There are two ways to buy financial services in the 21st century
One of my members bought life insurance from the large insurer (Mascot is a dog) before he asked me for help. Frank bought their insurance because the agent said the company is the best. She said, “It is large and will always be there to pay the benefit.” However, is it worth paying an extra $17,970 on your level term policy? There are customer-focused insurers, rated A+, the same as It, charging $384 vs. It’s $983 for the same $300,000 30-year term policy. Frank was wasting $17,970! After reading our Insider’s Guide to Life Insurance, Frank purchased the $384 policy. Investing his savings of $599 ($983-$384) in his Wealth Reserve for 30 years in a market index, Frank may have an extra $175,000 for HIS dreams not the insurers. http://www.theinsidersguides.com/lifins41.html
In the 21st century, there are two ways to buy financial services—the consumer way and the independent’s way. Financially independent people don’t let themselves be sold. They shop for value in everything. They never pay retail. They shop at Costco. They buy used luxury cars. They wait for sales on electronics. They use the Internet to research the price.
Buying vehicles is one of the largest expenses in most people’s lives. Over our lifetimes, we may spend $250,000 or more. Unfortunately, most people take the consumer way and spend 4 to 5 times what they need to for vehicles. One of our members, Denise, bought a car before I met her. Joy bought her car after she read The Insider’s Guide to Vehicle Purchase.
Consumers’ way. Denise took a loan for the full amount of the price. During the paperwork process with the F&I person (finance and insurance), she was persuaded that the gap insurance and window glass etching options were good buys. Instead of getting a lower price, Denise assumed that an extra $25 a month was no big deal. This was the deal she finally agreed to:
Total borrowing: $25,000 @ 16% for 72 months (her FICO score is 610)
Monthly payment: $542.30 Total payments: $39,045.60
Total interest: $14,045.31 Final residual value: $5,000
Denise spent almost $40,000 for an asset that has little value after 6 years. During those 6 years, she could have accumulated a Wealth Reserve of $57,352.04 on the $542.30 monthly payments. Thus, buying the vehicle on time actually cost her $40,000 plus $57,000 she could have had by investing the payments. The car cost almost $100,000.
The real cost of buying a new vehicle is FOUR times the price--Not a great deal.
Independents’ way. Joy had been buying “assets that grow by themselves” with $500 a month for some time. She had been growing her Wealth Reserve. She started her Wealth Reserve by using our FREE Guide at http://www.theinsidersguides.com/freeguide.html.
Independents use their Wealth Reserve balance for all their financial needs. Thus, their Wealth Reserve can earn 10% to 12% over time in stock and bond mutual funds. They can ‘borrow’ $25,000 from their own Reserve or ‘bank’ and pay themselves back by continuing to invest $500 for the 6 years. Joy pays monthly like Denise but to a different account. The $14,045 interest that Denise pays to another bank, Joy compounds in her own ‘bank.’ Joy accumulates about $53,000 during the six years—replacing the $25,000 she ‘borrowed’ to buy her vehicle. The vehicle is still worth only $5,000 but Joy has grown her Reserve by $28,000. Also, because Joy paid cash for a used luxury car, she probably got a lot more vehicle than Denise got for her borrowed $25,000.
As you guessed, the Independents’ way is how financially independent people stay wealthy. They paid their own “bank” and got the car and the extra $28,000 for the same $500 expense.
You can build your Wealth Reserve with savings from each Insider's Guides for: Vehicle Insurance . . save up to $6,000 over 10 years; Homeowner’s Insurance . . . $2,000 over 10 years; Life Insurance . . . $20,000 over 20 years; Lawsuit Insurance . . . $3,000 over 10 years; Health Insurance . . . $5,000 over 10 years; Disability Insurance . . . $5,000 over 10 years; Long Term Care . . . $40,000 over 20 years; Education Funding . . . $20,000 over 18 years; Retirement Spending . . . $1,000s over 30 years; Banking . . . $3,000 each year; Annuities . . . $20,000 in 20 years; Mutual Funds/Securities . . . $3,000 each year; Spending Plan: Reach every goal; Self-Funded 'Bank' . . . $250,000 in 15 years; Vehicle Purchase . . . $10,000 per vehicle; Mortgage Purchase . . . $3,000 per contract; Wealth Reserve . . . $1,000,000 in 25 years; Wealth Transfer . . . $20,000 in 10 years; Living Insurance . . . $120,000 over 20 years; Self-insurance . . . $20,000 over 20 years; Avoid buying 101 products that waste your money.
You can save $3,000 every year by buying the Independents’ way. Shop for financials just like you do groceries. Your agent, banker, broker, money manager and advisor do already. www.TheInsidersGuides.com
Friday, June 12, 2009
Monday, February 2, 2009
Do Washington elites pay taxes?
What happens when the representatives we put our trust in go to Washington? Is it the water? Is the air contaminated from the swamp gases that trickle up through the cracks in Washington’s mausoleum-type buildings?
Obama’s victory made Americans feel that America might again stand for equal and fair treatment. I thought for a brief moment that after the election-night speech in a Chicago public forum, we might be on the right track back to feeling pride in our country’s leaders.
To me, and many Americans, the election of Obama represented a moral re-awakening of America. In my naïveté, I thought that we had seen the end of the DOUBLE standard. There is one standard for the political elites and another standard for the people who pay their salaries.
Obama or his staff has nominated one, Tim Geithner, for Treasury. This position involves honest dealings in crucial financial matters. To the world and to my fellow taxpayers, this guy should be Mr Clean. He should symbolize the most honest and fair way of handling financial matters. He should also know his subject matter.
The public face that is presented about this candidate is that he is wealthy and knowledgable about financial matters. We are told that Obama aides “said they didn't think these issues would present a problem, given what they characterized as the minor nature of the infractions.” Only in Washington is not paying taxes, twice (even after an audit), a “minor infraction.”
We are being told that if you get caught not paying taxes, not once but twice, it is OK if your “mistakes weren't intentional” and you are “contrite.” Instead of dealing with this matter openly, with the “transparency” Obama promised, our representatives take the wealthy tax cheat into a room closed to the public and press. For most Americans, public humiliation is part of the mia culpa. Not for the elites.
The specifics of how a wealthy knowledgable financial guy and his accountant can cheat we fellow taxpayers can be read in the press. It is just hard to believe that you and I would not end up in court after failing to understand that we must pay Social Security and Medicare taxes, even after we were caught once. Even if the future head of the IRS doesn’t know it, his tax preparer would know that Americans can’t deduct our child’s camp fees, early-withdrawal penalty from a retirement plan, a charitable-contribution of ineligible items, and utility costs.
Finally, as a knowledgeable and wealthy public servant, it is hard to believe that this guy would employ an immigrant housekeeper whose work-authorization papers had expired. Where was this person during the Clinton administration when we all learned that the wealthy keep illegal immigrants so they can pay less.
Would most Americans just assume they could get away with this kind of dishonesty? It is not a matter of degree. Yes, I agree the nominee is not a mass murderer. However, if Obama and our representatives support a nominee engaged in illegal acts, aren’t we continuing the same history as Bush and other elites: election by court order, evesdropping without court order, torture by any other name, intentional deception to make war, welfare for the wealthy, indescriminate spending, and poor judgement. Change was the keynote to Obama’s message. We want change. We don’t want the old DOUBLE standard that seems to infiltrate the hearts and minds of our representatives and Washington functionaries. We don’t want the morally suspect decision-making process that characterizes normal Washington activity. We don’t want “business as usual.” We don’t want “government by crisis,” when checks and balances (common sense) are put aside in the name of expediency. We want integrity back in government. Rewarding bad behavior in anyone (no matter how wealthy or knowledgeable) is the kind of activity we wanted Obama’s CHANGE to change.
Now another Obama nominee, Daschle, didn’t pay his taxes. This is the third person “too important to pay taxes” that Obama has put up. Where is the CHANGE we were promised. This is the old boy network again. Geithner, the new head of the IRS, was confirmed after deliberately avoiding his tax obligations. What does this say about our Congress? Obama continues to ignore breeches of character. Perhaps Congress people think it is OK not to pay because they don’t pay either.
Do any Washington elites pay taxes? Why am I paying taxes this month?
Obama’s victory made Americans feel that America might again stand for equal and fair treatment. I thought for a brief moment that after the election-night speech in a Chicago public forum, we might be on the right track back to feeling pride in our country’s leaders.
To me, and many Americans, the election of Obama represented a moral re-awakening of America. In my naïveté, I thought that we had seen the end of the DOUBLE standard. There is one standard for the political elites and another standard for the people who pay their salaries.
Obama or his staff has nominated one, Tim Geithner, for Treasury. This position involves honest dealings in crucial financial matters. To the world and to my fellow taxpayers, this guy should be Mr Clean. He should symbolize the most honest and fair way of handling financial matters. He should also know his subject matter.
The public face that is presented about this candidate is that he is wealthy and knowledgable about financial matters. We are told that Obama aides “said they didn't think these issues would present a problem, given what they characterized as the minor nature of the infractions.” Only in Washington is not paying taxes, twice (even after an audit), a “minor infraction.”
We are being told that if you get caught not paying taxes, not once but twice, it is OK if your “mistakes weren't intentional” and you are “contrite.” Instead of dealing with this matter openly, with the “transparency” Obama promised, our representatives take the wealthy tax cheat into a room closed to the public and press. For most Americans, public humiliation is part of the mia culpa. Not for the elites.
The specifics of how a wealthy knowledgable financial guy and his accountant can cheat we fellow taxpayers can be read in the press. It is just hard to believe that you and I would not end up in court after failing to understand that we must pay Social Security and Medicare taxes, even after we were caught once. Even if the future head of the IRS doesn’t know it, his tax preparer would know that Americans can’t deduct our child’s camp fees, early-withdrawal penalty from a retirement plan, a charitable-contribution of ineligible items, and utility costs.
Finally, as a knowledgeable and wealthy public servant, it is hard to believe that this guy would employ an immigrant housekeeper whose work-authorization papers had expired. Where was this person during the Clinton administration when we all learned that the wealthy keep illegal immigrants so they can pay less.
Would most Americans just assume they could get away with this kind of dishonesty? It is not a matter of degree. Yes, I agree the nominee is not a mass murderer. However, if Obama and our representatives support a nominee engaged in illegal acts, aren’t we continuing the same history as Bush and other elites: election by court order, evesdropping without court order, torture by any other name, intentional deception to make war, welfare for the wealthy, indescriminate spending, and poor judgement. Change was the keynote to Obama’s message. We want change. We don’t want the old DOUBLE standard that seems to infiltrate the hearts and minds of our representatives and Washington functionaries. We don’t want the morally suspect decision-making process that characterizes normal Washington activity. We don’t want “business as usual.” We don’t want “government by crisis,” when checks and balances (common sense) are put aside in the name of expediency. We want integrity back in government. Rewarding bad behavior in anyone (no matter how wealthy or knowledgeable) is the kind of activity we wanted Obama’s CHANGE to change.
Now another Obama nominee, Daschle, didn’t pay his taxes. This is the third person “too important to pay taxes” that Obama has put up. Where is the CHANGE we were promised. This is the old boy network again. Geithner, the new head of the IRS, was confirmed after deliberately avoiding his tax obligations. What does this say about our Congress? Obama continues to ignore breeches of character. Perhaps Congress people think it is OK not to pay because they don’t pay either.
Do any Washington elites pay taxes? Why am I paying taxes this month?
Friday, January 23, 2009
We are wasting $3,000 a year on financial products
"Most Americans are wasting over $3,000 per year on the financial services they own." According to a new survey, we are wasting $500 on car insurance, $500 on life insurance, and $2,500 on mutual funds/securities. That could mean an extra $250,000 in 20 years! $700,000 in 30 years!
Most people I have talked to believe that you can’t have enough insurance. They don’t understand that you should insure only what you can’t afford to lose. For instance, for car and home insurance, you are better off picking a high deductible to save up to 40% of the cost of a policy. Claims are infrequent—every 11 or 12 years—so you are more than likely to earn interest on the premiums you save year after year.
Insurance is not an item our moms taught us to buy. Who wants to spend their time comparing coverages? Who wants to meet with an insurance agent? This thinking has changed. Insurance and financial services in general have become commodities, like groceries.
With the Internet and new product pricing, you can actually find a huge difference in costs. Depending on your lifestyle profile and the insurer’s marketing plan, you could pay $3600 or $1400 for the same two-vehicle coverage. The difference—$2200—could accumulate to over $150,000 in 20 years. Both insurers are highly rated and responsive.
The differences in price are significant across almost every type of coverage—life, health, long-term care, accident, disability, and excess liability. See the amount of savings by type at TheInsiderSGuides.com.
The options you pick, but don’t need, can significantly change the price. For each type of insurance, you need the guidance of an unbiased advisor—someone who does not profit from your choices. There are 20 to 30 discounts available. To buy wisely, you must know what you need.
Money management is the area with the greatest savings. Many of us pay over $2,000 a year needlessly. When you read the advice of the most well- respected industry practitioners—Warren Buffett and Bill Gross—you learn that “money management is a gigantic rip-off.” There is little correlation between what you pay in commissions, fees, and spreads, and the after tax returns you end up with over time. A low-cost index fund is best for most investors, Buffett said. Thus, most of us are giving away 1%-2% of our pensions and mutual fund balances—3%-4% when inside annuities. That $2,000 drain on each $100,000 every year reduces your eventual spending power by up to $700,000.
Most people I have talked to believe that you can’t have enough insurance. They don’t understand that you should insure only what you can’t afford to lose. For instance, for car and home insurance, you are better off picking a high deductible to save up to 40% of the cost of a policy. Claims are infrequent—every 11 or 12 years—so you are more than likely to earn interest on the premiums you save year after year.
Insurance is not an item our moms taught us to buy. Who wants to spend their time comparing coverages? Who wants to meet with an insurance agent? This thinking has changed. Insurance and financial services in general have become commodities, like groceries.
With the Internet and new product pricing, you can actually find a huge difference in costs. Depending on your lifestyle profile and the insurer’s marketing plan, you could pay $3600 or $1400 for the same two-vehicle coverage. The difference—$2200—could accumulate to over $150,000 in 20 years. Both insurers are highly rated and responsive.
The differences in price are significant across almost every type of coverage—life, health, long-term care, accident, disability, and excess liability. See the amount of savings by type at TheInsiderSGuides.com.
The options you pick, but don’t need, can significantly change the price. For each type of insurance, you need the guidance of an unbiased advisor—someone who does not profit from your choices. There are 20 to 30 discounts available. To buy wisely, you must know what you need.
Money management is the area with the greatest savings. Many of us pay over $2,000 a year needlessly. When you read the advice of the most well- respected industry practitioners—Warren Buffett and Bill Gross—you learn that “money management is a gigantic rip-off.” There is little correlation between what you pay in commissions, fees, and spreads, and the after tax returns you end up with over time. A low-cost index fund is best for most investors, Buffett said. Thus, most of us are giving away 1%-2% of our pensions and mutual fund balances—3%-4% when inside annuities. That $2,000 drain on each $100,000 every year reduces your eventual spending power by up to $700,000.
Friday, July 25, 2008
“Professional money management is a gigantic rip-off”
“Professional money management is a gigantic rip-off.” This was written by one of the most successful fund managers, Bill Gross, Director of PIMCO. He admits that his industry is more about luck than skill. People pay managers for the same reason we all think we are superior car drivers. We all think we are above average. Stop and reason! Average means in the middle. For investments, the average—the S&P 500 index—actually beat 88% of large managed funds. businessweek.com/bwdaily/dnflash/nov2003/nf20031114_4313_db013.htm
Recently, a study of the performance of all mutual fund managers over the period 1975 through 2006 shows that NO MANAGER is a consistent winner throughout their career. Some have beaten a market index for some time BUT you can’t count their fees. That’s not fair. We are required to pay the managers’ fees; even when they lose our money! Just think if plumbers operated like that: Get paid handsomely and don’t fix the leak—they would be sued immediately. Managers don’t stop charging when they lose your money.
Take Away: your earnings will be higher by doing nothing—don’t use someone else to pick stocks or funds—just let it ride on the average of the markets. nytimes.com/2008/07/13/business/13stra.html
An investment in a mutual fund that holds common stocks has provided returns of 12% over most periods 10 years or more. An index fund holds many different company stocks so you don’t lose money if one company goes bankrupt. If you use low-cost funds, you will keep more of what your account earns. If the fund earns 12% and you pay 0.1% for bookkeeping, your investment will compound at 11.9% over time. Every year the returns will be different of course. However, when you hold tight and don’t buy and sell, you win. Instead of paying a stock picker, you should pay a hypnotist to make you forget your long-term account. Our members provide their experiences to illustrate where to invest: http://www.theinsidersguides.com/freeguide.html
Don’t fall for the myth of "professional" money management. Wall Street makes up stories that we want to hear. Money management is just a sophisticated lottery game and only the game owners profit by it.
Recently, a study of the performance of all mutual fund managers over the period 1975 through 2006 shows that NO MANAGER is a consistent winner throughout their career. Some have beaten a market index for some time BUT you can’t count their fees. That’s not fair. We are required to pay the managers’ fees; even when they lose our money! Just think if plumbers operated like that: Get paid handsomely and don’t fix the leak—they would be sued immediately. Managers don’t stop charging when they lose your money.
Take Away: your earnings will be higher by doing nothing—don’t use someone else to pick stocks or funds—just let it ride on the average of the markets. nytimes.com/2008/07/13/business/13stra.html
An investment in a mutual fund that holds common stocks has provided returns of 12% over most periods 10 years or more. An index fund holds many different company stocks so you don’t lose money if one company goes bankrupt. If you use low-cost funds, you will keep more of what your account earns. If the fund earns 12% and you pay 0.1% for bookkeeping, your investment will compound at 11.9% over time. Every year the returns will be different of course. However, when you hold tight and don’t buy and sell, you win. Instead of paying a stock picker, you should pay a hypnotist to make you forget your long-term account. Our members provide their experiences to illustrate where to invest: http://www.theinsidersguides.com/freeguide.html
Don’t fall for the myth of "professional" money management. Wall Street makes up stories that we want to hear. Money management is just a sophisticated lottery game and only the game owners profit by it.
Tuesday, July 8, 2008
Do you have enough for retirement?
This is the BIG question for many people over age 55 ask their advisors.
Most people over age 55 have no idea if they will have enough saved to be able to quit working and live on the income from their nest egg. They may live another 35 years. Most advisors don’t know the answer either.
There is a simple answer: $5.55 a day.
This is the amount necessary for you to have an additional Wealth Reserve of $150,000 in 20 years. BOTH of you can make the $166.67 monthly contribution and have $300,000. It would take doubling that again—$666.67 a month—to reach $300,000 in less time—15 years. Time is the key factor in compounding your money.
EVERYONE needs more money in retirement because of increasing expenses. Most people need their Social Security income too. That income is now in doubt. Our Treasury Department contends that changes are inevitable, because the program seems likely to become insolvent in 2041. Most policymakers seem to agree that, if benefits must be cut, the cuts should affect higher-income workers and retirees before they affect lower-income workers and retirees. Treasury wrote a new “progressive benefits reduction” analysis. treasury.gov/press/releases/reports/ssissuebriefno.%205%20no%20cover.pdf
Everyone can invest $5.55 per day—that’s a cigarette/coffee or a 15 mile trip. Some people can afford to double that. If you can add more, fine. Unless your joint income exceeds $169,000 in 2008, put the money in a Roth IRA. The earnings—$150,000 less $40,000 deposit—are not taxed. There is no income tax, ever. That adds 25% more to your balance. Unlike pensions, regular IRAs, insurance, annuities and savings, there is NO tax or fee. You get to use all your money! irs.gov/publications/p590/index.html
Do you have enough for retirement? NEVER
Ask anyone who is in retirement today. Bread, milk and eggs went up 20% so far. Health care and long-term care expenses are rising. How long will the young people want to pay for our Social Security if it ends before they use it?
Set up an account for you and your spouse in 30 minutes using our members’ strategies: http://www.theinsidersguides.com/freeguide.html
Most people over age 55 have no idea if they will have enough saved to be able to quit working and live on the income from their nest egg. They may live another 35 years. Most advisors don’t know the answer either.
There is a simple answer: $5.55 a day.
This is the amount necessary for you to have an additional Wealth Reserve of $150,000 in 20 years. BOTH of you can make the $166.67 monthly contribution and have $300,000. It would take doubling that again—$666.67 a month—to reach $300,000 in less time—15 years. Time is the key factor in compounding your money.
EVERYONE needs more money in retirement because of increasing expenses. Most people need their Social Security income too. That income is now in doubt. Our Treasury Department contends that changes are inevitable, because the program seems likely to become insolvent in 2041. Most policymakers seem to agree that, if benefits must be cut, the cuts should affect higher-income workers and retirees before they affect lower-income workers and retirees. Treasury wrote a new “progressive benefits reduction” analysis. treasury.gov/press/releases/reports/ssissuebriefno.%205%20no%20cover.pdf
Everyone can invest $5.55 per day—that’s a cigarette/coffee or a 15 mile trip. Some people can afford to double that. If you can add more, fine. Unless your joint income exceeds $169,000 in 2008, put the money in a Roth IRA. The earnings—$150,000 less $40,000 deposit—are not taxed. There is no income tax, ever. That adds 25% more to your balance. Unlike pensions, regular IRAs, insurance, annuities and savings, there is NO tax or fee. You get to use all your money! irs.gov/publications/p590/index.html
Do you have enough for retirement? NEVER
Ask anyone who is in retirement today. Bread, milk and eggs went up 20% so far. Health care and long-term care expenses are rising. How long will the young people want to pay for our Social Security if it ends before they use it?
Set up an account for you and your spouse in 30 minutes using our members’ strategies: http://www.theinsidersguides.com/freeguide.html
Monday, May 19, 2008
THE FACTS OF FINANCIAL LIFE
Keep YOUR kids out of debt! Explain the FACTS OF LIFE now!
You can help your kids stay out of debt and reach all their goals in life by explaining the FACTS OF FINANCIAL LIFE. You can do this only if you know the answers to these two questions asked of 12th graders. These questions were asked of participants in the JumpStart Coalition on Personal Financial Literacy.
Which of the following tends to have the highest growth over long periods, say 18 years?
a) A checking account.
b) Stocks.
c) A U.S. savings bond.
d) A savings account.
At age 25, Mary began investing $5.56 per day, $2,000 a year. At age 50, Rob started saving $4,000 a year. They now are both age 75. Who has more money saved for retirement?
a) They each have the same amount.
b) Rob, because he saved a bigger amount each year.
c) Mary, because her money grew for a longer time at compound interest.
If you correctly answered "b" and "c," you did better than most of the nation's high school seniors. Most got them wrong. A Schwab survey found that while 70 percent of parents had taught their kids how to do laundry, only 19 percent had explained how to invest money to make it grow.
It is not difficult to learn these lessons. In fact, our members have found the pictures and charts in our FREE Guide make it easy to explain the FACTS OF FINANCIAL LIFE. Try it yourself for FREE at www.theinsidersguides.com/freeguide
It is a curious thing that our representatives in Washington have not found a financial literacy course for our schools after 220 years. According to John Adams:
"All the perplexities, confusion and distress in America arise, not from defects in their Constitution ... not from want of honor or virtue, so much as from the downright ignorance of the nature of coin, credit and circulation."
By the way, Mary will have about $6.5 million and Rob will have about $630,000 using a tax-free low-cost broad market index account.
You can help your kids stay out of debt and reach all their goals in life by explaining the FACTS OF FINANCIAL LIFE. You can do this only if you know the answers to these two questions asked of 12th graders. These questions were asked of participants in the JumpStart Coalition on Personal Financial Literacy.
Which of the following tends to have the highest growth over long periods, say 18 years?
a) A checking account.
b) Stocks.
c) A U.S. savings bond.
d) A savings account.
At age 25, Mary began investing $5.56 per day, $2,000 a year. At age 50, Rob started saving $4,000 a year. They now are both age 75. Who has more money saved for retirement?
a) They each have the same amount.
b) Rob, because he saved a bigger amount each year.
c) Mary, because her money grew for a longer time at compound interest.
If you correctly answered "b" and "c," you did better than most of the nation's high school seniors. Most got them wrong. A Schwab survey found that while 70 percent of parents had taught their kids how to do laundry, only 19 percent had explained how to invest money to make it grow.
It is not difficult to learn these lessons. In fact, our members have found the pictures and charts in our FREE Guide make it easy to explain the FACTS OF FINANCIAL LIFE. Try it yourself for FREE at www.theinsidersguides.com/freeguide
It is a curious thing that our representatives in Washington have not found a financial literacy course for our schools after 220 years. According to John Adams:
"All the perplexities, confusion and distress in America arise, not from defects in their Constitution ... not from want of honor or virtue, so much as from the downright ignorance of the nature of coin, credit and circulation."
By the way, Mary will have about $6.5 million and Rob will have about $630,000 using a tax-free low-cost broad market index account.
Monday, April 28, 2008
Are Roth IRAs good for retirement?
Members and their kids keep asking me this question.
Consider two choices: 401k with matching and Roth IRA.
If your 401k has no match, skip it. Yes, a 401k does reduce your income for tax purposes now and lets your eggs grow tax-deferred. If you invest 10% of your gross, say $3000 a year, you could have $1.2 million in 35 years. However, when you take it out, you may pay 25% or more in federal and state income tax. (We will likely pay Bush’s ‘free ride for the rich’ in the future.) Your tax rate is lower now. Pay the tax on the $3,000 now and avoid tax on the $1.2 million later. Inflation takes HALF your buying power every 25 years, so a MILLION BUCKS won’t buy what it used to. So add $10 a month every year to get ahead of inflation.
Matching funds from your employer is FREE money! Take it. If you receive 50% on your first 5% of salary, that’s $750 a year. Add that to your 10%--$3,000—and you may find $1.5 million in 35 years. You may have to pay $388,000 in tax on that, but at least you will have $1.2 million to enjoy for the rest of your life.
No matter what you do—401k with match or Roth IRA—success in retirement savings is just a matter of sticking with it. Put your savings and investing on automatic and your future life will be assured. Your employer or mutual fund trustee will debit your account monthly for the $250 and you don’t have to worry about retirement again. Our members show you how they did it. They bought “assets that grew by themselves.” They didn’t have to rely on bad investment advice. They didn’t have to write a monthly check.
Start TODAY! It takes 30 minutes. I will email you our FREE Guide: http://www.theinsidersguides.com/freeguide.html
Consider two choices: 401k with matching and Roth IRA.
If your 401k has no match, skip it. Yes, a 401k does reduce your income for tax purposes now and lets your eggs grow tax-deferred. If you invest 10% of your gross, say $3000 a year, you could have $1.2 million in 35 years. However, when you take it out, you may pay 25% or more in federal and state income tax. (We will likely pay Bush’s ‘free ride for the rich’ in the future.) Your tax rate is lower now. Pay the tax on the $3,000 now and avoid tax on the $1.2 million later. Inflation takes HALF your buying power every 25 years, so a MILLION BUCKS won’t buy what it used to. So add $10 a month every year to get ahead of inflation.
Matching funds from your employer is FREE money! Take it. If you receive 50% on your first 5% of salary, that’s $750 a year. Add that to your 10%--$3,000—and you may find $1.5 million in 35 years. You may have to pay $388,000 in tax on that, but at least you will have $1.2 million to enjoy for the rest of your life.
No matter what you do—401k with match or Roth IRA—success in retirement savings is just a matter of sticking with it. Put your savings and investing on automatic and your future life will be assured. Your employer or mutual fund trustee will debit your account monthly for the $250 and you don’t have to worry about retirement again. Our members show you how they did it. They bought “assets that grew by themselves.” They didn’t have to rely on bad investment advice. They didn’t have to write a monthly check.
Start TODAY! It takes 30 minutes. I will email you our FREE Guide: http://www.theinsidersguides.com/freeguide.html
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