Man this site is harsh some times, I think there is a lot of depth to this question. It’s easy to look at statistics and say that it’s because of massive wealth imbalances and that is 100% an accurate statement. But from experience / polling there’s also a ton of people who have bad financial hygiene, people who could & should be way more invested and aren’t. So I think there’s also very big educational issues at play / wealth imbalance glosses over a lot of smaller but still important issues.

Also, what if people don't want to be part of the very system which causes wealth inbalance?

or is the stockmarket a "the only way to lose is not to play" kind of deal?

The not being a part of a system bit is tricky. One of the more exciting emergent trends in finance imo is ESG etfs which pick stocks based on good environmental, social and corporate governance criteria. So there is already this idea that capital should have organization patterns for people who value this & I hope that iterates in really positive ways.

But yeah I’d trend towards “the only way to lose is not to play” side of things. It’s really hard to find other ways to efficiently save/grow your money, interest rates are crushed for saving money outside of the market.

I'm a lot more cynical about the trend. ESG funds serve the sell-side's desire to charge higher expense ratios and the buy-side's desire to feel clean and ethical. It's much less clear that they have had any positive impact on corporations' behavior (or even stock prices).

The "G" is also there mostly because it's the only thing that can be quantified across every company. For that reason it dominates the sampling, even though most values-driven investors care much more about the E and S.

the sad part about "the only way to lose is not to play", is that playing in this case further entrenches the very system which requires you to effectively play in the first place.

There is very little, if even any way to recourse this without massive societal change. And getting such change in action is even harder.

> There is very little, if even any way to recourse this without massive societal change. And getting such change in action is even harder.

getting water to flow up hill is massively hard. And in the foreseeable future, not possible. Until the day humanity discovers unlimited energy and move into a post scarcity society.

So play the game as much and as well as you can, and build up wealth for your family and future family. That's the only move left, unless you want to sacrifice yourself and your family's financial well-being for a cause that you nor your children will benefit from.

You can do what I did and lose 5% of your net worth on wallstreetbets

While a modest fraction of people trade individual stocks, a lot of Americans have some type of 401k, pension, or retirement account that is tied to the stock market.

This pegs it at 50% of private sector workers and 80% of public sector workers. https://www.pensionrights.org/publications/statistic/how-man...

Additionally, in many cases, couples may just have one person with access or contributions to the market - but this still leaves them exposed (for good and bad) to the market.

Pension are 403b which is 401k equivalent just fyi. I'm on it current shift toward tbill/bonds.

Having stocks is definitely better now than when I was younger.

Fun story: I was interested in investing as a kid, family member opened an account for me as a minor, with enough money to pick one investment to buy and hold. It had a bad month, account went below some threshold minimum balance I didn't know about (I'm sure it said somewhere, I didn't get to choose who the account was through), and suddenly account provider started liquidating shares every month for an account fee because of a balance below some amount, and we ended up having to close the account at a loss to avoid fees eventually wiping it out.

Obviously a lot of lessons packed in there, but at the time it seemed obvious that the whole system was designed to prevent regular folks who couldn't just start with many $k accounts from buying and holding.

Now there are tons of low cost options for things like robo-investors, ETFs and index funds, monthly low value investing, etc. It's a whole different world, which on one hand is nice, but on the other leaves me with the feeling that "regular" investments are some kind of loss-leader or tool to enable some other means of profiting the big players.

Because many Americans can’t even pay their current bills or save literally a single dollar. So fractional shares are irrelevant unless they are free.

There's a gap between those folks, though, and the median household which earns $63,000 a year but has almost no savings or stock holdings. The median household wealth is $100,000 and that's almost all housing.

> , and the median household which earns $63,000 a year but has almost no savings or stock holdings. The median household wealth is $100,000 and that's almost all housing.

Given that stock ownership is about 55% of the public, the median household likely has at least a few shares.

https://news.gallup.com/poll/266807/percentage-americans-own...

That includes 401k and IRAs etc. which obviously very few living outside of middle class have.

In addition, stock ownership has been on steady decline for everyone but the upper middle class.

Well you're not wrong on the overall trend over the past twenty years, but over the past four or five, the rate has been trending upward. Most of the downward movement was during the recession, for which it's not obvious that the reason ownership went down is not mainly panic selling (i.e., individual choice and risk tolerance) instead of anything systemic.

I know plenty of middle class people who stay away from stocks - they don't understand them and view them as very risky investments.

They stick with bonds and such.

The sad truth is many folks are afraid of investing. Much of the financial services industry is built off this. How many financial advisor offices do you see around? Instead of educating themselves, they'd rather pay a "professional" who often does no better than they'd do themselves if they just stuck to simple index funds.

> they don't understand them and view them as very risky investments.

which is a shame. Stocks (or owning businesses in general) is the real way to get out of the rat race.

I wish that financial education is part of the standard school curriculum. Financial education such as what stocks are, what bonds are, and how do you "save" money and budget, and what it means to invest and what risks "mean" etc

Most people are scared of stocks because they think it's "risky" - they'll lose all their money if the company bankrupts.

While that's true, the other factors not considered is inflation risk (of bonds or, of bank savings account). The risk of not investing for the long term is just as bad.

Well, you can't live inside stock certificates :-)

Sorry I’m not sure I understand the point you are making.

Most models have the numbers of Americans living in poverty or lower class as above 50% of the US population.

It’s unlikely if even what they term “lower-middle class” owns real estate.

Any model describing the median American as “lower class” is being unreasonable. Most Americans - not all, but most - live a comfortable life.

Citation needed. “Comfortable” is obviously subjective, but the discussion was around ownership of stocks.

Even these[0] models have it at >=50% and they are at least 15 years old, and disparity has only increased since then.

[0] https://en.wikipedia.org/wiki/Demographics_of_the_United_Sta...

One annual out-of-pocket max (broken arm, bad fall, car wreck, appendicitis, pregnancy) away from having your financial plans disrupted for a couple years isn’t comfortable. One of those plus any one other problem at the same time from severe financial distress (maybe lose home, maybe bankruptcy) isn’t comfortable. No matter how many x-boxes you have.

If your net worth is negative servicing your debts has a better risk adjusted return than investing in stocks unless the interest rates on your debt are extremely low.

Yup. If you have a bunch of credit card debt at 20+%, and/or are paying off a car in the high-single-digit percent range, then you really want to pay that off before you consider investments.

If all you have is a sub-5% mortgage (though even that's pushing it), or a low-interest student loan, then you should put money toward retirement if you can.

On the other hand, ~15 years ago I had a 3.5% student loan, and even though rationally I should have carried that debt (making regular payments, of course), for peace of mind I paid it off as quickly as a could. I think a lot of people are in that boat, or worse, having been taught that all debt is bad for you.

>On the other hand, ~15 years ago I had a 3.5% student loan, and even though rationally I should have carried that debt (

Right, but near or sub inflation rate student loans are mostly a non-existent thing anymore. They're much more likely to be at 8% and because of their special treatment in bankruptcy they're usually better to pay down than other loans at similar rates.

As a child I learned how to compute compound interest then shortly after saw a TV advertisement for some kind of predatory loan (not sure if there were payday loan places in the late 80s/1990, but something like that), did the math and for a long time thought all loans were essentially scams (not realizing that the interest rates of payday loans weren't representative). ... it turned out to serve me well: there are worse financial mishaps you could make than avoiding reasonable debt. :)

Because the priority order is:

a) Consumption spending

b) Real estate

c) Stocks

When middle class people hit diminishing returns on electronics and vacations, they upgrade their houses. Appetite for remodeled kitchens and bigger, nicer, better-located houses is voracious, so relatively few people satisfy it and fall through to stocks.

Making sacrifices on housing in favor of your stock portfolio is of course possible, but will get you a lot of weird looks and pressure from family, particularly if kids are involved.

The biggest tax advantages for investing go to the rich, who can arrange their businesses and finances to max out retirement accounts, and very highly paid professional with fat 401k matches. No matter how someone with a normal salary and a 2% match tries they cannot get anywhere near maxing out a 401k, due to how they’re structured (over 50% of the max can only come from an employer, and the employee can’t make that up on their own). They benefit the already-well-off much more than the middle class or poor. So there’s discouragement to savings built into our tax law (or stronger-than-appropriate encouragement available only to the already-doing-quite-well, if you prefer)

> So there’s discouragement to savings built into our tax law (or stronger-than-appropriate encouragement available only to the already-doing-quite-well, if you prefer)

Only the latter "version" of this is possibly true. Nothing you said shows a discouragement to savings. At best you showed that the wealthier are more encouraged to save.

"Rich" typically do not care about their retirement accounts and do not have an employer. They typically benefit from owning a business, having a stream of passive investments and compounding growth. But this may depend on your definition of rich.

It’s my understanding that one can arrange for oneself (and family members) to be employed by one’s businesses such that 401ks are maxed out. This can amount to a huge de jure employment benefit but a de facto slow-motion tax-advantaged inheritance over, say, 20 or 30 years. Just live off trust assets and the rest of your wages (or whatever) until you can draw on retirement.

Though yes it’s probably too small-potatoes for the rich rich to bother with. Mere tens-of-millions business owners are more the audience for that maneuver. Like everything else it seems one is likely to be smacked down for attempting to use it while not-rich (need enough legitimate business activity to make the wages to relatives plausible)

This is very true! I know plenty of people who when they have extra money, investing or saving is the last things on their mind.

Housing is arguably an investment, or at least the people doing it think it is.

That’s true. I know people who say stocks are too risky, but real estate works for them.

Do people actually get family pressure to remodel their kitchen?

My wife’s side pressure her (me) to “upgrade” her wedding set every few years. WTF. They’re terrible with money, of course, and constantly make passive-aggressive comments about who’s spending what. I don’t think they even realize they’re doing it, it’s just a really, really awful and deeply middle-class-anxiety attitude they’re stuck in.

Heh I had to look up what a wedding set was. Upgrade... wedding rings? Isn’t a big part of the symbolism the permanence factor of the rings? The symbolism of upgrading the ring seems a bit unfortunate...

Anyway, sorry to hear, that probably gets really old.

The stone itself is supposed to be permanent; the band and the setting (receptacle for the stone) are less weird to change.

Interesting, that seems a bit diamond-industry-marketing-driven, I thought a band was the symbol, and that the stone was a more recent invention. Especially since the wedding band is what you get when you actually get married. Many people in my family only wear the wedding bands and leave the engagement rings off.

But these are largely just assumptions on my part.

LOL me too. They know I have rental properties but are always bitching about my small house and why I am not doing this or that. They don't know that my real estate portfolio is worth upwards of $5 million and when the mortgages start to be paid down, will eventually be generating $20,000 a month in rent. Look forward to telling them to get fucked when they come looking for some of that money.

For small investors, I suggest US Treasury I-bonds: inflation protected, liquid after one year.

This of course is, after paying off all high-rate debt, and maxing out 401k contributions.

For anyone looking, the term is "Real Return Bonds". And if you are in Canada watch out, there are not as many of them and the average maturity is quite high so you can expect some wild swings (e.g. XRB ETF).

Yeah check the rates on I-bonds right now, they went down 1% this month. It's not even worth it anymore. I was earning 2.55% APY now it's barely 1.5%. You can get the same return in an AMEX savings account.

You have to put your 401k contributions somewhere, even if it is selecting your plan’s auto pilot option.

In addition to everything else said in this thread -- all good stuff -- it's worth noting that there's often an upfront expense that's hard to overcome in order to invest in the stock market in any sort of meaningful way. For example, some of the stocks recommended by the likes of Mr Money Mustache require a $3,000 minimum first-time investment. That's a big hurdle for some, myself included. I'm in music and media, not tech, and while my income is pretty solid, my overhead is absurdly high relative to it. Putting aside $3k on top of doing the financially responsible things like maintaining rainy day funds, saving for retirement, etc, is just tough.

MMM is definitely recommending Vanguard mutual funds, either VFIAX (US 500 biggest) or VTSMX (total US market). But the ETF's are equivalent and can be purchased fractionally literally $1 at a time. I.e: Open robinhood brokerage, purchase $1 of VTI (ETF equivalent of VTSMX)

Who said they were inaccessible?

37% of Americans struggle with hunger [1] and 57% of Americans have less than $1000 in savings. [2]

Would you be buying stocks if you didn't have enough to eat?

[1] https://www.feedingamerica.org/hunger-in-america/facts

[2] https://finance.yahoo.com/news/58-americans-less-1-000-09000...

EDIT: Apologies, first should be 37 million Americans (NOT 37%)

Your link [1] says 37 million Americans, which is 11%, not 37%. (Still a shocking #!)

It probably doesn’t apply to those struggling with hunger, but just because people don’t have savings doesn’t mean they don’t have expendable income. It could just as easily mean they prioritized stuff over savings, and I bet that’s the case for most of them.

That’s an average per consumer. It’s likely skewed way up by extreme outliers. Need to see median, 75th percentile, 95th percentile to really understand it. The headline seems like deliberately misleading journalism.

Per the US government, the median American household has more than $12,000 per year in cash to burn after all ordinary expenses. That is a lot of money for savings and/or beer.

The second is a pretty bad survey. I have a relatively sizable net worth but $0 in a savings account. That's because savings accounts have shit yields.