62% of Americans Have Under $1,000 in Savings, Survey Finds • Hacker News Board

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

#171

Post by UK-AL » Thu, Oct 08, 2015, 6:53 PM UTC

Laaw wrote: post #54

beambot wrote: post #44

Earlier quoted context omitted.

What? Let's assume he's intelligent and has good diversification (eg. he mentioned bonds, stocks, home, and cash -- probably in a investment account). If all his financial positions got "wiped out" in a broad-sweeping financial collapse, then "cash in savings" would be equally worthless. In the meantime, he has a home to live in. Plus, most investment accounts give you easy access for withdrawals (eg. debit cards) or…

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 in diversified portfolio, to loose it all the following must happen. All listed companies must have completely collapsed. Goverment must have basically collpased to loose all value on the bonds.

If that happens its probably the financial amagedden anyway.

If the stock market falls by 50% i still have 70% of my portfolio. I'm OK with that.

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

#172

Post by pnathan » Thu, Oct 08, 2015, 6:54 PM UTC

patio11 wrote: post #5

There's a conversation to be had about many Americans living in precarious financial situations, but the reason why most Americans don't currently view their savings accounts as priorities is because in the current interest rate environment savings accounts and CDs are products with vanishingly little to recommend them. The APY my bank offers is one basis point . That's $1 per year for every $10k held in the account.…

Yes, the cautious and financially conservative Americans I know do not regard savings accounts as meaningful. They don't bother with them except as "thing that I stuff cash into that isn't in working cash".

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

#173

Post by [deleted] » Thu, Oct 08, 2015, 6:54 PM UTC

misiti3780 wrote: post #82

runako wrote: post #45

Earlier quoted context omitted.

I think you're implicitly doing an asset allocation for the poster. > Cash on hand or it's invested in stocks, bonds and my home. That could be $100k on hand in checking, $600k in stocks/bonds, and $200k in home equity, with $0 in a savings account. Asset allocations that don't use savings accounts are not necessarily 'precarious'. Also, it's worth noting that most financial advisors do not recommend that you keep a…

everytime someone says that, I always think of a great quote by Nouriel Roubini: "asked whether he invests in stocks, he replied, "Not as much these days. I used to have a lot in equities—about 75%—but over the past three years, I’ve had about 95% in cash and 5% in equities. You’re not getting much from savings these days but earning 0% is better than losing 50%." [1] https://en.wikipedia.org/wiki/Nouriel_Roubini

[deleted]

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

#174

Post by morgante » Thu, Oct 08, 2015, 6:54 PM UTC

Laaw wrote: post #36

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.

You're exactly the kind of person this article is pointing out, because your ability to be wiped away by the market is a precarious position to be in.

> You're exactly the kind of person this article is pointing out, because your ability to be wiped away by the market is a precarious position to be in.

Any scenario where the stock market declines by 99% ($100k to $1k) would basically mean the collapse of the entire financial system. I doubt your bank savings account would be very useful in that scenario.

Moreover, I don't think this article is actually talking about people who do save but just choose to save into high-return assets. I save 80-90% of my income, but it all goes into index funds. Does that mean I am not "a saver?"

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

#175

Post by hiram112 » Thu, Oct 08, 2015, 6:56 PM UTC

branchless wrote: post #150

refurb wrote: post #128

Earlier quoted context omitted.

But what was your real interest rate when they were paying 3-7% in interest? Back in the 1970's savings accounts were paying 15%+. However, inflation was double digits as well. You'd be lucky if your real interest rate was more than a few percent.

This. Now real interest rates are negative as inflation stats don't reflect reality. So 0.5% when prices are rising well above this. Almost nobody on hear is speaking of "real" rates. Disturbing.

I agree. Just because the price of eggs and computers aren't going up doesn't mean inflation is flat. The Fed's printing machine has massively (re)inflated almost all major assets including housing, education, and non-disposables.

BTW, this is not the first time I've seen a comment mentioning this fact being downvoted. I would be more than happy to debate this with anyone who disagrees.

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

#176

Post by mikestew » Thu, Oct 08, 2015, 6:56 PM UTC

6stringmerc wrote: post #90

mikestew wrote: post #20

"Savings account"? I have $5 in my savings account to keep in good stead with the credit union. Despite that, one can rest assured that the total net worth of my wife and me is many orders of magnitude greater than what our savings account reflects. Maybe I'm out of touch, but asking about savings accounts strike as being in the same vein as asking how much I feed my horse.

I'm not criticizing, but would like to point out you may fit the definition of "asset rich and cash flow poor" and, under certain circumstances, could essentially be bankrupt due to an inability to access funds. A recent example would be the entertainer 50 Cent declaring bankruptcy in the context of a judgment totaling in the millions. Also, based on my experience on Wall Street (note: not a licensed advisor or broke…

Not taken as criticism, and I absolutely know where you're coming from; solid advice. My mitigation is tight stops, and yes, I know what the downsides of those can be in a crashing market. The risk/reward for me versus a savings account at 0.5% is acceptable to me.

Or if you mean it's all tied up in a 401K, yeah, I hear ya. The vast majority of our funds are in there. The mitigation to that is a goodly amount of cash (easily get by for a year with no income) in a standard brokerage account that has a debit card and a checkbook I've got lying around the house somewhere, under the assumption that something like AAPL should be liquid enough should we need the cash. But, see above...

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

#177

Post by goodcjw2 » Thu, Oct 08, 2015, 6:57 PM UTC

Laaw wrote: post #36

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.

You're exactly the kind of person this article is pointing out, because your ability to be wiped away by the market is a precarious position to be in.

Given the interest rate so low, saving is definitely a "smart" answer. Keep cash and keep invest seems to be a "wise" choice in our current market. So, it might be the market (or policy maker) to blame...

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

#178

Post by rhizome » Thu, Oct 08, 2015, 6:58 PM UTC

refurb wrote: post #128

Spooky23 wrote: post #26

Earlier quoted context omitted.

If you need liquid savings, cash is king. I opened a savings account with my son a few weeks ago. In my day, those accounts paid 3-7%. There was a story of compounding interest to tell. Now, I feel like I'm teaching my kid to be a sucker.

But what was your real interest rate when they were paying 3-7% in interest? Back in the 1970's savings accounts were paying 15%+. However, inflation was double digits as well. You'd be lucky if your real interest rate was more than a few percent.

Even so, under ZIRP it's really weird how little passbook savings returns these days.

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

#179

Post by ghaff » Thu, Oct 08, 2015, 6:58 PM UTC

branchless wrote: post #167

ghaff wrote: post #159

Earlier quoted context omitted.

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. Whatev…

The frugal stuff is rubbish. He can be frugal because the main outgoing for any family is rent. He's taking in two rents. The rest is just a cheap show. The reason why we are all suffering is because of rentiers. It's not because we have slightly expensive data plans on our phone. Rentiers are using this to explain away the real problem. This guy is along for the ride for the web-clicks. Go on his site and ask a ques…

It's "renters" BTW. [EDIT: Scratch the previous. I am, of course, wrong about the renters correction. Misread.] I'm not sure what he did to get your back up so much or when being a landlord became such a terrible evil. Also, "we" are not suffering. Yes he has a schtick and probably a pretty profitable one. His general advice is probably good for some but mostly isn't my thing because I like restaurants and traveling and that sort of thing. And I certainly don't care enough to go to his site and ask questions.

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

#180

Post by morgante » Thu, Oct 08, 2015, 6:59 PM UTC

Laaw wrote: post #53

HLRoku wrote: post #40

Earlier quoted context omitted.

I don't really follow how having money in stocks, bonds and a house is somehow capable of being wiped away by the market when a savings account in a bank wouldn't be in dire straits with such an economic upheaval to render those 3 investments useless

I'm sorry you don't follow, but it should be fairly obvious that stocks can crash, bond markets can collapse, and home prices can plummet, whereas money in FDIC insured savings accounts would only be lost in the event of a catastrophic, country-jeopardizing event, in which case we'll all have bigger problems. I'm not meaning to attack anyone personally, I just think this survey is trying to suss out what percentage o…

Not even the worst stock crash in history was a 99% drop.

Also, you are almost 100% wrong about the intention of the article. It's not that they're trying to make some point about people's poor asset allocation, it's just sloppy reporting.

If their actual point was that people had too much money invested, wouldn't the most obvious and actionable advice for the "What to Do If Your Savings Fall Short" section be to sell some shares and transfer the cash into a savings account?

It's on you to prove why your financially unwise viewpoint is correct.