Home Sweet Savings

Today we hear about the savings rate. Actually, what we hear about is the growth in personal income and personal consumption. The difference is assumed to be savings. And a whole host of scolds will tell us that we’re just not saving enough.

Earlier I mentioned how the “Great Moderation” has improved our economic security. Another factor in the low savings rate in the US is the high rate of homeownership here.

By convention, my entire mortgage payment is considered to be spending, even though a large portion of that payment may go to pay the loan’s principal. As ownership has risen in the US, more and more people are building equity in their homes. But this trend isn’t captured.

I don’t want to bore you with the numbers. But it’s curious that countries where more people rent their residences have higher savings rates. While real estate may no longer be considered a fool-proof investment, it should still count for something. The scolds just don’t seem to get that.


Douglas R. Tengdin, CFA
Chief Investment Officer
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By | 2017-07-17T12:35:26+00:00 March 28th, 2008|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. –
Leave a comment if you have any questions—I read them all!
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