My wife and I were talking about this earlier. Boomers who managed to save cash were able to put that money into fixed income assets at incredibly high interest rates during the eighties. A 5 year CD in 1984 paid 12%, at renewal in 1989 it was, 9%, then 6.5% at the next renewal in 1994. In 1999 rates started their race to the bottom but stocks skyrocketed. So if you amassed cash in the eighties and nineties through fixed income, you had a great position to capitalize on the dot com boom, buy cheap during its crash, buy cheap real estate after the 2008 financial crash, capitalize on the market rebound, etc. All mostly for free because of timing.
All easy decisions, in hindsight. In reality quite a few missed out completely on all of those or lost significantly. It’s all just some sort of gambling in a casino. I’m sure in hindsight it will be clear which opportunities you missed out on in your time. The big difference is being able to save to start off with, because wages were relatively a lot higher for simple jobs than they are now.
That’s why I started by highlighting the fixed income stuff like five year CDs. I remember my mother and grandmother putting their money in those and bonds and how well it served them into retirement. Those weren’t hindsight. Back then, working families put their money in savings. Sure there were Wall Street cocaine yuppies making insane money but, at least in my household, that was just the stuff of movies.
I’m not fully disagreeing with you. I just think both aspects made a difference. Higher wages and a feasible way to save your money without having to partake in the casino was key. I look at millennials and zoomers and I see none of that. Low wages, higher cost, and the only way to save for retirement is by betting everything you’ve got on a system that’s heavily rigged against you as a retail investor. As Gen-X at least we had the chance to make our own wealth by creating an entire new industry. My younger siblings and my children would have had none of that, if I had siblings or children. /Rant
covid crash happened only a few years ago and looking back it was the opportunity of a lifetime. Of course at the time there was a very real possibility that society was collapsing and there wouldn’t be a stock market in a year or so.
I Bonds were paying over 9% if purchased recently. I grabbed 10k of them for myself and my partner for the electronic bond limit.
Buying just a simple shares in cheap fee index tracking FTEs like for the SP500 would have netted you ~40% in less than 3 years.
The vehicles for wealth building not only still generate significant returns, they do so when interest rates were incredibly low by historical standards. Since you mention “just timing”, it is silly to ignore that with “just timing” recent events you could have as a millennial bought a house or refinanced one at 2.5%, gotten into other assets on loans when the prime rate hit zero, and then benefited off of a meteoric rise by simply putting assets into simple low cost investments.
The stock market by comparison in the boom of the dot com era would give you about the same sp500 growth in 3 years as I just outlines in “just timing it”, around 40% from 1997 to late 1999.
Markets are easy to look back at historically and define ease of success. The picture you painted shows an unfair representation of that ease as well as not indicating the same gains in the same time with even better interest rates were available to all of us recently.
It is not randomly generating it. It’s moving it around from other places, but even then I agree it’s not available to many.
As with most disruptive world events, it benefited those with wealth that was not already tied up in living. If you were a millennial with a house down payment and a 6 month safety net in cash when Covid hit, you had opportunity to grow your assets by close to if not more than 100% in 3 years. If you didn’t, you watched as the world burned and you took job losses as well as draining money you had to pay rent.
The data though, shows an interesting thing. The amount of free cash available to Americans in accounts as cash went up starkly. Double digit percentage rise in free available assets kind of starkly. So much so it is only now returning to previous Covid levels. The vast majority of checking account cash is tied up in middle income households. So anecdotally I would agree that the last 3 years were a real rectal widening experience that arrived unlubed, but the data at a macro level shows people have more cash on hand and had it during the breadth of the pandemic, than they did before it.
All this to say, there should be an increase in bond buying availability for the majority of potential investors with a bank account, not less. I work on the financial sector so take that bias with the grain of salt it should merit.
My wife and I were talking about this earlier. Boomers who managed to save cash were able to put that money into fixed income assets at incredibly high interest rates during the eighties. A 5 year CD in 1984 paid 12%, at renewal in 1989 it was, 9%, then 6.5% at the next renewal in 1994. In 1999 rates started their race to the bottom but stocks skyrocketed. So if you amassed cash in the eighties and nineties through fixed income, you had a great position to capitalize on the dot com boom, buy cheap during its crash, buy cheap real estate after the 2008 financial crash, capitalize on the market rebound, etc. All mostly for free because of timing.
All easy decisions, in hindsight. In reality quite a few missed out completely on all of those or lost significantly. It’s all just some sort of gambling in a casino. I’m sure in hindsight it will be clear which opportunities you missed out on in your time. The big difference is being able to save to start off with, because wages were relatively a lot higher for simple jobs than they are now.
That’s why I started by highlighting the fixed income stuff like five year CDs. I remember my mother and grandmother putting their money in those and bonds and how well it served them into retirement. Those weren’t hindsight. Back then, working families put their money in savings. Sure there were Wall Street cocaine yuppies making insane money but, at least in my household, that was just the stuff of movies.
I’m not fully disagreeing with you. I just think both aspects made a difference. Higher wages and a feasible way to save your money without having to partake in the casino was key. I look at millennials and zoomers and I see none of that. Low wages, higher cost, and the only way to save for retirement is by betting everything you’ve got on a system that’s heavily rigged against you as a retail investor. As Gen-X at least we had the chance to make our own wealth by creating an entire new industry. My younger siblings and my children would have had none of that, if I had siblings or children. /Rant
EDIT: The eternal battle with autocorrect
Yeah. People could also get rich now on crypto, but that’s easy to say in hindsight, it was all a gamble, and just as many people lost a whole lot.
covid crash happened only a few years ago and looking back it was the opportunity of a lifetime. Of course at the time there was a very real possibility that society was collapsing and there wouldn’t be a stock market in a year or so.
everything’s easy in hindsight
I Bonds were paying over 9% if purchased recently. I grabbed 10k of them for myself and my partner for the electronic bond limit.
Buying just a simple shares in cheap fee index tracking FTEs like for the SP500 would have netted you ~40% in less than 3 years.
The vehicles for wealth building not only still generate significant returns, they do so when interest rates were incredibly low by historical standards. Since you mention “just timing”, it is silly to ignore that with “just timing” recent events you could have as a millennial bought a house or refinanced one at 2.5%, gotten into other assets on loans when the prime rate hit zero, and then benefited off of a meteoric rise by simply putting assets into simple low cost investments.
The stock market by comparison in the boom of the dot com era would give you about the same sp500 growth in 3 years as I just outlines in “just timing it”, around 40% from 1997 to late 1999.
Markets are easy to look back at historically and define ease of success. The picture you painted shows an unfair representation of that ease as well as not indicating the same gains in the same time with even better interest rates were available to all of us recently.
Casually dropping 20k isn’t in 95% of people’s ability.
Never said it was.
It is not randomly generating it. It’s moving it around from other places, but even then I agree it’s not available to many.
As with most disruptive world events, it benefited those with wealth that was not already tied up in living. If you were a millennial with a house down payment and a 6 month safety net in cash when Covid hit, you had opportunity to grow your assets by close to if not more than 100% in 3 years. If you didn’t, you watched as the world burned and you took job losses as well as draining money you had to pay rent.
The data though, shows an interesting thing. The amount of free cash available to Americans in accounts as cash went up starkly. Double digit percentage rise in free available assets kind of starkly. So much so it is only now returning to previous Covid levels. The vast majority of checking account cash is tied up in middle income households. So anecdotally I would agree that the last 3 years were a real rectal widening experience that arrived unlubed, but the data at a macro level shows people have more cash on hand and had it during the breadth of the pandemic, than they did before it.
All this to say, there should be an increase in bond buying availability for the majority of potential investors with a bank account, not less. I work on the financial sector so take that bias with the grain of salt it should merit.