Ways to build your Wealth Reserve

Mary just started her first job
Mary is the daughter of one of our members in FL. Congratulations! She is earning more than she has ever earned and asked how to begin her financial life. She contributes to her company 401k. Mary read our FREE Guide and set her goals as far as she knows them—buy a house and a better car. Mary wants to buy a 2 bedroom for $200,000 in Pensacola . She can share with someone. She will need $40,000 down to avoid mortgage insurance for the bank. She has $7,000 saved. She needs to invest $500 a month for 4 years: check using this calculator: http://www.moneychimp.com/calculator/compound_interest_calculator.htm. She can get her parents to help with the closing costs. Her mortgage would be about $1000 a month. A share would rent for $700 to $800. She used our Guide to Buying a Mortgage to understand the process: http://www.theinsidersguides.com/mort20.html. Then she can buy a luxury car for 40% off using The Insider’s Guide to Vehicle Purchases: http://www.theinsidersguides.com/vehpur41.html Congrats!! Mary will grow her Wealth Reserve instead of paying rent (growing someone elses).

Fred wanted to avoid an increase in his homeowner’s policy
Our member, Fred of MA, got a rate hike notice from his insurer. He asked his agent why and was told that all homes in his area were at higher risk. Fred thought his 15 years of no claims would mean no increases. His home was not on the shore or near a river. He asked his neighbor if he had received a similar notice. No one had. Fred checked our Guide. He realized that he had nothing to loose by shopping. He went online for 3 quotes. He found one for $85 less than his old premium before the increase. He will save over $2,500 with one hour’s work. http://www.theinsidersguides.com/homins40.html


Ruth was offered an annuity and declined
Member Ruth of FL was offered an annuity by her advisor using the phrase: “Annuities are a woman’s lifeline in retirement.” Her advisor said that annuities provide a predictable income for a more secure retirement. He said annuities appeal to women because women live seven years longer than men, are concerned about adequate income, and like annuity guarantee that they can’t outlive payments. Ruth read our Guide which helped her decide to use a low-fee balanced fund instead. Ruth learned annuities cost more and earn less than she could on her own, have reduced payouts to women since they live longer, payout amounts lose half their value over time, and charge for guarantees that are never used by 94% of contract owners. Plan your retirement spending: http://www.theinsidersguides.com/anresp.html

Lower your profile with insurer and save
If you are a homeowner who files frequent insurance claims, has bad credit or even calls your agent to ask about possible coverage for a broken window, you may be assigning yourself to a new category when your policy renews. These actions can be noted in the computer CLUE file. Insurers use it in their risk models. You could face higher premiums or outright cancellation of coverage. In some cases, the history of your home can put your profile in a higher risk group. Or if you are buying a home with a “rap sheet” you may not be able to afford the coverage. Members lower their premiums by knowing our Insider’s “tricks of the trade:” http://www.theinsidersguides.com/homins40.html

BEWARE: Hot “deal” in life insurance
One of the hottest life insurance sales strategies being used today is harvesting home equity to over-fund a life insurance policy up to the MEC guidelines. The agent takes the equity in your home and deposits it in a policy they call “investment-grade life insurance.” The commissions are HUGE. They claim it can be used as a college funding vehicle, a non-regulated retirement plan or a family bank while providing families the valuable protection they need. You surrender the tax-deductibility of your home equity loan payments. They tell you this is a good investment because you earn more than the loan costs. They may claim that “the actual cost of the life insurance protection inside of a cash-value life insurance policy is much cheaper than buying a separate term insurance policy.” The cost is hidden not less—all 50 year olds of similar health pay the same COI, just over a longer time period. They cite studies that say most investors earn less than 4% while insurance earns above 5% tax-deferred and has loans. Some even claim you can pay increasing mortgage payments from policy loans. Every reputable advisor will tell you that insurance is not an investment. Members have learned to avoid these tactics by learning to buy only what they need with our Guide: http://www.theinsidersguides.com/lihein.html

“Show me state” says you need it more than we do
Missouri is exempting most Social Security benefits from state income taxes, starting this year and being phased in through 2012. The Gov called the tax "an unjust cut on Missourians' hard earned income." Missouri was one of 15 states that collects income tax on Social Security benefits.

You CAN have enough income in retirement
When you go on vacation, do you plan how far you will drive or fly? Do you compare prices between different tours or airlines? Do you make a reservation for each night of your stay? Do you take enough cash to pay for gas or meals? Do you change hotels/motels when you find out the price went up? Planning for your retirement is done exactly the same way. First, pretend you are in retirement. What are your actual income and expenses for the first month, first year? Social Security income can be estimated from the site: http://www.ssa.gov/planners/calculators.htm. Ask your employer for a preliminary statement if you have a pension coming. Use our Insider’s Guide to Retirement Spending to complete your estimate: http://www.theinsidersguides.com/retspe31.html

Communism hits home run . . . on Republican Field!
The Bush Supreme Court has ruled that you can’t bargain with retailers for a lower price anymore. Companies can now dictate prices to your bargain stores. No more 15% off sales. It means higher prices will be charged than would otherwise be the case. More of us will have to buy “off the truck.” It is back to pre-anti-trust years when manufacturers fixed prices and retaliated against discounters. Today the Court ruled against this 100 year old law: It is “illegal under §1 of the Sherman Act for a manufacturer and its distributor to agree on the minimum price the distributor can charge for the manufacturer’s goods.” The Court dissenters said: “The Sherman Act seeks to maintain a marketplace free of anticompetitive practices, in particular those enforced by agreement among private firms.” When “fair trade” laws were studied in 1975, Justice found “that minimum resale price maintenance had raised prices by 19% to 27%.” Also, the White House has indicated that President Bush will veto any attempt to establish gasoline price gouging legislation. The oil trust can set prices anywhere anytime now and even Congress can do nothing. Read (final paragraph) and weep! Give your opinion at http://www.consumerworld.org/


Almost all of your estate could be designated OUTSIDE your will
Our Insider just completed a NEW Insider’s Guide: A Guide for Survivors. He reports that most people leave their assets outside their will. Most assets are passed to survivors by beneficiary or right of survivorship rules, NOT according to a will. Check that custodians still have your current designations and don’t name your estate. IRAs can be extended. Joint and POD accounts and IRAs, annuities and pensions will go to the person designated when the accounts were opened. Your will may be changed in the last month of your death, but that won’t mean anything for the bulk of your estate. Members retain all their beneficiary designation documents in their 3-ring “Survivor manual.” See our Guide below.

A NEW Insider’s Guide: A Guide for Survivors
You may be asked to serve as executor of your family member’s estate. You need time to grieve the loss. You need time to pick up the pieces. Now you can . . .
Create your future life.
You will be able to handle ’executor’ details of the estate, and
You will be able to manage the money, and
You will be able to make a new life.
The memories live on. You will survive with the assurance that you can take control of your financial life. You can find your own way. Our Insider shares his experience first hand: http://www.theinsidersguides.com/sur11.html

Who owns your accounts now?
Mayflower National Life to Assurant Inc
Rydex Investments to Security Benefit Group
SKY Financial Group to HUNTINGTON BCSHS
Investors Financial Services to STATE STREET
Option Care to WALGREEN


Questions or comments to FinancialRx@TheInsidersGuides.com