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Saving vs Hoarding

Most people would agree that saving is good. 

And most people would agree that hoarding is bad. 

But what’s the difference between the two? I don’t believe it’s measured by commas. 

I think the distinction is pretty straightforward: we’re saving when the dollars have a defined purpose, and we’re hoarding when the dollars don’t. 

Hoarders are driven by fear - fear of the unknown, fear of spending, fear of scarcity. 

Savers are driven by plans - plans for today, plans for tomorrow, plans for those dollars. 

Two different people can have the same dollar amount in a bank, and one may be purposefully saving and the other one fearfully hoarding. 

Emergency funds, vehicle replacements, retirement, kids gifts, home purchases are all a small sample of valid, measurable purposes for our savings. 

Accumulating money without an end game  - out of fear, or maybe even sometimes just out of habit - can lead to hoarding. 

Potential signs we’re saving:
  • Money is earmarked for a specific purpose.
  • We don’t have an issue spending it on that purpose.
  • We’ve defined how much is enough. 

Potential signs we’re hoarding:
  • Money has no endgame or purpose.
  • We don’t want to spend the money.
  • We haven’t defined how much is enough. 

Much like the concept of being cheap vs frugal, it’s not the actual dollars that matter. It’s the reasons behind them. 

Interesting Resources

Quote
Morgan Housel 
"Progress happens too slowly to notice, setbacks happen too fast to ignore."

A Few Rules
3 min read | Collaborative Fund
I pulled the above quote from this piece, and honestly have an arsenal for the rest of the year. This piece reads like a mini book of Proverbs. My second favorite: History is driven by surprising events, forecasting is driven by predictable ones. It's not an easy problem to solve. 

How Much Impact Does the President Have on Stocks?
Interactive Exhibit | Dimensional Fund Advisors 
A few weeks back I talked about Elections Years, Presidents, and the Stock Market (TL;DR - there's not much of a difference). This interactive piece allows you to look back almost 100 years over the different Presidents to see things like the stock market return, the Congressional breakdown, unemployment, inflation, deficit/surplus of spending vs GOP, and average economic growth. Really fascinating to play around with and learn a few things.

*Virtual high five to the first reader who finds the President who presided over the lowest deficit over that time. I wouldn't have guessed it.*
I LOVED hearing your responses last week on turning it off for a weekend. Those who did respond overwhelmingly said it was valuable and you plan on doing more of it again. Maybe I'll need to do a follow up on that at some point. 

For the time being - I'd love to hear your thoughts on saving vs hoarding. Is it as simple as I laid out? Is that simple enough? How do YOU differentiate them? 

Gratefully,
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Fident Financial, LLC (FFL) is a registered investment advisor offering services in the state of PA and in other jurisdictions where exempted.  Opinions expressed in this email are solely those of FFL, unless otherwise specifically cited.  Material presented is believed to be from reliable sources but no representations are made by FFL as to another parties' information accuracy or completeness.






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