Wealth Inequality In America

This is just a damn true fact that world's 80% money is with those only 20% rich people. And rest of 20% money is distributed among 80% of the total population. It is not the case of just America but of the whole world.

This 80:20 RATIO IS GONNA BE STILL WORST LIKE 90:10 OR LIKE. THIS MEANS RICH WILL GET RICHER AND MIDDLE CLASS WILL HAVE MORE WORST SITUATION.
 


lukep said:
I can't believe we're doing this again...


Homeownership is for chumps.

It is both a horrible purchase decision and a horrible investment.

  • You never actually own it.
  • You have to pay taxes on it forever.
  • The cost of upkeep is considerable, forever.
  • You have no control over the RE market, which doesn't grow as much as people think.
  • You will always be sued into the poorhouse if some idiot crashes on your lawn.
  • If you want to move to a new city or country, you have to put it on the market and spend months and huge amounts of money to sell it first!
  • The nation you purchase it in might not be that stable in 30 years either. That goes double for the USA.
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Depends where you live... in London, renting is unbelievably expensive, and it's almost impossible to get more than a 12 month contract. If you've got kids in school, you don't want to have to up sticks and move halfway through. We have a shitload more disposable income since buying a place.

I agree if you're single and want to move every 3-4 years though.
 
lukep said:
Homeownership is for chumps.

It is both a horrible purchase decision and a horrible investment.

  • You never actually own it.
  • You have to pay taxes on it forever.
  • The cost of upkeep is considerable, forever.
  • You have no control over the RE market, which doesn't grow as much as people think.
  • You will always be sued into the poorhouse if some idiot crashes on your lawn.
  • If you want to move to a new city or country, you have to put it on the market and spend months and huge amounts of money to sell it first!
  • The nation you purchase it in might not be that stable in 30 years either. That goes double for the USA.
Click to expand...
What you're saying is true, at least in part. Like most things, it's conditional. Purchasing a home is a good deal depending on what you bought, when you bought it, what you paid for it and how much rents cost in your area. Being a landlord can catapult you into a high income bracket if you do it right.

I didn't watch the the video, didn't need to. Of course the middle class is getting screwed, and this is business as usual. If you change the tax laws, etc., the rich will get around them. Shoe is right, the rich always win.

http://www.shoemoney.com/2011/04/08/the-rich-always-win

The game is clearly rigged. I'm a liberal/progressive who is tired of this argument, and suffering from a lack of outrage. My response is to go get rich.
 
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lukep said:
Homeownership is for chumps.

It is both a horrible purchase decision and a horrible investment.

  • You never actually own it.
  • You have to pay taxes on it forever.
  • The cost of upkeep is considerable, forever.
  • You have no control over the RE market, which doesn't grow as much as people think.
  • You will always be sued into the poorhouse if some idiot crashes on your lawn.
  • If you want to move to a new city or country, you have to put it on the market and spend months and huge amounts of money to sell it first!
  • The nation you purchase it in might not be that stable in 30 years either. That goes double for the USA.
Click to expand...
Your second and third points are really non-starters. If you rent, you are still faced with those costs, except they're buried in the rent. Landlords certainly don't take a loss on the units they're renting.

Some of the other points really depend on the market where you live, how long you keep your property, the interest rate you are paying on your mortgage, and how quickly you pay down your mortgage.

There are pros and cons to each. For instance, when you rent, it's pretty easy to move from one place to another; when you own, you can customize your place to suit your wants/needs.

I really think it comes down to your personal preference, and not whether you are a chump or not.
 
Interesting how the recession only widened income inequality. Even more interesting that they were associated with the QEs.
 
TylerT833 said:
Interesting how the recession only widened income inequality. Even more interesting that they were associated with the QEs.
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People with assets are able to leverage them in low interest rates environments and purchase more assets.

I also don't understand why this is an issue. There are gaps in level of talent, education and looks, work ethics, and desiere. Wealth is just another category where there is a gap. Big deal
 
Let me give you a little information about my background, I have a degree in economics from a Big 10 university, I work on the financial industry and as a plan B I build, develope, monitize and flip websites, I do pretty well. We have a family friend who isn't as well off, having car troubles and hard up for cash. So over the Easter holiday we met up and I gave him all the information needed to basically do what I do website wise, to this day he has done nothing. He would rather go out drinking with the few dollars that he has in his pocket then to do something productive.

I take it that's behavior is similar for many people in the bottom half. The majority of rich people got that way by saving, investing and working hard. Unfortunately not all people have that in them.
 
Natasha Nixon said:
I disagree with the whole renting = anti wealth idea.
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"Anti-wealth" is probably too strong of a term since renting isn't going to be much of a drain on a normal person, but its not ideal. Having tenants pay for your mortgage while you live rent free is probably the best situation you can put yourself in.

Natasha Nixon said:
I also disagree, at least to some degree that savings is the foundation of wealth building.

Maybe if you're interested getting wealthy at 60 in a wheelchair (exaggerating here a bit) it's a great road to go down on.
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You can't get wealthy off of savings alone, but you're certainly going to need capital to take advantage of investment opportunities whether it be real estate, stocks, or buying/building a business like what you mention below. This is why savings is considered the foundation of wealth building.

Natasha Nixon said:
Buying a home doesn't make much sense to me as far as being the prototypical wealth building mechanism -the home is a resellable asset that typically goes up in value, but t's far more inefficient than other assets -namely, business assets -if you're looking to build wealth.
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Buying your own home won't make you wealthy but the real estate business has made folks a lot of money, no doubt about it. Look at McDonalds business model. The Hiltons? How about that guy who had a documentary about him building the biggest mansion in America, owner of some timeshare company.

Natasha Nixon said:
If you want to build wealth before you're too old to enjoy it, you're far better off renting and putting your cash to use in the acquisition of business assets -whether it be IP's, products, actual business', etc. Assets that can grow far faster than the inflation rate or any Oceanside home can and actually provide cash flow for the acquisition of other assets in the meantime.
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That's true, your own business is the most important component to building your own wealth. But after you've got stacks, the question is, what do you do with it?

Every asset class has their own pros, cons, risks, and rewards.
 
transistor said:
Is renting really that bad of an idea? I remember Peter Schiff talking about how renting makes more sense than buying.
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Renting can make sense in locations where you have to loan up to your neck in order to live anywhere (New York, San Fran, ect).

If you can't afford a 20yr mortgage then it might not be a good idea. Otherwise own a property with a 15 or 20 year mortgage and you'll build quite a bit of wealth pretty quickly.
 
peter schiff as I recall has been bearish on the US dollar, stocks, and treasuries since 2009. he has predicted everything that DIDN'T happen. lol
 
BabyGotBacklink said:
It has always irked me when people talk about buying a home as "an investment".... if it's rental/commercial property that's one thing but a family home doesn't = investment to me because there is very little guarantee that you will get back what you put in much less cut a profit from a sale down the road.

Markets change, buildings require ongoing maintenance ($$$) and if you are figuring financing costs into the loan amount you might go in upside down from the get go.
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100% agree with this and frankly something not many discuss (overlooked?).

I own a decent portfolio of units (started in 2012) but i must say that from my point of view - adding in favour of your argument - most people that 'invest' into RE seem to be quite delusional or naive from my personal experience.


1) If anybody uses debt to purchase a unit, he is essentially borrowing the house from the bank and subrenting to tenants, because in effect it isnt ones unit but the banks until fully paid. This = arbitrage.

2) The majority of units ive researched - if acquired through debt - are instantly negative cashflow from the get go (at least where i live). So when people talk about purchasing shit loads of BMV units with deposits and essentially arbitrage between rent and mortgage they are in my opinion dellusional - it just doesnt happen, not in my experience or in my area.

The only succesful person ive personally met (purchasing with debt) acquired 10 units (studios) direct from bank (repo) and negotiated a 20k/unit price (total 200.000).
He had to do extensive renovation to all of them and within months of completion had 4 rented out (2 = breakeven on mortgage + costs).

Other than that, purchasing one unit with one mortgage makes no sense whatsoever and - in my research - instant negative cashflow.

The way i look at it: If you cant afford it, dont buy it.
 
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