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If life was a game and money was points...

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LikeASet   United States. Apr 03 2017 04:45. Posts 2109
This is just a thought experiment.

If you had to start from nothing, and wanted to make a million dollars in the most efficient way possible without breaking any laws of course, what would you do in order to do so?

When I say nothing I don't really mean nothing like homeless bum. Let's take a typical person that would be on this site such as myself. Here is the hypothetical starting situation;

- Don't have to worry about current living situation, let's say you moved back in with the folks
- You have a college degree (I myself have a BS in Finance), but resume would only appeal to entry level positions
- You have a mind that is strong in logic, pattern recognition, and systematizing.
- You are a commute away from upper middle/upper class cities

When I think about this I imagine going a low variance route in which one obtains a typical administrative/salaried entry level position (40-60k USD/year), working a second job during evenings/weekends that is hobby-like (ex. piano lessons, in my case fitness training which would supply another 20-40k year), and then dumping excess income into real estate. I guess nothing unusual here.

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K40Cheddar   United States. Apr 03 2017 06:44. Posts 2162

learn how to code and develop flappy bird and make millions of dollars ez game

GGLast edit: 03/04/2017 06:45

hiems   United States. Apr 03 2017 07:19. Posts 1368

for sure donate sperm on the side.

 Last edit: 03/04/2017 07:24

hiems   United States. Apr 03 2017 07:31. Posts 1368

seriously tho the biggest thing is no such thing as easy million dollars. "low variance route" probably bad way to think of it too you should model your finances with variance in mind. 60k is okay for entry level or joint earners but its probably insanely hard to reach million on that income. also working a second job is okay for money but if your talking over the course of 10, 20 years that is likely going to burn you out.

dnagardi   Hungary. Apr 03 2017 19:26. Posts 1510

if we knew the answer, we would already be there

goose58   United States. Apr 14 2017 17:33. Posts 869

In order of importance:

1) increase income as much as possible (increase education/certificates/degrees, always look for a better job, negotiate raises, work overtime, side jobs etc)
2) reduce expenses as much as possible (focus on needs not wants, DIY, look for deals/sales/coupons, roommates, move to a cheaper place, tax breaks/programs)
3) invest diversely and often (retirement funds, index funds, real estate)
4) repeat until 1milly (this can happen faster or slower depending on how hard you want to work, your discipline and stamina, and how bored/boring you are willing to be..)

Different strategies exist and it's easier said than done, but people do it all the time..

Romm3l   Germany. Apr 18 2017 23:30. Posts 285

agree with some but not all of above post. maximise income, minimise expenses and invest the difference is the general idea and that order of importance is correct - but it's incorrect to look at these as separate problems that have their own solutions in isolation.

You make decisions in how to allocate time and money, and if you have <$1m then the most important decisions by far are how you allocate your time. The value of your human capital (defined as the present value of your expected future working life income from work) should be >$1m if you're from a first world country with only moderately above average motivation and ability. Compound interest is the eighth wonder of the world but only after you already have meaningful capital, and investment returns will do little compared to employment income and saving as much of it as possible in getting to the first $1m.

So how to allocate your time in order to maximise (income-cost)? Few thoughts:

- Maximise the value of your human capital as above poster said by constantly trying to better yourself (soft and hard skills, don't underestimate the former)

- Allocate your effort and time where you maximise the present value of returns - either extra income generated or extra cost saved are equivalent here. This is where looking for better jobs / different lines of work comes in, where the happy intersection of your relative strengths/weaknesses, and what's out there in terms of opportunities is most favourable.

- Notice above I said present value, i.e. spending time on things that won't give you any benefit now but are investments that should yield higher future expected earnings add value, e.g. gaining some professional qualification or learning and networking.

- Don't piss away your precious time doing DIY or coupon hunting to cut costs - this time is better allocated increasing the value of your human capital. Go for the easy, obvious and large cost saving wins (minimise rent, transport and discretionary luxury spending) and low hanging fruit that don't require time and effort.

- Don't piss away your precious time working bullshit dead end second jobs where your hourly rate has no long term upside. this time is better spent increasing your skills and network and marketing yourself to find better opportunities with better pay than your current job. Not doing those things mean your main job will stay entry level longer and progress slower. We live in a sophisticated specialisation economy and there isn't the same financial value in being a jack of all trades.

- Since investment income doesn't move the needle and your assets <<< expected human capital value, don't waste too much time thinking about how best to invest or be a warren buffett at least until after you're a millionaire. Dollar cost average into passive global equity index funds with the lowest fee -> job done.


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