Welcome to Part 8 of this running thread on America’s Great Reorganization. And thank you for sticking with me through it all.
Yesterday we talked about the collectivist approach to investing. That’s the “conventional” retirement planning model.
Retirement Inc. has pushed the collectivist approach for forty years now. It says we should all funnel our savings into various kinds of funds (mutual funds/index funds/exchange-traded funds) and then hold them inside of retirement accounts – 401(k)s and IRAs.
As we discussed, this model created distortions within our society… because it enabled a quasi-political agenda. Worse, the conventional approach strapped humanity to the hamster wheel. Here’s what I mean…
There are a plethora of rules that come attached to retirement accounts. Those rules work together to effectively put our money in jail. Once we lock our savings away in these accounts, we can’t touch it again until we retire without incurring heavy-handed penalties.
Of course, Retirement Inc. pitches its funds as “diversified” – because they own stocks in a wide range of industries. They say their diversification equals safety.
But notice how they only focus on one asset class. And it just happens to be the asset class that pays them fees year after year. Even when they recommend bonds – usually it’s through some bond fund trading in the stock market.
So Retirement Inc. wants us to give them total control over our money. We are to lock it away and trust them with our investments… and hope they “go up”.
I see this approach as incredibly fragile. The self-directed investor can do much better.
Continue reading “The Great Reorganization – Part 8”