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> and I’m now putting thousands onto my net worth every month Lucky you. A lot of people I know don't even make thousands per month. They make less than $2,000

by foepys 8y ago

> and I’m now putting thousands onto my net worth every month Lucky you. A lot of people I know don't even make thousands per month. They make less than $2,000 after taxes. With this, accumulating millions isn't possible, not even slowly. And even these people are way better off than other's who barely make $1,000 or even less.

retrac98 8y ago
This is the beauty of it - you don’t need to make thousands per month to work towards making thousands per month. The money you do invest can generate a return, which when re-invested compounds. Yes, this happens very slowly at first, but over the course of many years gets you towards your thousands per month. I don’t have thousands left from my 9-5 job every month, but my assets (accumulated over years) work for me, and I just add what I can to that money making machine.
- intended 8y ago
  True, but this is a huge misdirection. The difference between the top 1% and top 0.1% is in itself absurdly large. Your Existence or presence alone creates money making opportunities, and in some cases you are effectively beyond the law. Talking about millionaires is like talking about your friends who are rich lawyers in the same breath as Bill Gates. It’s the difference between the moon and Saturn.
  - deleted 8y ago
    [deleted]
closeparen 8y ago
Suppose you make $24k. Investing $2400/yr from age 22 and earning 5% returns, you investments pay $540/mo in today's dollars by age 65 [0]. Add in $1,110 in tdoay's dollars from Social Security [1] and you're at 85% income replacement. Of course there are big problems with saving 10% of so little, and your retirement account could be even more at risk in a financial emergency, but in principle retirement works up and down the income ladder. [0] https://retirementplans.vanguard.com/VGApp/pe/pubeducation/calculators/RetirementIncomeCalc.jsf https://retirementplans.vanguard.com/VGApp/pe/pubeducation/c... [1] https://www.ssa.gov/OACT/quickcalc/ https://www.ssa.gov/OACT/quickcalc/
- lkrubner 8y ago
  "and earning 5% returns" This is basically impossible for reasons explained here: https://voxeu.org/article/suprasecular-stagnation https://voxeu.org/article/suprasecular-stagnation I'm old enough to recall the boom of the 1990s. Me and my professional friends were constantly invited to come to seminars about investing. All the mutual funds were trying to convince us to invest in the stock market. At that time, the stock market was booming, so it was easy to believe that investing in the stock market was a legitimate way to become wealthy. All of the pitches recited the same set of numbers: we could invest in low risk mutual funds and get 12% returns, or we could invest in high risk mutual funds and get 16% returns. It was explained that when we were young we should prefer high risk strategies, and as we got older we should prefer lower risk strategies. Then the crash of 2001 happened. Nasdaq took 10 years to come back to life. The stock market was flat for many, many years. Around 2003 we started getting invitations to seminars that taught us how important it was to invest in real estate. We were told that the value of homes had never gone down, in all of USA history. It was the safest investment, and had significant returns. Then the crash of 2008 happened. My friends who had bought homes were underwater. Even as recently as 2015, I still had friends who owed more on their homes than the homes were worth. These notions that it is easy to get stable long term returns has not been born out by my experience, or the experience of any of my professional peers. Our actual experience was very well described by the Bible: "I returned, and saw under the sun, that the race is not to the swift, nor the battle to the strong, neither yet bread to the wise, nor yet riches to men of understanding, nor yet favour to men of skill; but time and chance happeneth to them all." http://biblehub.com/ecclesiastes/9-11.htm http://biblehub.com/ecclesiastes/9-11.htm
  - closeparen 8y ago
    And yet the annualized rate of return of a total stock market index from 1990 to 2017 is 9.82%. There are absolutely booms and busts. It’s absolutely not stable when you look inside the cycles. But there are, reliably, cycles. Period and amplitude vary. But on a long enough time horizon, it works out. It’s also expected to decree as your risk exposure as you get closer to retirement to mitigate the risk of retiring at an unlucky time.

by foepys 8y ago

retrac98 8y ago

This is the beauty of it - you don’t need to make thousands per month to work towards making thousands per month. The money you do invest can generate a return, which when re-invested compounds. Yes, this happens very slowly at first, but over the course of many years gets you towards your thousands per month. I don’t have thousands left from my 9-5 job every month, but my assets (accumulated over years) work for me, and I just add what I can to that money making machine.

intended 8y ago
True, but this is a huge misdirection. The difference between the top 1% and top 0.1% is in itself absurdly large. Your Existence or presence alone creates money making opportunities, and in some cases you are effectively beyond the law. Talking about millionaires is like talking about your friends who are rich lawyers in the same breath as Bill Gates. It’s the difference between the moon and Saturn.
- deleted 8y ago
  [deleted]

closeparen 8y ago

Suppose you make $24k. Investing $2400/yr from age 22 and earning 5% returns, you investments pay $540/mo in today's dollars by age 65 [0]. Add in $1,110 in tdoay's dollars from Social Security [1] and you're at 85% income replacement. Of course there are big problems with saving 10% of so little, and your retirement account could be even more at risk in a financial emergency, but in principle retirement works up and down the income ladder. [0] https://retirementplans.vanguard.com/VGApp/pe/pubeducation/calculators/RetirementIncomeCalc.jsf https://retirementplans.vanguard.com/VGApp/pe/pubeducation/c... [1] https://www.ssa.gov/OACT/quickcalc/ https://www.ssa.gov/OACT/quickcalc/

lkrubner 8y ago
"and earning 5% returns" This is basically impossible for reasons explained here: https://voxeu.org/article/suprasecular-stagnation https://voxeu.org/article/suprasecular-stagnation I'm old enough to recall the boom of the 1990s. Me and my professional friends were constantly invited to come to seminars about investing. All the mutual funds were trying to convince us to invest in the stock market. At that time, the stock market was booming, so it was easy to believe that investing in the stock market was a legitimate way to become wealthy. All of the pitches recited the same set of numbers: we could invest in low risk mutual funds and get 12% returns, or we could invest in high risk mutual funds and get 16% returns. It was explained that when we were young we should prefer high risk strategies, and as we got older we should prefer lower risk strategies. Then the crash of 2001 happened. Nasdaq took 10 years to come back to life. The stock market was flat for many, many years. Around 2003 we started getting invitations to seminars that taught us how important it was to invest in real estate. We were told that the value of homes had never gone down, in all of USA history. It was the safest investment, and had significant returns. Then the crash of 2008 happened. My friends who had bought homes were underwater. Even as recently as 2015, I still had friends who owed more on their homes than the homes were worth. These notions that it is easy to get stable long term returns has not been born out by my experience, or the experience of any of my professional peers. Our actual experience was very well described by the Bible: "I returned, and saw under the sun, that the race is not to the swift, nor the battle to the strong, neither yet bread to the wise, nor yet riches to men of understanding, nor yet favour to men of skill; but time and chance happeneth to them all." http://biblehub.com/ecclesiastes/9-11.htm http://biblehub.com/ecclesiastes/9-11.htm
- closeparen 8y ago
  And yet the annualized rate of return of a total stock market index from 1990 to 2017 is 9.82%. There are absolutely booms and busts. It’s absolutely not stable when you look inside the cycles. But there are, reliably, cycles. Period and amplitude vary. But on a long enough time horizon, it works out. It’s also expected to decree as your risk exposure as you get closer to retirement to mitigate the risk of retiring at an unlucky time.