can one be too frugal?

[ss_md]

ss_md, not a flame, but take the suggestion of rs 250 and read "The Millionaire Next Door". It is a fantastic book. The real wealth in America is not the physician making $300,000 per year and spending $300,000. It's the guy that owns the junk yard that earns $100,000 and lives on $50,000. Most Americans can't even afford to retire when they become of age. If you want, party hardy now, but remember the rule of 7 in the future.

I agree with you that you can’t spend every dollar you earn and expect to become wealthy or even retire. At the same time the average person in America cannot expect to become wealthy by just being frugal. Which was the original point of my statement. The average person works at a job and is behind the game from the start. A typical scenario: graduate from college with student loans, get a job, repair or replace car, get married, and have kids. The expenses and costs keep snowballing and alakazam, debt up to their ears! Most Americans live paycheck to pay check. The sad part is they are hoping and praying their retirement plans rebound and Social Security is around when they retire. Granted we are all in control of our own destiny but this situation is far more typical than saving 50% of net income annually.

If someone is smart enough to accumulate wealth, they are not going to be dumb enough to let someone use it, unless it is proven to them.

The businesses that the Dot comers (sp) developed looked good on the business plans and a majority of those are now Dot goners. There was a great deal of the dumb factor there. Investing bears risk and nothing in life is guaranteed. Investors are well aware of this fact. Yes – they will do their due diligence, especially after the dot com travesty. No – they will not invest in every ‘flash in the pan idea’ that pops on their desk. Investors will still be stimulated by a great business plan and invest with the potential of good ROI.

Why do I say that - I have taken a number of companies public and worked with financial institutions. They want the numbers. If people have lots of money, they will be in managed money accounts.

Of course they want to see the numbers but numbers on a proposal are only educated speculation. Look at mortgage lenders; they weigh heavily on FICO scores and foreclosures are at an all time high in our nation. Those numbers didn’t mean diddly. Things happen and the future cannot be predicted. In hindsight, all they can say is it looked like a good investment and walk away and deduct their loss on their taxes. Yes - investors will have managed accounts as part of their overall investment strategy. However, their portfolio may include higher risk investments that yield higher profits to be diversified; depending on the amount of risk or loss, they are willing to bear.

 

[saxonsaxon]

Money

It is not how much you make it is how you invest that in the end pays big dividends.
I am saving away 24K (401K)a year for my old days and I pray that S.S. and my pension will be enough to keep me afloat when I am 55. If not,I can always move to a country where things are cheaper and my dollar will go further.