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Missed Fortune – An Unnecessary Tidal Wave of Investment Wreckage

Posted on | April 17, 2009

The economic crisis around us has created a massive tidal wave of wreckage.  Among those that have been impacted, the wallets and retirement plans of the American public has been some of the hardest hit.

While the major discussion among those following “conservative” advice is “How much have you lost?” or “Should I pull my money out of the market or leave it”, our conservative advice is the same as it has always been: Put your savings away in a specifically designed account, a maximum-funded, properly-structured insurance contract.

This type of policy can be one of the best ways to save for retirement and rainy days, as evidenced by how these policies have performed during this down economy.  There is no 40-60% loss!

target Missed Fortune   An Unnecessary Tidal Wave of Investment WreckageCan you miss and hit a target at the exact same time?  Yes, if we’re talking about a recent article called “It Doesn’t Have to Hurt“, published in Newsweek.

The author, Richard Thaler, hits the mark about consumer spending habits but misses the mark regarding cash accumulation vehicles for retirement.

With easy access to credit and undisciplined habits, the savings rate of the American public has dropped like a ton of bricks.  Consumer debt is at a 50 year all time high and savings accounts are at a 50 year all time low.

“It wasn’t so long ago that Americans were good savers.  From 1950 to the early 1980s the saving rate was a satisfactory 8 to 10 percent.  But even then, Americans never showed much willpower to stashing away cash.  The most important ways households saved were in pensions, cash-value life insurance, and by paying off their home mortgage.  What these have in common is that the saving occurs automatically and effortlessly.”

For years we’ve experienced these benefits with our clients.  Once an insurance policy is in place, a simple automatic draft can be set up to transfer funds from checking or savings accounts directly to your insurance account.

This savings habit becomes out of sight and out of mind as money each month is allocated toward cash accumulation and retirement savings.

Richard Thaler’s article goes wrong as he begins to focus on retirement investment vehicles.  As he gives his opinion how American’s can get back on track, he gives the following advice.

“In getting us back on the savings track there are two basic principles of behavioral economics to remember.  First, make savings automatic.  Second, put savings away in a specially designed account, such as an IRA or 401(k).”

To his first point, we agree whole heartily.  Creating budgets and a habit of saving is monumental to long-term financial success.  His second point however, does not ring true, and we’re not the only ones.

Just take a quick look at the comments that have been left on the Newsweek website about this article.

Many American’s who have followed the typical investment advice have lost anywhere from 40-60% of their savings.  Maybe all these big rich executives and investment companies don’t get it.


As we said in Missed Fortune 101 before these economic downturns ever reared their ugly face, “all the dogs are barking up the wrong tree doesn’t make it the right one!”

The advice in this article and promoted by so many other “experts” is to “save more so you can invest more, so you can have more.”  Instead of a formula for success it has really been a recipe for disaster.

It could be written “save more so you can invest more, so you can lose a lot.”

The tragedy is that if the vehicle for cash accumulation would have been a properly structured maximum funded insurance contract, the many that have had their retirement savings cut in half, would still have their retirement monies.

Our advice is the same as it has always been.  Put your serious cash away in a specifically designed account, a maximum funded insurance contract that is properly structured.  This type of policy can be one of the best ways to save for retirement and rainy days.

Oh, and by the way, our clients, who have followed these strategies, haven’t lost one dime in their insurance contracts due to this economic crisis.  Stop rolling the dice with your retirement funds and instead put a solution in place, a conservative one.

Photo by kokuziu

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

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3 Responses to “Missed Fortune – An Unnecessary Tidal Wave of Investment Wreckage”

  1. Allen Taylor
    April 17th, 2009 @ 11:45 am

    Nice writing. You are on my RSS reader now so I can read more from you down the road.

    Allen Taylor

  2. Tom Humes
    April 17th, 2009 @ 11:47 am

    Nice Site layout for your blog. I am looking forward to reading more from you.

    Tom Humes

  3. Susan Kishner
    April 17th, 2009 @ 11:51 am

    Nice site. There

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