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lectur4-page39 - to make up the loss. A senior citizen does...

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Low interest rates are not a welcome thing to all people. Older, retired citizens often have their money in less risky investments and depend on market interest rates for some portion of their retirement incomes. Low interest rates mean less income to these senior individuals. The stock market is often perceived as too risky for these individuals to invest in at this particular point in their lives. Senior citizens typically do not have the remaining life span and associated earning potential to recover from a major downturn in stocks. As a young person, if you invest in the stock market and the market takes a nose dive you have years of earning potential stock market, and the market takes a nose dive, you have years of earning potential
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Unformatted text preview: to make up the loss. A senior citizen does not have years of earning potential to recover from a large loss in the stock market. Young people like to see low interests rates. They are typically buying homes, automobiles, furniture, etc. Young people must often use credit to acquire many of the items they want because their incomes are not sufficiently high enough to meet the items they want because their incomes are not sufficiently high enough to meet their immediate desires. If you are a net debtor (owe money), you want to see low interest rates. If you do not have much debt and are a net lender of funds to financial institutions, you naturally want to see high interest rates to enhance your returns. 39...
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This note was uploaded on 12/29/2011 for the course ECO 210 taught by Professor Malls during the Fall '10 term at SUNY Stony Brook.

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