The buy and hold myth continues with part 2 of 6 explaining how long term investors are gambling on their family’s financial future. Barrack Obama urges “common sense” in financial regulations.
USPresident Barack Obama, speaking a year after the Lehman Brothers‘ collapse, warned against complacency as the financial crisis ebbs and said the US must have a new regime of “common-sense” regulations to avoid another market meltdown.”
I am urging those with 401k’s, 403b plans to use a little common sense when you are choosing a long term buy and hold strategy. During this Secular Bear market, lasting 18 years, you should take steps to protect any gains you have left.
The 9 common financial myths have been propagated by the market media matrix to maintain the status quo on your financial future. Last year I issued a warning to long term investors, particularly those with 401k plans and other long term investments. Over the next 90 days, I will be posting videos to help you unravel these myths about investing, insurance, and the financial markets. In my opinion, the next 90 days will determine your family’s financial future.
These 9 myths are:
Long Term Buy and Hold Myth
Diversify your investments
Professional Money management
Researching / Homework stocks
Market Timing
Global Economy
Mergers Myth
Stock Splits
The first financial myth should be addressed over the next week when you receive your end of quarter reports. The biggest financial myth is the theory of “buy and hold” for long term. In today’s age of instant financial info, the myth is busted! I will show you historical facts that dispel the “buy and hold’ for the long term, is nothing more than one of the best kept financial insider secrets over the last 30 years!
The last 30 years, has seen a significant rise in what the financial insiders call “dumb money” in the stock market. The insider definition of “dumb money” is the money that is pumped into the stock market by 50% of the population through their 401k’s and 403b plans.
The employers have changed their retirement benefits from a “defined benefit” to a “defined contribution” plans. A defined benefit plan places your retirement completely under the control of your company. Under a defined benefit plan, your employer specify what will be your retirement amount based on seniority and years of service. Since the company is responsible, they have to pay for these benefit out of the company’s profits. Guess what? The companies that still have defined benefit programs are struggling to fund the defined benefit plans, because they have to contribute “x” number of dollars now, for future retirees. Most state, Federal, and highly unionized companies have this type of plan. Yet, most of these defined benefit plansDO NOT HAVE ENOUGH FUNDS TO COVER FUTURE RETIREES!
A defined contribution plan allows the employee determine how much money to contribute into a his own retirement account. If the employee doesn’t contribute anything to his own plan, he will have nothing at retirement. The company saves money by not using current company’s profits to fund future retirees accounts. More on types of plans later, but for now, let’s just say that everyone is an investor, long term or short term by default!
If you are responsible for your own retirement plan, how much time have spent on reviewing your plan? Is it only the 30 minutes per year when deciding your choices of investments? Do you find these choices confusing? Well, that is the purpose of the website to provide you with some common sense answers of the financial services industry.
Let’s start with the a 6 part video series dispelling the buy and hold long term myth.
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