Is it possible to become a millionaire (or near to) through investments?

BananaRepublic

grey_gym_sock wrote: »

yes.

on pre-crises spending, you're talking about the debt-to-GDP ratio rising from a percentage in the low 30s to the high 30s. the crisis made it balloon to about 80%, and because of austerity's failure, it's since risen to about 90%.

You are propagating a left wing con trick, namely the use of the term 'austerity'. We are not going through anything that approximates 'austerity'.

grey_gym_sock wrote: »

i doubt we can get rid of bubbles altogether. but we could certainly regulate the finance sector properly - i.e. both regulate how credit is granted, and simply ban a lot of the use of complex derivatives (since it serves no useful purpose). the general consequence of financial deregulation - that it was going to lead to a crisis - was predictable, though not the exact form it took. and the risks in the finance sector are mostly still there.

Had you linked to a pre-crisis statement to that effect from yourself, then I might believe it was predictable.

grey_gym_sock wrote: »

so labour, and the IMF, have flip-flopped on their line a few times. but the reality is that relying on monetary stimulus (even "unconventional" monetary policy, i.e. QE) has failed to give us a strong recovery. fiscal stimulus is needed.

even the OECD seems to agree now: http://touchstoneblog.org.uk/2016/02/where-does-the-chancellor-now-stand-as-calls-for-public-spending-and-ending-reliance-on-monetary-policy-grow-ever-louder/ (though they are liable to flip-flop again, like the IMF)

it's the slowest recovery from a recession since the south sea bubble. and it's even worse when you look at the distributional effects: real wages are down, and most ppl are poorer.

the eurozone has done worse than the UK, not because it is more socialist, but because it's gone for much more severe austerity than the UK. which is largely because eurozone governments' actions are constrained by the pro-austerity ECB.

meanwhile, the USA has done better than the UK, because they went for hardly any austerity.

yes. that was the wrong way to pay for it. i think the government should be spending far more in this area, but it should be paid for via public borrowing, not via household fuel bills, so that it can provide a fiscal stimulus to the economy (as well as the benefits from more secure and cleaner energy supply).

low wages and low productivity are closely connected. employers have lost interest in improving workers' skills, and instead gone for the strategy of using more workers at lower pay. real wages per hour are down since the pre-crisis point. all economic growth has come from extra hours worked (partly increased population, partly more hours per worker).

you have to look not just at the employment and unemployment figures, but at how many are working part-time who'd like to work full-time; at how much employment is insecure and low-paid; and at fake self-employment (which the DWP pushes some people into). overall, we have a seriously under-employed, under-skilled, under-paid workforce.

i think it would a good thing if increased public sector employment pushed up wages generally. because then employers would have to think about raising skills and automation (since they would have to pay their employees more anyway), instead of relying on the pool of cheap labour.

Blimey, it sounds like you have not worked in the private sector. The public sector sucking up workers, and driving up wages makes it harder for UK companies to compete globally, and also locally if they compete with outsiders.

And the problem is many areas is not a shortage of unskilled staff, but a shortage of skilled staff. Building workers such as skilled brickies are in short supply. Software engineers are in short supply, with a booming market.

The one area where I criticise UK companies is a lack of willingness to allow engineers to train on the job. They usually want someone with an exact match in skills and experience, when a clever engineer can be up to speed in months if not weeks. I have the suspicion that French and German companies look for talent first, then exact experience second, but that is based on limited personal experience. If you put narrow requirements on job candidates, you end up narrowing your pool.

Anyway, you advocate borrowing more instead of restraining our spending, leading to a ballooning debt, and massive debt repayments. So in your world instead of spending within our means, and using our money effectively, you advocate spending money we do not have, and spending a larger and larger proportion on debt repayments.

You must live in a Socialist lahlahland, where fantasy rules.

BananaRepublic

Thrugelmir wrote: »

At an operational level the public sector is grossly inefficient in the way it manages and spends money. In the short term GO's approach is the right one. Squeezing the public sector is forcing those within it to think with a commercial hat on. After all it's taxpayers money of the future they are spending.

I quite agree. While many dislike the private sector, the market is an effective mechanism to remove companies that are inefficient. I have experience of working in the private sector on defence contracts, where the problems are that the government selects the company with the sharp suited salesmen making promises they cannot keep, and once the contract is agreed, the government makes continual changes, driving up costs. That is why so many big IT contracts fail. I know Glen is obsessed with knocking the Tories, especially Osborne, and never Labour, but Labour had huge problems in this area. The truth is all governments have screwed up with big contracts. Part of the problem is the civil service not being up to the job in this area.

grey_gym_sock

BananaRepublic wrote: »

You are propagating a left wing con trick, namely the use of the term 'austerity'. We are not going through anything that approximates 'austerity'.

granted, it is relatively light austerity (compared to greece, for instance).

what makes a policy count as austerity is deciding to cut some areas of expenditure, or of raising taxes, at a time when the economy is in recession or a weak recovery, and when it operating far below its full capacity. that is what GO has done - though at varying speeds; and he is clearly threatening to do the same thing again, when he suggests that if the outlook worsens - i.e. we are in danger or slipping in recession again - then he will need to cut expenditure. IOW, austerity is a pro-cyclical policy: offering less fiscal stimulus precisely when the economy is slowing.

at the same time, there are "automatic stabilizers" (i.e. social security spending automatically rises in a slowdown, and the tax take falls), which are anti-cyclical. GO's policy changes have weakened these stabilizers a bit, but they still exist.

a pro-cyclical policy is complete madness. it actually leads to higher public debt, because it traps the economy in a deeper slowdown. businesses won't start investing more while they know that households and the government are both holding down spending, and that other businesses also aren't investing (confidence is a recursive process). a longer or deeper slowdown keeps the tax take down, and social security spending up, so the deficit doesn't reduce as fast as it could. the opposite approach, increasing public spending in a downturn, can start turning confidence around sooner, getting businesses investing more, and households spending more, the tax take up, and social security spending down. well-directed spending - perhaps infrastructure investment - can easily pay for itself. the time to hold back public spending is when the economy is near full capacity, i.e. when we have full employment - otherwise, the danger is inflation - how far we are away from that now!

history bears this out. GO said he'd wipe out the deficit in 5 years, and instead it's only down about 1/3 (bizarrely, he claims it halved); so he says he'll wipe it out in the next 5 years, using the same policies that failed the first time. genius (politically, it is genius: how can he get away with that?).

or look at the post-WWII period, when the debt ratio was over 200%, public spending was kept high (not quite as high as during the war) in order to found the welfare state, and by the 1970s, the ratio had fallen to under 50%.

this has more arguments on the same lines: https://static1.squarespace.com/static/541ff5f5e4b02b7c37f31ed6/t/547de54de4b01fa8516004ea/1417536845863/Spending+Away+Debt+-+Final.pdf

one possible area of confusion: some of the hotly debated cuts don't actually reduce public expenditure. e.g. the benefit cap, which operates as a cut in housing benefit, leads to families losing their homes (because they can't pay the rent), and the local authority is then obliged (because there are children) to house them in temporary accommodation (with likely serious damage to the children's life chances), which costs even more than the previous rent.

public investment is a better example of what GO has been cutting, when he should be increasing it.

Had you linked to a pre-crisis statement to that effect from yourself, then I might believe it was predictable.

i didn't predict it.

my point was that some people did. it wasn't a bolt from the blue, i.e. something nobody could possibly be expected to predict. this is quite good (from 2003): https://www.opendemocracy.net/globalization-americanpower/article_1463.jsp

but i wasn't reading the right things at the time.

it's worth noting that most economists didn't predict the crisis, because most of them follow the neo-classical school of economics, which fails to explain money or debt at all - i.e. it basically leaves them out, and says: let's pretend we all make goods and swap them via barter: the financial system is just a more efficient way to achieve the same thing as barter. which of course it isn't. there are other schools of economic thought which have useful things to say about the finance system, but unfortunately most economists are wedded to a school which, while it has its merits, is useless in that area.

Blimey, it sounds like you have not worked in the private sector. The public sector sucking up workers, and driving up wages makes it harder for UK companies to compete globally, and also locally if they compete with outsiders.

as it happens, i've always worked in the private sector.

but i didn't say quite what i meant to. employers are not trying to make all jobs low-paid, low-skill. the jobs market is becoming more polarized: there are high-skilled, high-paid jobs, in some areas (including software development, which i work in - so this is not a personal complaint), but the lowest-paid jobs are becoming less secure (the rise of zero-hours contracts) and even lower-paid, while many middling jobs are being eliminated.

And the problem is many areas is not a shortage of unskilled staff, but a shortage of skilled staff. Building workers such as skilled brickies are in short supply. Software engineers are in short supply, with a booming market.

The one area where I criticise UK companies is a lack of willingness to allow engineers to train on the job. They usually want someone with an exact match in skills and experience, when a clever engineer can be up to speed in months if not weeks. I have the suspicion that French and German companies look for talent first, then exact experience second, but that is based on limited personal experience. If you put narrow requirements on job candidates, you end up narrowing your pool.

yes, somebody needs to be prepared to train workers to get skill levels up. the government may need to push this a bit, e.g. offer to pay part of the cost of training (in areas with identified skills shortages) if employers pay the rest. at the same time, the government could be discouraging zero-hours contracts, and scrapping the fake "training" schemes where people do things like stacking shelves to keep their benefits. make it clear to employers that the government will help them if they go the "high skill, high wage" route, not if they go for "low skill, low wage".

Anyway, you advocate borrowing more instead of restraining our spending, leading to a ballooning debt, and massive debt repayments. So in your world instead of spending within our means, and using our money effectively, you advocate spending money we do not have, and spending a larger and larger proportion on debt repayments.

answered above (and see the PDF i linked to). spending more now is the best way to get the debt down.

and you don't understand the nature of money. we have our own currency: that means the State can create as much money as it needs. money is never the limitation; real resources are the only limitation.

currently we have economic capacity - i.e. mainly un- and under-employed people - lying idle. if we put them to work, the UK will be richer. the way to do that is with higher (well-directed) public spending. it can pay for itself.

grey_gym_sock

Glen_Clark wrote: »

You keep talking about GDP - but isn't their GDP figure inflated by the increase in BTL and inflated rents?
Wheras building more houses (like Germany) would bring down rents, making the GDP figure lower?

i think both rents, and "imputed rents" (for owner-occupiers), are included in GDP.

so yes, lower rents would reduce GDP.

but the building more houses directly adds to GDP (i.e. the cost of construction is counted, not the land value).

and lower rents would give households more financial breathing space, which they could either use to spend more on other things (boosting GDP), or could save. but some of them would spend it.

in general, keeping basic things (rent, utilities, transport) cheap frees up spending power for other areas, so should indirectly boost GDP.

i do agree GDP is a flawed measure - it adds up the bad things and the good things together. i don't really think GDP maximization is our ultimate goal. but you have to work with something, when looking at the whole economy.

BananaRepublic

grey_gym_sock wrote: »

granted, it is relatively light austerity (compared to greece, for instance).

It isn't even 'austerity'.

grey_gym_sock wrote: »

what makes a policy count as austerity is deciding to cut some areas of expenditure, or of raising taxes, at a time when the economy is in recession or a weak recovery, and when it operating far below its full capacity. that is what GO has done - though at varying speeds; and he is clearly threatening to do the same thing again, when he suggests that if the outlook worsens - i.e. we are in danger or slipping in recession again - then he will need to cut expenditure. IOW, austerity is a pro-cyclical policy: offering less fiscal stimulus precisely when the economy is slowing.

at the same time, there are "automatic stabilizers" (i.e. social security spending automatically rises in a slowdown, and the tax take falls), which are anti-cyclical. GO's policy changes have weakened these stabilizers a bit, but they still exist.

a pro-cyclical policy is complete madness. it actually leads to higher public debt, because it traps the economy in a deeper slowdown. businesses won't start investing more while they know that households and the government are both holding down spending, and that other businesses also aren't investing (confidence is a recursive process). a longer or deeper slowdown keeps the tax take down, and social security spending up, so the deficit doesn't reduce as fast as it could. the opposite approach, increasing public spending in a downturn, can start turning confidence around sooner, getting businesses investing more, and households spending more, the tax take up, and social security spending down. well-directed spending - perhaps infrastructure investment - can easily pay for itself. the time to hold back public spending is when the economy is near full capacity, i.e. when we have full employment - otherwise, the danger is inflation - how far we are away from that now!

That is pseudo-intellectual sophistry, and madness.

grey_gym_sock wrote: »

history bears this out. GO said he'd wipe out the deficit in 5 years, and instead it's only down about 1/3 (bizarrely, he claims it halved); so he says he'll wipe it out in the next 5 years, using the same policies that failed the first time. genius (politically, it is genius: how can he get away with that?).

or look at the post-WWII period, when the debt ratio was over 200%, public spending was kept high (not quite as high as during the war) in order to found the welfare state, and by the 1970s, the ratio had fallen to under 50%.

this has more arguments on the same lines: https://static1.squarespace.com/static/541ff5f5e4b02b7c37f31ed6/t/547de54de4b01fa8516004ea/1417536845863/Spending+Away+Debt+-+Final.pdf

one possible area of confusion: some of the hotly debated cuts don't actually reduce public expenditure. e.g. the benefit cap, which operates as a cut in housing benefit, leads to families losing their homes (because they can't pay the rent), and the local authority is then obliged (because there are children) to house them in temporary accommodation (with likely serious damage to the children's life chances), which costs even more than the previous rent.

public investment is a better example of what GO has been cutting, when he should be increasing it.

i didn't predict it.

my point was that some people did. it wasn't a bolt from the blue, i.e. something nobody could possibly be expected to predict. this is quite good (from 2003): https://www.opendemocracy.net/globalization-americanpower/article_1463.jsp

Most people did not predict it, it was missed by the 'experts, bar a few, no wonder economics is called the dismal science. I cannot recall anyone calling time on Fred Goodwin's antics until it was too late, he was even knighted such was the esteem for him, and his madness.

grey_gym_sock wrote: »

but i wasn't reading the right things at the time.

it's worth noting that most economists didn't predict the crisis, because most of them follow the neo-classical school of economics, which fails to explain money or debt at all - i.e. it basically leaves them out, and says: let's pretend we all make goods and swap them via barter: the financial system is just a more efficient way to achieve the same thing as barter. which of course it isn't. there are other schools of economic thought which have useful things to say about the finance system, but unfortunately most economists are wedded to a school which, while it has its merits, is useless in that area.

Economics is a famously imprecise 'science', except it is not a science. It is said that if you put N economists in a room, you get N opposing economic views.

grey_gym_sock wrote: »

as it happens, i've always worked in the private sector.

but i didn't say quite what i meant to. employers are not trying to make all jobs low-paid, low-skill. the jobs market is becoming more polarized: there are high-skilled, high-paid jobs, in some areas (including software development, which i work in - so this is not a personal complaint), but the lowest-paid jobs are becoming less secure (the rise of zero-hours contracts) and even lower-paid, while many middling jobs are being eliminated.

Without doubt that is true. But it is also true that making jobs less secure can counter intuitively improve employment, as too many employment rights can make employers unwilling to hire, as a downturn would mean unaffordable obligations. That is a problem in France. These days even middle class jobs are often short lived, with people almost certain to be laid off at least once, and more often multiple times. I've been laid off numerous times.

I happen to think that some employee rights are too lax. But increasing all rights is not the answer. Just as taxing the rich more does not necessarily increase the tax take, things aint always simple.

grey_gym_sock wrote: »

yes, somebody needs to be prepared to train workers to get skill levels up. the government may need to push this a bit, e.g. offer to pay part of the cost of training (in areas with identified skills shortages) if employers pay the rest. at the same time, the government could be discouraging zero-hours contracts, and scrapping the fake "training" schemes where people do things like stacking shelves to keep their benefits. make it clear to employers that the government will help them if they go the "high skill, high wage" route, not if they go for "low skill, low wage".
answered above (and see the PDF i linked to). spending more now is the best way to get the debt down.

It was pseudo-inintellectual nonsense.

grey_gym_sock wrote: »

and you don't understand the nature of money. we have our own currency: that means the State can create as much money as it needs. money is never the limitation; real resources are the only limitation.

currently we have economic capacity - i.e. mainly un- and under-employed people - lying idle. if we put them to work, the UK will be richer. the way to do that is with higher (well-directed) public spending. it can pay for itself.

Sounds like more pseudo-inintellectual nonsense. I wonder if you hanker after a command economy?

racing_blue

Back to the original question. I got a spam email from HL today about 3 ISA investors who became millionaires

It's on their site:

https://www.hl.co.uk/free-guides/isa-millionaires

The basic gist seems to be start early, preferably in 1987, & keep at it.

BananaRepublic

grey_gym_sock wrote: »

this has more arguments on the same lines: https://static1.squarespace.com/static/541ff5f5e4b02b7c37f31ed6/t/547de54de4b01fa8516004ea/1417536845863/Spending+Away+Debt+-+Final.pdf

They seem to have agreed on a conclusion, and then martialled selective facts to 'prove' the conclusion, all very hand waving and completely unrigorous. They ignore so many issues, such as the dependency of the US on imports, and differences in the world economy between then and now. I am not an economist, but it seems very flimsy. I note that it was written in 2009, and at one point says the only way to increase employment is government spending. This was Labour's line too, the claim being made that cutting would put us in a worse state. In fact Osborne's approach has led to a dramatic drop in unemployment, so much for the claims of that report, and Labour.

Osborne's failure to bring the deficit down as quickly as wanted this year is nothing to do with an agenda, and everything to do with the slowdown in China. As you know, that country has a huge problem with debt, due to the government stimulating growth, and the government is trying to deflate the debt bubble gradually.

Glen_Clark

grey_gym_sock wrote: »

lower rents would reduce GDP.

but the building more houses directly adds to GDP

Yes but that would be a genuine increase in GDP, not a fake increase in GDP like Osborne's Socialism for Landlords housing market interventions to push up rents of existing properties, vastly boosting the wealth of the landed aristocracy at her expense of the productive side of the economy - and vastly increasing the National Debt.

Glen_Clark

BananaRepublic wrote: »

You are propagating a left wing con trick, namely the use of the term 'austerity'. We are not going through anything that approximates 'austerity'.

Who is we? I've just been watching 'Can't Pay? We'll take it away on TV. The baliffs have never been busier, last one showed a 60 year old mechanic who had worked all his life, van no longer work due to a brain tumour. He was being evicted on to the street alone because his housing benefit didn't cover the rent on his tiny 2 bedroom terraced house.
You also seem obsessed with 'left wing' and 'right wing' principles but its moved on from there. Osborne's Obsesive Housing market interventions are more left wing than right wing, its just that his form of Socialism most benefits the inherited wealth of the landed aristocracy.

Glen_Clark

BananaRepublic wrote: »

I quite agree. While many dislike the private sector, the market is an effective mechanism to remove companies that are inefficient. I have experience of working in the private sector on defence contracts, where the problems are that the government selects the company with the sharp suited salesmen making promises they cannot keep, and once the contract is agreed, the government makes continual changes, driving up costs. That is why so many big IT contracts fail. I know Glen is obsessed with knocking the Tories, especially Osborne, and never Labour, but Labour had huge problems in this area. The truth is all governments have screwed up with big contracts. Part of the problem is the civil service not being up to the job in this area.

Still obssesed with left and right wing, but its competition that makes for efficiency. Unfortunately it isn't always practical to introduce competition.
I've seen efficiency and inefficiency in both the private and public sector. A private monopoly is worse than a state monopoly.
Privatising the railways didn't make them more efficient did it? Even Norman Tebbit realised that wouldn't work.