Why aren't we all getting rich from compound interest?

Just let your wealth compound over time and you'll be a millionaire, the advice goes. If this is true why aren't more people rich?

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Performed by Gary Stevenson
@garyseconomics

[shumlanguage]

my mentor used to say "compound interest is great, but the first 200 years are the hardest."

[mattygiggity]

You can tell Gary is rich because he puts his biscuits on a plate

[tonysilke]

The high inflation is a significant reason why most retirees have sleepless nights. The increase in prices of everyday items puts them at risk of running out of money. As prices rise, the amount of money retirees can withdraw from their retirement savings also increases.

[ChristopherY]

Back in 2007, during my time working in real estate, I witnessed people purchasing newly built homes from builders with the plan to sell them before the closing of escrow to another buyer for a profit. The crash hit hard and fast, and I vividly recall many of these units ending up foreclosed upon, with the builder's plastic still covering the carpets

[ImBenWaterman]

Love this. I bought my house for $167k 3 years ago & today it's worth about $200k. Great return on paper, but in reality if I were to try and use that gained equity to get a nicer place it wouldn't help much because the prices of all the other houses have gone up too. All it means for me is higher property taxes since it's valued more.. Meanwhile private equity is eating up all the single family homes around me boosting the prices higher & higher.

[cdcgb]

I've always had the itching thought when people talk about house prices going up = good that is: if you only own one house, why are you happy the price is going up? Unless you own 3, 4, 5+ houses you won't ever see the return on the investment as it's not really an investment, it's the place you live! If you bought it for 80k and it's worth 400k now who cares, you still only own one property and you'll always need somewhere to live!

[wayneb]

This is so important, some people think we live in a meritocracy but people can work hard their whole lives and save, be productive, building things that grow the economy etc and still end their lives close to 0. While people born into a rich family just accumulate wealth through their investments. Compound interest is the reason people starting at 0 can't compete with people starting at 1 million. It's not just that they have catching up to do, but that every second the gap is increasing.

[RaRodz]

The goal is not to be rich, the goal is to be free

[andreww]

Independently wealthy - early retired - ex-NY banker here. I now buy multifamily real estate. I understand the dynamics Gary mentions here very, very well. When he says the rich are not evil, but do what they do as a necessary outcome of the system design he is 100% correct. Gary is unique in few powerful ways. First is that he is practical and grounded and this makes his economic analysis very clear. Second is that he is brave and angry - this makes his message especially important. The doors are currently closing for many, but I believe Gary can offer one of the few legitimate ways out. I think he warrants your close attention.

[PerryByford]

I’m really glad you’ve been making the rounds on a bunch of other channels. I feel like you’ve really helped to get inequality into the minds of so many more people. This could just be me in my echo chamber but I genuinely think the narrative is starting to shift for the better.

[Fåreøen]

This is such a class argument. As an American we never think this way. We all think we can and will be rich.

[khj]

The silent killer is inflation. Every year 2-3% of your hard earned money disappears into the ether.

[IELTS-Speaking]

Gary's so good, he even compounds his tea mugs

[hdnft]

Hey Gary,
You're articulating something that most people have been feeling but cannot put into words. Consequently, we get sidetracked into blaming and complaining about other issues that do not reflect the actual predicament we are in, causing us to stay divided instead of finding common grounds. Whether you know it or not, you're shifting the consciousness of people with your work. Many thanks for the education.

[PremSteve-ygde]

Diversification is the secret to optimal performance. This is why I have my interests set on market sectors based on performance and projected growth, such as stock, EV sector, renewable energy, Tech, and Health. Keep investing regularly and you'll be blown away how much it can change in a few short years. Here's to $1 million and to FIRE

[mattcrvg]

So, so grateful I clicked on this video at 2 AM in the morning here in Brazil. I could listen to you talking for hours, your points made me think of economic classes and books I've read, think about how we struggle every day, how the news are a shitshow.

Sometimes knowledge is a curse, but it is better to know than to don't.

[AndresCarlos-vwem]

Moving from single stocks to ETFs, tired of the circus. Thoughts on your best possible strategies to hedge a 6-figure portfolio from dwindling please?

[photonthief]

Mum! The new Gary's Economics just dropped!

[Mariateo]

Thanks for the perfect update. Your videos have been great!! I am one of your viewers and have been watching your videos lately. I would like to invest but I still can't seem to find the right investment to commit to. How do I properly invest in the market and what strategies do I employ to make significant gains and stable cashflow?

[StuartRochabrunt]

Because this method only works if you have a significant amount of money you don't need, ready to be invested over and over, and besides, you also have your life's expenditures paid with another cash flow that will never stop. Long story short: Only those who are already rich can take advantage of the compound interest and get richer.