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I'm Too Risk-Averse for Index Investing

paranoidvalueinvestor.substack.com

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Re: I'm Too Risk-Averse for Index Investing

#51

Post by JKCalhoun »

assbuttbuttass wrote: post #15

There's something really insidious about tying 401ks and other retirement accounts to the stock market. People including myself end up with a large portion of our assets essentially gambled on the future success of US corporations. It gives some false legitimacy to this idea that our media is constantly pushing, that if the stock market is going well then regular Americans are doing well.

Surely every 401K plan allows for bonds.

Further, my 401K allowed for indexes tracking foreign markets, real estate....

I don't doubt that the majority of people exposure to stocks are U.S. markets, to be sure. But perhaps, to that end, the government (Feds) are more likely to respond to collapses in the U.S. Stock market than other forms of investment.

I don't know that I believe it myself, but I'm proposing that maybe the "safe" money is in U.S. Stocks.

Re: I'm Too Risk-Averse for Index Investing

#52

Post by bleuchase »

assbuttbuttass wrote: post #15

There's something really insidious about tying 401ks and other retirement accounts to the stock market. People including myself end up with a large portion of our assets essentially gambled on the future success of US corporations. It gives some false legitimacy to this idea that our media is constantly pushing, that if the stock market is going well then regular Americans are doing well.

> There's something really insidious about tying 401ks and other retirement accounts to the stock market.

Insidious? That’s a bit rich. You can allocate money in your 401k however you want. It’s self-directed. If you don’t like stocks keep it in bonds or cash.

Re: I'm Too Risk-Averse for Index Investing

#53

Post by mvc »

assbuttbuttass wrote: post #15

There's something really insidious about tying 401ks and other retirement accounts to the stock market. People including myself end up with a large portion of our assets essentially gambled on the future success of US corporations. It gives some false legitimacy to this idea that our media is constantly pushing, that if the stock market is going well then regular Americans are doing well.

It was super annoying when I returned to the UK with my dual UK/US wife and we couldn't invest in the same passive funds (or rather, we could, but at punitive tax rates) because US seems to like their citizens wherever they live in the world to invest in the US.

Nice bit of protectionism you got there.

Fair enough for the Maniforts/Bidens of the world wheeling and dealing on a global stage. Less fair for those of without spare thousands to burn on financial advisors.

Re: I'm Too Risk-Averse for Index Investing

#54

Post by JKCalhoun »

awillen wrote: post #49
eatsyourtacos wrote: post #39

Earlier quoted context omitted.

This is 1000000% true. The entire system is completely broken. It is literally designed to make the markets keep going up, which as usual benefits the wealthy far more than the average person. And people who are even middle class barely really benefit from it. While the lower class and poor don't benefit at all. I choose not to participate in "investing" because it's not investing. It's literally gambling. You can't…

But how do you fund higher guaranteed social security? You need more money, which means either higher taxes or more people earning taxable money. The speed of population growth is declining, which is a big problem for the latter, and the former clearly has its limits. You're saying stocks are a Ponzi scheme, but as a solution you're proposing something that constantly needs more people paying in money or it will coll…

Agree with you. To be sure government and our Corporate overlords have demurred responsibility and put retirement planning on the backs of us clueless workers.

But every other proposal sounds worse or unworkable.

Re: I'm Too Risk-Averse for Index Investing

#55

Post by TIPSIO »

Article was structured a little weird (with the headings) and either proposed nothing as an alternative or was saying Value Investing is the better route.

This is kind of my beef in general, where does a normal family park cash?

Value Investing isn’t exactly easy.

I used to be big into FI/RE, but as I get older I am realizing cash flow is better (maximize your dollars in as easy and as stable as possible). Is more sustainable long-term than giant index fund nest egg… if I could choose.

Re: I'm Too Risk-Averse for Index Investing

#56

Post by Auracle »

eatsyourtacos wrote: post #46
sbelskie wrote: post #32

Earlier quoted context omitted.

I can understand that feeling but what offers average Americans a better option for growing and securing wealth than investing (most) savings in the stock market?

Why should that be how it works though? We should be taxing people more, and guaranteeing much higher social security so we don't have to gamble our savings in a giant ponzi scheme. It shouldn't be on the individual to be lucky that a massive recession doesn't hit when they want to retire.. or depend on the market making a few percent a year just to survive.

Most 401ks are probably in funds that automatically start allocating more and more bonds as they approach retirement age. And frankly, if I could stop contributing to social security and invest it instead I would in a heartbeat. It’s effectively a Ponzi scheme that relies on more and more citizens paying in. That’s unsustainable, and by the time I retire I’m sure they’re at least going to move the age to collect up.

Re: I'm Too Risk-Averse for Index Investing

#57

Post by [deleted] »

awillen wrote: post #49
eatsyourtacos wrote: post #39

Earlier quoted context omitted.

This is 1000000% true. The entire system is completely broken. It is literally designed to make the markets keep going up, which as usual benefits the wealthy far more than the average person. And people who are even middle class barely really benefit from it. While the lower class and poor don't benefit at all. I choose not to participate in "investing" because it's not investing. It's literally gambling. You can't…

But how do you fund higher guaranteed social security? You need more money, which means either higher taxes or more people earning taxable money. The speed of population growth is declining, which is a big problem for the latter, and the former clearly has its limits. You're saying stocks are a Ponzi scheme, but as a solution you're proposing something that constantly needs more people paying in money or it will coll…

[deleted]

Re: I'm Too Risk-Averse for Index Investing

#58

Post by throw0101a »

baxtr wrote: post #31
impostervt wrote: post #2

Buying value stocks may be better than buying an index, but identifying value stocks is hard and time consuming. Wouldn't the average investor be better off buying index funds, since the average investor does not have the time, inclination, or training to find value stocks?

Yes, agreed. This is comparing Apples and Oranges. Also, keep in mind: If you had invested all your money into a NASDAQ ETF at the peak of the Dotcom bubble 20 years ago, you would have earned about 300% in returns by now. I think it is easy to dismiss indices in a bear situation. When in doubt, zoom out and relax.

> Also, keep in mind: If you had invested all your money into a NASDAQ ETF at the height of the Dotcom bubble 20 years ago, you would have earned about 300% in returns by now.

It should be noted that the NASDAQ is heavily skewed to one particular sector, and so less diversified. Going for the S&P 500, US Total Market (Russell 3000), or world index would spread the risk around more.

Even investing only at market peaks, as long as you didn't panic and sell, would still give results most people would find satisfactory:

* https://awealthofcommonsense.com/2014/02/worlds-worst-market...

Re: I'm Too Risk-Averse for Index Investing

#60

Post by JKCalhoun »

eatsyourtacos wrote: post #46
sbelskie wrote: post #32

Earlier quoted context omitted.

I can understand that feeling but what offers average Americans a better option for growing and securing wealth than investing (most) savings in the stock market?

Why should that be how it works though? We should be taxing people more, and guaranteeing much higher social security so we don't have to gamble our savings in a giant ponzi scheme. It shouldn't be on the individual to be lucky that a massive recession doesn't hit when they want to retire.. or depend on the market making a few percent a year just to survive.

I agree, but you have to specify where you're going pull those taxes from. We need a "sustainable tax base".
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