What would all the "experts" say if…

…Congress made the following changes to the Roth IRA in order to promote savings and financial security for the individual?
1.  They removed the income restrictions making it possible for ALL citizens to invest in the Roth…from the hourly employee to multi-million dollar athletes.

2.  They also decided to remove the limits on the amount one could invest; therefore, the hourly employee could deposit as much as he/she could as well as the millionaire.  Post-tax dollars of course (no change there).

3.  In order to help people stay out of debt (let’s face it, there are way too many bankruptcies and foreclosures) they removed the age restrictions and allow for the new Roth IRA to be completely liquid.  No more waiting till you’re 59 1/2.  You can withdraw or borrow from this account AT ANY TIME.

4.  What if they added an extra bonus to really promote this new Roth by adding a rule that if one does borrow from their account the full balance still earns interest.  For example: you have a balance $100,000 and borrow $20,000 to buy a car.  The account would not compound interest at $80,000 but continue to grow at the full $100,000.  Therefore never giving up the opportunity to earn interest on your money.

5.  Realizing that one individual may be significantly more successful than others in their immediate family, Congress decides to allow an individual to start a new Roth IRA for his/her family members…again, without limits on the dollar amount.

6.  What if they included a guaranty that the new Roth IRA could NEVER lose principle.  Meaning, the account balance would NEVER go down…EVER!

Honestly, what do you think Suze Orman, Dave Ramsey, and all the other “experts” would be saying about these new changes?  They already recommend the Roth IRA, even with all the limitations.  They already advise to put as much as the law allows into these tools.  If these changes were to be made these people would be all over it.  Imagine, now they could acquire the well-to-do and the extremely wealthy as clients.  It’s crazy to envision what the hype would be like for this new Roth IRA…they’d be drooling and advising EVERYONE to do it as soon as they could.

Here’s the kicker…IT ALREADY EXISTS!  If it already exists, then why aren’t they drooling over the chance?  The answer:

BECAUSE THEY DON’T GET PAID TO PUT YOUR MONEY IN THE TOOL THAT ALREADY OFFERS THIS SUPER, STEROID LACED ROTH IRA?

It’s not a joke people.  Wall Street, brokers, financial planners, they all make money by managing your money.  If they don’t have the money under their control then they don’t make their annual fees.  How many of you, who have lost a ton this past year, received a call from your financial guy telling you to put all your funds into cash?  My guess is ZERO…unless maybe your financial planner is a family member.

How about this one:  I worked with a client who last summer (July ’08) had three accounts totaling approx. $960,000.  Going through his account statements he was being charged roughly 1.75% in fees.  When his accounts dropped to $600,000 he was still being charged 1.75%.  He decided to take the advice of this planner – “Stay in. Don’t secure your losses. It’s going to come back.”  Now that his accounts are worth roughly $300,000 guess what he’s still being charged…yep, that 1.75%.  This gentleman is 67 years old and had planned – and had enough by the way – to retire at age 70.  “But you’ll average 8% if you stay in.”  Come on.  Get real.  What if, you’re close to retirement when something like this happens?  Does that “8%” mean anything?  Absolutely not…IT’S ALL ABOUT PRINCIPLE SECURITY!

So, in three years, just to get back to his previous balance, this guy will need a 47% return EACH year.  Good luck.

YOU DO NOT need to put your trust in someone else, you do not need to play the game and hope you get the return, you do not need to watch the market everyday to attempt to time the perfect investment.  The tool exists, all you need is the knowledge of exactly how to make it work.  The wealthy have been doing this for over 200 years.  It’s time the average consumer does it as well.  Let’s all get ahead.

Kelly O’Connor – kelly.oconnor@mtnfinancial.com

303.578.9708

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