It’s not the government’s job to make you 10% per year
When you pay attention to the financial markets and all activity surrounding them, you start to see one simple pattern that pretty much guides everything.
- Things go up — everyone’s happy.
- Things go down — everyone starts blaming the government.
It would actually be kind of humorous if it weren’t so frustrating. It’s as if the world believes that the purpose of the market is to earn them a return of 10% per year or more, no questions asked. With so many people in our country and around the world tying up their life savings and retirement savings in index-tracking funds and equities, it’s no wonder this is the case. Somewhere along the line everyone started believing that the market would earn them better returns than their bank accounts and … well … they forgot about the risk.
That’s right. In case you didn’t know, there is risk involved in investing in equities or any other financial instrument. That risk exists whether you’re in mutual funds in your 401k or straight-out stocks in your non-retirement funds. Put your money into the market and ten years from now you might have less money than you have now.
Seriously, did anyone notice what just happened to GM. It just hit 50 years lows. Meaning that if you had put your money into old, faithful, GM fifty years ago and held on, today you’d have just about the same amount of money as you did then. No gains, not even inflationary gains.
So I guess it’s no wonder we all just scream for the government to fix things. I mean, it is our nature to blame others. It’s not unexpected, I just wish it weren’t so. Either accept the risks involved in your own financial strategy, or put your money in a bank or money market where you will get a guaranteed, albeit smaller, return.
September 4th, 2008 at 12:05 pm
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