COMMON SENSE
I believe that almost everyone has basic common sense. Common sense is simply the ability to make the right decision. But in order to make the right decision, you need all the facts. Once you have them, your common sense will tell you what to do. The problems come when you act on impulse or emotion. When you don't get all the facts before making a decision, many times these decisions turn out to be wrong. What I want to do in this book is to give you all the facts about how you can become financially free. Then, I believe your common sense will tell you what is right for you and your family.

SENSE
A Simple Plan for Financial Independence

by Art Williams

To my wife, Angela The mo t special person I've ever known, my inspiration, and the greatest joy of my life.

Published by Parklake Publishers, Inc. All rights reserved. Atlanta, Georgia August 1983
c c

1983, Parklake Publishers, Inc. 1983, First Revision. Parklake Publishers, Inc.

1

Table of Contents
Introduction. My Own Stor Can You Manage Your Financial Principle Principle Principle Principl Principle Principle Principl Prin ipl Principle Principl Endnotes Bibliography #1 - G t Future? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 2 3 5 7 11 14 21 23 33 35 ment 37 40 43 48 49

tarted Now. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . ..

#2 - Pay Your elf Fir·t #3 - U °e Time & Con istency #4 - E tabli h An Em rg ncy Fund #5 - Buy Th Right Life In urance

#6 - Minimize Taxes With An IRA #7 - Bypa The Middleman ional Manag

#8 - Inve st With Prof

#9 - Start A Family Tradition #10 - Develop A Winning Attitude

Are you sure? Didn't you just agree that you were an "average American?" Before you turn the page and forget it. It just happens. Forget your plans for a moment. In 1983. Remember. 1 • MOST AMERICANS WILL RETIRE IN POVERTY. According to a recent Census Bureau survey.' • IF YOU DIED TODAY.4%by the West Germans. In this book.the average death claim paid was only $5. No one intends to let his goals of security and financial freedom slide. Most people make the same basic financial mistakes: Are you making these mistakes? Enough about the problems. 15. not to scare you. about how to make your money work for you. If you iellow the simple plan outlined here. CHANCES ARE YOUR FAMILY WOULD BE PROTECTED FOR LESS THAN A YEAR.487!3 Alarming? Yes. What have you actually done to prevent being a statistic? I'm quoting these statistics. compared to 14. 87%of Americans 65 or older were living on a meager income of less than $10. Statistics show that the "average" family carries death protection of $13.000a year. the thousands of individuals who make up those statistics didn't think it could happen to them.8%ofour disposable income.we saved 4.very. you'll never become one of the "statistics. but to point out dramatically that most Americans are making some serious financial mistakes.2 INTRODUCTION DO YOU CONSIDER YOURSELF AN "AVERAGE AMERICAN?" Then take a look at these statistics: • THE AVERAGE AMERICAN SAVES LESS THAN ANYONE IN THE WORLD.5%by the French and 20%by the Japanese. But this very minute you're probably about to dismiss these scary figures as "not applicable" to your personal situation. think seriously about your financial progress. This is a book about solutions.310. I want to show you how to avoid these mistakes and how to get started now on the road to total financial independence.In 1981." Let's get started! .

I was skeptical. As an educator. just like mine and my dad's. . no will." I worked quickly toget my insurance and securities licenses. Georgia. I wanted to give my clients the same information I used myself to understand financial services. I was "fired up. In most cases. one brother was in high school and another brother was in the sixth grade. I met a manager for a financial services group who believed in term insurance plus investments as a way to build financial security.their whole financial program. I found their financial programs were disasters. There were three children: I was in college. and that I could have $100. I wanted to find the answer. My mother spent the next 13 years struggling to raise her boys. I wanted to help them with investments.take the same money they were spending and get more value for it. savings and taxes . What's Wrong With Your Life Insurance? All of these publications confirmed what my cousin had told me. My family was devastated. I found Consumer Reports. This revelation excited me so much that I began to talk to others about it. I tried not to "talk down" to them as I've had salesmen do to me. Our meeting seemed destined because my accountant-cousin had talked to me about the same philosophy only a few weeks before. I wanted people to be comfortable with me. but I felt that I would not be selling people "just another insurance policy. I was stunned.000 of whole life insurance. The man I met at the PTA meeting offered me ajob selling with his company. and knew that consumer organizations could help. When my cousin explained to me that the purpose of life insurance was protection only. My dad had too little life insurance. My father had died suddenly and tragically of a heart attack at age 48. I didn't want to be a life insurance salesman.AND WHY I'M INTERESTED IN YOUR FUTURE I became interested in investments and insurance completely by accident. Changing Times and a great book.3 MY OWN STORY . little savings and no retirement program. At a PTA meeting. I sold what I believed in myself.000 of term insurance for the same money I was paying for $15. I thought I was protecting my family in the best way that I could. so I went to the library in Columbus to research it." I wanted to provide my friends a chance to do what I had just learned to do . I was coaching football and teaching in Columbus. I had personal reasons for being interested.

There's no trick to financial success. But if someone hadn't opened my eyes to the basics of sound financial planning. I began to earn more money with my new part-time job than I was earning as athletic director and head football coach.000. to have more financial security and peace of mind. and have developed 10 principles into a road map for total financial independence. my life has been blessed in a special way. I hope you'll take that time with this book. and the life of my family. It's so simple. After two and a half years part time. Since I accidentally got started in this business. too. and for an amazing number of other families. I know what a difference being secure financially has made in my own life. I have had the joy of sharing the promise of financial security with many people. These principles have worked for me personally.4 Then a funny thing happened. if you just take the time to think it over. In the last 14 years. I became totally financially independent seven years later. I would probably still be struggling today. They can help you. Art Williams . I did this through a combination of efforts in both my business life and personal life. I had accumulated over $40. I decided to make financial planning my full time profession. I have counseled with thousands of families in almost every state.

5 CAN YOU MANAGE YOUR FINANCIAL FUTURE? A few years-ago. There are options available. There are no tricks and gimmicks. give you more disposable income and allow for the kind of wise investment that can make you and yourfamily more financially secure. I heard about a speech made by a high-powered insurance executive during a seminar. I still believe that fundamentals are the key to victory here. My experience has shown me that planning and investing for your future is nothing but a simple mathematical problem. People of average intelligence. low-quality products and services. the fundamentals. as well. given the facts. . like 2 + 2 = 4. only to find out after it's too late that if they had done the little things. Ridiculous! I believe that most financial institutions have deliberately complicated a simple business to confuse the American people so they can sell them highcost. and (this is important) you must stick to it! Planning isn't difficult if you stick to the fundamentals. It should be flexible. What You Need Is a Plan. it's not neccessarily being in the right place at the right time. I believed that the fundamentals were the key to victory. Remember that old saying. that can minimize your taxes. the obvious things. "Watch your pennies and your dollars will take care of themselves?" It's still true. talented or sophisticated you were. Planning is the first step to taking control of your financial future. And you certainly don't ha e to be a financial gemus. like you and me. a "get rich quick" scheme. After fourteen years in the financial planning business. People spend their whole lives looking for a better way. No matter how smart. I want to give you that answer. It doesn't take a genius to figure out that you can't reach a destination without a road map. You do have options. they would be in great shape. you won by out-blocking. if you know what they are. Luck is not necessary. so obvious. You have to have a plan. When I coached football. but firm. out-tackling and being in better physical condition than your opponent. The point of hi peech was that the average American family was not smart enough to look at all the options and make intelligent decisions about what they neededthey needed to have someone to tell them. even wealthy. and a math problem has only one answer. Planning is the first step. The fundamentals of financial independence are so simple. The key to financial independence is not neccessarily having a lot of money to invest (most of us don't). can understand financial matters.

6 My Plan Has 10 Basic Principles: 1. It works! And I hope it helps you become totally free of financial worries. Minimize Taxes with an IRA. 6. 8. Invest with Professional Management. Bypass the Middleman. MOVING FORWARD EXTRA HELPS 9. 5. 2. Buy the Right Life Insurance. Establish an Emergency Fund. Get Started Now. 4. Develop a Winning Attitude. Pay Yourself First. GETTING STARTED 3. Use Time & Consistency. Start a Family Tradition. 10. . 7.

" You're probably thinking the same thing right now. paying yourself first means putting yourself and your family before any other demands on your money. The present is tough enough. If you're like most people. Let's look at some options: 1. It's amazing how fast your money will build if you invest even a small amount regularly. you . there are ways to arrange your present income (what you actually are earning NOW) to free up funds for investment. 2. It's a matter of repositioning your income and priorities. PAY YOURSELF FIRST. and an entire chapter is devoted to it later. It takes a little more time to develop a management attitude about your spending habits. Even families with above-average incomes are feeling the pinch of inflation and the tax bite. Solution: Whenever I talk to people about beginning to build for financial freedom. No matter what your income. Or. at a good rate of return. Deposit a set amount EACH AND EVERY MONTH into an investment program. Don't feel bad about this. but my family doesn't have any 'extra money' to invest each month. . ADJUST YOUR PRIORITIES. They don't have "extra income" to inuest for the future. We do well just to pay the bills and keep our heads above water. you can find money to save.GET STARTED' NOW 7 GET STARTED NOW WHERE WILL I GET THE MONEY? Problem: PRINCIPLE # 1 Most people have too much month left at the end of the money. Take charge of your money. This is one of the most important concepts in this book. their very first response is this: "Building your financial estate is a great idea. you just spend as expenses come up. you don't really manage the money you do have. no matter what other financial obligations you have. Briefly.spend money on things that you don't really need. but it's essential that you "get control" of ~ your spending. If you're serious about building financial security for you and your family. we've all done it. But don't give up too easily.

keep a budget for one month. I promise you at the end of the month you'll have a real eyeopener. that's $48. At four games a month. Budgeting is also a great way to determine where you're wasting money.00 for the four of you to eat at the game. A part of the budgeting process is distinguishing between what you need and what you want. but you might want a Cadillac.just a rough record will do. It costs $12. You see how just by making one minor adjustment in your activities. say 3 months. You actively decide what will be spent. rather than your activities and expenses controlling you. ADJUST YOUR LIFESTYLE. For example: you might need a second car. Along with controlling your money comes the matter of priorities. There's nothing quite as good as the feeling that you are in control of your money. you have "instant money?" There are probably many situations like this in your daily life that could be used to free money for building financial security. at least at first.8 GET STARTED NOW Probably the best way to do this. During the entire Little League season. Having a definite figure in mind helps you avoid rushing to the store and spending far more than you can afford. you may have to make sacrifices for a period of time. even major ones. If you spent $44 of those dollars in groceries during that period to make sandwiches at home and carry them to the game. As a family exercise. It's a kind of trade-off . 3. you'd have $100 more that could be invested for your future! And you haven't deprived yourself of anything! Budget for success. and where your money can best be put to good use. and sticking to that plan. Whenever family money is spent. Don't make it so much trouble you won't keep it up. The main purpose of a budget is this: it gives you control of your own money. Determining what you will spend on certain items. can make a world of difference in where your money goes. Let's say you have two children. you'll spend $144. After you've done this exercise for one month. And along with setting priorities comes one tough rule of life: you can't have everything. jot it down on a budget sheet or even a legal pad.do without something now so that you can have more You can't have everything! . and put a dollar amount limit on what you will spend for each. If you want to achieve financial independence. is by budgeting. Allow for items like gifts.00. Too often purchases. are made on the basis of want. You'll be amazed at how the little things add up to big dollars! Let's take an easy example: Suppose you and your family attend a Little League ballgame once a week. you may have to postpone some of your desires and wants. sit down with your family members and try to prepare a rough budget for the future. If you're really ready to get serious about your financial future.

There's nothing wrong with your children making a contribution to their expenses.Low-value. it can be done in basic ways that simply eliminate extravagance without any decrease in enjoyment! 4. believe me. I'm not saying it's a piece of cake. trim the time away to three days and plan enjoyable family activities at home for the balance of time. Youcan take money from a 51h% savings plan and invest it in an area that has the potential for higher returns. things may still be so tight that it's tough to invest more than $10-$20 a month. a little hard work never hurt anybody. Work is work. Consider part-time work for all members of your family. And.000 that way. I know it's tough. And oftentimes. There are two major areas in which most Americans are not getting their money's worth: A . and the financial freedom it gave me long-term is something that was valuable beyond measure. Another way to free up additional income for savings and investment is to re-align your assets. but I'll tell you. high cost life insurance. As a coach and teacher in Columbus. If your family income is very modest. I've worked numerous part-time jobs. "Free up" money to invest. I started selling insurance and securities nights and weekends. Summer jobs or part-time weekend jobs can provide the kids with their own spending money. savings and loans and insurance companies. And that equals more money to invest! 5. it simply has to be done. in most cases. I saved $40. This simply means that you move assets you have around to produce cash. That's what Idid. But. expensive life insurance policies with term insurance and currently save as much as 30-70%. You may be able to "free up" money to get your investment plan started immediately. Georgia. the rewards are worth it. consider taking a part-time job to get the extra income for starting your investment program.GET STARTED NOW later. and it was the income from that part-time job that enabled me to start my own business. and I socked everything I made into an investment account. Youcan replace your outdated. That parttime job turned my life around. 9 Get a part-time job. EARN ADDITIONAL INCOME. B . If you want to make significant progress. If you usually stay a week on out-of-town vacation trips. and thereby eliminate another area of expense from the family budget. RE-ALIGN YOUR ASSETS. The money I made was earmarked for savings. Both these areas are covered in more detail in chapters 5 and 7 of this book.Low-interest savings accounts with banks. Another hidden asset for most people is an Individual Retirement .

AVOIDTHECREDITTRAP. I really believe that if you'll "hang in there" to the end." Payoff your charges at theend of each billing period . the newness of the item has worn off .it's the only way to win! For purchases like furniture or appliances.Creditcardsaregoodforconvenience and emergencies. Don't give up when you see a few charts and graphs." but you'll have to pay up sooner or later. WHERE DO I GET THEMONEYTO INVEST? .thereby saving money you would normally pay to Uncle Sam. you'll be ready to take control of your future. disability or automobile insurance. Come along with me now while we talk more about a plan. like a family car. Save your money and pay cash instead . you may pay 18-21'?I) in finance charges.10 GET STARTED NOW Account. 6. But be careful to avoid the common pitfalls of "plastic money. finance as little as possible and pay it off as soon as possible. It's easy. We're already on our way! Let me remind you again. Now. see how many options you have.otherwise. (Most banks now charge $20-30 just to issue a card . Anyone can do it.it may even be broken or damaged beyond repair. It's tempting to buy something on "time. If you must use an installment loan for a necessary major purchase. you can deduct that amount from your taxable income ." The tragedy is that by the time you payoff the loan. And just a few short pages ago you were convinced that you couldn't come up with any money to start on your path to financial freedom! But these are the facts: You can do it. You do have a choice about your financial future. When you invest the maximum amount allowed in an IRA. Don't load up your loan contract with extras like credit life insurance. save your money and pay cash instead.whether you use it or notl) Be careful not to overspend. Installment loans are another area of caution. Don't buy on time. It's so easy to say "charge it.

000 annually. Why Is Paying Yourself First So Important? Today. many people who never learned that basic concept are living in poverty. Originally the planners of Social Security calculated that there would be 30 workers for every retired person. just like you and I are working now. The best argument I know for paying yourself first is the situation of retired people in America. Look at the facts: According to the last Census Bureau Survey. most people fail to accumulate enough money in their lifetimes to retire with dignity. most people don't have anything left to save." 1935 1955 1983 . A full 87% retired on less than $10. writea check to yourself for 10% of your income. and is likely to go even lower.000 a year. What happened? How can this sort of thing be happening in the richest country in the world? It's a matter of percentages. Today the rate is 3-1. it was down to a 6-1 ratio.PAY YOURSELF FIRST 11 PAYYOURSELF FIRST Problem: At the end of the month. retired on less than $5. Census study. at least at the time of the last U." Many of the people who make up these statistics have worked hard all their lives. In 1955. beforeyou pay anyone else.S. PRINCIPLE #2 Solution: At thefirst of the month. The chart at right illustrates graphically that most Americans.

2 million Pretty amazing when you think about it. Eventually.. For example: Average of $12. not the end. you find that you have more bills remaining than you have dollar bills. you've got to start by paying yourself first. Pay yourself before you pay the grocer. after paying your monthly bills. isn't it? But it's not how much money you earn that counts. Then. It was designed as a supplement to retirement income. Again. the most important savings question: How much of this amount have you saved? Look at your savings account balance. not as a primary income. ten years down the road you will find yourself in exactly the same position.-o ~m-c-om--e-sa-v-e""Td-------- If you're like most people. it's the old problem of depending upon someone else to prepare for your financial future. according to your income = ----~t~o~~l~a-m-o-u-nt~~-r-n-M~-----. a plan that you consider your "DO NOT TOUCH" fund.000 for 40 years = $480. .000 Average of $20. working life. average annual Income (estimate) How are you doing so far? The answer to the next question will help you gauge how you're doing so far. Now. yet many people have come to rely on Social Security exclusively. YOU'LL EARN A FORTUNE IN YOUR LIFETIME How are you doing so far? Most people fail to understand the basic concept that they will earn a fortune in their lifetime.. PUT YOURSELF AT THE HEAD OF THE LINE If you want to have any chance of achieving long-term financial independence. or the banker. What percent of the substantial sum total amount earned you've earned over the years is reflected there? x IT'S NOT WHAT YOU EARN . it's how much you keep that really matters. Unfortunately. Social Security will not provide for your retirement. or the doctor. a tremendous amount of money will pass through your hands in your lifetime. No matter what your annual income is.000 for 40 years = $800. Even if your salary is modest. IT'S WHAT YOU KEEP ~~-=~~~-----no. Never do it . Put yourself at the beginning of the line.000 for 40 years = $1. First. of years workea = -------"iM.12 PAY YOURSELF FIRST It's time to face the hard facts: by the time you retire. it's Divide ~--------by probably a pretty impressive figure. chances are you'll be shocked by your answer. Estimate a yearly "average" amount and multiply it by the number of years you've worked. if you don't act now. How could you have made all that money and saved so little? It's easy to do. It's easy to see why people say they just don't have any money to invest. Put this 10% into a monthly investment plan.no one cares about your future the way you do. I strongly recommend that you pay yourself a minimum of 10% of each paycheck you earn.000 Average of $30.Roughly figure how much money you've earned so far in your level.. there are taxes.

into two different funds. My savings account was a "put and take account" and constantly went up and down .200 or $1. To succeed with regular savings. And I know things come up that demand attention. you've got to develop a certain mindset about it. Your money is your work force. The important thing is to get some money started working for you. In today's economy. Your dollars are your employees. through the magic of compound interest. or something else. THE MAGIC OF COMPOUND INTEREST Even if 10% of your salary doesn't seem like much. the down payment on a home. but let me say here that even the smallest amount of money. either. you couldn't afford to let your employees sit around and do nothing. you can't let that happen to your money. pretend it's not even there. When you do need it for one of the goals you and your family have set. As a school teacher and coach." I know it's hard." withdraw for something other than a major goal." If you owned your own business. I refereed basketball games for $10-12. is what many people call "the magic of compound interest.or whatever amount you can save. All I'm saying is that if at all possible." You're taking a step backward each time you Don't "put and take.500 and then I would have to buy a new washing machine. . and also one of the simplest. The dollars you earn are your "employees. umpired baseball games for $5-10. saved systematically over a period of time will multiply far beyond your expectations. such as 13 You may want to split your 10%.mostly down. one for short-term miscellaneous emergencies. My savings would build up to $1. Don't "put and take. Look at yourself as the employer of your income. YOUR "DO NOT TOUCH" FUND Next. and the other for long-range goals. save it. I had $1. No amount is too small or insignificant to save." We'll talk about compound interest more later. You must view your savings account as "untouchable. sold Christmas trees and so on. Get it working for your future. One of the most amazing facets of financial management.000 in my teacher's credit union and was trying to save $100 a month. it will be there. I had to struggle financially and was always taking extra jobs to help ends meet. once you start your savings plan.PAY YOURSELF FIRST this fund can supply you with money for major expenditures. the most important point about your savings plan: don't touch it! I know it's hard.

you invest your money at 5%and get "X" in return. Chances are. That's when someone showed me a compound 20 Years $2. And the discipline is there. TIME 2.time and consistency .481 As you can see. too. The amount of time that you maintain a consistent savings program makes a big difference.321 17.449 40 Years 50 Years $11.Lump Sum Investment (invested one time only) 10 Years WRONG.653 6. In reality.that magical figure is closer than you think.593 $7.390 60 Years 5% = 10% = $1. Don't despair! By paying yourself first. $1. THE DISCIPLINE TO CONSISTENTLY WORK TOWARD A GOAL We've all got the time. it would be "X" times two.000 in savings.628 2. if you're an average family. Right? interest table and explained the "magic" of compound interest. you haven't yet acquired $10. With the help of two key elements . acquiring a substantial sum of money requires only two things: 1.679 304. just as soon as we set our sights on a goal that can be attained.000 .467 117.727 30 Years $4. too.259 $18.039 45. I used to think that the interest rate on an investment was pretty simple . . it's not just how much you save that counts.14 USE TIME & CONSISTENCY PRINCIPLE #3 USE TIME & CONSISTENCY It's a common misconception that to save a lot of money you have to make a lot of money. you '11get off to a good start. Then if your investment returned 10%.

000 at 65you must save a lot more. The importance of time can't be underestimated.516 264. And it's also true that anyone can manage to save $10.402 116. if you are 55 and have the same goal. but it's true. Actual rate at the time you invest may be lower or higher. no matter what their income. compounded annually.USE TIME & CONSISTENCY 15 TIME IS ON YOUR SIDE Problem: Most people don't start their investment program until it's too late. Most people fail to use time to their advantage because they allow PROCRASTINATION to erode this plan.$100. you see. If you want to be financially independent.22 per month at 12%! I know it seems amazing.000 at Age 65 (@ 12% Interest) * ---------------_. Let time work for you. time is a critical element.36 43 times more So.114 179.22 per month. t •- GOAL $100.36 a month. you have no choice: you must start now.658 Income taxes may be due annually on the interest earned. It's one of the most important elements in your financial plan. Suppose you are 25 and have a goal of $100. 43 times as much as you would have needed monthly at 25.000 cash at retirement age. ._------------------------- AGE 55 $446. Solution: It doesn't take a lot of money to build financial independence if you start investing soon enough. • The 12%rate of return is used for purposes of example._----_.The Price of Waiting ($1 a day invested at 12%. But. You could accomplish this by saving only $10.858 $32. $446. How Money Works . even though the money is invested and is not a pan of your "disposable" income. until age 65) Total at Age 65 Cost to Wait Begin Saving: Age 25 Age 26 Age 30 $296. or later you must save more.

you come up with $1090. If you have a moderate-sized "lump sum" to begin with.. in effect. Let's say you begin your program with $1200. They're easy to understand. even though th mon y i inve l d and i not a part of your "disposable" income. your results will be significantly different. It's worth itl) beginning now. and systematically adding to it. If you save $100/month BEGIN WITH A LUMP SUM There's one way to really give yourself a boost when you start your savings/investment program.16 U E TIME & CONSI TENCY Time + $ Amount Lead to Success Time i the key. and suppose you were able to achieve a 12%return on your money. Let's see how it would work: (Don't get impatient when you see charts of figures coming up. Suppose you wanted to start aving $100 per month over a long period of time. at an annual rate of 12%. You'll be giving yourself a year's head-start. If you save $1200 today in addition to the $100/month..661 in forty years. Your $1200 will.. . (12/$100 s). t In orne iaxe rna b due annually on the interest earned. then: _. then: By starting with a lump sum payment of $1200 to your account. The other element is money. 0 take the few minute to look them over and think about the concept. turn into $111.. at 12%.968.

USE TIME & CONSISTENCY 17 THE MAGIC OF COMPOUND INTEREST Problem: Solution: Most people think a few extra percentage points of interest don't amount to much money.000 (one time only investment) $289. Just one or two percent of interest compounded over a number of years can be the difference in thousands and thousands of additional dollars for you.653 20 Years 30 Years 40 Years $93.10% and 12%.467 50 Years $18 79 5% 60 Years .646 4.050 $11.tBI ! 12% 10% 5% $3.002 30 J. you can really take advantage of one of the most amazing financial concepts of all: the magic of compound interest.628 0 10 Years Later $29.000 at three different rates of interest .) The Magic of Compound Interest LUMP SUM OF $1. Take a look: The chart below shows what happens if you invest a lump sum of $1. Don't ask me how it all works . no provision is made here for estate or income taxes.593 1.105 2. By using time. money and a fair rate of return..959 17. You can see what a difference a few additional percentage points can make long-term in the growth of your money! (This chart is used for illustration of compound interest only.321 6.727 2.449 $9.it just works.5%.

538669 I $3." The chart at right also emphasizes the difference a few percentage points of interest can make. This chart shows what happens when you invest $100 each month (put it in at the first of the month) at our three sample rates. . the difference in the total amount of money you accumulate at the different rates illustrates just how important a few extra percentage points of interest can be.063.) $9.18 USE TIME & CONSISTENCY Looking at the figures. the difference was considerable.131! I found also that the magic of compound interest worked the same way with monthly investments. Again. I realized that after 10 years my money was really starting to grow. After 20 years. 10 Years Later 20 Years 30 Years Years 50 Years 60 That's when I first realized that to really achieve Financial Independence. (This chart is used for illustration of compound interest only. After 30 years. I had to apply every tool available to me.982 The Magic of Compound Interest $100/MONTH $lOOlMonth (put in at first of month) 12% 10% 5% Begin investing $100 per month. the difference would be $126. no provision is made here for estate or income taxes. just by earning 10% interest instead of 5%. the compounding was really working its "magic. After 30 years.

** $5 month compounded annually Interest Rates Years 10 20 30 5 6% 12% .279 4.034 1.000 and received 3% interest it would have grown to $2. The following group illustrates what 3% more interest will do for you. ""Income taxes may bedue annually on the interest earned even though the money is invested and is not a part of your "disposable" income.6% interest 72 -:.933 t'' i truly amazing! ·If you had invested $1..199 476.to 60 The "Magic of Compound Inter 816 2.00 each month and see how important it is for you to get a little bit higher return on your investment.USE TIME & CONSISTENCY 19 RULE OF "72" Another important concept in understanding the magic of compound interest is the Rule of "72!"Your money will "double" at an exact point by dividing 72 by the % of interest: 72 -:.989 33. 10 month Let's invest only $5.000 in exactly 24 years.599 15.404 48. .120 4.3% interest 72 -:.965 153.9% in terest 72 -:-12% interest 72 -:--15% interest = = = = = 24 years* 12 years 8 years 6 years 4 yr .898 9.589 17.

you first must decide what you want to accomplish financially. and everyone The important thing is to have out so that you 'II have a clear view One warning. But the adage. DECIDE UPON A PLAN.but do it regularly.20 USE TIME & CONSISTENCY CONSISTENCY MAKES THE DIFFERENCE Problem: Solution: Most people don't plan to fail. What education for your children? Goals has different goals and priorities. (Refer back to the chart on page 14 to see how your money will grow over a period of time. develop a systematic savings plan. Sit down with your spouse and what you want to achieve. Invest on a Regular Monthly Basis To develop a successful savings and investment program. "time flys" is true. other family members and decide are your goals? A home? College are a personal thing. Determine how much you can afford to save and whether you will do it weekly. then decide how you want to do it. save regularly. they fail to plan.) Do what suits you best . Don't forget retirement. Set a goal. After you've set your goals. I know it seems like a lifetime away. Retirement planning should be one of everybody's goals. monthly or whatever. plus it doesn't seem as exciting a goal to work toward as a new house or travel plans. Above all. decide upon a plan to achieve them. 2. ESTABLISH A GOAL. . 1. and retirement time will come around whether you plan for it or not. Be smart. your own family's goals clearly set of what you're working for. and STICK TO IT.

They lose not only their initial savings goals but often a part of their investment because they terminate their plan prematurely. For this reason. Your emergency fund should be established so that it is readily accessible in the event it is needed. If your budget allows. high-return investment instruments. Because the average person doesn't have the huge sums of money required to invest in very high-rate savings instruments. have three months' income set aside in an emergency fund.000 or $100. it's a good idea to have the equivalent of three months' salary in reserve. the "average" person receives the higher rate of return without having to put up $10. Just because you never know what could happen. you can deposit a portion of your investment dollars into your emergency fund and deposit the overflow into a long-term investment instrument. Money market funds have gained popularity in recent years as safe. The principle of money market funds is simple. Remember. a major household repair could be necessary (say. the furnace breaks down in the middle of winter) . this is an emergency fund. plus many funds offer checkwriting privileges (although that privilege should be used only when necessary). particularly if you are starting from zero. money market fund groups accept smaller amounts from many investors and "pool" the money to invest in these higherreturn vehicles.ESTABLISH AN EMERGENCY FUND 21 ESTABLISH AN PRINCIPLE #4 EMERGENCY FUND Problem: Most people begin to save money. a serious medical problem could arise. Your family's breadwinner could lose his or her job. Pay yourself first by putting money into your emergency fund before you put it anywhere else. .000. Save three months' income. I recommend a "money market fund" to hold your emergency money. An emergency fund is critical to your financial success. Solution: Before you begin a long-range investment program.there are any number of minor disasters tha t could occur unforeseen. Your investment is easily accessible if you need it. You should budget for your emergency fund in the same way you budget for other expenditures. Thus. then withdraw it when emergencies arise. It's importan t to protect against being "wiped out" financially and being forced to remove every cent you've worked hard to save and invest.

You are providing a "cushion" against unforeseen problems or disasters. any savings plan which is readily marketable will work as an emergency fund. While they are average long-term savings vehicles.and see more results sooner. Money market funds work best for short-term savings goals. highreturn investment program that provides easy access to your money. they are not the best instruments for your emergency fund.) The main point of an emergency fund is protection. . Your money will build up before you know it. And. available at banks and savings and loans. because you are penalized if you must withdraw money prematurely. You'll be able to concentrate much more clearly on your long-range financial plan . money market funds were something only sophisticated investors knew about. uch a homeowner • health. Many times this causes the investor to lose both his longrange savings objective as well as a major part of the investment in the form of an early withdrawal penalty. money market funds are widely advertised. and auto in urance. fund means Your emergency fund can not COy r major crise uch as: major m dical problem t erious auto and home accident . a long-term investment vehicle. The basic problem is that most people who begin a long-range program without an emergency fund end up terminating that investment program prematurely because of some special circumstance that arises.22 ESTABLISH AN EMERGENCY FUND In the past. and you'll be surprised at the feeling of security you'll have. The e cata trophe mu t be provid d for in other way. Don't confuse them with mutual funds. avoid the high-return savings certificates.6 billion Assets Number of Funds Assets Today. They have become extremely popular in recent years as the average consumer searched for ways to gain ground in an inflationary economy. some of which are insured by the FDIC and FSLIC. One caution: even though you don't intend to withdraw from your emergency fund unless necessary. agencies of the federal government. knowing that you're covered in the event of emergencies. banks and brokerage firms now offer money market fund accounts. that "tie up" your money for 1-2 years. you are preparing yourself with the security that will allow you to go on and work toward some long-term investment program. (We'll talk more about mutual funds in Principle #7. Establish your emergency fund as soon as possible. In fact. And that's the name of the game! An emergency protection. However. and fire. I recommend the money market fund as the best short-term. Growth of Money Market Funds (through 1983 May)7 @ Number of Funds 309 $169. many savings and loan associations.

Why life insurance? What Are You Paying For? Second. PRINCIPLE #5 One of the most important expenditures the average family makes in its lifetime is the purchase of life insurance.000 per year x 40 years = $400. Solution: Buy only term insurance. It is also one of the most misunderstood. you must understand what kind you should buy. a substantial sum of money to provide this protection. you will eventually acquire. You need more coverage when you're young. It is to protect against premature death. This is totally untrue! Life insurance is a way to buy time until you get your personal financial estate in order. Most people earn from $400. which is less expensive now. I recommend inexpensive term life insurance only. It is absolutely critical that you make the right decision about the kind and amount of life insurance to buy.000 during their lifetime. you must understand what you are paying to protect. The basic concept behind my beliefs about term in urance protection is a simple theory with a long name . less when you're older.000 to $800.000. Life insurance is a ubstitute for the cash and other wealth that your family would accumulate if the breadwinner were living. The most common misconception about life insurance is that it is a permanent need that each family has. you must understand the purpose of life insurance. What Should You Buy? Third. (Example: an average of $10.) It is the loss of that earning potential that makes life insurance a necessity.BUY THE RIGHT LIFE INSURANCE 23 BUY THE RIGHT LIFE INSURANCE Problem: Most American families don 't have enough life insurance protection because they buy the wrong kind of life insurance. .the "Theory of Life in urance buys time. What's Its Purpose? First. Life insurance does not "in ure life" so much as it "protects your dependents" from the loss of financial support. Ideally. and invest the difference. through savings and investments.

3. you don't have money . Term insurance. you need a lot of coverage . you'd better. 4. The Theory of Decreasing Responsibility I Age 25 1.. 3." It simply means that your need for insurance is greater when your responsibilities are greatest. when your children are young. best fills that temporary need. NEVER #2: NEVER BUY LIFE IN URAN E A AN INVE TMENT. hopefully. 1. 4. you have a mortgage payment and so forth. Age 65 In the early years. Mortgage paid. In my years of counseling people about financial strategy. and your accumulated savings. In the early years. Retirement income needed. The Theory of Decreasing Responsibility illustrates the wisdom of term insurance as a wise insurance choice. 2. As you get older. 2.. your home is paid for. Life insurance protects your family until you've had time to build financial security. As you grow older. [NCLUDING NIVERSAL LIFE... ~--> Remember Your Goal Your major goal is to become self-insured by age 65 or sooner. in the later years. House mortgage. You buy low-cost. increase. i. This is the time that you need very little "death protection" in the form of insurance..e. Children young. . High debt.children are grown and on their own. your responsibilities decrease . I've developed what I call my "three NEVER'S" for life insurance buyers. your insurance coverage decreases. in my opinion. routine payments are reduced.24 BUY THE RIGHT LIFE INSURANCE Decreasing Responsibility. Loss of income would be devastating. and "invest the difference" between the cost of term and whole life insurance in a promising investment program. Children grown. Low debts. high coverage term in your early years. NEVER #3: NEVER BUY A LIFE IN RANCE POLlCY THAT PAY DIVIDEND. and should rely instead on accumulated cash for your retirement years. THE THREE "NEVERS" OF BUYING LIFE INSURANCE There are three basic mistakes that I feel most people make when considering life insurance. NEVER #1: NEVER BUY ANY KIND OF "CA H VALUE'! WHOLE LIFE I URANCE.

246 CSmlIlu.:1 7. The rash valu« increases through the years. annual renewable term. The tabl s on this page wi II help you compare the cost of coverage for different kinds of insurance offered by several companies.4:'. Death Benefit . 5·Year Renewable & Convertible Term _ $:l6:i $4i:i.368 3. ear level term. Hut if you d iv. Th is "Ih'a Ih benefit" is t he most important part of your policy.·ro $tl:ti ':->III.183 3. ~()·pa_ life.value of money.r.insura nee is t() protect your fa m iIy aga ins: IIll' ckal h of IIll"brcadwi ruu-r.IX:I :-i:1.·r' I 3.000 IS-Year Average Policy· I.' .. Some policies have ot her fl'at un-s. Endowment at 65 7.. The IS-Year Cost For Life Insurance Male. I bel icve that the mai n reason for buying Ii ft. Universal Life 5. Death Benefit . Annual Renewable Term 4.f.·.108 9. The figurt's below do not take into account the rinu. I'm not considering the special features just mentioned. including cash \ alue lx-ru-Iit s. Five Year Renewable & Convertible Term 3. universal life and 01 her similar products ('os I 1111 "l' now t han t he pun' protection of term insurance.Iift· policy remains level during the term of the policy.3O'l 18. insurance only pays the death benefit. withdrawal opt ions or su rrcndcr opt ions.617 886 I IIII·SmoIwrl 1. Annual Renewable Term ::::::~$!:r"II~IKIS"". your lift. and .Kl1Y THE 1<1(. 15·Year Level Term 2. Universal Lifc:::::::::':$I'IHI:l~''''"I:-III'oI. "NEVER" #1: NEVER BUY ANY KIND OF' CASH VALUE' WHOLE LIFE INSURANCE INCLUDING UNIVERSAL LIFE.·rl 792 ISrnulct-r1 Total IS-Year Premium $ 5.'I'1 2.879 13. Generally.) When you pay the premium for I. Endowment@65 ••••••••••••••••••••••••• l!i12·lIi'~III'''''·''' _ S:!.$200. you pay for deat h protect ion only.l. loan right s. 15·Year Level Term _ •• 2.$200. lUI mat tcr how much you pay. Age 30. That is why whole life. Whole Life 6. whereas the premium of a term policy rna incrcase v ith agc.695 :42.H'rLIFE INSllRANCE 2. ou pay extra for IIll'Sl' benefits. (I am assuming in these charts that the coverage ends with death in fifteen years.'''' 5.524 7.os 11.751 50. Whole Life 6. if you gin' up some or a II of till' dcat h benefit.''''' S7~rll"'IU''''''' 4.:lfli 7. Age 30. and may be borrowed against or used to pay premiums on till' policy. tilt' premium of a whok.""·~lIhok. The ot her policies contain benefit s like cash value in addit ion to dcat h pnlll'rt ion. 20·Pay Life _ •••••••••••••••••••••••••• _ :-i::.905 IS-Year Average Annual Premium Male.)·year n-ncwable and convvrt ihle term poli('il·s.. 20·Pay Life Annual PremhUn $363 473 CNon·SmcMI 633 1!imoIcn'I 508 cNon·SmcIlu.. But.oI.7'1:1 r... which apply if you give up some or all of your deat h protection coverage.':J.000 1. endowment at ()!).Sllhol.

9 The bottom line is this: even though the rate of return on policies issued since those studied in 1977 may be somewhat different.2 to 1. Income taxes may be due on the interest income earned on your investment.85 percent. "With 55e of each premium dollar going into what are essentially savings accounts. Life insurance should NEVER be bought as an investment. Annual compounding. buyers and holders of whole-life in urance are losing billions of dollars a year. There are plenty of sound and potentially rewarding long-range investment opportunities in the marketplace today.428 10% 10.559 51. Most people need every cent they can get.073 36. let's look at what only $50a month.491 3.3 percent.984 29. sa ings or tax shelter of any kind.200 103.690 5% 7.311 13. In comparison to the low rates of return mentioned above.730 *Payments made at beginning of each month. Your insurance policy is designed to serve a totally different need. none of us can afford to lose money. They can't afford to make a poor investment. saved regularly.373 40.5%. To see the difference a few points of interest can make. In the last 10 years. . 5% and 10%. just to make ends meet. the rate of inflation has made getting a good return on your money a necessity.965 279.288 31.282 20.934 74.750 20.26 BUY THE RIGHT LIFE INSURANCE "NEVER" #2: NEVER BUY LIFE INSURANCE AS AN INVESTMENT Never mix insurance and investments.5% 7. 3. with a best estimate of 1. Your investment dollars should be focused toward one of those vehicles. The Federal Trade Commission Staff Report of July 1979 says this about return on investment for policies considered during its period of research: "The average rate of return paid to iohole-life policyholders in 1977 was estimated to befrom 1. The annual increase in cash surrender value is not currently taxable. would earn for you. COMPOUND INTEREST TABLE ~50/Mo* 10 20 30 40 1% 6.172 17. . compare the return on an investment of $50 a month at 1%.

25% 6.97% Savings Certificates of Deposit Corporate Bonds (Aaa) Corporate Bonds (Baa) Purchasers of investments should consider tax advantages and disadvantages of alternative investments.J{. Note that cash value insurance held for only five years had a return of MINUS 9% to MINUS 19%. to 4.75 to 7. 6.S. 121.2% 5. Cash Value Life Insurance Held for 5 Years Cash Value Life Insurance Held for 10 Years Minus 41K.5'}f. to Plus 21Jl') Cash Value Life Insurance Held for 20 Years State and Local Government Bonds (Aaa) Pass Book Savings Deposits State and Local Government Bonds (Baa) U.1f.67% 5. . You had to have held a cash value policy for 10 years to reach a positive return rate. Returns on cash value insurance policies are generally tax free. as computed by the FTC staff. Some investment! 27 COMP ARA TIVE RATES OF RETURN IN INVESTMENT INSTRUMENTS10 0/0 Return -5 -4 -3 -2 -1 0 1 2 34 56 789 Minus 9% to Minus 191. Some bonds are tax-exempt.75% 8.99 to 7. 5.02% 8.BUY THE RIGHT LIFE INSURANCE The chart below shows the percent of return you would have received on different types of investments in 1977. Treasury Bonds 21M.

60 4.74 21.36 14.60 26.54 6.16 Percentage Difference 43% 37% 32% 29% 26% 23% 22% 22% .96 55 Whole Life Policy Without Dividends $ 10.48 12." The chart below compares the annual premium cost of two whole life policies sold by the same company.78 5. Comparative Annual Whole Life J> rerruums 12 • (Cost per $1000.96 20 16. policies that pay dividends have had higher premium rates than non-dividend products. At Whole Life Issue Policy with Age Dividends $14. excluding policy fee) The chart below compares the annual premium costs of two "Life Paid up at 90" policies sold by the same company.83 35 27. In my opinion.09 5. Historically.48 4.76 45 40.96 25 19.17 50 49.75 17.80 Difference in Cost $ 4. The difference in premium costs indicates the additional cost to the buyer for his dividend privilege.22 7. Treasury about insurance dividends. but are simply refunds to the policyholder of a portion of the overcharge collected.44 9.73 40.53 30 22. One policy pays dividends. Consider what the U. the other does not.S.28 BUY THE RIGHT LIFE INSURANCE "NEVER" #3: NEVER BUY A LIFE INSURANCE POLICY THAT PAYS DIVIDENDS. buying a life insurance policy that pays dividends is poor 'Use of your insurance dollars.14 40 32." Decision Number 1743 says "Dividends declared by participating companies are not dividends in a commercial sense of the word.54 32.

2-15 Premium 32.00 410. multiply your annual income by eight to give a "ballpark" figure for minimum coverage needed.000 on the breadwinner for adequate protection for the family. Average the annual cost of your policy for your period of insurance (5. $200. Their costs then skyrocket." 3.000 to cover the breadwinner and add $50.000 + $50.50 125.25 64..00 82.000 more on the breadwinner for each child. IF YOU HAVE A SPOUSE.000 50.50 41. Example Amount Age30 25. 4.. NEVER BUY A LIFE INSURANCE POLICY ON CHILDREN.00 Never buy a separate policy for the spouse.000 First Yr.BUYADEQUATECOVERAGE Buy enough insurance coverage to really protect your family.000 500. Or.. $100. For example: For a family with two children. 10 or 15 years) to make sure you are getting a good buy .BUY THE RIGHT LIFE INSURANCE 29 RULES FOR BUYING LIFE INSURANCE 1. many companies have jumped on the bandwagon recently. A good rule of thumb is to start with $100.300 per yearfor 20 years assuming that the insurance proceeds earn 10% with annual compounding and that income is payable in monthly installment ). Shop for the best insurance buy. BUT NOT AS A SEPARATE POLICY. A policy to insure against the death of your spouse can be bought very inexpensively as a rider on your policy. Premium 20.. YOU NEED TO BUY INSURANCE ON THE SPOUSE ALSO.000 to $5. offering cheap term for 1 or 2 years. 2.000 100. .000 + $50. then only enough for burial coverage ($2.000 equals $200. I recommend no insurance on children or if you feel you must. BUY ONLY LOW COST TERM INSURANCE .000).00 Yrs.00 645.000 of life insurance would give survivors an annual income of $22.

The same principle applies with your life insurance policy. option to purchase additional insurance. old services.) 7. Many new. If you're holding on to an old. Credit life is nothing more than a very expensive form of decreasing term insurance.000 worth of term insurance at age 30. Don't have a separate mortgage policy.or several different policies on anyone person . old cars. aves you $100 each year. Example: Six policies per family. Don't buy mortgage insurance. The same is true for insurance on short term debts. You are not usually obligated to buy it when you purchase a car or other major item. We do it every day in every area of our lives. time a $20 policy fee for each policy.to-date ones is a fact of life. ($100 could buy you roughly $100. IF YOU CAN FIND A NEW INSURANCE POLICY THAT IS BETTER FOR YOU AND YOUR FAMILY. 6. The base policy on the breadwinner should be increased to add the proper amount of coverage for the home. child riders and other unnecessary gimmicks. outdated product that costs more for less protection than the newer policies. usually around'$10-$25. Mortgage insurance is nothing but life insurance. innovative insurance products have been developed in the last few years. times $20. you would be foolish not to replace it with something more beneficial to you and your family If it's better. buy it! . HAVE ONLY ONE INSURANCE POLICY PER FAMILY Most life insurance policies you buy have a policy fee and administrative charges. equal $120 per year.you are losing money. with a possible exception being waiver of premium benefit. and your children . u p. If you have a policy on yourself. We replace old clothing. BUY IT. your spouse.30 BUY THE RIGHT LIFE INSURANCE 5. Buying ONE policyperfamily. Replacing old. ou tda ted iterns with newer. Avoid "credit life" policies of any kind. STAY AWAY FROM FANCY "OPTIONS" Don't load up your policy with accidential death. Buy only death protection on the breadwinner. old appliances.

and wish to replace your old policy or policies with a new one. with smaller face amounts. • If you have more than one policy. consider these points: WHY SHOULD YOU REPLACE OLD POLICIES? In my opinion. • With a whole life policy. but not both. • If you borrow the cash values from your policy. • Inflation has made many older policies. competitive term insurance policies on the market. perhaps at a cheaper rate. • You have a good competitive term policy now and your old policy is cheaper than a new policy. you receive either your cash values (if you live) or the face amount of your policy (if you die). The most important are: • You're in bad health and uninsurable. 8% or more. you can combine all your insurance protection in one comprehensive policy. • If you have traditional cash value insurance. • You can SAVE MONEY currently with one of the new. • You don't need life insurance. you're receiving a poor return on your cash values. totally inadequate by today's standards.BUY THE RIGHT LIFE INSURANCE 31 When deciding whether to replace a present policy with a newer one. WHEN NOT TO REPLACE YOUR OLD POLICIES?? There are some good reasons not to replace your present insurance policies. you must pay 5%. here are some guidelines . HOW DO YOU REPLACE OLD POLICIES??? If you do find a better insurance buy. because the cost of insurance goes down when mortality is low. • Most families need more insurance but can't afford another policy. you should consider replacing an old policy or policies for the following reasons: • People are living longer. • The dividends you receive aren't really dividends. most new insurance policies are cheaper than policies purchased several years ago.

A. b fore you decide on a company consider these features: a. i a pretty safe choic . try to obtain th mo t f ature for the low t po ibl co t.av rage th annual premium ostforlOto15yearstodeterminethe "real" average premium payment. Imentionedb for . Some companies offer an extr mely low first-y ar rate. b. It pay to hop ar undo You'll b amaz d at how much rat can vary betw en compani for the arne cov rag and prot ction. but what your premium will be throughout the life of the policy. STEP 2 .32 BUY THE RIGHT LIFE INSURANCE you need to follow: STEP 1 . STEP 3 . a company with a commitment to the term in urance concept. then dra tically increase the co t in future ear. not subject to uncontrollable increases at a future date. If you cbange your mind up to 20 days after you receive the policy. These rules should help you get the maximum return on your insurance dollar. STEP 4 . . not only the beginning monthly pr mium. WHICH LIFE INSURANCE COMPANY SHOULD YOU USE? Any r putable "I gal re er e" life in urance company. The rate of pr mium hould be guaranteed. most states require the company to refund all your money.Buy ONLY from a licensed agent. D s the company offer guaranteed rate? A k if the premium rates of the policy are guaranteed. The final factor in your decision is choosing an insurance company that can serve your family's needs. Don't consider ONLY the first-year rate.Many state insurance departments require the agent to take your policies and a complete detailed comparison statement. Mak ur that you clearly under tand.make an application with the new company. Consider them carefully when planning an insurance purchase or evaluating your present plan. How r.After carefully reviewing the comparison statement and determining that you can get more for your money . d. h . If you don't qualify you get your money back. Naturally. regardles of size. I RECOMMEND that you require the agent to complete this comparison even if his state does not have the comparison requirement.Don't ever drop your old policy until your new policy is issued and received by you.

think only the wealthy can benefit Every American who pays taxes and is eligible should have an IRA or Keough plan.MINIMIZE TAXES WITH AN IRA 33 MINIMIZE TAXES WITHANlRA Problem: Solution: Most Americans from tax shelters.You take $2. (Individual Retirern nl Account) D IRS (Internal Revenue D Serv ice) Choose One of the Above You ave $500 in taxes IMMEDIATELY by starting an IRA! . The problem is that people do not understand the basic rules of the Tax Game! Once you understand bow taxes are calculated and how to reduce or delay taxation . Long term . PRINCIPLE #6 Every wage earner in America today has a tax problem. I believe that everyone who pays taxes should earmark the first $2000 of their long-range investment plan each year for an Individual Retirement Account.You defer tax on the contributions to the IRA until you begin withdrawing fund during retirement. And the more you earn. to contribute to an Individual Retirement Account. Recent tax legislation has made it possible for everyone who earns money and is younger than 701h years old. The IRA then gi e you two di tinct advantage : Every wage carrier has a tax problem. taxes have climbed to an alarming rate. and. and po sibly tax rate as well.you can overcome this problem. Let's take a closer look at the immediate short-term advantage of an IRA investment versus a non-IRA investment.because it's not what you earn that counts . In the last three decades. the more you pay! Taxes are an important item to consider .it's what you keep. IRA Short term .possibly even eliminate it .000 (per pou e) "off the top" of gro income at tax lime thus decrea ing taxable income.

. t in any after-tax program until you fir t hav an Em rg n y Fund.047 $1.971 $ 38. a 12% yield in the 25% tax bracket would be the after tax rate of 9%..801 $164. *These values are subject to applicable taxes upon distribution.973 40% I 50% $1.437 You can clearly see that the higher the tax bracket.400 8.()()() 6% $ 13. t Rate = 12(Yo (annual) Values/end of year" 10 = 20 = 30 = 40 = $ 39..406 $ 72.840 $ 83.603 $185. conlribute the maximum amount allow d to your Individual R tir ment Account ach ar.285. Because the person in example two is in the 25% tax bracket.942 $ 53.34 MINIMIZE TAXES WITH AN IRA However. Example Deposit Inter #1 IRAl3 Example #1 Because Individual Retirement Accounts are funded with Pre-Tax dollars. .055 $436.285 Examples #2-5 Non-IRA Inve tments (based on 12% yield) ~ Personal Tax Bracket After-tax Annual Deposit After-tax Rate Accrued Values End of: Year 10 Year 20 Year 30 Year 40 25% $1. and th n .646 $222. Examples two through five illustrate the adverse effects on money accumulation in a non-IRA investment. I firmly believe that no one should ever invest in any after-tax program until he first has an emergency fund. a 25-year-old depositing into an IRA for 40 years could accumulate $1.975 $270. and then has maximized his Individual Retirement Account for each year. Rememb r.718.718. the smaller the amount of money that works for you! Now you see why I strongly recommend the use of an Individual Retirement Account. Also.leaving only $1500 to be deposited.397 540.000/yeat-. As shown.902 $125.426 ~ $ 24.4% $ 22.992 $ 83.2% $ 17.862 $552.585 1.000 being invested . the advantages don't stop here! The following graphs illustrate further the benefits of investing money in an Individual Retirement Account. don't inv . $500 will already have been deducted for taxes .500 9% 30% $1.200 7.437 -amazing!!! = $2. example #1 shows a total contribution of $2.assuming an interest rate of 12% (annually) for various periods of time.309 161.After 40 years the accumulation would be drastically reduced to $552.

" You must learn to "Bypass the Middleman. rather than a savings account. Many people have failed financially because they didn't understand the basic concept of "avoiding the middleman. But here's what happens. You deposit the money in the bank. BECOME AN OWNER. You must become an "owner. what you are purchasing with that kind of "guarantee" is something you hadn't counted on . The bank receives high rates of interest on its investment and is happy to pay you a low 5 1/2% for the use of your money.' Here's how it works.6% interest. credit unions and insurance companies when saving money is concerned. Suppose you invest money at your local bank in the form of a savings account. and.stay clear of banks. savings and loans. NOT A LOANER As a general rule . who PRINCIPLE #7 Solution: Eliminate the middleman and invest your money the same as the middleman does.at no extra cost . in return." not a "loaner. Most people believe that this is a very "safe" investment. After you invest your money in the bank. but gain the profit for yourself. receive 5 112 . if you want to make your money work for you. what you really have is a "loaning" account. You are lending money to the bank and they are making a hefty profit off your money. the bank in turn loans that money out or invests it directly into the American economy. You have no choice but to reverse the situation. You see.A GUARANTEED LOSS! Are you earning a guaranteed loss? L .BYPASS THE MIDDLEMAN 35 BYPASS THE MIDDLEMAN Problem: Most people loan their money to a middleman invests the money and takes much of the profit." Your Investment Dollars *The middlemen average 12 to 17"10 profit after paying Interest Guaranteed Loss? Even though you may feel comfortable with the fact that investments in banks and savings and loans are "guaranteed" against loss by the FDIC.

You will like it . by shifting some money around we were able to save $9.000 at 6% in your local savings and loan. We were able to show the couple above that their loan could be "pre-paid" in 22 years and 6 months if they pay a $600 lump sum in June 1983 and make an additional principal payment of only $50 each month. You simply pay the loan off early by making additional principal payments each month or lump sums of cash at various times.126!!! Can the bank do that? They sure can.you can't afford a loss! Payoff your mortgage early! You can't afford a loss! . How can this be? Because most of each payment in the early years goes for interest not principal.I think it's one of the greatest investments you can make. say inflation is 7 1/2% LOOK AGAIN . unless you become an owner . $52.437 immediately. after five years of payments the principal will be reduced by only $2.. You see. You have "earned a loss" in purchasing power of $330! $600 180 $420 750 $330 What you have been guaranteed by the lending institution is a loss of purchasing power. You earn interest for the year But.130. Their payments are $714. Over the life of the loan. Can you beat it? Yes. But it doesn't really hit you until you see it in black and white. your net earnings are But. have you ever really analyzed how the "financing" works? I recently looked at an individual case where a couple had purchased a home in June 1980 for $75. The $600 down would eliminate "14" payments .36 BYPASS THE MIDDLEMAN Think about it: You invest $10.you lose! And in today's tough economic times .50 would be saved in interest! It's a concept you should look into.the banks will notl!' You know the ravages of taxes and inflation in all areas of life. For example.25 per month for principal and interest.000 at 11%for 30 years.. Home Mortgages Owning a home is a major investment .in other words. In fact. When buying a home. you must use the services of a middleman. We all experience it. because the interest rate you are receiving can't keep up with taxes and inflation. but there are ways that you can minimize the cost of being a "loaner" in this situation. you pay taxes on that interest (301}f) So. over the life of the loan.267. by using a concept called MORTGAGE ACCELERATION. the "owners" will pay back $257.

you could earn no interest. or even lose a part of your principal. your return will probably be low (5-7%).) investments. But many high-return vehicles in the marketplace have extremely good records of return on investment. there are many ways to invest: stocks. When you get into the area of more "sophisticated" investment. At the very worst. you possibly need professional investment management.Ioanership" and why I say that in order to stay ahead you must invest directly into the American economy. CDs (certificates of deposit). your return may be as high as 12% or possibly even more. real estate. with little or no loss of investor funds. bonds. etc. The element of risk is always present in any investment which holds the possibility for higher gains. and someone will try to sell it to you. Rule No. They simply don't have the time or investment expertise to go it alone in this area. There are no guarantees. Rule No. you may need some advice and direction in order to make good investment choices. bank savings accounts. Unless you have extensive knowledge in the stock market. Be careful. If you want to maximize your return on investment. PRINCIPLE #8 Solution: Utilize a concept of investment that provides professional money management for average Americans. real estate).1 If your investment goes into "loanership" (cash values. You can earn more if you own. know how to analyze which stocks are "good" and which are "bad. . annuities. Oh. Also. Maximize your return. bonds. You name it. there are some basic rules you must consider.2 If your investment dollars go into "ownership" investments (stocks. I'm sure you see now why I preach "ownership vs.INVEST WITH PROFESSIONAL MANAGEMENT 37 INVEST WITH PROFESSIONAL MANAGEMENT Problem: Most people need some help with their "big" investment decisions." have the time to spend on the phone with your broker or if your temperament wouldn't allow you to lose if the stock market took a down turn. you have to accept some risk.

3) Money Available Your investment is readily marketable. Each is designed to fulfill a specific need. always read the prospectus thoroughly to make sure you understand all the details of the fund's philosophy and operations. Some people are more comfortable with a conservative investment. normally available only to the wealthy. Here's basically why I recommend mutual funds. When considering a mutual fund. For these reasons. The chart at the top of the next page shows you the types of investments you can make. The fund is required to buy back your shares at any time. they are required by law to put your check in the mail for the current value of your shares within seven calendar days. depending on whether you want to be conservative or aggressive. By owning many different stocks and bonds. choose growth-oriented investments. Others choose to accept greater risks in hopes of maximizing their return. the mutual fund's portfolio is well diversified. The sales charge you'll pay when you first invest is a small price for the security of having professionals make the investment decisions. Whatever your attitude and objectives are. and whether your goal is short-term returns or long-term growth possibilities. there is a mutual fund that's best for you. 4) Variety of Objectives The investment that's right for you depends on your attitudes and objectives. However. . When you buy shares in a mutual fund. Others. Decide on your objectives. Some people want income now. you enjoy several advantages. There are many types of investments. They provide the following: 1) Professional Management A mutual fund is a company which invests the money of its shareholders. Most are appropriate for only specific types of investors. Probably the most important advantage is professional" management. who want income later. Upon proper request. 2) Diversification Secondly. Because thousands of its shareholders have chosen to pool their money in a given mutual fund. There are many different types of mutual funds. the mutual fund can reduce the impact of one poor selection. the fund can easily diversify its investments among the stocks and bonds of many companies. I recommend for "Middle America" an investment concept called MUTUAL FUNDS. mutual funds can match nearly everyone's attitudes and objectives.38 INVEST WITH PROFESSIONAL MANAGEMENT Consider mutual funds.

total mutual fund sales for the first five months in 1983 amounted to $18. Suffice it to say . IS This figure already exceeds the total annual sales for 1982 ($15.. According to the "Wiesen berger Investment Companies Service Management Results" report of March 1983. mutual funds in general have done quite well over the last decade. But there are some other. . 1983. the average Maximum Capital Gain mutual fund appreciated 229.4 billion.I'm glad I had a portion of my investment dollars in mutual funds during that period. According to the Investment Company Institute in Washington. Obviously. D. and nearly doubles the 1981 total of $9. elements that can playa big part in your financial success or failure.l4 This is not to say that mutual funds will do as well In the future . Butremembera mutual fund isa long term investment. That's the reason for an emergency fund. Mutual funds have a record of success. others agree.INVEST WITH PROFESSIONAL MANAGEMENT 39 Limited Partnerships Common Stocks Mutual Funds Preferred Stocks Rental Properties And finally.C.4% for the 10 1/4 year period ending March 31. Don't start one and then stop when something else "looks good" or a minor emergency comes up. more intangible. By now you should have a pretty clear idea of what you can do to reach your goal of financial freedom.7 billion).76 billion.remember there are no guarantees.

121 has actually grown slightly to $91. but you get the idea. Hopefully.000) but your original $91. could use the investment that you started with just $100 to educate children. $100 a month x 20 years = $91.714 D. it's essential that you begin your plan as soon as possible. and so forth. Let me give you an example: Suppose you start with nothing . If you continue to save $100 each month for 30 more years. You could withdraw $10. for generations.121 B. your original college = $91. emergencies.000 a year for 8 years for college expenses $91. and start a tradition that you can pass on for generations to come. the $91 714 would grow to over $3.like I did. The sooner you begin to apply them. you would have $91.714 on a 12% return. the sooner you can begin to build a lasting TRADITION of financial independence that can continue for generations. the idea of building a "GENERATION TO GENERATION INVESTMENT" is one of the most exciting financial planning concepts. teach them toyour family. If you want to build financial freedom.000 every six months) to send your two children to college for 8 years ($80. relieve you and your . You can see how buying now and saving consistently can accumulate funds that prepare you for retirement.000. you may never reach financial freedom for you and your family. Meanwhile.000 $10. A.000 a year ($5. The principles we've talked about so far will put you on the right track. Your children and their children continue saving $100 each month (after estate tax considerations). minus withdrawals = for C. Begin today to apply the fundamentals. Begin a Generation-toGeneration Investment To me. At 12% in 20 years.121. Withdraw $80. Then your family.000. You begin by saving $100 a month. you would be able to put away more than $100 a month.121.40 START A FAMILY TRADITION PRINCIPLE #9 START A FAMILY TRADITION Problem: Solution: If you don't start now. retirement. and continue to pass it on to the next generation.

I believe that you can help develop a winning attitude in your children. If you constantly criticize and "tear down" their efforts. a little thing like this can go a long way in helping to build a positive attitude. Share financial goals with the whole family. I reminded them that they could do anything they wanted . your children's attitude will be positive. or raking leaves is the perfect way to start a savings ethic. they'll become discouraged and frustrated. It's important to remember that your attitude is all-important. Gifts of money from relatives and grandparents are an excellent way to begin your children's savings program. and respond to their efforts with encouragement and praise. As soon as children are old enough to understand. You'll find it's much easier when you have to say "no" if your children understand the family's financial picture. and is the only person knowledgeable about the family's financial standing. Secondly. Your attitude is all-important. BE AN EXAMPLE OF GOOD FINANCIAL PLANNING. . Never be guilty of this. I believe that one of the greatest things you can do for your children is to teach them the principles of financial planning.that nothing was impossible. your children will take pride in it Be a good example. save a quarter. Often. If you support and praise savings efforts. The same principle works in building financial attitudes. From the time they were little. This is particularly important when your children are in their teen years. What you say and do in your life is what your children will learn. and still provide a CORNERSTONE upon which your children can continue to build. The family money is a concern of the entire family. and if you establish the savings habit when your children are young. The best part of starting your financial plan early is the opportunity you'll have to pass on a TRADITION of good financial planning. You can do this effectively by keeping a few simple guidelines in mind: 41 1. You'll be amazed how repetition of simple adages like "If you make 50~. whenever they said "I can't. I used to employ a light-hearted form of "punishment" with my own kids.START A FAMILY TRADITION children of the worry of major expenses. While they were doing them. the breadwinner handles all financial matters. encouraging children to save money earned from part-time work like mowing lawns. A fringe benefit is the feeling of belonging and uni ted effort that they'll get if they have some input into the family's plans. 2. As they get older. Too often. If you accent the importance of a good attitude. Talk openly about financial matters. Old habits die hard. include them in discussions of your financial plans. ENCOURAGE YOUR FAMILY TO SAVE." can make a lasting impression over the years." I made them do three push-ups. it's important to reinforce what you say with action. like a college education. chances are they'll carry it into their adult lives.

but it can be done in a basic way. Teach children to invest wisely. about the growth of your savings accounts. and with enthusiasm. don't worry. That experience taught him more about wise buying and investing time and effort to achieve a return than any economics lesson. and so will your family . He drove it for two years. (This also allows you to supervise spending and help your children make wise decisions. In our own lives. the children will learn that saving money is a matter of pride and accomplishment. Our son's first car was a 1958 Chevy that he bought. Just a few dollars a month will serve as the foundation for financial independence you want to achie e. help teach the principles of wise investment. and the principles of time and consistency will help. and I hope you'll give them a try with yours. if the children are a part of them. rather than designating a certain amount that they could spend. to build your generation to generation investment. Just begin as soon as you can. If you want to involve your family. but are starting out with nothing. all the knowledge in the world about what it takes to make money work for you doesn't mean anything unless you act. A Note on Allowances: My wife and I have never believed in giving allowances to our children. INSTILL AN "EYE" FOR INVESTMENT. . painted and fixed up. It may sound funny to talk about teaching investment to children. We felt that the traditional allowance is given for "spending" and we wanted the children to learn how to save. You'll be glad you did. We prefer to give money as the need arises.42 START A FAMILY TRADITION as well. Start your program for financial independence today.) 3. These simple ideas have worked well with my children. and that future generations of your family will benefit from your efforts today.from GENERATION TO GENERATION. we bought and sold four houses before buying our "dream house. If you teach the principles of good financial planning. you can be secure in the knowledge that the GENERATION TO GENERATION INVESTMENT that you've begun will continue. Remember. then sold it at a handsome profit. If you talk openly. not spend." Those actions.

happy. your expectations. If you accept being poor. Why? Because it's a fact of life that people live up to their own expectations of themselves. life will give you hardships and heartaches. if you think you can or you think you can't. You receive in the end what you expected during the journey. and in all other areas of your life. believe me. In your financial planning efforts. it will happen. FOR THINGS TO IMPROVE. The kind of success you'll have throughout your life depends on your outlook. . excited. YOU MUST EXPECT TO SUCCEED. It all depends on your attitude. happy and successful. enthusiastic. Learn to see yourself as financially independent. Learn to see yourself as free. confident attitude about life. Your expectations are more important than what anyone else thinks about you. life will make you poor. YOU MUST IMPROVE. Life will give you whatever you demand. your "will to win" will be an important factor. and I'm passing them on to you in the hope that they give you "food for thought" about your own attitudes. The things I've learned about winning have made a difference in my life. Solution: PRINCIPLE #10 Over the years. I believe that your life will turn out exactly as you allow it to. .DEVELOP A WINNING ATTITUDE 43 DEVELOP A WINNING ATTITUDE Problem: Most people have the attitude that things won't work out. If you accept living with financial hardship. Before you can have any meaningful success. you must develop an attitude or expectation of success. life will deliver that. life wiJI make you average and ordinary. Basically. Most people are unwilling to put off until tomorrow things they can't Expect success. Develop a positive. LIFE WILL GIVE YOU WHATEVER YOU WILL ACCEPT. I've developed a few theories about what it takes to be a winner in life. sacrifice and work for. If you will accept being average and ordinary. If you accept being unhappy. you're right. that bad things will happen. If you're convinced it will happen. too. Expect to succeed.

Think And Grow Rich. EXCUSES ARE THE EASY WAY OUT. " Excuses don't count. It worked for me and it will work for you. " "People like me don't have a chance. I decided on my specific goal. Everyone can begin today to follow a plan that will lead to financial independence. I've found that there s one common denominator among successful people. There's a "common denominator" to success. "I don" have any money." Hill spent his adult life studying uccessful people. They all pos ess "a winning attitude.700 a year as Athletic Director and Head Football Coach." They have the ability to tay motivated to achieve their goals. no matter what happens along the way. too. Can you li 'e with being average and ordinary? If not you will be ucce ful. written by Napoleon nut. After reading Think and Grow Rich. Step #1· YOU MUST HAVE A SPECIFIC GOAL. a plan all the egreat men used to become financially independent." 'I can't change after all these years.Iw. earching for that single characteri tic that made all of them successful.44 DEVELOP WINNING ATTITUDE really afford today. I began to practice thi formula. I'll do it tomorrow. You can do it! YOU MUST DEVELOP A WINNING ATTITUDE IN ALL AREAS. " HI don't have time.~ One thing that really helped me start winning financially was a fantastic book . I wanted an income of $30. . I was earning $10.000 a year guaranteed for life. Hill came up with a formula. After days of thinking and worrying. Everyone has the ability to begin right now to "take control" of his life. Everyone has a con enient excu e not to act.t: two A few people can stay motivated for two or ut a winner will stay motivated for as takes to win . The greatest definition of A WINNER I've ever seen goes like this: Mest people can stay motivated fo. Mo t people are heavily in debt because their desire are tronger than their will to win.

Step #5 . Step #6 .YOU MUST DEVELOP A PLAN TO ACHIEVE YOUR GOAL.YOU MUST DECIDE WHAT KIND OF PRICE YOU ARE WILLING TO PAY. I was still $200.000 plus.000 a year for life.000 for 10 years and invest $1.000 per month for 10 years.000 short. and it worked for me and my family. guidelin will help you reach your goal . the $40.) I figured that if I accumulated $300. wrote down my goal and placed it on my daily calendar. Follow Napol on Hill' formula and giv your If an xtra " dge."There is no free lunch.000: $1.YOU MUST HAVE A SPECIFIC TIME TO ACHIEVE YOUR GOAL.YOU MUST THINK ABOUT REACHING YOUR GOAL EVERYDAY.DEVELOP A WINNING ATTITUDE 45 Step #2 .000 and I had only figured out how to get $100. That was a tough decision but it was what I wanted todo. Saving $1.YOU MUST WRITE IT DOWN. But I needed $300. but I wanted my plan to be easy to understand. (I cut out a piece of cardboard. Are you willing to pay the price? . There was not one day that I didn't think about how great it was going to be to be totally financially independent. I now had my final plan. that was what it would take .000 by investing the $40. (Actually.000.000 could go on forever.000 casu. but if I knew that I wanted to be totally financially independent in 10 years. Your goal must be specific and you must write it down as a commitment. Those dreams made me keep trying when I wanted to quit. I could withdraw $30." You need to tay moti ated to uc eed. Invest my $40.) Step #4 .000 would equal $30. 1would be financially independent by AGE 38.000 I had saved. Step #3 .000 a month wa tough for me. and following th .000 in my 2 1/2 years of working part-time. This $30. I was 28 years old and I decided I would work and sacrifice for 10 years to achieve my goal." I decided my price would be to give up coaching to work full-time helping people to build financial security. $300.000 a month for 10 years to get the additional $200. = $100.000 each year and never touch my principal. I figured that at 10%interest I would have to save $1.000.000 would grow to more than $100. I had saved $40. and received 10% interest. If I committed my $40000 for 10 years and could get 10%interest. my savings would be = $40 000 x 10% x 10 yrs.OOO/mo at 10% interest= $200.

I would have been willing to pay a price 10 times greater. If I had known how GREAT it would be. You can be happy or sad." Victory will go to those fortunate few who possess and carry with them the spirit of a winner! I hope." you've got to become a "DREAMER" again. because if you have that quality. I dreamed every day for years about how great it could feel to be financially independent. bad world. They are really "turned on" about life and about becoming somebody that they'll be proud of .. but you know what I found out? Being financially independent was 100 TIMES GREATER than I dreamed it would be. No one can tell you how truly great it is being financially free unless he is there himself. I have helped you dream again. "It was worth it. how can you develop it? If you want to be "A WINNER.. Developing a winning attitude may be the most important thing you accomplish in your lifetime. you have a choice. I believe you must become a dreamer again.life has dealt me a bad hand!" To win in life. Remember. A winning attitude is not for sale." One of the things I love about the United States and the free enterprise system is that you can become what you dream about. Most people in America have stopped dreaming. You can change! You can make it better for you and your family if you want to badly enough! I believe a winning attitude is everything. You can become what you dream about. . then they are thrown out in the "big. Those dreams kept me going when times were tough. Do it right .46 DEVELOP A WINNING ATTITUDE BECOME A DREAMER AGAIN If you don't feel you have a winning attitude. in some small way. You can't go to college and receive a degree in it.and do it now. You aren't born with a winning attitude. confident and turned on about life. everything else you want can be accomplished. These once en th usiastic people go in to a shell. I also hope I have provided you with a plan and the necessary motivation to become totally financially independent. They begin to develop an attitude that "life has passed me by . but who doesn't rook back and say. Your attitude is "the difference. GOOD LUCK! Prepare for financial success today. I don't know anyone who has become financially independent who hasn't paid a big price. You must be excited. It must be developed and earned through hard work." and companies and people start taking advantage of them. You can be financially free or always worried about money. You can be someone you are proud of or someone who's average and ordinary. They grow up with everyone telling them how special they are.

Begin your journey to happiness and total financial independence today. .di cipline and a winning attitude. And you'll reach your goals much sooner than you expected. Take along education . BUT TOUGH PEOPLE DO My wish for you and your family is financial freedom and the ecurity to enjoy all the great things life has to offer. But you and you alone control your own destiny.47 TOUGH TIMES DON'T LAST.

p. Think and Grow Rich © 1967. p. .. Company Institute. p. That should help you decide where to invest. DC. DC. Treasury Decision. 9 Federal Trade Commission. Number 1743. Plus. the amount withdrawn must be included in your gross income for that year and a substantial interest penalty is required for early withdrawal from any time deposit (such as bank or IRA deposits). Dutton. 1. The policies shown represent a cross-section of insurance products available in the marketplace. 1-3. Paraphrased and reprinted by permission of the publisher. DC). If your IRA is set up in a mutual fund. 12 A. Chart from Venita Van Caspel's Money Dynamics for the 1980's.P. 2 U. 1980 Census of Population and Housing (Washington. 3-B. May 1983. 5 Ibid. December 29.S. 13 If you make a withdrawal from your IRA prior to age 59th. Best's Flitcraft Compend (Oldwick. you will incur a 10%tax penalty on the amount withdrawn. Bureau of Consumer Protection (Washington. 11 U. Some policies shown are more popular than others. Inc. 1982). Portions were obtained from the 1982 Best's Flitcraft Compend and Diamond Life Bulletin Policy Statistics. Table B.S. 1979). 4 U. 1982 Survey of Mutual Trends in Mutual Funds 1982 Life Insurance Fact Book (Washington.1979). only the 10%IRS penalty applies. NJ. 3 American Council of Life Insurance. July 9. Best Company. p. (1982 edition. 1983 (Washington. January 1983. 431). Census Bureau. 17-59. press release dated June 23.S. Research Department. pp. 16 Napoleon Hill. Census Bureau. Research Department. 1980 Census of Population and Housing (Washington. 10 Life Insurance Cost Disclosure: A Staff Report for the Federal Trade Commission. 6 Investment Company Institute Funds Shareholders. 15 Investment DC).48 ENDNOTES Endnotes 1 Bureau of Economic Analysis. 1966. pp. plus current taxation.36. 1983). Results (New York.1983. p. p. March 1983). 8 Segments of this information were obtained directly from leading insurance companies within the industry. 14 Weisenburger Investment Companies Service Management NY. 194-198. E. DC. pp.M. 7 Investment Company Institute Activity. pp. as quoted in USA Today. 3. 1937 by The Napoleon Hill Foundation. DC). 1. 20 and 40. FTC News (Washington.

Inc. 1982. Arthur. l'U.1979. 1983. Bureau of Economic Analysis. American Council of Life Insurance 1~82. Department of Commerce. DC. Napoleon. Scott.S. Inc. FTC News.P. Wa hington. Hill. Washington DC Department of Commerce. Federal Trade Commission.BIBLIOGRA-PHY 49 Bibliography 1982 Life Insurance Fact Book. 1981. of the Census 1982. Investment Company Research Department. DC. Dutton. Reynolds. 1960. Milton. G. Washington. fnstitute 1982 Survey of Mutual Funds Shareholders. Citadel Press. Weisenberger Invest- . Best's Flitcraft Compend. Best Company. Life Insurance Cost Di closure: A Staff Report to the Federal Trade Commission. David McKay and Company. U. July 1975. March 1983. NY. A.July 9. New York NY. Oldwick. How Your Life Insurance Policies Rob You. New York. Bureau of Consumer Protection.. 1982.M. DC. E. Washington. DC. United States Department 1980 Census of Population and Housing. Think and Grow Rich. Washington. Weisenberger Investment Companies Service Management Results. ment Companies.. The Mortality Merchants. 1968. Secaucus. NJ.

It' not a matter of complicated maneu ering and doe n't involve huge urn of capita!. a Art William lik to call it. He wa introduced to the fundamentals of financial planning in the mid t of a uc e ful career as a football coach in Columbus. he achieved hi own per onal goal: h tart d hi own company. He aved money. William.Manywould ay that's thebe tway. William continued to u e the ound financial principle he had appli d to hi p r onallife in the operation of hi bu ine s.Hi goal in Common ensei to hare these principle in th hope of helping oth r to achie e th freedom of financial ind pendence. Art William doesn't c nsider him If a financial" xp rt.by trial and rr r. The principles in Common Sen ear level or pa t financial exp rience. A friend expo ed him to the philo ophy of "buy term and in e t the difference. He studied. " From thi fir t expo ure William entered the financial world in the only way he knew . Most signifi antly.he began working part-time in the insurance and ecurities field. Once you ve read Common en • there' noexcu e for not achieving financial independ nce. both individual and corporate. Williarns. . the hard way . FINANCI L FREEDOM. regard Ie of age. he followed the concept he learned. doing bu ines in 49 tate. down-to-earth plan for building a trong financial foundation. Arthur L. But it al ooff r that important ingredient. in hi own word. The mo t amazing thing that William di covered on hi p ronal path to financial ucce wa thatthe key lement for building financial indep ndence are astoni hingly imple. one of the fastestgrowing marketing organizations in Am rica today. has come from modest beginnings in 1977 to a company with billion of dollar in bu ine in force. Chairman of the Board Chief Ex cutive Officer The A. Common ' n e off r a olid. came into th financial planning ar na through the back door. income William I arned about financial management.L. He didn't study finance in choo!. HOPE . He didn't inherit a r lative' bu ine .Arthur L.. i a multi-millionaire. Eventually. Anyonecan follow them ea ily. Williams. A. Jr. " omeone who mad it. Georgia. Theformula he learned for "taking charge" of hi own financial future work d. In hi own busine s.Jr. Williams. Jr. he read and he talked to e eryone he met who might have any knowledge and experti e in insurance and related financial topic." He i .hope thatthe average per on can r ach hi or her financial goal. he took part-time job to earn more. Hi company." someone who want to har ith you what he learned along the way. Today. imple.L. Or. William Corporation ABOUT THE AUTHOR Arthur L. he inve ted where he could with hi' available fund.

DEVELOP A WINNING ATTITUDE START A FAMILY TRADITION INVEST WITH PROFESSIONAL MANAGEMENT THE MIDDLEMAN BYPASS MINIMIZE TAXES WITH AN IRA LIFE INSURANCE BUY THE RIGHT ESTABLISH AN EMERGENCY FUND USE TIME AND CONSISTENCY PAY YOURSELF FIRST GET STARTED NOW .

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