Do it properly! Although this is an obvious statement, most people when saving for retirement don’t know how to do it properly.

They make errors that cost them and cost them big time. They can’t retire in comfort and this is not the minority – this is the majority!

Problems we all face Are:

Keep in mind, the state won’t help you much, medical costs are soaring and people are living longer.

Unless you are saving for retirement properly, you won’t enjoy your golden years and of course you should – You have worked hard all your life!

Let’s face it – if you have worked hard all your life enjoying your “golden years” should be your right.

Lets look at some common mistakes people make when saving for retirement and how if you don’t make the same mistakes, you can enjoy the comfort and lifestyle you deserve.

Common mistakes

Here are some common mistakes that people make when saving for retirement:

1. Mutual funds and stocks can make you rich

Well let’s look at the facts.

If you are saving for retirement you can expect maybe 10% annually compounded and taking into account inflation that’s not much.

Even more worrying is 90% of funds cannot even do this!

They lose, or provide single digit gains that are eaten up by inflation.

Why do people invest in mutual funds?

Most of the time they are taken in by the sales hype and this does not match the reality.

2. Don’t take risks when Upside is limited & downside is more!

If you are going to save for retirement your better off in a fixed interest fund – same upside and less downside.

Check the facts:

Ask any mutual company for an average performance of ALL funds under management. You won’t get it, but if you could you have losses across the board.

Forget the sales patter!

When a fund performs great – when it fails they launch a new one.

They don’t care if you make money or not, they have their commission so why do they care? They don’t.

2. Alternative Investments for growth

OK great lets when saving for retirement trade alternative investments:

Like currencies, futures, options or hedge funds.

A warning – Keep in mind the risk reward:

90% of investors lose in these investments and that’s the lot!

Consider saving for retirement in a hedge fund. Most are secretive and unregulated so you cant see what they do. They are not obliged to give you performance of all funds under management and most blow up!

This means losses of 50% or more in most cases …Don’t believe they lose? Check the statistics. Hedge funds sound fantastic in theory, but the reality is very different.

3. When you get close to retirement you cant take risks

Why? Quite simply if you are saving for retirement you can take losses early on as you have time to recover, when you get close to using your fund you cant.

You have spent years building it and it needs to kept intact.

Don’t take risks in the last few years. The odds are you can’t won’t make it back quickly enough! Use low risk investments..

4. High return and low risk

We all want this!

We want this at anytime but when saving for retirement it’s essential.

We ALL want our money to work hard and produce above average gains with little downside risk, but is it possible?

The answer is yes!

5. The best low risk investments

When saving for retirement, you will hear it time and time again..

Property is the best investment and it is a good one, but there is one that compares that’s cheaper and growth potential is the same, if not more.

When saving for retirement lets look at land. Here we will give you one example, but there are many more. Just check these statistics out and your mutual fund manager will weep with envy!

Land is a simple investment and is the secret of the world’s wealthiest investors:

Let’s consider Costa Rica. You can by land at 70% less than in the US and there is a huge property boom going on and land is at a premium and that means huge growth potential.

Quite simply, Americans are buying Costa Rica properties in record numbers to get second and retirement homes at cheaper prices and their only 3 hours from the US!

What does this mean, if you are saving for retirement? It means big gains and low risk:

50 – 100% gains per annum are being made with low risk ( prices don’t tend to fall here in land they simply stay static and rise quickly) is this better than your mutual fund? No contest!

You want good returns and low risk when saving for retirement and land investment gives you this.

We don’t have room to tell you how cheap it is, how tax efficient it is, how easy it is to do and why this boom will continue but check the facts for yourself.

If you want to save for retirement, land is the ideal vehicle and you should consider it

Your retirement income investment plan starts now, right now, no matter how old or well heeled you happen to be.
Step One is to understand what a retirement plan is, and to identify the three large numbers you need to keep track of while you are developing your stash. With these three totals on your spreadsheet, it’s much easier to develop long-range retirement income goals that make personal sense. A retirement plan is an income production plan. Guaranteed retirement income – projected expenses = the gap. No gap, add parents and children to the expense number. There’s always a gap.
Employer provided pension plans, Social Security, and (always much too expensive) fixed annuity contracts, are retirement income providers. They are monthly income machines that you have paid dearly for but which may not be adequate to cover your retirement expenses— most of us will need more income than our guaranteed benefits will provide.
And we need to develop these additional income sources while we are still earning some kind of income. The retirement plan is the investment process you employ to eliminate the gap between your projected guaranteed income and a conservative estimate of your retirement expenses. The sooner and smarter you invest before retirement, the easier the transition from full employment to full vacation will be. Smart investing involves separating your security selections by purpose, and monitoring their performance in the same way. You’re never to young to start developing the income side of the portfolio.
Once you start to draw income at retirement, it is much more difficult to invest effectively and unemotionally. Since your income will need to remain secure and constant through several economic, market, and IRE (interest rate expectation) cycles, you really need to develop appropriate portfolio market value expectations if your program is to survive. You cannot afford to take your eye off the income ball, because income is the only thing you can spend without depleting the productive value of the assets in your investment portfolio.
Obvious? Yes, but only until the market value of your portfolio begins to shrink as a result of economic, market, and IRE cycles. If you invest properly, it (the income) should continue to grow in spite of changing market conditions and fluctuating market value numbers. You must learn to expect market value fluctuations and take advantage of them— assuming, of course, that you are following appropriate quality, diversification and income generation standards.
Retirement income planning became more difficult for most of us around the time corporate America realized that defined benefit pension plans were far too expensive to manage and maintain. At around the same time, the Social Security trust fund somehow disappeared (Did it ever exist at all?), and more and more of our hard earned was needed to support our aging friends and relatives. Why haven’t the myriad of defined contribution programs been able to fill the retirement income gap?
Because millions of totally investment-inexperienced people were given discretion over billions of investment dollars that could be tax detoured out of their paychecks and into IRAs, 401ks, 403bs, Thrift, Savings, Thrift/Savings Plans, etc. Self directed investment programs generated a need for an investment media; the investment media fueled the speculative juices of an emotional and naive mass of newbie investor/speculators; Wall Street created tens of thousands of new products and compound income schemes to sponge up the wayward dollars.
The Masters of the Universe were ROTFLOL while the Investment gods gaped in disbelief.
Defined Contribution plans are just not retirement plans— even if your employee benefits department, the media, Wall Street, and Uncle assure you that they are. Most plans are difficult to self-manage with a retirement income objective. Still, these benefit plans are necessary and quite capable of taking you close to where you want to be. Their only drawback is the false sense of wealth and retirement security that they promote. Either the money has to be converted into an income portfolio— a costly and time-consuming process— or far too many mutual fund shares have to be sold to produce the spending money
Most people think of savings and investment programs as retirement plans, and rationalize away the need for additional, outside development of an income investment portfolio. This is because all of the information they receive speaks to market value growth instead of to income. It’s very likely that less than half the money will ever be yours to spend! What, you say— why? Here’s an example. A NYC resident with a $3 million IRA retires with the expectation of maintaining her life style. Even invested for income alone, $15,000 per month is easy to generate. But how much more has to be disbursed to satisfy three levels of tax collection?
Next example. The same portfolio in equity mutual funds during a correction— now you’re dipping into principal!
Even though defined-contribution plans are excellent mechanisms for growing an investment portfolio with your hard earned, pre-tax, dollars, most plans and most plan participants worship the market value god to the exclusion of all others. Most people are too greedy and/or tax-averse to convert them into income producers during rallies— when they can lock in a meaningful cash flow. Additionally, the counter productive IRC encourages our use of owned assets first— a universally ignored phenomenon.
The “buy and hold” mutual fund mentality doesn’t transition well from growth to income— regardless of the fund category or description; the idea of helping people into a comfortable retirement hasn’t stopped the tax collectors; the market cycle is just as likely to be down as up when your gold watch is presented. You have to do more, and less, to secure that comfortable retirement.
Step One of the retirement plan is developing a focus on income, and understanding that spending money and market value are not blood relatives. Step Two is developing the right combination of tax deferred and tax-exempt income— among other things.