Is the secret to long term wealth as simple as living below your means and investing in a low cost index fund

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tvubpwcisla
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Is the secret to long term wealth as simple as living below your means and investing in a low cost index fund

Post by tvubpwcisla »

It seems like building long term wealth is pretty simple. Live below your means and invest in a low cost total stock market index fund. Am I missing anything other than stay the course? Is it really that easy?
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Re: Is the secret to long term wealth as simple as living below your means and investing in a low cost index fund

Post by Padlin »

It's that simple, but not necessarily easy.
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Re: Is the secret to long term wealth as simple as living below your means and investing in a low cost index fund

Post by TomatoTomahto »

We are not super frugal, but do live “below our means.” It’s working for us. Working even better for our frugal son.
I get the FI part but not the RE part of FIRE.
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Re: Is the secret to long term wealth as simple as living below your means and investing in a low cost index fund

Post by livesoft »

tvubpwcisla wrote: Sat Jun 19, 2021 9:42 am It seems like building long term wealth is pretty simple. Live below your means and invest in a low cost total stock market index fund. Am I missing anything other than stay the course? Is it really that easy?
You are missing that it takes a long term to do this. Normal people cannot LBYM and invest for 1 year, 5 years, or 10 years and declare they are done.
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Re: Is the secret to long term wealth as simple as living below your means and investing in a low cost index fund

Post by CarlZ993 »

In the broadest sense, I follow these three rules:
- Live beneath your means,
- Pay yourself first, and
- Manage your debt wisely.

The devil is in the details.

I didn't start out as an index investor. But I am now & will continue to do so. It has proven to be quite profitable & very low maintenance.

Take care.
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Re: Is the secret to long term wealth as simple as living below your means and investing in a low cost index fund

Post by Sandtrap »

tvubpwcisla wrote: Sat Jun 19, 2021 9:42 am It seems like building long term wealth is pretty simple. Live below your means and invest in a low cost total stock market index fund. Am I missing anything other than stay the course? Is it really that easy?
Define “wealth”?

Substantial wealth?
Financial Independence?
Enough?
Rich beyond one’s needs for life?

The “idea” of wealth is simple.
Starting from 30 cents is not.

Read: “Millionaire Next Door”
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Re: Is the secret to long term wealth as simple as living below your means and investing in a low cost index fund

Post by dbr »

tvubpwcisla wrote: Sat Jun 19, 2021 9:42 am It seems like building long term wealth is pretty simple. Live below your means and invest in a low cost total stock market index fund. Am I missing anything other than stay the course? Is it really that easy?
Of course not.

It matters tremendously how much you invest, for how long, in what you invest, and what you consider to amount to wealth.

You have to do the math.

You also have to understand nothing is certain -- best laid plans and all that,.
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Re: Is the secret to long term wealth as simple as living below your means and investing in a low cost index fund

Post by Nate79 »

No, there is much more to it than that.
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Re: Is the secret to long term wealth as simple as living below your means and investing in a low cost index fund

Post by tibbitts »

tvubpwcisla wrote: Sat Jun 19, 2021 9:42 am It seems like building long term wealth is pretty simple. Live below your means and invest in a low cost total stock market index fund. Am I missing anything other than stay the course? Is it really that easy?
No, I don't consider that a typical person can build what I'd call "long term wealth" that way, but it depends on your definition of wealth. And it's a never-ending lifelong process so I don't think it's easy.
Last edited by tibbitts on Sat Jun 19, 2021 10:19 am, edited 1 time in total.
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Re: Is the secret to long term wealth as simple as living below your means and investing in a low cost index fund

Post by leeks »

Yes.

Having (and keeping) a spouse on the same page is relevant too.

Earning a high income makes it easier. But, as long as you can spend less than you earn, it can be done on any income.
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Re: Is the secret to long term wealth as simple as living below your means and investing in a low cost index fund

Post by UpperNwGuy »

tvubpwcisla wrote: Sat Jun 19, 2021 9:42 am It seems like building long term wealth is pretty simple. Live below your means and invest in a low cost total stock market index fund. Am I missing anything other than stay the course? Is it really that easy?
You are missing nothing. It is really that simple. I wouldn't, however, use the word "easy."
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Re: Is the secret to long term wealth as simple as living below your means and investing in a low cost index fund

Post by tibbitts »

leeks wrote: Sat Jun 19, 2021 10:17 am Yes.

Having (and keeping) a spouse on the same page is relevant too.

Earning a high income makes it easier. But, as long as you can spend less than you earn, it can be done on any income.
Well, unless you have a high enough income to have money left over from whatever you define as "essentials", you won't get any traction from investments. So I wouldn't say "any income."

I don't know that having a spouse at all is important; the value is in having another income-earning person to split certain expenses with, and to potentially eliminate other expenses entirely (another person who could do tasks for "free" that otherwise you'd have to pay for.)
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Re: Is the secret to long term wealth as simple as living below your means and investing in a low cost index fund

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I removed an off-topic post. As a reminder, see: General Etiquette
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Re: Is the secret to long term wealth as simple as living below your means and investing in a low cost index fund

Post by THY4373 »

leeks wrote: Sat Jun 19, 2021 10:17 am Having (and keeping) a spouse on the same page is relevant too.
I am going to disagree on this. Having a spouse can help especially at lower incomes by (potentially) adding to the family income while maintaining some "economies of scale" on living costs and diversifying incomes sources. However spouses introduce additional risks/costs:

About the best divorce rate I have seen is about 35% which is for first marriages, well educated couples who got married later in life. While not all divorces end in financial disaster (mine certainly did not) many do. I find it a bit amusing that Bogleheads will argue endlessly over safe withdrawal rates but often completely ignore this elephant in the room.

You need to find a spouse that is not only compatible with you on the economic side of things but also the myriad of other things you are looking for and this can be a real challenge (and of course folks change over time so the person who was perfect for you at 30 might not be at 50).

Spouses often lead to children which while (often) truly rewarding in many ways, aren't great for accumulating more wealth.

Solo folks have a lot more control and flexibility in what they do and how they do it. My highest savings rate ever is now that I am solo again post divorce.
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Re: Is the secret to long term wealth as simple as living below your means and investing in a low cost index fund

Post by Wanderingwheelz »

Replace “easy” with “simple”.

It is pretty simple, but it’s definitely not easy.
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Re: Is the secret to long term wealth as simple as living below your means and investing in a low cost index fund

Post by Vtsax100 »

tvubpwcisla wrote: Sat Jun 19, 2021 9:42 am It seems like building long term wealth is pretty simple. Live below your means and invest in a low cost total stock market index fund. Am I missing anything other than stay the course? Is it really that easy?
It is that simple. The trick is learning it early in life. Most people do not.
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Re: Is the secret to long term wealth as simple as living below your means and investing in a low cost index fund

Post by ResearchMed »

tvubpwcisla wrote: Sat Jun 19, 2021 9:42 am It seems like building long term wealth is pretty simple. Live below your means and invest in a low cost total stock market index fund. Am I missing anything other than stay the course? Is it really that easy?
It also means that you make absolutely sure that no one has a catastrophic illness, gets laid off long term, and no adult in the family dies.
Just do all of that in addition to the savings/spending plan, and you should be fine...

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Re: Is the secret to long term wealth as simple as living below your means and investing in a low cost index fund

Post by Watty »

tvubpwcisla wrote: Sat Jun 19, 2021 9:42 am It seems like building long term wealth is pretty simple. Live below your means and invest in a low cost total stock market index fund. Am I missing anything other than stay the course? Is it really that easy?
Somewhere I pick up a quote that stuck with me that went something like this;

You can only really control three things in investing;

1) How much you save or spend each year.
2) Your asset allocation.
3) Keeping your investing cost low, which is more important that most people realize.

A few things I would add to that.

You also need to have a job that pays decently. Spending money to obtain well paying skills and to keep them current is essentially investing in yourself. It does not need to be anything fancy either. If you have a job flipping burgers then you can still figure out what skills you would need to get a job managing the restaurant or working for the corporate company.

Not living in a very high cost of living area is also important. If you are not getting paid a premium salary that makes living there worthwhile then consider moving.

Staying as healthy as possible is also very important.
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Re: Is the secret to long term wealth as simple as living below your means and investing in a low cost index fund

Post by LittleMaggieMae »

It seems like building long term wealth is pretty simple. Live below your means and invest in a low cost total stock market index fund. Am I missing anything other than stay the course? Is it really that easy?
The missing part is having a personalized goal to reach. The "live below your means" and "invest in a low cost total stock market index fund" is the basic PLAN. It says nothing about the goal.

I could take home 50K per year - and invest 100 per month (live beneath my means - I'm not spending every penny) That would build wealth over 30years but would it be meaningful to me after 30 years?

In other words, if you don't quantify what "wealth" means as you move thru life "saving" - you may not build enough to meet your needs (the reason/goal you set out on the journey to build wealth). On the other side of the coin if you don't quantify what "wealth" means you might live so far below your means that your life isn't as "good" as it should be (and you become one of those stingy, bitter people who have lots of money) OR you keep earning ever bigger amounts so you can save ever bigger amounts (and maybe miss out on "life" while you are doing that) - all in the name of accumulating a too big pile of wealth.

Without a long term goal - how will you know if you are earning enough or investing enough to be meaningful to you?

Saving money for purely for the sake of saving money isn't a goal and often isn't the best course of action.
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Re: Is the secret to long term wealth as simple as living below your means and investing in a low cost index fund

Post by dbr »

Wealth is $1B by the time you are 50 starting at age 20.

Assuming your return is 6% you would have to LBM by $12,648,911.49 each year.

Math matters.

If you have a less ambitious goal of say $1M then the LBM is only $12,648.91 per year, and that is very reasonable.

If the investment is in stocks and you reach $1M at age 50, then it is a possibility that at age 51 you will only have $500,000.
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Re: Is the secret to long term wealth as simple as living below your means and investing in a low cost index fund

Post by sailaway »

It is like dieting: the rules are simple, the trick is maintaining the right habits long term. Luckily, I am better with the finances than the diet, and DH doesn't have a problem with either.

A higher income certainly makes it easier, especially if you aren't susceptible to the peer pressure to spend more. Simple tastes help a lot, as well, since it means you aren't fighting with yourself to keep spending in line.

Good thing we had both a high income and simple tastes, as we never would have expected DH to develop a chronic pain issue that will likely cut his career short in his 30's while not being specific enough to be eligible for disability. But we will be OK, thanks to LBYM and index investing.
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Re: Is the secret to long term wealth as simple as living below your means and investing in a low cost index fund

Post by Marseille07 »

tvubpwcisla wrote: Sat Jun 19, 2021 9:42 am It seems like building long term wealth is pretty simple. Live below your means and invest in a low cost total stock market index fund. Am I missing anything other than stay the course? Is it really that easy?
It's simple but not necessarily easy because stocks can stay down for a long time. Nikkei still hasn't recovered their 1989 levels after 30+ years.
Last edited by Marseille07 on Sat Jun 19, 2021 11:27 am, edited 1 time in total.
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Re: Is the secret to long term wealth as simple as living below your means and investing in a low cost index fund

Post by flyingaway »

Get a good job first.

Otherwise, you cannot live below your means and certainly will not have money to invest in a low cost index fund.
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Re: Is the secret to long term wealth as simple as living below your means and investing in a low cost index fund

Post by aj44 »

THY4373 wrote: Sat Jun 19, 2021 10:46 am
leeks wrote: Sat Jun 19, 2021 10:17 am Having (and keeping) a spouse on the same page is relevant too.
I am going to disagree on this. Having a spouse can help especially at lower incomes by (potentially) adding to the family income while maintaining some "economies of scale" on living costs and diversifying incomes sources. However spouses introduce additional risks/costs:

About the best divorce rate I have seen is about 35% which is for first marriages, well educated couples who got married later in life. While not all divorces end in financial disaster (mine certainly did not) many do. I find it a bit amusing that Bogleheads will argue endlessly over safe withdrawal rates but often completely ignore this elephant in the room.

You need to find a spouse that is not only compatible with you on the economic side of things but also the myriad of other things you are looking for and this can be a real challenge (and of course folks change over time so the person who was perfect for you at 30 might not be at 50).

Spouses often lead to children which while (often) truly rewarding in many ways, aren't great for accumulating more wealth.

Solo folks have a lot more control and flexibility in what they do and how they do it. My highest savings rate ever is now that I am solo again post divorce.
It gets brought up but then shut down pretty quick and deleted because it gets into relationship issues, I’d prob have the same forum rules because it’s a pretty charged topic, you get the pie in the sky it can never happen to me vs the jaded it happened to us.
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Re: Is the secret to long term wealth as simple as living below your means and investing in a low cost index fund

Post by Candor »

In general, it has worked so far. At the least it is a good foundation for building financial security which, if all/most goes well, should lead to a certain level of wealth over the long term.
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Re: Is the secret to long term wealth as simple as living below your means and investing in a low cost index fund

Post by Supergrover »

ResearchMed wrote: Sat Jun 19, 2021 10:55 am
tvubpwcisla wrote: Sat Jun 19, 2021 9:42 am It seems like building long term wealth is pretty simple. Live below your means and invest in a low cost total stock market index fund. Am I missing anything other than stay the course? Is it really that easy?
It also means that you make absolutely sure that no one has a catastrophic illness, gets laid off long term, and no adult in the family dies.
Just do all of that in addition to the savings/spending plan, and you should be fine...

RM
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Re: Is the secret to long term wealth as simple as living below your means and investing in a low cost index fund

Post by NiceUnparticularMan »

If you define being wealthy conservatively enough, have good luck with health, career, and family, use a diversified low cost index fund, and don't live through an abnormal time, then yes.

That's a lot of ifs but I think it is hard to come up with a better plan for most of us.
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Re: Is the secret to long term wealth as simple as living below your means and investing in a low cost index fund

Post by tibbitts »

Marseille07 wrote: Sat Jun 19, 2021 11:23 am
tvubpwcisla wrote: Sat Jun 19, 2021 9:42 am It seems like building long term wealth is pretty simple. Live below your means and invest in a low cost total stock market index fund. Am I missing anything other than stay the course? Is it really that easy?
It's simple but not necessarily easy because stocks can stay down for a long time. Nikkei still hasn't recovered their 1989 levels after 30+ years.
That's a good point that we forget sometimes because we haven't had a prolonged downturn lately. Had there been index funds widely available in the ten or fifteen years prior to the early 1980s, I'm not sure you would have been thinking about them at that time in terms of wealth-building. I know that when I first started looking at investments in the '70s, I wasn't impressed by any wealth-building effect. And lower expense ratios wouldn't have moved that needle for me.
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Re: Is the secret to long term wealth as simple as living below your means and investing in a low cost index fund

Post by Fallible »

tvubpwcisla wrote: Sat Jun 19, 2021 9:42 am It seems like building long term wealth is pretty simple. Live below your means and invest in a low cost total stock market index fund. Am I missing anything other than stay the course? Is it really that easy?
You could start with a dictionary definition of "easy": "achieved without great effort; presenting few difficulties" and "free from worries or problems."

Then look at the entire Bogleheads' philosophy, which requires learning and a steady self-discipline for an investing lifetime.

1 Develop a workable plan
2 Invest early and often
3 Never bear too much or too little risk
4 Diversify
5 Never try to time the market
6 Use index funds when possible
7 Keep costs low
8 Minimize taxes
9 Invest with simplicity
10 Stay the course

Then remember the words of Warren Buffett and Jack Bogle: "Investing is simple, but not easy," with "not easy" referring to control over the powerful emotions of fear and greed. So you may be referring to the "simple" part of investing.

Then ask yourself: "Is it really that easy?"

My answer after many years of indexing is: No.
Last edited by Fallible on Sat Jun 19, 2021 11:53 am, edited 1 time in total.
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Re: Is the secret to long term wealth as simple as living below your means and investing in a low cost index fund

Post by dodecahedron »

flyingaway wrote: Sat Jun 19, 2021 11:24 am Get a good job first.

Otherwise, you cannot live below your means and certainly will not have money to invest in a low cost index fund.
This is not necessarily true, at least for the conventional definition of "good job." Custodian/janitor and gas station attendant do not meet most folks' criterion for a good job but https://en.wikipedia.org/wiki/Ronald_Re ... nthropist) is a famous counter-example showing that having such jobs are not incompatible with wealth building.
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Re: Is the secret to long term wealth as simple as living below your means and investing in a low cost index fund

Post by coffeeblack »

dbr wrote: Sat Jun 19, 2021 11:17 am Wealth is $1B by the time you are 50 starting at age 20.

Assuming your return is 6% you would have to LBM by $12,648,911.49 each year.

Math matters.

If you have a less ambitious goal of say $1M then the LBM is only $12,648.91 per year, and that is very reasonable.

If the investment is in stocks and you reach $1M at age 50, then it is a possibility that at age 51 you will only have $500,000.
Isn't that only half the story? Once they reach 1 million and only have 35K in cost per year, they will be able to retire on 35k per year for the next 40 or so years. 3.5% WR.
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Re: Is the secret to long term wealth as simple as living below your means and investing in a low cost index fund

Post by Ferdinand2014 »

tvubpwcisla wrote: Sat Jun 19, 2021 9:42 am It seems like building long term wealth is pretty simple. Live below your means and invest in a low cost total stock market index fund. Am I missing anything other than stay the course? Is it really that easy?
No you are not missing anything. Yes.
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Re: Is the secret to long term wealth as simple as living below your means and investing in a low cost index fund

Post by coffeeblack »

Fallible wrote: Sat Jun 19, 2021 11:45 am
tvubpwcisla wrote: Sat Jun 19, 2021 9:42 am It seems like building long term wealth is pretty simple. Live below your means and invest in a low cost total stock market index fund. Am I missing anything other than stay the course? Is it really that easy?
You could start with a dictionary definition of "easy": "achieved without great effort; presenting few difficulties" and "free from worries or problems."

Then look at the entire Bogleheads' philosophy, which requires learning and a steady self-discipline for an investing lifetime.

1 Develop a workable plan
2 Invest early and often
3 Never bear too much or too little risk
4 Diversify
5 Never try to time the market
6 Use index funds when possible
7 Keep costs low
8 Minimize taxes
9 Invest with simplicity
10 Stay the course

Then remember the words of Warren Buffett and Jack Bogle: "Investing is simple, but not easy," with "easy" referring to control over the powerful emotions of fear and greed. So you may be referring to the "simple" part of investing.

Then ask yourself: "Is it really that easy?"

My answer after many years of indexing is: No.
What if they just bought one fund. Lets say lifestyle strategy fund at 20 years old. Invested in it for 30 years or more. they can even put it on auto pilot. That would have a very high probability of success. That seems pretty simple. Perhaps not easy because it requires someone who has the will to avoid some excessive spending and channel it into saving.
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Re: Is the secret to long term wealth as simple as living below your means and investing in a low cost index fund

Post by Normchad »

Yes, it’s that simple. And you have to do it for a long time.

A lot of folks want to make it more complicated, or throw caveats at it. Ignore the noise.

I’ve been doing it for 29 years, and it’s worked astoundingly well. For reference, I saved only $2k in my 401k in my first year out of college. I had a negative networth until I was 28. It still worked.

And you are not even required to be frugal, or drive a Camry. Live below your means, invest in diversified index funds, and just keep doing it for decades.
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Re: Is the secret to long term wealth as simple as living below your means and investing in a low cost index fund

Post by alfaspider »

Padlin wrote: Sat Jun 19, 2021 9:45 am It's that simple, but not necessarily easy.
Yep. Climbing Mt. Everest is simple. Just put one foot in front of another until you reach the top. That doesn’t mean it’s easy.
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Re: Is the secret to long term wealth as simple as living below your means and investing in a low cost index fund

Post by lws »

Living below your means , investing in a low cost index fund, and luck.
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Re: Is the secret to long term wealth as simple as living below your means and investing in a low cost index fund

Post by mffl »

THY4373 wrote: Sat Jun 19, 2021 10:46 am
leeks wrote: Sat Jun 19, 2021 10:17 am Having (and keeping) a spouse on the same page is relevant too.
I am going to disagree on this. Having a spouse can help especially at lower incomes by (potentially) adding to the family income while maintaining some "economies of scale" on living costs and diversifying incomes sources. However spouses introduce additional risks/costs:

About the best divorce rate I have seen is about 35% which is for first marriages, well educated couples who got married later in life. While not all divorces end in financial disaster (mine certainly did not) many do. I find it a bit amusing that Bogleheads will argue endlessly over safe withdrawal rates but often completely ignore this elephant in the room.

You need to find a spouse that is not only compatible with you on the economic side of things but also the myriad of other things you are looking for and this can be a real challenge (and of course folks change over time so the person who was perfect for you at 30 might not be at 50).

Spouses often lead to children which while (often) truly rewarding in many ways, aren't great for accumulating more wealth.

Solo folks have a lot more control and flexibility in what they do and how they do it. My highest savings rate ever is now that I am solo again post divorce.
I'm not 100% sure leeks is trying to say that the acquisition of a spouse in the first place is critical to getting where you need to be financially, it's just that a large proportion of people have a spouse as a pre-existing condition, so it's important that the one you have be on the same page, and once you have a spouse, losing the spouse to divorce is extraordinarily unhelpful for your financial planning. You're clearly right that marriage adds extreme financial risks, and kids are an extreme financial drain.

That said, I think some things are more important than finances, so one shouldn't take that as an anti-endorsement for a spouse or kids, but one should keep the risks in mind, do their best, and then see where the roulette wheel lands.
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Re: Is the secret to long term wealth as simple as living below your means and investing in a low cost index fund

Post by Taylor Larimore »

tvubpwcisla wrote: Sat Jun 19, 2021 9:42 am It seems like building long term wealth is pretty simple. Live below your means and invest in a low cost total stock market index fund. Am I missing anything other than stay the course? Is it really that easy?
tvubpwcisla:

The answer is "YES" (although it is not "easy"). I am an example:

I started investing in 1950 at the age of 26. ​On December 1950 the S&P 500 stocks were valued at $21. Today the S&P 500 Index is valued at more than $4,000 (not including dividends).

Best wishes.
Taylor
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Re: Is the secret to long term wealth as simple as living below your means and investing in a low cost index fund

Post by RXfiles »

Yes and no. you still have to have a income that's high enough to LBYM. so the most important factor is still your income. whether people want to admit that or not.
Fallible
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Re: Is the secret to long term wealth as simple as living below your means and investing in a low cost index fund

Post by Fallible »

coffeeblack wrote: Sat Jun 19, 2021 11:50 am
Fallible wrote: Sat Jun 19, 2021 11:45 am
tvubpwcisla wrote: Sat Jun 19, 2021 9:42 am It seems like building long term wealth is pretty simple. Live below your means and invest in a low cost total stock market index fund. Am I missing anything other than stay the course? Is it really that easy?
You could start with a dictionary definition of "easy": "achieved without great effort; presenting few difficulties" and "free from worries or problems."

Then look at the entire Bogleheads' philosophy, which requires learning and a steady self-discipline for an investing lifetime.

1 Develop a workable plan
2 Invest early and often
3 Never bear too much or too little risk
4 Diversify
5 Never try to time the market
6 Use index funds when possible
7 Keep costs low
8 Minimize taxes
9 Invest with simplicity
10 Stay the course

Then remember the words of Warren Buffett and Jack Bogle: "Investing is simple, but not easy," with "easy" referring to control over the powerful emotions of fear and greed. So you may be referring to the "simple" part of investing.

Then ask yourself: "Is it really that easy?"

My answer after many years of indexing is: No.
What if they just bought one fund. Lets say lifestyle strategy fund at 20 years old. Invested in it for 30 years or more. they can even put it on auto pilot. That would have a very high probability of success. That seems pretty simple. Perhaps not easy because it requires someone who has the will to avoid some excessive spending and channel it into saving.
It does address the simple part and it could be easier if the one fund is the right course for them and they're never tempted to tinker with it it over those 30 years.
"Yes, investing is simple. But it is not easy, for it requires discipline, patience, steadfastness, and that most uncommon of all gifts, common sense." ~Jack Bogle
coffeeblack
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Re: Is the secret to long term wealth as simple as living below your means and investing in a low cost index fund

Post by coffeeblack »

Fallible wrote: Sat Jun 19, 2021 12:37 pm
coffeeblack wrote: Sat Jun 19, 2021 11:50 am
Fallible wrote: Sat Jun 19, 2021 11:45 am
tvubpwcisla wrote: Sat Jun 19, 2021 9:42 am It seems like building long term wealth is pretty simple. Live below your means and invest in a low cost total stock market index fund. Am I missing anything other than stay the course? Is it really that easy?
You could start with a dictionary definition of "easy": "achieved without great effort; presenting few difficulties" and "free from worries or problems."

Then look at the entire Bogleheads' philosophy, which requires learning and a steady self-discipline for an investing lifetime.

1 Develop a workable plan
2 Invest early and often
3 Never bear too much or too little risk
4 Diversify
5 Never try to time the market
6 Use index funds when possible
7 Keep costs low
8 Minimize taxes
9 Invest with simplicity
10 Stay the course

Then remember the words of Warren Buffett and Jack Bogle: "Investing is simple, but not easy," with "easy" referring to control over the powerful emotions of fear and greed. So you may be referring to the "simple" part of investing.

Then ask yourself: "Is it really that easy?"

My answer after many years of indexing is: No.
What if they just bought one fund. Lets say lifestyle strategy fund at 20 years old. Invested in it for 30 years or more. they can even put it on auto pilot. That would have a very high probability of success. That seems pretty simple. Perhaps not easy because it requires someone who has the will to avoid some excessive spending and channel it into saving.
It does address the simple part and it could be easier if the one fund is the right course for them and they're never tempted to tinker with it it over those 30 years.
temptation to tinker over 30 years. I suppose that's the not so easy part.
jjj_22
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Re: Is the secret to long term wealth as simple as living below your means and investing in a low cost index fund

Post by jjj_22 »

Easy is different from simple. What you describe is simple. It is not necessarily easy. Life circumstances and personal temperament could make it very hard.
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Re: Is the secret to long term wealth as simple as living below your means and investing in a low cost index fund

Post by DSBH »

tvubpwcisla wrote: Sat Jun 19, 2021 9:42 am It seems like building long term wealth is pretty simple. Live below your means and invest in a low cost total stock market index fund. Am I missing anything other than stay the course? Is it really that easy?
It could be that "easy" if you have a good job so you can max out (and do) to the IRS limit your 401k or equivalent & backdoor Roth IRA for 30 years, then you can achieve - what most would agree - the "long term wealth" level. It could be even "easier" if you married someone who also do the same.
John C. Bogle: "Never confuse genius with luck and a bull market".
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Re: Is the secret to long term wealth as simple as living below your means and investing in a low cost index fund

Post by mptfan »

tvubpwcisla wrote: Sat Jun 19, 2021 9:42 amIs it really that easy?
It's simple, but it's not easy. Most people cannot or will not do it because it requires discipline and deferred gratification and ignoring societal and peer pressures.
Silence Dogood
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Re: Is the secret to long term wealth as simple as living below your means and investing in a low cost index fund

Post by Silence Dogood »

coffeeblack wrote: Sat Jun 19, 2021 11:50 am What if they just bought one fund. Lets say lifestyle strategy fund at 20 years old. Invested in it for 30 years or more. they can even put it on auto pilot. That would have a very high probability of success. That seems pretty simple. Perhaps not easy because it requires someone who has the will to avoid some excessive spending and channel it into saving.
I've done something similar to this.

My Roth IRA has been exclusively invested in the Vanguard Target Retirement 2055 fund since I first opened it, age 20.

(I also have a 401(k), which does not offer this fund, but I use other available index funds.)
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Adenovir
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Re: Is the secret to long term wealth as simple as living below your means and investing in a low cost index fund

Post by Adenovir »

tvubpwcisla wrote: Sat Jun 19, 2021 9:42 am It seems like building long term wealth is pretty simple. Live below your means and invest in a low cost total stock market index fund. Am I missing anything other than stay the course? Is it really that easy?
It's the difference between knowledge and wisdom. Knowledge is knowing about living below your means and investing in a low cost total stock market index fund. Wisdom is the ability to stick to it over decades. Simple but not easy.
"Investing is simple but not easy." ~Warren Buffett
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Re: Is the secret to long term wealth as simple as living below your means and investing in a low cost index fund

Post by AerialWombat »

Wanderingwheelz wrote: Sat Jun 19, 2021 10:50 am Replace “easy” with “simple”.

It is pretty simple, but it’s definitely not easy.
+1
This post is a work of fiction. Any similarity to real financial advice is purely coincidental.
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ResearchMed
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Re: Is the secret to long term wealth as simple as living below your means and investing in a low cost index fund

Post by ResearchMed »

Adenovir wrote: Sat Jun 19, 2021 12:58 pm
tvubpwcisla wrote: Sat Jun 19, 2021 9:42 am It seems like building long term wealth is pretty simple. Live below your means and invest in a low cost total stock market index fund. Am I missing anything other than stay the course? Is it really that easy?
It's the difference between knowledge and wisdom. Knowledge is knowing about living below your means and investing in a low cost total stock market index fund. Wisdom is the ability to stick to it over decades. Simple but not easy.

Knowledge is knowing that tomato is a fruit.*
Wisdom is not putting tomato in a fruit salad.


*with apologies to TomatoTomatoh :wink:

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Re: Is the secret to long term wealth as simple as living below your means and investing in a low cost index fund

Post by BGeste »

Yes. The earlier and more you invest the faster you become wealthy.
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