WANT A COMFORTABLE RETIREMENT? SAVE, INVEST…AND DON’T RELY ON POLITICIANS
Don’t fall in love with politicians, they’re all a disappointment. They can’t help it, they just are. – Peggy Noonan
With the Republican National Convention set to open in a few days, we are entering the home stretch for the race for the White House. A process that started a few years ago is starting to wind down. The media will be full of promises that the contenders make to make your life better. Because we all know that these wise politicians have the answers to make us happier and wealthier. If you listen to their promises you can basically quit your job because in one way or another they will take care of you. Whether it’s giving your children free college, increasing unemployment benefits or a host of other government giveaways, these politicians have no qualms about more and more government involvement in our lives. Funny how every election cycle we get more and more promises and yet none of the problems get solved. Why? Maybe, it is because government is incapable of running anything efficiently. As former US president Ronald Reagan said: “One way to make sure crime doesn’t pay would be to let the government run it.”
Not immune
Don’t think because you live in Israel that you are immune. We have it just as bad. Just as an example take the new policy brought to us by finance minister Moshe Kahlon. The plan that he claims will help eliminate inequality will give every newborn child a savings account. According to the report in the Jpost, “the one adopted by Kahlon, includes allocating NIS 50 per month for all newborn children as well as a variable lump sum at withdrawal for NIS 500… Thus at the age of 21, each child will have NIS 20,000…. The cost to the State is estimated at about NIS 2.4 billion.”
Well isn’t that a great use of our NIS 2.4 billion? After all it’s OUR money being used to fund this (ever get the feeling that the politicians forget this small point!). I ran the numbers on a compound interest calculator and it comes out to a 4% annual return. After factoring in inflation this plan is a disaster. If they were serious about really helping give young adults a solid start financially, they would allow parents to open up investment accounts for their children, like in many countries of the world. That way parents can invest money for their children and get historical long-term returns in the 10% range. Unfortunately if you go to a bank today and want to start a savings plan for your child your options revolve around various deposits that pay next to nothing. I realize my suggestion gives control and freedom back to the parents, and our politicians would never let that happen, but it would also save NIS 2.4 billion! Just give us back our money to invest!
Do it your self
Instead of taking individual responsibility, more and more people look for the government to solve their problems. As if some politician has the secret sauce and knows what is better for you than you know. Ever speak to a millionaire and ask how she became wealthy? I have and have yet to hear the answer, “I got rich because of the government.” So why on earth do we continue to abdicate responsibility to 120 people, most of whom never ran a business, met a payroll or know what it takes to create a real job and who have no idea what’s in our best interest?
Take control of your own financial situation. Start by sitting down and doing a budget. By doing this you can get a clear picture of how much money is coming in versus how much money is going out for expenses. Then you can set up a disciplined monthly or annual savings plan. Start thinking about your long-term goals and needs, and then speak with a financial professional. They will be able to do a long-term financial plan for you and help determine how much needs to be saved, monthly/annually, at what rate of interest, in order for your to achieve your financial goals.
No Knesset member is going to do this for you. Take control of your own financial situation and start building a secure financial future.
The information contained in this article reflects the opinion of the author and not necessarily the opinion of Portfolio Resources Group, Inc. or its affiliates. Aaron Katsman is author of the book Retirement GPS: How to Navigate Your Way to A Secure Financial Future with Global Investing (McGraw-Hill), and is a licensed financial professional both in the United States and Israel, and helps people who open investment accounts in the United States. Securities are offered through Portfolio Resources Group, Inc. (www.prginc.net). Member FINRA, SIPC, MSRB, FSI. For more information, call (02) 624-0995 visit www.aaronkatsman.com or email aaron@lighthousecapital.co.il.
