Three Keys to a Successful, Conservative Financial Plan

Michele Warg
Posted by in Accounting, Auditing & Tax


Imagine what it would be like to have a financial plan that gives you predictability, control and tax advantages – a method that lets you bank on yourself, rather than Wall Street, the government, or an employer. It may surprise you to learn that such a method already exists… and has for over a century. Hundreds of thousands of people use it, and not one lost a single penny in their plans when the stock and real estate markets crashed. In fact, their nest-eggs have all continued growing every year – safely and predictably. As a consultant to financial advisors, I've researched over 450 savings and investing products and strategies over the past two decades. Most proved to be worthless, or even dangerous to your financial health. I was fortunate to finally stumble on a method that many folks with conservative values agree may well be the best way to invest money. I call this method "Bank On Yourself," because it lets you take back control of your financial future, stop relying on others for your financial security, and become your own source of financing. Let's take a look at the three keys to a successful financial plan that this time-tested method gives you: Predictability, control, and tax advantages. Key #1: Predictability My research into financial strategies led me to conclude that Americans have been brainwashed into believing we must risk our money in order to grow it. It is possible to grow a substantial nest egg – without the risk or volatility of stocks, mutual funds, real estate, and other investments. There is an asset class that has increased in value during every stock market decline and every period of economic boom and bust for more than a century. That asset is dividend-paying whole life insurance. A dividend-paying whole life policy grows by a guaranteed and pre-set amount every year. In addition, the growth is exponential, meaning it gets better (more efficient) every single year you have the policy, simply because you stick with it. And no luck, skill, or guesswork is required to make that happen. Furthermore, there are little-known options that can be added to the policy which turbo-charge the growth of your equity ("cash value") in the policy. Once credited to your policy, both your guaranteed annual cash value increase, plus any dividends you may receive, are locked in. They don't vanish due to a market correction. Dividends aren't guaranteed, but some companies have paid them every single year for more than 100 years, including during the Great Depression. These policies also give you peace of mind for retirement planning, because you can know the minimum guaranteed income you can take in retirement, and for how long you could take it. Key #2: Control You control the money in your policy, not the government. You can use it when and how you choose, without the restrictions or penalties common to 401(k)'s and other government-sponsored retirement plans. You can use the money to "bank on yourself" and become your own source of financing, so you can reduce or even eliminate the control banks and financial institutions have over you. You can get access to your equity in the policy by answering just one question: How much do you want? No begging, no prying credit applications to fill out, and no need to pledge your first born. Key #3: Tax Advantaged One of the biggest appeals of 401(k)'s is that they allow you to defer your taxes. But what direction do you think tax rates will be going over the long term? If, like many people, you believe taxes are going up, consider that if you're successful in growing your nest-egg, you'll only end up paying higher taxes on a bigger number. Even if tax rates stay the same, it's estimated that by deferring your taxes, you'll ultimately pay 10-20 times more in taxes over a 30-year period! Consider paying your taxes up front – at least you know what they are. Dividend-paying whole life is taxed more like a Roth IRA – you fund it with after-tax dollars and you can take a retirement income from the policy with little or no tax consequences, under current tax law. There are many myths and a great deal of misinformation about this powerful financial tool, and no shortage of "experts" who will tell you to avoid whole life policies. © 2010 Pamela Yellen ABOUT THE AUTHOR: Financial security expert, Pamela Yellen, is author of the New York Times best-selling book, Bank On Yourself: The Life-Changing Secret to Growing and Protecting Your Financial Future. For more information, visit: www.BankOnYourself.com and take the $100,000 Challenge. It lets you test your knowledge of the facts about dividend-paying whole life. And a $100,000 cash reward awaits the first person who has a different product or strategy that can match or beat a properly structured dividend-paying whole life policy.
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  • Alexavia
    Alexavia
    You're the geratest!
  • Financial Planner Baltimore
    Financial Planner Baltimore
    Some other tips are to invest, pay off credit card debt, maximize your employee benefits and review your insurance coverages.  Great article.  Thanks!
  • rks
    rks
    This is really helpful in such a uncertain market. I would like to say thanks for such a great article. The 3 points strategy (Predictability, control, Tax Advantage) is really beneficial.

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