Lost Innocence

My father was a child during the depression of the 1930s and it left an indelible impression on him. He always used to tell me how my grandfather was terrified of losing his job as a clerk and how I should always save my money. You never knew when the day would come when you had no job and no income. That was about the extent of financial education that he gave me.
I decided to at least try to teach the same lesson to my 9 year old daughter. So I took myself down to my local PNC bank where I maintain checking accounts for the family. The helpful young representative, fresh out of college with a degree in marketing, showed me brochures for the ‘S Is For Savings’ children’s savings account. They have a website with videos of colorful Sesame Street characters and a Savings jar, a Spending jar and a Sharing jar for charitable causes which teaches your child all about saving and spending and giving. I asked him what interest rate they paid. He replied that we would earn 0.01%. I lost interest (excuse the pun) at that point.
We are fools to save money in conventional savings accounts when inflation is running at 10% or more for daily essentials.
So what to do? How can you preserve the value of money when Bernard Bernanke and those plugged into government and finance have no intention of letting you?
They want you to put your money in stocks or bonds where they can get at it. The Facebook IPO is a good example of why they may not have your best interests at heart. The sponsors of the Facebook launch knew that it was overpriced. Its opening price was $38.03 and, as of the date of writing, stands at $21.52. The company, along with the investment banks that led the IPO, is the subject of dozens of shareholder lawsuits. They allege that analysts at the large underwriting investment banks cut their financial forecasts for Facebook just before the IPO and told only a handful of clients. Facebook and the banks overseeing the IPO insist that nothing about its IPO process was illegal or even out of the ordinary.
Another reason why you might not want to put your money in stocks is the dramatic decline of the stock market in 2008. It was Alternative Investment Funds India not only a financial blow to people who kept savings in stocks and mutual funds in their 401Ks but also a psychological blow.
My grandfather and father had a reasonable expectation that they could deposit their money in a bank and it would be safe and would earn a decent amount of interest to make it worth keeping there. They did not need much financial education to find a safe haven for their money. Now there can be no such assurance. You have to be vigilant and knowledgeable. Innocence is too expensive.
If you want to preserve your capital or even make money in stocks or bonds, you need financial education and a very clear and well-tested approach to investing or you need access to inside knowledge.
I can think of some approaches to investing that require less financial education and some that require more. The following seem to be viable approaches that do not need too much research: gold and silver bullion coins, Certificates of Deposit and ETFs in currencies of countries that Importance Of Finance are well-governed or have substantial natural resources, or both, such as the Norwegian Kroner, Swiss Franc, Australian dollar, Canadian dollar or Singapore dollar and, finally, blue-chip stocks that pay good dividends such as the Johnson and Johnsons and Altrias of this world.
Here are some approaches that need more financial education and require a love of the subject so that you can spend years accumulating experience and really learning it. The key to these is to start small and build up gradually. You will make mistakes. They are: rental property (the Rich Dad, Poor Dad series of books recommend looking at 100 properties before buying any), commodity future spreads – you have to be willing to study old charts and wait for the opportunity when spreads are unusually close or wide and, finally, buying and selling options in credit spreads, where success or failure does not depend on guessing market direction.
If you do not educate yourself financially, you have no defense. The days of financial innocence are over.

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