My son and I both subscribe to the Investopedia website.  It has very informative articles sent out daily, and a stock simulator which allows you to lose digital, simulated currency playing the stock market instead of fiat currency in the real stock market. This morning’s email started out with an article on buying gold. I was struck by the fact that first on the list of ways to hold gold was through physical possession, something that has always been frowned upon by financial planners and most “investment experts.” Next came holding gold through ETF’s and stocks. There was even a reference in the article to planning for an “end-of-the-world” scenario.  It seems even the mainstream investment strategists are seeing the light, or darkness as it may turn out to be.

Read more about gold and precious metals at NotParanoidJustPrepared.com.

D-Day- 20 January, 2017

20 January 2017

The Day is upon us, for better or for worse. The Don, Our Trump, the Big D takes control today. Just a reminder, in case you live under a rock.

Let it be known that my affordable health care has increased by nearly $100 again this year. I am now paying nearly $1000 a month- very affordable! I paid about $450 dollars a month before it became affordable.  Thank you to Barack Obama, Congress, and Cigna for all your help with this matter. I am so happy to support big business, giant healthcare concerns, Wall Street, and all the entitled millions of Americans, and non-Americans, that need my help.

With the recent demise of all of The Limited’s brick and mortar stores- that would be the closing of its remaining 250 stores down from about 750 total back when malls were the craze, the writing on the wall is getting clearer.  What else happened in the last week? Macy’s is closing another 68 of its stores, 109 Kmarts will close, and 41 Sears stores will close.  And that is just the “big guys” that are going under. The full list is much bigger.

What does all this mean? First, the loss of what, 20,000 jobs? That will increase our overall unemployment rate, currently at an adjusted rate of about 5% (unadjusted it is somewhere around double that, if not more- pay attention to media nuances and verbiage!) It will make our sluggish economy even more so. But more importantly it will make one of my lifelong dreams a little bit closer to coming true. One day I am going to drive my truck through the empty and abandoned shopping malls of America, I am going to spin doughnuts in the food court, and take a leak in the fountain in the middle, the one right near the Orange Julius. All the while vintage Mojo Nixon will be blaring from my speakers. Mark my words, it won’t be too much longer.

An article in the 10-11 December, 2016 Wall Street Journal focused on “staple” products in the food stamp program. The first sentence says it all,” In a rare tuneup to the $74 billion federal food stamp program, U.S. regulators deemed potato chips and ice cream too unhealthy to count as staple foods.”

Well, is comment really necessary? And where do I begin? It is hard just to get past the fact that food stamps is a 74 billion dollar program in and of itself. That is just mind boggling, especially in our affluent, first-world, expanding economy where there is so much job growth, construction, and low unemployment. Next, the fact the potato chips and ice cream were ever considered staple products is… just embarrassing.

Two more references to the article are necessary.  The first is that “more than 45 million people received funds from the program last year.” The current population of the U.S. is about 318 million people. That means that about 14% of our country receives assistance from the food stamp program alone.

Wikipedia lists 79 “means tested” programs for which 2.3 trillion dollars were spent in 2011. These programs include social security, housing, food, training, childcare, and medical programs among others. The 2011 figures do not include the so-called Affordable Care Act. The 2011 figure amounts to a cost for each American of about 7,192 dollars per year. That is just the cost of welfare programs. Is it any wonder our national debt is so high?

Last point of reference from the article is that not only were potato chips and ice cream removed from their former status by the USDA, but “Twinkies can no longer be considered bread and pork rinds aren’t considered a staple meat.”

In the case of Pam and Sam, compound interest is a myth at best. But more of them below.

Most of us know how compound interest works, but here is a refresher. It starts like this- you put money in the bank- your principal, and it earns interest- the amount the bank pays you to use your money. The interest you earn- the accrued amount,  is added to the original principal and therefore the amount of interest grows over time. Rather simple.

My son and I receive daily emails from Investopedia, and online resource for investing education and financial news. They have a wealth of knowledge on all types of investing. But beware, as with all knowledge a little of it can be dangerous.

A recent morning email contained an article on compound interest. In it Pam and Sam both invested $15,000 at an interest rate of 5.5% compounded annually. Pam invested early, at age 25. Sam invested later, at age 35. At age 50 Pam had over $57,000, Sam just over $33,000. Wow. This certainly illustrates the concept.

But there are problems.  Where did Pam and Sam find an investment returning 5.5% annually? It seems that the investment was pretty stable, perhaps a savings account? And this is where we need a reality check. In the real world, can we find such an investment? It all sounds good on paper. But the truth is that you WILL NOT find this investment opportunity- a stable, fixed 5.5% return over 25 years is a thing of the past. If you are teaching your child about saving, and open a savings account for them, you might get .25%, about 5.25% less than this example. Let’s not even get into the tax burden, and calculating for inflation over those 25 years. We might get really discouraged.

Not only is it important to teach our children about the virtues of putting something away, of saving, but more important are the concepts of discretion, critical thinking, and the benefits of a healthy level of scepticism. So much of what we are told, overtly and in this case, couched in a basic economics lesson, is not true. Children should be taught to understand that taking something at face value may not always be the best decision.