Preface to the Reader
Have you ever found yourself in the middle of a stock market crash with your portfolio down 30%, 40% or more and realized with a start that you were working with a financial planner?
Or found yourself at the end of a stock market crash with far less of your nest egg than you started with and felt stunned, depressed, even angry and wondering how this could possibly have happened under the guidance of a licensed advisor?
Isn't the very idea of retaining an advisor NOT to have this type of thing happen?
Seriously, when you travel on an airplane, do you expect the plane to crash and the pilot to do nothing?
I've Been At This Investing Game For Many Years Now...
..., doing my best to educate investors about the need for a scientific approach to wealth creation, and I don't have enough fingers to count the times I've heard the same story repeated: of hard working folks who saw big chunks blown out of their life savings during market crashes while working with a licensed financial planner.
My feelings about this today remain what they were after the crashes of 1987, 2000 and 2008: righteous anger over the carnage of wrecked portfolios and dashed dreams that the financial planning industry so often inflicts on millions of hard-working Americans and their families.
And so I wrote the following piece because it needed to be written. Depending on your point of view -- or your profession -- it could cause you to sever all future contact with me, or nod your head in vigorous agreement. Let's have at it.
Now You See It...
Each time the stock market crashes, trillions of dollars in retirement portfolios disappears as Americans who thought they were going to retire take to passing out shopping carts at WalMart.
And the licensed planners who dispensed this advice (for a fee) that led to these train wrecks? They are never chastised, they suffer no economic loss themselves, they get to keep their licenses and life goes on.
And why is this so? Because the licenses they hold largely immunize them from claims of incompetence or malpractice. As long as the best practices of the planning industry are adhered to, even when their clients lose their shirts, the advisor is still good to go.
...Now You Don't
And the investors who trusted their advisors to help grow their money? Left along the side of the road (might I say, Wall Street road kill?) and handed the usual collection of lame excuses.
"No one could see this coming." (Really?)
"Don't worry, this is America and the market always comes back." (Sure, if you want to wait 10-20 years)
"I know we're all hurting. But I've got my own money in the same investments I put you in." (And your point is...?)
This Really Ticks Me Off!
Why? Because it's both 100% unnecessary and 100% avoidable. And so I felt compelled to write this article today.
As Woody Allen once quipped, "I don't get angry. I just grow a tumor." Since I don't wish to grow a tumor, writing a piece like the following proves highly cathartic for me and I thank you again for your indulgence.
When the market crashes again (and it will one day, regardless of how high it goes from here... that's because cycles always reverse) if just a single reader avoids having their life savings erased, writing this will have been worth the effort. And so I give you...
How I Became a Financial 'Unplanner' (The Advisor Unplugged)
I didn't grow up wanting to be a financial unplanner. This isn't what 10-year-old boys raised in the hardy, post-WWII era depicted by Norman Rockwell typically envisioned for their futures.
A cowboy? Yeah!
A doctor? Maybe.
But a financial unplanner?
And yet today, nearly six decades later, my tagline reads: Gordon Philips, wealth coach, financial unplanner, retirement repairman. Sounds cheeky, I know. But it's really not much different from home schoolers calling themselves "unschooled."
SIDEBAR: Given how consistently the educated-at-home beat the pants off of their government schooled peers in geography and spelling bees, you have to admit that this "unschooling" thing has a lot going for it.
Since the wealth coaching services I perform to assist would-be retirees set a scientific course to reliable retirement are little understood (which is understandable since I may be the nation's only financial unplanner), I thought I would write an article explaining my career metamorphosis, while dissecting the financial planning industry along the way.
Would you ever expect to see a sign like this in the business section of town?
Come On In And I'll Unplan Your Retirement!
It would suggest that financial unplanning is somehow to be contrasted with conventional financial planning. Perhaps, borrowing a musical concept: the planner... unplugged?
Gordon, the Early Years
Let me begin with some brief personal history, then we'll jump right into this financial unplanning thing and compare it to the conventional planning process which, for the squeamish, may be best avoided right after eating.
In my senior year in college while enrolled in pre-med, I took differential calculus and got pretty good grades. I am one of those very odd people who actually enjoys math. Then Vietnam ended, LBJ resigned the presidency and I quickly changed majors: to the electric bass guitar.
Years later while making a splendid living as a society bandleader in Boston, working mostly nights and with little to do during the day, I began reading and learning everything I could get my hands on about growing money.
I started out investing the way my parents and their friends were doing, only to discover, with no disrespect intended, that my parents and their friends had no idea what they were doing. They were following the herd, and at least once a generation the herd runs off the cliff.
So I decided to take a scientific, which is to say mathematical approach to investing instead, and that did the trick. Here is what I discovered.
If you are correct in your price directional observations significantly more often than you are incorrect, and if your average win is significantly greater than your average loss, when these two factors are multiplied together you create what is called a mathematical expectation of profit, known as positive expectancy.
The formula looks like this.
P.E. = [(% win * avg. win) - (% loss * avg. loss)]
Surprisingly, while I fully expected that differential calculus would be required to track such esoteric factors as rate of change in ROI over time, I quickly realized that the only math required to invest successfully had been taught to me back in the 7th grade.
Fun With Forex
I continued investing merrily along, having fun learning about options and ETFs, and then one day a friend said, "Have you heard about Forex?" Thinking perhaps that it was some new brand of breakfast cereal, I said I had not.
My friend showed me how to trade the international foreign exchange from my home computer and I fell in love. Where the stock market was a modest puddle of equities, the Forex was a vast ocean of liquid money sloshing around the world and inviting me to come take a dip.
Soon I was teaching Forex trading to people of all ages and descriptions from all over the world.
Along the way I would befriend students whose retirement train had been derailed by financial planning and would explain to them how to get their retirement back on track and chugging along again.
This led me to study:
* Asset protection
* Portfolio hedging
* Portfolio rebalancing
* Inflation management
* Legacy wealth planning
* Scientific wealth creation
... and many other aspects of planning one's finances.
Since risk management is Job #1 when trading currency, teaching investors how to manage risk in their retirement portfolios was, quite naturally, Step #1.
Which is when I noticed a funny thing. People who had experienced the work output of licensed financial planners had typically been investing with no risk protection in place whatsoever.
I Mean, Seriously, None. Goose Egg. Zero.
I couldn't believe this. I was flabbergasted. It would be like airline pilots flying without landing gear or tight rope walkers working without nets.
Who on God's green Earth would put their life savings into the stock market via mutual funds, 401(k)'s, IRA's, etc., with no downside risk protection in place whatsoever, then sit back and hope for the best?
That's when I realized: pretty much everyone!
But how could this be? Most of the people I knew were intelligent, street smart and extremely well educated. Some had even been to college.
SIDEBAR: Risk management is the step that most financial planners skip entirely. If you currently find yourself being financially planned, be sure to ask your advisor the following questions:
Q1: Do you have equity trailing stops in place underneath my open long positions?
Q2: By what percentage draw down will you allow my portfolio to sink before taking corrective action to hedge losses?
Note: If either question is answered with a bewildered stare, find another planner asap ... or call me!
Hit By A Bus
In recent years I have consulted with numerous individuals who had seen their portfolios crash in 1987, 2000 or 2008.
I would ask: "What happened? Did you get hit by a bus?"
"No," came the answer. "We were financially planned."
Of course, this wasn't what these folks expected when they delegated their sacred duty to protect and grow their life savings to a presumed expert.
So why, one must ask, is it the case that millions upon millions of would-be retirees hand their retirement portfolios over to advisors to be financially planned, only to experience market crashes... and then find themselves in the same tenuous situation as the last Titanic survivors to make it the lifeboats who, upon watching the ship sink before their eyes, realized that the time to have started running was when the band struck up "Nearer My God To Thee"?
A Funny Thing Happened On The Way To Retiring
Over time I found myself spending considerable amounts of time helping people get their financial lives back on track.
Some volunteered to compensate me for my time. And that's when I found myself in an airport one day reading an article about the consulting boom: how corporate types were abandoning the boardroom so they could stay home in their jeans and get paid big bucks to consult to the very companies they had just quit.
And that's when it hit me. I hadn't grown up to be a cowboy or a doctor. I had grown up to be a consultant.
A Financial Unplanner Is Born
And here I am today. Thoroughly unlicensed in all 50 states to give financial advice (I never do) or to otherwise manage anyone's money (ditto).
Thankfully, I lack every known license or certification except what is actually required: the knowledge to really do it!
This independence leaves me free to remain a contrarian thinker, unfettered by the best practices of the financial planning industry.
So what is it that I actually do? I educate. I coach. Sometimes I even nag (investors left in a state of dumbfounded paralysis by the loss of their life savings occasionally require prodding)
But I remain undeterred in my mission to help these folks scientifically rebuild their portfolios. My motto: "No investor left behind."
The Financial Planner, Disrobed
CAUTION TO THE READER: Those of you who have ever known a financial planner; whose friend, relative or neighbor is a financial planner, or who have ever seen a financial planner, naked or fully clothed, may want to avert your eyes. This won't be pretty.
I will now reveal some misunderstandings about the financial planner. Not all planners, of course. I'm sure there are some good ones out there. If you know of one, please get in touch. I'm starting a list and still have plenty of room to write.
Let's begin by comparing the work output of a trusted service professional in the community like a home builder to that of another trusted community professional: the traditional financial planner who, ostensibly, is planning a clear path for his clients right through the latest market crash and safely out the other side.
If I showed you a house built with a cracked foundation, crooked walls, tilted floors and sagging ceilings you'd say, "Wow, what a lousy builder" or "Who the heck designed this thing?"
Of course, our own life experience with local builders shows quite the opposite to be true. Their work is typically excellent.
But this is no surprise. I consult regularly with small business owners, every one of whom became successful the hard way: by knowing what they were doing and doing it well.
Do the home builders in your community require a degree in order to build beautiful homes? No.
Do they need to be licensed by the state or federal government to make sure that the walls, floors and ceilings are all straight? Nope.
Do they need a college degree to know that you can't build a house without first putting in the foundation; that a house built hovering in thin air might fall down? Not hardly. So what do they need? They need to know what they're actually doing!
Through the Eyes of the Planner
All financial and medical professionals in every community in the land seek to build up what is called a "book of business."
Take my uncle the dentist for example. He built up a practice over a 30-year period until he had hundreds of families in the area coming to him, then retired by selling his practice to a younger dentist whom he brought in as a partner, while gradually phasing himself out.
Now let's switch gears to the financial planner. What's his job? "Same difference." To build up a book of business by attracting a sufficient number of families in the community who hand over the management of their life savings to him.
Each time the market crashes, there will be many clients who stick with the planner regardless, simply because they don't know what else to do.
Some clients will quit and the planner will have to ramp up his marketing to build his book of business back up, including younger families who have no prior experience.
My point being that, no matter how poorly the planner performs, many clients will just write off a poor experience as the best that could have been done under the circumstances. Balderdash!
Now -- and this is going to be both uncomfortable and spooky -- follow along with me here as I introduce a new concept.
You will need to make room in your head, perhaps alongside your understanding of the Electoral College.
What if (and I'm just sayin', OK?)... what if the reason why millions of investors trust in the idea of being financially planned is because... they've been "mentally planned" to accept the results?
To determine whether your own views and opinions about investing may have been mentally planned, ask yourself...
I'm sure I riled more than a few feathers there. But please, Dear Reader, before you pelt me with sticks and stones let us ask ourselves:
What qualities should we be looking for in a financial planner that could not also be asked of our rabbis, priests and pastors? For the similarities truly are remarkable. Let's take a look...
Let Us Pray...
Similarity #1: You defer to clergy to nurture your spiritual life; you defer to planners to nurture your financial life.
Similarity #2: Clergy assists in preparing your transition to the afterlife. Planners help to prepare transition into the financial afterlife. We call this retirement.
Similarity #3: With guidance from clergy, you pray for a better tomorrow and hope for the best. With guidance from a planner, you pray for a rising market and hope for the best. Unfortunately, hope is not a strategy.
Similarity #4: When your personal life starts to head downhill, the clergy is there to hear your fears and console you, reassuring you that faith will lift you up again. When your portfolio starts to head downhill, the advisor (now on speed dial) is there to hear your fears and console you, reassuring you that markets will one day rise again.
Similarity #5: Screw up your spiritual life and you could spend eternity in Hell. Screw up your financial life and everything can go to hell, leaving you to spend what feels like eternity surviving on acts of kindness from reluctant taxpayers.
Similarity #6: Where the pious tithe 10% of their income to church or synagogue in reasonable expectation of a spiritual return on their investment, the financially planned entrust their entire life savings to the Church of Wall Street, occasionally to see a return 50% smaller than they started with.
None of this made any sense to me. So I began my career as a financial unplanner by asking the following simple question:
If the job of the financial planner is to plan, one must ask... to plan WHAT, exactly?
To PLAN to grow finances larger.
Or to actually GROW them larger?
How about putting some actual risk protection strategies in place? Unfortunately, that's usually not part of the "planning." Sigh.
"OK, Philips," you say, "enough ragging on planners. If you're such a hot shot, what's your plan?"
I thought you'd never ask. The question boils down to this: How does one grow and protect money scientifically?
1. First, secure what you have already -- your home, vehicles, savings accounts and other assets -- with proper asset protection. This is job #1. Anything titled in your own name can be taken away from you. This makes it a contingent asset.
Head out to the store for a quart of milk... in a hurry... not paying attention... put the other driver on life support... and lose everything you've ever worked for. Just like that. In the blink of an eye. Scary? You bet. Need help? Call me.
2. Secure your lifestyle against unexpected events, from the trivial to the traumatic. Get good legal and identity theft plans in place. Save yourself tons of anxiety, wasted time and thousands of dollars in years ahead. These plans will run you about $1.31 a day. Ask me for the best.
3. Hedge 10%-15% of your electronic money (basically, your life savings) to counter the Big Inflation to come with real assets like precious metals, rare coins, antiques, fine art, raw land, etc.
4. Keep a few months' worth of cash (real green) on hand in the event of emergencies like bank holidays, civil unrest, capital controls, etc.
5. Identify wealth creation strategies with a positive expectancy and established track records: good investment newsletters, stock picking services, automated investing software (like the algorithm I helped to develop).
6. Subdivide your investable assets into classes of risk tolerance by degree of percentage draw down, determine portfolio diversification accordingly and establish equity trailing stop losses for each. Did I lose you there? the math is actually pretty simple. Call me.
7. Decide which subset of investable assets you're going to manage yourself. Consolidate 401(k)s into an IRA through a custodial provider like Adventa, designate it a self-directed IRA, decide on regular vs. Roth.
8. Rebalance your portfolio periodically. Move money from whatever isn't working quite as well into what's working better. Rinse, repeat. Stop when you've hit your financial goals.
Start with a Wealth MRI so you know exactly where you stand today.
And In Conclusion
Would you buy a car without a brake pedal and take your family for a ride? Yet millions of Americans are driving their life savings around in the equivalent right now. It's going to look pretty ugly the next time the road runs out.
If nothing else, Dear Reader, get out your investing statements and other paperwork, pick up the phone and speak to your planner. Ask them the questions I gave you a little earlier.
Ignore how well your portfolio has done since March 2009 when the market starting roaring back up after the Crash of 2008. Everyone is a genius in a rising market, just like a rising tide raises everything afloat.
Instead focus on the planner's performance during the period October 2007 - March 2009 when the market was crashing and the Dow Jones Industrial Average dropped 54%.
If they say they did a great job for their clients then, ask for proof. Actual numbers, graphs, charts. Maybe you've got yourself a good one. If so, let me know. Seriously, I'd like to get to know them.
In closing, if you have personally experienced financial planning that left your retirement goals more closely resembling the Hindenberg landing than the Moon landing, get in touch and let me see how I can help.
Remember: The retirement you save may be your own.
In the London Telegraph I spot "six stereotypes about men and women that are scientifically true..." and I instantly exclaim, "Aha, I knew it!"
The headline caught my eye since I have been studying the subject of gender differentiation for many years, beginning in college when I minored in co-ed anatomy, a hands-on subject if ever there was one.
Immediately I said to myself, "Gordon, it's time for the world to know that these male/female stereotypes extend to investing too. Men and women actually do invest differently!"
Summarized From The Article
From the above referenced article we learn of six (6) allegedly scientific differences between men and women, aside from the obvious anatomical differences of which the French are fond to remind us.
I will rephrase these points of gender distinction, then offer my own observations on the investing angle below:
1. Following Directions
From the article we learn that women have better memories in following directions and can locate things nearer to them more easily. Men, on the other hand, like to be spontaneous in their navigational exploits, the primary objective being to remain in control as opposed to achieving one's actual destination.
2. Language Arts
Women speak an average of 20,000 words each day more than men, talk faster, learn to speak younger and devote more brain cells to conversation. This would explain why women often view men as conversational troglodytes.
Men tune out when listening to their partner's problems, showing a strong connection to their emotions only when they themselves are the victim.
Men are funnier, but only because they insist on doing all the joke-telling while employing humor in an attempt to woo women who indulge the male ego by pretending to listen.
Women are infinitely superior to men at being able to reflect for a moment while simultaneously juggling other things and balancing commitments. Whereas men are better at doing one thing at a time -- and one thing only -- until it is completely dead, no longer moving or otherwise finished and the mind is totally empty and ready to undertake the next task.
6. Holding Your Liquor
Men make better drinkers, but only because women lack a particular gastric enzyme and absorb about 30% more alcohol into their bloodstreams than men do. Sensing this, women tend to drink more slowly and elegantly. Men produce more of this gastric enzyme and are thereby able to consume more liquor in the early stages of drinking, until the liver is suddenly overwhelmed and the brain stops functioning.
And Now, The Financial Angle
Based on my relations, that is to say, relationships with countless Forex trading students and wealth coaching clients over the years, I have observed a number of gender related behavioral patterns which I was terrified to speak of until now.
However the revelations in this article has emboldened me to come out of the coaching closet with the following observations which I hope prove useful.
1. Following Investing Directions
Where money is involved, coaching lady clients is often so much easier than coaching men. Where a lady investor will ask me intelligent questions like. "Do you think the market is going up or down?," the male investor upon sniffing the slightest indication of a trend must be restrained from charging ahead, spear in hand, focusing on the thrill of the hunt and ready to impale and conquer every move. Much of my coaching then focuses on explaining why this usually doesn't end well from a risk management perspective.
2. Investing Language
Lady coaching clients will engage in enlightened social conversation around the subject of investing, seeking to understand the nuances of it all. They'll ask me how I feel about a particular investment, what it might mean for their family, things like that. Male investors, on the other hand, tend to communicate in short sentences that must occasionally be extracted with a pair of pliers, forcing me to ask intellectually probing questions like, "Do you want to make money?" and "Would you like to discuss how that would affect your future?"
3. Investing Empathy
Lady investors will read how the latest stock market crash decimated millions of investors and small business owners. They will say things like, "Those poor investors and their families! How will they ever get along now?" The male investor will quickly recognize that millions of freshly impoverished families translates into immediate opportunity for career advancement, now that all those losers have been cleared out of the way.
4. Investing Humor
Lady coaching clients will be quick to respond to my slightest attempts at wit, often laughing out loud and making me feel like a million dollars. This is important to me since, like most older men, I only recently achieved maturity and my ego is still fairly delicate. In comparison, the male coaching client will respond to my levity with a grudging chuckle accompanied by an immediate attempt to raise the humor bar with a wisecrack of their own, thereby forcing me to chuckle in response and maintain parity in male ego reciprocity.
5. Investment Multitasking
I have observed that lady coaching clients can talk to me while at the same time checking their investment account balances, texting a friend and taking a quick incoming call. Male coaching clients -- those who can remember their account login credentials -- will go totally silent over the phone as they focus on the all-consuming task of logging in, a behavior that presumably has some prehistoric connection to the stalking of prey. Those who cannot remember their login credentials will likewise go silent as they try to figure out where on their computer they left those credentials, leaving me careful not to appear impatient lest the balance of conversational dominance be disrupted.
6: Holding Your Investing Liquor
Because I don't drink and am seldom in the company of inebriates, I am at a bit of a loss to make alcohol-related investment gender comparisons other than to note that my first wife -- a blonde knockout of a vocalist and entertainer who won on the old "Star Search" TV show -- could sock away more vodka than most sailors, had a mouth that would make some sailors blush, and probably would have made a terrific investor since she would have terrified the market into going in her direction. Fortunately for me and any children we might have had, I was able to depart the relationship before we could reproduce.
I hope this was helpful to those needing to retire soon or otherwise seeking a financial consultant in your life.
LADIES: I am the sensitive, caring male wealth coach you've been looking for and have only your deepest, inner financial needs in mind. I can help you get in touch with your inner investor and take your enjoyment of money creation to higher and higher plateaus.
GENTLEMEN: I will do nothing to impede your need for financial control other than to suggest when it might be best to ask for directions, particularly when seeking a clear path around obstacles like crashing markets, imperiled 401(k)s, volatile real estate, collapsing currencies, retirement generally... you know, things like that? I know we can work together in harmony and no actual bonding will be necessary.
Dear Intrepid Investor,
If you've been working your tail off all these years and managed to scrape together some hard earned savings that you currently have sitting, vulnerable and exposed, in 401(k)'s or IRA's ... I'm glad I got to you in time!
You see, a new and insidious retirement syndrome has just been identified.
This silent killer of retirement dreams is known to creep into your higher cognitive functions, weakening your financial immune system and rendering you dangerously vulnerable to growing economic threats like...
...a stock market that spends more time going sideways than up...
...interest rates so low that bank CDs don't pay diddly squat...
...Social Security now 81 years old and in a walker...
...a Godzilla of an expanding bond bubble...
...an endangered pension system...
...and growing political instability...
...and that's on a good day!
This silent syndrome, this destroyer of retirement dreams, will erode your future wealth as surely as Hillary lost those emails, clouding your mind and rendering your retirement planning confused... if not crippling it completely.
Yes, I am speaking of that insidious mental disorder known to afflict investors trying so desperately to retire...
Retirement Deficit Disorder (RDD)
Where cancer will strike 1 out of 2 investors, RDD has struck 9 out of 10 already. Which makes it 180%* more deadly to your retirement plans!
* [(9/10) / (1/2)] = 1.8
RDD is all the more sinister since most investors don't realize they're afflicted... until it's too late. RDD knows no race, religion, gender or age distinctions. Everyone with a nickel in retirement savings or a dime in the bank is at risk.
Billions of dollars continue to pour into cancer research. And how much money is spent each year to defeat this epidemic financial cancer that has destroyed trillions of dollars in investor net worth already?
Goose egg. Which is why I'm bringing you this urgent message today.
To see whether you might be a silent victim of Retirement Deficit Disorder -- and to determine your suitability for a program of intensive treatment that can cure RDD completely and put you on the path to total financial recovery -- take a few minutes to complete the following free survey. As with all disease, diagnosis is the first step to treatment.
Investor Vulnerability Survey
Q1. Do you worry that the stock market will crash again and you will have absolutely no clue what to do to get your retirement out of harm's way?
Q2. Do you know when (and when NOT) to buy stocks and mutual funds?... or whether to buy money market funds instead?... or maybe buy both?... or neither? ... or maybe you should be selling everything???
Q3. Do you watch TV and read the financial news only to realize that these experts continuously contradict each other and seem to have no clue what's coming next?
Q4. Are you now, or have you ever been, working with a financial planner and seen your investments drop like a rock and wonder what the heck happened?
Q5. Are you at that uncomfortable place in your life where you realize that your retirement planning is pretty much at the same spot where the Titanic was when the lookouts couldn't find the binoculars?
Q6. Deep down inside, in that quiet place where each of us tells ourselves the truth, do you feel totally inadequate to handle your own investments and thereby forced to turn to experts who either keep mis-advising you or outright lose big chunks of your money for you?
Q7. Between ISIS, Putin, ZIKA, the ongoing economic depression, the disappearing dollar, global political turmoil, increasing litigation against assets, even identity theft that can paralyze your finances, do you get the creepy, uneasy feeling that your retirement planning is at extreme risk of lots of bad things happening, and that there is no one out there who seems to know how to secure what you've got right now, let alone actually grow it in any scientifically meaningful way?
Thank you for participating. How did you do?
If you felt a silent shudder of fear and uncertainty course through your nervous system, perhaps felt a wave of denial wash over you as you contemplated the dreadful consequences of not knowing the answers to these questions, you will be pleased to know that graduates of my alternative approach to retirement wellness soon find themselves completely RDD-free and positioned for a healthy, happy and satisfying retirement.
Dr. Philips will see you now. Office hours are 1:00-5:00PM ET daily. Get in touch at my website for a free evaluation.
Hold a dollar bill in one hand and a pair of scissors in the other. Each year at precisely the stroke of midnight, trim off exactly 3.3% of that dollar. I know, that's pretty tricky to pull off, but do your best.
Next year, come back on NYE and trim off 3.3% of what's left. Do that each year for the next 22 years and you'll have half of the original bill remaining.
How do we know this to be true?
The Rule of 72
The "Rule of 72" is one of those handy little tools you just can't live without if you're a serious investor (or have any hope of retiring!) since it measures compound growth and is wonderfully easy to use.
Just divide the periodic rate of return into the number 72 and the answer is the number of periods required to double what you started with.
For example, let's say you can get a perfect 6%, year after year, in mutual funds. Of course this will never happen in a world of central banking hijinks and political chicanery, but just pretend along with me so we can complete the exercise.
Dividing 6 (the periodic rate of return) into 72 gives us 12 periods (years) to double your money. Get a nice 12% a year and your money would double in just 6 years. Why? Because 12 divided into 72 is 6.
Now here's a little trick to wow your friends the next time you find yourself discussing the economy at a fancy uptown cocktail party (... or church barbecue if south of the Mason Dixon line).
We flip the Rule of 72 upside down, take its reciprocal, and forecast the number of periods for an initial value to be reduced by half. Sorry if I lost you there. Let me try that again.
The Rule of 72 when used in reverse tracks the compound rate at which an initial value disappears. In other words, it lets us know the half life of an initial value -- i.e., the number of periods required to get to half of whatever we started with.
And the Greenback...?
How fast is the U.S. dollar disappearing?
[Those of you depending on dollar stability for your retirement security may wish to avert your eyes at this point.]
At an average annual historical inflation rate of about 3.3% (true: I have the numbers) the U.S. dollar likely will lose 50% of its purchasing power over the next 21.8 years.
How do we know? We divide 72 by 3.3 and we get 21.8. But is this really reliable? Are there any real world examples we can point to? Absolutely. Tons of them in fact. Here is just one from my tender childhood.
In 1960 my parents bought a brand new house in Andover, Massachusetts for 31,000 currency units, which is to say, U.S. paper dollars featuring a picture of George Washington on the front, the number "1" up in each corner and the suggestion on the reverse that we trust in God for purchasing stability.
Basically, my parents forked over the equivalent of 30,000 pictures of George that would probably fit in a small suitcase.
Today (October 2016) that same house is appraised at Zillow.com at $675,000 - a whopping markup of 21.8 times its initial cost. Now we need 22 suitcases!
Yikes... is that house really worth 21.8 times what it was when it was new? After all, it's been deteriorating for 56 years.
Turning back to our handy Rule of 72, if we divide 72 by 21.8 we get (voila!) 3.3% as our annual inflation rate. Sounds pretty darn close to our original 3.3% to me. Amazing how well math continues to serve us.
Crystal Ball Not Required...
Looking to the future, assuming that inflation continues to grind along at a smooth 3.3% per year and never gets completely out of control so that we have to burn dollars in the fireplace just to stay warm, how many years will it take until today's dollar buys half as much?
I'm glad you asked. We simply divide 72 by 3.3 and we get 21.8 years, or around the year 2038 when today's prices should be just about double for just about everything.
[And for the economists in the crowd, will real wages keep up with the rate of monetary destruction so the two essentially cancel each other out? Well, I ask you, has that been the case thus far? Hmmmmm? The defense rests.]
And for you youngsters, if we multiply 21.8 times 2 we get 43.6 which is how many years it will take for the dollar to lose half of its value, then lose half of its value again and be worth one-fourth as much as it is today.
Investing In Reverse
And so, Dear Disconcerted Reader, the question begs asking: Are you compounding your wealth at an average annual rate of return greater than the rate of monetary destruction?
Because if not, I hate to break it to you... but your nest egg is SDRAWKCAB GNIOG. Pardon me. I meant to say, GOING BACKWARDS.
Fortunately, there are solutions to wealth erosion that do not involve hoping, praying or other licensed approaches to retirement planning, relying instead on scientific methods to reliably grow wealth fast enough to outpace Mr. Washington's sad demise, and with the application of a little hard work, even allow one to retire (as in, not have to work any more) within the next several years.
However, since I don't wish to be seen as your typical, self-serving Internet wealth guy, you'll have to get in touch and schedule a phone call. In the meantime, I'll be here re-reading my dog eared copy of Extraordinary Popular Delusions And The Madness of Crowds for insights into post-election market reaction.
With one half of the country spitting mad at the other half, it should offer some outstanding investing opportunities!
And May All Your Investing Decisions We Wise And Profitable,
Milford, New Hampshire ("Live Free Or Die Broke")
Hi, this is Gordon Philips. Allow me to share some powerful wealth creation concepts I call Philips' Three Laws of Financial Motion.
These laws can be identified as the scientific underpinnings of wealth creation since they are not based upon the type of subjective investing concepts popular with the financial planning community, like hoping for the best, total failure to manage risk due to fear of loss, or belief that a crashing market will necessarily come back again one day.
My three financial laws are based upon the science of money, from debt elimination to the geometric growth of wealth.
As such, they represent the most effective, useful and reliable tools you'll ever discover to amplify wealth and create true time freedom.
You probably remember from your school days how Isaac Newton discovered gravity by observing a falling apple, then went on to develop his famous Three Laws of Motion.
I've reworked those laws into what I calls my Three Laws of Financial Motion.
Newton's laws are reliable because they're based on observable nature. My three laws are equally reliable because they're based on our essential human nature, and it hasn't changed a bit since the earliest recorded history.
Let's go through Newton's Laws, one by one. His First Law addresses inertia and states: "An object at rest remains at rest unless acted upon by an outside force."
Philips' First Law of Financial Motion addresses financial inertia in stating: "A person stuck in their present financial circumstances will remain stuck unless acted upon by a greater outside force."
If you're feeling financially stuck, if you'll forgive the use of a colorful expression, you have to get off your assets and go to work. There is no shortcut. Otherwise, you'll continue heading in the same straight line to nowhere in particular.
It reminds us of the definition of insanity. Keep doing what you've been doing and expect anything to change.
Feeling financially stressed? Working too hard for too little money? Retirement age approaching with little likelihood of being able to retire at all?
Outside forces will be required to over your financial inertia and get you unstuck. Otherwise, you're going to stay in the same rut. Yes, motivation does play a role. But motivation takes care of itself when you can glimpse the future and see what actually will happen when you make the necessary scientific changes to two key areas of your life:
The first area is your time, and involves scientifically redirecting a few hours of your life each week into a new and particular set of activities, guaranteed to generate both immediate and residual income.
The second area involves scientifically redirecting a portion of investable assets to strategies that can engineer the growth of those assets, such as the automated investing software that I've helped to develop.
The good news is that everyone already has at least one of these two forms of capital available to them.
The first being human capital, meaning your own efforts, plus the leveraged efforts of others, and the second being investing capital, even if you have relatively little to begin with.
But you say there's no way this is going to work for you, because you have no free time and little to no investing capital to work with?
That you're working two jobs already, your plate is completely full, you have no time to yourself? That you can't even think about freeing up a few hours each week to start something new?
That even if you could, you have little to no available savings to invest?
Well, let me ask you this. What if you suddenly learned that you had to plug yourself into a kidney dialysis machine for four hours each week or die? Would you find the time to make that happen? Maybe give up a little TV or other recreational activities? I think you would.
As far as having no savings to invest and grow, there's no problem there either.
If you work with me, within your first month you'll be generating new income that you can start investing right away. Problem solved.
Newton's Second Law states: "Force equals mass times acceleration."
My Second Law of Financial Motion states: "The forcefulness of retirement planning equals financial education times the acceleration of wealth."
In other words, the degree to which you are able to accelerate your retirement will depend upon the extent of your new financial knowledge in putting the power of exponential growth on your side.
And Newton's Third Law states: "For every action there is an equal and opposite reaction."
My Third Law of Financial Motion states: "For every financial action, there is an equal and opposite financial reaction."
The more correct action you take to change your financial future, the more your income will react by growing larger!
And thanks to compounding, the faster your income increases, the faster it can keep increasing, a phenomenon that Einstein called the 8th Wonder of the World.
In closing, are you happy with the current state of your finances?
Are you still stuck in transactional income, meaning you have to keep showing up and working to keep getting paid?
Meaning you have no income leverage? That it's all up to you?
Is your current job or career paying the bills, but not allowing you to move your finances forward fast enough to retire while you're still young enough to enjoy it?
Maybe not even retire at all?
Are you doing OK financially, but bored with your current work?
Are you running your own small business and feeling more like your business is running you?
Life only gives us so many hours and then we're gone.
If you work 40 hours a week for 50 weeks a year, by the end of 40 years you'll have worked a total of 80,000 hours.
How many of those hours do you still have left? Wouldn't it be great if you could keep them all to yourself?
Would you be intrigued to learn that there is a specific and little known set of activities that harness both human capital and the exponential growth of money to create time freedom?
Because, after all, money really is just time, right?
In closing, the principles I have just outlined absolutely work for anybody willing to do the work.
These are areas in which I have a lot of personal experience. I understand the science behind them, and what it takes to make them work in the real world.
If this made sense to you, get in touch. The first consultation is always on the house, and I'm a very good listener.
Society has taught us since childhood to save for our golden years. "Save for retirement! Set something aside from each paycheck! Always pay yourself 10% first!," is the advice we are given.
And so we save - or try to - driven by a compelling (if amorphous) sense of the urgency to keep saving enough to retire on, like a squirrel gathering enough nuts to last through the coming winter, lest we end up broke and dependent on family, neighbors or worse, the government (which is to say the charity of reluctant taxpayers).
But could this entire notion of saving for retirement be misguided, if not completely false?
Could the stress and anxiety so many would-be retirees experience be completely misplaced?
Is there a truly happier ending here, hiding in plain view?
Bear with me here and allow me to make my point.
Let's take the case of two would-be retirees. We'll call them Bert and Ernie. Let's watch them prepare for retirement and see whose approach makes the most sense.
Are you ready? To borrow a 70's term, this is going to blow your mind. You may need a stiff drink to handle this. Just warning you. Here we go.
Bert is 56 years old. He's been working his entire life as a college professor and earning a college professor's salary, which is to say, not a heck of a lot.
So far Bert has been able to scrape together $150,000 which he senses in his gut is nowhere near enough to retire on comfortably.
Like most Americans, Bert has taken a largely religious approach to retirement, which is to say he's been praying he'll be able to retire!
Problem is, he's never really done the math so he has absolutely no clue what it will take to retire on comfortably. He just knows that, no matter what, he has to KEEP ON SAVING!!
Let's give Bert the benefit of the doubt and posit that by some miracle he'll somehow be able to scrape together TWICE that much and set aside $300,000 by the time he's 65, which is just 9 short years from now.
Here as they say, is the $64,000 Question.
What will Bert actually DO with that $300,000? Spend it to live on?
If his living expenses will run $5,000 a month in retirement and we subtract the $2,000 a month he'll be getting from Social Security, Bert would need to tap his retirement savings to the tune of $3,000 a month.
Which means it would last exactly 100 months... a little over 8 short years... meaning he'd be just 73 years old when his LIFE SAVINGS RAN OUT.
So.... what will he do after that? Clearly, this isn't going to work. So let's go to...
This is where Bert gets himself a nice $300,000 bank CD. I see they're paying a whole 1.5% a year these days which would eke out a meager $4,500 a year in interest, or $375 a month.
Add that to the $2,000 a month from Uncle Sam and Bert would have $2,375 a month. Not even close. And no cigar! So that's not going to work either.
Hmmm, how about...
That's where Bert crosses his fingers (and other available body parts) and puts the entire $300,000 into the stock market? (... please, Dear Reader, try to stifle your smirks and guffaws and stay with me here.)
Since 1928 the mighty Dow Jones Industrial Average, backbone of the American economy has crashed 7 times, each crash occurring on average about 12 years apart, and with an average drop of about 45% per crash.
If Bert is really, really lucky and everything goes smoothly, the DOW might possibly crank out the 6% annual return it's averaged over all these years and Bert might see $18,000 a year, which is $1,500 a month.
Let's add that to the $2,000 a month from Social Security and he's got... hmmm... $3,500 a month. Still $1,500 short.
Who Wants to Be a Millionaire?
If only Bert had managed to save a MILLION dollars! Then he'd be all set! Uh, not quite.
You see, a one-million dollar bank CD at 1.5% would generate $15,000 a year, which is $1,250 a month. Leaving Bert with $3,250 a month when Social Security is added in.
Again, not even close. And still no cigar!
And please, Dear Reader, let us not overlook for a moment the nagging fact that true INFLATION is running at LEAST 4% right now (see www.ShadowStats.com ) meaning that bank CD's are TOTALLY USELESS for growing wealth since they can't even maintain purchasing power!
So, regrettably, even a MILLION DOLLARS in a bank CD won't get (or guarantee) you squat these days.
Poor Bert, he's really in trouble. Then there's Ernie.
Ernie is 60 years old and doesn't have a dime to his name. No savings at all. Not a penny. Goose egg. He says his philosophy has always been to "enjoy it while you've got it."
Ernie says he loves traveling light and not having any savings is liberating! With no savings, "Relatives can't hit me up for loans, the IRS can't attack my bank account, hackers don't worry me, and I don't have to concern myself with politicians and bankers with their haircuts, bail-ins or other financial shenanigans."
The fact is, Ernie has been retired for many years now, if you define retired as not needing to get out of bed in the morning and go "sell your soul for your daily bread."
You see, Ernie's retirement living expenses come to just about $5,000 a month.
He gets $1,000 a month from Uncle Sam (Social Insecurity as he calls it), another $250 a month from an annuity he set up many years ago, $500 a month from a company pension plan, $1,000 a month from WST-40 automated investing software and $2,250 a month from his network marketing business.
All totaled, that's a smooth $5,000 a month in residual income.
HOLD ON JUST A GOSH DARN MINUTE HERE...
Do you mean to tell me that Ernie's recurring monthly income... passive income he doesn't need to lift a finger to earn... EXACTLY equals his monthly expenses?
Yes, Virginia, that's exactly what I'm telling you.
Ernie has AUTOMATIC income coming in each month EQUAL to his expenses. He doesn't need a PENNY in retirement savings.
Looked at from the point of view of accumulated net worth, Bernie doesn't have any! He's flat BROKE!!!
Yet he's comfortable retired, without worrying a minute about paying his bills.
And because his income is so diversified, even if one piece of it did wane a little, he could always work a little on his network marketing business and get its contribution to monthly residuals a little higher.
Here is poor, penniless Ernie's situation again, summarized:
Monthly Streams of Passive Income
$1,000 Social Insecurity
$ 250 annuity
$ 500 company pension plan
$2,250 network marketing
That's passive government income. 100% passive. All Ernie has to do is stay alive to keep receiving it.
That's passive insurance income Ernie gets every month just for "fogging a mirror."
This is passive retirement income. According to Ernie, "This is the money those cheap #@&!!'s should have been paying me all along while I was working there all those years ago. So I'm finally getting it now. Better late that never!"
Ernie's automated trading robot just keeps chugging along each month. Ernie started out his currency trading account with $5,000 that he allowed to double every couple of years until it had grown to $50,000. Today he pulls out $1,000 a month in passive income while still letting his account keep compounding a little.
Ernie says this passive, monthly residual income is the most fun of all. He started his business a couple of years ago based on a recommendation from Gordon.
He says he can't believe how much fun it is having folks all over America out building their own businesses too, working in their own self-interest, so Ernie can receive a nice override on their activities.
SUMMARY: A TALE OF TWO PITIES
The most work Ernie does these days is opening those letters with checks in them, or logging in to see how much money he's got. He's says it's a pity he didn't understand this 40 years ago, but he's perfectly happy today!
As for Bert, the pity here is that he could have a MILLION dollars in the bank and still be in deep doo-doo.
Meanwhile, Ernie could be living in a camper deep in the woods enjoying nature, sailing from port to port in a yacht while strumming the guitar in his bathing suit, traveling the country in an RV, or doing whatever he feels like doing at the moment.
Get the Point?
The retirement fallacy is that saving a boatload of money for retirement does NOT necessarily mean that you're retired if it can't WORK for you to generate PASSIVE income to retire on.
On the other hand, diversified streams of recurring monthly income -- of automatic monthly money --- now, that's retirement!
Because you don't have to WORK to earn it.
Amazing, isn't it? Perhaps someone should alert the media and inform the public schools!
And Here's the Really Good News
Anyone can retire, starting at any age, regardless of how much you've managed to save (or not save) for retirement thus far.
Because it's not SAVINGS that counts, it's INCOME!
And generating passive income is easy. You just need to put a little science on your side.
I sometimes feel like the character played by Mel Gibson in Conspiracy Theory with his eyelids pinned wide open.
In my case I see an economic locomotive barreling up Mount Dow, towing behind it rocking carloads full of oblivious investors all chatting, texting and busily living their lives, even as the track may be about to run out.
Could this market crash? Sure it could. One of the usual bears is saying so already. See also here.
But could the market go still higher? Certainly. Will it? No one knows. That's because we don't have markets any more. We have only interventions.
There is no longer true price discovery. Price will keep going up for as long as it suits the interests of the Deep State.
Does any of this matter to us? Yes, and no. No in the sense that technical analysis and trailing stops keep us out of harm's way when everything finally crashes.
Yes, in the sense that society is in the pressure cooker already and no matter which candidate your voting machine selects, the top of the cooker could blow right off.
If Hillary wins, millions of hard-working small business owners, truckers, veterans, laborers, gun owners and other typically conservative "blue collar" Americans will see what they perceive as their last hope (Trump) go up in smoke. Expect many of them to take their anger to the streets.
If Trump wins, millions in the inner cities could boil into the streets. Think: Rodney King, National Guard, limited martial law...
Either way, I think we're in for a very interesting next four years. The smart money is on collapse. Billionaires are building walled communities, earth-sheltered fortresses, moving onto yachts and hunkering down for an economic hurricane.
Meanwhile, government agencies of all stripes, from the Department of Agriculture to the Postal Service(!) have been buying up firearms, ammo and other defensive supplies as fast as the manufacturers can churn them out.
What do beltway power brokers anticipate that their media mouthpieces are failing to mention?
In all my years of observing men, money and markets, this movie is turning out to be a real cliff hanger. My guess is that the Big Ending is going to be a real tear jerker for the unprepared.
Can fortunes still be made even if the wheels come off the economy? Goodness, yes. Volatility such as I expect will provide endless opportunity for marvelous gains.
But the other wall of the 2008 financial hurricane hasn't hit yet. We're still in the eye where media birds sign songs of love for Hillary and blue skies are the limit for higher stocks.
Now is the time for all thinking men and women to:
1. Get out of debt asap.
2. Diversify a portion of electronic assets into real assets to hedge the dollar.
3. Defend retirement portfolios against the potential for a whopper of a financial train wreck.
My recommendation: Divert some time and attention each day to getting your financial house in order.
If you need some help, send up a smoke signal before the fire breaks out.
Perhaps, dear reader, you attended public school. My high school years were spent at arguably the world's most prestigious preparatory school: Phillips Andover Academy where I received a rigorous classical education in the 18th century style. There were two things wrong with this picture:
1. It was the 20th century at the time;
2. There were no girls anywhere to be seen so I wasn't paying much attention to anything my instructors told me. Teenage boys can be like that.
Further attempts were made to expand my education at Boston University where I was enrolled in pre-med, but it wasn't working. My physics professor had no answers to uncomfortable questions about the origins of the universe, and my history professor had no answers to uncomfortable questions about the origins of the social experiment we call government.
So I did the only logical thing I could think to do. I left and went on the road playing R&B in dives and beer halls. Many decades later as I look back at all that was taught to me, and in consideration of all the money my parents paid for my education, I have to ask myself whether they might be entitled to a refund?
I was taught from my earliest years to revere Abraham Lincoln as the "Great Emancipator." Generations of African-American children have stood solemnly at the feet of his monument in Washington, D.C., the scope and majesty of which would turn Caesar green with envy.
How then is it possible that the great emancipator have also been a great racist? Here he is in his own words as spoken in Charleston, Illinois on September 18, 1858 during a presidential debate with candidate Stephen Douglas.
"I will say then that I am not, nor ever have been, in favor of bringing about in any way the social and political equality of the white and black races, [applause]—that I am not nor ever have been in favor of making voters or jurors of negroes, nor of qualifying them to hold office, nor to intermarry with white people; and I will say in addition to this that there is a physical difference between the white and black races which I believe will forever forbid the two races living together on terms of social and political equality. And inasmuch as they cannot so live, while they do remain together there must be the position of superior and inferior, and I as much as any other man am in favor of having the superior position assigned to the white race. " - Abraham Lincoln
Of course today we know that Lincoln didn't "save the union," either. He drove an ideological wedge into the very concept of states' rights that is still fracturing the republic to this day. The reader might care to dig into The Real Lincoln by Thomas DiLorenzo.
Bouncing further along my road to becoming formally educated, I learned that we live in a free and open society and that America was founded along these principles.
Hmmm.... So why did delegates to the convention that drafted America's constitution that hot summer in Philadelphia proceed from the first day to bar the door, shutter the windows, meet on the second floor to thwart eavesdropping and swear an oath of lifetime silence among themselves until the last one had died?
What did they have to hide? And why did George Washington who presided over the convention and was the shoo-in for the presidency take James Madison's handwritten notes on the proceedings back to his private residence at Mount Vernon and squirrel them away so no one could read them? Can you spell federalist coup?
Funny, I distinctly recall no mention of this at either "PA" or "BU" in spite of the small ransoms my parents paid to ship me to both.
Speaking of our hoary old Constitution which, by the way still is the supreme law until erased entirely by the same Supreme Court that was impaneled to defend it, it requires under Article 1, Section 10 that the states use "...no thing except gold and silver in payment of debts."
So what are all these debt-based Federal Reserve Notes doing in circulation, and what's up with this spooky looking seeing-eye pyramid?
Yes, my parents shelled out big bucks to assure that their son became properly educated in the ways of the world and fully prepared -- morally, ethically, philosophically, scientifically and even spiritually (the Bible was required reading at "PA") -- before allowing me to emerge into adult society as a functioning, tax paying member of the middle class.
In hindsight, this was a questionable investment since most of what I learned in the decades to follow either filled in yawning chasms of missing information or entirely reversed the truths of what I had been taught.
Another case in point: throughout my schooling the idea of oil exploration and fossil fuels was a big subject. "Peak oil" was coming and (hu)mankind had better get on the nuclear bandwagon.
But didn't this involved playing around with the same atom that gave us the atomic bomb? And wasn't Russia -- then (and apparently still) the "evil empire" -- pointing their ICBMs back at us, each loaded with atomic bombs in a deterrent standoff so the world could avoid "MAD" (Mutually Assured Destruction)?
Meanwhile our own government was pointing acres full of ICBMs back at the "Russkies," yet wanted to hook up controlled atomic bombs to generators and install one on every street corner so we could all have enough electricity? It was all pretty confusing for a young person trying to make sense of it all.
Meanwhile, back at the ranch... in the early 1950's a young working electrician named John Searl was playing around with rotating magnets and created a purely mechanical device that when spun up on his mother's kitchen table transitioned into a superconducting state, rose off the table, smashed straight through the roof and rose off the planet, never to be seen again.
Now known as the Searl Effect Generator, this was not a so-called "free energy" or "perpetual motion" machine. The device was simply concentrating ambient electrons into a rare earth core, spinning them progressively outwards into successive layers of various materials, picking them up on the outer edge using standard generator technology, thereby harnessed to do work, sent to ground and thereby released back into the environment.
The analogy that comes to mind is of a large dam holding back water which is allowed to spill through sluice ways and spin electrical generators before heading down river to evaporate into the atmosphere, condense, rain down and complete the cycle. Nothing wasted and no laws of thermodynamics are violated.
Searl learned to control his inadvertently antigravitic device enough to create small, round flying platforms he named "levity disks." He later learned to control their flight using ham radios and eventually sailed at least one of them all the way around the world, as it was passed off from one ham radio operator to another. This entire saga was covered extensively by the local press and even the BBC.
My point being, dear reader, that at least one confirmed technology exists (and there are today countless others) to generate unlimited, free energy from whatever you want to call it -- the atmosphere, vacuum, the ether -- without drilling, scarring and fracking the earth to burn fossil fuels, without using nuclear reactors, without killing birds with windmills, etc.
Why do these long ago breakthroughs remained totally ignored today by even the most prestigious educational institutions? You could pay a king's ransom at Harvard, Princeton (a little less at Podunk Community Junior College) and still never learn any of this.
Wouldn't you think that over 60 years of ongoing breakthrough applications of technology that could offer even the poorest nations an abundance of unlimited, free energy would motivate our priciest institutions of higher education to at least mention it?
Here's another good one. Why has the hidden global cartel that financed the American Revolution, the War Between the States, the founding of the Federal Reserve, the creation of the income tax, WWI, WWII and the "War On Terror" never once been identified in the mainstream media? Don't they pay those reporters enough?
Here's a real knee-slapper for you. The federal government can easily run countless printing presses 24/7 and print all the money it needs for anything you can think of: the roads, the military, grandma's Social Security, etc.
So... why the income tax? Why send scary people with guns to come take your house, your farm, your pickup and your bank account for failure to settle up with the tax man when all Uncle Sam has to do is print the money?
That's a good one, wouldn't you agree? Was this question broached during your tenure in institutional education? I'm guessing not.
Goodness knows, I could go on and on. These and countless more are the important issues that go to the very heart of our understanding of real history, without which it's impossible to navigate the modern era.
Yet without this knowledge and the perspective to put it all together, you could be left wondering what happened to your money, your nation, your health, even your peace of mind.
Unfortunately, not a word of "any of the above" is breathed in public school nor taught in college in exchange for even the largest of student loans. It gets zero coverage on TV, it's almost never brought up at family gatherings and it certainly isn't mentioned from the pulpit.
What forces could be powerful enough to suppress this information, this efficiently, this persistently and this effectively for so long? That's the single most interesting question of all.
I started asking questions like these as a young man and received the greatest graduation gift possible, a lifetime of intense curiosity about the world around me.
That same curiosity led me to understand the scientific basis for the creation of both wealth and health, and I continue to learn something new every day.
I'll do my best to share these insights as this blog matures. And there may not be time to cover it all. Not that I intend to assume room temperature any time soon, but because the same forces that have been working hard all these years to manage public perception via carefully filtered access to information are now hard at work on managing the greatest information sharing technology since the invention of movable type: the Internet itself.
Is retirement looming for you, dear reader, or is your date with relaxation destiny still decades away?
Either way I thought I'd offer some less than mainstream observations about Social Security that may startle you into taking immediate action to shore up your retirement planning before the entire economy detonates like a giant Dollar Death Star, leaving behind a black hole that sucks in all finances and compresses them into a singularity from which not even enlightened economic thought can escape.
OK, so that was a little over the top. Let me try to continue in a manner that dignifies my ancestors, one of whom (true story) was kicked out of Ireland for stealing pigs. He must have been a politician.
Let's say you'd like to retire at age 70 after central planners have raised the minimum retirement age in a desperate attempt to save the wealth redistribution scheme we have all come to know and love. You know, the one where scary people with guns forcibly take away your house and bank accounts if you choose not to participate?
I'm referring of course to Social Security.
[SIDEBAR: Please, by no means concern yourself with the fact that there are currently about 3 workers (2 flipping burgers at minimum wage) paying into the system for every retiree like you who will be sucking funds back out, and that these indentured youngsters stand about as much chance of seeing a penny from Social Security as Madonna does of being interviewed by A.A.R.P.]
Your latest Benefits Estimate Statement informs you that your personal fair share of wealth redistribution should come to a nice $1,000 a month. The Death Clock says you should be checking out around age 90. Of course, by then you'll be too old and tired to get out of bed and enjoy your monthly windfall, but at least you can lay there and count it.
OK, so.... $1,000 a month x 12 months is $12,000 a year, times 20 years of retirement comes to a cool $240,000. Darn close to a quarter-million shlamolas(!) that you can look forward to scamming off your fellow taxpayers. Excuse me, that is, receiving in retirement benefits.
[SIDEBAR: Please, be all means, don't for a moment stop to ask yourself why the government couldn't just print the money for your retirement benefits instead of taking it from other people's paychecks. Thoughts like these will only get you in trouble. Just take the money and run.]
Back to that awesome $240,000 you've got coming from your favorite relative, Uncle Sam. Hey, it's your money, right? I mean, it's keyed to your name and SSN, is it not?
Sorry, but you see... your number doesn't actually belong to you. It belongs to the government. They've got billions of SSNs. They simply assigned one to you, like branding a cow or putting a bar code on a can of beans. When you're no longer on this side of the grass they'll retire that number like a worn out football jersey and eventually assign it to someone else. I just thought you'd want to know.
Back Once Again to Your $120,000 Retirement Booty
OK, so you say you're living in a double-wide with your unemployed children and don't want to wait until age 70 to start receiving your free cheese. I'm sorry, there I go again. I meant to say, your benefits.
You say you need that money right now, cash on the barrel head. That you're willing to take a huge discount if Uncle will let you sign a release form agreeing to accept... oh, I don't know... say, half of that right now? Yeah! $120,000 this week would be really nice in exchange for waiving all rights to future payments.
Bingo. You're a freaking genius. You just saved the government a whopping 50%. What a terrific idea. Nobel prizes are awarded for less. Now we know that politicians are not always the sharpest tools in the shed (Gerald Ford comes quickly to mind), but surely even the dullest pols will quickly realize that not only would this "bird in the hand" solution to the looming debt crisis:
(A) Save the gubmint trillions$ they don't have...
(B) Pay down the national debt, literally overnight...
(C) Solve a BIG problem for the millions of Americans who struggle each month just to get by....
But it would also:
(D) Pretty much guarantee politicians eternal re-election just for dreaming up such a fabulous idea!
[SIDEBAR: Please, by all means, try to avoid asking yourself why if the government owes the "national debt" to itself, it can't simply forgive itself its own debt and start all over again. I mean, if you owed yourself $100 trillion dollars, couldn't you just tell yourself to forget it and move on? Dangerous thoughts like these are not to be tolerated in a free society. Please forget I ever mentioned it and continue reading. You're welcome.]
So How About It, Sam, Baby?
Cash now in exchange for saving the government a bundle down the road? Sorry, no can do. Uncle doesn't have the money. There is no personal retirement account that has ever been set aside for you.
Or anyone else, for that matter. Uncle already spent it all. Every nickel.
[SIDEBAR: All that is left in the so-called Social Security "lock box" are IOUs to be funded from future taxes plus money printing. You have been bamboozled. But don't feel bad. Everyone else was bamboozled too which is important in a democracy where we are all to be treated equally.]
So there goes your $120,000 on the barrel head idea. It was a pretty good one too. But wait just a gosh darn minute here... how about selling your Social Security Number on Ebay? Stranger things have been sold there. Why not your SSN?
Unfortunately, that would get you an all-expenses-paid stay at a federal assisted living community surrounded by razor wire. Too bad, too. I hear SSNs are a pretty hot item down near the Mexican border where the same number is sold to Pancho, Pedro and their 200 closest friends.
They each use it for a few months, at a host of different employers of course, then recycle it to Juan, Jose and their 200 closest friends before the IRS can catch on. That way your identity can get stolen, not just once, but repeatedly!
[SIDEBAR: I just happen to have access to the most awesome Identity Theft protection plan out there... where if your number should get sold to Pancho (or stolen by the same hackers who recently put $100 million on the Federal Reserve's tab), a licensed fraud investigator will restore your identity for you so you can function normally again, if perhaps not quite as relaxed as before.]
Well, I hope this was helpful in stimulating you into taking active retirement planning measures. I always do my best to open up new lines of thinking. I'll be back next week with another installment on Social Security, a plan only a mother (or her Big Brother) could love.
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