3 ms·

Because stock market crashes never happen?

• ghaff 7y ago
  If you’re smart you diversify so you’re earning a few percent a year on some portion at very low risk.
• deleted 7y ago
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• fock 7y ago
  I don't think the people who are non-obvious rich put their money solely in an index fund. They'll generally have about 50-500 apartment units in some big city, which (if properly insured) guarantees you can weather anything except for wars and asteroids. Maybe they put their earnings into an index fund though ...
  • lacker 7y ago
    Not solely, but index funds are probably the most common investment. Just look at the total money Vanguard has under management.
  • lonelappde 7y ago
    $5M in Vanguard also is safe from everything but wars and asteroids.
• kd5bjo 7y ago
  If memory serves, The largest single-day drop was around 25% and the biggest total was around 90%. That leaves 10% to live off of: if you have 10x what’s necessary for the rest of your life invested you can absorb those losses.
  • oarsinsync 7y ago
    To have 10x what's necessary, you need to be able to survive on 1% returns (I'm trying to be generous there). So if you can live on $30,000, you need to have "only" $3MM invested. You should also not be investing more than 25% of your assets into a single asset class, so you need to have $6-12MM of assets (range depending on considerations) in the first place. I think having even $3MM is a reasonably called 'rich', but others may disagree.
    • kd5bjo 7y ago
      Oh; you certainly have to be rich to pull this off. But the context was “a few millions in an index fund,” which is what your analysis came up with. Also, if you’re going to posit funds in other asset classes, you should also include the worst-case returns of those funds in the analysis.
    • deleted 7y ago
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