Precious metals are a great non-market correlated asset. Perfect for diversification of investment funds.
Since President Nixon took us off the gold standard in 1971 we have been operating with a fiat currency. Basically this means currency with out any backing. It is just printed up money, and it is digitized in these modern technology times. What that means is someone presses a button and presto; currency ends up in a bank somewhere!
This is a somewhat simplified version of what happens, but look it up – this is accurate! So why are precious metals a good way to diversify?
First of all they do not lose their intrinsic value and therefore are a great hedge against inflation. They retain value regardless of market conditions and they are a tangible asset. Plus they have high liquidity which means if you need to sell them you can do so quickly.
Financial experts recommend 10-20% of your portfolio be in precious metals, and that number is now being pushed slightly higher.
Bullion coins and bars are how precious metals are sold. They are not numismatic coins that are collectibles and priced according to their non-metal worth. Bullion is instead sold by weight, typically in ounces.
Please talk to your financial professional about investing in gold/silver, or contact me for more details!
Bullion can be held privately or within an IRA.
This is a borrowed article, not original but a good one!
One of the earliest lessons in life is that actions have consequences, and boy is this true in the final third of life. If you’re at or near retirement the decisions you’re about to make will have consequences for decades to come. Unfortunately, it only takes one bad decision to ruin a lifetime of good ones. So what are the biggest mistakes to avoid?
1. Retiring based on your birthday instead of your bank account.
Imagine that I wrote the name of a city on a piece of paper and sealed it inside an envelope. Giving you the envelope, I said: “Without looking inside, drive to the airport and buy a plane ticket to anywhere in the world. When you arrive, open the envelope and see if the place matches with the destination that I wrote on the paper.” What are the odds that you would end up in the right city? Not good, right?
Retirement is about independence, not simply age, and money is critical to independence.
As ridiculous as it sounds, that is how most people plan for their retirement. People save; they just don’t do it with a great deal of deliberation or a clear understanding of the end goal. They do it with a completely random series of 401(k) and IRA contributions And they may end up far from where they need to be.
If asked when you’ll retire, your answer should be a dollar amount, not a year. Retirement is about independence, not simply age, and money is critical to independence. You need to know exactly how much you need to save to fund the retirement you want.
2. Not properly managing your risk.
Risk is a necessary companion to investing. When you’re in your 20s and 30s, you can afford to take greater risks in hopes of receiving greater returns. If you lose money, you have decades to recover. Not so as you approach retirement. You can’t afford to operate at the same risk level. As you age, you need to progressively shift out of potentially volatile investments. During retirement, large losses in your portfolio are extinction-level events. They are like meteors to dinosaurs.
Consider the mathematics of loss. Imagine you had a $1 million portfolio that lost 50 percent in a given year, dropping to $500,000. If it gains 50 percent the next year, you’re not back to even, you’re only at $750,000. To get back to even you would need a 100 percent increase. So, the bigger the loss, the more difficult the recovery.
If markets have taught us anything during the last 10 years, it’s that you need a plan to manage your risks and avoid large losses.
The same is true for a whole host of new risks that come with growing older. A serious medical condition, the death of a spouse, getting laid off, entering a long-term care facility or getting divorced could all significantly impact your emotional and financial well-being. The goal is to consistently identify and manage your risks in order to increase your odds of a rewarding retirement.
3. Retiring with too much debt.
When the history of the 2008-2009 market collapse is written, I have no doubt that debt will be the central theme. Sadly, many of the 78 million boomers approaching retirement got caught up in the frenzy along with everyone else. Now, as they approach a time that is supposed to be about enjoying life and living their dreams, they instead find themselves beholden to their jobs and struggling to make ends meet.
An increasing number of people are entering retirement age with no pension, inadequate savings, a big mortgage (sometimes two), an average of about six credit cards, and debt on one or more cars. Wprl is not a choice at that point any more than it’s a choice for a 30-year-old with all the same obligations and a growing family to feed.
Having debt adds risk and reduces cash flow. Your primary goal should be to retire debt-free and have your income at your disposal. If you retire with debt, you will spend a long period paying for the purchases of yesteryear instead of using your income to live the life you’ve dreamed of.
4. Not getting professional advice.
Preparing for retirement is all about accumulation — saving and investment performance are your primary concerns. But in retirement, your primary goal becomes much more complex: to continue to grow the pie while simultaneously eating it. Going without a competent adviser at this stage could be a big mistake.
5. Fumbling your distribution strategy. Improperly converting your savings into an income stream, taking too much too soon from the wrong account or in the wrong markets could be the difference between retirement bliss and retirement blunder.
A distribution strategy typically occurs in two phases. Phase 1 involves moving the money from preretirement accounts, for example, your 401(k), to postretirement accounts. Phase 2 involves creating an income stream from those postretirement accounts.
The ideal time to begin working through your distribution strategy is a year or so before retirement. You should be thinking about how much you need, where it’s going to come from, and whether your nest egg is up to the task.
When you retire, your portfolio takes over the job that the payroll department handled during your working years, namely to send you a paycheck every month. If you retire when you’re 65 and live until you’re 85, it needs to cut you 240 monthly checks. There are a host of variables that will affect its ability to do that, such as the distribution rate you choose, investment returns, inflation, how long you live — and good old-fashioned luck.
Some things you can control and others you can’t, but having a well-conceived, sustainable distribution strategy will help ensure that your money lasts as long as you do.
Women Take Charge of Your Financial Future!
Are you so confused by all the different financial information out there that you don’t even know what questions to ask or who to trust? If this sounds like you, you are not alone.
I recently read an article in the newspaper about a survivor’s guide for women who have lost their spouse or life partner. The pain of loss is hard enough, but with it comes a flood of financial responsibilities. And most women are unprepared to deal with this flood. Even if you are single or recently divorced, women typically are not as familiar with investing, insurance and taxes as their male counterparts.
For example I asked a friend several weeks ago if her portfolio survived the downside in the market. She responded by telling me she was not in the market, she just had a 401k at work.” After internally gasping I gently explained that her 401k “might” be tied to mutual funds & stocks. And I urged her to check on it – just to see. She called me later that week to tell me lost quite a bit…She was shocked that it had not occurred to her to check on this earlier.
I hear stories like this from women all the time and I have been there myself. Having been self-employed for most of my adult work life, when my financial advisor used to talk to me about SEP’s, 401k’s, annuities, and insurance I had maybe half a clue of what he was talking about. I gave up a tremendous amount of financial power by saying to him “what would you advise”, “what would you do?” This would not have been bad if I had a basic understanding of what he was talking about to begin with!
After working in the financial world for several years I could not believe how naïve I had been. So I have set out to educate other women on taking charge of their financial futures. I have workshops developed for single, divorced and recently widowed women.
Contact me to find out when the next dinner seminar will be presented! I also do presentations for local businesses in the DFW area.
When it comes to annuity products, fixed index annuities (FIAs) have been around for a relatively short period of time. Created in 1996, FIAs are insurance products, not investments, that offer the opportunity for some interest potential while protecting against market risk. However, as with many new ideas, misperceptions abound.
Misperception #1: FIAs are too complex to understand.
Reality: Understanding FIAs involves learning some basic terms because interest earnings are calculated in various ways.
• FIAs offer the ability to earn interest based on changes in an external index, such as the S&P 500, while offering protection from loss of principal. However, at no time is clients’ money invested directly in the market because they do not actually own any stocks, bonds, index funds, or other investments. When a person buys an FIA, the insurance
company provides a guaranteed minimum value, and guarantees a minimum rate of interest. Insurance companies offer resources to ensure a full understanding of FIAs to help people make educated financial decisions. As with other fixed annuity products, FIAs offer additional benefits including tax deferral, a guaranteed minimum value, a death benefit, and the option for guaranteed lifetime income.
Misperception #2: FIAs have high fees.
Reality: Like many financial products, FIAs carry some fees. The insurance company uses these fees to help support its guarantees and provide valuable benefits including:
• The potential for interest based on changes in an index. FIAs provide purchasers with the opportunity to benefit from a portion of market index increases without directly participating in the market.
• Protection from loss of principal if the market index declines.
• A guaranteed minimum value, credited with interest at a guaranteed rate.
• Tax deferral. Taxes are not paid on interest earned on an FIA until the money is withdrawn.
• Lifetime income option. Like most other annuities, FIAs can be converted into a stream of guaranteed lifetime income.
Product and feature availability may vary by state.
Misperception #3: FIAs tie up your money for years.
Reality: Many of today’s FIAs have surrender periods of less than 10 years.
• Some of today’s FIAs have surrender periods as short as five years.
• Most annuities give you access to at least a portion of your money, such as 10%, after the first year with no surrender charges or other contract penalties.
• Many FIAs offer multiple ways to access funds without penalties.
• Features, such as penalty-free withdrawals, loans, nursing home provisions, and full accumulation value paid to beneficiaries at death before annuity payments begin, are now common.
Misperception #4: FIA values must be annuitized.
Reality: Most FIAs offer multiple ways to access accumulated values without taking annuitization.
• While some contracts have certain values that may be available only through annuitization, most current product designs allow for lump-sum access after the surrender charge period. Many offer the option (either built into the contract or available as an optional rider with an additional cost) for a guaranteed lifetime withdrawal stream.
Misperception #5: If you die, the insurance company keeps all of your money.
Reality: FIAs let you choose a beneficiary.
• Your beneficiary will be entitled to receive your contract’s death benefit if you die before you start taking annuity payments, or if annuity payments have been initiated, to receive any remaining guaranteed payments under certain annuity options, in lieu of
a death benefit. The exact amount the beneficiary receives will depend on the terms of the contract, but most current product designs provide a death benefit equal to the accumulation value, which reflects the interest credited to the annuity as well as any previous withdrawals or amounts deducted from the annuity.
An FIA may be a good solution.
The reality is, with the volatility of the financial markets in recent years – combined with the limited availability of retirement income sources such as pensions – Americans have a greater responsibility to prepare for their future.
FIAs can be a great addition to an overall retirement income plan, but they’re not right for everyone. Purchasing an annuity is an important decision – and one that should be made only after consulting with a financial professional.
Please contact me with questions, or to set an appointment for a free meeting to discuss your retirement options.
*This article was produced by Allianz.
Rule of 100: The Rule of 100 is perhaps the simplest financial rule of thumb out there. It is also one of the most widely abused/misused.
Simply put, you take 100 and subtract your age from it and the resultant sum suggests the maximum amount of your portfolio you should have exposed to higher risk investments. So for example, if you are 25 years old, 100 – 25= 75 you should have 75% of your portfolio invested in higher risk investments to optimize your long term growth (more time to make up for loss).
But rule of 100 can also be one of the most ignored. According to statistics the majority of Americans fail to start planning for retirement when they should and therefore there are not too many 25 year olds with 75% of their assets invested period. They tend to buy toys like cars and flat screens instead of planning for the future!
Then there is the aging community (the people who hold 80% plus of U.S. Savings and Investment Dollars). If you are age 70 you should have no more than 30% of your Invested assets exposed to higher risk investments (100-70=30). Here too the Rule of 100 is but a guideline. Many seniors have lost pensions and retirement dollars and for them the Rule of 100 may not apply. They may need higher risk investments to help make up for money lost. So the Rule Of 100 is a general rule of thumb, but not set in stone!
And please remember - there are good solid investments out there that are not tied to the stock market!
Earlier today, President Obama popped into the White House Personal Finance Online Summit, where our own Meg Marco was in attendance. Speaking to the small group of writers, the president offered up his advice on personal finance.
“Don’t spend all your money,” he joked.
He did share some advice learned from his grandmother, who was one of the first female vice presidents at the Bank of Hawaii: “Save a little bit of whatever you are earning and the magic of compounding interest applies.”
The president says he’s “sympathetic” to those coming out of school who are saddled with college loans and other debt. “Michelle and I graduated from law school and our combined debt was $120k,” though he adds, “we went to a good law school so we knew we could earn it.”
Between unemployment, school debt, the housing problem and — for a growing number of people — having to care for elderly parents, the economy can be a “quadruple whammy,” it’s more important than ever that people have “spending discipline.”
And that goes for both your personal finances and the nation as a whole.
“It remains smart to spend on things that will increase productivity and income in the long term,” he explained. “The economy has to get back to producing more and not just spending more.”
He relates the story of his family’s first starter home, a condo that, in spite of the high payments, was still a good investment. “[The] same goes for the nation,” he said, naming education and infrastructure as “sound investments” for the country.
Added Obama, “There is a distinction between spending on things that will increase your productivity and your wealth” and spending on things you merely want. (from the Consumarist, June 9th, 2011)
Many of us were brought up to be savers. “Put a little away for a rainy day”, “save don’t spend”, be thrifty, etc. The savers in this economy that put aside 10.00 to 10,000.00 per year, will still have that specific amount of money 20 years from now! If you save 10,000 per year for 20 years you will have 200,000.00. Right! The smartest thing about the article above from the Consumarist is the line from the Presidents’ Grandmother. She said;, “Save a little bit of whatever you are earning and the magic of compounding interest applies.” The emphasis here should be on the magic of compounding interest. Just saving will not really cut it anymore. $200,000.00 in 20 years does not take into account what that amount will be worth. If gas is $10.00 per gallon, milk $9.00 per gallon, medium size homes valued at 600k, then $200,000.00 will buy very little indeed. So not only is saving important, we also have to take the beauty of inflation in to account. And, I can pretty much assure you that interest rates are going to go up. The cost of goods is going to go up, the cost of living is going to go up.
Now if we use a compounding calculator and take the same 10k over 20 years giving it a little boost of only 4% interest, we end up with: $331,603.25 instead of $200,000.00. If we raise that interest level to 8% we end up with $540,838.79. And if we really want to be out of control and raise it to a whopping 13% we actually have $1,029,930.04. Now here comes the tricky question. Which one would you rather have? A savings of 200k which could be worth next to nothing, or a million which will be hit with the same inflationary amount, but can buy a bit more?
The bottom line is that the savers of the world are actually losing money. Unless they understand the beauty of Grandma Obama’s wise words and believe in the magic of compounding interest! Find good investments with good consistent returns and you will have a happy life! Or a happy retirement……something like that.
TAX FREE RETIREMENT
With Maximum Funding Life Insurance!
When you mention life insurance to people the first thing that usually comes to mind is “death benefit protection.” There is so much more you can do with a life insurance policy! Maximum funded life insurance is a simple method of using a life insurance policy for both accumulative supplemental funds for retirement AND death benefit protection.
I happen to love universal life policies because of their flexibility of premium, but you can use this method as it suits you best.
How Does Maximum Funded Life Insurance Work?
What are the benefits of using Life Insurance as another option for retirement savings?
Life Insurance offers:
Here is a great hypothetical example of a gentleman named John Smart:
John , a 40 year old male pays 10k a year premium to fund his $695,697 life insurance policy (he could put in more if he wanted to)
Total Life Insurance Premium Paid $250,000
$10,000/year from age 41-65
Total potential cash withdrawal: $1,325,469
$53,019/year from age 66-90
Death Benefit continues to be available upon death of insured.
AND YOU CAN BORROW FROM THE POLICY IF YOU NEED TO!
This is a great retirement strategy for someone with a minimum of ten years to invest. Fifteen to twenty years or longer would be optimal as in the illustration shown above. So…..if you are in the 35 to 55 year old range, get going!
I also highly recommend the book, Tax-Free Retirement by Patrick Kelly where he basically goes through the fundamentals of this strategy. Call your life insurance professional to discuss this asap. Heck, call me if you are in Texas or South Carolina!!
An astounding seventy percent of all Americans do not have disability insurance. However statistics show that three out of ten Americans will become disabled during their working years. Most with families, homes, lives they want to preserve. Around 60% of all personal bankruptcies filed in the United States each year are due to an inability to pay for medical expenses that would have been covered by disability insurance.
Think about it. Initially with a medical issue you have to cover your deductible prior to the insurance company covering you at 100%, or 80% or 70%. With deductibles now in the $2500.00 to $10,000.00 range (to lower premiums) you have a chunk of cash to cover. Then, 20% of potentially huge ongoing hospital and medical bills puts more of a strain on your cash. If you are disabled and cannot work ~ good-bye to the things we all consider meaningful. Our sense of security, our possessions, our way of life.
The wild thing is that most insurance professionals don’t even offer it to their clients anymore. And some clients believe they are just being “up sold”. Agents have told me their clients will say, “just give me basic coverage.” It doesn’t matter if it is life insurance, medical, or anything else. Just the basics. I personally believe agents are not doing a good enough job educating their clients about insurance in general.
Doctors, dentists and other professionals are typically the folks that buy disability insurance. They know firsthand what they stand to lose. But what about small business owners, and entrepreneurs? They are typically not covered and many were never offered this type of insurance to begin with.
Be a conscientious consumer. Please get the facts by talking to your insurance professional today!
P.S. I happen to offer Disability Insurance, Long Term Care, Final Expense, Life Insurance and Medical including Medicare Supplements!
The primary purpose of life insurance for individuals and families is to provide a death benefit to help replace lost income and protect loved ones from the financial losses that could result from the insured’s death. However, life insurance — and we are referring here primarily to cash value life insurance — also offers a number of other benefits in the form of tax advantages, many of which are unique to life insurance.
Life Insurance Basics
There are two general categories or types of life insurance. One is term insurance, which provides “pure” insurance protection. It pays a death benefit to beneficiaries if the insured dies during the term the policy is in force. If the insured lives, the policy expires without value at the end of the term. Or, in many cases, the policy can be renewed for an additional term, though generally for a higher premium.
The second type of life insurance policy is known as “cash value” or “permanent” life insurance. These policies include whole life and universal life, among others. A cash value policy is generally designed to provide long-term life insurance coverage, generally for the insured’s entire life.
It also features a level premium and the opportunity to accumulate cash value. Permanent life insurance is designed to help pay for the death benefit protection in the insured’s later years by keeping the premiums level for the life of the policy (unlike term insurance), and assuring that death benefit protection does not become prohibitively expensive in the insured’s later years. The cash value is available to the policyowner through policy loans and other options, which reduce the death benefit.
This brings us to the tax advantages of cash value life insurance. Life insurance enjoys unique status among financial products. The tax benefits of life insurance are:
Permanent life insurance is a unique financial product in that it provides death benefit protection along with the potential for attractive tax advantages.
*Article Entirely borrowed from an unknown author