that article actually makes no sense. The math is completely wrong. His theory is that while you save x dollars in taxes you will eventually pay x+y dollars in retirement where y is the taxes on the extra money you made. While that is true, if you dont save in a tax deffered or other retirement vehicle you not only miss saving out on X dollars in taxes you still pay x+y in the end. So

tax deffered = x+y
non tax deferred = 2x+y

Qualified plans ‑‑ the ‘grand illusion’
http://www.worldchiropracticalliance.org/tcj/2006/jul/i.htm

(Note that this is not a financial website, though I don’t know much about the author of the article, but he brings up some very interesting points.)

There are several things that Ms. Yellen says to look for in a Whole Life policy/company – Direct vs. Non-direct recognition, riders, etc.

Can you recommend a few companies and products that would work well with the Bank on Yourself concept?

Thank you, sir.

At least with a traditonal whole life contract you get contractual guarantees backed up by a regulated insurance company (I’d like to see you put your net worth up against theirs) and your beneficiaries get a tax free death benefit. Dont be so quick to knock others, any 3rd grader can do that.

Sorry, mis-clicked before I finished … now where was I? Oh yeah,

Visit a fee-only Certified Financial Planner (TM) practitioner who will give you the facts on these schemes. Pay him/her an hourly rate and you will keep your wealth working for you and not a salesman. Stay realistic, stay reasonable, stay away from scams, and you will get rich slowly and retire comfortably.

As a fee-only CPA, MBA and CFP (TM) I am appalled at the effort put into this discourse by Mr. Acevedo regarding Bank On Yourself POLICIES (yes, these are insurance policies). As any informed adult is aware, whole life insurance policies are sold, and not bought, and this is simply another scheme to sell whole life insurance and enrich the salesperson.

Mr. Kindall: a “lens” is a term coined by the self-promotional “Squidoo” site Mr. Acevedo invites his prey to visit. And you are correct sir: this concept is “completely full of BS” and they are “trying to sell something.” Something that the majority of us simply do not need: a whole life insurance policy that does nothing more than siphon assets from productive, tax-saving saving and investment opportunities into the coffers and pockets of big insurance companies and their salesforce.

“If something sounds too good to be true, it probably is.” Warning signs: 1) the salesperson has no meaningful credentials other than insurance industry education (CLU, ChFC); 2) the salesperson is commission-based and not FEE-ONLY; 3) this is a once-in-a-lifetime opportunity that the mainstream financial advisor community is too uninformed and ill-educated to pick up on, but YOU, yes only YOU, can be the smart one and get into this private club with your secret password and then gain access to the protected, for-your-eyes-only special report (I’m getting ill); 4) of course let’s bring in tax saving opportunities and mis-represent conventional retirement planning as “only tax deferred.”

The facts are that two plus two actually do equal four. Mr. Acevedo is promoting a scheme that will entice you into purchasing a whole life insurance contract (and yes, Virginia, term-life is cheaper and better … look up Low Load). You will then put your capital to work by borrowing against your home (going into debt) to in effect take your equity from one pocket and put it into another. The problem is that Mr. Acevedo and his cohorts will be dipping into that other pocket to help themselves to ever-higher insurance premium payments.

Yes, you can safely make 8-10% annual returns long-term. Yes, most retirement plan investments are “only” tax deferred BUT THAT IS THE BEAUTY: tax deferral means you have use of the money and not the Federal government who will only spend it (and certainly Mr. Acevedo will not have it to buy more gas for his Porsche). There is a wonderful mathematical concept that these salesmen conveniently avoid: the TIME VALUE OF MONEY. The money that you tax defer is at work for you making far more in LONG-TERM CAPITAL GAINS (which are taxed at a maximum of 15%) than you will ever, ever pay out in taxes. Plus you get company matches, plus Roth IRA’s grow tax free forever (including in the hands of your heirs), plus …. oh I could go on for hours… I am steaming.

This is nothing more than a get rich quick scheme, and the person getting rich is Mr. Acevedo. Do yourselves a big favor and schedule a free, one hour initial consultation with a FEE-ONLY CERTIFIED FINANCIAL PLANNER:

Might I respectfully suggest in the future you take the time to read all previous posts prior to submitting a post?

The previous posts above should have been enough to clarify your confusion; however in view of your incomprehension here I go again…

Bank on Yourself(TM) is a financial strategy offered to the general public by way of our radio ads and other marketing venues.

It is ALSO offered to the Financial Planning/Insurance industry as an alternative planning system that may be incorporated into their practice.

Only HIGHLY trained and EXPERIENCED Financial Planners and Insurance agents qualify to become Bank on Yourself(TM) Certified Advisors. Most of our current advisors have more than 20 years of Professional Financial Planning experience and most possess advanced degrees such as CPF(TM), MBA, CPA, ChFC and CLU (myself being one of the rare exceptions to this fact- I only have 6 years experience in the industry).

The radio ads ARE MOST CERTAINLY NOT designed to get anyone to “become an insurance agent”. They are designed to bring to light one very simple fact being ignored by the entire Financial Planning industry, and that is: the LACK OF CAPITALIZATION is the crux to ALL financial disarray.

I would like to advise you to go to the website you were directed to in the radio ad you heard; and enter the pass code provided to you- this will allow you to download an INVALUABLE report outlining the concept (I PROMISE there will be no information advising you to become an insurance agent!).

For another detailed overview of this strategy, provided by a Infinite Banking/Bank on Yourself(TM) CLIENT you may visit the following link which is also available on my lens:

http://www.infinitebanking.info/IBC%20-%20How%20It%20Works.pdf

There are no pop-ups, sales or gimmicks- JUST PLAIN, GOOD, SIMPLE and LIFE CHANGING information.

I hope this helps your confusion.

Aren’t the radio commercials for findoutmorenow.com designed to get you to sign up to become an insurance agent? From what I’ve been able to ascertain, that must be the “catch”.

Let me start out by sharing that I am sincerely impressed by the level of discussion and the topics addressed on this blog. It is quite fun to have such a forum to share and discuss these ideas.

1) Taxes…

Mr. Miller asks :”So, how, exactly, are you not saving in tax?” – if I understood correctly by his calculation one can save up to 25% in taxes each year by setting aside money in a “tax deferred” account rather than not.

Setting aside Mr. Miller’s tax calculation (I don’t know how he arrived at that 25% figure?) I think he misread my statement. My statement was as follows:

“…you are NOT savings on taxes you are simply DEFERRING taxes”

In other words, it might appear as if you are saving taxes now, however, the fact remains that you will be taxed on this money LATER when you take distributions from this money (as a matter of fact, even if you DIE, your money and it’s growth WILL BE TAXED- and in the case of an estate tax situation the total amount may be taxed upwards of 50%- imagine that!).

As it relates to the original topic posted my contention is that the restrictions inherent in qualified tax-deferred plans far out weigh any perceived short-term tax advantages.

2) Taxes lower in retirement…

Mr. Miller states: “In retirement, you (hopefully) are no longer paying a mortgage and you also aren’t saving for retirement anymore! Those are two VERY significant portions of most people’s budget.”

Setting aside his “light-hearted jab” at my use of CAPS…lol, I once again think that he misunderstood my statement.

Income taxes are not a result of budget (or expenses), they are levied on INCOME or in the case of retirees this would be on their distributions from their qualified accounts, pensions, social security, non-qualified accounts (investments or savings) and any other forms of passive income.

The fact that your expenses would be less in retirement has nothing to do with the degree to which your income will be taxed.

My observation was that of the defeatist mentality which assumes that the older we get the less income we should strive to make.

3) Missing the audience of this blog…
I am not sure how Mr. Miller knows the exact make-up of the people reading this blog, nevertheless if it is comprised primarily of individuals as he describes then these are EXACTLY the people who could benefit the most from these observations.

His premise is, that as him the people on this blog choose to INVEST their money for retirement (rather than pay-off debt and SAVE) because “obviously a 10% “average” S&P 500 index return is higher!” than the interest they are paying on their student loans, car payments and mortgages or any money they might earn in a fixed account.

His comment alludes to a very important and MAJOR misconception regarding investing in the stock market. Despite the fact that everyone claims to know that past performance is no guarantee of future performance, conventional wisdom is insistent on highlighting the fact that the market indexes always will outpace the return of guaranteed fixed investments. And so the BUY-HOLD strategy (index investing is a buy-hold strategy) was invented thus paving the way for the creation of financial instruments (such as mutual funds) and tax-deferred programs (such as 401k’s) to be pedaled to hard working people trying to do the right thing!

In order to truly understand this fallacy one must first examine its origin. If you look at a market chart for the past 102 years you will find that the market continuously has moved to new heights, however when you look closer at the graph you will notice that the market moves in secular cycles. A secular cycle is defined as periods of long positive returns followed by periods of long flat or downward turns.

When you look at these cycles you will notice that the great majority of time the market is actually doing NOTHING- it runs flat! Whether things will work out in the long run actually MAKES NO DIFFERENCE AT ALL if you are looking to retire or have a large capital need- such as an emergency, a need for a new car, a need to buy a home, a need to pay for a child’s education etc.

To further illustrate the point had you been in a BUY-HOLD situation, such as which you are almost forced to have within a 401k (due to its lack of investment options-i.e. usually limited to mutual funds), during the period between 1966 and 1982 or the period between 2000 and 2004, there is a good chance your portfolio gains would have been negligible.

I can assure you that you would have paid a lot more in interest over those years than you would have made in the market had you utilized a BUY-HOLD/INVEST in the Index strategy.

The reason is simple, because no matter how you spin it or how “little” the interest you are paying may seem; the fact remains that the INTEREST you PAY will be a constant and an inevitable consequence should you continue to choose to be undercapitalized.

And why are most people undercapitalized during their income producing years?
1) Because they either don’t save at all (I imagine that is not the case of the people on this blog)
2) Because they invest rather than save
3) Because they tie-up their money in IRA’, 401k’s and other qualified tax-deferred programs as well as other illiquid assets such as their home (but that’s another topic all together).

In closing please remember a 10% “average” rate of return is simply that- an AVERAGE, and it has NO meaning or relevance to YOUR financial future.