[WalterBright]

> Steady investment will never give you that.

Sure it does. I've seen lower middle class people become millionaires that way. Of course, one needs the discipline to not succumb to spending it on a car/house/divorce, and the intestinal fortitude to not panic sell when the market tanks.

[TheOtherHobbes]

This is like arguing that because twelve people a year become multimillionaires after buying a lottery ticket, the lottery can make you rich.

The empirical evidence is clear - for most people, day trading of any kind is a reliable way to lose money, and even buy-and-hold can kill you if pick the wrong asset class. (Ask Warren Buffet.)

You may be lucky, you may have an unusually effective model - but the odds are you're the noob at the poker table and the pros are laughing at you as they clean you out.

[WalterBright]

Just invest in the S&P 500. It isn't rocket science.

[Cthulhu_]

It's not, however, you need access to starting capital and patience. Wealth begets wealth with this strategy, but you'll only become a millionaire using this tactic if you can put in a significant amount.

The S&P tripled in value since 2010, so you would've had to invest $333.000 at that time and cash out now to become a millionaire. But few people have that. That's a 1%, I already made my fortune / I have rich parents privilege.

Sure, ANY amount you put in there would've gotten tripled, but turning $1000 into $3000 isn't going to make that big a difference.

And if you have hundreds of thousands lying around, I'd argue that buying a house would be more beneficial for your well-being in the short term.

Disclaimer: I've invested some money in the past, both low-risk long-term stuff, index funds, and 'play money' into meme funds like Apple and Tesla. I think at most I've doubled what I put in? Didn't lose money (even with the rona), that's for sure.

I try to not go "I should've done x" too much though, like "I shouldn't have sold my handful of $250 Tesla stocks when I did".

[asa4akj]

it's called patience and keep on investing. You only need to put 400$ every month into SP500 in order to reach retirement age with more than a million.

[onion2k]

A million in 2060 isn't going to be enough to retire on. I'd be surprised if it was enough to buy a moderate house.

If you'd done this 40 years ago, the million dollars you'd have today would have the equivalent purchasing power of $300,000 in 1980. Inflation is a cruel master.

[mrep]

"The average annual total return and compound annual growth rate of the S&P 500 index, including dividends, since inception in 1926 has been approximately 9.8%, or 6% after inflation" [0]. With 6% inflation adjusted returns, that'd give you a million inflation adjusted dollars after 45 years of investing $400 a month.

[0]: https://en.wikipedia.org/wiki/S%26P_500_Index

[blahblahblah10]

While that's definitely true, maybe one should look at this another way.

$400/mo saved in a 0% interest bank account for 40 years = $192,000

$400 * 12/year invested at 10% (incl. inflation) for 40 years = $2.12 million

While $2.12mm in 2020 money is $440,000 in 1980 money (assuming 4% inflation), it's still much better than the alternative.

A couple of other points:

* Investing $400/mo earlier is relatively harder than $400/mo later in the 40-year timeline assuming compensation increased by the inflation rate but one keeps the invested amount ($400 here) constant. This is ignoring factors like salary increases later in one's career (not sure if that even generalizes for lower-income professions).

* I wonder if there's any study done tracking if there's actually a steady increase in spending consistent with the inflation rate for all individuals (with some stochasticity). Or, do people adjust the goods they buy and "outwit" inflation? For e.g., the biggest purchase one makes usually, a house/apartment, doesn't scale with inflation. Similarly, electronics actually get cheaper. So, apart from food, does spending actually track inflation?

[mmmrk]

You invest into something like the S&P 500 (maybe better: MSCI World/FTSE Developed World) precisely to outrun inflation. In the OP's example, the million would be worth that million, not 300k. Look up compound interest.

[WalterBright]

$300,000 is a lot better than $0.

[RhysU]

Putting $8.5K annually into a 401k for 35 years and assuming a 6% return gets you $977K says a web calculator.

[kiplkipl]

500 companies in one country isn't diversified.

[orojackson]

That's what ETFs like VXUS and IXUS are for. You get international exposure.

VT is another good choice if you're lazy and just want to own a slice of the global stock market.

[kiplkipl]

Sure, but he didn't say those, he said S&P 500. It seems like weird American exceptionalism that the internet repeatedly recommends only investing in one nation's index when that would be laughable if you heard a Japanese, Chinese, or German person saying to do the same with their national index.

[asdfadsfgfdda]

1. The market cap of SP500 companies is ~30 trillion dollars, significantly larger than the entire stock markets in Japan, China, and Germany combined.

2. SP500 companies earn ~40% of revenue from outside the United States

[WalterBright]

It's not that weird. Look at historical returns for the S&P 500 vs European indices. Besides, quite a bit of the S&P 500 consists of global companies.

[dmoy]

At this point it's just antiquated advice, but it's an easy and well-described thing to put forward as a general trading theory. Buy an index fund and just wait for decades.

To put it another way - it rolls off the tongue better than "buy a weighted amount of a CSRP (or comparable) US Total Market Index and FTSE (or comparable) Global All Cap ex US Index, where your weighting is probably slightly overweighted to domestic".

Often (usually?) when people say it, they aren't literally advocating to only buy S&P 500. Some people still do recommend this, but I'd wager they're closer to a minority now. Famously I'm pretty sure Warren Buffett is still advocating S&P 500 only, and it takes a long time for voices like Michael Burry to outweigh. Vanguard pushed out a whitepaper years back, and made a very public change in their own corporate 401k to get rid of the s&p500 fund choice.

[pjc50]

> needs the discipline to not succumb to spending it on a car/house/divorce

Apart from the 2008 boom/crash, owning a house has been a great way for the middle class to become asset millionaires. I knew someone in London who was routinely out-earned by the asset appreciation on their own house.

Besides, inflation has rather moved the bar for "millionaire" to every middle class couple with a house and two retirement funds..

[leetcrew]

> Apart from the 2008 boom/crash, owning a house has been a great way for the middle class to become asset millionaires. I knew someone in London who was routinely out-earned by the asset appreciation on their own house.

there are certainly some hot real estate markets where houses appreciate a huge amount over a short period of time. in hindsight, it looks like a no-brainer to purchase a house in these areas. on the flip side, maybe someone builds a huge apartment complex on your street right before you wanted to sell and the value plummets. if you look at the whole american housing market though, there is a ton of variance but in the long term it seems to barely outpace inflation. [0] once you factor in maintenance and property tax, it doesn't really look like a good investment vehicle. imo, buying a house is best looked at as an alternative way to pay for housing which may or may not be superior to renting.

> Besides, inflation has rather moved the bar for "millionaire" to every middle class couple with a house and two retirement funds..

for sure, a million dollars just isn't that much anymore. if you follow the 4% rule, it gives you about $40k to spend every year. which is basically what it costs me to live in a studio in a relatively nice part of town as a single twenty-something.

[0] https://static01.nyt.com/images/2006/08/26/weekinreview/27le...

[qes]

I'm not in a particularly hot real estate market - decidedly average.

It was abundantly clear when we bought that our location would not have a large apartment building built next to it - you can at least to some degree select for factors like that.

With all costs considered, we lived in a 2000 sq ft home with attached 2+ car, large shed, biggest yard on the block, etc. for a little bit less than it would've cost us to stay in our previous small 2 bedroom apartment in a equivalent enough location, assuming even that the rent remained the same for the past 10 years.

And on top of it we're walking away with $100,000 in equity. That is accounted for in the costs - but I'm not so sure that I would've actually saved that $100k if it hadn't been getting stuck away in the property value all along.

Anecdotal, of course, but it seemed like a no brainer at the time and in fact turned out to be such. It's not for no reason that home ownership is widely recommended as a good financial move.

[WalterBright]

> inflation

Indeed. Hoarding cash is for fools. I'm always bemused by the claims that wealthy people hoard cash.

[Cthulhu_]

But they do; sure, they spend heaps on shit like houses and cars and parties and vacations or whatever other hobbies they have, but most of their money is in their companies, stocks, stock options, tax havens, etc. At some point they reach a critical mass where no matter how much they splurge, they will never see their wealth decline. At best the companies / stocks they own will lose some value, but they will NEVER feel that in their wallet.

And some will set up a charity, but people like Bill Gates have never spent a significant portion of their wealth on that. Again though, that may be a logistical problem - they can't spend money fast enough whilst not splurging it.

Of course, the solution is simple; have the companies pay their staff better. Or give the staff stocks themselves, to be force-bought by the employer when they leave / get fired, and have it pay out dividends monthly to stipend their base income. This gives the employees representation in the board of directors as well, which is much needed in the modern capitalist system.

[NovemberWhiskey]

>but most of their money is in their companies, stocks, stock options, tax havens, etc.

That is not "hoarding cash" - keeping your net worth under the mattress or in a savings account is hoarding cash. Perhaps, at the margin, a money market account.

[newen]

But when people colloquially say that wealth people are hoarding cash, they mean what the comment you're replying to is saying and not the keeping cash under the mattress thing. More commonly, people say hoarding wealth.

[Swannie]

"Hoarding cash" means exactly what it sounds like - people being overly attached to cash in the safe/under the mattress/in "high interest" savings accounts.

This has been its use for a long time in any publication talking about money.

I know when you say "hoard wealth" you really mean not spend their wealth, because I'm not really sure how you "hoard wealth", as being wealthy basically means you've got stores of valuable assets... or a hoard if you will.

The two phrases are definitely not used interchangeably.

[WalterBright]

> Apart from the 2008 boom/crash

Only if you decided to sell then. If you did nothing, you'd have been fine.

[Melting_Harps]

> Sure it does. I've seen lower middle class people become millionaires that way. Of course, one needs the discipline to not succumb to spending it on a car/house/divorce, and the intestinal fortitude to not panic sell when the market tanks.

I think he was referring to the adrenaline rush, not the potential to make life changing amounts of money playing the long game, which clearly doesn't yield the same 'rush' he was referring to but is none-the-less an effective strategy.

I'm an unabashed adrenaline junkie: I've been in martial arts, school sports, motorsports, I did regular public speaking engagements for my startup and in academic-based oratory before that, and spent time in high end Kitchens... but with that said, to this day I will never understand the mediocre adrenaline 'hit' you get from gambling. It's really low level stuff to me, like lower than lifting weights or running a mile, something I did regularly at the gym after getting beat up working an 11 hour shift of a busy Dinner service.

I used to play $10 buy-in tourneys of Texas-Hold'em (forced into is more like it) hosted in the living room next to my bedroom when I was in my late teens/early 20s in Motorsports and I often got so bored, even when I won, that I failed to stay in if it went longer than an hour and often asked to take a cut on my pot/payout and forfeit to just get some sleep as I had school and work in the morning.

By contrast my professional driver friends/roommates were up until 5am and one of them played online for high stakes, the other played the stock market on the side and said it felt like the same 'rush,' as a day at the track but I could never relate to either of them as a track day was way more intense for me.

Flash forward to my Bitcoin days and after the initiation you get from from a couple of years in that space with such absurd volatility and all that the drama that follows it is such that nothing really even compares to it anymore, and I wasn't even a day trader, I'm merely an early(ish) adopter so none of this makes any sense to me at all.

What I do know is that this was done for gamblers [1] after COVID and is slowly becoming the norm in legal states that have re-opened due to the demand these, quite frankly addicts, create for the Casino Industry.

I wonder if something like Neuralink could help mitigate these diseases, as it all seems to stem from a neurological/neurotransmitter stimulation/feedback loop. I'm less concerned with the Matrix-style downloading/AI integration and more focused on what it could do for people with severe Depression, Alzheimer's, Parkinson's, and ALS.

1: https://www.highstakesdb.com/10328-covid-19-friendly-blackja...

[WalterBright]

I don't get a rush from gambling, because I know the math and know I am doomed to lose.

Stocks, on the other hand, have an upward bias. Of course, there could be events like losing a war where your portfolio will be vaporized, but in such cases you're going to lose anyway, so there's no point in worrying about such catastrophes.

[abduhl]

Alternatively, you don't get a rush from gambling because you have a lack of imagination on how you can beat "the math" and so have never gotten the rush from your plan working out (at least in your small sample size and from your perspective).

[WalterBright]

> you have a lack of imagination on how you can beat "the math"

I.e. I don't invest in ignorant fantasies.

I recall going to Lake Tahoe once. Buses would pull up to the casinos, disgorging mobs of silver-haired people rushing into the casinos to spend the day losing money.

It's sad.

[orojackson]

Or taking a different view that concurs with yours: investing in index funds or broad ETFs lets me match or beat most long-term investors with nearly zero effort. There's no need for me to waste my time reading "financial news" or developing super fancy HFT algorithms like some posters here have done. I just need to buy those index funds at my desired asset allocation and I'm good to go. Repeat until retirement. Very simple.

Granted, I do complicate things a little by insisting that I never sell anything I buy, not even for rebalancing, until retirement (otherwise I wouldn't be buying and holding in my eyes). However, I get around that by constantly rebalancing with new money [1].

Honestly, I find it rather jarring that as someone who usually frequents /r/personalfinance and Bogleheads, I see lots of investing suggestions on HN that do not involve indexing.

[1]: http://optimalrebalancing.tk/

[WalterBright]

I never really understood the "rebalancing" thing. It requires selling your winners. One thing about winners - they tend to keep winning!

Some people call it "locking in your gains". I call it "minimizing your returns".

[leetcrew]

it's not like riding a motorcycle, but buying close-to-expiry options can be sort of like trading bitcoin back in the day. the addition of time pressure makes it a little more interesting. pretty fun when you see your contract jump from a total loss to a 600% gain on the day of expiry.