Savers vs Investors

A saver is someone who does not and usually cannot accept risk. This can be because of age or upbringing. This could because of a lack of understanding about investing. This also can be just attributed to fixed pensions and standard of living.

For the last 5 – 6 years the Fed has reduced interest rates to practically zero and also implemented QE1, 2,3. It was just this month that the Fed made an incremental raise in rates. During this period savers were offered extremely and unpalatable interest rates at the safe places, the banks. Savers were told to just tighten their belts, that there was no inflation to worry about. However these figure usually did not include food or energy costs. The savers had no option but place their funds in the stock market. The influx of capital was a prime reason for the increase in the stock market. After a time caution was thrown to the wind and the thought of risk or loss was neatly pushed aside. But what about now?


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