How to Take Control of Your Financial Future
by Pamela Yellen
Pamela Yellen is a financial security expert who investigated more than 450 savings and retirement planning strategies seeking an alternative to the risk and volatility of stocks and other investments. Her research led her to a time-tested, predictable method of growing and protecting wealth now used by more than half a million people.
Here are 5 Keys to taking control of your Financial Future for the horribly misinformed.
1. The Key to a Financially Stress-Free Life
Only 14% of employees say that they do not feel financial stress. Are you one of them? If not, you can be.
If you’re worried about money, you definitely aren’t alone. If you want to find your way into that small percentage of Financially Stress-Free, start by flipping your perspective, literally…
Think of your money as a pyramid. Everybody’s finances form some kind of pyramid. And if you’re like the vast majority of people, your current financial picture may look something like this:
In an upside-down pyramid, the vast majority of financial assets are in the “money at risk” sector.
With most of your eggs in that money-at-risk basket, you can be flush today and destitute tomorrow. It’s out of your control. Far too many of us have been duped into putting the majority of our assets into investments rather than savings.
Are You Saving or Investing
- To save means to place money you can’t afford to lose in a vehicle that is safe and has guaranteed growth. You are certain your money will be there when you need it.
- In contrast, to invest means to place money in a financial vehicle or an asset that has a certain amount of risk. You hope to make a gain, but it’s not guaranteed. In fact, you might even lose your original investment money.
The only money you should invest is money you can afford to lose—or money that you’re able to let languish in the market for at least twenty years, if necessary, until it recovers.
And so many of us do this with our emergency fund, our children’s college fund, our retirement nest egg—the very money we absolutely cannot afford to lose!
Without a sizeable liquid rainy-day fund, you may be forced into selling or liquidating your nest egg assets prematurely. When this happens, the timing is often terrible. You’re at the mercy of current market conditions and forced to sell at the worst possible time.
When safe and liquid cash reserves are the foundation of your pyramid, life is a lot less stressful. Rather than walking a tightrope in a strong wind with nothing to catch you, you’re working with a financial safety net.
How Much is Enough
Most financial talking heads will insist you only need 3-6 months’ income in your rainy day fund.
I strongly disagree.
June, 2012: CNN Money reported that almost 5½ million Americans had been out of work for more than six months. This represented close to half of the nation’s unemployed.
January, 2014: The Bureau of Labor Statistics reported that the average length of time it took workers to find new jobs was nearly eight months!
Loss of income, medical emergencies, divorce, major home repairs – it doesn’t take much to run through savings that represent just 3-6 months of income.
By failing to prepare, you are preparing to fail.”
To have a stable Financial Pyramid, you need an emergency fund of two years’ worth of income. This may sound daunting, but trust me, you can build up this fund… Not overnight, but with some time and forethought, you can do it without feeling deprived.
There are vehicles that I’ve discovered where you can safely stash your savings and get a better return than you might think (I’ll talk about them in Key #5).
2. How to Build a Secure Retirement Fund Where You Call the Shots
According to a 2012 AARP survey, 72 percent of baby boomers believe they’ll be forced to postpone retirement, and half have little confidence they’ll ever be able to retire.
How Can This Be
After a lifetime of hard work, many seniors will find themselves forced to choose between putting food on the table and buying their medication.”
– U.S. Senate Committee on Health, Education, Labor, and Pensions
How Did it Come to This
The conventional retirement plans we see most commonly today began in 1978 when Congress added Section 401(k) to the tax code, creating a tax-deferred way for employees to augment their pensions. These plans were never intended to replace company retirement plans—but that’s exactly what happened.
Nearly 75% of all company retirement plans disappeared between 1980 and 2012. Companies realized it’s cheaper to offer a small matching contribution to an employee’s 401(k) plan than to fund and pay for the management of a company pension plan. So they transferred the burden of funding employees’ retirement to the employees themselves.
And the results have been disastrous turning what once was a guaranteed, predictable retirement income for life into a risky gamble! Why?
Because most 401(k) plans are dependent on the stock market, with its inherent risk and volatility.
Traditional 401(k), IRAs and Roth plans retirement plans based on the market offer absolutely no guarantees!
The 401(k), without any guaranteed returns, is a recipe for disaster. The 401(k) is a speculation bonfire—over 77% of the savings in these plans are invested in volatile equities and mutual funds—which dumps all of the investment risk on uninformed retirement savers. Tying all of retirement income to the stock market is insane.”
– Barry Dyke, author of The Pirates of Manhattan
And government-approved retirement plans such as 401(k)s, IRAs and Roth plans have more strings attached than Pinocchio before he became a real boy.
What Restrictions Are on Typical Retirement Plans
- How much you may put in your plan
- What you can and cannot invest in
- Wow much you can borrow and how you must pay it back
- How long you must wait before you can access your money
- When you must access your money
- How much you must withdraw (and pay taxes on) at that time
Penalties for running afoul of these regulations can be huge.
NOTE: I answer many more questions in my full Report, 5 Simple Keys You Need to Know to Take Control of Your Financial Future, including:
- Can You Choose How Much and When to Withdraw Money from Your Retirement Plan?
- How Liquid are Your Retirement Plan Assets? Can You Access Your Money if You Need or Want it Before You Retire?
- Aren’t Fees on These Plans Designed to be Affordable?
- What About the Benefits of Deferring Taxes?
So What Do I Do
Okay, so despite what current conventional wisdom claims, I have discovered a vehicle for your retirement funds where your nest egg can be completely under your control and not at risk yet still grow at an excellent rate.
If you have EVER read a single one of my blog posts, you know I’m referring to the Bank On Yourself method. To learn more about how you can revolutionize your retirement, Request a Free Analysis.
What About My 401(k)
Since most folks are currently trapped in their 401(k) type vehicles, let me give you a glimpse at a very valuable tool you can use to save you from expensive fees in your mutual funds, exchange-traded funds or notes.
Fund expenses are not broken out and listed on your monthly statement. That’s why I call them stealth fees: You can’t easily see them or calculate their potentially devastating impact on your retirement nest egg.
Don’t let the miracle of long-term compounding of returns be overwhelmed by the tyranny of long-term compounding of costs.”
– John Bogle, founder of Vanguard, father of the index fund
But the tool I’ve discovered can help reveal those fees. It’s offered by an organization called FINRA (Financial Industry Regulatory Authority), the organization authorized by Congress to protect America’s investors.
Buried deep in the FINRA website is a marvelous free tool called the FINRA Fund Analyzer that you can use to quickly and easily analyze the costs of almost any mutual fund or exchange traded fund you care to investigate.
How Do I Use the FINRA Fund Analyzer
I don’t have space here to give you all the information you need to fully utilize this tool, so please, Click Here to download the full, 26 page, Report where I cover this topic in depth. (It’s absolutely free!)