Comment by righthand | Hacker News Reader

Comment by righthand | Hacker News Reader

Very much so, most people have bought into the idea that education is lame and therefor do not apply themselves and let go of their abilities to do things like mathematics, even simple math in their head. Let a lone being able to discern statistical data.

Finances are kept in poor places, such as banks and bitcoin, the stock market instead of better investment strategies like Bonds and ETFs. This allows the rich to eat the poor. As financial knowledge decisions get branded as wall-street-only information, people do not bother to read the details. Even though many brokerage accounts have a $0 minimum with low risk of failure.

There has also been a big fall in literacy rates, again ensuring people cannot read the details.

Now we are stuck with pearl grippers and hysterics preaching absolute nonsense. Personally it has caused a rift between myself and my parents because they chose to hop on the bandwagon and spread lies. While I believe they are entitled to spread lies, I cannot back the incentive to do so.

I can however enable more like minded people who may be uneducated on topics to learn more about brokerage accounts for example, and help alleviate the stigma.

> Finances are kept in poor places, such as banks and bitcoin, the stock market instead of better investment strategies like Bonds and ETFs.

Why do you list stocks in the "poor" places and bonds in the good ones? Why do you see bonds as a better investment than stocks? (Certainly that has not been true historically...)

Stocks here almost certainly means stock-picking, vs investing in broad market-tracking funds (ETFs). Historically, people are terrible at picking good stocks and have much better returns investing in ETFs that track things like the S&P500.

Stocks will shift on a whim and rely on hype, same as bitcoin. This can cause a total crash and people losing money. Capital earned on stocks is not cash equivalent therefor if the stock goes down, you lose your initial investment. The risk is insanely high. Compared to Tbills and other cash equivalent bonds, if the yield goes down you still have your money. Take a look at what happened just today when the market opened and China released an LLM model, the AI hype market crashed.

over a large enough time scale, stocks do just fine. if you need to take the money out right this second, yeah, you've a problem, but the SP500 is going to outperform Tbills over a decade. But really, A proper portfolio is going to have a mix of both, as well as other investments, to protect from crashes in one sector.

"Hey, I know your granddad bought the family home with his job at the local grocer, and you need to saddle 100K in student debt just to have a shot of buying a home by the time you're 35, but don't be sad, SP500 is at an all-time high!"

Not what I’m suggesting at all. This last December I was talking to a store clerk in Colorado. The store clerk mentioned needing to switch banks because their current bank wasn’t great. I advised instead they look into a Cash Management account at a financial service firm which would give you 5% investment on your money instead of letting it sit in a checking account. Explained that the 5% return was important to helping inflation proof your money on average inflation years. And that you can use it like a checking account, in-fact it was backed by one. You can always move your money back to the bank if dissatisfied.

There are obviously more nuanced things to understand such as “cash equivilent bonds/etfs” but that is what they should figure out.

It’s about undoing the stigmas not solving the housing crisis.

We keep people in the dark with this belief that financial strategies aren’t to be talked about publicly.

Ah, well that I totally agree with. I think it's a cultural issue in a lot of the West tbh. It is considered impolite or improper to discuss financials with friends, neighbours, even family sometimes. You also see that aversion in Westerners discomfort with bargaining in marketplaces. Like with most of our ills, I blame the British.

Most Americans don't have enough money in reserve for 5% interest on their bank balance to make much of a difference†. If you're living paycheck to paycheck then you spend all of your money before it has a chance to accumulate any interest. I obviously don't know the financial situation of the store clerk you were talking to. But if you are trying to get typical American retail workers excited about 5% interest, you are probably a bit disconnected from the financial reality of their lives.

†https://www.cnbc.com/2024/01/24/how-much-money-americans-hav...

I’ve lived paycheck to paycheck and I definitely still had a few dollars to get the ball rolling after each paycheck. Claiming that you can’t is exactly the defeatist attitude that will keep you financially disabled.

People with less than $500 can still start gaining that 5% yield, and it is better than the bank taking that 5% and eating it. If you don’t get that 5%, the bank will. Furthermore most people can easily calculate 5% and make the decision themselves if you don’t actively discourage them as your reply suggests.

From the article you linked:

> This leaves them vulnerable to unexpected expenses, underscoring the importance of having an emergency fund, if they’re able to build one.

The rest of the article goes on how to vet yourself to start building an emergency fund. A great emergency fund would be a very liquid, low tax, investment option. Like cash equivalent Bonds and ETFs.

If someone has a bank account with $1 it would still be better in a Fidelity Cash Management account gaining a yield than it would be in a bank not gaining at all.

> I’ve lived paycheck to paycheck and I definitely still had a few dollars to get the ball rolling after each paycheck. Claiming that you can’t is exactly the defeatist attitude that will keep you financially disabled.

2010s were a decade of paycheck to paycheck years for me+kids. We frequently ate plain white rice (only) because there wasn't enough money for a can of beans. Or 1 onion. Sometimes I couldn't swing a bag of rice. The kids had a couple of regular meals when school was in session.

I suggest your circumstances aren't as universal as they may seem to you.

And you didn’t have a bank account with money in it? Did you cash your paychecks at a check cashing service (giving them a cut?) and spend all the cash? What were your expenses during that time that ate all your paycheck? Surely not just rice.

That comment was directed at the previous poster’s remark than since 60% of Americans have $500 or less in their bank account that must mean all 60% have no money to save and that my advice was bad. That is the defeatist attitude. I’m definitely not insisting that some portion aren’t entirely living paycheck to paycheck.

The point of my comments is to acknowledge that people should seek out return for their money instead of keeping it in a bank. Not to squabble over who is worse off.

> And you didn’t have a bank account with money in it?

I had a bank account. Each month it eventually came to have the exact amount of the rent in it. Most months, anyway.

> Did you cash your paychecks at a check cashing service...

On a few occasions where utilities would be cut off in less than a day, I used a check cashing service. Specifically Ace as their fee was lowest.

> (giving them a cut?) and spend all the cash?

On those occasions I blew it on water or power.

> What were your expenses during that time that ate all your paycheck. Surely not just rice.

Not just rice, true. My expenses were rent, water, power, fuel and minimal auto insurance (until the van was stolen anyway). Water and power outweighed food because disconnected utilities were CPS threat vectors.

> The point of my comments is to acknowledge that people should seek out return for their money instead of keeping it in a bank.

For those that make more than 100% of their minimal bills sure. For the millions of us who had to live otherwise, keeping non-existent money in a bank seems unrealistic.

Sure that is a much larger issue about wage stagnation than it is about ability to save then. It sounds like you were trying to do more than the minimum when it came to keeping money.

If you maintain a $1000 average bank balance (which is at the higher end of ‘paycheck to paycheck’) then 5% interest is $50/year. It’s worth having, but people aren’t going to put time and effort into getting it when they have bigger problems to worry about.

Why not? It takes maybe a week to set up? And most of that week would be waiting for a funds transfer. It costs $0 to open and you get atm fee reimbursement and no international transaction fees. I get that people are busy but if you’re unhappy about something and you can change it, then why not carve out time to do so. People have plenty of time to seek new employment, this is just as critical.

You’re just raging at people at this point. Most people don’t optimize their finances to that extent. Sorry. An extra $50 a year (in the most optimistic case) is not going to protect anyone against inflation, as you were originally suggesting.

Sorry you must work for a bank or something?

How am I raging? I’m passively telling people ways to better their lives. They can choose to use the info or not. You are the one raging against the idea of a better world with happier people. An extra $50 certainly does help people living paycheck to paycheck. The point of my commentary is that people should be optimizing their finances more and we should be discussing options publicly. Your insistence that it’s futile is mind bogglingly stupid.

It's not futile to try to get interest on a tiny bank balance and I explicitly said that it's not futile. (I said that the hypothetical $50 was 'worth having'.) The thing is that people on low wages already have to think about money all the time. They will be reluctant to spend even more time thinking about it unless there's likely to be a big payoff. I think you are vastly overestimating how much money a typical American has lying around that has the potential to collect interest.

Also, the current interest rate on a Fidelity cash management account appears to be around 2.2%, not 5%.

Well then you would appear to be wrong because buying SGOV, and FDLXX (cash equivalent bonds that track tbills) will give you closer to 5.0% (creating a high yield checking account for daily use). What you are quoting is an APY on a deposit sweep. There are clearly two options to get any % back.[0]

Even if you foolish choose the 2.2% option you would still yield more return on your money than a bank checking account which probably gives you less than 0.01% return.

You can optimize further by cutting Fidelity out of the equation and purchase Tbills on treasurydirect.gov straight from the government creating a high yield savings account with monthly yield.

Even better, Tbills are tax-free at the state and local level.

[0] https://www.fidelity.com/spend-save/fidelity-cash-management...

Respectfully, this shows more how you see unmoored from reality than it does that you are mathematically superior to the plebes. You think the 5% is going to have any success significant effect on the store clerk that is not making much and has to spend the majority of his/her money, living paycheck-to-paycheck? It’s peanuts. It doesn’t inflation proof their money, let’s be honest and not smug about it. I’m sure the people you are interacting with are not totally unaware of the benefit of saving money. The “poors” aren’t all that stupid.

Wow. I didn’t say that at all. I think the smug people here are those telling me I can’t give advice and help make a difference how I see fit. That passing information is somehow abusive? Get bent.

Not all of them, sure, but there's a lot of money being spent on lottery tickets and scratchers and $700 shoes and other nonsense that doesn't make sense to me. Caleb Hammer on YouTube interviews people with really bad spending habits for his Financial Audit channel and it really seems like, sorry to say, that some of them really are stupid.

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