Saving for retirement. Almost everyone uses that strategy, but people can't really build up enough money this way. Unless of course you have enough money that a return of 5% earns thousands of dollars. That's not really possible for most people. But the common thread is that people believe they have to start saving and investing for retirement as soon as possible in order to have enough money to retire. But in reality it's almost impossible to build up enough money this way. The average American has just $60,000 upon reaching retirement age.
There's plenty of investment advice to follow. Along with investment advisors, there's lots of info about how to invest money and broker recommendations. Everywhere you look, TV, web, and print, the talk is about money and how to grow it. What's your favorite investment: stocks? Bonds? Mutual funds? How about futures; things like gold, oil, silver? Perhaps you've seen ads that push "the excitement of Forex trading", where you are lured by opportunity of speculating in foreign currencies. Brokerage firms are not the only places to invest your money. It's likely that the bank where you got your mortgage is among them. Remember, this article concerns saving for the long term - as in retirement.
Certainly, a big attraction of retirement accounts is that most are tax-deferred. That is, you pay no tax based on the money you deposit into the account, and no tax on on the account's earnings. The only time tax is paid is when you withdraw funds. Most people think this is wonderful since they don't plan to withdraw until retirement, and at that time they will be in a lower tax bracket. It all sounds great, and squares with most people's idea of the American Dream.
It's not unexpected that you may agree with this logic. The trouble is, it's all wrong! Despite all the recommedations exhorting you to invest for retirement, it can be a very big mistake. Furthermore, following this course may curtail your retirement - perhaps forever.
You probably realize first and foremost that advertisers of investment "products" do so to make money. Secondly, they are spending lots of money to persuade you that it's in your best interest to start saving for the future as early as possible. They don't disclose that for homeowners with a relatively new mortgage, you're mortgage interest cost will be much higher than any earnings of a retirement account. For instance, a homeowner with a 6%, $250,000 mortgage will pay $15,000 in interest the first year alone. Let's compare that to your IRA. If you contribute $2,000, and your account earns 8% (a high number by today's standards) you'll earn $120 in year one.
On the other hand, let's see the results if you use mortgage acceleration as an investment. This is like investing in any other investment, except the investment is your mortgage note. That investment is used to pay down your mortgage each year. In 4 years, your IRA will have earned $1,730. But what if you pay the tax on the $2,000 each year and use that money (about $1,600) to pay off your mortgage? You will have reduced the balance by $6,400. It's really more, since the reduced principal each year causes more of your monthly check to reduce it further.
Here's the result: after 4 years, the difference in principal saves $30,000 of interest payments. $30,000! Compare that to the $1,730 the IRA earns. The results aren't even close. And because interest saved = interest earned, you'll have earned yourself $30,000 tax free! The time to pay off your mortgage will also be reduced by many years. That's why stock brokers can't offer anything with as great a return. Investing in mortgage acceleration earns more for homeowners than any investment. Find out how you can use this amazing investment system.
| About Author Silence Dogood : |
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The absolute most profitable investment is not anything you'll find on Wall Street. Would you be satisfied with a 5% return when you could get 500% ? Find out HERE
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Article Added on Sunday, February 7, 2010
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