Tuesday marked President Barack Obama’s sixth State of the Union address.
As usual, there were the advocates and critics who praised or chastised the president for laying out his agenda for the year ahead and reflecting on recent events.
One of the highly discussed topics was Obama’s proposal of a myRA account, which help individuals save for retirement by investing in government bonds.
While the yield on a retirement account is low, it’s safe and a very attractive option to many Americans who aren’t comfortable investing in the stock market.
The topic of saving money is one of great importance to the nation, especially after the financial crisis and recession, which left many homeowners foreclosing on their homes with nothing more than a few weeks pay in their bank accounts.
Yet even after such a steep economic downturn, Americans still flood online retailers and shopping malls on holidays like Thanksgiving just to spend what little money they’ve managed to put aside.
The general argument as to why Americans spend frivolously is that few have learned the value of compound investing, even fewer have the patience to wait for the returns that would fuel their retirement or fund their cash safety net.
The administration sees the need to educate individuals with the myRA as well as highlights the fact the average American doesn’t save to begin with, a small step in the right direction.
If a TV at BestBuy is 10 percent off, it’s seen as better investment than a 2.7 percent 10 year yield on treasury securities.
After all, what’s not to love about seeing the Red Hot Chili Peppers play the halftime show on a 60 inch HDTV?
In reality, this perception is a mental abnormality that is the result of excess consumerism in our society.
To combat this behavior, Americans shouldn’t be forced to save, but merely made aware of the consequences of not saving.
The college years represent a prime opportunity for young savers to learn about the beauty of compound investing, as well as how to create a financially balanced lifestyle.
After all, once your journey on campus comes to an end, you may feel that student loans will be the last form of debt you’ll ever want to have.
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