5 ms·

This is gambling. If house prices or stock markets go down you suddenly sit on a big pile of debt. The debt is low interest rate but it’s still debt.

walshemj 7y ago
Not really binary bets or\day trading are gambling, if you can afford it and have spare cash it would make sense over the long term to invest - though not in individual shares for most. As Benjamin Graham said “Buy when most people, including experts, are pessimistic, and sell when they are actively optimistic.”
- SketchySeaBeast 7y ago
  My parents retired a year ago. If they'd kept all their money in the stock market until this month they'd be in a lot of trouble, and probably will be for the foreseeable future - how is that not a gamble? "You need to diversify" would be an argument against gambling in the stock market, and getting into something safer.
  - tathougies 7y ago
    If they stick to a reasonable withdrawal rate, they likely would not be. The stock market will rise in time, and has almost certainly risen in value since the time they made investments, even with the current drop in share prices.
  - stevesimmons 7y ago
    Even if your parents put everything in the stock market, they would presumably draw down that capital gradually over the coming 20+ years. i.e. They are diversified over time.
  - pbk1 7y ago
    In addition to the withdrawal rate as others have mentioned, the prudent approach to retiring now would be gradually changing their allocation to a less risky mix over the course of several years. Had for example they rotated some equity into a modest amount of Treasuries, that portion of their portfolio would actually be doing well right now (see for example $TLT).
  - xchaotic 7y ago
    You need to rebalance your portfolio as you get closer to retirement as you can’t time the market. I think by the time you’re retirement age, your portfolio should be 30% equities
    - SketchySeaBeast 7y ago
      Would you say that you should put it into safer things, maybe gamble with it less?
  - quickthrower2 7y ago
    Yeah it’s common advise to move a higher proportion of your wealth into cash as you approach retirement and I think it is the default behaviour of superannuation plans (I.e. pension) in Australia.

walshemj 7y ago

Not really binary bets or\day trading are gambling, if you can afford it and have spare cash it would make sense over the long term to invest - though not in individual shares for most. As Benjamin Graham said “Buy when most people, including experts, are pessimistic, and sell when they are actively optimistic.”

SketchySeaBeast 7y ago
My parents retired a year ago. If they'd kept all their money in the stock market until this month they'd be in a lot of trouble, and probably will be for the foreseeable future - how is that not a gamble? "You need to diversify" would be an argument against gambling in the stock market, and getting into something safer.
- tathougies 7y ago
  If they stick to a reasonable withdrawal rate, they likely would not be. The stock market will rise in time, and has almost certainly risen in value since the time they made investments, even with the current drop in share prices.
- stevesimmons 7y ago
  Even if your parents put everything in the stock market, they would presumably draw down that capital gradually over the coming 20+ years. i.e. They are diversified over time.
- pbk1 7y ago
  In addition to the withdrawal rate as others have mentioned, the prudent approach to retiring now would be gradually changing their allocation to a less risky mix over the course of several years. Had for example they rotated some equity into a modest amount of Treasuries, that portion of their portfolio would actually be doing well right now (see for example $TLT).
- xchaotic 7y ago
  You need to rebalance your portfolio as you get closer to retirement as you can’t time the market. I think by the time you’re retirement age, your portfolio should be 30% equities
  - SketchySeaBeast 7y ago
    Would you say that you should put it into safer things, maybe gamble with it less?
- quickthrower2 7y ago
  Yeah it’s common advise to move a higher proportion of your wealth into cash as you approach retirement and I think it is the default behaviour of superannuation plans (I.e. pension) in Australia.