Hold the Dollar Rule the WorldWritten by Ida Byrd-Hill
Today, all Americans are engrossed with news reports of stock market decline. You’ve heard news reports and said to yourself “ I’m glad I am not obsessed with money like rest of country.” The question you should be pondering is “Why is our country obsessed with stock market?”
The stock market represents bedrock of American society – capitalism. The stock Suppose an individual invested $1000 a year every year from 1925 to 2000 in companies that revolutionized 20th century – AT&T, Ford, General Motors –, their estate would have grown to more than $$69,559,828. (This assumes no additional deposits and an average rate of return of 12.70%)
The average American enjoys enormous accumulation of wealth/capital/money via stock market. This wealth/capital/money has given them freedom; hence they are very concerned about upward and downward spiral of market.
You are thinking “Freedom?! How can money bring freedom? We have freedom given to us by Constitution.” Yes, we have implied freedom, yet magnitude of freedom an individual or family enjoys can be directly related to their wealth ranking in society. This philosophy has been fundamental in America.
Stop Planning for Future Retirement , Live Today in StyleWritten by Ida Byrd-Hill
For past 85 years, financial services industry – banks, financial planning, insurance and stock brokerages have experienced double digit growth by cajoling frightening individuals by prospects of poverty and lack during retirement. Everything from radio, televisions commercials and print ads projected bleak prospects for retirement if individuals did not save and invest. Individuals born between 1912 to 1945, currently ages 60 to 93, responded to this marketing strategy as they experienced pain of Great Depression.
The Great Depression caused largest economic slump in industrialized nations ever. The Great Depression began in 1929 when stock market collapsed. Stock market values dropped eighty percent. Not only did individual investors lose big, so did banks. Many banks had a large chunk of stock in their asset portfolios. So much so that 11,000 banks out of 25,000 collapsed in U.S. alone. Individuals lost on three fronts. They lost money in stock market, in bank and their jobs. The burgeoning manufacturing industry saw a 54% drop in output causing 25 to 30% of workforce, approximately 12-15 million people, to go on layoff.
With so many people out of work, breadlines and soup kitchens became common place. People had no money to feed, clothe or house themselves. Unfortunately, government did not have resources to help them either. The impression of Great Depression has been firmly imprinted on minds of individuals, ages 60 to 93, born 1912 to 1946. Most have vowed to themselves they would never again suffer lack they suffered during Great Depression. Hence, these individuals are frugal; budget conscious savers who disdain credit and speculative investments. They sought safety of guaranteed investments and security of insurance companies who weathered Great Depression. With evolution of Federal Deposit Insurance Company (FDIC), they spread their money across several banks. Although they have money in banks and stock brokerages, they do not really trust banks or stock brokerages. They trust FDIC and SIPC (Security Investor Protection Corporation).
The financial industry evolved around financial behaviors of these Depression Era individuals. These individuals amassed greatest amount of wealth in history of United States. Because they were solely afraid of suffering another Great Depression.
The financial behavior of Depression Era individuals is exactly contrarian to those born 1946 to 1964. These individuals are called Baby Boomers. These individuals never saw lack. Their mothers, once house wives, worked in manufacturing industry during World War II. When their husbands returned from war, many women continued to be employed outside of home. Her employment brought new affluence to home. It also brought her into forefront of financial decision making. Women, now, influence 80% of financial decisions. After World War II, The US government created an economic boom bringing new jobs and more income that US economy has ever seen. Baby Boomers have always seen good economic times. They have never experienced financial lack, financial lost or suffering.