{"id":250,"date":"2012-10-23T00:27:28","date_gmt":"2012-10-23T00:27:28","guid":{"rendered":"http:\/\/www.apisbull.com\/blog\/?p=250"},"modified":"2012-10-23T00:27:28","modified_gmt":"2012-10-23T00:27:28","slug":"new-wealth-strategy-for-the-middle-class","status":"publish","type":"post","link":"https:\/\/www.apisbull.com\/blog\/?p=250","title":{"rendered":"New Wealth Strategy For The Middle Class"},"content":{"rendered":"
Back in 1974, Washington bureaucrats met behind closed doors to solve the \u201cpension problem.\u201d\u00a0<\/span><\/div>\n

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What\u2019s the \u201cpension problem?\u201d
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Well, it first became apparent in 1963 when failed automaker Studebaker Corporation closed down its U.S. assembly-line facility.\u00a0<\/span><\/div>\n

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Studebaker\u2019s pension plan was so underfunded that one-third of its workers got axed from their jobs with no pension at all.\u00a0<\/span><\/div>\n

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Another third of the employees only received 15% of their vested value.<\/span><\/div>\n

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Then President John F. Kennedy appointed a commission to look into fixes for this problem.<\/span><\/div>\n

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Ten years later, the US Congress came up with plan that was supposed to save the day.<\/span><\/div>\n

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Unfortunately, it would be the doom of the many middle class Americans.\u00a0<\/span><\/div>\n

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If you lost money in the 2008 stock market crash (or any previous crash), you\u2019ve been victimized by it.<\/span><\/div>\n

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But the real threat to the Middle Class from this menace is yet to come. We\u2019ll reveal that in a minute, along with a sensible solution.<\/span><\/div>\n
But first, we need to track down the roots of this middle class threat.<\/span><\/div>\n<\/div>\n

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Congress\u2019 Failed Attempt at\u00a0Pension Reform: ERISA<\/strong><\/div>\n<\/div>\n<\/div>\n

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The Employee Retirement Income Security Act of 1974 (ERISA) introduced Individual Retirement Accounts (IRAs) to the American middle class.\u00a0<\/span><\/div>\n

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The promise was to allow individual investors the opportunity to reap the capital gain rewards of the stock market that had previously been the domain of the wealthy.<\/span><\/div>\n

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It all sounded good on paper.\u00a0<\/span><\/div>\n

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The big problem was that nobody bothered to teach sound investing techniques to the little guy.<\/span><\/div>\n

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Up until that point, most people didn\u2019t invest on their own. They got a job. They worked themselves up the company ladder. And they retired with a pension.<\/span><\/div>\n

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All for the same company (which is almost unheard of these days).<\/span><\/div>\n

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The key was the pension.\u00a0<\/span><\/div>\n

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A pension was an actual pool of money that employers and employees put into the pot.\u00a0<\/span><\/div>\n

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Companies hired professional investors to manage the pension funds. These managers did all the investing.<\/span><\/div>\n

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The workers simply contributed, trusting that when they retired, the pension would be there to take care of them.\u00a0<\/span><\/div>\n

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For the \u201cBuilder\u201d generation it worked. At least for the most part.<\/span><\/div>\n

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But the Studebaker incident revealed some massive flaws in the system.<\/span><\/div>\n

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And the government commission that studied pensions found the problem was more widespread than they thought.<\/span><\/div>\n

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Hundreds of large companies employing hundreds of thousands of workers were under-funding their pension plans and using that money for other purposes.<\/span><\/div>\n

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Strangely, ERISA only partially addressed that problem.<\/span><\/div>\n

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Under ERISA, companies were no longer required to offer pensions to their employees.\u00a0<\/span><\/div>\n

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But companies that did faced a whole new set of onerous regulations to follow.<\/span><\/div>\n

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As a result, companies began abandoning traditional pension plans rather than meet the stringent requirements of the new law.<\/span><\/div>\n

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The Move Away From Pensions\u00a0Into Individual Retirement Accounts<\/strong><\/div>\n<\/div>\n<\/div>\n

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So for the \u201cBoomer\u201d generation, retirement options changed. With pensions becoming a relic of the past, large corporations pushed employee 401(k) plans instead.\u00a0<\/span><\/div>\n

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And everyone was advising individuals to take advantage of the new, wonderful opportunity that an IRA offered.<\/span><\/div>\n

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Since the average wage earner knew nothing about how to invest, large Wall-Street firms took charge.<\/span><\/div>\n

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They recruited wide-eyed, wet-behind-the-ear, young college grads, gave them minimal training.<\/span><\/div>\n

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They armed them with a small set of financial products (usually mutual funds) and sent them out to \u201chelp\u201d this new flood of investing prospects.<\/span><\/div>\n

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Financial planners sprang up like mushrooms in a manure pile\u00a0<\/span>and began convincing every \u201cMiddle Class Mary\u201d and \u201cBlue Collar Bob\u201d that they needed to put money into an IRA\u00a0<\/span>which meant investing in the stock market through mutual funds.<\/span><\/div>\n

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That, too, worked for a while.\u00a0<\/span><\/div>\n

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In fact, a whole generation of Boomers turned 40 and 50 something watching their money double, triple even quadruple every 5-10 years, just holding it in the stock market.<\/span><\/div>\n

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It really didn\u2019t take much know-how either. Almost anyone could do it.<\/span><\/div>\n

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All Good Things\u00a0Must Come to an End<\/strong><\/div>\n<\/div>\n<\/div>\n

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But that was the old model. It worked for awhile. But not anymore.<\/span><\/div>\n

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Most people still (mistakenly) think a buy-and-hold strategy in the stock market will just magically start working again.<\/span><\/div>\n

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It won\u2019t. At least not for a long, long time.<\/span><\/div>\n

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What most people didn\u2019t realize back then (and still don\u2019t today) is that the 1980\u2019s and the 1990\u2019s were the biggest bull run in the stock market ever.<\/span><\/div>\n

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Stock valuations got out way out of proportion because so many people were piling into the market.<\/span><\/div>\n

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But everything changed when dot-com bubble burst.\u00a0<\/span><\/div>\n

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After that debacle, many an investor sat at his kitchen table at 2:00 AM, unable to sleep, staring blankly at his latest investment fund statement.\u00a0<\/span><\/div>\n

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Depressed. Scared. Despondent.<\/span><\/div>\n

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Unfortunately, many investors who lost their fortune in the dot-com fiasco didn\u2019t get smarter \u2013 they just got more stubborn.<\/span><\/div>\n

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Their financial advisors gave them the standard pep talk: \u201cyou just have to tough it out. This will correct itself. Stocks always go up.\u201d\u00a0<\/span><\/div>\n

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They\u2019d even try to convince themselves with little internal mantras … \u201cI know it works because the stock market has always worked!\u201d\u00a0<\/span><\/div>\n

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In one sense, it\u2019s understandable.\u00a0<\/span><\/div>\n

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No one taught them how to invest … how to read the warning signs.\u00a0<\/span><\/div>\n

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And who was supposed to teach them?\u00a0<\/span><\/div>\n

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School teachers who were living paycheck to paycheck on the low end of the pay scale? Their parents? Grandpa and Grandma?\u00a0<\/span><\/div>\n

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How were they supposed to know about investing? They grew up in the pension era. And they all got clobbered too!<\/span><\/div>\n

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So the Middle Class limped along, taught by under-educated financial planners (who usually made less than they did) that the stock market and IRAs and 401(k) plans were still there to help them.<\/span><\/div>\n

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Wall Street\u2019s Dirty Little Secret<\/strong><\/div>\n<\/div>\n

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Meanwhile, Wall Street laughed all the way to the bank.\u00a0<\/span><\/div>\n

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You see, they knew that allowing a huge pool of rookie investors into the market was the best gift they could get.<\/span><\/div>\n

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It was like dumping a bunch of helpless minnows into a tank of hungry sharks.<\/span><\/div>\n

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And big Wall Street firms have been gobbling up the middle class\u2019s money ever since.<\/span><\/div>\n

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For example, in 2011, Goldman Sachs awarded over $15 billion dollars in bonuses to its employees. That\u2019s an average of $430,000 per employee!<\/span><\/div>\n

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Even first year, junior analysts at Goldman Sachs received an average bonus of $56,000.<\/span><\/div>\n

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And that\u2019s not even counting their annual salaries! (usually twice the amount of the bonuses).<\/span><\/div>\n

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Oh, and let\u2019s not forget those mutual funds that every Middle Class worker was wooed into buying.\u00a0<\/span><\/div>\n

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The average mutual fund manger receives a $436,500 salary annually (not including bonuses)<\/span>\u00a0even when their fund loses money for the investors (like 70% have since the year 2000)!<\/span><\/div>\n

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It\u2019s enough to make you sick to your stomach or make your blood boil.<\/span><\/div>\n

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How to Get Revenge on Wall Street…<\/strong><\/div>\n<\/div>\n

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The stock market was once a \u201csafe\u201d place to park long-term investments.\u00a0<\/span><\/div>\n

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But those days are long gone.<\/span><\/div>\n

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Nowadays, you need a new plan. A set of proven strategies to take control … and get revenge on those Wall Street cronies.<\/span><\/div>\n
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Now is a great time to (finally) take control of your own finances…\u00a0<\/span><\/div>\n

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Invest in real assets that you have control over.<\/span><\/div>\n

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And completely bypass Wall Street on your way to Easy Street.<\/span><\/div>\n

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The stock market will likely get hammered in the coming years. There\u2019s really no solid foundation to it. It\u2019s all pumped up with funny-money the Fed\u2019s been dumping into the system.<\/span><\/div>\n

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And hidden in the ERISA act is a provision that forces retirees to withdraw money from the market at a set age.\u00a0<\/span><\/div>\n

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When millions of Boomers start doing that in the next few years, it could get really ugly.<\/span><\/div>\n

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In the meantime, the stock market is going to be an incredibly volatile ride.\u00a0<\/span><\/div>\n

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In those conditions, only the Wall Street sharks make money\u00a0<\/span>while Middle Class investors get fleeced.<\/span><\/div>\n

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Don\u2019t be a victim.<\/span><\/div>\n<\/div>\n
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