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I can understand why folks are abandoning equities after the violent up and down spikes during the last few months.
Stocks are for rich people. Middle class types should stick with insured accounts at credit unions and banks.
Thank Heaven, Bush didn't entrust part of Social Security to equities.
Middle class should stick to CD's and savings accounts if they never want to be rich. If they do they'd be smart to invest in low cost mutual/index funds.
Middle class should stick to CD's and savings accounts if they never want to be rich. If they do they'd be smart to invest in low cost mutual/index funds.
Maybe in the past, but not now. Defined benefit pensions are certainly better than 401(k) plans in the present environment.
Maybe in the past, but not now. Defined benefit pensions are certainly better than 401(k) plans in the present environment.
Might be better to be secure than wealthy, eh?
Hi saturnfan,
So basically you are saying now is the time to have defined benefits...after we have been primed for reflation? So that way in the coming years we can loose it all to inflation. Do you really want to have all your assets in dollar denominated accounts in the next 20 years? What I have been saying is in the near term for at least two years it will be good to have dollar denominated cash since we have no idea what game they will play. However in the long run I can never understand why people look at any account in nominal terms.
Defined benefit pensions are certainly better than 401(k) plans in the present environment.
How do you figure that? A pension plan is certainly subject to losses and shortfalls and underfunding -- and employees have ZERO control over any of it. There's virtually no transparency either.
A 401K gives an employee a decent amount of control (not as much as I'd like, but certainly enough to protect investment and make money even in a bear market). It also lays the numbers and choices right in front of the investor -- absolute transparency. It's right in front of you.
If you're going to claim something is "better" than something else, you need to give more details. Better for whom??
From another thread:
Quote:
Originally Posted by Nepenthe
My 401K plan offers me a choice from 60 mutual funds and allows me to mix and match. The employee match is at 7% and my company adds another 10% of my income as profit sharing each year. I have full control over it. If I want to be 0% in equities, I can EASILY do so. It is an EXCELLENT plan. I wish all employers offered it. They got rid of the flaccid, crappy pension plan, which I'm happy about.
Getting rid of the pension was the best thing my company did. The anonymous, ambiguous, nebulous, shrouded pension went bye-bye, the accrual went into our profit-sharing account, and the company match went from 5% to 7%. We now have full control over every aspect. MUCH better.
Investing has nothing to do with income class; it has everything to do with research. If a person is too lazy to do the work involved with being an investor then they should stick to CD's, annuities and the like. Being an investor means understanding the markets, doing tons of homework, and being actively involved. Giving your money to a Mutual Fund or Money Manager and expecting them to act in your best interest is asking to be a victim. What is happening right now is separating the investors from the chumps. It's the world’s oldest game, you let the plebes attain a certain amount of success and then you harvest it from them.
I can understand why folks are abandoning equities after the violent up and down spikes during the last few months.
I can agree that the small investor who doesn't have a lot of sophistication or trading tools or experience is better served in cash or a bond fund on the sidelines right now. But...
Quote:
Originally Posted by saturnfan
Stocks are for rich people.
That's absurd.
Quote:
Originally Posted by saturnfan
Middle class types should stick with insured accounts at credit unions and banks.
Because you'll surely grow your money by putting your money where it earns less than the inflation rate.
Quote:
Originally Posted by saturnfan
Thank Heaven, Bush didn't entrust part of Social Security to equities.
Because then we would have had to actually make smart decisions on our tiny privatized portion of our SS.
that is the stupidest thing I've ever heard. Just because you are rich doesn't mean you have any advantage over other investors unless you are an insider like buffet. The real fact of the matter is that equities is on the level of gambling. You buy the stock for xyz price and hope to sell it later for more. When adjusted for inflation a stock/company can only grow so much before it reaches its peak. All companies go bankrupt in the end. Regardless of size.
The real fact of the matter is that people need to make smart decisions and diversify their investments. Most put their money into speculative investments. In reality they should put a little into their safety net investments (no debt, 6 months emergency fund etc.) a little into their survival investments (paid off home, gold/silver, physical cash, 6 months food supply, guns/ammo), a little into cash flow assets (reits/mlps) and a little into speculative assets (non dividend paying growth stocks).
In reality the bottom line is that most people are morons when it comes to investing. Of course, people may think that they can just go to a financial planner or this or that. Most of those guys are nothing but salesmen, they'll never tell you to invest by paying off your debt or buy gold/silver because the dollar may collapse. Their main agenda is making money so they put you in stuff that makes them money AND THAT IS STOCKS.
I would like to submit per the Philip_T Investment Doctrine (tm) that the first, best investment for Joe and/or Jane MiddleClass, their #1 best investment is:
1. Themselves.
(followed by #2 -- their family, and #3 their community).
Joe and Jane are likely to be working 2000 or so hours a year for at least 20 years and up to around 40. Anything they can do even increase their earnings maybe just $1 an hour will pay back $2000 a year. "Invest" more in themselves and the gain is increased more.
Even holding myself accountable to the doctrine, I am (finally) bothering to take my PE (Professional Engineer) exam this next year. Customers are nagging me into it, but it mostly for my own good. While I am budgeting a "cost" of around 500 hours to prep for it (a trade-off cost of around $30,000 for me, it will gain me at least $10 an hour -- or over $20,000 a year for me. And it keeps paying for next 10 to 20 years for me. Very favorable return on the investment.
Works that same way for Joe and Jane MiddleClass for schooling, college, and training for marketable skills.
Works that way for trades and even Joe the Plumber (if he ever makes it past loud-mouth slacker helper to J-man)
Works that way for salesfolks doing sales training. On and on.
Nothing to do with anyone's tax policy, tax-deferred paper shuffling, or whether some market is up or down.
Try to convince many public retirement plans with workiers of this. You certainly couldn';t before this year. This however may result in a genration that will never return to the makets as happened after the 30's depression but I really doubt it. Just as so many lose everyhting starting their own small business than succeed. Americans are risk takers just as many are gamblers asvegas and the lottery shows.They just like to blame someone else when they loseotu.Human nature.
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