-$62,734.06. That’s the “unrealized” loss we’ve had in one of the mutual funds in our retirement account, according to the statement we just received.
A $62,734.06 unrealized loss.
I keep staring at the statement, hoping that number will somehow magically turn positive. After all, we’ve had a nice run-up in the stock market recently, and that mutual fund has one of the best long-term track records of any fund.
What the heck is an unrealized loss, anyway?
I realize I’ve lost a whole bunchof money. And I remember working my butt off to make that money!”
A $62,734 “unrealized loss.” Is that an oxymoron, like “Great Depression,” “small fortune,” “accurate forecast” and “quickly reboot”?
I dunno if it qualifies as an oxymoron. But I do know it’s moronic that we pin our hopes and plans for financial and retirement security on things we can’t predict or count on!
My husband Larry is 61 and theoretically four years away from retirement. He probably won’t retire when he’s 65 because he says he’d get bored. But if we were relying on the conventional wisdom about saving for retirement, it wouldn’t even be an option for him.
Did you know that 40% of retirees were forced to retire sooner than planned, due to health problems, job layoffs and other factors beyond their control?
Of course, none of us want to think that could happen to us… but what would you do if it did?
Another mutual fund in our retirement account shows an $8,012.16 “unrealized” gain.
And there lies the rub: You don’t actually lock in a gain or loss until you sell an investment.
(November 22, 2011 Update: Our most recent retirement account statement shows our “unrealized loss” is virtually unchanged since I wrote this blog post almost a year ago. And looking at the Dow’s ups and downs over the past year makes a day on the roller coasters at Six Flags look tame.)
Unfortunately, studies and history show that most of us arefar more successful at locking in our losses than ourgains.
Can you tell me what your retirement account will be worth on the day you plan to tap into it? (Not what you hope it will be.) If your answer is “no,” how can you even call it a plan? And what will you do if the market plunges by 50% – again – right before you planned to retire?
The ’10/10/10′ Formula of Savings Rescues Many Overstretched Family Budgets
Executive Summary: Most modern Americans overspend, assume too much debt, and fail to invest wisely for retirement. Tim Austin, a leading proponent of ‘old-fashioned’ spending and savings strategies, recommends a time-tested 10/10/10 financial formula: saving 10% of gross income for the near-term; 10% for the mid-term; and setting aside 10% for the long-term. Austin’s favorite savings tool is specially-designed dividend-paying whole life insurance policies such as those structured by Bank On Yourself’s specially trained and Professionals.
By Pamela Yellen and Dean Rotbart
Even back in 1975, the year comedian Woody Allen wrote, directed and starred in the movie Love and Death, the perception of whole life insurance as a savings instrument designed for fuddy-duddies and masochists was already commonplace.
There are some things worse than death”
…deadpans the film’s protagonist, Boris Grushenko, played by Allen…
If you’ve ever spent an evening with an insurance salesman, I’m sure you know what I mean”
Using the following core principles, Austin’s clients have reversed years of debt accumulation and money struggles, allowing them to pay for their children’s college educations, repay all bank and credit card loans, and save safely and effectively for retirement.
Here in a nutshell is what Austin advises:
Whole life insurance consistent with the Bank on Yourself strategy should be a cornerstone of every family’s financial planning
Save at least two years’ worth of anticipated expenses before investing a single dime in risk-bearing instruments
Set aside 30% of gross income, then budget your lifestyle around the remaining 70%. Ideally, keeping spending to only 50%, or even 40%, of gross income
Put 20% of gross income into short-term and mid-term instruments, including whole life policies, certificates of deposit, money market funds and savings accounts. Save 10% of gross income for retirement in multiple whole life policies, added strategically over time, and designed for income replacement
[Request a free Analysis and find out the bottom line numbers and results you could have if you added Bank On Yourself to your financial plan]
When you buy a car, hold onto it as long as it remains mechanically sound. Only purchase a new car when you are left with no choice. The same approach should apply to other major capital expenses
Stop thinking of a home as an asset. Moreover, stay longer in fewer homes – or even a single home, thereby greatly reducing total interest spent on mortgages
Teach your children, even at an early age, about the wisdom of saving, spending and investing with a 1940s and 1950s sensibility
Branson conceived the Virgin Group in 1970 and it has gone on to grow very successful businesses (Virgin Mobile & Virgin Airlines to name a few) in numerous sectors.1
We had a chance to ask Sir Richard questions and here are five Success Tips he shared:
Success Tip #1…
Your business life starts at home – pick a good partner and respect them for who they are.
Success Tip #2…
The biggest challenge business owners run up against is being risk averse. At some point, you have to just say, “Screw it, let’s do it!”
Success Tip #3…
It’s important to keep fit – you’ve only got one body. Try to find fun ways to do it.
Success Tip #4…
Praise your team/employees – never criticize them. Treat them right and they’ll do anything for you.
Success Tip #5…
Don’t take yourself too seriously!
I found it fascinating that when one of us asked a question of Sir Richard, he would often respond by asking a question back; he seemed genuinely interested in us as individuals and it tied right into Success Tip #4. Sir Richard simply makes you feel that you matter. And he always looks for the best in people.
1. http://www.virgin.com/about-us/
2. “How to Play a Market Rally”, The Wall Street Journal, November 15, 2010 (The DOW has since crossed 11,000 at least two more times)
In every economy – whether boom or bust – opportunities arise. Unfortunately, most people don’t have the financial resources to take advantage of them.
This is an inspiring story of how people are using the Bank On Yourself method to be in a position to take advantage of some amazing opportunities…
Here’s a new reality: You need cash now more than ever. Not credit. Not equity. Cash.” – “Why Cash is King,” Men’s Health, November, 2010 issue
“Bank On Yourselfers” Joni and Dave Schultz
Take Joni and Dave Schultz, who just happen to be my sister- and brother-in-law. Joni is a hospital department supervisor and Dave just retired from his job in construction.
“Bank On Yourselfers” Joni and Dave Schultz
They came to visit us recently, and Joni’s first comment when she walked in the door was, “Now I get it! I understand why Bank On Yourself is so much better than using a credit card or finance company, and why it’s even better than paying cash for stuff!”
Joni and Dave started a Bank On Yourself policy about five years ago, in order to supplement their retirement income and add predictability to their financial plan.
But they’d never used it to finance any purchases… until now.
Now is the Best Time to Prepare for the Next Economic Downturn
By Pamela Yellen and Dean Rotbart
Executive Summary: Among the best non-conventional or alternative financing options for small businesses are loans taken against the owners’ or business’s whole life insurance policies. Correctly structured, policies such as those that conform with the Bank On Yourself strategy, are tax-advantaged and readily accessible sources of the cash that every small business owner requires to survive harsh economic times.
DENVER – Small business owner Terry Hauschulz recently needed a $15,000 loan so that he could pay the tab on his October 15th federal tax return.
Clients of Hauschulz’s 10-year-old medical equipment repair business have been dallying when it comes to paying him. “Great receivables, no cash,” Hauschulz laments.
The 55-year-old proprietor mulled asking his commercial bank to help tide him over. “You know what that would be,” he says of the iffy and laborious process of winning a loan approval these days even for those borrowers with good credit.
Instead, Hauschulz, like tens of thousands of other self-reliant entrepreneurs, professionals and small business operators, looked to non-conventional finance options.
The solution he selected – borrowing against his individual whole life insurance plan – allowed him to promptly receive the necessary funds without a credit check, without having to submit financial statements, without needing the approval of a loan committee and without any bureaucratic hassles.
Scary Fact #1: 40 percent of all workers plan to delay retirement
61% blamed the decline in their 401(k) for this. And a majority said they’re prepared to spend less in retirement according to a new survey by Towers Watson.
A recent study revealed Boomers and Generation X’ers are coming up frighteningly short on their retirement savings.
And when nursing home and home health care costs are added in, that shortfall doubles, according to a study released this month by the Employee Benefit Research Institute (EBRI).
Nearly half of both Baby Boomers and Gen X’ers won’t have enough funds to cover living expenses, according to an EBRI report released earlier this year.
Scary Fact #3: New 401(k) disclosure rules don’t put a lid on fees
New regulations announced this month by the Department of Labor will require better disclosure of all the hidden fees you’ve been paying in your 401(k), starting in January, 2012.
But, for all the noise on Capitol Hill about this horrifying issue, NO regulations have been proposed or even discussed to reduce the confiscatory fees you pay!
Even a one percent higher fee can cost an employee $64,000 or more in realized savings by age 65, according to the DOL’s own estimates.
The 401(k) situation is so bad that you will probably need to get an average annual return of 8% to 10% – just to break even!
Not convinced? Check out the shocking exposé Pulitzer Prize-nominated journalist Dean Rotbart and I recently co-wrote on this.
Scary Fact #4: Hope is not a strategy
We’re headed for a retirement train wreck, and it’s going to get really ugly over the next 15 years” – Rob Arnott, a widely respected market strategist
In a well-researched article in this month’s Fundamentals Index Newsletter, the authors point out that the return assumptions built into pension and retirement plans today assume that “everything will go right.” They’ve relied on unrealistic assumptions. The authors also go on to demonstrate why returns are likely to be much lower in the future.
We’re relying on hope. But hope is not a strategy; hope will not fund secure retirements. We’re planning for the best and denying that worse can happen. It makes far more sense to hope for the best, with plans for realistic outcomes – and contingency plans for worse ones.”1
Scary Fact #5: 40 percent of retirees were forced out of work early
Remember the scene from the 1983 movie classic, “The Big Chill,” where the character played by Jeff Goldblum asks…
Have you ever gone a week without a rationalization?”
Well, many boomers today are trying to rationalize away the fact that they won’t be able to retire when and how they had planned by trying to convince themselves that retirement is overrated. They now talk about continuing to work in some capacity as long as they can.
While there’s no question that this can give you more of a sense of purpose and fulfillment and keep you from dying of boredom, the reality is that many people are being forced to retire earlier than they can afford to. Job layoffs and health issues are the primary reasons for this.
I love what I do, and I hope to be doing it for a long time. But shouldn’t the decision to retire – or not – be a matter of choice, not necessity?
The reality is that you may not have a choice. Nearly four in ten retirees say they were forced out of work earlier than they’d planned because of layoffs, poor health or the need to take care of a loved one, according to EBRI.
Scary Fact #6: All Bank On Yourself policy owners received a guaranteed increase and a dividend – again
I was just checking to see if you were paying attention! That’s not a scary fact (unless you’ve been procrastinating on starting to Bank On Yourself).
Whole life insurance is an asset class that has increased in value during every stock market decline and every period of economic boom and bust for more than a century.
A dividend-paying whole life policy grows by a guaranteed and pre-set amount every year. In addition, the growth is exponential, meaning it gets better every single year with no luck, skill, or guesswork required to make that happen.
A Bank On Yourself-type policy includes an option that turbo-charges the growth of your cash value in the policy.
You can know (rather than hope) the minimum guaranteed income you can take from the policy in retirement.
And, you can access the money in retirement with little or no tax consequences, under current tax law.
You can also have access to capital when you want it and for whatever you want. No nosey credit apps or pledging your first born.
So, if you haven’t added Bank On Yourself to your financial plan yet, doesn’t it make sense to request a free Analysis and find out what your bottom-line numbers and results could be?
There’s no obligation, it’s not scary, and no one’s going to twist your arm! If you haven’t already started to Bank On Yourself, please take the first step today and take back control of your financial future! REQUEST YOUR FREE ANALYSIS!
1. “Hope is Not a Strategy,” Fundamentals Index Newsletter, October 2010 Issue
What started in 2002 as a quest to educate Americans and help them achieve financial security and peace of mind using the Bank On Yourself method came to uncover an all-American treasure more exquisite than I ever imagined.
The revelation was gradual.
At first, my concentration was tightly focused on helping people reach their savings and retirement planning goals and objectives using a seldom-trumpeted, but proven variety of whole life insurance. After laborious and extensive research, a system was created that would permit almost anyone – rich and poor, young and old – to wean themselves from dependence on banks, credit cards, auto leases, mortgage companies and the risks and volatility of the stock and real estate markets and traditional retirement plans.
People could sleep well at night knowing that their savings were growing – safely and predictably – even when the markets tumbled.
Soon, the American public began to come around to my way of thinking – or at least that’s what I believed at the time. People from all walks of life made initial inquiries, read up on Bank On Yourself materials, met with the specially trained financial representatives and then made the choice to bank on themselves.
Clients became our most potent marketing tool, as they began sharing the Bank On Yourself concept with their family, friends, neighbors and colleagues, as well as increasing their own commitment to this proven savings and money management philosophy.
I’ll admit I was pretty pleased with myself…
To be honest, I was pretty self-satisfied both by the consistent growth in the number of folks who were using the concept, and by what we professed to be our innovation. There was no question that our Bank On Yourself precepts were changing how people viewed investing and financial planning.
A couple months ago, I interviewed Dan Proskauer. Dan lives below his means and has significant savings discipline. But after decades of saving and investing and “doing all the right things” we’ve been taught to do, he realized he had nothing to show for it.
Dan is a vice president of technology engineering, very analytical, and he has spent hundreds of hours investigating .
His conclusion? “The more I look into Bank On Yourself, the better it looks,” says Dan. And he has implemented it for his family in a big way.
Dan shared the findings and conclusions of his research in a fast-paced interview. I encourage you to check it out now, if you haven’t already done so.
But what if you’re in debt?
Dan told me he was talking to a friend who was complaining that he and his wife were always in debt and confessed, “There are things we want to do – we don’t want to deprive ourselves of life. We can’t really afford them, but we do them anyway.”
Maybe you can relate to Dan’s friend’s situation. It’s a seemingly endless cycle of living beyond your means, using high-cost borrowing, which means you have interest to pay – leaving that much less for everything else.
C. Northcott ParkinsonPerhaps surprisingly, it has little to do with how much you make – people of all income levels suffer from this. After all, as the late British economist, C. Northcote Parkinson noted…
Expenses rise to equal income”
It’s part of “Parkinson’s Law.” He also said that, “a luxury, once enjoyed, becomes a necessity.” I can definitely relate to that, can’t you?
When Dan described to his friend how Bank On Yourself could be used to become his own source of financing and help free him from the endless cycle of debt, his friend’s first reaction was, “Yeah, it sounds great, but we could never do it – we have to get ourselves out of debt first.”
But as Dan explained more about it, his friend realized he didn’t have to wait. He could start now and reduce or eliminate debt while at the same time increasing savings. He realized Bank On Yourself could help his family “move to the right side of the line.”
What side of the “line” are you on now?
If you’re on the “wrong” side of the line, you know it. You’ve probably tried to get to the other side of the line, but it’s not an easy journey to make.
The good news is that if you’re truly fed up with your situation and ready to make a change, Bank On Yourself can help you get there. My New York Times best-selling book, is filled with stories of folks of all ages and incomes who have done just that.
One woman who shared her story in the book is Rose Hillbrand (Chapter 8). Rose knew the feeling of hopelessness that came with the crushing debt she had incurred. The video below updates her inspiring story of how Bank On Yourself helped her move to the other side of the line. It was filmed when I was in Ohio speaking to a standing-room-only crowd of over 250 people…
And, if you’d like to get a no-obligation Analysis and a referral to a knowledgeable Bank On Yourself Professional like the one Rose got referred to, who can show you how much your financial picture could improve if you added Bank On Yourself to your financial plan, simply request a free Analysis here.
Most financial experts say that the way to avoid getting into debt is to save up and pay cash for things.
They are wrong! There is actually a better way to purchase things. I call it the “better than debt-free” method, and it actually beats paying cash.
How is that possible?!? The conventional wisdom says that paying cash for things is the answer. But this ignores an important, but little-known principle of finance…
What do I mean by that? Let’s say you’ve decided you’re going to beat the financing and leasing rackets by paying cash for major purchases. So you start putting money aside into a savings or money market account. When you hit your savings target, you pull your money out to pay cash for that item.
Now how much interest are you earning on that money?
You’re earning ZERO interest, of course. Which is why financing, leasing and paying cash are all losing scenarios.
Fact: You’re either going to pay interest to others to finance things, or you’re going to lose the interest or investment income you could have earned, had you kept your money invested instead.
When you Bank On Yourself, you do pay interest on your policy loans. But the interest you pay ends up in your policy, as I explain in detail on pages 100-102 of my book.
But far more important, as Dan Proskauer puts it…
The Bank On Yourself method offers something you truly deserve, but may not have – financial security and peace of mind. With Bank On Yourself, you can sleep well knowing your savings can only grow, never shrink. With Bank On Yourself, you know, rather than hope.”
Bonus: Some companies have a feature that allows you to continue to earn the exact same interest and dividends – even on the money you’ve borrowed!
However, only a handful of companies offer a dividend-paying whole life policy that meets all the requirements to maximize the power of this concept AND pay you the same interest and dividends, regardless of whether you’ve borrowed from your policy .
And if your policy isn’t structured properly, your cash value won’t grow nearly as fast, you could lose the tax advantages, or both.
So, whether you’re on the side of the line that Dan Proskauer is on, and you want to strengthen your financial position and have predictability and peace of mind… or you want to be on that side of the line, chances are excellent that Bank On Yourself can help!
SANTA FE, NM – Officially, neither the U.S. government nor the retirement planning industry keeps count of how many American employees entrust others to decide for them how and where to invest their hard-earned retirement savings.
Nonetheless, there is evidence that the number of these so-called ‘zombie investors’ – those who shuffle forward without using their brains – may already exceed 15 million individuals and is on a sharp upward trajectory.
The march has been fueled by a Greek chorus of government regulators, Wall Street executives, financial planners and media commentators who regularly opine that only by delegating the task of retirement investment to others can individuals assure the optimal long-term preservation and appreciation of their nest eggs.
“Effective management of a retirement portfolio can be a challenging task, requiring significant knowledge and commitment of time,” cautions the Securities and Exchange Commission.
Thus the SEC and the Department of Labor have instructed employers to offer their workers a variety of defined contribution retirement plans, most commonly 401(k)s, “designed to make it easier for investors” to avoid the headaches and inherent risks of managing their own retirement monies.
Easier, indeed! But wiser and less risky? Often not
Such full-faith reliance on administrators and funds managers is propagating gargantuan portfolio losses that could billow to hundreds of billions of dollars during the lifetimes of the current generation of U.S. workers.
Already many Americans believe that by the time they retire the Social Security system will be bankrupt.
But what wage-earners have yet to comprehend is that many of the personal retirement accounts they are paying into annually at work will – regardless of how the markets perform over the coming decades – stealthfully bleed each employee of tens of thousands, even hundreds of thousands of dollars that could remain theirs
Instead, Hauschulz, like tens of thousands of other self-reliant entrepreneurs, professionals and small business operators, looked to 
Whole life insurance is an asset class that has increased in value during every stock market decline and every period of economic boom and bust for more than a century.
