15 financial mistakes that you can correct before it's too late.
I'm going to talk about 15 baby boomer blunders that I actually printed in an
e-book. And you're going to be blown away with how many baby boomers have made
these mistakes. But I want you to avoid or correct them if any of these apply to
you. So, my name is Doug Andrew and this is my studio. Welcome here. So, I'm just
going to have a little personal chat. I've been blessed to have a national radio
show aired for 11 years now. And also written 11 books. I love to give people
insights into opportunities that maybe they didn't know existed before or maybe
correct mistakes that they've made. And so, years ago, I wrote an e-book
called Baby Boomer Blunders and there were 10 in here. And it was actually
chapter 2 in my third book that became a New York Times Wall Street Journal
number 1 bestseller. It was written to an audience of 78 million baby boomers.
And it was showing them how they could accumulate an extra million bucks at
retirement. So, I can't give you all the nitty-gritty detail here but I'm going
to share with you these 15 mistakes and see if any of them are a mistake you're
making or have made. And I'm going to show you how you can correct them before it's
too late. And I'm going to show you resources so that you can overcome, avoid
or correct these mistakes that people make because I have seen thousands of
baby boomers. I'm one of them. What is a... Baby boomer is somebody born between
1946 and 1964. I was born in 1952. But a lot of baby boomers felt like they lost
their future back in 2001 to 2003 after the 9/11 terrorist attacks. They had to
put off retirement 7 years and then in one single year --
2008, those baby boomers lost 40% again in their retirement nest eggs because
the money was maybe in the market. And so, that was horrible. That decade is the
last decade. A lot of the clients that we helped, we overcame the blunders and they
were able to double, even triple their money during that time period tax-free.
So, I'm going to show you how to do that. We're going to go through these blunders
maybe 4 or 5 at a time and I'm just going to outline what they are. And
then if you're interested, you can obtain copies of some of my books and so forth.
I'd be happy to gift it to you free. You just pay shipping and handling and you
can read about these blunders in more detail. A lot of the episodes, I talk
about how people sort of follow the crowd or follow the herd. And so this is
where people sort of they hit retirement especially and they go, "Oh, my heavens.
What was I doing? What was I thinking? Why did I break away from that?" So, here we go.
I'm going to go down these 15. First one, I hear people say, "Well, I've saved only 1,
2 or 3 percent of my income instead of 10 to 20 percent." Yep. If you
want to get serious about having enough money at retirement, you should be
socking away 10 to 20 percent of your income. In fact, the mega wealthy
millionaires and billionaires tell me that they learn to live on just 50%
of their income. So, if you're socking away just 1, 2 or 3
percent, it isn't going to cut it. You need to save more. Second blunder, okay? "I've
borrowed money in my life to consume instead of conserve." Yeah. A lot of people
and they borrow money for depreciating assets. Cars, jet skis, boats. Things
that go down in value. That's stupid, okay? You can borrow but
borrow to conserve not to consume. See, mega wealthy people, they borrow money
like this billionaire I was talking to the other day. The billionaire is
borrowing money at 3% interest. "I can't afford not to", he says. Because he borrows
money at 3%... Let's say a million bucks that's 30,000. But he
gets 2 tax deducted. That's a net cost of only 20,000 a year to use
OPM --Other people's money. He goes out with that
million dollars and he makes 8% or 10% using the same vehicles
that I do. In fact, he says, "Doug, you think just like I do." And so, how much
more is 10% than 2%? That's 500%. That's 5 times as much. He
makes 100 grand for every 20 grand he pays. Would you hire an employee for
20,000 that made you an extra 100,000? Would you buy a widget
machine for 10, 20 thousand that made you 5 times that? Sure. That's a
500% return unemployment cost or equipment costs. Here's another
one. "I've paid off my house but I was sending extra principle payments to the
mortgage company. And now I don't have any deductions anymore." Actually, I show
people how you can get out of debt to pay off your house at 2 and a half to
3 years faster by not sending next to principal payments to the mortgage
company because that's killing your partner --your tax deduction. You have
enough money and maybe your right hand pocket and your assets. I choose to have
my money in my Laser Fund that anytime with an electronic funds transfer maybe
or phone call, I could pull it out and pay off my house. So, I am out of debt. But
I don't physically pay it off because I want the liquidity. I don't want it
trapped in the property. Because a lot of people have lost a lot of money when
they had all of their money tied up in a paid off property. And they lost their
job or they got disabled and they couldn't get it back out again without
drastically lowering the price to sell it. Here's another one: "I would have a
vacation condo or cabin but I can't afford one yet. I wait until retirement."
So, I've done an episode on don't do that. You can actually buy a cabin or condo
even if you finance it. And I can prove mathematically that at the end of the
day, because that real estate is appreciating, that you can enjoy those
things now. Smell the roses as you go instead of waiting till the end of the
day when so many people don't have the energy anymore.
Don't wait to enjoy life. I mean, you can't just blow it all. But if your goal
in retirement is to own a condo or a cabin, you can actually get that 20/
30 years earlier and come out the same way financially. Instead of socking
it away in an IRA or 401K. And then having to pay tax and you're still short,
the money, that you could have bought the
cabin with 20 years earlier. I want you to watch that episode. Here's another one:
"I've bought and sold investments at the wrong time." Yeah. People... The big blunder
baby boomers make is they've been trying to time the market. And that never works
because most people emotionally, when the market starts to go down, down they... You
know, "Hang in there. Hang in there", they're told. "It always comes back." But after it
drops 30 or 40 percent, over 90% of people say, "I've had it." And they sell....
low. And then when the market turns around, they wait, wait, wait, wait, wait,
wait. And they finally buy in and so they're selling low, buying high. And the
average return for Americans is only 3 and a half percent. That's pretty
pathetic. You ready for the next blunder? Well, "I've not matched the right
investments --the vehicles I put my money into with the right objectives." This is a
big mistake. A lot of times, people choose long-term investments for short-range
goals. Or short-term investments for long-range goals. They put their money in
a mutual fund which is the long-term investment. You should leave it aside for
at least 5 years or longer. I would define as long-term. But they act like
it's a drive up window. And as soon as they get impatient, they pull it out. And
then some people, they put 100,000, a million, 2 million in a bank
account earning 1%. And I'm going, "That's a short-term vehicle for your long-term
investment." Because I ask them "What's this money earmarked for?" And they go, "Oh,
I don't know. I didn't know where else to put it. Maybe a trip." But you got a
million dollars in that. Where you going? To the moon? What? Come on.
You put long-term investments into those strategies that are long-term. And a lot
of people they just don't think through that process. That's a huge blunder.
Here's the next one: "I've tried to time the market to get ahead better." Yeah. So
many times people think, "Well, I can do this better." And emotion enters in
instead of logic. They make their decisions more right brain instead of
left brain. And sometimes, people just make it totally left brain and they
don't listen to their heart. And so, they get all
fouled up and they're trying to time the market and like I have said, they buy and
sell at the wrong times because of that market volatility. Here's another one: "I'm
at risk in the market rather than linking my investments to what the
market may do without losing." This is a huge strategy that we teach in many of
our books, my most recent book --The Laser Fund is called indexing. In other words,
people make the blunder of thinking that what you did for retirement --money in the
market and mutual funds or whatever is what you do throughout retirement. No, no.
At retirement planning is totally different than what you did for
retirement planning. So, you want to have your money
predominantly out of those yet to be taxed IRAs a 401Ks. Have the taxes over
and done with by the time you retire is my opinion. And then repositioned into
something that's going to be tax-free but is immune from market volatility. You
don't lose when the market goes down. And when the market goes up, you benefit but
you can create predictable income. Which leads to the next blunder and that
boomers make. "I paid too much for insurance. I'm insurance poor." Rather
than having Uncle Sam pay for it.. And people go, "What?" Yeah, if you read my books,
people say, "Doug, how can you afford millions of dollars of life insurance?"
And I go, "Well, because I'm not technically paying for it. It's being
paid for with a minuscule portion of interest that would otherwise go out the
window in income tax --unnecessary income tax." If I followed the herd, putting money
in tax deferred IRAs or 401Ks. So, we don't object to insurance benefits. We
object to paying for them. And I arranged to sort of indirectly have Uncle Sam pay
for my insurance. You can do that also. I want to share one more and then I'm
going to go to the last 5. Here it is: "When I focus on my comprehensive
financial sheet, (the balance sheet or whatever you call your
financial statements and your level of understanding) I concentrate on the least
important category, the money. Instead of the most important assets --family, health,
and values." Yeah a lot of people spend their health accumulating their wealth.
And then later in life they spend all their wealth trying to regain their
health. That's really silly. Or they accumulate their financial
wealth at the expense of relationships with their spouse, their kids, their
grandkids, their God. And at the end of the day, they're going, "What was all this
for?" So, stay with me, I'll share the last 5 blunders many baby boomers make. The
next blunder: "I've not understood until it was too late that 3 marvels are
miracles of wealth accumulation." I share these in my books
--Compound Interest. I thought I understood it. I didn't. Tax favourite accumulation
and safe positive leverage. The ability to own and control assets with very
little or none of my money tied up or at risk in those assets. Because many people
lose because they're exposed like that. And many savvy people sometimes have a
hard time with those 3 concepts and I can stump CPAs with math riddles. When
they say, "Oh, I understand compound interest." And then I have them fold a
sheet of paper in half a couple of times. I say, "Now, imagine if you could fold that
sheet of paper in half 48 more times a total of 50 times. How thick do you think
it it'd be?" "Oh, I don't know a quarter of an inch a half an inch." It would be 93
million miles high. I should have paid for his 5, one thousand 7 inches
thick. When it folds in half, it double double doubles. If it doubled 42
times, it would be from here to the moon. But if you double it 50 times, it's from here
to the Sun. So, they don't understand compound interest. Here's another one:
"After working all of these years, I'm wondering what it was all for?"
I've just been following the herd. And yep, they realized that maybe they
could have been smelling the roses. Maybe they could have developed better
relationships. They should have allocated. And yeah, saved money. But what is the
objective? If you accumulate all your money at the expense of really building
memories or having a deepen relationships with your spouse, then it
wasn't worth it. I would rather die and they're
spending my last dime on my last breath and trying to leave behind all this
money that may ruin my children if I just dump it in their lap. I would rather
build the memories and have the great times and still be
frugal. And so, that's a key blunder that I've seen many baby boomers make where
sometimes people have been frugal and lived in a two-bedroom house which is
not bad. And they've told their children for years, "We can't afford it. Can't
afford it. Can't afford it to go to Disneyland." And now, they have a couple of
million dollars and they can't get themselves to spend more than 2,500 a
month. And they wonder why their kids don't call. Because it's sort of like
that song the cat's in the cradle. The kids have learned they're just too busy
and they can't. That's not worth it. Here's another one: As a business owner,
my exit strategy has pretty much been counting on somebody buying my business.
And many times doctors, dentists, chiropractors; they think somebody's
going to come buy in and give them a million or 2 million dollars for their
practice. A young graduate student, I mean... You know, can't afford it.
They already have this student loan debt. So, they sell it on a contract and then
the first 2 years, the new young dentist thinks that all those patients
are his. But the patients say, "30% of them leave to go to another
dentist." And then they can't make the payments. And so people have to come out
of retirement to salvage what they sold on a contract or installment. There's
better ways to exit a business. That's a big blunder people make. The last 2: "I
spent a lot of my health accumulated in my wealth. Now, it seems I'm going to be
spending all that wealth trying to get my health back." I actually have an
episode that talks about 12 things that you can do to increase your life
expectancy by 15 or 20 years. You need to start taking care of
yourself now. Prevention is worth a pound of cure. So, you want to take time to
exercise, to eat properly or else you're not saving anything. You're going to end
up spending it to cure the dis-ease.
Because when you're not at ease on a cellular level,
that's called dis-ease. It's better to prevent --the disease than cure it.
The last blunder I see is "I want to perform philanthropic humanitarian or
religious service. But I'm concerned that if I leave America for a little while, my
money is in danger." Yep, I've seen a lot of baby boomers that
have that dream and they come to us because we make their money immune from
the dangers of taxes inflation and market volatility while they're gone for
a year and a half building a hospital in Nepal or doing spine surgeries or fixing
cleft palates in third-world countries. If you want to go out and really
contribute back to the world, you want to have the health to do it. And the last
thing you want to worry about is your money back in the United States being
eroded away by taxes inflation and market volatility. So, learn how to make
yourself immune from that and avoid that blunder. So, what are the takeaways? Avoid
these 15 financial mistakes before it's too late.
Or correct them. Avoid these baby boomer blunders. And I can show you how to do
that. If that intrigues, that would take several different episodes. But they're
here for you and I want you to not outlive your money and at the end of the
day be going "What was all that for? Boy, did we make a bunch of blunders?" And you
try to teach your kids and grandkids that. Avoid them in the first place. So,
avoid these 15 mistakes that I've outlined. So, if this has arouse curiosity
and you want to know how to avoid those mistakes, watch this episode on why most
people do not become wealthy. The difference between the strivers and the
thrivers. And you'll also have the opportunity to get a free copy of my
most recent book that will empower you. I'll send it to you free. You just pay
5.95 shipping and handling. So, click here to watch that episode.