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Old 09-14-2013, 07:11 PM
 
191 posts, read 282,448 times
Reputation: 292

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Quote:
Originally Posted by nicet4 View Post
A Ponzi scheme is where the money eventually runs out and Social Security will never run out.
Actually a Ponzi scheme is a fraudulent version of a pyramid scheme (Pyramid scheme =where newer folks pay for the benefit of the folks who are longer into the scheme, new folks are needed to keep it going). Pyramid schemes are considered to be unsustainable mathmatically.

Social Security is more like a pyramid scheme but it's not illegal. Younger people are paying for the older people and have been for many years now. The money I'm paying now is paying for my parents. When I retire the gen-xers will pay mine.

We don't know if/when it will run out, but it may not pay as projected. That should be a wake up call to all who haven't been saving....
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Old 09-14-2013, 07:19 PM
 
4,984 posts, read 5,063,741 times
Reputation: 6322
Quote:
Originally Posted by sunshinyday View Post
Pyramid schemes are considered to be unsustainable mathmatically.
So is monetary system rooted in compound interest. Any series (1+i)^n where i>0 doesn't converge i.e. it's unstable mathematically, that doesn't prevent compound interest formula P*(1 + i/n)^n*t from dominating our financial and banking institutions.

Quote:
Social Security is more like a pyramid scheme but it's not illegal.
So is private medical insurance. Healthy people pay for sick people. Fresh supply of healthy people is a must for the scheme to survive.
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Old 09-14-2013, 07:24 PM
 
11,935 posts, read 20,386,478 times
Reputation: 19328
Quote:
Originally Posted by RogersParkGuy View Post
Please remember that real wages have been stagnant for more than 30 years, while the cost of living has steadily risen. Also remember basic needs like education, housing and healthcare costs far more today in real terms than they did 30 years ago. Also remember that those good jobs so many millions of Americans had 30 or 40 years ago, the kind with unions and pensions and health coverage and opportunities for advancement, have all but disappeared.

Then ask why people aren't able to save...
Quote:
Originally Posted by Submariner View Post
And yet, some do save, ...
And we get laughed at because we do things like wash ziplock bags and reuse tin foil -- all to save a few pennies. Well those pennies add up to dollars....

We live frugally TO save and to get what we want regardless of cost. When we were young we made the decision to NOT be the people chasing paychecks and careers -- to us it was too much a mental cost.... so we had to be very smart with our money.
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Old 09-14-2013, 08:04 PM
 
Location: USA
7,778 posts, read 10,139,902 times
Reputation: 11715
I don't spend money foolishly and I am a good money manager. I am not in trouble financially. My adult children are both good money managers. Neither are in trouble financially. I gave thought to the future many years ago and acted accordingly.
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Old 09-14-2013, 08:44 PM
 
Location: Bel Air, California
21,319 posts, read 21,886,413 times
Reputation: 33481
I'm so poor that I can't afford to take my wife to a psychiatrist. She thinks she's a chicken but at least we get our eggs for free.
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Old 09-14-2013, 10:21 PM
 
Location: University City, Philadelphia
22,592 posts, read 12,336,164 times
Reputation: 15493
Call me a cynic, but I think "investing" one's money in any kind of stock, bonds, mutual funds, money markets, etc. is risky and usually not very profitable for most average middle income people. I have both an IRA and a 401(k) that are so stagnant - in terms of real value - that I could never retire on those earnings. For me, the only really wise and profitable investment was in purchasing my home which nearly tripled in value since 2000. That happened mostly by luck, but a little research and a hunch that housing prices in my neighborhood were about to skyrocket.
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Old 09-15-2013, 12:08 AM
 
10,813 posts, read 8,061,664 times
Reputation: 17025
Quote:
Originally Posted by Clark Park View Post
Call me a cynic, but I think "investing" one's money in any kind of stock, bonds, mutual funds, money markets, etc. is risky and usually not very profitable for most average middle income people. I have both an IRA and a 401(k) that are so stagnant - in terms of real value - that I could never retire on those earnings. For me, the only really wise and profitable investment was in purchasing my home which nearly tripled in value since 2000. That happened mostly by luck, but a little research and a hunch that housing prices in my neighborhood were about to skyrocket.
Glad that works for you. I live in Texas where a home is considered more a shelter and a hedge against inflation than an investment. That's worked very well for me, my house has long been paid off, I don't need or want to cash in the stable equity.
In the meantime, i.e., the last 30 years, my stock portfolio has nicely appreciated. Way beyond the equity in my home.

Moral: what works for you doesn't necessarily work for everyone.
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Old 09-15-2013, 02:53 AM
 
71,538 posts, read 71,712,424 times
Reputation: 49125
same here , since the 1980's my portfolio appreciated enough to buy 3 homes like we owned .
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Old 09-15-2013, 03:50 AM
 
Location: Washington State
18,516 posts, read 9,574,204 times
Reputation: 15775
Most Americans put materialism and keeping up with the Joneses above sound financial decisions. It can be hard to make tough decisions when your wife wants to keep up with her friends with a big expensive house or toys for the kids but if you do and make good decisions for the long run, it will usually pay off.
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Old 09-15-2013, 03:59 AM
 
Location: Washington State
18,516 posts, read 9,574,204 times
Reputation: 15775
Quote:
Originally Posted by Clark Park View Post
Call me a cynic, but I think "investing" one's money in any kind of stock, bonds, mutual funds, money markets, etc. is risky and usually not very profitable for most average middle income people. I have both an IRA and a 401(k) that are so stagnant - in terms of real value - that I could never retire on those earnings. For me, the only really wise and profitable investment was in purchasing my home which nearly tripled in value since 2000. That happened mostly by luck, but a little research and a hunch that housing prices in my neighborhood were about to skyrocket.
I think it's risky if you plan to retire on the increase in value of your house although, I know many Californians that have lived on their increased house values for years.

I think diversification of investments is better over time. I have 3 rentals all paid for and substantial 401K funds that have appreciated but not as much as my houses have appreciated. The houses have a monthly rental income that I can use if I chooses to do so. However, keeping rentals is a headache.
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