3 ms·

I think a deeply underappreciated point in all this is to stop and consider that the description you’ve given above, which is a really nice summary, would be so

by mlthoughts2018 8y ago

I think a deeply underappreciated point in all this is to stop and consider that the description you’ve given above, which is a really nice summary, would be so utterly bonkers advanced-sounding and deeply complicated to average workers that they would absolutely have no comprehension whatsoever what any of this means, how to act on it, etc. Even working in quant finance and managing these portfolios for huge pension or retirement plans, you get astounded that the “technical experts” on the board of directors barely understand the concept of simple interest, and continuous compounding or any formulas would be untenably way, way too complicated. So when you see people on Hacker News acting aghast that elderly people might have inadvertently been loaded up on high-beta equities right around the 2008 crash, you just know those commenters have no concept of the reality that most Americans live through. In my grandparents case they even went to some local Edward Jones financial planner or something who just turned out to be deeply incompetent and acted like he was some hot shot day trader, putting them in equity-heavy niche portfolios with higher fees, when they should have been decorrelating themselves from market volatility generally. He did nothing illegal, and my grandparents believed earnestly that someone competent was making prudent decisions about their money.

Joky 8y ago
> the description you’ve given above, which is a really nice summary, would be so utterly bonkers advanced-sounding and deeply complicated to average workers But this description was very technical, another way to approach it is: keep in mind that there is no 100% safe way to save money, if you are looking to set money aside for retirement you may just put it a "retirement fund" based on the year you plan to retire (or a bit earlier to be conservative). For example the "Vanguard Target Retirement 2010 Fund" lost 21% in 2008: https://investor.vanguard.com/mutual-funds/profile/performance/vtenx/cumulative-returns https://investor.vanguard.com/mutual-funds/profile/performan... (but gained 19% in 2009 and 11% in 2010). Edit: I agree that access to the information is a big problem for the common people. This is a valid general concern outside of just planning retirement though.
tedmiston 8y ago
A book that might help make the big ideas more accessible to the layman is The Simple Path to Wealth by JL Collins. https://www.amazon.com/Simple-Path-Wealth-financial-independence-ebook/dp/B01H97OQY2 https://www.amazon.com/Simple-Path-Wealth-financial-independ... One beef I have with the finance industry is that very few people, especially professionals, will give you the above info in an actionable manner to do it yourself. And given the way they are compensated, it's not a big surprise. I would like to see it more open and approachable like programming. But I do believe that the average person can understand the basic concepts of buckets, index funds, risk allocation, and reducing risk over time. I do think that the weird high-fee niche investment case is unfortunately quite common. Perhaps one more big idea for most people to understand is that even most financial professionals can't beat the market, though it almost goes against their own compensation incentives to admit that.

Joky 8y ago

> the description you’ve given above, which is a really nice summary, would be so utterly bonkers advanced-sounding and deeply complicated to average workers But this description was very technical, another way to approach it is: keep in mind that there is no 100% safe way to save money, if you are looking to set money aside for retirement you may just put it a "retirement fund" based on the year you plan to retire (or a bit earlier to be conservative). For example the "Vanguard Target Retirement 2010 Fund" lost 21% in 2008: https://investor.vanguard.com/mutual-funds/profile/performance/vtenx/cumulative-returns https://investor.vanguard.com/mutual-funds/profile/performan... (but gained 19% in 2009 and 11% in 2010). Edit: I agree that access to the information is a big problem for the common people. This is a valid general concern outside of just planning retirement though.

tedmiston 8y ago

A book that might help make the big ideas more accessible to the layman is The Simple Path to Wealth by JL Collins. https://www.amazon.com/Simple-Path-Wealth-financial-independence-ebook/dp/B01H97OQY2 https://www.amazon.com/Simple-Path-Wealth-financial-independ... One beef I have with the finance industry is that very few people, especially professionals, will give you the above info in an actionable manner to do it yourself. And given the way they are compensated, it's not a big surprise. I would like to see it more open and approachable like programming. But I do believe that the average person can understand the basic concepts of buckets, index funds, risk allocation, and reducing risk over time. I do think that the weird high-fee niche investment case is unfortunately quite common. Perhaps one more big idea for most people to understand is that even most financial professionals can't beat the market, though it almost goes against their own compensation incentives to admit that.