Category: Retirement Plan Alternative

Famous people who use the Bank On Yourself method

June 30th, 2010 by Pamela Yellen | 45 Comments

There’s one surprising thing Walt Disney, J. C. Penney and the Pampered Chef have in common – they all used the Bank On Yourself method to start, grow and/or finance their businesses!

Walt Disney borrowed from his life insurance in 1953 to help fund Disneyland, his first theme park, when no banker would lend him the money.¹

Following the 1929 stock market crash, famous retailer J. C. Penney borrowed from his life insurance policies to help meet the company payroll.² Had he not had ready access to capital, the company probably would have been forced to close its doors, adding even more people to the unemployment line.

The Pamperd Chef used dividend paying whole life insurance loan for initial capitalization

In 2002, Doris Christopher sold her kitchen tool company, the Pampered Chef to Warren Buffett for a reported $900 million. Seven years earlier, she launched the company with a life insurance policy loan.³

Foster Farms was founded in 1939 when Max and Verda Foster borrowed $1,000 against their life insurance policy to buy an 80-acre farm near Modesto, CA.⁴

Senator John McCain secured initial campaign financing for his presidential bid by using his life insurance policy as collateral.³

So-called “permanent” or cash value life insurance (versus term insurance, which is like renting insurance) builds up cash value that policy owners can use in difficult times as a ready source of money to cover personal or business expenses for emergencies and even to cover insurance costs.

Hold your financial course or change your course?

June 15th, 2010 by Pamela Yellen | 5 Comments

“Those who can't remember the past are condemned to repeat it.” - George Santayana
The Dow has dropped below 10,000 several times recently – a level it first reached more than eleven years ago and has since bounced over and back an astonishing 63 times!

Millions of people who were counting on their homes to help fund their retirement now have no equity to count on, because they owe more than their homes are worth.

Credit is still extremely tight for both businesses and consumers, underscoring just how little control we have when we have to rely on other people’s money.

As we face continuing economic challenges, many people are wondering… what does the future hold?

Ever hear the old saying, “Change is the only constant?” Today that is clearly true more than ever! Stephen Covey, author of the run-away best seller, Seven Habits of Highly Effective People, tells the following story:

How will the debt crisis affect Bank On Yourself?

May 13th, 2010 by Pamela Yellen | 27 Comments

A question we are getting frequently right now is how safe is your money in a Bank On Yourself plan if the debt crisis in Europe continues and spreads to the United States?

Let’s start by answering the question…

What do life insurance companies invest in to be able to deliver on their promises to policy owners?

Life insurance companies are highly regulated and required to maintain sufficient reserves to ensure they can pay all future claims.

They are regularly audited by the state insurance commissioners’ offices, and sometimes by dozens of states, to ensure they are on solid financial ground. And a multi-layer safety net exists to assure your money in a life insurance policy is secure.

You may be wondering, “What about AIG?” Many people missed the fact that AIG’s problems were caused by a holding company, not its life insurance subsidiaries. Their insurance companies were walled off from the problems, have always been solvent and did not receive a bailout.

The companies recommended by Bank On Yourself Professionals are among the financially strongest life insurance groups in the world.

They enjoy some of the strongest surplus positions in the industry, approximately double the industry average.

These companies are, in essence, owned by policyowners, rather than stockholders, which allows them to focus on the long-term interests of policy holders, rather than the short-term demands of Wall Street.

Here’s what the companies used for Bank On Yourself invest in:

The truth about investing in mutual funds

May 5th, 2010 by Pamela Yellen | 6 Comments

Investors earn returns over time that are far lower than those quoted by mutual fund firms. In fact, it’s not even a close race.”

This is the conclusion of DALBAR, Inc., the well-respected independent investment research firm.¹

For the past 20 years, “the average equity investor barely managed to eke out an annualized return that outpaced inflation.” The average return was 3.49% per year – just slightly more than the inflation rate for that period!

Asset allocation and fixed income investors weren’t so lucky (if you can call that “luck”); they lost ground after adjusting for inflation.

Why most investors don’t come close to getting the returns touted in mutual fund prospectuses…

There are plenty of reasons for this. For starters…
[Read more…] “The truth about investing in mutual funds”

Does money buy happiness?

April 28th, 2010 by Pamela Yellen | 3 Comments

There is probably nothing in the world that people spend more time discussing than money.

Countries go to war because of money. People marry and divorce because of money. And we spend the biggest part of our waking hours working to earn it.

The age-old question, of course, is, does money buy happiness?

While writing a fascinating book, John Stossel, the highly regarded former anchor of the investigative TV show, 20/20, did some research into the answer to this question.

Dow 11,000: Déjà vu all over again?

April 12th, 2010 by Pamela Yellen | 13 Comments

Bill Clinton was President, the world awaited the potentially disastrous consequences of the Y2K computer bug, and – oh, yeah – the Dow closed above 11,000 for the first time in history.

The date was May 3^rd, 1999, and to quote Yogi Berra, nearly eleven years later,

This is like deja vu all over again”

The Wall Street spin-makers are pointing out what a “big accomplishment it is for a measure that was below 7,000 only a year ago” to recapture the 11,000 level.

Before we pop the cork on a bottle of champagne, here’s a few sobering questions to ask yourself…

What’s the rate of return on a Bank On Yourself plan?

March 18th, 2010 by Pamela Yellen | 138 Comments

A recent comment made by a reader of this blog inspired this post. I’ve never gone into detail on the question of how the rate of return on a Bank On Yourself policy compares with investing in stock market and mutual funds.

And is it really true that if you simply hold on long enough, investing in stocks and mutual funds will out-perform just about anything else?

So, I’ve decided to lay those questions to rest – once and for all – right here. Here’s the comment by a reader who calls himself “Tob” that sparked this post:

This is a ridiculous attempt to compare whole life insurance to the “stock market” after the worst decade. I can show you how investing blows the pants off whole life using investing basics. Balanced Funds. How many funds do you want that have produce 10% per year compounding average to convince you?”

So, has “Tob” really found that elusive investment that gives you a 10% average return, and still lets you sleep at night?

We’ll get to the answer to that question in a moment.

First, let me address the question,

“What the heck is the rate of return on a typical Bank On Yourself policy?”

Will the Government’s new plan to increase Americans’ retirement security work?

January 28th, 2010 by Pamela Yellen | 12 Comments

With much fanfare, the White House has announced the highlights of what they are recommending to help you save for a secure retirement. Will it help you… or hurt you?

Let’s take a look at the major provisions…

1. More Americans will be herded into a retirement plan system that most experts agree is broken

According to a newly released White House Fact Sheet, the administration wants to force many of the 78 million working Americans not currently covered by employer-based retirement plans into them. They will do this by requiring employers to enroll their employees in automatic direct-deposit IRAs, unless the employee opts out.

Experience shows most employees do not opt out. The result? Many more people will be relying on the same investment strategies that have lined the pockets of Wall Street and dashed the retirement hopes and dreams of millions of Americans.

On the other hand, those who use the Bank On Yourself method have been able to move closer to their financial goals and dreams each and every single year. To find out how you could turn your back on the stomach-churning ups and downs of stocks, real estate, and other investments, request a free, no-obligation Analysis today.

2. Proposed tax credits for retirement savings contributions mean you will be paying for other people’s investment mistakes!

Even millions of Americans who pay no taxes will receive these credits, under the administration’s proposal.

3. Employers will be expected to do what even the experts can’t

Employers who offer so-called “target-date” mutual funds will be expected to “evaluate their suitability for their workforce.”

These funds, which automatically shift assets over the individual’s lifetime to lower risk as the person approaches retirement age, failed miserably to accomplish that goal during the 2008 crash.

In addition, studies consistently show that 80% of all investment advisors and 80% of all mutual funds underperform the overall market¹. Yet employers with no training or experience will somehow be expected to determine which funds will do well.

4. The government wants to “promote” the availability of annuities and other forms of guaranteed lifetime income in 401(k) plans

Unfortunately, the growth and returns of some of these products may not even keep up with inflation.

5. Beleaguered small business owners will face new costs and administrative burdens

According to the National Small Business Association, 64 percent of small business owners surveyed said revenues declined in the past 12 months.

When small businesses are struggling to stay afloat, we oppose mandates such as this that stand to create a new administrative burden” – Molly Brogan, vice president of public affairs for the NSBA

6. The government controls your money in retirement plans, not you

The government determines when and how much you can take out of your retirement plan, and can change the rules any time they want.

Proposals to do just that have already been floated through Congress.

And if the government wants to force you to buy Treasury debt with part or all of their retirement plan money, because China and Brazil won’t take the risk any more, they can do it.

7. While expert after expert agree that the current systems of saving for retirement are broken, few offer any viable alternatives

Yet hundreds of thousands of people who use the Bank On Yourself method did not lose a penny during the market crash of 2008, or during the “lost decade” of the 2000’s.

Their plans have all continued growing – safely and predictably, and without the risk or volatility of stocks, real estate and other investments. Which may explain why my offer to pay $100,000 to the first person who uses a different strategy that can match or beat Bank On Yourself remains unclaimed.

Bank On Yourself isn’t a magic pill. It takes a little patience and discipline. But if you have those traits, it pays a lifetime of benefits.

To find out what your bottom-line numbers and results could be, and how much income you could count on at retirement, just request your free, no-obligation Analysis.

If you take the first step now, you could start taking back control of your money and your future financial security in as little as 60 days!

1. Hulbert Financial Digest, The Motley Fool

Lessons from a lost decade

January 15th, 2010 by Pamela Yellen | 3 Comments

I’ve lost a bet. I’ve lost my keys. But I’ve never lost a decade – until now.” – Sam Stovall, S&P’s chief strategist

The S&P 500 ended the past decade down almost 25 percent below where it was ten years earlier. And that doesn’t even factor in the 29% inflation we experienced during the decade.

since the end of 1999, the S&P 500 stock index has lost an average of 3.3% a year, on an inflation-adjusted basis, even after including dividends, according to the data compiled by Charles Jones, finance professor at North Carolina State University.¹

Hmmm… so what does that mean to the typical family in dollars and cents?

You may want to grab a bottle of Pepto-Bismol, because it isn’t very pretty…
Here’s what inflation and negative returns have done to a nest egg invested in an S&P 500 index fund (the way most Americans’ retirement savings are), over the past decade…

You now need a 39.9% increase just to get back to where you were ten years ago!

Given that the stock market has just experienced its fastest climb since 1933, how likely do you think it is that we’ll have another 39.9% rise this year? Especially given soaring government spending, stubbornly high unemployment, and looming tax hikes.
[Read more…] “Lessons from a lost decade”

I just came across these four surprising new facts that affect your money and finances…

Fascinating Fact #1: 61% of boomers fear outliving their money in retirement more than they fear death

But why should you have to, after a lifetime of hard work and sacrifice?!?