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BuildingWealth 
September 2012
In This Issue
Think About It ...
Don't Keep Us A Secret ...
Just How Exposed Are You ...
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Think About It ...*

 

How much wealthier are 'the top 1% of the wealthy' than you: 288 times wealthier than you - up from 125 in 1962.

How much has your wealth declined in the past 27 years: $57,000 in 2010 median household wealth, down from $73,000 in 1983  
 
In that same time period how much did the top 1%'s average wealth grow: $16.9 million up from $9.6 million in 1983.

   If this doesn't make you think, then you can really get your juices flowing by reading the entire story at:

   Now what are you going to do about it?  Maybe it's time to call 312.957.9400 x 403 or email Julie Ann.

Spaces & Places

 

    Julie Ann will be in these areas - consider hosting a SEB Roundtable if you live in one of these areas.

 

September

1-30: Chicago

 

October/November

8-10: Philadelphia/New Jersey

19-25: Bermuda

27-Nov 2: North Carolina, various locations

 

Host A Roundtable  

    Do you have a group of colleagues, friends or family who you want to introduce to our brand of privatized banking, 

Self-Empowered Banking 

(SEB)?     

   If so, then consider hosting a SEB Roundtable in your area. For more information, contact Julie Ann via email or at 312.957.9400 x 403.  

 Plan NOW to Build Real Wealth in 2012 ...

   It's never too early or never too late to build real wealth by setting up a Self-Empowered Banking System.
   Whether you're 6, 60 or anywhere in between -- NOW is the perfect time to get started.

   To learn more about how Self-Empowered Banking can get you on the road to financial freedom and real wealth creation, contact Julie Ann Hepburn or call 312.957.9400 x 403.

Don't Keep Us a Secret! 

Are you reaping the rewards of Self-Empowered BankingDo you know someone else who could benefit from learning more about how Self-Empowered Banking works and whether it's right for them?

   Please don't keep us a secret! We would be delighted to talk with them further, please refer them to NPCG: Julie Ann Hepburn or at 312.957.9400 x 403.
 
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Greetings!
   

     We posted a link to an article on our Facebook page last month that discussed funding retirement. According to this article, based on a study conducted by the National Bureau of Economic Research (NBER) - almost half of Americans die with less than $10,000 in assets.  

 

     The study looks at the connection between wealth and health combined with Americans' increased reliance on government for retirement support. Here are a few key findings of interest to you:

  • Many households have no 'housing wealth' and so increasingly rely on Social Security benefits for support.
    • Real estate has been sold and funds now going for senior living facilities, assisted living or other living expenses - leaving retirees without a real asset base.
  • Even though average income in retirement years is similar to earnings in their 50s or 60s, there is little wiggle room for any additional or unexpected expenses.
    • Health needs or other financial 'shocks' (think stock market volatility, financial scandals such as Madoff's scam, etc.)
    • Travel, entertainment or other 'enjoyment' expenses, which is why we retire.
  • A slight shift in the amount of Social Security benefits would translate very directly into reduced income for many retirees.
    • Reliance upon 'the system' has contributed to our accumulating a smaller, less diverse base of financial resources.

     These are some frightening thoughts but we're finding that this is a very accurate depiction of what is happening. 

 

     Just recently, one of our clients told me the story of a friend who is now 80 years old, and is expected to live another 10 or 15 years based on his family's genetics. He has already gone through more than $400,000 of his retirement savings, with no way of replenishing his funds except through his Social Security check.

 

     Unfortunately, he doesn't have a Self-Empowered Banking System in place and so he expects to run out of money before he dies. His children will then have to be totally responsible for his lifestyle, health care and whatever other expenses he incurs until he finally dies.

 

     Here's what he's dealing with by not having a Self-Empowered Banking System that can help him maximize his Social Security benefits and what he's saved from his working years.

  • At 72, he was forced to take all of his funds out of his 401Ks, IRAs and other government-sponsored retirement accounts and place them where he is only earning 1-3% in interest.
  • He did sell his house, and fortunately, he is able to live with his son, rent-free, except for the funds he contributes to the household and property maintenance.
  • As the stock market was melting down in 2008, he was smart enough to pull all of his funds out, but again he's earning a lot less than he had been, and took a bit of a loss in getting the funds out of the brokerage firm.
  • He has three children, eight grandchildren and two great grandchildren - all to whom he contributes 'presents' for birthdays, graduations, marriages, birthdays, etc.
  • Like most retirees he wants to enjoy his retirement, he's not extravagant but lunches with the boys (and the ladies, he's divorced) do add up, and the once in a while trip is paid for in cash.
  • He bought a new car because the old one was getting too expensive to maintain - paid for in cash with no plan to 'pay himself back' from his Social Security benefits. 

     Now, he's worried that he is going to run out of cash and according to the NBER study, he will.

 

     Does this sound like you??? Can you see that this might be you when you are 70 or 80 years old?? Whether you are 25, 45, or 65, if you are relying on Social Security and the current financial system to pay for your 'golden years' you are just kidding yourself.

 

     If this isn't enough to make you think, then read on for a look at how your hard earned retirement dollars are financing the wealthy and be sure to check the sidebar, Think About It ... for a few startling facts.

 

     And speaking of startling facts, in our next Building Wealth, we'll be taking a look at the effect of the third Quantitative Easing (QE3) on your hard earned dollars. In the meantime, check out our Facebook page for a QE3 post. 

 

     Hmmm ... there's a sudden chill in the air! Welcome to Fall everyone!

 

Warm regards,


Julie Ann 
JAH New Signature Photo
Julie Ann Hepburn
President

PS:  We love it when you pass on Building Wealth to friends, family and colleagues, but please remember to use the 'forward email' link at the bottom of every issue so they can have their very own issue the next month. 

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Just How Exposed Are You ...

 

     As many of you know I am a big fan and colleague of author Barry James Dyke, who wrote The Pirates of Manhattan in 2007, which details the history of our current financial system and why we continue to experience the boom and bust cycles that keep the majority of Americans from truly building sustainable wealth.

 

     In his most recent book, The Pirates of Manhattan II: Highway to Serfdom, he documents Main Street Americans' horrendous exposure to the stock market in their defined contribution, government-sponsored retirement accounts (IRAs, 401(k) and 403(b) accounts). 

 

     Using 2010 data from the Investment Company Institute 2011 Fact Book, he found of the $4.68 trillion invested in defined contribution retirement accounts that roughly 77.4% of Americans invested in volatile stock mutual funds. He found:

  • $2.74 trillion or 44.2 % of the total was invested in domestic equity mutual funds.
  • $675 billion or 14.4% was invested in foreign equity funds.
  • $878 billion or 18.7% was invested in hybrid securities (commonly known as target-date or life cycle mutual funds which invest in stock and bond funds.)
  • $710 billion or 15.2% of the total was invested in bond funds.
  • $351 billion or 7.5% of the total was invested in money market instruments. 

     The author found that although most fund companies are seeing major outflows in stock mutual fund holdings, target-date mutual funds, now the premier default investment for 401(k) plans, are still drawing in billions of new cash inflows due to lobbying interests of the mutual fund industry.

 

     Of the 8000 mutual funds Lipper tracks, 92% suffered losses in 2011. Morningstar, in tracking 8,000 mutual funds, found that the average mutual fund lost 2.9%, while the S&P 500 stock index gained 1.52% in 2011. European stock managers did even worse, with an average loss of 13.9% in 2011.

 

     "Recent new issue go-go stocks sold by Wall Street into mutual fund investors such as Facebook, Groupon and Zynga have been investment disasters. 

 

     "Facebook started trading at $38 a share in May, and two and a half months later, it is trading at $20.81, a 45% loss in value. Groupon came out at $20 a share in November 2011; in August 2012 it was trading at $6.15, a 69% loss. Zynga, another hot issue which was hyped to the heavens came out at $9.41 a share and in August trading at $2.95 a share, roughly a 70% loss. 

 

     "Some of largest owners of these stocks are mutual fund companies, which get their money from peoples' 401(k)s. It is another case of rampant speculation brought to you by Wall Street funded by Main Street America's 401(k)s," said Dyke.

 

     The author maintains that Americans want guarantees instead of rampant speculation. Dyke has plenty of research to back up his claims.

  • According to the findings of the Chicago Booth/Kellogg School Financial Trust Index released in May 2012, only 15% of the population trusts the stock market, a slight increase from 13% in 2009.
  • A survey done in 2012 by The Hartford Financial Services Group, Inc. found that 95% of workers under age 30 want a guaranteed account. Of those between age 30 and 40, 90% want a guaranteed account. For those over age 60, 77% want guarantees.
  • A survey done by Allianz Life in October 2011 found savers are shell-shocked. 51% of 1,000 surveyed are increasingly uncertain about the fate of their 401(k) and 403(b) plans. 27% thought the best to place to put their money was under a mattress.
  • In 1999, technology stocks that populated the NASDAQ gave it a composite index of 5,048. Thirteen years later, the NASDAQ is only at 3,028.

     Dyke's research reveals this hypocrisy: certain sectors of society such as highly paid executives, bankers, the Federal Reserve System, and government employees have rich retirement plans anchored by guarantees from the taxpayer, company balance sheets and through frequent use of life insurance and annuity products with contractual guarantees.

 

     If this article has you thinking and you've seen the value of your 401K, IRA or other government-sponsored retirement plan - all primarily anchored in investing in mutual funds - go down and keep going down, then maybe it's time to take matters into your own hands.

 

     We've said time and again that a Self-Empowered Banking System gives you the control, flexibility, liquidity and tax advantages that are rarely available in the traditional financial marketplace.

 

      How you are going to safeguard your financial future and build sustainable wealth? Are you asking the right questions about your financial future? 

 

     If not, then maybe it's time to find out more about how you can use Self-Empowered Banking to get you on the right track. Stop financing the wealthy with your hard earned dollars. Let's get planning for your financial future -- schedule an appointment now.  Contact Julie Ann Hepburn at 312.957.9400 x 403 or via email.

 

     View a recent interview with author Barry James Dyke describing the severity of this rampant speculation problem is entitled "The House Always Wins." He is interviewed by Allen McLellan of The American College: Barry Van Dyke Interview