The Democrat Thread

[StrangeSox]

Those people should have been doing what SS stated, and moving into cash or bonds, AKA "money holdings". You don't stay in the stock market when you're nearing retirement. What messed those people up was greed. They saw their portfolios increasing in value, so they stayed in the market DESPITE being near retirement, instead of moving their money into cash or bonds. I'm no fan of cash or bonds for investing purposes, but I am for holding purposes, and when you're set to retire, you want to start holding value, not increasing it with risk.

I hear there were some great AAA-rated securities they could have moved to!

 

Someone could have been 50 in 2000 and not expecting to retire for 15 years. Their entire pre-2000 S&P Index money will have seen zero growth. Even the automatic "target retirement" funds that are supposed to adjust for you have performed poorly on top of their expensive management fees.

[southsider2k5]

I don't see where the gamble is, and you've yet to show anyone.

 

Sure, and as long as your numbers come up in the lottery, you'll be fine.

[StrangeSox]

Most of it is lack of education on how to invest. People simply don't know, because most simply don't care. They believe in what I call the Dr. Evil method of life planning. They put their money into highly elaborate schemes and simply assume "everything's going to work out in their favor". Yet they'll do research for weeks when buying a new f***ing television.

 

Or they don't have money to invest in the first place.

 

I dunno, regardless of the "whys," this idea of shifting people (not everyone!) to defined-contribution 401k's hasn't really worked. There's going to be a huge wave of elderly poverty coming.

[southsider2k5]

I hear there were some great AAA-rated securities they could have moved to!

 

Someone could have been 50 in 2000 and not expecting to retire for 15 years. Their entire pre-2000 S&P Index money will have seen zero growth. Even the automatic "target retirement" funds that are supposed to adjust for you have performed poorly on top of their expensive management fees.

 

While their bond funds would have gone crazy.

[southsider2k5]

Or they don't have money to invest in the first place.

 

I dunno, regardless of the "whys," this idea of shifting people (not everyone!) to defined-contribution 401k's hasn't really worked. There's going to be a huge wave of elderly poverty coming.

 

Mostly because they have money for everything but their retirements.

[Y2HH]

I hear there were some great AAA-rated securities they could have moved to!

 

Someone could have been 50 in 2000 and not expecting to retire for 15 years. Their entire pre-2000 S&P Index money will have seen zero growth. Even the automatic "target retirement" funds that are supposed to adjust for you have performed poorly on top of their expensive management fees.

 

And if they had held it and kept investing in it they'd be MORE than fine right now...13 years later. Giving them 2 more years until retirement. And right now, they should be moving out of the S&P and into cash, or bonds.

 

The problem with the market is, people can't handle the swings. What happened with these people is in 2000, when they had 15 years left before retirement, they sold their 401k at it's low, stopped investing in it, and here we are...stagnant growth. Had they simply stayed the course, they'd not only have every dime of their original investment back, but all the compounded investment they added too it over time would be worth 5X what they paid for it along the way -- correcting that, that's not right, my mistake. I meant to say that the value would have increased 5 fold had they stayed the course vs the low point it hit during the crash.

Edited April 25, 2013 by Y2HH

[Y2HH]

Sure, and as long as your numbers come up in the lottery, you'll be fine.

 

Right, because investing in the S&P500 is the same as winning the lottery.

[StrangeSox]

And if they had held it and kept investing in it they'd be MORE than fine right now...13 years later. Giving them 2 more years until retirement. And right now, they should be moving out of the S&P and into cash, or bonds.

 

Or they'd have lost their job 3 years ago at the age of 60, been pretty much unemployable since then and drained their retirement accounts just paying the bills.

[StrangeSox]

The problem with the market is, people can't handle the swings. What happened with these people is in 2000, when they had 15 years left before retirement, they sold their 401k at it's low, stopped investing in it, and here we are...stagnant growth. Had they simply stayed the course, they'd not only have every dime of their original investment back, but all the compounded investment they added too it over time would be worth 5X what they paid for it along the way.

 

If people really can't handle investment swings and 40 year financial predictions, maybe we shouldn't have a retirement system based around the assumption that they can?

 

[Y2HH]

Or they'd have lost their job 3 years ago at the age of 60, been pretty much unemployable since then and drained their retirement accounts just paying the bills.

 

They could always develop cancer too.

 

Why all the doomsday scenarios? How come everyone has to lose their job? You do realize far more people are employed than not, right?

[StrangeSox]

They could always develop cancer too.

 

Why all the doomsday scenarios? How come everyone has to lose their job? You do realize far more people are employed than not, right?

Well that one is more anecdotal because it's what has happened to my wife's uncle, but he's far from the only one.

[southsider2k5]

And if they had held it and kept investing in it they'd be MORE than fine right now...13 years later. Giving them 2 more years until retirement. And right now, they should be moving out of the S&P and into cash, or bonds.

 

The problem with the market is, people can't handle the swings. What happened with these people is in 2000, when they had 15 years left before retirement, they sold their 401k at it's low, stopped investing in it, and here we are...stagnant growth. Had they simply stayed the course, they'd not only have every dime of their original investment back, but all the compounded investment they added too it over time would be worth 5X what they paid for it along the way.

 

5X's? WTF? The SP bottomed out at about 700. What kind of math are you pushing here? You are also leaving out the inflationary differences over those 15 years, which means your original investment isn't worth what you paid for it anymore.

[Y2HH]

If people really can't handle investment swings and 40 year financial predictions, maybe we shouldn't have a retirement system based around the assumption that they can?

 

Perhaps we should have one like Greece, or Spain, or Portugal?

 

There are no easy answers, other than to educate yourself and plan for the future. I know, that's hard. Nobody wants to do that. Meanwhile, spend 2 weeks researching your next smartphone purchase, right? But f*** researching your 401k or retirement.

 

Some people have bad luck, and I get that. People bankrupted by medical bills, or health issues, etc. We aren't talking about that. What we're talking about here is 100% self inflicted. They always have time to research granite countertops, or televisions, or cars they're going to buy, but they never bother researching their financial future. And somehow, that's my fault? Somehow, that's their companies fault?

 

I don't think so.

 

That's their own fault.

[Y2HH]

5X's? WTF? The SP bottomed out at about 700. What kind of math are you pushing here? You are also leaving out the inflationary differences over those 15 years, which means your original investment isn't worth what you paid for it anymore.

 

When the S&P dropped by half, shares in S&P index funds also dropped by half, if not more. For example, my fund is selling shares at 102$ right now. Upon the collapse, and all the way back up, I was buying shares at a > 50% discount, then a 40% discount, etc...stockpiling the number. A few years ago I was able to buy 2 shares for what one costs now. Compound that over the years. In 2008, when the market collapsed my 401k was worth about 15k. It's worth almost 80k now.

 

That's > 5X.

[StrangeSox]

Perhaps we should have one like Greece, or Spain, or Portugal?

 

There are no easy answers, other than to educate yourself and plan for the future. I know, that's hard. Nobody wants to do that. Meanwhile, spend 2 weeks researching your next smartphone purchase, right? But f*** researching your 401k or retirement.

 

Some people have bad luck, and I get that. People bankrupted by medical bills, or health issues, etc. We aren't talking about that. What we're talking about here is 100% self inflicted. They always have time to research granite countertops, or televisions, or cars they're going to buy, but they never bother researching their financial future. And somehow, that's my fault? Somehow, that's their companies fault?

 

I don't think so.

 

That's their own fault.

You seem to be speaking mostly about middle-class-and-up professionals, not the majority of working Americans here who likely don't even have employer-sponsored retirement benefits let alone 5-10% of their weekly paycheck to put aside for 30-40 years from now because they've gotta figure out how to cover the bills coming next week.

[southsider2k5]

When the S&P dropped by half, shares in S&P index funds also dropped by half, if not more. For example, my fund is selling shares at 102$ right now. Upon the collapse, and all the way back up, I was buying shares at a > 50% discount, then a 40% discount, etc...stockpiling the number. A few years ago I was able to buy 2 shares for what one costs now. Compound that over the years. In 2008, when the market collapsed my 401k was worth about 15k. It's worth almost 80k now.

 

That's > 5X.

 

[Y2HH]

You seem to be speaking mostly about middle-class-and-up professionals, not the majority of working Americans here who likely don't even have employer-sponsored retirement benefits let alone 5-10% of their weekly paycheck to put aside for 30-40 years from now because they've gotta figure out how to cover the bills coming next week.

 

It's funny, but you know what I've noticed about most people, it doesn't matter what they make, they tend to spend more than that.

 

Friends of mine take home 120k between them, and are up the ceiling in debt, despite having a mortgage that's half of what mine is. Meanwhile, I make far less than them, live on a single income, support a family, and still somehow have money to save! I know, I must be doing some sort of freaky magic, right?

 

Most of that, across the board, is self inflicted.

 

Let's examine what these people are spending their money on and I bet we can solve the problem, even if they're making 50k. There money is going somewhere, and believe me, it's NOT all going to living expenses. I bet a LOT of it's being wasted.

[StrangeSox]

When the S&P dropped by half, shares in S&P index funds also dropped by half, if not more. For example, my fund is selling shares at 102$ right now. Upon the collapse, and all the way back up, I was buying shares at a > 50% discount, then a 40% discount, etc...stockpiling the number. A few years ago I was able to buy 2 shares for what one costs now. Compound that over the years. In 2008, when the market collapsed my 401k was worth about 15k. It's worth almost 80k now.

 

That's > 5X.

 

that's not "5X what they paid for it," though.

[Y2HH]

 

Great comeback, failure.

[Y2HH]

that's not "5X what they paid for it," though.

 

It's 5x it's former value. Of couse it's not 5x what they paid for it. That's f***ing retarded.

[southsider2k5]

Great comeback, failure.

 

Counting your investment as a compounding investment deserves nothing better. I'm walking away from this, because this is just awful. This coming from someone who will argue about just about anything.

[Y2HH]

Counting your investment as a compounding investment deserves nothing better. I'm walking away from this, because this is just awful. This coming from someone who will argue about just about anything.

 

I never said it quintupled in value without adding new money, but it DID with adding money and by the market value increasing along the way. That's how investments work. You don't simply buy into a 401k once, and hope it increases in value. That's moronic, and it's what you're basically trying to say. You invest in it, over time, and that's how you end up with a retirement fund. You buy shares at lows, you buy shares at highs, etc...and over time, the value rises. What you don't do is buy on the way up, and sell on the way down, which is what most people seem to have done.

 

If they had just left it alone, and kept investing, they'd have it all back and then some. Whether you want to admit this or not is irrelevant. But it's true. I could have panicked and sold my 15,000$ 401k in 2008 and had nothing right now. Or I could have done what I did, stayed the course, continued investing and 5 years later have 5X that value.

Edited April 25, 2013 by Y2HH

[StrangeSox]

It's funny, but you know what I've noticed about most people, it doesn't matter what they make, they tend to spend more than that.

 

Friends of mine take home 120k between them, and are up the ceiling in debt, despite having a mortgage that's half of what mine is. Meanwhile, I make far less than them, live on a single income, support a family, and still somehow have money to save! I know, I must be doing some sort of freaky magic, right?

 

Most of that, across the board, is self inflicted.

 

Let's examine what these people are spending their money on and I bet we can solve the problem, even if they're making 50k. There money is going somewhere, and believe me, it's NOT all going to living expenses. I bet a LOT of it's being wasted.

Yeah probably not very accurate to compare people making more than twice the median household income to people making the median or the 50% of people that are making less.

 

Even if we go down the "personal responsibility" narrative path, we still end up at "holy s*** there's an awful lot of people at or near retirement with little or no retirement assets, hope they can survive on $15k/year SS benefits that we also seem desperate to cut!" In engineering, a system that's designed well mechanically and electrically but keeps failing because human factors weren't taken into account is considered a bad system, even if the errors are the 'fault' of the operators and not of the machine itself.

[Y2HH]

Yeah probably not very accurate to compare people making more than twice the median household income to people making the median or the 50% of people that are making less.

 

Even if we go down the "personal responsibility" narrative path, we still end up at "holy s*** there's an awful lot of people at or near retirement with little or no retirement assets, hope they can survive on $15k/year SS benefits that we also seem desperate to cut!" In engineering, a system that's designed well mechanically and electrically but keeps failing because human factors weren't taken into account is considered a bad system, even if the errors are the 'fault' of the operators and not of the machine itself.

 

So, your suggestion to solve this is what? To complain?

[StrangeSox]

It's 5x it's former value. Of couse it's not 5x what they paid for it. That's f***ing retarded.

In your 8:38 post you literally said "5x what they paid for it," I think that's what ss2k5 is reacting to so strongly.