IF I OFFERED YOU TWO CHOICES
(A) Getting a 15% rate of return on some investment (a cheery notion) -or-
(B) Getting every dollar back on every car you, your spouse & your kids will drive
for the next 30+ years, but you earn 4% on the money…
…which would you choose?
I hope your answer is either (B) or “that’s not enough info” or “that depends”. Here’s why.
We Americans have apparently been smitten with the prospect of “rate of return”
or “ROR” or “IRR” (internal rate of return) as far back as we learned how to count.
But there is more to managing your finances that merely swinging for the fences.
IF YOU CHOSE (A)
1. You must assume that the 15% option must necessarily bring with it some degree of risk, possibly catastrophic risk of loss of principal.
2. You didn’t put a dollar amount into the 15% deal, so we could have been talking about a meaningless transaction
(All I gave you was the premise of that attractive rate and your heart started pounding … come on, you know it’s true)
3. You didn’t consider the tax implications – was it 15% gross, before all taxes? – which would be more like 9% net – still decent, but not stellar.
4. You didn’t think about how long that hypothetical 15% would be earned – was it a portion of one year? – which would make it sound
like the teaser rates offered by some traditional banks on CD’s, all sizzle, no steak.
5. You didn’t consider your own tendency to take out the money as soon as you made it, which kills the so-called compounding of dollars.
6. You didn’t think about your own spotty history of putting the money in / taking it out, never really giving it TIME to grow.
7. You were not given any information about the track record or integrity of the offering entity.
You get the picture.
IF YOU CHOSE (B)
1. You could be getting all your money back on something you can actually measure: your car payments; the purchase price of the car;
the length of time you will all be driving; the number of kids in your family; the cost of insurance, sales tax, registration, etc,
( Yes, I added these last 3 items as a bonus, but if you’re going to dream, dream BIG ! )
2. We’re talking about a concrete example of an expense you already have, not something you’d have to find new money to pay for.
3. Since I’ve already done the math on my own set of facts, I can tell you this number is usually 7 figures, so you would potentially be adding
$ 1.0 million or more to your bottom line net worth, at a time when it just could be important to your retirement security.
The truth is, there is a growing number of people like you, clients, advisors, professionals, business owners, across the country,
people who have proven for themselves that this is not an impossibility, but is very doable, very real, very practical, very sound…
… and who are already practicing this in their own lives.
More to come on Privatized Banking. Contact me if you’d like to learn more.
Joe Pantozzi CLU, Chartered Financial Consultant
Alpha & Omega Financial Services, Inc.
Common Sense Economics since 1976
For where your treasure is, there will your heart be also. Mt. 6:21
Securities products and investment advisory services offered through registered representatives/investment advisor associates of Ameritas Investment Corp (AIC) member FINRA/SIPC.
AIC is not affiliated with Alpha & Omega Financial Services Inc.