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Missed Fortune – Turning Obstacles Into Opportunity

Posted on | January 15, 2012

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Transforming Common Obstacles Into Golden Opportunities

Entrepreneurial coach Dan Sullivan teaches a formula for success known as the VOTA Process.

It consists of the following steps:

  • Vision- you first establish exactly where you are and where you’d like to go.
  • Obstacles- you next identify the main obstacles that prevent you from achieving that vision.
  • Transform- next you transform those obstacles into strategies and opportunities which eliminate those dangers.
  • Action- a very specific action plan is created.

If you were to apply that approach to your own life today, it would probably start with a question like this, “3 years from today, what has to have happened in every area of your life–spiritually, emotionally, economically, personal relationships, etc.– in order for you to be happy with the results?”

Once that question has been answered, the next step would be to identify the obstacles that would prevent you from achieving that vision.  Many of those fears and dangers will be financial in origin.  There’s a great deal of uncertainty in the lives of many thanks to our economic woes.

These financial concerns often are centered in the market uncertainty that has caused many investors to lose a third or more of their serious money.  Those concerns are compounded by the threat of increasing taxes and rising inflation rates.

Even a respectable retirement nest egg can be eroded very quickly when the forces of taxes and inflation go to work on it.  Taxes will be going up, in part, due to the continued growth of the national debt that will soon swell to nearly $18 trillion.

Continued economic uncertainty is continuing to lead to market volatility.  And with the Fed continuing to print money to keep up with government spending, inflation is just around the corner.

These are the likely obstacles that will affect our financial future.  Turning them into specific strategies and opportunities requires doing something different than what we’ve always done.

Money isn’t the only thing we need to protect.  Our time is extremely precious and cannot be made up easily.

This leads us to the final question that must be asked, “If, for some reason, you do not take action to solve these issues, how are you going to feel if the status quo doesn’t change?”

Here’s where specific actions come into play.

A strategic rollout, for example, allows you to move your money out of those IRAs and 401(k)s, pay the applicable taxes at today’s rates, and then move them into vehicles that are tax-free from today forward.

You can link your returns to those things that inflate so that when we have inflation it actually helps rather than hinders you.

Finally, you can implement indexing strategies that allow you to participate in the economy’s growth whenever it goes up, but protects your principal when it goes down so you don’t lose any money.

If you wish to learn how to put these actions to work for your financial future, that’s what the Missed Fortune strategies are here to do.

What Your Financial Advisor Doesn’t Know Can Hurt You

When it comes to protecting their client’s money and other assets, most financial planners don’t know what they don’t know.  That can come back to bite their client’s hard.

Here are a few of the strategies your financial planner should know in order to allow you to enjoy liquidity, safety of principal and a predictable rate of return.

Indexing:  When people lose money due to market volatility, it’s because their money is in the market where it’s most vulnerable.  With an indexing strategy, your money is in a guaranteed instrument that protects your principal whenever the economy declines.

If the economy grows, you immediately participate in that upside because your money is indirectly linked to the market.  If the market falls, however, you don’t lose a dime of your principal.  The beauty of this approach is that every year you make money it becomes newly protected principal.

In 2008 when many people lost 40% of their principal in the market decline, those using the indexing strategy didn’t lose a dime.  And the second the market rebounded, they were making money again.

Protection Against Inflation:  When inflation was at 10% in the early 1980s, those who had linked their returns to the things that inflate when there is inflation weren’t losing sleep at night.  Once you’ve learned how to do this, your rate of return outpaces the rate of inflation and your money grows fast enough to maintain your purchasing power.

Rising Taxes: If you have an IRA or 401(k) portfolio with $1.5 million, the sad truth is that not all of that money is yours.  Uncle Sam expects to get his share in taxes and right now that’s about a third of your nest egg.

Compounding this problem is the fact that Congress is very likely to raise taxes in the near future with the Congressional Budget Office predicting a future tax rate of 50% or more.  That means that taxes will take anywhere from a third to one half of your money as you withdraw it each year.

Your retirement money needs to be in a vehicle that allows it to accumulate, to distribute and ultimately to transfer to your survivors tax-free.  Thanks to Sections 72E, 7702 and 101A of the Internal Revenue Code, there is such a vehicle.  Most financial advisors don’t know about these sections of the code and that can cost you a lot of money down the road.

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

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