Stock Market Timeline

The only thing for certain in the stock market is there will be ups and there will be downs. When you compare the Bank On Yourself method to the traditional long-term stock and mutual fund investing strategies, you’ll see that there are absolutely no guarantees that the market’s performance will match up with your expectations. You’ll always be in for some surprises.

And there’s a dirty little secret Wall Street doesn’t want you to know: Studies show that the average equity mutual fund investor has only earned 3.49% annually for the past 20 years, beating inflation by less than 1% a year.

Asset allocation and fixed income investors haven’t even managed to outpace inflation for the last twenty years! (Source: DALBAR 2012 Quantitative Analysis of Investor Behavior)

This simply isn’t the case with Bank On Yourself.

1. Do you receive a guaranteed increase every year?

Bank on Yourself

Plans receive a guaranteed increase every year – your statements always have good news, and no ugly surprises

During 2008, the third worst in history for the stock market, the policies used for the Bank On Yourself concept received their contractually guaranteed increase, plus a dividend. See an example here of how one of these policies grew in 2008, while the stock market plunged

Stocks and Mutual Funds

There are no guarantees that your money will increase in any given year. Wall Street lost over 45% of the typical investor’s money – TWICE – over the past decadeDo you know for sure that’s not about to happen again?

Investors have no way to predict the value of their investments at any given point in time

Over the last 80 years, the Dow was in a stall that lasted 12-25 years 65% of the time (as the stock market timeline charts also reveal)

2. Is your principal protected during a market correction?

Bank on Yourself

No loss of principal due to a market downturn

Stocks and Mutual Funds

You can lose part or all of your principal in a stock market correction

3. Are your gains locked in during a market downturn?

Bank on Yourself

All gains credited to your plan are locked in – they don’t disappear when the market tumbles (the financial guarantees of the policy are backed by the claims-paying ability of the insurer, so be sure to use a financially solid company. You can request a referral to a Bank On Yourself Authorized Advisor, who is a life insurance agent with advanced training on this concept, and who can recommend the best companies for Bank On Yourself)

Stocks and Mutual Funds

You can lose part or all of your gains in a market downturn

4. Are your results dependent on luck, skill, or guesswork?

Bank on Yourself

You don’t need to pick the right stocks, funds, real estate or other investments – Bank On Yourself lets you focus on other, more fun things and worry less. Imagine not having to know the best way to invest money and not having to figure out how to bump up your returns

Before making your first premium payment, you can know your guaranteed minimum annual increase, and the minimum value of the plan in any given year

Stocks and Mutual Funds

Results depend on picking the right stocks, funds or money managers. 80% of all mutual funds and 80% of all investment advisory newsletters underperform the overall market over the long term (Source: Hulbert Financial Digest – July 2009 cover story)

The best-performing mutual fund of the last decade rose more than 18% annually, yet the typical investor in that fund lost 11% annually, according to the investment research firm, Morningstar Inc. 1 (By law, mutual funds can only advertise the results of “buy and hold” investors, even though all long-term mutual funds continue to be held for less than five years.)

5. Does your money grow more efficiently every year?

Bank on Yourself

The growth in the policies recommended for Bank On Yourself is both guaranteed and exponential (the growth escalates by ever increasingly higher amounts).

The chart below is based on one of Pamela Yellen’s Bank On Yourself policies, showing the actual growth she’s received so far in the policy, and the projected future growth, based on the current dividend scale (dividends are not guaranteed and are subject to change):

growth pattern chart with copyright

Note: Your cash value is guaranteed to be equal to your death benefit at maturity, and your death benefit increases due to the features of this kind of policy. However, no two Bank On Yourself policies are alike – each one is custom-tailored to the client’s unique situation. To find out your bottom-line results if you added Bank On Yourself to your financial plan, request a free Analysis here.

Stocks and Mutual Funds

Money invested in the stock market grows unpredictably, can stall for lengthy periods of time, and can plunge just when you planned to tap into your funds.

 
Actual growth of the Dow over the past 38 years, not adjusted for inflation

Actual growth of the Dow over the past 38 years, not adjusted for inflation

6. Can you use your money without selling your assets?

Bank on Yourself

You can borrow the equity in your policy (without selling any assets) and your plan could continue to grow as though you never touched a dime of it, because some policies receive the same guaranteed annual increase regardless of any loans, and any dividends you may receive are not affected by loans (this feature is not offered by all insurance companies, so work with a Bank On Yourself Authorized Advisor who knows which companies have policies that meet all the requirements to maximize the power of the concept)

Stocks and Mutual Funds

To get access to your equity, you typically have to sell your assets, and you stop getting the interest or investment income they provided. If you have to liquidate assets when the market is down, you’re breaking Rule #1 of Investing (“buy low, sell high”)

7. Can you rely on it for a predictable income at retirement?

Bank on Yourself

You can know the minimum annual income you could take from your policy, and for how long you could take it, so you don’t have to pin your hopes for a secure future on luck, skill or guessing games

Any dividends credited to your plan, on top of your annual guaranteed increase, would increase the amount you could take from your plan

Stocks and Mutual Funds

There is no way to predict the value of your investment in 10 years, 20 years, or whenever you hoped to retire. The market can crash just as you’re approaching retirement, or after you retire, and undermine your best-laid plans

8. Does it “self-complete,” so your family or heirs also receive the money you had planned to save?

Bank on Yourself

Provides an income tax-free death benefit, providing peace of mind for your family or heirs, if you were to pass away. If your loved ones have no need for the money, it can be left to your church/temple and/or favorite charities. This benefit could be many times more than the current value of the plan at your death

Stocks and Mutual Funds

Only the current value of your investments would go to your loved ones

With the exception of Roth plans, taxes would be due and leave your loved ones with far less money

9. Are your assets protected from creditors and lawsuits?

Bank on Yourself

Both your cash value and death benefits may be protected from lawsuits and creditors in many states (check with legal counsel to see what applies in your state)

Stocks and Mutual Funds

Money invested outside of certain qualified plans does not enjoy protection from lawsuits and creditors

1. “Best Stock Fund of the Decade: CGM Focus,” by Eleanor Laise, Wall Street Journal, December 31, 2009