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March 05, 2009

Saving vs. investing

Americans appear to be in a paradigm change. It has been greed over need, which is changing as difficult lessons are being relearned. It has always been simple. If you save, you don’t move backward, only forward. If you invest, you are gambling, and values can go up or down. Homes and 401(k) plans are a gamble. There are no guarantees.

Regardless of what the government says and does, it seems the switch to more savings has been thrown. In the long run, this is very likely a good change for our country. For years we have been told our savings rate is too low. Now we are being told our spending rate is too low. It doesn’t add up or make sense.

People seem to be moving in the direction of common sense and safety as they realize the pain involved when you roll the dice and don’t win. It may be well to remember that the odds tend to be in favor of those who control the game.

Will Rogers still has it correct: “The return of your money is more important than the return on your money.”

Carl Kent



That was an interesting Link. I'm not sure just what Stewart's point was. "

The point of the rant? The point is why should anyone put any credence in anything broadcast on CNBC when they get everything so wrong? They're supposed to be the money experts. The rant was Stewart's way of one-finger saluting Santelli, who "bailed out" on appearing on his show.


That was an interesting Link. I'm not sure just what Stewart's point was. I kept waiting for the people in the white coats to come get him.


"Did you see Jon Stewart's CNBC skewering the other night?"

Skewered and roasted.

CNBC has been calling a market "bottom" since last December. Nearly each day is "the bottom". Stewart's best line was his last in the piece, something about listening to CNBC making him $1 million but only because he started with $100 million.

As the market slides closer to it's true bottom (zero?), the CNBC (and FNC) skirts are getting shorter and the blouses lower cut. On the ladies that is, although Dennis Kneale might be dressing that way at home.


Real estate has historically been a solid investment, only until blatant over valuing of homes and 125% of the inflated value programs did we start to see the problem of being upside down in your home. Couple that with people buying $500k houses on $60k incomes and you have a meltdown. Funny thing is that realtors, appraisers, mortgage brokers, lenders all had no problem knowingly taking their cut of the pie and consumers knowing what they were doing had no problem making the CHOICE to sign on the dotted line. 401k's historically are a great invesment especially as most companies match what you invest. personally I saw what was coming and moved my profolio to a lame money market product, at least I did not lose money although I did keep 100% of the company match so that is a 50% return.
Savings is not a practiced discipline today, many believe living at 125% of your income is feasible and when the math finally computes, they believe they are entitled.


"Will Rogers also said, "an economist's guess is liable to be as good as anybody else's.""

Or worse, in the case of CNBC. Did you see Jon Stewart's CNBC skewering the other night? This has already become a classic:


"The paradox of thrift (or Paradox of Saving) is a paradox of economics propounded by John Maynard Keynes. The paradox states that if everyone saves more money during times of recession, then aggregate demand will fall and will in turn lower total savings in the population because of the decrease in consumption and economic growth."


Will Rogers also said, "an economist's guess is liable to be as good as anybody else's."


The big problem is where do you put your money in savings where the return is greater than inflation?

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