Comments on: Boost Reserves or Buy Stocks?

By: Stacey

Stacey — Mon, 29 Dec 2008 21:09:21 +0000

@#10 Bill, are you earning any interest on that $10K in checking? If not, you should shop around.

@#11 Craig, re: your last sentence, savings can be “cash-like” you know…cds, savings accts, even savings bonds (E-series or I-series). Go to http://www.treasurydirect.gov if you want to learn more about savings bonds. You can purchase direct from that site if you don’t want to go thru a bank. Then your “inventory” is on-line–no bonds to lose or get stolen! Also, they have a nifty Savings Bond Wizard for tracking (by serial number) your bonds’ value, next interest date, etc. so you could track all your bonds, no matter where purchased (on-line or at a bank.)

For us, our savings bonds have been a welcome port-in-the-storm. Some are even yielding 6% (I-series bought in 2000) Wish I had invested in more at that time

By: Craig

Craig — Mon, 29 Dec 2008 20:44:15 +0000

I am young and in a position that I can put money away for 10 years without really needing cash now. Have no financial responsibilities other than myself. Of course I don’t know if the stocks will go down more or can predict what the next few yrs could bring in my personal life. If I am laid off I could be alright for 2 months but would struggle after and am not sure if I should take the risk and load up my IRA and future savings or keep the cash now.

By: Bill M

Bill M — Mon, 29 Dec 2008 18:44:21 +0000

I have decided to pay off all debt except the house and invest a little every week at the same time. I try to keep around 10k on my checking account at all times for the unexpected.

By: Daniel

Daniel — Mon, 29 Dec 2008 17:11:23 +0000

This is a good post and I find myself torn between saving and investing and paying off debt often. For the upcoming year we decided to try to pay off all our non mortgage debt by June. We decided to do this because we currently have enough in our emergency fund to sustain us for 6 months if we both lost our jobs. At that point we plan to boost up contributions to a non retirement investment account where the money will be available to us if we absolutely had to use it.

By: Doug

Doug — Mon, 29 Dec 2008 12:37:00 +0000

Money—Supply, Velocity, and Loss of
We all know that the money supply has been increasing, and many have been surprised at the decline in prices that has accompanied the recent “growth” of the money supply. We all know that inflation is a monetary phenomenon, Right? Yes that is right, but lets take a closer look at what is happening with the money supply and the velocity of money. If inflation is a monetary phenomenon and money supply is increasing, why aren’t we already seeing inflation? During the time that the money supply has been growing the velocity of money has been declining—at an alarming rate. Why has the velocity declined. Financial innovations—such as those nasty Collateralized Debt Obligations (CDO’s) increased the velocity of money. These innovations were “productively” increasing the velocity of money when they were created and when all was well with their value. As the credit crisis evolved–we had to unwind all of the “productivity” that was gained through the use of these “darling turned ugly duckling instruments”. This unwind took its toll on the velocity of money and the real damage will be the unseen damage that is yet to come. What unseen damage? The damage that will be done as the velocity of money declines as these instruments are “cleaned up”. The decline in velocity caused by the unwind of these instruments has contributed to the false sense of “deflation” that has gotten so much attention from many “talking heads” lately. We know, through both common sense and historical numbers that the velocity of money declines during recessions—sometimes sharply. During a NORMAL economic cycle, the decrease in velocity would be normal as central banks would increase the money supply, get the economy going again and then the velocity would again rise.
Read the remainder of the article at http://www.stockshotz.blogspot.com

By: Single Guy Money

Single Guy Money — Sun, 28 Dec 2008 17:30:43 +0000

I’ve decided to increase my cash savings instead of throwing more money in the market. I have increased my 401k contribution but other than that, I am more focused on saving cash.

By: Jason Bontrager

Jason Bontrager — Sun, 28 Dec 2008 15:42:40 +0000

So here’s a question: who thinks selling short now, with a contract to buy back on January 21st, 2009, might be a good risk (assuming such an arrangement is possible…I’ve never sold short)?

By: Mark

Mark — Sat, 27 Dec 2008 21:23:36 +0000

I have actually been increasing my savings the last 2 months. I am going to switch and increase my investments this coming year.

By: Stacey

Stacey — Sat, 27 Dec 2008 18:18:15 +0000

It’s the old “good enough” yardstick. I’m not fretting over it–I’m splitting some to ING savings, doubled DRIP to P&G, continuing to max DH’s 401K and continuing my $150/mo to my T Rowe mutual fund and $500/mo to the boys’ 529s (which is less than 1/2 of what we used to fund.) We have a healthy emergency fund balance in an ING Savings Acct; however, since IMHO things are going to get worse before they get better I’ve also laddered CDs to sleep better at night. Since our portfolios are down 40-50%, including what used to be healthy 529 balances, my goal is to stay flexible and keep balances in instruments I can get to, penalty-free in case the worst (illness/job loss) comes home to roost w/us. I’d be less conservative if we weren’t carrying 2 residences, but that’s not “the hand” we’re currently holding

By: Jason Bontrager

Jason Bontrager — Sat, 27 Dec 2008 13:07:08 +0000

I’ve upped my monthly stock purchase by $50, but otherwise haven’t changed much. I’ve cut one monthly expense for a purchase that I’d been losing interest in (comic books), and I’m planning on taking fewer road-trips to Austin in the coming year. My cat probably won’t last another year either, and I won’t be replacing her when she goes (amazingly expensive things, diabetic cats).

As for my “emergency fund”, I don’t have one as such, just a money market account that I use as my primary checking account. I just try to see to it that less leaves than enters (difficult during the holidays, but those are past now). I do have another checking account that I keep active just in case I need to write a check for less than $100. I only keep about two grand in that one though, and I should probably transfer half of that over into my money market account, which provides better interest.

So that’s it. Keep investing and keep saving. My 403b is maxed out and has been since I started my current job, so no need to worry about changing that.

I have two big expenses on the horizon, a bathroom renovation and, eventually, a newer car. Those are going to hurt, but I’ve got funds to cover the first, and my current car still runs, so I’m putting off the second as long as possible.