No. of Recommendations: 0
He found banks that paid as much as 13 or 14% in the 70s I believe.

I remember those days. It cost 17-18% for a mortgage. When we bought our first house in 1982, the rates had really dropped, so our first mortgage was at a low rate of 13.75%.

My family often ponders what he might have accumulated had he put some of his money into the market, even conservatively. But he is living proof, that you can accumulate wealth without risk through prudent saving and understanding the "miracle of compound interest and time." Since you are still young, why not look for the best and safest returns? Leave the risk taking to the older generation that got a late start and doesn't have a choice.


Generally speaking, he would have done better if he had invested some of his money. A big risk of taking the safe route of finding the lowest risk places for your money, such as a savings account, is that you don't necessarily keep up with inflation, so although your dollars are growing, they may not be growing at least as much as inflation, and you effectively lose buying power.

I would also argue that it's better to be taking higher risks when you are younger and do have time on your side so that if your investments do go down, you have time to grow them back up. Taking more risk when you are older means that you don't have as much time to build up the nestegg and you may not be able to generate enough earnings to supplement what you have saved.

Given a choice, I would much rather take risk now when I'm in my late 40's when I can continue to add to my savings from my earnings than later when I am in my late 70's and can't just go back to work, or at least not at the salary level that I have now.

Print the post  

Announcements

The Retirement Investing Board
This is the board for all discussions related to Investing for and during retirement. To keep the board relevant and Foolish to everyone, please avoid making any posts pertaining to political partisanship. Fool on and Retire on!
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.