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Have You Ever Wondered If You Can Retire, Stay Retired, and How Much You Can Safely Spend Without Running Out of Money?

Perhaps I can help. My name is Michael Paulding Thomas. I'm a German-American independent Investment Advisor and Securities Principal. Since 1989 I've helped over 200 clients build a guaranteed income stream to ensure they don't outlive their money in retirement.When you think of your retirement, does it seem more probable that you will outlive your money or that your money will outlive you?Here's what I offer: a no-cost, no-obligation second opinion to help you figure that out.If you're open to it, I'd like to have relaxed and easy-going conversation with you about your retirement plan. If I think your investments continue to be well-suited, I'll gladly tell you so, and be on my way.If, on the other hand, I think some of your strategies no longer align with your Golden Years, I'll explain why in plain English and recommend some alternatives.

• Start Here: My Process & My Philosophy

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• My Articles, Essays & Reports
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My Articles, Essays & Reports

Recommended Books

With over three decades in the Investment Advising business, I can attest that this is the simplest and most effective investment book I’ve ever read.If this book resonates with you, then you’ll enjoy working with me. If it doesn’t, you won’t.

This is a collection of quotes and thoughts from some of the world's greatest investors.This is a free PDF just click the image to open it.

The best book on the history of Capital Group. Find out what makes American Funds so special.

Nick Murray says: "I think so highly of this book that I’ve bent my unbreakable rule never to provide jacket blurbs. The compounding of growing dividends is at the core of David’s investment policy. You will particularly wish to consider his recommended withdrawal strategy, which I’ve not seen anywhere else."

The Surprising Secrets of America's Wealthy. One of the best books I've ever read on personal financial success.

How the less affluent have fallen into the elite luxury brand trap that keeps them from acquiring wealth and details how to get out of it by emulating the working rich as opposed to the super elite.

Podcasts

This is my favorite investing podcast from my favorite management company.Want to learn how professional investors do it? The weekly, 30-minute Capital Ideas / American Funds audio podcast brings you the latest investment thinking from Capital Group. Each episode gets inside the minds of portfolio managers, analysts and economists to break down market trends, macroeconomic forces, investing approaches and lessons learned from personal experience.

Capital Conversations is a Capital Ideas video podcast offering an unscripted look into The Capital System.Join Mike Gitlin (CEO of Capital Group) as he hosts in-depth discussions with Capital Group's portfolio managers, analysts and senior leaders from around the globe. Gain unique perspectives on investment strategies and market trends while getting to know the people behind the portfolios.

Financial Calculators & Links

This essay started over 36 years ago when I entered into the investment business and began cataloging my beliefs and insights. Eventually I shared it with a few clients (on physical paper!) when they asked for a brief summary of my financial philosophy, strategies and service model. What you're reading here is the most current edition of my original notes.

• My Process
• Core Principals
• Strategy
• What I Do & Don't Do

My Process

My Four Core Principals

My Simple Financial Strategy

What I Do & What I Don't Do

What is Dollar Cost Averaging?

“DCA is stupid-smart.” ―Michael

DCA is an investment strategy designed to reduce volatility in which mutual fund shares are purchased in fixed dollar amounts at regular intervals, regardless of what direction the market is moving. Thus, as prices of securities rise, fewer units are bought, and as prices fall, more units are bought.For example, instead of investing $8,000 into an IRA / mutual fund as a lump sum, the investor buys smaller amounts over a longer period of time ($667 per month). This spreads the cost basis out because you bought mutual funds shares 12-times per year instead of one time.DCA has been called the "dumb man's revenge" because over the long-term it can outperform "clever" market timing strategies and sporadic deposits.

“Dollar-cost averaging is almost real-time re-balancing." ―Nick Murray

“This is a testimony to the genius of dollar-cost averaging, which all long-term accumulators practice because we have no choice: we're investing what we can save from what we earn, and this process is ongoing. Investing over time into a meaningfully diversified equity portfolio, aided by annual re-balancing, inevitably loads up on the laggards and eschews what's hot, thereby insuring that we outperform not just the markets but our own investments." ―Nick Murray

Benefits of DCA

1. It's Smart. Buying more units when prices are low and fewer units when prices are high is a good way to reduce the average cost per unit.2. It's Automatic. With an Electronic Fund Transfer deposits occur systematically from your checking account into your mutual fund. You can do so for as little as $50/month. However, you are always in control - you can increase, decrease, pause, stop and re-start the plan at anytime.3. It's Disciplined. Dollar cost averaging takes the emotion out of investing. You can stop asking yourself, "When's the right time to buy?" It eliminates the issue of market timing. As a result, an investor's returns will be determined more by the overall trend in a given fund as opposed to the investor's specific entry price. In addition, it helps investors reduce their cost basis on securities that decline in value.

“The best time to invest in equities is whenever you have the money. It is the patient, disciplined equity accumulator — looking neither to the left at economic events nor to the right at market gyrations — who achieves his/her lifetime goals. This exquisitely rare accomplishment is never intellectual, but always temperamental.Thus, if I suddenly came into a million after-tax dollars one day, it would all be invested in equities by nightfall. Never having experienced such a day, but instead having spent a career investing my net earnings, I have always been, however haphazardly, dollar cost averaging. That is to say: whenever I had money to invest, and the equity market was terrible, I all unwittingly acquired barrels full of panic-priced shares. And when I had investable sums in soaring markets, I (equally unconsciously) bought thimbleful of relatively overpriced shares.." ―Nick Murray

Nick Murray's 20 Investment Epiphanies

My investment philosophy is based upon the teachings of Nick Murray and Warren Buffet. Below are some of Nick's best thoughts on the subject.

Nick Murray is the Advisor to Advisors and prolific author. With 50+ years of experience in the investment markets he is an expert in the art and science of helping individual investors work toward reaching their investment goals. He is the recipient of the 2007 Malcolm S. Forbes Public Awareness Award for Excellence in Advancing Financial Understanding.

“On my 41st anniversary in our great profession, I did a piece for Financial Advisor magazine called “Forty-One Epiphanies,” listing that number of great realizations I'd experienced during those years. Below is an excerpt of the 20 epiphanies that are client-oriented." ―Nick Murray

1. Most people who invest most of their capital in fixed income investments as they go into retirement will run out of money well within their lifetimes, and will die destitute and dependent upon their children. Equities = life. Bonds = death-in-life.2. Optimism is the only realism. It is the only worldview that squares with the facts and with the historical record.3. Get a year's living expenses in a money market fund as quickly as you can, even if you have to live on coffee and rice while you're saving toward this goal.4. The origin of all wealth is threefold: personal initiative, hard work, and thrift. Tell me the percentage of your income that you're putting away, and I'll tell you whether you're going to achieve your financial goals.5. The world does not end. It only seems to be ending. This time is never different.6. Americans say they want safety and income. What they really want is all the income they can get, and the illusion of safety. More money has been lost in the quest for the chimerical combination of safety and high yield than in all the stock market crashes in history.7. The only sane investment objective in retirement is an income that grows at a minimum of the same rate at which one's cost of living is rising.8. Disciplined diversification is a pact with heaven: I will never own enough of any one thing to be able to make a killing in it; I will never own enough of any one thing to be able to be killed by it.9. All investment “new eras” end in ruin, because all inventions follow the same arc, from miracle to commodity.10. Price and value are inversely correlated. When the price of any investment sector is rising, its value is declining; the converse is also true.11. The most fascinating aspect of all financial crises is their essential sameness.12. Get out of debt, and stay out of debt. Keep your nut as low as you possibly can, especially in “good times.”13. What goes around comes around, even if it's on a very long, elliptical orbit.14. Inflation is always and everywhere a monetary phenomenon.15. The advance is permanent. The declines are temporary. There have been thirteen bear markets with an average decline of 30% since the end of World War II. The first one started on May 29, 1946. That day, the S&P Index closed at 19.5 As I write, thirteen ends-of-the-world later, it is 1,575. Stocks are up nearly eighty times over these seven decades because earnings are up nearly eighty times.16. The dominant determinant of the real long-term returns real people really get isn't investment performance. It's investor behavior.17. Protectionism always raises consumer prices above where they would otherwise be; it also invariably destroys more jobs than it “saves.”18. All investments are income investments. They are made for the production either of current income, or of future income, or of income for someone else. The only sane test of an investment's long-term income-producing potential is its long-term total return, not its current yield. By that one sane test, equities are a far better income investment than bonds.19. The computer in your cell phone is a million times smaller, a million times cheaper, and a thousand times more powerful than the mainframe computer used by E.F. Hutton & Company on the day I joined that firm, May 1, 1967. This is a billionfold increase in computing power per dollar. In the next quarter century, there will be another such billionfold increase, at which point technology will have essentially solved all our current problems: energy, the environment, poverty and disease. This is the exact worst moment in human history to turn pessimistic.20. Ten thousand people a day are retiring in this country every day, without a clue that their basic financial challenge is not loss of principal but erosion of purchasing power.

With over three decades in the Investment Advising business, I can attest that this is the simplest and most effective investment book I’ve ever read.If this book resonates with you, then you’ll enjoy working with me. If it doesn’t, you won’t.

Invest in Real Estate or the World's Great Companies?

A question I get occasionally is, "What about investing in real estate?" It's a valid question so let's compare real estate to investing in a broadly-diversified collection of the world's great, publicly-traded companies.

“Real estate is a business, not a passive investment." ―Dave McDanal

Performance

Which generates a greater return on investment: stock ownership of Google, Exxon Mobil, Coca-Cola and JP Morgan Chase, or the buildings they occupy?The absolute silliest of all real estate illusions is that one's home (or rental property) provides significant growth of capital. Since 1945, according to the Nobel laureate Robert Shiller, American family home prices have risen at a rate of about 4% per year.Whereas the return of the American Funds Investment Company of America since 1945 has been 12%. And you don't have to heat the the ICA in the winter.

“Someone who claims to think that buying an apartment complex or an office building or a strip mall ― or all three ― will produce a greater return on his capital than does owning a basket of the 500 largest, most profitable, most soundly financed and most innovative companies in America and the world is not rational." ―Nick Murray

Security / Safety

Most people invest in real estate because they don't understand equity mutual funds or think they're "risky". They believe that real estate is a safer investment than equities.But are they really?If you own and are liable for the mortgages of those four companies’ buildings mentioned above, your position inherently carries much greater risk than if you owned the stocks, where there is no personal liability. (That, among other things, is actually the genius of common stocks, and indeed of the corporate form of organization.)There is also one overwhelming benefit of mutual funds, which is of course diversification (as an example, the American Funds Growth Portfolio invests in over 1,200 companies from all over the world). If you end up, late in life, with the huge preponderance of your net worth in essentially the same leveraged, illiquid asset class, it won’t matter what the relative risks of equities and real estate are perceived to be: you will have raised your own personal risk profile to and beyond the red line.

Maintenance, Costs & Flexibility

Real estate is inherently illiquid, incurs substantial acquisition and disposition costs, and demands significant management oversight. It is subject to recurring expenses, such as property taxes, homeowners association fees, and maintenance costs, which are paid separately.In contrast, mutual funds present a more streamlined investment proposition. They incur a one-time cost (which is waived for investments exceeding $1M), and have very low annual expenses which are deducted directly from the account (usually less than 0.8%). Note: you can also purchase mutual funds as C-shares or F-shares that don't have an upfront charge, however the annual expense (which lasts forever) is much higher, often double.Mutual funds are very flexible in their withdrawal allowances. Should you wish to take out a portion of your investment, this can be easily accomplished online or with a phone call, and must be completed within a maximum of five business days, by law. Conversely, real estate does not offer this flexibility, as partial withdrawals are not feasible (if you need $20,000, you can't just sell your garage!).Moreover, real estate income is fixed, regardless of your immediate needs. For instance, if a rental property generates $1,000 per month, but you require only $800, the excess $200 cannot be 'left' in the property. Mutual funds, however, allow for such flexibility, as you can withdraw only the amount needed, leaving the remainder to compound for future growth.Finally, mutual funds can be paired with a variable annuity (don't use "fixed" or "index" annuities!) in order to generate a guaranteed monthly income for life (on two spouses), while the balance continues to be invested in the world's great companies. This guaranteed income will increase when/if the mutual funds grow, but never down. When both spouses die, the children inherit the balance of the account. This guaranteed lifetime income is not possible with real estate.

I'll leave you with this article by Nick Murray...

Investor vs Investment Performance

“The best investors in the world are really good at doing nothing for long periods of time." ―Michael

How Can The Driver Be Slower Than The Car He's Driving In?

If you compare the average speed of a driver in a car to the average speed of the car, how would it be possible that the two are different?Here's how: a car traveling on a specific route usually moves at a rate of 60 mph, but our particular driver frequently takes breaks or second-guesses the pre-planned route and takes detours; thus his average speed is less than 60 mph.Investors do the same thing: they invest in a mutual fund that averages ~12% over all ten year periods (such as the American Funds ICA), yet they only get a 10-year return of 6% because instead of investing and leaving it alone, they pull their money out when the market drops and re-investment when market is up (selling cheap and buying expensive).Then they blame "the market", the mutual fund and even their Advisor. The driver is blaming the car or the pre-planned route instead of himself.

“Investing is easy, it's clients that get in the way" ―Michael

Take a look at the chart below which shows the average rate-of-return over twenty years of the driver (investor) vs the car (the investment).
(Source: Capital Group Literature number INGEFL-050-0522)

In my 35+ years of coaching clients, I've found the differences between the two to be much more pronounced, especially over longer time-frames. Most investors without a coach aren’t disciplined enough to stay on track (ie, staying in the market when it's down).

Why Do They Do This?

Why do investors "get out of the car" or go off of the planned route?Fear and Greed.Driven by these emotions, clients often engage in such negative behaviors as chasing the hot manager or asset class, avoiding areas of the market that were out of favor, attempting to time the market, or otherwise abandoning their investment plan.

"If you cannot control your emotions, you cannot control your money." ―Warren Buffett

During periods of uncertainty, investors often gravitate to the investment media for insights into how to position their portfolios. While these forecasters and prognosticators may be compelling, they usually add no real value.

"Don’t try to time the market. It’s very, very difficult to do. There may be a couple of people in the world who can do it, but if there are, they’re not telling you." ―Ben Bernanke

The Wall Street Journal Survey of Economists from December 1982 – December 2010, showed that economists’ forecasts were wrong in 37 of the 57 time periods – 65% of the time!Every public trade that's ever been transacted since the 1800's is logged in a computer(s) somewhere, and if by now a pattern to the market hasn't been discovered, it isn't going to be.

“The sole function of economic forecasting is to make astrology look respectable. There are two kinds of forecasters: those who don’t know, and those who don’t know they don’t know.” ―John Kenneth Galbraith

Do not waste time and energy focusing on variables that are unknowable and uncontrollable over the short term, like the direction of interest rates or the level of the stock market. Instead, focus your energy on things that you can control, like creating a properly diversified portfolio and staying in it!My best clients have understood that building long-term wealth requires the ability to control one’s emotions and avoid self-destructive investor behavior (with my help).

Even If You Could Time the Market, It Doesn't Make Much of a Difference

The Solution: Do Nothing (Buy and Hold)

“Don't watch the market closely. Buy and hold is the best strategy. The money is made in investments by investing, and by owning good companies for long periods of time.” ―Warren Buffett

Stop watching and obsessing over the market! Doing nothing is often the best investment strategy. Let the market do what it is supposed to do. You can't control it anyway, so don't try!

"When the spaghetti hits the fan, don't just do something: stand there. This too shall pass. You see, what happens in the equity market has very little to do with what actually happens to the equity investor. That's because the dominant determinant of long-term, real-life outcomes is not the performance of markets but the behavior of investors." ―Nick Murray

We can only control our participation in the market, and our behavior while we’re in it.

"Fidelity has done a study as to which clients had done the best at Fidelity. They were the people who forgot they had an account!" ―James O'Shaughnessy“Investing is like a bar of soap… The more you touch it, the smaller it gets.” ―Darcy Howe“If you spend more than 13 minutes analyzing economic and market forecasts, you’ve wasted 10 minutes.” ―Peter Lynch"Personal finance is 80% behavior and only 20% head knowledge." ―Dave Ramsey

The Antidote: A Professional Advisor

“At the end of an investor’s life, less than 5% of his total lifetime return will come from what his investments did versus other, similar investments. The other 95% will come from how the investor behaved. And the primary determinant of that behavior will be the quality of the advice he got, or didn’t get.” ―Nick Murray

I am a long-term advisor serving clients with long-term goals. If a client is exhibiting short-term behavior or emotionally reacting to short-term market conditions, I need to have a serious discussion with him about his goals, and reassure him that a long-term perspective is the best perspective. My greatest value to my clients is my ability to influence their behavior in a positive way.

“The investor needs a confident, seasoned professional keeping him on the right track... making sure he stays diversified and insulated from his own tendencies toward greed and fear.” ―Nick Murray from his book Serious Money“People make better decisions with financial advisors.” ―Robert Shiller, Nobel Prize-winning economist“Without an adequately compensated advisor to help with selection and discipline, the individual investor will simply make all the classic and horrendous mistakes.” ―Nick Murray

To see how I implement this philosophy with my clients read WHAT I DO AND WHAT I DON'T DO.

The Magic of Compound Interest

“Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn’t … pays it..” ―Albert Einstein

The Power of Compounding

Let's look at the incredible power of compounding. An old question that beautifully illustrates this is:Would you rather have $1,000,000 or a penny that is doubled every day for 30 days?

Doubling a penny 30 times = $5,368,709! (It actually only take 28 days to surpass $1M.)

What Is Compound Interest?

I used to think that the interest rate on an investment was pretty simple — you invest your money at 5% and get “X” in return. Then if your investment returned 10%, it would be “X” times two. Right?WRONG. That's when over 35 years ago someone showed me a compound interest table and explained the magic of compound interest, which is one of the most amazing facets of financial management.Compound interest is the interest calculated on the initial principal and also on the accumulated interest of previous periods. This means that interest is earned on both the initial amount and the interest that has been added to it over time.For example:1. If you deposit $100 at a 5% annual interest rate, at the end of the first year, you would have $105.
2. In the second year, you would earn 5% on $105 (not $100), resulting in $110.25.
3. This process of earning interest on interest occurs year after year and leads to exponential growth.Again, doubling the rate-of-return doesn't simple double the result. Look at the example below of fully-funding two IRAs for a married couple ($7,000 per person, per year):

12% earns three times as much as 6%. Amazing, isn't it?

How It Works ― The Rule of 72

The simplest way to understand of compound interest is the Rule of 72. It is a simplified formula that estimates the number of years it will take to double your investment.

The math behind it works because doubling is linked to how percentages compound over time. The exact calculation involves logarithms, which are used in higher-level math to solve problems related to exponential growth. But the Rule of 72 skips all the complicated calculations by relying on a close approximation that works well for most realistic growth rates.It’s not perfect — its accuracy wobbles with very high or very low interest rates — but for rates between 4% and 15%, it’s remarkably accurate. Economists trace its origins to 15th-century merchants who marveled at the power of compounding long before financial calculators existed.The correct rule should be:69.3 / Interest Rate = Years to Double MoneyBut we use 72 instead of 69.3 because it has a lot of divisors so it can be easier to do mentally. For example, 72 divides cleanly into 1, 2, 3, 4, 6, 8, 9 and 12, allowing for a quick and simple division problem instead of using a compound interest calculator.

The High Cost of Waiting

"Never interrupt the compounding." ―Charlie Munger

The power of compound interest is amplified by time ― the longer you keep it going, the more your money grows. But the reverse is also true.Let's look at two examples of waiting to invest and thus robbing you of compounding.Example 1: Delaying One Year Costs You $1.5M

In the above chart, we notice the following:1. Fully-funding two IRAs for a married couple from age 25 to 65 (40 years of saving) and earning an average of <ins>12% rate-of-return</ins>, will build them a $13M nest-egg.2. By waiting just one year to start their IRAs (39 years of saving) it costs them $1.5M!3. By waiting five years to start their IRAs (35 years of saving) it costs them $6.2M!4. By waiting 15 years to start their IRAs (25 years of saving) it costs them $11.5M!At the bottom of chart you can see the amount of extra monthly contributions it would take to catch-up to the original value. Scary.
Example 2: When is $21k > $90k?

Let's compare Sam and Linda, two 28-year-olds contemplating saving for retirement in a <ins>long-term equity mutual fund</ins> earning an average of 10%:1. Sam begin investing immediately and saves $500 per month for seven years. Then he stops contributing due to family and other financial obligations. However, he doesn't withdraw any money and lets it compound until age 65 and ends-up with $496,636.2. Linda, due to not having extra cash, decided to delay investing for seven years until she is 35. However, once she starts contributing she doesn't stop and continues until she is 65. She ends-up with $493,482.Sam contributed $21,000 and accumulated $496,636. Linda contributed $90,000 and accumulated $493,482.This demonstrates both the power of starting early, and the high cost of waiting.

“Compound interest is ugly in the early years, but beautiful in the later years.” ―Michael

Even the smallest amount of money, saved systematically over a period of time (Dollar-Cost Averaging), will multiply far beyond your expectations through the magic of compound interest. No amount is too small or insignificant to save. The important thing is to get some money started working for you as soon as possible.

“If you understand the math behind compounding you realize the most important question is not ‘How can I earn the highest returns?’ It’s ‘What are the best returns I can sustain for the longest period of time?’” ―Morgan Housel

What The Experts Say About Using Variable Annuities For A Guaranteed Income

When you’re approximately 10-years from retirement withdrawals start considering a variable annuity with.a guaranteed income rider. This will provide a minimum 5% guaranteed withdrawal for the rest of your life, while staying 100% invested in the world's great companies.

"I know of only two ways of coping with equity volatility during retirement withdrawals:1. Abiding faith in the historical record, in the greatness of free-market democratic capitalism.2. The other method is what the variable annuity industry is pleased to call 'living benefits'.”―Nick Murray, On Panic, Faith, and the Determined Primitive
"Insurance companies promise that annuitants won't run out of income, ever! When there is a living benefit, an annuitant may run out of cash but not out of income.” ―Richard Hoe, ChFC, CLU, AEP. From the article "The Better IRA" in The Investment Edge magazine.

Article: Annuities Are Coming in New Shapes and Sizes

Barron's article, July 28, 2025...once you’re retired, by establishing a reliable lifetime income stream to supplement Social Security.The major stock market dip in early April underscored a major benefit of annuities’ income guarantees: peace of mind. “We had to talk a lot of people out of pulling money out of the market,” says Howard Sharfman, at NFP Insurance Solutions. “But nobody who has guaranteed income called us to have that discussion.”There are other benefits, too. “You can take more risk by holding more in stocks because you have the income in place with the annuity,” Elder says. “You don’t need to provision as much money for later in life because you know you have an income floor. So you can use the money earlier.”Variable annuity is the best choice because it doesn’t cap upside and allows you to potentially build more assets.

Moshe Arye Milesky is a tenured professor at York University. He has a Ph.D. in Finance, a Master of Arts in Mathematics and cum laude from Yeshiva University. He is a lifetime Fellow of the Fields Institute for Research in Mathematical Sciences. Over the last 25 years he has published 15 books and 60 peer-reviewed scholarly articles on wealth and risk management. He currently serves as a member of the editorial boards for the Journal of Pension Economics and Finance (JPEF), and Insurance: Mathematics and Economics (IME).

“I purchased a variable annuity with a guaranteed living benefit and allocated 100% to stocks.” ―Moshe Milevsky, End Notes from the book In Defense of Annuities (2021).
“... with a guaranteed and predictable lifetime of income that can't be outlived.” ―Moshe Milevsky, Section IV from the book In Defense of Annuities (2021).
“A living benefit is paid to the annuitant for as long as they live and ceases upon death.” ―Moshe Milevsky, Section V from the book In Defense of Annuities (2021).
“It protects against the risk of living beyond, even far beyond, life expectancy - without surrendering either upside potential of liquidity of the underlying portfolio.” ―Moshe Milevsky, Section V from the book In Defense of Annuities (2021).
“The income is guaranteed to never decline for the remaining life of the annuitant. If the underlying investment portfolio ever reaches zero, the guaranteed income will continue so long as the annuitant or, for a joint product, one member of the couple is still alive. Whatever remains in the account at the time of death goes to the heirs.” ―Moshe Milevsky, Section V from the book In Defense of Annuities (2021).
“Fees and periodic withdrawals are deducted from the VA account as long as there are funds available. But if those periodic withdrawals every fully deplete this account, the insurance component is triggered to fulfill the remaining withdrawals for the lifetime of the investor.” ―Moshe Milevsky, Section V from the book In Defense of Annuities (2021).
“... to provide an assortment of lifetime income guarantees meant to protect the policyholder against longevity risk as well as what the industry has coined as ‘sequence-of-returns risk’, which refers to the chance that a retirement portfolio, from which cash is being withdrawn, suffers early losses, magnified by the retiree living longer than average. All you need is a bear market at the wrong time, and the sustainability of your income can be cut dramatically.” ―Moshe Milevsky, Section V from the book In Defense of Annuities (2021).
“By promising a lifetime of retirement income, insurance companies are taking on the above-noted longevity risk.” ―Moshe Milevsky, Section V from the book In Defense of Annuities (2021).
“Invest aggressively, diversify, exposure to equities, and wrap some protection around it. Optimize your variable annuity by having an aggressive allocation and protecting it with a lifetime income.” ―Moshe Milevsky, from his Annuities for a Biological Age webinar (2020).

John Huggard, J.D., CFP, CLU, ChFC, is a sought after expert witness in securities cases and a nationally recognized speaker on the topic of variable annuities.

“Win-Win Situation:
- If the market goes up - you're a winner.
- If the market goes down - you're a winner.
- No more disgruntled clients.―John Huggard, page 42 from his lecture notes, "Understanding the New Variable Annuity Living Benefit Riders" (January 8, 2007).
“Living Benefits are not new variable annuities, but riders available with existing variable annuities. Often, only a box on the application need be checked to obtain a specific living benefit. Living benefit riders provide long-term investors with:
- An opportunity to obtain stock market gains if the market goes up.
- An opportunity to obtain an upward ratcheting lifetime stream of income regardless of the stock market's future direction without annuitization.
- The ability to avoid the 'longevity problem' for both spouses.
- The ability to avoid the 'sequence of return' trap.
- The advantages of obtaining basic variable annuity benefits (commission-free investing, no transaction costs, death benefit, etc.).”―John Huggard, Page 8 from his lecture notes, "Understanding the New Variable Annuity Living Benefit Riders" (January 8, 2007).

Re-Balancing: A Free Lunch In Portfolio Management

If an investment is successful, naturally, you'd want to stick with it. The last thing you'd want to do is sell some of your winners to invest more money in your investments that aren't doing as well. Right?Well, no.Unfortunately, human nature’s default investment policy is: let’s sell whatever has performed most poorly over the last block of time so we can buy more of whatever has gone up the most (selling when it's down and buying when it's expensive). We intuitively chase immediate past stellar investment performance, which is not, to put it charitably, an optimal long-term strategy.One of the most powerful and practical antidotes to this counterproductive impulse is: re-balancing.

What is Re-balancing?

“Re-balancing means always shopping the sales, automatically.” ―Nick Murray

Re-balancing is an essential part of managing your investment portfolio by trimming back on winners allowing you to buy more of a laggard, protect your gains, and position your portfolio to benefit from the next uptick in the market. Basically, you are always selling high and buying low.Suppose your mutual funds are allocated equally among three distinctly different equity sectors: large-company (33%), small-company (33%), and international (34%).Over the course of a year or two, let’s say, the three sectors will very likely have appreciated differently to a point where they now each represent more or less than the original 33% of your overall portfolio.The plan is to re-balance the three sectors back to their original percentages. Which means that you will sell off enough of the over-performers to reduce them back down to 33% of the portfolio — and reinvest the proceeds to bring the laggards back up to 33% each.This rational discipline is the direct opposite of the most basic human instinct.

“Re-balancing is there to save us from ourselves.” ―Nick Murray

Re-balancing causes you regularly to be lightening up on sectors that have become relatively expensive (and thereby potentially more fully valued, if not overvalued) in order to increase your positions in those that have become relatively cheaper (and therefore potentially more attractively priced, as the current market shuns them).Re-balancing creates a systematic way to buy low and sell high.

An Example

“We sell high for the express purpose of buying low.” ―Nick Murray

Step 1: Invest $36 into Three Mutual Funds, Equally

- Total shares: 12
- Value: $36
Step 2: Six Months Later... They're Out of Balance- Fund A grew more than Funds B and C.
- Fund B decreased some.
- Fund C decreased the most.

- Total shares: 12 (no change)
- Value: $36 (no change)
Step 3: Re-balance- So, let's re-balance by selling 2 shares of Fund A and use the proceeds to buy more shares of Fund B and Fund C.

Step 4: After Re-balancing

By rebalancing your portfolio, you have increased your number of shares from 12 to 20 without adding new money!If this is done within a tax-advantaged account, such as a 401k, IRA or variable annuity then there are no tax consequences.- Total shares: 20 (you increased your shares without adding an money!)
- Value: $36

“Re-balancing, much like dollar-cost averaging itself, is smarter than we are.” ―Nick Murray

The Benefit

“An annually re-balanced portfolio will outperform the same portfolio without re-balancing.” ―Nick Murray

If you re-balance regularly, it is possible to add an extra 0.3% - 0.5% on top of your returns over the long haul. Generally, the more frequent the re-balancing, the better.Example: for the years 1968-1991:

If re-balancing within a tax-shelter (IRAs, 401ks, Variable Annuities) then there are no tax-consequences of trading shares, and many firms have automatic re-balancing programs at no extra cost.

Three Rules of Re-balancing

1. Only re-balance non-taxable accounts (ie, qualified accounts and variable annuities). Unless it is built-into the investment, such as the American Funds Growth Portfolio (one of my favorites).2. Re-balance as often as possible. Example: American Funds allows quarterly, and Jackson variable annuities allows monthly re-balancing.3. It's best to set-up automatic re-balancing. But if you insist on doing so manually, then do so the same day regardless of the market. Don't turn re-balancing into market timing.

“The most effective tool for overcoming the very human performance-chasing impulse is rebalancing — the act of systematically selling off pieces of overperforming sectors annually re-balanced portfolio will outperform the same portfolio without re-balancing.” ―Nick Murray

• Read Nick Murray's one-page article "Why We Rebalance"

Why Not Invest in Gold?

This question usually comes from people with one of two philosophies:1. They think Armageddon is imminent and only gold is "safe"; or2. They actually think it is a good investment.
To overcome the first belief is more difficult as it requires a shift in fundamental philosophy. If you don't believe that the world will continue as it always has, and you don't have faith in the future, there is nothing further I can say to persuade you otherwise. By the way, if civilization truly does end, gold won't help either - no one is going want colored rock, they want canned food and water.The second belief is what we will address today - whether gold is a good investment or not. And if not, what is a better alternative.

“Gold is colored rock which has no intrinsic value. Its value is arbitrary and derived from speculation ― whatever someone else is willing to buy, or sell it, for.The only two things that actually make money are printing presses and the great companies of the world ― and the first is illegal.” ―Michael

The Persistent Illusion of Gold

The August 7, 2023 online edition of the Wall Street Journal contained a remarkable article titled “When Markets Get Scary, Mom and Pop Buy Gold.” In addition to being a fair sample of everything that’s wrong with financial journalism, it’s a common recitation of the perceived benefits of owning gold.The statistic at the heart of the article is as follows:

“The percentage of Americans who believe gold is the best long-term investment jumped to 26% this year from 15% in 2022, according to a Gallup report from May. In contrast, those preferring stocks dropped to 18% from 24% last year, while those favoring bonds climbed to 7% from 4%.”

The illusion is not just that gold is an efficient inflation hedge but that it is somehow preferable to holding a broadly diversified portfolio of quality common stocks (ie, mutual funds) for the long term.First, let’s get our terminology straight: gold is not an investment at all. That is, it does not produce anything. It just sits there. In fact, it costs money to store and to insure.If you bought an ounce of gold nearly 44 years ago at $800, you now own an ounce of gold worth (as of Sep 2023) $1,965. It’s up about two and a half times, having produced neither dividends, nor interest, nor anything else. The Consumer Price Index in January 1980 stood at 78. In July of 2023 it was 306. It’s up just shy of four times. Which means that, just to have kept up with inflation, your $800 gold ounce would now have to be valued pretty close to $3,200. But it isn’t. Not even close.Wait, it gets worse. The Standard & Poor’s 500 Stock Index at the end of January 1980 stood at 115. As of Sep 2023 it sits at 4,490. That’s right: while the price of gold was rising two and a half times, the S&P 500 went up 39 times, not counting dividends which — at the risk of repeating oneself — gold does not pay.

“Gold gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again, and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head.” ―Warren Buffett

A Better Option: The Great Companies of the World

Ultimately, gold has money-market type returns with the volatility of the S&P 500.

“You could take all the gold that’s ever been mined, and it would fill a cube 67 feet in each direction. For what that’s worth at current gold prices, you could buy all, not some, of the farmland in the United States. Plus, you could buy 10 Exxon Mobils, plus have $1 trillion of walking-around money. Or you could have a big cube of metal. Which would you take? Which is going to produce more value?” ―Warren Buffett

“While businesses were reinvesting in more plants and new inventions came along, you would look into your safe deposit box, and you'd have your 300 ounces of gold. But it didn't produce anything. It was never going to produce anything.” ―Warren Buffett

If you insist on investing in gold, I recommend finding a mutual fund that invests in companies that deal with gold, but never directly in gold itself.Ponder this: if gold is such a great investment and these gold-selling companies you see on TV are telling you it's is going to increase so much in value - why in the world would they sell it to you?! Wouldn't they just hold onto this "great investment" for themselves?

• Read Warren Buffet on the "Silliness of Gold"
• Listen to Tim Ferriss interviewing Peter Mallouk — Gold, Bitcoin, Stock Market

What the Experts Say about American Funds

American Funds is my investment manager of choice (they manage all of my family's money). As an independent Advisor I have access to every mutual fund family in America, but I have been exclusively recommending AMF for over two decades (with rare exceptions).”*I will not dive directly into the inner workings of AMF but instead quote what others have stated about the firm.

"For the entirety of my half-century career, no mutual fund company has ever championed long-term equity investing as consistently, eloquently and even relentlessly as have the American Funds. Indeed, there's been nobody close; the American Funds group has been in a class by itself. I have always applauded them for this unreservedly." ―Nick Murray
"Welcome to what many believe to be the world’s best fund management organization." ―Financial Times
"American Funds sells mutual funds you could bring home to meet your parents: the funds are described with words like steady, solid, and dependable" ―Boston Globe, September, 17 2004
"The American Funds family of mutual funds is one of the largest of its kind in the world because investors and advisers alike are attracted to the low-cost, high-quality attributes that combine for the best funds to buy. You’ll especially find American funds in retirement accounts like IRAs and 401(k)s because their portfolio managers’ long-term outlook and dozens of years of experience result in portfolios that are built to last."
"Therefore American mutual funds don’t often hit the lists of best short-term performers — they are typically among the best performers for long-term periods, such as over five and 10 years and beyond." ―InvestorChoice, December 2015
"They have funds that have consistently outperformed and consistently been lower-cost versus their active peers." ―Todd Rosenbluth, director of ETF and mutual-fund research at CFRA
“American Funds very visibly accomplishes what index-fund proponents claim cannot be done: outperform year after year, decade after decade.” ―Morningstar, January 30, 2014
"A long-term broadly diversified collection of the world's great publicly-traded, mainstream companies (ie, mutual fund), is the finest, most transparent, simplest, low-stress and most effective of any investment in the history of humankind. And American Funds is the best at it." ―Michael Paulding Thomas
"The American Funds group has won a legion of admirers for its distinctive investment approach... ‘We like their management and their people,’ says a marketer for one of the fund’s biggest distributors. ‘We like their buy-and-hold philosophy. They don’t surprise us.... They’re defensively managed." ―Barron’s, January 12, 2004
"The American Funds line-up follows an ‘old-school’ approach that is coming back into favor, said an analyst at Morningstar.... ‘They buy for the long-term because they like the business....’ There is also an emphasis on dividend-paying stocks, which is timely because of tax breaks which took effect last year. American Funds wins fans with conservative style." ―Reuters News, January 9, 2004
"American Funds has a strong record of acting in shareholders’ interests, by keeping costs low and focusing on long-term results.... We think that their funds... remain attractive options." ―Morningstar Mutual Funds, January 6, 2004
"American Funds has focused more on retaining the top investment talent... than on gimmicks such as rolling out new funds." ―Morningstar Fund Family Reports: American Funds, December 2003
"As for why they’re steering their clients toward American Funds, advisers mainly say it’s their consistent performance and low annual cost — qualities that seem to engender a considerable level of trust." ―Dow Jones News Service, October 13, 2003
“American Funds gives you Nordstrom service with Tesla performance at Walmart prices.” ―Michael

This book lays out the incredible history of Capital Group. Find out what makes American Funds so special.

"Capital (American Funds) is the best managed investment organization… that I’ve known as a consultant over the past 40 years. I’m confident that Capital is one of the best and quite likely the best designed, best staffed, and one of the best managed professional firms in the world." ―Charles Ellis, author of "Capital""Capital, the parent firm of American Funds, is one of the finest business organizations in American Business. This book was written by an index fund /no-load proponent who was looking to debunk American Funds (which are neither indexed, nor no-load) and instead he (Ellis) discovered their exceptional values, performance and pricing. This story is fast-paced and highly interesting, both to Advisors and clients." ―from the forward of the book.

What Capital Group / American Funds Says...

“There are 290,000 financial advisors in America. 212,000 of those own a Capital Group strategy for their clients.”“For 94 years ― it's not just about the destination but about the journey. And our clients like a calm journey. Don't reach for the last basis point of return or yield - but think about how the client is experiencing the journey and they''ll always appreciate that you took them on a smoother one rather than a rougher one.” ―Mike Gitlin, President and CEO of Capital Group
“We have this 'Capital System' (at Capital Group / American Funds) where money managers are encouraged to have their own points of view and to express it. Trying to understand management teams (of companies to invest in) and their quality is huge for what we do. And, in fact, is one of our most important strategic advantages. The index funds don't spend any time evaluating management, not one bit. If we can do that well, that really gives us an advantage.” ―Don O'Neal, Capital Group Portfolio Manager

Their Three Most Important Values

I don't want to go too much down a rabbit hole of statistics but I do want to mention three of their values that are aligned with mine (and Nick Murray's), and thus make them a wonderful solution for our investment philosophy.
1. The Capital System is distinctive way of managing moneyEarly in Capital Group's history, they realized that their funds would outlast the professionals who managed them. So they asked themselves a key question: If a portfolio manager left the firm, how could they keep funds going strong?Answer: By dividing funds into sections and giving each of the existing managers a portion to administer, no fund would be too dependent on a single person.

“By incorporating the highest conviction investment ideas of each manager in a fund, we aim to both increase the diversity of those ideas and reduce the volatility of a fund, which can give you a smoother ride in bumpy markets.”

2. They take a long-term approachTheir investment managers’ compensation is tied to short-, medium- and long-term results, with a greater focus on the long term. Also, Capital Group is a privately held firm, so rather than being distracted by what’s good for "the Street," they can focus on what’s best for long-term investors.

“We invest in companies for the long-term, not buy stocks for the short-term.” ―this was told to me personally by one of their fund managers.

3. Their deep and fundamental research is the backbone to delivering superior results.They believe that the best way to get to know a company is to know the people behind the business. they get to know both upper management and the employees on the ground.

“Meetings are essential to our research. Our investment professionals conducted more than 20,000 meetings with companies in 2023.”

This is my favorite investing podcast from my favorite management company.Want to learn how professional investors do it? The weekly, 30-minute Capital Ideas / American Funds audio podcast brings you the latest investment thinking from Capital Group. Each episode gets inside the minds of portfolio managers, analysts and economists to break down market trends, macroeconomic forces, investing approaches and lessons learned from personal experience.

Capital Conversations is a Capital Ideas video podcast offering an unscripted look into The Capital System.Join Mike Gitlin (CEO of Capital Group) as he hosts in-depth discussions with Capital Group's portfolio managers, analysts and senior leaders from around the globe. Gain unique perspectives on investment strategies and market trends while getting to know the people behind the portfolios.

Where and How to Invest for Long-Term Growth?

A successful investor needs three things: :1) The Right Plan.2) The Right Investment. (This is what we'll discuss today).3) The Right Coach. (Hopefully you'll agree that that's me!)
I've previously written about the power of Compound Interest and the dramatic effect it can have on your long-term investing. But, you may ask, how and where is the best place to invest in order to take advantage of this magic?1. Publicly-traded companies are the best long-term investment.2. Equity mutual funds are the best method of investing in publicly-traded companies.

U.S. Publicly-Traded Companies Since 1926

1. Inflation = 3%. Bonds = 6%. Large U.S Companies = 10%. Small U.S companies = 12%.2. In the ninety-nine 12-month rolling-periods the market's return has been positive 74% of the time. Specifically, annual returns have been positive 73 times and negative only 26 out of 99.3. However, the market very rarely returns anything close to 10% in any given year. In the 99 years 1926 through 2024, the market has come within two percentage points of 10% only seven times. The best year returned 54%, and the worst year was down -43%.4. Declines of -5% occur about three times a year.5. Declines of -10% occur about once a year.6. Declines of -15% occur about once every three years.7. Declines of -30% occur about once every five years (Bear Market).8. 40 months is the average length of time it has taken for a Bear Market to breakeven.9. Returns in the first year after the five biggest market declines ranged from 36% to 137%, and averaged 70%.
These are the facts. Everything else is a scare tactic.

The Stocks vs Companies Game

“It's not a market of stocks. It's a market of companies.” ―Nick Murray

To drive home the companies versus stocks distinction, consider this thought experiment. List ten companies whose products and services your family uses nearly every day.
My Family's Example:1. Apple. We have two Apple laptops and one iPhone.2. Alphabet. Most of our family owns Google Pixel phones and we google stuff a jillion times a day.3. Netflix. Somebody’s always watching something.4. T-Mobile/Mint. The wireless carrier of our phones.5. U.S Bank. We bank there.6. USAA. Carries our personal and business insurance.7. Procter & Gamble. The family consensus is that Bounty is, in actual fact, the quicker picker-upper.8. Amazon. Somebody’s always ordering something.9. Citibank. Many of our credit cards are issued by Citi and are in constant use.10. Berkshire Hathaway. Seems like our lives run on Duracell batteries!
Would I stop using any of these products and services if the stock market went down 50%?No, of course not. And neither would just about anyone else. That’s the critical difference between stocks and companies. Stock prices can crater, and they often do, if only temporarily. But as long as real people continue to buy the products and services of great companies like the ones I’ve just named, they’ll endure. And, if history is any guide, they’ll resume the gradual increase in their earnings and dividends — a process that has delivered an average annual compound 10% return for almost a century.

“We invest in companies for the long-term, not buy stocks for the short-term.” ―this was told to me personally by one of Capital Group's fund managers.

The Method: Equity Mutual Funds

The best way to own the great companies of the world is not to buy them directly, but to own them indirectly via mutual funds.

Equity mutual fund = A broadly diversified, professionally managed collection of the world’s great publicly-traded, mainstream, profit-seeking companies.


Said another way: To own a basket of shares of the world’s most substantial, soundly financed, profitable and innovative global businesses, many of whose products and services we purchase regularly.

“We are long-term owners of well-diversified portfolios of superior companies that have consistently demonstrated their ability, in time, not merely to survive but to triumph over any and every earthly species of ‘crisis.’” ―Nick Murray

A 100% equity mutual fund is a professionally managed type of collective investment that pools money from many people and invests it in a large number of companies (usually over 100). The mutual fund hires professional fund managers who choose exactly which companies to buy (and when to sell).A mutual fund is a lot like a pie — no matter how small (or big) a slice you take, you still get the same ingredients.

“My fortune is invested in profit-seeking enterprises managed by largely rational men and women who respond to the reality of price signals every minute of every day. Price signals sent out by seven billion people making economic and financial decisions in their own best interests.” ―Nick Murray

7 Benefits of Equity Mutual Funds

1. Diversification is our Equity SacramentPerhaps the biggest benefit of mutual funds is their massive diversification.One of my most-recommended investments, the American Funds Growth Portfolio, consists of seven individual mutual funds (ie, seven of the bundles shown on the above-right) and collectively invests in 1,285 companies from 47 countries among dozens of industries.This provides stability and is the ultimate risk management device.

2. Invest 100% in publicly-traded companies. No bonds, options, futures, precious metals, alternatives, hedges, crypto, real estate etc.3. Consistent performance. Example: the American Funds Investment Company of America has averaged 12.2% since 1934, net of fees.4. Two layers of the best human thinking. 1) The executives running the companies we're investing into; and 2) the mutual fund managers who decide which companies to invest in.5. Relatively low volatility compared to other investments because they're very diversified.6. Lower stress and maintenance for you. Once you've invested in a mutual fund there is nothing more to do. All investment decisions are made by the fund managers.7. Your money is accessible within five days.

“It can be historically demonstrated that the best defense against retaining your purchasing power through retirement is to invest in a broadly diversified portfolio of the world’s great companies. And the finest method of investing in them are good, long-term mutual funds.” ―Nick Murray

• Read Nick Murray's article "The Companies We Own"

Protecting your Family with Term Life Insurance

Three Ramifications at Death

When a breadwinner passes away, there are generally three ramifications:1. Emotional trauma
2. Financial insecurity (life insurance)
3. Legal entanglements (Living Trusts)
My expertise lies in helping you with the last two.

The Need for Life Insurance

“Insure against what can go wrong in order to acquire the luxury of investing for what can go right.” ―Nick Murray

⬥ There are 106 million Americans, representing 41% of the adult population, who acknowledge they are living with a life insurance coverage gap.⬥ Four in 10 families (37%) say they would face financial hardship if the primary wage earner died within six months. For 21%, it would be within just one month.⬥ Research shows owning life insurance increases feelings of financial security. Nearly 7 in 10 life insurance owners say they feel financially secure compared to less than half of non-owners.―LIMRA, Insurance Barometer Results, April 2022

“Do you know exactly what would happen to your family financially if you didn’t wake up tomorrow?” ―Nick Murray

Two Types of Life Insurance

1: Cash-Value Life Insurance = Insurance + Savings (more expensive)⬥ Whole life
⬥ Paid-up life- Universal life
⬥ Variable life
2: Term Life Insurance = Pure Insurance (less expensive)⬥ Annual renewable term
⬥ Decreasing term
⬥ Scheduled Level term
⬥ Guaranteed Level term (this is what you want)
Example of Cash-Value vs Term⬥ $500,000 coverage
⬥ 35-year-old male
⬥ Standard, non-tobacco
⬥ Company: Banner William Penn (same for both)*

The 30-year term policy is $236 per month cheaper than the cash-value policy, and both are offered by the same company. Thus, the correct choice is to buy the term product and invest the $236 premium savings every month for 30 years. At 8% it will grow to $351,725.At the end of 30 years when the term is over, the client will be 65. His family won't need life insurance coverage because they'll have fewer financial obligations (lower debt, kids are out of the house), and will be living off of their retirement income, including the $351k from his premium savings. This is called buying term and investing the difference.Summary: buy term insurance, not cash-value, and do your investing in a mutual fund. Don't combine the two.

The Two Variables in Life Insurance

1: Amount of CoverageDetermining the proper amount of coverage is based upon A) initial liabilities, plus B) income replacement.
A) Initial LiabilitiesThese are one-time expenses such as:
Funeral expenses
⬥ Outstanding debts
⬥ Mortgage
⬥ Children's future cCollege costs
B) Income ReplacementWith the loss of income how much money would your family need per month to pay for ongoing expenses, after having their initial liabilities paid-off?Multiply that number by 240.For example: if a family needs $4,000 per month (after liabilities are paid-off), then: 4000 x 240 = $960,000.    At a 5% withdrawal rate that will generate $48,000 per year ($4,000 per month).So, if their initial liabilities are $450,000 (mortgage, car loan, debts, etc) and the income replacement is $960,000, then they need a total of $1,410,000 of coverage.

“The wise way to find out how much life insurance you need to purchase is to add up the annual living costs for your dependents, or your annual contribution to them (your income), and then purchase a policy that is 25 times that sum.” ―Suze Orman

2: Length of TermDetermining the proper length of term is based upon the minimum time needed to eliminate your financial obligations (mortgage, college expenses, debt, income-replacement etc.). Remember, the longer the term the higher the premium, and vice versa, but the premium won't change during the term (as long as you don't get “scheduled” term).

I usually recommend getting the longest guaranteed level term you can afford with the proper face amount; $1,410,000 in the above example.

What the Experts Say...

“With 55 cents of each premium dollar going into what are essentially savings accounts, buyers and holders of whole-life insurance are losing billions of dollars a year. The savings element of such policies returned on average between one percent and two percent in 1977…” ―Federal Trade Commission Report, July 10, 1977
"Financial planning for the average person can be very simple. If there is a need for life insurance, buy term (the cheapest) and invest the difference. Mutual funds, well managed, are generally the best way to invest in a growing America while taking advantage of the “pooled” investment money of mutual funds to reduce the risk factor." ―Arthur Milton, How Life Insurance Policies Rob You
"Buy cheaper term insurance and invest the difference." ―Norman Dacey, What's Wrong With Your Life Insurance
"In the next ten seconds, I'm going to tell you how you can save hours of time and thousands of dollars. Ready? Buy term life insurance.""...maybe you've heard (and have already fallen prey to) the sales pitches from life insurance salespeople, most of whom love selling cash value life insurance because of the huge commissions it pays.""Cash value life insurance is the most oversold insurance and financial product in the history of the industry."
―Eric Tyson, Personal Finance for Dummies
"The industry has a hidden agenda. It would rather sell you whole-life or universal life policies. It would rather sell you those policies even if they leave you underinsured. For nearly 50 years, Consumer Reports has been recommending that most buyers choose term insurance.”
―Consumer Reports, June 1985
"I, like most competent financial planners, recommend the purchase of low-cost level term insurance for ten to twenty years, and then invest the difference. I have reviewed many life policies, and I have never seen one that would beat buying term and investing the premium savings in an IRA in a 12 percent average annual return mutual fund.”“Cash value life insurance is one of the worst financial products available.A cash value policy is an insurance product that packages insurance and savings together. Do not invest money in life insurance; the returns are horrible.Don't do cash value insurance! Buy term and invest the difference.”
―Dave Ramsey
Here’s the key lesson with life insurance: You want a policy that is called term life insurance — not whole life. And here’s some really good news: Term life insurance is incredibly affordable. You are going to be amazed at how little it costs to buy yourself peace of mind.Do not let anybody tell you that your life insurance policy is a good way to build extra savings. Fall for that and you will end up wasting thousands of dollars over the life of the policy.” ―Suze Orman