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Like many others here I've invested in index funds in recent years, just to see modest returns. I doubt this kind of return is really worth the trouble, even th

Like many others here I've invested in index funds in recent years, just to see modest returns. I doubt this kind of return is really worth the trouble, even though all thouse "early retirement" people keep telling me I'll come out on top in the long run. I don't really think it's a very good idea to trust the global economy to do the right thing with my money, considering all those dumbf* running the show.

ThirdFoundation 8y ago
Sorry, but I'm not understanding your point. Index funds are almost no trouble at all. People harping on index funds typically suggest something akin to 'invest in an S&P 500 index fund and let it sit for 35 years.' So all you have to do is buy the shares and leave them there. If it's in your 401(k) then it can be essentially automated. We have a long history of data that suggests that in the long run the stock market is the good investment to get returns from. Picking an index fund protects you from one of the companies in the index going to zero and removes the randomness of stock picking from the equation. Considering returns compound, even modest returns are better than just sitting in cash. What would you suggest as an alternative?
- Applejinx 8y ago
  If the system breaks, returns don't compound. That's an assumption that our whole system is defined on, but globally the amount of leverage on money is astronomical. Basel III set it to 3% (I'm aware the US is either 4% or 5%) Returns don't compound if it's all made up of fairy dust and repeatedly bailed out by issuing more money to do quantitative easing. That's a sign of trouble, and harmed societies all over the world. You can't just keep bailing the banks in order to make sure 'returns compound'. At some point it's too ridiculous and things break.
  - skh 8y ago
    If things break as you say then it won’t matter what you’ve invested your money in. In such a scenario the investments that pay off are in knowledge that others find useful and physical fitness.
- bryanlarsen 8y ago
  "We have a long history of data that suggests that in the long run the stock market is the good investment to get returns from." But that data is cherry-picked, as far as I'm concerned. It's only using about 100 years of American stock market performance. During those 100 years American stock exchanges changed from hosting regional companies to hosting the largest international companies. Obviously that same market growth cannot recur over the next 100 years; once you're at #1 you can't go higher. So a true measure would be a basket of stock markets. And that basket 100 years ago would have included a large portion in the Frankfurt Stock Exchange, whose history has not been as favorable as the NYSE...
davidgrenier 8y ago
Could you clarify on what the "trouble" is? Unless you are referring to not spending the money. The article is fairly dramatic, however the silver lining I see is that, it would seem the wealth inequality will kill the economy before we end up with riots from the poor and working class and it'll be in the incentives of the rich to solve the problem..
CompelTechnic 8y ago
Even considering the recent meltdown, the S&P500 is up 34% over the last 5 years, before even adding in dividends and up much more than that (200%+) if you want to start at the very bottom of early 2009. These returns are big, not modest. If you think that the dumbos running the show are going to ruin everything, consider that we've had dumb humans running things since the beginning. Pessimism can masquerade as grizzled realism. It can make you blind to opportunity. It is your opportunity to lose.
freddie_mercury 8y ago
Vanguard Total Stock Market has returned 10.49% annualised over the past 5 years. Vanguard Total World Stock has returned 6.42% annualised over the past 5 years. Out of curiosity, what kind of returns a) were you expecting and b) count as non-modest for you?
Cthulhu_ 8y ago
Recent years? The return is over a span of 10-30 years, if you look up some charts you can see how overall, the index funds have multiplied in value. You just have to have patience, it's not a get rich quick scheme. The get rich quick schemes are highly risky, yet highly profitable if you get the timing right (see: cryptocurrencies, last year, which was basically what you get when smart investors manipulate the market in such a way that the masses join in and boost the prices even further).
mruts 8y ago
Then just buy T-notes I guess? Are you seriously suggesting you want to keep your money in cash? Are you crazy?
- mpweiher 8y ago
  Crazy here. Well somewhat crazy. I am invested heavily in various ways, but I've recently started keeping a somewhat outsize cash reserve. Which I will use to buy things up cheaply once the market tanks.
  - mruts 8y ago
    But why don't you just keep it in 1-3 month T-notes and then sell that in a downturn so you can buy cheap stuff? 3 month T-notes are called the risk-free rate for a reason...
    - mpweiher 8y ago
      Not risk-free when you're outside the US. "Tagesgeld" here is generally at 0%, excepting "switcher" offers that are limited in volume etc. BUNDs are often negative these days.
      - mruts 8y ago
        hmm, that's a good point. Do you have access to the US equity markets? If so you could go with a short-term gov bond ETF.
        mpweiher 8y ago
        >> Not risk-free when you're outside the US. > Do you have access to the US equity markets? Sure. You just have the additional exchange-rate risk, to which I am already amply exposed, and quite a bit of regulatory overhead that I can do without. I am not saying that cash is the 100% optimal strategy here, but so far I haven't seen any obvious/easy alternatives. And again, it's not a 100% cash strategy, cash is still a minority instrument right now, just larger than it would be in other climates.

ThirdFoundation 8y ago

Sorry, but I'm not understanding your point. Index funds are almost no trouble at all. People harping on index funds typically suggest something akin to 'invest in an S&P 500 index fund and let it sit for 35 years.' So all you have to do is buy the shares and leave them there. If it's in your 401(k) then it can be essentially automated. We have a long history of data that suggests that in the long run the stock market is the good investment to get returns from. Picking an index fund protects you from one of the companies in the index going to zero and removes the randomness of stock picking from the equation. Considering returns compound, even modest returns are better than just sitting in cash. What would you suggest as an alternative?

Applejinx 8y ago
If the system breaks, returns don't compound. That's an assumption that our whole system is defined on, but globally the amount of leverage on money is astronomical. Basel III set it to 3% (I'm aware the US is either 4% or 5%) Returns don't compound if it's all made up of fairy dust and repeatedly bailed out by issuing more money to do quantitative easing. That's a sign of trouble, and harmed societies all over the world. You can't just keep bailing the banks in order to make sure 'returns compound'. At some point it's too ridiculous and things break.
- skh 8y ago
  If things break as you say then it won’t matter what you’ve invested your money in. In such a scenario the investments that pay off are in knowledge that others find useful and physical fitness.
bryanlarsen 8y ago
"We have a long history of data that suggests that in the long run the stock market is the good investment to get returns from." But that data is cherry-picked, as far as I'm concerned. It's only using about 100 years of American stock market performance. During those 100 years American stock exchanges changed from hosting regional companies to hosting the largest international companies. Obviously that same market growth cannot recur over the next 100 years; once you're at #1 you can't go higher. So a true measure would be a basket of stock markets. And that basket 100 years ago would have included a large portion in the Frankfurt Stock Exchange, whose history has not been as favorable as the NYSE...

davidgrenier 8y ago

Could you clarify on what the "trouble" is? Unless you are referring to not spending the money. The article is fairly dramatic, however the silver lining I see is that, it would seem the wealth inequality will kill the economy before we end up with riots from the poor and working class and it'll be in the incentives of the rich to solve the problem..

CompelTechnic 8y ago

Even considering the recent meltdown, the S&P500 is up 34% over the last 5 years, before even adding in dividends and up much more than that (200%+) if you want to start at the very bottom of early 2009. These returns are big, not modest. If you think that the dumbos running the show are going to ruin everything, consider that we've had dumb humans running things since the beginning. Pessimism can masquerade as grizzled realism. It can make you blind to opportunity. It is your opportunity to lose.

freddie_mercury 8y ago

Vanguard Total Stock Market has returned 10.49% annualised over the past 5 years. Vanguard Total World Stock has returned 6.42% annualised over the past 5 years. Out of curiosity, what kind of returns a) were you expecting and b) count as non-modest for you?

Cthulhu_ 8y ago

Recent years? The return is over a span of 10-30 years, if you look up some charts you can see how overall, the index funds have multiplied in value. You just have to have patience, it's not a get rich quick scheme. The get rich quick schemes are highly risky, yet highly profitable if you get the timing right (see: cryptocurrencies, last year, which was basically what you get when smart investors manipulate the market in such a way that the masses join in and boost the prices even further).

mruts 8y ago

Then just buy T-notes I guess? Are you seriously suggesting you want to keep your money in cash? Are you crazy?

mpweiher 8y ago
Crazy here. Well somewhat crazy. I am invested heavily in various ways, but I've recently started keeping a somewhat outsize cash reserve. Which I will use to buy things up cheaply once the market tanks.
- mruts 8y ago
  But why don't you just keep it in 1-3 month T-notes and then sell that in a downturn so you can buy cheap stuff? 3 month T-notes are called the risk-free rate for a reason...
  - mpweiher 8y ago
    Not risk-free when you're outside the US. "Tagesgeld" here is generally at 0%, excepting "switcher" offers that are limited in volume etc. BUNDs are often negative these days.
    - mruts 8y ago
      hmm, that's a good point. Do you have access to the US equity markets? If so you could go with a short-term gov bond ETF.
      - mpweiher 8y ago
        >> Not risk-free when you're outside the US. > Do you have access to the US equity markets? Sure. You just have the additional exchange-rate risk, to which I am already amply exposed, and quite a bit of regulatory overhead that I can do without. I am not saying that cash is the 100% optimal strategy here, but so far I haven't seen any obvious/easy alternatives. And again, it's not a 100% cash strategy, cash is still a minority instrument right now, just larger than it would be in other climates.