31–40 of 43 posts
"Two million bucks is the great dividing line between middle-class comfort and worry in America right now. That $2 million is $100,000 in income, if you base it on an aftertax 5%."
Obviously everyone in the middle class is sitting on $2 million in wealth.
I like how in the end the whole article boils down to a potshot at police and firefighters for wanting pensions. You stay classy, forbes.
You really have to be a member of the clueless aristocrat club to write for Forbes. "Two million bucks is the great dividing line between middle-class comfort and worry in America right now. That $2 million is $100,000 in income, if you base it on an aftertax 5%." Obviously everyone in the middle class is sitting on $2 million in wealth.
"A million dollars then would be about $20 million today, which is, interestingly, $1 million a year at a 5% aftertax return." 5%?? Does anyone know what investment is he talking about?
5% is pretty conservative, especially if you're in it for the long haul. If you look at any 30 year average pretty much since 1920, it tends to be 9% or more: http://www.getrichslowly.org/blog/2008/12/16/how-much-does-t...
Stock investing for retirement is predicated on a market which rises relative to inflation (investing in this regard is an inflation hedge).
Paul Krugman in The Great Unravelling (2003) noted that a stock market which provides consistent returns is also consistently undervalued. Stocks (or any other investment vehicle) are not an automatic win.
There are also long stretches in which returns have been nil to negative: http://www.nytimes.com/interactive/2011/01/02/business/20110...
Earlier quoted context omitted.
It could go down too, by 4%. Risk works both ways, hence the higher reward. You can't really expect anything, the only thing that you can do is trade risk for potential gain or loss and hope that you jump to the next ice-floe when you should. Miss the beat and you'll lose rather than gain.
Sure, on any given year it can swing wildly, but long term I believe that those who invest in individual stocks ("the rich") will do significantly better than inflation. It sounds like you're assuming it's a fair game and that everyone gets to participate. The reality is most people don't get to do the things the rich get to do, and their gain tends to come at the everyone else's loss. For example, the rich often pay…
Anybody can go to ETrade or Fidelity and buy an S&P index fund. (Or individual stocks, but that usually produces worse results).
carrying forward capital losses indefinitely
That may let "the rich" pay a low effective tax rate one year, but if so it means they paid a high effective rate in previous years where they had capital losses but couldn't use it to offset ordinary income. Getting rid of that offset would put an end to virtually all investing: investors would suffer 100% of their losses but keep only 85% or less of their gains, and that's not even accounting for inflation.
You really have to be a member of the clueless aristocrat club to write for Forbes. "Two million bucks is the great dividing line between middle-class comfort and worry in America right now. That $2 million is $100,000 in income, if you base it on an aftertax 5%." Obviously everyone in the middle class is sitting on $2 million in wealth.
Earlier quoted context omitted.
5% is pretty conservative, especially if you're in it for the long haul. If you look at any 30 year average pretty much since 1920, it tends to be 9% or more: http://www.getrichslowly.org/blog/2008/12/16/how-much-does-t...
Take a look at the major US stock market indices from 2000 to present: DJSE, S&P 500, NASDAQ. They're flat or down (markedly so for the NASDAQ from its 2011 peak). Stock investing for retirement is predicated on a market which rises relative to inflation (investing in this regard is an inflation hedge). Paul Krugman in The Great Unravelling (2003) noted that a stock market which provides consistent returns is also co…
And if something would be an automatic win it wouldn't take long before everybody would be doing it, killing the economy (and whatever it was that was an automatic win) in the process.
Earlier quoted context omitted.
Please, please do not use 9% as your expected investment return. The numbers touted over the past decade & a half are mostly an artifact of the post WWII period. Furthermore, consider the demographic issue of boomers retiring. These boomers are forced sellers, in other words returns will be muted for the foreseeable future because of the larger class of people who will sell equities in order to fund their retirements…
I disagree. If you include tricks that most working class doesn't have the ability to pull off effectively, I believe that the returns will likely continue at that rate, and so does my financial advisor. Stuff like tax harvesting, margin borrowing, offsetting dividends with margin interest, carrying forward capital losses indefinitely, etc. The simple fact that the majority of the population can't do these things mea…
We actually don't disagree, as it were. As long as you are systematic in your approach, continuously question your assumptions, & constantly look for "what ifs".
I agree with your last statement as well.
Regards, TDL
That's because $100 million is really a 'tweener number: You can be Richie Rich among your upper-middle-class friends or a hanger-on in the superrich crowd.
Ok, this is stupid on so many levels. First among them is that the difference between upper-middle-class and upper class is not, in reality, based on an income threshold. Steve Jobs was a billionaire and solidly middle-class. He worked too hard. Bill Gates is possibly lower-upper but he had to push himself into the right circles to get there.
The upper class (the real one) is a well-connected, socially closed set of parasitic people who peddle social connections and influence as a means of sustaining their insanely expensive lifestyles. They generally have the resources to accrue $1-2 million per year without really working, just by selling and exploiting their social connections, but they aren't all in the $50m+ net worth crowd. Just like us, some of them negative net worth. In their cases, it's usually a consequence of doing seriously stupid shit.
You can separate the lower class from the middle class based on education, income, and job prestige because the middle class's values are defined based on an ethic of production and these are taken as evidence of a productive life. The middle-class line corresponds to an income around $100,000 per year per adult at age 40, adjusted for cost of living and job prestige. (Yes, this means that 50th-percentile is not "middle class"; society is pyramidal.) The upper class, by contrast, defines itself based on an ethic of consumption-- materially speaking and in terms of social access (the ability to consume the attention of important people). Different things entirely.