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“Cows get slaughtered… Don’t be a cow”

In one of my previous blog post “The #1 Secret to Retirement Saving Success”, I declared the novel idea that you should not confuse Securities based, Stock Market Investments (Risky) with Retirement Savings (Safety). In short, if you cannot afford to lose it, then do not take the risk! I further elaborated that any savings exposed to stock market risks (Yes, even Mutual Funds ) is NOT a good plan! This was Secret #1 and if you did not agree, or did not read that post, I suggest you stop now, click on the link above and re-read it before reading this post. Otherwise you risk being confused and disoriented as you read and process the following.

Ok, now that we have the “Housekeeping” out of way, let’s get back to today’s subject… “Where else can you save money and grow your account balance at a rate that meets or beats inflation without taking on Market Risks?” As I stated in my previous post, I know of only two (Let the quarreling begin), and I call these “Future Proof secrets #2 and #3”.

The first is a Fixed Indexed Annuity (FIA). We describe these in more detail in our book “Future Proof Investing”. These FIA’s are the best for rollovers of an existing 401k or IRA that is still exposed to market risks. But don’t expect your broker or banker to speak kindly of them. FIA’s are an Insurance vehicle and they can no longer charge their fees when you move your money into one. All FIA’s use one or more stock market indexes to pace the amount of interest that your account earns. FIA’s typically have a “floor” of 0% interest or higher, meaning that if the stock market totally crashed, you lose nothing… your principal is protected. But they also come with a “Ceiling” or “Cap” which means you can only participate in a portion of the market “up swings”. Fixed Indexed Annuities also provide periodic “reset points”. Below is a hypothetical FIA versus Mutual Fund performance during the “lost decade” (2000-2009).


This means that every year (or number of years), all interest credited to your account is “locked in” and becomes protected principal. Thus, you participate in market gains but never the losses. Beware though, there are now over 1000 different variations of FIAs, so make sure you get with a trusted advisor and get educated before you choose the one that’s right for you. But, if you are 45 or older and you still expose your savings to market risks, then definitely choose one ASAP because all of the above benefits are given to you in trade for time. This means you are expected to leave the money in the account for 5-15 years or until you are 59 ½ … sounds familiar doesn’t it?

The second secret is a “dividend paying, overfunded, investment grade, cash value insurance policy”. And yes, all those adjectives are mandatory or you are being misled. Again, don’t expect your broker or banker to speak kindly of them. These types of policies are an Insurance vehicle and they cannot charge you fees if you move your money into one. These policies have historically only been offered to banks (Called “Bank Owned life Insurance (BOLI)) and corporations (Called “Corporate Owned life Insurance (COLI)). But these types of policies are now being offered to “Boomers” who take the time to get educated on them, and most of all, those who qualify. These policies typically grow at 3-4% guaranteed and annual dividends can increase that net growth to 5-7% annually. The basic premise behind these plans is that by systematic overfunding and by allowing about 3000 days for the cash values to grow within the account, you now have a pool of money that is semi-liquid and growing faster than inflation. It is also excellent for “legacy planning” because these special policies have an increasing death benefit that enables your heirs to receive not only the death benefit, but also the cash value upon your passing. These policies have many moving parts and 90% of all insurance agents do not even know they exist or how to construct one. So trust only a trained agent to properly structure them for you. We have been structuring these policies for many of our clients over the past 10 years, and only recently do we feel proficient in their design. But once they are established, they can transform your Retirement Savings into a Future Proof Investment.

Once again, nothing I am saying here is an actual “Secret”. Everything I reveal here is conventional and traditional for the ultra rich in America. What is unique is that I am sharing this knowledge with the same public who has been led like “Cows to Slaughter” by Wall Street marketing and propaganda machines. So once again, it’s your choice, “Are you a cow or a stallion”? One gets slaughtered; the other lives free…It’s your choice and we are here to help if you want to live free!

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