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Strategies & Market Trends : John Pitera's Market Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Hawkmoon who wrote (3420)	3/8/2001 5:13:29 PM
From: jimcav	Respond to of 33421

I never offered a definition of savings, I did however dispute the fact that investments with known high risk should be considered savings. Obviously during hyper-inflationary times banks would give you a negative relative return-- not disagreeing on the reasons WHY people have done what they have, just whether or not they should be considered savings. "The fact is that people are doing something with their money OTHER than spending it on consumables." How is this factual?..the borrowing against assets is at historical levels, either being put back into other investments or used for consumables. So while the immediate placement of people's money might be into 401k's with a match from employers, (makes sense), borrowing against such assets negates the "savings" effect. Especially if the debt is incurred on the notion that the asset value will continue to rise or at least NOT DECLINE.

To: Hawkmoon who wrote (3420)	3/8/2001 5:56:03 PM
From: Doppler	Read Replies (1) \| Respond to of 33421

FYI- The Personal Savings Rate does include 401K contributions. Unfortunately those savings are currently being negated by the high levels of consumer debt which offset it in the gov't calculation. The personal savings rate for November was –0.8%, the lowest it's been since the government started tracking the number in 1929. When the savings rate is negative, consumers are financing their consumption by tapping sources other than their current income—for example, borrowing, selling assets, or spending past savings. Here is another quote from a Vanguard article on the savings rate. Perhaps the most important thing to understand is how investments are counted. The savings rate does include your contributions to both IRAs and employer-sponsored retirement plans, such as 401(k)s, but it doesn't include any employer match. It also excludes any capital gains (i.e., appreciation) on your investments. If your portfolio gained 10% last year or has grown 30-fold since you started contributing, that accumulation is invisible to the savings rate. I guess the bottom line is that Americans have been spending money faster than they make it, or put it away for retirement.