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Old 07-30-2012, 04:37 PM
 
Location: Near Manito
20,170 posts, read 24,284,822 times
Reputation: 15285

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Quote:
Originally Posted by malamute View Post
It can. Look at third world nations where wages remain low forever.

Wages are a factor of supply and demand. When labor is limited in supply, then wages go up because employers must compete for the labor. When the labor is made unlimited, then wages can go down.

Now the whole world competes for the jobs created through our consumerism. Many jobs are exported and employers can bring in unlimited supplies of third world workers who are happy to work for much less than Americans can live on.
I don't mean to be flippant, but my references to exploring overseas employment as a stopgap to finding a lifetime career in the US presuppose working for equal/better wages than one can earn in the US.
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Old 07-30-2012, 04:55 PM
 
Location: Near Manito
20,170 posts, read 24,284,822 times
Reputation: 15285
Quote:
Originally Posted by HappyTexan View Post
Well 6% today means high risk

Bonds from Italy, Spain or Greece should get you that 6% but in the process you could lose all your principal.
I have to disagree, Tex. I just looked up my portfolio again, and it breaks down this way:

37% guaranteed traditional (paying 3% ytd)
14% large-cap stocks (paying 11.9% ytd)
33% high-yield mix (Merrill-Lynch BB/B) (paying 7.73% ytd)
9% real estate securities fund (paying 18.4 % ytd!!!!)
7% inflation-linked bond fund (paying 4.8% ytd)

Pretty vanilla. All of this is invested through one of the major retirement investment organizations.

I think you'll agree that this is not a high-risk portfolio! And I avoid those exotic foreign bonds...
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Old 07-30-2012, 05:22 PM
 
Location: Great State of Texas
86,052 posts, read 84,321,515 times
Reputation: 27718
Quote:
Originally Posted by Yeledaf View Post
I have to disagree, Tex. I just looked up my portfolio again, and it breaks down this way:

37% guaranteed traditional (paying 3% ytd)
14% large-cap stocks (paying 11.9% ytd)
33% high-yield mix (Merrill-Lynch BB/B) (paying 7.73% ytd)
9% real estate securities fund (paying 18.4 % ytd!!!!)
7% inflation-linked bond fund (paying 4.8% ytd)

Pretty vanilla. All of this is invested through one of the major retirement investment organizations.

I think you'll agree that this is not a high-risk portfolio! And I avoid those exotic foreign bonds...
Yes I agree. I would also say that you are educated in investing. Many are not though and you wouldn't believe how many couldn't be bothered. Fidelity has an excellent site for analyzing and comparing potential investments.
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Old 07-30-2012, 06:13 PM
 
8,391 posts, read 6,283,864 times
Reputation: 2314
Quote:
Originally Posted by slackjaw View Post
"Low" would imply someone near the bottom in a list of countries ranked by median wage, I don't believe that is the case.

Uganda is an example of a low wage nation.
You are correct the term low wage nation is vague and can have multiple meanings, and I wasn't clear what I meant by the term low wage nation.

There are various websites like the Economic Policy Institute that utilize what they call a Basic Family Budget calculator.

What this is a calculation of how much monthly and yearly income families of various configurations(one parent one child, two parents three children, etc) would need to live in different areas around the nation(Chicago, Houston, NewYork, they use small towns, rural towns as well)

The Basic Family Budget calculation as explained by EPI consists of rent, food, child care, transportation, health care, taxes, and other necessities. The Basic Family Budget, doesn't include savings or retirement savings or phones, internet, cable.

The website does a good job of explaining the methodology of their numbers.

So using those number of what is necessary to live is where I derive my opinion that America is indeed a low wage nation.
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Old 07-30-2012, 08:36 PM
 
Location: Near Manito
20,170 posts, read 24,284,822 times
Reputation: 15285
Quote:
Originally Posted by HappyTexan View Post
Yes I agree. I would also say that you are educated in investing. Many are not though and you wouldn't believe how many couldn't be bothered. Fidelity has an excellent site for analyzing and comparing potential investments.
Fidelity's site is very good. So is T. Rowe Price's:

https://www3.troweprice.com/ric/ricweb/public/ric.do

I hear you about people who can't be bothered -- I was one of them for a long time. Folks especially need to be alert when it comes to the fees that brokerage houses and investment firms charge. Vanguard, Fidelity, T.Rowe Price and TIAA-CREF are among the lowest. They let you keep most of your own money....
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Old 07-30-2012, 08:48 PM
 
22,923 posts, read 15,429,204 times
Reputation: 16962
Be especially aware of handlers who will "churn" your investments from fund to fund generating a handling fee payment to the handler each time a portion of your fund is transferred from one fund to another.

These guys know how to make a buck by simply moving a portion of one of your holdings from one fund to another just to generate a commission on the transfer.

Select a fund manager who will follow your guidelines to the letter and advise you for discussion before any movement of your funds takes place.

You pay them for their expertise but in most cases they are no more savvy than yourselves and you only need them because you have other things to occupy your attention on a daily basis. They should inform you of any changes they believe should be made to your accounts and the reasons for those changes should be readily understandable and acceptable to you before they go moving money around on your behalf.
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Old 07-31-2012, 04:13 PM
 
Location: Earth Wanderer, longing for the stars.
12,406 posts, read 18,935,415 times
Reputation: 8910
Quote:
Originally Posted by Iamme73 View Post
Thanks for the advice, but my frustration isn't about me. I make good money. By most standards, I'd be considered high income.

I have a 401k and a pension, for as long as the pension lasts, and I think Social Security will pay out most of what is owed.

I didn't exclude Social Security. I think it is by far the most stable retirement income for older Americans. The OP did exclude SS by complaining about people near retirement age only saving $30,000.

My post was to point out why I think this is the reality for those Americans.

Your advice is sound as far as it goes, but in my opinion it is not realistic. If a worker earns $26,324 or less like 50% of all American workers do, how can that worker realistically save $5000 a year for 40 years?

I know your advice was based on landing a good job, but the American economy produces a lot more low income jobs than high income jobs.

The conventional idea that people move the up the income ladder as they age is true to an extent, but it is also true that many of those stuck in low income jobs tend to stay in low income jobs.

66% of all American workers earn less than $39,900 a year. Where are these people going to find $5000 dollars a year to save?

Then let's not forget the 40 year thing. In a 40 year span, a significant % of Americans will be unemployed for an extended period of time, and/or get divorced, and/or have major expensive medical costs, and/or go to college, and/or buy a home, and/or have children, etc.

In order for the advice to work in my opinion, it depends on nothing bad happening and a person earning a lot higher income than most Americans earn so they can afford to overcome all of those likely financial set backs.
Aren't we talking safety here, too? Not too long ago I could invest in triple A insured non callable municipal bonds at five percent. That, I considered safe. Even long termed CD's were paying that much. Safe. Where is there something of similar SAFETY today yielding four to six percent?

We are also going to have inflation. Forty thous will not mean as much in the future as it now does.
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Old 07-31-2012, 04:21 PM
 
Location: Near Manito
20,170 posts, read 24,284,822 times
Reputation: 15285
Quote:
Originally Posted by goldengrain View Post
Aren't we talking safety here, too? Not too long ago I could invest in triple A insured non callable municipal bonds at five percent. That, I considered safe. Even long termed CD's were paying that much. Safe. Where is there something of similar SAFETY today yielding four to six percent?

We are also going to have inflation. Forty thous will not mean as much in the future as it now does.
That's a very astute observation. Current inflation, in the midst of the persistent recession, is running around 1.5%, and can easily rise when things perk up again. Hopefully, though, so will everything else -- including investment returns.

Also, SS benefits are tied to cost of living increases, so that part of one's retirement income should remain comparatively stable.
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Old 07-31-2012, 04:41 PM
 
Location: Florida
33,508 posts, read 18,072,477 times
Reputation: 15498
Stock Market is unpredictable. Too much going on now and we may see QE3 soon. Interest rates may rise and the stock market would go down. China will not buy our debt forever as we cut the dollars value with more printing of dollars.
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Old 07-31-2012, 04:48 PM
 
Location: Earth Wanderer, longing for the stars.
12,406 posts, read 18,935,415 times
Reputation: 8910
Frankly, I think that many of us who are now doing well had both the youth and savings to take advantage of the market when Clinton was President. Now that the market is giving such lousy returns we can still do fairly well with little worry.

People just starting out now, with years ahead of them, as Yeledaf says, will have bust and boom times and so long as they are attentive to markets the world over, should be alright.

The problems may be with those who are now in their 50's whose careers may be straight lined and who cannot invest for a good return without risk. I consider the stock market risky today. Our overseas markets are chancy. The middle class buying public the world over seems to be strained for cash. We have not come out of the real estate crisis yet and there may be a huge problem with student debt looming. I just don't see a lot of promise in the near future.

I think we all do agree that people should be constantly nagged into starting saving and investing from very early in life. There is SO much to say for mere compound interest.

Some parents get their young children in the habit of saving half of whatever money comes their way. This way they can see some growth in the savings and are also in the habit of saving regularly.
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