Personal Finance Blog for Retirement and Investment Advice

Stock Market Declines Linked to Early Death, Illness and Fatal Accidents, Studies Show

If you have even 10% of your wealth in the stock market and experience only a 10% loss, your risk of dying early, or having a physical health problem like high blood pressure or a mental health problem such as depression, increases significantly.

That’s according to a recent study published in the American Economic Journal. These losses are known as “wealth shocks,” which the study found “strongly affect physical health, mental health, and survival rates.”

Among every 100 retirees with money in the market suffering a 10% wealth shock, one additional person will die within the next two years, and 2.5 more will develop health problems.

The study didn’t examine the impact of a bigger drop than 10%, but it’s easy to imagine it would be worse.

It’s not rocket science to realize there is a close connection between your health and your wealth.

It’s not just the risk of early death and sickness you need to worry about…

The anxiety, anger, and frustration you feel caused by negative stock market returns also “makes investors more prone to driving errors and lapses.”

A market loss of as little as 1½% (which can happen on an almost daily basis during periods of higher market volatility) was found to increase the number of fatal car accidents by .5%, as reported in another economic journal last year.

Doesn’t it make you wonder what the impact is when the market drops by 10%, 20%… or 50% or more, as has happened twice – just since the year 2000?

Yet another study that examined patient records for every hospital in California over nearly three decades found a connection between market declines and hospital admissions, particularly for mental health conditions like anxiety, panic attacks, and major depression.

When the market fell nearly 25%, “hospital admissions spiked over 5%” immediately, for example.

The study’s conclusion: “stock market declines today result in psychological distress today.”

But here’s what’s really scary…

Americans Have Very Little Savings Outside of the Stock Market and Real Estate, According to the Federal Reserve Survey of Consumer Finances

And those are the two financial assets most likely to suffer big losses during a market crash or recession.

In case dying early, physical and mental health problems and fatal car crashes aren’t enough reasons not to over-rely on the stock market for growing your retirement savings, consider these additional reasons:

  • With the current bull market now hitting its 10th birthday, we are past due for a major market crash
  • Since 1929 we’ve had three market crashes where the Dow took between 16 and 25 years to recover to pre-crash levels
  • The sad reality is that – even after suffering through all the stomach-churning rollercoaster ups and downs of the stock market – the average investor in equity mutual funds has gotten only a 5.29% annual return over the last two decades! (Source: DALBAR 2018 Quantitative Analysis of Investor Behavior)

Given all of this, would it be worth doing some serious soul searching right now to determine if you have too much of your retirement savings at risk in the market?

Market volatility is a fact of life. If you have money in the market, there is no avoiding the ups and downs. We had two market corrections of 10% or more last year. But, as we’ve seen, even a 1½% drop can have dire consequences.

Does it really make good sense to put most or all of your nest-eggs in one volatile basket?

There’s Never Been a More Critical Time to Diversify Your Retirement Savings – Your Very LIFE Depends on It!

When you’re looking for ways to diversify your nest-egg, take a good look at the Bank On Yourself safe wealth-building strategy. It provides an unbeatable combination of advantages and guarantees, including:

Find Out How Adding Bank On Yourself to Your Financial Plan Can Help You Reach Your Financial Goals and Dreams, Without Taking Any Unnecessary Risk

Don’t fall for Wall Street’s BIG LIE. You don’t have to take risk to grow a sizeable nest-egg. And you don’t have to expose yourself to a greater risk of early death or mental and physical health problems.

Find out how you could benefit from a custom-tailored program and get all your questions answered when you request a FREE, no-obligation Analysis here.

Your life and health depend on it, so don’t wait another moment! Click here right now:

Record-High Credit Card Debt Promises Problems for Many

According to the Federal Reserve, credit card debt in the U.S. is at its highest level ever. In December 2018, credit card debt was $26 billion higher than it was just three months earlier.

Americans over age 60 hold nearly one-third of all credit card debt in the country – and they’re seeing their accounts go delinquent at an increasing pace.

We’re not surprised. Eighteen months ago, we at Bank On Yourself bemoaned the fact that household debt at the end of 2017 was at a then all-time high of more than $13 trillion. Now credit card debt is poised to overtake auto debt as one of the “big three” consumer debt millstones (after mortgages and student loans).

Carrying significant credit card debt can cause serious problems

Living with a large balance on your card(s) can be like trying to cross Niagara Falls on a tightrope: You hope and pray nothing goes wrong.

What could go wrong while your cards are maxed out? [Read more…] “Record-High Credit Card Debt Promises Problems for Many”

How Complex Is Dividend-Paying Whole Life Insurance?

Some financial advisors say whole life insurance is complicated, and that “you should never invest in something you don’t understand.” … Then they try to sell you stocks, bonds, mutual funds, and EFTs that most laypeople can only begin to truly grasp!

Dividend-paying whole life insurance is so simple an average 10-year-old can understand the concept in 10 minutes. We’ll prove it to you now …

The Simplicity of Dividend-Paying Whole Life Insurance

The concept behind a dividend-paying whole life insurance policy is extremely simple. It’s based on five easy-to-understand ideas:

1. Your Risk Is Minimized by the “Pooled Risk” Approach of Insurance

This timeless concept is at the foundation of all forms of insurance. In its simplest form, policy owners pay an insurance company a relatively small sum of money in advance. This is called a “premium.” In exchange, they are covered for a potentially much large expense later. In this case, they receive an agreed-upon amount to cover the costs and loss of income related to the death of the insured, which is called the “death benefit.”

2. You’re Guaranteed to Have “Level-for-Life” Premiums with a Whole Life Insurance Policy

[Read more…] “How Complex Is Dividend-Paying Whole Life Insurance?”

Get Financially Naked With Your Partner to Avoid Relationship Mistakes

Do you remember the first time you got naked with your beloved?

Along with the passion of the moment, if you’re like most of us, you were probably a bit self-conscious. After all, for the first time, you may have had had to reveal that paunch you’d been hiding, those patches of cellulite or that outie belly button you’ve hated since the third grade.

But because you overcame those concerns and let yourself get naked – well, I don’t need to remind you what happened next!

The point is, when you allow yourself to get financially naked with your partner, amazing things can happen. You not only have a better understanding of one another, but you’ll also work better as a team to achieve your goals and tackle your problems.

It turns out that being clear and open with each other about financial issues is one of the most positive things you can do to ensure a “happily ever after.”

Couples May Argue About Sex, Kids and In-Laws, but It’s Their Arguments About Money that Best Predict Whether or Not They’re Headed for Divorce Court…

[Read more…] “Get Financially Naked With Your Partner to Avoid Relationship Mistakes”

The Most Important Lesson Learned from the Government Shutdown: Americans’ Finances are Fragile

The longest U.S. government shutdown in history laid bare an uncomfortable truth: Americans aren’t saving enough and the majority of us have no rainy-day fund to protect us when the inevitable you-know-what hits the fan.

More than 70% (!) of all types of employees at all income levels surveyed live paycheck to paycheck and said they’d have difficulty meeting their financial obligations if their paycheck were delayed for just one week! That’s according to the 2018 “Getting Paid in America” Survey by the American Payroll Association.

This explains why, after missing just one or two paychecks, we heard so many heart-breaking stories from government workers who weren’t being paid or were furloughed. For example… [Read more…] “The Most Important Lesson Learned from the Government Shutdown: Americans’ Finances are Fragile”

How Much Money Do You Need to Save for Retirement?

People need to save between 10% and 17% of their income if they plan to retire at 65 but are putting away only 6-8% of their income, according to a new study by the Stanford Center on Longevity. That’s only half of what they should be saving.

What percent of your household income are you saving? It’s important to be brutally honest with yourself because a shortfall of the magnitude most Americans will experience means more than just not being able to live the retirement lifestyle you dreamed of. It may mean…

  • Having to choose between putting food on the table and the medical care you need
  • Not being able to afford to pay for heating and air conditioning
  • Having to rely on the charity of your children
  • Foregoing travel and even life’s little luxuries

I doubt you worked hard all your life so that you can scrimp and sacrifice just to get by in retirement.

Fully 60% of U.S. households are at risk of not having enough money to make ends meet in retirementeven if they cut back to spending just 75% of pre-retirement levels – according to a 2018 study from the Center for Retirement Research.

The Rule of 25 for Determining How Much You’ll Need to Have Saved

[Read more…] “How Much Money Do You Need to Save for Retirement?”

Reviews for Saving for College Using the Bank On Yourself Method

When you think about saving for your children’s college tuition, what savings vehicle comes to mind?

Families often use traditional investment and savings accounts, 529 College Savings Plans, UGMAs (Uniform Gift to Minors Accounts), and UTMAs (Uniform Transfers to Minors Act).

But there’s a big problem there. Who’s going to guarantee you won’t lose your money – and your kid’s chance for a great education – in a stock market crash?

Nobody.

Absolutely nobody. Not your broker, certainly. (Try asking him if he’ll guarantee your stock market investment. Get ready to be laughed at.)

Not Uncle Sam. And not the college. Nobody’s going to guarantee that your money in the market will grow. And nobody’s going to guarantee you won’t lose it in the next market crash.

And that’s the thing. This is your kid’s future you’re gambling with, for Pete’s sake. This is money you can’t afford to lose!

And if you can’t afford to lose it, you can’t afford to risk it. Because “Risk = possibility of loss.”

If you can’t afford to lose it, you can’t afford to risk it.”

That’s why the Bank On Yourself strategy for saving for college is becoming more and more popular. [Read more…] “Reviews for Saving for College Using the Bank On Yourself Method”

Take Our Survey and Tell Us Where You Think the Stock Market is Headed

2018 was a wild ride on Wall Street, with volatility so violent it made daily swings of 500 or more points on the Dow seem almost “normal.”

We experienced several record-setting point swings on the Dow and came within a hair of entering a bear market, where securities fall 20% or more from recent highs.

But there’s a big difference between a bear market decline of 20% and a major market crash, like the one we had during the 2007-2009 financial crisis, which knocked the S&P 500 down by 57%.

And when the dot-com bubble burst in 2000, the S&P 500 plummeted by nearly 50%.

And since this time around we haven’t yet entered a bear market (by the most common definitions), that means we are (still) in the longest-running bull market in history.

In two months, this bull market will hit its tenth birthday – something that’s never happened before. [Read more…] “Take Our Survey and Tell Us Where You Think the Stock Market is Headed”

Shhh! Your Bank Has a “BIG” Dirty Little Secret – it Could Crush Your Retirement

Who can forget those dark days of the housing market crash of 2008? The vacant homes and neglected lawns.  The abandoned swing sets and forgotten barbecues. The bright signs and bold arrows that needed little explanation: “Foreclosure.” “Auction.” “Bank Owned.”

We’re told that the housing bubble and collapse was about predatory lending and high-risk borrowers who were duped into loans that they couldn’t afford. The massive regulatory response to the subprime crisis meant that banks were no longer allowed to behave BADLY… so they chose to behave DIFFERENTLY.

Shhh. Your Bank Has a “Big” Dirty Little Secret. Read this Very Carefully…

The largest source of mortgage lending in the United States is now being done by non-banks – financial entities that offer unsecured personal lending, business loans, leveraged lending, and mortgage services… but do not hold a banking license. As a result, they’re not subject to standard banking oversight and can engage in risky lending.

But where do they get the money to make these loans? You guessed it: Wells Fargo, Citibank, Bank of America and everyone else who got their hands dirty ten years ago. [Read more…] “Shhh! Your Bank Has a “BIG” Dirty Little Secret – it Could Crush Your Retirement”

October 2018 Was Among the Most Volatile Month for Stocks in 118 Years

October was one of the most volatile months for the Dow since 1900. Back then, we were hopping on the first electric buses in New York City and enjoying a new kind of sandwich called a “hamburger” in New Haven. And, we were piling onto an early “Loop the Loop” roller coaster on Wall Street.

Fast forward to October 2018… and enter the Zero-G Inversion Coaster. The Dow fell by over 1,000 points in two days. The S&P 500 dipped in and out of correction multiple times. The Nasdaq plummeted 700 points mid-month, soared over 300 points the next week, and then tumbled back down over 500 points toward month-end. It comes as no surprise that the Fear Index also hit a 3-month high.

It wasn’t Halloween that spooked the markets last month…

Investors had plenty to fear with trade wars, tariffs, rate hikes, Fed policy, underwhelming earnings, slumping housing data, and political partisanship run wild. And as the sugar high of tax cuts, low interest rates and low inflation wears off, there’s a pervading sense that we’ve reached some sort of flashpoint.

What keeps economists up at night? One very sobering question:

What if This Economy is “as Good as It Gets”?

[Read more…] “October 2018 Was Among the Most Volatile Month for Stocks in 118 Years”