2011 Best Picks … if You Intend to Keep Your Roller-Coaster Investing Dilemma Intact

2011 Best Picks … if You Intend to Keep Your Roller-Coaster Investing Dilemma Intact

I am fully aware of the sarcastic nature of the headline, but in this instance, that seems the best way to get my message across. I’ll wait to see what you think after reading.

Right about now, almost every financial show, magazine, guru, blog, and what-have-you is offering investors advice about the products and places in which they should put their money so that they can become rich in 2011! I’m sure you've seen references to those hand-picked funds where all you have to do is purchase – and then start planning how you’ll live wealthily ever after, haven't you?

Depending on how you define smart, I may not be the smartest cookie around - but I have a ton of common sense. So perhaps I’m missing something in this regard, but here are two simple reasons I believe any serious person should not waste their valuable time, effort, or money on these so-called best picks.

Reason #1: There’s only one predictable thing about the stock market, and YOU already know what it is: the stock market will continue to fluctuate up and down. No one can predict exactly where it is headed next. I mean, if you seriously think about it, where have these prediction gods been these past couple years while folks were taking a spanking with their portfolios?

My guess is that they have always been around, introducing unsuspecting, naïve investors to “smoking hot picks” that turned out not to be so hot after all. Before you fall for any of these (in my opinion) silly moves, do yourself a big favor and look at how your favorite expert's most recent "best picks" are doing today, just for track-record purposes to see how smart their advice really was. What kinds of testimonials do you have from folks who are actually getting anywhere financially by following these “smoking hot” leads?

Reason #2: All of these experts would rather be retired, enjoying their ultra-wealthy status, than marketing to YOU. Something also tells me that if these prediction experts really knew what the heck it was that would make you a gazillion bucks tomorrow, they’d have used those abilities to make fortunes for themselves, too. In which case, they’d be so super rich that they’d probably be retired to their own private islands, cruising the open waters, and drinking an endless supply of piña coladas. They're not doing that, though, are they? No - they are working for their paychecks by showing you the “best picks,” which change from year to year.

I could be absolutely wrong, but common sense, the facts on the ground, and reality tell me otherwise. I won't deny that it's possible to become rich overnight, but from what I have seen, most folks only build true, lasting wealth over time, with a real plan and the assistance of a professional with a proven track record.

If you'll be in the D.C. area on Saturday, January 15, 2011, please join me for a special financial workshop. You can visit our Web site or call or call 301.949.4449 to reserve your seat now. Feel free to invite anyone you know who might be interested. Sorry, I can’t promise you any hot picks, but you will walk away with proven, legally sound, practical steps you can begin using immediately to help regain control over your retirement.

Wishing you a safe, happy, and prosperous New Year!

Ho! Ho! Ho! Three Cheers of Gratitude!

Ho! Ho! Ho! Three Cheers of Gratitude!

Wow I cannot believe how quickly Christmas rolled around this year. It sure seems to me like last Christmas was just yesterday, although my daughter thinks the complete opposite - and I’m guessing that’s probably true for your kids, too. Anyhow, as we take some time to look back over this past year and glance ahead to the coming year, I’d like to ask you to take a few minutes to ponder the one word I believe sometimes gets lost as we slog through our busy lives.

That word is GRATITUDE.

Without a doubt, 2010 has been an especially challenging year for many in this country. Far more than usual number of people are without employment, as the economy tiptoes out of the recent recession. And lots of folks with jobs are under pressure to stretch their paychecks far enough. Many have been forced to forego the pleasures they have come to enjoy. In such an environment, it is very easy to lose sight of the fact that there is always someone else (many people, for that matter) who would consider it heaven just to have somewhere warm to sleep at night, breathe fresh air on their own, wake up pain-free in the morning, take a warm shower, put clean clothes on their back, have breakfast, and most importantly, have the health and strength to do all of these things.

If you have the luxury of reading these words, you almost certain realize that you are enormously blessed, do you? In that case, I just successfully made my point regarding gratitude. As we go through this holiday season, please take some time to carefully consider the gifts with which you have been blessed, rather than focusing your energies on what you do not have.

From all of us here at Laser Financial Group, have yourself a wonderful Christmas and a safe holiday season!

Changes In The Financial Laws - What Do They Mean for You?

Changes in the financial laws - what do they mean for you?

It’s an unsurprising statement of fact to say that the world of personal finance revolves around laws. As a natural consequence, therefore, the passage of new laws – or significant changes to existing rules – means that the complexion of your retirement strategy and products may also be required to change. Or so you would think. Here are some real-life cases in point:

• Before the passage of the Revenue Act of 1978, 401(k)-type plans did not exist in America.
• The Tax Reform Act of 1986 made primary/secondary residence mortgage interest (within limits set out under Section 163 of the tax code) just about the only tax-deductible interest for individuals, after 1991. Before that time, even credit card interest was tax deductible. In response to this change in the law, homeowners have resorted to using cash-out refinances to convert their otherwise nondeductible consumer interest payments into deductible mortgage interest. Doesn’t that make perfect sense? And it’s legal!
• Also, since the Taxpayer Relief Act instituted Roth IRAs in 1997, investors who thought it wise to leverage the benefits from them had to make some changes.

I could go on and on, but here’s the point I am trying to make: I’m only an observer of Congress, but I’m fairly certain this trend toward new laws and changes will not be ending anytime soon. That means that as an investor, you may need to revisit your strategy/product choices and, more importantly, make some changes to ensure that you are taking full financial advantage within the scope of those new laws.

So far everything sounds pretty normal, but the reality is that only a cutting-edge financial counselor will be savvy enough to suggest you examine your plans/products and make such changes. And from what I am witnessing, the rather unfortunate truth is that some financial professionals have no more idea about what’s cutting edge than I do about performing open-heart surgery.

I’ll be the first to admit that none of the highly trained professionals here at Laser Financial Group (including myself) could ever claim to know everything – because we don’t. But what we are sure of is that we are constantly keeping up with developments in our industry. And whenever we are asked a question, we give honest and correct answers, which occasionally include the admission that we will have to do further research to find the complete answer and get back to the client a little later.

However, some in this industry will go as far as dishonesty just to save face or prevent losing a potential client. Think about this. You’ve learned something new and exciting that you believe could be a plus to your retirement strategy, and you seek verification or a second opinion from a financial professional. After all, you expect YOUR advisor to be honest, don’t you? However, this guy or gal has only the vaguest idea – or is completely unfamiliar – with your inquiry, but happens to be one of those types who wants to be perceived as a know-it-all.

What kind of response are you likely to get? I’m thinking the possibilities range anywhere from, “That’s illegal, because I’ve never heard of it,” to “Since the law surrounding this is fairly new, it’s probably a good idea to stick to the old system and wait to see how this new strategy works out.” If not literally, the answers would probably be close to this.

Don’t get me wrong. I am a huge proponent of proper due diligence, especially when it comes to retirement. But don’t we all need to be reminded that laws change and we may have to change our course accordingly, if we want the best results? This statement by Benjamin Franklin pretty much sums it up in my opinion, “When you’re finished changing, you’re finished.”

To that end I also recommend that you heed this advice by the late President Reagan: “Trust, but verify.” I would, however, add my own very important caveat that your verification source must be knowledgeable and 100 percent honest.
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To schedule your appointment with a knowledgeable and honest financial advisor who will help you sort through any changes in the law that may affect your retirement planning, please visit our Web site or call us directly at 301.949.4449.

Pay Now or Pay Later?

Pay Now or Pay Later?

[Jackie (not her real name) made this request via the “Ask the Advisor” tool on our website. I obtained her permission to share it on this blog because it has such an interesting educational twist to it.]

Hi Samuel,

I inherited about $55,000 of my father’s IRA and was intending to pay all the taxes this year and be done with it. But my father’s financial advisor and another advisor at my bank think I will pay too much in taxes by doing that. Instead, they suggest that I do a stretch IRA. I am 49 years old, a single mom with two teenagers, and I earn about $68,000 a year. Would you give me your thoughts on this? 

Thank you.

Those who read my columns regularly are quite likely to know my initial response: Let’s gather the facts, and then you can make your own decision. The main issue here is that this lady (or probably anyone, for that matter) does not want to pay “too much in taxes.” Let’s clarify the point by agreeing that not only does she not want to pay “too much” today, but in the future as well. Now that we’ve established that, let’s drill down to the two alternatives, shall we?

The “Pay Now” Alternative

As a head of household earning $68,000 a year, Jackie will have a standard deduction of $8,400 and $10,950 of personal exemptions (for herself and the two teenagers at $3,650 each). This will result in a taxable income of approximately $48,650 ($68,000, less $8,400, less $10,950). Notice that this is the lowest number. However, should she itemize on her Schedule A because she has more deductions to claim, like mortgage interest, charitable donations, property taxes, and the like, that $48,650 taxable income will be even less still.

Here’s a key statement: According to published IRS tables for 2010, a head of household with taxable income between $45,550 and $117,650 will be taxed at a 25 percent marginal rate.

So as it stands now, Jackie’s marginal rate is 25 percent. If she recognizes all of the $55,000 inheritance as income in 2010, her taxable income moves up to $103,650 ($48,650 plus $55,000). Now, the real revelation: What bracket does the new taxable income of $103,650 put her in? You are smart, so you can see that it is the exact same bracket of 25 percent. Incredible, isn’t it? But I told you it has an interesting twist…

Given this scenario, she would pay 25 percent tax ($13,750) today and could save the remaining $41,250 in a completely income-tax free account going forward, and know for certain that she is done and does not have to worry one bit about future tax rates. Not to mention that – under current law – if she happens one day to pass this money on to her children, they’ll owe no income tax whatsoever.

What About the Advisors’ “Stretch” Alternative?

According to the IRS’s Single Life Expectancy Table for Inherited IRAs, this 49-year-old woman will be permitted in 2010 to withdraw $1,567, as opposed to the entire $55,000. The question – and this is a really good one – is: At what tax rate will this little tiny, itty-bitty amount be taxed? The shocking but 100 percent correct answer is – are you ready for this? – 25 percent (or $392). Yes – the same 25 percent! Pretty interesting, isn’t it?

That therefore leaves the rest of the money still untaxed, and therefore yet-to-be-taxed at future (and unknown) tax rates. Again, you are smart, so you realize that by doing this, Jackie would be making a very unwise gamble that her tax rate will remain that low (or somehow even lower), because otherwise she would have made a very bad move. Remember she is claiming two teenagers today who, in a few years, will no longer serve as a tax break for her. But guessing by what these two advisors are proposing, they seem pretty sure that today’s incredibly low rates will stay that way for a very long time – or even better, they expect tax rates to be lowered in the near future. All I can do is to wish them good luck on that frankly naive gamble.

My bottom line in situations like these is that you decide for yourself. But make sure you talk with professionals who have a real track record of knowing how things really work, because a large number of advisors apparently live on another planet.

Visit our Web site to ask YOUR question or call us today at 301.949.4449 to schedule a complimentary session with one of our knowledgeable advisors to discern the best move for your inheritance or other retirement income planning needs.

Who Says There Are No Guarantees in Retirement These Days?

Who Says There Are No Guarantees in Retirement These Days?

Did you know that you can add a separate income option to your IRA, 403(b), 401(k) or even nonqualified funds that will guarantee an 8 percent annual compound interest, regardless of what the stock market does?



Let’s set the record straight – this isn’t wishful thinking! This has been happening and still happens for retirement investors today. My regular readers already know that I allow no room for any “smoke blowing” on this blog. I present only practical, factual strategies that serious retirement investors can implement today.

For Real? Yes, Really!

It is understandable that with the recent mess in the stock market, as well as investment scams galore, it may be very difficult for you to consider something like this as a viable possibility. There are even scores of so-called financial advisors who do not have the slightest clue about what I am discussing here; that may be surprising, but it’s understandable, too – because of the thousands of investment options/companies out there, only about 40 of them (as in four-zero) offer these options in any form.

And given that the majority of financial professionals are not independent, in the sense that they work for a specific provider and therefore cannot offer options outside of their company’s portfolio, what are the chances that investors who work with them will be exposed to these options?

Anyway, without making things complex, here’s how this specific solution works. You may attach an optional feature to your retirement account that basically states that for the sole purpose of determining your lifetime income, your funds will grow at a guaranteed 8 percent annual compound interest for the next ten or twenty years, or until you start taking income – whichever comes first.

For one thing, I think this is beautiful because right from day one, you are able to know your exact lifetime income in the worst-case scenario. I must remind you, though, that this is an optional feature, so you don’t have to use it – it is totally up to you. Sort of like having a backup file for your computer, it’ll become handy when you actually experience a crash. Other than that, you’ll not need it – or would you? If the stock market performs amazingly well over the next 20 years and you end up with much more money under your base contract, you won’t have to use this feature.

But for those who believe that maybe – just maybe – their portfolios will not consistently earn 8 percent every single year for the next 20 years, this feature is pretty amazing.

I do not and cannot predict the exact future performance of the stock market – I’m thinking I wouldn’t be working if I could. But having spent several years helping a number of retirement investors, here’s what I can tell you: potential is not a retirement strategy. Potential return is never the same as actual return. You could potentially make a gazillion bucks overnight, but you could also end up with much, much less than a guaranteed 8 percent, annually compounded. You could also potentially end up with absolutely nothing.

In that instance, this optional feature would come in very handy, wouldn’t you agree? Several of our clients have secured their retirement incomes this way. But before they did, we provided an analysis of their year-by-year income account growth, and their correspondent guaranteed lifetime incomes.

JAY says “This is Unfreakin’ Believable!”

Jay is a DC-area attorney looking to retire in 10 years (at age 66), who was referred to our firm by one of our existing clients. Jay’s main concern was that – based on what he’s seen in recent years – he wasn’t so sure how much and for how long his nest egg could afford him when it really comes down to the wire.

Boy, did I have a rather simple, straightforward proposal for Jay. Why doesn’t he set aside the portion of his nest egg that he could not afford to gamble with any longer and attach this optional feature to it? He thought it was a great idea, so he decided to protect $425,000.

So Jay’s $425,000 at the guaranteed 8 percent would result in his income account having a balance of $1,009,297.44 in just 10 years when he plans to retire (at age 66) – and yes, this is all guaranteed! He’ll therefore receive $50,464.87 of guaranteed annual income – PLEASE READ THE NEXT WORDS SLOWLY – for as long as he lives. Just to be clear, this $50,464.87 is the exact amount he’ll receive, regardless of any stock market crashes.

Again, you must remember that this is not a probability or a dream. It is what will definitely happen for Jay, come what may. Of course, in the event that the market does better over the next 10 years and that pot gets bigger, he is able to draw his income from the bigger pot – and who wouldn’t?

So now can you understand why the esteemed attorney thought out loud, “This is unfreakin’ believable!”?

I do not know how you and/or your financial advisor perceive retirement but, do you really believe that your portfolio can do better than a guaranteed 8 percent interest annually, compounded over say the next 5, 10, 15, or even 20 years, in this new economy?
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For your complimentary consultation to examine whether this option may be right for you, please call Laser Financial Group at 301.949.4449 or visit us on the Web.

Common-Sense Holiday Shopping Tips

Common-Sense Holiday Shopping Tips

Wow! Where did the time go? I remember January 1, 2010, like it was yesterday, yet it is Thanksgiving already? Anyway, as we take some time to reflect and give thanks, on behalf of all the guys and gals here at Laser Financial Group, I’d like to say a huge “thank you!” to all of you for being a part of our family. And especially for your readership, feedback, and referrals. We really do appreciate the trust you have in us and want to assure you that we’ll never disappoint you – NEVER!

Thanksgiving also means that the busiest shopping season of the year is upon us once again. Here are two simple, but incredibly effective, tips to remember as you embark on your shopping expeditions.

1. Put dollar amounts instead of items next to each name on your shopping list.

This is the easiest and most effective way to stay within your budget – if you’ve made a budget. Even if you don’t have a budget, it would be wise to have an idea about what you expect your total outlay to be, before you head out. A lot of people focus on the itemized list, and wind up spending whatever is necessary to acquire those gifts, not that there is anything wrong with that if that’s your intention. But as we all know, most people end up exceeding their budgets and creating all sorts of financial worries later, when this whole process is supposed to be fun. By writing down dollar amounts instead, you’ll be sure to avoid most of the usual “had-I-only-known’s.”

Make it a point to remember that virtually nothing you buy is really worth more than the thought behind any particular gift. So please be sure not to fall for Madison Avenue’s attempts to lure you into buying so that you’ll be trendy, accepted, still-married, or better-liked. I’m guessing you know these are all bogus ideas simply intended to get you to spend more – and they don’t even come close to the mere thought of presenting someone with a gift.

2. Double-check your shopping receipts.

This is pretty basic, but please be sure that you are paying for exactly what you purchased. There have been several recent instances where shoppers have noticed double charges (items being inadvertently scanned twice), and even some including “cash-backs” the shoppers did not request – or receive – on their final bills. As you’d expect, such items are extremely difficult – if not impossible – to prove, once you exit the store. That is why it is critical for you to take just a minute or two to review your receipts. Just be sure to step aside – since there are likely to be others in line behind you. I don’t have to tell you what is likely to happen if you do not step aside, do I?

Happy Thanksgiving, and wishing safe travels to those who will be hitting the roads or the skies this holiday week.
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For other smart tips and bits of financial wisdom that will help you make the most of your money, visit our website, or call us for a complimentary consultation at 301-949-4449.

A Completely Different Perspective on Reverse Mortgages

A Completely Different Perspective on Reverse Mortgages

My discussion today is not about the ins and outs of a reverse mortgage, but rather a review of the rationale behind them. The federal government defines a reverse mortgage as “a product that allows you to convert part of the equity in your home into cash without having to sell your home…” Just about every time I watch TV, I see advertisements that pitch them as “the smartest thing you could do if you’re 62 or older.” But I see things differently: I completely disagree from a realistic, common-sense, and above all financial standpoint.

We have (so-called) experts encouraging Americans to make the largest down payments possible when they purchase their houses – so they can have smaller mortgages. Then, they are encouraged to do everything possible to pay off and eliminate those “interest-sucking” mortgages as quickly as possible!

And then, at age 62 or older, when these very same homeowners are financially broke (but living in homes they’ve paid off), they’re told the smartest thing they can do is to get a reverse mortgage, which literally means re-mortgaging those very same houses they worked so aggressively to pay off? If you think about it for just a moment, you’ll see that it’s rather backwards, and not at all smart. Really, how many financially wealthy individuals do you know who have reverse mortgages? The answer is NONE! And I’ll explain why in just a moment.

But before that, as I always echo, we need to avoid making financial decisions based on our emotions – yet again and again, it seems that the majority of folks allow themselves to be controlled by what I term extreme emotional nonsense.

It sounds pretty good – trendy, even – to hurry up, pay down your mortgage, and avoid those “money-sucking” interest payments. But in the end, will a reverse mortgage be interest-free? Of course, not! Those lenders have one goal: to make money. And guess how they make it – through the interest that is factored into each transaction.

So instead of making mortgage decisions based simply on the emotions surrounding costs, it behooves investors (and advisors, alike) to consider PROFIT. You see, in the world of savvy financial planning, there is one universal law, just like the law of gravity – because it works 100 percent of the time, whether you believe it or not, like it or not, or even know about it or not. And that law simply states that there is always an opportunity cost (otherwise known as the alternative forgone) for every dollar spent.

So instead of aggressively paying down/off your house, could you put those dollars somewhere else, where they could earn over and above the net cost of your mortgage? If the answer to that question is yes – and in most cases I have analyzed, that happens to be the case – you’d be making an unwise financial move if you used those valuable dollars otherwise. The interesting thing, though, is that if you really think about it, that’s why reverse mortgages are so popular these days – because some seniors have cash flow issues.

In the Baltimore-Washington DC corridor where I live (and I love it here), seniors lose their homes every year, in spite of the fact that they owe no mortgages. They learn the hard way that things like property taxes, which you owe for the life of your house, trump every mortgage loan. The thing is, what really matters at the end of the day for any homeowner (whether they agree about this fact or not) is a constant available stream of cash flow. So racing to eliminate your mortgage at the expense of a consistent cash flow becomes, quite frankly, pretty stupid – financially speaking.

For instance, given today’s mortgage rates of about 4.5 percent (and assuming that interest payments are tax deductible, given what we’ve been hearing on the news lately), we’re looking at a net cost of 3.4 percent (given a 25 percent marginal tax bracket). I know of several safe, secure, tax-advantaged savings programs that are paying 5 to 5.5 percent fixed interest. If you do the math, there’s a clear arbitrage PROFIT of about 2.1 percent – that would not be sacrificed by eliminating the mortgage payments.

You must also keep in mind that equity in a house is very volatile and risky because no one can control its movements, regardless of whether they might think or wish they can. So to bet your retirement on plans to get a reverse mortgage later might just reveal a nasty surprise – remember less equity in your home will mean little to no money flowing.

Please do not infer that I am opposed to reverse mortgages across the board, because I would recommend a reverse mortgage for someone who has been the victim of bad financial advice and is already left with no option but to REVERSE the very mortgage they just paid off. If you’re not there yet, however, you may want to think twice.
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For a complimentary consultation to discuss YOUR best options, please phone Laser Financial Group at 301.949.4449 or visit us on the Web.

Too Good to Be True ... or Too Bad to Be False?

Too Good to Be True ... or Too Bad to Be False?

I recently met with a gentleman who’s been a client of ours for quite a long time and, in his own words, “has been happily retired for the past four years, thanks to your guidance” (meaning yours truly). He was telling me how amazed he was about the fact that pretty much everything we’ve ever told him in reference to his investment portfolio turned out to be right on point, to the most minute detail. He’d seen how the huge stock market downturn had negatively affected some of his friends, to the extent that they had to cut back and make huge sacrifices at a time when they could least afford to do so. Yet his portfolio, under our direction, kept growing, and his retirement income didn’t experience any dips – just as we advised that it would.

As you might expect, up until this point I was having a ball, because nothing makes me happier than hearing our clients say they understand that they don’t have to suffer when the stock market tanks or tax rates rise, if they follow the strategies we carefully craft for them.

This all ended when he looked me straight in the eye and said, “Sam, you know I have to confess that had I not actually owned these strategies/products for a while now and witnessed firsthand that they truly work, I’d honestly think, ‘It sounds too good to be true.’”

My response was, “Wow, that’s a very interesting thought.” Because that’s exactly what he was looking for when we met several years ago. You see, this retiree (and virtually all investors I’ve ever met) wasn’t looking to implement any strategies or put his hard-earned nest egg into anything he did not believe to be equally “too good” and “true.”

Are there folks who actually validate retirement strategies they are considering based on that saying/principle? That would be unbelievably naïve, don’t you think? That is to say, a proposal has to sound less true to be worthy of consideration? Of course, no one should jump on board some crazy, illegitimate, or lousy proposal. But legitimate strategies that will truly help investors solve their retirement dilemmas MUST be very good and, in fact, true as well.

This phrase, “too good to be true,” originated all the way back in 1580, but it is not a credible test when it comes to dealing with serious financial planning. I’d run as far as I could from anyone who judges a proposal to be bad solely because they are unfamiliar with it or it sounds too good. For instance, this client in question would have completely missed out on his peace of mind during these trying times if he had followed the “too good to be true” principle back then, wouldn’t he?

You may recall, not long ago a young lady claimed she was attacked by a woman who threw acid on her face. Everyone seemed to believe her instantly, to the extent that her story was picked up on every website, TV, and radio program, and she was even scheduled to appear on Oprah. Soon after the dust settled, however, it was discovered that she’d staged the whole fiasco just to get attention – and boy did she get some attention! People were eager to believe something that sounded too awful to be false, which makes me wonder what would have happened if she had staged a plan that sounded too good?

If “too good to be true” makes something invalid, then by implication does “too bad to be false” make it valid? Here at Laser Financial, everything we ever recommend to our clients has to be good and true – there’s just no question about that.
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Call us at 301.949.4449 or visit us on the Web to schedule your complimentary strategy session today!

Do You Know if YOUR Favorite Financial Guru Is Offering Accurate Advice?

Do You Know if YOUR Favorite Financial Guru Is Offering Accurate Advice?

Just about anyone who knows me by any measure would wholeheartedly agree that I am a huge proponent of educating oneself, especially when it comes to planning your retirement income. In fact, that is my passion! But there’s a caveat: I am extremely cautious – and you should be, too – about determining the FACTUAL basis of the information you act upon.


Realize I did not say the source of the information, but rather the factual basis, because there is a huge difference. In the world of personal financial planning, unfortunately and sadly, most of what you read and/or listen to may indeed be nonfactual. Wait a minute! Am I saying that financial advisors, personal finance books, websites, TV programs, and radio gurus do not provide factual information? Yes, that’s exactly what I am saying – although, of course, it’s not all of them. What makes it even worse is that some of those sources aren’t even aware that they are making bogus claims – now that’s scary! I know this because, day in and day out, I disprove these bogus claims to clients and prospective clients. That’s actually what motivated my book, 5 Mistakes Your Financial Advisor Is Making. How often have you heard stories about credible sources disseminating totally bogus and inaccurate information? You may have experienced many instances of this in your own life.

Last Tuesday, October 26th, Kathy Kristof wrote a column on the CBS MoneyWatch website titled “5 Tax Moves You Must Make Now,” in which she wrote in support of smart investors saving more in their 401(k) plans now:

"...That’s partly thanks to a tax break that allows contributions to come out of pay before income taxes are computed, so each $100 in savings only costs you about $75, after you take into account the $25 in federal income tax savings. (This assumes a 25% federal bracket, which applies to singles with up to about $83,000 in taxable income and married couples with up to $138,000 in income. Higher income filers get a bigger break."

Granted, this is a hugely credible website – I mean we’re talking CBS Money Watch here – and Kathy is esteemed in many respects. Her published bio reads, “Kathy Kristof is a syndicated personal finance columnist, speaker and author of three books, including the recently updated Investing 101 (Bloomberg, 2008).” She sure sounds like someone who knows what she’s talking about, right? BUT – and this is a huge BUT – the writer’s above statement about 401K contributions is NOT so factual. It may sound eloquent, but it is NOT factual.

Dear reader, let me make this crystal clear. What I just said is NOT my opinion on that statement. The big kahuna/syndicated columnist/speaker/author has made a nonfactual statement. Scary isn’t it? We all have the right to free speech, but wouldn’t you agree that when someone is in a position of offering – or purports to offer – advice for others to act on (and we’re talking serious retirement advice), they have a duty to be 100 percent factual?

It’s no secret that the overwhelming majority of Americans enter retirement financially perplexed, after years of hard work. Why should that come as a surprise? Because if you follow nonfactual information, no matter how good the intention of the information provider, you can expect only one result: CONFUSION. I could write at great length on this topic because, as I indicated earlier, this issue gets me very fired up. But here are the bare FACTS on the author’s above statement:

1. According to the law that regulates ALL 401(k)s in this nation (and the very one the column is referencing), you get to make pretax contributions and defer (in other words, postpone) taxes on the growth, insofar as you abide by certain rules.
2. Once you draw out those funds, you must pay all the taxes you have been postponing (the ones still unpaid) – please read the FACT that follows slowly – at the tax rates in effect whenever you make those withdrawals.
3. So on that $100 savings Kathy refers to, you are effectively choosing not to pay the $25 tax today because you are betting that when you withdraw this money later, the tax rates – over which you have absolutely no control – will be lower, and you’ll therefore end up paying less than $25.

So let’s make this plain and simple. Deferring the $25 tax IS NOT a savings – it’s merely a postponement. If you have to pay it later, you would not consider that a savings, would you? Yet you can see how, as an investor, you might be inclined to believe the accuracy of that statement and therefore act on it – but, in fact, the complete opposite is true.

One final thought. Now that you know the FACT around this specific issue, do you think postponing paying your taxes at this point in America’s fiscal history, when tax rates have nowhere to go but up, is really a smart move? Then again, if you look closely, the column’s title simply says “Tax Moves,” so maybe it’s not necessarily intended to discuss “smart moves.” Armed with factual knowledge, it sure seems that way.
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Contact Laser Financial Group today to schedule your complimentary session to get the FACTS around planning your retirement income. Call us at 301.949.4449 or visit us on the web.

How Important Are Your Financial Advisor's Certifications – the Alphabet Soup After Their Name?

How Important Are Your Financial Advisor's Certifications – the Alphabet Soup After Their Name?

Does a financial professional with a certification know more or have better strategies than one without a certification? By certifications, I mean the ABCs you often see after a professional’s name when it’s written. In personal finance, for example, you may see things like CFP (Certified Financial Planner), CRPC (Chartered Retirement Planning Counselor), CLU (Chartered Life Underwriter), and a slew of others.

But how many investors really understand the nature of these certifications? For instance, how many understand that by law a financial professional CANNOT offer them any financial products – or even advice – simply because they have a certification. That’s right – they cannot! Instead, the law requires that they have the appropriate jurisdictional license. This means, for instance, that a CFP or CRPC cannot offer folks, say, mutual funds, annuities, or individual stocks. You see, it’s the specific license that allows a professional to offer financial products. On the other hand, this also means that someone could have the legally required license to offer those very same products without having any certification.

So in effect, one doesn’t need a license to obtain a certification – and vice versa. Insofar as I know, in my specific field, you, dear reader, could go out and get certified right now, if you wanted to, by taking the course and associated exam – but it would be illegal for you to practice without a license. Interesting, huh?

Does that mean we can safely say that these certifications are luxuries, and not basic requirements? Exactly! In the interest of full disclosure, though, I must let you know that I have a few certifications of my own. While I personally believe that a certification may indicate a professional’s commitment to excellence and a keen interest in their profession, I must also point out that no certification, in of itself, should be the sole basis on which you – or any investor – should choose a financial advisor.

In fact, it might be wiser for investors to base their choices and/or decisions squarely on the actual meat of the proposal/plan, provided that the professional offering it is legally licensed to do so. When it comes down to the wire, what is most important? Those certifications that are not required by law and, let’s face it, do not literally benefit you as an investor? OR an honest, straightforward, thoughtful, respectful professional who actually cares about the wellbeing and success of your financial goals and shows you a realistic, workable, step-by-step plan?

Where Did the Certifications Originate?

These certifications are created by private organizations that exist to turn a profit, just like all businesses. For that to happen, though, they’ll have to solicit interested professionals, right? But how do you get those professionals to pay the fees for the required courses – and keep paying renewal and membership fees – without indicating that there’s some value in differentiating themselves from those who do not have the certifications? And what better way of achieving all of this than by encouraging the consuming public to think incredibly highly of these folks? So one can say it’s a win-win for the professional and the organizations offering the certifications. I must remind you, again, that I have couple of certifications myself.

Let me conclude by reechoing the point I made earlier: Do not do business with any financial professional – including myself – simply because of a certification he/she holds. Do it based on their track record and the practicality of the solutions they offer, because trust me – you won’t remember the certifications if your nest egg isn’t right there with you.
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To schedule your complimentary session with a skilled financial professional who has your best financial interests at heart, call Laser Financial Group at 301.949.4449 or visit us on the Web.

Is Gold a Smart Retirement Investment?

Is Gold a Smart Retirement Investment?


As one might expect, I frequently hear random financial questions from folks who “just want to know” what I think. Lately a very popular question involves wanting to get “my take” on whether they should invest in some of those shiny yellowish bars rather than focusing on the green bucks. Those of you who have been reading my posts for a while may remember that I discussed gold on March 29 of this year. I strongly recommend you read/reread that post for some further perspectives, because today’s discussion will spotlight an entirely different aspect of that conversation.

As I always say, the only smart thing to do in terms of your retirement strategy is to consider the facts and the facts only. Where am I going with this? I want to examine some events on this subject that have transpired during our lifetime.

You know how most financial professionals – and even amateur investors – agree that it is always a good idea to have a long-range perspective in retirement planning? To borrow one of my sixth-grade daughter’s favorite phrases, in this specific situation, I totally buy that. I researched the performance of gold vs. the S&P 500 Index over 30 years, in relation to inflation. For those not quite familiar with the term, inflation is the change in the prices of items. So in this instance, it is a measure of how much the price of items increased over the period we are considering. This factor will help us gauge the worthiness of these two investment candidates. Wouldn’t you agree that 30 years is a fairly good and realistic measure?

What do the numbers show for an investment of $100,000 on December 31, 1979 through December 31, 2009?

First, over the last 30 years, inflation averaged about 3 percent a year, which is to say that what you could have purchased in 1979 with $100,000 would require $242,726 to obtain in December of 2009. So in terms of making a financially savvy decision, we’d need that initial 1979 investment of $100,000 to be worth at least $242, 726 by December 2009. Now, I have yet to meet anyone in their right mind who would settle for an investment that would NOT improve their financial situation. Would you purchase an investment if you knew it would not increase your wealth? Of course not! People invest, expecting those investments to grow at a healthy rate.

Second, over those same 30 years, gold has averaged 1.05 percent annual growth, meaning that a $100,000 investment in gold in 1979 would have been worth $137,000 at the end of 2009. Specifically, the price of an ounce of gold was $850 in 1979 and increased to $1,150 as of the end of 2009 (and $1,360, as of last Friday). Therefore, if you had invested in gold over the past 30 years, your investment would not have kept up with inflation. You would have lagged by about 1.95 percent annually – and at the end of the 30 years, would have been short by about $105,726.

Third, if you had placed the same $100,000 in the S&P 500 Index over those exact same 30 years – December 1979 through December 2009 – you’d have seen a yield of $1,155,825. Yes – more than a million bucks! The index was 107.94 in December of 1979 and closed at 1,115.10 on December 31, 2009. That annual growth rate was more than 5 percentage points better than inflation, which means you would actually have gotten wealthier. Sounds more like what most investors are after, right?

Many of you may think I am an advocate against the stock market, but that’s not quite accurate. Actually, I quite like the stock market – but only when it’s up. But as we all know, that is not reality, so I use a methodology that allows my clients to enjoy the appreciation of the market without enduring losses in the negative years. So they don’t lose anything when the market plunges.

Now Let’s Put Things Into Perspective

Notice that we used the same 30-year period for both investments. We did not choose good years for one and bad years for the other. And over those 30 years, both the US and world economies experienced some really positive situations, as well as terribly negative ones, too. Both gold and the S&P 500 were on the very same playing field.

One investment truism that works 100 percent of the time: You can make money only when you buy low and sell high. So make sure that the price of the gold (or whatever investment product you decide to buy) will be higher when you are ready to sell it. Otherwise, you’ll be in very hot water. Also make sure that your investment product will allow you access to the cash you need when you need it – I’m talking about liquidity and cash flow here, because no one should find themselves at retirement in the position of being asset rich but cash poor.

Whose Advice Should You Follow?

Do you need to purchase something just because you’re hearing a lot about it on the radio, read about it online, in newspapers and magazines, or saw a slew of personality newscasters touting it in TV ads? Maybe, but maybe not. As always, I am not going to tell you what to do because I don’t know your specific situation. But please get this. You need to know where you are headed financially with crystal clarity! The only possible means by which you can make that happen is with a real plan that is crafted for you after a specific discussion with a real, down-to-earth, honest professional who knows what he/she is talking about. The alternative is to be in a state of confusion, vulnerability, and panic that makes you an easy target to be blown in whichever direction the financial press wind takes you.
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Call my office today at 301.949.4449 or contact us electronically here to request a personal meeting with me and get your questions answered.

Can You Live Comfortably in Retirement on 80 Percent of What You Earn Now?

Can You Live Comfortably in Retirement on 80 Percent of What You Earn Now?

I don’t know who determined this, why it is so, or how it even came to be, but there appears to be a widespread agreement of sorts that in retirement, folks need to replace somewhere between 70 and 75 percent of their pre-retirement incomes in order to maintain the same standard of living. I’ve seen 401(k) brochures and even some so-called retirement advice books that use this – in my opinion – completely crazy idea.

According to the 2008 Replacement Ratio Study, conducted by Aon Consulting and Georgia State University, the “new and latest” replacement income ratio is between 81 and 88 percent. It’s pretty much saying that going forward, you should use this range for your planning.

But Should You Even Bother?

Sure, there’s some value in these kinds of studies/reports – otherwise, they wouldn’t be conducted and published, right? However, I happen to be one of those guys who wouldn’t waste valuable time and effort to consider theories like this. And here’s my reasoning:

Is it that easy to plan for replacement income percentage? As in, just take the widely agreed upon number and follow it to be okay? How many REAL-LIFE retirees can attest to the validity of any of these theories? I have been helping REAL folks with their retirements for a number of years now. And for some reason, they seem to need to replace much, much higher percentages of their pre-retirement incomes – we’re talking somewhere in the neighborhood of 100 percent to even more than that. Sure, there are some who need much less, but I haven’t seen very many in that category. But I’m sure they are coming soon – in theory.

Even if you’re not yet retired, you probably at least know a couple of retired folks, so I encourage you to perform a quick real-life study of your own, just like the ones we perform here at CSU (Common Sense University) on an almost daily basis. Just ask a retiree and listen closely to their response – it’s that simple! And by the way, CSU is the school from which every Laser Financial Group strategist must graduate.

In Real Life…

Every day, I meet with folks just like you who tell me they would like to maintain at least their pre-retirement standard of living. And as you’d expect, pretty much everyone would like to kick it up a notch and enjoy an even higher standard of living – if they can afford to. I can relate to that!

Just the other day, I met with a client who currently earns about $52,000 a year and is looking to retire in the next couple of years. He desires to travel and see the world as much as he can, after working all his life. Should I have told him that based on the most updated Replacement Ratio numbers, he should expect to do just fine and maintain his standard of living with an income of about $42,000 per year (which is 81 percent, as the study recommends), and send him on his way? And remember, this is a much higher percentage than all the previous ratios. But seriously, does this make any sense whatsoever to you?

Following the Common-Sense Approach, we priced out what he does today and what he intends to do during retirement, using realistic estimates, and came up with a pretty good number. In his case, it was pretty clear to him, with my guidance, that the only real change will be that he will no longer be working at his job. His rent, gasoline costs, grocery bill, phone and cable bills, etc. will be EXACTLY the same. He will not automatically receive a 20 percent break from all those service providers, simply because he will be retired. That would be nice, but for now it’s merely a wish.

Sure, there are discounts on things like movie tickets and certain restaurants like IHOP, but how much do those really add up to? Also, recall that this gentleman intends to travel, as most folks do, but the last time we checked, we did not find any 20 percent discounts on travel prices for retirees. You may be beginning to get my drift here. It does not have to be that complex – just look at real life!

There seems to be this dilemma where on the one hand, folks are hearing that one size does not fit all. Yet on the other hand, the very same people are being told to plan their lives around some magic number that has absolutely nothing to do with their individual lives. I’m sure there are folks out there somewhere for whom these kinds of theories work perfectly – I just haven’t met any yet.

Here’s the bottom line. You can always make a good financial decision with lots of common sense. The great news is that you have it, so please use it!
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For your complimentary consultation wtih a Common Sense U grad from Laser Financial Group, please call us today at 301.949.4449 or visit us on the Web. We'll help you make real, practical plans so that you can eliminate the guesswork and count on a comfortable retirement.

Why You Should STOP Planning For Retirement Today!

Why You Should STOP Planning For Retirement Today!

Let me begin by explaining my definition of “planning for retirement” as making contributions into any sort of plan for the sole purpose of accumulating savings. You may be wondering what I mean by that. I understand, because isn’t this action precisely what almost everybody seems to be doing? Once again, I am here to tell you that this is the entirely wrong approach. Yep – I just said the wrong approach!

Let’s do one of my favorite things together right now – think about it for just a moment. Should you (or anyone serious about their financial future) be focusing on how large the balance of your nest egg is, or instead on how much of that balance actually belongs to you? You know, the portion of that nest egg that you’ll really get to spend when the time comes and/or how much your heirs will actually end up receiving when it’s all said and done? The answer is pretty obvious.

It is imperative that you separate yourself from the crowd that simply signs up for a retirement plan, whether at work, that they saw on TV, or that was recommended by a trusted friend or a really smart and cool financial guru, because any plan that focuses solely on accumulation (planning for retirement) absolutely will not cut it when you need it most – and believe me, that time will come sooner than later.

What Should You Be Planning For?

Having spent more than a decade helping real-life retirees successfully plan for their golden years, I can confidently tell you that the only correct approach I know of is to plan for “retirement INCOME.” So many investors overlook the two most crucial benchmarks that every serious, real retiree must consider – Tax Efficiency and Vulnerability to Market Risk. Accumulation programs tend not to pay much attention to these benchmarks, if any at all. Case in point: Remember what just happened to those “planning for their retirements” when the stock market tanked in 2008? Had those investors focused on income, rather than the size of their nest eggs, it would have been obvious to them that their incomes could easily be diminished or completely wiped out if the market were to crash. Yet they missed that hugely important piece of information. My point is that simple accumulation skips right over the real deal.

After all, what is the ultimate goal of every single accumulation plan? To provide what? INCOME! Folks, you must be extremely careful, because not all financial professionals are equal, and it seems to me that the real ones are very, very few.

Let’s do a quick exercise. Assume you are deciding between two programs: A, which would potentially accumulate $1 million or B, with a potential to earn $900,000. I’m guessing most people would jump to select A, with the $1 million payout. No doubt, there are tons of (clueless) financial advisors who’d do the same. Here’s the thing, though. Those balances are just “accumulation.” Now let’s make “income” the focus and see if things change.

Question 1 would be: Are these balances taxable? In our example, A is taxable, while B is tax-free. If we assume just a 25 percent tax, investment A will net $750,000, versus B’s $900,000. Are you beginning to see how income planning makes so much difference? And why so many folks are working so hard, yet end up struggling financially in their retirement?

Question 2 has to do with vulnerability to market risk. Let’s say Investment A is vulnerable to market risk, so it could experiences catastrophic losses at any time – you may even have your own story to tell in this regard. Investment B, on the other hand, will not lose anything when the market dips. Now who wants the vulnerable $1 million (reduced to $750,000 after taxes) versus income-tax free Investment B’s $900,000 that will NOT be affected by any market risk? It’s a no brainer, right? But you’ve got to realize how we got here.

When Was the Last Time You (and Your Advisor) Discussed Income – REALLY?

Has spendable income ever even come up in your discussions? Don’t you think it’s time? Please do yourself a big favor and avoid signing up for any plan – regardless of who tells you to do so – if you do not know how much income it provides for AND for how long you can/will be able to access it. By income, I mean what you actually get to spend, not Uncle Sam’s portion. For goodness’ sake, isn’t that the reason you are saving in the first place? There seem to be lots of retirement planners, but the great majority are really just helping folks plan for Uncle Sam’s retirement. It will definitely serve you well to speak with an income planner and save yourself from potential shock down the road.
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For your complimentary consultation about planning for YOUR retirement income, please call Laser Financial Group today at 301.949.4449 or visit us on the Web.

What Ever Happened to the Good Old Universal Value?

What Ever Happened to the Good Old Universal Value?

HONESTY is undoubtedly one of the very few undisputed universal virtues. Every sane adult raises their children to honor, respect, and appreciate this vitally important virtue. I have yet to meet anyone who wasn’t strongly admonished as a child, by the adults who influenced them, to be honest, no matter what. Who didn’t occasionally get in trouble for being dishonest as part of their growing up process?

Then we grow up to become adults in our own rights and assume positions of power and influence. Regardless of what you do, you must realize that you are in a position of influence because your actions and interactions affect others around you. Our various positions require and assume that we haven’t abandoned our call to be honest. In fact, I would argue that even if we didn’t sign a contract specifying it, it is assumed, required, and demanded that we will be honest.

Think about it. How often do you rush to do business with someone you believe to be dishonest? You simply don’t. People just wouldn’t patronize a lawyer, doctor, financial planner, teacher, plumber, mechanic, politician, pastor, or you name it that they believe to be dishonest. Likewise, professionals in these areas promote themselves by telling consumers they are better than their competitors because these professionals have the consumer’s best interest at heart. And isn’t that just a code phrase for honesty?

Okay, I did not just fall to Earth from the skies above. I am aware and agree that it would be naïve to believe that 100 percent of folks are honest 100 percent of the time. But lately, the repeated incidences of what I’ll term gross systemic dishonesty from certain quarters has caused me to wonder what happened to that virtue we were all raised to cherish – HONESTY!

According to a recent report, federal investigators went undercover and collected audio and video evidence that some school counselors have been blatantly lying to would-be students about things like how long it should take them to complete a program and potential starting salaries after graduation. They’ve also been teaching the prospective students how to literally lie on their federal student financial aid forms. And these are school counselors, the supposed good guys!

And what about Bernie Madoff, who lied with a straight face for years, while ripping off people’s life’s savings? Or the campaigning politicians who tell lies left and right with absolute impunity, and then claim they simply “misspoke” (whatever that means) only after being caught?

You may have heard about the bizarre cases of some city officials in the California towns of Bell and Vernon. How can someone running a small town, where the average resident earns only $25,000 per year, pay themselves a yearly salary that is more than double that of President Obama’s?

So Now What?

It is my humble opinion that there will always be a few immoral jerks who believe it is much easier and somehow “smarter” to be dishonest, push the envelope, and get away with as much as they can. No question about that. I also happen to believe that no amount of monitoring, coaching, legislation, or rules can ever dissuade those who want to be dishonest. For goodness’ sake, Bernie Madoff was the Chairman of the Board of the very organization that regulates financial professionals to ensure they are clean – the National Association of Securities Dealers, now called the Financial Industry Regulatory Authority – while running one of the biggest ponzi schemes of our times. How do you make sense or explain that, except to understand that there always will be dishonest people, even in positions of power?

BUT here’s the good news! There are also folks who understand that the only ones who will be left standing tall at the end of the day are those who CHOOSE to be honest every day – no matter what! I always tell people that we don’t train or encourage the staff at Laser Financial Group to be honest – we just hire and associate with honest people!

Think You Have a Legal Right to Social Security Benefits? Think Again!

Think You Have a Legal Right to Social Security Benefits? Think Again!


Whenever I meet with prospective clients regarding their retirement income planning – and our other strategists have similar experiences – one of the first steps is identifying their sources of anticipated future income. To a person, virtually everyone identifies Social Security as their first source. And usually their perception is something along the lines of: “The system OWES me that income; they MUST pay it to me. It’s my LEGAL RIGHT!”

Well, I don’t know how to break this to you, but I’ll do my best to explain it in simple terms. If you think your past payments of Social Security taxes legally entitles you to benefits, you're dead wrong! Yes, by that, I mean: the fact that this money is regularly withdrawn from your paycheck does not give you a right to retirement benefits.

“WHAT ARE YOU TALKING ABOUT???” you’re likely wondering right now. “Who says so? Of course I’m entitled to that money – it’s MY money!”

You regular readers probably know by now that I don’t just say stuff without backing it up with FACTS. So here are the facts.

The plain and simple answer is that the U.S. Supreme Court established this in a 1960 case – FLEMMING v. NESTOR, 363 U.S. 603. In that case, Mr. Nestor argued through his attorneys, among other claims, that his promised Social Security benefits were a contract, and that Congress could not legally renege on that contract. You may be thinking and feeling similarly, right? I mean, those FICA taxes fly out of your paycheck without any mercy. However, the shocking truth is that in its ruling, the U.S. Supreme Court rejected this argument and established the principle that entitlement to Social Security benefits IS NOT a contractual right.

Interestingly enough, of all the places you can go to research this subject, the Social Security Administration has perhaps the best summary and comments on this case. Read a couple key word-for-word quotes below:

“Like all federal entitlement programs, Congress can change the rules regarding eligibility – and it has done so many times over the years. The rules can be made more generous, or they can be made more restrictive. Benefits which are granted at one time can be withdrawn…”

Read the next sentence, also from the Administration very, very carefully.

“There has been a temptation throughout the program's history for some people to suppose that their FICA payroll taxes entitle them to a benefit in a legal, contractual sense.”

I did not major in English, and neither am I a lawyer, but from a layman’s perspective, that statement is pretty straightforward, isn’t it? Look, you do not have a legal right to Social Security benefits, period! ZIPO legal right.

Just for an an added layer of confirmation, here’s a Congressional Research Service report that was prepared for members of congress by Kathleen S. Swendiman and Thomas J. Nicola, both legislative attorneys. The summary of their report says that the Supreme Court has made clear in court decisions subsequent to Flemming v. Nestor that the payment of Social Security taxes conveys no contractual rights to Social Security benefits.

This is an important thing you must understand as you plan for your retirement. Strangely enough, I am not sure how many so-called financial professionals even know and understand that Social Security is not legally guaranteed, regardless of how much you’ve paid into it.
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For a no-obligation, complimentary consultation to examine your anticipated retirement income, call Laser Financial Group at 301.949.4449 or visit us on the Web.

Should We Take Out Life Insurance Policies on Our Kids?

Should We Take Out Life Insurance Policies on Our Kids?

Okay, this is going to be one of those discussions where I ask you to completely ignore your emotions for a moment, while I present the two sides to this argument. As the father of a fashion-crazed sixth-grade daughter (please wish me luck!) and one who would have an expanded family soon (your prayers, please!), you can be sure that I have my own opinions, but I am taking my own advice here and leaving my emotions OUT of this conversation.

Absolutely Not!!

This school of thought argues that to buy coverage on children amounts to parents/guardians trying to profit upon the tragic and unlikely demise of their children. And, since these children don’t provide any income toward the upkeep of their families, there is no financial loss to replace, should the unthinkable happen. Besides, even the thought that you believe your kid might die is simply preposterous. What kind of parent would you be if you let something happen to your child?!

Absolutely Yes!!

These folks, on the other hand, argue that, our kids do die. And since we don’t know “how” (not “when”) that will happen, it is prudent to insure their lives. There are numerous stories of families who have lost children to horrible illnesses, only after racking up huge financial obligations, some resulting in home foreclosures and myriad other financial troubles that could have been assuaged – at least to some extent – by a life insurance check.

I remember, years ago, being a branch manager at a top broker-dealer/insurance agency and having to write a letter confirming that a family would be receiving a death benefit check for the passing of their child in a horrible accident before the funeral home would feel comfortable “taking care” of their deceased child. I also remember another instance where the child of one of my colleagues was diagnosed with a deadly cancer and eventually passed away. The family used up all of their financial resources to care for their gravely sick child, even missing work without pay. After all was said and done, the death benefit check they received came in very handy and saved them from what could have become a spiraling financial nightmare – following the already incredibly tragic loss. Please note that I am simply sharing these real-life stories by way of information – I am NOT saying I support those who make this argument.

Some also argue that maximum-funded insurance policies are a great way to build cash values that can later be accessed to fund a child’s college education. In this case, the primary goal of max-funding is cash accumulation; the minimum death benefit is an incidental extra.

I told you earlier that this was going to be a very charged discussion. But as I always say, if you have kept the emotions at bay long enough to gather the facts, you can then make the best decisions for your family.
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Schedule your complimentary consultation with an expert at Laser Financial Group today! Call us at 301.949.4449 or visit us on the Web.

What REALLY Happens to the Dollars You Invest?

What REALLY Happens to the Dollars You Invest?

When most Americans invest money in their retirement plans, they usually go the traditional route, whereby if the stock market does well, they could make unlimited gains. On the other hand, when things go south, the losses also are unlimited. Millions are still trying to recover from this reality as you read this. The second traditional option is to purchase a product that pays a fixed amount of interest, like a CD from a bank, for instance.

Then there is a little-known approach that links investments to a stock market index and earns interest based on the market’s performance – via that index. Since the money is not actually invested in the market, however, when things go bad, investors don’t lose anything. This option has minimum and maximum cap rates, but it keeps market risk completely off the radar.

The thing most people don’t really understand – and, for the most part, haven’t even considered – is whether, when they make gains or losses as investors, the investment companies who carry their savings do the same.  Say you buy a mutual fund, a CD, or an annuity and your money goes to “this place” called the stock market or the bank’s vault, do you gain when the market does well and the investment company/bank gains, and do poorly when the investment company/bank loses?

It would make sense to believe it works this way, but that’s not exactly what happens. Will Rogers once said, “The problem in America isn’t so much what people don’t know; the problem is what people think they know that just ain’t so.”

You see, when you put your money in a bank or any other investment company, they use that money to undertake business ventures they believe will enable them to make money. And I’m talking serious cash, w-a-a-a-y more than you have probably ever imagined.  Now, since they have your money, there has to be a mechanism that gauges how much they have to return to you at any point in time, right? This is precisely where direct stock market investments, linking strategies, fixed interest, and a multitude of other strategies come in to play. Think of them as contracts (the key word being contracts), because in a very real sense, that’s EXACTLY what they are.

Again, these contracts are used to determine how much you have a right to claim of the investment you made. I know you are smart and starting to see the big picture, but please think about this for a moment. Do any of these companies or banks exist to lose money in an unpredictable stock market? Have you noticed that, for the most part, the SAME investment companies offer various types of investments – again, I call them contracts? 

None of our clients lost any money during the recent economic tsunami. What’s most interesting, though, is that the EXACT SAME companies (and I mean the same everything) in which our clients invested their money have many other customers whose contracts lost the better part of their life savings. Interesting, isn’t it?  The reason being is that these companies offer options, just like you’d find at a clothing store or a car dealership. So some of their investors’ money is more protected, while others have a much greater risk.

So How Come Everyone Isn’t Aware of These Choices?

I wish I had the crystal ball on this one, but I don’t. All I know for sure is that these options exist. The caveat is that not all companies carry every contract/option – just as in almost every field. May I therefore humbly suggest that you consult with a qualified, independent financial professional who knows what he/she is doing and, more importantly, is also honest to the core? Because from what I’ve seen, that’s the only way you can be sure you’ll be presented with all the choices available so that YOU can determine what will work best in YOUR circumstance.

Rather than worrying about how your investment company could be protecting your money while the majority seems to be hemorrhaging cash by the second, focus instead on making sure you are dealing with a LEGITIMATE business and that you have an ENFORCEABLE contract (notice the word contract again here). A truly independent and honest financial professional is indispensible when it comes to making sound decisions for your future.

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Call Laser Financial Group today at 301.949.4449 (or visit our Web site) to set up your confidential, complimentary appointment with an honest, independent advisor who can give you a new perspective about your investment options.