Could Traditional Financial Advice Be Outdated?

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The Richness of Life Weal th FINANCIAL GROUP

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Learn Safe Financial Alternatives.

Transcript of Could Traditional Financial Advice Be Outdated?

Page 1: Could Traditional Financial Advice Be Outdated?

The Richness of Life

WealthFINANCIAL GROUP

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Jim Kipp

Jim KippFinancial Strategist

Kipp Wealth ManagementEagle, WI

262-646-4443

www.kippwealthmanagement.com

[email protected]

Since 1985Over 24 Years

of Experience!

Milwaukee Magazine

About Your Presenter

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What You Thought To Be TrueTurned Out NOT To Be True

What If …

When Would You Want To Know?

Especially When It Comes to Your Money & Investments!

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Could Traditional FinancialAdvice Be Out of Touch Today?We’ll Be In A Lower Tax BracketExcessive Risk for Higher ReturnsDiversify – Large Cap, Small Cap Etc.

Maximize Contributions To 401(k) Plans, SEP Plans & IRA’sGet Your House Paid Off By Retirement

Your Pension Is Sacred

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The Silent Thief - Inflation

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Actual Income Needs Projection

Income adjusted for a 3.3% estimated rate of inflation

$35,000 $41,168 $48,424 $57,750

$50,000 $58,812 $69,179 $83,500

$75,000 $88,219$103,768

$125,250

Now 15 Years10 Years5 Years

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Inflation Undermines Life and Legacy

• Be willing to accept a lower lifestyle1

• Dip into and use up existing assets2

• Go to children or government for help3

• Go back to work4

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The Mathematics of Losing Money in the Market

When does -40 + 66 = 0 ?

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It’s Easier To Lose Money Than to Make It Back

$100,000

$60,000

$80,000

+25%-20%

-40%

+66.6%

$50,000-50%

+100%

Break Even

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III. Safe Strategies That May Help You

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The Oracle of Omaha

Warren Buffet’s Rules for Investing

Rule #1: Never Lose Money

Rule #2: Never Forget Rule #1

Source: http://www.wordpower.ws/quotations/warren-buffet-quotes.html

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Asset Allocation Made Simple

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Red Money vs. Green Money

Green Money is Safe Money Red Money is Risk Money

Red Money is Risk Money

Green Money is Safe Money

Green Money is Safe Money

Red Money is Risk Money

Accumulation Years

Distribution Years

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The Rule of 100

Green Money

65%

Red Money

35%

100 – Age = % Red Money

Red Money

Green Money

100 – 65 = 35% Red Money

This is just a general guideline and individual situations vary

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Upside Down Planning

Green Money

Red Money

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Example $200,000 Age 65

$130,000

$ 70,000

$180,000

$20,000

Reposition $110,000

100-65 = 35%

Asset Allocation in a volatile market is critical for efficient money management

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Product Allocation

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Basic Product Class Options

Money Market

FixedIndexed

Annuities

CD’s Treasuries

Fixed Annuities

Variable Annuities REITs

Stock Bonds Mutual Funds

Derivatives

Every product has plusses & minuses and a proper use in your planning!

Lower Risk Higher Risk

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Typical Product Allocations

CD’s

Stock Bonds Mutual Funds

CD’s Treasuries Municipals

Market

Seeking Greater Safety

Seeking Higher Return

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Three Worlds of Investing

Fixed IndexedInsuranceAnnuities

Personal Protected

Pension Plans

Bank CD’s

Govt. Bonds

InsuranceFixed Annuities

Mutual Funds

Brokerage Account

VariableAnnuitiesInsurance

Safety/Guarantees Hybrid/

Indexed

Risk/Market

1. Principal is guaranteed2. Interest is guaranteed3. Short term & liquid

Potential Return: .5% to 2%

1. Starts with the guarantees from the world of safety2. Links growth of the world of the stock market as an index

Potential Return: 0% to 30%

1. Principal is NOT guaranteed2. Interest is NOT guaranteed3. Need TIME on your side

Potential Return: -40% to +40%

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Who Owns Annuities?

Federal Reserve Chairman Ben Bernanke

Keeps Personal Finance Portfolio Simple

Tuesday , July 31, 2007WASHINGTON —

The Fed chief's largest assets last year were two annuities

$1,000,000

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February February February February February February February February February February February April1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2009

$45,000.00

$65,000.00

$85,000.00

$105,000.00

$125,000.00

$145,000.00

$165,000.00

$185,000.00

$205,000.00

$155,475.41

$178,796.73

$63,358

$85,628

Index AccountS&P 5000% 0% 0%

0% 0%

$100,000

109 % More!

- 4.46% Average Re-turn

- 1.40 % Average Re-turn

+ 5.98 Average Return

Dec

10.03%

15.0%

5.12%6.40%

9.85%

15.0%

-9.26%

-10.74%

-24.0% -40.86%

6.40%

5.12%

9.85%

-5.42%

35.15%36.12%

$100,000 In Market Compared To Fixed Indexed Strategy

$110,030

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Will Rogers Said …..

“It’s not the return ON my investment that I’m concerned about…“It is the return OF my investment.”

Will Rogers

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Asset AllocationIncome for Life Strategies

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Personal Pension Lifetime Income Benefit Riders

$100,000

$110,000

10% BonusLinked to an

Index like the S&P 500

Index at 1000

Index at 900

Break Even

Positive Gain

1 2 3 4 5 6

8%

8%

8%

8%

8%

All income guarantees are based on the claims paying ability of the insurance company.

Income Rider must be selected at time of application for withdrawal benefits feature, of “Life Only” annuitization option must be implemented by annuity contract owner. Life Only payout option may offer limited or no flexibility after implementation. Annuity contracts can provide long term streams of income payments based on the annuitant’s age and o f amount of premium applied to the contract.

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Personal Pension Laddered Vision Income Programs

Leg 1: Immediate Annuity @ 1.5% annuitization rate; Leg 2: Fixed interest annuity @ 4.25% guaranteed for 5 years; Leg 3: Deferred Fixed Index Annuity estimated @ 5.5% Leg 4: Deferred Fixed Index Annuity estimated 2 6%.

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1. Lower?2. Same?

3. Higher?

Will Future Tax Rates Likely Be

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U.S. Bailouts!

$700+ Billion!

$11 Trillion

$3Billion

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Double Stacked Pallets of $100 Bills

One TrillionDollars

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SuddenImpact

“As a country, we’ve hit an iceberg, we’re taking on water,

and the band plays on as if nothing has happened!

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IRA Tax Strategies

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Your IRA, pension and 401(k) benefits will be taxable at retirement, probably at a higher tax rate.

Is Postponing Tax Really The Best Idea?

MF p.236

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Whose Retirement Are You Planning Yours or Uncle Sam’s?

$ 350,000 IRA Age 61

Over 20 Yrs RMD’sYou Pay Uncle Sam

$ 280,852

At Your Death Uncle Sam

Receives Another

$ 328,268

Total Tax Paid To Uncle Sam

$ 609,120

Assumes Growth Rate Averaging 6% Annually IRA Balance Age 90 is $713,626

CongratulationsYou’ve Become The

Perfect Tax Payer!

But, What About …Future Taxes &Estate Taxes?

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“The Front 9 is where you position yourlead by building up your assets and theback 9 is where you protect your assetsfrom excessive taxation and where youwin or lose!”

“What good is making even a 50% rate of return on an investment if, at the time of withdrawal taxes will step in to claim 70, 80, or maybe even 90% of it?”

--Ed Slott, America’s IRA Expert “The Tax Savings Time Bomb”

IRA/401k Tax Time Bomb!

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The Four Tax Buckets

IRA, 401k,

TSA, 403b

Roth IRA Income Tax

Free Investments

Maximum Insurance

PlanSDLI

Ordinary Assets

and Income

Taxable Tax-Deferred

Income Tax Free

Estate Taxable

Income Tax Free

Estate Tax Free

For greater tax efficiency Move money further to the right

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Get Your Confidential IRA Tax Recovery Analysis and Report

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Creating Generational Wealth

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1. Use the least amount of money to create the greatest amount of wealth.

2. Guarantee that the wealth will occur & transfer tax free.

3. Create multiples of wealth immediately using safe leverage.

Wealth & Wisdom Institute

Three Basic Rules For Investing

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Creating Generational Wealth

$36,800$36,800$36,800$36,800$36,800

Survivor Indexed

LifeTax Friendly

Tax Free Asset

$ 184,000

Reverse Mortgage$ 184,000

(No Monthly Payments)

$184,000Into BucketOver 5 Yrs.

Can Provide•Tax Free Income•Emergency Fund•Vacation Fund•Education Fund•Legacy Planning

$ 609,260 Death Benefit

At Death $ 609,260

Tax Free to Heirs $ 184,000 To Pay Off Mortgage Leaves Them $ 425,260 Net + Sale of House

Fair Market Value$350,000

Couple Ages 65/64

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New Cash Contributions Compound Interest

Ages 66 & 64

7.00%

Total Premiums Allowed:$ 180,000 GSP

Minimum Death

Benefits Required:

$ 609,260_

Insurance Mortality and Expense Charges

1.5%

TEFRA 1982DEFRA 1984TAMRA 1986

Corridor dictates the minimum death benefit required based upon the insured’s age and gender to accommodate the ultimate desired aggregate premium basis.

Year 5

Year 4

Year 3

Year 2

Year 1 $36,000

$36,000

$36,000

$36,000

$36,000

IRA’s, CD’s, Investments,

Annuities,Home Equity

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What IfYou Could Create An Asset

No Market Risk To Principal – Growth S&P 500

Has Liquidity

Tax Free Growth & Tax Free Withdrawals

Can Avoid Estate Tax – Avoids Probate

Complete Control of Asset

Passes Tax Free To Family Members

Protected From Creditors

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“Life Insurance, is not only the single biggest benefit in the tax code, but it is also the most cost effective way to protect a large IRA!”

“Life Insurance and Income for Life, a perfect Estate Plan!”

--Ed Slott, America’s IRA Expert

Ed Slott

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III. The Wealth Experience Method

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Key Question:Is there a good step by step process through which I can

make better financial decisions?

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The Seven Step Retirement Checklist

• Personal Wealth Index1

• Four Financial Cornerstones Analysis2

• Income for Life Plan3

• Total IRA Review4

• Long Term Care/Medicaid Options Review5

• Essential Documents Review6

• Tax Efficient Estate and legacy Options Plan7

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Helpful Decision Making Reports

1. Take Your Wealth Index

2. Walk through our Wealth Experience Workbook

3. Receive valuable planning ideas and timetables

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Take Your Free Wealth Index Survey Now

Log On To …

www.wfgnetwork.com/jimkipp

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Thank You!See You Soon