Tuesday, December 21, 2010

Accumulation of Capital:The Proper Use of Parsimony

"Capitals are increased by parsimony, and diminished by prodigality and misconduct"~Adam Smith from "Wealth of Nations" BookII Chapter III

Reading this quote from the great Adam Smith provides various thoughts. For starters, what is parsimony and prodigality? How does this quote correlate into the process of building wealth? For starters, lets define Parsimony as stated in Merriam-Webster(online)

1.the quality of being careful with money or resources :thrift
b : the quality or state of being stingy
: economy in the use of means to an end; especially :economy of explanation in conformity with Occam's razor

Most people when presented with the word stingy or frugal, images of "Scrooge" come into their minds(see him above). Lets focus on the second definition of Parsimony for this blog.

Prodigality(noun)-from the root word prodigal

1. : characterized by profuse or wasteful expenditure : lavishprodigal feast> <prodigal outlays for her clothes>
: recklessly spendthrift prodigal prince>
: yielding abundantly
When Adam Smith wrote "Wealth of Nations", he was speaking to the wealth of the entire nation, and the principles that it takes to have a "wealthy nation". These same principles can be applied to the individual. It is the individuals IN a nation that determine the wealth or poverty of a nation.
I know I hear you stating, "But I am working as hard as I can in my business, Job, etc, how can I SAVE my way to wealth?".
Let's take the premise that money is your steward or your employee. Adam Smith also states the following, "A Man grows rich by employing a multitude of manufacturers: he grows poor by maintaining a multitude of menial servants." In other words, your money needs to be working for you productively, otherwise it will leave you poor and broke.
Many of us are taking our profit(income from Job, business, etc) and purchasing "menial servants". An example of menial servant is a NON Asset. Many Americans purchase depreciating assets which provide zero cash flow, thus reducing their net worth. As of 2006, the average United States citizen has a savings rate of <4%> (negative). This is due to the over leveraging of debt used to purchase "menial servants" or bad assets.
Purchasing Assets(things that place money IN your pocket) turns your employee from a "menial servant" to a industrious manufacturer(worker). Your money must be working 24 hours per day and 7 days per week. There are various examples of purchasing Cash producing Assets:e.g. Income Producing, Real Estate, Bonds, a profitable business(large or small)
If you are a business owner, you may not see the way that you can "Save" your way to wealth. I will provide an example. Let's suppose that you own a Lemonade stand. You sell a glass of lemonade for $1.00 per glass. The cost to produce and make the lemonade is about .50 cent/glass. You finally open up your stand, and you sell 2 glasses of lemonade! Success! Here is where the important decision is made: You can take that $2.00 and spend it on a bar of candy, or you can take or "SAVE" that profit and choose to reinvest back into your growing enterprise.
Choosing the parsimonious direction, "saving" your profit and reinvesting back into your business will help grow your business. Your wealth will be measured in your ability to produce more lemonade AND capital that is accumulated from your enterprise. As you grow your enterprise, you will need more equipment, employees, advertising, marketing, etc. All of this requires money, which will come from the parsimonious use of your gross profits!
This same principle can be applied to a person who is in a low end job. He can use his "profits" from his paycheck to place money to the side to pay for improving his job skills. His "wealth" is measured in his ability to improve his job skills. As he improves his job skills, he has the ability to earn more income, thus providing an opportunity to "save" more money to work for his objectives. This same person could also start a home based business with a low entry fee, and develop the capital from his growing business to expand his wealth. It all starts from the individual making the decision on how he will spend his "profit". At each pay day, all of us have a choice to be poor or wealthy, regardless of our economic stratus.

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Sunday, October 24, 2010

The Greatest Secret by Earl Nightingale

This famous speech provides us the Secret to success. Many will miss it, but I hope and pray that most begin to take these videos and begin to think about WHY?

Second Part of the Great Earl Nightingale

3rd and Final Part

Monday, October 18, 2010

Cool Video for Voting Season

My good friend Julie Blades Colombo told me about this video. Its a documentary about everyday folks..well I will not steal the thunder. Its titled, "Simply America". Is a very nice video..

Wednesday, October 13, 2010

What are Riches?

This video is from the man who sold millions of copies of the famous book, "Think and Grow Rich". In this book, Napoleon Hill provides the blueprint to achieve "riches". What are riches? This term is very broad and subjective. It is not just about money. Riches can come in various forms such as lasting friendships, strong relationships and a "rich" family filled with love, joy, and excitement. This video clip provides an insight into the "Think and Grow Rich" philosophy of Napoleon Hill.

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Wednesday, September 29, 2010

Can you Afford to Retire?

WOW!!! This video and interview is very revealing! This interview is with an expert a consultant in the Retirement planning industry. This gentleman has set up 401k type plans for major corporations in the US. He states that there is a GAP between the have and have nots regarding the 401k type plans. He also discusses who REALLY saves money when a company implements a 401k plan with its employees.
Check this interview out with Brooks Hamilton. He is the founder of Brooks Hamilton and Partners. In this interview he reveals some MAJOR CONCERNS with the 401k type plan..click here One of the major points is that these experts state that you need to contribute at LEAST 18% of their annual salary for 30 plus years to have enough to retire. Most people invest into their retirement plan 1/3 of that amount. The other point is after the passing of ERISA in 1974, the shift in responsibility from the Employer to the Employee. This turned into major cost savings for the employer, but the financially uneducated employee is now making MAJOR financial decisions.

Brooks is also featured in this video clip which discusses "Can you Afford to Retire?" This video explores more in greater detail the major problems facing people who use the 401k plans.

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Making these 5 mistakes is costly..

Are you frustrated with your 401k type plan? Even if you are doing well inside of it, you may not know how long it will work for you at retirement. Just because it doing well now, does not mean it that translates into success after 59 1/2.
This article "The top 5 Financial Mistakes Business Owners make and How to Avoid them"I would submit to you that making these 5 mistakes can be costly. What are these 5 mistakes? Well, most people are making these mistakes currently in regards to retirement planning. I will not steal any thunder from Ms. Pamela Yellen, but this is very valuable information! If you are a business owner or not one, this article is an excellent read!
These mistakes can be very costly and you may find yourself being short with many different needs at retirement.

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Monday, September 27, 2010

Those "Evil" Bush Tax Cuts, are they for the Rich??

People are having this debate about the "Bush" Tax cuts being reversed. The claims that the "rich" were getting a larger tax break is part of the argument for the reversal of these cuts. The other side believes that it will encourage economic growth if the cuts are held in place. Whatever side you are on, this will impact your retirement savings.
If you are 59 1/2 or younger(or currently retired), you better be seriously concerned. Your 401k withdrawals after 59 1/2 are taxed at earned income tax levels. In other words, IF you have the need to withdraw $1,000,000 or more out of your 401k plan, you may find yourself "rich". Being "rich" has its advantages, but for the IRS provides us the greatest advantage by collecting 35% of our hard earned money!! Ouch!! If your objective is to accumulate $1,000,000 for retirement, you will provide approximately $350,000 to the IRS. This is assumed that this is a lump sum withdrawal.
The experts say you will be in a lower tax bracket at retirement. Really? If that is the case, why is there a debate about raising the Earned Income tax rate schedule? I never understand why people listen to the "experts" on the TV or radio, they dont know your personal situation and retirement planning is not a cookie cutter process. Its also not known what the tax rates are going to be in the future, but its safe to assume they will not be lower based on the current deficit and debt load by the US govt. See the link at the top of this blog??
Each Qualified retirement plan(401k, 403b, Traditional IRA) has 2 tax benefits. With 401k type plans, you get the tax deduction upon contribution, tax free growth(no capital gains!!!), then you pay the taxes at the current income tax rates upon withdrawal. So here is the Congress seeking to take a Tax increase on your retirement money! You saved taxes on a lower tax bracket, and you will withdraw and pay full taxes on a higher tax bracket. Here is the other kicker: Capital Gains tax rates are LOWER than the Earned Income Tax rates. You may have been better doing a "buy and hold" strategy outside of the 401k and saved more money! "Doh"~Homer Simpson..
How do you have a Tax Free retirement? You must first work with someone who understand which lines in the Tax Code that max out all the benefits for retirement accumulation....That search can end right HERE with us!!

Here are the current Tax Brackets as of 2010:

Tax Bracket Single Married Filing Jointly
10% Bracket $0 – $8,375 $0 – $16,750
15% Bracket $8,375 – $34,000 $16,750 – $68,000
25% Bracket $34,000 – $82,400 $68,000 – $137,300
28% Bracket $82,400 – $171,850 $137,300 – $209,250
33% Bracket $171,850 – $373,650 $209,250 – $373,650
35% Bracket $373,650+ $373,650+

Keep in mind these are the current rates, set to expire after 2010. Here is an article discussing the implications of the Bush Tax cuts in case they expire: "What to Expect if the Bush Tax Cuts Expire" Its an excellent read! If you have concerns about your current 401k plan, and you wish for FREE information on how to have a Tax Free Retirement, please contact me for the FREE Info!!

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Sunday, September 26, 2010

Are you ALL your Important Assets covered?

People purchase protection for their Cars, Home, Jewelery, Boats, or Motorcycles. etc. When the unexpected happens, this protection can come in and make things "whole" again. In my experience working in Financial Services/Insurance, I have seen so many cases where people had more than enough protection that carried them through the "storm". Not once during the claims process did they complain about "paying to much" for their protection. Most people are not worried about that if their house has burned down. Your house is important "asset"(I use that word asset loosely)would you ever think about not insuring it? Of course not!!
So why do many people have zero protection for their retirement savings? What form of protection do most have against downside losses? Many experts and advisors believe in Dollar cost averaging or a Buy and hold strategy. These are fine, but you must plan for the worst! For example, if I employed a buy and hold(dollar cost)strategy for Pan Am stock from the 1970s, how much stock would I have today, and how much would it be worth today? I would have plenty of shares of stock that are worth nothing!
In my opinion, you must have liquidity when those market corrections take place. This just means you must have fast access to cash. The problem with most people is that their 401k is liquid, but the value of the liquidity or shares is subject to the volatile mood swings of the market. This means your money is not protected, and may not be there when you really need it.
The other main concern is after 59 1/2, how far will this retirement money last? With the tax changes on the horizon, this will have a huge impact on how long these monies will last. Changes in the health care legislation, looming inflation, Government spending all play a factor in how long your money will last.
In short, you must think about making sure your retirement savings are protected against loss. Having your car and home insured make sense, so why not your hard earned cash??

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Sunday, July 11, 2010

Your Retirement Plan..IS it Safe from theirs??

Are your Current retirement plans(401k,IRA,403b, etc)safe from "theirs"? First of all, who is "theirs"? Well lets look at several things before we answer the "theirs" question. Most people love these plans since they provide an easy way to "invest" for retirement. Many popular Financial experts love to recommend these plans. Most retirement plans use Mutual funds to help grow the client's retirement nest egg. This has provided some interesting events in the years to come. Let's look and see if this is a smart strategy.
In 2011, the Bush Tax cuts are set to reverse back to the original tax brackets prior to 2001. (For the specific tax rates and changes, see July 7, 2010 Yahoo finance article "How the Expiring Bush Tax Cuts Effect You") The qualified plans such as the 401k, IRA,457 and 403b have a very important role in these tax changes. Baby Boomers at 59 1/2 and older will be taxed at the NEW TAX BRACKETS upon withdrawal. For example, if your goal is to accumulate $1,000,000(interest gained plus principal) at retirement,if the entire principle and interest was withdrawn, you would pay 39.6% in income taxes. This would leave you with about $600,000 to live on for retirement. Most people are living longer, life insurance companies have stretched out the calculation of life insurance rates to be calculated to age 121 instead of age 100. This is is proof that people are living longer.
So the question is this; how long can you live off of $600,000? If you listen to Experts like Ric Edleman,Dave Ramsey or Suze Orman, at around age 59 1/2 your term Life Insurance has run its course. They recommend purchasing Term insurance, approximately 20 years, and investing heavily in a mutual funds viz a viz a 401k plan. According to these experts, you will be self insured because you are debt free and have $600k(our earlier example) to live on for retirement. Keep in mind, you will need to eat, live, medical needs, grand kids, travel,etc. At age 59 1/2 +, it is very expensive to cover the needs for Life Insurance, Health insurance, Long Term Care, Disability, etc. with only $600k. Keep in mind, one may live for another 30-40+ years.
With Congress' recent changes in the Health Care system, Social Security, Medicare, Medicaid, not to mention The Wars overseas; these enterprises must be funded. Let us not forget there is a TRILLION DOLLAR DEFICIT, and MULTI TRILLION DOLLAR debt service. How will these things be paid for? The Answer:Taxes from your 401k plans.
Many Baby Boomers and most Americans are sold on the fact that the 401k plan is the end-all-to-be all for retirement. The result:most Americans are placing money into these plans for retirement. This plans are big winners in the long haul for two other groups: Wall Street and IRS. Wall Street is managing trillions of dollars in Mutual Funds thanks to 401k plans. Wall Street makes money from these investment regardless if the market goes up or down. It is estimated that over $40 Trillion dollars in Generational wealth will move from the Baby Boomers to Generation X. The IRS knows this fact, and is willing to wait until the largest generation sets to retire. They also know that most of the Average American's wealth lies in two places: The equity of their homes, and 401k type plans. The IRS has a plan for both! Many Boomers would have contributed to their 401k plan at a lower tax bracket during their working years, but will be withdrawing monies at a higher tax bracket at retirement! All these years, the "experts" were telling them they would be in a lower tax bracket! What they fail to realize is that THE IRS or "theirs" is waiting their "cut" once the participant reaches age 59 1/2. In closing, here are two short video clips below that discusses the issues surrounding 401k type plans and taxes.

Here is the second clip:

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Sunday, April 11, 2010

Are you maxing out your Tax Refund?

Tax season is upon us, and the major deadline for turning in your tax return is this week. For those who receive a refund, here is a newsflash: Its your money! Your are not getting something for nothing! In fact, you allowed your the Federal Government or State borrow your money without charging interest! Would you be allowed to borrow money from a bank without repayment with interest? Of course not! The people who get a tax refund are allowing the IRS to hang on to their money without charging any interest!
Why not use that money during the year, and max out your deductions! Talk to your CPA or Tax Preparer about options to help you keep more of your money during the year, instead of giving it away without charging interest.
The other mistake most people make is they spend this money on doo-dads or non income producing assets. These things will not place any more money into your pockets. Why not expand you net worth? Take your tax refund and make your money work harder for you. In the following video clip, Douglas Andrew shows a way one can max out the tax refund and get huge benefits for the long term!

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Monday, March 22, 2010

Your Assets are under attack by THEI.R.S.

Your retirement assets are currently under attack. The Baby Boomers have an estimated $45 Trillion dollars waiting to be accessed for Retirement. The low end of this estimate is around $15 trillion and the high end is close to $100 Trillion. These funds are residing in various types of Qualified Plans(401k, IRAs, 403bs, 457, TSPs, etc). These funds many people have prudently saved and invested during their entire working lives. These assets are under attack by: THE I.R.S or THEIRS.
Here is why these assets are under attack: Social Security/Medicare is financially unsound, Increasing Deficit spending by the Federal Government, and a brand new Health Care entitlement program. These problems, PLUS the increase of Tax rates, these funds are under attack. These obligations must be meet, and the Politicians will grab at any type of cash to pay for these programs. $45 trillion is a large enough amount of Assets that will qualify as a target.
Funds inside of a qualified plan will be taxed, even if the tax payer received tax deduction for the contribution into the plan. If your income was TAX exempt, and you contributed towards a TSP, that is double stupid. The tax payer will be taxed at the current tax rates. Based on recent events with the health care program, do you think that rates will stay low, OR go up? My bet is that the tax rates are going up, and many Baby Boomers will lose most of this $45 Trillion to taxes. They will outlive their money, and die broke, UNLESS they find out the parts in the tax code that provide TAX FREE RETIREMENT! Call us to find out which parts of the Tax Code can be used to your advantage to receive a tax free retirement! Once you find out what the tax codes are, you must begin a plan NOW!!! Call 919-352-9260 and cover your assets NOW!

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Healthcare, IRA Conversions, and Retirement what do they have in common?

The US Congress just passed the major change to the Health Insurance industry. As anyone who understands how Government works, these plans are paid for using one of several things: Increased Taxes or sell more Government Debt(Bonds) or asking the Federal Reserve to print more money(or combination of all three). My bet is that Taxes will be increased. That may be a good or bad thing for some, but how does all this impact your retirement? Let's explore this. We will start with the current Income Tax situation.

Here are the current Tax Brackets(assuming you are married filing jointly):


These Tax cuts that were signed into Law by President Bush, will expire the end of 2010. The top two brackets (33% and 35%)will go to 36% and 39.6% respectively. If you are making more than $209,251 per year, your taxes are going to go up...maybe more.

There is a March 21, 2010 article in Yahoo Finance on the amount needed to save for retirement named: " 1 Million Doesn't Cut it for Retirement" In this article, some industry experts state that more than $1,000,000 is going to be needed for retirement. I would agree with this premise also.

So let's add these two things together. Let's say that you have $1,000,000 in your retirement plan. Let's supposed that you have done real well with your 401k plan and invested and saved prudently. You followed Money Mag's recommendations. The instant that you turn 60, you start to withdraw this money, or you want to roll it out into an Annuity that will stretch out the money for the rest of you life. At this point, you will pay the IRS a check of $396,000! How long can you live off of $604,000 at age 60? This is based on a person retiring THIS YEAR BEFORE 2011! Also it assumes that this person will have $1,000,000 in the 401k plan. What happens if it is less? With inflation and increase Taxes, who can afford to live off of less especially when you are older?

People are living longer, and will have different needs as they get older. Most folks will run out of money before they turn 70 if the previous scenario is followed(which most people it is less than $1,000,000, and will be dependent on some form of Government Welfare. There is a better way. We can show you how to convert those dollars while Taxes are lower to accounts that can potentially provide a TAX FREE RETIREMENT! Call us at 919-352-9260 to find out how to have this TAX FREE RETIREMENT!

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Tuesday, March 16, 2010

Two "Free" Things the IRS Gives You

That is a Statement! Two FREE things the IRS gives you! What are those two things? Let's explore them in more detail. Free things can be very important, especially during your retirement years. Once you have retired, you want to be able to enjoy your retirement years with peace and limited amount of financial drama. There are only two things in the code that provide TAX Free retirement and/or Tax free transfer at death.

Roth IRA

The Roth IRA is a vehicle that allows you to withdraw your accumulation for retirement, Tax FREE! The contributions are placed into the account AFTER taxes, but once you are older than 59 1/2 you can withdraw your money tax FREE. There are income restrictions and the money MUST be taken out before you are 70. This is a very cool feature that you can have millions in your Roth IRA, and at retirement never taxed on that money!

Life Insurance

I hear you saying, "Wait a second..Life Insurance?" Yes Life insurance! The death benefit proceeds are TAX free to the beneficiary. If you have a beneficiary listed on your policy, the money goes directly without any questions asked by the Tax man. Now you are saying, "Wait a second, I have to die to use it? It makes no sense to give away money to something that I can't use?" That makes sense on the surface, but there are many uses for Life Insurance. It can be an excellent way to store cash for the long haul. It also can be withdrawn tax free. It also can be structured in a similar fashion to a Roth IRA, with the additional feature of having a Tax Free Death Benefit!

It makes sense to talk with your advisor to move from accounts that will tax you at retirement, to accounts that allow tax freedom at retirement! There are some pitfall in making the conversion, so choose a professional that understands how to make that conversion work. It is well worth the conversion to have TAX FREE income at retirement.

Thursday, March 11, 2010

Debt Free and Being "Self Insured" is Risky

"Become Debt Free then Eliminate your Insurance! Pay off your home, then you dont need the insurance! Once your home and kids are grown, you dont need more life insurance! Stop paying all that additional insurance, its a rip off! You can save on the cost of insurance and invest in the Stock Market. You will grow your paper assets to the point where you are self insured." All of these concepts are given out by prominent Financial Advisors and TV Finance Gurus. They may not say these items verbatim, this is the underlying theme of this philosophy. In my opinion, this type of thinking is like betting on horse racing. Let's look into this stupidity in more detail.

Let's suppose you have a home that is worth $300,000. The mortgage is paid off, and you are DEBT FREE! You have accumulated in your 401k plan $1,000,000. You follow the advisor's advice and take off your homeowner's insurance since you have enough assets to be "self-insured". A violent tornado hits your local town, and destroys your home. It is totally eliminated. Nothing is left. What happens?

These kind of scenarios take place all the time. If you don't believe me, ask the people that were victims of Hurricane Katrina. If this scenario happens, your 401k plan must be used to pay for all the expenses related to the destroyed home. Keep in mind, the house will not be rebuilt in one day. The cost to rebuild the home will be around $300k, but you must stay in a hotel, or must have alternative living arrangements while the home is being rebuilt. Since the home was not empty, the items inside the home must be replaced:i.e jewelry, Electronics, furniture, guns, appliances, etc. After its all said and done, you may spend around $600k to move back into a "normal" life with the home rebuilt. Your hard earned cash that was accumulated in your 401k plan is now been reduced to $400k. This scenario can be avoided IF the proper Hazard Insurance was still on the property. The accumulated wealth in the 401k would have been preserved without having to use those funds to rebuild the house. The annual premium for the Hazard insurance is a VERY TINY FRACTION of the overall value of the house and belongings.

How about the assets inside the 401k plan? How are you insuring those assets against risk of loss? No one ever really ponders that question, they just dollar cost average through the scenario or assume that they will be in a lower tax bracket at retirement. In 2008 people on average lost more than 40% in their 401k plans! What "insurance" was used to protect the assets against losses? With these 401k type plans, it is similar to purchasing a home, but not having hazard insurance. You have no insurance against downside risk, and the investor bears 100% of the risk, but the Mutual Fund company gets paid regardless of what happens.
Taxes is another form of risk. The contributions into a 401k plan is tax deductible, but what happens at retirement? You are taxed at your earned income tax bracket upon withdrawal of the funds after 59 1/2. I know what you are thinking, "I will be in a lower tax bracket at retirement!". Really? Are you paying attention to all the bailouts and stimulus packages? How about the Health Care debate? What about the unfunded liabilities of Social Security and Medicare? The Govt is going to raise taxes, since taxes are the lowest currently in decades. If you withdraw your money from the 401k plan after 59 1/2, look for your money to last around 5-9 years, then you will be out of cash.

Suze Orman talks about life insurance as only a temporary need. Wealthy people do not have a philosophy of ANY TYPE insurance as a temporary need. The see insurance as a permanent need regardless of what type of insurance it is. Its an integral part of the over all investment plan and strategy. They may adjust how much risk or insurance is needed relative to the price of the insurance, but they will NEVER stop purchasing insurance. In fact, the more wealth they accumulate, they purchase more insurance to protect their wealth from loss or taxes. They don't see the PRICE of insurance as a hindrance in investing. They don't just dollar cost AVERAGE to wealth, they grow wealth with planning while taking in account all aspects of the ownership of that asset. They leverage the use of insurance to transfer risk to reduce or mitigate losses. They don't get "debt free" to only become self insured.

How does one insure the assets inside of a 401k plan? These plans provide no ability to mitigate risk for the average investor. The Mutual Fund company can make money regardless if the investor loses or gains money. Statistics show that the average stock market investor LOSES money. What insurance are they purchasing from their stock broker? I hear you saying now, "Robert, there are no guarantees in purchasing stock?" I agree their are none, but I will make sure that the situation has more risk sharing than the average investor. The average investor is satisfied with purchasing a Mutual Fund in a 401k plan, pick the mutual funds that the employer picks for him, hand over his hard earned money to a mutual fund manager; someone that he will never meet. If the investor loses money, the losses are passed to the investor 100%. The Mutual Fund company still makes money. That does not seem fair.

It makes no sense to not have your fixed assets uninsured. It is equally irresponsible to have your liquid assets "naked" or uninsured also. The risk management piece must be taken into consideration when placing capital into any asset. Typically, people are excited the acquisition of the new asset, but a novice just looks at the potential earnings, while an expert looks at all aspects of the deal. All of your assets must have some form of insurance, so coveryourassetsnow!

If you are seeking to protect your downside risks in your wealth building strategy, call me directly at 919-352-9260. If you lost money in your retirement plan, and you are seeking shelter from the storm, call! We will perform a free analysis to show you strategies that will allow you to sleep better at night!

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Monday, March 1, 2010

Who,What, When, How and The Why?

Starting a business is an exciting thing. The dreams of financial independence, freedom, wealth, etc all the trappings of a "successful" business are the things that motivate us to start a business..really? If that were the case, then most of us would have successful businesses. Being a business owner is one of the keys of success in the Free Enterprise system.
When I sit down with business owners and ask them, this simple question: "What do you want out of your business?"; they provide all the things they DO NOT WANT! What happens? The business owners get exactly what they do not want. Its no wonder many businesses fail within the first 1-5 years of operation. I think its because many business owners fail to plan properly. Why do they fail to plan properly? Its for a variety of reasons, but ultimately it is typically the lack of understanding of how to ask the right questions.
In my opinion, the following questions must be asked then answered by the prospective business owner: Who, What, When, How, and Why?


If you are in business, someone must purchase your product or service. Who is your customer? Depending on your product/service or business model that answer may vary. You must clearly define who your customer is. Who is the ideal customer? Where is the customer located? How much money does this customer make? It must be clearly defined in your mind, so you can zoom in like a laser on that customer. If not, you will totally waste your time with customers that are not suited for your product or service.
Depending on what type of business model you participate in, the customers can be retail, wholesale, or internal customers. You clearly must identify who those persons are in order to have a successful marketing campaign. Marketing is the life blood of any business. Two thing that should take place everyday: Flossing your teeth and Marketing. It can not be just some random marketing program, but focused marketing.

A second part of the question "Who" is knowing the competition. This is very important. Clearly identifying the "enemy" helps define your product or service in the marketplace. If you know how the enemy is positioning himself in the marketplace, then you can counter or lead by focusing on the weakness of the competition. With your USP(unique selling proposition..discussed below), you can position your product above the competition. Knowing who the enemy is and how they market, will provide you insight on how YOU should market. If they are Big, you may have to attack with a guerrilla style marketing campaign. If they are small and you are larger, then you may take a more mass marketing approach. This can be accomplished once you identify WHO the "enemy" is.


What are you selling? What is your product or service? Sometimes this may sound very simple, but many people really don't know their product or service. They just look at the profit potential. You must be a student of your product or service in order to transfer the enthusiasm to a prospect. Why should I your product from you? What makes your product better than your competitors? What is your USP or Unique Selling Proposition?
It is amazing how many people approach me about their product or business opportunity, and they have not the slightest clue what the USP is for their product. For example, if I am in a network marketing company, my product is not the product or service the Parent company manufactures. It is the business opportunity! Most Network Marketing people have zero clue on their USP, thus the high failure rate. The same problem exists in direct sales also. The parent company spends millions of dollars on branding the company name in the marketplace, but people by the product from the Individual sales person. That sales person needs to have his/her USP! What is your product? What separates it from every other product of its kind in the marketplace? This question is vital. Going back to the network marketing example, a person must be able to differentiate himself versus other network marketing companies AND other network marketing associates.

The question of "When" falls more into goal setting. When do you want to accomplish your sales goals? When provides some timelines to look back and monitor your progress. Many people have short term, intermediate goals and long term goals. It is well documented the success of having timelines attached to your goals.
The Goals should be detailed to the point that your mind can zero in on them. Your daily goals should be something that is reviewed several times per day, without exception. This will program your mind to focus on the the important things and not become distracted.

This is the part that separates the "men from the boys". Successful business operations have a system. They have processes in place where by the business owner can measure the results or the output. For example McDonald's or WalMart. Their approach to distribution is very systematic. They can measure the cost per unit or revenue per unit. That is why they are successful companies due to the turn key system they implement in the operation. Employees must have straight forward clear objectives and duties laid out before them. Managers and owners must have the ability to see the entire process from beginning to end, and hold employees and staff accountable for any success or failures along the way. The more systematic the approach, the more predictable the business becomes.
The How answer should direct you to work flows, and also how your business will be detailed. How will the accounting systems be set up? Inventory: how will it be delivered to the customer? How will productivity be measured? All of these things must be thought through when answering the "How".

I saved the best for last. As stated before, most people start into business for a variety of reasons:Wealth, Freedom, Time, Vacation, etc. All of these are good reasons. Going into business can be a difficult and challenging endevor. During those lean times, there must be something that pushes you through those difficult times. It has to be a part of your being or your passion.
The passion will drive you over the finish line. If you are doing something you are passionate about, it will not be difficult to answer the previous questions. It will not be difficult to tell prospects your USP. That passion will be passed to your employees. It will become like a virus! The why must be solid and a deep burning deal deep inside your being.

In conclusion, you must have a laser type focus to be successful in business.Having these questions answered in the beginning provides an excellent start. There are many more questions that need to be answered also. Starting a business requires, guts, determination, hard work, moxy, and the ability to have a real good street sense. Its not a sprint, but a marathon. The rewards can be worth it.

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Friday, February 12, 2010

Social Security the BIG old Elephant in the Room

I have worked in the past with kids in Group Home Facilites. Many of them had various problems:ADD, Conduct disorder, past life of crime, etc. NONE of them were out of touch with THEIR reality. If presented something that they had never seen before, they never denied its existence, they tried to figure out how it came into being. I never worked with kids that were out of touch with reality.
I really believe that people that work in Washington DC are 100% totally out of touch with reality. I believe this for various reasons, but for this post I will focus on Social Security. I have been a vocal critic of the current Social Security "Retirement" System. I have felt for years that is financially unsound; for many reasons to numerous to list here on this blog. Here is the bottom line: Social Secuirty is on the verge of bankruptcy. Here is the article that discusses the problem:


How does this problem impact you and your personal finances? It depends on your age. If you are not a Baby Boomer, when putting together your financial plan, DO NOT FACTOR in Social Security as part of your retirement income. Call Me directly to get an secure retirement plan: 919-352-9260.

Thursday, January 28, 2010

Watching the Circus in DC

There is a saying "If you leave the clowns in charge don't be surprised if a circus breaks out". I don't remember who said this, but this describes our government officials in Washington D.C. As I listen to our President discuss the State of the Union to Congress, I just cant help but think why so many people are expecting ONE man to save them from financial ruin or hardship. It is too much pressure on one man to bear. He is at the end of the day, ONE man. He has NO Legal authority to provide all these things for us, as we sit back like children awaiting the next goodie or handout.
We must increase our financial IQ by taking Robert Kioysaki's advice and "Minding our Own Business". What does that mean? Does it mean that we just turn our backs on others? It simply means that we must FIRST take control of our lives by accepting responsibility for our actions.We do this by increasing our Financial IQ.
My daughter goes to the public library several times a week to study. When I pick her up, I am amazed the wealth of knowledge that is at our fingertips. This knowledge is FREE! Most of us NEVER use it! We prefer to watch a sporting event, see who will be the next Reality Show star, etc. None of these activities place money in our pockets. When we hit a financial brick wall, we seek the assistance of the Govt.
There are so many books that can increase your financial IQ, why not start today. Its better to invest in yourself and your children, as compared to waiting on pins and needles on President Obama and the 3 ring circus masters(Congress) to provide you wealth. It may provide lots of emotion, but it provides nothing but financial co dependence.
Start this process by going to the bookstore or the library, Read books like "Richest Man in Babylon" or "Rich Dad/Poor Dad". I am so thankful that my Parents and Grandparents instilled that seed in me at a early age. I know that many kids or people don't have that chance, but I will do my best to touch and educate as many people as possible. We have to educate ourselves in financial matters. Our lives as US citizens depend on it.
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Tuesday, January 26, 2010

Why It's Time to Retire the 401(k)

Why It's Time to Retire the 401(k)

I will keep repeating this OVER and OVER again. These plans are not the end-all-to-be-all. Understand the end game with these plans. Some of the secrets are revealed in my report, "The Truth about Retirement Plans"

Wednesday, January 20, 2010

What Happened?? Pt1

In my line of work, I talk to many people about their jobs, careers, goals, dreams, etc. Many people think a dream is to have a "Good Job". What is that? Is there such a thing? People are now trading Freedom for Security, especially in this country. It is a shame since many of our ancestors were KILLED or struggled to get to this country and make a life for themselves. We live in the most prosperous time in the history of mankind, but yet the average person is seeking a safe secure job. The other option that people speak on is to have a Government program to act as a Safety net in case "Bad Luck" strikes.
Let's look at Social Security as an example. Social Security acts as a sort of "retirement benefit" that will pay an certain amount at retirement age. The total tax taken is approximately 13%. You will have this "Tax" taken from your check each pay period, but it is placed into a Trust fund. This fund is separate from the general funds. The problem is that the Govt owns and controls the cash. The money is not invested, but is used to pay current benefit recipients. I can show people how to take that extra 13% and come out way ahead then leaving with the "safety net" program of Social Security, without all the risk! Its out of FEAR and LIES that this program has maintained its prominence in American history. It produces NO Wealth, it produces co-dependence. Why not allow folks to take the 13% and use it for themselves? The true meaning of Capitalism is when the INDIVIDUAL maintains and OWNS his capital. The State or Govt's job is to protect this Capital for invaders: Foreign and Domestic.
If the system allowed us to invest the 13% difference into our savings or investment program, what would be the results then?
The next blog entry I will show how saving or investing the 13% from SSI can benefit the individual greater than giving it away to the Government for them to squander and lose. Learn MORE about building wealth by contacting me directly or send me an email! I would love to hear from you!

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Tuesday, January 19, 2010

Herman Cain on the Fair Tax

Herman Cain discusses the Fair Tax. I am open to all types of suggestions on changes to the Tax code. This is an excellent concept and Mr. Cain goes through an explanation on the broad strokes on the Fair Tax.

If you are seeking a FREE info on Wealth Building Strategies or how to protect your 401k plan from Downside risk, go to www.noexaminsurancenow.com

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Friday, January 15, 2010

The 401k NO Brainer by Neil Cavuto

I am amazed by the so called "experts" that endorse a LOSING Strategy. They endorse this losing strategy with such vigor! While I do not dislike Neil Cavuto, he is wrong in his position with the 401k plan. Neil Cavuto does NOT allow Garrett to defend his position, he also talks OVER Garrett with so MANY fallacies it is ridiculous. 401k plan is NOT a NO-brainer, regardless if your employer is matching. Its not a forced savings, and you are not guaranteed a return when investing in the market. Yes the averages can made to be any number based on the time line of the average. How does Neil know when the person is going to retire? Can he place his claims in writing and guarantee the returns? What products can be purchased to protect the consumer against downside risk? All they can say is that, "The market has averaged X over the last 40 years, so THEREFORE it will be there when you retire." This statement is such BS.

Wednesday, January 6, 2010

Tuesday, January 5, 2010

Dissecting Dave's Bull Crap Financial Advice

I will resort back to science class for this blog. We will dissect something..a response to a caller's phone call. I feel financial advisors like Dave Ramsey are extremely DANGEROUS to the marketplace. He plays on the financial ignorance and fears of the average caller. This caller asks him a very direct question, and it is an excellent query. Watch the video and read my critique of his "bad advice" below..

Did you see the many errors in Dave's advice? There are plenty to go around, but I will focus on just his hypothetical that he created out of thin air. His hypothetical NEVER REALLY answers Tyler's question. Upon deeper inspection, it actually proves that Dave Ramsey is a total novice when it comes to Life Insurance needs.

I find it interesting that Dave Ramsey's answer is framed in a scenario that fits his reason for ALL people to purchase term insurance. The reason why Term insurance is cheaper than Permanent Life Insurance is because of the probability of death is much lower during the term period as compared to a Perm Life insurance period(to age 120). In fact, only 2% of claims are paid on Term Life insurance contracts. So does Dave know when folks are going to die? If he does than he is REALLY Good..NOT! Here is my critique.
First of all, in his hypothetical, he states that the 32 year old has a 20 year term and it expires at age 52 with a house that is paid for, $500k-$750k cash in Mutual funds in his 401k plan, and no need of any life insurance and debt free. Sound good, right? The guy dies at age 52 without life insurance. Smart advisor Dave states that the wife will be okay. This statement REALLY pisses me off!
The wife will NOT be "okay" based on Dave Ramsey's hypothetical. Here is why. The house is paid for, and the 52 year old leaves $500k-$700k in a 401k plan. Oh By the way..how does Dave Ramsey know for sure that this guy will have this much in his 401k plan? Can he put that claim in writing and guarantee this result? Nope! This $500k-$750 in his 401k plan will count towards his Estate Tax bill to the IRS in 9 months, along with that "paid for" house. Guess how the family will pay for this Taxable expense? If you said his 401k plan, go to the head of the class! So lets cut the 401k plan in half to $350k. Oh he never states the age of the surviving spouse. If she is 52, that money will be rolled into a IRA which she cant use until after age 59 1/2. This money is rolled so it will not be subject to taxation. That money will be taxed once she pulls it out of the IRA after 59 1/2. Now remember its only $350k, so she has to make sure that money is invested wisely. What conditions will the market be in at that time? Can she just "dollar cost" average to wealth? I think not. The house that is paid for: What happens if the Real Estate market when the spouse dies at age 52 is like today's market? The value can be lower and the surviving spouse needs liquidity. She will need to do the following: A) sell the house at below market price or B) refinance. If she refinances the house, the appraisal will be based on the local market or "comps" of this house. In a down market, she may not get as much as expected.
Here are some other considerations. The surviving spouse, she may have health challenges as she gets older. How will these needs be addressed? What life insurance does she have? Does she have an expired term life policy? If so, her premiums are 5 figures a year at age 60 and increasing EACH year. How long is that $350k going to last at retirement? My guess about 5-9 years, and she will be living with her children.
In my humble and honest direct opinion, Dave Ramsey is an arrogant,ignorant misguided advisor that needs to step down from giving out advice. His advice in this scenario PROVES that he has NO business discussing Life Insurance how it relates to people's lives.

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Video by Robert Kiyosaki

Excellent Video by Robert Kiyosaki:

Opinions on 2010

Here is Robert Kiyosaki's take on what is to happen for 2010. He has some very good points.


High Income Earners have Qualified Plan options

Here are some things to think about if you are an high income earner. Check this link out: