http://www.bargaineering.com/articles/linkfests-are-fun.html personal finance blog with anecdotes, advice and commentary. Sun, 22 Nov 2009 06:04:27 -0500 http://wordpress.org/?v=2.8.5 hourly 1 http://www.bargaineering.com/articles/linkfests-are-fun.html/comment-page-1#comment-79626 TLReid Sun, 01 Apr 2007 06:22:25 +0000 http://www.bargaineering.com/articles/linkfests-are-fun.html#comment-79626 Good comments but I want to raise a big issue, where many articles, posts and comments are assuming that stock and bond funds never lose value. Much discussion of "savings" and "extra savings" by putting money, and more money, into various stock funds, maybe some bond funds, etc. There have been years and even multi-year periods when such investments have LOST value. Even 1 year of loss then requires extra gains just to get to even. A multi-year period of falling asset prices (yes, stocks and even bonds can drop in price, just like houses, condos, and electronics) would hit literally millions of "savers," "retirees" and "pre-retirees" incredibly hard. Please consider this in personal planning and in helping educate others about their planning too. At a very minimum, each person should have 6 months of monthly expenses in secure bank savings. Then, approximately $10,000 per person in a very safe investment such as secure bank certificates of deposit or short-term (very short-term) Treasury bills. Only after that, should actual "investments" like those available through 401(k), IRA, Roth IRA, annuity, ever be considered. People don't like to admit that investment losses are actually rather common. The financial industry wants you not to be very aware of that, and to buy, buy, buy. Just make sure that you do NOT "buy high and sell low" - it's the surefire way to lose more than you can imagine is possible. If you must buy an investment, okay, but don't let it become a loser. Loser investments are far more toxic for your future (and present) than a "mere" 4% return on a guaranteed-principal CD. Good comments but I want to raise a big issue, where many articles, posts and comments are assuming that stock and bond funds never lose value. Much discussion of “savings” and “extra savings” by putting money, and more money, into various stock funds, maybe some bond funds, etc. There have been years and even multi-year periods when such investments have LOST value. Even 1 year of loss then requires extra gains just to get to even. A multi-year period of falling asset prices (yes, stocks and even bonds can drop in price, just like houses, condos, and electronics) would hit literally millions of “savers,” “retirees” and “pre-retirees” incredibly hard. Please consider this in personal planning and in helping educate others about their planning too.
At a very minimum, each person should have 6 months of monthly expenses in secure bank savings. Then, approximately $10,000 per person in a very safe investment such as secure bank certificates of deposit or short-term (very short-term) Treasury bills. Only after that, should actual “investments” like those available through 401(k), IRA, Roth IRA, annuity, ever be considered.
People don’t like to admit that investment losses are actually rather common. The financial industry wants you not to be very aware of that, and to buy, buy, buy. Just make sure that you do NOT “buy high and sell low” – it’s the surefire way to lose more than you can imagine is possible. If you must buy an investment, okay, but don’t let it become a loser. Loser investments are far more toxic for your future (and present) than a “mere” 4% return on a guaranteed-principal CD.

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