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Honestly, it’s hard right now. Investing in a low-cost and well diversified index fund used to be the way to go and is probably still your best option (at leas

by dvko 4y ago

Honestly, it’s hard right now. Investing in a low-cost and well diversified index fund used to be the way to go and is probably still your best option (at least for the majority of your savings). I’d read the little books by John Bogle (Vanguard founder), the Simple Path To Wealth (book or blog) and maybe I Will Teach You To Be Rich by Ramith Sethi (book). That said, the future isn’t as certain as it was in the last 200 years. I doubt we will see the same levels of economic growth with the various crisises intensifying over the next few decades. A house to live in in an area that is relatively safe from natural disasters would be high on my list as well.

hansworst 4y ago
The future isn’t as certain as the last 200 years? Just in the previous century we had two world wars, followed by a period with serious threats of all out nuclear war. I’d say we’re not necessarily doing worse than that right now.
- dvko 4y ago
  It really depends on how the climate crisis will unfold. We’re on par for well over 2 degrees of warming with no real solution in sight, so it remains to be seen how everything will turn out.
- nabaraz 4y ago
  Case in point: Covid killed 6M people (0.0008% of world's population). 200 years ago, it would have been much much higher.
  - Retric 4y ago
    8 billion / 6.7 million is 1/1,200 or 0.00084 which is 0.084% not 0.0008%. You forgot that % means shifting the decimal 2 places to the left. Also, “A recent assessment of health information systems capacity in 133 countries found that the percentage of registered deaths ranged from 98% in the European region to only 10% in the African region.” https://www.who.int/data/stories/the-true-death-toll-of-covid-19-estimating-global-excess-mortality https://www.who.int/data/stories/the-true-death-toll-of-covi.... Actual death totals are likely closer to 15 Million than 7. Thus the real death total is likely around 0.2% of global population which is still quite far from the Black Death etc, but far from meaningless.
    - neuronic 4y ago
      Additionally, a lot of the negative consequences due to COVID are not caught in the death rate statistics. Long COVID/Post-viral syndrome and related long term health issues are doing a number on economies and healthcare systems around the globe. Secondary deaths are also not counted, for example due to reduced quality of care in stressed healthcare systems. Try getting ER treatment in China right now...
  - deleted 4y ago
    [deleted]
- nroets 4y ago
  I agree with his expectation that economic growth will be very slow. More importantly, there's a savings glut: A high savings rate in Asia (China in particular) caused real interest rates to become permanently negative. Some of that money spilled over into the stock market where P/E ratios are still very high. Expect stock market returns to be very poor over the next couple of decades.
- texasbigdata 4y ago
  Your financial returns will approximate world gdp plus a premium for risk tolerance adjusted for volatility. The OPs comment is directionally correct as gdp growth above 10% is harder to find nowadays and lower than 2% is much easier to find
- marginalia_nu 4y ago
  200 years is an odd figure. If you replace it with 80 years it becomes reasonable enough. The post-war prosperity has been a long historical anomaly. A century of prosperity is not historically unprecedented, just relatively rare, and easy to take for granted. What we're facing now is more like a return to what the world has looked for the most of its history.
baxtr 4y ago
Honestly, it’s really easy right now. Put all your residue money into a S&P500 ETF (ideally VanGuard), lock it up and look at in again in 10 year intervals. Done.
- dvko 4y ago
  That’s what I said. Don’t be surprised when the return over the next 10 (to 100) years isn’t anywhere near its historical return rates though.
  - justincormack 4y ago
    You are still better off than if you put your money in a year ago though...
geysersam 4y ago
> the future isn’t as certain as it was in the last 200 years. The future is always certain in hindsight...
- dvko 4y ago
  Yeah, certain is definitely a poor choice of words. “I doubt economic growth over the next 100 years will be as high as it was over the past 100.” is what I should have said.
devoutsalsa 4y ago
I liked the Simple Path To Wealth. It convinced to go 100% all in in VTI (the ETF version of VTSAX). It’s really easy to think about and I can sleep easy at night. In a company retirement fund where VTI isn’t an option, I go for the closest thing to an S&P 500 fund. It’s setting myself up for average returns and that’s what I want.

by dvko 4y ago

hansworst 4y ago

The future isn’t as certain as the last 200 years? Just in the previous century we had two world wars, followed by a period with serious threats of all out nuclear war. I’d say we’re not necessarily doing worse than that right now.

dvko 4y ago
It really depends on how the climate crisis will unfold. We’re on par for well over 2 degrees of warming with no real solution in sight, so it remains to be seen how everything will turn out.
nabaraz 4y ago
Case in point: Covid killed 6M people (0.0008% of world's population). 200 years ago, it would have been much much higher.
- Retric 4y ago
  8 billion / 6.7 million is 1/1,200 or 0.00084 which is 0.084% not 0.0008%. You forgot that % means shifting the decimal 2 places to the left. Also, “A recent assessment of health information systems capacity in 133 countries found that the percentage of registered deaths ranged from 98% in the European region to only 10% in the African region.” https://www.who.int/data/stories/the-true-death-toll-of-covid-19-estimating-global-excess-mortality https://www.who.int/data/stories/the-true-death-toll-of-covi.... Actual death totals are likely closer to 15 Million than 7. Thus the real death total is likely around 0.2% of global population which is still quite far from the Black Death etc, but far from meaningless.
  - neuronic 4y ago
    Additionally, a lot of the negative consequences due to COVID are not caught in the death rate statistics. Long COVID/Post-viral syndrome and related long term health issues are doing a number on economies and healthcare systems around the globe. Secondary deaths are also not counted, for example due to reduced quality of care in stressed healthcare systems. Try getting ER treatment in China right now...
- deleted 4y ago
  [deleted]
nroets 4y ago
I agree with his expectation that economic growth will be very slow. More importantly, there's a savings glut: A high savings rate in Asia (China in particular) caused real interest rates to become permanently negative. Some of that money spilled over into the stock market where P/E ratios are still very high. Expect stock market returns to be very poor over the next couple of decades.
texasbigdata 4y ago
Your financial returns will approximate world gdp plus a premium for risk tolerance adjusted for volatility. The OPs comment is directionally correct as gdp growth above 10% is harder to find nowadays and lower than 2% is much easier to find
marginalia_nu 4y ago
200 years is an odd figure. If you replace it with 80 years it becomes reasonable enough. The post-war prosperity has been a long historical anomaly. A century of prosperity is not historically unprecedented, just relatively rare, and easy to take for granted. What we're facing now is more like a return to what the world has looked for the most of its history.

baxtr 4y ago

Honestly, it’s really easy right now. Put all your residue money into a S&P500 ETF (ideally VanGuard), lock it up and look at in again in 10 year intervals. Done.

dvko 4y ago
That’s what I said. Don’t be surprised when the return over the next 10 (to 100) years isn’t anywhere near its historical return rates though.
- justincormack 4y ago
  You are still better off than if you put your money in a year ago though...

geysersam 4y ago

> the future isn’t as certain as it was in the last 200 years. The future is always certain in hindsight...

dvko 4y ago
Yeah, certain is definitely a poor choice of words. “I doubt economic growth over the next 100 years will be as high as it was over the past 100.” is what I should have said.

devoutsalsa 4y ago

I liked the Simple Path To Wealth. It convinced to go 100% all in in VTI (the ETF version of VTSAX). It’s really easy to think about and I can sleep easy at night. In a company retirement fund where VTI isn’t an option, I go for the closest thing to an S&P 500 fund. It’s setting myself up for average returns and that’s what I want.