Author Topic: I'm young and naive. How was the economy before I was born?  (Read 9440 times)

nawhite

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I'm young and naive. How was the economy before I was born?
« on: September 06, 2013, 01:42:00 PM »
I'm in the process of reading an old copy of The Wealthy Barber and some of the statistics for expected rates seem just bizarre to me. I'm only 26 (born 1987) so I've missed a lot of the dips and swings of the economy in the past 100 years. My assumptions about my retirement calculations are based on my experience and what I read on here but I'm curious what logic I use is faulty just because I've never seen different.

Can people list some crazy economic events that happened pre 1995 that I should be aware of when planning my retirement? I took my american History in high school but there are all sorts of foreign affairs to cover that the local economy wasn't covered in a way that was useful for someone planning retirement. For instance, I've heard about there being high inflation post WWII which is usually the worst case in the SWR research. But I have no idea what inflation was number wise or what that felt like day to day.

In my 26 year old head:
Houses return @ inflation but are ridiculously location dependent and you can lose everything
Inflation stays around 0-3% which made milk go up about 50% over the course of my life
The stock market returns around 8% a year before inflation and crashes are few and far between but well publishized by the news and it is fairly easy to buy in the bottom half of a crash (not at the bottom but in the bottom half)
Savings accounts pay no more that 2% interest ever
Unemployment is usually around 5% but after crashes temporarily goes up to a max around 10%
The Great Depression was WAY WAY worse than the Great Recession in almost every way and depressions don't really happen anymore thanks to government agencies like the SEC and the Fed
I can get health insurance either through work or independently for a lot of money but not a ridiculous amount of money.

I'm young, I'm naive. How wrong are my assumptions and what gloom and doom (or good old days) have I never heard of?

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Re: I'm young and naive. How was the economy before I was born?
« Reply #1 on: September 06, 2013, 02:04:02 PM »
One of the easiest ways to see "the economy" over time is to use the cFIREsim calculator: http://www.cfiresim.com/input.html

Take what you think should be a decent stache to retire on, add annual spending, asset allocation and any other assumptions you want to model.  Then let cFIRE show you how that portfolio would have fared over 113 different time periods going back to the late 1800s.

It's a great way to see how much variability one can experience during a financial lifetime. (If you like it, remember to thank bo_knows.)

matchewed

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Re: I'm young and naive. How was the economy before I was born?
« Reply #2 on: September 06, 2013, 02:30:52 PM »
Umm... Google economic history of the United States? Then read the inevitable Wikipedia article.

:)

hybrid

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Re: I'm young and naive. How was the economy before I was born?
« Reply #3 on: September 06, 2013, 02:55:04 PM »
Perspective of a 47 year old...

I bought my first house in 1989 at 10.5% interest.  Watched it appreciate really, really slowly for the first 11 years (I bought at the end of a bust), then it took off like a bat out of hell until we sold it in 2008 just before the economy tanked.  My lesson learned was not to put too much stock into what the market says about home value at any one moment.  That roller coaster will leave you with your stomach lurching.  The housing boom going on in some cities?  Don't bank on it....  Maybe those values will hold up and maybe they won't.

During the 90s boom there was so much more optimism.  Peace, prosperity, IT took off, the debt was under control.  And Cisco reached $80 a share (what a bubble that was)....

The 2000s feel like a lost decade+ by comparison.  The housing bubble was a mirage, banks and investment firms playing fast and dirty, twelve long years of war (and more to come soon!), the national debt through the roof, health care and education costs skyrocketing.  Yikes.  And don't get me started on the Redskins....   ;-)

I try to be optimistic, but to be optimistic I have to stop paying too much attention to what is going on in Washington (except for RGIII, of course...  ;-)  ).  There is still fabulous wealth in America if you don't waste it on cable, data plans, big cars, McMansions, etc.  There are plenty of good jobs if you are truly good at what you do and can market yourself.  Opportunity abounds for those who are both capable and marketable.  The 2000s may have sucked for America overall but personally I have absolutely nothing to complain about.  That's my takeaway.

As for you, the rock bottom lending rates you have experienced your entire adult life will disappear one of these days and may not return for decades.  5% home loans seemed like a dream come true in the mid-2000s, that was until I refinanced at 3.25% in 2011.  That is not the norm.  6-8% is a lot closer to normal over the course of my lifetime.  So expect housing (and all forms of borrowing) to get more expensive at some point.  It has nowhere to go but up after all.  Hell, in the early EDIT - 1980s my mother landed a CD paying 15% when America was experiencing some real gut-wrenching inflation.  That is not out of the realm of possibility.  All I can say is be ready for some serious change in the future, my magic 8 ball says we won't (can't?) stay on this odd glide path too much longer.   
« Last Edit: September 07, 2013, 09:20:42 AM by hybrid »

hybrid

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Re: I'm young and naive. How was the economy before I was born?
« Reply #4 on: September 06, 2013, 02:58:38 PM »
Umm... Google economic history of the United States? Then read the inevitable Wikipedia article.

:)

Fair to a point, but I'm thinking the OP is looking for some perspective to go with the dry numbers?  The OP is 26, his economic "normal" is a lot different from others.  Don't get sucked into the current "normal", OP, the norms always change.

Spork

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Re: I'm young and naive. How was the economy before I was born?
« Reply #5 on: September 06, 2013, 03:14:42 PM »
At approximately the same age as Hybrid: His take is spot on with my own.  I remember buying my first house at right about 8% and absolutely giddy because that rate was unheard of.  In fact, the guy that built that house quit building because there was so much money to be made in doing refi's for all the 12%'ers out there.

And with that $80/share CSCO bubble, I remember the popped side of it...  I had a modest amount in a company-sponsored stock plan (tech company) where the stock went from about $35/share to less than $1.  And while everyone was whining, about how awful that was, I remember my sell price for the company stock was about 3x my basis even including all the shares bought at $35.   It doesn't take many shares purchased at 30 cents a share to make a big pile of cash when things recover.

nawhite

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Re: I'm young and naive. How was the economy before I was born?
« Reply #6 on: September 06, 2013, 03:19:51 PM »
One of the easiest ways to see "the economy" over time is to use the cFIREsim calculator: http://www.cfiresim.com/input.html

Thanks for the link but I'm more looking for experience about what do those 5% of failing years look like to people who lived through them? Firesim is great for figuring out my chances (assuming past performance indicated future results) but how do I tell I'm not going to make it while I'm in the middle of my retirement? Or conversely, how do I tell that things are ridiculously good this year so I'd be ok increasing my expected SWR (or making a one time big purchase).

Thanks so much for the awesome response hybrid. Hybrid, are these rates so low that I should be booking investment properties as fast as I can b/c I'll never see these rates again or do interest rates really heavily influence prices (like everyone keeps saying but I've never seen first hand)?

Spork: Never been employed during a stock crash like that, do co-workers really go whining? Can anyone describe how it felt to watch their 401k crash in 2001 or 2009 (or something earlier, was there a crash in 1987?) I've never seen that while I've been in the market.

Spork

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Re: I'm young and naive. How was the economy before I was born?
« Reply #7 on: September 06, 2013, 03:26:25 PM »

Spork: Never been employed during a stock crash like that, do co-workers really go whining? Can anyone describe how it felt to watch their 401k crash in 2001 or 2009 (or something earlier, was there a crash in 1987?) I've never seen that while I've been in the market.

Among my friends, I see a few different reactions:
* just don't notice -- not really paying attention to their retirement finances
* folks that understand "corrections happen" -- and know they're now buying bargains
* folks that over react.  These are the "buy high/sell low" types.  If it crashes, they pull all out.  I know more than a few of these and there is absolutely no reasoning with them.  One of them drives a $60k Mercedes and will tell you outright he has squat in retirement savings and that the market is not to be trusted.  He'll tell you how he had 80k saved (which is low for his age) and it went to nothing (which means he cashed it out at the bottom.) 

My only shortcoming in the 2008 correction was I was voluntarily taking a few years off of work -- making it difficulty to do much in the way of stock purchases.

Jamesqf

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Re: I'm young and naive. How was the economy before I was born?
« Reply #8 on: September 06, 2013, 06:08:54 PM »
Never been employed during a stock crash like that, do co-workers really go whining? Can anyone describe how it felt to watch their 401k crash in 2001 or 2009 (or something earlier, was there a crash in 1987?) I've never seen that while I've been in the market.

I can't say that I ever heard any real whining.  I really started investing right after the '87 crash: I had been out of school a couple of years, had paid off student loans and saved what seemed to me like an enormous amount of money - something over $10K.  Put it all in the market, and never looked back.  Though I did learn a few things over the years: first to give up on brokers selling individual stocks, then to do no-load mutual funds. 

With the perspective of this starting point, I was never much bothered by subsequent crashes, as I was always pretty darn sure that the market would recover in due course. 

sol

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Re: I'm young and naive. How was the economy before I was born?
« Reply #9 on: September 06, 2013, 07:46:56 PM »
I grew up during the cold war.  As a child, my family talked of nuclear annihilation and the potential end of humanity.  When the USSR collapsed, it was like a weight had been lifted and we first realized that life might get better instead of worse.

Lesson learned:  things are never as bad as they seem.  Don't count on the future looking like the present.

I graduated at the height of the tech bubble.  Some of my friends were making $150k right out of college, some were making 75k but taking stock options expected to be worth 2 to 3 million inside of three years.  They financed fancy apartments in the Bay Area.

The bubble burst.  The stock options were worth zero.  Everyone felt foolish.

Lesson learned: things are never as good as they seem.  Don't count on the future looking like the present.

pachnik

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Re: I'm young and naive. How was the economy before I was born?
« Reply #10 on: September 06, 2013, 07:51:02 PM »
I am in Canada so our 401k is called an RRSP. 

Anyway, I remember in 2009 when mine dropped about 20% or so.  I sure sat up and took notice but didn't make any changes since I'd been through these things before.   What gave me confidence also was that everyone's investments dropped about that much in percentage also.  If it was just my stuff, I think I would have been worried. 

Another thing that helped me anyway was that my RRSP wasn't on the Internet.  In other words, I received paper statements quarterly.  So yes, I'd "lost" money but I couldn't keep checking the amount every day and dwelling on it.  I still haven't put my RRSP on the internet for this reason.

Kriegsspiel

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Re: I'm young and naive. How was the economy before I was born?
« Reply #11 on: September 06, 2013, 08:39:34 PM »
Umm... Google economic history of the United States? Then read the inevitable Wikipedia article.

:)

Great article. All of us eggs should read it.

matchewed

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Re: I'm young and naive. How was the economy before I was born?
« Reply #12 on: September 06, 2013, 08:43:59 PM »
Yeah I didn't mean as much snark as what may have come off. But economic uniqueness at any one time isn't unique. Things will always be particular and although we rely on averages and historical data that is no guarantee for the future.

Understanding how varied that past is even from a numbers standpoint can help you realize that what is happening today will not be a status quo situation.

bogart

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Re: I'm young and naive. How was the economy before I was born?
« Reply #13 on: September 06, 2013, 08:59:50 PM »
I think Sol summarizes it pretty nicely.

The year you (Nawhite) were born was the year I graduated high school.  I remember mortgage rates in the teens (Bankrate backs me up on this, as high as 19% toward the end of the '70s on 30-year fixed) as well as savings account rates at 10% (my credit union when I was in high school, probably higher than typical as the CU tends to be.  Why right now it's paying 1%!).  ARMS hadn't been invented when I was at the age when I first became aware of mortgages.

I don't really remember the 1987 crash, though I had a sense that it affected those who graduated college around the time I started it -- not their portfolios (obs.) but their job prospects, particularly those moving toward careers in finance or related industries.

Gas was <$1/gallon forever.  Then it wasn't.  It went up to $1.50.  Sometimes $1.80!  Then higher, as you'll have noticed.

Cars are a lot safer than they used to be.  Drivers are not.

My out-of-state public school tuition at a (good) flagship university cost an average of $7K per year.  My privately purchased health insurance in graduate school (1990s) cost me about $60/month. 

brewer12345

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Re: I'm young and naive. How was the economy before I was born?
« Reply #14 on: September 06, 2013, 09:32:37 PM »
One of the easiest ways to see "the economy" over time is to use the cFIREsim calculator: http://www.cfiresim.com/input.html

Thanks for the link but I'm more looking for experience about what do those 5% of failing years look like to people who lived through them? Firesim is great for figuring out my chances (assuming past performance indicated future results) but how do I tell I'm not going to make it while I'm in the middle of my retirement? Or conversely, how do I tell that things are ridiculously good this year so I'd be ok increasing my expected SWR (or making a one time big purchase).

Thanks so much for the awesome response hybrid. Hybrid, are these rates so low that I should be booking investment properties as fast as I can b/c I'll never see these rates again or do interest rates really heavily influence prices (like everyone keeps saying but I've never seen first hand)?

Spork: Never been employed during a stock crash like that, do co-workers really go whining? Can anyone describe how it felt to watch their 401k crash in 2001 or 2009 (or something earlier, was there a crash in 1987?) I've never seen that while I've been in the market.

I did not live through it, but the proverbial retiree who got it in the ass the worst was the one who retired in 1966 through maybe 1970.  They stepped right into a prolonged period of high inflation and low returns on just about every asset class.  By the early 80s inflation in the US was so high that it was almost to the point where US companies would have had to use GAAP standards only required in so called "inflationary" economies (something like a doubling of prices in 3 years is the trigger).

Mega

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Re: I'm young and naive. How was the economy before I was born?
« Reply #15 on: September 06, 2013, 09:49:07 PM »
One of the easiest ways to see "the economy" over time is to use the cFIREsim calculator: http://www.cfiresim.com/input.html

Take what you think should be a decent stache to retire on, add annual spending, asset allocation and any other assumptions you want to model.  Then let cFIRE show you how that portfolio would have fared over 113 different time periods going back to the late 1800s.

It's a great way to see how much variability one can experience during a financial lifetime. (If you like it, remember to thank bo_knows.)

Thank you for this link. I could kiss you.

I now know my 'number', and can look at what different retirement scenarios look like (e.g. without mortgage, my number is ~$850K, with the mortgage, my number is ~1.4m)

Interestingly, at 95%, MMM's number $24K per year would be ~$600k

CU Tiger

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Re: I'm young and naive. How was the economy before I was born?
« Reply #16 on: September 06, 2013, 09:56:33 PM »
One of the easiest ways to see "the economy" over time is to use the cFIREsim calculator: http://www.cfiresim.com/input.html


Spork: Never been employed during a stock crash like that, do co-workers really go whining? Can anyone describe how it felt to watch their 401k crash in 2001 or 2009 (or something earlier, was there a crash in 1987?) I've never seen that while I've been in the market.

I remember joking with co-workers that I used to have a 401k, but it was down to a 201k with the downturn.

I was not worried about it. I am a fairly unemotional investor who sets things up automatically and lets them grow. When the market is down my purchases buy more shares.

There was a crash in87 and some people in our town lost almost everything they had because they had been speculating. Lost their house, etc. I remember that the wife went to work at McDonalds so they would have some income. That made me someone who will invest, but not try to time the market.

ny.er

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Re: I'm young and naive. How was the economy before I was born?
« Reply #17 on: September 06, 2013, 10:44:55 PM »
My grandparents were young adults during the Great Depression.  During the time my father and his sisters were young, my grandfather was out of work for 6 years.They ate very little during this time, my father said they ate a lot of potatoes. Even after my grandfather started working again (factory work), my grandparents almost never spent money on anything. They lived like poor people, while they amassed quite a large sum of money. When my father was 18, he joined the navy, then went to school on the "GI bill" (free 4 year degree) and became an engineer. He went through several layoffs in the 70's and 80's, and had to move several times for jobs in different locations around the US. All this made me a saver and investor, which has in turn helped my family through our own rough patches. Specific interest rate highlights that I can recall: a friend paid 16% on his first home mortgage in 1982. It was a great time to have savings though - our passbook savings interest was REALLY high (10% or more?). When we purchased our home in 1990, interest rate was 10%, and it's basically been on the way down ever since.

brewer12345

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Re: I'm young and naive. How was the economy before I was born?
« Reply #18 on: September 06, 2013, 10:59:51 PM »
If you would like to learn about the Great Depression, I recommend acquiring a copy of Studs Terkel's excellent "Hard Times."  It is an oral history of the Depression.

footenote

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Re: I'm young and naive. How was the economy before I was born?
« Reply #19 on: September 07, 2013, 07:13:21 AM »
"Thanks for the link but I'm more looking for experience about what do those 5% of failing years look like to people who lived through them? Firesim is great for figuring out my chances (assuming past performance indicated future results) but how do I tell I'm not going to make it while I'm in the middle of my retirement? Or conversely, how do I tell that things are ridiculously good this year so I'd be ok increasing my expected SWR (or making a one time big purchase)."

nawhite - Unless you think you're going to live through a drawdown period that is worse than any downturn in the past 100+ years (yoiks!), you simply need to ensure your [assets / annual spending level / other assumptions] had 0% chance of failure in any of those periods. Unless you're only willing to save up to the level where you have a 5% failure rate, you don't need to worry.

(I personally plan on using the Retire and Retire Again method. Using this method, you re-rerun FIREcalc each year and see what your safe spending for the year is. Happily, this can increase your spending if you have the luck to be in a positive period. And if you're in a negative period, you adjust accordingly.)

footenote

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Re: I'm young and naive. How was the economy before I was born?
« Reply #20 on: September 07, 2013, 07:15:50 AM »
One of the easiest ways to see "the economy" over time is to use the cFIREsim calculator: http://www.cfiresim.com/input.html

Take what you think should be a decent stache to retire on, add annual spending, asset allocation and any other assumptions you want to model.  Then let cFIRE show you how that portfolio would have fared over 113 different time periods going back to the late 1800s.

It's a great way to see how much variability one can experience during a financial lifetime. (If you like it, remember to thank bo_knows.)

Thank you for this link. I could kiss you.

I now know my 'number', and can look at what different retirement scenarios look like (e.g. without mortgage, my number is ~$850K, with the mortgage, my number is ~1.4m)

Interestingly, at 95%, MMM's number $24K per year would be ~$600k

Don't kiss me. Kiss bo_knows.  ; )

(btw, your numbers are extremely close to mine! With no mortgage, we're at ~$800k.)

Frugally-raised

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Re: I'm young and naive. How was the economy before I was born?
« Reply #21 on: September 07, 2013, 09:00:24 AM »
I like studying economic history to see how bad things can get—and where. Of course, while it gives me a broader perspective, it doesn't tell me much about the future.

I remember "stagflation" and the 1973 oil crisis. The long lines at gas stations were a powerful reminder of the precariousness of our financial lives. And while interest rates were high, which made you feel good when you looked at your savings account, inflation was so high that it ate up most (all?) of the gain.

(Of course, now I understand that keeping money in a savings account is only going to result in losing money long-term. But I was raised by a father who grew up during the depression. Savings accounts were "safe", and safety was paramount. Amazing how our early experiences with money/economics frames our entire lives.)

Another way to get a different perspective is to read old financial books. I'm reading The Truth about Money by Ric Edelman. A good book for general explanations of broad topics, but it is a child of its time (1996). For example, in explaining municipal bonds (p. 71):

"... municipalities cannot go broke because they have a never-ending revenue source. It's called (surprise!) taxes."

Someone tell Detroit!

hybrid

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Re: I'm young and naive. How was the economy before I was born?
« Reply #22 on: September 07, 2013, 09:37:27 AM »
"... municipalities cannot go broke because they have a never-ending revenue source. It's called (surprise!) taxes."

Someone tell Detroit!

Well put.  There are a lot of things that people may have thought were rock solid but really aren't.  So while we are talking about that, I hope folks aren't wed to the notion that pensions are untouchable.  Entirely too many state governments cannot meet their financial obligations in the long term.  At some point it is well within the realm of possibility that pensioners are going to have to take a serious haircut.

The same holds true for Social Security.  The longer Congress dithers with badly needed structural reforms, the greater the odds existing recipients will feel a hit.  We aren't there yet, but we will be one of these days.....

Mega

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Re: I'm young and naive. How was the economy before I was born?
« Reply #23 on: September 07, 2013, 10:58:10 AM »
Well put.  There are a lot of things that people may have thought were rock solid but really aren't.  So while we are talking about that, I hope folks aren't wed to the notion that pensions are untouchable.  Entirely too many state governments cannot meet their financial obligations in the long term.  At some point it is well within the realm of possibility that pensioners are going to have to take a serious haircut.

The same holds true for Social Security.  The longer Congress dithers with badly needed structural reforms, the greater the odds existing recipients will feel a hit.  We aren't there yet, but we will be one of these days.....

I have spent alot of time making sure my wife understands she may never collect on her teacher's pension in 30 years, even though it is a public sector pension.

Look at Cyprus & Greece. That is an excellent example of what happens when government does not properly control banks (Cyprus) / spending (Greece).

If you work for a private company... well, let's hope for the best for your pension (e.g. Nortel, Enron, ect.)

Do you have investment accounts... well, let's hope the company doesn't steal money right out of your account (MF Global).

avonlea

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Re: I'm young and naive. How was the economy before I was born?
« Reply #24 on: September 07, 2013, 12:27:46 PM »
I grew up during the cold war.  As a child, my family talked of nuclear annihilation and the potential end of humanity.  When the USSR collapsed, it was like a weight had been lifted and we first realized that life might get better instead of worse.

Lesson learned:  things are never as bad as they seem.  Don't count on the future looking like the present.

Yes, I remember this.  My older siblings watched Rocky IV, Top Secret, and Red Dawn quite a bit in the 80s. :) The threat of communism was often talked about in the classroom and at the dinner table.  1989-91 were uplifting years. "Wind of Change" is still one of my favorite songs.














Catbert

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Re: I'm young and naive. How was the economy before I was born?
« Reply #25 on: September 07, 2013, 12:55:24 PM »
Perspective of a 60 y.o.:  My 1st house was 12% interest in the 1970s - but the house sold for almost 3 times what I paid for it about 6 years later!  My next house had an 18% mortgage, however, I think that was the second mortgage.  What I remember most clearly is that it was the same interest rate as my credit card.  For the next 30+ years mortgage interest rates have trended downward.  That time is over IMHO. 

Inflation can be much different than 2-3% a year.  It was double digits for a while in the late 1970s/early 1980s.  That's why my house tripled in value in 6 years.

Savings interest rates:  My experience/memory is that interest rates are more typically 5-6%.  During those high inflation times my mother locked in a 10 year CD at 11% interest.  My father thought she was crazy to tie her money up for so long since rates were sure to go up.  He was wrong.



Mega

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Re: I'm young and naive. How was the economy before I was born?
« Reply #26 on: September 07, 2013, 05:07:51 PM »
Interestingly, I think the 30 year US treasury had a higher return that the stock market from the mid 80s.

VERY different from today.

mikefixac

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Re: I'm young and naive. How was the economy before I was born?
« Reply #27 on: September 07, 2013, 09:42:24 PM »
One of the first quotes in The Rational Optimist is by a Lord McCauley in the 1800s or something like that in which he says something like,

How can we look to the future and see how bleak everything is going to be, but when we look to the past, we see nothing but progress and growth.

DocCyane

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Re: I'm young and naive. How was the economy before I was born?
« Reply #28 on: September 08, 2013, 06:37:43 AM »
During the latest Great Recession my father reminded me that this has happened twice before in his lifetime. He is 72. And like before, bad times will pass. But so will good times.

The enduring lessons are clear. It's always in fashion to be frugal. Save every penny you can and invest it where rich people invest. Rich people will always take care of themselves. You don't see them buying penny stocks, whole life insurance, or cars that cost 85% of their annual income.

Employment is precarious, so be prepared to lose a job with an emergency fund and an up to date skill set. The times of 30 years of service, a gold watch and pension have passed. All for the best. Pensions will crumble and end up in drawn out litigation as pensioners die waiting for a check. Have your own retirement set up. No one else will care for you, least of all a corporation or the government.

It's a marathon not a sprint. Run it like you want to pass the finish line with your arms extended skyward.


SunshineGirl

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Re: I'm young and naive. How was the economy before I was born?
« Reply #29 on: September 08, 2013, 08:35:43 AM »
I grew up during the cold war.  As a child, my family talked of nuclear annihilation and the potential end of humanity.  When the USSR collapsed, it was like a weight had been lifted and we first realized that life might get better instead of worse.

Lesson learned:  things are never as bad as they seem.  Don't count on the future looking like the present.

I graduated at the height of the tech bubble.  Some of my friends were making $150k right out of college, some were making 75k but taking stock options expected to be worth 2 to 3 million inside of three years.  They financed fancy apartments in the Bay Area.

The bubble burst.  The stock options were worth zero.  Everyone felt foolish.

Lesson learned: things are never as good as they seem.  Don't count on the future looking like the present.

Nice analysis!

My perspective - We are all far more influenced by the economy than it might seem when you're young. I graduated college in boom times when jobs were plentiful and the stock market could do nothing but go up. Bought my first property for the very good interest rate of 8% at that same time. Now, interest rates are low and jobs are not so plentiful.

A really, really good read on the Great Depression is The Great Depression: A Dairy, by Roth. It's a journal of a lawyer who lived through the Depression and tried to analyze what was happening as it was happening.

My takeaway on everything, based on my reading and 25 years of adulthood and watching my parents and now some friends go through layoffs:
-- Your individual circumstances are far more affected by the economy at large than you might think.
-- Losing a job in your 20s is far easier to repair than losing a job in your 40s or 50s. Financially AND psychologically.
-- Have good liquidity at all times.
-- Keep debt to a reasonable level, if you have debt at all.
-- Don't believe the hype. Be prudent. Avoid fear, but be cautious. Avoid exuberant investments (don't go all-in on anything).