And if I’m wrong and everyone is actually doing it, how is it sustainable in the long run? I mean, we can’t all be millionaires.
If anyone says anything is “a surefire way to make money”, they are looking for a Greater Fool on which to unload their position so they can actually make the money.
If there was a way to gain more than the S&P then in theory the market would find that gain and reduce it to being the same as S&P. If investing in all stocks would be better then Vanguard all stocks index would be better.
Hedge funds and managed funds for “serious investors” try to get better than the S&P and some succeed but most fall below. Is general not everyone is doing it but by the way things are now everyone really should. It’s a surefire way to get 4% + inflation.
The best investment you can make is flossing every day.
In my experience:
- A lot of people do this with 401ks and such because many times there aren’t many other options.
- People I know who are serious investors with a lot of money tend to not invest much in the S&P 500 because they think of themselves as superior investors, but I don’t know of anyone for whom this is actually true based on past performance.
- I invest some 20% of my money in the S&P 500, which is probably not as much as I should. It’s some combination of the above hubris, which is natural, wanting to be diversified, and enjoying gambling on individual stocks.
This is my approach.
I have hubris. But also some self-awareness.
20-50% into broad market indexes. 50-70% into messing around and generic picks.
Of my own picks, only a few have outperformed the s&p50p. Some are… not good. If I happen to find another nvidia I’ll be very happy. If I don’t, I’ll be able to retire at a not unreasonable age.
Cuz it’s not a “surefire way to make money”. In the 2000s it was flat or went down even for like a decade after the dot com bubble. When the AI bubble pops and the recession comes it might be like that again.
If you are young a down market is a great opportunity to buy. That ten years allows you to pick up stock and build your portfolio.
Because its gate kept, particularly outside the US we don’t have any way to invest that doesn’t require some fee, so you need to be rich enough that your investment will make you more than the monthly fee to the broker. Then as a non cajillionare if the particular fund your invested in goes bust you get completely fucked over because debts are paid out to the largest creditors first.
Well, not entirely true. I use broker that has no fees for cheapskate scum like me, only having brokerage fees for trading 100k € in a month.
You have to pay a monthly fee to a broker? I can buy an index fund right now and only pay $10.
Investing is something you do for the long run. Investing today and getting it all out in a month will probably make you lose money. The market will always go up and down but zooming out, it will go up. Investing in the long run will make you money. Investing in the short run, will make you vulnerable for market ups and downs.
So my tip is, invest a monthly a fixed amount of money every month (dollar-cost average) and don’t touch it for the next 5 years. Yes, also keep your hands off it when the market is going down.
When I tell my friends to do it they instantly reject the idea. Which is why I forced 1200 students in my school to play a game where you invest in stocks (Github), and people are ranked by profit in a leaderboard. I control access to a tool they need, so I’m making them play. I hope that the most of them will realise they should have invested IRL once they see the profits over time
“You need money to make money.”
Additionally, making more money is MUCH easier when you have money too start with.
Because it needs spare money.
If exercise makes you so healthy why doesn’t everybody do it?
Not everyone has money to do it, and not everyone knows you can do it. Also, as the dollar devalues most everyone will become a millionaire, but being a millionaire won’t mean what it used to anymore – which is already the case.
Millionaire today is a family with a house and two 401k which are underfunded for their age 🤡
Going to the gym and eating healthy is a surefire way to look good and have a longer healthspan too but most people aren’t doing that either. Why? Probably because it takes time and effort.
Also I’m not sure how many people have the patience to not touch the money once you get into tens or hundreds of thousands. I could pay off my house with my savings but I wont.
I mean if your house credit interest is higher than the return of investment of the S&P500 then you probably should pay it off :D
Yeah, but it’s not.
A large number of us CAN be millionaires. Which is a problem.
It took me roughly 40 years to become a millionaire. 40 years of investing in stable stocks and bonds and scrimping and living well below my means. I was finally able to afford to buy a house. Then the market boomed and suddenly I’m worth over a million.
Unfortunately, almost all of that is tied up in owning a small plot of land. If I sold it, I’d need to immediately use it to buy another small plot of land, or leave my city or go back to extortionate rent. And yet I need to pay monthly taxes on that land, or I no longer own it.
Where I used to spend $90/month on food, now I spend well over $500/month.
Essentially, if you’re over 55 and you’re not a millionaire and you’re living in a major city, you’re screwed because of inflation.
A large number of us CAN be millionaires.
It’s actually technically correct that we all can be millionaires, at least on a household basis. The mean household wealth in the US was $1.06 million as of 2022, by now it’s undoubtedly higher. So with a full redistribution of wealth every household would have over $1 million.
In reality though the median household wealth is just under $200k as of 2022, and doesn’t rise as consistently so who knows where it is now.
So half of US households have less than 200k to their name lol
Ie half the country got nothing in practice.
200k wont save you from a catastrophic health event. Your family is BKed
Such Boomer thought, why would someone younger than 55 have better chances?
I think you’re conflating a few things there.
Most people in North America and Europe under 30 today are likely to become millionaires before they die. My point was that being a millionaire is pretty much useless when you spend that much in groceries and rent in a year.
Over 55s had a dream of becoming millionaires when they were younger and a million dollars was enough to live on for the rest of your life. The sad truth is that those who didn’t make it are likely to die in poverty, while most of those who did make it likely still can’t afford to retire at 65.
The younger you are, the more the S&P will help you compound your savings to the point where you can afford to stop working before you die. Assuming you can save anything—which is really difficult and getting harder.
They’re saying that if you’re 55 and in that situation you are in trouble as you’re running out of time to get out of the situation. In your 30s it might not be great compared to previous generations, but you still have time to turn things around.
But only a small portion of 30 something’s will break out… But sure they all still have a chance
Nothing is surefire, but I’ve seen the S&P 500 informally considered the baseline, especially when comparing actively managed funds. If you’re paying more and under performing the S&P 500, even if making a profit, you’re loosing out.
With regard to the point about everyone being millionaires, from a macro economic lens, all the dividends you receive from investing in the S&P 500 is because they’re charging more than enough for a product to cover operating costs, business expenses, etc and still have enough to pay out share holders. This means someone somewhere is loosing out, and that money is being transferred from them to you through the companies.
