This question feels overly broad. Im also unsure it can be easily salvaged.

@Loki Well, the question itself is of course only referring to getting rich via investing in index funds. So it's not that broad.

I get your point. But even then. I could talk about the fact that certain people are uninformed. About what would happen if everyone tried to use stocks this way. About how certain people prefer an immediate pleasure rather than to play the long game. About how certain countries block such interaction. Etc Etc. Its a very very big topic. Still, If I misunderstood your actual question. Excuse me.

you're missing that people are people. Most don't want to wait for returns, they'd rather get/attempt instant gratification/success (lottery, casino, etc). Also, some people live paycheck to paycheck and can't invest heavily into index funds or savings

@Loki Your comment is the start of a good answer.

Why isn't everybody rich? That's a naive question that assumes that "everybody" has enough discretionary income to start investing early and that tkose contributions are enough to add up to something.

the sentence "basically always has great returns in the long run" is whacky. Multiplying you rmoney by (say) 5x or 10x (and that over the course of >decades<) is simply nothing. It's just literally not worth bothering. When businesspeople speak about "good returns", they mean they invested $20,000 in a restaurant and cashed out for $2m a few years later. (That would be worth doing, and makes you a little more than very simply having "a decent job" for the same few years.) The error of scale when people talk about "good returns" in markets is incredibly silly.

@depperm: You miss that investing alone does not make rich. At least not early enough to not be too crippled to enjoy the money. If you're not a complete sadist who enjoys himself not being able to enjoy all the money until shortly before death, you're better of building your own business - because without business, there won't be any big money. That's not to say: Investments are a great tool to conserve money, but not to build it - at least on average. But hey: Believing this Get-Rich-With-Stocks-Hype makes for a good book market.

@Fattie: This is the difference between passive and active investment and also there is a considerably bigger risk involved in the kind of investments you are talking about.

Because rich means having more than most others

"Rich" and "poor" are relative. Some people define the poor as those earning x amount under the average. So this group is not going to get smaller. Similarly how do you define rich? I think I am very well off - compared to my grandparents. But I could not e.g. buy a private aircraft and a house and a Van Gogh. In Antibes there are huge yachts moored in the harbour; their owners must be rich. But each of them can look out to sea and see the yachts which are too big to get in the harbour. Do they think they are rich?

Also, investing has not always been as easily accessible as it is now. 40 years ago you simply did not have easy access to information. Stock prices was something you found in the paper, lagging 1 day behind at best. You didn't just log on to your online bank and wired some money to your trading account.

It's also self-regulating I imagine. Would you rather have $1000 tomorrow or $10 today? Would you rather have $11 in 10 years, or $10 today? For most the answer is quite obvious, but there are a range of values in-between and some midpoint will form where some will invest and others will not. 7% returns means you can 10x your money... if you're willing to wait a lifetime (35 years).

1) "#$%! happens" ... Invested $50K in a tech fund in Feb 2000? You lost it. Bought real estate in 2006? You lost it. W/zero debt & after ~20yrs of saving/investments since age 18, I'm nowhere near retiring thanks in part to bubbles & recessions. 2) Investing requires disposable income. Millions of working or geographic "poor" spend ALL of their income on rent, bills & food. 90% of Americans have < $5K saved. Wages stagnated for 40yrs while costs skyrocketed. Investing isn't an option. 3) Time + piddly interest rates. 0-2% for the past decade! Yrs of losses take yrs to recover.

@Fattie: Nope. Your typical retail shop has a yearly dividend of 2% tops. Same for other "old economy" business. Dividends of 5%+ sustained over decades are only possible with monopolies (e.g. Microsoft).

@mc01: Nope. Invest $50K in a well-diversified tech fund in 2000? If you had the sense not to sell when the market dropped, it's worth more today. Bought an affordable house in '06? It's almost certainly worth more today, and you got to live in it for the last dozen years :-)

@jamessqf - Clearly a whole lot of people lost a lot of money and homes and investment value as I said. The question is "why isn't everybody rich [from investing]" not "why are a handful of people rich." If you bought into a "tech fund" (which by definition is not diversified) in early 2000, it most likely took years to recoup losses from the bubble collapse. An "affordable" house bought in '06 might've recovered its value by now, but depending on circumstances chances are good that in the meantime the owner sold at a loss to get out from under the debt, or wiped out other savings.

Not an answer, but... not everybody wants to be rich. I don't want to bother myself with investing or stuff like that - I'd rather do what I enjoy instead.

Reminds me of the joke: "How do you make a small fortune in the stock market? First, start with a large fortune..."

@phresnel: Re "enjoying the money", there are a great many enjoyable things that are inexpensive, sometimes free. So many, in fact, that I really don't have time to do many of the more expensive things, which are usually less enjoyable, anyway.

If everyone was "rich" would anyone really be "rich" then?

Voting to close because this belongs to [macro]economics and not perfi. Most perfi users will be in best case acquianted with microeconomics, and the whole discusion will be void.

Because they have enough money for cigarettes but not for investing.

@mc01 read the question again, it asks if "that investing in the stock market, especially an index fund that tracks the top 100 / 500 companies in a country, basically always has great returns in the long run."

Your scenario's are undiversified, short term, and in the case of the house, using heavy margin. So yes, if you follow bad investment practices then you can lose money - but that wasn't what was being questioned.

Accepted answer is objectively false. Not everyone can be rich because by definition, it would require everyone to be far above average. There's no "behavior" that would allow all people to be above the arithmetic mean wealth. Absurd.