What’s in Your Nest?


I’ve noticed people typically fall into five groups when it comes to nurturing their nest eggs. A lot of us are looking at the way we have feathered our nests in the past and wondering if a correction is in order. Can you relate to any of these types?

Spenders – These people live for today and nothing beyond. A lot of them cannot conceive of the future, so they don’t prepare for it.

Savers – I have a friend who said to me several years ago: “I work too hard for my money to risk it in the stock market.” She keeps all her money in the bank, or a nearby mattress.

Passive Investors – These folks like to believe they are investing in the stock market, but they do so in such a passive way (ie. depositing money into a 401k and then forgetting about it) that they may as well keep their money in certificates of deposit.

Active Investors – Here are the people who analyze fundamentals of the companies they invest in. They understand that they are loaning money to these businesses and they actively monitor the results of their investments.

Entrepreneurs and Capitalists – These are your risk takers. They will put everything they have into a venture they believe in. The amount of money is irrelevant. Whether it’s one rent house or that investment bank at the bargain basement price, if it’s promising these people go for it.

How do you describe yourself, and has your philosophy changed over the past two weeks?

I believed my economics and finance professors when they lectured on the efficiency of markets. Throw a dart at the Wall Street Journal, they said, and you’ll do as well as if you studied individual stocks. This is the kind of philosophy that relies on faith in the system. It assumes everyone plays fair. I don’t want to be cynical, but the last several weeks have showed us that’s not always true. We must be smart. My husband and I have been a passive investors for some time, dutifully contributing to the pot and watching it grow. This year we’ve watched our balances plummet. As a result, we hope to move into a more Active Investor role, as well as dedicate more assets to entrepreneurial pursuits. But alas, we’re also risk averse. I’m sure we’re not alone.

Can anyone provide some guidance, some inspiration?