- Staff
- #61
what was really interesting was when I showed her what her current COI was.....they were close to all prem. paid was all COI....
Dave Ramsey
- Thread starter 1manshow
- Start date
- 25,029
I assume they are now former State Farm clients.
- Staff
- #63
- 25,029
Anytime I come across Farmers, Allstate or StateFarm, I just ask them to pull out their last annual report. Hang them with their own rope.
I particularly like Allstate. Those guys loved to write small base ULs and larger term riders. I can convert the term into Lincoln Benefit with a 1035. Did one last year that was about to force surrender, I had quoted him out at tbl 8, if we were lucky. Then I found the term rider. Easy peasy.
- 4,132
Of all you guys pushing equities, how many of you are licensed?
It pays for an individual to have a variety of investments, with risk spread and of different maturity or timing.
You really can't compare cv life and equities as both operate in different risk worlds. It really isn't a matter of which one is better than the other, it's which fits the risk tolerances of the individual you're in front of?
I'm not too worried about coverting any of you to think differently, most can't. I don't think any of us are going to disagree with what a client wants to do.
It pays for an individual to have a variety of investments, with risk spread and of different maturity or timing.
You really can't compare cv life and equities as both operate in different risk worlds. It really isn't a matter of which one is better than the other, it's which fits the risk tolerances of the individual you're in front of?
I'm not too worried about coverting any of you to think differently, most can't. I don't think any of us are going to disagree with what a client wants to do.
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- 15,041
What is even funnier, the numbers are wrong. I didn't notice it until later, the calculator was adjusting for inflation. I didn't realize it at the time. Once I did, I didn't say anything to see if anyone noticed. Obviously no one had. We just trust whatever numbers someone gives us. They may be accurate, but we may be mislead about what the numbers actually measured. This is something of which the mutual fund industry is extremely guilty. That is why I asked crons79 to source his information.
My guess is that the numbers I gave would be about 3%-4% higher if unadjusted for inflation. Still not setting the world on fire. What clued me in to this is when a former mutual fund wholesaler told me. He gave some time period and said that the average return was 11% or so, but then he said that if you accounted for periodic investments over that period, the return dropped to around 6%-7%.
So you're right, people are losing sleep to get 3% return above inflation. They could get very close and not lose sleep. Also, none of this accounts for human behavior. The example I used assumed an extremely disciplined investor who never missed a contribution and never overcontributed. Only a fool would believe that will happen. The investor will get scared and stop investing, get excited and over invest, change jobs, stop contributions to make a purchase, etc.
But, I was able to find another calculator that doesn't adjust for inflation, but it also doesn't give a return percentage that reflects the effects of periodic investments. It does give a final value as well.
From, 6/1/1968 to 2/28/2011, $50 a month turns into $403,491.04.
Index Calculator for IFA Index Portfolios and IFA
What is really interesting is to look at what the average investor does.
Step 1: Active Investors - Index Funds Advisors, Inc.
The average investor is losing sleep to get 3.17% over twenty years, BEFORE inflation.
- 11,295
I completely agree with you. (And yes, I was licensed with a 7 & 66.)
Everything has a "risk factor" to consider.
When I was selling securities, I would ask a client "on a scale of 1 to 10, where 1 was CDs, 5 was the S&P and 10 was penny stocks... where would you feel the most comfortable?"
Most people would gravitate towards the 5. I then showed them "how smart I was" by showing them risks of 3 and 4 that got returns close to the "5".
However, there is always a "risk premium" that needs to be assumed.
You see, if you know you can get 5% at the bank (which isn't happening today, but it's just hypothetical), and I show you a fund that has the capability of returning an 8% return... then I am trying to improve your returns by about 3%.
How much additional risk are you taking on to get that extra 3%? Should you be taking on that risk? (That's a discussion about a person's current planning.)
When I was at the credit union, we were "all about the numbers". If someone had $10,000 of assets, they were considered a "qualified referral". (What a joke!)
I would hope now, that those who are offering securities, are being more conservative in WHO they offer their securities to, and the level of SAVINGS they have... that they won't be investing in the market.
My goal today is to help people build up their savings moat so that they CAN take on additional risks and returns... because most people are investing before they save.
As John Savage has said "The only person who invests before they save is a DUMB person."
So, I made the conscious decision to drop my licenses because it can pay me MORE to help people SAVE and protect their families. Yes, they save in banking accounts as well as in cash value life insurance products. There is a virtually unlimited market. There is no reason to "track the market every day". And I can help people build a better financial foundation by saving, than by pushing equity investments.
- 300
S&P 500® with Monthly Dividends
Since inception (6/1/1968-2/1/2011)
@$50 Per Month
Average annual total return: 10.47%
Account Balance at the end of the term: $417,593
I use American Funds Hypothetical Tools. You have to be a registered rep to use it on their website.
Both of my agencies were based in the Nashville area (Dave's backyard) and so I just assumed I heard this type of thing a lot due to that. I guess I was wrong.
When people would come in my office and say "Dave says buy Term" I would come back with "Absolutely and for most people I won't argue...assuming you follow the rest of his advice to the letter".
Dave doesnt say "Buy Term" and shut up. He says: (not in the exact order) 1. Develop a rainy day fund. 2. Get our of debt. 3. Buy a term policy. 4. Invest.
The problem is that most people that came in my office were not following the plan. By bringing this up it at least allowed me to have a conversation without them having a closed mind. At the same time if someone came in and was following his advice to the letter and Term was right for them...knowing his plan gave me credibility.
When people would come in my office and say "Dave says buy Term" I would come back with "Absolutely and for most people I won't argue...assuming you follow the rest of his advice to the letter".
Dave doesnt say "Buy Term" and shut up. He says: (not in the exact order) 1. Develop a rainy day fund. 2. Get our of debt. 3. Buy a term policy. 4. Invest.
The problem is that most people that came in my office were not following the plan. By bringing this up it at least allowed me to have a conversation without them having a closed mind. At the same time if someone came in and was following his advice to the letter and Term was right for them...knowing his plan gave me credibility.
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