“The difficulty lies, not in the new ideas,
but in escaping from the old ones.”
John Maynard Keynes
“The General Theory of Employment, Interest and Money”
(Book Part 2)
* “You are the numbers wizard Brett!
Unlike the 'other' books, yours ‘pulls back the curtains
and provides the numbers on how it really works.”
Mortgage Consultant to the ‘other’ “best seller” books.
"Never stand begging for that which
you have the power to earn."
Miguel de Cervantes
This ia Part 2 of "Last Chance Retirement". A wealth creation technique that has been used by the "Rich" for centuries is leveraging the value in their assets via arbitrage to create more wealth! This is the same technique banks have used for centuries. Why and How to do this for the "average" homeowner was most recently explained in the "Missed Fortune" books. This is also a great way for most people saving for retirement, to Super-Charge their savings to create more wealth and income at retirement.
What you will find different in this book are explanations of differences on a couple of very important strategies, that could save you many thousands of $'s! These are explained below in the box on the left.
Another issue that has become a hotpoint recently has been raised by another advisor/author, who claims that IRS code #264 states you cannot take a tax deduction on any interest expense as a result of borrowed monies put into a Private Plan. Experts in the industry state this rule does not apply - I'll address this in the box below on the right.
There is something else you will find in my book that none of the others do -- I provide tables that show you what the actual Return on Investment may be based on age for:
... based on:
For most people under age 60 this can be an excellent financial strategy to consider. But for someone over 60 - especially when there is no real tax benefit - this becomes less so the older they get. Before you put yourself at risk (or liability) for a wealth creation strategy that may NOT be good for you (or your Client) and that could actually end up costing many thousands of $'s, you need to read Part 2 to learn how it really works!
Qualified Rollout Illusion!
If you have Qualified Savings (IRA, 401k, 403b, 457, SEP and Keogh), eventually (age 70.5) it is mandatory that you start taking the money out so that the IRS can start collecting on the deferred taxes (something you will never have to do if you implement the Private Plan you will learn about in Part 1). One technique promoted in 'Missed Fortune' is to take out an equity loan to invest in a Private Plan, and so use the new interest deduction on the loan to offset and 'zero' out this tax bill. The only problem is it is an Illusion -- it does NOT work!
Normally any loan interest deduction is used to reduce the cost of the loan payment. If you use it instead to pay the taxes on the Qualified Rollout, all you have done is rob Peter to pay Paul! When you tally up the total taxes paid, you will find that you did not gain even 1 penny in tax savings if you follow this strategy!
My other big 'difference' with Missed Fortune is the tax deduction on any equity loan for monies invested into this strategy. That book spends considerable effort to get you to understand the benefits of the tax deduction, but then never shows you if this technique will even work with or without it.
As I said above, it may or may not based on your age. But many, many times their response to me was always: "the tax deduction is just icing on the cake -- it is not needed to make this strategy work regardless of age." This is just false, and is responsible in part for my having written this book (but it is the smaller part of the book)!
Home Wealth Management can be a great or bad strategy. So before you commit yourself to something involving up to $100,000 (the maximum equity loan for deductible interest for a couple), you need to understand the IRS laws, how the Private Plan may increase your net wealth in the future and how to design it to do so -- this is what you will find in this book that is not in any other!
A key to making the Home Wealth Management strategies work is to be able to deduct the interest on the equity loan you borrowed from your home to invest into a Private Plan.
This other advisor states that the IRS code disallows this deduction. In my book you will find a statement from the attorney of one of the largest providers of Private Plans (also one the largest and highest rated Financial Services companies in the world), stating that in their view this tax law does NOT apply to this strategy and why.
But if you disagree with this expert's opinion, I list the exceptions in the IRS code and how to design a Private Plan to comply with this code anyway -- something that this other advisor does NOT do!
I also include a summary of a report from the Federal Reserve Bank that states the average homeowner would be a LOT better off at retirement if they STOPPED paying off their house with extra payments, and instead invested those monies in tax adavantaged Retirement Savings.
A Private Plan is both Tax FREE, and by law the ONLY Retirement plan that can also include (FREE) benefits for Terminal Illness, Convalescent / Long Term Care, Critical Illness, and allow you to use the savings for College Funding or to be your Own Banker, and guarantees Retirement Savings completion for a Surviving Spouse! Isn't it time for you to learn about this amazing, IRS approved Retirement Savings plan?!
"Doing the best at this moment
puts you in the best place
for the next moment."
"It ain't what you don't know that
gets you into trouble.
It's what you know for sure that just ain't so."