4 ms·

I guess the stock market is the new savings account, at least for the affluent.

by qzw 6y ago

oxymoran 6y ago
You can invest for free on nearly every trading platform now. If you have any disposable income to save in a savings account(which I am fully aware is the big IF), there is no reason that money can’t be invested in the market. That’s exactly why the market is doing so well.
- NationalPark 6y ago
  I'm skeptical that new retail investors are having such a big impact, but if there's data available then I could be convinced. If it is true though, then I don't see how it can last with so many of these new investor now being unemployed and losing the $600 a week.
- deleted 6y ago
  [deleted]
renewiltord 6y ago
You can buy fractional stock in an ETF with Robinhood. It's the savings account for everyone. RH revolutionized this with their commission-free trading and app access.
- ceejayoz 6y ago
  It's not, though. A savings account that might temporarily lose half of its value in a recession isn't a great option for lower income folks.
  - asdff 6y ago
    If your investments lose half their value in a recession you are horribly over-leveraged. In any case, we are back to Feb highs now, and whatever loss you might have sustained no longer exists, unless you sold at the bottom.
    - ceejayoz 6y ago
      The Dow went from 14k to 7k during the Great Recession of 2007-2009. The S&P 500 saw a similar loss of half its value. Index investing is generally considered a safe approach, not "horribly over-leveraged". The problem with using the market as a savings account is the times large numbers of people need to dip into savings tend to coincide with the times the market is dipping.
      - renewiltord 6y ago
        That's what everyone says, but it's based on conventional monetary policy. We have modern methods now and we know the government won't let you starve, won't let you be kicked out, and won't let you receive no money. If you don't use the stock market as your savings account, that's reasonable for your risk tolerance but the truth is that people have cottoned on to the true risk and they've adjusted their behaviour to match their tolerance.
      - asdff 6y ago
        A savings account shouldn't be your emergency fund to dip into. It should be a lockbox you don't touch, in which case buying the index regularly is a no brainer. If you need to dip into your savings, you need to be expanding your emergency fund before you can think about saving and investing.
        ceejayoz 6y ago
        A long recession means exhaustion of emergency funds, which means dipping into savings. No matter how well-intentioned you start out, eventually money runs out and that savings/investment starts to look like the remaining option. Having to do it when it's depleted by market crash sucks.
sigstoat 6y ago
even without the fractional shares mentioned by sibling comments, you can open a vanguard account and get a single share of VTI, which is currently $170 something. no other fees, or hidden weirdness or anything. or get some bond ETF that has less volatility. the dividends will still exceed anything you get from a savings account. or even just leave the cash in the vanguard money market fund. that won't even lose value, and actually pays interest. so... s/the affluent/the educated/ perhaps

I guess the stock market is the new savings account, at least for the affluent.

by qzw 6y ago

I guess the stock market is the new savings account, at least for the affluent.

You can invest for free on nearly every trading platform now. If you have any disposable income to save in a savings account(which I am fully aware is the big IF), there is no reason that money can’t be invested in the market. That’s exactly why the market is doing so well.

NationalPark 6y ago
I'm skeptical that new retail investors are having such a big impact, but if there's data available then I could be convinced. If it is true though, then I don't see how it can last with so many of these new investor now being unemployed and losing the $600 a week.
deleted 6y ago
[deleted]

renewiltord 6y ago

You can buy fractional stock in an ETF with Robinhood. It's the savings account for everyone. RH revolutionized this with their commission-free trading and app access.

ceejayoz 6y ago
It's not, though. A savings account that might temporarily lose half of its value in a recession isn't a great option for lower income folks.
- asdff 6y ago
  If your investments lose half their value in a recession you are horribly over-leveraged. In any case, we are back to Feb highs now, and whatever loss you might have sustained no longer exists, unless you sold at the bottom.
  - ceejayoz 6y ago
    The Dow went from 14k to 7k during the Great Recession of 2007-2009. The S&P 500 saw a similar loss of half its value. Index investing is generally considered a safe approach, not "horribly over-leveraged". The problem with using the market as a savings account is the times large numbers of people need to dip into savings tend to coincide with the times the market is dipping.
    - renewiltord 6y ago
      That's what everyone says, but it's based on conventional monetary policy. We have modern methods now and we know the government won't let you starve, won't let you be kicked out, and won't let you receive no money. If you don't use the stock market as your savings account, that's reasonable for your risk tolerance but the truth is that people have cottoned on to the true risk and they've adjusted their behaviour to match their tolerance.
    - asdff 6y ago
      A savings account shouldn't be your emergency fund to dip into. It should be a lockbox you don't touch, in which case buying the index regularly is a no brainer. If you need to dip into your savings, you need to be expanding your emergency fund before you can think about saving and investing.
      - ceejayoz 6y ago
        A long recession means exhaustion of emergency funds, which means dipping into savings. No matter how well-intentioned you start out, eventually money runs out and that savings/investment starts to look like the remaining option. Having to do it when it's depleted by market crash sucks.

sigstoat 6y ago

even without the fractional shares mentioned by sibling comments, you can open a vanguard account and get a single share of VTI, which is currently $170 something. no other fees, or hidden weirdness or anything. or get some bond ETF that has less volatility. the dividends will still exceed anything you get from a savings account. or even just leave the cash in the vanguard money market fund. that won't even lose value, and actually pays interest. so... s/the affluent/the educated/ perhaps