kEEPING IT SImPlE ISN’T STUPIdtake money out of circulation for investments. Instead, it will be going
to taxes. Taxes eat the economy—they are simply transfer payments that
do not expand capital.
This generational shift in supply/demand fundamentals has experts like
John Bogle (Vanguard) and Bill Gross (Pimco) projecting 2.5% to 4%
returns for the next decade. While some investors may call their assess-
ments pessimistic, these guys own some very fancy calculators and they
are aren’t afraid to use them. What if they’re right?
“PensIon envY,” A sYMPtoM oF the neW noRMAlA person spends the first half of their lives accumulating money and
paying into savings. They spend the second half of their lives trying to
preserve their money and paying out of savings. In the past, thirty years
on the job was rewarded with a pension. Today, the 401k and 403b has
taken over. If you are going to have a pension, you will have to buy one
on your own.
Research by the Center for A Secure Retirement found that two-thirds of
middle-income Boomers believe their retirement will be different from
that of previous generations. What will cause the difference? Pensions
for one, debt for the other. Pensions and guaranteed income are what
sixty percent (60%) of middle-income Boomers say they envy most
about the retirement of previous generations.
In retirement, achieving a sustainable, reliable, guaranteed income is
the most important goal of the investor. Even if one runs out of money,
as long as they have sufficient income, they have a successful financial
plan and will not live poor.
hoW to BUY A PensIon: the sIMPle stRess
FRee WAY to ReACh YoUR RetIReMent goAlsHere’s the problem: Most traditional investments are based on the con-
cept of capital appreciation. You buy assets, such as shares of stock,
and hope they appreciate in value so you can sell them later for a profit.
Cash-flow investing works differently. With cash flow, you buy an as-
set not for its future value but for its ability to generate income. This
income gives you flexibility: You can spend it if you want to or you can
reinvest it. Cash flow reinvested is compounding growth. It is stabilizer
for your entire investment plan.