Passive Income Blog

Archive for the ‘Wealth Building’ Category

Social Security was created as a wealth building tool by providing savings for retirement.  It was supposed to help us supplement our income as we reach retirement age by paying us back after having paid into the system for so many years.
Now that the Baby Boomers are retiring, we see that the system has enormous issues that cannot be fixed in the short term and the long-term outlook is bleak.  For the first time in 30 years, we are paying less into the system than is going out of it.  It is projected to continue in this fashion for many years.
When creating a wealth building strategy, Social Security must not be taken into account.  The system is bankrupt.  
Social Security is no longer the cornerstone of wealth building for retirement.  What happened?
1. The surpluses paid into the system by Baby Boomers were “moved” by the U.S. Treasury to cover the deficits of other Federal programs.
2.  The U.S. Treasury issued “IOU’s” to the Social Security Administration to cover the debt.
3.  Now that the Baby Boomers are retiring, the Social Security Administration needs to cash in on these IOU’s to pay retirees.
Welcome to Reality
What makes Social Security a total wealth-building boondoggle? 
With a National Debt of over $13 Trillion, there is no money to pay back the debts to the Social Security trust fund!  The only way the Treasury will be able to honor any of its IOU’s is to have the Federal Reserve print more money.  
How will printing more money affect your wealth building plans?
1. Since it will dilute the value of your money, leading to higher inflation,  the prices you pay for goods and services will increase.
2.  It may even lead to hyperinflation.  Hyperinflation is when a currency inflates at a rate of 50% or more per month.  This happened in the South during the Civil War, it happened during the Weimar Republic of Germany, and recently in Zimbabwe, which is still reeling from the effects.  We are at the beginning of the 19-year Baby Boom retirement transition.  There were 72 million Baby Boomers in 2000.  It will take more than one printing of money to cover the costs of Social Security.  If your money is worth less and less, how are you going to build wealth for your own retirement?
3. According to the Consumer Price Index, prices have doubled since 1982.  If the Federal Government prints money to “save” Social Security, your money may be going to the supermarket, gas pump and mortgage/rent rather than your wealth-building plan.
You need to develop a wealth building plan for your retirement that does not depend on Social Security.  It is the only chance you will have to offset the potential demise of the Social Security system.

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About the Author:
Bettina Romberg writes about economic issues and how they relate to your wealth building plans and your financial future.  Get a copy of her free e-book, “13 Economic Uncertainties That Washington Wishes You Didn’t Know” at her blog: http://www.bestwealthbuildinginfo.com
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This is an update regarding the 100% JV Funding program from Zurich Planners. As you know, we have now passed the cutoff for submitting new projects to our original funding group and those projects which have not yet been submitted will now be subject to the new environment for this activity.

Re: Original Funding Group with 100% JV funding of projects $25M and up:

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It depends on your wealth accumulation “stage”

Nearly everyone who purchases an investment, be it shares or property, wants to see it immediately rise in value. And the more the better. It justifies the investment decision and makes the investor feel wealthier.

However, while it might make you feel good, it may not be in your best interests for investment markets to rise strongly. What you want to happen depends heavily on your wealth accumulation “stage”. This is assessed by comparing how much you expect to be able to commit to investment markets in the future (i.e. your projected surplus or future capital) with your current net investment wealth (your net worth less your lifestyle assets).

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We are what we think
All that we are arises
With our thoughts
With our thoughts
We make our worlds.
– Budha.

The first law of success is first within then without. Therefore every creation of man including wealth begins in form of thought process. Wealth building begins with our thoughts. A man creates nothing which he does not first conceive in his thought. Whatsoever we think about in our minds regarding wealth building becomes our reality. Whatever it is that dominates our thought daily often becomes our lot. If we fill our minds with thoughts of poverty, it will become our reality. If it is the thought of wealth that we allow to dominate our minds it will eventually become our reality. Whatever thought you allow to dominate your mind eventually materialize in your life. Your thoughts are therefore the most powerful influence in your life. You should therefore follow me on a journey that will make this clearer to you.

Napoleon Hill in his classic Think and Grow Rich, said “Thoughts are things.” To him, whatever you desire if you allow that the thought to dominate your mind, you will acquire. If you therefore desire wealth and allow the thought of wealth to dominate your mind, you shall acquire wealth. So is success. Anything you desire, just allow the thought of that thing to dominate your mind and take action about it, you shall acquire it. When you dominate your mind with thoughts about wealth, you become wealth conscious and aware about wealth. Fortune gravitate to those whose minds have been prepared for it. Conservatively, poverty is attracted to those whose minds have been prepared for it.

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Life insurance is an underutilized, but potentially versatile and highly efficient investment vehicle.  It is useful not only for wealthy families.  An individual or family having a net worth of only $1 million or even less is financially able to fund an offshore asset-protection life-insurance dynasty trust that provides a life insurance benefit, tax-free growth of a variable high-yield investment portfolio, tax-free policy loans during the life of the insured, tax-free payment of policy proceeds to the trust upon death of the insured and tax-free distributions to beneficiaries.

It is well known that standard whole and universal life insurance policies provide tax-deferred growth of the policy’s cash or investment value.  The cash value of a standard policy, however, is part of the general investment fund of an insurance company.  Growth of cash value within the policy is generally relatively low, usually a few percent annually.  Also, the policy is only as secure as the insurance company.  Policy funds are generally commingled with the insurer’s general fund, and the policy owner or beneficiaries basically are unsecured creditors of the life insurance company.   In case of bankruptcy of the insurer, policy assets could be lost.

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Many wealth managers approach investors positioning themselves as “trusted advisors”. Can you develop this type of relationship with someone who is compensated for selling product, or should you seek out a wealth manager who operates without conflicts of interest between the firm and the client? As more independent advisors arise, this question will present itself more frequently to investors.

One of the biggest complaints investors have is that they feel they are being “steered” towards specific investments by their advisor. Frequently, these products are manufactured and/or managed by the firm that employs the relationship manager. They can take the form of mutual funds, managed accounts, or partnerships. This is true for brokerage firms, investment banks, and trust banks. In many instances, the compensation of the “trusted advisor” is largely impacted by how much proprietary product he or she can sell. With that type of motivation in place, it is fair for investors to ask if their best interests are being placed first.

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There are many ventures that can aid a person in creating a nest egg to retire upon. Stocks, bonds, 401k’s, social security, and other pension packages are examples of types of income that must be considered when planning out a retirement. However, using investment properties as a source of income is one of the safest ways to ensure a long, happy, and wealthy retirement.

One of the first things to remember is that investment properties are a long term type of business plan. Unlike any other mode of nest egg development, properties are usually expensive but are also one of the safer investments. Expenditures that go along with this type of investment are property taxes, insurance, maintenance, and advertising.

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After the initial business effort has been expended when you continue to generate recurring income or passive income, it is referred to as residual income. A lot of people focus on earning salary, wages, commission, fees, etc. as means of linear income. Depending on the number of hours invested, you get a linear income. By understanding residual based income to develop true wealth, you are at an added advantage. Wealth can be defined as, at the end of the day, how much money is kept or in other words net positive cash-flow.

This is because once things are set in motion you earn money continuously from your initial effort. Linear income is directly proportional to the number of hours you have worked, generally paid in arrears. Those understanding residual based income to develop true wealth know a variety of ways of earning it. Residual income also enables you to devote more time to other things of interest because you can leverage of the efforts of others in your business. This helps to have more time to devote to the generation of additional streams of income.

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For a person to feel really free and less stressed about his or her professional future the best thing to do is to find a source from which it is possible to earn a passive income. When you are capable of earning a decent amount of money from the passive source of income the dependence on the job lessens and that increases the confidence of the person seeking such an opportunity.

Also the person feels like there is no need for him or her to go back to toothier day job. Therefore creating passive revenue streams is an absolute necessity. Sometimes the passive earning source is so lucrative that the person prefers to only earn from this means. Passive income gives the person the confidence to live the way he or she likes and to enjoy personal and professional freedom to the fullest by choice of a new lifestyle. But finding a reliable source from which this form of passive or residual based income can be earned is also not easy.

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Understanding wealth principles is important if you want to build wealth. Different people opt for different strategies. Some prefer to invest in the stock market, some in real estate investments, etc. which helps in providing tax advantages and a steady stream of cash inflow. For different investors, wealth means different things. Some may prefer to accumulate material items such as own huge mansions, fancy cars and have the ability to relax throughout the day. But, for others the perspective differs!

Funds invested in the stock market grow significantly over a few years. Another section of people consider putting all their children through college, as wealth! A few strategies need to be followed to build wealth. Managing risks, starting early, spending less and making the most of the money you have are some of the strategies. Those understanding wealth principles know the meaning of compound interest. Start by saving early in life. At the end of the day, it’s all about how you keep.

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