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He never saved more than $6,000 a year, which is likely less than 10% of his income at terminus. And you missed the point that this is the worst you could do.

He never saved more than $6,000 a year, which is likely less than 10% of his income at terminus. And you missed the point that this is the worst you could do. If “Bob” had simply invested every year, his end result is likely 2-3x.

itsoktocry 6y ago
>He never saved more than $6,000 a year He started with $2,000 and was saving $2,000 per year...in 1970. That is a lot. If you are able to do that as a 22-year-old entering the job market, good for you. It's unrealistic for the vast majority of people. The average savings rate in the US is about 7%. "Bob" managed 30%+ in the most important (read: earliest) years, allowing it to compound for a long time. His savings was front-loaded. This is not normal. Most people don't start saving anything of significance until they are into their 40s. >And you missed the point that this is the worst you could do. You missed my point that this isn't nearly "the worst you could do". This fictional person started with incredibly privileged circumstances: A substantial windfall, apparently no debt, apparently a great job straight out of college, that allowed them to invest significant funds very early in their career. The unrealistic investing scenario is countered by the unrealistic saving ability. Not a particularly valuable thought experiment. And, once again, I don't disagree with the premise: save what you can and invest it in a diversified portfolio and allow it to compound over your life. This is the best option for 99.9% of the population. But, it also doesn't guarantee a comfortable retirement for that 99.9%, which is scary.