[PKop]

Part of the discussion should be, can the 'masses' "Generate income not based on hours worked", "Minimize taxes", and "Leverage time and debt to become wealthy like the personal-finance gurus themselves did?"... in other words, is becoming wealthy possible?

It is worth being honest about the false hope these authors are peddling about "becoming wealthy", instead of what they are really advising which is, to become above average / not poor. It is ultimately good advice for most while the crux of the issue is pretending everyone in America is a millionaire waiting to happen.

I would add that much of the sensible advice provided by these types of authors is not taught in public schools as a basic necessity of general education.

[californical]

Definitely not everyone, but most people in America can become millionaires (inflation adjusted) within their lifetimes.

Saving $100 per week should be possible for most households today. $100 per week over 40 years with an 8% return is $1.3m.

If you think the market will be slower in the future, or higher inflation, or whatever, use the absurdly conservative 6% and it’ll take 50 years instead of 40.

Add in the possibility of home ownership giving an additional asset to add to the net worth over the investing lifetime, giving an extra few hundred thousand… and in forty years from now, we’re well over $1m in assets, easy.

Getting $100/week might seem daunting, but that’s less than 10% of the median household income — totally within reach of a majority of people with some small changes.

[carnitine]

The problem isn’t that inflation will erode the return percentage, but that it will erode the value. $1.3m in 40 years really doesn’t sound like that much money.

[californical]

It’s enough money to pay for perpetual retirement — it would provide an inflation-adjusted $50k per year indefinitely, which is what that median-earner was making. So $1.3m is enough to never need to work, and that doesn’t include social security.

Throw in that extra $15-20k per year from SS and you’re living a pretty wealthy life (especially if you’ve managed to pay off a house during your life, so no mortgage. Otherwise just put $300k of the 1.3 to pay cash for a house. Having no mortgage makes your money go even further, and you’ll be rolling in money.)

[nly]

> Saving $100 per week should be possible for most households today. $100 per week over 40 years with an 8% return is $1.3m.

A 8% annualized above-inflation return over the next 40 years is a big ask in today's low-growth world.

[giantg2]

I think an even deeper question is, is it possible for the masses to get rich and what would the macroeconomics look like? I would think competition and resource scarcity would prevent this.

[californical]

It’s not scientific, but MMM has an article on this that was insightful in how society could change for the better as a result:

https://www.mrmoneymustache.com/2012/04/09/what-if-everyone-...

[giantg2]

Did I miss it or did they not cover the effects of the easy money they talk about for loans? If the availability of the money is increased, usually you will get much lower returns. Not to mention, much of the market is built on speculation and this increased money is not actually going to companies on the stock market (because most of us don't have access to private equity).

I do understand and agree with the part about increased productivity (decreased scarcity and cost) raising quality of life. I just don't see that applying to everyone equally (companies will keep some of that cost decrease as profit and return some to investors but not everyone can afford to be investors). I think there are a lot of finer points the article glosses over, especially around inefficiencies. And of course this is far from a settled topic as there are many economists debating this sort of thing.

[MattGaiser]

I would argue that middle class today is a lot richer than 50 years ago. Larger average homes. More cars. More trips. Better healthcare. Food is cheaper as a percentage of income.

[giantg2]

The middle class has also shrunk, right?

Those advances are adjustments in quality of living driven by efficiencies in manufacturing, etc. This would be more on the resource scarcity side and less on the rich/income side. I would exclude food as an indicator since that is heavily subsidized. Healthcare has also increased substantially as a percentage of income.

[PeterisP]

The global middle class has grown but the USA middle class has shrunk due to some rebalancing/equalization with other countries.

[giantg2]

Yeah, that rebalancing and equalizing was what I was mostly the effect I was wondering about or getting at.

[Nasrudith]

There is also a distinction I have seen ignored - everybody (any individual) vs everybody (all individuals).

Take a group of randomly selected non-rich people 1 to N and assume you have a "dart board" of varied strategies and their return in this iteration. Take the normal distribution over time and the outliers at the right end of the bell curve you will find that some will become rich in the proper flux.

You can't all just throw them at the same spot and get an absurd economic yield. It would in the end regress to both a standard distribution and the mean.

Competition mostly diminishes the returns in a given investment faster. The price differentials close through the generation of profit and fulfillment of demand. You are being paid to be a servant of entropy lowering things to their base state. This isn't a bad thing but one specific plan will not last forever.

Resource scarcity is weirdly peripheral to all of it and how you define rich in absolutes vs relative.

[b112]

If the masses got rich, inflation would set a new baseline. In short, if everyone is rich, no one is ... it's just normal wealth.

[cma]

But due to diminishing marginal utility of wealth, a more flat baseline like this scenario would still make everyone far more rich on average.

[giantg2]

Exactly what I was getting at.

[b112]

Yes, but laying it out can help the point.

[leetcrew]

it depends what counts as "rich". I can imagine a world where everyone has a structurally sound shelter, maybe even a large one. I can't imagine a world where everyone lives in a penthouse apartment overlooking central park (without killing billions of people first).

[sokoloff]

While not everyone’s household has a practical probability to become a millionaire household, I think a quarter of them could without inordinate difficulty (around 10% already have and some of the 90% are well on their way, but are younger households and so have time and growth ahead of them)