Wednesday, October 21, 2009

Sucks to be a saver

I read this article yesterday about how the decisions made by the government are ruining any incentive to be a saver. It's totally true - our ING accounts are currently at 1.3% interest. It had previously peaked at 4.5% in late 2006 (and coincidentally, so did our balance several months later). Our CDs are only doing a little better, ranging 1.55-2.15% depending on when they were opened (and the earlier ones are about to start rolling over into lower rates). I didn't believe the article about money market funds until I went and looked on the Vanguard website - the year-to-date on their Prime Money Market fund is only 0.51% - and the expense ratio is 0.28%! What's a saver to do? :-(

4 comments:

Knot said...

You are a saver. I've noticed that you really pay close attention to the details of finance.

I think you have to look at it from the govt.'s perspective. They want you spending money. They want it circulating around and generating jobs etc. That's the macro view. But by the same token, on the micro level, we should "save for a rainy day". Our mindset as a country on the micro level is "horde, I may get laid off."

It's an odd spot we are in. It's NEVER bad to save, the incentive is just not there. As a commodity, money is cheap. The banks will buy a dollar from you for what was it .013 cents. So the bank is going to pay you 1.03 cents for your dollar bill over 6 months or a year or whatever the term is.

In light of it all, I'm no economist, but stuffing it in a mattress is almost as safe as putting it in a bank or an investment now. But that's the way it goes. Up and down.

Anonymous said...

My investment plan at this point revolves around buying precious metals and land. At least they are real. ING has disappointed me quite a bit recently.

-Seth

Courtney said...

Land is probably a bargain, but I'm of the opinion that gold is overvalued as an investment right now (as a hedge against financial collapse, it might be a different story...) Ironically, we're trying to save to buy "land" - as in a new house, not as in an investment.

Anonymous said...

Actually gun stuff has paid off too.

In 2004, I bought $79 for 1000rds of 7.62x39. Today that same lot goes for $259. I bought a rifle in 2004 for $225 which now retails for $975. Nope, won't be putting any long term savings in a bank...

-Seth