Do you know any truly rich people (someone who consistently maked $500+k per year)?

One of my personal training clients had dinner last week with the Prince of Dubai. He owns a number of horse farms nearby. WEG in Lexington, KY for the next two weeks. Lots of rich people in town.

Alan

One of the richest people in the casino business is not Steve Wynn or Sheldon Adelson, but rather an unassuming guy named Ernie Moody, who invented Triple Play Poker, which is a well known video poker game. He earns about $10,000,000 per year at least. I've met him on a number of occasions, including when he was just starting out back in 1995. He also owns a bunch of race horses now.

I did not take the time to look at all 6 pages of responses, mainly because I don't care about the question or the answers.

What I want to know is does the OP know that he used the word "maked" in the subject line? Maybe 666energy drink maked him a reTARD?

craigmac4h wrote:

You've made a pretty good argument for a consumption tax. I had a similar conversation with someone in a similar financial position as you describe (it was a family member, hope he's not reading this), and his argument AGAINST the consumption tax was that it could provide an incentive for people to hoard their money in savings accounts and spend as little as possible to avoid having their earnings be taxed. I thought surely a person making 500,000 a year wouldn't try to live on 20,000 a year just to avoid consumption taxes. Do you think a consumption tax would raise revenues without encouraging people to live on Ramen?

Awesome point - that's exactly one of the benefits of a consumption tax. Our nation's saving rate has gone down the drain - we WANT a higher savings rate.

another reader wrote:

Awesome point - that's exactly one of the benefits of a consumption tax. Our nation's saving rate has gone down the drain - we WANT a higher savings rate.

For the sake of argument, wouldn't that mean less money being spent on goods and services, since savings aren't counted in the GDP?

CEO2 wrote:

Same for me.

Dont for a second though feel bad for teachers - - they get tons of vacation, summers off, set hours, no one bugs them in the middle of the night, generous pensions paid for by you the taxpayers, health insurance. Plus if they are good, they get nice personal satisfaction of helping shape kids' lives. All in all not a bad gig. Sometimes I wish I had done that, life would be simpler (like the 60K theory proposed above).

You know they're not paid for the summer break.

i won't wrote:

You know they're not paid for the summer break.

You know they're free to work another job over summer break? I'm only guessing, but I bet they get health insurance over summer vacation too.

My sister is a doctor. It amazes me how she and the other doctors I have met use their money. It sure seems like many of them are living the same distance (or job loss) from bankruptcy as the average white collar worker.

I've worked quite a bit with a guy who owns a large manufacturing company. His company holds well over half the world market in a niche industry. No one would ever guess this guy is a multi-millionaire. He wears t-shirts and inexpensive jeans all the time, drives an old pickup, and loves working with machines. I am sure he enjoys fixing broken grinders and lathes in his facility. He contributes a lot of time, labor and money to charities.

3 month vacation wrote:

You know they're free to work another job over summer break? I'm only guessing, but I bet they get health insurance over summer vacation too.

i'm not suggesting that teacher's should definitely get paid more to account for their lack of summer employment, but how easy is it for a teacher to find a decently-paying job that lasts for only 3 months?

I know this guy:

http://en.wikipedia.org/wiki/Les_Wexner

He is absolutely loaded, his kids go to my school

ring ring ring wrote:i'm not suggesting that teacher's should definitely get paid more to account for their lack of summer employment, but how easy is it for a teacher to find a decently-paying job that lasts for only 3 months?

There are plenty of jobs that only last the summer for teachers...ever heard of summer school? There this also SAT prep, college prep, summer tour jobs, private tutoring. Not exactly a shortage of short term jobs for teachers in the summer.

Why do we need a higher savings rate? Is the economy really better if I save 10% of my income (put it in the bank) or if I invest 10%(buy stocks)? I don't think so. Heck "saving" money is pretty stupid once you have your 6 month cushion. At the current interest rates, your savings are losing money every month to inflation(well depending on what you believe the inflation rate to be). You would be much better off investing.

another reader wrote:

craigmac4h wrote:

You've made a pretty good argument for a consumption tax. I had a similar conversation with someone in a similar financial position as you describe (it was a family member, hope he's not reading this), and his argument AGAINST the consumption tax was that it could provide an incentive for people to hoard their money in savings accounts and spend as little as possible to avoid having their earnings be taxed. I thought surely a person making 500,000 a year wouldn't try to live on 20,000 a year just to avoid consumption taxes. Do you think a consumption tax would raise revenues without encouraging people to live on Ramen?

Awesome point - that's exactly one of the benefits of a consumption tax. Our nation's saving rate has gone down the drain - we WANT a higher savings rate.

Shit, that's not rich. 500K? Nothing.

You want truly rich? You need to know someone who makes no money in a year but still lives like a king. That would be me. I don't do shit. I don't work. I don't have a career. I went to college for about 6 years and got a communications degree. Mostly that was to score vag and drink and do drugs. My grandfather made a shit ton of money for our family, and my dad kept the biz going and made it even bigger. He died last year. I still own majority share of the company, but I stay out of it. The board likes it better that way. I just sit back and let the bank account get bigger. I spend money like a complete asshole each and every day. I admit that. I am very wasteful. I travel the world. I go where I want when I want on total whims. Oh well I will never run out of money. Never. I love my life. I have two women that are about 15 years younger than me at my house.

I guess I do make money technically but it is not because of anything I do. It is because my pop pop and dad were awesome MFers.

500K a year? That is not rich. This is truly rich.

To the person criticizing the fact that the finance industry doesn't really add significant value to society, as compared to engineering or manufacturing or health industry: No doubt, you're completely correct. I, and other investment bankers I know, are under no delusions about that, although you must realize the finance industry only exists because there is a strong demand for what it provides. I chose to aim for a high paying career, and along with working my ass off, as well as being blessed with the requisite intelligence, was able to attain it. Sure, the financial analysis that I do interests me, but no doubt one of the strongest motivators was the lifestyle it would give me. So yes, I am aware that I am in it for the money. Money is what allows me to greater enjoy the rest of my life as its less of a limitation compared to for the middle class.

There is nothing inherently wrong with wanting to be rich. In fact, I would argue there are very few people who do not want to be rich. Let's be honest with ourselves, greed is a near universal trait in America. We are a culture of materialism. Unfortunately it takes more than just wanting to be rich, to be rich. Baring luck (like the guy posting above me who inherited his business), wealth takes some kind of talent, drive, and intelligence. The people I work with in my investment bank are basically all brilliant. Top grades in high school and top SATs so they could get in to the top colleges. Great grades in elite schools got them to the upper echelon of finance. Performing to the expectations of a 150k salary for a 23 year old kept them there.

I am 29. I make about 400k a year. I know thats not super wealthy, but it is certainly a lot for completely self made money. I am certain that the salary will double if not triple or quadruple within the next 5-10 years, as I get promoted. By the way, I paid for my MBA from a top 3 program. (parents paid for undergrad, but no doubt I would have paid off my loans within a year or two). Zero debt. 200k in savings. Drive a nice car. Bought nice cars for my parents (who, as an engineer and doctor, make plenty themselves, not to mention they are even more frugal). Living in NYC with my girlfriend. Love my life and am proud of how hard I worked to get here.

Don't get me wrong, there are many paths to both wealth and happiness. I have friends who are doctors, lawyers, professors, mechanics, and engineers. I grew up in a middle class town and lifestyle, as did my friends. Through the basic opportunity of the middle class life style, and some hard work and maturity while young, they attained what most would consider wealthy, and now reap the rewards of a comfortable life. I also have friends who aren't making as much as they'd like, working as teachers, salesmen, secretaries, or even can't find a job. There's only ONE person responsible for their financial discontent: themselves. They played or partied too much relative to their intelligence. I had a friend lazy as shit who pulled a 4.0. That's awesome. For the rest of the people of average intelligence, myself included, there's a trade-off, and the degree to which one trades off is determined by oneself. For the most part, and for essentially anyone posting on this thread (the middle 80% of the population i.e. the middle class), the socioeconomic system is largely merit based, effort based, talent based.

The top 10% of earners in the US pay something like 90% (don't quote me, either way its grossly disproportionate) of the taxes. I wholly agree with Almost Elite. We should not be subsidizing the decisions of the poor who chose not to make the most of the opportunistic ALL middle class people had through income tax. To the poor, lazy f***ers out there (whether you are lazy now or were in school), we should not be paying for anything beyond the basic essentials. If I chose to work 80 hours per week instead of 60, and my company rewards me with a bonus thats 50k larger, I should not have to split that with the government, who takes it and hands it out to some lazy idiot.

If my tone comes across as angry, than I apologize, because I don't actually care that much. I just pity the people who delude themselves into thinking anything other than their own inability/incompetence is the reason they're not at a minimum, upper-middle class, and demand higher taxes on the wealthy to increase their standard of living. As ridiculous and incentive-decreasing the system is, I recognize its necessity and the fact that not all the poor are lazy (just most). But more importantly, in the end I'm still making bank. I still have money in excess of what the materialistic side of me desires. And my hard work will allow me to virtually stop working in my 40s with a net worth hopefully around 10 million, which I will continue to invest and grow.

This has become an interesting thread.

First, a very interesting and related argument is taking place over this post by a professor at Chicago:

http://delong.typepad.com/sdj/2010/09/todd-henderson-we-are-the-super-rich.html

Delong responded here:

http://delong.typepad.com/sdj/2010/09/in-which-mr-deling-responds-to-someone-who-might-be-professor-todd-henderson.html

The Chicago professor is making a lot of money, but his problems can be summarized like so:

"By any standard, they are really rich.

But they don't feel rich. They have a cash flow problem. When the bills are paid at the end of the month, the money is gone--and they feel that they have to scrimp."

I thought this was interesting and related to this discussion.

Back to the original point of the thread, I do know some very wealthy people. Some of my extended family is fantastically wealthy, but their middle-aged kids (with one exception) are basically losers. I'm not sure what the story is, but I guess they aren't too bright and never needed to be ambitious like their parents. They aren't able to help run the family business. The parents are totally cool, I really like talking to them and they love seeing us.

My brother and I once went through some calculations and guessed that our parents make close to $500k/yr (total), but they won't tell us how much. I'm a graduate student and I'm very happy to be living on my $20k/yr stipend while studying interesting things, my brother is in finance. My mother is very ambitious and runs a company that she founded, but she makes less money than our father because he works for a Fortune 500 company. Our father probably has one of the best analytical minds in the country (seriously), but that talent is wasted to some extent because he can be a bit lazy. He's happy to do his job well, work normal hours, and go to the symphony, play games and sports, travel, etc. More than anything, when we were growing up our parents stressed the value of education -- always made us do our homework, read to us when we were little, talked to us about things we were interested in, pushed us to try harder at the things we were bad at, challenged us and made sure we were well-rounded (pushed us to do sports, learn music, etc). They didn't spoil us -- we had fewer toys and games than almost all of our friends, and my allowance never topped $5/wk, even in high school, but if we needed money for something we could ask and usually get it. They were (and are) great parents. There's only so much you can do to control a personality, but somehow my brother and I are both extremely bright and motivated. Considering that our grandparents were immigrants, I'm sure they'd be very proud.

I had a couple of comments from previous posts:

1. A previous poster said that intelligence correlates with income. I would agree. But most of the smartest people I know (on the level of the top 0.1% of the population) do not aspire to make as much money as they can. I think most are confident enough to know that they can always make a living doing what they're interested in if they're good at what they want to do. The people I know who make the most money are not quite as bright but have a bigger chip on their shoulder. Even among university professors, there are definite differences in personality types. Things like drive, determination, and motivation are often more important than competence. Some people are really interested in their jobs and are happy to do them very well. Other people want to take over the world.

2. A previous poster wrote:

"Yes, I may make a good amount of money... more then 98% of Americans... but I consider the majority of that money as non-negotiable savings. In other words, I put a large chunk of money in the bank, and it STAYS there. NO MATTER WHAT. So I am living like someone making a fraction of what I make because I chose to SAVE. If I get taxed, you aren't eating into my disposable income, because in my mind, I don't have any. I have savings that don't get touched, and you're taxing my savings. So I don't live "rich" even though Obama would call me such. I really might as well not have 1/2 of my income on a given year, because its gone and stocked away. I'll grab it when I'm 45 or 50. The way I was raised, that is being responsible, and by repealing the Bush tax cuts, you're punishing me for my responsibility."

This is so ridiculous that I barely know how to respond, but it relates to the link I posted earlier. No matter how much money you make, you could always spend or invest the excess fraction and lack disposable income. You think the problem is with the government, but I think the problem is with you. If you don't want to pay taxes, you can move to Somalia. If you don't think it's fair that you have to pay more taxes than someone poorer than you, my first piece of advice is that you should stop worrying so much about other people. But more importantly, I think you're forgetting what it really means to be poor. I'll stop there.

I actually agree with most of what "goldman" said. But you have an interesting point: How would you define "basic essentials"? Food, shelter, running water, electricity? Should we add military defense? Education? Health care? A solvent government (interest on loans)? I think these are all basic essentials for a functioning country that need to be paid for. I don't think it should come as a shock that wealthier people will have to contribute more. In the end, we're only arguing how MUCH more they should contribute, and if you stand back and think about it, all of this arguing about a couple percent one way or the other can start to seem a little silly.

Agreed. No doubt the rich should pay more. The thing is, not only do they pay more, they pay comparatively more, let's say 50% vs 20%. I admit I don't have the knowledge to say where the money should be made up if that 50% become 40%. But you're also right about the fact that in the end the rich will still be rich.

As for what defines a basic necessity, I would say you're on the mark with food, shelter, running water, electricity. Essentially, what a homeless shelter would provide. It's the social luxury America can afford because of its wealth. Do you think in 3rd or 2nd world countries a lazy American would get even 1/10 they get in America in welfare? Being nice to the poor and needy is party of being humane, yes, but it is still a luxury that many societies don't have. And I think providing anything beyond the basics is wrong. It goes against the virtue of hard work. There should be no free ride.

As for military defense, that is what in political science is called a public good. You can't selectively provide public goods, such as roads, military, police, firemen, and thus the poor benefit the most from these as they otherwise could not afford these things if the government selectively distributed.

Free education, in my opinion, is important for the growth of our country. It's a investment in the future. But perhaps we should go to a system like Germany, and select earlier. Instead of all encompassing high schools, they have high schools for the kids that plan on going to universities and schools for those that will pursue trade schools. This I think is more economical and more efficient, although it comes at the cost of unfairly hurting late bloomers.

goldman wrote: I am certain that the salary will double if not triple or quadruple within the next 5-10 years, as I get promoted.

do you know how many people have been "sure" the money train will keep rolling (for them) just as they are about to be thrown off?

its not fashionable, and frowned upon, but save your $.

How long could you keep living in NYC if you were tossed out now? 1yr? 2? There are many people w/ +20yrs who are not working because they are more expensive than you. The minute you become expensive, you are out.

My brother plays pro poker and is in that "club".

goldman wrote:

As for military defense, that is what in political science is called a public good. You can't selectively provide public goods, such as roads, military, police, firemen, and thus the poor benefit the most from these as they otherwise could not afford these things if the government selectively distributed.

Actually, the case for our progressive tax system is the exact opposite, that is, the wealthier you are, the more you benefit from our strong defense, infrastructure and public safety such as police/fire.

I am not a fan of our progressive tax system but there is some logic to it. Our urban poor, for example have atrocious protective services and education.

I think the most compelling case for the progressive tax is our Defense Department. It is the most evenly distributed benefit to all taxpayers, however, it is extremely underserved by the wealthy (they pay but do not serve). It is a voluntary service but I think it is a poor reflection of our American value system that participation by the wealthy, is disproportionately low.