How can I grow my 401(k) or IRA without the dangers of the stock market?
In the Video above, Scott Farnsworth, Central Florida's Tax-Free Retirement Expert answers a frequently asked question: How can I grow my 401(k) or IRA without the dangers of the stock market?
"The conventional answer to that question is that you should move it into CDs or some other low interest bearing account, but I found another answer that is really far more effective, and that's to use a TRA or a tax free retirement account and to use its indexing investment strategy.
The way that works is we track a stock market index, like the S&P 500. When that index goes up, we get the first twelve percent of that growth. At that point, we lock in our gains. If the market goes down the next year, we don't go backwards. We stay right where we were until the market turns around and then we continue to go up when the market goes up, but we never go down when the market goes down.
Warren Buffett said there are two rules of successful investing. Rule number one, never lose money. Rule number two, never forget rule number one. With this indexing strategy, we never lose money. We only push forward when the stock market is going up. To me, it's a great answer to a very difficult question."