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One of the biggest mistakes I
frequently see investors make is needlessly losing control of their
money. Any time you pay a hefty commission or face surrender
penalties in order to get YOUR money you lose control. Losing
control severely limits access to YOUR money and limits your
flexibility to make changes. This can trap you in an
under-performing investment adding years to the time needed to reach
your goals.
Whose money is it? Is it your broker’s, banker’s or insurance
agent’s? No, of course not. It’s YOUR money. Don’t believe the lie
that says you have to pay a big commission or face years of onerous
surrender charges to get an advisor’s help when you invest. It’s
simply not true. Can you imagine your doctor or dentist asking you
to pay them for 10 years worth of service up front? Then a
professional advisor shouldn’t ask you to, either.
Sharon is a real-life example. Sharon became a widow a few years ago
after her husband died of Lou Gehrig’s disease. Her advisor put
almost 90% of her money into variable annuities. Now her money is
locked up for 10 years! If she wants or needs more than a small
portion of that money she will have to pay a penalty that starts at
9%! That’s tens of thousands of dollars in surrender penalties.
Whose money is it? It’s her money, but now she can’t get at it!
Think about all of the reasons Sharon may want or need her money
over the next 10 years. Her health could deteriorate and she might
need nursing home or home health care. Maybe she decides to move to
a different part of the country to be closer to her grandchildren.
Or she could decide that she wants to buy a second home at her
favorite vacation spot.
Her investment objective could change. Maybe she doesn’t feel
comfortable with her money fluctuating and wants to put her money in
a CD at the bank. Her income or her tax situation could change so
that she no longer needs that kind of investment. But it really
doesn’t matter, because now she can’t get more than a small portion
of her money for the next 10 years unless she pays thousands and
thousands of dollars in penalties!
Notice in all of these situations that Sharon is the one who gets
stuck paying the penalty. Not the broker or agent that sold it to
her and definitely not the insurance company. It makes you wonder
who benefits most from these transactions. It obviously isn’t
Sharon!
None of us knows what tomorrow holds. So it’s important to maintain
the flexibility to access YOUR money! Thousands upon thousands of
investors have seen the value of their investments drop
substantially and because they are in a similar situation to Sharon,
they have only limited flexibility to make adjustments to their
portfolio.
Brokers would have you believe that the whole market is down and
there isn’t anything you can do. That’s not true. For instance,
certain Real Estate Investment Trusts have provided an attractive
level of income without facing the wild fluctuations of the stock
market. Portions of the bond market have enjoyed double digit gains
in 2002.
Besides, there’s no need to pay a big commission or have long
surrender penalties. My clients don’t. They pay me a small ongoing
fee instead. They get professional advice and access to investments
they can’t otherwise get but they keep control. They can access
their money whenever they want without surrender penalties. We can
quickly adapt and adjust their portfolio based on market conditions
and changes in their situation.
Learn from Sharon’s mistake. Don’t let yourself be talked into an
investment with a hefty commission or a long period of surrender
penalties. Don’t put all of your eggs in just one kind of investment
basket regardless of how safe it is or how many features it has. And
seek the advice of an experienced, professional advisor who gets
paid by fees instead of commissions.
It’s YOUR money. Don’t let anyone talk you into losing control of
it.
Tell me about your story and get your financial questions answered
by calling 1-877-827-1463 or submit your question to
www.guardingyourwealth.com/askjeff.htm. I
want to hear from you!
Mr. Voudrie is a Certified Financial Planner and President of Legacy
Planning Group, Inc., a Private Wealth Management Firm in Johnson
City, TN. www.guardingyourwealth.com.
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