5 ms·

Kind of apples to oranges. Take the difference in salary between a college graduate and a high school graduate over those 40 years. Factor in inflation. Inves

Kind of apples to oranges. Take the difference in salary between a college graduate and a high school graduate over those 40 years. Factor in inflation. Invest that at a 7% return. I'm sure it will easily dwarf $2.25M. Why don't people have millions invested by the time they retire? Because no matter how much money people make (up to a certain point, depending on the person), they spend it. If you give the average high school graduate $150K and tell them to invest it for 40 years, I pretty much guarantee that it will be gone long before the 40 years are up. To be fair, I don't have millions invested and I'm scarily close to retirement. So I'm not trying to be critical of others ;-)

WalterBright 6y ago
I know people who retired as millionaires on a lower middle class salary doing just that - living below their means, and regularly investing the difference. It does work. But if you spent all your income, you'll never have money.
- t-writescode 6y ago
  I suspect all you can argue nowadays is that it _did_ work. With housing costs increasing faster than inflation, forcing people to spend money on rent instead, which has no investment potential, I don't think it still works.
  - goldenchrome 6y ago
    Your own house isn't an investment because you always need to live somewhere. Investments are things you can spend like index funds and bonds.
    - zamfi 6y ago
      > Your own house isn't an investment because you always need to live somewhere Ehhh, yes and no. Plenty of people who bought nice-ish houses in the Bay Area in the '70s and '80s sold them in 2014-2018 and retired outside the bay with a nice extra pile of cash. You need housing, but you don't need a crazy expensive house in a crazy expensive area.
    - 2ion 6y ago
      If not that it's an insurance against future rent payments and it creates different options. The total cost of ownership with a high likelyhood for an well-priced and appropriate property with appropriate mortgage payments is lower than runaway rents in hcol areas. Lastly, you can trade property value and QoL by neglecting upkeep at any time to make up a shortfall in income and even "run down" the property over quite some time, at extreme levels not even using utilities, which is not an option if you're paying rent -- try neglecting your rent payments.
    - nradov 6y ago
      Residential real estate is usually a good investment even if you happen to live in it. When you retire you can access the equity through a reverse mortgage.
entha_saava 6y ago
I thought he was referring to democratizing / commoditizing that education and not about removing the requirement.
randomdata 6y ago
> Take the difference in salary between a college graduate and a high school graduate over those 40 years. There is no difference. Incomes have held stagnant for the entirety of those 40 years, despite the transition from people of equal calibre being only high school graduates 40 years ago to being college graduates today. $0 invested at 7% still leaves you with $0.
grandridge 6y ago
Saving for 30 years at 7% has happened precicly once in modern history post war when the world grew from 2bn to 7bn. Why do people keep repeating this? Where do you think you'll get 7%?

WalterBright 6y ago

I know people who retired as millionaires on a lower middle class salary doing just that - living below their means, and regularly investing the difference. It does work. But if you spent all your income, you'll never have money.

t-writescode 6y ago
I suspect all you can argue nowadays is that it _did_ work. With housing costs increasing faster than inflation, forcing people to spend money on rent instead, which has no investment potential, I don't think it still works.
- goldenchrome 6y ago
  Your own house isn't an investment because you always need to live somewhere. Investments are things you can spend like index funds and bonds.
  - zamfi 6y ago
    > Your own house isn't an investment because you always need to live somewhere Ehhh, yes and no. Plenty of people who bought nice-ish houses in the Bay Area in the '70s and '80s sold them in 2014-2018 and retired outside the bay with a nice extra pile of cash. You need housing, but you don't need a crazy expensive house in a crazy expensive area.
  - 2ion 6y ago
    If not that it's an insurance against future rent payments and it creates different options. The total cost of ownership with a high likelyhood for an well-priced and appropriate property with appropriate mortgage payments is lower than runaway rents in hcol areas. Lastly, you can trade property value and QoL by neglecting upkeep at any time to make up a shortfall in income and even "run down" the property over quite some time, at extreme levels not even using utilities, which is not an option if you're paying rent -- try neglecting your rent payments.
  - nradov 6y ago
    Residential real estate is usually a good investment even if you happen to live in it. When you retire you can access the equity through a reverse mortgage.

entha_saava 6y ago

I thought he was referring to democratizing / commoditizing that education and not about removing the requirement.

randomdata 6y ago

> Take the difference in salary between a college graduate and a high school graduate over those 40 years. There is no difference. Incomes have held stagnant for the entirety of those 40 years, despite the transition from people of equal calibre being only high school graduates 40 years ago to being college graduates today. $0 invested at 7% still leaves you with $0.

grandridge 6y ago

Saving for 30 years at 7% has happened precicly once in modern history post war when the world grew from 2bn to 7bn. Why do people keep repeating this? Where do you think you'll get 7%?