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Retirement Planning: What is Greed? September 26, 2008

Posted by retirementwithaplan in retirement.
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What is greed? Is it “To make a business decision, you don’t need much philosophy; all you need is greed, and maybe a little knowledge of how the game works.” as Bill Watterson suggests? Or is more how Eric Fromm tells it describing it as “a bottomless pit which exhausts the person in an endless effort to satisfy the need without ever reaching satisfaction”?

Retirement planning requires some saving, some investing and some greed. Right? Here’s a simple question: We invest but why?


Investing is not saving. Stuffing it under the mattress is saving. Banks on the other hand offer you interest because of the agreement you enter: they can use your deposited money to generate more business and in return, they reward you with interest. Not a loan exactly, but a deal nonetheless. And this makes you want as much interest as you can get.

Greed?

A bond is a loan and your money is rewarded with interest. Looking for the highest yield means taking the biggest risk. The lower the yield, which moves in the opposite direction of the bond price which will rise when the yield drops, is a telltale sign that the risk is much less. Depending on your tolerance for risk, you opt for the most conservative or the least conservative fixed income instrument. Either way, you want your money to grow.

Greed?

A stock is a essentially a gamble based on the fact that you can pick a company that will grow in value, making your investment worth more when you decide to sell it. You might even get a slice of the profits in the form of a dividend. Mutual funds allow you to better diversify that risk. And when it comes down to it, no return is good enough – you can always do better.

Greed?

But no one can say, that the reason you put money in the bank, buy a bond or invest in equities and do so without the foregone conclusion that you seek to make money. And it is never enough.

Before you can enjoy it, taxes and inflation, fees and expenses, all take their piece of your action. So you reason and rightly so, that you need to make even more money.

Greed?

We all have greed. If we didn’t, there would be no marketplace. We would all fairly price and barter much more often. 

Excesses of anything is not healthy and because of the current state of under-regulation and financial cronyism, we have greed run rampant across every news and business channel. So now, as taxpayers, we own a piece of our own capitalism. Let’s hope we can make some money…

Greed?

I don’t agree with what has happened recently around the country (and is currently happening on Wall Street) but it might just better than the other option.

 Can the very greed that got us here get us out? Possibly and the reasons are simple: Congress barely understands what happened and because of that is wholly unable to make the market work for our tax dollars. Unfortunately, even with regulation, the private sector is going to have to dig its own way out of the hole they just dug and not simply by digging the country deeper in debt.

Bottom line: be comfortable in your greed. 

If anything, it is the current administration that is to blame for Wall Street’s latest bout of greediness.

 This too shall pass. What the world will look like is anybodies guess but I don’t think, that whatever it turns into, will be very pleasant.

How does this affect your retirement plan? An excellent question and in the short-term, not at all. We have to wait and see how this shakes out in the coming days.

Signed copies
on sale:
Retirement Planning for the Utterly Confused

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