How people can be naive when it comes about for searching for right saving account choice? That is just so unbelievable. Let’s present that naivety.
Well known fact, in other words, common truth is that every investor wants to take all chances in trying to maximize his returns and minimize losses. That is legitimate thing to want. When we come from that understanding, it won’t take so long to see that there has been such a buzz recently about particular retirement account, also known as the 702 account, which give promises to help in achieving that goal by paying a guaranteed return of up to 60 times the standard bank account without any taxes.
This account came into interest field of many people when they have heard that this kind of account has been used by people with privileges and billionaires such as Warren Buffet and Microsoft owner Bill Gates. It came on the promoted flyers and books by an organization called Palm Beach Group. As they said, trough this account you can “retire with an extra $4,098 per month, tax free”! Imagine that! Would you stay in line for opening this account? Like most of other people who are searching for a holy grail, you would also end up being cheated, without any chances of spending your savings. Why is that? Well, it is quite simple – it is just one more misinformation. And not even smart, though.
Think like adults
It is funny thing to see what people will write when they are just searching for some big scandal news. And the most unbelievable thing about this “insider news” is that it worked. I was starting to get some mails, from people that I use to think are quite smart. You can imagine how I felt when I realized that they are just some opportunists, who will rather believe total strangers, when they offer them possibility to get rich, than to think like adults, as they are. What my answer to them was?
Well… How to put it right? My answer was, and I quote myself. “This should be retirement account, not one more Donald Tramp’s plan, for regular mortals. “ The U.S. does not need one more Donald Tramp, believe me, one is just enough. And you can imagine reactions from the people when I sent them my opinion about subject. It really ruins my day when I see how people can be naïve when it comes about getting money without working hard for it.
So, in few words I’ll explain to you the whole case. At first place, that is not retirement account at all, no, it is a life insurance policy. IRA means Internal Revenue Code, and in this particular case comes from section 7702, which is section that regulates contracts for life insurance. So, what they are tried to do is to put a tax-code name on a permanent life insurance policy in effort to associate it with retirement plan. So, 7702 becomes 702, and that is that.