Are You being sold down the river in reits, annuities and dividend-paying stocks?

In August of 2000, a stockbroker from a major bank tried to hard sell me into stocks and funds that he said were diversified and trading for a good price. Here’s what his plan looked like. 

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If I had invested in his plan, I would have lost everything. Dial-up connections destroyed Dot Coms. Enron went belly-up. Japanese stocks imploded. The telecommunications industry went bankrupt when long distant rates fell from 45 cents a minute to 10.
 
Most of these problems were easy to see. However, with pundits blathering on about a “New Economy,” far too many fell for the sales pitch and ignored their own wisdom. I didn’t know that the broker/salesman had a conflict of interest and was just selling me those funds to make his own mortgage payment. However, I was adamant that I wasn’t going to invest my hard-earned money until I was presented with a plan that I had confidence in.
 
My money stayed in an FDIC-insured Certificate of Deposit, earning 4.5% interest. Cash was the top-performing asset in 2000. The NASDAQ lost 78% of its value between March of 2000 and October of 2002.
 
In August of 2001, I invested in a few companies that I believed strongly in (after much research), which were trading at rock bottom prices. I cashed out in December of 2001 – just three months after 911 – having almost tripled my money. That experience, and all of the research that I did to create it, formed the foundation of the simple pie chart system that I developed.
 
It worked great in the Dot Com Recession, but how did the system perform in the Great Recession? Listen to Nilo Bolden describing how it worked for her.
 
This rather simple system has worked in two of the worst recessions the U.S. has seen since the Great Depression. Buy and Hold has investors on a Wall Street rollercoaster. You can’t afford to lose more than half of your money every eight years. It takes a decade to crawl back to even (even if the markets rebound). One million becomes $450,000. With an annualized gain of 10%, or $45,000, you have to wait 12 years to get back where you started. The Nest Egg Pie Charts earn gains in recessions and outperform the bull markets in between.
 
The Nest Egg Pie Chart Strategy

1. Deposit 10% of your income into tax-protected retirement accounts, including 401ks, IRAs, health savings accounts, college funds, etc.
2. Keep a percentage equal to your age safe.
3. Overweight safe at market high. Overweight into stocks at market lows.
4. Get hot.
5. Avoid the bailouts and vulnerable industries.
6. Diversify into 10 funds.
7. Rebalance once a year to capture your gains, redistribute your assets, examine your selections and determine what’s hot and safe in the year ahead.

 
So, why isn’t this system taught in school and sold at brokerages? It isn’t as profitable for the broker/salesman as putting all of your dough into funds. Buy and Hold hasn’t worked since 2000, but it is still standard in the industry because it’s the only way that a broker/salesman can manage 600 or more clients. The Department of Labor advises that $19 billion is lost every year due to a conflict of interest in the financial services industry. (Credit card loans are another problem for another blog.)
 
And here’s additional important information on the time-proven Nest Egg Pie Chart Strategy.

1. When you deposit 10% of your income into tax-protected retirement accounts (including 401ks, IRAs, health savings accounts, college funds, etc.), you stop making the taxman and the health insurance company rich at your own expense. You keep more of your dough for yourself and provide far better for your future.
2. Keep a percentage equal to your age safe. As you get older, you can’t afford to have your principal at risk. In today’s world, bonds are vulnerable. (Remember the lessons of GM, American Airlines, Greece, Detroit, MF Global and more.) Rethinking what’s safe is imperative. Hard assets hold their value better than paper assets in a high debt world. Most people can save thousands of dollars every year in their annual budget with smarter energy, investing and budgeting choices.
3. Overweight safe at market highs. Overweight into stocks at market lows. 2017 marks the 9th year of the current bull market. The last two times the market went that long without a correction, the economy crashed. Investors lost 55% in the Great Recession and 78% in the Dot Com Recession. 2003 and 2009 were stellar years for gains – particularly for the NASDAQ Composite Index.
4. Get hot. What’s hot changes every year, which is yet another reason to rebalance annually. In 2007, clean energy was the hottest industry with gains of more than 60%. Investors who purchased homes in 2009 saw the value double. The hottest return in 2017 is to find creative ways to get rid of your utility and gasoline bill, while the energy efficiency tax credits are still available.
5. Avoid the bailouts and vulnerable industries. In 2004, I predicted Google would be one of the greatest IPOs of all time. A year later, I gave General Motors an F. In 2007, the signs were there that Europe was in trouble. In 2008, three years after I warned to get out of Blue Chips, 20% of the Dow Jones Industrial Average went bankrupt or was bailed out. All of these predictions were easy to see, with the Stock Report Card, the Four Questions and the Theory of Economic Evolution. These tools are outlined in my books and taught at my Investor Educational Retreats.
6. Diversify into 10 funds. You don’t need 18 pages of stocks and funds to be diversified. In fact, if you have that chances are you are getting killed in fees and are not very diversified at all. You want small, medium and large caps, value and growth, and four hot industries/countries.
7. Rebalance once a year to capture your gains and redistribute your assets. This simple strategy helps you to capture gains at the highs, buy in at the lows and always keep enough safe.

 
Over the years, we’ve identified many great hot industries that have sparked amazing returns. Between 2009 and 2011, gold miners tripled. We removed gold miners at the highs in 2011. Australia, Chile and Latin America soared in the wake of the Great Recession. The NASDAQ doubled the Dow – so we listed NASDAQ as a hot in 2011.
 
Safe, income producing hard assets that you purchase for a good price are the best “safe” investment in today’s astronomically high debt world. Paper assets of all kinds are vulnerable to inflation, credit risk and currency moves. FDIC-insured cash is better than bonds as an interim move. However, BREXIT repriced the British pound and the euro overnight. If you wait for the headline, you’ll be late.

Are You Beng Sold Down the River in Your Annuity, REIT, Dividend-Paying Stock?
Annuities and insurance plans are offered by banks, brokerages and insurance companies that would be out of business if they hadn’t been bailed out eight years ago. There is no guarantee on these products. Most banks, brokerages and insurance companies have only a fraction of the capital to make good on their promises, and owe multiples more than their value. Annuities often have fees and complicated rules (with no guarantee). Everyone I know who is over the age of 60 has either lost their insurance policy or is now paying 4X the premiums for 1/4 of the coverage. Over the decades, if you'd saved and invested that money yourself, you'd have tens, if not hundreds, of thousands of dollars.

Greek bonds, Detroit bonds, automaker bonds, airline bonds, etc. are not just a fluke. They are the result of high debt and borrowing from Peter to pay Paul. U.S. public debt is $20 trillion, with total U.S. debt ringing up to an eye-popping $63+ trillion. Many blue chips owe more than they are worth. Many dividend-paying REITs have been cash-negative for years. The higher the dividend the higher the risk.

Sadly, there will always be a great pitch that costs you an arm and a leg. In 2000, it was the New Economy. In 2008, that bailing out the banks, insurance companies and brokerages would save the world. Meanwhile, 7 million Americans lost their homes, while over six million are still underwater. Today, unsuspecting retirees are being sold into high-risk REITs as a safe, income-producing investment, without being warned that the higher the dividend, the higher the risk. I examined the REITs sold to one 80-year-old woman. All had been cash negative for more than 3 years.
 
The only solution to the conflict of interest that is inherent in the financial services industry is wisdom – The ABCs of Money that we all should have received in high school.
 
If you want to make sure that you are:

• Safe and protected from another downturn,
• Considering great income-producing hard assets that are on sale now through 2017 (only),
• Earning money while you sleep
• Saving thousands of dollars every year with smarter energy, investing and budgeting choices
• Getting hot,
• Investing in products and companies you believe in,
• Avoiding the polluters and predators, and
• Sacking the bailouts,

 
Then join me at my Valentine’s Investor Educational Retreat. Click on the flyer below to learn more. Call 310-430-2397 with your questions and to register now, while there is still availability. (Only a handful of seats are still available.) You receive the best price when you register by December 15, 2016.
 
Two Free Gifts
Get your own Thrive Budget and sample nest egg pie charts at the links below.
 
The Thrive Budget
http://old.nataliepace.com/pie/thrive.php
 
Nest Egg Pie Charts
http://old.nataliepace.com/pie/pie.php
 
 

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