Thursday, August 6, 2009

Two Things You Have To Do

RetirementNestEggs Several months ago, back when the Dow Jones Industrial Average was at a decade low 6500, a friend of mine who is not a professional stock analyst or broker predicted the bottom of this recession in front of a group of 25 or so clients (bold move!). Turns out he might have been right, although I think it is still too soon to confirm or deny his prediction. But if you had dumped $10,000 into the Dow Jones Index that same day it would now be worth roughly $14250 or about a 42% increase in just 4 months. That’s something you can’t ignore.

Sure, I have been burned just as much as the rest of you in my retirement accounts over the last year and a half, so I understand the sick feeling that comes over you when you have to open your quarterly earnings/loss statement every 3 months.

I also completely understand bulking up the old emergency fund and paying down your unsecured debt – do it! But if you are young (younger than 45 or so) you have got to be taking advantage of the giant rebound in the market that we will inevitably experience over the next several months.  You cannot afford not to!

Friends, the current economic situation we are in is once in a lifetime.

Fortunes are made, missed and lost in environments just like this. If you are disciplined, use the right products and understand your personal risk tolerance, the choices and investments you make could be game changers for your financial future. Your savings pilgrimage will be a lot easier with the initial boost of a 50% return right out of the gate. Talk about a motivation energizer!

There are 2 things you must be doing no matter what your situation is.

First things first, if your company offers a 401(k) with any sort of match, you have to do whatever it takes to get the full match. Scrape every penny together and tighten your belt to take advantage of the guaranteed return. You will not find a guarantee like this anywhere in the market!

Second, the Roth IRA is the greatest gift the government has ever given to savers! There are some income limitations to take advantage of this program. A single individual with an adjusted gross income (AGI) of more than $95,000 is prohibited to contribute funds into a Roth IRA account. For a couple, the AGI is $150,000, and these limitations change on a annual basis.

If you qualify for a Roth IRA you have to have one! No Excuses!

When you reach retirement the distributions from a Roth IRA are tax free because you contribute with after tax dollars. I don’t know about you, but I am pretty sure than in 30 years taxes are going to be higher than they are today. If you do not understand why this is an amazing deal PLEASE CALL ME RIGHT NOW!

The reason I am so adamant and enthusiastic about these two things is because of this…lottery

In a recent survey, 40%…. 40% of respondents said that their best chance to gain $500,000 in their lifetime is via a sweepstakes or lottery win.


Apparently 40% of people have never heard the good news about the power of compound interest. I have got a lot of work to do.

Please do not be one of these people. $500,000 is easily attainable if you simply do two things, get the match in your 401(k) and contribute systematically to a Roth IRA.


  1. Very informative piece, nice work. Do you prescribe to the idea of using a Roth when you are not at your highest tax bracket, and then switching to a Traditional IRA when you reach your peak?

  2. Great question Clark. Odds are that when you have reached your peak income tax bracket you will no longer be able to contribute to a Roth due to income restrictions. You would then be forced to contribute to a different qualified plan such as a traditional IRA. There is new legislation out there that allows rollovers to a Roth from traditional IRA's regardless of income, which is pretty cool and allows for some specific planning around the tax implecations of a rollover.

  3. I don't know how I missed this post on August 6th, but I'm glad I went back and caught it. Very good information. Yes, even for folks of modest incomes 1/2 million dollar nest egg is attainable. Long live the Roth IRA!