Re:The End of Retirement (2014)
by pc86 on Friday May 21, 2021 @07:21AM
(#27232662)
The fact that you need to make up such a farcical example to prove your point should tell you something. The fact that you need to hand-wave a decade of wildly different asset classes' appreciation (or depreciation) in order to prove your point should tell you something.
1. Houses aren't particularly liquid, and in a debate about what is "smart" vs. "moral," and the fact that they don't always overlap, you're going to have a hard time arguing for forced eviction from one's primary (only) residence.
2. The 200k house ten years ago is going to be worth a lot more than 200k today. On average you're looking at 290k in a decade.
3. Bob's 100k in stocks would be 217k if he bought it one lump sum and got average returns, so let's say he purchased over time and is sitting around 175k.
4. Charlie's lost money because his 100k is somewhere between 105k and 110k now but he's lost 2-3 times that in purchasing power.
So they are emphatically not worth the same.
Alice owns an illiquid 290k asset for which she's only liable another 100k, so she's +190. She can refinance and lower her payment. She can get loan forbearance because we as a society have decided that it's immoral to immediately kick people out of their homes because they can't pay.
Bob is +75k and there are plenty of ways to make money off of a stock portfolio without liquidating it. You can even get a traditional loan using the portfolio as collateral but you're unlikely to get more than 40-50% of the value given the potential for volatility.
Charlie's lost money and yes, he's going to get laughed out of any assistance office because he's using a savings account - a vehicle designed mainly for emergency funds and short-term savings - for his life savings.
To your last point about the city center apartment, there is a huge difference between a reasonably intelligent person who just lost their job selling their apartment and moving somewhere cheaper, and a bank or government forcing them to do so.
1. Houses aren't particularly liquid, and in a debate about what is "smart" vs. "moral," and the fact that they don't always overlap, you're going to have a hard time arguing for forced eviction from one's primary (only) residence.
2. The 200k house ten years ago is going to be worth a lot more than 200k today. On average you're looking at 290k in a decade.
3. Bob's 100k in stocks would be 217k if he bought it one lump sum and got average returns, so let's say he purchased over time and is sitting around 175k.
4. Charlie's lost money because his 100k is somewhere between 105k and 110k now but he's lost 2-3 times that in purchasing power.
So they are emphatically not worth the same.
Alice owns an illiquid 290k asset for which she's only liable another 100k, so she's +190. She can refinance and lower her payment. She can get loan forbearance because we as a society have decided that it's immoral to immediately kick people out of their homes because they can't pay.
Bob is +75k and there are plenty of ways to make money off of a stock portfolio without liquidating it. You can even get a traditional loan using the portfolio as collateral but you're unlikely to get more than 40-50% of the value given the potential for volatility.
Charlie's lost money and yes, he's going to get laughed out of any assistance office because he's using a savings account - a vehicle designed mainly for emergency funds and short-term savings - for his life savings.
To your last point about the city center apartment, there is a huge difference between a reasonably intelligent person who just lost their job selling their apartment and moving somewhere cheaper, and a bank or government forcing them to do so.