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Re: Could this scenario happen?
Old 01-25-2006, 04:59 PM   #21
 
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Re: Could this scenario happen?

I have heard a lot of different scenarios on this forum the last few years.

This one I can safely say "NOT GONNA HAPPEN". Even if you GAVE everyone in the country a Million Bucks, a majority would not have anything in 5 years.

Most folks live from paycheck to paycheck and have little interest in Long Term Finance.

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Re: Could this scenario happen?
Old 01-25-2006, 05:53 PM   #22
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Re: Could this scenario happen?

I will bet you a million bucks it ain't gonna happen. If it were that easy then everyone would have a lot of money. Whenever a person comes to conclusion based on a small observation I am incredibly skeptical. This guy sees 10-15 people who participate in a 401k at work and he thinks everyone is participating in 401k plans and in return accumulating wealth. Not true. Ask for the facts - even if 1/2 to 2/3 of people 50 or older contribute to their 401k plans, the fact is the majority have very little in the way of savings. Accumulating an above average nest egg is for the disciplined minority - not the majority.
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Re: Could this scenario happen?
Old 01-25-2006, 06:15 PM   #23
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Re: Could this scenario happen?

Depending on which statistics you look at, either almost nobody has any money put away (source: usually an investment firm's study), has some but not enough (companies and the us govt trying to get you to pay for your own retirement as they arent going to provide the pension or SS you think they are), or half are good and half arent.

Remember. You. Bear. Other guys. Sneakers.

Its all relative. If most people cant pay big bucks for something, it either wont exist or the price will come down to where people can afford it. If you're better equipped to afford it, you'll live better than the mean.
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Re: Could this scenario happen?
Old 01-26-2006, 12:40 AM   #24
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Re: Could this scenario happen?

It seems hard to imagine everyone running around with a million bucks or more, but it is a curious thought.

Just look at what happend to the Real Estate market when lots of people had/have access to easy money (either just low interest loans or interest only, no money down, etc.) costs have gone way up and now people with money (who just want to pay for the house) have to chase the prices. I know easy money isn't the only factor, but IMO it is a big one.
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Re: Could this scenario happen?
Old 01-26-2006, 07:23 AM   #25
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Re: Could this scenario happen?

True, the housing market is one good example of people making money but not really getting that far ahead. For instance, I walked away from my condo with a profit of around $76,000 (settlement check was more, but then I factored in all the renovations I did to the place). At the time, I could've probably handled a mortgage payment of around $180K or so. So basically, that would've gotten me into a nearby single family home that was around 1500 square feet, 3 br/2ba, 1-car garage, 1/4 acre lot, built in the 60's, in a decent (not upscale, but not dangerous) neighborhood.

Sad thing is though, back in 1998 I was actually close to being able to afford one of those houses anyway! Although I was working two jobs, and would've only been able to make a minimal down payment...so maybe things HAVE improved a bit. Still, not as much as I would have liked!

And even with all the "easy money" out there, I guess it is still harder for poorer people to get ahead. For example, when I bought my condo in 1994, I paid $84K for it. Put 5% down. I made around $22K at my full-time job, and maybe $5K at my part time. I was 24 at the time. Well, adjust for inflation, and that $27K combined was around $33.5K when I sold the condo in 2004. I sold it for $185K. The guy that bought it made $50K per year, was 30 years old, and put zero down.

Back when I bought it, it was a "starter home". I guess nowadays though, many people have to "start" their homes later in life?
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Re: Could this scenario happen?
Old 01-26-2006, 07:48 AM   #26
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Re: Could this scenario happen?

Quote:
That's not true.
Exactly, and this is why this discussion is pretty dumb really.* They have actual statistics on this, and the last i heard, the national savings rate is right at 0%.* So clearly, not everyone's doing it.

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Re: Could this scenario happen?
Old 01-26-2006, 08:08 AM   #27
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Re: Could this scenario happen?

Quote:
Originally Posted by azanon
Exactly, and this is why this discussion is pretty dumb really. They have actual statistics on this, and the last i heard, the national savings rate is right at 0%. So clearly, not everyone's doing it.
I believe the 0% rate that gets frequently quoted excludes all 401k savings. So the OP's coworker who's concerned about everybody saving tons in their 401k could be right if we just look at the 0% savings rate.

Of course, we also have data about 401k participation, and clearly, folks aren't saving enough to cause us high savers (10%+) to panic.
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Re: Could this scenario happen?
Old 01-26-2006, 08:27 AM   #28
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Re: Could this scenario happen?

If you take my company participation in our 401k it's only about 50% .. and of those in it most are just putting in enough to get the match, I know of only 2 or 3 that are maxing out contributions.

There are very few young people participating, by young I mean under 30. It's very frustrating for me to have the 401k chat with a new employee knowing they won't take advantage of it.
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Re: Could this scenario happen?
Old 01-26-2006, 01:04 PM   #29
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Re: Could this scenario happen?

I tried to find the reference from a few days ago but it is lost. I read that 65% of boomers have a net worth of less than $50K. From some of the other quoted numbers it sounds possible.

If that's correct I don't think we have to worry about an abundance of millionaires. Instead a bunch of boomers feeding Social Security till they die.

As for myself I have my first month of ER under my belt and loving it.

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Re: Could this scenario happen?
Old 01-26-2006, 01:56 PM   #30
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Re: Could this scenario happen?

Ok, Hot off of Yahoo Finance (I know, I know) :


"According to an annual report by TNS Financial Services, a record 8.9M households have a net worth of at least $1M, up 8% from 2004.

The increase marked the third straight year that the number of millionaire households has increased, but the recent rise is significantly lower than the 33% increase from 2003 to 2004. According to researchers, the average annual income for a millionaire household is $119,000 with $82,000 coming from salaries and professional fees.

The number of "emerging affluent" households also showed strong growth in 2005. An "emerging affluent" household has a net worth between $100,000 and $500,000 excluding primary residences. The number of "emerging affluent" households increased almost 3% to 24.5M in 2005. The average annual income for this class of household is $64,600 with $45,000 coming from salaries and professional fees."


According to the US Census folks, in 2000 there were 105 million housholds in the US of A.

The percent of all households with a networth of $1 Millon would be about 8.5%

The Emerging Affluet group would be about 23 % of all households.

This would mean that 32% of all households have a networth greater than $100,000. Which means that 68% of all households have a net worth of less than $100k.

The lady is wrong.

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Re: Could this scenario happen?
Old 01-26-2006, 02:55 PM   #31
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Re: Could this scenario happen?

Quote:
Originally Posted by azanon
They have actual statistics on this
Help me out...which 'they' are we talking about and how is it that we know the stats are 'actual'?



(this is sarcasm)

Cute fuzzy bunny...

But seriously. Who would be in a position to say what percentage saves how much with any authority at all? I've seen stuff from the US census, stuff from investment companies, stuff from various limited studies. None of them were very comprehensive. Almost all required someone lying telling the info gatherer what they saved or spent.
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Re: Could this scenario happen?
Old 01-26-2006, 04:32 PM   #32
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Re: Could this scenario happen?

Quote:
Originally Posted by (Cute Fuzzy Bunny)
Help me out...which 'they' are we talking about and how is it that we know the stats are 'actual'?



(this is sarcasm)

Cute fuzzy bunny...

But seriously. Who would be in a position to say what percentage saves how much with any authority at all? I've seen stuff from the US census, stuff from investment companies, stuff from various limited studies. None of them were very comprehensive. Almost all required someone lying telling the info gatherer what they saved or spent.
Well, what studies do you have on how often and under what circumstances do people lie in research studies? Back when I was a student I used to work on various "lie" scales for determining the reliability of responses. Interesting stuff.
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Re: Could this scenario happen?
Old 01-26-2006, 04:47 PM   #33
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Re: Could this scenario happen?

It depends strongly on the subject matter, what you tell them you're going to do with the results, and how you ask the questions.

I can produce 100% accurate looking data that has absolutely no basis in reality.

As far as generic accuracy, among the broad population people will almost NEVER tell the truth when it comes to matters of money and sex. Weight and age are right behind that.

People that agree promptly to be surveyed with the results being shared are the most likely to lie. Or they've got a lot of money or they're humping like bunnies and wanna share.

Nerds lie about how fast their computers are. Investors about how much money they have or make.

Et cetera, et cetera...
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Re: Could this scenario happen?
Old 01-26-2006, 05:01 PM   #34
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Re: Could this scenario happen?

Quote:
Originally Posted by (Cute Fuzzy Bunny)
Nerds lie about how fast their computers are. Investors about how much money they have or make.

Et cetera, et cetera...
So,...what do (Cute Fuzzy Bunnies) posting a stream-of-consciousness blog on buying a new laptop lie about?

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Re: Could this scenario happen?
Old 01-26-2006, 05:05 PM   #35
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Re: Could this scenario happen?

Shoot...I knew I forgot to do something...I forgot to lie! Dangnabit.

It was a bit streamish...I didnt want to lose any bits of stuff I used in the decision process...oh well, hope its useful to someone...

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Re: Could this scenario happen?
Old 01-26-2006, 05:11 PM   #36
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Re: Could this scenario happen?

Quote:
Originally Posted by (Cute Fuzzy Bunny)
It depends strongly on the subject matter, what you tell them you're going to do with the results, and how you ask the questions.

I can produce 100% accurate looking data that has absolutely no basis in reality.

As far as generic accuracy, among the broad population people will almost NEVER tell the truth when it comes to matters of money and sex. Weight and age are right behind that.

People that agree promptly to be surveyed with the results being shared are the most likely to lie. Or they've got a lot of money or they're humping like bunnies and wanna share.

Nerds lie about how fast their computers are. Investors about how much money they have or make.

Et cetera, et cetera...
Sure, but wouldn't you think that people tend to say they have more money (or sex) than they actually have? If so, then savings may be even smaller than reported. ( I suppose it is possible that people under report their assets, out of fear of people knowing how much they actually have or some other reason, but I think the tendency would be to lie on the high side.)

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Re: Could this scenario happen?
Old 01-26-2006, 05:17 PM   #37
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Re: Could this scenario happen?

Well, theres where the questions come in.

"So are you putting a bunch of money away for when you're an old phart, or are you living the life now cuz I love your cell phone and is that an xxx handbag?"

But you're right, many of these money studies make things look pretty good. The US census study probably lands in the camp of 'lying to the upside'. They asked a small number of people if they wanted to bare their finances. If a portion of those people said 'no', they just went with the rest. If somone dropped out later, they werent replaced. They asked them to provide information on savings and investment verbally. No confirmation or other paperwork. Then they tracked them for several years, again losing but not replacing people.

I'm really gonna bet that they didnt get 100% truthful information. Or 80%. Or 50%.
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Re: Could this scenario happen?
Old 01-26-2006, 05:28 PM   #38
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Re: Could this scenario happen?

Quote:
Originally Posted by SteveR
The lady is wrong.
Will everyone have a million dollars in the future? No. That is wrong. Will there be a lot more millionaires in the future than today. It certainly is trending that way. Will it be tougher to retire with a million bucks in the future than it was in the past. Yes. That is right. Does that mean that you shouldn't bother saving? No. That is wrong. So, somewhat wrong somewhat right.

Anyone who works in the financial industry can tell you that there is a flood of capital these days. This is obviously going to be a big problem for retirees. Is it coming from 401k's? I don't think so, and frankly I don't understand how to reconcile the poor savings data with this glut of capital (China? Perhaps brewer can help me out). But it's a problem nonetheless.
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Re: Could this scenario happen?
Old 01-26-2006, 05:36 PM   #39
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Re: Could this scenario happen?

I know my company and some other ones I have good info on have been saving cash for a few years now. They are waiting for the green light to come on. In the meantime, they are buying back their own stock to use of some of that cash. It is my guess that many investors are doing the same thing. I know I have more "cash" in short term investments than ever before. If my company and I are any indication of the rest of the market then there is a lot of cash parked waiting for that green light.

I guess the real question is what effect will that have on stock prices when the light goes green? Too many dollars chasing too few goods? If so, then expect prices to go down and a lot of churn and burn in all the markets. I am not expert but it seem logical anyway. Longer term? That would require use of the brain cells I killed off last weekend. 8)
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Re: Could this scenario happen?
Old 01-26-2006, 05:41 PM   #40
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Re: Could this scenario happen?

Quote:
Originally Posted by (Cute Fuzzy Bunny)
Well, theres where the questions come in.

"So are you putting a bunch of money away for when you're an old phart, or are you living the life now cuz I love your cell phone and is that an xxx handbag?"

But you're right, many of these money studies make things look pretty good. The US census study probably lands in the camp of 'lying to the upside'. They asked a small number of people if they wanted to bare their finances. If a portion of those people said 'no', they just went with the rest. If somone dropped out later, they werent replaced. They asked them to provide information on savings and investment verbally. No confirmation or other paperwork. Then they tracked them for several years, again losing but not replacing people.

I'm really gonna bet that they didnt get 100% truthful information. Or 80%. Or 50%.
Just a guess - people will understate debt and overstate assets. The debt is easy to explain - people forget about it, "out of sight, out of mind", or it's something they'll pay off soon, when things get better, so they don't want to mess up the census results with it.

Overstating assets - bragging, people don't know. Those on this board that do a "net worth statement" are a slim majority. They guess to make it look good, to impress others.
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