MyRA…
It sounds like it was scrawled on the back of a cocktail napkin moments before President Obama’s State of the Union Speech.
I mean, he couldn’t even say it properly… I think he pronounced it three different ways during the speech.
That didn’t stop him from calling it “a new way for working Americans to start their own retirement savings.”
“MyRA,” he said. “It’s a new savings bond that encourages folks to build a nest egg. MyRA guarantees a decent return with no risk of losing what you put in.”
He didn’t sound too convinced, and you shouldn’t be either.
The takeaway from Obama’s mannerisms and flubs is that a “new” government retirement program is about as foolproof as a government health care website.
If you want the government to manage your money, good luck ever retiring.
The only fail-safe way to a comfortable retirement is to educate yourself and make a few simple decisions about where you’d like your money to grow. It’s not as hard as the government bean counters or the financial investment cartel would have you believe.
Here’s a quick lesson in how to do it… and how NOT to.
MyRA: The Best Way to Never Retire
Have you ever heard the tired phrase, “The definition of insanity is doing the same thing over and over and expecting different results?”
Well, by that definition, the government is completely, institutionally, electro-shock-therapy grade insane…
Obama’s claim that a myRA guarantees a decent return with no risk of losing your money, is — how do I put this delicately? — batshit crazy. What he is really letting you do is buy up government debt for an absolutely dreadful return. I’d say myRA is nothing but a plot by the government to use your retirement money to pay for the $17 trillion in debt it racked up through its own carelessness.
Like Social Security, myRA won’t get you anywhere near the money you’d need to retire.
If we were being very generous and decided to take the President at his word, the myRA account would mirror the Thrift Savings Plan G Fund, which is currently provided to federal employees.
How much would you guess that kind of account yields? 10%? 15%?
Fat chance…
Last year, that fund averaged returns of 1.8%.
Even with inflation at record lows, that measly yield is the fiscal equivalent of bailing water from a beat-up lifeboat. Those are hideously bad returns, and that’s being polite…
The Federal Reserve has a 2% inflation target (and its easy money policies will indeed send this much higher). So in the best-case scenario, you’d be treading water. If inflation takes off at all, then you’d actually be losing money every year in the myRA.
Now, to be fair, that plan returned a whopping 3% over the past ten years. How did the S&P 500 do over that same period? 64.56%… and that includes a complete financial meltdown!
So are you rushing to sign up for your myRA? I didn’t think so…
Also keep in mind that there are no tax deductions for buying bonds through myRAs, so you’ll be buying these bonds with dollars that are already taxed. Uncle Sam gets his cut up front plus the use of your money for decades to come, while you lose control of your money to the government.
Simply put, the government cannot help you save enough to retire. If you need proof, just look at that ‘other’ government retirement program: Social Security.
Social Security Ain’t Gonna Cut It
By now, we all know that Social Security is a type of Ponzi scheme: the people that pay in last bankroll the first round of investors. Personally, as someone in his thirties — despite paying in every single year since I began working as a teenager — I have zero confidence that I’ll be able to use Social Security for my retirement…
And that isn’t cynicism or paranoia talking. Those are just the cold, hard facts.
Future taxes are going to fall far short of retirement payout. Even the chief actuary for the Social Security Administration has projected that the Social Security Trust Fund will be dried up by 2033 if no changes are made.
So we will probably see some “adjustments” to the Social Security system. What does that mean, exactly?
For one, they’ll raise the retirement age… so you’ll be pumping more of your money into the system AND working another year or two.
Second, they’ll cut those benefits by at least a quarter. Right now, you have to scrape by on an average of $1,269 a month. In the best-case scenario, those cuts will drop you to $951.75. Try living comfortably on under a grand…
If fact, just ask anyone living on Social Security alone if they are “living it up” in their golden years. They’ll tell you hell no — if they don’t just box your ears for asking such a silly question in the first place.
So now you know why trusting the government alone will not prepare you for any sort of cushy retirement. But what about the other “safe” retirement plan: a 401(k)?
While this is a better bet than relying solely on the government, this is still a misguided plan.
Why?
Broker fees.
Now, I’ll start by saying that 401(k)s aren’t the worst option. In fact, many people who really don’t want to do the work are perfectly happy throwing money into a pile and checking it every couple of years. No doubt, you can save a chunk of money by doing that.
But you’re also throwing a TON of money away in the process…
Did you know that over a lifetime, these fund fees cost the average American household $154,794?!
If you are a higher income earner, you could be bleeding up to $277,969. That’s almost one-third of your hard-earned savings.
All told, 401(k) fees eat up $25 billion of Americans’ savings each and every year…
There is an easy solution to this: make your own 401(k). Open a Roth IRA account, and you can choose the basket of stocks that completely mirrors the same plans that are charging you several percent a year. In fact, there are a slew of ETFs that completely ape the same exact stock picks that most mutual funds and 401(k)s use for a tiny fraction of the cost.
And it’s really easy to do — if you have the right research…
For example, I just banked an easy 20% gain on one of these ETFs in my Crow’s Nest service. In an IRA, we’d let it roll and collect those safe, easy gains for years and years to come. In fact, my portfolio is up over 20% for the year on airtight, safe stocks.
And it’s not just my portfolio that is banking over ten times what these government plans are hawking.
Our Like Minded People community is sitting on gains of up to 95% on its unique blend of land, food, and water stocks.
And that’s with no hidden fees and no fear of the government spending all the money in the pot.
It’s called self-empowered investing, and it’s much simpler than you’ve been led to believe. You don’t have to sit by a computer all day, checking your portfolio every few minutes. You don’t have to sit glued to the television, watching boring CNBC programs all day. These things actually make you a worse investor…
We abide by the “KISS” rule: Keep it simple, stupid.
Create a permanent portfolio of rock-solid growth stocks. Like I stated above, there is little mystery to 401(k)s. They all have the same basic allocations…
But if you have that solid foundation, you can afford a chance here and there. Sometimes you’ll hit a homerun and send your portfolio skyrocketing with one well-timed pick. It just happened this year with one of Nick Hodge’s Early Advantage picks… he sold it for 122%. Good luck banking a winner like that in a myRA or 401(k).
So please, if you haven’t already, let us do all of this work for you. We don’t charge you a percentage every year. We don’t just move stocks around to rack up fees. And we certainly don’t deliver 1.8% returns that will kill any chance you have of retiring with the dignity and freedom you deserve.
Treat yourself better than the government does, and join the Outsider Club in telling Obama and his myRA to take that 1.8% and stick it where the sun don’t shine…
