Re: No incentive
mInvestor
8/7/2012 11:24:41 PM
mln,
Correct.
Basic Money Management Skills have not been taught to most ordinary Americans.
I believe basic Skills on this issue and especially the importance of Savings as against Consumption should be imbibed in the way most Americans think.
The philosophy of not spending more than you earn is Anathema to the way everyone in America(from the President of the Federal Reserve downards) thinks.
They constantly say-Spend,Spend and Spend!!!
We need Consumption to get our economy going.
The entire Financial System is geared towards this way of life.It also has the bad effect of making us dependent on Foriegners (like the chinese and Japanese) to keep financing our lifestyles.
Not a great situation to be in.
Regards
Ashish.
Re: No incentive
mInvestor
8/6/2012 4:00:21 PM
I totally agree with you guys that the current economy situation is challenging and the FED policy doesn't help us. To make a good investment return from the current rate is kind of joke.
However, it doesn't explain why 30% people are living on paycheck-by-paycheck. This is different thing. What's the reason for those people living on paycheck bu paycheck? It could be they don't have good skills to find a good job, or they don't have other choice for some reasons.
But I noticed some people don't make much money, but still planing and talking about some expensive vacations, fancy cars, cool gadgets. They do live on paycheck by paycheck. On the other hand, I saw some newcomers working as general labor. They don't get a fat check every month. But they save a lot, they don't plan for any expensive vacation (instead they just do some summer camping with kids). They don't pay cable companies to watch TV. instead they set up antenna in the backyard and watch high definiation channels for free. They save enough money to send their kids to top univesities, etc. I believe you can find some this kind of people around you.
They achieve all these by saving, not investing. Most of them don't have enough knowledge to invest. But they know they have to live in their means. They shall not spend more then what they earn. Maybe this kine of thinking can be some help for other people.
Savings rate has gone up again..
back2basicz
7/31/2012 6:31:12 PM
Noreen,
Your Gonna Like this chart I borrowed from ZH,Americans are starting to once again Save More cash.
Inspite of the fact that the economy is very anaemic.What this probably means is that people are starting to religiously put aside more of their income,Saving for a rainy day.
Is this because people expect things to get worse going ahead(and so they want to prepare themselves in advance???)
I dont know.
Americans are saving 4.4% of their Income as Savings.This is the Highest its been since August 2011.
But its a trend to watch out for sure.
When American Consumers start saving,Chinese manufacturers start worrying!!!
Ashish.
Re: A Long, Dark Tunnel
back2basicz
7/31/2012 6:26:58 PM
Street Smart,
You gotta do,What you gotta do!!!
And that is Generate the kind of Growth that is essential to ensure you progress in life.
Regards
Ashish.
Re: Another Day in Paradise
back2basicz
7/31/2012 6:25:24 PM
Value,
Fascinating Insight!
I agree entirely with the conclusions of this article.
More people than not tend to think they are poorer than they actually are.
Its kinda funny,but true.
People Do tend to talk down themselves regularly!!!
Regards
Ashish.
Tokyo,
Quite right!
You raise very critical and vital issues here.
Its what we basically call Negative savings rate policy being pushed by the Federal Reserve.
At this rate,saving in the Bank in terms of CDs do not make any sense at all.
But how about investing in Long-term Dated Corporate or Mortgage Bonds?
Most of the best and well capitalized firms offer decent Interest rates on their Bonds today(anywhere between 3-5% Annually).
And since the Mortgage Bonds are basically guaranteed by the Taxpayer/Treasury;there is hardly any risk in owning those today.
Beats keeping money in a CD which is guaranteed to lose 3-5%(depending on what CPI is in your area) today.
Regards
Ashish.
No incentive
tokyogai
7/30/2012 4:03:45 PM
I agree that many live paycheck to paycheck, but there is also the effect that the rate of return on savings id dismal. Inflation seems to be running 2-3%/year ( except for the things we all use, like groceries and energy). A saving rate of 1% is considered good. I would ask- why save at these rates? you are better off buying gold jewelry ( which Indians count as savings, but we consider spending).
Another Day in Paradise
Value Hiker
7/27/2012 6:08:55 PM
People tends to think they are in worse financial situation, just see the following report from CNBC: http://finance.yahoo.com/news/one-percenter-174006081.html.
I still agree that everyone needs a financial plan, no matter how simple it is. Fail to plan is a plan to fail. A little planning plus some financial knowledge will save many people from finanical ruins
@TelecomFreq, I agree. I think people feel like they're so far behind that they'll never get ahead. I think they spend in the short term because the long term is too hard to contemplate.
And second quarter numbers just came out. They make you want to either pull up the covers, close the blinds and hide your gold under the mattress or go out for expensive lattes and cocktails. Maybe both!
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