February 1, 2014

I Can Haz Stock Optionz?

Here’s a piece of investment and career advice: If your job doesn’t give you a piece of equity in the company you’re working for, it’s time to move on.

You Need Equity To Live In Silicon Valley

140131-stanford-memeMay 22, 2013 – Andy Rachleff Wealthfront

The other day we were modeling our typical client’s spending when we realized something disturbing – an average Bay Area-based young couple has to own equity in a business if they hope to send their kids to a good university and be able to retire well.

Investing well alone can’t get you there.

Our analysis found you need to work for at least one company where your equity stake can generate at least a few hundred thousand dollars after tax to make your economics work in the Bay Area.

The problem is the hole that opens up in a typical couple’s budget when they are in their late 30s. Three big pressures converge then: the mortgage on your expensive Bay Area home, and the dueling needs to fund your retirement and your kids’ college early so that you take advantage of compounding.

That’s why we say: You need equity to live in Silicon Valley.

And we say, you need even more equity to live in The Real Silicon Valley.  Then again, you could always rent AND send your kids to Community College and Cal State AND move to Arkansas for your Golden Years.

Basically this is another one of those “We make $250,000 a year and we feel sooooooo poooooor” pieces. Please all join in this First World Problems Pity Party because in lieu of another crap house for your disapproval.

Comments (9) -- Posted by: madhaus @ 7:06 am

9 Responses to “I Can Haz Stock Optionz?”

  1. nomadic Says:

    I thought the article was going to say you need equity because these days you have to pay cash to “win” the bidding for a house. Where else are you going to scrounge up $1M+?

  2. PK Says:

    We all know the real problem in the Bay Area – billionaires coming into our neighborhoods and running roughshod over the average millionaires. Typical.

  3. dollarbin Says:

    Company equity stake? Whatever happened to simply pushing your elderly parents down the stairs and getting a few hundred g’s from their estate?

  4. M2W2 Says:

    Real Estate — are you still on this blog? I would really like to get your opinion on a property I’m considering. I’ll post a throwaway email if you’re still reading this.

    Thanks
    Must walk 2 work

  5. M2W2 Says:

    edit:
    *Real Estater

  6. nomadic Says:

    dollarbin, a few hundred G’s doesn’t cut it where $500k is “not a lot of money.”

    Might work in flyover land though…
    ;-)

  7. Real Estater Says:

    The article neglected one fact: The couple’s savings account is their house. By the time they retire, their house should have at a minimum tripled in value, and they can live happily ever after. There is no doubt about it.

  8. Alex Says:

    *holds HOMELESS sign*

    Brother, can you spare a millyun or 2?

  9. Alberto Says:

    Real Estater,
    I understand your point but:
    1. with a bubble bursting every 6-8 years in the last 20 yrs
    2. with the maintainance costs that a house made of wood requires
    3. with the cost of life not actually followed by the average salary, here in Silicon Valley in particular

    …can you please explain to me what percentage of Silicon Valley population that “there is no doubt about it” apply to?
    I’m not being sarcastic, I’m being serious: apart from foreign investors with piled tons of cash, survivors from 2008 housing bubbles who didn’t loose their jobs, and WhatsApp former workers now swimming in pools of golden coins, who is actually gaining from a “tripled” house value, as is?

    Thanks
    Alberto.


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