• Kalkaline @leminal.space
    link
    fedilink
    arrow-up
    9
    arrow-down
    30
    ·
    2 days ago

    I get the joke, I get why it’s difficult to save money too, but you should understand compound interest and how it works before you get buried in debt that you can’t pay off and have to push retirement savings back by decades. You should understand why our society has run away winners and then everyone else. A big part of that is understanding compound interest.

    • Donkter@lemmy.world
      link
      fedilink
      arrow-up
      38
      arrow-down
      3
      ·
      2 days ago

      I understand compound interest and how it works. If I invest money now, the interest I earn compounds on my accumulated interest on top of the initial investment. It’s not a very difficult or esoteric concept.

      What now? Do I get a pony?

    • UnderpantsWeevil@lemmy.world
      link
      fedilink
      English
      arrow-up
      32
      arrow-down
      1
      ·
      edit-2
      2 days ago

      you should understand compound interest and how it works before you get buried in debt that you can’t pay off

      When incomes are stagnant and interest is variable and inflation drives expenses upward, this is theoretically good advice but practically useless.

      What do you tell the kid who can’t afford college without taking out a 7-10% APY loan? Is risk you’re taking on a degree worth the benefit of joining the professional class? Impossible to say under current conditions.

      What do you tell the young adult choosing between renting an overpriced apartment or taking out a six-figure loan to buy an old home in a bad part of town? Is the 6% mortgage rate going to get better or worse in another ten years? Is the local job market going to improve or collapse?

      What do you tell the middle aged man faced with an insurance company rejecting his claim on a critical pharmaceutical? Do you go out of pocket and cut into your savings? Or do you try and make it without the meds and hope you don’t destroy your chances at a comfortable retirement?

      All the math teaches you is that risks exist. They keep you clear of a few truly awful choices, but they don’t do anything to guarantee your success. There is no correct play in a game that is stacked against you.

    • thedirtyknapkin@lemmy.world
      link
      fedilink
      arrow-up
      24
      arrow-down
      1
      ·
      1 day ago

      doesn’t matter if I understand that when rent has going up $100/year for the last 4 years and now consumes 99% of my income leaving me deciding between rent, food, and electricity. none of that matters when i have negative money to invest with and no debt.

      • Kalkaline @leminal.space
        link
        fedilink
        arrow-up
        1
        arrow-down
        13
        ·
        1 day ago

        It matters to the extent that there is a whole class of people who don’t have to worry about that stuff that think you’re not paying enough taxes and could use less of YOUR social security when retirement comes.

    • theUwUhugger@lemmy.world
      link
      fedilink
      arrow-up
      2
      arrow-down
      7
      ·
      2 days ago

      I really really don’t think its going to make that much difference on the few thousand bucks you realistically have!

      If you want to invest long term, put it into google/apple… stock! In fact open.ai is trying to convert to for profit, their stock is also going to go wild!