How is it possible that so few families have built any form of capital?

[Captain N]

Generational wealth is very real. Every time properties/stocks/bonds were passed to the next generation, the value automatically increased.

When my mother-in-law passed away in 2012, my wife inherited her million-dollar childhood home in Chicago that her parents bought for $40k in late 40s. The moment she inherited the house, the capital gain reset to zero. In effect the property had gained around 300k in value for not having to pay capital gain tax.

The same went for the ESCO stocks that she inherited. When my father-in-law received them as compensation, they were worth around $2 per share. In 2012 they were worth $40 per share. The capital gain reset to zero and the stocks in effect gained around $8 per share. The stocks are currently valued at close to $100 per share. Likely we will be leaving them to our children. At that time, the capital gain will again reset to zero.

No doubt. The point I was making as that folks like you and I and our children are going to be OK down the road because of generational wealth. A lot of people aren't going to be that lucky and are going to continue to grind themselves to death just to make ends meet. So for people like us to say just get lucky or have well-to-do parents die and you'll be fine is as asinine as telling someone who lives paycheck to paycheck that they're going to be a millionaire if they just save $15/month.

[Draco-Onis]

What am I pretending is true?

Don't you know the first rule of investing? historical data is not a predictor of future returns.

[mittacc]

Don't you know the first rule of investing? historical data is not a predictor of future returns.

While true, it mostly applies to single stocks. 40 years of historical general market trends where crashes are included and times have changed widely should at least be an indicator?

[Elegiac]

While true, it mostly applies to single stocks. 40 years of historical general market trends where crashes are included and times have changed widely should at least be an indicator?

Market value is meaningless for people that don’t own stocks.

“Why don’t poor people invest capital they don’t have into making capital to invest?”

It’s a dumb circular argument primarily geared towards justifying bootlicking the rich.

[Shadowferal]

I think the best thing that could happen to the country is if Wall Street permanently crashed.

[Elegiac]

I think the best thing that could happen to the country is if Wall Street permanently crashed.

Make it a legal requirement to trim companies from the top down during recessions, lol.

[mittacc]

Market value is meaningless for people that don’t own stocks.

“Why don’t poor people invest capital they don’t have into making capital to invest?”

It’s a dumb circular argument primarily geared towards justifying bootlicking the rich.

You were one of the people scoffing at saving a "measly" $15/month on a luxury expense you don't need when you're low on money. People don't get the same chances in life but stop saying it's impossible to make a change because it is not.

[Elegiac]

You were one of the people scoffing at saving a "measly" $15/month on a luxury expense you don't need when you're low on money. People don't get the same chances in life but stop saying it's impossible to make a change because it is not.

Cool: that's a strawman.

Nobody is saying social mobility doesn't exist. What people are saying that what social mobility does exist is becoming increasingly limited and socioeconomic status tends to be inherited - both of which are supported by hard data and not "if you drank less Starbucks surely you'd be able to afford it".

If getting rich were that easy everyone would be rich.

[Shadowferal]

hmf...need my money now. I have to eat sometime this week.

[JohnBrown1917]

hmf...need my money now. I have to eat sometime this week.

But if you live on the edge of starvation you might have an extra 200$ when you retire!

[Elegiac]

But if you live on the edge of starvation you might have an extra 200$ when you retire!

If you eat only rice and drink only water you might be able to afford a whole yearly deductible. /s

[Rasulis]

No doubt. The point I was making as that folks like you and I and our children are going to be OK down the road because of generational wealth. A lot of people aren't going to be that lucky and are going to continue to grind themselves to death just to make ends meet. So for people like us to say just get lucky or have well-to-do parents die and you'll be fine is as asinine as telling someone who lives paycheck to paycheck that they're going to be a millionaire if they just save $15/month.

I was actually trying to reinforce your point that inheritance and getting in early make a lot of difference. Especially in the US, where inheritance is not penalized. Instead the beneficiaries benefited from being able to reset the capital gains over and over again.

[Shadowferal]

Hmf...and if I go to jail for armed robbery I can eat, have a room, and clothing, and free medical!

[Captain N]

I was actually trying to reinforce your point that inheritance and getting in early make a lot of difference. Especially in the US, where inheritance is not penalized. Instead the beneficiaries benefited from being able to reset the capital gains over and over again.

Understood. Sorry about the confusion on my end.

[Draco-Onis]

While true, it mostly applies to single stocks. 40 years of historical general market trends where crashes are included and times have changed widely should at least be an indicator?

Do you know what the world will be like in 40 years? Do you know if you are going to be alive then? if you do buy a lottery ticket. The best advice for people who are broke pay off your debts buy a useful asset like a property to rent to other people or to live in or invest in yourself and if you have some spare money buy stocks. You don't put money in stocks you can't afford to lose so broke people should never put money in the stock market.

[d00mGuArD]

Cool: that's a strawman.

Nobody is saying social mobility doesn't exist. What people are saying that what social mobility does exist is becoming increasingly limited and socioeconomic status tends to be inherited - both of which are supported by hard data and not "if you drank less Starbucks surely you'd be able to afford it".

If getting rich were that easy everyone would be rich.

I would love to see the "hard data" about it. What percentage of millionaires inherited their money? 10%? 12%? 15%? (no idea, you can show me the hard data)
All the others used social mobility. So let's see how many, I am really curious.

[Draco-Onis]

I would love to see the "hard data" about it. What percentage of millionaires inherited their money? 10%? 12%? 15%? (no idea, you can show me the hard data)
All the others used social mobility. So let's see how many, I am really curious.

There is no hard data because the majority of people want to claim "self made" like Bill Gates a "self made" billionaire Kilye Jenner. But the hard date on wage stagnation versus inflation, corporate profits, CEO pay and percentage of people moving up the ladder is available and it's been going down for decades now.

We now have an entire generation earning 20%+ less than previous ones because they got into the work place during the financial crisis.

[Shadowferal]

pfft...I remember way back when Rutgers had a physics program that could branch out into micro-electronics, mathematics, I think thermodynamics, or continue traditional phyics. Had I never had to worry about the basics, I'd have at least two PHDs by now.

[Kokolums]

Modern US culture prides itself on "rugged individualism" which greatly damages the ability for families to accumulate capital.

It is seen as a good thing / character building to struggle and lift yourself up by your own bootstraps. So a family with money is less apt to give it to their kids. Even poor parents could lift up their kids by offering them food and shelter for 2 years after high school in exchange for the child saving every penny. That would give the child a large nest egg of like $30,000 or more by age 20, boosting themselves to get going in the years to come. However, that would be giving the child a free ride so it is not done.

What's interesting is that the United States was founded on the exact opposite belief. Americans rallied around the idea of "unite or die", where if ALL the colonies united and pulled together, they could win a better life and freedom from the British Empire. You would think that philosophy would carry over, but it didn't.

[Blueobelisk]

This thread is stressing me out. It's becoming harder to be wealthy.