Posted on June 10, 2008 @ 10:28 pm - Written by BawldGuy
Had a great conversation with an active client today. The discussion wandered over to stocks vs real estate. He’s been in that game — as a player for both sides. This is when I asked him his stocks’ return compared to his real estate. A minor pause ensued, as we both knew the answer. So why would you keep putting hard earned cash into something performing at a fraction of the return as the alternative does in a mediocre year?
Simple — you wouldn’t. He’s moving the lion’s share from stocks, to cash, to real estate. Smart move.
Look, I’m not interested, nor am I gonna spend much time arguing with the Wall Streeters on this subject, ‘cuz it’s not fair to them, and it’s frankly a waste of my time. Am I saying you shouldn’t invest in stocks or mutual funds? Nope — it’s your money and you should do what you think best, and fits your personal comfort zone. Getting out the portfolio folder and checking your stocks’ historical performance might be an idea to consider.
If your stocks return 10% yearly, how would your real estate have to perform to beat that return?
If the real estate appreciated at 3% annual rate, and you put 20% down, your return, sans tax benefits and cash flow, is 15%. Do we really need to take this any further? Really? Read the rest of this entry »
Posted on June 9, 2008 @ 11:35 pm - Written by BawldGuy
Throwing out the low and high ends of the scale, the typical Brown and Brown client is easily described as Regular Folk. Sure we get the low end newbie, able to begin minimally, and the ones with several hundred grand to start plus equities in umpty ump properties to trade. But 70-80% of our clients begin with $50-100,000 on up to around $300,000 give or take a few bucks. And they’re all regular folks just like you and me.
They’re usually married, but not always — a sizable minority are not. They make $45-150,000 a year, sometimes more, rarely less. They fall into the 42-55 age bracket, although those younger and older than that range are well represented. They’re all old enough to realize their future shouldn’t rely in any way, shape, or form on a toss of the dice. Duh.
Almost all own a home, and almost all with a mortgage. Though most have a retirement plan at work, usually a 401(k), rarely is there more than $30-90,000 in them. This fact alone is what gets so many to begin thinking more seriously about the retirement. Contemplating living post-retirement on the income generated by a couple hundred grand isn’t exactly the catalyst leading to a good night’s sleep, know what I mean, Verne? Read the rest of this entry »
Posted on June 1, 2008 @ 10:57 pm - Written by BawldGuy
This question haunts me sometimes. It’s understandable ‘cuz the stories folks tell me can bring on a strong and unwanted sense of helplessness. When people find themselves in their 50’s and realize their retirement isn’t gonna come close to what they planned 20-something years ago, panic can set in. The Wall Street Journal published a story 3-4 years ago. Among other things, it said the average American man, at 57, had less than $60,000 in his 401(k), a home with a mortgage, and hope that Social Security wouldn’t be in the history books as an idea that failed.
Given decent health and a ‘can do’ attitude, you can significantly improve that picture. Does the above describe you? Don’t despair. But do act quickly, ‘cuz as you might have already surmised, time ain’t yer friend at this point. You need to muster up some good old fashioned gumption, and get into gear — overdrive would be preferred. Your original fantasy might not be in the cards now, but you can sure make a new one come true.
Posted on May 31, 2008 @ 8:57 pm - Written by BawldGuy
Just looked at our next Texas location and it rocks. Too early to spill the beans, but we’ll be putting our boots on the ground very soon. Hint: It’s on the A-List of areas having appreciated more than 7% in the last 12 months.
Also, a buddy living in another region has convinced me to fly up there to check out the ‘unreal deals’ available. Gee, haven’t heard that one before. Worth a flight and a day or two to find out though. We’ll see.
Off the cuff — follow me on twitter, I’m @BawldGuy. Just go to twitter.com — it’s free, and you’ll like it. Go to my profile and see who follows me and who I follow. If you do the same, you’ll find out what folks in the business around the country talk about with each other.
Also off the cuff here — so many of my clients have been sorely disappointed by the performance of mutual funds in their 401(k) plans. They complain how they’ve heard most of their adult lives how the returns were in the range of 8-12% annually, when their real life results haven’t reached even 5% yet. Now we have a 20 year study which proves just that. (More on that this week.)
No time here to expand on the thought, but it’s nice to finally have a 20 year study on which to fall back, know what I mean, Verne? Verne’s not laughing — guess he’s in mutual funds. Here’s the last train to Capital Growth for those San Diegans interested.
I’d love to talk with you about getting started with your own Purposeful Plan — one heading straight for a very cool retirement. You can find me by clickin’ here, then waiting for my always quick response. I need a fix, so hurry up, wouldya? Much appreciated.
So it’s Saturday, which means there’s a video, right? Then I put ‘train’ in the title, geez. Settled on The Monkees, a band for whom I’m still in the dark. How in Aunt Millie’s old robe did they ever do so well? Dateline should do an investigation, ‘cuz there’s gotta be a conspiracy buried somewhere. Anyway, it so happens they did have a song about a train, so that’s the one I’m usin’. Sorry in advance.
Posted on May 27, 2008 @ 3:44 pm - Written by BawldGuy
I’m proud to introduce David Shafer, a very smart guy. Today’s topic, EIUL’s have been a subject close to my heart. Though I’ve written about it several times here, and at BloodhoundBlog, I thought it was time to bring in an expert.
NOTE: David used numbers even more conservative than I would, which is just fine by me. For example, even though the performance of the S & P over the last half century is around 8%, David uses 6.5%. Why don’t I care? ‘Cuz I’ve never had a client complain when real life performance exceeds projections. Duh.
When BawldGuy asked me to blog on equity indexed universal life insurance (EIUL), I thought no problem, since I had been blogging on it for a couple of years on both my site and others. Then he asked me to look at the archives from Bloodhound to see his previous blogs and I knew I had to write something a little different. In order to make sense of EIUL contracts you really need to understand the misinformation that underlie the arguments being put out by folks in books, the mass media and blogs on both sides of the issue. You need to be clear on what your wealth creation plan is and what it isn’t. So bear with me for a few paragraphs as I burn down the straw-men arguments before we get into the mechanics of EIUL’s.
Usually these discussions surround a common theme, EIUL’s versus mutual funds inside a tax deferred wrapper (401K, IRA’s). First let’s talk about mutual funds. Mutual funds were designed to reduce risk or as financial experts describe it variance. They were a boom to Wall Street as mutual funds induced many folks to invest in stocks, something they were not inclined to do in the past. They have been around for 2 generations so we have plenty of data to tell us accurately how people do investing in mutual funds. Read the rest of this entry »
