I’m pissed off about this article from MSN Money: http://articles.moneycentral.msn.com/Investing/Extra/why-gen-y-might-never-retire.aspx [1]
“But when it’s time to invest, they’re as risk-averse as their Depression-era forefathers. That could prove to be a personal-finance mistake of epic proportions.
It’s overly dramatic to say that investing like a scared rabbit could ruin your life. But it could certainly affect your ability to free yourself of the working world anytime before you draw your last breath.”
I rarely get irrationally angry at news articles, but I just want to say, “F* You, MSN!” Gen Y might never retire, that’s probable, but it wont be because of conservative investing. We will never retire because we’ve never been taught to live lower than our incomes. A majority of us do not understand how or why we should be doing anything except spending every dollar of our paycheck. This article is nothing short of investment fear mongering.
“If you invested $250 a month, or $3,000 a year, in bank deposits yielding 3.7% on average, you’d have $275,000 some 40 years later when you wanted to retire. If you invested the same $250 but earned the 11.67% average of small-company stocks, you’d have $2.6 million.”
I don’t have the skills to debate their math (but I can’t believe their calculation takes into account compounding interest on a bank account versus losing and regaining value of stocks). My thought is, “Why on Earth would I need 2.6 million dollars?” 275k seems like more than enough to reasonably sustain a person. Just don’t go spending 150 dollars every week at the grocery store. Really, though, what are y’all going to be doing during retirement that you’ll need millions of dollars for?
I’m not totally conservative with my 403b retirement, but I’m not 70% stocks as this article says. I’d rather be moderate and smart with my investing; investing more in things like “lendingclub.com” or with a local credit union where my money invests directly in my community. Its more rewarding personally and I’m not guilty of committing a deadly sin. Greed and dreams of ammassing millions of dollars on Wall Street is exactly why our economy is in the shitter right now.
/rant