Most Helpful Customer Reviews
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109 of 126 people found the following review helpful:
1.0 out of 5 stars
Utter Garbage, 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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36 of 41 people found the following review helpful:
1.0 out of 5 stars
What your Life Insurance Agent hopes you NEVER read, October 1, 2007
When did Life Insurance become a good Investment?
Did they stop charging those 90% plus commissions on target premiums?
When did the Life Insurance Agent become a charitable organization?
Anyone who is believing this so called NEW way of thinking is either really bad with math or simply does NOT understand Life Insurance. There is a REASON you don't see REAL professionals using this concept they KNOW the TRUTH!!!
What is the ROI on my home Equity? MORE THAN ANY LIFE POLICY!!!!
After you learn how to subtract out all the commissions and fees, then the REAL cost of the death benefit, loan fees for your house loan fees for the life policy let's sit down and compare which approach works best. Having my house free and clear with NO COMMISSIONS to pay, no loans, and no INCREASING internal costs for the life insurance will BEAT any Life Policy I GUARANTEE IT!
Here is a shocker to reality. If you bought into this BS and mortgaged your house and placed the money into a life policy order a current statement for your policy showing the SURRENDER CASH VALUE in the first year, HOW MUCH did you LOSE? Then look at the 5th year how much have you LOST? Tenth year? Do the REAL MATH find out the REAL FACTS.
LIFE INSURANCE is one of the HIGHEST commissioned products in the financial industry if not the HIGHEST FACT! Where do you think that money comes from, YOUR POCKET. 90% first year target premium commission and then about 6% commission each year thereafter. Do the math if the insurance company is paying out 90% of the first year target premium in commissions and 6% each year how long does it take for YOU to make MONEY or even breakeven on your so called investment? It will take OVER 20 YEARS!
Here is a little KNOWN FACT there are currently MANY so called experts out there today TRAINING for a large fee many other life insurance agents and mortgage brokers how to SELL LARGE COMMISSIONED life insurance policies. They don't care if you need a policy or NOT they only care about SELLING a policy. Check the facts. Some are even paying for cruises for Seniors then encouraging them to apply for insurance. IT IS HIGHLY PROFITABLE to someone BUT NOT YOU the policyholder.
You will see many lawsuits in the coming years from these abuses when the you know what finally hits the fan.
By the way did you know that it was illegal for you stock broker to encourage you to take out a mortgage to buy an REAL INVESTMENT? It should also be illegal for Insurance Agents but it's not, well not YET, time will tell.
I wish more people would ask the harder questions before believing this new line of BS.
FACTS: Insurance agents make about a 30-50% commission on term life insurance and around 90-95% commission on whole life products. Keep in mind that this is the first year commission on the premium and subsequent year commissions are much lower with an average of 6% per year for whole life products and 4% per year on term life insurance products.
One of the great problems with whole life is only an expert can tell if a policy you own or are considering will ever become a decent investment. James Hunt, actuary for the Consumer Federation of America, who has analyzed thousands of policies, notes that whole life policies hardly ever yield a reasonable return unless held for 20 years or more.
So if you buy one be prepared to pay into it for the very long haul.
The key to a whole life policy is its internal rate of return -- the yield on the policy after all fees and charges are subtracted. A competent analysis can determine at a minimum whether the weight of the fees and charges built into one of these policies will ever allow a worthwhile return. Such an analysis will also pinpoint the minimum amount of cash value that you can derive from a policy at any given time interval.
Some financial planners, actuaries and accountants can perform internal rate of return analysis on your policy. The Consumer Federation has a service that will do this, calculating the real return year by year and comparing it with other investments.
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28 of 33 people found the following review helpful:
5.0 out of 5 stars
Please ... Don't Read this Book!!, June 19, 2005
I always find reviews from people who don't read the book interesting.
So here are a couple of things that are being misunderstood and misrepresented. Mr. Andrew stresses that for a prudent investment to be valid, one has to follow, in order, these rules - Liquidity, Safety, Rate of Return and tax favorable position if possible. The investment itself - life insurance - is the only investment (besides a ROTH qualified plan) to provide tax free accumulation, tax free distribution, and tax free transfer. If you qualify for a tax free contribution using the deductibility of your home mortgage, fine, but the strategy still can work even if you don't.
The use of an Equity Indexed Life Insurance policy as the investment can be easily misunderstood. Often it is confused with it being an Equity Indexed Annuity, which it isn't. It does have a guaranteed minimum interest rate - which means your gains are not subject to loss if the index falls. It also has a "Cap" (the maximum percentage of the growth of the index that they will credit - if the index gains beyond the maximum percentage amount your account value is credited up to the Cap percentage).
Here though are three interesting things that should help clear up why this is the product of choice:
1. The minimum guarantee is covered by the reserves which are required of the insurance company - for every $100 they have to reserve $104 dollars (compared to a bank which only has to reserve $1.25 per $100). How many banks have failed vs life insurance companies in the past 125 years? Why do you think banks have to offer FDIC insurance?
2. The participation in the index is not DIRECT. The insurance company buys Options to cover the gains and protect against loss.
3. Each period (say, from one point this year to the same point a year later) any gain is applied to your entire account value and any loss still earns you the minimum guarantee. Then, regardless of what the index did, your starting point for the next measurement period begins there - either up or down from that new point. So your gains are LOCKED and your starting point is RESET. You only have interest risk, not principal risk.
A couple of side notes - had these investments been around for the past 30 years they would have averaged between 8 - 9.8% (depending on the product Cap) per year. So will the average remain the same over the next 30 years?
Additionally, on the downside, there are short term up front loads in the form of premium charges and cost of insurance (the latter because it takes about five years to fully fund your policy). Also, the company is free to change the Cap (which more than likely is to lower it) and to discontinue a specific product for new issue and homogenize new offerings to conform to industry standards.
How much insurance are you buying? Every dollar in the account value is yours and the amount of insurance you are "buying" is the difference between the account value and the death benefit. So if your death benefit is $700,000 and your Account Value is $540,000, you are paying for $160,000 of insurance. And... each year the amount of insurance will reduce as the account grows larger.
Most people buy "Death" insurance - As much insurance as they can for as little premium as possible - and term is great for this. But with "investment grade life insurance" you're buying the LEAST amount of insurance as possible (by putting in as much money as the contract will allow) and taking advantage of the tax free growth inside such a contract plus the ability to withdraw it in a tax free nature and pass it on to heirs tax free.
Wouldn't it be nice if you didn't have to buy insurance? But what other investment instrument provides tax free accumulation, distribution and transfer without much risk? (Leave a review if you know one.)
This is not a "get rich quick" investment scheme - it is a methodical conservative strategy that will increase your overall net worth by .... ??? who's to say - could be millions if you apply it over enough period of years. At least Doug walks the walk by applying the strategies to his own growth of net worth.
So who would this book appeal to? Well consider this...
If what you knew to be true was no longer true, when would want to know... most people want to know Right Now. So just because we were taught to use Qualified Money Accounts(IRAs/401(k) type accounts) to save for retirement, it really is better to pay tax up front than pay it later. Create your own ROTH like investment without the "strings" that the IRS attaches to a ROTH.
Also when you pay the principal on your house to the bank or mortgage company, what do they do with your equity? They invest it for themselves. Do they EVER send you an interest check for any of what they use of your money? Fat chance! So why not look into creating wealth using money you pay out to other people?
Why leave a portion of your wealth in a building that ties up your equity in an unsafe, illiquid asset that earns no rate of return? (Talk to my sister, mother and niece who lived in New Orleans. Their equity which was tied up in the house is totally unavailable to them - and if you think "That's what insurance is for" means anything - think again!!) Better to have access to it and not need it than need it and not be able to get to it!
So if you are interested in how your mortgage can create wealth for you, read this book. At the very end of the book you will find a telephone number where you can call Doug Andrew and he will get you in touch with a qualified individual who can help you understand how this can apply to your situation. It's worth the price of admission.
And yes, I am a "qualified individual."
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