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Investors are ignoring the financial aspects of living longer, says BlackRock's Larry Fink....

Investors are ignoring the financial aspects of living longer, says BlackRock's Larry Fink. Americans are facing an enormous "savings gap" and need an investment strategy with a time horizon greater than just a year. With bonds and bank interest paying next to nothing, the biggest risk for investors isn't market volatility, but investment indecision, and holding on to cash as a safe haven.
Comments (38)
  • Now that is the way to talk your book!
    29 Feb 2012, 08:16 PM Reply Like
  • Exactly. So Blackrock wants savers and near retirees to deposit everything they can with Blackrock. So the asset gathers can generate even more fees for themselves and continue to enrich themselves. Meanwhile any losses from risky investing get to be borne by the investors while Blackrock executives and employees keep making money no matter what. Same scam mutual funds and wall street money mangers have been running for decades now.


    Meanwhile Banana Ben keeps aiding and abetting them by keeping interest rates near zero for 3+ years and likely another 3 years yet. And trying to induce inflation to even further reduce any earnings and savings of average americans.
    29 Feb 2012, 08:55 PM Reply Like
  • Few seem to grasp the incessant effects of inflation. They want to imagine that only costs rise, but nothing else. It's silliness. Somebody's cost is somebody always else's price.


    Here's some simple math which illustrates what occurs over time and why markets rise, virtually endlessly in nominal terms. For the sake of argument, let's apply a P/E of 10, but it could be anything, depending on the business and growth rate involved.


    Time 1:


    Price $2 - Cost $1 = Profit $1$ x P/E 10 = Shar Price $10


    Time 2 (later, when inflation has risen 100%):


    Price $4 - Cost $2 = Profit $2$ x P/E 10 = Shar Price $20


    Effectively, this is what occurs over time as everybody's prices/costs rise. It's why the price of everything -- shares included-- perpetually escalate. Of course, there can be temporary volatility caused by fears and misapprehensions of all kinds, but the foregoing relationships are immutable.
    29 Feb 2012, 09:23 PM Reply Like
  • "Few seem to grasp the incessant effects of inflation."


    Tack, you're on to something here.


    (Hint) It's called "inflation hedge."


    And Tack is right.
    29 Feb 2012, 10:05 PM Reply Like
  • One of the reasons that capital gains have historically been taxed at a lower level is that your historic cost base is not indexed for inflation. In effect each and every year that you have inflation you are taxed on that inflation in addition to normal price appreciation.


    If cap gains tax rates rise then the impact of this phantom taxation will increase - assuming Obama wins there will be an expectation that taxes will rise and I would expect a lot of people will sell towards the end of the year to take advantage of the lower tax rates on their long-term gains.


    Happens every time cap gains rates rise.
    29 Feb 2012, 10:36 PM Reply Like
  • Would be a hell of a lot better than sitting on cash.
    Look at the 10 year and +
    29 Feb 2012, 11:17 PM Reply Like
  • what a load of crap. where was his bravado and ridiculous sense of civic duty when spoos were trading 700?
    29 Feb 2012, 08:37 PM Reply Like
  • Yeah, the last 12 years have been great! If you were lucky, you broke even (not counting inflation), if not, you're down.


    But this time is different I am sure as as a nation and world, everything is fixed and so much better than in 2007 or 2002 or...


    You just have to beat inflation if you are a saver.
    29 Feb 2012, 09:17 PM Reply Like
  • I am up 94% 2000 Jan to date. And I have never had more than 1-2% bonds, and 98% of the time I was fullinvested in equities, with very little cash on the sidelines for more than a few days while waiting for an opportunity. Not great perhaps, but much better than sitting on the sidelines, and a lot more than the break even that you state.


    And, no, this time is NOT different. And if you are only staying even with inflation, that is called treading water.
    29 Feb 2012, 11:09 PM Reply Like
  • You certainly didn't buy and hold - which is what most folks are told to do and certainly what this article alludes to.


    Most folks don't have the time for active investments - which what you have to do nowadays to preserve capital as we as a nation and world go into and out of more and more frequent bubbles/busts.
    1 Mar 2012, 01:36 AM Reply Like
  • True - buy and hold, at least for now - has gone the way of the Dodo.
    1 Mar 2012, 10:19 AM Reply Like
  • Geeze, spare the vitriol, you first three replies. Evaluate the man's statement on its merits, rather than on the bias you perceive. I don't work in the financial industry, have no ax to grind, and agree completely that people in the US don't save enough. The primary reason is the large segment of irresponsible people who believe govt will take care of them, and if not, can get govt. to steal from others to take care of them.
    29 Feb 2012, 09:19 PM Reply Like
  • So transparent as a sales pitch it's not even funny. It sure works though, look at assets under management. But he wants more, prolly wants them all.
    29 Feb 2012, 09:21 PM Reply Like
  • So you are saying that people should keep their cash and not invest with Blackrock, or any place, or what??


    BTW, (BLK) itself is up around 1300% since 2000.
    29 Feb 2012, 11:21 PM Reply Like
  • Simple answer? Live longer - work longer. If we don't, we're screwed.
    29 Feb 2012, 09:55 PM Reply Like
  • 31yrs as of Feb. and fully invested in working longer to live longer....if my wife doesn't kill me first. (optimist vs. me (realist))
    1 Mar 2012, 04:17 AM Reply Like
  • I agree. It's just a sales pitch. Nobody will go broke by not having a high enough return on their investments. But they very well could lose all of their retirement savings by handing it to any investment company to lose for them.
    It's not a matter of not saving enough. The issue is whether to believe that only by handing over one's retirement savings to a professional or taking undue risks trading ourselves in the markets can we possibly have enough to get through the rest of our lives at the paltry interest rates offered.
    29 Feb 2012, 09:59 PM Reply Like
  • Or you could end up like a couple of people I know that held onto cash for some 17 years, and it lost over 2/3 of it's value.


    And yes it IS not saving enough. But even if you save "enough" and let it sit there and go down in value at 3-4% a year, it is probably pointless.
    29 Feb 2012, 11:32 PM Reply Like
  • Invest in the following:


    own your home a a home you can own outright, even if it's a mobile home.. own it outright.


    have house an energy efficient as possible


    grow an orchard and a large garden


    have chickens for eggs and maybe even meat


    the point is to have the least amount of expenses so not to be dependent on productive citizens labor and never go hungry and shelterless.
    29 Feb 2012, 10:05 PM Reply Like
  • I don't think my CCR's will allow for mobile homes, chickens or orchards. And I don't want to live in boonytown.
    29 Feb 2012, 10:14 PM Reply Like
  • I wanted to put cows in my back yard, but the city objected.
    29 Feb 2012, 11:34 PM Reply Like
  • Jason, do you really think that everyone can just plant an orchard, and grow a garden? Or have chickens? Even if I had the room here in Phoenix, about the only orchard that would grow would be citrus, and that takes a lot of water - not a lot of water in the deserts.


    Your type of advice always dumbfounds me, because you seem to assume that everyone lives in the same part of the country that you do, and lives in the boondocks.
    29 Feb 2012, 11:37 PM Reply Like
  • you do what you can where you can is the advise. .. hedging ideas is all. For you, in Arizona, getting solar panels and heating your water with solar would be my advise for you.. so to hedge against rising cost of energy and further debasement of dollars. Read between the lines Windsun ..
    1 Mar 2012, 01:31 PM Reply Like
  • I already have all that. But getting short on lizards to eat.
    1 Mar 2012, 04:18 PM Reply Like
  • "Wednesday, February 29, 8:03 PM Investors are ignoring the financial aspects of living longer, says Blackrock's Larry Fink. Americans are facing an enormous "savings gap" and need an investment strategy with a time horizon greater than just a year. With bonds and bank interest paying next to nothing, the biggest risk for investors isn't market volatility, but investment indecision, and holding on to cash as a safe haven."


    Maybe this was a quote when the S & P was at 750 and it had gotten misplaced? LOL.


    Of course Americans are facing a savings gap.
    10% of all Americans own 90% of the country's net worth.
    For most of the 90% of Americans that own only 10% of the country's net worth it is to late anyway. Transfer payments are all they have to look forward to.


    For the younger generation out there: do what YOU feel is right. Ignore these asset gatherers and their sales pitches. You do not need them. Educate and invest your own money and starve people like Larry Fink.
    29 Feb 2012, 11:19 PM Reply Like
  • Just love all the crowded trades seeking to beat inflation that have blown up over the last decade. They have been a great inflation hedge. Why trust these clowns (Fink & Doll) with your money? According to Josh Brown Fink top ticked the market in 2011: "I remember Fink's "Be 100% Equities" call in July 2011 - top-ticked it almost to the minute."


    Agree with Archman Investor and Jeremy Grantham. Learn to invest on your own: "The individual is far better-positioned to wait patiently for the right pitch while paying no regard to what others are doing, which is almost impossible for professionals." - Jeremy Grantham - Longest Quarterly Letter Ever - February 2012
    29 Feb 2012, 11:58 PM Reply Like
  • Let's not shoot the messenger.


    The number of people who are not ready for retirement is mind blowing. This is going to be a huge problem over the next 3 decades and likely longer.


    The drivers are people living longer, higher inflation, global pressure on wages, government budgets under stress, higher tax policies and medical care costs that are rising faster than inflation. And the waves of people hitting retirement now do not have pensions like the last generation. In summary incomes going down in real terms and costs rising.


    This looks like a train wreck to me.
    1 Mar 2012, 12:54 AM Reply Like
  • Messenger? He's no messenger: he just want your money to pay his fees. He's got expenses to cover. Big house in the Hamptons, penthouse on Park Ave and the wifey's couple of Bentleys (that's just a few items...)
    Go ahead and trust him with your retirement and college funds.
    1 Mar 2012, 08:20 AM Reply Like
  • I think paranoid describes your thinking. You can put your money in a mattress for all anyone cares if you think everyone is out to get you and your shekels. There are plenty of places to put money besides BlackRock.
    1 Mar 2012, 09:28 AM Reply Like
  • How did that strategy work for the Japanese investing during the last 20 years? 40,000 down to 10,000.
    1 Mar 2012, 02:06 AM Reply Like
  • Expect that every time an investment manager talks to the public, it's going to be a sales pitch.


    However, the SK market current simply hasn't fully expressed the on going argument about today's retail investors. Except maybe for SK readers who tend to go beyond beyond cookie cutter portfolios, we are mostly in cash or non-producing assets such as gold. Even likely, medium to long term Treasuries that can't possibly beat expected inflation.


    Blackrock was originally a fixed income boutique, so I don't think he's talking his book like Gross. It's probably the flows he is seeing within his own firm.
    1 Mar 2012, 02:10 AM Reply Like
  • Nu,
    What flows within Blackrock?? Blackrock is simply an asset gatherer just like every other investment shop out there. They could care less whether you as an investor makes money or not. They collect their fees on assets under management whether you make or lose money or not. That's always been the game and always will be. If you happen to make money then OK, but they take zippo risk and make fees collected no matter what. There is a reason why these investment shops keep getting richer and richer and it certainly has very little to do with investment performance.
    1 Mar 2012, 04:05 AM Reply Like
  • Then go to Schwab or eTrade and run your own stuff. It is a free country. You have no obligation to work with these outfits. I don't.
    1 Mar 2012, 09:30 AM Reply Like
  • LOL, exactly what we do and have done for 30+ years. And BTW, far outperformed these bandit asset gatherers as well. Unfortunately the vast majority can't or won't do such.
    1 Mar 2012, 05:24 PM Reply Like
  • UI


    Being uneducated and lazy can be expensive. People have chosen their own destiny and I cannot fault asset gatherers for offering a service that people need. The fact they are lousy at it and the benefit reward framework is out of whack is disgusting for sure.
    1 Mar 2012, 05:52 PM Reply Like
  • "Most folks don't have the time for active investments"


    yet many of those same people seem to have time for a few beers and/or a movie on the weekend. I have made investment my primary recreation for many years, and spent much of my free time being sure I will not be a burden as I age.


    The result is that I can now relax, and in my 60's, enjoy a comfortable yet frugal retirement.
    1 Mar 2012, 05:12 AM Reply Like
  • Tack is correct and will continue to be until he is wrong. I won't be putting any money on that bet. You can't tell people how to raise their kids, who to love or how to spend their money. Most people don't think we can end up like Japan. Most people think there will always be someone on the other side of the trade to pay more. Thanks to 401K's and IRA's for the 30 years someone has been there to pay more. At one point we had more mutual funds than we had stocks. But the last time I checked income always has to be there to support housing and equities. Our middle class has been the support for the rich and the poor.....they have been the meat in that sandwich....that maybe starting to fade. Most baby boomers are retiring and will need their money. They aren't suppose to be heavly weighted in stocks any way. What can Fink tell someone that had GM bonds and was invested in Fannie and Freddie. They don't care about the return on their investment....just the return of their investment. The greatest money return that one can get is to get out of debt first .... then you can start thinking about savings. That is how it is for most americans. They never learned to pay themselves first. What are winners without losers and who is Fink without investors. There are so many people out there like Fink that are so worried about me and my money. Inflation may eat my cash but it won't feed Fink.
    1 Mar 2012, 05:29 AM Reply Like
  • BlackRock is not dependent on retail investors so let's not confuse them with a lot of the other players.


    His point stands no matter who carries the message.
    1 Mar 2012, 09:32 AM Reply Like
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