When 401k's and IRA's came out in the 80's, I was so excited. I could save money, lower my taxes, and make tax-free earnings while I go. Then I would only have to pay taxes when I took it out 30 or so years later. What I hadn't really thought about was the fact that I couldn't touch the money without paying tax and if I took it out early, I would have to pay a penalty, too.
To entice me, I was given the opportunity to invest my money in things I thought only rich people could get in to. I could invest in stock funds, bond funds, certificates of deposit. Wow! Me, investing. The only thing I had invested in before that was my house and savings bonds. I could have high risk with a high potential to grow...and lose, of course. It was all quite heady. Getting myself involved with such things was good, in that I was saving, but bad in so many other ways.
I wasn't a sophisticated investor. I depended on the companies managing my money to give me good advice. Perhaps it was good advice, but I still lost money at every drop in the market. I had put my hard-earned money into something that gave me no security. I would go to the annual meetings put on by HR to learn more about investing. What I wanted most, though, was for me to save more. OK. I can accept that concept. Save more and have more. That was the theory.
Life goes on, though. I had to dip into the funds for this and that, and gradually, I saw my money shrink. Worse yet, I had to give back over 30% of it to taxes. I felt like I was losing and the investment companies, and the IRS, were the big winners. When do I get to win?
In the last decade, the market took such a tumble, that took nearly half of what I had left.
And then, a few years ago, I was attending a conference in San Diego. I wasn't happy with my job, or where I was living at the time having moved to the middle of the country, and I was very worried about my finances. I had lost my home to foreclosure and was considering bankruptcy. With that in mind, I was invited to dinner with a good friend of mine who was an audit director from the bay area. She had brought her audit team, being the generous soul that she was, and I happened to sit next to Chat. I didn't know him at the time.
We introduced ourselves and I asked him what sort of name Chat was. He told it was Thai, I told him my wife was Thai, and from then on we were nearly inseparable friends. We talked of work and dreams and concerns and then I told him my issues with money. I am not too shy about such things. He left it at that, and we went our separate ways at the end.
Then we started writing regularly via email and he asked to talk to me on the phone.
"Roy, I was wondering. Would you like to put your money into something that protects you from market downturns?" He had me. He told me about something called an annuity. I thought those were just for old rich people. I was wrong. He showed me how I could roll my money over to one, I could invest in various types of mutual funds, and...here is the best part. When the market drops, they hold my account at the highest value and start paying 6% interest. I didn't believe him.
I had heard of so many ways to get rich, to save and double my money and so on, and I was far too skeptical to believe. He understood and then he did something I was again surprised at. He showed me his own annuity. And it showed how it protected him.
I did it. Even though it guarantees me 6%, it has already grown over 15%. Remember what I said about the Rule of 72? Do the math.
Finally, I get to win. I take back my title of this article. Don't stop me from saving!
I check it every day, btw.
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