Maybe the headline should be: "Why Doing Nothing But Saving is for Suckers"
Why Saving is for Suckers
11–20 of 43 posts
Re: Why Saving is for Suckers
#12The headline seems a bit misleading - it seems to be in favor of spending all of your money as soon as you get it - the article's actual point, that it is better to put your investments in places that do better than 1% per year, is quite valid.
Re: Why Saving is for Suckers
#13I agree with the math in the article as well as the fact that interest paid on liquid accounts is rather low. The author suggests that higher interest can be returned by investing in a domestic stock index. The author ignores one very important concept faced by individuals: risk. It would be just plain stupid for most people to keep an emergency fund in the stock market. At the same time, it would also be stupid for…
Right. Putting all your eggs in one basket is for suckers. Keep some of your eggs in the fridge. They won't hatch many chickens, but they're unlikely to get eaten by foxes, either. Nothing to see here. Move along.
That's not what the article says. It says you have to deliberately move your eggs around according to the business cycle.
A pure cash investing strategy (money market, CD, T-Bill/Bond) now has a track record as good as the US stock market over 30 year periods. Except the much lower volatility of cash makes it superior.
Plowing money into stock indexes is for suckers. To get any decent returns one is forced to analyze macro economic conditions and allocate accordingly between cash, equities, and inflation/currency hedges. The article makes this point in different words.
Re: Why Saving is for Suckers
#14Right, because the SUCKERS like me who spend far less than they earn and keep their money in a savings account with the highest interest rate they can find (at essentially NO risk) were hurt so badly last time the economy crashed. Right?
Which is better, to live wealthy with high risk or to live poorly with little risk? Sure you can make out good when the economy crashes (which is rare) but in the meantime (while things are good) those taking high risks are sure enjoying themselves. Remember; it's just money, you can always make more, try to enjoy yourself a little bit while you have it and don't wall yourself off from the world just to keep what little (or a lot) you may have.
Re: Why Saving is for Suckers
#15Right, because the SUCKERS like me who spend far less than they earn and keep their money in a savings account with the highest interest rate they can find (at essentially NO risk) were hurt so badly last time the economy crashed. Right?
I agree with your sentiment. I also keep quite a bit of money in cash, but these days I'm keeping less so since it seems likely we'll have high inflation in our future, given how much money is being printed. I've moved most of it to gold or silver.
Re: Why Saving is for Suckers
#16Right, because the SUCKERS like me who spend far less than they earn and keep their money in a savings account with the highest interest rate they can find (at essentially NO risk) were hurt so badly last time the economy crashed. Right?
Exactly. ING Direct has an ad that shows up when you log in that says, "There's no such thing as saver's remorse." So true. If you decide you are not happy with your return on investment of a savings account, you can always move the money somewhere else. Once you've lost all your money buying whatever security Mad Money tells you to buy, you aren't getting it back.
Personally, I have done well with a S&P500 index fund. But I still like to have a big chunk of money immediately available, so if I need the money I can get at it without worrying that today is a "down day".
(People will argue that this is a waste, because inflation outpaces whatever you earn from interest, but this is not entirely true. Other people will enter into similar "money-losing" agreements with me; my rent will cost the same number of dollars every month for 2 years. So while I'm technically losing money, I still have the ability to pay for the same stuff. Compared to actually losing money by buying into whatever fad is popular today, I prefer this one...)
Re: Why Saving is for Suckers
#17Right, because the SUCKERS like me who spend far less than they earn and keep their money in a savings account with the highest interest rate they can find (at essentially NO risk) were hurt so badly last time the economy crashed. Right?
I agree with your sentiment. I also keep quite a bit of money in cash, but these days I'm keeping less so since it seems likely we'll have high inflation in our future, given how much money is being printed. I've moved most of it to gold or silver.
Gold seems to continue to drop in price, even as we print paper money. It's possible that debt is more valuable than yellow-colored metal coins. (Gold does not have a lot more intrinsic value than anything else. If the economy collapses, will people be willing to buy your chunks of metal? Why?)
Re: Why Saving is for Suckers
#18author of article is kind of an idiot. you too can buy us bonds (the 4% he refers to) you just are locked in for 30 years. banks give you less yield because you can get your money out quickly. what he should say is that the us govt programs to support the market are really used to prop up bank earnings through the yield curve instead of a direct recapitalization. an individuals choice not to save does nothing to "scr…
What's worse is that point--that banks profit off spreads--doesn't actually do harm to consumers. It's the long-term lending, short-term borrowing structure of banks that enables them to offer higher interest rates than the market short-term interest rates. That's how banks came about: people got higher interest by pooling their money with money-lenders than they did lending money themselves. Both the consumers and t…
banks traditionally borrow short to lend long. that is how profit and loss capability is generated. that is the s&l proverbial plan. its built into the design and is not a flaw. the problem is expecting the taxpayers to bail the players out when things do not go according to plan and the banks turn out to stink at their jobs.
Re: Why Saving is for Suckers
#19It's not saving that is for suckers, it's savings accounts.
This is link bait. You have to get to the second page to find out he recommends investing in the stock market when savings accounts and stocks are two entirely different things and have much different risk/reward ratios and he doesn't explain the difference.
Re: Why Saving is for Suckers
#20Earlier quoted context omitted.
I agree with your sentiment. I also keep quite a bit of money in cash, but these days I'm keeping less so since it seems likely we'll have high inflation in our future, given how much money is being printed. I've moved most of it to gold or silver.
Gold seems to continue to drop in price, even as we print paper money. It's possible that debt is more valuable than yellow-colored metal coins. (Gold does not have a lot more intrinsic value than anything else. If the economy collapses, will people be willing to buy your chunks of metal? Why?)
> Gold seems to continue to drop in price
Huh? Gold (and commodity metals in general) has been the trade of the decade.
> Gold does not have a lot more intrinsic value than anything else.
You can go any time in history any where in the world and buy a decent suit with an ounce of gold. Gold has always preserved wealth in the long run. Not true of any other asset class. Everybody should be at least a few percent in gold. It's cheap catastrophe insurance.