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This may come as no surprise, but three out of
four Americans hate financial planning. Many of
us like to dream about things such as buying a new
home, traveling to different places, sending our
children to college, or even retiring early. Unfortunately,
the reality of financing those dreams often prevents
many of us from living them out, which may explain,
in part, why so many people hate financial planning.
With some patience, planning and discipline, you
can achieve some if not all of your dreams, and
at the same time, feel better about yourself and
your money!
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Suriviving and Planning for Retirement
by Ieuan Dolby
The financial security umbrella that most wage earners
would like to shelter under after retirement is now leaking
very badly indeed! Money savvy experts block up news channels
and advertisement spaces with offers of transforming the
average citizen into a healthy, wealthy and wise investor;
advocates of 'parting with your money' do house calls
alongside those selling vacuum cleaners and the sole 'wanted'
letter fights for attention in the mail box amongst the
hundreds of once-in-a lifetime offers of richness!
News these days is very negative regarding government
pension schemes! They blame it on either too many old
people one day, not enough young people the next! The
answer we are told is "Go Private"!
Private pension funds are collapsing left right and center!
Directors, Managers and Chairmen of companies tend as
a rule to do one or more of three things with employee's
pension funds. They decide that the amount is too great
to give back and so move to a remote island with no extradition
treaty and eat caviar and drink champagne without moral
conscience creeping in. Or they gamble the future of a
failing company on money within the pension fund and (as
always happens) the company collapses anyway! Or last
but not least they listen to a door-to-door salesman who
suggests that the proceeds are invested in some amazing
opportunity that in actual fact turns out to be a big
scam! So pension schemes and for that matter provident
funds that are either controlled by the government or
by the company that you work for are basically not worth
a dime; unless a sieve be an attractive replacement for
an umbrella!
There are other ways to go, other ways to invest money
and to build up a "portfolio" of stocks and
shares in a variety of companies that hopefully will provide
high returns in the years to come. Naturally, an extremely
large sum of money is required to invest initially which
defeats most people but …….. start off small
and buy one share and should the company not go bust,
not file for bankruptcy, not use the pension fund to prop
up falsified accounts, not be accused of insider dealings
and not overstate earnings or be caught actually having
no capital, reserves or ability to continue trading then
it is quite possible that within a thousand years this
one share might be worth something! Too many companies
have recently collapsed taking with them thousands of
shareholders dreams of not having to skimp and do without
during retirement!
Property has always been heralded as one of the best investments
available. And certainly many children saw their very
own parents exclaiming over the profit they have made
on a recent house sale (never mind the fact that they
had to buy a new one at the same time)! A nice thought,
a dream of dreams but in reality property prices have
increased so dramatically that nobody can afford anything
larger than a shoebox under the town bridge! Property
has become an unaffordable luxury that now many people
still invest in thus saddling themselves with a life-time
mortgage that eats incomes dry, that prohibit investments
elsewhere due to lack of excess funds and that produces
many retired people with roofs over their heads but without
the finances to turn on the lights! Oh, and of course
it is impossible for property prices to keep on going
up! Nobody ever talks about possibility, but face the
simple fact that people cannot afford to buy houses anymore!
That bubble will burst and any savvy investor should take
heed before falling into the tangled property web!
Gold is of course an attractive option! Not only does
it have value but it also looks nice and impresses friends
but ……..too many problems are associated with
this metal. When the time comes to sell the price maybe
way down; actual appreciation is not a definite possibility
and storage is a constant hassle. Storage boxes in banks
are not cheap and the money used for rental would be best
invested elsewhere. Under the bed is not the safest or
most secure of places, especially when friends are 'shown
the hoard' after a drunken night on the town!
In reality there are only a limited number of ways for
the average wage earner to invest money for the future!
One way is to choose a couple of Investment Trusts - more
than one just incase one of these institutes happens to
go bust! These are companies that work with 'small' people's
money by spreading risk over a variety of businesses that
trade on a stock exchange of one nation or another! The
other advantage of these companies is that the government
tends to be favorable towards them and so tax incentives
and reductions often apply!
One could of course invest heavily on horse racing or
into a casino in Las Vegas but gambling has never really
provided long term returns. Lottery tickets and scratch
cards remain an ever hopeful means to an end but, dream
on!
Let's not live under false pretences. Be brutal and face
the fact that unless one has lots of money, the chance
of getting lots of money is well ……. best left
unsaid! For example: 2000 pounds worth of bonds purchased
from the Post Office (National Savings - hahaha) yields
2475 pounds after five years of care. Now in anybodies
calculations even after twenty years in servitude that
amount is not going to keep the 'cat in the bag or the
'pigeons in the coop' (whatever best describes the situation)!
The security of investments even in the most secure of
environments is not secure and the property bubble might
explode at any moment, oh and should you be winning the
government will ruin it all by charging stamp duty or
VAT, inheritance tax, capital gains tax or just tax to
reduce the final amount to what you first started with
and plus a penny for luck!
What is the answer?
One supermarket recently had on offer tins of baked bean;
buy twelve and get one free! Another chain decided to
offload hundreds of packets of pasta: spend a hundred
and get a delightful packet of pasta twists for free.
And another had loads of; two for the price of one items
around the store! The answer is to buy these products,
as much as one can get hold of and store them for the
future. Dig holes underground, fill cellars and attic's
with non-perishable goods and so when retirement days
sneak up unexpectedly you may not have the money to go
out but at least you will not go hungry!
Well, not quite a suitable answer but then options are
very limited for those without a penny to spare! Selling
oneself as a matured sex slave to some North Korean General
will probably not appeal to many and suicide at the age
of 67 (after having spent the 1,347 pounds saved over
the last forty years of hard work) is more difficult to
achieve than previously planned for.
In fact the only real answer is to move out of the country,
to buy a small property in the south of France, in Romania
or Spain where prices are half if not a quarter of those
in the UK, where the value of life is far better and where
the air is clean. One pound will go a lot further so …………..
Maybe this is the only way!
About the Author
Ieuan Dolby is the Author and Webmaster of Seamania .
As a Chief Engineer in the Merchant Navy he has sailed
the world for fifteen years. Now living in Taiwan he writes
about cultures across the globe and life as he sees it. |
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