A set of circumstances have left me with a lot of time on my hands. I’ve spent some of several days reading back posts on Garth Turner’s blog. He got kicked out of the conservative party so probably isn’t a total asshole.
I started reading it because of my interest in real estate, and the obscene rise in housing prices in the last several years. But reading his rants for a few months back I’ve now got even bigger concerns.
I’m sure everyone has seen the “save your money” commercial (even I have, though I don’t watch TV). And I bought the idea. My risk tolerance is zero, and I’d 100% rather not lose money and not gain interest than take risks on investment portfolios that may return 10% or may cost the same.
But things have changed since I started building up my savings. The savings account interest has been at 1.5% or lower for years, but the inflation is steady at 3%. That means I’m losing 1.5% of my savings every year.
To add insult to injury I’m paying taxes on the 1.5% interest (even though it’s actually a 1.5% loss). So after taxes I’m making 0.9%. That means after taxes I’m losing 2.1% of my savings every year.
That makes me want to cry.
What choice do I have? Get a portfolio and risk losing everything quickly, or slowly lose everything over a long period of time?
I guess I shouldn’t complain too much, there are plenty of people who lost their life’s savings in the stock market, at least I have.. 100/2.1.. roughly fifty years to lose it all. I should research how compound negative interest works :)