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Lessons This Generation Can Learn

One of the things I dislike most about ING Direct’s recent integration with ShareBuilder is that every time I login to check something in my bank accounts, I can also see my poor little Roth IRA. It’s being pummeled about by the ups and downs of the market and some days it’s quite depressing.

Since this has been going on for months now, I’m becoming used to it. I’m even beginning to think that it’s a good lesson. In some ways, it’s a blessing to be young right now. Yes, the job market feels tight (don’t even get me started on county library jobs). And it’s very sad to see our little retirement portfolios dipping ever-downwards. And the debt clock is ticking ever-upward. I didn’t say it was a fun time to be young.

But living through the dot-com burst, the housing bubble, the subprime mortgage crisis, and the current fallout is a learning experience.

We’ve learned not to buy more house than you can afford—even if you get a great deal on the loan. We’ve learned that houses aren’t sure investments any more than anything else is. We’ve learned that no matter how good the market looks, we should still allocate our assets wisely.

There’s a reason to buy bonds as well as stocks, and we’re living it right now. There’s a reason that a retiree’s portfolio includes cash or cash equivalents as well as stocks and bonds, because sometimes the stocks take a dip.

If we remember this for the rest of our lives, these early blows will be as valuable as a spike in the market. I just hope things don’t get so bad that people from our generation avoid investing at all in favor of stashing it under a mattress.


Funny about Money December 8, 2008 at 7:16 am

It was great karma that you got the new job at this juncture. And indeed you are lucky to be young at this time.

My retirement portfolio has lost over $100,000 over the past year — that I know of. The 403(b) providers rarely send statements, and they make it difficult to get onto their online sites, with a PIN number that at the outset was never provided. I was ready to retire and probably would have by now, if the Bush Economy hadn’t collapsed on our heads. Now, assuming I don’t lose my job in the next round of layoffs (not a safe assumption), I will need to work at least until I’m 70. But it will be wildly lucky if I can hang onto my job for even another year.

IMHO, the thing we should be learning from this fiasco is to refrain from voting for ideologues and doctrinaire fools. Not to be too strong about it: but that’s the crop we sowed here. We’re seeing the result of a political movement that put unwise people into our country’s leadership and now is affecting the entire globe’s economic well-being.

Green Panda December 8, 2008 at 7:55 am

I agree with you Mrs. Micah! I saw my balance for my Roth IRA and it’s a bit depressing. But I have a few decades, so I’m not stressing too much.

We are socking money for the car loan. I’m determined to keep that car until t dies and put the payment savings toward my student loans and savings.

fitwallet December 8, 2008 at 8:12 am

“We’ve learned not to buy more house than you can afford—even if you get a great deal on the loan.”

Well, SOME of us have learned! A friend of mine recently told me that she and her partner are looking to buy in the next 1-2 years, while the market is still good. They want to put very little down, or possibly even get an interest-only mortgage. They have almost nothing in savings, and only one of them is actively working on paying off her debt. I wish them all the best in life, but I had to chime in and explain why I didn’t think this was a good idea, or even feasible.

Dad December 9, 2008 at 2:54 am

You will find that people will learn or not learn from this. Some will stuff their money under the matress and then get burglarized. Recently I’ve noticed people (generally middle aged) reading books like How to Make a Killing in the Real Estate Market. I really want to scream at them “Don’t be a fool!” But they are strangers and I don’t see how I can speak. Maybe I’m just being a coward here. I suspect they are people who have been hit badly by the economic downturn and are looking desparately for a get rich quick scheme that ‘will work’.

But many people came out of the Great Depression with a lot of experience that helped them manage their money and their lives well.

There have been comments that make it sound like only one side of the political equation is at fault. I have concluded that the entire Washington pack of politicians shares the blame. Those that deregulated the banks and those that insisted that banks had to give home mortgages to people who couldn’t afford them. And those are only two of the issues involved.

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