Sep 28th, 2012 by Jennifer Lynn
Me again, on the couch, nibbling on a hunk of zucchini bread, with locally grown zucchini and blueberries, and trying to capture my breath. My little butterbean is blessedly asleep and it is during these quieter moments that I try to pen some musings.
And it is quite common for my thoughts to drift to finances and, in particular, on this night, to saving.
In this turbulent economic climate of nonexistent interest rates, savers are financial losers, which is why I believe it is so important for savers to shift their surplus into tangible assets which retain value or even appreciate.
I view my financial surplus (my savings) as tiny financial seedlings that—if prudently planted and nurtured—will one day grow and transform into mighty, fruit-bearing money trees.
Right now the biggest hurdle to wealth creation is finding fertile soil and a suitable planting ground in order for those first precious seedlings of savings to thrive properly.
Surplus held in a traditional savings account is rapidly losing value due to paltry interest rates and the corrosion of purchasing power. Hard-working families not completely strapped down by bills are now faced with a further challenge: how to store financial surplus, their savings, in a manner which will retain its value.
Some solutions I ponder over; storing a percentage of savings in precious metals, numismatics, antiques, collectibles and art, one’s own business (entrepreneurship), strong stocks wielding dividends (requires heftier principles), alternative currencies.
These all have inherent risks and are niches which require research and a certain level of awareness and expertise. Nowadays folks are being shaken out of passivity and forced to be more creative and knowledgeable in order to remain ahead of the insidious inflationary beast.
It is wise to choose a few niches and then become acquainted and comfortable with them until you’re a well-informed expert. (And, fortunately, there is a plethora of knowledge available online and at the local library.)
I would love to hear your thoughts. How are you combating inflation during this prickly era of suppressed interest rates?
=^..^=
I have also thought about putting some money into either gold or oil as i see both as being better long term investments than a savings account.
Not many people seem to realize that every time Ben Bernanke prints money he is diluting the value of everyone else's savings. There is no incentive to save if this continues.
The only other thing I can think of which will give you a return on your money is renting out property. However, if the property prices drop you will be holding a whole heap of negative equity :
Good ideas to ponder. The current climate definitely should cause us to look for other ways to produce income other than through typical savings accounts. I think the thing to keep in mind is to not get into something that's so illiquid that it is not worth the higher possible return.
I wouldn't begin to know where to put savings to earn any kind of money. But I do think that savings is a good thing for emergency (that is what I am working on). However, my 2 cents is that just continue to save and then when the markets turn around, you will have a good chunk to put to work for you then! Interest wise.
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I've clicked over to your site from Dumb Little Man (blog) which I've subscribed to for some time. Each time the economy and/or makets crash, I think to myself, man, I wish I was ready for this with some savings so I can invest while houses/stocks/etc are cheap!
Finally I have done so. I socked away $4000 through 2007. I also decided to look at dividend stocks as you mentioned in your post. Everything else seemed more complicated and required more to startup. So I opened a discount brokerage account with $500.
I was reading all kinds of money/finance guru books and took to Motley Fool's books. So I joined Motley Fools subscription dividend investment newsletter. I made sure to look for my own stock picks, but it was reassuring to compare with their approach and advice. I feel pretty good about where my savings are sitting now and hope to do this again. I hope to build up some more cash and wait for the next market crash, and invest it again.
Saving is tough for me, because I'm a typical guy and like gadgets and toys. But watching dividend income grow quarter after quarter and year after year, really helps me stick to my savings goals.
I keep telling myself –
Nothing changes, if nothing changes.
and
Hold onto your wealth. Stop giving it to Amazon, REI, Best Buy, etc.
Best of luck with your goals,
Great job on your blog,
~Rob
Rob, I adore hearing stories of 'self-learned' financiers. Remember: instead of buying tons of products from businesses like Amazon, REl, Best Buy, etc, become a stock holder (if you believe their company offers value, that is) and own shares of the company instead.
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