Learn how there are greater opportunities to create wealth during a recession than during the boom years. Become wealthy by applying two timeless principles - hard work and productive education. The Secret? Learn how to apply your education in the work you do every day that provides value to others. Listen now to hear more!
You can also listen to one of our previous podcasts, “How Does One Profit in This Great Depression 2.0?”
I have often heard many well-intentioned Americans tell me that they feel they are on track to their retirement goals merely because they have been saving a good amount in their 401(k)’s or similar qualified plans. Many believe this is their only option.
My purpose is to shed light on a critical factor that is one of the causes for dramatic disappointment to our 76 million Baby Boomers now entering retirement. This covert killer can leave one with LESS THAN HALF of the money when you retire than the financial calculators will show you. Worst of all, no one would ever know why because the 401(k) providers are not required to disclose it. This lurking enemy is commonly referred to as “fees.”
Hidden fees are one of the most misunderstood components of a 401(k). According to 2007 AARP survey, 83% of respondents said they did not know what fees they were charged, many of whom believed that there were no fees! The reason there is so much confusion is because the disclosure of fees are not required by law. In fact, if they are disclosed, they are often buried several pages in a document called “Statement of Additional Information.” At times, it is nearly impossible to even get the information from the 401(k) providers!
According to the US Dept. of Labor, 17 different types of fees can be applied to any 401(k) plan. Many of these fees are 12b-1 fees, soft dollar fees, brokerage fees, redemption fees, shelf space fees, etc. that are sometimes combined into a single fee called a “wrap fee.” The combination of these fees can be over 2% per year! This could cut someone’s retirement balances by more than half of the expected balance even if they get a certain projected rate of return and make the employer match obsolete. This occurs because fees are not factored in the fund’s historical performance charts that many view in the prospectus.
Some fees are so excessive that there are class action lawsuits against the 401(k) providers. One lawsuit in Washington State has a fund that charges 12.17% in fees each year!
Fees are not inherently bad, but ignorance is not bliss when time is no longer on one’s side. How are these fees affecting your retirement? What could happen if these fees are charged as your balance is declining? Do you realize that an annual fee as small as 1.35% can cut your end balance in half after 40 years of accumulation?
I invite you to watch this video to learn more about this critical issue.
This podcast is based on the Time Magazine cover story published in the October 19, 2009 issue. Listen to why many have begun to see, like many Americans, why the 401k isn’t all it was cracked up to be, and how we were test subjects that benefited financial institutions’ pockets more than our own. Also, see the video below for an interview with Time’s editor about this article.
If you are confused, like most Americans, on what you could be doing instead, listen to an earlier podcast “Fire Your 401k and Be the Bank.”
If you cannot play the video, click here to watch video online.
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Podcast Video: Play Now | Play in Popup | DownloadChris Miles discusses options with a 401k. If you cash out your 401k, what are your options? Is it wise to cash it out, or should you leave it where it is? Learn 3 strategies to consider with your 401k, whether you leave it in a 401k or could you do something else.
Remember, these are only options, not recommendations. This is not intended to be advice, but merely given for informational purposes.
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What strategy could be better than using a 401k? Learn a strategy used by the wealthy that allows them to use their money like a bank does. This strategy can be used with a number of investment vehicles, but we will discuss one that works most effectively right now. Learn to use your same dollar 2 or 3 times.
Note: This is not intended to be interpreted as advice. The strategies discussed is for educational and illustrative purposes only. Results vary based on the investor’s knowledge.
For more specific details and other strategies, register for our weekly money tips.
Listen to the 5 common traits that made middle-class individuals become millionaires. And no, it’s not the lottery, a 401k, or an inheritance.
Srully Blotnick, in his book, Getting Rich Your Own Way, did a 20-year study to find 5 common traits of those 83 (out of 1057) that became self-made millionaires. They are:
To hear more personal experiences of applying these principles, LISTEN HERE.
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Chris Miles & Dale Clarke discuss how to question statistics that may be skewed to deceive us to believe what the government, banks, financial experts, etc want us to believe. You can read many of these points on the blog “Figures Don’t Lie, But Liars Figure.”
To read the referred home sales article, click HERE.
To read the referred Utah unemployment rate article, click HERE.
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Learn how to avoid speculation and financial scams by not chasing rates of returns and controlling your emotions.
Also listen to “What is a Great Rate of Return?”
Lisa Nicole Bell of Inspired Life Radio interviews Chris Miles about why should people fire their adviser, how to know whether the advice they receive will help them create wealth (not just for the adviser), and what is the basic principle to securely build wealth.
Click here to listen!
The best investment for you is to invest in being a better investor in what you know best, not some financial investment sold to you by an “investment specialist.” Listen to know which investment is right for you, not what is right for the person selling it to you.
You can Listen to our previous blog about this as well.
To receive other FREE financial & investing secrets and tips, click here!
