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How Wall Street Consumes All Retirement Earnings



-- Posted Thursday, 8 July 2010 | | Source: GoldSeek.com

(1 Minute Article)

By Daniel R. Amerman, CFA

(The video below takes just under two minutes to view, the transcript can be read in about a minute.)

 

Let's talk about your retirement. You responsibly save for decades, your investments help the real economy of this country grow, and as a reward, you eventually reap the benefits of that economic growth in the form of a prosperous retirement.  

Wonderful theory.

When we look not at paper wealth, and not at stock or real estate bubbles, but the real US economy, then over the last 50 years economic growth has averaged about 2% per year per person, after adjusting for inflation.

Now here's a fascinating coincidence.   The rule of thumb figure is that total financial industry revenues average about 2% of assets under management.  So for every $100 in an investment account, about two dollars will end up sticking to the fingers of the investment industry over the course of the year.

What a coincidence! We responsibly save to be rewarded with our share of economic growth, but the annual financial fees exactly cancel out the annual growth and we’re left with… what?

Meanwhile, in exchange for managing let's say $10 trillion in retirement account investments, Wall Street pulls out $200 billion every year.  That's $200 billion they get whether the economy is growing or shrinking.

Now logically, this would lead to a situation where tens of millions of retirement investors wait patiently for the wealth that has been promised to them but never quite arrives, while in the meantime every year a relatively small group of people enjoy extraordinarily good incomes on Wall Street.

It sure is a good thing this is just some silly coincidence, isn’t it?   

 

Do you know how to Turn Inflation Into Wealth?   To position yourself so that inflation will redistribute real wealth to you, and the higher the rate of inflation – the more your after-inflation net worth grows?  Do you know how to achieve these gains on a long-term and tax-advantaged basis?  Do you know how to potentially triple your after-tax and after-inflation returns through Reversing The Inflation Tax?  So that instead of paying real taxes on illusionary income, you are paying illusionary taxes on real increases in net worth?  These are among the many topics covered in the free “Turning Inflation Into Wealth” Mini-Course.  Starting simple, this course delivers a series of 10-15 minute readings, with each reading building on the knowledge and information contained in previous readings.  More information on the course is available at DanielAmerman.com or InflationIntoWealth.com .

Contact Information:

Daniel R. Amerman, CFA

Website: http://danielamerman.com/

E-mail:  mail@the-great-retirement-experiment.com

This article contains the ideas and opinions of the author.  It is a conceptual exploration of financial and general economic principles.  As with any financial discussion of the future, there cannot be any absolute certainty.  What this article does not contain is specific investment, legal, tax or any other form of professional advice.  If specific advice is needed, it should be sought from an appropriate professional.  Any liability, responsibility or warranty for the results of the application of principles contained in the article, website, readings, videos, DVDs, books and related materials, either directly or indirectly, are expressly disclaimed by the author.


-- Posted Thursday, 8 July 2010 | Digg This Article | Source: GoldSeek.com




 



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