12. America’s Wealth 31% of America’s wealth is now in the house. 67% of Americans have more wealth in their house than in all other investments combined. Preferred Non-Preferred
16. Wealth Vision “ The real voyage of discovery consists not in seeking new landscapes but in having new eyes.” - Marcel Proust French novelist and Author, 1871-1922
35. Value of Money “ Time is the greatest ally when it comes to saving for retirement. A worker who saves $1,000 a year from age 20 through age through age 30 then stops, will have more at retirement than someone that starts a age 30 and saves the amount for 35 years Straight.” - Elaine L. Chao, U.S. Secretary of Labor
36. $32,101 Hypothetical 8% Rate of Return on $434 Paying 5.00% $250,000 $651,128 Interest Only Loan Investing The Difference:
37. $146,933 Hypothetical 8% Rate of Return $100,000 Equity Liberated $1,006,266 $250,000 Idle Equity Liberated And Invested at 8%:
38. $146,933 Hypothetical 8% Rate of Return $100,000 Equity Liberated $1,006,266 $250,000 Idle Equity Liberated And Invested at 8%:
39. Home Insecurity “ That was my nest egg. It was about half my net worth. I have a $400,000 loss after the flood insurance. Its appraised value was probably $600,000 to $700,000, but I had been offered more to sell it. That house was the first thing I ever had that was paid for. The hurricane certainly complicated my decision across the board. From a personal standpoint, I need a little more income.”- Trent Lott, U.S. Senator, SunHerald.com
40. Answer : False Equity in your home does not enhance your net worth at all. Separated from your home, however, it has the ability to dramatically enhance your net worth over time." Question: True or False Equity in your home enhances your net worth.
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43. You Have The Choice… You Can Work To Pay Your Mortgage! or You Can Make Your Mortgage Work For You!
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45. “ Rule of 72” Applied To Future Cost of Living *rounded up to 15 $2,500 per month Your Living Cost Today $5,000 per month Cost of living in 15 years $10,000 Cost of living in 30 years Doubles every 15 years 72 divided by 5 = 14.4*
65. Market Risk Evaluation Annuities U.S. Treasury Bills X Equity in House Money Market Funds Investment Grade Life Insurance CD’s X Mutual Funds X High Grade Bonds X Blue Chip Stocks Investment Real Estate X Lower Quality Bonds X Speculative Common Stocks Raw Land Limited Partnerships Business Ventures X Commodities Rate of Return Liquidity Safety Investment
66. Market Risk Evaluation Annuities U.S. Treasury Bills X X Equity in House Money Market Funds Investment Grade Life Insurance CD’s X Mutual Funds X High Grade Bonds X Blue Chip Stocks X Investment Real Estate X Lower Quality Bonds X Speculative Common Stocks X Raw Land X Limited Partnerships X Business Ventures X Commodities Rate of Return Liquidity Safety Investment
67. Market Risk Evaluation Annuities X U.S. Treasury Bills X X X Equity in House X Money Market Funds Investment Grade Life Insurance CD’s X Mutual Funds X High Grade Bonds X Blue Chip Stocks X Investment Real Estate X Lower Quality Bonds X Speculative Common Stocks X Raw Land X Limited Partnerships X Business Ventures X Commodities Rate of Return Liquidity Safety Investment
70. Risk and Return Before a single dime of your critical cash is invested, 3 factors need to be considered:
71. Risk and Return Before a single dime of your critical cash is invested, 3 factors need to be considered: the risk of loss of your investment Safety
72. Risk and Return Before a single dime of your critical cash is invested, 3 factors need to be considered: the use and control of your investment the risk of loss of your investment Liquidity Safety
73. Risk and Return Before a single dime of your critical cash is invested, 3 factors need to be considered: the earnings on your investment the use and control of your investment the risk of loss of your investment Return Liquidity Safety
74. Market Risk Evaluation Annuities U.S. Treasury Bills Equity in House Money Market Funds Investment Grade Life Insurance CD’s Mutual Funds High Grade Bonds Blue Chip Stocks Investment Real Estate Lower Quality Bonds Speculative Common Stocks Raw Land Limited Partnerships Business Ventures Commodities Rate of Return Liquidity Safety Investment
75. Market Risk Evaluation Annuities U.S. Treasury Bills X Equity in House Money Market Funds Investment Grade Life Insurance CD’s X Mutual Funds X High Grade Bonds X Blue Chip Stocks Investment Real Estate X Lower Quality Bonds X Speculative Common Stocks Raw Land Limited Partnerships Business Ventures X Commodities Rate of Return Liquidity Safety Investment
76. Market Risk Evaluation Annuities U.S. Treasury Bills X X Equity in House Money Market Funds Investment Grade Life Insurance CD’s X Mutual Funds X High Grade Bonds X Blue Chip Stocks X Investment Real Estate X Lower Quality Bonds X Speculative Common Stocks X Raw Land X Limited Partnerships X Business Ventures X Commodities Rate of Return Liquidity Safety Investment
77. Market Risk Evaluation Annuities X U.S. Treasury Bills X X X Equity in House X Money Market Funds Investment Grade Life Insurance CD’s X Mutual Funds X High Grade Bonds X Blue Chip Stocks X Investment Real Estate X Lower Quality Bonds X Speculative Common Stocks X Raw Land X Limited Partnerships X Business Ventures X Commodities Rate of Return Liquidity Safety Investment
78. Test For Conservative Long-Term Accumulation 9.61% 7.45-13.75% FIFO Investment Grade Life Insurance 7% 5 to 9.3% LIFO Annuity 5% 1-18% As Earned CD Average Range of Return Taxation Investment
79. Test For Conservative Long-Term Accumulation Earned Income Tax 9.61% 7.45-13.75% FIFO Investment Grade Life Insurance 7% 5 to 9.3% LIFO Annuity 5% 1-18% As Earned CD Average Range of Return Taxation Investment
80. Test For Conservative Long-Term Accumulation Income Taxes Due On Interest Earned 10% early withdrawal similar to a IRA or 401(k) prior to 59 ½ 9.61% 7.45-13.75% FIFO Investment Grade Life Insurance 7% 5 to 9.3% LIFO Annuity 5% 1-18% As Earned CD Average Range of Return Taxation Investment
81. Test For Conservative Long-Term Accumulation TAX FREE 9.61% 7.45-13.75% FIFO Investment Grade Life Insurance 7% 5 to 9.3% LIFO Annuity 5% 1-18% As Earned CD Average Range of Return Taxation Investment
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85. $100,000 Gains Become Principal That is a $12,750 difference because of the annual lock in and reset. 10% The Powerful Advantage of Annual Lock in and Reset of the S&P Index $110,000 $99,000 -10% 1% $111,100 13% $116,655 $103,950 5% 5%
86. S&P 500 Index vs. EIUL Contract 1999-2005 12.99% EIUL Contract $112,990 $112,990 12.99% 1999 $100,000 Basis $100,000 Basis S&P500 Index Year
87. S&P 500 Index vs. EIUL Contract 1999-2005 $114,120 1.00% $106,050 -6.14% 2000 12.99% EIUL Contract $112,990 $112,990 12.99% 1999 $100,000 Basis $100,000 Basis S&P500 Index Year
88. S&P 500 Index vs. EIUL Contract 1999-2005 $114,120 1.00% $106,050 -6.14% 2000 1.00% 12.99% EIUL Contract $115,261 $89,252 -15.84% 2001 $112,990 $112,990 12.99% 1999 $100,000 Basis $100,000 Basis S&P500 Index Year
89. S&P 500 Index vs. EIUL Contract 1999-2005 $114,120 1.00% $106,050 -6.14% 2000 $116,414 1.00% $67,485 -24.39% 2002 1.00% 12.99% EIUL Contract $115,261 $89,252 -15.84% 2001 $112,990 $112,990 12.99% 1999 $100,000 Basis $100,000 Basis S&P500 Index Year
107. Our Solution Compared To IRA Deposits: 30% Tax Bracket $67,827 Annual Withdrawal $3,956 7.5% $904,363 Regular IRA Net Monthly Income Rate of Return Balance Investment
108. Our Solution Compared To IRA Deposits: 30% 30% Tax Bracket $47,497 $67,827 Annual Withdrawal $3,958 7.5% $633,054 Roth IRA $3,956 7.5% $904,363 Regular IRA Net Monthly Income Rate of Return Balance Investment
109. 50% More Income For Life! Our Solution Compared To IRA Deposits: 30% 30% 30% Tax Bracket $72,004 $47,497 $67,827 Annual Withdrawal $6,000 7.5% $960,055 Our Solution $3,958 7.5% $633,054 Roth IRA $3,956 7.5% $904,363 Regular IRA Net Monthly Income Rate of Return Balance Investment
110. Our Solution Compared To IRA Deposits: 30% 30% 30% Tax Bracket $72,004 $47,497 $67,827 Annual Withdrawal $6,000 7.5% $960,055 Our Solution $3,958 7.5% $633,054 Roth IRA $3,956 7.5% $904,363 Regular IRA Net Monthly Income Rate of Return Balance Investment
111. How long will $1 million last? Comparison with tax-deferred IRA/401K 120 115 110 105 100 95 90 85 80 75 70 65
112. How long will $1 million last? Comparison with tax-deferred IRA/401K 120 115 110 105 100 95 90 85 80 75 70 65 Age 81 35% Tax Bracket
113. How long will $1 million last? Comparison with tax-deferred IRA/401K 120 115 110 105 100 95 90 85 80 75 70 65 Age 81 Age 82 35% Tax Bracket 30% Tax Bracket
114. How long will $1 million last? Comparison with tax-deferred IRA/401K 120 115 110 105 100 95 90 85 80 75 70 65 Age 81 Age 84 Age 82 35% Tax Bracket 30% Tax Bracket 25% Tax Bracket
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118. If you do a good job saving for retirement , Will you be in a higher or lower tax bracket? Answer : Most of us will be in the same tax bracket or possibly higher.
125. Step 1 home equity line Consider the amount borrowed and the tax preferences of that money. credit cards car loans student loans installment loans A smart loan amount when used to shelter bad debt can increase Safety, Liquidity and Return.
126. A simple rule of thumb, multiply current gross income by 4 for an availability estimate. Consider what portion of the wealth might be available to you. liquidity – liquidity – liquidity location – location – location Step 2
127. Step 3 Consider that wealth in the house, is only safe if you have use and control. lawsuit divorce disability job loss foreclosure depreciation A smart protection strategy is to have a 100% HELOC that is updated when equity increases by 5%.
128. Net Gross Internest Paid* Interest Earned Year 10 $46,200 $96,715 Year 20 $92,400 $286,968 Year 30 $138,600 $761,226 *Assumes a 27% marginal tax bracket and 7% state tax rate, after deducting applicable interest for tax purposes 30 year Interest Only vs. 30 year fixed: Equity Removed:$100,000 Interest-Only Payment:$583 Tax Bracket: 34% Net Earned $46,200 $92,400 $138,600
Notas do Editor
How We Work… If you should decide to work with us, we are only paid on solutions that work, You’ll Never write a check to us personally and we do not charge to work with your CPA or Attorney. We are here to serve YOUR needs!
This is really a 3 day Educational course that we’ve shorten to give you an overview or an introduction to some of the basic concepts… Our Goal Is To Provide Every Family With The Strategies, training and Help They Need To: Be Debt Free, Reduce Income Taxes, Establish A Source of Emergency Funds and Maximize Retirement Savings. We believe every family should have the opportunity to be financially secure…
Now there's another interesting question . . . ADVANCE SLIDE . . .that we have to ask if more and more of us are going to be living longer and longer which is, how old is old? Think back to when you were a kid, how old did you think old was? Twenty-five? Thirty-two? It turns out that most of us walk around with a number in our minds, and the number is 65. Sixty-five, where did that age come from?
First let’s talk about The Facts Of Life in the USA… We have several huge problems. Is there any question that Consumer Debt is out of control? I read somewhere that the average American family has 7 credit cards, with balances totaling over $10,000. Do you think that is the main reason why most people aren’t able to save any money? And, then there’s then recent loses in the stock market. How many of you lost money in the recent stock market decline? Are you even back to where you where 5 years ago? How many of you have moved some, or all, of your money into money market accounts, CDs or savings accounts? Are you happy with the low interest rates you are getting? How many of you are paying less in income taxes than you were 10 years ago? Do you see taxes going up with the problems we face with the social security system?
First let’s talk about The Facts Of Life in the USA… We have several huge problems. Is there any question that Consumer Debt is out of control? I read somewhere that the average American family has 7 credit cards, with balances totaling over $10,000. Do you think that is the main reason why most people aren’t able to save any money? And, then there’s then recent loses in the stock market. How many of you lost money in the recent stock market decline? Are you even back to where you where 5 years ago? How many of you have moved some, or all, of your money into money market accounts, CDs or savings accounts? Are you happy with the low interest rates you are getting? How many of you are paying less in income taxes than you were 10 years ago? Do you see taxes going up with the problems we face with the social security system?
Let’s take a quick quiz… How many of you believe… (read the questions on the slide) (You might consider giving a prize to whoever answers all of these correctly…)
So, How Do We Keep The Great American Dream Alive? It’s a whole new ballgame. We Need To Rethink The Old Traditional Ways We Managed Our Money and we need to Find Ways To Make All Of Our Money and Assets Work For Us…
Reason #1: Mortgages don't lower home values. Your house will grow in value (or not) whether or not you have a mortgage. In fact, most people discover that, over time, their mortgage balance falls while their home value rises - creating substantial wealth they never expected. Reason #2: Your mortgage is the cheapest money you'll ever buy. Most people need to borrow money during their lives, so why pay 18% to credit cards when you can borrow at rates of 7% or even less? Reason #3: Your mortgage is the best way you can lower your taxes. Interest you pay on personal loans, auto loans and credit cards is not tax-deductible, but for most of us, interest you pay on mortgage loans is fully tax-deductible, making the cheapest loan you'll ever get, even cheaper. Imagine borrowing money for a net cost of less then 5%1 You can do it with a mortgage loan! Reason #4: Get the cash out of the house - while you still can. The main reason people turn to borrowing is because they have little or no income. But if you ever suffer a job loss, major medical or other financial crisis, you could find yourself unable to get a home loan. That's because lenders don't like to lend money if you are already in financial difficulty. That's why you should get a big mortgage now, before you need it - while you still can. Reason #5: Your mortgage becomes even cheaper over time. Depending on the loan you choose, your payment never rises - but your income likely will. That means todays mortgage payment becomes increasingly easy to pay over time. The rules of money have changed. And nowhere is that more true than with mortgages. Reason #1: Mortgages don't lower home values. Your house will grow in value (or not) whether or not you have a mortgage. In fact, most people discover that, over time, their mortgage balance falls while their home value rises - creating substantial wealth they never expected. Reason #2: Your mortgage is the cheapest money you'll ever buy. Most people need to borrow money during their lives, so why pay 18% to credit cards when you can borrow at rates of 7% or even less? Reason #3: Your mortgage is the best way you can lower your taxes. Interest you pay on personal loans, auto loans and credit cards is not tax-deductible, but for most of us, interest you pay on mortgage loans is fully tax-deductible, making the cheapest loan you'll ever get, even cheaper. Imagine borrowing money for a net cost of less then 5%1 You can do it with a mortgage loan! Reason #4: Get the cash out of the house - while you still can. The main reason people turn to borrowing is because they have little or no income. But if you ever suffer a job loss, major medical or other financial crisis, you could find yourself unable to get a home loan. That's because lenders don't like to lend money if you are already in financial difficulty. That's why you should get a big mortgage now, before you need it - while you still can. Reason #5: Your mortgage becomes even cheaper over time. Depending on the loan you choose, your payment never rises - but your income likely will. That means todays mortgage payment becomes increasingly easy to pay over time. The rules of money have changed. And nowhere is that more true than with mortgages. Reason #1: Mortgages don't lower home values. Your house will grow in value (or not) whether or not you have a mortgage. In fact, most people discover that, over time, their mortgage balance falls while their home value rises - creating substantial wealth they never expected. Reason #2: Your mortgage is the cheapest money you'll ever buy. Most people need to borrow money during their lives, so why pay 18% to credit cards when you can borrow at rates of 7% or even less? Reason #3: Your mortgage is the best way you can lower your taxes. Interest you pay on personal loans, auto loans and credit cards is not tax-deductible, but for most of us, interest you pay on mortgage loans is fully tax-deductible, making the cheapest loan you'll ever get, even cheaper. Imagine borrowing money for a net cost of less then 5%1 You can do it with a mortgage loan! Reason #4: Get the cash out of the house - while you still can. The main reason people turn to borrowing is because they have little or no income. But if you ever suffer a job loss, major medical or other financial crisis, you could find yourself unable to get a home loan. That's because lenders don't like to lend money if you are already in financial difficulty. That's why you should get a big mortgage now, before you need it - while you still can. Reason #5: Your mortgage becomes even cheaper over time. Depending on the loan you choose, your payment never rises - but your income likely will. That means todays mortgage payment becomes increasingly easy to pay over time. The rules of money have changed. And nowhere is that more true than with mortgages.
Let’s Understand a little more about Home Equity… If You Build Up Equity In Your Home, Is It Going To Help Your Home To Appreciate In Value?
The Truth Is… Your Home Is Going To Appreciate The Same Amount, Whether You Have Equity Built Up Or Not!
Consider… If Having Equity In Your Home Isn’t Helping It To Appreciate In Value, …Then What Is Your Equity Doing?
It’s A Missed Opportunity… It Is Just Sitting There Earning ZERO! And Worse Yet, It’s Losing You Money! From A Financial Or Business Perspective Does That Make Any Sense?
Question: True or False Equity in your home enhances your net worth. Reality: Equity in your home does not enhance your net worth at all. Separated from your home, however, it has the ability to dramatically enhance your net worth over time.”
Why Wouldn’t You Do This? More Advantages… You Would Have A Greater Income Tax Write Off During The Entire 30 Years … If You Are Laid-Off or Injured You Always Have The Money To Make The Mortgage Payments… You Are In A Better Position To Take Advantage Of Other Money Making Opportunities… You Can Always Pay Off The Mortgage Early , If You Ever Want To…
Best Of All… In Most Cases… All Of This Can Be Accomplished Without You Spending A Penny more Than You Are Spending Today!
Read Slide
So, what do you think is the single biggest change that's going to happen in our lives as a result of greater longevity?
Historically, we've lived a linear life plan . Life was short. Biologic clocks were ticking away. And we tended to organize our lives in a relatively predictable fashion.
First we learned. We did that once.
Then we fell in love, got married, and it always lasted forever.
We divided up the responsibilities --"Honey, you take care of the home. I'll go out and earn the money. Those were our jobs." Our kids always turned out perfect. And right before we died—
We took a cruise. That ‘s what life was .
But what if you knew you might live to be 90 or 100? Would you be in a hurry to get to be old just so you could be old for an extra 20 years? No one ever says that they can’t wait to have more longevity so that they can be “older” a really long time. What people say is they want to be young longer. They want to be middle-aged longer. The truth is, people don’t want to be any age at all. They just want to have the freedom to do all the things they want to do with their lives. I think the biggest change you’re going to see is the end of the linear life plan and the emergence of what I’ll call . . .
. . . a cyclic life plan in which people go back to school two, three, four times in their lives. In which people who might find themselves widowed or divorced fall in love again. In which people retire and then get tired of it and start new lives, new careers. They reinvent themselves.
Caregiving.” The average American today actually has more parents than children. Yet the average person in this country has given almost no thought to long-term care and financing it, which could break the bank.
. . . “Emptynesting.” As life grows longer, many couples will find themselves spending more years together - after the kids have left the nest - than all the years they spent actively parenting. It’s often a time when most couples sit down and rethink both their lifestyle priorities and and possibly reshaping their financial plans.
“ Singlehood.” We have 18 million singles over the age of 50. This next part might upset some of you.
When we pass away, these new modern women go through a period of very deep grief and bereavement —
. . . for about a year and a half. And then they get on with their lives.
ADVANCE SLIDE “Grandparenthood.” How about grandparenthood? Are any of you grandparents? Presenter Notes The National Center for Public Policy and Higher Education reports that the number of high-income families borrowing for college has grown from 16% in 1990 to 45% in 2000. With the rising cost of college education today, this is an ideal spot to provide examples of attractive approaches that you have used in your practice and resulted in win/wins for your client, their children and their grandchildren.
This gal sitting down in the blue dress is named Sarah Knauss. She’s 118 years old. Her daughter, Kitty, in the red dress is 95. Standing at the top is her grandson, Bob. He’s 73. He’s holding the great granddaughter, Kathy. She’s 49. The great-great granddaughter, Christina, is sitting on the floor. She’s 27. And the great-great-great grandson, Bradley, is 3. Six-generation families. Have you begun to contemplate how you would manage your wealth across two, three, four-generation families?
“ Retirement” is certainly one of the big adult lifestages that is being reinvented. In fact, I believe we are witnessing the birth of a new era of retirement right now.
Note that according to Webster’s Unabridged Dictionary, “retirement” officially means : “to disappear,” “to go away,” “to withdraw.” For a growing number of people, this is not what they’re hoping for with their extended longevity. What about you?
Assuming you followed through, you’d need to put away $467 per month (if you were in a combined 30% tax bracket) This would be the after-tax cost of your mortgage payment at 8%. Let’s see the results…
Your investment account would to $662,025 in 30 years. Had you gone the first route, borrowed the $100,000 and put it immediately to work, your wealth would have grown to $1,093,573. That’s over 60% more!
If you are a farmer and you had to go to the local feed store to buy some seed, to plant in your corn fields. And when you got to the counter to pay for the seed, the clerk ask you: Would you like to pay tax on the Seed now and get the harvest tax free or get the seed tax free and pay Tax on the harvest?
I Rather Pay Tax on the seed and get the harvest tax free! But the is just the opposite of how Qualified or Regulated Retirement plans work! Regulated Retirements plan let you get a tax break on the fund your contributing, but when you retire here comes uncle Sam with a wheel barrel to collect his taxes! Uncle Sam Has conditioned us to believe that qualified/ Regulated plans are god for us, when it is actually uncle Sam’s best retirement savings plan.
Each now had his own opinion, firmly based on his own experience, of what an elephant is really like. For after all, each had felt the elephant for himself and knew that he was right!
Let Me Ask You This Question Is: {READ THE SCREEN!!!!} Let me ask you this questions too: What are taxes going to be 10, 15, 20 years from now? Higher or lower? More the likely than not they will be higher! What has the IRS done to us in the last 10 years? Lowered tax brackets while increasing effective tax rates, Taken away deduction, increased taxation of social security, and more Alt. Minimum Taxes
More ‘Smart Money’ Choices … Now Imagine What Could Happen, If You… Increased the Deductibles On Your Home Owners Insurance, Auto Insurance, Health Insurance, Disability Insurance, etc… Positioned Your Assets And Income To Qualify For College Financial Aid… Took Advantage Of The Free Money In A 401K… Reduced Your Income Taxes…
And, It Gets Even Better… Become Your Own Banker! How About The Next Time You Decide To Buy A Car, Make A Major Purchase or Need Money For A Business Opportunity… You Borrow The Money From Yourself Instead Of A Bank! Then You Pay Yourself The Principal And Interest You Would Have Paid The Bank! How Much Better Off Would You Be?
Read Slide
So, How Do We Keep The Great American Dream Alive? It’s a whole new ballgame. We Need To Rethink The Old Traditional Ways We Managed Our Money and we need to Find Ways To Make All Of Our Money and Assets Work For Us…