COMMON SENSE

Arcording to  Trent of the “Simple Dollar”

Three Questions to ask yourself if you are in your 20’s and want to save for Retirement.

1. If money were no object, what would you do with your time?
2. Are you frugal?
3. Are you interested in having children?

The Simple answer is….

Just worry about the saving for now – don’t sweat the details.

Many people get overly wrought about making sure that their money is in the “perfect” investment. To put it simply, your investment choice is secondary – by a long shot – to simply saving your money as soon as possible and as much as possible. Start saving now. If you don’t know what to invest in, just ask for suggestions from the representative there. Since it’s a tax-deferred retirement account, you can make investment changes later on without any tax issues.

Doctrader says: The most import aspects of long term planing is learning there are market cycles. If you can identify the market cycles, you will be miles ahead in your investment choices!  During bull markets, you should have your money invested in high growth areas of the market through an index fund.  When the bull market begins to wane, you should move your long term investments to a money market position or a  cash position.    If you chose a “stable fund” alternative to cash, you run the risk of losing money due to inflation or hidden land mines within a “stable fund”.

Stable funds usually are guaranteed by an insurance companies.  Insurance companies are subjected to the 7 deadly sins of investing.

These are:

• regulation
• investigation
• litigation
• arbitration
• capitalization
• Taxation
• politicization

These 7 deadly sins of investing will impact your future retirement.   If you are serious about your future, your best option is to “create a product or service” which can launch your career into a small business.  After all, our founding fathers were small businesses.  In  fact, most of new jobs created today and in the future will belong to small businesses.

My suggestion, turn your passion into a profitable small business!

doctrader

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The following story is pipe dream, sounds interesting, but don’t make too much of it!   Just goes to show how much people really try to analyze the future, and believe they will come out on top.  The entire post doesn’t take into account of real deflation/inflation, market cycles, or the whole mess with political incompetence.   The biggest factor to consider in any short term or long term investing decision is politics!

The idiots we have in charge today, have one thing on their minds, absolute power!  The more people they can make dependent on the government, the better for them to return to political office and retire with more power.  You see money equals power, power equals money.   Anyone with a little bit of common sense, knows, you cannot print more money without inflation and a decreasing your purchasing power.

The future is not predictable! Enjoy the fantasy story….

Posted by

Jacob Lund Fisker

This is a guest post from Debbie M giving a detailed budget for a retirement plan costing half a million dollars. For most incomes, half a million means a less early retirement. Yet, it is still earlier than the “usual million(s)”.

The best part of my story is figuring out my expenses. Since I plan to quit work forever (or at least be able to) once I achieve financial independence, this is vital. It’s much harder to find a job when you’ve been out of work a while, and frankly it’s hard enough for me to find jobs now.

My investment plan is a little less exciting. I prioritize diversification. I used to not include bond-like things because my pension is bond-like, but really my pension fund is also invested in stocks, so if stocks plummet, my pension could be in trouble. So I’m including large cap and small cap, domestic and foreign (including developed and developing), growth and value, and bond funds and REITs.

If I keep up with current contributions to Roth retirement vehicles for the next five years, I will have $155000 in those alone, which would give me $645/month, which gives me some wiggle room in case the pension rules change or I can’t …

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Skepticism runs deep in my psyche along with a mistrust of the often touted ‘expert opinion’. I also dig my heels in when I feel I am being sold something with scare tactics-as in do this OR ELSE.

I put money aside every paycheck into my 401K, I save into our emergency fund (and now house fund) money market account, I put extra toward the principle of our mortgage (which translates as ‘death-grip’ BTW). But I have a tip about this hot new investment that I plan to give a whirl-MYSELF!

Last year’s financial crisis was something of a revelation for me. Watching my carefully gathered funds just vanish made me feel helpless, just totally powerless. It was soon after that I reduced my 401K deduction drastically. Instead of putting money in a precarious house of cards, I wanted to invest in my own house-my own homestead-my own ‘retirement’. Yes, my taxable income is higher, but I feel it is a small price to pay for honoring that inner-voice.

I have made the decision to look at retirement in a whole different light. For many, retirement is the tantalizing carrot dangling just out of reach, waiting as a reward for 40 years of unrewarding work. ‘When I retire I will be able to enjoy my life.’ ‘When I retire I can really get into my hobbies.’ I don’t have any intention of waiting.

My investment in our future is starting now, while I am still healthy and strong. My husband and I can still break ground, install fencing, and start an orchard; if I wait until 65 that will not happen. I do not plan to retire to The Village in Florida, or play a lot of golf, or go on cruises when I am old. I foresee myself working part-time until I am physically unable (I do love my career when I can find balance!). I see myself helping to raise my (great?) grandchildren.

Compound interest is a wonderful thing and don’t get me wrong-I will continue to save and invest. But I am going to ‘diversify my portfolio’ just a little!

Twenty years down the road-worst case scenario: my 401K retirement nest egg may dry up and blow away, the FDIC may not be able to keep up with banking collapses, food and fuel prices may skyrocket. But with acreage owned, goats in the shed and potatoes in the clamp, I can feed myself. With a wood plot and a passive solar design I can stay warm. With solar panels I can pump water. You get the idea. I may not be saving for the future but I sure as hell am investing in my future.


A Small Life – http://hickchicks-smalllife.blogspot.com/

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If  Wall Street’s Greed  and Politician’s Fear could have solved the financial crisis, then why did we have to go through the pain of  last year?

For free market capitalism to work, both Main Street and Wall Street have to have greed and fear.   Even today, they average long term investor is only “Fearful” of missing the bull next rally.  They do not have any “fear of  losing everything”.  The “baby boomers” have taken the “buy, hold, and hope theory” to the maximum level, being eternally over optimistic with regards to the economy.  After all, they learned investing  during the 80’s and 90’s when the market had spectacular gains.  Now the baby boomers find themselves in a difficult position, believing the market will go up and the value of their homes will go up at the same time!   Currently, many baby boomers are putting off their retirement, once again,  hoping the markets will reward them for the failed theory of “buy, hold, and hope investing strategy“.

Fear and Greed are supposed to rule the markets, yet Wall Street has conditioned you to only have “fear” of missing the next bull rally. So you buy, hold,  and hope for the next bull market rally! You wanted cheap goods, cheap oil, while continuously buying more and consuming more!  I remember in 2008, when people were complaining about gasoline being at $5 a gallon.  I asked them, which is more valuable, a gallon of gas or your 401k plan?  The value of you portfolio in you 401k plan is directly linked to economy of oil, and oil to your stock market gains!

Meanwhile, the market media matrix was touting Goldie locks economy, green shoots, what is their next slogan to get you to spend every dime of your paycheck?

Wall Street has “Greed”, and no fear.  Wall Street tells the politicians as the markets were falling, ” we are all in this together”!    Last year, there were secret cigar smoking strategy rooms, weekend mergers, hostile takeovers, and plenty of back alley back stabbings stealing assets from weaker competitors.  The dog eat dog world of Wall Street, everyone was fighting to stay alive.

Now, just a year later, no one is talking about the “toxic assets” that are still held by those  bailout cry babies.   Meanwhile Bernake, Geitner, and Kardashin, are bringing in tons of cash to shore up the financial services industry with the indentured taxpayer!  The next market crash, will ensure the debts to your children and grandchildren.

OUR country’s  future is foretold  in the headlines of history,  “The 100 Trillion Dollar Note” as  Zimbabwe tries to stifle the fires of hyper inflation.   Politician’s Fear taking preventive actions, only to act decisively during a crisis, always choosing the  politically expedient  incompetent answer. A Trillion here, a trillion there, pretty soon we are talking about “real money”!  Spending 25% of the nation’s GNP has never solved any  nation’s debt problem in the history!   The idiots in congress have never managed a busines, let alone a simple  a “hot dog stand”, yet they want to master mind economic recovery with an estimated100 Trillion in unfunded liabilities.

The Politician’s Greed, for incumbency forces him to take action during a crisis.  He rejects free market capitalism  correcting mechanism,       forgoing the short term temporary pain of a Depression.  He purposes silly fixes and proudly announces that he has solve the problem.

Engineering our way to  a Weimar Republic, which could be worse than a “Great Depression“.   In either case, hyper inflation or depression,  you will still have to have food!  If you don’t have 6 month to a years supply of food, that may be your best investment choice over the next 6 months.  Time is running out, you cannot simply trust in the “buy, hold, and hope” theory any more!

Doc

History Repeats!

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