Are you confusing your good fortune due to your own skill rather than due to luck? I’m here to argue that above average wealth is mostly due to luck. Therefore, stop deluding yourself into thinking you’re so great!
As President Obama said in a July 13, 2012 campaign election speech, “If you’ve got a business, you didn’t build that.“
When I first heard Obama say this sentence, I was taken aback. From 2009-2012, I had been working on Financial Samurai for three years from about 5 am – 7 am and from 10 pm – 12 pm after working 12-hour days in finance.
If I wasn’t building Financial Samurai, who was?!
I had also recently left my finance job because I wanted to be free. All I really desired to do was write while traveling around the world, so that’s what I did.
Wisdom Grows With Age
As I’ve gotten older, I’ve come to understand more of what President Obama was talking about. Just like how it takes a village to raise a child, it takes a lot of help along the way to achieve your goals. Obama was referring to not building the roads and bridges that helped your business prosper along the way.
I firmly believe that it was mostly luck (~70%) that helped me achieve a basic level of financial independence at age 34.
Of course, effort is also required to get ahead, but it’s not the main reason. There are plenty of people who work much harder than you or I, yet will not achieve what we have.
The more we can recognize our luck, the more prosperous we’ll become. The main reason why is because we will continue to work as if our luck will eventually run out.
I encourage you to list as many fortuitous events that have happened in your life. This way, you’ll appreciate more of what you have and fight harder to achieve your goals and freely help others.
Outsized Wealth Is Mostly Due To Luck
When you accumulate a net worth of one million dollars, three million dollars, five million dollars or ten million dollars, know this level of wealth is mostly due to luck. It has to be given the median net worth is about $150,000 and the average net worth is about $750,000 today.
And when I say mostly luck, I mean greater than 50%. The range can be anywhere between 51% – 99% for how much luck was the reason for your outsized wealth. The exact percentage is your choice.
But if you have a net worth equal to 5X the median or you have an above average net worth for your age, consider yourself lucky. Beating the average so thoroughly is not easy.
In fact, roughly half of the world’s richest one percent of people live in the U.S according to Branko Milanovic, a World Bank economist. Therefore, just being able to work in America is a huge lucky break.
Back in 2013, all you’d need to do was earn $34,000 a year per person to be considered a top 1% global income earner. Inflation-adjusted, the $34,000 hurdle is roughly $45,000 today. Back in 2013, the global median income was just $1,225 a year, or $1,600 a year in today’s dollars.
A Review Of Some Lucky Breaks
My first lucky break was being born into a stable, dual-parent household. They worked in the U.S. Foreign Service which enabled me to live in five countries before coming to America at age 14. They also both speak Mandarin.
With this type of background, chances are greater you will speak a couple languages, interact with people from more cultures, adopt a zest for travel, be more understanding towards people of different backgrounds, and have a broader world view.
Since middle school, my parents have always tried to make me appreciate the value of money. My first experience with money came when my father scolded me for ordering a lemonade at a restaurant.
“Son, why spend $2 on a lemonade when you can order water with a lemon slice for free?” he said.
This moment instilled in me a level of frugality that has stuck ever since.
In high school, his lesson of frugality paid off when I told him I’d only be attending a public in-state university to save on tuition. He encouraged me to apply wherever I thought looked interesting, but I insisted on saving us money.
In the end, his $2 lemonade lesson saved my parents, and ultimately me, over $100,000 in private university tuition in the late 90s. I always told them I’d pay them back once I got a full-time job and I did.
I’m grateful for my parent’s guidance. But things were not always easy. Here is a review of some lucky breaks that helped me build above-average wealth.
1) 70% Luck. Got Into A Respectable College.
After getting suspended in high school for fighting and getting caught shoplifting with friends and doing other illegal things, I thought there was no way any college would take a chance on this juvenile delinquent. But I paid for my transgressions and The College of William & Mary gave me a chance.
I kept the faith that if I did well in college, an employer would ultimately give me a chance as well. Luckily, I got accepted to college before my major transgression the summer after senior year.
Can you imagine spending four years trying to get good grades in college, knowing there was a high probability everything was for naught because of the mistakes you made in high school? For four years I had to keep the faith.
As a parent now, I totally see why kids having too much free time can lead to trouble. Few kids will become professional athletes, but at least playing sports may help kids stay out of trouble!
2) 80% Luck. Landing A Job In NYC.
I got through 55 interviews over 7 rounds to land my first job in investment banking at a bulge bracket firm. Someone like me from a non-target state university had no business getting this job.
But I got on a 6 am bus to go to a career fair one Saturday and one thing led to another. Because nobody else got on the bus, I had more opportunities to interview and get a job.
Although my base salary was only $40,000 in Manhattan, my experience working in banking taught me how to invest, network, sell, and build relationships early on. Further, I don’t know if I would have landed a job in the International Equities department if I didn’t have an international upbringing.
I’m grateful for my recruiter, Kim Purkiss for giving me a chance. She was a strong black woman who didn’t give up on me even though I kept getting bounced around various desks because nobody wanted me.
3) 90% Luck. Making Money During The Dot Com Boom.
In 2000, I invested in VCSY, a Chinese internet stock that climbed 50X in six months. I sat on the Asian equities desk and thought internet in China would be huge one day.
I invested $3,000 in VCSY out of the $4,000 total I had. Then I told my colleagues about the idea who then told their colleagues at different firms.
Because I sat on the Asian equities desk at Goldman Sachs, other people found the idea to be credible. In truth, I was just taking a punt on this name I knew little about.
The $3,000 turned into a high of $170,000. I sold at $155,000 before it completely collapsed to $0 a year later. I’ve been trying to hunt for new multi-bagger fortunes since, but with no luck.
4) 100% Luck. A Fortuitous Phone Call.
In 2001, a headhunter called my VP to see if she wanted to work for a competitor covering West Coast clients. She said no and handed me the phone because I covered West Coast clients out of NYC.
One thing led to another, and I got a new job with a raise and a promotion. Over the next two years, 90% of my old analyst class got let go. I’m grateful to my VP for thinking of me.
This one phone call is something I’m most thankful for. If it wasn’t for my VP and this phone call, I would have lost my job during the many rounds of layoffs post the Dotcom bust. I knew I wasn’t being offered a 3rd year analyst position at Goldman Sachs.
5) 50% Luck, 50% Habit. Frugal Living.
After arriving in San Francisco for my new job, I decided to live like a poor student for a year and a half because I didn’t know anybody and didn’t know where to live. I could have ended up doing “equities in Dallas,” as Michael Lewis wrote in Liar’s Poker.
In 2003, at the age of 26, I put down $120,000 and bought a 2/2 condo in Pacific Heights for $580,500. I figured, best to turn funny money (VCSY profits) into a real asset. Coming to San Francisco before web 2.0 was a lucky break.
Today, the condo is a paid off rental worth ~$1,280,000. It used to be a strong-performing asset, that was once worth up to ~$1,450,000. But condos prices have underperformed in SF since the pandemic. That said, the condo still generates a steady $50,000 in gross rental income a year.
6) 60% Luck, 40% Guts. Went All-In On Real Estate And Didn’t Get Laid Off.
At age 28 in 2005, I bought a single-family home I didn’t need on the north side of San Francisco for $1.5 million. The $300,000 downpayment took all the cash I had. I needed a $50,000 bridge loan because it was December, and bonuses weren’t paid until February the next year.
In retrospect, I was overly aggressive with my purchase. Things were good for a couple of years until the financial crisis happened. I was sweating bullets with my ~$1,100,000 mortgage. If I got laid off and couldn’t find another job within three months, it would have been game over for my finances.
So I rented out a room for several years, held on, and survived. I’m grateful to my grandfather for the bridge loan, the government for helping save the economy, and my company for not firing me during the downturn.
7) 100% Luck. Tried To Sell Property At The Bottom And Didn’t.
In 2012, I tried to sell the house I bought for $1.5 million in 2005 for $1.7 million. I got no takers. It was embarrassing, so after 29 days, I took it off the market. Actually, my agent had told me a couple of people had been willing to offer $1.5 million, but I declined.
I wanted to sell because I had just left my job. The worst of the financial crisis had just passed. I wanted to minimize expenses and reduce risk. My wife and I didn’t need a four-bedroom house because we didn’t have kids yet.
I ended up selling the house for a million more five years later after my PITA tenants gave their notice due to luck. I only had one offer too, but it was $240,000 more than I would have taken.
The proceeds were reinvested in the stock market, bond market, and in real estate crowdfunding, which have showed positive returns. I’m grateful to my realtor for not pushing me to sell.
Today, the house I sold is probably worth $500,000 more (~25%). However, my reinvested proceeds have more or less kept up. I’m most thankful for the time and stressed saved not having to manage the property with rowdy tenants.
8) 70% Luck, 30% Ingenuity. Negotiating A Severance.
One October 2011 afternoon while sipping a Mythos beer in Santorini, Greece, I came up with the idea to engineer my layoff. Financial Samurai was growing and all I wanted to do was write online instead of be in an office for 12 hours a day.
One thing led to another and I negotiated a severance in the spring of 2012 worth five years worth of living expenses. At the time, it felt like I had won the lottery!
I wasn’t too proud to negotiate. The majority of people I know think their employer would never offer them a severance. So they give two-weeks notice instead and quit. But quitting your job is more selfish than negotiating a severance.
I’m grateful to my manager and the head of HR for agreeing to make the separation work. I turned my severance negotiation experience into a ebook that has helped thousands negotiate millions in severance payments since 2012. The ebook has also generated over $500,000 in net profits so far.
9) 60% Luck, 40% Consistency. Growth of Financial Samurai.
Since starting Financial Samurai in 2009, the growth trend has been positive. I’ve had some flat years or down years do to some Google algorithm changes. However, for the most part, the journey has been good. A website can only go so far with only one main writer.
I’m grateful for the search engine traffic because I never expected it. I’ve got a small social media presence, an intimate free newsletter of 55,000 people, and a podcast and that’s it. I’m not a part of any mastermind groups and I don’t have a YouTube channel.
All I’ve done is continue to write and connect with others. I’m very grateful to all you readers who have commented and shared my work. I’m also grateful to Google, even though it can be quite fickle.
There’s also something lucky and interesting in my space. Most personal finance writers don’t have finance backgrounds. As a result, it’s been relatively easy to differentiate this site by just being me and writing from experience.
10) 50% Good Luck, 50% Bad Luck. Left A Fortune Behind.
On the one hand, leaving work at the bottom of the bear market was lucky because things didn’t get worst. Having an economic tailwind boost the value of your investments makes it much easier to stay retired.
On the other hand, leaving work right before things got really good made me miss out on millions of dollars in forgone compensation.
As Dan commented, The Best Asset Class Performers From 2001-2020, “My opportunity cost of cashing out of the stock market in 2019 was not as severe as yours dropping out of the labor force in 2012! Salaries and wages have gone up 30% since you decided to quit, and you’re paying for all those health insurance premiums out of pocket. Hope you can get it together.“
Ouch!
In retrospect, if I could retire all over again, I would have worked for another three years. If I did, maybe I wouldn’t have felt as much anxiety and stress the first year. Hence, my decision to retire in 2012 was a combination of immaturity, impatience, and bad luck.
11a) 60% Luck, 40% Purposeful Hunting. Found a neighborhood before it got hot.
In 2014, I discovered Golden Gate Heights three years before Redfin named Golden Gate Heights a top 10 hottest neighborhood to buy. I was sick of living in the north end of the city for the past 12 years and wanted a change of pace.
New parks, new restaurants, new scenery, and cheaper prices sounded like a great idea! Since fake retiring in 2012, I had longed to move back to Oahu and find a home with an ocean view. When I realized I could just move three miles west in San Francisco to buy an ocean view home, I was sold!
Since 2014, prices have risen handsomely. I wish I had bought another house or two in the neighborhood back then. I’m grateful to the listing agent who agreed on my offer with a handshake, and rejected a $30,000 higher offer.
11b) 100% luck. Heartland real estate boost due to pandemic.
Since the pandemic began, demand for single-family homes on the less dense west side of San Francisco has grown. Almost every month, I’ve been chronicling homes that have sold and I’m astounded by the amount of demand.
But the pandemic boosted heartland real estate investments the most in 2021. This was complete luck. Without the pandemic, heartland real estate prices would have increased closer to 10% in 2021, not 30%+.
Below are the returns percentages of the Fundrise heartland eREIT. 41.7% in 2021 is incredible. But maybe even more impressive is a 10.4% YTD return for 2022 given a surge in mortgage rates. I expect prices to moderate over the next six months and then strengthen after mortgage rates decline again.
12) 60% Luck, 40% Stubbornness. Not Selling Financial Samurai.
In 2018, I was very tempted by multiple offers to sell Financial Samurai for a tidy sum. But I turned them all down after running the numbers and speaking to one person who seriously regretted selling his site for millions. I stubbornly wanted to achieve my goal of publishing 3X a week for 10 years in a row by July 2019.
Valuations for private websites continued to increase until 2022. I did not anticipate such a strong return in the S&P 500 in 2019, 2020, and 2021 after a dismal 2018.
I would have regretted selling my baby in 2018 because Financial Samurai is still fun to run. It gives me something mentally stimulating to do after I spend time with my kids. Four years later, I’ve already earned back 100% of the potential purchase price. Now, everything feels like gravy with mashed potatoes and key lime pie.
The irony is if I was focused mainly on trying to make lots of money online, I probably would have sold and missed out on further gains. There are a hoard of online marketers I compete with who care more about profits than the joy of writing.
Further, if I had sold Financial Samurai, I also wouldn’t have had the opportunity to write a traditionally published book. Publishing a book is a cool bucket list! As an author, I finally have some status to help my kids.
If you have a cash flowing online business that can’t be shut down due to a pandemic, you’ve benefitted. Here’s my step-by-step instruction on how to start your own website.
13) 100% Luck. Getting To Work In America.
I was born Asian and live in America. Living in America, alone, is like winning the lottery. But living in America plus being born Asian is like a dream.
Because I’m Asian, some people in America just assume I’m intelligent, even though I had a mediocre SAT score and didn’t go to a fancy private university. It’s funny because when I lived in Asia, people just treated me normally because I was part of the majority.
Even private universities like Harvard raise the required standardized test scores for Asians to get in. Although Harvard penalizes Asians for our personalities to throttle admissions, I see it as an honor Harvard needs to do such a thing.
Asians are seldom in race discussions because we don’t fit a certain narrative. Therefore, one benefit may be that Asians are more free to just get on with our businesses. Being given the opportunity to work hard with less societal drag is a privilege.
14) 100% Luck. Don’t need to sleep too long.
Since 1999, I’ve been able to operate on 5-6 hours of sleep a night plus the frequent 30-minute nap after lunch. I don’t need to drink coffee or energy drinks to stay awake either. With more energy naturally comes more productivity. In fact, I’ve been up since 4:30 am editing this post before the kids get up.
I’m also a super optimist, probably due to having overcome all the troubles I experienced in high school. When someone says something cruel or says I can’t do something, I get fired up to work harder. I love rejection! It’s like spinach to Popeye.
Besides having asthma as a child, I don’t have any disabilities that afflict roughly 15% of the world’s population or one billion people. Of the one billion people, roughly 200 million people experience considerable difficulties in functioning.
We must not take our ability to walk, talk, see, hear, speak, and understand for granted. At the same time, we should help our brothers and sisters who do have difficulties. This is the minority we need to fight hardest for.
Finally, I don’t have a strong desire to be loved by strangers. As a result, I’m more easily able to speak my mind and break free from groupthink.
15) 85% Luck. Met My Wife In College.
Not only did The College of William & Mary take a chance on me, I also found my future wife in college during senior year.
Finding a life partner early on is either the best type of luck or manifest destiny. Life has been so much more fun having someone to share it with. Sure, there have been plenty of ups and downs. But at least the trend is positive!
Building wealth with someone is also much easier. You can be each other’s champions before each job interview. You can share living expenses to save more money. As a couple, you can also take more risks, like one person retiring first or starting a business while the other holds down a steady paycheck until things work out.
We’ve been together for over 23 years and I hope we have 50 more. Marrying your equal is better than marrying rich.
Don’t Take Your Luck For Granted
As you can see from the bullet points, most of the things that helped get me out of my parent’s basement were due to luck.
I also made many terrible investment mistakes, such as buying a vacation property in 2007. This was a combination of stupidity, ignorance, and bad luck. Like a baby baboon, I thought my income and investments would keep growing to the moon forever.
15 years later, however, we still own the property. It is paid off and it’s been nice to take the kiddos up there during the summers. Maybe they’ll finally see their first snow this winter! Just don’t remind me how much money I could have saved by just renting instead.
I’ve also talked about my perpetual rejections, which is the main reason why I continue to save and invest today. Bad things like pandemics, bear markets, injuries, sicknesses, and deaths are inevitable. There is a comfort to saving and investing for dark days ahead.
Thankfully, we can get insurance to hedge against the worst. I felt tremendous relief when I finally got a new affordable 20-year term life insurance policy earlier this year at age 44. In 2013, I messed up by only getting a 10-year term, which resets at $723/month in January 2023!
Prepare For Bad Luck, But Appreciate Good Luck
Sooner or later, we all will get unlucky. And when we do, we must accept bad luck as a part of life. The return of the bear market in 2022 is a perfect example of why we need to stay humble and diversified.
During bad times, we should also remind ourselves about all the lucky breaks we’ve experienced so far. Go through the gratitude exercise, like I have done with this post. I’m sure you’ll feel more appreciative if you do.
I’d love to hear about your lucky breaks and how much you think luck plays a part in your success. What are some of the things you’re doing to hedge against bad luck? How are you making the most of your good luck?
Related posts about wealth and luck:
When Do You Finally Feel Rich? It’s Not Always About The Money
Be Unapologetically Fierce About Pursuing You Dreams
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Thanks for the reminder about gratitude. I feel like equating one’s success to luck is a little like attributing it to God (a line I hear more often in my circles), when in reality, behind almost every lucky thing that happens to us there is a person who chose to enable that good fortune. I try to remind myself of this often so that I remember to thank those people when I can.
Thoughtful article, Sam. I find it interesting that in the West we attribute our success solely to our own doing, while in the East it is recognized that it is your community that led to your success. I believe the true answer is a mixture of both, but you wouldn’t be who you are and able to create what you do if it wasn’t for those around you that helped shape you into who you are today. It is also why I believe that intellectual property rights are not as prevalent in the East as the West, being that those around you don’t recognize creations as yours, but as the communities. Nevertheless, there is something to be said about hardworking and determination.
Hello, I am not sure how I’ve been receiving your emails/articles but I have to say I’ve been enjoying for some time now. After reading this article I’ve realized that I would like to share a bit and hopefully get a response.
I will have to say I’ve haven’t been the luckiest as I was born into a poverty city, a single parent which passed away when I was 12yrs of age. That left me scrambling to figure things out myself. After completing high school in 2007. I was highly interested in Real Estate and stocks but of course around that time the economy was in a horrible shape.
So I was forced into college which I’ve completed a B.S from Michigan State University. I purchased 2 real estate properties and I trade stocks. I am striving to earn a decent income of maybe 1 million a year but if I fall short then that’s cool.
What are your thoughts or tips? I need to do more studying on taxes, any tips? Is it true that you are supposed to used the banks to leverage your dollars vs saving at the banks?
I hope you or someone can respond.
Thanks
My thoughts are that getting to $1 million a year takes time and a lot of luck. Here is an article on who makes over $1 million a year. But if you are in the right profession and give it a long enough time, it may eventually happen. What are your goals for the money though?
Hello thanks for taking the time out to respond. My plan is to build residual income through real estate (if I manage 15 units that at the lowest will generate 100k per year), I will invest in the stock market, Fundrise and start a business.
Not buying it! Luck has a lot to do with it, but the decisions you make in life has more to do with it than luck.
Luck= high probability plays repeated.
For example, you wish to start a technology company and are from South Africa like Musk. A simple internet search shows that China disappeared Jack Ma for months and Europe slammed Google with fines. Meanwhile in the USA, twitter banned a sitting President. It’s rather obvious where a technology company will be most welcome and therefore move to the USA.
Thank you for your website and newsletter! Your advice to save “even though you like your job because one day you may not” was spot on and I feel lucky to have read it all those years ago. Wishing you and your family a happy and restful Thanksgiving!
Opportunity comes to those who take it
Hey Sam,
How did you run Financial Samurai from 5 – 7am and 10-12pm after working a day job for 12 hours? Were you ever worried about deteriorating eyesight as a result of the constant screen watching?
Although I work on my website after business hours, that’s the number one concern I have with watching a computer screen all day for 18+ hours. It scares me to death.
Didn’t think about it. I wasn’t looking at a computer all day for work. I was out and about a lot and traveling.
Die someone you know lose their vision or have their vision deteriorate drastically due to too much screen time? What were some of your lucky breaks?
I did go a little off topic there, I read this post a lot during the years so I wanted to ask a unique question.
A lot actually. But the biggest lucky break was my parents deciding to take a promotion to move to the United States even when they had a young family and they didn’t know a lick of English.
I didn’t control that decision, I had no say in it, yet that decision single handedly set me up for success, for life.
Oh also, I do know someone who had their vision deteriorate drastically due to too much screen time. Me :(
Like most people Sam you had some luck but beyond that you worked incredibly hard and that was key to your success.
I am so thankful and lucky to have a great family and good health. That’s the most important thing for me but I’ve also done ok in my career and am very thankful of all my luck.
Happy Thanksgiving to everyone!
What a wonderful post and a Happy Thanksgiving to you and your family Sam.
Reading the comments, it’s amazing to me how many people have a self-worth so tied to their net worth that the mere insinuation that luck played any part in their success is enough to make them angry.
Perfectly said!
If I took the time my list would be as long as yours, Sam. When thinking about an orphan’s life in a country on a different continent from where I was born, and I think about all of the opportunities here in the US along with my family upbringing, I was ahead right out of the gate.
It’s just a great reason to setup part of our wealth to give to those in need and, in my wife and my case, leave a whole bunch to charity when we die.
Love your humility, Sam! I think that’s one of the best things that makes you so likeable… (that and being a Giants fan! )
I agree… being smart and making the list of your opportunities is important, but anybody that doesn’t recognize a lot of lucky breaks went into them getting where they are is kidding themselves. I like to think my firm base in God helps me realize when things go my way when they probably shouldn’t have. Looking back on a long and happy career, I never would have chosen the path that I ended up taking. A lot of times, things don’t become clear until you look back and think “Wow, if I wouldn’t have done this, then that never would have happened…”
Thanks for keeping us grounded even though a lot of your base is doing very well thanks to your advice!
Greg, you’re too kind. Go Giants! Can’t believe we lost to the Dodgers. Ugh. I saw Larry Baer the other day btw. Seems like he’s doing OK after the incident.
Best to you Greg!
I had to overcome a lot of bad luck through hard work to earn my dollars. But thanks (sarcasm) for overtly telling me I got to where I am via chance.
It was chance. You transcended luck, but luckily for you, you were the type of person who could do that. Too many people quit after an early failure.
Ignoring luck as an element of success leads to survivorship bias, as the non-success stories either never get told or are used to condemn the whole system (i.e. the sad quasi-sepia tones used in all the photos for the hardship stories the NYT loves to run).
I agree with Liam. It’s great that you did the hard work, and that’s commendable in and of itself. But consider this: as an accident of birth, you possess the necessary intellect to be able to get where you are through hard work. Imagine if you had been born a doofus? I think we all know plenty of people who couldn’t get there, even with hard work. Or imagine you were born with a chronic health condition that would make it literally impossible for you to put in the hard work.
It’s good to work hard, and to be proud of yourself for the work you put in. But it’s simply not accurate to say that no portion of your success is due to luck.
I love this conversation regarding luck, and I like that you bring it up so often. It’s forced me to think about it deeply as a factor in whatever success I’ve had. I’m still not decided on it, but I do think that attributing your success to your intelligence & hard work alone is a fatal mistake.
In all of your case examples (except for where you’re born and who your parents are), you had consciously put yourself in a position to benefit from whatever opportunity came your way. It goes back to that old tripe: Luck is what happens at the intersection of preparation (consciousness) and opportunity (ether). The archetypal example of luck is like someone finding the winning lotto ticket in the gutter. Even in that example, they had to decide to pay attention to that piece of paper and explore its potential rather than ignore it.
I hate that Obama quote, by the way. He may have meant to say “If you’ve got a business… you didn’t build that ALONE.” or “…you didn’t build that IN A VACUUM.” But he didn’t.
Thanks to the good LOrd, my parents and my husband, but will lose it all after the dollar collapses which Biden and the democrats are working to accomplish,
Thanks Sam, I love this post as it is filled with gratitude, self-awareness and reflection. Of course you worked hard, applied insight and knowledge to work, and leveraged your networks to catalyze the events. I’m sure many FS readers are incredibly talented, motivated and self-driven to already put much of their own mind and sweat to work in their favor. But IMO, acknowledging serendipity and being aware of other people’s generosity in our good fortunes also make one grateful, humble and joyous of the world around us. And to then pay it forward for someone else – ah, it is what makes life fun and fulfilling.
Thanks for reading and commenting. Recognize our luck is so important, especially during a global pandemic!
And who would have though everything would come roaring back so strongly and quickly.
I think you’ll enjoy this following related post: https://www.financialsamurai.com/if-you-want-to-naturally-be-nicer-get-richer/
Sam
Great Post
My apologies up front, no time for a lengthy and worthy post, short version follows.
I personally give credit to God’s grace for all unexplainable fortunate events in my life!
My wife!
My Success!
My Financial Security!
My failures are due to my own poor decisions at the time they were made!
Do not get me wrong I believe in all the same information others have posted but using the word luck in the place of God’s grace is not compatible with my understanding of being faithfully devoted to him as our forefathers were when they gave birth to the greatest nation the world will ever know!
Best Regards
Chris
Amen, Thy Will
be Done.
Sam,
I lucked into finding your site many years ago and I continue to cherish it.
Perhaps the luckiest gift is to be an agent of luck and watch others flourish too.
Thank you for all the luck you give to us as readers!
Sam,
This is your second post about the so controversial, most of the time mocked or rejected concept – luck. At least, there is one more published in April 2017. And they are by my favourites. Because they are simple but genuinely candid, and somehow innocent.
I admire/love your stubbornness not to accept appraisals for your writing, work experience or achievements – which you could – and prefer to stay and show humble. This is rare!
You know that our biggest enemy and the source of all evil lies within us – the ego, which set free the greediness and the pride, as the belief you are better than others.
All the best,
Marius
I had an extremely wealthy uncle who had made good starting from essentially nothing when he graduated high school. He managed to get into a military academy and, afterwards, found it wasn’t for him, and got out after his initial four year service commitment ended.
When we were talking, he told me he didn’t know anyone that had made the big money (not his words) without at least one or two pieces of outstanding luck. He wasn’t talking about building it slowly, through saving and investing; he was talking about corporate executive kind of lucky.
He also mentioned that part of the problem, as he saw it, was that universities were not teaching their students how to be successful. They were teaching them how to be what employers are looking for.
It resonated with me because I recalled, just a few years earlier, a VP at a telecom that I worked for, who spoke to me about his meetings with the faculty at a nearby university and how it had taken entirely too much effort, in his opinion, to make them understand that the students needed to be taught things that would make them more employable (by the telecom).
It seems a subtle distinction, but it’s huge.
Getting out of this trap requires quite a bit of luck, either in getting the big breaks despite this, or in developing some rare insights on your own, or even just having an uncle who has already figured it out and tells you, right when you are ready to listen, and early enough for it to do some good.
Destiny is in love with effort.
Love that saying! Thanks!
This is a very interesting article. Thanks for sharing this story. It’s very informative. I don’t think any of this was luck. There was a reason why you needed to be at all of these places. A person can generally be “lucky” with little things in life, but when it comes to big life-changing events or the decisions you make – luck has nothing to do with that.
Sam: I totally agree it’s 100% pure dumb luck: I was lucky to join an Internet company pre-IPO in 2004 and now my net worth is ~$10M. Had I failed the interview in 2004 like the two WhatsApp founders, I would most likely join them and later got acquired by FB and I’d probably worth even more. But that’s life :)
If you live long enough (I’m 52 now) and seen enough, you’d realize meritocracy is the most over-rated quality in life, and entitlement is pure evil. I’ve seen brilliant coworkers who are 10x smarter, but delayed their departure to join the next hot startups because the company tried to retain them, and 10 years later found themselves out of work and 10x poorer because their retention stocks became worthless.
If you really believe you deserve your success (and failures), you’ll probably not make it through middle age.
Yes… but blowing a windfall is the most common thing in the world.
That’s why 95% of people who win the lottery go broke.
Almost 8/10 major pro athletes are broke within 6 years of retiring.
Getting lucky on a good IPO is somewhat random…
But having financial literacy and knowing how to grow wealth and make it productive takes discipline, skill, and intelligence.
It’s okay that you’re doing well and other people aren’t… you didn’t take it from them.
Sam, very thought provoking as always. It seems to me like the biggest piece of luck is in being born into the family you have described. Your thoughts on helping others and familial duty and honor are well articulated. Thank you for sharing your thoughts and experiences.
Anyone who is successful will tend to say things like hard work, networking, focus, ability to say no, etc. make one successful. I cant remember anyone every denying luck being part of it. One could argue that the other drivers bring luck but there is always an element of luck.
What is your definition of luck?
Oxford’s dictionary defines it as:
“success or failure apparently brought by chance rather than through one’s own actions.” [note that it is both success and failure that carries the definition]
Some of the examples you set forth can be attributed at least in part to ‘fortuitous timing’, the old right place at the right time, but to define such a large percentage of one’s success OR failure being attributable to the above definition of ‘luck’, I believe sells one short. You still made decisions to put yourself at that place at that time AND make the correct decisions that result in your ‘good luck’.
Despite one’s humility attributing success to factors outside their own making, to me, what is more important is what actions you take AFTER said incidence of luck. To me, this is as important as how one handles adversity. The true measure of someone is how they handle BOTH- the good and bad in their lives.
I’ve been flat broke twice in my adult life (measured by having a less than zero net worth and no assets other than a very used car) and no job. The cause both times was due to decisions/risks I made not some metaphysical unknown force that decided to take a karmic dump on my head. After a short pity party, I started over but did not lay blame or causation anywhere but on my own shoulders. While financial and emotionally a bit painful, it also made me tougher and more appreciative of what I still had – my family and my health. Both of which I strive to never forget or take for granted.
Now, having achieved some modicum of success (financially speaking) for a third time, for me it is a combination of many factors – not the least of which is knowing what NOT to do – learning from my earlier mistakes. Yes, a good portion of our net worth is due to gains in the overall US stock market, but we (my wife and I) decided to live on less than 25% of our income and invest the remainder over the past 20+ years, buying used cars that we kept for 15+ years, inexpensive clothes and other frugal decisions. Was this good luck or good decision making – I lean towards the latter as even during the recession in 2008, we made decisions that allowed us to persevere and continue to where we are today.
I appreciate your point and humility, but I think that attributing such a large percentage of one’s success OR failure to ‘luck’, does no one any favors.
What percentage should luck be to produce favors the others? Thanks
I don’t believe in something as arbitrary as luck (by the Oxford definition). Those factors over which I have no control (being born a white American male) I do not count as ‘lucky’, but neither do I discount the advantages they have provided me in some aspects of life. There are millions of white American males sitting in prison and dead because of decisions they made, so that advantage alone is no guarantee. Growing up as one of 4 children in a single parent home in a low/mid income household without a male role model, would by some measures put me at a slight disadvantage, or it could simply make me work harder.
Just as YOU chose to take a different path from your rebellious teen period, each and every day we all make dozens (or more) decisions that take us down potentially different paths. In the end, those factors we do control can far outweigh and overcome any innate advantages or disadvantages. No, not 100% of the time, but I believe a significant majority. Yes, sometimes, bad stuff happens to good people – ‘luck’ or simple consequence? Does it matter? Not to me – the only thing that truly matters is how we handle that adversity and what steps we take to overcome it.
If the majority thought that success was mostly luck, would your website (and others like it) be successful? What would happen to all the motivational speakers ;).
Given time, the human spirit is unmatched in what it can achieve and endure.
You are absolutely correct. Luck is a stupid concept because it is absolutely meaningless. You could stay at home all day and claim to be unlucky. I wont expound on the multitude of ways that effort = success because I believe you already did a fine job.
The harder you work, the luckier you become. None of this is luck.You invested in a Chinese Internet stock that did well, I did not. Therefore you’re lucky? What does that make me; unlucky? You invested in overpriced SF property that continued to go up and become more overpriced. I did not. That makes you lucky and me unlucky? You negotiated a nice severance package to pursue your dream career. People negotiate severance packages every day. When I tried to negotiate a severance package I was told the job is no longer being offered. Evidently, I was not savvy at negotiating severance packages. I guess that makes me unlucky. All of this gives me the perfect right to vote for egalitarian politicians who want to tax the heck out of you because that’s exactly how they see the world of free market capitalism…pure luck and therefore you don’t deserve it. As for Obama, he was an ignorant activist who never, ever experienced hard work in the private sector where wealth is produced not by luck but by competent people who know a thing or two about measuring risk and perseverance. Am I lucky because after 35 years of working and saving, my 401k is looking good? Who told me to put money and sacrifice spending on cars and vacations into the 401k? Luck? Try smarts. Folks, do not replace risk taking with luck. Luck has nothing to do with it, other than I was born in the US compared to a 3rd world country. I would have ventured to the US any way. Why? Because I’m ambitious and do not believe in luck. I’m grateful not because I’m lucky but because I’m loved by others. That’s it. End of story.
plus one
Dude-why do you think it’s a zero sum game? His luck does not mean or imply you’re unlucky. They are unrelated. Sure- he made some decision that played out well and some that didn’t. What percentage is just luck or timing or risk taking or clever decisions —like the job phone call his VP handed to FS. You can’t deny the facts. What percentages go with what facet, I have no idea. No one does. That’s just life
Peter, did you not read the blog thoroughly? Were you born or migrated to a country with opportunity? A country with no current war or conflict? Did you build the roads, electricity grid, water system, roads, etc yourself?
Did you write the laws and regulations for a capitalistic society to exist? Do you have clean water to drink every day where you don’t have to walk for 4 hours to fetch potable water? Did you build a health system where you can access doctors and medicine easily?
I assume you have eyes, fingers, and a working brain in order to read and type your response. Did you create those yourself? If you say no to any of my questions, then you are indeed lucky. Just like myself.
Well if you call it luck you are the hardest working lucky person there is. If you chose not to take the risk sit on your couch and play video games would you be lucky? NO your hard work paid off. My wives career has had a lot of “luck” in it, meaning opportunities opened up just when we needed them. BUT NONE of those opportunities would have been possible if she did not work her ass off and out perform her peers, being number one in your region give you opportunities that others don’t get and that is not luck.
I don’t know about the reader you lost but I bet I agree with her. You could have stood in the middle of the street and say LUCK HIT ME and you would still be in the middle of the street with the 100 thousand other homes people in CA or you can do what you did and take the chance work your ass of risk everything and reap the rewards.
I believe it was the pro golfer, Lee Trevino, who said after a hole in one, “How come it seems like the more I practice, the luckier I get!”
I’ve been reading your blog for years, but lately I’ve just been reading the email digest rather than clicking through. I clicked through to this one specifically because you said someone disagreed enough to stop reading your blog.
Then, as I’m reading, I see that your parents were foreign service officers! I took and passed the exam last year, but didn’t make it all the way to the oral exam. Last time I didn’t have any children. Now I have a two month old daughter and was wondering if she’d resent me for making her move around so much if I got my dream job. But it sounds like, at least as an adult, you count that experience into your success.
I’m going to take the exam again in February. Hopefully someday she’ll count that experience as a lucky break to her success, and I can look back and count this post as one of mine.
What stopped you from taking the oral exam? The 13 years I’ve spent living abroad was some of the most magnificent, eye-opening, and enriching years of my life. Probably the most!
The Qualifications Evaluation Panel. They look at your resume, your personal narratives, and your timed essay from the exam. They rank everyone within their selected track, and then take however many they need from the top of the list. Those people get invited to the oral exam.
This year I’ll be changing tracks to match my work experience better, and tailor my narratives to that.
Gotcha. Good luck! And congrats on passing the written and the little one!
I think I’d love to be a FSO, but I wouldn’t be able to pass the exam :P
I hope that you got it and the sacrifices were in your favor!
No you’re wealth is mostly due to luck of asset inflation caused by the the fed and the luck of where you chose live. Most people work hard for there money and what happened for you could not happen for them, no matter what, despite being smarter and working harder. You are just lucky (so far) on catching bubbles.
I totally agree, hence the content in my post:
* arrived in SF before Web 2.0, couldn’t ended up doing equities in Dallas
* the Fed pumped everything up
It’s largely just luck!
But if as young man decided to rented instead of buy your house, like so many do, you would not have made a million dollars. Your lucky the housing market went up but you also increased you luck by taking a chance. The harder you work the more luck you receive, I am not sure if it was your article but there was one this weekend talking about a fund manager that actually lost money over the last 8 years. He did not get lucky because he was wrong in his thinking he was in the same financial bubble and had more money to invest but he did not benefit from the windfall because he was not as smart as you. Yes you got lucky but give yourself some credit YOU BE A SMART MAN. I just likened your thought process to the lefts mindset that when a white man succeeds it is only because he is white and has nothing to do with what he did. Your not white but the point is the same. Did have some advantages? yes. Could they be over come? yes. Did other people in worse situation make it big? yes Love your writing your my favorite. also I have a brother whom after the 2008 market crash took out most of his investments and never put them back in. Is that bad luck or stupidity? Thank you
I would say your brother had bad luck for not having the courage to stick things through and add more!
You and Resjudicata, the commenter I responded to, will have to battle it out then :)
It was my newsletter who stated a Hussman Fund is down 57% since 2009, but still collected $50 million in fees! WOW!
You are consistent!! Love the article Thank you!!