Learn how the science and art of investing is highly dependent on your clarity of your Soul Purpose. To get clearer on your purpose and learn the economic principles to create wealth, learn more about our Wealth Empowerment Workshop.

Next week, we will discuss how to create Cash Flow Generators from your Soul Purpose.

Book Recommendations:

(Once again) “3 Feet From Gold” by Sharon Lechter and Greg Reid

“Killing Sacred Cows” by Garrett B Gunderson

Tune in next Tuesday to learn how to create wealth by living your Soul Purpose!

Book Recommendations:

“Trump: Never Give Up” by Donald Trump

“3 Feet From Gold” by Sharon Lechter and Greg Reid

My purpose is to shed light on a critical factor that is one of the causes for dramatic disappointment to our 76 million Baby Boomers now entering retirement. This covert killer can leave one with LESS THAN HALF of the money when you retire than the financial calculators will show you. Worst of all, no one would ever know why because the 401(k) providers are not required to disclose it. This lurking enemy is commonly referred to as “fees.”

Hidden fees are one of the most misunderstood components of a 401(k). According to 2007 AARP survey, 83% of respondents said they did not know what fees they were charged, many of whom believed that there were no fees! The reason there is so much confusion is because the disclosure of fees are not required by law. In fact, if they are disclosed, they are often buried several pages in a document called “Statement of Additional Information.” At times, it is nearly impossible to even get the information from the 401(k) providers!

According to the US Dept. of Labor, 17 different types of fees can be applied to any 401(k) plan. Many of these fees are 12b-1 fees, soft dollar fees, brokerage fees, redemption fees, shelf space fees, etc. that are sometimes combined into a single fee called a “wrap fee.” The combination of these fees can be over 2% per year! This could cut someone’s retirement balances by more than half of the expected balance even if they get a certain projected rate of return and make the employer match obsolete. This occurs because fees are not factored in the fund’s historical performance charts that many view in the prospectus.

Some fees are so excessive that there are class action lawsuits against the 401(k) providers. One lawsuit in Washington State has a fund that charges 12.17% in fees each year!

Fees are not inherently bad, but ignorance is not bliss when time is no longer on one’s side. How are these fees affecting your retirement? What could happen if these fees are charged as your balance is declining? Do you realize that an annual fee as small as 1.35% can cut your end balance in half after 40 years of accumulation?

I invite you to watch this video to learn more about this critical issue.

If you are confused, like most Americans, on what you could be doing instead, listen to an earlier podcast “Fire Your 401k and Be the Bank.”

If you cannot play the video, click here to watch video online.

To learn more about Cari’s business, visit her website at http://www.shoeparty.com.

To watch all ten steps to success in network marketing, go to http://learnnetworkmarketingtoday.com/

To learn more about Bryan Robert or to contact him, go to http://www.bryanrobertonline.com/contact.html

Believe it or not, life-changing products and lucrative commission plans are NOT the keys to success! Listen to learn Bryan’s secrets to finding a successful network marketing company to increase your cash flow!

For questions for Bryan Robert, go to http://www.bryanrobert.net.

Remember, these are only options, not recommendations. This is not intended to be advice, but merely given for informational purposes.

The secret?  IGNORE THE INTEREST RATE and use our Cash Flow Index (CFI). Listen now to learn how!

You can also listen to our previous podcast on effectively paying off debt.

Note: This is not intended to be interpreted as advice. The strategies discussed is for educational and illustrative purposes only. Results vary based on the investor’s knowledge.

For more specific details, register for our weekly money tips to get the next tip on September 17th.

Srully Blotnick, in his book, Getting Rich Your Own Way, did a 20-year study to find 5 common traits of those 83 (out of 1057) that became self-made millionaires. They are:

1. Persistence
2. Patience
3. Doing “the nobler and pettier” aspects of their job
4. Increasing non-competitive attitude towards the people with whom they worked
5. Aside from their main career, investment activities consumed a minimum of their time and attention

To hear more personal experiences of applying these principles, LISTEN HERE.

To read the referred home sales article, click HERE.

To read the referred Utah unemployment rate article, click HERE.

Also listen to “What is a Great Rate of Return?”

Click here to listen!

Listen to my previous blog about this as well.

The basic economic principle to creating wealth is that exchange creates wealth. In other words, the more we exchange with one another, the more wealth that is created (this works for money, relationships, health, intellectual gain, etc).

For example, there are only a finite number of dollars in existence, but an infinite number of times we can exchange it.  Each of us are passing around the same dollars everyday. Therefore, to be wealthy, we must be willing to exchange or produce more than we receive or consume. Inasmuch as we are always striving to do this, our wealth increases.

Unfortunately, many equate wealth with only financial means. Although I do believe the principles are the same, I have met several rich people who are broke in other areas of their lives. Consequently, many lose their financial resources because other areas have deteriorated, like their health or relationships.

Being wealthy DOES NOT require us to have financial resources before we can provide any real value to the world (Read more and/or listen). More often than not, the financial resources come AFTER the value is produced. Money does, however, increase our propensity to provide more value more quickly. It is a tool to increase our leverage to provide more value, but it is NOT what creates our wealth, even financially-speaking. Listen to know how to create wealth without money.

True wealth comes by continually progressing in ALL areas of life by seeking more ways to serve and provide more value to exchange with others.

1. Intellectual Capital

2. Niche Capital

3. Relationship Capital

Even many that know what they should be doing lack the discipline to take productive action on that understanding. I have coached people that have a lot of knowledge, but lack the wisdom (knowledge properly applied) to make things work. I have seen “investors” be gamblers because they cannot control their own emotions and thoughts, and therefore rationalize why they should still do a particular trade/deal/business. Many will say, “Yes, I already know that, Chris, but teach me something new.” My response is “Yes, you may understand it, but you don’t get it.”

You MUST master your thoughts, words, actions, and emotions to be a great entrepreneur/investor. In a recent Time Magazine online Q&A, Robert Kiyosaki repeatedly answered questions reminding everyone that discipline is the key to success in investing, and the lack thereof creates failure. In the video interview, he even mentioned how military training has helped him be successful today.

In short, the only way to succeed in anything is discipline. Like in the military, set up a “code” to govern your actions, especially when life’s “bullets” are whizzing by your head.

MASTER YOUR LIFE BY MASTERING YOUR THOUGHTS, MONEY, TIME, AND EMOTIONS.

1. Traditional savers still feel broke after years of saving. I have yet to meet someone in retirement that KNOWS their money will last for the rest of their life. Listen why. Some can do it for a certain number of years before they can’t enjoy retirement anymore. The only people I know that have peace of mind are those that invested outside of 401k/IRA’s, OR the financial advisers getting paid commissions on their clients hoping for better returns.

2. Numbers aren’t reality and people aren’t numbers.  Just because some suave salesman pulls out his fancy calculator and tells you it’s going to be alright, doesn’t mean it will be. Can he/she foresee your future? What if something changes in 20 years? 20 minutes?

By the way, Mr. Adviser, stop looking at my financial assets to produce returns for you and look at me as the REAL investment!

3. Average returns are not actual returns. If they tell you “Historically, this ‘investment’ has done ___%…” ask them if they will guarantee it in writing. THEY CAN’T!

Also, you can have a positive average rate of return, and in reality, still be losing money. Watch this video to learn how.

4. Inflation is much higher than what many believe. This is the most subtle way to tax the poor and middle class so the politicians look better. Listen here.

5. Your taxes will likely be higher. Even if taxes don’t increase (which I’m sure they will), you will likely have to pay more solely due to inflation. Things get more expensive over time meaning you need more money each year.

Besides, if your retirement accounts actually succeed like your adviser crosses his/her fingers for, wouldn’t you be in a higher tax bracket? If not, it’s probably because your accounts failed.

6. You cannot accumulate enough to only live off of the interest. Like I mentioned in one of my recent podcasts, it’s nearly impossible for even the best savers to live off of 4-5% of their money each year.

7. Paying off “debts” early will shrink your nest egg. Although I am in favor of paying off liabilities, there’s a catch. If pay off your liabilities, it will take money away from your retirement. Unfortunately, you cannot eat a paid-off home. Paying off “debts” is more in the self-interest of the banks than for you. Many retirees are currently asset rich/cash poor which restricts their freedom. For alternative strategies, listen now.

Stop “planning” for retirement!!!  Instead, make it happen by DOING THE OPPOSITE which gives you a better chance.  Learn the “art” of investing to start becoming financially free today!

If you need further convincing, check out these scary stats!

Today, we see a pandemic paradigm governing humans to blame anyone when things go awry. Thomas Jefferson proclaimed, “Timid men prefer the calm of despotism to the tempestuous sea of liberty.” Why do we shrilly scream for independence and utter whining whispers at the first sight of responsibility?

To many, independence means to be “in dependence.” They fancy others slavishly sowing so they can slothfully reap. They “fight” for freedom, but ultimately, beg for bondage. They want what has never existed - freedom from consequence. Indisputable independence is the freedom to pioneer one’s path and be accountable for the destination.

My challenge is to consider what areas of our life and finances are we not taking on responsibility. Are we blaming market events, investors, financial institutions, banks, politicians, etc for our problems rather than creating solutions? Why can we see so clearly others’ errors which are somtimes trivial, yet are so blind to our own destructive faults? What possibilities would arise if we focused the energy we waste complaining and repeatedly pointing out others’ mistakes towards production and creating greater happiness and financial freedom through discovering soul purpose? What blessings are we failing to see because we focus more time and energy on the lack thereof? I challenge each of us to objectively ponder these questions, journal our responses, and identify ways to further focus on our financial independence.

They publish statistics giving us a false hope of a recovery, but could backfire if we made choices based on those “facts!”  Couldn’t that have a similar consequence for us as it did the failed banks when a subprime borrower would claim they made $10,000/mo. on the mortgage application when they really only made $5000/mo.?  Unfortunately for us, we don’t have the government bailing us out!

I did the same thing when I was a financial adviser. If I wanted to give hope to my client (or to scare them into doing business with me), I would run numbers that were historically accurate, but using average returns, government’s inflation statistics, etc.  I would show potential clients what they “could” have in retirement while offering no promises.  I would even show a conservative inflation statistic of 2-3% (my inflation podcast killed this statistic) to encourage them to save more with me.  By adjusting these numbers, I could show nearly any outcome I wanted!  Do you see my point?

My advice is to NOT make financial choices based on speculation or so-called “official” statistics. Whether you choose to invest in business, real estate, etc, it’s up to you.  In mutual funds (401k’s and IRA’s) and similar paper assets, you have high risk because they are dependent on these statistics.  Why gamble your hard-earned money away?  I recommend you invest where you CAN control your own statistics!

“Inflation is as violent as a mugger, as frightening as an armed robber and as deadly as a hit man.“ - Ronald Reagan

Also, refer to our video “Money Not Math” on this website to see if you can figure out what is happening to our “investments.”

On the podcast, Dale Clarke and Chris Miles discuss how 401k’s and IRA’s are affecting Americans’ ability to retire. Is there hope?

The 401k Fallout

When I was a “traditional” financial adviser, I would rattle off some assumed 2000 Bureau of Labor Statistics that came out with a longitudinal report that studied where 25 yr olds in 1960 were in 2000.  It showed:

29% of 65 year olds were deceased,

66% totally dependent on others or still working,

4% financially independent, and

1% wealthy (By the way, I have never seen any government source confirm these numbers, but I have seen many financial institutions quote it).

The Tragic Truth

The REALITY is much worse!  According to the National Centre for Health Statistics, a 25-year old only has a 16% chance of death before age 65, not 29%.  Of the surviving, the 2000 Bureau of Labor Statistics:

24.4% of 65-69 year olds were still working,

66% of them depend on Social Security to provide at least 50% of  their income (22% are totally dependent).

This means that of the original group, only about 8% are either 50% or less dependent on Social Security or financially independent…at the time of the study.  I would bet the majority of this 8% were supported or eventually supported by Social Security to a certain extent.

Furthermore, the median household income for those 65 and older was only $33,802 in 2002.  In addition, the 2000 U.S. Census said that this aging population had a net worth of $108,885.  However, $85,516 was home equity leaving a measly $23,369 for savings and retirement.  If you read my blog on hidden 401(k) fees, you would also notice that the average balance in a 401(k) for 65 year olds (in 2007) was only $60,000.  Could you live like that for one year?  Two years?  How about 25 more years?

Hadn’t more than 8% of Americans implemented some sort of retirement products during their life, like 401(k) and IRA’s, some through financial advisers?  Weren’t many of these “Prime lifers” born in 1935 strict savers because of the influence of the Great Depression?  What happened?

The Cause

There are many factors contributing to this.  For instance, most financial planners will quote some “average” return in the markets that someone can supposedly count on for the long haul.  However, the “actual” return often is different.  See my blog “The Retirement Titanic” to get more specifics. For example, I illustrate how a positive ACTUAL rate of return of 12% could become a negative return in reality!

The Solution

Get further educated on leveraging the assets you have. One cannot expect to get different results by believing the same things about investing as everyone else.  Education is critical to changing your paradigm and taking different steps to create freedom and gain control of your life.  Learn more on our blogs and listen to our podcasts to increase your ability to become financially free.

With the Dow Jones Index currently around 6700 points today, its lowest point in nearly 12 years, I hate to say “I TOLD YOU SO!” Oops, I guess I just did.

However, although I am not a big fan of investing money in mutual fund-based investments, like 401(k)’s, IRA’s, etc, I NEVER want people to suffer heavy losses that compels them to wake up and listen to what we are teaching. Nevertheless, loss does cause us to question our assumptions and explore new, and more effective, possibilities.

I had several clients last year (when the Dow was around 11,000) ask me about what I felt the market would do. I told each one of them that even though it seems irrational (at that time), expect the Dow to tank somewhere near 6000, and quite possibly lower because a Depression IS coming. Some took action while others did not. The ones that took action, even when it hovered around 8500, are smiling much bigger now that they took their own initiative to reallocate to safer funds.

For those that still question whether to get out or what to do, I will have you answer the following questions so you can decide for yourself:

1. Do you KNOW what the market will do next?
2. Do you keep hearing financial “experts” telling you to stay in for the long haul, although the long haul seems to be getting longer?
3. Can you make the markets go up?
4. Are you only investing in these because someone, like a financial planner or HR representative at your company, told you it was a “wise” thing to do?
5. Will these vehicles REALLY help you retire well? Watch “The Retirement Titanic.”
6. Are you “in the dark” about what is the best investment for you?

You are not alone if you couldn’t answer these confidently. Will you wait for it to drop further before you do something? If you have more questions, feel free to comment, email me, or Dale, at cmiles@freedomfasttrack.com or dclarke@theaccreditednetwork.com.

For another perspective on this subject, read this blog.

Many believe passive income to be earning income on investments without having to do anything to earn it.  Or, in other words, provide little or no value to receive a lot of value. However, let me pose a few questions to you about this perspective?

1. If one owns a rental property and gets paid rent, is that really “passive?”

2. Did you really do nothing for it?

3. If you do nothing, will the income last? For example, if you provide tremendous value in a business for months, or even years, so that you create conditions to make money while you sleep, was that a passive event, or were you active in creating it?  Do you still have to maintain it? Some may consider maintaining control and applying one’s human life value bondage, but is it?

4. Who is paid more - one who provides value for others in a way that few can, or one that gets paid doing virtually nothing and has a difficult time understanding why they get paid so handsomely?

5. Can freedom be purchased with money?  Is it possible that many that have passive income could be slaves to doing investments or businesses that they do not enjoy?

6. Would you call doing an investment or business ONLY for money “freedom?”  If that were the case, couldn’t one work a typical full-time job and still be free?

I do not believe that living financially free can be purchased.  The only ones I have met that believe this theory are the ones that have never had money. Freedom is a state of being, not a state of your account balance.

I challenge each of us to put money in the proper perspective as a tool to be used to serve others through our soul purpose rather than money being a master that will command us when we will be free.

For further explanation, read my article on the Killing Sacred Cows blog and/or listen to the future podcast.

For strategies to pay off debt better than what Dave Ramsey teaches, listen to this podcast!