11 ms·

This is quite sad. One thing i've been shocked by over the years is how often even well educated, highly intelligent individuals have a very poor education in

This is quite sad. One thing i've been shocked by over the years is how often even well educated, highly intelligent individuals have a very poor education in personal finance and make terrible decisions. Theres just so much noise out there and its still crazy how much of the investment management industry exists despite showing negative value. If I had to sum up personal finance advice for the average person in a few bullets it would be this. 1. Invest in a well diversified portfolio that pays very low fees (vanguard funds for instance) 2. Do not try to time the market 3. Save as much as you can as early as you can - maximize your 401k/ROTH contributions 4. Never carry a balance on your credit card from month to month And yet so much goes wrong...

QAPereo 9y ago
Finance isn't rigorous or fundamental in the way that somethings like math, physics, chemistry, etc are. In that way, it's a lot less interesting to many highly intelligent people, because it is after all, just bullshit which happens to be capable of making you rich in a narrow point in time. In another time and place, there would be nothing valuable or true about most of economics, finance, and the like. Meanwhile the hyperfine transitions of Hydrogen are, and will always be what they are, and be just as useful and fundamental in a thousand years (hopefully). So, unless the highly intelligent, well educated person has a particular interest in finance, it's probably going to appear to be the crooked, black magic shitstorm it really is.
- alexanderstears 9y ago
  It's not accurate to characterize finance as simply something that happens to be capable of making you rich in a narrow point in time. More than you know, I'm not a cheerleader of modern finance but it is the reason that most of the capital in the world exists and it's important for people to be aware of it as a fundamental part of our society. People ignore it at their own risk. You're right that the problems of finance aren't fundamental to the natural world, and they're not as elegant as the problems in mathematics and the mathematical sciences. However, there is some basic amount of financial knowledge that people should have as a basis of functioning in the world. And I think many intelligent people should be interested in establishing that knowledge base because it can enrich their life. What's fortunate is that the amount of knowledge required to simply understand one's degrees of freedom and the outcomes is pretty basic. Even if you don't find it interesting, you should be able to slog through it in less than a day. And that's a good thing because it would take a lot longer than a day to get to the state of the art in finance but that's not critical to understanding why it's unfavorable to use a credit card to buy a car.
  - Retric 9y ago
    Finance also causes a lot of problems. If nobody could get a home loan the housing prices would drop. But, loans don't create wealth so long term would be closer to break even than you might think.
    - alexanderstears 9y ago
      and so we use finance to bridge time horizons. The banks should only lend money to people who would be capable of saving for a house. But if you're capable of saving for a house, and someone has money they're not using, why not use their money to buy the house and pay them back? If every party satisfies their self-interest, their transaction creates value (which is distinct from wealth). Financial market problems are finance problems to the extent that North Korea's nuclear tests are physics problems. The body of knowledge exists, an actor uses it. My personal estimation is that a lot of the good things in this world exist because of fractional banking and finance and that humanity is better for it. I think we can do better, but throwing the baby out with the bathwater is a recipe for disaster. Replace 'finance industry' with 'airline industry'. Sure, the airlines pollute, and planes crash and that's unimaginably bad. But each time a plane crashes, all the subsequent trips get safer. We're never going to make it perfect, but we can make it easier to roll the dice. And people don't fly places and engage finance for no reason - they do so to improve their lives. We should focus on improving peoples lives, whether that's making it easier for them to find a place to live or transport themselves.
      - Retric 9y ago
        The problem IMO is by adding intermediaries to a transaction you also increase costs. Society pays a massive subsidy on home loans so many of these costs are also hidden. EX: Home ownership limits mobility reducing economic growth. What happens without loans? Well, someone with capital to give out a home loan could just as easily buy then rent out a house. This would increase the pressure on home construction industry to build things to last. Further assuming there was no tax subsidy we would reach a different equilibrium. I don't know if this would be 'better' but it would have different costs.
- bllguo 9y ago
  It may be less interesting to highly intelligent people, but finance employs an enormous number of them regardless. I assure you that plenty of highly intelligent people care just as much as anyone else about being rich. Your implication - that highly intelligent people are more likely to care about "useful and fundamental" scientific results than money - seems very naive.
walshemj 9y ago
There are problems with trackers and closet trackers I sthat you have to by the dog's Some of my actively managed funds managed to avoid a lot of the loss on bank shares - a tracker would have had to keep holding risky bank stocks or say enron and take the loss
- joosters 9y ago
  And the active funds would have noticed Enron how?
  - kgwgk 9y ago
    Not a good example: https://en.wikipedia.org/wiki/James_Chanos#Enron_collapse https://en.wikipedia.org/wiki/James_Chanos#Enron_collapse
    - ceejayoz 9y ago
      Also not a good example. Individual fund managers, financiers, etc. often make individual correct (or lucky, sometimes) decisions. It's their ability to do that continuously for decades that's very much in doubt.
      - walshemj 9y ago
        I think there where enough signs of enron being doddgy
        ceejayoz 9y ago
        Given that individuals who predicted it are notable enough to have a Wikipedia entry, I'd say that's hindsight talking.
    - jogjayr 9y ago
      That just moves the problem away from stock-picking to manager-picking. How do you pick a "good" manager as a retail investor? A winning track record could just be the result of survivorship bias.
sillysaurus3 9y ago
Some of it goes wrong because it has to. Few carry a balance on their card because they're incompetent.
- aperrien 9y ago
  I agree. Due diligence is always important, but it often seems that a lot of financial advice seems to say "Don't have anything go wrong in your life, or in your family's life."
  - jimhefferon 9y ago
    Yes, OP's advice is perhaps a good first approximation but a lot of people have a kid get sick, or some other disaster that could not be helped. Not everyone, for sure, but a lot.
3pt14159 9y ago
Disclosure: I'm probably exposed to every stock in this comment. Eh. If you're smart and in technology you can beat index funds pretty easily. I'm not even counting Bitcoin. I time the market too. Your advice works for the median person, but if you're in the intellectual 1% or 0.1% beating the market is pretty easy. 1. You should have a really good reason for buying a high P/E or negative EPS stock. It should be grounded in unit economics and entrenchment, not marketing. Tesla is a good example, I knew it was just a matter of unit economics. The technology was solid. Made over 10x sans options. Apple is another good example: They had a low P/E and I thought they were well situated to make money from services if they could just figure out how to design better software. They did it. 2. When the cover of Time magazine is this: http://img.timeinc.net/time/images/covers/pacific/2005/20050613_400.jpg http://img.timeinc.net/time/images/covers/pacific/2005/20050... And The Economist is this: https://i.ebayimg.com/images/g/qcYAAOxyGwNTFJSE/s-l300.jpg https://i.ebayimg.com/images/g/qcYAAOxyGwNTFJSE/s-l300.jpg Put two and two together and put everything in cash. Sure I missed out on two years of growth, but after the recession hit I bought back at half. Bought back in when things had stabalized and recently sold 85% of the portfolio because fundamentals look wacky. It might take a month it might take two years, but another recession is coming. 3. Research the damn thing. If you don't understand it well enough don't buy it. You're not losing money by failing to buy the next hot thing. I read the entire Bitcoin paper before buying to make sure it could handle different stresses. My only regret was not leaning harder into it when I bought it at $4 CAD / BTC. I was too sheepish about "internet monopoly money" even though I knew it could hit $10k or $50k a coin if it took off. 4. Don't necessarily max out your 401k / RRSP. Tax rates are going way, way, way up once the baby boomers hit the social safety net. If you aren't at the top marginal rate you're using up tax deferment that will be better once you are. Plus having money outside of these vehicles makes investing in your friends startup easier. The only exception is if you're buying a house and you can loan yourself money from it (since it's like buying the house tax free). 5. Bubbles can go on for way longer than you think. Just be fucking patient. Do I wish I mortgaged a house in Toronto in 2009? Sure. But the stock market has gone up too and housing at these levels is unsustainable. At the very least housing price growth will subside.
- mikestew 9y ago
  I'm sure you're being downvoted for going against orthodoxy by suggesting that one can "beat the market". I agree with you in that it can be done, and should not be attempted by most people (I personally would not put intelligence constraints on it; I think it's a factor of one's tolerance for looking at financial data, and an ability to keep emotion out of trading decisions). I don't try to time the market, however. My prime directive is to preserve capital, which I implement mostly through stops. I'm happy to leave money on the table, but I don't want to lose money. But let's look at the fund in question: how did they stay funded? The same way a lot of bad funds stay funded: people put money in and never look at it again. And those people are not the ones updating stop limits, looking at charts, and basically making a hobby of their finances. Those people should be buying index funds. And there is absolutely nothing wrong with that. With the time I've spend reading books, tracking markets, etc., I could have learned a language, started a business, build my own house, whatever. Because after looking at returns over the last twenty years, yeah, I have demonstrated I can consistently beat the market (or more likely, can leverage opportunities of sheer luck), but not by enough to make the opportunity cost worth it if I didn't actually like doing it as a hobby. And folks should completely ignore your point #4, especially the part about buying a house "tax-free". Eh, not quite.
cletus 9y ago
There's actually more to it than that. It's worth noting that there is a not insignificant number of people who are poor because they make (financially) poor decisions. I say this completely not in a way that's judgmental or dismissive of the issues poorer people have (in the US in particular). There are a number of reasons for this. Decision fatigue [1] is one of them. So when you have anything from a moderate amount of wealth, you probably know that time, patience and a little financial discipline is all that's required to preserve and even grow that wealth. Have you ever noticed that it's mostly poor people who buy lottery tickets [2]? Likewise it's the poor who disproportionately fall for "get rich quick" schemes. Some of this you can attribute to bad judgment but also desperation plays a part. I mean, if you have $1000, what does a 10% return net you? $100? Who cares? But what if it could turn into $100,000? Now that'd be something! I suspect this plays into the gullibility of many when it comes to scams. So in the Steadman case I imagine there was some of that but I also suspect many (or even most) investors were just trying to invest in their future without the promise of 1000x returns and just got duped. Don't discount the "get rich quick" mentality though. I've seen this first hand. My father and uncle spent their entire lives trying to get rich quick. [1] http://www.nytimes.com/2011/08/21/magazine/do-you-suffer-from-decision-fatigue.html http://www.nytimes.com/2011/08/21/magazine/do-you-suffer-fro... [2] https://www.theatlantic.com/business/archive/2015/05/lotteries-americas-70-billion-shame/392870/ https://www.theatlantic.com/business/archive/2015/05/lotteri...
- goialoq 9y ago
  There are some weird biases on display here, and conflation of income and wealth. Plenty of high-income people have low wealth because they waste money. Obviously, the higher income you have, the more buffer you have against bad decisions, and the more growth opportunity you have.
npsimons 9y ago
> 1. Invest in a well diversified portfolio that pays very low fees (vanguard funds for instance) 2. Do not try to time the market 3. Save as much as you can as early as you can - maximize your 401k/ROTH contributions 4. Never carry a balance on your credit card from month to month I have to strongly second all of these; the issue becomes, once you've done them, what more can you do? You get to a certain age and realize you have most of your career behind you, or you'd like to have most of your career behind you so you can retire early - how do you get there? It's a problem that cuts across different aspects in life: what to eat, how to exercise, etc. Min/maxing, munchkining applied to real life. Is it any surprise that software engineers looking to squeeze the last possible cycle or byte out of their software do these sorts of things? But much like software, premature optimization is the root of all evil . . .
- mooreds 9y ago
  Have you read Mr Money Mustache? He has lots to say about this stuff: http://www.mrmoneymustache.com/ http://www.mrmoneymustache.com/
ChuckMcM 9y ago
It is sad on many levels, but it is also understandable. I've met people who consider their maxed out 401K savings as "meeting their savings goal" and so they spend excess income of frivolous things. Hardest thing in the world to explain to someone looking at an unexpected end of the year bonus of $50K that even though they saved the 'maximum' of the about $25K in their 401k they should also put at least half of that $50K into savings as well. Unless you have 10x your annual salary in a savings account you really can't say you have 'saved enough'. Even then there are so many things that can and do hit you in life that aren't part of the plan. Your house burns to the ground, your kid develops cancer, your wife decides she likes someone other than you better, Etc. It goes on and on. My grandmother was a daughter of the depression and was really paranoid about future losses (when she passed we found vegetables and fruits she had canned 'just in case' in the cellar that were decades old!) But she also had an expression I liked. I would ask her what she was saving for and she would say "I don't know but I'm sure God will tell me what it is when the time is right."
- nine_k 9y ago
  Saving 10x your annual salary means saving half of your salary for twenty years. This is, to my mind, not very realistic. You need to invest into something highly profitable to hit this goal without being so drastic, e.g. to have bought some Bay Area realty in 1980s, or some Apple stock around that time. This is not a common option, and it's mostly unavailable now.
  - kayhi 9y ago
    I think this is why people recommend starting early and having a 40 year window. I’m considerate of the fact that many have student loans, etc. and this isn’t feasible. A blogger Mr. Money Moustche pushes hard on having a high savings rate compared to the norm.
    - ChuckMcM 9y ago
      This is absolutely true. Student loan debt is a huge burden. If you're burdened by debt then most financial advisers in a low inflation scenario suggest you pay it off as quickly as you can. If we suddenly get 8 - 12% annual inflation and your salary is tracking that, then by all means stretch out your repayment so that you can pay it off with inflated dollars.

QAPereo 9y ago

Finance isn't rigorous or fundamental in the way that somethings like math, physics, chemistry, etc are. In that way, it's a lot less interesting to many highly intelligent people, because it is after all, just bullshit which happens to be capable of making you rich in a narrow point in time. In another time and place, there would be nothing valuable or true about most of economics, finance, and the like. Meanwhile the hyperfine transitions of Hydrogen are, and will always be what they are, and be just as useful and fundamental in a thousand years (hopefully). So, unless the highly intelligent, well educated person has a particular interest in finance, it's probably going to appear to be the crooked, black magic shitstorm it really is.

alexanderstears 9y ago
It's not accurate to characterize finance as simply something that happens to be capable of making you rich in a narrow point in time. More than you know, I'm not a cheerleader of modern finance but it is the reason that most of the capital in the world exists and it's important for people to be aware of it as a fundamental part of our society. People ignore it at their own risk. You're right that the problems of finance aren't fundamental to the natural world, and they're not as elegant as the problems in mathematics and the mathematical sciences. However, there is some basic amount of financial knowledge that people should have as a basis of functioning in the world. And I think many intelligent people should be interested in establishing that knowledge base because it can enrich their life. What's fortunate is that the amount of knowledge required to simply understand one's degrees of freedom and the outcomes is pretty basic. Even if you don't find it interesting, you should be able to slog through it in less than a day. And that's a good thing because it would take a lot longer than a day to get to the state of the art in finance but that's not critical to understanding why it's unfavorable to use a credit card to buy a car.
- Retric 9y ago
  Finance also causes a lot of problems. If nobody could get a home loan the housing prices would drop. But, loans don't create wealth so long term would be closer to break even than you might think.
  - alexanderstears 9y ago
    and so we use finance to bridge time horizons. The banks should only lend money to people who would be capable of saving for a house. But if you're capable of saving for a house, and someone has money they're not using, why not use their money to buy the house and pay them back? If every party satisfies their self-interest, their transaction creates value (which is distinct from wealth). Financial market problems are finance problems to the extent that North Korea's nuclear tests are physics problems. The body of knowledge exists, an actor uses it. My personal estimation is that a lot of the good things in this world exist because of fractional banking and finance and that humanity is better for it. I think we can do better, but throwing the baby out with the bathwater is a recipe for disaster. Replace 'finance industry' with 'airline industry'. Sure, the airlines pollute, and planes crash and that's unimaginably bad. But each time a plane crashes, all the subsequent trips get safer. We're never going to make it perfect, but we can make it easier to roll the dice. And people don't fly places and engage finance for no reason - they do so to improve their lives. We should focus on improving peoples lives, whether that's making it easier for them to find a place to live or transport themselves.
    - Retric 9y ago
      The problem IMO is by adding intermediaries to a transaction you also increase costs. Society pays a massive subsidy on home loans so many of these costs are also hidden. EX: Home ownership limits mobility reducing economic growth. What happens without loans? Well, someone with capital to give out a home loan could just as easily buy then rent out a house. This would increase the pressure on home construction industry to build things to last. Further assuming there was no tax subsidy we would reach a different equilibrium. I don't know if this would be 'better' but it would have different costs.
bllguo 9y ago
It may be less interesting to highly intelligent people, but finance employs an enormous number of them regardless. I assure you that plenty of highly intelligent people care just as much as anyone else about being rich. Your implication - that highly intelligent people are more likely to care about "useful and fundamental" scientific results than money - seems very naive.

walshemj 9y ago

There are problems with trackers and closet trackers I sthat you have to by the dog's Some of my actively managed funds managed to avoid a lot of the loss on bank shares - a tracker would have had to keep holding risky bank stocks or say enron and take the loss

joosters 9y ago
And the active funds would have noticed Enron how?
- kgwgk 9y ago
  Not a good example: https://en.wikipedia.org/wiki/James_Chanos#Enron_collapse https://en.wikipedia.org/wiki/James_Chanos#Enron_collapse
  - ceejayoz 9y ago
    Also not a good example. Individual fund managers, financiers, etc. often make individual correct (or lucky, sometimes) decisions. It's their ability to do that continuously for decades that's very much in doubt.
    - walshemj 9y ago
      I think there where enough signs of enron being doddgy
      - ceejayoz 9y ago
        Given that individuals who predicted it are notable enough to have a Wikipedia entry, I'd say that's hindsight talking.
  - jogjayr 9y ago
    That just moves the problem away from stock-picking to manager-picking. How do you pick a "good" manager as a retail investor? A winning track record could just be the result of survivorship bias.

sillysaurus3 9y ago

Some of it goes wrong because it has to. Few carry a balance on their card because they're incompetent.

aperrien 9y ago
I agree. Due diligence is always important, but it often seems that a lot of financial advice seems to say "Don't have anything go wrong in your life, or in your family's life."
- jimhefferon 9y ago
  Yes, OP's advice is perhaps a good first approximation but a lot of people have a kid get sick, or some other disaster that could not be helped. Not everyone, for sure, but a lot.

3pt14159 9y ago

Disclosure: I'm probably exposed to every stock in this comment. Eh. If you're smart and in technology you can beat index funds pretty easily. I'm not even counting Bitcoin. I time the market too. Your advice works for the median person, but if you're in the intellectual 1% or 0.1% beating the market is pretty easy. 1. You should have a really good reason for buying a high P/E or negative EPS stock. It should be grounded in unit economics and entrenchment, not marketing. Tesla is a good example, I knew it was just a matter of unit economics. The technology was solid. Made over 10x sans options. Apple is another good example: They had a low P/E and I thought they were well situated to make money from services if they could just figure out how to design better software. They did it. 2. When the cover of Time magazine is this: http://img.timeinc.net/time/images/covers/pacific/2005/20050613_400.jpg http://img.timeinc.net/time/images/covers/pacific/2005/20050... And The Economist is this: https://i.ebayimg.com/images/g/qcYAAOxyGwNTFJSE/s-l300.jpg https://i.ebayimg.com/images/g/qcYAAOxyGwNTFJSE/s-l300.jpg Put two and two together and put everything in cash. Sure I missed out on two years of growth, but after the recession hit I bought back at half. Bought back in when things had stabalized and recently sold 85% of the portfolio because fundamentals look wacky. It might take a month it might take two years, but another recession is coming. 3. Research the damn thing. If you don't understand it well enough don't buy it. You're not losing money by failing to buy the next hot thing. I read the entire Bitcoin paper before buying to make sure it could handle different stresses. My only regret was not leaning harder into it when I bought it at $4 CAD / BTC. I was too sheepish about "internet monopoly money" even though I knew it could hit $10k or $50k a coin if it took off. 4. Don't necessarily max out your 401k / RRSP. Tax rates are going way, way, way up once the baby boomers hit the social safety net. If you aren't at the top marginal rate you're using up tax deferment that will be better once you are. Plus having money outside of these vehicles makes investing in your friends startup easier. The only exception is if you're buying a house and you can loan yourself money from it (since it's like buying the house tax free). 5. Bubbles can go on for way longer than you think. Just be fucking patient. Do I wish I mortgaged a house in Toronto in 2009? Sure. But the stock market has gone up too and housing at these levels is unsustainable. At the very least housing price growth will subside.

mikestew 9y ago
I'm sure you're being downvoted for going against orthodoxy by suggesting that one can "beat the market". I agree with you in that it can be done, and should not be attempted by most people (I personally would not put intelligence constraints on it; I think it's a factor of one's tolerance for looking at financial data, and an ability to keep emotion out of trading decisions). I don't try to time the market, however. My prime directive is to preserve capital, which I implement mostly through stops. I'm happy to leave money on the table, but I don't want to lose money. But let's look at the fund in question: how did they stay funded? The same way a lot of bad funds stay funded: people put money in and never look at it again. And those people are not the ones updating stop limits, looking at charts, and basically making a hobby of their finances. Those people should be buying index funds. And there is absolutely nothing wrong with that. With the time I've spend reading books, tracking markets, etc., I could have learned a language, started a business, build my own house, whatever. Because after looking at returns over the last twenty years, yeah, I have demonstrated I can consistently beat the market (or more likely, can leverage opportunities of sheer luck), but not by enough to make the opportunity cost worth it if I didn't actually like doing it as a hobby. And folks should completely ignore your point #4, especially the part about buying a house "tax-free". Eh, not quite.

cletus 9y ago

There's actually more to it than that. It's worth noting that there is a not insignificant number of people who are poor because they make (financially) poor decisions. I say this completely not in a way that's judgmental or dismissive of the issues poorer people have (in the US in particular). There are a number of reasons for this. Decision fatigue [1] is one of them. So when you have anything from a moderate amount of wealth, you probably know that time, patience and a little financial discipline is all that's required to preserve and even grow that wealth. Have you ever noticed that it's mostly poor people who buy lottery tickets [2]? Likewise it's the poor who disproportionately fall for "get rich quick" schemes. Some of this you can attribute to bad judgment but also desperation plays a part. I mean, if you have $1000, what does a 10% return net you? $100? Who cares? But what if it could turn into $100,000? Now that'd be something! I suspect this plays into the gullibility of many when it comes to scams. So in the Steadman case I imagine there was some of that but I also suspect many (or even most) investors were just trying to invest in their future without the promise of 1000x returns and just got duped. Don't discount the "get rich quick" mentality though. I've seen this first hand. My father and uncle spent their entire lives trying to get rich quick. [1] http://www.nytimes.com/2011/08/21/magazine/do-you-suffer-from-decision-fatigue.html http://www.nytimes.com/2011/08/21/magazine/do-you-suffer-fro... [2] https://www.theatlantic.com/business/archive/2015/05/lotteries-americas-70-billion-shame/392870/ https://www.theatlantic.com/business/archive/2015/05/lotteri...

goialoq 9y ago
There are some weird biases on display here, and conflation of income and wealth. Plenty of high-income people have low wealth because they waste money. Obviously, the higher income you have, the more buffer you have against bad decisions, and the more growth opportunity you have.

npsimons 9y ago

> 1. Invest in a well diversified portfolio that pays very low fees (vanguard funds for instance) 2. Do not try to time the market 3. Save as much as you can as early as you can - maximize your 401k/ROTH contributions 4. Never carry a balance on your credit card from month to month I have to strongly second all of these; the issue becomes, once you've done them, what more can you do? You get to a certain age and realize you have most of your career behind you, or you'd like to have most of your career behind you so you can retire early - how do you get there? It's a problem that cuts across different aspects in life: what to eat, how to exercise, etc. Min/maxing, munchkining applied to real life. Is it any surprise that software engineers looking to squeeze the last possible cycle or byte out of their software do these sorts of things? But much like software, premature optimization is the root of all evil . . .

mooreds 9y ago
Have you read Mr Money Mustache? He has lots to say about this stuff: http://www.mrmoneymustache.com/ http://www.mrmoneymustache.com/

ChuckMcM 9y ago

It is sad on many levels, but it is also understandable. I've met people who consider their maxed out 401K savings as "meeting their savings goal" and so they spend excess income of frivolous things. Hardest thing in the world to explain to someone looking at an unexpected end of the year bonus of $50K that even though they saved the 'maximum' of the about $25K in their 401k they should also put at least half of that $50K into savings as well. Unless you have 10x your annual salary in a savings account you really can't say you have 'saved enough'. Even then there are so many things that can and do hit you in life that aren't part of the plan. Your house burns to the ground, your kid develops cancer, your wife decides she likes someone other than you better, Etc. It goes on and on. My grandmother was a daughter of the depression and was really paranoid about future losses (when she passed we found vegetables and fruits she had canned 'just in case' in the cellar that were decades old!) But she also had an expression I liked. I would ask her what she was saving for and she would say "I don't know but I'm sure God will tell me what it is when the time is right."

nine_k 9y ago
Saving 10x your annual salary means saving half of your salary for twenty years. This is, to my mind, not very realistic. You need to invest into something highly profitable to hit this goal without being so drastic, e.g. to have bought some Bay Area realty in 1980s, or some Apple stock around that time. This is not a common option, and it's mostly unavailable now.
- kayhi 9y ago
  I think this is why people recommend starting early and having a 40 year window. I’m considerate of the fact that many have student loans, etc. and this isn’t feasible. A blogger Mr. Money Moustche pushes hard on having a high savings rate compared to the norm.
  - ChuckMcM 9y ago
    This is absolutely true. Student loan debt is a huge burden. If you're burdened by debt then most financial advisers in a low inflation scenario suggest you pay it off as quickly as you can. If we suddenly get 8 - 12% annual inflation and your salary is tracking that, then by all means stretch out your repayment so that you can pay it off with inflated dollars.