This is right but your implication is wrong. You get rich from working and index funds are a way to preserve and modestly increase that wealth. Boglehead thinking probably won't help people making minimum wage or whatever because if you invest almost nothing to begin with you'll get fairly little out. It also won't make you super-rich if that's what you want.
when your health is poor and corporate America has drained every ounce of life out of you
This sounds completely wrong. Working a salaried job in tech is one of the least stressful, lowest risk, and highest paying ways to earn money. It's easy mode (if you can get in the door). Hustling leveraged real estate or some other kind of "passive income" is much harder and riskier.
you cannot be serious?? have you ever met a healthy “salaried tech worker”?! I know a few but percentage-wise I’d say 98.48% are about as healthy as my 76-year old Mum. This has to be a joke, right?
I worked at a obline gambling/games company for 5 years. I think half of the people started a company while working there. Nobody worked 40 hours. Maybe 10,20 or so. Company was basically a automatic train with everybody having a party on it.
I got much healthier with my last job as salaried tech worker. 4x a week gym or running outside during lunch breaks, frequent early finish and off rock climbing. Once I started going to gym, all those colleagues obsessed with the projected image of professionalism said fuck it, and they started doing similar things. Now half of IT does something active during lunch breaks, finishing at same time but much happier and filled. It took just one guy who had the balls to not give a fuck that much. Just to clarify this is banking world and working on/next to core package of our bank, not some laid back low paid government job or similar.
If you dont like your current dev work, negotiate or move, its stupidly easy compared to any other engineering or sciences, anywhere in the world.
I’ve been following the bogleheads philosophy since I graduated college. I’ve done it while working normal jobs, pursuing startups, side projects, sabbaticals abroad and everything in between. I’ve had some luck with startups, but the majority of my savings has come from monthly contributions.
I’m now at a point where my investments in index funds kick off nearly enough to cover my expenses. It’s an incredible thing that I’m super proud of.
Your take here is reckless and I hope nobody takes it seriously. I’m not advocating for putting your life on hold to work a 9-5 just to save - but if you’re not sticking some cash into safe investment vehicles as you go then you’re just playing on hard mode.
You do you, man. But you haven’t replied to anyone asking your thoughts on alternatives and if total market index funds hit the ground we’ve got bigger fish to fry.
Is this disagreement really about different meanings of 'safe'?
I think most people would agree that we're in a bit of a weird time financially. It seems possible to me that total market index funds might go sideways for a while, and that we might, in fact, have bigger fish to fry as well.
On the other hand, if you've paid down your debts, and emergency fund is in good shape, and you still have extra cash, is there a better bet than a total market index fund?
how about something as simple as following what greatest investor that ever lived Warren Buffet does? Pick a few companies, do a finacial colonoscopy on them, learn their business inside out and then go all in. over 50% of his investments are in two companies (me too, just not same as his), over 75% in 6 companies…
no one gets rich by diversfying, it is just a fairy tale US workers are being fed once they start working with company-sponsored 401k’s and the like
well we're back to this infinite circle of crap at this point. Aside from random people, there are thousands of people whose entire career, well-being and life depends on portfolio performance, and close to 90% of them underperform a random portfolio. Why can't they just "copy Warren Buffett"? maybe it simply hasn't occurred to them yet?
I have a buddy that's a wealth advisor with a high net worth (100M+) wealth management firm. Wealth preservation -- and really diversification -- is all ultra-high net worth folks care about. They buy lots of index funds.
I'm not sure if this is some prosperity gospel silly-ness, but I think folks reading this deserve a disclaimer: Buffett's college mentor was Benjamin Graham -- the father of value investing, Gates mom was friends with Buffett and set up Bill's first contract with IBM, Zuckerburg's parents offered each of their children the opportunity to go to Harvard or open a McDonald's franchise. Six of the top 1000 richest people have the last name Walton. Failure -- as most of the world know's it -- never exists for most folks in the Forbes list. They were always going to be very very comfortable. Putting too much stock in their success is like watching Skii-Ball at Chuckie Cheese to learn bowling.
$100M is not ultra high net worth. and also absolutely no one here is talking about “wealth preservation.” what I was saying is that none of even those “ultra high” earners made their money diversifying.
once you are super rich surely you’ll set some money aside to make sure you stick around in high society. but no one - not a single soul has ever gotten rich that way.
The top 1000 richest people are probably not good examples for the rest of us. They're extreme outliers. Much like professional athletes few make it to the top 1000. The average Joe is not going to make it.
There will only ever be thousand people in the top 1000 richest people. There is no guide that can help you become one, you will have to displace one of them to get that title and you cannot displace them by copying them by the way so the argument that the advice doesn't match their behaviour is kind of useless because you want unique circumstances that nobody else had before you.
they are an equivalent of Michael Phelps. I like to swim, but I probably in all honesty could not really keep up with him. In fact, I would probably just die if I did.
This is hilarious. You're wrong for like every reason, but I'll give you 3:
1. Berkshire has not significantly outperformed the S&P500 for 20 years. Go take a look, they've basically converged. Markets become more competitive over time. People lose their edge.
2. Investment returns in excess of diversified market returns (which represent underlying growth across the entire economy) ARE zero sum. If you get them, Berkshire does not and quant firms do not and hedge funds do not. If you can beat these guys, don't use your money. Go get a job doing this.
3. Watching Michael Phelps swim is a terrible way to learn to swim. Anatomically he's totally aberrant, but he's also optimizing for fractions of a second racing across an indoor olympic pool. That's all inapplicable to basically everyone swimming anywhere.
You're choosing not to hear what folks are saying and I wish you luck. Your hubris will be rewarded justly by markets, but perhaps only after a few confidence building wins that convince you random jitters of a trend line are really signs of your hidden brilliance yet to be recognized.
Berkshire doesn't have a chance to outperform because it's too big. It can do a little bit better (either in EV or in some risk adjusted EV measure) but it's able to capitalize on opportunities smaller traders have.
Warren Buffet is pretty diversified, owning stakes across many different sectors. He’s also advocated investing in index funds with the old ‘time in market’ line
I don’t want (and even if I did chances are I never would be) Buffet-rich. But that doesn’t mean I cannot be smart with money I set aside for investment. These studies offer one way of looking at things, they are based on “work looong time, put money for retirement into something you can’t pick (in most company plans or have limited options), pay high fees for… and be happy you are “millionaire” when you are with one foot in grave…”
how he got wealthy is not relevant to how the wealth is grown. if you have $1,000/month to invest or your mum/dad gave you $1,000,000/month the principle of growing wealth is the same. and it is not diversifying nor is buying index funds
So you're saying starting off with money, help overtaking profitable companies, and investing over the easiest window in history to make money is irrelevant to the claim of someone being the greatest investor that ever lived?
And if you go by your principle argument, several others are far greater than Buffet, such as James Simons, who's strategy is diametrically opposed to Buffet's.
I might be misunderstanding the context here, but are you starting from the assumption that investors are trying to get rich?
I think many investors are trying to preserve what wealth they've accumulated through saving/inheritance, and are very happy with modest returns, or even just preserving what they have.
and investing in “index funds” is not gambling?! :) if you buy index funds do you even know what you bought? or is it just “hey everyone else is doing imma do it too?”
Most index funds are quite transparent about their constituent assets. The purpose of index investing is to capture the market as a whole which includes assets held by the few people who make their millions / billions and the many others who blow up their accounts going all in in single stocks.
jokes aside surely there are plenty of people who gambled and lost their entire accounts on 1 or 2 stocks. but there is a difference in buying biotech startup out of Springfield MO and buying Apple
my basic argument isn’t that you should blow your savings on some single stock of some rando company but that doing something like 45% Apple, 20% Amazon, and spred another 20% among 2-3 companies in energy etc… is much better option than buying index fund. and over last decade would
have 100x your money over VTSAX… and is just as “safe”
No, it isn't "just as safe", by any stretch of the imagination. "Safety", in the context of investing, refers to the distribution of possible outcomes around the expected return of an investment. In most instances, diversification will reduce the standard deviation of the expected return of a portfolio, without sacrificing the expected return. In other words, a diversified portfolio is safer, all else equal. This has been known for at least 70 years. You're not providing any counterpoints to established investment theory. You're simply making false claims that contradict both the theory and the empirical evidence.
But there is zero reason to believe that any of those companies will continue giving the same returns. It's entirely feasible that they will plateau, or even begin to fall, whereas the rest of the market will continue to climb. There are plenty of historical examples of "solid" investments that evaporated over time, so it's not like this is unprecedented.
