I realized that unless my calculator was having a meltdown, his IRA had outperformed Berkshire stock by about 120 to 1 from 1989 through 2012, and by almost 90 to 1 from 1989 through 2018. ============================================================================================================================================================================================================ This conversation is moderated according to The Post's community rules. Please read the rules before joining the discussion. If you’re experiencing any technical problems, please contact our customer care team. Comments are now closed. Sort by Newest What a waste of an idea. You didn't say anything about how to convert $70,000 into $264,000,000. Really, what was this article about? clickbait? Sort of like pointing out why the roofing contractor's roof never leaks ... The Bozo's WaPo -- click bait rag and promoter of fast track money schemes. How sad the mighty have fallen. But then you read it anyway....priceless.... ProPublica revealed that Thiel’s Roth had profited immensely by buying PayPal founders’ stock in 1999 at 0.1 cent a share — which by my math was less than 1/20,000th of what eBay paid for PayPal three years later. Thiel’s special deal was not available to the general public. So why is this legal ? Mr. Weschler, the next time you're in San Diego, I would like to buy you a grande Starbucks Pumpkin Spice Latte and split a scone with you. I'll just have a glass of water. If you could teach me how to take my $2000 SS check and convert it into enough money to get my 9 grandchildren through college, I'd be grateful. 529 accounts already in place. Yeah. Everyone can do it. If all people made money investing in stock then people have to sell their stock and someone else has to buy it and the price can never go down. That doesn't happen. $12,000 match balance in an IRA grew to $58 million in 29 years. No effing way, even with generous annual matches. True, at least for mortals. No, he could have bought and held Cisco, Amazon etc. This is all great if you already have a well-paying job at an employer that offers company match. If you are in that position, there is no reason why you should EVER struggle financially unless you completely mismanage your budget. I only worked for one employer that even OFFERED a 401(k) and there was ZERO company match. The solution is to limit contributions to IRAs and other retirement plans to widely-traded assets that have a readily ascertainable market value. Bespoke or private company assets invite too much trickery. I converted our Iras to Roths when we put solar on the house and used the tax credits to mitigate the taxes owed. (Edited) THANK YOU for describing the benefits of a Roth contribution in a 401K or IRA. This is exactly what my IRA advisor and I discussed at my last quarterly meeting. She even ran the numbers for me to demonstrate the value of converting a portion of my retirement savings over to Roth. My employer's 401K has a Roth component, but the corporate 401K advisor actively discourages it's use. I realized during my employer's annual 401K review meeting, after asking about the Roth option, that the 401K advisor simply doesn't understand long term retirement planning. He's young, and used to working with younger investors. My IRA and 401K are with separate brokerages, both advisors claim to be fiduciaries that protect the best interests of their client. I found that wasn't necessarily true for my 401K. My recommendation for anyone saving for retirement, in addition to the wonderfully sage advice of Ted Weschler, is to "trust but verify" whatever financial advice you receive Do your own research of possible, read broadly, and talk to more than one financial planner, especially as you approach retirement age. It seems clear that advisor is a fool. Younger investors can (and arguably should) assume they're in a lower tax bracket now than they will be in 20-30 years, so it makes more sense to take the tax hit up front. Financial literacy is simply not something most people are taught. “For the prior 22 years, there was a direct overlap between things I was looking at for my day job and potential investment opportunities for my retirement account." Isn't that the definition of front-running? He was with B-H. Reminds me of the joke about the late Sen. Barry Goldwater’s family wealth and his admonition: “If you had any guts, you’d go out and inherit a department store.” What specific investments got his 70k IRA to $226 million? Clickbait I doubled my roth in the panic of the 2020 pandemic. Spotting trumps lies contributed to that success. Weschler has a pretty good point about sticking with equities. It seems like the popular assumption is people have no risk appetite so the target retirement date funds of funds that are popular often leave people with surprisingly conservative portfolios. The simple solution is of course to pick a date that is further out and you'll have a far higher share of equities. With the Trump tax brackets, now is a great time for Roth conversions. They expire in 2026. Almost a certainty that taxes will increase after the expiration. So, the tips are: 1, go back in time and max out your IRA contributions when you were younger, and 2, while back there, get in on the ground floor at PayPal so that you can buy their stock at $.01 per share three years before they are bought out by eBay Cool...now, all I have to do is switch over to the "Technology" section of the Washington Post so I can find that article on affordable time travel that ran last week... best comment on this thread!!! I also suspect that the number of people maxing out their retirement accounts straight out of undergrade has to be somewhere in the range of .2-.5% at most. The "investment advice" in the bulk of this article boils down to "bet it all on Red 12" and if you win 5 times in a row you are filthy rich. True but pretty useless as investment advice. The only useful part of the article is the last two paragraphs, where it is pointed out that $70k can grow to over $1M if sensibly invested and left alone. (Edited) Great profile, some useful nuggets as well. Weschler is a pro's pro, and the results of his investing show. Love that he is philanthropic as well. Not surprised but still disappointed to see so many "crabs in a bucket" haters in the comment section, very typical of the WaPo readership these days. Weschler gives great advice for the average investor, especially helpful for millennials who are fortunate enough to work for an employer who does 401K matching. I wish he had mentioned 529s along with Roth IRAs as great ways to save in tax-advantaged accounts. There is very basic and sage advice in this profile brought to life by an incredibly successful investor. Good for him and thank you Mr. Sloan for writing this. Would have been better if you put more meat on the bone on how he grew the fund so dramatically. I'm glad you at least noticed that Sloan has no idea how the dramatic gains occurred. So what was the added value of this clickbait? I think WaPo should be embarrassed to publish this Yahoo level stuff. This is not “simple tricks,” it is what this guy does for a living. He has hours a day to research stocks and companies. If people spend all day teaching kindergarten or roofing houses or counseling the anxious, they don’t have the bandwidth to research stocks all night. yeah - he's no Joe Six Pack on the loading docks just muddling through with an IRA I consider his advice to invest in index funds as excellent- It is the way to go for all of the people not privy to his “insider” status. That would certainly include teachers, roofers, craftspeople, etc. Make it a long term habit, and you’ll have a solid retirement base. "Thiel’s special deal was not available to the general public." Everything that's wrong with this country in one sentence. Sort of how Mitt got millions in his IRA. Have the IRA buy stock right before the company goes public and there is a huge gain. Was this guy being paid by the word to assemble this rambling, repetitive, piece of obsequious praise? I got part way through a couple times, not having learned anything but having PayPal owners buy (not available to the public) stock for hundredth of a penny on the hundred dollars, and then jump to his illustrious background at other big name firms. He is credited for 'learning' from mistakes. Sounds oh-so good, but in the investment market you cannot see the future, therefore other than become more conservative there are no lessons to be learned. This seems to be a rah-rah article pushing Roth IRAs, and nothing more. Did this fellow have some insight or talent that absolutely everyone else other than Warren Buffet has? That is the most likely explanation, along with being in the right place at the right time, which will never be the case for any other investor on this planet. The financial editor really needs to figure out a better headline than one which implies, as in Ratatouille, Gusteau's famous mantra "Anyone can cook" becomes "Anyone can invest." Only if you have a very unusual and smart rat in your chef's bonnet. Thanks for weighing in. It is so discouraging to read the complimentary comments on this useless piece of click bait. yes, if any investor would have engaged in "diversified portfolio" investing, as logic dictates, he would never have gotten so wealthy! (Edited) Weschler says that he used to buy beaten-down bonds of companies that were in less dire straits than they seemed to be, and stocks of little-known companies that he determined were in much better shape than the market thought they were. The secret is clear. He made a fortune buying junk bonds in distressed companies that recovered in an environment where interest rates fell for 30 years. He also invested in small cap growth stocks before they became known. I believe the reason that no specifics are shared is that it is extremely risky and most people would fail and lose all their money in attempting it. Especially in the current interest rate environment it would be nearly impossible to duplicate. There is also a lot more focus on small companies than there was 30 years ago, making it harder to find undiscovered growth stocks. Weschler points out that if you don't have the time and skill to research those small cap growth companies you are better off putting your money in an index fund. He also gave and followed the time honored advice of putting money into retirement accounts with an employer. I wish I had done that when I achieved the means. I was just hoarding cash to buy a house, which ironically didn't happen until I retired. It also took me until then to find and invest in growth stock. I have tripled my money in less than three years. I'll repeat the advice. Set aside as much as you can afford into retirement account(s). Especially if you get a match from employer. You'll thank yourself later. Agree. The kernel was there in plain site, but not as noticeable because of all the bling and name dropping, especially those that tend to really irritate. Here it is again: "Weschler, extrapolating from numbers that I sent him, said that if you’d put the $70,535 that he had in his IRA at year-end 1989 into Vanguard’s S&P index fund, you’d have had more than $1.6 million as of June 30. (The exact number, Vanguard confirmed, was $1,636,238.)" If you bought MSFT in 1989 at 0.57 adj a share & sold at dotcom peak at $45, waited until crash and bought AAPL in 2003 at 0.20/sh, then bought TSLA at $4/sh in 2012, you'd have turned your 70k in 50 billion - 200x Weschler - you'd be a 1/4 Bezos - lots of ways to do it! (that scenario would require other worldly perspicacity and timing I suppose!) What a dud of an article. Any generic investment article says start investing in a 401(k) early and often, and choose the aggressive index option while you have time for the account to grow. ' There's nothing to explain how he beat the averages. Not a single stock or bond named as an example of one of his winners. Not a single "simple trick" shared. If he bought MSFT in 1989, sold in 2000, bought AAPL in 2003, he'd have 4 billion - 15x Weschler - millions of people could've done something like this so perhaps someone did. Um...so how exactly did $70K become $264 million? Where are his trades?? (Edited) Rereading the article, I think that the $70k became $264M partially by virtue of millions of dollars invested into the account by a very high income individual. Plus savvy investing by a pro with loads of knowledge not available to you or I. Probably taking very large risks enabled by the high income - if he did lose it all, he had millions more where that came from. NOTHING in this "strategy", aside from time, is available to John Q Public. The only takeaway of any value is right at the end, where it is pointed out that $70k becomes over $1M with a fairly conservative strategy. That's roughly what I did, That is what diversified portfolio strategy would do - 7% - 8% compounded during most of post war period. About 4% since 2008. No way a mortal using a logical strategy, available to typical investor, could have done what the gentleman in the article did (other than dumb luck). I certainly haven't made $200 million but the past 10 years have been wonderful for trading within a Roth account. My tax preparer gave me great advice to convert my smallish IRA to a Roth back in 2009 when I was unemployed (by choice) and yet had plenty of savings to cover the taxes. has been one of Warren Buffett’s deputies at Berkshire Hathaway since 2012 That's the secret. The trick is there at the end and hidden a bit in the article. He left NYC to avoid groupthink and he spent a lot of time researching stocks and industries to find things that were undervalued. There you have it. Do your homework kids. Learn about what drives an industry, what makes a company work, and find something that Wall Street analysts and banks aren’t paying attention to but that could be big… then take a calculated risk. We always maxed out our retirement accounts and saved 40% of before tax income and we don’t have $260 million. Full disclosure: we aren’t poor either and are comfortable in retirement while living below our means. We started with more than 70k but made safe investments in index funds. The article fails to explain exactly how his 70k turned into 260 million. What asset classes was he invested in for example? I wanted to know how on earth Weschler had done what he did. So, I sent him a brief email telling him that I wanted to understand how he’d made all that money. Well, the readers are left wondering how he did it. I have learned nothing from this article, except that he managed/invested in a hedge fund. I hid a jar of pennies under the porch, for my future. I'm usually forgiving with journalistic largess but this article is pure crap. He didnt turn 70K into 260M+ with simple tricks - nothing in this shows how he made is money. Compounding be dammed. Honestly one of the worst and most worthless articles I have ever read in the Post - sorry - not one to be so dramatic but really..... Im an investor but this is a fluff piece with no meaning or meat. It's all there: . Start early. Compounding over a career is hugely important. . Invest in index funds because they cost less in fees and you can put more of your money in the fun instead of into a broker's pocket. # AND # Contribute the max to your retirement plan. Barring that, . Contribute enough to get any employer match; . Increase the contribution each time you get a pay raise, and also when eligible to contribute more at age 50. . Don't disregard ROTH accounts as you get closer to retirement. It would have meant more if he recited some of his wins and losses during this period. Ah, but is this really true/legal. The money he put into his original IRA, and converted to a Roth IRA, has to be "earned income" - not "investment income". It doesn't really sound (from the article) if this was true. Over the last 18 months my investments have done really well, and I would love to put some of that gain (shares) into my Roth IRA or my 401k - but the IRS rules are very clear! You can only put into ANY tax deferred account only the money that you earned (and paid tax on) in that tax year. Yes, if you put $100 of earned income into an IRA and it earns 4,000%, you can transfer that new value to a Roth IRA. You can transfer the proceeds from one tax-deferred account to another tax-deferred account. But you can't "add to" a tax-deferred account any sums that were not "earned" in the year in which you did the transfer. From the article, it sounds suspiciously like that rule wasn't obeyed here. My young nieces just thrive on this kind of article. Shame on you, Wall Street, for your rags-to-riches tales that promise rewards that are beyond the reach of so many people. methinks the effective tax rate isn't high enough. Mr. Weschler's probably paying approx. 23.8% for most of his long-term cap gains, assuming he's generating over $400K in income annually. 20% peak LT cap gains rate plus the 3.8% Net Investment Income Surtax (Federal Form 8960) of 3.8% for most of his income. That Surtax helps subsidize the ACA. If you get a subsidy, you can thank citizens like Mr. Weschler. Sure, 23.8% is a relatively low tax rate for a high earner, but it's a higher rate than the vast majority of citizens pay in federal income tax. Garbage story. Disappointing article. Not a single detail on how the return was achieved. Give some examples. What stock or bond did he buy at what price and when did he sell it? The returns are just hard to believe. Value Investing. That's how it's done. Read "The Intelligent Investor" by Benjamin Graham, or almost anything by Warren Buffett. You're welcome. Thanks for the moronic reply. And yes I have read all those. And yet you still wonder how he did it? (Edited) Because all the minimum wage workers tending the elderly in nursing homes, cleaning motel rooms, and flipping burgers have generous 401(k) plans and matching employer contributions. Look, I see a pig fly in front of my window! You have no point, sorry If you own your own home and have health care coverage when you retire, shouldn't $70,000 be enough to live the rest of your life in comfort? I assume you mean $70,000 per year.... (Edited) No, around here, $10,000 per year for seven years will do just fine. 900 square foot house, good pickup truck for wood, we're all set. And the remaining funds will compound interest, which seems to be the only "secret" alluded to here. I'll be working until I'm 80, if I live that long. Sir, you and I live radically different lives. And I am jealous of yours! For me, $70K would be far too small a principal to retire on. Being a grandparent can be expensive, but it's also wonderful to be able to help my family financially. $70,000. ? That would certainly depend on where you lived…… Those are 2 pretty big ifs. Where does this magical health care coverage come? Does it have no co-pays? Does it cover everything? What is the plan for long term care if needed? Not sure why any of this is surprising. Max 401k, invest 1/4 of after tax income. 30 years. 5 million. Father and son do it and you end up with 100 mil vanguard index (admiral?) with its 7% return is the ticket. Love compounding interest. No reason that anyone with a salary of 150k cannot do this. (Edited) Of course, in another 30 years the earth will be in chaos due to global warming so $$ isn't going to help ... No reason any young adult just starting out can't follow the basic investment advice in this article and reach retirement age comfortably funded. Except that so many people, including many posting scathing comments about this article, live for the moment. Saving for the long term, much less for the next $400 car repair crisis medical emergency, is beyond their comprehension. One may make a small fortune in farming. First you start with a large fortune..... Yeah, it's called luck... "Simple tricks..." Yea, right. I despise articles like this. He had special priviledges you and I don't have. He worked in the industry and was able to capitalize on it. Regular folks can't do a lot the things in the article. The article has a quote from him saying if you cannot spend the time researching investments, you should instead buy index funds. It goes on to explain how the returns would have been substantial, but perhaps not extraordinary, had one simply bought and held those over the years. I found it insightful because we learn that he generated the incredible returns by longing public equities and bonds, available to anyone.. NOT via special placements, or otherwise sophisticated trading strategies. When did our society go from working to earn enough money to provide for all of our family's needs and many of their wants to working to become fantastically wealthy, at least in the monetary sense of wealth? Was there never a point where this guy said "A hundred million in the bank (or on paper) -- I think that provides the security I want for my family." I guess Ted Weschler is a nice guy, but $264M doesn't compare to my idea of marriage which involves living in the same house as my husband (Edited) When I was growing up, my father kept a written record of every penny he spent. When he reached the point that he had enough income to invest in the stock market, he put most of his extra money in mutual funds. Although he and my mother never spent lavishly, they did travel, which was their favorite form of recreation. They left my brother and me a nice estate. My husband and I are following his example. (Edited) Surely you mean: "The Simple Trick of Starting Your Career before the mid-1990s with a great education." "Weschler spends a lot of his time studying companies and industries to find things that the financial markets don’t seem to be seeing." That's one of the sadest things I have read this week. To be as rich as he is and still obsess over obscure arcanities so as to pile up more zeros after the comma. At least he "reads and thinks" a bit. Sounds like a nice guy, but also Scrooge at his counting desk without the ghosts. Is q life worshipping lucre worth the zeros? Maybe he enjoys his craft, more so than writing disparaging comments on digital newspaper forums, for example. Steve's wife here: The numbers *are* amazing, but the guy *works* for Berkshire Hathaway? OK. I hope he WOULD be using all that info/knowledge/insight to do this. At first glance, I thought he was someone like the rest of us who sit OUTSIDE prodigious investment organizations and firms. I was hoping he was. : ) Many, many more stories of how people lost significant amounts from their retirement funds making poor investment decisions. In gambling, sometimes you win and sometimes you lose. Mostly you lose. You mostly don’t lose if you buy and hold S&P index funds. Ted recommended this. Some people learn, others do not. Which are you? I own an index fund or two and some carefully selected common stocks. I got an "A" in Finance 610 "Investments" back in MBA school. I think the old Wells Fargo approach of a stock fund and a bond fund in proportion to your station in life is perhaps a good way to go. Companies like Vanguard make it easy for us. I don't like to gamble even for fun. Just joined up today, I see. How are things in your home country? Bad food, worse weather Please explain how a restaurant worker could put $6000 a year into a 401k and still pay rent and feed themselves. Unreported taxable income? Sarcasm I hope. Nope. Retired CPA, tax professional. Never would serve clients like that. Tip income for employees, unreported cash sales for the owners. Cash payments to workers to avoid payroll taxes and insurance costs, workers drawing public benefits although actually earning too much while it was going unreported. I have no sympathy for tax cheats. Be proud of every dollar you earn. No one is trying to explain that, sorry. The gist and summary is that there was an opportunity for him to purchase PayPal stock at a significantly lower rate than was available to the public. He bought a lot of it and when eBay bought PayPal, he made out like a bandit. The man went to a great school, worked in the financial sector in MY, went into business with one of his coworkers in Charlottesville, VA, a lower cost area than DC, made a donation to a church so he could have lunch with Warren Buffett and now works with him. It shows that the school one goes to can have a tremendous effect on one’s career and financial success and it isn’t so much what you know, but who you know. The PayPal deal was Peter Thiel, not Weschler. The point of the article is that he DIDN’T get rich through shady deals. He had other advantages, yes, but not that. It shows that the school one goes to can have a tremendous effect on one’s career and financial success and it isn’t so much what you know, but who you know. Road apples. And that "Paypal stock" was pre-IPO, so it had zero public market value when he bought it. Of course, when eBay purchased PayPal for a premium three years later, it became very tangible. The man had the vision to purchase the stock and since it was pre-ipo, he knew someone. The simple trick seems to be "start with a lot of money". He started with nothing but gradually built his 401k, initially. I guess you missed that part? There was no trick other than being a shrewd investment analyst + stock picker. But these are minor details. It sounds like you have made your mind and didn’t even bother to read the article, let alone grasp the lessons from it Best of luck Is this a real article or is this a native advertisement? Classic bait and Switch. No mentioning of How. Very disappointed in WP. Wow apparently you can't say ******* in the comments. Okay is it just me or is the “how” missing from this article???? "how" is on second base. "who" is on first. And "some" were born on third base. And think they hit a triple. He got rich and you can too! Here's how! Ha Ha. Just kidding. I'll tell you how to get rich. Just send me $20 and I'll share the secret with you. Literally no explanation or information that would help another person even start to to what he did. Classic example of Survivor Bias. Also blatant click-bait headline. I’ve read Allan Sloan’s columns for years. I’m usually a big fan, but this one is disappointing. The article doesn’t really explain how he achieved those gains. He purchased bonds of distressed companies and small-cap value stocks. He held his investments in tax-deferred and tax-free accounts. I could have guessed as much. I didn’t expect a playbook that I could follow myself; but I did expect a great story. I think Mr. Sloan lost the plot on this one. And paid millions of dollars to have what turned out to be a couple of job interviews with Warren Buffet. Only a fool believes a person amasses $264M through "simple tricks." No doubt, tricks were used. Just not the type available to you and me. But you just can't kill the myth that in America massive wealth is there for anyone who's hard-working, smart, frugal, and invests wisely. (And if you haven't achieved great wealth, then there's something wrong with you.) There's no end to the number of columnists, book authors and publishers continuing to ride that gravy train of cruel lies. If it was easy to make money, we would all be rich. But then again, maybe we all are rich. (Edited) Depends on point of view, of course. But not ALL of us are rich no matter how you look at it. What an insufferable attitude. Just ignorant. As the article outlines, the tricks are certainly available to you and me. He was a shrewd stock picker, investing in public equities, and sometimes bonds, within a brokerage account. It goes on to say how one’s returns would have been substantial, though not extraordinary, had one invested in a standard S&P index fund. Increasing your exponent base just a few % over thirty years results in a massively different outcome. So, what’s the basis for your conspiracies? This article is nothing but Clickbait. "his account was up to $70,384......<and then a Miracle occurs....or Underwear Gnomes> By year-end 2018, that $70,384 had grown to $221.6 million." Seriously? We too contribute fully to my IRA. With contributions. Since the 80's. Maxed out. With sound financial advice and excellent gains. We don't have $221M. What index funds is he using again? "Selling Weapons to Taliban in Afghanistan"? "Prudent investments in NarcoTerrorism"? "Sound Savings in Russian Oligarchies"? come on..... Where are the details? Not seeing it. This is a very disappointing article. My first response got dumped for "moderation" issues (gosh I guess the truth doesnt count ) Most laypeople cannot match the moves this professional money manger does everyday to maximize his holdings. The $1.6 million figure referred to at the end is the achievable goal number for most folks reading this article. Exactly. Even the guy profiled here says the average joe should just go for index funds! and he's not wrong. Starting early in investments makes all the difference. There's something frantic about this article. Ok! News I can use! (Edited) This article is just a big bunch of hooey. Sorry, if it were that easy, everyone would be doing it. I am doing well but I remember that for YEARS I didn't even have $10 I could put into a savings account, much less an IRA. People like this writer seem to forget about things like that. And there I was thinking my husband did a great job managing our portfolio in his spare time. Hmm. How much of this is accurate I wonder. The short answer - he took on a lot of risk. He put a lot of money into individual small stocks that returned big gains, which is precisely what most financial advisors advise people not to do. He could have ran a mutual fund that bought the same stocks he was buying in his IRA, giving us all a chance at those returns, but then, the returns probably wouldn't have materialized with so much money flowing into those stocks. Returns that are not risk adjusted are meaningless. Come on Washington Post, do better. No kidding. This man is an investment genius. That's how he turned $70K into $264 M. And presumably there's a lot more in his other accounts. I worked on Wall St. after college. It's not that difficult to understand the technical aspects of finance. But some people have the uncanny ability to pick the right horses. How that's done is not covered in any textbooks. I wish I had that talent. I left finance. It wasn't for me, and it didn't match my interests. But I have to admit that I'm envious of this man's success. but where are the details. you don't just state - "well here it was 70K and then it was $221M". What was the path. what were the decision points. lousy article. clickbait as stated above “Although I have been an enormous beneficiary of the IRA mechanism, I personally do not feel the tax shield afforded me by my IRA is necessarily good tax policy,” he wrote. “To this end, I am openly supportive of modifying the benefit afforded to retirement accounts once they exceed a certain threshold.” Thank you for that honesty. Tax-advantaged retirement accounts were created to incentivize regular people to save for their retirement, not to serve as tax shelters for mega millionaires and billionaires (but who can blame the super rich if they take advantage of what's legally available to them?). The comparison of regular and Roth IRAs omitted that there are no Required Minimum Withdrawals (RMDs) from Roth IRAs. Here’s why he did the conversion. With a regular IRA, the money going in is tax-deductible, but withdrawals are taxable. And you have to start taking annual withdrawals when you turn 72. With a Roth, the money going in isn’t deductible, but the withdrawals aren’t taxable. It was noted (implicitly) in this section. I tried everything that he suggested in the article and I lost $39 million. Go figure. The trick is in how capital gains are ignored and as non taxable in an IRA. You can do something like this by being a money trader full time using your account as its platform. Trading for dividends is another strategy by switching between similar dividend payers in accordance with their x dates. A passive investment strategy can be ostensibly safer with by buying the mutual funds usually suggested by financial advisers, but it varies with market up and downs that can be server while dividend stocks are reliable payers and their prices on the low end make percent returned in dividends higher not lower. DO NOT GIVE A CRAP! FFF THE FED!!!!!!!!!!!! What does this have to do with the Federal Reserve? 1- Not a very good article on "HOW" exactly he made that much money - 2- Most people do not have $29 million in another account to pay the IRA-to Roth tax conversion costs. 3-W.R. Grace is a terrible/horrible company- proven to done so many wrongs affecting our society- 4-What did he do when W.R. Grace tanked and almost entered BK? 5-As for Peter Thiel of Paypal - what he did was beyond wrong - and there should be some "clawback" by the IRS for his Bernie Maddoff move. 1- Not a very good article on "HOW" exactly he made that much money Weschler says that he used to buy beaten-down bonds of companies that were in less dire straits than they seemed to be, and stocks of little-known companies that he determined were in much better shape than the market thought they were. That's basic stock-picking with lots of research - which, as a hedge fund manager, may have included speaking to CEOs and other corporate officers of the companies he was interested in. 5-As for Peter Thiel of Paypal - what he did was beyond wrong - and there should be some "clawback" by the IRS for his Bernie Maddoff move. ProPublica revealed that Thiel’s Roth had profited immensely by buying PayPal founders’ stock in 1999 at 0.1 cent a share — which by my math was less than 1/20,000th of what eBay paid for PayPal three years later. Thiel’s special deal was not available to the general public. Please describe how Theil's move was anything like Maddoff's Ponzi scheme. (Edited) Alan - I enjoy your work but the title's misleading: There were no simple tricks to convert $70,000 to $264M. He was an investment genius. There are simple tricks - as Weschler points out in the article - to convert $70,000 to $1.6M. A less spectacular title, sure, but more accurate. I am a 66 year old retired teacher. I have about 3 million dollars in assets. Here's the "secret"... I didn't buy anything I couldn't pay for (phone plans, cable TV, cars, etc, etc.). I did borrow for a modest house. In the meantime, I saved my money and the interested compounded over the years -- sometimes dramatically, sometimes pathetically. No, I didn't live like a monk. I ate out. Went to movies. I delayed gratification. I didn't need things instantly. That's about it. Has anyone understood how he made his fortune? I did not. I didn't either, but apparently he had $29 million in couch money to pay taxes on a conversion. I'm pretty sure that what the article is missing is that for several years of his career he was able to deposit quarterly into retirement accounts the equivalent of what a pediatric trauma surgeon earns all year. The closer you work to the capital, the more if the capital you keep. But not everybody can be a hedge fun manager. Someone has to remove tumors killing children, and earn less pay. this article doesn't say anything really, but because you are limited in what you can put in retirement accounts, that doesn't come close to explaining what he did here. I have put the max in my retirement accounts and I calculated you'd have to have 30% growth each year of the 30 years he went from 70k to 200+ million. That's impossible. He must have bought either a series of incredible stock buys (like tesla, facebook, etc at ipo day) and not done too many disasters or he did something else. This article is really disappointing. There are annual limits on how much you can deposit into retirement accounts. Yes, but then you grow the accounts through good (and sometimes lucky) investment choices. what the article is missing is that for several years of his career he was able to deposit quarterly into retirement accounts the equivalent of what a pediatric trauma surgeon earns all year What the hell are you talking about? WaPo has become the misleading ads we see on the internet. mute The article is misleading, it has nothing about retirement strategies or anything else. Our investments have been very disappointing (gold and silver, mining stocks) compared to the fraudulent stock market. They are down from 10 years ago but still close to 1 mil. Sometimes late at night I feel like an idiot for not getting in on the Tesla, Bitcoin, latest Fed driven mania bandwagon. But retiring at age 54 and devoting our time to working out, hiking, mountain biking and kite boarding has been a huge success. At age 67 now we have better bodies and more sex drive than in our 40s. Our health is paramount and we couldn't be happier. We travel fulltime and really don't care about money very much although we do love to buy the top line carbon bikes and kiting gear. We sold all our US properties and good riddance, no taxes, no bills. Living in Mexico or any other country is 1/3 the cost of the USA. And more interesting as well. No regrets! Really sad. Goodbye. That's encouraging that your health improved. I'm about at your retirement age and I'm wondering what to do for myself. My self worth is way too caught up in my job. How did you retire "with so little"? I need health insurance for at least 10 years to get to 65, plus in retirement I hope to do fun things still like some travel. Lets say you live on 100k a year for everything including housing, paying your own health insurance, my family would cost about 2500 a month, so that's 30k right there. I'm probably getting some taxes as I sell assets to get this money to live on. My kid will be in college for 4 years. So I'm wondering how people can retire so early. But on investments, did you really thing gold and silver made sense as retirement vehicles? They are not likely to be that important in today's world. I know gold bugs disagree but why do normal people need them? Also mining stocks haven't done that well over time. You are still relatively young, I am not an investment advisor, but please consider something like slowly rotating into stocks, and get an advisor that you pay a fee for service, not based on commission. The premise of this article promises to dive in to how Ted got to 264M from a simple retirement account, and revealing nothing all through the end. Yeah, we know S&P 500 index fund would be valued at $1.6M after 32 years, nothing new there. Allan, you need another column showing the journey, what was Ted’s strategy? How was he frequently trading from his IRA account? Did he buy and hold, or did he continually turned over his entire portfolio. Which stocks got him the most rewards, and in which period, how long did he held them? And he traded them for what? Would he be willing to share more? The $264M number is truly astounding if it all actually came from just $70K. With this article, we didn’t learn much at all on how that happened other than the generic, he used to look for companies that the financial market overlooked. Putting 100% in equities isn't something most advisers would dare recommend because stocks are volatile. It makes reasonable sense for someone young. And it might make reasonable sense for someone old with a very large account balance. someone old with a very large account balance There's the one simple trick Yep. When you have $29 million laying around in other accounts you can probably incur more investment risk than someone with a mere million or two. (Edited) It's very easy to make a small fortune in the stock market. Start with a large fortune. Seriously, the only real value here is the same advice I give my kids: Start thinking about and saving for retirement early, maximize the  employer match, invest 100 percent in equities (through no fee, no load index funds), and ignore all the other noise. That won't get you the unreproducible gains outlined in the story, but you can build a secure retirement. It also helps to have a large salary so you can sock a lot of money into investment accounts. But obviously that isn't actionable advice... oh thats the same way to make a million with a winery. or a horse farm. start with 10M. hahahaha He’s two orders of magnitude beyond what an ordinary schmuck could do following ordinary advice to invest in an Index fund. An index fund might get you $1.6M from $70k after 30 Years assuming the Wall Streer robber barons or the government don’t screw you first. But this guy got $264M because he spent his entire career researching and picking unicorns. His results are not readily repeatable. Agreed, the headline is bullshine, but there are valuable nuggets of wisdom in the story. (Edited) You'd think the Washington Post's Allen Sloan, acclaimed financial reporter, would have the discernment to see that, yet here we are. More about the Post providing Content For You To Click On than any thing else. yeah, this is like a motley fool article. no details, bragging about 6 baggers or something. That kind of wealth is amassed in one way only-- the old-fashioned way. And I don't mean through hard work, saving, and wise investments. Sloan is a fool, or thinks we are. Are you asserting that Weschler's investments were unwise? Without knowing his risk tolerance and financial backstop, you can't legitimately make that assertion. One can make big profits in the Third World Drug Cartel ETF, but I wouldn't recommend it. Good lord, I never thought the money I paid for subscription will go to writing clickbait articles you would find in the gutter of daily mail or the Yahoo mail bottom feed. Any other "simple" tricks you know that we can learn? How about getting an enlarged "member" with just one pill a day? Can you hook us up? (Edited) All that stuck with me is that the politicians who are supposed to help all their constituents live a good life go to extreme lengths to smooth the way for the super wealthy to get even wealthier. Right-wing politicians talk so much about wanting folks to make their way in life fairly and with hardwork. Then why were the folks who already have the means to keep at least three generations of their family in more than ordinary comfort given deals that were originally meant for people of modest means. Is the world meant to be skewed so unjustly in the favor of the wealthy? Am baffled. Right-wing politicians talk so much about wanting folks to make their way in life fairly and with hardwork. They are lying. That talk is the con. "If it sounds too good to be true it probably is," Bernie Madoff. The Post think we're foolish enough to believe this guy amassed $264M through "simple tricks." Even Weschler says that, working with what we're likely to be stuck using, index funds, we'd make $1.6M-- which is a lot of money, but only 0.6% of this guy's fortune. So, Sloan, you just take what Weschler tells you at face value? I don't. You and the Post should be ashamed of yourselves for trying to perpetuate the preposterous lie that massive wealth is yours!! in America if you only work hard, save, and invest wisely. What a pantload. (Edited) would seem to point to him front running personal investments ahead of his hedge fund. The one advantage individuals and tiny funds have is that their purchases/sales don't move the stock price. Insider knowledge and front running were particularly prevalent in the 80s and 90s - hell, just read the Cramer books where he admits to violations like this. And unfortunately that means no useful advice to give the reader/investors here. Sloan lives in his own privileged world, lacking any clues. Absurd headline. Article also provides almost no real insight into how the gains were achieved. Sure it does.....he got lucky, several times, and leveraged that luck (and favorable tax policy for the wealthy) to his benefit. So I guess that's the "simple trick"....to be lucky. This article is little more than pathetic click-bait. You don't have to be wealthy to enjoy the favorable tax policies applied to long-term capital gains. Oh yeah ... sure, right, anyone can do this, it's a no-brainer, if they weren't self-centered and had no conscious. (Edited) Attention WAPO Readers! If you read the above article on "The simple tricks that turned one investor’s $70,000 retirement account into a $264 million fortune " then I have a deal for YOU! ! ! For a limited time only, when you send me the Walmart, American Express, iTunes or Target gift card number and codes, I will ensure the monies will be used for "investing". All details will be held in strict confidence. No questions asked! Don't delay, act today ! ! ! /s I'm sorry but this article doesn't explain anything. Good investing took his ira from $70k in 1989 to $221.6 million in 2018. It's not compounding and simple investments. You'd have to pick multiple winners in that timeframe. 30% annual growth over 30 years gets you from about 70k to 183 million. That's impossible growth for normal investors. The simple tricks that turned one investor’s $70,000 retirement account into a $264 million fortune 'Weschler says that he used to buy beaten-down bonds of companies that were in less dire straits than they seemed to be, and stocks of little-known companies that he determined were in much better shape than the market thought they were.' There are no simple tricks in turning $70K into $264MM over ~30 years... but the secret sauce is in this compound sentence. Understanding cash flows, income statements and balance sheets is a good start. Quantifying risk and market valuations allowed the investor to make a fortune. The writer of the article does a disservice to the readers in creating this fluff piece. Exactly, none of it is simple. It requires knowledge, understanding, time, and capital. This is available to very few people. [public] knowledge didn't get him this return. Oh and don't forget LUCK. You could write a comparable story about a guy who made a dozen visits to Vegas, had monster runs at the craps table and never crapped out, just kept on piling on his winnings and then walked away. Really, this qualifies as financial pornography aside from turning your standard IRA into a Roth and paying the taxes, which doesn't explain the value of his portfolio, just its insulation from taxes. (Edited) I took my $70K and bought 35K PowerBall tickets! YeeHaw, let it ride! Probably not the best move, but at least you'll know very quickly and with relative certainty what your future holds. So, although I posted earlier about the criminality of the using the tools that are supposed to be for lower-paid working people, I now learn the Tim Cook was given a $750 million bonus for being CEO of Apple for 10 years. I guess Sloan will tell us how to do this as well. The money game in this country is out of control and seriously needs some laws that prevent this kind of wealth transfer (yes, it has to come from somewhere and it is from us to them in the form of low wages of the employees and overpriced consumer goods to the rest of us, and their tax strategies that they use to pay the least amount possible). The earlier in life that you learn that the value of your labor is merely what another will trade you for it, the sooner you'll typically realize that aspiring for the minimum is a losing proposition. Can you cite anything, anything at all that Mr. Weschler did that was criminal? It's a rhetorical question. You have bupkis. Congrats. In ancient Rome during the late Republic, there was a practice called proscription, which should be applied in America if there were any justice. Still the best legal way to get rich is writing a book "How To Get Rich In Ten Steps". The rest is sheer luck or fraud. Hilarious. Consider what his situation would have been had his first retirement account had not been in Grace, but, say, Union Carbide or Bethlehem Steel, or some misbegotten Internet play that went to zero as did the first two. Indeed, Grace itself had a near-death experience because of its asbestos exposure, but I expect that this investor had moved out of the stock before that. his initial IRA stake grew more than 300,000 percent from 1989 to 2018, You drop this bomb and don't tell us what these incredible investments were? Cmon now. Full disclosure, spill the beans. So a rich guy gamed the system with the help of the GOP, which games the tax system in favor of the wealthy. Got it. How did he, as you insist "game the system"? Given that he works for Berkshire Hathaway, I suspect he's a knowledgeable value investor. If you want to learn about it, I'd start with reading Benjamin Graham's "The Intelligent Investor", followed by anything written by Warren Buffett. One of the best investments I ever made was buying Graham's book at the Crown Books store in the mid-1980s. What a lovely reminder that you too could have done it if you "tried hard". Portraying rare successes of people like Mr. Weschler appears to have been intended to promulgate the image of equal opportunities for all and laziness of everyone who did not bother to "succeed" (financially). Yeah, exactly. Gosh where are as the articles about not buying lattes? Time to recycle those. I don't have 200 million dollars because I once bought avocado toast. (Edited) "The simple tricks that turned one investor’s $70,000 retirement account into a $264 million fortune" Simple? 1. Secure a job early with a 401(k) with a generous employer matching program (Sorry, everyone else!) 2. Max it out. (Remember, those restaurant avocado toasts and daily lattes add up!) 3. Roll it over to an IRA 4. Convert it into a Roth IRA (While you're at it, learn what a conversion ladder is, so you don't screw yourself come tax filing time...) Then... Path 1: Learn value investing. Acquire enough capital to invest. Secure enough time to research under-valued companies Make sure you have enough runway to realize your investments and weather inevitable storms. Path 2: Hire Peter Thiel's Financial Advisors Structure you IRA to invest in specific value or growth stocks (Sorry index fund investors!) Cross your fingers. Make sure you have enough runway to realize your investments and weather inevitable storms. Note: If you want to get really fancy, you can pursue BOTH paths! See? Simple. OK. So a long article to say not a word, really, about how he did this at this level. I can see underpaid workers at McDonalds, Walmart and Kentucky's needing three jobs to get around jumping on this occasion ...... Simple method. Spend your entire life researching and investing in undervalued stocks and shares. For desert, go and work at Berkshire Hathaway. There must be easier ways to earn a fortune, but none spring to mind. Thanks. I think I will try that. (Edited) Here's my Friday tips for making a fortune, all 100% legal: 1) Regularly check down the back of the sofa. You might think its all just old peanuts & fluff but you never know, you might find the odd $10M 2) When you're in the gas station buying your Bud Light & chewing tobacco, always buy several scratch cards too 3) Do the slots as often as you can, for as long as you can. Ideally for several days straight. 4) Marry a Nigerian prince in exile. They always have at least $20M to hide 5) Change your name to Anna Nicole and marry the first old rich idiot you can find 6) Start a pillow company (this only seems to work for total morons though) 7) Don't read WaPo articles about hedge fund managers (Edited) 😂 This is better than the article...at least it has entertainment value! Thank you. I bow to you sir. This has to be a joke. Returns of that magnitude are either high risk option trading or there is fraud in this number. This story is as yet unfinished. The Internet is full of those "ONE SIMPLE TRICK's that will make you money, lose weight, grow hair, and be a beast in the bedroom. All scams. And now the Post thinks that makes a cute headline. How the mighty have fallen. Did Bezos sell out to the Enquirer? He's putting his money into personal rockets, not journalism. As if he has just had a run of good luck. Haha, that is really funny!! Now spend 15 minutes (the time u "researched" his email) - maybe 15 hours learning statistics. You will learn we are looking at a one in trillion-trillions event. Oh, but there are only billions of people, maybe one million that get this chance. Only conclusion: the trades were made with inside info, probably front-running. (Edited) I don't believe he is not involved in money laundering and/or some ponzi scheme. The proof is his performance at Berkshire. (And Theil needs to be investigated with financial schemes like his IRA. He's writing down the value of assets like Trump, for tax avoidance.) Speaking of the PayPal mafia, I suspect the government advantaged to create Right-wing oligarchs committed to public/private mass financial surveillance (and targeting Right-wing COIN ops, in the case of Palantir, Oracle). https://en.wikipedia.org/wiki/PayPal_Mafia http://publici.ucimc.org/2018/06/the-alt-right-extends-its-reach/ (Edited) As someone who found this article interesting, I'm a bit surprised by the comments. A few thoughts: Part of the challenge of writing about personal finance is that you end up making the same points over and over and over. The destination is usually the same; the trick is finding an interesting way to get there. I thought this column succeeded However, the headline perhaps sets up some expectations that be cannot fulfilled. Editors write headlines, not reporters or columnists, by the way Peter Thiel is a loathsome hypocrite, but I knew that going in I'd never heard of this guy Wechsler before. While he clearly (and understandably) wishes that was still true, I admire that he's willing to talk so that some other people might benefit. Most people would have just clammed up, afraid that they would only dig themselves in deeper Weschler devoted his career to investing and was able to leverage that knowledge legally for his own benefit, so it's not surprising that he did better than average (although spectacular is a better description) People seem to have missed that Weschler supports limiting the benefits of retirement accounts beyond a certain dollar amount Like some other commenters, I'm a bit nervous about Wechsler's advice to "invest 100 percent in equities." That's worked out great for the past 30 years, but as the fine print always says, "past performance may not be indicative of future results." I think average people need to keep a portion in something safe so that they don't experience a total loss. We can debate what percentage that should be (10%? 20%? 30%? 40%?) ... but I don't think it should be zero Keep up the good work, Allan. Most advisors would say the percentage in stocks should be closely related to age. A worker in his 20s has 40 years to benefit from compound growth and recover from setbacks, but a near-retiree needs first of all to protect what he has. Agreed. And maybe that was what Wechsler had in mind, someone at the beginning of their career. A better rule: Your broad-based stock investments (read Index mutual fund or ETF) should recover from downturns within ten years. Guess when you are going to die and deduct ten years from that. That is your investment horizon. If you have deductible retirement accounts that will have substantial Required Minimum Distributions (RMDs) starting at 72 of about 4% and growing, you might want to consider that. The only way to lose is if your stock investments are way up at the end of the year before the RMD, but then fall way down when you withdraw. (Edited) This. 👆 According to traditional recommendations, I hold way too much stocks (90%) for my age, but my horizon is well over 10 years. If I followed the traditional ratio, I would have lost significant gains over the past decade+. It's whatever you are comfortable with. I'm 55 and remain pretty aggressively weighted toward equities. the bucket method address this risk much better. We have no reason to expect bond rates to improve in the next decade or two. The 60/40 method of the past is no longer viable. No, not good work. This is flim-flam about insiders making money on their insider knowledge. You can't invest totally in stocks unless you have a huge backup of money you'll actually need. He invested as much as he could because he knew things you and I don't. Don't believe this article for a minute. You seem to be implying that he had inside information. If you have some evidence, let's see it. Or are you the flim-flam artist? No, he knew things that you and I don't because that was literally his job, researching companies. If you were properly educated and spent 40+ hours a week at it, maybe you could do it too. even if he made a deal with the devil, his returns exceed what could be obtained with publicly available information. it's akin to a guy winning the powerball 4 times. Eligibility to contribute to a Roth IRA also depends on your overall income. So how did he get around that? When the internet pipeline was smaller they used to have compressed files -- maybe they still do -- that went into the pipeline small, but expanded when it came out. He did the same thing -- put undervalued stocks and bonds or pre-IPOs worth little that grew once in the IRA. Plus, He converted conventional IRAs into Roth, paying ordinary income rates on the amount transferred with $29 million of funds outside the retirement accounts -- thanks to George II and the GOP congress. From ProPublica: Yet, from the start, a small number of entrepreneurs, like Thiel, made an end run around the rules: Open a Roth with $2,000 or less. Get a sweetheart deal to buy a stake in a startup that has a good chance of one day exploding in value. Pay just fractions of a penny per share, a price low enough to buy huge numbers of shares. Watch as all the gains on that stock — no matter how giant — are shielded from taxes forever, as long as the IRA remains untouched until age 59 and a half. Then use the proceeds, still inside the Roth, to make other investments. About a decade after the creation of the Roth, Congress made it even easier to turn the accounts into mammoth tax shelters. It allowed everyone — including the very richest Americans — to take money they’d stowed in less favorable traditional retirement accounts and, after paying a one-time tax, shift them to a Roth where their money could grow unchecked by Uncle Sam — a Bermuda-style tax haven right here in the U.S. It's what's known in the biz as "tax-efficient". You should try it sometime. You might like it! read the article. He contributed to an IRA. He later converted it to a Roth when the max income limit was removed. Paid 28M in taxes to do so. (Edited) $70k to $1.6M using index funds over 30 years. Wonderful. But in all reality 1.6M today isn't what it used to be and will probably only provide a moderately comfortable retirement assuming you don't also have to pay for health insurance. Though 1.6M is a lot more than most people will end up with in retirement. The retirement system in the US is somewhat broken. Even in retirement you're dependent upon growth of the stock market. The underlying point is that the initial investment grew way bigger than the rate of inflation when invested in cheap, broad-based index funds. But this guy grew it to $222 mil. How? The purchasing power of $70,000 in 1991 is about $140,309 today. I think you mean the opposite. You'd need $140k today to have the same purchasing power of $70k in 1991. That's just a rewording of what I said. If you had $70,000 in 1991, you would need $140,309 in 2021 to purchase the same items. Alternatively, the $140,309 that you have in your pocket in 2021, would only be enough to purchase $70,000 worth of stuff in 1991. Reached into other accounts to pay 29 mill in tax👌🏼 As Yogi Berra once quipped "If you can do it, it ain't braggin'". Legally implied, of course. I was hoping for more detail on what stocks he picked and how he chose them. Not because I think I could replicate it, more just for the fun story. Everyone already knows the start early and use index funds advice for how to build a good nest egg. As for the IRA to Roth IRA conversion, it seems like opinions vary as to whether or not it's worth the hassle and expense to do that. I dont know about hassle or expense to move from IRA to Roth, but its seldom mentioned that even though normal IRA withdrawls are taxed, they're taxed based on your marginal tax rate at the time, which after you retire and have substantially reduced income (for most people, i.e. no salaried income, just dividends/social security), and thus your tax rate will be very low... Yes. Thanks to budget-busting tax rate reductions for the rich from Reagan, George II, and Trump, rates are lower now that retirees are withdrawing the funds than they were when we were putting funds tax deferred in the retirement accounts. So deductible accounts were better for us than Roths. At current low tax rates, that may reverse to the benefit of Roths if tax rates go up. Agree, but, with the ridiculous SECURE act a few years ago, any ira/401k that your kids inherit needs to be drawn down within 10 years, likely at the peak of their income years, i.e. peak income tax rates. I realize that is not a concern for many. But for those that drank the 401k koolaid given by the financial industry and corporations to avoid pensions, and diligently saved and spent frugally so they could have a frugal retirement and help their kids with inheritance (isn't that what we were supposed to do, and is needed even more nowadays for the future our kids face), are somewhat screwed and now need to consider converting to non-ira funds and pay the taxes. SECURE was a corporate and rich people giveaway at the expense of middle class and poor, and we will continue to pay for those tax cuts. Of course, that this is even an issue for me means I am somewhat successful in my saving, assuming my forced equity investments don't crash and burn in a near term dystopia. more precisely, taxed based on your blended tax rate. That's why they win out for higher income workers. The tax deduction for the 6k to 19.5k you contribute to the IRA or 401k is 100% at your marginal rate unless you just cross a bracket. But the income pulled out in retirement goes across the 2nd and 3rd and 4th brackets, depending on how much. Doesn't work so well when you have 200M, of course. Then your RMDs put most of your income in the top bracket. Hence his motivation to convert. "Thiel’s special deal was not available to the general public". Sounds sketchy and inside to me. You obviously aren't familiar with how tech startups are usually capitalized, and how founders and key employees are compensated/incentivized to stay in place through the exit strategy (either selling for a premium to a bigger fish like eBay, or an IPO). Yes I am, but it's a setup for improper use of inside information. Enron anyone. WorldCom, come to mind. Most of Congress. Stock is worthless as paper. Sell it, or collateralize it. Timing is everything Are you suggesting that Thiel had inside information that eBay would eventually buy PayPal three years after Thiel exercised his options at an absurdly low strike-price? (Edited) Weschler, extrapolating from numbers that I sent him, said that if you’d put the $70,535 that he had in his IRA at year-end 1989 into Vanguard’s S&P index fund, you’d have had more than $1.6 million as of June 30. This is a far more realistic expectation for the average person than Mr. Weschler's results. After reading the article, I still don't really understand how he did it. Good for him, but most people don't get to work for Warren Buffett. Right, really no insight from this article. Just a financial celebrity puff piece. (Edited) Typical whiners below. No one is suggesting that if you flip burgers for a living, you too can becoem millionaire. However, if you have access to 401K etc, like many do, do not be like the majority fo Americans who do not tighten their belt and place priority on saving for retirment versus instant gratification. How many will forgo a vacation in order to add 2K to their 401K? Or a $50+K wedding some of those people just have to have... Generation Yolo wants what it wants, and fails to realize that there will come a day when your quality of life will in large degree be influenced by the extent that they've saved, or not saved for retirement. Didn't we go through this scenario once before, about a decade ago, with Mitt Romney's IRA .. I think you may be correct, which is why I understood how he stuffed undervalued assets into the retirement accounts that grew once they were in there. I'm so excited to see stories by, for and about old rich white people are getting the attention they deserve. Now the rest of us younger more diverse people are going to go back to our absent retirement funds, pathetic bank accounts and lower lifespans. Thank you boomers, hope you enjoy the retirement we will never have. You might be more successful if you'd leave your ageism and racism at the door. Just sayin'. Maybe you should read Michelle Singletary's WaPost financial advice columns if you don't want to read about the financial success of boomer white guys. She offers solid and practical advice. And over the years, her columns repeat the value of saving, delayed gratification (spend your nest egg on the wedding versus buying a home), and establishing an IRA or 401K for one's retirement. What a crock. May as well have suggested the simple trick of investing a few thousand when Apple, Amazon, Tesla and Google first floated. You forgot Microsoft. I invested 8k in MSFT back in 1982 and never touched the stock. It has grown considerably. I regret I wasn’t as early with Amazon. MSFT went public in March 1986 at $21/share. (Edited) You are correct. Wrong year. This article doesn’t really tell you much. Basically he was in a hedge fund, so his gains probably came from fees, and using a ton of leverage on stock positions. That’s not meant to belittle his gains, just not something even the “above” average Joe can replicate. Dollar cost averaging over time, and starting early is key, for the rest of us. (Edited) Sound advice: “…start early, maximize the (employer) match, invest 100 percent in equities, and ignore all the other noise.” Invest in index funds as most don’t have time and knowledge to research company financials. "I also realized that Weschler wanted to encourage young people to do what he did to accumulate his nine-digit net worth: save and invest, early and often, and take advantage of any retirement account benefits offered by their employer." But that is NOT how he made his money. This is how... "After about 10 years with Daniels, Weschler went off on his own to start what turned out to be a very successful hedge fund. He said that it produced more than 22 percent of after-fee compounded annual returns for investors during its run, from Jan. 14, 2000 through Dec. 9, 2011. A terrific record." Creating a hedge fund it not *simple* Not to mention the fact that he started a leveraged buyout fund before he created his hedge fund. Again, not *simple* Of course, there is not mention in this article of what he actually invested in. We know that Buffett is heavily invested in Coke and Geico, among many others. What companies, commodities, bonds or crypto did this guy invest in to get such huge returns? This article is such useless clickbait. Weschler is a former hedge fund manager and current investment manager at Berkshire Hathaway. Don’t need to read more than the photo caption. We are talking about two different games here. He is a major league slugger hitting .230, with 40 HRs. He may strike out a lot (maybe he doesn't), but some percent of the time he hits a HR. The real point of the article is at the end, that we can play Tee-Ball -- invest in index stock funds with little chance of striking out, but little chance of hitting HRs. Or we can choose to sit in the bleachers and not play. What he is doing is the same thing they do on Shark Tank, but on a huge scale. He is investing in start-ups and undervalued stocks and bonds. I understand the Shark Tank whiffed on Ring (doorbells). Maybe he didn't. Thanks for the wonderful and inspiring article. I'd like to know what he looks at when analyzing companies. That would be worth a read. He need not read anything (although he seemingly does his own fundamental analysis on out of favor stocks and bonds -- including I suspect, foreign nation bonds). All he needs to do is have someone with the next Pay-Pal, facebook, etc. come to him and say, "You've got a quarter of a billion. Give me $15 million for 25% of my company." The point of the article is that if you max out your 401(k) and especially matching contributions and put it all in a good equity index fund you build a very nice nest egg. Now stop whining and get on it! These stories always omit that the subject is white and male -- First hired, last fired -- and so he's never had to tap his retirement for living expenses between jobs. His wealth is a demonstration of how our financial system rewards stability. That he is exceptional demonstrates how exceptional it is to have career stability in an economy where employers exploit "layoffs" to juice profits and how inadequate unemployment insurance is. Additionally, the tool of "401k matching" -- the flyers always say it's "free money", but it isn't. The amount of match available to frontline workers is a function of how much money the executive suite has to save after their basic expenses are met. When the e-suite wants to put more into tax-deferred savings, they raise the match, which raises the cap on how much they can put away. A smaller ratio of executive pay to worker pay would be a better path to larger worker savings accounts. Oh, please. The earlier in life that you learn that the value of your labor is merely what another will trade you for it, the sooner you are likely to realize that your economic destiny is most directly in your own hands. paypal wasnt 'beaten down' in 1999 . whats a beaten down stock he bought ? Paypal wasn't a public company 1999. He didn't buy common stock shares. He exercised private stock options, most likely. The payday came when Paypal was acquired by eBay three years later. That's Peter Theil, not the subject of the article I'm always so disappointed when the once-venerable Washington Post publishes clickbait headlines on articles that don't deliver. At one time they were better than that-- mostly when clicking wasn't how you read a news story.... The modern day Horatio Alger is nothing more than a Berkshire Hathaway employee leveraging insider information and abusing tax breaks. In other words, Alger has become Bud Fox from Wall Street. How do you 'abuse' a legal tax break? Do you like paying more tax than you need to? Didn't read the article, did ya, sparky? (Edited) More than you apparently. Point out where he abused anything 'sparky'. You clearly don't understand the minutia regarding IRA's and Roth's. I guess you are envious. I've seen a man of wealth and family scrimp till his hair's gone gray Laid in the ground just like I'm gonna be, he could have drunk it away. -- Robbie Fulks I invested a lot of my money in empty beer bottles which can be returned to the beer stores here in Ontario to collect the deposit. I was hoping that they would raise the deposit from 10 cents a bottle to 25 cents. This was based on the precedent set when the deposit went from a nickel to a dime sometime in my youth, just around the time I hit the drinking age. Alas, the rate hasn’t changed yet. The good news is any liver damage will be treated for free under our provincial health care programme. Talk about burying the lede. Obvious congrats to Mr. Weschler, a pro, for his astronomical investment returns. He's worked hard, played smart, and awarded appropriately. But for the rest of us, as the last paragraph indicates, would have done plenty well if we just stuck the $70k into a Vanguard S&P 500 Index fund. Including this at the end risks readers thinking "gosh, I could never do that" or thinking that a 314K% return should be an expected goal. Mr. Weschler said it best: invest early, get a match, sit tight. But good for him, that's astounding. Maybe I'm just stupid, but how could he be eligible for an IRA? "The 2021 contribution limit is up to $6,000 ($7,000 if 50 or older) for below $140,000 (single filers) or $208,000 (married filing jointly)." I think everyone regardless of income is eligible for an IRA just not a Roth IRA thus you need to convert your IRA funds to a Roth and pay tax on it. There is something called a backdoor Roth but not sure how it mechanically works 'you need to convert your IRA funds to a Roth and pay tax on it' You just said it... Everyone is eligible for a NON-deductible conventional IRA. Deductible IRA's have a lower income limit than Roth IRAs, which also have an income limit. A NON-deductible IRA is probably not worth it. (The taxed contributions can be withdrawn with no further tax, The earnings are taxed at high, ordinary earned income rates, NOT capital gains rates, and contributions and earnings must be withdrawn proportionally.) Everyone with *earned income* is eligible to contribute to an IRA. Anyone can contribute to a traditional IRA regardless of income (if you're over a limit, your IRA contribution won't be deductible). And that's where the back-door Roth comes in. If you're over the income limit to contribute to a Roth, you contribute to a non-deductible traditional IRA and immediately convert it to a Roth. No taxes owed. Cute trick. It seems you are playing dueling income limits. For that to work, the income limit for conversion of a non-deductible IRA to Roth IRA would have to be higher than the income limit to contribute directly to a Roth IRA, since you will have paid taxes on the funds going into either. however, this is only simple and tax free if you have no other holdings in traditional IRAs. For most W2 people, it's a lot easier convincing your employer to offer a Roth 401k and not having to deal with it. 401Ks are traditionally rolled over to an IRA upon leaving an employer. Correct. It's allowed, yes. But should you? If you do, you'll lose legal and bankruptcy protection 401(k)s have that IRAs don't. Better to roll it over to your new employer's 401(k) (unless it's an abysmal plan). (Edited) In the absence of a new employer. But in any case, 'These retirement assets, IRA's, are nonetheless protected under a federal bankruptcy law if you file for bankruptcy.' A 401K is not affected by a company's bankruptcy, as you say. But an IRA would have no attachment to that company, so what bankruptcy protection are you referring to? (Edited) He is referring to protection from creditor attachment in individual bankruptcy. However, see: Wikipedia: [bankrupt] can exempt his or her IRA, up to the amount necessary for retirement, from the bankruptcy estate. The Court indicated that because rights to withdrawals are based on age, IRAs should receive the same protection as other retirement plans. Thirty-four states already had laws effectively allowing an individual to exempt an IRA in bankruptcy, but the Supreme Court decision allows federal protection for IRAs. The Bankruptcy Abuse Protection and Consumer Protection Act of 2005 expanded the protection for IRAs. Certain IRAs (rollovers from SEP or Simple IRAs, Roth IRAs, individual IRAs) are exempt up to at least $1,000,000 (adjusted periodically for inflation) without having to show necessity for retirement. The law provides that "such amount may be increased if the interests of justice so require." Other IRAs (rollovers from most employer sponsored retirement plans (401(k)s, etc.) and non-rollover SEP and SIMPLE IRAs) are entirely exempt. (Edited) But not automatically, and not to a Roth IRA. When I retired, my 401K could have stayed in the 401K if I had wanted. The IRA offered more flexibility on withdrawals than my 401K did, so I converted it. But to a regular IRA, not Roth, because I didn't want to pay the taxes that year, all at once. The headline writer needs to actually read the article. The chances of most people picking a PayPal at its infancy are like winning the lottery. Nice if it happens, but stick to fundamentals instead. And you might want to read the article a little more closely. The subject of the article did not invest in PayPal. That was an anecdote about Peter Thiel. But, point is still valid. You ain't going be win the Peter Thiel lottery. And you won't win the Ted Weschler lottery, either. His point, quite correctly, was the headline seemed to promise that with simple tricks you could equal the subject's performance. Clearly that is not the case. At the end, the article indicates that with simple -- strategies, NOT tricks -- you could still amass a substantial next egg. Note, however, that even the period cited for that was a unique period of declining interest rates and thus increasing bond and stock values that are unlikely to be repeated at current low interest rates. Yep. And that's why you don't just read the headline and dash off silly comments. So the trick is to buy into a company when it starts at 1/20000 of the later price? Great plan! Founders and investors of most tech start-ups are granted options with very low strike prices. And most of those options end up being worthless when the start-up fails to achieve lift-off (IPO or acquisition at a premium valuation) velocity. Lesson of this article: How do you make $264 million? Start a hedge fund. What insight! While interesting there is little value in this article for average person. That is because the average person spends their day working rather research company performance history, market analysis, etc. It is obvious Weschler is good at what he does. And good on him for making money but it was not a simple trick. He worked at it, something most can not. The best advice is start saving early ... but then that assumes one makes enough to even save. The “simple tricks” of being a hedge fund manager. You idiot. lol Now do the guy who won a jackpot in Vegas. The correlation of intelligence and effort is about the same. As a billionaire, I suppose you are entitled to sneer at his measly quarter billion. You ARE a billionaire, aren't you? (Edited) You DO realize there are millions of Americans who have followed the traditional slow-and-steady financial advice and lost their entire life savings in '08, or had medical bankruptcies, or are other casualties of our highly unequal wealth system, don't you? (And no, I am not one of them. But I know they're there, and I actually care about my fellow humans who did everything they were told. Whether that worked for them involves as much luck as talent or work.) Who "lost their entire life savings in '08"? Perhaps a few that had their entire savings tied up in Mortgage-backed securities, or equity in Lehman Brothers, or other overly-leveraged company. Now if you needed to draw from your retirement savings in 2008-2012, that was definitely painful, but those who didn't panic sell, and maintained a diverse and balanced portfolio, were whole again by 2013. 'and I actually care about my fellow humans' You do? I care about my wife, my pets, some friends and some of my family. (Not all.) The rest of my fellow humans? I only have so much caring left. (Edited) This article amounts to 'click bait.' No 'simple tricks that turned an ordinary investor’s $70,000 retirement account into a $264 million fortune' were divulged. Just standard advice for the masses: start early, max out your contributions, take advantage of your employer's match... and maybe you'll have enough after 40 years if the whole house of cards that is the stock market doesn't fall down. And of course how the privileged in the finance industry can make ridiculous sums with access to research, know-how, Warren Buffet, hedge funds, etc. Boo. You too can benefit from the financial acumen of Warren Buffett, Charlie Munger, etc. And the price of admission is a modest $285/share for BRK-B. You forgot the 2.3 million for a lunch — two years in a row! I agree, his wealth is not reproducible and is NOT the result of simple tricks, although to be fair, I did not see that term applied to his wealth in the article itself as opposed to the headline. Maxing out your retirement accounts, including any employer match, invested in 100% index stock mutual funds, is simple and likely to be very rewarding. Essentially that is what I did, starting near the bottom of the stock market in 1987. My holdings are barely a rounding error of his, still a rounding error of his seems substantial to me. ONE BIG CAUTION to the result of such a strategy cited in the end of the article. The period 1989 to June 30, 2021, was the greatest bull market in bonds in the history of America and probably the world, with interest rates going from high double digits to near zero, and with stock indexes outperforming bonds in that period as a consequence. That performance is unlikely to be repeated. Still, that strategy should likely earn returns well in excess of 5%, perhaps approaching double digits. Yes, we could accumulate hundreds of dollars! standard advice made me a 401k millionaire....but you would be surprised how many people don't even take the free matching money from their employer...The title is misleading but WaPo writers don't write the title. The entire Roth debacle here is really the storyline that needs investigation. Roth's only help out people who have money to pay the taxes in today's dollars. Roth's don't work out too well for the middle and lower class schmo who is using "standard advice" but just has enough to fund a 401k. Yes, agreed. I too am a 401(k), or in my case 403(b) millionaire, but I've eked out a living my entire life, and never had enough money to invest in a Roth. I didn't get a job with decent retirement until I was 38, couldn't afford to put a dime of my own money into the retirement account until I was 46.5, and the odometer kicked up past $1,000,000 on the last day of 2020. Still working at 69, and hoping for 1.25 million before retiring next spring, a few months before I turn 70. Luckily I stumbled into a workplace that contributes 12% whether you put anything in or not. It's the reason I've stayed 31 years. Yes about Roth. You are subsidizing your investment in Roth in current income paid in taxes. Remember, multiplication is transitive, that is, the order you multiply a chain of numbers makes no difference in the product. $4,000 to invest in retirement account: Deductible: $4,000 x 2 (investment return) = $8,000 x 0.75 (25% tax rate on withdrawal) = $6,000. Roth: $4,000 x 0.75 (25% tax rate) = $3,000 invested x 2 (investment return) = $6,000 (no tax due). Tax deferred is better than Roth if your tax rate went down in retirement, which it has. The analysis going forward seems likely to change to favor Roth, as tax rates are likely to go up from here. Still, most disciplined savers are likely to be better off when they are drawing down retirement funds than they are in their early earning years when the deductible contribution gives you more current income, especially to earn the maximum employer match (if any). And avoiding the taxes now is a big psychic incentive to save. Just like it’s wise to diversify your investments, there’s no reason not to diversify your tax strategy too. You can have both traditional and Roth accounts, then choose which account to withdraw from according to your tax situation later. That $1.6 million,” he says, “drives some very simple advice: start early, maximize the (employer) match, invest 100 percent in equities, and ignore all the other noise.” Good advice for 20 -30 somethings but I think people should diversify as they get older. Don't want be nearing retirement, 100% invested in equities and have another 2008 style crash. Why? Are you going to die when you retire? Your time horizon on retirement should be 15-20 years, maybe longer if you retired early. If you have substantial tax deferred retirement accounts subject to Required Minimum Distributions (RMDs) starting in year one of 4% and increasing from there, you need investments that will exceed 4% return to more than preserve your capital. And the RMDs themselves will effectively generate income to live on while preserving your capital. Since the purpose of interest is not to increase wealth, but to preserve your initial investment's buying power, if you are living on the interest, you are not preserving the value of your capital, you are drawing it down. Pretend you retired in 1989 in Japan with 100% invested in stocks. Maybe then you'll see the need for diversification as you approach retirement. Not in japan. "Thiel’s special deal was not available to the general public." This is why people get really angry. Oh, c'mon. Most pre-IPO start-up tech companies offer stock options at an attractive strike price in order to attract and retain talent. Personally, I've had options on hundreds of thousands of shares of pre-IPO tech companies that in most cases, ended up being worthless. (Edited) Did you have the option to put those options in a Roth IRA? Roth IRAs were never intended as a tax dodge for billionaires. *That's* what makes people angry. And rightfully so. Allan, how's about sharing your portfolio with us? I'm sure you've been able to replicate these simple tricks. I couldn't read past the first paragraph..clickbait. Are you confused about how newspaper articles work? Alan's the author of the article, not the subject. It's not an autobiography. and if the author had done his job, he'd have asked that question of the subject. Maybe so. But under no rational circumstance do we expect to see the author's portfolio. Not an example the average person can follow. Stockpicking can also lead to big losses if you aren't a very astute person with an unusual background. And have income that you don't need to live on for investment purposes. That leaves out a lot of people. and Stockpicking isn't for amateurs. Fortunately, there are many other investment vehicles including mutual funds, target (retirement) date funds, ETFs, etc. It's never been easier to build a diverse and balanced portfolio. Most professionals fail at it too. Just like most professional lottery players fail too. Many professionals fail to beat the S&P 500 Anybody can buy the S&P 500. I did all of it except starting early... 'ask me for anything but time.' Starting early makes all the difference, really. Even the S&P 500 return (almost twelve times increase) isn't bad if you started early, and kept at it. One additional thought: The very best 'investment' you can make is to do something you love (or really, really like) doing for work. Then retirement doesn't seem so urgent. ^^^^Truth! I wish I had done that.... "Do what you love," is possibly the worst advice I ever received. I love teaching. But teacher hiring is mostly based on nepotism and favors, so it's taking us at least twice as long to get started as it did the generation before us. When I went to teacher school, the average teacher spent 1-2 years as a sub before getting hired on full-time. Now, it's 3-4 years, and I myself am at year 6 of poverty-wage entry-level positions even though I have a master's degree and excellent grades and test results. Those don't matter at all anymore. All that matters is that you know the hiring director, because the number one thing a hiring director wants is an easy choice, not a good pick. I didn't expect to get rich as a teacher. I knew what I was getting into. That's why I got a master's (so they have to pay you more) and why I spent so much time working for dirt. But it's not worth it, and this is coming from a man who has pined to teach since before he entered Kindergarten, literally. I figured that I would struggle to make ends meet for a few years, and then the raises would start adding up and I'd be able to live comfortably with my modest, minimalist, frugal ways. I don't buy things I don't need, I don't buy things at full price, I have taken on other jobs to fill in the gaps, and I still have to live with my parents. Literally all my friends are in similar situations, not able to find a job in the field they got their degrees in (which include things like business and biology) and getting paid less than their parents made thirty years ago. The job to which I just applied will pay less than my father earned as a mailman in 1990. He doesn't have a college degree, and I've got a master's, and I make less than a mailman did in 1990. And that's not even taking inflation into account. We all took financial literacy classes, but nobody cares about how much education we have, and all the investment strategies in the world won't do a bit of good if you don't have a penny. Great story Mr. Sloan. I don't have even 1% of what this guy has, but I invested the maximum in my 401(k) every week for 26 years, invested mostly in growth stocks and was able to retire in comfort at age 60, with all the money anyone reasonably could want. The basic system described here does work. No, I won't be flying my own spacecraft into orbit, but I can fly to Buenos Aires or Budapest (once the pandemic eases), and I am contributing to our local food bank and to a financial-aid fund at a community college. Deferred gratification and thrift do pay off in the long run. Thanks for the cure for pessimism paralysis. I did the same thing. Of course, we enjoyed a uniquely favorable economic environment, but still, if people do half as well, they should be happy. The rich get richer. Today's "water is wet" article. Didn't read the whole article, did ya? (Edited) "In 1990, Weschler left New York and relocated to Charlottesville to start a leveraged buyout fund with Grace vice chairman Terry Daniels, who was also leaving the company." So ... a private equity guy is really, really rich. Nothing new here. He could probably afford to take huge risks with his retirement fund because he had plenty of non-retirement money as backup. (Edited) The only worthwhile takeaways from the misleadingly titled article are (1) to invest as much as you can, as early as you can, particularly if employer matching is an option, and (2) be strategic about how you calibrate a traditional IRA and a Roth IRA, maximizing the tax advantages of both. Sadly, too many young people have chosen to saddle themselves with (often unnecessary) large amounts of college debt, potentially limiting how much of their investing potential they realize during the years when building a critical mass is of most value later in life. Ah yes, the "we chose this" nonsense. Here we go in short form. We were promised - not just told or advised or encouraged, but promised - that if we took on college debt, we would struggle initially compared to our non-college peers and then we would shoot ahead of them as we went along. We were promised - promised - that if we did well in school, it would be recognized and rewarded. We were assured that while having a contact already in the field would help us get a job, we could get hired based on our merits and work our way up just like all of our parents did. They said that if we got a graduate degree, we were truly ahead of the pack and could expect to be rewarded for that in the future. It was all lies, and they were calculated lies designed to trick us. And I think this bit deserves its own line: WE ARE SEVENTEEN WHEN WE APPLY TO COLLEGE No seventeen-year-old can be expected to peel back the onion-like layers of deception that put us here. We're all qualified, we're all willing to do our jobs, but we can't get hired and we can't get paid. Instead of blaming us for not having jobs, you should hire us for one and see what we can do. Because we've all spent tons of time in school and it seems like nobody thinks that's valuable, despite what they told us before we went. We've been swindled, my friend. Hoodwinked. Cheated. And now we're getting blamed because we didn't catch the cheats? Not our responsibility! Maybe you should just stop with all the nepotism and the workaholicism and the "everybody should be dirt poor first" mentality and we can get this country back on track. Or, could it be that no one will hire you because you demonstrate absolutely no personal responsibility?... Nobody *promised* you a thing, junior. That's not how life works. Recognize your choices here and own them. Did you major in chemical engineering? Or psychology? Get it yet? Saying that everyone can do the same is flat out lying. If everyone that invested 70000 became a mega millionaire, money would be worthless. Imagine giving everyone in America a million bucks. What would a million dollars then mean? Nothing. Your buying power would be based on what you had before you got the million. I suspect this is a guy trying to get out ahead of a scandal before it breaks. His returns are very unrealistic. Didn't read the article, did ya? Nobody says--not even him--that what he did was available to the masses. He does give you advice though: “...drives some very simple advice: start early, maximize the (employer) match, invest 100 percent in equities, and ignore all the other noise.” Take his advice. You need it. Lots of "sour grapes" comments on here. I did some, but not all, of what Weschler did, and while I did not achieve his returns, I did manage to build a hefty retirement account. We're not saying the grapes are sour, we're saying they're poisoned. If you're a fan of fables, check this one out. It's called The Miser. There once was a miserly man who decided to sell everything he had for a lump of gold. He coveted this nugget and, warily, buried it in a hole in a spot only he knew. Every day on his way to work, he would pass the spot and uncover the nugget; he liked knowing he had money, and it made him feel good to see that it was safe and hadn't been stolen. But one day, another workman noticed the miser's frequent trips to this same spot, and he went up after the miser had left and stole the nugget. When the miser went to uncover his lump of gold the next day and found it missing, he despaired. 'Ah me! My fortune! My precious! It's been taken! My life is in shambles!' There was rending of garments and gnashing of teeth, but when his tantrum was over, his neighbor finally approached. 'It hurts me to see you hurt so much,' said the neighbor, 'So I have a fix! Just take a rock and put it in the hole instead and PRETEND it's gold.' The miser was angry. 'But a stone I fancy to be gold isn't worth any money!' The neighbor wisely replied, 'Neither is a true lump of gold, if it's kept underground.' A fortune hoarded is worth nothing. Buffet and Weschler and the people who have you convinced you can be one of them aren't building retirement accounts to retire on. They're just racking up the score and hoping to get in the top ten, perfectly content to let their fortunes sit unused by people who actually need things. None of these fortunes are worth a dime because they won't spend the money, thus keeping our economy half based on a stone we pretend is gold. Clearly a better plan is to spend your time whining like a little girl in the comments section in WaPo about how you are the victim, right? Buffet has transferred tens of billions to the Gates Foundation. I contributed to my various 401K plans for 42 years, maximizing employer contributions and investing mostly in stocks (~80). I had some gains and some losses over the years and ended with $500K in my IRA after I retired. What did I do wrong? Without knowing what your portfolio looks like, I'd guess : a) that you had too much in bonds b) your equities were in mutual funds with high expense ratios, c) you have an account manager who is taking too much in fees. Yes, but given all that, it is hard to explain how he would have done so poorly. The only explanation I could have is he chased individual stocks, following the "advice" of a stock broker and paying big commissions for bum steers. I did what he said he did, for not quite as long, and I have a lot more than that. All in no load stock mutual funds, Or when crashes happened during the last 35+ years, he pulled everything into cash and waited too long to get back in the market. I've seen lots of people do that, get scared and then miss the big, sometimes fast turnaround growth. I read the article. I still don't understand what he is talking about. The "everyman" tone Sloan is trying to put on this story seems disingenuous. Here's the takeaway for you: “...some very simple advice: start early, maximize the (employer) match, invest 100 percent in equities, and ignore all the other noise.” Sounds good if you: -Have an employer who offers a plan -Have a job that, like the subject of the article, pays you enough to be able to save $6000 a year -Actually have real jobs, not gig work I've managed to save about $400k for pending retirement, but mostly thanks to jobs in the past 10 years. Many years, I was temping or otherwise unable to take part in a 401k. But I have no children and have modest tastes (no $1000 smartphones every 2 years, no massive TV, etc). I have friends who lost 30% or more in the value of their stock portfolio in 2008, when they were already retired. They didn't have $29M lying around to offset the losses. And getting a job as a Walmart greeter wasn't going to help. (Edited) Not sure we should be seeing this guy as any sort of hero, or take him at his word that every single transaction he made was a publicly traded thing , and he only ever had publicly available information to base his judgments on. In the end this guy contributed little or nothing to the world, and in return extracted a quarter billion dollars from the rest of us. All of us are a little poorer that he may be fabulously rich. Why should we admire or cheer for that? Please. He took nothing from you. He sure as hell did. Remember that this guy contributed nothing to humanity -- he just bought stuff at one price, then sold the same stuff back at another. Speculating in asset prices is a zero-sum game: for him to profit, somebody else had to lose. His gains came explicitly from the aggregate losses of the rest of the human race, of which I'm a part. Those losses show up to me laundered into uncountably many tiny forms: credit card fees, insurance rates, rents, the prices of food or drugs or gasoline and on and on. Obscuring this connection is terribly important to the tiny subset of us who benefit from these arrangement, so the rest of us can see we're getting screwed, but never quite understand by whom. That's clearly absurd. Stock appreciation in the long term is not a zero-sum game. Nobody has a short position who loses as the stock appreciates over time. Which is what zero-sum means. And if your thesis is that all assets have an inherent short position owned by society, well, then you have far more problems than can be addressed here. All those "laundered" items you list are the result of the *economy*. Blaming some rando who amassed a big pile of cash for not being able to make rent is, again, a strong indictment of *you*. After all, the blame for the cost of your rent is way better placed on you and your neighbor than on anyone else. I'm no defender of the ultra wealthy. Not even close. But that doesn't mean people like me can be complicit in such complete inanity. Can't we leave the magical thinking to the Trumpsters? " In the end this guy contributed little or nothing to the world, and in return extracted a quarter billion dollars from the rest of us." Are you usually this ignorant? (Edited) What did he produce in his career? He was a hedge-fund manager. He bought stuff at one price, he sold the same stuff back at another. He did not build anything, he did not invent anything, he did not grow anything, he did not make anything, he never cut anyone's hair or fixed their fence, he provided no visible service. But in the end he is rewarded with fantastic wealth, the work of tens of thousands of other people. His role in society was purely parasitic. That may be uncomfortable to face, but it is important to see. Thanks for confirming that you are indeed, ignorant. Do you know why the USA has some of the lowest price food in the world? One large part is because it has the most sophisticated derivatives market. This allows farmers to plant with assurance as to how much they will receive for their output at harvest time, regardless of any under supply or oversupply that actually happens. That’s because derivatives allow shifting of risk from those that don’t want it to those that can absorb it. For an ignorant person like you, nothing was done. But fortunately, the farmer knows better. At some point, the big numbers become meaningless. There is only so much money that a person can spend wisely during a lifetime. Yes, you can buy a plane, a yacht, etc but you can only buy so many and use them so much. The rest of the money is accumulated because he simply enjoys the process. I don't have a yacht or a plane but I have enough. I have determined what my peak wealth is and I donate the rest at the end of each year. This touches upon my confusion about Warren Buffet for many years. Why on earth would a person work so hard to accumulate such a staggering amount of wealth and neither spend it on he and his family nor donate it to charity in his lifetime for the enjoyment of seeing it in action helping others. I would learn later, Warren is the ultimate nerd. A company spreadsheet nerd. He loves nothing more than pouring through financial statements of companies to learn about them, and find value companies which he then invests in. He loves the research, not the accumulated wealth or what he can buy with it. The question remains: does this help society? He's helped other become rich too, but yea, we've concentrated a lot of wealth in a small number of bank accounts. That's not ideal. Good article. "Start early, maximize the (employer) match, invest 100 percent in equities, and ignore all the other noise." Pretty simple approach and it really does work. Not everyone will become a multi-millionaire, but they'll be better off financially when they do retire than if they didn't follow that simple advice. "Start early." How? My job pays me a poverty wage even though it requires a master's degree for which I am $70K in debt and still of no interest to hiring managers because I don't know anyone in the business already. The teaching career is rife with nepotism and most job openings are already filled before they're posted. "Maximize the employer match." What match? My employer doesn't really offer one. If I had any extra money, which I don't because I get paid just enough to not qualify for government benefits, it would be pocket change. A 100% return on $10 is still just $20, and you're not getting anywhere near that (more like 5%, which would be $10.50). "Invest only in equities and ignore the other noise." You mean like indices, which consistently outperform the market? Or what about real estate, which historically appreciates steadily? Or CDs, which are an easy and cheap investment you don't have to think about? How about bonds, which don't have a great return but are secure and make people feel patriotic? Stocks are volatile and require research to pick. This stuff does not work for the typical American. They're just ways to give more of your money to rich people and beg for a portion of it back. With the account fees and minimum balances and their other penny-pinching antics, they use your money to make fortunes and give you whatever they think they can get away with. Equity investments are controlled by computers and no human can keep up or beat the system. You *chose* the teaching field, sport. Don't like the results? Go do something else. Nobody owes you a thing. And you're very wrong. Everyone can save and invest in an index fund to take advantage of the equity markets. But here's what we do know though: you wrote this at 11am on a Friday. How's spending your time writing whining comments instead of *working* going for you? Oh, and another piece of advice: anybody with your poor attitude should not be allowed anywhere near a classroom. Here's hoping they realize it and fire you for cause. The first trick is to get a $70,000 retirement account. Weschler cites "exceptional luck" as a factor in his wealth. I suppose having that luck is a "simple trick", with emphasis on the "trick" part. Something else I got from this article - if you want to dedicate your life to thinking about and researching the market and money, you might do really well. Years ago, I actually tried getting into that mode, and saw some small succcesses (or was it luck?). But I knew I didn't really care enough about it to keep it up, because I found it inherently dull and deadening. It takes a certain kind of personality to do this stuff, and I was not that type. This article would have been much more interesting with a couple of examples of the actual successful investments that he made. Presumably, his portfolio was not very diversified since a diversified portfolio could never have generated these kinds of returns so there must have been a handful of investments that were huge wins. (Edited) Although Mr. Weschler’s success is probably not imitable, I applaud this article for pointing out the advantages and costs of a Roth account. At my last job I encouraged my coworkers to take whatever the company was willing to put in our 401s and to invest whatever possible in Roth’s, and pay the tax up front. Getting the growth on the investments tax free is the way to go. Too many people begin to realize this too late when they are cashing out 401s to pay off mortgages or replace cars. The tax bite is so much higher then than it would have been earlier. Pensions are the way to go. 401Ks were created for the investor class and then foisted upon the working class because it's more volatile and you don't have to pay any pensions at all. It's a racket. How many jobs offer you a pension anymore? "chirp chirp" (crickets) NYPD. Dad retired at 53. Paid for all three of his children to earn college degrees. No college debt. Success has its own language and many critics present to not understand or speak it. His point is that pensions were replaced by retirement investment accounts, which do not offer the same security. He is advocating for a policy to return to pensions, not that everyone will be able in the current environment to find a job with a pension. how many offered pensions even back in the day where you could count on the employer not to fire you well short of 20 years? It was never even at 50%. The vast majority of pension plans are underfunded. Further, pension plans were fine when a person worked for the same company for their entire career. That is no longer the case. That said many people for the Federal government because they will get a pension and more over retirement health benefits. Which are worth a lot. (Edited) Federal government hasn't offered pensions since 1986. In my 38 years in the workforce, I've only worked for one organization that offered a pension. A highly-endowed private University. However, I didn't stay in that job long enough (7yr. minimum eligibility if I recall correctly) to be vested in the pension program. For me, a self-directed 401K and rollover IRAs have been the superior route. Portable, flexible, and eligible to begin saving from day-1 of employment. The only benefit of traditional vs roth is whether or not your marginal tax rate goes up or down between making contributions and taking distributions. If the tax rate is the same, then there is no win or loss between the two types of accounts. U R correct. $4,000 to invest Conventional IRA = $4,000 x 200% = $8,000 -- 25% = $6,000 Roth IRA = $4,000 -- 25% = $3,000 x 200% = $6,000 (Edited) Actually, Weschler would have more money if he HADN'T converted to a Roth. There would have been more money to compound tax free in the regular IRA. The tax benefits of the Roth do not appear until you take the money out. The tax benefits of the IRA are there from the beginning, then disappear when you take the money out. That’s why the law requires RMDs, to force you to take the money out so it can be taxed. No useful information in this article. Except, maybe, spend every awake moment investigating obscure companies for investments. Invest in Roth’s rather than 401k. The tax bite is less up front on the investment rather than on the investment and the growth later on! Plus people tend to cash in their 401s in lumps and push themselves into a higher tax brackets and pay more in taxes than they saved initially! the historical return on stocks for most of the post war period was in the 7% - 8% range. Since 2018 there has been tremendous volatility for roughly the same returns. To imply that most people can become multi-millionaires by playing the long term game is ridiculous. It is possible though (and importantly) to make a large contribution to your retirement. "Weschler said that he kept swinging for the fences despite that whopping loss because, 'One of my personal investment mantras is that there’s no such thing as a loss, it’s just an unmonetized lesson'.” That perspective helped him to not make hasty emotionally decisions when facing paper losses. He kept swinging for the fences despite whopping losses in his retirement account because he had other accounts and a high salary. He knew it wouldn't affect him tremendously if he lost all $70,384. Emotions start entering the calculations when you're depending solely on that money for retirement -- it becomes much harder to risk it all in that case. The useful advice is to start early, keep saving, and invest (in index funds if nothing else). It's drowned out by the sensational story of ridiculous gains that can never be matched by normal people who do not have the time nor the ability to examine companies to find potential high-return investments. Mr. Weschler did that for a living and he used what he learned on the job for his personal gain. Good for him, but this article is clickbait. It's really easy to take that approach when you've got a fortune to rely on if it doesn't work. Why would you even care about losing on an investment when your quality of life will not suffer in the slightest? He's just playing a game. Munger said it's a rare combination of patience and aggressiveness that wins this game - most people don't have the temperament to be successful. bummed my roth IRA isn't in the 9 digits, Hahaha! Who gets a company match anymore? PS - for most people who have an IRA it's too late to start early. For younger folks, they aren't getting compensated enough to save for retirement. I'm 34 with exactly $0 in savings and over $70K in student loan debt for an advanced degree that nobody cares about anymore (it's a master's and those are essentially required now). I also have a masters that was required to get my first position and then was never important again. I know to the dollar how much I spent to open that first door. And, no, I did not learn anything in my grad classes that made me a better employee. Don't know where you're looking but many companies still do a match. My son works as a crew member at Trader Joe's and they do a match. A couple of points: 1. Somebody leaked Americans personal tax returns, which is a felony. The IRS needs to identify these leakers and prosecute them to the full extent of the law. 2. Any American could have started PayPal or another business that provided the returns that Thiel and other PayPal founders earned. The founders had no obligation to share either the opportunity to invest or the returns to any other person. Somebody leaked Americans [sic] personal tax returns, which is a felony. It is interesting that Weschler knew about this story before it was published, and responded to questions about his IRA, but did not use legal means to stop its publication. That makes me wonder if there might be more to how ProPublica got their hands on this tax information than it simply being an illegal leak. (Edited) What "more to how ProPublica got their hands on this tax information" are you imagining? In their article, ProPublica wrote that they contacted many of the people whose data they had. I believe trying to stop publication would have been futile, unless someone had proof that ProPublica stole (or contracted others to steal) the information. There is court precedent on similar cases. On 2) - yeah I got mine tough luck losers buzz off! So dumb - they obviously have special insight and talents that 'any American' doesn't possess duh - luck of the genetic draw (and being in the right place at the right time). Sounds like Congress should cap the maximum value of Roth IRA accounts at, say, $10M per person. Anything above that would need to be withdrawn, taxing it as a non-Roth withdrawl. But that's just me being jealous because I don't know anyone who can put me onto an investment with a reasonable shot at a 20,000 fold increase in value. Maybe it's you being jealous, but it's also good tax policy to limit the amount that can be in a tax shelter. What’s the point of writing this article? The average investor does not have time to search out the companies that would provide these kinds of returns, unless he/she “knows someone” who is doing the research. The advise to save and invest early is common sense, but most people don’t have the necessary disposable income. Furthermore, making a Roth conversion requires having disposable funds for the tax bill (which was pointed out). Paid 29 million in taxes by dipping into other accounts. Dont know why I didnt think of dipping into my other accounts. Sigh. Exactly. That was where I stopped reading this article, although once I saw he "has been one of Warren Buffett’s deputies at Berkshire Hathaway since 2012, where he manages billions of Berkshire bucks", I knew where it was going. Did you also check down the back of your sofa? You never know... In the sofa cushions! That’s where my missing $29MM went! What did he invest in? That's my question. Yes, start early, buy and hold, and invest regularly, but the majority of us can't pick individual stock without the necessary information to make an informed decision. Your time is better spent in a casino. A little entertainment soothes the pain of losses. Casinos do not average 10% in positive return; the stock market does. 10% doesn’t get this guy’s returns. that is the achilles heal of this article. about 7%-8% annual returns are more like the normal post war returns. This is far below what this man has earned. It's very simple - all you have to do is buy shares in companies that are extremely undervalued. Please provide a list for the rest of us! 😎 It's so easy! Right! Psst… wanna buy a bridge? (Edited) It's not what you buy, it is when you buy it in the life of the stock. Does it have splits coming that will enhance the value? Will it start to pay dividends? -- but don't try to time the market! Don't read this as anything that a normal person can do. These people are insiders and they are investing their money on inside information. Them mis-using financial instruments that are for normal working people to gain some financial security to create billions in non-taxed profits for themselves is criminal. I'm sick of rich people finding loop-holes so they can avoid paying taxes, which is against their every fiber. Using your money to help others have any kind of security in life is against their immoral principles. This is a ridiculous article and proof of the media’s twisted purpose - the guy is a total outlier. (Edited) He might be a total outlier, but his advice is still sound: "start early, maximize the (employer) match, invest 100 percent in equities" If everyone simply maxed out their employer match, and put the money into the lowest money market they can, they still double their money. Me personally, I'm way behind saving for retirement, but in 2019 I lucked into an employer who matches 100% up to the federal limit, so my ~$17,500 contributions are matched 100%, and the markets gains are magnified. In 2 years I'm at $95K just from this bit of good fortune and putting the money into two mutual funds, my contribution has been ~$32K of that. What company is this? So you tripled your money in ~ 2 years?? Don't see how this is possible with 401k ETFs/Mutual funds - maybe company stock? What company? Exactly right YonderStudio. Why do we glorify selfish tax evading jerks that make gobs of money for themselves instead of those folks that contribute to the betterment of this world? Are you talking about yourself? You certainly aren't talking about the subject of this story. The correct term here is "tax avoidance", something actually encouraged by the IRS. Tax evasion on the other hand, is illegal. Hey Ted, no, I am a cancer biologist, and despite working hard in order to improve this world, I haven’t had the opportunity to avoid taxes like you have. But props, you’ve made a lot of money, congrats on your accomplishments. When you use your money for good— really any meaningful cause—send me another comment. I also disagree that Roth is somehow magically better. With Roth you are not only making a bet that taxes will be cheaper now, you are also making a bet that you will get to use up your entire Roth account before you die. If you don't, you've paid taxes on money you didn't use. I'll stick with a traditional account where I'll only pay taxes on the money I use. I've already projected that if I live to 90 I'll still have 65% of my original balance on the day I retire (at 57, I'm currently 49). If I go sooner then I'll leave even more to my heirs. Its free money for them, let them pay the taxes on it. If you don't, you've paid taxes on money you didn't use. My heirs, such as family, won't pay taxes on them as the Roth(s) continue to grow in value far, far beyond a person's personal lifetime. How anyone could miss this crucial info and gift to their family, and deciding to not help them and "let them pay the taxes on it" speaks for itself, and shows how far off the overall comment is. Skipping the Roth for the very short term gain is one of the most costly mistakes anyone can make, and usually the arguments is they predict they know where taxes, markets, their lives, and finance are headed, and they also always predict perfect returns. This advice is awful. But didn't the Trump tax bill limit Roth inheritances to the heirs having to use all the money within 10 years? I remember reading that and being extremely annoyed about that part being snuck in there. When before it was a certain percentage they had to withdraw every year. you're going to pay more taxes in retirement than you had to, for this approach. Those with roth balances to draw from are in better position to avoid paying any taxes on long term capital gains or dividends (by keeping taxable income in lowest two brackets) as well as paying less for medicare. The combo of the IRA and the Roth IRA to manage brackets is very powerful. (Edited) I'm certain that my taxes will be higher in retirement and a Roth account can be left to beneficiaries.