My wife and kids are off visiting our relatives in Tokyo, and so I’m at home alone for the next couple weeks, reliving my bachelor days for a little while. Plenty of cold pizza for breakfast!
In place of the usual ritual of bathtime and bedtime stories with the kids (is there anything cuter than a three-year-old in a tub of bubbles?), I’ve lately had more time in the evening to sit down and noodle at the family finances. This got me to thinking a little bit about the various ways people do this—or don’t—and how it might affect investment behavior.
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For retirement investors, the weak 10-year track record of stocks means it’s time to renew a focus on the economics of retirement. The math is pretty simple, at least at a high level:
Contributions (C) + investment returns (R) = retirement wealth (W)
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Federal Reserve data indicate that between January and early May, bank savings deposits rose by almost $170 billion. At the current rate, new deposits for 2009 will exceed those in 2008, which totaled almost $330 billion.
Clearly, you’re voting with your money. While many of you have stayed invested, others have either withdrawn from the market or stopped committing new investment to the market—and, in some circumstances, both.
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