The Bank of You University Podcast
By Randy Luebke RMA, RFC
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Podcast Description
If you want to win at the game of money, credit and finance, don't do what banks want. Do what banks do. After all, it's their game. They are supposed to win. But you can win too. Become your own bank. Become... The Bank of You!
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007-The Bank of You Univerisity Podcast – The 12 Principles of Money, Principle #4 – The Principle of Leverage | The Bank of You University Podcast Episode 007 – The 12 Principles of Money, Principle #4 - Leverage Join us on iTunes today! Select this link to go to iTunes This episode of The Bank of You University Podcast series takes another look at our unique and proprietary approach to financial planning. It answers the questions: - What is Leverage and why is everyone do down on it? - How Leverage can make a mediocre investment shine - How can Leverage amplify everything? - If a little Leverage is good, then why isn't a lot of Leverage GREAT? I hope that you will enjoy listening to this podcast. Be sure to pass it along to your friends, relatives and co-workers. Also, remember that you can subscribe to our podcast through iTunes and be automatically notified as future podcast are made available. We can help by showing you to start to making better, smarter safer choices and financial decisions about your retirement today so that, tomorrow, you CAN begin to live the life you dream of, a less stressful and a more fulfilling life. Join us on iTunes today! Select this link to go to iTunes Show Notes: Definition: Leverage Amplifies Everything In the world of money, leverage means DEBT! Debt, the nemesis of Dave Ramsey and Suze Orman Without leverage, our financial systems would simply not function DEBT Is Not Another Four Letter Word! Dave Ramsey - Pay off all of your debts, including your mortgage before you start to save for your retirement Not inherently a bad thing Leverage amplifies gains Multiplies our losses The 4th Principle of Money we simply state that, “Leverage Amplifies Everything.” Example of an Investment with No Leverage Initial Cash Investment = $100,000 Rate of Return = 10% Return on Investment = $10,000 You would have earned $10,000. Example of an Investment with Leverage Initial Cash Investment = $10,000 Borrow = $90,000 Cost of loan 6% Total Investment = $10,000 + $90,000 = $100,000 Rate of Return = 10% Return on Investment = $10,000 Invest $100,000 Only going to invest $10,000 of our own money $90,000 will come from other people (O.P.M. – Other People’s Money) Borrow from them at a cost of 6% $100,000 to invest at 10% per year End of the year earned $10,000 Need to deduct the cost of borrowing the $90,000 from our $10,000 of earnings 6% interest the cost of borrowing $90,000 would be $5,400 As a result: $10,000 – $5,400 = $4,600 in Net Profits Bad deal? How much of your money did you actually invest? $10,000 Borrowed the other $90,000 Investment formula looks like this: $4,600/$10,000 = 46% Rate of Return Your profit exploded! This is the power of Principle #4 – The Principle of Leverage. Increased the net rate of return by a whopping 460% If you were to follow that logic one might conclude that if a little leverage is good, then a lot of leverage would be……..GREAT! NO INVESTMENT is absolutely risk-free Example Losing 1% with Leverage Initial Cash Investment = $10,000 Borrow = $90,000 Cost of loan 6% Total Investment = $100,000 Loss of Return 1% = $1,000 Net Investment = $99,000 Rate of Return = 10% Return on Investment = $9,900 Cost of borrowing = $5,400 Net Returns $9,900 – $5,400 – $1,000 (Loss to principle) = $3,500 in net profits Now our returns look like this: $3,500/$10,000 = 35% Rate of Return 1% loss Rate of return to decrease by more than 20% Example Losing 6% with Leverage Initial Cash Investment = $10,000 Borrow = $90,000 Cost of loan 6% Total Investment = $100,000 Loss of Return 6% = $6,000 Net Investment = $94,000 Rate of Return = 10% Return on Investment = $9,400 Cost of borrowing = $5,400 Net Returns $9,400 – $5,400 – $6,000 (Loss to principle) = ($2,000) net LOSS Total Investment = $10,000 + $2,000 = $8,000 Now our returns look like this: ($2, | 1/26/12 | Free | View In iTunes |
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006-The Bank of You University Podcast – A Less Stressful, More Fulfilling Life | The Bank of You University Podcast Episode 006 – A Less Stressful, More Fulfilling Life Join us on iTunes today! Select this link to go to iTunes This episode of The Bank of You University Podcast series takes a look at our unique and proprietary approach to financial planning. It answers the questions: - How do you do what we do? - What makes us different than other financial planning firms? - Is there REALLY a better, smarter and safer way to plan for your retirement? All are valid questions and all real concerns for anyone who is serious about planning for their retirement. By the way, if you are in your 20’s or if you are in your 90’s, EVERYONE should be concerned about their retirement. Why? Because now more than ever the phrase “If it’s to be it’s up to me” needs to be forefront in our minds. The Traditional Retirement In recent decades retirement looked something like this: - Work for the same employer for 30-40 years. - Retire with a pension that guarantees income for the life of both you and your spouse. - Collect Social Security benefits with similar lifetime income guarantees. - Supplement those incomes with a small amount of personal savings. - Die 5-10 years into retirement. (Sorry guys, but that is generally how it worked.) - Then, mom would continue to receive the guaranteed income benefits from both the pension and from Social Security. - Maybe dad had some life insurance to add to mom’s savings. - Their home was generally owned free and clear of all mortgages, therefore… - Mom could have a pretty nice life, and…. - When mom passed away, she would likely leave some inheritance to her children and grandchildren. Thus was the retirement of Mr. & Mrs. Cleaver. That is likely not going to be our retirement. The retirements of the baby boomer generation and their children will be much, much different. As a result, we need a much, much different way to approach planning for retirement altogether. That way, our unique and proprietary way, is called The Bank of You Paradigm®. Your Retirement? - You may not have a pension with income guaranteed for life. - You may be concerned the Social Security is under stress and it also may not be there for you. - Your savings may have been crushed by the bursting of the stock market bubble in 2000 and again in 2008. - You may live 20, 30 years or more into your retirement years. - You may have a mortgage on your home and you home may not be worth as much as it once was. - Your parents may outlive their retirement savings and rather than pass down an inheritance, they will need all the money they have and maybe some of yours too. - Your adult children moved back in with you! If you are a baby boomer, you at a time in your life when your expenses should be minimal and you income should be the strongest so that you can save and invest significant amounts of money to fund your retirement nest-egg. Unfortunately, this is not the situation most baby boomers find themselves in today. If you a Gen-X, Y or younger, you may not give retirement much consideration whatsoever. Yet, this is THE time to start planning for your retirement. No matter what your age, your retirement will look very different than those who retired before us. We will likely live longer, more active lives. We may have to help support our parents and our children. That said, your life does not have to be stressful. If your retirement plans are broken, we may be able to fix them. There are ways to make up for lost time and insufficient savings. If your retirement plans are not broken, we can make the even better | 1/5/12 | Free | View In iTunes |
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005 The Bank of You University Podcast – “The End Is Coming” | The Beginning of the end…of the year Beginning of the 4th Quarter US Economy is a train wreck World economy is moving in sync US sneezes the rest of the world gets a cold Likely to continue for quite a while - In terms of retirement planning, people are afraid To do the wrong thing To do anything Result – absolute wrong thing by doing nothing - What you can/should do? Reset your plans based on a low growth economy and a volatile stock market Eliminate 100% of your reductive debts Credit cards, car loans, things to buy stuff Ensure you have significant liquid savings = 6-12 month’s income Invest with safety #1 objective Refinance Lower your borrower costs now – aka save money Let inflation payoff your debt when it happens Mortgage rates are all time lows If you have a job, congratulations! If you have good credit If you have equity and If you have not refinanced in the past 3 months, then you CAN save money! The Real Estate Assistance Program - REAP The Rewards! If you are buying, selling, or financing real estate, you want to enroll It’s free It saves you real money www.REAP-TheRewards.com If you are buying or selling real estate we will negotiate a credit from the Realtor for you Why – Corporate Relocation across the Country & around the world Why not around the neighborhood? Realtors want/need qualified buyers – We guarantee them Realtors want/need motivated sellers – We guarantee them Win/Win - Mortgages … Cost Free! - How? There are always costs - How do you pay for them? Cash Add to the mortgage Have the lender pay them today, in exchange for a slightly higher rate You pay over time If it makes sense in today’s dollars – no brainer If rates drop, do it again with no prepayment penalties If/when inflation hits, or just goes back to normal – cheaper dollars No Costs means $101,000 = $101,000 and not a penny more Join us on iTunes today! Select this link to go to iTunes | 10/13/11 | Free | View In iTunes |
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004 The Bank of You University Podicast – Long-Term Care: a Better, Smarter, Safer, Way. How to create unique, cost-effective | This episode is a re-broadcast of The Bank of You University live workshop from May 24, 2011. This workshop covered long-term care. During the workshop we discussed: - What long-term care actually is - Activities of Daily Living - The Facts, History and Issues Concerning Long-Term care Who and how many will be effected Costs - Source of Funding for Long-Term Care What Social Security & Medicare WON’T cover Traditional Long-Term Care Insurance The use of C.A.L.I. (Cash Accumulation Life Insurance) The Single-Premium Long-Term Care Power Pill! Thank you for listening. Please leave your comments on our web site www.TheBankofYOU.com Who will need Long-Term Care? >65 years old = 60% <65 years old = 39% That said, everyone needs to address this issue because IF you are one of those who ultimately needs long-term care assistance you will be participating in your life 100%. How Long Will You Need Long-Term Care As you would suspect, most long-term care begins in the home. After all, no one wants to leave their home and, frankly, your family and friends are generally the "early responders". That said, below is a sequence of time spent in each stage of the process. Home Healthcare 312 days Assisted Living 21 months Nursing Home 2 years Put this altogether and the total amount of time needed for long-term care averages about 5 years! Now, multiply the annual cost of health care x 5 years and you can see that this can represent a substantial sum of money. That's the bad news. The good news is that their are some truly amazing ways to multiply the money you have so that it can go a very, very long way toward covering your long-term care needs. What are the odds? Out of every 1,000 people: 5 will experience a fire and the average expense will be $45,000. 70 will experience an automobile accident with the average expense around $11,000 600 will need long-term care... 600 out of every 1,000 people and the average expense will be $72,000 a year for 5 years. Won't Medicare Pay for me? Yes, but you have to be discharged from a medical facility after remaining their for 3 days to qualify. Then Medicare will pay: 100% of costs for days 1-20 100% of costs LESS your deductible for days 21-100 0% (the money stops) after 100 days of care! The Pension Protection Act allows for tax-free exchanges of life insurance and annuities into long-term care insurance programs AND when you take withdrawals from the long-term care plans to cover you expenses you have access to the money INCOME TAX FREE! (This is a BIG deal!) What about Medicaid or MediCal (California Residence), Won't The Pay for My Long-Term Care? Yes, but..... You must spend down all your assets until you have only $2,000 left. All your savings, CD's, investments, real estate, virtually everything must go before these programs will kick in. Moreover, most of the States are broke (or nearly broke). With that we must assume that the money available to pay for these benefits will be reduced. In fact: In today (2011) 44% of the annual Federal Budget is used to pay for Social Security, Medicare and Medicaid. By 2030, these 3 programs will use up 75% of the Federal Budget. That, BTW, is about the time that the cost of servicing the debt on the Federal Deficit will take 75% of the Federal Budget as well. Let's see,... 75% +75% = 150% of the entire budget, leaving no money for defense, education, etc. If Not For You, Do It for Those Who Love You Probably the most disturbing of all the facts about long-term care are the MediCal/Medicaid Resource Limits for 2011. (Medical for California residents and Medicaid for most of States) IF YOU ARE MARRIED, your spouse is allowed to keep 1 Home, 1 Car and up to $109,560 in other countable assets. That's it. The other spouse, of course, can only have $2,000 of countable assets. | 8/1/11 | Free | View In iTunes |
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003 The Bank of You University Podcast | This episode of The Bank of You University Podcast is all about life insurance. Life insurance has got to be one of the most misunderstood, misused financial products in the market even though it's been around for nearly 300 years. This podcast is a rebroadcast of the March 2011 live Bank of You University Workshop which is held monthly in Newport Beach, CA. As a result of all the content and questions from the audience this podcast is quite lengthy. That said there is so much good material covered listening to the entire recording is well worth your time. Join us on iTunes today! It's a good life! Randall A. Luebke RMA, RFC Randy@LifetimeParadigm.com www.LifetimeParadigm.com | 7/1/11 | Free | View In iTunes |
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002 The Bank of You University Podcast | Today is Monday February 14, 2011. In today's episode I will present: What is Retirement Income Planning? An introduction to The 12 Principles of Money - Principle #1 The Principle of Regeneration - Principle #2 - The Principle of Opportunity Thank YOU for taking time to listen Join us on iTunes today! Select this link to go to iTunes It's a good life! Randall A. Luebke RMA, RFC Randy@LifetimeParadigm.com www.LifetimeParadigm.com | 2/15/11 | Free | View In iTunes |
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001 The Bank of You University Podcast – Introduction to The Bank of You | Today is Monday January 31, 2011, and this IS the first ever Bank of You University Podcast. Thank YOU for taking time to listen and remember.... this is my very first episode! What is The Bank of You University? What is The Bank of You Paradigm? Join us on iTunes today! Select this link to go to iTunes It's a good life! Randall A. Luebke RMA, RFC Randy@LifetimeParadigm.com www.LifetimeParadigm.com | 1/31/11 | Free | View In iTunes |
| Total: 7 Episodes |
Customer Reviews
Perspective
Thanks for sharing your thoughts and ideas with us. My wife and I had a great time together this weekend listening to your podcast and discussing the ideas of doing the things the bank does to put our money to work for us. Looking forward to the series.
