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I don't contradict that wealth inequality exists, or even that it increases. But if middle class relies only on income from salaries and spend it like there's n

I don't contradict that wealth inequality exists, or even that it increases. But if middle class relies only on income from salaries and spend it like there's no tomorrow (because catching up with the Joneses, or simply they don't know better) instead of staying out of debt + saving + investing it, the gap will only increase.

neonological 6y ago
Investments do not compound fast enough for middle class people for it to really matter. Most people must work for an economy to function. If everyone can stop working and rely on income from investment growth then there would be no more human capital to grow those investments because everyone is waiting for investments to grow rather then producing work and labor which is the true driver of growth. Therefore, Anyone who relies on investments for income not only by the above economic logic must represent a very small minority... but people who get income off investments are gaining income off the backs of people who labor to grow those investments. Second, realize that the spending habits of the rich and the poor are roughly equivalent when scaled. https://www.npr.org/sections/money/2012/08/01/157664524/how-the-poor-the-middle-class-and-the-rich-spend-their-money https://www.npr.org/sections/money/2012/08/01/157664524/how-... It is completely erroneous to think poor people are stupider than rich people so much so that middle class spending habits are responsible for most of their suffering.
- ivanche 6y ago
  It seems to me you're painting everything black or everything white, no shades in between. I never said anyone must rely only on investment income. I also never said that everybody should stop working and live off of investments (of course it's unsustainable). But outright refusing to combine salary and investment income just because investments "don't compound fast enough" is like saying you don't want to ride a bicycle because BMW 750i is faster than bicycle, so you'd rather walk. Look long term. I'm fairly and squarely in middle class. Yet, my family net worth went from -$11,000 to +$50,000 in less than 4 years. Was it luck? Inheritance? Heck no! We changed our habits, cut spending, got rid of debt, worked hard to increase income and then invested everything we could afford. I'm aware that my wife and me would still probably never be millionaires. But my kid? No doubt! If he ends with less than $5,000,000 net worth I would be disappointed.
  - neonological 6y ago
    I consider myself middle class. And I make what you made in 5 months what took you 4 years without any penny pinching schemes. Not to mention I invest what I make. So yeah when I say it doesn't compound fast enough for poor people, I'm being honest. You don't even stand a chance catching up to me with just investing. Not to mention I'm still considered middle class. Don't get me wrong. I'm not saying you won't make this kind of money ever. You could approach and likely surpass this income in the future. What I'm saying is investing won't get you anywhere at your stage. Not when baseline living costs are too high and compounding interest is too low. Also I NEVER said to not invest. I'm saying investing doesn't close the gap nor does it alleviate hardship. It doesn't address the problem head on. To poor people investment is worth much less than it is to rich people, much much much less. So much less that a wage increase effects lifestyle more than gains on investment. See this: https://www.investopedia.com/financial-edge/0211/why-the-first-1-million-is-the-hardest.aspx https://www.investopedia.com/financial-edge/0211/why-the-fir... Wishing your kid will be worth 5 million is a pipe dream. First consider inflation. Second consider that every generation will have it harder than the last. Your kid will absolutely 100% have to rely on inheritance to get ahead. Both me and you didn't rely on inheritance but I doubt our kids will have any chance if they don't.
    - ivanche 6y ago
      Well, then I can only say we revisit this thread in year 2081. I started investing when I was 40. My son started investing when he was 5. He has 60 more years of compounding ahead of him. Even if the rate of return drops to 7% instead of historical (around) 10.3%, he'll be good. Also, I wasn't referring to $5,000,000 in today's money, but in year 2081 money. I know it will be much less than today but heck, it will probably be much more than what is $50,000 today.
      - neonological 6y ago
        You're not getting it. 60 years compounding is a pipe dream. It can happen, but there are many issues with what you just said. First of all 60 years. Basically you're dreaming about the next life. This is how they justified the caste system in India. Second off, while your shit is compounding so are all my assets as well. So are the assets of rich people. The growth of stocks this century will be entirely different from the last century based solely off the fact that everybody is basically executing your exact same investment strategy. Also keep in mind getting salary raises at where you are in the wealth equation is going to be maximally better than your investments for a long time to come. Even 10% of 1 million is much less than what I make. Either way like I said, your kid is relying on your help (inheritance) to achieve this when he's 60 which is also near the end of his lifetime.

neonological 6y ago

Investments do not compound fast enough for middle class people for it to really matter. Most people must work for an economy to function. If everyone can stop working and rely on income from investment growth then there would be no more human capital to grow those investments because everyone is waiting for investments to grow rather then producing work and labor which is the true driver of growth. Therefore, Anyone who relies on investments for income not only by the above economic logic must represent a very small minority... but people who get income off investments are gaining income off the backs of people who labor to grow those investments. Second, realize that the spending habits of the rich and the poor are roughly equivalent when scaled. https://www.npr.org/sections/money/2012/08/01/157664524/how-the-poor-the-middle-class-and-the-rich-spend-their-money https://www.npr.org/sections/money/2012/08/01/157664524/how-... It is completely erroneous to think poor people are stupider than rich people so much so that middle class spending habits are responsible for most of their suffering.

ivanche 6y ago
It seems to me you're painting everything black or everything white, no shades in between. I never said anyone must rely only on investment income. I also never said that everybody should stop working and live off of investments (of course it's unsustainable). But outright refusing to combine salary and investment income just because investments "don't compound fast enough" is like saying you don't want to ride a bicycle because BMW 750i is faster than bicycle, so you'd rather walk. Look long term. I'm fairly and squarely in middle class. Yet, my family net worth went from -$11,000 to +$50,000 in less than 4 years. Was it luck? Inheritance? Heck no! We changed our habits, cut spending, got rid of debt, worked hard to increase income and then invested everything we could afford. I'm aware that my wife and me would still probably never be millionaires. But my kid? No doubt! If he ends with less than $5,000,000 net worth I would be disappointed.
- neonological 6y ago
  I consider myself middle class. And I make what you made in 5 months what took you 4 years without any penny pinching schemes. Not to mention I invest what I make. So yeah when I say it doesn't compound fast enough for poor people, I'm being honest. You don't even stand a chance catching up to me with just investing. Not to mention I'm still considered middle class. Don't get me wrong. I'm not saying you won't make this kind of money ever. You could approach and likely surpass this income in the future. What I'm saying is investing won't get you anywhere at your stage. Not when baseline living costs are too high and compounding interest is too low. Also I NEVER said to not invest. I'm saying investing doesn't close the gap nor does it alleviate hardship. It doesn't address the problem head on. To poor people investment is worth much less than it is to rich people, much much much less. So much less that a wage increase effects lifestyle more than gains on investment. See this: https://www.investopedia.com/financial-edge/0211/why-the-first-1-million-is-the-hardest.aspx https://www.investopedia.com/financial-edge/0211/why-the-fir... Wishing your kid will be worth 5 million is a pipe dream. First consider inflation. Second consider that every generation will have it harder than the last. Your kid will absolutely 100% have to rely on inheritance to get ahead. Both me and you didn't rely on inheritance but I doubt our kids will have any chance if they don't.
  - ivanche 6y ago
    Well, then I can only say we revisit this thread in year 2081. I started investing when I was 40. My son started investing when he was 5. He has 60 more years of compounding ahead of him. Even if the rate of return drops to 7% instead of historical (around) 10.3%, he'll be good. Also, I wasn't referring to $5,000,000 in today's money, but in year 2081 money. I know it will be much less than today but heck, it will probably be much more than what is $50,000 today.
    - neonological 6y ago
      You're not getting it. 60 years compounding is a pipe dream. It can happen, but there are many issues with what you just said. First of all 60 years. Basically you're dreaming about the next life. This is how they justified the caste system in India. Second off, while your shit is compounding so are all my assets as well. So are the assets of rich people. The growth of stocks this century will be entirely different from the last century based solely off the fact that everybody is basically executing your exact same investment strategy. Also keep in mind getting salary raises at where you are in the wealth equation is going to be maximally better than your investments for a long time to come. Even 10% of 1 million is much less than what I make. Either way like I said, your kid is relying on your help (inheritance) to achieve this when he's 60 which is also near the end of his lifetime.