beergut
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Post by beergut on Jan 4, 2017 21:21:38 GMT -5
In 1976, the year I was born, the minimum wage in Texas was $2.30. The minimum wage has risen, incrementally, from $2.30 in 1976 to $7.25 in 2009. During that same time period, the Dow Jones Industrial Average has returned an averaged of 11.35% per year (with dividends reinvested). Someone who began working in 1976 and saved just one hour of pay per week and invested it (giving them two weeks off for vacation) would have been saving and investing $115 per year in 1976 and $362.50 per year in 2016. That investment would be worth $133,226.20 right now. Saving your wages from one hour per week.
Now, if they went with the rule of thumb and saved 10% of their wages, or 4 hours per week (200 hours per year in a 50 week work year), they would have $495,140.70 today. This is on a minimum wage salary assuming no raises out of that bracket in four decades. So, tell me again how you can't afford to save for retirement?
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justme
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Post by justme on Jan 4, 2017 21:30:55 GMT -5
I think the problem is more whether they have that one hour to save per week after housing and food and other necessities.
The debatable part is necessities and quality of housing and food.
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973beachbum
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Post by 973beachbum on Jan 4, 2017 22:25:24 GMT -5
So $7.25 an hour is $290 a week gross before taxes. Even assuming somehow they don't take out any fed or state taxes, which most do at least a small amount, just Medicare and SS type of thing would have to be 15%.
So where does one live indoors and not have to eat road kill on $246.50 a week?
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Deleted
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Post by Deleted on Jan 4, 2017 22:35:47 GMT -5
So $7.25 an hour is $290 a week gross before taxes. Even assuming somehow they don't take out any fed or state taxes, which most do at least a small amount, just Medicare and SS type of thing would have to be 15%. So where does one live indoors and not have to eat road kill on $246.50 a week? Medicare and SS are only 7.2%. $7.25 an hour wouldn't be pleasant here, but nobody makes that. Even McDonalds pays $10. With a roommate that's doable since there are quite a few two bedroom apartments for $600.
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973beachbum
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Post by 973beachbum on Jan 4, 2017 22:43:10 GMT -5
I know that but NJ takes out other stuff too so no matter how little you make it still ends up north of 10%.
And around here very very few min wage jobs give 40 hours a week! The grocery stores and fast food places also pay more than min wage although not much more.
But 40 hours is a pipe dream there!
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Knee Deep in Water Chloe
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Post by Knee Deep in Water Chloe on Jan 4, 2017 22:56:50 GMT -5
I suppose if said minimum-wage earner chose to never had children...
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teen persuasion
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Post by teen persuasion on Jan 4, 2017 23:15:53 GMT -5
In NY, min wage just went to $9.70 in my part of the state ($11 elsewhere). At 40 hours, 52 weeks that's just over $20k (more than I gross now part time at $15 ). MFJ with 3 kids, EITC + CTC + state matches of each gives more than $12k in refundable credits, for $32k. That's easily doable, we had 5 kids at roughly that income, and paid down the mortgage early and then ramped up retirement savings after.
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Deleted
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Post by Deleted on Jan 4, 2017 23:18:44 GMT -5
Minimum wage with kids would be a nightmare unless someone provided free childcare, but for a single able-bodied person I do believe saving something for retirement should not be a huge deal, I just don't think it's a priority for many.
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Tiny
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Post by Tiny on Jan 4, 2017 23:30:10 GMT -5
Another issue is even if they did save the$362.50 a year (2016 dollars) - they might not have easy or free access to the stock market. By easy I mean knowing how to get started (although with the advent of the internet- you'd think it wouldn't be that hard). And by 'free' I mean finding a way to invest the $$ without paying any upfront fees (either for the account because it doesn't meet a minimum balance criteria/some other criteria OR some sort of 'trading fee' per trade/purchase). I was kind of stunned when my late 20 somethings nieces and nephews seem to think they needed a financial advisor to figure out how to invest the 3% of their income they thought they could manage to save (if they really tightened their belts and SUFFERED!!! deprivation) every year (I'm guesstimating it's less than $2500 a year...) not to mention they weren't sure which stocks to buy - as in INDIVIDUAL stocks. These are the children of fairly well educated working parents. these are adults who managed to get thru 4 years of college and successfully hold down white collar type jobs. There's also the obvious (as pointed out by others) - a full time minimum wage income, doesn't go very far if you are going to attempt to live on your own.
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Tiny
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Post by Tiny on Jan 4, 2017 23:34:47 GMT -5
I think there's a deeper issue - the myth that you cannot, no way, no how, save anything unless you are earning a lot of money - like so much money that after you get exhausted spending the money - you'll save whatever is left. I think it's because saving $10 a month in your sock drawer in an envelope seems pretty futile... that's barely enough to buy a fast casual lunch OR to fill up your gas tank. But you have to start somewhere. And there's some good lessons to be learned about how to find the money you want to save. Again, my late 20 something nephews/nieces seem to be stuck in the spend money first - save what's left mindset... rather than save first (pay yourself first) and THEN spend what's left.
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tallguy
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Post by tallguy on Jan 5, 2017 0:37:35 GMT -5
I'm not giving my son a choice. He moved back with me (from his mom's) in 2014. Got a job late in the year, and to get him properly started with the saving/investing mindset I funded a Roth for him with everything he earned. For 2015 I told him I would match whatever he contributed, so of course he did $2750 to max it out and cost me $2750 more. Because I went part-time for 2016, I told him I would not contribute anything for him going forward, but I do charge him much less in rent with the proviso that he contribute at least $2000 on his own. So, in the end, he can either contribute to his Roth...or I'll bump up his rent. He's paying one way or the other, and he's a smart kid, so his Roth gets funded with at least $2000 pretty soon.
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OldCoyote
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Post by OldCoyote on Jan 5, 2017 1:04:55 GMT -5
If they only knew how to save and invest at an early age, I did not know!
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Opti
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Post by Opti on Jan 5, 2017 1:21:21 GMT -5
So $7.25 an hour is $290 a week gross before taxes. Even assuming somehow they don't take out any fed or state taxes, which most do at least a small amount, just Medicare and SS type of thing would have to be 15%. So where does one live indoors and not have to eat road kill on $246.50 a week? Medicare and SS are only 7.2%. $7.25 an hour wouldn't be pleasant here, but nobody makes that. Even McDonalds pays $10. With a roommate that's doable since there are quite a few two bedroom apartments for $600. Nice on the apartment rental prices. Its hard to get even just a room for $600 month in central NJ. Should you find one, almost all tack on utilities and extras like funding their FIOS habit.
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CCL
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Post by CCL on Jan 5, 2017 2:12:51 GMT -5
If they only knew how to save and invest at an early age, I did not know! I wish info had been available back in the 80s. We would have saved much more. I made sure my kids knew about retirement savings. When they got their first jobs with benefits I sat with them and helped them sign up for the 401k plans and insurance. They told me in one of their classes the instructor asked if someone could explain 401ks and my kids were the only ones who knew what they were . These were college courses just a couple years ago, so apparently there are still a lot of people out there who have no idea how to save for retirement.
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Rukh O'Rorke
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Post by Rukh O'Rorke on Jan 5, 2017 2:25:10 GMT -5
Do you have any idea the expenses involved in investing back then?
And I don't think you could invest those low amounts .
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geenamercile
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Post by geenamercile on Jan 5, 2017 6:16:11 GMT -5
I think the problem is more whether they have that one hour to save per week after housing and food and other necessities. The debatable part is necessities and quality of housing and food. Another factor is if you are receiving any assistant with the food or housing if you save past a certain amount you will lose your assistance until you don't have the savings.
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973beachbum
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Post by 973beachbum on Jan 5, 2017 8:08:07 GMT -5
We were really poor for a number of years. We made next to nothing and still I look back and think we actually had resources available to use that allowed us to live much better than our income would normally have allowed. We had already bought a house. It was a small house but a house non the less. And it was cheap to live in because of that. So our living expenses were lower, including utilities, for all of us than the rent on a very small apartment. We also had two paid off cars. So we could just try to keep them up and lowered our auto ins limits so we could afford it. We then just had to buy food and replace clothes when we absolutely had to. We literally didn't buy anything we didn't need and most weeks the mantra was more like "can't eat it, can't buy it". I literally did things like collected empty soda cans and took them to the recycling place to get paid for them. I kept a small amount of cash in my sock drawer as my EF. I'm sure at some times it was even in quarters,nickles and dimes. That small amount though allowed us to get new used tires or sneakers for our DD type of thing. Someone telling me to use it to save for later would have literally meant not buying those new shoes for DD or driving an unsafe car. And that is assuming there is a place where I can invest $7.52 a week.
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Rukh O'Rorke
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Post by Rukh O'Rorke on Jan 5, 2017 8:18:00 GMT -5
I remember looking into investing with mutual of omaha in the 80's. It wasn't easy, and it wasn't cheap for a minimum wage person back then. I think there was a minimum of $250 per transaction, but I don't recall if you had to open with a larger amount. I think there was a fee to for each transaction. I wanted to invest, but I could not ever get the extra cash necessary to start with. I was making more than minimum wage toward the end of the 80's, but not substantially. www.businessinsider.com/historical-trading-commissions-2014-3this site lists the minimum to make a trade back then as $45 dollars. Compared to $7 today.
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Opti
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Post by Opti on Jan 5, 2017 8:34:53 GMT -5
I think the problem is more whether they have that one hour to save per week after housing and food and other necessities. The debatable part is necessities and quality of housing and food. Another factor is if you are receiving any assistant with the food or housing if you save past a certain amount you will lose your assistance until you don't have the savings. True. It would be nice to allow some sort of IRA savings, but it is counted as income if you withdraw from it before retirement age, hence probably why the policy exists.
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Deleted
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Post by Deleted on Jan 5, 2017 8:38:02 GMT -5
I remember looking into investing with mutual of omaha in the 80's. It wasn't easy, and it wasn't cheap for a minimum wage person back then. I think there was a minimum of $250 per transaction, but I don't recall if you had to open with a larger amount. I think there was a fee to for each transaction. I wanted to invest, but I could not ever get the extra cash necessary to start with. I was making more than minimum wage toward the end of the 80's, but not substantially. www.businessinsider.com/historical-trading-commissions-2014-3this site lists the minimum to make a trade back then as $45 dollars. Compared to $7 today. There were no load mutual fund companies back in the late 80's early 90's. Money and Kiplingers magazine were filled with ads for them. I started in 92 when I was doing my taxes and realized I was going to owe $600 which seemed like a fortune to me. I was using the paper forms and saw a line item for IRA deduction and had a "hold the phone!" moment. If I maxed the IRA ($2000) I cut the amount due to something like $200! I started with either Berger Funds or Janus. I can't remember what the minimum was to open because I started with the full 2K the first year, but they took $50 contributions to the IRA after that.
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Deleted
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Post by Deleted on Jan 5, 2017 8:41:39 GMT -5
I think the problem is more whether they have that one hour to save per week after housing and food and other necessities. The debatable part is necessities and quality of housing and food. Another factor is if you are receiving any assistant with the food or housing if you save past a certain amount you will lose your assistance until you don't have the savings. I thought the asset tests were all eliminated?
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Opti
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Post by Opti on Jan 5, 2017 8:43:41 GMT -5
Another factor is if you are receiving any assistant with the food or housing if you save past a certain amount you will lose your assistance until you don't have the savings. I thought the asset tests were all eliminated? Possibly for Food stamps, but they are coming back in various states due to assholes who did fraud.
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973beachbum
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Post by 973beachbum on Jan 5, 2017 9:04:08 GMT -5
I remember looking into investing with mutual of omaha in the 80's. It wasn't easy, and it wasn't cheap for a minimum wage person back then. I think there was a minimum of $250 per transaction, but I don't recall if you had to open with a larger amount. I think there was a fee to for each transaction. I wanted to invest, but I could not ever get the extra cash necessary to start with. I was making more than minimum wage toward the end of the 80's, but not substantially. www.businessinsider.com/historical-trading-commissions-2014-3this site lists the minimum to make a trade back then as $45 dollars. Compared to $7 today. There were no load mutual fund companies back in the late 80's early 90's. Money and Kiplingers magazine were filled with ads for them. I started in 92 when I was doing my taxes and realized I was going to owe $600 which seemed like a fortune to me. I was using the paper forms and saw a line item for IRA deduction and had a "hold the phone!" moment. If I maxed the IRA ($2000) I cut the amount due to something like $200! I started with either Berger Funds or Janus. I can't remember what the minimum was to open because I started with the full 2K the first year, but they took $50 contributions to the IRA after that. That is what we are saying. Of course there were no load mutual fund and having $500 or more to put in to start it would make it easy to find one that would allow you to start. But this thread is about how a min wage earner can just put the $7.68 a week in a no load fund. They would have to save that for most of a year and never touch it to start the account to begin with and IME the min amount to add to it was $25. So more saving until the $7.68 reached the min amount. I'm not saying it isn't possible but highly improbable that an adult not living with someone else who is paying the majority of the bills is going to have much if anything left over working min wage jobs. And this entire thread is predicated on the premise that they will get 40 hours a week every week.
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Deleted
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Post by Deleted on Jan 5, 2017 9:32:03 GMT -5
There were no load mutual fund companies back in the late 80's early 90's. Money and Kiplingers magazine were filled with ads for them. I started in 92 when I was doing my taxes and realized I was going to owe $600 which seemed like a fortune to me. I was using the paper forms and saw a line item for IRA deduction and had a "hold the phone!" moment. If I maxed the IRA ($2000) I cut the amount due to something like $200! I started with either Berger Funds or Janus. I can't remember what the minimum was to open because I started with the full 2K the first year, but they took $50 contributions to the IRA after that. That is what we are saying. Of course there were no load mutual fund and having $500 or more to put in to start it would make it easy to find one that would allow you to start. But this thread is about how a min wage earner can just put the $7.68 a week in a no load fund. They would have to save that for most of a year and never touch it to start the account to begin with and IME the min amount to add to it was $25. So more saving until the $7.68 reached the min amount. I'm not saying it isn't possible but highly improbable that an adult not living with someone else who is paying the majority of the bills is going to have much if anything left over working min wage jobs. And this entire thread is predicated on the premise that they will get 40 hours a week every week. But, my point was I WAS there. I was making $4.65/hour cleaning horse stalls and $5/hour packing bolts in bags when I started my account. Yes, I had to save it up ahead of time, yes I had to have a couple roommates in my house that covered nearly all my mortgage and utilities and I rarely ate out or went to concerts or anything like that, but it really wasn't horrible. People I worked with thought I was out of my freaking mind for locking up 2K for 40 years to save $400. I think the not thinking long-term is a larger barrier than setting aside $10 or $20/week.
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Lizard Queen
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Post by Lizard Queen on Jan 5, 2017 9:42:58 GMT -5
I saved 15% in my 401k while I was making $4.40/hr. Of course, I was living with my parents at the time. I also paid for college mostly on my own. Tuition was way more affordable in the 90's. I paid per credit hour about what the local CC is charging these days. That's 5-6x increase in 20 years. I also went without health insurance for a while, and the complete cost of a doctor visit, which I had to pay, was $35. Now it's $100's. In 20 years. This is multiples of the stated inflation rate, and min. wage hasn't even kept up with the stated inflation rate, much less the increased costs of important things that aren't included in it. So while saving on MW is possible, it's getting harder and harder to do over the years.
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Rukh O'Rorke
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Post by Rukh O'Rorke on Jan 5, 2017 9:49:38 GMT -5
That is what we are saying. Of course there were no load mutual fund and having $500 or more to put in to start it would make it easy to find one that would allow you to start. But this thread is about how a min wage earner can just put the $7.68 a week in a no load fund. They would have to save that for most of a year and never touch it to start the account to begin with and IME the min amount to add to it was $25. So more saving until the $7.68 reached the min amount. I'm not saying it isn't possible but highly improbable that an adult not living with someone else who is paying the majority of the bills is going to have much if anything left over working min wage jobs. And this entire thread is predicated on the premise that they will get 40 hours a week every week. But, my point was I WAS there. I was making $4.65/hour cleaning horse stalls and $5/hour packing bolts in bags when I started my account. Yes, I had to save it up ahead of time, yes I had to have a couple roommates in my house that covered nearly all my mortgage and utilities and I rarely ate out or went to concerts or anything like that, but it really wasn't horrible. People I worked with thought I was out of my freaking mind for locking up 2K for 40 years to save $400. I think the not thinking long-term is a larger barrier than setting aside $10 or $20/week. No you weren't? We were talking 80's, not 90's. There were a lot of changes, first with computers, then the internet.
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haapai
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Post by haapai on Jan 5, 2017 9:55:25 GMT -5
But, my point was I WAS there. I was making $4.65/hour cleaning horse stalls and $5/hour packing bolts in bags when I started my account. Yes, I had to save it up ahead of time, yes I had to have a couple roommates in my house that covered nearly all my mortgage and utilities and I rarely ate out or went to concerts or anything like that, but it really wasn't horrible. People I worked with thought I was out of my freaking mind for locking up 2K for 40 years to save $400. I think the not thinking long-term is a larger barrier than setting aside $10 or $20/week. I was sorta there too, and setting aside $10 or $20 a week would have been quite doable. But I'd also like to mention the considerable short-term and medium-term planning that is required to live on very low wages. If you want to survive one these type of wages for a long time, you're going to have to get in the habit of saving up for irregular expenses and those add up to a whole lot more than $10 to $20 a week.
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Deleted
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Post by Deleted on Jan 5, 2017 9:56:07 GMT -5
But, my point was I WAS there. I was making $4.65/hour cleaning horse stalls and $5/hour packing bolts in bags when I started my account. Yes, I had to save it up ahead of time, yes I had to have a couple roommates in my house that covered nearly all my mortgage and utilities and I rarely ate out or went to concerts or anything like that, but it really wasn't horrible. People I worked with thought I was out of my freaking mind for locking up 2K for 40 years to save $400. I think the not thinking long-term is a larger barrier than setting aside $10 or $20/week. No you weren't? We were talking 80's, not 90's. There were a lot of changes, first with computers, then the internet. Huh? I didn't have a computer or internet in 92. I mailed checks to the funds. I was still making minimum (or nearly) and saving. For the most part it was just going into a savings account at the bank in the late 80's and I would buy EE bonds too.
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Deleted
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Post by Deleted on Jan 5, 2017 10:04:06 GMT -5
But, my point was I WAS there. I was making $4.65/hour cleaning horse stalls and $5/hour packing bolts in bags when I started my account. Yes, I had to save it up ahead of time, yes I had to have a couple roommates in my house that covered nearly all my mortgage and utilities and I rarely ate out or went to concerts or anything like that, but it really wasn't horrible. People I worked with thought I was out of my freaking mind for locking up 2K for 40 years to save $400. I think the not thinking long-term is a larger barrier than setting aside $10 or $20/week. I was sorta there too, and setting aside $10 or $20 a week would have been quite doable. But I'd also like to mention the considerable short-term and medium-term planning that is required to live on very low wages. If you want to survive one these type of wages for a long time, you're going to have to get in the habit of saving up for irregular expenses and those add up to a whole lot more than $10 to $20 a week. Yes, and while it gets poo-pooed on here all the time, I'm convinced having (and following) a realistic budget is the key.
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Rukh O'Rorke
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Post by Rukh O'Rorke on Jan 5, 2017 10:05:55 GMT -5
No you weren't? We were talking 80's, not 90's. There were a lot of changes, first with computers, then the internet. Huh? I didn't have a computer or internet in 92. I mailed checks to the funds. I was still making minimum (or nearly) and saving. For the most part it was just going into a savings account at the bank in the late 80's and I would buy EE bonds too. I'm talking about the investment companies, and how having computers enabled them to offer more services and products to the rank and file.
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