This week’s special report on women and wealth comes to us from our friend Kate Phillips of Total Wealth. Kate co-authored Financial Planning Has Failed with Kim Butler.
If you pay attention to the dominant current cultural narratives about women and wealth in the U.S., you might think women are victims.
Victims of the wage gap.
Victims of the wealth gap.
Victims of sexism, rampant discrimination, and, of course, that dark, shadowy testosterone-driven force intent on holding women back and preventing them from reaching their potential: the patriarchy.
I’m not making light of the very real challenges women around the world face—now or in the past—including poverty and wide economic disparities. If anything, I want to raise awareness about financial realities. But let’s look at the whole truth of these matters.
“False wealth is the accumulation of finite resources in the hopes of satisfying infinite desires.”
—The Last Safe Investment, by Michael Ellsberg and Bryan Franklin
Mutual funds. A college degree. A home. These are the best vehicles to invest in for a return — so we are told. But does this typical advice have a “blind spot”? We think so. And it’s a whopper.
Not until after the dotcom bust in 2000 and the financial crash in 2008 did many Americans wake up and realize that “Financial Advice Commonly Derived,” or FACD, simply had not worked for them. You know the narrative: go to work and earn a living, scrimp and save, invest those savings in markets (where, um, you have no control), and then watch the money magically multiply (an alleged 7% annualized). Voila! After 30-40 years, you can retire and be happy—via delayed gratification.
“The plan is broken at every step,” says Michael Ellsberg, co-author, with celebrated Silicon Valley strategist Bryan Franklin, of The Last Safe Investment, a provocative game-changing book published last year. “The investing part is totally devoid of your human capital,” he points out. “It separates investing from anything you have skill or control or domain over. Which we think is a pretty big problem.
Mitt Romney came under scrutiny during his presidential run when it came to light that he had socked away a fortune in his self-directed IRA. Romney’s IRA was worth between $20.7 and $101.6 million, according to Forbes.com. How was it possible that he could have acquired such wealth in the qualified plan environment?
The answer lies in the descriptor “self-directed.” Because Romney’s IRA was self-directed, he was able to use his IRA to fund venture capital and private equity investments inside of his retirement account. When Bain Capital (in which Romney was a partner) became highly successful, Romney’s wealth ballooned.
The exact strategies to produce such a hefty sum remain a mystery and doubtlessly involved—as The Atlantic surmised—“the alchemy of the private-equity business itself and the opportunities that come out of that insular world for people like Romney, who was the founder and chief executive of Bain Capital.”
While few people have the ability to turn what started as modest sums into many millions, the financial container Romney used to grow his investments tax-deferred is not reserved for multi-millionaires. Any American can open a self-directed IRA and use it to invest in (almost) anything they wish.
Whole life or universal life: which is better? Is indexed universal life (IUL) a viable option? Is whole life really worth the extra premium cost? Should I cancel or exchange my whole life policy for a newer or different type of policy?
These are questions have been debated amongst insurance agents, financial advisors, so-called financial experts, gurus, and financial bloggers for years. And by now, we believe the answers are actually quite clear-cut. The dangers of disadvantages of universal life can no longer be ignored.
In September of 2018, MSN.com published an article from the Wall Street Journal: “Universal Life Insurance, a 1980’s sensation, has backfired.” It details multiple instances of policy owners who have had premiums double, triple, and worse.
“The human species, according to the best theory I can form of it, is composed of two distinct races, the men who borrow, and the men who lend.”
Money is moving out of the stock market into other types of investments. Today we examine the trend, plus seven reasons why private lending opportunities are attracting new investors.
Investor Dollars are Leaving the Stock Market
Just over ten years ago, the stock market began it’s recovery from the subprime debacle-fueled crash and the Great Recession. Now, after 300% gains have been realized, investors are heading for the stock market exits at a brisk pace.
“This Stock Market Rally Has Everything, Except Investors,” a recent New York Times headline declares. Indeed, both individual investors and pension funds have been reducing exposure to equities for months now.
We also have a Spanish translation of this article.
“This is the way to look at life insurance. A great book and a new way of thinking about life insurance that everyone should read.”
– Tom Wheelwright, CPA, Author of Tax-Free Wealth
The little life insurance book—with a life of its own!
About eleven years ago, I wrote Live Your Life Insurance for my own clients as a sort of “owner’s manual” to their whole life insurance policies. I had been telling the same stories and explaining the same terms to client after client, and I knew there had to be a better way! At last, I put everything I had been telling my clients down in writing.
Soon, I discovered that the information was valuable for a wider audience. Other advisors and clients outside of my practice wanted it, too! In 2009, I published Live Your Life Insurance on Amazon in paperback. At the time, it was more of a “booklet” at the time—just 32 pages plus a (very useful) glossary.
As you probably know, you can borrow against your whole life insurance policy. Some people do, and some people don’t. Sometimes, people borrow too much, too soon, and too often. Meanwhile, others miss out on opportunities because it doesn’t occur to them to use their policy.
If you have a whole life insurance policy (or are considering one), you should know the pros and cons of borrowing against your policy. Below you’ll find 7 things you should understand that will help you make good decisions and get the most out of your policy.