Pay Growth vs Stock Market Returns

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sourcepl84
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Pay Growth vs Stock Market Returns

Post by sourcepl84 » Tue Jun 11, 2019 2:08 am

Sorry if a similar question has popped up before but I couldn't find one.

Hypothetically if income growth is higher than inflation every year, why would you invest in the stock market?

For e.g. I ran some numbers by taking japanese stock market returns and 1 year bank interest rates since 1989 (infamous crash). If your salary grew by just 1.25% every year for 30 years, you would match the final amount of money after 30 years that the stock market gave you. If I run it with US 1 year bank interest rates and stock market returns since 1989, you need a pay growth of about 4.3% to match the stock market total returns.

It almost seems like if you don't expect your income to grow then you invest in the stock market (risk), but if you expect healthy income growth then you're better off keeping the money in the bank. So if not for beating inflation, why else would you invest in the stock market?

Or would the better thing to do is keep half the amount saved as cash and invest the other half into the market to split the difference?

Will appreciate some insight into this topic. Thanks.

sarabayo
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Re: Pay Growth vs Stock Market Returns

Post by sarabayo » Tue Jun 11, 2019 2:56 am

sourcepl84 wrote:
Tue Jun 11, 2019 2:08 am
Sorry if a similar question has popped up before but I couldn't find one.

Hypothetically if income growth is higher than inflation every year, why would you invest in the stock market?

For e.g. I ran some numbers by taking japanese stock market returns and 1 year bank interest rates since 1989 (infamous crash). If your salary grew by just 1.25% every year for 30 years, you would match the final amount of money after 30 years that the stock market gave you. If I run it with US 1 year bank interest rates and stock market returns since 1989, you need a pay growth of about 4.3% to match the stock market total returns.

It almost seems like if you don't expect your income to grow then you invest in the stock market (risk), but if you expect healthy income growth then you're better off keeping the money in the bank. So if not for beating inflation, why else would you invest in the stock market?

Or would the better thing to do is keep half the amount saved as cash and invest the other half into the market to split the difference?

Will appreciate some insight into this topic. Thanks.
Well, when you say your income is "growing", it just means that each subsequent year's income is greater than the previous year's income. It doesn't mean that you invested something and got a positive return on it. So I don't really see how you're comparing growth of an investment (like investing in the stock market) with growth of an income stream. Am I missing something?

Topic Author
sourcepl84
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Re: Pay Growth vs Stock Market Returns

Post by sourcepl84 » Tue Jun 11, 2019 3:28 am

[/quote]

Well, when you say your income is "growing", it just means that each subsequent year's income is greater than the previous year's income. It doesn't mean that you invested something and got a positive return on it. So I don't really see how you're comparing growth of an investment (like investing in the stock market) with growth of an income stream. Am I missing something?
[/quote]

Sorry forgot to clarify. When income grows by X%, I'm assuming your savings grow by X% as well. Then it's your choice to keep these savings in a separate high yield account/CD (separate from your emergency savings) or put it in the stock market.

My question can be rephrased in a simpler manner. The point I'm trying to make is that if your income/savings growth is above inflation, then why would you waste your time/money in making mistakes researching a good broker/fund (one that doesn't cheat you), whether the ETF is accumulating/distributing and a whole host of other variables that come into the picture when finance guys are trying to get your money.

Why not just put more effort into growing your own income/savings?

I do admit that such sustained income growth for 40 years would be impossible. What most likely happens is you get 10% or 50% growth once in like 10 years, and the rest of the years it could be 0% or just a bit above that. In my model I can choose pay growth increases in such a manner that still match stock market returns. But I'm still interested in other answers if their income growth was so high that they decided to not take risk in the stock market.

goblue100
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Re: Pay Growth vs Stock Market Returns

Post by goblue100 » Tue Jun 11, 2019 4:25 am

I don't think income growth has anything to do with it. People invest in the stock market to get a (hopefully) greater return than they get other places. Some people would prefer to invest in real estate. But the whole idea is to get some growth on their savings.

True, if my income is so great relative to my expenses I may not need greater returns, but those people would be few and far between, and probably not residents of this board.
Financial planners are savers. They want us to be 95 percent confident we can finance a 30-year retirement even though there is an 82 percent probability of being dead by then. - Scott Burns

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bottlecap
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Re: Pay Growth vs Stock Market Returns

Post by bottlecap » Tue Jun 11, 2019 6:39 am

Why assume your salary increase will affect the return on your savings?

Why assume your salary increase will steadily increase?

How much will you be saving every year? If you save 15% of it, will getting -1 to 2% real return on it every year over 30 years give you enough of a nest egg to retire comfortably?

No offense intended, but I can’t make any sense out of your post. Either I am missing something very basic about it or you are.

JT

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sourcepl84
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Re: Pay Growth vs Stock Market Returns

Post by sourcepl84 » Tue Jun 11, 2019 9:15 am

bottlecap wrote:
Tue Jun 11, 2019 6:39 am
Why assume your salary increase will affect the return on your savings?

Why assume your salary increase will steadily increase?

How much will you be saving every year? If you save 15% of it, will getting -1 to 2% real return on it every year over 30 years give you enough of a nest egg to retire comfortably?

No offense intended, but I can’t make any sense out of your post. Either I am missing something very basic about it or you are.

JT
You’re correct that it all depends on what the retirement goal is. So one would need to save much more in the bank compared with investing in the market to meet the same goal. Then it just boils down to risk tolerance. Maybe I’m biased against the market because of bad experiences dealing with fraud brokers/funds.

I’ve clarified in my second post that savings growth need not be the same every year (unrealistic). Yet you can achieve similar returns as the market (where you only invest the same amount every year)

surfstar
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Re: Pay Growth vs Stock Market Returns

Post by surfstar » Tue Jun 11, 2019 9:33 am

The income growth is a red herring. You're looking at it all wrong.

What grows more, a CD or the stock market?

You want growth over a long time, invest in equities. Your income "growth" is irrelevant. No matter how much you make, you want to save and invest. Why not put your savings into the highest growth potential, per your risk/timeframe.

Buy a low-cost, index fund and there are no fraud brokers/funds to worry about. Sounds like you aren't aware of index fund investing and had a bad experience with a very different aspect of "investing".

MotoTrojan
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Re: Pay Growth vs Stock Market Returns

Post by MotoTrojan » Tue Jun 11, 2019 9:35 am

Even if your salary didn’t beat inflation (could be a fixed number for life, or even go down) you could obviously save enough for retirement in a bank account if your income is high enough or expenses low enough. If your expenses are 1% of your take home pay, you only need to work one year and then keep up with inflation somewhat.

But if two people earn the same salary and have the same expenses, but one uses equity to grow it, they’ll retire much sooner.

You’re not thinking about this correctly.

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MNGopher
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Re: Pay Growth vs Stock Market Returns

Post by MNGopher » Tue Jun 11, 2019 9:45 am

Pay growth, savings increases, and investment return are not 3 mutually exclusive things. You can strive to do your best in all 3 areas.

Topic Author
sourcepl84
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Re: Pay Growth vs Stock Market Returns

Post by sourcepl84 » Tue Jun 11, 2019 10:49 am

MotoTrojan wrote:
Tue Jun 11, 2019 9:35 am
Even if your salary didn’t beat inflation (could be a fixed number for life, or even go down) you could obviously save enough for retirement in a bank account if your income is high enough or expenses low enough. If your expenses are 1% of your take home pay, you only need to work one year and then keep up with inflation somewhat.

But if two people earn the same salary and have the same expenses, but one uses equity to grow it, they’ll retire much sooner.

You’re not thinking about this correctly.
you should change it to “they’ll probably retire much sooner”
Last edited by sourcepl84 on Tue Jun 11, 2019 11:10 am, edited 1 time in total.

alex_686
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Re: Pay Growth vs Stock Market Returns

Post by alex_686 » Tue Jun 11, 2019 10:56 am

Expecting your income to grow is kind of besides the point. You should treat your income as human capital.

What really matters is how accurately you can predict your income. If you have a union government job you can accurately predict your income, thus you can treat it as "bond like" asset, and have a higher equity allocation. If your income expectations are erratic, then your income is "equity like", so more towards bonds.

Topic Author
sourcepl84
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Re: Pay Growth vs Stock Market Returns

Post by sourcepl84 » Tue Jun 11, 2019 11:16 am

surfstar wrote:
Tue Jun 11, 2019 9:33 am
The income growth is a red herring. You're looking at it all wrong.

What grows more, a CD or the stock market?

You want growth over a long time, invest in equities. Your income "growth" is irrelevant. No matter how much you make, you want to save and invest. Why not put your savings into the highest growth potential, per your risk/timeframe.

Buy a low-cost, index fund and there are no fraud brokers/funds to worry about. Sounds like you aren't aware of index fund investing and had a bad experience with a very different aspect of "investing".
I own some index etfs.

how do you know your fund is low-cost and does what it says? Tomorrow they’ll come up with some other fund that tracks 20,000 companies in the world, the next week one with 50,000 and 0.01% TER, and then you’ll move your funds into the new one incurring some fees/charges. After accounting for all these mistakes and charges you’ll probably end up with same returns as a bank or even worse. So is this effort really worth it? Why not just increase your earnings and therefore savings?

emoore
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Re: Pay Growth vs Stock Market Returns

Post by emoore » Tue Jun 11, 2019 11:49 am

sourcepl84 wrote:
Tue Jun 11, 2019 11:16 am
surfstar wrote:
Tue Jun 11, 2019 9:33 am
The income growth is a red herring. You're looking at it all wrong.

What grows more, a CD or the stock market?

You want growth over a long time, invest in equities. Your income "growth" is irrelevant. No matter how much you make, you want to save and invest. Why not put your savings into the highest growth potential, per your risk/timeframe.

Buy a low-cost, index fund and there are no fraud brokers/funds to worry about. Sounds like you aren't aware of index fund investing and had a bad experience with a very different aspect of "investing".
I own some index etfs.

how do you know your fund is low-cost and does what it says? Tomorrow they’ll come up with some other fund that tracks 20,000 companies in the world, the next week one with 50,000 and 0.01% TER, and then you’ll move your funds into the new one incurring some fees/charges. After accounting for all these mistakes and charges you’ll probably end up with same returns as a bank or even worse. So is this effort really worth it? Why not just increase your earnings and therefore savings?
There is no way that switching from a low cost index fund to another low cost index fund will leave you with the same returns or worse than a bank. The effort of sticking with a low cost index fund is most worth it.

surfstar
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Re: Pay Growth vs Stock Market Returns

Post by surfstar » Tue Jun 11, 2019 12:08 pm

sourcepl84 wrote:
Tue Jun 11, 2019 11:16 am
surfstar wrote:
Tue Jun 11, 2019 9:33 am
The income growth is a red herring. You're looking at it all wrong.

What grows more, a CD or the stock market?

You want growth over a long time, invest in equities. Your income "growth" is irrelevant. No matter how much you make, you want to save and invest. Why not put your savings into the highest growth potential, per your risk/timeframe.

Buy a low-cost, index fund and there are no fraud brokers/funds to worry about. Sounds like you aren't aware of index fund investing and had a bad experience with a very different aspect of "investing".
I own some index etfs.

how do you know your fund is low-cost and does what it says? Tomorrow they’ll come up with some other fund that tracks 20,000 companies in the world, the next week one with 50,000 and 0.01% TER, and then you’ll move your funds into the new one incurring some fees/charges. After accounting for all these mistakes and charges you’ll probably end up with same returns as a bank or even worse. So is this effort really worth it? Why not just increase your earnings and therefore savings?
I suggest you read The Bogleheads Guide to Investing, as a start. Or for a free, short read: https://www.etf.com/docs/IfYouCan.pdf

MotoTrojan
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Re: Pay Growth vs Stock Market Returns

Post by MotoTrojan » Tue Jun 11, 2019 1:19 pm

sourcepl84 wrote:
Tue Jun 11, 2019 11:16 am


I own some index etfs.

how do you know your fund is low-cost and does what it says? Tomorrow they’ll come up with some other fund that tracks 20,000 companies in the world, the next week one with 50,000 and 0.01% TER, and then you’ll move your funds into the new one incurring some fees/charges. After accounting for all these mistakes and charges you’ll probably end up with same returns as a bank or even worse. So is this effort really worth it? Why not just increase your earnings and therefore savings?
The difference between saying "I am fine with holding the entire world's equity exposure via Vanguard's VT at 0.09% ER, with a total of 8032 individual companies, and won't be persuaded to switch to Fidelity's new 0% ER funds" vs. saying "I am overwhelmed by all the choices and possible outcomes and instead would like to simply keep up with inflation and have to work decades longer than I would've, or drastically reduce my spending now and later".

I understand if you are overwhelmed, but there are options to make that much easier for you. Sounds like you'd be a candidate for a Target Retirement or Lifestrategy fund that maintains it's allocation automatically and in the Target case will adjust that for you as you age.

Going from 8,032 companies to 20,000 would be a huge cost in the current market as those other companies (if they even exist) would be tiny, hard to hold (illiquid), and still barely move the needle even if they went bankrupt or grew 1000x. As the market changes, the index will adjust, but you shouldn't care and won't notice.

I still don't follow your point.

MotoTrojan
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Re: Pay Growth vs Stock Market Returns

Post by MotoTrojan » Tue Jun 11, 2019 1:23 pm

sourcepl84 wrote:
Tue Jun 11, 2019 2:08 am


If I run it with US 1 year bank interest rates and stock market returns since 1989, you need a pay growth of about 4.3% to match the stock market total returns.
I would be interested to see your calculations here. This doesn't look right.

KlangFool
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Re: Pay Growth vs Stock Market Returns

Post by KlangFool » Tue Jun 11, 2019 1:33 pm

OP,

1) What gross saving rate are you basing your decision on? 1%? 5%?

2) Why 100% stock? A 60/40 portfolio is the standard benchmark

Let's take a simple example to show why the gross saving rate matters.

A) The gross saving rate is 1/3 of the gross income.

B) In 6 years, the portfolio will be 2 times the gross income.

C) In 9 years, the portfolio will be 3 times the gross income.

D) In 6 years, the pay growth has to be 2 times the portfolio growth in order to match the amount.

E) In 9 years, the pay growth has to be 3 times the portfolio growth in order to match the amount.

KlangFool

pdavi21
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Re: Pay Growth vs Stock Market Returns

Post by pdavi21 » Tue Jun 11, 2019 3:29 pm

Your pay growth would have to be 4.3% of your total portfolio, not just your salary. So with a $500k stock allocation that was cash instead, you'd need a pay raise of $21,500 to make up for the difference. If you make $60k, that's over a 30% raise.
"We spend a great deal of time studying history, which, let's face it, is mostly the history of stupidity." -Stephen Hawking

Topic Author
sourcepl84
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Re: Pay Growth vs Stock Market Returns

Post by sourcepl84 » Wed Jun 12, 2019 11:35 pm

MotoTrojan wrote:
Tue Jun 11, 2019 1:23 pm
sourcepl84 wrote:
Tue Jun 11, 2019 2:08 am


If I run it with US 1 year bank interest rates and stock market returns since 1989, you need a pay growth of about 4.3% to match the stock market total returns.
I would be interested to see your calculations here. This doesn't look right.
I assume that the savings don't grow when you put in the market. The logic is that you don't spend much effort growing your income/savings and are just happy to invest the same savings every month/year. But yes if savings grow (with income) and you put increasing amounts in the market, your total returns after X years (assuming markets are near highs) far exceed just keeping growing savings in the bank.

Again, all this assumes that you found the perfect broker/fund who didn't lie to you about any commissions or technicalities of the fund. That is where the great returns that everyone often quotes sour. At the end of the day you can't trust anyone and have to do your own homework. You just have to question if it's even worth it.
Last edited by sourcepl84 on Thu Jun 13, 2019 7:10 am, edited 2 times in total.

Topic Author
sourcepl84
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Re: Pay Growth vs Stock Market Returns

Post by sourcepl84 » Wed Jun 12, 2019 11:49 pm

MotoTrojan wrote:
Tue Jun 11, 2019 1:19 pm
sourcepl84 wrote:
Tue Jun 11, 2019 11:16 am


I own some index etfs.

how do you know your fund is low-cost and does what it says? Tomorrow they’ll come up with some other fund that tracks 20,000 companies in the world, the next week one with 50,000 and 0.01% TER, and then you’ll move your funds into the new one incurring some fees/charges. After accounting for all these mistakes and charges you’ll probably end up with same returns as a bank or even worse. So is this effort really worth it? Why not just increase your earnings and therefore savings?
The difference between saying "I am fine with holding the entire world's equity exposure via Vanguard's VT at 0.09% ER, with a total of 8032 individual companies, and won't be persuaded to switch to Fidelity's new 0% ER funds" vs. saying "I am overwhelmed by all the choices and possible outcomes and instead would like to simply keep up with inflation and have to work decades longer than I would've, or drastically reduce my spending now and later".

I understand if you are overwhelmed, but there are options to make that much easier for you. Sounds like you'd be a candidate for a Target Retirement or Lifestrategy fund that maintains it's allocation automatically and in the Target case will adjust that for you as you age.

Going from 8,032 companies to 20,000 would be a huge cost in the current market as those other companies (if they even exist) would be tiny, hard to hold (illiquid), and still barely move the needle even if they went bankrupt or grew 1000x. As the market changes, the index will adjust, but you shouldn't care and won't notice.

I still don't follow your point.
I'm not in the US anymore and can't access these so-called low-cost funds easily. I've had to put lot of effort into researching the best ways to get access.
I figure even if I were in the US I'd still need to do my homework and be on top of things to have everything covered. As you said there are too many options. Doesn't sound like passive investing to me! I'd rather spend that effort growing my own income.

Topic Author
sourcepl84
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Re: Pay Growth vs Stock Market Returns

Post by sourcepl84 » Thu Jun 13, 2019 12:54 am

MNGopher wrote:
Tue Jun 11, 2019 9:45 am
Pay growth, savings increases, and investment return are not 3 mutually exclusive things. You can strive to do your best in all 3 areas.
This is well put. Unfortunately investment return is fraught with so many risks, misinformation and deception that at the end of the day you're better off just keeping money in the bank. I'd rather focus on pay growth and savings increases to offset minimal investment return.

MotoTrojan
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Re: Pay Growth vs Stock Market Returns

Post by MotoTrojan » Thu Jun 13, 2019 7:21 am

sourcepl84 wrote:
Thu Jun 13, 2019 12:54 am
MNGopher wrote:
Tue Jun 11, 2019 9:45 am
Pay growth, savings increases, and investment return are not 3 mutually exclusive things. You can strive to do your best in all 3 areas.
This is well put. Unfortunately investment return is fraught with so many risks, misinformation and deception that at the end of the day you're better off just keeping money in the bank. I'd rather focus on pay growth and savings increases to offset minimal investment return.
The effort to find a safe broad based index fund even abroad cannot be more than the amount of time you've spent on this thread (a better option would've been posting your situation and I bet you'd get responses with great options).

The amount of extra time it would take working to maintain the same standard of living now and/or in retirement is significantly more. Give this a look. Compares an 80/20 equity/bond portfolio with 37.5% International exposure; basically what you'd get in a Lifestrategy 80/20 fund or common 3-fund setup, to a 100% cash portfolio from 1987-now. Starts with $12K and $1K/month inflation adjusted. Sure there is no wage growth beyond inflation but that would help both sides. $2.3M will get you a very different situation than $900K. Not only is this an absolute 60% reduction, but for a 30 year retirement you could presumably withdraw 4% or $92K inflation adjusted from the $2.3M if invested, but will get only 3.3% safely from the $900K, and that would be 100% depletion so you better not live any longer.

You may feel there are risks in brokers etc... but you are unequivocally taking more risk by only holding cash. To each their own.

https://www.portfoliovisualizer.com/bac ... 0&total3=0

KlangFool
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Re: Pay Growth vs Stock Market Returns

Post by KlangFool » Thu Jun 13, 2019 7:36 am

sourcepl84 wrote:
Wed Jun 12, 2019 11:49 pm
MotoTrojan wrote:
Tue Jun 11, 2019 1:19 pm
sourcepl84 wrote:
Tue Jun 11, 2019 11:16 am


I own some index etfs.

how do you know your fund is low-cost and does what it says? Tomorrow they’ll come up with some other fund that tracks 20,000 companies in the world, the next week one with 50,000 and 0.01% TER, and then you’ll move your funds into the new one incurring some fees/charges. After accounting for all these mistakes and charges you’ll probably end up with same returns as a bank or even worse. So is this effort really worth it? Why not just increase your earnings and therefore savings?
The difference between saying "I am fine with holding the entire world's equity exposure via Vanguard's VT at 0.09% ER, with a total of 8032 individual companies, and won't be persuaded to switch to Fidelity's new 0% ER funds" vs. saying "I am overwhelmed by all the choices and possible outcomes and instead would like to simply keep up with inflation and have to work decades longer than I would've, or drastically reduce my spending now and later".

I understand if you are overwhelmed, but there are options to make that much easier for you. Sounds like you'd be a candidate for a Target Retirement or Lifestrategy fund that maintains it's allocation automatically and in the Target case will adjust that for you as you age.

Going from 8,032 companies to 20,000 would be a huge cost in the current market as those other companies (if they even exist) would be tiny, hard to hold (illiquid), and still barely move the needle even if they went bankrupt or grew 1000x. As the market changes, the index will adjust, but you shouldn't care and won't notice.

I still don't follow your point.
I'm not in the US anymore and can't access these so-called low-cost funds easily.
sourcepl84,

Not true. As long as you can buy US stock, you can buy ETF. It is the stock version of the low-cost mutual fund.

KlangFool

KlangFool
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Re: Pay Growth vs Stock Market Returns

Post by KlangFool » Thu Jun 13, 2019 7:40 am

sourcepl84 wrote:
Wed Jun 12, 2019 11:35 pm
MotoTrojan wrote:
Tue Jun 11, 2019 1:23 pm
sourcepl84 wrote:
Tue Jun 11, 2019 2:08 am


If I run it with US 1 year bank interest rates and stock market returns since 1989, you need a pay growth of about 4.3% to match the stock market total returns.
I would be interested to see your calculations here. This doesn't look right.
Again, all this assumes that you found the perfect broker/fund who didn't lie to you about any commissions or technicalities of the fund. That is where the great returns that everyone often quotes sour.
sourcepl84,

How much effort is required to buy the ETF version of the total world stock index fund? Is the additional return of 2% to 3% per year worth it? Is reaching your financial 5 to 10 years earlier worth it?

https://investor.vanguard.com/etf/profile/VT

It is your choice.

KlangFool

Topic Author
sourcepl84
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Joined: Tue Jun 11, 2019 1:36 am

Re: Pay Growth vs Stock Market Returns

Post by sourcepl84 » Thu Jun 13, 2019 11:21 am

KlangFool wrote:
Thu Jun 13, 2019 7:40 am
sourcepl84 wrote:
Wed Jun 12, 2019 11:35 pm
MotoTrojan wrote:
Tue Jun 11, 2019 1:23 pm
sourcepl84 wrote:
Tue Jun 11, 2019 2:08 am


If I run it with US 1 year bank interest rates and stock market returns since 1989, you need a pay growth of about 4.3% to match the stock market total returns.
I would be interested to see your calculations here. This doesn't look right.
Again, all this assumes that you found the perfect broker/fund who didn't lie to you about any commissions or technicalities of the fund. That is where the great returns that everyone often quotes sour.
sourcepl84,

How much effort is required to buy the ETF version of the total world stock index fund? Is the additional return of 2% to 3% per year worth it? Is reaching your financial 5 to 10 years earlier worth it?

https://investor.vanguard.com/etf/profile/VT

It is your choice.

KlangFool
Buying ETFs incur brokerage costs which defeats the purpose of low-cost investing. I’ve looked at it from all angles and there are only bad options if you’re outside select countries with direct access to the index funds. Anyway this is digressing from the topic so thanks all for your views, it helped me get a clearer picture.

KlangFool
Posts: 12764
Joined: Sat Oct 11, 2008 12:35 pm

Re: Pay Growth vs Stock Market Returns

Post by KlangFool » Thu Jun 13, 2019 12:10 pm

sourcepl84 wrote:
Thu Jun 13, 2019 11:21 am
KlangFool wrote:
Thu Jun 13, 2019 7:40 am
sourcepl84 wrote:
Wed Jun 12, 2019 11:35 pm
MotoTrojan wrote:
Tue Jun 11, 2019 1:23 pm
sourcepl84 wrote:
Tue Jun 11, 2019 2:08 am


If I run it with US 1 year bank interest rates and stock market returns since 1989, you need a pay growth of about 4.3% to match the stock market total returns.
I would be interested to see your calculations here. This doesn't look right.
Again, all this assumes that you found the perfect broker/fund who didn't lie to you about any commissions or technicalities of the fund. That is where the great returns that everyone often quotes sour.
sourcepl84,

How much effort is required to buy the ETF version of the total world stock index fund? Is the additional return of 2% to 3% per year worth it? Is reaching your financial 5 to 10 years earlier worth it?

https://investor.vanguard.com/etf/profile/VT

It is your choice.

KlangFool
Buying ETFs incur brokerage costs which defeats the purpose of low-cost investing. I’ve looked at it from all angles and there are only bad options if you’re outside select countries with direct access to the index funds. Anyway this is digressing from the topic so thanks all for your views, it helped me get a clearer picture.
sourcepl84,

Which is minimal if you choose the right brokerage.

<<. I’ve looked at it from all angles and there are only bad options if you’re outside select countries with direct access to the index funds. >>

Obviously, you had not. With the exception of a few countries, folks in many countries can open brokerage A/C in some other countries in order to access the ETF.

KlangFool

sarabayo
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Re: Pay Growth vs Stock Market Returns

Post by sarabayo » Thu Jun 13, 2019 12:22 pm

sarabayo wrote:
Tue Jun 11, 2019 2:56 am
Well, when you say your income is "growing", it just means that each subsequent year's income is greater than the previous year's income. It doesn't mean that you invested something and got a positive return on it. So I don't really see how you're comparing growth of an investment (like investing in the stock market) with growth of an income stream. Am I missing something?
After reading everyone's replies in the thread, I still don't understand the basic premise of the OP's question. How can you even compare the growth of an income stream with return on an investment? I can't make sense of this.

It seems like the discussion has moved on to "staying in cash vs investing in the stock market". That's an age-old question which is easy to understand, but it seems to be a different question from the one asked in the original post.

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