THE NO-COMPROMISE RETIREMENT PLAN • 15
In today’s market, to get diversification, you have to give up a lot of growth. That’s a core conflict of your IRA. My friends and I saved with a mistaken belief: we assumed once we hit age sixty-five, we could put our funds into safer instru- ments and be done with it. Sure, they wouldn’t grow as much in CDs as they did in stocks, but we could still get meaningful growth on our funds while keeping them protected. Think back to the 1970s and 80s. Perhaps you were like me. When I was in my thirties, I opened a checking account at the local bank in Louisville, Kentucky. It was a basic checking account, a place to deposit my checks (remember when you had to drive to the bank to deposit a check?) and pay my bills (remember when you had to write a check to pay a bill?). From this account, I was very careful about when I paid my bills. I always waited until the last day possible, and then wrote a check and put it in the mail. This odd behavior wasn’t because I was broke; I had enough money to cover my bills. Can you guess why I did this? In 1980, my checking account was earning an interest rate of around 18 percent. Eighteen percent! I wanted to keep my money in the bank and earning that interest as long as I could. It’s hard to remember back when money could achieve mean- ingful growth in secure vehicles. It’s just not a reality anymore. Most checking accounts today earn around 0.10 percent. When was the last time you saw a checking account earning interest on the left side of the decimal point? It doesn’t happen anymore.
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