Fifty percent of people CANNOT save enough for retirement.

[BarneyFife]

Daniel... its possible. My parents paid for both kids through a private college (engineering), paid off house, cars, and have savings too. They worked hard and were frugal (my parents never purchased a new car) but it feels damn good that I didn't have one loan in college and everything was paid for. They also were immigrants from Europe who came to this country with nothing.

I remember back in high school I was kind of embarassed because my dad would drive a 15 year old car around but when I got older, I realized it was pure brilliance. It takes discipline and most people don't have it. People are always putting themselves in debt by going on expensive vacations, buying a large home they don't need, buying new cars every few years, boats, etc.. I do understand that some people have had some terrible luck with health and I am not refering to those unfortunate people.

 

[Legend]

Originally posted by: MonkeyK

Originally posted by: Legend

Originally posted by: WHAMPOM

I am going to rain on your parade. Damn near 70% of stock market investors loose money. An amazing 5% are big money investors that make so much, that it knocks the average back to the plus side.

Where did you hear this?

Because most mutual funds have made 9% avg interest in the past 80 years. That doesn't sound like losing money to me.

http://flagship4.vanguard.com/VGApp/hnw...1&FundIntExt=INT&DisplayBarChart=false

Put a linear approximation on that curve and you get nearly 2.6x your investment returned every decade. So for 40 years, that's 45.7 times your initial investment. So you're saying that if I invested 25,000 in 1966 and that today it's worth 1.14 million, that I've lost money? That's very interesting.

WTF are they teaching people at school? Ohhhh, scary stock market. Better spend money on nit naks.

I agree with you that "Damn near 70% of stock market investors loose money." is a dubious claim (though perhaps 70% of investors that do their own investing in individual stocks might be more believable)

But why does everyone suck at math? 1.09^40 = 31.4, not 45.7 (compounding exagerates errors)

but even this is not good reasoning since it does not take inflation into account. When I say 1 million, it sounds like a lot of money. But that one million is a future value, worth much less today (or in your example, that 25,000 is a past value and worth much more today). It is much easier to understand an amount if we factor out inflation by just subtracting anticpated inflation from anticated returns. So if you expect a mutual fund to return 9% and expect infation of 3%, calculate your earnings at 6% and you will be able to comprehend the result in terms of what you spend today.

In the above example, assuming mutual funds return 9% and inflation at 3% annually,
1.06^40 = 10.28 * 25,000 = 257,000
which would not be much of a living.

You're right, I didn't account inflation there. I got the numbers by taking Vanguard Welling's performance graph. In 10 years, 10,000 becomes ~26,000, so 2.6x. 2.6^4 = 45.7. The reason it's higher is because it's 9.88% the past 10 years. The economy has grown faster since the 80s than it has since 1929.

And that's not an absolute accurate value that will happen, I realize that.

Yes, inflation will reduce the value of money. That's why I'm maxing my IRA each year, and when I graduate later this year and begin full time employment, I'm going to put in about 20k of investments each year until I'm about 30 years old (raw money, 401k will match some). Then I'll move from the cheap ass efficiency apartment into an actual home and focus my money on that. This is with all that SS money not even considered. If I had that, I would be able to do this much more easily.

In the meantime, my money will be compounding. I should have about 4-8 million upon retirement.

While we engineers do have more money available than other people, I think we should move to a private SS system, and price match low income people. That'll stop the government from spending surpluses because they'll no longer have ownership of the money.

 

[Jeff7]

Originally posted by: loki8481
45% of people believe that the rapture will occur within their lifetime.

think there's a connection?

I wonder how many of them actually do put money into retirement accounts of some sort?