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This is the situation I am in. I'm not savvy enough to make investments that have meaningful or significant returns - so it all goes into a savings account. I

by Nadya 11y ago

This is the situation I am in. I'm not savvy enough to make investments that have meaningful or significant returns - so it all goes into a savings account. I have 1 years' expenses saved and it just slowly accumulates because I don't know how to make a safe return on it. I don't want to invest say, 3 months savings only to lose it... Definitely the "play to not lose" mentality rather than a "play to win" mentality but I see little reason to change that behavior.

antimatter 11y ago
I'm in this exact same situation. I have very little trust in my knowledge of any other form of investing. Would much rather take the safe route.
- ryandrake 11y ago
  It makes sense to hold savings in a savings account or CD if you're worried about risk of loss. The stock market is very volatile and you can lose your shirt if you don't know what you're doing. Ask me how I know this.
nemo44x 11y ago
You are actually taking on more risk than if you had some invested in different vehicles. The truth is you're losing more money by not having any of it generating higher potential yields. Likewise, putting all your money in higher yielding vehicles (for instance, call options) is a lot of risk too. There's a calculus to understanding how much you should have put into different vehicles (including cash in a savings account) to take on the most conservative position. The way you're playing is you are forfeiting and losing by taking on more risk than you think. It's weird to think about but you need to factor in inflation and cash becomes worth less when it is just sitting there. It isn't volatile but it is mainly deterministic. Some diversity in your arrangements would protect you better.
- Nadya 11y ago
  > The truth is you're losing more money by not having any of it generating higher potential yields. I'm aware of this and can account for this loss. What I dislike is an unknown potential loss that I can't readily account for. For example - if I invest $50k I need to account for the possibility I might lose the entire $50k, or a portion of it. Being realistic, I'm unlikely to lose it all, but even if I only lose $5,000 that puts me off from making that investment. It's very risk-averse behavior, which many people with a confirmation bias are against. Their $50k investment may have returned $150k and they begin to question why I wouldn't make that investment. In other words, even if 3/5 people make $150k, as a risk-averse person, I see myself as already being part of the 2/5 people that lose the $5,000. The only forms of investments I've ever done are playing the markets on MMORPG's. The markets are predictable, safe, and I can readily make a 8-10% ROI each night. If I could make investments like that in a real market I would in a heartbeat! :P
  - snikeris 11y ago
    Check out Harry Browne's Permanent Portfolio: https://en.wikipedia.org/wiki/Fail-Safe_Investing https://en.wikipedia.org/wiki/Fail-Safe_Investing It's a relatively low risk way to invest.
KirinDave 11y ago
Compare your savings interest rate to the rate of inflation. You're literally better off with credit card rewards and paying down the debt monthly, in many cases. That's how bad most savings accounts are.
AjithAntony 11y ago
Investigate the "robo advisors" like betterment and wealthfront. You are exactly their target audience. You can safely ignore the general FUD you will read about their fees. The people writing that it costs too much are far more sophisticated than you and have traded a great deal of their time researching investing to be able to invest "cheaper" on their own. If you are extremely price sensitive, then you should look at wisebanyan which is "free", or use a referral link to join wealthfront to get the first $15k managed "free".

by Nadya 11y ago

antimatter 11y ago

I'm in this exact same situation. I have very little trust in my knowledge of any other form of investing. Would much rather take the safe route.

ryandrake 11y ago
It makes sense to hold savings in a savings account or CD if you're worried about risk of loss. The stock market is very volatile and you can lose your shirt if you don't know what you're doing. Ask me how I know this.

nemo44x 11y ago

You are actually taking on more risk than if you had some invested in different vehicles. The truth is you're losing more money by not having any of it generating higher potential yields. Likewise, putting all your money in higher yielding vehicles (for instance, call options) is a lot of risk too. There's a calculus to understanding how much you should have put into different vehicles (including cash in a savings account) to take on the most conservative position. The way you're playing is you are forfeiting and losing by taking on more risk than you think. It's weird to think about but you need to factor in inflation and cash becomes worth less when it is just sitting there. It isn't volatile but it is mainly deterministic. Some diversity in your arrangements would protect you better.

Nadya 11y ago
> The truth is you're losing more money by not having any of it generating higher potential yields. I'm aware of this and can account for this loss. What I dislike is an unknown potential loss that I can't readily account for. For example - if I invest $50k I need to account for the possibility I might lose the entire $50k, or a portion of it. Being realistic, I'm unlikely to lose it all, but even if I only lose $5,000 that puts me off from making that investment. It's very risk-averse behavior, which many people with a confirmation bias are against. Their $50k investment may have returned $150k and they begin to question why I wouldn't make that investment. In other words, even if 3/5 people make $150k, as a risk-averse person, I see myself as already being part of the 2/5 people that lose the $5,000. The only forms of investments I've ever done are playing the markets on MMORPG's. The markets are predictable, safe, and I can readily make a 8-10% ROI each night. If I could make investments like that in a real market I would in a heartbeat! :P
- snikeris 11y ago
  Check out Harry Browne's Permanent Portfolio: https://en.wikipedia.org/wiki/Fail-Safe_Investing https://en.wikipedia.org/wiki/Fail-Safe_Investing It's a relatively low risk way to invest.

KirinDave 11y ago

Compare your savings interest rate to the rate of inflation. You're literally better off with credit card rewards and paying down the debt monthly, in many cases. That's how bad most savings accounts are.

AjithAntony 11y ago

Investigate the "robo advisors" like betterment and wealthfront. You are exactly their target audience. You can safely ignore the general FUD you will read about their fees. The people writing that it costs too much are far more sophisticated than you and have traded a great deal of their time researching investing to be able to invest "cheaper" on their own. If you are extremely price sensitive, then you should look at wisebanyan which is "free", or use a referral link to join wealthfront to get the first $15k managed "free".