Posts Tagged ‘retirement’
Link: Myth: Retirement Accounts Are Designed To Help You Retire Early
I just read an interesting article that follows along with my view that retirement accounts are really not that great.
Check it out and see for yourself that there are downsides to them.
Active investors: stay away from retirement accounts
The prospect of tax free gains or investing with tax free money, offered by retirement accounts, seems like an amazing deal.
If you’re earning $50,000 per year, you’re probably losing at least 20% to taxes (varies by where you live) and I bet you would love to get some of that 20% back.
What could be better than that government offering you a 20% return on your money even before you put it into the markets?
But don’t be fooled!
There is always a catch!
I have been a strong advocate of RRSPs and TFSA, until now, because I understood, theoretically, that they allowed for you to make and keep more money than a regular trading account.
I know that an RRSP is beneficial if you’re making more money now than you will be living off of in your retirement and a TFSA is great if you’re in the opposite situation, but they both have the very very limiting restriction.
They both require that you become a permanent bull.
You see, retirement accounts will not allow you to short stocks, they won’t let you buy/sell on margin and they certainly won’t let you trade in put options.
Those poor bastards with retirement accounts have had their hands tied behind their backs as this recession looms on and the markets wipe out all gains since 1997!
It is probably a sentiment of bullishness and hopes of an unchallenged US/Canadian economy that made regulators impose that restriction on retirement accounts.
It must have been a happier time when those accounts were created.
The government needs to remove that restriction on retirement accounts and let the people decide which they would rather be – bulls or bears.
It is challenging enough to make money in this bear market, but being forced to be a bull, watching your savings go to hell and not being able to do anything about has to be the worst.
I don’t really know what to say to those of you with retirement accounts except to make wise decisions from now on.
But for the rest of us, stay away from bull-only accounts and be free to trade the markets as you see fit.
