Thursday, December 8, 2011

Investment Myth : Inflation erodes your savings

Don't invest your money in stocks, says Mark Cuban. Wall Street is no longer a good place to make money.
Cuban discusses how average investors looking to invest $25,000, $50,000, $100,000 or more can get return on their money.
"There is a transactional value to cash, and I think that the whole concept of you fall further and further behind because of inflation is ridiculous," he says.

Sometimes, when you hear investment managers tell you the savings rates are below inflation rates and if you don't invest in equities, your savings will be eroded by inflation. This compelled retail investors to look for alternatives (which incidentally will be the equities the investment firm is trying to sell you).

To a certain extend, the manager is right if you are one who will never invest but only saved. However, if you have been investing and is just merely waiting for a better entry point, then the 1 or 2 years of "inflation" erosion is not going to hurt you as you will be able to get 10-20% min. discount on prices.

So... no hurry, just be patient with your cash. Cash is not King but it certainly allows you to grab discounted items when the time comes.


Infi said...

hi , have been always reading your posts. Think this is very true. I think I do not know how to invest, so the safest strategy will be wait for a crash and then buy the big names. But meanwhile I am always worried that I am losing out due to not investing as like what your post is saying ^^

Singapore Man Of Leisure said...

Tell me about it!

I swithed my company's pension fund last week when the market rebounded from 75% equities and 25% bonds to:

1) 25% cash at fixed 3.5% interest

2) 50% bonds

3) 25% equities

Deja vu time all over again ;)

YJ72 said...

I am hoping that you are right. I am still waiting but my fingers are getting very itchy. Saw some of my favourite Reits' price falling and decided to place some orders in queue. A few hours later, I suddenly realized that I am breaking away from my initial plan and I quickly withdraw all my buy orders.


Wealth Journey said...

Disclaimer to all, I do not know what I am doing.

Army teach me one favourite catchphrase :- I think, you thought, who confirmed?

I think this is the right way to do my asset allocation and investment strategy, you thought I know what I am doing, but who can confirmed??? :p

Hope all understand your decision is your judgement call, not because you think I thought :)