CNN Money has an extensive feature on how general consensus is wrong again. The articles look at the biggest money fears, how they may be unreasonable, and what should worry the public instead. Here are the first three from the series. The remaining three appear in a follow-up post here at Consuermsim Commentary.
While Americans are afraid of dying young and leaving their families without their income for support, they should be more concerned about becoming disabled and unable to work due to an injury or illness. While 50 percent of workers have life insurance, only 28 percent have extended disability insurance.
Suggestions: Get adequate disability insurance, covering at least 60 percent of your salary, “own occupation” coverage which pays if you can’t do you current job regardless of whether you can do another, and keep premiums low.
The stock market crashing is a big fear, while researchers believe there is more of a chance of mediocre returns throughout the next several decades. “Unless whole new demographic groups, like Asia’s burgeoning middle class, suddenly start putting a lot of money into U.S. stocks, the once-in-a-lifetime rise in what people are willing to pay for equities looks like it has about run its course.”
Suggestions: Diversify holdings throughout types of investments, dollar cost averaging, buy cheap funds like index funds, and invest more.
High gas prices, high stock prices, and some other factors have caused many to believe that the U.S. economy will crash. CNN Money believes we’re more likely to see some stagnation. “But today the U.S. could be facing a long, sometimes painful return to average. Even optimistic economists figure the boomers’ retirement will slow the pace of economic growth a bit.”
Suggestions: Outsource investments by looking outside the U.S. for investment opportunities, buy treasury inflation-protected securities (TIPS) to hedge against inflation, and invest 5% of your portfolio in gold through an ETF. On the other hand, gold just hit a 17-year high. That sounds a little like it’s not time to invest.
More of our biggest fears are debunked in Part Two.
Updated February 6, 2012 and originally published September 18, 2005.