May 10th, 2010 // 4:00 am @ Andrew Rosenbaum
In the current economic environment, it is difficult to produce a significant return from conventional financial products that offer safety, such as savings accounts and certificates of deposit.
But if you own a whole life insurance policy, you may be able to deposit money using your life insurance contract and gain two important things:
- A return from dividends*, as well as guaranteed cash values that grow tax-deferred each year.
- An ability to leverage your death benefit, because in most situations, every additional dollar added may produce an additional $3 in your death benefit. That gives you an opportunity to create more of a legacy and pass along more income tax-free money to your heirs.
Basically, you’re getting your money to do more than one job.
It will both generate a higher return than what’s available from most financial products today, and significantly enhance your death benefit.
It’s a sensible and secure long-term growth vehicle for extra cash that can be set aside for several years.
So if you’ve worked hard and saved money that you can afford to sit for a while, discuss this option with your financial representative.
*Dividends are not guaranteed and are declared annually by the company’s Board of Directors.
May 3rd, 2010 // 4:00 am @ Andrew Rosenbaum
Having children is one of life’s greatest joys. It’s also the reason many people buy life insurance.
So, once the kids are out of college and off on their own, do you still need life insurance?
With college tuition bills behind you, you’re in a position to aggressively save for retirement.
You are likely to need both your income and your spouse’s to accumulate sufficient retirement savings.
Life insurance can help you still reach that goal if something should happen to your spouse.
What’s more, you’ve heard of “boomerang” kids who move back in if they lose a job or divorce?
In the past 18 months we’ve seen a lot of families reunited under one roof because adult children have lost jobs and even homes due to foreclosures. Your children’s welfare is your concern at any age.
Grandchildren may also need your help. If tuition at a private college now costs close to $50,000 a year, what might it be 20 years from now? Will your adult children be able to save that on their own?
Whole life insurance is a versatile guaranteed financial vehicle that protects your family in the case of premature death.
It can provide a strong financial foundation for your economic security no matter what life has in store for you and your children.
April 26th, 2010 // 4:00 am @ Andrew Rosenbaum
If you’re like most people, you may be having trouble sticking to your New Year’s resolution to save more money.
There are two common reasons why it’s hard to save, particularly in today’s economy:
1. We buy too many things to satisfy emotional needs, instead of buying only the things we really need.
We’re too willing to pay a premium for a brand that feeds our self-esteem. It’s a habit we could afford in the go-go years, but we’re finding it difficult to break now that we need to save.
The solution: Re-examine your motive for accumulating stuff.
Are you a victim of a mentality that believes “I buy, therefore I am”?
Is that the image you really want to project to your family and friends? Is that a lesson you want to teach your children?
A far better self-image is someone who is economically secure.
I define economic security as a feeling that your financial plan is on track even during volatile economic times.
Economic security gives you the confidence that your net worth will not crumble overnight.
You’ve heard the saying, “Pay yourself first.” It’s wise advice.
The first check you write each month should be to yourself in the form of savings.
If you don’t have the discipline to write it yourself, set up an automatic payment system that transfers some income each month into savings.
Of course, choosing the right savings vehicle is not always easy. That brings me to the second big obstacle to saving:
2. The roller coaster markets are still volatile, so we don’t know where to put the money we save.
The yields are small on many conservative investments, and they shrink even more after you pay the tax bill.
Fear, confusion, and inertia are discouraging people from setting money aside. If it remains in your bank account, it’s tempting to spend.
What if I told you that you could put away money each month into a financial product in which your cash value will build and that the value will be backed by a guarantee?
What’s more, any increase in cash value is currently tax deferred, and that if structured correctly you are able to withdraw some of the value without paying taxes at any age?
It sounds pretty good, right?
The product is permanent life insurance, and specifically known as whole life.
That means your family’s financial security is protected by a death benefit (also not subject to income tax under current law) if something were to happen to you.
So instead of buying a term life policy to protect your family and trying to save and invest money on your own to build financial security, why not combine both necessities into one streamlined product?
It’s the best and easiest way I know to achieve financial peace of mind.
April 19th, 2010 // 7:02 am @ Andrew Rosenbaum
It’s Wall Street bonus time, and the big surprise is what is on so many bankers’ shopping lists: whole life insurance.
After last year’s economic freefall, it’s not just Main Street investors seeking safer financial products; Wall Street players are adding whole life products to their portfolios.
And many of them are using guaranteed financial products to balance portfolio risk.
They’ve seen how other investors protected their wealth with products such as whole life insurance when the economy sank.
Sophisticated investors have begun to question the common belief, “Buy term and invest the rest.”
They see it is a misconception, because (1) most people don’t invest the rest, they spend it, or (2) they invest it in something that they think will produce a high return, but that is more like gambling than investing.
Bonus time is a great time to invest in your economic security.
Consider taking part of your bonus and putting it toward guaranteed financial products that will weather the storm, whether markets go up or down.
December 30th, 2009 // 4:00 am @ Andrew Rosenbaum
Imagine you are investing $1,000 in a mutual fund. You have a fantastic first year, earning a 100 percent rate of return, bringing your balance to $2,000.
In year two, things go poorly and the investment loses 50 percent. Your balance is now back to $1,000.
In year three, the market goes up and you earn 100 percent again, bumping your balance back up to $2,000. The fourth year markets tank again and you lose 50 percent. Your balance has now fallen back to $1,000.
Notice that your beginning and ending balances are exactly the same. Your actual yield is a big fat 0 percent.
Here’s the interesting thing. What is your average rate of return? 25 percent.
I know any investor would love to get a 25 percent return. A mutual fund with this exact performance could advertise, “Our fund has averaged 25 percent over the last four years.”
It’s a true statement. It is not illegal or blatantly dishonest. It simply fails to illustrate the fact that investors actually ending up with no return.
One of my clients is a major league hedge fund manager. He knows something about high-risk investments. But what does he have in his portfolio? A guaranteed contract –- a whole life insurance policy.
In the past year he doubled the size of his policy. In this economic environment, he told me, he needed to lower the overall risk of his investments. And a guaranteed contract is a smart alternative to treasury bills, which are currently paying a very low yield.
Here’s how he explains it in his own words:
Whole life is an investment with its own risks and rewards. But the risk is relatively low. The return is virtually guaranteed, you can borrow against it over time, and you can use it for estate planning purposes. I know that when I die my family will have enough money to manage their own lives. I could invest in ExxonMobil, but who knows what the stock would be like in ten years?”
He told me he thought that whole life has a bad rap, which encourages people to think they can outperform the policy. To quote him again,
Many savvy investors believe they can stimulate the characteristics of life insurance benefit on an after-tax basis – it has to be after tax because money accumulates within a policy tax-free. They think they can take $10,000 a year and invest it, but what happens is they never do it, and their portfolio is skewed.”
My hedge fund client really understands risk, and he certainly understands rewards.
December 23rd, 2009 // 3:59 am @ Andrew Rosenbaum
Accumulating without utilizing is like buying a cruise to the Bahamas then never going.
The basic premise of the accumulation theory is that collecting money — gathering a “nest egg” — guarantees financial protection.
But no amount of money guarantees happiness or, for that matter, security. Many Wall Streeters are discovering this.
I believe in the utilization theory, which says money gains meaning by how it is earned and used.
What is true is that money is a tool and, like all tools, it is designed to do a job. It’s up to you to use that tool to enhance your happiness.
People who enjoy lasting wealth have a deep understanding of money — what it is and what it is not. Money isn’t as important as the asset that produces it.
With the utilization theory, the idea is to limit the risk that the asset will lose its power to provide financial security for you.
The more risk we take on, the more stress and pressure we experience, regardless of how much money we have or make. The more we use money to transfer risk, the more economic confidence we feel.
Purchasing a guaranteed contract that provides a reliable return, virtually risk-free, and ensures your family’s financial security if you die, is a wise use of money.
December 16th, 2009 // 3:58 am @ Andrew Rosenbaum
This past September, the Wall Street Journal printed a special section entitled “The Resurgence of Whole Life Insurance.”
Many more people are considering whole life insurance these days because it’s one of the few assets that has retained its value during the economic downturn.
If your business runs short on cash –- and most businesses are suffering from a cash crunch in this recession –- you can borrow against a whole life policy without incurring the onerous fees and penalties of borrowing against traditional retirement accounts.
To quote the article,
Whole life, or permanent life, as it is also called, is experiencing a revival of interest as a long-term investment to weather difficult economic times. Aside from the death benefit, the insurance provides a tax-deferred buildup of cash value that can be borrowed against on a tax-favorable basis, providing a ready source of capital when other sources of money are problematic or hard to come by.”
Whole life has both a “living” and a death benefit. You can assess the accrued cash value of a whole life policy at any time.
I’ve seen how useful this can be. The cash helped one of my clients through a business downturn.
The whole life policy he had purchased years ago had built up a considerable amount of cash. He was able to withdraw a part of the cash value at no penalty.
Because he withdrew the money personally, it didn’t affect the credit rating of his business. Although he repaid the loan, the fact is he didn’t have to. The amount one withdraws from a policy can be deducted from the policy’s payout.
The bottom line is this: A whole life insurance policy that has been given a chance to grow is an asset that’s “got your back” if you need it.
If you’d like to read the entire Wall Street Journal section, please contact me and I’ll send you a copy.
December 9th, 2009 // 4:00 am @ Andrew Rosenbaum
The federal government says the country is coming out of the recession. My biggest fear is that, with the market recovery, people with a lot of ground to recover in their portfolios will chase risky high returns again.
But with high-risk investments you will inevitably lose your money. That’s not financial planning; it’s legalized gambling.
A wealth swing coach helps you spot your investment flaws. Investors try to outsmart market volatility. They mistakenly believe they can cash in at the top, then balance their portfolios to preserve their wealth.
They rarely do. Sooner or later, the market will turn down again and they’ll have lost the opportunity.
Trying to outplay market volatility is like trying to control the weather. It’s impossible.
Remember the old expression, “save for a rainy day”? Don’t assume it will always be sunny.
As a golf fan, I like golf analogies. Tiger Woods never tries to outplay the weather. He doesn’t take wild risks. He meticulously measures, plans, and calculates every move he makes.
He starts out playing conservatively and defensively. Only if the weather’s right and only if he thinks he’s playing well does he go on the offensive.
So balance your investments by including assets that will endure no matter whether markets are sunny or stormy, and you’ll be better prepared if other investments decline.
December 7th, 2009 // 11:44 am @ Andrew Rosenbaum
Here are a few highlights from the article:
“Rosenbaum, 55, has been in the insurance industry as a financial advisor for 33 years. He joined Strategies for Wealth, a General Agency for Guardian Life, in 1976 and has been there ever since. His focus on simplified and ‘safe risk’ financial, estate and retirement planning has stood the test of time. He is a 33-year qualifier for Guardian’s Leaders Club, a 24-year qualifier for Guardian’s President’s Council, and is a former president of the Executive Committee of the Leaders Club, the highest honor to be bestowed on a member of Guardian’s field force.
“While there was some initial struggle and he came close to leaving the business early in his career, discovering the principle, ‘Remember the mission, forget the commission’ struck a chord. Instead of focusing on what he wanted, Rosenbaum began to focus on the client’s wants and needs.
“…While competitors were shouting about being product-centric, he excelled by becoming client-centric. He went from selling to serving.”
The article continues by quoting Andrew:
“Safety is key, and that’s why my message is so timely. A sound financial plan is not about wringing every last bit of return out of an investment — it is about balancing and offsetting risk. Even if overall returns are lowered a bit by adding whole life, on balance, the entire portfolio is stronger as a result.
“I use the analogy of how Tiger Woods plays. He doesn’t try to hit the ball 350 yards every time he swings. He assesses the conditions he is playing in that day, and then swings. People need to do that with their money.
“In a golf swing, there are pieces of the swing that cannot be isolated by the player. You need another pair of eyes to see where those flaws might be. In financial planning, there are flaws that people do not typically see or understand. A prime example is that people go crazy over big rates of return, but they don’t take into account the taxes and fees they have to pay to obtain those returns. They fixate on a gross number. As a ‘wealth swing coach,’ I enable them to see that what’s really important is not what you make — it is what you keep.”
December 2nd, 2009 // 3:53 am @ Andrew Rosenbaum
So Woods was taking practice swings before teeing off, as an older gentlemen stood off to the side carefully studying his swing. The commentator informed the viewers that this man was Butch Harmon, and that he was Tiger’s swing coach.
I was somewhat shocked. I had no idea he still had a swing coach. Why would Tiger use one?
At that moment the commentator said, “Butch Harmon is one of the best-kept secrets in the game of golf. He consistently helps his students knock two to three strokes off their score by increasing their efficiency.”
The storehouse of knowledge Harmon had acquired from studying thousands of professional golfer’s swings enabled him to spot tiny flaws in even the greatest golfer’s swing. Though Tiger knows he’s the best in the world, he’s wise enough to know he cannot see himself swing.
So Butch serves as Tiger’s “eyes of wisdom” outside of himself to make sure he’s optimizing efficiency.
What the swing coach does for the world’s greatest golfer is exactly what I do for some of the world’s smartest executives and entrepreneurs. I’m their wealth swing coach.
Most of my clients are highly successful. But they all have tiny flaws they can’t see. Over the short-term these flaws are barely perceptible and seem to be of no consequence. But over the long-term, they can be disastrous.
A common flaw I see is people choosing to chase wealth instead of building lasting economic confidence. People hope they will amass so much wealth they’ll be financially secure no matter what. But the events of the past 18 months prove how shortsighted that vision can be.
Some people stopped opening brokerage statements because it upset them to see how much they had lost. But they lost more than money — they lost their peace of mind because of this common flaw.
A “wealth swing coach” would have discovered and showed them how to correct it.
More people need a wealth swing coach. I’m ready to share what I’ve learned working with hundreds of financial planning clients. That’s the purpose of my book and this blog.