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True if you save zero or negative percent of your earnings. If you always save 10 percent of your earnings, then clearly the multiplier works in your favour.

by j7ake 3y ago

psychoslave 3y ago
If inflation is higher than what you can earn from a saving account, then how is it rational to "save" anything? You’ll have a bit bigger number on the account, but in the end you can actually buy less. You can of course go with more risky placements and hope to go higher than a saving account, but then you have to spend attention on the market circus with additional worrisome mental load that you can actually lose everything.
- johnnyanmac 3y ago
  >If inflation is higher than what you can earn from a saving account, then how is it rational to "save" anything? general security? You don't need to (nor should you) hoard 10% of your finances for all 40+ years of your career into a low interest savings account. But you do want to keep a decent amount in case of various downturns. a high CoL city where you pay not much more for "things" can help with that. Can also help pay for an financial advisor who will happily play with the monopoly money for you. Delegation is a great "experience" to consider when comparing costs of living.
- j7ake 3y ago
  When you buy car, fly planes, or shop at Amazon, you do not get a discount for living in a low cost of living area. So the bigger number matters because many products are the same price ecerywhere in the world.
- alright2565 3y ago
  > but then you have to spend attention on the market circus with additional worrisome mental load that you can actually lose everything. Not true. You can just buy a slice of the whole economy. Then the only situation in which you lose everything is that in which your dollars would be worthless anyway.
- satvikpendem 3y ago
  No, just VTI and chill, it's the FIRE / Bogleheads model, and it works very well. No one who saves money for retirement should literally be doing so via a savings account. Sadly, not too many people know this then wonder why they're poor when others are rich come retirement age, not understanding the power of compounding in the market.
  - psychoslave 3y ago
    Where do you learn about these things? Having grown and living in France, I was never given a word about it, not even at university. We are supposed to have state managed retirement plans, but given the shady future of France, I’m starting to wonder what I should do to ensure I can either reach a retirement that also take into account being able to backup my two kids as they grow up.
    - satvikpendem 3y ago
      Reddit. /r/personalfinance, /r/financialindependence (for Europeans, /r/eupersonalfinance and /r/EuropeFIRE) etc. Read their wikis.
    - acabin 3y ago
      Look up for Ben Felix on YouTube. Lots of free useful guidance!

True if you save zero or negative percent of your earnings. If you always save 10 percent of your earnings, then clearly the multiplier works in your favour.

by j7ake 3y ago

True if you save zero or negative percent of your earnings. If you always save 10 percent of your earnings, then clearly the multiplier works in your favour.

psychoslave 3y ago

If inflation is higher than what you can earn from a saving account, then how is it rational to "save" anything? You’ll have a bit bigger number on the account, but in the end you can actually buy less. You can of course go with more risky placements and hope to go higher than a saving account, but then you have to spend attention on the market circus with additional worrisome mental load that you can actually lose everything.

johnnyanmac 3y ago
>If inflation is higher than what you can earn from a saving account, then how is it rational to "save" anything? general security? You don't need to (nor should you) hoard 10% of your finances for all 40+ years of your career into a low interest savings account. But you do want to keep a decent amount in case of various downturns. a high CoL city where you pay not much more for "things" can help with that. Can also help pay for an financial advisor who will happily play with the monopoly money for you. Delegation is a great "experience" to consider when comparing costs of living.
j7ake 3y ago
When you buy car, fly planes, or shop at Amazon, you do not get a discount for living in a low cost of living area. So the bigger number matters because many products are the same price ecerywhere in the world.
alright2565 3y ago
> but then you have to spend attention on the market circus with additional worrisome mental load that you can actually lose everything. Not true. You can just buy a slice of the whole economy. Then the only situation in which you lose everything is that in which your dollars would be worthless anyway.
satvikpendem 3y ago
No, just VTI and chill, it's the FIRE / Bogleheads model, and it works very well. No one who saves money for retirement should literally be doing so via a savings account. Sadly, not too many people know this then wonder why they're poor when others are rich come retirement age, not understanding the power of compounding in the market.
- psychoslave 3y ago
  Where do you learn about these things? Having grown and living in France, I was never given a word about it, not even at university. We are supposed to have state managed retirement plans, but given the shady future of France, I’m starting to wonder what I should do to ensure I can either reach a retirement that also take into account being able to backup my two kids as they grow up.
  - satvikpendem 3y ago
    Reddit. /r/personalfinance, /r/financialindependence (for Europeans, /r/eupersonalfinance and /r/EuropeFIRE) etc. Read their wikis.
  - acabin 3y ago
    Look up for Ben Felix on YouTube. Lots of free useful guidance!