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.
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.
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
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%.
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.
