What if dollars didn't have slave owners on them? Hmm.....
Don't forget to Vote this November!
Vote any which way you want....just keep voting. We complain about our parents' running our lives, yet we never vote to make our own rules. It's our future.
The US stock market just climbed the highest in a single day ever. At over 10% gains across the board, investors rallied and drove equity prices up for nearly non-stop gains in trading. This sounds like a huge positive when considered out of context, but there's a deep reality that can easily be overlooked.
Returns in the stock market are still approximately down 20% for the year. Consider this:
At the high point, the Dow Jones was around 14,000.
During last week's low, it sunk to around 8,500.
Now, it is sitting at 9,400.
TEN years ago...the Dow Jones floated around 10,000. This means that your hard-earned contributions in a passive style investment returned you nothing in the last decade. It actually lost you money; and it's a bit more than your account is stating.
What most people don't realize is that a 20% loss is NOT equal to a 20% gain. If you start with $100 and lose 20% of it, you are left with $80. If you keep that $80 invested and earn 20%, you now have a total of $96. Taking a loss on your initial investment lengthens the time you need to recoup. Every time you take a step back, you've got to take two steps forward to get anywhere. It's a fact of life that hurts more the closer you get to retirement.
An ounce of prevention is worth a pound of cure.
Your first move towards money should be defensive. What are the safest investments? How can I protect myself from losses? The pandered philosophy is to diversify and invest broadly in stocks, bonds, commodities, and even real estate. Nearly ALL professionals will tell you that the best protection which also ensures gains is to spread your wealth around. DO NOT buy into this thinking blindly!!! I swear...it's some of the most toxic advice ever.
The diversity idea works if your worth is in the millions of dollars. I'm saying that if you were to sell everything with your name on it, was left with only straight cash, and needed to decide how to apply your money...diversifying and balancing yourself across the board is certainly the best option. The problem is that it's NOT a realistic option. Wealth is accumulated over a period of one's entire life. And the rate at which we earn money changes throughout our careers.
You start bagging groceries for $6 an hour. You later become a cashier and earn $12 an hour. After getting an education, a corporation pays you a great $60,000 salary (e.g. about $29 per hour). The option to diversify your money doesn't even become viable until most of us are in our thirties.
Wealth is a process that is built through stages. What may be great advice for one person, can be horrible advice for you. The same rules don't apply to everyone. If you double your investment of $1 million, you'd be really happy. But if Warren Buffett doubles an investment of $1 million, that's not even a single percent of his net wealth. Your thousand is Buffett's million. This is why you MUST understand what phase you are in economically. Being in debt a million dollars will get your thumbs broken something awful, but for others it's next to nothing. (Sorry for the redundancy, but it's the most important concept that is often overlooked).
Everything is relative. Your financial well-being greatly depends on your specific situation. I have NEVER heard a drop of good advice from a person that didn't inquire about my personal situation. In fact, it is unethical for someone to give you financial advice without understanding your tolerance for risk. And your risk tolerance is a consideration of BOTH your emotional attitude toward losing/gaining money AND your ending financial stability if you were to lose money. The worst unethical practice is allowing a person to take on more risk than their finances can handle. (does sub-prime mortgage ring a bell?)
We are in some very interesting financial times. I honestly believe that we will have a long recession. At the very best, it looks like the economy will see insignificant growth for some time. Anything else would likely signal unhealthy inflation, or another dangerous bubble. With unemployment a little over 6% (and speculated to rise to 10%), unemployment for new college graduates over 7%, and big losses in retirement funds, it'll take a while before we see sustainable growth. Afterall, whenever you take a step back, it takes two steps forward to make any progress.
Mark Twain has said that "history doesn't repeat itself, but it does rhyme."
We are in a challenging environment that echos of the Great Depression. The greatest theft of our lives didn't happen with a $700 billion dollar bailout legislation - it happened with our future. The prosperity of the young, up and coming, professionals has suffered a major heart attack at the hands of the expiring generation and no one of my age seems to care. It makes me question, at what age do we begin to care about our future?
You are lead to believe that there is pride and honor in selling yourself for monotonous labor. If you staple enough papers or answer calls with extra chipper, you are a valued member of a society that honors your life. But the moment business slows, the first action is to leave you jobless. Leaders hail soldiers as heroes and patriots, yet 1 in every 4 homeless people are veterans. It's a sad deal. Your loyalty is sold and never returned. And still, we love to point our noses above others because arbitrary seniorship was added to our title.
The truth is that you are an indentured servant. You are a slave with pay. Corporations, companies, and entrepreneurs are the machines that add value to society. The rest of us are merely the grease between the wheels.
We should be mad as hell and not take this anymore. We should be using our voice and sharing our thoughts to create a future we deem fit, rather than simply accepting the scraps our elders are leaving us with. This is supposed to be a democracy where our voice can be heard. Why do we choose to be silent and complacent with the robbery of our future?
The American system certainly does reward those with ambition. But it also punishes those stuck in the middle class. If you knew the rules of the game, you would see that working a typical 9 to 5 is among the worst of decisions.
Did you know that Social Security tax is only paid on income of up to $90,000? That's right! The rich pay LESS for the welfare of retirees than most of us.
Who's looking out for you? The person that manages your 401k? Ha! The truth is that no one is looking out for your well-being. And still, you pride yourself on filing enough papers to ensure the well-being of your boss.
If you were to invest solely in US treasuries, you can actually save a healthy amount of money for retirement with almost no risk. Has anyone ever taught you how? I doubt most of you know. Everyone just talks about their 401k or IRA, but few of us really understand the rules. A 3% annual yield on a savings bond can equal a little under a 6% annual yield in a bank savings account. But heck, you don't want to be a person...you'd rather be an associate...
Do you even know who the BEST business customer in the nation is? It's the US government. Did you honestly believe that tax dollars were all spent on salaries and fixing roads? The federal government AND the state government operate by contracting business with Joe Schmo. Best of all, the government never defaults on payments for these contracts. There's even a secondary market for these deals.
For a monetary culture, it's astonishing how little is taught in personal finance. The system doesn't teach you the fundamentals. What is taught is how to obey orders (whether it's in a classroom or anywhere else). Our parents were once able to provide for a family with a high school education. How far has your bachelor's degree gotten you? The unemployment rate for new graduates is over 7%, and the number of graduates whose work dramatically undervalues their education is speculated to be very significant. Unless you rank among the top 10% of your class, it might not make financial sense to expand your education before beginning your career.
It's unfortunate how near-sighted our values often are. Ben Franklin has said that "they who can give up essential liberty to obtain a little temporary safety, deserve neither liberty nor safety." The power of his words ring more clear with recent events.
Too often are we quick to act petty when there are pennies left on the table. If only we realized that competition is global, maybe there would be less deceit and more cooperation among neighbors.
America does not want a nation of employees. America loves entrepreneurship and ambition. The American dream is to create your life the way you want it. The dream was to assemble with those of similar ambitions and prosper through cooperation. Why have we been lead to believe that we deserve less?
When you pick a beauty queen, you get beauty pageant answers. The fact that McCain decided to have Sarah Palin as his vice presidential running mate makes me question the quality and care behind his decisions. How deeply and thoroughly does McCain evaluate situations before making major decisions that can have global consequences? We are in the greatest economic crisis since the 1930s, and the right wing of the race has openly admitted to not understanding economics. There seems to be an increasing lack of talent in Washington...
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