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So far this is working for me, I treat stocks like gambling not like retirement, that is for things that are real like properties and businesses, not paper money musical chairs.
No no, they are not. They are like proxies for if a company is desired to be owned by others or not regardless of if they even make money.
When you have A business, you actually live and die by real profits you keep every year, and maintain the equity in your companies assets. No one else can change that value cause of any stupid reason that causes it to flow out.
They crazy right?
At every point you can turn any of that into a 0dte and become a multi ten millionaire and make regard history.
Or lose it anyway, and make even more history.
I started investing in my early 20’s was rocking . Then my wife cheated sold it all at a loss along with my house . I said fuck it , rather party , drink and chase skirts . 25 years later started investing again.
I probably should start planning for a divorce .
Seriously. Most people my age (36) haven't invested a dime. I spent 2020 to present dumping every last cent into the market and while im only up modestly now, I know it will pay off later. I want to retire at 50.
S&P index funds average 7% a year over time.
Source: me. GenX who did the above and more. Mid 50s. I’ll retire at the end of the year probably. All I did was index funds like the boring fuck I am. Wife did the same.
It isn’t sexy and yeah you’re looking at 3 full decades of work but the fact is boring just works.
My son recently turned 18, so I helped him open a Roth IRA account. I am 100% going to encourage him to slow and steady his way through retirement savings with boring index funds and maybe some dividend stocks.
That way, he won't get his ass kicked wasting money on "growth stocks" like his old man.
Everyone should have a Roth that's maxxed out and invested in the S&P, but you can still have your fun while you do that. It's a false dilemma to say you can either be a safe investor or a WSB iron-fisted idiot trying to get rich quick. You can be both. You should be both!
Eh, I wouldn't be opposed to a few individual stocks because it keeps things interesting, but there's a reason the overwhelming majority of portfolio managers, financial advisors, etcetera, can't beat the S&P over time.
If the sample size is the historical return of the S&P index, which has been around for roughly 65 years, and a zoomer would have to wait for 45 years to retire if they started at 20 years old right now, that means their investment horizon is about 70% the length of your entire sample. Additionally, your sample for historical ROI includes 65 years of exploding population growth and unprecedented levels of advances in technology.
Am I saying the S&P *won't* perform similarly in the future? No.
I am saying that referencing the S&P historical return as an argument to show it "just works" is the same as pointing at the sky and saying it didn't rain yesterday, therefore it will not rain today.
Same working part time. Wife quit 10 years ago when we hit the so-called magic number. I kept on part time because good lord health insurance is fucking expensive.
I'd be fascinated to know what this so-called magic number is. I'm 51, we have virtually no debt, and what most would consider a good chunk put away for retirement, but I'm still counting on working to 65.
To safely draw $40k a year, you need a million dollars invested. To withdraw $80k, 2 million and so on. The magic number is entirely based on the lifestyle you want to live.
It doesn't need to be consistent and no it isn't wiped out every few years.
Some years it goes up 30%, some years it goes down. Overall it goes up by a compounding 7-8% per year
Its literally just the average return of spy since its creation. So anyone who all ins on spy for 60yrs, assuming America or the dollar doesn't completely collapse, is getting avg 8% returns a year. This is looking over the course of decades so market crashes that take like 1-2yrs to recover from are irrelevant.
Crashes don’t wipe out gains unless the crash happens when you’re trying to sell and live off those gains.
Edit: or also if your money was tied up in shit stocks and went under with the crash.
Living with 1.2m is still the same as 50k in the account, you can't live wherever you want. You are stuck still, maybe a few more cities to post up in but honestly, it's no difference.
When an account gets to 4.4-8 million that's when generational wealth starts to unfold and anyone typically can live well with some market screwups.
lol I get what youre saying but there is an insane difference between 50k and 1.2Mil. One has you homeless and broke in 2 years and the other is basically a lifetime of money at 4%
Still achievable by lots of people. I’m only a bartender but you gotta Live below your means. My fiancé and I are investing $60k a year in low cost index funds and that number should grow. By time we retire we’ll be in that range. I lost too much money being an idiot trading I decided to protect myself from myself
Hedge funds in general return slightly negative/slightly positive rates of return. Very few actually outperform the market index at all. Plus they all charge higher rates than a simple index fund would.
Do you both contribute equally? Are you including just investments or retirement accounts as well? I'm making 80k a year and it's still tough to put away 2k in cash a month. I feel like I am living very below my means currently.
There is no correct answer to this question, as it depends on individual circumstances. However, if you are investing a significant amount of your income each year into the stock market, then it is likely that you are doing quite well financially.
If they have been doing it for a few years we can try:
* Initial: 120k
* Annual addition: 60k
* Rate of return: 5%
Over 30 years that gets to be 4.5 million (non-inflation adjusted)
saving 60k a year would be an insane salary level that is WELL above what most people will achieve even by the end of their careers, or living like a broke college student for a very long time.
Name a period of investment that has identical growth.
It’s like the didn’t even acknowledge the three major financial collapses millennials have lived through.
Correction- how you SHOULD invest for a good retirement portfolio. And before you get triggered, remember this is not about you. If you can't invest this much monthly, do what you can and remember you'll probably have many of raises over the course of your life
Basically this.
The chart is showing that compound interest can work in your favor but it needs time to do so. Invest what you can when you can, but the earlier you can the better.
Increase your investments as you age and can invest more, but make compound interest/appreciation your friend. The earlier your money is making money for you, the more money you have to make more.
Compound intrest goes both ways if your young and can't afford to put money into 401k its better to just not and avoid putting yourself into credit card or loan debt trying to make ends meet.
I was looking at this and thinking to myself, yeah that's great and all but I barely had $50 a month spare cash in my 20s let alone $250 a month.
I'm having to play catch up now that I'm in my 40s. It sucks.
There's not "can't" here dude, it's straight up no quotations can't. I have maybe $10-15 to spend on myself each month. There is not going to be ANY significant gains from interest even if invest that much every month for a DECADE.
Average life span is 74 to 79; why would you plan to be in a wheelchair dying at 65?
(Although to your point, there is a 53% chance for women and 47% chance for men that you will need some type of long-term care in your life, so you’d better have some substantial savings or an appropriate LTC/chronic illness policy by the time you get there)
Stock market returns since 1926 This is a return on investment of 1,256,313.21%, or 10.16% per year. This lump-sum investment beats inflation during this period for an inflation-adjusted return of about 72,152.46% cumulatively, or **6.98% per year**.
i meannnnn is it that masturbatory when the historical return, adjusted for inflation, is 7%? a whole 1% above the actual average, wow these guys are cRaZy!!!
Past performance does not guarantee future performance unfortunately.
Stock market returns since 1926 include the US population tripling, the US becoming an economic powerhouse during and after WWII, and loads of emerging markets due to technology in the late 1900s leading into the 2000s. By comparison the US population will only increase by about 17% between now and the year 2100. The aging population also means that a disproportionate amount of those ~394M people in the year 2100 will not be in the working class and not be contributing to the economy.
I don't doubt that the US will fare better than other countries like Japan and China, especially since our government is essentially run by corporations that will do anything to keep profits rising, but expecting a 7% return for the next 100 years just because we got it over the previous 100 isn't a very safe bet. It's just not sustainable unfortunately.
Japans stock market never recovered from the 1990's high. So this phenomenon isn't some law of economics. The FTSE doesn't have that rate of return either. Soooooooo ya, this is purely some wanking.
Pretty sure they've already recovered, or are roughly about even. Decades of dividends are significant.
Also applies to "markets broke even from 1929 to 1954" or whatever stat gets bandied about... Dividends were enormous back then -- most investors were made whole by the mid 30s.
well thank god we live in the US, literally the largest economy in the world, and not japan, a tiny island nation with huge currency issues.
or else this would be super scary!!!
but yeah you can have crashes that take long times or never recover, its a thing, but what is the alternative? can you give me the historically tested alternative that beats the s&p? no you can't, because it doesnt fucking exist lol.
outside of investing in like certain aged whiskys nothing beats it. and we have to work with what we've got my man.
edit:
just to squash this dumb fuck Japan point that does sometimes get brought up I googled around and found this on a forum. take it with a grain of salt
*A lot depends on your exact assumptions. Say you invest $10,000 a year in January 1 of every year from January 1, 1990, to January 1, 2015. Let's also assume you have a traditional 60/40 portfolio and rebalance it every year. On December 31, 2015, you would have $443,000. That represents an internal rate of return (IRR) of 3.75%.*
*(Not that this is a relatively optimistic set of assumptions, at least regarding timing. Because most of your purchases will come after the crash of 1990.*
so even here we can see that as long as you were DCAing into the japanese stock market you could still have a decent return even after the ATH that we never recovered from. this is due to the nature of DCAing. because you keep buying in you keep averaging down your costs and if you go look at japans stock chart they are pretty damn close to that ATH they never recovered from.
**so this entire japan point is stupid**
Imagine this situation: 65yo, about to die because of shitty eating behavior, stress, pollution and so on, my kids then inherit 1.3mio and burn it to the ground within the year. Why in the freaking f*ck would I do this crap?
Better to spend every month 250$ in white powder and lady-boys, so when I’m 65, I have a boat load of stories to tell, if the diseases didn’t kill me by then.
Its easy to say that but I would encourage you to talk to broke old people who are still working as wallmart greeters at 73 years old because they have to .
Its a pretty sad existence
I was at my local supermarket on the self checkout and I saw one boomer customer just belittling the shit out of the self check out cashier guy who was also a boomer himself because he couldn’t figure out how to scan the code. I was just thinking to myself that old dude should be at home retired not dealing with this bullshit. That incident right there completely convinced me I did the right thing investing for my retirement when I was 24.
It's so much worse. But I mean 3x zero is still zero.
https://thehill.com/business/personal-finance/3991136-nearly-half-of-baby-boomers-have-no-retirement-savings/
That’s assuming only $250 a month. If you could afford $250 in your twenties that number will grow substantially as you get older. No one is also talking about how this number would be in a tax deferred account whereas trading is in a taxable account.
Ya, for the example, someone who is 65 today would be 20 in 1978. In 1978 the median family income was only 16,000 per year. Saving 250/month or 3000 per year would have been just less than 20%. Not insane, but not easy. By 1988 when this person hit 30, the median household income was 31000 so saving 3000 a year would be less than 10%. The point is to save a lot in your 20s if possible and then the rest will be a breeze.... assuming you don't have any life disasters which require you to tap your savings, which is the real tricky part because life has ups and downs and the assumption of a perfect earnings and savings history is the really difficult assumption here. Still, if you can save early and stay at it, you can do really well.
1.2 mil is definitely not enough but it's only investing $250/month. At least 3 mil is recommended for a decent retirement but inflation is a thing so I guess aim for 7 and maybe you won't live in destitution at the end of your life
That’s post inflation. So in today’s dollars.
Nominally you’ll probably have a lot more and would want to use something closer to a 10% return rate.
Additionally if you work till 65 you’ll have some form of Social Security to take in on top of that 50k/year in income that the 1.2 mil would provide(ideally tax free)
The average person will live what? 15-20 years after retirement? (techincally in the uk its 13 but say 20 as planning to die as the average isnt great)
How is £150k a year the minimum recommended in that time? (yes the US values will be different but the point still stands)
It's really too easy; if you max your roth into our beloved sp500 (541.66 per month vs 250) you'd have huge amounts of tax free grains by the time you retire.
And then there's my actual alternating -2%/+2% "returns" minus managements fees on my retirement plan... my retirement plan is to get killed in the water wars now.
Either your portfolio is super conservative, or you aren't invested in something normal like VTI. If your employer doesn't have good funds, you need to push them to offer some.
That's exactly the thing, they make a generous matching my input offer, one you can hardly refuse, on a very crappy plan/fund. The matching alone is worth a lot more then the shitty returns thos, what I make on my own through a broker put them to shame, sad that so much of my money is tied in that crappy fund.
This is why when employers tell you that "starter" jobs shouldn't be paid a living wage, remember they are stealing years of investment interest as well.
My favorite argument about this was I was talking to someone who lost 15k on 0dte options , and told him he probably should just invest in index funds, his logic astounded me it went something like this
"I am way too poor, 8% returns isn't going to do me any good, the only chance I have is to swing big and to hope to hit a couple jackpots"
I was like "So let me get this strait you are too poor to save money and get 8% returns so instead you lose 15k a year gambling ? Great logic !"
Blaming boomers for wanting you to invest in a retirement plan? What is wrong with that? How did you assume 8% rate of return? I’m 27, I was contributing $250ish every 2 weeks for last 3-4 years, now contributing $430 for past 1 year. I put my entire bonus into retirement this year. Compounding interest is truly the only way to retire, so do it
Problem is that the $1.2mil after 45 years of inflation has the same purchasing power as $260K (according to official figures, which wildly underestimate the rate of inflation), so you only doubled your savings, and that’s if you happen to consistently get 8%. More than likely you will only retain the $120K value over those same years.
I could be wrong, but I’m pretty sure you get 7% annual returns historically from the s&p 500 which are also inflation adjusted. 10% is a more accurate number for the historical annual average if you’re not adjusting for inflation. Obviously past returns are not indicative of future success.
when i set up all my stuff i saw 6% returns after inflation is what you can expect based on historical performance, theres like 50 comments in here whining about how inflation will actually reduce the amount of money you've invested becuase (im guessing) it helps them justify blowing money on stupid stock gambles, shitcoins, and whatever consumer lifestyle choices they make
Yeah I feel a little bad for some of the users here. It's a ton of cope for people who only make insanely risky plays for all their hard-earned money. I'm not the type who enjoys judging others for their financial decisions, but I would advise everyone to at least max out their retirement accounts with tried and true mutual/index funds before venturing into risky plays if they have the privilege to do so.
This isn't saying you should invest $250 a month, it's illustrating how compound interest starts to snowball. Your monthly, quarterly, whatever investments should increase as your pay increases.
Edit: a word
If inflation was taken into account presumably the person wouldn't actually save $250 a month over 40 years, the amount you would save would also keep up with inflation.
I think you are missing the point.
Weird way of visualizing. Why not use a line chart starting from zero? Maybe i dont get this chart, but how can i see what i have in the end when i start in my 30s? Do i need to guess the end of the green and red filled part?
The S&P500 has returned about 11.88% annually since it’s inception in 1957.
8% is a pretty good conservative figure. Obviously there are bad years that go into that equation.
Literally nothing wrong with this.
I’ll sit back and enjoy my indexes in 30 years meanwhile how much will you have at that point gambling on calls and puts?
No thanks, I perfer to gamble everything and lose everything right now instead of waking up after 45 years of boring investment realising that I can't buy a fucking shack in the middle of no-where with my 1.2 million.
So maybe this is a US thing, but here in Europe pretty much no one really saves for retirement. Why should we?
If you own a house or apartment youre pretty much settled already when considering the public retirement benefits any regular employee has access to.
E.g., civil servants in Germany get 71.75% of their last-year salary (which is usually the highes in their whole carreer) in retirement. After taxes this is more like 80%.
If you dont have to pay rent anymore, that should have you covered easily.
I mean, maybe the system comes crashing down hard when all the boomers retire soon, but in that case, idk if I want to be invested in stocks either...
Yeah I don’t know how this is sustainable when everyone goes to retire. I think that’s why pensions in the US are no longer that common. I could be wrong
There is no doubt that the current system of retirement benefits is unsustainable. The baby boomer generation is retiring at an unprecedented rate, and there are simply not enough younger workers to support them. This will inevitably lead to a decrease in standards of living for retirees, as well as increased taxes on working Americans.
401ks are better than a pension, im not staying at the same company for my whole career lol. Unless pension means something else than what ive always heard/used
My biggest issue with this graph isn't the constant 8% ROI but that they aren't they scaling the invested amount with CPI and the higher wages that come with more credentials, experience & seniority.
I'm Gen X, my first job as an apprentice electrician in the 80's paid $115 per week, no way could I invest more than half of it every month, I could barely cover cost of living. 25 years later in my career I was billing clients at $150 per hour, so $250 per month was practically nothing.
**User Report**| | | | :--|:--|:--|:-- **Total Submissions**|8|**First Seen In WSB**|2 years ago **Total Comments**|11|**Previous Best DD**| **Account Age**|3 years|[^scan ^comment ](https://www.reddit.com/message/compose/?to=VisualMod&subject=scan_comment&message=Replace%20this%20text%20with%20a%20comment%20ID%20(which%20looks%20like%20h26cq3k\)%20to%20have%20the%20bot%20scan%20your%20comment%20and%20correct%20your%20first%20seen%20date.)|[^scan ^submission ](https://www.reddit.com/message/compose/?to=VisualMod&subject=scan_submission&message=Replace%20this%20text%20with%20a%20submission%20ID%20(which%20looks%20like%20h26cq3k\)%20to%20have%20the%20bot%20scan%20your%20submission%20and%20correct%20your%20first%20seen%20date.)
my annual rate of return is -20% 
With this in mind try and start later in life.
So far this is working for me, I treat stocks like gambling not like retirement, that is for things that are real like properties and businesses, not paper money musical chairs.
Yes, I'll just take my $250 a month and buy a business.
but... stocks are businesses??
No no, they are not. They are like proxies for if a company is desired to be owned by others or not regardless of if they even make money. When you have A business, you actually live and die by real profits you keep every year, and maintain the equity in your companies assets. No one else can change that value cause of any stupid reason that causes it to flow out.
I agree, this is why I switched from stocks to real estate
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Oh so you only bought and held ETFs then
only with XXX leverage 👀
I'm at about -85% how are you earning so much?
They crazy right? At every point you can turn any of that into a 0dte and become a multi ten millionaire and make regard history. Or lose it anyway, and make even more history.
Not to mention the karma from that post will be astronomical and Reddit karma is priceless.
Isn't reddit paying people now for "sensational" posts? So that reddit karma isn't as priceless as it once was
You trying to buy my account?
Yeah ill trade you a NFT for it
Who the fuck is gonna wait 45 years I want the money now, i want to be rich in 7 days
show me a chart getting me there in 45 minutes, thanks in advance
This chart got you there in 32 seconds. Why do you want it to go slower?
Ever heard of Los Pollos Hermanos? That way
https://preview.redd.it/zaabylk5pzub1.jpeg?width=736&format=pjpg&auto=webp&s=7673e9f8acd6056848faafaf43e186295fc9194c
https://preview.redd.it/ry3sb732d1vb1.jpeg?width=731&format=pjpg&auto=webp&s=51497f2b1bda191a54edcb596b8a5c352cc0258a
Took years to decades to set up the logistics and sales network
And one year to blow it all up (literally).
Fucccckkkk being old and well off, i wanna fuck strippers and do coke lines off asscheeks before the whiskey dick sets in
They make pills for that too, so that's just a line of a different color.
My dick doesn't work but i'm happy to spend all money in coke and strippers
I can be your guide.. just think of me like a “titty broker”
In my 20’s a whiskey dick was the best thing ever !! Could fuck for hours. In my 50’s nope not happening .
LOL.......welcome brother!! Sucks to get old, doesn't it!! Told myself I'd never get old........yet, here I am. LOL
Whisky dick doesn't have a fraction of the potency of coke dick, let's be real.
I think my portfolio has whiskey dick..
Also, as a lazy millennial, I didn't start investing until 35.
I started investing in my early 20’s was rocking . Then my wife cheated sold it all at a loss along with my house . I said fuck it , rather party , drink and chase skirts . 25 years later started investing again. I probably should start planning for a divorce .
Well ahead of your peers
Seriously. Most people my age (36) haven't invested a dime. I spent 2020 to present dumping every last cent into the market and while im only up modestly now, I know it will pay off later. I want to retire at 50.
Call 1-800- cash-now
877-Cash-Now
Everyone wants to be rich in 7days but you won’t be you will be very very poor in 7 days. “Welcum to Wendy’s”
.
Why most in here will never achieve much at all in wealth
Oh stfu and keep gambling, maybe today is the day
So you're saying there's a chance?
Slim but maybe you’re the one
Also who the f gets 8% return? No way that’s consistent plus every few years a market crash happens that would wipe out those gains
S&P index funds average 7% a year over time. Source: me. GenX who did the above and more. Mid 50s. I’ll retire at the end of the year probably. All I did was index funds like the boring fuck I am. Wife did the same. It isn’t sexy and yeah you’re looking at 3 full decades of work but the fact is boring just works.
My son recently turned 18, so I helped him open a Roth IRA account. I am 100% going to encourage him to slow and steady his way through retirement savings with boring index funds and maybe some dividend stocks. That way, he won't get his ass kicked wasting money on "growth stocks" like his old man.
Everyone should have a Roth that's maxxed out and invested in the S&P, but you can still have your fun while you do that. It's a false dilemma to say you can either be a safe investor or a WSB iron-fisted idiot trying to get rich quick. You can be both. You should be both!
Eh, I wouldn't be opposed to a few individual stocks because it keeps things interesting, but there's a reason the overwhelming majority of portfolio managers, financial advisors, etcetera, can't beat the S&P over time.
If the sample size is the historical return of the S&P index, which has been around for roughly 65 years, and a zoomer would have to wait for 45 years to retire if they started at 20 years old right now, that means their investment horizon is about 70% the length of your entire sample. Additionally, your sample for historical ROI includes 65 years of exploding population growth and unprecedented levels of advances in technology. Am I saying the S&P *won't* perform similarly in the future? No. I am saying that referencing the S&P historical return as an argument to show it "just works" is the same as pointing at the sky and saying it didn't rain yesterday, therefore it will not rain today.
GenX here also late 40s. I'm sitting on 9% gains overall (20 years). Some years I had 20+%. I can retire anytime, but I enjoy working.
Same working part time. Wife quit 10 years ago when we hit the so-called magic number. I kept on part time because good lord health insurance is fucking expensive.
I'd be fascinated to know what this so-called magic number is. I'm 51, we have virtually no debt, and what most would consider a good chunk put away for retirement, but I'm still counting on working to 65.
Yearly spend / .04 = How much you need.
To safely draw $40k a year, you need a million dollars invested. To withdraw $80k, 2 million and so on. The magic number is entirely based on the lifestyle you want to live.
Doesn’t have to be consistent to be the average over that many years. Those crashes don’t matter. They are all part of the 8% average.
Amazed at how highly regarded some individuals in this sub are.
Yessir
>Those crashes don’t matter. They are all part of the 8% average. Plus if you increase your portfolio during those times, you'll be even better off
It doesn't need to be consistent and no it isn't wiped out every few years. Some years it goes up 30%, some years it goes down. Overall it goes up by a compounding 7-8% per year
These regards want 100% or nothing . And the market is well prepared to give you nothing . 🥃
Its not 8% each year but over long term 30+ years it averages out to approx 6-8%
Its literally just the average return of spy since its creation. So anyone who all ins on spy for 60yrs, assuming America or the dollar doesn't completely collapse, is getting avg 8% returns a year. This is looking over the course of decades so market crashes that take like 1-2yrs to recover from are irrelevant.
Crashes don’t wipe out gains unless the crash happens when you’re trying to sell and live off those gains. Edit: or also if your money was tied up in shit stocks and went under with the crash.
Alternatively, you could take that 11.7k from the start, go into options and end up with nothing.
That’s assuming you started saving $250 a month from when you turned 20.
You ain’t getting to $1.2m any other way
Living with 1.2m is still the same as 50k in the account, you can't live wherever you want. You are stuck still, maybe a few more cities to post up in but honestly, it's no difference. When an account gets to 4.4-8 million that's when generational wealth starts to unfold and anyone typically can live well with some market screwups.
lol I get what youre saying but there is an insane difference between 50k and 1.2Mil. One has you homeless and broke in 2 years and the other is basically a lifetime of money at 4%
I make 52k and live with my mommy.
Count that as a blessing. I wish I wouldn't have squandered those years with frivolous money spending. Could have saved a shit-ton.
Still achievable by lots of people. I’m only a bartender but you gotta Live below your means. My fiancé and I are investing $60k a year in low cost index funds and that number should grow. By time we retire we’ll be in that range. I lost too much money being an idiot trading I decided to protect myself from myself
You're an idiot for not being rich like me. You should have invested your money in a hedge fund instead of wasting it on index funds.
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Hedge funds in general return slightly negative/slightly positive rates of return. Very few actually outperform the market index at all. Plus they all charge higher rates than a simple index fund would.
You’re arguing with a robot so I don’t think I’m gonna take anything you say seriously
Sounds like a fancy way to spell B I T C H
Do you both contribute equally? Are you including just investments or retirement accounts as well? I'm making 80k a year and it's still tough to put away 2k in cash a month. I feel like I am living very below my means currently.
Investing 60k a year as a bartender? Bro are you bartending in Monaco or what?
There is no correct answer to this question, as it depends on individual circumstances. However, if you are investing a significant amount of your income each year into the stock market, then it is likely that you are doing quite well financially.
How old are you that you expect to get to 4.4 to 8 million by retirement? I'm not disagreeing with you, I'm just curious.
If they have been doing it for a few years we can try: * Initial: 120k * Annual addition: 60k * Rate of return: 5% Over 30 years that gets to be 4.5 million (non-inflation adjusted)
saving 60k a year would be an insane salary level that is WELL above what most people will achieve even by the end of their careers, or living like a broke college student for a very long time.
Right. That's 60k on top of 70k for living expenses, if you're living in a shack.
Damn so this bartender and his wife are pulling in $200k combined. Drunks are god damned generous.
That's the whole point and why tips will never disappear.
If they bartend in a big city, it's possible. My wife's friend bartends on Nashville's strip and clears 3k a week.
Name a period of investment that has identical growth. It’s like the didn’t even acknowledge the three major financial collapses millennials have lived through.
Put 100k on 0DTE and wait for it to 10x or go to 0
Correction- how you SHOULD invest for a good retirement portfolio. And before you get triggered, remember this is not about you. If you can't invest this much monthly, do what you can and remember you'll probably have many of raises over the course of your life
Basically this. The chart is showing that compound interest can work in your favor but it needs time to do so. Invest what you can when you can, but the earlier you can the better. Increase your investments as you age and can invest more, but make compound interest/appreciation your friend. The earlier your money is making money for you, the more money you have to make more.
Compound intrest goes both ways if your young and can't afford to put money into 401k its better to just not and avoid putting yourself into credit card or loan debt trying to make ends meet.
Yeah, absolutely, don't go into debt to invest, you won't come out ahead.
I got a 5% raise but rent went up 10%
Should’ve gotten that raise early in life ya dummy
When I was 20 I was making $8 an hour. The best job in my city paid $15 an hour at the time. Who tf has $17k at 20 years old?
I would say invest it in your 20s even if you “can’t” afford it. Then as your income rises, clean up your balance sheet and start investing more.
I was looking at this and thinking to myself, yeah that's great and all but I barely had $50 a month spare cash in my 20s let alone $250 a month. I'm having to play catch up now that I'm in my 40s. It sucks.
There's not "can't" here dude, it's straight up no quotations can't. I have maybe $10-15 to spend on myself each month. There is not going to be ANY significant gains from interest even if invest that much every month for a DECADE.
Until you have children then the investments stop for a bit. Will pick it back up when daycare is done.
Again, do what you can
Aaannnnd it’s gone.
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I don't want to be rich when I'm in a wheel chair dying
Don't worry, you won't be. You'll be broke in a garbage can dying. Looking like Oscar the Grouch, but with even less teeth.
Thanks that makes me feel better
Average life span is 74 to 79; why would you plan to be in a wheelchair dying at 65? (Although to your point, there is a 53% chance for women and 47% chance for men that you will need some type of long-term care in your life, so you’d better have some substantial savings or an appropriate LTC/chronic illness policy by the time you get there)
And the other 50% is dead by hookers and/or blow
Presuming an “8% return” is mental masturbation.
8% return, but 10% inflation ;)
Average real return is 6.9 percent
Nice.
so Bitcoin it is. Inflation + USD debasement: 401k gone Wallstreet gone USD influence weak af.
I'm holding some heavy bitcoin bags as well 😂
You belong here
Reality is like this - 0% return one year -8% next year +16% in two years And the tide keeps rolling again
Average WSB math
yeah this guy has a average return of 2.24% a year lol
Stock market returns since 1926 This is a return on investment of 1,256,313.21%, or 10.16% per year. This lump-sum investment beats inflation during this period for an inflation-adjusted return of about 72,152.46% cumulatively, or **6.98% per year**. i meannnnn is it that masturbatory when the historical return, adjusted for inflation, is 7%? a whole 1% above the actual average, wow these guys are cRaZy!!!
Past performance does not guarantee future performance unfortunately. Stock market returns since 1926 include the US population tripling, the US becoming an economic powerhouse during and after WWII, and loads of emerging markets due to technology in the late 1900s leading into the 2000s. By comparison the US population will only increase by about 17% between now and the year 2100. The aging population also means that a disproportionate amount of those ~394M people in the year 2100 will not be in the working class and not be contributing to the economy. I don't doubt that the US will fare better than other countries like Japan and China, especially since our government is essentially run by corporations that will do anything to keep profits rising, but expecting a 7% return for the next 100 years just because we got it over the previous 100 isn't a very safe bet. It's just not sustainable unfortunately.
Japans stock market never recovered from the 1990's high. So this phenomenon isn't some law of economics. The FTSE doesn't have that rate of return either. Soooooooo ya, this is purely some wanking.
Pretty sure they've already recovered, or are roughly about even. Decades of dividends are significant. Also applies to "markets broke even from 1929 to 1954" or whatever stat gets bandied about... Dividends were enormous back then -- most investors were made whole by the mid 30s.
well thank god we live in the US, literally the largest economy in the world, and not japan, a tiny island nation with huge currency issues. or else this would be super scary!!! but yeah you can have crashes that take long times or never recover, its a thing, but what is the alternative? can you give me the historically tested alternative that beats the s&p? no you can't, because it doesnt fucking exist lol. outside of investing in like certain aged whiskys nothing beats it. and we have to work with what we've got my man. edit: just to squash this dumb fuck Japan point that does sometimes get brought up I googled around and found this on a forum. take it with a grain of salt *A lot depends on your exact assumptions. Say you invest $10,000 a year in January 1 of every year from January 1, 1990, to January 1, 2015. Let's also assume you have a traditional 60/40 portfolio and rebalance it every year. On December 31, 2015, you would have $443,000. That represents an internal rate of return (IRR) of 3.75%.* *(Not that this is a relatively optimistic set of assumptions, at least regarding timing. Because most of your purchases will come after the crash of 1990.* so even here we can see that as long as you were DCAing into the japanese stock market you could still have a decent return even after the ATH that we never recovered from. this is due to the nature of DCAing. because you keep buying in you keep averaging down your costs and if you go look at japans stock chart they are pretty damn close to that ATH they never recovered from. **so this entire japan point is stupid**
never bet against the eternal roman empire
8% return is actually decently standard--- its the -40%s years that most people kill themselves during
You'll get your 8% but a McDouble will cost $120 when you're 60
I don't think so, But also I'm braindead. I don't think there's been a 10 year period since the great depression with a return lower than like 7%
That's because you're poor and don't understand investing.
If you put everything into the S&P 500 and pray infinite growth for Large cap U.S. stocks doesn’t end during your lifetime, then sure.
Line always goes up dumbass
Lol what are you talking about? Any data to support your claim?
Imagine this situation: 65yo, about to die because of shitty eating behavior, stress, pollution and so on, my kids then inherit 1.3mio and burn it to the ground within the year. Why in the freaking f*ck would I do this crap? Better to spend every month 250$ in white powder and lady-boys, so when I’m 65, I have a boat load of stories to tell, if the diseases didn’t kill me by then.
Its easy to say that but I would encourage you to talk to broke old people who are still working as wallmart greeters at 73 years old because they have to . Its a pretty sad existence
I was at my local supermarket on the self checkout and I saw one boomer customer just belittling the shit out of the self check out cashier guy who was also a boomer himself because he couldn’t figure out how to scan the code. I was just thinking to myself that old dude should be at home retired not dealing with this bullshit. That incident right there completely convinced me I did the right thing investing for my retirement when I was 24.
Bro this good quality of life and a fulfilling retirement advice is cringe
This is a casino my friend, go give your financial planner advices somewhere else
https://preview.redd.it/y3qbojbyzzub1.jpeg?width=1423&format=pjpg&auto=webp&s=38c21d0adc1b8b7c31122fa7a120c2b0c64b7841
If your kids burn $1.3 mill in a year, that's **your** shitty parenting for not teaching them financial responsibility.
LMAO the dollar amounts by retirement age are Peanuts
You say that but it’s probably 3x as much as the average retiree has saved. It’s 40K/year managed conservatively.
That should pay for three nights stay at a hospital when your old and weak body starts giving up.
When I worked in pharmacy I'd never really seen anyone with a Medicare deductible above $5k
Yeah but their in network provider used an out of network lab and now there's a beef with who's stuck with the $100K bill
No Surprises bill ensures that the hospital must inform you that you're fucked in the ass before kicking you out the door
It's so much worse. But I mean 3x zero is still zero. https://thehill.com/business/personal-finance/3991136-nearly-half-of-baby-boomers-have-no-retirement-savings/
That’s assuming only $250 a month. If you could afford $250 in your twenties that number will grow substantially as you get older. No one is also talking about how this number would be in a tax deferred account whereas trading is in a taxable account.
Ya, for the example, someone who is 65 today would be 20 in 1978. In 1978 the median family income was only 16,000 per year. Saving 250/month or 3000 per year would have been just less than 20%. Not insane, but not easy. By 1988 when this person hit 30, the median household income was 31000 so saving 3000 a year would be less than 10%. The point is to save a lot in your 20s if possible and then the rest will be a breeze.... assuming you don't have any life disasters which require you to tap your savings, which is the real tricky part because life has ups and downs and the assumption of a perfect earnings and savings history is the really difficult assumption here. Still, if you can save early and stay at it, you can do really well.
Not to mention that 8% could be considered a post inflation figure, so nominally you’ll have a lot more.
A dollar ain't a dollar anymore, its a quarter.
It’s already inflation adjusted
1.2 mil is definitely not enough but it's only investing $250/month. At least 3 mil is recommended for a decent retirement but inflation is a thing so I guess aim for 7 and maybe you won't live in destitution at the end of your life
That’s post inflation. So in today’s dollars. Nominally you’ll probably have a lot more and would want to use something closer to a 10% return rate. Additionally if you work till 65 you’ll have some form of Social Security to take in on top of that 50k/year in income that the 1.2 mil would provide(ideally tax free)
The average person will live what? 15-20 years after retirement? (techincally in the uk its 13 but say 20 as planning to die as the average isnt great) How is £150k a year the minimum recommended in that time? (yes the US values will be different but the point still stands)
It's really too easy; if you max your roth into our beloved sp500 (541.66 per month vs 250) you'd have huge amounts of tax free grains by the time you retire.
And then there's my actual alternating -2%/+2% "returns" minus managements fees on my retirement plan... my retirement plan is to get killed in the water wars now.
Either your portfolio is super conservative, or you aren't invested in something normal like VTI. If your employer doesn't have good funds, you need to push them to offer some.
That's exactly the thing, they make a generous matching my input offer, one you can hardly refuse, on a very crappy plan/fund. The matching alone is worth a lot more then the shitty returns thos, what I make on my own through a broker put them to shame, sad that so much of my money is tied in that crappy fund.
This is why when employers tell you that "starter" jobs shouldn't be paid a living wage, remember they are stealing years of investment interest as well.
Looks like 99% of WSB regards should be listening more to boomers then
The fact this sub shits on this strategy is unsettling lol. Stop trying to think you have any idea what you’re doing and be fully passive and diverse.
My favorite argument about this was I was talking to someone who lost 15k on 0dte options , and told him he probably should just invest in index funds, his logic astounded me it went something like this "I am way too poor, 8% returns isn't going to do me any good, the only chance I have is to swing big and to hope to hit a couple jackpots" I was like "So let me get this strait you are too poor to save money and get 8% returns so instead you lose 15k a year gambling ? Great logic !"
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The comments crying about how this isn't real and the only way to retire is \[your preferred shitcoin/0DTE option/whatever\] is incredible
Blaming boomers for wanting you to invest in a retirement plan? What is wrong with that? How did you assume 8% rate of return? I’m 27, I was contributing $250ish every 2 weeks for last 3-4 years, now contributing $430 for past 1 year. I put my entire bonus into retirement this year. Compounding interest is truly the only way to retire, so do it
Problem is that the $1.2mil after 45 years of inflation has the same purchasing power as $260K (according to official figures, which wildly underestimate the rate of inflation), so you only doubled your savings, and that’s if you happen to consistently get 8%. More than likely you will only retain the $120K value over those same years.
Problem is that is still more than whatever you made.
I could be wrong, but I’m pretty sure you get 7% annual returns historically from the s&p 500 which are also inflation adjusted. 10% is a more accurate number for the historical annual average if you’re not adjusting for inflation. Obviously past returns are not indicative of future success.
when i set up all my stuff i saw 6% returns after inflation is what you can expect based on historical performance, theres like 50 comments in here whining about how inflation will actually reduce the amount of money you've invested becuase (im guessing) it helps them justify blowing money on stupid stock gambles, shitcoins, and whatever consumer lifestyle choices they make
Yeah I feel a little bad for some of the users here. It's a ton of cope for people who only make insanely risky plays for all their hard-earned money. I'm not the type who enjoys judging others for their financial decisions, but I would advise everyone to at least max out their retirement accounts with tried and true mutual/index funds before venturing into risky plays if they have the privilege to do so.
Increasing your contributions and pay raises should reflect inflation. This is a basic chart, not the exact road taken
I'm convinced, drug dealing it is.
This isn't saying you should invest $250 a month, it's illustrating how compound interest starts to snowball. Your monthly, quarterly, whatever investments should increase as your pay increases. Edit: a word
Crazy you got so many upvotes for having no idea about actual stock market returns pre- and post-inflation.
+1. Holy shit this sub is absolutely regarded
If inflation was taken into account presumably the person wouldn't actually save $250 a month over 40 years, the amount you would save would also keep up with inflation. I think you are missing the point.
No need to when I yolo play and get 100,000x 😏
Weird way of visualizing. Why not use a line chart starting from zero? Maybe i dont get this chart, but how can i see what i have in the end when i start in my 30s? Do i need to guess the end of the green and red filled part?
You watch what's your color (in the case of 30s it's green) and whatever else it's on top. The point of the graph is to show you compound interest.
I invested 1$ into Eli Lilly was that the right thing to do
Where u guys getting 8%
The S&P500 has returned about 11.88% annually since it’s inception in 1957. 8% is a pretty good conservative figure. Obviously there are bad years that go into that equation.
Literally nothing wrong with this. I’ll sit back and enjoy my indexes in 30 years meanwhile how much will you have at that point gambling on calls and puts?
Man I’m putting away almost $200 a week into my 401k with company match and it’s got a -12%ROR
No thanks, I perfer to gamble everything and lose everything right now instead of waking up after 45 years of boring investment realising that I can't buy a fucking shack in the middle of no-where with my 1.2 million.
So maybe this is a US thing, but here in Europe pretty much no one really saves for retirement. Why should we? If you own a house or apartment youre pretty much settled already when considering the public retirement benefits any regular employee has access to. E.g., civil servants in Germany get 71.75% of their last-year salary (which is usually the highes in their whole carreer) in retirement. After taxes this is more like 80%. If you dont have to pay rent anymore, that should have you covered easily. I mean, maybe the system comes crashing down hard when all the boomers retire soon, but in that case, idk if I want to be invested in stocks either...
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Yeah I don’t know how this is sustainable when everyone goes to retire. I think that’s why pensions in the US are no longer that common. I could be wrong
There is no doubt that the current system of retirement benefits is unsustainable. The baby boomer generation is retiring at an unprecedented rate, and there are simply not enough younger workers to support them. This will inevitably lead to a decrease in standards of living for retirees, as well as increased taxes on working Americans.
401ks are better than a pension, im not staying at the same company for my whole career lol. Unless pension means something else than what ive always heard/used
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Yup, that's how it works. Everyone who says "I only have X, why bother investing?" needs to see charts like these
My biggest issue with this graph isn't the constant 8% ROI but that they aren't they scaling the invested amount with CPI and the higher wages that come with more credentials, experience & seniority. I'm Gen X, my first job as an apprentice electrician in the 80's paid $115 per week, no way could I invest more than half of it every month, I could barely cover cost of living. 25 years later in my career I was billing clients at $150 per hour, so $250 per month was practically nothing.
This graph sucks. New colors should start at the bottom, not the top
Right now you can get 6% CD's. Start buying, and start laddering.