Sunday, March 20, 2011

Today’s Money and Taxes

Look in your savings, checking account, or wallet right now. The money in there is worth more today than it ever will be in the future. The reason is something called inflation, and recently it is getting a lot of press. Going back 30 Years to 1981, the average rate of inflation has been 3.31% per year. This means if you had $1,000 in 1981; it only has the spending power of $364.29 today as it did in 1981.

The next topic is taxes. Today there are record deficits and large unfunded liabilities by both state and federal governments. Our population is aging, and our workforce reduced. Politicians have two choices either they can cut benefits or raise tax revenues. So this begs the question, which direction do you think taxes are headed?

So why does traditional thinking say take as many pre-tax dollars today and defer them for use as far in the future as possible? Think about it, we are taking our most valuable money (today’s dollars); deferring taxes in what most likely will be our lowest tax bracket. So one day in the future we will have less buying power and our money will be taxed the most.

How long do you want to do this?

Would you like an alternative?

If you would like an alternative please email me @:

Sunday, March 13, 2011

The “1” Question you need to ask and consider before you put your money anywhere?

Many people find out the hard way, once it is too late. That once seemingly great place to put their money has now handcuffed them or not available when they need it the most. Even if they thought they would never need that money sometimes life happens. Some of these events include but not limited to:

• Unemployment
• Disability
• Divorce
• Treatment for Medical Illness
• Education Expenses
• Wedding
• House Down Payment
• Business opportunity

The “1” question most people never ask:

How do I access my money and how quickly can I get it in an emergency?

Due to not asking this very question many people are forced to put items and expenses on high interest credit cards or pay unnecessary taxes and penalties at the very moment they can least afford it.

Some factors to consider and ask when placing your money in an account:

• How quickly can I get my money? (Ideally you would want less than a week)

• If I ask for my money, will I get it automatically or will I have to go through an approval process and qualify to get access to my own funds?

• Will I owe a penalty and taxes when gaining access to my savings?

• Will all my money be there when I need it the most or will it be subject to the ups and downs of the stock market?

• Can I use my money for anything I see fit or am I forced to use it only on certain expenses?

Throughout the years I have heard some terrible stories about folks struggling financially. Many times they are struggling financially not because they are not responsible people. They always had good intentions, however due to where they chose to put those savings has caused them many unintended consequences they never thought possible. That is why I think you should always ask this “1” question before putting your money in any account:

How do I access my money and how quickly can I get it in an emergency?

Saturday, March 5, 2011

What’s the best place to put my money?

What’s the best place to put my money?

Listen to just about any financial talk show and within the first fifteen minutes they always get to this same question. What I’ve learned over the years instead of answering the question directly it’s better to name the attributes the person would be looking from this financial product. The reason is many people have prejudices over certain financial products simply because of their name and not from any real world experience. People kick many products to the curb too quickly, and give some products a lot more praise than they are worth. The underlying cause, I think, is very few people explain how these products work, and over time if you hear something often enough many people will begin to think it is true without any real proof (think about the earth being flat etc.).

I thought I’d share characteristics of two places you can put your money:

• The first (Account #1) is the most popular place people say to put your money and has drastically changed the way people are forced to view retirement.

• The second (Account #2) is the place I put most of my own personal wealth and I think if more people really looked into would want to put theirs as well.

Account #1:
• Your money grows tax deferred
• Limited contributions per year
• No or limited access to your money (Not even for cars, houses, college, unemployment, or vacations etc.)
• All distributions are fully taxable at an unknown future tax rate
• 10% penalties + 100% taxable withdrawals are incurred if taken prior to age 59-1/2
• Creditor protected in most states
• Put in place by an act of congress a little over 30 years ago
• In 2001-2002 and again between 2008-2009 many people lost over half of their savings
• No guaranteed future value or growth
• Cannot be used as collateral
• Unknown total fees paid

Account #2:
• Your money grows tax deferred
• Unlimited contributions per year
• Complete access to your money at any time (For cars, houses, college, unemployment, or vacations etc.)
• All distributions can be made completely tax-free if structured properly
• No penalties if taken prior to age 59-1/2
• Creditor protected in most states
• Has been around for over 200+ years
• Competitive rate of return that can only go up year to year
• Guaranteed future value and growth
• Can be used as collateral
• No hidden fees paid

Let me know in the comment section which account you would prefer.