Who doesn’t? Everybody dreams of fine things and a comfortable retirement. It just takes money. But building wealth today – and far into the foreseeable future, will require a different skill set, and different strategies than those that served our parents over the last 50 years. Let me offer three quick reasons why:
- Real Estate Windfalls – My parents bought the home I grew up in for $40,000 – and sold it 30 years later for $400,000. That was pretty typical. When they “downsized,” they paid cash, and put nearly $200,000 in their pockets – tax free. Do you think that will happen for us? All those “reverse mortgage” ads are running on TV for a reason? Millions of seniors are tapping into, and living on the stored up equity that’s fallen into their laps.
- Uncooperative Stock Markets – Used to be, the stock market moved on corporate earnings and other factors advisors could research and predict. Today, stock markets move on geo-political events like wars; and on international monetary events like European Debt. All that makes individual stock market investing – even through mutual funds – a fool’s game – because you know instinctively, tomorrow could be the day we re-live the crash of 2008 all over again.
- Taxation – Every single traditional way of building wealth is subject to taxation whether its stocks, bonds, mutual funds, gold, 401ks and IRAs – all of it. And with future taxes headed nowhere but up – our best case will be to take two steps forward – and one step back because of taxes. Tax-free wealth will be the wave of the future.
So what’s an investor to do? First, re-think your approach to wealth accumulation. Put more emphasis on your “defensive” game plan – how do I avoid losing money – whether we call it market risk, taxes, and others like steadily increasing fees and commissions. Second – stay tuned to the blog – answers are forthcoming.