Beware of Financial Icebergs

ABOUT THIS EPISODE

Learn to identify the 4 "Retirement Icebergs" that can sink your retirement voyage. Plus: hear a story of how Dan saved a client from a watery demise. 

Welcome to the don't play retirementroulette, podcast with Dan Sullivan. You were hard for your money and youshouldn't risk losing it and jeopardizing your future. Listen asAmazon, the best selling author and retirement planning, expert DanSullivan, shares his strategies to lower your rest and secure your future. I once again by Nevis an internationalbest selling author of the book. Are you playing retirement blue, let youcan go and pick up a copy on Amazon Dan. Thank you so much. You spend part ofyour day with me. I appreciate it. Thank you. So this week we are going tobe tackling the Fourth Chapter of your book and it's all about financialicebergs. You Open this chapter talking about, of course, the Trin story thatTantani what went wrong and how...

...honestly something so tragic andhorrible really could have been avoided if there would have been betterpreparation and so in terms of finances. What are those ice birds so to speak,that we can avoid as we look towards retirement and just the future or youshow the biddle of me thanks? Well, actually, there anumerous ice sports, but I just focused on sor and I focused on the first tontotalk about a one said: People don't normally think of and the one of thebiggest ice birds out there that no one is addressing. Is The bond market seeI'm old enough to remember? And I don't look at all, but I know oldenough of to remember which, when interstate were in double digits rightand the biggest market Bulmar et in history, we've hadit's actually not the stock market.

It's the bond market is been more gains,more value in the bond market and this is all work. So let's go back into thattime. Machine again and let's say you could get ten percent on a Treasurynote. So that's the government lends investors and they want the investorswon interest back to the privilege of living the government. That's how bondswork your winding Walter be a corporation or of the government. Solet's say back in the day, you could get ten per cent, so you had a hundredthousand dollars. You Go! I, if you want the government a hundred thousanddollars, they would give you ten percent interest that up or that moneywhich would be ten thousand dollars a year. So today, if you would a Bot wend thatsame hundred thousand dollars to the government, you get about two percenton that money, which is about two thousand, but it's actually a littlebit less than that plecious sort. The...

...simplicity say, keep the numbersnumbers even here, so you lend that same hundred thousand dollars today andthe government is going to pay you two percent interest or two thousanddollars income on that hundred thousand dollars. To let's say you have some ofthose old bonds that was so pain, ten percent to think investors would bewilling to pay you little bit more than even that you want to profit when youwant to sell that your boards would be in demand needing there. Anyone who had olderhigh yielding bonds where the high interest trade will be able to selltheir bonds at a huge profit. Now this is what going on now for forty yearssince, in since the early to s until we went down to about zero interest ratesand interest rates, so what started to creep up a little bit...

...those interest rates creep out theinverse happen. So, let's like to a double advocate here, so let's say you:You have it to two percent on that's going to yield you two thousand dollarson your hundred thousand or investment when the rat keeper going out and someone in the Bobon are yieldingfive percent, leading that you can go on by a Lebond in earn five thousanddollars interest on your hundred thousand dollar festen. What happens tothe bond that that you have? That will only pay you two thousand dollars intothose down and value, so people have been so conditioned year after yearafter year, bonds of safe tons of safe tons are safe and they can only go upand value, but we start to see the opposite that now, no, I don't knowwhere interest traits are going about. No one knows, but what I notice thatthe easy money has been made in the...

...board market. If you look at yourtypical mutual fund, even some of the what's called target thuds literallysome of these funds without investors, knowing as thirty thort fifty sixtyseventy percent month, wers people look out the traditional fifty fiftyapproached, I put fifty per cent of my money in the stork mark and fiftypercent bonds I'll be okay at the stock packet. Go Stop not going to be thecase going for it, it's impossible. They can't because rates cannot gobelow zero, which so raise into into the second ice spirit. It's mutualsense. Everyone loves mutual fought, but the fact of the matter is this:that, at three of the largest sun buts, there's almost ten trillion dollarsunder management and those fun groups. So you you need to ask yourself thequestion: How do you manage ten...

...trillion dollars? The answer? Is You?Don't you don't you can't manage it? In fact,I had a a pretty substantial client referred tome, his point now, the a couple months back and he brought in all his fan godsstatements and he had woke a substantial amount of money with an God.He said Dan, I feel pretty comfortable about it. I'm diversified with my VanGuard Mutual Fund, so you see I have this one, that's a the center. What itis I dissected of a deanas. What do you find out is sad, all allthe funds except one there and there were several right, different,different signs, all apple, they all don't like a soft.They all don't, Google, they all own Amazon, so Al they're, all vested inthe same companies. He was started to find out. That was the case, but Iasked you the question of John Ben...

Managing Ten trillion dollars. Themoney has to go somewhere. So what do you find out is that a many of themutual funds are too big to be properly managed. The Fun companies are too bigto properly diversify. Don't give me wrong, I love Apple. I love Microsoft.I love Boobo. I got all I was in all those companies, but one thing you have to be cognizant ofis: What do you actually are wet you all these funds? If you want all thosethose stocks almost starts but feel by a mutual sense of diversification andmanagement, mutual fund might not be the bestinvestment for you, so, for instance, with Van gads owns hundreds of millions of shares andhundreds of millions of dollars and hundreds of billions of dollars worthas as apples stock and the search of...

...apple looks like it's got to startgoing, heal the way is very difficult for them to sell billions and billions,and billions of dollars worth of apple stock is o that all that that they'llvictim of their own success. So what I recommend is, at you do analysis onyour funds to make sure that your sons are doing what they said that they'regoing to do and to find out. If you have one step, might be at risk. Theylooks as a bond market alternatives that can give you the same type ofreturns from without a risk to the principle, but addition to that some ofthe some of the ice ports that were talking about is that this going to be a tax time bomb comingand it's going to get worse as the debt explodes over twentytrillion dollars of this country and...

...were already started to see it thestarting of the higher income people of a four hundred thousand. Now we knowthat one distain, so you need to be condescent of the fact that don't setyour tax rates going to be higher. You need to adjust plan accordingly. Nowthe fourth, I sport that that we mentioned once again, there's no erstep for one out there is that we need to prepare for a long term, TA crisisto Bendigo who who tes the data is that if you married, was also a fiftypercent chance that you could have some substantial need for either in homecare long term to in a nursing home for a Hibert, something in between a nursing,home and home God in on care. So the cost of one term care, depending on howyou Y use it to be as high in...

Massachusetts, for instance, as high asa hundred and fifty thousand dollars a year. Now most people cared are for ahundred and fifty sand dollars a year, but but some people get so approachedof it. So you need to get your plan to recognize the fact that you're gonnaneed some type of supplemental income down the road to get you as Er bad o.well, it really it's just about eating yourself and really taking the time toput work in, even though finances and numbers may not appeal to everybody,and they may not be fun for everyone. Well, that's good, because I wouldn'thave a job if that was the case. Yeats yeah, it's good and it's important totake that time to invest in your future and just educate yourself, and that oneis the best move to make where you have your ideal of retirement and you're,not just playing retirement roulette, and that is what brings me back to yourbook. All the details are laid out there. How people can educatethemselves and just being smart about...

...retirement it's by Dan Suliman. It'snot the international best selling book. Are you playing retirement Roulette Dan?Thank you so much persae. Thank you. Kindly have a good day, thanks for listening to the don't playretirement roulette, podcast with Amazon, best selling author DanSullivan, learn more or get a copy of Dan's book when you reach out to him atSoliman retirement com, that's Sulivan, retirement com, e.

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