Saving money is not allowed

[prawn_86]

Perhaps i am just looking for a reason to blow my money on floosies and booze

Seriously though, i am saving as much as i can like Nomore4s, but i just find it interesting that the gov and/or RBA penalises people for saving, when from a macro perspective they should be doing the opposite, as it is not saving that got us where we are at the moment.

I think Nyden summed it up well also.

 

[aleckara]

This is exactly the point.

Saving is to be punished Prawn. Obviously they are trying to get you to spend your money right now. They want to 'stimulate' the economy.

I don't know if this is such a good tool to use anymore since we make nothing here. Most of the money consumed will just go overseas anyway.

The problem here is your tolerance to risk. If you don't think the market will go down anymore put the money into stocks. If you think the market will go down use the money as collateral and start shorting.

 

[It's Snake Pliskin]

Savings are not doing ok NC, thats the problem. The return on a savings account is now negative.

Say 5%pa from the bank, official inflation is running at about that (more like around 10% though) and then you get charged tax on your interest, so you if the interest and the inflation cancel out, you lose out by the tax taken from your interest.

Is there anything one can do, aside from spend all their money at once, which is looking like a good idea to me for the timebeing

Prawn,

Get a grip!

Money equals capital. With capital you can be your own god of dreams. Forget the rubbish, create and look for opportunities.

Just spending it is mindnumbingly moronic and defeatist.

It's tough for everyone, so how can you shine out above the rest? If you can answer that question let me know.

Cheers...

 

[nomore4s]

Sorry for actually caring about my future and wanting to get ahead.

Without trying to be an @rse (tends to come naturally for me), how does going out and spending all your money on crap achieve this?

At some point, to get ahead you will need to save some sort of lump sum to be able to put yourself in a position to take advantage of opportunities so that you can get ahead. Worrying about the effect inflation is having is just a waste of time - you can't control it.

Why do you need an incentive to save? Isn't saving money to give yourself a safety net and a chance to make some good investments especially in the current environment incentive enough?

 

[prawn_86]

Spending all my cash doesnt help me get ahead, hence why i havnt and am still saving, despite in being a negative return.

I dont need an incentive to save, but our country, and the whole western economy does, and that incentive is not being provided.

Out of interest does nayone know the personal levels of savings for the Chinese? Thier gov has massive reserves, so im assuming that it is ingrained in their people to save rather than spend.

 

[It's Snake Pliskin]

Spending all my cash doesnt help me get ahead, hence why i havnt and am still saving, despite in being a negative return.

I dont need an incentive to save, but our country, and the whole western economy does, and that incentive is not being provided.

Out of interest does nayone know the personal levels of savings for the Chinese? Thier gov has massive reserves, so im assuming that it is ingrained in their people to save rather than spend.

Generally Asian countries know how to save money - especially the Japanese and Chinese regardless of where they live. Australians, the Brits and Americans only know how to spend money which is why they are affected by what is happening now more than other nations.

Just saving is not the answer though. Doing something with savings is important to grow those savings. The challenge is knowing what risk to take.

 

[xoa]

Great Rudd commands you: Spend more money!

 

[nomore4s]

Just saving is not the answer though. Doing something with savings is important to grow those savings. The challenge is knowing what risk to take.

Very good point imo.

 

[apra143]

For the newbies among us, i.e. me, how does saving money whilst in a deflationary situation loose money? A simple number example with say $10k would be good.

 

[michael_t_f]

Prawn I am in the same situation as you and I'm a stupid "Gen-y". I have a decent amount of savings and put away about $800 a week.
Just kick back and keep researching and taking notice of things going on in the world, don't believe the media and you will know the right time to move your money.
The more assets fall in value the more valueable your cash..

 

[numbercruncher]

I just dont get what people are expecting though ?

I mean if your saving $ , earning some interest AND those $ safety is guaranteed by your flippant government all while prices for almost all goods are falling ...... thats pretty wicked no ?


Sure Govs and central banks are setting the stage for more inflation in the future , you just reshuffle as you see fit, there may even be a share market spike soon ( or more crashing ) - you just choose your risk profile ...

I recently read that only 20pc of Australians have savings that exceed 20k !

I think you blokes complaining are probably doing awesome and I really think its an exhuberance of youth thing ? impatience perhaps ?

 

[Indie]

Prawn, you are only paying marginal tax on interest earned, you are not losing your starting capital. Your capital is actually growing, albeit very slowly.

Also, those dollars you are saving, they are increasing in purchasing power each day vs stocks, property, fuel, and most other things. You are being rewarded for being a good saver. That dollar you stashed away in June, it buys about twice as much BHP now. Deflation is the savers best friend. Your purchasing power is only getting stronger at this point in the cycle while those carrying debt are paying compound interest on depreciating assets. You are in the box seat.

 

[BradK]

Great news about the interest rate cut today.

I WAS going to use the money to buy a new plasma - but Harvey Norman are giving me 48 months interest free!!

Think I might GET the plasma over 48 months - and book a holiday with the extra money!

Awesome!!!! Oh, and I might take a kick back to interest only on my mortgage after the scare of the past two years....

Brad

 

[Happy]

We are conditioned to think in commonly accepted stereotypes:
property, debt, stock market

Current situation probably requires to think outside the square or at least dig up some info on Great Depression.

Like when we live normal lives, nobody thinks of dying too much when we are 10, 20, 30 and all of the sudden our world is turned up side down, cancer, accident, other life threatening illness.

Then many say every day is a bonus and people appreciate simple things in life.

Recession will decimate jobs in waves, some said that every employee keeps other 6 people in employment. At first manufacturing, bankers, sales people, restaurants other services, entertainment then second wave more manufacturing and so on.

Depression will make it even harder, maybe we don't ahve to have it.

 

[skyQuake]

Well if interest rates - tax is < than real inflation, then its not such a good idea to save money...

 

[theasxgorilla]

if ive offended you sorry, but i simply cant agree with your flawed analysis of the current situation - I bet millions would give their left testicle to be in your situation - debt free, saving and enjoying deflation, awesome.

Not a hope in hell...I'd go into debt to keep both of them intact...sincerely.

 

[numbercruncher]

Not a hope in hell...I'd go into debt to keep both of them intact...sincerely.

But youd still have your right one to make sons with !

 

[moXJO]

But youd still have your right one to make sons with !

Just look at what hitler managed to do with one ball

 

[Smurf1976]

my best gauge on real inflation is a bottle of coke

when i finished Year 9 at school (2001) a 600ml cost me $1.80
i asked my sister what it cost in Aug 2008 at the same school, it cost $3.50

The fish & chip shop near my parents' house opened in 1985. I remember that quite well as it was a big deal at the time, there being no other shops of any kind in the area.

Minimum order for chips was 50 cents then and that got you a big parcel wrapped up in white paper (not a small bag). Then it went up to 60c within a month or two. Last time I went into that shop was a few years ago and the minimum order was $2 and you didn't get as many chips as you used to for minimum order.

That's pretty basic in terms of the effects of inflation. Potatoes, cooking oil, old fashioned white butcher's paper, salt, power to run the deep fryer and some profit for the shop owner. In the order of 350% or so inflation over the past 23 years.

 

[drsmith]

I WAS going to use the money to buy a new plasma - but Harvey Norman are giving me 48 months interest free!!

It would be interesting to know how much of the purchase price is retained by the finance company on that.