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Wealth is like a cube of ice too; it will slowly melt whether you like it or not. General inflation, specific CoL line items, or cost of education for your kids

Wealth is like a cube of ice too; it will slowly melt whether you like it or not. General inflation, specific CoL line items, or cost of education for your kids etc; they all change without any notion of fairness to your hard work. The health that needs to be coupled with wealth to be free is also decaying over time. The things you'd enjoy at your 30s, 40s, 50s, and 60s are also going to be different. You can't optimize for only what you'll enjoy in your 60s and you can't really store up freedom.

N00bN00b 5y ago
Wealth management isn't explicitly mentioned, but it's part of the work that comes with having a high savings rate. It's not too hard to beat inflation. Yeah, you do have to expose yourself to some risk, but it's really not hard to know enough about investing to make your wealth grow over time.
N00bN00b 5y ago
The real issue is never making it to an age where you can optimally use the "freedom" you've stored. I think at 65 1 in 5 males are dead in the US. That 20% risk needs to be properly accounted for somehow.
maceurt 5y ago
Highly disagree if you start investing young and slowly have your portfolio get more and more risk averse over time you should be able to keep majority of your wealth if not grow it depending on your tolerance to risk and when you start withdrawing from your account. > General inflation Average market growth is higher than the average inflation per year. I trust that investing in the market and holding a percent of your portfolio in Treasury bonds will give you a very good chance of growing or maintaining your savings against inflation and market variance.
- acituan 5y ago
  > Average market growth is higher than the average inflation per year. I trust that investing in the market and holding a percent of your portfolio in Treasury bonds will give you a very good chance of growing or maintaining your savings against inflation and market variance. There are several problems with this analysis; 1) You're making a 50+ year forecast (depending on your age) based on a 100 year data, a prediction ultimately not based on first principles. 2) Ultimately average inflation doesn't matter; the specific things you'll need to buy matter. You can enjoy the lowest CPIs in the world and still get shortchanged if you need to buy a house in the Bay Area at the end of a boom. 3) Lifetime averages might look good, but not all years of your life has the same wealth sensitivity; e.g you can postpone getting into a mortgage in your 30s but can't really postpone unexpected healthcare costs after 50s without lifespan altering consequences. The aim is not maximizing your returns until the day you die, it is to have enough when you need it throughout your life. I'm not saying you're going to be necessarily wrong, but there is a risk of overemphasizing the predictive power of past performance and understating outlier events. By the way, economies can fail in more than one way, e.g. markets can't really beat hyperinflation, which is a salient risk today depending on how covid shapes supply/demand curves, and in stagflation markets would suffer in addition to inflation, which is an outlier risk but a risk nonetheless. Sure, any of these would resolve in a decade, but during that decade you're going to be faced with purchasing decisions that you can't wait out, hence the melting of your ice cube.

N00bN00b 5y ago

Wealth management isn't explicitly mentioned, but it's part of the work that comes with having a high savings rate. It's not too hard to beat inflation. Yeah, you do have to expose yourself to some risk, but it's really not hard to know enough about investing to make your wealth grow over time.

N00bN00b 5y ago

The real issue is never making it to an age where you can optimally use the "freedom" you've stored. I think at 65 1 in 5 males are dead in the US. That 20% risk needs to be properly accounted for somehow.

maceurt 5y ago

Highly disagree if you start investing young and slowly have your portfolio get more and more risk averse over time you should be able to keep majority of your wealth if not grow it depending on your tolerance to risk and when you start withdrawing from your account. > General inflation Average market growth is higher than the average inflation per year. I trust that investing in the market and holding a percent of your portfolio in Treasury bonds will give you a very good chance of growing or maintaining your savings against inflation and market variance.

acituan 5y ago
> Average market growth is higher than the average inflation per year. I trust that investing in the market and holding a percent of your portfolio in Treasury bonds will give you a very good chance of growing or maintaining your savings against inflation and market variance. There are several problems with this analysis; 1) You're making a 50+ year forecast (depending on your age) based on a 100 year data, a prediction ultimately not based on first principles. 2) Ultimately average inflation doesn't matter; the specific things you'll need to buy matter. You can enjoy the lowest CPIs in the world and still get shortchanged if you need to buy a house in the Bay Area at the end of a boom. 3) Lifetime averages might look good, but not all years of your life has the same wealth sensitivity; e.g you can postpone getting into a mortgage in your 30s but can't really postpone unexpected healthcare costs after 50s without lifespan altering consequences. The aim is not maximizing your returns until the day you die, it is to have enough when you need it throughout your life. I'm not saying you're going to be necessarily wrong, but there is a risk of overemphasizing the predictive power of past performance and understating outlier events. By the way, economies can fail in more than one way, e.g. markets can't really beat hyperinflation, which is a salient risk today depending on how covid shapes supply/demand curves, and in stagflation markets would suffer in addition to inflation, which is an outlier risk but a risk nonetheless. Sure, any of these would resolve in a decade, but during that decade you're going to be faced with purchasing decisions that you can't wait out, hence the melting of your ice cube.