Retirement Savings

Stop. If you are following the wall street mentality to retire, you may be in for a shock. Many of these investments have failed the very people who rely on them, and are only making the banks and fund managers rich…not the investors.

In fact, many retirement savings vehicles provided by wall street pay the fund managers and banks regardless of if you are making of losing money. This means you could be losing your lunch while they are eating your dinner.

So what should you do with your retirement savings? How can you have less worry about the money you need to have for retirement, yet still have the liquidity and control of your money to invest in ventures such as your own business or real estate when you get the opportunity?

Well let’s take a look at some of your investment options for retirement savings and see if we can find the best place to put our savings dollars.

401k

This is pretty much the first go to place for many people with their retirement savings dollars. The reason is, you most likely get a match from your employer. This gives the 401k a head start on other investments, but is the match really worth it? Let’s look at some of the other characteristics of the 401k and then make this determination.

The first characteristic I want to look at is the fact that the 401k, as a retirement savings vehicle, is tax deferred. Is this a good thing?

At first I think many people see this as a benefit, but for who? Is this really going to benefit you or the government? If I gave you a loan, but I told you that the interest rate would be calculated at the end of the loan, when I knew how much money I would need, you wouldn’t take that loan…ever.

But, isn’t this the same thing the 401k is doing? You have no clue what taxes will be when you retire. Whether that is 5, 10, 20, or 40 years from now. Do you think taxes are more likely to go up or down from where we are today? So, is deferring tax really a benefit? Does upside of getting a match make the 401k worth it.

The other disadvantage of the 401k is it’s lack of liquidity. The hard truth that isn’t factored into S&P growth statistics is the fact that many Americans are getting into hard times and need cash now. Or what if you have a business, investment, or real estate opportunity that you have to pass up because all of your money is locked away in a 401k? Does that make the match worth it?

I’m can’t give a blanket yes or no, it varies for each individual, but if you haven’t thought about this before putting money into your 401k you may be shooting yourself in the foot. We’ll get to the 401k alternatives, but first let’s take a look at some more retirement savings options.

Mutual Funds

Many 401k owners choose to put their money into mutual funds. However, mutual funds are very popular as a primary or secondary investment. But let me ask you this, have you ever met a mutual fund millionaire? No. Because it doesn’t exist. The people getting rich off mutual funds are the fund managers, and that’s basically it.

There have been so many scams and bad practices involved with mutual funds it would make you sick. It’s unfortunate that mutual fund companies and managers make money regardless of performance. You could be losing money, but they still will make their millions.

Stocks

Stocks as a retirement savings vehicle can be beneficial, or very risky. However, the stock market operates on supply and demand more than if a company is doing well or not. If we look at the history of the stock market, we see that there was a huge jump in the price of stocks between 1978-1998. Was there something that happened in 1978 to cause such a jump in the market prices? Is this what we would consider a bubble?

Well, it happens to be that there was such an event. In 1978 a little thing called the 401k was put into place. This caused many dollars that were going into pensions and other investments to be funneled into the stock market.

If you invested back in the 70’s and 80’s then you made probably made a good amount of money, however, these last 10 years have been quite different from the good old days. We’ve seen these baby boomers start to retire, and begin to pull their money out of the market. With so much supply and not enough demand, prices in the stock market have begun to fall. And, as many of these baby boomers have only just begun to retire, what do can we expect from the future?

It may not be as negative as it seems, however, the sheer unpredictability of the stock market makes it a very risky investment.

Cash Value Life Insurance

So, is there a retirement savings vehicle out there that you can rely on for your future? What are our alternative investments? Unfortunately, 401k’s and market investments have let many people down. However, there is an alternative that can give you guaranteed results and still have your money available for your use in hard times, or if you have better opportunities. I’m talking about cash value life insurance.

What many people do not know is that life insurance offers a great retirement savings alternative. The reason they don’t know? Well that is because many of the people on your TV and radio won’t make money if you put your money into life insurance, so of course they are going to be negative towards it. They want money, the want you to buy term and invest the difference. They want you to keep hitting your head against the wall and hoping something good will come out of it.

What are the benefits of using life insurance? Let’s take a look.

Tax Advantages

Life insurance offers tax advantages that you won’t find anywhere else. The money grows tax free and if treated properly will never be taxed again. When you die, your heirs inherit the death benefit attached to your dollar, which until you are over 100 years old is always more money than you have actually put into the account.

Safety

Life insurance is very safe, if not the safest place to put money. The life insurance companies guarantee you that you will never lose principle or growth. This means no one will make money off of you when you lose money, because you will never lose money. And every year your friends have losing 401k plans, you won’t have the worries about whether or not you will be able to retire.

Liquidity and Use

Another great benefit of life insurance is that it is usable. You can always borrow the money out from your policies cash value for any reason you want, with no penalties. The life insurance company isn’t going to ask you what you are doing with your money, and you don’t have to get approved for a loan.

The benefits of this can be infinite. If you have business or real estate opportunities, you may miss them if you have your money locked up somewhere. But with life insurance, not only is your money available, but if you do this the right way you will also receive a tax write off on the dollars you pay back to the life insurance company.

If you don’t know about life insurance as a retirement savings vehicle it’s time you find out. For a limited time we are offering a free book on life insurance and it’s uses, so that you can educate yourself. Don’t take my word for it, or that guy on the radios word for it, figure out what’s best for you yourself by signing up below.

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