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The money I saved as a child would buy one picogram of gold today

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Re: The money I saved as a child would buy one picogram of gold today

#121

Post by Spivakov »

krastanov wrote: post #65
Taek wrote: post #12

Earlier quoted context omitted.

It's about the lesson more than anything else. I really want my kids to learn how to save and be well practiced at it, even though the utility function doesn't make a ton of sense.

I feel most of my saving habits came from RPG games, not from my parents (although they did try to teach me that too).

Your comment reminds me of this interesting article: https://crpgaddict.blogspot.com/2010/06/game-economies.html?...

In many rpgs as you progress through the game the need for expenditure diminishes to zero. Different case if it is mmo or designed around grinding though.

Re: The money I saved as a child would buy one picogram of gold today

#122

Post by bee_rider »

krastanov wrote: post #65
Taek wrote: post #12

Earlier quoted context omitted.

It's about the lesson more than anything else. I really want my kids to learn how to save and be well practiced at it, even though the utility function doesn't make a ton of sense.

I feel most of my saving habits came from RPG games, not from my parents (although they did try to teach me that too).

Spending all your money on health potions and in preparation to fight (the|your) boss, accidentally over-leveling, and not needing them at all?

Re: The money I saved as a child would buy one picogram of gold today

#123

Post by slg »

koolba wrote: post #92
slg wrote: post #47

Earlier quoted context omitted.

I made that comment because I know people are going to use the linked example of what happened in Argentina as the predicted fate of what will happen in the US. That seems to be what you are implying here by drawing parallels between the two. But I simply want to make it clear that the US is at 8% inflation for the last year while Argentina spent decades with the average annual inflation rate measured in the hundreds…

> But I simply want to make it clear that the US is at 8% inflation for the last year while Argentina spent decades with the average annual inflation rate measured in the hundreds. The two aren't close to the same. “How did you go bankrupt?” Bill asked. “Two ways,” Mike said. “Gradually, then suddenly.”

Well I guess I shouldn't spend money on food this week as that is a gradual step towards bankruptcy.

Re: The money I saved as a child would buy one picogram of gold today

#124

Post by kevinmchugh »

saagarjha wrote: post #99
epgui wrote: post #33

Earlier quoted context omitted.

I don’t understand why so many people “save money” but then just keep cash under a mattress or in a savings or checking account. If you want to win at life, you “save money” by purchasing non-cash assets like stocks.

Because investing is non-trivial and nobody tells you how to do it.

There's lots of advice out there and it is almost all as useful as it is expensive

Re: The money I saved as a child would buy one picogram of gold today

#125

Post by JumpCrisscross »

epgui wrote: post #33
Taek wrote: post #12

Earlier quoted context omitted.

It's about the lesson more than anything else. I really want my kids to learn how to save and be well practiced at it, even though the utility function doesn't make a ton of sense.

I don’t understand why so many people “save money” but then just keep cash under a mattress or in a savings or checking account. If you want to win at life, you “save money” by purchasing non-cash assets like stocks.

> you “save money” by purchasing non-cash assets like stocks

Bonds aren’t great for building wealth. But they’re fine for preserving it. Saving money via a mix of inflation-indexed and fixed-yield debt will generally preserve your purchasing power over long time intervals.

Re: The money I saved as a child would buy one picogram of gold today

#126

Post by reducesuffering »

nanomonkey wrote: post #87
renewiltord wrote: post #22

Zeihan in tears. I really enjoy his description of geopolitics, but the man definitely overestimates Argentina repeatedly for no bloody reason. When I was a child, I saved a little of my allowance to start with, but then rapidly realized that every year I was blowing away (in earnings) my savings from the previous year. Soon my porn and bootleg music high-school business was beating all the savings of the previous ye…

What are some examples of these crazy liquid assets? In the past I've spent extra money on tools, a house and some gold and silver (as I have a goldsmithing hobby). The house is difficult to unload, at least mentally, pretty good market. The tools have kept their value, but finding a buyer is difficult. The gold and silver are a similar story, but tend to fluctuate in value rapidly.

Global stock and precious metals ETF's are inflation-resistant and quite liquid. You'll pay only 0.02% spread to liquidate them and have the cash in your bank account within a few days. As opposed to a house which is generally 6% spreads and a couple months to liquidate. Only in exceptional liquidity crises (August 2008 - March 2009, and March 2020) are you at risk of cashing out for 30-50% losses. 80% of the time it's at value or higher. So you just need a small percentage of assets that are deflation-resistant (cash & bonds) for the small periods of time deflation happens, to pay your expenses.

Re: The money I saved as a child would buy one picogram of gold today

#127

Post by cat_plus_plus »

Cash should be seen as medium of exchange rather than store of value. If you saved for a bike, the bike was probably worth much more to you than a picogram of gold. Even if you ended up forgetting about your penny jar and finding it in the attic as an adult, the act of saving itself gave your valuable lessons about planning and delayed gratification.

On the other hand, if you made even a conservative investment like a thin silver chain or a popular book with author autograph, I bet you will get more than your money's worth for that today. If you bought a share of Apple stock - woah, but I guess we couldn't have all known back then.

As adults, yeah we should know better than to keep our wealth essentially in the pockets of politicians. Invest in something that will be useful to your or someone else even many years later, or profit-generating businesses. But there is nothing wrong with children play-learning a simplified version of life rather than immediately having to know the difference between mutual funds and ETFs.

Re: The money I saved as a child would buy one picogram of gold today

#128

Post by marcodiego »

slg wrote: post #9

Argentina has experienced multiple rounds of hyperinflation due to failed monetary policy. Saying this story is a "lesson about the power of inflation" is like saying "the sun is hot". Yes, it certainly is, but it is so far beyond normal definitions of "hot" that people will have a hard time understanding it. This is more a story about the failures of Argentina's governments over the last 50 years than a story about…

In 2011, while still at my first job, I spent a few days touring in Buenos Aires. At the time, 1 Brazilian Real was worth 2 Argentine Pesos. It was enough to feel like a rich there.

About ten years later, 1 Brazilian Real is now worth more than 24 Argentine Pesos. Of course, during the same period, Brazil had some crisis too. So, it is much harder for me today to save enough to spend a few days in Buenos Aires. Sad.

Re: The money I saved as a child would buy one picogram of gold today

#129

Post by rmatt2000 »

treeman79 wrote: post #11
slg wrote: post #9

Argentina has experienced multiple rounds of hyperinflation due to failed monetary policy. Saying this story is a "lesson about the power of inflation" is like saying "the sun is hot". Yes, it certainly is, but it is so far beyond normal definitions of "hot" that people will have a hard time understanding it. This is more a story about the failures of Argentina's governments over the last 50 years than a story about…

There are a lot of people that think we can print spend endless amounts of money without consequences. Heck an alarming amount of people don’t understand that bonds need to be paid back.

Not to mention the stunning number of people with college degrees who don't think loans should be paid back.

Re: The money I saved as a child would buy one picogram of gold today

#130

Post by Swizec »

Certhas wrote: post #8
t43562 wrote: post #3

I remember my dad encouraging me to save my dollars and not spend them on choc-99 double ice-creams ($2.13). These were soft whip ice-creams with 2 cadbury's flake chocolates stuck in the side and they seemed like the closest thing to heaven on earth to me. What my dad said seemed logical though and I saved. When I was 16 I had a holiday job that earned me many ice-cream-worths but I kept it - didn't buy a bicycle or…

As a childhood lesson you don't need crazy inflation for this to hold true though. Anything that takes more than a few of months to save up to just doesn't make sense as a kid. Your disposable income goes up by factors of ten every few years. You have 2$ to spend at 5, 20$ at 10, 200$ at 15. Then it slows down but you might still get to 2000$ at 25. Saving as a kid really never seemed worth it to me.

Wow I wish I had $200 to spend at 15

The rest of your comment makes sense. I didn’t really start saving until my late 20’s. It just made waaaay more sense to invest any disposable income in myself.

So far so good. Thanks to those early investments in myself I’ve been able to save more in the past ~5 years of my career than my cumulative earnings of the first 10 years.

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