So, dh and I have a friend. He lives in a different province but we see him once a year or so. He's married and has twin girls (about 10). His wife is a SAHM. He works freelance in a precarious business that is growing weaker by the year. He expects to be totally out and looking for other employment in the next year or so.
He was good at what he did and knows he will absolutely not make that kind of income again-probably half the amount. His wife could go back to work, but it would be a low paying job that has to fit around her daughters' school schedule
So..in the old days he would always push us to buy mutual funds and to pad our RRSP (Cdn retirement account). He was a big believer in mutual funds and sunk a lot of his $$ into them.
The past 5 or so he has changed. He says all the big corporations are top heavy. All the 'big wigs' earn million dollar wages yet the business ends up tanking (there are a few Cdn corps that have suffered greatly in the last decade or so-and shareholders watch their thousands being turned into pennies)
So...he now keeps all his savings in regular savings accounts. He claims they get as much interest as locked-in GICs (not sure what the American equivalent is).
I think he said he is earning either 1.5 or 2 or 2.4% on his investments. Here's the kicker (for me) he has almost $150,000 in savings account. Other friends tell him to buy a condo-or a big down payment-with the money and rent it out. Others tell him to invest in stocks, mutual funds.
But he is adamant about leaving it in a savings acct. He says he knows the family income will drop by at least 50% in the coming years and rather than stress about investments he wants to know the $$ is in there to tie them over or for emergencies-home repairs, new car, schooling for girls, etc.
His home is also paid for and he has no debt. He lives in Saskatchewan which is booming now so his home value has shot up
To me, he has a lot of money. But I'm not sure what he is doing is unwise. I know people always say 'you can make money or you can make your money make money' and obviously he is doing the former. Also, not sure what inflation is but he is either hovering at that or possibly below
Thoughts?