Hard as it may be to believe, some people such as myself have NEVER considered stock investments to be savings. Any money invested in stocks is "play money" with no guarantees attached to it one way or another, nor is it money that one relies on to pay living expenses at some later point in time.
I am just explaining what the government definitions are and why the official savings rate is low.
People who don't understand stock investment would probably have this opinion, people who don't understand real estate investment migth have the opposite opinion.
Of course any individual stock issue might be very risky. But you'd better tell my mother and others that the only way to make a living later in life is to invest in real estate :)
I do, however, consider any money invested in paying down a mortgage to be *saving*....because some day I'm going to get back some of it, all of it, or more than I ever put into it.
That should be counted as saving I believe.
The alternative, which is to rent, would be to throw money down the drain every month, never to be seen again in any way, shape or form.
That is an economic fallacy vis a vis owner occupation.... a common one though...
Real estate also hasn't yet demonstrated (to me, at least) the ability to go to zero, while we've all seen many stocks do so, easily and fast.
I guess mostly the land as in space will survive but I can imagine the structure being destroyed by an uninsurable risk... and then there are neighborhoods which were once upscale that are now slums.
I think it is easier to destroy your equity in residential property given typical borrowing ratios today.
Moomin |
