Investing is for idiots, dummies, and fools.  Why?  Because unless you answer yes, to any of  the following questions, the odds are 90% that you will do worse by actively investing instead of simply maintaining a proper asset allocation.

Are you..
A senior executive at Goldman Sachs, J.P. Morgan, or one of the top 20 hedge funds?
A senior congressperson or senator?
A senior executive of a publicly traded corporation?

If the answer is no, and you are actively investing, then you are being played for an idiot, a dummy, or a fool.  The market is rigged.  The inside players, those listed above, already know the outcome before they invest.   They are not risking their money. You, the active investor, are only suckered in to play the game after the insiders have placed their bets.  Your loss is almost guaranteed.

Recent revelations about former Treasury Secretary Hank Paulson giving inside information to top hedge fund managers, members of congress profiting from insider information, not to mention Goldman Sachs shorting their own clients, should lay to rest any doubts as to the foolishness of investing in the markets.

The information you receive from the mainstream financial media is pure propaganda, propagated by Wall Street, to lure dummies, fools, and idiots into investing in the market after the insiders have placed their bets.  Don’t take my word for it.  Below is a video of former hedge fund manager, and financial media investing celebrity Jim Cramer, explaining to Aaron Task how he (maybe) manipulated the stock market using CNBC.

Do you have a few million dollars you can use to manipulate the stock market?  Have any friends in the financial media you can use to spread rumors?  If the answer is no, and you are actively investing, you are a fool, idiot, and dummy.

So, how do you save for retirement, if investing is for idiots, dummies, and fools?  Asset allocation, not investing, is the secret to saving and achieving your retirement goal.  Maintaining a proper asset allocation model, 70% S&P 500 stocks and 30% U.S. Treasury Bonds, beats 90% of mutual funds and money managers, and gives you 90% odds that you will not run out of savings for retirement.

The historical average annual return on this asset allocation model is 9%  Read What is Asset Allocation.

With asset allocation you are not trying to outsmart investors with insider information, wasting your time reading and watching financial propaganda, or chasing the herds of idiot, dummy, and fool investors to the stock market slaughterhouse.

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A negative – 0.55 yield on a 5 year TIPS.  Investors paid $1,055 to get back $1,000 in 5 years.  Why would any sane investor willingly and happily take a loss?  One word – inflation.  Investors are betting that inflation is going to rise.  What makes them so sure?  QE2.

In my next article, here on the Early Retirement Blog, I will describe in detail, what is QE2 and how it affects your retirement.  But briefly, Ben Bernanke and the Federal Reserve will announce on November 3rd, a second round of quantitative easing (QE2), where they are expected to inject  $1 trillion or more into the U.S. economy.

Expanding the money supply by such a large amount, will devalue the dollar, and produce inflation.  If you hold a dollar, and all of a sudden their are twice as many dollars as before, then  the dollar that you are holding  loses half it’s value.  It now takes twice as many dollars, to buy the same thing, your dollar could buy before.  It takes more dollars to buy bread, cars, gas, stocks, real estate etc.  The price of almost everything goes up.

Meanwhile, because of high unemployment, your wage stays the same or only slightly increases.  That is how inflation makes you poorer.  More about all of this in the next article, about QE2, but now back to TIPS and your retirement.

If you buy a standard $1,000 5 year Treasury Bond paying 1%, over the next 5 years, you will get back your $1,000 plus 1% in interest ($50 after 5 years).  But if inflation goes up 20% over the next 5 years, the $1,000 you get back after 5 years, will only be worth $800.  You will take a $150 loss in real terms.

On the other hand, if you own a $1,000 5 year TIPS that pays -0.55%, and over the next 5 years inflation goes up by 20%, you will get back your $1,000 (worth $800 in real terms) plus $189 in interest ($989 in total).  You basically break even.  If inflation goes down, we get deflation over the next 5 years, you will lose $55.  TIPS are a hedge, a protection, against inflation.

Treasury Inflation Protected Securities (TIPS), do just as they say, they protect the investor against inflation.  If inflation goes up by 5% next year, as measured by the Consumer Price Index (CPI), investors will receive an interest payment of 4.45% (5% – 0.55%)

So, bond investors are betting that inflation is coming, and they are desperately pouring into TIPS.  How does this affect you and your retirement.  If the bond investors are right, and inflation does come, individuals owning TIPS will be okay.  While individuals holding cash, money market, CD”s and standard Treasury Bonds will lose.

To learn more about TIPS visit the U.S. Department of Treasury TIPS Resource Guide.  Also read related articles:

Inflation Deflation Double Dip Recession
Asset Allocation Made Easy
Why You Should Not Retire in Debt

The Dow hit 10,000, while the dollar collapses, and unemployment reaches 10 percent – it’s not a coincidence.   Unemployment and the collapsing dollar are the two principal reasons why the Dow Jones 30 has risen 50% from it’s low in March. Artificially low interest rates, and investment bank speculation, have also played a significant role.

In an effort to boost their earnings, and beat Wall Street analyst expectations, the large American multinational corporations that comprise the Dow Jones 30 index laid off hundreds of thousands of their employees.   The rise in their stock prices has come, in large measure and literally, at the expense of their employees.   While unemployment may be bad for the economy, in the short run, it is very good for the corporate bottom line.

Since many of the Dow Jones 30 corporations are multinationals, earning a significant percentage of their revenues in foreign markets, they have benefited tremendously from the collapsing dollar.    Not only are their American produced exports instantly more competitive, more importantly, many of them manufacture and sell their products overseas.   A declining dollar, automatically increases their income, when the revenues from foreign sales, are exchanged back into dollars.

A collapsing dollar may be bad for U.S. consumers, increasing the cost of imports, which makes Americans poorer and produces inflation, but it is very good for multinational corporations.

Artificially low interest rates, created by the Federal Reserve to protect banks, has also helped the Dow Jones 30 rise to 10,000.   Several of the corporations in the Dow Jones 30, are large banks that have benefited from the ability to borrow at near zero interest, while collecting much higher interest payments from their customers.

Near zero interest rates has also helped the Dow reach 10,000, as large institutional investors such as mutual funds, who had fled to cash during the economic collapse, return to the stock market seeking higher returns. Record profits at Goldman Sachs and J.P. Morgan, were gained from speculating in commodities such as oil,  helping Dow components Exxon and Chevron.

Individual American investors, with their 401k’s and IRA’s, scared out of the stock market during the economic collapse, did not participate or benefit from the 50% rise in the Dow to 10,000.   Many individual investors are kicking themselves for missing the stock market rally.   Wondering if they should get back into the stock market, or if Dow 10,000 is a result of a bear market rally, and as soon as they begin investing again they will get punished yet again?

If you are an investor, who has been dollar cost average investing with a proper asset allocation, the question is unimportant. You would have been buying stocks when they were cheap, selling them when they were expensive, and would not have been burned by the economic collapse or missed out on the recovery.   The question of, is the Dow too high or too low, should I get in or out, is a question for herd investors.   Investors who are easily panicked, who follow the herd into pastures that have already been eaten, and who never realize that the Wall Street cowboys are fattening them up for the kill.

So, if you are investing for your retirement, make sure that you are dollar cost averaging using a proper asset allocation model, and try our free retirement calculators and learn how to retire early.   And, if you were delaying your retirement, you should seriously consider taking advantage of the stock market rally to retire now.

Nouriel Roubini – Economist Rock Star

Who talks about astrologists and psychics anymore?   If you want to know the future – ask an economist. Economists study and know the internal workings of that strange beast called the economy.    And as you know, the economy affects you, and your job,   and the value of your house and retirement accounts.   They can rattle of, and explain, such terms as GDP, inflation, interest rates, bonds, stocks, currency, consumer confidence, and lots of statistics.

Economists like astrologers, have a whole language unto themselves, and they love to use charts.

Although economists have become very popular, even respectable, it is important to remember that most economists missed the economic collapse.   Only a very few economists predicted the economic collapse.   The vast majority of economists were busy finding reasons why the credit and housing bubbles would go on forever.   So before you add an economist to your Facebook friends list, follow an economist on Twitter, or subscribe to one of their blogs, make sure you are choosing the right economists.

To help you out, I’ve put together a list of my five favorite economists, with a brief description of their economic views.   Why should you care about my list?

I predicted the global economic collapse and the stock market bottom.   If you had been reading my blog, you would not have lost 50% of your net worth in the collapse, and you would have been in a position to take advantage of a 50% rise in the stock market.  These are the economists I follow and respect.

Mike Whitney
An economics writer for Counterpunch, a progressive newsletter and website, Mike Whitney does a great job of translating how the actions of the Federal Reserve and Government affect individuals.   He digs beneath the financial propaganda to pull out the truth behind the numbers.   Mike Whitney not only predicted the credit crisis, he did stellar work covering and explaining the credit crisis as it unfolded.

Nouriel Roubini
A.K.A. “Dr. Doom”   A nickname he picked-up, from fellow economists and t.v. pundits during the housing bubble, by constantly warning everyone that the housing bubble was going to collapse and the U.S. economy would enter a recession.   The most famous of the economists who foresaw the collapse, his many appearances on t.v. can be found on youtube, and his pronouncements are now taken seriously by investors.

I agree with Roubini’s latest analysis, that there is a strong possibility that the U.S. economy will experience a double dip recession.   I disagree with Roubini’s opinion that Ben Bernanke deserves re-appointment as Chairman of the Federal Reserve.

Paul Craig Roberts
Also an economics writer for Counterpunch.   Paul Craig Roberts is a macro-economist, looks at the big picture, who has been warning about the economic collapse for years.   He correctly sees the correlation between outsourcing of jobs, and illegal immigration, and the negative consequences they both have on the overall economy.   Because he is a macro-economist his predictions can take years to develop.

Peter Schiff
A libertarian hedge fund manager who is running for Senate in Connecticut, Peter Schiff and I both share the dubious honor of being laughed at by people, when we warned them about the coming economic collapse.   You can watch on youtube, as the laughable economist Art Laffer, laughing at Peter Schiff when he appeared on CNBC and warned their viewers about the coming economic collapse.

Paul Krugman
A Nobel Prize winning economist, Princeton professor, and New York Times columnist, Paul Krugman understands the relationship between a strong middle class and a strong economy.   He also predicted that the housing bubble would end up crashing the economy.

Because of his reputation, his Nobel Prize, his tenured professorship, Paul Krugman does not hold back from attacking the powerful interests that dominate Washington and Wall Street.   His liberal Keynesian economic policies, represent a social democrat tradition that was popular during the Great Depression, and which almost went extinct over the last thirty years.

So, there you have it, my five favorite economists.    I enjoy reading their commentaries, I usually learn something new, and I trust their opinions.   Although I may not agree with all of them all of the time, and their predictions may not always be accurate, these five economists come closest to turning an art into a science.

Also, even though this blog is focused on retirement, I do write about the economy.   What happens in the economy affects everyone’s retirement.   Read why I believe the U.S. Economy is headed for a Double Dip Recession. (written in August 2009, I predicted a double dip recession would begin in the second quarter of 2010, and it appears that my prediction is once again coming true. Here’s the link to the updated double dip recession prediction.)

Visit the Early Retirement Website to learn how to retire early.

Who says you can’t earn big returns in a recession?  Even if U.S. Government Bonds pay nothing,  the stock market and housing both lost 40% last year, you can earn huge risk free investment returns.   That’s right, you can earn 9%, 13%, 21%, maybe even 28%, risk free investment returns.   How? Pay off your credit card debt.

In a recession, when other investments yield either low or negative returns, it makes much more sense to invest in paying off your credit card debt.   Every dollar that you invest in lowering your credit card balances  is the equivalent of earning the interest rate on your credit card.

Instead of chasing around looking for investments that will produce big returns, wasting time reading financial magazines and watching CNBC, you can find huge investment returns by simply putting your hand in your pocket and pulling out your wallet.   The plastic inside is an investment gold mine.   High returns, 9%, 13%, 21% and 28% annual returns, are literally at your finger tips.

And best of all it is a completely risk free investment.   The worst thing that can happen, by paying off your credit card debt, is that the credit card company offers to lower your rate.   You don’t have to worry about picking the right investments, hoping  they will do well,  trying to figure when to get in and get out.   You are guaranteed the same high rate of return every month you invest in paying off your credit card debt.

In any case, if you are planning to retire, you should not retire in debt.   Some will argue that stocks are cheap and now is a good time to buy stocks.   That may be, now may be a good time to buy stocks, and then again now maybe a bad time to buy stocks.   No one know for sure.   But one thing is for sure, it is always a good time, to pay off your credit card debt.

Also Read:
How to Get Out Of Debt
How to Save $1 Million
Why You Should Not Retire in Debt

Visit the Early Retirement Website, learn How to Retire Early, and try our Free Retirement Calculators.

I would like to thank Bernie Madoff for doing me and the American people a great favor.   Bernie Madoff’s arrest, after 20 years of running a Ponzi Scheme, has begun to open people’s eyes to the truth about Wall Street.   Sooner rather than later, the American people are going to finally realize, that the entire Wall Street financial services industry is nothing but one big Ponzi scheme.

Almost every single financial planner in America is a Bernie Madoff.    They earn their living selling clients bogus investments, promising high returns, collecting big commissions and fees.   They mislead their clients by telling them that they need more savings than is actually required to achieve financial freedom, forcing their clients to keep working, in order to keep growing their management income.

Now that Bernie Madoff is going to jail, the American people are starting to realize, that everything they have been told by Wall Street has been one big lie.  And the biggest lie, yet to be reported, is the formula Wall Street uses to calculate your financial freedom.

The formula used by Wall Street financial planners, you need retirement savings sufficient to produce an annual income of 80% of your current salary, over-estimates the amount of savings you need to retire and turns you into a wage slave.

Read: The Wall Street Wage Slave Formula

Fortunately, you can break free from Wall Street wage slavery, and achieve financial freedom.  Simply visit the Early Retirement Website, learn how to retire early, and try our free retirement calculators.

Doubling Down on Disaster

Warren Buffet, America’s best known and wealthiest investor, is hoping you will help him out and buy his Bull.  With the stunning news that Berkshire Hathaway’s profits dropped 96 percent in the fourth quarter of 2008, he has sent out his customary letter to company shareholders, telling them they should continue to invest in his Bull.  “America’s best days lie ahead.”  Warren Buffett wrote.

If you don’t buy Warren Buffet’s Bull, if you stop believing and investing in America, then he will lose the 251 bets he placed in the stock market.   Warren Buffett a gambler?  Humble polyester Warren Buffett from Polyester Omaha Nebraska?

I came to admire Warren Buffett as an astute investor in the aftermath of the dot-com bubble bust.  He correctly realized that most of the dot-coms had business models that would never succeed.  He got a lot of flak for not joining the party, but unlike many other investors, he avoided a long and painful hangover.  He gained my respect.

Unfortunately, Warren Buffett got suckered into the housing bubble, investing billions in housing boom related stocks (carpets, bricks, jewellery, furniture).

Making high risk derivatives trades with his shareholders money,  Warren Buffett in an attempt to increase short-term profits, placed bets on the future values of companies and assets.  “If we lose money on our derivatives, it will be my fault,” Buffett said.  The AP reports “Buffett said he initiated all of Berkshire’s 251 different derivative contracts because he believes they were mis-priced in Berkshire’s favor.”

Wikipedia explains derivatives: “Speculators will want to be able to buy an asset in the future at a low price according to a derivative contract when the future market price is high, or to sell an asset in the future at a high price according to a derivative contract when the future market price is low.”

Andy Kilpatrick, author of the ironically titled book “Of Permanent Value: The Story of Warren Buffett,” tells the AP in the same article that “Berkshire’s results were still impressive given how they compare to the rest of the world.”  In 2008, Berkshire Hathaway lost only 10% of value,  compared to a 37% loss for the S&P 500.

Which may sound great, but what is missing from the article, is the fact that if the American people stop buying Warren Buffet’s Bull and stop investing in America, he and his investors are going to lose the Bull and have to eat shit.

Think about that, the next time you hear Warren Buffett tell you that, “there’s never been a better time to invest in America!”

Update: April 30, 2011
Well, well, well.  Today, 40,000 Buffett cult followers will converge in Omaha, Nebraska to hear “The Great One” explain his, and his presumed successor and top Berkshire Hathaway manager David Sukol’s actions in the front running scandal of Berkshire Hathaway’s Lubrizol acquisition.

More and more, as the PR curtain surrounding Warren Buffett slowly opens, it becomes apparent that Warren Buffett is in reality just another crony capitalist, and not the great investor the cult followers assumed.

Also Read:
How to Retire with Less Than $1 Million
When Will the Economy Hit Bottom?
How to Save $1 Million
What is a Double Dip Recession?

The most obvious reason to fire your financial planner, is because he or she lost half your life savings in the recession, begging the question why ever seek their advice again?

The not so obvious reason to fire your financial planner, and do your own retirement planning, is because it does not really matter which financial planner you use – almost all financial planners over estimate your retirement savings needs.

When you visit your financial planner, financial adviser, retirement specialist, money manager, or whatever they call themselves, and you ask them how much money do you need for retirement, the answer you receive is wrong.  The truth is they do not know how much retirement savings you need – they are guessing.

Your financial planner is using a widely accepted retirement industry formula, that calculates you will need to be able to spend 80% of your current salary in retirement, it is a complete guess.

A guess that forces you to save more for your retirement than is necessary, causing you to work many more years than you need to, that does nothing but earn your financial planner additional commissions and fees.  Why are you paying someone a lot of money, to give you a guess, that unnecessarily delays your retirement?

To calculate how much retirement savings you really need, visit the Early Retirement Website and try the Free Retirement Savings Calculator, it compares retirement savings needs using both the Green Retirement and Traditional Retirement formulas. You’re in for a happy shock.

Another truth is that 85% of mutual funds and financial planners do not beat the S&P 500 index.   Most financial planners do nothing more than sell clients various mutual funds, the same mutual funds that do not beat the stock market index, so why not do your own investing and save money?   The odds are that if you follow the advice found in a basic investing book, you will probably do no worse than your financial planner, and perhaps even better.

Here is a list of reasons why you should fire your financial planner:

Poor Performance
High Fees and Commissions
Inaccurate Retirement Calculations
Faulty Asset Allocation Models
Constant Buying and Selling of Your Investments

In the unlikely event that your financial planner made you money during the recession, then by all means keep him or her, give ‘em a big hug and a box of chocolates.   If you insist on not firing the financial planner that lost you money, then at the very least do yourself a favor, and ask them to use the Free Early Retirement Calculator to calculate your retirement savings needs.

Green Retirement offers Early Retirement Planning and Early Retirement Software for only $49.   Green Retirement LLC. does not sell investments or offer investment advice.

Why the Rich Love Being Green

A surprisingly large number of people, who use our Early Retirement Planning Software, are rich millionaires.   Green Retirement benefits the middle class the most, reducing the savings they need for retirement,  enabling them to achieve their retirement goals.

So, why would rich people who don’t have to worry about retirement, be interested in Green Retirement?

Why?   Because with traditional retirement planning, you get penalized for doing well, and that means even a lot of rich people have trouble retiring.

If you are a C.E.O, Internet Entrepreneur, Surgeon, or upper management executive, and have a high net worth and six figure salary, even with a few million you may still not be able to retire – according to traditional retirement planning.    For instance, if you have a net worth of $2.2 million and a salary of $180,000 per year, with traditional retirement planning you will need $3.6 million dollars.   A person with a salary of $225,000 per year, will need $4.5 million to retire.

I know, don’t cry for the rich, wouldn’t be lovely if we all had the same problem?   The problem however, is that the same problem that affects the rich, also affects you and it makes it harder for you to retire.   If you get a $10,000 raise this year, you will now need an additional $200,000 in savings, to be able to retire. And then next year, you only get a $5,000 raise, but that means you will need to save an additional $100,000 to retire.

With traditional retirement planning, every time you get a raise, financial freedom and retirement slips further away.

And well, that’s just un-American.   That is why the rich love Green Retirement, they get to enjoy the fruits of their success, and so should you. Find out how much savings you really need to retire on the Early Retirement Website, try our free retirement calculators, and learn how to retire early.

Boost Retirement Income with The Dogs of the Dow

Just because you have an asset allocation in stocks, does not mean that you have to forgo income, you can achieve higher rates of return than Treasury Bills or Money Market Accounts by considering the popular Dogs of the Dow for your stock portfolio.   Almost everyone should have a long-term asset allocation that includes stocks, and the Dogs of the Dow are one way, you can boost your retirement income.

The top five yielding companies in the Dogs of the Dow, which includes household names like, AT&T, Verizon, Pfizer, Citibank, Bank of America, currently yield a combined average of 7.81%.   With the Federal Reserve cutting interest rates by half a point, and the likelihood of further rate cuts down the road, retirees are facing ever diminishing returns on their bond allocations.   The best FDIC insured Money Market rates are no higher than 3.5%, and may drop lower, following the Fed’s cut.

Here is a link that lists the current yields on the Dogs of the Dow.   If you don’t know what the Dogs of the Dow is, speak with your financial advisor and tax planner, to see if it is the right retirement investment for you.   Your financial planner should be able to help you institute a dollar cost averaging plan, to take advantage of the high yields, while reducing your downside risk. Also visit Wikipedia to learn more on the Dogs of the Dow.

Green Retirement Planning does not offer investment advice, the views expressed in this article, are solely those of Ramsay Mameesh – Founder of Green Retirement.

Also Read:
Easy Asset Allocation
How to Save $1 Million
How to Retire Early