I have been reading this subreddit and posting in here for a while. However, I have become more active recently and received a few requests to flesh out one of my previous comments and turn it into a post.

For context: I am in my early 20s and currently earn more than $2.5 million in taxable income every year. However, my actual net worth (low to mid 8 digits) increases annually by a number far higher than this if you factor in my unrealized (and untaxed) capital gains. I grew up in a very fortunate family background to a father that has considerably more money than I do (even today). Thus, my windfall gave me significantly more independence and perspective but it did not change my life circumstances. Just to be absolutely clear: none of my current net worth was inherited or given to me by anyone. However, it’s obvious that I would not have the knowledge or the opportunity to create this wealth without my parents. I was very lucky in many ways.

Here are some of the most important lessons I’ve learned through my journey so far:

• Capital dominates relationships.
  • Many social situations are dictated by which person has more money. It’s our sad reality.
  • Furthermore, there are many “good” people that will still treat you differently just because they know you have money. I think this is simply human nature. However, these people, while perhaps genuinely virtuous, will still subconsciously view you as a resource to be used. For this reason, it is extremely difficult to form relationships with people that have considerably different life circumstances (even someone making 500k a year lives a very different life from someone making 5 million a year). It is not a matter of elitism or classism. It is a matter of trust.
  • In my limited experience (I’m sure it’s not reflective of the vast majority of people in this range), the high upper-middle class (salary $500k-$1.5 million) tends to have a less productive understanding of money and relationships. They have enough money to feel superior towards others (the true middle class) but not enough money to gain a deeper perspective on capital (explained later). PS: Please don’t debate this broad and arbitrary salary range with me. I have met people that will argue with others about whether they are low upper class or upper-middle class. That is a waste of time.
• Success reveals true friends and helps you identify fake ones.
  • This is an important one. Whenever I achieve something I am proud of, I am very happy to share it with my friends and family. Their reactions to good news (both from me and from others) reveal a lot. The people that I trust the most and therefore are closest to are those that genuinely congratulate others and make them feel good about their accomplishments. There are many people that will either quickly change the subject after a brief “congrats” or even diminish the accomplishments of other people. While I still amicably interact with these people, I know that they do not actually care about my well-being at all.
  • Conversely, I have made an active effort to demonstrate excitement for the accomplishments of my friends. I buy my friends drinks when they reach important life milestones and make sure they understand how unique and noteworthy their achievements are. I think those that sincerely celebrate other people’s accomplishments are the ones that are truly comfortable with their life circumstances. I actually think the causal relationship between these two things is bidirectional. Isn’t life easier when you can feel genuine happiness for others? Regardless, don’t let someone’s negative reaction to your good news make you feel bad. That’s their problem.
• Money is a necessary but insufficient component of a meaningful life.
  • Money is one of those things where you want it when you don’t have it but stop caring about it when you do. Obviously I think about money to a certain extent (otherwise I wouldn’t be on this subreddit), but it is not something that guides my life purpose. In other words: I would be supremely disappointed if I never made another dollar for the rest of my life but I also wouldn’t find life satisfaction from making $1 billion.
  • I think the point of diminishing returns for money is pretty early ($10-$15m). It’s easy to fall into the trap of materialism but buying things quickly becomes tiresome. Before the pandemic, 90% of my leisure spending was on travel, and my genuine passions/hobbies. My happiness when spending that ultimately inconsequential amount was much higher than my happiness when spending hundreds of thousands of dollars on “luxury” items.
  • Finding a purpose beyond money is deeply personal. While everyone has a different answer, I believe everyone will be able to find a deeper purpose eventually. I have never met any “successful” person that views money as their end destination.
• True meritocracy is a myth.
  • My road to financial success was paved with dumb luck. The outcome of my investments was lucky but even my ability to source these investment opportunities was a result of luck (being born into the right family). Even my father, who started with nothing and led a publicly-traded company as a CTO with a multi-billion dollar market cap, was only able to succeed through luck. Execution definitely plays a role in the direction of our lives but the intensity is largely determined by fortune.
  • While I don’t think intelligence or work ethic is responsible for the majority of success in this world, I firmly believe it determines the direction of your life. For example, Jeff Bezos could only become the world’s richest man through luck. However, as a Princeton graduate working at DE Shaw, he was destined to live comfortably regardless of luck. In my opinion, one of the most important non-luck factors driving the direction of one’s life is their willingness to learn. Yes, the least intelligent people are oftentimes the ones that convince themselves that they already know everything (Dunning-Kruger effect). I know someone that will never admit when he does not know something. I will ask him a question and he will give me an obviously incorrect answer. If I try to dig in deeper, he will continue to provide even more incorrect (and easily verifiable) information. Unsurprisingly, he views himself as an extremely intelligent person (despite performing very poorly in university). Conversely, the smartest (and IMO most likely to be successful) people I know are those that actively seek to learn through reading, self-instruction, and listening to those that know better. If I have any insight into how someone can “become rich”, it’s absolutely in this bullet point.
  • Accepting that my financial success says very little about my merit was difficult but it also radically changed my perspective on the world. Money does not reflect one’s worth, work ethic, or intelligence. Humbly remembering this has positively impacted my relationships and interactions with strangers. Furthermore, it has enlightened my thinking on charity. If the majority of my money is not rightfully earned then I am truthfully entitled to very little of it. This leads to my next point.
• The difference between conservatism and selfishness is charity.
  • I am a proud fiscal conservative. Anyone that knows me at all knows that I have an almost obsessive fixation on lowering my annual tax burden. I hired a CPA in college just to answer questions about my (oftentimes ridiculous) plans to minimize my effective tax rate. However, one person challenged my ideology and made me realize the selfishness of my behavior. Fiscal conservatives like me claim that government inefficiency is a driving factor behind our desire to pay less taxes. However, maneuvering around taxes and hoarding money is simply greedy. Without charity, avoiding taxes is just done to keep more money for oneself. I think a certain level of greed is fine but I had previously deluded myself into believing my past behavior was an ideological stance and not purely selfish. I still do everything I can to minimize my tax burden. However, I have also donated more during this pandemic than I have ever saved in taxes (tbh it balances out post-deduction).
• Intergenerational wealth is very dangerous for both individuals and society.
  • This is for all the parents that have been posting questions on this subreddit lately. Having attended private/boarding schools for most of my life, I can say without hesitation that intergenerational wealth is usually a net negative for all parties involved. I have seen heirs to multi-billion USD fortunes (in China where there is a 0% gift tax) waste their lives on nothing. How can you motivate yourself to do something without any real fear of discomfort? Also, please do not think this is a problem reserved for the ultra-wealthy. If anything, it is most dangerous within upper-middle-class families that can provide comfort for their children but not lifelong support. Unfortunately, I know many people from my university that came from upper middle class backgrounds that had many opportunities (no on-campus job requirements, private high schools, etc) but unfortunately squandered all of them due to their complacency. I do not know what the true solution to this problem is. However, I think giving children independence from their parent's financial success (at least while they are still developing their own path) is crucial.
  • I won't make this post too political but I also firmly believe that intergenerational wealth serves very little purpose for society as a whole.

Feel free to ask me anything related to what was discussed above. I will not answer questions asking for advice on making money. As I have explained above, I am not the right person to answer this question. If you want to replicate what I did, just make sure you’re arrogant and lucky!

Edit: Formatting