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on October 1, 2007
Every flimflam man knows that the con must be carefully layered around a kernel of truth for credibility. Missed Fortune 101 by Doug Andrew succeeds in this by wrapping a number of preposterous ideas and prevarications around three basic and true axioms. They are: (1) income is taxed in what are essentially "chunks," (2) the only relevant tax rate for decision making is the marginal rate, and (3) tremendous wealth can be created by borrowing at one rate and investing at a higher rate. Everything else in this book is not only utter nonsense, but potentially lethal to one's financial health.

The author arrives at two basic conclusions. We should borrow out of our homes and invest the proceeds at a higher rate. Universal life insurance serves as Andrew's means to this end. We should also suffer the consequences of withdrawing from our IRAs and other retirement plans now rather than later, since the tax from such withdrawals will only get worse. Naturally, the leftover funds (heavily diluted by taxes) should be invested in the same insurance policies, which supposedly offer a higher--and safer--yield than whatever the retirement plans were invested in. By page 5, I realize I'm reading a book-length sales pitch and con that has the potential to wreak havoc in my clients' lives (disclosure: I've been an Enrolled Agent tax professional and Certified Financial Planner licensee for almost three decades).

Anything this full of nonsense is difficult to critique. Short of writing a book-length retort, I've settled on the idea of listing the multitude of problems by category and providing examples from each.

A far more comprehensive review is available at my personal sites; just Google my name to find me. This is an abstract from that review. Serious readers will want to check out my books to see what links may exist between financial abuse and the field of addiction. You may wish to start with Drunks, Drugs & Debits: How to Recognize Addicts and Avoid Financial Abuse or Alcoholism Myths and Realities: Removing the Stigma of Society's most Destructive Disease.

Highly misleading examples
(2) "A $6,000 interest expense deduction on an itemized tax return has the same impact as a $6,000 qualified plan contribution. They are simply reflected in different sections of the return." Aside from numerous other issues, the tax savings from the interest deduction may be zero if you don't already itemize deductions.

(3) He implies that ordinary investors can double their money for 20 periods by comparing one dollar pre-tax and one dollar taxed-as-earned, doubling each "period" for 20 such "periods." The number of humans who have done this or something equivalent numbers perhaps a few thousand, which wasn't accomplished by investing in insurance contracts.

Faulty and twisted logic
(4) "...Your home may likely sell much more quickly and for a higher price with a high mortgage balance rather than a low mortgage balance." What the heck does the balance on my mortgage have to do with what a buyer is willing to pay me for my house?

Broad, sweeping and misleading generalizations
(2) Andrew advises that we all sell our homes and repurchase with 100% financing with the goal of freeing up equity to invest in his recommended universal life policies. He ignores the higher interest and property mortgage insurance costs on such loans, overlooks possible increased property taxes and disregards fixed transaction and moving costs.

(4) "Unfortunately, non-spouse heirs far too often end up with only about 28 percent of the money that was left in their parents' IRAs and 401(k)s." This is exceedingly rare and, therefore, scare-mongering.

Questionable predictions and grand assumptions
(3) "Conservatively, [our cozy retirement] cabin will double in value every ten years..." and our $100,000 cabin will be worth "$800,000 in thirty years." Very few areas in the country even during the late real estate boom of the last three decades have done that well. What would qualify as "aggressively"?

Assertions and generalizations that may be lethal to your retirement
(1) "Home equity has no rate of return when it is trapped in the house..." This is outright nonsense. The return is what you save in interest or rents.

(5) He concludes that if not done before, "roll-outs" from IRAs commence at age 59 ½ over a five year period and that some younger people under age 50 should commence withdrawals despite the imposition of early withdrawal penalties. The value of tax-deferred growth is ignored, as is the fact that "repositioning" of funds shrink the amount available for investment by the tax paid, which greatly distorts his calculations.

Inane or incorrect assertions
(2) He states that the interest on an equity line used to purchase universal life insurance from which you contemplate borrowing is deductible. Under IRC section 264(a)3, it isn't.

Sloppy editing of facts
(2) "One requirement [for withdrawing tax-free income from a Roth IRA] is that a distribution may not be made until at least five years after the first contribution is made." This is incorrect. Principle contributions, which are withdrawn before earnings, can be taken at any time at no cost in tax or penalty.

Poor writing and berating of those who disagree with him
(2) "There are two ways to handle information: ignore it as false or increase your level of understanding to accommodate new ideas." Obviously, we are supposed to accommodate his ideas or we're complete idiots.

(3) There are probably hundreds of examples poor writing. "...Premium payments can be varied, fluctuated, and adjusted according to circumstances..." should be, simply, "Premiums can be adjusted."

Throughout, Andrew uses variations of the typical bunko-artist salesman ploy: scare you into agreeing to do whatever he says because life will be filled with disasters if you don't. On the contrary: your financial life will likely turn into a catastrophe if you do.
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on March 21, 2007
I've read the book. I'm a graduate of the author's seminars for agents (and mortgage brokers)and one who's sat through a friendly competitor's

version of same. I've also witnessed at least 6 public seminars on the subject matter and like to think I have a unique insight to the concepts

discussed in the book.

For one, the strategy is sound, both in theory and real life.

I have implemented the strategies myself and have no regrets.

The problem with the author's approach is that he beleives so strongly in his position, he trains his agents and mortgage brokers to aggressively push all prospective clients to place every last available cent they own in to an Equity Indexed Universal Life contract. Knowing the author's background and ethics, I can say without hesitation that he is a "True

Believer" and NOT a get-rich-quick Scam artist.

The "invest it all" tactic may be okay for some, but other agents/brokers simply educate the prospective client and try to get them to understand/acknowledge that home equity is NOT all it's cracked up to be. In fact it's often times a wasted, nearly useless asset.

But many agents have failed miserably using the author's "All-or-Nothing" investment philposophy. No surprise there.

Other savvy insurance brokers/agents simply ask, "Do you have any underperforming investments?"

Of course you do - who doesn't?

Then an investor can dip his toe in the water by investing a small amount of money in an EIUL policy. If the investment performs well after a year, he usually wants to consider placing more $$$ in the EIUL policy at the policy's anniversary date.

Bottom Line about the book and author: Good strategy. Bad sales technique.

If you want to try this concept, find an agent who knows EIUL's, has read the book, has gone through the training with either author Doug Andrew or 2 or 3 other gurus of Andrew's ilk AND, most importantly, is comfortable with your desire to start with smaller investment amounts.

If the agent/broker wants you to dump everything you own in to an EIUL, no matter how sincere his intent, he's NOT someone you want to deal with.

Find someone else.
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on June 6, 2006
I am astonished that so much negative is written about the ideas in this book. One person even admitted he had not read it, but critiqued it anyway. Many people misrepresented what he said. Must be some scary stuff in the book to get people so riled up. So here are my ideas about the book. Even the Dallas paper's columns were not very fair IMHO.

1. He says up front that for simplicity sake he will use 33% as the tax rate. But that is for both federal and state taxes. So if state taxes represent 5% that leaves a federal tax of 28%, a tax rate many of the middle class are in. But even using the 25% tax bracket the theories still hold true.

2. I have recently looked at the insurance products and there are some out there that have paid around 7%-8% over the last 15 years so the number he used (7.75%)is a legitimate number.

3. Suggesting that folks only have one tax deduction (their mortgage interest) is impossible. At the very least they have real estate taxes to deduct so the deduction gained over the standard deduction is not totally unrealistic.

4. Everything he says about dead equity in homes is true. It does have a 0% gain and lendors due foreclose on homes with high equity first.

5. If you take out the equity of your home and invest it you don't have to get a rate of return equal to the mortgage rate because of the interest deduction. Using a more conservative 25% tax rate if you have a mortgage of 6% then you only have to get a return of 4 1/2% to break even. I know of tax free muni funds that have returned better than than over the last 20 years.

6. Which brings me to a final point. The ideas he presents are solid, but if you don't like insurance companies then there are other alternatives for the investment side that makes sense mathmatically. And no lender will loan money to folks if they think that they can't repay the loan so it is unlikely that the larger mortgage would get folks in trouble. If you don't have the income for the larger mortgage you won't get it. If you hate paying commissions or fees for financial products then put your money under your bed or bury it and watch it slowly dissipate (time value of money).

Any investment idea is by definition not for everybody. If you don't like the idea of investing with life insurance and want to invest with banks (CD's, MM's), fine, this strategy might not be for you. If you feel the need to have a paid off house (although he talks about this in the book) then don't carry a mortgage. Just understand that their are ways of doing things that produce better results. This is one of many. Great book for many of us.
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on November 1, 2014
I have read this book several times. It is easy to read and understand Mr. Andrew's concepts. He says in the book that his investment strategy is not for everyone and it isn't. You must be very disciplined or it could cost you unnecessary expenses. I have been using his strategy for about 6.5 years now and it is going quite well.

Mr. Andrew's main premise is to use other people's money to buy a home and invest the extra money (unpaid principle) into some other separate investment. Interest only loans are getting harder to find (2014) but you can still use conventional loans and refinance often if desired. He recommends investment grade indexed universal life insurance contracts that you can get from many sources besides him. I have mine through an investment manager who lives across the street. The secret is to fully fill the contract (he calls them buckets) in four to five years depending on age. Once a bucket is filled you can start another which I plan on doing.

Insurance products have a very high cost up front but over 20 - 30 years or more they are about the same as a typical mutual fund. However, they do not fluctuate wildly with the stock market and can be borrowed against tax free. They also protect your family well before you reach your investment goals. One thing to remember is your investments don't stop when you retire. They should go on until you pass which could be a long time depending on how long you live to.

If nothing else, Mr. Andrew shows how important it is to start saving for retirement as soon as possible. Time really helps your investments. Good luck.
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on June 18, 2006
After reading all the reviews, it appears that the major "hot button" issue in Andrew's strategy is recommending universal life insurance. We have all read and heard for years that such policies are scams to make insurance companies rich and us poor and we should all buy term insurance. However, that advice is correct for people who are interested in the death benefit of their insurance policy and not the estate planning aspects. For the person of average assets or no children or many years from worrying about how to leave their assets to their children, it makes sense that the knee jerk reaction of hating universal life dominates this discussion. For most, Roth IRAs and the new Roth 401(k) (if you can get it) seem to make more sense.

Just a personal note, our parents died 2 1/2 years ago and due to lawyers and probate, we have still not received the total proceeds of their estate. Both my husband and I have vowed not to do that to our children, and one way to avoid the time, taxes, lawyers and expense is to use life insurance in an estate plan. It's not the only way, but it is a strategy that should be considered.

One gentleman suggested buying non-dividend stocks instead of insurance. Just thought I'd mention that in 2011, the step-up basis for leaving assets to your heirs expires. But life insurance proceeds can be tax-free.

Several people complain, rightly, about the high fees for universal life. But there is a low load company out there--no commission, no surrender fees.

The advice in this book certainly isn't for everybody. One shortcoming I'm mulling over is the alternative minimum tax. With a large mortgage and high property taxes, this evil, despicable tax (but I'm being redundant) not indexed for inflation, might make using the mortgage strategy much less profitable for many people--and soon.

If you are a person of means, and are interested in estate planning, read this book. And read all the reviews. Some excellent advice can be found in them. Thanks to all who took the time to write.
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on February 23, 2015
The alternative of using life insurance as the "safe" part of your portfolio makes sense. Do you have to do it? NO, but at least learn of the option and then decide if you will use it or not. I think it is wise to have a variety of assets and investments so that you are not too exposed into just one kind of investment. As an example, imagine if all your wealth is concentrated in real estate and something happens that makes real estate values plunge, you are in deep trouble. However if your wealth is dispersed in insurance products, real estate, precious metals, mutual funds, etc., now while your real estate holdings may be hurting, your other investments may be doing well. So at the end of the day, why not consider adding life insurance to your portfolio? Douglas Andrew makes a convincing argument for the use of life insurance, it is worth exploring. All it will cost you is a few dollars to buy the book and a few hours on a Saturday afternoon to read the book.
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on June 20, 2006
You may be reading all these reviews and wonder whether these principles are real or not, but I will tell you an even bigger missed fourtune. I prepare peoples tax returns for a living. And I see Mr. and Mrs. Smith who have paid off their house with all their hard earned dollars and at age 65 turn around and get a reverse morgage and only get half of the equity out of their house. They take out a reverse morgage because social security is all they have. To combat inflation and to still stay in their house they have no other choice. So if you read this book like I have and follow the principles of seperating your equity from your house and letting it grow you will not be like the Smiths and get a reverse mortgage and only get half of it back.
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on September 29, 2007
Folks, this book will not apply to most readers.
I really wanted to understand and believe the method of this book because I certainly could benefit from it. The theme is to extract equity from your home(s) now before the bubble deflates. Then you invest it into insurance products for a guaranteed return. The whole book builds the reader up to find that magical solution, which climaxes at the end with a table of financial calculations.

Here is the problem with this method. His base figures are unrealistic to start with. Current rates for equity extraction (home loan/credit or refinance) are *higher* than what he uses in his tables. The returns from a fixed insurance contract are much *lower* than his tables. If you plug realistic figures into the calculations you will see this method barely makes sense.

There are many huge disadvantages to this method. First the upfront and yearly fees are so expensive it does not make sense to withdraw your money for at least 6 to 7 years should you need it. Second, you are paying a price for the guaranteed fixed return in the term of management fees which lower your return. If you invested in a regular taxed mutual fund, over a long period of time you will always do better than the insurance fixed return. Third, insurance contracts are not wise vehicles for passing on wealth to beneficiaries. Sure there is a payout, but should you live far past your average life expectancy, the majority your accumulated funds go into the insurance company's vault forever! Fourth, the method mentioned in the book is convoluted and is in part based on a series of tax loopholes. That means, as the author does acknowledged, the legality and advantages may change or vanish over time.

With all these drawbacks, why was the book written?
This book is essentially a sales pitch disguised as a presentation of logic and calculations. But as mentioned, the figures used for the foundation of the calculations are simply not realistic.

Financial planners make their biggest commissions on insurance products. The author is a financial planner.

Most financial gurus (Susy Orman, etc.) dislike insurance contracts and advise that individuals plan their own investments.

However, for those who would like a lower fixed return for a price and are less concerned about passing on their wealth to beneficiaries, this method could possibly apply.
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on January 4, 2009
As someone who works in the financial industry, sells investments and insurance, guides clients to prudent investment strategies, I have to say the book is loaded with tripe and miss-information. Who but an idiot would mortgage their home, cash in their 401k and IRAs, suffer the taxes and penalties on early distributions so they can invest everything in an universal life policy.
Yes, I read the book cover to cover; not once but twice. This is a very dangerous book. It went in the trash when I finished it.
If you're looking for a prudent way to invest, I'd suggest "The Intelligent Investor," by Benjamin Graham.
"Missed Fortune 101" is Douglas Andrew's contribution to the housing and credit crunch we're in today.
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on March 9, 2005
As I read reviews for this book and having read it and the larger version that parented this title, I have come to realize that those that are familiar with the world of personal finance always seem to love this book and the message it brings. Even for the few in the financial world who do not like what this book has to say mention that the techniques and strategies in it are sound. I have been in the financial services industry for nearly 8 years and feel that I am very familiar with most investments out there. Knowing what I know, I have to say that this book is incredible! Get it, use it, grow from it. It is all good!
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