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> It seems like a savings account could do the trick. You can save a healthy retirement by putting a portion of your salaries in a savings account in your local

> It seems like a savings account could do the trick. You can save a healthy retirement by putting a portion of your salaries in a savings account in your local credit union. With interest rates as low as they are, savings accounts have a negative real return. The $1000 you save today would have substantially less purchasing power by the time you'd retire. > As a bonus—while you are not using that money—other members of your credit union can use this savings in a form of a loan, to buy a home, start a business, etc. Well, yes and no. Banks don't really directly lend out the money deposited in savings accounts, due to fractional reserve requirements. > The idea of my retirement being at the will of some hedgefund manager is not appealing next to the idea of my retirement being used temporary to help my neighbors buying a house or start a business. I don't get this. With an IRA or a personal taxed brokerage account, you aren't at the mercy of anyone: you can choose which companies & funds to invest in. Hedge funds are not the be-all-and-end-all of the stock market, most funds are mutual funds who invest conservatively. If you just mean that hedge funds can cause black swan events like what we're seeing with GME, then sure, that's a concern, but only for the short term. Long-term, the stock market tends to appreciate and substantially beat inflation. We can add regulations to prevent hedge funds from fucking things up, without tearing the entire system down.

runarberg 6y ago
Well in my ideal situation, the stock markets have already crashed and burned. My argument above is not that savings accounts are optimal for me personally, but that they are an alternative to the stock market. Better yet, an alternative which is far more worker friendly as they don’t rely on taking the profits from the workers and putting giving them to the shareholders.
- Alupis 6y ago
  You might be missing the issue here. A savings account will cost you money in the long term - ie. your purchase power will decrease every year because the interest paid on savings accounts does not even keep up with inflation. The longer and more money you have in a savings account, the less purchase power you actually have. Think of this like putting $100 into the account but only being able to spend $90 of it. Multiply that by your life's savings... and this becomes a horrible way to save for retirement. A Money Market account would be better, and nearly as safe as a savings account. IRA's and 401(k) where you control you money is ideal. If you don't want to be bothered to pay attention to the markets... get yourself a managed IRA (yes, a fund would then be in control of your future). With a managed portfolio, you generally get some say over how your money is invested - so you could direct them to invest in industrializing economies (which would help lift people out of poverty over time). Just because you make money on the stock market doesn't mean someone is getting screwed over... Bottom line is, a savings account will lose you money over time (and that doesn't even touch on the maximum amount you can have per account to be insured, which is far less than you'll need for retirement).
  - tartoran 6y ago
    I think the parent is talking about an ideal situation in which saving accounts do actually pay off a nice interest that beats the inflation and sprinkle some extra profit on top. Not a lot but it is risk free. Isn’t the idea that banks make the money flow by circulating it around a good one? A saver who doesn’t need it now can park it in a bank and when their time to retire comes they get their actualized money plus some profit. And since the interest compounds, with a nice rate it could be both safe and profitable. I agree that this is not feasible now but that is only becaus of the low interest. That dynamic would change if the interest is dialed up.
    - Alupis 6y ago
      The only way a bank could afford to pay enough interest on a savings account to meet inflation would be to... wait for it... invest that money in something that would beat the inflation rate. We've just re-invented the stock market.
      - runarberg 6y ago
        No. That is not the only way... Alternatives include: charging more interest on loans then on savings, charging service fees for each transaction. Also just think about this for a second. If the economy keeps growing (which is what inflation really is) more people will have more money, they would want to keep that money somewhere. They put it in a savings account. The bank now has more money to pay more interests. We don’t need the stock market.

runarberg 6y ago

Well in my ideal situation, the stock markets have already crashed and burned. My argument above is not that savings accounts are optimal for me personally, but that they are an alternative to the stock market. Better yet, an alternative which is far more worker friendly as they don’t rely on taking the profits from the workers and putting giving them to the shareholders.

Alupis 6y ago
You might be missing the issue here. A savings account will cost you money in the long term - ie. your purchase power will decrease every year because the interest paid on savings accounts does not even keep up with inflation. The longer and more money you have in a savings account, the less purchase power you actually have. Think of this like putting $100 into the account but only being able to spend $90 of it. Multiply that by your life's savings... and this becomes a horrible way to save for retirement. A Money Market account would be better, and nearly as safe as a savings account. IRA's and 401(k) where you control you money is ideal. If you don't want to be bothered to pay attention to the markets... get yourself a managed IRA (yes, a fund would then be in control of your future). With a managed portfolio, you generally get some say over how your money is invested - so you could direct them to invest in industrializing economies (which would help lift people out of poverty over time). Just because you make money on the stock market doesn't mean someone is getting screwed over... Bottom line is, a savings account will lose you money over time (and that doesn't even touch on the maximum amount you can have per account to be insured, which is far less than you'll need for retirement).
- tartoran 6y ago
  I think the parent is talking about an ideal situation in which saving accounts do actually pay off a nice interest that beats the inflation and sprinkle some extra profit on top. Not a lot but it is risk free. Isn’t the idea that banks make the money flow by circulating it around a good one? A saver who doesn’t need it now can park it in a bank and when their time to retire comes they get their actualized money plus some profit. And since the interest compounds, with a nice rate it could be both safe and profitable. I agree that this is not feasible now but that is only becaus of the low interest. That dynamic would change if the interest is dialed up.
  - Alupis 6y ago
    The only way a bank could afford to pay enough interest on a savings account to meet inflation would be to... wait for it... invest that money in something that would beat the inflation rate. We've just re-invented the stock market.
    - runarberg 6y ago
      No. That is not the only way... Alternatives include: charging more interest on loans then on savings, charging service fees for each transaction. Also just think about this for a second. If the economy keeps growing (which is what inflation really is) more people will have more money, they would want to keep that money somewhere. They put it in a savings account. The bank now has more money to pay more interests. We don’t need the stock market.