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Thank you Igor. Your explanation makes sense to me. Every so often the small investors get wiped out, but those in the know get out before the crashes, and get even richer. Like politics it's a dog and pony show, but there's a sucker born every minute, so it works over and over again. And I agree, the motive is greed, with the power to pull it off, and no accountability for the consequences. Meanwhile the masses are too busy counting their cash back and free air miles and savings sign up bonuses to notice. Plus most people don't have much money tied up in savings accounts so the interest rates are not an issue for them.
I think forewarned is forearmed.
It is only my opinion.
A lot of "little people" do well during the early run up when the rising tide is lifting all boats. People who buy and hold forever steadily gain forever. The stock market has never permanently gone down. People who have bought and held real estate have almost always done well. Detroit is an example of the rare exception.
The power brokers understand human psychology, greed and fear. Everybody knows to buy low and sell high. Nobody has a crystal ball.
Far too many regular people don't notice asset appreciation until it is well underway. That is, they don't notice a bull market in stocks or a housing boom, until much of it has run its course and is approaching a peak. They get in for fear of missing out. Many of these same people become fearfull during a bust, when stocks crash or when home prices collapse.
So while many regular Joe investors know to buy low and sell high, then tend to emotionally buy high-ish from fear of missing out, then tend to sell lowish from fear of losing it all.
Very few are regular folks are as savvy and disciplined as Mathjak here, who seems to think everybody is like him, when in fact Joe Six Pack, Suzy Soccer Mom, and 75 year old widow Wanda are all getting slaughtered as savers or as casual investors who lack sophistication. I will admit to Mathjak that there are millions of well educated people with enough financial sense to invest some of their savings in sound vehicles of moderate risk and generally manage those investments wisely. It is not like he is alone doing so.
But there are also masses of people who are not good with money and never have been. Many have nothing saved to invest, but many more who simply worked themselves to death, have saved a nest egg and either have it in the bank where they are getting slaughtered at low interest rates, or they got burned investing and are now fearful of doing anything but putting their money in the bank.
A lot of "little people" do well during the early run up when the rising tide is lifting all boats. People who buy and hold forever steadily gain forever. The stock market has never permanently gone down. People who have bought and held real estate have almost always done well. ..
But if you are old, you may not live long enough to see the recovery, and your heirs will just take the loss and spend whatever they inherit. If you are old and need investment income to live, and the investments take a hit in the short run, you may reduce your principal quicker than planned to make up for the lesser income, leading to reduced income even when the market recovers. Or maybe you spend your golden years as a door dash delivery person.
If you are old and underwater on your mortgage you may not be able to sell your house or move if you want or need to. What you say about the stock market as a whole and the real estate market as a whole is true in the long run, but can be a gamble in the short run. And you should never gamble more than you can afford to lose. The rich seem to multiply generational wealth in the long run, the middle class, not so much.
You can do with your money as you like ..but most who do have assets want to use them efficiently ….they want to generate a fair return for a fair amount of risk …
What many of us don’t want is a guaranteed loss of what we do have in purchasing power which is what most fixed income will leave you with .
That is risk without return more often than not .
So , many retirees use conservative portfolios which are geared to average 3-6% above inflation over time
So true. The problem with zero interest policy is the pernicious way it punishes seniors and savers and particularly risk-averse investors. While it has always been true "there is no such thing as a free lunch," today it is more like "you must take on risk just for the chance of breaking even in real terms."
The closest thing available is I-Bonds. Of course, there is a restriction for how much you can buy, and even these bonds do not provide an after-tax real positive return. At least they adjust for increases in the CPI, and they do not decline or provide negative yields, such as with TIPS.
But if you are old, you may not live long enough to see the recovery, and your heirs will just take the loss and spend whatever they inherit. If you are old and need investment income to live, and the investments take a hit in the short run, you may reduce your principal quicker than planned to make up for the lesser income, leading to reduced income even when the market recovers. Or maybe you spend your golden years as a door dash delivery person.
If you are old and underwater on your mortgage you may not be able to sell your house or move if you want or need to. What you say about the stock market as a whole and the real estate market as a whole is true in the long run, but can be a gamble in the short run. The rich seem to multiply generation wealth in the long run, the middle class, not so much.
What about the fact that maintaining a 40-60% equity portfolio over decades of retirement leaves those heirs with more then you started with 90% of the time .
Even a dip in the later years would likely leave them with a bigger balance then had they avoided equities for 2 to 3 decades in retirement
Sorry bob , more poor financial logic trying to justify weak financial logic in the first place
What about the fact that maintaining a 40-60% equity portfolio over decades of retirement leaves those heirs with more then you started with 90% of the time .
Even a dip in the later years would likely leave them with a bigger balance then had they avoided equities for 2 to 3 decades in retirement
Sorry bob , more poor financial logic trying to justify weak financial logic in the first place
It's my logic and it works for me. About 20 years ago when I was day trading futures for a few months I was lucky enough to get out with a small profit rather than a huge loss. I closed my account and a lady called me up and asked me why I closed my account. I said because I want my life back. Rising prices, interest rates, taxes, up and down real estate and stock markets, employment statistics, which party is in power, have no affect on me. Like the credit card commercials say, for me, peace of mind is ... priceless.
It's my logic and it works for me. Back when I was day trading futures for a few months I was lucky enough to get out with a small profit rather than a huge loss. I closed my account and a lady called me up and asked me why I closed my account. I said because I want my life back. Rising prices, interest rates, taxes, up and down real estate and stock markets, employment statistics, which party is in power, have no affect on me. Like the credit card commercials say, for me, peace of mind is ... priceless.
TheFact it works for you doesn’t mean it should be presented to others as good sound financial logic backing it …in fact it doesn’t mean it’s working well for you ..
It just means you are living a lifestyle that doesn’t count on it doing much. Plus if you are so concerned about heirs , had you properly invested they likely would have been left way more to utilize.
So when one’s expectations are set low enough even living on ss with no savings can be done.
Yours is more a case of you have low expectations for your savings so you plan around that fact and don’t count on it as much as you could have .
We simply make whatever we have work …but that doesn’t mean we couldn’t have done much better and either enjoyed it ourselves or spent it on others letting them enjoy it
TheFact it works for you doesn’t mean it should be presented to others as good sound financial logic backing it …in fact it doesn’t mean it’s working well for you ..
It just means you are living a lifestyle that doesn’t count on it doing much. Plus if you are so concerned about heirs , had you properly invested they likely would have been left way more to utilize
Now who is trying to justify their financial logic? At 75, and retired since 62, if it wasn't working I think I would have noticed by now. And you are right, I got everything I ever wanted because I never wanted much. In fact the best things in life are free, or don't cost more than I can easily afford.
I'm not worried about my heirs at all. I taught them to take care of themselves, like my parents taught me. Regardless of what they inherit I'm sure they will run through it in six months anyway. As a member of the first year of the baby boom, we grew up with a perspective and experiences my children and grandchildren are not likely to share.
I probably could have done better in a lot of things, mainly relationships, but I don't think finances is one of them. I have more money than I'll ever need. Any more would just be a burden.
Now who is trying to justify their financial logic? At 75, if it wasn't working I think I would have noticed. And you are right, I got everything I ever wanted because I never wanted much. I'm not worried about my heirs at all. I taught them to take care of themselves. Regardless of what they inherit I'm sure they will run through it in six months anyway.
Well you made my point ….trying to pass the financial logic you use on yourself to others and telling them using equities in retirement is way to dangerous and fear mongering the use of equities is very different than the story you are handing us and trying to justify why you don’t invest better .
Personally I don’t care what you do …but spreading fear about using equities to others is most un good and your reasoning above has nothing to do with fear of equities or not.
Quote:
Originally Posted by bobspez
But if you are old, you may not live long enough to see the recovery, and your heirs will just take the loss and spend whatever they inherit. If you are old and need investment income to live, and the investments take a hit in the short run, you may reduce your principal quicker than planned to make up for the lesser income, leading to reduced income even when the market recovers. Or maybe you spend your golden years as a door dash delivery person.
If you are old and underwater on your mortgage you may not be able to sell your house or move if you want or need to. What you say about the stock market as a whole and the real estate market as a whole is true in the long run, but can be a gamble in the short run. And you should never gamble more than you can afford to lose. The rich seem to multiply generational wealth in the long run, the middle class, not so much.
Fear mongering above
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