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> save more, spend less, and invest in things that last and grow That's the basic formula for retirement saving in a nutshell. I'd wager that most people grasp
by roymurdock 9y ago
> save more, spend less, and invest in things that last and grow
That's the basic formula for retirement saving in a nutshell. I'd wager that most people grasp the logic of this formula at a basic level without a formal education in investing, or needing to pay for a financial advisor.
What people (myself included) lack is the discipline to save more + spend less, and the accounting skills + access to information required to make informed investment decisions and to create/manage balanced portfolios.
The rise of the index fund has been helpful...but investing is still an extremely opaque process at best. One of the more recent examples is the death of the intuitive link between "buy low, sell high" AKA "value investing"[1] that has a bunch of GS investors scratching their heads. If this basic economic link starts to break down...how can people with already limited financial knowledge make smart investment decisions? Or is buying the index really the way forward, until another market correction?
Are you seeing any interesting companies in the space that are working on solving these basic problems, or working in this space yourself? As a 24 year old I'd be interested to hear how the industry is evolving to accommodate younger investors that are just starting out on the retirement path.
[1] https://www.bloomberg.com/news/articles/2017-06-08/goldman-sachs-mulls-death-of-value-investing-after-losing-decade https://www.bloomberg.com/news/articles/2017-06-08/goldman-s...
- wbl 9y agoDon't make smart decisions. Sign onto Vanguard, set up autoinvest, and forget you ever did.
- Mz 9y agoWhat people (myself included) lack is the discipline to save more + spend less, and the accounting skills + access to information required to make informed investment decisions and to create/manage balanced portfolios. Assuming you aren't outright dirt poor, none of this requires serious discipline or accounting skills or even diversification. You can buy stocks in blue chip companies and set up a DRIP. Between the DRIP and stock splits, over time, your nest egg grows. People who want to invest often use tricks to make the money less accessible to themselves so that when they are feeling like accessing it and blowing it for some reason, there is a built in cooling off period. (A la the "put your credit cards in the freezer" type suggestions.) People who invest are people who choose to invest. You learn about investing by doing it and by reading relevant news publications, like the Wall Street Journal.
- MR4D 9y agoUnfortunately, many people over time have taken your advice. They bought WorldCom, Enron, Sears, Northern Telecom, and many others. It does require work and significant knowledge. And generally speaking, you will learn very little about things like asset allocation, correlations, or liquidity analysis from the WSJ. I'd recommend following Dave Ramsey for a awhile before doing anything. Way too many people want to jump into the deep end before making sure they even have their bathing suit on.
- smileysteve 9y agoAs a 24 year old, investing as much as possible for compound interest. While living the life you want to live. You'll be miles ahead. And have a plan.
- smileysteve 9y agoIndex funds don't need a correction, Random Walk doesn't show index funds outperforming every individual pick, it shows indices beating active trading over time, esp with fees. Assuming relatively perfect markets, it's self adjusting. If there is a short term where active management beats passive, then the money adjusts until active fund is over priced when the index funds make better returns again.