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In Reply to: Re: Re: Whole Life? What the hell?!!! posted by PFS Phoenix on June 28, 2001 at 09:39:56:
Let me first start by asking, do you receive 100% of that 12%? My answer would be, NO. Most people can see why, right? First off, you have to pay some sort of management fee or loading fee on the management of your money, be it a mutual fund or guided portfolio management. Now, maybe you invest your own money, but regardless, there's always some sort of fees cutting into your gains. The average is 1.27%, but for simplicity I will use 1%.
Next, Uncle Sam. He wants his piece, right? Just like everything else. So, say for the average wage-earner their tax bracket is 28%, you're talking about losing around 25 on that gain.
Finally, inflation. Do you know what the 40-yr average gas been? 4.50%! But to be fair, and following most current reports, I'll use 2.5%.
You lost 5.5%, and that is a guarantee everytime you walk out to invest. No obviously taxes will affect cash value accumulation when you annuitize it, but the power of tax deferred growth is much greater at a rate of 5 or 8% than taxable gains at 12%, and that's a fact. Plus, you're not worrying about losses, which will set progress back.
You know that a 20% drop require a 40% gain right? Say you had a $20 stock. Well, if it dropped 50% to $10, how much of a gain would need to get back to $20, say maybe where you bought it? 100%, Got me?
Now as far as IRA's, 401k's and other tax deferred vehicles are concerned, I do not deter from their use. You should be maxing out on those. However, $2000 a year into an IRA might sound like a lot, but come 40 years, inflation will erode that so much that you will need supplementary income. The fact is, those vehicles are good, but they're not enough. You have to consider what inflation will do to your money.
If you're saving to retire on $100,000 a year, 20 or even 40 years from now, that $100,000 won't be the same amount as it is today. In fact, that $100,000 will be equivalent to somewhere near $300,000 40 years from now. I'm sure you never thought possible right? Well, consider the stamp. Yes a stamp! It hasn't changed, just the price of a stamp. What was it 40 years ago, 2 cents maybe? What is it today? 35 cents? Wow, some growth in price I'd say.
What makes me different than your brainwashing is that its education, not brainwashing that has taught me what I know retirement. We use math and finance principles to determine what will be needed than plan accordingly with insurance investments, not the other way around. We're here to educate people on what they will need, because most people will get to the end of that long road called work and find out they don't have enough.
I could go on about the seminars I attend, and you know what, for one of the best products in the world, we have the worst image?! For pennies on the dollar you can guarantee your family's safety and protection, or even retirement. But because people are not properly educated about all the underlying facts, a dark shadow is cast on insurance.
Now, what does your personal life have to do with my comments? I don't particularly care what the opportunity means because if you scour the net, you'll find thousands offering the same thing, and opportunity to achieve the American dream. Why not consider a career with New York Life? They offer a broad array of financial services with a better reputation. Just a suggestion, because you don't have to wait until they contact you.
Oh, one more thing, if you don't annuitize by a particular age, you'll get penalized, that's tax law. (70 1/2, earlier than 59 1/2 and you get a 10% penalty in addition to income taxation).
Until next time....