if you never earn enough money to be able to afford to invest
That’s a misconception. You can now buy shares in fraction depending on the investment platform. You can put however much money you want. Of course, the fewer shares you buy, the fewer the returns should the stock price increase (and fewer losses if share price goes down).
You can still invest $10 in a share price of $100, which means you own one-tenth fraction of a share. Even a broke person have $10 (unless you’re homeless, which is understandable, saying “I’m broke” is most of time a hyperbole and does not mean you only have your clothes on your back).
I’m surprised I’m the only person yet on Lenmy who corrected that you don’t have to be rich to buy shares to invest; usually someone would have done so almost immediately when it comes to this thing. Even a blue collar worker throughout his entire career can be a shareholder with 97 holdings and eventually become rich, like literally.
The problem isn’t actually not being able to invest, it’s not being able to meaningfully invest.
If you have $10, you can throw away. $10 doesn’t mean that much to you. So let’s say you sock it away into a decent stock. Let’s get edgy. Let’s pick something that’s going to double in a year. A year goes by, you have $20. Now you can really afford that carton of eggs.
Investing at poultry levels doesn’t mean anything to you because it’s not enough money to do anything with. You generally need to be socking away 10-30% of your income to get anywhere significant enough to retire.
The argument that you can invest because you can afford to spend $10 is as useless as investing $10.
But if you did your research well and leave the $10 in a stock with huge potential growth in the future, that could triple or even grow to one hundred percent in years if not decades. Of course, if you really need the money, simply don’t invest.
Another person replied to me and mentioned about debt. I hadn’t initially consider it because in my country, debt crisis is not really an issue unlike in the US or elsewhere so I didn’t mean to be callous. If the person have debts and really need every penny and cents count, of course pay them off first before starting to invest; I’m not a financial advisor but that’s the general advise that a qualified person will also make.
My very first comment is a counter to the idea that you have to be extremely rich or an institutional investor to start investing, which has never really been the case. You can start investing with any amount you can afford.
You can treat it like a pension fund or savings account and put however amount every now and then, and let the power of compound interest work. If you read the Wikipedia entry on Ronald Read that I linked, that’s what he did. He also redistributed the gains and dividends to buy more shares on another stock. And he was a gas station attendant and then a janitor who eventually made $8 million by the time he passed away.
I read the article. Bro, that dude started investing following the stock market crash of the great depression with an initial investment of ~$2500, equivalent to about $60k today.
That’s not $10. That’s $60k which was then invested over 80 years starting at the lowest point in the history of the market and going into the postwar economic miracle of the US in WW2.
This is not a reasonable comparison, even a little. Average returns today are a tiny fraction of what this guy saw in his lifetime, and he was able to put down an amount that is nearly the median household income in the US today. If someone can put down a years wages into the stock market then they’re already financially stable. Nearly a third of Americans have less than $1k in savings. Not to mention, for most of the working class today, if you have $60k to throw around, it would be a better financial strategy to use that as a down payment on a house than put it into the market.
Let’s do the math. For baby boomers, I have average returns since 1970. An average of 10% a year. As a reminder, this is MARKEDLY LOWER (we’ll get there) than what your example saw in his lifetime. You’re right! Even investing $60 a month ($720 a year) over 40 years ($28,800 total) makes you a cool half a mil at that rate. HOWEVER. At today’s rates, an average return of 6.1% means you would need to invest almost 5x as much, $250 a month ($3000 a year) to reach the same amount in 40 years ($120,000 total). Meanwhile, your example lived through times where returns were, at times, on average, over 40% a year. On average. While that wasn’t the market state for his whole life, it WAS the state not long after he started investing. If you could get those numbers comsistently, it would take less than $1 a month over 25 years to make half a million dollars.
That’s a misconception. You can now buy shares in fraction depending on the investment platform. You can put however much money you want. Of course, the fewer shares you buy, the fewer the returns should the stock price increase (and fewer losses if share price goes down).
Being broke is a misconception?
You can still invest $10 in a share price of $100, which means you own one-tenth fraction of a share. Even a broke person have $10 (unless you’re homeless, which is understandable, saying “I’m broke” is most of time a hyperbole and does not mean you only have your clothes on your back).
I’m surprised I’m the only person yet on Lenmy who corrected that you don’t have to be rich to buy shares to invest; usually someone would have done so almost immediately when it comes to this thing. Even a blue collar worker throughout his entire career can be a shareholder with 97 holdings and eventually become rich, like literally.
The problem isn’t actually not being able to invest, it’s not being able to meaningfully invest.
If you have $10, you can throw away. $10 doesn’t mean that much to you. So let’s say you sock it away into a decent stock. Let’s get edgy. Let’s pick something that’s going to double in a year. A year goes by, you have $20. Now you can really afford that carton of eggs.
Investing at poultry levels doesn’t mean anything to you because it’s not enough money to do anything with. You generally need to be socking away 10-30% of your income to get anywhere significant enough to retire.
The argument that you can invest because you can afford to spend $10 is as useless as investing $10.
But if you did your research well and leave the $10 in a stock with huge potential growth in the future, that could triple or even grow to one hundred percent in years if not decades. Of course, if you really need the money, simply don’t invest.
Another person replied to me and mentioned about debt. I hadn’t initially consider it because in my country, debt crisis is not really an issue unlike in the US or elsewhere so I didn’t mean to be callous. If the person have debts and really need every penny and cents count, of course pay them off first before starting to invest; I’m not a financial advisor but that’s the general advise that a qualified person will also make.
My very first comment is a counter to the idea that you have to be extremely rich or an institutional investor to start investing, which has never really been the case. You can start investing with any amount you can afford.
You cannot meaningfully invest without at least a few hundred spare dollars. Expecting a multi-hundred-percent increase is not realistic.
You can treat it like a pension fund or savings account and put however amount every now and then, and let the power of compound interest work. If you read the Wikipedia entry on Ronald Read that I linked, that’s what he did. He also redistributed the gains and dividends to buy more shares on another stock. And he was a gas station attendant and then a janitor who eventually made $8 million by the time he passed away.
I read the article. Bro, that dude started investing following the stock market crash of the great depression with an initial investment of ~$2500, equivalent to about $60k today. That’s not $10. That’s $60k which was then invested over 80 years starting at the lowest point in the history of the market and going into the postwar economic miracle of the US in WW2.
This is not a reasonable comparison, even a little. Average returns today are a tiny fraction of what this guy saw in his lifetime, and he was able to put down an amount that is nearly the median household income in the US today. If someone can put down a years wages into the stock market then they’re already financially stable. Nearly a third of Americans have less than $1k in savings. Not to mention, for most of the working class today, if you have $60k to throw around, it would be a better financial strategy to use that as a down payment on a house than put it into the market.
Let’s do the math. For baby boomers, I have average returns since 1970. An average of 10% a year. As a reminder, this is MARKEDLY LOWER (we’ll get there) than what your example saw in his lifetime. You’re right! Even investing $60 a month ($720 a year) over 40 years ($28,800 total) makes you a cool half a mil at that rate. HOWEVER. At today’s rates, an average return of 6.1% means you would need to invest almost 5x as much, $250 a month ($3000 a year) to reach the same amount in 40 years ($120,000 total). Meanwhile, your example lived through times where returns were, at times, on average, over 40% a year. On average. While that wasn’t the market state for his whole life, it WAS the state not long after he started investing. If you could get those numbers comsistently, it would take less than $1 a month over 25 years to make half a million dollars.
Absolutely incomparable.