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comment by mk
mk  ·  430 days ago  ·  link  ·    ·  parent  ·  post: Telling children 'hard work gets you to the top' is simply a lie

It seems to me the best avenue to move from middle to upper class in the US has been real estate. If you start early, you can continually leverage your building equity to get loans for purchases of more property. US tax law is extremely landlord friendly, allowing you to write off "depreciation" of real estate, while you can also write off any cost of improvements, even as the market appreciates. Aggressively working on a real estate portfolio for 30 years gives a good chance of breaking out of the middle class. I can point to a couple of people that have done so.

I bought a house with two other friends and rented it for a while. It was an enlightening experience. I wouldn't have been able to get started on my own, but after we flipped that house, I could have gone off on my own and expanded if I wanted to.

snoodog  ·  430 days ago  ·  link  ·  

I noticed that as well. Real estate loans in the US are also non-recourse in most places so you can leverage yourself to the hilt with minimal downside risk. If the market goes up you get all the benefits, if it goes down... to bad you walk away and get locked out of the credit market for a while. As you said tax treatment is very favorable so that helps a lot as well.

Starting your own company is a possibility, but I dont think its very practical these days. International competition makes it hard to get into the any of the low end / simple businesses. If you have some sort of super specialized skills and knowledge maybe you could provide a lot of value but even then you need that good marketing/connections money to start. I heard of a few people making it big on construction companies, but many of them also went bust big time when 2008 hit, I expect a similar problem soon.

I think I could make enough to get by, but not enough to get rich. Once you factor in hours spent/time not spent with family, or doing non work stuff its not really a great deal. Also you already have to be middle class with some sort of cash in the bank to afford to take that risk.

Dot-com stuff was a big money maker for certain people because you didnt actually have to show profit. People would just buy into pie in the sky ideas. Ponzi schemes or similar are super effective, just need to be legal so you dont loose it all in the end.

mk  ·  430 days ago  ·  link  ·  

    The secret of a great fortune made without apparent cause is soon forgotten, if the crime is committed in a respectable way.

-Honoré de Balzac