Considering many American workers are in debt with high interest rate products (sub-prime car loans and credit cards), those would first have to pay the interest on their debt on top of the capital gains on the $100 when they sold it (provided they invest wisely). In other words, it makes no sense to invest when the return wont consistently match your debt interest payments.

Depends on the type of debt, which is individual to the consumer. Mortgage, auto, and student loan debt compose 88% of consumer debt. [0]

These types of debt typically have low interest rates. Market returns for the past decade have exceeded the interest rates. Paying the minimums, and investing the difference? The consumer would be ahead. 12-15% YoY stock returns compound faster than 4% mortgage debt.

[0]: https://www.experian.com/blogs/ask-experian/research/consume...

I don't think it's wise to project guaranteed 13-15% stock market returns, or suggest it's better than paying off debt. It may have been the case last few years of the cycle, but may well not be the case for the next 5 years.

You're arguing for taking out loans to invest in the stock market, which sounds irresponsible to me.

Actually, corporations do do things like borrow to pay dividends or buy back stock... because they get to deduct debt from their taxes. Individuals can take advantage of this with mortgages: your mortgage interest is deductible. [1]

Not all debt is equivalent: credit card debt and payday loans are examples of pretty punitive debt that really should be avoided. The return on investment from paying off debt is roughly equivalent from the interest on your debt; if it's lower than you can get by investing elsewhere, then it may make sense to invest elsewhere, especially when you factor in second-order effects like tax laws.

[1] For the record, I think the tax-advantaged nature of debt is absolutely inane and should be removed. But that is unlikely to be politically feasible.

Are you saying every person who buys a home with a mortgage, while still throwing 5% of salary in their 401(k) is irresponsible? Many, many people do this.

If you think you can count on YOY 12-15% returns on the stock market, you should be buying 10% OTM LEAPs instead of shares. You'll be the world's first trillionaire in a decade or so

You don't need a 12-15% stock market return for your investment returns to beat the growth of your interest debt. For most mortgages, it's a fixed rate. About 4%, some well-qualified borrowers have in low-to-mid 3%, for mortgages originated in the last 12-24 months. Long-term, will an index fund stock market investment exceed 3% returns? Historically speaking, it's a likely outcome.

Even if they all did that, they still end up buying after all the really wealthy get in, whether it's investment bankers, venture capital, hedge funds, or whatever else, normal income people just end up buying from the 1% and 0.1% who got in privileged and early. Add on top of all that, think about all the investments with minimums that are thousands of dollars and it's obvious that regular money will always be behind even if its investing maximally because less money always has fewer opportunities.

No, this is just atrociously wrong. It pains me to see because the post you're responding to about getting everyone to chip in a small amount to investments every month is one of my pet goals that I've helped many friends with.

Everything you've said is wrong. I don't know what you mean by "getting in after all the really wealthy get in"... VCs, IPOs? That's not even close to necessary. Investing in simple index fund ETFs is fine. And "all the investments with minimums in the thousands"? Well... don't buy those! Again, buy simple index fund ETFs. Most brokerages don't even charge a commission on that, so you can easily add small amounts each month.

People just don't seem to know that investing in the stock market is easily done, and so extremely worthwhile. Income inequality being what it is, the wealthy will probably own more of the stock market for a long time (or always), but that 84% could easily come way down if people just knew what to do!

But I feel like your comment is counter-productive fear mongering that will turn off people on the margin, thinking everything is stacked against them, the "good" investment opportunities aren't available, and so they just shouldn't even try.

I'm not saying it's necessary, I'm just saying the previous poster can't seriously expect that the 84% (86%?) number will decrease much from everyone investing if that percentage's owners are able to always outperform - even if the top 10% (or even 1%) only have a 2% advantage because of better or earlier access it's just going to compound non-linearly compared to everyone else's returns over time. And it being non-linear means for that 80-something% number to go down the $100/month folks have to continually increase in population at a rate greater than the difference between their rate of return and the rate of return of the top 10% or top 1%.

>> less money always has fewer opportunities.

That's a fact of the US system.

> I don't know what you mean by "getting in after all the really wealthy get in"... VCs, IPOs? That's not even close to necessary.

That's a strawman. What's necessary, isn't the subject.

> And "all the investments with minimums in the thousands"? Well... don't buy those!

The wealthy have more opportunity, got it. Pointing to some other instrument, saying "it's also good" is not a correction.

> Everything you've said is wrong.

If you find yourself saying this, you're probably about to say something stupid. It's trite nonsense.

That is zero sum thinking and misses the point entirely. You don't decide based upon more or less than others but the best option for you. Judging by percentages is like saying "Why jog or walk if you will never be a supermodel?" Invest because it is an end in itself.

The reason VCs and hedge funds get in early is because they can afford to fail a lot and have their successes outweigh their failures. It isn't because of some caste gatekeeping to monopolize the wealth while twirling their moustaches but because without that level of capital it is a very good way to lose your life savings. First rule in investing is never risk what you can't afford to lose.

It's not zero sum thinking. Clearly investing is likely better than not investing.

My point wasn't that people shouldn't invest, it's that previous poster suggested everyone investing would "chisel away" at the "86% number," and my general presumption is that so long as the return on wealth is nonlinear to the quantity of wealth, as enabled by the ability to access more expensive/specialized/higher-return investments, it's a lost cause as a simple comparison of function order and rate.

If those who are already richer are likely to have a higher rate of return from greater levels of access or unique opportunities and that rate of return compounds non-linearly, no matter how many regular people invest it's still basically comparing functions with nonlinear differences in rate of increase.