Is saving considered a virtue in the united states?

(sarcasm mode on) And reduce corporate profits? What are you, a communist? (sarcasm mode off)

 

<div class='quotetop'>QUOTE(burritos @ Sep 18 2007, 02:58 PM) [snapback]514418[/snapback]</div>

I'm an "average Joe," hoping to save for retirement. It's a constant battle trying just to hang onto a nest egg, let alone to see it grow.

I'm leery of the stock market, so most of my savings are in cash. I just transferred some into an online E*Trade bank account, where it will earn 5.05 percent, rather than less than 1 percent in a passbook savings account at the local bank.

I have mixed emotions. While I want to avoid losing money in the stock market, I'd also like to earn decent interest on my cash. Keep in mind that when I do well, the government steps in and takes a third of it in taxes... So I guess the government has a stake in how well we all do, since they share in the gains, and to a very limited degree, in the losses.

Harry

 

well, some of us try like hell anyway, despite saving something up and then losing it multiple times to illness.

 

Only metaphorically.
Nowdays, you don't save, you invest. And you hope your investment will pay a higher rate than the cost of interest on your mortgage.
This has been the correct formula for some 40 years now, esp. with the ability to deduct mortgage interest on your taxes. Owe 100 grand on your home at the same time you have 100 grand in a 401K or pension fund.

Savings don't really exist when you owe 100 to 300 grand on your home. Any "savings account" at that point is meaningless. You pay down your loan if you have extra, or you draw equity out if you need it.
What good is a savings account earning 1-5 % interest when you pay a higher interest on your mortgage?

The term "savings" is a misnomer these days. And fiscal prudency is a lost art to MANY people. But, I'm not sure those two issues are connected. I think credit cards have removing spending inhibition. You just don't feel the same bad feeling you get spending cash. We all know you still spent it, but it seems less "spent" when no money seems to change hand. Then the bill comes and folks are shocked at how much they DID spend. Can't pay it all, rack up interest, repeat....

 

<div class='quotetop'>QUOTE(Earthling @ Sep 18 2007, 03:32 PM) [snapback]514436[/snapback]</div>

Unfortunately, with cash you loose steadily over time. Without some sort of good investment, your nest egg won't grow, and will in most cases shrink.

Tom

 

<div class='quotetop'>QUOTE(Darwood @ Sep 18 2007, 04:02 PM) [snapback]514451[/snapback]</div>

What's a mortgage?

My house is paid for and has been for years.

Like I said, mixed emotions: it's nice the government wants to help people not have their houses foreclosed, but that doesn't affect me in the least.

As far as stocks go, losing 100 percent when a company goes bankrupt ain't much of an investment. I do have some stocks, mostly solid companies that have lots of brainpower and aren't affected by energy costs. In my E*Trade bank account, a couple of mouse clicks moves the money into my trading account, so I can buy stocks anytime I want. Right now I'm trying to gauge which way the market will go, and I should probably set some stops.

As you get closer to retirement, you tend to want to gamble less...

Harry

 

<div class='quotetop'>QUOTE(qbee42 @ Sep 18 2007, 03:04 PM) [snapback]514453[/snapback]</div>

Esp. when the fed is loose with the currency and/or oil trading starts switching to Euros or Yens, causing the trillions held in dollars by other countries for the sole purpose of buying oil to flood back to us. A flood of US dollars back into the market will make your $X dollars worth about half as much. I don't have an answer to where you should put that money though...How about buying things you know you'll need before inflation causes their cost to rise? An EV perhaps?

 

<div class='quotetop'>QUOTE(Darwood @ Sep 18 2007, 04:24 PM) [snapback]514469[/snapback]</div>

That does bring up a good point: one of the best investments you can make is to insulate your house and/or upgrade to a high-efficiency furnace. Why? Because not only do you save money, the money you save (return on your investment) is tax-free. The tax man has no idea you are saving $100 a month heating your house, or more, and he can't get his mitts on that money.

I'm trying to figure out how much more of a bull market we will have. Usually you get crazy upward spikes before the market reverses hard into a bear market. We've had a bull market for a while now...

Harry

 

My answer: NO savings in not valued in the US. It is plan to see by our tax structure that Americans are encouraged to spend as much as they make. The Federal government taxes spending at 0% but savings and investing at up to 35%. If the Federal government wanted to encourage savings the easiest way to do this would be to flip the tax structure around and tax spending through a national sales tax while repealing the income and capital gains taxes.

The mortgage interest deduction is a joke. It is nothing more than another federal giveaway to the wealthy. I have owned a home for 6 years and have never saved a penny from the mortgage deduction. Why? Because I chose to own a modest home without a huge mortgage. I don't see it as the government’s role to encourage people to purchase very large or expensive homes.

I agree with Earthling that one of the best investments you can make is in energy conservation. We sold our Nissan truck that got 15 mpg for our VW turbo diesel that gets 45 mpg. That alone has saved us $15,000 in fuel costs over the last 5 years.

Right now my wife and I are concentrating on paying off debt instead of maxing out our retirement. I figure a guaranteed 6 to 8% return to pay of all our debt over the next 2 years is better than risking it in the stock market. It will be nice to be 31 and completely debt free.