We recently pointed out that starting to save early for retirement is extremely helpful, and also a useful chart showing how much you should have saved at different stages of your career to ensure a comfortable retirement.

To show how these ideas work, we figured out how much money you would have to set aside monthly, starting at different ages, and under different rates of return, to end up with $1,000,000 in savings when you are ready to retire at 65. (Ed Note: First figure is $361.04)

continue reading HERE

related: 

SEE ALSO:  Every 25-year old needs to see this chart

The red flags contained in the national and global headlines that have come out thus far in 2014 should have spooked investors and economic forecasters. Instead the markets have barely noticed. It seems that the majority opinion on Wall Street and Washington is that we have entered an era of good fortune made possible by the benevolent hand of the Federal Reserve. Ben Bernanke and now Janet Yellen have apparently removed all the economic rough edges that would normally draw blood. As a result of this monetary “baby-proofing,” a strong economy is no longer considered necessary for rising stock and real estate prices.

But unfortunately, everything has a price, even free money. Our current quest to push up asset prices at all costs will come back to bite all Americans squarely in the pocket book. Death and taxes have long been linked by a popular maxim. However, there also exists a similar link between debt and taxes. The debt we are now incurring in order to buttress current stock and real estate will inevitably lead to higher taxes down the road. However, don’t expect the taxes to arrive in their traditional garb. Instead, the stealth tax of inflation will be used to drain Americans of their hard earned purchasing power.

I explore this connection in great length in my latest report Taxed By Debt, available for free download at www.taxedbydebt.com. But diagnosing a problem is just half the battle. I also present investing strategies that I believe can help Americans avoid the traps that are now being laid so carefully.

The last few years have proven that there is no line Washington will not cross in order to keep bubbles from popping. Just 10 years ago many of the analysts now crowing about the perfect conditions would have been appalled by policies that have been implemented to create them. The Fed has held interest rates at zero for five consecutive years, it has purchased trillions of dollars of Treasury and mortgage-backed securities, and the Federal government has stimulated the economy through four consecutive trillion-dollar annual deficits. While these moves may once have been looked on as something shocking…now anything goes.

But the new monetary morality has nothing to do with virtue, and everything to do with necessity. It is no accident that the concept of “inflation” has experienced a dramatic makeover during the past few years. Traditionally, mainstream discussion treated inflation as a pestilence best vanquished by a strong economy and prudent bankers. Now it is widely seen as a pre-condition to economic health. Economists are making this bizarre argument not because it makes any sense, but because they have no other choice.

America is trying to borrow its way out of recession. We are creating debt now in order to push up prices and create the illusion of prosperity. To do this you must convince people that inflation is a good thing…even while they instinctively prefer low prices to high. But rising asset prices do little to help the underlying economy. That is why we have been stuck in what some economists are calling a “jobless recovery.” The real reason it’s jobless is because it’s not a real recovery!  So while the current booms in stocks and condominiums have been gifts to financial speculators and the corporate elite, average Americans can only watch from the sidewalks as the parade passes them by. That’s why sales of Mercedes and Maseratis are setting record highs while Fords and Chevrolets sit on showroom floors. Rising prices to do not create jobs, increase savings or expand production. Instead all we get is debt, which at some point in the future must be repaid.

As detailed in my special report, when President Obama took office at the end of 2008, the national debt was about $10 trillion. Just five years later it has surpassed a staggering $17.5 trillion. This raw increase is roughly equivalent to all the Federal debt accumulated from the birth of our republic to 2004! The defenders of this debt explosion tell us that the growth eventually sparked by this stimulus will allow the U.S. to repay comfortably. Talk about waiting for Godot. To actually repay, we will have few options. We can cut government spending, raise taxes, borrow, or print. But as we have seen so often in recent years, neither political party has the will to either increase taxes or decrease spending.

So if cutting and taxing are off the table, we can expect borrowing and printing. That is exactly what has been happening. In recent years, the Fed has bought approximately 60% of the debt issued by the Treasury. This has kept the bond market strong and interest rates extremely low. But a country can’t buy its own debt with impunity indefinitely. In fact the Fed, by winding down its QE program by the end of 2014, has threatened to bring the party to an end.

Although bond yields remain close to record low territory, thanks to continued QE buying, we have seen vividly in recent years how the markets react negatively to any hint of higher rates. That’s why any indication that the Fed will lift rates from zero can be enough to plunge the markets into the red. The biggest market reaction to Yellen’s press conference this week came when the Chairwoman seemed to fix early 2015 as the time in which rates could be lifted from zero. That possibility slapped the markets like a frigid polar wind.

Janet Yellen may talk about tightening someday, but she will continue to move the goalposts to avoid actually having to do so. (Or as she did this week, remove the goalposts altogether). As global investors finally realize that the Fed has no credible exit strategy from its zero interest policy, they will fashion their own exit strategy from U.S. obligations. Should this happen, interest rates will spike, the dollar will plunge, and inflation’s impact on consumer prices will be far more pronounced than it is today. This is when the inflation tax will take a much larger bite out of our savings and paychecks.  The debt that sustains us now will one day be our undoing.

But there are steps investors can take to help mitigate the damage, particularly by moving assets to those areas of the world that are not making the same mistakes that we are. In my new report, I describe many of these markets. Just because the majority of investors seem to be swallowing the snake oil being peddled doesn’t mean it’s wise to join the party. I urge you to download my report and decide for yourself.

Peter

Using Options in a safe, conservative way to increase your income.

Many investors are familiar with Buffett’s famous holding of Coca-Cola (NYSE: KO). Buffett began buying shares in 1988. At the time, Buffett said he expected to hang on to this “outstanding business” for “a long time.” And over the ensuing years, he continued to build his position in the iconic company.

Today, Coca-Cola is Buffett’s largest holding. As of February 14, the Oracle owned 400 million shares of Coca-Cola, valued at $15.3 billion — a fifth of his equity portfolio .

But what many investors don’t know is the story about when Buffett used options on Coca-Cola.

That’s right. The King of Buy-and-Hold uses options. More importantly, it’s the way Buffett used options in the case of Coca-Cola — which happens to be a safe, conservative way — that too many investors often ignore… 

In 1993, Coca-Cola was trading around $39 per share. Buffet, a bargain hunter, believed that was too pricey. But the billionaire investing genius wasn’t content to passively wait for the stock to fall to his preferred price. 

The Oracle of Omaha decided to use a simple options strategy that eventually earned him $7.5 million before he bought a single share of Coca-Cola. 

After deciding he’d be willing to open a position with Coke at $35 per share, a $4 drop from its current price, Buffett wrote 5 million put options with that $35 strike price. 

For those who don’t know, a “put” is an options contract that gives the owner the right, but not the obligation, to sell 100 shares of the underlying stock at a specified price (known as the “strike price”). In exchange for writing the puts, or agreeing to buy the stock if it drops to that price, investors collect premiums. 

In Buffett’s case, he received a $1.50 premium for every put option he wrote with a $35 strike price. He wrote enough of these contracts to allow him to collect a cool $7.5 million in the process.

If Coca-Cola was to fall below $35, the buyers of the options Buffett was writing would exercise those options and sell their shares to him. In that case, Buffett would be obligated to buy Coca-Cola at $35 per share, which is exactly what he wanted to do in the first place.

On the other hand, if share prices of Coca-Cola were to rise during the life of the contract, the owners of the options Buffett wrote wouldn’t be able to exercise them and Buffett, of course, wouldn’t be able to buy Coca-Cola at $35. The options would expire and Buffett would simply walk away with his $7.5 million. Not bad.

And that’s exactly what happened. Buffett earned $7.5 million without buying a single additional share of Coca-Cola, proving that it’s possible to multiply your income from well-known, ordinary stocks. And it doesn’t have to be difficult. 

That’s why StreetAuthority’s Michael Vodicka created Income Multiplier Weekly. Each week, he shows subscribers of his new premium newsletter how to start increasing their income from well-known stocks like Coca-Cola, Microsoft, Verizon, and others. In fact, Mike has created a special presentation, showing exactly how he’s executing his strategy and how other investors can, too. (You can view his presentation here.)

Simply stated, we believe conservative income strategies like selling puts are one of several instances where many investors just seem to ignore Buffett. And this is a mistake. If you want to be successful in the market, don’t be content to simply marvel at Buffett’s “genius” — be sure to pay attention to what the man actually says and does, and act accordingly.

Good investing, 

Brad Briggs
Executive Editor, StreetAuthority

P.S. — I mentioned earlier that Mike’s readers are already profiting from his recommendations. So far, readers have already collected annualized income of 36%… 47%… even 87% from stocks with traditional dividend yields of less than 5%. To learn more about how easy multiplying your income can be, you can watch his special presentation byfollowing this link.

To ensure that you receive these emails, please add us to your address book. 

Ben Graham, Peter Lynch & of course Warren Buffet & Charlie Munger. Many more too in this is an exceptional collection of links to the very gifted’s opinions how to be successful evaluating companies & siezing the advantage in Markets. This author has put together a large collection. Just below is a very small portion of these links in this article. An article one might well review from time to time, especially when things get crazy – Editor Money Talks. 

Ben Graham

• Intelligent Investor
• Security Analysis
• The Interpretation of Financial Statements
• An hour with Ben Graham
• Lectures on Value Investing
• Two illustrative approaches to Formula Valuation of Common Stocks

Peter Lynch

• Learn to Earn
• One Up On Wall Street
• Beat the Street.
• Peter Lynch Interview

Balance Sheet, Income Statement and Cash Flow Statement

Creative cash-flow reporting, financial shenanigans and Quality of Earnings.

1) What does each accounting sheet/statement hold?

2) Learning the components that make up each line item

3) How each line item can be manipulated for better or worse

….the extensive article & compilation of links HERE