Pressroom |  Press Archives  |  About Ric  |  Free Email Updates

Potential Future Millionaires

For Immediate Release
March 16, 1999

Media Contact: Will Casserly
wcasserly@ricedelman.com
(703) 251-0110

Instead of a new CD player, hip-hop clothes, or expensive jewelry, 10-year-old Julia and her 13-year-old sister Sara each received extraordinary birthday gifts this year from their grandfather: he's made them future millionaires.

Fred Lokay of Virginia contributed $5,000 each for Julia and Sara in a new kind of retirement trust for kids which, he feels, will provide his granddaughters a comfortable retirement without a great deal of expense on his part. And the girls join more than 500 other children from across the nation whose parents and grandparents felt the same way.

In fact, consumers living in Alabama, California, Colorado, Connecticut, Florida, Illinois, Indiana, Maine, Maryland, Massachusetts, New Hampshire, North Carolina, North Dakota, Ohio, Pennsylvania, South Carolina, Tennessee, Texas, Virginia, West Virginia, Washington, D.C., and even as far away as the United Kingdom, have established these new retirement trusts for their children and grandchildren. It's known as the Retirement Income ? for Everyone Trust™ (RIC-E Trust™), which was begun late last year.

Under the RIC-E Trust™, a parent, grandparent or other adult contributes a minimum of $5,000, and pays a $300 one-time set-up fee to establish the Trust in the name of a child. If the trust's assets were to grow at 10% per year, the stock market's historical annual return since 1926 according to Ibbottson and Associates, the $5,000 contribution would be worth more than $2.4 million by the time a newborn reaches age 65. By contrast, this same $5,000 would be worth only $27,800 if it were used for college after 18 years, assuming the same 10% annual return ? demonstrating the benefit of compound interest if you leave the money untouched until the child's retirement.

Through the RIC-E Trust™, there are no annual income taxes until the money is withdrawn in the child's retirement, and no annual trustee fees, provided the specimen trust agreement is used. And the RIC-E Trust™ does not reduce a child's eligibility for college aid, nor can it be lost through a divorce, lawsuit or creditor's claims.

"Ordinarily, locking away money for so long seems unnatural, because the child will certainly want to spend the money as he matures ? to pay for college, to buy a home, or even to help raise his own kids," said Ric Edelman, creator of the Trust. "But children who have access to money are virtually certain to spend it well before retirement, so we wanted to establish a way to ensure that the money invested today will remain intact for the child's retirement. Even though some people might think that preventing access to the trust's assets for decades is a problem, it actually is the whole point of the RIC-E Trust™."

"Indeed, the RIC-E Trust™ allows consumers to build an astonishingly large retirement nest egg for the children they love by combining the power of the stock market with the ability to compound returns over very long periods of time," Edelman said. "Ordinary people now have access to the same wealth creation tools that have traditionally been available only to the rich," he said.

The RIC-E Trust™ is offered through a network of nearly 4,000 financial advisors nationwide. Enrollment information on the RIC-E Trust™ can be found on the web site www.ricedelman.com or in Edelman's new book, "The Truth About Money" from HarperCollins.

Ric Edelman, CFS, RFC, CMFC, New York Times best-selling author, syndicated columnist and nationally recognized television and radio host, is one of the nation's most respected and highly successful financial advisors. He hosts a personal finance program on America Online (keyword: Edelman), has produced a popular series of video and audio cassettes and hosted seminars, all on personal finance, and is on the faculty of Georgetown University in Washington, D.C. His firm, Edelman Financial Services Inc., manages almost $1 billion for individuals and businesses across the country and in six foreign countries.