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Investing for Retirement
Feb. 8th, 2006 06:24 pmToday I went to a seminar on retirement money distribution. I went because mostly you hear about how to add money to your retirement savings, but not how to take it out.
Just knowing half the story is not good enough. For example, I knew how to buy insurance, but I had to learn the hard way that I never want to make a claim except to prevent bankruptcy. Actually, I didn't learn the hard way. I made a small claim on my house insurance, and my premium went up for a while. The hard way to learn this would have been to make a claim for mold. Then your insurance gets canceled and you can never sell your house.
So I went to the seminar, but I didn't learning anything. The guy could never answer any questions. He wasn't an expert on our pension. He wasn't an accountant. He wasn't a lawyer. He wasn't a banker. I knew more about pulling money out than he did. No, you don't pay a 10% penalty on pension money if you retire early. Yes, you can take money out of your IRA early with no penalty if you retire early so long as you a) take out no more than you put in or b) take out substantial and equal regular amounts.
However, I did learn something from the book I was reading on the way over there, Rich Dad's Prophecy by Robert T. Kiyosaki with Sharon L. Lechter, C.P.A. (I'm not sure I would recommend the book as a whole. I suspect they could have made their points in a publication the size of a magazine article, but I'm still only on page 121.)
The author claims that the poor, middle class, and rich invest for retirement in different ways. The poor invest in a large family (so they'll have someone to take care of them when they're old) and government support programs. The middle class invests in a good education, high-paying job, profession, home, savings, retirement plan, mutual funds, and small real estate investments. The rich invest in a good financial education, building a business, large real estate investments, private equity funds, hedge funds, a personal money manager, private placements, and limited partnerships.
Interesting. The author goes on to say that actually, each class also invests in all the same things the lower classes invest in. For example, the rich also invest in their family so they can have emotional support and they invest in government support programs so there won't be "beggars in the streets and burglars in the homes of the rich." (He doesn't mention such government programs as financial aid for students.)
This is one of those authors who thinks everyone could be rich, even though he seems to understand math. So he recommends we all invest in all of the above. He has a point--most rich people get their money from running businesses, not from having jobs, for example.
I think it's also true, though, that we can only invest in as much as we have money for. First you start with feeding your family. Later you can move into the large real estate holdings.
I once had a friend who wanted to talk to me about "investments" by which he meant systems for buying stocks. However, I kept putting him off because I wasn't ready for that yet. One could make a case that putting an extra $50/month into the right stocks would have been wiser than putting it toward student loans, especially since it was the early 1990's at the time. So, maybe I'll learn something I can use from this book. Currently I'm not convinced that I want any of those rich people's investments beyond the good financial education, although I admit I don't even know what some of them are.
Just knowing half the story is not good enough. For example, I knew how to buy insurance, but I had to learn the hard way that I never want to make a claim except to prevent bankruptcy. Actually, I didn't learn the hard way. I made a small claim on my house insurance, and my premium went up for a while. The hard way to learn this would have been to make a claim for mold. Then your insurance gets canceled and you can never sell your house.
So I went to the seminar, but I didn't learning anything. The guy could never answer any questions. He wasn't an expert on our pension. He wasn't an accountant. He wasn't a lawyer. He wasn't a banker. I knew more about pulling money out than he did. No, you don't pay a 10% penalty on pension money if you retire early. Yes, you can take money out of your IRA early with no penalty if you retire early so long as you a) take out no more than you put in or b) take out substantial and equal regular amounts.
However, I did learn something from the book I was reading on the way over there, Rich Dad's Prophecy by Robert T. Kiyosaki with Sharon L. Lechter, C.P.A. (I'm not sure I would recommend the book as a whole. I suspect they could have made their points in a publication the size of a magazine article, but I'm still only on page 121.)
The author claims that the poor, middle class, and rich invest for retirement in different ways. The poor invest in a large family (so they'll have someone to take care of them when they're old) and government support programs. The middle class invests in a good education, high-paying job, profession, home, savings, retirement plan, mutual funds, and small real estate investments. The rich invest in a good financial education, building a business, large real estate investments, private equity funds, hedge funds, a personal money manager, private placements, and limited partnerships.
Interesting. The author goes on to say that actually, each class also invests in all the same things the lower classes invest in. For example, the rich also invest in their family so they can have emotional support and they invest in government support programs so there won't be "beggars in the streets and burglars in the homes of the rich." (He doesn't mention such government programs as financial aid for students.)
This is one of those authors who thinks everyone could be rich, even though he seems to understand math. So he recommends we all invest in all of the above. He has a point--most rich people get their money from running businesses, not from having jobs, for example.
I think it's also true, though, that we can only invest in as much as we have money for. First you start with feeding your family. Later you can move into the large real estate holdings.
I once had a friend who wanted to talk to me about "investments" by which he meant systems for buying stocks. However, I kept putting him off because I wasn't ready for that yet. One could make a case that putting an extra $50/month into the right stocks would have been wiser than putting it toward student loans, especially since it was the early 1990's at the time. So, maybe I'll learn something I can use from this book. Currently I'm not convinced that I want any of those rich people's investments beyond the good financial education, although I admit I don't even know what some of them are.