The median 40 year old has retirement savings of $45K, not $5K. And the median 70 year old has savings of $200K. In both groups, doubling the amount is quite significant.
Using median makes it a loaded statistic skewed in favor of the minority (in this case, the wealthy).
Over half the country is living paycheck-to-paycheck, so that median number is already in the ‘well-off’ category by default, making them irrelevant to the main point of discussion.
Is that true? Median is literally taking the value in the middle. So if there are 30 million 70 year olds then it would be picking the 15th millionth person and using their savings.
Averages or Means are skewed by outliers, not the median. The median is just picking the middle number in a list of numbers. There is no skewing possible. If you have 99 people making $1 per year and one person making $1B per year, the median is $1. The average/mean is $1,000,000.99 which is way skewed.
What does fairness have to do with it? Compound interest is just math.
One could trivially make an argument that we should redistribute the wealth among the population, but there is not a clear way how to do this effectively, or it would have been done already.
The hard part is taking on the appropriate amount of risk in order to actualize those gains; a bank won’t just give you a 10% interest rate, you have to work your ass of for it. An entrepreneur needs to assess the landscape and invest in what the market will want tomorrow, and most people guess suboptimally (3-6%), or end up losing money, whether in fact (negative returns) or relative to inflation (0-3%).
Even pointing to the S&P 500, as most people do, you still need to make the conscious decision to sell and take profits, FOMO be damned. Or alternatively, taking a perceived loss but actual profit (e.g., you didn’t sell right at the peak, but that’s usually okay). It’s not easy, and most people don’t have the time or stomach for it; these people are best served by long term, government-backed bonds, after which you will come out only slightly ahead of inflation.
Using the rule of 72, and a 3% bond rate, it would actually take you 24 years to double your money, not seven. And that, my friend, is why you and I are not billionaires.
But is it really fair that a person with 50 million can turn that into 100 million
Yes.
And since that can only happen by investing that amount into the economy, it’s wisely encouraged by the system, versus putting the 50 million in a vault somewhere.
It’s essentially an investment in the country’s further financialization and privitization…both of which are things completely ruining the country (unless you’re rich, then these movements just make more parts of the country your own personal playground).
And, it’s worth pointing out that the rich carry a large asset base in their own companies which they can borrow against tax free while the value of the underlying assets continually grow. The only thing similar a non-rich person has access to is a home equity line of credit…and even then you own a home with equity which…you ain’t rich but you ain’t exactly broke either.
But is it really fair that a person with 50 million can turn that into 100 million, whereas most people can turn at most $5,000 into $10,000?
Earning $5,000 over 7 years is basically worthless.
The median 40 year old has retirement savings of $45K, not $5K. And the median 70 year old has savings of $200K. In both groups, doubling the amount is quite significant.
Jesus Christ those are pathetic numbers for retirement at those ages.
Got to eat. Retirement is gone, and your 401k is nothing more than a subsidy so you can work part time as a greeter until death.
Using median makes it a loaded statistic skewed in favor of the minority (in this case, the wealthy).
Over half the country is living paycheck-to-paycheck, so that median number is already in the ‘well-off’ category by default, making them irrelevant to the main point of discussion.
You have it backwards. The mean, not the median, is skewed by outliers.
If there are ten people in a room with $10 and one person with $1,000,000, the median is $10 whereas the mean is ~$90,000.
No idea why you’re down voted for math :/
Is that true? Median is literally taking the value in the middle. So if there are 30 million 70 year olds then it would be picking the 15th millionth person and using their savings.
You might not know what median means (math pun!).
Averages or Means are skewed by outliers, not the median. The median is just picking the middle number in a list of numbers. There is no skewing possible. If you have 99 people making $1 per year and one person making $1B per year, the median is $1. The average/mean is $1,000,000.99 which is way skewed.
No one is putting their entire retirement into the stock market, so they’re not doubling the amount.
At age 40, it’s recommended that you put 60-80% of retirement funds into the stock market. Doubling that is still significant.
Sweet, I didn’t realize I could double $0.
And you can do it as many times as you like, no charge*!
* = charges may apply, see your local hedge fund for details
What does fairness have to do with it? Compound interest is just math.
One could trivially make an argument that we should redistribute the wealth among the population, but there is not a clear way how to do this effectively, or it would have been done already.
The hard part is taking on the appropriate amount of risk in order to actualize those gains; a bank won’t just give you a 10% interest rate, you have to work your ass of for it. An entrepreneur needs to assess the landscape and invest in what the market will want tomorrow, and most people guess suboptimally (3-6%), or end up losing money, whether in fact (negative returns) or relative to inflation (0-3%).
Even pointing to the S&P 500, as most people do, you still need to make the conscious decision to sell and take profits, FOMO be damned. Or alternatively, taking a perceived loss but actual profit (e.g., you didn’t sell right at the peak, but that’s usually okay). It’s not easy, and most people don’t have the time or stomach for it; these people are best served by long term, government-backed bonds, after which you will come out only slightly ahead of inflation.
Using the rule of 72, and a 3% bond rate, it would actually take you 24 years to double your money, not seven. And that, my friend, is why you and I are not billionaires.
Yes.
And since that can only happen by investing that amount into the economy, it’s wisely encouraged by the system, versus putting the 50 million in a vault somewhere.
They are not investing it into the great magical economy. It’s in hedge funds that actively destroy the economy.
It’s essentially an investment in the country’s further financialization and privitization…both of which are things completely ruining the country (unless you’re rich, then these movements just make more parts of the country your own personal playground).
And, it’s worth pointing out that the rich carry a large asset base in their own companies which they can borrow against tax free while the value of the underlying assets continually grow. The only thing similar a non-rich person has access to is a home equity line of credit…and even then you own a home with equity which…you ain’t rich but you ain’t exactly broke either.