A bucket with holes

December 11, 2009

IS YOUR FINANCIAL PLAN A BUCKET WITH HOLES?

So imagine you want to build up some wealth over you lifetime (I think most of us do).  The bucket represents your plan to achieve that goal.  The water represents your pool of money.  And the holes in the bucket represent the money that is flowing into your pool and then right back out either unknowingly or unnecessarily.  The main culprits causing holes in your plan are

  • Debt
  • Interest
  • taxes
  • opportunity cost

Here is a startling fact: The average American spends around 30 cents of every dollar earned on interest alone.

To fill your bucket you can choose from one of two options:

  1. Add water to it at a faster rate than it is flowing out the holes AKA seek out risky investments with the hope of cashing in on a high rate of return.
  2. Simply plug the holes and watch your bucket overflow.

Instead of frantically chasing high yield investments that put your money at high risk work on controlling the controllable!

When you implement the banking concept and become your own bank you put yourself in control of your financial future.  Instead of paying 30 cents of every dollar to someone else, pay it to yourself and watch as you actually make money doing something you would have done anyway…making purchases.  Instead of paying cash for major purchases, and losing the opportunity for that cash to grow, finance them through YOUR bank and keep your money working for you forever!  These are only a couple of examples of the infinite possibilities behind becoming your own bank.

So…how do you want to fill your bucket?

What is the best alternative to a 401k?  Thousands of employees are losing their employers match on their 401k plan and on top of that retirement nest eggs are being cut in half due to the recent downturn in the economy.  Some folks who planned on retiring this year have had to put off that luxury for several more years while their funds play catch up.

So what kind of advice is out there?  Well you can go to yahoo answers for some non-expert advice.  Most of the responses (in fact all of them) advise the desperate individual to get an IRA or a Roth IRA.

for more advice you could go to “the finance buff” and he’ll explain, in more confusing terms, the same thing you found on yahoo answers.

You could check with an expert by the name of Suze Orman and she’ll simply tell you to “hang in there!”  here is quote from her site –>”Yes, I know how hard it is to do nothing when you see your 401(k) falling 20% or more, but sticking with your long-term strategy will allow you to have a financially secure retirement.”

You could even go to Dave Ramsey–what kind of advice do you think he’ll give you?  “If you receive a match in your (401k, 403b, TSP), invest here first up to the match.  Then, fully fund a Roth IRA for you (and your spouse, if married).  Then, come back to the (401k, 403b, TSP).”

So as you can see there is a common thread here; if you don’t use a 401k, the next best option (according to the above experts) is an IRA or Roth IRA.

However even before considering a 401k, IRA, Roth IRA or 403b you have to honestly answer the following question:  Who do you want to control your money? What I mean by this is simple, all of the above plans are government created tax loopholes, and as we all know that which the government creates, the government controls.  Don’t believe me?  Lets look at the restrictions placed on these government sponsored plans:

rules and regulations regarding government sponsored retirement plans

  • Total contributions may not exceed 100% of the employee’s compensation.
  • Total contributions may not exceed $49,000 in 2009 and 2010.
  • the total contribution that an employee can make on a pre-tax basis is limited to $16,500 in 2009 and remained at that level in 2010.
  • withdrawals from a retirement account may be subject to an additional tax of 10% if the distribution is made before you reach age 59.5 years old.
  • (with the exception of a Roth IRA) Required Minimum Distributions (RMDs) are minimum amounts that a retirement plan account owner must withdraw annually starting with the year that he or she reaches 70 ½ years of age, and they face stiff penalties for failure to take RMDs.

Well if you ask me I would say there is at least some form of control being exercised when the government limits the amount of money I can save, tell me when I can and cannot access my money, and penalize me for not abiding by their rules.

SO…WHAT IS THE REAL ALTERNATIVE?

The answer may surprise you.

watch the short video explaining the 200-year-old vehicle that, if understood correctly, lets you be in complete control of your money and your retirement!

CLICK HERE TO WATCH

New book now available!!

November 16, 2009

discovering hidden treasures

Head over to my website to pick up a copy of the new book!  available in hard copy or PDF.

here is a little write up about the book:

We live in a new financial world where much has changed, yet most advisors are still peddling the same old stuff. They preach asset allocation, diversification, risk-tolerance, and all the other buzz words of traditional methods that frankly are NOT working. People are postponing retirement, or having to live on much less than they had anticipated. The stock market and real estate have changed dramatically. It’s time to assess what you are doing.
Inside this book you will learn about hidden treasures of knowledge which will help you see how to create, retain, and transfer wealth. These are methods and strategies not often taught in the financial community, but can assist in handling many financial concerns.Questions like:

What is going on in the economy and how does it effect my financial plan?
How is best to save for retirement?
How can I jump-start my retirement?
How can I create additional tax advantages?
Where is the best source for financing my personal and business needs?
How can I protect my assets and pass them efficiently to my heirs?

These and many more questions will be answered as you read through the book. You will find it easily understandable and full of common sense.