For the normal person of average means, investing in the stock market is an important thing to do. It amplifies the amount of money you're able to accumulate over your lifetime. But the amount of income you're able to save may be even more important than investing it perfectly if recent dire predictions about future stock market returns come true.
A recent article from Megan Mcardle in The Atlantic got me thinking. The article is called "The Great Stock Myth," and appeared in the September 2010 issue and is now on the magazine's Web site.
In the article, McArdle cites a study from Smithers & Co., a financial services consulting firm, which forecast a 1.8 percent growth rate for U.S. equities over the next ten years. Mcardle concludes that, at that rate, the average investor would need to squirrel away up to 40 percent of her annual income in order to replace half of her income at retirement.
This 2008 video of Bankrate's senior financial analyst, Greg McBride. illustrates what happens if investors get only 1 percent return on their investments.
Personally, I don't see myself bailing out of the stock market anytime soon as I have about 40 more years until retirement if I can work until age 70. A Bankrate poll done last year found that 35 percent of Americans weren't worried about the stock market as they believe it will go up over time.
How do you feel about investing in the stock market?
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