The Lost Decade

29Sep10

No, this isn’t a reference to 2004-2010 and the great TV show Lost.  This is additional information to show how wrong-minded people like David Cicilline are when they talk about not wanting to let people put a portion of their future social security benefit into the stock market.

Fool.com has an article about “The Lost Decade That Can Hurt You“.  It shows the S&P 500 ETF returns for given time periods for the last 1 to 25 years.  Yes, there is a great deal of fluctuation in the recent years, even showing a 7.3% loss over the last 3 years.  But look what happens when you start looking at the last 15-25 years.  The returns seem to normalize and even increase as time goes on.  Can social security match that 7.7% gain over the next 25 years?  Of course there’s no guarantee that any market or any fund will increase by that number for the next 25 years, but why can’t I have the option to put a portion of my social security money there?  Oh sure, I can invest with my own IRA by purchasing a 401k somewhere.  But why can’t I invest *my money* that I pay every month into the Social Security system where I want?  Why do only politicians get to say where my money goes and what it’s used for?  And let’s skip the argument that all taxes go to where the politicians say, like schools, roads, running government, etc.  No, this is different.  This is my money that goes in, the government holds it for me and then when I reach a certain age, they give it back to me.  It’s a savings account.

If you had a savings account at one bank and they were offering 1% interest on your money and you saw that a different bank was offering 4% interest on a savings account, what would you do?  Would you switch?  Of course you would!  But what if someone told you, “No, you may not switch, you must stay in that 1% account.”?  You’d be irate.  You’d be calling lawyers!  But no, we just let politicians do exactly this to us when they say they will not allow us to invest a portion of our social security benefit in the stock market.

Make sense?  It sure doesn’t to me.

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