[drewblaisdell]

You are being downvoted but I think this point is important: increasing stock prices disproportionately benefit the wealthy and widen the gap between rich and poor.

edit: and now I am being downvoted for merely pointing this out.

[WalterBright]

Much of the wealthy got that way by investing in stocks to begin with. If you don't invest in stocks, you won't benefit from a rising market. Why not do the obvious, and start investing yourself?

Don't invest in lottery tickets, which are mathematically a losing game.

[coliveira]

Nonsense, the stock market can (sometimes) help on retirement, but apart from professional traders, I haven't seen anyone who got rich simply by investing in stocks, and I know a lot of people who make good money. This is a myth propagated by the Wall Street.

[manigandham]

When people talk about getting rich, beware that they're mostly talking about getting rich quickly in a matter of months or years. That won't happen, but you can definitely retire as a millionaire from modest means.

It's simple math that investing even minor amounts over your life can compound greatly.

[WalterBright]

> I haven't seen anyone who got rich simply by investing in stocks

I know quite a few. You can read about more in the book "The Millionaire Next Door" by Stanley.

Heck, anyone who bought AMZN, MSFT, AAPL at the opening price, and held, is a wealthy person today.

[coliveira]

It is very easy to point at a company that is extremely successful today and say that it was "just a matter of investing in AAPL". The difficult is to know which company is the good one at the IPO. Thousands of seemingly great companies have failed during the last decades. Moreover, 30 years ago AAPL was a failing company. I don't think there is anyone with good sense that bought AAPL at the IPO and held that investment in their portfolio during that period. Less so with MSFT, but even MSFT lost 80% of its value in 2001. I don't think anyone wise would keep their fortune on MSFT, unless required by law.

If you read the "millionaire next door", you'll see that they made this money by saving, not by (just) investing in the market.

[WalterBright]

> but even MSFT lost 80% of its value in 2001

No, it was 50%. It's up around 400% since the bottom.

> The difficult is to know which company is the good one at the IPO

It's fine if you don't want to invest because of the risk. But to then say it's unfair that others who do take the risk get the rewards is ... unreasonable.

[WalterBright]

> they made this money by saving, not by (just) investing in the market

Even if you saved $20,000 a year, it would take you 50 years to save a million. But if you invested that instead, at a conservative 7% a year, you'd wind up with $9 million.

You'd pass a million after 22 years.

https://www.daveramsey.com/smartvestor/investment-calculator

[coliveira]

Not investing in the stock market doesn't mean that you'll put your money under the mattress. There are several investment vehicles, from fixed income to real state and including your own businesses. These investment are much safer and are not so correlated to the craziness and plain criminality happening on Wall Street.

[chii]

there's empirical evidence that by using a broad, well diversified index fund, and consistently remained invested in the market, you can get an average return of about 6-7% per annum over the very long run (30+ yrs).

The problem is only when you don't have enough "spare" wealth to invest because the daily costs have all eaten up your paycheck. That's a problem i dont know how to solve.

[coliveira]

There is empirical evidence that people only come up with this "average" on periods when the market is at the top. If you did your calculations around 2008 you would see a very different picture.

It is easy to be bullish on the market when everything seems to be doing well; a wise person needs to look at different periods, and see that the stock market also has produced a lot of disasters. People who lack this perspective are bound to be engulfed by such disasters. Heck, I hear that even professional investors, who are paid to buy stocks, are starting to take their money out of the market fearing of what might come next.

[chii]

> Heck, I hear that even professional investors who are paid to buy stocks, are starting to take their money out of the market fearing of what might come next.

and that's why most active managed funds perform worse than most passive index funds. that's why stock picking doesn't work for most (unless you're buffett). That's why timing the market doesn't work.

People are too emotional. If you stick to an algorithmic method (of putting in part of your paycheck every month), ride the ups and the downs (don't sell, don't take on debt to buy extra, unless you can afford the debt easily etc), you will come out ahead more times than behind.

[WalterBright]

> Heck, I hear that even professional investors, who are paid to buy stocks, are starting to take their money out of the market fearing of what might come next.

I hear that most every day, every year, every decade. There's always plenty of reasons to not invest. There's always an article in the financial news predicting imminent doom.

I ride them up, down, and back up again.

[ekianjo]

> increasing stock prices disproportionately benefit the wealthy and widen the gap between rich and poor.

Everything including stock prices disproportionately benefit the wealthy and widen the gap between rich and poor. Not sure what kind of point you are trying to make. When you are much richer than anyone else, you are bound to keep growing your assets at a faster space than anyone else too. It's the nature of compounding.

[WalterBright]

Percentage-wise, it grows at the same rate for each investor.

[manigandham]

Sure but capital is the single biggest factor in market returns.

More money means more ways to make more money by taking larger bets, using more leverage, waiting longer to turn losers into winners, and generally absorbing more risk to generate more return.

[WalterBright]

The leverage you can do is the same whether a small or large investor. Check out "margin percentage" on various brokerage sites.

[manigandham]

It's not the same. For example, I have Portfolio Margin [1] which gives me much greater leverage than normal Regulation T accounts, and that's just as a personal trader. You unlock even more access and advanced strategies as you gain capital all the way up to 10s of millions.

1. https://www.tdameritrade.com/investment-products/margin-trad...

[WalterBright]

I think if you work through the numbers, the risk level to the brokerage is the same. For example:

"But the goal is to align margin requirements with your portfolio's overall risk, based on the net exposure of all positions, and not just on individual positions. Portfolio margin is available to qualified investors who meet our minimum requirements and have $125k or more in total equity."

And by "qualified" investors they likely are looking at your other assets to see if they can be used as collateral. Note that if you go negative with your brokerage account, they don't just swallow the loss, they'll come after everything you have.

[chii]

the wealthier you are, the more you are able to diversify, and also to "safely" leverage to gain more.

[WalterBright]

Diversification lowers your rate of return to the mean. Hedging lowers your risk by lowering your rate of return.

[hdxhysyeh]

So what if the rich are getting richer too? Are you suggesting that the poor would be better off without access to stocks or that we should ban stock trading because the poor can't invest as much? They still see a return on their investments and receive a better return than they would from keeping the money in their bank account.