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Savings is not the way to prepare for retirement.

May 13, 2017

When I was young statements on TV seemed very impressive to me. Even as a college professor at 40 I thought those commercials for savings were something to listen to. I had 3 savings accounts, 4 Annuities, a mutual fund, limited partnership, one IRA and many deferred compensation accounts. Then, one day in a conference we discussed who saves and who invests. I was shocked to discover that socialists save and capitalists invest, that the US is wealthy and the EU is poor, but above all that when I retire if I keep my standard of living my various saving accounts would empty one after the other before I knew it!

I needed a strategy to invest. First I realized that I wasn’t a socialist at heart, my savings were not a function of my belief system. I REALLY didn’t believe stupid things about money. I “inherited” ideas from my parents and from being a teacher, 1) I didn’t believe that paying off my mortgage was a good strategy – it was terrible. Today, I borrow the max every time my home value is appraised up. I pay my taxes with borrowed money and invest the rest in the market, 2) Today I have a wonderful Roth IRA invested in Goog, 3) Today I am free and smart.

Today I know that “fake news” applies also to commercials, not just politics. Today I know that fake ideas and beliefs infest economics like a disease. I wrote 2 books on the psychology of it and, man, you wouldn’t believe what I found out! Did you know that Buffett said that the economic law of Diversity apply only to investors who don’t know how to pick winning stocks? Did you know that the economic law of Liquidity apply only to markets and not to individual investors?

As the Nobel price winner (2002) Daniel Kahneman once said, “Most people are too lazy to make the best decisions for themselves. I used to be one of them. Today I am retired taking cruises with my beautiful wife.

I wish you the best recovery from savings accounts, annuities, deferred compensation, limited partnerships and mutual funds.

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