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yeah, I love it when these savvy economics types come here and say "oh yeah...you can amass a portfolio of so many millions by the time you are 50 or 60 or whatever"...I sometimes question if these people are even in sync with reality. You need a hell of a lot of luck to get to that stage - no job loss, no unexpected medical bills, no nothing... a picture perfect life with a lifetime income stream and stocks that just keep compounding like hell.
And given that our stock markets have essentially become casinos there is an equal chance to either make millions or lose all that you have regardless of how savvy you think you are at investment.
Essentially I think there is absolutely nothing smart regarding investment.. Investment is essentially akin to gambling.
Tell me, how many consecutive years have your investments yielded an 8% return or higher? The average annual return on a standard investment portfolio in America is less than 3%.
People get crappy returns because they jump in and out of stocks instead of sticking with them.
But one recent investing innovation seems to be working very well: Target Retirement Funds. People tend to just keep adding money to these and leave them alone. As a result, many people are getting close to or even better than their funds' published returns. The key is you must be consistent. And most people are not. But target date funds create an all in one portfolio for people so they don't have to be good at allocating their money. The fund does it automatically for them and they don't have to think about anything except to keep adding money to the fund.
Here is just one example of a target retirement fund where the investor return is close to or better than the fund's published returns (depending on the time period):
The next best category of mutual funds where investors get close to their funds' published returns is balanced funds, which typically own 60% - 70% in stocks and 30% to 40% in bonds. They're aggressive enough to get good long term returns, but conservative enough that they don't lose a lot less than stocks in bad years. Since their volatility is lower, they're easier to stick with...and more people do stick with them, and they get better returns as a result.
If you don't live like a millionaire then you're not a millionaire. He may have had millions but he lived like a pauper. That means he was a pauper. I don't live like I'm worth as much as I am, but I certainly spend money to buy and do things that make me happy. I have relatively expensive hobbies, I live in a nice house, I have nice cars, I go out to nice restaurants frequently, I go to the movies a lot, etc. Just making the money is pointless.
This is so ignorant I don't know where to start.
I wonder what you consider "living like a millionaire". It turns out, more millionaires live somewhat closer to how this guy did than how most Americans think millionaires live. There is a small slice of millionaires who live the "millionaire" lifestyle. Most other millionaires live pretty middle class lifestyles, or maybe a notch or two above that...but that's it.
Many of the movies out, eating at restaurants, etc. falls under the category of "road bump opiates"....Things you use as a short term crutch to keep yourself going for being tied down to a ho-hum job that you're dependent on. I'm not saying I don't do some of these things, too...but I see them for what they are.
Last edited by mysticaltyger; 02-12-2015 at 12:43 AM..
No. Plenty of people lived like they were a millionaire as they embezzled funds, ran up huge debts. etc.
He lived like a pauper. He had several million so millionaires live like paupers.
I really don't get this "lived like a pauper" comment. There's nothing in the article to suggest that. Just because the guy didn't go out to eat all the time and didn't want to put money in the parking meter doesn't mean he lived like a pauper. I think people have such warped ideas of what a pauper is. I would like to send you to South America for a month so you can see how so many people can live quite happily on much less than Americans do...and they thinking nothing of it.
And there are other Americans out there who are now saying pretty much the same thing:
Many of the peripheral things society dictates people care about are financially draining and don’t bring true happiness or a pure existence.
[the] carousel of lifestyle inflation will enslave you to your job in perpetuity. I think it’s terrifying when you see it for what it is–a way to keep you chained to your desk. Work, buy, work more!, buy, go into debt, better work more! The horror.
Last edited by mysticaltyger; 02-12-2015 at 12:38 AM..
Half the neighborhoods in America have a millionaire quietly living a fairly boring life. (There are 9-million-and-change millionaires in America.)
A million dollars just isn't all that much money. Sure, I'd love to find a bag with $1 million in the back of my pickup truck. I'd be very upset if I lost $1 million. The point is, with a net worth of $1 million, most people will still look for things on sale and even clip coupons. A net worth of $1 million hasn't been "Got it made, no more problems, pop the champagne and buy a yacht" for a very long time.
For most people, a net worth of $1 million just brings bigger and more complex life problems -- they're the ones who find out the hard way that money truly doesn't buy happiness. (But poverty still sucks.) For others, like the 92-year old in the story, the lifestyle doesn't require a huge income pump -- just keep at it and let compound interest work it's magic.
The one problem with the Frugalwoods and Mr. Money Mustache and the rest is none of them seem to get it that their system only works if almost nobody does it.
This is my system, too. I've been at this for a long time. I spend as if money DOESN'T EXIST. I lead an immensely comfortable life. But I spend almost no money to do it. (And everything I do is completely legal.) I do spend quite a bit of time and energy instead of money -- but I would do that anyway because that's who I am. I grow food, prepare it, build things instead of buying, buy books at thrift stores instead of Amazon, etc. If not for vacations, my total annual living expenses are in the high four-figures. Four. With vacations, we move to the low five figures. I justify that as "mental health expenditures."
But if everyone lived like me, entire segments of the market would collapse tomorrow. I don't spend enough money to keep my community going -- and I freely admit that. My cheap-ass ways works GREAT for me. But it doesn't do diddly-squat for the economy. I'm not a spender. I'm a saver-and-investor. Just about the worst thing that could possibly happen to America is if everyone woke up from their retail-zombie ways and took up my lifestyle. My success depends on the vast majority of people spending almost everything that they make.
If everyone lived like me, the only thing worth investing in would be ammo. Because almost nobody would have a job.
One of the few time-wasters that I allow myself is posting on this ridiculous forum in the hopes that a few people read this stuff and say, "Hey, I can get off the debt merry-go-round, too!" I realize that almost nobody will. In fact, I'm counting on it. If I thought for a minute that I could change the minds of the masses, I'd log off and keep my mouth shut.
You can lead a horse to water. You can fill a bucket for the horse. You can put the bucket right up to the horse's mouth. But chances are, that horse isn't going to take a drink. Being a consumer-debt-zombie is too comfortable and too familiar.
I know plenty of people who have pretty much lost all their assets with investments. Not everyone is an investment guru, infact most people aren't. Most people I know who have dabbled with investments have LOST large sums of money even though the investment looked good at the outset. The market seems to be in a constant state of bubbles and busts and these cycles can last a very very long time. The current runup is nothing but a bubble that will bust and there is huge consensus to that effect and here you have people saying how they made so much money...well, have you taken into account the bust that is upcoming soon?
Apparently people are forgetting 2007 when the DOW went from 14500 to 6500 in a matter of weeks! What has taken years to runup can unravel in weeks if not days wiping out everything, that is just the nature of the market because it's based on speculation.
I really would like to find out what kinds of investments these people were "dabbling" in. I think your choice of the word "dabbling" is very telling. It strongly suggests they really didn't understand what they were investing in and the risks they were taking.
That's why they invented Balanced and Target Date funds. You mix in some bonds with the stocks and can sometimes even get better long term returns than an all stock portfolio. More typically, you'll come up a bit short compared to stocks, but you won't lose as much in the down years.
Quote:
Originally Posted by k374
LMAO! This is the same guy who brags how he evaded taxes like crazy and then preaches to the other rich people how the rich should pay more taxes. Well, write that first check Mr. Buffet! damn hypocrit!!
I agree with you on Warren Buffet's hypocrisy.
But the argument for investment success is quite straightforward and it's quite easy and cheap to do these days. You can invest in one stop mutual funds like Vanguard Balanced Index. 60% total stock market index & 40% investment grade bond index. Easy. Cheap. Decent returns without insane volatility. It's not hard. Or perhaps is cousin, Vanguard STAR, which actually has slightly better long term returns and a lower initial investment minimum of $1000.
To the best of my knowledge, VT doesn't have a super low cost of living. And it's hardly a news that you would need to earn more than the lowest quintile to amass that level of wealth.
Housing can't cost more than average in Vermont. That is usually the elephant in the budgets of low earners, so that is usually the best advantage for a low earner to have..
What use is reading the Journal if it's not actionable?
Because knowledge really is power. And the info in the WSJ is often quite actionable. I learned a few interesting tricks from them.
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