How To Find a Good Place for Money
That is the money question isn’t it? Figuring out where and how can be like an artist trying to start with a blank canvas. You can go anywhere and that can get you stuck in nowhere.
A trick artists or filmmakers use is to employ parameters or restrictions on themselves and this generates the need for creativity…and voila! the latest masterpiece is born! It also helps to have a theme or goal.
So, to start on the answer to how to find a good way to grow money, you need to determine two things:
- What are your goals for life in the future?
- What are your goals for life now?
The future depends on what we do today. In fact, much of your future has been determined by things you did yesterday and before. Financial growth is clearly driven by this same principle.
Assets grow over time, so what you initiated yesterday will be worth more tomorrow. The later you start, the slower you will reach long-term goals.
You may choose to save a chunk of your paycheck every payday and live on less now so that you will have more to live on tomorrow. Some choose to spend it all now since the hole in their pocket is burning up. Your goals for now and the future depend on each other. And, more importantly, if defined, they can help you identify what you need to grow money in.
|QUESTIONS TO ASK YOURSELF—|
|• Do I have the recommended $500,000 (each spouse) to retire on?|
|• How long do I still have on my mortgage?|
|• When do I want to retire?|
|• Can I live on less right now?|
|• How sensitive am I to risk?|
|• Can I depend on my financial assets to grow?|
We aren’t going over all these questions in this blog. You need to reflect on questions like these.
Let’s look at the answer to “how to find a good place for my money” in terms of three things:
You want these three things to be in any decision you make. Unless you are growing money for fun and have a lot of disposable income that you don’t mind losing, think carefully about vehicles that don’t hit all three of the above items.
Think about going to a casino. Every game in that building is rigged to give the House odds. You play long enough, they will always win. Why? Because the games are not stable, predictable or scalable. A lot is just chance. If you invest the same way, you will lose over time. Why? Because the House always wins. The “House” is made up of Wall Street, the IRS, and the Federal Reserve (and don’t forget a dash of US Government).
What About Qualified Retirement Plans?
Let’s use a 401(k) as an example to see the larger picture.
Many participate in this retirement vehicle. Many are even living off of one right now. There is no question that 401(k)s do provide income for your future. But, do you fully understand what kind of fire you are playing with?
In regards to the tax product itself, ask: Who created the rules for me to set up a 401(k) tax-deferred retirement account? Wasn’t it the IRS? Have they ever changed the rules, making the situation, shall we say, more difficult? Will they do it again before I retire?
Regarding my 401(k) growth: who dictates what my interest and gains will be in the market? Are those gains/losses consistent?
The ugly truth about 401(k)s is that they are not in any way stable. The growth consistently comes from what you and your employer contribute. Compound growth does occur but it is certainly not stable or predictable like your contributions are.
To illustrate the lack of predictability, here is a story from a close family member. He lost 25% of his 401(k) in the crash of 2008 and it took him 12 years to get back to where he was in 2008. If you can’t depend on the compound growth, you really aren’t standing on solid ground are you?
Another part of the problem is that your company’s custodian is in charge of the 401(k) investing. Custodians of retirement accounts deal with hundreds, if not more, clients and companies. How your account performs is a lot less relevant to them then the overall arch of profit and success of all the investments combined. And there is much they are not in control of and is out of their hands. And the kick in the teeth is that you will still be charged fees whether you gain or lose.
Now, what if you were in direct charge of your own IRA? Obviously, you would be more interested in the outcome of your own personal financial decisions than a stranger would be. The problem is that many people just ‘set it and forget it’ with their company’s custodian. Even though that is a very easy solution, it could cost you.
401(k)s are also not scalable. While your money is growing over time, there are government-enforced limits to how much you can contribute each year. Even if you had a really good investment thing going, you’re locked in to only gaining so much, even in a good bull market.
401(k)s Only Work In Theory
Consider taxes. Sure, the theory behind deferring the tax is to push it out to your golden years when you are in a lower tax bracket. But let’s say you have 30 years left before you retire. In 30 years, do you think the government will lower taxes, keep them the same, or raise them?
Chances are that you will be taxed more in 30 years on your qualified retirement funds then if you paid them now. Even if you are in a lower tax bracket because of age, what if you do really, really well with your retirement funds? If you end up with a lot of money, you will still be in a higher tax bracket.
Will the value of the dollar be more in the future? Not at all. The dollar consistently deflates—meaning it takes more and more of them to buy something. What this means is that the money you save up will have less buying power than it does today, dollar for dollar, due to inflation of goods and deflation of dollar value. This is a hidden tax on your money.
Let’s recap on the problem with traditional investing in qualified retirement plans like 401(k)s:
- Taxes will always be higher in the future
- Your amount saved will grow and will be further taxed in the future
- When you do eventually withdraw from your funds, your dollars will be weaker in buying power
Does this type of investment sound like a good idea to you? Yet, 401(k)s are THE most common way for people to save for retirement. Reviewing what we’ve discussed here, do you think that 401(k)s and the other types of traditional IRAs are an answer to “how to find a good place for your money”?
What if you could do better?
Finding A Good Place
How do you find a needle in a haystack? You simply burn the haystack. Only the metal needle will remain.
Figuring out what we don’t want in a financial growth vehicle will help us to eliminate the undesirable ones and be left with only the best ones.
- We don’t want limitations on how much we can add.
- We don’t want volatility due to wild swings of value up and down.
- We don’t want to be too heavily taxed.
- We don’t want our principal to be controlled by people who don’t have our best interests in mind.
- We don’t want a lot of fees associated with our strategy.
- We don’t want our money tied up until we’re 65.
Based on what we’ve encountered at Position Yourself Wealth Strategies, there are at least 3 vehicles that hit most of these parameters. Properly executed, the right vehicles can provide for your future and generate wealth for you to use now.
- Private Lending Opportunities
- Real Estate
- Personal Banking
Private Lending Opportunities
Private lending is the opposite of commercial lending. It is an alternative type. Put simply, you lend money to a borrower and they pay you a predetermined amount of interest on a regular basis. It’s substantially higher interest without a middleman, like a bank, involved.
Did you know that it’s possible for your rates of return to start in the double digits? We can provide you with education on private lending opportunities with these kinds of returns. These can be useful vehicles for cash savings or even qualified retirement funds, for some. You can take control of your money, your retirement and your future.
The rates and gains are stable, predictable, and there is no limit to how much you can scale up your growth.
Contact us to learn more about private lending or asset growth vehicles for your circumstances. You won’t regret learning about this!
Acquiring property can also be very lucrative. It is generally stable and grows in value over time. Based on what you charge in rent fees, you can project what you will make over time. Real estate can have tax advantages as well. There is also no limit, other than finances, to how much real estate you can acquire.
But more than this, if you structure your finances with HELOCs, you may just be able to leverage your equity from one property to another, increasing savings and lending power. Reach out to us to learn more on this strategy.
Personal banking is a concept where you use a properly structured whole life policy to act as a “bank” for yourself. In a short time, after cash values have accrued, you can borrow against the policy and then pay yourself back at your own pace. This has several advantages.
- Your cash value continues to compound in growth from yearly interest and dividends, even when you have a loan out against your policy
- You are not taxed on the policy growth unless you sell the policy or it lapses
- You have a death benefit that will pay off any outstanding loans with money left over for beneficiaries
- You have flexibility in repaying a loan. Since the loan is secured by your death benefit and the insurance company is charging you interest, it’s up to you how and when that loan is repaid
There is much more to discuss regarding these three types of strategies. These strategies can be used on their own or in combination with each other. This is how you take individual compounding assets and further compound them together as one whole networked-strategy for wealth.
Give us a call, set up a consult on our calendar, or send us an email. There is never a fee to work with us. We want to educate you so you can determine the best strategy for your circumstances and for your life!
We hope this article helps you on the road to answer the question on how to find a good place for your money.