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    Rule Your Freakin' Retirement: How to Retire Rich by Actively Managing Your Assets
    Rule Your Freakin' Retirement: How to Retire Rich by Actively Managing Your Assets
    Rule Your Freakin' Retirement: How to Retire Rich by Actively Managing Your Assets
    Ebook314 pages4 hours

    Rule Your Freakin' Retirement: How to Retire Rich by Actively Managing Your Assets

    By Michael Parness

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    About this ebook

    DON'T PANIC. RULE!

    Market turbulence has made opening monthly 401(k) statements shocking rather than reassuring. Michael "Waxie" Parness can help.

    The standard strategies and advice regarding your retirement accounts are NOT working. Many people's 401(k)s are now 201(k)s, and it may get worse. YOU need to take control of your retirement, and your life. Rule Your Freakin' Retirement, through practical and pragmatic advice and examples, will teach you alternatives to the "buy, hold, and pray" strategies most investment advisers give. In today's world you need fresh ideas, and this book gives you the tools you need to not only protect what you have in your IRA, but to grow it in an aggressive, time-tested, yet easily managed way. And, yes, a safer way!

    Building on his successful Rule the Freakin' Markets, master trader and motivational speaker Michael Parness applies the same aggressive strategies to normally ignored or undermanaged 401(k), IRA, and other retirement accounts. Contrary to conventional wisdom, Parness argues that no matter what age you are, NOW is the time to adopt active, aggressive, and controlled strategies to ensure a fully funded, real retirement on your own terms, not subject to market gyrations out of your control. He outlines, in plain language, bold but practical strategies emphasizing research and tailoring approaches to individual needs.

    With record numbers of baby boomers entering or nearing retirement, and succeeding generations caught by a volatile economy, Rule Your Freakin' Retirement offers tangible, proven, no-nonsense advice that all can profit from, in the engaging Waxie style.

    LanguageEnglish
    PublisherMacmillan Publishers
    Release dateMar 3, 2009
    ISBN9781429962568
    Rule Your Freakin' Retirement: How to Retire Rich by Actively Managing Your Assets
    Author

    Michael Parness

    Michael Parness has been featured in The Wall Street Journal, Forbes, Money magazine, and The New York Post, Bloomberg Radio, and makes weekly appearances on CNNfn's The New Show. He is the author of Rule the Freakin' Markets. He lives in New York City.

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      Book preview

      Rule Your Freakin' Retirement - Michael Parness

      Introduction

      Don’t Believe Everything You Hear

      In July 2002 The Wall Street Journal printed an amazing story. A reporter attended a seminar in Denver with a group that called itself Annuity University. If you don’t know what an annuity is exactly, don’t worry about it; there are a million types of annuities, and I’ll be describing many of them later in the book. For now, just think of an annuity as an investment vehicle sold by an insurance company in which a buyer pays a specific amount up front in exchange for guaranteed periodic payments down the road, usually monthly or quarterly. As you’ll learn, annuities are often poor investments. They give crappy rates of return and are loaded with fees. For some people—seniors in particular—they can be a big mistake.

      So what did they teach at Annuity University? Insurance agents learned how to use scare tactics and charm to get seniors to buy their products. The writers of the article, Ellen E. Schultz and Jeff D. Opdyke, reported that agents were told to treat seniors like blind twelve-year-olds. A portion of the article reads:

      Trainees learn that the educational seminars can be used to generate fear among the attendees. Toss hand grenades into the advice to disturb the seniors, Mr. Clark [the seminar leader] tells the trainees. He adds, You’re there to solve their problems, but you have to create those problems first. No problem, no sale. So at the seminars, you’re creating problems, and you tease them with the solutions to encourage a follow-up meeting with a salesman.

      They thrive on fear, anger and greed, Mr. Clark continues. Show them their finances are all screwed up so that they think, ‘Oh, no, I’ve done it all wrong.’ This will make you money. The Annuity U. class learns that whatever the retiree’s particular concern—whether it’s taxes, investment returns or asset protection—the solution is almost always the same: an annuity.

      Another Annuity U. lecturer, Mel Brandon of Memphis, Tenn., tells the class that educational seminars offer a good way to find out which seniors are well off and worth concentrating sales pitches on. When people arrive at his seminars, he says, he has spotters in the parking lot checking out what kind of car each person drives. That way we’ll know who has the money. The class chuckles.

      Charming, eh?

      The salesmen of annuities and the companies that market them make a fortune by selling these things. A single sale can lead to thousands in commission for the salesperson. Insurance companies, some of which are not especially trustworthy, often load annuities with indecipherable fee structures. Even a sophisticated investor may have a hard time determining how much an annuity actually costs. The literature that gives fee details is intentionally opaque and confusing. It’s legalized loan sharking, and millions buy into it each and every year without even learning what they are getting themselves into. And blind faith equals a bad financial future.

      These guys take advantage of vulnerable people so that they can line their own pockets. It’s despicable, really. And scary. But in the world of retirement investing this sort of behavior is not at all uncommon. People get taken all the time. Hundreds of times a day every day, people across the country put money in investments that make little sense for them. They’re talked into spending their money in this way by advisors who are more concerned about their own incomes than anything else. And not everyone who’s taken is a vulnerable senior.

      A lot of smart, sophisticated people have their money in places they shouldn’t.

      Beware the Advisor

      In the world of retirement planning, there’s so much money in circulation that you have to expect hucksters like the ones described in the Journal article. Not all of them come out of shady operations like Annuity U. A lot of people who appear to be entirely credible are nearly as dangerous. If you need a quick example, just think back to the late nineties and the dot-com stock boom. The biggest, most-trusted investment houses showed that their interests and those of their investors were frequently at odds. The Merrill Lynch analyst Henry Blodget, who made a career out of hyping Internet stocks, told people within his company one thing (e.g., I can’t believe what a POS [piece of shit] that thing is.) while Merrill said something completely different to the public (presents on attractive investment).

      Blodget may be an extreme example, but it’s a good idea to keep him in mind. You need to remember that Merrill, JPMorgan Chase, and the rest are companies—public companies—that are under constant pressure to show increasing profits. Every quarter they need to be taking in more and more money. And the advisors these companies employ to help you invest your hard-earned money often work on some sort of commission. You can be sure that the best commissions will not come from selling items with low customer fees, even if those are the best investments for you! Don’t believe me? Go to your broker and tell him you’re going to buy a bunch of bonds: You won’t be trading or making any sort of adjustments; the money’s just going to sit there, earning a predictable, steady, relatively low rate of return. See how happy your broker is then. At that point you may find out about additional fees that are applied to customers who don’t make enough movements with their investments. Think about this for a second: You’ll pay extra when you ask the brokerage to do nothing. Many brokers will suggest meaningless trades—known in the industry as churn—as a way of creating fees.

      One last note about the dot-com boom and bust: About the only people happy about the bust from 2000 to 2003 were the traders like my clients at trendfund.com and short sellers.

      Not all the overpriced advice on retirement is coming from the big Wall Street brokerages. In researching this book, I spoke to a friend who told me that a financial advisor oversaw his retirement accounts. He met the guy at work, as the advisor provided services for the company’s 401 (k). Through that position, the advisor would give seminars on retirement planning and offer his expertise outside of the work environment. This friend of mine, who had a substantial amount of money in an individual retirement account (IRA), liked the guy, and asked him to administer his account. There’s nothing inherently wrong with this relationship, and I wasn’t skeptical until I asked about the advisor’s fee. The advisor, I was told, was being paid one percent of the amount that was being managed. I fired up a spreadsheet, did some quick calculations, and let my friend know that if he continued to pay one percent he’d pay over $200,000 in fees in the twenty years before he retired. Was this guy earning that sort of money? I took a look at his accounts and saw that he had a pretty basic setup of mutual funds.

      It seemed to me that the advisor was putting in roughly ten hours per quarter on my friend’s account—if that. And he really wasn’t doing anything special to claim these extravagant fees. I suggested to my friend that he pay his advisor hourly for his work.

      So be wary of the market and anyone who’s trying to sell you anything, including individual expertise. It’s a solid first step to moving toward the right investment strategies—and a healthy, financially secure retirement! It’s a solid first step as you begin to Rule Your Freakin’ Retirement!

      Beware the General Wisdom

      While I’m on the topic of Wall Street advisors, I want to address an important point, one that I’ll return to periodically throughout this book. I bring it up here because it’s something you’re not going to hear from most financial advisors, especially those who are in the business of selling stocks and mutual funds. They’re not going to tell you that the market is fundamentally a dangerous place. Yes, over the long term both the S&P 500 and the market as a whole have shown nice returns. But there’s no guarantee that the historical rates of return will continue

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