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Would you rather have your retirement funds invested in the stock market or in a govt SS account?
Vanity | 9/20/2008 | Jim Robinson

Posted on 09/21/2008 12:45:52 AM PDT by Jim Robinson

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To: Jim Robinson
Barak Hussein Obama today laughed and said John McCain wants your social security invested in the stock market. How would you have liked your social security invested in the stock market this week, he asks? And his liberal Democrat audience howled in approval of his financially astute remarks.

Gets really sad how stupid this people are.
21 posted on 09/21/2008 1:11:09 AM PDT by Ugot2Bkidding
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To: Kickass Conservative

We’re in the same boat. As it is, I can’t afford to retire until I’m 70 and it’s highly unlikely that I’ll live that long. Well, if my wife outlives me, they say she’ll get 1/2 of my social security benefit when she reaches 66 years of age. That will almost pay the utility bill. Thank God I’ve got enough insurance to see her through, providing I can continue the premiums up until the month I pass on.


22 posted on 09/21/2008 1:15:05 AM PDT by Jim Robinson
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To: Jim Robinson

Stock market. In fact, we need to start the conversion to self-invested retirement accounts ASAP. Otherwise the SS system is going to eat us alive.


23 posted on 09/21/2008 1:18:18 AM PDT by DoughtyOne (McCain, the Ipecac president... Obama the strychnine president...)
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To: Ugot2Bkidding

Obama is an idiot, but good news; SO are his followers. The market recovered and returned to about the same place it was Monday. I was hoping you were going to give us an example comparative. Heaven knows I am too lazy. lol


24 posted on 09/21/2008 1:21:41 AM PDT by WildcatClan (The world is full of fatheads; so I invented Diet Shampoo)
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To: Jim Robinson

First off, I’m certainly not here to defend Social Insecurity as an “investment plan”.

Now to my point - I’ve heard this “in the long run, the stock market averages 10% a year (Dave Ramsey even says 12%)” since, well...forever. I’d never really questioned the figures - I just took them as fact.

The only problem is, looking at this historical chart of the Dow http://finance.yahoo.com/echarts?s=^DJI#symbol=^DJI;range=my
and plugging some numbers in Excel, it appears that this statement is patently false.

As an example, if you invested in Jan, 1950, the Dow was at 235. In January 1975, the Dow was at 768. That’s not 10% annually. It ain’t even close. From what I can see, the ONLY time the market has performed that well over a stretch was from ‘75-2000.

Am I missing something, or are the financial advisors who’ve been pushing this line for the last 20+ years bold-faced liars?


25 posted on 09/21/2008 1:25:42 AM PDT by sbelew
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To: WildcatClan

I’ll give you a comparison. The stock market chart from the 30’s until today looks like a hockey stick. The social security chart from inception to-date resembles a flat line. And as the man said, seeing as how it doesn’t even beat inflation, it’s actually a negative.


26 posted on 09/21/2008 1:29:12 AM PDT by Jim Robinson
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To: Jim Robinson
How would you have liked your social security invested in the stock market this week, he asks?

You mean, we have a choice?

Regards,

27 posted on 09/21/2008 1:39:50 AM PDT by alexander_busek
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To: sbelew

I am not sure who those people are but I think a more true figure would be around 7%. I think that number will even bear out in the time frame you provided.


28 posted on 09/21/2008 1:42:42 AM PDT by WildcatClan (The world is full of fatheads; so I invented Diet Shampoo)
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To: sbelew

You’re right. The returns were higher in the later years. I have no idea what rate of return they were claiming in the 50s and 60s. I was too young to care, but my guess is, they were probably using a lower number. Mortgage interest rates were much lower back then too. I was in the service in the latter part of the 60’s and I invested in savings bonds. I think the rate of return was something like 2.5%.


29 posted on 09/21/2008 1:43:27 AM PDT by Jim Robinson
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To: WildcatClan

Well, one of them is at the top of this thresd - and I don’t say that to bash Jim, only to illustrate that it is what most people think.


30 posted on 09/21/2008 1:45:04 AM PDT by sbelew
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To: Jim Robinson

Market. Easily.


31 posted on 09/21/2008 1:46:36 AM PDT by meyer (Go, Sarah, Go!!)
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To: sbelew

By the way, if the vertical scale on the chart you linked were equally graduated, your chart would resemble a hockey stick. The line from about 1985 onward would be almost straight up and it would be about ten times higher than it is.


32 posted on 09/21/2008 1:55:49 AM PDT by Jim Robinson
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To: Jim Robinson

Ahh, I missed your post, JimRob.

Being a history guy, when someone says “long-term, I think the “real long term”, heh. Twenty-five years is a blip on the radar screen :)


33 posted on 09/21/2008 1:58:05 AM PDT by sbelew
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To: Jim Robinson

Yeah, I saw that they truncated the chart, and I won’t deny that if you rode the market from ‘75-00, it was a very profitable trip.


34 posted on 09/21/2008 1:59:58 AM PDT by sbelew
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To: All

I am like many who have already stated it..

I have been forced to pay into Social Security since i started to earn wages..

But after finding out that all SS income goes into the general fund and is ESTENTIALLY spent by the house and the senate for a wide range of expenses..

I would MUCH rather have the right to invest MY money for MY SS as I see fit.. but I am FORCED by idiots who tell me that the government will do that for me.. and fail.


35 posted on 09/21/2008 2:18:13 AM PDT by Kitanis
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To: sbelew

If you were invested in the market as opposed to investing in SS you would be far better off, whether it is 7,8,9 or 10%. Analysts will differ in the methodology used to produce these numbers. Unless we are discussing solely index funds the percentage gains are not worthwhile in any case.

That is why I prefer fixed-rate guaranteed annuities at 80% investment and then use 20% of my contribution on a somewhat higher risk investment with a better possibility of a higher return. The market has been good to me but paramount in this is the flexibility to get in and out and change course at my discretion.

Better minds than mine can argue the average yearly percent increase in the various indexes but I trend towards the conservative number. I think Jim’s larger point is that SS is a huge wealth distribution blackhole that many a hard-working American has poured money into that they will never see. The Government will always mismanage funds of this volume. They make their decisions based on pandering for votes. When we make the decisions, we aren’t subject to any such temptations or constraints. Pardon my TMI. :)


36 posted on 09/21/2008 2:20:09 AM PDT by WildcatClan (The world is full of fatheads; so I invented Diet Shampoo)
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To: Jim Robinson

37 posted on 09/21/2008 2:21:07 AM PDT by M. Espinola (Freedom is not 'free'.)
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To: Jim Robinson

I took an estate planning course while in college in the 1960s, and I seem to recall the instructors talking about 7% annual return as being a reasonable and safe “target” for your investments.

I don’t think you can directly look at the DOW over these years and calculate the annual return of the component stocks. The DOW is an index number based on the daily sales price of the component stocks. It doesn’t really reflect the stock’s earnings (dividends). It just reflects stock appreciation. The earnings re-invested act like compound interest and can build the total quite quickly... over time.


38 posted on 09/21/2008 2:21:26 AM PDT by coldoc
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To: Jim Robinson
How would you have liked your social security invested in the stock market this week, he asks?

Sad that Obbie doesn't understand the fundamentals of retirement investment.

Anyone who follows the rules would have reallocated to low risk guaranteed return options in he last 3 - 5 years before retiring.

As a person who is 20 years from retirement, I'm still in buying mode so this is actually a good week for me as I am getting more for money.
39 posted on 09/21/2008 2:46:26 AM PDT by HEY4QDEMS
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To: WildcatClan

As I stated in my first post, I am NOT arguing that Social Security is in ANYTHING other than a bad,bad,bad investment.

The 9-10% comment caught my attention, and I’m just having a bit of an epiphany about the stock market.

I’ve got to get to bed, but I think I may play with some numbers tomorrow. It might be that the stock market isn’t the best place to put SS funds (as if they existed, lol) from a risk-reward perspective? Maybe something with a slightly lower return, but with less chance of going flat (or worse) for 10-15 years?

I’ll be honest - looking at the actual rate of return on the Dow over a loooonng period of time has blown my mind a little - and not in a good way. Despite the good he does, Dave Ramsey needs an @ss-whooping for spreading that 10-12% long-term crap around. It just ain’t so.


40 posted on 09/21/2008 2:47:42 AM PDT by sbelew
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