Even Bad Investments Are Better Than Not Saving At All

Even Bad Investments Are Better Than Not Saving At All

When it comes to investing for the future, it’s easy to get analysis paralysis. There are so many stock options and savings plans, new savers might have no clue where to start. As finance blog Work to Not Work points out, all investments are better than not saving in the first place.

Picture: Andreas Poike/Flickr

If you place your money in a mutual fund and that fund loses value, you might come out behind. If you fail to save in the first place, you won’t be in the race at all. This doesn’t mean that you should never try to get the best return on your investment, but if you’re not saving because you’re worried you might lose money on a venture, you’re only making it worse:

The two most important aspects of investing are time and contributions. What exactly you are invested in comes in a distant third place. You could literally pick the worst investments possible and it would still be better than not saving at all.

But what if you don’t have a 401(k)? Well, the first thing is to still start saving. Keep it in your checking account if you really don’t have a dedicated savings/retirement account setup yet. Figure out a separate account later, but start saving now.

In the long run, even taking a loss early in your investment career can be easily overcome. If you only have $1000 saved to start with and it drops 20 per cent, you’re out $200. That money matters, but you can lose a lot more by not making contributions in the first place.

Saver’s Block: How to begin when you don’t know where to start [Work to Not Work]


  • What’s a 401(k)? It’s the US version of superannuation, right?
    So this story translates to Australia as: top up your super contributions.

    • These stories are all the same. The path to financial success/become debt free is to not spend money. There is nothing magic about them. 401(k) is the US pension plan system, but superannuation is a lot better.

  • Not really.
    Don’t quote me, but i believe there is no tax on disbursements from 401k after 60, and any contribution lowers your taxable income.

    Super on the other hand has a lowered tax rate of 15% once you turn 65 – so its a tax break in some circumstances.

    The Australian translation of this story is – Don’t read american information to make your Australian financial decisions.

    • The Australian Translation For People Who Read The Actual Story is – saving some money is better than not saving anything, because even if you make a low/negative return, you will still end up >=0.

      Picking out ‘401k’ and arguing about it vs super is missing the whole point.

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