PCS Investments - Retirement Plan

6625 Miami Lakes Drive, FL 33014

Retirement Plan

Do you know what is a Retirement Savings Plan?

This type of plan you’ve probably heard about 401k plans with 80% of employees through their work where they lay weekly money and the employer also contributes a part, a financial institution invests your money in mutual funds and the money grows with profits and dividends paid by these mutual funds.

Good idea, right? Not so much, there are several problems:

1 – The financial institution receives 1% – 2% per year on all the money you are contributing and earning in the form of commissions and expenses for handling funds.

How much is this of all your money in 20 years? 20% – 40% of your money (This is what financial institutions earn and you usually do not even realize how and how much they charge you for money)

2- The day you withdraw your money you have to pay at least 30% of taxes to the government or IRS (This is how the government collects a lot of money, through taxes when having control of the information of retirement plans of the individuals)

To give an example, $100k that you contribute over a period of 20 years to $5k per year and add an annual return of 8% on the investment and subtract the expense of the financial institutions (2% per annum) and 30% of taxes.

100k + 8% compound annually = 270k in 20 years

52k (2% for institutions annually) + 65k (30% taxes) = 117k

270k – 117k = 153k is the total you receive at the end

153k – 100k (contributions) = 53k profit

Financial institutions and the IRS receive at least $117k in commissions and taxes and YOU receive $53k of profits in 20 years

Is it still a good idea?

If you think it’s a conspiracy between the government and financial institutions MAYBE you’re right, after all if it wasn’t like this neither of them could earn so much money, perhaps this is why the government supports too much the financial institutions.

Why does NOT anyone say anything? Because the affected are the poor people that has to work for money and in no system has a voice that defends them , the rich who makes money through business or investments are not affected so much, because they do not save money, they invest and deduct gains from their income tax.

There is a better way to save for retirement and you can keep all the money. How?

First of all, there is an investment account for retirement that you pay no taxes now or when you withdraw your money, and it’s no secret, is an account called ROTH IRA where you accumulate your earnings without taxes neither in the present nor in the future you have to pay no taxes on your earnings.

Second, there are mutual funds where you can invest and you do not have to pay almost anything in commissions and expenses for the management of the fund, it is not a secret, they are called Index Funds, which is a fund that duplicates or copies a market index, e.g. S&P 500.

So why don’t they propose that you do this in the first place? If they propose this to you then neither the financial institutions nor the IRS earn so much money, the financial institutions are not going to propose something where they do not earn money and do not benefit from it, it is something that you have to do on your own because is for your own benefit.

KNOWLEDGE IS THE KEY TO SUCCESS!

The only good thing about 401k plans is that you deduct taxes in the present on your income, because in the end the financial institutions and the IRS are the ones that take most of the money you could have earned. They know that no one is going to claim when the time comes to withdraw the money and even if you do, there is no remedy, the damage is done, MAYBE by shame people prefer not to say anything because in reality you would realize that you have been the victim of a scam by your own government and financial institutions.

In summary, if you are really serious about your savings for retirement, consider also a ROTH IRA account and invest your money in Index Funds using the Power of Compound Earnings in combination with the use of the Average Cost, if you do it correctly with a Financial Advisor (That does not charge by commission) you would be guaranteeing the following:

No taxes on capital gains

No high fees to institutions

No high expenses to funds

Preserve 100% return on investment

Using the previous example, you would save $100k and earn $170k for a total of $270k in 20 years.

And if you ask, if you do it for 25 and 30 years? The total would be more than $400K and $600k respectively.

The savings in fees and taxes would be the following:

20 years: $117k or 43% = 52k (2% for institutions annually) + 65k (30% taxes)

25 years: $190k or 48% = 100k (2% for institutions annually) + 90k (30% taxes)

30 years: $310k or 52% = 190k (2% for institutions annually) + 120k (30% taxes)

Finally, you can not ignore the following information, in a 401k plan if you need to take part or all of your own money that you already contributed before time, they impose a penalty of 20% in many cases, plus taxes for the amount you got, the opposite of a ROTH IRA plan, you do not pay penalty or taxes for taking out your own money if you need it.

Now you know, analyze your situation and pass this information to your family and friends who may be in this situation to help them make better decisions.

“IF YOU THINK EDUCATION IS EXPENSIVE, TRY IGNORANCE”

Learn more about a Roth IRA www.rothira.com

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