The misery of youth

[CFordUNC]

I think a big issue for younger people when it comes to investing is that social media and influencers have given the appearance that if you didn’t invest in Netflix or Apple or Google or Amazon or whatever, or if you aren’t a stock picking or day trading wizard, then you are doing investing wrong. Or if you aren’t a millionaire or financially independent or whatever by age 30 or 35, or if you aren’t a homeowner or an owner of multiple homes or building your own real estate Empire by 35, you are not doing anything.

The reality is that there is a really, really simple path to wealth. But it’s a long path to wealth. It’s not a glamorous path to wealth. It is a slow, boring, methodical path to wealth. But it’s a proven path. And that is, save and invest 10%, 15%, 20% of your income and stick it in low cost, passively managed, total stock market and total bond market index funds. Set it and forget it. Don’t bother to check your accounts but maybe once or twice a year. Just save and invest, preferably on auto draft. Someone who can start doing that in their 20s or even their 30s, and do it with discipline and consistency over two or three or four decades, well in all overwhelming probability have more money than they know what to do with in retirement- and still be able to live and enjoy life along the way.

The problem for young folks is, the Internet and social media have given us more access to more information and minute to minute access to more people‘s lives and snapshots of only the highlights and none of the lowlights. So everybody wants to be the next GameStop millionaire, but nobody wants to be the next Thomas Stanley Millionaire Next Door.

I feel like I am qualified to critique younger folks, as I am on the younger end of the millennial generation, and I know how many of my peers and younger, don’t think through the value of having a long-term disciplined saving and investing plan. I get that it is not fun to stick away money now that you won’t touch for 30+ years. But you can’t afford not to.

 

[ZenMode]

There is no reason to believe S&P index funds won't continue to perform in the future as they have in the past. New markets emerge and drive growth. Hell, I bought into a company a few years ago that was showing promise. Nvidia. I got lucky but the point is AI is still an emerging market and there will always be others

"There is no reason to believe S&P index funds won't continue to perform in the future as they have in the past."

Why?

 

[CFordUNC]

I don’t mean to be dismissive of young people‘s financial and economic concerns. I know that there are real economic concerns and anxieties. But I also don’t have as much patience, and maybe that is a character flaw on my part. All I know is that I’ve sacrificed and saved and invested when I barely had two pennies rub together. I did it when I was making eight dollars an hour in my first job out of college, while paying rent on an apartment, while paying all of my bills, while paying on the (admittedly small) student loan that I did have. I do it now when I make well more than tenfold that initial salary. I’ll do it when my household income is even significantly higher next year, because I’ve built the habit and the financial muscle over the last 10 years even when I had very little. And I just think that more young people need to have that type of mentality where, if you say that finances and economics are a stressor, and they understandably are, then why not invest the time in reading and listening and learning about how to make the most of any given situation you are in in life financially. I did it coming from a family that had SNAP at times when I was growing up, where nobody knew anything about saving and investing or anything other than just making it to the next paycheck.

I’m not saying that just because I did it, that everyone else should do it. But I do believe that what I’ve done, anyone else my age and younger can do, as well, because there is no magical elixir, there is no get rich quick scheme, there is no winning the lottery or hitting some growth
stock jackpot. It is simple educating oneself on how to save and invest effectively, and then rolling up one’s sleeves and doing it.

 

[UNCatTech]

This is an interesting topic.

We can't all just get a small million dollar loan from our parents when starting out.

As parents I believe we do a disservice to our kids by not talking about money. He'll my wife and I didn't talk adequately until we were in our 40's. We now have regular discussions and we talk with our kids.

I reviewed my daughters' contributions with them a few weeks ago. They are both ahead of where I was at their ages. Also had my daughter's wife up her contributions to equal the company match. Can't have her missing that opportunity.

I'm also trying to undo the scarcity mindset that I have and taught my kids.

 

[heelinhell]

This is an interesting topic.

We can't all just get a small million dollar loan from our parents when starting out.

As parents I believe we do a disservice to our kids by not talking about money. He'll my wife and I didn't talk adequately until we were in our 40's. We now have regular discussions and we talk with our kids.

I reviewed my daughters' contributions with them a few weeks ago. They are both ahead of where I was at their ages. Also had my daughter's wife up her contributions to equal the company match. Can't have her missing that opportunity.

I'm also trying to undo the scarcity mindset that I have and taught my kids.

I have two daughters ages 39yo and 49yo. Me and the missus sat down with them last Sunday and had a very productive meeting for two hours sharing with them our estate documents ( will ,advance directives, durable and health care POAs ) and a detailed picture of our financial situation ( IRAs and taxable portfolios ).

Their reaction was that they had no idea how rich we are, and I had to emphasize that it may seem like a lot, but 15 years from it will not seem like a lot. I told them that it was imperative that they continue to fund their Roth IRAs if they want to enjoy the same standard of living in retirement that we enjoy.

I funded my traditional IRA at 29yo and my Roth IRA the first day it became available. At the time, my mortgage payment ate up 45% of my net income. We lived without cell phone and internet costs, we had no idea what work-life balance meant, we did not take expensive vacations, and we rarely spent money eating out. No $5 lattes for us. We drank Mr. Coffee and we liked it !

Count me as a grumpy old man

dana carvey grumpy old man youtube - Google Suche

 

[lawtig02]

Two quick things:

1. I think the math in the OP is correct now (hopefully).

2. There have been a few references in this discussion to economic anxiety. While that's definitely a relevant concept, what I'm really getting at here would better be called economic resentment, or economic frustration. It's the perception among many young people that the older people in their lives have benefitted tremendously by market dynamics that they were simply lucky enough to be the right age to experience, and the corresponding doubt that such dynamics will benefit them. Resentment is not a pretty emotion, but it's an incredibly powerful one, including in electoral politics. And that helps me understand why the young vote was not what it could have been in this past election.

 

[Paine]

Interesting discussion for sure, one that I’m too emotional about to want to speak about at length on here.

I’ll say this: young people in this country have been steeped in a culture of mass consumption and instant gratification more than any generation before us. Financial education is basically nonexistent. I had to figure things out myself, but we can’t expect everyone to be able to do that.

People see influencers living easy lives and aspire to that. The influencer life is all about getting rich quick and not having to do basically any hard work. Basically like hitting the lottery. You see this with the crypto obsession too.

All that to say, I’m with CFord that some young people need a kick in the ass. Some just don’t even know what they don’t know when it comes to finances though.

The cultural stew that young people are steeped in is not conducive at all to financial success. Combine that with structural forces in the economy, and you have a recipe for what we see now.

 

[lawtig02]

Interesting discussion for sure, one that I’m too emotional about to want to speak about at length on here.

I’ll say this: young people in this country have been steeped in a culture of mass consumption and instant gratification more than any generation before us. Financial education is basically nonexistent. I had to figure things out myself, but we can’t expect everyone to be able to do that.

People see influencers living easy lives and aspire to that. The influencer life is all about getting rich quick and not having to do basically any hard work. Basically like hitting the lottery. You see this with the crypto obsession too.

All that to say, I’m with CFord that some young people need a kick in the ass. Some just don’t even know what they don’t know when it comes to finances though.

The cultural stew that young people are steeped in is not conducive at all to financial success. Combine that with structural forces in the economy, and you have a recipe for what we see now.

100% agree. I view the influencer world as a form of disinformation, and while its primary goal is to make the influencer rich (which doesn't always happen, of course), it also has the goal of making viewers unhappy with their current circumstances and, yes, resentful of those who have more. I also agree about the structural issues that are far more real than TikTok, and the combination of the real and the perceived creates a lot of challenges for America's youth.

 

[UNCatTech]

I have two daughters ages 39yo and 49yo. Me and the missus sat down with them last Sunday and had a very productive meeting for two hours sharing with them our estate documents ( will ,advance directives, durable and health care POAs ) and a detailed picture of our financial situation ( IRAs and taxable portfolios ).

Their reaction was that they had no idea how rich we are, and I had to emphasize that it may seem like a lot, but 15 years from it will not seem like a lot. I told them that it was imperative that they continue to fund their Roth IRAs if they want to enjoy the same standard of living in retirement that we enjoy.

I funded my traditional IRA at 29yo and my Roth IRA the first day it became available. At the time, my mortgage payment ate up 45% of my net income. We lived without cell phone and internet costs, we had no idea what work-life balance meant, we did not take expensive vacations, and we rarely spent money eating out. No $5 lattes for us. We drank Mr. Coffee and we liked it !

Count me as a grumpy old man

dana carvey grumpy old man youtube - Google Suche

It's great that you did that.

We are still figuring everything from my father passing. They had nothing in order.

 

[UNCatTech]

Two quick things:

1. I think the math in the OP is correct now (hopefully).

2. There have been a few references in this discussion to economic anxiety. While that's definitely a relevant concept, what I'm really getting at here would better be called economic resentment, or economic frustration. It's the perception among many young people that the older people in their lives have benefitted tremendously by market dynamics that they were simply lucky enough to be the right age to experience, and the corresponding doubt that such dynamics will benefit them. Resentment is not a pretty emotion, but it's an incredibly powerful one, including in electoral politics. And that helps me understand why the young vote was not what it could have been in this past election.

So what are the young expecting the president to do in this case?

There is only indirect links between the markets and the administration, correct?

 

[lawtig02]

So what are the young expecting the president to do in this case?

There is only indirect links between the markets and the administration, correct?

Yeah, I'm only trying to be diagnostic here. I have no idea what the prescription would be. My guess is that, because of exactly what you say, young people will be just as, and maybe more, resentful and frustrated in four years than they are now, and Dems would stand to benefit from it. I worry we're entering a long season of change elections, which could be great for Dems in four years but is really difficult for the stability and good governance of the country.

 

[grimes70]

I think a big issue for younger people when it comes to investing is that social media and influencers have given the appearance that if you didn’t invest in Netflix or Apple or Google or Amazon or whatever, or if you aren’t a stock picking or day trading wizard, then you are doing investing wrong. Or if you aren’t a millionaire or financially independent or whatever by age 30 or 35, or if you aren’t a homeowner or an owner of multiple homes or building your own real estate Empire by 35, you are not doing anything.

The reality is that there is a really, really simple path to wealth. But it’s a long path to wealth. It’s not a glamorous path to wealth. It is a slow, boring, methodical path to wealth. But it’s a proven path. And that is, save and invest 10%, 15%, 20% of your income and stick it in low cost, passively managed, total stock market and total bond market index funds. Set it and forget it. Don’t bother to check your accounts but maybe once or twice a year. Just save and invest, preferably on auto draft. Someone who can start doing that in their 20s or even their 30s, and do it with discipline and consistency over two or three or four decades, well in all overwhelming probability have more money than they know what to do with in retirement- and still be able to live and enjoy life along the way.

The problem for young folks is, the Internet and social media have given us more access to more information and minute to minute access to more people‘s lives and snapshots of only the highlights and none of the lowlights. So everybody wants to be the next GameStop millionaire, but nobody wants to be the next Thomas Stanley Millionaire Next Door.

I feel like I am qualified to critique younger folks, as I am on the younger end of the millennial generation, and I know how many of my peers and younger, don’t think through the value of having a long-term disciplined saving and investing plan. I get that it is not fun to stick away money now that you won’t touch for 30+ years. But you can’t afford not to.

I'll add utilities to the index funds. Most are a gurateed income producer. Government regulators make sure they are viable. I began buying CP&L in the 80s in bits and pieces. Reinvested dividends and hardly ever looked at the price. Have a very nice nest egg of now d00k Energy stock.

 

[heelinhell]

It's great that you did that.

We are still figuring everything from my father passing. They had nothing in order.

I feel for you . My parents had nothing organized. They were hoarders so we we were poring through utility receipts from 20 years ago before their deaths.

After my sister and I went through the minutiae and finally tracked down other records , I told myself that I would keep organized records and share them once my daughters became adults.

 

[sringwal]

"There is no reason to believe S&P index funds won't continue to perform in the future as they have in the past."

Why?

Because, unless there is evidence to the contrary, you have to go by prior data. It's all you've got.

 

[sringwal]

Two quick things:

1. I think the math in the OP is correct now (hopefully).

2. There have been a few references in this discussion to economic anxiety. While that's definitely a relevant concept, what I'm really getting at here would better be called economic resentment, or economic frustration. It's the perception among many young people that the older people in their lives have benefitted tremendously by market dynamics that they were simply lucky enough to be the right age to experience, and the corresponding doubt that such dynamics will benefit them. Resentment is not a pretty emotion, but it's an incredibly powerful one, including in electoral politics. And that helps me understand why the young vote was not what it could have been in this past election.

Oh, absolutely. But I'd posit that is part of a larger propaganda issue more than anything else.

 

[lawtig02]

Because, unless there is evidence to the contrary, you have to go by prior data. It's all you've got.

Agree, but why would a 45 yo assume the next 20 years will be comparable to the last 20 years? A dollar invested on January 1, 2005 is worth $2.57 today. But a dollar invested on January 1, 1966 was worth 46 cents on January 1, 1986. I happen to think our economy over the next 20 years is more likely to resemble 2005 to the present than 1966-1986, but it's not crazy for young people to be really skeptical about that.

 

[sringwal]

Agree, but why would a 45 yo assume the next 20 years will be comparable to the last 20 years? A dollar invested on January 1, 2005 is worth $2.57 today. But a dollar invested on January 1, 1966 was worth 46 cents on January 1, 1986. I happen to think our economy over the next 20 years is more likely to resemble 2005 to the present than 1966-1986, but it's not crazy for young people to be really skeptical about that.

Healthy skepticism always has value. None of what you wrote, however, negates the statement "There is no reason to believe S&P index funds won't continue to perform in the future as they have in the past." The key word there, at least for me, is "reason."

I'm skeptical about Cryto-currency and have never invested in it, despite having both the means and opportunity. Yet, bitcoin continues to rise at absurd levels. It's about balancing a healthy skepticism vs potential risk/reward. In the case of crypto, I have missed out on a significant amount of earning potential already, and will likely miss out on it moving forward as well.

 

[heelinhell]

I'll add utilities to the index funds. Most are a gurateed income producer. Government regulators make sure they are viable. I began buying CP&L in the 80s in bits and pieces. Reinvested dividends and hardly ever looked at the price. Have a very nice nest egg of now d00k Energy stock.

Yep

I have owned Southern Company and Dominion Resources for 35 years. based upon my cost basis the dividend pays me 12%/yr
Even better are the tobacco stocks I own (Altria and Phillip Morris ) Based upon my cost basis the dividends pay me 38%/yr
We also hold Chevron, Pepsi, and Verizon which we have owned for 35 years and pays nice dividends based upon the cost basis.

Me and the missus live on our stock dividends, Social Security, and NC state retirement...

We are also gifting the children so that we can selfishly enjoy how it benefits them even though it will reduce their inheritance once we kick the bucket

 

[CFordUNC]

Yep

I have owned Southern Company and Dominion Resources for 35 years. based upon my cost basis the dividend pays me 12%/yr
Even better are the tobacco stocks I own (Altria and Phillip Morris ) Based upon my cost basis the dividends pay me 38%/yr
We also hold Chevron, Pepsi, and Verizon which we have owned for 35 years and pays nice dividends based upon the cost basis.

Me and the missus live on our stock dividends, Social Security, and NC state retirement...

We are also gifting the children so that we can selfishly enjoy how it benefits them even though it will reduce their inheritance once we kick the bucket

I think that’s a brilliant thing to do to ensure that you get to experience your children enjoying the gift instead of them enjoying it once you pass. I advise high net worth folks with whom I work all the time to consider gifting up to the gift tax exclusion annually. It is extraordinarily difficult to bypass the tax man once you have passed away.

 

[heelinhell]

I think that’s a brilliant thing to do to ensure that you get to experience your children enjoying the gift instead of them enjoying it once you pass. I advise high net worth folks with whom I work all the time to consider gifting up to the gift tax exclusion annually. It is extraordinarily difficult to bypass the tax man once you have passed away.

That was our thinking. Why should we deprive ourselves the joy of seeing how our gifts help our children ?

Given the 13 million dollar estate tax exclusion, we are not avoiding the tax man at this point, but I will welcome that problem if and when the time comes.