How does Big Money work? (i.e. stocks, Enron, net worth)
1)  You ignore dividends. You can hold your 10 million shares and never sell them and still get cash to live on if the security pays dividends. McDonalds stock pays 3% in dividends (a year). If you owned 10 million shares of McDonalds you would get 75,000 every three months. I am sure you could live on 25,000 a month.  2)  Enron was an energy company. They sold energy and made a profit (or rather were supposed to). Enron didn't make their money by selling stock. McDonalds makes their money by selling hamburgers (and other food). The income of a company comes from their customers, not from selling stock.  3)  IF you sold all of your 10 million shares within a short time frame it, likely, would drive the price of the stock down. But you do not need a billion dollars to live on. If you sold 1000 shares each month you would have plenty for buying cars and pizza. Selling 1000 shares may drive the price of the stock down for a minute or two. But the rest of the transactions, for that security made the same day, would quickly obscure the effect you had on the stock.  4)  When you buy stock your money does not (usualy) go to the company. If I were to buy 100 shares of McDonalds, McDonalds would not get $11670.That money is (usually) paid to a 'Market Maker' who, in turn, will use the cash to buy MCD from other individual shareholders (presumably for less than 116.70 a share).
"Stocks are regarded as an inflation hedge because when your money is worth less, everything else is worth more. i.e. Stocks are more expensive (go up) simply because your money is worth less, but not because of better earnings across individual companies. So that general idea can effect sentiment, whereby if everyone believes it then more people buy stocks if they think there will be a lot of inflation. But it doesn't explain actual behavior (whether ""more"" people buy, hold or sell.) It's worth noting that individual companies and stocks also may be adversely affected by inflation, since their own assets or accounting may already be outside of the currency and/or they may already be engaging in their own hedging." The Japanese stock market offers a wide selection of popular ETFs tracking the various indices and sub-indices of the Tokyo Stock Exchange.  See this page from the Japan Exchange Group site for a detailed listing of the ETFs being offered on the Tokyo exchange. As you have suggested, one would expect that Japanese investors would be reluctant to track the local market indices because of the relatively poor performance of the Japanese markets over the last couple of decades.  However, this does not appear to be the case.  In fact, there seems to be a heavy bias towards Tokyo indices as measured by the NAV/Market Cap of listed ETFs.  The main Tokyo indices - the broad TOPIX and the large cap Nikkei - dominate investor choice. The big five ETFs tracking the Nikkei 225 have a total net asset value of 8.5Trillion Yen (72Billion USD), while the big four ETFs tracking the TOPIX have a total net asset value of 8.0Trillion Yen (68Billion USD).  Compare this to the small net asset values of those Tokyo listed ETFs tracking the S&P500 or the EURO STOXX 50.  For example, the largest S&P500 tracker is the Nikko Asset Management S&P500 ETF with net asset value of just 67Million USD and almost zero liquidity.  If I remember my stereotypes correctly, it is the Japanese housewife that controls the household budget and investment decisions, and the Japanese housewife is famously conservative and patriotic with their investment choices.  Japanese government bonds have yielded next to nothing for as long as I can remember, yet they remain the first choice amongst housewives.  The 1.3% yield on a Nikkei 225 ETF looks positively generous by comparison and so will carry some temptations. Is my financial status OK? If not, how can I improve it? I'm going to concentrate on this question, particularly the first half.   Net income $4500 per month (I'm taking this to be after taxes; correct me if wrong).  Rent is $1600 and other expenses are up to $800.  So let's call that $2500.  That leaves you $2000 a month, which is $24,000 a year.   You can contribute up to $18,000 a year to a 401k and if you want to maintain your income in retirement, you probably should.  The average social security payment now is under $1200.  You have an above average income but not a maximum income.  So let's set that at $1500.  You need an additional income stream of $900 a month in retirement plus enough to cover taxes.  Another $5500 for an IRA (probably a Roth).  That's $23,500.  That leaves you $500 a year of reliable savings for other purposes.  Another $5500 for an IRA (probably a Roth).  That's $23,500.  That leaves you $500 a year of reliable savings for other purposes.   You are basically even.  Your income is just about what you need to cover expenses and retirement.  You could cover a monthly mortgage payment of $1600 and have a $100,000 down payment.  That probably gets you around a $350,000 house, although check property taxes.  They have to come out of the $1600 a month.  That doesn't seem like a lot for a Bay area house even if it would buy a mansion in rural Mississippi.  Perhaps think condo instead.   Try to keep at least $15,000 to $27,000 as emergency savings.  If you lose your job or get stuck with a required expense (e.g. a major house repair), you'll need that money.   You don't have enough income to support a car unless it saves you money somewhere.  $500 a year is probably not going to cover insurance, parking, gas, and maintenance.   It's possible that you could tighten up your expenses, but in my experience, people are more likely to underestimate their expenses than overestimate.  That's why I'm saying $2500 (a little above the high end) rather than $2000 (your low end estimate).  If things are stable, wait a year and evaluate.  Track your actual spending.  Ask yourself if you made any large purchases.  Your budget should include an appliance (TV, refrigerator, washer/dryer, etc.) a year.  If you're not paying for that now (included in rent?), then you need to allow for it in your ownership budget.   I do not consider an ESPP to be a reliable investment vehicle.  Consider the Enron possibility.  You wake up one day and find out that there is no actual money.  Your stock is now worthless.  A diversified portfolio can survive this.  If you lose your job and your investment, you'll be stuck with just your savings.  Hopefully you didn't just tie them up in a house that you might have to sell to take your next job in a different location.  An ESPP might work as savings for the house.  If something goes wrong, don't buy the house.  But it's not retirement or emergency savings.   I would say that you are OK but could be better.  Get your retirement savings started.  That does two things.  One, it gives you money for retirement.  Two, it keeps you from having extra money now when it is easy to develop expensive habits.  An abrupt drop from $4500 in spending to $1200 will hurt.  A smooth transition from $2500 to $2500 is what you would like to see.  You are behind now, but you have the opportunity to catch up for a few years.   Work out how much you'll get from Social Security and how much you need to cover your typical expenses with the occasional emergency.  Expect high health care costs in retirement.  Medicare covers a lot but not everything, and health care is only getting more expensive.  Don't forget to assume higher taxes in the future to help cover that expense and the existing debt.  After a few years of catch up contributions, work out your long term plan assuming a reasonable real (after inflation) rate of return.  If you can reduce the $23,500 in retirement contributions then, that's OK.  But be pessimistic.  Most people overestimate good things and underestimate bad things.  It's much better to have extra than not enough.   A 401k comes with an administrator and your choice of mutual funds.  Try for diversification.  Some money in bonds (25% to 30%).  The remainder in stocks.  Look for index funds.  Try for a mix of value and growth, as they'll do better at different times.  As you approach retirement, you can convert some of that into shorter term, lower yield investments.  The rough rule of thumb is to have two to five years of withdrawals in short term investments like money market funds.  But that's more than twenty years off.   You have more choices with an IRA.  In particular, you can choose your own administrator.  But I'd keep the same stock/bond mix and stick to index funds if you're not interested in researching the more complex options.  You may want to invest your IRA in a growth fund and your 401k in value funds and bonds.  Then balance the stock/bond mix across both.   When you invest each year, look at the underrepresented funds and add the most to them.  So if bonds had a bad year and didn't keep pace, invest in bonds.  They're probably cheap.  You don't want to rebalance frequently, but once a year might be a good pace.  That's about how often you should invest in an IRA, so that can be a good time.   I'll let the others answer on the financial advisor part. I am a believer in that theory. My opinion is that over the long term, we can expect 25% of income to reflect the payment on one's mortgage, and if you drew a line over time reflecting the mortgage this represents plus the downpayment, you'd be very close to a median home price. The bubble that occurred was real, but not as dramatic as Schiller's chart implies. $1000 will support a $124K 30yr mortgage, but $209K at 4%. This is with no hype, and exact same supply/demand pressures.  The market cap of all US companies adds to about $18T. The total wealth in the US, about $60T. Of course US stocks aren't just held by US citizens, it's a big world.  Let me suggest two things - the world is poor in comparison to much of the US. A $100,000 net worth puts you in the top 8% in the world. The implication of this is that as the poorer 90% work their way up from poverty, money will seek investments, and there's room for growth.  Even if you looked at a closed system, the US only, the limit, absent bubbles, would be one that would have to put a cap on productivity. In today's dollars we produce more than we did years ago, and less than we will in the future. We invent new things faster than the old ones are obsoleted. So any prognostication that our $18T market can grow to say, $30T, does not need to discuss P/Es or bubbles, but rather the creation of new products and businesses that will increase the total market.  To summarize -  Population growth (not really discussed), Productivity, and long term reduced Poverty will all keep that boundary to be a growing number.  That said, this question may be economic, and not PF, in which case my analysis is bound for the Off-Topic barrel. Fascinating question. If this happened, first you would be breaking the law for driving without insurance. Second, my uninsured motorists insurance would cover it.   Third, your personal net worth is not zero. You are the owner of all those corporations which happen to own those assets. I could sue you and you would have to liquidate your stakes in those corporations. Your example is just saying someone doesn't have any assets if all their cash is tied up in stocks (equity ownership of corporations). If you're argument held true in court, no one could sue anyone successfully, because everyone would just put all their money in equities before a lawsuit. Big money, by vitue of its own existence, produces value.  What's a person to do with it? Stuff it under a mattress and earn 0 yield? No.  If you want safety, you'll put it in AAA rated US gov't bonds and help fund the government. If you want yield, you'll put it in broadly diversified equities investments, small companies, big companies, energy companies, tech companies, media companies, and so on, and soak up the net gain while injecting much needed capital investment directly into those industries, financing start up costs like construction and equipment procurement costs, as well as staffing costs.  Yes, big money absolutely creates value. The trains, cars, roads, and sidewalks you travel through to get to work? All financed by filthy rich people money. The building you work in and the equipment you use? Likely financed by filthy rich people money as well.  Its called financial intermediation and capital arbitrage, and you can thank your Gods you live in a country where the government allows it to operate efficiently. crank out expensive shares when markets are frothy Corporations go public (sell their shares for the first time) in market conditions that have a lot of liquidity (a lot of people buying shares) and when they have to make the fewest concessions to appease an investing public. When people are greedy and looking to make money without using too much due diligence. Think Netscape's IPO in 1995 or Snapchat's IPO in 2017. They also issue more shares after already being public in similar circumstances. Think Tesla's 1 billion dollar dilution in 2017. Dilution results in the 1 share owning less of the company. So in a less euphoric investing environment, share prices go down in response to dilution. See Viggle's stock for an example, if you can find a chart. issue debt Non-financial companies create bonds and sell bonds. Why is that surprising to you? Cash is cash. This is called corporate bonds or corporate debt. You can buy Apple bonds right now if you want from the same brokers that let you buy stocks. mutual fund investor Bernstein is making a cynical assessment of the markets which carries a lot of truth. Dumping shares on your mom's 401k is a running gag amongst some financial professionals. Basically mutual fund investors are typically the least well researched or most gullible market participants to sell to, influenced by brand name more than company fundamentals, who will balk at the concept of reading a prospectus. Financial professionals and CFOs have more information than their investors and can gain extended advantages because of this. Just take the emotions out of it and make objective assessments. To avoid having it become overly complicated, I suggest it be run as would a mutual fund. Mutual funds transact each evening to set a price. Transactions for purchases or sales are done at that price each evening.  Initially, you have a dollar amount invested for each person. You can calculate the percent of the 'fund' each has, and, assuming the total is under $10K, 7 digits after the decimal accuracy is enough to track each share to the 1/10 cent.  When new money is added, that night, you calculate the exact value of investments, and add the new funds, so each person now has a smaller share of the larger fund.  If you wish, you can normalize this to 'share value' so my initial investment of $1000 is 100 shares regardless of the total amount invested. Then when new money comes in, the 'shares' increase as well. This may feel better as a declining percent may just seem awkward, even though that's the case.