So I am an avid saver. I have always lived well below my means. I like listening to self help finance (Ramsey) etc and am facinated by books regarding finance etc.

I am also an avid reader of books regarding the erosion of middle class america and the tax burden of entitlement funding in the US.

I find it increasingly hard to know which way to direct my financial ship.

Ex. I just had a financial analysis done by my bank. Turns out it was a sales pitch for them to "actively" manage my account. In it they described a class of investment advisors with some letters after their name who where likened if a tax prep person at H&R block were a CFP these guys were CPA's to the finance world.

Upon analyzing my mix of investments they said that I was too heavily in cash. I was surprised by this because the reason my account had done better in some cases then recommended was because of the cash that I had accumulated. So the conventional wisdom is that i was cash heavy (~15-20%) of my account for my age group (34).

So whats that mean? Historically I have been a 50% large, 20% small, 20% foreign and 10% bond/cash guy.... but now... do you stock pile cash with a looming market correction. Investing in bonds looks awful right now, Investing in real estate... Paying down debt would seem safe unless you expect inflation to occur which seems the only way out of current problems... What to to do?

Thoughts?

Stop listening to Dave Ramsey for personal finance advice. He does good at debt elimination but the rest of his advice is elementary...even borderline wrong.


That depends on if you think there's a market correction or inflation coming. If your asset allocation feels right to you & you've been happy with it, why change just because some bank jockey said to?

Sorry I might have mispoken.

I actually think that Ramsey is wrong a great deal. I mean his return rates are way to high. He over simplifies and uses persuasion to get to the masses.

If i am on board with carrying as little debt as I can (student loan and mortgage) keep my debt to income ratio below 15% and save more then 15% I dont think he can help me much more.

My discussion point was mor ein regards to what others thought regarding the current economic situation. Really just to discuss with people who are as interested in finance as me but come from different schools of thought.

1. My education as an economist is shaken based on a recent movie i watched regarding deregulation of financial markets. It drew a corelation between deregulation and three bubbles all becoming worse - 1.Savings and Loan, 2. Internet, 3. Current deriviatives/mortgage bubbles. It would appear to me that a deregulated market is less stable then a regulated one.
2. Special interest groups in Washington have far greater power then individuals which causes incorrect social behavior. There is clamor for change but the system is set up by those who do not want it.
3. The US economy has shifted itself away from manufacturing and industry. I work in these industries so they are by no means "good jobs" but they provided some basis in production that was not creative.

In my head I cant help but think of Rome but perhaps more apt is GB around 1920. It was outsourcing its manufacture to some degree to the colonies. It was the super power etc etc... it has taken a century but is that where the US is headed? And GB at least as a more homogenious population that is more apt to agree on things then the US...

Just trying to encourage discourse?

@Clemson

While yes, there are worries, I've also been a practicing economist for near a decade now. I worry that you are drawing conclusions from a self admitted correlation. Correlation does not equal causation, and any pop-book, or movie, simply loses facts in its abstraction.
I also wonder, as you are an economist, why you would even be concerned about our changing focus from manufacturing to service. Why would it be economically prudent to focus on industries where we have no competitive advantage. Should we move labor to unproductive uses just so we have the industry? There's a net welfare loss there. Further, a 1920s analogy to GB misses quite a lot of the differences in economic compositions, the world isn't anywhere like the 1920s, and Britain struggled for other more important reasons (like it, and its trading partners minus US, were decimated in WW1).


Sorry to be critical, but what you've said doesn't gibe with economics.