Personal Finance Blog for Retirement and Investment Advice

Beware the "Behavior Gap": Interview with Carl Richards

April 27th, 2011 by Pamela Yellen | 2 Comments

I’m delighted to share this fascinating interview with Carl Richards with you. Carl writes a weekly essay for The New York Times “Your Money” section and has been a Certified Financial Planner for 15 years. His witty sketches have appeared in numerous publications, including the Wall Street Journal, Morningstar and The New York Times.

Over the years, he noticed that the actual real-life returns the average investor gets are dramatically lower than the return of the average mutual fund. He named this phenomenon the Behavior Gap^TM and began devoting his energy to explaining why the Behavior Gap exists and what constitutes smart investor behavior.

Carl recently shared his surprising insights, tips and strategies with me in an audio interview. I hope you’ll listen to it today – I know you will find it very helpful!

You can listen to the interview by pressing the play button below, or you can download the entire interview as an Mp3 and listen on your own player or iPod…

You can also download a transcript of the interview here.

Here’s what you’ll discover in this interview…

Why 80% of all actively managed mutual funds and investment advisors underperform the overall market
The #1 biggest mistake individual investors make over and over again… and why most will keep making it
The keys to being a smart investor
How to determine if you should be investing in equities at all
The real key to happiness (it isn’t what you might think!)
How to practice “radical self-awareness” so you control your money rather than letting it controlling you
Why happiness is directly related to how much you focus on the things you can control
How to increase your wealth and happiness by focusing your energy on three things you do have control over!

You can listen to the interview by pressing the play button below, or you can download the entire interview as an MP3 and listen on your own player or iPod…

You can also download a transcript of the interview here.

Improve Your Financial Picture…

To find out how much your financial picture could improve if you added Bank On Yourself to your financial plan, request a free Analysis. If you’re wondering where you’ll find the funds to start your plan, the Bank On Yourself Professionals are masters at helping people restructure their finances and free up seed money to fund a plan that will help you reach as many of your goals as possible in the shortest time possible.

Full Potential Video Interview with Pamela Yellen

April 22nd, 2011 by Pamela Yellen | 4 Comments

Pamela Yellen was recently interviewed by James Rick, host of Full Potential. In this fast-paced video, Pamela reveals…

Why she’s so passionate about the Bank On Yourself Method
Why she created the $100,000 Challenge – a cash reward for the first person who can show they use a different strategy that can match or beat the advantages and guarantees of Bank On Yourself
Three tips you can use today to take back control of your money and finances

Improve Your Financial Picture…

James Rick, also known as “Mr. Full Potential,” is the founder of FullPotential.com and author of “Unleash Your Full Potential.” James is a lifestyle strategist for living your best life, cutting costs and building wealth through what you love! So check out his other terrific interviews!

Is the U.S. headed towards financial doomsday?

April 12th, 2011 by Pamela Yellen | 34 Comments

Financial Doomsday? People concerned about the declining value of the dollar have been asking us how that might affect the value of Bank On Yourself policies. Some have even asked if they can buy policies in other currencies.

The frequency with which we’ve been receiving these questions seems to be picking up recently. And I believe the reason for that is the endless parade of financial advice-givers who are all too happy to take your U.S. dollars to tell you why those dollars will be worthless… and why our economy is on an unavoidable collision course with destruction.

These merchants of gloom and doom appear to have one goal in common: To so paralyze you with fear that you let them do your thinking for you as you rush to take their advice.

Good Advice?

These merchants of gloom and doom appear to have one goal in common: To so paralyze you with fear that you let them do your thinking for you as you rush to take their advice.

I won’t insult your intelligence by doing the same.

What I will do is pose some questions designed to help jump start your powers of critical thinking.

You see, I’ve been studying the newsletters, videos, and articles churned out by these doomsayers. Some of the information in them is well researched, although the conclusions they draw from it can be a stretch.

But the problem is not so much with any facts or statistics they may quote. It’s what they leave out that concerns me.

So I’ll hope you’ll take a few moments to ponder these questions, before rushing to take the advice of these prophets of doom…

Click here to read the Confiscation Order...

Be Smart: Ignore All The Financial Experts…

April 7th, 2011 by Pamela Yellen and Dean Rotbart | 1 Comment

Ignore All The Financial Experts Who Advise You to Scale Back Your Expectations and Lifestyle

The chorus of gloomy financial experts is singing a ballad of restraint. They warn that we all must adjust ourselves to a “new normal,” in which we lower our expectations and scale back our lifestyles.

The supposed villains are many and include: persistent high unemployment; the devastated real estate market; rising energy and food prices; record budget deficits; the possibility of a double-dip recession; international turmoil; and, well… you name it.

You have no choice, caution the pessimistic gurus, but to swallow:

Earning less on your investments and savings for the foreseeable future

Downgrading your current lifestyle to make up for the loss of investment returns

Having less income at your disposal due to rising prices and the threat of inflation
Getting socked with higher tax rates as the U.S. Government struggles to close its budget gap, and cash-strapped states and cities do likewise
Pushing your retirement out – perhaps indefinitely
Living on less if you do eventually get to retire (that is not only less than you live on now – which these downbeat financial representatives have always claimed is a retirement must – but less even than “the less” they were already advising you get by on just a few years ago)

Sticking with the financial counselors who have been at your side all along because they remain your best source for guiding your future financial planning

To all of these bitter pills, we can only respond… B.S.

Top 16 Investing and Savings Myths

April 7th, 2011 by Pamela Yellen and Dean Rotbart | Leave a Comment

All the statements listed below are common financial myths. Accepting any of them as fact could lead to costly financial missteps…

See how many of these common beliefs you already recognize as flawed and which ones you have yet to unmask.

As you may discover, what we’ve been taught by mainstream money experts and well-intentioned friends and family isn’t always accurate.

The Myths:

Over time, the stock market has consistently proven the best and most reliable investment vehicle for the vast majority of Americans
Investors need to accept risk and volatility in order to generate meaningful profits
Home ownership and appreciation is a reliable vehicle for protecting and growing your wealth
401(k)s make effective investment vehicles, if only because your employer matches your own contributions
Your 401(k) plan administrator must be a licensed, professionally trained and carefully screened financial expert
The fees you pay for your IRA, 401(k) and other retirement funds have only a trivial impact on your ultimate returns
You will not require as much income when you retire as you need now, especially since you’ll qualify for a lower tax bracket
It is never possible to know with any certainty the value of your retirement account at intervals down the road, because market fluctuations are unpredictable
Wise retirement planners recommend you aim to make your retirement income last to age of the average American life expectancy, currently 77.9 years
Always defer taxes as far into the future as possible, especially when you wish to accumulate a larger retirement nest egg
People of modest income can’t possibly set aside $1 million or more for their retirement
Before you can begin saving for the future, first you have to dig your way out of debt
Paying cash is the ideal method of purchasing big-ticket items, such as cars and vacations
Effective savings and investing strategies are too complex for amateurs. Only professionally trained money managers consistently succeed
If you follow the advice of mainstream financial experts and don’t stray, your nest egg will be safe and grow large over time
To receive quality, personalized attention from highly trained financial representatives, you have to already be wealthy, or close to it

Announcing the winners of the “what inspires you to save” contest!

March 31st, 2011 by Pamela Yellen | 1 Comment

Last week we held a contest about what inspires or motivates you to save money. The response was overwhelming and with many so inspiring and heartfelt entries, it was very difficult for our team to pick the six winners…

After much deliberation, five members of the Bank On Yourself team each picked their favorite entry – each of these winners will receive their choice of a $25 dining gift certificate or a personally autographed copy of my best-selling book, Bank On Yourself, for themselves or to give as a gift to someone they care about.

And together, the team picked their favorite entry and that person won a $100 American Express Gift Certificate. (All winners will soon be receiving an email letting them know how to claim their prizes.)

Read on to be inspired by the winning entries…

Enter our "what inspires you to save" contest!

March 23rd, 2011 by Pamela Yellen | 76 Comments

People are inspired to save money for different reasons. Share what inspires or motivates you to save in the comment box below and you could win one of six prizes we’ll be awarding, including five prizes of your choice of a $25 dining gift certificate or a personally autographed copy of my best-selling book, Bank On Yourself, for you or to give as a gift to someone you care about.

Post your entry in the comment box below...

Five members of the Bank On Yourself team will each pick their favorite entry for the dining certificate/autographed book prizes. And together we’ll pick the most inspiring entry and award that person a $100 American Express Gift Certificate. (Sorry – U.S. residents only.)

Just post your entry in the comment box below by Monday, March 28. The prize winners will be notified by email on Friday, April 1, and the winning entries will be featured in that day’s blog post.

Save for something that excites you!

Research shows that people are more likely to save if they are saving for something that excites them, rather than because they “should” save.

For example, my husband Larry and I have two grandchildren living a couple states away. We call or Skype them (almost like being there!) every Sunday. Last Sunday, Halle, who’s in second grade, told us her favorite subjects now are science and math. She’s learning the multiplication tables, and we spent nearly an hour quizzing her – she would happily have kept doing it for another hour, but our brains were fried!

Halle’s brother Jake loves playing basketball. He’s a head taller than his classmates, so who knows where that will lead…

Anyway, a few years ago, we started savings plans for Halle and Jake’s college educations.

Doing that just feels so motivating. And because we’re saving the money in a Bank On Yourself policy, rather than an investment account or a 529 Savings Plan, we know the money will be there when needed. And if they decide to become entrepreneurs instead of going to college, the funds can be accessed without the restrictions or penalties common to 529 and other plans.

(Compare saving for college in a Bank On Yourself policy versus a 529 Plan)

So what inspires or motivates you to save?

Just post your entry in the comment box below by Monday, March 28, and you could win one of the six prizes described above!

Should you be worried about the Dow’s plunge?

March 17th, 2011 by Pamela Yellen | 12 Comments

If, like most Americans, you have a substantial portion of your nest-egg in stocks and mutual funds, I urge you to take a few minutes to read this right now…

The U.S. stock market has lost considerable ground and volatility has returned with a vengeance. The situation is precarious in both Japan and the Middle East.

But the recent stock market plunge was virtually assured before the earthquake and tsunami hit Japan.

Here’s why…

We’re doing it again: Buying stocks after big gains in the markets.

In 2008, 2009 and most of 2010, mutual fund investors in almost every month took more money out of stock mutual funds than they added. Then, in January, someone hit a switch.

Investors decided that it was time to get back into the stock market. Keep in mind this decision came after an almost 100 percent gain from the market bottom in 2008. So in December we pulled $10.6 billion out of equity mutual funds, and in January we poured an estimated $30 billion into the market.

Do you see the problem here?”¹

The problem, as this article from The New York Times blog titled, “Are We Buying High All Over Again?” points out, is that investors are repeating past bad behavior. Just as they have done throughout history, and just as they will continue to do for the rest of time.

How Good of An Investor Are You Really? Ask Your Doctor!

March 9th, 2011 by Pamela Yellen | 2 Comments

Executive Summary: The life-long costs of neglecting your health can be staggering. Expenses include out-of-pocket medical bills as well as losses of productivity and quality of life. Too many people watch their investments more closely than they do their health. Illness brought on by lifestyle choices, such as smoking, overeating, lack of exercise and stress, accounts for as much as 70% of nationwide health care spending.

By Pamela Yellen and Dean Rotbart

In mid-December 2008, a skeletal Steve Jobs, CEO of Apple Inc., canceled his scheduled presentation at the annual Macworld conference, triggering investor fears that the company’s visionary co-founder was seriously ill. A month later, Jobs announced his first health-related leave of absence. He began a second leave this past January.

During the 30-day period when concerns about Jobs originally surfaced, the shares of Apple stock dropped 14%, or $12 billion in market value. Healthcare Costs

The shareholders of Apple weren’t worried about the potential hospital bills and other medical costs that Jobs would incur. Comparatively speaking, those expenses would be a drop in the bucket.

But Apple shareholders – confronted with the loss of Jobs’s services, perhaps for good – instantly realized the true cost of sickness must also be measured in loss of productivity, leadership and innovation, among other attributes a key executive brings to his or her company.

For tens of millions of Americans who are otherwise mindful of how and where they stake their money and retirement savings – including many successful Bank on Yourself participants – the importance of investing wisely in their physical health is a lesson they have yet to master.

That’s a huge fiscal mistake

7 Ways You Can Build Your Wealth Through Better Health

March 9th, 2011 by Pamela Yellen | 1 Comment

By Pamela Yellen and Dean Rotbart

Lose weight, buy a new car. Spend a half hour exercising at least three days a week, take a luxury cruise. Reduce your stress at work and at home, remodel your kitchen. Quit smoking, sock away a couple hundred thousand dollars for retirement.

How sweet life would be – and what a great motivation to stay or get healthy – if we all received such direct benefits from investing more effectively in our health.

The truth is, while there isn’t a cruise awaiting us at the end of every jog, the lifetime returns that better health deliver are real, sizeable and far more reliable than any money you risk on the stock market or other trendy investments.

A good, strong heart may be priceless to you and your loved ones. But there is also a financial benefit that you can count in terms of a longer and more productive work life, and fewer doctor, medicine and hospital bills. What you don’t spend or lose tending to your sick self can really be better used for life’s many pleasures – including building a secure retirement nest egg.

There are library shelves full of advice on how to get healthier. Here are seven of our favorite tips that don’t require a Herculean effort or cost a fortune. But each will immediately set you on a better path to wellness:

1. Get more sleep. Not a bad way to kick off your new healthy lifestyle. Most of us short-change our sack time to crowd in more and more activities and chores. The price we pay? High blood pressure, type 2 diabetes and impaired concentration. Try for at least 7 or 8 hours each night.

2. Got milk? If not, get some. More precisely, get some extra vitamin D, ideally 800 to 1,000 international units (IU) daily. A single glass of milk will deliver about 125 IU. You might also try cheeses, yogurt, salmon, almonds and fortified orange juice. A lack of vitamin D is linked to osteoporosis, depression and chronic fatigue, among other common symptoms.

3. Chill out. People who live stressful lives suffer more heart attacks and strokes. Beating stress needn’t be painful. Go for short walks. Take mini-vacations by listening to your favorite music on a break. Take up yoga. Throw darts.

4. Get a pet. The Centers for Disease Control and Prevention reports that pets can lower both your cholesterol and triglyceride levels. Petting your dog or brushing your cat has a calming effect on both of you. Moreover, pets increase the likelihood that you’ll get outdoors more and socialize with other pet owners – both activities that the CDC says are good for your health.

5. Lose the Salt Shaker. None of us need extra salt in our diets. We’re already showered with the sodium crystals contained in the packaged and restaurant foods we consume. Experiment with the many varieties of salt-substitutes if you otherwise find your meals too bland. The Center for Science in the Public Interest reports that high-salt diets cause 150,000 premature deaths in the U.S. each year.

6. Wash Your Hands More Often. Handshakes, stair banisters, elevator buttons, door handles and a million-and-one other objects that we come in contact with routinely are breeding grounds for germs and the infectious diseases they can bring. Carry a pocket-size container of hand sanitizer for those times when soap and water are unavailable.

7. Stop Speculating on Wall Street. Okay, so this is blatantly self-serving. But entrusting your life’s treasure to the ups-and-downs and further-downs of the stock market really can shorten your life – or at the very least, squash your enjoyment of it. Just ask anyone of the tens of millions of Americans who saw 40% to 50% of their wealth evaporate in a flash during the stock and real estate crashes of 2008 (not to mention the crash of 2000) how many years of aggravation those disasters cost them!

The cure: Substitute a Bank on Yourself plan for your mutual funds or stock portfolio and sleep better at night, afford a new pet, take a sunny vacation (and soak in some natural vitamin D), eat quality packaged foods and at restaurants that don’t need to salt their food to make it taste great, buy hand sanitizer by the case, and wave goodbye forever to your investment stress.

Here’s what you’ll discover in this interview…

Improve Your Financial Picture…

Improve Your Financial Picture…

Good Advice?

But the problem is not so much with any facts or statistics they may quote. It’s what they leave out that concerns me.

Ignore All The Financial Experts Who Advise You to Scale Back Your Expectations and Lifestyle

You have no choice, caution the pessimistic gurus, but to swallow:

To all of these bitter pills, we can only respond… B.S.

All the statements listed below are common financial myths. Accepting any of them as fact could lead to costly financial missteps…

The Myths:

Read on to be inspired by the winning entries…

Save for something that excites you!

So what inspires or motivates you to save?

That’s a huge fiscal mistake

Improve your financial picture.