Monday, July 27, 2015

Are you a hyper saver?

Dividend Growth Stock Blog

I read the following the other day.

"Personal Savings in the United States decreased to 5.10 percent in May of 2015 from 5.60 percent in April of 2015. Personal Savings in the United States averaged 8.39 percent from 1959 until 2015, reaching an all time high of 17 percent in May of 1975 and a record low of 1.90 percent in July of 2005. Personal Savings in the United States is reported by the U.S. Bureau of Economic Analysis."

Wow, I am shocked.

Here's a historical view since the 1960s. Our parents were much better savers (10%-15% saving rate).
Ever since I started working, I've saved approximately 50% of what I earned. When I was young, I didn't earn much. But over time, as my earnings increased and I tried to save more, keeping pretty close to the 50% mark. Some years, it was around 40% because I had to pay the mortgage. Some years, it's around 60%.

The saving habit was instilled to me by my parents who were very frugal. They had to be - to raise a large family with no college education. I see them save all the time. They eventually invested in real estates and a business which pays for their retirement now.

I will try to teach this habit to my son.

In any case, I was shocked when I saw the numbers. I didn't realize that as a nation, we don't save at all. The 5% is just noise. Basically, the nation is living on the edge. If something bad happens then it is over.

When I read blogs on this community, I see saving rates of 50+% or more. I see some ridiculously high number like 80% sometimes. Compared with 5%, these folks are not super savers; they are hyper savers.

So, how I see it, if you want to retire, you need to invest. I prefer Dividend Growth Stocks. In order to do that, you need to start saving. Make sure you save more than 5%.

There is a flip side.

If everyone starts saving, then no one is spending. That means the businesses will have less earnings from profits which will ultimately bring down the whole economy.

Freaky economics. So, let's keep it quiet and save away.

Are you a hyper saver?


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