The wealth-building thread

[FrantzM]

No point in working too hard here, the pinkos and/or politicians will take it away via a dazzling amount of taxes, direct or indirect. Anyway, am I the only one completely disgusted with the concept of "finance" aka playing around with money? Even if this can be a great boon, as your post explain, I just don't want to have anything to do with it; nor the worry I'm sure it'd bring me.

Understand the sentiment but logic will tell you that they (pinkos or politicians) take a percentage thus the more you have the more you have left ...
"Enough" is a moving target when it comes to money.
No need to go overboard.. Balance is key.. in everything.

 

[muslhead]

I'm not an expert at all, but I do think this is not the right moment to invest in stocks or funds. The market is way too high imho.

Or am I wrong?

Your thought process is wrong. Your conclusion may be right but you will only know that in the future.
Your statement shows you have a bias and biases have no place in investing assuming you are talking about investing as your wealth building path.

 

[Ron Texas]

Spend less than you make.

 

[muslhead]

There are many ways to build wealth and the best way is to find a passion and do it. Money will follow. Wealth is built through hard work and expertise.
The default answer here has been the stock market. if that is the path you choose, i would suggest reading the story of the turtle traders as it shows the impact of the most important aspect to gain success on this path, your brain, and why its almost impossible

 

[Chromatischism]

In the short term, perhaps. Over many years, not a chance.

Peter Lynch destroyed indexes. Actively managed funds can be better than indexes. You don't need 500 companies. Of course, choose carefully. And you don't have to stay with the same ones forever.

 

[Ron Texas]

Peter Lynch destroyed indexes. Actively managed funds can be better than indexes. You don't need 500 companies. Of course, choose carefully. And you don't have to stay with the same ones forever.

The SPX has become a self fuflilling prophecy. So many decided to jump on it that inclusion in the index just makes some stocks go up.

 

[Ralph_Cramden]

Peter Lynch destroyed indexes. Actively managed funds can be better than indexes. You don't need 500 companies. Of course, choose carefully. And you don't have to stay with the same ones forever.

Again, in the short term. Over 30-40 years, not a chance, especially for most of us, who don't have anywhere near the access Lynch had to company information.

https://www.fool.com/investing/2018/01/03/warren-buffett-just-officially-won-his-million-dol.aspx

https://awealthofcommonsense.com/2016/07/peter-lynchs-track-record-revisited/

 

[HiFidFan]

Did you buy during 2020 low?

I have four investment accounts, three passive accounts and one account that I actively manage, a relatively small part of my total investments.

In my active account, I sold when CV19 hit and the market was tanking. I didn't sell at the bottom but close. then I watched in disbelief when the market made the V recovery. I had no idea what was driving the stock mkt up. I mean, millions of people out of work, travel ground to a halt, small businesses shutting down, we all know the story. I didn't buy back in, I continued to watch in awe at the recovery and new highs the market made (makes). Of course in hindsight, printing trillions of dollars is the reason. Inflation doesn't seem to worry the Fed. MMT isn't talked about much in the main stream, but I wonder if that is the theory being played here.

My passive accounts are doing well, my actively traded account remains basically where I left it 18 months ago.

 

[Chromatischism]

Again, in the short term. Over 30-40 years, not a chance, especially for most of us, who don't have anywhere near the access Lynch had to company information.

https://www.fool.com/investing/2018/01/03/warren-buffett-just-officially-won-his-million-dol.aspx

https://awealthofcommonsense.com/2016/07/peter-lynchs-track-record-revisited/

You don't need insider information.

Anyway I prefer crypto to the stock market these days.

 

[HiFidFan]

Of course, choose carefully.

Uh huh.

 

[JeffS7444]

No point in working too hard here, the pinkos and/or politicians will take it away via a dazzling amount of taxes, direct or indirect. Anyway, am I the only one completely disgusted with the concept of "finance" aka playing around with money? Even if this can be a great boon, as your post explain, I just don't want to have anything to do with it; nor the worry I'm sure it'd bring me.

I don't know how things are in France, but in the USA if you are fortunate enough to have a company-sponsored retirement plan, your money is typically invested in the stock market, with no guarantee that you will have $xxx/month in your retirement years: Maybe you will get lucky, but maybe you will end up with nothing. But regardless, the company managing the retirement plan always collects their fees.

Regarding taxes in the USA, in Why "A" Students Work For "C" Students, Robert Kiyosaki mentions this:

During the [presidential] campaign, President Obama disclosed that he paid 20.5% in taxes on approximately $3 million in income. Mitt Romney paid 14% on $21 million in income.

This gap in income and taxes angered many voters, especially the poor, middle class, and younger voters. Rather than ask why or how Romney made more money and paid a lower percentage in taxes, many voters just got angry

As Kiyosaki sees it, the real difference between the two men is that Romney has a more sophisticated understanding of money, and gets most of his income from investments, which are taxed at a much lower rate, whereas Obama has an employee's understanding of money, but employees pay more in taxes.

Although in some ways his books are not very well-written, are filled with out-of-context quotes from famous people to support his statements, and contain much which is questionable, Kiyosaki also has a much more broader view on the creation of wealth, going well beyond common bits of wisdom such as paying off credit card debts and diversifying one's investment portfolio. And he makes the case for investing for income rather than for capital gains, which is a point of view which I had never seriously considered before, but maybe I should.

 

[Chromatischism]

I have three passive accounts and one account that I actively manage, a relatively small part of my total investments.

In my active account, I sold when CV19 hit and the market was tanking. I didn't sell at the bottom but close. then I watched in disbelief when the market made the V recovery. I had no idea what was driving the stock mkt up. I mean, millions of people out of work, travel ground to a halt, small businesses shutting down, we all know the story. I didn't buy back in, I continued to watch in awe at the recovery and new highs the market made (makes). Of course in hindsight, printing trillions of dollars is the reason. Inflation doesn't seem to worry the Fed. MMT isn't talked about much in the main stream, but I wonder if that is the theory being played here.

My passive accounts are doing well, my actively traded account remains basically where I left it 18 months ago.

Damn, that sucks. I missed the opportunity to quintuple my money on Tesla and some other things, but at least my money stayed in the market since I didn't sell.

 

[Chromatischism]

As Kiyosaki sees it, the real difference between the two men is that Romney has a more sophisticated understanding of money, and gets most of his income from investments, which are taxed at a much lower rate, whereas Obama has an employee's understanding of money, but employees pay more in taxes.

There is more to it than that. Obama paying more in taxes was not out of naivety. The two have different views on the matter, but of course the difference in investment income vs other types is real since tax rules and rates differ.

 

[Pdxwayne]

I have three passive accounts and one account that I actively manage, a relatively small part of my total investments.

In my active account, I sold when CV19 hit and the market was tanking. I didn't sell at the bottom but close. then I watched in disbelief when the market made the V recovery. I had no idea what was driving the stock mkt up. I mean, millions of people out of work, travel ground to a halt, small businesses shutting down, we all know the story. I didn't buy back in, I continued to watch in awe at the recovery and new highs the market made (makes). Of course in hindsight, printing trillions of dollars is the reason. Inflation doesn't seem to worry the Fed. MMT isn't talked about much in the main stream, but I wonder if that is the theory being played here.

My passive accounts are doing well, my actively traded account remains basically where I left it 18 months ago.

Yeah, the problem is always about when to get back in once you got out.....I have friends that gladly said they got out during the financial crisis around 2007, but they didn't say anything afterwards when the market recovered. I am assuming that they missed the up....

 

[JeffS7444]

Did you buy during 2020 low?

Yes but buying big in April 2020 was pure luck on my part: The stock market had already recovered somewhat from an earlier crash, but I feared that a bigger, longer-lasting crash might be just ahead, and I agonized over whether to simply keep my money invested in the money market (<1% returns), but eventually decided that I didn't have a clue how to know when it was the "right" time to buy, just as I don't know if now is a good time to sell.

 

[A Surfer]

If you can't afford to lose it all, don't invest it. The wealthy who are now at the stage where they don't have to risk anything of their own are clearly the alpha investors who clean up. No matter how you slice it, investing is a pyramid scheme of sorts. Shame that people can't just count on their governments to collect more tax but provide excellent health care and residential support services which as you age are really what matter, IMO.

 

[Pdxwayne]

I don't know how things are in France, but in the USA if you are fortunate enough to have a company-sponsored retirement plan, your money is typically invested in the stock market, with no guarantee that you will have $xxx/month in your retirement years: Maybe you will get lucky, but maybe you will end up with nothing. But regardless, the company managing the retirement plan always collects their fees.

Regarding taxes in the USA, in Why "A" Students Work For "C" Students, Robert Kiyosaki mentions this:

As Kiyosaki sees it, the real difference between the two men is that Romney has a more sophisticated understanding of money, and gets most of his income from investments, which are taxed at a much lower rate, whereas Obama has an employee's understanding of money, but employees pay more in taxes.

Although in some ways his books are not very well-written, are filled with out-of-context quotes from famous people to support his statements, and contain much which is questionable, Kiyosaki also has a much more broader view on the creation of wealth, going well beyond common bits of wisdom such as paying off credit card debts and diversifying one's investment portfolio. And he makes the case for investing for income rather than for capital gains, which is a point of view which I had never seriously considered before, but maybe I should.

My investment philosophy changed significantly after the financial meltdown. I have switched to aiming for passive incomes rather than chasing capital gains. Not saying that everything I did since then works, but overall I am making very good progress.

 

[Tom C]

If I put money into a pyramid scheme (or go to Vegas), I can on average expect to lose.
If I put money into the stock market, I can expect to win.
That is the difference. Equities are not a zero-sum game. Underlying the ownership certificates are hard assets and real people doing real work. Not at all the same.

 

[JeffS7444]

There is more to it than that. Obama paying more in taxes was not out of naivety. The two have different views on the matter, but of course the difference in investment income vs other types is real since tax rules and rates differ.

I see nothing particularly patriotic about paying higher taxes as a worker bee versus paying a lower rate of taxes as an investor hanging out at the beach, because I assume that there's a reason for the reduced taxes for investment income. I wish my family and schooling had taught me about these other forms of income.

 

[JeffS7444]

Shame that people can't just count on their governments to collect more tax but provide excellent health care and residential support services which as you age are really what matter, IMO.

Wouldn't that be nice! But in USA and pretty much all other parts of the world save for Sub-Saharan Africa, population is aging, and that means fewer workers to support more retirees who are also living longer. And while countries like Norway are doing well at the moment, what happens when petroleum no longer drives their economy?