I have a fairly high-paying job, but I would like to find a way to earn more eventually. Not so I can be filthy rich and buy myself ridiculous things most people can't afford, but so I can have the freedom to take a sabbatical and travel, or start my own business, or heck, retire early, while I'm still healthy enough to enjoy life.
I grew up poor, and to me, having more earnings/savings makes me feel more safe and in control of my life. The biggest difference it has made recently is going from having roommates to having my own place. I'm an introvert, I need time alone, and I find it really rewarding to be able to come home to my own little sanctuary after work.
While I'm a big believer that we're going to see a big correction in the next couple of years (the kind that will make 2008 look like a foreshock), nobody knows how much higher the market can go and for how long. Maybe it will still be going up before I die.
The conventional wisdom is to never try to time the market. Buy and hold, and in the long run you'll make money.
http://awealthofcommonsense.com/2014/02/worlds-worst-market-...
“The market can remain irrational longer than you can remain solvent.”
Is that where Bitcoin's HODL "wisdom" comes from?
Also, don't bet on one horse.
Edit: Also, everyone should investigate this.
But let's step back and calculate suppose you got into $SPY in 2007 at 155. If you had kept the $10K in there, it would be worth $20K today almost. However, if you had kept adding money to it each year, your return would be massive. As you get older, you move from more index holdings to bonds, which guarantees you to hold your money. Another method is dividends, if you had AAPL shares, suppose 1000 shares @ 0.50 per quarter, that's $2.00 a year on 1000 shares, $2000 a year. If you had a family member who doesn't work and owns all the shares, in Canada, that would be up to $60,000 each year you can earn tax free.
I don't hold any stock, although I believe it is safe to do so, I currently only own 2 shares of TSLA as I wanted to be eligible for the class action lawsuit if there ever was one. I only trade options and I believe that is the safest way to make money and never go bankrupt.
Also, if you buy stock you can also sells calls/puts against your shares to protect you from a downside/flat days.
To reiterate, the statement above, is always easy to make, because this is the only way to make money. If you don't get into the market, then each year your money is running away from you, see inflation. Ally savings accounts just aren't as helpful.
Hopefully I have changed your mind and you will start looking into Vanguard funds at the minimum.
With that said, I am nervous about the current market. I'm still invested but am starting to diversify into buy and hold real estate in established locations. One thing I don't like about the market is the impact that some random geopolitical event can have and I don't see the world moving toward more stability at the moment.
As for the political instability, if it gets bad enough, we are all going to die of famine, so no point thinking doomsday. Also, since you are holding long term, who cares if it goes down, you are worried about 15/20/25 years from today. I think this is what stops many people from getting the market, thinking banks are corrupt, the system is crazy, and so on. Leave your politics to the side, this is the market, it doesn't care about conservatives or liberals, Chinese or American, black or white, it cares about dollars and cents.
Where I work hard is my options trade.
If you really want to see proof that you can make money, without working hard, shameless plug, www.marketgodfathers.com, I provide option trades before the market opens, I provide when I enter and when I exit. If someone follows my plans, they would make the same amount of money, percentage wise with a $30K account and no research required or work. So there are ways. Obviously, you might think this is incorrect, but if you spend time researching the market, you can definitely do what I do on your own. I do it in bull markets, and I will do it in bear markets.
The thing about money in the market is when you make more, you want more. It never stops. Also, when you learn one way to make it, you always want to enhance it and do better. It's a never ending journey.
Remember the richest people in the world pay people to manage their money, so the stock market is where you want to be.
Depending on the interest rates of the debt you hold and how long it's supposed to take to pay it back, you could save yourself a lot of money long term. It's not an approach that investors often recommend but if you've got a 7% interest rate on a 30 year mortgage the return for paying it off early is 7% saved. Whether the market goes up or down, the loss for that percentage remains the same.
The more debt you get paid off, the more cash flow you free up to invest.
It doesn't always make sense, but it's worth considering. When interest rates were really low I locked up a 2.8% rate on a 15 year mortgage...and at that point there's really no incentive to pay it off early. Other forms of debt will vary though.
- Better debt to income ratio/monthly cash flow numbers as I diversify into real estate
- Provide more cash flow to purchase under valued assets should the market drop significantly (there's always an initial overreaction)
With real estate, there are hidden costs. The furnace breaks, the AC breaks. The stairs need something. The roof needs patching. There is mold. There is property tax. There are bad tenants. There are other aspects also. It takes time.
IMO forget real estate and get in the market. But I mean, I am biased right? :)
I'm not looking at it as an either/or thing though, I'll still stay in the market just not 100%. Part of the reason I'm diversifying is because the market has been very good to me and I want to pull some of that profit off the table. In any event, I'm going to begin looking for the user named realestategod so you two can have a chat :)
Apparently that makes the average Joe a crook? I don't know, I don't see it.
If anything, ownership should be spread more widely. Suppose the government bought index funds and used it to fund basic income?
You are providing funds for companies to exist. Companies that pay some of the people, and provide services for other people. You also get a share of the profits.
Certainly, this can be abused, but at the fundamental level, it's a good thing to have businesses that provide value. I like being able to go buy a nice computer when I want one, or going and getting some fast (or slow) food. I also like googling things. All these things are (often) supported by stocks.
If all people wanted was agency over themselves most people could do it--living off the land in the middle of nowhere is still pretty cheap here in the U.S.
Requiring someone else to provide something you need without compensating them with something they want in return (money or barter) is removing their agency over their life.
How does money get other people to do things for you? Well, there has to be this group of individuals who are just dying for that money and will do all manner of things to get it. That flexibility comes from desperation and not having agency over your own life.
"If all people wanted was agency over themselves most people could do it--living off the land in the middle of nowhere is still pretty cheap here in the U.S."
You mean if people wanted to trade nature having control of their existence for an employer having control over their existence, it should be easy in the US. Even that is hardly true - even subsistence agriculture requires skills that can't easily gotten and moreover, all land owners have to pay taxes so you can't have true independence, a best growing your own food and hopefully selling the surplus to pay your property taxes.
It's not that any of this is impossible. Rather, it's a "way out" but so is getting a lot of money so you're a labor buyer rather than the labor seller. But all this does add up to lack of money actually being a force to "regulate and monitor the agency" of most people today.
Not that lucrative … by whose standards?
We might not advertise that we use them explicitly for this, but this is exactly what they end up doing. People that need money have to give away their time and do stuff for other people.
>We use money as a medium of exchange enabling people to get other people to do things for them.
Po-ta-toh, po-tah-to. Those people that do "things for them" give up part of their own agency of what to do and part of their own time in exchange of getting paid. They can still pick between this or that job (if they're lucky and there are plenty of jobs), but they can't choose not to give their time to a job, or to be too picky about which job to do (lest they starve).
>If all people wanted was agency over themselves most people could do it--living off the land in the middle of nowhere is still pretty cheap here in the U.S.
The agency doesn't end in subsistence, as people aren't animals. It includes being able to do things like e.g. travel, watch tv, eat a nice meal, surf the internet, etc. -- and that gets costly fast. Part of that agency also includes that is shouldn't involve others treating them like pariahs (because again, they're not animals).
by that definition, nobody can have true agency, until a post-scarcity society where provision of services does not require any labour from any human, and is free.
Of course. Nobody is 100% free. At best we have fewer limitations to what we decide to do, but not none.
Even in a post scarcity world, where we would much freer, we wouldn't have 100% agency (for one, we can't do whatever we like to other persons, we need to respect their agency too. Second we have inherent limits, as to what we can do without getting tired, talent, a lifespan, etc). So our agency is limited in several ways.
When I think of money..I think of freedom...to do what I want to do. When you don't have money or your need to get money then suddenly you have to do stuff that you don't want to do. Even if you have a job you love to do...you are still going to work and taking orders from your boss. It would always be preferable to do the stuff you love to do...but on your terms.