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What's your better, alternative option? You're saying that $1MM in retirement isn't as much as you'd like...so...it'd be better to have nothing and have saved

What's your better, alternative option? You're saying that $1MM in retirement isn't as much as you'd like...so...it'd be better to have nothing and have saved zero?

DennisP 6y ago
The obvious answer is to save more than that if at all possible, and if you're not in your twenties then diversify across asset classes instead of throwing it all into US stocks.
itsoktocry 6y ago
>You're saying that $1MM in retirement isn't as much as you'd like...so...it'd be better to have nothing and have saved zero? If this is what you got from my comment, it's probably pointless to engage with you. In the off-chance you're sincere: the thought experiment in the article is interesting, I get that. But it's trotted out as evidence that you can be the worst investor in the world and still make money. Okay. Now examine the assumptions. This fictional person started with $2,000 at age 22 (about $15,000 today. No student loans, nice windfall. Sound like the 22-year-olds of today?), and assuming they were making the average salary in 1970 (unlikely as a young person), they managed to save a substantial proportion of their salary every year. This gets invested, instantly cut in half, but then compounds for 45 years, with more dollars added along the way. Yes, you can be the worst investor ever and get reasonable results over 45 years if you're a really good saver. So what? This person managed to 6x their money over half a century. In my opinion that's a devastating result. Now imagine if you're one of those people in between the best/worst saver/investor? Without some luck your results will be similar, ie not great. And this doesn't account for the fact that past results != future results. It also doesn't account for when you need to disinvest. This article was written in 2014, with stocks near record highs at that time. Pretty convenient for this calculation. What happened if retirement came a few years earlier, in early 2009? So to answer your question, of course something is better than nothing. But the other lesson I see there: saving what you can and investing it blindly in an index fund isn't a guarantee of a cushy retirement, even though that's what the population is being sold. This is a crisis in the making.

What's your better, alternative option? You're saying that $1MM in retirement isn't as much as you'd like...so...it'd be better to have nothing and have saved zero?

DennisP 6y ago

The obvious answer is to save more than that if at all possible, and if you're not in your twenties then diversify across asset classes instead of throwing it all into US stocks.

itsoktocry 6y ago

>You're saying that $1MM in retirement isn't as much as you'd like...so...it'd be better to have nothing and have saved zero? If this is what you got from my comment, it's probably pointless to engage with you. In the off-chance you're sincere: the thought experiment in the article is interesting, I get that. But it's trotted out as evidence that you can be the worst investor in the world and still make money. Okay. Now examine the assumptions. This fictional person started with $2,000 at age 22 (about $15,000 today. No student loans, nice windfall. Sound like the 22-year-olds of today?), and assuming they were making the average salary in 1970 (unlikely as a young person), they managed to save a substantial proportion of their salary every year. This gets invested, instantly cut in half, but then compounds for 45 years, with more dollars added along the way. Yes, you can be the worst investor ever and get reasonable results over 45 years if you're a really good saver. So what? This person managed to 6x their money over half a century. In my opinion that's a devastating result. Now imagine if you're one of those people in between the best/worst saver/investor? Without some luck your results will be similar, ie not great. And this doesn't account for the fact that past results != future results. It also doesn't account for when you need to disinvest. This article was written in 2014, with stocks near record highs at that time. Pretty convenient for this calculation. What happened if retirement came a few years earlier, in early 2009? So to answer your question, of course something is better than nothing. But the other lesson I see there: saving what you can and investing it blindly in an index fund isn't a guarantee of a cushy retirement, even though that's what the population is being sold. This is a crisis in the making.