Retirement

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Last Updated: Saturday, 27 April 2024 00:25

Published: Friday, 04 September 2020 23:07

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This section deals with Retirement in terms of money and NOT in terms of age.

Retirement refers to Financial freedom. So, why would anyone want to get financial freedom? First of all, you should have the freedom to do anything you want to do, and say NO to things you don't want to do. As I discussed earlier in other articles, most of the people are part of the fake economy, where they get out of their house everyday to dig up a hole for half the day and then fill up that hole for the other half of the day. Why spend your labor doing something that produces nothing?

I'll talk about all the strategies that you can use to save enough to achieve financial freedom.

When we talked about GDP, we said that US GDP grows by about 5% a year, and it reflects the total amount of money growth in the system. So, any money you invest anywhere has to grow by 5% every year, just to keep up with the money growth. I think of GDP growth (minus the population growth) as real inflation.

There are 3 places where you can invest in order to grow your savings:

1. Banks: Depositing money in banks is a sure way to lose money every year. With interest rates at 0%, you lose about 5% of your principle amount every year, since GDP grows by 5% a year. So, in 30 years, $1 deposited in bank is reduced to 10 cents when real inflation is considered. Chances are very high that deposit rates may go negative in future (as of 2020, it's still positive). Read in "Banks" section for more details.

2. Bonds: Instead of lending money to banks, you lend it to institutions or private companies. Of course the rate you get here will be higher than what you can get by depositing money in banks, but the money is not insured by FDIC or any other agency. So, if the private company goes bankrupt, almost all of your prinicipal is gone. Read in "Bonds" section for more details.

3. Housing: Housing is one area which has put even "Warren Buffet" to shame. The return that anyone in USA can get in housing is more than what Warren Buffet ever made on any investment in his life. This insane return in housing market has been going on for a decade, and with Government supporting housing forever, I don't see how it can burst, unless "FED" is abolished al together. Read in "Housing" section for more details.

4. Stocks: This is my favorite part. This is the mother of all Ponzi schemes and is run by an arm of Govt itself, known as "FED". See in Stocks section on why this Ponzi scheme will run for as long as there is a money printing entity. If this crashes, then housing will crash too, along wit all the other assets too. So, if you have to invest in a Ponzi scheme, invest in one that is the mother of all Ponzi schemes. That will be the last one to fail.

Now that we have figured out that stocks are the best investment vehicle for our future returns relative to GDP, let's explore the strategies for retirement in next few sections.