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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

#291

Post by enoch_r »

scoreponok wrote: post #246
enoch_r wrote: post #132

Earlier quoted context omitted.

Since June 2009, when that interview was conducted, the S&P500 has more than doubled, not including dividends, so I hope he switched back or he did, in a sense, "lose" 50%.

This is hindsight bias. The markets could have easily went the other way. Market timing is notoriously futile. If you want to play "what if?" and pick arbitrary dates then he could have as easily put his cash position into equities lets say beginning of October 2008? Then his advice would seem very wise indeed.

I agree, market timing is futile. Roubini is unwise not because he lost money, but because he believed he could time the market. Mountains of evidence suggest that the RoR on stocks is positive and higher than that of lower-risk assets, Roubini claimed that the opposite was temporarily true. This is a good example of an attempt at market timing that failed.

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

#292

Post by walshemj »

thibaut_barrere wrote: post #28
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.…

I'm curious about that - isn't it also culture-driven (spending habits) or maybe linked to education costs? For instance in France, where "CD" equivalent (DAT) rates are fairly low as well currently, the saving rate (ratio between what is added to savings monthly, and monthly revenue) is 15.1% in 2014 (source: INSEE [1]). Also, still in France, people will save /even/ if the interest rate is low. [1] http://www.insee…

But what are the counting as saving purely cash or does that include securities.

I am sure that in the UK that stocks and share ISA's are counted as savings

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

#293

Post by kamaal »

morgante wrote: post #174
Laaw wrote: post #36

Earlier quoted context omitted.

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 abou…

>>Any scenario where the stock market declines by 99% ($100k to $1k) would basically mean the collapse of the entire financial system.

Yet if you owned real estate[Land, Houses], they stand exactly as they are. While the numbers in the bank database turn to 0 after the collapse and companies go bankrupt and never recover. If you owned real estate, your money will recover in the very next turn.

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

#294

Post by lmm »

donjh wrote: post #269
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.

The thing that I don't understand about this logic is that in the event of an economic downturn or disaster, if you lost your job the market would also be on the decline - the worst time to sell. Isn't it better to keep a couple month's expenses in savings, even if only for the peace of mind?

Everything has a cost - however much you're holding in cash you're effectively burning ~3% of that each year. How quickly do bills come due? If I lost my job tomorrow I could take a payment holiday on my mortgage (since I've made overpayments) and pay for food and the like with my credit card (and in my specific case as a contractor I'd have what I'd earned last month, but I appreciate that doesn't apply to everyone); I'd certainly have a few months' leeway to sell some stocks/bonds/whatever, and what you lose in a slump is less than what you gain during the boom period.

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

#295

Post by hugh4 »

Avshalom wrote: post #285
hugh4 wrote: post #282

Earlier quoted context omitted.

That advice isn't aimed at people who are genuinely poor, it's aimed at middle class whiners who earn middle-class money and still complain that they "can't get ahead" and "will never be able to retire". MMM has never claimed to be frugal -- indeed, he likes to talk about the "extravagance" of his $25K pa spend for a family of four.

>MMM has never claimed to be frugal -- indeed, he likes to talk about the "extravagance" of his $25K pa spend for a family of four. And imagine how well that sarcasm goes with those of us who have never seen 25,000.

And if you're in that situation then MMM isn't for you. People in that situation need a blog on how to earn more money, not one on how to spend less.

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

#296

Post by hugh4 »

toomuchtodo wrote: post #284
fancyketchup wrote: post #271

Earlier quoted context omitted.

> The only reason people need to rent is because of the requirements to own (down payments, emergency funds to cover your mortgage in tough times so you don't lose your equity) So, in other words, the landlord is selling a service? In exchange for a monthly fee, you don't have to do any of the crap (down payments, mortgages, property taxes, maintenance) it takes to own a home? Do you view farmers the same way? If it…

> Do you view farmers the same way? Providing food for free is next on my list. I don't need labor. I just need clean energy and automation.

Uhh, and land.

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

#297

Post by lmm »

kdamken wrote: post #210
branchless wrote: post #167

Earlier quoted context omitted.

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…

Except that it's not rubbish. Most people do spend large amounts of their paycheck on things they don't need. Just because he makes good money doesn't mean his concepts of saving a large percentage of what you earn aren't sound. They apply to all income levels, even more so for the lower ones. Following his advice and sticking to a budget has gotten me from saving nothing every month to saving at least half of my tak…

> Most people do spend large amounts of their paycheck on things they don't need.

Maybe. Or maybe they're spending their paycheck on things that they do need because they have to work for a living, they can't live by renting out their assets like MMM can. Example from the other branch: MMM can say "buy a bike instead of a new car" because he had the privilege of putting his "job" (rental properties) as close as he liked to his house. Most people don't have that option.

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

#298

Post by lmm »

fancyketchup wrote: post #271
toomuchtodo wrote: post #192

Earlier quoted context omitted.

> when being a landlord became such a terrible evil. It's not being evil per se, but being an economic leech of sorts. The only reason people need to rent is because of the requirements to own (down payments, emergency funds to cover your mortgage in tough times so you don't lose your equity). Its an arbitrage between someone on financially sound footing versus someone not so. Disclaimer: My family has a landlord or…

> The only reason people need to rent is because of the requirements to own (down payments, emergency funds to cover your mortgage in tough times so you don't lose your equity) So, in other words, the landlord is selling a service? In exchange for a monthly fee, you don't have to do any of the crap (down payments, mortgages, property taxes, maintenance) it takes to own a home? Do you view farmers the same way? If it…

The landlord is selling the service of "having a lot of money". It's usury by the back door.

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

#299

Post by rokhayakebe »

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…

Now think about the time you were poor and the time you had money, and try to see whether you are where you are today because you were saving money.

Saving money, and leaving cheaply when poor will help you develop a habit for when you are financially in a better place.

However saving 20% of your salary when you make, say $2,000 per month in NYC/SF/LA, is not going to be possible. Not only that, but it would take 4 - 5 years to get to $20,000.

My thinking is there is a minimum people need to make before they can save meaningfully. Below that point, saving is just an exercise to get ready for a better financial position/earning.

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