A brokerage account that reinvests dividends with index funds.

Because as we all know, markets never go down.

How much would you have made if you'd invested in a FTSE index fund in 1990 till 2020?

Very little, as it happens. The reason everyone says index funds are great is because the US markets have done well historically. This is not a guarantee.

> markets never go down.

And of course market never recover.

you don't invest in just one region. You invest across the entire world, in all regions. You buy the entire market at market cap weights. This has been shown to have a positive expected return, going back over 100 yrs.

Do you really expect the last 100 years to be predictive of the next 100 years?

Well I don't.

Also, at current interest rates, you'd need to save 65% of pre-tax income to have a good pension, so the likelihood of any of us having a decent pension is very, very low (modulo getting in early at a megacorp).

> Do you really expect the last 100 years to be predictive of the next 100 years?

it's the best you can do. As the saying goes, past performance doesn't indicate future performance. However, it's the best guess you can make.

No, it’s clearly not. You can also understand how the fundamentals have changed and reason about what is going to happen.

> fundamentals have changed and reason about what is going to happen.

and has this been more correct than using historical data?

And the fundamentals and valuations are subjective - people value different aspects of a company differently. Who's to say your valuation is correct? This is the reason behind volatility.

But if you're buying a broad market cap-weighted index, the behaviour of the price is less affected by individual valuations and more affected by macro-economic factors. And historically, a broad market cap-weighted index has had positive returns. This cannot be said about individual companie's performance.

Better put it all in your mattress then. Or crypto.

People have been saying "the markets are fundamentally changed and investing is dumb" for ages. Japan has been the single example people point to over and over and over. Meanwhile, other people are looking at 400% returns over several decades.

True, but the dividend, even reduced, buys you more stock when the market is down. Stocks generally have done well long term.

This is actually only true for the US, other mature markets (such as the UK) have not shown this pattern (look at FTSE 100 returns if you don't believe me). Additionally, sixty years ago, the UK markets were the largest in the world, and I suspect that an indexing strategy would have done well during the height of the British Empire.

I honestly am not sure where to look for dividend reinvestment for ftse 100 returns, so I guess I'll take your word for it, but I know that the european and london exchanges haven't done as well as the US.

What metric are you using to say largest in 1960 though? Not disagreeing, just curious.

1960 was just something I pulled out of my ass, to be honest. I think what I was getting at was that the markets for the dominant power tend to provide above inflation returns, which for the UK is probably pre WW2, to be honest.