Using Insurance As an Investment Strategy

By Steve Beaman 

 

With the massive increases to our taxes taking place on January 3rd (barring any major changes), the notion of avoiding taxes or simply delaying payment becomes all the more attractive. Since the 1980's when deductions were largely eliminated except for mortgage interest and charitable contributions, it has become increasingly difficult to protect your hard earned money from the "redistributionists" who want to give it to someone else. Insurance is something you should consider.

Let's start at the basics, what is insurance? Simply stated, insurance is the act of transferring risk from one part to another. So you purchase auto insurance to transfer your driving risk to a company who, because of its broad coverage can pony up the cash in the event of a collision. Or you purchase life insurance to transfer the risk of the financial loss incurred by your death to an insurance company. It's pretty simple really, but there is one key component to insurance that makes it possibly quite attractive to you as an investor; the growth of your money inside an insurance contract is tax deferred!

Let's assume for a moment that you're in that hideous 39.6% federal bracket meaning that you and your spouse make more than $250,000 per year. So the next dollar earned, you keep (including State taxation) only about 55% of your earned money and that does not count the special investment taxes that have been placed on capital gains and dividends. So what do you do? Well, insurance may be an attractive idea. Let's assume you fund a variable life insurance policy and with it, rather than investing money in simply more ended mutual funds or ETF's, you put those investments under the insurance umbrella. The resulting returns are pretty staggering. Due to its tax deferred accumulation, the return inside the insurance contract can be ½ of the return outside and with no additional risk, yield the same future amount. Let's be specific, let's assume you're 35 years old, and earn just over $250,000, so you can save $1,000 per month toward your future retirement. With that money, option one is to invest it with a traditional investment product like a Mutual Fund or ETF, and option two is to purchase a variable insurance product. Here are the results, assuming they both earn 7% per year over the next 30 years, and taxes don't change, and you pay 1.5% per year in cost of the insurance product. At 65, you will have gained over $500,000 more by using the insurance vehicle to invest rather than the non-insurance way.

Now here's an interesting question that sometimes comes up, "what's the difference between using Insurance and other retirement plans like 401k's and IRA's?" Well I would say this, there has been talk in Washington of nationalizing the 401k's and IRA's and while this may be a long shot, there has never even been a discussion of stopping the insurance products. So you make the call, is it less risky to have an insurance product tax deferred or a 401k/IRA?

One final note, all insurance companies and all insurance products are not created equal! Your invested capital is regulated but that doesn't mean the insurance company will be around to honor its commitments to you, so conducting due diligence on your part is required, and is smart. As you evaluate your entire capital structure including your house, your cash, your equity assets, your debt assets and your commodity assets, keep in mind that only you have genuine concern about your future. Your advisor and your agents care, but they have many people to care about. You and you alone bear the ultimate responsibility to know where your money is, what your money is doing, and why it's placed as it is!

Steve Beaman is the Founding Member of The Society for the Advancement of Financial Education - S.A.F.E. He is the author of over 400 articles on better living; a 2 volume 12 CD Audio library and "The American Dream Under Fire".

Steve is a frequent keynote speaker, television guest and radio guest. He has appeared on Fox News, Heritage Foundation Radio, Politics Tonight with Paul Lisnek, and countless others. He performs live events with the "Arming America Band" featuring major rock talent.

To contact Steve or book him for an event, please write to info@societyforfinancialeducation.org.

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How to Fund College Education - Are There Options?

By Walter Seward

 

Our children are growing up. High School will soon be completed. What's next? College? Now for the hard questions. Where? How much will it cost? Where will we get the money?

Some families have set up a savings account when their children were born. Others have opened a 529 savings account. A few families have a participating permanent whole life insurance policy from which they may "borrow" funds for college expenses.

What is the best option you ask.

Before discussing your options. Let's talk about Investment vs savings.

An investment is always a risk, a gamble, an unknown. An investment may be money put into stocks or mutual funds or even a 529 College Savings plan. We invest with the HOPE for a financial gain. However, there are no guarantees!

Savings is when we have put money into a secure place and you know up front what the return or gain be. Your savings account at the bank states they will pay you a specific amount of interest.

College 529 Savings plans although the tax advantage is attractive. They do have some definite drawbacks. What if your child chooses not to go to college, wants to attend college in a different state, or is able to get scholarships to fund his or her education? Another point to be made is that the funds have to be used for education by the time the beneficiary (your child) turns thirty, to avoid the non-qualified use penalty. Also the government can change the rules of the 529 plan at any time.

The other viable option worth serious consideration is to purchase for your child a Participating Permanent Whole Life Policy. Why? There are several solid reasons which I will highlight here.

1. It is secure. It is not tied to the stock market.
2. This type of insurance is very low cost when purchased for children.
3. It has a guaranteed rate of return.
4. You may borrow from this policy cash to pay for college education without obligation to pay a set amount each month to replace that loan. The advantage of borrowing from "self".
5. Most important is that you have full control over these funds and their availability to you.
6. Additional benefit is that you will get additional money from the death benefit.

My advise is to consult with financial adviser and consider all your options.

It is my opinion that using your child's life insurance policy to fund College is a wise decision.

http://walterseward.com

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Top 5 Advantages of a 401k Plan

By Teddy Dutch Danfield

 

We all know we need to save for retirement. The question becomes: Where should I save my money? The simple answer for many will be their work 401k plan. I want to give you five advantages of a 401k plan. Most people have a 401k plan, but they do not know how to take full advantage of a 401k plan.

#1 Just start saving money in 401 Plan
Most people associate a 401k plan with the stock market. The stock market is viewed as a risky investment. Therefore they do not want to save any money in a 401k plan. First of all you do not have to invest in the stock market if you feel it is too risky. This is a great advantage of a 401k plan because you can choose to invest only in bonds or even a guaranteed investment.

Now investing in only bonds may not give you the higher rates like stocks, but you will not have to worry about huge declines in value. However, a big mistake people make is not to save any money at all. Following a plan of not saving will only guarantee you will work forever.

#2 Company Match = Pay Raise
Typically employers offer a company match if an employee saves money in the 401k plan. A common company match is a 3% match. For you the employee a 3% match means if you save 3% of your paycheck in the company 401k plan then your employer will match this same 3%. Here is a mistake many people make when saving in a 40k1 plan. They decide only to save 1% of their paycheck, but the employer will only match the same 1% and not 3%.

Do not give up a 3% pay raise by not saving any money in the 401k plan. The company match is one of the great advantages of a 401k plan. Just by saving a little amount of your pay will lead to a pay raise. What a great benefit.

#3 Pay Less in Taxes
Who likes to pay taxes? No one. Well by saving money inside of a 401k plan can reduce your taxes. The government allows you do deduct any money you save inside your 401k plan. For example, you decide to save $2,000 into your work 401k plan the government allows you to deduct the $2,000 from your wages. If you earned $50,000 the government allows you to subtract the $2,000 from your income. In other words you would only have to pay taxes on $48,000 vs. $50,000.

All during your working years you can continue to save money in your 401k plan without having to pay income taxes. However, when you retire the government does want to start collecting taxes on your 401k savings. When you do start withdrawing money after age 59 1/2 you will pay current income taxes only on the amount your withdraw from your 401k.

Remember you only pay taxes on the money you withdraw; the remaining balance continues to grow tax-deferred. Deferring your taxes later in life is one of the huge advantages of a 401k plan. As I stated earlier just starting to save money in a 401k plans opens up all these advantages.

#4 Professional Money Management
In a 401k plan you only have to pick the mutual funds, not the individual stocks or bonds. Professional money managers who have expertise in researching companies pick the investments inside the mutual funds. By investing in mutual funds inside your 401k plan saves time and money.

You do not have to do your own research on each individual company. A typical mutual fund has between 100 to 300 different companies.

As an investor I know I do not have the time or expertise to research 100 companies to decide how to invest my money. Not having to pick our own individual investments is another one of the skey advantages of a 401k plan.

#5 The Money is Yours, Not the Companies
A common mistake people think about a 401k is the money is tied to the company. People believe if the company goes out of business they will lose their money. This is incorrect because the money is invested separately at a mutual fund custodian company. Your employer does not have any access to your 401k plan money.

The only amount of money an employer could keep if you leave the company is the company match. Some employers have a required amount of time you need to be employed at the company before you receive the amount they matched in your account. This is known as the vesting schedule. Companies may require you work at the company for three years before you receive the money the company contributed to your 401k plan.

However, they never have any right to the money you personally saved in the 401k plan. This is your money, not theirs. Not having to pick all your own investments is another one of the advantages of a 401k plan vs. a pension plan. Potentially an employer does not have to honor a pension plan if the company goes out of business. If you believe this could not happen to you just look at some of the airline and steel companies. When the companies went out of business they did not have any money to pay for the employees pensions.

Final Thoughts
We all plan to retire someday. To retire successfully we need to have some cash saved up to pay our living expenses during retirement. We cannot depend entirely on Social Security or a company pension. We do not have any control if the government or your employer decides to make changes in the future.

A 401k plan can give you some control of your retirement plan and your future. However, you do need to review your account periodically to see if changes need to be made.
Overall there are significant advantages of a 401k plan to your retirement plan. Take the time to review these advantages for your own retirement savings.

For more on Roth IRA information and receive a complimentary retirement ebook at http://rothirasecrets.com

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Love Your Investments With Highest Dividend Stocks

   

By Joe Mathrews

 

Lots of investors have gathered fortune with highest dividend stocks. However, stocks always call for uncertainties. Thus, investors constantly remain under the threat of losing money. Stocks often come at high price ranges. Thus, make sure to collect relevant information, before you start investing money in buying stocks from good companies. Stocks are assets. They help you grow financially and at the same time they can be means of regular income. It is important that you start searching for avant-garde stocks. This is sure to add to your accumulated wealth.

Invest Wisely and with CautionFor decades, dividend investments have been part of lives especially for dedicated investors. With the bonds and shares there has always been an improvement in business. You just need to concentrate on two things. You should take into account the total return of the stock and the amount of dividend it would yield at the end. Inflating the balloon is fine but putting in too much air can result in bursting. Thus, it is always advisable to cut your coat according to your cloth. Invest to a level where you would be able to handle the risk of bankruptcy. Do not ever keep your entire fortune at stake.

Judging the SafetyInvestors are always wondering about the safety of highest dividend stocks. Once you can take to the smart tactics, making an investment won't at all be a risk for you. When investing carefully one is sure to get safe returns on the amount of money being financed in the deal. When you have decided to spend in dividends, the first thing you require doing is to spot a company with a good track record in paying dividends. Finding a company sounds easy. However, this is not so in reality. It is hard to get hold of a consistent track record. Still the game is on, and you keep on making payments and repayments with the desire to hit the jackpot at the end.

Believing in Equality
There are certain things you should look into when planning to invest in the stock market. You can start with the dividend payout ratio. The percentage should not be more than sixty on the part of the company. If the company keeps the lion's share with the thought of expanding in the future, this can cause a severe cut down in the amount of dividend being earned. So the ratio should always stay leveled to make both the investor and the company enjoy a good amount at the end.

Securing Yourself is Important As a part of social security benefits, one can readily finance in highest dividend stocks. It is best to get in touch with a company with a standard price setting caliber. However, being overconfident in such matters is no way accepted. Market can crash at any moment. So expect the best and always stay prepared for the worst. Still, there are precautionary measures, which can save you from absolute bankruptcy. There is no point being a beggar at the end. Select and invest only after you have judged the authenticity in matters of investment returns.

Joe Mathrews as a part of social security benefits, has decided to invest in the genre of highest dividend stocks. Thus, he walks an extra mile explaining the methods of investment.

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The US Dollar

By Matthew Zorn

 

Over the last decade the US has gutted its manufacturing and professional services base by shipping them overseas, or as many call it, outsourcing. Since 2008, the Federal Reserve has been printing money at an alarming rate, tripling its balance sheet.

This is now starting to catch up with them and there is something going on behind the scene that has created a dollar protection policy. This is an all out operation to keep the value of the dollar up, make no mistake.

There is a huge supply of US dollars in the market from the printing that has been taking place and a lack of its use that is building. This is a perfect scenario for a collapse. Russia, Brazil, South Africa, and China as well as Australia, and now even perhaps France have all taken steps to eliminate trade in the reserve currency and are now setting up direct trade in the currencies of their own countries. The dollar is being threatened.

Okay, so what's the worry? What is the possible outcome of a devalued dollar?
First, the exchange value drops, followed by the cost of imports rising. Next we move on to domestic inflation. Domestic inflation will result in an environment that does not allow the Fed to keep interests rates low. The Fed is then forced to raise interest rates in an effort to keep inflation at bay.

Rising interest rates will signal the end of cheap money and will have an effect on expansion for business, additional costs for consumers who are in debt, and will have an adverse effect on the debt that the government holds. Taking more and more out of revenue streams to service higher debt costs. There are many more consequences, these are just a few.

So how does the Fed combat that?

Starting in April of this year, brokerage houses were told that hedge funds and institutional investors were going to start selling gold and silver. Goldman, then told their clients to take it one step further and to start shorting both metals, with an emphasis on gold. This is more than just selling; this is additional pressure being applied to the downside.

The Fed, as well as other sanctioned entities, are now using "Naked Shorts." Completely illegal, and you and I would go to jail if we did this. You can see by the action in the commodities sector, gold and silver specifically, that this is working. But, why is all this going on?

We are at a point in this money creation cycle that you cannot have any competition to the US dollar. It must remain being seen as a safe haven, and gold and silver are an alternative form of currency. That is a no, no in their eyes. It must be crushed. One thing to keep in mind is all of this is being done with paper gold and silver, not physical.

Bringing down the price of precious metals against the value of the US dollar make it look much stronger and helps to retain its safe haven status.

But, why would you want to scare people out of bullion, and are there unintended consequences?
People, and more importantly countries are backing up the trucks and taking advantage of the opportunity that these lower prices present. Although the paper market maybe taking it on the chin, the physical market is tighter than ever, and supply problems for delivery have been reported over the last month.

If too many people move to gold because they feel that the money printing will have unfavorable long-term consequences, it would surely disrupt or collapse the value of the dollar. The Fed needs confidence in the dollar so that they can continue to print huge amounts of paper money without crashing the price or value.

They are currently creating a situation and structure that will lead to an event in which we will see the collapse of our economy, and they know that. How do we know? One need not look any further than the growing police state that is the US. When we see the Department of Homeland Security buying bullets numbering in the billions that is one thing, suspicious, but explainable if you buy their story.

However, preparing and selling ARMORED TANKS to local police forces all around the country. You simply can't explain that away.

When this is all said and done, a new currency, perhaps global, will be necessary to instill confidence in fiat paper again. You may image that precious metals will be a part of that and this may be the reason that countries and central banks are stocking up now while the price continues to drop.

Matthew Zorn, who writes under the pen name M.P. ZORN, is a freelance writer and the author of the published books "Free Fall" and "Zero Hour." M.P. ZORN's books are available at in digital and print formats. Be sure to follow him at his website MP ZORN for more information on his books and follow his blog.

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Excellent And Simple Tips On Foreign Exchange Trading

   

By Leonard Lucas

 

You will find online business offerings which can be a lot better than other individuals, like their dimension. The foreign exchange market symbolizes the most important Forex trading platform for money on earth.

The speculation that pushes the price ranges up and down about the money exchanges tends to outgrow busting press. You have to set up electronic signals in the industry to allow you to utilize busting media.

Always have a laptop on hand. This may be used to make a note of any information and facts you find available on the market while you hear it so you won't neglect later. You may also use this in order to keep track of your development. Look back at your prior tips after a while to find out should they be nonetheless pertinent and successful.

You could turn out to be tempted to invest in several distinct foreign currencies once you begin Foreign Exchange trading. Commence purchasing just one foreign currency match until finally once you have acquired much more about the foreign currency market.

You may use all different forms of evaluation when buying and selling in the Forex marketplace. You should understand and comprehend all of them to become effective. As you may become more superior, you will discover strategies to pull benefits of the whole trio of evaluation varieties.
Consider transitioning up after you've become used to your Forex trading patterns. You may make trades rapidly.

Find a buying and selling foundation which is considerable. Numerous platforms permit you to have information and then make transactions over a Smartphone! This means that you may have more quickly allergic reactions and greater mobility.

You can find analysis of the most useful currency trading maps everyday and several-hour time periods. You can get Forex maps every quarter-hour. The disadvantage of these simple-term cycles is that they go up and down extremely and mirror an excessive amount of random good luck. It is possible to sidestep the vast majority of pressure and impractical enjoyment by avoiding quick-term cycles.

Make and stay with an investing program. Failure is probably going to come about when you neglect to build a Forex trading technique. Using a prepared indicates you can expect to avoid emotional buying and selling that is almost never successful.

Find out what little bugs linked to your trading computer software has. Even the best acknowledged computer software does have its defects. Expect to operate all around your computer software and learn the workarounds. You do not would like to stay away from finding out what information and facts can and should not be accepted when you're in the middle of your trade.

Approaching completely from specialist investors, these guidelines may help you business on the foreign currency market. Despite the fact that we could not ensure you will be profitable in your Forex trading, the following tips will assist you in turning into successful. If you stick to these guidelines, you will end up prone to make productive and rewarding transactions on the Forex market.

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Types of Brokers in CFDs Explained

By Frank Barry   

 

For people who want CFDs explained in the fastest way, then it should begin with differentiating the various types of CFD providers. Well, this is because by understanding this, new traders would be able to have a grasp on how a typical transaction would really look like in trading contracts for difference. In other words, they will have an instant understanding on how the systems work. It is in this light that this article will tackle this matter.

In a general sense, there are at least two (2) types of brokers in trading contracts for difference. These are those brokers that have direct market access (DMA) while the other type refers to those brokers that are commissions free. Both of these two (2) will be differentiated in the subsequent parts of this article.

Direct market access (DMA) brokers or intermediaries
On the one hand, direct market access brokers are those that offer trades and positions for the same or unified price. For example, if a trader calls to a traditional stockbroker instead of a CFD broker, then buying 1,000 shares of a specific company will require the buyer to deal in the official price of the London Stock Exchange. The said price will be the same for the rest of the buyers in the market, whether big or small. These direct market brokers will do the same. Hence, if a trader wants to buy shares using the CFDs, then he will then be offered of the same price. Consequently, this also means that the instrument can be traded too at the same price.

Another unique characteristic of these brokers is that they charge commission, which is commonly between 0.1% and 0.2% of the positions. Trader should be very mindful of this because this may have a great impact to their trades, most especially to those small ones. Well, this is because some of these direct market access traders implement the minimum commission charge, which could be from $10 up to as much as $25.

Commission-free Brokers
As its name suggests, this seems to be the opposite of the first type mentioned above. However, this does not necessarily mean that they are cheaper. Well, this is because while they do not charge any commissions from you, the dealing price that they implement is set internally by their market makers.

Hence, there is a higher probability that the dealing price is not the most competitive one.

Nevertheless, there are some instances when the dealing price is close, either a little higher or lower than the price in the London Stock Exchange, to the market average. Aside from these price determination issues, the other mechanics in transacting in CFD trading are the same.

Visit IndependentInvestor.co.uk to have CFDs Explained and learn more about Types of CFD Providers.

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