The suggestions come in response to the letter from Husker Fan that we mentioned above. (BTW, we know ?Husker Fan? is not a reference to the Alaskan sled race. It has something to do with removing that leafy outer covering on an ear of corn...no?)
First up, a few thoughts from Reckoner Mark, writing in from Pittsburgh, PA...
First, stop adding to your retirement plans. Even if you manage to turn them into fortunes, the government will be there to change the rules and confiscate parts of them. Although the FED/Govt is trying to keep stocks up, they must realize that they probably won?t be able to keep them up forever. When stocks eventually get decimated, then the FED/Govt will shift to its two-step Plan B:
** Step 1 ? Force you to accept some percentage of government bonds in your IRAs, 401(k)s, pensions, etc. They will even make you sell some of the precious metals in there if necessary. Wouldn?t that add insult to injury?
** Step 2 ? Bailout its equity favorites using that money it just took from your official retirement accounts in an egregious display of favoritism. I?m guessing the usual suspects: GE, JP Morgan, Goldman Sachs, solar energy companies and other political contributors.
Of course, they?ll say they?re good Samaritans saving you from you. In reality, they?re farmers. It?s harvest time. You?re the crop.
Second, put all the pre-tax money back into your pay and then into savings vehicles that are more removed from the banking system. Precious metals, like 90% silver coins, come to mind. Think savings, not investments. It hurts, but also forget the 401(k) match by your employer. I?ll bet that government will change the rules and say that because you didn?t ?earn? the match, it will have to be taxed. Of course, anyone with a 401(k) match must be rich. Anyone lucky enough to still have a pension must be part of the evil rich.
Third, don?t get rid of all these IRA and 401(k) retirement investments just yet, but use them to hedge the savings vehicles that are more removed from the financial system. I don?t know husker?s age and how far off retirement is, but let?s assume it?s 20+ years away. A lot can happen in 20+ years. I keep thinking of Harry Dent?s thesis that deflation could suddenly blindside us, so maybe having some cash is a good idea. I?m unsure about his thesis, but we?re in uncharted territory. We have such fragile, complex, chaotic, interconnected, rigged systems ? financial, political, regulatory, military, ethnic/religious, industrial (just in time), etc. ? who knows what could actually happen. If today?s world had an official bird, it would be the black swan. Make that a mutant, fire- breathing black swan. With fangs. And laser eyes.
Fourth and finally, remember that it?s not what you earned and put in these accounts that matters. It?s what you?ll have left compared to others when we reach ?the end of the world as we know it.? To oversimplify a bit, there are just two possible outcomes waiting for us just over the horizon. One is a crash where the distortions, debt and (we hope) financial criminals disappear so we can start fresh again. The other is totalitarianism. If we have the former, then whatever you have left matters a lot. If we have the latter, then nothing matters at all.
And here?s Reckoner HC from California, chiming in...
I had 401ks, a 528 deferred comp plan and IRAs and turned it ALL into a self-directed IRA which I then turned into gold and some silver.?
I have since closed out the account and hold my own assets. I don?t trust the government, especially once they proffered the idea of confiscating it all and ?giving? us T bills instead. Oh yeah, that sounds like a plan ? to rip us off!
Reckoner FI concurs. Writes FI...
If it were me I?d cash in ALL of my 401(K), Roth IRA, AND regular IRA. In fact, I did just that in 2005 and have been ecstatic that I did so. The penalties and taxes I paid were very small compared to where my gold and silver are now.
As long as your money is in these accounts, it is NOT in YOUR hands and under your direct control. Therefore, you are at the ?mercy? of a custodian to not go bankrupt and take your money with them, as well as having to depend on them to make distributions to you.
In addition to all of the above, how many investments can you think of that have done better since 2005?
To me, this decision seems to be a no-brainer.
From Maryland, here?s what Reckoner Eric K. says...
Don?t be silly. You don?t have to pay that tax and you can multiply your gains in gold bullion by buying gold stocks that are quite cheap right now. Eventually you will have to pay some tax on the non-Roth but your gains can be huge.
Of course, there were other suggestions too...though their efficacy/relevance would depend on the nature of the individual accounts...
HuskerDu writes:?In response to Husker, why not hold the gold in your 401K? You could engineer a foreign property purchase, then a gold swap as a mortgage holding.
Glover says:?Sounds like a good idea taking funds from the 401k account to invest in gold bullion but to avoid the early withdrawal just take a loan against the account and set up a 12-month or 24- month repayment. Only a small processing fee and low interest on the loan.?
And Reckoner Ron writes:?Here?s a suggestion for your 401k for gold. Just open an account with an IRA firm that deals with gold bullion brokers (I know several), have them transfer the amount you want to move to gold or silver or the full amount. These firms deal with all types of assets not just metals and purchase your metals. No need to pay taxes now. The taxes will stay deferred under 401k rules. Hope this helps.
And finally, one anonymous, cheery Reckoner writes in to say...
My first question to you is ?how much do you (really) want to protect what is yours (and the family)?? In other words; how long do you think fiat money will ?protect what is yours???
Food prices are up 150% since 2008 and in general energy prices have doubled. How long before all durable goods are effected in the same manner? In 1966 I almost bought a car for $3,500. Last year the same comparable car would have cost over 40K.
Cigarettes were 0.20 cents a pack and now you?re lucky if you can buy the ?same name brand? for $5 a pack.
A few years back I purchased a Perth Mint Certificate and purchased silver at just under $18 an ounce. After paying the penalty (IRA) and my capital gains, I had to gain back an approximate 40% loss just to break even. If you do the math you will see I?m ahead now and the rest is ?icing-on-the-cake?.
Bite the bullet and pay the piper! A few years down the road you will realize it was the best thing you ever did to protect what is yours and your families.
Hmmm...let?s see now. If you bought silver now at $33 an ounce and it reached $54 (40% to break even)?you may not have to wait as long as I did to make up your loss.?
One word of caution: can you stomach the roller coaster ride during the waiting game.
Good luck in you decision ? not if ? but when!
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Thanks to everyone who wrote in with suggestions. We?ll have some more during the week to come. In Bernanke?s War-on-Savers world, we freedom-minded folk do well to stick together.
Enjoy your weekend.
Cheers,
Joel Bowman
Managing Editor
The Daily Reckoning
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Here at?The Daily Reckoning, we value your questions and comments. If you would like to send us a few thoughts of your own, please address them to your managing editor at?joel@dailyreckoning.com
Source: http://britanniaradio.blogspot.com/2012/09/the-daily-reckoning-u_3656.html
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