One can turn any expense into a high number by applying some not-quite-realistic rate of return[1] over a long period of time. I remember reading a web comic which applied this procedure to an iPhone, with enough creativity you could probably make coffee at Starbucks into a million-dollar expense as well.
In some sense it is true, if you invest regularly and wait a long time you’ll likely accumulate considerable savings. But singling out one particular expense for that kind of treatment, without the context which you provided above, is exactly what Lumifer called it: blatant propaganda.
[1] E.g., William Bernstein “Five Pillars of Investing” cites 3.5% long-term real (ie after inflation) rate of return from stocks.
The corresponding number at 3.5% is $500,000. I wasn’t trying to argue for any particular value, merely that the cited value isn’t wildly off base, and that long-term investment is how you get into its neighborhood.
Yes, I understand that and I didn’t mean to criticize your argument, which is good, I meant to attack the original source which was trying to impress the audience with a large number without explaining where it really comes from (which you did explain). Sorry that I didn’t express this more clearly.
The cited value isn’t wildly off base, in the same sense it wouldn’t be wildly off base to say that if you work at McDonald’s and invest every penny you made, after 40 years you’ll be a millionaire. So car ownership is really expensive in the same sense in which McDonald’s pays really well.
Not to accuse you of doing this, but I’m a little bemused at how my post seems to have been taken as a broad apologetic for the ancestor’s cost calculator when I was trying to make the point that, when you’re playing with values in the high hundreds of dollars per month, conclusions like “investing this will make you a millionaire after 35 years” prove a lot less than they sound like they do. Hell, the first sentence even says that bicycles aren’t the important thing to be thinking about there.
So in other words, I think we agree. I could probably have been clearer with my examples, though.
One can turn any expense into a high number by applying some not-quite-realistic rate of return[1] over a long period of time. I remember reading a web comic which applied this procedure to an iPhone, with enough creativity you could probably make coffee at Starbucks into a million-dollar expense as well.
In some sense it is true, if you invest regularly and wait a long time you’ll likely accumulate considerable savings. But singling out one particular expense for that kind of treatment, without the context which you provided above, is exactly what Lumifer called it: blatant propaganda.
[1] E.g., William Bernstein “Five Pillars of Investing” cites 3.5% long-term real (ie after inflation) rate of return from stocks.
The corresponding number at 3.5% is $500,000. I wasn’t trying to argue for any particular value, merely that the cited value isn’t wildly off base, and that long-term investment is how you get into its neighborhood.
Yes, I understand that and I didn’t mean to criticize your argument, which is good, I meant to attack the original source which was trying to impress the audience with a large number without explaining where it really comes from (which you did explain). Sorry that I didn’t express this more clearly.
The cited value isn’t wildly off base, in the same sense it wouldn’t be wildly off base to say that if you work at McDonald’s and invest every penny you made, after 40 years you’ll be a millionaire. So car ownership is really expensive in the same sense in which McDonald’s pays really well.
Sure; I don’t dispute any of that.
Not to accuse you of doing this, but I’m a little bemused at how my post seems to have been taken as a broad apologetic for the ancestor’s cost calculator when I was trying to make the point that, when you’re playing with values in the high hundreds of dollars per month, conclusions like “investing this will make you a millionaire after 35 years” prove a lot less than they sound like they do. Hell, the first sentence even says that bicycles aren’t the important thing to be thinking about there.
So in other words, I think we agree. I could probably have been clearer with my examples, though.