2011 Baby Boomer Affect On Stock Market

The demographic birth boom is considered to be 1946 – 1964.  1946 + 65 = 2011.  Baby boomers start to retire this year.  This could adversely affect the stock market as they start to cash in shares in their 401k’s.  Also full Social Security starts to kick in. 

http://en.wikipedia.org/wiki/Post-World_War_II_baby_boom

Consumer bankruptcies hit 5-year high in 2010 - Business - Stocks & economy - msnbc.com

With bankruptcies, comes opportunity; Real Estate that will be left behind for the banks to deal with. And as we all know, banks are not in the Real Estate business, they are in the loan business!

http://www.msnbc.msn.com/id/40895648/ns/business-stocks_and_economy

Looking Forward: The Next Presidential Candidate

Now that the smoke is clear from the 2010 election with the Democrats losing 61 seats, it’s time to think ahead about the direction of our country. 

We can see the desperation in voters with the uprising of the Tea Party movement.  This country had high hopes for Obama and many have claimed him to be the “Messiah” but the last election shows that millions of people have turned away from him. 

Just to clarify I stake no claim with the Republican or Democratic party.  I am a registered Independent and am fiscally conservative.  When it comes to fiscal politics, I don’t think it makes any difference which party wins.  Both are controlled by the rich. 

When you have a situation such as the Tea Party movement it’s a cry for desperation.  Millions of middle class voters want someone to save them from the financial crisis we are in.  The Tea Party is made up of mostly middle class citizens who are worried they are sliding from the middle class into a future of poverty.

The poorer people in our country aren’t really involved in the political battle going on.  The poor are smart in a sense because they know politics cannot save them from poverty which is why there usually isn’t a large turnout of poor people when it comes to voting.  They also know Obama is in trouble for trying to spread the wealth.  They also know the middle class is not interested in saving the poor anymore because the middle class are now focused on saving themselves from slipping into poverty.

What every voter regardless of economic class needs to realize is that the problem is not political, so it cannot be solved by electing new political leaders.  The biggest problem we are facing is financial.  And the biggest proponent of our financial crisis is the Federal Reserve Bank.  This is a way for the rich to control the rest of the people; through the banking system and not through politics.

Most people in this country have poor financial sense as evidenced by the amount of debt people get themselves into.  They don’t realize that the financial crisis and bank bailouts are necessary for the ultra rich, who control the central banks, to become richer and control people by fear.

Ireland recently announced a $115 billion bailout.  This shows how desperate other parts of the world are.  The European Union as well as England does not want the crisis to spread.  They know if Ireland fails so will Spain, Portugal and Italy.  If the EU fails then the US will fail since the EU is the biggest trading partner of England and the US. 

The citizens of Ireland have no choice but to agree to a $115 billion bailout.  Same goes for the citizens of the US.  But since most people are not smart with their own personal finances, how can they be smart with the finances of the world?  Where does this bailout money come from?  Well the bank prints it.  Who pays the interest?  The taxpayers.  Who receives the interest?  The bankers and those that own the banks.

What we need to understand is due to our own financial ignorance, we allow the ultra rich bankers to steal our wealth right out from our own pockets.  We fear not having enough money yet we blindly allow the ultra rich to steal from us by controlling the monetary system.

The recession isn’t over, don’t believe any political leader that tells you that.  It might seem that it is over at the moment due to the holiday season and consumers are shopping.  But the recession isn’t over.

There’s really no sense in getting hyped up over the next presidential election.  Instead we need to think of what do we do if the politicians we elect cannot save the financial world?  What if they screw up?  What do we need to do to prepare for a collapse just in case?  What if the whole world slides into a global depression?  What if there is world wide hyperinflation?  Should we listen to Obama and count on hope?  In this case hope is for the hopeless especially if we the people of the United States hope the next political candidate can save us.


This post largely based on Robert Kiyosaki's Conspiracy of the Rich teachings.

401k Insanity

How many people are relying on their 401k’s as a sole source of income for their retirement?  How many people know what they have their 401k invested in?  How many people haven’t logged into their accounts for over a year to see what is going on with their 401k?  Based on your answers, would you consider yourself an investor? 

The truth is, most of us are not investors, yet we are forced to take part in investments in our 401k’s and pray we can retire.  I remember a show on PBS Frontline a few years back talking about people not being able to afford to retire.  The focus was how companies have moved from pensions where the company takes care of your retirement to the 401k style where we as individuals are responsible.  During the interview, an entry level worker came in to drop off some papers.  When he left the room, the CFO was asked if he would let the entry level worker choose what the CFO’s 401k was invested in.  The CFO looked at the interviewer and asked him if he was crazy of course he wouldn’t.  The interviewer then said, “But that’s what you expect him to do for his retirement.”

A 401k was never meant for the masses.  The 401k first emerged as an arcane sub-paragraph in the fine print of the tax code in 1978.  It was intended as a technical fix to protect the tax shelter for executives at Kodak and Xerox.  The 401k provision came about like lots of changes to the tax code comes about which is a company has a particular problem and a particular issue particular to them.  They come to Congress and they start asking for their loophole.  Other corporations caught on and after more prodding, the IRS ruled in 1981 that savings from regular salary checks also qualified for the 401k tax shelter.  This opened the floodgates and created a huge savings for corporations by shifting the reliability and costs to employees.  Workers liked it because they felt empowered since they had control. 

So what’s it feel like to be in control?  Most everyone who had a 401k when the market crashed in October 2008 lost 30, 40, 50% or more in their 401k.  For those of us who are younger that didn’t affect us too much.  But for the baby boomer getting ready to retire they lost a large portion of what they worked for their whole lives.  So what’s to say it won’t happen to the next generation as well?  The market is cyclical.

It is to say, when you steal or lose someone’s money, you take a part of their life.  The very experts who were trusted to keep the financial markets in order are the very people that robbed anyone vested in the stock markets’ wealth.  To add insult to injury, many naïve and innocent people have become agents of these supposed trusted financial experts. 

There are tons of financial planners and other so-called experts who truly believe they’re doing the right thing when they recommend the investments they sell.  Most of these financial experts are not rich people, just sales people.  They sell what they are told to sell.  I’ve talked to a few over the last couple years and I always ask their expert opinions on gold and silver or real estate for financial planning purposes.  They all say the same thing, to stay away because they are too risky.  But losing 50% of your 401k retirement nest egg isn’t?  Financial planners don’t like gold, silver or real estate because they can’t make a commission off of you because they can only sell paper assets.

The 401k is basically a government endorsed Ponzi scheme.  The primary investment vehicle of a 401k are mutual funds.  A mutual fund goes up only if fresh money comes in.  A Ponzi scheme requires an ever-increasing flow of money from investors to keep the scheme going.  Let me lay it out in a way that is easy to see.  Say you have $10,000 to invest.  Type in any mutual fund ticker in Google.  I’ll pick RSNRX for this example.  Now scroll down and find the Key Expenses.  This particular fund has a 4.75% front end load commission.

$10,000 * 4.75% = $475 -> commission you pay to the mutual fund company

Heck I could take $10,000 and invest it in the stock market and pay $9 to buy, have the same amount of risk, and pay $9 to sell. 

This fund also has an expense ratio of 1.45%.

$10,000 * 1.45% = $145 -> deducted from your earnings each year to cover operating expenses.

Now take the assets of the fund which are $1,600,000,000 (that’s billion) and multiply it by the expense ratio.

$1,600,000,000 * 1.45% = $23,200,000 -> mutual fund company makes every year.

They make this money whether you have a gain or a loss.  Who would like to get paid and have your pay be the same if you do a good job or a bad job? 

Here’s your return after 1 year assuming a 10% gain in the mutual funds purchase price:

$10,000 - $475 = $9,525

$9,525 * 10% = $953

$9,525 + $953 = $10,478

$10,478 * 1.45% = $152

$10,478 - $152 = $10,326

$10,326 / $10,000 = 3.26% gain

So you made 3.26% when the fund actually had a 10% gain that year.  Great investment advice!  Plus you the investor fronts 100% of the money and risk.  But it’s not you who is getting rich, it’s the mutual fund company.  This is what Americans use to plan for retirement.  Very risky and very costly if you ask me. 

I may be a bit drastic calling a 401k a Ponzi scheme.  However in a Ponzi scheme a major problem arises when more people want their money back than are willing to put money in.  Maybe that’s a reason why 401k’s have such severe penalties for early withdrawal.  If you want to withdraw your money before 59 ½ then you’ll pay a 10% penalty and you’ll get hit with another 40% in tax penalties. 

Sorry to paint a dreary picture, I’m not being too positive here.  But I believe the hard working class have been mislead.  So what do you do then?  I have a 401k too.  I only put the amount in that my employer matches.  Then I take the other money that I could have contributed and will use it for other investments such as real estate where I can get cash flow now and forever.  I know real estate and other types of investments aren’t for most people.   Unfortunately a 401k is the best thing going for the masses because at least it’s something hopefully.  I’m just afraid that it won’t be enough someday.  If you would like to find out more about how you can invest your IRA's in real estate please visit my website: http://www.webuyhousescranberry.com/Invest.html

6 Tips On How To Get A Property Tax Cut

You can fight city hall!  Good article on how to reduce your property taxes.  Did you buy at the peak of the market and get re-assessed?  Has your property value declined since your purchase?  If so then you are still paying high property taxes for a property that isn't worth as much as when you bought it.  Chances are your property taxes didn't decrease.  

Riding The Wave Of The Foreclosure Business - 24/7 Wall St.

Riding The Wave Of The Foreclosure Business - 24/7 Wall St.

"qualified buyers and investors will likely add value to those properties and the neighborhoods they are in.”

See our website: http://www.webuyhousescranberry.com to see how we can help in a foreclosure situation

Discounted Foreclosures Account for 25% of Home Sales in Third Quarter

Please see the article here: http://www.mortgagenewsdaily.com/12022010_foreclosed_home_sales.asp

This is an increase of 1 percent  from the market share held by foreclosed properties during the second quarter.  If you happen to find yourself behind in payments or being foreclosed upon, please view my website at www.webuyhousescranberry.com to see how we can help.