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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

#261

Post by epgui »

ALittleLight wrote: post #214
dijit wrote: post #54

Earlier quoted context omitted.

I mean, liquid asset vs variable and tied up asset? I'll be the first to admit to being fiscally conservative: money I can't spend and that is sunk into something else does not guarantee that I get my money back. I'm losing money on the savings I have every year, which is why I put nearly all my savings into a fund, but then that fund dropped in value almost immediately by 30%, if I had done nothing with my money and…

I don't understand the mindset that losses aren't real until you convert them back into cash. If you had turned your money into casino chips and were sitting at a poker table, and had just lost 30% of your chips, would you consider that your losses weren't real until you cashed out your chips? Of course, you might win your money back, and if you were a good poker player who usually came up net-positive from situation…

It’s not the same: in your example with casino chips, each game you play is a bet, it’s more akin to buying and selling a stock each time. You realize your gains/losses each turn.

A better analogy is stocks vs Real Estate. Let’s say you buy a home for 200k, and sell it later for 300k. Every day in between, when you “weren’t in the market”, the potential value of your home fluctuated: it’s entirely possible that halfway in between, the top bid on that day, were it listed on the market, would have been for 6$.

Of course in reality you don’t see all these intermediate hypothetical prices, but in theory they’re there just the same as if you bought stocks and then didn’t look at prices for 10 years.

The fact that there is a price on the open market (the fluctuation of which determines your unrealized gain/loss) does not obligate you to sell at any particular moment: that’s just like owning a home and not caring how much someone would pay for it on Tuesday vs Wednesday because you don’t intend to sell it in the first place.

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

#262

Post by nly »

wildrhythms wrote: post #234
ClumsyPilot wrote: post #185

Earlier quoted context omitted.

Most people who want to secure family wealth and have the option of trickle incompe buy real estate

2008 is calling and wants to talk to you.

2008 property crash was mostly a US phenomenon

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

#263

Post by Retric »

jonhohle wrote: post #251
arcticbull wrote: post #246

Earlier quoted context omitted.

That's the wrong way of looking at it, which is why you arrived at the wrong conclusion.

Savings is explicitly idle money. Illiquid holdings are very different from cash that can deployed immediately. You certainly don’t hold 100% property and by definition that unspent money is savings. Savings can certainly be used to purchase securities, commodities, property, but then it’s no longer savings and is an investment.

You think in terms of money because that’s what your paid in, but for subsistence farmers who never deal in money it was the excess physical harvest etc.

Where investments differ is the possibility of returns above what was saved. A pound of gold is still going to be a pound of gold in 1,000 years, but land can provide rental income so you still have land but now you also have money or what or whatever.

What muddled the water is people used to have savings accounts that provided interest above inflation.

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

#264

Post by Retric »

jonhohle wrote: post #260
arcticbull wrote: post #252

Earlier quoted context omitted.

Savings is not idle money. Savings is stored value. Currency is an intentionally lossy short-term store of value designed to incentivize allocation of capital into long-term savings vehicles like stocks, bonds and real estate that are productive and help the economy. Idle cash hurts the economy. That's why even in a savings account, idle cash isn't idle, it's collateralizing loans. A savings account is more of a bond…

Idle money is literally the definition of savings: - https://www.investopedia.com/terms/s/savings.asp - https://www.wellsfargo.com/goals-investing/saving-vs-investi... - https://financial-dictionary.thefreedictionary.com/saving I agree that fiat is intentionally lossy. I also have no problem with the idea of my idle money being, in fact, borrowed out at no risk to myself (and at recent interest rates there wouldn’t b…

From your link: “income that is not spent on current consumption.”

Income is not limited to money, you can do something and be paid in physical goods. Either indirectly by being paid in them or directly by at making them ex: canning tomatoes you grew.

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

#265

Post by samarthr1 »

davchana wrote: post #236
logifail wrote: post #114

Earlier quoted context omitted.

> And you definitely don't hold cash. Holding cash has a lot of risk as well (Sorry, genuine questions) risk of what and compared to what?

One of the many, we indians experienced few years ago, where the prime minister simply announced on national tv that from tonight 8pm onwards two denominations (the highest ones at the time) are not valid anymore. I think he gave few/20 weeks to deposit old notes to banks. One of many, the housewives who saved money from day to day house expenses, had to come out clean to family that they are holding 1000s of currenc…

And so did a bunch of folks who held black money no?

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

#266

Post by davchana »

samarthr1 wrote: post #265
davchana wrote: post #236

Earlier quoted context omitted.

One of the many, we indians experienced few years ago, where the prime minister simply announced on national tv that from tonight 8pm onwards two denominations (the highest ones at the time) are not valid anymore. I think he gave few/20 weeks to deposit old notes to banks. One of many, the housewives who saved money from day to day house expenses, had to come out clean to family that they are holding 1000s of currenc…

And so did a bunch of folks who held black money no?

I think the official figure is, more that 99% of old money was presented to banks for conversion; but this might spill into a political or controversial conversation, I will not be pursuing it because of lack of energy.

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

#267

Post by jonhohle »

Retric wrote: post #264
jonhohle wrote: post #260

Earlier quoted context omitted.

Idle money is literally the definition of savings: - https://www.investopedia.com/terms/s/savings.asp - https://www.wellsfargo.com/goals-investing/saving-vs-investi... - https://financial-dictionary.thefreedictionary.com/saving I agree that fiat is intentionally lossy. I also have no problem with the idea of my idle money being, in fact, borrowed out at no risk to myself (and at recent interest rates there wouldn’t b…

From your link: “income that is not spent on current consumption.” Income is not limited to money, you can do something and be paid in physical goods. Either indirectly by being paid in them or directly by at making them ex: canning tomatoes you grew.

I agree with that. In that case savings would be the goods that remain unused or at least left in a condition that did not put their value at risk (e.g. eating the tomatoes). A properly canned food can be a great store of value for a decade or longer and is a hedge against inflation, however are suboptimal after a point due to their volume and mass. An entire pantry may be the equivalent value of one oz of gold, for example, though with more immediate utility.

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

#268

Post by ChadNauseam »

epgui wrote: post #113
saagarjha wrote: post #99

Earlier quoted context omitted.

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

I recommend “A Random Walk Down Wall Street” for a safe/conservative, no-bs and simple introduction.

I haven't read the book, but is the premise that asset price movements form a random walk? (They don't, and hearing it said that they do is probably my nerdiest pet peeve.)

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

#269

Post by OJFord »

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.

Saving for a (an achievable) goal is though. I bought stuff that I had to save for as a teenager that I still have and use. (Speakers & AVR come to mind.)

I agree about the sort of 'goalless' saving that I do now though.

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

#270

Post by t_mann »

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.

I liked it (saving and later also investing), I think at one point I even bugged my bank for better rates on my tiny account once I'd figured out how to compute compound interest on my dad's calculator (and realized it was programmable).

Not that I don't need a job anymore, but it did serve me well (the stock market rising continuously for 10 years might have helped too). I definitely wouldn't talk anyone out of it with that sort of reasoning, maybe the only benefit is sparking an interest in math and computers.

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