Gyroscopic Investing

MWKXJ wrote: The Treasury's new "MyRA is now available.

Interesting.

It will never decline in value, but it also won't ever earn enough to fund a meaningful retirement benefit.

It is also unlikely to even keep up with inflation, so there will be losses in real terms.

It's like a safe that is secure no one can actually open it, which makes it useless as a safe.

Can you contribute to one in addition to other IRAs? Does this effectively give you an additional $5,500 per year of tax-advantaged space?

Pointedstick wrote: Can you contribute to one in addition to other IRAs? Does this effectively give you an additional $5,500 per year of tax-advantaged space?

Honestly, I don't know much about the new MyRA and was hoping others here would chime in.  I seem to recall from past speculation on the board that it would be like the "G Fund" previously available only to Federal employees.  The "G Fund" was allegedly a good way to save, however, that may have been back in the days when interest rates were higher.

http://gyroscopicinvesting.com/forum/ca ... component/

Pointedstick wrote: Can you contribute to one in addition to other IRAs? Does this effectively give you an additional $5,500 per year of tax-advantaged space?

Looks like it's just a Roth with only one investment option. I don't get how it gives people any options they didn't already have. I think it's either a MyRA Roth or a Roth Roth, not both.

MWKXJ wrote: The Treasury's new "MyRA is now available.

Non-wage earners again get the short end of the stick.  I'm getting sick of this!  We are nothing but corpses to chop, bone and juice.

barrett wrote:

Pointedstick wrote: Can you contribute to one in addition to other IRAs? Does this effectively give you an additional $5,500 per year of tax-advantaged space?

Looks like it's just a Roth with only one investment option. I don't get how it gives people any options they didn't already have. I think it's either a MyRA Roth or a Roth Roth, not both.

No, its a Roth with principal protection and no fees.  Think deep cash.  A good complement to I-Bonds.

Based on a quick search:

https://myra.gov/get-answers/

1.) to PS, this DOES count towards your annual IRA limits. So not additional tax space
2.) after you get $15,000 in the account, you are REQUIRED to have it moved into a private IRA. This would mean effectively losing the reason for getting it in the first place; to keep from losing money.
3.) The G-Fund is better if you can get it due to a much higher account balance you can have in it
4.) This myRA is only marginally better than a regular Roth IRA in that for the first few years of maximum contributions (up to $5,500 if you're under 50) because you can have a guarantee to not lose money. After those first few years, you lose this as it moves to the private Roth IRA.
5.) Based on the hassle of this switch, I'd say it's barely worth it to those who have more money.
6.) For those that have only a slim amount of money they can put away each month, that would get eaten apart by transaction fees or minimums to open a Roth/Traditional IRA it would be useful.
7.) I'm assuming currently that you can't just get a myRA, get it up to $15,000, have it transfer into a Roth IRA, and then open up another myRA again. If you could do this, it'd become more enticing.

MachineGhost wrote:

MWKXJ wrote: The Treasury's new "MyRA is now available.

Non-wage earners again get the short end of the stick.  I'm getting sick of this!  We are nothing but corpses to chop, bone and juice.

Any reason you think they get the short end of the stick?

more reading at that link. Answered my own question:

"Can I open a second myRA account once my first account is closed after transferring its assets to the private sector?"

"No, you are limited to opening one myRA account. A myRA account is intended to be starter retirement savings accounts before you transition to a private sector Roth IRA, where you have other investment options and opportunities to continue to grow your savings."

I've already lost interest (not intentionally a pun).

Greg wrote: Any reason you think they get the short end of the stick?

You can't contribute to any tax-deferred accounts of any kind other than insurance or annuities unless you have "earned income".  I'm not willing to pay those ridiculous fees just yet.  You could be the richest man in Babylon with tons of "unearned income" and you're still shit out of luck.  It's old school thinking.

MachineGhost wrote:

Greg wrote: Any reason you think they get the short end of the stick?

You can't contribute to any tax-deferred accounts of any kind other than annuities unless you have "earned income".  I'm not willing to pay those ridiculous fees just yet.  You could be the richest man in Babylon with tons of "unearned income" and you're still shit out of luck.  It's old school thinking.

MT, correct me if I'm wrong, but does a Roth IRA not have a limitation on how much can be contributed if you "earned" self-employment income, as opposed to 401(k)'s, pension plans, etc..  I could refile last year's taxes and redeclare my Misc Income as Schedule C just to be able to contribute to a Roth if there is no limit based on the "earned income".

Gotcha. Thanks. I haven't thought about it enough as to whether this is fair or not.

http://www.investopedia.com/terms/u/unearnedincome.asp

Greg wrote: Gotcha. Thanks. I haven't thought about it enough as to whether this is fair or not.

http://www.investopedia.com/terms/u/unearnedincome.asp

The insinuation is that only rich people have "unearned income" and don't need tax deferral accounts.  It's just ideological Bullshit.

What a pile of crap. I wonder if anyone is actually going to sign up for these things.

Pointedstick wrote: What a pile of crap. I wonder if anyone is actually going to sign up for these things.

People might but there is only a very tiny group of people that would like this.

1.) People with so little money that they don't want to have to wait for their savings to accumulate in an IRA to be able to buy one share of an ETF (since mutual funds for the most part have at least a $1000 minimum)
2.) People are so afraid of losing this small amount of funding that they are willing to have it in a low-rate/inflation-possibly-beating guaranteed fund.

I think you need to satisfy both #1 and #2 to have the MyRA right for you.

Pointedstick wrote: What a pile of crap. I wonder if anyone is actually going to sign up for these things.

Careful, its for the lower class.  The unbanked.  They underserved.  I wouldn't be surprised if Walmart starts offering the ability to sign up for it in stores to draw in traffic.  Or even employer's dumping their pricey retirement plans for the MyRA instead.  Win-win!

Even the USPS is considering getting into the payday lending business to be more just to the "exploited by loan sharks" by offering 15% max interest rates.

Oh I see, it's a retirement account for people who have difficulty planning for the future and don't sign up for financial accounts. I predict it will be a smash hit.

Pointedstick wrote: What a pile of crap. I wonder if anyone is actually going to sign up for these things.

C'mon, PS! Tell us how you really feel!

Pointedstick wrote: Oh I see, it's a retirement account for people who have difficulty planning for the future and don't sign up for financial accounts. I predict it will be a smash hit.

Yes, it is just right for those people!

Pointedstick wrote: Oh I see, it's a retirement account for people who have difficulty planning for the future and don't sign up for financial accounts. I predict it will be a smash hit.

That's, like, probably 80% of the Baby Boomers...

MachineGhost wrote:

Pointedstick wrote: Oh I see, it's a retirement account for people who have difficulty planning for the future and don't sign up for financial accounts. I predict it will be a smash hit.

That's, like, probably 80% of the Baby Boomers...

80% of the baby boomers don't have bank accounts? Try 3-5%: https://www.economicinclusion.gov/surve ... -findings/

Percentage with no retirement savings? 14-25%: http://www.cbsnews.com/news/shocking-nu ... t-savings/


The problem is attitude. Opening a bank account is easy. Signing up for an IRA takes 10 minutes. For a normal person with a picture ID, a social security number, a device with an internet connection, and the ability to passably read, these are trivial tasks. Those who can't be bothered to do these things, have psychological hangups about doing so, or don't know how won't have any easier of a time or more interest in signing up for this new type of account. The people who envisioned this thing completely misunderstood the psychological characteristics of the target audience. For these kinds of people, forced "savings" like the Social Security payroll tax is a much more effective approach. Evidently Obama--the originator of the MyRA--doesn't understand this. But Trump does. That's why he wants to beef up Social Security. The kinds of people who do not have bank accounts or retirement accounts will not provide for their own financial future unless forced. They simply won't.

Heh, maybe people should be allowed to opt out of the payroll tax and Social Security if they can demonstrate that they already have retirement savings and accounts.

I kind of like this idea actually.  It looks like it's intended to teach people how to save, getting them started with some good budgetary habits.  So many people cannot get their heads wrapped around the idea of setting aside a bit of money every month for savings.

I did something like this for my brother, who was constantly talking about how he just couldn't save for this or that reason.  I opened a 529 account when his daughter was born, started a small monthly contribution and told him I'd keep it up if he could match it.  He was all tied up in knots about it until I told him he could always cancel a monthly payment if he was running short (he's self-employed).  He doubled my contribution and has now proudly kept it up for 3 years.  When his son was born I doubled my contribution and he did the same.  He loves how the money is piling up and voila, a new habit has taken hold.  Yay.

That's a great story, WiseOne! Really wonderful that you were able to have that kind of positive effect. It's also an example of how ultimately the solution to a problem like this comes from people, not systems or programs. You made that happen, and you didn't need a MyRA to do it. If you hadn't come along, would your brother have saved some money in a MyRA? Probably not.

Point taken...no I would bet my brother wouldn't have jumped on a myRA account.

Personal finance courses in high school would be an idea, though.

TennPaGa wrote:

Pointedstick wrote: It's also an example of how ultimately the solution to a problem like this comes from people, not systems or programs. You made that happen

As moda might say, BOOM!

I don't want to derail the MyRA conversation, but this is why, in a nutshell, I'm extremely skeptical of the efficacy of any kind of top down "solution" prescribed by any entity (government or private sector) that is much larger than, say, 20 people.

I think that this post and PS's post above are examples of what you might call "mature libertarianism."

It's simply making common sense non-ideological observations about how some problems do not lend themselves to government solutions.

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RE the general point of the thread, as a retirement plan professional, I can tell you that a retirement account with a single investment option providing returns that lag inflation, and with no annuitization of the account balance at retirement age will NEVER meet anyone's goals for retirement income.

I think of the MyRA as the retirement equivalent of those mice that are bred for the sole purpose of being fed to snakes and other predators people keep as pets.

Once those MyRA balances get moved to Roth IRAs, Wall Street will happily gobble them up like Scooby Snacks.