Monday, September 27, 2010

The Real Cost of That Guarantee

Just imagine that you had $10,000.00 to invest right now. Where would you invest it? Let’s say that you found a great deal at the bank – a CD with a guaranteed 5% annual rate of return. That sounds like a great deal, doesn’t it? Now, just for fun, let’s figure out how much you would make if you decided to take the bank up on their guarantee for one year:
  • First let’s multiply the $10,000.000 by the guaranteed 5% rate and this gives you your one year profit of $500.00. Not too shabby.
  • Next let’s multiply your one year profit of $500.00 by 25% (the amount of taxes you will need to pay to pull out this profit) that results in $125.00. Subtract the taxes paid from the first year’s profit ($500.00 - $125.00) and you still have a $375.00 profit. Still, not that bad.
  • Finally, let’s take inflation into account. With 4% inflation, your original $10,000.00 is worth $400.00 less now than last year. So, let’s subtract the loss in buying power due to inflation from the profit that was adjusted for taxes ($375.00 - $400.00). Your final profit -$25.00! What happened?
What happened here is what happens to a lot of intelligent people – they don’t take into account all of the factors, such as taxes and inflation – because they were never taught how to. And I think this is very important for everyone to know! The real cost of the guarantee, in this case, would be a loss of $25.00 worth of buying power! So, it turns out that it was a great deal after all … for the bank!

Important Note: Typically, whenever a financial institution is willing to “Guarantee” you a rate of return, it will be a guaranteed loss to you, when you take into account “Taxes” and “Inflation”. Next time you are enticed to take that guarantee, try out this little exercise to figure out if it is going to benefit you … or just the bank. Don’t forget about the taxes and inflation!

I like the way The Motley Fool puts it: “Over time, of course, the market has historically been the best place to park your money. [T]he so-called 'safest' investment vehicle – putting your money in an interest-bearing bank account, or in a money-market account – is in a very real sense the most guaranteed losing proposition of them all (short of stuffing your savings under your mattress, and watching it eaten away either by mice or by the sharp teeth of gnawing inflation).

Why is this? Because if you’re getting, say, a guaranteed 5% a year, then you are missing out on the average 10.6% that an index fund, like one that tracks the performance of the S&P 500, would have been gaining for you. It’s true that you’re protected from losing your principal if you take the bank account-conservative route – but you’re also 'protected' from any major long-term investment returns.”


I'm so excited to share this information with you. If you have enjoyed the information or feel that it would benefit someone else, please share it. If you have any questions or comments, please feel free to contact me.

Tuesday, September 21, 2010

Stay Focused on Your Core Genius
Written by Jack Canfield

I believe you have inside of you a core genius... some one thing that you love to do, and do so well, that you hardly feel like doing anything else. It’s effortless for you and a whole lot of fun. And if you could make money doing it, you’d make it your lifetime’s work.

In most cases, your Core Genius is directly tied to your passions and life-purpose.

Successful people believe this, too. That's why they put their core genius first. They focus on it—and delegate everything else to other people on their team.

For me, my core genius lies in the area of teaching, training, coaching and motivating. Another core genius is writing and compiling books. Over my 35 year career, I have written, co-authored, compiled and edited more than 150 books, and I love to do it! I do it well, and people report that they get great value from it.

Compare that to the other people in the world who go through life doing everything, even those tasks they’re bad at or that could be done more cheaply, better, and faster by someone else.

They simply can’t find the time to focus on their core genius because they fail to delegate even the most menial of tasks.

When you delegate the grunt work—the things you hate doing or those tasks that are so painful, you end up putting them off—you get to concentrate on what you love to do. You free up your time so that you can be more productive. And you get to enjoy life more.

So why is delegating routine tasks and unwanted projects so difficult for most people?

Surprisingly, most people are afraid of looking wasteful or being judged as being above everyone else. They are afraid to give up control or reluctant to spend the money to pay for help. Deep down, most people simply don't want to let go.

Others (potentially you) have simply fallen into the habit of doing everything themselves. "It's too time-consuming to explain it to someone," you say. "I can do it more quickly and better myself anyway." But can you?

Delegate Completely!

If you’re a professional earning $75 per hour and you pay a neighborhood kid $10 an hour to cut the grass, you save the effort of doing it yourself on the weekend and gain one extra hour when you could profit by $65. Of course, while one hour does’t seem like much, multiply that by 52 weekends a year and you discover you’Ave gained 52 hours a year at $65 per hour —or an extra $3,380 in potential earnings.

Similarly, if you’re a real estate agent, you need to list houses, gather information for the multiple listings, attend open houses, do showings, put keys in lock boxes, write offers and make appointments. And, if you’re lucky, you eventually get to close a deal.

But let’s say that you’re the best closer in the area.

Why would you want to waste your time writing listings, doing lead generation, placing lock boxes, and making videos of the property when you could have a staff of colleagues and assistants doing all that, thus freeing you up to do more closing? Instead of doing just one deal a week, you could be doing three deals because you had delegated what you’re less good at.

One of the strategies I use and teach is complete delegation. It simply means that you delegate a task once and completely - rather than delegating it each time it needs to be done.

When my niece came to stay with us one year while she attended the local community college, we made a complete delegation - the grocery shopping. We told her she could have unlimited use of our van if she would buy the groceries every week. We provided her with a list of staples that we always want in the house (eggs, butter, milk, ketchup, and so on), and her job was to check every week and replace anything that was running low.

In addition, my wife planned meals and let her know which items she wanted for the main courses (fish, chicken, broccoli, avocados, and so on). The task was delegated once and saved us hundreds of hours that year that could be devoted to writing, exercise, family time, and recreation.

Most entrepreneurs spend less than 30% of their time focusing on their core genius and unique abilities.

In fact, by the time they've launched a business, it often seems entrepreneurs are doing everything but the one thing they went into business for in the first place.

Many salespeople, for example, spend more time on account administration than they do on the phone or in the field making sales, when they could hire a part-time administrator (or share the cost with another salesperson) to do this time-consuming detail work. In most cases, in a fraction of the time it would take them and at a fraction of the cost.

Most female executives spend too much time running their household, when they could easily and inexpensively delegate this task to a cleaning service or part-time mother's helper, freeing them to focus on their career or spend more quality time with their family.

Don't let this be your fate!

Identify your core genius, then delegate completely to free up more time to focus on what you love to do.

I believe that you can trade, barter, pay for and find volunteer help to do almost everything you don't want to do, leaving you to do what you are best at - and which will ultimately make you the most money and bring you the most happiness.

Jack Canfield, America's #1 Success Coach, is founder of the billion-dollar book brand Chicken Soup for the Soul©Inspirational Books)© and a leading authority on Peak Performance and Life Success. If you're ready to jump-start your life, make more money, and have more fun and joy in all that you do, get FREE success tips from Jack Canfield now at: www.FreeSuccessStrategies.com/.

Monday, September 13, 2010

Are You Confusing Motivation with Inspiration?

Lance Secretan, the author of Inspire! What Great Leaders Do has been studying great leaders like Gandhi, Buddha, Mother Theresa, Nelson Mandela, Martin Luther King Jr. and Confucius for over 30 years of his life. Many people have come up to him over the years and asked, “What about Hitler or Stalin or Mussolini? They were great leaders too!” Well, that didn’t really sit well with Lance, so, he decided to take all of his years of research and come up with his own definition of great leadership. Here’s how his definition goes:

Great Leadership is a serving relationship with others that inspires their growth and makes the world a better place.

So, Lance breaks down his definition of great leadership into 3 parts. The first part being that Great Leadership is a serving relationship. There is a great quote by Frank Warren that goes like this: “If you want to be a leader you will be very frustrated; for very few people wish to be lead. If you aim to be a servant, you will never be frustrated.” The secret here, Lance says, is servant leadership! The second part of Lance’s definition is that Great Leadership should inspire growth in people. And finally, the third part of his definition is that Great Leadership should make the world a better place. And it is by this definition; Hitler would not be considered a great leader!

Lance mentions in his book that we haven’t really learned that much about leadership in the past 100 years. Most of what we know and teach about leadership still comes from the behavioral scientists like Pavlov and BF Skinner and others – the philosophy of using the punishment and reward system as motivation. We are motivated to do well at work to get that promotion or award or that nice corner office. We are also motivated that if we don’t do well at work we could get demoted, not get that bonus check, lose our budget or even get fired.

Lance believes that we need to move away from this old-school motivational way of leadership and into a newer-school inspirational way of leadership. But first there must be some clarification, because Lance feels that “we have been confusing motivation with inspiration”. The dictionary tells us that to motivate is to provide a motive; to induce, incite, impel. Inspiration, on the other hand, comes from the Latin word spirare – meaning spirit, to infuse with an encouraging or exulting influence, to animate, stimulation by divinity, a divine influence upon human beings, to give life, the breath of God. By definition, you can see that the two words do not mean the same thing; much less should they be used interchangeably in a sentence. Lance even goes further, by mentioning in his book, that as the words relate to leadership, these two words are polar opposites.

Motivation is something we “do” to someone; inspiration is something that is the result of a soulful relationship. Anyone who has had the privilege of working with a great mentor in their lives probably knows and appreciates the difference. The mentor is not in it for themselves; they are offering a gift to you, an act of love and service. Their generosity of spirit and their gift of learning is not only what inspires you, but what inspires the mentor as well. Motivation comes more from a place of self-concern – “I want to change your behavior with a reward or incentive, so that, if you meet the targets or goals I set for you, I will meet my own needs and goals.” When we motivate, we serve ourselves first; when we inspire, we serve others first. Motivation is about me and fear where inspiration is about you and love.

Let’s all take a page out of Lance’s book Inspire! What Great Leaders Do and start moving away from motivation and more towards inspiration – not just where leadership is concerned but with all aspects of our life. By working together, serving one another and inspiring each other to grow, we can make the world a better place!

I'm so excited to share this information with you. If you have enjoyed the information or feel that it would benefit someone else, please share it. If you have any questions or comments, please feel free to contact me.

Tuesday, September 7, 2010

When Success is Slow, What Can You Do?
Written by Jack Canfield

Pop Quiz: Can success be sped up? Is there an antidote to slow outcomes despite arduous planning and actions taken? What's the secret for seeing huge results right now?!

I get versions of these questions frequently from people who feel frustrated at sluggish progress in their success journey - despite all the know-how and principles they rigorously employ.

Let's get one thing straight...

When we admire someone's success, or even our own, we often focus on the end result and not so much on the effort (and time) that it took to get there. This can cultivate unrealistic expectations, especially the idea that overnight success can happen through careful strategy and an execution of sound advice.

The truth be told, success typically follows a series of little events and achievements that can seem to take an eternity, that include a few disappointments along the way, and that challenge everything about you to the core - your stamina, courage, integrity, and even your willingness to keep going.

If you focus on what's not working, guess what: You're likely coming from a place of aggravation as your mind wraps around all that is wrong.

You may even have negative thoughts like "I'm not good enough," "It will never work," or "Something must be wrong with me."

What this mentally does is engender more of these counter-productive feelings. And given what we know about the Law of Attraction, you attract what you are feeling. So negative experiences, people, and results will beget more negative experience, people, and results. There's not much success in that.

The key is to focus on what IS working.

To do so, I recommend two simple practices: journaling and meditation.

Maintaining a journal (I call it an Evidence Log, Results Journal, or Gratitude Journal) is a great way to steer your attention to the positive and continually renew your vision for yourself.

Start each day with reflections on what you are grateful for in your life (list them out!) and end each day with notes on what went right (again, write them down), however small they may seem.

Spend time each day in quiet contemplation, prayer or meditation.

Meditation can be a powerful tool for arriving at solutions to problems and shifting your attitude so you can attract success sooner rather than later. The magic of meditation is its ability to essentially shut down the outer layer of your judgmental, highly-critical brain and allow your unconscious mind to take over. This is where you enter a deeper state of inner peace and joy, tapping into a higher level of creativity that will help usher in the results you want. (Don't know how to meditate? Lots of books and materials are available to guide you through this practice. It's easier than you think.)

Let's say you're doing ALL these things, but you still aren't happy with your results...

I'll ask you then, are you taking real ACTION?

You may be taking the actions you are used to taking. But if you keep doing what you've already done, then you'll keep getting what you've always gotten. It's a matter of practicing some new behaviors. Shake things up a bit and see if you can take new actions or modify existing ones.

Remember the Rule of 5.

Every day do five specific things that take you toward your goal. Change up the five actions regularly and be open to feedback so you know when you're off course.

Lastly, I want to remind you about patience.

It's natural to underestimate how long a certain goal can take, especially a profound one. When I set a goal to become a millionaire, the year was 1983. How long did it take? Eleven years. It took time for Chicken Soup for the Soul to hit the bestseller lists. You could say our tenure on the New York Times list was more than a decade in the making. That's a lot of patience for someone who initially wanted overnight success.

So, yes, patience is a virtue. But keep at it, and in no time, you'll be only one week, or one day away from your ultimate success.

Remember... be GRATEFUL, reflect on what IS working and continue to take ACTION!
* * *
Are you "stuck" in this area?
For more on speeding up your success, I highly recommend picking up a copy of
The Success Principles 30-Day Audio Course.
* * *


Jack Canfield, America's #1 Success Coach, is founder of the billion-dollar book brand Chicken Soup for the Soul©Inspirational Books)© and a leading authority on Peak Performance and Life Success. If you're ready to jump-start your life, make more money, and have more fun and joy in all that you do, get FREE success tips from Jack Canfield now at: www.FreeSuccessStrategies.com/.

Wednesday, September 1, 2010

Part 3 of 3: The Stretch IRA – A Summary

Also read:
The Stretch IRA is a concept -- an example of how an IRA could possibly be stretched across multiple generations. And in the first two parts of this three part series I demonstrated just one way an IRA could be stretched, but by using two different investment vehicles – the Traditional IRA and the Roth IRA. In both Parts 1 and 2, the income that was generated and stretched across the generations was all made possible from just a $250,000.00 investment that was accumulated by the age of 70. Just to demonstrate how possible it is to accumulate $250,000.00 by the age of 70, here are 10 examples:
  • 1. Invest $91.00 per month for 45 years working at 6% starting at age 25.
  • 2. Invest $48.00 per month for 45 years working at 8% starting at age 25.
  • 3. Invest $24.00 per month for 45 years working at 10% starting at age 25.
  • 4. Invest $12.00 per month for 45 years working at 12% starting at age 25.
  • 5. Invest $1,646.00 one-time working at 8% at age 7.
  • 6. Invest $471.00 one-time working at 10% at age 7.
  • 7. Invest $135.00 one-time working at 12% at age 7.
  • 8. Invest $1,020.00 one-time working at 8% at age 1.
  • 9. Invest $260.00 one-time working at 10% at age 1.
  • 10. Invest $67.00 one-time working at 12% at age 1.
There are so many different ways accomplish this task, however, the trick is to teach these important money concepts and to inspire your other family members to continue this “family tradition” going forward and to in turn inspire their family members and so on and so on. There is nothing really stopping the beneficiary from taking their inheritance in one big lump sum as opposed to stretching it forward, so this has to be inspired, taught, understood and agreed upon by all of the people involved for it to work properly. By teaching the family members the powerful compounding effect of money over time by just choosing to take only the Required Minimum Distribution (RMD), the money can still have a chance to grow while you are making your withdrawals, thus spreading this money much further.

I want to share with you one more real extreme example of how an IRA could be theoretically stretched over 156 years and over four generations: A father named John started a family tradition by opening a Roth IRA for his son Billy at age 7. When Billy was age 27, he had his first son named Bobby. Billy immediately made Bobby the beneficiary of the IRA. Twenty-seven years later Bobby has his own son named Ben. Now Billy changes the beneficiary from Bobby to Ben. Twenty-six years later Ben has a son named Barry. Billy, at age 80, changes the beneficiary from Ben to Barry. Seven years later Billy dies at the ripe old age of 87. Barry, the beneficiary, is now only seven years old and has an IRS life expectancy factor of 76 years. So, Barry will now be forced to start withdrawing at least the Required Minimum Distribution (RMD) for the next 69 years, until the account is emptied. So, in this example the money lasts 156 years.

Now that was an extreme example, but in that example only the beneficiary would get changed to the youngest member of the family, so that money is only going to go so far. To make things really extreme, just imagine if each of the fathers were inspired to also do what John did by continuing the tradition of also starting a new Roth IRA for each of their own children at age 7 and teaching them to change the beneficiary to the newest member of the family and have them inspire the same concept to their children down the line. Theoretically that money would never end.

So, you can see that there are many different ways to possibly stretch an IRA and hopefully by now you understand the concept. In these uncertain economic times that we live in, you really need to be able to think outside of the box to be able to plan for your future, as well as for the future of your family. You not only need to have a plan, but also a backup plan in case things don’t work out the way you wanted them to. So, you need to know all of your options and have as many tricks up your sleeves as possible. This all starts with educating yourself and in turn passing your knowledge forward. Children are our future and should learn these important money concepts as early in life as possible. I hope you have learned something by reading this three part series and my wish is that you get a chance to share some of this information with someone else.

I'm so excited to share this information with you. If you have enjoyed the information or feel that it would benefit someone else, please share it. If you have any questions or comments, please feel free to contact me.