Fall Festivities and Socializing- Safely.

Socializing is critical for mental health, and people who associate with others live longer. Research also concludes that isolation can often lead to loneliness, depression, and other health problems. Especially now, during COVID-19, our desire to connect with others is heightened. Before the fall season changes to winter and cold weather arrives, get out and enjoy the season- but do so safely. Here is a list of ideas to safely enjoy fall festivities until we experience brighter days ahead in a post-COVID-19 world:

Read more


The 2020 Election: Check Your Emotions and Stay Invested

November third is fast approaching, and you may be wondering how the 2020 Presidential election might impact your portfolio. Here is what we know from a historical perspective:

Read more


How to Win with Real Estate

Did you know, there’s a third side to every coin? As Robert Kiyosaki, “Rich Dad, Poor Dad” author, says—there’s heads, tails, and the edge. While the first two sides are easily identified, the skill to see the contrasting edge must be cultivated. With our finances, and real estate investments, we must also cultivate this skill.

There’s wisdom to be gleaned from each of these sides, and no analysis is truly complete without seeing the wisdom in all three. Take a moment to reflect on what it is that’s important to you and be willing to think outside the box.

Then, take responsibility and ownership of your own success—don’t leave it up to chance. The control, wisdom, and even wealth that come from this sense of ownership will be all the more rewarding to you. If you’re ready to put in the work, so am I. Let’s dive in…


Combatting Volatility

I’m sure it comes as no surprise—the stock market is a volatile place to be. And it’s likely to continue that way as long as the uncertainty of 2020 continues. If you’re frustrated by the lack of options to earn a decent return on your money, you’re not alone. Yet as a keen observer of the three-sided coin, you’ll see that you’re not limited to either stock market or no stock market.

In fact, there’s a third side—alternative investments. And the one on my mind today is real estate. If the first thing that comes to mind is buying a home or a condo, or even some big and complex deals, don’t give up on the idea just yet. There are a number of ways to participate in the real estate market, and not all of them are as intimidating.

Yet before we get into those investment types, let’s break down the benefits of real estate.


Real Estate is IDEAL

When it comes to real estate, there are 5 big ways to win. In many ways, you could even say that real estate investing is IDEAL.

INCOME: positive cash flow that you collect from rent, after expenses

DEPRECIATION: As your real estate assets depreciate, you can take a deduction to offset your income each year on taxes. Residential real estate can be depreciated for 27.5 years, and commercial for 39.

EQUITY: As you pay down the mortgage, you continue to build up equity. If you’re doing it right, rent will cover your mortgage and provide an income.

APPRECIATION: Over the long-term, real estate has 7% returns after adjusting for inflation, meaning it has outperformed bonds, Treasury bills, and even stocks.

LEVERAGE: You only need to put 20-25% down to own valuable income producing property.

When it comes to real estate, there are few investments with such consistently positive benefits. And, your rates of return don’t just come from one stream. Let’s look at how that works.


Multiplying Your Money

Let’s say you’ve found an attractive and affordable property that you’d like to purchase as a rental property. After inspection, you close on the property for $100,000. You only need a down payment, so with closing costs you invest $25,000 up front.

That means to carry the property, you only need an $80,000 mortgage. At a 30-year fixed rate of 4.5%, you’re looking at $405 a month. Furthermore, at least $1,300 of those payments are going toward the principal, annually. Which means you’re building up that much in equity per year.

Because it’s a rental property, you’re also generating an income. Let’s say the average profit of the property is $100 a month. That’s $1,200 of annual income, and due to depreciation costs you’ll likely earn this tax-free.

The final piece of the equation is the appreciation. If the property appreciates 6% a year, which is a realistic expectation, that’s another $6,000 a year. So, the rental income, equity, and appreciation combined gives you $8,500 on a $25,000 investment.


Other Ways to Win with Real Estate

1. Be a lender, not an owner

For many new investors, jumping straight into ownership can be intimidating. Fortunately, there are other ways to “get your toes wet.”

I got my own start in real estate by being a “banker.” I made private loans to other established real estate investors, in both the residential and commercial spheres. Even after all these years, I’m still collecting monthly checks from those early investors.

The trick is knowing who you’re working with and insuring that you’re investing values are aligned. And never forget to have a legal advisor draw up any contract that you negotiate. That’s how you maintain the integrity of the deal, and insure you get repaid and are protected if things don’t go as originally planned


2. Be A Limited Partner

Through this approach, you have an equity stake in the deal, as well as some tax benefits—yet you’re only held liable up to the amount you’ve invested. This works by pooling money. A syndicator will collect investments from a variety of investors, which is used to buy apartment complexes, mobile home parks, and the like. Then, the project’s business plan can be executed.

With these types of deals, there’s often a fixed minimum rate of return that you’ll receive monthly. In addition, you can partake in the profits, including a portion of some additional cash flow, and/or proceeds from the sale of the appreciated asset.


3. Turnkey Investments

Want to own properties, but not interested in being the landlord, so-to-speak? Through this approach, providers will find and fix up the properties for you, so that you can immediately rent them out. And most of these turnkey operations will provide a management team to oversee the property thereafter.

With these deals, there are three things to consider:

  • Team
  • Market
  • Property

Of the three, team is the most important. After all, these are the people who will be overseeing the performance of the property. Their management will have a direct effect on the property’s success.

While turnkey properties come with extra expenses—such as leasing and management fees—don’t underestimate the value of this service. If real estate is your “side hustle,” having someone else take calls from tenants and recommend repairs can be priceless.


Real Estate is a Contact Sport

Many people have done well with the three approaches above. In fact, even combinations of the three have benefits. Yet if you’re willing to take the leap into ownership, the payoff can be substantial.

I began my own real estate journey by reading books like Rich Dad, Poor Dad, and by joining organizations like BiggerPockets to connect with other investors and stay up-to-date. I actually met my first partner through the platform, to whom I provided a loan for an investment property.

As I became more comfortable, I took a chance after meeting with a number of turnkey providers. I purchased several rental properties—renovated single-family homes—and still own them today.

Through the years, and through my research and connections, I’ve since invested as a limited partner in apartments and mobile home parks. These plays provided passive income, but at a higher return than I would have gotten as a private lender. In syndications, it’s not unusual to earn well over 20% after factoring in equity and depreciation gains. (NOTE: Limited partnerships are often available only to accredited investors.)

And although the returns and tax benefits of real estate can be significant, significant cash is often required to get started. It’s possible to draw from your savings account…yet there is a better way.


How Life Insurance Benefits Real Estate Investors

The best place I’ve personally found to store dollars that can be used for investments, is with specially designed whole life insurance. This financial product boasts returns that are often two to three times higher than bank rates.

The real power, however, is the ability to leverage the life insurance company’s money through a guaranteed loan provision of up to 95% of your cash value. This leaves your money free to continue its compounded growth. And you get a tax-free death benefit on top of it, which means you can build generational wealth.

Taking a strategic approach allows your dollars to work in two places at the same time, and leverage someone else’s money to grow your own wealth. For more strategies on turning life insurance into your most powerful asset, check out this blog post.


Long-Term Investing Win

Overall, real estate is one of the most consistent long-term investments—with good cash flow. People will always need places to live. And with so many ways to be involved, you’re sure to find something that fits your goals and will broaden your options.

To learn more about how to incorporate real estate into your overall wealth strategy, schedule an appointment today.

And to connect with other like-minded individuals looking to gain control of their finances, join our Facebook group.





Now is the Time to Schedule Your Fall Financial Review

October is the financial planning month and a great time to meet with your financial professional to ask questions, review policy and portfolio performance, and make decisions that keep you on track with your goals. Regardless of your age, it may be a suitable time for you to schedule a financial review.

Read more


Lowering Interest Rates: Good for the Economy and the Markets?

Interest rates can positively or negatively affect the U.S. economy, the stock markets, and your investments. When the Fed changes the Federal Funds Rate (the rate at which banks can borrow money to lend to businesses or you), it creates a ripple effect. In this article we take a look at how lowering the interest rate can impact you.

Read more


What Does Wealth Mean to You?

When people think of wealth, they might think of examples in film, such as Veruca Salt from the 1971 classic Charlie & the Chocolate Factory. Little Veruca had everything she wanted in life but desired one of Willy Wonka’s geese that laid golden eggs. When Wonka refused to sell the little girl’s father one of his prized fowls, the girl broke into song about how she wanted everything… and ultimately labeled a “bad egg” and sent down the garbage shoot.

Read more


Life Insurance as Unique as You

Your life insurance needs are unique to your situation and can change over your lifetime. For some people, life insurance is to provide assets to raise a young family in the event of early death. Other people may use life insurance to cover their debt to ensure it is taken care of if they die prematurely. In business, life insurance could be a tool to transition ownership when the company sells or to insure a key employee whose death would profoundly affect the business.

Read more


Reg BI: What Is It, and Why Should You Care?

On June 30, 2020, Regulation Best Interest, or Reg BI for short, officially went into effect. But what is Reg BI, exactly? Where did it come from, and how does it impact you, the investor? Here’s what to know about the new rule under the Securities and Exchange Commission (SEC).

Read more


Hidden “Wealth Eroders”: How to Plug Financial Leaks

Retirement—maybe you’ve put a lot of thought into it, or maybe you haven’t. Yet chances are, you could be taking an even better approach, by saving more efficiently and combating wealth eroders you didn’t know existed. All it takes is a small paradigm shift. When it comes to your personal life, consider what’s most important to you—for me, that’s family. Then ask yourself, “Is the approach I’m taking to my personal finances able to fulfill my desires now and later?” 

Too many of us are stuck thinking about what will happen “later” (retirement), that we forget about what’s happening in the present. If we spin our wheels saving for the unknown, we can miss out big time. I know that I want to make as many memories with my family as I can, right now. I also know that I want to contribute in a meaningful way to my future and theirs. By learning to plug financial leaks, you can enjoy the most important things in life now and still save for the future.

If you’ve been steadily saving for retirement, that’s fantastic. 10% is not unusual, and 20% is even better. Yet many Americans are finding saving to be a difficult pursuit, and many of the reasons are elusive. Likely, you’re spending a sizable amount on taxes, interest on your mortgage, home equity lines, college loans, credit card loans, and more. And that’s on top of your monthly living expenses. If you’re also looking to make memories now, that only adds to the pressure you may be feeling.

Growing your retirement nest egg can feel like an uphill battle with all of these other costs. And you can hope to earn interest on it, yet what about the little fees and expenses that quietly eat away at your accounts? If you could identify and chip away at these hidden wealth eroders, how would that change your life? 

Could you take on less risk in your investments, or stop “chasing returns”? Would you have more certainty, and therefore more confidence? So much of the typical retirement savings advice places too much emphasis on risk, without really addressing the dangers. The phrase “more risk, more reward” has become a common battle cry of the typical advisor. 

Instead, if you learned how to identify and wipe out those eroders, you could save more money, more efficiently. And in doing so, lower your financial stress and create the most wealth.. 


The Hidden Wealth Eroders:

1. Mortgage Refinancing 

Everyone, including your mortgage company, is encouraging the general public to refinance at today’s record low interest rates. And while it’s hard to resist the allure of rock-bottom interest rates, it’s not always the ideal route. 

In reality, low rates don’t always help you lock in low payments. Additionally, you can end up paying some pretty significant fees for the “privilege” of refinancing. At a minimum, you’re looking at 1% of the total loan, if not more. And if you look at a standard amortization table, you’ll see that when you refinance, you go back to the earliest years of the loan. That means you’re paying mostly interest, rather than chipping away at the principal.  It’s not the interest rate that matters most, but the volume of interest you pay. 

Ultimately there are personal factors to consider, but don’t let the allure of a low interest rate take precedence.


2. Investment Fees

Even with “no load” mutual funds, it’s common to see management fees at about 1%-2% of your account every year. And yes, even that 1% can do some serious damage—around a 20% erosion on the value of your account over 20 or 30 years. Imagine if that was a 2% fee.

There’s no better time than the present to take a hard look at the fees you’re paying on various accounts. I know many investors who didn’t even realize how much they were losing to fees each year, and the subsequent loss of compounding interest. 

Once you’ve identified what fee you’re paying and where, ask yourself if you’re really getting more value because of those management fees and transaction fees. If they’re not adding value, there are plenty of other places to store your money that offer low fees and even better opportunities for growth. 


3. Interest on Auto Loans, Credit Cards, Student Loans, and HELOCs

As I’ve come to understand, the way you use your money is more important than where you put it. Nothing demonstrates this more than the following quote from Nelson Nash, author of Becoming Your Own Banker. He says, “You finance everything you buy…you either pay interest or pass it up.”

There are two primary ways we finance things:

  • We take on debt and pay back principal (with interest) or
  • We pay cash and avoid the interest payments.

However, there’s a lesser known third option, which allows you to recapture significant interest costs. This way, your money grows and compounds in a safe vehicle over a long period of time, and can act as collateral to borrow from a financial institution. Having your money continuously earning will allow you to grab the power of compound interest. 


4. Taxes

This is the biggest wealth eroder most of us face in our lifetimes. Imagine a single dollar, doubling every year. Believe it or not, you’d have $1,024 after ten years. Yet with a mere 10% tax rate on that money each year, you’d only see $613 in your account.

After 20 years, that account would grow to over $1 million before taxes, yet only $376,000 when you taxed it at the same, modest 10%. It’s even more sobering when you realize that you’re in a higher tax bracket, and taxes are likely to increase in light of the $26 trillion of government debt and unfunded liabilities for social programs such as Social Security and Medicare. 


5. Term Life Insurance

Though useful for protecting your family against income loss, more than 98% of these policies never pay out. They’re not a wealth building asset. Not only do years’ worth of payments vanish, you generate no returns on that money. You forgo a large death benefit when the policy lapses, and term life insurance can be prohibitively expensive to maintain later in life (when you need it most and are guaranteed to use the insurance when you pass). 

Term life is best used as a supplement to whole life insurance, for when you want maximum insurance. A properly structured whole life insurance policy has a number of benefits, including a tax-advantaged savings ability, which makes it an ideal alternative. Additionally, it’s permanent, meaning that you get what you pay for and your family is guaranteed to benefit.


Opportunity Cost

The reason these wealth eroders matter so much in the grand scheme of things, is because of opportunity cost. And there’s a significant cost for ignoring these fees—every unnecessary dollar you pay is a dollar you cannot use to make your money grow. 

Think about it like a $5 cup of coffee. It smells and tastes good when you first receive it from your friendly barista. Yet that $5 had an opportunity to do more. If you took it and saved it elsewhere at 5%, that $5 could actually be worth $21.61 in 30 years, all without lifting a finger. That’s an expensive cup of coffee at the Opportunity Cost Café. 

It seems small, but consider your much larger fees and the significance becomes clear. 


The Alternative

So how do you recapture this lost wealth AND save on opportunity costs? The first step is to address these holes that can be plugged. The second step is to look to accounts that do more for your dollars without the risk and the fees. 

Here are areas in which you can seek improvement:

Insurance Premiums

When it comes to your homeowner’s insurance and auto insurance, it’s tempting to keep your deductibles low so that you can keep costs down when making a claim. Yet consider the possibility you’ll make a claim—it certainly likely, but not something you’ll have to do often. 

Suppose you raised your annual deductible form $250 to $1000? That would substantially reduce your premiums, and you could put away the savings in a high interest vehicle or use it to reduce other debts. Then, in the event you do make a claim, you can use those savings to easily pay the deductible.  That’s why it’s so important to have an emergency and opportunity fund available so you don’t have to go into unnecessary debt to fund unexpected expenses. 

Many neglect to review their policies frequently, and end up overpaying in premiums. By doing a yearly review, you can identify insurance you don’t use often and raise the deductibles. 


Roth Conversion and Cash Value Life Insurance

If you have recently lost your job, or expect to have a substantial reduction in income this year, thus finding yourself in a lower tax bracket, now might be the ideal time to do a Roth Conversion. You might also consider it if you expect the government to raise taxes substantially in the future (a distinct possibility). 

By rolling over your traditional tax-deferred IRA or SEP into a Roth IRA, you can pay tax now on your lower tax rate. As a result, you won’t have to pay taxes on the distribution in retirement. Note: Roth conversions do not have an income limit, yet you must be mindful that the conversion could put you in a higher tax bracket.  

Another reason this might make sense is that Roth IRAs are not subject to required minimum distributions after age 72, unlike a traditional IRA. So if you’re fortunate enough not to need the distributions at that point in time, you’re free to let it grow. This can even be left to your heirs. 

This is where cash value life insurance comes in. This method is a tremendous way to store safe dollars, and comes with significant tax benefits. Similar to a Roth IRA, money is contributed on an after-tax basis, and grows tax-deferred. Unlike Roth IRAs, there is no income limit for utilizing a cash value whole life policy, and your contributions can be substantial. There are also no government restrictions on when and how you’re able to use your cash value, since it is a private account with the insurance company. 

Even better, you can continue to grow your funds while utilizing the dollars as collateral through a policy loan. This is a tax-free way to leverage your money without withdrawals.  This allows you to your other people’s money while yours gets to compound uninterrupted.  The funds can be used to fund college or automobiles and provide capital to invest in options that require lump sums. 

And lastly, the death benefit, which is many times the cash value, is passed tax-free to your beneficiaries. This allows you to leverage a large asset with smaller dollars. For more information on how whole life insurance works, watch my video


Make the Most of Your Dollars

These are uncertain times, and it’s easy to start heading down a dark path in our own thoughts. The economy looks different, our daily lives look different, and our businesses look different—and it’s uncertain how things will continue to change in the next year. However, the key to navigating times like these, is to focus on things that offer certainty, so that we can continue to pave a path of progress and prosperity. 

Success lies not in what happens to you, but in what you can control. No philosophy addresses this better than Stoicism, the center of which advocates for individuals creating a strong internal locus of control. If we unpack that, it boils down to a belief that individuals are responsible for their own success or failure in this world. That life puts forth a challenge, and then asks, “What will you do about it?”

Ultimately, the most financially satisfied people in our nation are the ones who know how to make their dollars work for them—to seize control and responsibility, no matter their external circumstances. This, more than anything else, is the secret to financial independence. You don’t need to build mountains, you need only optimize what you have. If you, or someone close to you, suspects your money is not working as hard as it could, don’t hesitate to call. 

To discuss strategies that will help you keep more of your wealth, schedule an appointment here. 

And if you’re looking for a community of like-minded individuals to connect with, join my private Facebook group: Unconventional Financial Wisdom.


The CARES Act and RMD: Relief for Investors

YOu The CARES Act (The Coronavirus Aid, Relief, and Economic Security Act) contains the legislation for Required Minimum Distributions (RMD) for those over age 70 ½ and have already started RMD. Under the CARES Act, no RMD is required for individuals or beneficiaries of inherited retirement accounts in 2020 due to COVID-19. How will this help investors?

Read more