How you are losing your A—Even though the Stock Market is way up!

As I write this article the stock market has had a fantastic rebound from its last serious downturn and most investors seem to have a little more bounce in their step than several years ago.  It seems that the market is hitting new all-time highs every other day.   I am happy that people’s investments and retirement accounts are doing better and I hope they continue to do so in the future.  However, as we all know the stock market goes up and goes down and the timing of your entrance and exit on certain investments can have a huge effect on your actual gains and losses. (never forget 1999,2001, 2008 just in recent history)

The stock market and all the emphasis put on it by almost everybody can act like a giant Magic show where you are paying attention to what the market is doing in the left hand but totally oblivious to what your overall financial picture is doing in all other parts of your life.  The traditional media’s focus on stock market investing almost to the exclusion of everything else has made most Americans singularly focused on that one part of their financial life while not paying attention to where most of their wealth is being eaten up systematically month after month and year after year.  This cannibalization of wealth happens no matter if the stock market is up or in the tank.  I call these massive wealth drains and there are 4 huge ones (along with several other smaller ones) we will cover briefly in this article.

The first and biggest expense people have over their lifetime are income and other taxes.    Even with that fact most people really have no clue how the tax system operates and that is by design by our old Uncle Sam.  Books have been written on how to reduce taxes but since our time is limited take a couple of points away from this article.  Since taxes are such a huge expense maybe you should spend some time studying one of those many books by a credible tested source and figure out how to reduce your taxes.  The only thing I have time for today is to give you this huge general idea.  The tax system is set up to penalize hourly and salaried workers while rewarding entrepreneurs and business owners.  Salaried workers pay taxes based on that they gross while business owners pay taxes based on what they net for income.  When that statement is made most people think of the fortune 400 companies getting something over on the little guys.  Keep in mind you don’t have to be a massive business to get great tax advantages.  Even the little businesses and start-up businesses get huge tax benefits.  So since that is the case, rather than complain about it and say “oh well I guess I am out of luck because I have a normal job” dig a little deeper and realize that everyone should have a small business even if you run it from your home office or kitchen table.  To qualify for tax deductions in that business The IRS says that you have to have the intent to make a profit and work in that business for a reasonable amount of time (he never defines reasonable).  When that standard is met you automatically qualify for dozens of tax deductions that you don’t get to take as an individual.  If you have losses and start-up expenses much of them can be written off against your other income from your job (limits apply so get a good business CPA to work with you) Realize that nobody (even your CPA or tax preparer) cares how much you are paying in taxes and if you don’t take time to know how it works and use it effectively you will cost yourself tens and hundreds of thousands of dollars in lost income over your lifetime plus the compounded growth that lost money would have given you over time.

Another huge wealth drain is market losses on any investment capital that you control.  So when the stock market or a piece of real estate drops significantly in value it could take years for your money just to get back to even and of course, there are certainly no guarantees that it will come back during your investment lifetime.  Compound interest is an amazing beast that even Einstein had trouble grasping so I will keep it brief.  If the compounding curve of your money is broken by market losses or premature withdrawals it has a massive effect on your final pool of wealth.  Just for fun, if you were offered a job that only lasted 36 days and you had two choices on the pay plan which one would you take?  First, you could be paid $5,000 per day at the end of every day for 36 days for a total of $180,000 of income.  Not bad for just over a month’s work!  The second option is you would be paid one cent starting on day one but that one cent would be compounded by 100% daily and payable at the end of those 36 days.  Well if you jumped at the $180,000 you missed the power of true compounding of money.  If your coworker doing the same job chose the compounding penny they would not be a millionaire…………….they would be a stinking filthy rich multi-millionaire with a check of $343,597,384!  Do the math and then tell me when you want to break your compounding curve with big losses or withdrawals. (did you know you can have money invested tracking the market without it being subject to any market losses?)

Next massive wealth drain is interest and fees paid to banks or finance companies over your lifetime.  Loaning of money (financing) has been around in some form for thousands of years.  Since the time you could pull your ox into the temple you could get a loan on it if you paid more back than you borrowed and left the ox as collateral.  Any business model that has been around that long is a winner!  However, when you’re on the borrower side of the transaction it is a wealth drain especially if most of your borrowed money is on depreciating assets such as cars, boats, equipment and any other item that goes down in value.  Now people will tell you that if you can borrow money cheap and invest in something that makes more money than you pay in interest back to the bank then you are using leverage properly.  That theory can be true but it comes with many caveats and other lessons we cannot cover here this week.  Do a simple exercise and add up all the money you have paid out over your lifetime in monthly payments on everything.  Then compare that number to the amount of money you have saved for retirement and tell me which one is bigger.  Leave your results in the comment section.  Then decide you should know more about how to be the lender and not the borrower.

Last massive wealth loss is depreciation (money lost) on items such as cars, boats, equipment, appliances and almost any other large asset we buy over our lifetimes.  Almost nobody discusses this (except me of course) and yet did you know that most people will lose more money on just their cars during their lifetime than they can ever save for retirement let alone all the other depreciation?   Do your own math on your life and find out the truth.

Think of your financial life as a big pie and as such it has many pieces to the entire pie.  Don’t fall for the magic trick of only paying attention to what is happening to your one slice of pie, which are your investment gains or losses.  Pay attention to the entire pie and start to slow down and stop your 4 massive wealth drains.

John Jamieson is the #1 Bestselling author of two books “The Perpetual Wealth System” and “Wealth Without Stocks or Mutual Funds” as well as a nationwide wealth strategist with clients in dozens of states.  Contact him at john@wealthwithoutstocks.com  or visit his site at www.wealthwithoutstocks.com

How To Protect Your Recent Stock Market Profits

Since November of 2016 the stock market has hit record high after record high which has created an estimated 3 trillion of additional wealth for stock holders.  If you own stocks or mutual funds your money should have done well and had nice gains.

The next question is how much longer will it last?  Will it come back down to where it was?  If it comes back down might it even go down more?  The answer to all of those is NOBODY KNOWS!  People have been trying to time the stock market for generations and very few have been successful.

Do you want to give your stock market gains back during the next downturn?  Do you want to lose money when it goes back south of where it started its upward trend?  Would you like to keep your gains but not give up the possibility of future upturns?

You can reallocate some of your stocks and mutual funds into programs that protect your new found gains while allowing you to participate in future gains should they continue.  This can be done with the use of a solid fixed indexed annuity.

When you purchase a fixed indexed annuity your money will track one of various indexes (actual index depends on the product and company  chosen by you and your adviser) with the protection against any market downturns that may occur.  If you purchase an annuity and the index you track goes up over the next year or two your money will grow along with that index (actual growth rates vary greatly based on the product chosen) but if that index goes down during the same period your cash won’t go down because of that market and index loss.

You’ll need to know some terms and ask some questions about your potential investment. Here are some to consider but not an exhaustive list:

  • Will your potential gains have a “cap” on them? Meaning your gains could be limited regardless of how the actual index performs.
  • If your index potential is “uncapped” what will be the “spread” between how the index actually performs and how much your cash actually be credited?”
  • What will your participation rate be on the index? Meaning if the index goes up 10% will you get full credit or 30% of the gain? 50 or 60% of the gain? Will you get full 100% credit?
  • Will there be any fees associated with the Fixed Indexed annuity you choose? If so, what do you get in exchange for any possible fees?  Is there value in the fees or is it just taking money out of your pocket without giving any fair value in return?
  • Do you want a lifetime income rider? For a fee many of these products will provide a rider that says they will pay you a certain percentage every month for the rest of your life no matter how long you live.  So you would be guaranteed the income from the money even if eventually the money in the account is actually spent through.  What is that fee for the rider?
  • How long of an early withdrawal period does the product have? This is a program for longer term money that you don’t mind letting alone and in the program for 5 to 10 years.

These annuities qualify for a tax and penalty free roll over from IRA’s old 401k’s or any other qualified account you may own.  If you have an active 401k, 403b and like accounts, there might be some restrictions on moving the money placed on the account by your current plan administrator.  Your IRA’s could be rolled over (either all or In part) to a solid fixed indexed annuity with no issues.

Remember this is one of the 3 major types of annuities.  In addition to the Fixed indexed annuity there are also variable annuities and fixed annuities.  The fixed annuity gives a guaranteed rate of return with no risk of loss but the upside is usually on the low side.  Could be a great fit for people who like CD’s and very safe products with a guaranteed rate of growth that happens no matter what happens in any market.

A variable annuity can basically give you high rates of return but are also subject to some loss (some have floors on the loss and many do not) and are usually subject to more fees than the other types of annuities due to their active trading and money movement.

In closing, a solid Fixed indexed annuity offer strong growth with the protections of no downside risk.  If you would like more training on this particular program, feel free to visit www.perpetualpensions.com and watch the video halfway down the page.  No charge and its only 20 minutes long.

John Jamieson is a national wealth strategist and 2 time #1 Bestselling author.  He is a frequent guest on national radio shows and a contributor to some of the biggest online financial websites and magazines in the country.  He operates a national firm that focuses on showing people how to create Wealth Without Stocks or Mutual Funds.  You may contact him through his site at www.wealthwithoutstocks.com

Myths of Whole Life Insurance

Every time I hear someone say what a lousy place whole life insurance is to put money I always ask them to tell me why they think so……and I get the sound of silence.  They heard it from somewhere but don’t really know why they believe this myth. They believe whole life too expensive. Or it takes forever to build cash they can use.  Also, I am frequently asked about buying term and investing the difference in mutual funds instead.
Find out how much Bank of America and Wells Fargo, to name just two big businesses, think of the myths above.  You might be interested in this post I did on where money puts money as well.
After watching the quick video below, ask yourself, “Why haven’t I set this up for myself yet?” Think your too old? Nonsense! Think you can’t own a policy because your not insurance? Rubbish!
Enjoy the video and then reach out to us so we can help you put in place one of the most powerful accounts available to you to grow and protect wealth!

Why lose a dime in the stock market again?

Did you know it’s not preordained that you must lose money in the stock market?  If you use the strategies of indexing and resetting you can grow your money without the risk of stock market losses. Enjoy this quick video explaining these two powerful yet little used strategies and let us know if we can help further.

Video – How to Avoid the Next Stock Market Crash

The Power of a Money Reset

This is a true story from a new client that describes almost everyone reading this today.

“John, I just got back to even this year on my retirement account after being down for about 8 years.”

Does this sound familiar?

I asked this client if he had ever heard about a reset and he said “no”.  If he understood a reset he would have never been in the tough situation of waiting for money to rebound to long forgotten high values.

You see, when your money has the power of a “reset” every year it is a game changer for the future value of your money.Reset buttonEx:  You place money in a program that allows you to track an index instead of actually owing the underlying security.  Let’s say for the sake of example that the index you follow is at the level of 100 on the day your money starts tracking that index.

Let’s also assume that one year later that index is now 80 instead of 100.  This is a 20% loss that because of the way you have your money structured you did not participate in any loss whatsoever.  Your cash didn’t lose any market value even though that index you track is down 20%!  This is powerful in and of itself but it gets even better.

Now let’s say from the first day of your second year until the last day of that same year the index that went down to 80 rebounds that year to 90.  If this was a share of a mutual fund or a stock you would still be underwater 10%.  However, since you took advantage of tracking the index your cash went up the second year because your base for determining an index’s gain or loss “reset” back to the 80 level which it was at the end of the first year.

So, in year two, instead of being still underwater on your investment your cash grew by a percentage of the index gain from 80 to 90!  Would this have changed my new client’s end results?  The results would have been very different over that 8 year period by utilizing the power of indexing with the power of a reset.

Do you have money in the market right now you are hoping will grow over time providing you with a great retirement nest egg?  If you knew your money could never go backwards, would grow any year the index was higher than where it started from by using the power of a “reset” why would you still take on all the risk of the market?  There is no need to lose large amounts of money needlessly.

You can be in the market with a chance at real growth but never the downside risk.  Your money can also be guaranteed to provide you with lifetime income no matter how long you live.  Another benefit is you can use your IRA money or new money for this kind of program.

Do you own “Investment Grade” life insurance? Banks do, Corporations do, and now so can you

What is “Investment Grade” Life Insurance…

life insuranceJust a few short years ago, I was staunchly opposed to whole life insurance, because that’s what I was taught by national “gurus” 25 years ago. I wholeheartedly believed (as many people still do) that if you need life insurance, you should buy a term policy, then take the difference in premiums between whole life and term and invest it in mutual funds.

So when a good friend of mine sat me down and tried to show me a whole life insurance plan, I nearly refused to listen. Many of you reading this will feel the same way, and nothing I say will change your minds. That’s fine — you’re entitled to your opinion just as I was entitled to mine.

Thankfully, my friend told me about “Investment Grade” life insurance. I soon realized that the gurus in my early years and the gurus of today were correct — based on the information they’d been given. The problem was their information was incomplete.

Whenever I hear a financial consultant (or anyone, for that matter) talk about less expensive premiums for term, I know they really don’t understand how this animal of properly designed “Investment Grade” whole life insurance really works.

With a properly designed whole life insurance policy, you get:

1. Principal protection guarantees of your money. Your cash value isn’t subject to market losses, as it is with mutual funds and other programs. When the stock market tanks again (and it’s never a question of if but when), you won’t lose a dime.

2. Guaranteed growth of your money every year. This will be interest-rate-driven based on the economy, but your account will move forward every year regardless of what the market does. This is compound tax-free growth and not the “average rate of return” you get with mutual funds. To be fair, in our current low-interest-rate environment, the growth rates are only in the 2 percent to 4 percent range but as you study further you start to realize the real wealth is not in the growth rate even when rates go higher.

Many financial advisers will tell you that your money would do better in a good mutual fund. But remember: When someone shows you an “average rate of return,” they can start taking that average from any time that benefits their example. This is not compounded growth but rather a factor of timing as to when you enter and exit the market. The stock market has wild swings; if that is acceptable to you, you should have much of your money in stocks. If not, maybe it’s time to consider a different way to think about investing. (Remember the period from March 2000 to October 2002, when the Nasdaq lost 78 percent of its value? It’s been 16 years since the dot-com bubble started to pop, and the tech-heavy index still hasn’t quite recovered to that level. If you like guarantees and stability then you have no business putting most of your money in the stock market.)

3. Dividends paid to policy owners are not taxable. Dividends aren’t guaranteed, but many reputable life insurance companies have been in business for more than 100 years and they’ve paid out dividends every year. The amount of that dividend will depend on several factors, but it boils down to how much profit the insurance carrier made. When properly paid to the policy owner, those dividends are not taxable.

4. A high starting cash value amount, based on what you contribute to the policy. Whole life policies that aren’t properly designed will have very little cash value in the early years.

But a properly structured life insurance policy will have high cash value percentages, even in its first year, and they increase every year. This becomes an important fact when you realize that access to your cash will help you grow wealth systematically regardless of market conditions

5. Access to your cash value at any age, at any time, for any reason — without taxes or penalty. This is a huge benefit of whole life policies compared to 401(k)s and IRAs, which impose multiple obstacles if you want to access your cash before retirement, and penalize you if the funds you borrow from them are not paid back by a certain time and at a certain interest rate. No such obstacles exist with a whole-life policy. So leave your cash in the policy if you wish, or borrow it back out and use it, the choice is yours.

6. The ability to use your account’s cash value to recapture lost depreciation on major purchases and interest and fees paid to banks. If you treat this pool of money inside the life policy like your own personal bank, you can loan it out to yourself and others to create wealth. (More on this in future articles, but suffice it to say for now that banking has been around in some fashion for thousands of years. Any business model that lasts that long is worth understanding and using to your advantage.)

7. Guaranteed insurance. Once the policy is in place, your insurance is guaranteed for the rest of your life. Many people assume they’ll be able to buy new insurance at any point in their life. But nothing is further from the truth — especially for those who’ve been diagnosed with chronic or terminal diseases. If you become seriously ill, don’t expect to be able to buy a new policy.

With many whole-life policies, you can add an “accelerated death benefit rider” for little to no cost, which will give you access to a large portion of your death benefit during your lifetime if you have a terminal or chronic illness. I just had a colleague with a client who was diagnosed with Lou Gehrig’s disease, or ALS, and was sent a check from his insurer for more than 70 percent of the eventual death benefit. He’ll be able to enjoy his remaining time without worrying how he will pay his bills.

8. The ability to combine your life policy with the worlds of real estate, private lending and auto financing to accelerate your wealth, both inside and outside of the policy. Just remember that any funds inside the policy are tax-free for life.

9. Protection from long term care and chronic care expenses. Well written policies with the proper companies could provide the ability access a portion of your eventual death benefit during your lifetime to help pay for assisted living or long term care expenses. This will insulate and protect your other wealth so you don’t spend a lifetime building wealth only to give it all back before you pass away leaving nothing for your family.

10. Death benefit. In addition to all the benefits you can make use of while you’re still here, at heart, this investment is still a life insurance policy, so when you eventually die, there will be a sum of money left behind to your beneficiaries — tax-free.

There’s a reason family dynasties, banks, and big corporations have been using life insurance for generations to grow and protect their wealth. Even when subject to estate limits, these death payouts go a long way toward promoting the tax-free, inter-generational transfer of wealth.

Of course, insurance company policies and riders will vary by state due to state regulations and depending on the actual insurance carrier. But you won’t find another type of account or investment that has all these benefits in one investment — not 401(k)s, IRAs, mutual funds, stocks, bonds, precious metals, real estate, nor any other account.

To engage with me further on this kind of policy, please email me directly at john@wealthwithoutstocks.com and visit our site at www.wealthwithoutstocks.com for many free videos, articles, archived interviews and more!

30 year Wall Street Executive Endorses Wealth Without Stocks or Mutual Funds

Please take a look at our brand new review for Wealth Without Stocks or Mutual Funds that a reader posted on Amazon.  If the book impressed a man who was at the top levels of a major Wall Street firm, then don’t you think you should pick up a copy and devour the information?

This is not your standard financial or business book.  The reader is shown real ways to grow and protect money by saving, investing (in little known yet powerful vehicles), and using small business strategies to make your business more profitable or launch your dream business and make money right away instead of waiting two years. His endorsement is reprinted word for word below and can also be seen at the order page on Amazon. You will also see an endorsement from Jack Canfield who is a multi millionaire many times over and the author of the Chicken Soup for the Soul® series. This is right at the top of the cover!

Click www.wealthwithoutstocks.com, order your book and receive a special limited time FREE Bonus valued at $995.00 just for investing in my book.  Thanks and get started now.

“As a retired senior executive of a global Wall Street firm, I found this work to be an immensely informative sourcebook of alternative methods of wealth-building. It identifies less well-known usages of existing products and services which enable self-directed activities such as self-funded business investments through an IRA and self-funded loans through a negotiated bespoke insurance annuity with its tax advantages. Importantly, Mr Jamieson offers to facilitate contact with experts in various fields if a closer discussion of a method is deemed necessary. The examples put forward are especially interesting for those who would be interested in taking a more active role than simply allowing banks, insurance and investment firms to take over the process of wealth creation for a fee(s). If nothing else, the book will suggest a new perspective of wealth building.”    W. Ferrari

Wealth Without Stocks or Mutual Funds Launches Monday!

Well, if you have not heard yet my new book launches on Monday, Dec. 7th.  I am so excited to have this book available to everyone as there is great information inside.

Want to know more about “Wealth Without Stocks or Mutual Funds“?  We have some pre-launch videos talking about the book that you can view here.  Also, the website is just chocked full of information; each chapter is discussed so you have an idea of what is covered, resources for you to tap into, additional training, and so much more!

And the best thing… there is a special bonus for those who purchase the book (Paperback or Kindle) from Amazon.com during our Launch Promotion.  I will share the link to that Special Bonus on Monday.

We look forward to hearing from you! All of us at Perpetual Wealth Systems is ready to provide you will any follow up support needed to actually implement the strategies and information in the book to help you and your family.

PS: Here is the latest video but you can watch all of them here

https://youtu.be/Y89ejg4Pwa0

Give Yourself a Raise, Part 3

This article is the last in a series of pieces on how to dramatically reduce your income taxes legally and ethically. If you missed the first two you can review them before moving on to this article; Giving Yourself a Pay Raise – Beating the Biggest Wealth Drain and Give Yourself A Raise. These other two articles discuss the hundreds of deductions you qualify for when you own a business as opposed to being an employee. First we show you how everyone can have a small business even if they’re a current employee working for someone else. Specifically we talked about 4 strategies out of those many hundred of deductions that you can start to use immediately to increase your net take home pay. Now let’s talk about the 5th and a special discussion on a superior business structure for successful businesses to lower their taxes by 50% or more.

CarIcon smpixels

 

TAX DEDUCTION 5 $25,000 Vehicle Deduction

 

Per Section 179, you may be able to expense some or all of your business use of your vehicle. Basically, if your vehicle weighs more than 6,000 pounds, you can expense up to $25,000 the first year the vehicle is used in your business. You also must use the vehicle at least 50% for business in order to qualify. The $25,000 deduction assumes 100% business use. If you use your vehicle 75% for business, you would get 75% of the $25,000 or $18,750.

Car Used Less Than 50% for Business

If the business use of your car drops to 50% or less, there are certain rules that apply. These include:

  1. You cannot take a Section 179 deduction for your heavy vehicle.
  2. You must use the straight-line method of depreciating your vehicle. While the five-year period still applies, this will result in a lower depreciation deduction in the earlier years.These 5 strategies are just the tip of the iceberg that I mention here and in the other two articles.

These 5 strategies are just the tip of the iceberg that I mention here and in the other two articles.

If you are already a successful business owner and feel like you are implementing every legitimate tax deduction, but are still paying $150,000 or more in annual income taxes there is a different specific strategy for you.   There is a little known company structure that may help you save 50% or more on your income taxes every year. We call this our income efficiency strategy and work in conjunction with a very high level attorney to structure these programs. It is very unlikely your current tax professional will be aware of this business structure but this attorney has been utilizing them for clients since 1998. However, the attorney who sets these up will be happy to have conference calls with your tax professionals to explain the program in depth. This attorney is not trying to replace your current professional but rather work with them to implement this plan for your business.

You will utilize structures that have been around for decades and most tax professionals mistakenly believe are only good for public corporations. These are structures that Lowes®, Southwest Airlines®, and Home Depot® use just to name a few. Now the successful small business owner can utilize the same structures as the big boys thereby dramatically lowering your tax liability.

I don’t want to bore you with details here but if you are in that small group who are paying those kinds of taxes we have a real solution that has been looked at by the IRS several times since 1998 and every time there were no changes required for the client. In other words this is not some kind of a scam or loophole but rather a very specific company structure that will fit into your existing business model to dramatically reduce your income taxes. Send us an email at info@perpetualwealthsystems.com with the subject line “income efficiency strategy” and we will have one of our professional teammates reach back out to you to see if we can help.