Financial Freedom Bootcamp 2014 : Part 2
Plus, an update for precious metals investors
Build a “Moat” Before You Construct Your Financial ‘Castle’
Last week I covered Level One of our Five Levels of Financial Freedom. Level One is all about building an emergency reserve and creating a charitable giving plan. You can listen to last week’s show and read all the show notes here.
Today, I will cover Level Two. Level Two is all about protection. Back in the old days when a man would set out to build a castle, what would he do at the outset of the endeavor? He would build a moat before he began building the castle. Why? In order to protect everything he was building. It is the same with your financial plan today. You do not want to build up a large fortune just to have it stripped away due to an accident and a shrewd attorney. This is why Level Two is the most important level in your journey to financial freedom.
Here is a brief overview of Level Two and its components:
If your car were to be stolen, would you want a check for just the amount that you need to get by, or a check for the full replacement value of the car? If your home were to suddenly burn to the ground, would you want the insurance company to send you a check to rebuild half of your old house? Or would you want a check for the full replacement cost of the house?
It is obvious that most of us would prefer to receive full replacement value on our assets, income, and lives, if disaster were to suddenly strike. Yet, this is where most people get it wrong today on insurance. Instead of buying the kind of insurance coverage that they would really and truly want, they focus solely on “premium costs” and not “replacement value.” Why? Because most people fear being over-insured and paying too much for something they may never use than they do in being underinsured and at risk.
The truth is that most people are woefully underinsured or improperly insured today.
What is your greatest asset?
Many people respond to this question with the following answers:
- My home
- My automobile
- My business
And the list goes on…
While all of things listed above are important, the truth is, your greatest asset is your ability to earn income.
Think about it for a minute. Let’s say that you are 35 years old and you currently earn $50,000 per year. If you are like most people, you are hoping to retire around age 65. Therefore, over the next 30 years, your earning potential is at least $1,500,000.00. (30 working years X $50,000 per year)
The most obvious way that your income earning potential could be disrupted is through a short-term or long-term disability. But in addition to examining your disability insurance in this step, you also want to examine your health insurance and long-term care insurance before moving on to the final step in Level Two.
Not all life insurance policies are the same. There are basically two ways to acquire life insurance, similar to the two ways you can go about getting a home: rent or own. When you rent your life insurance, you purchase what is known as term-life insurance. The second way to obtain life insurance is the own it. When you own your life insurance, you purchase what is known as cash-value life insurance. The features of a cash-value policy include a death benefit payout upon the policyholder’s death, cash value accumulation during the policyholder’s lifetime, and a tax-sheltered investment in which the interest and earnings are not taxable.
If you do not have a will, the state in which you live has one for you. Also, if you were to become incapacitated and unable to make decisions for yourself, who would take care of your affairs? Who would make medical decisions for you? To make sure you get to make all the decisions regarding your affairs, make sure you have the following documents in place if necessary for your situation:
- Durable Power of Attorney for Finances
- Health Care Proxy
- Living Will
Further, for some individuals and families, a trust will make sense to consider before moving on to Level Three.
Tom Cloud – Precious Metals Advisor
Tom Cloud joins us for the latest in the gold and silver markets and shares some of the fundamental and technical factors that are affecting prices right now. What can investors expect in the coming weeks? Listen for the full report.
Precious Metals Investing 101 – Free Educational Resources
Next, Jennifer Robinson is here to update our FTM Insiders on Trigger Trading activity for the past week. We sold three positions, were stopped out of one stock (for a profit!), currently have three stocks in play (including GDX up 3.32% and HAR up 5.17%), and are awaiting the trigger price on six stocks.
Recent Trigger Trade Performance
|Ticker||Buy Date||Buy Price||Sell Date||Sell Price||Days Held||Profit/Loss %|
Jay Peroni – Certified Financial Planner
One company is leading the way when it comes to energy efficiency. It is one of the world’s leading providers of lighting solutions for both indoor and outdoor applications. Its innovative lighting solutions cover both conventional fixtures and advanced solid-state technology that can seamlessly integrate with powerful digital controls and day-lighting to create greater energy efficiencies and a higher quality of light. Today, Jay Peroni discusses the company Acuity Brands (NYSE: AYI). Read/Print the entire stock analysis here.
BOTTOM LINE: Acuity Brands (NYSE: AYI) is a good buy up to $140 per share. My 12 month price target is $183, representing a 40% potential gain from here.
Disclaimer: Investing involves risk. Always do your own due diligence and consult a trusted financial professional before making any investing or financial decisions. Jay Peroni is a Certified Financial Planner and is part of our Christian Financial Advisor Network. FTMDaily is affiliated with Jay Peroni and Faith Based Investor, LLC.
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DISCLAIMER: The above trading ideas are from my own personal stock watchlist and are for educational and informational purposes only. They are NOT specific buy recommendations. Trading stocks is risky and you could lose all of your money. Trade at your own risk. Jerry Robinson is not an investment advisor. You should always consult a trusted financial services professional before making any financial or investment decisions. READ FULL DISCLAIMER.