The Best Way to Save...

"Save a little money each month and at the end of the year you'll be surprised at how little you have"
Ernest Haskins


Welcome to The Golden Sense! It's 2012 and many people have made New Year's resolutions. People often forget about their resolutions by February. I think most folks would just like to have a happy 2012 with as little stress as possible. Stress is the killer.  New research by the American Psychology Association finds the three things that deliver significant stress in peoples lives are money (76%), relationships (55%), and job stability (49%). Is it any wonder, psychologically speaking, that everyone is so stressed given the economic backdrop?


It is easy to understand why money delivers the most stress. I have a friend who lives in New York City and works as a nanny. As you may know, New York City is very expensive. She actually makes good money but in the past she has saved nothing and spent the extra on a nice cocktail, a cute pair of pumps, or trip back to California. She is 27 yrs old and it recently dawned on her that saving a little extra money would give her some comfort. She decided she wanted to save money for retirement. Like everyone else, she has stress in her life. In her life, she came to the conclusion that there are two things that bring relief: a Manhattan martini and a full retirement account.

She already knows where to get a good Manhattan martini. But how could she get a retirement account that she wouldn't touch? She proposed that exact question to me.


Saving is tricky because there is always the temptation to use your saved money on something that "comes up". If the money is easily accessible, then it ends up being spent. So, I gave her two options.


First option, start a Roth IRA for herself.


A Roth IRA is an Individual Retirement Arrangement that is named after its creator, the late Senator William Roth of Delaware. A Roth IRA allows you to save up money that you can use after retirement. The Roth IRA is considered to be the simplest form of retirement account that a person can have because it provides tax-free growth.


So why a Roth IRA?


First, Roth IRAs are good because you pay taxes now as you contribute to your savings. The reason this is good is because the U.S. Government is on a spending binge and has amounted an incredible debt. This raises the likely possibility that the government will raise taxes in the future. Basically, the idea is to pay taxes now while they are still low and enjoy the money later when taxes might be higher.


Second, Roth IRAs have an early withdrawal penalty. This will help defer my friend from taking out money unnecessarily.


Third, many banks and investment firms have accounts where she can invest in stock funds or gold using a Roth IRA. This is important because it allows her to actually invest instead of relying on the small returns that saving accounts or CD's yield.


A Roth IRA can be set up at most banks or investment firms. Once she gets it established she can contribute money at any time. However, there are restrictions on contribution amounts. There are other arcane guidelines and provisions, but these are the basics. The idea could work for her and she could finally feel good about having a retirement savings.


I then gave option two. Buy gold coins and save them in a personal safe or safe deposit box.


Why gold coins? Isn't this method of saving a little barbaric?


No. It's smart.


First, one ounce gold coins have been around for thousands of years and have proven to be the best storage of wealth over time. The world is currently saturated with fiat currency (money backed by only the promise of an indebted government). Almost all investments are losing value when compared to real inflation. As your money loses value, gold consequently goes higher. Gold is retaining its purchasing power while other investments are declining.


 Second, I recommended one ounce gold coins instead of a gold exchange traded fund (ETF) because my friend will be less tempted to go through the process of selling her gold coins through a dealer. With an ETF it is too easy to cash out and press the sell button on her computer. I recommend buying one ounce Maple Leafs or Krugerrands.


Third, gold is transportable and the gold market is out of the hands of crooked politicians and greedy governments. This is important as we are ascending into uncertain times. Many people have a hard time accepting this, but I wanted my friend to at least flirt with the idea of being financially free.


The choice is up to her. Of course, my influence is small. I hope she finds herself sipping on a Manhattan martini, with a full Roth IRA bank account and a pile of gold coins to boot.


I know this would make her smile. And why wouldn't she?


Sincerely,


T. Norman

When asked what predicts financial satisfaction, more people said having an emergency fund, than said paying off a credit card or owning a home according to a University of Georgia study. That is important when you consider many people ignore the advice of having an emergency fund of 3 to 6 months. Studies find in fact that 43% of households have less than $1000 in liquid savings and 28% live paycheck to paycheck without any savings at all. My advice is to have at least $1000 saved up and buy yourself a pure 1 ounce gold coin along with a few pure 1 ounce silver coins. Then you will be set. Nothing will shake you.

Rebecca and I recently took a vacation in Oahu, Hawaii! We stayed in Waimanalo Beach. It's an amazing beach and it is not as crowded as the rest of Oahu. If you are looking at going to Oahu, I definitely recommend Waimanalo Beach. The beach is 3 miles long and not crowded at all. It's a great place for swimming and getting some peace and quiet on the sand.

Santa Barbara is finally enjoying its annual two weeks of amazing January weather. It's a rare occurrence, but I actually hit the beach last weekend. 75 degrees, clear skies, sunglasses and a tank top. Not a bad look for January in SB.


It looks like the new owners of the local luxury resort the Bacara are trying to make a quick $80 million.

The Pacific Coast Business Times reports-

Six months after Ohana Real Estate Investors bought Bacara Resort & Spa for an estimated $104 million, industry sources say the luxury hotel is back on the market.

According to several Santa Barbara hotel operators, a major international hotel chain recently approached Ohana with an unsolicited inquiry to purchase the 360-room Goleta resort. The offer is estimated at between $180 million and $200 million, almost double the price Ohana is believed to have paid in July.

Industry sources said the talks between Bacara's current owner and the prospective buyer are preliminary and no formal offer has been made. There have been no official negotiations between Ohana and potential bidders, the sources said.


Waimanalo Beach: