To me, it’s more about financial independence than early retirement. Financial independence gives you the options to do a lot of different things; “retire” and volunteer for an effective charity, continue working and donate 100% of your income to charity, continue working and balloon your nest egg to establish a trust to be donated to an effective charity upon your death, etc. The knowledge that you are 100% financially independent gives tremendous security that (as well as it’s other benefits, such as decreasing stress) allows someone to comfortably and without consideration give large amounts of money.
I believe that “giving large amounts of money without consideration” in this context does not include the part that you need for the financial independence.
In other words, if you need X money to be financially independent, and you have X+Y, you are free to spend up to Y in whatever way you wish, including e.g. donating the whole Y to a charity or investing them in a new project, even if for an average person spending Y this way would seem insane.
Until you reach X, you work because you have to. To some degree you are motivated by fear. You probably take jobs you wouldn’t take if you were born in a billionaire family.
After you reach X, the fear motive is gone. But you can still do things for other reasons, for example because they are fun, or because you feel competitive. Some of those things may bring you more money.
OK, so maybe you shouldn’t stop, but if you’re not primarily motivated by making money any more, the likelihood that whatever you do will incidentally bring you noticeably large amounts of money Y is not very high.
There are different kinds of “motivation by money”. Some people are in a situation where if they don’t make enough money, their children will starve. Some people already have all they need, and more money is just some kind of “score” to measure how successful they are in their projects; to compete against other people in similar situation.
Some activities bring average money reliably. Some activities have a small chance of huge success, and a big chance of nothing. Not having to make money frees your hands to do the latter kind of activities, without putting your family in danger of starvation. For example, you can spend all your day writing a book, with the goal of becoming famous. If you fail, no problem. If you succeed, you can make a lot of money.
Yes, the probability of such outcome is small, because it is P(doing something like this if you already have enough money) × P(succeeding).
Yes, the probability of such outcome is small, because it is P(doing something like this if you already have enough money) × P(succeeding).
So, we agree that the probability is small.
And, actually, it’s P(doing something like this if you already have enough money) × P(succeeding) × P(what you like to do has high-variance outcomes and could generate a lot of money). Maybe what you really like is just long walks on the beach :-)
To me, it’s more about financial independence than early retirement. Financial independence gives you the options to do a lot of different things; “retire” and volunteer for an effective charity, continue working and donate 100% of your income to charity, continue working and balloon your nest egg to establish a trust to be donated to an effective charity upon your death, etc. The knowledge that you are 100% financially independent gives tremendous security that (as well as it’s other benefits, such as decreasing stress) allows someone to comfortably and without consideration give large amounts of money.
In the context I treat them as synonyms.
Ahem. That is an excellent way to stop being financially independent in short order.
I believe that “giving large amounts of money without consideration” in this context does not include the part that you need for the financial independence.
In other words, if you need X money to be financially independent, and you have X+Y, you are free to spend up to Y in whatever way you wish, including e.g. donating the whole Y to a charity or investing them in a new project, even if for an average person spending Y this way would seem insane.
If you’re making money with the goal of being financially independent you’re done when you have X so you can and should stop. Where does Y come from?
I don’t agree with the “should stop” part.
Until you reach X, you work because you have to. To some degree you are motivated by fear. You probably take jobs you wouldn’t take if you were born in a billionaire family.
After you reach X, the fear motive is gone. But you can still do things for other reasons, for example because they are fun, or because you feel competitive. Some of those things may bring you more money.
OK, so maybe you shouldn’t stop, but if you’re not primarily motivated by making money any more, the likelihood that whatever you do will incidentally bring you noticeably large amounts of money Y is not very high.
There are different kinds of “motivation by money”. Some people are in a situation where if they don’t make enough money, their children will starve. Some people already have all they need, and more money is just some kind of “score” to measure how successful they are in their projects; to compete against other people in similar situation.
Some activities bring average money reliably. Some activities have a small chance of huge success, and a big chance of nothing. Not having to make money frees your hands to do the latter kind of activities, without putting your family in danger of starvation. For example, you can spend all your day writing a book, with the goal of becoming famous. If you fail, no problem. If you succeed, you can make a lot of money.
Yes, the probability of such outcome is small, because it is P(doing something like this if you already have enough money) × P(succeeding).
So, we agree that the probability is small.
And, actually, it’s P(doing something like this if you already have enough money) × P(succeeding) × P(what you like to do has high-variance outcomes and could generate a lot of money). Maybe what you really like is just long walks on the beach :-)
You can also be motivated by “Earning to Give”, or something to the same effect. That was largely the point of my thread.