Bubble lesson #1: everything (especially if they are the same type) rise and fall together in a bubble.
damn buyinghouse is writing a long answer
Blockchain = Sexy name for journal
Bitcoin transactional network = General ledger + sale ledgers + purchase ledgers
That is, bookkeeping in the cloud
Has anyone come up with any analytical tools?
Yes, some did used by some governments. I think IRS also might be using something but not sure - all rumors.
Just for fun. Believe me, we will have fun with the negative people on this forum.
I ran a scenario. I am working with this guy, 39 years old, he owns a bunch of stores in the Bay Area. He wants to know how to leverage his expenses, he doesn’t mind life insurance. He has, for fun, $100K a year at my disposal, which I can help him with, very kindly I will oblige. He loves to go from store to store, he is an excellent human being paying his employees more than minimum wages, that’s his passion. He will sell the stores when he is ready, he said when he is 65.
The $100K will be played like this:
$100K premium a year until age 69.
He can loan $90K but to have a buffer, he will loan out $80K as soon as the insurance company transfer the $100K from his bank to his account policy. 10 days, or so. Not bad, right?
$80K are in his hands, right? Loan to never be paid back. Ever! Death benefit will pay for loans at the end.
There’s an internal fee of 5%, charged to the loans in a monthly basis, simple interests against compounding interests, they are a lose proposition.
Plus, he has another $80K in his policy are earning 7% to 16% since the S&P 500 index is doing so great.
What can you do with $80K? Pay a mortgage? Use if for a down payment for a home?
He will retire at age 70 with $334,861 a year, tax free, until the day he dies or at age 120.
Where can you get that return with $400K “invested” in 20 years. Investment is a word we are not supposed to say, but because on this forum they use it a lot I will for entertainment purposes, the insurance companies do the investing, not us the agents.
So, for $20K (it’s less, trust me, you are leveraging $160K?
I will comeback to this topic tomorrow with illustrations, I have several clients to visit.
This technology is good if it can be made ubiquitous… but need to make transactional cost very low… and usable by mom & pop shops. But if no web access, can’t use it, then problem… how to deal with that?
There are low cost alternatives, but median ethere transaction fee seems to be around 3%. For reference, visa costs about 1.5% or something like that.
There are no transaction fee coins, like raiblocks, or low transaction coins like byteball.
I guarantee you can’t post the illustration that shows:
$100k/yr premium paid
$80k/yr loaned out
$334K/yr income at age 70
I have a better scheme based on the description:
He puts in $100k, after 10 days, he loans $80k out. The he puts the $80K immediately back into a new policy, and after another 10 days he loans $64k(80% of the $80k) out again. Repeat the above process, so by the end of the year, he should have in the policies earning interest:
$80k + $80K * 0.8 + $80K * 0.8 * 0.8 + … = $400K (using the formula for the sum geometric sequence). So by the end of the year, he would have $400K earning 7% to 16% interest, while his total out of pocket expense is only the initial $100K.
Will that work?
Yeah, until one of the 40% of years where the index gains less than the interest charged to borrow against the policy. Then you’ll owe a whole bunch of interest, since gains won’t cover the cost of borrowing.
John. Nice idea. But it won’t work.
If you are high earner, say earning $1M a year, which the insurance companies would cover you for $22 millions or more, you can deposit more premiums but not according to your wish. The reason being is that they pay or deposit the earning every month into 12 buckets. Besides that, we play with death benefit being less so your principal gets fatter because you are not paying lots of cost of insurance.
The premiums discussed are for $100K, his limit is $109K a year per MEC. We can accommodate a lump sum besides the $80K and that money will be earning the same interests. We don’t get paid on that amount. After $109K, it becomes just a regular investment program, taxable. HIs age and income are things to watch for. He could pay more premiums if his age was 30 yo for example.
This is a conservative approach to leverage your expenses. In this example, you get $80K in your hands, you invest it as you know how, and then you have another $80K earning at least 7%. This on a collateral account the insurance company creates. All costs of insurance and interests charged are shown in an illustration.
This is not your “I will be rich scheme in a year or so”. To achieve that, risk your money in the stock market. But you be aware, you ride the wave, you do good, or you go to the bottom with the stock market. And taxes are not avoidable anyway.
Even $100 a month, age 40 I believe, with living benefits, maybe a crappy face coverage amount of death benefit will make you retire with $7K a year. Compound interests are the best. All of the above, tax free.
I’ll be back. Can I have your name, age, and phone number to get all your information, so we can open an IUL for you if I show you those numbers?
Of course policies lapse if you are not careful by loaning more than what you have earned, that’s why we mention a “buffer, cushion zone” that you should leave as on the above soon to be illustrated policy. He can loan $90K but that would be risky. On the illustration I am going to show you, the insurance company gives you an extra $ amount to play with interests.
It is a flexible account. If you don’t want to earn %, just pay the cost of insurance, and if you are in trouble paying your bills, use the excess for that purpose.
Believe me, I understand your concerns, you are negative because this type of deals are strange to your line of thought.
I will be back, going to pick up my kids and meeting 1 client afterwards. I will scan and post the illustration.
You already gave the parameters of your client. They start at 39 and loan $80k/yr immediately then $334K/yr at age 70.
Out of respect, because I am not the president of this country, and in order to keep this post going, I deleted the illustrations that made some people see what is real.
I showed them that the equivalent to buying a $400K home for 30 years can allow them retire with close to $350K a year, tax free, using the miracle of compound interests and your money not being risked in the stock market. Such illustration was running at 7%, all expenses deducted at the same time, with returns going around 16% for the last year. Double returns!
So, I delivered, and made those negative people quiet. No apologies needed since I was called a fraudster. Right?
Can you imagine being called that way when I am using a software program that can’t be hacked by me, and, an illustration approved by the state of CA and the same insurance company? Jesus!
This is safer that bitcoin investing
So, what’s up doc?
You deleted the illustration. haha.
One of your most common statements is that the loan is simple interest while the investment is compound interest. That’s actually a lie. They are both compound interest. You can see it the column of total loan amount. If you look at that column and don’t realize the loan interest is compounded, then there’s zero point in ever discussing anything financial with you.
All your policy is doing is a bet that the market return will be higher than your 5% interest. The 40% of years where the market return is less than 5% are going to kill you. You’ll have compound interest growing on your loan while your investment gains are less.
Also, it’s not the equivalent of buying a $400K home. I honestly don’t have the patience to explain the math, and you can’t even tell the difference between simple and compound interest.
GBTC will be split into 91 shares! Is 2k a share too expensive for mom and pop investors?