From the category archives:

Wealth

Skip These Mistakes & Own Your Financial Future

November 6, 2011

Podcast: Download (22.9MB)

This week Doug Andrew discussed the following:

Upcoming Free Webinar

Attend our free 90-minute webinar live over the Internet this coming Tuesday, November 8th at 11:00 a.m. pacific (12:00 p.m. mountain, 1:00 p.m. central, 2:00 p.m. eastern), and again at 6:30 p.m. pacific (7:30 mountain, 8:30 central, 9:30 eastern). The topic is “True Asset and Wealth Optimization.” You’ll learn how to choose the right investments for liquidity, safety, rate of return and tax benefits.

Click Here to Register Now

All attendees receive a bonus hardcover copy of Last Chance Millionaire, Doug Andrew’s New York Times best-selling book.

Welcoming the Prospect of a New Painful Era of Self Reliance

ABC News recently reported on president Obama speaking at a San Francisco fundraiser warning that America was poised to enter a “new painful era of self-reliance in America.”

Do you know what they call people who rely upon themselves? Adults.

Taking ownership of one’s future is not only possible; it’s essential if we wish to be free to prosper. Aren’t we supposed to be self-reliant?

It’s not reasonable to expect government to pay off our mortgages, to pay for our healthcare or to pay for our kids’ college education.

If just 20% of the $3.6 billion in stimulus spending were instead given to employers to expand their workforces, it could have created a $50,000/year position for two years for every unemployed person in this country. Instead unemployment went from 7.2% to 9.2%.

We need to get out of the mindset that big government should be taking care of us. We need to take ownership in our future. Ownership makes great things happen.

When’s the last time you washed a rental car or changed the oil in one? If you own your residence, it’s almost certain that you’ll take better care of it than if you were just renting it.

Taking ownership and being self-reliant is the American way. This is especially true regarding our financial future. When we have incentive to take ownership of our own future, we can redirect otherwise payable taxes to causes you support.

These aren’t tax loopholes, they’re decades-old, grandfathered sections of the IRS code that even tax attorneys and CPAs are rarely taught in their training. These include section 163 of the Internal Revenue Code, which provides tax incentives regarding home ownership.

You need to take ownership in providing for your own retirement instead of counting on the government to provide it for you. After all, the government is still on the hook for $115 trillion in unfunded liabilities including Social Security and Medicare. They’ll gladly try to take care of your retirement, but you can do better.

If you take ownership of your own health or even caring for the poor, you get incentives in the form of tax deductions. All of this is possible if you understand legally how to redirect otherwise payable taxes to the causes you support.

So why don’t more people do it?

The problem is that we simply don’t know what we don’t know and powerful opportunities are missed as we follow the herd.

Seven Ways Most Financial Advisors Fail to Protect Their Clients’ Money

Here are seven things that more than 90% of financial advisors don’t know how to do to protect their clients’ money.

Give you guarantees with an upside potential. Traditional financial planning in this country usually gives you guarantees but usually without upside potential if the economy does well. Or they may give you upside potential without any guarantees if the economy loses. This is one of the reasons so many people lost a third or more of their IRAs or 401(k)s during the last decade. Missed Fortune Indexing strategies enable you to earn a predictable, conservative rate of return even if the economy loses. At the same time you can enjoy upside potential up to a certain capped rate of return when the economy grows. Few advisors know how this is done.
Protect you from loss of principal. The key here is not only to protect your principal you invested, but also in any year that you make money, to turn that money into new protected principal that’s not subject to loss.
Protect you from the effects of inflation. We’ve been fortunate for the past two decades to have inflation remain steady around 2-3%. But those days are gone and inflation is likely to rise due to the incredible amount of money that’s been and is being printed. This means that your rate of return must be able to outpace the rate of inflation, and most investment advisors don’t know how to do that.
Protect you from the danger of rising taxes. Most advisors simply hope that when the future arrives, you’ll find yourself in a lower tax bracket when you retire. But that often doesn’t happen for various reasons. Your dependents have moved out. Your home is paid off. You’re not only missing out on these deductions, but Congress is looking to raise taxes too.
They don’t know how to get tax-free returns rather than just tax-deferred returns. Most people are in a for a rude awakening when they see just how quickly taxes will eat up their nest egg as they’re taxed before contributing to their IRA or 401(k). They’re then taxed upon withdrawing their funds and taxed again when they try to transfer what’s left to their heirs. A better way is through investment vehicles that have been grandfathered for more than 4 decades and have been around a lot longer than IRAs or 401(k)s. They’re safer than municipal bonds and pay a higher rate of return than municipal bonds, plus they accumulate money tax-free and the money transfers tax-free at your passing.
Provide predictable rates of return. The stock market has only averaged a 3.83% rate of return for the past two decades. Trying to get an average return of 12% is just not realistic. But if you choose, you can convert all of your income to generate predictable rates of return of about 8% tax-free.
Help people get their money out of their IRAs or 401(k)s with the least amount of tax impact. This is where a strategic roll-out can help protect you from some of the tax-deferred woes by getting your money out of those IRAs and 401(k)s and into a vehicle that will allow it to grow tax-free.

If you’d like to empower yourself to learn how to overcome these common mistakes make by many tax planners & financial advisors, it’s time to learn more by visiting with a Missed Fortune Advisor.

Bonus Missed Fortune E-Book: Baby Boomer Blunders The average Baby Boomer has less than $50,000 accumulated for retirement (which means many have less than that), primarily due to bad habits and having money invested in the wrong places where economic downturns can diminish their nest egg. Download this e-book now at www.babyboomerblunders.com.

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Moving Your Money to Safety

October 30, 2011

Podcast: Download (22.9MB)

This week Doug Andrew discussed the following:

Upcoming Free Webinar

Attend our free 90-minute webinar live over the Internet this coming Tuesday, November 1st at 11:00 a.m. pacific (12:00 p.m. mountain, 1:00 p.m. central, 2:00 p.m. eastern), and again at 6:30 p.m. pacific (7:30 mountain, 8:30 central, 9:30 eastern). The topic is “True Asset and Wealth Optimization.” You’ll learn how to choose the right investments for liquidity, safety, rate of return and tax benefits.

Click Here to Register Now

All attendees receive a bonus hardcover copy of Last Chance Millionaire, Doug Andrew’s New York Times best-selling book.

Losing Trust in Our Financial Systems

A recent article by Catherine New in Daily Finance shows that Americans are losing trust in the country’s financial system.

The results of the magazine’s quarterly survey indicate that trust in our financial institutions is slipping.

The article points out:

“The latest figures from the quarterly Chicago Booth/Kellogg School Financial Trust Index showed that only 23% of those surveyed said they trust the country’s financial systems, down from 25% in June. The index measures trust in four areas: banks, the stock market, mutual funds and large corporations.

“The findings in this issue reflect what’s been reported in the news and demonstrate the fragility of trust many Americans still have in the institutions where they invest their money,” said Luigi Zingales, a finance professor at the University of Chicago Booth School of Business and co-author of the Index.

Trust in banks has experienced an even steeper decline, falling from 39% in June to 33% in October. Notably, people were much more inclined to trust local banks and credit unions: More than half of those surveyed said they still had faith in those institutions.

The survey also revealed that nearly 60% of respondents were either angry or very angry about the current economic situation — the highest level of anger measured since the earliest months of the financial crisis.”

These findings back up an earlier survey by CNN that revealed that nearly 90% of Americans say the economy stinks.

3 years after the financial crisis pushed this country into a deep recession, financial conditions are as poor as they’ve ever been.

Ask yourself: would you want to stay on board a sinking vessel that has been foundering for the past decade? Those Americans who’ve had their retirement money in the stock market have made little, if any, gains in the past 10 years.

If you had $100,000 socked away in an IRA or 401(k) you saw it take a 30 or 40% hit following 9/11. Then after growing back to its high-water mark it took another huge 39-40% decline in 2008. Even today few people have managed to break even thanks to the market volatility of the “lost decade.”

The situation becomes all the more uncertain when considering that Congress and the president are still spending with abandon. In just three years the national debt has soared from $9 trillion to nearly $15 trillion.

If you remain on board a sinking vessel by keeping your money in IRAs and 401(k)s thinking that future taxes will be lower, you’re not seeing the writing on the wall. Taxes are only one of the threats to your retirement money; the other two components of the upcoming triple whammy are inflation and market volatility.

You need a strategy that moves your money to safety.

The Triple Threat of the Next 10 Years

Taxes will be going up. The Congressional Budget Office estimates that tax rates could go as high as 62.5% for couples making over $200,000 or single filers making over $100,000. Even if the Bush tax cuts are allowed to expire at the end of 2012, it will be the largest tax increase in history.

Inflation is the second big danger. Over the past two decades inflation has averaged around 2-3%, but those days are over. The days ahead will likely see inflation inching up to 5% on the low end and perhaps as high as 7-10% on the high end.

It’s essential that you protect yourself from the effects of inflation as it robs every dollar you have of purchasing power.

The third big danger is continued market uncertainty. This type of economic uncertainty is what prevents employers from hiring and contributes to the growing unemployment rate.

These three dangers combine to form an economic triple whammy that requires different action than simply following the crowd.

You must understand the tax and inflation power curve.

Let’s say you socked away $10,000 a year for 30 consecutive years and earned 7.2% interest. You’d have a nest egg of about $1 million. Now if you were to withdraw only 7.2%, in order to maintain your principal, you’d be taking out $72,000 a year.

But if that money is in an IRA or 401(k), you’ll be paying a nice chunk of any money you withdraw to the IRS. Your tax situation will be complicated because most people, by this time, will have no dependents to claim, their home will be paid off, and they’ll no longer be contributing to their retirement fund.

This means their tax liabilities will be higher rather than lower. It’s a safe bet that of that $72,000 you’re withdrawing each year, about 1/3 of it–$24,000 will be gobbled up by state and federal income taxes.

Now consider what inflation will do to the remaining $48,000 a year you’re expecting to live on. Even at just 5% inflation, the purchasing power of your dollars will be cut in half twice over that 30-year period. This means that you’ll only be able to purchase with $4,000 per month what $1,000 per month today would buy.

Now you start to see why the effect of the tax and inflation power curve is so important to understand and even more important to counter.

You need strategies that reposition your serious money for the future with a strategic rollout before the end of 2012. This will allow your money to accumulate tax free from that day forward as it’s grandfathered under the Internal Revenue code.

The strategies you choose must allow you to access your money tax-free and transfer it tax-free when you die. They must tie your money to those things that inflate so when inflation comes, your rate of return is outpacing the rate of inflation.

Your strategies must allow you to index your money to the markets without putting it at risk to the volatility of the market. It should grow when the economy grows and protect your principal when the economy declines.

These are the Missed Fortune strategies that have been working for decades for those willing to break away from the crowd and move their money to safety

Learn more by meeting with a Missed Fortune advisor.

Bonus Missed Fortune E-Book: Baby Boomer Blunders The average Baby Boomer has less than $50,000 accumulated for retirement (which means many have less than that), primarily due to bad habits and having money invested in the wrong places where economic downturns can diminish their nest egg. Download this e-book now at www.babyboomerblunders.com.

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Learning From the Mistakes of Others

October 23, 2011

Podcast: Download (22.9MB)

This week Doug Andrew discussed the following:

Upcoming Free Webinar

Attend our free 90-minute webinar live over the Internet this coming Tuesday, October 25th at 11:00 a.m. pacific (12:00 p.m. mountain, 1:00 p.m. central, 2:00 p.m. eastern), and again at 6:30 p.m. pacific (7:30 mountain, 8:30 central, 9:30 eastern). The topic is “True Asset and Wealth Optimization.” You’ll learn how to choose the right investments for liquidity, safety, rate of return and tax benefits.

Click Here to Register Now

All attendees receive a bonus hardcover copy of Last Chance Millionaire, Doug Andrew’s New York Times best-selling book.

Contrast and Comparison

One of the most simple and compelling lessons in economics can be drawn from the experience of two neighboring states and their respective experiences with taxes and unemployment.

Both states were facing budget shortfalls. Both states needed increased revenues to meet their financial obligations. Both sought to turn the tide toward economic recovery, but there’s a dramatic difference in the approach taken by each state and a corresponding difference in the results they got.

Anytime government suffers for lack of tax revenue to pay its employees and programs, it has the option of raising taxes to bring in more revenue, or lowering taxes to increase the revenue being taxed. It can either increase regulation of employees and the associated costs of doing business or it can deregulate and create certainty and confidence among employers so they’ll hire more workers.

In January of this year, Illinois chose to raise taxes to address it’s budgetary concerns. The results were swift and sure. But they weren’t the results Illinois was banking on receiving.

From an article in Business Insider:

“[I]n addition to the worst bond rating in the country, the state lost the most jobs of any state last month. The Illinois Policy Institute reported the grim news that “Illinois lost more jobs during the month of July than any other state in the nation, according to the most recent Bureau of Labor Statistics report.

After losing 7,200 jobs in June, Illinois lost an additional 24,900 non-farm payroll jobs in July. The report also said Illinois’s unemployment rate climbed to 9.5 percent. This marks the third consecutive month of increases in the unemployment rate.”

There is a clear correlation between the January tax increase and the subsequent drop in employment numbers. It’s a powerful illustration of the futility of trying to conceal the results of runaway spending by imposing punitive taxes on producers rather than reducing the spending.

If you were a business owner in Illinois, would the prospect of higher taxes motivate you to grow your business?

Faced with a similar budgetary shortfall, Wisconsin Governor Scott Walker asked employers why they weren’t hiring people. Business leaders told him they were feeling uncertainty about whether taxes were about to go up or not. So Wisconsin chose to lower taxes and to deregulate in order to provide the certainty and confidence that job creators were seeking.

The results were astounding.

Wisconsin saw jobs increase dramatically with 39,000 new private sector jobs were created with 14,100 jobs in manufacturing. Wisconsin’s non-farm growth is now two times the national average. One other happy note: the state also managed to turn a $3.6 billion deficit into a surplus in that same time thanks to the increased revenues.

Two states facing similar challenges, took radically difference approaches and got radically different results. The lesson in this for all of us is that economic growth and prosperity only occur where job creators are operating in a climate of certainty and confidence.

This is worth remembering whenever government leaders propose policies that create uncertainty and less confidence by seeking to raise revenue by increasing taxes and regulation.

Principles of Wealth Accumulation

If you’re seeking greater certainty and confidence in your personal financial future, you’ll need to incorporate proven strategies based upon sound principles. Here are two principles that can give you an edge.

The first is the miracle of compound interest. It’s a principle Einstein said was one of the least understood phenomena on the planet.

A single dollar, doubling every period for 20 periods, will grow to $1,048,000 if that growth is tax free.

If you have to pay tax on every gain your money makes, that dollar being doubled every period is instead being eaten up by federal or state income taxes. If you’re in a 25% tax bracket that means you’ll actually only have $72,000 to show after 20 doublings. In a 33% tax bracket it will only grow to $27,000.

This is why tax-deferred or taxed-as-earned investments should be avoided in favor of strategies that allow your money to actually grow through compound interest.

The second principle is that of tax-free accumulation. Most Americans accumulate their money in the worst possible place by paying tax on their income as they earn it. Then they place that money in taxed-as-earned investments and pay tax on any of the gains they make. Finally, they pay more tax when that money is transferred to their heirs.

As a result, what should have been a sizable nest egg is quickly consumed by taxes and ultimately ends up as a fraction of what it could have been.

It’s like crawling towards the finish line of financial independence when they could be running or flying. Is it any wonder why so many Americans are dependent upon Social Security and Medicare?

A better choice would be a vehicle that allows your money to accumulate tax-free now and in the future, thanks to sections 72E, 7702 and 101A of the IRS code. Not only does your money remain safely yours, but you can access it and ultimately transfer it to your heirs tax free. That’s the power of choosing wisely.

These are just two key principles of wealth accumulation. Missed Fortune strategies incorporate these and many other principles that enable you to enjoy certainty and confidence in your financial future.

Learn more by meeting with a Missed Fortune advisor.

Bonus Missed Fortune E-Book: Baby Boomer Blunders The average Baby Boomer has less than $50,000 accumulated for retirement (which means many have less than that), primarily due to bad habits and having money invested in the wrong places where economic downturns can diminish their nest egg. Download this e-book now at www.babyboomerblunders.com.

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The Economic Power of Choosing Wisely

October 16, 2011

Podcast: Download (22.9MB)

This week Doug Andrew discussed the following:

Upcoming Free Webinar

Attend our free 90-minute webinar live over the Internet this coming Tuesday, October 18th at 11:00 a.m. pacific (12:00 p.m. mountain, 1:00 p.m. central, 2:00 p.m. eastern), and again at 6:30 p.m. pacific (7:30 mountain, 8:30 central, 9:30 eastern). The topic is “True Asset and Wealth Optimization.” You’ll learn how to choose the right investments for liquidity, safety, rate of return and tax benefits.

Click Here to Register Now

All attendees receive a bonus hardcover copy of Last Chance Millionaire, Doug Andrew’s New York Times best-selling book.

Two States At An Economic Crossroads

With so many eyes focused on the efforts of state and national government to turn the economic tide towards recovery, the states of Illinois and Wisconsin have provided a powerful object lesson. One state demonstrated exactly what to do to promote economic and job growth, the other showed us exactly what not to do. All states should learn from their examples.

Anytime government suffers for lack of tax revenue to pay federal employees and programs, they have the option of raising taxes to bring in more revenue, or lowering taxes to increase the revenue being taxed. They can also increase regulation of employees and the associated costs of doing business or they can deregulate and create certainty and confidence among employers so they’ll hire more workers.

Only one of these approaches is consistent with making unemployment go down.

In Illinois, lawmakers raised taxes in January of this year and saw unemployment increase dramatically.

This is described in detail by Business Insider magazine:

“[I]n addition to the worst bond rating in the country, the state lost the most jobs of any state last month. The Illinois Policy Institute reported the grim news that “Illinois lost more jobs during the month of July than any other state in the nation, according to the most recent Bureau of Labor Statistics report.

After losing 7,200 jobs in June, Illinois lost an additional 24,900 non-farm payroll jobs in July. The report also said Illinois’s unemployment rate climbed to 9.5 percent. This marks the third consecutive month of increases in the unemployment rate.”

There is a clear correlation between January tax increase and the subsequent drop in employment numbers. It’s a perfect illustration of the futility of trying to conceal the results of runaway spending by imposing punitive taxes on producers rather than simply cutting the spending.

Ask yourself, if you were a business owner in Illinois, would higher taxes motivate you to grow your business?

By contrast, during this same time frame, the state of Wisconsin saw jobs increase dramatically with 39,000 new private sector jobs were created with 14,100 jobs in manufacturing. Wisconsin’s non-farm growth is now two times the national average. One other happy note: the state also managed to turn a $3.6 billion deficit into a surplus in that same time thanks to the increased revenues.

So what did Wisconsin do differently?

Governor Scott Walker asked employers why they weren’t hiring people. Business leaders told him they were feeling uncertainty about whether taxes were about to go up or not. So Wisconsin chose to lower taxes and to deregulate in order to provide the certainty and confidence that job creators were seeking.

The results speak for themselves.

If we wish to see unemployment grow and business continue to wither, Illinois is a great example of how to do that. However, if we want to see unemployment reversed and business incentivized to grow, Wisconsin is the better example to follow.

Economic growth and prosperity only occur where job creators are operating in a climate of certainty and confidence.

Certainty and confidence are the result of sound strategies. This is true of states, nations and individuals.

Standing At Your Personal Financial Crossroads