Editing Talk:947: Investing

Accounting for inflation, you'll probably end up losing money if you're just relying on bank interest for income. [[User:Davidy22|Davidy22]] ([[User talk:Davidy22|talk]]) 10:04, 9 October 2012 (UTC)
:Losing money compared to what? Even if inflation is 3%, getting 2% interest in a bank is better than getting 0% interest under your mattress... [[Special:Contributions/72.169.224.98|72.169.224.98]] 14:09, 6 December 2012 (UTC)

::Losing money compared to $1 spending power from the start date to $1 spending power at the end date, regardless of how much interest is earned, you still can't buy the same amount of stuff. [[User:Lcarsos|lcarsos]]<span title="I'm an admin. I can help.">_a</span> ([[User talk:Lcarsos|talk]])  16:00, 6 December 2012 (UTC)

:::Actually, putting money in the bank, you lose more in inflation than you gain in interest.  It's really a scam.  However, by putting it under your mattress, you're taking it out of circulation and, in effect, increasing its value through deflation.  It really IS a better alternative.  At least until you put it back into circulation, then the deflation is undone but, by then, it's no longer in your hands so what the hell do you care?[[Special:Contributions/76.29.225.28|76.29.225.28]] 06:01, 8 July 2013 (UTC)

::An alternative to investing in a bank account is to do with your money what the bank intends to do with your money, which is to loan it to other people at a higher interest rate, higher than the rate of inflation. Of course, some fraction of these loans will never be repaid, and you can't simply withdraw your money whenever you feel like it, so this type of scheme works better if you have tons of money to begin with-- more than just a thousand dollars seed money.[[Special:Contributions/63.155.139.54|63.155.139.54]] 14:39, 26 April 2013 (UTC)

:::You don't really have to have the money.  You just have to be buddy-buddy with the Fed.  Banks are allowed to lend out ten times more money than they actually have.[[Special:Contributions/76.29.225.28|76.29.225.28]] 06:01, 8 July 2013 (UTC)

:::I see! So in order to avoid having to use a bank, you should... become a bank! ...oh.--[[Special:Contributions/199.244.214.110|199.244.214.110]] 20:42, 2 May 2013 (UTC)

::::Banks don't have the luxury of being able to put all their money in insured term deposits. [[User:Promethean|Promethean]] ([[User talk:Promethean|talk]]) 03:08, 3 May 2013 (UTC)

Compound interest is actually extremely powerful, if you have enough interest and enough time. 10% interest (like what you'd get from a good mutual fund) over 30 years (a little under the length of an average working career) gives a pretty impressive return. {{unsigned ip|108.162.219.47}}
:Exactly. The only reason the return here is unimpressive is the ridiculously low interest rate that won't even outpace inflation. With a good rate of return (10-15%), compound interest can work for you. I don't like Randall's implication that compound interest is over-hyped; it's not magical, but it is extremely powerful. [[User:NealCruco|NealCruco]] ([[User talk:NealCruco|talk]]) 16:14, 29 April 2014 (UTC)
::I assume it may differ from country to country but currently most banks here offer even less than 2%. It's a bit depressing when I think it was double that about 5 years ago. [[User:Tharkon|Tharkon]] ([[User talk:Tharkon|talk]]) 01:35, 14 July 2014 (UTC)

Banks are not typically places one would look for investment purposes. Sure, it's fine to squirrel some money away in a savings account or other high(er)-liquidity vehicle. The point here is that if you are going to invest in any meaningful way, then you have to resign yourself to the fact that your money will become more illiquid, and therefore less accessible. So, investing in a mutual fund or workplace-friendly 401(k) is actually a really great way to tap into the "power" of compound interest. Start off investing in high-risk index funds (usually tracking the S&P 500 or other small-to-medium sized business aggregator). You should be making something like 10-15% y-o-y at least. Then move into bonds and treasury bills (lower return but safer) as you get closer to retirement. [[User:Orazor|Orazor]] ([[User talk:Orazor|talk]]) 13:43, 30 July 2014 (UTC)

I don't know if Einstein did or did not say that statement; but I always found it more profound than a mere personal finance exhortation.  Compound Interest is a long-term exponential growth force. To my knowledge, there are no such forces in physical systems (there are long-term exponential decay forces, such as nuclear decay and absorption by extended partially transparent media; and short-term exponential growth phenomena -- rapidly limited by fuel -- such as supernovae, but no sustained exponential growth phenomena I can think of).  Biological systems, in contrast, are largely defined by the interactions of competing exponential growth forces. Economic forces, created by living organisms, but limited by the capacity of said organisms to transform their physical surroundings, give the appearance of a long-term exponential growth force (which is really a physics impossibility).  Hence, if it is really as described (and there are no hidden risk factors or sustainability limits), then compound interest, really, is the most powerful force in the universe. [[User:Danshoham|Mountain Hikes]] ([[User talk:Danshoham|talk]]) 11:50, 19 January 2016 (UTC)