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62% of Americans Have Under $1,000 in Savings, Survey Finds

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Re: 62% of Americans Have Under $1,000 in Savings, Survey Finds

#151

Post by Laaw »

fancyketchup wrote: post #138
Laaw wrote: post #54

Earlier quoted context omitted.

You're the second person to say this, but how would "cash in savings" be equally worthless? Maybe I'm not understanding, but it's pretty difficult to actually lose money in a savings account, that's the whole point.

Because the set of events that could "wipe away" your (reasonably-intelligently diversified) assets has a large intersection with the set of events that could "wipe away" your saving account in a bank. Things like nuclear war, global pandemic, etc. Yes, the FDIC does insure savings accounts, but that's only useful so long as the FDIC exists.

I don't agree! I think much worse things would have to happen to dissolve the FDIC than would have to happen to lose a significant portion of your investments in the bond/stock/real estate markets.

Re: 62% of Americans Have Under $1,000 in Savings, Survey Finds

#152

Post by ghaff »

brianwawok wrote: post #89
ryandrake wrote: post #69

Earlier quoted context omitted.

Curious, not criticizing: What is your plan if you get sick or laid off, or for some other reason need a large amount of cash immediately? I always thought it was common advice to keep ~6mo living expenses in cash savings for emergencies.

6 months is usually far too long to keep in direct cash / savings. I think 2-3 months direct cash/savings/checking is fine, then move excess cash to CDs or something semi-liquid. You totally CAN get money out of CDs, just sometimes lose your interest. If you have some kind of CD ladder or such going on - you can have a new CD coming out every 1-3 months anyway, which will give you the cushion you need after savings r…

Although pretty much all essentially risk-free investments these days have interest rates so low, you're getting into fine-tuned optimization territory for most people. It's fair that if you have a big wad of cash that you really want to protect from capital losses, it's probably worth putting it in something other than cash. But the gains are minimal.

Re: 62% of Americans Have Under $1,000 in Savings, Survey Finds

#153

Post by throwaway342526 »

ryandrake wrote: post #69
tootie wrote: post #34

Earlier quoted context omitted.

My net worth is probably top 5% or so and I haven't even had an open savings account in 10 years. Cash on hand or it's invested in stocks, bonds and my home.

Curious, not criticizing: What is your plan if you get sick or laid off, or for some other reason need a large amount of cash immediately? I always thought it was common advice to keep ~6mo living expenses in cash savings for emergencies.

The typical advice is ~6mo in liquid assets. Not cash.

Stock is considered a liquid asset.

Re: 62% of Americans Have Under $1,000 in Savings, Survey Finds

#154

Post by exhilaration »

sleazebreeze wrote: post #71
eimai134 wrote: post #13

I'll bet a lot of people have money elsewhere. However, I have a lot of friends who are poor (by that I mean that they qualify for food stamps), and it's amazing to see the way they spend money. When I was poor I bought the very cheapest shampoo ($1) and bought generic everything. The poor people I know now buy name-brand products and buy a ton of Christmas and birthday presents. My husband and I have savings but we…

My partner's family lives in government subsidized housing and they get the full array of benefits including disability and food stamps. His mother buys new luxury items like purses from Coach regularly with cash from under the table jobs. They have more TVs, newer smartphones and iPads and lots of other expensive goods, and yet they have zero savings. I don't understand the thinking there. I just hope their retireme…

At least in the U.S., putting that cash into savings would make it visible, putting their government benefits at risk. They probably don't make enough to survive -- those TV's and smartphones might only add up to a month or two of rent alone -- so they're trapped.

Re: 62% of Americans Have Under $1,000 in Savings, Survey Finds

#155

Post by OrwellianChild »

branchless wrote: post #144
beambot wrote: post #83

Earlier quoted context omitted.

Best example ever: http://www.mrmoneymustache.com/2015/05/20/what-im-teaching-m...

MMM has at least two rental properties and is a phoney. He can teach his kid to be a rentier by borrowing long and taking advantage of the separation between the value of labour vs assets when fiat money is over-issued by private banks. And how to run a web-site about being frugal whilst deriving rental income from three families who cannot save because they are busy working hard to keep MMM pumping out half-truths o…

If I may paraphrase:

"MMM can teach his kid how to make money on investments in real estate and make profits from renting his owned (financed) assets.

He can also teach his kid how to share what he's learned about not over-spending on depreciating assets."

Then there's something in there about people who choose to rent being taken advantage of by people who choose to be landlords, but I don't understand it well enough to take your meaning.

Re: 62% of Americans Have Under $1,000 in Savings, Survey Finds

#157

Post by branchless »

OrwellianChild wrote: post #155
branchless wrote: post #144

Earlier quoted context omitted.

MMM has at least two rental properties and is a phoney. He can teach his kid to be a rentier by borrowing long and taking advantage of the separation between the value of labour vs assets when fiat money is over-issued by private banks. And how to run a web-site about being frugal whilst deriving rental income from three families who cannot save because they are busy working hard to keep MMM pumping out half-truths o…

If I may paraphrase: "MMM can teach his kid how to make money on investments in real estate and make profits from renting his owned (financed) assets. He can also teach his kid how to share what he's learned about not over-spending on depreciating assets." Then there's something in there about people who choose to rent being taken advantage of by people who choose to be landlords, but I don't understand it well enoug…

Don't paraphrase me, thanks.

Re: 62% of Americans Have Under $1,000 in Savings, Survey Finds

#158

Post by Nadya »

nemo44x wrote: post #87
Nadya wrote: post #58

Earlier quoted context omitted.

This is the situation I am in. I'm not savvy enough to make investments that have meaningful or significant returns - so it all goes into a savings account. I have 1 years' expenses saved and it just slowly accumulates because I don't know how to make a safe return on it. I don't want to invest say, 3 months savings only to lose it... Definitely the "play to not lose" mentality rather than a "play to win" mentality b…

You are actually taking on more risk than if you had some invested in different vehicles. The truth is you're losing more money by not having any of it generating higher potential yields. Likewise, putting all your money in higher yielding vehicles (for instance, call options) is a lot of risk too. There's a calculus to understanding how much you should have put into different vehicles (including cash in a savings ac…

> The truth is you're losing more money by not having any of it generating higher potential yields.

I'm aware of this and can account for this loss. What I dislike is an unknown potential loss that I can't readily account for.

For example - if I invest $50k I need to account for the possibility I might lose the entire $50k, or a portion of it. Being realistic, I'm unlikely to lose it all, but even if I only lose $5,000 that puts me off from making that investment. It's very risk-averse behavior, which many people with a confirmation bias are against. Their $50k investment may have returned $150k and they begin to question why I wouldn't make that investment.

In other words, even if 3/5 people make $150k, as a risk-averse person, I see myself as already being part of the 2/5 people that lose the $5,000.

The only forms of investments I've ever done are playing the markets on MMORPG's. The markets are predictable, safe, and I can readily make a 8-10% ROI each night. If I could make investments like that in a real market I would in a heartbeat! :P

Re: 62% of Americans Have Under $1,000 in Savings, Survey Finds

#159

Post by ghaff »

branchless wrote: post #144
beambot wrote: post #83

Earlier quoted context omitted.

Best example ever: http://www.mrmoneymustache.com/2015/05/20/what-im-teaching-m...

MMM has at least two rental properties and is a phoney. He can teach his kid to be a rentier by borrowing long and taking advantage of the separation between the value of labour vs assets when fiat money is over-issued by private banks. And how to run a web-site about being frugal whilst deriving rental income from three families who cannot save because they are busy working hard to keep MMM pumping out half-truths o…

I think you're being a bit unfair. I have no doubt he is pretty frugal. That said, I'm not a huge fan of his schtick but recognize that there are people who probably benefit from the over-the-top exhortations to avoid spending money. A lot of people fritter away a lot on things that they don't need and may not even especially enjoy. Which has been my main takeaway on those occasions when I've skimmed his site. Whatever works.

Re: 62% of Americans Have Under $1,000 in Savings, Survey Finds

#160

Post by ansible »

joeyo wrote: post #78
ngokevin wrote: post #33

Earlier quoted context omitted.

Why not move your savings account to a different bank? If you are in the US, Discover or Ally banks offer nearly 1% APY. $100K would yield $1K per year.

Even 1% is still abysmal. Some of that 100k should be in cash, because liquidity is useful, but long-term returns on capital should be much closer to 5%.

Yes, 1% is bad.

The "official" rate of inflation is low, but I think that it is bogus. Maybe pizza and cars haven't gone up in price much in the last decade, but other big things (such as education and health care) have.

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