This statement is not what you usually hear from an insurance person. However, a new way of buying insurance and all financial services has arrived.
Based upon the model used by businesses, this approach builds on the trend of more of us who must manage our own pensions--401k, 403b and IRA accounts. Even though many of us say we don’t want to manage our own financial futures, we will be better off in the long run.
We are being forced to self-direct all our financial products. Our agents, bankers and brokers have all moved on. Typically, we practitioners of this new “self-insurance” model use our savings to build up our own reserves. This “Wealth Reserve” as I call it is a self-insurance fund I use to cover many risks so that I don’t have to buy a policy for every risk. I built a sizable reserve by buying products “wholesale.” I invest the savings.
Businesses have been doing this for a long time. For instance, most large businesses do not buy health care like we do. They buy it “wholesale.” They pay the claims from their own account. The insurer acts as the administrator—following the employer’s plan to decide it your claim should be paid. The business funds the claim account only to the extent necessary to pay claims. The insurer makes a fee for processing.
This costs the business less because the money to pay the claims is actually part of the working capital of the business. It is not sitting in an insurer’s investment account paying interest before it is needed to pay claims. For large claims, like brain surgery or death, the business buys catastrophic insurance. Some companies have their own (captive) insurer (reserves) to save even more.
How can you use this example? Let’s take homeowner’s insurance. Did you know that many agents purchase the standard HO-3 homeowner’s policy for their own coverage, but with a $2,500 deductible? That policy takes care of 99% of the claims and saves them 20-30% a year. They understand that they need to maintain the property to prevent it from deteriorating faster than it needs to. But by investing that 30% savings each year, they build a Wealth Reserve that earns them interest and will cover the deductible if they ever need it. So, over 10 years, they save $2,000 in premiums and earn interest on the funds.
Taken together for all your risks, you can build a large Wealth Reserve. For instance, we have helped people save over $3,000 a year on financial services, including banking, mortgage, education, mutual funds, securities, annuity, insurance—life, health, disability, long term care, vehicle, homeowner’s, lawsuit, vehicle purchase, legacy, wealth transfer, retirement spending . . . almost any service. Over time, those savings will compound to a $500,000. This fund can be used to pay for your insurance, retirement, and health care needs. Some clients plan to save $120,000 on long-term care insurance this way. Others have dropped their life and disability insurance—placing the premium in investment accounts that compound at the market rate over time.
When I was just 22 and working part-time during college, I was induced to buy permanent life insurance. I later cancelled it when I could not afford the $1200 annual premiums. I was in grad school and taking out loans to finish an MDiv. The agent representing Columbus Mutual probably earned all of that $1200 in the first year. I got little back when I couldn’t make the payments.
The agent did not explain that I would be better off buying a mutual fund instead of insurance. This was probably 1970. By the end of the 1960s there were around 270 funds with $48 billion in assets. No one advised me to invest in mutual funds at that time. My high school and colleges mentioned nothing about the miracle of compounding $1200 a year in a mutual fund at the average market rate of 12% per year. I think I would have paid attention if someone had told me it would be worth $1 million by the time I was 60.
1970 0
1980 $ 23,233.91
1990 99,914.79
2000 352,991.38
2008 933,673.59
There are few financial literacy programs in high school or college even today. Consequently, even in 2006, the Jumpstart Coalition for Personal Financial Literacy found that half of high school seniors failed to answer basic money questions. Schools don’t teach basics of saving, investing, compounding, and getting what you want, so parents are expected to. This leaves the blind leading the blind. Parents teach spending but few are role models in investing with compound interest. The subject they missed the most about was investment in the market.
For Example, question 26. Kelly and Pete just had a baby. They received money as baby gifts and want to put it away for the baby's education. Which of the following tends to have the highest growth over periods of time as long as 18 years?
44.8% a) A U.S. Govt. savings bond
34.8% b) A savings account
6.3% c) A checking account
*14.2% d) Stocks
* correct answer
Friday, January 4, 2008
Wednesday, December 12, 2007
A Gift of a Lifetime
If you are stuck about what to get for a young person this holiday, consider the Gift of a Lifetime—financial freedom. Because of the power of compound interest, you can start your loved one on the path to financial freedom that they will use for a lifetime.
You can start small or large. You can establish an account for any person of any age. Even if they have not been born yet, you can lay the foundation for a better life now.
The nice part is that you can do it easily and quickly.
You can start with as little as $100 by bank draft.
Fill out the application (download http://www.tiaa-cref.org/pdf/forms/mf-app.pdf) and send it to TIAA-CREF.org, one of the most secure pension providers since 1918.
Depending on the age of the recipient, they can be the owner with you, you can leave them the money as a TOD transfer, or they can be the owner from the start. If they have earned income, using a ROTH IRA will add another 25% tax-FREE earnings to their retirement nest.
The point is to get them started with the equity index mutual fund early. Since this fund does not trade stocks, the tax bite is minimal. TIME creates wealth, not fast trading. As Warren Buffett, one of the world’s best investors, said,
“We continue to make more money when snoring than when active.”
berkshirehathaway.com
Look at what your gift can provide in the future because of compounding:
$100 is worth $10,000 later. $1,000 gets $100,000 and $10,000 gets $1,000,000. You can stop anytime. They can add more anytime.
If you start your gift early, providing $100 a month for 8 years before age 26, the child can have $36,000 at 30, $100,000 at 40, and $1 million at age 65. (http://www.saferchild.org/power.htm)
You can use this gift to help them go to college, start their life, buy a home, start a business, or just maintain as financial security later in life. You can structure it the way you want. When you or they take money out, the tax can be as low as 5% depending on the owner’s income level and type of account. See our FREE Guide: http://www.theinsidersguides.com/freeguide.html.
They can use it later in life as a reserve to help them through a crisis or just to remember you as they spend it. Ether way, this reserve could provide wealth for life.
Some of our members have found it to be the perfect Gift of a Lifetime. It just gets bigger every year.
You can start small or large. You can establish an account for any person of any age. Even if they have not been born yet, you can lay the foundation for a better life now.
The nice part is that you can do it easily and quickly.
You can start with as little as $100 by bank draft.
Fill out the application (download http://www.tiaa-cref.org/pdf/forms/mf-app.pdf) and send it to TIAA-CREF.org, one of the most secure pension providers since 1918.
Depending on the age of the recipient, they can be the owner with you, you can leave them the money as a TOD transfer, or they can be the owner from the start. If they have earned income, using a ROTH IRA will add another 25% tax-FREE earnings to their retirement nest.
The point is to get them started with the equity index mutual fund early. Since this fund does not trade stocks, the tax bite is minimal. TIME creates wealth, not fast trading. As Warren Buffett, one of the world’s best investors, said,
“We continue to make more money when snoring than when active.”
berkshirehathaway.com
Look at what your gift can provide in the future because of compounding:
$100 is worth $10,000 later. $1,000 gets $100,000 and $10,000 gets $1,000,000. You can stop anytime. They can add more anytime.
If you start your gift early, providing $100 a month for 8 years before age 26, the child can have $36,000 at 30, $100,000 at 40, and $1 million at age 65. (http://www.saferchild.org/power.htm)
You can use this gift to help them go to college, start their life, buy a home, start a business, or just maintain as financial security later in life. You can structure it the way you want. When you or they take money out, the tax can be as low as 5% depending on the owner’s income level and type of account. See our FREE Guide: http://www.theinsidersguides.com/freeguide.html.
They can use it later in life as a reserve to help them through a crisis or just to remember you as they spend it. Ether way, this reserve could provide wealth for life.
Some of our members have found it to be the perfect Gift of a Lifetime. It just gets bigger every year.
Wednesday, November 21, 2007
What a millionaire investor knows about investing that you don’t
The majority of academic research finds that the price of a stock is difficult to predict. However, as a group—the market—stocks have gone up about 10%-12% a year over the long term (12+ years). No one can predict stock levels because there are too many unknowns and too many people chasing the solutions to those unknowns. Most investors have about the same information available at any time. The market of thousands of stocks traded by millions of people is a random system. There will be some prices higher than yesterday and some lower than yesterday. Some people see patterns in the changes in prices but they have not become rich with the information. Most of what Wall Street does—analysis of the company fundamentals and timing the ups and downs of their prices—does not improve your earnings over time. Usually the opposite is true. A Random Walk by Burton G. Malkiel, p. 110-185.
Flipping a coin gives anyone a 50% chance of being right. Some people are better at finding the prices that move up. However, they can’t do it all the time. Thus they describe their talent in gambling terms: “I had a hot hand” or “all my calls went the right way.” Some have become rich from their choices. Investors give money to these people in the hope that they can get rich on their coattails. However, by the time the crowd overwhelms the lucky person, luck has moved to another person. The only people who consistently make money and get rich are the people who supply the means of playing this game. Even though shareholders in the five largest Wall Street firms have lost $74 billion of their equity in 2007, a record $38 billion in bonuses is expected to be doled out anyway. What a business!! They get paid for losing our money.
The investors who do well over time are those who buy companies or their stocks at bargain prices and hold them for a long time. Just like a sale on groceries, people like Warren Buffett defy the odds and buy basic product and service providers (like Benjamin Moore, GEICO, and Fruit of the Loom) when their prices are low. Over time, stocks pay dividends and the price goes up with the general economy. Everybody needs paint, insurance and underwear!
It seems simple. However, many investors come to believe they can beat the odds and outsmart everyone else. Some have. Any corporate officer has access to information about their firm and industry that gives them an edge. Thus people who invest in special situations have a much better chance than we do. It is still a chance. Remember Martha Stewart and her friend Sam Waksal, of ImClone infamy.
In the same vein, most wealthy people got that way by being involved in a business they control. There is nothing surprising about this. If you spend your time improving your profitable business, you will be successful. Eventually you will become wealthy. If you give up, you lose.
However, for most investors, investing in the market itself beats 70%-88% (BusinessWeek 11/03) of the people who are hired to do it. That includes pension funds and the largest mutual funds. Many studies have shown that the average investor earns a paltry 2.57% annually compared with inflation of 3.14% and 12.22% for the S & P 500 index. (1984-2002 DALBARinc.com) Investors chase the past performance of those who claim they have beaten the market. This is the business of Wall Street—selling the dream of wealth. Whether a manager makes money for you or not, you are still charged for their salary and expenses. For more information, see our Guide: http://www.theinsidersguides.com/mutsec41.html
When the market seems to be volatile—talk about recession and economy slowdown and big bubble collapse, we want to take our money and hide it in some safe harbor. We think we can wait out the chaos. We say we will get back in when the market direction is clearer. Advisors have traditionally moved money into utilities, staples and health care. A recent study by Vanguard’s IC&R shows these moves to defensive equity fail to save you. Advisors either mistake the exit signs or miss the rally marking the rebound. By selling, you lock in your loss. The portfolio with a proper mix of stocks and fixed income assets is the optimum holding strategy for chaos. You don’t sell your house when home prices rise and fall, do you?
When millionaires think of selling, they look at their funds and ask if the reason they bought them is still valid. Their long-term goals have not changed. There is nowhere else they can put their money to earn 12%. Even in retirement, moving in and out of market sectors for protection is a loser’s game. Millionaires keep their eye on the chart of stock market growth over the last 50 years. See the inset at http://www.theinsidersguides.com/sifili.html
Flipping a coin gives anyone a 50% chance of being right. Some people are better at finding the prices that move up. However, they can’t do it all the time. Thus they describe their talent in gambling terms: “I had a hot hand” or “all my calls went the right way.” Some have become rich from their choices. Investors give money to these people in the hope that they can get rich on their coattails. However, by the time the crowd overwhelms the lucky person, luck has moved to another person. The only people who consistently make money and get rich are the people who supply the means of playing this game. Even though shareholders in the five largest Wall Street firms have lost $74 billion of their equity in 2007, a record $38 billion in bonuses is expected to be doled out anyway. What a business!! They get paid for losing our money.
The investors who do well over time are those who buy companies or their stocks at bargain prices and hold them for a long time. Just like a sale on groceries, people like Warren Buffett defy the odds and buy basic product and service providers (like Benjamin Moore, GEICO, and Fruit of the Loom) when their prices are low. Over time, stocks pay dividends and the price goes up with the general economy. Everybody needs paint, insurance and underwear!
It seems simple. However, many investors come to believe they can beat the odds and outsmart everyone else. Some have. Any corporate officer has access to information about their firm and industry that gives them an edge. Thus people who invest in special situations have a much better chance than we do. It is still a chance. Remember Martha Stewart and her friend Sam Waksal, of ImClone infamy.
In the same vein, most wealthy people got that way by being involved in a business they control. There is nothing surprising about this. If you spend your time improving your profitable business, you will be successful. Eventually you will become wealthy. If you give up, you lose.
However, for most investors, investing in the market itself beats 70%-88% (BusinessWeek 11/03) of the people who are hired to do it. That includes pension funds and the largest mutual funds. Many studies have shown that the average investor earns a paltry 2.57% annually compared with inflation of 3.14% and 12.22% for the S & P 500 index. (1984-2002 DALBARinc.com) Investors chase the past performance of those who claim they have beaten the market. This is the business of Wall Street—selling the dream of wealth. Whether a manager makes money for you or not, you are still charged for their salary and expenses. For more information, see our Guide: http://www.theinsidersguides.com/mutsec41.html
When the market seems to be volatile—talk about recession and economy slowdown and big bubble collapse, we want to take our money and hide it in some safe harbor. We think we can wait out the chaos. We say we will get back in when the market direction is clearer. Advisors have traditionally moved money into utilities, staples and health care. A recent study by Vanguard’s IC&R shows these moves to defensive equity fail to save you. Advisors either mistake the exit signs or miss the rally marking the rebound. By selling, you lock in your loss. The portfolio with a proper mix of stocks and fixed income assets is the optimum holding strategy for chaos. You don’t sell your house when home prices rise and fall, do you?
When millionaires think of selling, they look at their funds and ask if the reason they bought them is still valid. Their long-term goals have not changed. There is nowhere else they can put their money to earn 12%. Even in retirement, moving in and out of market sectors for protection is a loser’s game. Millionaires keep their eye on the chart of stock market growth over the last 50 years. See the inset at http://www.theinsidersguides.com/sifili.html
Friday, September 28, 2007
Buy "Assets That Grow By Themselves"
During our working lives, most of us earn $1.5 to $2.5 million before taxes. By using 10 percent of that income to buy “assets that grow by themselves,” we can accumulate another $1.5 million to accomplish all that we want to do in life. We can be free of money worries!
The “food” that makes “assets grow by themselves” is TIME. The best investor, Warren Buffett said, “We continue to make more money when snoring than when active.” Berkshirehathaway.com/letters/1996
Assets that “grow by themselves” are the assets that increase in value without you doing a thing. Smart investors buy and hold a silent stake in great businesses—companies they use everyday. They buy stocks through mutual funds. They watch their money make money on top of dividends the businesses pay as they grow. The earnings compound over time.
The value of the businesses increases over time too. In 10 years, your purchase of $500 of assets per month ($60,000) grows to over $115,000, $250,000 in 15 years, $1 million in 25 years. From this Wealth Reserve, you can buy those things you have planned for—a luxury car, a starter home, a college fund, a retirement nest egg. If you start buying “assets that grow by themselves” early, you can accumulate a tidy sum--$1.5 million.
You have to let “assets grow by themselves!” Assets that grow by themselves grow faster inside your retirement plan at work, your rental real estate, and your securities inside IRA mutual funds. Mutual funds can own almost any asset. Some grow at a rate that is higher than inflation—about 3%. Risk free savings accounts can’t do that. Over the long run, stocks are less risky than savings because 12%-3% is greater than 3%-3%. It is the amount you keep not the yield that matters.
Most of your private property—checking, savings, CDs, vehicles, appliances, furniture, and house--are NOT assets that grow. They loose value or don’t grow in value over time. They don’t pay dividends or earnings. They don’t help you accomplish your financial goals. Most of them eat up your hard-earned paycheck. Between inflation, bank fees and taxes, most “safe” accounts lose money.
Financially independent people own different kinds of assets that grow. They never put “all their eggs in one basket.” Even when they run a business full-time, they typically have only 25% of their wealth in the business. They own many types of assets--tax-favored retirement accounts, real estate, and securities taxed at low rates are the most popular. They avoid hedge funds and commodities.
Financially independent people are independent because they use their income to buy more “assets that grow by themselves,” NOT more things. Typically their assets allow them to feel comfortable because they never use credit to pay for what they need. They spend less than they make. If their income were to be cut for five years, they would be able to survive—keeping their family and home intact. They don’t borrow money except to buy assets that earn more than the cost of the loan. Usually a mortgage or business loan is all they owe.
Most people buy mutual funds through their retirement plan. Typically they started early in their working life and consistently increased the proportion of their income designated for investments. By maximizing their retirement plan contributions, they reduced their taxable income and pay less tax now. Some obtain FREE contribution matches from their employer. Their asset growth is SUPERCHARGED.
Stock mutual funds usually grow at the highest rates over time. You can easily buy a well-rounded bunch of stocks by owning them through a mutual fund. Using one with few expenses and fees leaves more earnings for you. Some funds grow quickly but not at a steady pace. However, over time stock market index funds average 12% per year. You can estimate how much your assets can grow by themselves with the chart.
You can use the chart (or moneychimp.com/calculator/compound_interest_calculator.htm) to estimate how long it will take you to buy a starter home, college fund, start a business and build a large nest egg for retirement or any other reason. The stock market returns are not guaranteed, but over time—in most 15 year periods—they are within our estimate.
Your investment portfolio should hold only assets that grow by themselves. The long term rates of growth will vary so that your TOTAL portfolio can grow no matter what type of economic situation you are in. This may allow you hold higher growth stocks as well as rental real estate and non-U.S. and emerging market stocks. By holding assets of different types, you can earn high returns with less than market risk.
One of our members, Bill, holds these asset classes at low-cost Vanguard. Bill’s portfolio had 5-year total returns of 13.66% as of 12/31/06:
Asset Class (symbol) Annual Return Volatility
500 Index (VFINX) 6.07 1.00
Selected Value (VASVX) 14.12 0.83
REIT Index (VGSIX) 22.70 1.00
Strategic Equity (VSEQX) 13.43 1.05
Small Value (VISVX) 12.96 1.00
Small Index (NAESX) 11.63 1.00
Int’l Value (VTRIX) 17.21 1.03
Emerging Mkts (VEIEX) 25.51 0.99
IT Hi Yd Bond (VWEHX) 7.55 0.82
IT Bond Index (VBIIX) 5.43 1.00
Total portfolio return 13.66 0.97
Some members like to keep it simple. They hold the Total Stock Market Index, Total International Stock Index and Total Bond Market Index funds. (U.S. stock market represents just 35% of the world's stock value.) Each year they shift assets from one to the other depending on how well each is growing. Because the largest U.S. corporations have earnings from foreign operations, some members hold just the S&P 500 Index fund. In every 15 year period, this index has averaged over 12% per year. These members added $2,000 per year, $5.56 per day, to achieve $1.3 million since 1970, $412,000 since 1980 and $90,000 since 1990. All are on track to meet their goals.
Buy “assets that grow by themselves” and relax. Let your money do the work. It is TIME not timing or stock picking that wins.
The “food” that makes “assets grow by themselves” is TIME. The best investor, Warren Buffett said, “We continue to make more money when snoring than when active.” Berkshirehathaway.com/letters/1996
Assets that “grow by themselves” are the assets that increase in value without you doing a thing. Smart investors buy and hold a silent stake in great businesses—companies they use everyday. They buy stocks through mutual funds. They watch their money make money on top of dividends the businesses pay as they grow. The earnings compound over time.
The value of the businesses increases over time too. In 10 years, your purchase of $500 of assets per month ($60,000) grows to over $115,000, $250,000 in 15 years, $1 million in 25 years. From this Wealth Reserve, you can buy those things you have planned for—a luxury car, a starter home, a college fund, a retirement nest egg. If you start buying “assets that grow by themselves” early, you can accumulate a tidy sum--$1.5 million.
You have to let “assets grow by themselves!” Assets that grow by themselves grow faster inside your retirement plan at work, your rental real estate, and your securities inside IRA mutual funds. Mutual funds can own almost any asset. Some grow at a rate that is higher than inflation—about 3%. Risk free savings accounts can’t do that. Over the long run, stocks are less risky than savings because 12%-3% is greater than 3%-3%. It is the amount you keep not the yield that matters.
Most of your private property—checking, savings, CDs, vehicles, appliances, furniture, and house--are NOT assets that grow. They loose value or don’t grow in value over time. They don’t pay dividends or earnings. They don’t help you accomplish your financial goals. Most of them eat up your hard-earned paycheck. Between inflation, bank fees and taxes, most “safe” accounts lose money.
Financially independent people own different kinds of assets that grow. They never put “all their eggs in one basket.” Even when they run a business full-time, they typically have only 25% of their wealth in the business. They own many types of assets--tax-favored retirement accounts, real estate, and securities taxed at low rates are the most popular. They avoid hedge funds and commodities.
Financially independent people are independent because they use their income to buy more “assets that grow by themselves,” NOT more things. Typically their assets allow them to feel comfortable because they never use credit to pay for what they need. They spend less than they make. If their income were to be cut for five years, they would be able to survive—keeping their family and home intact. They don’t borrow money except to buy assets that earn more than the cost of the loan. Usually a mortgage or business loan is all they owe.
Most people buy mutual funds through their retirement plan. Typically they started early in their working life and consistently increased the proportion of their income designated for investments. By maximizing their retirement plan contributions, they reduced their taxable income and pay less tax now. Some obtain FREE contribution matches from their employer. Their asset growth is SUPERCHARGED.
Stock mutual funds usually grow at the highest rates over time. You can easily buy a well-rounded bunch of stocks by owning them through a mutual fund. Using one with few expenses and fees leaves more earnings for you. Some funds grow quickly but not at a steady pace. However, over time stock market index funds average 12% per year. You can estimate how much your assets can grow by themselves with the chart.
You can use the chart (or moneychimp.com/calculator/compound_interest_calculator.htm) to estimate how long it will take you to buy a starter home, college fund, start a business and build a large nest egg for retirement or any other reason. The stock market returns are not guaranteed, but over time—in most 15 year periods—they are within our estimate.
Your investment portfolio should hold only assets that grow by themselves. The long term rates of growth will vary so that your TOTAL portfolio can grow no matter what type of economic situation you are in. This may allow you hold higher growth stocks as well as rental real estate and non-U.S. and emerging market stocks. By holding assets of different types, you can earn high returns with less than market risk.
One of our members, Bill, holds these asset classes at low-cost Vanguard. Bill’s portfolio had 5-year total returns of 13.66% as of 12/31/06:
Asset Class (symbol) Annual Return Volatility
500 Index (VFINX) 6.07 1.00
Selected Value (VASVX) 14.12 0.83
REIT Index (VGSIX) 22.70 1.00
Strategic Equity (VSEQX) 13.43 1.05
Small Value (VISVX) 12.96 1.00
Small Index (NAESX) 11.63 1.00
Int’l Value (VTRIX) 17.21 1.03
Emerging Mkts (VEIEX) 25.51 0.99
IT Hi Yd Bond (VWEHX) 7.55 0.82
IT Bond Index (VBIIX) 5.43 1.00
Total portfolio return 13.66 0.97
Some members like to keep it simple. They hold the Total Stock Market Index, Total International Stock Index and Total Bond Market Index funds. (U.S. stock market represents just 35% of the world's stock value.) Each year they shift assets from one to the other depending on how well each is growing. Because the largest U.S. corporations have earnings from foreign operations, some members hold just the S&P 500 Index fund. In every 15 year period, this index has averaged over 12% per year. These members added $2,000 per year, $5.56 per day, to achieve $1.3 million since 1970, $412,000 since 1980 and $90,000 since 1990. All are on track to meet their goals.
Buy “assets that grow by themselves” and relax. Let your money do the work. It is TIME not timing or stock picking that wins.
Friday, July 20, 2007
12 things your agent/broker/banker/money-manager won’t tell you.
1. “We have FEES and COSTS for everything. Most are not necessary.” For instance, your life insurance policy is probably one with a higher premium than necessary. Compare the cost of $200,000 benefit for a 50 year old in good health--$356 versus $481 per year. [] It does not cost $50 to buy 200 shares of IBM. You can buy them for $0. [] And why should your broker charge you $160 when your account is inactive? [] Why are you paying 50 cents to deposit a check? Banks should pay you to deposit checks. [] Is your 401k money manager really worth 1.54% of your assets each year? And looses money too? Your employer should buy a retirement plan that costs you $0.30% or less with no kickbacks.
2. “We offer products that are best for our firm, not for you. We don’t show you all the fees and commissions and financial kickbacks and perks we earn when we sell you our products. Our products are the “best” available because we sell them. We are the best in the industry because our marketing image says we are.” One pension plan provider charges 2.75% a year for their tax-deferred annuity. It has 9 years of surrender charges so you can’t transfer your money if you change employers. It charges another $30 a year for ‘recordkeeping.’ Its mutual funds are among the poorest performers. [] One brokerage firm steered customers into their own funds because they have a higher broker payout. [] Your agent doesn’t sell SBLI, your broker doesn’t sell Vanguard, your banker does offer really free checking, and your money manager doesn’t price your funds at cost—0.1% or less.
3. “We will discuss your financial needs with half truths.” You are told you need $1,000,000 of life insurance but the policy type that your agent picks is the most expensive in the world. Even if you agree you need $1 million, you pay more for permanent, 30 year guarantee term or “return of premium” term than just term. [] You want a guaranteed income for the rest of your life but your broker doesn’t mention that the annuity payments loose half their value in 24 years. [] You want to save for college but your banker doesn’t mention that 529 plans are NOT taxed like the custodial account just opened for your child. You want to save for retirement but your broker put you in two 'hot' funds.
4. “We don’t tell you about other alternatives. We don’t get paid to tell you there are less expensive alternative ways to solve your problems.” You can buy a FREE checking account from your credit union. The CDs pay more, the checking costs less and the loans are cheaper. You don’t need an ATM on every corner. [] You can defer taxation on your account earnings by buying and holding stocks or tax-managed funds. [] You can save on liability insurance by buying only what you need. [] Wealthy people buy “assets that grow by themselves” so they can self-insure and self-fund their needs. [] Consumer Reports reviewed 47 LTC policies and concluded that “for most people, long-term-care insurance is too risky and too expensive.”
5. “We don’t explain how you can reach your goals in the least costly way.” Banks offer life insurance to cover your loan because you want to get the loan. They don’t explain that your existing term policy will cover the loan. [] You can build a much larger retirement nest egg by investing in stock mutual funds costing .07% vs. 1.3%. Compounding magnifies the difference—20% more money over time. [] When new employees sign up for the retirement plan they are encouraged to pick the ‘safest’ option—treasury bonds. Stocks are more likely to grow in value over the long term than treasuries.
6. “Our products must be ‘sold not bought. We use half-truths in order to contrive an ‘urgent financial need’ that you can solve only by buying our products.” One firm charged a 91-year-old “client” more than $35,000 for four trades over two years, at approximately $8,800 per trade. [] The largest annuity seller is accused of misleading policyholders regarding bonus payments promised on annuity products. [] Life insurance is not the foundation of every financial plan—you are more likely to run out of money than die in the 21st Century.
7. “We believe the hype of our industry: We give good financial advice that you can’t get anywhere else.” There are no classes in our high schools called Financial Health Class. You can’t easily find out the “tricks of the trade” used to sell you the products created to pay high fees to sellers. Young single people don’t need life insurance. They need to invest 10% of their income at an early age to reach their goals and become wealthy. [] If brokerage firms actually followed their own stock selection advice, they would have negative returns. The average return for the top 10 brokerage firms was minus 2.26% from 1997-2001! Most were negative (Investars). 88% of managed mutual funds earn less than the market. You are better off making your own mistakes. http://www.theinsidersguides.com/doityofi.html
8. “We are experts at figuring out what your “hot buttons” are and using them to get you to buy our products. We exploit the fact that everyone wants to buy the next Google stock or become a millionaire overnight buying and selling real estate or gold. We exploit the fact that seniors fear losing money and want to earn 10% on their money with a completely guaranteed investment.” Finding the next Google is like finding a dime in a football field on the first try. The average equity investor earned a paltry 2.57% annually; compared to inflation of 3.14% and the 12.22% the S & P 500 index earned annually, 1984-2002. [] You pay for guarantees by earning less and not keeping up with inflation. So even though you don’t lose money, inflation reduces your money’s buying power. Putting your money into different risky investments reduces your chances of losing money and increases your chance of beating inflation. The stock market returns about 11% over time. See chart: http://www.theinsidersguides.com/doityofi.html
9. “We don’t sell products from companies that don’t pay a commission—so you never obtain the least-cost product. We only sell products with commissions and fees and kickback incentives and “soft dollar” reimbursements.” When was the last time your broker offered the mutual funds with the highest returns over a 20-year period? Vanguard Primecap--13.6% over 20 years--#1 in large company growth stock funds. Vanguard Health--17.4% over 20 years--#1 in Sector funds. Vanguard Energy--16.4% over 20 years--#2 in Sector funds. [] Did your agent call to tell you that life insurance rates are dropping so you should apply? [] Did your auto agent mention that rates have fallen? [] Did your banker mention that internet banking is FREE? [] Where do you find the highest CD rates?
10. “We charge you fees whether we give good service, good rates, good returns, or good benefits.” One money manager charges 1.5% for the same exact fund that charges .07%. With $250,000 invested, you will give up about $700,000 (2,723,138 vs. 2,022,979 over 20 years of compounding at market rates). Only 12% of managers can beat their benchmarks over long periods of time. You don’t get a refund if your manager can’t beat the index. [] You can’t get a refund if your CD or annuity renews at a lower rate. [] You can’t get a refund if we mess up your trustee to trustee transfer. You don’t receive a “better” death benefit check for $200,000 when your loved one dies. [] Many banks hit customers for fees they didn’t tell them about. Only the lawyers knew.
11. “When things go wrong, we treat you like you’re the enemy.” All brokerage firms disallow you to sue for bad service—you must use their arbiter and settle for the decision. One firm has the worst call response service in the industry. [] One company pressured outside engineers to prepare reports concluding that damage was caused by water rather than by wind. They just denied all of them in the same geographic area. [] Another insurer dropped coverage and stopped signing new policies in coastal areas of 9 states. [] Some long term care insurers aren’t paying claims.
12. “We don’t care if you have been a loyal customer. We buy and sell customer accounts anytime we can make more money from it.” In the last few years, hundreds of customers have had their accounts transferred out of area. For instance, John Hancock’s president sold the company to Manulife [Canada], Fireman’s Fund was sold to Allianz [Germany], Household Finance went to HSBC [Hong Kong], and Sage Life went to Old Mutual [S. Africa]. Brown & Co and HarrisDirect went to E*Trade. Golden West Financial went to Wachovia. MBNA and Fleet Bank went to Bank of America. A complete list is available at http://www.theinsidersguides.com/whoowyoacno.html. More consolidation is expected: HSBC, Rydex, Gateway Investment, GAMCO Investors, Julius Baer Investment, UBS AG. Your accounts could be next. You can do it yourself and save.
"Investors should purchase stocks [financial services] like they purchase groceries—not like they purchase perfume…” Benjamin Graham
See Today’s Savings Ideas at TheInsidersGuides.com
© 2007 IAN,llc
2. “We offer products that are best for our firm, not for you. We don’t show you all the fees and commissions and financial kickbacks and perks we earn when we sell you our products. Our products are the “best” available because we sell them. We are the best in the industry because our marketing image says we are.” One pension plan provider charges 2.75% a year for their tax-deferred annuity. It has 9 years of surrender charges so you can’t transfer your money if you change employers. It charges another $30 a year for ‘recordkeeping.’ Its mutual funds are among the poorest performers. [] One brokerage firm steered customers into their own funds because they have a higher broker payout. [] Your agent doesn’t sell SBLI, your broker doesn’t sell Vanguard, your banker does offer really free checking, and your money manager doesn’t price your funds at cost—0.1% or less.
3. “We will discuss your financial needs with half truths.” You are told you need $1,000,000 of life insurance but the policy type that your agent picks is the most expensive in the world. Even if you agree you need $1 million, you pay more for permanent, 30 year guarantee term or “return of premium” term than just term. [] You want a guaranteed income for the rest of your life but your broker doesn’t mention that the annuity payments loose half their value in 24 years. [] You want to save for college but your banker doesn’t mention that 529 plans are NOT taxed like the custodial account just opened for your child. You want to save for retirement but your broker put you in two 'hot' funds.
4. “We don’t tell you about other alternatives. We don’t get paid to tell you there are less expensive alternative ways to solve your problems.” You can buy a FREE checking account from your credit union. The CDs pay more, the checking costs less and the loans are cheaper. You don’t need an ATM on every corner. [] You can defer taxation on your account earnings by buying and holding stocks or tax-managed funds. [] You can save on liability insurance by buying only what you need. [] Wealthy people buy “assets that grow by themselves” so they can self-insure and self-fund their needs. [] Consumer Reports reviewed 47 LTC policies and concluded that “for most people, long-term-care insurance is too risky and too expensive.”
5. “We don’t explain how you can reach your goals in the least costly way.” Banks offer life insurance to cover your loan because you want to get the loan. They don’t explain that your existing term policy will cover the loan. [] You can build a much larger retirement nest egg by investing in stock mutual funds costing .07% vs. 1.3%. Compounding magnifies the difference—20% more money over time. [] When new employees sign up for the retirement plan they are encouraged to pick the ‘safest’ option—treasury bonds. Stocks are more likely to grow in value over the long term than treasuries.
6. “Our products must be ‘sold not bought. We use half-truths in order to contrive an ‘urgent financial need’ that you can solve only by buying our products.” One firm charged a 91-year-old “client” more than $35,000 for four trades over two years, at approximately $8,800 per trade. [] The largest annuity seller is accused of misleading policyholders regarding bonus payments promised on annuity products. [] Life insurance is not the foundation of every financial plan—you are more likely to run out of money than die in the 21st Century.
7. “We believe the hype of our industry: We give good financial advice that you can’t get anywhere else.” There are no classes in our high schools called Financial Health Class. You can’t easily find out the “tricks of the trade” used to sell you the products created to pay high fees to sellers. Young single people don’t need life insurance. They need to invest 10% of their income at an early age to reach their goals and become wealthy. [] If brokerage firms actually followed their own stock selection advice, they would have negative returns. The average return for the top 10 brokerage firms was minus 2.26% from 1997-2001! Most were negative (Investars). 88% of managed mutual funds earn less than the market. You are better off making your own mistakes. http://www.theinsidersguides.com/doityofi.html
8. “We are experts at figuring out what your “hot buttons” are and using them to get you to buy our products. We exploit the fact that everyone wants to buy the next Google stock or become a millionaire overnight buying and selling real estate or gold. We exploit the fact that seniors fear losing money and want to earn 10% on their money with a completely guaranteed investment.” Finding the next Google is like finding a dime in a football field on the first try. The average equity investor earned a paltry 2.57% annually; compared to inflation of 3.14% and the 12.22% the S & P 500 index earned annually, 1984-2002. [] You pay for guarantees by earning less and not keeping up with inflation. So even though you don’t lose money, inflation reduces your money’s buying power. Putting your money into different risky investments reduces your chances of losing money and increases your chance of beating inflation. The stock market returns about 11% over time. See chart: http://www.theinsidersguides.com/doityofi.html
9. “We don’t sell products from companies that don’t pay a commission—so you never obtain the least-cost product. We only sell products with commissions and fees and kickback incentives and “soft dollar” reimbursements.” When was the last time your broker offered the mutual funds with the highest returns over a 20-year period? Vanguard Primecap--13.6% over 20 years--#1 in large company growth stock funds. Vanguard Health--17.4% over 20 years--#1 in Sector funds. Vanguard Energy--16.4% over 20 years--#2 in Sector funds. [] Did your agent call to tell you that life insurance rates are dropping so you should apply? [] Did your auto agent mention that rates have fallen? [] Did your banker mention that internet banking is FREE? [] Where do you find the highest CD rates?
10. “We charge you fees whether we give good service, good rates, good returns, or good benefits.” One money manager charges 1.5% for the same exact fund that charges .07%. With $250,000 invested, you will give up about $700,000 (2,723,138 vs. 2,022,979 over 20 years of compounding at market rates). Only 12% of managers can beat their benchmarks over long periods of time. You don’t get a refund if your manager can’t beat the index. [] You can’t get a refund if your CD or annuity renews at a lower rate. [] You can’t get a refund if we mess up your trustee to trustee transfer. You don’t receive a “better” death benefit check for $200,000 when your loved one dies. [] Many banks hit customers for fees they didn’t tell them about. Only the lawyers knew.
11. “When things go wrong, we treat you like you’re the enemy.” All brokerage firms disallow you to sue for bad service—you must use their arbiter and settle for the decision. One firm has the worst call response service in the industry. [] One company pressured outside engineers to prepare reports concluding that damage was caused by water rather than by wind. They just denied all of them in the same geographic area. [] Another insurer dropped coverage and stopped signing new policies in coastal areas of 9 states. [] Some long term care insurers aren’t paying claims.
12. “We don’t care if you have been a loyal customer. We buy and sell customer accounts anytime we can make more money from it.” In the last few years, hundreds of customers have had their accounts transferred out of area. For instance, John Hancock’s president sold the company to Manulife [Canada], Fireman’s Fund was sold to Allianz [Germany], Household Finance went to HSBC [Hong Kong], and Sage Life went to Old Mutual [S. Africa]. Brown & Co and HarrisDirect went to E*Trade. Golden West Financial went to Wachovia. MBNA and Fleet Bank went to Bank of America. A complete list is available at http://www.theinsidersguides.com/whoowyoacno.html. More consolidation is expected: HSBC, Rydex, Gateway Investment, GAMCO Investors, Julius Baer Investment, UBS AG. Your accounts could be next. You can do it yourself and save.
"Investors should purchase stocks [financial services] like they purchase groceries—not like they purchase perfume…” Benjamin Graham
See Today’s Savings Ideas at TheInsidersGuides.com
© 2007 IAN,llc
Thursday, July 19, 2007
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
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
Monday, July 2, 2007
Savings ideas for June 24
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
Jean saved $545 on her car insurance
Member Jean of PA got our email and asked if it was worth switching car insurers. She was told by her agent that her rate was the lowest available in her area. However, what her agent didn’t say was that he only represented 24 companies. What about the others? Jean hated to change agents. She did use our Guide to shop and buy only what she needed from a telephone agent. She saved $545 for a 6-month policy. She also has better coverage because she increased the liability to $300,000. $1090 per year savings means Jean will be able to buy a home sooner. She may have $22,000 for the down payment in 10 years. Yes, it is worth it: http://www.theinsidersguides.com/vehins41.html
Floridians get refund
United Property & Casualty customers who were overcharged last year were ordered to be refunded $43,249,714 recently by the state. Don’t wait to be overcharged. When your homeowners' insurance rate increases, shop for a lower rate. Chances are you will find it, especially when you know what NOT to buy using our Guide: http://www.theinsidersguides.com/homins40.html
Most customers who shop, switch—for price or service reasons
The average auto insurance customer gathers three competitive quotes while shopping for a new provider, and while the majority of insured shoppers remain with their current carrier, 33 percent will switch, according to the J.D. Power and Associates 2007 Insurance Shopping Study(SM) released June 27, 2007 . The study finds that while 33 percent of consumers who shop because of price ultimately switch, nearly 75 percent of consumers who shop because they have experienced poor customer service switch carriers. Members shop every 2 years to take advantage of insurer’s marketing changes. Use our Guide to buy only what you need: http://www.theinsidersguides.com/vehoin.html
GMAC lowering rates—Time to go shopping!
GMAC aims to be one of the top five U.S. auto insurers in the next five to eight years, chief executive Gary Kusumi said recently. GMAC is currently 21st on the list. Cerberus bought a 51 percent stake in GMAC to help GM out of debt. The Cerberus connection also allows GMAC to cut rates in support of its long-term strategy, compared to public companies that have to meet quarterly earnings expectations, said Kusumi. To date GMAC has lowered car insurance rates in 13 states. GMAC offers products such as low mileage discounts. "A key piece is of our strategy is price," said Kusumi. "We are very good at competitive rates and we are willing to sit and wait for market conditions to get better." Members buy only what they need when there is a sale: http://www.gmacinsurance.com/
Question of the week:
Should you pay off the mortgage or keep the tax deduction?
Many people keep a mortgage in retirement for different reasons. Bankrate.com helps you figure it out for your situation: http://www.bankrate.com/nltrack/news/mortgages/20070112_pay_off_mortgage_a1.asp?caret=2g
Assets held by the world's highest-net individuals climbed 11.4% last year—Did yours?
Compare how your advisor/broker grew your assets last year to these benchmarks: U.S. stocks—15.5%, Foreign stocks—26.6%, Balanced—11%. Whatever you are investing in may not be right for your future. Diversification is the hallmark of the wealthy independent’s strategy. Many members find simplicity in only 3 funds. Consider their strategy in our FREE Guide: http://www.theinsidersguides.com/freeguide.html
Guaranteed income for life is THE sales pitch for annuities
“New Research Reveals That Guaranteed Income for Life is Top Retirement Goal for 97 Percent of Baby Boomers.” That headline captures the industry exuberance about variable annuities. The industry expects to seize the $5.8 Trillion in assets retirees have to spend in coming years. However, the small print obscures the fact that insurers protect themselves from losses that will cost retirees, one way or another. There is no free lunch. See alternatives: http://www.theinsidersguides.com/anresp.html
Small business pension plan
The maximum contribution to your 401k is $45,000. Individuals age 50 or older are allowed a $5,000 catch-up contribution. The annual compensation limit is $225,000, according to 401khelpcenter.com. You and your family in the business can participate without all the paperwork by using mutual fund or discount broker turnkey operations. A Roth 401k makes it tax-FREE.
It does NOT pay to save, study says
The U.S. system penalizes young, lower-income households that should be given incentives to save early in life. There is a federal tax on each dollar saved by a low-income family. Also they could qualify for the Saver's Credit and the Earned Income Tax Credit (EITC). However, the EITC gives them a zero or negative tax liability, which makes them ineligible for the Saver's Credit. The perfect Catch 22—earn and save and pay tax, then loose the credit. Our system penalizes the most in need of saving. On the other hand, it rewards those who DON’T need to save. See http://www.consumerworld.org/
INVESTing in the stock market pays. That is why most wealthy people pay a smaller percentage of income as income tax, according to Warren Buffett. Their income comes from their asset accounts getting bigger and bigger--your Wealth Reserve. See how our members “SAVE” and pay NO tax ever in our FREE Guide: http://www.theinsidersguides.com/freeguide.html
Credit score mistakes
1. Don’t close accounts after you pay them down. Leave credit card accounts open but paid up. Scores are based on your outstanding balances divided by your total credit lines. Less than 50% is good. 2. Don’t avoid credit counseling if you need it. In most cases it does not lower your score since you are trying to deal. 3. Your income and assets are NOT used to determine your score since they are not available in all cases. 4. There are many credit risk scores. Find out which your lender uses. 5. Maintain a high score by not being reported 30 days late or having a vendor hire a collection agency. Your score can fall over 100 points as a result. Members save on all their banking with our Guide: http://www.theinsidersguides.com/bavepu.html
UNUM does Group LTCi
Nearly nine out of 10 companies offering new long term care benefits in 2006 selected Unum as their provider, according to an independent survey of group long-term care insurance sales. Unum has a long history providing disability coverage with mixed reviews. Members check all the alternatives to this insurance with our Guide: http://www.theinsidersguides.com/dilocain.html
The SCAMS continue to flourish
John Hancock Life Insurance will pay $21.2 million to settle a Securities and Exchange Commission investigation of the Boston-based fund company's failure to disclose certain revenue sharing schemes. Hancock made deals with brokerage firms for recommending funds to their customers. The company will have to return $16.8 million of ill-gotten gains, plus interest, which will be split among dozens of John Hancock funds.
Wachovia Securities was fined $2 million for failing to adequately supervise its fee-based brokerage business between 2001 and 2004. Approximately 1,300 of Wachovia’s customers paid millions of dollars in fees that they shouldn’t have. By 2004, 44,000 customers were paying more than $110 million in Pilot Plus fees. But much of that money came from customers who should not have been charged investment fees at all. 594 Wachovia customers conducted no trades in their fee-based accounts for at least two consecutive years but still paid the firm approximately $1.9 million in fees. 620 Pilot Plus customers held assets of less than $25,000 for at least one full year, and paid at least the minimum annual fee of $1,000, or twice Wachovia’s stated top rate of 2% allowed under the Pilot Plus agreement.
Wachovia’s supervision of its fee-based brokerage accounts really collapsed when it came to the company’s cadre of high revenue-producing brokers, members of the “Red Carpet Club.” Wachovia exempted Red Carpet Club members from several steps of its review process. The NASD said that Red Carpet Club members' customers constituted approximately 99% of those accounts in Pilot Plus that held less than $25,000 in assets.
NASD assessed $1.25 million in fines against four firms for overcharging customers: Mass Mutual Life, New York Life, Ameriprise (American Express), and Northwestern Mutual Life. Each will repay their “customers” over $2 million but said they did nothing wrong.
About half of advisors spend less than 30% of their work time meeting with clients and prospects, according to a new study.
More scams are tracked for you: http://www.nvinsurancealert.com/
Members avoid securities firms that play games with their money and time. Our Insiders provide members with the information to buy only what they need and save: http://www.theinsidersguides.com/mufuse.html
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
Jean saved $545 on her car insurance
Member Jean of PA got our email and asked if it was worth switching car insurers. She was told by her agent that her rate was the lowest available in her area. However, what her agent didn’t say was that he only represented 24 companies. What about the others? Jean hated to change agents. She did use our Guide to shop and buy only what she needed from a telephone agent. She saved $545 for a 6-month policy. She also has better coverage because she increased the liability to $300,000. $1090 per year savings means Jean will be able to buy a home sooner. She may have $22,000 for the down payment in 10 years. Yes, it is worth it: http://www.theinsidersguides.com/vehins41.html
Floridians get refund
United Property & Casualty customers who were overcharged last year were ordered to be refunded $43,249,714 recently by the state. Don’t wait to be overcharged. When your homeowners' insurance rate increases, shop for a lower rate. Chances are you will find it, especially when you know what NOT to buy using our Guide: http://www.theinsidersguides.com/homins40.html
Most customers who shop, switch—for price or service reasons
The average auto insurance customer gathers three competitive quotes while shopping for a new provider, and while the majority of insured shoppers remain with their current carrier, 33 percent will switch, according to the J.D. Power and Associates 2007 Insurance Shopping Study(SM) released June 27, 2007 . The study finds that while 33 percent of consumers who shop because of price ultimately switch, nearly 75 percent of consumers who shop because they have experienced poor customer service switch carriers. Members shop every 2 years to take advantage of insurer’s marketing changes. Use our Guide to buy only what you need: http://www.theinsidersguides.com/vehoin.html
GMAC lowering rates—Time to go shopping!
GMAC aims to be one of the top five U.S. auto insurers in the next five to eight years, chief executive Gary Kusumi said recently. GMAC is currently 21st on the list. Cerberus bought a 51 percent stake in GMAC to help GM out of debt. The Cerberus connection also allows GMAC to cut rates in support of its long-term strategy, compared to public companies that have to meet quarterly earnings expectations, said Kusumi. To date GMAC has lowered car insurance rates in 13 states. GMAC offers products such as low mileage discounts. "A key piece is of our strategy is price," said Kusumi. "We are very good at competitive rates and we are willing to sit and wait for market conditions to get better." Members buy only what they need when there is a sale: http://www.gmacinsurance.com/
Question of the week:
Should you pay off the mortgage or keep the tax deduction?
Many people keep a mortgage in retirement for different reasons. Bankrate.com helps you figure it out for your situation: http://www.bankrate.com/nltrack/news/mortgages/20070112_pay_off_mortgage_a1.asp?caret=2g
Assets held by the world's highest-net individuals climbed 11.4% last year—Did yours?
Compare how your advisor/broker grew your assets last year to these benchmarks: U.S. stocks—15.5%, Foreign stocks—26.6%, Balanced—11%. Whatever you are investing in may not be right for your future. Diversification is the hallmark of the wealthy independent’s strategy. Many members find simplicity in only 3 funds. Consider their strategy in our FREE Guide: http://www.theinsidersguides.com/freeguide.html
Guaranteed income for life is THE sales pitch for annuities
“New Research Reveals That Guaranteed Income for Life is Top Retirement Goal for 97 Percent of Baby Boomers.” That headline captures the industry exuberance about variable annuities. The industry expects to seize the $5.8 Trillion in assets retirees have to spend in coming years. However, the small print obscures the fact that insurers protect themselves from losses that will cost retirees, one way or another. There is no free lunch. See alternatives: http://www.theinsidersguides.com/anresp.html
Small business pension plan
The maximum contribution to your 401k is $45,000. Individuals age 50 or older are allowed a $5,000 catch-up contribution. The annual compensation limit is $225,000, according to 401khelpcenter.com. You and your family in the business can participate without all the paperwork by using mutual fund or discount broker turnkey operations. A Roth 401k makes it tax-FREE.
It does NOT pay to save, study says
The U.S. system penalizes young, lower-income households that should be given incentives to save early in life. There is a federal tax on each dollar saved by a low-income family. Also they could qualify for the Saver's Credit and the Earned Income Tax Credit (EITC). However, the EITC gives them a zero or negative tax liability, which makes them ineligible for the Saver's Credit. The perfect Catch 22—earn and save and pay tax, then loose the credit. Our system penalizes the most in need of saving. On the other hand, it rewards those who DON’T need to save. See http://www.consumerworld.org/
INVESTing in the stock market pays. That is why most wealthy people pay a smaller percentage of income as income tax, according to Warren Buffett. Their income comes from their asset accounts getting bigger and bigger--your Wealth Reserve. See how our members “SAVE” and pay NO tax ever in our FREE Guide: http://www.theinsidersguides.com/freeguide.html
Credit score mistakes
1. Don’t close accounts after you pay them down. Leave credit card accounts open but paid up. Scores are based on your outstanding balances divided by your total credit lines. Less than 50% is good. 2. Don’t avoid credit counseling if you need it. In most cases it does not lower your score since you are trying to deal. 3. Your income and assets are NOT used to determine your score since they are not available in all cases. 4. There are many credit risk scores. Find out which your lender uses. 5. Maintain a high score by not being reported 30 days late or having a vendor hire a collection agency. Your score can fall over 100 points as a result. Members save on all their banking with our Guide: http://www.theinsidersguides.com/bavepu.html
UNUM does Group LTCi
Nearly nine out of 10 companies offering new long term care benefits in 2006 selected Unum as their provider, according to an independent survey of group long-term care insurance sales. Unum has a long history providing disability coverage with mixed reviews. Members check all the alternatives to this insurance with our Guide: http://www.theinsidersguides.com/dilocain.html
The SCAMS continue to flourish
John Hancock Life Insurance will pay $21.2 million to settle a Securities and Exchange Commission investigation of the Boston-based fund company's failure to disclose certain revenue sharing schemes. Hancock made deals with brokerage firms for recommending funds to their customers. The company will have to return $16.8 million of ill-gotten gains, plus interest, which will be split among dozens of John Hancock funds.
Wachovia Securities was fined $2 million for failing to adequately supervise its fee-based brokerage business between 2001 and 2004. Approximately 1,300 of Wachovia’s customers paid millions of dollars in fees that they shouldn’t have. By 2004, 44,000 customers were paying more than $110 million in Pilot Plus fees. But much of that money came from customers who should not have been charged investment fees at all. 594 Wachovia customers conducted no trades in their fee-based accounts for at least two consecutive years but still paid the firm approximately $1.9 million in fees. 620 Pilot Plus customers held assets of less than $25,000 for at least one full year, and paid at least the minimum annual fee of $1,000, or twice Wachovia’s stated top rate of 2% allowed under the Pilot Plus agreement.
Wachovia’s supervision of its fee-based brokerage accounts really collapsed when it came to the company’s cadre of high revenue-producing brokers, members of the “Red Carpet Club.” Wachovia exempted Red Carpet Club members from several steps of its review process. The NASD said that Red Carpet Club members' customers constituted approximately 99% of those accounts in Pilot Plus that held less than $25,000 in assets.
NASD assessed $1.25 million in fines against four firms for overcharging customers: Mass Mutual Life, New York Life, Ameriprise (American Express), and Northwestern Mutual Life. Each will repay their “customers” over $2 million but said they did nothing wrong.
About half of advisors spend less than 30% of their work time meeting with clients and prospects, according to a new study.
More scams are tracked for you: http://www.nvinsurancealert.com/
Members avoid securities firms that play games with their money and time. Our Insiders provide members with the information to buy only what they need and save: http://www.theinsidersguides.com/mufuse.html
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