Most retirement accounts, mutual funds, and other large pension funds are invested in the S&P 500 corporations.

Unfortunately, many, many seniors do not understand how their investments are being managed, or simply do not understand the basic nomenclature of the “so-called” investment gurus.

In fact, today, (12/4/2008) I heard a very prominent mutual fund manager who is extremely experienced and respected in the financial community state, “Do not sell your funds as I expect the market to turn around momentarily and produce returns of 10% over the next 10 years!”

He obviously gets paid whether your investments go up or go down, and he needs to keep as much cash in his family of funds as he can.

I disagree with his prediction and I will explain why, as follows.

First, let’s try to make the senior or novice investor understand what the S&P 500 really is, and why its members are so important to both the American economy and more importantly, to the welfare of the planned retirement community.

Why are most equity funds invested in the S&P 500? A summary of the definition from “The Wikipedia”, the free encyclopedia. . . The S&P 500 is the most widely followed index of large-cap American stocks. It is considered a bellwether for the American economy, and is included in the Index of Leading Indicators. Some mutual funds, exchange traded funds, and other managed funds, such as pension funds, are designed to mimic the performance of the S&P 500 index. Many hundreds of billions of US$ have been invested in this fashion.

Companies such as General Electric, Bristol-Myers Squibb, Alcoa, Apple Inc, Black & Decker Corp., and Home Depot are just a few of the more recognized of the 500 listed. If you want to see the complete list, click on this link: http://en.wikipedia.org/wiki/List_of_S%26P_500_companies

How has this group of funds performed for the past 10 years?

The following link shows a chart of data from Yahoo.com and graphically depicts the ups and downs of the S&P 500 performance. The overall chart is for 58 years. (1950 through 2008)

To see the chart, click on this link: http://www.cabinetsoflasvegas.com/S_P500Sum

Unfortunately, if you or your financial administrator invested in the index or stocks or funds that mimicked this index, you made no headway in your account during the last 10 years.

Will the volatility continue for the next 10 years? Obviously no one can predict the future, but there simply are better ways to invest than to buy and hold, and you can do it yourself with such a little bit of effort.

There are trading systems using funds that invest in the same S&P 500 stocks that have produced returns over 27.7% annually during the same 10 year period for which the “Buy and Hold” investors received 0%.

Remember the rule of 72. This rule states that to find the number of years required to double your money at a given interest rate, you just divide the rate into 72.

If your investment earns 7.78% return, like it did for 44 years, it will double every 9.3 years (72 divided by 7.78%). So, if your $40,000 investment had grown at 7.78% for the past 10 years, it would be worth $84,771 after 10 years.

However, if you traded the same mutual funds and received 27.7% return for the past 10 years, your account would be worth $461,285.

Isn’t it worth looking into a better way of getting your retirement fund back on track?

On August 3, 2005 www.seniorjournal.com posted the following statement – “Late Boomers, have nearly 40 percent of their assets in blue chip stocks, which are most often favored by conservative investors.” For full results of the Baby Boomer report visit www.clarkconsulting.com/execreport.

Why is this information important? Because, late Boomers (those born 1946-1951), are about to reach 60 and be eligible for early IRA distributions without penalty.

Since, Baby Boomers are now on the cusp of retirement many new changes will be taking place in our economy. Their numbers are staggering; about 79 million American Boomers were born from 1946 through 1964, the oldest of whom are now in their late 50s.

Lets do the numbers, in 2008–just two years from now–the leading edge of the Baby-Boom generation will reach 62, and the IRS has stipulated that IRA owners have to start taking distributions at age 70 ½. But remember that early distribution of IRA funds is allowed at 59 ½. Here comes the glut of stocks into the market (various retirement plans hold investment in stocks not just IRAs but we are only addressing IRAs). What does that mean to the rest of us? Well, if the market experiences a glut in stocks then that translates to lower prices for the stocks. If your retirement monies are based on 45% or more in stocks investments you will be hit hard for several years. The general rule for retirement investing is to diversify. Many custodians and financial advisors translate this to diversifying into various different stocks. However, investment strategies are not limited to the buying of stocks. Investors should look into other areas such as: commercial paper, bonds, real estate, annuities, trust deeds/mortgages, tax lien certificates, promissory notes, timberland investment, currency exchange, hard money lending, secured loans, ext. Unfortunately, it is very hard to find a custodian that offers this much diversification. Here comes the ultimate tool; Integrating an LLC with a self directed IRA (also you can roll other retirement plans into an IRA).

And IRA funded LLC gives you the freedom to invest in what you desire. You manage your IRA funds and direct your retirement future. This is called having “checkbook control” of your retirement funds. As an added plus the LLC fully shields the IRA account from outside liabilities. In addition there are numerous other advantages. Some of these advantages include:

The LLC may have multiple investors besides the IRA account.

Multiple IRA accounts may be investor/members of the LLC.

Non-IRA investors/members of the LLC may guarantee loans for the LLC.

The LLC is not limited to real estate ownership, virtually any other investment type

can be made under this business structure.

LLC income and capital gains pass thru to IRA account member’s tax deferred, under the same rules as other IRA income.

Lower fees from the IRA account custodian since there is only one asset to manage the LLC.

To implement this technique, the self directed IRA purchases membership units (shares) of a privately held LLC. This is a straightforward procedure. If you are interested in how to create and implement such a powerful tool then do not wait and build your own IRA owned LLC today.

Advanced education is vital, but it comes at a cost. Short of saving for retirement or buying your dream home, no other expense has that great an impact on the family finances. College costs increase at about twice the inflation rate. Current increases have averaged 5% to 8%. In fact, it is estimated that by 2020, a four year college education could be as much as $287,000 at a private institution and $133,000 at a public one, based on College Board estimates. Ouch. But, are you really prepared to sacrifice your own financial security during retirement for your child’s education?

As expensive as it is to send junior to college, retirement is even costlier. Sadly, nearly half of American households are not saving at all; and two thirds are not saving enough to retire adequately. Couple that challenge with a desire to fund your child’s education and you may have a serious economic dilemma on your hands.

Paying for School

College expenses are traditionally paid from one of several sources: parent’s current income, financial aid/scholarships/grants, and parent’s personal savings. Over the past several years, however, a proliferation of college

savings programs have been introduced including prepaid tuition programs, including:

Coverdell Education Savings Accounts. Formerly called Education IRAs, a Coverdell ESA allows you to put $2,000 away each year per child (if eligible), and you can usually invest the money however you like. Distributions

are tax-free when used for qualified elementary and secondary education, as well as qualified college education

expenses.

Prepaid Tuition Programs. Prepaid tuition plans are college savings plans that are guaranteed to increase in value at the same rate as college tuition. The main benefit of these plans is that they allow a student’s parents to

lock in tuition at current rates. While the state plans vary, if the student attends an in-state public college, the plan

pays the tuition and required fees. If the student decides to attend a private or out-of-state college, the plans

typically pay the average of in-state public college tuition.

529 college savings plans. These plans are a popular choice because they offer the account owner control and flexibility, combined with special income tax and estate benefits. Section 529 college savings plans are tax-

exempt college savings vehicles with a low impact on need-based financial aid eligibility. Unlike prepaid tuition plans, there is no lock on tuition rates and no guarantee. Investments are subject to market conditions, and the

savings may not be sufficient to cover all college costs. However, with this added risk comes to opportunity for potentially earning greater returns.

Today, there are many choices available for parents, but the most important consideration in planning for college or retirement is to start saving as early as possible. The earlier you start to save, the lower the regular contributions will have to be. It’s never too late, or too early to start.

Set Priorities

It’s not easy to be a disciplined saver, but there is no way to survive this funding conundrum without it. In an age where instant gratification is a way of life, it’s tempting to spend today and worry tomorrow. Spend less and save more, while unpopular advice, is necessary advice. The alternative will get you nowhere. So, setting and maintaining a budget will

be critical to your success. It’s nice to spoil our children, but do they really need fifty-seven Xbox games in their collection? Is that trip to Disney really necessary every year? Sacrifice today will help assure a better future tomorrow.

Get the Kids Involved

Parents should be straightforward with their children about how much they will be able to afford. If the child wants to go to a “name-brand” school that costs $35,000 a year, but the parents can only afford $15,000 a year, the student can take part in the choice to find alternative financing or go to the more cost effective school. Remind them that if mommy and

daddy don’t have enough money in retirement, because they spent all their money on college funding, they should get used to the idea of having them as roommates to support when they’re all grown up. So, run the numbers together to see which universities your family can afford. Compare the costs of attending public vs. private institutions and consider the possibilities for financial aid.

The federal government has made it possible for virtually anyone to attend college, despite cost and despite parent’s income. Student loans and parent loans are readily available at low interest rates and payments are often deferred until the student graduates (for most full time students). Too many families incorrectly assume that they won’t qualify because they feel they are too wealthy, but this is not the case. The application process may be somewhat cumbersome, but the benefits far outweigh the (time) costs.

The best financial aid, of course, is free money. Much of the student financial aid comes in the form of loans, but there are grants and scholarships readily available for that patient enough to search for them, and qualify for them.Check out The College Board for more information about college costs, scholarship search strategies and financial aid.

Working While Studying

Parents who wish to only partially subsidize education for their kids (or not fund it at all) have a number of alternatives.Students can apply for loans, work-study or (gasp) get a job. Asking a college student to work and/or take out loans may not seem attractive now (especially for the student). But, there is something to be said about a child that works his way through school. They’re often hungrier, eager and motivated to succeed. Those traits can take you far in life. In fact, some of the best and brightest professionals have managed to do well in school while also managing a job, present

company included. After all, the kids can get student loans to fund education, but when is the last time you heard of retirees taking loans to fund their retirement?

Consider a Whole-Portfolio Approach to Investing

Don’t want to bother compartmentalizing your “pots of money”? No problem. Many of my clients have opted for a more holistic planning approach. A whole-portfolio approach takes into account all of your taxable and tax favored investment accounts. With this approach, you can always earmark certain buckets of your portfolio for certain things. But putting it all

together in one portfolio provides a big-picture view of your overall asset allocation. That way you can manage your total portfolio risk at any given time.

This approach allows you to incorporate your various goals, including college and retirement, into the big picture as you plan for future spending needs. You may find that the financial pie is actually big enough for both, or you may need to adjust one goal or another.

Closing

So, which one is it—college or retirement? Ideally, you don’t want to sacrifice one goal for the other. Try to balance the two so you don’t shortchange your future or your children’s in the process. The decision to put your child’s education before your own retirement is not only an economic decision, but also, an emotional one. Parents feel a sense of obligation to provide a better way of life for their kids, but if they plan carefully, they won’t have to risk their own well being in order to accomplish this.

The consequences of funding education before funding retirement may lead to inadequate retirement funds or prolonging your work years. The choice is yours, so choose wisely.

The Roth IRA differs from the traditional IRA in many respects. First, let’s start with the similarities. Each plan can be set up by an individual to fund retirement. Both have the same contribution limits (currently $4,000 per year or $5,000 if you are 50 or older). The investments grow tax-free while invested. The main differences occur on the tax consequences of the contributions and withdrawals. It is these differences that make the Roth IRA a popular first choice before a traditional IRA.

In a traditional IRA, contributions are deductible from current income. But, when contributions and income are withdrawn at retirement, both are taxable as ordinary income. This has the effect of deferring tax on the contributions and income and creating a potential permanent tax savings if you are in a lower tax bracket at retirement. However, the income is taxed the same way regardless of whether it is derived from capital gains, dividends, or interest.

In a Roth IRA, there is no deduction of the contributions, meaning that they represent “after-tax” funds. Withdrawals of contributions (not income) can be made from the plan at any time without tax or a penalty, which gives more flexibility to accommodate changes in financial needs over time. When contributions and income are withdrawn at retirement, they are tax-free, meaning that you never pay the tax on the income in a Roth IRA. That’s a permanent tax savings.

Of course, there are some rules, limits, and restrictions on both the traditional and Roth IRA’s. Both plans should feature prominently in your retirement planning. Investors can have both plans in force to maximize contribution limits.

Taking advantage of tax-deferred IRA plans is a smart way to accumulate wealth for the majority of Americans. Knowing the tax rules that relate to each type of plan ensures that you minimize tax and make the most out of your retirement.

However, when it comes to real life, these three letters will have a greater noticeable affect on people than many of the other three letter names that we here on a regular basis such as the CIA, FBI, NSB, ATF, and countless other abbreviations that are hidden behind three little letters.

The good news is that an IRA isn’t nearly as insidious as its name would imply. This is a useful tool to most Americans who hope to someday retire from their life of work and life out a somewhat comfortable existence.There are actually many different IRAs, which is the abbreviation for Individual Retirement Account.

A Traditional IRA is the most common. The only requirement for this particular IRA is that you are employed and that you invest no more than 100% of your income or $4,000 per year, whichever is greater up to the age of 49.

At the age of 50 your maximum investment is 100% of your income or $5,000 whichever happens to be greater. If you meet the requirements of the IRS to their satisfaction your contributions to your traditional IRA will be tax deductible. As a result, the funds are not taxed while in your IRA account but once the funds are withdrawn they are subject to federal income taxes.

This is not necessarily a bad thing, particularly for those who plan to be in a lower tax bracket when the funds are withdrawn. However, there is a growing number of people who are interested in the benefits that Roth IRAs and similar funds present by paying the taxes now when the rates are known rather than risk an even higher rate of taxation in the future, even in a lower tax bracket. The best advice I can give is to discuss the matter thoroughly with your financial planner and listen to their advice.

This is a case where only you can ultimately decide which decision is best for your needs but he or she can provide valuable guidance. You should also keep in mind that though laws favor non-taxation for Roth contributions that could change between now and the time you are ready to withdraw your funds, which will have you paying double taxes on those funds and is the primary reason that many people elect to stick with Traditional IRAs instead.

There are several distinct disadvantages to the traditional IRA funds. One of those would be the requirements in order to qualify for tax deductions. First of all, if you have the opportunity to invest in another retirement option through your employer you must be below a certain income level in order to qualify for the tax deduction. If you do not meet that qualification all the funds that are deposited into your IRA fund are subject to federal income tax.

You will need to seriously discuss your stock buying strategies before determining if this is the best choice for you as those who buy and hold tend to be penalized when it comes to capital gains.

As things are currently, a Roth IRA is often preferable as the money isn’t immediately tax deductible but not only is the investment not taxed upon withdrawal but neither are the gains that were earned on the investment. Another serious setback when it comes to the traditional IRA is that you are required to begin receiving payments at age 70.5. As we are seeing more and more people work well beyond the traditional retirement age this is becoming more and more of an issue.

There are advantages and disadvantages to traditional IRAs. It is important that you decide which of these you are prepared to live with and which you would rather live without. These differences will matter a great deal when retirement comes. Take the time to discuss your goals for the future with your financial advisor and see what he or she recommends.

Most places of employment will offer a variety of retirement plans you can choose to make use of. Two commonly asked questions are whether a Roth 401(k) is the same as a Roth IRA retirement account and is either one better than a traditional 401(k) plan.  While there are significant differences, any type of IRA & retirement plan investing is a great idea; for the past 10 plus years the average American actually had a negative savings rate!

The Roth IRA

A Roth IRA and a Roth 401(k) are two very different savings instruments. Both have the same concept however. Basically, you make contributions to plan for retirement. There are no tax deductions for these contributions. Yet, upon your retirement, you can withdraw your contributions and additional earnings tax-free. While it would be wonderful to have a simple answer to these common questions, one type is not necessarily better than the other. It will greatly depend on your personal preferences and circumstances. The right choice for you will depend on your specific situation and expectations.

The Traditional 401(k)

With a traditional 401(k), the employee will contribute a specified percentage of their salary to a plan that is employer-sponsored. Many companies will make contributions to your account, and some companies will even offer a match of up to 100% of your contributions. No contribution that is made to the traditional 401(k) is counted as taxable income. All of the gains that are accumulated in the account are tax-deferred. Upon withdrawal, the amount is taxed as if it were ordinary income. The traditional 401(k) is similar to a traditional IRA account and account owners will have to begin taking withdrawals at age 70 1/2.

Roth 401(k)

When dealing with a Roth 401(k), the contributions that are made by the employer are kept separate. These contributions will receive the same tax treatment as a traditional 401(k).

A Roth IRA does not have a withdrawal requirement. You will never be required to make mandatory withdrawals from the account. Roth 401(k) accounts do have a withdrawal rule, and owners will be required to begin withdrawing when they reach 70 1/2. One way to avoid the mandatory withdrawal rule is to rollover the Roth 401(k) into a Roth IRA retirement account. Keep in mind that Roth 401(k) accounts are available to every worker, while Roth IRAs have an income restriction.

The Roth 401(k) plan has a maximum contribution limit. In 2009, the limit is $16,500. However, there is a $5,500 catch-up contribution that is allowed for workers who are over the age of 50. Combined, employees can contribute up to $22,000 per year into their account.

Contribution Limits: Roth IRA & 401(k)

IRAs have a very significant difference from a 401(k). With an IRA retirement account, the contribution limits are lower. This is because these accounts are not sponsored by your employer. For 2009, Roth IRA contribution limits are set at $5,000. Employees are allotted an additional $1,000 for catch-up, totaling $6,000 for the year if you are over 50. It is possible to have more than one type of retirement account. If you have an IRA and a 401(k), you can contribute the maximum amount to both accounts. Now, the question remains, what’s better, a 401(k) or a Roth IRA?

Choosing Roth 401(k) or Roth on Roids

An analysis conducted by William Urban from Bingham, Osborn and Scarborough, indicates that the Roth 401(k) plan “might be the better choice for more people than commonly understood.”

The popular belief is that a Roth 401(k) makes more sense, especially if you are planning to be in a higher tax bracket upon retirement. The analysis showed that if your tax bracket falls in retirement years, the accumulation in the Roth might make that the better choice. This is usually the case if employees can afford to contribute the maximum amount allowed. Many times, younger workers are in the lower tax brackets. This minimizes the immediate tax benefits of the traditional 401(k), making the Roth fund a better choice.  Some experts think that a Roth on Roids is even more advantageous because it has guaranteed minimum returns and you never lose money like most people did in 2008.

Regardless of your decision, going with any tax advantaged savings account is critical to save for retirement. More and more people file for bankruptcy because they did not have a large enough savings when a financial emergency occurred such as a sickness, loss of a job, or death in the family.

Investing Gold in INR is the safest way to invest money for the post retirement time. Golden IRA is a self directed individual retirement account program in which a person can open a Gold IRA or can also switch their saving or current IRA into a golden IRA.

When we talk about IRA (Individual Retirement Account), they are of various types, and it totally depends upon the type of investment you are going to make. For example, stock investments, bond investments, security investments and many other investments. Nowadays, there are many investment agencies, which provide golden IRA by using which persons like us can hold gold in their retirement accounts. It is widely used now and every person wants to have a golden IRA rather than a simple and insecure IRA. This is due to the fact that gold is the only investment material that does not depends on any other individual for value. Moreover, as the market value of stocks decreases the value of gold increases, as a trend.

If we want a secure IRA in present economic situation which is fluctuating day by day, the Golden IRA is the best option so as to make our future bright and safe. There are lots of options available for us to invest in gold IRA. These options include bullion bars which are basically physical gold bars and cost up to ten grand per bar, gold coins again a physical thing but can be used in Golden IRA, gold certificates tell us about the gold we own, gold exchange- trade funds that simply tracks the up and down value of our gold and so on. We can use any one of these options or multiple options to invest in Golden IRA.

IRA Mistake #1: Not Naming a Beneficiary

Upon opening an IRA, you are not required to name anyone as a beneficiary to the account. Even though this action is not required, it is highly recommended. If something happens to you and there is no beneficiary named for the account, it will end up in probate. This will be a long, drawn out process that will cost money that didn’t need to be spent. The money in the account will be disbursed over the remaining life expectancy of the deceased account holder. This is usually a shorter amount of time than the expectancy of a beneficiary. In short, this means that money will be disbursed faster which will place a very heavy tax burden on the person who is receiving the money, which is determined in probate.

Naming a beneficiary when you open the IRA account will eliminate this. You will then be absolutely sure where your remaining IRA account will go after your death. You can also determine how fast the funds will be distributed.

IRA Mistake #2: Forgetting the Deadline for IRA and Roth IRA Contributions

Don’t forget the core purpose of Roth IRA’s – to fund it as much as possible for retirement! Many people believe that the last day they can make a contribution is on December 31, of the last day of the year. This is not true! You may continue to contribute up to April 15 of the following year. IRA contributions are based on the tax year – not the calendar year, so don’t miss this extra time by assuming the end of the year means the end of contributions.

The best way to avoid this common mistake is to fund as much as you can early in the year. If you meet the maximum simple IRA contribution limit or Roth IRA contribution limit, you will not miss out on saving more money. The date of April 15 is referred to as an extended contribution deadline. These few extra months could make a huge difference for most savers in your IRA retirement account.

IRA Mistake #3: Not Knowing Spousal/Non-Spousal Inheritance Rules

There is a difference in the rules of inheritance that applies to spousal and non-spousal beneficiaries. If you are a spousal beneficiary, you have two options. You may roll the funds into an IRA that is already in your name, or you may change the name on the inherited account. After this is complete, the money will be viewed as if it were yours all along. Contribution and withdrawal rules will apply as if it were your own account.

Non-spousal inheritances work differently. You will not be able to roll the funds over to your personal IRA. You are also not allowed to make any contributions to the original IRA account.

IRA Mistake #4: Not Contributing Because of Stock Market Volatility

Due to the recent stock market meltdown, many people are questioning whether they should continue contributing to their IRAs. The answer is simple. Never stop contributing! Regardless of what the market is doing at any given time, you should take full advantage of the numerous benefits offered by an IRA retirement account. One of those benefits is a tax break. No matter what the state of the market is, you will continue to get tax breaks on all money contributed. If you are lucky enough to work for a company that will match your contribution, you make even more money with the account, as well as with the added tax breaks which will of course lead to IRA retirement income when it is time to spend it.

I was talking to an old friend the other day, he works at a management company that handles Self Directed IRAs. Anyway we were discussing the sad fact that 96% of Americans allow banks, Insurance companies and stock brokers to rip them off, by putting everyones IRA money into the respective companies own financial instruments, like mutual funds and stock. And then to add insult to injury paying the average IRA account holder a miserly 8% and keeping all the profits for themselves.

My friend was saying, when you aren’t limited to investing in whatever your custodial company offers, you can invest your IRA in some very interesting ways. He went on to tell me that more and more people over 50yrs old were converting their 401(Ks) and the normal IRAs into a Self Directed IRA. You don’t pay taxes or penalties to convert over to them, They (the over fifties) need a company that handles a self directed IRA, a company that allows people to run their own investment portfolio, and does what you say, when you tell them. But one that will still give you a helping hand and guide you through all the rules and regulations. You will make more with a self directed IRA investing your money in real estate than you will with your money sitting in a bank at 8% per annum.

In 1974 Congress brought into being The Individual Retirement Account or IRA a trust fund that is accepted by the IRS. You get a tax rebate for every dollar that you put into your account, for example you get to deduct it from your income this year and you pay no tax on it until you take it out. The Federal Government created The Self Directed IRA so you can put away savings and earn money for when you retire without having the interest eaten away by taxes.

My friend went on and said that when his clients turned over four houses or more a year, he encouraged them to convert over to a Self Directed Roth IRA to maximize their compound interest. I will explain what a self directed Roth IRA is. The essential part of the Roth IRA is the fact that the money you put into it is not tax deductible, while the money you withdraw when you retire is not taxed. It does not become eligible for tax again.

I told a story the other day about a friend of mine who liked a self directed IRA so much he taught his son and daughter to invest in them too. But you don’t have to be young to have a self directed IRA, plenty of my generation ie the baby boomer generation are changing over to them too. Your ROI is based on your knowledge of real estate not on the yo yo effect of the stock market.

I have had people come up to me and say that they know nothing about real estate and they thought that people who deal in real estate were losing money. I told most of these people to read my articles and then go to my website and they would see the real story about real estate and where it is going, they will also find there a TURNKEY approach to real estate investing that many hundreds of people are applauding.

The Social Security administration’s recent report stated that Social Security will begin to have a minus cash flow by the year 2017 and by the year 2040 will not be able to pay a full benefit. With this crisis looming, all of us should take whatever steps we need to ensure we are covered in our retirement. We need to get our families into saving for their retirement too. I told my friend that maybe someone would rollover their 401(K) into a self directed IRA after reading about my talk with him. He actually seemed bashful about me wanting to write about talking to him.