The book Sam Stone cited to does envision that rate of return over many, many years and suggests that you start young so that you can avoid dips in the market. It also suggests diversifying with some very safe investments like Roth IRAs etc… I believe that it was originally written by a Canadian financial planner for Canadians and then sort of “translated,” for Americans. It’s a wonderful book and I highly recommend it. That said, it’s not terribly useful if you’re living substantially below the poverty line but the major case study used isn’t someone making a whole lot of money.
You may well do. I never disputed it. But the risk profile to get a 10% rate or return long term is absolutely not what I would recommend to a low income person for whom it is the sole element of retirement savings. Not that I would recommend anything anymore, because I am no longer in that benighted business.
A lot of oh so smart people that told us the days of asset allocation were over are looking pretty stupid now. Of course, they still practiced asset allocation in their own accounts, so they are sitting pretty comfy after all. The most dangerous words in the investment game? “It’s different this time.”
You know that and I know that, but tell that to the parents around here. There is a definite perception that going to the local 2 year college is equivalent to going to Berkley for the first two years - and even better, since it is cheaper. This is not to knock two year colleges, which are better for some people. My point is that many of the people who do not have the drive for success, or the drives to give their kids success, either won’t or can’t see the difference. I don’t know if this is cheapness, or the lack of exposure to a really good school, or being convinced by their crappy alma mater that their Podunk U is as good as Harvard. But it is a verycommon discussion around here among white parents.
? Roth IRAs are by no means “very safe” unless you invest the money in “very safe” investments. They can be risky or safe depending on how you invest the money. It’s just a retirement account, like a 401k except you don’t pay taxes on withdrawals, you pay into it with post-tax money, and it’s a bit more flexible about getting money out.