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How does he plan to invest this money to get 8% a year and guarantee that at 65 you will have$1M?
If you invest in stocks you can have a big down year or two and wipe out 40% of your $$$
If you have a cohort of people nearing retirement and have performance like you had 2000-2008 you'll have a huge issue on your hands. It's a dumb plan.
Sure but I'm saying it's $700K more than you would have without the program. I'm not advocating for the program but you're comparing $1M to $700K when the comparison is $700K to $0
Why are you being so obtuse? 8% is annualized based on historicals. As you move closer to retirement you can choose to mitigate the risk by shifting the holdings into more stable options. Over the course of 65 years you'll have -20% years and +30% years.
Thank you. When you are 65 you don’t have an opportunity to make up $300K. People seem not to understand this, especially when they are young. That is because they think they are going to live forever.
Contrary to popular opinion, I am in the camp that believes there is absolutely no guarantee that the stock market goes up forever in the long term. I think people take for granted the 8% long term average of the S&P 500.
i would presume, the politicians would have people who knew about long term investing to manage the accounts.
but either way, it's free money. the baby nor the parents paid the 7k.
Yes, I am.
8% is the average. It is not the return every year. It would be nice if you just got 8%, then you could be ensured $1M at 65. But as the poster replying to me said, many years are well above 8%. What also needs to be true is that many years are well below 8%. We are saying the same thing.
In 2008 the S&P 500 was down 38.5%. Imagine we adopt this plan. There will be years like 2008 again. There will also be years like 2000-2003 where the S&P was down 10%, 13%, 23%.
Now imagine turning 65 January 1st 2009, or January 1st 2004. You are right fucked. A huge chunk of the money you were relying to retire on has vanished.
That depends on if America ever leaves a constant war economy built on hyperconsumerism. If they stay, we'll be fine, but if we change for the better, who knows?
For every big down year, there's actually big up years. The US stock market averages a little over 10% annual returns over the long run. Some years are down, some years are up, but on average there's more up years than there's down years.
Yes. I understand that over a long enough time horizon stocks go up, and that bad years are followed by good years. What I am saying is investing in just stocks, what would be required to get these returns, cannot guarantee $1M, and for someone who experiences a big down year when they are 64, a year from getting this money, that would be catastrophic.
This is why the closer you get to retirement the more conservative you need to be with your investments. A 30 year old who needs the money at 65 has plenty of years ahead of them to recover from a big loss, a 64 year old doesn't.
It's based on the stock market, so it's never going to end up exactly $1,041,459 at the end, Some people are going to end up with more, some with less. But for a fairly low initial amount of money, and a long time to compound, seems like a good investment and better than what a lot of people have at retirement. If I was having a baby, I would love to be able to put money at their birth into some kind of long term investment account that they could not access until they retired.
A simple solution to a market crash right before retirement would be something like a target date fund where the money starts to move into bond as the person gets closer to retirement.
Imagine if this money was collectively managed like some kind of (*gasp*) pension fund, not as individual accounts? Or do you think the idea is to dump $7K into an account and say «good luck!»?
I don't know if looking back 100 years is accurate when the Fed has only been actively managing to a 2% inflation goal since 2012
[https://www.richmondfed.org/publications/research/econ\_focus/2024/q1\_q2\_federal\_reserve](https://www.richmondfed.org/publications/research/econ_focus/2024/q1_q2_federal_reserve)
You need to learn how averages work.
> According to the Fed’s latest Survey of Consumer Finances from 2019, the median net worth of Americans between ages 55 and 64 is $212,500. The average net worth, which tends to skew higher due to high-earning outliers, is $1,175,900.
https://www.cnbc.com/select/average-net-worth-of-americans-ages-55-to-64/
Edit to make it more clear: If you and Musk are standing in a room, the average net worth is $97 billion.
Do you have $97 billion?
Median means half of people have less and half have more.
If you understood averages, either you presented a number knowingly and dishonestly representing it as what most people have or you didn’t know and just googled “average net worth 65”.
And, for most people, a lot of that “wealth” is locked up in their homes in the form of equity and isn’t easily accessible and could deteriorate very quickly when the next housing market sell off happens. Not to mention transaction fees involved in selling real estate plus taxes on capital gains if appropriate.
And homes are a horrible measure of wealth. There are tons of people that bought affordable homes that have skyrocket in value to the point where they can barely afford the increase in property taxes.
Also, if you turn a home into cash, you still need a place to live. That $100k in home equity will disappear very quickly if they become a renter.
Unless it’s a separate investment property, it’s a bad idea to include home value in net worth calculations for purposes of trying to determine how wealthy someone is.
So, most people do not have $111k accessible to them.
I’ll let you Google around for a counter argument.
The poster you are arguing with is mostly wrong, but you said that $111k is better than most people will have. You then also said the median net worth of 55-64 year olds is $212,500. 50% of people have $212,500 or more. So unless there is something really odd with the distribution of wealth most people likely do have more than $111k.
I am being pedantic, but so is the rest of this thread.
I’d be worried they’d also be bent by people managing these accounts, if all your clients are infants and you know for a fact they can’t reach the money until they’re retirement age you’ll have a lot of opportunity to be dishonest. After all the government loves pillaging social security for other things and giving out IOUs they never intended to pay back and many companies have their employees’ 401k auto allocated into their own stock that many employees don’t pay attention to.
His plan is either stupid or evil (he’s a Wall St billionaire so he has to know how dumb this idea is). If you create $25B out of thin area, that’s going to make the dollar even more worthless than it already is and make prices for everything shoot up faster.
It’s a great idea if you want to speed up the dollar’s demise and create tons of broke 65 year olds
Do you want to wait until you’re 65 (and old with worse health) to access $1M? And, by the time that happens, that $1M will buy you a few loaves of bread if you’re lucky (cuz inflation). There’s people in their 20s who become millionaires these days
Because you can get it rn (they have 0% intro APR credit cards which you can exploit and make lots of money if you know what you’re doing). I don’t want to wait 40+ years just to get “free money” (that will likely be be taxed [he said “tax free” but the govt can always change tax laws] and inflated into nothing)
Bill [SVB] Ackman will make anything to prop up Ponzis he is a beneficiary of. Just dig into SVB case to see how this snake was screaming and begging for a federal bailout (your current and future taxes) of the scam-bank which he had billions at
It’s not a terrible idea it’s just that the numbers are suspect.
Where do you get 8% compounded? Long term SP500 average is about 6%.
Second of all, inflation. Real returns are about 3-4%.
$7,000 at 3.5% after 65 years is $65,496. (In today’s dollars)
Let go crazy - at 5% real returns (effectively 7-9% nominal) it’s $167,000.
It’s nice but no one is retiring on that alone.
So the government will be investing 25 billion in fortune 500 companies that are already worth billions to trillions and they will have to actually grow this amount of additional income year over year? I think the idea is good, but there is something that doesn't add up.
just my thought, but i don't think i will start and grow a multibillion dollar company, but i sure as heck can invest with them. I have a much better shot at being a multimillionaire that way. considering its the US gov doing the investing... i would rather not have them involved in my retirement plans. just look at any gov project or plan. how many of those go exactly as planned and on budget?
Why 65? Thats too long of a horizon in my opinion and we already have SS. Make it 18 and I’d be more interested. They could use it to invest in their education or start a business or learn a trade. That would be better for their retirement prospects.
Social Security is highway robbery as it functions currently, let alone that it’s likely to run out before us young folk age to access ours.
It’s the equivalent of stuffing money in your mattress and hoping inflation doesn’t ruin your savings plan. The government is keeping all of the interest growth and we get a mattress savings account if we’re lucky?
Explain to me how I have that wrong, if I do.
I don’t think you have it wrong about SS tbh. The whole point was to keep old people off the street essentially. It’s a bad investment. You will simply get less than you put in no matter what, which is not the end of the world but if it’s not self sustaining then what’s the point? But prior to its existence about half of our elderly population was homeless. If it can be replaced by a viable more modern alternative, it’s worth considering.
I would rather we just treat SS like the sovereign wealth fund in Sweeden, allow some portion of it to be invested like any pension would invest funds, with the trust going bust in a few years though its not really possible anymore.
I dunno how much there is to expand on. Most pension funds are invested in a mixture of stocks and bonds, and many countries have sovereign wealth funds that are invested in stocks and bonds. The idea is not complicated, the politics and implementation are enormously conplicated.
Yeah, for sure, but that doesn’t solve anything broad or societal.
I don’t have kids, but if/when I do, they’ll definitely have a fund I contribute to over their childhood. I certainly hope and also expect it to be worth well more than $28,000 by the time their 18. They will also be contributing to it from money they earn from extra chores or jobs they might get in their early teens, such as soccer referee or neighborhood lawn mowing. Or ‘real’ jobs they might get when they are 15-18.
My parents have started funds for their grandchildren (my nephews and niece), so they might be able to also support such a venture.
All of that is from a place of upper lower (sometimes called middle) class privilege though. I want our nation to do fucking better for their citizens though.
I like the sovereign wealth fund implementation idea that a poster had better than the concept originally posted.
And who would have control of that money? What they mean by privatizing is to have the banks control all that SS money. Who is going to guarantee an 8% return?
Akin and Co will invest that money for all Americans, charging commissions and management fees guaranteed for them while nothing is guaranteed for you.
What you will have is the government putting 7k into the s&p 500 in the name of every child that cannot be touched until retirement. How does the government "give" 7k? Through taxpayer funds. Sounds kinda crazy and unethical. The people paying taxes get nothing but to fund someone else's retirement.
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How does he plan to invest this money to get 8% a year and guarantee that at 65 you will have$1M? If you invest in stocks you can have a big down year or two and wipe out 40% of your $$$
It’d probably be akin to a target date fund where as you get closer to retirement the funds move into lower risk investments like bonds
How would that generate 8% annually?
It wouldn’t, at least not for the last 5-10 years. But if it’s something to be implemented that’s how it should be done
Then you wouldn’t have $1M
He never said they would. He’s just laying out what the theoretical plan would be. Christ
If you have a cohort of people nearing retirement and have performance like you had 2000-2008 you'll have a huge issue on your hands. It's a dumb plan.
So they only get $700k instead of $1M? So? The goal is still accomplished to help people with retirement.
Have you done retirement planning for yourself? Do you think a 30% reduction the year before you're set to retire isn't a big deal?
Sure but I'm saying it's $700K more than you would have without the program. I'm not advocating for the program but you're comparing $1M to $700K when the comparison is $700K to $0
Why are you being so obtuse? 8% is annualized based on historicals. As you move closer to retirement you can choose to mitigate the risk by shifting the holdings into more stable options. Over the course of 65 years you'll have -20% years and +30% years.
Wtf is your problem?
Lmao you are really missing the forest for the trees
Thank you. When you are 65 you don’t have an opportunity to make up $300K. People seem not to understand this, especially when they are young. That is because they think they are going to live forever.
it's way more than what most people have at 65.
I’m aware
8% is the long term average of the S&P500. Most years it's either far above or far below 8%. https://ycharts.com/indicators/sp_500_return_annual
Contrary to popular opinion, I am in the camp that believes there is absolutely no guarantee that the stock market goes up forever in the long term. I think people take for granted the 8% long term average of the S&P 500.
until it stops going up, invest.
Buy at the high? That never hurt anyone..
Buying the index without knowing a thing is not investing, it’s gambling. It’s a gamble with higher odds than most, but nevertheless still gambling.
i would presume, the politicians would have people who knew about long term investing to manage the accounts. but either way, it's free money. the baby nor the parents paid the 7k.
We are saying the same thing
No you’re not
Yes, I am. 8% is the average. It is not the return every year. It would be nice if you just got 8%, then you could be ensured $1M at 65. But as the poster replying to me said, many years are well above 8%. What also needs to be true is that many years are well below 8%. We are saying the same thing. In 2008 the S&P 500 was down 38.5%. Imagine we adopt this plan. There will be years like 2008 again. There will also be years like 2000-2003 where the S&P was down 10%, 13%, 23%. Now imagine turning 65 January 1st 2009, or January 1st 2004. You are right fucked. A huge chunk of the money you were relying to retire on has vanished.
that was money you werent gonna have anyways. moot point. free money invested to you at birth. you didn't pay for it.
That’s not how it works. Take a look at long term returns and not single years.
I understand. If you have significant down years closer to 65 you won’t have $1M
Which of the following would you choose: A: $1M, B: $800K, C: $O?
Index fund based on the S&P500 which rebalances every year
That depends on if America ever leaves a constant war economy built on hyperconsumerism. If they stay, we'll be fine, but if we change for the better, who knows?
For every big down year, there's actually big up years. The US stock market averages a little over 10% annual returns over the long run. Some years are down, some years are up, but on average there's more up years than there's down years.
Yes. I understand that over a long enough time horizon stocks go up, and that bad years are followed by good years. What I am saying is investing in just stocks, what would be required to get these returns, cannot guarantee $1M, and for someone who experiences a big down year when they are 64, a year from getting this money, that would be catastrophic. This is why the closer you get to retirement the more conservative you need to be with your investments. A 30 year old who needs the money at 65 has plenty of years ahead of them to recover from a big loss, a 64 year old doesn't.
It's based on the stock market, so it's never going to end up exactly $1,041,459 at the end, Some people are going to end up with more, some with less. But for a fairly low initial amount of money, and a long time to compound, seems like a good investment and better than what a lot of people have at retirement. If I was having a baby, I would love to be able to put money at their birth into some kind of long term investment account that they could not access until they retired. A simple solution to a market crash right before retirement would be something like a target date fund where the money starts to move into bond as the person gets closer to retirement.
Imagine if this money was collectively managed like some kind of (*gasp*) pension fund, not as individual accounts? Or do you think the idea is to dump $7K into an account and say «good luck!»?
You don’t understand how CAGR works
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S&P average is about 10.5%. You can lose a couple percent to inflation and be peachy keen.
Why would you assume such a high rate?
Inflation Rate in the United States averaged 3.30 percent from 1914 until 2024
I don't know if looking back 100 years is accurate when the Fed has only been actively managing to a 2% inflation goal since 2012 [https://www.richmondfed.org/publications/research/econ\_focus/2024/q1\_q2\_federal\_reserve](https://www.richmondfed.org/publications/research/econ_focus/2024/q1_q2_federal_reserve)
Which is still better than what most people end up with at 65.
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You need to learn how averages work. > According to the Fed’s latest Survey of Consumer Finances from 2019, the median net worth of Americans between ages 55 and 64 is $212,500. The average net worth, which tends to skew higher due to high-earning outliers, is $1,175,900. https://www.cnbc.com/select/average-net-worth-of-americans-ages-55-to-64/ Edit to make it more clear: If you and Musk are standing in a room, the average net worth is $97 billion. Do you have $97 billion?
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Median means half of people have less and half have more. If you understood averages, either you presented a number knowingly and dishonestly representing it as what most people have or you didn’t know and just googled “average net worth 65”. And, for most people, a lot of that “wealth” is locked up in their homes in the form of equity and isn’t easily accessible and could deteriorate very quickly when the next housing market sell off happens. Not to mention transaction fees involved in selling real estate plus taxes on capital gains if appropriate. And homes are a horrible measure of wealth. There are tons of people that bought affordable homes that have skyrocket in value to the point where they can barely afford the increase in property taxes. Also, if you turn a home into cash, you still need a place to live. That $100k in home equity will disappear very quickly if they become a renter. Unless it’s a separate investment property, it’s a bad idea to include home value in net worth calculations for purposes of trying to determine how wealthy someone is. So, most people do not have $111k accessible to them. I’ll let you Google around for a counter argument.
The poster you are arguing with is mostly wrong, but you said that $111k is better than most people will have. You then also said the median net worth of 55-64 year olds is $212,500. 50% of people have $212,500 or more. So unless there is something really odd with the distribution of wealth most people likely do have more than $111k. I am being pedantic, but so is the rest of this thread.
Bill ackman's only motivation is enriching himself
This sounds a lot like Thomas Paine's proposal in Agrarian Justice: https://www.ushistory.org/paine/agrarian/agrarian1.htm
I think rules would be bent/broken by many people who want that money NOW!
I’d be worried they’d also be bent by people managing these accounts, if all your clients are infants and you know for a fact they can’t reach the money until they’re retirement age you’ll have a lot of opportunity to be dishonest. After all the government loves pillaging social security for other things and giving out IOUs they never intended to pay back and many companies have their employees’ 401k auto allocated into their own stock that many employees don’t pay attention to.
His plan is either stupid or evil (he’s a Wall St billionaire so he has to know how dumb this idea is). If you create $25B out of thin area, that’s going to make the dollar even more worthless than it already is and make prices for everything shoot up faster. It’s a great idea if you want to speed up the dollar’s demise and create tons of broke 65 year olds
we already create money out of thin air every year. atleast in this case it actually goes to the common man
Do you want to wait until you’re 65 (and old with worse health) to access $1M? And, by the time that happens, that $1M will buy you a few loaves of bread if you’re lucky (cuz inflation). There’s people in their 20s who become millionaires these days
it's free money. why would i not want free money at any point in life?
Because you can get it rn (they have 0% intro APR credit cards which you can exploit and make lots of money if you know what you’re doing). I don’t want to wait 40+ years just to get “free money” (that will likely be be taxed [he said “tax free” but the govt can always change tax laws] and inflated into nothing)
no, i'd have to pay back any money from a credit card. i don't have to pay back any money from the govt pension. apples to oranges.
Bill [SVB] Ackman will make anything to prop up Ponzis he is a beneficiary of. Just dig into SVB case to see how this snake was screaming and begging for a federal bailout (your current and future taxes) of the scam-bank which he had billions at
I think it’s the answer.
It’s not a terrible idea it’s just that the numbers are suspect. Where do you get 8% compounded? Long term SP500 average is about 6%. Second of all, inflation. Real returns are about 3-4%. $7,000 at 3.5% after 65 years is $65,496. (In today’s dollars) Let go crazy - at 5% real returns (effectively 7-9% nominal) it’s $167,000. It’s nice but no one is retiring on that alone.
better than nothing
I was always told stock market is 8 to 10% annually. 6 seems low? Off topic but....
Long term, including recessions is closer to 6-7% nominal
So the government will be investing 25 billion in fortune 500 companies that are already worth billions to trillions and they will have to actually grow this amount of additional income year over year? I think the idea is good, but there is something that doesn't add up.
just my thought, but i don't think i will start and grow a multibillion dollar company, but i sure as heck can invest with them. I have a much better shot at being a multimillionaire that way. considering its the US gov doing the investing... i would rather not have them involved in my retirement plans. just look at any gov project or plan. how many of those go exactly as planned and on budget?
Why 65? Thats too long of a horizon in my opinion and we already have SS. Make it 18 and I’d be more interested. They could use it to invest in their education or start a business or learn a trade. That would be better for their retirement prospects.
Social Security is highway robbery as it functions currently, let alone that it’s likely to run out before us young folk age to access ours. It’s the equivalent of stuffing money in your mattress and hoping inflation doesn’t ruin your savings plan. The government is keeping all of the interest growth and we get a mattress savings account if we’re lucky? Explain to me how I have that wrong, if I do.
I don’t think you have it wrong about SS tbh. The whole point was to keep old people off the street essentially. It’s a bad investment. You will simply get less than you put in no matter what, which is not the end of the world but if it’s not self sustaining then what’s the point? But prior to its existence about half of our elderly population was homeless. If it can be replaced by a viable more modern alternative, it’s worth considering.
I would rather we just treat SS like the sovereign wealth fund in Sweeden, allow some portion of it to be invested like any pension would invest funds, with the trust going bust in a few years though its not really possible anymore.
Yes, I’m liking this. Can you expand on that?
I dunno how much there is to expand on. Most pension funds are invested in a mixture of stocks and bonds, and many countries have sovereign wealth funds that are invested in stocks and bonds. The idea is not complicated, the politics and implementation are enormously conplicated.
Plot twist: $1,041,459 is only worth about 7 cents in todays money in 65 years
I bet our Congress won’t even consider this great idea!
It's not nothing, but the buying power of $1M 65 years from now is going to be virtually nothing. Definitely not remotely enough to retire on.
Why not do that yourself?
Yeah, for sure, but that doesn’t solve anything broad or societal. I don’t have kids, but if/when I do, they’ll definitely have a fund I contribute to over their childhood. I certainly hope and also expect it to be worth well more than $28,000 by the time their 18. They will also be contributing to it from money they earn from extra chores or jobs they might get in their early teens, such as soccer referee or neighborhood lawn mowing. Or ‘real’ jobs they might get when they are 15-18. My parents have started funds for their grandchildren (my nephews and niece), so they might be able to also support such a venture. All of that is from a place of upper lower (sometimes called middle) class privilege though. I want our nation to do fucking better for their citizens though. I like the sovereign wealth fund implementation idea that a poster had better than the concept originally posted.
A million dollars won’t be enough to cover the inflated income need by then. This dog don’t hunt.
It's still 268000 in today's money
And who would have control of that money? What they mean by privatizing is to have the banks control all that SS money. Who is going to guarantee an 8% return?
Yes, using infinite growth dogma to plan for the future. What could go wrong?
Akin and Co will invest that money for all Americans, charging commissions and management fees guaranteed for them while nothing is guaranteed for you.
So more money to prop up the stock market.
He is a bad guy, so I doubt his scheme is valid
Lol relying on billionaires to solve our problems. Not gonna work.
What you will have is the government putting 7k into the s&p 500 in the name of every child that cannot be touched until retirement. How does the government "give" 7k? Through taxpayer funds. Sounds kinda crazy and unethical. The people paying taxes get nothing but to fund someone else's retirement.
Social Security?
Social security is earned. You contribute with each pay period.
They could just increase the child tax credit.
You can’t fix America without abolishing taxes
Have you used any roads today? Or do you just stay in your parent’s basement all the time?