> I would also love to hear why protecting investors from themselves is a good thing. It's an honest question: what is the merit of putting a cap on what you can invest based on your income? Shouldn't that cap be a personal choice?
The reality is these bets have ~10% chance of success. People [in aggregate] have a history of being duped into putting too much money into highly risky bets that they don't understand. That doesn't include the outright scams that have happened in the past.
At the end of the day, we [the taxpayers] are on the hook for things going badly. [i.e. In the form of investigation, entitlements] So yeah, we should have some say in how much is on the hook. So yes, when I'm on the hook for bailing people out of poor decision making...I don't want them to dump their life savings into it.
> Those with an annual income or net worth of less than $100,000 will be allowed to invest up to $2,000 in a 12-month period, or 5 percent of the lesser of their income or net worth, whichever is greater. Those with an income and net worth of more than $100,000 will be permitted to invest up to 10 percent of the lesser of their annual income or net worth.
Most people really don't even save up to these limits.
Besides, you really should be dumping the money into tax advantaged accounts anyway. At that point, to hit the cap, we are talking 33% or more of your income being saved. Very, very few people hit that number and they mostly are the /r/FI types who wouldn't touch this except for a minority position in their investments.
> The reality is these bets have ~10% chance of success.
Randomly picking stocks - which is heavily advertised on TV, radio, and by your personal broker - has at least as bad of a chance. Yet we glamorize it, do we not?
> Randomly picking stocks - which is heavily advertised on TV, radio, and by your personal broker - has at least as bad of a chance. Yet we glamorize it, do we not?
...do we?
Most of the investment advice I read says to use things like Vanguard ETFs for broad market funds.
Likewise. I assume your broker isn't the guy running the local bank branch and instead is a Vanguard online portal or something with low fees. But the majority of average people who have retirement funds don't trade or invest this way.
The reality is these bets have ~10% chance of success. People [in aggregate] have a history of being duped into putting too much money into highly risky bets that they don't understand. That doesn't include the outright scams that have happened in the past.
At the end of the day, we [the taxpayers] are on the hook for things going badly. [i.e. In the form of investigation, entitlements] So yeah, we should have some say in how much is on the hook. So yes, when I'm on the hook for bailing people out of poor decision making...I don't want them to dump their life savings into it.
> Those with an annual income or net worth of less than $100,000 will be allowed to invest up to $2,000 in a 12-month period, or 5 percent of the lesser of their income or net worth, whichever is greater. Those with an income and net worth of more than $100,000 will be permitted to invest up to 10 percent of the lesser of their annual income or net worth.
This is pretty reasonable.
http://www.bloomberg.com/news/articles/2015-03-30/u-s-consum...
Most people really don't even save up to these limits.
Besides, you really should be dumping the money into tax advantaged accounts anyway. At that point, to hit the cap, we are talking 33% or more of your income being saved. Very, very few people hit that number and they mostly are the /r/FI types who wouldn't touch this except for a minority position in their investments.