12 ms·

My grandparents were children of the depression and encouraged me to invest in the vanguard 500 for as long as I could remember. Once I joined the military and

My grandparents were children of the depression and encouraged me to invest in the vanguard 500 for as long as I could remember. Once I joined the military and had a steady paycheck I started putting some money away each month. Fast forward twenty-something years and I’m so so so grateful to have had that influence which gives me optionally in my life. No doubt investing with vanguard had a huge influence on their lives and I can’t imagine how many millions have been impacted. Dollar cost averaging ftw!

jjice 1y ago
As children of the depression, where did your grandparents get the knowledge to invest in the market? From what I've seen, lots of people weren't keen on the market after growing up through the depression. Good on your grandparents.
- UncleOxidant 1y ago
  Agreed, that generation generally viewed the stock market as gambling and thus didn't tend to invest. I'm not sure I can blame them for coming to that conclusion after living through the Roaring 20s bubble and the ensuing Depression.
  - tonyhart7 1y ago
    well it is a "gambling" tho, they are right but you cant avoid that like you still need to invest some of money into that
  - chii 1y ago
    > that generation generally viewed the stock market as gambling and thus didn't tend to invest which, i reckon, might've been what made returns high as that cohort didn't invest as much while prices were down, and thus made more returns as prices grew in the future. The recent growth in people (esp. young people) investing (from it being easier than ever, to availability of information about investing) would make prices grow higher faster. This, i predict, means future returns are actually going to be lower for this generation.
    - bad_haircut72 1y ago
      Since everyone "knows" index funds are the way to go, thats what everyone does, which IMHO is one of the reasons why stocks are so overvalued
      - UncleOxidant 1y ago
        And companies getting onto an index seems potentially fraught with corruption when so much money is at stake. Is there a publicized algorithm that determines which companies get into an index or are palms greased? That said, I mostly invest in indexes even though I have concerns. I've just done much better over the years with index investing than investing in single stocks. Diversification is maximized in index investing.
        chii 1y ago
        > getting onto an index the S&P 500 index is hand picked (by some committee iirc) at S&P. But there's only 1 type of index fund - the total market, cap-weighted index fund - that's worth investing in as a passive investor. Not any specific index that excludes some stocks while including others.
      - no_wizard 1y ago
        >Since everyone "knows" index funds are the way to go, thats what everyone does, which IMHO is one of the reasons why stocks are so overvalued Its been general knowledge for a long time. Even more so now, yes, but even before the internet. Famously Warren Buffett has proclaimed that the average person should be investing in index funds for many decades, for example. Bogle published his methodologies like 40 years ago. Value investing was also well understood (and is what made Warren Buffett a billionaire). Neither of which of these strategies have seemed to overtake the public en masse, even as investing has become easier. There seems to be some disconnect in the human brain that most people can't seem to get their act together with investing[0]. Anecdotally I have been a big Boglehead for quite some time, and long talked people's ear off about it, which inevitably means I'm talking about investing in index funds (the 'holy bogle trinity'[1]). Yet, while I continue to build wealth this way, nobody I know has followed this sound advice, even as I have openly shown that its reasonably sound and likely better than most other forms of investing. Instead, people buy stock in specific companies, or still trade crypto, or see themselves as day traders etc. with all kinds of predictable (and mixed) results. There seems to be some allure in the human mind that drives it. I'm not entirely sure what it is, but passive index fund investing while sound, and certainly well known, isn't as 'hot' as it should be. All this is to say, I don't think its overvalued at all. I think its still undervalued relative to performance [0]: even when given all the knowledge and tools, though financial literacy isn't great in the US, its not the only reason behind this. [1]: The three fund portfolio: https://www.bogleheads.org/wiki/Three-fund_portfolio https://www.bogleheads.org/wiki/Three-fund_portfolio
- dmoy 1y ago
  The way it worked for my grandpa, who also lived through the depression was basically this: 1. Living through the depression made him singularly focused on money, to the point where that's basically all he talked about 2. Throughout life, he tried everything to hustle money - normal job, individual stock tracking, index funds sure, but then also hustling collectibles at garage sales (especially rare coins, because, you know, they are also money), a wide ranging used car sales operation (he'd drive 10 hours cross multiple states to get a good deal on a car to flip), etc etc. 3. He also was pretty good with math (money is numbers), and wasn't dumb, so in the very long run he kept rough track, and realized that of all the things, index funds probably did the best, and also took like zero time. But at least he had his kinda fun doing it. So when before I went to college (even at age 12), he'd call us up and tell us to go to a good but cheap state school, and study something like engineering that makes a good income. So then after I graduated (from a good and cheap state school, with two engineering degrees, and also a CS degree), and got a real job, his phone calls changed to telling me to invest in the S&P 500 with as much as I could, and ignore crashes. (He would also call and try to predict crashes, some he missed (dot com), some of which he got right (2007-8), and some of which were basically fiction (2013, 2015). So I lived like a monk for 5+ years and still live pretty frugally. I think the highest I've ever spent on my income is 50% of after tax, and it used to be more like 20-25% before house+kid. On the plus side, working for a long time at a >50% savings rate means you're much more immune to short term work shenanigans like layoffs. On the down side, you gotta resist buying new stuff all the time, which can be hard when there's lots of cool stuff.
UncleOxidant 1y ago
My grandparents were children of the Depression and given their experience living through that they always considered the stock market to be gambling and thus never invested in the stock market. My parents absorbed that ethos and also never invested until they had to when they got a 401K (but they were well into their 50s)... then they liquidated their holdings as quickly as they could like they thought stocks were dirty, or something.
- bluedino 1y ago
  Even right now a lot of people retire and then liquidate their 401k I just don't get it. My father and father-in-law both did it.
  - Retric 1y ago
    I agree it’s a terrible strategy on average, but Money has diminishing marginal utility. Having 1/10th as much money is far worse than having 10x as much is better. As such once people can lock in a reasonable retirement they often get really conservative.
    - no_wizard 1y ago
      This is why you might say, transition out of stocks being the majority of you portfolio to bonds. To completely cash out - as in, not be invested at all - isn't wise.
    - h2zizzle 1y ago
      This is why high progressive tax rates, let alone high marginal tax rates, are justifiable. The less you earn, the lower a percentage of your earnings you can afford to lose before having to make drastic lifestyle changes. However, relatively low on the absolute income range for Western countries, you reach a point where you could lose 90% of your income, live in a high-cost-of-living area, and still experience negligible change in your circumstances. Tax rates should be based on analyzing where that point is.
      - 1y ago
kccqzy 1y ago
My parents did quite a bit of "investing" by stock picking when I was little. That didn't work well and I didn't invest anything at all for quite a bit of time. One day I by chance discovered the /r/personalfinance subreddit and the bogleheads forum and that's when I started investing. Dollar cost averaging ftw indeed.
- kccqzy 1y ago
  I had a brain fart while writing this comment. I meant to say "indexing ftw" (and also that appears to be the main innovation of Vanguard).
wing-_-nuts 1y ago
Yep, you would be shocked at what a high savings rate and consistent investing can do for someone, even without ever earning a FAANG salary. Being financially comfortable takes so much stress out of life.
ahaushsbsuav 1y ago
[flagged]
traceroute66 1y ago
> I started putting some money away each month To be honest, the positive of your story is less Vanguard, more this. You probably benefited more from old-fashioned compounding than Vanguard itself. Too many people, sadly, don't put some money away each month. They spend, and then they spend some more on credit, spending beyond their means. Yes, of course, there will always be people who genuinely live paycheck to paycheck due to whatever reason. But for people with a stable, reasonably well-paid job, its almost criminal not to put some money away each month.
- loire280 1y ago
  Living below your means and saving is absolutely important, but the Vanguard-style index fund is what made the compounding you mention available to the general public. Without that investment vehicle, cash saved would lose value relative to inflation or be subject to a lot more risk, making retiring at a reasonable age much harder.

jjice 1y ago

As children of the depression, where did your grandparents get the knowledge to invest in the market? From what I've seen, lots of people weren't keen on the market after growing up through the depression. Good on your grandparents.

UncleOxidant 1y ago
Agreed, that generation generally viewed the stock market as gambling and thus didn't tend to invest. I'm not sure I can blame them for coming to that conclusion after living through the Roaring 20s bubble and the ensuing Depression.
- tonyhart7 1y ago
  well it is a "gambling" tho, they are right but you cant avoid that like you still need to invest some of money into that
- chii 1y ago
  > that generation generally viewed the stock market as gambling and thus didn't tend to invest which, i reckon, might've been what made returns high as that cohort didn't invest as much while prices were down, and thus made more returns as prices grew in the future. The recent growth in people (esp. young people) investing (from it being easier than ever, to availability of information about investing) would make prices grow higher faster. This, i predict, means future returns are actually going to be lower for this generation.
  - bad_haircut72 1y ago
    Since everyone "knows" index funds are the way to go, thats what everyone does, which IMHO is one of the reasons why stocks are so overvalued
    - UncleOxidant 1y ago
      And companies getting onto an index seems potentially fraught with corruption when so much money is at stake. Is there a publicized algorithm that determines which companies get into an index or are palms greased? That said, I mostly invest in indexes even though I have concerns. I've just done much better over the years with index investing than investing in single stocks. Diversification is maximized in index investing.
      - chii 1y ago
        > getting onto an index the S&P 500 index is hand picked (by some committee iirc) at S&P. But there's only 1 type of index fund - the total market, cap-weighted index fund - that's worth investing in as a passive investor. Not any specific index that excludes some stocks while including others.
    - no_wizard 1y ago
      >Since everyone "knows" index funds are the way to go, thats what everyone does, which IMHO is one of the reasons why stocks are so overvalued Its been general knowledge for a long time. Even more so now, yes, but even before the internet. Famously Warren Buffett has proclaimed that the average person should be investing in index funds for many decades, for example. Bogle published his methodologies like 40 years ago. Value investing was also well understood (and is what made Warren Buffett a billionaire). Neither of which of these strategies have seemed to overtake the public en masse, even as investing has become easier. There seems to be some disconnect in the human brain that most people can't seem to get their act together with investing[0]. Anecdotally I have been a big Boglehead for quite some time, and long talked people's ear off about it, which inevitably means I'm talking about investing in index funds (the 'holy bogle trinity'[1]). Yet, while I continue to build wealth this way, nobody I know has followed this sound advice, even as I have openly shown that its reasonably sound and likely better than most other forms of investing. Instead, people buy stock in specific companies, or still trade crypto, or see themselves as day traders etc. with all kinds of predictable (and mixed) results. There seems to be some allure in the human mind that drives it. I'm not entirely sure what it is, but passive index fund investing while sound, and certainly well known, isn't as 'hot' as it should be. All this is to say, I don't think its overvalued at all. I think its still undervalued relative to performance [0]: even when given all the knowledge and tools, though financial literacy isn't great in the US, its not the only reason behind this. [1]: The three fund portfolio: https://www.bogleheads.org/wiki/Three-fund_portfolio https://www.bogleheads.org/wiki/Three-fund_portfolio
dmoy 1y ago
The way it worked for my grandpa, who also lived through the depression was basically this: 1. Living through the depression made him singularly focused on money, to the point where that's basically all he talked about 2. Throughout life, he tried everything to hustle money - normal job, individual stock tracking, index funds sure, but then also hustling collectibles at garage sales (especially rare coins, because, you know, they are also money), a wide ranging used car sales operation (he'd drive 10 hours cross multiple states to get a good deal on a car to flip), etc etc. 3. He also was pretty good with math (money is numbers), and wasn't dumb, so in the very long run he kept rough track, and realized that of all the things, index funds probably did the best, and also took like zero time. But at least he had his kinda fun doing it. So when before I went to college (even at age 12), he'd call us up and tell us to go to a good but cheap state school, and study something like engineering that makes a good income. So then after I graduated (from a good and cheap state school, with two engineering degrees, and also a CS degree), and got a real job, his phone calls changed to telling me to invest in the S&P 500 with as much as I could, and ignore crashes. (He would also call and try to predict crashes, some he missed (dot com), some of which he got right (2007-8), and some of which were basically fiction (2013, 2015). So I lived like a monk for 5+ years and still live pretty frugally. I think the highest I've ever spent on my income is 50% of after tax, and it used to be more like 20-25% before house+kid. On the plus side, working for a long time at a >50% savings rate means you're much more immune to short term work shenanigans like layoffs. On the down side, you gotta resist buying new stuff all the time, which can be hard when there's lots of cool stuff.

UncleOxidant 1y ago

My grandparents were children of the Depression and given their experience living through that they always considered the stock market to be gambling and thus never invested in the stock market. My parents absorbed that ethos and also never invested until they had to when they got a 401K (but they were well into their 50s)... then they liquidated their holdings as quickly as they could like they thought stocks were dirty, or something.

bluedino 1y ago
Even right now a lot of people retire and then liquidate their 401k I just don't get it. My father and father-in-law both did it.
- Retric 1y ago
  I agree it’s a terrible strategy on average, but Money has diminishing marginal utility. Having 1/10th as much money is far worse than having 10x as much is better. As such once people can lock in a reasonable retirement they often get really conservative.
  - no_wizard 1y ago
    This is why you might say, transition out of stocks being the majority of you portfolio to bonds. To completely cash out - as in, not be invested at all - isn't wise.
  - h2zizzle 1y ago
    This is why high progressive tax rates, let alone high marginal tax rates, are justifiable. The less you earn, the lower a percentage of your earnings you can afford to lose before having to make drastic lifestyle changes. However, relatively low on the absolute income range for Western countries, you reach a point where you could lose 90% of your income, live in a high-cost-of-living area, and still experience negligible change in your circumstances. Tax rates should be based on analyzing where that point is.
    - 1y ago

kccqzy 1y ago

My parents did quite a bit of "investing" by stock picking when I was little. That didn't work well and I didn't invest anything at all for quite a bit of time. One day I by chance discovered the /r/personalfinance subreddit and the bogleheads forum and that's when I started investing. Dollar cost averaging ftw indeed.

kccqzy 1y ago
I had a brain fart while writing this comment. I meant to say "indexing ftw" (and also that appears to be the main innovation of Vanguard).

wing-_-nuts 1y ago

Yep, you would be shocked at what a high savings rate and consistent investing can do for someone, even without ever earning a FAANG salary. Being financially comfortable takes so much stress out of life.

ahaushsbsuav 1y ago

[flagged]

traceroute66 1y ago

> I started putting some money away each month To be honest, the positive of your story is less Vanguard, more this. You probably benefited more from old-fashioned compounding than Vanguard itself. Too many people, sadly, don't put some money away each month. They spend, and then they spend some more on credit, spending beyond their means. Yes, of course, there will always be people who genuinely live paycheck to paycheck due to whatever reason. But for people with a stable, reasonably well-paid job, its almost criminal not to put some money away each month.

loire280 1y ago
Living below your means and saving is absolutely important, but the Vanguard-style index fund is what made the compounding you mention available to the general public. Without that investment vehicle, cash saved would lose value relative to inflation or be subject to a lot more risk, making retiring at a reasonable age much harder.