Social Security strategy for the non-dependent

“Many high-net-worth investors ignore one of the most powerful financial-planning tools available to them: Social Security,” writes Ash Ashluwalia in this past Monday’s Wall Street Journal.

He caught my attention. I’ve been assuming the system’s demise–and seeking to make alternative plans–since the mid-1980s, when I first learned from Dr. Gary North about how the program is really a Ponzi scheme and is going to fail, one way or another.

Dr. North pointed to comments by then-Sen. William Proxmire during a 1976 hearing. I have bolded the most relevant part: (more…)

Interest and Percentages, Part 1 – Thinking Like a Banker

Interest Percentage Pie Chart

How do interest and percentages stack up?

Over the last couple of years, I have come to realize how important it is for us to think strategically—and very differently than most of us were taught in school—about interest and percentages.

I think the first time someone brought this to my attention was when one of my advisors asked, “What does your bank pay to borrow money from you right now?”

At the time, I think I was receiving about 0.1% interest on (some of) my deposits. (Many pay nothing at all. And if I were living in Europe or Japan, they would be charging me interest for parking my money with them.) So I said, “Let’s say 0.1%.”

“Okay,” said my advisor. “And how much are they charging in interest if you want to borrow from them?” (more…)

Assets and Liabilities

house-car-vintage-old.jpg (3089×2048)

You know what assets are, right? They’re what you own. And liabilities? What you owe.

That’s the traditional, “back-of-the-envelope” definition.

Could this definition not only be wrong, but seriously misleading and damaging?

I think so!


Cash: Accumulation or Flow?

Family banking advisors1 urge us to think of money in terms of cash flow–keeping it moving–instead of cash accumulation–saving it up, storing it in savings accounts, 401(k)’s, 403(b)’s, 529 Plans, and similar “Qualified” plans.

This mentality is very different from what I was taught growing up and throughout most of my adult life.

I’m not going to try to expose the cultural messages that lead us to accumulate. That will be for a different time. What I want to point out here is the difference between cash accumulation and cash flow. (more…)