When do you think the Dow will go to 32,000?”

Does that seem like a crazy or dumb question?  It’s not.  I’ll explain why in a moment, but I have another question for you first:

What would you consider to be a minimum acceptable annual return on your money for taking on the nerve-wracking risk and volatility of the stock market?

5%?  7%?  Maybe even 10%?

Over the past two years, we surveyed tens of thousands of people about this, and most responded that they wouldn’t consider risking their money in the market unless they could get a 7% or more annual return.

But let’s say you only insisted on a 5% per year return…

The Dow would have to be over 32,000 right now – TODAY! – to give you just a 5% annual return, after adjusting for inflation!  (32,072 to be exact.)

We’ve been tracking this data since 2010, and even though the Dow has soared to new heights in recent days, investors are still falling behind.

Are you curious how we calculated this?  The Dow first closed above 11,000 on May 3, 1999.  Between then and March 31, 2013 (the latest date for which figures are available), we’ve had just over 40% inflation, according to the government’s key inflation barometer.

Of course, there are many who say the government’s numbers way underestimate the real inflation rate.  You may have experienced that yourself, as you’ve watched the prices skyrocket on many things you buy regularly.

Regardless of which inflation numbers you believe are correct, you know that inflation takes a real bite out of the purchasing power of your dollars.

For the record, as others have pointed out, if you only wanted to keep even with inflation since May, 1999 – 14 years ago – the Dow would have to be at 15,427.17 today.  That’s when we’d be at a “true,” rather than a “nominal” high.  But we’re still not there.

What if you didn’t care about the spending power of your dollars and you just wanted a 5% return since May 1999?  You’d need a Dow of 22,899 today, which would require a more than 50% increase from where it is now!

So let me ask you again – how long do you think it will take the Dow to hit 32,000 – or even just 22,000 – and STAY at that level or higher?

But wait!  It gets worse – these numbers don’t even take into account any investment or retirement account fees or taxes, all of which will take another huge bite out of your nest egg.

Request your FREE Analysis and find out why Bank On Yourself may be the best way to invest for safely, liquidity, flexibility, control and tax advantages!

Does Warren Buffett Know Something You Don’t?

In an interview on CNBC last week, Warren Buffett, who is considered to be one of the most successful investors of all time, said… 

We will have another bubble and it will burst.”

The warning signs are all around us already…

• Small investors are borrowing against their portfolios and margin debt has skyrocketed to a level just shy of that seen in 2007 – just before the markets crashed
• Houses going on the market in some cities are receiving multiple bids above the asking price on the first day – often accompanied by letters from the hopeful buyers pleading to be given a chance (more shades of 2007)
• Sub-prime loans (high-rate mortgages for high-risk borrowers that caused the housing bust) are making a comeback (it’s déjà vu all over again)

Risk On! As far as I can tell, for most people, the lessons learned from the Great Recession were fleeting.

But the more important question is – what lasting lessons did you learn from the financial crisis?

Take this quick survey and share your biggest takeaway with us!

1. The ugly truth about the stock market’s new record highs

Take a look at the chart below which reveals how, when measured in real purchasing-power terms, the S&P 500 Index is nowhere near its March 2000 high. In fact, the index would have to increase by another 32% today, just to get you even (in real dollars) with where you were more than 13 years ago:

Even if you look at the total return of the S&P 500 (including reinvested dividends), the real (inflation-adjusted) purchasing power of your investment remains negative after 13 years. And this assumes you have no fees, commissions or taxes, which, of course, will take another big bite out of your savings.

2. Long-term investors received only HALF the return of the S&P 500

That’s according to the new study just released by the well-respected independent analysis firm, DALBAR.

The study examines real investor returns in various types of mutual funds for the last 20 years ending December 31. Investors in equity mutual funds averaged only 4.25% per year – a little less than half the return of the S&P 500. (Was that worth the roller coaster ride and sleepless nights?)

Investors in asset allocation funds got only 2.29% per year, and fixed-income fund investors got less than 1% per year… for the past 20 years!

All of which makes it clear that investors are only fooling themselves if they believe they are growing real wealth in the Wall Street casino, when the reality is that they are digging themselves deeper and deeper into a hole they may never be able to climb out of.

Now take a look at another chart:

This chart was sent to us by one of our subscribers to demonstrate how much his net worth had grown since he started his first Bank On Yourself policy and got out of the stock market in 2009, compared to the previous ten years.

That’s what happens when you take the volatility and randomness of the market out of your financial plan. Bank On Yourself lets you get back control of your money and finances and stop worrying about the bad news of the day.

You can listen to or read the interview I did with this subscriber, as well as see a more detailed version of the chart above. There are at least three insights shared in this interview that could be worth a million dollars or more to you.

Would you like to find out how much your own financial “picture” could improve if you added Bank On Yourself to your financial plan? It’s easy to find out when you request a FREE Analysis, if you haven’t already done so.

3. The government wants more control of your retirement plan! 

The latest proposal to control your IRA, 401(k) or other government qualified retirement plan came in Obama’s new budget plan that was announced last week. It would limit how much a person can accumulate in and withdraw tax-free from an IRA or 401(k).

The government’s rationale for such a move is that, “Some wealthy individuals are able to accumulate… more than is needed to fund reasonable levels of retirement saving.”

Why are government-sponsored retirement plans such an attractive target for government control and ownership? For the same reason notorious holdup man Willie Sutton gave when he was asked why he robbed banks: “That’s where the money is!”

Because the government sponsors these plans, they know where your money is and how much you have there. And they can change the rules any time they want. 

The money in your Bank On Yourself plan isn’t reported to the government or IRS. Learn more about the tax advantages of Bank On Yourself here.

Knowledge is power, so I hope you found this helpful.

Americans’confidence in being able to retire comfortably is at a record low, despite the economy showing signs of improvement and the stock market hitting record highs.

To compensate for their lack of retirement funds, more people are planning to postpone retirement.

That’s according to the just-released annual study by the Employee Benefit Research Institute.

The statistics are bleak:

• 57% of those surveyed report having less than $25,000 in total household savings and investments. Only 24% reported savings of $100,000 or more
• Only 24% are very confident they’ll be able to live comfortably in retirement
• Only half said they could definitely come up with $2,000 to cover unexpected expenses within the next month

How long do you think $25,000… or even $100,000 in savings will last a person in retirement? On average, a man turning 65 this year will live another 20 years, and a woman that age will live another 23 years.

To compensate for their lack of retirement funds, more people are planning to postpone retirement. That strategy may not work very well, since more than 47% of current retirees were forced into retirement sooner than planned.

The other way some people are hoping to make up for the dramatic shortfall is by saving more – a lot more than they are now. Almost one-quarter of those surveyed say they’ll need to save at least 30% of their income to achieve a financially secure retirement.

But that’s NOT what’s happening – people are spending more and saving less

As the stock market – fueled by historic money printing by the Federal Reserve – hits record highs, and home prices rise, consumer spending is climbing. At the same time, a quarter of Americans are dipping into their 401(k) to pay for everyday bills!

And the savings rate is now only a paltry 2.6%, which is one of the lowest rates since 2007!

It’s called the “wealth effect,” and it makes people do dumb things, like spend money they know they should be saving. They figure that because the numbers on their retirement account statements and the sales prices of their neighbors’ homes are up right now, they no longer need to save as much.

Which makes you wonder… did anyone learn any lasting lessons from the last crash?

In the book, “Predictably Irrational,” behavioral economist Dan Ariely talks about how people typically forget about their losses and overrate their successes. (You gotta love the name of the institute he co-founded – “The Center for Advanced Hindsight.”)

I think a lot of people may have already forgotten much of the pain of the last crash, which lost the typical investor 49% or more of their investments and took their home value back to the level of a decade earlier.

But I think that in the back of many people’s minds is the fear that the current bubbles now building in the stock and real estate markets are setting the stage for the next crash. And who wants to set aside their hard-earned dollars in something that could crash again?

So they spend those dollars instead.

What to keep in mind when you’re tempted to spend instead of save…

1. Having a sizable safe and liquid cash reserve is critical. Watch this three-minute video about the secret to a financially stress-free life.

2. You don’t have to risk your money in the stock market to grow substantial wealth… and you don’t have to settle for the minuscule returns savings and money market accounts and CD’s are paying these days.

Even in this historically low-interest-rate environment, Bank On Yourself plans are providing substantially higher returns than savings accounts. You can access both your principal and gains with no taxes due… and no questions asked!

Plus, you won’t have to worry about the value of your plan declining when the market crashes again. We often hear from people who use Bank On Yourself about how much more fun and motivating it is to save money when you aren’t worried about losing it.

3. You can use the money you save in a Bank On Yourself plan to make major purchases, and the plan can continue earning the exact same guaranteed annual increase and the same dividend as though you hadn’t touched it.

Dividends aren’t guaranteed, but the Bank On Yourself Authorized Advisors only use companies that have paid dividends every year for at least the past 100 years.

Watch this video on how to fire your banker and become your own source of financing

To play the game, click the blue box below. Type an amount of money to give the tortoise and the hare, and press ENTER.

Then click the brown box. Type a year for the investment account to sustain a 30% loss, and press ENTER. Every year except the one year you pick, the investment account will return 8%. But in the one year you select, the investment account will suffer a 30% loss. Why 30%? Because since 2000, the typical investor lost 45% or more — twice! It could happen again in 5 years, 10 years … or even tomorrow.

Which “loss year” will let the hare be ahead of the tortoise at the 10-year finish line? The 1st year? The 10th year? Some year in between? Choose different years and different starting amounts. Give it a try and have fun! Then click the link below the game, for an explanation. (But don’t do that until you’ve played the game!)

©2013 Hayward-Yellen 100 Ltd Partnership

Most people’s egos prefer THEIR facts to THE facts.”

And I’ll bet you can think of several people who are guilty of that right off the top of your head, can’t you?

One of my mentors, Dan Kennedy, also noted, “People are quick to dispense advice on any subject, regardless of their qualifications. Most people don’t even distinguish between ‘opinion’ and ‘knowledge.’ That’s why you must.”

When it comes to Bank On Yourself, there’s a lot of opinion being dispensed as fact… and I thought I’d help you sift through three common misconceptions about Bank On Yourself in this blog post…

Myth #1: The commissions paid on Bank On Yourself plans are high

Often, this accusation is made by advisors who profit from investing your dollars on Wall Street. They even say agents only sell these policies because of the high commissions.

What they don’t realize is that Bank On Yourself Authorized Advisors receive 50-70% less commission than advisors who structure policies the traditional way.

And the shocking fact is that the advisor who manages your money in the stock market is making at least ten times more than the Bank On Yourself advisor, if you contribute the same amount of money each year!

Watch this video to learn exactly how a Bank On Yourself Advisor is compensated, and how you’re paying through the nose for your broker’s advice…

Your Bank On Yourself Authorized Advisor can tell you the guaranteed minimum value of your policy at every point along the way. Try asking your money manager to do the same…

Myth #2: You don’t benefit from the interest you pay on policy loans

Hey, I get why people don’t understand how these policy loans really work – there’s no other financial vehicle that I’m aware of that gives you all the advantages of a whole life insurance policy loan. And there are a lot of people (myself included) who believe policy loans may well be the 8th wonder of the world.

As I’ve explained in my best-selling book and on my website, you do pay interest on policy loans. The interest charged is typically at below-market rates.

One thing that makes a whole life policy loan unique is that when you borrow from your policy, the money doesn’t actually come directly from your policy. It comes from the company’s general fund, because all the cash value of all the policies is pooled together.

It works the same way when you repay loans – the payments you make on your loans and the interest you pay don’t go back directly into your policy; they go back into the general fund. The interest you pay ultimately benefits you – the policy owner – through a combination of guaranteed annual cash value increases, plus any dividends the company pays.

For a fuller understanding of how this works, check out our Consumers Guide to Bank On Yourself Policy Loans. Pay particular attention to FAQ #5.

One of the benefits of the Bank On Yourself method people really like is that you can borrow from your policy to buy something or take advantage of an investment, and the policy can continue earning the exact same cash value increases and dividends as though you hadn’t touched a dime of it.

Buyer Beware! Only a handful of life insurance companies offer this feature along with all the other features required to maximize the power of the Bank On Yourself method.  These are the companies preferred by the Bank On Yourself Authorized Advisors.

There are some companies that don’t really want you to take policy loans and some that even reduce the agent’s commission if they deem he or she has “too many” clients with policy loans.

I have a policy I started 20 years ago from a company that has an excellent reputation, but whenever I take a policy loan, they tell me how much my dividend will be reduced if I don’t pay it back. You want your policy to be with a company that will not reduce your dividend when you use the money in your policy. And it’s best when that company understands and supports the concept of using the policy to enable you to fire your banker and become your own financing source.

Myth #3: Only wealthy people can “afford” to use Bank On Yourself

This is an urban legend that desperately needs to be put to bed. It’s true that using whole life insurance as a safe and powerful wealth-building method was once done mainly by the too-big-to-fail institutions and the wealthy, but the secret has been out for some time now.

The Bank On Yourself method is used by people of all ages and incomes. Check out some of their inspiring stories here. 

Remember – the guardians of the way things are supposed to be done want to keep the wool over your eyes. But, to end with a quote from Marshall Thurber, “all the dogs barking up the wrong tree doesn’t make it the right one.” 

This chart tells the rest of the story you’re not hearing…

You’ll notice inflation was 36% over the past 13 years, which took an enormous bite out of the purchasing power of your savings.

Some readers may be wondering why I didn’t include the value of the dividends earned by the S&P 500 companies in the chart. So let’s do that now. The total return of the S&P 500 (including dividends) for the past 13 years was 22%, which is an average return of about 1.7% per year – and still lags inflation.

Don’t forget the fees and taxes…

To make matters worse, those returns assume no fees or commissions were paid. But if you bought a mutual fund that tracks the S&P 500 index, you’ll pay fees. And if you’re saving in a 401(k) or other government-sponsored retirement account, those fees are just the beginning.

Did you know that total fees of only 1 percent can slash the value of your savings by 28% over the long-term, according to the Department of Labor?

Then there’s taxes, which can take the biggest toll of all. If you’re saving in a 401(k), 403(b), IRA or similar plan, you’ve only postponed paying your taxes. And most people think the tax rates will only continue to go up.

How confident are you that another market crash won’t occur in 5 or 10 years… or even tomorrow?

I’ve pointed out before that the stock market has experienced several periods where it’s taken 16-25 years just to get back to even after a market crash. And history has a way of repeating itself.

We’ve now had 13 years of a go-nowhere market. How can you be sure that’s behind us now? Unless you have a crystal ball, you can’t, of course. Only history will tell.

But here are some red flags that ought to be making you nervous…

• The economy actually shrank last quarter
• Consumer confidence is down
• Only a few bull markets in history have posted a larger percentage gain than the current one – usually the higher and faster the rise, the deeper the crash that inevitably follows
• Washington continues its war on your retirement by not dealing with unsustainable debt and spending, once again kicking the can down the road

67% of workers say they’re behind schedule in saving for retirement

That’s according to a recent study by the Employee Benefit Research Institute. And 61% of people in their 50s say they’ll need to “significantly” cut back on spending to save for retirement. They did what they were told to do and all they have to show for it is sleepless nights and broken retirement dreams.

Instead of achieving the financial peace of mind they want and deserve, they’ve been digging themselves into a financial hole so deep they may never be able to retire.

And that’s a shame. Everyone deserves to have a secure and predictable income in retirement.

The question is… will continuing to do the same things get you there?

I hope you’ll take a little time to read the comments at the end of the post, which are very insightful and further prove that Allan Roth sped right past the solution he himself said he was seeking.

It takes courage and wisdom to turn your back on the conventional financial wisdom that has caused so much financial insecurity and pain for so many. We commend all of our subscribers who have bypassed banks and Wall Street and now have the financial security, flexibility and control that had previously eluded them.

If you haven’t yet begun to Bank On Yourself, find out what you’re missing when you request your free Analysis.

Now here’s the list of winners…

Each of the following posters won their choice of a $25 dining gift certificate or a personally autographed copy of my best-selling book:

1. JG
2. Mark Stanley
3. Luis
4. Lizette Spatt
5. Russell Whipple
6. William (Bill) Williams
7. Mark Willis
8. Jason
9. Derek Logan
10. Scott
11. John Chiappetta
12. Mark Stanley

Thanks again to everyone who participated!

Allan Roth – a financial planner and blogger for CBSNews.com MoneyWatch – has written an article about why he believes this tried-and-true strategy is “snake oil.” But Allan Roth is not an investigative reporter. Allan Roth is an investment advisor with some very strong opinions. Of course, we understand that Mr. Roth is entitled to his opinions, however, his article about Bank On Yourself is filled with numerous misstatements of fact and misquotes. When I sent a detailed accounting of his blunders to the legal department of CBSNews.com, it got routed to an editorial “executive producer” who refused to correct the record.

Therefore I am taking this to the court of public opinion and giving you the facts so you can decide for yourself. We really want to hear from you, so we’re going to pick 10 of the most interesting or insightful comments made on this blog and award posters valuable gifts. (Details at end of this post.)

How did he arrive at the “well, duh” conclusion that at the end of the day you’ll have more money if you don’t buy things than if you do? And how did Allan Roth completely miss the boat on what Bank On Yourself is all about? Read on to find out…

After a number of Roth’s clients asked him about adding more guarantees and predictability to their financial plan with Bank On Yourself, Roth contacted one of the Bank On Yourself Authorized Advisors to determine if the book’s claims were true. Roth was particularly interested in knowing if the process described in the book for becoming your own source of financing for major purchases worked as claimed.

Here’s a link to the article Mr. Roth wrote.

Roth writes that the projections “seemed magical”

The advisor Roth contacted provided him with several illustrations showing how he could borrow from his policy to purchase cars, and how that would impact the income he could take from the policy during his retirement years. Roth wrote in his article that the projections “at first glimpse… seemed magical.  By year 12, when I had planned to use the insurance policy to live on, I had more money under the scenario where I borrowed to buy a car than in the one where I didn’t [use the policy to] purchase a vehicle.”

But later Roth pointed out that by following the Bank On Yourself method of financing his automobile purchase through his policy, he would have paid an “additional” $12,000 to the insurance company, and he wanted to know where that money went. The advisor explained it to Roth at least six different ways, but Roth never seemed to understand. Finally the advisor gave up.

That’s when Roth came to me. I painstakingly answered the same question two different ways. The bottom line is that the illustrations and projections provided to Allan Roth – the ones he himself called “magical” – were correct. There was no software malfunction. We simply used arithmetic to show Allan how his $12,000 was in his policy and had grown to $13,748.

You can see that arithmetic in my verbatim first reply to Allan Roth.  Here is the proof that the financial promises in the Bank On Yourself book DO add up.

But Roth wasn’t convinced, so he went to the insurance company that provided the illustrations and asked them to verify his conclusions. They, too, explained the flaw in Roth’s logic.

All along, Allan Roth’s confusion and conclusions were based on comparing buying a car through his policy versus not buying a car at all! Roth ignored the fact that you have to compare apples to apples, meaning you have to assume you were going to buy the car one way or another.

No wonder he concluded he’d “be out even more than 30 grand” if he used the policy to finance a car!

Well, duh! Of course you’d have more money if you didn’t buy a car!

And nowhere in my book do I say you’ll come out better by financing a car (or anything else) through your policy than by not buying it at all. Throughout the book, I explain I’m going to compare financing a car the traditional ways against financing a car through a Bank On Yourself policy.

For example, on page 5, I talk about how you can have a bigger nest egg “by buying cars… the way I reveal in chapter 2 and 6, rather than by financing or leasing them.” And on page 17, I note, “But please understand this is about a different way to pay for things…” And on page 20, I wrote, “To understand the power of it, let’s go back to our example of buying a car… but instead of borrowing $30,000 from a finance company, you’re going to borrow it from your own Bank On Yourself plan.” And there are numerous other similar mentions in my book.  (I wonder if Roth even read my book?)

It seems pretty clear, doesn’t it? To have the most money in your pocket, don’t buy a car! Take the bus.

But if you are going to buy a car, I haven’t found anything more financially savvy than banking on yourself, using a Bank On Yourself policy loan.

Roth claims that when he went to the insurance company to ask them to verify his conclusions, the insurance company did just that. But that’s not what happened.

The insurance company verified that the ILLUSTRATIONS he received were correct, as were some numbers (for example, “6.9% Ret”) that Roth wrote on the illustrations. But the CONCLUSIONS Roth came to on his own were correct ONLY if you insist on comparing buying a car through the policy versus not buying a car at all!

Roth left out some critical details…

In his article, Roth didn’t mention that the second time he spoke with the insurance company, they brought in someone who is an expert at evaluating insurance illustrations and how these policies work when you use them for financing. This expert explained to Roth the exact same thing I tried to explain twice and the advisor tried to explain six times: you can’t compare buying a car through a policy with not buying a car at all!

Poor Allan. He still couldn’t understand, and this pains me greatly. For the last ten years, I have devoted myself to my mission of educating people about the wealth-building advantages of specially-designed dividend-paying whole life insurance policies, on which the Bank On Yourself concept is based. I know my efforts have gone a long way toward taking a strategy that was historically the domain of the wealthy, the too-big-to-fail financial institutions and Fortune 500 companies, and making it more accessible to the rest of us.

And it particularly pains me that I was not able to communicate the value of Bank On Yourself to Allan Roth, who wrote in his article lambasting my book…

On a personal level, I am really seeking refuge from the volatility that has whipsawed the markets and frayed investor nerves.”

I truly feel Roth’s pain! As I write this, in early December 2012, the Dow has increased by less than 1% per year - for the last 13 years. The S&P 500 is actually below where it was at the end of 1999. And during that same period, inflation has eaten away about 35% of the value of your money.

But Bank On Yourself provides a wonderful solution, and it’s a shame Mr. Roth didn’t realize he was literally holding it in his hand: One of the illustrations Roth received showed how, in the 13^th year of the policy (when Roth would have stopped paying premiums), he could have a net cash value increase of $18,817.¹  That represents a 5.1% annual return on his $367,715 cash value of the year before. And that 5.1% is AFTER all fees and expenses. Best of all, it comes without the risk or volatility of stocks and other investments.

Can you tell me what’s not to like about that? Mr. Roth was so close, yet he sped right past the “refuge” he said he is seeking.  And that his clients are clearly seeking, too.

Furthermore, because it’s possible to access both your principal and your gains in these policies with no taxes due under current tax law, you would have to get at least 6% or 7% every year in a taxable or tax-deferred account to equal the 5.1% return of the Bank On Yourself policy that was custom-tailored for Roth.

Plus, there is a death benefit of almost $753,000 available for Roth’s family’s peace of mind – a fact Roth totally ignored.

Where else does Roth think he can safely get that kind of return and protection?

Please note:  No two Bank On Yourself plans are alike.  Yours would be designed to help you meet your specific long-term and short-term goals and objectives.  To find out what your plan would look like, request your FREE Analysis here, if you haven’t already.

And keep in mind that a Bank On Yourself-type policy keeps getting better and better every year you have it - no luck, skill or guesswork required.

Not long ago, we interviewed Bank On Yourself policy owner Dan Proskauer who told me he wanted to “shout from the rooftops” about how his net worth had grown steadily after he started his first Bank On Yourself policy 3½ years ago, compared with his Wall Street roller coaster ride previously. Proskauer used Quicken to visually display the growth in his family’s wealth over the last 13 years.

A picture is worth a thousand words, isn’t it?

Can anyone tell me what’s wrong with results like this?

As Dan Proskauer pointed out when I talked to him, Bank On Yourself only makes it easier and a lot more fun to save, knowing you don’t have to worry about when the market is going to crash again, taking your hard-earned money and dreams of a worry-free retirement down with it.

It should also be noted that Dan (who now has nine policies) has used policy loans numerous times to make major purchases. In fact, at the time this picture of his net worth was taken, Dan had a large outstanding policy loan he had taken to buy a boat. But the continued upward march of his net worth is unmistakable, confirming from real-world experience that using a Bank On Yourself policy for financing purchases is not the losing strategy Roth portrayed.

Am I being naïve?

Some people have told me I may be too naïve, and that maybe we didn’t fail to communicate the benefits of Bank On Yourself to Roth. Maybe Mr. Roth had an ulterior motive for insisting on comparing how much money he’d have if he bought a car through a policy, against not buying a car at all – especially after the flaw in his logic was explained to him nine different times by three different people.

They point out that Mr. Roth:

• Boasts that he does not have an insurance license and has never sold an insurance product. Yet apparently he’s enough of an expert on life insurance to have written an “exposé” on every cash value life insurance-based concept that attracts the attention of his clients
• Roth appears to have created a second job for himself publishing articles on his CBS News MoneyWatch blog criticizing financial experts ranging from Rich Dad, Poor Dad best-selling series author Robert Kiyosaki, to legendary bond fund manager Bill Gross, demographic trend expert Harry Dent and others. (I guess that puts me in good company!)
• Roth has NEVER met a cash-value life insurance product he likes and insists you should buy “only the insurance you need and make sure it’s low-cost term insurance.” And for only $350 per hour, he will be happy to help you invest the money you “save” in the stock market, although he says he’s looking for an alternative to the volatility of the stock market

Roth fancies himself as an expert in “behavioral finance,” which looks at why people – including the experts – keep making the same money mistakes over and over again. It’s a fascinating field, and one that has intrigued me for years.

Roth teaches people they should buy low-cost index funds and then avoid buying and selling emotionally. That sounds like good advice, but if it’s that easy, why do 80% of all mutual funds and investment advisors underperform the markets?² And why does the typical investor consistently and significantly underperform the market?³

Roth keeps hinting that there are “techniques” which both large and small investors can use to “invest their assets in a much more logical, non-emotional manner.” But he himself admits his “techniques” don’t work! In a 2008 article he wrote…

I can’t seem to resist the human urge to find the next hot stock.
If I can’t resist that urge, how can I possibly expect my clients
to do it? I can’t!”⁴

Perhaps Roth should take a page from Carl Richards, one of the few financial experts Roth has anything good to say about. Richards wrote a book on behavioral finance, and when I interviewed him for my blog in April 2011, Carl said, “ I’ve determined that the solution is to take the sharp power tools away.” And that’s one thing Bank On Yourself policy owners say they love—there’s no luck, skill or guesswork – or will power – involved.

If you want to see the full explanation of how Allan Roth’s $12,000 grew to $13,748, you’ll find it here, in my first reply to Roth.

Note: There are numerous other inaccuracies in Mr. Roth’s article that I’m not going to address here. I think you get the point.

Roth takes issue with my sound bites

Roth’s biggest complaint with me and my book may be the sound bites that appear on the book’s cover and in the chapter titles related to getting back or recapturing the money you spend on major purchases.

Sound bites are designed to cut through the clutter, and we needed all the help we could get, since we’re going against Wall Street and conventional wisdom. Perhaps I could have used different sound bites on my book cover and in my chapter titles.

But Roth is hardly one to point fingers. His main sound bite is that a second grader can beat Wall Street. Yeah. And so can monkeys throwing darts.

I expand on the “get back every penny” concept at length in my book as a process of first saving up for major purchases in a carefully crafted dividend-paying whole life insurance policy, then borrowing from your policy (not from a finance company), and then repaying your policy loans, so your money is available for you to use for subsequent purchases and/or to fund your retirement. This avoids the traps of conventional financing methods and the volatility and unpredictability of traditional investment strategies.

My book contrasts the Bank On Yourself method with conventional financing methods

Example: If you finance a $30,000 car with a bank loan, the interest you pay goes to the bank and you’ll never see it again. All you’ll end up with is your car, worth whatever its trade-in value is. If you lease the car, you turn your car back in at the end of the lease and you’ll have nothing at all to show for your payments.

If you save up money in a savings account and then take the money out to pay cash for the car, the bank won’t continue paying you interest on the money you withdraw.

However, if you use the method described in my book to buy a car, when you’ve paid off your loan you have your car, and the money you paid for your car is now in your policy, available for you to use again. On top of all that—if your policy is from one of the handful of companies that offers this feature  - you continue to receive the exact same dividend on ALL of your money - as if you’d never taken it out to buy the car!

Finally – and this is VERY important—the interest you pay on the policy loan is recouped through the full dividend you receive – unreduced even though you have a policy loan. Again, not all companies offer this feature.  (Learn more about how Bank On Yourself policy loans work here.)

Why put your money where you need to
cross your fingers and hope?” 

Bank On Yourself is based on logic and real actuarial science – and an asset that’s increased in value every single year for over 160 years.

What other strategy or product gives you all these advantages?

Keep in mind that Allan Roth is an investment advisor who tirelessly promotes investing on Wall Street, who happens to be a blogger. He is not an investigative reporter. For the record, we worked with a Pulitzer Prize-nominated investigative journalist who spent more than a year investigating Bank On Yourself and reviewed Roth’s article and all of his correspondence on this matter. The result of that in-depth investigation? This investigative journalist bought a Bank On Yourself policy for his family!

But at least now, when Allan Roth’s clients ask him about having the guarantees and predictability in their plan that Bank On Yourself provides, he can send them his article and tell them, “Oh, I already exposed that.” And then pray they don’t discover the truth.

We want to hear from you!

We really want to hear from you! What is your experience with Bank On Yourself, whether your journey started from reading my book or from any other source? Has Bank On Yourself given you the “refuge from volatility” Allan Roth says he’s seeking? Have you used your policies to finance major purchases and what has your experience been with that? Have you had an experience where having money safe and available to you in your Bank On Yourself plan saved your butt? Do you have a great way of explaining how making major purchases through a Bank On Yourself policy works better than the alternatives?

We’ll pick the 10 most interesting or insightful comments made on this blog by midnight, Monday, December 10… and give those posters their choice of a $25 gift certificate for a restaurant in your area, or a personally autographed copy of my best-selling book. (Just in time for the holidays – this could make a nice gift for you or someone you care about!)

Here are the simple rules to participate:

1. You must be a US resident over the age of 21.
2. Your post must be made on this blog in the comments below no lather than midnight on Monday, December 10th. You must include a valid email address to qualify.
3. The 10 winners will be notified no later than Wednesday, December 12th and must respond within 24 hours with a valid street address in the U.S. for shipping, if you choose an autographed copy of the book as your gift and wish to receive it before December 25, 2012.
4. You may post more than one entry if you wish and there will be only one winner per household.
5. Gifts will be awarded based on how meaty, informative and insightful the comments are, as determined by the Bank On Yourself team and comments others may make on your comments. But please keep your comments focused on your Bank On Yourself experience. We have to hope Allan Roth has understood where his analysis fell short, so, there’s no need to cover that ground again.
6. The decisions of the Bank On Yourself team are final and, by participating, you agree to hold Bank On Yourself and its principles, employees and related companies harmless. Any posts deemed inappropriate by Bank On Yourself may be edited or deleted.
7. The list of winners will be posted on this blog before December 31, 2012. All entries become the property of Bank On Yourself and by submitting an entry you give permission to Bank On Yourself to quote from or publish your comments.

(Please note that the link to Allan Roth’s article is a static link, rather than a live link, just to make sure that you have all the facts and information as they existed before this rebuttal was published.)

1. Based on the current dividend scale.  Dividends are not guaranteed and are subject to change.  Bank On Yourself Authorized Advisors use companies that have paid dividends every year for at least 100 years
2. Hulbert Financial Digest, July, 2009
3. DALBAR’s 2012 Quantitative Analysis of Investor Behavior
4. “Core and Casino,” September 1, 2008, FinancialPlanning.com

We had almost 150 entries (I’m surprised there weren’t more – it was an easy way to win up to $500!).

Most people who entered guessed high – often way high. And the range of guesses was enormous; the Dow closed at 12,932.70, but the guesses ranged from 10,000 to 16,000!  Which points out the sheer unpredictability of the stock market, which has barely budged for the past 13 years. (Ready to say goodbye to the roller coaster ups and downs of stocks and other volatile investments?  Request your FREE Analysis and find out how much your financial picture could improve if you added Bank On Yourself to your financial plan.)

And the winners were…

The Dow and S&P closes on the day after the Election

• Bill Liebler – who was within about 12 points of where the Dow closed – won a $250 Amazon Gift Certificate. I interviewed Bill in my New York Times best-selling book  in chapters 7 and 10.  Among other things, Bill uses Bank On Yourself to fund his daughter’s college education.  To learn more about why Bill thinks Bank On Yourself beats using a 529 plan, UGMA or other government sponsored plan, check out this article and video.
• And Jim Vana was the other winner of a $250 Amazon Gift Certificate for coming the closest (within 1 1/2 points) of where the S&P 500 closed.

And thanks to all who participated!

Here were the simple contest rules…

1. Post your guess of what the Dow and/or S&P will close at, on Wednesday, November 7, the day after the election, in the comments box below.

2. The person who comes closest to guessing where the Dow actually closes will win a $250.00 Amazon.com Gift Certificate, and the person who comes closest to guessing where the S&P 500 closes will win a $250.00 Amazon.com Gift Certificate. You can take a guess on both indexes and win $500.00 if both of your entries come closest.

3. In the event of a tie, the winners will split the prizes(s)

4. Only one entry per person is allowed and be sure to include a correct email address, so we can send your Gift Certificate to you if you win (your email address will not be published).

5. Only U.S. residents over age 18 qualify to win

6. Your entry must be posted in the comments box at the bottom of this blog post by midnight, Wednesday, October 24, 2012 to qualify

Note: We’d also love to hear if you’re in the stock market or out of it now – and why – so feel free to add a comment about that when you post your entry in the comments box below, along with your guess for what the Dow and/or S&P 500 will close at on Wednesday, November 7.

Please note that all comments are moderated, which means there will be some delay before your entry/comment appears.

When Dan saw this chart on his financial tracking software program, he said his jaw dropped so hard it left a dent on his keyboard and that “we should be shouting about this from the rooftops.”

They say a picture is worth a thousand words, so take a look for yourself and note how you’ll see a more detailed version of the chart when you place your mouse over it…

Why would Dan be willing to reveal and discuss something as personal as his net worth for the whole world to see? Because, in Dan’s words…

If I can help a few people start Bank On Yourself this year, instead of next year or instead of never, then it’s well worth my time.”

I had interviewed Dan on this blog two years ago (“Bank On Yourself under the microscope“), and Dan agreed to give us an update on how things have changed now that he’s 3 1/2 years into the Bank On Yourself program.

Dan is Vice President of Technology for a major health care company.  He’s extremely analytical and has spent literally hundreds of hours analyzing and “spread-sheeting” the concept and his plans.  He says, “I had high expectations for Bank On Yourself… and they’ve really been exceeded.”

I think you’ll enjoy listening to this fast-paced interview with Dan (and/or read the transcript), which reveals:

• How Dan’s mindset about saving and investing has changed as he sees how Bank On Yourself has impacted his finances
• The BIG difference between “paper wealth” and “real wealth”
• How Bank On Yourself eliminates volatility and unpredictability
• The downsides to government-sponsored retirement plans like 401(k)s and IRA’s

• Why Dan was surprised to see his net worth grow so dramatically, even though he’s still in the early funding stages of his Bank On Yourself policies
• How Dan now satisfies his urge to try for higher returns in the stock market
• Why Dan has nine different Bank On Yourself policies now… and why each one is unique
• How we’ve been brainwashed into believing we must accept risk to grow significant wealth, and why Dan now realizes that taking that risk isn’t necessary
• How having money safe and available to you in a Bank On Yourself policy increases your options rather than limiting them
• The value the Bank On Yourself Authorized Advisors bring to the table

Dan noted that his income has increased some in the last four years, as has the amount he saves each year.  The difference is that now he has a great place to put that income (his Bank On Yourself plans), where he no longer loses any of it to the “randomness of the market”.  And he’s convinced the picture you see above wouldn’t look anywhere near this good if he hadn’t discovered Bank On Yourself.

One thing we consistently hear from folks who use the Bank On Yourself wealth-building method is how much more fun and motivating saving money becomes when you don’t have to worry about losing it or what effect the events of the day in the U.S. or in some faraway place will have on your hard-earned money!

Check out Dan’s interview…

You can listen to the interview by pressing the play button below, or you can download the entire interview as an mp3 and listen on your own player or iPod:

You can also download a transcript of the interview here.

Let us know what you think in the comments box below! And if you want to share your net worth growth picture with us (without the actual dollar amounts listed to protect your privacy), we’d love to see it!