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I love the anyone can do it investment hype. Not that investing isn't a good thing if you can afford it, but investing regularly is the only way to grow your money, and that's where the difficulty comes in. If you have an income, heck, even if you're one of the people who stand by the freeway off ramp with a cardboard sign for coin, there's always money to invest if you don't care about what they call in economics "the opportunity cost".
I'm not talking about the "Morning Starbucks" or "Afternoon Soda from the machine" type of opportunity cost to investment.
Too many people can't even afford $25 a month without getting the electric shut off to invest or risking the last week of the month without food or the gas money to get to work. And if they decide to invest in something they have to hold on to, and not first put their spare change in an emergency fund that doesn't cost anything to access immediately if they need it for, say, a car repair or to make up a rent payment if they had a shortfall in working hours or become unemployed, then they've screwed themselves and their investment. First thing to do, build an emergency free or very low monthly fee savings account with at least three, preferably six months of bill payments. Then you can invest. Of course, investors would prefer your emergency account will be in investments because they profit every time you need to pull money and tend to have fairly high annual fees on minimum level accounts.
Something I've learned over the years - it takes one month of income to recover financially from one week of unemployment. At least one month to make up for late or overdraft fees incurred. And if you put off repairs or payments because you couldn't afford them, or you've got a medical bill hanging over your head, or if you had to purchase COBRA to cover a lapse period in your health insurance, there's another month or two, as things get worse.
Try running a budget for a family of four with a household budget of $28K a year in most urban areas. Most of them don't even qualify for a Credit Union account, not to mention a bank account.
I suppose they could live in a car or in a truck camper shell that one of the adults uses to get to work, using someone's driveway or public facilities for their sanitation and that friend's address for their mail, and then they might be able to save significantly enough to regularly put in a STAR fund or a brokerage account that won't end up be eaten up by the minimum fees on the months they can't spare the money. I suppose the young people who are investing in their college or training because there's no subsidized education available to get them an above minimum wage can cut back on their hours or delay their training.
Investing is good. I appreciate the meager investments I have that remain after medical emergencies, emergency funeral arrangements, several short bouts of part-time income or unemployment, etc. I especially appreciate my father in law's investments, and my parent's investments, both having accrued during more stable times when these people were lucky enough not to deal with significant emergencies during their lifetimes, and could invest the suggested 7 - 10% a paycheck for a long period of time.
But advising someone to "invest, invest, invest" when they are not in a stable enough financial situation to invest is destructive to that person.
Too many Americans are not in a stable enough financial position to put money aside.
Haele
