Not just rate of return, but who will be the fund providers and what will their fees be?
Even at the exact same rate of return, the difference in the (effectively compounded) fees paid on a low-cost index fund and a “low-cost” index fund can be 15% of the total value of the account over the course of 6 decades. You can do this math yourself by looking at existing funds.
The number and amount of money involved makes these a really juicy target for providers that will charge higher than standard fees if they can get away with it.
joezydeco•2mo ago
Not just rate of return, but what's the inflation index?
$875K seems like a pretty healthy amount to collect after 65 years. But if I run that backwards on the US CPI index, that's $87,000 in today's dollars. Hmm.
toomuchtodo•2mo ago
Good callout backing out the math to show the economic light cone. Inflation was low when there was a ton of surplus labor. China was deflationary as they industrialized. As the world rapidly ages, and the working age population shrinks, more fiat and wealth will be chasing a shrinking pool of labor. If growth is a function of demographics, population and consumption, and inflation is a function of labor costs, how will growth ever outpace future inflation from demographic compression? And what about the existing debt obligations someone will need to pay back?
> The average American already owes 100k+ on the national debt, and now we’re debating whether borrowing more money to invest on their behalf in the stock market is a good idea?
quantified•2mo ago
Another inequality generator, and stock market inflator.
toomuchtodo•2mo ago
> "At a historically reasonable 7% rate of return"
https://finance.yahoo.com/news/goldman-strategists-see-us-st...
https://www.jpmorgan.com/insights/markets-and-economy/top-ma...
stockresearcher•2mo ago
Even at the exact same rate of return, the difference in the (effectively compounded) fees paid on a low-cost index fund and a “low-cost” index fund can be 15% of the total value of the account over the course of 6 decades. You can do this math yourself by looking at existing funds.
The number and amount of money involved makes these a really juicy target for providers that will charge higher than standard fees if they can get away with it.
joezydeco•2mo ago
$875K seems like a pretty healthy amount to collect after 65 years. But if I run that backwards on the US CPI index, that's $87,000 in today's dollars. Hmm.
toomuchtodo•2mo ago
https://news.ycombinator.com/item?id=44455077 (citations)