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Oh and the average person doesn't have $100K laying around to invest in the market which is where all the wage money is going.. into overinflated stock prices that pump out the net worth of the top 5% or so.
Ok, I was somewhat agreeing with you until you went here.
I, like many folks, was aimless and dumb in my 20s (as you so aptly describe). But you know what? By age 26 (actually by about 24...it took me 2 years to land a decent paying job) I had had a belly full of it (broke not able to pay rent, indebtedness....you name it). So as soon as I got a decent paying job, I get very serious about investing & paying off debt. I was 14K in the hole at the time. And the job still paid well below the average salary for the area where I live. But I started investing $50 a paycheck anyway. Even though I was in the hole, had a crappy car that broke down a lot, etc. This was 1997 when the stock market was getting overvalued but the bubble hadn't popped yet.
I was lousy at asset allocation. I switched from one mutual fund to another, often at inopportune times. My rate of return was lousy....and by 2008, I really hadn't made any money with my investing, mostly due to bad timing and poor asset allocation decisions on my part. Yet I kept at it. Kept putting money away.
I didn't happen to have $100K "laying around" before I got started. But I have more than that now. If I had thought like you, I would now be in my 40s and I'd be either broke or in debt, and most likely complaining about it.
The most important thing is to get started. Just. Get. Started.
Here are some mutual funds that let you start an IRA with a $100 minimum:
One of their top funds is FPA Crescent. This is a balanced fund that invests in stocks, bonds, and cash. It tends to do better when the stock market is doing badly (as was the case in 2008).
I hope this is true. It will ultimately be better for our economy in the long run. But it seems more like a propaganda article to get people to spend more than anything else.
They say Americans are saving the money, but in the same breath they also mention personal consumption expenditures went up 4.3% in the 4th quarter of 2014, the highest since 2006. They also mentioned the savings rate has dipped over the last 2 years....so the article seems to contradict itself.
My feeling...
There are those now that realize that times have changed and one must adjust (lifestyle including).... They save for the next rainy day.
There are those that are too nostalgic of the good yesteryears... consuming on credit. Easy credit (example automotive leasing). They are driving up those consumption numbers. (In my locale, certain groups originating from the financial district of NYC have both high consumption and income to support... so its hard to tell who is who)
Could be the article is picking up on the former?
I have my vices that I spend on.... but I have no delusions that things will suddenly change over night. I save.... (and trying to figure out how to invest). I'm in the former group. I commute a long ways and the difference is saved... its not a whole lot (I don't drive a gas guzzler). The impact of lower gas prices will impact me greater if it translated to lower prices for goods and services.
I don't have a whole lot to invest... but it doesn't take much to get started. I may not be a investment wizard pulling high returns but at least the habit is being put to play. Once the kids are out of (god for sakes expensive) day care and the wife is back earning what ever she earns, then its the same habit... just ramp it up a bit. Someone in another thread just made a suggestion that a good place to "rainy day money" in is a Roth IRA. Certainly doesn't take much to get started... and the claim is that you can withdraw the contribution in an emergency... so I'm looking into it.
Gas prices have only been low for 3 months. I agree its good for the economy, but it needs to take hold before people notice. At this point the average Joe has probably only saved like $120 spread over the 3 months due to lower gas prices.
Hopefully we start seeing more good jobs being created and rising wages. That is the area that needs attention.
Exactly. The big surge won't be in the news for a few months yet, but it has already started.
What that shows is that Americans are failing to pump gas price savings into their credit cards. I'm sure this distresses the megabanks, but it is really good news that the American consumer can afford to pay cash.
Things are truly great. New unemployment claims are the lowest in 15 years. Gas is under $2/gallon. Interest rates hover near historic lows. Venture money is out there for the asking.
For those of you too young to realize it, these are the good old days. It's time to get moving. If you don't make it now, you never will.
the problem is no gains in employment but then hardly to be expect since government mandated ACA with huge subsidity replaces it on companies dime mostly. The FED is holding interest rates low and we have every low inflation .If things were great the FED would already be behind the curve and inflation climbing fast. Markets are not doing much profit wise and many evaluations are on buying their own shares to raise values. We will not know until FED lets rates rise on their own and they have never been here before. Until off FED life support nothing is great or even known really.
Whole interview is worth listening to but from the 10 minute mark to the 12:30 mark is good. 51% of the country are making $20.00 or less among other gems.
It's not the good old days.
Housing, food, education prices at record highs, no real job growth, salaries flat for 3 decades.
Low gas prices prove Saudis are in complete control of world energy, can shut down American fracking operations and tank the fragile Russian economy on a whim.
sorry it is not cherry picking . . if you fell asleep for 15 years you barely went any where on anything you had existing invested in the markets on an inflation adjusted basis.
that my friend is called your existing investment hitting a wall for the next 15 years. it is not picking a trend line . it is simply looking at your balance back then same as you looking at your balance today.
so are you really trying to tell us if the balance you have up to this point on your equities averaged only 1.50% over the next 15 years that is cherry picking and your money you have up to this point actually did great 15 years later ? of course not , new money did well but your older balance just about died on the vine in equities.
you better rethink that logic.. if all your money that you have invested in equities only grew at the rate it is what it is.
sure you can smoke and mirror it and look at the last 5 years and it looks great. but then look at from 2000 to 2010 and you would have had negative returns instead.
Why choose any of these periods? We have 100+ years of data, whence the recency bias?
It's not the good old days.
Housing, food, education prices at record highs, no real job growth, salaries flat for 3 decades.
Low gas prices prove Saudis are in complete control of world energy, can shut down American fracking operations and tank the fragile Russian economy on a whim.
Housing costs are substantially below record highs. Food prices are nowhere near record highs. Salaries for men have actually declined over the last 40 years, but salaries for women have shown substantial gains.
BTW, you can thank your Secretary of State for negotiating low oil prices with OPEC to put the squeeze on Russian imperial ambitions. It's not the Saudis, it's us.
If you are waiting for someone to hand you the keys to wealth, you are going to have a long wait. Someone always ends up on the bottom. Thank you for volunteering. Not only are you clearing the track for people with more ambition, you really boost morale by giving everyone someone to look down on.
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