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Jorge,
I answered your question in the last page.

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Originally posted by George Smiley Heh, piece of piss innit?!

absolutely.


if guerra's 35 million number is correct, i made a pretty accurate guess; that's a little more than 11 percent of the population. That number means that most people need to make around 125K to save that much. score!

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Originally posted by George Smiley So tell me how much they would have had to put aside each month. And tell me how much they would need to earn each year to be able to afford to do that, and for how many years would they need to save...

Ok. I will answer here for you. Earning enough money is not the problem. About 80 to 87% of Americans have the money to invest in. The problem is that most do not begin early. So if you want to start late, at the time most Americans begin to save money, 40, you would need to put 2 750 a month to earn that same million. But if you started early at 29 than its just 90 dollars a month.
Watch 1080 * 38 = 41040 for a million dollars
2750 * 12 * 27= 891000 for the same million as above^

quote:

Originally posted by guerra-monstru Not true

You clearly don't know how to do Future value calculations if you think my number is wrong. Plus, you gave no interest rate. how can you tell how much 1080 will grow without knowing the interest.

EDIT: actually, you're right, i was wrong, you need to save more than 9000 a year, i was doing monthly compounding at 4.5%. If the annual rate of return is only 4.5%, then you need to save more - $9300.

enter this into excel, =pmt(0.045, 40, 0, 1000000). That's how you find the required payments to accumulate 1 million.

you could also see the how you accumulate over a period of time by doing this: =fv(interest rate, term, payments each year, 0)

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Originally posted by guerra-monstru Ok. I will answer here for you. Earning enough money is not the problem. About 80 to 87% of Americans have the money to invest in. The problem is that most do not begin early. So if you want to start late, at the time most Americans begin to save money, 40, you would need to put 2 750 a month to earn that same million. But if you started early at 29 than its just 90 dollars a month. Watch 1080 * 38 = 41040 for a million dollars 2750 * 12 * 27= 891000 for the same million as above^

what? not only does that not make sense, but it also doesn't add to a million dollars.

what about compounding interest? that's what causes the wealth to grow.

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Originally posted by guerra-monstru Ok. I will answer here for you. Earning enough money is not the problem. About 80 to 87% of Americans have the money to invest in. The problem is that most do not begin early. So if you want to start late, at the time most Americans begin to save money, 40, you would need to put 2 750 a month to earn that same million. But if you started early at 29 than its just 90 dollars a month. Watch 1080 * 38 = 41040 for a million dollars 2750 * 12 * 27= 891000 for the same million as above^

Ok, I'm no economist or financial expert, so you're gonna have to explain it in simpler terms than that cos all I see is you get to $41,040 and somehow you've managed to add interest on that to come to $1m, that right?

I don't understand how you get to $1m!

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Originally posted by jerZ07002 what? not only does that not make sense, but it also doesn't add to a million dollars. what about compounding interest? that's what causes the wealth to grow.

I was trying to use an example from an economics professor a long time ago. Sorry for forgetting all of it Im old anyways and too rich for this shit, now I go back to work

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Originally posted by George Smiley David Bozo's comment's and attitude is exactly why right-wing capitalist economies are fucked socially. High poverty and high crime. I don't think Obama is telling people they shouldn't follow their own desires, he's saying that that's not all they should be striving for. Individualism and materialism is why my society and your society is fucked. Everybody is so selfish and care only about themselves. This is an attitude personified by the ruling elite (and by that I'm talking about the big corporations and their allies in government) because if people weren't so selfish, if they didn't live under the illusion that "everyone can be a millionaire" then they'd begin to stick up for each other and that would be bad for these elites who rely on the poor to keep their dollars rolling in to maintain their privileged positions in society. You two fall for it hook line and sinker every time, they must have seen you comin a mile off

+1, end of thread. The CATO Institute never fails to piss me off. They mis-characterize everything in order to make it seem like someone is after their guns, money, or personal right to do whatever the hell they want. Always playing the victim card, it's pathetic.

It's not like Obama said "don't become a businessman and don't join the military." He simply noted that there's something in life bigger than yourself and to be a good citizen of the society you live in you should think of ways to give back. Whether that's a life devoted to service is up to you.

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Originally posted by guerra-monstru I was trying to use an example from an economics professor a long time ago. Sorry for forgetting all of it Im old anyways and too rich for this shit, now I go back to work

try microsoft excel, its more accurate.

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Originally posted by George Smiley Ok, I'm no economist or financial expert, so you're gonna have to explain it in simpler terms than that cos all I see is you get to $41,040 and somehow you've managed to add interest on that to come to $1m, that right? I don't understand how you get to $1m!

my revised number of 9300+ over 40 years at 4.5% is 100% accurate (my first one was inaccurate because i used monthly compounding instead of annual RR). disregard anything else, i am pretty good with financial calculations.

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Originally posted by George Smiley Erm no funnily enough! Can you give me the wage that you'd need to be earning to be able to save $1m by the time you retire? Or tell me how much a person would need to save each month and add their other outgoings on top of that?

sorry, was away. It's not so much the wage that matters, it's how much the person saves and invests. It depends on their expenses. He or she may choose to live modestly now in order to secure a more comfortable retirement. A person could rent a shabby apartment for $500/month or choose to have a nicer house and pay a $2500 mortgage. There's a $2000/month gap right there. It all depends on savings and how you structure your lifestyle. Too many people want too much too early and they end up hurting themselves down the road because of their own poor planning. Then they expect the government to simply pick up the tab for their own lack of prudence and frugality. The problem is the "keeping up with the Jones" mindset, not necessarily a pure maldistribution of wealth, as you believe.

1) 4.5% is a rather low rate of interest to use as a long term figure considering that the risk free rate of return on a 10 year U.S. treasury is just over 4% as of today. The long term average return of the S&P 500 is over 10%, though I think that is also a bit aggressive as it captured the anomalous period of astronomic growth in the 1990's. I'd say 7-8% is probably a fair long-term assumption to use.

2) Jerz07002 has correctly pointed out that it is the compounding effect of interest that truly creates wealth (George, for the non-financially schooled, this means that if I earn a 5% rate of return and save $100 at the end of 1 year, I have $105 ($100 plus my 5% return). Beginning in year 2 I am earning the same 5% rate of return, however this time it is based on a $105 base, so at the end of year 2, I have earned more than $5 in interest. It doesn't seem like much, but after a period of years, the earnings accrue substantially. The earlier you start, the more compounding will work its magic).

There is a general rule of thumb called the rule of 72 in economics. It goes like this: Take the prevailing rate of interest and divide it into 72. The resulting number is the approximate number of years it takes your initial investment to double. So if the interest rate is 7%, it would take roughly 10 years to turn my $100 into $200 without any additional contributions.

Anyway, to use the Excel formula for present value, you'd want to calculate an ending value of $1,000,000 using an interest rate of 7% per year. The other variables are the number of years of savings involved, and the amount of each contribution. The problem with just using the basic present value formula P=Ve^rt is that it does not account for additional monthly contributions, rather it just tells you a future value of your present savings based on a given rate of return.

Since contributions are monthly and interest payments are generally credited monthly, we need to also use a monthly interest rate, so 8%/12 = 0.66667%/month. For a 30 year period (30x12 = 360 months) you'd need to save $670/month. Maybe not an easy feat for many, but with financial discipline it is also not out of reach for a great many.

By the way, here's a link to the financial calculator I am using:
http://www.dinkytown.net/java/FinCalc3.html

Now let's assume you were smart and started saving when you were 20 and you retire at 65...that's 45 years of saving (540 months). Now in order to have $1M when you retire you would only need to contribute $190/month.

Now simply for argument's sake, let's say some wise industrious person started saving $300/month when they were 20 and didn't retire until they were 70. 50 years of savings...720 months. At an 8% constant return, that person would have over $5M upon retirement! Fuck me, right?

What if that person was able to eek out a 10% return (0.833333%/month)? Fuck-n-a, they'd have over $14M when they hit 70!

Get it now? Start early, pay yourself first. People don't seem to grasp the time value of money concept, but it is no excuse for bigger government and more welfare/entitlement programs.

For argument's sake, you could also say that as a person gets older, his/her income likely goes up and his/her monthly contributions might also rise (though I have a daughter and my savings have clearly gone down!)

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Originally posted by jerZ07002 my revised number of 9300+ over 40 years at 4.5% is 100% accurate (my first one was inaccurate because i used monthly compounding instead of annual RR). disregard anything else, i am pretty good with financial calculations.

Edit: I had to go back and read. Your calculation is correct (though I'd say it would be more accurate to use monthly numbers since contributions are likely monthly and interest is generally credited on a monthly basis). This is not easy, but not impossible. 4.5% is a lousy rate of return and nobody said saving a million bucks was easy.

Using an 8% rate of return, that annual contribution goes to $3860/year or $321/month.

Using my assumption of an 8% rate on a MONTHLY basis (0.66667%/month, 40 years or 480 months), the monthly contribution would go down to $286/month.

Fwiw, a $100 monthly contribution for 40 years at 15% interest gets you over the $1M mark, though that assumption is a bit aggressive for my blood.

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Originally posted by Shakka Edit: I had to go back and read. Your calculation is correct (though I'd say it would be more accurate to use monthly numbers since contributions are likely monthly and interest is generally credited on a monthly basis). This is not easy, but not impossible. 4.5% is a lousy rate of return and nobody said saving a million bucks was easy. Using an 8% rate of return, that annual contribution goes to $3860/year or $321/month. Using my assumption of an 8% rate on a MONTHLY basis (0.66667%/month, 40 years or 480 months), the monthly contribution would go down to $286/month. Fwiw, a $100 monthly contribution for 40 years at 15% interest gets you over the $1M mark, though that assumption is a bit aggressive for my blood.

i used 4.5% because it is a guarantee - plus you can get that inflation indexed. i had to double take about the monthly contributions, you are right. using monthly contribution is correct.

BTW. you also have to consider a 2-3% yearly rate of inflation. In reality, to have the equivalent of $1 million in today's dollars forty years from now, you would need to invest about 9K a month for forty years at a rate of 6.5% - 7.5%. - 1 million dollars 40 years from now will be worth the equivalent of $452K (using the 2% inflation rate - which is modest).

Re: Re: Re: Well said

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Originally posted by Q5echo wow, way to support your man in a simple intelligent discussion. if you had half a brain, or at least one testicle, you could have done so much better...fail

the day your average post reaches more than one sentence of original text is the day i consider your thoughts about how to conduct myself in pdd

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Originally posted by Shakka The long term average return of the S&P 500 is over 10%, though I think that is also a bit aggressive as it captured the anomalous period of astronomic growth in the 1990's. I'd say 7-8% is probably a fair long-term assumption to use.

you are correct about the 7-8 percent. actually, over the past 40 years, the S&P has an average annual return of 7%. The S&P hit 100 on June 4, 1968, and today it closed at 1398.

Altho I'm no economic expert (altho I did study it for a year at university there's a reason I dropped out!) I've noticed a slight problem in the arguments we are having about the likelihood of somebody becoming a millionaire (not to mention that your definition of a millionaire is somebody with $1,000,000 and mine is somebody with $2,000,000 so our attitudes my be somewhat different)...

The whole point of this thread is that some git at the Cato Institute is saying sod your fellow man, enjoy your own life and do what you want without having to spend you money on other people. The capitalists are arguing that this is good as it is essentially entrepreneurial which is good for society as a whole. Yet your arguments that say how many people can become millionaires hinge around having to scrimp and save your whole life so you have $1,000,000 when your 67 (giving you around 5 years of happiness!). Surely the point is that these people also have a very very good life, not just when they hit 67?

I therefore don't think your arguments can work only if you can amass $1,000,000 at retirement, it must be in your prime of life for the argument to stand. I would therefore say that whatever wage you are suggesting can earn someone $1,000,000 at retirement by having no life, needs to be adjusted upwards by enough to allow that person to have a very good life as well as being able to become a millionaire...

Who says you need to have a million dollars to retire comfortably anyway? I'd be perfectly happy with 500-600k, and that amount is doable even for someone who starts investing in their mid 30's. Don't forget we still get social security at 62. That should be enough to provide for all basic needs (food, clothing, shelter). Anything else you've saved beyond that is just a bonus that lets you afford some luxury and extra vacations during your golden years.

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Originally posted by George Smiley

i think what the "capitalists" in this thread are demonstrating is the relative ease one can amass X amount of money by a certain time using a fraction of your income during your productive years. all within the great capitalist construct accessible to just about anybody. the idea is great, no?

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Originally posted by Capitalizt Don't forget we still get social security at 62.

i don't know, will we?

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Originally posted by Q5echo i think what the "capitalists" in this thread are demonstrating is the relative ease one can amass X amount of money by a certain time using a fraction of your income during your productive years. all within the great capitalist construct accessible to just about anybody. the idea is great, no?

Er no I think we've demonstrated it is possible for a privileged few to amass that amount if they give up having a life until they are retired...

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Originally posted by Capitalizt Who says you need to have a million dollars to retire comfortably anyway? I'd be perfectly happy with 500-600k, and that amount is doable even for someone who starts investing in their mid 30's. Don't forget we still get social security at 62. That should be enough to provide for all basic needs (food, clothing, shelter). Anything else you've saved beyond that is just a bonus that lets you afford some luxury and extra vacations during your golden years.

You don't need a million dollars! But if you had your way you wouldn't be getting any social security either...

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Originally posted by George Smiley (not to mention that your definition of a millionaire is somebody with $1,000,000 and mine is somebody with $2,000,000 so our attitudes my be somewhat different)...

George, you originally posed the question:

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Can you give me the wage that you'd need to be earning to be able to save $1m by the time you retire? Or tell me how much a person would need to save each month and add their other outgoings on top of that?

If you really meant $2M then you should've been more specific. However, the examples that several of us gave were quite demonstrative of the power of saving and investing in one's future.

The counter-point to your question would be, in your socialist world, how would a person attain the same amount of savings (And please don't tell me it is the government's job to make sure everyone can retire a millionaire because I've yet to ever see a socialist society where that is anywhere close to the case. Only the political elite seem to achieve that in the socialist world. Every one else is confined to varying levels of mediocrity.)

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The whole point of this thread is that some git at the Cato Institute is saying sod your fellow man, enjoy your own life and do what you want without having to spend you money on other people.

And? So what? They key is, as you said, having to spend your money on other people. I don't believe in moral imperatives or forced charity. I prefer my generosity to be voluntary.

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The capitalists are arguing that this is good as it is essentially entrepreneurial which is good for society as a whole. Yet your arguments that say how many people can become millionaires hinge around having to scrimp and save your whole life so you have $1,000,000 when your 67 (giving you around 5 years of happiness!).

1) Are you saying then that everyone should be entitled to be millionaires when they retire, despite how good or bad their planning might've been? Who said achieving that much wealth was supposed to be easy (at least easy for everybody?)

2) What the hell do you mean 5 years of happiness? Is money the only thing that makes a person happy in your eyes? And you're a self-proclaimed socialist? wtf? I'm not rich, but I have a job I enjoy, a family I love, and friends all around me. I'd say I'm quite happy (and fortunate for that matter).

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I therefore don't think your arguments can work only if you can amass $1,000,000 at retirement, it must be in your prime of life for the argument to stand. I would therefore say that whatever wage you are suggesting can earn someone $1,000,000 at retirement by having no life, needs to be adjusted upwards by enough to allow that person to have a very good life as well as being able to become a millionaire...

You're changing your argument to fit your agenda, and you're putting words in our mouths to justify your skepticism.

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Originally posted by Shakka If you really meant $2M then you should've been more specific. However, the examples that several of us gave were quite demonstrative of the power of saving and investing in one's future.

No it's OK I did mean dollars (just a little aside to point out a cultural difference)

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The counter-point to your question would be, in your socialist world, how would a person attain the same amount of savings (And please don't tell me it is the government's job to make sure everyone can retire a millionaire because I've yet to ever see a socialist society where that is anywhere close to the case. Only the political elite seem to achieve that in the socialist world. Every one else is confined to varying levels of mediocrity.)

Well I don't want a socialist world! I've always argued for a mixed economy, with some industries publicly owned, but the majority privately owned. I just think there needs to be more regulation to prevent certain groups amassing wealth, and therefore power, as it is undemocratic and there is little equality (so, my answer would be that they can attain the same amount of savings pretty much the same way they do today, only I'd tax them to buggery!! )

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And? So what? They key is, as you said, having to spend your money on other people. I don't believe in moral imperatives or forced charity. I prefer my generosity to be voluntary.

Yes but that's the whole problem! And to get this thread back on topic (apologies) that is the whole point Obama is trying to make - if people prefer only to give voluntarily then most of them won't. If we paid no taxes, would you willingly give away the same amount as you pay in tax? No way! Yet that money is NEEDED to create the stable society we live in, it's just that people don't realise that. Obama is saying it's fine to pursue your own desires, but you should also care about your fellow man as well

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1) Are you saying then that everyone should be entitled to be millionaires when they retire, despite how good or bad their planning might've been? Who said achieving that much wealth was supposed to be easy (at least easy for everybody?)

The point is not about "millionaires" but the (imo) mistaken belief that everyone can be rich and wealthy. "Millionaires" is just a bench mark, or word for wealthy person, and in this thread we took it mathematically. I don't think you need to be a millionaire to attain the lifestyle I'm referring to, but I don't think that lifestyle is attainable for the vast majority of either of our countries. I am also not disputing that people can't become millionaires because they obviously can, but that's not the point

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2) What the hell do you mean 5 years of happiness?

I mean what's the point of giving up your life so you can have a huge pot of money waiting for you when you retire when in about 5 years you'll either be too senile to know what to do with it or dead. Basically, there didn't seem a lot of point to this example for the reasons it was given (and no, of course money doesn't = happiness, well...)

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You're changing your argument to fit your agenda, and you're putting words in our mouths to justify your skepticism.

No I'm not. It adds nothing to the argument that "everybody" can be wealthy to show how someone can amass a wad of cash to spend over 5 years when you ignore the previous 60 years!

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Originally posted by George Smiley Er no I think we've demonstrated it is possible for a privileged few to amass that amount if they give up having a life until they are retired...

a privileged few? wtf does that mean george? are you not "priviledged" enough to have 10-15% of your income working for you instead of you working for it...till you die? if the quality of your life depends completely on having that 10% till you die then i'd first question what the hell it is you want from life in the first place.

10%, 15%, a million dollars. these are all arbitrary #'s really. the idea is to have more, using less, over time. it's not a concept for the priviledged few. it's a concept for people who want more out of life than what they, by themselves or the state, can provide for it.

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Originally posted by Q5echo a privileged few? wtf does that mean george? are you not "priviledged" enough to have 10-15% of your income working for you instead of you working for it...till you die? if the quality of your life depends completely on having that 10% till you die then i'd first question what the hell it is you want from life in the first place. 10%, 15%, a million dollars. these are all arbitrary #'s really. the idea is to have more, using less, over time. it's not a concept for the priviledged few. it's a concept for people who want more out of life than what they, by themselves or the state, can provide for it.

I mean that I think our calculations have shown that this opportunity is not widely available to the population, but only to those that can afford to amass that amount of money. If they can, then fair play to them (altho I would expect them to be contributing more to society as a result, but that's a different thread). But the point you and others are trying to make is not that it is possible to amass that amount, but that it is possible for a large majority of people to do so, indeed, I think somebody even said people who don't are "stupid" (or words to that effect)

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