4 ms·

I wonder what would be a good way to deploy that concentrated capital. Essentially, it’s the combined labor of a large pool of people, hoping that their capital

by pm90 7y ago

I wonder what would be a good way to deploy that concentrated capital. Essentially, it’s the combined labor of a large pool of people, hoping that their capital will be deployed in places where it will earn great returns. What happens when these pockets of wealth don’t have anywhere to go? Related: pensions are out of fashion in the US. Where is the wealth of young Americans going nowadays?

ummonk 7y ago
>Where is the wealth of young Americans going nowadays? 401k / ira though more commonly paying down student debt.
pianoben 7y ago
Rent, healthcare, etc. Some have 401k accounts, if they are lucky, otherwise you have IRAs which have an annual contribution limit of $6000, IIRC (am not an expert and am likely wrong on that point). Pensions are unavailable and housing is out of reach for most.
neom 7y ago
Most Americans don't have student debt to pay down (44million), nor a 401k (55million). Most young Americans are just trying to get by, I'd imagine "wealth" isn't a reality for most, outside of maybe emotional wealth.
toomuchtodo 7y ago
There are few, if any, productive ways to deploy those huge swaths of capital that can command the risk adjusted returns those funds seek. See: negative yields on bonds across the world, and VC gambles.
hermitdev 7y ago
I'm 38 and have a pretty good salary. About 50% after tax goes to rent, 25% goes to paying down debt inherited from getting married and medical bills (previous employer had shit insurance). The last 25% is what we live on for essentials (insurance, gas and tolls to go to work, utilities, food, etc). My wife and I have long ago paid off out student loan debt. We have 10s of thousands in high interest, unsecured debt. Debt, that in theory we could pay off tomorrow from savings. However, since most of my savings (my wife has none) is spread across 2 401ks, a Roth IRA, a traditional IRA and a taxed investment account, and I work for an investment fund, I'm subject to all sorts of lockups, retention requirements and blacklists on trades on securities held by my employer. Tl;Dr; I have savings to cover my debts, but cant legally access most of it. I'm not unhappy that I got married, but I didn't consider the financial repercussions before I went through with it.
- prawn 7y ago
  With debt from marriage, are you talking about the costs of a wedding, or taking on debt from your wife or something else?
  - hermitdev 7y ago
    Taking on debt from my wife, cost of the rings, wedding was cheap, we just did a justice of the peace wedding. Also, furniture for our new place (needed more than my 1-bedroom + den apartment). Lots of little things that just kept adding on.
- openureye1s28 7y ago
  50% for rent? You are either living way beyond your means, or not earning your true market value in your area.
lotsofpulp 7y ago
If they have wealth, it’s typically going into broad stock market index funds or ETFs such as VTI, or target date retirement funds which are the same mixed with some bonds. Probably the right thing to do given that money is concentrating in a few large companies, and the government will bail them out no matter what. $9 out of $10 goes to Vanguard, as of 2017: https://www.nytimes.com/2017/04/14/business/mutfund/vanguard-mutual-index-funds-growth.html https://www.nytimes.com/2017/04/14/business/mutfund/vanguard... And their total stock market index fund sends 25% of that money into the top 10 companies: https://investor.vanguard.com/etf/profile/overview/VTI https://investor.vanguard.com/etf/profile/overview/VTI The money is going to the equity value of all of these companies, with the biggest getting the most, hence the high pay due to stock options at FAANG: Microsoft Corp. Apple Inc. Amazon.com Inc. Facebook Inc. Class A Berkshire Hathaway Inc. Class B Alphabet Inc. Class A Alphabet Inc. Class C JPMorgan Chase & Co. Johnson & Johnson Exxon Mobil Corp. Visa Inc. Class A Procter & Gamble Co. Bank of America Corp. Walt Disney Co. AT&T Inc. Mastercard Inc. Class A
- viraptor 7y ago
  That's quite a lot of internet/finance exposure. Let's hope it doesn't suddenly crash again...
  - lotsofpulp 7y ago
    That’s where all the profit margins are in publicly traded companies due to low marginal costs, infinite scalability, low liability, and huge barriers to entry. Even if it crashes, since so many voters are invested in it, they’ll just get a bail out at the cost of reducing value of USD. Which isn’t a problem as long as the US stays relatively powerful in the world.

by pm90 7y ago

ummonk 7y ago

>Where is the wealth of young Americans going nowadays? 401k / ira though more commonly paying down student debt.

pianoben 7y ago

Rent, healthcare, etc. Some have 401k accounts, if they are lucky, otherwise you have IRAs which have an annual contribution limit of $6000, IIRC (am not an expert and am likely wrong on that point). Pensions are unavailable and housing is out of reach for most.

neom 7y ago

Most Americans don't have student debt to pay down (44million), nor a 401k (55million). Most young Americans are just trying to get by, I'd imagine "wealth" isn't a reality for most, outside of maybe emotional wealth.

toomuchtodo 7y ago

There are few, if any, productive ways to deploy those huge swaths of capital that can command the risk adjusted returns those funds seek. See: negative yields on bonds across the world, and VC gambles.

hermitdev 7y ago

I'm 38 and have a pretty good salary. About 50% after tax goes to rent, 25% goes to paying down debt inherited from getting married and medical bills (previous employer had shit insurance). The last 25% is what we live on for essentials (insurance, gas and tolls to go to work, utilities, food, etc). My wife and I have long ago paid off out student loan debt. We have 10s of thousands in high interest, unsecured debt. Debt, that in theory we could pay off tomorrow from savings. However, since most of my savings (my wife has none) is spread across 2 401ks, a Roth IRA, a traditional IRA and a taxed investment account, and I work for an investment fund, I'm subject to all sorts of lockups, retention requirements and blacklists on trades on securities held by my employer. Tl;Dr; I have savings to cover my debts, but cant legally access most of it. I'm not unhappy that I got married, but I didn't consider the financial repercussions before I went through with it.

prawn 7y ago
With debt from marriage, are you talking about the costs of a wedding, or taking on debt from your wife or something else?
- hermitdev 7y ago
  Taking on debt from my wife, cost of the rings, wedding was cheap, we just did a justice of the peace wedding. Also, furniture for our new place (needed more than my 1-bedroom + den apartment). Lots of little things that just kept adding on.
openureye1s28 7y ago
50% for rent? You are either living way beyond your means, or not earning your true market value in your area.

lotsofpulp 7y ago

If they have wealth, it’s typically going into broad stock market index funds or ETFs such as VTI, or target date retirement funds which are the same mixed with some bonds. Probably the right thing to do given that money is concentrating in a few large companies, and the government will bail them out no matter what. $9 out of $10 goes to Vanguard, as of 2017: https://www.nytimes.com/2017/04/14/business/mutfund/vanguard-mutual-index-funds-growth.html https://www.nytimes.com/2017/04/14/business/mutfund/vanguard... And their total stock market index fund sends 25% of that money into the top 10 companies: https://investor.vanguard.com/etf/profile/overview/VTI https://investor.vanguard.com/etf/profile/overview/VTI The money is going to the equity value of all of these companies, with the biggest getting the most, hence the high pay due to stock options at FAANG: Microsoft Corp. Apple Inc. Amazon.com Inc. Facebook Inc. Class A Berkshire Hathaway Inc. Class B Alphabet Inc. Class A Alphabet Inc. Class C JPMorgan Chase & Co. Johnson & Johnson Exxon Mobil Corp. Visa Inc. Class A Procter & Gamble Co. Bank of America Corp. Walt Disney Co. AT&T Inc. Mastercard Inc. Class A

viraptor 7y ago
That's quite a lot of internet/finance exposure. Let's hope it doesn't suddenly crash again...
- lotsofpulp 7y ago
  That’s where all the profit margins are in publicly traded companies due to low marginal costs, infinite scalability, low liability, and huge barriers to entry. Even if it crashes, since so many voters are invested in it, they’ll just get a bail out at the cost of reducing value of USD. Which isn’t a problem as long as the US stays relatively powerful in the world.