This type of investing isn't about day trading following the latest hype. It's about putting some surplus money to better use for when you need it in 10-20 years.
That's even worse, because the entire point of the stock market is supposed to be that investors choose where to put their money based on how the company is performing and what they're saying. I.e., you vote with your wallet, and the market therefore punishes bad behavior and rewards good behavior.
If everyone is passively investing, that no longer works. Then it's not even a market. We don't even know, for sure, if that works.
It's gambling and we're already there. Hardly anyone cares about what any company does when investing in it; all that matters is whether it grows and whether you can time a jump elsewhere before it drops.
Right but those wildly overvalued companies become that way because millions of passive investors just mindlessly dump their money into them.
If you use big index funds, you're the primary people contributing to Nvidia, Tesla, and openAI. You didn't start it, no, but you certainly propelled that ball forward like a bullet.
And, well, that's fine, because we cant expect anyone really to actively invest. The problem is we don't know if this works. This definitely has the potential to blow up. You have to realize that what we're doing here is undermining the stock market at a conceptual level.
There are people who don't invest? Do they just keep their retirement savings in cash? I imagine for most people either the government or their employer invests for them.
Most of my family and extended American family doesn’t really invest. I think probably 10% of us “believe” in the stock market. The rest sometimes buy houses (which I encourage because it’s better than nothing), but otherwise are planning on social security, pensions, and lump-sum savings to cover their retirement
Most of my family is farmers or missionaries, and I bet those groups are less likely than most to own stocks.
Also, 'owning stocks' vs 'investing' feels different to me. My brother will go all in on tesla for one year, and then pull out and just sit there until he has another somewhat-random impulse. Likewise, my dad used to put all his money into some index funds for the 30 days leading up to Christmas, because 'the government always makes the stocks go up during the holidays, to keep everybody happy'. They count as 'owning stocks' (at least sometimes), but I don't feel they count as 'investing'.
In short, yes, but my family is very cheap, so it is doable with sacrifice. I think I'm middle class (or maybe upper-middle?) now, but I think I'm the first generation that can say that. And even I rented closets, garages, and spaces behind TV's until about 4 years ago, lol.
I mean no offense, but your understanding of a median seems flawed. The median is the number/point that separates the upper half from the lower half - it is not what 50% has.
The math does add up. There is no contradiction in your parent’s post.
Incredible HN post. I'm hoping it's because you are from a country where people are generally well taken care of.
Yes, there are people who don't invest. Where do they keep their retirement savings? 40-50% of Americans, at least, simply have no retirement savings! Most people in America aren't earning enough to put away a meaningful amount for retirement. It's going to be grim as boomers and millennials hit retirement age and have to keep working.
> More than half of Americans are net debtors, with a negative net worth.
Median household net worth is around $193k, not negative. Maybe this is true on an individual basis because there a bunch of, say, young debtors and elderly parents who have transferred their positive assets living in households with working adults with more positive wealth than the youngsters and elders combined have net debt, but...
Your comments make me think you've never seen hardships in your life that weren't self-afflicted.
Life can be cruel even if you've made great plans and took all the precautions you could think of. Illnesses, accidents, the lack of a social net because your country was set up that way, crime, the list goes on.
I.... they are dealing with systemic poverty. Being poor is expensive. They absolutely know they need to save, but if the choice is "starve to death today but save for retirement OR don't die, but don't save for retirement" most people are going to choose the latter.
McDonald’s will not let you work 40 hours a week, or any consistent schedule at all. You will show up when they tell you to and that’s that. Same with grocery stores or most retail jobs.
Also you’re neglecting the cost of transportation (almost certainly a car, with gas and insurance), rent, and medical expenses.
Median rent value in Seattle is $2300/month if you are looking for a one bedroom, a little cheaper if you are looking at a studio. Minimum wage here is $21/hr. The first quartile for rent is $1600.
Assuming you work full time, you are making $3360 a month, less taxes.
That means that even if you get the bottom 25% of rents, over half your take home pay goes to rent. Then we need health care, food, taxes, transportation, clothing, etc.
If everyone was an "investor" it means they aren't blowing all their spare cash on goods and services. Demand drops and you need fewer people to work to provide said goods and services. It kinda balances out.