Is it true that the biggest reason for wealth inequality in the U.S. is that many Americans are uninformed about investing?
Granted research has shown that the pre-tax income for the bottom 50% of earners in the U.S. has dropped since the 1980’s. And a full 36% of income growth between 1980 and 2014 and went to the top 1% of earners.
One of my children actually did what I recommended. Taking some of their money out of the accounts we set up for them and actually invested them. We still have the account in my name, so I get to pay the taxes on any income, but don’t get the income.
I don’t see the problem, at the basic levels:
Stock is a percentage of ownership of a company
Bond is loan to a company at a stated rate of interest
Dividend is your percentage of profit from a company
Interest is earned from the bond
Warren Buffet has a simple investment strategy, buy into companies who products you like and believe in. Also do not sell for less that you bought it for.
It would not be hard to follow this type of strategy when you invest on your own. It is slightly more difficult when others are providing the investment options, such as 401K, 403B, SEP or SIMPLE.
There is a risk to investing, but there is also a greater risk in not investing. It will take some time a dedication, but it can be as simple as described.
I open an account with E-Trade (Options House before it was taken over) where I was only investing in dividend producing companies that had returns greater than 12%. A couple of stocks have decreased slightly in their yield, but a few have increased.
I am working on the basis that if the yield is 12%, I will get all of my investment back within 6 years (Rule of 72), and the underlying investment is then the houses money that I can keep, sell or buy more shares.