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Started By
Message
Saving doesn't make you rich
Posted on 11/4/14 at 7:42 am
Posted on 11/4/14 at 7:42 am
6
Posted on 11/4/14 at 7:45 am to CHiPs25
quote:
If you think you can save your way to wealth, you’re wrong. Spending less than you make is not the path to riches. Instead, wealth comes and goes as asset prices -– real estate, stocks, and bonds -– rise and fall.
This is why most Americans have no shot at ever being wealthy, while the already-wealthy people who own those assets just keep getting wealthier.
well, they have a point
Posted on 11/4/14 at 7:55 am to Croacka
quote:
well, they have a point
I don't think they do.
While someone making 100k/yr can't get billionaire wealthy through saving, they certainly can save enough to be wealthy and suggesting they are wasting their time is absurd. The story is more about the politics of envy and greed than about how people should manage their finances in a prudent and proven way.
Saving 10% and making 9% for 30 years gets you 1.4mm, which is top 5% of Americans or so.
It's an irresponsible and frankly stupid story.
Posted on 11/4/14 at 7:57 am to Ole War Skule
Yea, real dumb article.
Yes, your wealth will rise and fall witht he market.
Here's the thing, over the long term, the market is always rising over a long enough time frame.
Yes, your wealth will rise and fall witht he market.
Here's the thing, over the long term, the market is always rising over a long enough time frame.
Posted on 11/4/14 at 8:02 am to Ole War Skule
to me the article makes it sound like they are talking about people stashing money away in mattresses or savings accounts
they are basically saying that your money is not gonna grow unless you invest it, be that in real estate or stock market, etc.
at least thats what I gathered from skimming the article
they are basically saying that your money is not gonna grow unless you invest it, be that in real estate or stock market, etc.
at least thats what I gathered from skimming the article
Posted on 11/4/14 at 8:23 am to Ole War Skule
quote:
While someone making 100k/yr can't get billionaire wealthy through saving, they certainly can save enough to be wealthy and suggesting they are wasting their time is absurd. The story is more about the politics of envy and greed than about how people should manage their finances in a prudent and proven way.
Posted on 11/4/14 at 8:32 am to CHiPs25
I'm cashing out and putting it all into lotto tickets.
Posted on 11/4/14 at 8:33 am to SippyCup
Saving really doesn't make you rich, putting your savings at risk makes you rich......... Or poor 
Posted on 11/4/14 at 8:36 am to Ole War Skule
[quote]Saving 10% and making 9% for 30 years gets you 1.4mm, which is top 5% of Americans or so. [/quote
I agree but my take from the article is that you can't get there by simply saving. You need to make investments with your savings. Where can you get 9% on a savings account?
I agree but my take from the article is that you can't get there by simply saving. You need to make investments with your savings. Where can you get 9% on a savings account?
Posted on 11/4/14 at 9:08 am to CHiPs25
The article is filled with emotional argument, no surprise considering the source. HuffPo
They decouple savings from investing, which is one in the same for most people. I love their choice of "Speculation" as if investing is an entirely luck driven activity.
I don't know Ben Walsh (the author) but I doubt he set up his 401k with a speculation advisor.
quote:
Letting speculation work for you, not saving, is how wealth is truly built in America. Net worth is tied to the market value of some illiquid things (houses) and some liquid things (stocks, bonds).
They decouple savings from investing, which is one in the same for most people. I love their choice of "Speculation" as if investing is an entirely luck driven activity.
I don't know Ben Walsh (the author) but I doubt he set up his 401k with a speculation advisor.
Posted on 11/4/14 at 9:17 am to CHiPs25
The author tries to make it sound like the poor little guy can't get ahead. He is correct, putting money in a savings account won't make you rich.
Investing won't absolutely make you wealthy (ie billionaire) but can make you a multi-millionaire.
The rich get richer because they keep doing the same things that made them rich in the first place. Also, past a certain point living expenses compared to income are very small so a larger amount of income can be reinvested.
Investing won't absolutely make you wealthy (ie billionaire) but can make you a multi-millionaire.
The rich get richer because they keep doing the same things that made them rich in the first place. Also, past a certain point living expenses compared to income are very small so a larger amount of income can be reinvested.
Posted on 11/4/14 at 9:20 am to CHiPs25
Here is what this poorly written article is trying to say: saving money into a savings account paying 0.25 percent interest isn't going to make you rich. You have to invest it.
Posted on 11/4/14 at 10:18 am to LSUFanHouston
This article is purposefully misleading. From the article:
Now, to start with, that's an incredibly narrow and impractical definition of "saving." This would be like an article saying "working out doesn't increase your muscle size" and then having a little footnote sating (working out, in this case, does not include lifting weights). But, even assuming that weird little definition applies, Walsh implies throughout the whole article that saving does include investment:
Except that "Let your assets work for you" is exactly the kind of speculation he's talking about. If were the author of the linked article, I'd be irate at the way Walsh is misreporting and misrepresenting my conclusions.
quote:
(Note that saving, in this case, does not include the capital gains people get from selling assets for a profit.)
Now, to start with, that's an incredibly narrow and impractical definition of "saving." This would be like an article saying "working out doesn't increase your muscle size" and then having a little footnote sating (working out, in this case, does not include lifting weights). But, even assuming that weird little definition applies, Walsh implies throughout the whole article that saving does include investment:
quote:
misleading and harmful homilies like “work hard. Spend a little. Save the difference. Let your assets work for you,” from the Motley Fool, are: misleading because saving is not the primary way wealth is accumulated
Except that "Let your assets work for you" is exactly the kind of speculation he's talking about. If were the author of the linked article, I'd be irate at the way Walsh is misreporting and misrepresenting my conclusions.
Posted on 11/4/14 at 10:28 am to CHiPs25
quote:
Saving doesn't make you rich
Although I didn't read the article, and it may in fact be dumb, I agree with the above statement.
In and of itself, saving does not make you rich. It makes you wealthier than if you were to spend it of course, but saving is not the biggest factor in accumulating wealth. Making more money is the #1 factor, and should be the #1 goal of people who want to accumulate wealth.
Someone making 20k a year will never be wealthy fast enough to really enjoy it no matter how much they save. That's not to say people shouldn't save and invest as much as they can as early as possible, but IMO people should focus much more attention on increasing income.
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