For many, the idea of twitching the nose and achieving instant solutions to complicated problems seems a fine skill. In the ’60’s Elizabeth Montgomery as Samantha Stevens on TV’s Bewitched solved many this way. Fictional daughter Tabitha carried on the tradition.
The skill is not one that can be learned. You have it or you do not.
The leadership in North America and Europe seem to be believe there is a magical solution to complicated problems. Twitch – Iran becomes a responsible world citizen. Twitch – North Korea fixed. Twitch – Syria, Libya, Egypt all repaired. Twitch – European government overspending becomes innocuous. Twitch – the war on terror ends.
It would be difficult to assume they think otherwise if your only evidence were to be the bold, creative solutions they are putting forward.
Enough of the political level problems.
How many of us think that a lottery win is a rational part of our retirement plan? In the US about 21% do.
How many think they can afford housing at its current price because mortgage loans will stay at 3% or less? If mortgage rates became 7% tomorrow, could you still afford to own your home? Compared to a 20 year, $300,000 mortgage at 3%, the payment would be 40% higher at 7%. Want to know about 11%? Ask your parents. Almost double.
How many think their job is forever? Hopefully, not many.
How many think government benefits will survive intact? Government retirement benefits were designed when people lived less long and interest rates were higher. It matters. If you save for 40 years in a 6% interest environment with the plan to have $1,000 per month for 15 years, you need to save about $65 per month. If you earn 3% and might need the money for 20 years you need to save over $200 per month. If the cost of acquisition triples, the government must redefine the benefit. It is not magic to figure that out.
Magic is nice if you can find it. In its absence, persistence and discipline will probably work as well.
Could it be there is more magic than I thought, because persistence and discipline seem to be declining when they should be increasing.
Don Shaughnessy is a retired partner in an international accounting firm and is presently with The Protectors Group, a large personal insurance, employee benefits and investment agency in Peterborough Ontario. email@example.com
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