Keeping an emergency fund while augmenting retirement savings.

• Save up one year's worth of expenses
• Keep fund in interest-bearing account
• Invest yearly interest from account into high-yield aggressive-growth stocks
• Continue every year until retirement
• Sell upon retirement and put into interest-bearing account
• Create cash flow with money based on expected age of death
• Use the annuity to augment retirement savings

Example:
• One year's expenses: $25,000
• Kept in money market account: 4%
• Yearly interest earned: $1,000
• Invested in stocks averaging 18%
• Age of beginning investment: 30
• Age of retirement: 65

Amount earned at age 65: $1,816,652
• Invested at 4.5% in money market account

• Two options

1) Create a perpetuity
⁃ Money ($1,816,652) is invested at 4.5% and the yearly interest ($81,749) is drawn out at the end of the year to supplement next year's retirement income. Invested in a separate money market account (at 4%) for general retirement income. Assuming biweekly payments, this method earns you an extra $3,209.93 every two weeks to supplement the primary retirement savings. This creates a near-guaranteed supplemental income for the remainder of the person's life.

2) Create an annuity
⁃ This method requires an assumption of the length of investor's life. Calculations are based on retirement at age 65 and death at age 100. Money ($1,816,652) is invested at the same 4.5% (no need to transfer the supplemental money to the primary money market account) earning a biweekly annuity payment of $3,966.40 until age 100.

Comparisons: Biweekly Payment: Remaining Amount at Age 100:
• Perpetuity $3,209.93 $1,816,652
• Annuity  $3,966.40 ø

-Difference $756.47 $1,816,652

What my facebook friends think about Obama's victory.

It's cute how people can have so much faith in someone so inexperienced and full of rhetoric.
So, in honor of Obama's nomination, I give you the Ten Cannots William J. H. Boetcker.

"You cannot bring about prosperity by discouraging thrift.
You cannot strengthen the weak by weakening the strong.
You cannot help the poor man by destroying the rich.
You cannot further the brotherhood of man by inciting class hatred.
You cannot build character and courage by taking away man's initiative and independence.
You cannot help small men by tearing down big men.
You cannot lift the wage earner by pulling down the wage payer.
You cannot keep out of trouble by spending more than your income.
You cannot establish security on borrowed money.
You cannot help men permanently by doing for them what they will not do for themselves."

Words of wisdom.

It amazes me how swayed people are by empty rhetoric about hope and change and not by policy, experience, and most of all common sense.

Common sense is a great thing. Too bad our country lacks it. More on that in another post.