Since I've seen a lot of very young users here lately I wanted to share some uncomfortable facts so no one invests with false hopes.
Investing will not make you rich. (statistically speaking)
I mean rich here not in the spiritual sense like your yoga teacher. But the top 0.1% of the wealth pyramid are meant. Now some will surely say, 0.1% is already very far up, to get into the top 1% is enough for them. Well that is naturally simpler, but who connects with wealth a paid off house and some hundred thousand in fixed assets? Just nobody.
Wealth is represented to the public by opulent estates, expensive cars, yachts and private flights. The top 1% starts at about €1.3 million. For the 0.1% it needs already 4-5 million € and upward. Now I could calculate why you can't / shouldn't own a Lambo, a 20m yacht and a plane with these assets. But like most people on Insta you could rent / charter these things. So where is the problem now?
Well I guess you don't want to wait 40+ years. If you have 10k starting capital at 18 and invest 1k per month as a savings rate with 7% pa it will take >27 years to 1m and >45 years to 4m and then the tax office will come and deduct your taxes for the sale. Surely you could "simply" save more or have more initial capital. The question is how realistic is that on average? Exactly, not really realistic. Individuals will make it, of course, but not everyone. This has not only to do with how hard you try but also who you are and where you come from. Of the 1.5% of the population with assets >€1 million, only 6% live in eastern Germany, 14% have a migration background and 31% are women. At 73%, the majority of working millionaires are self-employed.
It could be countered that low wealth and low income / savings rate can be compensated by higher risk, as this would allow for higher returns. Of course, a 2010 investment in Bitcoin can bring you huge profits with little investment in a relatively short time. Doge or Shiba would be further (terrible) examples. But you also have to ask yourself at what point does investing stop and where does gambling begin. With a lottery ticket you can also make a huge profit in a short time, does that make it an investment? No.
What is now my message, investing is stupid, head in the sand and bang out all the money? Not at all, it is more about having realistic expectations. Because if you start with wrong expectations and at some point you realize that Lambos and yachts are not going to work out, you will stop your savings plan instead of going through with it.
If you constantly pursue realistic goals, you might end up achieving more than you thought at the beginning, even if it's "just" a few more years of retirement.
For those who are not yet in the working world I have attached a video preview. Maybe just retiring earlier is a bit more attractive then.
https://www.youtube.com/watch?v=NJW_av0PQXM
Source of the wealth data: https://www.diw.de/sixcms/detail.php?id=diw_01.c.793802.de
