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That's because people mistook 'simple' with 'easy'. Saving is like dieting - we all know what we need to do because it's a simple concept, but it takes discipline to keep at it no matter the temptation - which is not as easy to do.
The problem in todays economy is that saving is not an option due to the fact that salaries are not commensurate with inflation. In 1980 my dad was a teacher, mom only worked part time as a freelance writer, they had a $700/month mortgage, us three kids and my dad was involved in a motorsport (a rather pricey hobby). Now, a teacher can barely afford an apartment for rent much less have disposable income and support a family. Now both parents have to work and make a combined income of at least $100k/year to live a middle class lifestyle. God forbid one of the parents actually stays home with the kids to make sure they are guided, taught, loved and disciplined. IMO our economy and social well being/mental health are in direct conflict with each other and each is it's own house of cards.
Just finished the book. Of all the investment & personal finance books I have read, this one comes closest to the way I manage my money and investments.
but many of us do find ourselves with choices as we roll our 401ks over or sell assets , get inheritances .
the point is , where choices are involved lump sum vs dollar cost averaging in has won over and over as far as results.
you would have to be a good market timer to buck that .
which is why we don’t sell everything when we reach our desired allocations and start over
This part seems backwards. Wouldn’t you have to time the market successfully in order to know when to lump sum it? With DCA, there is no market timing.
This part seems backwards. Wouldn’t you have to time the market successfully in order to know when to lump sum it? With DCA, there is no market timing.
nope ..because markets are up 2/3rds of the time and down only one third you would need to be a superb timer in order to dca in over the long term and beat lumps sum.
if what you believed was true we would all reach our desired allocation , sell and start from zero again .
you can see over time that wouldn’t work well at all
here is kitces analysis
EXECUTIVE SUMMARY
Conventional investment wisdom suggests that dollar cost averaging is a good approach to allocating investment dollars over time. By always investing a constant dollar amount, the strategy ensures that fewer shares will be bought as prices rise, while more shares are purchased if prices decline, bringing down the average cost per share in the long run. The only question is over what time horizon it’s best to average in.
Yet as it turns out, the answer is “none”. In reality, a dollar cost averaging investment strategy doesn’t actually enhance returns in volatile markets that have similar upside gains and downside losses on a percentage basis. And given that on average, markets go up more often than they go down, choosing to dollar cost average is more likely to just leave gains on the table (and the longer the time period, the greater the risk of foregone returns).
Just finished the book. Of all the investment & personal finance books I have read, this one comes closest to the way I manage my money and investments.
The problem in todays economy is that saving is not an option due to the fact that salaries are not commensurate with inflation.
Are you sure? According to SLFed USA reached an all-time high in inflation adjusted wages in right before covid hit, and they are currently higher than any time in history pre-2020. Unless you're in the "they cook the inflation books" camp salaries are still at a great place versus inflation.
The problem in todays economy is that saving is not an option due to the fact that salaries are not commensurate with inflation. In 1980 my dad was a teacher, mom only worked part time as a freelance writer, they had a $700/month mortgage, us three kids and my dad was involved in a motorsport (a rather pricey hobby). Now, a teacher can barely afford an apartment for rent much less have disposable income and support a family. Now both parents have to work and make a combined income of at least $100k/year to live a middle class lifestyle. God forbid one of the parents actually stays home with the kids to make sure they are guided, taught, loved and disciplined. IMO our economy and social well being/mental health are in direct conflict with each other and each is it's own house of cards.
Then find another job that pays better so you can support you and family better. I deal with hiring every day and salaries are higher than ever before. Furthermore, despite the layoff news, plenty of high paying jobs left unfilled. Even a junior Accountant with less than 2 years of experience can expect 70K - 75K pay in 2023 (more if you live in high labor cost locations such as NY or CA).
Stay invested, dont spend money recklessly but wisely, and understand human nature. Middle class is priced out of the system. The path of least resistance is inflation and bailouts. Dont fight central banks. Dont expect politicians to be fiscal conservatives.
Birth rates will continue their decline. The west is in decay because of the price of housing. No need to be defeatist about it though. Play by the rules you are given. Be an impartial observer of human nature. Dont make decisions with emotions.
Every single nation that has fallen did so because of overprinting, not because of deflation as MMTers claim, but hey, let them be wrong again. Live and learn.
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