Please explain how to keep up with a fricking 7.9% inflation rate...

[deaddog]

which led me to think (reaffirm) that the only way to beat inflation is to invest speculate in equities. Period.

FTFY

 

[M.W.]

Bit strange when you can't even enter savings/wealth, equity to calculate wealth. Income has very little bearing on how rich someone else if their cost basis is out of whack.

https://howrichami.givingwhatwecan.org/how-rich-am-i

 

[piezoe]

So not only is there purchasing power lower but now they're taxed at a higher rate..

Well you did fairly well up to that point. There purchsing power is not net lower. It is net higher. They only pay higher taxes on their last dollars earned. They are still way ahead! You remind of a guy who complains about paying a million bucks last year on income tax. I wish we could all be so "unlucky."

 

[M.W.]

That completely ignores alpha generation. If someone can generate uncorrelated alpha then over the long term you will most likely beat the index even by generating 6 percent per annum. Most fund managers, however, don't generate uncorrelated alpha. Heck, most hedge funds don't even manage to do that. They take large, concentrated bets fully aligned with the market. And most hedge funds suffer badly when equities trend down.

Your suggestion of bespoke index replication is rather oversimplified. If that held true then most fund managers would do so. They don't because they can't beat the index that way. Peter Lynch held many dozens of positions and invested a lot in stocks that did not make up the top 10 positions of any index, capitalization wise.

Most guys here and anywhere can't even end a single year in the green. What you suggest is not realistic for most. Still the best way to grow equity in stock markets is to buy an index tracking fund. Period.

A fund manager or a computer. 8% is about the average return on the S&P 500 over the last 20 years (~7.9% I think) If you are struggling to get that return from trading or personal investing , quit and put your money in an index fund. Had you put your money in an index fund you'd have beat inflation every year for the past 20.

You have a vastly oversimplified version of the relationship of government taxing and spending to inflation. Shall we call your version the "Twitterized" version?

Now then, have I "...explain[ed] how to keep up with a fricking 7.9% inflation rate" ?

I should add that I am not a fan of straight Index Funds. Since most of the S&P's gain is attributable to a half dozen or so stocks, just buy those stocks in the same relative proportion to each other as in an index fund. Then adjust from time to time according to the long range outlook for these stocks. You'll do better than the index fund over time but worse in down turns. You'll have a little more volatility. (I don't do this myself by the way. Not exactly anyway.)

 

[piezoe]

I remember when people like me were called "conspiracy theorists" for warning about damn near exponential inflation a couple of years ago. All of the retards, including on here, who get all of their information from the TV said that the man on the TV told them that inflation fears are unfounded.

Inflation fears are unfounded.

 

[M.W.]

Not true for most. It starts biting most families. And mortgage rates have not even meaningfully ticked up yet. If mortgage rates quote 4 or 5 percent then let's talk again. Unless the supply crunch abides soon and China again manufactures and delivers on time prices will only tick up more. This is highly questionable in the current geopolitical realm.

Inflation fears are unfounded.

 

[piezoe]

Inflation is theft....borrow vast amounts of money at low interest and take large bets like the gov and big institutions..

It's theft to those living on fixed income it is manna from heaven to those who are heavily in debt at fixed rates whose income keeps pace with inflation.

 

[Arnie Guitar]

I'm now a resident of The Sunshine State.
No more Wisconsin income tax, high property taxes and heating bills.
I've also cut the cord, no more cable bill. I bought a Superbox.

A big increase in income.

 

[piezoe]

Not true for most. It starts biting most families. And mortgage rates have not even meaningfully ticked up yet. If mortgage rates quote 4 or 5 percent then let's talk again. Unless the supply crunch abides soon and China again manufactures and delivers on time prices will only tick up more. This is highly questionable in the current geopolitical realm.

I was only partly serious. As you pointed out, it's a serious matter for many.

 

[ElCubano]

Bit strange when you can't even enter savings/wealth, equity to calculate wealth. Income has very little bearing on how rich someone else if their cost basis is out of whack.

agree. Was more to point out how much have compared to the rest of the world. There is a calculator I'm sure for wealth and it would probably blow you away on how we fair out.