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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]On DCUM, every time someone asks this question, multiple people say: "family money" because then they don't have to think about what they themselves could have done differently. I really don't think receiving large gifts or inheritances from family is as prevalent as you think. Minor downpayments are the most common form of help, but usually don't run into paying for the entire house.

Practically no one ever says: "stock market". Yet for us, that's been the sole driver of our wealth, and I suspect it contributes to the wealth of a lot of my neighbors in Bethesda, along with people who manage or sell successful businesses. We bought high tech stocks when they were cheap because we believed in the product and decades later can sell some stocks to meet our needs.

[/quote]

But how did you have so much excess wealth 20 years ago to invest substantial sums on individual stocks?

[b]We followed the “prudent advice”:[/b]

Paid down student loans (guaranteed return as they say) but not too fast as they were tax deductible 
Invested in diversified index funds through maxed out 401ks
Kept adding to some long term CDs for building up a down payment on a house (which took a LONG time since houses appreciated faster than the $50k/year we were saving). 
Then we had kids, and whose there went $28k/year/kid for daycare
Then we bought a house and suddenly we are dropping $20k for waterproofing a basement…

Dabbling in the stock market is fun, but a) in 2023 you can say tech was great, but you have survivor bias (and honestly most high flying tech are not profitable enough to justify their valuation, like Uber or Tesla, or have already past their prime like Facebook). 
In general they recommend against investing large sums in individual stocks unless you don’t care to lose it. And if you don’t care to lose $20Ks of dollars, you are already WAY richer than us and likely OP. [/quote]

You followed the “prudent advice”. This is exactly your problem. This is OP’s problem. 
This is the reason she is left behind. She doesn’t play to win. She plays not to lose.
“Prudent advice” will not get you rich overnight. It will make you comfortable when you get old. 
OP’s friends that are getting richer are probably playing more aggressively and taking more risks. 
“Prudent advice” is what most people choose to follow. Go to college and get a 9-5 corporate job instead of the 
more riskier path of entrepreneurship. Same with investing.

I bet some of OP’s friends took more risks with their investments and got rewarded.

[/quote]

And the data shows that the majority of people who can take risks are wealthy or have a wealthy family etc. [/quote]

This, but the problem is that the people who do this don't understand the ways in which they are wealthy.

No one is getting rich by working a 60k a year job and playing the stock market on the side with their "disposable income" instead of sinking it into retirement. No one, sorry.

Some small number of people may work jobs like this, work their way up the ladder, while saving very aggressively and then using *some* of their savings (on top of what they are saving for retirement) to play the stock market, and are successful. You need a lot of things to cut your way for this to work -- you need to not have any sudden surprise expenses that would eat up those savings, like a medical crisis or needing to replace a car at an inopportune time, and you also need to get somewhat lucky on the market. This is the "risk" part of taking risks. You might lose. Some people save up money, invest it, and it doesn't work out. And you can assume you're smarter than everyone else if that doesn't happen to you, but if that were true, then these investments wouldn't be risks. The reason the rewards are higher is because there is a high risk of failure. If it works, you got lucky.

But the most common way people get rich via "risky" investments is by making them with play money. This means they are not investing their income or even savings built out of income. They are investing lump sums they got from inheritances, trust funds, or other extra sources of income that most people do not have. They can take bigger risks with this money because if they lose it, they still haven't touched their income or retirement or ordinary savings. I know people who have bought investment properties or worked brokerage fund using lump sums ranging from 20k to 500k that they received through no work on their part -- inheritance from a grandparent, trust fund coming due upon a certain age, etc. And yes, these people have done well for themselves and built real wealth. But the reason they were able to take bigger risks is that they were playing with house money. If you walk into a casino and the casino gives (not lends) you 100k, you are going to behave differently than if you are playing with your own money.

This idea that peopel who are just tucking money into retirement and emergency funds and refusing to take "big risks" are being dumb ignores the fact that most people making money off of investing are not doing so with money they earned as ordinary income.[/quote]

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