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I started investing seriously after the 2008 crash. I bought near the bottom when things were on their way up. I'm certain I missed the absolute nadir of the market. But I bought close enough that it doesn't matter.
I ask again -- 2% return? Why bother? May as well leave money in a bank at those rates.
2008 was the 'buy low' opportunity of a life time. I wouldn't get used to it!
They'll need to update the definition of Accredited Investors who are allowed to invest in hedge funds, pre-IPO shares, private equity, etc. A liquid net worth of $1 million makes you an accredited investor and that definition hasn't changed for quite some time.
I have been looking at retirement calculators online and all of them say I need way over $1 million to retire. Thats at $85K income and 30 years of age.
However, some calculator say even if you get only $20K today you will need $1 million to retire. For example, the Charles Schwab calculator says with $20k income and after retirement only spending $20k a year a person would need over $1 million.
That would seem to indicate huge percentage of Americans around 30, if not the vast majority of them needs to become millionaires in order to retire?!
That calculator does make sense if think of today's US Dollars adjusted for inflation in next 35 years and beyond. Honestly, I would doubt % of retiring Americans who are millions will soar anywhere near 50% in 35 years.
The problem shall be is how the retirees in future going to survive when fall far short of $1 million dollars? Looks like the retirement prospects for people in their 30s or younger are WORSE than they are now.
"Retirement" isn't even the half of it! If at some point in your old age you'll need home health care, facilitated living, or a nursing home, you'll need a lot more than 1 million to cover that for years on end. Those things are extremely expensive. Old age and infirmity burn through money! You'd better stay in good shape, exercise, and hope you don't get a stroke when you get to that age.
The reason your goal seems overwhelming is that you may be thinking you have to save that amount yourself. Let good investments do much of that work for you. And hope that another crash like the one in 2008 doesn't happen on the way. Write your congressional representatives to reinstate the Glass-Steagall Act, which properly regulated financial services activities to prevent such crashes. If you don't know what I'm talking about, research it on the internet and inform yourself. If you're going to be depending on investments to boost your retirement nest egg, you need to know about these things.
2008 was the 'buy low' opportunity of a life time. I wouldn't get used to it!
I plan on getting used to it. I think we're in for crash after crash after crash. We keep putting band-aids on the real problems, which we keep punting a few years at a time. I don't think we'll make it to 2020 before the next one. Probably student-loan-debt related and Baby Boomer end-of-life meltdown related.
I'll just keep following Warren Buffett's advice. I'll be cautious (not fearful) when everyone else is greedy. And I'll be greedy when everyone else is fearful. That makes a great deal of sense to me.
the problem is warren's creed goes against human nature. when humans are not under stress fire everyone plans on doing that. the reality is when the fighting starts humans hate losing money more then they like making it and the reaction is bail and run.
over and over it plays out the same way in major downturns and most investors do not get even the gains the funds they were in got over the long haul.
small investors as a group do the wrong thing at the wrong time.
when starting it out it is easy to stay the course as you do not have that miuch in it. but later in life if you have 7 figure portfolios even a down day can move tens of thousands of dollars. as light equity wise as i am a 300 point move in one session is a 25k move for us.
it isn't easy watching more then my wife makes in a year evaporate in a trading session.
so i use a newsletter for discipline, especially in those big corrections where it takes a lot of nerve to stay under fire when you are down more then most people have in a life time saving.
the problem is warren's creed goes against human nature. when humans are not under stress fire everyone plans on doing that. the reality is when the fighting starts humans hate losing money more then they like making it and the reaction is bail and run.
over and over it plays out the same way in major downturns and most investors do not get even the gains the funds they were in got over the long haul.
small investors as a group do the wrong thing at the wrong time.
when starting it out it is easy to stay the course as you do not have that miuch in it. but later in life if you have 7 figure portfolios even a down day can move tens of thousands of dollars. as light equity wise as i am a 300 point move in one session is a 25k move for us.
it isn't easy watching more then my wife makes in a year evaporate in a trading session.
so i use a newsletter for discipline, especially in those big corrections where it takes a lot of nerve to stay under fire when you are down more then most people have in a life time saving.
That is why you should only look at your portfolio performance in percentage terms, not dollar amounts, and benchmark your % performance vs. the appropriate benchmark like the S&P. That takes the emotion and burnout factor out of investing.
well it is not easy for humans to do. don't forget many investors like ourselves earn relatively small incomes compared to the portfolios we developed.
our portfolio moves more than we both make in a year many times added up.
it is near impossible to seperate that fact and only look at percentages because the numbers are so large.
i sure know a whole lot better than to ever bail and run but i have to tell you being down 30% in 2008-2009 were some pretty trying times.
if i had to make the decisions to stay or run on my own and not follow the newsletters lead even i think i would have bailed at some point and i know better.
we do not use the same parts of our brain in hypothetical situations as we do when under live fire. that is a big problem most folks are not aware of.
the hypothetical brain gives us great advice and makes rational decisions.
as jason zweigs book teaches us the parts of our brain that react to losses is very different.
brain scans of folks losing money were similiar to smelling dog poop or watching someone vomit.
the waves and brain areas used changed on a dime when they went from hypothetical to real time..
As ibbotson and morningstar research shows few small investors are able to fight this fact . that is why morningstar publishes two returns. the actual fund return and the return small investors got as a group by tracking the money flow in and out.
Last edited by mathjak107; 08-30-2014 at 04:39 AM..
I plan on getting used to it. I think we're in for crash after crash after crash. We keep putting band-aids on the real problems, which we keep punting a few years at a time. I don't think we'll make it to 2020 before the next one. Probably student-loan-debt related and Baby Boomer end-of-life meltdown related.
I'll just keep following Warren Buffett's advice. I'll be cautious (not fearful) when everyone else is greedy. And I'll be greedy when everyone else is fearful. That makes a great deal of sense to me.
That's a plan many investors hold in their back pocket. Only that the cycle between these overwhelming events is typically long. And of course the next crash may well be a different unexpected Black Swan, and the response centrally and otherwise may be of a different nature. IMO 2008 was relatively predictable, as was the central response. Some other crunches not so. Like '91 and 2001.
the problem is warren's creed goes against human nature. when humans are not under stress fire everyone plans on doing that. the reality is when the fighting starts humans hate losing money more then they like making it and the reaction is bail and run.
over and over it plays out the same way in major downturns and most investors do not get even the gains the funds they were in got over the long haul.
small investors as a group do the wrong thing at the wrong time.
when starting it out it is easy to stay the course as you do not have that miuch in it. but later in life if you have 7 figure portfolios even a down day can move tens of thousands of dollars. as light equity wise as i am a 300 point move in one session is a 25k move for us.
it isn't easy watching more then my wife makes in a year evaporate in a trading session.
so i use a newsletter for discipline, especially in those big corrections where it takes a lot of nerve to stay under fire when you are down more then most people have in a life time saving.
My own 'doctor scale' is one that has major influence my investing decisions.
We have 10 very different docs in our medical group, all participating in our office 401k. We meet from time to time on its management and general investment direction. One by one as our docs become enthusiastic about the equity markets, I get a bit more questioning and possibly defensive. When all 10 are in, I'm actively looking for outs.
well it is not easy for humans to do. don't forget many investors like ourselves earn relatively small incomes compared to the portfolios we developed.
our portfolio moves more than we both make in a year many times added up.
it is near impossible to seperate that fact and only look at percentages because the numbers are so large.
i sure know a whole lot better than to ever bail and run but i have to tell you being down 30% in 2008-2009 were some pretty trying times.
if i had to make the decisions to stay or run on my own and not follow the newsletters lead even i think i would have bailed at some point and i know better.
we do not use the same parts of our brain in hypothetical situations as we do when under live fire. that is a big problem most folks are not aware of.
the hypothetical brain gives us great advice and makes rational decisions.
as jason zweigs book teaches us the parts of our brain that react to losses is very different.
brain scans of folks losing money were similiar to smelling dog poop or watching someone vomit.
the waves and brain areas used changed on a dime when they went from hypothetical to real time..
As ibbotson and morningstar research shows few small investors are able to fight this fact . that is why morningstar publishes two returns. the actual fund return and the return small investors got as a group by tracking the money flow in and out.
That's why I don't gamble. Winning a thousand bucks at the table doesn't affect me enough. But losing a buck pisZes me off!
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