Financial Planning
The Secret Of Those Who Retire Early

Got money? Want more?

You’ve come to the right place.

Financial planning is the art of taking money and placing it into financial vehicles so that it can grow. Grow, without you having to do what people normally consider work: having a job, reporting to a boss, getting a paycheck. Grow so that, hopefully, you can reach what one Wall Street wag calls “critical mass” — where you have enough money that you no longer have to show up at the job (unless you want to), where you have enough money that you can pursue happiness with a vengeance, where you have enough money that the pursuit of money, itself, is no longer necessary.

It´s art, because, even though the word “plan” is in there, few people successfully predict what the financial markets will do on a continuous basis. Fortunately, with an understanding of how various financial vehicles work (and the ever-increasing variety), it´s possible to protect yourself from even bad predictions.

Before we look at the Wealth Preservation Institute’s unique take on this important subject, let´s take a look at what most people consider financial planning to be: buying stocks. And just how successful is that? Take a peek…

Encouraged by the ease of buying stocks — and encouraged by financial planners, and, of course, by brokerage houses — many people believe that buying stocks will help them knock the ball out of the park, hit the home run and retire. Yet here are some grim statistics:

• What: The longest, and some say, the greatest, Bull Market in Stock Market History
• When: 1984 - 2002
• How did everyone do?

Did someone say something about double-digit gains?

If they existed at all, they rapidly evaporated.

Let’s say that, back in July of 2003, you and your advisor were looking to put some money into a stock. Two stocks show up on your screen: Wal-Mart and K-Mart.

If you wanted to put your money into a safe investment, what could be bluer than that blue chip stock that The Economist magazine calls the backbone of the American Economy: Wal-Mart? One of largest companies in the world; consistent earner; pays dividends.

Surely, a better purchase than lowly K-Mart. K-mart, just emerging from bankruptcy; big marketing tie to Martha Stewart (who was looking at jail time); and no anticipated dividends.

Yet let’s take a look at just how well you might have done…

Well, maybe you’d make up the loss in the Wal-Mart stock price from the dividends…? Uh, no.

Now, looking at this, surely someone will pipe up that proper “asset allocation” protects you against such unfortunate stock choices. With asset allocation, they will claim, you are protected because you never have too much money in any one stock to be seriously hurt. And since the overall market is predicted to continue to go up, it’s predicted that most of the stocks in your portfolio will go up, more than making up for those that go down. And we believe that that is true, that in the longterm, the stock market, on the whole, will go up.

The question is, who can predict when that “longterm” will be?

If you had your money in the stock market when it decided to take a trip distinctly into negative territory in 2000, and you had been about to retire, where would you be now?

Might you find yourself suddenly having to work a few more years than you planned? Or what if you’d already retired? Might you start thinking more hamburger and less steak in your golden years? Trips courtesy of Netflix instead of by airplane? Maybe that´s the good of television — to allow people to live vicariously through others when their dreams have been dashed. But wait, pretty soon it will be difficult to even get television “for free” — with or without commercials.

So what is the wisdom that tells you to put the bulk of your investments into an investment vehicle that during its longest bull run earned the average investor a mere 2.7%? And that’s not even adjusted for inflation!

I’ll tell you: it´s the wisdom of the herd — or should I say, flock, as in, flock of sheep.

You’ve just been flocked.

Is there hope?

Do we have your attention yet? Let´s face it, there are many ways to invest in the stock market, and, yes, there are some that actually have a better potential than the “buy and hold” strategies. By the way, have you noticed how the stock market experts change their tune? After 2000, suddenly “buy and hold” was a whole lot less popular as the key to stock market wins. Now they tell you, right? We call that “20/20 hindsight”.

So hopefully you would like to know about some other possibilities.

And we at the Wealth Preservation Institute have provided a couple of e-documents for your reading pleasure, on a couple of strategies that we believe are worth your time to explore and to consider. After reading them, if you have questions, feel free to contact us — no obligation.

Here are the little-known strategies for you to check out (just click on the links to bring up an e-document that will tell you even more):

• Equity Harvesting (EH) - Equity Harvesting takes advantage of one of the last tax favorable plans the IRS allows you to have. EH is a tax favorable wealth building system based around using your home mortgage deduction in a strategic manner for your benefit. Do you like simple math? You’ll love this

• 1% CFA Mortgage - A companion strategy to Equity Harvesting. Be careful when using these strategies — and steer clear of advisors who stick to the strict interpretation for how to use the principles of Missed Fortune 101 and The Infinite Banking System.

• The “Maximizer” - Does the idea of nearly doubling the returns of the S&P 500 index — while principally protecting 90% of your money from downturns in the stock market — sound good to you? Then click here, or on the blue “The Maximizer” link at the beginning of this paragraph

• Equity Indexed Annuities (EIAs), also known as Fixed Indexed Annuities - This is a respectable investment strategy with very respectable returns. If you had made 7% on tax-deferred monies for the last 10-20 years, would you be happy? What if, incredibly enough, you would have NEVER lost principal on your invested dollars in down years and the gains in every up year were locked in? You could have had those kinds of returns if you had invested in different types of EIAs during that time. Sure beats a 2.7% return, doesn’t it? Want to find out more? Just click here (or on the “Equity Indexed Annuities” link at the beginning of this paragraph!)

• Qualified Plans/IRAs - When you can deduct money from your taxable income and put it into a qualified plan or IRA, a whole stadium of financial advisors cheers! To find out more (and if you aren´t putting money into one of these plans, you surely should! And if you are, there may be a few twists you find useful) just click here.

Mix and match?

Did you know that you can purchase Equity Indexed Annuities inside a qualified plan or IRA? If you are over 50, this is a terrific idea as an asset allocation model. CAUTION: DO NOT let an attorney or CPA tell you it is a bad idea to buy EIAs in qualified plans or IRAs. That proves they have no clue how to help you protect your money from downturns in the stock market while still giving you good upside growth potential.

And there’s more…

Even though there´s lots of food for thought on this page and the associated e-documents, we’ve just barely scratched the surface. If you think this is exciting, why not call us up for a no-obligation talk about your financial planning goals?