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Old 08-28-2008, 02:13 PM
 
124 posts, read 234,017 times
Reputation: 46
Default I have no faith in retirement accounts, medicare, etc

Am I just paranoid, or is this a rational fear? I am 26 years old and just started work this year after graduating with a degree in nursing. Over and over again, I have seen people who gave their life to a company or government agency get screwed. I have seen them get their medical benefits taken away. I have seen retirement accounts bomb. Promises promises promises.

Of course, this doesn't happen to everyone, but I don't want to give it the chance to happen. It just makes me want to buy gold and put it under my pillow.

Is there a sure-fire way to get returns on accounts without betting the farm?
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Old 08-28-2008, 02:24 PM
 
3,557 posts, read 6,705,794 times
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Don't buy gold because it you'll get better returns in the long run with a savings account.

You can invest in bonds or CDs that have very little risk, though they don't pay much in interest. But they are steady earners.

Your best bet is to avoid going in to debt (especially consumer debt), pay cash for your cars, and to save 15% of your income toward retirement.
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Old 08-28-2008, 02:28 PM
 
Location: Los Angeles Area
3,306 posts, read 1,295,979 times
Reputation: 592
Quote:
Is there a sure-fire way to get returns on accounts without betting the farm?
Nothing is risk free, but there are a variety of options that are very low risk. You can create an IRA at a bank which will be insured by $250k from the FDIC (assuming the bank is a member). Of course its possible that you lose your money, but it would require a complete collapse of the federal government. You could but your retirement funds into a bond fund. If they are government bonds then it would require a complete collapse of the government in order for you to lose your money.

People that lose money in their retirement accounts are usually the people that didn't diversity correctly. Also, something I notice a lot is that older folks aren't moving into more low risk options as they age. The typical advice is to invest heavily in stocks when you are young as you have plenty of time to "ride out" the ups and downs but as you age to slowly move into bonds and other low risk investments. By the time you are ready to retire the vast majority of your funds should be in bonds or something similar. So when you hear of older people losing money its because they are still in the stock market hoping for a big return. If they were mostly in bonds they would be getting modest gains right now.
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Old 08-28-2008, 02:46 PM
 
1,884 posts, read 3,476,039 times
Reputation: 1106
Quote:
Originally Posted by mtb83201 View Post
Am I just paranoid, or is this a rational fear? I am 26 years old and just started work this year after graduating with a degree in nursing. Over and over again, I have seen people who gave their life to a company or government agency get screwed. I have seen them get their medical benefits taken away. I have seen retirement accounts bomb. Promises promises promises.

Of course, this doesn't happen to everyone, but I don't want to give it the chance to happen. It just makes me want to buy gold and put it under my pillow.

Is there a sure-fire way to get returns on accounts without betting the farm?
Yes, you are being paranoid and you are rambling. Name some companies that screw people of out their benefits and retirement accounts. There are thousand of companies, so I wouldn't be surprise if you can come with one or two, or even a few. If you work for a company, chances are you will be given medical benefits and a chance to participate in its 401k as part of your compensation package. You will be able to choose which type of investments and how much go into your 401k. You will also be able to change your investment selection as often as you wish. You need to be aware of risks associated with your chosen investments and stay alert for market correction/changes. The 401k is your money and your responsibility.

I am not a fan of 401K for reasons I had expressed here a long time ago. But that's something else entirely. The point is the responsibility has shifted from employer (no more traditional pension) to employees (401K). Thus, it's up to you take control your 401K investments.
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Old 08-28-2008, 03:12 PM
 
Location: Houston
19 posts, read 35,441 times
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Quote:
Originally Posted by davidt1 View Post
Yes, you are being paranoid and you are rambling. Name some companies that screw people of out their benefits and retirement accounts. There are thousand of companies, so I wouldn't be surprise if you can come with one or two, or even a few. If you work for a company, chances are you will be given medical benefits and a chance to participate in its 401k as part of your compensation package. You will be able to choose which type of investments and how much go into your 401k. You will also be able to change your investment selection as often as you wish. You need to be aware of risks associated with your chosen investments and stay alert for market correction/changes. The 401k is your money and your responsibility.

I am not a fan of 401K for reasons I had expressed here a long time ago. But that's something else entirely. The point is the responsibility has shifted from employer (no more traditional pension) to employees (401K). Thus, it's up to you take control your 401K investments.
mtb, Many companies who offer this 401k also match your contribution into this 401k dollar for dollar up to a certain percentage. This "match" is basically free money which at the end of the day could be seen as $$ to cover the tax bill on your contribution. So, if nothing else, you may want to at least look into participating in the 401k.
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Old 08-28-2008, 04:00 PM
 
Location: San Jose, CA
6,700 posts, read 16,225,483 times
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Quote:
Originally Posted by Humanoid View Post
Nothing is risk free, but there are a variety of options that are very low risk. You can create an IRA at a bank which will be insured by $250k from the FDIC (assuming the bank is a member). Of course its possible that you lose your money, but it would require a complete collapse of the federal government. You could but your retirement funds into a bond fund. If they are government bonds then it would require a complete collapse of the government in order for you to lose your money.
If your IRA funds are in securities, bonds or mutual funds, then you're insured by the SIPC up to $500K.
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Old 08-28-2008, 04:25 PM
 
Location: Los Angeles Area
3,306 posts, read 1,295,979 times
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Quote:
If your IRA funds are in securities, bonds or mutual funds, then you're insured by the SIPC up to $500K.
SIPC isn't like the FDIC, it isn't going to protect you from market loss, investment fraud and things of that nature. It just helps if your broker defaults.
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Old 08-28-2008, 07:11 PM
 
Location: Fredericksburg, Va
2,393 posts, read 6,659,149 times
Reputation: 1903
Since you have a fear of the normal means of retirement, you'd best start socking away a goodly amount of money to fund your own future! You need to invest in something to get a decent return. A savings account nowadays isn't going to cut it!
Diversify--put your money in several differently allocated mutual funds. There are alot of good "no-loads" out there that won't cost you alot!
But however you do it--save, save, save! Social Security probably won't be there for you when you're in your 60's, sorry to say! You're going to need to take charge of your own future! If it IS there--good for you--you'll have a few bucks extra!
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Old 08-29-2008, 08:46 AM
 
Location: Forests of Maine
21,524 posts, read 27,137,267 times
Reputation: 8600
Have you considered Income properties?

I have done well buying MFRs [Multi-Family-Residences]; like tri-plexes, quad-plexes, 5-plexes, 20-plexes.

Zero-money down. I only pay the closing costs and escrow. The rental income carries the mortgage, insurance, repairs, sewer, garbage pickup, and exterior lighting.

My tenants work for their salaries and they often pay around 50% - 60% of their salary as rent. Each month the bills are paid and we pay a small amount extra as a principle payment [usually like $200/month].

I was career military [enlisted] so you know that my salary was never very high.

We collected a few of these properties, in different states and in other nations. When I qualified for my military pension, I sold most of our properties and used the money to buy a farm.

We now live on a farm with no mortgage, with my pension income. We also still have one apartment building, that is growing equity once again.

I understand that you do not have a military pension to look toward. However do consider rental income as a possible investment vehicle for yourself.

Single-Family-Residences and Du-plexes simply do not work out. The math is rarely in your favour with anything less than 3 renters.

Also keep in mind that with rental property, they depreciate. There will exist 'paper-losses'. In IRS terms they lose money, and that loss is subtracted from your taxable income. This type of investment shelters your income from taxes.

You can stop paying income taxes, as your income can become fully tax-sheltered.

My income has been fully tax-sheltered since 1983 [during my working career].

Many people would realize as much as a 30% increase in their take-home paychecks if only they stopped paying income taxes.

Feel free to PM me if you have any questions.

Good luck and may God bless you.
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Old 08-29-2008, 09:39 AM
 
Location: The Great State of Texas, Finally!
5,224 posts, read 7,493,264 times
Reputation: 2191
Forest beekeeper,

so are you saying that a 4 plex would be the way to go on the rental investment property vice a single family residence or a duplex?
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