One main reason retirement money and 401K plans are diminishing is because of inflation and the value of the dollar in today's economy. It's no surprise that the U.S. continues to spend money. The reaction of this madness is the U.S. losing it's value. This means, your hard earned cash 5 to 10 years ago you invested is being devalued. It's becoming non existent.
Their are safer investments now during this economic crash. But their is only a limited time to start securing your future. At this point in time, America is in process to begin the largest wealth transfer we have seen since the great depression. More on this in just a moment.
For now, read over the 6 problems with your 401K Plan you must know about:
Over the past quarter of a century, 401(k) plans have evolved into the dominant retirement plan scheme for most U.S. workers. While many improvements have been made to the structure and features of 401(k) plans since their creation, additional problems still need to be addressed, and various enhancements still need to be made. Let's look at six problems with the current 401(k) plan structure, and then discuss how you can mitigate the negative implications of these known fallacies.
1. Structural Flaws Associated with Investing Contributions
You have probably been told that investing your money through a process known as dollar cost averaging will allow you to prudently build your retirement nest egg over time. Unfortunately, while this concept may be true when the market is expected to trend up over time, it is not true when the market is oscillating in a relatively flat manner, nor is it true if the market is trending down. Therefore, while it may make sense for you to buy more and more shares of an asset that is increasing in value, this philosophy does not make sense if you are buying an asset that is fully valued or one that is decreasing in value.
Sadly, you may have bought into the concept of dollar cost averaging because it was explained to you as a prudent investment methodology. Unfortunately, dollar cost averaging is simply a convenient solution to address the manner in which contributions have to be channeled from your employer to your investment funds in your 401(k) plan.
To explain, defined contribution plans, like your 401(k) plan, require periodic contributions to be made to your retirement account every time your employer processes a payroll on your behalf. Therefore, without a theory such as dollar cost averaging, the concept of funneling money on a periodic basis from your pay check to your investment options would not make sense, particularly given the fact that your investment options may be fully valued, or even worse, overvalued at the time the contributions are going being made. Fortunately, you can take control of your investment process by directing all of your retirement plan contributions into a conservative investment option that is offered in your retirement plan. Then, when the time is right, you can make a strategic investment allocation of the cash that you have accumulated to one or more of the funds offered in your 401(k) plan. Of course, you will have to be able to determine when your investment options look attractive from an investment standpoint. Nevertheless, you should expect this type of responsibility if you participate in a defined contribution plan.
2. Long Investment Time Horizons Have Negative Investment Implications
You have also probably been told that your employer established a 401(k) plan on your behalf in order to provide you with a long-term savings plan for retirement. Given this premise, you were most likely led to believe that you should develop a long-term strategic asset allocation based on a time horizon that is likely to exceed a decade. Unfortunately, what you may not have been told is that it is highly unlikely that the portfolio managers that are currently managing your investment options will be managing them 10 or more years from now. Therefore, if you are going to develop a strategic allocation with a long-term focus in mind, you probably need to be using index funds in order to mitigate the likely mismatch between the shorter-term tenure of your fund managers and your longer-term investment holding period.
Read more on the 6 Problems with your 401K.
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How to Secure Your Financial Future While 401K's Are Diminishing
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You will want to look into setting aside tax free money. But more importantly, after chatting with the super rich at elegant little dinner parties. You will be surprised how the super rich are leveraging their life policies to pay their family month after month.
During this unique economic situation we are in. Their is a large wealth transfer happening. Right now setting aside a little in your life insurance policy allows you to leverage this as your own bank. This is called "infinite banking" and has been used by the rich for years.
This allows you to lend money from your life policy. Yet, still get paid month after month. Not only that, you will also pay back the interest, not to your bank. But you pay the interest back to yourself. Your life policy receives the capital back and you earn more for retirement.
Learn more about these methods.
Action Steps:
1. Learn how the super rich use life insurance to pay themselves monthly
2. Share this important information with friends and family
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