Be The Best Of The Best – Episode 34

Be The Best Of The Best – Episode 34

In this podcast, Ken brings back some bullet points from his latest podcast to deepen those topics a little more. Also, Ken talks about housekeeping and a recent trip he took to Toronto.

Ken Greene transitioned from being a Professional Engineer (P.E.) to the “Engineer of Finance.” His goal is to help people become financially independent and help them earn better yields with less risk by investing Off Wall Street.

 

 

Links and Resources from this Episode

Show Notes

  • Ken talks about Hank (and why he calls him that) – 9:34
  • Cash flow and move – 11:31
  • Banking is necessary banks are not – 11:58
  • Housekeeping – 14:40
  • How he wants to serve others – 15:36
  • He talks about the typical financial advisor – 17:54
  • Ken wants to teach and educate – 18:29
  • Ken doesn’t want to be a financial entertainer – 23:17
  • Be the best of the best – 24:56
  • Ken talks about a trip he took to Toronto – 25:22
  • He talks about his father and “Joey The T-Rex” – 28:36

 

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Don’t Gamble Your Child’s Future Funds: A New Way To Pay For College

Don’t Gamble Your Child’s Future Funds: A New Way To Pay For College

The Cons of 529 Plans: rules, rules, and more rules!

 

All my clients that are parents or grandparents want the best education for their kids and grandkids. They understand the number one investment they can make for their child’s financial future is a great education that can create higher earned income. Typical financial advisors and the government constantly promote and encourage parents and grandparents to invest in a 529 plan for higher education. So this must be the best plan. Or is it?

Hear me out.

Typically financial advisors preach for parents to set up a 529 plan to save for their child’s education because it reduces taxes all while creating a future for their children. I invite you to go to the super fun and exciting government website to read all the rules for a 529 plan, I’ll wait.

Fun, right?

Don’t get me wrong, a 529 plan is great in theory, but in reality it’s a great seduction plan created by the government and the financial industry. There are a few reasons to like it, but there are even more reasons to not like it.

 

My Concerns

Government savings incentives like the 529 plan are a marriage in hell between the  financial industry and the government. The main reason you are enticed to use a 529 plan versus a regular investment is to save on taxes. Taxes become the main focus. Unfortunately, the tax tail is wagging the investment dog. Typical financial advisors encourage you to put your hard earned money in a 529 plan so they can enjoy it now and for the next 18 years (depending on when you started funding the 529 plan). While you own it, the IRS controls it via rules, rules, and more rules. If you break the rules you get to enjoy the tax penalties. Are these rules to protect your child’s or grandchild’s education? Are these rules to protect you? Or do these rules benefit Wall Street, the government, and its affiliates?

 

A 529 could be perfect for you if:

  • You know for certain your family won’t need to access this money for 18 years or so.
  • You are perfectly happy having money locked up on your end while the financial industry enjoys your money today via the commissions, money management fees, and 12b-1 charges.
  • You have no doubt in your mind that your child will be attending a college approved by the IRS.
  • You are not worried about the stock market volatility. You feel very, very comfortable it will never crash again. Or it will completely recover just in time for college tuition.
  • You understand that this 529 plan could have a huge negative impact on available financial aid for your child or grandchild.

 

Typically, setting up a 529 plan assumes that your child or grandchild will want to attend a university, earn a degree, and get a job. But what if they don’t want to go to the university you had in mind? What if you need that money in the interim due to an emergency (lost job, health scare, big move)? What if your child or grandchild wants to pursue a higher education outside of college? If you need the money for an emergency or it’s used for something other than what the IRS deems as “higher education,” you broke their rules and there could be painful tax penalties from the government.

Let me hop on the soap box real quick: there’s a myth perpetuated by universities that the only way to get a higher education is to go to college. As a college graduate, I am not saying I regret my formal education. I’m very grateful to have earned my B.S. degrees in electrical and civil engineering. However, I also earned an incredible education in engineering by working with people that had a higher education from the military, major telecom companies in the U.S., fabricators, machinists, and construction workers.

OK, hopping off now.

If you’re still with me, I want you to know there’s a different way to play the game!

 

My Game: The Alternative To a 529 Plan

How would you like to design a savings & investment plan with very few rules? 

  • Less rules = more options.
  • Income tax-free growth.
  • Guaranteed growth.
  • Potential for greater than 4% net internal rate of return (IRR).
  • Money can be used for all forms of higher education for your child or grandchild.
  • Doesn’t impact available financial aid.
  • Can be accessed anytime while in growth phase (e.g. emergency, other investment opportunity).
  • Can be used for more than just education: wedding, travel, loans, ….
  • No negative impact on financial aid.

If you’re interested in learning more on how to design your own ”way better than a 529 plan” for your child’s or grandchild’s education, let’s schedule a time to talk.

Outliving Your Money Is Not An Option: How To Reclaim Your Retirement Funds

Outliving Your Money Is Not An Option: How To Reclaim Your Retirement Funds

When people come to see me for financial advice, they fall into one of two categories: the accumulation phase or the distribution phase. Those in the accumulation phase are dealing with questions and issues around growing their wealth, whereas people in the distribution phase are reaching retirement age, and they want to start dipping into their nest egg.

Accumulation Phase – Clients in this category are typically under 50 years old. They are focused on protecting and growing their wealth. They have questions about what would be the best savings and investment strategies to use when it comes to safety, liquidity, rates of return, taxes, asset protection. For these people I ask: “Where are you today, where do you want to be, and how do you want to get there?”

Distribution phase –  Clients in this category are typically focused on simplifying their life, and they don’t want to work or can’t work as hard as they did in their 20’s, 30’s, and 40’s. They are focused on having financial independence (financial freedom) to do something else they enjoy or want to retire completely (when everyday is a Saturday).

When new clients are nearing or already arrived at the distribution phase and first sit down with me and ask, “so what do I do? Here’s my nest egg, is this enough for me to survive for the rest of my life?”, they are terrified they will outlive their money, and there’s substantiated reason for this terror.

Today isn’t like those pension days when people used to have certainty they would be paid X amount for the rest of their lives once they retired. Pensions are a rarity nowadays, unless you’re working for the local, state, or federal government.

The Problem

What is the probability that you will outlive your money? Typical financial advisors and money managers are focused on securities (e.g. stock and bonds) in the stock market which aren’t so secure. They will use computer financial simulations, such as the Monte Carlo simulations, to account for a variety of potential variables (e.g. market volatility, returns, inflation, interest rates) that can affect your wealth and passive income.

To answer the question, let’s first address the circumstances. Today we’re looking at a low-interest rate environment, where the consensus in the financial industry used to be the 4% rule, which indicated you can withdraw 4% of your portfolio balance every year at retirement and it’s relatively safe (meaning ~ 80% chance of success) that you won’t outlive your money. Now the number is more like 2.8% per year from your nest egg if it’s all tied up in Wall Street. So let’s say you have a nest egg of $1 million, and let’s inflate the percentage to 3% to keep the math simple.

With these numbers your typical financial advisor is recommending to not withdraw more than $30,000 at a time in order to have an 80% success rate (success meaning not outliving your money). If you do the math, this also means a 20% failure rate. This is what most financial advisors teach and preach, but I say that’s B.S. Here’s why:

  • You may own these qualified plans and these investments on Wall Street, but they really control it. They want to control it throughout your accumulation phase (typically 25-65 years old) and they make good money every single year on it.
  • On that $30,000/yr there can be a huge impact on the taxation of your social security income, which means less net income.
  • On that $30,000 there can be a huge impact on Medicare. How would you like to pay hundreds of thousands of dollars while your neighbor pays $0 for the exact same service?
  • A lot of typical financial advisors forget to talk about the required minimum distribution (RMD) that kicks in at 70 and ½ years old. Which is a great (sarcasm) rule created by the IRS that says “Hey, we’re going to mandate that you take out this percentage of money from your qualified plan(s) and if you don’t, we will tax 50% of what we think you should have taken for that year.” Now those rules change all the time, but as it exists today, those are the rules.

That’s painful! But there is a different way to play the game.

As an engineer, I spent the first part of my career studying how things work and more importantly, don’t work, and how to fix it (troubleshoot). I can tell you the standard retirement plan strategy (Plan A) is not working.

Plan A: The typical Wall Street scenarios, with typical financial advisors preaching and teaching strategies that do not put you first. What that looked like for your nest egg of $1 million:

  • 3% withdrawal rate ($30,000 a year)
  • 80% success rate (20% fail rate)
  • Taxed if you do, taxed outrageously if you don’t (50%)

 

Of Course There’s Another Way …

So what if you had a custom designed financial plan that gave you closer to a 99% chance of success? What if your financial plan was designed in such a way that you could withdraw 7-13% per year for the rest of your life?

Plan B: A privately designed pension using my understanding of finance from an engineering perspective combined with the latest research in actuarial science. Below is a taste of what it could be:

  • 7-13% withdrawal rate
  • $70,000 or more each year
  • Income taxes are substantially reduced
  • Minimal impact on social security

Let’s break this down. When you’re looking at 7% with a $1 million nest egg, that could be $70,000 or more until you die. You could enjoy $130,000 a different year and have great certainty you will never outlive your money. Not only will you not outlive your money, but you can pass on a huge amount of wealth to your family and charities that you care about. How powerful is that?

 

The Takeaway

The way the majority of the financial industry teaches clients how to use and invest money favors Wall Street and the government, not you. That’s because while you own your money, they control it. They can mandate for you to take out a certain amount so it can be taxed, and they can tax you 50% if you don’t obey. All this for a 20% chance of failure? I don’t think so.

Curious to learn more about how you could enjoy up to a 99% success rate? Schedule an appointment with me and we can design a custom financial plan that suits your needs.

Hank’s Success Story – Episode 33

Hank’s Success Story – Episode 33

With a new format on this episode Ken talks with a long time friend, client and podcast listener about his success story of applying financial advice he’s learned to create wealth.

Ken Greene transitioned from being a Professional Engineer (P.E.) to the “Engineer of Finance.” His goal is to help people become financially independent and help them earn better yields with less risk by investing Off Wall Street.

Links and Resources from this Episode

 

Show Notes

  • Hank’s background – 4:05
  • Hank’s success story – 7:02
  • Banking is necessary, banks are not – 7:16
  • They talk about the win-win situation – 8:47
  • How family can make business more complicated than it needs to be – 13:58
  • The conversation Hank had with his wife about a family loan and what happened – 15:47
  • Understanding different financial policies – 17:45
  • How to pay back loans – 19:33

 

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Why Most Financial Advisors Only Recommend Investing In Wall Street – Episode 32

Why Most Financial Advisors Only Recommend Investing In Wall Street – Episode 32

You’re going to be shocked when you hear why most financial advisors only give clients typical Wall Street options for their investments. You’ll also learn how to create your own custom plan which is much better than relying on Wall Street.

Ken Greene transitioned from being a Professional Engineer (P.E.) to the “Engineer of Finance.” His goal is to help people become financially independent and help them earn better yields with less risk by investing Off Wall Street.

 

 

Show Notes

  • What most advisors don’t understand about insurance engineering – 4:50
  • Ken tells us that he wanted to be the advisor he needed when he was 22 years old – 6:00
  • Why most advisors tell people to only use Wall Street, especially when they are so close to retirement – 6:43
  • How mutual whole-life insurance is a Bankasaurus – 9:30
  • Ken talks about the “Rule 144” – 12:46
  • The power of combining investments, savings, actuarial science, and Wall Street – 19:09

 

Links and Resources from this Episode

https://business.facebook.com/GreeneFinance

 

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