everytime someone says that, I always think of a great quote by Nouriel Roubini:
"asked whether he invests in stocks, he replied, "Not as much these days. I used to have a lot in equities—about 75%—but over the past three years, I’ve had about 95% in cash and 5% in equities. You’re not getting much from savings these days but earning 0% is better than losing 50%."
> I hate the idea of sitting in cash with a guaranteed negative real rate of return of about -10% per year, even if it’s for a short period of time.
I would not be surprised to see equities doing worse than -10%. Sometimes there are no good investments, only loss mitigation, and cash is not necessarily a bad idea.
> I'm willing to bet that during that period stocks probably beat almost every other form of investment with regards to profits.
This illustrate why makes me uneasy of current times, that blind faith in the stock market as the ultimate investment. From FIRE communities to r/wallstreetbets to regular retirement to professional fund manager, don't ask question and join the dance, it always was and always will be 6-8% per year, it's a law of nature.
> Definitely doesn't feel like my wealth is growing in index funds fast enough to retire within this life time.
Ha ha, I feel the same. But don't discount the fact that small percentage returns are actually exponential growth. (For example, 2% returns actually doubles your money every 10 years.) Just because it 'feels' like your investments are stalled doesn't mean that they are.
>Every American's life savings is in the stock market
First, you are exaggerating. Secondly, why is this a good thing? Maybe the whole damn world should re-evaluate this.
99% of people are not "investing", they are throwing money in something that should magically keep going up over time because everyone wants it to magically go up over time.
> That's pretty much what people use stock market for anyway
That's what I used to think until I began to understand (through Mr Money Mustache posts) that lots of people with large amounts of money invest (i.e. buy-and-hold) in the stock market because, despite the annual ups and downs, it has historical net annual gains of 7-10% over the last hundred years...
> In one way or another we all depend on the stock market to climb about 10% a year so we can retire some day and have savings to live off of, etc.
One critical detail here: 10% is definitely not sustainable. Long-term, the market reliably provides about 4% after accounting for inflation. You shouldn't assume you can get any more return on investment than that.
> You have to be wealthy to see an appreciable growth in assets. Both the absolute and percentage amounts matter. Yes, anyone can get a 3% return on their investments over time, but that doesn't really matter when you can only invest $1.
This is an excellent example of how low interest rates prevent anyone but the wealthy from making money on investments.
> Investing is buying something that will generate returns, and cash cannot generate any return, kind of by definition.
During the hyperinflation of the 90s, if I bought US dollars and sold them a month later, I could have a return in the double digits. That looks like a good investment.
> There is a lot of better choices with more return of investment.
Except it has actually been one of the best choices to put your money for quite some time. Things can always change, but an average annualized return of 38% over the past five years is really hard to complain about.
"asked whether he invests in stocks, he replied, "Not as much these days. I used to have a lot in equities—about 75%—but over the past three years, I’ve had about 95% in cash and 5% in equities. You’re not getting much from savings these days but earning 0% is better than losing 50%."
[1] https://en.wikipedia.org/wiki/Nouriel_Roubini
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