Insurance Agent Forum

[Steve]

When you reach a certain level of thought (often corresponding with age, but on the other hand, many folks never get there, yet a lucky few get there at a young age...) one could give a rip about what someone presumes about ones financial status. I am debt-free. I give generously to a couple of non-profits that I care about. I am what I am, and the only thing that truly matters is that my wife and children are happy. (and me!)

Look in one driveway and see a Mercedes and no activity.
Look in another and see a Hyundai and the family out there laughing and playing tag or football or basketball. Who do you want to be friends with? Neither one is a wrong answer, but certainly different in values.

[healthagent]

There's no problem with having that Benz as long as the payments are a small portion of your take-home, you truely make fantastic money and you're doing great with investing.

But if you own that Benz and you have no real savings and making the payments is a burden you probably suffer from a severe lack of self-esteem.

Your house house payment should be made with one week's net income. All your other bills should be made with the next two weeks leaving one full week for saving.

I'm at the point now where one week's pay is my entire month's worth of bills.

[James]

Originally Posted by Steve

I appreciate all of the varying viewpoints on this topic, but I remain steadfast:

Eliminate Debt.
Actively Manage Budget.
Take advantage of qualified investments.

Insurance is insurance. Investments are investments. Aside from some tax situations, treating insurance as an investment instead of insurance is paying for someone to do what you should be doing without them. That's a loss. That's one reason (in Wisconsin, and I presume elsewhere) there are regulations strictly prohibiting insurance agents from representing themselves as "financial advisors."

I am not defending or endorsing BTID.
I am not defending or endorsing perm.

Every situation is different. Everyone can beat this to the ground, forever. Everyone is right, everyone is wrong.

The difference lies in those who are controlling their lives and those who aren't. 90% of the population (pulling the number out of nowhere!) lives on todays and tomorrows earnings. Fancy houses, fancy cars, great appearances, no substance.

I guess you'll never get it? We are not necerssarily talking investment or savings. We are talking about equity management yet you and others now move on and talk "Keeping Up with the Jones's". I really don't get that at all.

[Steve]

What's not to get? Debt/No Debt, Keep up with the Jones's or keep up with yourself. If that isn't an aspect of equity management.... -- not trying to confuse you James.

[marcircus]

Folks, could we keep this thread going on-topic. It would be nice to attract as many divergent thoughts on the ideas of missed fortune, using debt to leverage assets, the benefit of equity or debt in one's home, insurance as a vehicle for financial security.

How about starting a separate thread on keeping up with the Jones conspicuous consumption in the "Anything Goes Forum."

Thanks.

[Airborne1]

Originally Posted by James

I guess you'll never get it? We are not necerssarily talking investment or savings. We are talking about equity management yet you and others now move on and talk "Keeping Up with the Jones's". I really don't get that at all.

James/Marcircus

The fundamental issue is whether or not is smart/safe to separate home equity to begin with.

I've done quite a few seminars. For those that can get over that issue of paying down the home as quickly as possible (only held true during the Great Depression), the only other point is where to put it.

In fact, although D. Andrews admits he personally separates as much home equity as possible, he CAUTIONS readers not to use more than 40% home equity for funding life insurance. He does not steer you with what to do with the remaining 60%.

Not 1 critic has done a comprehensive OBJECTIVE analysis as it pertains to their situation, so I have to believe they also can't be objective in any serious investment strategies. What financial lemmings they are.

Truth is, Scott Burns does a partial analysis, but misses some critical information

[James]

Originally Posted by Steve

What's not to get? Debt/No Debt, Keep up with the Jones's or keep up with yourself. If that isn't an aspect of equity management.... -- not trying to confuse you James.

You have lost me. I don't see how leveraging of debt has anything to do with keeping up with the Jones's? Okay let me see if I can work thru this obvious problem.

1. Equity Management, you have lets say 100 grand here and a debt of 100 grand there. Balance is the same technically in the next scenario but some obvious differences.

2. No Equity Management and you have a piece of property you hold the deed free and clear but no 100 grand on hand but the percieve value, which is the same as above technically.

Technically they are the same thing except for a few obvious points. No cash on hand Vs cash on hand in this fund or funds. You see I'm limiting this to a very narrow specific holding and not a enter life style, you see the distinction? Now in America Society what is consider King? Well I'm referring to the old saying, "Cash is King". See, if you use equity management correctly, no matter what strategy you take to get there as long as you get there you are in a much better position financially speaking.

It is like a more complicated issue of National Trade Deficit. Some say we are running a negative trade surplus? Well that is not as true as many say it is, it's only true if you look at the product side and ignore the capital account side of the equation, such as deposits by other Nations in US Bonds and Business Sectors such as Japan, Germany and others opening up factories here. Fact is I rather have a deficit surplus Vs what Japan and worst scenarios and have a stagnant economy, remember all the talk of the early 80's how Japan's protective trade practices was outstriping America Deficit Trade Surplus. Fact is our economy is growing far faster than that of Japan's economy. In fact, if you look back at the late 20's and 30's with trade barriers we ran a Trade Surplus but the effects on the economy was very negative.

Equity management is in some aspects the same, sure you owe but you have cash and "Cash is King".

[marcircus]

Aairborne1

You may have missed what I said one or two pages back.

I think I have come to the conclusion that just as some people are content to lease a car, in fact quite enthusiastic, we may well be on the dawn of a new era in which having the maximum possible debt on a home is no different than leasing a car.

There is a heck of a valid point. Why should someone have maximum equity in a home. Must agree with that.

In fact Airborne1 my fascination with insurance is the fact that my children are so young. Their youth enables them, or will enable them to get great rates on COI and the compounding over time will be noteworthy.

I think the popular press does a disservice to the public by really focusing only on mutual funds. There is in fact another world out there enabling one to derive financial security and attain diversification.

[James]

Originally Posted by Airborne1

James/Marcircus

The fundamental issue is whether or not is smart/safe to separate home equity to begin with.

I've done quite a few seminars. For those that can get over that issue of paying down the home as quickly as possible (only held true during the Great Depression), the only other point is where to put it.

In fact, although D. Andrews admits he personally separates as much home equity as possible, he CAUTIONS readers not to use more than 40% home equity for funding life insurance. He does not steer you with what to do with the remaining 60%.

Not 1 critic has done a comprehensive OBJECTIVE analysis as it pertains to their situation, so I have to believe they also can't be objective in any serious investment strategies. What financial lemmings they are.

Truth is, Scott Burns does a partial analysis, but misses some critical information

Totally agree! I'm still puzzled how some here attack it as "Keeping up with the Jones's" issue??? Boy some people make me laugh! Am I suppose to take this seriously or is it I am posting to much?

[Airborne1]

Originally Posted by marcircus

Aairborne1

You may have missed what I said one or two pages back.

I think I have come to the conclusion that just as some people are content to lease a car, in fact quite enthusiastic, we may well be on the dawn of a new era in which having the maximum possible debt on a home is no different than leasing a car.

There is a heck of a valid point. Why should someone have maximum equity in a home. Must agree with that.

In fact Airborne1 my fascination with insurance is the fact that my children are so young. Their youth enables them, or will enable them to get great rates on COI and the compounding over time will be noteworthy.

I think the popular press does a disservice to the public by really focusing only on mutual funds. There is in fact another world out there enabling one to derive financial security and attain diversification.

No problem

To answer your question awhile back, I'll have to ask you a question, but I'm only going to post a reply off line.

1. Did you get my PM ?

2. Which timeframe would concern you the most if your investment of choice for home equity was only earning 2 - 3% ?

1. 5-10 yrs
2. 10+ years

Try to forget about all other asset classes for the moment, since no can reliably predict market conditions going forward & only fixed income will guarantee no loss.

Feel free to use 1 or more worst-case scenarios

[marcircus]

Per Airborne1

1. Did you get my PM ?

2. Which timeframe would concern you the most if your investment of choice for home equity was only earning 2 - 3% ?

1. 5-10 yrs
2. 10+ years

1. Yes, received your PM. It was very decent of you.

2. Not sure I understand the question. However, if any investment were only returning 2-3% for ten years, that would certainly concern me. The reason is that most likely it would not outpace inflation for the same period. If that is the question, then 10+ years of 2-3% return would concern me more than 5-10 years.

[Airborne1]

Originally Posted by marcircus

Per Airborne1

1. Yes, received your PM. It was very decent of you.

2. Not sure I understand the question. However, if any investment were only returning 2-3% for ten years, that would certainly concern me. The reason is that most likely it would not outpace inflation for the same period. If that is the question, then 10+ years of 2-3% return would concern me more than 5-10 years.

I was addressing your concern that D. Andrews does not address the downside risk of 2 - 3%. Scott Burns also raises this issues and I'm not sure whether he gabe the agent the opportunity to explain why this is not a huge concern. Thats why I asked you what timeframe concerns you the most.

[marcircus]

Just found this paper, have not had time to read it, so no commentary, just posting the link:

http://www.insmark.com/ConceptLibrar...%20_MA171_.pdf

[policy doctor]

Great Find!! I will download that article, as support for funding an EI Life.

Are you selling this product now? I am, but structuring it more for retirement needs. People need to save a lot of money monthly, and let compounding work for them. 15-20 or more years, and they'll have a steady stream of income.

[marcircus]

Originally Posted by policy doctor

Great Find!! I will download that article, as support for funding an EI Life.

Are you selling this product now? I am, but structuring it more for retirement needs. People need to save a lot of money monthly, and let compounding work for them. 15-20 or more years, and they'll have a steady stream of income.

No, not selling it, just trying to learn all I can about LI.

We have been inundated in the media with the importance of investing for our future, but the only aspect covered are mutual funds, stocks, bonds, CD's, IRA's, 401(k)'s.

I wanted to get my children, pre-teens, IRA's. Well, with no earned income, no IRA. So, I settled on a VUL as an alternative.

Once I started reading about LI (in doing research for the VUL - - that is how I found this forum). I discovered the incredible power, flexibility, and attributes of the product. I like to think of LI as a Financial Swiss Army Knife. I have come to the conclusion that it is integral to the foundation of our financial well-being and must be included with the same prominence in our financial profile as IRA's. I think it is a shame the financial media neglects discussing this asset (except to say buy term, invest the difference) and educating the public.

I think it is such a good product that if one were just around 21 - 22 with their first "real job," I am not so sure it would not be worth getting a UL/WL before even getting an IRA. My reason for saying it is that they will never be that age again and COI will never be as cheap.

[indaville]

Does anyone know what the limit is on how much equity you can take out of a home and still deduct the interest? In other words if someone has a $1,000,000 home that is paid for, how much money could they pull out of it via a HELOC and still deduct the interest. I thought there was a limit of $250k or something?

Thanks!!