Young Couples Planning to be Broke..If they stay together at all

Most young couples ages 25 to 45 have conversations and agreements around money related to what they plan to consume not save. 

That’s really it, there is no plan to save and if there is, that plan is not primary or even secondary. The plan to consume is a top priority and thus most relationships are problemactic as it relates to money.

In fact the savings of most young people is really a preconsumption fund, meaning money saved  for retirement is subject to be tapped if a new house, car or private school for the kids comes along and thus it was never a future fund from the start.

At a minimum a family needs three things financially:

1. Life Insurance to totally replace each bread winners income and get the family through all the years they would be dependant on that income.

2. A plan to save at least 1 million dollars by retirement. You will need at least this by the time you retire.

3. An agreement not to blow the future on temporary cars, houses, and other things that come along and derail you from your plan.

It is my belief that 50% of marriages don’t need to end in divorce. Most of it is bad planning and financial stress caused by bad decisions. Keeping your family intact is the best reason of all to do the right thing.

Wishing you Wealth Wellness and Wisdom

Manager of Wealth

What Tim Bradley can teach us about Undeserved victories in Business and Life

The sports world is up in arms about this past Saturday nights championship fight between Bradley and Pacquiao. Many are screaming that the fight was fixed and that Bradley clearly did not win that fight. Even Bradley looked as if he didn’t feel he won the fight. But there are a few important lessons to be learned by Bradley’s unexpected and possibly undeserved win over Pacquiao that the public and especially business people should not miss.

Lesson One – Sometimes you lose when you think you should win and sometimes you win when you think you should have lost. Life is not fair.

Tim Bradley controlled the one thing that he could control about the outcome of the fight. He trained hard, came to the fight prepared and gave everything he had. People are screaming that the fight was fixed but anyone who watched that fight saw Bradley fight with his whole heart and do his very best. If the judges fixed the fight they clearly didn’t tell Bradley before hand.

In business everyone has major and minor setbacks but what most successful people won’t tell you is that a great deal of massive success is also about dumb luck. Ask Warren Buffet, Bob Johnson, or Mark Zuckerburg how much luck, timing, and undeserved good fortune helped them become champions in business. Like Tim Bradley they worked hard to prepare but they also showed up to the fight and won. Many with even more talent failed or never achieved success on such a massive scale.

Lesson Two – It’s going to be painful win or lose

People are so mad at the outcome that they totally missed that undefeated Tim Bradley fought almost the entire fight with a fractured foot. Could you go 12 rounds with a broken foot against one of the greatest boxers in the world? Business like boxing is a world where you sure to get your butt kicked each time you make a mistake and drop your guard or make a bad decision. Sometimes you keep making the same bad decisions and you keep getting punched in the face like Bradley did each time he didn’t block the left jab.

In the end no judge could have given Bradley the fight if he hadn’t stayed on his feet and made it all 12 rounds fighting his heart out. You can’t win the game if you aren’t there at the end and if you watch that fight Bradley went through a lot of pain to be there at the end. 

Successful business people all have a story about fighting against great odds. financial misfortunes, bad markets, lawsuits, and outright disaster but most who stay focused, come out the other side and win big. Unfortunately the majority quit too early and only have stories about the pain but not the reward. Bradley could have quit and I’m sure he wanted to.

Lesson Three – When you get an undeserved win be humble about it and gracious to the loser because chances come around

I gained total respect for Tim Bradley because of how he handled things after the decision was given. He complimented Pacquiao on a great fight and acknowledged that the crowd didn’t agree with the decision but he would keep his word and give Manny a rematch in November as promised. He showed so much class in that moment and didn’t fake it like he had really beaten the Pac Man. He got lucky because he was prepared well and finished the fight strong. He didn’t get a big head about winning because he knew he needed to do better and that he wasn’t the best fighter that day.

In business we all have some victories that are right place right time victories and we see others who are more talented fail. It is important to be humble and acknowledge our good fortune especially to ourselves. Being grateful and humble is a hard lesson to learn in America because we have a bragging culture but we also have a country full of people who were lucky to be born with opportunities they did nothing to earn. Bradley showed how to win with class.

A good friend of mine told me Bradley was clearly out classed in the fight and didn’t think Bradley ever has a chance of beating Pacquiao. I totally disagree. Go look at the Ali vs. Frasier where Frasier beat Ali like he stole something but Ali came back and took Frasier out in the next fight. Look at Ali vs Foreman”Rumble in the Jungle”, Ali was losing the entire fight and almost died in the ring but walked out a champion. Look at Moorer vs. Foreman, where a 50 year old George Foreman became Heavy Weight Champ of the World on one punch at the end of the fight.

In Boxing and in Business you always have a punchers chance even for an undeserved victory,

 

Wishing you Wealth Wellness and Wisdom

Manager of Wealth

 

Maxing out you 401K sets You Up for Higher Taxes

Tony Brayboy of Matrix Wealth LLC speaks at the Wealth Breakfast in Baltimore

The Uninsured Risk of Being a Parent and how to protect your Family Properly

If you are reading this chances are you have a family. I am also going to assume that you love your family,and are making big plans for the future of your children. Some of these plans may include a great primary and secondary education. Also making opportunities and experiences available to them in arts and culture, and making sure they get a solid start once they reach adulthood.

I applaud your plans for your children. Your kids will have opportunities that you never even dreamed about when you were their age. The great thing is that your hard work and sacrifice is paying for all of these opportunities as well as the basics, food, clothing, shelter, video games, etc. Even greater news is you have a plan and the work ethic to get it done for your family. The not so good news is that you most likely have no real plan in place to fully provide the INCOME it will take to carry out those plans if you were to pass away prematurely.

The uninsured risk of being a parent is hitting more and more families everyday. Many 30 and 40-year-old parents are being stricken with Breast cancer, diabetes, stokes, heart attacks and sleep apnea. Not to mention simple work and non work related accidents and car crashes. The ranks of the six figure earners are exploding with women and minorities like never before in the history of the U.S..

The ranks of the properly insured grow smaller everyday.Why? Because the idea of what being properly insured is has not advanced in the last two generations and the wealthy are the only ones truly taking advantage of the great opportunity to advance the family legacy through the proper use of insurance.

Being properly insured means being able to totally replace your yearly income for the full time your family will need it. How long do you suppose your children and/or your spouse will NEED your income? Depending on the commitments you have made and the plans your family has that could mean 25 to 50 years. 30 plans for houses, 5 year plans for cars and 20 plans for credit cards. Do you have a plan that will pay for that long? Do you have total income replacement insurance that you personally own? If not, you are leaving your entire family in peril everyday because you refuse to totally cover the risk.

A recent survey was done amongst six figure earning parents and they were asked how much life insurance protection they had. The number than had over $500,000.00 was less than 5%. The number the that had none was over 20%.The number that would have none if they loss or changed their job was over 40%. This is an epidemic problem. Can your family lose over $100,000.00 of income and still operate at a level?

How to replace Income

$500,000.00 can only replace about $20,000.00 in income long term because you can’t really get more than a 4% guaranteed return in any stable financial instrument. That means to replace $100,000.00 you need about $2.5 million in life insurance. Put in the proper instrument it will pay $100,000.00 per year forever. It will pay your spouse, your children, and your childrens’ children, etc.. Learning how to do this properly and for as little cost as possible is an art.

BTW, If you have coverage on your job you need to purchase proper coverage like you have no coverage at all because if you lose or leave your job that is exactly what you will have only you will be older than you are now and the coverage will cost much more. Don’t fall into the trap that gets so many Americans. There are so many Americans looking for proper coverage that they are simply to old or too sick to qualify for. Insurance favors the young and the healthy and time is not on your side.

The structure of a proper income replacement plan is key. If you don’t have a plan that will replace your income for the next 50 years minimum then call me so I can help you put together great options. Having no plan is a plan to fail and today’s parents are failing their children everyday by only considering the possibilities if everything remains perfect. Nothing ever goes perfectly. Plan for the worst and hope for the best and you will never have any regrets. By law you can not drive a car or own a  home without proper coverage. Why can you be a parents without proper coverage. So much is riding on YOU!

Call me at 410-908-5987 to schedule a free 15 minute consultation.

Wishing you Wealth Wellness and Wisdom

Mark

Manager of Wealth

Four Things Occupy Wall Street should be thinking about to change America for the Better!

It is great to see people standing for something. Although it is early in the development of the Occupy Wall Street movement, it may yet be a great thing for the country. There is a unique opportunity, not just to complain but to question the very foundation of what we count on Wall Street for.

Should America be counting on Wall Street for their retirement saving? Absolutely not. Markets will have ups and downs for a great number of reasons that don’t make any sense to the investor. Making money trading on Wall Street and making money investing as a retirement plan owner are two totally different things. The biggest difference is a trader can make money on both sides of a trade.  A retirement plan investor loses every time their stocks go down in price.

In addition stock prices go down if the company does not reach the targets it set in its quarterly plan, even if makes a huge real profit. You lose as a stock holder and the company keeps the cash. Stocks like Microsoft that have been performing poorly over the last few years still they make tons of cash. Stock value goes down but the company does billions in sales profitably. Sound like a good deal?

There are investments in America that have offered profitable returns in America for the last 100 years. They don’t have all the sexy marketing. They just work and have better tax advantages.

America needs to go back to investing the way it did before 1978 when retirement plans were created. People would be a lot richer without the risk of investing in what they don’t understand.

Do the Occupy Wall Street protestors know that Wall Street is about to shrink on its own over the next 20 years because of population trends?  Everyday 10,000 people turn 65 in America. This will happen everyday for the next 20 years. These seniors have more than 65% of the country’s wealth and they are moving it to safety because it’s all they have. In addition to that stat only 3 in 100 seniors has enough capital to retire comfortably. Those three are not taking any risk.

What happens when a country’s baby boomers take their cash out of the stock market, you ask? Japan happens! Their population is 20 years older than ours. When their baby boomers retired they took the money in the Japanese market with them. Their market is 75% below 25 years ago. We will most certainly see the same.

Occupy Wall Street should be asking what is the plan now that the world is making moves to remove the dollar as the favored currency in the world?  All of the top world powers have been meeting in secret and not so secret meetings to remove the dollar and create one central currency under one global central bank. This would crush our economy because we are the largest debtor nation and our currency would be worth very little in the world.

Here is a fact to think about regarding the country’s debt. If you taxed every American at 100% of earnings the national debt would still not be paid off. This is the real cost of our 10 year war. It has completely drained our treasury.

The fall of the stock market, the exit of seniors money, the crushing debt, and the change to a global currency are things that are happening for sure. It is no longer conspiracy talk like when we were in college years ago.

If you are marching around with a sign while not seriously considering alternatives to the system itself, you are not making things better for you or your family. It time for these wonderfully intelligent, free American people to start to think!

Please let me know your thoughts! If you think this is worth talking about post it and resend it to your friends.

Wealth Wellness Wisdom

Mark

Manager of Wealth

Is Occupy Wall Street the Beginning of 21st Century Civil Rights?

People have taken to the streets because something is really wrong in America and they want change. What type of change they want and from whom is unclear at this moment, but Action is always a good start.

Is Occupy Wall Street the beginning of a 21st century civil rights movement? My answer is Possibly with a smile. I smile because although we have revised history to make ourselves the most moral people on the planet earth, the truth remains that we are far from completing the goals of the 20th century’s Civil Rights Movement. The truth is America ALWAYS takes a very long time to do the right thing. And lots of people get hurt in the meantime.

We are the country that wiped out most of the native people who were here before us, kept slavery in effect for 4 centurys, called the country free in 1776 but didn’t allow women to vote until 1920. Of course we didn’t have a Voting Rights Act until 1965. It took until 2011 for Gay Rights in the military. And yes we used to have children working in coal mines because our child labor laws were terrible for the first few hundred years. I could mention so many things that are basic human rights in the country that took way too long to come to pass but you get the point. We can see injustice and keep going along with it better than anyone on the planet but once we decide to do the right thing we want the world to adopt that view and we condemn anyone who is not so enlightened as America.

Occupy Wall Street can build itself into one of the great movements.  At its center is the idea that people should have a fair chance in life and not have to worry that the banks and other financial institutions are stealing their futures. It is a great idea that is taking shape but it will take time and those in power will not go quietly.

More importantly those that lead and support Occupy Wall Street should know that they will not be supported in word nor deed by the majority of people who will be helped by their efforts. 

The leaders of Occupy Wall Street should be prepared for lots of criticism from the very people they seek to help. Just as Martin Luther King and the civil rights workers did. Just as the women from the womens rights struggle did. Just as the first abolitionist did. They may live and die with high disapproval ratings like King only to one day be remade into champions of all Americans.

Power concedes nothing.  This system was not undone by credit default swaps and bad banking. It was doomed with passage of the Retirement Act of 1978 that created the IRA, 401K, thrift savings plan, and 403B. At that moment all of America’s workers became stock market gamblers with no real experience. That moment brought us here because America’s life savings flooded the market and created faux wealth of every type. That is what we must undo.

Slay that dragon and maybe we have a chance to survive. If we keep that system alive and keep training advisors the way we do now with the greatest compensation going to the plans with the highest risk we can not recover.

Will a 21st century civil rights save the people? I have no idea but we should do right because right is the right thing to do.

Will we recover? Yes we will recover, but perhaps not in your life time because in America we take a long long long time to do the right thing.

Wealth Wellness and Wisdom

Mark Fuller

Manager of Wealth

No time to sit back and watch the Wall Street Train Wreck!

I’m going to make this super short so that you can hear me through the noise.  A confused mind often opts to do absolutely nothing and so what you can count on is that most people in America will do nothing as their money evaporates in their retirement plan. Occupy Wall Street will not change that. When people get scared they usually do nothing but stand in one place and wait for the train wreck to happen.

Data from the social security administration says that only 3 out of every 100 working people retire securely with enough income to not be totally dependent on the government for the rest of their lives. That means we have a 97% chance of failure and it’s largely due to not knowing enough and making the right choices. 97% of people are good, decent, hard-working people. But they can’t retire well because every few years they lose most of their savings in the stock market. This will be the legacy of the tax deffered retirement plan. Write that down because in the future it will sound profound. It’s not profound but you can’t hear the truth of this through all the noise.

Our advisors were trained to believe in a plan that has a 97% chance of not working out. This doesn’t make your advisor a bad person.

This doesn’t make you a bad person. 

You will be like most of the 97% who thought they would make it without being properly educated and taking the right steps to secure themselves.

Truthfully, you can’t earn enough money to buy your way out of knowing what you need to know. Being rich now doesn’t make you wealthy in the future. In fact, if it did there wouldn’t be a 97% failure rate. If being rich now secured your future then the success rate would be over 25% for American Seniors. But its only 3%.

What ever you do don’t just stand there and do nothing! Think and act. A huge train is coming down the track.

60 Minutes told people two years ago but most are still just watching. http://www.youtube.com/watch?v=q8C1ZUrYhC0

Wealth Wellness Wisdom

Mark

The Unholy Alliance “Your Money and the Stock Market”,you can do Much better!

It’s the day after another market collapse and a lot of people are feeling pretty sore because they have just been beaten up.  Why is this type of abuse acceptable for average Americans and is it all just part of the way saving and investing works?  The short answer is NO, this is not how it works. Today I’m going to share a brief history lesson that will tell you exactly how we as American workers got to the point where we watch our life savings go up and down everyday in the market and how we can get out of this trap.

The IRA, 401K, 403B, and Thrift savings plans did not always exist. If you were a worker in America before 1980 you didn’t have one of these plans. These plans were created by The Revenue Act of 1978 and it forever changed the average person’s relationship to the financial markets. Before this date American workers had “defined benefit plans” meaning when you retired from a company they would pay you a certain percentage of your former salary and benefits. Most American referred to them as Pension Plans. Firefighters, police officers, military, some government employees still have these plans. When the Revenue Act of 1978 was created it signaled the end of the defined benefit plan and started the era of the “Defined contribution Plan.” A defined contribution plan meant that an employee was allowed to put up to a certain amount of money into an investment account,with no financial advising, tax deferred and a company could also match all , a portion, or none of those funds. As America moved through the 80s companies large and small began moving out of pension plans and into qualified plans. This is what created the disaster you see today.

What’s so bad about investing in the market?

First of all workers are not really investors they are savers. The purpose is to save your money so that you can replace your income when you retire. Investing is risk. Sometimes you win and sometimes you lose. America’s life savings was not meant to be in the casino every single day. When you start work at a company they give you a form that says retirement plan options. You check low, medium or high risk and now 6 percent of your money is going into a fund you know nothing about. When the market is good and your money grows, like in the greatest bull market in history 1982-1999, you feel like a genius. When it crashed like in 1999, 2008, and yesterday you feel like a fool. Neither is true. The truth is you and most of the American work force should not have their retirement money in the stock market. Who advised you on that retirement portfolio. Who keeps telling you to hang in for the long-term even as large institutional companies fail.  Who is telling you all of these things, chances are you are and the media that sells advertising to the financial service companies.

What can I do instead of stock market investing? Pension plans are not an option, are they?

What you can do is get your life savings out of the market!  You can’t afford to lose everything. You couldn’t afford to lose half of everything in 2008 and chances are you have gone over a decade without making a dime if you subtract your contributions from your returns. Stop the madness now! And yes, there are was to set up your own private pension plans that are not exposed to the market and will secure your retirement without the up and down of the market. The companies that provide these plans have been producing uninterrupted returns for over a century. Paying dividends, not losing your hard-earned money. These companies are where the wealthy and educated store the vast majority of their fortunes. I hope you know that less than 20% of the wealthiest people’s money is in the stock market. The wealthy don’t take those risk. Think about it. The short answer is dividend paying insurance companies can set up a private pension plan for you that will work and pay you the income you are saving for. Not every company is the same and there are more companies to stay away from than to save with. Shoot me a message and I will be glad to point you in the direction of someone who can help you understand all there is to know about safe options.

Maybe you need the cold hard facts on the history of the 401k from the government itself. Here is the history and you will see that until 1980 American workers did not suffer loses like yesterday. When the great depression hit, workers did not have money in the stock market. It was a depression because companies closed and there was no work. Satchel Paige once said, “It’s not what you don’t know that will  hurt you, it’s what you think you know that ain’t so.”

Read the history for yourself:  http://www.ebri.org/pdf/publications/facts/0205fact.a.pdf

You may also find this video enlightening.  60 minutes did an excellent job on the 401k. Share this with your friends because it doesn’t need to be this way http://youtu.be/nAHgr9dY9BU

Wishing you Wealth Wellness and Wisdom

Mark Fuller – Manager of Wealth

Leaving a financial legacy , Seniors can do much more with retirement income than pay off homes!

Imagine working your whole life and paying every on time or early. You have done all the right things, raised your children, and worked for 40 years on a good job. Now you are retired and drawing a fixed income of $3500.00 per month from your pension and social security. You are also like many American seniors who are still paying a mortgage. You live in a $250,000.00 house but you have paid down your mortgage so you only have $100,000.00 left to pay before you house is paid off. Now when you got this mortgage you were ten years from retiring and earning $70,000.00 per year on a full-time job. The mortgage payment of $1700.00 per month represented less than 30% of your income but now in retirement the mortgage payment is now 50% of your monthly income. Taxes, insurance, utilities and medical expenses  have almost all disposable income going to bills. With 20 years left to pay on this mortgage and a life expectancy of 85 you might be paying for this property for the rest of your life.

But there is a great option that creates additional income and provides an opportunity to leave a much greater financial legacy than bill paying ever will. Instead of mortgage payments for the next 20 years you could create a great financial nest egg with the same money. Most never consider this option because they want to pay off the house and leave it to their kids(who already have homes of their own, and will sell your house as soon as they are able)

Lets assume $1500.00 a month was going to principal and interest and $200.00 was going to taxes and insurance. If you stopped paying a mortgage and started sending $1500.00 a month to a saving account paying 5% over the same 20 year period of time you would amass $620,619.46. So the same dollars that only pay off a house could have built up a huge financial legacy for your heirs. In addition, it could have acted as a safety net in case you fall on financial hard times.

For many seniors once they retire their retirement income is so low they can’t qualify for a home loan because their debt to income level in too high.   Most live on a lower fixed income than they had while they were working. With 85% of American’s net worth is in real estate equity and 65 %to 70% of the wealth belongs to seniors. This reality creates a huge problem or a huge opportunity. Being equity rich and cash poor is a disaster waiting to happen.

The reverse mortgage is one of the few government programs that actually performs as promised, if you use it properly. Advice form a great mortgage adviser and a great investment advisor can be invaluable. I hear more mythology about these products which is far from the truth and has seniors scared to death.

This is a mortgage that accrues interest instead of one that you pay monthly.  It is not you signing over you home to the bank. I have heard people say these mortgages are for poor people who can’t pay their mortgages . Everyday I see wealthy people use these mortgages to capture the equity in their properties and move the money to savings accounts where they can keep the growth.

Don’t let misinformation steal your opportunity. Get educated. Why would a person take half their income for 20 years to pay off a house when they could amass over $600,000.00?  Only because they don’t know any better. If people knew better they would do better.

For more information please contact my mortgage planner Omar Smith 443-271-5952 and get all the facts.

Wishing you Wealth Wellness and Wisdom

Manager of Wealth

If your Mortgage/Rent payment is higher than your Savings deposit you are in Trouble

The title of the article says it all. Simply put, If you are paying more for your home than you are into your savings every month it is just a matter of time before you fall into major trouble. After a decade of being a mortgage broker and two decades of working with people’s investment needs I have noticed a trend that supersedes all others. 90% of the middle class pay more toward mortgages than toward retirement. This is very dangerous.

Growing trend among American professionals

The professional with all of her bills paid on time, perfect credit, and everything going according to plan is who I’m talking to. This article isn’t about those struggling but about those who are seemingly doing better than ever before.  The last boom in the economy came just in time for my generation. Chances are that if you are a professional person you have earned between $75,000.00 and $125,000.00 a year for the last decade. Last year I interviewed over 100 such professionals average age 39 with 15 plus years in the work world. For the last decade almost all had earned between $750,000.00 and $1,000,000.00 but not more than 6 had saved more than $100,000.00. I’m not talking about people who bought a lot of fancy cars and partied it all away. I’m talking about average joes who purchased their piece of the American dream.

Why is this trend a disaster waiting to happen? We live in an era of “defined contribution “plans(ie IRA and 401k) not an era of “defined benefit” plans(ie, pension plans) like the last generation. All we will have when we retire is what we have saved and the interest in can produce.  If the majority of our income goes toward houses, cars, private schools and taxes we are going to have a huge number of very poor seniors about 25 years from now.

Our system allows you to spend 30% to 40% of your before tax income on housing. Our system also takes about 30% of your income in taxes. The taxes you pay locally pay for public schools but many parents are sending one or two children to private school at an average cost of $1000.00 per month. The car payments average $450.00 per month.  The last consideration is being able to set aside 10% to 15% of income for savings.

Upward Mobility has a cost

For most the cost will be financial stability in their senior years. A $320,00.00 home with a $2500.00 payment will cost you $900,000.00 in mortgage payments. $2500.00 monthly payments into your savings over thirty years at 6% earns you $2,600,000.00 which will totally secure your retirement. So the house is costing much more than money.

The same is true for cars and expensive private school educations. Making these purchases before setting up a proper savings plan is costing you. It feels so good right now to live in a great community, drive a great car, and send your kids to great schools.  You won’t feel the pain until you turn 50 and realize you have a few years to correct your financial mistakes. Of course most never do.

Everyone teaches you that the answer to this problem is simply to make more money. It’s not. With more money you will make the same errors in judgement on a larger scale. Ask anyone making $300,000.00 in 2008 who lost their job and now can’t find one.  Ask them what kind of house they bought when they were making $300,000.00 a year and ask them how hard it is the pay for it now.

Common Sense is not so Common

You can fix these financial issues pretty easily if you have courage, a goal, and the heart to follow what you know to be right. Use my plan and you can have your cake and eat it to. Use the plan that 90% of African-American professionals are using and you can eat your cake for a little while until it runs out.

Tomorrow I will give you the steps to getting on track to have the best decade of your life.

Wishing you Wealth Wellness and Wisdom

Manager of Wealth