Saving: Good or Bad?


Over the years, we have all probably been encouraged to save, first by parents and then by assorted financial advisors.  Clearly, saving is important and most of us should have cash reserves to cover several months of expenses and be putting something aside for retirement.  To that extent, saving is good.

The big picture is another matter.  Currently the markets are focused on retail sales with careful scrutiny of results for Black Friday and Cyber Monday.  Any sign of weakness in consumer spending would probably adversely affect stocks and stock markets.  Investors are likely to be cheering for, “shop ‘till you drop.”

Economists have been noting that, while incomes are up, spending as been somewhat flat, suggesting that there has been an increase in the savings rate.  This may be a partial explanation for the generally lackluster rate of economic growth in recent quarters.

Apparently it’s good for investors, if they save, and the rest of you spend.

All comments and suggestions are welcome.

Walter J. Kirchberger, CFA®