I guess people don’t want to retire earlier than 55 or 59 1/2, since no one ever seems to talk about just sticking your investments in a brokerage account.
Interesting, but I doubt people tend to invest this consistently and regularly. They probably have an easy time investing when times are good (and they actually have a few extra bucks to gamble with), and tend to not invest when times are bad (they're trying to eat).
Take someone who was doing pretty good during the tech and real estate bubbles, and decided to invest their spare change in 1998, 1999, 2005 and 2006, but did not invest in the "leaner" years. I bet that person overall would have lost money on the stock market. Oh, wait, I can tell you that that person would have lost money, because it was me!
I'm so tired of the constant drum-beat of "The only way to retire is to invest in the stock market!!" that only seems to serve the interests of Wall Street. I wish there were viable alternatives.
Lots of people do something very similar. They throw money into the stock market regularly for years, and then on a single day they retire and start slowly taking it out instead.
People don't usually invest their entire life assets at a singular point in time. Share purchases are made per paycheck (e.g., 401k) over a working career. In practice, no retail investor experienced what you described.
A lot of people in America going to work until they die, because they can't afford to retire.
I've always had a problem with saving for retirement. I'd rather spend money when I'm younger and can enjoy it, than when I'm old and can't enjoy a lot of the things that I could when I was younger.
I've also never been big on chasing money, either through climbing the corporate ladder or entrepreneurship. I'm just not interested in that stuff, and get burnt out before long working in a career I don't enjoy, so I wind up taking years off when I can afford it, and that eats in to my savings. My investments have never worked out either. I'm just not good with money.
Yes, I know a lot of people are going to suggest that I should put my money in to an index fund and forget it. But I've never been able to trust that the market will keep going up. Of course, I've been proven wrong so far. But how much longer will it keep going up? No one knows, and I really don't know why some people pretend they do. No amount of statistics are going to guarantee that you'll have more money when you take it out of your index fund than when you put it in. And plenty of people have been burnt by the market and watched their savings burn up.
A lot of people talk about investing as if it's guaranteed to make money for them. But it's not. You could lose every penny you invest, and wind up being worse off than if you didn't. It's happened to me before, so I'm really wary of "investing" (ie. risking) my money.
So I'm kind of resigned to not having all that much money left when I'm too old or sick to work. And then I'll probably die. But at least I'll have lived somewhat by then.
The story is slightly more complicated than that. Most people who put money into their 401ks end up with positive real returns. If you invest in the whole market, you're going to get positive real returns in something like 96% of historical 30 year periods. [1] Most mutual funds/ETFs invest in a large enough portion of the market that this number isn't far off.
People who buy a small number of individual stocks end up in a different situation. While their average return is positive, those results have a large degree of skewness (meaning most stocks stagnate or fall, but the meteoric rise of those that do well makes up for it on average). If you picked a random stock in 1992, you'd quite likely have lost money by now.
If you don't want to think too much about investing, you could invest in a target retirement date fund, e.g. VTTSX (2060)[0], and let it grow for a few decades.
I think your comment is a non-sequitur. I am highly invested in my 401K and IRA but I would much rather have returns over the next 10 years than the next 3 months.
If your retirement is 3 months away, then sure you should be thinking short term, which actually means you should be moving away from stocks entirely. Investors that are really that short term should be in bonds or cash.
The argument is that stocks have been the best asset class investment in each decade for the last two hundred years, not that it takes two hundred years.
I'm going to guess that you'll live for at least another decade, and tell you to go right ahead and consider that the long run. If you've any multiples of decades, you're even more set.
To my knowledge, there's plenty of funds who place investors money for the long-term into low to moderate risk assets. Pension funds, municipalities, businesses with cash surpluss or individual people who invest for their retirement aren't into the thrills of short-term speculation.
That's the wrong type of investment for a retirement account with a 50-year horizon. An account like that is (should) be invested in a diversified portfolio of stocks and bonds, such as one composed of low-cost index funds.
Most people put money in stocks via ETFs inside 401k, IRA, and brokerage accounts periodically (usually monthly) over decades.
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