In the recent past, we looked to professionals in the financial planning industry to help us devise a more informed plan that would take us comfortably into our retirement years. Unfortunately, the procedures and methods that most typical financial planners follow and suggest have become archaic and antiquated (even self-serving). Too often, this misguidance has led to diminishing returns instead of the large gains usually promised. As a result, and for good reason, we as a public have lost our faith in these so-called professionals and have lost the desire to save or invest for the future. Read the book, “Where are the Customers’ yachts?” by Fred Schwed Jr.
To further the challenge, Social Security has published their prediction to be bankrupt (See your yearly Social Security statement page 1 top right paragraph) and the government is screaming at the public through almost every form of media to establish a personal financial plan that would not include government assistance. In other words, “You are on your own!”
Without understanding your economic alternatives or having a personal system of financial growth, the effects of social heredity during the demographic and economic transition have proven to be devastating financially for most.
In other words, it’s becoming more and more difficult to achieve any level of financial security if we make our financial decisions based on our inherited perceptions. As time goes on things change and the economic climate we live in changes too. Things are changing more rapidly now than ever before. Unrecognized changes expand the information gap between our perceptions and reality. The decisions we make have their result determined by how close, or far, our perceptions are to the reality of the world we live in.
For instance, did you know:
1. You can self-direct IRAs, 401K’s, and other tax-deferred retirement plans and use those funds to leverage the acquisition of high-performing real estate and watch your assets grow unhindered by taxation.
2. If you have stocks bonds or mutual funds, you can often Pledge (Not Borrow) that asset as a down payment on real estate, but never take it out of the funds they are in. In effect, you can double dip!
3. Banks make money through something called arbitrage, and so can you.
4. You have hidden assets you didn’t know you had. You have all the financial assets you need to achieve any goal you desire.
5. The Return On Investment for Home Equity is Zero.
6. The effective rate you are paying on a fixed-rate mortgage changes from one year to the next.
7. Of the ways that the financial planning industry is allowed to report the performance of your investments under their management, at least 9 of the 13 can make it look like you are getting a better return than you are. Sometimes you lose money when they report a gain.
Through knowledge of truths like this, and much more, you can turn the financial table in your favor.
To achieve your own goals and dreams (which may be just a comfortable retirement), you must become knowledgeable and sophisticated about how the money game works, now, and stay that way through fast-paced changes. This requires an education process that may rattle your conventional thinking and an ongoing affiliation with a trusted source of new and current information, as well as opportunities to keep you on the cutting edge. Finally, you need to learn to apply a new systematic process that works and keeps working; because all the knowledge in the world won’t get you anywhere without its application.
The principles of what is becoming known as Alternative Economics are critical in developing a successful personal system of financial growth. Alternative Economics is being called by some experts the solution to a failing financial plan in America and the economic doctrine of our era.
Alternative Economics was first introduced to the public through local investor clubs of the national investor group as a personal system of financial growth and an emerging industry by the National Strategic Investment Corporation (NSIC) in February 2005.
The founders of NSIC recognized growing financial disparity in homes on a national level due to inefficient financial planning traditions, a failing social security system, and mismanaged or impotent government and corporate retirement programs that overlook many beneficial alternatives.
This disparity has reached a climax as the public is encouraged to take charge of its financial future. The challenge to this solution lies in the progressively fast-changing economic climate of this country, caused by the effects of rapid technological growth, among other major changes and events. The national education system can not keep up with these changes, therefore leaving the public to make financial decisions based on perception and not reality. Financial decisions made with old or just inaccurate information or perception yield less than desirable results and extinguish motivation for savings or investment activity. As a result, less than 1% of this nation’s household income is currently being invested in any kind of retirement or financial plan.
Alternative Economics is an answer to the call to the American public being shouted by top officials from every political party in the federal government to plan our financial future. The message is clear, “the government will not be able to support us as we get older”.
The “Savings Are Vital to Everyone’s Retirement Act of 1997” (SAVER) was enacted on November 20, 1997. The purpose of the SAVER Act is to advance the public’s knowledge and understanding of the importance of retirement savings. The Act directs the Secretary of Labor to take action in four general areas:
1. To maintain an ongoing program of outreach to the public to effectively promote retirement income savings;
2. To disseminate specific educational materials related to retirement savings and the principles of saving and investment;
3. To establish a website as a means to disseminate these materials, and
4. To convene these National Summits on Retirement Savings.
In 2006, this was the objective of the National Summit on Retirement Savings, taken right from the DOL website located at the Department of Labor website listed in the resources section below.
National Summit Objectives
1. Advance the public’s knowledge and understanding of retirement savings and their critical importance to the future well-being of workers and their families.
2. Facilitate the development of a broad-based, public education program to encourage and enhance individual commitment to a personal retirement savings strategy.
3. Develop recommendations for additional research, reforms, and action in the field of private pensions and individual retirement savings.
Alternative Economics fulfills all three of these objectives. But why is our savings so important to the federal government? The answer is twofold:
1. The productivity of this nation and therefore the health of its economy are directly related to the savings habit of its people.
2. Based on current savings habits in America, the majority of future generations will not have the ability to retire or even support themselves with their resources.
Coupled together, these two effects of the current savings habit of the American people could result in an unrecoverable condition and even a collapse in our national economy.
“Left uninformed, ambition is paralyzed by fear of the unknown. Opportunities go unrecognized and our dreams of a prosperous future fade away into excuses.”
-Steven Hettema-
You may be asking yourself, “What is Alternative Economics”? To answer this, let’s start by telling you what it is not.
Alternative economics is not about stocks, bonds, or mutual funds. Our corporate retirement plans, pension plans, 401ks, and IRAs are all invested in stocks, bonds, and mutual funds. Let’s face it, we’ve all seen or experienced the poor performance of these traditional investment classes. We’ll talk in more detail in future articles about why we believe these investments are yielding such disappointing results. We’ll also discuss how alternative economics will solve this problem on a personal level for anyone who actively applies the methods and principles it suggests. But for now, let’s keep the conversation a little broader in scope.
As a country, we’ve lost faith in these investment tools and are no longer motivated to save or plan for the future in the manner that we used to. This is evidenced by the fact that Americans save or invest less than 1% of their income. Some believe this is just because we are less disciplined today or because we just don’t care anymore. Suggestions have been made that we are entering a new economic era led by an irresponsible generation with an immediate gratification mindset. These explanations blame this depleted savings habit of our nation on the actions of the people, not the cause for these actions or lack thereof.
The American people of this generation are not stupid; we are simply reacting to our common sense. Why engage in a plan that we know is failing for so many? After all, discipline comes from motivation and motivation comes from faith in an action that will yield a desired result. We just don’t believe anymore in the traditional financial plan, which relies (for the most part) on the performance of stocks, bonds, and mutual funds. What we need are better alternatives.
Alternative Economics is also not reliant on your frugality. Most Americans are under the perception that growing assets and/or investing are only possible at the price of significant lifestyle sacrifice. It’s no wonder people think this way, listen to what Federal Reserve Chairman Ben Bernanke was quoted saying:
“Unless the current generation is willing to sacrifice, by cutting consumption or increasing savings, future generations could face a heavier reduction in living standards.”
“We can mitigate the adverse effect of the aging population on future generations, but only by forgoing consumption or leisure today. As the population ages, the nation must choose among higher taxes, fewer government programs, cuts in Social Security and Medicare, a higher deficit, or some combination of those options.”
USA TODAY May 10, 2006, by Sue Kirchhoff
Does Ben understand what he is saying? Doesn’t consumer consumption affect the health of the economy? Of course, it does! Spending less to put more in savings or afford a higher social security tax is not a solution. Sorry, Ben! People need alternatives that will allow them to keep spending (maintain or improve their lifestyle now) while growing assets for their future at the same time.
The reality of this perception, left to us by the media, our political leaders, and our heredity, makes more understandable the lack of motivation Americans have to save or invest conventionally. Think about it, who in their right mind would be motivated by this financial plan?
Take money from your current budget, sacrificing your lifestyle now, to save or invest for your future in a system that, based on past performance and future projections, will leave you with retirement savings that won’t even support the reduced lifestyle you endured to make a better one.
With that kind of outlook, no wonder we are more apt to say, “Spend it while you can enjoy it and hope for the best at retirement”. Even though that’s not a plan, it makes more sense than the traditional option described above.
The concepts of Alternative Economics deal with the necessity of asset accumulation without requiring or even considering frugality.
Finally, alternative economics is not reliant on corporate pension plans or government-managed retirement programs such as Social Security.
In a recent Frontline Report titled “Can You Afford to Retire,” which first aired on May 16th, 2006, observers were made aware of corporate financial strategies that led to the demise of employee pensions. Specifically, federal law allows companies that offer pension programs to use those employee pension funds for company expenses with the hopes of repaying the deficit at a later date. If the company experiences financial difficulty and can not repay the pension funds, then it can file Chapter 11 bankruptcy to wipe out the debt, leaving employees with nothing. Check out the full report at the link below.
http://www.pbs.org/wgbh/pages/frontline/retirement
The Social Security system has predicted its bankruptcy date and publishes it in its report to the American people every year. Most of us have, at some point in our working lives, received the yearly Social Security statement. If you are like the majority of people, when you finally take the time to look at the document, you immediately turn to the 2nd and 3rd pages, which outline your benefits if you retire, are injured, or die. This year, take the time to read the first page. On it, you will find the details of when (not if) the Social Security system will be bankrupt. Specifically, it’s in the paragraph on the upper right-hand side of the cover page. When you read it, you will understand why the government is so emphatically encouraging us all to make financial retirement plans that do not include government or corporate-managed programs.
It’s time for economic alternatives; it’s time for Alternative Economics.
Alternative Economics (TM) is a personal system of financial growth designed to reveal hidden assets and apply them to alternative investment strategies using four asset acceleration principles through three financial growth stages. It is the solution to the failing traditional financial plan in America and the economic doctrine of our era.
Let’s break that down:
- a personal system of financial growth
- revealed hidden assets
- Alternative investment strategies
- Four asset acceleration principles
- Three financial growth stages
Watch for future articles on each one of these five subjects very soon. Meanwhile, you can see more about the National Strategic Investor Group, the National Strategic Investment Corporation and Alternative Economics at http://www.nsicgroup.com