MyVideoTalk Asks; DO YOU REALLY WANT A JOB?
January 19, 2012 | Author dragonfly
DO YOU REALLY WANT A JOB WHERE YOU RISK BEING LAID-OFF OR FIRED?
For forty years I’ve been helping Americans—just like you—use the income and resources they already have to erect and sustain…
The Four Pillars of Financial Success…
- zero debt
- an abundance of cash
- passive income streams
- legacies for those they care most about
Imagine a home based business that raises your Four Pillars on a solid foundation and improves your lifestyle at the same time.
MyVideoTalk…
You don’t have to imagine. For the first time in my fifty years in business and forty years as a financial advisor, I am endorsing and participating in a direct marketing business that…
- is not a financial services business
- will revolutionize the lives of anyone that takes advantage of the opportunity it presents
Success in a MyVideoTalk business—and I define success as financial security based on the EUREKONOMICS™ Four Pillars Model mentioned above—takes little more than time and effort well spent. That’s not hype. Thousands of Americans—from stay at home moms to Warren Buffet, Robert Kiosaki and Donald Trump—are proving it every day.
What you have to add to the equation is an alphabet of traits and commitments to yourself…
Ambition, Boldness, Courage, Desire, Energy, Focus, Generosity, Humility, Ingenuity, Joy, Knowledge, Loyalty, Maturity, Nimble Mind, Openness, Persistence, Quick Thinking, Resilience, Self-Awareness, Tenacity, Unselfishness, Values, Wisdom, one X Chromosome (OK, that was hard), Youthful Spirit, and a Zany Outlook…
Your Destiny…
Look…everyone chooses their own destiny by how they react to the events and circumstances of their lives.
- One brother becomes a bum while the other becomes a billionaire.
- One parent of an abducted child becomes depressed and withdrawn while the other becomes obsessed and involved.
- One member of a team turns a loss into a reason to quit, another into a reason to try harder.
Skills And Experience Can Be Treasures, But They Are Not Measures…
Smart, well educated, and talented people fail every day. You could be a student, a senior executive, a medical, accounting, or legal professional, a small business owner, a handyman, a minister, a teacher, a craftsman, just out of school or recently laid-off or fired. None of that matters.
The true predictor of success and measure of a person is character. You develop character when you react to life events…
- by standing up to adversity, grasping opportunity, and accepting good fortune
- by making and admitting mistakes
- by doing all that with humility and gratitude
Character isn’t limited by race, religion, income, occupation, education, social standing, or any group or individual trait…and those who would deceive America by highlighting our differences on the stage of public discourse are doing a disservice to every one of us.
Every American can succeed because we live in a country with character—and some intriguing characters as well. If you have developed character, you will find a home with MyVideoTalk. You will also find colleagues that share your visions; friends that are more than willing to help you erect and sustain your Four Pillars; mentors that will help you help others do the same.
Act Today…
He that waits upon fortune, is never sure of a dinner.
Benjamin Franklin
Go to my Independent Rep site at MyVideoTalk Give yourself the gift of fifteen minutes to review the MyVideoTalk products and MVT’s outstanding business opportunity.
YOU WILL NOT BE DISAPPOINTED.
If I am not for myself, who is for me?
And if I am only for myself, what am I?
If not now, when? - Rabbi Hillel (fl. 30 BC – 10 AD)
How To Address Ideologues Cheerfully in 2012…
January 9, 2012 | Author dragonfly
If you would overcome the banal attacks of non-thinking ideologues…
you must arm yourself with both knowledge and wisdom. Knowledge is your sword; wisdom your armor and your shield.
Behold—WISDOM, wrapped often in sarcasm and humor…
1. In my many years I have come to a conclusion that one useless man is a shame, two is a law firm and three or more is a congress. — John Adams
2. If you don’t read the newspaper you are uninformed, if you do read the newspaper you are misinformed.– Mark Twain
3. Suppose you were an idiot. And suppose you were a member of Congress. But then I repeat myself.– Mark Twain
4. I contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle.– Winston Churchill
5. A government which robs Peter to pay Paul can always depend on the support of Paul.–George Bernard Shaw
6. A liberal is someone who feels a great debt to his fellow man, which debt he proposes to pay off with your money.– G. Gordon Liddy
7. Democracy must be something more than two wolves and a sheep voting on what to have for dinner.– James Bovard, Civil Libertarian (1994)
8. Foreign aid might be defined as a transfer of money from poor people in rich countries to rich people in poor countries.– Douglas Casey, Classmate of Bill Clinton at Georgetown University
9. Giving money and power to government is like giving whiskey and car keys to teenage boys.– P.J. O’Rourke, Civil Libertarian
10. Government is the great fiction, through which everybody endeavors to live at the expense of everybody else.– Frederic Bastiat, French economist(1801-1850)
11. Government’s view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.– Ronald Reagan (1986)
12. I don’t make jokes. I just watch the government and report the facts.– Will Rogers
13. If you think health care is expensive now, wait until you see what it costs when it’s free!– P.J. O’Rourke
14. In general, the art of government consists of taking as much money as possible from one party of the citizens to give to the other.– Voltaire (1764)
15. Just because you do not take an interest in politics doesn’t mean politics won’t take an interest in you!– Pericles (430 B.C.)
16. No man’s life, liberty, or property is safe while the legislature is in session.– Mark Twain (1866)
17. Talk is cheap…except when Congress does it.– Anonymous
18. The government is like a baby’s alimentary canal, with a happy appetite at one end and no responsibility at the other.– Ronald Reagan
19. The inherent vice of capitalism is the unequal sharing of the blessings. The inherent blessing of socialism is the equal sharing of misery.– Winston Churchill
20. The only difference between a tax man and a taxidermist is that the taxidermist leaves the skin.– Mark Twain
21. The ultimate result of shielding men from the effects of folly is to fill the world with fools.– Herbert Spencer, English Philosopher (1820-1903)
22. There is no distinctly Native American criminal class…save Congress.– Mark Twain
23. What this country needs are more unemployed politicians.– Edward Langley, Artist (1928-1995)
24. A government big enough to give you everything you want, is strong enough to take everything you have.– Thomas Jefferson
25. We hang the petty thieves and appoint the great ones to public office.– Aesop
FIVE SENTENCES; Infinite Wisdom – by Adrain Rogers
- “Friend, you cannot legislate the poor into freedom by legislating the wealthy out of freedom. And what one person receives without working for, another person must work for without receiving. The government can’t give to anybody anything that the government does not first take from somebody. And when half of the people get the idea they don’t have to work because the other half’s going to take care of them, and when the other half get the idea it does no good to work because somebody’s going to get what I work for. That, dear friend, is about the end of any nation.”
In The Shadow Of The American Flag
November 26, 2011 | Author jr
Over the past few weeks, Sandy and I have been reorganizing our living space to create a client friendly home office where clients can discuss personal finances in comfort and privacy. I did much of the work for this project on our front patio where the American flag flies 24/7/365.
As I was painting, sanding, unpacking, and doing other tasks on the patio, the ever-present Colorado sun distracted me by waving a shadow of the flag over the patio. I would stop work to see who or what—unnoticed except for the shadow—was annoyingly approaching me.
As the days went by, it dawned on me that I have lived my entire life in the protective shadow of the American flag…
- From birth, through WWII, Korea, the turmoil of the ’60s–the assassinations of John, Bobbie, and Martin–the financial and social trauma of the ’70s, Vietnam—during which I served behind a desk in Dayton, OH—the inflation ravaged Carter years, the rebirth of the American spirit during the Reagan Presidency, the extraordinary boom of the ’90s and the equally extraordinary financial failures of the 2k0s, the terror of 9/11, the historic election of a black American President in 2008, and the failure of that President to fulfill the promise his election held for America.
- During the thirty-seven years that I have been a licensed life insurance agent, The Shadow of the American Flag has also protected the thousands of insurance and financial advisory practices that ethically and honestly serve American families and small businesses. (The financial services industry has brought both credit and discredit to the American entrepreneurial spirit. It has produced some of the greatest models of American ingenuity and some of its most infamous frauds. You can fill in the names. Regardless, ethical advisors and their clients survive and thrive.)
Now, it’s time for insurance agents, financial advisors, and their clients to assure that the Shadow of the American Flag continues to protect every American’s personal finances in the decades to come. It is not enough to make a living or make a killing in our business and for our clients. Insurance and financial advisors and their clients are in a unique position to raise their voices and employ their resources to revitalize America and restore the promise of the American Flag—in whose shadow we and our clients have all lived, survived, and thrived.
We can only make this real by…
- becoming actively involved in the political process
- supporting candidates and issues that…
- empower individual Americans and diminish the power of bureaucrats and politicians
- reduce the intrusion into the lives of individuals and the workings of small business by government takeovers, over-regulation, healthcare that interferes with the doctor-patient relationship and imposes an impossible burden on small business, and special treatment for large financial institutions like Fannie Mae and Freddie Mac and their Wall Street cronies
Let’s get to work.
PS – If you are not an insurance agent or financial advisor, you are likely the client of one. Join us and pass this on. Ask your agent/advisor to join in the effort to restore America.
Individual Liberties Create and Nurture Free Markets
October 3, 2011 | Author dragonfly
How an Unconscious Conspiracy Stole Our Individual Liberties, Restricted Free Markets
How That Theft Created and Burst the Real Estate Bubble
Preamble…
The ASSertion is (OOPS! Keyboard malfunction), “The conventional wisdom says the 1999-2006 residential real estate “bubble” in the U.S. and the subsequent collapse of global financial markets were caused by a failure of the free market.”
That raises the question, “What’s wrong with that assertion?”
That is, of course a loaded question. The question assumes that something is wrong with the ‘assertion’ and invites only answers that agree with that conclusion. However, since I believe the ‘assertion’ is invalid, a loaded question is OK with me.
The Basic Argument…
My unequivocal answer to the question is, “Individual liberties create and nurture free markets. Free markets are an outcome and cause nothing unless they have been manipulated to reduce or eliminate individual liberties.” – The Author
Free Markets emerge and prosper only when government, financial structures, and social institutions protect and preserve individual liberties. A summary review of historical precedent – Mao’s China, Castro’s Cuba, or the USSR – and current events – Iran, North Korea, and countries in South America and Africa – confirm this statement.
A basic knowledge, understanding, and appreciation of the repression of individual liberties by the British, which gave birth to United States of America as an economic powerhouse, demonstrate clearly that individual liberties create and nurture free markets.
However, the practical answer to the question – “What caused the ‘bubble’ and the collapse?” – emerges when we look at the personal economies of Americans during the last thirty years. My conviction is that the culprit in the collapse is the compromising of individual liberties by dysfunctional government, financial structures, and social institutions.
An Unconscious conspiracy…
Since 1974, there has been an unconscious conspiracy to limit the individual liberties of Americans. Big government, big unions, big business – especially financial businesses, big non-governmental bureaucracies, and all of their minions – I call them Behemoths – knowingly and/or unknowingly embraced the aim of this unconscious conspiracy.
Some Behemoths, like the current administration in Washington, do so in the name of “change.” Others like the US Congress, which falls short educationally and intellectually when it comes to economics and historical context, do so out of ignorance, greed for money and power, and their inability to comprehend basic economic principles and historic precedent – not to mention their lack of common sense.
What Benjamin Franklin wrote 250 years ago or so is still true today. When you give up control of your money, “you give to another power over your liberty.”
All of the Behemoths in the unconscious conspiracy share a single aim. They all want to gain control of the individual American citizen’s money – income, savings, home equity, legacy, etc. The unprecedented success of this unconscious conspiracy reduced or, in some regards, eliminated individual liberties. That’s what created the bubble and the collapse of 2006.
Success for Behemoths = Liberty Lost for Americans…
Unfortunately, the Behemoths have had and continue to have a great deal of success:
- The various government Behemoths have increased their take of Americans’ wages and savings through multiple levels of taxation…
- payroll withholding (city, county, state, federal)
- social security
- Medicare
- sales
- property
- gasoline
- tobacco
- alcohol
- telephone
- natural gas
- electric
- heating oil
- cell phones
- corporate taxes passed on to consumers
- and on, and on…
- Financial Behemoths – investment companies, mutual funds, retirement plans, stock insurance companies, banks – have tightened their grip on the money Americans rely on to deal with life’s surprisingly unsurprising surprises, their future income needs and their legacies.
- Mortgage lenders, credit card companies, big box stores’ charge cards, auto lenders, same-as-cash businesses such as furniture stores, cosmetic medical and dental practices, and other business that promote every conceivable credit opportunity have lured Americans into a financial swamp that restricts their liberty by relieving them of control of their money.
The Steady Erosion of Individual Liberty…
ERISA passed in 1974. The Behemoths held ERISA out (among other things) as salvation for working Americans whose employers couldn’t or wouldn’t provide them with a pension plan. ERISA intended – we were told – to give individuals control of their retirement destinies.
The effect of ERISA was, and remains, quite the opposite. Financial Behemoths today control trillions of dollars that working Americans rely on for retirement income. This is retirement income that Americans believe they will not have to work for and they cannot outlive.
When the markets in which those retirement funds are invested crash, the minions of the Behemoths exhort the Americans they have misled (they promise only that they promise nothing) to “stay the course” and leave their money under the control of the same folks who just decimated the retirees’ incomes.
The true outcome of ERISA is that the money that Americans give the Behemoths to put aside in IRAs, 401(k)s, and their equivalents is ending up in speculative securities that the Behemoths characterize as investments.
The entire retirement income scheme that ERISA established is like a casino that financial Behemoths – especially the IRS – own and operate. The Behemoths are the house. They always profit from the money that Americans gamble there. Meanwhile, Americans are at the mercy of the gaming-table markets that hypothetically but unrealistically promise to deliver secure life-long income.
Worst of all, their future-income is at the mercy of the future-whims of the IRS.
The Coach – A.L. Williams
1977 introduced America to The Coach, A. L. Williams. The Coach bears a distinct resemblance to Ali Hakim – the traveling salesman in Oklahoma! – who has the skill to convince even in the absence of evidence.
The Coach developed the idea that Americans should reallocate their money – real money that the individual American controlled – from whole life insurance contracts and other traditional savings vehicles
- and use some of it to buy expensive term life insurance (that pays high commissions)
- and use the rest of their money to buy mutual funds owned and operated by Behemoths (these also pay high commissions).
With all those commissions floating around and a sexy but entirely unproven idea, The Coach easily recruited sales reps. However, most of his recruits only worked part time to supplement their full time employment, lacked significant financial or economic training and had little or no experience as advisors. Like so many since, they believed they had found the holy grail of financial success. They, like their master and mentor, believed (and still do to this day) that the flawed model The Coach developed would work in practice the way it appeared to work in theory.
Regardless of the credentials these advisors claim, the model didn’t, doesn’t, and won’t work. (If only Dave Ramsey and Suzie Orman would figure that out…) The result is that millions, perhaps billions of American dollars drifted out of the secure savings programs, which individuals controlled and that offered – surprise – security, and into the accounts of Behemoths.
A. L. Williams’ business diminished the liberty of the American public accordingly.
When E. F. Hutton Speaks…
In 1979, E. F. Hutton introduced the insurance industry and the American public to another new and sexy approach to saving and insuring – universal life insurance. Just imagine, you can deposit your insurance premiums in an insurance policy and hope to earn high returns on the portion of the premium that the insurance company doesn’t need to support the life insurance contract. It’s The Coach’s “buy term and invest the difference” strategy repackaged.
Countless millions of American dollars flowed out of secure savings programs – whole life insurance policies in particular – and into universal life insurance policies. The results of this flawed model still plague America today. Over the past three decades, universal life insurance has contributed to the de-mutualization of companies like Prudential, MetLife, Principal Financial Group, and John Hancock. In addition, universal life was a major contributing factor in the failure in 1991 of Executive Life of California and of Mutual Benefit Life (the oldest insurer in America).
In the experiment that is universal life insurance, the money of American families “saved” in universal life policies simply disappeared into thin air when the policies did not fulfill their promises.
The loss of money means the loss of liberty.
Where the Transfer of Money Leads…
During the ‘70s and ‘80s, universal life insurance, A. L. Williams, and the Behemoth bandwagon-followers that adopted the product, the strategy, or both managed to suck a huge portion of the savings out of American pocketbooks. When the savings ran out, the Behemoths discovered that they could convince Americans to sacrifice not only their savings but also their incomes.
They found two equally effective ways to do that.
First, the Behemoths convinced Americans that they could have everything they needed and anything they wanted as long as they had enough credit. They accomplished this with an onslaught of advertising and promotion for credit schemes ranging from simple credit card solicitations to inculcating the belief that lots of credit created superior credit ratings and that allowed for more credit, better ratings and a circular spiral into a dungeon of debt.
The Financial Behemoths also convinced Americans that the best place for their money was in investments and – worse – that giving the IRS control of the future value of those investments was an equally good idea. Defined contribution retirement plans multiplied like fleas on a stray dog.
Liberty lost.
Then there was ’99 through ’06.
“Show Me the Money…”
Here comes the bubble.
The Disorganized Conspirator Behemoths had just about decimated the savings accounts of Americans. They had encumbered American paychecks with debt payments and retirement plan contributions. Where, the Behemoths wondered, would they find more money for their greedily bulging accounts?
Enter dozens of pseudo financial gurus with “just-like-the-wealthy-do-it ” schemes to transform American homeowners’ equity into money for the accounts of the Behemoths.
- Doug Andrews created the Missed Fortune Myth that relied on steadily increasing home values (OOPS!) and year upon year actual – not average – market returns of seven or eight percent in “investment grade” equity indexed universal life insurance policies (OOPS! Again.)
- Mortgage lenders like Money Tree and others encouraged homeowners to refinance in order to solve their money problems when they got “in debt up to [their] eyeballs”.
- Other mortgage hucksters promoted buying homes to “fix and flip” using the equity in a residence as seed money.
- The Federal government’s Fannie and Freddie, relying on deeply flawed conventional wisdom, burdened Americans with mortgages and payments on homes they couldn’t afford. (I call this “idiot compassion” – a phrase adapted from Chogyam Trungpa Rinpoche.)
- And, the list goes on…even today VP Joe is telling us “Now, people when I say that look at me and say, ‘What are you talking about, Joe? You’re telling me we have to go spend money to keep from going bankrupt?’” Biden said, “The answer is yes, that’s what I’m telling you.”
What makes it worse, the Behemoths themselves believed their gospel. They bundled and traded 125% debt to equity loans as if they were gold. They built and fortified their Jericho but to no avail. “The walls came tumbling down.”
“And the Beat Goes On…”
Free markets did not fail. The failure lies with the Behemoths that are supposed to protect the liberties of individual citizens and the free markets that arise from those liberties. The failure manifests the deceptive, subtle, and persistent erosion of those individual liberties by the Behemoths for their own gain but in the name of free markets. Today, the Behemoth of Behemoths, the Federal Government, is openly promoting the transfer, reduction, and elimination of individual rights in the name of bailouts, health care, ecology, union jobs, and saving GM.
The bubble that burst in 2006 has allowed a much more pernicious cancer on free markets than the Unconscious Conspiracy that initially caused the failure.
“Without individual liberties, there are no free markets. Period.” – The Author
Startling New Scientific Discovery Proves Economic Theory
September 1, 2011 | Author dragonfly
Startling New Scientific Discovery
How Dinosaurs Were Made Extinct
by Paul A. Cantor on August 26, 2011
Benjamin Franklin and Jonathan Swift were both masters of satire. Paul A. Cantor rivals their clever insights in the article linked above. Paul is the Clifton Waller Barrett Professor of English at the University of Virginia. He is the coauthor, with Stephen Cox, of Literature and the Economics of Liberty. See his interview in the Austrian Economics Newsletter.
Paul writes–in part…
…these theories conveniently conjure up various subjects of left-wing paranoia — the grand antithetical fears of global warming and nuclear winter — and they all insidiously suggest remarkable new roles for the federal government, like protecting us from comets and other objects from outer space.
Are even the dinosaurs lining up against the cause of the free market these days? Well I for one, as a student of Austrian economics, have a more plausible explanation: the extinction of the dinosaurs must have been the result of government intervention in the marketplace. Though my speculations have met with some skepticism from the paleontological establishment, I am finally prepared to go public with my findings after a visit to Montana this past summer which allowed me to examine the fossil record firsthand and to reconstruct the true story of the rise and fall of the dinosaurs.
You may be laughing or crying after reading this article depending on your outlook. If you understand basic Austrian economics you may be laughing and crying at the same time.
Keynesian VS Austrian Economics
Keynesian economists of today–perhaps contravening the tenets and intent of Keynes himself–believe that the state should control the economy and manage wealth. Austrians conversely believe that free enterprise should control the
Gift Tax Sale – 2011 and 2012 Only…
August 17, 2011 | Author dragonfly
Gift Tax Sale…
Gifting has always been a very effective estate planning tool. Not only does a completed gift generally remove the gifted asset from the donor’s estate, it also removes any future appreciation from the estate and may offer income-shifting advantages.
Important changes for 2011 and 2012:
- The lifetime gift tax/estate tax exclusion is increased to $5 million per person ($10 million per couple) with a top tax rate of 35 percent. This increase is unprecedented and creates a rare opportunity for large gift-tax-free wealth transfers.
- The generation-skipping transfer-tax exemption is increased to $5 million.
- The gift and estate tax is reunified. Simply put, to the extent the exclusion is used for gifts during the donor’s lifetime, it is unavailable for bequests upon death.
- Beginning in 2012: The exclusion amount is subject to indexing
- As the law stands today, these limits will be reduced beginning in 2013
Rare Opportunity to Transfer Wealth!
A case study…
- Ron and his wife are both in their middle-50s and have one son. Their net worth is over $8 million. Ron wants to provide a safety net for his wife and leave a legacy for their son and any future grandchildren, all the while minimizing transfer taxes.
- Ron establishes an irrevocable life insurance trust (ILIT), with spousal lifetime access provisions to the cash value. He gifts $1 million to the ILIT, using a portion of his lifetime gift tax exclusion and generation skipping transfer tax exemption.
- The trustee then uses the $1 million to purchase a 10-year certain immediate annuity. The annual after-tax guaranteed income payment is slightly more than $103,000.
- The trustee then uses $102,000 of the annual payment to purchase a universal life policy with a death benefit of approximately $4,400,000.
- Upon Ron’s death, the proceeds of the life insurance policy are to be held by the trustee, with income to be paid to his wife for life.
- Upon her death, income is to be paid to his son for life, and then to his son’s children for life, etc.
- The funds in the trust will escape estate taxation at each death.
- Also, any transfers out of the trust to skip persons (generally persons two or more generations younger than the grantor) will be exempt from any generation skipping taxes.
Discussion…
Gifts may be transferred outright or in trust. An outright gift gives the donee unrestricted control of the property. This may not be suitable if the donee is a minor or a spendthrift. Gifts in trust offer the donor the ability to control the distribution of income and principal, while providing asset management and creditor protection for the trust’s beneficiaries.
Properly structured gifts of life insurance policies and/or premiums offer the donor the ability to leverage the value of the gift by removing the death proceeds from the donor’s estate.
The unlimited marital deduction for gifts and bequests to spouses remains unchanged, as does the annual gift tax exclusion permitting donors to give up to $13,000 ($26,000 for a married couple) worth of gifts to any number of persons each year without incurring a gift tax.
The annual gift-tax exclusion amount is indexed for inflation and is available for certain present-interest gifts to trusts requiring the use of a special notice each time a gift is made to the trust. However, use of the gift tax lifetime exclusion, instead of using the annual gift tax exclusion, means no special notices are required.
Gifting strategies for 2011 and 2012…
Using a cash value life insurance policy to fund the trust provides flexibility in uncertain economic times and amid changing tax laws. Flexibility in drafting trust documents, such as spousal lifetime access or trust protector provisions, can also be beneficial. Taking advantage of the two-year gift tax sale by making gifts in 2011 and 2012 up to the maximum amount of your available gift tax exclusion may result in your heirs receiving significantly more wealth.
Lifeboats For Your Money…
August 8, 2011 | Author dragonfly
Lifeboats for Your Money Predictions Revisited…
In January of 2008 and again in March of 2009 I posted the following warning. I didn’t emphasize that the safest place for your lifeboat money is in participating whole life insurance policies from mutual insurance companies. As you read this reminder, be aware that participating whole life insurance policies continue to deliver guaranteed cash value increases and non-guaranteed dividends as promised and that no American is losing a single penny in their whole life insurance accounts.
A Titanic Failure
In January, 2008 I wrote an entry in my blog about the failure of the White Star Line to add enough lifeboats to the Titanic because they believed it unsinkable. It’s worth re-reading today as the Titanic of the US economy is compromised by the arrogance and greed of the financial Behemoths and the gluttonous appetite for power by the Dolts in DC – the US Congress, the US Presidents of the past 16 years and the misguided ambition of the current US President for a “change” to the unknown…at least to you and me it’s unknown.
America’s Problem Is A Problem for Americans
The problem for the typical American is the possible failure of the good ship Economy – especially the financial structure that supports it. The media is not trumpeting the nature and outcome of such a failure, nor is the faltering financial community keeping us honestly informed. Instead they feed us the pabulum advice…
-
- stay the course,
- don’t make decisions now,
- wait for the market to settle,
- buy now when the market is down so you can capture the gain on the upswing
- and on, and on, and on…
BUNK, BUNK, BUNK, BUNK, AND MORE BUNK!
You were told the same thing when the market was at 12,000, 11,000, 10,000, 9,000, 8,000, and today. That advice has created immense losses for Americans – TRILLIONS OF DOLLARS OF LOSSES.
Then There’s Common Sense
What if, on the other hand, you had done what common sense, and a few advisors that are not controlled by the Behemoths, recommended as early as July of 2007? What if you had moved your money into a lifeboat when all the signs pointed at the sinking of the good ship Economy? You would have lost nothing.
Of course, if the market had surged at that time you might be disappointed that you didn’t hang on for the gain. However, that is like folding a losing Texas Hold’em blind only to discover that the next three cards would have made it a winner.
An Example
In the current situation, had you opted to move your money from “the market” to the lifeboat of a credit union, money market account, CDs, whole life insurance [my choice], or any other financial product with guarantees, you would not have lost a penny – not one single penny – and would have earned fair market interest rates the entire time. Want proof?
$100,000.00 left in the “market” in July of 2007 is worth less than $50,000.00 today.
$100,000.00 moved into a lifeboat in July of 2007 at 3% is worth over $105,000.00 today.
That difference of over $55,000.00. 3% doesn’t look so bad from this perspective.
Nobody Told Me
The advice of the Behemoths and their Minions aims to bolster the balance sheets and income statements of–believe it–the Behemoths and their Minions, not yours. Their advice aims to keep their ship afloat at your expense. It is bad advice for you and me and for 99.9% of Americans.
Hell, Warren Buffett – America’s iconic investment guru – lost money last year. So did T. Boone Pickens and many other notable investors. The Wonks on Wall Street [I now call it Dull Street] – the same folks the Behemoths quote to entice you to “invest” [aka gamble] with them - have failed across the board.
It Gets Worse
The Dolts in DC have spent over a trillion dollars in a disorganized and undisciplined attempt to right the good ship Economy. They have committed almost two trillion dollars more of our money since. They have failed so far. We all want success in this regard. However, the plenitude of pork that permeates the spending plans of these programs indicates discomfort for “We the People” and contentment for the cronies of the Dolts in DC.
Take Refuge
If you haven’t taken refuge in a lifeboat yet, it’s time. If the market grows dramatically and rapidly you may miss a part of the upsurge. That’s very unlikely. If there’s hope to repair the massive breach in the hull of the good ship Economy, it will likely have to be put in dry-dock for a period of time. In the short-term it is better to have a small guaranteed gain than the possibility of no gain or significant losses. For all practical purposes there is no long-term until the good ship Economy returns to full functioning capability.
“Relying on the long run for investment decisions is essentially relying on trend lines. But how certain can we be that trends are destiny? Trends bend. Trends break. Today, in fact, we have no idea where any trend lines might begin or end, or even whether any trend lines still exist.”
Posted Feb 27 2009, 10:16 PM
by John Mauldin
Investors Insight
If your advisor continues to encourage you to keep bailing while the ship is sinking and sturdy lifeboats are waiting, fire him or her. S/he is obviously not looking out for you.
Common Sense – Again
The common sense approach to creating wealth and managing your personal economy does not depend on the success or failure of other people and self-serving financial institutions. It relies on you and other like-minded Americans taking control of the money that flows into your life to assure your success, not the success of some Behemoth, banker or politician.
by Jeffrey Reeves, MA, EUREKONOMIST
Personal Finance Relies On Four Pillars
July 16, 2011 | Author jr
Posted in Money, Personal Financial Management, The Four Pillars, Whole Life Insurance | 
Tags: debt, EUREKONOMICS, financial, financial advice, financial plan, financial planning, jeffrey reeves, legacy, Money, personal finance, Personal Financial Management, personal financial plans, ready cash, Retirement, The Four Pillars, Whole Life Insurance | 
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“It’s Only Money.” Makes No Sense in Family Finances
June 2, 2011 | Author Dr Agon Fly
“It’s only money…” has no place in decisions about family finances
How many times have you heard someone say, “Let’s buy it! It’s only fifty bucks. We’ll save twenty-five dollars!”
Good Grief! There is no “only” when you are dealing with your personal finances. The automobile salesperson might want you to believe that the car you are considering is only $15,000 and, since the sticker price is $20,000, you are saving $5,000.
Savings are only savings when you put them into an account that you control.
If, instead of spending it, you put your $15,000 in your family bank–regardless of the form that bank takes–it would compound to nearly $65,000.00 in 30 years at 5%. If you add the $5,000 you saved, you’d have improved your family finances by almost $90,000 from a single decision to not save-by-buying.
Americans make those kinds of savings decisions frequently but on a smaller scale – say $50 twelve times a year. Compound those dollars over 30 years and your family finances will be a lot closer to fifty grand than fifty bucks.
Every penny counts.
“Only” fifty bucks? It’s self-deception. The old adage “every penny counts” is still in common use because it’s true.
We all tend to convince ourselves that our buying decisions are wise regardless of the reality those decisions impose on us when it comes to our family finances. It’s one of the oldest tricks in the world to tell ourselves “It’s only…”.
The next time you think you are saving money by buying a product on sale, ask yourself if the product you are buying and the amount you are “saving” is really worth it. (Often it will be. Americans have the most enviable lifestyle in the world and EUREKONOMICS™ does not espouse a life of deprivation.)
EUREKONOMICS™
EUREKONOMICS™ espouses the economic principles and financial practices that the Founders and Builders of America paid forward to us. These principles and practices have been twisted and manipulated by the Behemoths–big government, unions, banks, investment firms, etc.–to serve their aims and not those of the American people.
Remember – only money is money. For everything else–your 401(k), IRA, mutual funds, investments, and so on–you have to spend your money, and worse, relinquish control of your family finances to strangers.
When you’re closer to pushing up daises than doing fifty push-ups, having cash and income instead of the stuff you bought will be a blessing. Tennessee Williams expressed it best over half a century ago:
“You can be young without money but you can’t be old without it.”
PS – There is one purchase that Americans can make to assure…
- the safety of their family finances
- tax-free growth every year
- they never incur a loss
- their cash is accessible at all times without penalties or restriction:
participating whole life insurance from a mutual company.
Money and Financial Management Goals
May 31, 2011 | Author Dr Agon Fly
Our money and financial management goals remain the same as they’ve been for many years, so we renew them and reinforce them on a regular basis. I repeat them here because we spent part of a recent holiday weekend reviewing and renewing them.
We Resolve
We resolve to strengthen the foundation of our financial management plan and of the Four Pillars that support our – and every – successful personal economy.
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We resolve to continue to eliminate all debt-to-others from our personal economy. That means getting rid of our last debt-to-others, the mortgage. We may not get it done this year but we’ll make progress.
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We resolve to continue to convert assets into income that we do not have to work for and we cannot outlive. Every year we add substantial amounts of money to our private pension funded by participating whole life insurance polices, which are not controlled by any company and is not “tax qualified.”
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We resolve to add more money to our whole life insurance “banks”so that any unplanned money needs – a new car, a new roof, medical expense, etc. – can be met without invading our income or our income producing assets. We hope to increase the available money in these “banks” by at least 20% each year.
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We resolve to continue building a legacy of both money and wisdom to pass on to our children, their children and their children’s children by creating whole life insurance “banks” for each of them as we are able and by teaching them how EUREKONOMICS™ serves them today and into the future.
Aggressive But Realistic Goals
These may seem to be aggressive goals. They are. They are not, however, unrealistic or punitive. We will not give up any lifestyle gains we made in prior years and we expect to continue to improve our lifestyle. Every American can benefit from EUREKONOMICS™. Get the whole story here…
By Jeffrey Reeves MA, EUREKONOMIST™
This Agent Is Not A EUREKONOMIST™
April 15, 2011 | Author jr
Inaccurate Is Not OK…
A client recently sent me a copy of an email received from an insurance agent promoting whole life insurance policies from a specific life insurance company. The primary goal of the original email seemed to be to demonstrate that one form of dividend calculation on whole life insurance policies is better than another.
The email from the agent was inaccurate and therefore misleading. I have no doubt the agent was convinced that the information in the email was correct or that s/he was operating in good faith. However, my client asked me to confirm or deny the claims in the email and I felt compelled to clarify the inaccuracies as much as possible.
The exercise of clarifying the issues raised in the email are meaningful so I am repeating my response here and expanding on it as needed.
The original email content is in standard type. My responses are indented, bold, in italics, and preceded by my initials in brackets thus [JR].
Two Types of Mutual Insurance Companies…
There are two types of Mutual Insurance companies . They are called direct recognition and non-direct recognition. I have policies in both these types of companies.
[JR] Actually there are direct recognition mutual companies and mutual holding companies and non-direct recognition mutual companies and mutual holding companies.
If a company is structured as a mutual company or a mutual holding company is as significant as whether it pays dividends on a direct recognition or non-direct recognition basis.
Direct Recognition VS Indirect Recognition
Non-Direct Recognition…
Non-Direct means the policy owner receives the same dividend rate no matter how many dollars he has borrowed from the insurance company using his death benefit as collateral.
[JR] Well, that’s not exactly correct. Actually, the policy’s cash value is the primary collateral used when a policy loan option is exercised by a policy owner. One cannot borrow more than a whole life policy’s currently unencumbered cash value.
Death benefit only comes into play in the event of death.
So you may have borrowed $10,000 whereas another policy owner borrowed $100,000 but you both earn the same dividend rate.
[JR] The statement is true as far as it goes. However, it ignores the fact that the policy owner that borrowed $100,000 would pay a lot more interest to the insurer than the policy owner that borrowed only $10,000.
In both cases, the interest paid by the policy owners–one to a greater extent than the other–would add to the surplus of the insurer; and the company pays dividends from its’ surplus is where dividends come from
Or you may not have borrowed anything but you would still earn the same dividend as someone else who has borrowed and is using that borrowed money to earn even more profit somewhere else.
[JR] The unasked question is, “Why is that a bad deal for anyone?” Some indirect recognition companies have followed this pattern for over a century.
(As an aside, what the devil difference does it make what the policy owner is doing with the money s/he borrowed from the policy that s/he owns? Sorta sounding like a Robin Hood argument.)
Direct Recognition…
Direct means the company determines the dividend rate according to policy holders fair share
[JR] This statement is irresponsible. It assumes the indirect companies dividend paying practices are unfair to their policy owners.
Should indirect recognition companies like Mass Mutual be ashamed after over 100 uninterrupted years paying top dividends? How unfair!
according to how many dollars he has borrowed from the insurance company’s general fund using his death benefit as collateral.
[JR] There you go again Mr/Ms Agent…it’s cash value not death benefit that is the primary collateral used to back a policy loan.
The higher the amount of dollars on loan to you does mean you will receive a lower dividend rate.
[JR] Ah! A moment of clarity. It’s true. Direct recognition companies apply a lower dividend rate to those policies that have loans outstanding.
The obvious conclusion according to this agent is that a policy owner that plans to exercise the right to take policy loans granted by his or her policy–a binding contract–an indirect recognition company may not be the best option.
Now, why does this matter? Well, it doesn’t really matter a whole lot
[JR] Another brief moment of clarity. Often the difference between the performance of non-direct recognition policies and direct recognition policies is not significant enough to make it a deciding factor on a buying decision.
But…if it doesn’t matter, why the epistle?
but some insurance agents use the fact that a company is a non-direct company as a selling point when trying to sell someone a policy.
[JR] OK…now i know why. Mr/MS Agent in this epistle uses the direct recognition dividend practices to promote the sale of policies for their direct recognition companies.
The Banking Concept
But it is good to understand that an insurance company makes money using the velocity of cash flow,
[JR] If a policy owner-borrower is being what R. Nelson Nash, formulator of the Infinite Banking Concept™, calls “an honest banker,” the insurer has very good cash flow.
If the policy owner fails to repay the loan and the interest, the insurer uses the policy’s cash value, which was used as collateral, to repay the interest and protect the other policy owners/borrowers. If the policy cash value is all used to pay premiums and/or interest, the policy lapses.
just like a bank does.
[JR] Insurance companies, like banks, use the money that policy owners pay in premiums and interest to make loans and enter safe and conservative joint ventures. That much is accurate.
However, insurance companies do not act “just like banks.” Banks work for shareholders not depositors. Mutual insurance companies and a holding company’s mutual insurance company work exclusively for the benefit of policy owners.
If you have your money sitting in a 5 or 10 year CD at the bank, the bank knows that it has a set amount of money that it can lend over and over and over again during that set period of time. An insurance company does the same thing
[JR] Banks operate on a completely different set of principles and rules than insurance companies. Insurers do not do “exactly” the same thing.
Banks operate on money that they derive from depositors . In addition, they have access to a form of ”matching funds” from the Federal Reserve Bank. Therefore, the banks can actually lend up to ten time the amount of money they have received from depositors!
Insurance companies limit themselves to using only the money they have on hand.
The Velocity of Money – Sorta…
You pay your premium and it can lend an amount of money over and over and over again for a lifetime. However, if YOU borrow money from your life insurance company, now they can no longer velocitize that money.
[JR] An insurance company can only lend up to the limit of its cash available excluding reserves. Insurance companies cannot leverage FED funds to increase the amount they can lend. That’s not at all the same as a bank.
In fact, if the insurer lends money to Home Depot they cannot “velocitize” (not a recognized word in any dictionary) the money either, nor can they leverage through fractional banking like a commercial bank.
Instead, you are now in control to velocitize your own money.
[JR] The insurance company is in fact “velocitizing” the money by charging the policy owner a competitive interest rate and—again—by contract, the policy owner is always in control of the cash value in a whole life insurance policy.
Moreover, because a whole life policy is a contract with borrowing provisions decided by the insurer, the burden is contractually on the insurer to make sure it makes money for all of its policy owners and not one more than others—and that’s true for both direct and indirect recognition companies.
The Attempted Deception Falls apart
However, one must consider this fact. How long will an insurance company be able to stay in business if a large portion of their policy owners are receiving an unfair share of the profits?
[JR] Hmmm – how is it possible for a policy owner to receive an “unfair share of the profits” by being charged a fair interest rate under contract terms determined by the insurer. Robin Hood again?
Again, does that put Mass Mutual—100+ years old—and never missing a dividend at more risk than a direct recognition company like Northwestern Mutual—also over a century old with a great dividend record?
Who actually owns the insurance company again? The policy owners. That would be YOU.
[JR] This is accurate when description of mutual companies. Although mutual holding companies “operate” as mutuals, the holding company–not just policy owners–holds significant interests in the mutual insurance company.
That is not an indictment of the mutual holding companies. It’s merely an attempt to bring clarity where none exists.
Some of the non-direct recognition companies restrict the number of loans, or the amount one can take as a loan or the number of policies one can own etc.
[JR] I’ve not experienced that in 40 years of dealing with a wide variety of insurance companies of both types except when the insurance company was in receivership–and that happened only twice that I know of.
(Tell me who you are talking about so I can avoid them.)
Do you want to have a policy that restricts your capital availability?
[JR] This is a cheap shot and poor salesmanship. I know of no direct or non-direct company that issues a contract that says the owner of a whole life policy cannot access to all of their cash value on demand.
Some non-direct recognition companies fire the agents that tell their clients about banking
[JR] This too is uncalled for. If an insurance company were to take this action, it would be grounds for a significant law suit by both the agents and the insureds. The insurer cannot deny rights granted by the insurer in a recognized contract.
and also some have been bought by stock companies and are in the process of converting from mutual to stock because too many of their customers were borrowing from their policies.
[JR] I’d like to know the names of those companies so I can confirm the claim, avoid doing business with them, and make sure the agents and advisors I deal with all across the US know about it.
The company I recommend is a direct recognition company.
[JR] Well – who woulda guessed! This agent is surely operating in good faith, but is in dire need of information, knowledge, and wisdom.
by Jeffrey Reeves MA, EUREKONOMIST™
The Social Function of Insurance
April 11, 2011 | Author jr
Web Site of Extreme Value…
I have frequently quoted or referred to Mises.org
The Ludwig von Mises Institute was founded in 1982 as the research and educational center of classical liberalism, libertarian political theory, and the Austrian School of economics
I am especially interested in the economics aspects of the institute. The following article by Robert P. Murphy is one of the clearest explanations of the insurance function that I have personally ever read…and I’ve read many.
The Social Function of Insurance
Legal requirements and prudence require most adults to carry various insurance policies. Although we may often take insurance for granted, it serves a valuable social function.
Read the article here…
The Social Function of Life and Disability Insurance Products
You and I daily face the risks of our own death and disability. That creates great risk for our families, our co-workers, our social, civic, and religious networks.
You and I are not indispensable, but we are contributors and we are often unaware of the significance of the contributions we make. Our families in particular rely on us in ways that death benefits or disability income checks can never replace.
Not owning adequate life and disability insurance ignores the reality that we support our families spiritually, emotionally, physically, and financially. It also ignores the painful reality that our families would face in every aspect of their lives if we left them with inadequate financial support when we die or–perhaps worse–burdened them with care-giving responsibilities and not enough money to either give care to a disabled family member or take care of the basic needs of the household.
In addition, we often are completely unaware of the value we bring to our social, civic, and religious communities. Have you never found an unexpected vacuum created by the untimely death of one of your colleagues at work or a member of your social circle? Sometimes we don’t recognize contributions until they are no longer made.
Insurance provides us with a simple and inexpensive way to assure that the work we do every day can continue after our death or in the event of our disability. Businesses have realized this for over a century through the use of key person insurance policies that assure the business will continue to thrive if the contributions of its most important contributors is cut short.
I encourage you to make sure you provide the same assurance to your family and the communities that depend on you.
by Jeffrey Reeves MA, EUREKONOMIST™
Even The Fed Knows An Obama Economy Won’t Work
April 2, 2011 | Author jr
Fed Governor: Crisis Scared Winners, Too
- By ALLISON BELL
Read the entire article here…
Commentary…
As usual, the economist author of a study looked at the results derived from following conventional wisdom. What about those folks that relied on safe equity in their homes and whole life insurance policies, and their savings in local banks and credit unions. I assure you, those folks haven’t changed their practices and are not “scared.” They continue to apply the economic principles and follow the economic practices the Founders and Builders of America’s economy paid forward. Unfortunately, Washington and Wall Street have used Madison Avenue advertising and marketing schemes to convince Americans that creating equity in their homes and whole life insurance policies and saving money in their local banks and credit unions is a bad idea…better, the tell us, to give control of our money to some anonymous ‘money manager’ on Wall Street and subject our future income to the whims of the IRS.
There are links to more examples of just how bad the economy really is below. Just remember common sense: get out of debt, keep lots of ready cash, avoid the IRS–that means opt out of qualified retirement plans–and don’t forget to remember to pay something forward to those you care most about.
by Jeffrey Reeves
OTHER FEDERAL RESERVE BOARD COVERAGE FROM NATIONAL UNDERWRITER LIFE & HEALTH:
Posted in Money, What Others Say | Tags: bank, banker, banking, banks, debt, debt to others, financial, financial advice, financial planning, health insurance, investing, Retirement, saving | No Comments »
The Mortgage Monolith VS EUREKONOMICS™
March 25, 2011 | Author jr
Posted in Debt, Legal, Ethical, Moral | Tags: american economy, conventional wisdom, debt, debt elimination, financial management, four pillars, mortgage company, mortgage industry, principal and interest, refinance | Comments Closed
The IRS Wants To Lend You Some Money
March 17, 2011 | Author jr
You will have to pay tax on that money at some time and you will not have anything to say about the tax rate the IRS lays on you at a later date. Here’s a story to clarify…
A family owned some land and wanted to plant an apple orchard. Their friendly IRS agent showed up one day said, “Have I got a deal for you? You can buy your seeds to start your orchard and I’ll give you a tax deduction for the cost. This will make it easier for you to start your orchard. Then,” the friendly IRS agent continues, ”I won’t bother you till you start harvesting apples in about twenty years. Then I will tax you in the money you earn selling your apples, not just once, but every year until you die or run out of apples.” When the family asked the friendly IRS agent what the tax rate might be in twenty years, he replied, “I don’t know right now, but you can be sure the IRS will take care of that.”
Is that a good deal? You Decide. It’s the same deal you get when you take a tax deduction for a retirement account contribution. You defer the taxes and the tax rate. Like the snickering mechanic in the oil change commercial taught Americans, “You can pay me now, or pay me a whole lot more later.”
You deserve better. You decide.
SECRET NUMBER TWO…
- guarantee annual growth–that’s right–guarantee
- give you an ownership interest in the company selling them
- allow you to take tax-free retirement income
- give you complete access to, use of, and control of the money you save–no government, employer, bank, or investment company involvement in your decisions
For the past forty years Washington and Wall Street have used Madison Avenue advertising to mislead America into believing that such a savings plan doesn’t exist.
However, a Wall Street Journal article recently described this savings vehicle–one of the oldest, most respected, and most reliable financial tools American families can buy–as the Swiss Army Knife of Financial Tools.
“What is that financial tool?” you ask.
The answer is Participating Whole Life Insurance. It delivers on its promises with uncompromising integrity and has done that for the past 150 years.
If you remember only one thing from this article, remember that.
Posted in Retirement, Taxes, Whole Life Insurance | Tags: retirement account, retirement income, saving money, tax deduction, tax rate, Wall Street | No Comments »
Your Financial Adviser & Your Physician …Two Peas In A Pod?
March 5, 2011 | Author dragonfly
Focus on Symptoms…
It appears that some financial advisers and doctors take the same training. They seem to have tunnel vision; they tend to focus on symptoms and overlook the root causes that create the symptoms. You can see an exaggerated example of a doctor that looks deeper by watching the TV drama House.
Media Misinformation…
Unfortunately, there is no TV drama that illustrates how a good insurance and financial adviser deals with clients and looks beyond the obvious. Much of what we see and believe about the people in this profession is derived from media attention to crooks and thieves–Bernie Madoff, Lehman Brothers, Fannie Mae, Freddie Mac, AIG, etc? That creates a distorted picture. There are thousands of honest, intelligent, well informed, and well educated advisers across America.
However, the sad truth is that many of these advisors behave less like the hero on House and more like his antagonists in the TV drama. This situation presents a challenge to the small business owner and you deserve better. How do you sort through the tsunami of insurance and financial advisors that approach you on a regular basis?
A True Economic Model…
The one word answer is EUREKONOMICS™ – a true economic model that is as old as money, as current as the 21st century, and delivers with uncompromising integrity. The simple truth is that many of the planning systems that advisers use are rigged to produce a specific result…the sale of financial products–remember, a 401(k), IRA, mutual fund, etc, are products just like a sofa or an automobile are products.
Remember This…
If you remember just one thing, remember this: The difference between EUREKONOMICS™ and other financial planning systems is that EUREKONOMICS™ is the economic model upon which to base financial plans–it looks deeper.
Four Key Questions…
The EUREKONOMICS™ Economic Model first asks and answers the four key questions that every successful small business’s financial plan must address:
1. How does the business owner reduce and eliminate debt and the cost of debt?
2. How can the business accumulate cash to which it has easy access, which it can use at will, and over which it has complete control–no banks, no IRS, no creditors?
3. How can my business provide me and my family with security today and income in the future?
4. How do I use my business to make sure I leave a legacy of both wisdom and wealth to those I care most about?
Imagine how the EUREKONOMICS™ Economic Model, by answering these questions for you, will help you and your small business succeed!
You Decide…
YOU decide. Write to your EUREKONOMIST™ financial advisor – jr@EUREKONOMICS.com and demand your FREE copy of…
Hard Working Money
Four Proven Small Business Money Management Strategies, And Which One Works Best
Believe in better!
Posted in Personal Financial Management, Small Business | Tags: bernie madoff, economic model, fannie mae, financial advisors, freddie mac, lehman brothers, media misinformation, planning systems, root causes, simple truth, small business owner, successful small business, tunnel vision, uncompromising integrity | No Comments »
EUREKONOMICS™ Insights – Money, Power, and Old Age
February 18, 2011 | Author jr
Economic Education
Economic education takes time and attention to common sense thinkers and writers. You often find these folks on the outs with conventional wisdom. You regularly find them on sites and forums like Mises.org Here is an example.
Money, Power, and Old Age
by Jan Iwanik on February 18, 2011
I suspect that funded retirement plans like American 401(k)s British private pensions, or Polish open pension plans (OFE) cannot survive in a centralized democracy. The only alternatives are unfunded schemes such as American social security, British state pensions, or the Polish Social Insurance Institution (ZUS). But such systems naturally lead to a conflict of interest between age groups, out of which the older generations emerge victorious. As a result, an internal gerontocracy is formed within the democratic system. This new and more oppressive system may prove to be more sustainable than the democracy itself.
Read the rest here - http://tinyurl.com/Mises-org-2-18-11
EUREKONOMICS™ Demands Ethical Practices
February 17, 2011 | Author jr
It’s a sad day when insurance and financial advisors stoop to deception in order to sell their wares.
An agent I am mentoring in EUREKONOMICS™ principles and practices placed a well-structured participating whole life policy on the life of a small business owner. Another agent slithered through a crack somewhere and misled the client to believe the policy in hand was of lesser value than the one the other agent is proposing to sell the client.
Here is my response to my mentee with bracketed descriptions replacing [names].
Hi [Agent,]
I’ve reviewed the “Supplemental Illustration” from [the large foreign-owned stock insurance company] you emailed to me that [another agent] recommended to [your client] as a replacement for [your client's] whole life policy.
I suggest you point out to [your client] that [the other agent]…
- failed to show the entire illustration, which includes the guaranteed values, which is required by law in all fifty states
- wants [your client] to contribute a total of $172,600 to a life insurance policy over 16 years
- claims [your client’s] premium payments over those 16 years would grow to $233,697
- says [your client] could then expect that $233,697…
- to repay the entire amount of [your client's] contributions—$172k—in less than 7 years at the rate of $25,820 per year
- then produce $25,820 in income each year thereafter from policy loans for as long as he lives (that assumes somewhere in the neighborhood of a 12% return forever based on a calculator on BankRate.com)
Common sense tells us that these numbers are unrealistic, but a financial calculator could tell you the precise impossible-to-achieve rate of return that the other agent is using to create these post age 72 income amounts from policy loans.
You may want to create a spread sheet showing the current actual value of the [mutual company] guaranteed cash values and death benefit and non-guaranteed illustrated dividends of the current policy compared to the hypothetical values being illustrated for [the large foreign-owned stock insurance company] product.
You could either leave the guaranteed column empty on [the large foreign-owned stock insurance company] portion or—better yet—call a brokerage house and have them run [the large foreign-owned stock insurance company] illustration showing the same results and fully disclosing the guarantees—or lack thereof—and the return assumptions. You could then use their hypothetical numbers on your spreadsheet—with emphasis on hypothetical.
I hope this helps you demonstrate to [your client] that selling from an incomplete illustration that only shows untested hypothetical results is unethical at best and unworthy of consideration. It’s also worth noting that it could be a reportable violation of NAIC rules and state laws.
Every EUREKONOMICS™ Agent is fully committed to adhere to the legal, moral, and ethical standards of the insurance and financial advisory vocation without, however, being restricted by the constraints of conventional wisdom and artificially imposed regulation from quasi-professional governmental and certification granting organizations that serve more to constrain creativity than to protect the public.
A Client’s Question About Whole Life Insurance & Annuities
February 16, 2011 | Author jr
Financial Literacy
A thirty-something client recently posed the following questions…
Estate Taxes
Q…I have been reading a book that talked about getting a revocable trust for my estate planning and having my insurance policy setup so that my trust is the beneficiary so that my insurance policy when paid out is not taxed with estate taxes.
A…The kind of trust that removes your policy and its values from estate tax liability is called an ILIT—Irrevocable Life Insurance Trust. This kind of trust removes the policy and its values from your control. It doesn’t seem that is something you would want to do at this stage. Estate taxes do not come into play until your estate is in the $5mil range.
Estate Plans
Q…Would you have a suggestion for whom to contact to get a trust setup? I have been looking at legalzoom.com and other websites like it but I am interested in an A/B trust.
A…I would think your church would be able to refer you to an attorney that specializes in estate planning. I suspect that s/he would not recommend an A/B trust, which aims primarily to minimize estate taxation—unless of course you have been withholding information from me and you have millions stashed away. S/he may also suggest that you consider a less complicated and more effective approach by setting up a revocable living trust that can own your policy as well as other assets but over which you exercise full control. This type of trust has many benefits but one of them is not sheltering assets from estate taxation.
Annuities In Your Financial Strategies
Q…Another part of the book suggests setting up an annuity as well. Do you know much about those as an investment vehicle?
A…An annuity is a great savings/investment vehicle but requires a long term commitment. For example, if you were to inherit $100,000.00, wanted to have that money grow tax free, and didn’t plan to use it until age 60 or later, an annuity would be a good choice. However, since cash withdrawals from annuities can incur penalties and are taxed differently than life insurance loans and surrenders, you have to be committed to let the money grow unattended until age 59½. If you don’t want to or not sure you can wait that long to access some or all of the money there are other savings and investment strategies that would work better.
Thank you for your help.
It always adds joy to my day when I am able to help. Thanks for allowing me to do so. jr
by Jeffrey Reeves MA, EUREKONOMIST
A Principle of EUREKONOMICS™–Big is Bad
January 5, 2011 | Author Dr Agon Fly
Small Is Good…
OK, you wonder what I mean by “Big Is Bad.” I’ll start by telling you that “Big Is Bad” isn’t a moral judgment. “Big Is Bad” is a logical conclusion drawn from observing economic and social—especially governmental—reality. “Big Is Bad” describes what happens when an entity grows too large.
Examples of Big is Bad…
Big–>Bad for the Auto Industry…
· TheAmerican auto industry—its management and its unions—grew rapidly after WWII. The companies and the unions became Behemoths.
o The survivors destroyed their American competitors and then GM and Chrysler destroyed themselves.
Big–>Bad for the Housing Industry…
· President Carter presided over the passage of the misguided Community Reinvestment Act[1]. This act made owning a home contingent upon the largesse of the government and the granting of immunity from risk to mortgage lenders. The financial stability of the buyers became an afterthought.
o Fannie Mae and Freddie Mac grew like an unchecked cancer, became bloated Behemoths, and destroyed themselves and the equity of millions of Americans.
Big–>Bad for Investors…
Wall Streetas once the investment capital of the world. Today it’s the bailout capital of the world. In 1999, the US Congress—with its perennial lack of foresight and wisdom—repealed the Glass-Steagall Act of 1933. They replaced it with the Gramm, Leach, Bliley Act, which changed the law to allow banks, insurance companies, and investment firms to mix and match the services they provided to their customers[2].
o Wall Street firms like Lehman Brothers, insurance companies like AIG, banks like Wachovia, and hundreds of lesser-knowns became Behemoths—too big to fail said the Dolts in DC. They failed anyway and damaged the personal economies of all 303 million Americans in the process.
Big –>Bad for American Governence…
· The Fifty United States—thirteen originally—are the founders and owners of the government in Washington DC. They established the federal government to serve“We the People…” and to protect our rights from those who would ignore or abuse them. The role of the federal government is not to provide for us or to replace our personal decision-making with imperial fiats. However, in the past few decades the federal government has become the Behemoth of the Behemoths, has ballooned into a giant Pillsbury Dough Boy that usurps many of the rights of the Fifty United States and of “We the People…”—not to mention a boatload of our money.
o The federal government consumes or controls over one-half of the American economy directly and affects almost every aspect of the economic life of every individual and business in the country. The federal government’s financial house is a complete disaster with deficits running in the trillions—that’s thousands times billions. Unregulated czars and anonymous bureaucrats are adding hundreds of billions more to the expenses of American businesses and families. The Congress is corrupt beyond measure. Lobbyists like AARP win favors for the few at the expense of—you guessed it—“We the People…”–especially we the older people.
Big–>Bad for the Dollar…
· Finally, there’s the Federal Reserve Bank, which—by the way—is not a part of the federal government, has no reserves at all, and is not a bank[3]. The Federal Reserve Bank—the FED—is a private enterprise. The FED controls the currency of the United States of America. The FED is not accountable to anyone—least of all to “We the People…” In other words, their own interests motivate The FED’s owners. The FED gets to print as much of our money as it—not the government or “We the People…”—wants and manipulate the economy at its whim.
o No comment is necessary.
How to Survive Big…
EUREKONOMICS™ is a personal economic and financial management model based on principles and practices that are embodied in the Declaration of Independence, the US Constitution as interpreted by the Founders, and treasured works like Ben Franklin’s The Way to Wealth[4] .
EUREKONOMICS™ allows individual Americans and their families to escape BIG or to at least insulate themselves from the impact BIG has on their everyday lives by giving them a well established set of economic principles and financial practices upon which to base their personal economic decisions.
[1] http://en.wikipedia.org/wiki/Housing_and_Community_Development_Act
[2] http://en.wikipedia.org/wiki/Gramm%E2%80%93Leach%E2%80%93Bliley_Act
[3] Get a full PhD in the FED in 42 minutes at http://video.google.com/videoplay?docid=6507136891691870450#
Posted in Personal Financial Management | Tags: and freddie mac, bank, banking, banks, bureaucrats, community reinvestment act, economics, economy, fannie mae, fifty united states, glass steagall act, gramm leach bliley, gramm leach bliley act, insurance, interest, investing, investments, lehman brothers, Money, president carter, us congress, wealth | 1 Comment »
The Collective Economy…
December 27, 2010 | Author jr
The Collective Economy Has Americans Bamboozled
We have been deceived…
We have been deceived by Madison Avenue into thinking that the economy is some esoteric weapon wielded by Behemoths in Washington and on Wall Street over which we have little or no control.
We have been convinced that our role is simply to earn, borrow, spend and repay debt.
We have been brainwashed into believing that the Behemoths know better than individual Americans and their families how we should deal with the money that comes into our lives…and they do it by picking our pockets…and we let them do it…willingly!
Have we Americans lost our minds?
The RESULT of this kind of economic thinking has been the consolidation of financial resources and the concentration of the money–which belongs rightfully in the pockets of everyday Americans–in a limited number of accounts that are owned and controlled by Behemoths. The Behemoths have created a Collective Economy where we Americans are expected to give over control of our money to strangers that work for financial Behemoths and hope that they care for it as thoughtfully and prudently as we would.
That’s Not the Worst of it.
This flawed thinking is the CAUSE of the economic failures of the first decade of the 21st century…
- Two stock market crashes that decimated the wealth Americans…wealth that was trusted to a Behemoth
- A real estate debacle of monumental proportions that has destroyed the personal economies of countless American families; a crisis that was hatched by the arrogance of Barney Frank and other insiders in Washington and the deception of America by…
- Government protected Behemoths Fannie Mae and Freddie Mac
- Impenetrable financial monoliths like AIG and Lehman Brothers
- Wall Street wizards that are no more wizards than Oscar Zoroaster Phadrig Isaac Norman Henkel Emmannuel Ambroise Diggs–the “man behind the curtain”–the Wizard of Oz
- The failure of hundreds of banks and the loss of billions of dollars of equity by shareholders in those banks
- The failure of GM and Chrysler and the loss of the long established precedent protecting the ownership rights of bond holders over the demands of corrupt union officials for more money and power
- The accretion of power and control over our money and our everyday lives by…
- China, the Oil States, Japan and other foreign investors–some of whom want nothing more that to see the demise of the United States of America
- An out-of-control Federal Reserve Bank that prints money as the solution to every problem and is undermining the very fabric of our free economy in support of the Collective Economy
- Undercover and unaccountable “Czars” imposing unvetted regulations on every aspect of our daily lives
- A healthcare law that will destroy the best healthcare system in the world and vest power over our personal health with bureaucrats in Washington
- A financial regulatory law that puts even more control of our money in the hands of the greedy for power Dolts in DC and the greedy for wealth on Wall Street
That Americans could ever fall into the treacherous sink hole of a Collective Economy created by the stupid idea that government bureaucrats with corrupted power and financial Behemoths with billion dollar ad budgets are better equipped than we to manage our money and our lives is surprising…but it happened.
The Questions Now Are, “How did this happen?” and “How can we fix it?”
In 1974 the US Congress passed ERISA and began convincing Americans that saving money was a bad idea. The law they passed convinced us that investing [aka gambling] in an IRA or 401(k) was better than putting our money into guaranteed return savings vehicles. Americans listened. Wall Street and the IRS rejoiced.
In 1977 a high school coach convinced thousands of naive amateurs that they were financial advisors and taught them to strip every penny possible from secure whole life insurance policies and – you guessed it – buy term insurance and invest [aka gamble] everything else in mutual funds. Americans listened. Wall Street and the IRS rejoiced.
A few years later one of the Wall Streeters invented a new kind of life insurance that took the money that whole life insurance saved in guaranteed accounts and moved it into accounts that were not guaranteed but that the Wall Streeter could profit from even if the policy owner didn’t. These kinds of policies destroyed dozens of successful insurance companies and cost billions in lost savings to American families. Americans listened. Wall Street and the IRS rejoiced.
In the ensuing decades Americans listened to advice to invest [aka gamble] in dotcoms and invest [aka gamble] our home equity in all sorts of schemes. Americans were convinced that carrying debt equal to their investments [aka gambles] made some sort of sense. Americans listened. Wall Street, the IRS, and money lenders rejoiced.
BUNK – A THOUSAND TIMES OVER – BUNK!
“THE FACT THAT AN OPINION HAS BEEN WIDELY HELD DOESN’T MEAN THAT IT’S NOT UTTERLY ABSURD.” Bertrand Russell.
America has been listening to the wrong people for almost 40 years. The results are apparent. The Collective Economy has left American families and the American government bankrupt.
You and I can’t stop the Dolts in DC and the IRS from trying to convince us that they can handle our money better than we can. Nor will we sway the wonks on Wall Street from trying to sell us products that make them wealthy and us poor.
We can, however, stop listening to the wrong people. Re-discover the old ways of creating wealth, preserving assets, and taking care of your families.
EUREKONOMICS™…
EUREKONOMICS™ is a personal economic model that is working for millions of American families today and worked for the entire country during its first two centuries. EUREKONOMICS™ is a set of economic principles and financial practices that have withstood the economic failures of the 1820 to 1840 depression, the Civil War that cost over 600,000 American lives, the Crash of 1907, the Great War, the Great Depression, WWII and the downturn that followed, Korea, the severe economic downturns of the ’70′, ’80s, 2001, and 2008-2009.
Unlike many pseudo-models of personal economics, EUREKONOMICS™ does not rely on planning, which is often no more than a selling system put in a fancy binder. Planning may also be described as map making. It provides useful information based on a snapshot in time, but planning is not the journey.
EUREKONOMICS™ relies on preparation. Preparation is more comprehensive. Preparation, the basis of EUREKONOMICS™, is more akin to provisioning. It uses the information on the map as a guide but also acquires the resources to assure success on the journey without incurring significant risk. As a result, Americans that apply the economic principles and financial practices of EUREKONOMICS™ to their personal economies have experienced guaranteed growth of their assets. Any speculative or investment losses they incurred were offset by guaranteed gains.
The Four Pillars…
Albert Einstein said, “The significant problems we have cannot be solved at the same level of thinking with which we created them.”
The 50 page leather bound financial plan that you receive from the well known company with the large advertising budget is at best a snapshot of a fantasy; it represents the “level of thinking” that has America in debt up to its eyeballs. It is out of date when you receive it and out of touch with the reality of your life’s daily challenges.
The Typical Financial Plan Wants for Wisdom…
Think about it. Do you rush to the bookshelf to pull out your neatly bound financial plan when your family faces a crisis and you need money?
Ask yourself how you’d feel if, instead of unfounded fantasies in a fancy leather binder…
-
You were free from debt-to-others; no mortgage, no car payments, no credit card bills or store charge card balances, no home improvement balances at the home improvement center…no debt of any kind
-
You had an income you didn’t have to work for, you couldn’t outlive, was protected from inflationary pressures, and wasn’t decimated by interest payments and taxes every month
-
You had ready money to take care of yourself and your family when some planned or unplanned life event required it – job loss, college for the kids, illness or disability, a long awaited second honeymoon, long term nursing home expense
-
You had a secure tax free legacy of your wisdom and your wealth that you could pay forward on your terms to those you care about.
These are the Four Pillars that are the framework of all stable personal economies because they rest on a foundation of money that you – and you alone – control.
This is EUREKONOMICS™. This is the antidote to the Collective Economy that has America and Americans trapped in a dungeon of debt built by the Behemoths.
Posted in Personal Financial Management | Tags: bank, banking, banks, budget, debt, economics, economy, fannie mae, financial, freddie mac, insurance, investing, investments, lehman brothers, Money, mortgage, saving, savings, security, speculation, stock market crashes, stocks, Taxes, wealth | No Comments »
Remembering The Forgotten Generation And The Foundation of EUREKONOMICS…
December 22, 2010 | Author jr
Posted in Personal Financial Management | Tags: credit, debt, economic principles, economic stability, economics, economy, EUREKONOMICS, financial, financial practices, financial structure, four pillars, investing, investment returns, investments, measure of success, Money, mortgage, mortgages, security | No Comments »
EUREKONOMICS™ Principles And Investment Products…
October 22, 2010 | Author Dr Agon Fly
EUREKONOMICSTM is based on investment principles that are as old as money and as current as the 21st century.
Benjamin Graham, the Dean of Wall Street was Warren Buffett’s mentor. Graham stated this principle in one concise sentence in his classic works, Security Analysis (1934) and The Intelligent Investor (1949)…
“An investment operation is one which, upon thorough analysis, promises safety of principal and a satisfactory return. Operations not meeting these requirements are speculative.”
When look at the meaning of this sentence within the framework of EUREKONOMICSTM you discover that…
- EUREKONOMICSTM relies on the promise of safety of principal as the primary consideration when it comes to investing the money that enters your life
- The EUREKONOMICSTM‘ corollaries to the promise of safety of principal are…
- whatever you think of as a satisfactory return has support that basic premise
- an investment that doesn’t is not really an investment; it’s a speculation-in simpler terms it’s a gamble
Graham’s Promise of Safety of Principal…
The the professionals in the insurance and financial services industry that act on your behalf tend to seek out the wealthiest Americans as clients. That has an unintended consequence. It creates a view of personal economics that applies mostly to the small percentage of the population that have already created family wealth.
That perception pervades the part of the industry that creates products as well, especially among financial businesses that create investment products and insurance products that have an investment component. As a result, many products that are called investments actually fall into the group that Benjamin Graham describes as speculative. They offer neither safety of principal nor a satisfactory return.
There’s another issue. You can project a satisfactory return on an insurance or investment product by using higher than realistic interest or growth assumptions. However, for many of the financial products available in the market today the facts surrounding the real returns of actual investments held by everyday Americans do not support a claim to safety of principal and satisfactory returns.
Take mutual funds as an example. No registered representative would dare promise-as Benjamin Graham’s definition suggests-that an individual mutual fund could promise safety of principal and a satisfactory return. If they did, the regulators at FINRA would likely bring the advisor making such a claim before a disciplinary board to be tarred and feathered-figuratively of course.
However, financial advisors often suggest that hypothetically and “over the long term” this fund or that or some combination of funds assure safety and returns. Based on guidelines from the SEC and FINRA, as long as you complete a suitability form and a risk tolerance questionnaire, which protects the advisor and his or her firm from the overreaching arm of regulators in the event an investment fails, the safety of principal and satisfactory return promise requirement has been met.
Take a look at the performance of these types of investments and the losses Americans have suffered over the past decade. The tremendous American families have experienced have led to only a few disciplinary actions-and those mostly for thieves running ponzi schemes.
The Promise Fulfilled…
Insurance and financial advisors are not in any way irresponsible or engaging in deceptive practices. The problem is that most of the insurance and investment products that are available in the marketplace are designed to serve the needs of investors and speculators that can afford to take risks-and losses. These financial products are not designed to help the vast majority of Americans seeking to attain wealth regardless of what the manufacturers of these products would have us think.
It’s easy to recognize the truth of this assertion. Look at your own financial progress. I’ve been practicing for almost forty years and have met only a handful of people that started out with wealth. Most Americans have gained wealth by struggling for years to…
- educate ourselves about saving, investing, risk management, etc.
- build equity in
- our homes
- our businesses
- our insurance policies and savings accounts
Almost every person and every insurance and financial advisor I have met can relate to this idea. Why then would anyone suggest that everyday Americans follow any other path to wealth? I’ll leave that answer up to each individual to discuss with their insurance and investment advisor.
However, I caution you…conventional wisdom-which is not wisdom at all-will rear its ugly head and suggest that advisors are fools if they rely for wealth creation for themselves and their clients on…
- financial education
- building equity in prosaic things like…
- homes
- savings accounts
- whole life insurance policies-especially whole life insurance policies
- a strongly rooted recognition that their clients deserve nothing less
The Final Word
There is no financial product that will make you wealthy.
There is, however, one financial product that guarantees that you will have more money in it at the end of each year than you had at the beginning of the year and that should be the foundation for your successful personal economy.
That product is participating whole life insurance from a mutual insurance company.
Posted in Personal Financial Management, Whole Life Insurance | Tags: benjamin graham, decent return, economics, family wealth, financial, insurance, investing, investment product, investments, Money, personal economics, risk, satisfactory return, saving, savings, security, speculation, warren buffett, wealth | No Comments »
Awareness, Self-appreciation, and Gratitude—Keys To A EUREKONOMICS™ Practice
October 2, 2010 | Author Dr Agon Fly
“If it were not for the ‘last minute’, nothing would get done.” Dr Agon Fly
Many everyday events and occurrences are important; the kids are crying, the spouse is demanding, the boss is insisting, the grass needs mowed or the snow shoveled, and on and on. Chores, people, TV shows, and even bodily functions are shouting “Pay attention to me!” all the time. These demands are sometimes more urgent than they are important.
Paying your bills is one important everyday activity that becomes urgent when we put it off until the last minute. We tend to pay bills at the last minute because we think of it as an unpleasant activity.
However, paying your bills can also be an excellent exercise in awareness, self-appreciation, and gratitude.
- You can use paying your bills as an exercise in awareness. Paying for the things you bought and used…
- puts money at the center of your focus
- allows you to recognize both the value and the function of money in your everyday life
- lets you re-assess your decisions about money and realign your money usage with your life goals
- Moreover, paying your bills is an opportunity to pat yourself on the back. You work hard. You choose to spend your money in a certain way. Paying your bills, which are the direct result of those decisions, should be a source of satisfaction and self-esteem. If that is not the case, you may want to create greater awareness about the ways you are using the money that flows through your life.
- Finally, paying bills allows you to appreciate and be thankful for the work of the thousands of other Americans—just like you—who go to work every day to make sure…
- your electricity is on
- the grocery store shelves are stocked
- the streets are safe
- the cable or satellite TV is working
- the water is flowing and the sewage is treated
- the schools are open
…you get the picture.
We are entering the fourth quarter of the year. This is the time of year Americans…
· tend to run up the balances on their credit cards and incur other bills that they won’t see until January
· look forward with confidence but set themselves up to look back with regret
EUREKONOMICS™ is an approach to managing the money that flows through your life.
EUREKONOMICS™ lets you make sure you can always look forward with confidence and never have to look back with regret.
If you can delete the misconception from your thinking that paying bills is a burden and a struggle and replace that bad information with an understanding that paying your bills is a EUREKONOMICS™ practice in awareness, self-appreciation, and gratitude, you too will be able to always look forward with confidence and never have to look back with regret.
Posted in Money, Personal Financial Management | Tags: credit, EUREKONOMICS, gratitude, life goals, Money, money usage, self esteem | No Comments »
“It’s Only Money…” Has No Place In A EUREKONOMICS™ Practice…
October 1, 2010 | Author Dr Agon Fly
It’s only money…
How many times have you heard someone say, “Let’s buy it! It’s only fifty bucks. We’ll save twenty-five dollars!” Good Grief! There is no “only” when you are dealing with your money. Moreover, savings are only savings when you put them into an account that you control.
If, instead of spending it, you put your fifty bucks in your family bank–regardless of the form that bank takes–it would compound to nearly $300.00 in 30 years at 6%. If you add the 25 bucks you saved, you’d have over $450.00 from a single decision to not save by buying something.
Americans make those kinds of savings decisions frequently – say 12 times a year. Compound those dollars over a few decades and the total is over $5,000.00. Do it every year for 30 years… you’ll be a lot closer to fifty grand than fifty bucks.
“Only” fifty bucks? It’s self-deception. The old adage “every penny counts” is still in common use because it’s true. We all tend to convince ourselves that our buying decisions are wise regardless of the reality those decisions impose on us when it comes to our money. It’s one of the oldest tricks in the world to tell ourselves “It’s only…”.
“Human felicity is produced not so much by great pieces of fortune that seldom happen as by little advantages that occur every day.” Benjamin Franklin
The next time you think you are saving money buying any product–on sale or not–ask yourself if the product you are buying and the money you are “saving” is really worth it. Often it will be. EUREKONOMICS™ does not espouse a life of deprivation. Americans have the most enviable lifestyle in the world and it’s not a sin to maintain and improve that lifestyle.
EUREKONOMICS™ does espouse the economic principles and financial practices that the Founders and Builders of America and its economy paid forward to us. These principles and practices have been twisted and manipulated by the Behemoths–big government, unions, banks, investment firms, etc.–to serve their aims and not those of the American people.
Remember – only money is money. For everything else–your 401(k), IRA, mutual funds, investments, and so on–you have to spend your money, and worse, relinquish control of that money to strangers. When you’re closer to pushing up daises than doing fifty push-ups, having money instead of the stuff you bought will be a blessing.
This isn’t a new idea. Tennessee Williams expressed it over half a century ago:
“You can be young without money but you can’t be old without it.”
PS – There is one purchase that Americans can make to assure their money is safe, grows tax-free every year, never incurs a loss, and is accessible at all times without penalties or restriction: participating whole life insurance from a mutual company.
Posted in Money, Whole Life Insurance | Tags: bank, banking, banks, benjamin franklin, economic principles, economics, economy, financial, financial practices, insurance, investing, investments, Money, saving, saving money, savings | No Comments »
The Four Pillars Of EUREKONOMICS™
September 16, 2010 | Author Dr Agon Fly
EUREKONOMICS™–How to Thrive in the 21st Century
“The significant problems we have cannot be solved at the same level of thinking with which we created them.” Albert Einstein
Over the next several weeks–perhaps months–i will restate some of the basic economic principles and describe some of the financial practices that are fundamental to EUREKONOMICS™. Nothing is more fundamental than understanding the Four Pillars upon which EUREKONOMICS™ rests.
—
The 50 page leather bound financial plan that you receive from the high profile financial advisory firm with a billion dollar advertising budget is the manifestation of an advisor’s fantasy. The moment you receive it, it’s outdated. It represents a figment of the imagination of some Behemoth whose only aim is to move your money into its accounts. It doesn’t reflect your life’s day to day realities.
It’s devoid of wisdom.
Think about it. When your family discovers an opportunity or faces a crisis, when you need money quickly and without having to pay penalties or make application, do you dash off to the bookshelf and pull out your neatly bound financial plan ?
Ask yourself how you’d feel if, instead of fantasies in a binder…
- You were free from debt-to-others and in control of the equity in your home
- You had an income you didn’t have to work for but you couldn’t outlive that wasn’t burdened by tax liability to the IRS
- You had easy access to ready money to take care of yourself and your family when some planned or unplanned life event required it – job loss, college for the kids, financial opportunity, illness or disability, a long awaited second honeymoon, long term nursing home expense
- You had a secure legacy of your wisdom and your wealth that you could pay forward – on your terms – to those you care about
These are the Four Pillars that are the framework of all stable personal economies. They rest on a foundation of money that you – and you alone – control.
Lay this foundation and erect this framework. Guarantee yourself peace of mind about money… and about life.
Posted in Personal Financial Management | Tags: albert einstein, budget, disability, financial, legacy, Money, peace of mind, security, wealth | No Comments »
Why America Needs EUREKONOMISTS…
September 14, 2010 | Author Dr Agon Fly
This post is my reply to another Kool Aid drinker that knows nothing about participating whole life insurance but is—regardless—answering the life insurance question: “Which kind of life insurance policy should the questioner buy?” The answer–in bold–is from a mortgage broker. My responses follow.
Purchase Life Insurance: – I call this “Income Protection.” Only (repeat – ONLY) purchase a term life policy.
Hmmm! The mortgage broker states, “I call this….” So the millions of successful Americans that buy whole life insurance policies are wrong and the small “buy term and invest the rest” sect of Williams/Orman devotees like this one are right. No! This advice is akin to suggesting a diet composed only of Twinkies and doughnuts would produce optimum health.
The face-value should be an amount large enough to replace income no longer coming in due to the death, or the additional funding necessary to cover the expense of hiring someone to perform the tasks of the dear departed. If the budget permits, increase the face-value to pay off debts of #1) the mortgage, #2) creditors. The minimum policy should cover expenses to bury or cremate the deceased. The average burial costs are between $6,500 and $10,500. Cremation average: $1,250 to $6,500.
~ WOW! If only the millions of Americans that care enough about their families knew how foolish they have been to buy whole life insurance policies that actually serve the needs of the family both during their life time and after their death. After 40 years helping Americans deal with life and death issues it is apparent that more life insurance is always better than less and whole life insurance serves best. No widow or widower ever complained about receiving too much money from a life insurance claim.
Under no circumstances should you purchase a whole life, universal life, or any other type of policy that accumulates a cash-value.
~ YEAH, Right! More Twinkies…How about following that logic to its ultimate conclusion. Don’t buy a car, lease it. Don’t buy a home, rent an apartment. Why would anyone want to build equity in real property like a home or a life insurance policy? Shucks, why not go for the ultimate; don’t get married…
There are at least five (5) reasons why, as follows:
~ Now, the truth…
a. Although rates are better than a savings account or Certificate of Deposit, they are still low compared to other investments
~ When this argument arises, its proponents pull out hypothetical illustrations of future performance. Facts are different than projections. During the past 100+ years, whole life insurance policies that were issued and maintained produced results comparable to “investments.” (Can’t say the same for universal life policies. That’s why I never sold that kind of life insurance policy.) Looking forward using silly assumptions is a form of dishonesty. Any return over 5% net of taxes and expenses for an “investment” is unrealistic based on the actual performance of actual investments–that’s not my opinion but according to Benjamin Graham and Warren Buffett. One can–of course–use “averages” to “prove” whatever they want. I can show you how an “average return” of 10% per year leads to a total loss of your invested capital.
b. The interest rate to “borrow” the money is much higher (usually 6-9% plus). Unlike borrowing from your 401k plan where interest payments go back into your account, these payments go to the institution. Additionally, it could take up to six months to receive your check
~ These assertions are incomplete, mix unrelated issues with the issue being addressed, and are at best factually inaccurate.
i. Policy loans are, in many cases, the least expensive way to finance purchases. Although it is accurate to say that the policyholder borrows money from the insurer and repays the insurer, that does not take into account that the cash value of a whole life policy continues to grow and dividends continue to be credited to the policy regardless of the loan. Moreover, the value of the GUARANTEED cash value increases and dividends–not guaranteed but consistently paid for over 100 years–often far exceed the interest charged. Even some UL policies have zero cost loan provisions that assure the policy owner/borrower that the interest paid will equal the interest credited to the policy.
ii. It’s unclear where the six months comment comes from. I and many of my clients regularly borrow against the cash value of policies and receive checks in a few days, never weeks or months. (Most policies since the Great Depression have a rarely used provision that allows the insurer to withhold both cash accumulations and death benefit payments for as much as six months under very limited circumstances. To suggest that is the norm is–you put your own name to it.)
iii. Finally, borrowing from a 401(k)–assuming you are following conventional wisdom and actually risking your future by buying into such schemes–is fraught with dangers–too many for this response.
c. Although your premium does not rise, the portion that goes to pay your premium does because as you get older the rate increases. Therefore, the portion of the premium that goes towards your cash value contribution decreases as time goes on. Eventually, you are paying premium from your cash value therefore, you cash value will total zero at some future point in time
~ OK – that’s a relatively accurate description of a universal life insurance policy but does not begin to describe a whole life policy in which the premium, death benefit, and cash values are all GUARANTEED. In addition, the insurance contract–not the insurer–guarantees that any surplus/profit that the insurance company earns is paid to policy owners as a tax-free dividend. There are no outside investors in mutual companies.
d. After the cash value is depleted, the policy could be cancelled (unless you are willing to pay a higher premium)
~ This applies to UL policies – not whole life insurance policies. Whole life insurance policy premiums are guaranteed to remain level, the cash values are guaranteed to increase every year, and surpluses are guaranteed to be paid out as tax-free dividends annually. Moreover, this comment doesn’t address the question of what happens when the term insurance policy the mortgage broker recommends renews and the premium goes up 1,000% or more due to age.
e. Upon the death of the insured, beneficiaries receive either the face-value of the policy or the cash value. In order to receive both, the agent needs to mark both on the application. They generally don’t mark both because the policy premium would be much higher.
~ This refers to UL policies only. (Isn’t it amazing that the author of this response knows how other agents think and even knows their motives for filling out an applications one way or another?)
Whole life policies that are properly structured develop an increasing cash value. Happily, I just reviewed a policy that was issued in 1976. The premium was, of course, the same as it way originally. However, the death benefit was seven times the original face amount and the annual dividend was ten times the guaranteed premium–and rising every year.
“Cash Value” policies should only be used to supplement retirement savings after all other retirements account contributions reach their maximum allowed by Security Exchange Commission (SEC) regulations.
~ I worry about advisors that make assertions that sound like the Ten Commandments.
This is another out of context and meaningless comment. The SEC is the puppet of the Behemoths on Wall Street and in DC. Moreover, the SEC has no authority or purview relative to insurance companies and even less regarding how and where you put your money. They are supposed to regulate and control the behavior of folks like Bernie Madoff, Fannie Mae, Freddie Mac, and the dozens of other financial institutions that the overreaching federal government either put in jail or bailed out because the SEC didn’t do its job.
Here’s my bottom line: After almost 40 years as an insurance and RECOVERING investment advisor, I have not verified from actual performance any insurance/investment strategy that performs as well as EUREKONOMICS[tm]. During my entire 40 year career and for 100 years before that, not a single American that follows this strategy has lost any money, paid or incurred any taxes on their gains, complained that the cost of their whole life policies was too expensive, or expressed regret that the amount on the death benefit check was too high.
GO FIGURE!
Posted in Legal, Ethical, Moral, Money, Retirement, Whole Life Insurance | Tags: behemoth, behemoths, burial costs, debt, insurance, insurance question, insurer, interest, investing, investments, life insurance policies, life insurance policy, Money, mortgage, mortgages, purchase life insurance, Retirement, s, saving, Taxes, universal life, whole, Whole Life Insurance | No Comments »
What an economist has to say about EUREKONOMICS™…
September 13, 2010 | Author Dr Agon Fly
“Money for Life…in good times and bad–the primer on EUREKONOMICS™–is a dangerous book – in a good way.
“On the surface, it appears to be a personal finance book, and in a sense it is. It addresses such issues as how you manage your money and what you use it for. The consequences of your answers to these questions reach into every aspect of your life. And, if you follow the tenets of Money for Life, you find the magic of compounding working for you to create life-long wealth that you can pass along to your children and grandchildren, and even more importantly, you find yourself in a position to pass wisdom along to them as well.
“So, in one sense, this is a very practical book, with tactics that help you to set achievable goals and measure your progress toward reaching them, not that much different in some ways than a thousand personal finance books that came before it and a thousand books yet to come.
“But Money for Life…in good times and bad is so much more than that, and therefore, so much more powerful than most of those other books. Money for Life demands that you look to the past in order to see a clear path into the future. It expects that you’ll remember that the Money Monsters and the Behemoths (you’ll find out what these whimsical terms mean as you read the book) work for you, and not the other way around. Most importantly, it challenges you to connect your decisions about your money to your philosophy of life. If you think deeply about the book as you work through the practical, tactical exercises, you’ll find yourself rethinking your relationship with money, and by extension, with the whole economy.
“Aristotle, in his work Nicomachean Ethics, probed the question of what the ultimate good is. He had this to say about wealth: “The money-maker’s life is in a way forced on him; and clearly wealth is not the good we are seeking, since it is useful, only for some other end.” For Aristotle, the other end is the “good life,” which includes security and independence, as well as civic virtue and public service.
“There is a modern strain of this kind of thought as well. It can be found in recent discussions of “positive psychology.” This is the term used by the American Psychological Association to describe the study of what makes people happy. A recent paper describes the progress that has been made in understanding “positive psychology”. The authors studied people who described themselves as happy, to find out if they had common characteristics. Using a combination of questionnaires, surveys, interviews and human subject reports, they find “…six overarching virtues that almost every culture across the world endorses: wisdom, courage, humanity, justice, temperance, and transcendence.”
“The authors describe three robust, apparently universal empirical findings. For our purposes, the third finding is the most relevant. They write,
“[S]trengths “of the heart” – zest, gratitude, hope, and love – are more robustly associated with life satisfaction than are the more cerebral strengths such as curiosity and love of learning. We find this pattern among adults and among youths as well as longitudinal evidence that these “heart” strengths foreshadow subsequent life satisfaction.”
“This is quite a different view of people than that taught in economics! Economists start by assuming that rationality and self-interest are the best way of understanding why people make the decisions they make (as if people only made rational decisions!). Consumer choice theory assumes that people derive utility, (defined as well being, satisfaction, happiness, or whatever) only from consumer goods. Of course, most economists recognize that there are limits to this view, but nonetheless this is the view at the heart of most discussions of trade, and is not far below the surface in most other discussions. The economic point is that how you spend or manage your money can be thought of as an extension of your deepest self, your core values.
“And this realization lies at the core of the Money for Life philosophy. When the choices you make with your money are in alignment with your deepest values, your money and the decisions you make regarding it are more likely to make you happy. Your money, and the Economy is serving you and the ideals you hold dear, not vice versa.
“But Money for Life also serves as a financial self-defense manual. My daughter’s jujitsu instructor emphasizes the concept of situational awareness and the role it plays in preventing trouble. If you pay close attention to what is going on around you, you avoid problems. You can anticipate and prepare. The same can be said of your financial dealings. Prudent people can and do set aside money for contingencies. Money for Life helps you focus on what is going on around you, and plan for the best and the worst. Finally, Money for Life is a timely reminder that the personal and national economic gains that this pursuit engenders should be working for each of us in good times and bad and not the other way around. And that idea is what makes this book so dangerous – and so valuable.”
From the foreword to Money Now, Money Later, Money for Life–How to Thrive in Good Times and Bad
October 2007
Aristotle. Nicomachaen Ethics. Terence Irwin, Ed. Indianapolis, Indiana: Hackett Publishing Company, Inc. 1985. p. 8.
Seligman, Martin E. P., Tracy A Steen, Nansook Park, and Christopher Peterson. “Positive Psychology Progress: Empirical Validation of Interventions.” American Psychologist. Vol. 60, No. 5, July-August 2005. p. 410-421 Most of what follows relies heavily on this article.
Posted in Legal, Ethical, Moral, Personal Financial Management, What Others Say | Tags: debt, debt to others, financial, financial advice, financial planning, insurance dividends, investing, life insurance, Money, money for life, money under management, mutual insurance, mutual insurance company, passive income, saving, Taxes, term life insurance, universal life insurance, variable life insurance, Whole Life Insurance | No Comments »
EUREKONOMICS™–The Way Out Of Our National Debt…
September 12, 2010 | Author Dr Agon Fly
The Debt Paradigm
Barack Obama might, unwittingly and unknowingly, be right about solving our economic problems from the bottom up.
America’s economy – and the world’s economy for that matter – runs on debt. Just as our country and the world is addicted to oil based fuels, our economies are addicted to debt. The government cannot impose a solution to this problem any more than a parent can coerce a child into rehabilitating from a drug habit.
Bailouts Don’t Reduce or Eliminate Debt
For the government to give money through rebates, stimulus plans, tax credits, and bailouts to Americans who have run into debt in the hopes that they will no longer be addicted to debt is just as foolish as a parent giving money to a drug-addicted child in the hope that the money would not be used to feed the addiction.
Debt, Ben Franklin, and the Declaration of Independence
Ben Franklin said. “But, ah! Think what you do when you run into debt; you give to another power over your liberty.” That same concept applies to taking government money. Accepting money from the government as a way of life creates at the very least a psychic debt and gives the government power over your liberty–the very abuse that led the Founders to revolt and write the Declaration of Independence and the amazing US Constitution. The welfare mistakes of the past have taught us this lesson several times over.
If Barack Obama expects the mythical ‘middle class’ to climb out of the dungeon of debt and lead America to a more stable future, he needs to rethink his approach.
Here’s what needs to happen.
Individual Americans and American families need to adopt a new personal economic model that emphasizes saving over debt and over investing, which is nothing more than debt in disguise. [We will dedicate an entire blog entry to this concept at some future date.]
It’s unlikely that will happen spontaneously. Americans have been bamboozled into thinking that they should relegate their cash to consumption and forfeit control of their future to the government and Wall Street.
The Financial Behemoths have buried the idea that saving is a good idea under an onslaught of advertising, misinformation, and disinformation in support of investing for the past thirty years. America has been wrongly convinced that ‘investing’ is a form of savings. Worse, America has been misled into believing that using debt to fund investments is a wise decision.
The US Tax Code
President Obama and the Dolts in DC need to realize that top-down legislation, executive orders, and the tax code is rewarding the wrong thing when it rewads debt and investing over saving.
The tax code cannot be revised, tweaked, overhauled or manipulated. It is broken beyond repair. It needs to be scrapped and replaced with a more humane and holistic system.
Financial Management Principles
If you would change America for the better Mr. President, you cannot impose policies and programs that have proven ineffective failures all over the globe. You have to rely on the economic principles and financial practices of the Founders and Builders of America that got us here in the first place.
Posted in Debt, Legal, Ethical, Moral, Personal Financial Management, Taxes | Tags: barak obama, ben franklin, Congress, debt, economic problems, economics, economy, EUREKONOMICS, financial, government power, investing, investments, Money, saving, savings, Taxes | No Comments »
Question: Got Debt? Answer: Get EUREKONOMICS™
August 17, 2010 | Author Dr Agon Fly
America and the world have received a legacy of wisdom and wealth but have squandered it as pointed out in this post from HubPages.com…
Shakespeare, Franklin, and Stanley Johnson
Neither a borrower nor a lender be;
For loan oft loses both itself and friend,
And borrowing dulls the edge of husbandry.
This above all: to thine own self be true,
And it must follow, as the night the day,
Thou canst not then be false to any man.
William Shakespeare, “Hamlet”, Act 1 scene 3 – Greatest English dramatist & poet (1564 – 1616)
“But, ah! think what you do when, I you run I in debt you give to another power over your Liberty.”
Benjamin Franklin, Poor Richards Almanac, c. 1758
“…How do I do it? I’m in debt up to my eyeballs. I can barely pay the finance charges. Somebody help me.”
Stanly Johnson, Lending Tree commercial, c.2005
Amazing…
It seems Stanley Johnson–and the rest of America, including the Dolts in DC–paid little attention to the wisdom that Shakespeare and Franklin bequeathed to us centuries ago as a legacy.
Instead, Stanley was seduced by the Siren Song composed in the late 20th Century by the Wonks of Wall Street and the Wannabes in Washington. The lyrics go something like this:
Get stuff you don’t own.
Borrow to buy it.
That proves your true worth.
Debt’s a good diet.
“Invest” - do not save.
Give us all your money.
Become our good slave.
Your life will be sunny.
Having stuff you don’t own and “owning” investments you don’t control is a sure road to servitude, poverty, and the loss of liberty. It is devoid of common sense and lacks an economic foundation.
This is conventional wisdom and I call it The Debt Paradigm.
The problem here is that true intelligence–common sense–sees all sides in a debate. On the other hand, pseudo-smarts embrace a theory, elevate it on an ideological altar, and protect it by demonizing anyone that interjects a competing or alternate view.
History abounds with examples…
- The Romans of Caligula’s reign
- Crusaders that ravaged both the Jews of Europe and the Muslims of Arabia
- Nazi Germans
- Modern day Islamic fanatics that demonize Jews and Americans equally
- Crazed religious fanatics of Iran
- Corrupt unions like the SEIU
- Misguided ACORN workers
- The list could be endless and include every religion and government
There is only one way to deal with ideologies that demand absolute adherence–and the Debt Paradigm is such an ideology–and that is to get real , challenge the assumptions, prove the alternatives, wake up the ideologues to the untruths that are leading them where the LEADERS want them to go.
There are strategies that allow you to personally escape The Debt Paradigm and gain control of the money that flows through your life. One source of information about a unique approach to this dilemma of the 21st Century is found in the life-changing book Money for Life. I encourage you to read it.
EUREKONOMICS™ – Personal Financial Management & The Perfect Personal Economy…
August 12, 2010 | Author Dr Agon Fly
Personal Financial Management and Economics Simplified
Imagine this result of Personal Financial Management…
- A successful 45 years old
- A couple of children about to go off to college
- The stay-at-home spouse is about to re-enter the work force even though the family doesn’t need the income
- The mortgage is paid off
- No auto loans, credit card debt, or home improvement loans
- Several years of living expenses set aside in cash value life insurance and the local credit union to deal with life’s surprisingly unsurprising surprises
- A legacy of wisdom and wealth for those they care most about
Imagine that!
If you think you have to win the lottery or marry rich to achieve these goals, you are-as they say-drinking the Kool Aid. The Behemoths of big government, big investment houses, big banks, big stock insurance companies, the FED, the SEC, big unions, and big whatever have you bamboozled.
Behemoths
Behemoths have Americans convinced that cash and home equity, which are the two most basic elements in a successful personal financial management program and personal economy, are of no significant value. According to the Behemoths, Americans should surrender their wealth and well being to them for safekeeping. Americans should ignore credit union membership, eschew tax advantaged whole life insurance policies from mutual companies, and convince themselves that eliminating the mortgage is a really bad idea.
BUNK! Baloney! Bull!
Look more closely America. You’ve been misled. When you buy anything from a Behemoth, whether investments, 401(k)’s, IRAs, mutual funds, or stocks and bonds, the Behemoths guaranteed themselves a profit and guarantee you only that they guarantee you nothing.
As Benjamin Franklin wisely stated over 250 years ago, when you commit to a mortgage or any other form of debt you “give to another power over your liberty.”
Twenty Years Is All It Takes…
It doesn’t take a lifetime to lay a foundation and erect the Four Pillars of the EUREKONOMICS™ Model for creating wealth and managing personal finances…
- Freedom from debt – including the mortgage
- Plenty of ready cash to deal with life’s surprises
- Secure income they don’t have to work for and can’t outlive
- A legacy of wisdom and wealth
American families that use common sense and put their money into whole life insurance policies and local savings institutions where they can control it, can expect to create the financial management system described above in twenty years of earning and saving using the EUREKONOMICS™ Model.
Unclear Thinking
It is unrealistic and unclear thinking for American families to plan for and uncertain retirement when they have only a few months of expenses saved, they have little or no discretionary income at the end of each pay period, are “up to your eyeballs in debt,” and have an unpaid mortgage.
Tax Deductibility Is A Trap…
PS – “But, I get a tax deduction from the IRS when I put money aside for retirement.”
True. However, the IRS is a Behemoth and a tax deduction now defers both the tax and the tax rate. When you take post-retirement income the IRS will collect the taxes on that money and the tax they’ll levy will most likely be a lot higher than the relief you gained from your deduction early in your career.
If the IRS gives you a dollar today, they’ll take ten or more tomorrow.
by Jeffrey Reeves MA, EUREKONOMIST
Posted in Personal Financial Management, Taxes | Tags: behemoths, cash value life insurance, creating wealth, credit, credit union membership, debt, economy, family economy, financial, investing, investments, IRs, legacy, life insurance policies, managing personal finances, mortgage, mortgages, Retirement, saving, savings, security, stocks, Taxes, wealth, Whole Life Insurance, wisdom | Comments Closed
EUREKONOMICS™ – “Your Special Island…”
July 31, 2010 | Author Dr Agon Fly
Posted in Debt, Personal Financial Management, Retirement, Whole Life Insurance | Tags: bank, banking, banks, creating wealth, credit, economics, economy, EUREKONOMICS, financial, financial advice, financial adviser, financial advisor, financial management, financial plan, financial planning, free enterprise, insurance, invest, investing, investment, investment advice, investment adviser, investment advisor, investment companies, investment management, investment plan, investment planning, life insurance, macro economy, Money, personal finances, saving, savings, security, speculation, term life insurance, universal life insurance, variable life insurance, wealth, Whole Life Insurance | No Comments »
EUREKONOMICS™ Challenges…
July 12, 2010 | Author Dr Agon Fly
Posted in Money, Personal Financial Management, Retirement, Whole Life Insurance | Tags: bank, banking, banks, building wealth, credit, debt, economy, equity investments, financial, insurance, investing, investment brokers, investments, life insurance policies, managing personal finances, Money, money issues, mortgages, policies, Retirement, saving, savings, security, stocks, term life insurance, wealth, Whole Life Insurance | 1 Comment »
EUREKONOMICS™ Retirement Planning In One Easy Lesson…
May 13, 2010 | Author Dr Agon Fly
As I have said on many other occasions, Behemoths—big government agencies like the IRS, Fannie and Freddie, big investment firms, mutual funds, and stock insurance companies, big insurance agencies like AARP posing as advocates, big unions, big community organizations like ACORN—have misled Americans about the how-to of creating wealth and managing personal finances. This is most apparent in the failure of most Americans to reach seniority with the resources to retire—a misnomer at best—with any degree of security.
The Behemoths buried the wisdom paid forward by the Founders of America that empowered Americans and American business for over two centuries and made America and the American lifestyle the envy of the world.
The principles that underlie the wealth of many Americans and the practices that those principles support embody the wisdom of the Founders that is re-emerging in the early part of the 21st Century.
Prior generations of Americans—from Benjamin Franklin until today—had four main financial goals. My parents, over a dozen uncles and aunts and most of their contemporaries followed these financial rules of the road and all of them retired with peace of mind about money.
There are no secrets to this strategy. It’s really quite simple.
Principle Number 1…
In 1958, after ten years in their first and only home, my parents had a mortgage burning party. Dozens of relatives and friends attended—all of whom had already had their own similar parties or were looking forward to them.
A couple of years later my parents bought a new car. They paid cash, which they borrowed from one of their participating whole life insurance policies. They repaid the loan in less than two years.
· Principle Number 1: Get out of debt and stay out of debt.
o The corollary to Principle Number 1 is that if you must borrow; borrow from your life insurance policies. That way, when you retire the expense and burden of debt will not weigh you down, deplete your income, or force you to continue working for the man.
Principle Number 2…
As my parents aged, they wanted to expand their home, create a family room to accommodate regular visits from several grandchildren, and provide easier access to the basement and laundry area for themselves. Because they had no mortgage, car payments or other debts, and because they had saved money in both their credit union and participating whole life insurance policies, it was not a financial or emotional burden for them to build and pay for the extra room.
A few years later, after they had replenished their savings and repaid their policy loans—remember, they had no debt to others, only debt to themselves—they helped my younger brother buy his first house with an off-the-books down payment loan. My brother repaid the loan within five years.
· Principle Number 2: Save enough money to take care of your wants and needs and to deal with life’s surprisingly unsurprising surprises.[1]
o The first corollary to Principle Number 2 is this; what most Americans consider a reasonable emergency fund—savings equaling three to six months living expenses—is not only insufficient but also unrealistic. Credit and money in risk-based financial products—some of them intended for retirement— becomes the fall back of most Americans in the absence of adequate liquid savings.
o The second corollary to Principle Number 2 is to first assure your security with savings that are not at risk and don’t consider what the Behemoths call investing—but Benjamin Graham calls speculation—until you have substantial savings and no debt.
Principle Number 3…
When my parents finally retired, they withdrew interest from their savings and borrowed from their participating whole life insurance policies to supplement the meager retirement income my father received from his union.
Mom contracted pancreatic cancer and died at home a few years into her retirement. My father lived for several years, made a few extra dollars by mentoring apprentices in his trade. He also died at home. His heart gave out.
· Principle Number 3: Peace of mind during retirement derives from having an income you don’t have to work for and you won’t outlive.
o The first corollary to Principle Number 3 is that money used to buy anything—especially investments and most especially investments in retirement accounts that are subject to whims of the IRS—guarantee only that they guarantee nothing.
o The second corollary to Principle Number 3 is that the money that eliminates debt in Principle Number 1 and takes care of the wants and needs of Principle Number 2 is the same money that locks in secure income when a retiree needs it most.
Principle Number 4…
The proceeds from my parents’ life insurance policies, their savings, and the value of their lifelong home added up to enough money to allow each of the surviving children to measurably reduce their debt, increase their savings, and lock in a small future income that they won’t have to work for and won’t outlive.
· Principle Number 4: Pay forward both the wisdom gained from following the principles and practices of the Founders and the wealth accumulated by following them.
· The corollary to Principle Number 4 is all that you need to secure a worry free retirement is the prudent use of money in the lifetime that precedes retirement. There is no need for 401(k)s, IRAs, or their equivalents—they subject you to the whims of the Behemoths that sell them and the Behemoth of Behemoths that regulates and controls them. There is no need to chase the highest returns and subject yourself and your money to the necessary losses that chasing returns guarantees.
Conclusion…
If 21st Century Americans follow the model laid down by the many generations that preceded us…
· paid off their mortgages and all other debt
· saved money in participating whole life insurance policies, and local credit unions
· locked in retirement savings—not investments— along the way
· taught their children to do the same
then maybe the people we send to Congress would follow the same principles and practices for We the People.
[1] I recommend not less than three years gross income to my clients and most find that surprisingly easy to accomplish.
Posted in Retirement | Tags: bank, banking, banks, creating wealth, credit, debt, financial, financial goals, insurance, insurance companies, interest, investing, investment firms, investments, managing personal finances, Money, peace of mind, Retirement, risk, s, saving, savings, wealth, whole, Whole Life Insurance, wisdom | No Comments »
What is EUREKONOMICS™?
March 31, 2010 | Author Dr Agon Fly
EUREKONOMICS™?
EUREKONOMICS™ is the unique 21st Century system for creating personal wealth and managing personal finances that the book Money Now, Money Later, Money for Life! How to Thrive in good Times and Bad describes in detail.
The EUREKONOMICS™ Promise…
EUREKONOMICS™ promises:
-
Freedom from debt
-
Ready cash to deal with life’s surprises
-
Income you don’t have to work for and you can’t outlive
-
A legacy to pay forward to those you care about
The Etymology of EUREKONOMICS™…
EUREKONOMICS™…
o gets its pizzazz from EUREKA—an exciting Greek word made famous by the scientist Archimedes who ran naked through the streets of Athens exclaiming EUREKA! (“I found it!”) after figuring out a particularly thorny scientific problem while bathing
o gets its power from economics— a discipline that creates wealth but falls short on the excitement meter and sends people running—for a different reason.
When these two words combine into EUREKONOMICS™ they bring new excitement to the process of creating personal wealth and new science to managing personal finances.
The “WHY?” of EUREKONOMICS™…
For the past few decades, the pundits, the government, Wall Street, and popular economists have narrowly defined Americans as mere consumers. To their way of thinking, Americans are pawns in an economic system that the Behemoths—big government, big financial institutions, big unions, big lobbyists like AARP, big community organizations like ACORN—designed to make Behemoths wealthy and powerful while restricting everyday Americans and their families to the role of consumers.
EUREKONOMICS™ changes all that. EUREKONOMICS™ teaches financial literacy, economic principles, and financial management practices and guides Americans on a safe and easy path to prosperity.
EUREKONOMICS™ re-endows the individual and the American family with the economic power and pizzazz to re-take control of the money that flows through their lives and re-invigorate the simple and powerful strategies that the Founders and Builders of America paid forward.
Jeffrey Reeves
EUREKONOMICS™ – Life Insurance Information On-line
March 19, 2010 | Author Dr Agon Fly
It’s 2010. You can find information about every conceivable topic by doing a simple search using any one of a dozen or so search engines: Google, Yahoo, Bing, MSN, etc..
Unfortunately, much of the information you find on any given topic is biased in favor of products you can buy on the listed web sites. Other information is only tangentially relevant and some is just plain silly.
Fortunately, there are sites that provide clear and unbiased information and descriptions of the products they promote. Finding them is not all that easy.
I recently discovered a site that has, in at least one category, done a superlative job of discussing the features and benefits of both whole life insurance and universal life insurance. I heartily recommend this enlightening discussion to you. You can find it at http://www.insurancespecialists.com/life-insurance/whole-universal/
I can’t vouch for the rest of the content on this site, but you may also want to look around to see if it addresses as clearly other topics that interest you . The site deals with a broad spectrum of insurance products and provides links to recognizable providers such as MET, GEICO, and Liberty Mutual. It also links to notable brokerage operations like eHealthInsurance, which represents leading companies such as Anthem BCBS, Aetna, Kaiser, Humana, CIGNA, Celtic, UHC and others.
Posted in Whole Life Insurance | Tags: aetna, anthem bcbs, cigna, ehealthinsurance, geico, insurance, kaiser, liberty mutual, MET, on line insurance information, uhc, universal life, whole life | No Comments »
What’s Over The Horizon? EUREKONOMICS™!
March 2, 2010 | Author Dr Agon Fly
The financial principles that have made America’s economy and people the envy of the world are clear and simple.
- In the Declaration of Independence:
“We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are life, liberty and the pursuit of happiness. That to secure these rights, Governments are instituted among Men deriving their just powers from the consent of the governed.”
- In the Constitution:
“We the people of the United States, in order to form a more perfect union, establish justice, insure domestic tranquility, provide for the common defense, promote the general welfare, and secure the blessings of liberty to ourselves and our posterity, do ordain and establish this Constitution for the United States of America.”
Liberty and the blessings of liberty are both the cause and the effect of America’s financial success. Liberty derives from the ability of individual Americans to engage in “the pursuit of happiness” and is sustained by their success in doing so.
The ability to succeed in this elemental pursuit that is the foundation of America’s success and the success of its citizens is being challenged today by the failure of financial Behemoths, the incursion of the Dolts in DC into every aspect of the economy and many aspects of our individual lives. Just look at the headlines from this week alone:
| Obama opens health care summitPresident Barack Obama today opened a health summit
aimed at pushing through his stalled health care overhaul, saying reform is critical to boosting the struggling U.S. economy and emphasizing coop… |
| Home prices fall unexpectedlyHome prices dipped unexpectedly in December,
but the annual rate of decline slowed, according to Standard & Poor’s/Case-Shiller indexes. The S&P composite index of home prices in 20 metr… |
| Number of 2010 bank failures climbs to 20The Federal Deposit Insurance Corp. (FDIC)
shut down four banks late last week, bringing the number of U.S. bank failures for the year to 20. The FDIC took over La Jolla Bank, FSB, in La… |
| Foreclosed, delinquent mortgages reach record highThe proportion of U.S. mortgages
in foreclosure or at least one payment past due reached a record high during the fourth quarter, according to industry data provided by the Mortgage Bankers Associa… |
| Fed raises discount rate to 0.75 percentThe Federal Reserve said it will
raise the interest rate it charges banks for emergency loans in order to improve financial market conditions. The rate will be increased from 0.50 percen… |
EUREKONOMICSTM lets you create wealth and manage personal finances regardless of bubbles bursting, markets crashing, Behemoths bumbling, or the Dolts in DC deceiving. EUREKONOMICSTM embraces the founding principles of America’s greatness and molds them into a money management model that every American can easily follow without sacrificing lifestyle or falling prey to the failed financial model that has brought America to the brink of bankruptcy.
What exactly is EUREKONOMICS™ and how does it help you create wealth and manage your personal finances?
EUREKONOMICS™ is a wealth creation and personal finacial management model that guides you as you lay your financial foundation with money that you control, and allows you to effectively…
- manage and eliminate the indentured servitude that derives from your debt
- deal with life’s surprisingly unsurprising surprises, which crop up every day
- secure your retirment with an income you don’t have to work for and you won’t outlive
- create a legacy of wisdom and wealth for those you care most about
The secret that allows EUREKONOMICS™ to serve 21st century Americans so well lies in its foundation. Just as the devastating earthquakes in Haiti and Chile demonstrate how weak foundations create havoc and death and solid foundations save lives. Having a solid foundation of money that you control helps you avoid the devastation of financial earthquakes.
As you gaze over your shoulder and down the path at the receding horizon of the 20th century, the distress and damage the financial model we call the Debt Paradigm has created litters the way. The financial model that let Americans live happily and contentedly in control of their finances and their futures in the middle part of that century lies beyond the horizon. During the past decades it morphed into a model that separated Americans from control their money in the names of credit, investing, and returns – the Debt Paradigm.
EUREKONOMICS™ puts you back in control of your money without changing your lifestyle or pinching your budget.
- EUREKONOMICS™ allows you to comfortably make simple and painless changes in the way you create wealth and manage your personal finances.
- EUREKONOMICS™ show you how to build a foundation that can survive earthquakes, tsunamies, Wall Steet’s serpents, and the Dolts in DC.
- EUREKONOMICS™ advocates for the time tested strategy of saving money in the financial products and institutions that made America’s economy the envy of the world.
- EUREKONOMICS™ reintroduces and reinvigorates the most powerful, flexible, and versatile financial product ever introduced into any economy in any century - participating whole life insurance.
It’s easy to fall back on worn out shibboleths about increasing rates of return, the market always coming back, the fear of inflation, the promise of unrealizable growth, and so on. EUREKONOMICS™ talks about guaranteed rates of return, never losing money, eliminating debt without jeopordizing lifestyle, minimal or no interest loans with no applications needed, ready cash when life demands it, a retirement that is truly secure that you won’t outlive, and leaving some wisdom and wealth behind when you die.
What’s on your horizon? You choose.
Visit www.youBEthebank.com. Click on the Find an Advisor tab above to contact a Money for Life Guide and learn how you will benefit from EUREKONOMICS™.
Posted in Money, Personal Financial Management, Retirement | Tags: bank, banker, banking, banks, behemoths, blessings of liberty, credit, debt, derivatives, economy, financial, financial principles, financial success, inflation, interest, investing, investments, legacy, liberties, Money, Retirement, s, saving, savings, security, wealth | No Comments »
The Foundation Of EUREKONOMICS™…
February 27, 2010 | Author Dr Agon Fly
There is much talk in Washington suggesting that the Federal Government should take over businesses and social programs based on the assumption that…
- equality of results is essential to the success of everyday Americans
- equality of opportunity – “the pursuit of happiness” – is inappropriate for the 21st century
An economics professor once faced a group of students that insisted that equality of results, not equality of opportunity, would create a better society and economy. They insisted that an economic model of big government, big union, and big bureaucracy for redistributing wealth, like the one the Obama administration seems to be promoting, would work better than and that promoted by the Founders. They believed that such a model would create a society where no one would be poor and no one would be rich – a great equalizer.
The professor then said, “OK, we will have an experiment in this class based on a plan by which big government redistributes the wealth of the country to create equality among its citizens. In this class – our country for this experiment – grades are the wealth. We will average all of your individual grades and everyone will receive the same average grade. You will all be equal. No single student will fail.”
The class agreed to the experiment. After the first test, the professor averaged the grades of all the students and everyone got a B. The students who studied hard were somewhat upset while the students who studied little were happy. However, all of the students accepted the outcome and felt the experiment proved the case for redistribution.
As the second test rolled around, many of the students who studied little studied even less and the students who studied hard decided they wanted a free ride too so they studied less. The second test average was a C-!
No one was happy. Doubts about the efficacy of the program crept in.
When the third test rolled around, the class average was F. The scores never increased after that. Bickering, blaming, and name-calling created hard feelings. The professor was demonized. The students, disincentivized to achieve at a high level, would not study for the benefit of everyone else. Every single student failed.
The professor demonstrated to the students that redistributing wealth – grades in this case…
- failed to create benefits for any individual student
- penalized every student
The experiment demonstrated that a socialist society would also ultimately fail. We have seen the results of these kinds of governments many times over during the past one hundred years in failed socialist countries around the world. When the reward is great, the effort to succeed is great.
“When government tries to make everyone equal instead of assuring that everyone has equal opportunity, government imprisons individual liberties, shackles incentive, and no one can succeed.”
- Dr Agon Fly
As the late Adrian Rogers said, “you cannot multiply wealth by dividing it.”
EUREKONOMICSTM rests on the solid principles laid down in the Founding Documents and the two hundred fifty years of the demonstrated success of free enterprise that transformed America and other free societies into economic, social, and moral leaders.
These principles have endured, successfully overcome abuses along the way, and currently recognize the failures in the system that need attention…
- Some businesses grew and prospered on the backs of slave labor but failed for the same reason.
- Some businesses abused capital and took advantage of workers, and free enterprise America corrected for these errors by creating competing businesses that honored the work of their employees.
- Unions began as advocates for employees and morphed into empires that exploit their members.
- Groups like Acorn and AARP masquerade as advocates for members but act in their own interest or as the pawns of political groups.
- Elected officials seem to lose their moral and ethical compasses as well as the memory of who elected them once they achieve office.
EUREKONOMICS(TM) – The History of Money by Carlos Lara
February 7, 2010 | Author Dr Agon Fly
There are few economists and economic writers that can clearly articulate complex economic concepts as well as L. Carlos Lara and the other members of the United Services & Trust Corporation. Here is an historical and factual discussion of…
Sound Money
In-Depth by: L. Carlos Lara | Friday, February 5, 2010
My thoughts on the subject of sound money, of course, are not original. They have been guided here by my own private study of writers of a unique school of economic thought. These great thinkers, to whom I refer, can be traced to Salamanca, Spain as early as the 15th century. Later they were found in Austria, but now are centrally located here in the United States. These economic theorists have at their core of thinking the principles of scarcity and choice. More importantly, they believe that economic value is subjective to the individual. These concepts, when used in the thinking process, provide the ability to see the world and especially the market economy in a uniquely different way from all other schools of thought. What becomes apparent by utilizing this way of thinking is that an idea has crept into our world that is destructive. Ludwig von Mises, one of the greatest of these economists, believed that this idea was evil and that no one should give in to it. He felt, as most Austrian economists do now, that fighting against this idea was a responsibility each one of us had to society because the stakes are extremely high. They are nothing less than the future of human freedom. (1.)
Young or old, our own education is where our fight must originate. However, learning how the world works according to this manner of thinking is a different type of education not earned in the classroom. In fact, this type of education is an individual endeavor and each of us must decide when we really want to take it up in earnest. What most disappoints us is that even after we decide to take up this intellectual battle sometimes our understanding comes slowly. Painful experiences, for example, can be some of our greatest teachers, however, it is not until these experiences are combined with a sound body of knowledge and historical evidence that an epiphany occurs. As for me, I am “too soon old, too late smart.” (2.) Nevertheless, it is never too late to begin.
To understand what is meant by sound money, we need to examine a bit of history. There are a few unique characteristics about money that I suggest we revisit in order to obtain a full perspective on this matter especially in light of our current economic environment.
The Genesis of Money
First of all, money did not come into being by some sort of agreement, or social contract. Money comes into being freely in the market place by trial and error. This happens as individuals begin to facilitate the process of exchanging goods with one another.
In the days of bartering (what economists refer to as “direct exchange”), problems arose when people attempted to exchange two different commodities. For example, if you had butter to exchange for beef, but no one wanted your butter, then you obviously had a problem without a solution. This exchange problem, because it came up quite frequently, forced society to search for a commodity to serve as a temporary exchange, or what economists refer to as an “indirect exchange.” Obviously, the commodity society ultimately selected for the indirect exchange had to be highly marketable. It may have been eggs, milk or bread, but, whatever it was, society eventually employed it as money.
Over the course of time the one medium of exchange that won over all other forms of money has been gold. Why gold? Because it has features no other commodity has. For example, it is divisible. Imagine trying to divide butter to pay for something. Gold, on the other hand, can be cut up into tiny pieces while retaining its prorata value so that money calculations can be made. By making gold in either bullion bars or coins, it becomes very portable and very convenient to use.
There is also the fact that from time immemorial gold has been valuable as jewelry principally because of its decorative beauty. In addition to this, we must not forget that gold is limited in its supply. It is mined from the ground at great expense in order to get more of it. But that is not all; gold is extremely durable and non-perishable. It can last for centuries. And finally, gold is homogeneous. It can be made to look exactly like another of its kind, as in gold coins. For these reasons it is not surprising why historically gold has been the money of choice. No doubt, gold is sound money.
This brings up two extremely relevant questions.
What is the right quantity of money? How much should it grow?
These questions have been asked by economists for centuries. The struggle continues. As we well know, there has been an astronomical increase of the money supply by the Federal Reserve Bank during the last four decades and especially last year. The general public, I believe, innately knows that all this new money creation is not a good thing for society. I also am also convinced that only one man in a million knows how it is done and why. To help understand this and know for certain what the right answers to these two questions are, we need to try asking ourselves this question: What should the optimum amount of canned peas be in society? Or, what is the optimum amount of fresh turkeys, or watermelons, or cattle, or whatever commodity comes to mind. The point is that the more consumable goods we have in society the better it is for everyone. In fact, more goods in the market help bring down prices and our standard of living goes up. However, this is not the case with more money. An increase of money provides no social benefit whatsoever.
Why no benefit? Because money cannot be eaten or consumed. Money, remember, is used for exchange purposes only. Once a commodity is in sufficient supply as money, no further increases are needed. Any quantity of money is optimal. The more mining of gold for uses other than money, such as jewelry, is perfectly fine, but more gold as money is not needed. An increase in money only dilutes its value. And, it is this last point–dilution–that represents the sum total of our money problems today.
Legalized Counterfeiting
To put my points into perspective, imagine a free market economy where gold is the money. In such a society one can acquire the gold in one of three ways– mining, selling, or as a gift. In each one of these methods of acquiring gold, the principle of private property is strictly honored. However, let’s suppose an individual decides to take advantage of gold’s homogenous feature and creates an enormous amount of counterfeit gold coins for himself. This act will create a permanent destructive rippling effect throughout society. In addition to its fraudulent method of acquiring the gold and undermining the foundations of morality and private property, the counterfeiter will also increase the money supply substantially when he spends the money in the marketplace. With more money in supply, its value will necessarily decrease and drive up prices on all goods. This, of course, is price inflation. It is very destructive because it impoverishes the whole of society, while the counterfeiting continues. The counterfeiter obviously benefits immediately by getting the money first, as opposed to the later recipients of the money, or those who never get the money at all…usually the average hard working citizen. These good people wind up paying dearly because they are left to deal only with the increased prices on all the goods in the market place. For them the cost of living simply rises year after year, and no one can provide an explanation as to why it happens. For this reason, Austrian Economists have always said that the inflation process (the increase of the money supply), is a form of indirect or invisible tax on society. This entire counterfeiting scheme is cleverly hidden.
We are fortunate that private counterfeiting has really never been much of a problem in modern times. The shaving of the edges of gold coins, the customary method of counterfeiting, ceased when milling was developed. However, when counterfeiting is mandated by government, when it is legalized, we have a serious economic and moral problem for all of society. Historically, there have been two major kinds of government mandated counterfeiting-(a) Government paper money and (b) Fractional Reserve Banking. This is precisely what we have today in our United States, but not just here-now it is all over the world.
“There is in all of us a strong disposition to believe that anything lawful is legitimate. Thus, in order to make plunder appear just and sacred to many consciences, it is only necessary for the law to decree and sanction it.” (3.)
Frederic Bastiat
1801-1850
The American public, in just this past year, has become increasingly more informed in the absurd concept of printing dollars on a printing press, and then spending them as a solution to stimulating the economy. They realize that a flood of dollars into the market only devalues the currency. However, a much more insidious and camouflaged feature of our banking system is Fractional Reserve Banking. If you have the time, you can learn how that works by watching this educational video “The Mystery of Banking.” In the meantime, the most important thing to comprehend and remember is that so long as government paper money is redeemable in gold, it is as “good as gold” and can be said to be sound money. Our paper money, however, has not been linked to gold since President Roosevelt made that linkage illegal in 1933. Since that time, the continuous expansion of the money supply, mandated by government through its Federal Reserve Bank, has devalued our money by 97%. There seems to be no end in sight.
Message of Hope
Obviously, we must re-link our dollar back to gold. By doing so, we would all own, by assignment, property rights to a unit weight of gold. If our dollars are redeemable in gold, all banks would automatically be 100% reserve banks. More importantly, inflation would stop because gold cannot be inflated.
Next, we must privatize all banking, thereby abolishing government’s monopoly over our money. If step one and two can be accomplished, then there would be no need for the Federal Reserve. Step three would be to close it down. If that happened, the size and expense of government would decrease immensely; our taxes would go way down, our savings-which fuel investment-would go up.
Think this is too big to accomplish? You would be amazed at the literally hundreds of thousands who support this solution. This support has been fueled in large part by the Mises Institute, the Foundation for Economic Education and other such private institutes, funded with no connection to powerful elites. These centers of education have become the places for learning the economic principles that our children and grandchildren need to be taught. They continue to fan the flame of liberty by publishing articles, scholarly journals, books, by holding conferences, and teaching students. Because of their efforts spanning more than 60 years here in America, there is faith, hope and expectancy at these independent scholarly institutions that a dramatic change in the political and social landscape is right around the corner, a belief that a great change can take place overnight when the ideological conditions are right. These institutions continue to provide the educational fuel to keep the fire burning. Every conscientious citizen should join and become a member of one.
Remember, we do not need to convince the entirety of the United States. With only 10% of the population supporting this solution, public policy can actually change. In the end, all economic policies are ultimately dependent on the views of the general public and our choice is final! America was founded on the principle that the masses, the people, determine the course of our history, but this movement for change must start with the individual–that means you and me.
L. Carlos Lara is President of United Services and Trust Corporation, a Management Consulting Firm specializing in Business Consulting, Corporate Trust Services, Corporate and Private Seminars including Speaking Engagements.
Notes: ___________________________________________________
1. Special credit to Ludwig von Mises, Austrian Economist born 1881 Lemberg, Austria-Hungary, died 1973 New York City, NY. Noted for Praxeology. The Science of Human Action. Also, special credit given to Murray N. Rothbard, Austrian Economist, 1926-1995, student of Mises, for all information in this article.
2. From the title of the national best selling book Too Soon Old, Too Late Smart, Thirty True Things You Need To Know , by Gordon Livingston, M.D. Copyright 2004 by Gordon Livingston published by Da Capo Press
3. Frederic Bastiat 1801-1850, The Law-the classic blueprint for a just society. Republished by the Foundation for Economic Education, Irvington-on-Hudson, New York
Copyright © 2009-2010 United Services & Trust Corporation. All rights reserved. Repreinted with permission.
Posted in Money, Personal Financial Management | Tags: austrian economists, bank, banking, banks, credit, economic theorists, economics, economy, liberties, ludwig von mises, Money, sound money | 1 Comment »
EUREKONOMICS! Home Equity & Cash Value Life Insurance…
January 10, 2010 | Author Dr Agon Fly
Over the past decade or so, the fallacy that home equity should be “harvested” by means of mortgage refinancing or home equity loans and converted into equity in some other investment has been foisted upon Americans as a legitimate financial strategy.
The most common presentation of these schemes suggests that home equity should be redirected into what some advisors call ”investment grade life insurance.” Other schemes suggest turning equity you control into annuities, real estate, gold, mutual funds, or some other investment – aka speculation – that you do not control.
The consistent mantra of the promoters of this idea is, “That’s what the wealthy do.” They want you to believe that following their advice is the path to wealth that those who were already wealthy followed.
BUNK!
Each of these demonstrably unsuccessful and failed schemes relies on the flawed principle that you should convert and asset – over which you have control – into cash. Having done that, you should then give the cash to the financial advisor/planner that recommended the transaction who will then invest your money into whatever financial product or service s/he is promoting and earning commissions from selling or fees for managing.
The results from this so-called strategy are apparent in the home foreclosures many Americans face today. They also appear in the non-performing, under-performing, and money-losing investmentsinto which the advisors often directed the American consumer’s home equity dollars.
Average Rate of Return…
The promotional basis for most of these schemes is the mythical Average Rate of Return. The average rate of return shell game uses illustrations that show a consistent seven to eight percent return over multiple intervals – usually annual. A typical $1,000 investment example used by this scheme with an average rate of return of 8% might look like this:
- Year 1 – $1,000 x 8% = 1,080
- Year 2 – $1,080 x 8% = 1,166
- Year 3 – $1,166 x 8% = 1,260
- Year 4 – $1,260 x 8% = 1,361
- average rate of return = 8%
- actual compounded annual return = 8%
However, even though this illustration shows an average rate of return of 8% over a four year period, it is unlikely, if not impossible, to earn an actual8% year upon year compounded return. (Just ask one of Bernie Madoff’s clients if you don’t believe that.) A more honest illustration of an average 8% return might look like this:
- Year 1 – $1,000 x + 40% = 1,400
- Year 2 – $1,400 x + 22% = 1,708
- Year 3 – $1,708 x - 15% = 1,450
- Year 4 – $1,450 x - 15% = 1,233
- Average rate of return = 8%
- Actual compounded annual return = 5.38%
Even though the returns in the gaining years far outweigh the negative returns in the losing years, the average rate of return is still 8% while the actual compounded return is about 5.38% It’s possible to show a much lower actual compounded return with a little bit of creative arithmetic, but this is enough to make the point: average rate of return is always deceptive, is always hypothetical, and is never guaranteed.
The fact that the returns on the investments recommended by the harvesting proponents are not guaranteed or even predictable compounds the primary deception in these schemes, which is that real estate values always move upward.
Granted, over the few years before the real estate bubble burst, the values assigned to real estate moved predictably higher. However, the assigned values were often determined by the amount of money an advisor suggested the owner harvest and invest in the financial product s/he had for sale. Add to that the painfully unethical behavior of the mortgage industry granting loans to enhance the compensation of executives and brokers in that industry and the outcome was predictable.
The wholesale failure of financial Behemoths like Freddie, Fannie, Lehman, and so on is proof positive that the actual values of real property were artificially inflated to accomodate harvesting equity and other schemes designed to move money from the pocketbooks of American families into the coffers of corrupt Behemoths.
EUREKONOMICS! – The Return of Common Sense
Let’s turn the equity harvesting scheme on its head.
First, I have known many wealthy people. I have known some who harvested equity from their homes and business properties. I have known not even one that becamewealthy by harveting equity. However, I have known some that became paupers by doing so.
The wealthy people that have commented on or reported about this concept have harvested equity only when they could guaranteethat the use to which they put the money converted from equity would return more than the cost of converting the equity. In their decisionmaking, it was always more important to avoid or minimize risk than to hope for returns. They used harvested equity to get richer without risk, not to get rich in the first place.
Conversely, even considering minimal risk investments, few of the wealthiest people I have encountered over the past four decades of my career would ever consider placing a mortgage on their paid-for personal property, least of all their residences. They worked diligently for decades to pay off their mortgages and protect their personal assets from business failures and legal actions. Why, in God’s name, would they ever want to put those assets at risk?
What common sense program would ever warrant taking the chance that the family home would be lost to some investmentthat promises only that it promises nothing. What about a greater return? Think about it. Is there a rate of return that is worth more than peace of mind, carols around the family Christmas Tree, or candle lighting at Hannukah?
If you would have a strategy regarding equity harvesting, why not consider harvesting equity from a source that you control and using it to pay off your mortgage and eliminate interest payments to the Behemoths? Why not first build and then harvest the equity from your cash value life insurance policies, use it to reduce and eliminate debt to others, and repay the low or no cost policy loans so you can do it agian and again? Why not learn how to BE the bank?
This is the inverse approach to risking everything you own to get an impossible maybe. It is a way-certain to reduce and eventually eliminate debt-to-others and guarantee that the equity you build in your home, your other personal property, and the cash values in your life insurance policies remain under your control.
Finally, the most powerful argument for this approach is that it has been tried, tested, and proven over many lifetimes and generations. It works in good times and bad. It allows you to grow rich without risk and secure wealth without worry.
Posted in Legal, Ethical, Moral, Money, Personal Financial Management, You BE the "Bank" | Tags: annuities, average, behemoth, financial, financial strategy, gold mutual funds, home equity loans, home foreclosures, inflation, investing, investments, life insurance, Money, mortgage, mortgage refinancing, mortgages, rate of return, risk, s, speculation, wealth | 2 Comments »
George Washington On EUREKONOMICS™…
December 13, 2009 | Author Dr Agon Fly
Joseph J. Ellis in His Excellency George Washington [Vintage books, NY] writes that the Father of our Country, unlike Thomas Jefferson and others from the elite class of the day, demonstrated “…concern for his own economic interest…” and adds paranthetically that “Perhaps this is the underlying reason Jefferson and so many other[s]…would die in debt, and Washington would die a very wealthy man.” p47 It may also be why George Washington was chosen to be our first President. Early America knew that looking out for our country’s financial well being was a primary duty of our Presidents.
Washington, unlike many of his peers, chose “…to act in a direct and personal fashion to recover his own independence from…” the British government and their elitist allies in business and commerce who treated Americans with a certain amount of disdain and ignored their cries for justice and pleas for liberty.
How did Washington unfetter himself from the British elite? The Ellis biography describes it this way: “Starting in 1766 he abandoned tobacco [a British obsession at that time] as his cash crop at Mt. Vernon…From now on he would grow wheat, construct his own mill to grind it into flour, and sell the flour in Alexandria and Norfolk…” He also “built his own schooner…to harvest the herring and shad in the Potomac and sell the fish locally…He…purchased a ship…to carry his flour, fish, and corn to such distant markets as Lisbon…he developed a full scale spining and weaving operation…” he “…made it quite clear that [he] was determined to defy the pattern of indebtedness [to the British Behemoths] that swallowed up…” his contemporaries and that “he was hell bent on freeing himself from the clutches of…” the British Behemoths of the day. pp 52, 53
What the Father of America and the other Founders discovered and understood in 1766 was that liberty and freedom cannot be had by people that are subservient to government or to the business, union, and lobbyists that maintain symbiotic relationships with government. George Washington knew Eurekonomics in the terms of his day. Americans today do not.
Americans today have been misled and misinformed about almost every aspect of wealth creation and personal financial management. Americans today need to relearn what the Founders knew about money; they need to practice what the Founders practiced when they created wealth and managed their personal finances.
Americans today are blessed with advanced financial products that the Founders were just beginning to develop. In particular, Americans in the 21st century have access to the most powerful, versatile, and flexible financial product ever conceived: participating whole life insurance, which allows today’s Americans to control the money that flows through their lives.
Remember the Golden Rule: Whoever controls the gold makes the rules.
To the extent that others – especially governments – control the money that flows through the personal economies of individuals, to the same extent those others deny individual liberties.
“Individual liberties create and nurture free markets. Free markets encourage and nurture healthy personal economies. Limiting individual liberties necessarily damages personal economies. Damaging personal economies necessarily limits individual liberties.” – Dr Agon Fly
Think it through. Who among us has the greatest liberty? Is it not those who control and are good stewards of their personal economies?
- The construction worker that lays aside extra ready cash to carry him through a tough winter or a downturn in new housing construction
- The nurse that adds a specialty to her RN degree and makes herself more employable even during the bad times
- The small business owner that reduces inventory and overhead at the first sign of reduced sales to insure the jobs of his or her employees
- The entrepreneur that nurtures his business to create personal wealth
- The retiree that opts to reduce current income to accommodate a longer life span
Unfortunately, many Americans have been led astray, have relinquished control of their money to investment advisors, qualified retirement plans like 401(k)s, and have opted out of actively creating wealth and managing their personal finances.
Beginning during the Carter administration and continuing during the Clinton, Bush, and especially the Obama Presidencies, the federal government, financial entities, and social institutions seized control of more and more of the personal finances and economies of individuals and families based on the faulty premise that BIG knows best. The effect of these decisions on personal economies is apparent today in the painful rate of unemployment, the high foreclosure rate, falling investment values and returns, and the tsunami of bankruptcies.
However, in the past few years, an old and thoroughly proven idea – that each American and each American family can and should keep control of the money that flows through their lives – has risen like a Phoenix from the ashes of a conflagration of disinformation and misinformation that started in the 1970′s.
We call this resurrected idea Eurekonomics!
Eurekonomics aims to show Americans how to create a personal economy that lets them…
- Thrive in good times and bad
- Grow rich without risk
- Secure wealth without worry
by taking advantage of the power, flexibility, and versatility of participating whole life insurance.
Here is a list of the 13 Immutable Laws of Eurekonomics that the Founders knew and followed. Modern America has been taught that these laws are no longer valid and that we should trust the government, the financial Behemoths, the unions, AARP and its ilk…NOT!
1. The Law of Liberty: When others – especially governments – control your economy, they deny your personal liberty.
2. The Law of Economic Know-How: Successful personal economies rely on knowledge of personal economic principles, understanding the application of those principles to one’s personal situation, and wise decisions about how and when to apply them.
3. The Law of the Behemoths: The economic system in the modern world champions the economies of Behemoths – big government, big unions, big bureaucracies, and big businesses – at the expense of individual personal economies.
4. The Tax Law: The government always writes tax law to its own advantage. Tax deductibility is a trap.
5. The Foundation Law: Every successful personal economy rests on the foundation of accessible cash money and participating whole life insurance policies are the best product available for that foundation.
6. The Law of the Four Pillars: There are four, and only four, measures of successful personal economies: freedom from debt, ready cash, secure income, and a legacy.
7. The First Law of Wealth Creation: You must manage cash flow to create wealth.
8. The Second Law of Wealth Creation: You cannot buy wealth.
9. The Law of Debt: Debt is never good. It can be useful and important, but it is never good in a personal economy. Borrowing money from others is NOT how the rich do it.
10. The Law of Speculation: What conventional wisdom refers to as an investment is really a speculation according to Benjamin Graham. Speculation is gambling.
11. The First Law of Investing: Investing is appropriate only for a very small number of Americans.
12. The Second Law of Investing: If you invest, invest only from savings, never from income.
13. The Law of Returns: Average rate of return, whether illustrating past performance or future results, is useless in managing a personal economy. The actual rate of return – year after year – is the surest, safest, and fastest way to wealth.
For more information contact Jeffrey Reeves or visit www.youBEthebank.com
Posted in Money, Personal Financial Management | Tags: debt, economic interest, economics, economy, financial, indebtedness, investing, investments, legacy, liberty and freedom, Money, s, saving, Taxes, wealth | 2 Comments »
EUREKONOMICS™ Considers “Financial Planning” An Oxymoron…
November 30, 2009 | Author Dr Agon Fly
The Certified Financial Planner Board of Standards stated mission is “to benefit the public by granting the CFP® certification and upholding it as the recognized standard of excellence for personal financial planning.” The CFP Board’s web site discusses and defines financial planning as “the process of meeting your life goals through the proper management of your finances.”
Here’s the contradiction. Planning is one thing. Management is another thing altogether. Planning may be a prerequisite to managing personal finances but it is not the process itself.
Planning is a map-making process. Map-making is done from an aloof and uninvolved position using esoteric engineering tools to describe real terrain in abstract terms. Managing is what you have to do when you come to the river on the map and discover that there is no way to cross the turbulent waters at that particular point because last week’s flood washed away the bridge on last month’s map.
Financial planning, as described and defined by the CFP® training program, is akin to map-making. The planner is not actively involved in the “the process of meeting [a clients] life goals through the proper management of [their] finances.” The planner’s role is to recommend and sell financial products and advisory services that may or may not actually support the goals of the client during the management phase.
There are, of course, ethical standards to which each CFP® must adhere. There are also practice standards that the Certified Financial Planner Board of Standards, Inc. and other regulatory powers impose and enforce. Add to that the burden of the standards and rules of conduct imposed by bureaucratic regulatory agencies such as FINRA and these collectively impose a set of “established norms of practice” on the planner that often restrict the options the planner may present to the client.
The restrictions may not overtly deny a client the best option, but often direct the options along the “established norms of practice” and thereby deny the possibility of any other better-suited alternatives.
None of what I wrote above intends to demean either the designation or practices of those who legitimately profess themselves to be financial planners. It does intend to clarify that the entire process of planning and managing personal finances is shrouded by an imposing oversight structure and that this structure does not always provide Americans with the most appropriate personal financial advice or products.
Case on Point…
Over the past decade, I have met with and trained hundreds of insurance and financial advisors in life insurance and Series 6 pre-licensing, and a wide variety of continuing education topics including ethics.
- Almost every one of these professionals assumed that investing is an appropriate – perhaps essential – part of every American’s personal financial program – an idea that Behemoths in government and on Wall Street slowly injected into the American psyche over the past 30 years.
- One-hundred percent of them assumed that contributing to a 401(k) or its equivalent was the starting point for every personal financial management program – another idea that slithered into our collective psyche in just the past 20 odd years.
- Fewer than one in ten of these – ahem – professionals (not referring specifically to CFPs®) understood the most basic concepts relating to participating whole life insurance, mutual insurance companies, or even the life insurance products they sold most – universal life insurance.
- Only a handful understood the most elemental economic principles that clearly indicate that participating whole life insurance is the best and safest foundation for virtually every personal financial management plan.
One can more easily grasp the reasons for this strange set of facts when one reviews the history of personal financial management in America since 1974, a history that illustrates the slow erosion of control of personal wealth from the pond of individuals to the oceans of government and Wall Street.
Conclusion…
I am often accused of being “down on” financial planners. Not true. I am down on lemming-like robotic adherence to “established norms of practice” that have misled Americans into a financial swamp that consumes both their money and their liberty while denying the validity of more conservative and viable financial management strategies.
Financial planning is an oxymoron when it denies the use of planning tools and strategies at the expense of individual wealth and liberty.
by Jeffrey Reeves youBEthebank.com
Posted in Legal, Ethical, Moral, Money, Personal Financial Management, Whole Life Insurance | Tags: certified financial planner, economics, ethics, financial, investing, investments, liberties, life goals, managing personal finances, Money, oxymoron, personal financial planning, wealth | 3 Comments »
EUREKONOMICS™ On Whole Life Insurance and Universal Life Insurance Fees
November 25, 2009 | Author Dr Agon Fly
I recently received this question from Christine:
Hi Jeffrey,
I hear those whole life policys have huge fees, what are all the fees?
Here’s my initial answer…
Great question, Christine!
Unfortunately your question implies a common misunderstanding so lets clarify that issue first. Clarifying things may be enough, but if it isn’t feel free to question or comment further.
Whole life insurance policies have no fees associated with them other than a small (usually less than $60) “policy fee” that some insurance companies still charge when an application is submitted. Whole life policies do, however, have three variables that affect their financial performance…
- mortality, which is the guaranteed cost of the insurance, which guarantees the death benefit. If the insurer incurs extraordinary claims activity the non-guaranteed dividends are affected but the guaranteed elements are not
- administration, which are variable costs incurred managing the everyday business of the company
- actuarial, rate making, underwriting, general management
- policy issue, policyholder services, and ongoing accounting
- agency management, marketing, commissions, etc.
- investment returns, which pay for administration and create…
- the guaranteed cash values
- the non-guaranteed dividends
Whole life insurance policies have been manufactured and sold in America for over 150 years. These three variables are well understood and very closely managed. That allows mutual companies like Mass Mutual, New York Life, Ohio National Life and several others to perform consistently and predictably decade after decade, pay consistent dividends even during market crashes like the ones we have experienced this decade, and maintain the highest financial ratings possible for decades on end regardles of the performance of the general economy or the financial sector.
On the other hand, Universal life policies (first introduced into the market by stock brokers in the early ’80s), especially variable UL policies (introduced in the mid to late 90′s), and indexed UL policies (first introduced about 2002), have what you refer to as “huge fees.” While whole life policies guarantee the three major elements of life insurance contracts – premium, death benefit and cash value – UL products do not.
The fees in UL policies consist of…
- annually increasing cost of insurance (guaranteed to be level in whole life policies)
- variable administrative costs, which can increase (whole life policies control these costs so they only affect non-guaranteed dividends)
- cash accounts, in which the insurance company shares none of the risk, that decrease as well as increase (whole life policies guarantee these will increase every year)
Because of these factors, these policies are not recommended by the Eurekonomics’ Money for Life Model. That’s not to say they don’t have a place in the financial lives of some Americans. They may. However, they are not apporpriate as the foundation of one’s personal wealth and finances. Whole life insurance is.
Posted in Money, Whole Life Insurance | Tags: economy, financial, financial performance, financial sector, insurance companies, investing, investment returns, investments, Money, policies, risk, universal life, wealth | 1 Comment »
EUREKONOMICS™, The FDIC, & The Money For Life Model…
November 25, 2009 | Author Dr Agon Fly
Someone recently asked about FDIC insurance for the money in the “banks” suggested by the EUREKONOMICS’ Money for Life Modelfor creating wealth and managing personal finances, which recommends that each American should act as his/her own banker. (Some advisors refer to these as “family banks,” “infinite banks,” or “personal banks.” The use of the term “banks,” “banking,” and “being your own banker” is analogous to how one creates wealth and manages personal finances rather than a direct reference to commercial or chartered banks.)
The answer is…
You can use any savings product – or you can also use your mattress – as your “bank.” So, if you choose an FDIC insured product that’s where the insurance comes from.
However, over the past 100 years participating whole life insurance has proven to best serve those who follow the Eurekonomics’ Money for Life Model for creating wealth and managing personal finances. When your money is in participating whole life insurance, it is in the most secure place possible. All state insurance departments require that insurers maintain reserves adequate to cover the death benefits of the policies they have in force and those death benefits are significantly higher than the cash values. In addition, each state maintains a guarantee fund similar to the FDIC, which guarantees some or all of the cash values in existing policies in the event the insurer fails.
By the way, no American ever lost any of the guaranteed cash value of a participating whole life insurance policy, while many Americans have lost money that was held by commercial banks and especially money that was held in speculativeproducts like mutual funds, ETFs, managed accounts, etc. – aka casinos.
PS – I actually know a man that uses a cigar box hidden under a floor board as his bank. His pit-bull’s bed is over that spot. However, we don’t recommend using your mattress, a tin can in the back yard, or a cigar box and pit-bull as your “Bank.”
EUREKONOMICS™ Or A Steady Diet of Financial Misinformation..You Choose
November 21, 2009 | Author Dr Agon Fly
During the last half of the 20th century and the first decade of the new century there have been hundreds – perhaps thousands – of the latest and greatest diet books, diet infomercials, diet clubs, diets that are delivered to your door, diets you can pick up at the store, even urban legends about cabbage soup diets. They all promise miraculous results.
Financial diets have come and gone just like the food diets. Sometimes it’s been…
- real estate trusts (REITS)
- oil and gas limited partnerships
- harvested home equity
- gold and other precious metals
- mutual funds
- on-line stock tracking and picking services
- ETFs
- financial planning (an oxymoron)
- managed money (remember Madoff)
- 401(k)s and their equivalents
- the list could go on for pages
However, just like the food diet fads, financial diet fads fade and disappear.
Just as the weight lost on food diets returns, the gains from financial diets are lost.
Eurekonomics is the centuries old, tried, tested, and proven system that lets you create and control your wealth.
Eurekonomics relies on principles and practices that support every successful personal economy anywhere in the world in any era.
Eurekonomics denies current conventional wisdom that chants the siren songs…
-
- you can have everything you need and want as long as you have enought credit – that means debt on your balance sheet
- tax deductions for retirement savings are in your best interest – ignoring the fact that the taxes you’ll pay on the investments you made could – and likely will be – much greater than the few dollars you save in current taxes
- some “adviser” from a Behemoth company, with credentials that restrict the options and choices she can show you, actually knows something other than what her Behemoth allows her to know
- that Behemoths have some aim other than increasing their bottom line and shareholder equity – as opposed to your best interest
- and on and on…
Discover and learn more about Eurekonomics. You will be glad you did.
Jeffrey Reeves, youBEthebank.com, ltd.
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EUREKONOMICS™ – How Whole Life Insurance Can Save Social Security
November 19, 2009 | Author Dr Agon Fly
Preamble…
There are hundreds – perhaps thousands – of legitimate uses for participating (par) whole life insurance.
Thoughtful and creative insurance and financial guides recognize par whole life as the most powerful, flexible, and versatile financial tool in the US economy. These enlightened guides use par whole life for applications as simple as fulfilling basic family needs, as complex as the most advanced estate planning and wealth management strategies, and for every imaginable personal and business financial reason.
The most advanced among these professionals follow – and teach their clients to follow the EUREKONOMICS™’ Money for Life Model for creating wealth and managing personal finances. The idea that par whole life could also help solve the financial challenges faced by the Social Security System sprouted from the fertile minds of this group of insurance and financial guides.
The Hypothesis…
The premise is simple; the US Congress would exercise its wisdom (hmmm – is congressional wisdom an oxymoron?) and pass a law that required the Social Security Administration to purchase and maintain…
- a ten million dollar ($10,000,000.00) par whole life insurance policy on each member of the House of Representatives upon election
- a fifty million dollar ($50,000,000.00) par whole life insurance policy on each member of the US Senate upon election
- a one-hundred million dollar ($100,000,000.00) par whole life policy on the President, Vice President, and Speaker of the House of Representatives.
These purchases would create an immediate death benefit pool of one billion two-hundred thirty-five million dollars ($1,235,000,000.00). The death benefit would be payable to the Social Security Trust Fund. The US Congress would not be able to get its greed and power motivated mitts on it, as they would be prohibited from accessing this money for the General Fund.
That’s not a lot of money in the grand scheme of things in Washington DC. However, since…
- the makeup of the US Congress is not static and there tends to be a bi-annual 25% turnover in both the House and the Senate due to retirement, lost elections, and expulsions for criminal or ethical reasons
- and turnover in the White House is guaranteed to occur at least every eight years
one could expect the amount in that pool to grow by about 12.5% each year. That means that the initial one and a quarter billion would become about 5 billion in twelve years, 21 billion in twenty-four years, 86 billion in thirty-six years, and over 350 billion in forty-eight years.
Here’s an even better idea. If every US Senator and US Representative had a term limit of twelve years, there would be 100% turnover at least every twelfth year or about 33% every two years . Then the $1,235,000.00 would grow, based on a conservative estimate, to over two trillion dollars in forty-eight years.
Now, if we inflate the amount of death benefit on new policies issued to the newly elected at the same rate we inflate the compensation and expense accounts of the US Congress, reaching a total of over eight trillion dollars in forty-eight years is a reasonable assumption. In addition, using the dividends from the par whole life policies to purchase additional paid-up insurance would compound the total death benefit even further and achieving death benefits of over twenty trillion dollars or more in forty-eight years is a reasonable expectation.
Moreover, since the actual death benefits that the Social Security Trust Fund receives would not be subject to the whims of the US Congress they could safely be used to purchase secured debt. The SSA would thereby retain the principle. This would create a secure future revenue stream for the SSA.
Finally, if the US Congress would allow the SSA to use just a small percent of the current payroll tax to purchase small par whole life policies on the 51,859,000 current Social Security Beneficiaries, then the Social Security System would begin to receive accelerated death benefits as these beneficiaries die and would become solvent that much quicker.
The Real Possibility
Of course, the possibility that the US Congress would actually act in the best interest of “We the people…” or that a scheme like this that might actually work or could overcome political power brokers is about as realistic as the 7.5% year upon year returns illustrated by some insurance and investment advisors for mutual funds and equity indexed universal life insurance policies.
However, if this scenario ever becomes reality, I want to be the agent that sells the policies.
Jeffrey Reeves, youBEthebank.com
EUREKONOMICS™ 101 – Grow Rich Without Risk, Create Wealth Without Worry
November 15, 2009 | Author Dr Agon Fly
Mystery…No. 5 Volume Is More Important Than Rate
Every major product in the financial services business – every type of mutual fund, annuity, variable insurance product, bank CD, treasury bill, note and bond – proudly trumpets its rates. If 2% is good then 5% is better. If 6% compounded is wonderful then 8% compounded is marvelous.
The rates these products advertise, however, are hypothetical. Rate, like the products it applies to, represents the hypothetical aspect of pure unrelenting risk. The only guarantee of touted rates is that they are volatile and vary widely…in other words, they only guarantee is that there is no guarantee.
The facts are:
- If you contribute to your capital base on a regular basis
- If the financial instrument you chose to protect your capital has a guaranteed rate of return
- If you are using it as a source of borrowed funds for your own purchases
- If you are recapturing the principal, interest and fees you would otherwise be paying to others
- If you are not losing the earning power of your money while you are using it
- Then volume – regardless of rate – becomes more important.
In other words, if you are managing your money the way banks manage money, volume is more important than rate.
Remember the refrigerator at $1,000.00. If you financed it yourself and paid yourself back at the rate of $100.00 per month plus 12% interest, you would recover the entire $1000.00 dollars in less than a year, capture about $50.00 in interest and have the refrigerator to boot. Does the 12% rate have great value here or does the recovered principal – volume – prove more useful?
Remember what Will Rogers said: “I’m not so much concerned about the return on my money as I am about the return of my money.”
Mystery…No. 6 “Conventional Wisdom” Is an Oxymoron and Tax Deductibility is a Trap
“If you do the same thing everyone else does then you’ll get the same results they do.” – Dr Agon Fly
During the recent bear market, some of the highest paid advisors and investors were able to brag only that their clients lost less than others’ clients lost. “I only lost 35%” is a bragging line. Hardly a single mutual fund showed a gain. 401k investments went down to less than half their original values in some cases. All of these results occurred by following “conventional wisdom,” the thinking that tends to dominate any given topic.[1]
The reality is that current financial thinking, planning, and practices are akin to driving your car by looking out the rear view mirror. You get a great view of where you have been but no perspective on where you are going. You could also say it’s like mapping; it gives you a two dimensional view of what might be in store but cannot tell you about the bridge that just washed out.[2]
Part of that thinking is that you should take advantage of every tax deduction possible no matter what. This is a trap. A client of mine follows this philosophy to the extreme. If there are two choices and one has a tax advantage over the other – even if both were tax advantaged – he always chooses the one with the current advantage.
The results have been demonstrably horrible. His 401k went down almost 80%. His earnings were so low that he lost almost $100,000.00 in the tax deductions that he pursued and his balance sheet is worse now than it was 5 years ago. He is so busy avoiding taxes (legally) that he loses focus on his business and his own best interest.
The Debt Paradigm has created the personal economies of today; low savings rates, loss of the long-term perspective, excessive attention to current tax advantages, follow the crowd investing and saving strategies, high debt, constant refinancing of our home equity and on and on.
It is time to walk away from the madness of the Debt Paradigm and employ solid strategies and practices of the Money for Life Model that promise a solid financial base that the vagaries of the market and the whims of the IRS cannot disturb or destroy.
Mystery…No. 7 Compound Interest is Magic… Triple Compounding is Astounding
“The most powerful force in the universe is compound interest.” Albert Einstein
Compound interest on money you have saved (not invested) is the secret to financial success. What if you could save your money in a century old financial product where:
It earns compound interest – guaranteed
- You can borrow against it and it still earns guaranteed compound interest even on the borrowed amount
- You can repay the money that you personally borrow and reuse the borrowing power over and over
- Your borrowing costs are minimal or non-existent
- The interest you save by not borrowing from others becomes a secondary source of savings and another compounding factor
- Your money earns tax free dividends even when you have borrowed against the money
There are such products. Cash value life insurance, especially participating whole life insurance, is the cornerstone of the Money for Life Model for managing your personal economy and creating wealth.
Epilogue
There are a couple of thousand insurance and investment companies that do not have reliable cash-value life insurance products in their portfolios. There are fewer than two dozen companies that participating whole life insurance as one of their primary products.
It’s obvious that the almost one million insurance and financial advisors that can’t sell whole life insurance will not praise it as the most versatile, flexible, and powerful financial product in the marketplace today.
The companies that sell participating whole life insurance policies are the most respected and reliable insurance companies in the world. Here’s a partial list of companies that manufacture and sell participating whole life insurance – in alphabetical order:
- Lafayette Life
- Mass Mutual Life
- Mutual Trust Life
- New York Life
- Northwestern Mutual Life
- Ohio National Life
- One America Life
- The Guardian Life
These companies all understand and support the Money for Life Model in one fashion or another. They do not specifically endorse the Money for Life Model. However, their products and their practices support the use of participating whole life insurance as a savings vehicle with generous loan provisions, flexible premium options, and technical support for insurance and financial advisors that teach the Money for Life Model to their clients.
If you would like to learn more about participating whole life insurance and the Money for Life Model for creating wealth and managing your personal economy go to www.youBEthebank.com where you can find a link to an insurance and financial advisor that is well versed in the Money for Life Model and the use of participating whole life insurance as the foundation for a successful personal economy.
[1] Dr Agon Fly defines conventional wisdom this way, “Thinking what everyone else thinks and doing what everyone else does because that’s what everyone else thinks and that’s what everyone else does.”
[2] On a recent trip through New Mexico I followed a “scenic” route on the map that led me down a precipitous, 1,000 foot, one lane, unpaved, twisting and snow covered road with no turn-arounds, into the Rio Grande Canyon. I cursed the map, aka “plan”. I didn’t think about my preparedness, which called on every driving skill I’d ever learned and 40 years of focused meditation practice and got me through the ordeal. My wife, Sandy, on the other hand, was frozen and white knuckled during the descent.
Posted in Money, Personal Financial Management, Retirement | Tags: annuities, annuity, debt, economy, financial, financial services business, investing, investments, managing your money, Money, rate of return, s, tax deductibility, Taxes, wealth | 4 Comments »
EUREKONOMICS™ 101 – Grow Rich Without Risk, Create Wealth Without Worry
November 11, 2009 | Author Dr Agon Fly
Mystery…No. 2 You Know Best What’s Right for You
The Debt Paradigm preaches that you cannot fully comprehend your own personal economy. It implies that the professionals who subscribe to the Debt Paradigm are in some way wiser, more knowledgeable about your situation, better informed about your needs, and perhaps even cuter than you.
BUNK!
You do not need a financial planner with an abundance of letters after her/his name and the logo of a big company on his/her business card[1] and a sales oriented computer program to tell you what is right for you and your family.
In fact, the financial and investment professionals most apt to help you are most likely working with smaller firms and choose not to align themselves with just one financial advisory firm’s products. It is also likely that they have narrowly focused practices and a broad understanding of the markets they serve.
Regardless, you need to equip yourself to direct the course of action. Only you should decide to incur the “pure unrelenting risk” of an investment. Your cousin Louie, golf partner, co-worker, or professional colleagues are always available with hot tips and enthusiastic advice. Ignore them. When you need advice, seek out an investment professional[2] – be it in the stock market, mutual funds, real estate, commodities, foreign currency or any other potentially lucrative investment.
And remember, it’s up to you to protect your capital base. An investment advisor is not compelled to do that.
Mystery…No. 3 Don’t Risk What You Can’t Afford to Lose
Ask yourself the question, “What is it that I can’t afford to lose?” This is a money question but the answer is not purely about money. Excessive consumer debt, job losses, family crises, medical expenses and long-term care costs underlie most bankruptcies.
However, all bankruptcies result from a lack of a capital. If you are trapped in the Debt Paradigm, you are at risk. You have saved too little, invested too much, and assured the success of some Behemoth while critically damaging your own personal economy.
Your capital base is not secure or is non-existent. You are at risk because you are employing a set of strategies and practices that are not based on developing a capital base and thereby place your family and your fortune – that which you cannot afford to lose – in constant jeopardy.
It is only by having an adequate capital base that you are able to withstand and survive what Shakespeare called the “slings and arrows of outrageous fortune.”[3] You cannot afford to risk your capital base.
However, as we point out repeatedly in this booklet, the strategies and practices of The Money for Life Model allow you to build a solid base of capital and avoid the risk of losing it. This model of your personal economy relies on the steady accumulation of capital and the concurrent elimination of debt and guides you through a program that lets you control all of the money that flows through your life.
This leads us to the next mystery.
Mystery…No. 4 Why Debt = Financial Death
The foundation of all banking is debt. The bank borrows from you at 2% in your savings account and lends it to someone for a car at 8% or for some furniture at 15% or on their credit card 22.99%. The reason debt is not death for the bank is that the bank borrows to lend and for no other reason.
The reason debt is death for most Americans is that they borrow to spend. In fact, some put the interest paid out of every personal dollar earned as high as 36 cents. That is higher in some cases than all income and payroll taxes combined.
The average person will pay almost two times the purchase price of their home in interest, will pay enough interest on automobiles to buy an extra car every ten or twelve years and might pay their credit card companies up to 2000% of the principal balance before paying off the card. Is it a wonder that the savings rate is less than 0%? This is financial suicide.
Take the example of a $1000.00 refrigerator. The manufacturer borrowed the money to build the plant and buy the parts to build it. The distributor borrowed the money to lease the warehouse to store it until s/he placed it in inventory and in the store. The trucker borrowed the money to buy the delivery truck. You borrowed the money to buy it.
Who’s making all the money? You got it – the bank. What reduction in cost would occur if each entity financed their part of the process in lieu of borrowing from the bank? Obviously you control only a small portion of that series of borrowing transactions but, if you could eliminate some or all of the 35% of your income that you pay to others as interest, your personal economy would work better for you and your family.
It’s not a bad thing that the bank – or someone – makes money from lending. Banking is essential to the economy of the world and just as essential to your personal economy. The important thing to be aware of and to remember is that you are not currently in the banking business…but you need to be in the banking business.
You need to find your way out of the Debt Paradigm – where you are a bank customer – and adopt the Money for Life Model where you are both the customer and the “bank.”[4] In The Money for Life Model, your debt is productive for you just as it is for a moneylender in the Debt Paradigm.
This does not imply that you sever your banking relationships or that the commercial bank has no place in your personal economy. There are many occasions when you may want and need strong banking relationships; when following the Money for Life Model makes you a very attractive customer of the commercial bank, and may even earn you preferred treatment and rates.
The Money for Life Model, however, transfers a major portion of your borrowing from moneylenders to your personal “bank” so that you recover the principal, interest and fees that you would otherwise pay to others.
[1] Industry designations and accomplishments demonstrate that an advisor has acquired specialized knowledge about finances. It is not an indicator that s/he has skill and wisdom…one can know all about sand castles and have the skill to build one but lack the wisdom to wait for low tide.
[2] Part of our practice is to identify and refer these kinds of professionals to our clients when appropriate.
[3] Hamlet, Act III Scene I – William Shakespeare
[4] The word “bank” in The Money for Life Model refers to any savings vehicle that you own and use as a source of borrowing and that you plan to repay as you would repay a loan from a commercial bank, credit union, etc.
Posted in Money, Personal Financial Management, Retirement | Tags: credit, debt, economy, financial, financial planner, investing, investments, Money, money question, Personal Financial Management, s, security, Taxes, wealth | 1 Comment »
EUREKONOMICS™ 101 – Grow Rich Without Risk, Create Wealth Without Worry
November 7, 2009 | Author Dr Agon Fly
The Seven Mysteries – aka Wealth Builders
Moving from Bad Habits to Good Practices
Prologue
The difference between a habit and a practice is awareness.
If a habit relies on thoughtless performance, a practice relies on thoughtful performance. The behavior can be the same, e.g., locking the doors at night. Awareness makes the difference.
Conventional wisdom means that you do what everyone else is doing and think what everyone else is thinking because that’s what they are doing and that’s what they are thinking.
Do the Behemoths – that grow wealthy by convincing you to follow conventional wisdom – do they want you to be more thoughtful? Of course not.
Is there a more thoughtful way to accomplish what you want to achieve when it comes to creating wealth and managing your personal economy? Of course. It’s called common sense.
The Seven Mysteries aim to tear down the wall between Conventional Wisdom and Common Sense so you can thoughtfully grow rich without risk and create wealth without worry.
Read on…
Mystery No. 1 Pay Yourself First – But Don’t Count Your 401k
“Pay yourself first” is an axiom that’s been around for centuries – perhaps millennia. What it means is that your personal economy rests on the foundation of a personal savings plan – as opposed to an investing plan – and recognizes the need for a solid base of readily accessible capital.
The issue is not whether or not you need to put a capital acquisition strategy in place. You need to. The question becomes where you should put the money. Conventional wisdom from the Debt Paradigm say you should “max out your 401k.” This is extremely bad advice for you but great for the Behemoths.
The problems with relying on 401k’s, IRA’s and the like as your capital base are manifold:
First and foremost, you give up control of your money; first to your employer, next to the investment companies that manage your money, and finally to the IRS
- If you can get to your money at all, tax qualified plans restrict how much of your money you can use, and often restrict how or whether you can use it
- The money you withdraw – as opposed to borrow – is subject to penalties and/or taxes
- You have to repay borrowed money plus any fees associated with any loans you take within five years or pay the penalties and taxes referred to above
- You normally have to ask permission or get approval to get your hands on your money
- Your money is only available after much paperwork and then only on a restricted basis when you need it for any other reason such as an opportunity, a crisis, a child’s education, a parents long term care…
Savings accounts, certificates of deposit, money market accounts, and similar financial instruments have a place in your portfolio, but they too have shortcomings as base capital. To access the money in these funds you must deplete them and therefore lose their ability to earn interest.
Granted, the money in these funds is readily available if you lose your job and you need money to see you through to your next job or get a new business up and running. But, if the next job comes later rather than sooner, or the new business hits a bump in the road, your capital could be depleted and you would have no other resource to fall back on – except perhaps also depleting the 401k that you rolled into an IRA when you left your employer. And if that doesn’t last…
Mutual funds, real estate and any other investments (remember, investments are based on pure unrelenting risk) are subject to market conditions (think 2008 – 2009), and may not be fully liquid. The only way you can get your money out of them is if you sell them or borrow against them.
Moreover, you have to beg permission from a lender to borrow against your personal assets. Add to this degrading process that neither selling nor borrowing from others preserves your capital base and both deplete your resources. Worse still, the costs of borrowing drain your pocketbook while it fills the coffers of some Behemoth.
What’s a person to do? The answer is to step away from the Debt Paradigm and gain a new perspective. We call this new perspective or paradigm The Money for Life Model. It is a way for you to emulate the conservative financial strategies applied by savvy Americans and some of the most reliable corporations in the world for the past 150 years or so.
There are also financial instruments that allow you to build a fortified base of capital that you can use to create true wealth. From a very practical point of view, these products allow you to become your own banker, finance your life, and release yourself from the impoverishing clutches of the Debt Paradigm.
Posted in Money, Personal Financial Management, Retirement | Tags: 401k, conventional wisdom, creating wealth, debt, economy, financial, interest, investing, investment companies, investments, IRs, Money, Personal Financial Management, personal savings, s, saving, Taxes, wealth | No Comments »
EUREKONOMICS™ 101 – Grow Rich Without Risk, Create Wealth Without Worry
November 5, 2009 | Author Dr Agon Fly
Myth…No. 6 – My Financial Advisor Knows
This may be the biggest myth of all. Some of my best friends and clients are financial planners and advisors. They perform a valuable service, especially those who are specialized and focused on one particular aspect of the market and have an open mind toward the processes that you and I go through. I frequently refer clients to these professionals when the clients are in a position to use their expertise and services.
The general public, however, continues to support the myth that big companies with famous names (I call them Behemoths) automatically provide quality financial advisors. Recent history shows just how false that assumption is. Quite the opposite is true. Many of the well-known financial firms recruit anyone who is willing to endure their training and who can obtain the licenses required to sell financial products. A large percentage of those recruits fail within one year.
Moreover, these so-called financial plannershave very little leeway in terms of the planning they actually perform. Compliance Nazis severely restrict what these advisors can discuss with their clients and computer programs generate most of the charts, graphs, and spreadsheets that they call a plan. In addition, the Behemoths structure the outcomes in great part to assure the selling organization that the planner (aka sales rep) highlights company products and does not present anything to you that might land the firm in court.
Many – if not most – of the “plans” that these programs regurgitate are not plans at all. They are nothing more than sales presentations that encapsulate and perpetuate the conventional wisdom embodied in the myths we are discussing.
It’s a Stepford World and the well known financial planning firms see you as the Stepford Client of a Stepford Planner.[1]
Myth…No. 7 – I’ll Never Quit Working
Yeah. Right.
I actually believed this at one point in my younger life. It’s true in a way. It’s true if you mean that you will always pursue life goals. It’s not true if you mean that you will always work to earn an income to support yourself.
Ask any of the thousands over fifty who have had to find a job after a layoff if the work they were able to find was in fact equivalent in either pay or satisfaction to the work they had before. You discover that most of the time it is not.
You will also find out that many of those folks are trying to find ways to retire. They do not want necessarily to quit doing useful things. They just want to be able to spend their time and their lives doing something valuable to themselves and others – whether or not it produces income.
Consider another case. Sally was a successful consultant with a Fortune 500 company. The company put her on a highly sensitive and visible assignment that required long hours, extensive travel and intense focus. Long months into the project the 16 hour days, restless nights, bad diet, stress and physical exhaustion claimed Sally physically, mentally, emotionally and spiritually. She crashed.
At age 56, she is unable to work and is limited to her Social Security disability income of less than $1,500.00 per month. The bear market in 2001 and 2002 decimated her retirement funds and her prospects for any kind of future work are minimal at best.
The myth is that we will have an ability to find work or even to do work in the future. It is naïve at best to be unprepared for the probability that we will be challenged in some way in this regard.
Afterthought…The Seven Myths Are Wealth Destroyers
“Bad thinking creates bad habits” – Dr Agon Fly
Myths result from consistent bad thinking. Bad thinking transmutes into bad habits, which in turn fortify the myths. It’s a destructive and mind numbing cycle.
America’s understanding of personal economics today is as unsophisticated as the understanding of disease was a hundred years ago. You may question whether some or all of the myths are valid or whether or not they apply to you. It is more difficult to question the facts that surround and support them:
- Americans are addicted to debt; they have come to believe that credit is more important than savings. Proof? Americans have a lot more debt than they do savings.
- Most Americans are naïve when it comes to personal economics. Proof? Americans have a lot more debt than they do savings.
- Most personal economies are in a shambles. Proof? Americans have a lot more debt than they do savings.
- Americans save too little, invest too much, and often do both in the wrong places. Proof? Americans have less than a month or two of cash to cover budgetary needs and most have lost over half of the money the invested in their retirement accounts.
- All investment markets are based on pure unrelenting risk. Proof? None needed.
- Most financial plans are actually nothing more than marketing materials individualized to support a sales effort. Proof? Think about it.
- Most Americans are unprepared for their future – especially if it is not the future they planned. Proof? In addition to the above: Inadequate life insurance, disability insurance, long term care insurance, wills, trusts, guardianship for children…need we go on?
In the next part of this series, we will look at the Seven Mysteries that are wealth creators. I hope that they help you debunk and replace the Seven Myths.
by Jeffrey Reeves MA, youBEthebank.com
[1] An elderly client of mine was allowing her daughter and son-in-law to live with her. She asked me to counsel the young couple on building a personal economy. After several months it became apparent that both were unwilling to deal with the issue. They refused to balance their checkbooks (they each had one), formulate and live on a budget or curtail their spending (they were spending all of their money and nearly $3,000.00 of mom’s money each month) so I withdrew my support. The daughter was hired as a “financial planner” by one of the Behemoths just a week before I withdrew.
Posted in Money, Personal Financial Management, Retirement | Tags: credit, debt, economics, economy, financial, investing, investments, Money, Retirement, s, security, wealth | 1 Comment »
EUREKONOMICS™ 101 – Grow Rich Without Risk, Create Wealth Without Worry – Cont’d
November 3, 2009 | Author Dr Agon Fly
Myth No. 4 – I Have A Retirement Plan From Work
Myth: my company has a pension/profit sharing/401k/other plan that promises me a secure future income.
Reality: Enron, MCI, US West/Qwest, Mutual Benefit Life, United Airlines, and many other well known and superficially reputable and stable companies have defaulted on retirement plans in the past and many more will do so in the future.
Banks, investment firms, and automobile companies as easily recognized as America itself and many other businesses are embracing bankruptcy and the elimination of pensions and other retirement plans in the process.
I am not predicting an endemic financial catastrophe in America beyond what we have already seen (Nov 1, 2009). However, it is imprudent to rely on the good will of a corporation whose only justifiable objective is to make a profit for its shareholders – even if it means adversely affecting the lives of its employees.
Remember, only money – and not people – shows up on the balance sheets and the earnings statements of public and private businesses.
“Wait a minute” you say “my company has a long history of taking care of its employees and I believe that it will take care of me.” Well, that may be so. If you truly believe that then, as you prepare for the future, you can incorporate that belief into your equations.
I suggest, however, that you not rely on that as an inviolable truth and an changeless premise of your personal economy and financial plan. You must also prepare for the possibility – regardless of how remote you may think it is – that your future income from your employer’s plan may not be there at all or may be less than current projections would indicate.1[1]
There’s another false premise in retirement programs and the way we talk about them in the current paradigm. Have you ever heard that you should contribute to your retirement plan today because you are in a higher tax bracket now than you will be when you retire? Indeed?
If you are successful, the same person who tells you this falsehood will next tell you that if you follow his or her program you will have this incredible amount of money to create retirement income. Guess what, if they are correct you will find yourself in a higher tax bracket with no deductions to offset your income.
Which is true?
All tax qualified retirement plans have strings attached and most of the time, in the end, they generate more money for the IRS than the tax collectors give up in revenue they lose to current deductions.
Myth No. 5 – My Investments Will Carry Me
There is a belief prevalent among American investors that “staying the course” in the market is wise. The theory is that over the long-term if you ride out the low times your portfolio will increase with the general trend of the market and you will be OK.
Bunk!
Compare that with the reality that Wall Street averages showed no gain at all for almost half of the 20th century. Consider also that only a handful of the million-dollar per year money managers of the nearly 17,000 mutual funds earned their investors even 1% during the two recent bear markets.
In other words, the professional money managers with their analysts and researchers working full time at very high salaries (many earn over $1,000,000 per year to manage our money in mutual funds) lost money.
Do individual Americans who are doing a thousand other things every day to earn money, care for their families, attend their churches and synagogues, play or support our kids who play softball, basketball and soccer, ski, and on and on – do they have the time, energy, resources, insight, wisdom, courage and experience to emulate these people?
Not in a million years; who would want to emulate the losers in that crowd in the first place? Look where they’ve led American families over the past fifty years.
How about real estate? Here again, it takes skill, patience, education and experience to succeed in the real estate investment business. Most who do succeed are full time real estate investors who have prudently eased their way into the business and out of their former occupations over a period of years.
Many of them understood intuitively that they needed to find ways to finance their own adventure without depending on borrowed money. That realization allowed them to endure its vagaries and survive its volatility.
Suggesting that everyone can follow this path makes millions for the infomercial producers who hawk books and tapes, but does not produce similar financial results for most buyers of those educational products. I’d venture a guess that fewer than 1 in 10,000 who buy a real estate investment course from an infomercial actually succeed.
Investment in the stock market, in real estate or anything else you might imagine is not necessarily an incorrect decision. It is a myth, however, that individuals who are not following those markets on a full time basis can, in the short or the long run, beat or even stay with the market.
In fact, while the market averages showed a decent compound annual return from 1980 through 2005, individual investor performance during that same time period was a miserable 3.2%. The vast majority of mutual funds did not manage to perform as well as the averages either.
If you are lucky, your portfolio today is above 50% of what it was a few years ago.2[2] Investments are risky. All investments are risky. That is the very nature of the beast. Bernard Baruch, one of the mythical pros of Wall Street, said that to be successful in the market you need the wisdom of Solomon, the patience of Job and the courage of a lion. Investing is not the place for the uninitiated to put the money that is the foundation of their personal economy. The markets are pure unrelenting risk. They are casinos and the casinos always win while most who spend their money there lose.
1[1] I realize that the paradigm that most Americans rely on includes a perception that business and government programs are on some level inviolable. Reality is otherwise. So is experience and it is important that our preparations assume failure of these systems to some extent. That does not imply that all benefits of these programs are lost but only that we must build our own fortunes as if they could be. If they aren’t, then we are much better off. If they fail completely we are still OK. You can do this. A Money for Life Guide can show you how.
2[2] Be aware that if your investments loose 50% – say drop to $50,000 from 100,000 – they must gain 100% -rise from $50,000 back to $100,000 – before you break even and have the opportunity to realize gains.
Posted in Money, Personal Financial Management, Retirement | Tags: economy, financial catastrophe, investing, investments, IRs, Money, Personal Financial Management, Retirement, retirement programs, s, security, Taxes | No Comments »
EUREKONOMICS™ 101 – Grow Rich Without Risk, Create Wealth Without Worry – Cont’d
November 1, 2009 | Author Dr Agon Fly
Myth No. 2 – “My Home Will Keep Me Secure.”
Let me tell you a story.[1] Abigail had been in the military for 19 years when a stroke put her out of commission at the age of 52. She only qualified for a small military pension and a small monthly Social Security disability/retirement income.
“But,” she thought, “all is well. I own my home in a very nice neighborhood in a very nice city and my small income is more than I need for food clothing, entertainment, church and my VA benefits take care of my medical expenses.”
Fast-forward from age 52 to age 72. Abigail’s home is still in one of the nicest neighborhoods and is quite valuable but the myth is shattered. Her home is in need of significant repair. However, it had a $60,000.00 first mortgage on it that she borrowed to pay bills, make prior repairs, purchase a handicap-equipped car and pay off her credit card debt. The mortgage payment consumed over half of Abigail’s monthly income so she skimped on everything else and ran her credit cards up again. Her security – not to mention her comfort and peace of mind – were at risk and the picture wasn’t very rosy.
Fortunately, I was able to introduce Abigail to an ethical reverse mortgage specialist who helped her obtain a reverse mortgage. She paid off the $60,000.00 first mortgage, funded the needed repairs and freed up her entire retirement income for monthly expenses. She was also able to leave over $40,000.00 in the reverse mortgage for future emergencies and opportunities.
Now we have to wait and see if she outlives this strategy, which allows her a modicum of security. If Abigail lives beyond age 84 or 85 she may be right back where she was when I met her in 2004, and may not have the equity in her home to support a refinance of the reverse mortgage.
Abigail is not an exception. There are hundreds of thousands of older Americans who have homes that are paid for (some say as high as 77%) but little or no monthly income to pay for essentials. So, the equity to debt cycle continues for them. Eventually these brave Americans, who have given their lives to their families, churches and country either find a compassionate and informed advisor who guides them out of their turmoil or they end up discouraged, disparaged and depressed welfare wards of the state.
Many Americans had foresight enough to anticipate the possibility that a paid-for home would continue to be an expense and put aside extra money to deal with that reality. They were Savers.
Myth No. 3 – “I’m a Saver.”
“That’ll never happen to me,” you say. “I’m a saver and have money in CD’s and other investments.”
Meet Edgar and Edith Smith. Edgar had worked for decades and saved a part of what he earned every paycheck. He did not have a retirement plan because the small company he worked for cancelled it years earlier and, although he received a small settlement amount at that time, he and Edith were receiving no significant income from it.
Edith was a stay at home mom and had never worked outside the home so she did not have her own retirement or social Security. Even so, the Smiths were doing OK on Edgar’s Social Security and the earnings off their CDs – or so it seemed.
Then Alzheimer’s Disease attacked Edgar. In less than two years the savings were gone as was the income from the savings. Within another year, Edgar was in a nursing home on welfare and Edith, who had never had to deal with money issues or home repairs and certainly not with a completely debilitated Edgar, was herself in serious condition from stress, depression and near poverty.
Events that happen to people every day destroy the myth that savings are in some way secure: illness, uninsured losses, the needs of children and grandchildren, and the ravages of addiction to alcohol, gambling or drugs that afflicts people of all ages, both genders and every social condition.
Savings are also subject to market risk. Interest rates like those we experienced in the past few years (1999 – 2004) dropped from about 7% to as low as 1% and decimated the income derived from savings. Folks who were used to getting about $600.00 per month from their savings ended up with less than $100.00.
The savings rate in America in December 2005 was a negative .05% of net earned income. It doesn’t take a genius to realize that such a low rate of savings will never equate to some sort of future security. Even careful savers who might exceed the average could never accumulate enough money to offset the unrelenting onslaught of inflation and unforeseeable events.
[1] I’ve used aliases in all stories to protect the privacy of the subjects. The stories are all true and accurate in every detail.
Posted in Money, Personal Financial Management | Tags: create wealth, debt, economics, investing, investments, Money, peace of mind, Retirement, saving, savings | No Comments »
EUREKONOMICS™ 101 – Grow Rich Without Risk, Create Wealth Without Worry
October 28, 2009 | Author Dr Agon Fly
Seven Myths and Seven Mysteries of Personal Finance and Personal Economics
For the past half century, the hubris-laden financial industry has led Americans to believe that the individuals and organizations on Wall Street – renamed Dull Street by the author – and their minions on Main Street know more than we do about our personal finances and personal economies.
In fact, many of these self-appointed gurus of finance ended up penniless, in jail or in failed enterprises…
- EF Hutton
- Executive Life
- Mutual Benefit Life
- Arthur Anderson
- Indy Mac Bank
- Washington Mutual
- Freddie and Fannie
- Bear Stearns
- Lehman Brothers
- Bernie Madoff
- and the list goes on
Most financial executives and advisors – in my experience – have bought into the myth that the typical American is incapable of understanding personal finances and economics much less managing them effectively. The unfortunate reality is that many of these advisors don’t actually know enough about personal economics themselves to even discuss the topic intelligently.
They, like the clients they serve, have embraced the myth we call The Debt Paradigm.
These advisors know all about products. In fact, the financial tools that many advisors use to develop personal financial plans for their clients are often no more than sales tracks that lead to the sale of specific products and services that redirect the money of everyday Americans into the accounts of their Behemoth bosses.
This is especially true of those advisors that are captives of Behemoth financial organizations most interested in selling their own products under the guise of financial planning and advice. (This class does not include insurance companies that are selling and supporting particpating whole life products as the mainstay of their business.)
The Seven Myths and Mysteries Series is an attempt to begin (just barely, but to at least begin) deconstructing the Debt Paradigm myth and replacing it with a simple and effective model that American families can use to grow rich without risk and secure wealth without worry.
This kind of model doesn’t rely on esoteric insider analyses or on “secret” strategies known only to the initiated few. It rests on common sense and readily available information and ideas. The amazing part of that realization is that the “many” purport to have the inside track but the “few” – and you are among them because you are reading this – are the ones who actually do.
The two most important ideas you’ll take away from this series are these:
1. There is a model for helping you manage your financial lives and creating a personal economy that you control
2. You are in charge! It’s up to you to make your money work for your benefit and that of your family, including (and especially) your future generations.
We wish you well in your quest. We sincerely expect and desire that Seven Myths and Mysteries, while it does not claim to be an exhaustive study, will add to your understanding and insights about how to manage your personal finances and construct your own personal economy.
Here is a list of the Seven Myths and the Seven Mysteries we will discuss in this series. Some are very easy to wrap your mind around while others require a closer look.
Seven Myths – alias Wealth Destroyers – Bad Thinking Creates Bad Habits
1. I’ll Do OK on Social Security
2. My Home Will Keep Me Secure
3. I’m a Saver
4. I Have A Retirement Plan From Work
5. My Investments Will Carry Me
6. My Financial Advisor Knows
7. I’ll Never Quit Working
Seven Mysteries – aka Wealth Builders – Moving from Bad Habits to Good Practices
1. Pay Yourself First – But Don’t Count Your 401k
2. You Know Best What’s Right for You
3. Don’t Risk What You Can’t Afford to Lose
4. Why Debt = Financial Death
5. Volume Is More Important Than Rate
6. “Conventional Wisdom” Is an Oxymoron and Tax Deductibility is a Trap
7. Compound Interest is Magic…Triple Compounding is Astounding
Myth No. 1
“I’ll Do OK on Social Security.”
I believe in Social Security because I believe in the United States of America. I believe that Social Security will survive its current troubles because Americans are a good and compassionate people.
However, it is naïve to believe that Social Security will continue in its current form. It is equally turning a blind eye to believe that Social Security is at all adequate as the reliable and only source of income for those who qualify for its benefits.
Most of us look forward to a time in our lives when we can dedicate our energies to pursuits that fill our souls regardless of whether or not they fill our pockets. Some of us want that to happen when we are 40, 50, or 60. Others can’t imagine not following their career path until they step into the grave.
Social Security can help those who qualify for its benefits but it is a myth that Social Security is liberating enough to permit us to live in even the most basic prosperity one expects in our wonderful country without any other source of income. For most of us it is not even adequate to pay for rent and food much less the lifestyle we have imagined for ourselves as we age.
The stories about folks who relied on Social Security alone (whether or not by choice) and ended up eating dog food or having to choose between necessities and medical care abound. This is not urban myth.
A simple bit of arithmetic demonstrates that the costs of a modest apartment, food, transportation, Medicare coverage, clothing and a modicum of entertainment add up to more than a monthly Social Security check – even if you are receiving the maximum Social Security has to offer.
Moreover, if you can get by today, you will find shortly that inflation of the cost of necessities added to unexpected but unrelenting medical and long term care costs will quickly erode the value of that monthly check.
Living on Social Security alone is a Myth.
This provides a departure point for the second myth: Many believe that owning a home will insulate them in some way from poverty and need as the years go by.
That will be the first topic for the next installment of The Seven Myths and Mysteries.
Posted in Money, Personal Financial Management, Retirement | Tags: debt, economics, economy, financial, investing, investments, Money, personal economics, personal finance, personal financial plans, Taxes, wealth | No Comments »
National Health Care Fails! Again…
September 29, 2009 | Author Dr Agon Fly
If you were wondering about how the medical professionals feel about the insane national health care proposals in DC, read this article from the highly repected Investors Business Daily. It is submitted without comment because it speaks loudly for itself…
http://www.investors.com/NewsAndAnalysis/Article.aspx?id=506199
Posted in What Others Say | Tags: health care proposals, medical professionals, national health care | 1 Comment »
Open Letter To Those Who Doubt The EUREKONOMICS™ Model…
September 28, 2009 | Author jr
An Open Letter…
Dear Kay,
At www.youBEthebank.com we are committed to re-educate America about the power, flexibility, and versatility of dividend paying whole life insurance and the extraordinary benefit of participating with like-minded people in ownership of mutual insurance companies. To this end, we have sacrificed the past several years of our life to write and publish books, blogs, and articles that aim to enlighten and inform.
Whole Life Insurance from Mutual Life Companies…
Gaining the insight and information about whole life insurance and mutual life insurance companies is difficult for insurance and investment advisors. Many, if not most of them have been misinformed and even lied to about this product and its application.
It is even more difficult for everyday Americans to uncover these secrets when their source of information is produced by detractors in the ill-informed popular press, from talking heads like Suzie Orman and Dave Ramsey, and from often inaccurate internet sites.
Uncovering Green Shoots of Ideas and Ideals Shrouded by Behemoths…
I wish the ideas and ideals we write and talk about–ideas that are the foundation of the wealth and growth of the personal economies of Americans over the past two plus centuries–were not burdened with decades of deceit and disinformation from Behemoth detractors and competitors whose only goal is to filch control of your money or sell you their next book. Unfortunately, they are.
Many seem to be struggling to escape the conventional wisdom that denies the value and benefit of whole life insurance and mutuality. We understand that. We can continue our dialogue. Unfortunately, there isn’t enough time left to me in life to answer every individual consumer question and mentor every advisor that seeks my guidance.
The Source Book of EUREKONOMICS™…
So, here’s my suggestion. If you wish to pursue a relationship and take advantage of my 40+ years experience helping Americans achieve true financial independence, then I ask you to read and study Money for Life! before posing your questions about EUREKONOMICS™. I am confident that Money for Life! addresses the vast majority of your concerns.
In other words, I am willing to address your concerns if you are willing to study the EUREKONOMICS™ Model for Creating and Managing Your Personal Economy with the same diligence that you are employing to unearth reasons to deny the validity of what we teach.
By Jeffrey Reeves, MA, EUREKONOMIST www.EUREKONOMICS.com
Your Personal EUREKONOMICS™: Ideas And Ideals VS. Ideology
September 17, 2009 | Author Dr Agon Fly
Setting the Stage…
The men that came together in Philadelphia to craft the Declaration of Independence in 1776 were, for the most part, ideologues. Thomas Jefferson, John Adams, Benjamin Franklin, Roger Sherman, and Robert R. Livingston were on the committee that drafted the Declaration of Independence.
Adams and Jefferson in particular were at different points on an ideological spectrum. How was it, then, that they wrote a document that emancipated not only the United States of America but also millions of people since, based only on its content?
The answers are many, but one can sum them up in two words: ideas and ideals.
Benjamin Franklin was the third major force on that committee. Franklin was not an ideologue. Quite the contrary. Benjamin Franklin was a man of principles just as John Adams and Thomas Jefferson were. His principles were not, however, motivated by ideology but by ideas and ideals.
Both Adams and Jefferson were intimately familiar with Franklin from years of interaction. They each respected his sagacity and insights. They, too, were men of ideas and ideals. They willingly laid down their ideological swords and took up the battle for American Independence with ideas and ideals as their primary weapons.
James Madison, George Mason, Alexander Hamilton, George Washington, Benjamin Franklin, and about fifty other new Americans met in Philadelphia in 1787. Their aim was to debate and draft a new constitution for the fledgling United States of America.
Almost every participant offered a warring ideology about what the US Constitution should end up looking like. Over an arduous two years (1787-1789) of clashing ideologies and heated debate, ideas and ideals won over ideology and young America adopted the greatest governing document ever devised along with the first ever Bill of Rights guaranteeing individual rights over government control of individuals’ lives and activities.
History clearly demonstrates that Ideologues claim leadership by self-reference and by demanding rigid adherence to their own dogmatic declarations. These pseudo-leaders do not encourage ideas and ideals; they discourage and sometimes even punish them. If you aren’t convinced of this premise by the history of 20th century Europe, Russia, China, Japan, South Africa, Afghanistan, etc., etc. etc., remember your high school and college reading: 1984 by George Orwell and Lord of the Flies by William Golding.
Ideologies and the ideologues that promote them only masquerade as leaders. They are not interested in your wealth and well-being. They are absorbed and governed by a slavish adherence to a set of principles regardless of how their ideology affects the rest of the world. They aim to accomplish their goals just because they are their goals.
Act I – Enter The Federal Government
The National debt is approaching twelve trillion – that’s 12,000 x 1,000,000,000. There are about 306,000,000 Americans; about 100,000,000 American families. My calculator doesn’t have enough digits to even figure out how much each American individual and family owes based on these numbers. You can find out at… http://www.bigredcalculator.com/index.html
It is the adoption and slavish adherence to an ideology based on profligate spending in Washington DC and the abandonment of the American ideas and ideals expressed in the Declaration of Independence and the US Constitution that created this massive debt. Our government is corrupt. Our representatives are more interested in the accretion of power and the accumulation of personal wealth than they are in the wealth and well-being of Americans.
Only American citizens and citizen families can resurrect those ideas and ideals and reinstate them as the foundation of their personal economies and our country.
Act II – Enter the EUREKONOMICS™ Model of Personal Economics…
The EUREKONOMICS™ Model for creating and managing your personal economy does not aim to rehabilitate the power and money addiction of the Federal Government, the Executive Branch and the US Congress in particular. Political action will ultimately dethrone the self-appointed gods of government.
Instead, The EUREKONOMICS™ Model empowers you to thrive regardless of the antics in DC by teaching the 13 Immutable Laws of Personal Economics and guiding you in the practice the 7 Essential Steps for Creating and Managing a Successful Personal Economy.
Act III – Americans Take Action
The EUREKONOMICS™ Model is over one hundred years old. Millions of Americans have tested it and proven that it works in good times and bad. There are currently several hundred advisors all across the US that have studied this personal economic model and have adopted it for their own and their clients personal economic structures.
I encourage you to contact one of those advisors. They are listed on www.youBEthebank.com
Posted in Money, Personal Financial Management | Tags: debt, economics, economy, Money, wealth | No Comments »
For The First Time Ever, Americans Live In Fear Of The Government…
September 3, 2009 | Author dragonfly
The primary aim of this blog is to inform and educate Americans about ways to use the EUREKONOMICS™ model to create and manage personal economies that thrive in good times and bad.
Unfortunately, the Federal Government and the US Congress pose the greatest threat to our collective financial security. Their greed for the accretion of power and unparalleled confiscation of our money - especially the debt they lay on us and generations yet to be born - seems insatiable.
The Principles of the Founding Fathers
That’s not how America rose from nothing to the greatest and most exceptional nation on earth. American government and economics are based on clearly articulated ideas about limited government, personal liberty, and the freedom to create and manage our own personal economies…
- “life, liberty, and the pursuit of happiness,” not the guarantee of happiness
- the opportunity to succeed, not the guarantee of success
- liberty to succeed or fail on our own without the interference of government.
“We the People…”
Today we are seeing our liberties erode from the intrusion of big government into the lives and personal economies of individual Americans. Money and power in the hands of even the most beneficent government reduces the money and power in the hands of “We the People…”
- Every dollar that goes to Washington DC comes out of the pocket of a working American
- Every czar that acts as a lieutenant of the executive branch of government as an unaccountable enforcer of unwritten law drains the national treasury
- Every trillion dollar (remember, that’s 1,000 billions) law that Congress rushes through the legislative process with the excuse that “it’s imperative” being used to bypass “We the People” steals another bit of our liberty and a whole lot of our money
- Every surreptitious connection to…
- big banking
- big Wall Street firms
- big unions like the SEIU
- corrupting organizations like Acorn
- pseudo-advocates like AARP, Pharma, the AMA
- and other shadow groups that hide from the light of scrutiny
transfers money and power to the government and strips “WE the People…” of our voices, our liberties, and our ability to create and manage our personal economies.
If you haven’t read the Declaration of Independence in a while, here’s your chance. I encourage you to take just a few minutes and consider the sacrifices our Founders made to give us today’s America…
“And for the support of this Declaration, with a firm reliance on the protection of Divine Providence, we mutually pledge to each other our Lives, our Fortunes, and our sacred Honor.”
Ideas and Ideals of 1776
Recognize, please, that the ideas of 1776 are what makes America great. Honestly ask and answer yourself: Is what is happening today distorting the principles in The Declaration?
Is what is happening today undermining your ability to create and manage your personal economy?
Read the Declaration of Independence [below]. Pay attention to both the principles it illustrates and the specific complaints against the overbearing arrogance of the British King. Know that it’s time to act if that looks to you at all like the behavior of the Dolts in DC today. Isn’t it time for modern Americans to pledge their lives, their fortunes, and their sacred honor to save our country from a fate worse than British rule in the 1700′s?
_________________
The Declaration of Independence…
IN CONGRESS, JULY 4, 1776
The unanimous Declaration of the thirteen united States of America
When in the Course of human events it becomes necessary for one people to dissolve the political bands which have connected them with another and to assume among the powers of the earth, the separate and equal station to which the Laws of Nature and of Nature’s God entitle them, a decent respect to the opinions of mankind requires that they should declare the causes which impel them to the separation.
We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness. – That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, – That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness. Prudence, indeed, will dictate that Governments long established should not be changed for light and transient causes; and accordingly all experience hath shewn that mankind are more disposed to suffer, while evils are sufferable than to right themselves by abolishing the forms to which they are accustomed. But when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security. – Such has been the patient sufferance of these Colonies; and such is now the necessity which constrains them to alter their former Systems of Government. The history of the present King of Great Britain is a history of repeated injuries and usurpations, all having in direct object the establishment of an absolute Tyranny over these States. To prove this, let Facts be submitted to a candid world.
He has refused his Assent to Laws, the most wholesome and necessary for the public good.
He has forbidden his Governors to pass Laws of immediate and pressing importance, unless suspended in their operation till his Assent should be obtained; and when so suspended, he has utterly neglected to attend to them.
He has refused to pass other Laws for the accommodation of large districts of people, unless those people would relinquish the right of Representation in the Legislature, a right inestimable to them and formidable to tyrants only.
He has called together legislative bodies at places unusual, uncomfortable, and distant from the depository of their Public Records, for the sole purpose of fatiguing them into compliance with his measures.
He has dissolved Representative Houses repeatedly, for opposing with manly firmness his invasions on the rights of the people.
He has refused for a long time, after such dissolutions, to cause others to be elected, whereby the Legislative Powers, incapable of Annihilation, have returned to the People at large for their exercise; the State remaining in the mean time exposed to all the dangers of invasion from without, and convulsions within.
He has endeavoured to prevent the population of these States; for that purpose obstructing the Laws for Naturalization of Foreigners; refusing to pass others to encourage their migrations hither, and raising the conditions of new Appropriations of Lands.
He has obstructed the Administration of Justice by refusing his Assent to Laws for establishing Judiciary Powers.
He has made Judges dependent on his Will alone for the tenure of their offices, and the amount and payment of their salaries.
He has erected a multitude of New Offices, and sent hither swarms of Officers to harass our people and eat out their substance.
He has kept among us, in times of peace, Standing Armies without the Consent of our legislatures.
He has affected to render the Military independent of and superior to the Civil Power.
He has combined with others to subject us to a jurisdiction foreign to our constitution, and unacknowledged by our laws; giving his Assent to their Acts of pretended Legislation:
For quartering large bodies of armed troops among us:
For protecting them, by a mock Trial from punishment for any Murders which they should commit on the Inhabitants of these States:
For cutting off our Trade with all parts of the world:
For imposing Taxes on us without our Consent:
For depriving us in many cases, of the benefit of Trial by Jury:
For transporting us beyond Seas to be tried for pretended offences:
For abolishing the free System of English Laws in a neighbouring Province, establishing therein an Arbitrary government, and enlarging its Boundaries so as to render it at once an example and fit instrument for introducing the same absolute rule into these Colonies
For taking away our Charters, abolishing our most valuable Laws and altering fundamentally the Forms of our Governments:
For suspending our own Legislatures, and declaring themselves invested with power to legislate for us in all cases whatsoever.
He has abdicated Government here, by declaring us out of his Protection and waging War against us.
He has plundered our seas, ravaged our coasts, burnt our towns, and destroyed the lives of our people.
He is at this time transporting large Armies of foreign Mercenaries to compleat the works of death, desolation, and tyranny, already begun with circumstances of Cruelty & Perfidy scarcely paralleled in the most barbarous ages, and totally unworthy the Head of a civilized nation.
He has constrained our fellow Citizens taken Captive on the high Seas to bear Arms against their Country, to become the executioners of their friends and Brethren, or to fall themselves by their Hands.
He has excited domestic insurrections amongst us, and has endeavoured to bring on the inhabitants of our frontiers, the merciless Indian Savages whose known rule of warfare, is an undistinguished destruction of all ages, sexes and conditions.
In every stage of these Oppressions We have Petitioned for Redress in the most humble terms: Our repeated Petitions have been answered only by repeated injury. A Prince, whose character is thus marked by every act which may define a Tyrant, is unfit to be the ruler of a free people.
Nor have We been wanting in attentions to our British brethren. We have warned them from time to time of attempts by their legislature to extend an unwarrantable jurisdiction over us. We have reminded them of the circumstances of our emigration and settlement here. We have appealed to their native justice and magnanimity, and we have conjured them by the ties of our common kindred to disavow these usurpations, which would inevitably interrupt our connections and correspondence. They too have been deaf to the voice of justice and of consanguinity. We must, therefore, acquiesce in the necessity, which denounces our Separation, and hold them, as we hold the rest of mankind, Enemies in War, in Peace Friends.
We, therefore, the Representatives of the united States of America, in General Congress, Assembled, appealing to the Supreme Judge of the world for the rectitude of our intentions, do, in the Name, and by Authority of the good People of these Colonies, solemnly publish and declare, That these united Colonies are, and of Right ought to be Free and Independent States, that they are Absolved from all Allegiance to the British Crown, and that all political connection between them and the State of Great Britain, is and ought to be totally dissolved; and that as Free and Independent States, they have full Power to levy War, conclude Peace, contract Alliances, establish Commerce, and to do all other Acts and Things which Independent States may of right do. -
And for the support of this Declaration, with a firm reliance on the protection of Divine Providence, we mutually pledge to each other our Lives, our Fortunes, and our sacred Honor.
Posted in Debt, Legal, Ethical, Moral, Personal Financial Management, Taxes | Tags: aarp, acorn, and power, bank, citizens, czar, declaration of independence, economics, executive branch of government, financial security, life liberty and the pursuit of happiness, personal, Personal Financial Management, personal liberty, security, Taxes, tyranny, unwritten law, us | 1 Comment »
Time To Start Investing Again? EUREKONOMICS™ Cautions, “STOP!”
August 25, 2009 | Author dragonfly
Remember that averages are meaningless in planning your future. Are you going to live the average life span? Is your retirement account average – $143,000? Do you expect to receive the average social Security check – $1077.00?
Remember also that most of what the pundits,financial planners and investment advisors call “investments” are actually speculations.
Benjamin Graham, the Dean of Wall Street and Warren Buffets’ mentor put it this way, “An investment operation is one which, upon thorough analysis, promises safety of principal and an adequate return. Operations not meeting these requirements are speculative.” Benjamin Graham, The Intelligent Investor” 4th ed., 2003, Chapter 1, page 18. (emphasis is mine)
Benjamin Graham doesn’t suggest that you risk your principal for the possible but improbable big swing upward. Do not jump back into the market. You may miss an upswing and you may miss the upcoming downturn as well. If you are in the lifeboat and the ship doesn’t sink, you can climb back on board. If you are in the lifeboat and the ship is the Titanic, you’ll be happy as hell that you got off and stayed off.
Here’s a sobering reminder of what’s happened to the average investor and the averages over the past 20 years.
http://www.ifa.com/quoteoftheweek/pdf/QoW_55.pdf
by Jeffrey Reeves youBEthebank,com, ltd
Wake Up America! Nationalizing Health Insurance Will Cost You A Lot Of Money.
August 23, 2009 | Author dragonfly
No matter what President Obama says and regardless of his eloquence saying it, it would be a dire mistake, completely lacking in common sense, wisdom, and – mostly – regard for the US Constitution, for “We the People” to allow or accept any health care or health insurance program created by the US Congress and run by the US Government bureaucracy.
The record of accomplishment for US Government run programs is abysmal.
- Congress established The U.S. Post Service in 1775 – they’ve had 234 years to get it
right. - o It is seven billion dollars in debt again this year and will need another “bailout” (a word that is becoming all too common these days).
- Congress established Social Security in 1935 – They’ve had 74 years to get it right.
- o It is broke. It survives only on funds the US Government has borrowed from the next generation of Americans.
- Congress established Fannie Mae in 1938 – They’ve had 71 years to get it right
- o It is broke. Moreover, it is taking millions of Americans to bankruptcy court while it survives on (here’s that word again) bailout money.
- Congress established War on Poverty started in 1964 – They’ve had 45 years to get it right.
- o The IRS confiscates over a trillion dollars of our hard earned income each year to distribute to Washington bureaucracies to help poor Americans escape poverty, but the poor still abound. The US Government is losing that war.
- Congress established Medicare and Medicaid in 1965. Both are health care and health insurance programs. - They’ve had 44 years to get it right.
- o Both are broke. They survive only on funds the US Government has borrowed from the next generation of Americans.
- Congress established Freddie Mac in 1970 – They’ve had 39 years to get it right.
- o It is broke. Moreover, it too is taking millions of Americans to bankruptcy court with it.
- In 2009 Congress established a fund of trillions of dollars in the massive political payoff called the TARP Fund.
- o It shows NO sign of working the way the Congress and the White House (both Bush and Obama) presented it to “We the People.”
- In the first weeks of the Obama administration, the US Congress passed an almost one trillion-dollar pork-barrel bill disguised as a stimulus package that would, we were told, moderate the recession and reduce unemployment.
- o DUH! Did we really believe that?
- And now—a new record: Congress established “Cash for Clunkers” (welfare for the auto industry) in 2009 and it went broke in 2009!
- o So much for the ability of the US Congress to think ahead – it simply doesn’t exist.
So, with a perfect 100% failure rate, can Americans truly believe the US Government can
be trusted with a government-run health care system that the Congress designed?
“We the People” pay for every one of the failed programs listed above. Add another trillion or so (remember, a trillion is one thousand billions) of our hard earned dollars to the money the US Congress can waste, and it most certainly will be wasted.
The health care system in America is undeniably the best in the world. It became the best because “We the People” are in charge, and because the free enterprise system works. However, “We the People” also know that the system is imperfect and that the delivery system for health care relies on insurance companies whose self-interest is often opposed to the interests of “We the People.” It is also plagued by the irresponsible behavior of attornies that sue the medical commuity at the drop of a hat.
The health care and health insurance challenges that face America in 2009 have many more workable and less expensive solutions than the ones the Washington insiders are promoting. None of these alternatives requires giving the US Government another opportunity to fail.
This blog is too short to enumerate them. I encourage you to do some research on the internet where you will discover that the systems being modeled in Washington…
- are failing across the globe
- are loaded with political payoffs
By Jeffrey Reeves MA, youBEthebank.com, ltd and Ron Jennings, http://www.moneylearningcenter.com/
EUREKONOMICS™ – Money Now, Money Later, Money for Life…
August 20, 2009 | Author dragonfly
( Page 2 of 2 )From Kiplinger’s Personal Finance magazine, April 2009MYTH 6. Life insurance is not a good investment. This canard spread as 401(k)s and IRAs supplanted cash-value life insurance as Americans’ most popular ways to build savings while deferring taxes. True, the investment side of an insurance policy has higher built-in expenses than mutual funds do. But two factors point to a revival of insurance as an investment. One is guaranteed-interest credits on cash values, which means that if you pay the premiums, you cannot lose money unless the insurance company fails (see “Savings Guarantees You Can Trust,” on page 55). The other is the boom in life settlements. If you’re older than 65, you can often sell the insurance contract to a third party for several times its cash value — and pay taxes on the difference at low capital-gains rates.Truth: A good investment is one in which you put money away now and have more later. Checked your 401(k) lately?
by Jeffrey Reeves, youBEthebank.com, ltd.
Posted in Personal Financial Management, What Others Say, Whole Life Insurance | Tags: contracts, credit, financial, insurance, insurer, investing, investments, Life, Money, personal, policies, saving, savings, Taxes, undefined, wisdom | No Comments »
The Ghost Of HealthCare Yet To Come…
August 18, 2009 | Author dragonfly
“The Ghost of Christmas Yet to Cometakes the form of a grim spectre, robed in black, who does not speak and whose body is entirely hidden except for one pointing hand. This spirit frightens Scrooge more than the others, and harrows him with a vision of a future Christmas with the Cratchit family bereft of Tiny Tim. A rich miser, whose death saddens nobody and whose home and corpse have been robbed by ghoulish attendants, is revealed to be Scrooge himself: this is the fate that awaits him.” http://en.wikipedia.org/wiki/A_Christmas_Carol#Stave_IV:_The_Last_of_the_Spirits
There are many promises from the Congress and the President about how wonderful Insurance Reform (formerly Health Care Reform) will be for the American people.
If we want an insight into what will likely happen if these folks get their way, we need only look at what they are doing right now.
Over ten million American seniors – myself included – are enrolled in Medicare Advantage plans. These are plans that mirror the program the proponents of reform say the “government option” will look like. So, you’d think the Pres and Pelosi would hold them out as a stellar example.
Not so. Instead they want to elimimate them and toss ten million Americans out on their keesters – OUCH! What;s going on. Here’s a program that delivers ALL of the benefits that are claimed to accrue from “reform” but the reformers want to terminate – along with a bunch of us old folks – because the program is “too expensive.” Just like the hip replacement I anticipate in about ten years when I’m 80 will be too expensive because the wonderful government program needs the money for something else.
Wake up America! The issue isn’t helath care, cap and trade, or immigration, the issue is LIBERTY. The Founders of America broke with England because the British government confiscated the liberty of individuals through oppressive legislation and governance.
While we all want improvements to the way we deliver and pay for our health care, few truly want the Government to take over. Say NO to any national health insurance scheme that directly or indirectly through “co-ops” cedes control to any agency or organization other than YOU and your family.
Beware of promises that are promised only to win your support. If the Pelosi/Obama plan passes your future health care will be diminished as will you LIBERTY and your personal economy will suffer severly.
For a workable alternative that doesn’t allow the federal governmant to take over, seeNO! below or view the diagram at Adobe.com
Posted in Legal, Ethical, Moral, Taxes | Tags: american seniors, Congress, government program, Health, health care reform, helath care, insurance reform, insurer, liberties, Money, undefined, wake up america | No Comments »
NO! To National Health Insurance…
August 14, 2009 | Author dragonfly
“What we’ve got here is failure to communicate.” Cool Hand Luke, 1967
The US Congress and the Executive Branch of the US government are not listening to America. America wants “soulutions” to problems not government take-overs.
Put this simple diagram of a Universal Health Care Program, which is being ignored in DC, in the hands of every American you know. Maybe, just maybe, someone will pay attention.
EUREKONOMICS™ – Knowledge, Understanding, And Wisdom…
August 14, 2009 | Author Dr Agon Fly
Financial Literacy
Knowledge, understanding, and wisdom are complimentary and synergistic. However, it should be clear that only wisdom embodies the qualities of all three. It is possible to have an abundance of knowledge, deep understanding, and a complete lack of wisdom.
NAZI Germany (and successors totalitarian governments around the world today) demonstrated this gap most shockingly when it applied knowledge of what is required to sustain human life and understanding of how to eliminate those requirements to annihilate six million Jewish and other human beings. Wisdom was absent.
When discussing knowledge, understanding, and wisdom as they relate to personal economics, considering the role of education is essential. 21st century Americans do not understand money. One of America’s leading commentators on money, wealth, and business in general said this:
“In most cases, when people make more money, they get deeper in debt.” – Robert Kiyosaki
These folks have knowledge and understanding but a serious deficit in wisdom.
Nonsense from VP Joe Biden and Others
Our educators, legislators, unions, big businesses, and government bureaucracies have led Americans down a similar path to financial ruin. Many Americans’ personal economies are already broken and the US government is following a fools path to financial ruin with its insistence that “We the people” need more debt.
“Now, people when I say that look at me and say, ‘What are you talking about, Joe? You’re telling me we have to go spend money to keep from going bankrupt?’. The answer is yes, that’s what I’m telling you.” – VP Joe Biden
Debt Equals Loss of Liberty
The foundation for a personal (or national) economy is money that you control. Debt is money that others control. Worse still, it is money that you actually pay those others to control. You give up your libertyand pay others to do so as if it were a privilege.
Alternative to Debt
EUREKONOMICS™ teaches that money serves you in four – and only four – ways.
- It serves to eliminate debt and regain control of money that was previously ceded to others.
- It serves as ready cash to deal with life’s surprisingly unsurprising surprises – unexpected expenses and opportunities.
- It serves to deliver inflation protected income at a time of your choosing that you don’t have to work for and you can’t outlive.
- Finally – in every sense – your money and your wisdom about money allow you to deliver a legacy to those you care most about.
Debt is financial death and the death of liberty. Presidents, Vice Presidents, legislators, union bosses, big business execs, and individual Americans that fail to recognize this fact lack knowledge, understanding, and wisdom.
Jeffrey Reeves
The American Trinity…Led By Liberty
August 4, 2009 | Author dragonfly
Dennis Prager recently commented that he has been carrying American values around in his pocket for his entire adult life. To clarify he reminded his audience that those values appear on the coins and currency of the United States: Liberty, E Pluribus Unum, In God We Trust. He referred to these values as the American Trinity.
These observations seem most appropriate at this time in the history of America. It’s also most interesting that Dennis Prage linked these values to the US of A’s coinage and currency. Particularly, the idea of liberty relates directly to money. When the government controls the money that Americans rely on for life, liberty, and the pursuit of happiness, those inalienable rights of Americans are diminished.
In fact, throughout the recorded history of mankind, when governments control the citizenry by controlling the money that those citizens produce, those governments become facist, autocratic, repressive – even murderous. We need only observe what’s going on in Zimbabwe, Venezuala, Iran, and North Korea today.
What’s going on in Washington DC is also disturbing. America is on the brink of the greatest loss of liberty in its 233 year history; a loss that would be mourned equally by Democratic icons Jefferson and Jackson and equally by Lincoln, the soul of the Republicane party. The more of our money that the US Congress and the Executive Branch controls, the less liberty we have.
It makes me proud to see and hear American citizens shouting down the puppets of the political parties and demanding the transparency and honesty we were promised during the 2008 campaign. It will make me ecstatic when the US Congress backs away from the failed strategy that is on the table now, August, 2009.
That will only happen if Americans continue to challenge the Washington oligarchy that continues to deny we the people our voice.
When This History Repeats, Your Personal Economy Erodes…
July 27, 2009 | Author dragonfly
Ron Jennings, a successful Money for Life Guide in West Chester, Ohio, emailed this Adrian Rogers quote. While you are reading it, reflect on the policies and practices of the federal government during the Great Depression.
“You cannot legislate the poor into prosperity by legislating the wealthy out of prosperity.
What one person receives without working for, another person must work for without receiving.
The government cannot give to anybody anything that the government does not first take from somebody else.
When half of the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for, that my dear friend, is the beginning of the end of any nation.
You cannot multiply wealth by dividing it.”– Adrian Rogers, 1931 – 2005
The most prosperous decades in American history for the common citizen occurred in the late 20th century when the Federal Government reversed the policies of the Great Depression and reduced its meddling in the personal economics of the American family.
Unfortunately, those also turned into the decades of the greatest financial frauds in American history. Not the least among these frauds (but the least recognized and reported) are the pork-barrel projects of the power and money hungry Dolts in DC.
The problem we Americans face today is that our personal economies are being attacked by the cons in Congress and White House Wonks. Their attack is based on the false premise that Adrian Rogers stated so clearly just a few years ago (above). The saddest aspect of the current attempt to reduce the individual liberties of every American by a small majority of committed liberals is that it failed in the 1930s and it won’t work today. Moreover, the elitists in Congress are unwilling to apply to themselves the same standards they want to apply to unsuspecting Americans – that includes you and me.
The greatest attack on your personal economy comes from the proposed National Health Insurance plan. The simple reality is that the “plan” is more complex and convoluted than even Medicare and Medicaid – both of which are riddled with fraud and neither of which has reached a level of fiscal discipline needed to become a model for all of America.
Even worse, the “plan” favors big unions, big business, big government, and big bureaucracies at the expense of everyday citizens and small and micro businesses like the Avon lady, the child care center, the local independent insurance rep, small manufacturers and distributors, the local plumber, electrician, and heating contractor, and too many others to mention.
The greatest fraud, however, is that there is not a single congressperson that has read and evaluatedthe several 1,000+ page bills that are being bandied about the halls of the Capitol; nor will they. They plan to lift our liberties right out of our pockets and they don’t care enough to know all the details.
By Jeffrey Reeves, MA
Posted in Legal, Ethical, Moral, Personal Financial Management | Tags: citizens, Congress, economics, economy, financial, liberties, Money, wealth | No Comments »
Our Tax System … Explained In Beer …
July 22, 2009 | Author dragonfly
A gift of humor and wisdom from Brad Sugars of Action Coaches…
Suppose that every day, ten men go out for beer and the bill for all ten comes to $100. If they paid their bill the way we pay our taxes, it would go something like this…
The first four men (the poorest) would pay nothing.
The fifth would pay $1.
The sixth would pay $3.
The seventh would pay $7.
The eighth would pay $12.
The ninth would pay $18.
The tenth man (the richest) would pay $59.
So, that’s what they decided to do.
The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve. “Since you are all such good customers,” he said, “I’m going to reduce the cost of your daily beer by $20.” Drinks for the ten now cost just $80.
The group still wanted to pay their bill the way we pay our taxes. So the first four men were unaffected. They would still drink for free. But what about the other six men? The paying customers? How could they divide the $20 windfall so that everyone would get his fair share?’ They realized that $20 divided by six is $3.33. But if they subtracted that from everybody’s share, then the fifth man and the sixth man would each end up being paid to drink his beer.
So, the bar owner suggested that it would be fair to reduce each man’s bill by roughly the same amount, and he proceeded to work out the amounts each should pay.
And so the fifth man, like the first four, now paid nothing (100% savings)
The sixth now paid $2 instead of $3 (33% savings).
The seventh now pay $5 instead of $7 (28% savings).
The eighth now paid $9 instead of $12 (25% savings).
The ninth now paid $14 instead of $18 ( 22% savings).
The tenth now paid $49 instead of $59 (16% savings).
Each of the six was better off than before. And the first four continued to drink for free. But once outside the restaurant, the men began to compare their savings.
“I only got a dollar out of the $20,”declared the sixth man. He pointed to the tenth man,” but he got $10!”
“Yeah, that’s right,” exclaimed the fifth man. “I only saved $1 dollar, too. It’s unfair that he got ten times more than I!”
“That’s true!!” shouted the seventh man. “Why should he get $10 back when I got only two? The wealthy get all the breaks!”
“Wait a minute,” yelled the first four men in unison. “We didn’t get anything at all. The system exploits the poor!” The nine men surrounded the tenth and beat him up.
The next night the tenth man didn’t show up for drinks, so the nine sat down and had beers without him. But when it came time to pay the bill, they discovered something important. They didn’t have enough money between all of them for even half of the bill!
And that, boys and girls, journalists and college professors, is how our tax system works. The people who pay the highest taxes get the most benefit from a tax reduction.
Tax them too much, attack them for being wealthy, and they just may not show up anymore. In fact, they might start drinking overseas where the atmosphere is somewhat friendlier.
For those who understand, no explanation is needed.
For those who do not understand, no explanation is possible.
“Change We can Believe In” Has Morphed Into “Chains We Will Grieve In”
July 16, 2009 | Author dragonfly
Jobs in the 21st Century
Change We can Believe In?
NOT!
Chains We Will Grieve In?
INDEED!
Chains on the Citizens of America?
- Billions in Bank Bailouts that Bombed.
- Uber-Billions in Un-stimulating Stimulus.
- Trillions in Takeovers of the Auto Industry and the Health Care Industry.
- Trillions in Taxes On the Engines of Job Creation Diverted to Bumbling Bureaucrats
- Trillions Upon Trillions of Debt to Foreign Governments and Oil Cartels imposed on Unborn Americans
President Obama and the Democrats in the US Congress are tinkering with the motherboard of economics without knowing anything at all about the printed circuitry that makes it work.
Chains on Jobs
They have to stop! They have to stop BEFORE they takeover health care. If they don’t, pretty soon the only jobs in America will be…
- government jobs
- jobs for businesses that the government runs
That’s not Free Enterprise.
That’s not “life, liberty, and the pursuit of happiness.”
That’s not the America envisioned by the Founders.
That’s not the America Americans want.
Posted in Debt, Legal, Ethical, Moral, Taxes | Tags: auto industry, billions, bureaucrats, citizens, Congress, debt, democrat, democrats, economics, government jobs, health care industry, job creation, obama, oil cartels, Taxes, trillions, us congress | No Comments »
EUREKONOMICS’™ Non-Violent Defense Of Your Personal Economy…
July 6, 2009 | Author Dr Agon Fly
Redefining America and “American”
America needs neither the terrifying tsunami of new programs overwhelming it from the White House nor the violent volcanic eruption of legislative magma and ash under which the Congress is burying us…can you say “DEBT?”
Who Is In Charge?
Some Americans voted for “change” during last years presidential sweepstakes – clearly a gamble. However, a very small but not inconsequential minority of far left politicians, union bosses at the helm of sinking ships loaded with the gold of working Americans they claim as their own, and cabinet members turned bureaucrats conspire to takeover the US economy.
There are other contributors to and beneficiaries of these catastrophic changes:
- ACORN, a secretive organization that manipulates good-hearted Americans for the benefit of its intentionally obscure ideology and the financial benefit of its dishonest leaders
- The union bosses of the SEIU, AFL/CIO, AFSCME and others who confiscate dues from their members to elect their puppets and line their own pockets
- AARP- Americas largest insurance seller masquerading as the voice of older citizens while it lobbies for programs that will enhance its bottom-line and increase the political power it wields in the White House and on Capitol Hill
- Al Gore’s army of uninformed global warming crusaders who would willingly weaken the US economy – and therefore the personal economy of every US citizen – while China, India, the Oil States and other economic powerhouses buy America with money made by ignoring the same unrealistic and unnecessary protocols the Dolts in DC impose on American citizens and businesses
- Other vocal interests in the non-profit and for profit sectors that hope to benefit from the “re-interpretation” if the US Constitution, the restructuring of the US economy, and the re-definition of what it means to be an American.
Put Yourself In Charge of Your Personal Economy
The question – or perhaps answer – the title to this article addresses is…
“How can you protect yourself and your family from the almost certain economic crises financed by the unimaginable debt these ill-advised and programs incur?”
The answer: Change your mind about money. Americans have been taught to compartmentalize money issues. We’ve been led to believe that we can fix our personal economic problems by focusing on one issue at a time: the mortgage, the 401(k), creating the mythical six months savings account, taxes. As an example, a TV commercial running currently suggests that you can fix your monthly budget by changing from your existing satalite TV company to theirs – a savings of a few dollars per month.
Personal economies don’t work that way.
Personal economic success results from adopting a personal economic model that allows you to address all of the challenges you face during your lifetime; that allows you to flexibly and creatively deal with them as they arise without losing focus on the big picture.
Here’s how: Focus on four – and only four – uses of your money.
1. Ready cash…There is a myth in America that you should have three to six months of expenses set aside to deal with emergencies.
BUNK!
Consider how many American families today are facing foreclosure, repossession of their cars and furniture, bankruptcy…all because they believed in the myth and ran out of money way too soon.
Consider how many of these same folks would have spent the Fourth of July sitting on the patio, drinking a beer, and watching the kids play if they had based their personal economies on cash instead of credit.
American’s need to base their personal economies on cash money and not monthly interest charges that make others wealthy from their repayments of borrowed money.
In addition, they need enough ready cash to deal with life’s surprisingly unsurprising surprises not just emergencies.
2. Income you don’t have to work for and you won’t outlive.
There’s another myth that plays into the failure of personal economies. Most Americans are convinced that retirement is both desirable and achievable.
BUNK!
Most Americans believe that they are saving for retirement by putting money into a tax qualified retirement plan like a 401(k), IRA, or the like.
First of all, chances are better than even that money in a tax qualified plan will not produce the income it was projected to deliver when it was sold to you 20, 30, or 40 years earlier. It is the purchase of an investment that guarantees only that it guarantees nothing. It is not a savings plan. Moreover, it is equally likely that the taxes on that income will be higher than those shown in the hypothetical illustration from decades earlier.
Everyone dies. People who retire, i.e., dissolve into inactivity, die sooner. Life expectancy has increased dramatically over the past fifty years. If you are reading this, are in decent health, and don’t engage in stupid life-threatening activities, you can expect to live to be 100 years old – or older.
What’s the point? Most retirement income plans (including tax qualified plans) and planners use life expectancy tables to determine how you should allocate your resources from the time you retire until the date of your death at average life expectancy, which is most likely a decade or two less than your actual life span will be. Sounds like bad planning to me.
Better to have a proven model that makes sure you have the income you need whether you work or not but doesn’t strap you with the limitations and probable failures of a hypothetical plan that neither guarantees nor promises specific results.
3. Freedom from debt…There are pundits and advisors who would have you believe that there is such a thing as “good debt.”
BUNK!
It is essential to reduce and eliminate debt to others. This may not be the first item on the “to do” list if you have a mortgage, auto loans, credit card debt, etc. but is equally as important as the others.
The USA Today article referenced above illustrates that America is “in debt up to [its] eyeballs” and has no reasonable chance of escaping the dungeon it’s creating for itself. As Peggy Lee sang a few decades ago, “Is that all there is?…If that’s all there is, my friend, then let’s keep dancing. Let’s bring out the booze and have a ball, if that’s all there is…”
Reliance on debt for the essentials and perks of living in the US is financial nihilism; keep using it until you can’t, embrace failure, and start again. Unfortunately, there are thousands of homeless Americans that discovered that it is nearly impossible to regain what they lost to debt. There are millions more that find themselves in diminished circumstances or relying on public assistance and charitable largess.
None of the above denies that there are occasions when incurring debt can be useful. Our economy permits it and encourages it when there are no other reasonable alternatives; the home mortgage being the prime example. However, relying on debt to build your personal economy is just as silly as relying on a poor diet to assure your health.
4. Your legacy…There is a class of Americans that believe you should die broke and leave no legacy to your heirs or anyone else.
BUNK!
I personally feel that leaving a legacy of wisdom and wealth (if you have it) is one of the main reasons God put us here. The Declaration of Independence and the US Constitution embody the economic wisdom we need to pass on based on their Judeo-Christian value system.
Creating family wealth has allowed America to grow into the most powerful economy in history. The simple truths found in the finaicial admonitions of Benjamin Franklin, Alexander Hamilton, and other lesser knowns are why Americans have amassed more wealth in 200 years than the rest of the world did in two millennia.
Perhaps those who have received no legacy find it difficult to comprehend these ideas. If that’s you, let me ask you to imagine your life had you received the guidance of wise counsel and the benefit of a financial foundation. If you do so honestly, you will recognize the value of legacy – and do something about it.
These four pillars are essential to every successful personal economy.
Money is the essential foundation for that success. Debt may play a role, but it erodes the foundation and weakens the structure so must be used sparingly and cautiously.
Remember the paradox of frugality: When individuals strengthen their personal economies by following the practices of the EUREKONOMICS™ Model they weaken the hold of The Debt Paradigm on the economy that is being promoted in Washington and on Wall Street.
The “soulution” to the thrift paradox may be as elusive as Nessie (the Lock Ness monster) to the Dolts in DC and the Wonks on Wall Street, so I expect the US economy to muddle along until we replace them with representatives that actually understand economics and have a modicum of wisdom.
In the meantime, take care of yourself. Build your personal economy on a solid foundation that supports the Four Pillars.
Jeffrey Reeves
Posted in Debt, Personal Financial Management, Retirement | Tags: credit, debt, economics, economy, EUREKONOMICS, EUREKONOMIST, financial, interest, investing, investments, legacy, Money, mortgage, mortgages, Retirement, saving, savings, Taxes, wealth, wisdom | No Comments »
America’s Going Broke in Style…Thanks Congress!
June 29, 2009 | Author dragonfly
Going Broke in Style
While the Chinese, Middle Eastern, and Indian economies achieve new levels of diversity based on productive labor, America’s economic charm seems to lie in the misguided and misanthropic measures flowing out of the US Congress at the behest of President Obama. America is putting on heavy chains of debt, locking it in for decades and giving the keys to foreign governments that have our demise as one of their primary goals.
Where Is The Fourth Estate?
Don’t the successless sychophants in the mainstream media recognize that the Federal Government is following precisely the same path illustrated in the famous (or perhaps infamous) Stanley Johnson commercial? The Congress and the President have us up to our eyeballs in debt, and it’s debt to the wrong people.
What does that mean for your personal economy?
- It means that money that you have faithfully deposited into retirement accounts is at great risk.
- It means that every penny of debt you have personally, compounds the debt you have as a US citizen.
- It means that the advice you received over the past thirty years is wrong.
- It means the rules have changed, or at least reverted to the more sensible guidlines that allowed our forebears to live and die comfortably without relying on debt-to-others.
- It means – most of all – that those who change their way of creating and managing their personal economies and personal wealth will have a much better chance of escaping the swamp into which our “leaders” are guiding us.
Keep Your Eye on the Prize
Personal economics is like a jigsaw puzzle. If you don’t know what the final picture looks like, you’ll have a great deal of difficulty solving it. Americans have lost sight of the end result - creating and managing their personal economies – and have been deluded into thinking that the pieces of the puzzle – investments, mortgages, IRA’s, etc. – are what’s truly important.
The problems in DC and the problems in your household are the same. The pieces make up the puzzle, but no one piece is the solution. Instead, we recommend that you find a “soulution” that fits you and your family.
by Jeffrey Reeves MA, EUREKONOMIST
Posted in Debt, Personal Financial Management | Tags: Congress, debt, economics, economy, Money, personal, Retirement, risk, wealth, wealth creation | No Comments »
Warnings Across Centuries From Thomas Jefferson – Democrat…
June 24, 2009 | Author dragonfly
It has been said the greatest volume of sheer brainpower in one place occurred when Jefferson dined alone…
HOW DID JEFFERSON KNOW???
Especially read the last quote from 1802.
“When we get piled upon one another in large cities, as in Europe, we shall become as corrupt as Europe.”
“The democracy will cease to exist when you take away from those who are willing to work and give to those who would not.”
“It is incumbent on every generation to pay its own debts as it goes. A principle which if acted on would save one-half the wars of the world.”“I predict future happiness for Americans if they can prevent the government from wasting the labors of the people under the pretense of taking care of them.”
“My reading of history convinces me that most bad government results from too much government.”
“No free man shall ever be debarred the use of arms.”
“The strongest reason for the people to retain the right to keep and bear arms is, as a last resort, to protect themselves against tyranny in government.”
“The tree of liberty must be refreshed from time to time with the blood of patriots and tyrants.”
“To compel a man to subsidize with his taxes the propagation of ideas which he disbelieves and abhors is sinful and tyrannical.”Thomas Jefferson said in 1802:
“I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks (and the Federal Reserve IS a private bank) to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around the banks will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered..”
And, just for kicks, Mark Twain said this: ‘If you don’t read the newspaper you are uninformed, if you do read the newspaper you are misinformed.’
Posted in Legal, Ethical, Moral, What Others Say | Tags: bank, banking, banks, debt, democrat, inflation, liberties, saving, savings, Taxes, tyranny, undefined | 1 Comment »
Another Power Grab By The FED, SEC and the Dolts in DC
June 24, 2009 | Author dragonfly
“The National Association of Fixed Annuities, Milwaukee, has voiced that concern in a member alert…
“NAFA sees the proposal as “a clear attempt to take control – read collect fees – on all product recommendations,” including recommendations involving life insurance, long term care insurance, health insurance, property-casualty insurance, savings accounts and fixed annuities, NAFA officials say.”
http://www.lifeandhealthinsurancenews.com/News/2009/5/Pages/NAFA-Pans-FINRA-Draft.aspx
Maybe the answer is for independent insurance and financial advisors to relinquish S6, S7, etc. registrations and quit selling securities. Few Americans are truly qualified investors and most annuity buyers are not.
Whole life, health, and annuity products are usually more than adequate to secure the wealth of the typical American and her/his family and they grow and secure family wealth without risk and without worry.
Pretty soon we will allow the Feds take every authority away from us and our freedom will go with them. Life, health, and annuity agents should not be worried about fixing the system that’s gotten us into the mess we are in now; the same mess that allows the power-hungry in the FED and in DC to grab control. We should be looking for a “soulution” that lets the state insurance departments maintain authority and control.
Perhaps, therefore, the answer to the ongoing challenge of FINRA and the power-grabbers in DC is to withdraw from their area of control. The fewer professional insurance and financial advisors (yes, you can be a true financial advisor without any securities registrations) they control, the less power they wield.
A Fable – The Stimulus Story
June 16, 2009 | Author Dr Agon Fly
It is the month of August, on the shores of the Black Sea. It is raining, and the little town of Bombasticus looks totally deserted. It is tough times, everybody is in debt, and everybody lives on credit.
Suddenly, a rich tourist comes to town. He enters the only hotel, the Ritzski, lays a 100 Euro note on the reception counter, and goes to inspect the rooms upstairs in order to pick one.
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Pierreski, The hotel proprietor quickly takes the 100 Euro note and runs to pay his debt to Thumbless Joe the butcher
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Thumbless Joe the Butcher takes the 100 Euro note, and runs to pay his debt to Porky the Pig Farmer.
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Porky the Pig Farmer takes the 100 Euro note, and runs to pay his debt to Fred at the Pig Feed Store.
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Fred at the Pig Feed Store takes the 100 Euro note and runs to pay his debt to the Irma, the town’s prostitute that, in these hard times, gave her “services” on credit.
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Irma runs to the hotel, and gives the 100 Euro note to Pierreski the hotel proprietor to pay for the rooms that she rented when she brought her clients there.
The hotel proprietor then lays the 100 Euro note back on the counter so that the rich tourist will not suspect anything. At that moment, the rich tourist comes down after inspecting the rooms, and takes his 100 Euro note, after saying that he did not like any of the rooms, and leaves town.
No one earned anything. However, the whole town is now without debt, and looks to the future with a lot of optimism…
And that, ladies and gentlemen, is how the United States Government is doing business today.
Posted in Debt, Money, Personal Financial Management | Tags: credit, debt, stimulus, tough times, united states government | No Comments »
Power Grab By The SEC, FINRA, & DC Jeopardizes Your Wealth
June 5, 2009 | Author Dr Agon Fly
“The National Association of Fixed Annuities, Milwaukee, has voiced that concern in a member alert.
“NAFA sees the proposal as “a clear attempt to take control – read collect fees – on all product recommendations,” including recommendations involving life insurance, long term care insurance, health insurance, property-casualty insurance, savings accounts and fixed annuities, NAFA officials say.”
http://www.lifeandhealthinsurancenews.com/News/2009/5/Pages/NAFA-Pans-FINRA-Draft.aspx
Few Americans are truly qualified investors and most annuity buyers are not. Whole life, health, and annuity products are usually more than adequate to secure the wealth of the typical American and her/his family and they do the job without risk and without worry.
American citizens and their life, health, and annuity agents should not be worried about fixing the system that’s gotten us into the mess we are in now; the same mess that allows the power-hungry in the SEC and in DC to grab control. We should instead be looking for a “soulution” that lets the state insurance departments maintain authority and allows individual Americans to maintain control of their saving and insurance programs.
If individual Americans don’t watch these regulators “like a hawk,” pretty soon we will allow the Feds take every authority away from individuals and the individual 50 states and our freedom will go with them.
Perhaps, therefore, the answer to the ongoing challenge of FINRA and the power-grabbers in DC is for every citizen to encourage their advisors to withdraw from the arena FINRA and the SEC control. The fewer professional insurance and financial advisors (yes, you can be a true financial advisor without any securities registrations) these power hungry bureaucracies control, the less power they wield.
Posted in Personal Financial Management, What Others Say | Tags: annuities, annuity, financial, finra, Health, insurer, Life, risk, saving, savings, undefined, wealth | 2 Comments »
EUREKONOMICS™ On The Ethics Of Selling Investments…
May 21, 2009 | Author dragonfly
A Disorganized Conspiracy…
America is prone to adopt ideas that are popularized by the advertising and indoctrination of Behemoths (big business, big unions, and big government) regardless of the intrinsic value of the idea itself. The idea that average Americans should be investing is such a disorganized conspiracy. Its premise lacks intrinsic value.
That doesn’t mean Americans are all lemmings and sheep. Even those on the inside of a disorganized conspiracy, such as the one that is damaging Americans’ personal economies today, are unaware of the untruth that supports the manufactured myth. That lack of awareness gradually creates a shibboleth – an oft-repeated idea that the public as well as the purveyors come to perceive as truth just because it is so often repeated by so many.
The idea that most Americans should be investing, is such a shibboleth. It is time for insurance and financial advisors to begin demonstrating the untruth of that idea. It is time to challenge the ethics of selling investments to their friends, neighbors, and clients.
The Challenge…
The argument against investing begins with a clear understanding. What most Americans believe to be an investment is really a speculation, i.e., a gamble. Benjamin Graham said it best when he stated, “An investment operation is one which, upon thorough analysis, promises safety of principal and an adequate return. Operations not meeting these requirements are speculative.”
Mutual Funds and 401(k)s…
Does anyone believe that buying a mutual fund promises safety of principal? Is a sixty percent loss of value an adequate return?
Mutual funds and their counterparts inside 401(K)s and equivalent tax qualified plans are inscrutable, they defy analysis, and certainly do not promise “safety of principal and an adequate return.” In other words, they are speculative; they are gambles. Their only promise is that they promise nothing at all.
Well, that’s not entirely true. It’s especially untrue for tax qualified retirement plans, which promise future taxation at a potentially much higher rate than the deduction rate available when contributions are made.
Free Money…
“Yes but…” what about the matching from the company? Doesn’t that free money make up for possible losses?
It does, but only to the extent that the tax rates do not increase between now and the time you begin taking income from your retirement accounts.
If you follow the conventional wisdom and contribute the maximum to your retirement accounts, the employer portion represents a minimal amount of the total in the account. If you choose to contribute only as much as qualifies for the employer match, the entire amount of your future income will still be taxed. If that amount happens to be 50% of what it was last year, you’ll end up paying tax at a potentially higher rate on significantly less money.
From a different perspective, the amount of the tax deductions you receive currently constitutes a lien against your future earnings. However, unlike the lien on a property, the contributions to a tax-qualified plan do not diminish your liability. Additional contributions increase it. If tax rates also increase, you will experience the negative effect of compound interest.
More Myths…
There are a few myths that the Behemoths promote as part of the foundation to the shibboleth that all Americans should be investing. One of the most pernicious of these myths is the idea that a family only needs enough ready cash to cover three to six months of income or living expense.
The reason this myth was born was to free up more of your money for investing. Ready cash of three to six years of income or living expense is much more reasonable and is entirely achievable when saving replaces investing as a part of your personal economic picture.
“Yes but…” what about the rate of return? Can’t you expect a greater rate of return from investments than you can from savings?
NO! That’s another myth.
Recent studies demonstrate that money in safe bonds, which reflect savings returns, perform as well over the long-term as investments. This is significant because the insurance companies that we recommend tend to rely on the Prudent Man Rule and low risk financial vehicles for your money. The author just completed one study that compared the returns in a whole life policy to those of the Dow Jones Industrials over the past ten years. The whole life policy outperformed the DJIA by almost 130%.
A third myth, implied in the previous discussion and designed to tempt you to gamble your money, is that investing is for the long-term. However, individual investors do not produce the same results that the Behemoths have promoted and advertised to induce Americans to invest – aka, gamble – their money in the markets. The Behemoths speak only of averages. They focus your attention on the top of the mountain and fail to point out the chasm that looms immediately ahead. (You know that’s true today more than ever.)
The Question…
The purpose of this article is to raise the question: “Is it ethical to sell investments – especially inaccessible tax qualified retirement plans – to Americans that have auto loans, credit card debt, mortgages, lines of credit, and only a few months in cash reserves?”
Consider how many Americans today are unemployed and raiding their retirement accounts to keep up with debt payments or to deal with another of life’s surprises during what is going to be a very long and painful recovery.
Consider the recent revelations about the greed for your money found on Dull Street (formerly Wall Street) and in the halls of government by the Dolts in DC (all 535 in Congress and the 43,000+ lobbyists that feed them).
Can we afford to be silent about the conditions that have led so many to or over the brink of financial ruin?
Isn’t it time for Americans to withdraw from tax-qualified plans, get their money out of the banking, investing, and tax systems, and put it where they and they alone have control?
By Jeffrey Reeves MA, youbethebank.com
Posted in Legal, Ethical, Moral, Personal Financial Management | Tags: credit, debt, economics, economy, ethics, financial, interest, investing, investments, Money, Retirement, risk, saving, savings, Taxes | 1 Comment »
Unconventional Wisdom About The Fed and The Future…
May 5, 2009 | Author dragonfly
This post is mainly a link to a powerful assessment of conventional wisdom about the future of the US and the world economy by Jim Welsh, an investment advisor/economist that has been right more often than wrong.
Jim Welsh of Welsh Money Management has been publishing his monthly investment letter, “The Financial Commentator”, since 1985. His analysis focuses on Federal Reserve monetary policy, and how policy affects the economy and the financial markets.
This newsletter is dense, loaded with statistical data, and won’t be an easy read for the casually interested. It is worth the time and energy you’ll need, however. There will be a follow-up to this post that will deal with the Ethics of Advising Investing to Middle America – or something like that.
By Jeffrey Reeves, MA, Master Money for Life Guide, youBEthebank.com, ltd.
Posted in Legal, Ethical, Moral, What Others Say | Tags: economy, energy, financial, investing, investments, Life, Money, policies, undefined, wisdom | No Comments »
“If only,” “Someday Isle,” & “A Round Tuit”…Three Stooges
May 3, 2009 | Author dragonfly
The two most frequently asked questions posed to Money for Life Guides are:
“Why haven’t I heard of the EUREKONOMICS™ Model for Creating and Managing My Personal Economy before now?”
and…
“Why isn’t everyone using the EUREKONOMICS™ Model?”
However, one group of people (those who learned about this model years ago but whose thinking was trapped in the failed Debt Paradigm) are hanging out with the Three Stooges.
If Only…
On the one hand, they are wondering, “How much better our lives would be if only we had adopted the EUREKONOMICS™ Model ten years ago when we first learned about it.”
Truth be told.., if they had dedicated $10,000.00 a year to creating and managing their personal economy starting in November, 1998…
- had they chosen to invest that money in stocks, bonds, and mutual funds they would have had about $92,500.00 dollars in their accounts at the end of 2008 based on the performance of the Dow Jones Industrial Average.
- on the other hand, had they chosen to deposit that money into a Money for Life Account with guaranteed growth, they would have had almost $130,000.00 net of taxes, fees, and commissions.
Someday I’ll Get Around To It…
These folks may still be living on Someday Isle where the currency is A Round Tuit. They may still believe the failed advice to “be patient,” “hold on,” “wait for the rebound,” and, most damaging of all, “think long-term,” strategies designed to keep your money in a Behemoth’s account.
They believe that the recession will be over soon; that the economy of America and the world can be propped up with more government, more government spending, more government borrowing. They are convinced by the Dummies on Dull Street (formerly Wall Street) and the Dolts in DC (all of them) that giving control of their money to some Behemoth corporation, union, or government agency is somehow better than keeping it in accounts they control.
The time to change is NOW. Hear to what John Mauldin, a brilliant economic thinker, wrote in his weekly newsletter on May 1, 2009…
Next year, we will be entering what will certainly be the most dangerous era in my lifetime for the US economy. It is not clear what will happen. There are a lot of paths that can be taken…While I think the most likely outcome is a long Muddle Through recovery, the likelihood of a lost decade of deflation a la Japan is a very real potential outcome. And the possibility of stagflation and a seriously impaired dollar is also quite real…Investors, businessmen, and entrepreneurs need to be as nimble as possiblle. A free market will figure out what paths to take, and I am still optimistic about the long term. But we have some very dangerous times in front of us, and we need to be realistic.
What if…
It’s time to get off Someday Isle and learn how to grow rich without risk and secure wealth without worry. If you had left the island in 1998 you would obviously be better off today based on the example above. HowevEr, it doesn’t tell the whole story.
The money you held in your EUREKONOMICS™ Accounts would not have been idle. In addition to the growth referenced above, your money would also have been doing double duty…
- You could have borrowed from your account to buy a car and repaid yourself instead of the bank. That alone would have saved you thousands of dollars that you could have used to create a second Money for Life Account.
- You could have borrowed again to go on a grand second honeymoon, repaid that too, and saved the thousands of dollars – that would otherwise have been paid in credit card interest – in EUREKONOMICS™ Accounts.
The possibiities are endless.
by jeffrey Reeves MA, youBEtheBank.com
Posted in Money, Personal Financial Management, What Others Say | Tags: bonds, credit, debt, economics, economy, investing, investments, Money, risk, saving, savings, stocks, Taxes | No Comments »
Shenandoah Life Dragged Into Receivership By Freddie And Fannie…
April 27, 2009 | Author Dr Agon Fly
The MoneyforLife Blog will keep you posted on the progress of the almost century old Shenandoah Life Insurance Company as it emerges from receivership. What’s important to note is that this relatively small mutual insurer seems to have invested prudently and responsibly based on the support the US Congress gave to publicly held Freddie Mac and Fannie Mae.
Shenandoah Life has limited resources and cannot invest in large scale projects the way the Behemoths do. It must invest its capital based on generally available information from what it – and most others – would consider reliable sources. In this case the US Congress and the finance committees of the two houses were “sleeping with the enemy.” They were receiving significant campaign contributions from Freddie and Fannie and, at the same time, were aware of the great risks associated with the lending practices and portfolios of these two Behemoths of the mortgage industry. The committee power brokers intentionally withheld that information from the public – and Shenandoah Life and its policyholders are part of the public.
While dozens of financial institutions - mainly banks – are failing due to the irresponsible behavior of the entire industry and the failure of the Congress to exercise adequate oversight (not control), Shenandoah Life is the first casualty among life insurance companies. (No, AIG is not a life insurance company. It is a conglomerate Behemoth that owns life companies. Those life companies are doing OK.)
The cautionary tale here is that the 31 State Guarantee Associations will protected and preserved the personal wealth of Shenandoah Life policyholders. The federal folks, who contributed so significantly to this unfortunate failure will beat their chests, complain about executive compensation and divert attention away from their past and ongoing failures.
Stay tuned.
Here’s the Notice of Receivership…
“On February 12, 2009, pursuant to Title 38.2, Chapters 10 and 15 of the Virginia Code, the Circuit Court for the City of Richmond issued an Order that appointed the State Corporation Commission of the Commonwealth of Virginia as Receiver of Shenandoah Life.
Receivership is a protective measure established under Virginia law to protect policyholders in the event an insurer experiences financial difficulty. The Circuit Court for the City of Richmond found Shenandoah Life in a condition where any further transaction of business would be hazardous to the policyholders, creditors, members, and the public. Both Shenandoah Life and the State Corporation Commission determined that the receivership was necessary to protect the interests of policyholders and creditors.
For additional information regarding the receivership, please visit our web site www.shenlife.com, or you may contact Shenandoah Life at 1-800-848-5433.”
by Jeffrey Reeves – youBEthebank.com
Posted in Legal, Ethical, Moral, What Others Say | Tags: aig, bank, behemoth, Congress, financial, insurer, investing, mortgage, mortgages | 4 Comments »
529 Plans Guarantee Nothing And May Deliver The Same…
April 21, 2009 | Author dragonfly
An article, Turmoil Spooks 529 Holders, published in the National Underwriter on 4/20/2009 By TREVOR THOMAS indicated a flight to safety by some parents and grandparents that were putting money aside in 529 Plans for the college educations of their children and grandchildren.
This is one more indicator that America is waking up to the reality that Wall Street and the Dolts in DC have been telling us to “save” but that what they are really telling us is to gamble. Investing is clearly very risky. Investing that is disguised as saving is clearly a con of the lowest character. Putting your children’s or your grandchildren’s future at risk based on a con game that you or they cannot win is foolish.
Of course, the con-artists don’t tell you that. They project 8% gains year upon year and proclaim it the truth. They ignore actual investor performance history and substitute generic stock market statistics that support their sales proposal. (Sales proposals are OK when they are sales proposals. They are a con when they are packaged as sage personal finance advice.)
A truly sage advior told me today during an interview that he makes sure his college funding proposals incorporate cash value life insurance, which is not counted when seeking financial aid, and rely on gurantees that are –>
-
truth based
-
objective
-
verifiable
That kind of advice might just lead to reliable wealth creation and wealth preservation, intelligent legacy planning, and the perfect investment.
You might want to evaluate529 Plans that way, too.
by Jeffrey Reeves – youBEthebank.com
Posted in Legal, Ethical, Moral, Money, What Others Say | Tags: 529 plans, college educations, financial, financial advice, investing, investments, Money, risk, saving, savings | No Comments »
Save From Income. Invest From Assets – If You Must…
April 19, 2009 | Author jr
Answer to a Financial Advisor’s Question…
An insigthful Money for Life Guide recently asked…
“There is one concept in the book Money Now, Money Later, Money for Life that I am interested in being better able to more fully understand, teach and implement, ‘Save from income and invest from assets.’ Basically, my understanding is to save from income, purchase assets with savings & leverage, and use the income from assets to replenish the savings…”
Your understanding seems to be basically correct but also contains two assumptions that are alien to The EUREKONOMICS™ Model for creating wealth and managing personal finances.
- First, your question seems to assume “leverage” as a part of the investment equation. Leverage–in the minds of most people–implies borrowing from others, so it implies that the source of borrowed money is not under the control of the borrower. The EUREKONOMICS™ Model rests on the idea that individuals and families need to control the money that flows through their lives. When individuals and families borrow from an outside source, they are falling into the Debt Paradigm trap that chants the mantra “You cannot have what you need and want unless you borrow from others to get it.”
- Second, your question seems to assume that assets produce income. Some assets do not produce income; your home, your car, collectibles, precious metals, and so on. Moreover, some assets that are supposed to produce income do not; GM bonds, most mutual funds, some real estate, and so on.
- In addition, the unspoken conclusion of that sentence seems to be that the assumed income from the assets would reduce or eliminate the debt created to acquire those assets. (Ask anyone who has been tricked into one of the many get rich quick and easy schemes of the past about relying on formulas based on an ever increasing value of assets.) There are two malicious Debt Paradigm shibboleths embodied in this conclusion. The Debt Paradigm encourages having stuff you don’t own and owning investments you don’t control.
- Other People’s Money – The Debt Paradigm would have you believe that what it calls leverage, borrowing from others, is really “arbitrage.” Not so. Arbitrage is the process of buying in one market and selling in another to take advantage of varying prices [Oxford Dictionary]. A money lender uses arbitrage when it borrows from savers and pays them 3%, knowing that someone else will borrow the same money from the money lender at 6% for a mortgage, 8% for a car loan, or 18% on a credit card. It is not arbitrage when one borrows from a money lender. It’s debt and a burden on the resources of the individuals and families that are borrowing.
- Assets Increase in Value – No need to belabor this point today. The Debt Paradigm acts on the assumption that 1907, 1929-1942, 1973-6, 1979, 1982-4, 2002-3, 2008-20nn will never happen again or that the investor should only consider the long-term. DUH.
A More Accurate View of Wealth Creation and Financial management…
Let’s take a look at how the EUREKONOMICS™ Model for creating wealth and managing personal finances sees this issue.
Saving…
The EUREKONOMICS™ Model for creating wealth and managing personal finances tells one to save from income. Saving doesn’t imply investing in a 401(k), IRA, or equivalent plan. We’ve all seen what’s been happening to the money that Americans ‘saved’ in those kinds of plans.
Saving means putting money in a secure financial vehicle that guarantees a reasonable return for as long as the money remains an asset of the financial vehicle. The EUREKONOMICS™ Model for creating wealth and managing personal finances calls these savings vehicles Money for Life Accounts. Generally Money for Life Accounts are whole life insurance policies, annuities, credit union savings accounts, and other savings vehicles with guaranteed interest rate returns.
Investing…
If and when individuals and families using the EUREKONOMICS™ Model for creating wealth and managing personal finances want to invest, they would borrow the money for the investment from their Money for Life Accounts. The loan would be made with the commitment that the Money for life Accounts would be repaid from income on the same schedule a money lender would impose.
If the investment turns out to be a total bust and all of the money was lost, the owner of the Money for Life Account would still repay the loan and the Money for Life Account from which it was borrowed would be fully restored, including the earnings that derive from interest. The investment, in other words, would not have damaged the wealth and well being of the individuals and families that made it.
Is Investing Necessary?
Many who follow the Money for Life Model for Creating and Managing a Personal Economy find it entirely unnecessary to take the risk to invest in anything. They commit all of their money to building multiple Money for Life Accounts to assure that the Four Pillars of every successful personal economy are erected on an unassailable foundation of money that they control.
Jeffrey Reeves
Posted in Personal Financial Management | Tags: credit, debt, economy, financial, interest, investing, investments, Money, saving, savings | No Comments »
Has America Been Listening To The Wrong People About Money?
April 12, 2009 | Author Dr Agon Fly
In 1974 the US Congress passed ERISA and began convincing Americans that saving money was a bad idea. The law they passed convinced us that investing [aka gambling] in an IRA or 401(k) was better than putting our money into guaranteed return savings vehicles. Americans listened. Wall Street and the IRS rejoiced.
In 1977 a high school coach convinced thousands of naive amateurs that they were financial advisors and taught them to strip every penny possible from secure whole life insurance policies and – you guessed it – buy term insurance and invest [aka gamble] everything else in mutual funds. Americans listened. Wall Street and the IRS rejoiced.
A few years later one of the Wall Streeters invented a new kind of life insurance that took the money that whole life insurance saved in guaranteed accounts and moved it into accounts that were not guaranteed but that the Wall Streeter could profit from even if the policy owner didn’t. These kinds of policies destroyed dozens of successful insurance companies and cost billions in lost savings to American families. Americans listened. Wall Street and the IRS rejoiced.
In the ensuing decades Americans listened to advice to invest [aka gamble] in dotcoms, invest [aka gamble] our home equity in all sorts of schemes. Americans were convinced that carrying debt equal to their investments [aka gambles] made some sort of sense. Americans listened. Wall Street, the IRS, and money lenders rejoiced.
BUNK – A THOUSAND TIMES OVER – BUNK!
“THE FACT THAT AN OPINION HAS BEEN WIDELY HELD DOESN’T MEAN THAT IT’S NOT UTTERLY ABSURD.” Bertrand Russell.
America has been listening to the wrong people for almost 40 years. The results are apparent. American families and the American government are bankrupt.
You and I can’t stop the Dolts in DC and the IRS from trying to convince us that they can handle our money better than we can, or the wonks on Wall Street from trying to sell us products that make them wealthy and us poor.
We can stop listening to them. Please, stop listening to the wrong people. Find old ways of creating wealth, preserving assets, and taking care of your families.
By Jeffrey Reeves MA – youBEthebank.com
Why Choose American Insurance Companies…
April 10, 2009 | Author dragonfly
ING To Review “Strategic Options” For U.S. Ops; May Shift Annuity Book
By ALLISON BELL
Published 4/9/2009, National Underwriter“ING Groep N.V. wants to reduce the scope of its U.S. operations ‘over time and as market conditions permit’…”
A Dialogue With Stephen The Stepford Advisor…
April 8, 2009 | Author Dr Agon Fly
This post recounts an email exchange with a credentialed financial advisor. The content has not been modified but the name has been changed and the credentials eliminated to avoid implying that there is any relation between one advisors opinion and the position that might be taken by the credentialing body.
Stephen,
Thanks for your comments.
Although they do not open a discussion but rather, close the door on dialogue, I am responding in detail. [As you will likely recognize, Stephen's mind was made up before there was a chance to respond.]
Stephen The Stepford Advisor wrote:
“YouBeTheBank site recommends that individual purchase life insurance policies to accumulate funds which are then used to fund future activities.”
Specifically we recommend that clients purchase permanent cash value life insurance. We recommend further that they choose dividend paying policies from mutual companies. Please, take the time to read further in the blog and you’ll discover that we justify this approach in some detail. Better yet, order copies of Money for Life! How to Thrive in Good Times and Bad by Jeffrey Reeves [that's me] and Becoming Your Own Banker by R. Nelson Nash. You’ll discover the amazing power of this approach, as many other credentialed advisors have done.
Stephen The Stepford Advisor wrote:
“It fails to mention that the costs of owning the policies will be substantail,(sic)”
There are – of course – costs. Substantial? You might want to define that for yourself first and for your practice second. Many advisors find the approach not only helpful but essential to their practice and do not see the costs as either substantial or burdensome.
There is another aspect of this that you may want to consider. There are many different forms of permanent cash value life insurance available in the marketplace. Some carry a heavy cost burden while others do not. If you don’t know which policy is being used you do not know whether or not the cost is “substantial”. Whole life policies from mutual companies tend to be less costly. Universal lifepolicies tend to be more costly – especially when they are improperly funded. Term insurance policies tend to be the most expensive.
Stephen The Stepford Advisor wrote:
“as will the restrictions on the availablity(sic) of cash.”
Again, Stephen, you may not have all of the information you need. My clients can access all of the cash in their policies whenever they want it. There is a bit of a lag – a day or two for processing and mail time – since the request must be made through the insurer. Immediate needs are satisfied with overnight delivery. This is not uncommon for mutual companies that are responsible only to their policy owners and not to shareholders or other outsiders.
Stephen The Stepford Advisor wrote:
“The accumulation of funds should never be done with life insurance as the primary choice.”
My Grandpa told me to “never say never and always avoid always.” Your statement is a shibboleth – an oft repeated mantra that contains no truth but that has been repeated so many times that people assume it must be true. In 1492 the world was thought to be flat.
To a thinking person who truly explores this approach to creating and managing a personal economy, the opposite is true. Whole ife insurance belongs in the foundation of every personal economy. That was the opinion of most financial planners prior to the advent of EF Hutton creating UL, A. L. Williams brainwashing amateurs, and Wall Street’s merchants of misinformation misleading America into the mutual fund swamp beginning in the 1980’s.
For over 150 years, and still today, dividend paying whole life insurance has been and is the single best place to put the money you use as a foundation for your personal economy and wealth building system.
Stephen The Stepford Advisor wrote:
“Individuals who truly fear banks should buy treasury securities instead. There are no costs as a practical matter.”
Nowhere in our blog or our book do we state or imply that you should fear banks. In fact, the practices of Money for Life are based on the banking model. Treasuries, like all investments, are for the limited few who have already established a foundation. In addition, there are always (sorry Grandpa) costs. Most commonly ignored by Stepford Advisors is lost opportunity cost.
Stephen The Stepford Advisor wrote:
“Yet the fact is, if the bank is insured via FDIC, then for all practical purposes, the initial $100,00 is not at risk.”
True. FDIC insures up to $100,000.00 per account. But, again, we never suggested that money in banks is at risk. Also, are you aware that the 50 state insurance guarantee funds typically insure about $250,000.00 per policy? Are you aware that no whole life policy holder in the history of the insurance industry in the US has ever lost even one dollar of their guaranteed values? Banks can make no such claim. Mutual funds fail this test. Stepford Advisors run and hide.
Stephen The Stepford Advisor wrote:
“Almost no one needs that amount of money to fund future plans.”
Of all your comments, Stephen, this is the one that challenges me the least. I’ve been serving clients for over 35 years. During that time every one of those clients encountered a financial need so great that they had to invade their retirement accounts…every one of them. Here are a few situations that demand even larger amounts of secure money.
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Fidelity Funds reports annually on the unfunded medical expense needs of a couple that will retire in that year. In 2007 that was $207,000.00. That’s the out-of-pocket after insurance payments have been made.
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Another fund company (Vanguard, I believe) projects the long term care needs of retiring couples – for 2007 it was $350,000.00.
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One of my best friends has two Down Syndrome children. I expect they’ll continue to need that $100,000.00 almost every year.
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Kyle was injured in a skiing accident and after months in a body cast, two years of physical therapy, and $125,000.00 in debt he is back to work. Seems each of these adds up to more than the $100,000.00 that “no one needs”.
Stephen The Stepford Advisor wrote:
“You should reconsider your recommendation as it fails every reasonable test of jusgement.(sic)
Stephen, the recommendation and my judgment are just fine.
Moreover, the processes and practices that we talk about on YouBeTheBank.com and TheMoneyforLifeBook and blog are tried, tested and proven to produce results that are guaranteed – a word that Stepford Advisors are not allowed utter. ”Guaranteed” is entirely legitimate in the context of dividend paying whole life insurance from mutual companies. I can assure you that “every reasonable test” of judgment supports what we teach and practice.
I can further assure you that the advisors who apply these practices in their planning help more people than those who don’t. One of our understudies (a former Sr. VP with a major, well known international brokerage with a large ad budget) proposed his first case last week to a very sophisticated investment client and it passed “every reasonable test” of judgment for all parties – advisor, client, attorney, accountant and family. Imagine that.
Stephen, I want to end with a word of thanks, again. My mission is to educate and inform. Your comments give me that opportunity. I urge you to learn more than you know, earn more than you imagine possible, and begin to question the shibboleths.
On-Line Life Insurance And Investment Advice…NOT!
April 6, 2009 | Author Dr Agon Fly
Financial Literacy in Disguise
Television is a great teacher. So is the internet. That’s only true, however, if you pay close attention to the advertising and not the shows that are supported by advertising.
Advertising costs money. Lots of money. Businesses that can afford extensive TV and internet advertising need to be making lots of money. Advertising also tells you what’s at the front of the minds of Americans.
Here’s a few of the general business catagories that are currently spending millions – probably billions collectively - on TV and internet ads:
- Credit repair
- Credit negotiation
- Credit watch
- Bankruptcy
- Tax mitigation
- Class action law suits
- Auto insurance
- Life insurance
- Investments
- Sham WOW! [just threw that in for the fun of it]
It’s All About Selling Products
Of these, life insurance and investment ads bear special meaning for me. For almost 40 years, I’ve been helping people understand their alternatives when considering insurance and investment decisions.
During those almost 40 years I have studied economics, insurance, investments, and all of the topics that insurance and investment advisors must study to earn and keep their licenses, registrations, and appointments. I have also studied the various selling strategies that insurance companies and investment houses use to entice you to buy their products.
It’s important to remember that these companies are selling products. The products are packaged as “peace of mind,” “wealth creation,” “future security,” “best savings account,” or “concern for your family.” They are still products.
Be Aware
What is a Product
Products aren’t bad things. However, when you follow a link or respond to an ad that points you to a web-site or a toll free number for advice and guidance, be aware that the company sponsoring the ad wants to sell you their products: life insurance, mutual funds, investment advice [yes, advice is a product whether you pay for it by means of fees or by means of commissions].
Beware of Good Intentions
Often the web sites contain “calculators” that are supposed to help you arrive at a decision, while the advisor on the other end of the toll free number claims to aim at the same thing. Putting aside good intentions – paving material for a very unsavory place – the result of these calculations and advice will always be the same: “Buy my product.”
The product that the site or the advisor recommends may or may not be your best choice.
- My expectation, based on experience, is that it is not even close to your best choice.
- My advice, based on experience, is that you find an experienced advisor that is not affiliated with just one company and that does not ascribe to conventional wisdom – doing what the rest of the industry does because that’s what the rest of the industry does.
Changing Your Mind About Money
Very often your best choice is not goin to be a product at all. Rather, it is going to be a change in your approach to creating and managing your personal economy and your personal wealth; changing your mind about money.
By Jeffrey Reeves MA, EUREKONOMIST
Posted in Legal, Ethical, Moral, Personal Financial Management | Tags: EUREKONOMICS, EUREKONOMIST, financial, financial advice, financial adviser, financial advisor, financial literacy, financial management, financial plan, financial planning, invest, investing, investment, investment advice, investment adviser, investment advisor, investment advisors, investment decisions, investment management, investment plan, investment planning, life insurance, saving, savings, term life insurance, universal life insurance, variable life insurance, wealth creation, Whole Life Insurance | 1 Comment »
Another Wake Up Call For The “Invest The Difference” Crowd…
March 28, 2009 | Author dragonfly
Where do mutual insurance companies keep their money? Bonds are a staple of mutual insurance company investments. Opponents of whole life insurance from mutual companies say returns on bonds simply don’t compete with the equity [aka stock] market.
BUNK – AGAIN!
Below is an amazing chart extracted from John Maulden’s Weekly Letter that should make every “buy term and invest the difference” snake oil sales rep rethink his or her position. The commentary on these raw numbers is extraordinary and I encourage you to read the entire letter.
The commentary does not claim that you should not invest in equities or that your entire portfolio should be in bonds. It does caution - the Prudent Man Rule trumps the Prudent Investor Rule again in this instance – that you should eschew advice from anyone suggesting that equity investments or mutual funds [stock or bond funds] are the only acceptable alternatives for “the long term.”
What does this demonstrate relative to whole life insurance?
During the past ten years, a high early cash value whole life insurance policy from one mutual company outperformed the DJIA by as much as 130% – and even outperformed the DJIA based on guaranteed values. That’s a whole lot [pun intended] better than investment returns from mutual funds.
Whole life insurance policies are reliable financial instruments. Whole life insurance has proven for over 150 years that it belongs in the foundation of every personal economy.
If your financial advisor suggests otherwise, you might want to find a new advisor.
Posted in Personal Financial Management, Whole Life Insurance | Tags: bond funds, buy term and invest the difference, equity investments, insurance company investments, investment returns, life insurance policies, life insurance policy, maulden, mutual funds stock, mutual insurance companies, mutual insurance company, Personal Financial Management, prudent investor rule, prudent man rule, Whole Life Insurance, whole life insurance policies | No Comments »
Buy And Hold? A Sure Loser For Amateur Investors…Like Us.
March 25, 2009 | Author dragonfly
Gary D. Halbert’s Forecasts & Trends…
Ideas are strengthened when they are endorsed by informed experts. Gary Halbert has been proving for a very long time that the buy and hold strategy is flawed. Below is an excerpt from another of his brilliant articles on this topic.
Unspoken by Mr. Halbert but obvious from the article is the corollary that most Americans should not be investing in the first place.
Recognize that investing for the long term is an oxymoron. If you had used the buy and hold strategy starting in 1998 and planned to rely on your investments for income in 2009, you would have less money today than you invested over the past ten years. You would have lost money. Your $200,000.00 investment could be worth less than $90,000.00.
On the flip side, if you had prudently placed you money in a quality whole life insurance policy you could have almost $250,000.00 in cash values growing tax free and readily accessible for income, opportunities, emegencies, or a legacy for those you care most about.
America has been bamboozled by the shennanigans of the chalatans and scallyways of Wall Street for too long. It’s time to return to America’s fundamental financial model – save, build equity in your home, finance only when it’s absolutley essential, invest only form assets and never from earnings or ready reserves.
More Buy-And-Hold Myths Debunked
March 24, 2009
“…Unfortunately, this has not slowed the flood of misinformation being distributed by the usual suspects in an effort to support buy-and-hold investment strategies. It seems that the more I write about skewed articles, studies, etc., the more examples I see of them being generated by Wall Street and the brokerage community to sway unsuspecting investors. [emphasis added]
I recently received an e-mail from a major mutual fund family promoting the buy-and-hold concept. While I am not at all surprised that a mutual fund company would be trying to keep investors in their funds, I was disappointed to see that the argument used was a very old, and thoroughly discredited line of reasoning known as “don’t miss the best days in the market.”
I’m not going to disclose the company that published the e-mail I received, but it really doesn’t matter. You can look in the archives of virtually any major brokerage firm or mutual fund family and likely see similar titles. As I pointed out in the March 3 E-letter, it’s in their best interests for you to stay invested, even though doing so may not be in your best interest. Thus, you need to look out for your own best interest when you deal with them.”
Buy and Hold? Long term? Whom do you want to make wealthy?
I encourage you to follow this link to the full article.
Jeffrey Reeves
Posted in Personal Financial Management, What Others Say, Whole Life Insurance | Tags: financial, halbert, insurer, interest, investing, investments, legacy, Life, Money, saving, savings, Taxes, undefined | No Comments »
Personal Economics 101…
March 11, 2009 | Author dragonfly
Originally posted on July 24, 2008 and worth repeating…
Americans have been bamboozled into thinking that they can get rich and retire comfortably by putting their money in the hands of people whose only aim is to move money from your pocket into some Behemoth’s accounts; IRA’s, mutual funds, variable annuities, variable insurance policies, ETF’s, and on an on.
BUNK!
Here’s a simple rule to apply to your personal economy: invest from savings, not from income; speculate only with money you expect to lose [if you win add the winnings to your savings.] If you never develop a savings program, you can’t recover by ‘investing’ unless you are just plain lucky. Why? Because most ‘investments’ are actually speculative.
Benjamin Graham, The Dean of Wall Street, and Warren Buffett’s teacher, taught that an investment has two characteristics: safety of principle and a reasonable return. Hmmm! Honestly evaluate what Wall Street calls an investment today.
- Is it really an investment or is it speculation?
- Is your money safe and secure?
- Are you getting a reasonable rate of return?
- Is it enough to be re-assured that all will be well “in the long-term”?
Guess what? The answers are all NO. You don’t live in the long-term. If you are losing money today, hoping that tomorrow will produce better results is foolish at best. Properly saved money guarantees a reasonable rate of return in the short-term and is safe for the long-haul. Once you have money in hand, and enough money in hand to care for your personal needs, then you can consider investing.
Consider this: many Americans take money directly from their pockets [payroll deducted in many cases] and place it in accounts that produce unpredictable returns for them but assured profits for the Behemoths. Not only that, at the same time they borrow from credit cards and mortgage companies at rates that are guaranteed to be higher than their ‘investment’ account returns. Go figure…
Imagine how much better off these Americans would be if they put their money into financial products that fit the definition of Benjamin Graham referenced above.
It’s time to shift paradigms, to change models; save first, invest later, speculate never!
by Jeffrey Reeves, MA
www.YouBeTheBank.com, ltd.
Posted in Personal Financial Management | Tags: annuities, annuity, behemoth, credit, economics, economy, financial, insurer, investing, investments, Money, mortgage, mortgages, personal, Retirement, saving, savings, undefined | 1 Comment »
What Is A Personal Economy?
February 27, 2009 | Author Dr Agon Fly
It’s March 2009.
Americans are struggling with the cost of everything from mortgages to groceries. The struggle is the outcome of three decades of misinformation about how to handle the money that flows through the lives of American individuals and families.
Your personal economy succeeds when you control the money that comes into your life.
The Behmoths on Wall Street, Behemoth banks and insurance companies, and the Behemoth US Congress [the Dolts in DC], and the IRS…
- Have convinced you that they know better than you what is best for you and your family
- Have convinced you to divert your money into accounts that they control
- Have convinced you that a maybe dollar in twenty or thirty years is worth more than a real dollar today
- Have convinced you that you can only have the things you need and want today by using credit and mortgaging your future income and your current net worth.
BUNK! BUNK! TRIPLE BUNK! and BUNK ONCE MORE!
Everything you learn from this blog, and from our published works, aims to reveal and clarify the most basic secret of your success with your Personal Economy…
“Keep control of the money that flows into your life. Give control of as little of your money as possible to the Behemoths.” Dr Agon Fly
In addition, the experienced Money for Life Guides listed on YouBEtheBank.com will teach you strategies and tactics to help you gain and keep control of your money. They know how to guide you on a path that assures the success of your personal economy regardless of the bursting of real estate bubbles, the crashing of markets, and the dishonesty of the Behemoths.
Posted in Debt, Money, Personal Financial Management | Tags: bank, banking, banks, behemoth, Congress, economy, IRs, Money, mortgage, mortgages, Personal Financial Management, Wall Street | 1 Comment »
Only Personal Economies Count…
February 10, 2009 | Author dragonfly
The sum is sometimes greater than the total of all of the parts. That isn’t so when it comes to economics.
I rarely quote an entire entry from another source. This is one of those exceptions. R. Nelson Nash, one of the clear thinkers in the area of personal economics, contends that macroeconomics are irrelevant. John Mauldin’s preface to an article by Louis Gave reinforces this idea.
Your personal economy is all that really matters. If you manage it well you will be financially stable in good times and bad. Bubbles bursting, markets crashing, Wall Street acting like Dull Street – none of that matters when you have control of your money.
by Jeffrey Reeves
Where Will the Growth Come From?
February 9, 2009
One of my most significant learning experiences came from a basic forecasting mistake. Back in 1998, I looked at 40 years of documented evidence that 50% of all large programming projects ended up coming in late. That set of data was consistent over all industries and over decades. I checked it out with industry experts. I really did my homework. And thus I said that the Y2K bug would be a problem, as a sufficient number of corporations around the world would have bugs that would create supply and management problems, which would slow the economy down. I did not suggest that we would see blackouts or major problems, just enough to slow things down and, when coupled with other macro issues (like the tech bubble), could trigger a recession. We had the recession, so my investment advice actually turned out to be right (lucky?), but it was not caused by Y2K.
Almost 100% of the Y2K fixes came in on time. From a metric that said 50% was the norm, we went straight to 100%. What caused the change? I had a debate with (my good friend) the late Harry Browne, who many of you will remember as a very wise investment counselor, multi-book best-selling author, two-time presidential nominee of the Libertarian Party, gold bug, and from the school of Austrian economics. He said that Y2K would be a non-event. When presented with my marshaled facts, he said, “John, each company will figure out what it has to do to survive. That is the way markets work.” And sure enough, faced with extinction if they failed, it seems that CEOs found ways to get the programmers to meet a very clear deadline. Besides knowing they fudged deadlines in the past, we now know if you hold a gun to their heads and give them resources, they can in fact perform.
Why this comment to open today’s Outside the Box? Today we read a piece sent to me by my friend Louis Gave of GaveKal (and who will be at my conference in April). It is entitled “Where Will the Growth Come From?” It reminds us of the lessons that Harry gave me. Each person and company is responsible for their own part of the recovery. You can’t rely on mass statistics, or you miss the important lesson in individual responsibility.
I don’t think anyone can accuse me of being bullish the past few years. Interestingly, I get a lot of emails from people telling me the end of the world is coming, and deriding my longer-term optimism. They are convinced we are going into some deep national morass worse than the Great Depression (and such deflationary times will somehow make their gold go to $3,000!?!?). Yet they are working to make sure their own personal worlds are covered. I get no letters from people who are simply giving up. What company will keep a CEO who does not work hard to figure out how to keep the company alive? If you lose your job, do you not try and get another one or figure out how to make ends meet? Do you not put in extra hours to try and make your personal life or business or job better? Even if it is terribly difficult, the very large majority of people don’t throw in the towel. Each of us, in our own way, gets up every morning to fight the good fight, even when the swamp is full of more alligators than we ever counted on. We just pick up a baseball bat, wade into the swamp, kill as many alligators as we can in one day, and then go home to get ready to fight the next day.
The lesson from Harry is the same as it was in 1998: It is the individual working to get his or her own house in order that will help us all collectively get our national house in order. This is not to diminish the Herculean tasks we have in front of us, collectively. We have dug ourselves into a very deep hole of credit and leverage. It is going to take lots of time. The way back is not entirely clear at this point. This is not an ordinary business-cycle recession. But each of us will do what we can to make our small corner of the world better. And in the fullness of time, we will collectively get back to trend growth and a rational market.
Of course, we will then find we have other problems to face. There is no nirvana. There will always be more problems. But that’s what a free-market collection of motivated individuals does: We face problems and solve them to the best of our ability. And as a group, the clear path for centuries is one of growth and progress. Cautious optimism is the proper long-term stance.
So, today Louis speculates about what sectors might come back first, and offers a good lesson in economics along the way. I think you will enjoy this Outside the Box, unless you just want to believe in the end of the world.
John Mauldin, Editor
Outside the Box
Full article here–> http://www.investorsinsight.com/blogs/john_mauldins_outside_the_box/archive/2009/02/09/where-will-the-growth-come-from.aspx
Posted in Personal Financial Management | Tags: credit, economics, economy, financial, industry experts, investing, investment advice, investments, john mauldin, Money, personal, wise investment | No Comments »
President Obama’s Hope VS Speaker Pelosi’s Pork Barrel – An Open Letter
January 21, 2009 | Author dragonfly
“Starting today, we must pick ourselves up, dust ourselves off, and begin again the work of remaking America.” President Barack Obama’s Inaugural Address, January 20th, 2009
Dear Mr. President,
There are among us hundreds, perhaps thousands of dedicated, intelligent, passionate people that have been diligently working for decades at “remaking America.” One group of professionals in particular has helped a multitude of American families and small businesses escape the dungeon of debt that has become the resting place of millions of their fellow countrymen.
These professionals have helped their clients build personal economies that are thriving today while most other Americans bemoan their losses. You might ask how they helped their clients build economies that thrive in good times and bad. If you were to ask that question you would discover that there is one consistent answer.
Economies built on capital [I like to think of that as money] that is controlled by the individual as opposed to the banks, investment houses, government, unions or any other Behemoth remain solid in all economic conditions. Economies like America’s in the late 20th and early 21st century are based on debt. The reliance on debt is based on the faulty notion that debt trumps capital in the national economy and in personal economies.
Look around you, Mr. President. Is there a single institution, business, government, of family that has an economy based on capital that is in serious trouble. No. On the other hand, every economy that is based on debt – especially the one you just became responsible for – is failing and needs to pick itself up, dust itself off and begin again.
Pelosi’s Pork Barrel adds nothing to the economy. It adds immensely to the debt. It doesn’t pick us up. It drives us further down. It does not help us begin again. It forces America to continue its downward spiral. It creates no new jobs but assures cronies are paid off. It moves the economy backwards as it elevates political hacks.
Pelosi’s Pork Barrel would prove a black mark on the start of your administration, President Obama. Looking forward, accepting the Pelosi Pork Barrel would be a terrible mistake for the economy, for you presidency and – most imprtantly – for America.
By Jeffrey Reeves
Posted in Debt, Money, Personal Financial Management | Tags: bank, banking, banks, barack obama, behemoth, debt, economics, economy, inauguration address, investing, investments, Money, national economy, pork barrel, remaking america, thrive | No Comments »
Buy Now, Pay Later…The Debt Paradigm Is Alive and Well…
December 26, 2008 | Author dragonfly
Much later, according to a new poll of holiday shoppers by Consumer Reports.
In my book Money for Life…How to thrive in Good Times and Bad a great deal of time is spent discussing the Debt Paradigm; a system of thinking about money that suggests that you can have everything you need and want as long as you have enough credit [that really means you have debt].
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According to the survey, 23% of Americans will not pay off their holiday debt until March or later, equaling $14.6 billion in interest-accruing debt.
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Over one-quarter of Americans (26%) use credit cards most often when holiday shopping, contributing to the $63.6 billion charged on credit cards throughout the shopping season.
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Among those using credit cards to pay for holiday gifts, 17% or more plan on accumulating $1,000 or more in holiday charges.
Here are two ideas from the same survey that might help you avoid this insidious trap:
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With little more than a day to go until Christmas, re-gifting becomes an attractive option. A noteworthy proportion of consumers (13%) are planning on re-gifting. Men are more likely to re-gift (17%) than women (10%).
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After the holidays, 16% of consumers plan on returning some of the gifts they received. Men (21%) are more likely than women (12%) to return some of their gifts.
Holiday shopping makes people usually spend more than they intend to. In addition they rack up major credit card bills looking for bargains, after the season.
Don’t fall into the trap. Or, if you already have, seek out a financial guide that can show you how to be your own banker and never get trapped again. You can find a guide who is trained in this financial discipline at http://www.youbethebank.com/find-an-advisor.html
How’s Your Insurance Company Doing…
December 18, 2008 | Author dragonfly
Financial advisors that have studied the capabilities and performance of the insurance and investment companies they represent have known for a long time that developing the foundation for a successful personal economy demands the use of the most powerful, flexible, versatile and secure financial tool in the advisors tool belt…participating whole life insurance from a mutual life insurance company. This class of product has been call the “Swiss Army knife of Financial Products.”
It appears the rest of the financial community is awakening to this fact also. see the Forbes Article below…
OutFront
Mutual Respect
12.22.08, 12:00 AM ET
Mutual Life insurers are stuck in the mud. If you’ve pizzazz, you work for a stockholder-owned insurer. That was the refrain from stock insurers a few decades ago.
Without the shareholders’ lash to whip them into shape and stock with which to buy rivals, policyholder-owned insurers were sure to get crushed by publicly traded rivals. So went the argument, and so began a flight from mutual ownership that included such stalwarts as Equitable, Prudential and Metropolitan.
Read the whole article here – Who’s sneering now?
Policy Differences
Economic tumult aside, top mutually owned insurers have increased book values this year. Not so their public rivals.
| COMPANY | BOOK VALUE ($BIL)* | %CHANGE THIS YEAR | A.M. BEST RATING |
| MUTUALS | |||
| MASS MUTUAL | $8.4 | 5% | A++ |
| NEW YORK LIFE | 12.0 | 0 | A++ |
| NORTHWESTERN MUTUAL | 12.4 | 2 | A++ |
| PUBLICS** | |||
| HARTFORD LIFE | 4.7 | -19 | A+ |
| METROPOLITAN LIFE | 12.0 | -9 | A+ |
| PRUDENTIAL LIFE | 3.8 | -46 | A+ |
*Statutory surplus and capital as of Sept. 30. **Surplus and capital at each insurer’s biggest operating subsidiar Source: SNL Financial.
Words Of Wisdom About Conventional Wisdom…
November 29, 2008 | Author dragonfly
John Mauldin’s November 26, 2008 Weekly Eletter begins with the following quote:
“It will therefore be crucial that you see the world anew. That means looking from the outside in to reanalyze much that you have probably taken for granted. This will enable you to come to an understanding. If you fail to transcend conventional thinking at a time when conventional thinking is losing touch with reality, then you will be more likely to fall prey to an epidemic of disorientation that lies ahead. Disorientation breeds mistakes that could threaten your business, your investments and your way of life.”
– James Dale Davidson and Lord William Rees-Mogg, The Sovereign Individual, 1997
The Money for Life Model of wealth creation and money management challenges convetional thinking [we refer to it as conventional wisdom] at every step. As an alternative to the lemming-like behavior that conventional wisdom engenders, The Money for Life Model suggests that awareness is the first essential characteristic of intelligent financial decision-making. Watching and listening to the commercials of the financial Behemoths – including the advice from their minions – tells you only what they wish you to know.
It’s 2008. Look where their advice has gotten us…and them!
It’s time to become aware of the reality that the Behemoths [any large business, union, government bureacracy or NGO] wants only to gain control of as much of your money as possible - regadless of whether or not that serves your best interest.
By Jeffrey Reeves, YouBeTheBank.com, ltd.
Posted in Money, Personal Financial Management | Tags: conventional wisdom, financial decision, john mauldin, money management, wealth creation | No Comments »
Conventional Wisdom = Bad Ideas: This One About Life Insurance For Children…
November 28, 2008 | Author dragonfly
Bad advice like that which appears below in the excerpt from the article 15 Insurance Policies You Don’t Need by Lisa Smith on Investopedia is painful for those who truly understand the value, power, flexibility and versatility of cash value life insurance. The article claims that life insurance on children is not desirable.
BUNK!
Read R. Nelson Nash’s article Jeanette’s Banking System or The Education of Emily Elizabeth and you will understand that cash value life insurance purchased on children and grandchildren can be more powerful and a lot safer than the typical 529 Plan or Coverdale IRA, which are foolish gambles at best.
___________________________
8. Life Insurance for Children
Life insurance is designed to provide a safety net for your heirs/dependents. Because children don’t have heirs to worry about and, statistically speaking, most kids will grow up safe and healthy, most parents should not purchase life insurance for their kids. Instead, use the money that you would have spent on life insurance to fund an education plan or an individual retirement account (IRA). (To read more on saving money for your kids, see Investing In Your Child’s Education, Teaching Your Child To Be Financially Savvy and Don’t Forget The Kids: Save For Their Education And Retirement.)
Other items in this article make some sense. Discussions of cash value life insurance by pundits and feature article writers, however, generally lack in both accuracy and depth of understanding. Read the entire article here…
http://www.investopedia.com/articles/pf/07/cutpolicies.asp?partner=forbes-am&viewed=1
The Age Of The Financial Advisor vs. The Age Of Your Financial Advisor…
November 16, 2008 | Author dragonfly
It dawned on me this morning while reading John Mauldin’s weekly letter that the age of the financial advisor that is informed by technological connections, charts, graphs, hypothetical illustrations, and on-line quotations has passed.
Americans are discovering that wisdom is a function of lived experience, not theoretical models. Americans are looking for advisors who lived through…
- the 1974 recession
- the economic failures of the Carter years
- the struggles of early 80′s
- the unbridled euphoria of the booming nineties
- crashing markets in 2001-2002
and are now experiencing…
- the attack of a bear market weakened by…
- failed financial markets
- the real estate bubble bursting
- mortgage madness promulgated by the Dolts in DC and the greed of Wall Street
- an automotive industry self-destructing because…
- management foolishly fought safety an economy standards
- unions demanded more than common sense and common decency would suggest.
As this flight to wisdom became apparent to me, I realized that the agent advisors who have opted to become Money for Life Guides and work with their clients using the ideas, values, principles and practices found at YouBeTheBank.com have either lived through these time or been personally mentored by someone who has.
The Money for Life Model for Wealth Creation and Money Management recommends products, strategies, and tactics that have been tested and proven for centuries and millenia; that hold the wisdom that comes only with time and lived experience.
If you are looking for a way to handle your money that delivers peace of mind in good times and bad i strongly recommend that you contact a Money for Life Guide at www.YouBeTheBank.com
The Failed Wealth Creation and Money Management Paradigm…
November 13, 2008 | Author dragonfly
My apologies for such a long absence.
YouBeTheBank.com is launching its new web site. Although it is fully functional, there are more than a few additional capabilities that are being developed and added daily and weekly. It’s a time and energy consuming project.
____________
The turmoil in every market: real estate bubbles bursting, the motgage mess, bank failures, GM/Chrysler/Ford facing bankruptcy, and on, and on…all are the result of a failed paradigm that convinced Americans to delegate their own wealth creation and money management to the Behemoths -
-
the Dolts in DC who manage to increase their own wealth by taking more of yours,
-
mutual fund managers who don’t know what they don’t know,
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investment advisors who have only the minimal registrations and licenses to compliment the brainwshing they receive from their Behemoth bosses,
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union leaders who see their RIP engraved on history and scheme to keep alive a system of relating to capital that can only be described as self-serving,
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banks and credit card grantors that have manipulated the Dolts in DC to serve them instead of American citizens.
I’ll write a book about this someday but for now here’s an article from InvestorsInsight that articulates a piece of the problem.
__________________
“Buy-And-Hold” Bites The Dust – Now What?
by Gary D. Halbert
November 11, 2008
IN THIS ISSUE:
- Economic Overview
- The Conventional Wisdom Was Wrong
- The Shortcomings Of Index Investing
- Are Low Fees The Key To Investment Success?
- Risk Management Is Crucial
Introduction
In the newsletter business, it’s rewarding to see market action reinforce the advice you have been giving in your publication. Ever since I started writing this E-Letter, I have warned of the perils of passive “buy-and-hold” investing in general, and “index investing” in particular. While adherents to these strategies like to trot out long-term charts and graphs supporting their case, I have always warned that passive investing can result in major losses at just the wrong time from the investor’s perspective.
Posted in Money | Tags: american citizens, bank, bank failures, banking, banks, behemoth, conventional wisdom, credit, dolts, economics, halbert, investing, investment advisors, investment success, investments, investor insight, Money, money management, mutual fund managers, risk management, union leaders, wealth creation, wisdom | 1 Comment »
Compare Two Types Of Whole Life Insurance…
October 23, 2008 | Author Dr Agon Fly
| The following comment was submitted by an advisor in response to a recent article by Dr Agon Fly that appeared on ProducersWeb, a financial industry forum. I believe it could be useful for anyone interested in understanding life insurance policies and – more importantly - in securing their future.
ProducersWeb wrote: |
| What about U.S. Treasury decision 1743 that states that a dividend from a life insurance policy is nothing more than a return of a deliberate overcharge of premium imposed by mutual company? |
I’ve been unable to track down the reference made in your comment. It is true, however, that dividends from a mutual company are considered a return of unneeded premium. Your use of inflamitory terms like “nothing more” and “deliberate overcharge,” and “imposed” are, however, off base [at best].
Let’s add some perspective. If a mutual company and a stock company both offer whole life contracts, have the same or similar mortality charges, administrative costs, reserve requirements and guaranteed cash value commitments, the cost of the policies would be about the same for both insurers.
The stock company with the non-par policy would, however, still charge more than their base costs to make sure they made a profit to propell the business. It would also have to charge some excess premium to pay taxable stock dividends to their shareholders. You, as the policy owner would, therfore be paying “nothing more than a deliberate overcharge imposed by the insurer” and receiving nothing in return for having paid the excess.
The mutual company would also charge extra premium to propell its business for the benefit of its policy owners [as opposed to outside investors] and, unlike the stock company, would return that extra premium to the policy owners as a tax-free dividend.
Which would I prefer? I’d rather the return of the “overcharge” be reinvested in my policy than paid to an outside shareholder.
I hope this adds a bit of perspective. Many advisors across America recognize participating cash value whole life insurance as the most versatile, flexible and powerful financial tool available to Americans who want to…
- gain control of the money that flows through their lives,
become free from debt-to-others,
secure an income protected from inflation and that they cannot outlive,
assure ready cash for life’s surprisingly unsurprising surprises, and
create a legacy of both wisdom and wealth to pay forward to those they care most about.
These advisors study and understand every form of life insurance available in the market today. They do not disparage any of them since each may have a place in an individual client’s personal economy.
These advisors believe that it is every professional advisor’s duty and responsibility to know and fully understand all of the financial products that may be available to their clients. How else could they make honest recommendations?
Posted in Whole Life Insurance | Tags: contracts, economy, financial, insurance policy, insurer, interest, legacy, Life, Money, stock company, stock s, stocks, undefined, wholemortality, wisdom | No Comments »
Why Mutual Insurance Companies and Credit Unions Continue to Thrive…The Prudent Man Rule
October 14, 2008 | Author Dr Agon Fly
The Prudent Man Rule is based on common law stemming from the 1830 Massachusetts court decision – Harvard College v. Armory. (26 Mass.) 446, 461 (1830). The Prudent Man Rule directs trustees “to observe how men of prudence, discretion, and intelligence manage their own affairs, not in regard to speculation, but in regard to the permanent disposition of their funds, considering the probable income, as well as the probable safety of the capital to be invested.”
Benjamin Graham, the “Dean of Wall Street” and Warren Buffet’s mentor, held that an investment has two essential characteristics: “An investment operation is one which, upon thorough analysis, promises safety of principal and a satisfactory return. Operations not meeting these requirements are speculative.”
If we put these two principles together it becomes clear that – regardless of how “diversified” one’s “portfolio” – almost every “investment” that was presented to American consumers during the past thirty years is no investment at all; it is mostly “speculation.” Calling them “investments” is a ploy to justify having uninformed registered reps sell them to uninformed consumers.
Mutual insurance companies and your local credit union are among the most respected financial businesses in America – and with just cause. While the rest of America’s and the world’s financial infrastructure is imploding, mutual insurance companies and credit unions are doing quite well. The reason that is so? They follow the Prudent Man Rule in its purest form.
Insurance policies issued by mutual companies continue to increase in value tax-free, every year at a guarnateed rate and continue to pay tax-free dividends as well. Credit Unions are less at risk than other depositor funded institutions because they continue to serve a small community as non-profits. In both cases, the companies are owned by policy owners or depositors, not by outside investors greedy for profits at any cost.
Mutual fund companies and other investment vehicles do not guarantee or even hint at promising “safety of principal and a satisfactory return.” They claim that “diversification” makes up for that failure. It doesn’t. That is apparent during these days of bank failures, investment company executives being indicted for foisting false financial products and promises on “we the people,” and tumultuous market fluctuations.
The stock markets, mutual funds, and virtually every financial product promoted to Americans represent unwarranted gambles – speculation – dressed up as “investments.” Even the money you pour into your Las Vegas style 401(k) plan is unprotected from the speculative nature of the underlying investments.
Secure savings in credit unions and financial growth in cash value life insurance are today – as they have always been – the surest and safest places for your money; the most solid foundation for your personal economy; the most likely source for secure retirement income, ready cash for life’s surprises and a meaningful legacy for those you care most about…not to mention freedom from debt.
________________________
Posted in Money, Personal Financial Management, Whole Life Insurance | Tags: bank, banking, banks, benjamin graham, credit, credit unions, debt, economy, financial, insurance policies, investing, investments, legacy, Money, mutual insurance companies, prudent man rule, Retirement, saving, savings, stocks, warren buffet | 2 Comments »
Cents, Common Sense, And Economic Failures…Part I
October 6, 2008 | Author Dr Agon Fly
The Failure of America’s Economy and the Personal Economies of Americans…
This is a cautionary tale about four cousins - Elijah, Zachary, Mordechai, and Luke. Structured as an allegory, it describes their approaches to money and reflects the financial behavior of America and Americans over the last four decades. I hope you find this brief treatise enjoyable and instructive.
We begin the tale in 1968. Elijah, Zachary, Mordechai, Luke, and their families live in the mountainous coal-mining region of Appalachia – an isolated area with a relatively self-contained economy. The area’s economy as well as each of their personal economies rely on coal, coal-mining companies, government agencies that regulate coal-mining companies and other businesses that depend on the mining and selling coal to the broader market.
Each of these men views his and his family’s personal economy differently. Each expects a positive outcome and each approach produces predictable results – though often unexpected by the men themselves.
Elijah…The Value of a Penny
Elijah inherited 64 acres of prime farming and ranching land from his industrious parents. Elijah, however, didn’t appreciate the value of owning the land outright and applying himself to working the land raising crops and livestock for his family and for the market. Over the years Elijah raised money to support his family by selling off three fourths of the land in 16 acre parcels to his cousins Zachary, Mordechai, and Luke – more about them later – so that by 1968 each of the four owned equal amounts of land.
Elijah’s parcel sat on the eastern slope of Shelby Mountain. Although the land was mostly mountainside, about five acres lay on flat land, bordered on the east by Possum Creek and Possum Creek Road. The family home his parents had built and the four or so acres Elijah used for raising crops and livestock for personal consumption were separated from his cousins’ land by this border.
Just as Elijah was wondering how he could keep all that he had remaining of his parent’s estate, there was a knock on the door; enter The Mighty Coal Company. Jacob Ebenezer of The Mighty Coal Company wanted to buy a right of way across Elijah’s property to construct a railroad spur line, which, he explained, would carry coal from the rich Anglican Mine across Shelby Mountain to a rail line that would bring the coal to market.
Jacob offered Elijah two options. The first option was that The Mighty Coal Company would pay Jacob and his heirs a royalty of one cent per ton of coal that was carried over his land for as long as the Anglican Mine [or any other mine for that matter] used the spur line. If Elijah chose this option, The Mighty Coal Company would pay Elijah $1,000.00 up front and begin making royalty payments to Elijah as soon as the coal cars started rolling over the tracks carrying what the locals called “black gold.”
The Mighty Coal Company, explained Jacob Ebenezer, was still negotiating with other landowners on the route, and would likely be opening the spur line within five years if they could come to terms with the one hundred or so remaining landowners along the route. Elijah could keep the $1,000.00 if The Mighty Coal Company failed to complete the project.
The second option offered by Jacob Ebenezer was $10,000.00 cash up front. Elijah would receive no royalties and would not have to return any of the $10,000.00 if The Mighty Coal Company was unable to complete the project.
$10,000.00 was a lot of money in 1968 in Appalachian coal-mining country. Elijah thought it through this way. He could support his family in the family home for nearly another five years using the $10,000.00 from the sale of the right of way, the occasional sale of produce and livestock, and doing a few odd jobs when he must.
Elijah reasoned that if he took the $1,000.00 offer, he may never see another penny and, even if he did, it wouldn’t be for five or more years. Moreover, winter was coming and although he could use the extra money to get the family thru until spring, he’d be in limbo waiting for over four years for royalties.
Elijah took the $10,000.00.
The rest of Elijah’s story goes something like this. Elijah eventually sold all of his land and an option on his house to the man who owned the land that bordered his on the south. His neighbor had chosen to take the royalties.
Elijah died penniless and his neighbor took his land and house as agreed. Although Elijah was never a financial success, he remained a beloved character in the small Possum Creek community. His children, however, all left coal country for the big cities and there are no longer any remnants of his immediate family in Possum Creek.
Fast forward to 2008; every month since September of 1972 – 36 years; 432 months – The Mighty Coal Company has shipped an average of 100 coal cars carrying an average of 90 tons of coal each over Elijah’s property every day. That would have created $2,700.00 per month in royalties. That’s $1,166,400.00 in royalties never received. The Mighty Coal Company expects to be running coal over those tracks for decades to come.
A penny is an amazing thing.
_________________________
Posted in Money | Tags: behavior, economics, economy, financial, Money, personalpersonal consumption, undefined | No Comments »
The Money for Life Model of Financial Management and The Infinite Banking Concept(TM)
September 28, 2008 | Author dragonfly
I regularly receive questions that reference The Infinite Banking ConceptTM of R. Nelson Nash. The Money for Life Model of Financial Management guides its adherents on a path similar to the one Mr. Nash suggests.
A visitor to our web site recently submitted a series of clear and precise questions about three of the core concepts found in both programs; the Paid Up Additions Rider, guaranteed cash values and policy loan interest. The complexity of each of these makes sense to well-informed agent/advisors, but may befuddle a consumer – or as the questioner puts it a “normal guy.” [Hmmm! Does that mean those of us who call ourselves advisors are "abnormal guys?"?]
The questions and comments of the visitor who wrote to me are indented and in quotes.
“The first thing I am interested in is a “normal guy’s” explanation of a Paid Up Additions [PUA] rider. I cannot believe all the stuff that has been written about Infinite Banking that is lacking a clear explanation of just how it works.”
A reading of Money for Life…How to thrive in good times and bad would help clear up some of the ‘normal guy’s” questions you have.
“There are certain questions I have:
What is a PUA?”
A PUA has a variety of names. Basically, a paid up additions rider is a single premium insurance policy that is purchased with separate premium contributions in excess of the premium required by the base policy to which the PUA rider is attached. A PUA generally has minimal cost associated with it [commissions, policy issue fees, etc.], which makes it a most efficient way to increase both the death benefit and the cash value available for use as your ‘bank.’
There are wide varieties of restrictions and limitations on this rider form by different companies. Some of these riders lapse if they are not exercised, which means that you have to contribute each year or you forfeit the option to contribute in any subsequent year. Others allow partial contributions or include ‘catch-up’ provisions in case you miss a portion or even all of one year’s deposit.
Purchasing paid up additions using the PUA rider may put a policy in jeopardy of becoming a modified endowment contract [MEC]. This would result in the policy losing the benefits that make cash value life insurance so powerful and flexible as a cash accumulation and cash management tool.
“What does it mean that the policy is ‘engineered to increase in value every year.’?”
Whole life contracts are designed to guarantee an increase in the basic cash value each year. In the early years of most policies, the cash value increase is minimal due to the structure of the policy issue process, the long-term cash accumulation strategy, and the commission program.
The policy that I most frequently recommend is specifically designed – or engineered – to create cash value in the first year. This policy guarantees that about 90% of the base premium is credited to the guaranteed cash value in the first year and nearly 100% or more of the base premium in every year thereafter. The annual contribution of the PUA contributes 93% of the annual premium to guaranteed cash value every year it is paid.
“When I take a policy loan, do I or do I not have to pay the insurance company interest? If yes, then does this interest go into my cash value or go somewhere else?”
It depends on the company, but generally it works something like this; interest on policy loans is always assessed. If you fail to pay it, the outstanding interest and the policy loan itself are liabilities against both the cash value and the death benefit. Most policies, however, continue to pay the guaranteed internal interest rate when a loan is outstanding.
In effect this means that the interest you pay the insurer is a refund of the interest the insurer credited your account while the money in your account was on loan to you. The rate the insurance company charges you is generally a bit higher than the internal rate. This is to make sure each policy owner covers the cost of managing the loan and other policy owners are not subsidizing loans in which they have no interest.
Loans and interest are often described using reference to the ‘banking’ process for simplicity. It’s important that each advisor explain how it works with individual policies and loans. It makes a great deal more sense when the policy owner can see the actual results.
Conclusion…
Whole life insurance, used as a fundamental component of your clients’ personal economic structures, is an extraordinarily powerful and flexible tool. It is the Swiss Army Knife of financial products.
Over the past three decades or so the financial community’s understanding of whole life insurance has diminished dramatically. Whole life insurance has been misrepresented by those who can’t or won’t sell it.
The financial mess in America today is the direct result of the failure of the financial community to support the traditional financial values, practices, and products that made America the greatest economy and country in history. The greed on Wall Street jeopardizes our wealth and well-being as a nation and the wealth and well-being of “we the people.”
It’s time to again reclaim those values, reinstitute those practices, and recognize those financial products as essential to every successful personal economy.
If we fail at this we will fail completely.
The 21st Century Way to Wealth…Take Care
September 21, 2008 | Author dragonfly
The Wisdom of the Founders
By Benjamin Franklin, Commentary by Jeffrey Reeves
A large percentage of Americans during the colonial period were self employed farmers, merchants, craftsmen, tradesman, shopkeepers, and so on. Employees were less common than partners and permanent employees even rarer. Because of that, the following admonitions of Father Abraham address the working class who were also responsible for their own success and livelihood.
Today, the self reliance and independent spirit of those early Americans lives on in the tens of thousands of small businesses that create 90% of America’s jobs and in the drive and commitment of American workers employed by our larger corporations.
The commentary shows that Father Abraham’s words are just as meaningful today as they were then.
Father Abraham speaks:
And again, Keep thy shop, and thy shop will keep thee;
Each of us has a “shop” to keep. Your shop may be an actual shop or it may be a cubicle, or it could be the corner office. It may be the janitor’s closet or the cab of a truck. It may be as the center on a football team or as the fifth grade teacher at St. Cecelia’s Elementary school. Whatever your sphere of influence and responsibility, that’s your “shop.” As long as you take care of your shop you can reliably expect to be able to take care of yourself.
There are, of course, external influences that can wreck your ‘shop’ regardless of how careful you are. That’s always been the case and always will be. When it happens to an American, however, we just find another shop.
And again, if you would have your business done, go; if not, send.
And again, he that by the plough would thrive, Himself must either hold or drive.
And again, the eye of a master will do more work than both his hands.
Self reliance is a hallmark of Americans. Father Abraham recognized this and cautioned his audience that you can’t delegate your personal success. Individual success relies on individual effort; you are the master and your attention is essential to your success. Your mastery may be at the plow or as the head of the team. Success will elude you, however, if you delegate what only you can do; the business will not get done and the field will not get plowed.
And again, want of care does us more damage than want of knowledge.
There are three types of knowledge you must access when it comes to your work and your personal economy: knowing about something that could be done, knowing how to do what could be done, and knowing whether or not to take action. A ‘want of care’ means you didn’t evaluate the ‘whether-or-not’ aspect of knowing.
There’s also a second way to look at this axiom from Father Abraham. We’ve all met people with great intelligence who have achieved only moderate success because they relied on knowhow alone, and other more average folks who met with great success by working diligently. This proves the axiom. Lacking knowledge – not knowhow – is not as much an impediment as is lacking careful attention to both the initial decision and the ensuing action.
Father Abraham is quickly becoming my hero.
Jeffrey Reeves
Posted in What Others Say | Tags: benjamin franklin, economy, father abraham, independent spirit, self reliance, thrive | No Comments »
The Demise Of The Investment Myth…
September 20, 2008 | Author jr
Predictable Financial Failures
Pundits and politicians are bemoaning the entirely predictable failure of America’s financial triplets’ [the banking, insurance and investment Behemoths] irresponsible financial behavior over the past two decades: Bear Stearns, Indymac, Lehman Brothers, AIG, Fannie and Freddie, WAMU, Morgan Stanley, other lesser-knowns and others yet to come.
The pundits want to explain the situation by pointing at everything from executive compensation to over-regulation. The Dem’s want to blame it on Bush and the Republicans want to trace it back to Clinton. You won’t find an answer that makes sense listening to any of those folks and their agenda driven drivel.
Here’s the straight skinny.
During the Clinton years, which coincided with [but did not create] a long and strong bull market, the line between and among banks, broker-dealers, investment advisories and insurance companies got blurred and in some cases erased. This blurring continued into the 21st century and the Bush years.
But, the Bull Market Didn’t.
During the bull market the financial services industry came to the realization that the more money they could extract from Americans like you and me, the more money they could make for themselves. Moreover, they found that ‘invested’ dollars were more profitable for them than any others. This led The Behemoths to create the myth that every American should be investing.
The Investment Myth
This myth was easy to perpetuate because of the bull market’s seemingly relentless growth. When the bull market ended, however, the myth was in jeopardy. Americans were running out of money and were less inclined to ‘invest’ and that meant the financial services folk might have to take a cut in pay.
The Easy Mortgage
The Behemoths needed a way to perpetuate the myth. Enter the easy mortgage, the HELOC, the concept of ‘harvesting equity,’ the emphasis on massive and misguided 401(k) contributions [see final thoughts below] and a variety of other strategies to extract money from Americans.
The result for many Americans is that they have no money and the investments they bought with the money they borrowed from their home equity – or their credit cards – are worth less than they paid for them.
Now the Problem Arises.
- Americans have a ton of debt.
- They had been led to believe that using debt to buy ‘investments’ was a good idea.
- It wasn’t.
- Now, Americans can’t repay the debt they incurred to buy ‘investments.’
- Now the companies that convinced Americans to ‘invest,’ and also loaned them the money to do so, can’t collect because Americans have no money – they only have ‘investments’ that are worth less than the debt they incurred to buy them.
- Crash, boom, bang!
KAL’s cartoon
Sep 18th 2008
From The Economist print edition
One final thought. If you think your 401(k) [or any investment plan for that matter] is a good deal because you are putting a large amount of money into it, think again. If you put $10,000 in a 401(k) and incur the same amount of debt in the same year, you will likely pay more in debt service than you earn in your retirement savings account.
And another…Tax detectability is a monkey trap that many Americans fall into and never escape.
by Jeffrey Reeves MA, EUREKONOMIST
Posted in Debt, Personal Financial Management, Taxes, What Others Say | Tags: 401 k contributions, aig, bank, banking, banks, bear stearns, credit, debt, easy mortgage, executive compensation, financial, financial behavior, heloc, indymac, insurance companies, investing, investments, lehman brothers, Money, morgan stanley, mortgage, Retirement, saving, savings, Taxes, undefined, wamu | No Comments »
Bear Stearns, Lehman Brothers, AIG And The Fed…
September 16, 2008 | Author dragonfly
Rather than boring you by recounting what is readily available in the rest of the media, I want to recommend a great book that sheds light on what our Founding Fathers believed and embedded in our banking system. I’ll let you decide if those principles and practices are still there.
The Financial Founding Fathers, The Men Who Made America Rich, Robert E. Wright and David J. Cohen, The University of Chicago Press, 2006
As will rogers said in 1928,
“Alexander Hamilton started the U.S. Treasury with nothing, and that was the closest our country has ever been to being even.”
___________________
Posted in Money, What Others Say | Tags: aig, bank, banking, banking system, banks, bear stearns, financial, founding fathers, lehman brothers, press, u s treasury, university of chicago, will rogers | No Comments »
The 21st Century Way to Wealth…Settle Down
September 16, 2008 | Author dragonfly
By Dr Benjamin Franklin and Dr Agon Fly
“II. But with our industry we must likewise be steady, settled, and careful, and oversee our own affairs with our own eye, and not too much to others;
WOW! I wonder what Benjamin Franklin would think of ‘modern’ investment vehicles such as mutual funds, ETF’s, hedge funds, and derivatives of all kinds? These instruments require that you not “…oversee [y]our own affairs…”
The companies and the people that sell these products would have you believe that they are “steady, settled and careful,” but those qualities are not intrinsic to their products or the hallmarks of the marketers. In fact, the less you know the easier it is for them. If you think that’s an exaggeration, try reading a prospectus. You’ll discover that you know less after reading than you did before, and the prospectus is supposed to be the fountain of truth about mutual funds and primary stock offerings.
The truth is that America has lost sight of the wisdom that makes it great. Unless Americans reject the conventional wisdom, which is no wisdom at all, and regain clarity about how to handle their own money, they will soon find themselves gaining wisdom and clarity from the bankruptcy judge.
Father Abraham continues his lecture about being “steady, settled, and careful:”
for, as Poor Richard says, I never saw an oft-removed tree, nor yet an oft-removed family,
that throve so well as those that settled be. And again, three removes are as bad as a fire;
Father Abraham uses the word “remove” the way we might use the word “move.” In the America of the 1750’s, the ability to settle down in one place permanently was not quite as easy as it is today. Families built their own homes, made their own furniture, collected dinnerware one item at a time, and so on. Moving frequently would make being “steady, settled, and careful” quite difficult for the family.
You might remember, also, that Benjamin Franklin started the first volunteer fire department in Philadelphia around this time because a fire meant the loss of all that a family owned. The insurance that we rely on today was non-existent.
Just as a transplanted tree finds it hard to thrive, so a frequently transplanted early American family would find it difficult to thrive. In America today we hardly think twice about moving across town or across country. Many families spend their future trying to create a better one. They move to a new house or a new job or a new school district or a new city hoping that the mere fact of moving would create a better future. Americans burn their connections to place and destroy a part of their families when they do.
Granted, a lot has changed in the last 250 years, but Father Abrahams premise is just as valid today as it was in 1758; the deeper the roots, the stronger the tree. The same thinking applies to how you deal with your money. Moving money around like play money on a Monopoly Board is just as damaging to your personal economy as moving your family around is to your personal relationships. Money needs a home; it needs to be “steady, settled, and careful” in its own way.
As always, Benjamin Franklin, through the character of Father Abraham, brings wisdom, which knows no century, to the 21st century. We stand in awe of it both because it is timeless and because it has been buried by the advertising and marketing of the Behemoths, who would like nothing more than that ‘we the people’ remain slaves to their shibboleths.
_________________________
Posted in Money, Personal Financial Management, What Others Say | Tags: Add new tag, bankruptcy judge, benjamin franklin, conventionalinvestment vehicles, derivatives, economy, father abraham, fountain of truth, hedge funds, investing, investments, Money, mutual funds, prospectus, stocks, thrive, undefined, wisdom | No Comments »