Yet another report from yet another financial advisory outfit shrieks that many Americans are setting themselves up for ruinous financial futures by skimping on retirement saving. But there’s more to the story.
The report, out from GOBankingRates, reveals that one in three American earners have failed to put a single penny aside to cover their retirement expenses. And about half of the 1,500 people the financial company interviewed have invested less than $10,000 in their retirement futures.
Speaking to a CBS affiliate in Los Angeles, Karen Sarten of Beacon Pointe Advisors said this isn’t extremely surprising news.
“In your mid-30s, early 40s, late 40s, life is expensive,” said Sarten. “Marriage is expensive. Kids are expensive. And so, generally what we see is people tend to boost their retirement savings in their late 50s and early 60s and that’s OK.”
And sure, it’s a good for the financial services industry if desperate Americans begin sinking large sums in conventional retirement products later in life. For investors, however, the best returns and least costly investments can be found outside run-of-the-mill retirement products.
Why? Because Wall Street is encouraging investors to sink huge amounts of money into fees and other hidden expenses associated with traditional retirement accounts.
According to a recent breakdown by Forbes, the true cost of owning a conventional mutual fund averages an incredible 3.17 percent of investment on non-taxable accounts like an IRAs and 4.17 percent of investment on taxable savings accounts.
That’s because of costs that most mainstream financial advisors never factor in to the tiny .09 percent of investment they claim will be deducted from your wealth each year to cover costs.
Forbes explains the hidden fees that add up quickly include things such as:
Transaction costs: [T]ransaction costs can add substantially to the overall expense of an investor’s mutual fund. In addition to being substantial, these costs are nearly impossible to accurately quantify…
Tax costs: [E]ven if the investor did not benefit from the stocks’ gains, this investor will share proportionately in taxes due from the sale of these appreciated stocks when the mutual fund manager makes a change…
Cash drag: Cash is frequently held by mutual fund managers to maintain liquidity for potential transactions and potential redemptions by mutual fund owners. This may stifle the performance of a mutual fund if stocks increase in value greater than the cash held…
Soft dollar cost: Frequently, mutual fund managers may direct the money being managed to brokerage companies providing them with research and/or other services, even if the brokerage companies are not providing the most cost efficient brokerage commissions involved with buying and selling stocks…
Advisory fees: Many fee-based advisors will manage an investor’s portfolio for an annual fee commonly ranging from .25% to 2.50% of the portfolio’s balance…
In total, you can expect to spend at least $3,000 each year for every $100,000 you save for retirement, without ever realizing how much money you actually stand to lose.
Consider, for example, a nest egg of $261,400, managed by a financial “expert” for 20 years of retirement. The hidden fees quickly snowball to $124, 152.48.
Factor in the compound interest lost on all that fee money and the picture looks much worse.
For savvy investors who don’t want to be shaken down by financial middlemen, there’s a better option.
First, you must develop the confidence to manage your financial future on your own. That’s a big hurdle for many people looking at retirement investment options—but it makes a lot of sense if you think about it rationally.
After all, you’ve probably spent most of your adult life managing your cash inflow and outflow at the kitchen table, without a lot of help from financial fraudsters who make money sitting on yours.
The next step is to think about investing in the same way you think about buying generic label products at the supermarket.
The shiny and heavily-marketed financial products suggested to you by financial middlemen seem lucrative— and often are pushed as your only secure investment options— because Wall Street spends tons of money marketing them to you.
Meanwhile, the guys making money on Wall Street wouldn’t touch the products they push. That’s why they need you to buy them.
Just like there are generic options at the supermarket—often of superior quality than their name-brand counterparts— being sold at a lower cost because they don’t pay for marketing, there are tons of lucrative investment options you’ve never heard about.
You just have to know where to look for them.
What you’re looking for are individual stocks that pay owners as though they are partners in business. These are called dividend paying stocks.
And you shouldn’t have to look far. After all, about 84 percent of the major players on the S&P 500 stock index pay dividends today.
But it isn’t just about locating dividend payers. You then need to narrow that list to stocks that are both safe and high yielding.
Sounds like an oxymoron for investing, doesn’t it? Safe, high return stocks…
But, believe it or not, they’re out there. And there’s a whole industry built around identifying them and helping contrarian investors get their hands on these investment vehicles.
You don’t hear much about these stock market players because of what I was talking about earlier regarding generic goods. The analysts locating these stocks aren’t interested in becoming part of the Wall Street problem and, therefore, aren’t spending tons of money marketing their products and services to un-savvy investors to make a buck at the expense of another person’s financial future.
Instead, these advisors wait for savvy investors to come to them and stay in business by offering investment suggestions that, when played correctly, provide handsome returns. That way, customers keep coming back for more and there’s no need for a million dollar marketing campaign or an ongoing fee structure.
Editor’s Note: If you don’t want to lose an average of 3.17 percent or more a year in “hidden fees” investing in conventional mutual funds, take control of your financial future with these Safe Harbor Income-Builders: Stocks that Will Pay You in this Increasingly Volatile World.
Review these reports, see the stocks, and review an in-depth analysis provided for each. If you are not absolutely delighted with the opportunities, just return the reports for a complete 100 percent refund any time — no questions asked.
The post The retirement crisis is a Wall Street construct appeared first on Personal Liberty®.
from PropagandaGuard https://propagandaguard.wordpress.com/2016/03/22/the-retirement-crisis-is-a-wall-street-construct/
from WordPress https://toddmsiebert.wordpress.com/2016/03/22/the-retirement-crisis-is-a-wall-street-construct/
No comments:
Post a Comment