Fortunes aren’t made being conservative. Nobody has gotten rich earning less than 1% on their money. Yet more money has been put into savings accounts than into stock and bond funds, since the market crash of ’08. This may sound like a good thing. At first glance it looks as though people are building up their emergency funds. A great sign of financial responsibility, if it were only true.
The first 11 months of 2011, retail investors put over $900 billion into savings accounts. During the same period only $109 billion was investing into stock and bond funds. Putting money into a mattress is never a good idea, but expecting to reach financial goals earning less than 1% is just as bad.
A look at the chart below shows how extremely different the amounts of money saved and invested have become since the ’08 crash. Which isn’t that surprising really. The fact that the numbers haven’t returned to a more normalized setting after four years should be questioned. Continue Reading…