Your student loan payment could be $0 zero per month
Income-Based Repayment program provides repayment relief for up to 1.6 million current students, including a lower monthly payment cap and loan forgiveness after 20 rather than 25 years of responsible payments. IBR has already helped nearly half a million borrowers lower their payments and avoid default, but many more borrowers are struggling to keep up with their payments in these tough economic times and could benefit from IBR and the proposed Pay-as-You-Earn option. Generally, lower income borrowers pay 10% of their income: www.IBRinfo.org.
Most expensive college: Bates, ME Tuition: $51,300 a year!
Public university: Penn State Tuition: $14,416
This does not count living and book expenses.
Perhaps learning auto repair is not a bad alternative.
Pension funds’ values falling—workers getting out now
How bad is the cash crunch for companies? The aggregate deficit of pension plans among S&P 1500 companies climbed by $134 billion in September to $512 billion, according to Mercer. The funded status of the 100 largest corporate pensions dropped by $124 billion during September, according to Milliman, an actuarial and accounting firm. Looking at it another way, the funded ratio of companies in the index slipped to less than 73 percent from almost 80 percent at the end of August. The situation is deteriorating rapidly: The decline in the last quarter was the most significant three-month drop since the start of the financial crisis at the end of 2008, Milliman says. In a recent survey of Americans not yet retired, 40 percent said they currently save no money each month toward retirement. Members run their own: amazon.com/New-American-Retirement-System-Tax-FREE
Labor Department investigates brokers, reps, advisers in payola probe
The Consultant/Adviser Project has netted a number of wins for the Labor Department.
Last year, Metropolitan Life Insurance Co. agreed to pay $13.5 million in conjunction with a joint investigation by the DOL, the FBI and the Internal Revenue Service. That probe revealed that the insurer made improper payments to an insurance brokerage firm in order to steer clients toward buying MetLife group insurance products, according to authorities' announcement of the settlement. The payments weren't disclosed to plan administrators and were described as “communication fees” or “request-for-proposal fees,” lumped into the rates MetLife had charged the insured, according to federal authorities.
Credit union supported by anti-Wall Street broker after investment bank pulls out
Frank Congemi, a Queens-based freewheeling critic of Wall Street bankers and Washington regulators, has agreed to pay $5,000 to sponsor a Nov. 3 dinner hosted by the Lower East Side People's Federal Credit Union. Goldman Sachs had agreed to be one of four top sponsors for the dinner but withdrew its pledge this month after invitations to the dinner stated that the honorees included Occupy Wall Street, according to a story in The Wall Street Journal last weekend. Capital One pulled out also.
State local governments (GOP) raising taxes despite pledge
There have been a total of 548 U.S. sales tax changes so far this year. Indiana, Mississippi, New Jersey, Rhode Island and Tennessee tied for the highest state sales tax rate, at 7%, compared to the average state sales tax rate of 5.48%. However, this only represents the state-designated portion of the sales tax, not the total combined state, county and city rate. California used to have the highest state sales taxes, but it lowered its sales tax rate as of July 1. The highest combined city, state and county rate was in Arizona: Tuba City, Ariz., (part of the Navajo Nation), at 13.725%, followed by Kayenta, Ariz., at 12.1%; Fredonia, Ariz., at 11.725%; and Coconino County, Ariz., at 11.725%.
Consumer Reports Names Most Reliable Cars of 2011
At the bottom are the most expensive: Jaguar, Porsche, and Audi are at the bottom among brands for which we have sufficient data. You DO NOT get what you pay for.
Japanese brands dominate our survey's upper echelons and took the top nine spots. They were led by Scion, Lexus, Acura, Mazda, Honda, and Toyota. Many hybrids are proving extremely reliable. The top two models in our survey are the Lexus CT 200h and Honda CR-Z. The Toyota Prius was among the top models, rebounding from brake problems that plagued the current design. Family sedans hold up well overall and are led by the Ford Fusion Hybrid. All of the models for which we have data have at least average reliability. In contrast, only one minivan makes that cut: The front-wheel-drive Toyota Sienna is average. Heavy-duty, three-quarter-ton pickups are among the most problematic vehicles. With the exception of the turbodiesel Ford F-250, they all scored below average.
The Ford brand fell 10 spots, to 20th out of 28. The Explorer, Fiesta, and Focus — had below-average reliability in their first year. CR found that new or revamped models have more problems in their first year than in subsequent model years. Ford's problems underscore our advice to hold off buying a new car in its first year.
Auto insurers’ ratings—how did your company do?
Auto-Owners Insurance, State Farm, Amica Mutual, American Family and The Hartford score above industry average in the 2011 survey of claims performance by JD Power
GOP to keep needy off Medicaid
The House voted to restrict eligibility for Medicaid, insurance exchanges and other aspects of President Obama's healthcare reform legislation. The Congressional Budget Office has said as many as 1 million people could be affected by the restrictions, which, among other things, would include Social Security benefits as income in determining eligibility.
SCAMS
Citibank caught screwing its customers! No jail time for bankers . . .
Citigroup Inc. has agreed to pay $285 million to settle federal allegations that its broker-dealer subsidiary misled investors about a complex $1 billion mortgage investment that the company was secretly betting would fail. The investment, which was tied to the U.S. housing market, defaulted in November 2007 and left investors with a worthless investment, while Citigroup made $160 million in fees and trading profits earned through a $500 million short position in the specific group of assets that it had selected for the underlying investment. No Citi employees have been charged with a crime however.
Flat tax always helps the wealthy
Under Herman Cain's 9-9-9 tax reform plan, 84% of U.S. households would pay more than they do under current tax policies, according to a report released Tuesday by a nonpartisan research group. National sales tax of 9% is added to state sales tax. Wealthy live on capital gains of stocks and muni bonds so taxed at about 17%--no income, SS or Medicare taxes. The 999 plan has 0% tax on investment income. Wells Fargo broker hatched the 999 plan “riding in a taxicab in Nashville.”
Cain tweaks 9-9-9 tax plan to allow exemptions for biz
Cain proposed no income taxes for Americans living below the poverty line. He also proposed exemptions for businesses investing in "opportunity zones" as a way to give an economic jolt to rundown neighborhoods. Cain would eliminate minimum wage laws, building codes and zoning and regulations that hurt the economy. He initially said he would negotiate for the release of U.S. prisoners from terrorists, then reversed himself. He was for a woman’s choice but against abortion.
He insisted he had not changed positions, though.
IAN
41 Watchung Plaza, B242
Montclair, NJ 07042
347.746.2014
www.InsuranceAdvisorsNetwork.com
Alerts available at http://dankeppel.blogspot.com/
Friday, October 28, 2011
Friday, October 21, 2011
Snoring is the best way to create wealth
Did you know ‘Snoring’ is the best way to create wealth?
Master investor Warren Buffett told us that holding quality company stocks, NOT actively trading stocks, was the way he adds wealth for his company. Wall Street’s advice is the opposite: buy and sell continuously. Studies show broker recommendations fail. Buffett says: “Most investors, both institutional and individual, will find that the best way to own common stocks is through an index fund that charges minimal fees.... Paradoxically, when ‘dumb’ money acknowledges its limitations, it ceases to be dumb.”
http://www.amazon.com/Snoring-Best-Way-Create-Wealth/dp/1466408928/ref=sr_1_3?s=books&ie=UTF8&qid=1318961268&sr=1-3
Auto rates vary a lot for the same driver. Shopping pays!
For instance, in New Jersey the same two-driver household was charged $3,600 by GE but only $1,400 by Amica, AIG, and USAA. The $2,200 annual difference is worth over $42,000 to you over 10 years when invested. Use our Insiders’ tricks of the trade to save: amazon.com/Insiders-Guides-Discount-Financial-Services/
Health insurance refund?!
Blue Shield of California will return approximately $295 million to its customers and the community by December 31, 2011. In fulfillment of its pledge to limit net income to 2 percent of revenue, Blue Shield's individual and fully insured group customers will each get a 54 percent credit against one month of premium.
Long Term Care insurance coverage uncertain for the future
The long-term care (LTC) insurance market continues to be plagued by adverse claims experience and poor overall results, which has led to rate instability, insurer solvency concerns, and market exits by several major insurers, according to Fitch Ratings in a new report. Members self-insure with their own Wealth Reserve: amazon.com/Your-Retirement-Spending-Plan-enough/
Time to move your untaxed money to Asia?
A Swiss parliamentary commission is edging toward accepting a government proposal that would allow the transfer of bank clients' data to the United States to settle a tax evasion dispute, Swiss news agency SDA reported. Another reason for the OWS protesters to be angry—the 1% don’t pay their fair share! They hide their money in Swiss and Caribbean banks and holding companies. http://www.offshorecompany.com/banking/how-to-start-a-bank
Are you part of the 99%?
To be among the top 1% of income earners, you need an adjusted gross income of $343,927 or more. The 1.4 million Americans with this elite status reported 16.9% of all the country’s taxable income. One percent of taxpayers reported almost 17% of all taxable income. But that same tiny group also kicked in 37% of all the taxes paid. How much do you need to make to be in the top 50% of earners? Just $32,396. Members use their tax-FREE Wealth Reserve to avoid income tax in retirement: amazon.com/Create-Your-Tax-FREE-Financial-System/
Insurers improve quality of plans under new Obama guidelines
Nine Medicare Advantage plans scored top marks on the five-star government rating system for 2012, up from only three plans this year. These plans may you’re you save: http://www.kaiserhealthnews.org/Stories/2011/October/12/insurers-improve-quality-revenue.aspx Kiplinger helps you compare plans: http://kiplinger.com/columns/ask/archive/how-to-compare-medicare-advantage-plans.html
Only 3 in 10 Say They're Prepared for Retirement
A new study says that most families are not prepared for retirement. Most have committed to paying for other things like a child’s education. Most have not adjusted to the new American economy—workers have no guaranteed pension, medial or even 401k matching funds. Many say they will work part-time in retirement. But that assumes there will be jobs and the next generation will not work them. Members are changing their priorities with the New American Retirement System: amazon.com/New-American-Retirement-System-Tax-FREE
Los Angeles decides to stop doing business with 'bad' banks
LA Council members in the nation's second-largest city by population passed a resolution Oct. 12 in support of the demonstrations that started as Occupy Wall Street in New York. It will cost LA millions to switch banks from the ones that have pleaded guilty to fraud. “Many of the banks we're targeting have pleaded guilty to fraud,” Councilman Alarcon said. “There are an ample number of other institutions that acted legally who can do these transactions. The Occupy L.A. movement has put this issue front and center.” Los Angeles in 2008 sued more than 30 institutions it accused of engaging in abuse related to financial derivatives and bid-rigging, administrator Santana said. Council approved a list of banks for LA to do business with earlier.
SCAM
Generals in Afgan war say it will go on for years--$2 Billion and 5 American lives a week! “But what you're saying is that the United States isn't leaving Afghanistan in the foreseeable future?” cbsnews.com/stories/2011/10/16/60minutes/main20120799.shtml
This war has cost $½ Trillion so far. We had a $1.3 trillion budget deficit this year.
GOP against tax hike on foreign insurers too
Two Dems have written legislation that would raise taxes on foreign-based insurance and reinsurance companies operating within the United States. GOP objects, of course.
GOP to cut IRS collections by $4 billion
if Congress follows through on a plan to cut about $500 million from the agency's budget for fiscal 2012, it estimates the revenue loss at $4 billion for this year. Corporate audits are more complicated and require more auditors not less.
Here we go again—using our money to speculate!
Bank of America, hit by a credit downgrade last month, has moved derivatives from its Merrill Lynch unit to the bank subsidiary flush with insured deposits, according to people with direct knowledge of the situation. The Fed has signaled that it favors moving the derivatives to give relief to the bank holding company, while the FDIC, which would have to pay off depositors in the event of a bank failure, is objecting.
The Moody's downgrade spurred some of Merrill's bank partners to ask that contracts be moved to the retail unit, which has a higher credit rating. Transferring derivatives also can help the parent company minimize the collateral it must post on contracts and the potential costs to terminate trades after Moody's decision, said a person familiar with the matter. BOA held almost $75 trillion of derivatives at the end of June, according to data compiled by the OCC. Derivatives have been removed from the books. This allowed Merrill Lynch fee-based revenue to reach record highs this period.
Congress passed the Dodd-Frank to stop this kind of game but the Fed gave BOA an exemption in Sept 2010.
IAN
41 Watchung Plaza, B242
Montclair, NJ 07042
347.746.2014
Alerts available at http://dankeppel.blogspot.com/
Master investor Warren Buffett told us that holding quality company stocks, NOT actively trading stocks, was the way he adds wealth for his company. Wall Street’s advice is the opposite: buy and sell continuously. Studies show broker recommendations fail. Buffett says: “Most investors, both institutional and individual, will find that the best way to own common stocks is through an index fund that charges minimal fees.... Paradoxically, when ‘dumb’ money acknowledges its limitations, it ceases to be dumb.”
http://www.amazon.com/Snoring-Best-Way-Create-Wealth/dp/1466408928/ref=sr_1_3?s=books&ie=UTF8&qid=1318961268&sr=1-3
Auto rates vary a lot for the same driver. Shopping pays!
For instance, in New Jersey the same two-driver household was charged $3,600 by GE but only $1,400 by Amica, AIG, and USAA. The $2,200 annual difference is worth over $42,000 to you over 10 years when invested. Use our Insiders’ tricks of the trade to save: amazon.com/Insiders-Guides-Discount-Financial-Services/
Health insurance refund?!
Blue Shield of California will return approximately $295 million to its customers and the community by December 31, 2011. In fulfillment of its pledge to limit net income to 2 percent of revenue, Blue Shield's individual and fully insured group customers will each get a 54 percent credit against one month of premium.
Long Term Care insurance coverage uncertain for the future
The long-term care (LTC) insurance market continues to be plagued by adverse claims experience and poor overall results, which has led to rate instability, insurer solvency concerns, and market exits by several major insurers, according to Fitch Ratings in a new report. Members self-insure with their own Wealth Reserve: amazon.com/Your-Retirement-Spending-Plan-enough/
Time to move your untaxed money to Asia?
A Swiss parliamentary commission is edging toward accepting a government proposal that would allow the transfer of bank clients' data to the United States to settle a tax evasion dispute, Swiss news agency SDA reported. Another reason for the OWS protesters to be angry—the 1% don’t pay their fair share! They hide their money in Swiss and Caribbean banks and holding companies. http://www.offshorecompany.com/banking/how-to-start-a-bank
Are you part of the 99%?
To be among the top 1% of income earners, you need an adjusted gross income of $343,927 or more. The 1.4 million Americans with this elite status reported 16.9% of all the country’s taxable income. One percent of taxpayers reported almost 17% of all taxable income. But that same tiny group also kicked in 37% of all the taxes paid. How much do you need to make to be in the top 50% of earners? Just $32,396. Members use their tax-FREE Wealth Reserve to avoid income tax in retirement: amazon.com/Create-Your-Tax-FREE-Financial-System/
Insurers improve quality of plans under new Obama guidelines
Nine Medicare Advantage plans scored top marks on the five-star government rating system for 2012, up from only three plans this year. These plans may you’re you save: http://www.kaiserhealthnews.org/Stories/2011/October/12/insurers-improve-quality-revenue.aspx Kiplinger helps you compare plans: http://kiplinger.com/columns/ask/archive/how-to-compare-medicare-advantage-plans.html
Only 3 in 10 Say They're Prepared for Retirement
A new study says that most families are not prepared for retirement. Most have committed to paying for other things like a child’s education. Most have not adjusted to the new American economy—workers have no guaranteed pension, medial or even 401k matching funds. Many say they will work part-time in retirement. But that assumes there will be jobs and the next generation will not work them. Members are changing their priorities with the New American Retirement System: amazon.com/New-American-Retirement-System-Tax-FREE
Los Angeles decides to stop doing business with 'bad' banks
LA Council members in the nation's second-largest city by population passed a resolution Oct. 12 in support of the demonstrations that started as Occupy Wall Street in New York. It will cost LA millions to switch banks from the ones that have pleaded guilty to fraud. “Many of the banks we're targeting have pleaded guilty to fraud,” Councilman Alarcon said. “There are an ample number of other institutions that acted legally who can do these transactions. The Occupy L.A. movement has put this issue front and center.” Los Angeles in 2008 sued more than 30 institutions it accused of engaging in abuse related to financial derivatives and bid-rigging, administrator Santana said. Council approved a list of banks for LA to do business with earlier.
SCAM
Generals in Afgan war say it will go on for years--$2 Billion and 5 American lives a week! “But what you're saying is that the United States isn't leaving Afghanistan in the foreseeable future?” cbsnews.com/stories/2011/10/16/60minutes/main20120799.shtml
This war has cost $½ Trillion so far. We had a $1.3 trillion budget deficit this year.
GOP against tax hike on foreign insurers too
Two Dems have written legislation that would raise taxes on foreign-based insurance and reinsurance companies operating within the United States. GOP objects, of course.
GOP to cut IRS collections by $4 billion
if Congress follows through on a plan to cut about $500 million from the agency's budget for fiscal 2012, it estimates the revenue loss at $4 billion for this year. Corporate audits are more complicated and require more auditors not less.
Here we go again—using our money to speculate!
Bank of America, hit by a credit downgrade last month, has moved derivatives from its Merrill Lynch unit to the bank subsidiary flush with insured deposits, according to people with direct knowledge of the situation. The Fed has signaled that it favors moving the derivatives to give relief to the bank holding company, while the FDIC, which would have to pay off depositors in the event of a bank failure, is objecting.
The Moody's downgrade spurred some of Merrill's bank partners to ask that contracts be moved to the retail unit, which has a higher credit rating. Transferring derivatives also can help the parent company minimize the collateral it must post on contracts and the potential costs to terminate trades after Moody's decision, said a person familiar with the matter. BOA held almost $75 trillion of derivatives at the end of June, according to data compiled by the OCC. Derivatives have been removed from the books. This allowed Merrill Lynch fee-based revenue to reach record highs this period.
Congress passed the Dodd-Frank to stop this kind of game but the Fed gave BOA an exemption in Sept 2010.
IAN
41 Watchung Plaza, B242
Montclair, NJ 07042
347.746.2014
Alerts available at http://dankeppel.blogspot.com/
Thursday, July 2, 2009
Wealth Without Wall Street
Wealth Without Wall Street
“Wall Street's world turned upside down”
These were the headlines in 2009.
Wall Street financial management has proven itself worthless. Bill Gross was right. “Professional money management is a gigantic rip-off.” Only 2 advisors provided their clients with the correct advice about the total collapse of the market in 2008-9. In one year, most money management clients have seen their accounts plunge 40%, 50% even 70%. No advisor has fired him/herself. No advisor has returned their advisory fees and commissions. In fact, most advisors hid from their clients during the worst of the storm, as acknowledged by Fidelity executives in May 2009.
The naked truth—YOU must build wealth without Wall Street.
What to do?
Look at Wall Street “turned upside down.”
First, when money managers buy and sell securities in their mutual and hedge funds, they are trying to predict the future of the market. There is no proof this can be done over time. Yesterday’s winners are usually tomorrow’s losers. The AVERAGE market return has been 12%, so a few managers will beat the average by luck—Just not the same ones every year. www.Ifa.com/12steps/Step3/Step3Page2.asp#333
Second, you must pay the costs of the manager, her/his marketing group and operations, whether or not s/he makes you a dime. It is always better to pay as little as possible for the same performance over the long term. Costs can take up to 33% of your returns, over time. Investors averaged only 2.57% annually from 1984 through 2002 despite buying the ‘winners’ at the top. www.DALBARinc.com
Third, managers are paid for increasing “ASSETS under management,” not for making you rich. Bringing in more assets is a full-time job. It is expensive to market the funds given that there are now thousands available. It is inevitable that popular funds will grow until they produce average returns with high expenses. Managers want to be rich, not right. It takes luck to pick successful stocks. You do not benefit from economies of scale. As assets grow, fees do NOT shrink.
Fourth, there is much less chance of you being treated poorly by fund management if the structure and governance are customer-oriented like Vanguard’s and TIAA-CREF’s are.
Fifth, many professional managers and Wall Street “insiders” place their core assets in index funds. As bond guru, Bill Gross, said, “professional money management is a gigantic rip-off.”
Sixth, since no manager can consistently beat the market, a mutual fund or hedge fund for that matter, must be evaluated as a commodity. Commodities are usually judged on price. As Benjamin Graham, legendary value investor, said, “Investors should purchase stocks like they purchase groceries—not like they purchase perfume.” Actually, all financial services should be purchased this way—insurance, mortgage, credit, banking.
Seventh, due to changes in access and technology, some manufacturers of financial services and products have decided to enhance their direct to customer channel. Even though Vanguard funds have not been sold by personal selling, it has grown to rival most fund complexes. Discount brokers are now considered to have better customer service than brokerage firm services, according to Consumer Reports. Even though Progressive Insurance is sold by agents, their success in the direct channel has been impressive.
Eighth, Wall Street cannot reduce the risk of investing. Most individual investors have lost 30% to 50% of their life savings in the last Wall Street bubble. Many investors now realize that Wall Street is selling snake oil. Even the promise of diversification has left many realizing that “experts” can’t control risk.
Ninth, Wall Street used to control price—raising the price of investing to grow revenue directly lowers investor returns. The advisor or fund with the highest price does NOT guarantee success: only expenses to investors.
Investors can now control the price. We can use low-cost mutual funds and brokers. Since Wall Street cannot predict the markets and we don’t know if stocks will outperform all other assets over time, we must take the Pascal wager:
Pascal’s wager: The consequences of not being in the markets are worse than being in it for the long haul. Buying the market returns at the lowest price is the best solution for long-term wealth-building. You are better off without “professional” advice.
Example: Member Ron Delaney of New York will gain $400,000 because he asked about his 401k plan. Mutual fund fees are the largest source of overcharges—$400,000—over time. Ron did not believe pension costs were as high as we said. He asked his HR person about the costs of his 401K plan. He received a packet of materials. Finally, he calculated that his annual expenses were 2.1% and his annual fee was $50. His plan offered index funds for just 0.70%. He picked which funds he needed after reading our FREE Guide*. Ron saved $2,800 ($4200-$1400) every year. By the time Ron retires, he may have added an extra $400,000 to his 401k.
Your choice is clear—avoid Wall Street. Their “advice” is just marketing hype. Their research exists to sell their products. Take the advice of unbiased advisors like master investor Warren Buffett,
By periodically investing in an index fund, for example, the know-
nothing investor can actually out-perform most investment
professionals. Paradoxically, when "dumb" money acknowledges its
limitations, it ceases to be dumb. http://www.berkshirehathaway.com/letters/1993.html
* http://www.theinsidersguides.com/index.html
“Wall Street's world turned upside down”
These were the headlines in 2009.
Wall Street financial management has proven itself worthless. Bill Gross was right. “Professional money management is a gigantic rip-off.” Only 2 advisors provided their clients with the correct advice about the total collapse of the market in 2008-9. In one year, most money management clients have seen their accounts plunge 40%, 50% even 70%. No advisor has fired him/herself. No advisor has returned their advisory fees and commissions. In fact, most advisors hid from their clients during the worst of the storm, as acknowledged by Fidelity executives in May 2009.
The naked truth—YOU must build wealth without Wall Street.
What to do?
Look at Wall Street “turned upside down.”
First, when money managers buy and sell securities in their mutual and hedge funds, they are trying to predict the future of the market. There is no proof this can be done over time. Yesterday’s winners are usually tomorrow’s losers. The AVERAGE market return has been 12%, so a few managers will beat the average by luck—Just not the same ones every year. www.Ifa.com/12steps/Step3/Step3Page2.asp#333
Second, you must pay the costs of the manager, her/his marketing group and operations, whether or not s/he makes you a dime. It is always better to pay as little as possible for the same performance over the long term. Costs can take up to 33% of your returns, over time. Investors averaged only 2.57% annually from 1984 through 2002 despite buying the ‘winners’ at the top. www.DALBARinc.com
Third, managers are paid for increasing “ASSETS under management,” not for making you rich. Bringing in more assets is a full-time job. It is expensive to market the funds given that there are now thousands available. It is inevitable that popular funds will grow until they produce average returns with high expenses. Managers want to be rich, not right. It takes luck to pick successful stocks. You do not benefit from economies of scale. As assets grow, fees do NOT shrink.
Fourth, there is much less chance of you being treated poorly by fund management if the structure and governance are customer-oriented like Vanguard’s and TIAA-CREF’s are.
Fifth, many professional managers and Wall Street “insiders” place their core assets in index funds. As bond guru, Bill Gross, said, “professional money management is a gigantic rip-off.”
Sixth, since no manager can consistently beat the market, a mutual fund or hedge fund for that matter, must be evaluated as a commodity. Commodities are usually judged on price. As Benjamin Graham, legendary value investor, said, “Investors should purchase stocks like they purchase groceries—not like they purchase perfume.” Actually, all financial services should be purchased this way—insurance, mortgage, credit, banking.
Seventh, due to changes in access and technology, some manufacturers of financial services and products have decided to enhance their direct to customer channel. Even though Vanguard funds have not been sold by personal selling, it has grown to rival most fund complexes. Discount brokers are now considered to have better customer service than brokerage firm services, according to Consumer Reports. Even though Progressive Insurance is sold by agents, their success in the direct channel has been impressive.
Eighth, Wall Street cannot reduce the risk of investing. Most individual investors have lost 30% to 50% of their life savings in the last Wall Street bubble. Many investors now realize that Wall Street is selling snake oil. Even the promise of diversification has left many realizing that “experts” can’t control risk.
Ninth, Wall Street used to control price—raising the price of investing to grow revenue directly lowers investor returns. The advisor or fund with the highest price does NOT guarantee success: only expenses to investors.
Investors can now control the price. We can use low-cost mutual funds and brokers. Since Wall Street cannot predict the markets and we don’t know if stocks will outperform all other assets over time, we must take the Pascal wager:
Pascal’s wager: The consequences of not being in the markets are worse than being in it for the long haul. Buying the market returns at the lowest price is the best solution for long-term wealth-building. You are better off without “professional” advice.
Example: Member Ron Delaney of New York will gain $400,000 because he asked about his 401k plan. Mutual fund fees are the largest source of overcharges—$400,000—over time. Ron did not believe pension costs were as high as we said. He asked his HR person about the costs of his 401K plan. He received a packet of materials. Finally, he calculated that his annual expenses were 2.1% and his annual fee was $50. His plan offered index funds for just 0.70%. He picked which funds he needed after reading our FREE Guide*. Ron saved $2,800 ($4200-$1400) every year. By the time Ron retires, he may have added an extra $400,000 to his 401k.
Your choice is clear—avoid Wall Street. Their “advice” is just marketing hype. Their research exists to sell their products. Take the advice of unbiased advisors like master investor Warren Buffett,
By periodically investing in an index fund, for example, the know-
nothing investor can actually out-perform most investment
professionals. Paradoxically, when "dumb" money acknowledges its
limitations, it ceases to be dumb. http://www.berkshirehathaway.com/letters/1993.html
* http://www.theinsidersguides.com/index.html
Friday, June 12, 2009
There are two ways to buy financial services in the 21st century
One of my members bought life insurance from the large insurer (Mascot is a dog) before he asked me for help. Frank bought their insurance because the agent said the company is the best. She said, “It is large and will always be there to pay the benefit.” However, is it worth paying an extra $17,970 on your level term policy? There are customer-focused insurers, rated A+, the same as "It," charging $384 vs. "It’s" $983 for the same $300,000 30-year term policy. Frank was wasting $17,970 in total! After reading our Insider’s Guide to Life Insurance, Frank purchased the $384 policy. Investing his savings of $599 ($983-$384) in his Wealth Reserve for 30 years in a market index, Frank may have an extra $175,000 for HIS dreams not the insurers. http://www.theinsidersguides.com/lifins41.html
In the 21st century, there are two ways to buy financial services—the consumer way and the independent’s way. Financially independent people don’t let themselves be sold. They shop for value in everything. They never pay retail. They shop at Costco. They buy used luxury cars. They wait for sales on electronics. They use the Internet to research the price.
Buying vehicles is one of the largest expenses in most people’s lives. Over our lifetimes, we may spend over $250,000. Unfortunately, most people take the consumer way and spend 4 to 5 times what they need to for vehicles. One of our members, Denise, bought a car before I met her. Joy bought her car after she read The Insider’s Guide to Vehicle Purchase.
Consumers’ way. Denise took a loan for the full amount of the price. During the paperwork process with the F&I person (finance and insurance), she was persuaded that the gap insurance and window glass etching options were good buys. Instead of getting a lower price, Denise assumed that an extra $25 a month was no big deal. This was the deal she finally agreed to:
Total borrowing: $25,000 @ 16% for 72 months (her FICO score is 610)
Monthly payment: $542.30 Total payments: $39,045.60
Total interest: $14,045.31 Final residual value: $5,000
Denise spent almost $40,000 for an asset that has little value after 6 years. During those 6 years, she could have accumulated a Wealth Reserve of $57,352.04 on the $542.30 monthly payments. Thus, buying the vehicle on time actually cost her $40,000 plus $57,000 she could have had by investing the payments. The car cost almost $100,000.
The real cost of buying a new vehicle is FOUR times the price--Not a great deal.
Independents’ way. Joy had been buying “assets that grow by themselves” with $500 a month for some time. She had been growing her Wealth Reserve. She started her Wealth Reserve by using our FREE Guide at http://www.theinsidersguides.com/freeguide.html.
Independents use their Wealth Reserve balance for all their financial needs. Thus, their Wealth Reserve can earn 10% to 12% over time in stock and bond mutual funds. They can ‘borrow’ $25,000 from their own Reserve or ‘bank’ and pay themselves back by continuing to invest $500 for the 6 years. Joy pays monthly like Denise but to a different account. The $14,045 interest that Denise pays to another bank, Joy compounds in her own ‘bank.’ Joy accumulates about $53,000 during the six years—replacing the $25,000 she ‘borrowed’ to buy her vehicle. The vehicle is still worth only $5,000 but Joy has grown her Reserve by $28,000. Also, because Joy paid cash for a used luxury car, she probably got a lot more vehicle than Denise got for her borrowed $25,000.
As you guessed, the Independents’ way is how financially independent people stay wealthy. They paid their own “bank” and got the car and the extra $28,000 for the same $500 expense.
You can build your Wealth Reserve with savings from each Insider's Guides for: Vehicle Insurance . . save up to $6,000 over 10 years; Homeowner’s Insurance . . . $2,000 over 10 yearsLife Insurance . . . $20,000 over 20 years; Lawsuit Insurance . . . $3,000 over 10 years; Health Insurance . . . $5,000 over 10 years; Disability Insurance . . . $5,000 over 10 years; Long Term Care . . . $40,000 over 20 years; Education Funding . . . $20,000 over 18 years; Retirement Spending . . . $1,000s over 30 years; Banking . . . $3,000 each year; Annuities . . . $20,000 in 20 years; Mutual Funds/Securities . . . $3,000 each year; Spending Plan: Reach every goalSelf-Funded 'Bank' . . . $250,000 in 15 years; Vehicle Purchase . . . $10,000 per vehicle; Mortgage Purchase . . . $3,000 per contract; Wealth Reserve . . . $1,000,000 in 25 years; Wealth Transfer . . . $20,000 in 10 years; Living Insurance . . . $120,000 over 20 years; Self-insurance . . . $20,000 over 20 years; Avoid buying 101 products that waste your money
You can save $3,000 every year by buying the Independents’ way. Shop for financials just like you do groceries. Your agent, banker, broker, money manager and advisor do already. www.TheInsidersGuides.com
In the 21st century, there are two ways to buy financial services—the consumer way and the independent’s way. Financially independent people don’t let themselves be sold. They shop for value in everything. They never pay retail. They shop at Costco. They buy used luxury cars. They wait for sales on electronics. They use the Internet to research the price.
Buying vehicles is one of the largest expenses in most people’s lives. Over our lifetimes, we may spend over $250,000. Unfortunately, most people take the consumer way and spend 4 to 5 times what they need to for vehicles. One of our members, Denise, bought a car before I met her. Joy bought her car after she read The Insider’s Guide to Vehicle Purchase.
Consumers’ way. Denise took a loan for the full amount of the price. During the paperwork process with the F&I person (finance and insurance), she was persuaded that the gap insurance and window glass etching options were good buys. Instead of getting a lower price, Denise assumed that an extra $25 a month was no big deal. This was the deal she finally agreed to:
Total borrowing: $25,000 @ 16% for 72 months (her FICO score is 610)
Monthly payment: $542.30 Total payments: $39,045.60
Total interest: $14,045.31 Final residual value: $5,000
Denise spent almost $40,000 for an asset that has little value after 6 years. During those 6 years, she could have accumulated a Wealth Reserve of $57,352.04 on the $542.30 monthly payments. Thus, buying the vehicle on time actually cost her $40,000 plus $57,000 she could have had by investing the payments. The car cost almost $100,000.
The real cost of buying a new vehicle is FOUR times the price--Not a great deal.
Independents’ way. Joy had been buying “assets that grow by themselves” with $500 a month for some time. She had been growing her Wealth Reserve. She started her Wealth Reserve by using our FREE Guide at http://www.theinsidersguides.com/freeguide.html.
Independents use their Wealth Reserve balance for all their financial needs. Thus, their Wealth Reserve can earn 10% to 12% over time in stock and bond mutual funds. They can ‘borrow’ $25,000 from their own Reserve or ‘bank’ and pay themselves back by continuing to invest $500 for the 6 years. Joy pays monthly like Denise but to a different account. The $14,045 interest that Denise pays to another bank, Joy compounds in her own ‘bank.’ Joy accumulates about $53,000 during the six years—replacing the $25,000 she ‘borrowed’ to buy her vehicle. The vehicle is still worth only $5,000 but Joy has grown her Reserve by $28,000. Also, because Joy paid cash for a used luxury car, she probably got a lot more vehicle than Denise got for her borrowed $25,000.
As you guessed, the Independents’ way is how financially independent people stay wealthy. They paid their own “bank” and got the car and the extra $28,000 for the same $500 expense.
You can build your Wealth Reserve with savings from each Insider's Guides for: Vehicle Insurance . . save up to $6,000 over 10 years; Homeowner’s Insurance . . . $2,000 over 10 yearsLife Insurance . . . $20,000 over 20 years; Lawsuit Insurance . . . $3,000 over 10 years; Health Insurance . . . $5,000 over 10 years; Disability Insurance . . . $5,000 over 10 years; Long Term Care . . . $40,000 over 20 years; Education Funding . . . $20,000 over 18 years; Retirement Spending . . . $1,000s over 30 years; Banking . . . $3,000 each year; Annuities . . . $20,000 in 20 years; Mutual Funds/Securities . . . $3,000 each year; Spending Plan: Reach every goalSelf-Funded 'Bank' . . . $250,000 in 15 years; Vehicle Purchase . . . $10,000 per vehicle; Mortgage Purchase . . . $3,000 per contract; Wealth Reserve . . . $1,000,000 in 25 years; Wealth Transfer . . . $20,000 in 10 years; Living Insurance . . . $120,000 over 20 years; Self-insurance . . . $20,000 over 20 years; Avoid buying 101 products that waste your money
You can save $3,000 every year by buying the Independents’ way. Shop for financials just like you do groceries. Your agent, banker, broker, money manager and advisor do already. www.TheInsidersGuides.com
Monday, February 2, 2009
Do Washington elites pay taxes?
What happens when the representatives we put our trust in go to Washington? Is it the water? Is the air contaminated from the swamp gases that trickle up through the cracks in Washington’s mausoleum-type buildings?
Obama’s victory made Americans feel that America might again stand for equal and fair treatment. I thought for a brief moment that after the election-night speech in a Chicago public forum, we might be on the right track back to feeling pride in our country’s leaders.
To me, and many Americans, the election of Obama represented a moral re-awakening of America. In my naïveté, I thought that we had seen the end of the DOUBLE standard. There is one standard for the political elites and another standard for the people who pay their salaries.
Obama or his staff has nominated one, Tim Geithner, for Treasury. This position involves honest dealings in crucial financial matters. To the world and to my fellow taxpayers, this guy should be Mr Clean. He should symbolize the most honest and fair way of handling financial matters. He should also know his subject matter.
The public face that is presented about this candidate is that he is wealthy and knowledgable about financial matters. We are told that Obama aides “said they didn't think these issues would present a problem, given what they characterized as the minor nature of the infractions.” Only in Washington is not paying taxes, twice (even after an audit), a “minor infraction.”
We are being told that if you get caught not paying taxes, not once but twice, it is OK if your “mistakes weren't intentional” and you are “contrite.” Instead of dealing with this matter openly, with the “transparency” Obama promised, our representatives take the wealthy tax cheat into a room closed to the public and press. For most Americans, public humiliation is part of the mia culpa. Not for the elites.
The specifics of how a wealthy knowledgable financial guy and his accountant can cheat we fellow taxpayers can be read in the press. It is just hard to believe that you and I would not end up in court after failing to understand that we must pay Social Security and Medicare taxes, even after we were caught once. Even if the future head of the IRS doesn’t know it, his tax preparer would know that Americans can’t deduct our child’s camp fees, early-withdrawal penalty from a retirement plan, a charitable-contribution of ineligible items, and utility costs.
Finally, as a knowledgeable and wealthy public servant, it is hard to believe that this guy would employ an immigrant housekeeper whose work-authorization papers had expired. Where was this person during the Clinton administration when we all learned that the wealthy keep illegal immigrants so they can pay less.
Would most Americans just assume they could get away with this kind of dishonesty? It is not a matter of degree. Yes, I agree the nominee is not a mass murderer. However, if Obama and our representatives support a nominee engaged in illegal acts, aren’t we continuing the same history as Bush and other elites: election by court order, evesdropping without court order, torture by any other name, intentional deception to make war, welfare for the wealthy, indescriminate spending, and poor judgement.
Change was the keynote to Obama’s message. We want change. We don’t want the old DOUBLE standard that seems to infiltrate the hearts and minds of our representatives and Washington functionaries. We don’t want the morally suspect decision-making process that characterizes normal Washington activity. We don’t want “business as usual.” We don’t want “government by crisis,” when checks and balances (common sense) are put aside in the name of expediency. We want integrity back in government. Rewarding bad behavior in anyone (no matter how wealthy or knowledgeable) is the kind of activity we wanted Obama’s CHANGE to change.
Now another Obama nominee, Daschle, didn’t pay his taxes. This is the third person “too important to pay taxes” that Obama has put up. Where is the CHANGE we were promised. This is the old boy network again. Geithner, the new head of the IRS, was confirmed after deliberately avoiding his tax obligations. What does this say about our Congress? Obama continues to ignore breeches of character. Perhaps Congress people think it is OK not to pay because they don’t pay either.
Do any Washington elites pay taxes? Why am I paying taxes this month?
Obama’s victory made Americans feel that America might again stand for equal and fair treatment. I thought for a brief moment that after the election-night speech in a Chicago public forum, we might be on the right track back to feeling pride in our country’s leaders.
To me, and many Americans, the election of Obama represented a moral re-awakening of America. In my naïveté, I thought that we had seen the end of the DOUBLE standard. There is one standard for the political elites and another standard for the people who pay their salaries.
Obama or his staff has nominated one, Tim Geithner, for Treasury. This position involves honest dealings in crucial financial matters. To the world and to my fellow taxpayers, this guy should be Mr Clean. He should symbolize the most honest and fair way of handling financial matters. He should also know his subject matter.
The public face that is presented about this candidate is that he is wealthy and knowledgable about financial matters. We are told that Obama aides “said they didn't think these issues would present a problem, given what they characterized as the minor nature of the infractions.” Only in Washington is not paying taxes, twice (even after an audit), a “minor infraction.”
We are being told that if you get caught not paying taxes, not once but twice, it is OK if your “mistakes weren't intentional” and you are “contrite.” Instead of dealing with this matter openly, with the “transparency” Obama promised, our representatives take the wealthy tax cheat into a room closed to the public and press. For most Americans, public humiliation is part of the mia culpa. Not for the elites.
The specifics of how a wealthy knowledgable financial guy and his accountant can cheat we fellow taxpayers can be read in the press. It is just hard to believe that you and I would not end up in court after failing to understand that we must pay Social Security and Medicare taxes, even after we were caught once. Even if the future head of the IRS doesn’t know it, his tax preparer would know that Americans can’t deduct our child’s camp fees, early-withdrawal penalty from a retirement plan, a charitable-contribution of ineligible items, and utility costs.
Finally, as a knowledgeable and wealthy public servant, it is hard to believe that this guy would employ an immigrant housekeeper whose work-authorization papers had expired. Where was this person during the Clinton administration when we all learned that the wealthy keep illegal immigrants so they can pay less.
Would most Americans just assume they could get away with this kind of dishonesty? It is not a matter of degree. Yes, I agree the nominee is not a mass murderer. However, if Obama and our representatives support a nominee engaged in illegal acts, aren’t we continuing the same history as Bush and other elites: election by court order, evesdropping without court order, torture by any other name, intentional deception to make war, welfare for the wealthy, indescriminate spending, and poor judgement.
Change was the keynote to Obama’s message. We want change. We don’t want the old DOUBLE standard that seems to infiltrate the hearts and minds of our representatives and Washington functionaries. We don’t want the morally suspect decision-making process that characterizes normal Washington activity. We don’t want “business as usual.” We don’t want “government by crisis,” when checks and balances (common sense) are put aside in the name of expediency. We want integrity back in government. Rewarding bad behavior in anyone (no matter how wealthy or knowledgeable) is the kind of activity we wanted Obama’s CHANGE to change.
Now another Obama nominee, Daschle, didn’t pay his taxes. This is the third person “too important to pay taxes” that Obama has put up. Where is the CHANGE we were promised. This is the old boy network again. Geithner, the new head of the IRS, was confirmed after deliberately avoiding his tax obligations. What does this say about our Congress? Obama continues to ignore breeches of character. Perhaps Congress people think it is OK not to pay because they don’t pay either.
Do any Washington elites pay taxes? Why am I paying taxes this month?
Friday, January 23, 2009
We are wasting $3,000 a year on financial products
"Most Americans are wasting over $3,000 per year on the financial services they own." According to a new survey, we are wasting $500 on car insurance, $500 on life insurance, and $2,500 on mutual funds/securities. That could mean an extra $250,000 in 20 years! $700,000 in 30 years!
Most people I have talked to believe that you can’t have enough insurance. They don’t understand that you should insure only what you can’t afford to lose. For instance, for car and home insurance, you are better off picking a high deductible to save up to 40% of the cost of a policy. Claims are infrequent—every 11 or 12 years—so you are more than likely to earn interest on the premiums you save year after year.
Insurance is not an item our moms taught us to buy. Who wants to spend their time comparing coverages? Who wants to meet with an insurance agent? This thinking has changed. Insurance and financial services in general have become commodities, like groceries.
With the Internet and new product pricing, you can actually find a huge difference in costs. Depending on your lifestyle profile and the insurer’s marketing plan, you could pay $3600 or $1400 for the same two-vehicle coverage. The difference—$2200—could accumulate to over $150,000 in 20 years. Both insurers are highly rated and responsive.
The differences in price are significant across almost every type of coverage—life, health, long-term care, accident, disability, and excess liability. See the amount of savings by type at TheInsiderSGuides.com.
The options you pick, but don’t need, can significantly change the price. For each type of insurance, you need the guidance of an unbiased advisor—someone who does not profit from your choices. There are 20 to 30 discounts available. To buy wisely, you must know what you need.
Money management is the area with the greatest savings. Many of us pay over $2,000 a year needlessly. When you read the advice of the most well- respected industry practitioners—Warren Buffett and Bill Gross—you learn that “money management is a gigantic rip-off.” There is little correlation between what you pay in commissions, fees, and spreads, and the after tax returns you end up with over time. A low-cost index fund is best for most investors, Buffett said. Thus, most of us are giving away 1%-2% of our pensions and mutual fund balances—3%-4% when inside annuities. That $2,000 drain on each $100,000 every year reduces your eventual spending power by up to $700,000.
Most people I have talked to believe that you can’t have enough insurance. They don’t understand that you should insure only what you can’t afford to lose. For instance, for car and home insurance, you are better off picking a high deductible to save up to 40% of the cost of a policy. Claims are infrequent—every 11 or 12 years—so you are more than likely to earn interest on the premiums you save year after year.
Insurance is not an item our moms taught us to buy. Who wants to spend their time comparing coverages? Who wants to meet with an insurance agent? This thinking has changed. Insurance and financial services in general have become commodities, like groceries.
With the Internet and new product pricing, you can actually find a huge difference in costs. Depending on your lifestyle profile and the insurer’s marketing plan, you could pay $3600 or $1400 for the same two-vehicle coverage. The difference—$2200—could accumulate to over $150,000 in 20 years. Both insurers are highly rated and responsive.
The differences in price are significant across almost every type of coverage—life, health, long-term care, accident, disability, and excess liability. See the amount of savings by type at TheInsiderSGuides.com.
The options you pick, but don’t need, can significantly change the price. For each type of insurance, you need the guidance of an unbiased advisor—someone who does not profit from your choices. There are 20 to 30 discounts available. To buy wisely, you must know what you need.
Money management is the area with the greatest savings. Many of us pay over $2,000 a year needlessly. When you read the advice of the most well- respected industry practitioners—Warren Buffett and Bill Gross—you learn that “money management is a gigantic rip-off.” There is little correlation between what you pay in commissions, fees, and spreads, and the after tax returns you end up with over time. A low-cost index fund is best for most investors, Buffett said. Thus, most of us are giving away 1%-2% of our pensions and mutual fund balances—3%-4% when inside annuities. That $2,000 drain on each $100,000 every year reduces your eventual spending power by up to $700,000.
Friday, July 25, 2008
“Professional money management is a gigantic rip-off”
“Professional money management is a gigantic rip-off.” This was written by one of the most successful fund managers, Bill Gross, Director of PIMCO. He admits that his industry is more about luck than skill. People pay managers for the same reason we all think we are superior car drivers. We all think we are above average. Stop and reason! Average means in the middle. For investments, the average—the S&P 500 index—actually beat 88% of large managed funds. businessweek.com/bwdaily/dnflash/nov2003/nf20031114_4313_db013.htm
Recently, a study of the performance of all mutual fund managers over the period 1975 through 2006 shows that NO MANAGER is a consistent winner throughout their career. Some have beaten a market index for some time BUT you can’t count their fees. That’s not fair. We must pay the managers’ fees; even when they lose our money! Just think if plumbers operated like that: Get paid handsomely and don’t fix the leak—they would be sued immediately. Managers don’t stop charging when they lose your money.
Take Away: your earnings will be higher by doing nothing—don’t use someone else to pick stocks or funds—just let it ride on the average of the markets. nytimes.com/2008/07/13/business/13stra.html
An investment in a mutual fund that holds common stocks has provided returns of 12% over most periods 10 years or more. An index fund holds many different company stocks so you don’t lose money if one company goes bankrupt. If you use low-cost funds, you will keep more of what your account earns. If the fund earns 12% and you pay 0.1% for bookkeeping, your investment will compound at 11.9% over time. Every year the returns will be different of course. However, when you hold tight and don’t buy and sell, you win. Instead of paying a stock picker, you should pay a hypnotist to make you forget your long-term account. Our members provide their experiences to illustrate where to invest: http://www.theinsidersguides.com/freeguide.html
Don’t fall for the myth of “professional” money management. Wall Street makes up stories that we want to hear. Money management is just a sophisticated lottery game and only the game owners profit by it.
Recently, a study of the performance of all mutual fund managers over the period 1975 through 2006 shows that NO MANAGER is a consistent winner throughout their career. Some have beaten a market index for some time BUT you can’t count their fees. That’s not fair. We must pay the managers’ fees; even when they lose our money! Just think if plumbers operated like that: Get paid handsomely and don’t fix the leak—they would be sued immediately. Managers don’t stop charging when they lose your money.
Take Away: your earnings will be higher by doing nothing—don’t use someone else to pick stocks or funds—just let it ride on the average of the markets. nytimes.com/2008/07/13/business/13stra.html
An investment in a mutual fund that holds common stocks has provided returns of 12% over most periods 10 years or more. An index fund holds many different company stocks so you don’t lose money if one company goes bankrupt. If you use low-cost funds, you will keep more of what your account earns. If the fund earns 12% and you pay 0.1% for bookkeeping, your investment will compound at 11.9% over time. Every year the returns will be different of course. However, when you hold tight and don’t buy and sell, you win. Instead of paying a stock picker, you should pay a hypnotist to make you forget your long-term account. Our members provide their experiences to illustrate where to invest: http://www.theinsidersguides.com/freeguide.html
Don’t fall for the myth of “professional” money management. Wall Street makes up stories that we want to hear. Money management is just a sophisticated lottery game and only the game owners profit by it.
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