Best of the Week
Most Popular
1.London House Prices Bubble, Debt Slavery, Crimea 2.0 - Russia Ukraine Annexation - Nadeem_Walayat
2. Gold And Silver – 2014 Coud Be A Yawner; Be Prepared For A Surprise - Michael_Noonan
3.Sheffield, Rotherham Roma Benefits Plague, Ch5 Documentary Gypsies on Benefits & Proud - Nadeem_Walayat
4.Glaring Q.E. Failure Spotted - Money Velocity Is Falling Rapidly - Jim_Willie_CB
5.Don't Miss the Boat on Big Biotech Catalysts: Keith Markey - Keith Markey
6.Gold Prices 2014: Do What Goldman Does, Not What It Says - David Zeiler
7.Bitcoin Price Strong Appreciation to Be Followed by Declines? - Mike_McAra
8.Gold Preparing to Launch as U.S. Dollar Drops to Key Support - Jason_Hamlin
9.Doctor Doom on the Fiat Money Empire Coming Financial Crisis - Andrew_McKillop
10.The Real Purpose Of QE - It’s Not Employment - Darryl_R_Schoon
Last 72 Hrs
What Will December 31, 2014 Financial Headlines Look Like? - 23rd Apr 14
Why Gasoline Prices are Surging Again - 22nd Apr 14
Cold War 2.0 - 22nd Apr 14
The JIS – Junk Ideology Syndrome - 22nd Apr 14
How to Avoid Losing All Your Money - 22nd Apr 14
Silver Up, Stocks S&P Down - 22nd Apr 14
U.S. Mainstream Media Propaganda Setting the Stage for War With Pakistan - 22nd Apr 14
U.S. Interest Rates are NOT Rising! - 22nd Apr 14
A Crisis vs. the REAL Crisis: Keep Your Eye on the Debt Ball - 22nd Apr 14
Bitcoin Implications of Lack of Price Action - 22nd Apr 14
Japan - The Twilight Of The Rising Sun - 22nd Apr 14
Is This What a Credit Bubble Looks Like? - 22nd Apr 14
The Dark Side Of The Silver Mining Industry - 21st Apr 14
Strong U.S. Dollar Rally Could Pull Rug From Under Gold and Silver - 21st Apr 14
Silver Feeble Rally Fails to Hold Breakout, Falling Back Towards Support - 21st Apr 14
Stock Market Smart Money – All Out or More to Go? - 21st Apr 14
Fast Rising Pump Prices Counterattack - 21st Apr 14
Extreme Climate Change And Life On This Planet - 21st Apr 14
Gold and Silver Stocks Sitting Tight - 21st Apr 14
Stock Market Minor Correction Imminent - 21st Apr 14
Gold and Silver - Counting Blessings and Tender Mercies - 20th Apr 14 - Jesse
The CIA Through The Looking-Glass - 20th Apr 14 - Stephen_Merrill
Gold And Silver - Gann, Cardinal Grand Cross, A Mousetrap, And Wrong Expectations - 20th Apr 14 - Michael Noonan
Nikkei Stock Market - Sell Japan - 20th Apr 14 - WavePatternTraders

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

Are You An Investor Who Suffers From Hyperopia?

InvestorEducation / Learning to Invest Feb 13, 2013 - 08:48 AM GMT

By: Investment_U

InvestorEducation

Alexander Green writes: During the housing boom a few years ago – while home equity values were climbing – American consumers went on a world-class spending spree. The personal savings rate dropped to zero, then went negative. Consumers were actually spending more than they were earning.


But the housing collapse and resulting financial crisis had a sobering effect. Saving is in fashion again. According to the Federal Reserve Bank of St. Louis, the nation’s personal savings rate is currently 6.5%.

Yet two-thirds of Baby Boomers confess that they haven’t saved enough for retirement. A 2010 survey found that 34% of Americans have zero savings, including 22% of those 65 or older.

Blame it on our materialistic world, the American consumer culture or just plain old lack of self-control, but millions have a hard time passing up immediate gratification in order to reach long-term financial goals.

Yet there is one class of savers and investors with an entirely different problem and, in some ways, it is just as unfortunate…

Psychologists call it hyperopia.

That’s a fancy of way of describing people who are so far-sighted they can’t enjoy their money. They are good at looking ahead and saving for the future, but they can’t enjoy what they’ve earned.

The Depression Mentality
Years ago, when my older brother was playing the mini-tour in Florida, he had a local businessman and sponsor – “Joe” – in Virginia who wanted to come down and watch him play.

“Great, I’ll book you a room at the Hilton nearby,” my brother offered.

“The Hilton?” Joe said. “Forget that. I’ll book myself a room at the Motel 6.”

Now there’s nothing wrong with staying at a Motel 6, especially if that’s all you can afford. (Growing up, I never stayed in anything better.) But Joe was independently wealthy. He owned a string of McDonald’s franchises.

However, he grew up in the Depression. He had the kind of keen understanding of “scarcity” that eludes most people today. And, like many businesspeople, he owed his success, in part, to keeping a sharp eye on costs.

Still, he was getting on in years. (In fact, he died less than three years later.) He never spent much of the fortune he earned. Ironically, he could let his heirs blow through it. But he couldn’t bring himself to spend it himself.

Author Matthew Kelly writes that he, too, came from meager circumstances and – even after he was a bestselling author and an in-demand lecturer – he couldn’t make himself part with much of what he was making.

If someone you know has hyperopia, you might suggest they do what Matthew Kelly did…

Planning How Much to Spend
Just as most folks need to plan and make a habit of saving, some need to plan and make a habit of spending. Kelly figured out how much of his after-tax income he could drop with a clear conscience and then set goals to make sure he did it.

It’s a minority to be sure, but some folks – practical ones who work hard, save and invest – may need to pre-commit to indulgence. That could mean choosing a gift certificate over cash back when redeeming credit card reward points. Or perhaps reframing money spent as an investment in restoring yourself for work.

In my experience, workers generally fall into one of two categories: those who have to be goaded to work and those who have to be reminded to stop. The same is true of savers. The majority are clearly not saving enough (or leaving it untouched long enough). But some of the others aren’t enjoying the fruits of their labors.

It can be a great balancing act, deciding what to save, what to spend and what to give away. But the oldest adages are entirely true. You only live once. You can’t take it with you. Hearses don’t have luggage racks – and shrouds don’t have pockets.

So earn it. Save it. And pass it along. We’re only here for a visit.

Good Investing,

Alex

Source : http://www.investmentu.com/2013/February/are-you-an-investor-who-suffers-from-hyperopia.html

by Alexander Green , Oxford Club Investment Director Chairman, Investment

http://www.investmentu.com

Copyright © 1999 - 2013 by The Oxford Club, L.L.C All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Investment U, Attn: Member Services , 105 West Monument Street, Baltimore, MD 21201 Email: CustomerService@InvestmentU.com

Disclaimer: Investment U Disclaimer: Nothing published by Investment U should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investment advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication or 72 hours after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Investment U should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Investment U Archive

© 2005-2014 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Free Report - Financial Markets 2014