There is a spectrum range from Total Control to No Control over your financial accounts and investments. The term “control” in this context refers to your money-management capability of: timing of purchases and sales, the type of account an investment is placed into, the options of available investments, having liquidity to get out of the investment/account, minimizing government restrictions, physical possession, and decision-making over the operations of the actual investment.
The most helpless position is having little or no control over your accounts or investments. It is best to save, build, acquire, purchase investments and accounts with the most control, given your knowledge and time to manage that investment, account, or business. The most personally disastrous financial problems occur with accounts where you have no or little control. This is because they can be reduced or eliminated without your input. Examples of this nature include your social security retirement or company/government pension. Within the last several weeks, General Electric froze their pension plan for 20,000 employees (they had already eliminated it for new employees back in 2012); France announced retirement pension cuts and there is still rioting; and Netherlands announced their retirement plan is in peril, and needs financial reform to remain solvent.
Let’s review a few normal investments of the average investor, ranking them for personal control:
No/Little Control
- Social Security retirement benefits
- Company pension
Minimal Control
- 401(k), 403(b), 529, Health Savings Accounts that are held a prison of very limited mutual funds
- Annuities
Average Control
- Stocks, bonds, and mutual funds
- Cash value in life insurance products
Moderate Control
- Promissory notes secured by real estate
- Savings accounts and bank certificates of deposit
Maximum Control
- Cash
- Physical gold and silver
- Rental real estate
- Small business where you have significant ownership
It is best to increase your knowledge and skill to acquire and add money to investments and accounts with the most control that you can.