3. Japan’s Lesson
• Japan- world’s 3rd largest economy
• The US Economy is going through many similar
events
• The Nikkei 225 Index Japan’s Stock Market
down 72%... 20 years later
What Happens in a 20 year “BEAR” market?
4.
5. 38,915.44
December 29, 1989
Jan 1, 2010 9,346.13
-72.9% below its closing high
Nikkei 225 Index
40 year history
Nikkei 225
Oct 8 2013
13,894.61
11. 1966 1974 1982
Indexed Annuity
Dow
The Rewards of an Indexed Annuity with Annual Reset
750
750
The stock market, specifically the “Dow”, had a net gain of
zero from 1966 to 1982. Equity Indexing would have
provided growth by participating in the gain of the up
markets, but not participating in the loss of the down
markets.
“Dow”
+
+
+
+
+
+
+
+
+
Indexed Account with Annual Reset.
12.
13.
14.
15.
16.
17. Indexed Accounts do exactly that
Capture each years of positive gains, and
eliminate each negative years.
Major Index Leader
The difference that simply
eliminating the negative years
makes Is Substantial
19. Imagine if you still had every penny
of gains you’d received on your
investments!
To give you an idea of just how much of
a difference having your gains locked
in can make, here’s a fascinating little
quiz…
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20. Stocks and Mutual Funds
Let’s answer some common questions:
1. How does a Life Savings Account (LSA)
perform compared to stocks or mutual
funds?
2. Is it really true that if you simply hold on long
enough, investing in stocks and mutual funds
will out-perform just about anything else?
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21. Quiz
Before we answer that let’s have a lesson in
Annual Rates of Return
A 25% Average Annual Return
Not bad, huh?
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22. Do you think it’s possible to, get a 25% average annual
return for four years… and end up where you started?
• Is it possible to invest $100,000, get a 25%
average annual return on your money for four
years… and end up with only the $100,000
you started with?
• If you answered “no,” you’re in for a real
surprise!
• But let’s see how much money you actually
have in your account…
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23. Averages Can Be Deceiving
Start with $100,000
• Year 1 $200,000 100% gain
• Year 2 $100,000 50% loss
• Year 3 $200,000 100% gain
• Year 4 end $100,000 50% loss
(200% gain less 100% loss divided by 4 years equals)
25% Average Annual return
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25. So what good did getting a 25%
average annual return do you?
• That and a quarter won’t even buy you a cup
of coffee, let alone a mocha latte!
• You have nothing to show for this roller-
coaster ride other than heartburn and a
stomach ache.
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26. Wall Street illusionists
• The Wall Street illusionists have been pulling
the wool over your eyes for decades!
• You take all the risk, and they get the rewards,
whether you make money or not!
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27.
28. Shocking Fact #1:
• A recent study1 revealed that, for the past 190
years, American stocks have averaged a
REAL annual return of only 1.4 percent!
• The study did not deduct, commissions or
taxes.
1 “Stock market’s real return? Paltry,” by Anthony Mirhaydari, MSN Money, February 1, 2010
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29. Shocking Fact #2:
• The typical equity mutual fund investor has
actually been losing one percent a year for
the past 20 years, after adjusting for
inflation.3
3 DALBAR’s 2008 Quantitative Analysis of Investor Behavior
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30. Warren Buffet:
“I have two rules when investing.
• Rule #1) Never lose money.
• Rule #2) When in doubt see rule number 1”
• “… I advocate indexed investments … for
serious cash.”
• http://www.berkshirehathaway.com/letters/1988.html
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31. Beating The S&P 500
• “Over the 15 years ending October
31,2005, 94.28% of actively managed funds
did worse than the S&P 500”
John Stossel, author and reporter ABC’s 20/20.
Myths Lies and Downright Stupidity by John Stossel
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32. Beating The Market
• “While 95% of funds failed to beat the S&P 500 the tiny 5%
of funds that did beat the market do not do it consistently.
In other words, picking a fund that beat the market last year
does not mean it will beat the market in the coming years.
• “…beating the market average (S&P 500) has proven to be
impossible to accomplish over time”-
“Stop Sitting on Your Assets” by Marian Snow
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35. Amazing
• Start with $100,000 in Mutual Funds
Minus the ups and downs of the market
• End with $100,770 before fees and tax
• Deduct Mutual Fund Fees of $32,361
• Net before tax $68,409
– $20,522 (30% tax)
• After 11 years of fees and net tax $47,866
• Wait it can get worse…
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36. 401K Fees
Additional fees typically 2%-5%
If in the previous example the money was in
401K
Deduct MORE
And if money is taken and under age 59 1/2 take
a 10% penalty tax (which about 70% do)
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37. 401K Fees
Most workers don't know about 401K fees, rebates and
revenue-sharing agreements
Most fees are buried in the fine print or not disclosed at
all
The U.S. Department of Labor lists 17 distinct 401(k)
fees, including ones for record keeping, legal services
and toll-free telephone numbers.
Most common fees: Management fees, Administrative fee, Distribution fees
(about 1% a year), Sales loads (averaging 1.4%) Trading costs (averaging .5-
1% ) Excess capital gains taxes
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38. “What the heck is the rate of return
on a typical LSA policy?”
You would have to get a 8 – 11% average annual
return in a taxable account to equal the
average net return in a typical and properly
designed LSA
assuming you’re in the 35% tax bracket.
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44. Life Savings Account- LSA
Other points:
• Never Go Backwards
• Gains Locked In
• Minimum Guaranteed Return of
10.4% over 5 years or 2% per year
Keep in mind that you receive a guaranteed and
predictable cash value increase every single
year – in both good times and bad.
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45. No two LSA plans are alike
• However, no two LSA plans are alike – each
one is custom tailored to the client’s unique
situation.
• To find out how much your financial picture
could improve if you added a Life Savings
Account to your financial plan,
• request a free, no-obligation analysis.
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46. Let me let you in on a little secret…
One of the many advantages of a properly
structured LSA-type policy is that you can
borrow the equity (money) in your policy, use
it to invest elsewhere, and your money in the
policy continues growing as though you hadn’t
touched a dime of it!
(Note – not all companies offer this feature.)
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47. Little Secret
• Result:
• You could be receiving the 8 – 11% after-tax
equivalent return…
• PLUS the return of the investment you put the
money into!
• This allows you to have your money working
for you in two ways at the same time!
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48. Bottom Line
• The rate of return on an LSA will put just
about any traditional investment to shame,
and it will do that without the risk or
volatility of stocks, real estate, gold,
commodities and other investments.
• And without the risk of taxes
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