Saturday, March 5, 2011

What’s the best place to put my money?

What’s the best place to put my money?

Listen to just about any financial talk show and within the first fifteen minutes they always get to this same question. What I’ve learned over the years instead of answering the question directly it’s better to name the attributes the person would be looking from this financial product. The reason is many people have prejudices over certain financial products simply because of their name and not from any real world experience. People kick many products to the curb too quickly, and give some products a lot more praise than they are worth. The underlying cause, I think, is very few people explain how these products work, and over time if you hear something often enough many people will begin to think it is true without any real proof (think about the earth being flat etc.).

I thought I’d share characteristics of two places you can put your money:

• The first (Account #1) is the most popular place people say to put your money and has drastically changed the way people are forced to view retirement.

• The second (Account #2) is the place I put most of my own personal wealth and I think if more people really looked into would want to put theirs as well.

Account #1:
• Your money grows tax deferred
• Limited contributions per year
• No or limited access to your money (Not even for cars, houses, college, unemployment, or vacations etc.)
• All distributions are fully taxable at an unknown future tax rate
• 10% penalties + 100% taxable withdrawals are incurred if taken prior to age 59-1/2
• Creditor protected in most states
• Put in place by an act of congress a little over 30 years ago
• In 2001-2002 and again between 2008-2009 many people lost over half of their savings
• No guaranteed future value or growth
• Cannot be used as collateral
• Unknown total fees paid

Account #2:
• Your money grows tax deferred
• Unlimited contributions per year
• Complete access to your money at any time (For cars, houses, college, unemployment, or vacations etc.)
• All distributions can be made completely tax-free if structured properly
• No penalties if taken prior to age 59-1/2
• Creditor protected in most states
• Has been around for over 200+ years
• Competitive rate of return that can only go up year to year
• Guaranteed future value and growth
• Can be used as collateral
• No hidden fees paid

Let me know in the comment section which account you would prefer.


  1. I'd like to know what you are talking about....clearly you prefer account #2...i just don't know enough about any of it to make a call one way or another.

    I assume that option 1 is 401(k) which I think is total bullshit. but it is bullshit that I have to use (at least for the moment)

    I have no idea what option 2 is.

  2. Andy, Thanks for your comment. I think we feel the same about the 401k, but I am too pc to say BS. Anyhow the point I am trying to make with this and other blog entries is there are many more ways (and places) to save your hard earned money. Also it drives me up the wall (knowing what I know and what I've seen happen to folks) when they are given canned advice such as always max out your 401k, etc. Finally I think too when discussing financial matters people make perfect world assumptions. The reality is the world is not perfect you should always plan for contengencies, and the 401k in my mind is not a good storage place for money when your world gets turned upside down.