The drawbacks of displaying financial success

[The Old Man]

This sounds more like Bogleheads than ERE. I'm not arguing it violates ERE principles, just that most people here aren't after $380k/yr in dividends!

It is hard to get down to the $7,000/year ERE level, but see below. The fellow has an outward income of $3,500/year (i.e. job), but also substantial assets and passive income as well. It is stealth all the way - his wife has no idea, but does believe he bought some government bonds.

http://blog.modernmechanix.com/the-foster-portfolio/

Is Herbert Foster rich or wealthy?
Is he ERE, boglehead, or something else?

[RD]

I probably was sloppy and didn't make myself clear, as I was referring to the author's other articles on investing.
The linked article was just pretty okay.

[theanimal]

This sounds more like Bogleheads than ERE. I'm not arguing it violates ERE principles, just that most people here aren't after $380k/yr in dividends!

It is hard to get down to the $7,000/year ERE level, but see below. The fellow has an outward income of $3,500/year (i.e. job), but also substantial assets and passive income as well. It is stealth all the way - his wife has no idea, but does believe he bought some government bonds.

http://blog.modernmechanix.com/the-foster-portfolio/

Is Herbert Foster rich or wealthy?
Is he ERE, boglehead, or something else?

That is $3500 in 1951 dollars. Or $31,360 today. Definitely not ERE, IMHO. I'd say MMM lite.

[GPMagnus]

Thanks for the story - it was a good read!

[vivacious]

Separate argument:

Ecologically even, we might be better off if more people stayed home, didn't drive, and lived off food stamps (i.e. parasitic) than ran out to paper-shuffling jobs, burning lots of resources, and competing for market share to sell New Gadget X.

Yep. Most jobs have no major purpose really and are probably doing more bad than good as noted. Another argument for unconditional guaranteed minimum income also.

[JohnnyH]

There aren't many positives, but one is that people will invite you to join alternative investments. Venture capital. Start-ups. Loans to small businesses (for example, someone owns a fishing trawler). Apartment buildings. Such things tend to pay much higher return rates that publicly traded investments.

Another one is that if people know you're looking to buy a boat and they also know someone who is selling a $20k boat yet will only take cash, they'll make the connection.

I could see that being a good thing, when you have a big pile... But I'm pretty small potatoes and most of these opportunities would be too large of a position (too risky) for me to partake.

[tommytebco]

Plantingour pennies asks: "So, what is the status symbol for the FI/ERE crowd? We obviously need one..."

I can say a 7 figure IRA or Roth impresses me.!!

Eating grass clippings because they're cheap, much less impressive to me.

[JohnnyH]

I can say a 7 figure IRA or Roth impresses me.!!

A pre-traditional retirement age person with a massive Roth would indeed be impressive... I can't wait for my wages to drop ( I wonder how often this is said) so I can begin converting to Roth penalty free.

I really hope Roths still exist in current form when I'm 59.5... See this tax establishment? You get nothing!

[EdithKeeler]

I've worked very hard to make my entire family think I'm just like them.

They think I'm living paycheck to paycheck. They think I work 40 hours a week. I complain about a boss I don't have and tell stories about the co-workers I don't have. They think the little house my wife and I bought is our "starter house." Most importantly, they have no idea that I have a (modest) stockpile of cash.

At first I felt bad living behind a facade, and sometimes its hard to not get caught, but it works much better than everyone in the family calling you lazy for not working and scrooge for not handing out your money. I'm just like them.

I just read this and thought of an interesting conversation I recently had with my mom. I play my money pretty close to my vest with family, having learned that if I don't, there will be "emergencies" that only I can help with. Any cash that comes her way IMMEDIATELY burns a hole in her pocket, and then some, hence the subsequent "emergency." My mom's elderly, and in poor health, and I do help her out, because well, she's my mom. But if I don't limit it, I might as well just sign over my paycheck.

Anyway, recently I was super happy because I reached a certain milestone in my savings, and I let slip when I was asked why I was so happy. I was fortunately smart enough to say "Oh, my investment account just hit a good number," and my mom nodded. "A hundred thousand, huh?"

My answer of course, was "Yeah, but its in a retirement account where I can't get to it."

She'd have heart failure--and an immediate "emergency"--if she knew the real number.

[Sclass]

@JohnnyH - There aren't many positives, but one is that people will invite you to join alternative investments. Venture capital. Start-ups. Loans to small businesses (for example, someone owns a fishing trawler). Apartment buildings. Such things tend to pay much higher return rates that publicly traded investments.

Another one is that if people know you're looking to buy a boat and they also know someone who is selling a $20k boat yet will only take cash, they'll make the connection.

Had to comment on this. I wish people would approach me with these deals. Is this some kind of fantasy or has anyone had this really happen? I was in two limited partnerships that I was invited into. One was taken down by an embezzlement bankruptcy right out from under my nose and the noses of the senior partners. I got my original investment back after years of bankruptcy proceedings. The second is a REIT I'm in with four old friends. I have too much tied up in this thing and it is illiquid. It runs a tiny loss each year. I'll have to sue my friends to release the cap gains.

Seriously I could have done without either of the two investments. So this image of country club deals is wasted on me now. Both were offered up by mentors who had an idea of my financial success without seeing my Birken bag.

Speaking of my mentors, I'm often brought in to evaluate the technology of a startup they've been pitched to invest in. And wow have I seen some doozies. I mean I literally went into a "lab" that had an apparatus running on this magical new device that was just plain rigged. The rich guys were blown away by this great tech that literally had a man behind the curtain flipping switches. When you are overtly rich you get hit with scammers.

The boat offers is amazingly true. I'm not a boater but while getting a ride on a pals boat back to the marina we had two offers to trade or buy boats right out on the water. Guys just wanted to get out of what they had at an obvious loss. I couldn't believe the great deals they were pitching. We're talking $100k to $50k boats (twin engine power cruisers that would make serious sailors wretch) offered up for $20k. I'll never buy one but if you're looking for a power yacht just pull up to people docking and say nice boat.

[Chad]

Guys just wanted to get out of what they had at an obvious loss. I couldn't believe the great deals they were pitching. We're talking $100k to $50k boats (twin engine power cruisers that would make serious sailors wretch) offered up for $20k. I'll never buy one but if you're looking for a power yacht just pull up to people docking and say nice boat.

You know the old saying about owning a boat, "The best days of owning a boat are the day you buy it and the day you sell it."

[Sclass]

Chad, I've heard it a million times but there was something about seeing it up close and personal in the marina that blew me away.

[unno2002]

From somewhere in the past, I recall an aspect of a book or movie about “mafia”, something along the lives of the old guy telling the young to avoid a Cadillac, just get a Chevy and upgrade it as desired on the inside…

Re the “status symbol” for early retired, I opine that merely being retired early is the symbol…

[vexed87]

A few of my best buddies know I am pursuing FI, but they have no idea how much I am worth at this point, I'd like to keep it that way as I like to maintain a false persona that I'm perpetually broke and eagerly awaiting pay day. It can help curtail social expenditure. Also, not having a car is a great excuse as "I simply can't get there" (even though I'm perfectly fit enough to ride a bike wherever I need to go and make it in reasonable time!)

I can say there's no money to go on expensive trips, or eat out or go to the movies when they ask, up to now I have had excuses like a wedding/honeymoon to save for, and now it will be a house. I love spending time with these guys, luckily they do lots of frugal compatible nights in, but like to flit away the cash on take out food, meals out (always at terrible restaurants, why?!) or the movies etc.

That said, I am attending a 4 day music festival with some of these guys next weekend, which could be expensive, especially if you eat and drink from the stalls in the arena. It will be interesting to see how prepared they are to do their own cooking, drink water instead of £7 beers in the arena etc. I bet they will drop a wad, while I hope to keep my expenses purely to the entry fee and the crate of beer/food I'm lugging in to the camp site.

[El Duderino]

From somewhere in the past, I recall an aspect of a book or movie about “mafia”, something along the lives of the old guy telling the young to avoid a Cadillac, just get a Chevy and upgrade it as desired on the inside…

Or they could go full gangster and get a Chameleon XLE.

[Did]

Somehow, in this small Irish village we find ourselves in, there is a rumour that we are "millionaires". This rumour even reached our only friends in the town 13 km away, when their window guy asked if they had heard that there were Aussies in my village, "and he doesn't even work".

Such a rumour is a dangerous thing in rural Ireland. Ireland can be a very violent place!

ps - The rumour isn't true. I guess that is an ERE efficiency win if they think we have an ok salary......

[sharansingh]

That's sure they face this type of problem. So no need to show off whether you have so much money or not. Just be simple and gentle it will be cool.

[FBeyer]

...
ps - The rumour isn't true. I guess that is an ERE efficiency win if they think we have an ok salary......

ERE efficiency wins don't account for much if 'tards break into your house to steal all your 'millionaire gold' or you get robbed.
Can you drop a counter rumour somewhere so people don't get the idea that you're rich in the steal-my-stuff sense?

[Did]

...
ps - The rumour isn't true. I guess that is an ERE efficiency win if they think we have an ok salary......

ERE efficiency wins don't account for much if 'tards break into your house to steal all your 'millionaire gold' or you get robbed.
Can you drop a counter rumour somewhere so people don't get the idea that you're rich in the steal-my-stuff sense?

Ah we tried pointing out that we own the smallest cottage in the village (really, it's an old stone cottage), and drive the cheapest car, but honestly they have nothing else to do out here except talk about hurling and foreign millionaires...

[BRUTE]

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