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#40584 - 10/09/08 03:04 PM Re: Only a heartbeat away... [Re: Daniel]
Smike Offline
Carpal Tunnel

Registered: 05/01/01
Posts: 3143
Loc: in your backyard
The US saving rate figure ‘might’ not be the end all be all barometer of economic well being as it might have once been.

One article that give food for thought from a different perspective.

http://www.businessweek.com/magazine/content/05_03/b3916043_mz011.htm

So imagine home improvments spent to increase a homes value, but not put into savings, this would not be counted.

I hate to see large polices being made off of one indicator. Anyway one of the best ways to make people save is increase the interest rate. Simple economics 101.


Edited by Smike (10/09/08 03:07 PM)

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#40585 - 10/09/08 03:16 PM Re: Only a heartbeat away... [Re: Daniel]
Smike Offline
Carpal Tunnel

Registered: 05/01/01
Posts: 3143
Loc: in your backyard
 Quote:
Those who had savings in bank accounts haven't lost anything.


Most Bank accounts have been running % rates close to or below inflations rates. So in effect saving large amount of money in these institutions is costing money.

I'm still suspect that the Savings rate calculation is not up to par with current ways people actually are saving money outside of the traditional methods.

The stock market is one area that has had an enormous influx of capital in the last 20 years.

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#40586 - 10/09/08 03:30 PM Re: Only a heartbeat away... [Re: Smike]
Dillbag Offline
old hand

Registered: 05/02/06
Posts: 1130
Loc: "The Town"
Saving money and investing money are DIFFERENT!

You are not "saving" if you put your money in a Mutual Fund...or stocks... That's INVESTING, which has RISK which is what everyone wants to avoid!

It's the same as in the outdoor recreation world... No one wants to take responsibility for their own actions... if you take a risk... you might get BURNED...
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#40588 - 10/09/08 03:33 PM Re: Only a heartbeat away... [Re: Smike]
Daniel Offline
veteran

Registered: 05/23/01
Posts: 1515
 Originally Posted By: Smike
Most Bank accounts have been running % rates close to or below inflations rates. So in effect saving large amount of money in these institutions is costing money.


True; I just wanted to dispute the assertion that people who had been saving had lost 30% of their efforts. Also, putting it in the bank at some interest, even if it's close to or below inflation rates, is still better than putting money in the mattress where it earns zero interest or not having anything in reserve to deal with unanticipated major expenses when credit is tight.

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#40594 - 10/09/08 04:37 PM Re: Only a heartbeat away... [Re: Dillbag]
Smike Offline
Carpal Tunnel

Registered: 05/01/01
Posts: 3143
Loc: in your backyard
 Originally Posted By: Dillbag
Saving money and investing money are DIFFERENT!

You are not "saving" if you put your money in a Mutual Fund...or stocks... That's INVESTING, which has RISK which is what everyone wants to avoid!

It's the same as in the outdoor recreation world... No one wants to take responsibility for their own actions... if you take a risk... you might get BURNED...


Dillhole, the vehicles are different as you pointed out above, but the intended end results are exactly the same. People have some money and wish to make more money with it. If that wasn't the case then stuffing money under your mattress might not be so bad. (aside from it being stolen)Given the current climate its obviously that having 100K + (or now 250K + ) is at ‘risk’ in some banking saving institutions. And if someone wants to save and retire at a decent age they better have more then 250k saved away. So where are they going to put it? The smart answer has always been to ‘diversify” and I just don’t see the US saving rate calculation as looking diversified enough to be the end all be all indicator. (Example 401K income not counted) I don’t mean anyone should not be saving, but the dire messages were about to get pushed off the cliff because no one saved is a little overcooked IMHO. One could argue that the current crisis is made due in part to having money in non liquid-able assets instead of cash on hand (Bank savings accounts)

Here is some more points on why the Saving rate may not be the great indicator it once was:

http://seekingalpha.com/article/36867-us-savings-rate-based-on-outdated-methods-of-calculation

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#40596 - 10/09/08 05:22 PM Re: Only a heartbeat away... [Re: Smike]
alicex4 Offline
Carpal Tunnel

Registered: 07/05/00
Posts: 3400
The rise in capital in the stock market pretty much dovetails with the transition from Defined Benefit Pension plans to 401K's. Don't put your money in your mattress, at least get a safe deposit box. If you house gets burgled or burns down your homeowners will only cover $1000 in cash. I disagree with the idea that Americans aren't saving. I don't see the general populace socking their extra cash in gold or real estate, they are already spending more than they make. I hope everyone has 6-9 months liquid cash to pay for expenses when the inevitable job losses start happening.

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#40601 - 10/09/08 08:44 PM Re: Only a heartbeat away... [Re: alicex4]
Dillbag Offline
old hand

Registered: 05/02/06
Posts: 1130
Loc: "The Town"
NO... The intended result is NOT the same!

Saving is exactly that... saving it... Just because banks offer an interest rate to entice you to put your money with them... Doesn't change the fact that it's saving NOT investing!
_________________________
...anethum graveolens cucumis sativus!

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#40603 - 10/09/08 09:53 PM Re: Only a heartbeat away... [Re: Dillbag]
Smike Offline
Carpal Tunnel

Registered: 05/01/01
Posts: 3143
Loc: in your backyard
 Originally Posted By: Dillbag
NO... The intended result is NOT the same!

Saving is exactly that... saving it... Just because banks offer an interest rate to entice you to put your money with them... Doesn't change the fact that it's saving NOT investing!



You could say saving for your kids college education is putting cash into savings account earning 3% while the costs of higher education far out pace that each year. Is that saving? Granted that money will be there in 20 years as long as the FDIC covers it, but the cost for that security would be high.

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#40608 - 10/09/08 11:27 PM Re: Only a heartbeat away... [Re: Smike]
skillet Offline
journeyman

Registered: 12/09/04
Posts: 73
Loc: long island,ny
you guys talk like channel 13...
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#40612 - 10/10/08 12:18 AM Re: Only a heartbeat away... [Re: Dillbag]
Mike Rawdon Offline

Carpal Tunnel

Registered: 11/29/99
Posts: 4276
Loc: Poughkeepsie
 Originally Posted By: Dillbag
Saving money and investing money are DIFFERENT!

You are not "saving" if you put your money in a Mutual Fund...or stocks... That's INVESTING, which has RISK which is what everyone wants to avoid!


You need to spend more time listening to mutual fund sales pitches. (Murphy's Law, where are you when we need you?) Money in the bank is indeed exposed to RISK. Specifically the risk that it will DECREASE IN REAL VALUE if the interest rate is less than inflation. Which it usually is. Equities OTOH have stayed ahead of inflation, if you pick a long enough timeframe (not including the last 2 weeks, presumably!)

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