Dow turns positive for year: Erases 2,000-point plunge

[SheilaT]

14. It certainly feels that way.

"In a normal, non-hyper-financialized economy, every saver can beat inflation through simple savings - no investments, no risk-taking required." is wrong. Savers can never beat inflation. Invest only in bonds and not stocks and you will fall behind.

Stocks return an average of 10% per year, although almost no year is average. Year to year stocks can be quite volatile, but that 10% holds up over time. Passbook savings at a bank pays essentially nothing these days, and has been paying nothing for at least ten years. Meanwhile there is still inflation eroding those savings. That erosion makes a mockery of your contention that savings accounts are rock solid 100% safe investment vehicles. Meanwhile, even though the stock market has dropped significantly at various times, it has always roared back, building up to new highs. Sure, there will be future crashes, but if you hang in there for the long term -- and I've been in the market for some 40 years now -- you will do far, far better than just putting your money under a mattress.


If you honestly think you can save enough money to fund your retirement, go for it. But the harsh reality is that it is almost impossible for simple savings to do the trick. Investing in the stock market, not day trading, not reaching for huge returns, just investing in some good mutual funds, that will do the trick. Unfortunately, too many people look at short term volatility and panic. In the fourteen years I've been on DU I've read thousands of posts glibly predicting the market will totally crash, and almost as many gleefully anticipating a crash. Yes, the markets go up and down, but the overall trend is up, and up well ahead of inflation.

Here's a link to one of the very many sites that show this. http://www.businessinsider.com/range-of-annualized-stock-bond-returns-2014-11

Here's another linkhttp://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/histretSP.html
This one compares both rates of returns and what the compounded value of $100 invested in the stock market and in bonds. The Great Depression was very hard on stocks, but after that there is simply no comparison. Even in down years, someone who had been totally in stocks is far ahead of someone totally in bonds. Good investment advisor suggest a mix of stocks and bonds, a mix of what kinds of funds or stocks to be in.