Originally Posted by
iris lilies
yes, agreed that losing everything doesnt make sense for the average American investor in mutual funds and the like. It is hyperbole to support the false narrative about The Evil Wealthy People.Sure, people who SOLD OFF all of their financial
instruments and then spent that money—sure, they are chit out of luck. They sold their holdings.
So we were dumba$$es for losing our money. I know it seems that way.
Here's what the NYT says about that:
But to buy stocks, you need money. After watching their fortunes — and retirement funds — shrivel, few Americans were in a position to take a fresh flier on beaten-down stocks.
Those who could were already well-off. In 2007, the wealthiest 10 percent of American families owned 81 percent of the nation’s household stock market wealth, according Ed Wolff, a professor of economics at New York University who studies the distribution of wealth in the United States. By 2016, they owned 84 percent, he said.
The recovery in the stock market made those families even richer, increasing their net worth by double-digit percentages. Median American family wealth, meanwhile, dropped 34 percent.
Here's an example of how it's hard to just ride it out. This is what happened to me. Bear with me and I apologize for repeating myself--you've heard most of this before.
I had a late in life career change (I was 46 at the time, in 1998). Up to that point I couldn't make ends meet for a variety of reasons that I won't go into to protect the innocent. I had a low-level job raising 4 kids on $28k. In a plucky and brave moment (if I do say so myself) I asked my superior for a job that I was, on paper, vastly unqualified for, but I got it anyway. I determined that I would work hard and double my salary in 5 years. I did it in one.. and then by 2007 I had quadrupled it. In the meantime I was able to buy a reasonably priced car and put 3 kids through college, and using airline points, bring my family to Scotland.
I also saved up $75,000 which was in a 401k
Then disaster hit and you know what happened in 2007. In the subsequent couple of years of the recession, my $75k shrunk to $25k. At that point, I needed to make a property tax payment on the house we had bought in foreclosure, and I had various other bills associated with the two extra houses I was now responsible for legally. (yes, yes,yes, if I had it to over again, and had a crystal ball to tell me that the housing market was just about to go bust I wouldn't have put myself in that position--but who knew?? The market was screaming then).
My MIL would not pay the property taxes or other bills. So I sat for several days to see if there would be any way I could avoid liquidating my 401k. I couldn't see it. So I thought, oh, well, I'll liquidate and then I'll pay myself back as soon as we sell the house.
Which didn't happen for another 5 years. And when it did sell, we took a $100k loss. I got no money at the closing. So I had no money to pay myself back.
That's how it happened in my case. I was not out buying Prada bags and Lexus cars and cruises and then found myself in a financial whoopsie! I consider myself pragmatic, and reasonably sensible when it comes to money, although I am an easy touch when it comes to my family. I don't consider myself a proverbial grasshopper. Maybe I'm not an ant, but I'm definitely not a hapless dumba$$ either, and I feel that there are a lot of Americans out there like me who suffered in the recession and who struggled or are still struggling to make up for lost ground.