Bank On Yourself

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

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.

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.

Mission Not Impossible: You Can Teach Teens Financial Responsibility

February 9th, 2011 by Pamela Yellen | 7 Comments

Executive Summary: While teens can be hard to reach, the teenage years are the perfect time to teach kids the saving, spending, earning and investing habits they’ll require to enjoy a lifetime free of financial strain and worry.

These days, money in and money out is mostly electronic, meaning the speed at which our children must make the right or wrong financial decisions has accelerated. Launch your teens’ money management education by explaining to them why most adults fail.

Let children know that the solution can be found in the proven strategies of fiscal self-reliance that are embodied in the Bank on Yourself system and help your teens create their own vision of a secure and rewarding financial future.

There are plenty of practical steps you can take to make the entire subject matter more interesting to teens. By Pamela Yellen and Dean Rotbart

Russ Bragg has a higher financial IQ than most parents. He started out as a credit analyst for an international bank and began offering comprehensive financial planning services in 2000. He is an expert at helping clients define and then achieve financial independence.

For Bragg, you might imagine, educating his teenage son and daughter about proper money management would be a no-brainer.

If, on the other hand, you have teens of your own, you already know better

Enticed by credit card solicitations with low interest rate come-ons, Bragg’s independent-minded son was in credit counseling by the time he was 18. Bragg’s daughter, on the other hand, while still a student, applied for and received a prestige credit line that even some of Bragg’s agency clients are unable to qualify for.

“Same mother, same father, same food, same air” and two very different outcomes, observes Bragg wryly of his children’s money management styles.

Many otherwise more-than-adequate moms and dads – those who’ve mastered subject matter as sensitive as teenage smoking, drinking, and drugs – have found their skill sets sorely lacking when it comes to the topic of money.

Welcome to Survivor: Teen Money…

A sprawling multi-year marathon and obstacle course that pits a tribe of well-intentioned parents, grandparents and other adults against the strong-willed, often perplexing sensibilities of the untamed adolescent mind. The challenge? One of modern family life’s most difficult: teaching teens to handle money responsibly.

I remember writing once that as a society we are more comfortable talking about sex and those other issues than we are about money”

Money for Teens: One Savvy Author’s ‘Idiot’ Advice

February 9th, 2011 by Pamela Yellen | Leave a Comment

Nearly a decade ago, Susan Shelly wrote The Complete Idiot’s Guide to Money For Teens. The paperback was and continues to be one of the best read, most widely recommended texts on the subject.

A lot has changed for and about teens since Idiot’s was originally published in April 2001, as Shelly noted during a recent telephone interview. The changes work both for and against adolescents.

As an example, teens today can do comparison-shopping on the Internet to identify the best brands and prices – a big plus. But the Internet also enables kids to indulge in nearly instantaneous impulse buys: money enters and exits their bank accounts electronically, no wallet required.

Regardless of how teens avail themselves of today’s on-demand financial tools, the core principles of personal finance success – such as consistently saving a little now to accumulate a lot later – remain timeless.

Among Ms. Shelly’s 2011 recommendations:

Managing

To help teens be more thoughtful with their money, make sure they have financial responsibilities. Whether it is paying for their own smart phone or covering the incremental costs of adding them to your auto insurance policy, let teens learn the lessons of paying for at least some of their own consumption. Kids should know how much money they have and where it is.

Spending

Just like adults, Shelly says, some children are better savers than others. But all teens should be encouraged to avoid impulse purchases. Shelly says she would encourage any teen bent on making a significant purchase to wait a week to see if he or she will still want the item as badly. Ask teens to consider whether what they are buying is really worth it?

Earnings

A part-time job and/or the launch of their own entrepreneurial business is helpful. “I think that is very important, especially in times like these, that teens feel they are contributing to their family by being more self-sufficient,” Shelly advises. Ideally, young adults will build their earnings to the point where they no longer need or ask for an allowance.

Investing

It would be wise to assist teens in pooling enough money to manage their own small portfolio of funds to be placed in select savings and investment vehicles.

Instead of buying kids traditional birthday, graduation and special occasion presents or gift cards, parents and other relatives should consider providing cash, stocks or other savings instruments. Having their own financial portfolios will not only help teens accumulate wealth – it will give them the opportunity to learn the dos and don’ts of successful money management.

7 Steps To Set Your Teens On a Lifelong Path to Financial Success

February 9th, 2011 by Pamela Yellen | 5 Comments

Here is a list of 7 steps that you can use to help prepare your teens to be financially successful and responsible adults. Feel free to adapt these suggestions to your individual family dynamics.

teenager mowing lawn — To truly value money, teens need to
earn their own income

1. Start Bank on Yourself policies for your teens (if you have not already) and/or help them purchase their own policy. You can get a referral to a specially trained Bank On Yourself Professional who will work closely with you to customize a plan that’s designed specifically for your family.

2. Share details of your own Bank on Yourself policies with your children and review both your and their policies every six-months. Show them how you are utilizing your policies to predictably retain and grow more of your own money without paying interest or exorbitant fees to banks, brokerage firms and others.

3. Expose your teens to your full family financial picture – including what you earn, what you spend, what you borrow, and how you invest and save. You may wish to have your children participate by writing checks, reconciling accounts and helping to set and monitor your family budget.

4. Put your kids to work. To truly value money, teens need to earn their own income, whether through outside jobs, entrepreneurial ventures or by getting paid for family chores.

5. Don’t forget charity. Encourage your kids to set aside a regular portion of their earnings and income for a good cause, be it church or other worthy nonprofits. Such gifting will be returned to them many times over in terms of the character it builds.

6. Paint a vibrant picture of your adolescent’s fiscal future – one free from the money worries that envelop so many young adults and their parents. Help teens formulate their own vision of what a life of financial self-reliance and freedom will mean for them.

7. Allow kids to make mistakes and even fail when it comes to managing their own finances. Few adults get it right the very first time, either. Remember, we all learn a great deal from our mistakes.

Market Rally? Why you shouldn’t get carried away…

February 3rd, 2011 by Pamela Yellen | 25 Comments

There is something occurring right now that concerns me… and ought to concern you, too. So I urge you to pay close attention to this blog post…

Individual investors are moving into stocks and riskier investments

Since the financial crisis, and until very recently, individual investors (that’s you and me) largely avoided stocks. But now, as the stock market continues on a sharp rise that is already one of the steepest in history, people begin to fear they will miss out. According to a recent article in the Wall Street Journal¹….

Stock-market fever is one of your biggest enemies as an investor… It’s pure instinct. We’re hard-wired to run with a stampeding herd and to seek safety in numbers.”

The article advises that you shouldn’t trust the crowd, because, “they’re usually wrong. Time and time again, studies show the public invests at the wrong time – they get bullish and buy after shares have risen, and then panic and sell after they have fallen.”

Just as they did before the housing bubble burst and just like they did before the dot.com crash. And just like they have done throughout history.

The article notes that, “too many TV market pundits talk like they’re on ESPN. It gives the stock market a phony air of urgency and excitement.” And it reminds us that, “if you’re buying, higher stock prices are bad, not good.”

Wall Street lost more than 40% of our money -TWICE – in the past decade

How can you be sure they’re not about to do it again?

AAII vs. Bank On Yourself: Total Knockout in Round One

January 26th, 2011 by Pamela Yellen | 13 Comments

Last week, I posted the rebuttal I wrote to the American Association of Individual Investors (AAII) review of my best-selling book, which declared the concept “too good to be true.” BOY Boxing Gloves

Since AAII said they would not publish my response or correction of the misinformation contained in their review, I told them I would publish it here and let YOU be the judge of whether AAII was twisting and omitting things… or being fair and unbiased.

The response was swift, surprising and universal. There were so many insightful comments made that I couldn’t pick only three to award prizes to, as was my original plan.

So I picked ten (the winners are listed at the end of this post – check to see if your comment was one that was chosen). And I’ve excerpted from a number of the comments here, so I can share some of the highlights with you.

Jeffrey summarized the thinking of many commenters about AAII this way:

AAII naturally committed the typical strategic blunders essential to the charade proposed by the investment industry (Wall Street) and financial professionals (a.k.a. traders, gamblers, speculators, etc.). Any attempt to allow people an opportunity to truly grow wealth, reduce risk, and prepare for a more stable environment challenges the status quo of buy and lose (commonly referred to as buy and hold) and then industry pundits (AAII) start the negative attacks in order to establish fear of finances and preserve their base of profits. AAII omitted important aspects of your plan, distorted facts of your plan to promote obfuscation, and blatantly twisted all aspects of your plan in order to destroy your credibility.

Thank you for presenting people with an opportunity to actually prepare, plan, and realize a better financial picture.”

Is Bank On Yourself too good to be true?

January 19th, 2011 by Pamela Yellen | 85 Comments

A review of my book, Bank On Yourself, in the December 2010 issue of the American Association of Individual Investors (AAII) Newsletter declared that the concept is “too good to be true.”

The reason given was, “A life insurance policy loan is not truly a loan. Rather, it is an advance that the insurer must eventually pay out. Worse yet… policy loans can erode a life insurance policy over time.” It also pointed to “potential tax liabilities.”

This review brought to mind one of my favorite quotes…

If you’re looking for an excuse, any one will do.”

– Dan Kennedy

So I wrote the editor and explained there was some misinformation in the review, and that I would like an opportunity to correct the record, pointing out that their motto is “Unbiased Investment Education.”

The editor told me to let him know what I think is incorrect, and he “will take a look at it.” I suspected he was just “humoring me,” but gave him the benefit of the doubt. However, when I submitted my rebuttal, he replied that they would not publish it because “there are no factual corrections to be made.”

I informed AAII I would be publishing my rebuttal on this website, and let YOU decide who is taking things out of context, committing sins of omission, and twisting the “facts”… and who is being fair and unbiased. We’ll pick three of the most interesting, insightful and/or humorous comments made on this blog and award the posters their choice of a $25 gift certificate for a restaurant in your area or a personally autographed copy of my “too good to be true” book.

Besides that, there are several points made in my rebuttal that I have not made elsewhere, so you will find value in reading this (I made it a bit more colorful for your reading pleasure)…

The Secret to Making Your Financial New Year’s Resolutions Stick – You!

December 21st, 2010 by Pamela Yellen | 8 Comments

By Pamela Yellen and Dean Rotbart

Perhaps this year, finally, you will get your financial house in order. That means roping in spending, slashing debt, maximizing income and choosing investment and savings vehicles that actually deliver what they promise.

Even if you’ve fallen back on your New Year’s Resolutions, it’s not too late to get back on track. Learn how by watching this fascinating interview of Pamela Yellen on Good Day New Mexico

Hardest of all, it means sticking to your New Year’s resolutions beyond Valentine’s Day, past Mother’s Day and July 4^th, all the way through Labor Day, Thanksgiving, and yes, New Year’s Day 2012.

Remember, past failures are no guarantee of future failures! In fact, before they ever succeeded, research shows that most successful New Year’s goal-setters faltered for five consecutive years or even more.

You are far more likely to be successful if your resolve comes from within, instead of being imposed on you by outside forces.

This could be the year that you surprise everyone – perhaps most of all, yourself – by keeping and maintaining your New Year’s resolutions.

For the roughly 45% of us who determinedly set off on January 1^st with a full head of steam, but run out of inspiration before February 14^th, a subset of Americans – about one out of every five – do push ahead and do achieve their stated goals.

Whether the resolution is to lose weight, exercise more, quit smoking, drink less or spend less, for a small percentage of the population, New Year’s Day is the very trigger they require to set off on their final journey towards – or away from – a lifelong pattern of behavior that previously seemed unattainable.

7 Secrets to Get Your Financial House in Order – Permanently

We all have it within us to modify our behavior
Real, permanent change is usually driven by your own desire, rather than by the pressure others exert on you
Have a heart-to-heart talk with yourself. Where are you right now… and where do you want to be?
Enlist the support of one or more allies or a coach to encourage you and help keep you on track
Consider using websites that give incentives – and disincentives – for sticking to or breaking your commitments (such as a GoalPay.com)
Don’t wallow in self-blame when you fail – put aside your emotions and plot a logical pathway back
Don’t set yourself up for failure by insisting on an all-or-nothing change. Learn from the past, realize where you made errors and build on them like stepping-stones