The post is meant to illustrate the benefits of saving, investing and doing it from an early age. No where does it say the returns are guaranteed, the example is clearly illustrative but certainly not outrageous. But since you are so brilliant and need a solid knock on the head, if you did just a bit of googling, as I have no desire to waste much more time to get better data, then you would see that during the last 40-50 years, the average returns of the U.S. equity market (which you can easily get into with a local bank’s global equity fund) was some 10-12% per annum, compounded, see here. So the 11% example falls right smack within that range. Also, anyone who has attended finance classes know that historically, the equity market return used often used lies in the same range. The extremely low interest rate environment of the past ten years is one of the longest cycles, and hopefully does not last forever. Furthermore, even with the seemingly appalling returns of recent years, some folks estimate growth over the next 30 years in international equities at roughly 7-9%, and that’s only one person’s opinion. One need not limit their savings to bank deposits and equities, either. If you save religiously, but put it in things that may or often do grow in value, such as art, spectacular gems, ceramics, etc, you could earn decent returns as well. But NOTHING and I say ABSOLUTELY NOTHING is guaranteed. But trying is sure as hell better than just griping and attempting to poke holes in a system of savings and investment that has done very well by tens of millions of people around the world, as opposed to those who left their future retirement solely to chance.

And in case you want more egg in your face, why don’t you read this series of posts, with a semi-hypothetical portfolio of ten stocks picked on this blog, first acquired after the market turmoil in 2008, and which over the next six years, brought in a total return of roughly 120% (without changing any stocks at all), see final post in series, here. If you were reading this blog in 2008 and had the nerve to buy the same stocks in the list, or even just Apple, Inc. Then you would be laughing all the way to retirement. But again, that’s not guaranteed. However, several readers have written me privately to say they did buy a few of the stocks, and were thrilled with their results.

Furthermore, you can also take your savings and invest it in a business or businesses that yield you better returns than just being an employee. Those with capital are in a much better situation than those without capital to invest. A small, properly run business can and does earn upwards of 20-30% annual returns on capital, but then again, 90% of them do not.

Even if I only used 6% returns, rather than classically quoted 12%, if you saved religiously every month and got those returns, you would BE FAR BETTER OFF than someone who didn’t get into the habit of saving. You may be young, but don’t be intentionally, moronically stupid. Read what you read with a critical eye, but look at it from several angles, research and learn, and don’t think anyone else owes you an explanation for things you couldn’t be bothered to learn to figure out for yourself. Before you criticize, understand the issues, the context and the intent.

The point of the original post was to encourage young people to live well within their means, unspoken but implied is that they stop wasting money on things that are not essential, and instead save a good proportion of their income and invest it. If you only get 6% for the first few years, so be it, but build your capital anyway. Then later you will have options open to you that would not have existed otherwise. I wish you good fortune, but with the irritating tone of your comment, you need a good smack on the head with a marketmanila fishpan, before you finally figure it out.

And on a final note, I will give you the example of my wife’s work colleague from her government days. She saved a good 20-25% of her meagre government salary. She listened to good investment advice. She bought stocks of top Philippine companies. She bought bonds. She eventually used her funds to help her migrate to a first world country (after working and saving in the Philippines for 20 years) where she has worked her last 10 years just above minimum wage before retirement and where she saved up to 40% of her income. She invested some more, and now, is almost set for a very comfortable retirement, which she hopes to spend back in the Philippines. Hers was not exactly a rags to riches story. But a story of coming from Filipino minimum wage means, to being fully and utterly independent with a good 20-30+ post retirement years ahead of her with a nice nest egg put away. She did it, and so can many others, if they just persevere.

P.S. I don’t normally allow comments nor reply to people who don’t have the balls to put a real functioning email address. But I do so in this case hoping you will learn something. But trying to remain hidden behind a stupid pseudonym without providing a valid email address strips you of 99.99% of your limited credibility with respect to the topic at hand.

Yes, of course. Timing is always important. When you sell is the time when you crystallize your gains or losses.

The article I hyper-linked to (and the embedded scribd document) actually implies a “doomsday” scenario where the fiat currency is rendered worthless. It would be hard to imagine a similar scenario playing out with the US Dollar especially with its current status as global reserve currency. Hence my initial reluctance to post such an “out-of-the-box” idea of saving in gold.

For non-“expriv” currencies (currencies that are not the global reserve currency; or put another way, currencies that do not enjoy an “exorbitant privilege” status), hyperinflation and sudden revaluations can and do happen.
But hyperinflation and currency devaluations usually are only triggered by wars (e.g. Germany’s hyperinflation around the first World War) or internal country conflicts like civil unrest (e.g. Zimbabwe).
Argentina is one example of a country whose currency has been devalued several times in one generation.

But yes, saving is very important in any case. Be it in precious metals or the paper currency or stocks available wherever you are located.

You are my IDOL, being able to retire early is my dream.

I am 32 yrs old now and believe it or not, from the time I started working I have been living on a daily work allowance of 100 pesos (regardless of any salary increase )+ 100 pesos on transportation (no taxi). Add that to my household expense and an occasional splurge, I only spend about 40%-50% of my monthly income.
And I am proud to say that with my frugality, I have been able help build my parents a house.

Now that I have turned 32 I would like to start investing my savings (to maybe start on the early retirement dream), but I was always afraid to do so because: 1. I do not know where to begin, no knowledge whatsoever with stocks and bonds. 2. Because I am our family’s breadwinner and part of what I am saving for is our “in case of emergency” like hospitalizations and stuff like that, I am afraid of risking my savings in case things do not work out.

MM, Thank you for this very helpful post and I hope I can get enough courage to start investing.

JUST A FEW SUGGESTION:

1. IF YOU WANT TO INVEST A SMALL PORTION OF YOUR PORTFOLIO IN THE PHILIPPINES ( P200T + FOR EXAMPLE ) I WOULD LOOK INTO YOUR LOCAL RURAL COOPERATIVE . OUR COOPERATIVE IN ABUCAY BATAAN PAYS A 7% RETURN ON INITIAL P200T TIME DEPOSIT FOR ONE YEAR TAX FREE.

2. REGARDING BONDS : MOST FINANCIAL PLANNERS RECOMMEND BOND LADDERING , IT MEANS BUYING BOND AT DIFFERENT MATURITY. THIS WILL DIMINISH THE RISK OF INTEREST RATE FLUCTUATION.