What makes a business succeed? As a general rule, capital comes in handy! And whether a lack of cash is a symptom or cause of a failing business (it can be both), undercapitalization brings down more businesses than anything else.
Of course, you can save your own capital, but there are lots of pitfalls to dodge. You’ll want to avoid these scenarios:
Paying steep taxes and/or penalties to access your own money.
You either can’t use or must use the money, depending on your age.
There are limits on how much you can save.
You have to pass ever-changing qualifications to access money.
The money can only be used for certain purposes.
If you need money, you must sell the underlying investment and forfeit future gains.
A change of income, credit, or home values could make your “savings” inaccessible.
You can see why mutual funds, retirement accounts, qualified funds, and home equity lines of credit make poor choices for Emergency/Opportunity Funds for you or your business. So where DO you get capital?
I don’t want to tell you how much insurance I carry with the Prudential, but all I can say is: when I go, they go too.”
– Jack Benny, comedian (1894-1974).
An on-air penny-pincher who pretended that he would sooner die than part with a dollar, the real Jack Benny was a kind and generous man. Also an excellent planner, his widow was well-taken care of after his death and even received a daily red rose from the local florist, a provision arranged for in his will.
Ed McMahon, the former co-host to Johnny Carson on The Tonight Show, was another generous celebrity. Gifted with an optimistic personality and a hearty laugh, McMahon lacked Benny’s budgeting and strategizing skills. (Perhaps he took more after the Celebrity Sweepstakes Winners he helped create….) In spite of decades of career success, McMahon lost his health in 2007, then nearly lost his home to foreclosure in 2008 before passing away in 2009 at the age of 86.
While Donald Trump reportedly may have assisted the aging, ailing celebrity to stay in his home, the McMahons were also helped by another friend who told them about Life Settlements. As Pam McMahon (Ed’s widow) reports, they were previously unaware that they could sell a life insurance policy, thus using it as a liquid asset in a time of need.
Ed McMahon carried multiple life insurance policies, and the premiums became an unmanageable burden to them, especially when injuries prevented him from working. According to a letter written by his widow Pam McMahon,Ed had more than one policy and they were able to sell one to ease their financial stress.
More Seniors Are Selling Their Life Insurance Policies
Interestingly enough, another well-known celebrity has chosen to endorse Life Settlements (and probably not because she needs a paycheck – this octogenarian is still red-hot in show business!) Actress Betty White has done commercials for a company in the Life Settlement industry and has gone on record stating that she “would encourage any senior who is considering letting their life insurance policy lapse to consider a life settlement.” (I can’t help but wonder if she is the friend who helped the McMahons with her advice….)
But there are many other reasons, besides financial stress, to consider selling a life insurance policy. The beneficiary may have passed away. The policyholder might simply wish to use the money differently, such as starting a business or sending a grandchild to a private college. The policy holder may have multiple policies and no longer need them all, or the policy may insure a “key man” in a business partnership who has retired.
Is selling your life insurance policy the only solution for seniors seeking cash?
Absolutely not! Many seniors simply don’t qualify. For instance, if you are healthy and in your 70’s, it is doubtful that you could find a buyer for your policy. Life settlement investors and their intermediaries are looking to buy life insurance policies of individuals who are nearing life expectancy. Typically, the insured is in their 80’s and/or in poor health. Even if you do qualify to sell your policy, it’s important to look at what option makes the best sense for your particular situation.
Oftentimes, retirees have “lazy assets” that could be put to better use. There are better options than earning one percent or so in a bank certificate of deposit. Sometimes, a reverse mortgage may make sense. (Learn more about that option in this podcast with Kim Butler.) Or perhaps you can change the SEQUENCE of how you are spending your assets. This strategy can help and reduce taxes and increase income!
We invite you to schedule an appointment to learn about ways to generate more cash flow. You can also sign up for our Prosperity Accelerator pack and you will receive an ebook and articles with our favorite strategies for income.
Do you own a whole life insurance policy? One advantage of a whole-life policy is that it gives you many options. For instance, the cash value can be used to pay up premiums so that no more premium payments are ever needed! There are other ways to use your policy to obtain cash (while you’re still living) – withOUT having to sell your policy.
Are you interested in investing in Life Settlement Funds?
“In the real-estate business, past success stories are generally not applicable to new situations. We must continually reinvent ourselves, responding to changing times with innovative new business models.”
~ Akira Mori, Tokyo real estate developer
Investment real estate is a proven path to wealth. However, there is often a steep learning curve to real estate investing profits. Investing in real estate also has many possible pitfalls that can lead to frustration and loss!
How do you maximize your profits without suffering expensive “learning experiences”? Avoid these ten costly mistakes! (And if you aren’t sure that “active” real estate investing is for you, read on… we can help you avoid these mistakes AND earn passive cash flow from real estate investments… without plumbing or tenant problems.)
Mistake #1: Look at Too Few Properties
Too often investors are impatient, limited on time, or searching in too small of a market. They evaluate 8 or 10 properties, pick the one that seems the best, and make an offer. Yet choosing from limited options and locations usually mean settling for mediocre deals. And in markets where purchase prices are high compared to rents, properties have limited profitability.
To find better deals, look for MORE deals. Examining properties in various locations and markets is one way to do that if you’ve got the time (or a team) to travel as well as analyze properties. One of our providers of real estate investments examines about 100 properties (all around the country) for every ONE they purchase.
“I went to the ATM this morning and it said “insufficient funds”… I’m wondering is it them or me?…” – from Mirror.co.uk
As we commented in a recent post, “The Double Standard and the Golden Rule,” fractional reserve banking practices can leave our banks with insufficient capital should too many depositors want their money back at once. And frankly, in addition to the risk of bankers over-diluting our dollars or gambling them away with derivatives, a dozen other things could bring down the economy as well.
This website is provided for informational purposes only. The information contained herein should not be construed as the provision of personalized investment advice. Information contained herein is subject to change without notice and should not be considered as a solicitation to buy or sell any security or investment. Investing involves the risk of loss and investors should be prepared to bear potential losses. Past performance may not be indicative of future results and may have been impacted by events and economic conditions that will not prevail in the future.
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