The Democrat Thread

[Jenksismyhero]

Yes it does...but it does not expand at such a rate to substantially outpace inflation + management fees unless you get very lucky with your investments.

 

I think you're overstating it. If people the last 60 years weren't making money on their investments, they wouldn't invest. But people do, and they make money. Whether or not it's enough money, well, that goes back to the "we need to give people paid cell phone because they are necessities in today's society" argument.

[StrangeSox]

We've been running this 401k/IRA primary retirement source for one generation who's just starting to retire now. It doesn't appear that those who have been investing are making enough money on their investments. And many people simply don't make very much, so even if they are contributing 5% of their tight budget, it won't be all that much in the end.

[Jenksismyhero]

There were thousands of generations of evolution to develop abilities to hunt and gather, though. That doesn't apply to financial investing, with it's incredibly complex and numeric-centric nature and the need to assess risk and results years and decades into the future. That's not something humans are particularly well adapted to naturally.

 

Currency and trade and dealing with money isn't a new concept. It's been around for thousands of years. Being responsible with that money (personal finance) is, at this point, a basic skill necessary to live in this society.

 

I don't see any evidence that long-term successful financial investment is a skill that's readily available to a bare majority of the people or even a substantial minority. We've been doing this for about one generation now, and it's turning out very poorly. Well, not for wall street, but for most others.

 

I feel like you're equating "investment" with day trading, which takes a great deal of knowledge, insider information, and luck. Safe investments don't take more than reading comprehension and trust in whatever institution you're investing in/with. How is that any different than buying a 20k car that may or may not be a POS?

 

 

No, it doesn't come down to that. It comes down to "there's no good reason to make everyone's retirement hinge on their ability to succeed at financial investing, especially since it's a new phenomenon and early results aren't very promising."

 

Again, it doesn't. You have SS, Medicare, Medicaid, Denny's Senior Discount, etc. Investing is only a part of it.

[Jenksismyhero]

I'm not going to trust 'common sense' that just happens to support the conclusions you've already come to.

 

So you don't think that there's a segment of our population called "suckers" that buy into crap like subprime loans, bad auto loans, overpriced goods at specific stores (instead of shopping at other places), etc etc.?

[iamshack]

I love that SS is claiming this is impossible for the average person to figure out, meanwhile Balta is claiming he understood the housing bubble better than the Wall Street folks

[Balta1701]

So you don't think that there's a segment of our population called "suckers" that buy into crap like subprime loans, bad auto loans, overpriced goods at specific stores (instead of shopping at other places), etc etc.?

They're called "Wall Street executives".

 

[StrangeSox]

So you don't think that there's a segment of our population called "suckers" that buy into crap like subprime loans, bad auto loans, overpriced goods at specific stores (instead of shopping at other places), etc etc.?

 

Sure there's gullible people. Why should we expose their retirement finances to the hucksters as well? How much money has the financial sector "suckered" people out of?

[Balta1701]

I love that SS is claiming this is impossible for the average person to figure out, meanwhile Balta is claiming he understood the housing bubble better than the Wall Street folks

And I haven't a clue if I've done the right thing with my 401k/retirement plan. I've put away the money to gain the matching options, but I haven't a clue if I've picked reasonable investment vehicles or not.

[illinilaw08]

From that article, exactly what i'm talking about:

 

 

 

You don't think this stuff - lack of good personal finance skills and ability to think long term - feeds into the other problems listed in that article?

 

Of course it is. But there are two issues that feed off of that:

 

1) How do you get people to think long term? How do you get people motivated to seek out investment vehicles when it's 30 years down the road (especially if not employer sponsored)? I have long advocated personal finance classes as a high school and college pre-req.

 

2) What about people that just don't make enough to put money aside for retirement? SS and Balta are correct that at $50k with a family of 4, even if you are saving for retirement, you aren't saving enough. At some point, those people will be out of the workforce, either due to being too expensive or due to health issues.

[iamshack]

And I haven't a clue if I've done the right thing with my 401k/retirement plan. I've put away the money to gain the matching options, but I haven't a clue if I've picked reasonable investment vehicles or not.

Depends on what you define reasonable as.

 

By it's very nature, investment involves risk. Otherwise, it would be called saving.

 

No one can know exactly how things will turn out, but most folks with 401(k) accounts have the ability to watch the market daily, buy and sell their funds within a business day of making that decision, read reports and gauge risk tolerances, etc. It isn't as if you just put your money in there and then it's stuck there for all eternity.

 

These websites offer quite a bit of research tools to educate you on what risk/reward tolerances you are comfortable with and how to act on those tolerances.

[StrangeSox]

Currency and trade and dealing with money isn't a new concept. It's been around for thousands of years. Being responsible with that money (personal finance) is, at this point, a basic skill necessary to live in this society.

 

The way currency is used these days is a somewhat recent phenomenon, but yes, that's a necessary skill.

 

"dealing with money" isn't the same as active participation in finance capitalism, though, and "being responsible" with your monthly or yearly budget isn't the same thing as successful investing.

 

"Being good at investing" is, right now, a skill that's necessary to have a decent retirement. I'm challenging the validity of that structure, and repeating back to me "that's how it works!" isn't really an answer.

 

 

I feel like you're equating "investment" with day trading, which takes a great deal of knowledge, insider information, and luck. Safe investments don't take more than reading comprehension and trust in whatever institution you're investing in/with. How is that any different than buying a 20k car that may or may not be a POS?

 

A $20k car comes with a lemon law and a warantee. An investment explicitly has no guarantees of the safety of your money or any future gains.

 

Successfully investing for your retirement 20-40 years from know requires more than "reading comprehension" and trusting whatever institution you're investing in. You need to understand what the different options are, what they mean, what the information in a prospectus is telling you and how and why you might want to structure your investments. Unless you're will to pay substantial financial adviser fees, which of course is going to make it that much harder to have a decent retirement account at the end and you're relying on that person to do a decent job.

 

If you're talking super-safe 'investments' like essentially-zero-growth savings or MM funds, then you're not going to have much money at the end anyway unless you're a high wage earner socking away a substantial %.

 

Again, it doesn't. You have SS, Medicare, Medicaid, Denny's Senior Discount, etc. Investing is only a part of it.

 

A life supported solely by SS income is a very, very meager life. I believe we can do better than that as a society.

 

[StrangeSox]

Depends on what you define reasonable as.

 

By it's very nature, investment involves risk. Otherwise, it would be called saving.

 

No one can know exactly how things will turn out, but most folks with 401(k) accounts have the ability to watch the market daily, buy and sell their funds within a business day of making that decision, read reports and gauge risk tolerances, etc. It isn't as if you just put your money in there and then it's stuck there for all eternity.

 

These websites offer quite a bit of research tools to educate you on what risk/reward tolerances you are comfortable with and how to act on those tolerances.

 

So why is it a good idea to essentially require everyone to become well-versed in financial investments if they want a chance at a decent retirement instead of just having a system that provides a decent retirement after decades of work but still leaves open the option for anyone who wants to to invest?

[iamshack]

Of course it is. But there are two issues that feed off of that:

 

1) How do you get people to think long term? How do you get people motivated to seek out investment vehicles when it's 30 years down the road (especially if not employer sponsored)? I have long advocated personal finance classes as a high school and college pre-req.

 

2) What about people that just don't make enough to put money aside for retirement? SS and Balta are correct that at $50k with a family of 4, even if you are saving for retirement, you aren't saving enough. At some point, those people will be out of the workforce, either due to being too expensive or due to health issues.

Honestly, this has to do with being responsible about what you can afford, as well. And this goes back to previous discussions, as Jenks said...maybe if resources are not as plentiful as they once were, we need to scale back on things. Maybe if you make $50k a year as a household, you shouldn't have two children. Maybe you should carve out a more modest existence for yourself if you make a modest paycheck.

 

I understand the concerns here, and I agree some things need to change. I just disagree that we continue to throw all personal responsibility out the window and treat human beings with all kinds of access to information as if they are imbeciles.

[StrangeSox]

2) What about people that just don't make enough to put money aside for retirement? SS and Balta are correct that at $50k with a family of 4, even if you are saving for retirement, you aren't saving enough. At some point, those people will be out of the workforce, either due to being too expensive or due to health issues.

 

$50k is also the median. Many make less than that.

[Balta1701]

Depends on what you define reasonable as.

 

By it's very nature, investment involves risk. Otherwise, it would be called saving.

 

No one can know exactly how things will turn out, but most folks with 401(k) accounts have the ability to watch the market daily, buy and sell their funds within a business day of making that decision, read reports and gauge risk tolerances, etc. It isn't as if you just put your money in there and then it's stuck there for all eternity.

 

These websites offer quite a bit of research tools to educate you on what risk/reward tolerances you are comfortable with and how to act on those tolerances.

And now we're at the real issue...if I want to do this effectively, at the level required for success, I need to be in a position to respond to new events in a matter of days.

 

It literally needs to be a part time job, based on your description here.

 

If a person doesn't do that much, then they're doing what I am, putting it into a higher-risk vehicle figuring I'm only 30 and hoping that I understood the fee levels well enough to have figured out where I put it.

 

I'm simply never going to put that much time into managing a retirement account. And I figure...if that's the level of commitment it takes, the level of knowledge it takes, then basically, 99% of the population is going to be screwed.

[iamshack]

So why is it a good idea to essentially require everyone to become well-versed in financial investments if they want a chance at a decent retirement instead of just having a system that provides a decent retirement after decades of work but still leaves open the option for anyone who wants to to invest?

Because maybe I want more control over where my money goes? Maybe I would rather have the ability to use the considerable education I have paid for (and continue to pay for) to increase my money over time rather than allow the government to do so?

[Balta1701]

Because maybe I want more control over where my money goes? Maybe I would rather have the ability to use the considerable education I have paid for (and continue to pay for) to increase my money over time rather than allow the government to do so?

When has anyone attempted to stop you from doing so? If we eliminated the 401k entirely tomorrow, you'd still be able to do that.

[iamshack]

And now we're at the real issue...if I want to do this effectively, at the level required for success, I need to be in a position to respond to new events in a matter of days.

 

It literally needs to be a part time job, based on your description here.

 

If a person doesn't do that much, then they're doing what I am, putting it into a higher-risk vehicle figuring I'm only 30 and hoping that I understood the fee levels well enough to have figured out where I put it.

 

I'm simply never going to put that much time into managing a retirement account. And I figure...if that's the level of commitment it takes, the level of knowledge it takes, then basically, 99% of the population is going to be screwed.

It is not a part-time job. It takes a few minutes a week, if that. Most of the things that affect the stock market and other markets are all over the news and are almost impossible to escape.

 

If you're not willing to spend 10 minutes a week on your future financial health, when I know you spend hours a week posting on Soxtalk, then I honestly have no sympathy for you.

[StrangeSox]

So it's a good idea because you have the prerequisite knowledge and income that most don't have to make the most of investment opportunities? I'm not sure that's a good social policy.

[StrangeSox]

When has anyone attempted to stop you from doing so? If we eliminated the 401k entirely tomorrow, you'd still be able to do that.

 

If payroll taxes were increased to pay for larger benefits, he would have a few percentage less to invest.

[StrangeSox]

It is not a part-time job. It takes a few minutes a week, if that. Most of the things that affect the stock market and other markets are all over the news and are almost impossible to escape.

 

If you're not willing to spend 10 minutes a week on your future financial health, when I know you spend hours a week posting on Soxtalk, then I honestly have no sympathy for you.

 

You are literally involved in a trading market everyday, right? Doesn't that give you a decent advantage in understanding the risks and information associated with investment that a vast majority of people don't have?

[iamshack]

When has anyone attempted to stop you from doing so? If we eliminated the 401k entirely tomorrow, you'd still be able to do that.

If more of my money was being taken due to an increased social security program, than the percentage of my earnings dedicated to my own investments would be decreased.

[Balta1701]

It is not a part-time job. It takes a few minutes a week, if that. Most of the things that affect the stock market and other markets are all over the news and are almost impossible to escape.

 

If you're not willing to spend 10 minutes a week on your future financial health, when I know you spend hours a week posting on Soxtalk, then I honestly have no sympathy for you.

A few minutes a week? I've spent easily the equivalent of that trying to figure out the gobblygook I receive from my retirement plans and I still feel completely incompetent afterwards.

[Jake]

It does not take some crazy amount of change to have a society that both rewards smart investors and savers AND protects those with only adequate competency or those that lack the means.

[Balta1701]

If more of my money was being taken due to an increased social security program, than the percentage of my earnings dedicated to my own investments would be decreased.

So why does my income need to go to subsidizing your 401K plan?