Wednesday, October 12, 2016

Newsmax: Go into overdrive on 401k contributions...

Newsmax, a supposedly conservative outfit, highlighted the advice of a money manager recently: "If you’re maxing out the 401(k), if you’re putting in the full $18,000 a year, or if you’re age 50 or older, you’re putting in $24,000 a year, and you’re in a high tax bracket, you could be making 30 percent or more just in tax benefits... So even if the stock market doesn’t go up a single penny, it’s worth stuffing every single dime you can into your 401(k) plan just to get the tax benefit, of nothing else”.

This is conventional wisdom.  Of course, the audience here is not that big because only 7-10% of the current work force makes enough money over their daily needs to have an excess $18-$24k to put into their 401k.  But regardless, the call goes out to these people to take as much as their current income as possible and give it to Wall St for safekeeping.

Even though it is trading at an all time high and considered by many like Schiller to be at a historically significant level of overvaluation.

Cough Cough.

Look friend.  I don't know most of you and I never will.  But you are reading my blog for a reason.  You will do with your money what you want to do and none of that will affect me one little bit.  I'm not asking you for anything here.  I don't even put up ads.  If people want to use my trading service then I use this blog as a platform to share the occasional chart but for the most part this blog is simply common sense and truth as I see it.

So to reiterate my view on the common sense of storing your current wealth with Wall St in hopes of getting something for nothing in your retirement years I have one word: DON'T.  You do need to save for retirement but Wall St is not a savings institution. Its a gambling institution.  Sure, it's got a nice facade and the man at the door wears a nice suit and drives a nice car but that in no way detracts from the truth about Wall St.  If you store the buying power earned by your current labor there, it will not be there for you in retirement.

Wall st is highly tied to the US government.  Both are indebted up to their eyeballs in what is essentially leverage.  If one goes down they both go down.  All the gains of the stock market are not real gains because they are pumped up using unsustainable debt.  When those loans are called in, the prices of what now pass for "assets" - most of which are nothing more than promises written on paper - will collapse and never recover.  In other words, it is a debt Ponzi of historic magnitude.

So if you want to gamble with your retirement then go ahead and give your money to The Wolf.  But if you want to save for retirement in a way that is foolproof and cannot go bankrupt, buy gold and silver bullion coins instead of giving money to wall st.  Store them in your own hands.  Remove every con man and con game from between you and your retirement savings. You will find that the tax advantage you enjoy by sending pretax money to The Wolf is completely offset to the downside when the whole thing implodes under its own corrupt weight.  But those who hold gold and silver coins will not implode.  They will have buying power when everyone else is holding an empty paper bag.  And let's not even get into the taxation on capital gains.  I don't want to be seen as promoting tax evasion but I have a strong suspicion that many who have dollar gains on their gold and silver coins will not be paying capital gains tax on them when the coins are sold.  Yes the government would love to collect on this but unless you sell through a broker the laws are unenforceable. I'm not suggesting anyone do anything here, I am just stating the obvious truth of the matter.

Now there is nothing wrong with gambling if you know that this is what you are doing!  But most people are so economically ignorant that they listen to the melody of the Pied Piper of Wall St and they go into a mindless hypnotic trance and sign up for the payroll deductions.  They push the easy button so to speak.  Worse yet, this is being done mainly by people who don't even own their home yet.  They call themselves homeowners but in fact they are home debtors.  The bank owns their home and they make a monthly payment on the debt.  I'm here to tell you that, economically speaking, if you don't hold the title to your home then you have no real savings until your savings account exceeds the value of your debt.  Equity=cash-debt!

So by far the most conservative thing you can do is pay off your home before saving for retirement.  I'll say it again: buy a modest home and pay it off before bothering to save for retirement.  Have some cash set aside for emergencies of course (that is not your retirement savings!) but don't bother saving for retirement until you are debt free even if your plan is to be like me and hold 100% of your retirement savings in gold and silver coins.

I've even taken it one step further.  I bought my own power generation station (solar panels) to cover all of my electrical needs.  That is paid for.  It is one of the most conservative things you can do IMO.  Paying off future consumption in cash today where there is nobody between you and your asset is the exact opposite of debt based consumption.  The next step will be to expand my solar installation in order to provide for all the needs of the electric car I will buy.  It has nothing whatsoever to do with being "green" and everything to do with removing yet another variable monthly cost from my ongoing consumption.  Reducing the cash burn rate of daily consumption means you don't need as much cash during retirement without affecting your lifestyle. 

These are the real conservative viewpoints but very few are saying them because these ideas don't benefit wall street.

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