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Comment by korrachs | Hacker News Reader

I work in a wholesale brokerage. I try and manage the risk exposure so we won't go bankrupt tomorrow because someone couldn't tell the difference between 0 and O on their screen. I have seen trades worth hundreds of millions fail and bankrupt the people making them.

The problem isn't people not saving or investing the problem is an insane system kept afloat by greed, ignorance and fear. "Security"? what good is having paper when no one wants to buy it? October 29, 1929 is a day my grandmother remembers well and one I dread we will see again.

Government is the only insurance scheme large enough to protect us from ourselves.

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No one says you need to invest it in the stock market though. There are plenty of assets one can acquire, that are not directly connected to the stock market. Use some debt to acquire them, and good returns can be made, even in small(er) deals.

What investments are you suggesting?

Treasuries, CDs, et cetera. You should be able to build, over a few years, a decent rainy-day fund on $300,000 a year.

Disclaimer: this is not investment advice. Do not take investment advice from Internet comments.

The return on treasuries and CDs is ridiculously low, less than 3%. Bond funds are not much better.

Unless you're talking short term, put it in a total stock market index fund and forget about it.

The one option is real estate (which isn't feasible for some who aren't staying in a place for long to manage). What else do you have in mind?

Real estate and land, patents, royalty rights, investing in small businesses, interest bearing securities (bonds, CDs, CoCos, etc), etc.

>Use some debt to acquire them, and good returns can be made, even in small(er) deals.

Gambling on debt sounds like a sure-fire way to end up with even more debt. And that's what most investment boils down to: A gamble

Profit isn't generated out of thin air, somebody has to be the sucker and pay for it, those are usually the losers of aforementioned gambles.

So what? Everything in life is a gamble and involves risk. You need to learn how to live with it.

Dating? Hell, you can't even get to know someone properly in 6+ months. Taking a job? It's all rainbows and unicorns unless you work there for a 6-12 months, etc.

You act as if investing is bad. You're never going to make any meaningful amount of money if you don't invest (in the broadest sense, this could be in yourself, in your business, in the stock market, in alternative assets, etc).

Debt magnifies the result of your investment. Whether you make a good or bad investment is ultimately up to you. Moderate debt isn't a real issue. The interest is often also tax deductible. It sure as hell makes more sense taking on debt for investing than it does taking on debt to (excessively) spend (as most Americans do).

>So what? Everything in life is a gamble and involves risk. You need to learn how to live with it.

Indeed, it's all about risk-management and in that regard gambling on debt represents a way higher risk, one I would not take, than gambling on savings you actually own.

With the latter, you at least have some control over the worst case scenario, while gambling on debt throws any control like that straight out of the window as debt can spiral out of control very quickly that way.

> The interest is often also tax deductible. It sure as hell makes more sense taking on debt for investing than it does taking on debt to (excessively) spend (as most Americans do).

Sure, it does make more sense but consumer credits are mostly short-term and as such somewhat more manageable for debtors with no real income security. Long-term investment credits, which usually have way better interest rates, are simply out of reach for many of these people because they lack the secure long-term income and/or can't make the required deposit.

Sure. It also depends on the point in time and the asset. If the market has just crashed down 30%, I would probably be comfortable making an investment using significant debt in certain individual shares if the interest rate is low. At the moment? not so much.

Also, say you can acquire a plot of land you want to hold for a long time, and you can acquire it with 10% cash down + pay < 1% annual interest on a secured loan, you'd be an idiot not to take on the debt. Take the remaining cash and invest it somewhere with a higher yield.

It depends, is probably the correct answer here. :)

>Government is the only insurance scheme large enough to protect us from ourselves.

Maybe the culture you come from is very new.

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