Worried about a market correction? I’m not, because it won’t determine my fate

By BOB CUNNINGHAM

As I write this weekly entry, the Dow Jones is coming off a gain of more than 200 points.  Despite predictions of impending doom by some, and the realistic acknowledgement from even the most optimistic of investors that the markets won’t go up forever, they continue their improbable ascent.

It’s a lot like late 2006 and most of 2007, when we hit record highs according to all the major benchmarks… right before falling to Earth like a rocket in 2008, reducing many account balances by almost half in a matter of months, even weeks.

So why am I not concerned about the inevitable decline?  What puts me in a position of being so confident?  Simple… I’m flat broke and, thus, have nothing to lose.

LOL… JUST KIDDING.  How I crack myself up.  Truth is, while my wife and I are far from being considered wealthy, we have some decent retirement savings… we’re doing OK.

And the really cool thing is that our funds aren’t invested in the markets.

“But Bob, you’re missing out on some of the greatest profits ever!”

That’s true.  And we’re perfectly fine with that.  Our nest-egg is invested in dividend-paying whole life insurance, which gives us a steady and predictable gain… with NO chance of loss.

None. Nada. Zilch.

Look, friends, unless you’re brand new as a reader on this site, you’ve read here before about how losses annihilate an account more significantly than the same rate of gain helps.  I’ve demonstrated how average annual rate of return is a fallacy.  Go up 25% one year, go down 25% the next… and instead of being even, you’re actually down 12.5%.  Reverse the order – down the first year, then up the second – and you’re STILL down 12.5% after the second year.

Doesn’t seem fair, does it?

And while it is absolutely true that we are missing out on some pretty sweet gains right now, it is without question that we will be better off over the long run than those who insist on riding the roller coaster.  History says so… and I’m not willing to buck a trend lasting more than 140 years.

“Okay, but hasn’t the S&P 500 averaged about a 10% return all-time?  That’s what I always read.”

Again, that’s a bogus average – taking all the returns and adding them up (since after The Great Depression, I believe), subtracting the losses, and dividing by the total number of years.  The effective return, according to Morningstar.com, was slightly better than 3%.  The effective return is how much your money would have actually grown.  Dividend-paying whole life insurance returns between 4% and 5.5% (depending on dividends) EVERY YEAR, and is tax-free when the money is correctly acquired via withdrawals of principal and dividends and/or non-qualifying policy loans.

It’s truly great having a fairly specific idea of how much money you will have at any given time in the future.

“If this is true, why doesn’t everyone use dividend-paying whole life insurance, and get the heck out of the stock market altogether?”

Many would if they knew about it.  And more and more people are going that route, thanks to the strategy getting more publicity from sources such as this blog.  Still, the same conventional drivel of favoring 401Ks, IRAs, etc. continues to be perpetuated by Wall Street, many personal finance gurus, and our federal government.  It’s a constant battle.

The purpose of this blog is to educate folks… primarily, younger adults and families… that there is a much better way than conventional retirement savings vehicles.  The key is starting NOW.  This superior approach offers more safety, liquidity, a steady rate of return, tax benefits, and a living benefit that allows for self-financing of major purchases and other handy uses that you simply can’t get from traditional savings and investments.

And I’ll continue to plug these in this space and others.  Slowly, the tide will turn in favor of Americans who, like myself, want to retain complete control of their finances at all times.

As always, thank you for reading.

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DISCLAIMER:  This post represents the author’s opinions only.  In no way should any part of the content of this post be interpreted as official financial advice, nor does it represent an intention to solicit readers into a specific company or investment.  Results are never guaranteed.  Utilize the information as you see fit, make all money decisions at your own risk.

Just this once, I’d appreciate your OK to take this finance blog off topic

By BOB CUNNINGHAM

Make no mistake – this is a website dedicated to personal finance… unconventional in many cases, in a world that constantly nudges you against your own best interests… but specifically about your money, nonetheless.

But for the second consecutive week, your visit here will not yield you some new, relevant information in the economic world.  I do apologize for that.  Please stay with me, however.

Last week, I wrote you a quick note asking you to excuse me from a new post due to illness – I had surgery to have my gallbladder removed, received doctor’s orders not to work for two weeks, and was in enough post-operative discomfort that proper concentration on work was challenging.  So I took the week off.  I promise it won’t happen often.

I’m feeling significantly better as I write this, and I certainly could attack a new angle in the world of personal finance with this post.  Instead, however, I’d like to request the opportunity for some inflection in light of recent events.  Your humoring of me by reading the following is most appreciated.

In the world of personal finance, and the accompanying “blogosphere,” we spend a lot of time discussing the best ways to save, spend, and invest our money – tools that are extremely handy, strategies that are surprisingly lame, and everything in between.

What we don’t talk enough about is enjoying the fruit of our labors, taking full advantage of how lucky we really are, sharing with those less fortunate, and so forth.

Now please don’t get me wrong – my recent illness was never life-threatening, and by this time next month I should be fully recovered from the ordeal.  Millions and millions of people are a whole lot worse off than I was even at the pique of my abdominal pain a week ago Sunday.  My perspective isn’t improperly altered.

But this did serve as the third reminder of the last five years that life can change drastically.  One minute, you’re going along fine with all your ducks seemingly lined up in a row.  And then suddenly, you learn that your father has died unexpectedly.  You’re cruising with everything planned, and falling into place as you had anticipated, and then BAM!  Your brother obtains a blood infection and is only 50/50 to survive.

Both these things happened in my life.

My brother’s illness came first during this stretch, and for six solid weeks I was doing virtually nothing except heading the 35 miles or so from my home to the hospital every day to check on his condition and try my best to keep my sister-in-law, niece, and nephew informed and calm.  Somehow, he had contracted pneumonia through a strep-throat like bacteria and his condition grew worse as he lay in the Intensive Care Unit, a ventilator inserted to help him survive.  He had become septic, and at one point the doctor informed us that he was “a coin-flip” to make it through, and if he did so, there was a good chance that he would permanently lose kidney function.  They had to do a juggling act, balancing a dangerously accelerated heart rate with declining blood pressure that made him susceptible to a crash.  Very, very dicey.

Ultimately, we were blessed with his recovery.  And, he regained proper kidney function just two weeks after leaving the ICU.  He was laid up at home for several months after the initial stint in the hospital, but today he’s doing just fine and back to work as a restaurant manager.

My dad had been battling multiple forms of cancer, active and in remission, but was feeling as well as he had for months when my son and I drove up to see him at his home not far from the south entrance to Yosemite National Park.  We had a nice visit, and he informed us that he was to have a review from his doctor the day after my son and I were leave for home, with the distinct possibility that he could be taken off of chemotherapy for as long as six months.  With that potential green light, my dad was hopeful of taking a road trip in his RV with my stepmother.

And he certainly looked and acted better.  My wife and I had gone up for a visit about two months prior and it was scary how sickly he looked at the time.  This once 6-foot-2, 215-pounds of brawn built by decades of working as a heavy duty equipment mechanic was 155 pounds and he had begun hunching over to the point that I was now taller than he.  I’m 5-10.  He had always towered over me, but not on this visit.

That trip forced me to start trying to mentally prepare myself for the inevitable.  He was 78, and I was realistic enough to recognize he might never get better.  That’s why the visit two months later when my son came with me was so very encouraging.

But in the following wee hours of the morning, barely 12 hours after my son and I had gotten home, we received the call that my dad was gone – passing away in the local Emergency Room after a coughing fit that apparently burst some blood vessels in his fragile lungs, a side effect of an immune system severely weakened by the months of chemo.

I was devastated, and embarrassingly unprepared for the emotional strain of his loss.  That was 2015.  Less than two years later, I endure the aforementioned illness requiring my own trip to the ER and, subsequently, surgery.  My maladies were nothing compared to what my brother and father went through, but when you’re laying in a hospital bed, all sorts of thoughts race through your mind.  It’s just human nature to ponder the what-if’s.  That said, there are also positive take-aways from the experience:

  • Be sure you live your life to the fullest while you’re healthy enough to do so.  Don’t be reckless, of course,  But don’t wait so long to smell the pizza that you never actually get to.  We get only one life, friends.
  • Be sure you’ve made the arrangements you need to make to assure your loved ones are taken care of in the event something happens to you.  THE dumbest thing you can possibly do is convince yourself that nothing will ever happen to you.  You simply don’t know that, nor do you have any real control over it.
  • And lastly, don’t forget to take the time – time after time – to tell your loved ones how important they are to you, and how much you appreciate them.  I’ve always loved my family – my wife, two sons, daughter-in-law, grand-daughter, parents, brother, sister-in-law, nieces, nephews, cousins, aunts and uncles.  But these days – before I got sick but, admittedly, not so much until after my dad died – I make sure everyone I care about most knows how I feel – frequently.

This is, after all, so very much more important than IRAs, online savings accounts, or even “pay yourself first.”   Please always keep the proper perspective.  Thanks for reading.

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DISCLAIMER:  This post represents the author’s opinions only.  In no way should any part of the content of this post be interpreted as official financial advice, nor does it represent an intention to solicit readers into a specific company or investment.  Results are never guaranteed.  Utilize the information as you see fit, make all money decisions at your own risk.