tag:blogger.com,1999:blog-84655392313476364172024-02-07T04:24:10.451-08:00Richest Man In ZionIt has been said that money is the root of all evil. With all the negative connotations found in Christian society, should money just be avoided by all believers? Why do some people have the ability to control money and some people don’t? What is the difference between the two, and why is it so hard to close the gap? I will discuss these and other topics you will need in order to become the Richest Man in Zion. (All rights reserved. ©2009)Financial Survivalisthttp://www.blogger.com/profile/11650488643282887360noreply@blogger.comBlogger47125tag:blogger.com,1999:blog-8465539231347636417.post-3656743717230397352011-11-16T17:00:00.000-08:002011-11-17T09:06:30.529-08:00Financial Survivalist LaunchedMy new blog <a href="http://www.financialsurvivalist.com/">FinancialSurvivalist.com</a> is up and running with over 30 Posts already. The Financial Survivalist is an effort to compile all of my blogs and passions.<br />
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Blogs<br />
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<ul><li><a href="http://www.richestmaninzion.com/">Richest Man In Zion</a></li>
<li><a href="http://www.recklessgovernment.com/">Reckless Government</a></li>
<li><a href="http://www.blogger.com/forthewho.blogspot.com">For the Who?</a></li>
</ul><div>Passions</div><div><ul><li>Finance</li>
<li>Politics</li>
<li>Outdoors</li>
<li>Emergency Prep</li>
<li>Writing</li>
</ul></div><div>Though I will always keep Richest Man in Zion, <a href="http://www.financialsurvivalist.com/">Financial Survivalist</a> will receive the majority of my attention. Much thanks to all my supporters. Please continue to follow me at <a href="http://www.financialsurvivalist.com/">FinancialSurvivalist.com</a><br />
Enjoy Already Posted Articles Such as:<br />
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<ul><li><a href="http://financialsurvivalist.blogspot.com/2011/10/should-i-buy-gold.html">Should I Buy Gold</a></li>
<li><a href="http://financialsurvivalist.blogspot.com/2011/11/financial-survival-kit.html">Financial Survival Kit</a></li>
<li><a href="http://financialsurvivalist.blogspot.com/2011/11/real-estate-to-protect-against.html">Using Real Estate to Protect From Inflation</a></li>
<li><a href="http://financialsurvivalist.blogspot.com/2011/11/invest-in-yourself-why-i-dont-have-ira.html">Why I Don't Have an IRA</a></li>
</ul><div><br />
</div></div>Financial Survivalisthttp://www.blogger.com/profile/11650488643282887360noreply@blogger.com1tag:blogger.com,1999:blog-8465539231347636417.post-47834092471160038882011-10-10T08:06:00.000-07:002011-10-10T08:06:56.342-07:00Book Review: Killing Sacred Cows by Garrett GundersonKilling Sacred Cows is about debunking financial myths that infest our society. Not only do they infest our society, but these myths keep up from reaching our full potential. The majority of people do things like contribute to their 401k, try to get out of debt, and pay down their mortgage. These are all good things, right? Then why are the majority of people strugling to get by let alone retire rich? Dave ramsey says that you have to "get mad" in order to get out of debt. You have to live on rice and beans, beans and rice. However, Kim Hubbard made a very good point when he said, "I haven't heard of anybody that wanted to stop living on account of the cost."<br />
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In economics the majority is seldom right. I would argue the same is true for personal finance. This book will open you eyes and help you start living freely, and at the same time you can start to prosper financially. Garrett addresses many of the myths I have tried to address here on Richest Man In Zion. He goes a step further and debunks other myths, chiches, and faulty retirement planning advice.<br />
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If you are wanting to go from financial jellyfish to artful swimmer, then this book is for you. I think it is a well rounded approach at creating a new financial perspective. I have long proclaimed that our current financial service industry is corrupt and faulty. With recent turbulent times, people are starting to listen. This book will help you understand what is wrong with societies finances. Garret doesn't leave you hanging there. He gives you a formula and a plan to get yourself on the right path. After destroying everything you've been taught your entire life about personal finances, he puts you on your feet again.<br />
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My rating; 8.5 of 10. I especially recomend this book for anyone just starting to educate themselves financially. It's an easy read filled with quotes and little tidbits here and there. Hang on to it a bit and learn the formula for setting things right.Financial Survivalisthttp://www.blogger.com/profile/11650488643282887360noreply@blogger.com0tag:blogger.com,1999:blog-8465539231347636417.post-84050469280810590072011-10-04T08:36:00.000-07:002011-10-04T08:36:15.892-07:00If You Are Prepared You Shall Not Fear!I take a brief pause from my injury induced vacation to post a vital thought. We live in economically uncertain times. The financial markets more closely resemble a yoyo than an investment vehicle. Some communities experience 16-20% unemployment. Some streets look more like a massive real estate add than neighborhoods. Property values continue to fall along with retirement account balances. Europe seems like it's swimming up the debt default stream. The world is struggling to stay afloat. Anyone that thinks our economy, or the world economy, is healthy has been fooled by the same financial industry that stands to profit from it's own destruction.<br />
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</div><div>From the beginning of currency, financial markets have lived and died. Some lasted longer than others, but they all die. Though many would like to think differently, our financial system is not immune to a normal life cycle. The difference is the world integration that has taken place since the 80's. Our financial system no longer belongs to the United States. It belongs to the world, and as such when it fails the world shall fail. It is possible that we may live through a time that will come to be know as the Great World Depression. It will make the Great Depression seem small and feeble. However, it is also possible that the otherwise gridlocked political systems, that we sometimes think protect us, will be able to turn the tables and bring us away from the brink of the great abyss. Today is not the first nor the last time that large portions of society believe the end is near.</div><div><br />
</div><div>Recently a group known as "Anonymous" posted a warning for Wall Street. Previously know for targeting and destroying several various websites, they say that on Oct. 10 they shall erase the New York Stock Exchange from the interent. What does this mean? It could mean nothing. It could be they will hack and crash the NYSE.com website, which would translate to nothing more than an inconvenient interruption of the NYSE. It could mean a larger interruption of trading. The point is that "Anonymous" represents an ever growing assault against our already ailing financial system.</div><div><br />
</div><div>HOWEVER, IF YOU ARE PREPARED YOU SHALL NOT FEAR! I have dedicated a large portion of my life preparing for the worst. The worst most likely will not happen, but I sleep soundly at night knowing that if it does my family and I will survive. I have studied financial markets, world and political history. I know how to prepare and I am prepared. Within the next few days I will launch my newest endeveor <a href="http://www.financialsurvivalist.com/" target="_blank">Financial Survivalist</a>. It will be a website to help you prepare for the "Coming Insurrection." There is evil in this world. Evil's chosen battlefield is monetary. BE PREPARED AND YOU SHALL NOT FEAR.</div>Financial Survivalisthttp://www.blogger.com/profile/11650488643282887360noreply@blogger.com0tag:blogger.com,1999:blog-8465539231347636417.post-14658823425693593702011-09-26T20:53:00.000-07:002011-09-26T20:53:12.921-07:002 Week VacationI have injured my wrist and my injury is aggravated by typing. In order to let me wrist heal I will take a brief vacation from blogginh. I will still update the tip of the day. Follow at Facebook or twitter to get it automatically. Thank you for understanding.Financial Survivalisthttp://www.blogger.com/profile/11650488643282887360noreply@blogger.com0tag:blogger.com,1999:blog-8465539231347636417.post-56400245467629412972011-09-22T07:22:00.000-07:002011-09-22T07:22:45.751-07:00Are You a "Financial Jellyfish?"Are you a financial jellyfish? Jellyfish can look very beautiful in the water. As they get closer and closer to the shore, their true character is revealed. They begin to be tossed about by the currents. Then they are beaten by the waves, until they show up flattened and limp on the shore. Financial Jellyfish are the same. They tend to follow the crowd and do what society thinks is best. If multi-millionaires are rare, then why would anyone follow the crowd? However, there is hope for financial jellyfish. We can all learn and change. It's starts by financial education. If you answer yes to more than a few of the questions below, you might be a financial jellyfish.<br />
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<ol><li>Do you carry a balance on your credit cards?</li>
<li>Is your car worth more than your house/home?</li>
<li>Do you purchase "new" cars?</li>
<li>Do you max out your contributions to your 401k?</li>
<li>Do you make extra principle payments on your mortgage?</li>
<li>Do you think the S&P is going to give you 10% returns on into retirement?</li>
<li>Do you plan on living off of social security when you retire?</li>
<li>Do you live paycheck to paycheck?</li>
<li>Do you save less than 20% of your income every month?</li>
<li>Do you worship a financial ENTERTAINER (ie Dave Ramsey, Suze Orman)?</li>
</ol><div>As I said, there is still hope. None of us are perfect. Just keep following Richest Man In Zion, and keep trying to make good financial decisions. True change takes time.</div>Financial Survivalisthttp://www.blogger.com/profile/11650488643282887360noreply@blogger.com0tag:blogger.com,1999:blog-8465539231347636417.post-47961580438886303382011-09-19T15:18:00.000-07:002011-09-19T15:18:49.053-07:00Last Chance Millionaire by Douglas AndrewToday I am reviewing <a href="http://missedfortune.com/Products.html">Last Chance Millionaire</a> by Douglas Andrew. I think Doug is a genius. I think that he "gets it." With everything that's going on with our <a href="http://www.recklessgovernment.com/">Reckless Government</a>, I believe that the strategies discussed in this book are some of the best strategies for creating wealth. We are bombarded by thousands of people ever day with their own opinion on what we should do with our money. This book is a must read for anyone that desires to retire successfully.<br />
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First I want to define retirement. I define retirement as the point in which you have enough passive income to support your desired lifestyle. The way most people do this is by saving enough money until they have a large enough "nest egg." Then when the nest egg is large enough they live off of the interest. Most people do this in qualified plans (401k & IRA). That is good, but this book is better.<br />
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In this book Doug discusses common mistakes made by investors. He talks about what he calls "asset management strategies." These are strategies that he uses to maximise otherwise inefficiently held assets. He also talks about how to strategically use tax strategies that help you create additional passive income. He also talks about often misunderstood vehicles or tools for creating wealth.<br />
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Doug has directed this book toward mostly baby boomers and middle age workers that feel like they are falling behind. He makes a valiant and effective attempt at giving these people hope. Though, baby boomers will probably find the most use in his strategies, a younger person will be 10 steps ahead by understanding the same principles. In fact, I feel like the principles discussed in this book are some of the most important principles to maximizing your wealth potential.<br />
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All in all I give this book an 8 out of 10. The only downside to the book is that I know Doug is using this book to market his financial firm. However, I think it might be worth it for you to meet with someone from his firm.Financial Survivalisthttp://www.blogger.com/profile/11650488643282887360noreply@blogger.com0tag:blogger.com,1999:blog-8465539231347636417.post-17271324851952321002011-09-17T15:57:00.000-07:002011-09-17T19:03:15.849-07:00Why Dave Ramsey is an Epic Fail Part 2So if you haven't read <a href="http://www.richestmaninzion.com/2011/09/why-dave-ramsey-is-epic-fail.html?utm_source=BP_recent">Part 1</a>, you should check it out. In Part 2 I will list yet another reason why Dave Ramsey is an epic fail. Dave does a great service helping a lot of people out of debt. He can help you get on a budget and get your expenses under control. I'll give him that much, but only that much. What I want to talk about today is paying off your home.<br />
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Some people try to pay their home off faster. In fact, Dave says that after you pay off all other debt you should start throwing everything at your mortgage in the form of extra principle payments. He aslo recommends 15 year mortgages over 30 year mortgages for the same reason. The problem is that by paying off your mortgage early you are killing your partner Uncle Sam. You see, parts of the interest paid on your first and second home is tax deductible. If you were instead to put the extra principle payments (or the difference in 15 and 30 year payments) in a secure, liquid investment you would have the money needed to pay off your home years earlier.<br />
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So, instead of paying off your mortgage faster you put the extra money in a side fund. Lets say that after 12 years you have saved in enough to pay off the remainder of your mortgage. As far as I'm considered you are out of debt, but I wouldn't recommend you use that money to pay it off. If you did you would loose the tax deduction. Instead keep that money in a secure, liquid investment and in another 15-18 years later you'll have thousands if not hundreds of thousands of dollars that you would not have any other way.<br />
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There are a few keys to this strategy. One, you must be disciplined enough to put the extra money into a side fund. Second, the side fund MUST be liquid and secure. Stock, bonds and mutual funds do not qualify. I would never risk money that you have allocated to pay off your house if ever needed. Third, the investment must earn a consistant return equal too or greater than the interest on your mortgage. As long as you choose the right place for your side fund you will be fine.<br />
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A few other reasons why you shouldn't pay off your home at a faster rate:<br />
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1. The equity in your home comes and goes with the market. And at any time is an asset earning 0%. There is a way to lock in your equity when the value of your house appreciates.<br />
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2. If your home is destroyed by a flood or earthquake that is not covered by your home owners insurance you loose EVERYTHING!<br />
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3. In the even of financial troubles, the bank will forclose fastest on home that have a higher equity to loan ration. They won't tell you that, but it's true. So while you are paying extra payments on your home, all that money can easily be lost in a matter of three months.<br />
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4. Home equity is not liquid. The only ways to access it are to sell your home or take out a loan. In a financial emergency you may not be able to get a loan because might have lost your job. Don't think it can happen to you? It can. Instead you may have to sell your home at a discounted rate in order to sell quickly.<br />
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5. If you are ever sued your home equity is not safe. Don't think you'll be sued? Do you ever work with children? Is there ever dirt, snow or cracks on your sidewalk? It can happen. Don't be paranoid, be prepared.Financial Survivalisthttp://www.blogger.com/profile/11650488643282887360noreply@blogger.com0tag:blogger.com,1999:blog-8465539231347636417.post-54726695206289049002011-09-14T07:34:00.000-07:002011-09-14T07:39:08.201-07:00People are Poor for a ReasonThis going to be a tough one for you to take. It's a good thing no one reads this. ;) I want to preface this post by saying there are exceptions to every rule. That being said, rich people are rich for a reason and poor people are poor for a reason. I once read that if all the wealth in the world was dispersed evenly throughout the world's population, within in 10 years the same distributions of wealth would return.<br />
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Yesterday the Census Bureau released it's findings that poverty hit a record numbers last year. The thing that gets me is that according to the U.S. Department of Energy (Residential Energy Consumption Survey, 2005) the people that are "poor" have it pretty well off. Below are a few of the facts that bother me.<br />
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Item % Poor That Have It Do I Have It?<br />
AC 76.7% Yes (used)<br />
More Than 1 TV 80.7% No<br />
Cable or Satellite TV 61.8% No<br />
Stereo 58.4% No<br />
Video Game System 53.9% Yes (gift)<br />
Internet Service 36.7% Yes<br />
Separate Freezer 21.2% No<br />
Big Screen TV 23.4% No<br />
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It took my wife bugging me for months before I finally agreed to buy a USED airconditioning unit for a single room. Over 1/2 of poor households own a video game system! I only have mine because it was given to us as a gift. My TV is one of those box TVs that they stopped making over 10 years ago. It as well was given to us.<br />
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I wish that this survey had asked how often they ate out, or what is the total value of their cars. I've spent a significant amount of time working in lower income neighborhoods. Without fail there is always numerous households that have nicer cars than homes. I've talked to several people that were struggling to pay their rent and yet their cable bill got paid on time every month. To them, cable is a necessity.<br />
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My point is not that poor people aren't poor. My point is that poor people are poor because of the things they spend their money on. Instead of saving and investing their money they spend it on toys and status symbols. They go into debt in order to buy a nicer car. They use credit cards to purchase nicer clothes. They go out to eat every night so they don't have to cook.<br />
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I once read a story of a man that made himself a multi-millionaire three different times. The first was in an Asian country that decided to take his money from him and left him penniless. He traded the few things he had to escape to another asian country. Within a few years he had made himself a multi-millionaire again. He traded all his money and everything he had to get himself and his wife to America. There he had a cousin that gave him a job in a bakery. He and his wife slept in the back of the shop for a year while he saved enough money to buy the bakery. Within a few years he had opened several more bakeries and was once again a multi-millionaire.<br />
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Every day I see people on the corner begging for money. With in a mile from that same corner there is a homeless medical clinic, a food bank, two soup kitchens, a large homeless shelter and employment services. I already knew that those people were begging because they chose too. Then one day I saw a man that was renting one of my apartments. He receives about $1,300 in SS income each month, his rent is paid for by the city, his utilities are paid for by the utility company, and he gets food stamps. Yet there he was, on the very same corner holding a cardboard sign.<br />
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No matter the challenges we face, we can overcome them. It is the way we use our money that determines our wealth or lack thereof. Most people are in their current financial situation because of ignorance or choice. Educate yourself. Rent books from a public library. Use the free internet at the public library. Choose to use your money wisely. Change your stars.Financial Survivalisthttp://www.blogger.com/profile/11650488643282887360noreply@blogger.com0tag:blogger.com,1999:blog-8465539231347636417.post-24146041342858955202011-09-12T17:55:00.001-07:002011-09-12T17:55:26.465-07:00Sweat EquityOver the past four days I have been replacing the roof on a parking structure for one of my rental properties. I've learned a lot, and I guess the point of blogging is to share endless pointless information with anyone who is actually reading. Does anyone read this? Please comment.<br />
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1. I'm not as young as I use to be. After the first day of clearing shingles every part of me ached. Not only that but my right hand kept going numb. In fact it has been four days and it seems that my right hand goes numb ever hour or so. I've started stretching my wrist and it seems to be helping, but for three nights now I've been waking up several times with a numb hand. For being numb it is quite painful. Also, my back aches. Bending over all day has got to be illegal. I think this torture can only be compared to the pain I once experienced while trying to relieve my bowels in a mosquito invested valley of Yellowstone back country. We are talking thousands of mosquitos! It looked like I had the chicken pox, but much worse. Any way, I don't know how people can do this for a living. Four days of it and I want to die.<br />
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2. Sometimes you don't want to go cheap. I figured I could use the three 90 gallon trashcans at this property to get rid of all the old shingles. Little did I know there were FOUR layers of shingles on the roof. Yeah, that doesn't fit into three 90 gallon trash cans. Now I have a huge pile of shingles and trash and no where to put it. I should have paid the money to order the dumpster. I still might.<br />
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3. Sweat Equity: what is your time worth. When it all comes down to it our time is what we sell. Whether it's a 9-5 or a 1099, we sell our time for a price. What is your time worth. When it comes to me working on my properties, should I contract the work out or do it myself? First there is my time? Is it worth it or could I make more money doing something else? Second, I like working with my hands. Whether it is on a car or a house, something about using my hands to create makes me happy. So YES. Yes it is worth it. Working on my own rental properties is the best way I can think of to create equity/money for my labor. When it's all said and done (still have the pile of trash) I love being able to look at my roof and say, "I did that."<br />
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4. My hamsters are fighting.Financial Survivalisthttp://www.blogger.com/profile/11650488643282887360noreply@blogger.com0tag:blogger.com,1999:blog-8465539231347636417.post-58223482024120846872011-09-09T07:27:00.000-07:002011-09-09T07:27:36.602-07:00Misallocation of FundsSomething I was reminded of yesterday is misallocation of funds. In the last few posts we made the assumption that we would be able to get 10% ROR (rate of return) through retirement. That assumption is based on the fact that the S&P averages 10% annual return. We already talked about the flaws of averaging percentages, but I almost forgot to mention time frame.<br />
The reason why the S&P can get an average return of 10% is because we average it over many years. As someone approaches and enters retirement their time frame on that money is not as long as it use to be. When a persons time frame is shorter than 10-15 years their investments need to reflect that. The money that they plan on using in the next few years should be protected.<br />
There are a few options to invest money safely and still average 8%. However, the majority of people will be happy with some sort of annuity giving them 5-6%. The point I'm making is that the investment philosophy of Dave's Ramsey failed in distribution as well. I don't think it is realistic to plan on a consistant ROR of more than 6%. In retirement you often need your rate of return to be consistant.<br />
This topic does depend a lot on the choice of investments. The choices are almost endless. That is why I am a huge proponent of financial education. It is why I am writing this blog.Financial Survivalisthttp://www.blogger.com/profile/11650488643282887360noreply@blogger.com0tag:blogger.com,1999:blog-8465539231347636417.post-81256111137001971532011-09-08T07:24:00.000-07:002011-09-08T07:24:46.813-07:00Why Dave Ramsey is an Epic Fail<link href="file://localhost/Users/benjaminbowman/Library/Caches/TemporaryItems/msoclip/0clip_filelist.xml" rel="File-List"></link> <link href="file://localhost/Users/benjaminbowman/Library/Caches/TemporaryItems/msoclip/0clip_editdata.mso" rel="Edit-Time-Data"></link> <!--[if !mso]> <style>
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<div style="margin-bottom: .0001pt; margin: 0in;"> If you love Dave, great. He helps a lot of people. He is amazing at helping people get out of debt, but he is not an investment advisor. He is not a financial strategist. He is a salesman and an entertainer. I too love Dave for helping a lot of people, but it is important to know are realize that he is not a one size fits all answer. The Following is a very common scenario implementing Dave's strategy.</div><div style="margin-bottom: .0001pt; margin: 0in;"> If someone needed $50,000 a year in order to retire, and they think they can get a 10% return, then theoretically they will need to have $500,000 in order to retire. This is a modest living, but possible. If they retire in1998, and they didn’t make any withdrawals until the end of each year, then their account balance would look like this.</div><div style="margin-bottom: .0001pt; margin: 0in;"><o:p></o:p></div><div style="margin-bottom: .0001pt; margin: 0in;"><br />
</div><div align="center"> <table border="0" cellpadding="0" cellspacing="0" class="MsoNormalTable" style="border-collapse: collapse; margin-left: 4.65pt; width: 265px;"><tbody>
<tr style="height: 14.25pt; mso-yfti-firstrow: yes; mso-yfti-irow: 0;"> <td nowrap="" style="border: solid windowtext 1.0pt; height: 14.25pt; mso-border-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 30.85pt;" valign="bottom" width="31"> <div class="MsoNormal"><span style="color: black; font-family: Arial; font-size: 9.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 10.0pt;">Year<o:p></o:p></span></div></td> <td nowrap="" style="border-left: none; border: solid windowtext 1.0pt; height: 14.25pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 59.0pt;" valign="bottom" width="59"> <div align="center" class="MsoNormal" style="text-align: center;"><span style="color: black; font-family: Arial; font-size: 9.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 10.0pt;">Return (%)<o:p></o:p></span></div></td> <td nowrap="" style="border-left: none; border: solid windowtext 1.0pt; height: 14.25pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 60.6pt;" valign="bottom" width="61"> <div class="MsoNormal"><span style="color: black; font-family: Arial; font-size: 9.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 10.0pt;">Return ($)<o:p></o:p></span></div></td> <td nowrap="" style="border-left: none; border: solid windowtext 1.0pt; height: 14.25pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 56.4pt;" valign="bottom" width="56"> <div class="MsoNormal"><span style="color: black; font-family: Arial; font-size: 9.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 10.0pt;">Withdrawal<o:p></o:p></span></div></td> <td nowrap="" style="border-left: none; border: solid windowtext 1.0pt; height: 14.25pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; mso-border-top-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 58.0pt;" valign="bottom" width="58"> <div class="MsoNormal"><span style="color: black; font-family: Arial; font-size: 9.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 10.0pt;">Balance<o:p></o:p></span></div></td> </tr>
<tr style="height: 14.25pt; mso-yfti-irow: 1;"> <td nowrap="" style="border-top: none; border: solid windowtext 1.0pt; height: 14.25pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 30.85pt;" valign="bottom" width="31"> <div align="right" class="MsoNormal" style="text-align: right;"><span style="color: black; font-family: Arial; font-size: 9.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 10.0pt;">1997<o:p></o:p></span></div></td> <td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 14.25pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 59.0pt;" valign="bottom" width="59"> <div align="center" class="MsoNormal" style="text-align: center;"><br />
</div></td> <td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 14.25pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 60.6pt;" valign="bottom" width="61"> <div class="MsoNormal"><br />
</div></td> <td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 14.25pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 56.4pt;" valign="bottom" width="56"> <div class="MsoNormal"><span style="color: black; font-family: Arial; font-size: 9.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 10.0pt;"><span style="mso-spacerun: yes;"> </span>$<span style="mso-spacerun: yes;"> </span>-<span style="mso-spacerun: yes;"> </span><o:p></o:p></span></div></td> <td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 14.25pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 58.0pt;" valign="bottom" width="58"> <div class="MsoNormal"><span style="color: black; font-family: Arial; font-size: 9.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 10.0pt;"><span style="mso-spacerun: yes;"> </span>$<span style="mso-spacerun: yes;"> </span>500,000 <o:p></o:p></span></div></td> </tr>
<tr style="height: 14.25pt; mso-yfti-irow: 2;"> <td nowrap="" style="border-top: none; border: solid windowtext 1.0pt; height: 14.25pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 30.85pt;" valign="bottom" width="31"> <div align="right" class="MsoNormal" style="text-align: right;"><span style="color: black; font-family: Arial; font-size: 9.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 10.0pt;">1998<o:p></o:p></span></div></td> <td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 14.25pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 59.0pt;" valign="bottom" width="59"> <div align="center" class="MsoNormal" style="text-align: center;"><span style="color: black; font-family: Arial; font-size: 9.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 10.0pt;">29%<o:p></o:p></span></div></td> <td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 14.25pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 60.6pt;" valign="bottom" width="61"> <div class="MsoNormal"><span style="color: black; font-family: Arial; font-size: 9.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 10.0pt;"><span style="mso-spacerun: yes;"> </span>$<span style="mso-spacerun: yes;"> </span>143,650 <o:p></o:p></span></div></td> <td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 14.25pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 56.4pt;" valign="bottom" width="56"> <div class="MsoNormal"><span style="color: black; font-family: Arial; font-size: 9.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 10.0pt;"><span style="mso-spacerun: yes;"> </span>$<span style="mso-spacerun: yes;"> </span>50,000 <o:p></o:p></span></div></td> <td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 14.25pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 58.0pt;" valign="bottom" width="58"> <div class="MsoNormal"><span style="color: black; font-family: Arial; font-size: 9.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 10.0pt;"><span style="mso-spacerun: yes;"> </span>$<span style="mso-spacerun: yes;"> </span>593,650 <o:p></o:p></span></div></td> </tr>
<tr style="height: 14.25pt; mso-yfti-irow: 3;"> <td nowrap="" style="border-top: none; border: solid windowtext 1.0pt; height: 14.25pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 30.85pt;" valign="bottom" width="31"> <div align="right" class="MsoNormal" style="text-align: right;"><span style="color: black; font-family: Arial; font-size: 9.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 10.0pt;">1999<o:p></o:p></span></div></td> <td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 14.25pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 59.0pt;" valign="bottom" width="59"> <div align="center" class="MsoNormal" style="text-align: center;"><span style="color: black; font-family: Arial; font-size: 9.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 10.0pt;">21%<o:p></o:p></span></div></td> <td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 14.25pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 60.6pt;" valign="bottom" width="61"> <div class="MsoNormal"><span style="color: black; font-family: Arial; font-size: 9.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 10.0pt;"><span style="mso-spacerun: yes;"> </span>$<span style="mso-spacerun: yes;"> </span>125,320 <o:p></o:p></span></div></td> <td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 14.25pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 56.4pt;" valign="bottom" width="56"> <div class="MsoNormal"><span style="color: black; font-family: Arial; font-size: 9.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 10.0pt;"><span style="mso-spacerun: yes;"> </span>$<span style="mso-spacerun: yes;"> </span>50,000 <o:p></o:p></span></div></td> <td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 14.25pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 58.0pt;" valign="bottom" width="58"> <div class="MsoNormal"><span style="color: black; font-family: Arial; font-size: 9.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 10.0pt;"><span style="mso-spacerun: yes;"> </span>$<span style="mso-spacerun: yes;"> </span>668,970 <o:p></o:p></span></div></td> </tr>
<tr style="height: 14.25pt; mso-yfti-irow: 4;"> <td nowrap="" style="border-top: none; border: solid windowtext 1.0pt; height: 14.25pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 30.85pt;" valign="bottom" width="31"> <div align="right" class="MsoNormal" style="text-align: right;"><span style="color: black; font-family: Arial; font-size: 9.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 10.0pt;">2000<o:p></o:p></span></div></td> <td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 14.25pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 59.0pt;" valign="bottom" width="59"> <div align="center" class="MsoNormal" style="text-align: center;"><span style="color: black; font-family: Arial; font-size: 9.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 10.0pt;">-9%<o:p></o:p></span></div></td> <td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 14.25pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 60.6pt;" valign="bottom" width="61"> <div class="MsoNormal"><span style="color: black; font-family: Arial; font-size: 9.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 10.0pt;"><span style="mso-spacerun: yes;"> </span>$<span style="mso-spacerun: yes;"> </span>(60,943)<o:p></o:p></span></div></td> <td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 14.25pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 56.4pt;" valign="bottom" width="56"> <div class="MsoNormal"><span style="color: black; font-family: Arial; font-size: 9.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 10.0pt;"><span style="mso-spacerun: yes;"> </span>$<span style="mso-spacerun: yes;"> </span>50,000 <o:p></o:p></span></div></td> <td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 14.25pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 58.0pt;" valign="bottom" width="58"> <div class="MsoNormal"><span style="color: black; font-family: Arial; font-size: 9.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 10.0pt;"><span style="mso-spacerun: yes;"> </span>$<span style="mso-spacerun: yes;"> </span>558,026 <o:p></o:p></span></div></td> </tr>
<tr style="height: 14.25pt; mso-yfti-irow: 5;"> <td nowrap="" style="border-top: none; border: solid windowtext 1.0pt; height: 14.25pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 30.85pt;" valign="bottom" width="31"> <div align="right" class="MsoNormal" style="text-align: right;"><span style="color: black; font-family: Arial; font-size: 9.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 10.0pt;">2001<o:p></o:p></span></div></td> <td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 14.25pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 59.0pt;" valign="bottom" width="59"> <div align="center" class="MsoNormal" style="text-align: center;"><span style="color: black; font-family: Arial; font-size: 9.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 10.0pt;">-12%<o:p></o:p></span></div></td> <td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 14.25pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 60.6pt;" valign="bottom" width="61"> <div class="MsoNormal"><span style="color: black; font-family: Arial; font-size: 9.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 10.0pt;"><span style="mso-spacerun: yes;"> </span>$<span style="mso-spacerun: yes;"> </span>(66,852)<o:p></o:p></span></div></td> <td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 14.25pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 56.4pt;" valign="bottom" width="56"> <div class="MsoNormal"><span style="color: black; font-family: Arial; font-size: 9.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 10.0pt;"><span style="mso-spacerun: yes;"> </span>$<span style="mso-spacerun: yes;"> </span>50,000 <o:p></o:p></span></div></td> <td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 14.25pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 58.0pt;" valign="bottom" width="58"> <div class="MsoNormal"><span style="color: black; font-family: Arial; font-size: 9.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 10.0pt;"><span style="mso-spacerun: yes;"> </span>$<span style="mso-spacerun: yes;"> </span>441,175 <o:p></o:p></span></div></td> </tr>
<tr style="height: 14.25pt; mso-yfti-irow: 6;"> <td nowrap="" style="border-top: none; border: solid windowtext 1.0pt; height: 14.25pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 30.85pt;" valign="bottom" width="31"> <div align="right" class="MsoNormal" style="text-align: right;"><span style="color: black; font-family: Arial; font-size: 9.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 10.0pt;">2002<o:p></o:p></span></div></td> <td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 14.25pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 59.0pt;" valign="bottom" width="59"> <div align="center" class="MsoNormal" style="text-align: center;"><span style="color: black; font-family: Arial; font-size: 9.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 10.0pt;">-22%<o:p></o:p></span></div></td> <td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 14.25pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 60.6pt;" valign="bottom" width="61"> <div class="MsoNormal"><span style="color: black; font-family: Arial; font-size: 9.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 10.0pt;"><span style="mso-spacerun: yes;"> </span>$<span style="mso-spacerun: yes;"> </span>(98,250)<o:p></o:p></span></div></td> <td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 14.25pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 56.4pt;" valign="bottom" width="56"> <div class="MsoNormal"><span style="color: black; font-family: Arial; font-size: 9.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 10.0pt;"><span style="mso-spacerun: yes;"> </span>$<span style="mso-spacerun: yes;"> </span>50,000 <o:p></o:p></span></div></td> <td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 14.25pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 58.0pt;" valign="bottom" width="58"> <div class="MsoNormal"><span style="color: black; font-family: Arial; font-size: 9.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 10.0pt;"><span style="mso-spacerun: yes;"> </span>$<span style="mso-spacerun: yes;"> </span>292,925 <o:p></o:p></span></div></td> </tr>
<tr style="height: 14.25pt; mso-yfti-irow: 7;"> <td nowrap="" style="border-top: none; border: solid windowtext 1.0pt; height: 14.25pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 30.85pt;" valign="bottom" width="31"> <div align="right" class="MsoNormal" style="text-align: right;"><span style="color: black; font-family: Arial; font-size: 9.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 10.0pt;">2003<o:p></o:p></span></div></td> <td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 14.25pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 59.0pt;" valign="bottom" width="59"> <div align="center" class="MsoNormal" style="text-align: center;"><span style="color: black; font-family: Arial; font-size: 9.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 10.0pt;">29%<o:p></o:p></span></div></td> <td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 14.25pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 60.6pt;" valign="bottom" width="61"> <div class="MsoNormal"><span style="color: black; font-family: Arial; font-size: 9.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 10.0pt;"><span style="mso-spacerun: yes;"> </span>$<span style="mso-spacerun: yes;"> </span>84,128 <o:p></o:p></span></div></td> <td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 14.25pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 56.4pt;" valign="bottom" width="56"> <div class="MsoNormal"><span style="color: black; font-family: Arial; font-size: 9.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 10.0pt;"><span style="mso-spacerun: yes;"> </span>$<span style="mso-spacerun: yes;"> </span>50,000 <o:p></o:p></span></div></td> <td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 14.25pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 58.0pt;" valign="bottom" width="58"> <div class="MsoNormal"><span style="color: black; font-family: Arial; font-size: 9.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 10.0pt;"><span style="mso-spacerun: yes;"> </span>$<span style="mso-spacerun: yes;"> </span>327,053 <o:p></o:p></span></div></td> </tr>
<tr style="height: 14.25pt; mso-yfti-irow: 8;"> <td nowrap="" style="border-top: none; border: solid windowtext 1.0pt; height: 14.25pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 30.85pt;" valign="bottom" width="31"> <div align="right" class="MsoNormal" style="text-align: right;"><span style="color: black; font-family: Arial; font-size: 9.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 10.0pt;">2004<o:p></o:p></span></div></td> <td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 14.25pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 59.0pt;" valign="bottom" width="59"> <div align="center" class="MsoNormal" style="text-align: center;"><span style="color: black; font-family: Arial; font-size: 9.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 10.0pt;">11%<o:p></o:p></span></div></td> <td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 14.25pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 60.6pt;" valign="bottom" width="61"> <div class="MsoNormal"><span style="color: black; font-family: Arial; font-size: 9.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 10.0pt;"><span style="mso-spacerun: yes;"> </span>$<span style="mso-spacerun: yes;"> </span>35,387 <o:p></o:p></span></div></td> <td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 14.25pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 56.4pt;" valign="bottom" width="56"> <div class="MsoNormal"><span style="color: black; font-family: Arial; font-size: 9.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 10.0pt;"><span style="mso-spacerun: yes;"> </span>$<span style="mso-spacerun: yes;"> </span>50,000 <o:p></o:p></span></div></td> <td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 14.25pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 58.0pt;" valign="bottom" width="58"> <div class="MsoNormal"><span style="color: black; font-family: Arial; font-size: 9.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 10.0pt;"><span style="mso-spacerun: yes;"> </span>$<span style="mso-spacerun: yes;"> </span>312,440 <o:p></o:p></span></div></td> </tr>
<tr style="height: 14.25pt; mso-yfti-irow: 9;"> <td nowrap="" style="border-top: none; border: solid windowtext 1.0pt; height: 14.25pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 30.85pt;" valign="bottom" width="31"> <div align="right" class="MsoNormal" style="text-align: right;"><span style="color: black; font-family: Arial; font-size: 9.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 10.0pt;">2005<o:p></o:p></span></div></td> <td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 14.25pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 59.0pt;" valign="bottom" width="59"> <div align="center" class="MsoNormal" style="text-align: center;"><span style="color: black; font-family: Arial; font-size: 9.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 10.0pt;">5%<o:p></o:p></span></div></td> <td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 14.25pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 60.6pt;" valign="bottom" width="61"> <div class="MsoNormal"><span style="color: black; font-family: Arial; font-size: 9.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 10.0pt;"><span style="mso-spacerun: yes;"> </span>$<span style="mso-spacerun: yes;"> </span>14,966 <o:p></o:p></span></div></td> <td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 14.25pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 56.4pt;" valign="bottom" width="56"> <div class="MsoNormal"><span style="color: black; font-family: Arial; font-size: 9.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 10.0pt;"><span style="mso-spacerun: yes;"> </span>$<span style="mso-spacerun: yes;"> </span>50,000 <o:p></o:p></span></div></td> <td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 14.25pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 58.0pt;" valign="bottom" width="58"> <div class="MsoNormal"><span style="color: black; font-family: Arial; font-size: 9.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 10.0pt;"><span style="mso-spacerun: yes;"> </span>$<span style="mso-spacerun: yes;"> </span>277,406 <o:p></o:p></span></div></td> </tr>
<tr style="height: 14.25pt; mso-yfti-irow: 10;"> <td nowrap="" style="border-top: none; border: solid windowtext 1.0pt; height: 14.25pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 30.85pt;" valign="bottom" width="31"> <div align="right" class="MsoNormal" style="text-align: right;"><span style="color: black; font-family: Arial; font-size: 9.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 10.0pt;">2006<o:p></o:p></span></div></td> <td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 14.25pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 59.0pt;" valign="bottom" width="59"> <div align="center" class="MsoNormal" style="text-align: center;"><span style="color: black; font-family: Arial; font-size: 9.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 10.0pt;">16%<o:p></o:p></span></div></td> <td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 14.25pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 60.6pt;" valign="bottom" width="61"> <div class="MsoNormal"><span style="color: black; font-family: Arial; font-size: 9.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 10.0pt;"><span style="mso-spacerun: yes;"> </span>$<span style="mso-spacerun: yes;"> </span>43,664 <o:p></o:p></span></div></td> <td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 14.25pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 56.4pt;" valign="bottom" width="56"> <div class="MsoNormal"><span style="color: black; font-family: Arial; font-size: 9.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 10.0pt;"><span style="mso-spacerun: yes;"> </span>$<span style="mso-spacerun: yes;"> </span>50,000 <o:p></o:p></span></div></td> <td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 14.25pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 58.0pt;" valign="bottom" width="58"> <div class="MsoNormal"><span style="color: black; font-family: Arial; font-size: 9.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 10.0pt;"><span style="mso-spacerun: yes;"> </span>$<span style="mso-spacerun: yes;"> </span>271,070 <o:p></o:p></span></div></td> </tr>
<tr style="height: 14.25pt; mso-yfti-irow: 11;"> <td nowrap="" style="border-top: none; border: solid windowtext 1.0pt; height: 14.25pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 30.85pt;" valign="bottom" width="31"> <div align="right" class="MsoNormal" style="text-align: right;"><span style="color: black; font-family: Arial; font-size: 9.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 10.0pt;">2007<o:p></o:p></span></div></td> <td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 14.25pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 59.0pt;" valign="bottom" width="59"> <div align="center" class="MsoNormal" style="text-align: center;"><span style="color: black; font-family: Arial; font-size: 9.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 10.0pt;">5%<o:p></o:p></span></div></td> <td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 14.25pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 60.6pt;" valign="bottom" width="61"> <div class="MsoNormal"><span style="color: black; font-family: Arial; font-size: 9.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 10.0pt;"><span style="mso-spacerun: yes;"> </span>$<span style="mso-spacerun: yes;"> </span>14,800 <o:p></o:p></span></div></td> <td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 14.25pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 56.4pt;" valign="bottom" width="56"> <div class="MsoNormal"><span style="color: black; font-family: Arial; font-size: 9.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 10.0pt;"><span style="mso-spacerun: yes;"> </span>$<span style="mso-spacerun: yes;"> </span>50,000 <o:p></o:p></span></div></td> <td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 14.25pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 58.0pt;" valign="bottom" width="58"> <div class="MsoNormal"><span style="color: black; font-family: Arial; font-size: 9.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 10.0pt;"><span style="mso-spacerun: yes;"> </span>$<span style="mso-spacerun: yes;"> </span>235,871 <o:p></o:p></span></div></td> </tr>
<tr style="height: 14.25pt; mso-yfti-irow: 12;"> <td nowrap="" style="border-top: none; border: solid windowtext 1.0pt; height: 14.25pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 30.85pt;" valign="bottom" width="31"> <div align="right" class="MsoNormal" style="text-align: right;"><span style="color: black; font-family: Arial; font-size: 9.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 10.0pt;">2008<o:p></o:p></span></div></td> <td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 14.25pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 59.0pt;" valign="bottom" width="59"> <div align="center" class="MsoNormal" style="text-align: center;"><span style="color: black; font-family: Arial; font-size: 9.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 10.0pt;">-37%<o:p></o:p></span></div></td> <td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 14.25pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 60.6pt;" valign="bottom" width="61"> <div class="MsoNormal"><span style="color: black; font-family: Arial; font-size: 9.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 10.0pt;"><span style="mso-spacerun: yes;"> </span>$<span style="mso-spacerun: yes;"> </span>(87,791)<o:p></o:p></span></div></td> <td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 14.25pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 56.4pt;" valign="bottom" width="56"> <div class="MsoNormal"><span style="color: black; font-family: Arial; font-size: 9.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 10.0pt;"><span style="mso-spacerun: yes;"> </span>$<span style="mso-spacerun: yes;"> </span>50,000 <o:p></o:p></span></div></td> <td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 14.25pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 58.0pt;" valign="bottom" width="58"> <div class="MsoNormal"><span style="color: black; font-family: Arial; font-size: 9.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 10.0pt;"><span style="mso-spacerun: yes;"> </span>$<span style="mso-spacerun: yes;"> </span>98,080 <o:p></o:p></span></div></td> </tr>
<tr style="height: 14.25pt; mso-yfti-irow: 13; mso-yfti-lastrow: yes;"> <td nowrap="" style="border-top: none; border: solid windowtext 1.0pt; height: 14.25pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-left-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 30.85pt;" valign="bottom" width="31"> <div align="right" class="MsoNormal" style="text-align: right;"><span style="color: black; font-family: Arial; font-size: 9.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 10.0pt;">2009<o:p></o:p></span></div></td> <td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 14.25pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 59.0pt;" valign="bottom" width="59"> <div align="center" class="MsoNormal" style="text-align: center;"><span style="color: black; font-family: Arial; font-size: 9.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 10.0pt;">27%<o:p></o:p></span></div></td> <td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 14.25pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 60.6pt;" valign="bottom" width="61"> <div class="MsoNormal"><span style="color: black; font-family: Arial; font-size: 9.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 10.0pt;"><span style="mso-spacerun: yes;"> </span>$<span style="mso-spacerun: yes;"> </span>26,589 <o:p></o:p></span></div></td> <td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 14.25pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 56.4pt;" valign="bottom" width="56"> <div class="MsoNormal"><span style="color: black; font-family: Arial; font-size: 9.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 10.0pt;"><span style="mso-spacerun: yes;"> </span>$<span style="mso-spacerun: yes;"> </span>50,000 <o:p></o:p></span></div></td> <td nowrap="" style="border-bottom: solid windowtext 1.0pt; border-left: none; border-right: solid windowtext 1.0pt; border-top: none; height: 14.25pt; mso-border-bottom-alt: solid windowtext .5pt; mso-border-right-alt: solid windowtext .5pt; padding: 0in 5.4pt 0in 5.4pt; width: 58.0pt;" valign="bottom" width="58"> <div class="MsoNormal"><span style="color: black; font-family: Arial; font-size: 9.0pt; mso-bidi-font-family: Arial; mso-bidi-font-size: 10.0pt;"><span style="mso-spacerun: yes;"> </span>$<span style="mso-spacerun: yes;"> </span>74,669 <o:p></o:p></span></div></td> </tr>
</tbody></table></div><div style="margin-bottom: .0001pt; margin: 0in;"><br />
</div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi7KeKSQudfjve9T7HNdUKI6pwMCkacx6jVpgDf6kxZg_eHMPnmCeJGoHJ4qCs1yhkHddpREubLgRZV5aKublM6pvM4W2_e-YYiKd3MwiPfSjdvQAomqHmOplC-MSIZkBPqW611u5dRRtkU/s1600/distributions.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi7KeKSQudfjve9T7HNdUKI6pwMCkacx6jVpgDf6kxZg_eHMPnmCeJGoHJ4qCs1yhkHddpREubLgRZV5aKublM6pvM4W2_e-YYiKd3MwiPfSjdvQAomqHmOplC-MSIZkBPqW611u5dRRtkU/s1600/distributions.jpg" /></a></div><div style="text-align: center;"><br />
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</div><div style="margin-bottom: .0001pt; margin: 0in;"><span style="mso-tab-count: 1;"> </span>They did great when the market did great. Their account balance even grew when they were taking out their needed income. But as you notice their balance goes from $500,000 to $74,669 over the course of ten years. They are likely to run out of money in the next year or two. Most of us plan on being retired for longer than 10 years. If this person retired at age 65 they would run out of money by age 76 or 77. When someone runs out of retirement funds they often are not in the condition to work which leaves them two options; move in with family, or live in extreme poverty. Yes there is Social Security and Medicaid and Medicare for now, but that is never ideal nor desirable.<o:p></o:p></div><div style="margin-bottom: .0001pt; margin: 0in;"><span style="mso-tab-count: 1;"> </span>You may ask, “What happened? Why didn’t it work?” The simple answer in this case is timing. The market doesn’t just go one way. It goes up, down, and sideways. This person only makes money on up years, and they still have to withdrawal money when they haven’t made any. This person just didn’t time his retirement right. It’s not an easy thing to do.<o:p></o:p></div><div style="margin-bottom: .0001pt; margin: 0in;"><span style="mso-tab-count: 1;"> </span>The root of the problem is the assumptions of needs based planning that the market will always go up on an average 10%. That assumption allows people to plan on living off their interest rate, or their returns each year. However, as we talked about averages last post, it doesn't work. When their return is not enough, they will likely not be able to reduce their expenses sufficiently. The result is a withdrawal of the basis, or the amount from which they earn returns used to pay living expenses. This means that the amount of returns they will receive from year to year will be less. Essentially their retirement income will be less. Unless they decrease their expenses to match their decreased income the result will be fatal.<o:p></o:p></div><!--EndFragment-->Financial Survivalisthttp://www.blogger.com/profile/11650488643282887360noreply@blogger.com0tag:blogger.com,1999:blog-8465539231347636417.post-5867239709488527362011-09-07T09:02:00.000-07:002011-09-07T09:02:02.839-07:00Average Rate of Return<link href="file://localhost/Users/benjaminbowman/Library/Caches/TemporaryItems/msoclip/0clip_filelist.xml" rel="File-List"></link> <link href="file://localhost/Users/benjaminbowman/Library/Caches/TemporaryItems/msoclip/0clip_editdata.mso" rel="Edit-Time-Data"></link> <link href="file://localhost/Users/benjaminbowman/Library/Caches/TemporaryItems/msoclip/0clip_oledata.mso" rel="OLE-Object-Data"></link> <!--[if !mso]> <style>
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<div style="margin-bottom: .0001pt; margin: 0in;">It is said that the S&P 500 index averages a 10% annual rate of return. That means that year to year the S&P’s average annual return is 10%. Even though most people accept the average rate of return as 10%, between 1971 and 2009 it is actually 10.59%. This means that when investors are trying to beat or match the S&P 500 as a bench mark they usually expect about a 10% return. However, average and actual returns are two different things, and averages can be very tricky. I’ll give you an example of what I mean. Let’s say that we invest $100 in the stock market. In Year 1 we receive a return of 100%. So after Year 1 we have $200. In Year 2 we lose 50% (return of -50%). We now have $100 again. Then in Year 3 we gain 100% again. In Year 4 we lose 50%. In Year 5 we gain 100%, and in Year 6 we again lose 50%. After 6 years we now have $100. This is demonstrated by the chart below.<o:p></o:p></div><div style="margin-bottom: .0001pt; margin: 0in;"><br />
</div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjj4N9EvxzBF63O1zolRMPskEuqGLB2qmxriTjc3aoyHDzjLk5jZ9rax-X4wvVPoCAaVuAhy9JdJcDu_36N9Alc7_ADssvzPWPEFSb-4NACk_Ol1Rs0d2l-kc6gU1N6Ptg13OBs1vPrHG_u/s1600/averageROR.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjj4N9EvxzBF63O1zolRMPskEuqGLB2qmxriTjc3aoyHDzjLk5jZ9rax-X4wvVPoCAaVuAhy9JdJcDu_36N9Alc7_ADssvzPWPEFSb-4NACk_Ol1Rs0d2l-kc6gU1N6Ptg13OBs1vPrHG_u/s1600/averageROR.jpg" /></a></div><div style="text-align: center;"><br />
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</div><div style="margin-bottom: .0001pt; margin: 0in;"><span style="mso-tab-count: 1;"> </span>So, our average rate of return is 25%, but if we started with $100 and ended with $100, then our actual rate of return is 0%. If we account for three years of inflation our $100 now has the buying power of about $83. Obviously this is as pretty extreme example, and my first thought was that this would likely never happen to a market index. Upon further research I realized that not only could it happen, but it has happened, and could be happening right now!<o:p></o:p></div><div style="margin-bottom: .0001pt; margin: 0in;"><span style="mso-tab-count: 1;"> </span>As you see below the Dow Jones Industrial Average between 1963 and 1983 peaked five times at or around the 1000 level, and then dropped back down to or below the 775 level five times. This is a real life example of what we just illustrated. If someone put $100 into the market in 1964 they would still only have $100 18 years later in 1982. This is known as a sideways market. This particular sideways market lasted for almost 20 years.<o:p></o:p></div><div style="margin-bottom: .0001pt; margin: 0in;"><br />
</div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjjxRty7j4NiPP9ndfnRHOcKemV8UT28wyPXLFvLFRwYxO_amKn158AC6CypxI6D9YTXmeDiGlnGWx-G4n6H9wyJ_6OfBYNpL4NAD44kyZFuU7Mzl_4K1UskSDA70z5QUCl02YZ-QW8O3v7/s1600/dji63-82.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="274" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjjxRty7j4NiPP9ndfnRHOcKemV8UT28wyPXLFvLFRwYxO_amKn158AC6CypxI6D9YTXmeDiGlnGWx-G4n6H9wyJ_6OfBYNpL4NAD44kyZFuU7Mzl_4K1UskSDA70z5QUCl02YZ-QW8O3v7/s320/dji63-82.jpg" width="320" /></a></div><div style="text-align: center;"> <title></title> <style type="text/css">
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</div><div style="margin-bottom: .0001pt; margin: 0in;"><span style="mso-tab-count: 1;"> </span>Our current situation is not too far off from the same thing. When you look at a chart from 1997 to 2009 you can see that the market has gone up and back down to a starting point twice just like it had in 1971. When the S&P 500 bottomed out at 666 people began calling this situation the “Lost Decade” because if you invested $100 ten years ago you would only have $100. It’s like you didn’t do anything. As we look at the situation of 1971 they still had 10 more years of a sideways market? Does this mean that we have another 10 years of a sideways market today? <o:p></o:p></div><div style="margin-bottom: .0001pt; margin: 0in;"><br />
</div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgSdnJrNPre-sFiHR4D7jRDjO31OfGcix3xsVzp5r5dEueRMqTRMpT-oyQd9vPGvqEfyvdu0kZx6tgKUYbf8i8G-i_miIEchvuwLYXqyQ2Ge04EHNO57w68Citv2n57fjZ7I1a1nMMj-baa/s1600/dji97-09.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="266" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgSdnJrNPre-sFiHR4D7jRDjO31OfGcix3xsVzp5r5dEueRMqTRMpT-oyQd9vPGvqEfyvdu0kZx6tgKUYbf8i8G-i_miIEchvuwLYXqyQ2Ge04EHNO57w68Citv2n57fjZ7I1a1nMMj-baa/s320/dji97-09.jpg" width="320" /></a></div><div style="text-align: center;"><br />
</div><div style="margin-bottom: .0001pt; margin: 0in;"><span style="mso-tab-count: 1;"> </span><o:p></o:p></div><div style="margin-bottom: .0001pt; margin: 0in;"><span style="mso-tab-count: 1;"> </span>This concept demonstrates how averages can be manipulated to say what the manipulator wants, and the difference between average and actual. If you would like to know the actual annualized (year over year) rate of return for the S&P 500 between 1871 and 2009 it is 8.89%. However, that comes with an average standard deviation of 18.94%. For those of you who are not statisticians, this means that any given year can have a return that varies at least18.94% in either direction. For example in 2008 the return of the S&P 500 was -37.22%. In 2009 it was 27.11%.<span style="mso-spacerun: yes;"> </span>What does this mean to the average investor? It means that your actual return depends on your timing. If you put $100 into the market at the beginning of 2008 at the end of that year you would have $62.72. If I want to gamble I will go to Vegas, but when it comes to my retirement I don't mess around.<o:p></o:p></div><!--EndFragment-->Financial Survivalisthttp://www.blogger.com/profile/11650488643282887360noreply@blogger.com0tag:blogger.com,1999:blog-8465539231347636417.post-22125015288367374532011-09-06T22:34:00.000-07:002011-09-06T22:36:08.208-07:00Never Stop LearningI learned something new today. I've always thought being debt free was a good thing. Not always. First off never go into debt to consume, only to preserve. I mean that you shouldn't be in debt to buy a depreciating asset (ie. car, boat, snowmobile, junk). At the same time I realized today how risky and wasteful it is to have your home paid off. If your home is destroyed in an earthquake or flood that home owners insurance won't cover, would you rather that you had paid it off, or that you would have invested the extra money in a liquid and safe investment? Just something to think on.Financial Survivalisthttp://www.blogger.com/profile/11650488643282887360noreply@blogger.com0tag:blogger.com,1999:blog-8465539231347636417.post-89199818160478392262011-09-05T19:38:00.000-07:002011-09-05T19:38:47.458-07:00I'm BackI'm back. I've been way to busy with way too many things, but I am back with a new commitment to Richest Man In Zion. I want to thank everyone for their support and anyone that actually reads this. I've had a lot of time to think about what I'm doing and why I'm doing it. Money and investing is a passion for me. I want to share that with those around me. It is much easier to convince someone to do something stupid with their money than it is to do something smart. For a year I worked with a financial planning firm trying to convince people to do smart things with their money. I decided that wasn't for me. Instead I plan to offer the tools and tips for the common person to help them make smart choices. Richest Man is Zion will now offer:<br />
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<ul><li>Daily money tips</li>
<li>More Frequent Posts</li>
<li>Book Reviews</li>
<li>More External Resources</li>
</ul><div>Todays Money Tip: there is no such thing as quick money. I know it seems obviously, but every day people invest in Iraqi currency scams and buy into MLM's without knowing what they are getting into. I am a fan of MLM's, but not MLM's that sell themselves as something that will make you quick money. There is no such thing as quick money.</div>Financial Survivalisthttp://www.blogger.com/profile/11650488643282887360noreply@blogger.com0tag:blogger.com,1999:blog-8465539231347636417.post-87785983693449802632011-01-05T07:34:00.000-08:002011-01-16T22:08:20.359-08:00Flip or Flop: The Most Common Real Estate MythsI'm sure you've heard that millions of people lost their shirts when the Real Estate Bubble burst. Well, I can tell you that thousands collected those shirts and added them to their closets. In fact, smart investors make their money when other people are loosing it. I guarantee you that more people than you know made millions off this crash, not just in real estate, but in the markets too. In fact Warren Buffet (Berkshire Hathaway) posted a gain of $6.3 billion in just the last three months!<br />
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I read a lot and observe a lot. One thing I've noticed is that when people talk about investing in real estate they usually have no clue what they are talking about. There are so many misconceptions, and so much bad advice out there that I don't blame them. Many common strategies are designed to make money selling books not real estate. Comming soon is an eBook <u>Flip or Flop</u>, discussing the most common real estate myths out there. Below is a taste.<br />
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Flip or Flop<br />
Benjamin Bowman<br />
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1. Zero Down - HA! HA! That's funny, but I hear so much about it and there seems to be a never ending source of books about it. The fact of the matter is that lenders want ALL investors to have skin in the game. They want to know that when times get tough you're not just going to walk away, as so many people have. There may have been at a time, but now there is no such thing as "zero down."<br />
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2. Real Estate Always Goes Up - . . . Do I really need to say anything at all? Probably not, but for some reason people still believe this. No one will ever say it out loud because they are afraid of sounding like an idiot, and they would. However, actions speak louder than words.<br />
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3. Buy Low; Sell High - Duh! I've never seen a piece of advice so over simplified. This is sound advice for all investing. Now that you know to "Buy Low" and "Sell High," you'll never loose a dime! That's why all the professionals never loose a dime, right? No, and it's not good advice. The reason is the blatant acceptance of unnecessary risk.<br />
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4. Flip It! Flip it Good! - I hear stories about this one all the time. I always hear about the loads of cash people make over night. Great! Lets all do it. Too bad this is probably the worst way to invest in real estate.<br />
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5. Borrowing is Investing - "I'm a real estate investor." Really? How much of your money have you invested in real estate? How much of other peoples money? Too many people think that borrowing money from the bank to use in real estate makes them an investor. More than anything it makes them an extension on the banks investing arm, except the banks gets to avoid most of the risk and you're on the hook.<br />
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And more...<br />
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Tell me what you think on our face book page and get a free copy of the eBook when it is released.Financial Survivalisthttp://www.blogger.com/profile/11650488643282887360noreply@blogger.com0tag:blogger.com,1999:blog-8465539231347636417.post-53513619412503697902010-12-07T08:00:00.000-08:002010-12-07T08:00:55.031-08:00Give ThanksAs many people have pointed out, it is easy to get lost in the hustle and bustle of the Christmas season and forget what the Christmas is really about. This holiday season make sure you take the time to be thankful for everything you have. Even the poorest of this nation truly are wealthy. We have freedom to worship who, what and where we may. We have shelter over our head, food on the table, and a warm bed. We have clothing on our back and education available to our children. We have refrigeration that makes it possible to preserve meat without bathing it in salt. We have ICE CREAM!<br />
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We have endless amenities and luxuries that we use on a daily bases and take for granted because they have always been there. They may not always be. Christmas isn't about a tree, it's not about presents, and it isn't about Santa Clause. Christmas is a day chosen to celebrate the birth of Christ our Savior. It's hard to imagine a baby born in a stable as you sleep in your bed. It's hard to imagine the true sacrifice of God's only begotten son when your children sleep safely in the next room. It's hard to think of the gifts given to a King of Kings when ours come from a mythical saint. It's hard to think of Christ as the centerpiece for our homes when a tree takes His place.<br />
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Money is not the root of all evil. The love of money and of physical things is the root of all evil. I purpose it to be very dangerous to celebrate a holiday with Christ's name in it by buying all sort of physical things. Maybe this year instead of Santa bringing gifts, we should make them ourselves and just exchange them to celebrate the birth of Christ. Maybe instead of placing them under a Fir tree we should find a stable or vagabond shelter of our day to leave them. Maybe we should give thanks to God for all that we have instead of trying to obtain more. Maybe we should read the story of Christ birth from the scriptures.<br />
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What ever you do this Christmas season, and however you do it, make sure that Christ is a part of it. Give God thanks for all that you have, every seemingly meaningless thing, because it may not always be there. True wealth is not cannot be found in monetary greatness alone, but in life, family and friends. Give thanks for that wealth and your monetary wealth no matter how great and small. Merry Christmas to all.Financial Survivalisthttp://www.blogger.com/profile/11650488643282887360noreply@blogger.com0tag:blogger.com,1999:blog-8465539231347636417.post-48672710860034771902010-11-17T17:44:00.000-08:002010-11-17T17:44:20.782-08:00Food StorageAs we all hopefully know, there are more things to wealth than money and physical possessions. One of the greatest things we can have is freedom. We are enslaved on a daily basis by many necessary evils, and some not so necessary. For example, debt and work. Though some people may claim exception, debt is not a necessary evil. Work is the same way. We have certain obligations that limit our choices. Another unnecessary evil is lack of preparation.<br />
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You may not think a disaster will happen where you live. You may think that even if something did happen that the government would come to your rescue. This is America for crying out loud. Well, the people that experienced Hurricane Katrina learned that both of those assumptions are not necessarily true. So it is time we stop making excuses and prepare. When we are prepare we will feel the freedom that comes with it. We will feel the security knowing that if anything did happen we would be ok. If you're not sure how to prepare visit <a href="http://www.howtoprepareforadisaster.com/">howtoprepareforadisaster.com</a>. You can also find this link under my favorite links. It's not the prettiest site, but it has everything you need.<br />
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Food storage is one way you can prepare, and now is the time to do it. I have spoken many times about inflation and what I think is in the future. With the Federal Reserves latest round of what they call "easing" there is only one way prices can go. So if you are ever going to get food storage, now is the time to do it. Clothing is another thing that is going to get more expensive. Many U.S. retailers including Gap Inc. say that clothing prices will increase as much as 30% by spring.<br />
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There are a few places you can go to get your food storage. If money is not an issue then DailyBread.com is a good option. They definitely have the nicest food. If money is an issue, but not a problem then ShelfReliance.com is a good alternative. They still have a nice selection of food and they aren't as expensive. It isn't as nice of food though. If money is a problem then there is only one place to go. <a href="http://www.providentliving.org/location/map/0,12566,2026-1-4,00.html">ProvidentLiving.org</a> This link will help you find a home storage center near you. This is a cheap as it gets. Call them and they will give you a list of options.<br />
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Canning is another cheap option. You can find information on canning at <a href="http://www.howtoprepareforadisaster.com/">www.howtoprepareforadisaster.com</a> Click on food storage and then canning.<br />
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People may laugh at me. They may call me paranoid or delusional. What ever they call me I have the peace of mind that no matter what happens my family will be ok.Financial Survivalisthttp://www.blogger.com/profile/11650488643282887360noreply@blogger.com0tag:blogger.com,1999:blog-8465539231347636417.post-45629988950769840142010-10-19T12:27:00.000-07:002010-10-19T12:27:30.205-07:00Tier 6: Exotic Investments<span class="Apple-style-span" style="font-family: arial; font-size: 13px;">An Angel investor is someone who provides financial backing for small startups or entrepreneurs. They are usually the first round of financing of any business. That is they are the first ones to invest and they invest when the business isn't even off the ground. When it's just an idea. I have seen an Angel investor $10,000 in dozens of dozens of businesses and get nothing but ownership in worthless companies that die almost as fast as they were born. If this was the Angel investors retirement plan they would be broke. It's a good thing that most Angel investors are very wealthy, as they should be.</span><br />
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<span class="Apple-style-span" style="font-family: arial; font-size: 13px;">I have a friend and associate that helped people invest in real estate during the real estate bubble. The investments were "sexy." It's always the sexy investments that attract people because you can make a lot of money in a short amount of time. You can also loose a lot of money just as fast. During the real estate boom, normal people thought that the odds were better than they were. "Wanna be" investors found themselves making a lot of money easier than they should have. They also found themselves loosing it come the crash. If you're not ready to loose that money, really just throw it away, then you shouldn't invest in "sexy" or exotic investments.</span><br />
<span class="Apple-style-span" style="font-family: arial; font-size: 13px;"><br />
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<span class="Apple-style-span" style="font-family: arial; font-size: 13px;">The last tier of investing is Exotic Investments. Exotic Investments are any type of self managed investment including trading accounts. Exotic investments include but are not limited to: real estate, currency, commodities, private businesses, art, coins and antiques.</span><br />
<span class="Apple-style-span" style="font-family: arial; font-size: 13px;"><br />
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<span class="Apple-style-span" style="font-family: arial; font-size: small;"><span class="Apple-style-span" style="font-size: 13px;">I have used an analogy about collecting Polo shirts. If I had a closet filled with every different kind and color of polo shirt, all I would have is a diversified collection of polo shirts. I use that analogy as an example of how someone shouldn't diversify. However, if I an expert on polo shirts, if I had studied polo shirts my entire life and knew them in and out, then it may be riskier for me to try and diversify with stocks and bonds. It may be wiser for me to invest more in polo shirts. Exotic investments are the same. If you have a special knowledge of commodities or real estate, then it may change the risk involved with those kind of investments. By changing the risk it may change the order of the tiers for that specific asset class.</span></span><br />
<span class="Apple-style-span" style="font-family: arial; font-size: small;"><span class="Apple-style-span" style="font-size: 13px;"><br />
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<span class="Apple-style-span" style="font-family: arial; font-size: small;"><span class="Apple-style-span" style="font-size: 13px;">No matter what your situation, you should always consider your risks before investing. When it comes down to it no one has a better opportunity to know your risks like you.</span></span>Financial Survivalisthttp://www.blogger.com/profile/11650488643282887360noreply@blogger.com0tag:blogger.com,1999:blog-8465539231347636417.post-89602449751926407642010-10-16T14:13:00.000-07:002010-10-16T14:13:09.116-07:00Tier 5: Managed AccountsAfter you max out your retirement accounts like your IRA and 401k, the next step is to invest in accounts that do not have tax advantages. Some of the risks are the very same as your 401k and IRA. Some risks are additional. As always you should invest in Tier order (1-6). There are numerous places to open these accounts. Self managed accounts can be opened by ING Direct, Zecco.com, Scott Trade, and ETrade. I recommend Zecco for more actively managed accounts, and ING Direct for an automatic investment account. Both offer reliable service and very inexpensive trading. However, I would not recommend a self managed account unless you have been educated by yourself or others, and you can afford to loose the money you invest. Self managed accounts can be extremely risky.<br />
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Probably the easiest way and safest way to contribute to managed accounts is to get and financial advisor. Ironically it's not easy to find one. First of all don't pay someone a consultation fee. Second most financial advisors get paid by assets under management. That means they get paid a percentage (usually close to 1% depending) of the assets they are managing each year. It is important that you know so that if an advisors seems hesitant to allow another advisor to manage some of your money, greed is a possibility. Third, consider multiple advisors and multiple strategies. Take the time to interview multiple advisors. Ask about their strategies and philosophies. Ask your friends and family who they use. Most importantly find someone you trust.<br />
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This is not something that you can take lightly. There are many different advisors and many different types of strategies. Some strategies are better than others. It's hard to know what best and who is best. More often than not the difference between two advisors is a matter of good and better, not bad or good. That is why I recommend interviewing multiple advisors and finding someone you trust.Financial Survivalisthttp://www.blogger.com/profile/11650488643282887360noreply@blogger.com0tag:blogger.com,1999:blog-8465539231347636417.post-46459571013970024302010-09-28T11:16:00.000-07:002010-09-28T11:16:17.658-07:00Tier 4: Retirement AccountsThere are several advantages and disadvantages of a tax-advantaged accounts. The biggest advantage is that they can grow tax deferred, meaning that taxes don't have to be paid on growth until the money is withdrawn. The biggest disadvantage is that they are illiquid, meaning that once you put the money into them it better stay. Early withdrawals can mean extra tax and penalties. The biggest problem with them is that most people contribute to them before they are ready. Then, without savings and protection, unexpected events happen, and suddenly they are in debt and have to make early withdrawals from their tax-advantaged accounts and they incur those taxes and fees. <br />
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After, and only after you have the proper protection and savings, and you are out of debt, should you start contributing to retirement accounts. If you are not sure whether or not you have the proper savings or protection see <a href="http://www.richestmaninzion.com/2010/07/tiers-of-investing-tier-1.html">Tier 1</a> and <a href="http://www.richestmaninzion.com/2010/07/tier-2-protection.html">Tier 2</a>. So many people contribute to their 401k, IRA or 403b plans as soon as they become available. When I got my first full-time job with benefits, I made the mistake of contributing to the 401k plan they offered. I thought it was a great deal because they matched part of what I contributed. The problem was vesting. Vesting is when you gradually earn the right to keep what your employer has contributed on your behalf. If you don't work for them long enough, and I did not, then you don't keep their contributions.<br />
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So when I left I didn't get to keep anything that they contributed. I thought, "That's ok, because I was saving for retirement. I converted my small 401k to a Roth IRA and two years later I had lost enough money and my account was so small that the investment company closed my account and sent me a check. So A couple hundred dollars and a few years got me nothing. That is why it is so important for you to know when and how to contribute.<br />
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<b>Roth VS Normal</b><br />
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In a Roth account contributions are made with money that has already been taxed. The contributions are then allowed to grow tax free and if properly withdrawn the proceeds are tax free as well.<br />
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In a normal tax advantaged account you are allowed to make contributions with money before taxes are paid. These contributions are commonly used to defer a tax burden.<br />
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As an example a person contributing to a normal account contributes a full $1. The person contributing to a Roth account has to pay their taxes and only contributes $0.70. If they both grow at 5% for ten years then the Normal account will have $1.63 and the Roth account will have $1.14. Upon withdrawal the Normal account has to pay a 30% ($0.49) tax burden leaving $1.14. Mathematically it doesn't matter if you pay the taxes before or after. The trick is knowing when you will pay a lower percentage of taxes. Will taxes go up or down? Will your tax bracket go up or down?<br />
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<b>IRA VS 401k</b><br />
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An IRA (Individual Retirement Account) is essentially for people who do not have 401k's available to them. However, just because someone has access to a 401k does not mean they cannot contribute to an IRA. An IRA is self managed. You decide what you invest in and, you are responsible for the success of your account. However, there are income and contribution limits.<br />
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A 401k is a retirement account sponsored by an employer. There are similar types of limits on these accounts, but different amounts. Each account has different rules depending on the plan provider. Generally there are 1/2 a dozen investment options you can choose from based on your time frame. Though I cannot speak on any specific option, usually these aren't too bad (i.e. you could do worse).Financial Survivalisthttp://www.blogger.com/profile/11650488643282887360noreply@blogger.com0tag:blogger.com,1999:blog-8465539231347636417.post-70457589172116952572010-09-17T19:03:00.000-07:002010-09-17T19:03:37.564-07:00Get Out of DebtI know we hear this all the time. "Get out of debt." Sometimes I feel like we are children who's parents keep telling us the stove is hot. We still have to touch the stove and learn our lesson the hard way. Well let me sum it up for you. THERE IS NOTHING MORE FINANCIALLY DESTRUCTIVE THAN DEBT! Debt is literally captivity. Those who have debt are enslaved to their debtors. If that debt is directly or indirectly callable (the debtor and ask for payment in full) then it isn't only enslavement but it is complete control.<br />
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Types of Debt<br />
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<b>Mortgage:</b> There is nothing wrong with one modest home mortgage. The problem with that statement is that everyone has their own definition of modest. I grew up with two brothers and two sisters. For most of my childhood the girls had one room and the boys had another. That small one story, three bedroom house was modest and justifies. My parents never got into financial trouble while we were living in a house like that. Now is a great time to buy. The market is down, but don't be in a hurray because the market isn't going anywhere anytime fast. Buy when you are financially ready to buy. I recommend doing this after you have at least a 6 month emergency fund and no other debt.<br />
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<b>School Loans:</b> Education is very important, but I have seen school loans abused. Don't kid yourself, this type of debt is just as bad as any other. I remember my senior year in high school I had an Engish teacher in her mid 50's come in and tell us how excited she was because she had finally paid off her school loans. Are you kidding me!? Most people start going to college before they have any clue what they want to do for a career. A large portion of the people that graduate don't even do anything in their field of study. If school loans are the only way you can go to school then I wouldn't not tell you to stay at home, but I have respect for the man that works full time and pays for his schooling. Even greater respect for the man who works full time and goes to school full time. If you do decide to get school loans you better be living off rice and beans.<br />
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<b>Auto Loans:</b> Today it is almost impossible to function as a member of society without a car. Yet millions of people do it successfully. It is easier when you live in a metro area or in a warm climate. A bike is a great alternative, also walking and public transportation. If a car is necessary then try not to drive it when you don't have to.<br />
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I read a story about a man that came to the united states. He worked in a bakery owned by his brother. He also lived there with his wife and two children. He said that he didn't get an apartment because then they would have to get a car, and if they had a car they would want to go places. After working in his brothers baker for two years he had saved enough money to buy the baker and pay cash. With in a few more years he had open several other bakeries and was a millionaire.<br />
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I would never use financing to buy a car PERIOD! Despite what people think it is not a necesity and if you are still convinced it is a necessity, then you can buy a car that you can affoard. By that I mean a car that you can pay cash for. I had a friend that was getting started from scratch in a new city. He needed a car but barely had money to pay rent. He traded his T.V. for a car that wasn't worth the gas you put in it, but the car ran and it ran until he could affoard a better car. I'm proud of him for making that decision.<br />
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<b>Credit Cards:</b> Do I seriously need to say anything. I guess the only thing I would say is that if you have ANY credit card debt then you should be living off of rice and beans until you get them paid off. This debt is the most destructive debt and second only to the next type of debt.<br />
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<b>Retail Credit:</b> This is actually a similar type of debt to credit cards. The only reason why I put this below credit cards is because the credit reporting agencies do. I feel this is just as bad or worse than credit card debt, and again if you have ANY of this debt you should be living off of rice and beans.Financial Survivalisthttp://www.blogger.com/profile/11650488643282887360noreply@blogger.com0tag:blogger.com,1999:blog-8465539231347636417.post-41594772862547313532010-09-03T11:01:00.000-07:002010-09-03T11:01:37.545-07:00Ten Stock-Market Myths That Just Won't Die<span class="Apple-style-span" style="font-family: Arial, Helvetica, sans-serif; font-size: 10px; line-height: 10px;"></span><br />
<h3 class="byline" style="color: #666666; font-family: helvetica; font-size: 1.2em; font-weight: normal; line-height: 1.3em; margin-bottom: 0.583em; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 8px; padding-right: 0px; padding-top: 0px;">By <a href="http://online.wsj.com/search/term.html?KEYWORDS=BRETT+ARENDS&bylinesearch=true" style="color: #093d72; letter-spacing: 1px; outline-color: initial; outline-style: none; outline-width: initial; text-decoration: none; text-transform: uppercase;">BRETT ARENDS</a> (Wall Street Journal)</h3><div style="display: block; font-family: Arial, Helvetica, sans-serif; font-size: 1.3em; line-height: 1.5em; margin-bottom: 1em; margin-left: 8px; margin-right: 8px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">The Dow Jones Industrial Average last week ended up pretty much where it had been a little more than a week earlier. A rousing 200-point rally on Wednesday mostly made up for the distressing 200-point selloff of the previous Friday.</div><div style="display: block; font-family: Arial, Helvetica, sans-serif; font-size: 1.3em; line-height: 1.5em; margin-bottom: 1em; margin-left: 8px; margin-right: 8px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">The Dow plummeted nearly 800 points a few weeks ago -- and then just as dramatically rocketed back up again. The widely watched market indicator is down 7% from where it stood in April and up 59% from where it was at its 2009 nadir.</div><div class="insetContent insetCol3wide embedType-image imageFormat-D" style="border-bottom-width: 0px; border-color: initial; border-left-width: 0px; border-right-width: 0px; border-style: initial; border-top-color: rgb(176, 202, 218); border-top-style: solid; border-top-width: 0px; clear: left; float: left; font-size: 1em; margin-bottom: 10px; margin-left: 0px; margin-right: 19px; margin-top: 0px; padding-bottom: 0px; padding-left: 8px; padding-right: 8px; padding-top: 0px; width: 264px; zoom: 1;"><div class="insetTree" style="float: left; font-size: 1em; margin-bottom: 0px; margin-left: 0px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px; position: relative;"><div class="insettipUnit insetZoomTarget" id="articleThumbnail_1" style="float: left; font-size: 1em; margin-bottom: 8px; margin-left: 0px; 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margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">These kinds of stomach-churning swings are testing investors' nerves once again. You may already feel shattered from the events of 2008-2009. Since the Greek debt crisis in the spring, turmoil has been back in the markets.</div><div style="display: block; font-family: Arial, Helvetica, sans-serif; font-size: 1.3em; line-height: 1.5em; margin-bottom: 1em; margin-left: 8px; margin-right: 8px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">At times like this, your broker or financial adviser may offer words of wisdom or advice. There are standard calming phrases you will hear over and over again. But how true are they? Here are 10 that need extra scrutiny.</div><h6 style="color: #333333; display: block; font-size: 18px; font-style: italic; font-weight: normal; font: normal normal normal 1.8em/normal Georgia, 'Times New Roman', Times, serif; line-height: 1em; margin-bottom: 8px; margin-left: 8px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">1 "This is a good time to invest in the stock market."</h6><div style="display: block; font-family: Arial, Helvetica, sans-serif; font-size: 1.3em; line-height: 1.5em; margin-bottom: 1em; margin-left: 8px; margin-right: 8px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">Really? Ask your broker when he warned clients that it was a bad time to invest. October 2007? February 2000? A broken watch tells the right time twice a day, but that's no reason to wear one. Or as someone once said, asking a broker if this is a good time to invest in the stock market is like asking a barber if you need a haircut. "Certainly, sir -- step this way!"</div><h6 style="color: #333333; display: block; font-size: 18px; font-style: italic; font-weight: normal; font: normal normal normal 1.8em/normal Georgia, 'Times New Roman', Times, serif; line-height: 1em; margin-bottom: 8px; margin-left: 8px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">2 "Stocks on average make you about 10% a year."</h6><div style="display: block; font-family: Arial, Helvetica, sans-serif; font-size: 1.3em; line-height: 1.5em; margin-bottom: 1em; margin-left: 8px; margin-right: 8px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">Stop right there. This is based on some past history -- stretching back to the 1800s -- and it's full of holes.</div><div style="display: block; font-family: Arial, Helvetica, sans-serif; font-size: 1.3em; line-height: 1.5em; margin-bottom: 1em; margin-left: 8px; margin-right: 8px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">About three of those percentage points were only from inflation. The other 7% may not be reliable either. The data from the 19th century are suspect; the global picture from the 20th century is complex. Experts suggest 5% may be more typical. And stocks only produce average returns if you buy them at average valuations. If you buy them when they're expensive, you do a lot worse.</div><h6 style="color: #333333; display: block; font-size: 18px; font-style: italic; font-weight: normal; font: normal normal normal 1.8em/normal Georgia, 'Times New Roman', Times, serif; line-height: 1em; margin-bottom: 8px; margin-left: 8px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">3 "Our economists are forecasting..."</h6><div style="display: block; font-family: Arial, Helvetica, sans-serif; font-size: 1.3em; line-height: 1.5em; margin-bottom: 1em; margin-left: 8px; margin-right: 8px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">Hold it. Ask your broker if the firm's economist predicted the most recent recession -- and if so, when.</div><div style="display: block; font-family: Arial, Helvetica, sans-serif; font-size: 1.3em; line-height: 1.5em; margin-bottom: 1em; margin-left: 8px; margin-right: 8px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">The record for economic forecasts is not impressive. Even into 2008 many economists were still denying that a recession was on the way. The usual shtick is to predict "a slowdown, but not a recession." That way they have an escape clause, no matter what happens. Warren Buffett once said forecasters made fortune tellers look good.</div><h6 style="color: #333333; display: block; font-size: 18px; font-style: italic; font-weight: normal; font: normal normal normal 1.8em/normal Georgia, 'Times New Roman', Times, serif; line-height: 1em; margin-bottom: 8px; margin-left: 8px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">4 "Investing in the stock market lets you participate in the growth of the economy."</h6><div style="display: block; font-family: Arial, Helvetica, sans-serif; font-size: 1.3em; line-height: 1.5em; margin-bottom: 1em; margin-left: 8px; margin-right: 8px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">Tell that to the Japanese. Since 1989 their economy has grown by more than a quarter, but the stock market is down more than three quarters. Or tell that to anyone who invested in Wall Street a decade ago. And such instances aren't as rare as you've been told. In 1969, the U.S. gross domestic product was about $1 trillion, and the Dow Jones Industrial Average was at about 1000. Thirteen years later, the U.S. economy had grown to $3.3 trillion. The Dow? About 1000.</div><h6 style="color: #333333; display: block; font-size: 18px; font-style: italic; font-weight: normal; font: normal normal normal 1.8em/normal Georgia, 'Times New Roman', Times, serif; line-height: 1em; margin-bottom: 8px; margin-left: 8px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">5 "If you want to earn higher returns, you have to take more risk."</h6><div style="display: block; font-family: Arial, Helvetica, sans-serif; font-size: 1.3em; line-height: 1.5em; margin-bottom: 1em; margin-left: 8px; margin-right: 8px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">This must come as a surprise to Mr. Buffett, who prefers investing in boring companies and boring industries. Over the last quarter century, the FactSet Research utilities index has even outperformed the exciting, "risky" Nasdaq Composite index. The only way to earn higher returns is to buy stocks cheap in relation to their future cash flows. As for "risk," your broker probably thinks that's "volatility," which typically just means price ups and downs. But you and your Aunt Sally know that risk is really the possibility of losing principal.</div><h6 style="color: #333333; display: block; font-size: 18px; font-style: italic; font-weight: normal; font: normal normal normal 1.8em/normal Georgia, 'Times New Roman', Times, serif; line-height: 1em; margin-bottom: 8px; margin-left: 8px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">6 "The market's really cheap right now. The P/E is only about 13."</h6><div style="display: block; font-family: Arial, Helvetica, sans-serif; font-size: 1.3em; line-height: 1.5em; margin-bottom: 1em; margin-left: 8px; margin-right: 8px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">The widely quoted price/earnings (PE) ratio, which compares share prices to annual after-tax earnings, can be misleading. That's because earnings are so volatile -- they're elevated in a boom, and depressed in a bust.</div><div style="display: block; font-family: Arial, Helvetica, sans-serif; font-size: 1.3em; line-height: 1.5em; margin-bottom: 1em; margin-left: 8px; margin-right: 8px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">Ask your broker about other valuation metrics, like the dividend yield, which looks at the dividends you get for each dollar of investment; or the cyclically adjusted PE ratio, which compares share prices to earnings over the past 10 years; or "Tobin's q," which compares share prices to the actual replacement cost of company assets. No metric is perfect, but these three have good track records. Right now all three say the stock market's pretty expensive, not cheap.</div><h6 style="color: #333333; display: block; font-size: 18px; font-style: italic; font-weight: normal; font: normal normal normal 1.8em/normal Georgia, 'Times New Roman', Times, serif; line-height: 1em; margin-bottom: 8px; margin-left: 8px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">7 "You can't time the market."</h6><div style="display: block; font-family: Arial, Helvetica, sans-serif; font-size: 1.3em; line-height: 1.5em; margin-bottom: 1em; margin-left: 8px; margin-right: 8px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">This hoary old chestnut keeps the clients fully invested. Certainly it's a fool's errand to try to catch the market's twists and turns. But that doesn't mean you have to suspend judgment about overall valuations.</div><div style="display: block; font-family: Arial, Helvetica, sans-serif; font-size: 1.3em; line-height: 1.5em; margin-bottom: 1em; margin-left: 8px; margin-right: 8px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">If you invest in shares when they're cheap compared to cash flows and assets -- typically this happens when everyone else is gloomy -- you will usually do very well.</div><div style="display: block; font-family: Arial, Helvetica, sans-serif; font-size: 1.3em; line-height: 1.5em; margin-bottom: 1em; margin-left: 8px; margin-right: 8px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">If you invest when shares are very expensive -- such as when everyone else is absurdly bullish -- you will probably do badly.</div><h6 style="color: #333333; display: block; font-size: 18px; font-style: italic; font-weight: normal; font: normal normal normal 1.8em/normal Georgia, 'Times New Roman', Times, serif; line-height: 1em; margin-bottom: 8px; margin-left: 8px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">8 "We recommend a diversified portfolio of mutual funds."</h6><div style="display: block; font-family: Arial, Helvetica, sans-serif; font-size: 1.3em; line-height: 1.5em; margin-bottom: 1em; margin-left: 8px; margin-right: 8px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">If your broker means you should diversify across things like cash, bonds, stocks, alternative strategies, commodities and precious metals, then that's good advice.</div><div style="display: block; font-family: Arial, Helvetica, sans-serif; font-size: 1.3em; line-height: 1.5em; margin-bottom: 1em; margin-left: 8px; margin-right: 8px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">But too many brokers mean mutual funds with different names and "styles" like large-cap value, small-cap growth, midcap blend, international small-cap value, and so on. These are marketing gimmicks. There is, for example, no such thing as "midcap blend." These funds are typically 100% invested all the time, and all in stocks. In this global economy even "international" offers less diversification than it did, because everything's getting tied together.</div><h6 style="color: #333333; display: block; font-size: 18px; font-style: italic; font-weight: normal; font: normal normal normal 1.8em/normal Georgia, 'Times New Roman', Times, serif; line-height: 1em; margin-bottom: 8px; margin-left: 8px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">9 "This is a stock picker's market."</h6><div style="display: block; font-family: Arial, Helvetica, sans-serif; font-size: 1.3em; line-height: 1.5em; margin-bottom: 1em; margin-left: 8px; margin-right: 8px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">What? Every market seems to be defined as a "stock picker's market," yet for most people the lion's share of investment returns -- for good or ill -- has typically come from the asset classes (see No. 8, above) they've chosen rather than the individual investments. And even if this does turn out to be a stock picker's market, what makes you think your broker is the stock picker in question?</div><h6 style="color: #333333; display: block; font-size: 18px; font-style: italic; font-weight: normal; font: normal normal normal 1.8em/normal Georgia, 'Times New Roman', Times, serif; line-height: 1em; margin-bottom: 8px; margin-left: 8px; margin-right: 0px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">10 "Stocks outperform over the long term."</h6><div style="display: block; font-family: Arial, Helvetica, sans-serif; font-size: 1.3em; line-height: 1.5em; margin-bottom: 1em; margin-left: 8px; margin-right: 8px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;">Define the long term? If you can be down for 10 or more years, exactly how much help is that? As John Maynard Keynes, the economist, once said: "In the long run we are all dead.</div><div style="display: block; font-family: Arial, Helvetica, sans-serif; font-size: 1.3em; line-height: 1.5em; margin-bottom: 1em; margin-left: 8px; margin-right: 8px; margin-top: 0px; padding-bottom: 0px; padding-left: 0px; padding-right: 0px; padding-top: 0px;"><a href="http://online.wsj.com/article/SB128000197220920621.html?KEYWORDS=ten+stock-market+myths+that+just+won't+die">http://online.wsj.com/article/SB128000197220920621.html?KEYWORDS=ten+stock-market+myths+that+just+won't+die</a></div>Financial Survivalisthttp://www.blogger.com/profile/11650488643282887360noreply@blogger.com0tag:blogger.com,1999:blog-8465539231347636417.post-35701217154759913412010-07-31T12:45:00.000-07:002010-07-31T12:45:56.874-07:00Tier 3: Debt ReductionThis seems obvious but a lot of people tell me they will start investing when they get out of debt. All debt should be eliminated as soon as possible, especially short term obligations (everything but mortgage & student loans). However, it is important that you put your family first; both their present situation and future. It's a principle I call Pay Yourself First. After paying yourself, and God tithing, you can use what's left to pay down debt. I want to emphasize AS FAST AS POSSIBLE. If this mean you'll be eating rice and beans for a couple of years so be it. Maybe you can't handle just rice and beans, but Roman Noodles are cheap and so is pasta. Many soups can be made very cheaply as well. The point is that you won't be eating out, you won't be buy pre-made dinners or name brand anything. If you can put off buying something, put it off. It won't be easy and I never said it would be, but it will be worth it. It's time to separate the men from the boys, the rich from the poor, etc.<br />
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As far as debt settlement, consolidation, etc. Be very weary of any program you find because there are a lot of companies that prey on the weak and desperate. They'll show you what looks like a way out, and it may be, but not necessarily the easiest or fastest. Any kind of settlement, consolidation or bankruptcy will not change behavior. It will only mask the symptoms. If you cannot change the behavior that got you into debt then any program like this is worthless. If you don't think your behavior got you into debt, think again. At minimum you were not saving enough into an emergency fund to avoid debt. Just think about where you went wrong and try to learn from your mistakes.<br />
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0% interest. I know it's tempting. Especially when you need a car for work. I am even tempted when the dealer offers me an amazing deal on the jeep of my dreams. Avoiding is done for many more reasons than just avoiding interest costs. Debt is literal imprisonment. It creates an obligation that must be met and is trades for freedom. Instead of working because it right or you enjoying it, you end up working because you have to. I know people that were severely underpaid, but were too afraid of not being able to meet their obligations in order to search for other employment. Debt also creates risk. If something goes wrong the debt snowball can roll the wrong way and before you know it you're in a whole world of hurt. That 0% can easily turn into 12% when you miss or are late on one payment. Suddenly your payment has doubled so has your obligations.<br />
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Even mortgages and school loans need to be eliminated as soon as possible. Yes you can probably get a rate of return somewhere else that's high enough to offset your interest costs, but life is not a mathematical equation. Even those long term obligations enslave you in a way you don't know until you're free. Being debt free empowers you to make bold decisions that lead to success.Financial Survivalisthttp://www.blogger.com/profile/11650488643282887360noreply@blogger.com0tag:blogger.com,1999:blog-8465539231347636417.post-87453752316648921832010-07-16T07:21:00.000-07:002010-07-16T07:21:28.996-07:00Tier 2: ProtectionAs I spoke before the first part of a building that has to be built is the foundation. Can you imagine if someone started building the walls to their house without a foundation. What if someone moved into their house before the roof was built? Can you imagine what would happen to their stuff when a storm came? Financially speaking a person's nest egg is the stuff they move into the house. But a nest egg isn't just a chunk of money. It's all their hopes and dreams, everything they want for the future. So even though they are moving into their dream house, they still have to wait for the foundation to be built, and they have to wait for the roof to be completed.<br />
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Tier 2 is the roof to our building. Protection includes auto insurance, home owners insurance, property insurance, life insurance, disability insurance, health insurance and any other type of insurance that may apply. The fact is few of us get through life without a little bad luck, and some of us have a lot of back luck. Instead of crossing our fingers and hoping nothing happens why not prepare for it?<br />
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When an unexpected event happens that causes a liability, it is absolutely essential that the proper protection is in place. If the proper insurance is not in place, assets are used to pay the liability that is created. With decreasing assets it also puts a strain on the family's cash flow.<br />
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You might say, but I won't become disabled, or I'm young I won't get cancer. I met a 22 year old man yesterday that is disabled for life because of a car accident. I have family and friends that both contracted cancer before the age of 23. Life happens. But when you are young, you feel invulnerable. As you get older you will understand that you are not invulnerable. I simply hope that you take the proper steps to protect your hopes and dreams from the rain.Financial Survivalisthttp://www.blogger.com/profile/11650488643282887360noreply@blogger.com1tag:blogger.com,1999:blog-8465539231347636417.post-31077985788551007862010-07-06T14:15:00.000-07:002010-07-08T08:37:13.220-07:00Tiers of Investing: Tier 1How many people do you know who have a 401k or IRA? Almost everyone right?! Would it surprise you to learn that I do not have either of these accounts. I don't even take advantage of the matching through my employer. The reason why I choose not to contribute to either of these accounts is NOT because I financially am incapable. It is because just like in construction there is a certain order in which you must build, in investing there is a proper order in which you should invest. Investing out of order is like building out of order. No one would start building the walls to their house before the foundation is built. At the same time no one would move into their house before the roof is built. Can you imagine what that would be like. Yet every day millions of Americans build their investment walls with no foundation and move into their investment house without a roof. Then financial storms rain on their nice things inside, and financial earthquakes come and knock down their financial house. Then they are left wondering what happened.<br />
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Tier 1: Savings<br />
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The first place someone should invest is in themselves. You should always pay yourself first. Even if you have some debt, pay yourself and then your debtors. It is important that you stay out of debt, but without any savings unexpected expenses will come along and create debt or exasperate debt you already have. Especially if you are working to eliminate credit card debt, and you have cut up all your credit cards. If you don't have any personal savings and your car breaks down you can put yourself in quite the bind. A good amount to shoot for is 3-6 months of your expenses. The following are tips to help you save the way you should:<br />
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1. Create a budget (shoot for 50% needs, 30% wants, 20% savings, but everyone is different)<br />
<div>2. Save 10-20% depending on circumstances (i.e. debt & other obligations)</div><div>3. Make it automatic (automatic transfers)<br />
4. Treat it like a bill</div><div><br />
<div>The other question is where to put your savings. Good savings must be liquid, safe and consistent. What ever you do, do not put your savings into a normal savings account. My savings account at Wells Fargo pays .01% each month which means I earn an APR of about .12%. That's nothing. However there are online banks like ING that pay almost CD rates. Right now their savings account is paying an APR of 1.1%. That's almost 10 times Wells Fargo! (Email me @ ben@richestmaninzion.com and I'll give you a link for a $25 bonus with a new account. I will not add your email to any mailing list or share it with anyone). There are other options. I help a lot of my clients set up automatic savings plans that pay 4-5% annually. You can email me if you want more details on that as well.</div><div><br />
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</div></div>Financial Survivalisthttp://www.blogger.com/profile/11650488643282887360noreply@blogger.com0