The government does a lot of dumb things. But this ranks among the dumbest.

[ad#Google Adsense 336×280-IA]It stands to directly harm the financial fate of many, many unsuspecting Americans.

Thanks to Obama’s myRA plan, countless investors – who think they are doing the right thing – will virtually guarantee they never overcome our arch enemy… the curse of mediocrity.

We first wrote about this half-cocked savings plan immediately after Obama proposed it.

Here’s an excerpt:

Sure, a myRA comes with no risk. But the plan also come with virtually no chance of a sizeable return. After all, typical of Washington, our political pals allow just one asset in a myRA… Uncle Sam’s debt.

That’s right. The only asset allowed in a myRA are government-issued savings bonds (for all of you Treasury buffs, the bond replicates the G Fund).

If you want to jump-start your savings, Obama says, loan your money to Washington – and earn a whopping 1.89%.

You’ll be rich… in a few hundred years.

For the last year, the plans were offered to a handful of companies across the country as part of a trial program. But now that the plan is nationwide, we’re pounding the table against it once again.

We’re doing it not because we think you’ll get sucked into the plan, but because we are convinced this myRA scheme perfectly exemplifies why so many folks simply stand in their own way of building wealth.

Here’s what I mean.

I don’t want to go too “inside baseball,” but as publishers, we keep track of just about everything related to our editorial. It ensures we’re producing the very best, most usable content possible. And one of the metrics we look at every day is the number of folks opening our daily e-letters.

And here’s what we’ve learned… income is, by far, the most engaging topic. Any time we write about high-yielding stocks or income opportunities, the amount of folks opening our emails soars.

There is no doubt this trend has everything to do with the income crisis of the last eight years. It’s been nearly a decade since the Federal Reserve started slashing interest rates… and the effects have been financially deadly.

Obama’s myRA only magnifies the situation. Because it locks investors into the pitiful yields paid by U.S. Treasurys, folks who put their money into the scheme will barely overcome the effects of inflation, let alone build the sort of liberating wealth they’re aiming for.

Buying Treasurys is not an investment plan. It’s a very small part of a much larger plan. With yields of just 2.26% on 10-year Treasurys… a myRA will certainly not make you rich.

Most financial advisors will tell you the minimum annual income you’ll need in retirement is about $40,000. That means you’ll need a million-dollar portfolio returning 4% annually to meet the minimum income requirements.

If you want to travel and have even a modicum of luxury during retirement… you’ll need a whole lot more.

That idea begs two questions… and a bit of math.

The first question is simple. Are you saving enough money and making the right investment choices to someday retire with a portfolio large enough to produce the kind of income you need?

And the second question: What sort of assets will provide the reliable income stream you need once you retire?

Again, investors in this country are starving for reliable income. They know the old standbys won’t cut it.

In the midst of an income crisis, a myRA and its paltry returns won’t come close.

We argue it’s yet another false promise from Washington.

To ensure you don’t get caught in this trap, we beg you to take some time today to do a bit of easy math. In fact, we’ll help you run the numbers.

Here’s a link to one of Investment U’s most popular online calculators. Take 10 minutes when you are done reading this to play with the numbers. See what annual return you need to reach your goals… the number that will ensure you don’t succumb to the curse of mediocrity.

Once you have your number, forget the idea of a myRA and start building a diverse portfolio of assets.

True, lasting wealth starts with a foundation built on the proven idea of asset allocation.

Spread your investments among different asset classes, not just different securities or market sectors. For example, The Oxford Club recommends dividing your core portfolio into the following categories and allocations:

  • 30% U.S. Stocks
  • 30% Foreign Stocks
  • 5% Precious Metals
  • 5% Real Estate Investment Trusts
  • 10% High-Grade Bonds
  • 10% High-Yield Bonds
  • 10% Inflation-Adjusted Treasurys

We admit, if a myRA gets folks to start investing, it does a much-needed job. But it must go much further than simply creating a new conduit to fuel Uncle Sam’s debt addiction.

Investors don’t need more false promises. They need education and knowledge… two things Washington isn’t known for.

The key to overcoming this income crisis, in fact, is to avoid our government. Do what you can to sidestep its burdensome tax policies, record-low interest rates and volatility-inducing budget policies.

Find your numbers… diversify… and don’t stand for mediocrity.

Good investing,



Source: Investment U