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Because the priority order is: a) Consumption spending b) Real estate c) Stocks When middle class people hit diminishing returns on electronics and vacation

Because the priority order is: a) Consumption spending b) Real estate c) Stocks When middle class people hit diminishing returns on electronics and vacations, they upgrade their houses. Appetite for remodeled kitchens and bigger, nicer, better-located houses is voracious, so relatively few people satisfy it and fall through to stocks. Making sacrifices on housing in favor of your stock portfolio is of course possible, but will get you a lot of weird looks and pressure from family, particularly if kids are involved.

ericd 7y ago
Do people actually get family pressure to remodel their kitchen?
- karatestomp 7y ago
  My wife’s side pressure her (me) to “upgrade” her wedding set every few years. WTF. They’re terrible with money, of course, and constantly make passive-aggressive comments about who’s spending what. I don’t think they even realize they’re doing it, it’s just a really, really awful and deeply middle-class-anxiety attitude they’re stuck in.
  - zwappt 7y ago
    LOL me too. They know I have rental properties but are always bitching about my small house and why I am not doing this or that. They don't know that my real estate portfolio is worth upwards of $5 million and when the mortgages start to be paid down, will eventually be generating $20,000 a month in rent. Look forward to telling them to get fucked when they come looking for some of that money.
  - ericd 7y ago
    Heh I had to look up what a wedding set was. Upgrade... wedding rings? Isn’t a big part of the symbolism the permanence factor of the rings? The symbolism of upgrading the ring seems a bit unfortunate... Anyway, sorry to hear, that probably gets really old.
    - closeparen 7y ago
      The stone itself is supposed to be permanent; the band and the setting (receptacle for the stone) are less weird to change.
      - ericd 7y ago
        Interesting, that seems a bit diamond-industry-marketing-driven, I thought a band was the symbol, and that the stone was a more recent invention. Especially since the wedding band is what you get when you actually get married. Many people in my family only wear the wedding bands and leave the engagement rings off. But these are largely just assumptions on my part.
karatestomp 7y ago
The biggest tax advantages for investing go to the rich, who can arrange their businesses and finances to max out retirement accounts, and very highly paid professional with fat 401k matches. No matter how someone with a normal salary and a 2% match tries they cannot get anywhere near maxing out a 401k, due to how they’re structured (over 50% of the max can only come from an employer, and the employee can’t make that up on their own). They benefit the already-well-off much more than the middle class or poor. So there’s discouragement to savings built into our tax law (or stronger-than-appropriate encouragement available only to the already-doing-quite-well, if you prefer)
- freediver 7y ago
  "Rich" typically do not care about their retirement accounts and do not have an employer. They typically benefit from owning a business, having a stream of passive investments and compounding growth. But this may depend on your definition of rich.
  - karatestomp 7y ago
    It’s my understanding that one can arrange for oneself (and family members) to be employed by one’s businesses such that 401ks are maxed out. This can amount to a huge de jure employment benefit but a de facto slow-motion tax-advantaged inheritance over, say, 20 or 30 years. Just live off trust assets and the rest of your wages (or whatever) until you can draw on retirement. Though yes it’s probably too small-potatoes for the rich rich to bother with. Mere tens-of-millions business owners are more the audience for that maneuver. Like everything else it seems one is likely to be smacked down for attempting to use it while not-rich (need enough legitimate business activity to make the wages to relatives plausible)
- creddit 7y ago
  > So there’s discouragement to savings built into our tax law (or stronger-than-appropriate encouragement available only to the already-doing-quite-well, if you prefer) Only the latter "version" of this is possibly true. Nothing you said shows a discouragement to savings. At best you showed that the wealthier are more encouraged to save.
refurb 7y ago
This is very true! I know plenty of people who when they have extra money, investing or saving is the last things on their mind.
- closeparen 7y ago
  Housing is arguably an investment, or at least the people doing it think it is.
  - refurb 7y ago
    That’s true. I know people who say stocks are too risky, but real estate works for them.

ericd 7y ago

Do people actually get family pressure to remodel their kitchen?

karatestomp 7y ago
My wife’s side pressure her (me) to “upgrade” her wedding set every few years. WTF. They’re terrible with money, of course, and constantly make passive-aggressive comments about who’s spending what. I don’t think they even realize they’re doing it, it’s just a really, really awful and deeply middle-class-anxiety attitude they’re stuck in.
- zwappt 7y ago
  LOL me too. They know I have rental properties but are always bitching about my small house and why I am not doing this or that. They don't know that my real estate portfolio is worth upwards of $5 million and when the mortgages start to be paid down, will eventually be generating $20,000 a month in rent. Look forward to telling them to get fucked when they come looking for some of that money.
- ericd 7y ago
  Heh I had to look up what a wedding set was. Upgrade... wedding rings? Isn’t a big part of the symbolism the permanence factor of the rings? The symbolism of upgrading the ring seems a bit unfortunate... Anyway, sorry to hear, that probably gets really old.
  - closeparen 7y ago
    The stone itself is supposed to be permanent; the band and the setting (receptacle for the stone) are less weird to change.
    - ericd 7y ago
      Interesting, that seems a bit diamond-industry-marketing-driven, I thought a band was the symbol, and that the stone was a more recent invention. Especially since the wedding band is what you get when you actually get married. Many people in my family only wear the wedding bands and leave the engagement rings off. But these are largely just assumptions on my part.

karatestomp 7y ago

The biggest tax advantages for investing go to the rich, who can arrange their businesses and finances to max out retirement accounts, and very highly paid professional with fat 401k matches. No matter how someone with a normal salary and a 2% match tries they cannot get anywhere near maxing out a 401k, due to how they’re structured (over 50% of the max can only come from an employer, and the employee can’t make that up on their own). They benefit the already-well-off much more than the middle class or poor. So there’s discouragement to savings built into our tax law (or stronger-than-appropriate encouragement available only to the already-doing-quite-well, if you prefer)

freediver 7y ago
"Rich" typically do not care about their retirement accounts and do not have an employer. They typically benefit from owning a business, having a stream of passive investments and compounding growth. But this may depend on your definition of rich.
- karatestomp 7y ago
  It’s my understanding that one can arrange for oneself (and family members) to be employed by one’s businesses such that 401ks are maxed out. This can amount to a huge de jure employment benefit but a de facto slow-motion tax-advantaged inheritance over, say, 20 or 30 years. Just live off trust assets and the rest of your wages (or whatever) until you can draw on retirement. Though yes it’s probably too small-potatoes for the rich rich to bother with. Mere tens-of-millions business owners are more the audience for that maneuver. Like everything else it seems one is likely to be smacked down for attempting to use it while not-rich (need enough legitimate business activity to make the wages to relatives plausible)
creddit 7y ago
> So there’s discouragement to savings built into our tax law (or stronger-than-appropriate encouragement available only to the already-doing-quite-well, if you prefer) Only the latter "version" of this is possibly true. Nothing you said shows a discouragement to savings. At best you showed that the wealthier are more encouraged to save.

refurb 7y ago

This is very true! I know plenty of people who when they have extra money, investing or saving is the last things on their mind.

closeparen 7y ago
Housing is arguably an investment, or at least the people doing it think it is.
- refurb 7y ago
  That’s true. I know people who say stocks are too risky, but real estate works for them.