Author Topic: "Those who save, are the fools"  (Read 18811 times)

Bertram

  • Bristles
  • ***
  • Posts: 258
  • I'm not a chef
"Those who save, are the fools"
« on: May 02, 2016, 03:51:37 AM »
Ran across this article in the pretty well known german magazine "Der Spiegel".

https://translate.google.de/translate?sl=de&tl=en&js=y&prev=_t&hl=de&ie=UTF-8&u=http%3A%2F%2Fwww.spiegel.de%2Fwirtschaft%2Fsoziales%2Fsparen-kuerzen-niedrigloehne-wer-spart-ist-der-dumme-a-1090235.html&edit-text=
 
(Here is the original link, if the translator doesn't work: http://www.spiegel.de/wirtschaft/soziales/sparen-kuerzen-niedrigloehne-wer-spart-ist-der-dumme-a-1090235.html )

It essentially goes on and about how people who save are foolish. It also conflates a lot of different topics (personal savings and investments, and  industry and state investing and so forth). But what amazes me is the sentiment which I see very often: Spend your money, don't save it for a rainy day because you might get low or negative returns or everything might collapse. I feel bombarded by this stuff from so many sides, even people who I know are smart on some other topics or in general. It feels kind of surreal, as if we are living in different realities, and I sometimes wonder whether it is really me who is the sane one...

Talk some sense into me. What are your go-to articles to read when confronted with that sentiment?

Rosbif

  • 5 O'Clock Shadow
  • *
  • Posts: 77
Re: "Those who save, are the fools"
« Reply #1 on: May 02, 2016, 04:53:00 AM »
I'd say the go-to place would be my bank statement ;)

More seriously, I don't particularly care what strangers do with their €/£/$/whatever. As an aside, I don't get the general mockery of consumer spending. That "stupid" spending is what drives the economy, and without it, your dividends, net worth growth, and retirement plans are going to dry up. Is it wise for people to buy 5€ coffees and expensive cars with expensive credit? No. If they all suddenly stop, will it hurt your portfolio? Quite probably.

Don't sweat what other people think of you, don't read the news, eat well, exercise well, stay healthy, stay lucky.

(yes, I realise I sound like a goddamn hippy, the worst thing is that I don't even care any more ;) )

Dancin'Dog

  • Handlebar Stache
  • *****
  • Posts: 1760
  • Location: Here & There
Re: "Those who save, are the fools"
« Reply #2 on: May 02, 2016, 05:04:10 AM »
There has to be fools at the bottom to support the wise savers & investors at the top of the totem pole or pyramid.

Let the fools spend, spend, spend!  And work, work, work.....

dude

  • Handlebar Stache
  • *****
  • Posts: 2369
Re: "Those who save, are the fools"
« Reply #3 on: May 02, 2016, 05:07:44 AM »
My go-to refutation is the World's Greatest Investor's annual report, i.e., Warren Buffett's (and Charlie Munger's) Berkshire Hathaway annual report.  Read it (every year); it is ALWAYS worth it.

MustachianAccountant

  • Bristles
  • ***
  • Posts: 433
  • Age: 45
Re: "Those who save, are the fools"
« Reply #4 on: May 02, 2016, 05:24:39 AM »
The article is taking to task the way the government and corporations are spending/investing their surpluses. I don't quite make the connection with personal finance. Of course, I was reading the Google Translate version so...

maizefolk

  • Walrus Stache
  • *******
  • Posts: 7400
Re: "Those who save, are the fools"
« Reply #5 on: May 02, 2016, 05:53:56 AM »
But what amazes me is the sentiment which I see very often: Spend your money, don't save it for a rainy day because you might get low or negative returns or everything might collapse. I feel bombarded by this stuff from so many sides, even people who I know are smart on some other topics or in general. It feels kind of surreal, as if we are living in different realities, and I sometimes wonder whether it is really me who is the sane one...

Human beings are emotionally wired to be irrationally loss adverse. The fear of losing money in a stock market crash outweighs the much more likely outcome of having more money in the future than we saved today. It's not just us, studies in monkeys find the same non-rational response (http://www.nytimes.com/2005/06/05/magazine/monkey-business.html). So by having a rational view of investing for the future may be sane but at the same time be a clear outlier in the population.

Dances With Fire

  • Stubble
  • **
  • Posts: 223
Re: "Those who save, are the fools"
« Reply #6 on: May 02, 2016, 06:21:37 AM »
I'd say the go-to place would be my bank statement ;)

More seriously, I don't particularly care what strangers do with their €/£/$/whatever. As an aside, I don't get the general mockery of consumer spending. That "stupid" spending is what drives the economy, and without it, your dividends, net worth growth, and retirement plans are going to dry up. Is it wise for people to buy 5€ coffees and expensive cars with expensive credit? No. If they all suddenly stop, will it hurt your portfolio? Quite probably.

Don't sweat what other people think of you, don't read the news, eat well, exercise well, stay healthy, stay lucky.

(yes, I realise I sound like a goddamn hippy, the worst thing is that I don't even care any more ;) )

+1 I'm right there with you Brother/Sister.....Peace!

Dances With Fire

  • Stubble
  • **
  • Posts: 223
Re: "Those who save, are the fools"
« Reply #7 on: May 02, 2016, 06:22:50 AM »
There has to be fools at the bottom to support the wise savers & investors at the top of the totem pole or pyramid.

Let the fools spend, spend, spend!  And work, work, work.....

^^^This...

Mr. Green

  • Magnum Stache
  • ******
  • Posts: 4495
  • Age: 40
  • Location: Wilmington, NC
Re: "Those who save, are the fools"
« Reply #8 on: May 02, 2016, 06:54:04 AM »
Crabs in a bucket man, crabs in a bucket. And the entire marketing profession just pours gas on the fire.

2buttons

  • Bristles
  • ***
  • Posts: 393
Re: "Those who save, are the fools"
« Reply #9 on: May 02, 2016, 07:25:35 AM »
Blodsinn.

cerat0n1a

  • Handlebar Stache
  • *****
  • Posts: 2320
  • Location: England
Re: "Those who save, are the fools"
« Reply #10 on: May 02, 2016, 09:44:49 AM »
This is talking about the German government's longstanding policy of running a fiscal and trade surplus, rather than individual savers, isn't it? Conventional economics says that such large scale imbalances are corrected by currency movements, but of course that doesn't work within the Eurozone. The Euro is too strong for southern European countries to compete, too weak for the German economy. Germany can only have these surpluses because other Eurozone countries (greece etc.) have corresponding deficits. It's inevitable, as the author says, that this plays out with Germany forgiving debts owed by others.

forummm

  • Walrus Stache
  • *******
  • Posts: 7374
  • Senior Mustachian
Re: "Those who save, are the fools"
« Reply #11 on: May 02, 2016, 09:50:31 AM »
Germany has a very different cultural history about investing. They had a great economy and then got crushed by WWI. Then terrible, unbelievable inflation and then rebuilding and being crushed again by WWII. The cultural ethos there is also against owning stocks because that's considered immoral. But they also don't really need to save that much because of the strong safety net and retirement systems.

JZinCO

  • Pencil Stache
  • ****
  • Posts: 705
Re: "Those who save, are the fools"
« Reply #12 on: May 02, 2016, 09:58:30 AM »
I'd say the go-to place would be my bank statement ;)

More seriously, I don't particularly care what strangers do with their €/£/$/whatever. As an aside, I don't get the general mockery of consumer spending. That "stupid" spending is what drives the economy, and without it, your dividends, net worth growth, and retirement plans are going to dry up. Is it wise for people to buy 5€ coffees and expensive cars with expensive credit? No. If they all suddenly stop, will it hurt your portfolio? Quite probably.

Don't sweat what other people think of you, don't read the news, eat well, exercise well, stay healthy, stay lucky.

(yes, I realise I sound like a goddamn hippy, the worst thing is that I don't even care any more ;) )
Quite the opposite. You sound like a capitalist. You understand the perverse nature that some describe as MMM philosophy: "I can be frugal and use my money wisely to generate returns rather than material crap while acknowledging alot of my returns, in our current economy, depend on the continued consumer sucka driven economy."

StockBeard

  • Pencil Stache
  • ****
  • Posts: 649
  • Age: 42
Re: "Those who save, are the fools"
« Reply #13 on: May 02, 2016, 06:48:14 PM »
The cultural ethos there is also against owning stocks because that's considered immoral.
Hu, do you know why?

Bertram

  • Bristles
  • ***
  • Posts: 258
  • I'm not a chef
Re: "Those who save, are the fools"
« Reply #14 on: May 03, 2016, 03:12:12 AM »
This is talking about the German government's longstanding policy of running a fiscal and trade surplus, rather than individual savers, isn't it?

Well, that's the thing, the article is all over the place. It starts with personal savings rate, then talks about trade, then about infrastructure investments by the state. Conflating all that seems to be a warning flag...

Germany has a very different cultural history about investing. They had a great economy and then got crushed by WWI. Then terrible, unbelievable inflation and then rebuilding and being crushed again by WWII. The cultural ethos there is also against owning stocks because that's considered immoral. But they also don't really need to save that much because of the strong safety net and retirement systems.

Well the reitrement system is really not that strong anymore. Somebody who has worked and payed in for 45 years with an average german income (between 32-35K a year before taxes, and you pay in currently about 10% from that, the employer pays another 10%), and after 45 years, when you reach 67 you will get (due to reforms a few years ago) starting 2030 and going forward around 43% of the gross average income. At the moment such a person gets around 57% of the gross income (due to reforms there is an ongoing transition period that ends in 2030). Someone who earns double, will also get double out of it (that's also the upper limit). Average german rent at the moment is around 1000€ and is projected to decrease noticably until 2030. Without a payed off home, a company pension plan or private savings, you're really not in good shape. And the only tax advantaged way to privately save for retirement is via insurance products that cost an arm and a leg for overhead.

barbaz

  • Stubble
  • **
  • Posts: 201
Re: "Those who save, are the fools"
« Reply #15 on: May 03, 2016, 04:48:44 AM »
The cultural ethos there is also against owning stocks because that's considered immoral.
Hu, do you know why?
In eastern Germany I'd say it's a remaining influence of the GDR. And "immoral" isn't the right word, but there is a lot of prejudice against stocks. Germans prefer more "solid" investments, like saving accounts. As always with these things, the main problem is probably a lack of education.

2Cent

  • Pencil Stache
  • ****
  • Posts: 745
Re: "Those who save, are the fools"
« Reply #16 on: May 03, 2016, 05:27:46 AM »
Stock investments are seen as trying to get rich by gambling instead of doing honest work.