Got this email from a reader who lives on food stamps but she seems to have a better grasp on the world of high-finance than some folks who used to be considered some of our nation’s wealthiest investors.
But can someone please explain to her why so many otherwise smart people invest in schemes purporting to deliver high returns?
I read your column this am about the small-time Ponzis aka ‘mini mees’. My inquiry has to do with the investors.
I realize I am small potatoes when it comes to money. I live on an SSDI check, get my rent subsidized, get a few $’s in food stamps and am on medicare. Human Services only allows us to have a maximum of $2000 in savings. ( that in itself is amusing because it’s common knowledge around the low income that savings is a hope,a dream, a goal. I swear, I can put $$ aside in savings and the next month my filling falls out…. ( and so it goes…) I also have the knowledge of high school economics where I was introduced to the Wall Street Journal and NY Times. I’ve even dated a commodity broker ( talk about being a “second banana” ar ar ar ar lol lol – I kill myself sometimes).
That being said, I have to wonder – when I read of the returns expected by these big money investors – if they actually believed promised returns of 72%, 28% or even 10%? I know from where I sit it would appear to be absurd -but what do I know?
I am still at the CD stage and hope to start some safe, slow investing this year. ( Money consciousness kicks in!) So my question: Is it a legit possibility or just greed that encourages people, who are well off, to risk what they do have for something that could never really be?
I understand that with more money invested there is a greater risk for a greater return. So is it me? Do I not understand ‘real world’ finance or is it the investor who just couldn’t be happy with what they were getting and allowed themselves to be blinded – perhaps out of fear of having to downsize their lives???
If some of the blame lies in the investor, then they are no better then those that knew in their gut, they could not afford a home and yet allowed themselves to be convinced they could afford this home. They failed to read the fine print in their AIM mortgages; they knew their lives were not rock solid, and yet they overrode that feeling that says ” don’t do it”.
If so, then all I can say is “boo hoo hoo to you”. I say that angrily because I look at myself several years ago. I worked with Santa Fe redevelopement and they found me a home, $44,000/$350 a month mortgage. On the surface that looked perfect. However, when I looked at my debt – credit ratio and took into consideration what repairs I might have to shell out for, I decided to back out of the deal. Now I am far from perfect, but honestly, have we Americans lost our sense of thinking, of common sense, of sacrifice in the name of no more debt?
Short of enrolling in Metro and taking an economics class, I beg of you to explain all of this? I am sure I am not the only reader to wonder the same thing. It is one thing to blame the Ponzites, but when do we point the finger at the participating and willing party. I am sick of feeling sad for their losses if in fact it was due to greed.
Ya know Al, these days my prayer to God in the morning and at night is that of Gratitude. Until all this hit, I admit I was jealous of the “haves”, who and let’s be frank, never missed an opportunity to look down on those of us who ” suck the system dry” ( when In fact I didn;t ask to become disabled and I did work my ass off to accumulate credits for SS).
Now they are the ones who have to take their sorry butts to the food bank and complain about lines at human services.
Boo hoo hoo.
Let’s shine the lights on the foolish, the greedy, the blatantly stupid ( and this includes the elderly who have no problem wanting to give away their hard earned retirement). I know one should not kick another when that another is down, but let’s be fair.
The corporate punks are great whipping boys ( and you notice the are all men!) but it is time to acquaint the average person with what the best route for them to take with their money. They need to hear a tape that says over and over ” do not give your money away – what you have is enough”. Cripes. ( I mean the news had to alert homeowners about faux roofers. Do these consumers even call the BBB to do a back ground check ? Nope. They prefer to go for the price then wonder why they get screwed).
Bottom line: Wake up, grow up and take responsibility for your actions! It is you, in part, who created this screw up, so now the rest of us have to suffer. ( As a renter, the rental market gets screwed up because now those who are foreclosed out have to rent).
I will say on the positive side, being low income, you learn to save for those $80 walking shoes you will wear for 4 years; you learn to shop exclusively at thrift stores, you learn to cook and enjoy generic brands of food, and most importantly, you learn when the free days are here in Denver, how to get in on discounted bus passes and in general enjoy life on the cheap.
My ex bf used to call it “budget niceness” ( an excuse for doing cheap stuff at the end of the month lol lol ). The tables have turned, and I am so grateful for the past when I didn;t have what I thought others did.
I guess in some respects folks like myself are now the “haves” . Short of wanting a car, life itself is pretty darn good these days.
Thanks for the ear,