• kambusha@sh.itjust.works
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          2 months ago

          Historically, investing in a broad-market index fund has seen 8-12% annual returns. Average inflation in the US has been around 2-3%. Subtract another 3-4% for taxes, and you’re still making at least 3%.

          Anyways, the point is more about the fact how powerful saving & compounding is. Save early in life, and try to not inflate your lifestyle too much, and then you can technically reach financial independence.

            • kambusha@sh.itjust.works
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              2 months ago

              Agreed, no investment can be guaranteed. However, average return of s&p 500 over 100 years has been 10%. Average return of an example index-fund, VTI, since inception in 2001 has been around 8%.

              • Screamium@lemmy.world
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                2 months ago

                I’m of the opinion that the stock market is overvalued right now, mainly pumped up by tech stocks which are overvalued due to AI hype. I can’t help but think eventually all the baby boomers are going to want to cash out and enjoy their invested money while they’re still alive.

                But on another note, do you expect the stock market to perpetually trend up? I suppose inflation helps keep stock prices up because the dollar is worth less than before.

                • kambusha@sh.itjust.works
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                  2 months ago

                  The reality is, you’ll never be able to time it perfectly. Contributing over time, rather than lump-sum, will spread the risk.

                  If something does happen to the stock market, we’ll all be fucked. Pretty much every country, company, and individual is invested in some shape or form. Pensions, insurance etc.

                  • Screamium@lemmy.world
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                    2 months ago

                    If something does happen to the stock market, we’ll all be fucked.

                    I don’t think that’s true. Even though all the things you mentioned should be diversified, if something terrible effects the markets then there will be bail outs, rate cuts, and/or money printing. What I had in mind though, is that infinite growth is impossible in our finite universe. And there’s no bail out for our planet, yet no one cares that we’re all fucked if it becomes uninhabitable

            • lightnsfw@reddthat.com
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              2 months ago

              I was able to do that for a few years bit I was living with my parents and paying them a pittance for rent. Certainly not independent. All my expenses shot up when I left but I was able to pay a lot of my loans off before that.

            • jaycifer@lemmy.world
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              2 months ago

              No, independent would mean you could cease that source of income and maintain your lifestyle. If you save 50% of your first paycheck and then quit I doubt that would be the case.

              Being able to set that much aside would definitely make one wealthy (or live a very austere lifestyle) and fast track them toward independence, but it’s not an automatic qualifier.

          • GrammarPolice@lemmy.world
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            2 months ago

            You call 3% significant gains? I mean it’s better than nothing, but i don’t think it’s going to be worth breaking one’s neck over