Personal Finance Blog for Retirement and Investment Advice

Why Your Retirement Account is Missing $186,000

An eye-opening Report released last month by the Center for Retirement Research at Boston College reveals that the fees charged by mutual funds and 401(k) and IRA plans will slash the value of the typical person’s account by almost 37%!

That means if your account should have been worth $500,000, you end up with only $314,000 – all because of stealth fees that are draining your hard-earned savings! That’s $186,000(!) of your money that will end up in other people’s pockets, not yours.

These money-sucking fees often apply even to funds that track stock market indexes such as the S&P 500… as well as to the “Target Date” Funds that most employers now automatically put employees’ 401(k) money into.

Listen to John Bogle, the founder and former CEO of Vanguard, who many consider to be the father of the indexed mutual fund, quoted in MarketWatch, in February 2014:

Question: “If you pay a hefty fee to an active manager, what happens to your potential return?”

Answer: “Nothing good. At 2.5% over a typical investor’s lifetime, an astounding 80% of compounding returns ends up in the hands of the manager, not the investor.”

Bogle notes,

When our financial system – essentially our money managers, marketers of investment products and stockbrokers – put up zero percent of the capital and assume zero percent of the risk, yet receive fully 80% of the return, something has gone terribly wrong in our financial system.”

I’ve been doing some deep research into the fees charged by mutual funds and retirement accounts, and what I’ve discovered is mind-blowing.

For example, I looked at three popular S&P 500 Index funds and discovered that the worst of the three siphoned off 14.4% of your account value in 10 years, 26.6% in 20 years, and a staggering 37.2% in 30 years.

On a $100,000 Initial Account, that Adds Up to $160,712 in Lost Cash!

The least thieving of the funds only charged $11,512 in fees over 30 years. And other than the fees charged, these funds are identical! They’re all so-called “passively-managed” funds that simply track the S&P 500 Index. It’s not rocket science!

But pick the wrong fund – or let your employer pick it for you – and you’ll lose hundreds of thousands of dollars more than necessary!

In other words: Simply by avoiding these rip-off funds, you could end up with nearly $150,000 in extra cash to spend during retirement.

And remember: That’s with a $100,000 initial account.

A couple with $500,000 to start could end up with an additional…


…when they retire, simply by avoiding the hidden rip-off fees that Wall Street charges.

Think about that: An extra $750,000. That would give you MORE than double what you’d have otherwise.

For most retired couples, that much additional savings would mean never having to worry about money again right there.

In other words, just by making one small change in where you invest your nest egg – a change you could make in just 10 minutes – you could end up with more than twice as much money when you retire.

You could end up with a lifestyle substantially more prosperous than if you had not made that change.

Here’s a Heads Up About a Top-Secret Project I’ve Been Working On…

For the last year I’ve been working on a top-secret project. It could be the single most important thing I’ve ever done – and has the potential to completely transform your life.


I’ve been putting in some very long days, haven’t seen my husband much, and canceled my vacations. All my energy has gone into pulling together this special project!

It’s a distillation of more than ten years of research… and it’s all coming together next week. (One discovery I’ll share with you is something that will take you less than ten minutes to do, but can easily add six figures to your 401(k) or IRA – without taking on ANY additional risk.)

Stay tuned!

Grow your nest-egg safely and predictably every year – no matter what’s happening in the stock market.

The Bank On Yourself method is based on an asset that has grown in value every single year for more than 160 years. The value of your plan is guaranteed to grow by a larger dollar amount every year you have it. (So you can sleep like a baby when the next crash happens.) What other financial asset do you own that does that?

It’s easy to find out how big your nest-egg could grow – guaranteed – if you added Bank On Yourself to your financial plan. And there’s no cost or obligation to find out. Just request your FREE Analysis, if you haven’t already.

Request a FREE Bank on Yourself AnalysisYou have nothing to lose and a world of financial peace of mind to gain.

Fed says most Americans “extraordinarily vulnerable” to financial setbacks

A comment last week by Federal Reserve Chair Janet Yellen (read Is Pamela Yellen Related to Janet Yellen?) sent my inquiring mind down an investigative rabbit hole.Janet Yellen and Pamela Yellen

Janet stated that the Great Recession showed that a large number of American families are “extraordinarily vulnerable” to financial setbacks because they have few financial assets to fall back on when the you-know-what hits the fan.

She cited a new study showing that an unexpected expense of just $400 would force the majority of American families to borrow money or to have to sell something to cover it.

Just $400! Yikes! What is that? A minor car or appliance repair or a small medical or dental expense?

That stat came from a survey released by the Federal Reserve this summer that was so ignored by the media that it even escaped my notice.

When I finally tracked down that Federal Reserve survey (Report on the Economic Well-Being of U.S. Households in 2013), I could see why the media wanted to keep it under wraps.

Here are a few startling revelations from this Report…

  • Among those who had savings prior to 2008, 57% used up some or all of their savings in the Great Recession and its aftermath
  • 34% reported going without needed medical care in the last year because they couldn’t afford it
  • 42% had to delay a major purchase or expense directly due to the recession, and 18% were forced to put off a “major life decision”
  • 24% experienced a major unexpected medical expense they had to cover out of their own pocket in the prior 12 months (yup – that’s one out of four of us)
  • One-third of those who applied for credit were turned down or given less credit than they applied for
  • Just over half were saving some portion of their income, but about one-fifth were spending more than they earned

Another shocking report released last month revealed that in spite of the jump in value of stocks and real estate, the combined 401(k) and IRA balances for households nearing retirement actually declined to only $111,000 in 2013. (It was $120,000 in 2010.) That data comes from another Federal Reserve report – the 2013 Survey of Consumer Finances.

How much income do you think that $111,000 would provide you in retirement??

Are you sitting down? If a couple purchases a joint annuity with that $111,000, they would receive only… $500 per month!

And since the survey showed the typical household has virtually no financial assets outside of their 401(k)’s and IRA’s, that $500 a month is likely to be their only source of income to supplement their Social Security (and who knows how much of that any of us are actually going to receive?).

To top it all off, this week the Federal Reserve revealed that consumer debt in America just hit an all-time high!

This sad state of affairs can be totally avoided when people embrace two simple, but powerful, concepts:

  1. Know the difference between saving and investing and only invest money you can afford to lose or can wait Discover the secret to a financially stress-free lifeup to 20 years for the market to recover.
  2. Build a safe and liquid rainy-day fund equal to two years of your household income. (The conventional-wisdom advice of savings equal to only three to six months of your income was proven to be hogwash during the Great Recession.)

Watch this video to discover the secret to a financially stress-free life.

Is your Financial Plan a House of Cards?

Is your financial plan a house of cards that could come tumbling down with the next financial emergency or market crash? Do you want to enjoy a financially stress-free life that lets you handle whatever curve balls life throws at you?

If so, take a look at how The Bank On Yourself safe wealth-building method can give you lifetime financial peace of mind and put an end to worry and sleepless nights.

Request your Free Analysis right now (if you haven’t already). It’s easy to do, and there isn’t any obligation.

Request a FREE Bank on Yourself Analysis

Do you feel lucky?

For two years before the dot-com stock market bubble crashed, my husband Larry and I studied “stock charting” with one of the country’s top technical analysts. It’s one of the 450+ financial strategies and vehicles I’ve investigated over the last 25 years.

Stock charting looks at patterns in the charts of stocks, indexes and various market indicators to determine the best times to buy or sell, based on the knowledge that history repeats itself. (Frankly, I don’t have the patience for that kind of analysis and found it excruciatingly boring.)

History repeats itself in the stock marketWe owned a lot of tech stocks, and we’d check our retirement account balance every day because it was growing so fast. Some weeks we’d see such an enormous jump that we’d high-five each other shouting, “We’re rich! We’re rich!”

Yup, back then we were part of the “dumb money” – following the crowd like lemmings blindly following each other off a cliff. But I’m getting a little ahead of myself…

We were paying this analyst a good chunk of change for his coaching. Just when the dot-com bubble was peaking (as we now know with 20/20 hindsight), the analyst sent us this urgent one-sentence message:

If you only take one piece of my advice, make it this one:
Sell ALL your stocks now!”

Wow! There was no waffling. No equivocating. But… our stocks were still going up! Could we ride the bull just a little longer? Our greed glands were working overtime.

We decided to hedge our bets and sell a portion of our stocks and chart the remaining ones every day, selling each when we got a clear signal to.

As a result, we “only” lost 20% of the value of our retirement account when most investors saw their accounts plunge by 50% or more.

Since I have a very curious mind, I’ve continued following this analyst, even though I no longer own any stocks or stock mutual funds. He recently sent out a chart I’ll show you below that took my breath away… and will probably take yours away, too.

It’s a chart showing the long-term picture of the Dow Jones Industrial Average. He prefaced it with the same question I’ll ask you: Where do you think the Dow Jones wants to go next?

Based on historical patterns and the market tops and bottoms of the last two market crashes of 2000 and 2008 (the blue numbers 1 and 2), the index could plunge to around the 5,500 level from its current level of over 17,000 today:

The long-term picture of the Dow Jones Industrial Average

As they say, a picture is worth a thousand words.

Here are two more reasons to be cautious…

The first is economist and Nobel Prize winner Robert Shiller, who predicted the 2008 real estate crash, recently noting that stocks, bonds and real estate are all on the expensive side. Most worrisome is what Shiller’s “cyclically adjusted price-earnings” (CAPE) ratio is showing today. The ratio stands at the fourth-highest level going back all the way to 1881 – and topped only by 1929, 2000 and 2007, all years that are synonymous with bursting bubbles.


The second reason to be worried is that, in a recent Investors Intelligence survey of money managers, the number of bears has fallen to the lowest level since 1987 (the year of Black Monday infamy).

The percentage of bears and bulls at any given time is considered a “contrarian” indicator. Because studies show that whether you’re talking about Mom and Pop investors or Wall Street “experts,” most investors buy and sell at the wrong times.

copydoodlesaccessclub_crayon_arrow_1As any good student of history knows, there will be another major stock market crash – the only thing we don’t know for sure is the date or the magnitude.

The Federal Reserve’s easy-money policies continue to force money into riskier assets and blow asset bubbles all over the place.

And with geo-political turmoil and terror rising quickly world-wide, the possibility of a “black swan event” that could throw markets and economies into a tailspin is growing. (The concept of a black swan event was popularized by Nassim Taleb. The idea is that the world and the economy are severely affected by events that are rare and difficult to predict – but that should be taken very seriously.)

Which brings us back to the question I posed at the start of this post. If you have a significant portion of your assets in the market… do you feel lucky? Well, do you?

Doesn’t it make sense to…

Hope for the best but have a “plan B”?

Out of the more than 450 different financial products and strategies I’ve investigated, my favorite “Plan B” is a properly structured Bank On Yourself dividend-paying whole life policy.

The many advantages of these plans include:

  • Guaranteed, predictable growth
  • Guaranteed to grow by a larger dollar amount every year
  • Have never had a losing year for more than 160 years
  • Tax advantaged – you can access both your principal and growth with no taxes due, under current tax law
  • You have liquidity, access to and control of your money
  • You can use your money in the plan to make a major purchase or to invest elsewhere – and your policy can continue to grow as though you never touched a dime of it
  • You can (finally!) know the guaranteed minimum value of your account on the day you plan to tap into it – and at every point along the way

Know the Guaranteed Value of Your Nest-Egg

To find out what your bottom-line numbers and results would be if you added Bank On Yourself to your financial plan, request a free Analysis here, if you haven’t already.
Request a FREE Bank on Yourself AnalysisYou have nothing to lose and a world of financial peace of mind to gain.

The Secret Connection Between Health and Wealth

Is there a connection between your physical health and your financial wealth?

Absolutely! And it’s more important than you may realize…

When you’re not in good health, you’re not as effective on the job, in your investing strategies or at home.

Often, the price we pay for inattention to the care and feeding of our bodies doesn’t become evident for years or even decades. However, when the tab finally does come due, it is often shockingly high and can instantly erase a life’s worth of careful financial planning.

Diabetes… a heart attack… cancer can all drain tens – or even hundreds – of thousands of dollars out of your pocket over time.

Other tolls, such as worry, insecurity and loss of companionship, can’t be measured in dollars.

I’ve been a “health nut” for decades – reading and learning voraciously about ways to prevent and cure illness without relying on drugs, surgery or other invasive, debilitating procedures.

What I’ve discovered is that there is a whole world of natural alternative cures that you and I weren’t being told about.

Which is why I want to introduce you today to Dr. Stephen Sinatra – the world-renowned cardiologist and nutritional expert who’s advice my family has found incredibly helpful and effective.

Cardiologist Cures Chronic Conditions… Without Drugs

[Read more...]

Are we living in the United States of Amnesia?

It was announced that more than $1 trillion has been added to the value of American equities since the stock market hit a two-month low on August 7th. Americans’ wealth has reached a record high, thanks to a surge in the value of stocks and homes.

I’m sorry to be the bearer of bad news, but here’s a news flash: You haven’t made a penny in the stock OR real estate market!


We’ve been here before…

Just like those glowing reports about how much Americans’ wealth had ballooned prior to the last financial crash, the new reports are pure fiction. Until you sell your assets and lock in your (hopefully) gains, you have nothing more than a bunch of eye-popping numbers on paper. Those numbers repeatedly sucker many of us into believing we have real wealth and financial security when we do not. [Read more...]

A Special Message for Women Who Want to Be Financially Independent

Best Kept Secrets of Successful Women - Financial Edge

Free Bonus Report when you subscribe to the Women’s Financial Edge

I was really excited when one of the largest consumer newsletter publishers in the world, Agora Publishing, asked me to be the Editor-In-Chief of The Women’s Financial Alliance, a new publishing franchise dedicated to helping women grow their wealth safely and enjoy a richer lifestyle.

We launched a free e-letter – The Women’s Financial Edge – at the beginning of May, and it’s being extremely well received. We’ve already been featured in USA Today, CNBC, Huffington Post, The Detroit Free Press and more.

If you haven’t already subscribed, you can do so here right now. And when you do, you’ll be able to instantly download our Bonus Report, The Best-Kept Secrets of Successful Women.

This Report contains 28 powerful, easy-to-implement strategies and tips for saving more, avoiding costly financial mistakes, saving a relationship, gaining a career advantage most men will never have, getting more done in one day than most people do in a week, losing weight effortlessly, and much more! (Get this Report instantly when you sign up to receive the Women’s Financial Edge here.)

Perhaps you’re wondering…

Do Women Really Need or Want Different Financial Advice than Men?

Good question! And one I asked myself when I was first offered the position of Editor-In-Chief of this new publication. That got me doing a lot of research, and I was surprised by what I discovered…

[Read more...]

30 Reasons Not To Worry
About A Market Crash

My favorite financial journalist is Brett Arends, a regular contributor to The Wall Street Journal and MarketWatch. He’s one of the very few who doesn’t have his head up his you-know-what.

Anyhow, Brett just published a tongue-in-cheek article about all the reasons the stock market is just going to keep going up and up. And I strongly encourage you to read it here.

Some of my favorites of Arend’s 30 reasons not to worry include…

  • Yes, stocks look expensive compared with annual sales, net asset values, gross domestic product, the replacement cost of company assets, and the average earnings of the past 10 years. But none of that matters because valuation measures are completely irrelevant.
  • You bears “just don’t get it.”30 Reasons not to worry about a Stock Market Crash
  • The S&P 500 is almost three times as high today as it was in 2009. Therefore it must be three times as good a deal!
  • People who aren’t bullish are losers and sissies.
  • Everybody on Wall Street says this is a great time to buy stocks, and if they don’t know, who does? [Read more...]

Pamela Yellen Named Top Personal Finance Influencer

I’ve just been named one of the 30 most influential people in personal finance and wealth, and I wanted to share the exciting news with you!

Starting with a field of more than 1,000 finance experts, the study (commissioned by MoneyTips) used a rigorous process to score and rank each expert to whittle it down to a ranked list of the top 30 influencers in wealth and personal finance.Pamela Yellen is a Money Tips Top 30 Influencer

I’m ranked #19 on this list of the Top 30 social influencers impacting Americans’ financial lives.

The list was published last week on the Huffington Post, titled, What the Top 30 Personal Finance/Wealth Influencers Know That You Don’t. I was also one of a handful of the top experts quoted in the article.

I am very gratified by this acknowledgement. For the past decade I’ve devoted my life to educating people about alternatives to traditional investing and retirement planning that have enabled hundreds of thousands of people to stop using the crystal-ball-hope-and-pray method of financial planning and start knowing how good their financial future can be.

And I’ve learned several important lessons along the way – I’ll share the most important one with you in a moment.

[Read more...]

7 Ways to Spend Less and Enjoy Life More

Do you remember during the recession when it was actually trendy to cut up your charge cards and get out of debt?

Well, that fad wore off rather quickly, didn’t it?

Americans have since resorted to their free-spending ways, and now total debt in the US has hit a new all-time record.”

Over the past several years, 6-year-term loans have become the norm for financing cars, according to Experian Automotive.

And subprime loans to business have skyrocketed – at rates equal to as much as 125% per year, when the fees are included. (You read that right – 125%.)

Borrowing creates the illusion that we can afford a better lifestyle than we really can. And sooner or later, the chickens will come home to roost. It’s never pretty when that happens.

[Read more...]

What does Financial Independence
mean to you?

flag-fireworks-4thWith Independence Day right around the corner, I got to thinking about the real meaning of financial independence.

(Take our survey now and tell us what financial independence means to you.)

For retired Navy Commander and Bank On Yourself revolutionary Bob Chambers, it means,

Spending time with family and friends and having a predictable, life-long income that provides a comfortable lifestyle.”

If you’ve been a subscriber for a little while, you may recall that Commander Bob agreed to share the booklet he wrote, which he called “Financial Independence Made Easy,” after we received an avalanche of requests for it when I posted an interview I did with him.

Commander Bob has been a student of money and finances for many years, and his 20-page booklet is full of profound insights, including:

[Read more...]