12/30/05

Dear pinkocommiebastard,
My parents got totally freaked out by Bush's recent efforts to gut Social Security. They keep nagging me to open some kind of retirement savings account, but I don't want to be a sell-out. I'm afraid that if I become invested in the system, I will lose my appetite for revolution. But I don't think I will ever develop an appetite for dog food, which the 'rents warn will be my daily diet without any kind of old age savings. Maybe I can make some kind of "socially responsible" investments. What do you recommend?
- Concerned About Savings' Harm

Dear CASH,
First of all, so-called "socially responsible" investments are hogwash. Any kind of investment is a deal with the devil. If you open a simple bank account, your puny savings are lent overnight to the Federal Reserve, who, in turn, lend them to private enterprises, big and small. Your money will make its way to environmentally-destructive shrimp farming in Thailand, to sweatshops in China, to war profiteering in Africa, to factory closings right here in the U.S. We strongly recommend our comrade Barbara Garson’s excellent book, "Money Makes the World Go Around" (Viking, 2001) in which she invested her publisher’s advance and followed her money around the world to see how we are all invested in global capitalism, whether we like it or not.

Although, we'd like to think that the revolution is only weeks away, it will probably take slightly longer. So, what do you do, put your savings in your mattress? Fine – while the capitalists invest their savings and end up with money to donate to the Republicans. That's no way to further the revolution. The movement does not need activists who are so racked by poverty and starvation that they have no time or energy to fight the good fight. Garson's advice is to focus on your activism, not your investments. That is our advice as well.

But then again, socialists are notorious for doing very well at investing, maybe because we've learned to distrust the system. An older comrade whom we consulted put $25,000 into a middle-of-the-road "no-load" (no broker commissions) mutual fund in 1982, and left it alone to accumulate, and by 2000 it exceeded $600,000 and is still growing, and permits him to be a major contributor to the cause. His advice:

"Forget about brokers and their commissions. Use socialist common sense. Diversify by buying shares in mutual funds directly from the mutual-fund companies. Go to the huge companies, like Vanguard and Fidelity, that have proven track records and reputations to preserve. They offer dozens of funds, but stay away from the fad funds. And once you've bought some shares, LEAVE THEM ALONE! The stock market is bound to go belly-up now and then, and your fund will pay little or nothing. But in another year or so it will soar; that’s what stock markets do."

We asked another comrade, who makes his living as a financial advisor, to provide some advice to our readers. Unfortunately, his company would not allow him to publish advice under his own name, if it was accompanied by an imprudent acknowledgment of how lousy this rotten capitalist system is. These poor capitalists desperately need the liberation of socialism, so they can pursuer their true calling: comedy. Nevertheless, here's Comrade MBA X's advice:

Remember that prior performance doesn’t guarantee future returns. And do not put all your eggs all in one basket. Invest in a number of asset classes, allocated according to your risk tolerance (how much can you bear your investment dropping in price without panicking).

Beware. Once the investment has been made (unless it is ongoing) the commission sales person has almost no way to profit. So it is to his advantage to select high earning investments in order to convince you to sell the investment that he recommended last year and buy something new this year so that he can make another commission.

Retirement savings are made in a few, basic forms. A 401(k) plan is set up by your employer to enable you to put money aside from your paycheck before taxes are deducted – reducing your taxable income and the amount of taxes that you pay for the year. Sometimes the employer will match part or all of your contributions. Take advantage of the employer matching whenever it is available.

If your employer doesn't set up a plan, you set up your own by opening an individual retirement account. A traditional IRA usually provides a similar tax deduction as a 401(k). Like the 401(k), you will pay taxes when you withdraw the money to pay for your retirement. There can be penalties if you withdraw money before you turn 60 years of age.

A Roth IRA does not provide a tax deduction. But if you wait until you turn 60 to withdraw any money to fund your retirement, you will pay no taxes on your earnings. Another advantage of the Roth is that you can take out your investments without penalty or tax, no matter your age or time in the plan, so long as you don’t withdraw any of the interest."

It's a helluva way to run a country, but those are your options. Good luck, CASH!

Feeling pressure? The “Man” got you down? Politically frustrated? Sexually frustrated? Pinkocommiebastard’s got the advice that’s right for you. Send your questions to pinkocommiebastard@ypsl.org.