Business & Personal Finance Articles

The Saving Dilemma

March 9, 2023

We’ve all heard that you should pay yourself first and save for your future. But not everyone does it. Are you saving for your future? Is it 10% of your income? Is it 15? Is it 20? Are you saving anything? And if you are, are you saving in a place where you have access to that money?

Today, we’re going to talk about how to strategically save for the future so that you’re able to meet your long term goals of retirement and your short term and intermediate goals as well.

So a universal financial goal that most people have is to someday retire. But what about your other goals? How do you achieve those as well as your retirement? We call that the savings dilemma. Should you save only for long term goals or should you save for short term goals or should you save for both? And the problem is, once you make a decision whether it’s short term, intermediate or long term, you’re literally eliminating the other choices.

In other words, if you’re saving for long term goals like retirement in a conventional, traditional retirement plan, that means that money is not accessible or available to you for the short term needs that you’re going to have from the time you start saving until the time you go to retire. We call that saving in buckets, but that’s not necessarily the best strategy because you can’t access that money without penalty before age 59 and a half.

But what happens when you want to get married or put a down payment on your house or send your children to private school? Where is that money going to come from?

Now, a lot of times people say, “Oh, well, by the time those events occur, I’ll be making more money”. Well, maybe you will, maybe you won’t. And in all probability you will. But that still doesn’t negate the fact that saving in buckets is a very inefficient way of saving. When we’re looking at savings vehicles for our clients, we’re looking at somewhere where they’ll have complete liquidity use and control of their money without penalty is everywhere along the way.

You see, you may be making more money in the future, but what you can’t recapture is the lost opportunity cost for those years when you’re building up your income. When it comes to compound interest, there are only two variables in that equation and that’s time and money.

With time, we could never make it up. So it’s important to start saving as soon as possible and never jump off that compound interest curve because you could never make up that lost time.

It’s often said the more time you have, the less money you need to put away. The less time you have, the more money you need to put away.

The key is if you’re saving everywhere along the way and you have access to that money and you’re never jumping off the compound interest curve, well now you’re in a position where your money is always working for you, but you’re also in a position where you could access that and use it for the things of life, those things that come up, whether they’re emergencies or opportunities.

The most frustrating thing in life is to have an opportunity come your way and you’re not in a position financially to take advantage of it. Why? Because you don’t have access to your money. You see, we believe that there’s more opportunity in protecting yourself against the losses than trying to pick the winners. Our goal is to help you make your money as efficient as possible so that you’re able to achieve your financial goals regardless of what’s going on in the market or the bigger economic environment.

And when we say losses, we’re not only talking about market losses, we’re talking about the lost opportunity of paying taxes, the lost opportunity of paying fees, the lost opportunity of paying interest to an entity that you don’t own or control, and the lost opportunity of having to access your money and jumping off the compound interest curve.

One of the ways we help our clients to become more financially efficient is by using specially designed whole life insurance policies designed for cash accumulation so that they’re able to access their money that they build up for major capital purchases or to take advantage of opportunities or to expand their business.

By utilizing the loan provision within these policies, they’re able to earn continuous compound interest within their policy and still access the cash value to make these major purchases or take advantage of opportunities. So you have the potential to earn an internal rate of return within the policy uninterrupted, as well as the opportunity to take advantage of financial opportunities that come up.

Another benefit of this process is that you’re always paying yourself first. You start where you are with what you can afford, whether it’s 5% of your income or 20% of your income, and you continue to save as a matter of course and your money continues to grow and compound within the policy and all the while you have access to it via the loan provision.

The value of this process is really startling because what happens is wherever you start, whether it’s saving 2% of your income, 5%, 10% over time, you get to a point where you’re saving a significant amount of your income and it doesn’t feel like it’s reducing your lifestyle. Why? Because you have access to all the money that you were able to save in those previous years.

So your savings percentage increases as well as your total net worth. As you build up the cash value within the policy, you have access to that cash to pay off credit cards, student loans, put a down payment on the house. This policy can go with you through all stages of your life. At the end, you have access to it to supplement your retirement income and ultimately to pass down as a death benefit to your loved ones or a charity of your choice.

If you’d like to get started with this specially designed whole life insurance policy designed for cash accumulation to help meet your savings and financial goals, be sure to visit our website at Tier1Capital.com to schedule your free Strategy Session today.

Or if you’d like to learn more about exactly how we put this process to work for our clients, check out our webinar, The Four Steps to Financial Freedom.

And remember, it’s not how much money you make. It’s how much money you keep that really matters.

Access Your Money on Demand

March 6, 2023

As business owners, we all know how important it is to have access to cash when you really need it. Are you thinking about taking a policy loan from your life insurance policy to help grow and expand your business?

Access to capital is the lifeblood of any business. Your business cannot continue to operate, and it certainly cannot grow without access to capital. But many times because cash flow is cyclical, we run into situations where our cash flow is not flowing in as quickly or on a timely basis as we need it. And there are the opportunities that you have that you may not even be considering where you can borrow against the cash value of your life insurance to keep your business going or to help your business to continue to grow.

Traditional means of financing require that you ask for permission by applying and ultimately qualifying on the bank’s terms to obtain access to their capital. But the reason life insurance loans are more preferred is because you are not applying and qualifying. You are literally giving an order.

The loan provision that exists in your policy is a contractual obligation, the insurance company has to honor your request for the loan. You’re not asking permission. You are literally giving an order. And that is not a small distinction. That’s why our business owner clients love borrowing against their life insurance. They are not qualifying. It doesn’t matter what their credit score is, It doesn’t matter how much money they have in the bank. It doesn’t matter what their cash flow is. The insurance company, when you call them up, they say, “Yes, sir. Where do you want us to send the money?”

So with these life insurance policy loans, they’re unstructured loans. So it’s suggested that you pay at least the interest back every year, because if you don’t, it will tack on to the balance of your loan. But other than that, you’re not required to make payments back to this policy loan. You get to determine the terms of these loans.

And that, again, is a key distinction. You’re in control of the whole process. You determine if or when you pay back the loan if or when you pay the interest. What that means is you can literally fit the payment back to the insurance company, into your cash flow. You can do it on your terms, whatever makes it best for you.

We’ve had a lot of clients who start paying back their policy loans and then they stop because cash flow got bad. They literally stop paying back their loans until a time in the future when their situation or the economic environment changed.

So you may be wondering, how does this the logistically work with the life insurance policy, the individual and the business entity? And the way we help our clients structure this is by first obtaining a policy loan to the individual as the policy owner. And then the individual is able to loan their business the money and the business repays the individual.

One of the key things that jumps out to a lot of our clients is the fact that they are completely in control of this entire process from the beginning till the end, and that is the power of utilizing the cash value in your life insurance to loan money to your business.

It’s our mission to help as many business owners as possible to make the best financial decisions possible. And a simple way to do that is to be in control of your financial process. So how could we help you make your money more efficient and put you in the most control of your cash flow?

Whether you have existing insurance policy is or you’re looking to get some put in place to achieve these financial goals or other financial goals like business succession, business continuation, deferred compensation, or other business financial goals, check out our website at Tier1Capital.com. We’d be happy to help you get started with our process.

Feel free to schedule your free strategy session today or check out our webinar to see exactly how we put this process to work for our clients, The Four Steps to Financial Freedom.

And remember, it’s not how much money you make. It’s how much money you keep that really matters.

Preventing Lost Opportunity Cost

March 2, 2023

What are you doing that’s holding you back financially? When it comes to finances, no one wakes up in the morning and says, “Hey, how could I mess up my financial future today?” No. We all wake up and say, “Hey, how can I move myself financially forward?”

When it comes to finances, there are so many tricks and strategies that all claim to move forward. But the question is how do you make your money more efficient and how do you maintain liquidity use and control of your money?

We all need to navigate the headwinds that we all face, whether we’re business owners and we’re trying to navigate the headwinds that we face on a daily basis to move our company forward, or we’re a family and we’re trying to move ourselves forward financially. We all face the same headwinds. There’s the need for access to money, but if we don’t have money or more importantly, if we have money saved and then we need to access that money for an emergency or to take advantage of an opportunity, we’re going to drain down the tank. We’re going to use that money. And again, we’re never going to see the interest that we don’t earn on that money.

Then there are things like, let’s say you’re saving, there’s going to be taxes on your savings and investments. There’s going to be losses perhaps on your investment. There’s certainly going to be fees on those investments. All of those things are headwinds that we face on a daily basis. And then if we pay a tax, we pay a fee or we experience a loss, then there’s the lost opportunity cost. What we could have earned on that money had we not paid those fees or hit those headwinds or had those losses.

This is why we constantly talk about making your money more efficient. How do we work with what you have to get you as far as possible financially, whether in your family or your business?

Let’s say you have a plane that could fly 100 miles per hour, but you’re flying into a 345 mile per hour headwind. If your plane could only move 100 miles per hour, but you’re flying into that headwind, you’re going nowhere, and certainly nowhere fast. In fact, you’re not going nowhere, you’re literally going backwards.

So the facts are the facts. Your plane could only move 100 miles per hour and we have no control over the wind. But what if, instead of having a headwind, we adjusted the direction we were going and used it as a tailwind to propel us forward?

And that’s literally the type of planning we can help you with or the type of planning we designed for our clients on a daily basis.

We know that the winds are a given. The headwinds that we face are there. How can we work with those headwinds to make sure that we’re taking advantage of them so that now we’re using that wind to propel us forward rather than to prevent us from moving forward?

If you’re ready to make your cash and your cash flow more efficient and take advantage of the winds, please be sure to visit our website at Tier1Capital.com to schedule your free strategy session today.

Or if you’d like to learn more about how we put this process to work for our clients, check out our Four Steps to Financial Freedom Webinar right on our website.

And remember, it’s not how much money you make. It’s how much money you keep that really matters.

Increasing your Business’ Cash Flow Efficiency

February 27, 2023

As a young business owner, it could be simple to fall into the trap of reinvesting all of your profits back into your business to help that business grow and expand and hopefully grow your income as you go. But today, we’re going to talk about how do we save outside of the business on a systematic basis to achieve your other short term and long term financial goals?

When you first start off as a business owner, there’s not a lot of cash flow that you could take out of the business. You’re just putting all that money into the business to help grow and expand and set a footprint in your space. But once that business is established, there’s some extra cash flow there that may make sense not to put directly back into your business, because, let’s face it, life exists outside of your business. You may have a family, children that you want to send to college, a wedding that you want to pay for, or a home that you need a down payment for. How do you grow your business and still achieve these financial goals?

It’s often been said that the problem with a closely held business is that it’s closely held. And what does that mean? Basically, you make all the decisions, and generally most business owners will make the decision to reinvest all of their earnings back into the business. Not necessarily a bad thing, but here’s what happens. That money is stuck in the business. And if you have other goals outside of the business that you need or want to accomplish, it puts you in a position where you have to choose between your business or your family. And no business owner should have to make that choice.

So the question is how do you make your cash and your cash flow more efficient so your money could be in two places at once. And the way we help our clients to achieve this is by using a specially designed whole life insurance policy designed for cash accumulation. So you have full liquidity use and control of your money to do things like expand your business. But also send your children to college or finance a new car. There is no “or” in this situation, it’s an “and.” How do you do this and that? Not to mention, you could use this tool as a long term solution to achieve your goal of eventually retiring.

So by making your money more efficient, it’s literally like your money’s in two places at once, because quite frankly, it is. And that presents a situation or an opportunity where you have $1 performing two, three or four tasks. It’s multi duty dollars and it really works for a small business owner.

What do we mean by multi duty dollars? Well, you’re paying the premium for the life insurance, but you also have access to that money to expand your business or achieve your other goals. But that policy also produces a death benefit for your business or your family. And there’s other riders that could be included.

Those other riders include a disability waiver of premium rider in case you get sick or injured and can’t pay the premium or a terminal illness or chronic illness benefit rider which allows you to tap into the death benefit on a tax free basis to pay for a long term care event or a chronic illness.

Not to mention the fact that if you use the money to grow your business and put it back through the loan feature, when you go to retire, you can use the dividends from the policy to supplement your retirement income and that’ll save you on four taxes. Federal income tax, state income tax, Social Security offset tax as well as not allowing an increase in your Medicare premium. And there’s actually a fifth tax when you die, the death benefit goes to your family in the state of Pennsylvania, outside of state inheritance tax.

Let’s take a look at the loan feature of these policies. Every whole life insurance policy includes this loan feature, but these specially designed policies allow your money to be in two places at once. What do we mean by that?

Well, a policy loan is a collateralized loan against the cash value in your policy. So the money never leaves your policy, but you still have access to it from a separate policy loan given by the insurance company. So you’re able to access cash and still grow uninterrupted compounding of interest on your money.

One of the best features of these policies is that it’s a systematic way to save outside of your business, meaning as you pay your premium and build up your cash value, you have more and more access to cash and your policy becomes more and more efficient as it matures.

So before you know it, you’ll have a pile of cash that you have access to for whatever you want, whether it’s to expand your business or achieve your other financial goals, and you’re able to access it without interrupting the compounding of interest. So you could earn interest within your policy and continue to grow that cash and still make an external rate of return if, for example, you use it to grow and expand your business.

Think of it this way. You have two choices. Choice number one is to reinvest the profits in the business, and the money is illiquid, or choice two is reinvest the money into the whole life policy. The money’s liquid and you can then borrow against that cash to reinvest in your business. So you get to grow your business. But now you have some liquidity.

We look at financial situations through the lens of control. Is this decision going to put you in more control or less control of your cash flow?

If you’d like to get started with a specially designed whole life insurance policy designed for cash accumulation. Be sure to visit our website at Tier1Capital.com to get started today. Feel free to schedule your free strategy session. We’d be happy to help design a policy for you and give you a free cash flow analysis to see where we can help you make your money more efficient.

And remember, it’s not how much money you make. It’s how much money you keep that really matters.

Saving vs Investing

February 23, 2023

In today’s ever changing economic environment, there are a few questions that remain the same. How do you save for your retirement and achieve your financial goals along the way? There are so many things that are out of our control: interest rates, the stock market, government spending. Not to mention inflation.

But what isn’t changing are our financial goals. We still want to get married. We still want a new car. We still want to go out to eat when we want to go out to eat. How do we achieve all of these financial goals when there is so much out of our control?

Well, conventional wisdom would tell us to just take on more risk. More risk equals more return. But that is not always the case as we’re experiencing right now. The answer may be in saving. Saving, not investing.

And you may be wondering what’s the difference? Well, investments inherently have risk savings, do not. The tool we use to help our clients achieve their goals without taking on tons of risk is especially designed whole life insurance policy designed for cash accumulation for several reasons, and one being you’re able to access that money to achieve your financial goals without taking on the risk of the market and everything else that’s out there.

Because your money is safe inside that insurance policy. You could also access that money to reinvest in the market after the market went down. That puts you in control instead of you being at the mercy of people that you don’t even know.

You see, most savings vehicles that are presented to us have risk, whether it’s a retirement plan at work or a brokerage account or other mutual funds. They all include risk, but not everyone wants to take on that risk, and not everyone wants to be at the mercy of everything that’s going on in the world to achieve their financial goals. Not to mention, once you access that money, you have tax consequences possible penalties, and you don’t know how much you’re actually going to be earning on that money. And also think of it this way. Once you access that money, it’s no longer earning interest for you.

Our process aims to put you in control of your cash flow and to make your money as efficient as possible so you don’t have to take on tons of risk to achieve your financial goals.

We believe there’s more opportunity in avoiding the losses than trying to pick the winners. And we’re not only talking about market losses, we’re talking about the losses of interest paid to others or taxes paid to the government. They’re all losses that reduce the value of our money.

If you’d like to get started with a cash flow analysis to see how we could help make your money more efficient, check out our website at Tier1Capital.com and schedule your free strategy session today.

Or if you’re interested in learning more about how we put this process to work for our clients, check out our webinar, The Four Steps to Financial Freedom.

And remember, it’s not how much money you make. It’s how much money you keep that really matters.

How Can I Reach My Financial Goals?

February 20, 2023

There are so many financial tools available to us between IRAs, 401ks, brokerage accounts, loans, mortgages. The list goes on and on. The question remains, are these tools moving us towards our financial goals or keeping us further away from our financial goals? This question needs to be answered frequently. It’s not a one size fits all or one decision fits your entire life type situation.

Think of it this way. The products, the 401k, the IRA, the mortgage, are the tools. The strategy is what the tool is doing for you. How are you using that tool? Very often when we’re meeting with clients and prospects, we ask the question, Is this strategy bringing you closer to or further away from your goals?

And a lot of times the people will look at us and say, “What do you mean?” The choices we’re making with the financial tool, we don’t even think about it. We just do it because it sounds good or everybody else is doing it. That’s not good enough. If you have stated goals and stated objectives that you’re trying to meet.

Let’s take the 401k for an example. Most employers, if they offer a 401k, also offer automatic enrollment. By not making a decision. You’re making the decision to enroll in this 401k plan. How is this moving you towards your financial goals and is it going to help you achieve your short term and long term financial goals?

In most cases, it will help you achieve retirement or help supplement it at least. But what about your other financial goals, like sending your kids to college or buying a new house or going on a vacation? All of these goals need to be addressed and the 401k is not the tool that will help you get there. But when people use this automatic enrollment and are only saving in their 401k, what happens is their money is not accessible when they want to achieve these other financial goals. And if you access that money before age 59 and a half, if you’re able to, you’re going to pay a penalty and that money is going to be fully taxable as income.

The other option may be to take a 401k loan, but that has other rules associated with it, like the five year repayment schedule and the fact that your money can’t grow while you have it withdrawn through that loan feature.

In addition to that, you’re now paying taxes twice on the same money. You might be asking, how could that be? Very simply, when you pay back a 401k loan, you pay it back with after tax dollars. So you already paid tax on that money. Then you put it towards your 401k loan and now when you go to retire and you take the money out of the 401k, you’re going to pay tax again. You’re literally paying tax twice on the same dollar. Is that your goal and objective?

What you want to do when you’re doing financial planning is making sure your plan is flexible enough to achieve each and every single one of your financial goals, even if they change. Instead of putting money in different buckets for retirement, for paying for college, for paying for your vacation, for putting a down payment on your house. You want your money to be flexible so you’re able to achieve all of these goals throughout your life and you’re not stuck with tax consequences for each one.

Several years ago, we met with a family who had the goals of having a great retirement with a brand new mountain home, and they also wanted to send their children to college. After looking at their financial situation, it became apparent that what they were doing wasn’t exactly in line with what they wanted to achieve, and it certainly wasn’t the most efficient method.

But with some simple shifts in their cash flow, we were able to help them save for retirement, fully fund their children’s private college educations and build their mountain home so they didn’t have to wait until retirement. They were able to achieve that goal 12 years sooner than they anticipated.

But here’s the best part. By helping them to obtain the mountain home 12 years sooner or not having to wait till retirement in order to build it, the husband had an opportunity to work with his father every weekend to build that mountain home. He and his dad literally hammered every single nail into that cabin.

Unfortunately, several years later, the father died. He had cancer and died at a very young age. The husband came to me and said, “Hey, I want to thank you for everything you did to help us to build that mountain home.” And I said, “Well, you know, you put the money away.” He goes, “No, you don’t get it. I will never be able to get that time back. And if I waited until I retired in order to build that cabin, I never would have had that opportunity. So thank you for showing us how to get to our goal much, much sooner.”

You see, these are the things that money can’t buy. And this is why it’s so important to have the flexibility within your financial plan to achieve your goals all along the way.

Because life doesn’t wait and it’s not about saving for retirement or saving for college. It’s about those moments in your everyday life that you can never get back.

This couple didn’t change their outflows by one penny, but they were able to build the home 12 years sooner than when they were on track or when they thought they could do it. All because we looked at things through a lens that showed them free up their cash flow and do it in a way where they can achieve all of their goals and objectives.

If you’d like to see exactly how we put this process to work for our clients, check out our website. We have a free webinar, The Four Steps to Financial Freedom, where we do a deep dive on how we put this process to work.

Also, if you’re ready to get started with our process or have some specific questions, feel free to visit our website at Tier1Capital.com to schedule your free strategy session today.

And remember, it’s not how much money you make. It’s how much money you keep that really matters.

Can My Money Be More Efficient?

February 16, 2023

Are you thinking about taking the leap and expanding your business but feel hesitant in doing so? Well, one reason may be that your cash and your cash flow aren’t working as efficiently as possible.

Today, we’re going to talk about how making your money more efficient could help you take on those risks with more confidence.

First, let’s take a look at what happens when your money isn’t working at peak efficiency. Basically, what happens when your money’s not working at peak efficiency, you have less cash flow. And when you have less cash flow, you’re less likely to take risks or expand your business because you’re always thinking of, “Okay, if I take this money and put it towards expanding the business, then I won’t have the money available for operating the business”.

And this could be the case even if you have a pile of cash sitting in the bank, it’s all about cash flow because cash flow is the lifeblood of any family or business.

Furthermore, when your money isn’t working at peak efficiency, it leaves you susceptible to the past decisions that you’ve made and the success or failure of those decisions. Because think of it, if those decisions don’t work out, that puts a further pinch on your cash flow and again, makes you more hesitant to take the risk, a risk that most business owners are willing to take the risk, because it’s usually a risk that they can control.

So what happens is once your cash flow gets pinched, it makes it harder and harder to make that jump in expanding your business because once you’re stuck, you tend to stay stuck because you’re not taking on those risks for expansion and growth.

So the key is to make your cash and your cash flow as efficient as possible so that you’re able to take on these opportunities for growth and expansion with a safety net.

Here’s how we do it. We look at four key areas of business wealth transfer taxes, how you’re funding the retirement, how you’re making major capital purchases, and how you’re handling your debt. And when you look at those four areas, it’s really clear as to where your inefficiencies are. That’s where we’re trained and that’s how we can help you.

Our unique process helps businesses make their money and their cash flow more efficient by using specially designed whole life insurance policies designed for cash accumulation that will give you full liquidity use and control of your money while still able to access it to grow your business and earn uninterrupted compound interest on that money.

In addition to that, we’re able to answer key questions like business exit strategy, business continuation, taking care of key employees, and more importantly, what happens to the business when a key employee dies?

Each and every one of these issues could make or break a business, and it’s important to address these issues while you have the cash flow flowing through your business and the wherewithal to make these decisions. What do you want to happen? Even if you’re not here to see it happen?

If you’d like to get started with a free cash flow analysis to see where you are giving up control of your business cash flow, be sure to visit our website at Tier1Capital.com to schedule your free strategy session today. We’d be happy to help.

Remember, it’s not how much money you make. It’s how much money you keep that really matters.

Are You Feeling Financially Frustrated?

February 13, 2023

Cash and cash flow, the lifeblood to any small business or family. We all have experienced the feeling of being stuck and frustrated for not having access to cash when we really need it.

Traditional financial planning tends to give away control of our cash flow, whether it’s funding your retirement account, paying off your mortgage as soon as possible, or being in a race to pay off your consumer debt. All of these actions leave us in less and less control of our cash flow each and every single month. But the need for liquid cash to achieve our financial goals has never been greater. With inflation at an all time high and the market fluctuating every single day.

Not to mention that if you own a small business, the uncertainty and the possible turmoil that’s coming down the road, we need to prepare to make sure that we’re able to weather that storm so that we can get through it and be in a better position than we were going in.

But the question is, how do you achieve that goal, especially with interest rates rising each and every single month?

So keep in mind, because interest rates are rising, it’s not necessarily a bad thing. It’s a bad thing if you’re borrowing, and that’s your method of accessing capital in the markets. However, if you’re a saver and interest rates rise, doesn’t that mean that you’ll be earning more interest on your savings?

This is the reason why we help our clients focus on building capital, building liquid cash so that they have access to that money. They don’t have to beg, borrow and steal in order to move forward and to grow their business. They can do it by accessing their own money on their own terms. No questions asked, whenever they want.

There are several reasons why a small business owner would want and need access to capital.

Number one, to run their operation so that they can turn a profit.

Number two, to stay competitive, maybe reinvest in equipment or a plant.

Number three, to hire a new or a key employee to grow their business.

And number four, in general, just to create a higher rate of return on their capital.

In general, having access to capital allows businesses to invest in their business and run it as efficiently as possible. Keep in mind that businesses that have access to their own capital have a much higher success rate than those who don’t have access to their own capital and have to therefore pay for access to somebody else’s capital.

We use specially designed whole life insurance policies designed for cash accumulation to help our clients meet their financial goals, like growing their business without taking on more risk. We do this in creative ways that allow us to integrate key person insurance as well as business succession planning.

If you’d like to get started with the business succession plan, key person insurance or building cash for your business to help it grow and expand, especially in economic turmoil. Visit our website at Tier1Capital.com and feel free to schedule your free strategy session.

Also, if you want to see exactly how we put this process to work for our clients, check out our webinar, The Four Steps to Financial Freedom.

And remember, it’s not how much money you make. It’s how much money you keep that really matters.

How Risky is Your Financial Plan?

February 9, 2023

Traditional financial planning centers on taking various levels of risk. We’re told the higher the risk, the higher the reward. But have you ever taken on a great deal of risk and not received a very hefty reward? Or taken on a small degree of risk and lost a lot of money?

And furthermore, where is it written that in order to make money, you need to lose 40, 50, 60 or even 70% of your wealth? This is exactly why we focus with our planning on avoiding the losses and making your money as efficient as possible.

When it comes to financial planning, we like to think of it more like an art than a science. There’s more than one right way to build and maintain wealth in your family. Not everyone needs to take on a ton of risk to become financially successful. In fact, a lot of people don’t even want to take risk.

That’s why we focus on avoiding the losses instead of picking the winners. And when we say avoiding the losses, it means more than just avoiding the market losses. We’re talking about losing opportunity costs, losing money to taxes, losing money to interest. It’s all of those things, but more importantly, losing control of your cash flow. And we always say whoever controls your cash flow controls your life.

Imagine you had a leaky bucket, a bucket with a ton of holes in it, and you had your income streaming in as the water. Wouldn’t it make more sense to plug the holes in the leaky bucket before turning up the income?

Think about this. Does it make sense to take a lot of risk on a small amount of money to hopefully get a high rate of return on that small amount of money? Or does it make more sense to make your money more efficient, so even if you’re earning a smaller rate of return, you’re guaranteed to earn that rate of return, and it’s on a larger pool of money.

And by getting a small rate of return on a large pool of money, you actually make your money more efficient because, number one, you’re avoiding the losses. And number two, you’re not taking risk.

Our process uses specially designed whole life insurance policies to help make your cash flow more efficient. We build up a pool of cash in these policies to help achieve your financial goals and make your money more efficient. We always talk about control, because controlling your cash flow and controlling your money and having liquidity use and control of that money is invaluable. And when you have control of your money and you have control over your cash flow, you literally have control over your life. And the feeling of freedom and independence can never be measured.

If you’d like to get started with a specially designed, whole life insurance policy designed for cash accumulation and mitigating risk, be sure to check out our website at Tier1Capital.com to schedule your free strategy session today.

Or if you’d like to learn more about exactly how we put this process to work for our clients, check out our webinar, The Four Steps of Financial Freedom.

And remember, it’s not how much money you make. It’s how much money you keep that really matters.

Don’t Accidentally Disinherit Your Children

February 6, 2023

Nowadays, it’s very common to have a blended family. But how do you address the question of beneficiary designation when it comes to your blended family? Are you inadvertently disinheriting your own children based on your beneficiary designation?

Life insurance inherently includes estate planning. Every single life insurance policy includes a beneficiary designation where the death benefit will be passed on to the named beneficiary of that policy when the insured dies.

Now, here’s the key. It passes outside of probate and it passes, in most states, outside of state inheritance taxes.

So it’s very important. But what’s also important is the fact that you should make sure that your beneficiary designations are exactly the way you want them. You want to make sure that what you want to have happen will happen, even if you’re not here to see it happen.

In the case of blended families, a lot of times the husband will have the wife as the beneficiary and vice versa. And then, if it’s a blended family, they’ll have their own children named as contingent beneficiaries. But this could pose an issue down the line.

We had this exact situation just come up. The husband named the wife is the beneficiary primarily the wife named the husband as the beneficiary primarily. And then they each named their own children as contingent beneficiaries. But what happens when one of them dies first, their death benefits are going to go to the other spouse.

And that’s where the problem lies. His death benefit goes directly to his wife since he’s no longer alive. The wife’s death benefits go to the children, along with the death benefit that she received as a beneficiary of his policy. So her children were going to get everything and his children were going to get nothing.

We brought that to their attention and just said, “Hey, not sure if you know this or realize this, but this is the way it’s going to work. Is that what you want?” And they immediately said, “No, that’s not what we want.”

So the next step is for you to go to your estate planning attorney and get documents drafted up to make sure what you want to have happen will happen, even if you’re not here to see it happen. No one wants to inadvertently disinherit their children.

The value we were able to add to this couple was that we brought out or we brought up the point of how the money was going to flow. And again, when you look at things through the lens of cash flow and being in control of your cash, when we brought that point up to them, they were saying, “Hey, that’s not what we want. How do we change this?”

Awareness is the first step and then you have the power to make the changes necessary to make sure what you want to have happen, to happen, even if you’re not there to see it.

If you’d like a policy review or a review of your beneficiaries, check out our website at Tier1Capital.com and feel free to schedule your free strategy session today.

And remember, it’s not how much money you make. It’s how much money ,you keep that really matters.

Valuable Finance Insights from Tier 1 Capital