Fixed Indexed Annuities Are a Good Tool If You’re Getting Close to Retirement

When you see an investment report on a 401(k), for example, it most often shows the average rate of return on funds over the last 40 years.  Averages do not show the impact on retirement of periodic drops in value.  Reports give averages over a long-range period of time, but fund managers never want you to focus on the big drops that happen during the shorter periods in between. For example, in 2000 the S&P 500 dipped by -10.14%, then again in 2001 by -13.04%, and then again in 2002 by -23.37%.  That is a total of 46.55% drop in values in three years.  If you took the average gain per year for just those three years it was negative, at -15.5% each year!  So what does that mean to you? Well, if you’ve got a lot of time to make up those losses, then maybe not too much. But it would take eight years at an 8% gain just to get back to where you were three years earlier. If you don’t have 40 years to make up these big dips in the market, then frankly you’re getting bamboozled.

This is a lot of math, but my point is that most people don’t know how to calculate the math.  They just look at a report showing a 40-year average and say, “Not bad.”  Not bad if you have lots of time, but what if you’re getting within 10 years of retirement?

Indexed annuities can be a great way to overcome market dips. When you invest in indexed annuities, you get only the gains and no downs — you are “sharing” the ups but not having to experience the downs.  Don’t know what an indexed annuity is? Contact me for more info:

Do not confuse indexed annuities with variable annuities. Variable means you are in the market and must therefore be subject to the full ups and downs. Even if you placed your money in a strong New York Life variable annuity, remember, your money is in the market, not invested in New York Life, so it is subject to market ups and downs. Many people have made the mistake of assuming they were safe because of the financial strength of New York Life. But in my experience variable annuities can experience drops in value and then you still can’t get your money out during a bad drop because annuities aren’t all that liquid.

Now indexed annuities are even less liquid than variable annuities, so there is some disadvantage there. They may not work for you because they are not liquid enough for your needs.  But indexed annuities are guaranteed not to lose money and to share in the increases of the market.  And that’s a good thing.  If you are close to retirement and want a safe rate of return, and no downside risk in the market, these are great tools to use.

As a final note, there is one way to overcome to some degree the liquidity problem with indexed annuities and that’s by “laddering” them. You have probably heard about laddering CD’s and it works the same for indexed annuities. For example with a CD, let’s say you had $100,000 and wanted a good 5-year rate of interest on your safe money. You could split up the $100,000 into five $20,000 CDs.  Schedule each CD to mature one year apart, so $20,000 for a one-year CD until it matures, then place the next $20,000 in a CD that matures in two years, and so forth. Then in one year, the first CD matures, which if you need the money, you take it. But if not, it rolls over into a 5-year CD. In this manner, you have $20,000 maturing each year and in five years you will  have a five-year CD providing a top rate of return. To get the same impact for indexed annuities, you can “ladder” these annuities and provide better liquidity while getting the best possible rate of return.  

Contact me for more information on better ways to fund retirement than just dumping money into a 401(k) and hoping for the best:

What Do the Erie Canal, the Panama Canal, and You Have in Common When It Comes to Money?

So why talk about the Erie Canal?  Well, it serves to help illustrate a principle we teach in the Money Mastery program:  “Money in motion creates more money.”  Completed in 1825, the Erie Canal cut the cost of transporting goods westward by 95 percent.  And it cut the time to ship those goods by 80 percent.  This canal helped the West to be settled while many cities sprang up along the canal, the population surged and the  economic benefits exploded. From one single idea meant to make transportation cheaper in an era where moving goods was labor and time intensive sprang a whole bunch more benefits that continue to provide prosperity to this day. This is what “money in motion creates more money” means — the ability to put money, ideas, and resources to work to make more money.

Now what about the Panama Canal?  Well, its worth is similar to the Erie Canal because of how its creation put so many things in motion that created more opportunities and more money and resources. The canal is 48 miles long.  It takes 6 to 8 hours for a ship to pass through the Panama Canal rather than the many days and weeks it once took ships to travel around the coasts of South America. Since its creation in 1914, there has been an increase in the number of ships passing through it from 1,000 in 1914 to 815,000 in 2012. This equates to 333 million tons of cargo each year cutting across from one ocean to the other.  Making it possible for ships to avoid the dangerous passage around the tip of South America cutting months off travel time created an economic benefit that continues in massive proportions today.

So now let’s talk about you.  If you will examine how you make your money, how you save your money, and whether or not you are putting your money in motion to create more, you might find how to improve upon this process.  As you find ways of creating an Erie or Panama Canal in your own life, you too might be able to cut costs and multiply revenue.

Both these canals cost a lot of money and lives.  But the rewards have been astronomical in comparison — they have both made a much better life for all of us.  And so it can be with you.  If you will re-examine how your money is made and processed, you have a chance to use technology, innovations, new resources and more, to improve on what you already have.  If you can determine ways to get more income out of less time spent, you are the winner.  Wealth is not about a certain rate of return from the market. True wealth is about learning how to get your money to work for you to make you more.  Now is the time to think out of the box, just like our forebears did 100 and 200 years ago with creating of the Panama and Erie Canals.

Take Your Debt Payments and Turn Them into Tax-free Retirement Income for Life

Excuse all the following numbers, but they are necessary to teach the method of how to pay off debts and use those debt payments to build a safe and secure tax-free income at retirement that you cannot outlive. 

Let me establish the basic information first, then I can apply the method:

Doug and Karen Smith are age 40.  Doug purchased a $115,000 whole- life policy with Northwestern Mutual Life Insurance Company 19 years screen-shot-2016-11-28-at-4-50-02-pmago when they got married.

  • The premium was and still is $89 a month.
  • Cash values today total $26,000.
  • They have 4 debts totaling $23,000, not including their home.
  • The average interest rate charge on these debts is 19.6%.
  • The total payment each month for these 4 debts is $604.
  • Doug cannot save 3% of his income to qualify for the employer’s match to his 401(k).
  • Doug and Karen do not have a spending plan and have not been able to  save any extra money.
  • Their desired retirement age is 28 years from today.
  • Doug and Karen have always had to finance their cars, new and  used.

Here’s the action plan for our example couple:

  • Borrow $23,000 from Doug’s whole-life policy and pay off their debts.
  • Doug and Karen will keep making the same payments of $604 (the former debt payment) and $89 (the whole life insurance premium) a month to their life insurance company for the next 28 years, until retirement.
  • Doug and Karen will create a spending plan and hire a personal financial coach for a modest fee to hold them accountable for three  months.  (To sign up for your own personal coaching,  choose the Select Plan from the Money Mastery online site.)

Now, here’s what’s going to happen to Doug and Karen as they follow this plan:

  • The cash values on the life insurance policy will grow to almost $441,000 in 28 years.
  • Doug and Karen can borrow from their cash values over the 28 years to purchase five new cars and pay these loans back to  themselves, never losing any money, except depreciation. Subtracting the negative expense of depreciation of an estimated $15,000 for each of the five cars purchased will leave them with about $363,000 in cash at the end of the 28 years.
  • They will turn on the annual lifetime income from the policy of $30,500 at age 68. There will be no more taxes on growth of the cash values, or on withdrawals during Doug’s lifetime, nor upon death.  I repeat:  No more taxation!

So let’s analyze what all this means for you. The traditional method of managing debt you’re probably using is to keep paying down and Debtborrowing and paying down and borrowing and paying down.  But by using a simple whole life policy to borrow from, you recapture all of these payments.

What about the interest rate you will earn on a whole life investment?  The direct answer is 2 to 4% annually over the lifetime of the person, but to recapture all the debt payments makes the real rate of return over 200%.

If you want more information about how life insurance can be used to get out of all consumer debt quickly and begin saving for a nice retirement, contact me for a no-cost conversation:  I can explain this using your age and debt payment information.  Basically you will be borrowing from yourself. 

By establishing a reserve cash value fund, you accomplish the following:

  • No market risks.
  • No more taxes.
  • If you die too soon, the death benefit completes the cash savings.
  • If you live too long, income continues until death.
  • If you become disabled the insurance company pays  the premiums.

Sounds to good to be true?  There is a cost to this that needs to be addressed.  For you it may be too big of a cost but if you’re smart you won’t see it that way as I have explained how to get help with the following various issues.  Here are the requirements to make this work for you:

  • You will need a financial coach to help you change your spending and borrowing habits (see how to get one at a minimal fee above).
  • You will need to be healthy enough (or young enough) to qualify for and be able to afford the premiums on a whole-life insurance policy.
  • You need to control your spending so you can learn how to save extra surplus each month.
  • You will need to discipline yourself so when you pay off a debt, you won’t turn around and  borrow again. You will need to use the debt payment to deposit into the whole-life policy (this is a where a personal financial coach and the right tools can really be vital).
  • When you do need to borrow again, which you will certainly will, you will need to use the cash values in your own policy to do so.

Note;  If you are not healthy or young enough to do a whole-life policy I suggest you find a family member who is and use them.  You can stay the “owner” and control deposits and withdrawals. You should not put so much money into this cash value account that it will affect taxes.  Your agent and insurance company should guide you with this.

This whole-life policy can be compared to a horse on a cattle ranch.  The purpose of the cattle ranch is to grow the herd and sell off the beef for profit.  But you must have a horse to manage this cattle because they will do things that cattle cannot.  Whole-life insurance properly structured, will do four things for you at the same time: 

  1. Provide a death benefit
  2. Grow your money.
  3. Pay premiums if you become disabled.
  4. Eliminate taxes.

Like a horse on a cattle ranch, a whole-life insurance policy will do things you cannot get your money to accomplish.  For example a mutual fund will not pay you a larger death benefit when you die; your money in the market is subject to losses; your bank will not keep putting in money for your savings if you become disabled; and your 401(k) does not grow without paying taxes upon withdrawal. 

I suggest you read and re-read this article so you can compare with what you are currently doing with your debt payments.  Are you recapturing all of this money to be used for your future?  Are you getting your money to do four things for you at the same time?  Only a properly structured whole-life insurance policy from a dividend-paying company will accomplish this.

Would You Like a Better Return on Your Investments or a Better Return on Your Life?

What results do you want to get out of your money? Would you rather get a better return on your investment or the best possible life you can lead with the money you have available? Speaking from experience, I prefer the later. My focus in relation to what my money provides me is on improving the good times, bettering personal and family relationships, having more meaningful experiences, being able to travel where I want, accomplishing my life goals, and so forth. All of these far outweigh any “return on investments” I might make during my life.  Sure we all have to invest our money for some gain, but when my life gets better because of how I use the money, I am rewarded.

As a little example, let’s look at the comparison between having shutterstock_284334773knowledge vs. wisdom. Knowledge is very important, but it takes wisdom to apply this knowledge so we gain the most from what we know.  If knowledge was all that mattered, then librarians would rule this world.  It is only when you apply the knowledge for your gain that this knowledge become a benefit.  Applied knowledge = wisdom (and perhaps a few other things like adding to that knowledge compassion and respect, but that’s a discussion for another time). For now, let’s stick to the importance of applying knowledge to gain wisdom. 

So, getting a good return on investments for your money is nice, and is basically gaining some knowledge about the way markets work but what you do with this return on investment (ROI) is far more important as it will affect the “return” you get on your life (or ROL).  To be wise in the way we handle our money, we must be open to self-examination, constantly checking ourselves to make sure we don’t focus solely on ROI as noted in the post from June 2015, Financial Stability Affects Every Other Area of Our Life.

If you are sincerely interested in identifying a better ROL, go to and sign up for the Select program.  You will soon soar to new heights in every area of your life, not just money!

What You Don’t Know about Inflation Can Really Hurt You…

The following graph shows the impact of inflation on your purchasing power over the last 100 years.


Should you worry about this? 


If you had been retired 10 years and the following expenses all increased significantly, how would you adjust for losing one-eighth of your money?   These price changes are real.  This happens all across the nation and the graph above shows what your dollar will buy now versus so many years ago.

  • Medical costs have gone up by $112 a month
  • Auto insurance increased by $89 a month
  • Food costs have gone up by $223 a month
  • Gasoline costs have gone from $76 a month to $132.

This is the same effect as if your monthly income went from $3,400 a month down to $2,900 a month. That’s a huge pay cut!

The big question is how can you adjust your spending to make this work?  Inflation is here to stay.  We must learn how to own assets that keep up with inflation.  We must have income sources designed to adjust upwards.  It takes planning, for many years in advance, to have assets that will go up in value as your expenses increase.  Your task is to search out these kind of assets that will go up during inflationary periods but not go down in deflationary times.  I will add more “how to” in the near future that will meet this criterion but you are the one that must take the initiative to learn more about this.  For further help, go to  I encourage you to make it a habit to study and use search engines and social media and referrals to find our ways to invest that will increase in value and income over the next several years.  You can do this.  Give me your success stories when they happen.

Over the Long-haul the Stock Market Always Goes Up, Right?

We have all heard the statement many times, over many years, that even if the stock market takes a dive, it always goes up again.  The following graph, which plots the ups and downs of the stock market over a 100-year period seems to support this oft-repeated claim:


This illustration shows the market going up, experiencing some downs, then going up again and up some more, again.  Look at this growth!  It seems to prove the idea that the market always goes up.   However, your experience with the stock market would have been far different than what is illustrated in this graph if you had invested in the market in 1929, the year the stock market took the terrible crash that started the Great Depression. And you probably didn’t have money invested in 1943, or in 1975, either. But if you invested during any of these times, the market certainly wasn’t making tremendous gains and thus you would have had a hard time recovering any money you lost during a major downturn.

Now take a look at this same graph, which I have modified with hand-drawn lines indicating five periods when the market either took a dive or stayed the same, not making any gains:



If you had money invested during timeline “C,”  for instance, from 1929 until about 1955, a 26-year period, you would not have started to recover from everything you lost until 1955. That’s 26 years — more than half a working person’s life! This means it would not be likely that you would have had time to recoup any of your losses because during that long 26-year period, the market did not got up to the same level it had been before. Of course we don’t know what will happen to the market in the next two decades, but if your history matches any one of these five periods (A through E) on this graph, you will not grow your money.  Plus, inflation will erode your savings so that you will not only not earn any gains, but you may end up in the red!  Those who say the market always goes up also encourage you to invest in the stock market to solve the problem of inflation.  They say the market has averaged 10 percent growth and will always keep ahead of inflation.  But unfortunately, this isn’t the way it has worked out.  The graph looks good over a 100-year period, but you won’t be working and trying to accumulate savings and investments over 100 years. It doesn’t look so hot when you pick a 20- or 30-year period of time.

If you are planning to keep your money invested over the long-haul using the standard philosophy of “the market will always go up,” the odds are you will fail miserably.   Don’t you think 100 years is a long enough period of time to establish a trend?  Maybe not, but I think so.

Here’s my warning:  The market does not always go up during a shorter 20- or 30-year period and it’s those shorter periods that have the most personal impact for you.  We work and invest for 20 or 30 years then retire.  You don’t invest for 100 years.  Where will your money be on this graph over the next 1o or 2o years?  Will it always go up?  Don’t count on it — you take big risks with retirement funds by putting them all in the market.

Learn where to invest so you don’t lose money, keep ahead of inflation, reduce taxes, get a good growth and predict a strong income at retirement.  Contact me for help: or go to

5 Risks to Your Retirement

For so many people, retirement is a scary word. They hear so many horror stories about people who were all set up to retire, and then the market crashed and they lost half of their retirement or, they didn’t have a plan, and ran out of money. So many stories can make retirement a scary thing to tackle.

Did you know the average retiree only has money planned for eight years of retirement, when in reality they need to plan for closer to 20-25 years?

Nearly all experts today attribute this failure to one major problem: the lack of a clearly written financial plan. When you plan for your retirement, with all the facts in front of you, it is easier to foresee some of the problems that will come up. That isn’t to say that you’ll eliminate all financial problems and never have a hiccup; it does mean, however, that with planning, statistically you have a much better chance to live comfortably during retirement.

To make a plan that works, you must understand the 5 major risks to your retirement:

  1. The risk of LOSS; also called market risk.
  2. The risk of losing CONTROL and liquidity of your money.
  3. The risk of running out of money (INCOME).
  4. The risk of INFLATiON.
  5. The risk of TAXES.

I am going to tackle each of these risks one post at a time. First, let’s discuss the risk of loss.

The Risk of Loss (Also Called Market Risk):

Americans have been put in a corner with market risk. Since 1974, when retirement-fund-paying went from the employer to the employee with ERISA legislation, and in 1978 with the birth of the 401(k) section of the IRS tax code, Americans’ retirement money has been put at risk. There are many details with this, but the long and short of it is that Wall Street was able to get pension money away from employers, who typically had invested it in insurance companies, long-term real estate bonds, and other various conservative investments, and instead started having employees invest their own contributions (with a match sometimes from their employer) in the market. This happened when pensions started going away and employees had to get involved with the investment world through 401(k)s and IRAs and become directly responsible for building their own retirement instead of expecting it from their employer. This was a huge windfall for Wall Street investment firms as they now had control over trillions of dollars of retirement money. But, it left the employee at HUGE risk.

Before that, your parents, or maybe your grandparents, went to work forshutterstock_261713222 40 years, were given a gold watch, and then retired on a company pension that their employers were contractually obligated to pay for the rest of their lives. Due to these pensions, the employers were very careful with how the money was invested, and they only put it in conservative, time-tested investments that would not risk the income of their employees. This is called a defined benefit retirement plan, because the benefit (the amount you receive each month) is defined and laid out in your employment contract.

Now, we have a different system. Typically, employers have turned over retirement accounts to a financial firm to make investing choices for you (this is called a 401(k) or IRA). You can contribute specified amounts to these plans, changed every so often by Congress, and your employer can choose to match certain percentages; because of this these plans are called qualified plans, or defined contribution retirement plans.

Since the switch was made to the 401(k) and other retirement accounts (traditional IRA, 403b, TSP, etc.), the risk of making sure your retirement was safe was transferred from your employer over to you. And since you are not likely to be a savvy Wall Street investor with tons of time on your  hands to ensure the safety of your investments, YOU take all the market risks and all the losses. 

Because you now have the risk of the market, this means you should understand everything your retirement account is invested in. But that rarely, if ever, happens. Typically, once a year, your employer will have the company who manages the funds in their 401(k) plan come to your place of employment and do a presentation about the retirement plan. With little turnout, they typically explain a few ideas to a few people, and leave it at that. Here are some of the problems with this ridiculous process:

  1. Fuzzy Math. As I have explained in previous posts, everyone has heard that if you leave your money in the market, you’ll get a 10-12 percent return, right? You hear it on talk radio, the financial squawkers on TV, and all over the place. The problem is, that isn’t the full story. That is an AVERAGE  rate of return, but what you need to look for is what I call the “cash on cash rate of return,” or what’s actually in YOUR pocket at the end of the day.

Take a look at this fuzzy math:


Even though on it’s face, it looks like the person in the graph will get an average return of 14 percent over four years, they really won’t. With all the ups and downs, that percentage rate is affected by the balance during the ups and the downs. The 14 percent return is not figured on a static $1,000 balance — if it were, by the end of the four years based on this fuzzy math and the 14 percent return on investment, you would have $1,140 in the bank. But you can see from the graph that the person has even a little less than $1,000 in the account at the end of year-four, so that 14 percent return is a bogus number.  

Because you take all the risk of loss and Wall Street doesn’t want to lose your business when you feel that risk, they inflate the rates of return in complicated graphs and percentages. The cash on cash rate of return is rarely explained or shown to you. This is why so many Americans feel like they can’t get ahead on retirement!

  1. Fees. Up until very recently, the fees charged to your accounts were almost completely hidden from you. Legislation has changed that in a way, but all it did was make the financial firms have to disclose to your employer a little more explicitly their fees, but this didn’t have the desired effect of helping employees understand the fees. Fees on 401(k) accounts are still very high, and this takes a huge bite out of your retirement. The problem with this isn’t necessarily the fees, since if the fees are justifiable and the rate of return is acceptable and you agree with it, then you are getting what you paid for and that is fine. But, the fees that are hidden that you are paying and don’t know about, those fees are the problem. screen-shot-2016-09-16-at-2-31-17-pmYou don’t agree to them and they are passed along to you, sometimes for the benefit of the financial management firm, sometimes for the benefit of your employer, and sometimes for the benefit of them both. But, you are left out of the benefit altogether, and it is not disclosed to you.
  1. Timing of Returns. In a study completed in 2015 by WealthVest, it was shown how significantly the timing of your investment returns can affect your overall net gain. The timing of returns says that if you suffer early losses in your retirement years, it can greatly impact your retirement as you will be drawing on those funds to live, and it can leave your retirement fund decimated. So, according to the mainstream logic, all you need to do is guess correctly when to retire by not having a loss in the first five years of retirement! Good luck with that.

As part of this timing of returns, it is extremely important to understand the Fuzzy Math many financial firms use after a period of losses. For example, in 2008 many people lost a lot of money due to the economic downturn we experienced. Many people lost up to 40 percent of their money, and it was devastating. This is a real risk posed to you if you have all your money in the market. Now, let’s use some round numbers to illustrate the point of timing. Let’s suppose you have $1,000,000 in a 401(k), and it’s 2008. You lose 40 percent just like that and the balance is now $600,000.

This was painful! Remember, this ACTUALLY happened to people.  So, how did the media and the financial firms spin it? They said to expect these ups and downs, and to look at the long-term, and to be patient and to keep investing and it would all come back. And, boy did it ever! The year 2009 ended up being a banner year. They showed that even though 2008 was a huge loss, they were excited that 2009 had a 25 percent average return! Most Americans thought since they lost 40 percent one year, and gained 25 percent back the next that they only had 15 percent to go to get back to their original balance, right? Wrong. The problem was the the timing of returns. They lost 40 percent, and the 25 percent gain was based on the balance after losing 40 percent, not the original value of the investment account.  In order to come out on top and regain the original amount before the 40 percent loss, gains in 2009 would have had to be higher than the losses in 2008 to recapture what was lost.

Here’s what it looks like:

Original balance: $1,000,000

Profit/Loss in first year: -40%

New balance after first year: $600,000

Profit/Loss in second year: +25%

New balance after second year: $750,000

That  means the profit in the second year was $150,000. Fine. But if you still had the original $1,000,000 in 2009 and enjoyed that banner year with its 25 percent return, you would have earned an additional $250,000. So this means that you are behind in terms of time by $100,000.

You just gained 25 percent in a year, a great return, so it seem that you only need to have a few more good years to get the additional $250,000 back. But, in fact, in this scenario if you lost 40 percent you would need a 67 percent return in order to get back to where you were before the market dropped. If you earned 25 percent of it back in 2009 (which was not a typical year by the way) you would still need another 42 percent to regain it all. When people made 25 percent back in 2009 and got all excited about the fact that they made so much of it back in one year, they started believing that they probably had enough time before retiring (if, fingers crossed, nothing crazy happened again in the market) to get it all back. But what they didn’t realize is they actually needed another 42 percent and that there would be no way most of them would have the time to make up this kind of loss.  This kind of fuzzy math without a real, honest explanation of how rate of timing works in the market is what has HourGlasskept the financial firms in business. They make you feel like you’re doing the right thing by investing with them, but you still feel like you are not getting ahead.  The general public feels it, but doesn’t know how to put their finger on it, or know what to do about it. “Hmmm, how can that be?” you scratch your head and wonder. Now you know why. 

I recently asked a new client about her interaction with her 401(k) planning company at work, and she said they lectured everyone the same way: If you are young, they said, you need to “be aggressive,” and buy riskier assets in the plan to get a higher return. If you are middle aged and getting closer to retirement, (which is where my client is at about 45 years of age), they said you need to “be aggressive” to make sure you make it to retirement. If you are older and getting close to retirement and perhaps a little short on retirement funds, they said you need to “be aggressive” to make up for lost time.

Really? All they are doing is passing the risk on to the clients, probably for some “aggressive” funds that pay them more commission, which can be a breach of fiduciary responsibility. This is all too common, and it can lead someone to lose their hard-earned retirement money, and in many cases I have seen, it delays retirement and causes way too much stress and problems trying to work when people are too old to work.

Market loss is a MAJOR risk to your retirement.  If you have most of your money in these risky 401(k) or IRA accounts, I recommend getting solid investment advice from  You can get help playing the market, which is what you have to do if you are trying to build retirement using a 401(k).  He can help you in this effort. But if you’re thinking it’s time to get into retirement funding that does not require you to absorb so much risk on your own, contact me and I will be happy to discuss at no obligation, the myriad options available to you that will help you build a predictable retirement on ANY income that you cannot outlive:  

In my next post, I will deal with the second major risk to your retirement funds:  CONTROL.

10 Tips for Retired People that Will Help Protect Your Nest Egg

The North American Securities Administrators Association (NASAA) has noted:

As an older investor you are a top target for con artists. The files of state securities agencies are filled with tragic examples of senior investors who have been cheated out of savings, windfall insurance payments, and even the equity in their own homes. This is the bad news.

Now the good news: You can avoid becoming a victim by following 10 self-defense tips developed for seniors by NASAA:


  1. Don’t be a “courtesy victim.”
  2. Check out strangers touting “strange” deals.
  3. Always stay in charge of your money.
  4. Don’t judge a book by its cover.
  5. Watch out for salespeople who prey on your fears.
  6. Don’t make a tragedy worse with rash financial decisions.
  7. Monitor your investments and ask tough questions.
  8. Look for trouble retrieving your principal or cashing out profits.
  9. Don`t let embarrassment or fear keep your from reporting investment fraud or abuse.
  10. Beware of “reload” scams.

Now my take on the NASAA’s recommendations:

As we age we have experienced enough that we assume things are always going to stay the same.  But times change and this change brings with it new products, new technology, new methods of processing, new ideas, and so forth. Old ways go away and die.  Because of this, we have toScreen shot 2016-06-01 at 4.20.39 PM step up our willingness to pay attention to the details and not just be satisfied with the status quo.

Here are some additional suggestions for those in the retirement years that I have personal experience and want to suggest as a way to help protect your valuable nest egg in a period of your life that can make you quite vulnerable to changing times. 

First, make sure you have a loved one who has your best interest at heart to assist you in making financial decisions.  Get their perspective as a check-point for your actions.  You don’t need to agree with them at all times, but at least have a third party’s input.

Second, keep a journal of decisions made.  This allows you to refer back to what you have discussed about financial mattes and how things need to proceed as you age; it will help you recall assignments given and received.

Third, when making decisions, assess all options, make a choice, record it on paper, and then wait a week.  Don’t jump into an action quickly, if at all possible. Seeing the decision on paper and looking at it over a period of time will give you perspective.

Fourth, track results and compare.  We all know that flying from New York to Los Angeles is not a straight line.  The pilot must constantly adjust for the wind-currents that continually force the plane off its course.  Pilots say that they are on direct course only 20 percent of the flight time.  Most financial decisions are similar to flying across country, so don’t be discouraged if adjustments are needed. Track adjustments and compare with what you originally planned. You will learn a ton about the situation and be able to make better decisions going forward. 

Fifth, experience is a good teacher so learn from her. I have had my share of experience.  Some has been bad and some has been good.  The point is, don’t waste what knowledge you have gleaned from prior experience. Use it to set goals about where you want to be in five and 10 years and make decisions based on your goals and objectives, not on someone else’s.  

For more clarity of thought go to

5 Ways to Make Sure You Know the Rules of the Financial Games You Are Playing

Knowing the rules of the game is one of the 10 Money Mastery Principles I teach my clients.  As simple as it sounds, you wouldn’t believe how many people do not understand this concept or who think it’s not that important. What you don’t know CAN hurt you, and I can personally attest to that. It is vital that you understand the contracts you have entered into when it comes to your mortgage, credit card usage, and insurance policies. If you don’t understand the rules, those who do (namely insurance companies, banks, and mortgage lenders) will run right over the top of you in an effort to get more money out of you.

Here are 5 things you should do to make sure you always “know the rules:”

  1. Don’t get overwhelmed by the amount of information you need to know. Remember, you don’t have to know everything, you just need to begin by knowing something.
  2. Take the time to learn the rules. It usually only takes 30 minutes to learn what you absolutely need to know in order to make informed decisions.
  3. Don’t trust others to know the rules for you. Take responsibility for your own financial well being and do what is necessary to ensure success: hire a professional if needed to help you understand the rules. This can usually be done for as little as $300.
  4. Do first things first. Avoid the temptation to dabble in risky behavior before you are secure enough financially to afford that behavior. Pay off high-rate credit card debts first and know the rules of the credit card game before you play it.
  5. Give yourself 24 hours to consider a financial decision. Never feel pressured to make an important financial decision on the spot. Take 24 hours or overnight to consider all the issues to which you will be obligated by signing a contract, and re-read anything related to the rules of that contract before signing.

The One Thing Einstein Said about Compound Interest

One of the greatest minds of our time, Albert Einstein, certainly understood the power of compound interest — he considered it “the greatest discovery of the 20th century.” 

But compound interest can also be considered the greatest opportunity of this century!

That’s because it doesn’t just work for the bill collector. It can work in your favor, as well, if you truly understand how to harness its power. Millionaires have learned to harness that power. That’s why they receive interest instead of paying it. Rich people may have debt, but it is “good debt” or the kind that results in a fairly quick profit for them (such as real estate holdings or business capital investment). They only engage in short-term borrowing practices that will increase their long-term net worth.

Consider this Credit Card Situation

  • The amount owed on a card is $3,100.
  • Interest charged is 19.9%
  • The card holder only pays the minimum monthly payment of $51.43.

How long will it take to pay off the card?  A whopping 39.4 years and the person will have paid $21,216.10 in compounding interest! When you look at the hard, cold numbers, it seems stupid to behave this way with money and we think, “no one in their right mind would just throw away $21k.” But as a society we have become accustomed to this kind of mentality when it comes to debt and paying interest on that debt, assuming that it is somehow “normal.” Well, it’s not.

Compound interest is one of the greatest means for building wealth on ANY income, but only if you make it work in your favor. When it comes to interest, be an Einstein and learn how to make it work for you and not against you.