IRA’s & 401k’s
Why is this better than a 401K or IRA?
I will say what many in my industry tip toe and tap dance around because they are afraid of offending prospective clients. Qualified retirement plans, such as 401K’s and IRA’s, are the greatest scam ever put over on a society! They are Wall Street bred, government sanctioned, corporate sponsored hooey that has already and will continue to transfer trillions of dollars of wealth from the middle class to the wealthy classes and the federal government. Bank On Yourself is the antidote to the disease. Where your 401K or IRA provides only risk, restriction, taxation, uncertainty and empty promises, Bank On Yourself provides efficiency, control, safety, predictability, security, freedom and guarantees.
What about the tax savings I get when I contribute to my IRA or 401K?
This is the single greatest selling point of financial planners, plan administrators, politicians and financial media personalities to entice you into participating in these plans. It is also one of the greatest financial fallacies (lies) about these plans. You are NOT saving any tax dollars by contributing to these plans. You are simply deferring tax dollars to a later date. While every situation will be unique, I know I was shocked when I figured out that I was going to pay 1000% or more in taxes later in life than all the “savings” combined throughout my entire working career…
What if I my IRA or 401K fees are zero or very low?
First of all, how do you know what fees you are actually paying? It’s nearly impossible to determine from the statements provided to plan participants. A Department of Labor study showed that even a 1% increase in plan fees over the long haul could reduce your plan value by 28%. Fees act as compound interest, but in reverse, taking money out of your plan each and every year. Fees are the dirty secret of the financial planning industry and yet another great financial fallacy.
If I buy and hold, doesn't the stock market average out over time?
No. Despite what you hear in the news about all time highs in the Dow, S&P 500, etc. After inflation, tax liability and plan fees, the markets would need to be many times higher than they are today just to break even! Check out this article about why you need the Dow at 35,000!
Why did my financial planner tell me to run away when I mentioned this?
This used to puzzle me. You would think that at the very least stategies like Bank On Yourself would be a smart and prudent part of any sound financial plan and that financial planners would be great allies and partners. In reality most financial planners seem to hate these concepts with a seething, venom dripping, passion. I’ve determined there are two reasons for it: First, it makes perfect sense when you follow the money. Financial planners make their money either from ongoing plan fees for selling stock market based products or fees for services for selling stock market based products. These products come with no guarantees of performance and complete uncertainty and in fact have a long history of losses and failure. Even if you started out with using Bank On Yourself as only a part of your overall plan, how long would it take, experiencing guarantees, 100% predictability, no market risk, no restrictions, etc., before you wanted more and more of your savings out of the market based program and into your Bank On Yourself plan? Not long I suspect. So why would most financial planners want their clients to know anything about it, knowing it will become a huge threat to their main source of income? Most don’t and will say or do almost anything to discredit it. Secondly, most financial planners are products of years of Wall Street designed training and certification programs that have taught them there is only one way, the Wall Street way. When confronted with ideas that don’t match up with what they’ve been conditioned to think, they automatically reject it as wrong or a scam. We tend to believe them because we know and trust them, after all, most of them are really nice people. At the end of the day you have to think for yourself and act in your own best interest…
Why do financial planners and financial media personalities say to 'buy term and invest the difference?
Mostly because they are not aware of and do not understand the types of whole life policies or the structure of the whole life policies used for Bank On Yourself. In addition, these folks have built their careers and reputations on recommending certain tactics, such as “buy term and invest the difference, in mutual funds.” To change course now would undermine their credibility and cost them a lot of money and customers. They will stick to their mantra no matter what evidence might surface to the contrary because they have too much to lose to do anything else…