Wednesday, March 09, 2011

Why Skyrocketing Gas Prices Are a Good Thing

I'll admit, I'm freaked out about growing older. If I spot a gray hair, I pluck it (alas, half the time it turns out to be a golden highlight). If there's a moisturizer that markets itself as age-defying, I buy it. If I had the money, I don't even like to think about what I'd do with collagen.

As much as I focus on the physical--I'm also working on my balance and strength-building--it's the financial aspect of my senior years that has me more than a little worried.

"I hope you kids have as much fun in your retirement as we're having in ours," my dad says, while he blows through my inheritance. Never mind that half his money came from his father, who never met a nickel he didn't like to hoard.

I see lots of cat food in my future.

So the other day, Dave and I decided to get our financial house in order. We met with a bona fide investment adviser--he worked in a bank and wore a tie--and tried to look smart and moderately interested as he talked about things like IRAs and annual yields and bond exposure.

He recommended a few mutual funds that might perform well for us. I hated to tell him that, frankly, us sinking our money into anything is a near certain guarantee it will tank overnight: I'm pretty sure we're the only people who didn't make money hand over fist in the late '90s; the original owners of our condo realized a 50% profit in 2 years and we...well, I don't have to tell you about the real estate climate. The only stock I ever owned outright was in a newspaper company. Hah, joke's on me.

Still, as The Adviser scrolled through his charts and graphs, it was hard not to swoon over funds that with past-year growth in the 20% range were as attractive as George Clooney in a tuxedo (forget 5-year averages of 3%, which are like George Clooney in a beard and fat suit). We could be rich! So long cat food and pass the caviar.

The thing is, as we delved deeper into our potential holdings, we found where the money was being made. While most of the funds were incredibly diversified, with rarely more than 5% invested in any one sector, almost all had oil at the top of their list.

"It's a good time to be in oil," The Adviser joked with a dorky guffaw that suggested why he'd been banished to an outlying branch of this particular financial institution rather than afforded a corner office at central headquarters.

So here was a conundrum. Did we want to be in oil?

Ethically, no. I believe in global warming. I take public transportation. We recycle. And I'm pretty sure that if America weren't so dependent on oil, our government could afford to fund things like health care for all its citizens instead of a war in Iraq.

But financially? Dave and I need to make money. We need for Wall Street--which I totally despise for having cost a good number of my friends and family their jobs--to go gangbusters. We need this because Americans are expected to pay for their retirement years through ever increasing gains in the stock market as opposed to a more reliable safety net. Like, say, a pension.

Pension has, of late, become a dirty word. It's what those fat cat union employees collect while the rest of us muddle through with our vastly depleted 401 (k)s. What I don't understand is why, instead of being angry at--and let's be truthful, jealous of--these individuals, we don't demand the same benefit. Why, instead of asking the corporations that profit from our labor to invest in our retirement, are we expected to invest in them?

I remember back in the '80s when my dad lost his pension--the owners of his company looked at that big pile of cash and decided they'd like to have it for themselves. I was in junior high or high school at the time, so I had bigger concerns, like curling my hair, but I was profoundly aware of the stress this produced in our household. Suddenly my dad didn't have to just worry about paying the mortgage and putting food on the table and doling out allowances to four greedy kids, he had to worry about paying for all those things 50 years down the road. Subtracting the allowances and adding golf course fees.

He began saving like a fiend. Every expense became a catastrophe. Every school fee, every doctor's appointment, every bottle of contact lens solution felt like we were dooming mom and dad to the poorhouse. Meanwhile, his boss indulged his hobby of Civil War reenactments.

So, yea for the demise of pensions.

Which brings us back to The Adviser and our debate about oil. The thing is, my grandpa lived to be 98. If I inherited those genes--along with his sweet tooth and short stature--my nest egg needs to be feathered for a really long haul. "How much is enough?" Dave asks.

We're going into oil.


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