Are Equity-Linked CDs Right for You?

Are Equity-Linked CDs Right for You?

Pretty much everyone knows what Certificates of Deposit – affectionately known as CDs – are, so let’s not bore ourselves with another description. However, I’d like to share my thoughts on equity-linked CDs which, although they have been around since the 1980s, seem to be generating a lot of renewed buzz, good or bad.

Let me be crystal clear, right off the bat, though. This discussion is not going to amount to any wholesale declaration of whether these CDs are “good” or “not good.” Such comments don’t fit my mold at all. In fact, my goal here is to expose the ridiculously unprofessional and, quite frankly, shameful spin that surrounds the discussion about these CDs.

Instead of plain vanilla fixed interest, equity-linked CDs tie your interest to the performance of a given stock market index, such as the S&P 500 or DOW, up to a certain predetermined cap. So in a generic sense, if the underlying index does well, you stand to earn a higher return, up to the cap.

Of course, like any normal person would and should expect, there are tons of caveats involved, from exactly how your interest will be calculated to penalties for early withdrawal to maturity periods to taxation and a whole host of others. It therefore makes sense to be sure that before you choose one of these – or any other investment under the sun – you comb the fine print and know for certain that it fits your intended situation. That is where an objective, thorough, thoughtful, and above all honest financial advisor comes in handy.

Now to the point I’m trying to get at. Be extremely skeptical of those so-called know-it-all “experts” who have issued blanket “good” or “bad” judgments on equity-linked CDs, for the simple reason that they haven’t reviewed every one of them. I’m also guessing they probably don’t know you personally, let alone what your investing goals and principles are.

For a classic case that makes this point, contrast an objective review by the Securities and Exchange Commission with Frank Armstrong III’s column in Forbes, where he basically branded every equity-linked CD as “garbage.” I’m hoping you take your investing decisions rather seriously – meaning you give it more thought than any columnist, TV expert, blogger, or other financial “expert” can give you in a five-minute overview.

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It’s your financial future, no one else’s. Be sure to get the best professional advice for your situation. Call us today at   877.656.9111  or visit us on the Web to schedule your no-strings-attached consultation!

Are You Letting Your Financial Advisor Off the Hook?

Are You Letting Your Financial Advisor Off the Hook?

By and large, the way most of us prepare financially for our retirements or our kids’ college

tuition begins and ends with signing up for the “best” program we can find. As a result, we tend, for lack of a better term, to completely ignore what happens in between those years — which is a rather unfortunate mistake.

Of course you want to make sure that whatever you ultimately sign up for looks attractive enough. But it is no secret that, sadly, most financial professionals are experts at presenting powerful, rosy outlooks — either by using unrealistic assumptions, being naive, being genuinely clueless, and sometimes even being flat out disingenuous. And by the way, this is also the case with many so-called media money experts, marketing materials, and plans offered through your job.

So how do you keep from becoming a victim of the proverbial “it sounded really good — had I only known” syndrome? By making annual reviews a must, a without-fail part of your financial plan. I cannot reiterate this strongly enough. Ninety-nine percent of cases of disappointing financial outcomes I have helped folks deal with could have been salvaged if they’d done a simple, thorough review years ago. You see, only the rarest financial plan won’t need some sort of change or adjustment over time. But how are you supposed to know what needs to be changed or adjusted?

Besides knowing exactly where things are, a review will allow you to confirm the validity of your assumptions — and your advisor’s assumptions, too. In fact, if you ask me how you can tell if a financial professional is genuinely superior at his or her work, I’d say at the very top of the list of things is finding one who INSISTS on performing regular annual reviews, come what may, whether things are good or otherwise.

Sure, investing is a long-term venture. No question about that. But what, really, does “long-term” mean? Isn’t it simply an aggregation of what goes on over short-term periods? So, in a nutshell, it is essential that you hold your financial professionals’ feet to the fire — not literally, though — by demanding regular annual reviews.

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It’s your financial future, no one else’s. Be sure to get the best professional advice for your situation. Call us today at   877.656.9111  or visit us on the Web to schedule your no-strings-attached consultation!

Why 401(k)s and IRAs Could be Toxic for Social Security Recipients

If you plan on reducing your tax bill during retirement, one of the things you must pay attention to today is where you are investing.  This 2-minute video explains something that most financial advisors either don't know about or don't think is important.

It’s your financial future, no one else’s. Be sure to get the best professional advice for your situation. Call us today at  877.656.9111 or visit us on the Web to schedule your no-strings-attached consultation!

The Problem with GENERALIZING When it Comes to Your Retirement Future

The problem with GENERALIZING when it comes to your retirement future

Among the myriad things that might cause you to miss the mark when it comes to achieving your retirement goal, the one we might least expect – and yet which is extremely dangerous – is generalization. Yes, generalization! Way too many of us tend to generalize when it comes to our retirement finances.

But, as I often echo to the financial professionals who attend our continuing education classes, there’s a very good reason we call this enterprise personal financial planning, as opposed to group planning.  As elementary as this may seem, I can’t even begin to tell you how often I witness this phenomenon play out. And I’m not blaming you – the retirement investor – because, quite frankly, we have been trained to perceive things in that light: such-and-such financial product is either good for you or bad for you, period! And we say this about every single one of them. Meanwhile, nine out of 10 times, all such pronouncements amount to is someone’s opinion, which I think we both know is a rather simplistic and unfortunate way to approach, of all things, your retirement finances.

Obviously, there are bad and good financial moves and products. No question about that. However, arriving at that conclusion should depend on a specific product’s profile. So although your brother Jim or coworker Mary may have had a terrible experience with his or her 401(k), you may be hurting your financial future by generalizing and simply branding all 401(k)s with the same label.

Again, this may seem elementary and pretty obvious, but it is more common than you’d imagine. Even many so-called, self-acclaimed financial experts – those who should know better – are guilty of this ridiculous trend involving dubious generalizations.

Now here’s some simple advice that may help you avoid becoming a potential victim of this terrible phenomenon in the jungle we know as financial planning. First thing, step away from all the self-serving marketing noise, because not all financial products – even of the same kind – are created equal. Then, consult with an honest, experienced professional – someone you can actually hold accountable if it turns out that he/she steered you in the wrong direction in pursuit of their interests, rather than yours, or did not do the thorough job you expected.

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It’s your financial future, no one else’s. Be sure to get the best professional advice for your situation. Call us today at  877.656.9111 or visit us on the Web to schedule your no-strings-attached consultation!

PBS’s Frontline is Breaking the Mold to Rescue Retirement Investors

PBS’s Frontline is Breaking the Mold to Rescue Retirement Investors

Mark your calendar! This coming Tuesday, April 23 at 10 p.m., the award-winning PBS program Frontline will air what I believe is a must-watch show for every single retirement investor in America. The program, which Frontline is calling “The Retirement Gamble,” seems to be an attempt to caution the investing public about certain flaws inherent in many 401(k) plans that may actually serve to prevent, rather than ensure, a financially comfortable retirement. 

Personally, I am thrilled that Frontline is taking this giant step by being the "odd one out" in this respect. Finally, someone in the prime media is willing to pay attention to the minority view about 401(k)s, something I have spent the greater part of my career talking about. In fact, a few years back, I wrote a book titled Is Your 401(k) a Trap? in which I challenge the seemingly "grounded" yet misguided conventional wisdom that 401(k)s are the best retirement planning vehicles for American workers. 

My book is not so much of a witch hunt expedition - because that's simply not my style - and the information I present, which is supported by facts, IRS rules, and real-life evidence, proves beyond a doubt that many retirees would be far better off using investment vehicles other than 401(k)s to plan for their retirements. 

Obviously, I haven't seen the entire program, but from the trailers I've seen, I expect that those watch it will walk away with some "holy anger" and, hopefully, begin to demand real answers to some key questions, like: 

• Why aren’t the majority of so-called financial advisers pointing out these things? 
• What are other options – alternatives – to 401(k)s?
• Why are they still telling folks to jump on the 401(k) bandwagon without any sort of due diligence?
How do these options stack up against 401(k)s, in an apples-to-apples comparison?
• Is my employer’s specific 401(k) plan a good deal for my retirement needs?

Quite frankly, isn’t this how serious retirement planning is supposed to look in the first place? Instead of millions being told to simply sign up for their employers’ retirement plan, however inefficient they may be?

My book specifically answers these questions, as well as several other critical ones. It also walks you through the other options that many financial professionals somehow are unable or unwilling to discuss. You can pick up a print or Kindle version from Amazon, or iBooks. If you use any other e-reader, you can get a compatible electronic version, too.

Here’s a quick  snippet from a recent interview I gave about this issue:  

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Call us today at  877.656.9111 or visit us on the Web to schedule your no-strings-attached consultation!

BEWARE! of this IRA Tax Trap

Every year, right around tax time I receive numerous calls from seniors who feel trapped by their IRAs: they were “sold” a rosy tax situation, but in reality, are being clobbered by taxes. 

Of course, IRAs are not necessarily bad. However, it behooves you to carefully (and realistically) consider IRS rules and how they may impact you down the road before investing in anything. Unfortunately, many so-called retirement advisers either fail to consider the tax consequences of IRAs, or quite frankly, don’t think it is that important.

Here's a two-and-a-half minute rundown of what many fail to consider:

The Hidden Lesson for Homeowners and Financial Advisers from Stockton’s Bankruptcy

The Hidden Lesson for Homeowners and Financial Advisers from Stockton’s Bankruptcy 

News of the official approval of Stockton, California’s bankruptcy has been center stage this past week. Judging by the media coverage so far, many see it only as the story of the most populous American city ever to enter Chapter 9 bankruptcy. However, this event contains an underlying important financial lesson for American homeowners and the financial professionals who advise them.

 

As we are told, the city of Stockton finds itself in this unfortunate situation because of the housing crisis. Apparently, the bulk of Stockton’s revenue comes from property taxes levied on homeowners, but due to plummeting real estate values, recent revenue has fallen short.

Stockton city officials unfortunately failed to understand – or took for granted – a fundamental and incredibly important financial lesson: It is not prudent to plan financial sustenance around the assumption that the value of a house – or any other piece of real estate – will remain constant, or increase, for that matter.

This is just basic common sense which you probably already knew. I’m afraid, however, that millions of American homeowners are making the same mistake, to some extent, by basing their future financial sustenance – retirement income in this case – around a similar assumption about the equity in their homes.

In fact most folks would even argue – wrongfully – that the safest means of supporting one’s income needs in retirement is by building equity in your home. Of course, we all hope that over time the value of our houses increase so that we can build more equity. But that’s a dangerous proposition around which to base your livelihood, isn’t it? The result that impacted Stockton could also affect you – what happens if the value of your home decreases through no fault of your own?

Hopefully, this critical lesson will become apparent to the millions who may be ignoring reality or, quite frankly, are being led astray by unrealistic financial advice. If you'd like to manage your equity based on solid, realistic, factual, and savvy ideas, you'll be interested in my book, Savvy Strategies for Turning Your Mortgage into a Goldmine. 
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