Well, you don't buy individual stocks; you buy slices of slices of everything to dissipate your risk towards variance. And you definitely don't hold cash. Holding cash has a lot of risk as well

> And you definitely don't hold cash. Holding cash has a lot of risk as well

(Sorry, genuine questions) risk of what and compared to what?

One of the many, we indians experienced few years ago, where the prime minister simply announced on national tv that from tonight 8pm onwards two denominations (the highest ones at the time) are not valid anymore. I think he gave few/20 weeks to deposit old notes to banks.

One of many, the housewives who saved money from day to day house expenses, had to come out clean to family that they are holding 1000s of currency in old now defunct notes.

And so did a bunch of folks who held black money no?

I think the official figure is, more that 99% of old money was presented to banks for conversion; but this might spill into a political or controversial conversation, I will not be pursuing it because of lack of energy.

Risk of loss, theft or physical degradation. Then there’s the costs of holding cash, which are known to give you a negative yield due to inflation (nevermind bank fees or insurance costs, etc)

I assume cash was being used in the normal financial accounting sense of the word as opposed to dollar bills in the mattress.

Yes, there's inflation negative yield. But especially in the low interest and inflation rate environment that has been the case until possibly recently, the difference between "cash" (i.e. default investment at a brokerage) and other very low-risk investments (e.g. high quality corporate bonds) has been pretty minimal.

You hold cash for short or mid term optionality. If you want long term stable store of value buy gold or treasury bills

Most people who want to secure family wealth and have the option of trickle incompe buy real estate

2008 is calling and wants to talk to you.

2008 property crash was mostly a US phenomenon

I agree, we as a society have learnt nothing

Ah, like slices of slices of mortgages. :/

There are degrees to it. Slices of all mortgages are less risky than a single mortgage. Slices of all tech stocks are less risky than individual tech stocks. Slices of all American stocks is less risky than slices of one industry in America. And slices of all equities trades across the world is less risky than slices of America

Bet on humanity :)

> Slices of all mortgages are less risky than a single mortgage

If you've not watched The Big Short (2015)[0], it's a really excellent film.

[0] https://www.imdb.com/title/tt1596363/

I’d suggest that for most people, buying diversified index funds are a more appropriate strategy.

Nothing you do in life is risk free, even keeping cash under your mattress: the fact that there is risk involved does not change that this is how you make money. When you know that you’re guaranteed a loss of ~2%, at best, on cash, and that your expected real return on stocks is positive, well… That’s the point.

> I’d suggest that for most people, buying diversified index funds are a more appropriate strategy

At least in the UK, buying into index funds was substantially more expensive back then. I held shares in a retail bank for a time not long after that, for which I had an actual paper certificate! No wonder trading was expensive....

The problem with an example like this is that a (hypothetical) friend of yours could have bought into Apple or Amazon or MSFT back then and had a ton of money now :) . I was about to suggest index funds but looks like the FTSE-100 has been sh$t for the last 22 years, too (~10 percent total return). No luck there for your friend even if he had invested in index funds :(

I'm afraid you've mixed up "price return" (as in the change in the level of the index - ~6200 in April 2000 to ~7600 in April 2022. (Which is a 22.5% total return)) with "total return" (as in the return when you include dividend payouts - 170% in total, or 4.6% annualized)