Personal Finance Blog for Retirement and Investment Advice

Why you need Dow 32,000 today

May 15, 2013 by Pamela Yellen Leave a Comment

I have an important question to ask you, and taking a moment now to answer it may rattle you…

When do you think the Dow will go to 32,000?”

Does that seem like a crazy or dumb question? It’s not. I’ll explain why in a moment, but I have another question for you first:

What would you consider to be a minimum acceptable annual return on your money for taking on the nerve-wracking risk and volatility of the stock market?

5%? 7%? Maybe even 10%?

Over the past two years, we surveyed tens of thousands of people about this, and most responded that they wouldn’t consider risking their money in the market unless they could get a 7% or more annual return.

But let’s say you only insisted on a 5% per year return…

The Dow would have to be over 32,000 right now – TODAY! – to give you just a 5% annual return, after adjusting for inflation! (32,072 to be exact.)

We’ve been tracking this data since 2010, and even though the Dow has soared to new heights in recent days, investors are still falling behind. stock-market-rollercoaster

Are you curious how we calculated this? The Dow first closed above 11,000 on May 3, 1999. Between then and March 31, 2013 (the latest date for which figures are available), we’ve had just over 40% inflation, according to the government’s key inflation barometer.

Of course, there are many who say the government’s numbers way underestimate the real inflation rate. You may have experienced that yourself, as you’ve watched the prices skyrocket on many things you buy regularly.

Regardless of which inflation numbers you believe are correct, you know that inflation takes a real bite out of the purchasing power of your dollars.

For the record, as others have pointed out, if you only wanted to keep even with inflation since May, 1999 – 14 years ago – the Dow would have to be at 15,427.17 today. That’s when we’d be at a “true,” rather than a “nominal” high. But we’re still not there.

What if you didn’t care about the spending power of your dollars and you just wanted a 5% return since May 1999? You’d need a Dow of 22,899 today, which would require a more than 50% increase from where it is now!

So let me ask you again – how long do you think it will take the Dow to hit 32,000 – or even just 22,000 – and STAY at that level or higher?

But wait! It gets worse – these numbers don’t even take into account any investment or retirement account fees or taxes, all of which will take another huge bite out of your nest egg.

Request your FREE Analysis and find out why Bank On Yourself may be the best way to invest for safely, liquidity, flexibility, control and tax advantages!

Does Warren Buffett Know Something You Don’t?

In an interview on CNBC last week, Warren Buffett, who is considered to be one of the most successful investors of all time, said…

We will have another bubble and it will burst.”

The warning signs are all around us already…
Risk On

Small investors are borrowing against their portfolios and margin debt has skyrocketed to a level just shy of that seen in 2007 – just before the markets crashed
Houses going on the market in some cities are receiving multiple bids above the asking price on the first day – often accompanied by letters from the hopeful buyers pleading to be given a chance (more shades of 2007)
Sub-prime loans (high-rate mortgages for high-risk borrowers that caused the housing bust) are making a comeback (it’s déjà vu all over again)

Risk On! As far as I can tell, for most people, the lessons learned from the Great Recession were fleeting.

But the more important question is – what lasting lessons did you learn from the financial crisis?

Take this quick survey and share your biggest takeaway with us!

It’s not too late to add predictability and certainty to your financial plan…

You can bypass Wall Street and beat the banks at their own game when you Bank On Yourself.

Request your free Analysis (if you haven’t already) and find out how big your nest egg could grow – guaranteed – if you added the Bank On Yourself method to your financial plan.
You have nothing to lose… and a world of financial peace of mind to gain.

Filed Under: best way to invest money, Retirement Plan Alternative, Stock Market Investing Tagged With: Dow 32000, inflation adjusted stock market returns, stock market, warren buffett

How will these 3 financial surprises affect you?

April 22, 2013 by Pamela Yellen Leave a Comment

There have been three recent surprising revelations I urge you to pay close attention to, if you have any money invested in the stock market and/or you have an IRA, 401(k) or other government qualified retirement plan…

1. The ugly truth about the stock market’s new record highs

Take a look at the chart below which reveals how, when measured in real purchasing-power terms, the S&P 500 Index is nowhere near its March 2000 high. In fact, the index would have to increase by another 32% today, just to get you even (in real dollars) with where you were more than 13 years ago:

Your Retirement Plan Powered by Wall Street-Fast Graph

Even if you look at the total return of the S&P 500 (including reinvested dividends), the real (inflation-adjusted) purchasing power of your investment remains negative after 13 years. And this assumes you have no fees, commissions or taxes, which, of course, will take another big bite out of your savings.

2. Long-term investors received only HALF the return of the S&P 500

Retirement confidence hits record low

April 3, 2013 by Pamela Yellen Leave a Comment

Here’s what to do…

Americans’confidence in being able to retire comfortably is at a record low, despite the economy showing signs of improvement and the stock market hitting record highs.

To compensate for their lack of retirement funds, more people are planning to postpone retirement.

That’s according to the just-released annual study by the Employee Benefit Research Institute.

The statistics are bleak:

57% of those surveyed report having less than $25,000 in total household savings and investments. Only 24% reported savings of $100,000 or more
Only 24% are very confident they’ll be able to live comfortably in retirement
Only half said they could definitely come up with $2,000 to cover unexpected expenses within the next month

How long do you think $25,000… or even $100,000 in savings will last a person in retirement? On average, a man turning 65 this year will live another 20 years, and a woman that age will live another 23 years.

To compensate for their lack of retirement funds, more people are planning to postpone retirement. That strategy may not work very well, since more than 47% of current retirees were forced into retirement sooner than planned.
[Read more...]

Filed Under: best way to invest money, Retirement Plan Alternative, Stock Market Investing Tagged With: behavioral economist Dan Ariely, best way to invest money, dividend paying whole life insurance, retirement confidence hits record low, Retirement Plan Alternative

Who Will Win the Retirement Saving Race – The Tortoise or the Hare?

March 6, 2013 by Pamela Yellen 2 Comments

This is a race between the tortoise and the hare. The tortoise is a savings vehicle earning a steady 5% interest, year after boring year. The hare is an investment account earning a much more exciting annual rate of return of 8% every year except one. The object of the game is to help the hare cross the finish line ahead of the tortoise, 10 years from now.

To play the game, click the blue box below. Type an amount of money to give the tortoise and the hare, and press ENTER.

Then click the brown box. Type a year for the investment account to sustain a 30% loss, and press ENTER. Every year except the one year you pick, the investment account will return 8%. But in the one year you select, the investment account will suffer a 30% loss. Why 30%? Because since 2000, the typical investor lost 45% or more — twice! It could happen again in 5 years, 10 years … or even tomorrow.

Which “loss year” will let the hare be ahead of the tortoise at the 10-year finish line? The 1st year? The 10th year? Some year in between? Choose different years and different starting amounts. Give it a try and have fun! Then click the link below the game, for an explanation. (But don’t do that until you’ve played the game!)

Filed Under: best way to invest money, Retirement Plan Alternative, Stock Market Investing, Tax Advantages of Bank on Yourself Tagged With: Dalbar Quantitative Analysis of Investor Behavior, Retirement Plan Alternative, stock market timeline, tortoise and the hare

Why do so many people prefer THEIR facts to THE facts?

February 22, 2013 by Pamela Yellen 2 Comments

As Mark Twain noted…

Most people’s egos prefer THEIR facts to THE facts.”

Facts

And I’ll bet you can think of several people who are guilty of that right off the top of your head, can’t you?

One of my mentors, Dan Kennedy, also noted, “People are quick to dispense advice on any subject, regardless of their qualifications. Most people don’t even distinguish between ‘opinion’ and ‘knowledge.’ That’s why you must.”

When it comes to Bank On Yourself, there’s a lot of opinion being dispensed as fact… and I thought I’d help you sift through three common misconceptions about Bank On Yourself in this blog post…

Myth #1: The commissions paid on Bank On Yourself plans are high

Often, this accusation is made by advisors who profit from investing your dollars on Wall Street. They even say agents only sell these policies because of the high commissions.

What they don’t realize is that Bank On Yourself Authorized Advisors receive 50-70% less commission than advisors who structure policies the traditional way.

And the shocking fact is that the advisor who manages your money in the stock market is making at least ten times more than the Bank On Yourself advisor, if you contribute the same amount of money each year! [Read more...]

Filed Under: best way to invest money, Retirement Plan Alternative, Success Stories Tagged With: Bank On Yourself policy loans, dividend paying whole life insurance, small business financing

Stock market hits 5 year high – what they’re not telling you

February 6, 2013 by Pamela Yellen Leave a Comment

As the bull market that began in March, 2009 picks up steam, the Wall Street stock jocks are urging individual investors to jump back into the market with both feet. They boast that the S&P 500 has hit a 5-year high and is closing in on a new all-time high. But – somehow – they all forget to mention one pretty important fact: It also ended the year 3% lower than where it was 13 years ago at the end of 1999.

This chart tells the rest of the story you’re not hearing…

You’ll notice inflation was 36% over the past 13 years, which took an enormous bite out of the purchasing power of your savings.

Some readers may be wondering why I didn’t include the value of the dividends earned by the S&P 500 companies in the chart. So let’s do that now. The total return of the S&P 500 (including dividends) for the past 13 years was 22%, which is an average return of about 1.7% per year – and still lags inflation.

Don’t forget the fees and taxes…

Allan Roth CBSNews.com MoneyWatch Review of Bank On Yourself Contest Winners

December 13, 2012 by Pamela Yellen Leave a Comment

We had some terrific comments made on our response to Allan Roth’s CBSNews.com MoneyWatch review of the Bank On Yourself book. Many of the comments were posted by people who have been using the Bank On Yourself concept for some time. These are people who have first-hand experience using the specially designed dividend paying whole life insurance policies on which the Bank On Yourself method is based.

I hope you’ll take a little time to read the comments at the end of the post, which are very insightful and further prove that Allan Roth sped right past the solution he himself said he was seeking.

It takes courage and wisdom to turn your back on the conventional financial wisdom that has caused so much financial insecurity and pain for so many. We commend all of our subscribers who have bypassed banks and Wall Street and now have the financial security, flexibility and control that had previously eluded them.

If you haven’t yet begun to Bank On Yourself, find out what you’re missing when you request your free Analysis.

Now here’s the list of winners…

Response to Allan Roth CBSNews.com MoneyWatch Review of Bank On Yourself

December 5, 2012 by Pamela Yellen 32 Comments

Because the Bank On Yourself wealth-building method lets people bypass Wall Street to grow wealth safely and predictably every year – regardless of “whether the market goes up, down or sideways”™ - we’ve taken a lot of nasty flak from financial “gurus” and investment advisors over the years. That seems to be heating up as individual investors continue to flee the stock market in droves, which is having an impact on many advisors’ livelihoods.

Allan Roth – a financial planner and blogger for CBSNews.com MoneyWatch – has written an article about why he believes this tried-and-true strategy is “snake oil.” But Allan Roth is not an investigative reporter. Allan Roth is an investment advisor with some very strong opinions. Of course, we understand that Mr. Roth is entitled to his opinions, however, his article about Bank On Yourself is filled with numerous misstatements of fact and misquotes. When I sent a detailed accounting of his blunders to the legal department of CBSNews.com, it got routed to an editorial “executive producer” who refused to correct the record.

Therefore I am taking this to the court of public opinion and giving you the facts so you can decide for yourself. We really want to hear from you, so we’re going to pick 10 of the most interesting or insightful comments made on this blog and award posters valuable gifts. (Details at end of this post.)

I’ll address just one of Roth’s misstatements in this post. In a nutshell, Allan Roth’s argument is that using a Bank On Yourself policy to finance something like a car and following the strategy laid out in my best-selling book is a losing strategy. But the “logic” Mr. Roth uses is flawed: Allan Roth was comparing the total cost of purchasing a car and financing it through a Bank On Yourself-type policy to the total cost of not buying a car at all!

How did he arrive at the “well, duh” conclusion that at the end of the day you’ll have more money if you don’t buy things than if you do? And how did Allan Roth completely miss the boat on what Bank On Yourself is all about? Read on to find out…

After a number of Roth’s clients asked him about adding more guarantees and predictability to their financial plan with Bank On Yourself, Roth contacted one of the Bank On Yourself Authorized Advisors to determine if the book’s claims were true. Roth was particularly interested in knowing if the process described in the book for becoming your own source of financing for major purchases worked as claimed.

Enter Our Stock Market Contest and Win $500!

November 16, 2012 by Pamela Yellen 141 Comments

The results of our “guess what the Stock Market will close at on the day after the election” contest are in!

We had almost 150 entries (I’m surprised there weren’t more – it was an easy way to win up to $500!).

Most people who entered guessed high – often way high. And the range of guesses was enormous; the Dow closed at 12,932.70, but the guesses ranged from 10,000 to 16,000! Which points out the sheer unpredictability of the stock market, which has barely budged for the past 13 years. (Ready to say goodbye to the roller coaster ups and downs of stocks and other volatile investments? Request your FREE Analysis and find out how much your financial picture could improve if you added Bank On Yourself to your financial plan.)

And the winners were…

[Read more...]

Filed Under: Contest, Stock Market Investing Tagged With: 2012 election, amazon.com, stock market contest

Shouting about Bank On Yourself from the rooftops

November 8, 2012 by Pamela Yellen 9 Comments

Dan Proskauer recently sent me a chart showing how his family’s net worth has grown since he started his first Bank On Yourself plan 3 1/2 years ago, and how that compares to the previous 10 years.

When Dan saw this chart on his financial tracking software program, he said his jaw dropped so hard it left a dent on his keyboard and that “we should be shouting about this from the rooftops.”

They say a picture is worth a thousand words, so take a look for yourself and note how you’ll see a more detailed version of the chart when you place your mouse over it…

Why would Dan be willing to reveal and discuss something as personal as his net worth for the whole world to see? Because, in Dan’s words…