Probably, because everything would collapse if everyone was an "investor" and fewer people did actual work to keep the world going.
If everyone is passively investing, that no longer works. Then it's not even a market. We don't even know, for sure, if that works.
If you use big index funds, you're the primary people contributing to Nvidia, Tesla, and openAI. You didn't start it, no, but you certainly propelled that ball forward like a bullet.
And, well, that's fine, because we cant expect anyone really to actively invest. The problem is we don't know if this works. This definitely has the potential to blow up. You have to realize that what we're doing here is undermining the stock market at a conceptual level.
~62% of US adults own stocks: https://news.gallup.com/poll/266807/percentage-americans-own...
Also, 'owning stocks' vs 'investing' feels different to me. My brother will go all in on tesla for one year, and then pull out and just sit there until he has another somewhat-random impulse. Likewise, my dad used to put all his money into some index funds for the 30 days leading up to Christmas, because 'the government always makes the stocks go up during the holidays, to keep everybody happy'. They count as 'owning stocks' (at least sometimes), but I don't feel they count as 'investing'.
Isn't that very little money?
1 in 5 have $0
50% have enough to cover 3 months of expenses
You're saying that $500-600 (the amount you claim 50% of people have saved up, if it's the median) covers 3 months of expenses?
The math does add up. There is no contradiction in your parent’s post.
I have a family of 10 people. These people have, respectively,
$0 ; $0 ; $1 ; $5 ; $49 ; $51 ; $190 ; $8,000 ; $150,000 and $1,000,000.
What's the median amount of savings in this group?
And what amount would complete the sentence : "50% of people have ..."?
If the count of observations is even, it is usually the arithmetic mean of the two mid-points, so (49+51)/2 in this case.
The median does not have to be in the finite set of values.
Maybe Wikipedia can explain better than I can: https://en.wikipedia.org/wiki/Median
Back to the original post:
I'm assuming that "three months of expenses" would be roughly $6,000.
The parent post had the median at $500.
1. Given the sheer number of adult Americans (hundreds of millions of observed data points), wouldn't you say it's quite likely that the two mid-points are very close to each other (eg $499.97 and $500.02)? But definitely not (-$5,500) in debt for one mid-point individual vs $6,000 in savings for the next individual (which comes out to $500 in median and "top half has $6k")?
2. In the first scenario (almost continuous curve at the midway point), how likely do you think it is that somewhere right after that $500 mid-point, there is a huge discontinuous jump to $6,000 to accomodate the idea that the rough top half of observed savers has "3 months of expenses" saved?
3. Is there any other scenario I'm not foreseeing, that can reconcile: "the median is $500" with "the top 50% have $6,000+ in savings"?
I purposely didn’t because strictly that is not a median. Stupid example: median of 1,2,3 is 2 and 67% >= 2 here. We do agree that as N grows, the difference shrinks (to the point of no meaningful difference).
My point was that mathematically there is no contradiction. Let’s say half the population has $200 monthly expenses (3mo is then $600 saved), the median is $600 and it checks out.
That is a stupid assumption though - because who has such low expenses.
> I'm assuming that "three months of expenses" would be roughly $6,000
You then assume that we must be talking about the upper half, but that isn’t given.
We have to make SOME assumptions though, since the statement is underspecified: the OP didn’t specify what 3 months expenses means. It is unlikely that 50% of the US population have the EXACT same expenses, so I assumed an “on average” was missing somewhere which further relaxes the constraints.
I objected to your statement that the math doesn’t check out. There are many ways it could check out.
We came at this with different assumptions. I don’t think we fundamentally disagree and I didn’t mean to bicker.
I appreciate you taking the time to geek out on some statistics with me (and you even had me look up medians again because I was confused at your reply!)
Yes, there are people who don't invest. Where do they keep their retirement savings? 40-50% of Americans, at least, simply have no retirement savings! Most people in America aren't earning enough to put away a meaningful amount for retirement. It's going to be grim as boomers and millennials hit retirement age and have to keep working.
Median household net worth is around $193k, not negative. Maybe this is true on an individual basis because there a bunch of, say, young debtors and elderly parents who have transferred their positive assets living in households with working adults with more positive wealth than the youngsters and elders combined have net debt, but...
Rest assured it usually isn't their choice.
People choose to marry, have kids, and buy a house.
Life can be cruel even if you've made great plans and took all the precautions you could think of. Illnesses, accidents, the lack of a social net because your country was set up that way, crime, the list goes on.
And yes, I am assuming you live in a developed country. I have Ukranian citizenship and right now the Ukrainian government is abducting men who are over 24 years old and sends them to death. If you live in a country like that, true, you shouldn't worry about investing because you don't even have basic human rights.
Or that there's no standard minimum wage, or income protection if something does go wrong. Student debt is crippling to people in itself never mind hospital events.
That's so many people you should think "something must be wrong with the system"
> Illnesses and accidents are exactly the things you need savings for
It shouldn't be though, if you pay taxes, the government should be there for you in an emergency when it comes to health.
As far as I know in the US your employer provides health insurance?
Many people here, if they are not educated, are forced to work manual labor jobs. Those jobs will always work you under full-time, so they don't have to give you insurance. Usually that means you have to work another job.
People who haven't lived that life just don't get. It just doesn't click in your head.
You can work 60 hours a week and just barely make rent and food. Not only can you do it, I think most people are. And there's nothing you can do. There is no higher paying job waiting for you somewhere, because you don't have a college degree.
How're you gonna get a college degree when you work 60 hours a week? Hm? You're not. You're stuck. Your best shot, really, is to work up through management. That's why you'll see people working at the same restaurant for 20 years.
They must be so stupid, why don't they get a real job? No, actually, that's probably their best bet.
If you are working many jobs in the US you get no health care. You have to pay for it yourself. Even jobs that provide it you still need to pay for it. The employer basically pays a portion of the insurance bill. Good employers pay a lot, bad employers pay none.
Then you have deductibles. The amount you have to pay out of pocket every year before insurance does anything. If you have a ten thousand dollar deductible, insurance only kicks in at $10,001 and beyond.
That's not leaving a lot of space for food, clothing, heating, transportation, education, entertainment, etc.
Also you’re neglecting the cost of transportation (almost certainly a car, with gas and insurance), rent, and medical expenses.
Assuming you work full time, you are making $3360 a month, less taxes.
That means that even if you get the bottom 25% of rents, over half your take home pay goes to rent. Then we need health care, food, taxes, transportation, clothing, etc.
Not a lot of savings easily available there.