Author Topic: Only the Rich Invest  (Read 10513 times)

Debonair

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Only the Rich Invest
« on: August 03, 2017, 10:30:12 AM »
So a real winner from Vice News

High Stock Market only helps Rich People
https://www.vice.com/en_us/article/xwxqmj/trumps-beloved-stock-market-high-only-helps-rich-people?utm_source=vicefbus

The comments section of the FB post was full of peoples complaints that there is no way for normal people to invest.

I never realized I was rich.......



LalsConstant

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Re: Only the Rich Invest
« Reply #1 on: August 03, 2017, 11:16:32 AM »
That was an information free cringe fest.  Nice find.

One Noisy Cat

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Re: Only the Rich Invest
« Reply #2 on: August 03, 2017, 11:34:58 AM »
By not owning stock, she is admitting she is stupid. Democrats boast that historically the stock market has better returns in Democratic administrations than Republican administrations. There were a number of them (Paul Krugman) who predicted last November that Trump's election would immediately crash the market. So far it hasn't happened. Maybe it will in the future but bear markets happen every decade or so, no matter who is in power.

jinga nation

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Re: Only the Rich Invest
« Reply #3 on: August 03, 2017, 11:59:02 AM »
Obviously Vice, etc. is listening to the noise while ignoring the signal. SNR under than 0 dB.

Noise floor has come up, Signal Rx degraded.

Edited: I'm forgetting my damn RF basics. Shame on me!

« Last Edit: August 03, 2017, 01:10:37 PM by jinga nation »

Inaya

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Re: Only the Rich Invest
« Reply #4 on: August 03, 2017, 12:22:15 PM »
Obviously Vice, etc. is listening to the noise while ignoring the signal. SNR greater than 0 dB.
I know that SNR means signal:noise, but for some reason I read that as signal:news. And I think I like that and will keep using it.

jinga nation

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Re: Only the Rich Invest
« Reply #5 on: August 03, 2017, 12:59:45 PM »
Obviously Vice, etc. is listening to the noise while ignoring the signal. SNR greater than 0 dB.
I know that SNR means signal:noise, but for some reason I read that as signal:news. And I think I like that and will keep using it.
Noise is the new News.
I seriously think the media has run out of actual intellectual content to report, and thus either focus too much on trivial stuff or fake it big time.
This is what happens when a few big corporations own TV, Radio, Internet and print media. This is the new normal.

Debonair

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Re: Only the Rich Invest
« Reply #6 on: August 03, 2017, 08:57:59 PM »
By not owning stock, she is admitting she is stupid. Democrats boast that historically the stock market has better returns in Democratic administrations than Republican administrations. There were a number of them (Paul Krugman) who predicted last November that Trump's election would immediately crash the market. So far it hasn't happened. Maybe it will in the future but bear markets happen every decade or so, no matter who is in power.

Now I am a little disconnected being an expat so take it for what it's worth.

I have noticed some of my peers (I'm a 26-year-old with a Bachelors degree) doing something similar and flaunt that they are not investing. Many of them seem to view it as almost the same thing as gambling.

WhiteTrashCash

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Re: Only the Rich Invest
« Reply #7 on: August 03, 2017, 10:52:23 PM »
Since unplugging from advertising and learning a lot over the years, I've come to understand that the main reason most people don't have a voice in the affairs of the world is that they don't own the means of production, which for most people means owning shares of companies.

You invest = You get the wealth. You get the wealth = You get control of society.

All these people right now are screaming and shouting about wanting a revolution, but who is actually changing things? Elon Musk is. And that's because he invested intelligently and now he's leveraged those investments to overpower his enemies and fund things like solar power, electric cars, and the Hyperloop. A lot of powerful people want to stop him because these new technologies are going to annihilate entire industries that have allowed them to control our nation, but he just tells them to sit and swivel because he has the cash.

I wish more people would recognize how to truly empower themselves.

farfromfire

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Re: Only the Rich Invest
« Reply #8 on: August 04, 2017, 03:58:39 AM »
By not owning stock, she is admitting she is stupid. Democrats boast that historically the stock market has better returns in Democratic administrations than Republican administrations. There were a number of them (Paul Krugman) who predicted last November that Trump's election would immediately crash the market. So far it hasn't happened. Maybe it will in the future but bear markets happen every decade or so, no matter who is in power.

Now I am a little disconnected being an expat so take it for what it's worth.

I have noticed some of my peers (I'm a 26-year-old with a Bachelors degree) doing something similar and flaunt that they are not investing. Many of them seem to view it as almost the same thing as gambling.
Same here, and some in some countries these views are even more pronounced. If only Vice would use their considerable funds to teach some of these people the basis of index investing, it would have a more positive impact than this crappy article.

Eve's last sentence makes no sense, and she is quite the imbecile in general.

Drifterrider

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Re: Only the Rich Invest
« Reply #9 on: August 04, 2017, 05:48:03 AM »
People who don't plan for their future success won't have any.


Debonair

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Re: Only the Rich Invest
« Reply #10 on: August 04, 2017, 08:56:04 PM »
By not owning stock, she is admitting she is stupid. Democrats boast that historically the stock market has better returns in Democratic administrations than Republican administrations. There were a number of them (Paul Krugman) who predicted last November that Trump's election would immediately crash the market. So far it hasn't happened. Maybe it will in the future but bear markets happen every decade or so, no matter who is in power.

Now I am a little disconnected being an expat so take it for what it's worth.

I have noticed some of my peers (I'm a 26-year-old with a Bachelors degree) doing something similar and flaunt that they are not investing. Many of them seem to view it as almost the same thing as gambling.
Same here, and some in some countries these views are even more pronounced. If only Vice would use their considerable funds to teach some of these people the basis of index investing, it would have a more positive impact than this crappy article.

Eve's last sentence makes no sense, and she is quite the imbecile in general.
This looks like the problem when you have a politics writer try to write about personal finance.

Sadly sometimes I feel like my finances are more similer to my Taiwanese co-workers than my fellow expats.

farfromfire

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Re: Only the Rich Invest
« Reply #11 on: August 05, 2017, 07:52:26 AM »
By not owning stock, she is admitting she is stupid. Democrats boast that historically the stock market has better returns in Democratic administrations than Republican administrations. There were a number of them (Paul Krugman) who predicted last November that Trump's election would immediately crash the market. So far it hasn't happened. Maybe it will in the future but bear markets happen every decade or so, no matter who is in power.

Now I am a little disconnected being an expat so take it for what it's worth.

I have noticed some of my peers (I'm a 26-year-old with a Bachelors degree) doing something similar and flaunt that they are not investing. Many of them seem to view it as almost the same thing as gambling.
Same here, and some in some countries these views are even more pronounced. If only Vice would use their considerable funds to teach some of these people the basis of index investing, it would have a more positive impact than this crappy article.

Eve's last sentence makes no sense, and she is quite the imbecile in general.
This looks like the problem when you have a politics writer try to write about personal finance.

Sadly sometimes I feel like my finances are more similer to my Taiwanese co-workers than my fellow expats.
You are too kind.

Debonair

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Re: Only the Rich Invest
« Reply #12 on: August 07, 2017, 05:40:47 AM »
By not owning stock, she is admitting she is stupid. Democrats boast that historically the stock market has better returns in Democratic administrations than Republican administrations. There were a number of them (Paul Krugman) who predicted last November that Trump's election would immediately crash the market. So far it hasn't happened. Maybe it will in the future but bear markets happen every decade or so, no matter who is in power.

Now I am a little disconnected being an expat so take it for what it's worth.

I have noticed some of my peers (I'm a 26-year-old with a Bachelors degree) doing something similar and flaunt that they are not investing. Many of them seem to view it as almost the same thing as gambling.
Same here, and some in some countries these views are even more pronounced. If only Vice would use their considerable funds to teach some of these people the basis of index investing, it would have a more positive impact than this crappy article.

Eve's last sentence makes no sense, and she is quite the imbecile in general.
This looks like the problem when you have a politics writer try to write about personal finance.

Sadly sometimes I feel like my finances are more similer to my Taiwanese co-workers than my fellow expats.
You are too kind.

Yeah, you are not the first to say that.

talltexan

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Re: Only the Rich Invest
« Reply #13 on: August 07, 2017, 01:09:16 PM »
So let's be clear...do we criticize someone who is still paying off debt for not investing?

Or do we encourage that person to invest when they really ought to be attacking their debt?

Debonair

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Re: Only the Rich Invest
« Reply #14 on: August 08, 2017, 04:24:53 AM »
So let's be clear...do we criticize someone who is still paying off debt for not investing?

Or do we encourage that person to invest when they really ought to be attacking their debt?

Now the math is a little different for me but here is my take. The best strategy is to do both at once. In the USA ( correct me if I am wrong) the money put in 401k and IRA is sheltered from taxes and may have an employee match.

 Even if you are like my sister and your only investment is a 401k then you are still helped by rising stock market.   

WhiteTrashCash

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Re: Only the Rich Invest
« Reply #15 on: August 08, 2017, 07:09:35 AM »
So let's be clear...do we criticize someone who is still paying off debt for not investing?

Or do we encourage that person to invest when they really ought to be attacking their debt?

Now the math is a little different for me but here is my take. The best strategy is to do both at once. In the USA ( correct me if I am wrong) the money put in 401k and IRA is sheltered from taxes and may have an employee match.

 Even if you are like my sister and your only investment is a 401k then you are still helped by rising stock market.

Yeah, I still have student loan debt I am repaying but I am also heavily investing for retirement. It's completely possible to do both at the same time. Of course, it's not really possible if a person insists on drinks out at the bar with friends several times a week, HBO and Showtime subscriptions, Starbucks every morning, takeout for dinner every night, and other massive wastes of money that he or she insists are necessary.

prognastat

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Re: Only the Rich Invest
« Reply #16 on: August 08, 2017, 08:08:04 AM »
I mean technically only the rich invest is true, but more because anyone who is smart enough to spend less than they make and invest the difference is way more likely to become rich.

talltexan

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Re: Only the Rich Invest
« Reply #17 on: August 08, 2017, 10:12:59 AM »
How would you characterize a person whose credit card debt doubled from $12,000 to $24,000 last year, but increased the balance of his 401(k) from $150,000 to $210,000? (yes, including both market gains and new money contributed)

Gondolin

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Re: Only the Rich Invest
« Reply #18 on: August 08, 2017, 10:56:06 AM »
Quote
How would you characterize a person whose credit card debt doubled from $12,000 to $24,000 last year, but increased the balance of his 401(k) from $150,000 to $210,000? (yes, including both market gains and new money contributed)

Short term, they had a good year at +48k NW.

On the other hand, they ignored low hanging fruit by allowing the CC debt to balloon. While it's great to eventually get your +7% from the market, it's incredibly painful to take -20-25% returns every month at the same time. The gain from the 401k is gradual and subject to potentially extreme market divisions. The damage from the CC is immediate, known and 100% guaranteed.

With debt below 5% interest it can be argued that the money is more productive in the market. At CC interest rates there is no comparison and no argument.

Gondolin

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Re: Only the Rich Invest
« Reply #19 on: August 08, 2017, 11:01:21 AM »
Quote
Do you feel richer yet?

... Yes


Inaya

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Re: Only the Rich Invest
« Reply #20 on: August 08, 2017, 11:42:45 AM »
Quote
How would you characterize a person whose credit card debt doubled from $12,000 to $24,000 last year, but increased the balance of his 401(k) from $150,000 to $210,000? (yes, including both market gains and new money contributed)

Short term, they had a good year at +48k NW.

On the other hand, they ignored low hanging fruit by allowing the CC debt to balloon. While it's great to eventually get your +7% from the market, it's incredibly painful to take -20-25% returns every month at the same time. The gain from the 401k is gradual and subject to potentially extreme market divisions. The damage from the CC is immediate, known and 100% guaranteed.

With debt below 5% interest it can be argued that the money is more productive in the market. At CC interest rates there is no comparison and no argument.


Could be on zero interest cards, but I doubt it.

Chesleygirl

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Re: Only the Rich Invest
« Reply #21 on: August 08, 2017, 09:49:32 PM »
I've heard people talk about those "fat cats with 529 plans". Implying that only well off people could get them. I thought that was strange. I think you can start some 529 plans with only $500. There are definitely investments out there that have high minimum initial investments.

I'd like to know just for information sake, what types of investments that a poor person could set up with maybe a few hundred bucks.

Inaya

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Re: Only the Rich Invest
« Reply #22 on: August 09, 2017, 07:17:17 AM »
I've heard people talk about those "fat cats with 529 plans". Implying that only well off people could get them. I thought that was strange. I think you can start some 529 plans with only $500. There are definitely investments out there that have high minimum initial investments.

I'd like to know just for information sake, what types of investments that a poor person could set up with maybe a few hundred bucks.


You could use something like Acorns to invest very small amounts at a time (dollars or cents). No idea how the returns or fees are.

Chesleygirl

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Re: Only the Rich Invest
« Reply #23 on: August 09, 2017, 12:42:05 PM »
I've heard people talk about those "fat cats with 529 plans". Implying that only well off people could get them. I thought that was strange. I think you can start some 529 plans with only $500. There are definitely investments out there that have high minimum initial investments.

I'd like to know just for information sake, what types of investments that a poor person could set up with maybe a few hundred bucks.


You could use something like Acorns to invest very small amounts at a time (dollars or cents). No idea how the returns or fees are.

Thanks for the info. I haven't heard of Acorns, but I'd be interested in looking into it.

frozen

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Re: Only the Rich Invest
« Reply #24 on: August 12, 2017, 07:00:48 PM »

I'd like to know just for information sake, what types of investments that a poor person could set up with maybe a few hundred bucks.


I'm pretty sure Betterment has no minimum for investing. I think their goal based investing using index funds would be good for new investors.

SwordGuy

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Re: Only the Rich Invest
« Reply #25 on: August 12, 2017, 07:18:29 PM »
Savings account at a bank doesn't take much.  It can be used to accumulate funds until minimums are reached.

Vanguard Target Retirement accounts have a $1000 minimum.   Frankly, if you don't have at least $1000 to your name you don't need to be in the stock market.

The other stock funds have a $3000 minimum.

These are not huge, insurmountable numbers for someone who gets into the middle class.

If you're poor, well, that's different.   All savings are hard when you're poor.

BlueMR2

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Re: Only the Rich Invest
« Reply #26 on: August 13, 2017, 06:03:42 AM »
Talking with people that don't invest and it's pretty much the same story over and over again.  They feel like they really had to cut back to save up the minimum, they invested, the value dropped a bunch at some point, so they went into a panic and sold at a significant loss (to cut their losses before they got real bad of course).  Now they're convinced that the market is a rich people scam to steal their money.  *sigh*

WhiteTrashCash

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Re: Only the Rich Invest
« Reply #27 on: August 13, 2017, 06:54:21 AM »
Savings account at a bank doesn't take much.  It can be used to accumulate funds until minimums are reached.

Vanguard Target Retirement accounts have a $1000 minimum.   Frankly, if you don't have at least $1000 to your name you don't need to be in the stock market.

The other stock funds have a $3000 minimum.

These are not huge, insurmountable numbers for someone who gets into the middle class.

If you're poor, well, that's different.   All savings are hard when you're poor.

Yeah, there's a process to embracing Mustachianism. You read all the blog articles and posts and other supplemental stuff and start cutting back on unnecessary purchases. Then you learn to save that money in your bank account and let it grow for a bit. Then, you get it to $1000 beyond emergency money and you invest that in Vanguard's STAR fund. Then, once that grows to $3000, you convert that to VTSMX. Once that reaches, $10000, you convert that to VTSAX. The tough thing is getting people to take that first step and get themselves into the mindset that it's possible to live differently than they currently do.

talltexan

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Re: Only the Rich Invest
« Reply #28 on: August 16, 2017, 07:25:30 AM »
Quote
How would you characterize a person whose credit card debt doubled from $12,000 to $24,000 last year, but increased the balance of his 401(k) from $150,000 to $210,000? (yes, including both market gains and new money contributed)

Short term, they had a good year at +48k NW.

On the other hand, they ignored low hanging fruit by allowing the CC debt to balloon. While it's great to eventually get your +7% from the market, it's incredibly painful to take -20-25% returns every month at the same time. The gain from the 401k is gradual and subject to potentially extreme market divisions. The damage from the CC is immediate, known and 100% guaranteed.

With debt below 5% interest it can be argued that the money is more productive in the market. At CC interest rates there is no comparison and no argument.


Could be on zero interest cards, but I doubt it.

Let's change the question slightly: Year 0: no debt, but $138,000 in a 401(k); Year 1: $210,000 in a 401(k) and a $24,000 balance on a home-equity line of credit. (same net worths as in the previous example)

Has this person gotten ahead?

martyconlonontherun

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Re: Only the Rich Invest
« Reply #29 on: August 16, 2017, 07:59:05 AM »
I've heard people talk about those "fat cats with 529 plans". Implying that only well off people could get them. I thought that was strange. I think you can start some 529 plans with only $500. There are definitely investments out there that have high minimum initial investments.

I'd like to know just for information sake, what types of investments that a poor person could set up with maybe a few hundred bucks.
In WI you can start a 529 with $50. I have 3 accounts (my own for a future kid), my god daughter and my god son. I put 25 a quarter into the godchildren and 25 a month into my unborn childs. I will probably ramp both up eventually but I'm really surprised more people who plan to have children and plan to pay part of college dont start bifurcating their income tax free.

Acorn, IMHO, is only useful for a college student who gets it free for 4 years. Anyone else is better just putting more into a 401k if they need money to go to investing backdoor. The theory works the same whether you take it before the paycheck or blindly give off 5 cents on every transaction.

sw1tch

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Re: Only the Rich Invest
« Reply #30 on: August 16, 2017, 08:00:44 AM »

Let's change the question slightly: Year 0: no debt, but $138,000 in a 401(k); Year 1: $210,000 in a 401(k) and a $24,000 balance on a home-equity line of credit. (same net worths as in the previous example)

Has this person gotten ahead?

I would say "Yes" they have gotten ahead.  That $210,000 can now compound while the person takes their time to pay off the $24,000 HELOC while their money compounds.  The $72,000 has earning potential that wasn't there previously.  As I understand it, this is the basis of the "Don't pay off your mortgage" club.

Gondolin

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Re: Only the Rich Invest
« Reply #31 on: August 16, 2017, 08:03:26 AM »
Quote
Has this person gotten ahead?

Probably yes. It depends on the equity held in the house, the interest rate on the HELOC, and what that loan was used for. Depending on appreciation rates it can be more advantageous to have money in the market rather than in your home. I bet you can find people on this forum who have rebalanced their holdings between equity and stock by taking out a HELOC and putting the money into index funds.

My question is why this person appears to be putting tons of post tax money into their 401k when there are better vehicles.