In episode 59, we're not directly discussing the finer points of cash value life insurance. Just thought I'd get that out of the way in the spirit of full disclosure.
No, we're adding another episode to our Soapbox Series. It actually comes on the heels of a private discussion Brandon and I were having about using leverage to “juice” your returns.
Every now and then, one of us will stumble upon a blog post, magazine article, or something of that sort that makes our skin crawl a little bit. To us, “financial advice” that seeks to demonstrate the merits of using leverage aka “other people's money” (OPM) is pretty high on the list of things that sound like a good idea but rarely work in practice.
On the other hand, the carnage left behind in failed experiments using leverage is a much longer list.
Yes, we understand the math.
Yes, we know it should work.
Yes, your logic is almost perfect.
Except it seems there's most often an “x” factor. Some variable that flies in from parts unknown that ruins your perfectly balanced equation.
Take a look at the picture toward the beginning of this post, it is the perfect example…it looked good in the picture, I had all the right instructions, so what went wrong?
Well, I was way out of my depth. I discounted the fact that the person who constructed and baked this cake likely has years of experience. They certainly gave me clear instructions but there are probably hundreds of little things that they just do without thinking based on their past experience. These little adjustments weren't intentionally omitted.
However, those little adjustments when compounded make the difference between the picture on the top and what my result would be if I attempted this cake (the one on the bottom). Glorious success or complete failure.
To hear more specifics of our discussion, listen to the full episode.
Brantley is a practicing life insurance agent and has been for nearly 18 years. After years of trying to sell like his sales managers wanted him to, he discovered that people want to buy life insurance if you actually explain the benefits.