When a 5.75% Return is Better than an 8% Return

It’s not uncommon to hear an investment salesperson or financial guru looking to chum the waters for a possible comment section debate make a statement like “whole life insurance/universal life insurance is a bad investment because the rate of return is terrible.”

Though we’ve addressed this statement a few times on the Insurance Pro Blog, I wanted to distill the point many people miss into as simple a notion as possible. Also, I want to have a conversation about total return or total benefit you get from committing dollars to a specific cause.

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Same Stock Market, Two Different Decades

We know the stock market is volatile and we know that stock market losses happen. Traditional advice is that losses can be recouped with time so any investor whose stomach twists into knots when he or she opens a 401(k) statement need not worry if he or she can wait out the correction.

For the most part, there is nothing wrong with this advice, but what happens when one doesn’t have time to wait out the correction?

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136 Financial Pro Cast: And the Best way to Approach this Market is…

Remember, information contained within the Financial Pro Cast and these show notes is intended for entertainment purposes only. Before acting on any topics discussed within this episode one should consult the advice of their tax, legal, and/or investment advisor

The market has been making a comeback after reaching new highs a few weeks ago and tumbling. Does this mean we can ignore the worry signs and dive in full throttle?

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112 Dave Ramsey 12 Percent Magic

12 Percent Magic

For a number of years Dave Ramsey's 12 percent assumed rate of return has been a mainstay of the radio hosts's case for the average American to invest in the stock market.  He believe that this strategy yields the best path to prosperity.

Many have taken Dave's suggestion at face value while others–like us–raise an eyebrow at this seemingly outlandish suggestion.

You can get a 12 percent rate of return by investing in the stock market? Hmmm….I guess but it sort of depends on what stocks you are investing in exactly.

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The Dow Jones Industrial Average: 8% per Year?

The Dow Jones Industrial Average

While there is no doubting the last couple of years have been really great years for the stock market (if you think of it in terms of the growth over the year, rather than growth from many years past), but we’d like to take a moment and think of things a tad longer term.

But keeping with our traditional habit of raining on parades, we wanted to take a moment to point out that not all that glitters is necessarily gold. We’ve talked before about where the Dow Jones Industrial Average would need to be in order to have achieved an 8% per year rate of return since 2000, and figured it was about time that we updated those numbers.

The answer:

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Can we Please Stop Pretending that Market Corrections are Unusual and Rare?

Can we Please Stop Pretending that Market Corrections are Unusual and Rare

Stock Market Corrections are a fact of life in a our economy. There are several theories that seek to explain this phenomenon, and I personally like to think it’s a result of our warped implementation of market economics, but what do I know?

Lately certain members of the press have been buzzing a bit about the stock market and whether or not it’s headed for a decline. Will 2014 be the year to kiss your post 2008 gains good bye?


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Stock Ownership Hit’s New Low According to Gallup

Stock DeclineEarlier this month, Gallup released data it collects concerning stock ownership in the United States. The data show that stock ownership among Americans is at its lowest point since Gallup began tracking the data in 1998 with just 52% of American’s surveyed claiming to either directly or indirectly own stock in a public company.

Historical data from Gallup shows us that American stock ownership peaked around 2007 at 65% reporting direct or indirect ownership in stocks, and this percentage has been on a consistent decline since. Not surprisingly the sharpest declines in ownership took place during throughout 2008, but somewhat counter-intuitively—or at least that’s what some experts would have you believe, the trend continued in the same direction despite what has become a pretty good market rally since the 2008 fallout.

Is this a sign that it’s time to get back in?

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