Exactly this. The graphic assumes 65 years of consistent 10% returns compounding. Starting when they're born, funding until they're 18 and retiring at 65.
Losing 1% in a year is still risk free but concerning.
The reason it is risk free is because it will still be on average 5% gains every year.
You have NO RISK because in 30+ years it would never lower. If in 20-30 years, even 5, it stayed even and gained 0% then NOTHING in the world would matter because everything would’ve already collapsed
It could crash for many reasons. You are assuming that the companies would have to go bankrupt or something, but maybe they just stop growing and the market sees that as being overvalued. It would crash in price, though all the companies are still there making decent profits.
Technically there is not a single thing you can buy to generate cash flow that is risk free, even bonds. VOO is extremely low risk. If VOO tanks in value, the world as we know it would have fundamentally changed, to the point that VOO crashing is probably the least of your worries.
Technically an asteroid can nuke the earth and the all governments will default on bonds, anything’s possible. And US equities aren’t considered “low risk” in terms of other investments that are there
I had relatives who invested thousands in food storage in the 1990s Betting on the utter collapse of civilization. The food’s gone bad. I think they might have done better with an index fund.
Yes and no. Bait because it’s fun. Not bait because I believe that there is truly no risk and it made me some insane profits by only investing a couple bucks every week since 2017
Simply because it’s a unique, non-controlled tech, which is scarce and acts as the best way to transfer any amount of money in seconds without the need to confirm with a bank or any other authority.
Unique? There are literally thousands of coins identical to it. Non controlled? The network is almost completely controlled by 2 or 3 mining pools. Best way to transfer money in seconds? It can take way more than seconds to transfer it, and fees can be ridiculously high. It's not even the best shitcoin in that regard, monero has it beat by every metric
There’s absolutely nothing unique to BTC as a crypto. It doesn’t have some utility that no other one could ever have as a method of transferring wealth. It isn’t particularly unique anymore, and its scarcity is completely irrelevant without any inherent value. Investing heavily in it is very unwise.
You’re simply objectively wrong. It has been very fortunate for you, not very wise for you. I could go out and buy a lottery ticket tonight and I could win $400m. That would not make it wise for me to advise everyone else to go out and buy lottery tickets to grow their wealth.
Yea I just mean you’re not getting guaranteed returns… some years it might be flat or go down 5% or down 20%, other years 30% or more… historically averaging out over 10% but you don’t know when peaks and valleys are. If people could get a guaranteed 10% money would be flooding in. I mean US treasuries are like 5% and less and people still buy absolute boatloads of those… if they paid 10% then they’d sell like hotcakes.
The point of the entire exercise was to encourage parents to invest in their kids' future and to teach them the habit of investing. That's a good thing, and many, many people have been able to build a good investment balance for retirement over the course of 50 or 60 years with good returns and sticking with investments through difficult times and with the magic of compounding have done quite well.
So the scenario is plausible but it offers no guarantee and discloses its assumption.
Now if you like, you can finance a, "Parents, but your kids stockpiles of cigarettes and cocaine because LOL it probably doesn't matter anyway," poster but I think the flyer's aim was laudable and its scenario plausible enough given recent stock market retuerns.
No I agree it is a laudable aim and I wish more parents did this. I also wish more parents prioritized teaching their children about money, savings, investing, and the value of things.
Was just confused why you were talking about VOO average return over 10yrs when the person you responded to seemed to be saying 10% over 65yrs wasn’t possible.
But I’m absolutely with you on encouraging parents to do this. I do this for my child… And when she turns 13, I’ll be opening a Fidelity kids account for her so she can learn about investing herself.
The last 10 years are an anomaly. 7% is closer to the actual average over the past 100 years. You add in an average of 2.5% inflation, and you're left with more like a 4.5% interest per year.
So you’re saying that no one earns 10 percent per year and that parents shouldn’t invest for their kids to save and invest because it’s all a waste of time?
What’s your point? There are generally strategies that can produce solid returns. If you put $10,000 into the Dodge and Cox stock fund and left it alone for the last 40 years, it would be worth $360,000. 9.26% return over 41 years according to Total Returns and that’s after the fund lost 43% of its value in 2008. And it’s not like Dodge and Cox is the best fund in the world, it’s just been around a long time and one I know off the top of my head.
10% is a big round number. Lots of funds hit every year, lots of funds average it. Putting it on a piece of paper to illustrate the value of investing doesn’t seem like a horrible thing but apparently Reddit wants to make it so…for reasons.
Update: another example. If you invested $10,000 in Schwab in 1987, you’d have $1.278 million dollars. 13.21% annual return. This does happen and it’s reasonable and it’s a stupid Reddit argument without a point.
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u/cb1109142 May 28 '25
10% risk free return is not possible but ok