Chapter 1
The Amazing Story of Wan Ba-Shi
"In every moment of our existence, we are in that field of all possibilities where we have access to an infinity of choices."
– Deepak Chopra
There was an illusionist, Wan Ba-Shi, from a remote region of China who was able to perform an amazing trick. According to legend, he would go to a local farm and select the fattest pig from the feeding tough. He would throw an old blanket over the pig. A burst of smoke would momentarily obscure the blanket-covered pig from view. When the smoke cleared, he triumphantly pulled the blanket off the pig, and a white swan appeared in its place. Needless to say, the villagers watched in awe each time Wan performed this trick.
Fame and fortune ensued as word of his exploits spread throughout the land. Wan died at the age of 98 on his expansive pig farm with many servants. He never disclosed the secret of his great illusion.
I made that up…
But a pig to swan-like conversion is precisely what is needed by many of the 70 million employees who have 401(k) and 403(b) plans.
These retirement savings plans that most Americans rely on for a financially secure future aren't set up to help employees. If you're counting on your 401(k) or 403(b) plan to safely usher you into old age, you're likely to be bitterly disappointed.
Who does benefit from these plans? Employers, insurance companies, brokers, consultants and the mutual fund industry.
The principal culprit is the financial industry that's supposed to help us. Rather than leading us to financial security, the industry has placed its own economic interests ahead of those it's supposed to serve. (In the chapters ahead I'll show you just how the financial industry feeds off people planning for retirement – many of whom will end up with little more than their Social Security checks to comfort them.)
When you invest outside of these plans, you have a shot at doing so intelligently, if you follow a few basic rules.
Investing within these plans is another story. Most of them prevent you from making intelligent investment choices, by restricting your investment options to a dizzying array of expensive, underperforming, hyperactively managed mutual funds and overpriced annuities.
You can't intelligently invest your retirement assets unless you understand some basic rules.
These rules apply to both your non-retirement assets and your retirement assets, whether you have a 401(k) plan, a 403(b) plan, a 457(b) plan, a traditional IRA or a Roth IRA. Once you understand them, you can figure out how to best invest your retirement assets, within the unfair constraints imposed on you.
Smart Investing is not complicated. It's actually very simple. You have the power to make meaningful changes to your retirement savings plan – changes that could mean the difference between retiring with dignity and barely scraping by. You can maximize your retirement savings by learning how to avoid the minefields planted by the securities and insurance industries to explode your nest egg.
Let's start the process of converting your pig of a plan into the swan you deserve.
