Monday, September 12, 2016

A Couple of Thoughts

After meeting with the financial adviser a couple of weeks ago, I've been trying to think of a way to optimize my savings. I needed some deodorant and the dollar store had these discounted to 70 cents each. With the rate my bank is paying on a regular passbook savings account, I would have to save $7,000.00 per year to get 70 cents worth of interest. For two sticks it would be twice as much, of course, meaning $14,000.00. If I let the $14K ride all year the compounding of the interest might get me the $1.50 the bill came to with the tax included. 

Something like a third of all countries are now issuing bonds with negative rates, the theory being people will take their money out of the bank and put it into circulation rather than paying the bank to hold onto it. With all that spending, the economy picks back up and everything is ducky once again. Good in theory, maybe. Not good for old guys wanting to live off the proceeds of their savings. In Japan what they've seen is an up-tick in the sale of home safes. Rather than put their money into circulation, people are hording it at home. So much for the negative interest rate theory.

I'm not sure what the average guy can do about this other than get himself debt free so you can accumulate some cash and don't have to depend on interest income. Even if you had a $1,000,000.00 in your savings, the interest earnings wouldn't do much for you with a return of 1 or 2%. It used to be the rule of thumb was draw down 4% annually and you'd run out of retirement money about the time you ran out of heartbeats. Not anymore. Maybe buy more deodorant.

On a totally unrelated thought, I'm going to be participating in a bike ride in a few weeks so I figured I might want to do a little training. I went out yesterday morning, the 15th anniversary of 9/11. It was an absolutely gorgeous day. Blue sky, white puffy clouds, just a slight breeze and a temperature about 65 degrees. After the weather we've been having with the heat and then the rain, you couldn't ask for a better day to be out. I checked my watch as I was leaving the shack and it was 9:11 - that was a little spooky. As I was riding I didn't see any jet contrails, which isn't all that unusual, but I remembered the skies being empty and quiet after 9/11 and how eerie it felt. As I was returning home I heard something, stopped the bike, and sure enough it was the sound of a jet. I couldn't locate it in the sky but I heard it and several others later in the day along with the sound of a small plane. Funny how reassuring it was. Just like in the old movies, it's never a good thing when it's too quiet out there. 

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