The money I saved as a child would buy one picogram of gold today • Hacker News Board

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

#271

Post by vl » Mon, Apr 18, 2022, 2:28 AM UTC

MarkusWandel wrote: post #176

ip26 wrote: post #168

Earlier quoted context omitted.

It's protective against downside, but can constrain your upside. I was raised a saver, and it's been very hard to hire out simple tasks & let go of trifles, which in turn constrains how much time & energy you have to focus on increasing your earnings. As a low earner, it's better to focus on efficiency & DIY, but as a high earner it's irrational to spend an hour getting bent out of shape over a few dollars.

Absolutely agree, which is why, for example, I don't do my own car repairs any more. But you can still have a less fancy car and keep it longer. And I don't want to focus on increasing my earnings. I'd much rather be fixing something around the house.

The problem with car and house repairs is that even if you have money to pay for it, managing them still takes tremendous amount of time. In fact so, that for trivial repairs it's easier to order supplies and tools and do them myself. So one way or another car and house consume time.

Next level is to hire people to manage it for you, but this is completely different level of income.

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

#272

Post by niij » Mon, Apr 18, 2022, 2:32 AM UTC

Taek wrote: post #12

Certhas wrote: post #8

Earlier quoted context omitted.

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.

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.

Alternately teaching them to spend it as fast as possible is a good lesson for high inflation.

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

#273

Post by ALittleLight » Mon, Apr 18, 2022, 2:45 AM UTC

epgui wrote: post #261

ALittleLight wrote: post #214

Earlier quoted context omitted.

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 halfw…

Real estate is the same as my casino example. If the price of your house changes year to year then your networth changes with it. You might not care, or even know, about the changing price because you have no intention of selling your house, but that doesn't change the reality of your fluctuating networth.

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

#274

Post by vmurthy » Mon, Apr 18, 2022, 2:56 AM UTC

logifail wrote: post #100

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.

> If you want to win at life, you “save money” by purchasing non-cash assets like stocks. Except when you don't. Between 1995 and 2000 I lived in a student house in the UK and one of my housemates (who was also a student, and from my recollection almost as broke as I was back then) was really into investing into the stock market during the dot-com boom. He bought both Lastminute.com (IPO March 2000 @ 380p/share[1], s…

The problem with an example like this is that a (hypothetical) friend of yours could have bought into Apple or Amazon or MSFT back then and had a ton of money now :) . I was about to suggest index funds but looks like the FTSE-100 has been sh$t for the last 22 years, too (~10 percent total return). No luck there for your friend even if he had invested in index funds :(

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

#275

Post by epgui » Mon, Apr 18, 2022, 3:12 AM UTC

ChadNauseam wrote: post #268

epgui wrote: post #113

Earlier quoted context omitted.

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.)

The book really impresses upon the reader the difficulties of beating the market, and indeed talks a lot about random walks, but mostly it's about the efficient market hypothesis.

I should say that I also don't think this is the best description of how prices actually move, and over the years since I've read the book, I have come to no longer believe in the EMH. That being said, I do still think pointing people in this direction in general is the best thing I can do: even though these ideas will only take you so far, they remain academically productive, interesting, and useful... And most people would do better to approach the markets with more humility and less confidence. Those who are nerd enough to go beyond the EMH will undoubtedly do so on their own and at their own peril. :)

The book is very much in the tradition of Benjamin Graham's The Intelligent Investor, Warren Buffett's value investing style, etc.

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

#276

Post by makeitdouble » Mon, Apr 18, 2022, 3:21 AM UTC

jjeaff wrote: post #151

Jiro wrote: post #32

Earlier quoted context omitted.

Learning to manage money includes making correct decisions about whether a course of action is worth it. Forcing a child to save when he'd be better off not saving teaches the right lesson about what saving is, and the wrong lesson about when you should save.

Not saving comes natural to most people. Learning to save is the hard part. Most children don't ever make enough money that saving would make financial sense. The reality is, teaching kids to save their money is more a lesson in delayed gratification than it is a financial lesson.

This is true for many children, but there’s a also a lot of kids who are too afraid to spend and enjoy their money.

It is I think as important to teach children how to spend their money, on what, and get them used to understand how much they got for their money.

As a kid I saved for a long time to buy an Atari Jaguar, and it was a eye opener looking back at the “sacrifices” I made for that result.

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

#277

Post by xtracto » Mon, Apr 18, 2022, 3:33 AM UTC

slg wrote: post #123

koolba wrote: post #92

Earlier quoted context omitted.

> 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.

On the contrary, investing in cans of beans may offer a great way to protect your wealth from inflation. They may be a non-deprecating asset.

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

#278

Post by slv77 » Mon, Apr 18, 2022, 3:35 AM UTC

arcticbull wrote: post #245

slv77 wrote: post #84

Earlier quoted context omitted.

High inflation usually goes hand-in-hand with some degree of corruption that immensely benefits the connected and powerful. In Venezuela the government implemented exchange rates controls which were much more favorable then market based rates. Those with privilege and connections could purchase dollars at the official rate and then sell them at market rates at 10x what they paid for them. By this method an immense me…

High inflation hurts, proportionally, higher net worth individuals more than low net worth individuals.

Inflation benefits debtors while it penalizes savers but the poorest segment of society is neither savers (as they have no disposable income) or debtors (as nobody will lend to them) and are hurt the most from inflation.

A high net worth individual may lose expected future income due to inflation but someone that is poor may not eat today because of inflation.

Eventually when inflation gets bad enough and real rates are negative producers will simply sit on commodities rather then distribute them. Leaving the oil in the ground maybe a better looking term wealth preservation strategy then pumping and selling the oil.

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

#279

Post by xtracto » Mon, Apr 18, 2022, 3:35 AM UTC

marcodiego wrote: post #141

Brazil had its own share of problems with hyperinflation during the 80's and early 90's. I remember the behavior it conditioned people. Once people got their paychecks, they would rush to the supermarket to buy as much as they could, by the end of the month they wouldn't be able to buy that much with the same amount of money. People ran ahead supermarket staff which updated prices so they could buy the same product a…

>It was somewhat funny many years later finding old boxes written "Custou dez litros de gasolina"

That's genius. I'm going to start using it here for Mexico

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

#280

Post by nullc » Mon, Apr 18, 2022, 4:37 AM UTC

jjice wrote: post #218

Certhas wrote: post #8

Earlier quoted context omitted.

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.

Wish I had this logic when I was 16 and working my awful minimum wage jobs. Sure, that money ended up in an IRA eventually, but $1k gets made much faster as a software engineer than it does frying chicken wings for minimum wage, to the point where the trade off from having a bit of fun in high school or college would vastly outweigh the small gains I made. I remember thinking my friends and peers were wasteful for sp…

Was your future as a software engineer guaranteed when you were a kid? :)

Personally, I never would have had an opportunity to go for a high paying job if I hadn't saved up a lot of money at a time when I was earning little. So not only was a high paying future not a sure thing, it was probably only possible because I didn't act as though it were.

It's easy to take for granted all the luck and skill that our past selves benefited from, making past caution seem foolish in hindsight. Seldom was it actually guaranteed.