In my first article on retirement, I told you what you have always wanted to hear: Wall Street might actually suck. It was a victory for the neighborhood idiot, the village stoner, and of course, your unemployed broke self.
Such a system does exist and I am now going to give it to you. The free trial to my twenty five step plan gets you the basic course materials. For just $19.99 a month, I will send you personalized lectures that works within your needs to become extremely rich.
The thing is, as long as the stock market has been around, it has tended to go up significantly over long periods of time. As a matter of fact, for as long as the stock market has been around, over a 20 year time frame or longer, it has always gone up...a lot. Yes, that includes if you were dumb enough to invest right before the Great Depression (the worst possible time). Randomly choosing a lot of stocks therefore is going to be a great investment strategy because while a few might be suckers, over the long run, you will do about as well as the overall stock market.
Nonetheless, such developments might also mean the end of capitalism as well and honestly your money isn't going to be safe anywhere if that happens. Not to mention, historical returns were still high even during the period that Hitler looked like he was going to take over the world and the US was in a Great Depression. If you anticipate the apocalypse by your retirement age, honestly nothing is going to save you other than spending all your cash on that concrete bunker you've been convincing your wife is a great use of your time. Or of course, you can hope we won't kill ourselves in 40 years, make a shitton of cash and then spend it all on that same concrete bunker but make it way better.
But now you need more to finally bring about the death throes of the bourgeois. You need a system that is smarter than stock picking (but also uses the stock market to your advantage), cheap enough that you could utilize it, and basically takes no effort since you are far too busy finding a job and/or sitting on your couch complaining about how writing cover letters is stupid. Also, it really has to make you a ton of cash, like, a big ton.
Such a system does exist and I am now going to give it to you. The free trial to my twenty five step plan gets you the basic course materials. For just $19.99 a month, I will send you personalized lectures that works within your needs to become extremely rich.
...Which is what I would write if I was an asshole! I need validation and charging people to see my work is a barrier in that validation. Also my plan is only three steps. Anyway, let's get down to it.
1. Open a Roth IRA
Whose Roth, what's an IRA? How do I even do this? Well first off, I didn't even bother to Google who Roth is or why he gets his own Individual Retirement Account (IRA) option. I'm guessing he is a pretty boring accountant who liked numbers or something.
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| Ok, after I wrote that, I immediately looked up who he is. Turns out he is this guy and he was not an accountant but a senator who liked numbers. My hunch was right though. Judging from this picture, he doesn't seem like a guy I would go clubbing with anytime soon. |
Here is why this thing is awesome, you have heard the saying "nothing is certain but death and taxes" right? The Roth IRA makes this saying obsolete...sorta.
Essentially, a Roth IRA is bank account like your checking account that is specifically designed for retirement. What makes them so special is you pay taxes only on the money you put into them, not the money you take out.
So for example, if you put 100 dollars into a Roth IRA and the tax rate is 7% on that day. You owe the government 7 dollars and you pay it. If your investment grows to 2000 dollars by the time you retire and you withdraw all of it, how much more in taxes do you have to pay?...zero.
What's the catch? Well there are two. The first is, you can put money in right now but you can only take out your hard earned goods out when you turn 59 1/2. But of course, you should be doing that anyway so consider it a security lock to prevent against you impulsively withdrawing your money too early.
What's the catch? Well there are two. The first is, you can put money in right now but you can only take out your hard earned goods out when you turn 59 1/2. But of course, you should be doing that anyway so consider it a security lock to prevent against you impulsively withdrawing your money too early.
The second catch is that the US government limits the amount you can put in this account to 5,500 dollars a year. Honestly though, you are reading this blog, you probably don't even have that much money period. I really don't anticipate a problem here.
So yeah, this thing is pretty sweet. You are probably wondering how to open one, it's also super simple: go to your bank and ask. It is their job to help you through it. You do not want a regular IRA, you want a Roth IRA since a regular one you pay taxes on all the money you take out, not in. I'm guessing you can set it up in fifteen minutes or less.
*A Quick Note for the employed amongst us (if you are me or don't have a job like me, skip this)
Well first off, congrats on your job. I hate your guts. But second off, you also might have heard that you have something called a 401k with your employer. If you have not done anything with this, you probably should.
Once again, do not open a standard 401k, you want a Roth 401k. Ask your employer for more info if you need it, they will have it and assist. A Roth 401k is advantageous because that means you can add up to $18,000 each year. Plus you still have a Roth IRA as well to put money into if you want it.
Once again, do not open a standard 401k, you want a Roth 401k. Ask your employer for more info if you need it, they will have it and assist. A Roth 401k is advantageous because that means you can add up to $18,000 each year. Plus you still have a Roth IRA as well to put money into if you want it.
A final thing is some employers offer matching contributions. So for instance, if you put 500 dollars into your Roth 401k, the employee might also put 500 dollars into this. YOU NEED TO DO THIS. Like cmon, this is literally free money. Ask your employer if they do and then match as much as you can afford. It literally just doubles your money for no reason, consider it a life-hack.
2. Open a Vanguard Target Date Fund and transfer your Roth IRA into it.
If you just did the first step and ignored this one, you would have tax free money sure, but your money stash wouldn't get much bigger which kinda defeats the point. Remember how you used to buy a Coke for 5 cents in 1960? I certainly don't. However, I do remember embarrassing myself in the checkout line at my local 7/11 last week because I didn't have 5 billion dollars to pay for what it costs now.
You need your money to grow to counteract the fact that stuff tends to get more expensive over time. This second step is the part where you do that and get rich in the process.
Remember how I said that the monkey throwing darts at a board is a better investor than your average Harvard genius? Not only is this monkey a better investor than Mr. Ivy League but he actually turns out to be a great investor in his own right.
Remember how I said that the monkey throwing darts at a board is a better investor than your average Harvard genius? Not only is this monkey a better investor than Mr. Ivy League but he actually turns out to be a great investor in his own right.
The thing is, as long as the stock market has been around, it has tended to go up significantly over long periods of time. As a matter of fact, for as long as the stock market has been around, over a 20 year time frame or longer, it has always gone up...a lot. Yes, that includes if you were dumb enough to invest right before the Great Depression (the worst possible time). Randomly choosing a lot of stocks therefore is going to be a great investment strategy because while a few might be suckers, over the long run, you will do about as well as the overall stock market.
Now before you go planning your Bronx Zoo heist to get a stock broker, a cool non-profit called Vanguard has already done all of this for you. They invest in a large amount of random stocks and they are willing to put your money into their pool for an extremely small fee since they don't really have to do anything either.
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| Prior to Vanguard, I saw no other path but to pull of the Bronx Zoo heist I just warned you not to do. Unfortunately, my preliminary plans indicated that there probably isn't a decent way to inconspicuously take a chimpanzee through New York City. Instead, I waited for a clearance sale at my local toy store and bought this instead. For $5.95, I practically stole it! #Oceans14 |
They offer a lot of complicated options and I will spare you the rationale behind them all but what is best for most people is a new tool they just started offering called the Target Date Fund.*
Basically, you input your age and they automatically re-balance as you get older. Remember how I mentioned that the stock market has never gone down over long period of times? Well I can't predict the future and neither than you. It is unwise to put all your eggs in one basket, even if that basket is a fairly sturdy one like the stock market.
The Target Date Fund will start while you are younger with almost all your money being put into the stock market using the monkey dart method. As you get older (and closer to your retirement age otherwise known as the Target Date), it will start transferring more and more of this money into bonds. Basically, bonds are you loaning money to the government and them promising to pay you back. They are mega mega safe because what can the government do if it runs out of money?...it can print more of course!
The Target Date Fund will start while you are younger with almost all your money being put into the stock market using the monkey dart method. As you get older (and closer to your retirement age otherwise known as the Target Date), it will start transferring more and more of this money into bonds. Basically, bonds are you loaning money to the government and them promising to pay you back. They are mega mega safe because what can the government do if it runs out of money?...it can print more of course!
Opening a Target Date Fund is basically a no-brainer as it basically allows you to directly transfer your Roth IRA into it and then you basically never have to worry about it again.
How do you open it? About as simple as opening your Roth IRA. You go to this link, pick how old you are and press the red button that says Invest Now. Then you press "transfer an account" on the next page and it will take you through linking your Roth IRA account to your Target Date Fund. Seriously that easy. Which brings me to my final step...
3. Brag to your friends about how rich you will be in 40 years and buy an expensive mansion plus 500 pounds of blow.
Ok, just ignore everything I wrote after the word and. Please don't do that. But that aside, you are done.
But I know what you are thinking. I vaguely told you you are going to get rich...how rich?
Well, there are two things this depends on. One is, the world. If these next 40 years are making everyone as rich as the last 40 years did, you are going to get incredible amounts of money from doing this. If the world sucks as bad as it did from 1900 to 1940, you are going to still do amazing but not astoundingly incredible.
But I know what you are thinking. I vaguely told you you are going to get rich...how rich?
Well, there are two things this depends on. One is, the world. If these next 40 years are making everyone as rich as the last 40 years did, you are going to get incredible amounts of money from doing this. If the world sucks as bad as it did from 1900 to 1940, you are going to still do amazing but not astoundingly incredible.
The second thing is of course what you put in. Let's say we put in 1,000 dollars a year to a retirement account for 40 years at the worst time to invest and therefore got a really lousy return. So total over 40 years, that is about 40,000 dollars of actual money you put in, or about the cost of a large iced coffee from Dunkin Donuts. How much do you get out? Oh no big deal, $388,511
What about same scenario but best time to invest? You would once again put in 40,000 dollars and would take out... does $1,102,990 sound cool??
Don't even answer, it sounds fuckin' awesome.
Don't even answer, it sounds fuckin' awesome.
Instead of thinking of retirement as being boring, think of it as you putting money into an ATM and the ATM glitches and accidentally spits out somewhere between 10-25 times whatever you put in. Or perhaps think of it as paying whatever you want per month for the right to step in a money booth that showers you with cash. Let your imagination run wild.
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| My personal favorite way of thinking about retirement is picturing me as this dude but much younger. I walk walk into a casino with my briefcase and bet everything on red. I then promptly step outside for a 40 year cigar break and come back with everyone cheering and handing me roughly 10-25 briefcases. |
I've also taken the liberty of providing a calculator below so you can play around with some of these numbers and figure out how little cash you need to live out whatever power fantasy you desire upon turning 65. I hate math and I am guessing you do too, this handles everything for you. The only thing is you will have to play around with interest rates a bit for the numbers to plug in. I'm not going to even get into what that means but I encourage you to read about it. Just know you should put anywhere between 8.9-12.5 on that line which matches historical outcomes. Also note that the calculator claims your gains will be taxed but since you have put your cash in a Roth IRA, this is actually not the case.
In conclusion, there really isn't a conclusion needed. You just won life. The bourgeois does actually suck, you don't and you will now be able to acquire amazing riches by spending and doing almost nothing. George Washington, Gandhi, Steve Jobs, and now you. You're welcome.
*So no one actually sues me I am going to put the famous disclaimer you are going to see everywhere on stock investing sites. Historical returns do not guarantee future returns. The Earth could blow up, the hippies finally seize the stock market and invest all of the world's cash into bio-degradable cars, the President could be Donald Trump...etc.
Nonetheless, such developments might also mean the end of capitalism as well and honestly your money isn't going to be safe anywhere if that happens. Not to mention, historical returns were still high even during the period that Hitler looked like he was going to take over the world and the US was in a Great Depression. If you anticipate the apocalypse by your retirement age, honestly nothing is going to save you other than spending all your cash on that concrete bunker you've been convincing your wife is a great use of your time. Or of course, you can hope we won't kill ourselves in 40 years, make a shitton of cash and then spend it all on that same concrete bunker but make it way better.
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