Quote:
Originally Posted by Giller
I missed this part earlier. I would counter that the savings rate is irrelevant and history shows that the savings rate closely matches the inflation rate and therefore, you never actually 'make money' in a savings account-type investment. And then factor in taxes on that income, you actually have less buying power. Higher rates typically mean higher inflation and therefore nullify those high rates.
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Well most wealth is NOT inherited so savings in whatever vehicle (cash, equity, fixed income, etc.) that the worker chooses has to be at some level above negative to expect the average person's net worth to rise in a significant way. If the average worker is only putting up 0 - 2%, then that contribution has to be doing some pretty heavy lifting on performance to ensure 20+ years of security in retirement. The home mortgage as you say is just a liability these days.
I think your comments on savings/inflation rates were based on a time when central banks weren't as active as they are now. But even if we weren't into this ZIRP era, the growth of global corporate wealth would still push the average investor to lean heavily on equities to 'make up' for lost time. Global growth is just too tough an act to follow for competing non-equity investments, especially to someone whose time in the workforce is ending soon.
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