Learn how to never lose money again while getting incredible rates of return. Contact me today to set up an appointment to learn how its done. (888) 638-0080 or email rendrags[at]gmail.com
I have always loved the saying, If you can't beat'em, join'em. It doesn't apply in all areas of life, but in some cases it may make more sense than fighting multiple Goliaths as a lowly David. Last week a client of mine shared a video with me from the research of a Harvard Professor. In the research the professor discusses some mind shattering statistics and also shares our collective perception of the rich. What is shown is so mind blowing it is hard to really grasp.
What if you were David and you were asked not to fight Goliath, but to fight thousands of Goliaths all at the same time? This is what investing on your own is like these days. In this video it talks about how the wealthiest families in America, the top 1% own 50% of the Stocks, Bonds and Mutual Funds. While the bottom 50% own .5%.
If you had 100 people in a room, 1 person would hold 50% off all of the retirement playing chips. 50 of the 100 if they all banded together would hold half of 1 retirement chip. That is crazy! No wonder we see such large positive and negative swings in the market. A very small body of people control how the markets move.
Since 401k's and IRA's became the number one savings vehicle for the majority of Americans, they have put themselves on the battleground with these large stakes players. Now I am all for cheering on the under dog and hoping the little guy wins. In the grand scheme of money I am still a little guy like most Americans. However, in this case we aren't talking about a fight or a race, we are talking about your retirement. You only get one shot at getting this right. Those that get to retirement age and decide they need to start over are too late usually. This is not a game you goof around with.
I talk with people on a regular basis that will never be able to retire. They know it and they know I know it. They have simply run out of time or they took too big of risk with their money, only to have it not pan out well. I talk with people that let the HR person that makes $10 an hour tell them how to properly fund their retirement and that person learned it from the company managing the money. At what point do you look out for your own best interest? At what point do you take the reigns of your future?
Some people see lost money. I see lost money, but worse, lost time.
For many people it is not too late. They simply need to get educated, take control and get their money into a winning strategy. There are 3 major killers of wealth:
1. Losing money
2. Inflation and rising cost of living
3. Taxes
Of the common strategies for creating a stream of tax free money, which are you using now?
What percentage of your money do you have in protected strategies that can't lose money?
How much of your portfolio do you currently have in strategies that can't safely get double digit returns?
These are some great questions to ask yourself. I find questions are better than answers because they make you think and stretch and reevaluate. There are incredible companies out there that own the other 49.5% of the Stocks, Bonds and Mutual Funds. Companies that have been around since before the Stock Market and have strategies that protect you against loss, have potential double digit returns and don't risk throwing your money out the window ever few years as the market rides up and down.
The question isn't should you be in our out of the market, but how much should you have in the market? If the lions share is in 401k's and IRA's that are in the market, then the lion's share is at risk for loss. I don't share these things to motivate people, but to educate people. We don't need motivation or someone to inspire us. We need educations and understanding. We need knowledge. Knowledge is power, knowledge is what helps people make good decisions with proper information. I have much to share with you, if you're interested. At times I ask too much reading and studying of my clients, but in the end they thank me because their money is safe and they understand how it is going to grow and be protected.
I still remember vividly the moment when Brett Kitchen, Author of the Best-Selling Safe Money Millionaire book, told me that Life Insurance was a good place to save for retirement. I laughed and shrugged the idea off immediately. After all I was a huge Dave Ramsey fan and he says life insurance is not a good investment. For the record I am still a big Dave Ramsey fan. I think his advice on getting out of debt should be mandatory education for every citizen in America and certainly for our Leaders in Washington, D.C..
So lets explore the idea further. According to Barry Dyke, author of The Pirates of Manhatten, Life Insurance companies were the primary custodians of American savings until Wall Street started marketing Mutual Funds and 401k's. In the Casino Age we live in now, Wall Street will spend as many millions of dollars as they need to market a program into success. However be sure not to look behind the curtain or you will see the foolishness of the system.
I tend to believe numbers since math is hard to fudge and math is the universal language. I want to run a comparison of a 50 year old male saving money in an IRA or 401k verses saving money in a life insurance contract with tax advantages.
50 year old man putting $500 a month away for 20 years at 8%.
50 year old man putting $500 a month away for 20 years at 8% minus 2.5% fees.
50 year old man putting $500 a month into Life Insurance for 20 years at 8%
20 years in IRA/401k at 8% grows to $274,571 assuming no losses.
20 years in IRA/401k at 5.5% (8%-2.5% fee=5.5%) grows to $209,209 assuming no losses.
20 years in a Life Insurance plan at 8% grows to $193,154. Contractually cannot lose money.
I don't think I need to point out that stock market is a Roller Coaster with unpredictable ups and downs. What the market giveth it taketh away. When you lose money in the stock market you don't only lose money, you also lose your most valuable resource, time. If you lose 5-10 years of money and compounding growth time, it can adversely effect your retirement nest egg.
Quick little image to demonstrate the ups and downs of the market.
So if you could get 8% in each of the above scenarios you would be $81,417 ahead of the life insurance plan if you could find a fund with no fees. You would be $16,055 ahead of an account that earned 8% minus fees. Or you could have $193,954 without any worry of the ups and down, the pit in your stomach of opening your annual statement, hoping it isn't another year of losses. Plus you have a life insurance contract that pays out tax free when you are ready to start taking money out of the plan.
I for one cannot guess with any accuracy what taxes will be like in the future. Who knows, they may be lower. With $16 Trillion in Government debt and coming off 2 major Middle Eastern wars, I am not sure how they could go anywhere but up. However I am not a fortune teller or tax advisor.
According to the Wall Street Journal 55% of all the tax-free money saved within life insurance contracts is owned by the top 10% of Americans. If this doesn't show the trail of bread crumbs to where the wealthy are saving their money, I don't know what does. Meanwhile families in the bottom 50% own 6.5% of this asset class. Why is that? Why would the middle class shy away from a proven asset class that is dominated by the wealthy and the only barrier to entry is your health. Anyone at any income could own one of these plans. Is there any chance that Wall Street wants this information buried or distorted. Are there any celebrity figures that would tell you to run away from this asset class?
I know Wall Street absolutely doesn't want you putting money into these plans. They want your money in the next hot stock or mutual funds where they can make a killing off their clients while their clients take all the risk. Dave Ramsey openly detests any life insurance that isn't term insurance. He is a huge fan of Mutual Funds that get 12%. A few problems are the fact that most mutual funds don't earn 12% as he claims, the mutual funds have huge fees that will eat into your retirement money and his target market are people trying to get out of debt. Most debt that isn't good debt or strategic business debt is carried by the bottom 50% of the population and we can see that they only own 6.5% of this asset class. The plans I work with have averaged 8.85% for the last 25 years and 8.35% in the last 10 years alone. See Dave Ramsey's official feelings on Life Insurance here. I have nothing to hide by you seeing his opinion, I just ask that you do research and formulate your own opinion.
"The bewildering array of choices among nearly 5000 equity funds has ill served investors. The returns incurred by the average equity fund since 1984 have averaged just 2.7% per year, a shocking shortfall to the 9.3% return earned by the average fund. The result is that the average fund investor has earned less than one-quarter of the stock market's 12.2% annual return." -John Bogle, Founder and Former CEO of The Vanguard Group. To read more from John Bogle now that he has retired, see my other blog post here.
The plan in the example above shows a stream of tax-free income of $22,005 coming back out of the asset until age 120. While it is true you may be able to save a little more in an IRA or 401k than a life insurance policy, it is not safer and will not kick off a life time of money. In fact once you start pulling income off your qualified plans, you still have to pay the taxes you have put off for 20 years.
So let's say you have $209,209 after 20 years and want to get the same stream of income as the life insurance plan. Assuming a 25% tax bracket you would need to pull $29,340 out of your plan and pay $7335 to Uncle Sam, leaving you with $22,005. Well that is completely doable, unless you want to go back to work in 7.13 years. You see if you pull $29,340 out of your plan you will run out of money in 7.13 years, unless it is growing still and in that case you had to take risk to keep in growing. You could take risk and add on 1-3 years, but you run the risk of losing 30-50% if the market drops like is has every 7.2 years on average.
Lastly, one advantage to using life insurance is the actual death benefit. What happens if the 50 year old male in this examples passes away early. Now his family loses out on his income and he didn't have the needed years to build up a nest egg. The life insurance would cover that with a tax-free payout.
Life Insurance has been used by the wealthy and business owners as an incredible tool for over 100 years and it is still an incredible place to safely grow your money and provide you with income during retirement. Set an appointment to let me show you how your personal plan could look, grow and give you peace of mind in retirement. The safety and tax benefits of life insurance are unmatched.
"Each day, each month, each year. 1 more, 1000 more, a Million more investors will gradually learn the foolishness of this investment system and will start looking after themselves." -John Bogle, Founder and Former CEO, The Vanguard Group.
After losing over 35% of my 401k, I started doing research and looking for ways to safely grow my money. I didn't want to be counted among the many I speak with each day that have lost decades of saved money and time to the Wall Street Casino. I work too hard for my money to gamble it away. For the last 4+ years I have helped people save and prepare for retirement with safe tools like Life Insurance, Annuities, Market Linked CD's and Life Settlements. I have personally grown my money in these tools and have done extensive research to know how to use them to my advantage and to my clients advantage.
Recently I have been studying Mutual Funds and the history of the stock market. I have been fascinated with the open candor of John Bogle, Former CEO of The Vanguard Group, now that he has retired. Most of my talking points in the post will be from interviews, articles and books he has published. I think he is a brilliant man and has some incredible insiders wisdom we could all learn from.
There are many interviews with John on Youtube and he has written several books and articles. Watch the video above and I'll bet you get the sense that the investor is getting the short end of the stick. Since retiring he has become a huge advocate for protecting consumers from Wall Street. I would like to share some of his best quotes and them comment on them.
"One problem today is you can't predict returns in the market with any accuracy. What you can control is the risk you take and the cost or fees associated with the investment. Controlling this will be the secret to success in the coming decades."
"Cost is huge. Learn how to run a compound interest table at 8% and run it out 50 years. Then take a 5.5% return and run it out 50 years. It's not unheard of to have a 2.5% fee. What you will find is that you put up 100% of the Capital and take 100% of the risk. Why on Earth would you shoulder all the risk and then let the manager keep 75% of the reward?"
This last comment really hit me right between the eyes. I couldn't figure out how he came up with the numbers based off 2.5% fees until I took his advice and ran a 50 year scenario. I was shocked by what I found. See the numbers I ran.
8% over 50 years assuming no fees.
5.5% over 50 years assuming I paid 2.5% in fees.
So with my calculations you actually only get 31% of the winnings in the investment and the managers get the other 69%. This is assuming you had no losses, in which case you could end up with less and they still take their management fees. Its no wonder they get nicer and nicer building and we get the same old houses. Why should I walk away from this relationship with $1,454,196 and the Broker walk away with $3,235,965 if it was my money that made it happen? Yet we allow it to happen everyday.
"Lets talk about real returns for a minute. Lets say you were lucky enough to get a 6% return. Thats great but if you have a 2% fee then you really only got a 4%. Then of course you have to look at the Consumer Price Index or Inflation at 3%, so really you only got 1%. OK well at least you got 1% right? But then you also have to pay taxes. You can see how easily someone could end up with a 0-1% return and really not be making any money. However, the Mutual Fund go their money."
"There is too much Salesmanship and not enough stewardship. We need to cut way back on speculation and focus more on investment. We need to address ownership of your investment verses loanership. People are just loaning their money and not taking ownership."
I'd like to end off by addressing the idea of ownership verses loanership. So much money is lost in trading, speculating and moving money from one fund to another. Warren Buffet says, "if you wouldn't hold an investment for 10 years then you shouldn't own it for 10 minutes." I have met several millionaires in my life and I have found that most of them made their money in Real Estate. That is an investment where you really take ownership of the place you put your money.
How often are people looking for the next big thing so they can put their money into it for a short time and get a big return? Now a days is seems we want something for nothing and all this speculating is getting people nothing for something. That something being your hard earned money. Day in and day out I speak with people that have lost decades worth of time and money because of the market. This is time they will never get back.
There are investments available that still get very good returns. They require time and taking ownership and accountability for your money. They are not get rich quick schemes, but they are also not risk the farm scenarios either. At what point do you take ownership for your money and make sure it is working hard for you? Its easy to blame your broker when you have turned a blind eye to your own money.
Some sage wisdom from my favorite Savings and Investings book ever, The Richest Man in Babylon. He has the 5 laws of Gold. I am going to substitute Gold for Money since we use money to purchase and invest with these days.
The First Law of Money:
Money cometh gladly and in increasing quantity to any man who will put no less than 10% of his earnings to create an estate for his future and that of his family. (Save 10% no matter what. A portion of all you earn is yours to keep.)
The Second Law of Money:
Money laboreth diligently and contentedly for the wise owner who finds for it profitable employment, mutliplying even as the fields. (Find a good safe home for your money and make sure it is working.)
The Third Law of Money:
Money clingeth to the protection of the cautious owner who invests it under the advice of men wise in its handling. ( You could also point out that money flees from a careless owner. Make sure you are putting your money in smart investments. Not just flashy brochures and suits.)
The Fourth Law of Money:
Money slippeth away from the man who invests it in businesses or purposes with which he is not familiar or which are not approved by those skilled in its keep. (If the investment is not something you can't understand, don't invest in it. If the people managing your money are not qualified to handle your money, don't leave it with them.)
The Fifth Law of Money:
Money flees the man who would force it to impossible earnings or who followeth the alluring advice of tricksters and schemers or who trust it to his own inexperience and romantic desires in investment. (Today many people say or promise you will get X% return on your money, but have no plan or way of getting to that number except hope. Bernie Madoff promised returns so high that no one questions or cared to understand how he did it. They just through money at him.)
I just want to reiterate John Bogle's quote from above. "One problem today is you can't predict returns in the market with any accuracy." Wall Street has become a casino where the house wins and the vast majority of people walk away empty handed. At least Las Vegas is entertaining!
To learn about investments that are safely earning 5-16%, have a tracked record to prove it and can show you how they get to those numbers, contact me and lets talk about how they work and why they are able to claim those kind of returns in such an unstable time in history.
Could an earthquake in Japan ruin your retirement?
There is a great book called "The World is Flat" by Thomas Friedman. In his book the Author talks about how closely linked the world has become and how much we affect each other. We like to think that Greece going bankrupt won't have any effect on the United States of America or that the Euro struggling to hold value won't inversely effect the US dollar. The truth is that we are closely linked and our actions can and do affect the rest of the world.
"Before you finish eating breakfast, you've depended on more than half the world."
-Martin Luther King, Jr.
I can't imagine having all my retirement funds in the market when it crashed in 2001 or in 2008. For many of the clients I work with, it cost them 30-50% of their retirement account. Many say it was a bubble that people could see if they chose to have their eyes open. While that may be true, there are cases when you could lose your shorts because of something completely unexpected.
Back in 2011 the news came on with an emergency update that Japan and been hit by a tsunami and then had subsequent earthquakes. This was a devastating time. I remember our company trying to help raise funds and make people aware of the true amount of damage these natural disasters had created. No one wanted to see another Katrina size devastation. What none of us expected is the drop that occurred in the different stock markets around the world. The US alone had losses of more than $300 Billion.
"Right now, investors are justifiably worried," says economist Ethan Harris of Bank of America Merrill Lynch.
"The really big risk aversion (to stocks) started in the Middle East.
With what's happening in Japan, the two have created dread and
uncertainty. Nobody's done scenario planning for this type of disaster.
It's terrifying."
It seems like these types of events are becoming more and more common and as they do, they seem to send out a disruptive wake that sends the world markets reeling. So as someone that wants to see their money grow, but also doesn't want to see it erode away every time something in the news happens, what do you do to protect your money?
As a recruiter for a private investment firm, I can tell you that there are a few places left that aren't affected by the stock market or world events. They are private contracts that have returned 10-14% for over 100 years. They performed during the Japanese earthquake, the 2008 real estate bubble, the 2001 tech company bubble, the 80's with high inflation, and even the great depression. They are insulated against stock market risk and they are spread over the strongest companies in the world.
Sometimes our investments end up far from where they should be and in a precarious situation.
These investments were primarily only available to investors with $50-$100 Million dollars. Since 2001 they have been available to collective groups with individuals able to finally participate. The largest investment institutions in the world have been investing in this Stable Value Asset, but haven't allowed their investors to partake in the winnings. To this day they still don't offer this asset class to their clients. Reminds me of a hypocritical parents telling their child to do as they are told and not as I do. Or in other words, invest where I tell you, but not where we invest.
To learn more about these incredible, market risk-free, principle protected investments, contact me and we can go over the information to show you how to realistically get a 10-14% return on your money.
As someone that has been involved in personal finance for many years now, I have always recommended clients and prospects seriously look at their debt as one of the main things to attack while at the same time building a safe, solid retirement plan other than counting on Social Security. In November of 2012 a colleague of mine lent me a book named The Retirement Miracle by Patrick Kelly. This first chapter of this powerful book opened my eyes to the extent at which the US Government has pulled the wool over American Citizens eyes regarding our National Debt.
What if I told you our National Debt wasn't $16.5 Trillion, but was actually closer to $80 Trillion? I wouldn't have believed it without further research. Our country is choking on it's own debt and is slowly dying because of it.
“Congress doesn’t even know what the real numbers are,” said Rep. Jim
Cooper, D-Tennessee. “The real national debt isn’t $16 trillion. I wish
it were that low. The real national debt is closer to $60 or $80
trillion.”
When it comes to generally accepted accounting practices the Government has required individuals and businesses to follow very strict practices and guidelines. However, like everything else politicians and Government enforce, they opted themselves out of certain rules. The reason was best explained in a USA Today article with these words:
"The reason for the discrepancy: Accounting
standards require corporations and state governments to count new
financial obligations, even if the payments will be made later. The
federal government doesn't follow that rule. Instead of counting
lifetime benefits for programs such as Social Security, the government
counts the cost of benefits for the current year."
The article details more about how the accounting really adds up to $61.7 Trillion. Of course that was back in May of 2009 so things have gotten better, right? Wrong! The Government has continued to increase it spending while taking in less and less money from taxes.
So how big is a Trillion Dollars? If you started trying to count to a trillion it would take you nearly 32,000 years to do so. That means a cave man back in 30,000 BC would have started counting until modern day to reach a trillion.
There are 86,400 seconds in a day, 31,536,000 in a year. Now times that by 1,000,000,000,000. These numbers are so big we have a hard time even wrapping our minds around them. Now times that by $16.5 Trillion and you have the perceived National Debt. That would take 500,000+ years to count out. Now do the math on what $72,000,000,000,000 would take. I will leave that up to you. After all I have an article to keep writing.
You can watch the amount add up on http://truthinaccounting.org/. Viewers discretionis advised and also don't look directly at the numbers for too long or you will go blind.
You might be asking yourself, what can I do about it? There are a few things you can do. First, make sure you are doing all you can to be someone that is pulling the cart and not sitting in the cart being pulled. Make sure you are contributing. Second, you can write your government representatives and demand they work to fix the problem. Third, and perhaps most important, you can work on your own debt situation. After all our nation is made up of hundreds of millions of households. Each house we strengthen, strengthens the Nation we love. What is your personal and family debt situation? How long would it take to count out your debt? Is there a way to count faster and get rid of your debt faster? Yes! Did you know that most people can be completely debt free significantly faster than they believe? You see all debt is given based off ratios. So unless your income has significantly changed you can use these same ratios to get back out of debt faster. Most debt plans I help people build get them completely debt free, including their house, in 12 years or less. It is all about ratios so the math usually works out about the same for everyone. Take a second to add up how much you pay in debt payments each month. Of those payments, how much is going to interest that you will never see again? Now imagine you are completely debt free, but you still have the amount of money you were putting towards debt to now do investing. How would that change your life? Are you ready to change your life? I have a client that simply wasn't ready to change. He was so embarrassed of his debt and circumstances that he put on a show about his lifestyle that made him feel like a huge hypocrite. Once we got his plan in place, he felt a huge burden lifted from his shoulders. Bring the future to the present with me for a moment. When you look into the future and you see the life you dream to have, are you really going to get there with all the debt you are carrying? Would it be easier if you unpacked some debt from your life?
"I find it fascinating that most people plan their vacations with better care than they do their lives. Perhaps that is because escape is easier than change." -Jim Rohn
There is a way to get completely debt free in one third the normal time and I am happy to show it to you. Strengthen your house and strengthen this great nation. Cheers, Stephen Gardner 888-638-0080
Benjamin Franklin has a famous quote stating that "the only certain in this life are death and taxes". This is true for the most part, but there are legal ways to avoid taxes and ensure that the money you saved and worked so hard for isn't gobbled up by the Government upon your death.
Taxes are the number one expense in our life time. I am not against paying taxes, but I also don't think the government has a right to tax all your assets that you spent a life time working for just because you die. I would personally like to see my hard work passed on to my children and grandchildren.
In 2002 The New York Times ran an article titled "Death Still Certain, but Taxes May Be Subject to a Loophole". In the article, David Johnston, the author, gives some powerful insight into how the wealthy are using Life Insurance to protect their assets and avoid paying the hefty death taxes. The proceeds of a well constructed Life Insurance plan are paid out to beneficiaries Tax Free. For the record it isn't a loophole if it is part of the IRS tax code. Those that know the code and use it to their advantages will be better off.
Depending on the year and the state you live in, death taxes can be as high as 50%. Can you imagine saving money, paying off your home and building a retirement plan in a 401k or IRA just to have half of it disappear after your death due to taxes? Anyone that doesn't like the idea of giving their money to the government after death should be holding adequate amounts of death benefit to cover their assets.
Best-selling Author Ed Slott has an incredible lecture series called Stay Rich Forever and Ever. In that series he talks about how people can lose most of their money and assets without proper planning due to Death and Estate Taxes and Final Year Income Taxes. He gives the example of someone with 10 Million dollars having nothing within 9 months because of the tax booby trap their money fell into. This could leave your family with nothing because you didn't have a plan in place to protect your money.
Watch Ed Slott's 10 minute video here.
Ed Slott does not sell Life Insurance. He is a tax planner and CPA. He shows people how to strategically protect their assets and how life insurance he says, "is the single BIGGEST benefit in the tax code". He makes a joke that he actually personally owns so much Life Insurance that he's afraid to eat at home with his wife.
As the video shows, your money can get trapped and eaten up in taxes. He recommends using life insurance to cover that asset and leave money completely tax-free to your heirs. So why would someone buy life insurance and pay for this tool? Taxes and a legal way to protect yourself against them.
If you would like to learn how to safely grow your money without the worry of future taxes and also protect the assets you have worked so hard to accumulate, contact me and we can build a plan to protect your future. There is a way to create a stream of tax-free income in retirement (living benefits of life insurance) and a way to pass money on to future generations tax-free (death benefit) and I can show you today.
We live in such different times that for many of us this won't make sense, but for thousands of years people saved the seeds from their fruits and vegetables for the following years planting. It was a practice called "seed saving" or "brown bagging". Planting seeds in the Spring and harvesting in the fall was all people and farmers thought about or else they starved to death. Today I see many financially starved people.
It used to be that a farmer would plant in the Spring the crops he wished to have in the Fall. Whether it was corn or squash or soy bean. He would then watch over his crops to make sure they weren't drying up, being over-watered or letting the birds devour his hard work. He wouldn't plant his seed and then not check up on it for several months. If he could make it through the Summer he would then have the chance to harvest his crop and eat what he planted or sell it for a profit. However he wouldn't eat it all and he certainly wouldn't sell it all. He would guard it with his life against the coming Winter until he could find another Spring to plant them.
So many of us depend upon the grocery store and food manufactures to make our food that saving seed has become foreign to us. The seed of our day is "Money". Yet we don't seem to be following the principle of saving our seed for future opportunities. Today NBC News released an article that 25% of Americans will be raiding their 401k's and IRA's this year just to cover their basic monthly bills. Most people are saving something in their work fund or personal accounts, but usually not enough. As I speak with people from all over the country about saving and investing their money, so many are so focused on the interest rate that they forget to do their part and save money. Don't get me wrong, you want to get the highest interest rate you can, but I don't hear many talking about the amount of money THEY are saving. I see a pattern of relying too heavily on the interest rate and not enough on the volume of money we personally put away.
So how much should we be saving? Some say 10% minimum. While others are now saying 15%. I think you should save as much as you can with a goal to save a little more each year. Perhaps the most you can do right now is 1%. With some effort and focus you would probably get that up to 5% and then 10% pretty quickly. It's amazing what humans can do when they have a purpose behind something. Figure out what you are saving for and get serious about it.
There is a great story in the Old Testament of the Bible that talks about saving seed for the future. Remember Joseph and the coat of many colors, who was sold into Egypt? Well, once he had gained favor in the land, he was asked to interpret Pharaoh's dream of 7 fat cows being eaten by 7 skinny cows and 7 healthy ears of corn being devoured and eaten by 7 sickly ears of corn. He told the Pharaoh that they needed to save 1/5th or 20% of the grain for the years of famine. After 7 years of plenty and saving the grain, the 7 years of famine hit the land hard. They were able to survive because they had saved during the years of plenty.
We all have months and years of plenty. Do we save during those months or do we go on shopping sprees and eat out more? Are we prepared for the months and years of famine and hardship in our own lives?
One important reason you want to have money (seed) saved, is inevitably an opportunity (a Spring) will come upon you and you will have the resources to take advantage of that. I know a guy, let's call him Ben, that had just such an opportunity come his way. He had been saving money in his life insurance plan for many years when one day he was approached by his neighbor. The man told him that his family was on the verge of losing their home if they couldn't pay their mortgage. Ben asked him what savings he had or other resources, that could be used to make sure this didn't happen. The man mentioned that he had several hundred acres of land that he couldn't sell because the economy was so poor. Ben asked the man what was the lowest he would let the land go for? The neighbor told him $50,000. Because Ben had the money saved in his life insurance plan, he told him he would buy it.
The money saved the neighbors home and gave them some cushion while their money situation improved. The neighbor was grateful because it saved the home he and his wife had raised their children in. Because Ben didn't have to make payments back to his life insurance plan, he was able to sit on the land until the economy improved. 3 years later he was approached by a land developer and sold the land for over $250,000. Luckily he had saved some seed for that particular Spring because it resulted in an incredible harvest.
The truth is that the cost of living has gone up tremendously in America and we need to get wise with our finances and more disciplined with our saving. Unfortunately many people have confused the term saving with investing. Savings is money that you don't intend to lose. While investing is money you are willing to lose in an attempt to get a higher rate of return. Risk verses reward. The problem is that 401k's and IRA's have become the No. 1 place for Americans to save their money. 401k's are not a savings vehicle when your money is in the Stock Market and at risk to be lost. How many trillion's of dollars have been lost to hard working Americans each time the stock markets drops? CBS News has a great article on how trillions of dollars evaporated in 2008.
With a properly structured Cash Value Life Insurance plan you can safely save money for major purchases or even to supplement your retirement. You can borrow against the policy without any fees or penalties for touching your money before age 59 1/2. You can use these plans to make major purchases like cars, start businesses, pay medical bills or create a stream of tax-free income for life.
Remember a good farmer woundn't:
Lose his seed
Eat all his seed
Gamble with his seed
Sell all his seed
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