You won't get to the Promised Land by investing in stocks

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Browser
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You won't get to the Promised Land by investing in stocks

Post by Browser » Wed Sep 30, 2015 7:17 pm

With relatively few exceptions, people don't become wealthy by investing in stocks. They become wealthy by virtue of their inheritance, their skills and abilities in generating income, or just dumb luck. The stock market is where you go to try to hang onto the gains, and perhaps marginally leverage them, that come your way primarily from other means. We should have more modest hopes and expectations for our investment portfolios and our brilliant asset allocation strategies, and much greater hopes and expectations for our talents, skills, abilities, and good fortune of birth to generate income and produce wealth.
This isn’t to say that the billionaires on the list don’t have sizable equity investments. But my impression, having been a student of the Forbes wealth rankings for more than two decades, is that most of them go to the stock market after they already have made their fortunes.

Their attitude toward the stock market is not so much that it’s a place where great wealth is built, but instead where you go to preserve the purchasing power of your previously acquired fortune.

Developing realistic expectations is crucial. With unrealistic expectations, you take on unreasonable levels of risk, and then even more risk when those expectations don’t pan out, as they inevitably won’t.
http://www.marketwatch.com/story/invest ... beforebell
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steve roy
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Re: You won't get to the Promised Land by investing in stocks

Post by steve roy » Wed Sep 30, 2015 7:25 pm

There's two things that will get you to the Promised Land:

1) Devout prayer.

2) A four-day park jumper pass for Disney World (r).

Between the items listed above, the Promised Land will be in there someplace.

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Re: You won't get to the Promised Land by investing in stocks

Post by livesoft » Wed Sep 30, 2015 7:29 pm

So I have to be a billionaire now? Who keeps moving the goalposts?
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Re: You won't get to the Promised Land by investing in stocks

Post by triceratop » Wed Sep 30, 2015 7:30 pm

Why do only billionaires qualify for the Promised Land (TM) ? I thought that the goal was to have 'enough'. And in that respect it's likely that billionaires are the least likely to qualify for the Promised Land.
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Re: You won't get to the Promised Land by investing in stocks

Post by Artsdoctor » Wed Sep 30, 2015 7:36 pm

I think this is a major tenet of investing. Why are you doing it? If you're after a thrill, then you're going to be investing in relatively risky investments and part of that equation is the potential for great loss. If you're after a portfolio that can sustain you through thick and thin, you're going to fund it with income and any inheritance you have, and do it in such a way that it will last a lifetime. It's unusual to get rich off your investments, but if you can keep up with inflation and then a little bit more, and do it with reasonable risk, you've done a good job.

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Re: You won't get to the Promised Land by investing in stocks

Post by nisiprius » Wed Sep 30, 2015 7:54 pm

Would the "Promised Land" be the land of milk and money?
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Re: You won't get to the Promised Land by investing in stocks

Post by HomerJ » Wed Sep 30, 2015 8:03 pm

I will retire in my 50s thanks to the stock market. I will have "enough".

Why do you hate stocks so much? Serious question.

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Re: You won't get to the Promised Land by investing in stocks

Post by theunknowntech » Wed Sep 30, 2015 8:10 pm

Browser wrote:With relatively few exceptions, people don't become wealthy by investing in stocks. They become wealthy by virtue of their inheritance, their skills and abilities in generating income, or just dumb luck. The stock market is where you go to try to hang onto the gains, and perhaps marginally leverage them, that come your way primarily from other means. We should have more modest hopes and expectations for our investment portfolios and our brilliant asset allocation strategies, and much greater hopes and expectations for our talents, skills, abilities, and good fortune of birth to generate income and produce wealth.
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Re: You won't get to the Promised Land by investing in stocks

Post by IlliniDave » Wed Sep 30, 2015 8:21 pm

That depends on how broad or narrow a person's concept of the promised land is. Nothing happens in isolation--and stocks are just one tool in the toolbox. Perhaps if you'd have sat with my dad, brother, and myself looking out my little cabin across the water this past June with the sun setting over 2.5M acres of protected wilderness in Ontario and Minnesota, you might restate your title. I'm only a one-comma guy, and returns from 25+ years of stock investing put me in a position to buy the place and still stay on track for ER. I'll never be Warren Buffet or Bill Gates or counted among the elite hedge fund royalty. But there's a whole universe of possibilities for happiness out there where being a billionaire means nothing.
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Re: You won't get to the Promised Land by investing in stocks

Post by staythecourse » Wed Sep 30, 2015 8:25 pm

First, Harry Browne already talked about this nearly 40 yrs. ago when he started writing what became his ?16 points on success. So nothing new here.

Second, who said anyone around here is trying to use the market to get rich? I don't think I know ANYONE who has made themselves rich from just investing, even if so it is hard to differentiate their success from skill vs. luck. I do know MANY who made themselves a comfortable life with prudent investing far after they stopped working on passive flow of income and gains. I do know MANY folks who ended up poor not managing their money well. I do know MANY folks who mad a lot of money advising OTHERS on how to get rich.

I for one have been HARPING FOREVER on this site that folks need to make more efforts on the low hanging fruit of what makes one rich: Getting a great education, getting a high paid job, staying out of debt, saving a ton, etc...

I would say in financial success investing is not the top 3 or 4 most important aspects. Which sound almost ironic, no?

Good luck.
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Re: You won't get to the Promised Land by investing in stocks

Post by Day9 » Wed Sep 30, 2015 8:34 pm

If you have a good job but keep your spending needs very low and save something like 50% of your income you can reach the promised land in less than 20 years. It turns out a life without lavish consumer goods is worth living after all.

Median US income is $25k for individuals and $50k for households. It's reasonable to assume Bogeleheads can land a job that pays enough to have a high savings rate without living in poverty.
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Re: You won't get to the Promised Land by investing in stocks

Post by swguy » Wed Sep 30, 2015 8:43 pm

I haven't gone through the exercise of calculating just how much my retirement savings would be were they simply left to grow "un-invested" but I'm certain I wouldn't be looking at early retirement with them. Perhaps I haven't reached the Promised Land but investing has ensured that I reached retirement young enough to enjoy it.

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Re: You won't get to the Promised Land by investing in stocks

Post by Gattamelata » Wed Sep 30, 2015 9:01 pm

Browser wrote:With relatively few exceptions, people don't become wealthy by investing in stocks.
This depends entirely on your definition of "wealthy."

Here's mine: wealthy means that my money generates enough income that I can live well and take some fun vacations without having to work for it. I altered my financial model to assume a real growth rate of .5%, which is what I (ambitiously) figure bonds would get me after inflation. The difference between that assumption and stocks is a retirement at 65 (without stocks) and retirement at 50 (with stocks)... and that's only because I stand to collect a modest pension at 65 (that pension is almost irrelevant in the with-stocks model). Without the pension it's 70, and that's only because of social security.

For billionaires I imagine things are different. But I doubt many of them are reading these posts. It's probably worth considering that this is not the "become a billionaire" forum.

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Re: You won't get to the Promised Land by investing in stocks

Post by hulburt1 » Wed Sep 30, 2015 9:57 pm

That's funny I'm at 2m and never made more then 75,000. All in mutual funds. I learned that if you keep one job, one wife and one house you will be ok.

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Re: You won't get to the Promised Land by investing in stocks

Post by Browser » Wed Sep 30, 2015 10:00 pm

HomerJ wrote:I will retire in my 50s thanks to the stock market. I will have "enough".

Why do you hate stocks so much? Serious question.
And how would you have fared if you hadn't invested in stocks and simply invested more? Over every 30-year period since 1972, making equal annual contributions to one's retirement portfolio from earnings and keeping a 100% allocation to stocks only beat keeping 100% in bonds by 2% a year. Would that really be life-changing? And who in the world would have the nerve to hold a 100% allocation to stocks over their 30-year accumulation period anyway? I don't hate stocks. But I do think that the cult of equities is oversold on this board and everywhere else. Far better to have modest investment goals and put your faith in things that you can actually control in your life. The stock market is not one of those things.
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Re: You won't get to the Promised Land by investing in stocks

Post by triceratop » Wed Sep 30, 2015 11:13 pm

Browser wrote:
HomerJ wrote:I will retire in my 50s thanks to the stock market. I will have "enough".

Why do you hate stocks so much? Serious question.
And how would you have fared if you hadn't invested in stocks and simply invested more?
Why are these mutually exclusive; why does investing in equities mean you can't save the maximum amount possible? And besides he pretty clearly feels good about being able to retire in his 50s.
Over every 30-year period since 1972, making equal annual contributions to one's retirement portfolio from earnings and keeping a 100% allocation to stocks only beat keeping 100% in bonds by 2% a year. Would that really be life-changing? And who in the world would have the nerve to hold a 100% allocation to stocks over their 30-year accumulation period anyway?
2% a year is huge when compounded over a 30 year period. For many people of modest means, they'd gladly take that 2%. Let's also not forget that accumulation phases can be upwards of 40 years and investing does not end upon retirement. There is room in that extra time to transition away from 100% equities and still get some net benefit.
"To play the stock market is to play musical chairs under the chord progression of a bid-ask spread."

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Re: You won't get to the Promised Land by investing in stocks

Post by HomerJ » Wed Sep 30, 2015 11:45 pm

triceratop wrote:2% a year is huge when compounded over a 30 year period.
$100,000 at 7% over 30 years is $760,000....
$100,000 at 9% over 30 years is $1,320.00...

I'd say that's a noticeable difference. Almost twice as much money.

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Re: You won't get to the Promised Land by investing in stocks

Post by backpacker » Wed Sep 30, 2015 11:57 pm

Browser wrote:
HomerJ wrote:I will retire in my 50s thanks to the stock market. I will have "enough".

Why do you hate stocks so much? Serious question.
And how would you have fared if you hadn't invested in stocks and simply invested more? Over every 30-year period since 1972, making equal annual contributions to one's retirement portfolio from earnings and keeping a 100% allocation to stocks only beat keeping 100% in bonds by 2% a year. Would that really be life-changing? And who in the world would have the nerve to hold a 100% allocation to stocks over their 30-year accumulation period anyway? I don't hate stocks. But I do think that the cult of equities is oversold on this board and everywhere else. Far better to have modest investment goals and put your faith in things that you can actually control in your life. The stock market is not one of those things.
Someone here should start an actual cult of equities. Every morning, we would pray facing the NYSE and do two or three Hail Yellens. There could be a mystic ritual involving the bouncing of a dead cat. Maybe something about a death cross?

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Re: You won't get to the Promised Land by investing in stocks

Post by stemikger » Wed Sep 30, 2015 11:59 pm

Visit some third world countries and you will realize we are all in the promised land. Even people with very modest incomes.

Clean drinking water - check.
A meal on the table every night - check.
Cool in the summer and warm in the winter - check.

Yeah, I'm already in the promised land and I'm loving it!
Choose Simplicity ~ Stay the Course!! ~ Press on Regardless!!!

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Re: You won't get to the Promised Land by investing in stocks

Post by triceratop » Thu Oct 01, 2015 12:10 am

HomerJ wrote:
triceratop wrote:2% a year is huge when compounded over a 30 year period.
$100,000 at 7% over 30 years is $760,000....
$100,000 at 9% over 30 years is $1,320.00...

I'd say that's a noticeable difference. Almost twice as much money.
I intentionally did not use hard numbers because the gains are much less impressive when you compare 2% to 0% (but not insubstantial, still +81% growth), and I'd be accused of choosing high percentages. Your calculations are, of course, completely correct.
"To play the stock market is to play musical chairs under the chord progression of a bid-ask spread."

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Re: You won't get to the Promised Land by investing in stocks

Post by Leeraar » Thu Oct 01, 2015 1:40 am

stemikger wrote:Visit some third world countries and you will realize we are all in the promised land. Even people with very modest incomes.

Clean drinking water - check.
Except for those in Flint, MI.

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Re: You won't get to the Promised Land by investing in stocks

Post by David Jay » Thu Oct 01, 2015 1:44 am

Browser wrote:And who in the world would have the nerve to hold a 100% allocation to stocks over their 30-year accumulation period anyway?
ME. For 30 years from age 27 to age 57. 100% equities. Through Black Monday. Through the dot com bubble. Through the derivatives meltdown.

I am now moving the AA of my portfolio to include some debt instruments as I am perhaps 5-7 years from retirement ("number", not calendar based)
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

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Re: You won't get to the Promised Land by investing in stocks

Post by LiveSimple » Thu Oct 01, 2015 5:16 am

stemikger wrote:Visit some third world countries and you will realize we are all in the promised land. Even people with very modest incomes.

Clean drinking water - check.
A meal on the table every night - check.
Cool in the summer and warm in the winter - check.

Yeah, I'm already in the promised land and I'm loving it!

Add these too...

Clean and speedy highways or roads
Sleep in peace at your home
Less robbery or fraud or criminal activities around you / your family.
Economic system where the common man may have their share, if they are responsible.
Equal rights to everyone

The list goes on...

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Re: You won't get to the Promised Land by investing in stocks

Post by IPer » Thu Oct 01, 2015 5:26 am

Just another way for the talking heads to introduce fear to the sheeple so they can fleece them and keep them
from their goals!

Really! I had a friend who said why save anything because the market is rigged, perfect example.
Why invest anything, you can never become a Billionaire that way. Why go to work, you can never
make a Billion, etc. etc, etc. Freaking hogwash!

...look I know the article doesn't say to not invest and says be reasonable about ones goals and so forth but
most folk don't actually read these articles, just the headings, and then they "know it" already, I know, I studied
the market blurbs for 2 years (yep, still kept investing in spite of 'em!), it is as if they are designed to cause
derision ...
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Re: You won't get to the Promised Land by investing in stocks

Post by Rodc » Thu Oct 01, 2015 6:03 am

Did not read the article, but would say that a big part of success for most of us with more modest goals is still living below our means, which means having means that are sufficient to live below. Such means will most often come from income and perhaps some inheritance.

So income (primarily) and inheritance (secondarily, often missing) are the foundation, not the stock market.
We live a world with knowledge of the future markets has less than one significant figure. And people will still and always demand answers to three significant digits.

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Re: You won't get to the Promised Land by investing in stocks

Post by Toons » Thu Oct 01, 2015 6:15 am

I retired with the "help"from the magic of compounding via investing in the American Economy(mutual funds)
"Today",my needs are met.
I arrived in my Promised Land years ago :happy
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

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Re: You won't get to the Promised Land by investing in stocks

Post by IPer » Thu Oct 01, 2015 6:20 am

Toons wrote:I retired with the "help"from the magic of compounding via investing in the American Economy(mutual funds)
"Today",my needs are met.
I arrived in my Promised Land years ago :happy
+1 w00t!
Read the Wiki Wiki !

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Re: You won't get to the Promised Land by investing in stocks

Post by Browser » Thu Oct 01, 2015 6:34 am

The main point is this: with few exceptions, people don't become wealthy, financially comfortable, free from money worries, have "enough", or whatever your definition of financial success might be, because they passively invested in stocks. I know many people who are financially successful who invest in stocks, but I don't know anyone who became financially successful because they invested in the stock market. They would have been financially successful without ever putting a dime into stocks. These folks invest in the stock market because they can, and not because they must.

And here's the explanation. Whatever knowledge and skill you think that you possess for passively investing your surplus income into stocks pales in comparison to the impact of knowledge and skills in other arenas. You can play around the fringes of investing by controlling costs, fiddling with various asset allocation strategies, and avoiding stupid mistakes and you might squeeze an extra percent or two or three out of your returns over time, but that won't make the difference between being financially "successful" or "unsuccessful". Fundamentally, whether you actually make a lot of money by investing in stocks is otherwise completely out of your control. It depends entirely on what the stock market does during your short 20-40 year rendezvous with it, and all your investing knowledge, skills, and abilities mean relatively little within that context. You're not going to get the well-published long term returns from the stock market; you're going to get the returns that Mr. Market dishes up during the particular slice when you are dancing with him. How you "invest" your surplus income is not what will determine your fate; it is the extent and degree to which you are able to generate surplus income in the first place.

By comparison, the application of your knowledge, skills, effort, and decision-making ability in the areas of your life where you actually do have control over the outcome will overwhelmingly determine your financial fate. The education you are able to achieve, the career field you choose, the person you marry, deciding to have children, becoming friends with influential people, starting and running a business, the organization where you are employed, climbing the corporate ladder, working hard, the ability to lead and manage others, living beneath your means -- all these things are within our direct control and are the core factors that determine one's financial success.

If you are a person who is lacking in life and career skills and unable to generate the surplus income required to achieve financial success on these merits alone, then you might achieve financial success through passive investing in the stock market. But I wouldn't count on it, because that's mostly a matter of luck when you drill down to reality. Most financially successful people invest in stocks because they can and not because they must.
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Re: You won't get to the Promised Land by investing in stocks

Post by Twins Fan » Thu Oct 01, 2015 7:15 am

Well said, Browser. :beer

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Re: You won't get to the Promised Land by investing in stocks

Post by joebh » Thu Oct 01, 2015 7:26 am

Browser wrote:The main point is this: with few exceptions, people don't become wealthy, financially comfortable, free from money worries, have "enough", or whatever your definition of financial success might be, because they passively invested in stocks.
If you are saying that you first must be able to generate sufficient income to live on and enough left over to invest (passively or otherwise), then I agree. If you are poor, but passively invest in stocks, then you aren't going to become wealthy.

Still, to become financially comfortable, you don't need to inherit wealth. Most folks of even moderate means can become financially comfortable by living below their means, and passively investing for the long term. Been there, done that, now I'm retired and financially quite comfortable (though not a billionaire).

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Re: You won't get to the Promised Land by investing in stocks

Post by Rodc » Thu Oct 01, 2015 8:07 am

joebh wrote:
Browser wrote:The main point is this: with few exceptions, people don't become wealthy, financially comfortable, free from money worries, have "enough", or whatever your definition of financial success might be, because they passively invested in stocks.
If you are saying that you first must be able to generate sufficient income to live on and enough left over to invest (passively or otherwise), then I agree. If you are poor, but passively invest in stocks, then you aren't going to become wealthy.

Still, to become financially comfortable, you don't need to inherit wealth. Most folks of even moderate means can become financially comfortable by living below their means, and passively investing for the long term. Been there, done that, now I'm retired and financially quite comfortable (though not a billionaire).
And most would have very difficult time at best investing only in CDs and bonds. Can be done in some cases, but even then they would get there more quickly and would have a more secure retirements with some amount in stocks.

I think Browser greatly underestimates the value to many of investing in stocks.
We live a world with knowledge of the future markets has less than one significant figure. And people will still and always demand answers to three significant digits.

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Re: You won't get to the Promised Land by investing in stocks

Post by Sourc3 » Thu Oct 01, 2015 8:15 am

I believe the OP is making a flawed assumption of what it means to get to 'promise land'. Having joined this forum only a few months ago, I have never seen any posts encouraging people to take on investing as a full time 'job'. On the contrary, everyone here is supportive of the following:
  • - Get a good education (keep learning) to stay relevant in the job marketplace
    - Get the best paying job possible (and this is your day job)
    - Always live below your means
    - Invest the money you saved to continue living your frugal life from the point above without working one day
At no point in the list, you run into 'get rich' and live a lavish lifestyle. This forum is all about building wealth. Wealth is built over years and sometimes generations by careful planning and constant marginal improvement year over year. Riches are inherited or found to the OPs point. It's a totally different mindset.

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Re: You won't get to the Promised Land by investing in stocks

Post by greenfire » Thu Oct 01, 2015 8:44 am

My dad was a stock investor (1914-2007 lifespan.) When he passed away, I inherited all of his paperwork. On his social security statement it showed that his lifetime earnings were a little over $350,000. I calculated that his net worth, plus what he gave to myself and my brother (he started investing for us in small increments when we were small), was about $7,000,000. He invested over many many years in the stock market. He would buy in $500 or $1000 increments. He would buy things like ATT, Pfizer, etc. and set up for automatic reinvestment of dividends, and then hold for 40 years.

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Re: You won't get to the Promised Land by investing in stocks

Post by Maynard F. Speer » Thu Oct 01, 2015 8:49 am

You can certainly get a lot wealthier investing other people's money in the stock market

When I was running my first eBay business - which took all of 2 weeks to research and set up - I was making far more (per unit effort) than I'm making from stocks ... In both cases they're very similar - you're buying stock and selling it - but of course ultra-small businesses can double net assets every few months .. A huge advantage a small business has .. You don't get that investing in Unilever

Stocks are far easier to plough time and energy into though .. It's the simple feedback loop of a videogame .. While holding onto money is a main concern - and thus necessitates a diversified portfolio - I do like to have a small partition of my portfolio for trading .. Despite my better judgement, this part of my portfolio has proven the most profitable - in fact I've just reopened it .. As Buffett and Rogers have said, 40-50% returns are still possible .. But not investing in index funds
"Economics is a method rather than a doctrine, an apparatus of the mind, a technique of thinking, which helps its possessor to draw correct conclusions." - John Maynard Keynes

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Re: You won't get to the Promised Land by investing in stocks

Post by KlangFool » Thu Oct 01, 2015 8:59 am

TS,

1) Many of us do not care whether we get into Forbes 100 or so.

2) Many of us do not care whether we are wealthy or not by some people's definition.

3) My older brother had good paying jobs. He saved and invest. He early retired at 49 years. Now, he traveled any where and every where in the world as he likes. I have to keep up to the minute where he is at the moment via Facebook. He got to his promised land. No, he is not in Forbes 100 and he does not care either.

KlangFool

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Re: You won't get to the Promised Land by investing in stocks

Post by logicteach » Thu Oct 01, 2015 9:10 am

[quote]If you are a person who is lacking in life and career skills and unable to generate the surplus income required to achieve financial success on these merits alone, then you might achieve financial success through passive investing in the stock market.[quote]


It sounds as though you assume that people without high incomes are "lacking in life and career skill." This assumption seems unwarranted. Many of us choose our careers based on factors other that money: personal passions, lifestyle choices, or a desire to lead a life of service just to name a few. Most people on this board probably have higher incomes as well as higher net worth than I do. So what? I come here to learn from them about investing but that doesn't mean that I don't have other skills. As a matter of fact, I would be willing to bet that my education and skills are equal to just about anybody here. I chose to be a philosopher because of a love of ideas. I choose to teach because it allows me to try to show others how ideas can influence their lives and--yes--pass on valuable skills. As others have said, this forum is not necessarily about getting rich nor is that the primary goal of most people here, I think. Higher income does not always equate to more happiness. I grew up in a family that was quite well off and my childhood was hellish. I lived in poverty while spending many years in school which was a life of great anxiety. Middle-class independence seems great to me! Nor does higher income always mean more wealth. I have friends (and family) who make three to four times what I make and have less to show for it. Why? I try to do all the things this forum promotes. I live well within my means, save every penny I can, and invest sensibly in index funds. I am happy to have a chance to invest in order to live in modest comfort during my retirement and, furthermore, I am grateful for the education I have and continue to receive via this forum (I admire so many of you!) because I include much of it in my teachings about money and ethics. I'm proud to call myself a (merely) middle-class Boglehead who intends to preserve that status. I will not be able to retire early. I will not be able to retire in luxury. But I will be able to retire due to investmenting well. I still have a lot to learn--like how to quote on this forum (!), but, for me,that's part of the pleasure of the journey.

Browser
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Re: You won't get to the Promised Land by investing in stocks

Post by Browser » Thu Oct 01, 2015 9:37 am

logicteach wrote:
If you are a person who is lacking in life and career skills and unable to generate the surplus income required to achieve financial success on these merits alone, then you might achieve financial success through passive investing in the stock market.


It sounds as though you assume that people without high incomes are "lacking in life and career skill." This assumption seems unwarranted. Many of us choose our careers based on factors other that money: personal passions, lifestyle choices, or a desire to lead a life of service just to name a few. Most people on this board probably have higher incomes as well as higher net worth than I do. So what? I come here to learn from them about investing but that doesn't mean that I don't have other skills. As a matter of fact, I would be willing to bet that my education and skills are equal to just about anybody here. I chose to be a philosopher because of a love of ideas. I choose to teach because it allows me to try to show others how ideas can influence their lives and--yes--pass on valuable skills. As others have said, this forum is not necessarily about getting rich nor is that the primary goal of most people here, I think. Higher income does not always equate to more happiness. I grew up in a family that was quite well off and my childhood was hellish. I lived in poverty while spending many years in school which was a life of great anxiety. Middle-class independence seems great to me! Nor does higher income always mean more wealth. I have friends (and family) who make three to four times what I make and have less to show for it. Why? I try to do all the things this forum promotes. I live well within my means, save every penny I can, and invest sensibly in index funds. I am happy to have a chance to invest in order to live in modest comfort during my retirement and, furthermore, I am grateful for the education I have and continue to receive via this forum (I admire so many of you!) because I include much of it in my teachings about money and ethics. I'm proud to call myself a (merely) middle-class Boglehead who intends to preserve that status. I will not be able to retire early. I will not be able to retire in luxury. But I will be able to retire due to investmenting well. I still have a lot to learn--like how to quote on this forum (!), but, for me,that's part of the pleasure of the journey.
Couldn't agree with you more. People make decisions who have many available options provided by their skills, abilities, and opportunity set. Not everyone chooses a path based on the pursuit of financial wealth, and I daresay that they make a conscious choice to do so. There is personal, psychological wealth - which is probably the most important wealth that one can attain. Certainly not my intention to knock anyone based on their values and life choices.
We don't know where we are, or where we're going -- but we're making good time.

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stemikger
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Re: You won't get to the Promised Land by investing in stocks

Post by stemikger » Thu Oct 01, 2015 9:38 am

LiveSimple wrote:
stemikger wrote:Visit some third world countries and you will realize we are all in the promised land. Even people with very modest incomes.

Clean drinking water - check.
A meal on the table every night - check.
Cool in the summer and warm in the winter - check.

Yeah, I'm already in the promised land and I'm loving it!

Add these too...

Clean and speedy highways or roads
Sleep in peace at your home
Less robbery or fraud or criminal activities around you / your family.
Economic system where the common man may have their share, if they are responsible.
Equal rights to everyone

The list goes on...
Yes, the list is a long one. All one has to do is watch a documentary on North Korea and you will realize how free we really are. And as far as third world countries, that goes without saying. They are just praying they get something in their stomach at the end of the day and sometimes at the end of the week.

As Warren Buffett likes to say, you already won the lottery by being born in the U.S. Everything else is gravy.
Choose Simplicity ~ Stay the Course!! ~ Press on Regardless!!!

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Rob54keep
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Re: You won't get to the Promised Land by investing in stocks

Post by Rob54keep » Thu Oct 01, 2015 9:48 am

Why is it that we (and the media & politicians) use the phrase "high income earners" or "wealthy" in such loose terms? We talk about how the wealthy like Trump or Buffett should pay their fair share but then develop tax structures that penalize those that earn say over $200k? I think BH's need to be more specific when we are talking about income levels, wealth levels and ideas about the PromiseLand. My guess is that there are very few BH's that are Buffett-type wealthy.

hnzw rui
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Re: You won't get to the Promised Land by investing in stocks

Post by hnzw rui » Thu Oct 01, 2015 9:52 am

stemikger wrote:And as far as third world countries, that goes without saying. They are just praying they get something in their stomach at the end of the day and sometimes at the end of the week.

As Warren Buffett likes to say, you already won the lottery by being born in the U.S. Everything else is gravy.
Having lived in the Philippines for the first 18 years of my life, I'd have to agree. Heck, prisoners in the US live a far easier life than the poor (or even middle class) in other countries.

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Maynard F. Speer
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Re: You won't get to the Promised Land by investing in stocks

Post by Maynard F. Speer » Thu Oct 01, 2015 10:04 am

You should see Danish prisons

Image

Image

Image
"Economics is a method rather than a doctrine, an apparatus of the mind, a technique of thinking, which helps its possessor to draw correct conclusions." - John Maynard Keynes

Texanbybirth
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Re: You won't get to the Promised Land by investing in stocks

Post by Texanbybirth » Thu Oct 01, 2015 10:04 am

stemikger wrote:
LiveSimple wrote:
stemikger wrote:Visit some third world countries and you will realize we are all in the promised land. Even people with very modest incomes.

Clean drinking water - check.
A meal on the table every night - check.
Cool in the summer and warm in the winter - check.

Yeah, I'm already in the promised land and I'm loving it!

Add these too...

Clean and speedy highways or roads
Sleep in peace at your home
Less robbery or fraud or criminal activities around you / your family.
Economic system where the common man may have their share, if they are responsible.
Equal rights to everyone

The list goes on...
Yes, the list is a long one. All one has to do is watch a documentary on North Korea and you will realize how free we really are. And as far as third world countries, that goes without saying. They are just praying they get something in their stomach at the end of the day and sometimes at the end of the week.

As Warren Buffett likes to say, you already won the lottery by being born in the U.S. Everything else is gravy.
The three posts quoted above were the best part about this thread. It's sad how involved in the nuances we can get that we miss the forest for the trees. Thanks for the reminder, and the call to a bit of humility on my part.

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HomerJ
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Re: You won't get to the Promised Land by investing in stocks

Post by HomerJ » Thu Oct 01, 2015 10:07 am

Browser wrote:By comparison, the application of your knowledge, skills, effort, and decision-making ability in the areas of your life where you actually do have control over the outcome will overwhelmingly determine your financial fate. The education you are able to achieve, the career field you choose, the person you marry, deciding to have children, becoming friends with influential people, starting and running a business, the organization where you are employed, climbing the corporate ladder, working hard, the ability to lead and manage others, living beneath your means -- all these things are within our direct control and are the core factors that determine one's financial success.
This is well-written and absolutely true... The time my wife and I spent building our careers have indeed been the most important component of our wealth. So I do agree with you in part. A big part.

However, the stock market will indeed likely let me retire 5-10 years earlier than I would have if I just invested in CDs and bonds, so I consider it an important part of my financial success as well.
It depends entirely on what the stock market does during your short 20-40 year rendezvous with it, and all your investing knowledge, skills, and abilities mean relatively little within that context. You're not going to get the well-published long term returns from the stock market; you're going to get the returns that Mr. Market dishes up during the particular slice when you are dancing with him.
So far, every 30 year period has consistently returned very close to well-published long-term returns of the stock market. So here you are wrong....

If you "stay the course", you will indeed get the excellent long-term returns from the stock market. This is why we preach to people to "stay the course", and not jump in and out based on the news or articles or signals like you have suggested in at least 500 different doom threads.

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goingup
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Re: You won't get to the Promised Land by investing in stocks

Post by goingup » Thu Oct 01, 2015 10:07 am

Browser-
I think your premise is that you have to have a certain amount of wealth to own investable assets in the first place. Agreed.

Placing those investable assets in a low-cost balanced portfolio, and humbly accepting market returns for 40 years will inevitably lead to greater wealth. Do you disagree?

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Maynard F. Speer
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Re: You won't get to the Promised Land by investing in stocks

Post by Maynard F. Speer » Thu Oct 01, 2015 10:19 am

goingup wrote:Browser-
I think your premise is that you have to have a certain amount of wealth to own investable assets in the first place. Agreed.

Placing those investable assets in a low-cost balanced portfolio, and humbly accepting market returns for 40 years will inevitably lead to greater wealth. Do you disagree?
I'm afraid if it were inevitable, returns would be far more modest ..

Look at the Japanese stock market fall 80% over two decades - and we may look back on that as being a particularly 'good' century for stocks
"Economics is a method rather than a doctrine, an apparatus of the mind, a technique of thinking, which helps its possessor to draw correct conclusions." - John Maynard Keynes

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Re: You won't get to the Promised Land by investing in stocks

Post by SpaNancy » Thu Oct 01, 2015 10:26 am

Artsdoctor wrote:I think this is a major tenet of investing. Why are you doing it? If you're after a thrill, then you're going to be investing in relatively risky investments and part of that equation is the potential for great loss. If you're after a portfolio that can sustain you through thick and thin, you're going to fund it with income and any inheritance you have, and do it in such a way that it will last a lifetime. It's unusual to get rich off your investments, but if you can keep up with inflation and then a little bit more, and do it with reasonable risk, you've done a good job.

SO, if you already HAVE the money, why not put it in CD's?


I did a little 'experiment' with "Betterment", and so far, since June, they have done nothing but LOSE my money. I'm really fed up with the Pros and their "be in it for the long haul" BS. WHERE DOES ONE PUT MONEY SO THAT THEY KEEP UP WITH INFLATION AND NOT LOSE PRINCIPAL?????

That, to me, is the "Promise Land".



.

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Re: You won't get to the Promised Land by investing in stocks

Post by chicagoan23 » Thu Oct 01, 2015 10:30 am

I know many people who are financially successful who invest in stocks, but I don't know anyone who became financially successful because they invested in the stock market. They would have been financially successful without ever putting a dime into stocks.
The education you are able to achieve, the career field you choose, the person you marry, deciding to have children, becoming friends with influential people, starting and running a business, the organization where you are employed, climbing the corporate ladder, working hard, the ability to lead and manage others, living beneath your means -- all these things are within our direct control and are the core factors that determine one's financial success.
I would be interested in your thoughts as to how a typical wage earner (or even a high wage earner) can become financially successful without ever putting a dime into stocks (I can certainly see it for a small business owner whose business generates plenty of income or for a successful real estate investor--put those people aside).

For the rest of the items on your list, if a wage earner doesn't invest in stocks how would he be financially successful after he stops working--especially if he wants to stop working in his 50's? By putting excess savings in bonds throughout his working years? By just saving money and then drawing down those savings accounts and CDs until he dies? Something else?

It seems to me that unless you have the unique skill, contacts and competence to run your own business or are willing/able to take concentrated risks with real estate, you need stocks if you want to grow capital over time. Bonds and savings accounts don't grow capital--they provide fixed income. Is the suggestion to save up enough and just live off the income those fixed instruments throw off? That would seem to require a monumental amount of savings from wage income; something that is almost certainly out of reach for most who would want to retire early, if you have no appreciation of capital.

I agree with you that the market distorts the value of stock investments much of the time, but over long periods the profit-making potential of American industry has grown significantly and is likely to grow in the future, and owning stocks is the best way to share in that.

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Re: You won't get to the Promised Land by investing in stocks

Post by Browser » Thu Oct 01, 2015 10:32 am

So far, every 30 year period has consistently returned very close to well-published long-term returns of the stock market. So here you are wrong....
Not sure about 30-year periods, but here's a chart that depicts the range of outcomes over different 20-year periods.
Take what stocks did from age 35 to 55. That's the meat of [one's] career.... Depending on what year you were born, stocks produced all kinds of different results:
Image

http://www.fool.com/investing/general/2 ... estor.aspx

Consider that most of us have the bulk of our investment principal at risk during the latter 10-20 years of our careers, so that really the window is rather small during which we need to have Mr. Market smile on us. Anything can happen to stocks over a time period that short, as the chart illustrates. If you don't think your stock investment fortunes are mostly a function of the critical 20-year slice of time you draw from a hat, then I have to disagree.
We don't know where we are, or where we're going -- but we're making good time.

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Re: You won't get to the Promised Land by investing in stocks

Post by Rodc » Thu Oct 01, 2015 10:49 am

Browser wrote:
So far, every 30 year period has consistently returned very close to well-published long-term returns of the stock market. So here you are wrong....
Not sure about 30-year periods, but here's a chart that depicts the range of outcomes over different 20-year periods.
Take what stocks did from age 35 to 55. That's the meat of a money manager's career, the time to prove whether you're a standout. Depending on what year you were born, stocks produced all kinds of different results:
Image

http://www.fool.com/investing/general/2 ... estor.aspx

Consider that most of us have the bulk of our investment principal at risk during the latter 10-20 years of our careers, so that really the window is rather small during which we need to have Mr. Market smile on us. Anything can happen to stocks over a time period that short, as the chart illustrates. If you don't think your stock investment fortunes are mostly a function of the critical 20-year slice of time you draw from a hat, then I have to disagree.
This is probably more germane:
http://home.comcast.net/~rodec/finance/ ... nBonds.pdf

It only covers a 30 year accumulation, not retirement. Even so it shows that in the US, using stocks and treasuries, historically, has worked very well most of the time. Not always. There was a brief period ending in the early 1980s where a standard stock/bond portfolio returned about zero real. But even then stocks were much better than bonds (periodic investing stocks about +1% vs bonds at -4%). Given the high inflation that was part of the scenario likely a savings account or CDs was worse - but that is speculation as I have not done the calculation.

Fortunately for the poor soul retiring in 1982, it was followed by a great 20 year bull market so stocks in the end would have been very useful to own. So even in this example stocks were certainly better than bonds alone.

Unfortunately, as we all know stocks come with no guarantee. If you want a guarantee, you will have to suffer guaranteed low returns.
We live a world with knowledge of the future markets has less than one significant figure. And people will still and always demand answers to three significant digits.

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Re: You won't get to the Promised Land by investing in stocks

Post by Leeraar » Thu Oct 01, 2015 11:04 am

This may cross the line into "what other people do", but the US Financial Diaries project is quite fascinating.

http://www.usfinancialdiaries.org/

A reminder of how fortunate most of us are.

L
You can get what you want, or you can just get old. (Billy Joel, "Vienna")

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