{"id":28318,"date":"2021-07-15T07:01:34","date_gmt":"2021-07-15T07:01:34","guid":{"rendered":"https:\/\/adamfayed.com\/?p=28318"},"modified":"2023-11-27T08:02:15","modified_gmt":"2023-11-27T08:02:15","slug":"can-you-still-get-rich-or-wealthy-investing","status":"publish","type":"post","link":"https:\/\/adamfayed.com\/es\/expats\/can-you-still-get-rich-or-wealthy-investing\/","title":{"rendered":"Can you STILL get rich or wealthy investing?"},"content":{"rendered":"

One of my most viewed articles is investing vs speculation – how you can get rich investing. <\/a> It argues why it is possible to become wealthy slowly on a middle-income via investing.<\/p>\n\n\n\n

Many people understand this point and the past returns of the stock markets as shown by these returns:<\/p>\n\n\n\n

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Source, Business Insider<\/figcaption><\/figure>\n\n\n\n

Yet one of the main questions I get asked is \u201cstock markets have historically performed really well. I know nobody can predict the future for sure, but do you think markets will do so well in the future?\u201d. <\/p>\n\n\n\n

In this article, I will look at some of the reasons why asset prices could exceed historical norms and other reasons why they might not.<\/p>\n\n\n\n

Reasons for <\/strong><\/h4>\n\n\n\n

1.  Interest rates\/QE <\/strong><\/p>\n\n\n\n

We have to remember that we are living in unique times.  Interest rates are at 0%, or close to zero, in most parts of the world. <\/p>\n\n\n\n

Bonds aren\u2019t paying much better.  As Warren Buffett recently said on the video below, stocks look cheap now, because interest rates to stock markets are like oxygen or blood is to the human body.<\/p>\n\n\n\n

\nhttps:\/\/www.youtube.com\/watch?v=Pa2KjuRbjaM\n<\/div><\/figure>\n\n\n\n

When big companies can borrow money at close to 0%, and invest for growth, that is very good for the markets, as is the lack of any real alternative apart from maybe real estate which is a hassle.<\/p>\n\n\n\n

In comparison, when interest rates are super high, fixed income becomes more attractive relative to stock markets. <\/p>\n\n\n\n

For example, in 1999\/2000, interest rates were 3%-5% in many developed countries, and government bonds paid up to 6%. <\/p>\n\n\n\n

When there was an easy and \u201csafe\u201d alternative, people were more likely to take some money off the table.<\/p>\n\n\n\n

Of course, interest rates won\u2019t remain at 0% forever, although they are looking like they will in Japan and some parts of Europe. <\/p>\n\n\n\n

Yet the days of high-interest rates seem a long way off. We haven’t been there for at least 13 years already.  Another 13 years or more of near 0% interest rates doesn\u2019t seem so unlikely now. <\/p>\n\n\n\n

Quantitative easing (QE), which is often mistaken for money printing, is also more likely to result in asset price inflation (stocks in particular), rather than general inflation, as the video below explains.<\/p>\n\n\n\n

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