How to Double Your Money Guaranteed – Risk-Free!
Image sourced by Yorgos Ntrahas @yorgosntrahas
I recall my neighbor’s Christmas Eve party of some years ago.
Our neighbor, Flamboyant Freddie, was boasting about his early investment in Global Crossing.
Global Crossing was a telecom company that went public through an IPO (Initial Public Offering) on August 14, 1998. The company traded under the ticker symbol GLBC and went public at $19.00 per share of common stock. The stock proceeded to soar to an all-time high of $61.38 on May 14, 1999.
And then the company and the stock flamed out. And yes went Bust. Bankrupt. Ouch!
Exciting I guess, if you rode the stock to the top and managed to sell out before things went south.
But that’s rarely the case.
Certainly good cocktail party chatter, at least on the way up.
Truth be told, many people, myself included, are on the hunt for a 10 bagger or better yet the next 100 bagger stock every now and again.
A ten bagger means you grew your investment 10 times. Buy at $10; sell at $100.
A 100 bagger – the math is too much, just kidding. . . Buy at $10; sell at $1,000.
Either way, I’m sure you can sense the thrill. Maybe you have experienced this.
Examples include the early days of Nvidia, Tesla, Apple, Microsoft and their friends. But for each one of the home runs, there are a few dozen that go bust, to zero.
Hunting big game, or really investing in startup companies, early stage companies and venture capital companies, comes with excitement and fits and starts.
And Risk!
Risk is the possibility or probability that you could lose money.
Technically, risk means the variability of the outcome of your investment.
At the same time a handful of companies achieve 10 bagger status and 100 bagger status, many startups and early stage companies, like Global Crossing, go bust.
Ouch!
In contrast, let me share a Guaranteed Way to Double Your Money Every Year – Risk Free!
You may be scratching your head, wondering where’s Arthur V. going with this, but Read On!!!
I promise this will be worth your while and it’s Completely Legitimate too.
In fact, this concept is embedded in the IRS’s Internal Revenue Code (IRC).
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Many companies offer a 401k plan or a 403b plan retirement savings program.
What’s more, typically employers match your contribution to the 401k plan or 403b plan equal to a specified percentage of your salary or up to a certain dollar amount.
The amount your employer contributes to your retirement plan account is called the ‘Employer Match’.
For example, one company I worked for provided a 3% employer match up to $3,000.
Suppose you earn a salary of $100,000.
If you enroll in the company’s 401(k) plan or 403(b) plan; activate payroll deductions and contribute $3,000 into your 401k plan or 403b plan, your employer reduces your take-home pay by $3,000 and deposits the $3,000 into your retirement plan in installments.
What’s more, with a regular 401k plan and a regular 403b plan (these are also called a traditional 401k plan and a traditional 403b plan, you make your contributions on a pretax basis. This means you receive a tax deduction on your contributions.
In effect in this example, you pay income taxes on only $97,000 ($100,000 salary minus the $3,000 you contribute into your retirement plan.
If your income tax rate equals 30%, then you save $900 in income taxes ($3,000 multiplied by a 30% income tax rate). And. . .
The after-tax amount of your $3,000 contribution equals $2,100 ($3,000 minus $900 in income tax savings).
The employer match is FREE MONEY! A NO BRAINER!
Each company’s employee match is different, so be sure to get a solid handle on your company’s rules of the road!
Your Human Resources Group or Employee Benefits Group can assist.
Get organized.
The employer match doubles your money, risk-free.
Your money compounds tax-deferred until you make withdrawals.
In addition, when you withdraw money before you reach age 59½. there is a 10% penalty on your withdrawals. Although there are some exceptions to this.
In contrast, when you contribute money into a Roth 401k plan or a Roth 403b plan, your contributions are in after-tax dollars. But your money compounds tax-free.
Once your money lands inside your retirement plan account, You have to invest your money to grow your money.
The secret is to make time work for you; contribute (and invest) early and regularly (with each paycheck); and compound your money for years, ideally decades. And accumulate enough money to cover your retirement living expenses.
The mix of investments you select is called an ‘asset allocation.’
Typically, your employer works with a group of investment advisors. They hold periodic meetings about investing, investments and asset allocation and can help you select an investment plan and an asset allocation.
Each person’s asset allocation is different, based on their time horizon (how long before they retire), their risk tolerance and other factors.
Here’s how to double your money risk-free:
Meet with your employer’s human resources group or employee benefits group.
Gain an understanding of your company’s retirement plan a 401(k) plan or a 403(b) plan.
In particular, learn about the employer match and how much money you have to contribute into your plan to receive 100% of the employer match.
Meet with your accountant to decide what’s optimal for you.
Select the investments you want to own and invest in. This is called an ‘Asset Allocation’. Asset Allocation means the mix of investments you hold: common stocks, cash and money market instruments, bonds, real estate, crypto currencies, etc.
Elect to contribute your chosen amount – at least enough money to capture 100% of the employer match.
Ideally, you’ll contribute the maximum annual allowed contribution, which is set by the IRS (Internal Revenue Service). To confirm this year’s amount, visit the IRS website and ask your human resources department.
Rerun your personal budget to calculate your reduced take-home pay, taking into account your contributions to your retirement plan account.
Reduce your other spending in order to make sure you don’t spend more than your take-home pay.
Be sure to track your spending carefully so you won’t incur credit card debt.
If your contributions equal the amount required to capture 100% of your employer match, over time, look to increase your contributions to your 401k or 403b plan until you reach the annual maximum contribution. The IRS sets the maximum annual contribution amount.
Catch up contributions – when you reach age 55, you can contribute additional funds into your retirement plan, currently either up to $8,000 or up to $11,000 in a year. The amount changes from time to time so be sure to confirm the current amounts and limits by speaking with your company’s human resources department and visiting the IRS website.
Review your investment portfolio periodically to check whether your asset allocation – mix of investments – is meeting your financial goals and objectives – currently and looking ahead.
Rebalance your investment portfolio as appropriate.
Oh and one more point for the road to wealth:
Take action Now. Do Not Delay!
While capturing the employer match will double your money risk-free, when you invest money, you could lose money too. But hopefully, your investment adviser will help you make prudent financial decisions and prudent investment decisions.
Be sure to grab this guaranteed way to double your money ASAP!
Make an appointment to meet with your Human Resources or Employee Benefits Group.
Do NOT Delay!
The quality of Your retirement life – your ability to fund your retirement living expenses – depends on this!
See you next week.
Arthur VanDam, CPA MBA
Build More Wealth Right Now Click here.
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Disclaimer: OH and Please Remember, we are Not financial advisors, financial planners, attorneys or accountants and are Not providing any specific financial, tax, accounting or legal advice here. Be sure to conduct your own due diligence and consult your own professional advisors to get sound professional advice that’s specific to your financial and personal circumstances, risk tolerance, time horizon and investment goals and objectives among other key factors!
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