Monday, June 25, 2007

Build your Reserve, not your insurer's

Buy only what you need. Build your Reserve with your savings.

Do you still need life insurance?
You may be surprised to learn that many members who were paying for life insurance they no longer needed, used our Guide to drop it—saving $20,000 or more. Some purchased life insurance years ago to provide their family with income if they were not around. Others purchased the policy later to insure that their final expenses were covered. Is the reason you purchased the policy still valid? One member had saved little for retirement but kept paying for a policy for his kids. They were all successful and didn’t need the income protection. Another member had accumulated over $500,000 by age 50 and would retire with over $1million. He won’t need the $50,000 whole life coverage to pay for his cremation. Do you still need that old policy? There are many other ways to meet your needs that your agent didn’t offer (no commission):

Load or commission funds offer less return
You always have a no load fund alternative when your broker/advisor says to buy this or that mutual fund. The average annual fee is now 1.07%. Some of the best managers work for the low-cost mutual fund families. Check out what millions of other people did with their money. Would you “settle” for a well-run low-cost fund that produced 10%-12% over time? If your broker takes 5.75% of your money upfront and over 1% each year, is the long term record worth the extra you pay? Load funds may cost $1,000 a year or $30,000 over time instead of $1,500. Try no loads—you can’t get your 5.75% back but you can stop the bleeding by switching like others have.

BEWARE: Your money manager may receive favors that costs you money
The SEC head said these conflicts of interest raise your investing costs. In a recent letter to the chairmen of two congressional committees, Securities and Exchange Commission Chairman Christopher Cox said that soft-dollar arrangements “hurt investors.” They compromise a money manager’s fiduciary obligation “by inducing it to direct trades to broker-dealers offering research that the money manager wants,” rather than executing trades in the client’s best interests, he said. Mr. Cox added that the desire to build up soft-dollar credits can lead to overtrading in clients’ portfolios and that managers use one client’s commissions to buy research useful for other clients. Members prefer to use low-cost mutual funds or discount brokers. Some buy and sell at $0 cost. See our Guide:

Annuity sellers to receive more commissions
You may have heard that annuities are excellent products if you are a seller. They just got better. Insurance companies are now paying an additional 0.25% of the balance every year. In addition to the 4% to 12% commission, the sellers will receive another 1.75% to 3%, given the average time annuities are held. “The commissions are an additional loading-on of fees to EIAs [annuities] — which are already heavily laden with administrative expenses — that will ultimately come out of clients’ pockets,” one advisor said. Members consider all the alternatives in our Guide:

IRA annuity—the good, the bad and the ugly
Did your advisor suggest rolling your 401(k) from your former job into an “IRA annuity”? Look before you leap! The benefits of putting your money in an annuity and then into an IRA account are just duplicated—you pay twice. Sellers make up to 17% commission on an annuity. You will pay for that expense over the years in higher fees and less earnings. If you want to continue to grow your 401K benefits tax-deferred, the rollover IRA was created for that purpose. And it costs nothing. To grow your nest egg, you need to buy low-cost mutual funds inside the IRA. That way no tax is due until you take the money out. An annuity also charges you for a death benefit so your heirs can’t lose money. However, our annuity expert of 15 years says that only one person in a million uses it. Other guarantees—GMIB, GMWB—are cheaper when you buy them later. Don’t leave your money with your former employer—Think ENRON. You can assure yourself of not losing money by picking mutual funds that match your goals. See our FREE Guide to see how members decide:

Help with decision on family care is helping adults make family care decisions with confidence. It is a place for people to start the thought process, engage with others who have shared experiences and create a plan to solve tough issues related to caregiving such as housing, financial planning, insurance and care provision. It is an easy to understand process for organizing information, identifying priorities and assessing choices that serve as the basis for a plan. The service provides a personal online workspace that allows people to easily find pertinent information and make connections with other community members with shared experiences. People will also have access to industry experts and professionals who can provide relevant guidance, products and services.

Investing For Retirement: a learning module by the NASD
A quick course in investing for retirement uses this example: Investor A invests $2,000 a year for 40 years for a total investment of $80,000, starting at age 26. Investor B invests $2,000 a year for 7 years for a total investment of $14,000, starting at age 19. The table compares the results of net earnings--$1,000,000. These results assume a 10% tax-sheltered rate of return, which approximates the rate of return in the stock market for the past sixty years. If only we had seen this in high school.

Take your financial inventory
Complete a financial worksheet to plan for college, home, retirement. Free software helps you see the BIG picture—your income and assets and debts—so you can make changes to reach your goals. Free from nonprofit insurance information institute

My funeral expense fund:
A Roth IRA with $4,000 in at age 65. In 10 years it will have $10,000, at 15, $15,000, at 20, $25,000 and at 25 years, it may have $38,000 to use for these expenses. There are no taxes to pay now or later and the heirs can have a good laugh at the FREE memorial party. By the way, I left my body to science FREE at

Who owns your account now?
Nuveen to Madison Dearborn Partners
Putnam Lovell to Jefferies Co

Tuesday, June 19, 2007

3 ways to save money for your wealth reserve

Ron wanted a simple investment strategy that didn’t cost much
Member Ron wanted to start a simple investment strategy now that he is out of college in his first job. His employer has no retirement plan. Ron read our FREE Guide to decide WHICH securities could help him reach his long- and short-term goals. Ron opens a ROTH IRA with automatic investing. He wants to have over $1million in 25 years so he commits to $500 a month. Even if he decides not to retire early, he will have about a $100,000 in 10 years, $250,000 in 15 and half a million in 20. He uses low-cost stock funds which can gain 12% a year and cost only 0.09%. He avoids the broker fee (loads) of 5.75% per investment. He purchases fewer shares when the price is high (dollar cost average) so he will end up with the lowest cost of his shares. Ron will save about $200,000 over time.

Save time and perhaps money
If you have ever needed to find an important number fast—credit cards stolen or auto accident, you can now . . . with the "Family Records Organizer" CD-ROM by T. Rowe Price, the low-cost investment-management firm. You don’t have to be a customer--It's free: or 1-800-538-2706. Our Insiders advise members to keep a printed version in a 3-ring binder at home. If you are not around, non-PC users can find the answers. It may also contain your instructions for your funeral/memorial service. Members will keep our new Guide, the Insider’s Guide for Survivors, there too.

Wal-Mart to offer discount investment options
Wal-Mart has provided only limited details about its plans to push discount-brokerage services to millions of customers at its 4,000 U.S. stores. Although the retailer is promoting the new service, Wal-Mart Easy Investing by ShareBuilder, on its website, it won’t begin actively marketing the partnership for another two to six weeks. Members use our FREE Guide to decide WHICH securities help them make their long- and short-term goals. Automatic investing (consistency) is the key to success, not stock picking or market timing.

Reverse mortgage—the good, bad and ugly
According to a study by the Wharton School, up to 75% of the equity in your home is available for income payments for a 90 year old, 50% for a 65 year old, before fees. Home equity values usually comprise 60% of the average person’s net worth. Using your largest asset for a retirement supplement may be necessary. The fees and the lack of alternatives, make this strategy the one of last resort. You can’t be kicked out of your home, but the stream of income shrinks in buying power over time. This vehicle can be combined with other income annuities to help supplement a retirement spending plan. See our Guide:

Retirement for mother and daughter has changed
A new study "What Today's Woman Needs to Know: A Retirement Journey," suggests that younger women will carry more debt into retirement, which will be longer. They may expect to work longer than their mothers and to have a more active retirement with varied pursuits. Many women need to manage their saving and investments for retirement just like men. For a Free copy of the report, call 203-221-6580 or send e-mail to

Nearly 3 million households have lost their homeowners coverage since 2003
About half of non-renewed households said they were able to find other coverage. However, it is often more expensive and provides less protection. The survey showed that few respondents had done anything to secure their home in case of a natural disaster i.e. add storm shutters, make roofing improvements, etc. Only about one-fourth of the respondents 28 percent of households said they have made changes. Surprisingly, even in the South, only 31 percent said they made changes and in the Gulf Coast specifically, the number was only slightly higher at 37 percent. Members buy only what they need:

FREE course on managing your financial life
Planners explain what a financial plan is. The lessons take about 30 hours but are simple screen displays without tests. You may find this method of learning about what a planner does useful in evaluating your advisor. You may also discover that you can manage your financial life yourself. Our members come to that conclusion and use our Guides to save on the services they need instead of paying a commission or fee to someone else. Take a look for yourself:

Wall Street profits from your savings too
Wall Street firms are being sued for allegedly illegally forcing clients into lower paying deposit accounts, enabling the firms to reap “billions” in extra profits. It is alleged that ‘sweep’ programs amount to an illegal “tying” arrangement. Firms use the low-cost cash from brokerage customers to fund affiliated banking units, which lend those funds out or otherwise invest the money. Merrill’s savings bank earns a net interest margin of 3.6%, a bank consultant said. That contrasts with the 0.5% to 0.6% that firms make in money funds, he said. Initially, the sweep account interest rates were competitive with those of money market funds. Deposits at Morgan Stanley grew to $16.4 billion as of February 2007, from $449 million in August 2005, according to company reports. But all the firms eventually went to a tiered rate structure with yields as low as 1% or less for smaller customers. Members buy short-term investment vehicles at low-fee firms. See our Guide:

Most investors do not understand what they pay for
Fewer than half of investors – 43% -- said they understand their advisers' fee structure “completely” or “fairly well.” That finding confirms many surveys of the past. Wall Street continues to call their charges and costs anything but what they are. The Wharton School study showed that while 95% of advisers surveyed discuss their fees with clients, only 61% of investors surveyed said their advisers initiate fee discussions with them. Times are changing and very few institutions are clear about what it costs to invest. Our Insider spells out all the costs.

Florida bars Penn Treaty a long term care seller AGAIN
The Florida Office of Insurance Regulation has told Penn Treaty Network America Insurance Company that its certificate of authority to conduct business in Florida has been suspended for at least 12 months because the company did not file its 2006 audited statutory financial results on or before June 1, according to the company’s parent, Penn Treaty American Corp., Allentown, Pa. Penn suspended news sales in 2001 after some regulators questioned whether it had enough capital to support the business it was writing. The company later obtained new sources of financing and resumed sales. Members consider all the alternatives before buying LTCi

The SCAMS continue to flourish
SUV sales rise!?? Marketing trick wins America’s heart. A combination of factory rebates, incentives and dealer discounts can knock as much as $10,000 off the sticker of a $50,000 SUV. Some buyers reason that even with gas at $4 per gallon--$150 a tank—a $10,000 discount could go a long way toward easing the fuel bill. However, the big SUV is really a truck which costs a lot less than $50,000 to make, so the joke is on us. Auto makers still profit from sales of gas hogs and we will be paying $4 gas long after the payments end. Members buy smart—luxury for less:

Wolf in sheep’s clothing!! More cases are cropping up of seniors losing their assets to someone who befriended them and earned their trust. These scammers persuade seniors to sign a power of attorney so they can help manage bank accounts and other financial transactions. What's worse, some of these scammers have been family. Seniors should get a second opinion from at least one other relative or trusted adviser before signing anything, and if they feel coerced they should contact the police.

Free dinner will cost you!! The "free dinner" offers by investment salespeople means someone is selling something. If you don't know what the promoter is selling, if the promoter refuses to tell you what product or company he/she represents, if the promoter refuses to provide their name and just gives an RSVP phone number, don't go. Why would they hide a legit offer?

Bush Court lets insurers hide search of your records
The Supreme Court sided with insurers that prefer not to tell consumers when they have examined their credit reports, a ruling that frees insurers from the risk of class-action lawsuits alleging they failed to send required notices to millions of consumers. The Fair Credit Reporting Act requires companies to notify consumers when they take an "adverse action," such as increasing rates, based on credit reports. The alert gives consumers a chance to examine the reports, which they can obtain free, and contest inaccurate information.

Bush also wants to stop company shareholders from suing the abiders and abettors of company fraud such as accounting firms and investment banks. Against the advice of his SEC, Bush would outlaw the suits against Enron’s accountants and bankers who helped create the fraud that destroyed thousands of employees’ pensions. Enron's independent auditor, Andersen vouched for the flawed financial statements. The collapse of Enron and the conviction of its accounting firm, Arthur Andersen, mark a critical juncture in American business and political life. Lower courts said “Enron committed fraud by misstating its accounts, but the banks only aided and abetted that fraud by engaging in transactions to make it more plausible; they owed no duty to Enron's shareholders." The bankers took stakes in off-balance-sheet partnerships they created that helped Enron hide debt.

Retirement medical costs hit $215,000
Fidelity Investments estimates that a couple needs $215,000 on average for retirement medical expenses including Medicare premiums and deductibles and drug costs. Make sure you plan for your expenses and legacy if any. Good health is the best way to lower costs later on. Supplement your retirement income by investing $100 a month extra in a Roth IRA or tax managed or index stock mutual fund. After 25 years, you may have $190,000 to use for these expenses.
Another Gift of a Lifetime
Jack of PA wanted to make sure his 6 grandchildren received a legacy. He was in good health at age 71. Since he had no idea how long he would live or whether he had enough to live on for the rest of his life, he wanted to arrange an account now. He opened a mutual fund account for $25,000. Jack will add $1000 a year from his checking account automatically. If Jack continues to invest, he could end up with $300,000 in 20 years. At death, all 6 kids will split the total since Jack has listed them on the account as Payable on Death. No probate. No tax will be due and Jack invested in tax-managed funds. Jack used our Wealth Transfer Guide:

Buy Bonds or CDs direct and save
Frank of RI likes his retirement funds in safe but high yield instruments. He used our Guide to discover how to buy CDs and bonds at wholesale prices without the seller markup. He saved 1% and he received help from a specialist when he needed it. Frank found several munis at a higher yield than his broker quoted. He also purchased a $1000 CD for $999.29 improving his yield to 5.49%, 10% over current bank offerings. Over his whole retirement, Frank thinks he will save about $50,000 in commissions and fees using our Guide:

Auto and homeowner rates drop again
Top insurance executives anticipate lower rates, including a 10% drop in business insurance rates, this year, except in hurricane-prone areas. "As we see a gradual degradation (in pricing), companies on the margin will decline, and this will spawn consolidation," said Ramani Ayer, chairman and chief executive of The Hartford, one of the speakers at this conference. It is time to shop for your auto and homeowners policy again, if you have not in the last 2 years. Use our Guides to buy only the coverage you need:

Retire EARLY to simplicity
According to Kiplinger’s, the Kaderlis, now both 54, are currently traveling in the South Pacific, retired since 1991. They keep a small house in Mesa, Ariz. Traveling for wonderful experiences; they have amassed 16 years of rich memories and pictures. While this might sound like an extravagant lifestyle, Billy and Akaisha limit their expenses to about $24,000 a year. They eat well and enjoy themselves but don't buy a lot of stuff. "We base our lives on gathering experiences rather than collecting things," says Billy. They keep their friends and families -- and about 50,000 visitors a day -- up to date on their adventures through their Web site ( According to Kiplinger, the couple invests mainly in low-cost index funds, withdrawing about 3% of the balance each year. "At this point in our lives, we are less worried about running out of money and more concerned about not having enough time to enjoy it," says Billy. They saved like crazy 20 years ago. Members have learned from this strategy in our FREE Guide:

Getting married—the financial side
Tis the season . . . You know that after the bliss of the first month, there needs to be a discussion about sharing money. Advisors agree that you need a budget for joint expenses—a joint checking makes practical sense to cover rent, etc. Then there is the problem of different salary levels and “my” mad money to spend as each sees fit. What makes this decision easier is having goals—short and long term—about children, a house, educations, etc. You can both be happy and reach all your goals by starting to save and invest EARLY. To see the difference, check this chart:
Like all difficult anxious discussions, avoiding the topic just makes it worse. So talk often. For instance, if you are the saver and you see wasteful spending, have the talk then. Let your loved one know that $100 wasted now is worth $10,000 later. See chart. And be sure to discuss the debts that each of you brings into the partnership. Set up the rules by talking about getting to your goals. Members write goals down and post them on the fridge so every family member knows what they are saving for. See how they do it in our FREE Guide:

Saving is NOT a matter of how much you make
Fifty-eight percent of those surveyed who earned between $200,000 and $249,000 annually said they had difficulty saving because they had to pay their bills, a recent poll found. Comparatively, 56% of consumers who earned less than $25,000 annually reported that they couldn’t save money because of their bills. Another 10% in the $200,000 to $249,000 category also said they didn’t make enough money to save, compared with 59% of those who earned less than $25,000. Saving is a matter of habit like brushing your teeth. Members make investing automatic using the three steps in our FREE Guide:

Why your broker/advisor may move to another firm
Your broker may be receiving a package of 42.5% of their prior 12 months’ fees and commissions, in the form of a forgivable loan and transition money. There is a scramble to hire brokers/advisors by independent firms that compete with the large ones (Merrill, etc). For some that bonus is $100,000 or more. Members know that their brokers’ charges include services and advice but have learned to go it alone. Some members pay $0 for transactions. Make sure you are getting your money’s worth with our Guide.

What Isn't Covered By Your Homeowners Insurance?
Many typical property and liability policies don't cover home damage from floods, earthquakes, water line breaks, termites, mold and several other perils, large and small. Also vehicles such as cars, boats and motorcycles stolen from or damaged on your property aren’t covered. Ironically damages from a break in the water line on your property supplying water to your home aren’t covered. Pets stolen from or injured on your property aren’t covered. Your actual cash value payout could be thousands of dollars lower than a benefit calculated at the replacement cost type policy. A large judgment after a guest slips on your stairs is not covered. Don’t even mention small losses to the agent. Members self-insure the perils not covered with our Guide:

The SCAMS continue to flourish
A Denver District Court judge has issued a restraining order against Life Partners Inc. and Life Partners Holdings. The defendants are accused of raising more than $11.5 million from more than 110 Colorado investors through fractionalized interests in viatical and life settlements. A viatical or life settlement is the sale of a life insurance policy by a dying or elderly person at a price discounted from the face value of the policy.

ChoicePoint has settled with 44 U.S. states over a 2005 data breach that resulted in criminals potentially having accessed personal information from more than 145,000 consumers. The company, which maintains profiles of nearly every U.S. consumer, agreed to adopt stronger security measures and pay $500,000 to the states, Connecticut Attorney General Richard Blumenthal said in a statement. ChoicePoint said in 2005 that criminals posing as legitimate businesses had accessed consumer data, including Social Security numbers and credit histories. The attorneys general had alleged the company failed to adequately protect consumers' personal data.

Who Owns Your Account NOW?
Broker A.G. Edwards to Wachovia

Thursday, June 14, 2007

Why you need a Wealth Reserve

A Wealth Reserve is the total value of your "assets that grow by themselves." It includes your pension plan at work, your own IRA or ROTH IRA, your regular securities accounts, your rental real estate and any other assets that don't loose value.

The purpose of a Wealth Reserve is to allow you to become or continue to be, financially independent. Income is different than wealth. There are many people who earn large paychecks but have little wealth. They "consume" a lot of things and resources. Most things don't grow in value and are wasted. Most millionaires don't have huge incomes. They buy assets that grow without further work being done by themselves. When they buy things, they buy value--used luxury cars, items at wholesale prices or on sale--only after saving (investing) for them. Wealth is a way of living, not a movie you act in. Most people only act like they are wealthy. Real wealth requires patient and savvy uses of your income--not a huge income. That is why ANYONE can have real wealth. And you don't need an extra job to get it.

Your Wealth Reserve could amount to over $1,000,000 by investing what you saved when you buy insurance, banking, mortgage, annuity, mutual funds and securities directly from the firms industry insiders use. As little as $3.33 a day will allow you to become financially independent. You DO NOT need live on a budget.

You need to learn how and where to buy the financial services you need. Most people overpay for the products and services they have. You just don't know it.

As editor of The Insider's Guides, I have documented over and over the fact that most people waste about $3,000 a year on fees, commissions, charges, and costs they really don't need to pay. The Insiders I know and interview have shown me their "secrets of the trade."

For instance, your auto insurance premium probably includes duplicate health care, life insurance, and emergency services you are already paying for. Your life insurance may include charges for triple X reserves you don't need. Your mutual funds probably cost 10 times what they should. Your broker's advise has probably lost more money than if you had decided yourself. Your banks are taking over $600 a year without you knowing it. You are paying 5 times the price when you buy on time (credit cards).

Over time, these excessive costs mount up and compound into real wealth you gave away. Most members of our organization can save $100,000 to $200,000 over time.

Our member Ron R's experience is typical:

Ron wanted a simple investment strategy that didn’t cost much. He wanted to start a simple investment strategy now that he is out of college in his first job. His employer has no retirement plan. Ron read our FREE Guide to decide WHICH securities could help him reach his long- and short-term goals. Ron opens a ROTH IRA with automatic investing. He wants to have over $1million in 25 years so he commits to $500 a month. Even if he decides not to retire early, he will have about a $100,000 in 10 years, $250,000 in 15 and half a million in 20. He uses low-cost stock funds which can gain 12% a year and cost only 0.09%. He avoids the broker fee (loads) of 5.75% per investment. He purchases fewer shares when the price is high (dollar cost average) so he will end up with the lowest cost of his shares. Ron will save about $200,000 over time.

The other Insider’s Guides illustrate where the money comes from that builds your Wealth Reserve. We show you how to use your Wealth Reserve to save over 40% on vehicle, home, life, disability, and long-term care insurance.

The Insider's Guides illustrate how to use the Reserve to self-insure and self-fund all your financial needs saving you up to $3,000 annually. Ultimately you are better protected by having the funds to pay for your lifestyle independently.

Our Insiders have decided to start posting their "tricks of the trade" so that more working people can stop overpaying the financial services industry. The Insiders work in the industry now or recently. We are providing this information because we are unhappy with our industry’s role in helping educate their fellow citizens. We are unhappy that there is no basic financial education in our schools. Consequently, those who need help the most are being left further behind.

The disturbing facts we see:

The top 10% of American earners capture over 40% of the nation’s income. First time in 65 years! (NYT 6/25/6)

52% of Americans don’t know how much they need to live on. 36% have not saved for retirement. 57% have a retirement account BUT the median amount held is only $2,000. (

Indebtedness is a national addiction. The average debt, per household, NOT counting mortgage debt, is about $14,500. Total personal debt is $84,454. Future promises (Medicare, social security, etc) equal $473,456 per household. (USAToday 10/3/4)

We feel that most people would be better off if they used the same low-cost products and services that we do. By using our Insider information about products and services, you can buy the best products and save. Most of the products and companies industry professionals use carry the highest financial ratings. These companies’ products are a better value -- low cost/high quality -- because they are not advertised and do not pay high fees or commissions. In other words, we usually can’t sell them but we buy them for ourselves.

Our mission:

“Give a man a fish; you have fed him for today. Teach a man to fish; and you have fed him for a lifetime.”

Our weekly alert provides Ways to Save every Friday. It is free.

Live Long and Wealthy