I think I bought a Colt Python from Red Pear a year or so ago. Seems like a good dude.

Heineken-Ashi said:

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401k's aren't bad. They are a nice benefit. And they can even be lucrative when you happen to be alive and invested in the most parabolic bull market of all time. But they aren't there for you to get wealthy. They are one of multiple vehicles to provide enough incentive that you don't leave and that you keep selling your time and talents to them.

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This right here. My companies offer 401k's and the majority of my employees take part. I do not take part. We began offering 401ks as an incentive when competing during the hiring process, along with full health health benefits. When comparing apples to apples, a candidate is more likely to go with the company offering a 401k because their minds have been trained to believe that is what they should do.

Agree, wealthy is a very personal definition. It can also change over time.

For most of my life I defined wealthy as having enough invested value that a perpetual spinoff rate (I use 3.6%) would cover my full cost of living. That rate already contemplates reinvestment necessary to cover long term inflation.


But perhaps predictably, when I passed that I started looking at the next milestone - which for me was defined as enough stored value that it could cover each of my 4 kids cost of living in a perpetual spinoff as well.


The key word is "could" because I don't want them to know this financial backstop exists. Maybe they discover it later in life, haven't fully decided.

I'm not there yet, and maybe it's not good for anyone to actually believe they are already wealthy by their own definition. Gives me something to work for.

I stand corrected!

Kansas Kid said:

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RightWingConspirator said:

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Only thing I'll add is it matters not a whit to me how others define "wealthy." I only care about how I define it. If I can get to a net worth of $5MM within the next few years, I'll consider myself wealthy enough for my needs.

"I've never seen a hurse towing a U-Haul." There is some truth to this saying. It all stays here.

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Totally agree it is how you define it and not how someone else does. Some consider themselves wealthy as long as they can put food on the table and they have a close family and a lot of friends.

As for hearse and the U-Haul……

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The dude in the back of that vehicle is trying to take it with him.

Good approach, I do remember there being a natty position though ?

Heineken-Ashi said:

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Would you rather have $500k in a 401k? Or $500k diversified into multiple properties, companies, or alternative investments, especially the type where you are the GP, realizing both general returns AND the promote on top. In the former, you DCA into it and watch it rise over time hoping the market keeps going up. The latter, you are compounding 3-10x types of returns into more and more positions and likely better and more exclusive types of investments.

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Well said, and what I was intending by my first comment regarding the "wealthy" only having 20% of their net worth in the market. For clarification, yes I was speaking of the market as a whole, not just 401k's. Here are the 2023 average member allocations in Tiger 21 from which that stat was pulled:

Private Equity - 28%
Real Estate - 27%
Public Equities - 19%
Cash Equivalent - 12%
Fixed Income - 9%
Hedge Funds - 2%
Commodities - 1%
Currencies - 1%
Miscellaneous - 1%

In my 20s and even early 30s I was maxing out my retirement accounts. Then I met some folks who showed me the light. When I stopped maxing those accounts, and utilized some of the methods listed above, I started growing my net worth exponentially. Yes, those methods have risks as well, but higher rewards

FrioAg 00 said:

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Agree, wealthy is a very personal definition. It can also change over time.

For most of my life I defined wealthy as having enough invested value that a perpetual spinoff rate (I use 3.6%) would cover my full cost of living. That rate already contemplates reinvestment necessary to cover long term inflation.


But perhaps predictably, when I passed that I started looking at the next milestone - which for me was defined as enough stored value that it could cover each of my 4 kids cost of living in a perpetual spinoff as well.


The key word is "could" because I don't want them to know this financial backstop exists. Maybe they discover it later in life, haven't fully decided.

I'm not there yet, and maybe it's not good for anyone to actually believe they are already wealthy by their own definition. Gives me something to work for.

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100% that target moves. However, why did you ever set the original target? What is the point of a goal unless you had something to do once you reached it?

You said, gives you something to work for, but what are you actually working towards (other than a large bank account)?

I know a lot of people have fallen into the trap of making all these retirement goals while never actually thinking about what they will do with retirement. I work with a guy who is still working into his 70s now because he made work his life. He could have retired years ago but said why? He had nothing else to do. That isn't a problem, but that isn't what I strive towards.

There isn't anything wrong with being fulfilled by work. We all just need to define what we want to do and for some, they're already doing it as their regular job. For most though, it's not their day job.

honestly if you only have nicer stuff than most people; the loaded rover instead of the explorer, the $5k rolex instead of the $500 whatever, then you aren't that wealthy.

When you start flying private, have a person to drive you around, a 7 figure boat, have a team of people that take care of stuff/house for you, you vacation where there is no one else there (private islands, yacht charter, etc.), only staying in penthouses, and have well into 7 figures of a home, or other real estate, now you're a part of the wealthy class.


In a nutshell.

Having $3m in retirement when you're 55 is not that wealthy. It allows you to live as comfortable as you have been for all of retirement and maybe leave some for kids, but you aren't living like the truly wealthy people do, not on the regular. It's undoubtedly upper class, but it's not the elite class.

Having $50m in net assets, yeh you're there. Not sure where that line specifically is, but it's way more than a few $m, which let's be honest, is not that hard to achieve in the last 20 years.

My dad was at the ~$2m mark in retirement by his 50s back in early 2000s; now it's maybe $4m-$5m. He's hardly a 'wealthy' man. He just sold his 14 year old tundra for a couple year old Ridgeline, and went to work everyday like everyone else until his late 60s.

Now him and mom do some awesome traveling don't get me wrong; much better than the guy who has $500k in retirement at age 70.

But they're still flying scheduled service and going security just like everyone else lol.

I Am A Critic said:

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To me, being wealthy means being able to choose what I do with my time and not give a f what anyone else thinks. It's not a dollar amount.

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this idealism could apply to a homeless person lol.

This thread has gone kind of off the rails. I think all consider a 401k or other long term savings plans with the tailwinds provided by compounding as an attractive way to over a long time horizon generate a nest egg. The one caveat is if you want to live a more rich life (if that means spending $$$ or time to explore interests) you are going to need to generate considerable wealth/investments outside of a 401k/pension/IRA etc all.

You can do that by working in a niche industry where you trade your time/sanity for $$$ (Big Law, Specialized Medicine, Inv. Banking/PE, or Sales & Trading) or you can be an entrepreneur and build a business or investment platform or the big tech if you can arb living.

This allows you to stack considerable after tax investments (real estate, stocks/bonds, private business etc.) that requires significant capital.

The long term compounding of a 401k and monthly savings may result in "wealth" at 65, but I and from what I can tell many others want it sooner to enjoy it. I think with that thought in mind, you need to generate more income and result investments than a traditional corp job can pay.

Got this coaching and it really clarified things for me. I already thought this way deep down, but I couldn't have articulated it. Putting it in this structure really helped clarify things. It's geared towards entrepreneurs, but might be relevant to others in this discussion.

Most people think that entrepreneurs do it for the money. Some do, but I think this is misguided. And these are never the best entrepreneurs that I know.

The best entrepreneurs I know do it because they want FREEDOM. Specifically four freedoms:

TIME. They recognize their time as a very valuable resource and want to have the freedom to decide how they invest it.

MONEY. This isn't about the AMOUNT -- it's about the source. It's about getting money in exchange for doing something you find valuable and getting it from people you respect.

RELATIONSHIPS. The freedom to associate with people who enrich your life and that you actually enjoy.

PURPOSE. The freedom to constantly expand and elevate your purpose. To let it evolve so you can do it at a consistently higher level. (I don't think this needs to be some grandiose 'going to Mars' or 'save the whales' type thing)


I know plenty of people with a lot of money but not much freedom. They're working long hours, for bosses and customers they hate, at the expense of their personal relationships, and their soul is deteriorating with every passing moment -- because they're being used as a tool to achieve the purpose of some other person that they don't care about (or maybe is contrary to their values).

And the people I know who are the best entrepreneurs don't ever stop. They constantly want to elevate these freedoms because they always want their future to be bigger than their past. And when they've accomplished a lot, it means they have to dream even bigger.


To me, money is a tool to achieve these freedoms.

Probably the second most important ingredient in the recipe next to your mindset.

These are not my original thoughts -- this came from Dan Sullivan, founder of Strategic Coach. I've found his coaching to be very helpful.

bagger05 said:

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The best entrepreneurs I know do it because they want FREEDOM. Specifically four freedoms:

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and the 5th Freedom...Spending all day on TexAgs

bagger05 said:

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I know plenty of people with a lot of money but not much freedom. They're working long hours, for bosses and customers they hate, at the expense of their personal relationships, and their soul is deteriorating with every passing moment -- because they're being used as a tool to achieve the purpose of some other person that they don't care about (or maybe is contrary to their values).

And the people I know who are the best entrepreneurs don't ever stop. They constantly want to elevate these freedoms because they always want their future to be bigger than their past. And when they've accomplished a lot, it means they have to dream even bigger.

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The wealthiest people I know have this problem, they don't ever stop and that is at the expense of personal relationships as well. I know plenty of divorced business owners because the business is what got all of their time and devotion. I've known a couple businesses that failed because of divorce too.

Caliber said:

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FrioAg 00 said:

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Agree, wealthy is a very personal definition. It can also change over time.

For most of my life I defined wealthy as having enough invested value that a perpetual spinoff rate (I use 3.6%) would cover my full cost of living. That rate already contemplates reinvestment necessary to cover long term inflation.


But perhaps predictably, when I passed that I started looking at the next milestone - which for me was defined as enough stored value that it could cover each of my 4 kids cost of living in a perpetual spinoff as well.


The key word is "could" because I don't want them to know this financial backstop exists. Maybe they discover it later in life, haven't fully decided.

I'm not there yet, and maybe it's not good for anyone to actually believe they are already wealthy by their own definition. Gives me something to work for.

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100% that target moves. However, why did you ever set the original target? What is the point of a goal unless you had something to do once you reached it?

You said, gives you something to work for, but what are you actually working towards (other than a large bank account)?

I know a lot of people have fallen into the trap of making all these retirement goals while never actually thinking about what they will do with retirement. I work with a guy who is still working into his 70s now because he made work his life. He could have retired years ago but said why? He had nothing else to do. That isn't a problem, but that isn't what I strive towards.

There isn't anything wrong with being fulfilled by work. We all just need to define what we want to do and for some, they're already doing it as their regular job. For most though, it's not their day job.

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These are great questions.


1) when I was young I didn't love my job, even though I was good at it. Being on the bottom of any pyramid means assignment to many tasks you don't enjoy, you aren't learning from or increasing your market value, and they are just monotonous. As a young man achieving financial independence, or a source of income other than employment, felt like the obvious goal.

Of course, as my career evolved and progressed, I found my way to more and more enjoyable and rewarding things. I'm actually one of those rare people that love my job. The downside is a lot of stress from the weight on increased responsibility - if I screw up, many many people are impacted. But I've learned to handle that as well as any.


2) I have observed many people who let work define them, and they struggle with what to do beyond work. I am proud of the degree I have avoided that line of thinking, in spite of the fact that many people see my role as defining. The people who don't let my job define me are pretty much just me, my wife, my children and a few close friends.


2B) another interesting thing that occurs is having many children also becomes defining. They crowd out a lot of other potential uses for my time, and they are 100% worth it. In fact I can't imaging anything I'd rather be doing than teaching and spending time with them.

I'll likely retire around the same time they are out of school, which means an exponential increase in my unaccounted for time. I am taking on this challenge fairly proactively.

Per Forbes...

High Net Worth--$1 to $5 million in liquid assets
Very High Net Worth--$5 million to $30 million in liquid assets
Ultra High Net Worth--Over $30 million in liquid assets

High Net Worth

Becoming a 'millionaire' was a big deal at one time. Inflation has certainly changed that.

Caliber said:

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bagger05 said:

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I know plenty of people with a lot of money but not much freedom. They're working long hours, for bosses and customers they hate, at the expense of their personal relationships, and their soul is deteriorating with every passing moment -- because they're being used as a tool to achieve the purpose of some other person that they don't care about (or maybe is contrary to their values).

And the people I know who are the best entrepreneurs don't ever stop. They constantly want to elevate these freedoms because they always want their future to be bigger than their past. And when they've accomplished a lot, it means they have to dream even bigger.

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The wealthiest people I know have this problem, they don't ever stop and that is at the expense of personal relationships as well. I know plenty of divorced business owners because the business is what got all of their time and devotion. I've known a couple businesses that failed because of divorce too.

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I think you might have misunderstood me.

Yes, the best entrepreneurs I know are people who don't stop. They always are pursuing the next thing. But they're NOT doing it at the expense of their personal relationships. They take a ton of time off, seem to have great marriages and relationships with their kids, and time for themselves and their own interests/hobbies as well.

The entrepreneurs I admire are the ones who see their businesses as something that enhances the other aspects of their lives. And because of that they constantly think about evolving -- not stopping. The ones who have sold their businesses and gotten big checks are doing it because it's freeing them up for the next level.


I've seen plenty of the other type as well. And that's probably more common. In those cases it seems these people are doing it for the money, not the freedom (my assessment from the outside -- obviously I don't know).

I largely agree. Think Very High Net Worth starts between $10-15MM and High Net Worth is $3-10MM. Unfortunately, $1-3MM doesn't get you there these days.

I think you're being a tad dramatic here. There are multiple ways to get there. The benefits from a tax and employer match is well known, I think most others also understand compounding growth. I do not think we need it repeated multiple times, we can do the math.

I think what he is saying and I do not disagree is that asset allocation between before tax and after tax is important. If putting max amount into a before tax retirement account leaves little for after tax investments, some level of balancing between the two to diversify and potentially take more risk/higher reward isn't a complete miss.


side note, a lot of firms do not have great investment options in 401ks, most do, but not all.