Are you putting your retirement savings in prison?

Ted Benna, "Father of the 401(k)"

Ted Benna is known as the “Father of the 401(k).” In the late ‘70’s, he worked as a consultant to business owners whose main agenda was “How can I get the biggest tax break, and give the least to my employees, legally?”

Ted Benna, "Father of the 401(k)"

Tax nerd that he was, Benna discovered an obscure part of the tax code – section 401(k). Voila! By 2012, nearly 75% of all company pension plans had disappeared!

What does Mr. Benna say about his beautiful 401(k) baby today?

If I were starting over from scratch today with what we know, I’d blow up the existing structure and start over!”1

Uh oh.

Per the US Senate Committee on Health, Education, Labor, & Pensions: “After a lifetime of hard work, many seniors will find themselves forced to choose between putting food on the table and buying their medication.” The U.S. Census Bureau says the average value of 401(k) accounts of pre-retirees between 55 and 64 is only $170,645; the average value of their IRAs is only $147,345. And half of all those close to retirement age have less than $50,000 in these plans.

Something went horribly wrong. Actually, several things went horribly wrong, not only with 401(k)’s but also their kissing cousins: IRA’s, Roth Plans, 403(b)’s, SEP-IRA’s and so on.

And the problems with these government-controlled plans are in these five key areas:
[Read more…] “Are you putting your retirement savings in prison?”

Best retirement plan alternative?

I can’t afford to be a risk taker any more”

Worried Senior

…says 75-year-old Margie Alford of Austin, Texas.  Yet, Margie’s financial planner is moving her CD money into stocks instead, after fruitlessly waiting for three years for interest rates to rise.

Worried Senior

Low interest rates of the past several years have taken a toll on U.S. savers.  “The Fed has removed the last shred of possibility that interest rates will revert to normal in the near future,” according to Christopher Carroll, profession at Johns Hopkins University.1

As a result, retirees are taking on more risk… at a time they can least afford to.

With interest rates on CD’s, saving and money market accounts not even keeping up with inflation, what other options do you have?

The Bank On Yourself solution…

[Read more…] “Best retirement plan alternative?”

Money and Investing IQ Contest Results

The results of our “Test Your Money and Investing IQ” blog contest are in – once again proving that we have a lot of smart subscribers!

But some of these questions about key money and finance basics tripped up some of our readers – almost no one got all five answers right. Making financial decisions without knowing the correct answer to even one of these questions can easily shave six figures or more off your lifetime wealth.

So I urge you to pay close attention to the correct answers below. You’ll also find a list of our six contest winners at the end of this post.

Here are the correct answers given by readers to the five questions…

Question #1: If you finance a $30,000 car through a finance company, your actual cost for the car is the money you spend on it, plus the interest you pay, less the value of your trade-in at the end of your loan repayment period.

If you pay cash for a car, what’s your actual cost for the car?
Finance major purchases like cars through Bank on Yourself method to save and make money

Answer: Joe Goldsmith pointed out what many people with alphabet soup after their name don’t get – that “paying cash for the car is just another form of financing.”

John Nicholson summed it up succinctly: “If you pay $30,000 cash for a car, your actual cost is the money you spent on the car, less the trade-in value at the end of the period, plus the opportunity cost – the loss of interest that the $30,000 could have earned.”

Perry Blouin went on to calculate the enormity of the total loss you could have over 40 years because of this “opportunity cost.” And Valerie Coffman noted, “If you use a Bank On Yourself policy (to pay for the car), you make money as if you never took it out, and you make money on yourself when you pay it back. Awesome!”

As Eric pointed out, “with Bank On Yourself, you accumulate the $30,000 and when it comes time for your vehicle purchase, request a check from the insurance company, receive it within 48-72 hours and then be ready to negotiate with the car dealership.”

Using your Bank On Yourself policy to pay for major purchases also gives you access to money on your terms rather than someone else’s. You can pay it back on your own schedule without worrying about bill collectors, late fees or black marks on your credit report. It beats financing, leasing or even directly paying cash for things by a long shot.

To find out how much more lifetime wealth you could enjoy – simply by using the Bank On Yourself method to make major purchases versus the other options available to you, request a FREE no-obligation Analysis that will show you your bottom-line results. I think you’ll be amazed!

Unlike stock marketing, Bank on Yourself method does not rely on sale of asset to deliver profits

Question #2: If you have a $20 stock and it goes up by 40%, how much money did you make on that stock? (Hint: This is about a key financial principle, not a math question.)

Answer: The talking heads on Wall Street NEVER get this one and do their best to make sure you don’t figure out the blindingly obvious answer to this question!

As Ruth noted,

You don’t make any money until you actually sell your stock.”

Likewise, it makes me crazy when people talk about how much value their home has lost since the real estate bubble burst. You don’t have a REAL gain (or loss) until you sell an asset and lock your profits in.

Which is in stark contrast to the Bank On Yourself method. The gains you receive each year (guaranteed and predictable) are locked in the moment they’re credited to your policy. As for losses… well, there aren’t any. This is based on an asset class that has increased in value every year for over 160 years!

Question #3: According to Morningstar, Inc., the top-performing mutual fund for the last decade (ending December 31, 2009) enjoyed an 18% annual return.

However, the typical investor in that fund wasn’t so fortunate.

What was the annual return of the typical investor in that top-performing fund? And why was their return so different from the return reported by the fund?

Answer: Only one person – Raymond Trembath – nailed the shocking correct answer to this question (no one else came even close), and he also noted the reasons why:

“The typical investor in the best performing mutual fund of the last decade lost 11% annually, even though the fund itself rose by more than 18% annually. The reason this could happen is that all mutual funds are legally allowed only to advertise the results of their ‘buy and hold’ investors, in spite of the fact that long-term mutual funds tend to be held for less than half a decade!”

Doesn’t this typify the smoke and mirrors that the Wall Street Casino uses to pull the wool over our eyes?

If you find it hard to believe that the results mutual funds report could be so different than the results the investors in those funds get, I urge you to read the article supporting this from the Wall Street Journal.

The ultimate financial security blanket

Did you know that the Bank On Yourself wealth-building method has NEVER had a losing year? Used by Walt Disney and J.C. Penney, it has stood the test of time for more than 160 years.

To find out how you can grow your nest-egg safely and predictably, even when stocks real estate and other investments tumble… and how much money you could have – GUARANTEED – on the day you plan to retire, request your FREE no-obligation Analysis and Recommendations now.

You’ll also get a referral to a Bank On Yourself Authorized Advisor who can help you find money you didn’t know you had to fund your plan.

 mutual funds and investment experts are human too and sometimes make mistakesQuestion #4: What percentage of mutual funds, financial advisors and investment advisory services underperform the overall market? And why?

Answer: Nick H. hit this one spot on when he said, “80% per Hulbert Financial Digest.”

And it’s not just because of the fees they charge. It’s because all the “experts” are humans, too, and are “predictably irrational,” buying and selling at the wrong times.

Question #5: You could have $10,000 in a mutual fund that reports an average annual return of 25% for four years… and at the end of the fourth year end up with only the $10,000 you started with.

How is that possible?

Answer: Doc Youngblood’s little story was such a great, entertaining explanation of this, I decided to include his response in full:

“How is it possible to have $10,000 in a mutual fund that reports an average annual return of 25% for four years… and at the end of the fourth year you end up with only the $10,000 you started with?

The key to the question’s answer is hidden in this short, simple story, but hidden in plain sight for those willing to see.

And the story? You’ll like this I promise—no animals were hurt during its filming.

rubber duck in a sea of cashImagine we are duck hunting and I shoot. I miss by a foot behind the duck. So I quickly aim and shoot again. I miss by a foot in front of the duck.

By the law of averages, I hit a bulls eye. By the law of dinner, my plate is still empty.

So, if your mutual fund reports an average annual return of 25% for four years, does that mean you’ve got more money in your account?

Let’s play:

Year One: Year Two: Year Three: Year Four:
Starting balance: $10,000 Starting balance: $20,000 Starting balance: $10,000 Starting balance: $20,000
Change: +100% Change: -50% Change: +100% Change: -50%
Ending Balance: $20,000
(woo-hoo!)
Ending Balance: $10,000
(ah well, at least I didn’t lose my initial investment)
Ending Balance: $20,000
(hmm. . .it’s like déjà vu)
Ending Balance: $10,000
(can anyone say, “spinning my wheels”?)

Four years later you still have a $10,000 balance. But not once did the rate of return equal 25%. Here’s the percent change for each year: 100-50+100-50. So we add that up (100%) and then we divide that by four years to show our average rate of return is 25% for four years.

Wait! A 25% average rate of return is supposed to be a great thing, right?

Follow the cash in the example above—did the cash increase? The numbers above show one scenario with a 25% average rate of return and ending up with exactly the same money you started with.investor hiding from reality

However, 25% annual compound interest is a great thing. Take a look:

Year One: $10,000 becomes $12,500 at 25% compound interest.
Year Two: $12,500 becomes $15,625
Year Three: $15,625 becomes $19,531.25
Year Four: $19,531.25 becomes $24,414.06

Were you like me and confused about the two definitions? It’s very common to confuse them AND to assume that the average rate of return is a linear type of activity, one year after the next being the same. Average rate of return and compound interest are not the same.”

(For the record, you’ll find no smoke and mirrors when you see the bottom line numbers and results you could get when you add Bank On Yourself to your financial plan.)

Now for the list of our six contest winners…

There were so many insightful answers that it was hard to pick out only six winners. (All are being notified by email.)

The best entry, picked by our Bank On Yourself team, is Doc Youngblood, who wins a $100 Amazon Gift Card! (Doc – I guess you can tell your wife she was right!)

And the two runners up, who’ll get their choice of a $25 Dining Gift Certificate or a personally autographed copy of my best-selling book are:

1. Eric

2. Raymond Trembath

k on Yourself Test Your Money and Investment IQ contest winners and their prizesThere were also three winners who got at least one question right, who were randomly chosen to win prizes. The winner of the second $100 Amazon Gift Card is Robert N.

And the two randomly chosen winners who’ll get their choice of a $25 Dining Gift Certificate or a personally autographed copy of my book are:

1. Carl Schoner

2. Rita

Thanks to everyone who participated in this blog contest. You are all winners for thinking – and seeing – through the conventional wisdom about money and finances that has cost so many people so much in lost money, lost time and broken dreams.

Compare your Fear Factors choices to the rest of America

Financial Pumpkin With more than 500 responses in so far to The Bank On Yourself Fear Factors Challenge, you may be interested in knowing how your choices compare to the rest of America.

Here is how the responses to each of our 10 survey questions have broken down.  The percentages reveal which option our survey-takers find more scary!

You’ll see that snakes, blood, public nudity, eating fire-hot peppers, and even close proximity to a psychotic killer caused far fewer trembles than did the terrifying prospect of winding up in a serious financial jam.

Here’s what Americans find most scary…

1. Which of the following is more frightful to you?

  • 22.2% – Death
  • 78% – Outliving Your Money

Question 1

2. Which of the following is more frightful to you?

  • 28.6% – Having all of your investment decisions — good and bad — published in your local newspaper
  • 71.4% – Walking naked down a fashion runway while being photographed

Question 2

3. Which of the following is more frightful to you?

  • 17.5% – Having to remain awake for 48 uninterrupted hours
  • 82.5% – Having to memorize all the fine print on your 401(k) plan in no more than 48 hours

Question 3

4. Which of the following is more frightful to you?

  • 64.3% – Watching your stock portfolio lose 40% of its value in only a few weeks
  • 36.4% – Ingesting 40 habanero peppers within 24 hours

Question 4

The ultimate financial security blanket

Did you know that the Bank On Yourself wealth-building method has NEVER had a losing year? Used by Walt Disney and J.C. Penney, it has stood the test of time for more than 160 years.

To find out how you can grow your nest-egg safely and predictably, even when stocks real estate and other investments tumble… and how much money you could have – GUARANTEED – on the day you plan to retire, request your FREE no-obligation Analysis and Recommendations now.

5. Which of the following is more frightful to you?

  • 58.8% – Sitting for 30 minutes in a tub of live snakes
  • 41.7% – Explaining to your family or other loved ones that you’ve lost your home to foreclosure

Question 5

6. Which of the following is more frightful to you?

  • 49.2% – Having to pick the one mutual fund (among hundreds) that will outperform all others during the year
  • 52.1% – Bobbing for a 10 oz gold bar in a vat containing 50 gallons of cow’s blood

Question 6

7. Which of the following is more frightful to you?

  • 9.4% – Going on twelve once-a-month blind dates with a randomly selected bachelor or bachelorette
  • 91% – Entrusting your retirement portfolio to an anonymous fund administrator, who may or may not have any special education or training

Question 7

Editors Note: Although 9 out of 10 Americans fear entrusting their retirement to an incompetent administrator, millions of Americans may unknowingly be doing exactly that right now! Read our shocking exposé and learn the facts!

8. Which of the following is more frightful to you?

  • 64% – Having my personal tax returns audited by the IRS
  • 37.3% -Walking around for a week wearing pants with pockets overflowing with live worms

Question 8

9. Which of the following is more frightful to you?

  • 31.7% – Be strapped atop a vintage stunt plane while it performs a typical aerobatics routine
  • 70.% – Be tied to the Social Security program as your sole source of retirement income

Question 9

10. Which of the following is more frightful to you?

  • 66.1% – Losing my job and having to live only off of my current savings for a year
  • 34.6% -Renting an extended-stay room in the Bates Motel and sharing a shower with Anthony Perkins

Question 10

Were you surprised by any of your responses?

These results are a sad commentary on the financial condition and current state of mind of so many of our family members, friends, neighbors and colleagues.

The definition of insanity is doing the same things in the same way and hoping for different results.  So, if you’re ready to find a better way to save and invest for your financial future that gives you peace of mind and lifetime financial security, check out the Bank On Yourself method.
Request Your Analysis Button
To find out how much brighter your financial picture could be if you added Bank On Yourself to your financial plan, request your free, no-obligation Analysis now, while it’s fresh on your mind!

Bank On Yourself Money Alert!

Teleconference replay reveals the steps you must take immediately to protect yourself from Wall Street’s bloodbath

I just held an urgent Teleconference on what you should do right now to protect your family’s financial security.

A number of people told us they weren’t able to attend and asked if it was recorded so they – and the people they care about – could still listen to it.

You can listen to a replay of it below, or you can download the recording as an MP3 and listen to it on your own player or iPod now at:

I urge you to shut the door and put out a “do not disturb” sign while you listen to this critically important information which includes answers to timely questions such as:

  • Should you stay in the market despite the turbulence and wait for the market to rebound?
  • Is now the time to shift into gold?
  • Where else can you find shelter from the storm?
  • What can we do to encourage Washington to get its act together?

Find out what you need to do right now to protect your hard-earned savings and take back control of your financial future here:

Are you ready to do something different?

And if you’re ready to find out how the Bank On Yourself method can give you the financial security and predictability you want and deserve, take the first step right now by requesting a free Bank On Yourself Analysis.

You’ll also get a referral to one of only 200 advisors in the country who have met the rigorous requirements to be a Bank On Yourself Authorized Advisor, who can answer your questions and show you how much your financial picture could improve when you add Bank On Yourself to your financial plan.

Nobody is going to twist your arm, and you won’t even be asked to buy anything at your first meeting with your Authorized Advisor.

But at least you’ll know whether Bank On Yourself makes sense for you and your family.  So please request your free Analysis today.

 

Dow Down 512 points – Have You Had Enough Yet?

Protect your hard-earned money!

The markets are crazy and the economy may be unraveling.  We have some important and timely articles, interviews and advice planned in the coming weeks on how to protect your hard-earned money.  Subscribe to our free newsletter today, so you don’t miss any of it! You’ll also be able to immediately access my new 18-page Special Report absolutely free when you subscribe.

The Dow is down 1,300  points (give or take) in just the last two weeks, plunging more than 500 points today alone

The risk has been increasing daily that we will fall into another recession (if we aren’t ALREADY there), making it likely that the volatility in the markets will only continue – and maybe get worse.

If you have money in the stock market and you haven’t read the article I wrote on “Why You Need Dow 27,000 Today,” I urge you to read it now.

Are you sick and tired of the “hope and pray” method of building wealth?

Do you want to have a nest egg that grows by a guaranteed and predictable amount EVERY single year?

Have you just plain had enough? 

The drop was the largest one-day decline in three years.
The drop was the largest one-day decline in three years

If you answered “yes” to any of these questions, and you haven’t already added the Bank On Yourself method to your financial plan, please, please, please – DO NOT PUT IT OFF ANOTHER DAY!

Request a free Analysis now.  When you request your Analysis, you’ll get a referral to one of only 200 advisors in the country who have met the  rigorous requirements to be a Bank On Yourself Authorized Advisor.

The Advisor selected for you will be able to answer any questions you may still have and show you exactly how much money you can count on having in your plan at any point in time.

If you don’t like what you see, there’s no obligation at all and no one is going to twist your arm or try to hard sell you.

But at least you’ll know whether Bank On Yourself makes sense for your situation.

Wall Street already lost more than 45% of investors’ money – TWICE – just in the last decade

You may not vividly remember the sting of the last crash, but please don’t fool yourself into thinking it isn’t going to happen again.

More than $2 trillion of wealth has been wiped out in the past two weeks, but NO one lost a single penny in their Bank On Yourself plan. It’s an asset that has increased in value EVERY year for more than 160 years and remains the ultimate financial security blanket in both good times and bad.

So, request your free Analysis now.

The Recession is Over… If You’re On Wall Street

There have been a spate of articles in the financial media recently encouraging retirees to catch up on savings shortfalls by investing as much as 40-60% of their nest egg in the stock market.

These “experts” promote the concept as if it makes perfect sense to make up for your gambling losses by doubling your bets.

Gambling On Wall Street

To me, it’s appalling that anyone would advise those who are already retired to gamble their life’s savings on the volatile, risk-filled world of Wall Street.

But my message – that Wall Street is unstable and potentially as explosive as nitroglycerin – is really not age specific. The stock market can (and will) blow up in your face at any age.

For most Americans – and Wall Street goes to great lengths to hide this truth – the stock market is a promise unmet.

Gambling On Wall Street

The success myth hyped by the financial services industry is like a casino showcasing its big winners, without mentioning that the prize pool derives from the much larger pool of losers who generate huge profits for the operators, but who themselves walk away worse off than if they had stayed at home.

Money isn’t the only price that the Wall Street casino extracts from most investors

[Read more…] “The Recession is Over… If You’re On Wall Street”

Sure-Fire Results: How Old Sensibilities Are Proving a Potent Balm for Modern Personal Finance Ailments

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 authorized advisors.

Love_and_death.jpg‎ (233 × 358 pixels, file size: 34 KB, MIME type: image/jpeg)

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”

[Read more…] “Sure-Fire Results: How Old Sensibilities Are Proving a Potent Balm for Modern Personal Finance Ailments”

Bank On Yourself: A financial plan you can count on

Oh what a roller-coaster year this has been!  Our entire financial system and economy almost fell off a cliff.

Bailout

And while there are some hopeful signs of new life in the economy, this year has also brought us:

  • Massive bailouts
  • A tripling of an already-bloated federal deficit
  • A falling dollar
  • Rising foreclosures (and likely to spike as billions of dollars in ARM’s are now coming up for adjustment)
  • Major banks and investment houses taking on three times (!) the risk they were before the collapse
Bailout

So what do you think next year has in store for us?

No one really knows for sure.  (Well, except maybe the folks at the Psychic Hotline.)  So how do you prepare for a very uncertain future?

Here’s a quick quiz that may reveal an answer for you…

What’s the one financial asset that increased in value during the market crash of 2008?  And in 1929?  And in every period of economic boom and bust in between?

Answer:  The product used for Bank On Yourself:  Cash-value life insurance.

As I’ve mentioned, my husband Larry and I now have 18 Bank On Yourself policies.  I’ve picked one of them to show you how a dividend-paying whole life policy like this can grow over time – even when the markets are plummeting.  It’s a great example of how Bank On Yourself gives you the peace of mind that lets you sleep at night.

Here’s how much this plan has grown each year since the beginning of 2000, a period that includes not one, but TWO devastating market crashes.  In four of these years, the S&P 500 was down for the year, as you can see in this side-by-side comparison:

chart
chart

If you had put $10,000 into an S&P 500 Index fund at the beginning of 2000, how much do you think it would be worth today?

Take a guess before you read on.

[Read more…] “Bank On Yourself: A financial plan you can count on”

Video Overview: Bank On Yourself in a Nutshell

We just completed a short, fast-paced video explaining what Bank On Yourself is and how it works, that I think you’ll find very helpful.

Click on the play button to discover…

  • How Bank On Yourself grows your savings both predictably and guaranteed… even when stocks, real estate and other investments tumble
  • How it can beat the pants off your best saving or investing method
  • How the kind of policy used for Bank On Yourself is different from the ones Suze Orman, Dave Ramsey and 99.9% of all financial advisors talk about
  • Why it’s an excellent alternative to traditional retirement plans
  • How you can use it to get back what you pay for major purchases
  • Where to find the money to get started
upA_I_2ctEY

After you watch the video, I’d love to hear your thoughts and feedback – so please speak your mind below.