Would You Rather: Take a big $ loss now, or slowly over time?
Today's "Would you rather" question comes from one of our readers here - my boy Philip - and it circles around the economy these days. I don't know about you, but people around here are starting to freak out more every day, and it's starting to get out of hand. So with that in mind, Philip and I bring you the latest from our fun little game:
So what say you? Are you daring enough to watch your nest eggs take a one-time plummet? Or do you have patience to stick it out and watch it continously drop, little by little, day by day? Curious minds want to know.
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Previous "would you rather"'s:
- Would your rather keep $500k to yourself, or give away $1million?
- Would you rather default on ALL loans, or...
- George Bush gives you $2million, but...
- Would you rather take $500k now, or...
"Would you rather take one big hit and then be done, or just keep getting hit left and right for a long time?"Rather interesting in my opinion! The old me probably would have liked to drag it out a bit and pad the shock, but the NEW me is getting tired of it all and would like to swallow the loss and start moving on. Of course, in real life you don't really have a say in the matter, but you do here on this blog ;)
So what say you? Are you daring enough to watch your nest eggs take a one-time plummet? Or do you have patience to stick it out and watch it continously drop, little by little, day by day? Curious minds want to know.
-------------
Previous "would you rather"'s:
- Would your rather keep $500k to yourself, or give away $1million?
- Would you rather default on ALL loans, or...
- George Bush gives you $2million, but...
- Would you rather take $500k now, or...
Labels: crazy economy, stock market, would you rather
posted by J. Money at
12:48 PM
19 Comments:
The first time I read the post title I thought it said something else entirely.
OMG you are sooo right! hahaha...wow, i never even saw that! i am dying w/ laughter over here!!! whew...okay, i am changing it now before it causes any trouble ;) good freakin' catch.
(and for all others out there who didn't see it, the title originally read, "Would You Rather: Take one big $ hit now, or slowly over time?")
Depends on how big the hit is or how slowly the hits are over time.
Say, if the one big hit means I'll lose my house and health insurance, then maybe not.
If the slow hits over time means I don't get to eat out for a month, and then have to give up something else the next month, then I can take that.
With slow hits over time, at least I can adapt to the 'pain' although it would drag on for a while. I can take a one time big hit as long as it's survivable.
Would you rather! I used to play this game all the time as a kid. As for me, I would rather just get it over with. Quick and dramatic is definitely preferable to slow and subtle.
Hands down, I'd rather take a big loss now. That way, I have time to repair it before the end - if I take a slow loss over time, sure, I live better, but there's no time to repair the damage.
Woohoo, i got quoted in a blog post!
Anyway, I know I saw some similar argument on the site mises.org site (note it is a very politically biased site) but brings up other ways of thinking.
From moneyning.com site on a post today also was this tidbit
The shortest recession was 9 months and the S&P dropped 46% in that time period
The longest recession was 32 months where the S&P happened to also drop 46%
It is argued that government intervention caused it to take all that extra time and delay recovery, think about that.
Anyway, obviously I would rather take the hit quickly.
I found the article that I was reading, really this idea was kind of expressed in the last few paragraphs
http://mises.org/story/3104
(Note: their articles are very long and there is a lot to be learned but not in quick snippets for those with ADHD :)
ooooh, hadn't thought about that one frugal chick - good thinkin'.
i still have to keep with my original answer though because, for me, all my investments are in my retirement funds, and i'm still young, so it wouldn't affect anything else right now. - even if they all wipe out to zero (God forbid).
Philip you're famous now! haha...thx for that extra info - i don't know enough to decide what's good and what's not, but that surely helps me get started. i'll have to check out that site too...but you might need to give me a cpl weeks to get through it, my ADHD is in overtime today ;)
so far us "take it now's" are winning 4-1.
This is actually a really easy question. If you are talking the same number of absolute dollars, or even the same amount of money adjusting for inflation, you want to take the hit over time and not all at once, so that you can take advantage of the future value of the money (assuming your investments are not all losers). If the amount is *not* the same, then it would depend on the kind of interest you can get for your money.
I mean, psychologically it might be more painful to keep getting hit, but we never do well with money when we are emotional about it.
I don't mind seeing the big hit because I know it will bounce back eventually. There's no insurance in anything in this regard. It's a risk regardless of the climate. But, I'm young and can afford to have it dip (albeit deeply) and it will come back. I have to believe all dips eventually lead upwards.
Jerry
www.leads4insurance.com
Probably one big hit. It would make a difference if I knew it was going to be just one hit. Then it would be comparatively easy to take.
I hate it when I get a series of bad things. It feels like they'll never end.
Have you seen How I Met Your Mother? It's like in the 2nd season, when Barney has the option of slaps now or over time. He was unwise to choose over time because he gets so jumpy... (better for us, though!)
If it's going to be the same amount of money lost either way (accounting for all variables and such), I'd take the big hit once and then be done with it. Then you know it's done and you can move on. Little by little starts to wear on you. Depending on the circumstances, I might be more willing to take a somewhat bigger one-time hit just to avoid the drawn-out process.
Would I know the details of the hits? Would I be aware that I was either going to be taking many little hits or just one big hit? I'd say it's like ripping off a band-aid. Just do it and get it over with.
LOL, I just read the comment regarding the original title of the post!
To answer the question, I would rather have it drop like a rock and get it over with.
Although I have no money now, LOL - I think I would rather take a big loss all at once....I think that way I would mentally get over it quicker then thinking about little by little each time I loose money. Rip it off like a ban aid - it'll hurt at first but then it's time to move on :)
Just slug me now... little punches over time hurt more!
Oooh la la, the "nows" are now on top 11-2! Looks like everyone prefers the "ripping it off like a band-aid" method as Mare mentioned.
and to answer some of the questions, YES you would lose the same amount of $ either now or over time. and NO, you wouldn't know how much before answering the question ;) think of it as "real life" which is how it really is now - losing chunks at a time with no end in site - or "would you rather life" in that you just say it and you take the massive hit now (economy/mortgage-related), and then go back into normal market time.
This whole question is pretty interesting to me considering Strange Bird's point here that financially speaking it's better to have more money invested over time, than taking away a big chunk up front....
so i guess this is more of a psychological and emotional choice we're making :) all i know is, i'd like to take that hit NOW and get it over with...the market is loony!
ps: mrs. micah i'm searching for that episode now, i haven't seen that one but it sounds awesome :)
Are you serious? I would MUCH rather just take the big hit. GIVE IT TO ME! I cant take it.. But gradually- no. Absolutely not. I can't take it anymore.
Take the one time hit. For one thing, it's then over and things will start recovering (going up), right? If you take slow losses over time, you have to let that time pass before things start looking up. Most bad things are better if you just get them over with anyway....like pulling off bandaids and getting into a cold pool. :)
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