It was announced that more than $1 trillion has been added to the value of American equities since the stock market hit a two-month low on August 7th. Americans’ wealth has reached a record high, thanks to a surge in the value of stocks and homes.
I’m sorry to be the bearer of bad news, but here’s a news flash: You haven’t made a penny in the stock OR real estate market!
We’ve been here before…
Just like those glowing reports about how much Americans’ wealth had ballooned prior to the last financial crash, the new reports are pure fiction. Until you sell your assets and lock in your (hopefully) gains, you have nothing more than a bunch of eye-popping numbers on paper. Those numbers repeatedly sucker many of us into believing we have real wealth and financial security when we do not.
There’s a big difference between paper wealth and real wealth. Do you remember the go-go years of the dot-com bubble? I do. My husband Larry and I got into checking our retirement account almost every day because it was growing that fast. Yahoo! Some weeks we’d see such an enormous jump that we’d high-five each other shouting,
We’re rich! We’re rich!”
And didn’t we all feel like we were sitting real pretty again right before the financial crash of 2008? Then we discovered for the zillionth time that what goes up fast usually comes down fast, too. The stock and real estate markets did just that with a resounding thud. These collapses took the retirement security of millions of Americans with them. All our prosperity went unrealized.
In fact, Americans’ “paper” wealth plunged by nearly 40%, due to the collapse in home values and the stock market, reducing the net worth of U.S. families to a level not seen since 1992. (Source: Federal Reserve’s 2010 Survey of Consumer Finances)
The Oscar-nominated movie that came out earlier this year, The Wolf of Wall Street, has the most profound ten-second scene about the truth about Wall Street. This blog post spills the beans.
We see the same principle in our home values: The rise in a home’s value is only an unrealized paper gain – and it may vanish just when you really need the money.
During the real estate boom years, we got some astonishing appraisals. I remember when our neighbors put their home up for sale. It had been appraised for nearly 50% more than our last appraisal, even though it was about the same size as ours and had nearly identical features. Three months later, we ran into their real estate agent who told us no one had even looked at the house, let alone made an offer on it.
Two years later, the bank foreclosed on it.
Yup, we’ve been here before – all too many times
I’ve been surveying thousands of people since the publication of my latest New York Times best-selling book, The Bank On Yourself Revolution. Buy it here for the lowest price available. I’ve been asking people if they believe there will be another major stock market crash in the next five to ten years?
Even I was a bit surprised to discover that almost every single person believes that’s going to happen!
My next question was, “How many of you have a significant portion of your savings in the stock market?”
I’ll bet you can guess the answer. Almost everyone was rolling the dice in the Wall Street Casino with a major portion of their nest-egg.
How much financial peace of mind do you think that provides?
Those who forget history are condemned to repeat it
The financial media is pointing out that the S&P 500 has “surged nearly 200% from the bear-market bottom on March 9, 2009… When compared to other bull markets at their five-year points, the current rally is the second-best performer since World War II. The only rally that performed better was the S&P 500’s 228% surge from August 1982 through August 1987, which ended that year on Black Monday.”
And we all know what happened next…
Yep – we’re livin’ in the good ole United States of Amnesia…
I guess the real question is – in the immortal words of Clint Eastwood in Dirty Harry – “Are ya feelin’ lucky?”
Hey, I’m all for optimism. In fact, my husband Larry sometimes calls me “Pollyanna” because I’m always trying to look on the bright side of things.
But doesn’t it make sense to hope for the best, and to have a “Plan B” in case it doesn’t turn out that way? (Especially when you know in your heart of hearts that the overall economic picture doesn’t add up and whistling and hoping for the best isn’t a financial plan.)
The Bank On Yourself method is based on an asset that has grown in value every single year for more than 160 years. The value of your plan is guaranteed to grow by a larger dollar amount every year you have it. (So you can sleep like a baby when the next crash happens.) What other financial asset do you own that does that?
It’s easy to find out how big your nest-egg could grow – guaranteed – if you added Bank On Yourself to your financial plan. And there’s no cost or obligation to find out. Just request your FREE Analysis, if you haven’t already.REQUEST YOUR
You have nothing to lose and a world of financial peace of mind to gain!