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You can be a happy investor and still think about the dangers of rising inequality fueled by the market, no?
I wouldn't wish for the stock market to crash so some rich guy suffers. The rich will stay rich, it's the middle and low class who would suffer the most. If the market falls 75% tomorrow, Bezos will be fine, my parents will not.
No, I'm not a robinhood user nor do I own stock in robinhood. It's just an example of how it is never been easier for any American to invest in stocks.
https://www.theatlantic.com/business/archive/2015/05/lotteri...
[EDIT] It's not an insignificant amount either: half of $70 billion. From the same article:
"According to the North American Association of State and Provincial Lotteries, lotteries took in $70.1 billion in sales in the 2014 fiscal year. That’s more than Americans in all 50 states spent on sports tickets, books, video games, movie tickets, and recorded music sales."
If you can buy lotto tickets then you can invest, and if you're buying lotto tickets then you're probably wasting other money too.
$8/month x 47 years @ 10% = 100k roughly.
Try this: https://www.daveramsey.com/smartvestor/investment-calculator
It also seems kind of silly to play with $1 in the stock market; I'm going to make like 8 cents in a year on average with a high variance, while if I bought food I would be able to work using those calories and maybe earn $8 in the time it took to burn those calories.
My daily driver is 30+ years old. It's probably worth about $500. Repairs, taxes, and insurance on it is cheap, too. For one thing, since the car is pretty much worthless, there's no point in spending money on comprehensive insurance.
But I turn the key and it goes. Except for today, when the battery cable corroded to the point of not passing enough current. I ordered a new cable from Amazon for $10, and will install it tomorrow. It'll probably take about 10 minutes. Did I say it was cheap to repair?
Also people go through different stages in life, as you claimed in your comment. You might have been too poor before but I assume you can invest now right?
> People making $180k a year lack funds to buy stocks? Yeah, that’s a no from me.
An individual person making $180K a year is in the 92nd percentile. Parent is talking about the other roughly 300 million people.
"84% of US stocks are owned by the richest 10%" sounds like it could turn into a really big problem though. What can we do next? Why isn't everyone participating?
Btw please define "US stock". US tax resident? Listed on US the stock exchange? Owned solely by US citizens?
The quote does not state that not everyone is participating (though it's true). Just that the least wealthy 90% own 16% of the (huge) US stock market.
Here's an excerpt:
> The sharp fall in median net worth and the rise in overall wealth inequality over these years are largely traceable to the high leverage of middle class families and the high share of homes in their portfolio.
I.e., the middle portion (affluent or frugal enough to save, but not so extremely wealthy as to be set for life) largely invested in real estate in preference to the stock market, and the real estate market tanked.
1. maintenance costs
2. insurance costs
3. heavy and ever-increasing property taxes
4. 6% real estate commissions when you sell (contrast that with stock broker commissions on a trade)
5. you never have a clear idea what it is worth
6. it can take months to sell, meaning your money is not available to invest elsewhere
The only good thing about it is it's usually the cheapest way to borrow money.
edit: and now I am being downvoted for merely pointing this out.
Don't invest in lottery tickets, which are mathematically a losing game.
It's simple math that investing even minor amounts over your life can compound greatly.
I know quite a few. You can read about more in the book "The Millionaire Next Door" by Stanley.
Heck, anyone who bought AMZN, MSFT, AAPL at the opening price, and held, is a wealthy person today.
If you read the "millionaire next door", you'll see that they made this money by saving, not by (just) investing in the market.
No, it was 50%. It's up around 400% since the bottom.
> The difficult is to know which company is the good one at the IPO
It's fine if you don't want to invest because of the risk. But to then say it's unfair that others who do take the risk get the rewards is ... unreasonable.
Even if you saved $20,000 a year, it would take you 50 years to save a million. But if you invested that instead, at a conservative 7% a year, you'd wind up with $9 million.
You'd pass a million after 22 years.
https://www.daveramsey.com/smartvestor/investment-calculator
These often don't even beat inflation. The provider can also go bust like any company.
> real estate
I am the poster boy for losing pots of money on "can't lose" real estate.
> your own business
The failure rate for your own business is 80-90% in the first 5 years.
Stocks are far safer.
The problem is only when you don't have enough "spare" wealth to invest because the daily costs have all eaten up your paycheck. That's a problem i dont know how to solve.
It is easy to be bullish on the market when everything seems to be doing well; a wise person needs to look at different periods, and see that the stock market also has produced a lot of disasters. People who lack this perspective are bound to be engulfed by such disasters. Heck, I hear that even professional investors, who are paid to buy stocks, are starting to take their money out of the market fearing of what might come next.
and that's why most active managed funds perform worse than most passive index funds. that's why stock picking doesn't work for most (unless you're buffett). That's why timing the market doesn't work.
People are too emotional. If you stick to an algorithmic method (of putting in part of your paycheck every month), ride the ups and the downs (don't sell, don't take on debt to buy extra, unless you can afford the debt easily etc), you will come out ahead more times than behind.
I hear that most every day, every year, every decade. There's always plenty of reasons to not invest. There's always an article in the financial news predicting imminent doom.
I ride them up, down, and back up again.
Everything including stock prices disproportionately benefit the wealthy and widen the gap between rich and poor. Not sure what kind of point you are trying to make. When you are much richer than anyone else, you are bound to keep growing your assets at a faster space than anyone else too. It's the nature of compounding.
More money means more ways to make more money by taking larger bets, using more leverage, waiting longer to turn losers into winners, and generally absorbing more risk to generate more return.
1. https://www.tdameritrade.com/investment-products/margin-trad...
"But the goal is to align margin requirements with your portfolio's overall risk, based on the net exposure of all positions, and not just on individual positions. Portfolio margin is available to qualified investors who meet our minimum requirements and have $125k or more in total equity."
And by "qualified" investors they likely are looking at your other assets to see if they can be used as collateral. Note that if you go negative with your brokerage account, they don't just swallow the loss, they'll come after everything you have.
But the point is that more capital does give you more leverage. The next step is $5M+ mark when you get even more access to trading vehicles.
I don't believe it. I do believe that if you have a track record of paying your trading debts and paying fat commissions, they'll let you take on more risk. Worst case, if you've got $5M in an account, you likely have other assets the brokerage can seize.
> They don't look at or even know about any other assets though.
I don't believe they're going to let you highly leverage $10m without checking you out one way or another.
What does any of this background check have to do with your claim that more capital doesn't provide more leverage - when it quite literally does?
(It's value.)