Linked at the bottom is an excellent article from The Motley Fool on why during inflationary fear it is the worst time to stop investing. They call it, “You’re Too Broke to Stop Investing” and Chuck Saletta, the author, is right on.
Here’s what he’s talking about. When times are tough and inflation scares are rampent in the media, our natural tendency is to look where we can cut costs and get some extra cash in the pocket. Sadly, the easiest “cost” to remove is regular saving. I can cut my 401(k) contribution and have a few extra Ben Franklins in my pocket each month. Most of us aren’t aware how much this hurts us in the long run.
Most readers here know not to cut regular saving and investing, so very few of us will feel this hit in 10, 20, 30, or 40+ years when we retire. But for the rest of this country, the reduction in regular investing to make ends meet now is detrimental to one’s long term goals. Yes there are circumstances where its necessary to stop investing, but you’ll need to be late on your mortgage payment after you’ve sold your car and switched to beans and rice before it even starts to make sense.
Chuck put together some nice charts on how much money you need to have today, in order to stop investing and still meet your goals in the future. To create such a chart he has to assume a certain goal and market rate of return, but the message is clear. I doubt any of us are at the point where we could stop investing and still hit our goals. I was way off. The calculations are easy to adjust to your needs, they can be done with a compounding interest calculator. If you want to know how to use one, contact me at philip@weakonomics.com. But first go check out The Fool and look at Chuck Saletta’s charts.
 By The Weakonomist |
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