Past performance is not a guarantee of future results.
We used to think that all you had to do was work for a company for 40 years in the same job and you would be taken care of with your pension + social security. Pensions are just about nonexistent these days. Social security is going to be gone after the baby boomers suck it dry. And, personally, I don't have much confidence that blindly throwing my money into the stock market for 70 years is going to help me more than smartly saving my money. The current climate on wall street seems to be to rip off retail investors and take advantage of pension funds.
And that's why you should invest in low-fee index funds. You can't beat the market, so don't try. Just dump your money into a few good funds and ignore it for 60 years.
You have to do something with your money. If you just stash it into a savings account you will literally lose money to inflation. A good mix of index funds (or target retirement-type funds) are probably the "safest" long-term savings you can do with your money.
You probably won't become a millionaire, but you probably won't be destitute either.
Yep! In fact, the various Vanguard "Target Retirement" funds are simply different allocations of these three different funds. As the "retirement date" get's closer, it shifts more of the allocation over to Total Bond Market fund and out of Total Stock and Total International
Anyway, there is nothing better than stock market. I don't want to tell obvious things, but buying stocks are buying what the economy is made of. Everything else, like real estate for example, is just a direct or indirect derivative of stock. Investing in anything else (of course as long as we stay in a legal field, and mean only passive investment) just trades profits for risks. Best way of doing so is a balanced portfolio of stocks, bonds and cash, due to inverse correlation between stocks and bonds most of the time, but anyway, this isn't required on a 70-year timeline. If stock market won't give you the return, nothing else will - even bank deposit can be 'diluted' with inflation.
Social security, pensions etc. - agree, these are on the way out due to demographic changes. But that's a point for individual retirement savings, not against them.
And yes, there is no such thing as stock performance prediction, this has been proven many times since the 1930s. So funds are useless in the long run - just a way to trade performance for risks, and pay a fee (while i agree that in the case of Vanguard, you lose almost nothing because the fund is really cheap).
You have to be pretty good to pick individual stocks which will perform well on a 70 year timeline. Are there even more then 20 companies that have been publicly traded in the US for that long?
okay, okay, i got your point. Yes as long as the fund is a really low fee one, like Vanguard's ones with around $10 per $10000 a year invested, that's nearly an equivalent to a stock market minus the pain of balancing the portfolio yourself.
But again, that really means nothing compared to the fact that people don't really save at all. I know a lot of people of my age (early 30s) for who the phrase 'got no money' means 'maxed out all of my credit cards and can't get a new one'. Some of them are MBAs so it's not about financial literacy.
We used to think that all you had to do was work for a company for 40 years in the same job and you would be taken care of with your pension + social security. Pensions are just about nonexistent these days. Social security is going to be gone after the baby boomers suck it dry. And, personally, I don't have much confidence that blindly throwing my money into the stock market for 70 years is going to help me more than smartly saving my money. The current climate on wall street seems to be to rip off retail investors and take advantage of pension funds.
edited for typos..