Monday, August 10, 2015

The Crock of @#$% Report v.025

August 9, 2015
Millennials are saving — but they’re doing it wrong

There’s just one problem, however: That skittish mentality has pushed 20-somethings to keep their money in the modern equivalent of under the mattress or in checking or savings accounts where it accrues little interest, instead of investing...

1. You cannot claim that someone is saving wrong if they are accumulating money in a savings account or stuffing money under a mattress, any more than you can claim a child is saving wrong if the child continues to jam coins into their piggy bank. By definition, both are saving exactly right.

2. You cannot claim that someone is saving right if they are spending money to invest, on the hopes of making their money grow. Spending money is definitely not the definition of saving.

3. You cannot claim that someone is investing wrong if they are not investing at all, any more than it would make sense to argue that I am currently playing football wrong as I type this post from a reclining position on my couch. I cannot be playing football wrong if I am not actually playing football. Go figure. And for the record, there isn't even a football in my house.

4a. Even if you foolishly disagree with the definitions of saving and investing, you still cannot claim that Millennials are doing it wrong. Only hindsight can prove that. There is no guarantee that risky investments must increase in value over the long-term just because they generally have in the past. Past performance is not necessarily indicative of future results. It's one of the first things every potential investor is told to read. There are no sure things!

4b. If you claim Millennials are doing it wrong, then it is therefore just your opinion. 25 cents and an opinion could once buy you a cup of coffee. The opinion, of course, was optional.

5. It is my opinion, as a retired long-term saver, that skittish Millennials should consider U.S. Savings Bonds (especially inflation protected I-Bonds) as an alternative to stuffing mattresses with cash. I cannot guarantee that hindsight will be kind to that opinion, but it is something I have done and plan to continue to do.

This is not investment or saving advice, other than perhaps to point out that investing and saving are not the same thing, which is readily apparent if one has a dictionary handy.


Rob Dawg said...

Place to put your money: anyplace that includes an employer match.

Place to put your money: anyplace that cash flows positive.

Place to put your money: anyplace with substantial tax benefits.

Place to put your money: anyplace that reduces your ongoing expenses.

Stagflationary Mark said...

Rob Dawg,

Good list. I maximized your 1st one when I was working. My long-term TIPS uses your second one. Since I-Bonds are tax deferred, they use your 3rd one. And technically speaking, my basic necessities hoard uses your 4th one. (My toilet paper expenses have been zero for years as I draw down inventory. ;))

Place to put your money: anyplace that is liquid so that you are not forced to sell your best investments to "greater fools" at potentially horrible prices during a liquidity crisis.

Rob Dawg said...

Right now I am revisiting solar. Hoping to catch captial cost declines and maximum subsidy. Southern California Edison is not where I would chose to send my money and by all accounts that monthly number is about to explode.

Stagflationary Mark said...

I toyed with upgrading my 1990 natural gas furnace to a more efficient version when natural gas prices were so high, but part of me was in "if it's not broke don't fix it" mode. In hindsight, now that natural gas prices are much lower, it was a good "lazy" plan. It's not like my heating bills are enormous in the winter. The Seattle area isn't exactly arctic.

Rob Dawg said...

The Seattle area isn't exactly arctic.

The Hell it ain't! ;)

Stagflationary Mark said...

One good investment I did do was converting my outdoor lighting to fluorescent. That paid for itself many times over so far. Trivial upgrade. Well worth the effort.

Did the same for some bulbs in the house, but the indoor ones burn out so fast. Different brand and apparently crap. Not lasting anywhere near what was advertised.

Stagflationary Mark said...

In comparison to southern California, Seattle is arctic. Some years we do get some snow. The key words being some and some. ;)

Rob Dawg said...

My outdoor spotlights went from 120w halogen to 4w LED. Eight of them. From a kW/hr to rounding error.

Stagflationary Mark said...


I had five 60w outdoor bulbs, went down to 13w each I think (too lazy to check). Cost me about a dollar each for the bulbs (subsidized).

Spent $5 once to save about $6 per month. No complaints!

Next upgrade will be LED as well more than likely, especially indoors.

Stagflationary Mark said...

The math is interesting indoors in the winter. All that extra energy of the incandescents isn't completely wasted. There's something to be said for electric space heaters. ;)

Rob Dawg said...

Try these, the math works: