Wealth or Money-Eroding Factors
Increased Taxes
Taxes, like Death remain a reality. However, increased taxes are mostly government regulated and sometimes self-inflicted depending on what vehicles and strategies you choose for your investment and retirement portfolios. Understanding the US marginal income tax history will help you to see when is the best time to pay Uncle Sam? Taxes that are deferred, earn interest hence such taxes are compounded over the years for which they are deferred. This gives more money to Uncle Sam instead of you! With recent financial crises, it is obvious that taxes will have to be increased in order to reduce the high deficit the US owes. What will be the tax structure for the decades to come? Will your deferred taxes cost you double when they are finally paid? Longevity and the increase of retirees in the years to come, only guarantee the possibility of higher taxes! So, meeting with us to review the eroding effect of future tax increases on your investment and retirement portfolios will be time well spent if we can help you strategize a process to reduce this risk. Please view the US Historical Tax Chart. |
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Inflation
We live in an inflationary world, prices have never remained still instead, they continue to go up thus eroding the purchasing power of the dollar at an average of 3.5 to 4% every year! How much will your investment be worth after inflation, market risk and tax risk in 10, 20, 25 or 30 years? What proven strategies have you implemented to reduce the burdens of these money eroding factors? Example: John is 40 years old and decided to accumulate $1,000,000 in 25 years for his retirement. He will have to invest $18,000 yearly at an assumed 6% annual return. But, how much will his million dollars be worth at an average inflation rate of 3.5% and at an income tax bracket of 28%? Assuming these rates remain constant, his million dollars will be worth $345,537! Take advantage of our free consultation by scheduling to meet with us. More information on inflation can be found at: US Inflation Calculator.com |
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Market Risk
Market risk is the risk that the value of a portfolio, either an investment portfolio or a trading portfolio, will decrease due to the change in value of the market risk factors. The four standard market risk factors are stock prices, interest rates, foreign exchange rates, and commodity prices. ... The values of marketable securities fluctuate every day. Sometimes these changes in value have nothing to do with the real "value" of the investment but instead are influenced by a variety of unrelated events such as political changes, congressional actions, US and foreign activities. Over the years, many retirement portfolios have been wiped out because of ignoring this risk. During your free consultation with us you will discover strategies that will help eliminate or limit this risk.
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Accidents
The various kinds of accidents occurring in a variety of places have created a serious risk to the financial success of corporations, families and individuals! The contributions to your retirement and saving accounts are seriously impacted when your earning potential has been limited due to a serious accident that may eventually lead to disability or death. Even if an accident did not result in disability or death, just the recovery period alone will cause a financial setback. Most frequent accidents may include: car, explosion, electrocution, crushing, fall from elevation, fall from roof, fall, fall from stairs, burns, electrical shock, struck by falling object, struck by nail, struck by needle, struck by car, fall by slipping, etc. Hence, at our free consultation meeting you will learn of a strategy that helps hedge your retirement and saving contributions against this risk. |
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Disability
When disability occurs, yearly contributions into a traditional retirement or investment vehicle stops! This creates a negative impact on the growth of your retirement or investment funds. Example: James is 40 years old and contributes $10,000 yearly at an assumed 5% annual total return to his retirement portfolio hoping to retire at age 67. In the second year of contribution, James was in a serious accident in which he becomes permanently disable, no longer could he contribute to his retirement or investment either due to law or less cash flow. Assuming that James did not touch these funds, he will have only 2 years of contributions to grow for his retirement at age 67! After a 28% income tax, the sad result will be a benefit of $61,358. But if he had use a self-funding, tax-free strategic vehicle, James could have had a total income tax-free benefit of $652,152 of which $400,000* could be used to provide a stream of income for retirement! *Using current dividend rate which may change.
Disability is often referred to as "living death". It limits or prevents your goals for financial success. To watch your own financial potential falls apart due to the lack of preparation for an injury or sickness can be quite devastating and humiliating to individuals and families. Accidents and sicknesses are the primary cause for permanent disability. This risk is serious and must not be ignored! Disability risk must be discussed and hedged against for the continuation of your income, savings and retirement if your goals for success are to become a reality. Find out if you still have time to fix this financial pitfall by scheduling your free consultation today. |
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Death
Death can occur due to accidents, illnesses or advance age. Whatever the cause of death may be, it presents a serious risk to families and businesses. Death ends a well meaning plan by loved ones. When it occurs, its devastation is not easily forgotten both emotionally and financially. It has affected many generations both rich and poor. Hence, it is impossible to shield any from the emotional pangs of death in this imperfect world. It is however possible to create a relative hedge against the financial disaster caused by death of your loved ones. Not knowing when death will occur makes it imperative to establish a coordinated and permanent strategy in your financial plan so that whether you live, become disable or die before retirement, your plan will be self-funded to make your financial goals a reality. This risk is never properly addressed by traditional financial planners; we will address strategic solutions for this risk at your meeting with us. You will discover ways to improve your existing plan with no extra cost!
The most common conventional causes of death in industrialized countries are cardiovascular disease, cancer, Alzheimer's Disease and accident (in that order). Alzheimer's victims usually die of pneumonia, a lung condition or a cerebrovascular condition -- so Alzheimer's victims are often declared to die of other causes.
CAUSES OF DEATH, USA, 2002
FORMAL NAME |
INFORMAL NAME |
% ALL DEATHS |
| (1) Diseases of the heart |
heart attack (mainly) |
28.5% |
| (2) Malignant neoplasms |
cancer |
22.8% |
| (3) Cerebrovascular disease |
stroke |
6.7% |
| (4) Chronic lower respiratory disease |
emphysema, chronic bronchitis |
5.1% |
| (5) Unintentional injuries |
accidents |
4.4% |
| (6) Diabetes mellitus |
diabetes |
3.0% |
| (7) Influenza & pneumonia |
flu & pneumonia |
2.7% |
| (8) Alzheimer's Disease |
Alzheimer's senility |
2.4% |
| (9) Nephritis & Nephrosis |
kidney disease |
1.7% |
| (10) Septicemia |
systemic infection |
1.4% |
| (11) Intentional self-harm |
suicide |
1.3% |
| (12) Chronic Liver/Cirrhosis |
liver disease |
1.1% |
| (13) Essential Hypertension |
high blood pressure |
0.8% |
| (14) Assault |
homicide |
0.7% |
| (15) All other causes |
other |
17.4% |
[Source: National Vital Statistics Report, Volume 53, Number 5 (October 2004)] |
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Creditor Claims & Lawsuits Risks
Generally speaking, any outstanding debts you owe including medical bills, unpaid taxes, credit card debts, mortgage debts can be claimed against your estate at your death. The executor of your estate has a duty to pay any creditors that make a legitimate claim against your estate before distributing your remaining assets to your heirs. Lawsuits often result in cases whether there is enough assets or not to pay all outstanding debts. Other causes for lawsuits are Car Accidents, Medical Malpractice, Bodily injuries, etc. Building your retirement and investment portfolios into financial vehicles that are easily lien against will disinherit you and your loved ones from your wealth. During our meeting with you, you will discover strategies to help curb these risks.
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Schedule your
Free Consultation
At Prudent Financial, we guide our clients to systematize a strategy that will identify their financial potential and future results that are measured by their present financial position, their desire to improve, commitment, discipline and consistency in implementation. These elements define the basis for our clients' relative financial success. Please note: our advice is based on facts and realities, we do not dictate to our clients nor are we liable for their failure to implement any of our advice. |
