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What People Don’t Know About the Power of Wealth Preservation continued…

Posted on | October 26, 2008

What if there were a better way?

What if rather than being left to panic when the market goes south, you could know that you are earning at least a 1, 2, or 3 percent guaranteed rate on your money when the market goes down — this way you don’t lose? And then when the market rebounds, you can immediately make money on the upside?

Let me share a personal story to show you how this is possible.

A couple of years ago, I separated an additional $200,000 of equity from my home through a mortgage. Even though market conditions have caused my house to go down in value by about $200,000 in the last year or so, I feel calm and in control.

Why? Because my equity is not trapped in my house. The $200,000 that I separated is safely earning an average return of about 8 percent, while the mortgage is only costing me 6 percent, and because the mortgage interest is tax-deductible, my net cost is only 4 percent in my tax bracket.

Hence, I am making twice as much in interest (8 percent) as the net interest I’m paying (4 percent) on $200,000 that would no longer be represented as equity if it still were trapped in my house (because of the market downturn).

I place my serious cash (home equity, retirement savings, children’s college funds, etc.) in maximum-funded tax-advantaged insurance contracts in order to maintain liquidity, safety of principal and earn a tax-favored rate of return.

I link the return (that the insurance company is contractually obligated to pay me) to an index, such as the S&P 500 index.

When the S&P goes up, I make money and lock in the gain. Then when the market goes down, I don’t lose — I still receive a 1, 2 or 3 percent guaranteed return.

Then after the market bottoms out and starts to go up again, my beginning point has been reset, so I can start making money again as the market starts to recover.

I don’t have to wait to arrive at a break even point.

To learn how this works and how to choose the safest place for your money, check my blog next week, and I’ll explain this incredible system of indexing in more detail.

Once you learn this, I assure you — you will sleep better at night, even during turbulent times.

Doug Andrew

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*Life insurance policies are not investments and, accordingly, should not be purchased as an investment

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