Author Topic: The Billfold: You Donít Get Wealthy From Saving  (Read 5665 times)

amha

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The Billfold: You Donít Get Wealthy From Saving
« on: November 04, 2014, 04:24:46 PM »
The Billfold, the ever-pessimistic personal finance site for Millenials, sums up their entire philosophy in a single article, entitled "You Don't Get Wealthy From Saving":

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Did you see The Atlanticís piece about why the middle class doesnít save money? I was with them for most of itówage stagnation, increased cost of living, the usual suspectsóuntil it got to the end:

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Itís also a sign that Americans who arenít rich still must be taught that being wealthy starts with not spending money.

I literally thought of a record scratch.

You donít become wealthy from saving. This was one of the biggest points in Helaine Olenís Pound Foolish, which the Billfold Book Club read in July.

http://thebillfold.com/2014/11/you-dont-get-wealthy-from-saving/

The author goes on to demonstrate how, if you save three percent of your salary---THREE PERCENT---and you're making the US median wage ($50K or so), after 35 years at 6% you end up with just under $200K.

Previously on the forums:
http://forum.mrmoneymustache.com/antimustachian-wall-of-shame-and-comedy/pessimistic-personal-finance-for-millennials-site/
http://forum.mrmoneymustache.com/antimustachian-wall-of-shame-and-comedy/
http://forum.mrmoneymustache.com/antimustachian-wall-of-shame-and-comedy/the-billfold's-rebuttal-to-the-mmm-post-article-'not-all-of-us-are-wasteful'/

infogoon

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Re: The Billfold: You Donít Get Wealthy From Saving
« Reply #1 on: November 05, 2014, 12:08:37 PM »
Depending on how you define "wealthy", that might be the case. However, there's a vast land between "broke as shit" and "wealthy", and it definitely seems like it's better to move toward the latter if possible.

Sid Hoffman

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Re: The Billfold: You Donít Get Wealthy From Saving
« Reply #2 on: November 05, 2014, 12:23:30 PM »
Further proof that Pound Foolish is a junk book, as a lot of us concluded in another discussion thread on the MMM forums.  We also all know that 3% of your income doesn't qualify as savings.  Even MMM's shockingly simple math blog post doesn't show a savings rate below 5% in the table.  That same table makes it clear that if you want to retire after just 32 working years, you need to shoot a lot higher, like 25% savings rate.  Of course, all of us know that already.

No Name Guy

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Re: The Billfold: You Donít Get Wealthy From Saving
« Reply #3 on: November 05, 2014, 12:59:28 PM »
Well, I need to know nothing more than any analysis based on anything from Helaine Olen to know it's garbage.

Oh, and if the idea is that it's investments that make you rich, pray tell Billfold and Helaine, how does one accumulate the capital to procure said investments?  If you're broke as shit, you sure as hell aren't going to be able to borrow money.  The only way to generate capital for a broke ass person is to reduce consumption to less than production (e.g. spend less than what you earn).

But hey Billfold, way to go - appreciate you keeping the masses down and in their self imposed prisons of over consumption and mindless drivel - why don't you also get everyone a subscription to People while you're at it - that'll be about of equal intelligence to saying that you can't become wealthy from saving.

Scandium

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Re: The Billfold: You Donít Get Wealthy From Saving
« Reply #4 on: November 12, 2014, 10:53:16 AM »
I also found the quote there from the Atlantic pretty dumb

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[Economists Gabriel Zucman and Emmanuel Saez] have another proposal to nudge behavior toward saving: a new automatic retirement plan that skims 3 percent of annual earnings up to $100,000. The money would go into a savings account invested in a broad fund to keep its growth near the global return on capital. Individuals could only take money out of the account early for special reasons, like buying a house or going to school.

We have this already; it's called social security! Except it's 6.2%. Or really 12%. So they want to up it another 3%? Why not 10%. Or how about 100% and give free food and shelter? Problem solved!

eyePod

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Re: The Billfold: You Donít Get Wealthy From Saving
« Reply #5 on: November 13, 2014, 07:16:24 AM »
I also found the quote there from the Atlantic pretty dumb

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[Economists Gabriel Zucman and Emmanuel Saez] have another proposal to nudge behavior toward saving: a new automatic retirement plan that skims 3 percent of annual earnings up to $100,000. The money would go into a savings account invested in a broad fund to keep its growth near the global return on capital. Individuals could only take money out of the account early for special reasons, like buying a house or going to school.

We have this already; it's called social security! Except it's 6.2%. Or really 12%. So they want to up it another 3%? Why not 10%. Or how about 100% and give free food and shelter? Problem solved!

Or a Roth IRA. It isn't forced but you can take out your principal anytime!

Sid Hoffman

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Re: The Billfold: You Donít Get Wealthy From Saving
« Reply #6 on: November 23, 2014, 10:02:03 AM »
So this story showed up as the top article on yahoo today:

How to Become Wealthy: It's Simpler Than Most "Experts" Say

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Ask any honest financial planner how to become wealthy, and they'll tell you the simple act of saving money is far, far more important than picking the next hot stock.

So I was surprised when I came upon an article from The Billfold titled "You Don't Get Wealthy from Savings." The article was so wrought with pessimistic thinking and ridiculous assumptions that I couldn't help but debunk the most alarming.

Hopefully, by the end of the piece, you'll see that saving -- and some easy steps toward investing -- is key to becoming wealthy.

... article continued in link above