Retirement
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 | 
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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
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 »
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’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 »
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.
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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.
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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.
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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.
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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 »
Basic Economics: Save First, Invest Later, Speculate Never…
July 24, 2008 | Author dragonfly
Misinformation & Disinformation…
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! “Investing” Is Poorly Defined…
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 may–but don’t have to–consider investing.
A Form of Insanity…
Think about 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!
Jeffrey Reeves
Posted in Personal Financial Management, Retirement | Tags: agon fly, annuities, annuity, bank, banker, banking, banks, be the bank, become your own bank, becoming your own banker, bonds, book on money, books on money, books on personal finance, circle of wealth, debt, debt elimination, debt management, debt reduction, debt to others, disability income insurance, Dr Agon Fly, Dr_Agon_Fly, financial, financial advice, financial advisor, financial planner, financial planning, health insurance, housing market, how to thrive, infinite banking, insurance dividends, investing, jeff reeves, jeffrey reeves, leap system, life insurance, long term care insurance, mass mutual, mass mutual insurance, massachusetts mutual life insurance, millionaire, Money, money book, money books, money for life, money under management, money wisdom, morningstar, morninstar report, mortgage, mortgage management, mutual funds, mutual insurance, mutual insurance company, nash, nelson nash, new york life, new york life insurance company, northwestern mutual life, passive income, personal financial books, pirates of manhattan, r nelson nash, Retirement, retirement income, retirement planning, saving, stock dividends, stock market, stocks, Tags: 401(k) plans, Tags: 801(k) plans, Taxes, term life insurance, The Four Pillars, the guardian life insurance company, thrive, universal life insurance, variable life insurance, Wall Street, Whole Life Insurance, Who’s helping you, why buy whole life insurance, why whole life insurance, wisdom about money | No Comments »
It’s Only Money? How You Can Prosper With Small Savings Decisions…
July 18, 2008 | Author dragonfly
It’s only…
How many times have you heard – or said – something like, “Let’s buy it! It’s only fifty bucks. That’s a twenty-five dollar savings!”Guess what. There is no “only” when you are dealing with your money. And, savings are only savings when you put them into your “bank”.
If, instead of spending it, you put your fifty bucks in your “bank”, it would compound to over $400.00 in 30 years at 7.2%. Add to that the 25 bucks you “saved” and you’d have over $600.00. Consider that you make those kinds of decisions frequently – say 12 times a year – and your compounded savings total is over $7,000.00. Do it every year for 30 years and you be a lot closer to fifty grand than fifty bucks.
“Only” fifty bucks? Don’t kid yourself. The old adage “every penny counts” is an old adage because it’s true. We all tend to trick ourselves when it comes to money, and one of the oldest tricks in the world is the “it’s only”. The next time you think you are saving money buying a product on sale, ask yourself if the product you are buying and the money you are “saving” is really worth it.
Remember – only money is money. For everything else, including your “investments”, you have to spend your money. When you’re closer to pushing up daises than doing fifty push-ups, having money instead of the stuff you bought on sale will be a blessing.
“You can be young without money but you can’t be old without it.” Tennessee Williams
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www.TheMoneyForLifeBook.com – www.YouBeTheBank.com
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Posted in Money, Personal Financial Management, Retirement | Tags: compound interest, compounded savings, fifty bucks, investments, Money, saving, savings | No Comments »
Short Term – Money, Long Term – Investments, And Never The Twain Shall Meet…
July 12, 2008 | Author Dr Agon Fly
“There’s no crying in Baseball!” A League of Their Own, 1992
The baseball season is long and strenuous. Players, coaches and teams have to pace themselves. They recognize that one game in a long season – win or lose – is less important than consistently winning more than they lose. More importantly, a team has to win more than the other teams in their division if they want to get to the playoffs, compete for the league championship and make it to the World Series. We’ll get back to that in a paragraph or two.
The baseball season is like your financial season from the time you wake up to the reality that your financial future is in your own hands, till the time you pass on to the next world and pay forward the wisdom and wealth you accumulated during your earthly existence. So, like baseball, you don’t expect to win every time you make a decision about money and investing. What you aim for is consistently winning more than you lose – right?
Wrong. In many baseball seasons a team that lost its opening game and chanted the mantra, “It’s a long season; you can’t win ‘em all,” ended the season one half game out of first place, missed the playoffs, the league championship and the World Series. Every game counts and every financial decision counts.
Moreover, when a team prospers through the season and gets into the division playoffs, they are subject to defeat in the short term. And so it goes through division play and into the Series; victory or defeat is just the swing of the bat away. There are thirty teams in Major League Baseball but only one winner in the end.
So, also, when you get to the point where you want to live off your money and investments instead of your labor, you can have a great season right up to the end and lose in the short term. So, conclude for yourself that the short term is both more important and more manageable than the long term. Having money that you control in the short term is more important than having “long-term” investments that you don’t control, and that someone else – perhaps with motives that don’t serve you - does.
Every baseball team knows that winning or losing a single game could well leave them in front of their TV instead of in the dugout during the playoffs. Americans need to recognize that managing their money so that they don’t lose it is more important than hoping that some investment over which they have no control will miraculously get them into the playoffs and make them winners in the World Series of wealth building.
America has been duped into believing that is OK to lose money, that waiting out ‘the market’ is a strategy that serves them; that the future is assured if only they ‘stay the course.’
BUNK!
Americans need to wrest control of their money from the Behemoths that have seduced them into believing that bigger is smarter or better than they are, and that the Behemoths should be the custodians of Americans’ money instead of the individual Americans themselves.
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Posted in Legal, Ethical, Moral, Money, Movie Quotes, Personal Financial Management, Retirement | Tags: financial decision, future, investing, investments, Money, wealth, wisdom | No Comments »
Equity Harvesting Is A Gamble Based On A Gamble…
June 20, 2008 | Author dragonfly
Easy Money Schemes and Dreams
“You got to know when to hold em, know when to fold em,
Know when to walk away and know when to run.”
The Gambler, Kenny Rogers
The Original Gamble
Equity harvesting is the practice of acquiring the highest possible mortgage on your personal home so you can “invest” the money derived from the equity that is extracted in another asset.
Don’t do it.
You Have to Lose to Win
It’s true that there is NO return on equity. That’s what the promoters of this scheme use as intellectual leverage. If you were counting on appreciation in 2010 and had to sell a property that was appraised for $500,000 in 2008 - thinking you would see an increase - you were probably surprised to learn that the property is now worth $400,000 - or less. If you had already “harvested” the equity in the property you may feel that you won by losing.
If you had a $300,000 mortgage in 2006 and had “harvested” the $200,000 in “non-working equity” to buy some other asset, you would now be facing a serious shortfall. Worse yet, if the asset you bought relied on a stock index for its growth potential, you may be looking at less than inflation or near zero growth in that asset also.
Does that make you a winner? Maybe if your consider bankruptcy a win.
Tax benefits?
Maybe, but not assured. The IRS doesn’t allow you to deduct the interest on equity lines over $100,000 and some investments disqualify deductions.
Now, we can make the situation worse. Most equity lines have variable rates and the lender has a great deal of leverage in raising and lowering the rate. You could have a loan rate that far exceeds the growth rate of the “investment;” a gamble based on a gamble and neither one paid off.
Retirement Income
Equity harvesting is presented as a safe way to increase retirement income. It isn’t all that safe and the increase is based on aggressive assumptions that are not always realistic.
Reality has to sink into the American consciousness sooner or later. The safe and easy path to prosperity and a secure retirement income lies in paying off the mortgage, getting out of the 401(k)/IRA schemes, putting money into savings and whole life insurance policies, and investing only when a solid financial foundation is in place.
by Jeffrey Reeves MA, EUREKONOMIST
Posted in Movie Quotes, Retirement | Tags: 401(k) plans, become your own bank, becoming your own banker, debt elimination, debt management, debt reduction, debt to others, financial, financial advice, financial advisor, financial planner, financial planning, housing market, infinite banking, insurance dividends, investing, jeff reeves, jeffrey reeves, life insurance, mortgage, mortgage management, Retirement, retirement income, retirement planning, saving, term life insurance, Whole Life Insurance, why buy whole life insurance, why whole life insurance | No Comments »
Reverse Mortgage Money Magic…
June 19, 2008 | Author dragonfly
Retirement Assets…
“Made it Ma! Top of the world! White Heat, 1949
Reverse mortgages are often portrayed as last-resort financial tools; reserved for widows and widowers who have outlived their liquid assets and have to tap the equity in their paid-for homes to survive a few more years.
Not so.
Meet Bob and Sally…
- They live in a $1.2 million home in a stable neighborhood in Denver. The house is paid for.
- They have three children.
- All three of the children are married.
- Each of the children is in a professional practice in a different city; Dalla, L.A. and Chicago.
- Each child has a six figure income.
- Each child has a family and has roots in their new communities.
- Bob and Sally also have a significant estate and estate tax staring them in the face.
The family is close and the children return to Denver for visits on major holidays and during the ski season. None of the children is interested, however, in owning the family home or moving back to the city they grew up in.
Creative Planning and Execution…
Enter the jumbo reverse mortgage. Bob and Sally obtained a reverse mortgage of about $500,000 on their home. They used about $400,000 to buy a condo in Vail, the family’s favorite ski location. They put the property in a trust and began a gifting program that shifts their ownership to the trust and the children over several years. The additional money was used to buy a large life insurance policy on Bob that will be paid to the trust when Bob dies and fund home owner association fees, upkeep, etc. for the condo for decades to come.
The benefits:
- Bob and Sally’s estate, and therefore their estate tax, is reduced because they transformed an illiquid asset into cash and transferred the cash to the condo and the condo to the trust.
- The children will still have an expense free place to get together during ski season and for other family events like graduations and marriages.
- In a few years, when Bob and Sally decide to move from the big house to a smaller place, they intend to sell the Denver house and use the equity retained after the reverse mortgage to buy a condo of their own in Vail. When they do, they will get another reverse mortgage on the condo and use that money to further fund the family condo or, perhaps, buy a bigger one.
Find Out More…
Reverse mortgages are one of the most powerful tools available to seniors today. For additional information go to http://www.nrmla.org/
Jeffrey Reeves
Posted in Estate Planning, Movie Quotes, Retirement | Tags: 401(k) plans, agon fly, annuities, annuity, bank, banker, banking, banks, be the bank, become your own bank, becoming your own banker, bonds, book on money, books on money, books on personal finance, circle of wealth, debt, debt elimination, debt management, debt reduction, debt to others, disability income insurance, Dr Agon Fly, Dr_Agon_Fly, financial, financial advice, financial advisor, financial planner, financial planning, health insurance, housing market, how to thrive, infinite banking, insurance dividends, investing, jeff reeves, jeffrey reeves, leap system, life insurance, long term care insurance, mass mutual, mass mutual insurance, massachusetts mutual life insurance, millionaire, Money, money book, money books, money for life, money under management, mortgage, mortgage management, mutual funds, mutual insurance, mutual insurance company, nash, nelson nash, new york life, new york life insurance company, northwestern mutual life, passive income, personal financial books, pirates of manhattan, r nelson nash, Retirement, retirement income, retirement planning, saving, stock dividends, stock market, stocks, Tags: 801(k) plans, Taxes, term life insurance, The Four Pillars, the guardian life insurance company, thrive, universal life insurance, variable life insurance, Whole Life Insurance, Who’s helping you, why buy whole life insurance, why whole life insurance | 1 Comment »
In Memoriam To Debt, “Rate of Return” And The Tax Deductible Trap…
May 23, 2008 | Author dragonfly
If the price of gasoline doesn’t wake up America to the foolishness of its reliance on debt for lifestyle and “rate of return” and tax deferral for wealth creation, then we may all be speaking Arabic or Chinese within a few decades.
This blog and the book Money for Life…(thrive) in good times and bad are dedicated to helping Americans – and perhaps some in foreign lands too – escape the dungeon of debt where they are imprisoned and recapture the money that they are literally giving away to credit grantors, investment companies and the government.
Think about it. It’s as simple as 1,2,3…
- Debt will never make you rich.
- Bear-Stearns, one of the largest investment banks in the world, went broke chasing “rate of return”
- Every time you take a tax deduction from the government for a retirement contribution you are effectively taking out a loan that you’ll have to repay when you “retire.”
There is today, and has been for millennia, a better way to handle your money. You need to control the money that flows through your life, become your own banker and recover, in your own “bank,” the interest and principal that you currently pay to others, reduce or eliminate your dependence on the Pirates of Manhattan and the government’s hold on your future and declare yourself independent, just as the Founding Fathers did over 200 years ago.
Start today. Start here–> www.youBEthebank.com
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Posted in Debt, Money, Personal Financial Management, Retirement, Taxes, You BE the "Bank" | Tags: agon fly, annuities, annuity, bank, banker, banking, banks, be the bank, become your own bank, becoming your own banker, bonds, book on money, books on money, books on personal finance, circle of wealth, debt, debt elimination, debt management, debt reduction, debt to others, disability income insurance, Dr Agon Fly, Dr_Agon_Fly, financial, financial advice, financial advisor, financial planner, financial planning, health insurance, housing market, how to thrive, infinite banking, insurance dividends, investing, jeff reeves, jeffrey reeves, leap system, life insurance, long term care insurance, mass mutual, mass mutual insurance, massachusetts mutual life insurance, millionaire, Money, money book, money books, money for life, money under management, mortgage, mortgage management, mutual funds, mutual insurance, mutual insurance company, nash, nelson nash, new york life, new york life insurance company, northwestern mutual life, passive income, personal financial books, pirates of manhattan, r nelson nash, Retirement, retirement income, retirement planning, saving, stock dividends, stock market, stocks, Tags: 401(k) plans, Tags: 801(k) plans, Taxes, term life insurance, The Four Pillars, the guardian life insurance company, thrive, universal life insurance, variable life insurance, Whole Life Insurance, Who’s helping you, why buy whole life insurance, why whole life insurance | 1 Comment »
American Money, American Oil, American Innovation…
May 9, 2008 | Author dragonfly
“Frankly, my dear, I don’t give a damn.” Gone With the Wind, 1939
America is committing suicide by Congressional Cowardice!
The Congress doesn’t “give a damn.” It has completely abrogated its sworn responsibility to provide vision, wisdom and leadership. Some in Congress have given their votes and their minds over to the insane claims of fringe groups who really hate America. Others have relinquished their power to the Behemoths; corporations, unions, lobbyists that disguise themselves as spokespersons for some group or cause, and government agencies whose only function is self preservation regardless of the cost to the Country and its People – that’s you and me and 300 million other Americans.
All in Congress have put political party goals above the needs of America.
The presidential candidates are members of Congress, too. Each of them has “caved” to one or more of the caveats of their constituents during the campaign. All of them have failed the “vision, wisdom and leadership” test when it comes to recognizing and dealing with the realities of the 21st century.
Obama naively clings to an exclusive far left agenda while promising to be a uniter. Clinton is strident as she proposes specific, liberal, tax-increase based solutions to every imaginable challenge masked in so much detail that even an advanced degree in economics wouldn’t help one understand – or believe; just like HillaryCare of 1993. McCain offers only partial insights into his thinking and programs as he tries to convert his image from that of an independent minded conservative to that of a ”sorta” party loyalist.
There are two intimately related issues that should drown out the cacophony of claims by the crazies and the wimps and overshadow every other concern:
- America is at war. Insane Islamic zealots believe that only they possess the truth, and that destroying the western world in the name of Allah is the path to their heaven. It’s war declared on America - not criminal activity.
- America’s – and the world’s – economy is based on oil. If America doesn’t tap into its own oil reserves – as every other country in the world is doing – America will soon become a slave to the OPEC nations like Saudi Arabia and Venezuela – the birthplaces of the Islamic and other crazies. At the same time, America needs to have the vision to commit significant resources to oil alternatives.
If our leaders deal with these two issues, every other concern will resolve itself.
Some will argue that the current economic malaise is driven by failures in both the oil and the financial industry. The financial industry, however, is becoming more and more dependent on oil rich countries to supply it with the fuel for its engine, and that means dependence on oil by proxy.
Your personal economy depends on America being a leading economic power. If America fails to maintain its status as the engine of liberty through its economic strength, you and I will become servants to some foriegn power.
We need to elect leaders who recognize and deal with these harsh realities instead of those in Congress today who pander to every Behemoth that promises a contribution to their campaigns to stay in office – translate that as “to stay in power.”
In the meantime, you need to find ways to save money that allows you to control the money in your life. At the micro level you can switch to energy efficient light bulbs, drive more slowly and less often, buy more fresh food and less prepared food; that will help you and the rest of us too.
At the macro level you need to gain control of your money, to apply principles and practices that have been tested and proven over centuries and millenia and that apply equally today. This blog attempts to shed light on them. For a fuller understanding –> www.TheMoneyForLifeBook.com
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Posted in Debt, Legal, Ethical, Moral, Money, Personal Financial Management, Retirement, Taxes, You BE the "Bank" | Tags: agon fly, annuities, annuity, bank, banker, banking, banks, be the bank, become your own bank, becoming your own banker, bonds, book on money, books on money, books on personal finance, circle of wealth, debt, debt elimination, debt management, debt reduction, debt to others, disability income insurance, Dr Agon Fly, Dr_Agon_Fly, financial, financial advice, financial advisor, financial planner, financial planning, health insurance, housing market, how to thrive, infinite banking, insurance dividends, investing, jeff reeves, jeffrey reeves, leap system, life insurance, long term care insurance, mass mutual, mass mutual insurance, massachusetts mutual life insurance, millionaire, Money, money book, money books, money for life, money under management, mortgage, mortgage management, mutual funds, mutual insurance, mutual insurance company, nash, nelson nash, new york life, new york life insurance company, northwestern mutual life, passive income, personal financial books, pirates of manhattan, r nelson nash, Retirement, retirement income, retirement planning, saving, stock dividends, stock market, stocks, Tags: 401(k) plans, Tags: 801(k) plans, Taxes, term life insurance, The Four Pillars, the guardian life insurance company, thrive, universal life insurance, variable life insurance, Whole Life Insurance, Who’s helping you, why buy whole life insurance, why whole life insurance | No Comments »
Saving Money Is In America’s DNA…
May 5, 2008 | Author Dr Agon Fly
“You talking to me?” Taxi Driver, 1976
Yes. Even if you haven’t a penny in the bank, I’m talking to you.
Pat was divorced early in life. He never fully recovered from the trauma and never remarried. Over the next 24 years, however, he became quite a successful salesman for an industrial supply company. He took what he considered to be good advice and maxed out his 401(k), contributed to an IRA when possible and bought into the companies stock purchase plan; he amassed quite a corral of assets. Pat chose not to create a “bank” of money aside from that.
Then reality struck.
Pat had remained close to his children over the years. In 1999 his oldest daughter suffered a stroke. His former wife and his other children had moved out of state. The care of his daughter fell on his shoulders. Since Pat was earning a significant income the financial pressure was bearable.
Then reality struck again.
Shortly after that in late 2000 the company he worked for was acquired by a major competitor and Pat was terminated. His company stock was automatically cashed in as a part of the buyout so Pat incurred a large tax liability and reduction in value as a result. He rolled his 401(k) into his IRA account on the advice of his broker. Also on the advice of his broker, he invested his “retirement” accounts in what was considered safe but still fairly aggressive mutual funds. (Hindsight tells you where this is headed, but it sounded like a good idea at the time.)
And, again!
By the summer of 2001, at the young age of 55, Pat had given up on finding work. His daughter’s care and his own monthly expenses had drained the money he received from the stock sale. Pat decided to start his own business. He no longer had a no-compete limitation and he still had his old customer relationships so he cashed in some of his IRA investments, paid penalties and taxes, bought some inventory and went to work.
And again on 9/11…
Pat’s infant business took an immediate hit as devastating to him as the hit to the Twin Towers was to the rest of us. Not only that, but the value of his investments fell over 62%. Pat was suddenly struggling to make ends meet, care for his daughter and salvage a business he had started on a shoestring.
Your Personal Economy
Pat’s story is not yet ended but it has served its purpose for this post. Pat’s American DNA motivated him to “save.” His advisors – and most of the pundits, publicists and prognosticators who rely on the Behemoths for their information and advice – led him down a path that led him and millions of other Americans into a dungeon of debt.
In Pat’s case the debt was mostly to his company and to the government. His stock had strings attached so he really didn’t entirely own it and the price he received was not based on value but on the whim and greed of his employer. His “savings” in tax qualified plans were really nothing more than loans from the government at an unspecified interest rate to be repaid later disguised as a current deduction and a future liability.
Every successful personal economy has four clearly defined characteristics and achievable goals:
- Freedom from debt to others – including debt to the government disguised as a future tax liability
- Income you don’t have to work for but you won’t outlive that is protected from inflationary pressures
- Ready cash to deal with the surprisingly unsurprising surprises that we all experience
- A legacy of wisdom and wealth to pay forward to those we care about
Does your personal economy measure up? It can –> www.TheMoneyForLifeBook.com
Posted in Money, Movie Quotes, Personal Financial Management, Retirement, The Four Pillars | Tags: agon fly, annuities, annuity, bank, banker, banking, banks, be the bank, become your own bank, becoming your own banker, bonds, book on money, books on money, books on personal finance, circle of wealth, debt, debt elimination, debt management, debt reduction, debt to others, disability income insurance, Dr Agon Fly, Dr_Agon_Fly, financial, financial advice, financial advisor, financial planner, financial planning, health insurance, housing market, how to thrive, infinite banking, insurance dividends, investing, jeff reeves, jeffrey reeves, leap system, life insurance, long term care insurance, mass mutual, mass mutual insurance, massachusetts mutual life insurance, millionaire, Money, money book, money books, money for life, money under management, mortgage, mortgage management, mutual funds, mutual insurance, mutual insurance company, nash, nelson nash, new york life, new york life insurance company, northwestern mutual life, passive income, personal financial books, pirates of manhattan, r nelson nash, Retirement, retirement income, retirement planning, saving, stock dividends, stock market, stocks, Tags: 401(k) plans, Tags: 801(k) plans, Taxes, term life insurance, The Four Pillars, the guardian life insurance company, thrive, universal life insurance, variable life insurance, Whole Life Insurance, Who’s helping you, why buy whole life insurance, why whole life insurance | No Comments »
Borrowing The Government’s Money…
April 19, 2008 | Author dragonfly
“Greed, for lack of a better word, is good.” Wall Street, 1987
Wes thought himself a pretty well informed financial advisor and planner. For years he’s told his clients to max out their 401(k) plans and put as much as possible into IRA’s and other tax sheltered programs. His premise is that taxes saved today are better than taxes paid later; that tax rates in retirement will be less than tax rates during one’s working career; that using the government’s money is always better than using one’s own money.
He followed his own advice in this regard and was now about to retire. To test the theory behind his 40+ year practice, Wes looked back over the strategies he used during his working life. He was shocked when he realized that the taxes he saved were nothing more than loans that the government was granting him and millions of other Americans. He finally sees that the taxes - also known as ”interest” – he would pay during retirement greatly exceeded the benefit he gained from the deductions – also known as “loans” – the government granted him earlier in life.
Wes had charts and graphs and hypothetical illustrations that “proved” his theories – theories promoted by the vast majority of financial advisors and planners. But, now Wes is faced with the reality that his successes are going to cost him much more in post retirement taxes than the taxes he saved.
But wait! The issue isn’t really about taxes. Isn’t the real issue net income after taxes?
Yes and no. Wes saw that his sophisticated planning and disciplined investing created a significant pool of money over the years and his retirement income would be more than adequate to his needs. He also saw, however, that had he followed a less sophisticated and less government dependent approach he could have had an equivalent or even better retirement income and pay few if any taxes, and he would be able to pay forward his money-wisdom and a much greater portion of his wealth to those he cared about.
“Greed, for lack of a better word, is blind.” Dr Agon Fly, 2008
Using other people’s money – even if it’s the government’s – is never ever a wise financial move. Learning to control the money that flows through your life in a way that let’s You Be The Bank is safer, steadier and more secure.
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SPECIAL OFFER –> The paperback version of Money for Life…in good times and bad – How to Thrive in the 21st Century will be released on May 1st, 2008. Everyone who buys the e-book version before May 1st will also recieve an autographed copy of the paperback when it is release. No special codes are needed. Don’t be an April fool; make the purchase befor April 30th. Shipping and handling charges will still apply. –> www.TheMoneyForLifeBook.com
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Luck And Money…
April 16, 2008 | Author dragonfly
“Today, I consider myself the luckiest man on the face of the earth.” The Pride of the Yankees, 1942
The final proof of Money for Life,,,in good times and bad was sent to the printer today. Now the work of getting this amazing document that recalls the teachings of the world’s wisest financial minds from millennia past into the hands, minds and hearts of Americans begins in earnest
Thanks to all who read this blog for your support and encouragement.
I am exhausted today from the emotional and intellectual effort of proofing so I am ending this blog post early.
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Money for Life…in good times and bad – How to Thrive in the 21st Century will be released on May 1st, 2008. Everyone who buys the e-book version before May 1st will also receive an autographed copy of the paperback when it is release. No special codes are needed. Don’t be an April fool; make the purchase before April 30th. Shipping and handling charges will still apply. –> www.TheMoneyForLifeBook.com
Posted in Debt, Legal, Ethical, Moral, Money, Personal Financial Management, Retirement, Taxes, The Four Pillars, Whole Life Insurance, You BE the "Bank" | Tags: 801(k) plans, Add new tag, agon fly, annuities, annuity, bank, banker, banking, banks, be the bank, become your own bank, becoming your own banker, bonds, book on money, books on money, books on personal finance, circle of wealth, debt, debt elimination, debt management, debt reduction, debt to others, disability income insurance, Dr Agon Fly, Dr_Agon_Fly, financial, financial advice, financial advisor, financial planner, financial planning, health insurance, housing market, how to thrive, infinite banking, insurance dividends, investing, jeff reeves, jeffrey reeves, leap system, life insurance, long term care insurance, mass mutual, mass mutual insurance, massachusetts mutual life insurance, millionaire, Money, money book, money books, money for life, money under management, mortgage, mortgage management, mutual funds, mutual insurance, mutual insurance company, nash, nelson nash, new york life, new york life insurance company, northwestern mutual life, passive income, personal financial books, pirates of manhattan, r nelson nash, Retirement, retirement income, retirement planning, saving, stock dividends, stock market, stocks, Tags: 401(k) plans, Taxes, term life insurance, The Four Pillars, the guardian life insurance company, thrive, universal life insurance, variable life insurance, Whole Life Insurance, Who’s helping you, why buy whole life insurance, why whole life insurance | No Comments »
Clarity About Money – Revisited…
April 11, 2008 | Author dragonfly
“You know how to whistle, don’t you, Steve? You just put your lips together and blow.” To Have and Have Not, 1944
Yesterday I talked about Jerry’s widow Flo. I described how her daughter Mary Jane and her son in law Vern failed her and left her in a state of near poverty. The blog got a couple of questions that motivate a follow-up.
The first question was, ”What would a Money for Life Guide have done for Flo?” Knowing how to deal with money and knowing how to whistle do not come naturally and Flo wouldn’t have a great deal of time to learn.
Jerry died at age 63. He left Flo, age 62, with $250,000.00 in life insurance, almost $200,000.00 in IRA money, a $190,000.00 home that was paid for and $90,000.00 in savings and bank CDs.
A Money for Life Guide would have diversified Flo’s investments. S/he would have placed the life insurance proceeds and IRA money into a variety of secure, guaranteed income annuities. These would deliver initial cash flow of about $2,250.00 per month without using any principal. Flo’s income could increase if the underlying investments performed well, but would never decrease.
Flo also qualified for $1,800.00 per month in Social Security benefits. This benefit also has an inflation hedge built in. In other words, Flo would be debt free – remember that her home was paid for – and have an income of over $4,000.00 per month that she didn’t have to work for but that she wouldn’t outlive.
Flo’s Money for Life Guide would also move much of the $90,000.00 that was in the bank into a cash value life insurance policy over a period of four or five years. This creates a death benefit legacy for her daughter and for her possible grandchildren.
The cash values in her life insurance policies are still accessible by Flo if she needed them for any reason. In addition, the principal amount in her annuities, along with the equity in her home serve as Flo’s hedge against future medical and long term care expenses.
To summarize: Flo has set the four pillars of a successful personal economy. She is
- debt free,
- has an income she doesn’t have to work for and she won’t outlive,
- have money to deal with life’s surprises and
- leaves a legacy of wisdom and wealth for those she cares about
Finally, Flo continues to work part time at her passion but does not earn enough to reduce her social security. This money is being deposited into another cash value life insurance policy – another “bank” – that Flo can access if and when she ever needs it and add to her legacy if she doesn’t.
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SPECIAL OFFER! –> The paperback version of Money for Life…in good times and bad – How to Thrive in the 21st Century will be released on May 1st, 2008. If you buy the e-book version before May 1st, you’ll also receive an autographed copy of the paperback when it is released. No special codes are needed. Make the purchase before April 30th. Shipping and handling charges will still apply. –> www.TheMoneyForLifeBook.com
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The Most Versatile Tool In Your Money Tool-Belt……
March 30, 2008 | Author Dr Agon Fly
Insuring Against Recession
Check your life insurance policy to ensure it’s right for today’s troubled economy.
“A whole life insurance policy is the Swiss Army knife of the insurance world.”
Beth PiskoraManaging Editor, U.S. Editorial
The Outlook, Copyright © 2008, The McGraw-Hill Companies.
“Unemployment currently stands at 5%, but David Wyss, the chief economist for Standard & Poor’s, sees it creepingup to 5.5% by the end of this year. That means up to 750,000 Americans could potentially lose their jobs in 2008.
“Are you prepared — financially, if not emotionally — if you lose your job? If not, you might, with a financial advisor, consider buying more insurance. Even if you are retired, or feel very strongly that your income stream is safe, there are some stable long-term savings options in many insurance plans that you might want to consider in these volatile times in the stock and bond markets.
“While term life insurance is overall a more popular product, whole life insurance is enjoying a resurgence of demand. To understand if whole life is right for you, it’s best to know a lot about the product.
“A whole life policy can act as a buffer against estate taxes and probate costs, and provides a death benefit along with a living cash benefit, a feature unique to whole life. In addition, a whole life policy allows someone at the time of retirement to remain insured while spending the other assets they’ve accumulated or pursuing a more aggressive investment strategy for those assets.
“A whole life insurance policy is the Swiss Army knife of the insurance world,”… read the rest here –> http://themoneyforlifebook.wordpress.com/why-whole-life-insurance-works-in-tough-times/
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Money For Life…in good times and bad – How to Thrive in the 21st Century addresses the issues raised in this article in detail.
buy it today at –> www.TheMoneyForLifeBook.com
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Retirement Money-Shrinking Investments…
March 29, 2008 | Author Dr Agon Fly
“Life is a banquet, and most poor suckers are starving to death.” Auntie Mame, 1958
Ed and Jean worked hard for almost fifty years, lived a frugal but fulfilling life, and raise eight good children. They didn’t sacrifice their financial life to the Debt Paradigm. They owned their home, had pensions from their work, both received social security and they kept a “rainy day” account that added up to over $100,000.
As they enter what should be the easy and relaxed life of the comfortably retired, a financial snake oil sales rep from one of the merchants of misinformation suggested that the equity in their home was not producing anything for them and that they should “harvest” that equity and invest it – and, of course, invest it with the sales rep making the pitch.
“It just makes sense.” the rep said, repeating the mantra of the Behemoths, “You can get an interest only mortgage on your home at 6% (I can get that for you and get paid to do so), invest the money (with me, and I’ll get paid again) at 8% (not guaranteed but, hey, the “market” always rises), get a tax deduction (if the dolts in Congress don’t remove it and/or raise taxes on your gain) and you’ll be doing what the really rich people do all the time.”
BUNK!
Rich people pay their debts and use the cash flow to save more money. When they invest they invest only small amounts of their savings. They do not invest from income – not even into a 401(k) or equivalent. If tax laws change or the market tanks or the real estate bubble bursts (as it just has and still is – the worst is yet to come) their money is safe, their income is safe, their homes are safe, their investments are protected with prudence and they are living the banquet.
The “poor suckers” who are “starving to death” are the ones who believed the sales rep and followed his or her advice. Here’s a rule of thumb that has proven accurate for as long as people have been investing and saving; if a sales rep shows you a plan that requires you to reorganize a successful personal economy because by doing so you would be doing what the truly wealthy do, run to the door without looking back. You are about to be scammed.
What the truly successful do – and have done for millennia – is save first. They create their own security in four specific areas:
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they are free from debt-to-others
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they have income they don’t have to work for and can’t outlive
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they have money readily available to deal with life’s surprisingly unsurprising surprises
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they have created a legacy of wisdom and wealth to pass on to those they care about
The process they use to achieve these very achievable goals is clearly described in Money for Life…in good times and bad – How to Thrive in the 21st Century. The products and information that are available today, combined with the wisdom derived from the past, flow together in proper measure in this book. You can easily apply them to your situation.
Don’t be one of the “poor suckers.” Your life can be a banquet –> www.TheMoneyForLifeBook.com
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Posted in Money, Movie Quotes, Personal Financial Management, Retirement | Tags: 401(k) plans, 801(k) plans, agon fly, annuities, annuity, bank, banker, banking, banks, be the bank, become your own bank, becoming your own banker, bonds, book on money, books on money, books on personal finance, circle of wealth, debt, debt elimination, debt reduction, debt to others, disability income insurance, Dr Agon Fly, Dr_Agon_Fly, financial, financial advice, financial advisor, financial planner, financial planning, health insurance, housing market. stocks, how to thrive, infinite banking, insurance dividends, investing, jeff reeves, jeffrey reeves, leap system, life insurance, long term care insurance, mass mutual, mass mutual insurance, massachusetts mutual life insurance, Money, money book, money books, money for life, money under management, mutual funds, mutual insurance, mutual insurance company, nash, nelson nash, new york life insurance company, new your life, northwestern mutual life, passive income, personal financial books, pirates of manhattan, r nelson nash, Retirement, retirement income, retirement planning, saving, stock dividends, stock market, Taxes, term life insurance, The Four Pillars, the guardian life insurance company, thrive, universal life insurance, variable life insurance, Whole Life Insurance, Who’s helping you, why buy whole life insurance, why whole life insurance | No Comments »
Mortgage Myths and Money…
March 23, 2008 | Author Dr Agon Fly
“There’s no place like home.” The Wizard of Oz, 1939
Gino and Bernice managed their money carefully, saved a down payment and bought their home after a few years of marriage and the birth of their son. Gino’s income as a unionized cement worker depended on the weather and the good will of his employers but, because he was skilled and reliable, he was able to work regularly.
Within fifteen years Gino and Bernice paid off the mortgage – early. The money that they spent on mortgage payments was then redirected into their “banks”. When, many years later at age 63 , Bernice was diagnosed with pancreatic cancer, the family was able to cover her out of pocket medical costs and provide Gino with support services as Bernice languished for 18 months and died peacefully in her home on her 65th birthday.
A few years after Bernice died, Gino’s 65+ years of heavy smoking and drinking wore out his heart and lungs. While he was on oxygen for emphyzema he had a heart attack and survived open heart surgery. He lived for several more years as a semi-invalid and his son and daughter-in-law provided him with support around the house and in the yard.
When Gino finally died, his son inherited the house free and clear, plus thousands of dollars from Gino’s “banks” and savings accounts. The son, Pat, still rents the house. Within a few years Pat was able to use the inheritance and rental money to help pay off his own mortgage well before its final payment due date. The rent from the family home and the monthly mortgage payment, which he no longer has to pay, go into “banks” for himself, his wife, and his three children.
When Pat is 67 and ready to retire, he will have two properties, both paid for; one producing income and the other costing only taxes, insurance and maintenance. His three children will have college educations with no college loans. He will have a stable retirement income from his and his wife’s retirement plans from work, social security, income from the rental, and substantial income from his savings plans, with much of it tax free from his “banks”. Their retirement income, by the way, will exceed their working career income.
There is no such thing as “good debt” for an individual or family. There are occasions and situations where debt is useful or necessary. That doesn’t make the debt good. A mortgage is a debt; sometimes useful and often necessary, but still a debt.
Those who would have you believe that mortgaging your home to the hilt so you can “invest” the equity with them are selling a dream that that will put money in their pockets and could easily become a nightmare for you and your family. They want to convince you that this strategy is followed by the “wealthy” and if you just do the tricks they teach, you too will be wealthy.
BUNK!
Measure such “plans” against this template before you buy into them:
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Does their plan have guarantees?
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Are the guarantees strong enough to support the end result that is being illustrated?
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Could you get results that were substantially better than the guarantees without buying into the plan being sold?
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Are the non-guaranteed elements of the plan based on both back-testing and actual performance of the companies and products you are being asked to purchase?
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If non-guaranteed results are based only on back-testing because the products and/or companies have only been around for a few years, does the back-testing cover at least 100 years to include the depressions of 1907 and 1929 and the doldrums of the late 1940′s and early 1950′s or does it go back only far enough to incorporate the longest and strongest bull market in the history of markets?
Your financial life can be like that of Gino, Bernice and Pat. They did not have to take great risks or buy into esoteric schemes to succeed with the money that passed through their lives. They employed simple, treid, tested and proven strategies that allowed them to live comfortabley without relying on debt. You can too. –> www.TheMoneyForLifeBook.com
Posted in Debt, Money, Movie Quotes, Retirement | Tags: 401(k) plans, 801(k) plans, agon fly, annuities, annuity, bank, banker, banking, banks, be the bank, become your own bank, becoming your own banker, bonds, book on money, books on money, books on personal finance, circle of wealth, debt, debt elimination, debt reduction, debt to others, disability income insurance, Dr Agon Fly, Dr_Agon_Fly, financial, financial advice, financial advisor, financial planner, financial planning, health insurance, housing market. stocks, how to thrive, infinite banking, insurance dividends, investing, jeff reeves, jeffrey reeves, leap system, life insurance, long term care insurance, mass mutual, mass mutual insurance, massachusetts mutual life insurance, Money, money book, money books, money for life, money under management, mutual funds, mutual insurance, mutual insurance company, nash, nelson nash, new york life insurance company, new your life, northwestern mutual life, passive income, personal financial books, pirates of manhattan, r nelson nash, Retirement, retirement income, retirement planning, saving, stock dividends, stock market, Taxes, term life insurance, The Four Pillars, the guardian life insurance company, thrive, universal life insurance, variable life insurance, Whole Life Insurance, Who’s helping you, why buy whole life insurance, why whole life insurance | No Comments »
A Break From Serious Money Issues?
March 20, 2008 | Author Dr Agon Fly
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I frequently blog about money;
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A topic that’s not very funny.
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So, try as I might,
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I can not make light
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Of dollar, of dime, or of penny.
One of the rules about money that will keep you in synch with your financial goals is this:
“There is no such thing as ‘only’ when it comes to money.” Dr Agon Fly
It’s only five dollars (or ten, or ten thousand)…is nothing more than a rationalization. Better to admit that you want what you want, then find a reasonable way to afford it. And remember, affording a purchase does not mean you can manipulate your cash flow to squeeze out the monthly payments; it means you have the cash to make the purchase, and that you are willing to part with that cash to have what it will buy. Even if you have the cash, recall what Ben Franklin wrote in 1733, “Beware of little expenses; ‘A small leak will sink a great ship.’” Stop and think about it and you may decide to fore go the new coat, new car, new furniture or chocolate malt.
The same holds true for what you save. How many folks have rationalized away the opportunity to save a dollar or two because “it’s only a dollar.” Put your pocket change in a jar at the end of every day and you’ll find hundreds of dollars in your jar at the end of a year. Put that money into a simple savings account every year and your surprise will be thousands of tax free dollars when you retire. One client couple of mine decided to brew their own coffee in lieu of a daily trip to Starbucks and are putting over $4000 a year into their cash value whole life insurance “bank” as a result.
There are secrets – simple practices that America has lost sight of in the last 30 years – that can make you financially comfortable today and into your 30 or 40 year retirement. You can learn these secrets and take control of the money that flows through your life –> www.TheMoneyForLifeBook.com
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If You Plan to Retire…
March 15, 2008 | Author Dr Agon Fly
If you plan to retire you’ll need money for life…in good times and bad. You’ll need to be free from debt, have an income you don’t have to work for and you cannot outlive, have ready cash to take care of the surprisingly unsurprising surprises that afflict us all and – for some – you’ll want to leave a legacy of your wisdom and wealth for those you care about.
I am not as eloquent or as learned as John Mauldin who wrote the following. But my book Money for Life…in good times and bad shows you a strategy that lets you YouBeTheBank so you can set the Four Pillars, upon which every successful personal economy rests, on a solid foundation. John’s newsletter is lengthy but I encourage you to read it through, and pay special attention to the The Boomers Break the Deal segment.
Thoughts From The Frontline
John Mauldin’s Weekly E-Letter
Muddle Through and Your Long Term Returns
by John Mauldin
3/14/2008
Muddle Through and Your Long Term Returns
Muddle Through and Your Long Term Returns
Muddle Through Gets A Boost
Honey, I Vaporized My Customers
Consumer Spending is Going, Going…South
The Boomers Break the Deal
Today we drop back to take a look at the economy and its long term effect on our portfolio returns. I am in Orlando this week, speaking at the Newport Advisor Conference sponsored by the Newport Group. The attendees are primarily investment advisors focused on larger retirement accounts and pensions. This week’s letter is the gist of my speech I gave yesterday, as the entire speech would be way too long for a weekly letter. I want to thank the Newport Group for letting me do this, and thanks for the very kind way they have hosted me. Note: this week’s letter will print a little longer as there are a lot of graphs. And next week I will address the housing market, as was my intention this week.
Read the rest here –> http://www.investorsinsight.com/thoughts_va_print.aspx?EditionID=666
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Learn how to protect yourself and your lifestyle from the surprisingly unsurprising surprises of living in the 21st century –> www.TheMoneyForLifeBook.com
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Wealth is a Relative Term…Part IV
February 24, 2008 | Author Dr Agon Fly
“If you would be wealthy, think of saving as well as of getting. The Indies have not made Spain rich, because her outgoes are greater than her incomes.”…”Away, then, with your expensive follies, and you will not have then so much reason to complain of hard times…” Benjamin Franklin in Poor Richard’s Almanac
It’s worth noting that Dr. Franklin does not say “think of investing” when he advises you about building wealth. Only saving is “saving”. Investing is a form of “getting.” Today the merchants of misinformation and their minions, the snake oil sales reps of Wall Street, manipulate the thinking of Americans with self serving shibboleths. They tell us over and over that the market always recovers; they quote the “average” rates of return as if they were guarantees; they insist that if you stay in the market long enough you will always come out ahead; they discount the value of any financial vehicle that does not fit their greed based model of acquiring “assets under management” – a subtle way of saying they make money, whether you do or not, when you surrender your wealth to them.
Spain did not achieve the same degree of wealth as America because Spain consistently sent its money on risk based ventures. It failed to capture its gains by saving. It focused on “getting” and on “expensive follies” – the appearance of wealth. When a potential gain – a maybe – or a superficial possession puts what you have in hand - ready money – at risk it’s easy to lose your grip on what you have. The elite of Spain – and the elite of Europe for that matter – thought themselves wealthy, lived in luxury, and saw Americans as bumbling bumpkins. Americans lived much more conservatively and acted more prudently in business and personal economics. Europe focused on “getting” while America focused on “saving.”
Many Americans of today are behaving like the Europeans of America’s colonial period. They are facing financial hardship or even ruin because they are focused on “getting” instead of “saving.” The sub-prime debacle is the result of people “getting” homes and mortgages without first saving the down payment and saving enough ready cash to deal with the inevitable ups and downs of daily living. The failure of over half of American’s to retire comfortably is further proof. They want the appearance of wealth without first saving to develop true wealth. They want the outcome without the process.
“If you focus only on the top of the mountain, the path to the top will elude you.” Dr Agon Fly
Wealth is relative. So, too, is the appearance of wealth. Two neighbors have similar incomes and live in similar houses. One is fully paid for. The other is mortgaged to the hilt. One drives a ten year old Buick that is paid for. His neighbor drives a brand new Mercedes that costs him thousands of dollars each year in payments, insurance, fuel and maintenance. One sends his children to the public schools and tutors them according to their needs. The other spends tens of thousands of dollars each year to send his children to an exclusive private school. One belongs to an exclusive country club. The other plays golf at the public courses. They both work for a company that is about to go the way of ENRON and MCI. One is wealthy – no matter what. The other will soon be greeting you at WalMart.
One follows the American way – tried, tested, proven. www.TheMoneyForLifeBook.com The other focuses on getting and his follies. No link required.
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The 800 Pound Retirement Risk Gorilla…
February 20, 2008 | Author Dr Agon Fly
CNNMoney.com
Most Americans Unprepared for Retirement
Tuesday February 19, 3:37 am ET
By David Goldman, CNNMoney.com staff writer
After the author of this article points out that most Americans will have to reduce their lifestyle in order to retire, he goes on to point out that, in addition to lower incomes,
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“…Many workers do not have a realistic estimate of how much they will need to spend on health care when they retire, according to a 2007 study by the Employee Benefit Research Institute (EBRI).
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The study shows that 84% of employees estimated they and their spouse will need to accumulate less than $250,000 for retiree health costs, 32% of whom thought they would need less than $100,000.
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But according to the EBRI, couples will need to save about $300,000 in retirement to cover health expenses, assuming they live to average life expectancy and Medicare benefits remain at current levels. For those who live to 95, that amount jumps to $550,000.”
Read the entire article http://biz.yahoo.com/cnnm/080219/021908_crr_healthcare.html?.v=1&printer=1
Add probable long term care expenses either at home or in a nursing home to those amounts and the typical couple could easily be looking at close to $1 million in post retirement health and care costs alone.
This is not a new problem. The fact is that the entire Debt Paradigm, with its emphasis on investing as opposed to saving, is putting the future of all Americans at risk for the benefit of the merchants of misinformation and the financial snake oil sales reps. You can escape the dungeon of the Debt Paradigm. A good place to start is with the FREE white paper Why Budgets Don’t Work. You can download it at www.TheMoneyForLifeBook.com
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