Do you enjoy watching Netflix? What if you could get paid to do it?
With over 232 million subscribers worldwide, Netflix is one of the most popular streaming services available.
And the good news is, you can make money while watching your favorite shows and movies.
In this article, we will explore various ways to get paid to watch Netflix.
From full-time jobs to side hustles, we will cover everything you need to know to monetize your love for streaming. Plus, we’ll discuss other sites that pay you for watching videos and how you can turn your passion for films into a source of income. So, if you’ve been dreaming of getting paid to watch TV, keep reading to find out how you can make it a reality.
How To Get Paid To Watch Netflix
1. Build a Movie Review Blog
If you love watching movies and TV shows, you can start a movie review blog or YouTube channel. You can share your opinions on the latest shows and movies, hidden gems, and more. You can make money through affiliate links to movies and related products, display ads, and sponsorships. To get started, you need a laptop, internet connection, and a strong opinion about what you’re reviewing. You can learn how to start a blog and make money from it with a free course.
2. Start a Career in the Movie Industry
If you want to learn how to get paid to watch Netflix, consider starting a career in the movie industry. There are many jobs available, including makeup artists, animators, production assistants, casting assistants, screenwriters, creative analysts, actors, camera persons, costume designers, video editors, and technicians. You may need a degree or training for some of these jobs, and you’ll need a resume and/or portfolio to get started. You can also work on a smaller scale with online video editing.
3. Closed Captioning for Movies and TV Shows
If you are fluent in multiple languages and have a good ear for detail, you can become a closed captioner for Netflix. Closed captioning is a crucial service for non-native speakers and people with hearing difficulties. Netflix hires freelancers for closed captioning jobs, and you can check their preferred vendor list to find companies that are hiring for this position. You can also learn more about how to become a transcriptionist from home and earn $15+ an hour.
4. Voice Over Actor
You can get paid as a voice over actor for Netflix shows and movies. Voice over actors provide narration for documentaries, dubbing, and animated movies and TV shows. You can learn more about how to become a voice over actor and how much money you can make with a beginner’s job.
5. Netflix Tagger
As a Netflix Tagger, you watch Netflix shows and movies and add tags and categories to them to categorize them. The tags may include the genre, mood, cast members, and more. Netflix Taggers work directly for the Netflix streaming platform. This position isn’t always open, but you can check the Netflix careers job board to see if they are hiring for this position.
6. Watching Netflix While You House Sit or Pet Sit
You can earn money while you watch Netflix by finding paid house sitting or pet sitting jobs. House sitters take care of someone’s home while they are away, and pet sitters take care of pets. You can spend your downtime watching movies and TV shows, and make anywhere from $25 to over $100 per day. You can find house and pet sitting jobs on websites like Rover.
7. Sell Netflix Merchandise
You can sell Netflix merchandise for popular shows and movies on websites like Etsy. You can create your own designs or sell licensed merchandise. This is a great way to make money if you are creative and have a good eye for design.
What Apps Will Pay Me to Watch Movies?
In addition to Swagbucks, Perk.tv, and InboxDollars, other apps that pay you to watch movies include AppTrailers, Viggle, and Slidejoy. You can earn rewards like gift cards, cash, and PayPal payments.
Frequently Asked Questions
What are some legitimate ways to get paid for watching streaming services?
There are various legitimate ways to get paid for watching streaming services. Some companies pay people to watch and review their content, while others pay individuals to tag and categorize content. Some websites pay users for watching and rating movies and TV shows. Additionally, some market research companies pay people for their opinions on streaming services.
How do you become a Netflix tagger?
To become a Netflix tagger, you must have a strong understanding of movies and TV shows. Netflix taggers are responsible for watching and categorizing content based on specific criteria. Netflix typically hires taggers on a freelance basis, and the job is not always available. To become a Netflix tagger, you can check their job listings or apply through a third-party job site.
Are there any websites that pay you to watch Netflix?
Yes, there are websites that pay you to watch Netflix. Some of these websites pay users to watch and rate movies and TV shows, while others pay users to complete surveys about their streaming habits. However, it is important to be cautious of scams and to research the legitimacy of the website before signing up.
Is it possible to make a full-time income from watching streaming services?
While it is possible to make money from watching streaming services, it is unlikely to provide a full-time income. Most paid viewing opportunities are on a freelance basis, and the pay is typically low. Additionally, the availability of paid viewing opportunities is limited.
What are some other streaming services that offer paid viewing opportunities?
Aside from Netflix, other streaming services that offer paid viewing opportunities include Hulu, Amazon Prime Video, and Disney+. These opportunities may include reviewing content, tagging content, and participating in market research studies.
Are there any qualifications or skills required to get paid for watching streaming services?
The qualifications and skills required to get paid for watching streaming services vary depending on the opportunity. Some opportunities may require a strong understanding of movies and TV shows, while others may require participation in market research studies. However, most opportunities do not require any specific qualifications or skills.
What’s The Minimum Amount You Can Invest In A Tax-Free IUL?
If you’re looking to invest in indexed universal life (IUL), you might wonder what the minimum investment is.
According to a financial strategist I’ve followed, trained with, and put faith in for over fifteen years, Doug Andrew, it’s not about the minimum amount you can put in, but rather what you want to end up with.
With IUL, you can accumulate your money tax-free, safely, and earn predictable rates of return between 7 to 10 percent, which is higher than the average rate of return for most investments.
To maximize your IUL investment, it’s important to understand the guideline single premium, which is the maximum amount you can put into the policy over the life of the policy and no faster than the first 11 years.
The minimum amount you can put in depends on how much you want to accumulate to generate tax-free income. By using the rule of 72, you can estimate how much you need to invest to achieve your financial goals. For example, if you want to become a millionaire in 35 years, you could start socking away $500 a month in an IUL with an average rate of return of 7.5 percent.
Key Takeaways
- With IUL, it’s not about the minimum amount you can invest, but rather what you want to end up with.
- To maximize your IUL investment, it’s important to understand the guideline single premium and use the rule of 72 to estimate how much you need to invest to achieve your financial goals.
- By investing $500 a month in an IUL with an average rate of return of 7.5 percent, you could become a millionaire in 35 years.
Understanding Indexed Universal Life
Indexed universal life (IUL) is a type of life insurance policy that allows you to accumulate cash value over time. With IUL, you can earn tax-free interest on your cash value, and you don’t have to pay taxes when you take the money out or transfer it to your heirs.
The amount you can put into an IUL policy depends on the cost of insurance and the maximum amount allowed over the life of the policy. This is called the guideline single premium, and it is generally the most you can put into the policy over the first 11 years.
To set up an IUL policy with the least amount of premium, you should consider how much you want to accumulate and generate tax-free income at the end of the day. Based on the rates of return, you can use the rule of 72 to estimate how much you need to set aside.
For example, if you want to have a million dollars in 35 years, you can start by setting aside 500 dollars a month. With an average rate of return of 7.5%, you can achieve your goal. However, if you want to accumulate more, you may need to set aside more money.
Max-funded IUL, when structured correctly and funded properly, can turn into a cash cow for you. It is a flexible savings vehicle that allows you to put in as much or as little as you want, and it can grow to millions of dollars tax-free.
Historical Performance of IUL
Indexed Universal Life (IUL) has been around since 1997 and has become a popular vehicle for long-term financial goals such as retirement, business, real estate management, and college funding. IUL allows individuals to accumulate their money tax-free, with predictable rates of return between 7 to 10 percent.
Doug Andrew, a financial strategist since 1974, has been helping people with max-funded IUL and has seen an average rate of return between 8.2% up to 10.07%. Even during market crashes, IUL has not resulted in losses.
The minimum amount that can be put into IUL depends on covering the cost of insurance dictated under the tax citations under TEFRA, DEFRA, and TAMRA. The real question is, “What’s the most that you want to put in?” Generally, this is called the guideline single premium, which is the most allowed to be put into the policy over the life of the policy and no faster than the first 11 years.
For those looking to set up a contract, policy, or savings vehicle using IUL with the least amount of premium, the least amount that could be averaged on a monthly basis is recommended. For example, if an individual can set aside $500 a month in today’s dollars, that’s $6,000 a year. This amount can be adjusted based on personal financial goals, but it’s important to note that there’s no limit to how much IUL can grow to, only a limit to how much can be put in.
Using the rule of 72, which states that you take the interest rate that you’re earning on any investment and divide that interest rate into the number 72, it’s possible to estimate the growth of IUL over time. For example, if an individual started saving $500 a month and earned an average of 7.5%, they would have a million fifteen thousand dollars in 35 years.
Ultimately, the minimum amount that can be put into IUL depends on personal financial goals and the amount needed to generate tax-free income in the future. While it’s possible to become a millionaire by saving $500 a month for 30 years at 7.5% interest, it’s important to consider individual financial needs and goals to determine the maximum amount that should be put into IUL.
Tax Advantages of IUL
Indexed Universal Life (IUL) offers several tax advantages that make it an attractive option for long-term financial goals such as retirement, business, real estate management, and college funding. With IUL, you can accumulate your money tax-free, and it’s liquid, safe, and earns predictable rates of return between 7 to 10 percent. Moreover, you don’t have to pay tax when you take it out or transfer it to your heirs, and there is no income tax due when you pass away.
IUL allows for flexibility in terms of premium payments. The minimum amount you can put in is determined by the cost of insurance dictated under the tax citations under TEFRA, DEFRA, and TAMRA to accommodate the maximum amount you want to put in. The most you can put in over the first 11 years is called the guideline single premium. However, you don’t have to put in the maximum amount. You can put in less or more depending on your financial goals.
If you’re trying to set up a contract, a policy, a savings vehicle using IUL with the least amount of premium, then you want to think about how much you could probably average on a monthly basis. For instance, you could set aside $500 a month in today’s dollars, which is 6,000 a year. However, you can put in more or less than that depending on your financial situation.
Using the rule of 72, you can estimate how much you can accumulate in IUL over time. For instance, if you started socking away 500 bucks a month and earned an average of 7.5%, you would have a million fifteen thousand dollars in 35 years. However, you may need to accumulate 2 million or 4 million, depending on your financial goals.
In summary, IUL offers tax advantages that make it an appealing option for long-term financial goals. By setting aside a minimum amount of premium, you can accumulate your money tax-free and earn predictable rates of return between 7 to 10 percent.
Minimum Investment in IUL
The minimum amount that you can put into or invest in an IUL is determined by the cost of insurance dictated under the tax citations under TEFRA, DEFRA, TAMRA to accommodate the maximum amount you wanted to put in. Therefore, the real question is, “What’s the most that you want to put in?” This is called the guideline single premium, which is the maximum amount you want to be allowed to put into the policy over the life of the policy and no faster than the first 11 years.
For instance, if you want to accumulate your money tax-free safely, where it’s liquid, safe, and earns predictable rates of return between 7 to 10 percent, you can start with as little as $500 a month. This means that if you set aside $500 a month in today’s dollars, you can become a millionaire in 35 years at an average rate of return of 7.5%. However, you can put in more or less than $500 a month, depending on your financial goals.
Using the rule of 72, which states that you take the interest rate that you’re earning on any investment and divide that interest rate into the number 72, you can double your money every 9 years if you’re earning 8%, every 7.2 years if you’re earning 10%, and every 10 years if you’re earning 7.2%. Therefore, if you’re earning an average of 7.5% and you start socking away $500 a month, you would have a million fifteen thousand dollars in 35 years.
In conclusion, the minimum amount that you can put into or invest in an IUL is determined by the cost of insurance, but it’s not what you begin with that counts, it’s what you end up with. Therefore, it’s essential to determine your financial goals to know the most that you can put in to achieve them.
Maximizing Your IUL Investment
If you’re looking to accumulate your money tax-free safely and earn predictable rates of return between 7 to 10 percent, indexed universal life (IUL) may be a good option for you. With IUL, you don’t have to pay tax when you take out your money or transfer it to your heirs. In fact, there is no other vehicle in the internal revenue code that allows you to accumulate, access, and transfer your money totally tax-free.
When it comes to investing in IUL, the minimum amount you can put in depends on how much you want to accumulate over the life of the policy. The most you can put into the policy over the first 11 years is called the guideline single premium. Let’s say it’s $500,000. You don’t have to put in $500,000, but that’s the most you could put in over the first 11 years. There’s no limit to what it can grow to, and it can grow to millions and millions of dollars tax-free. So, if you’re trying to set up an IUL policy with the least amount of premium, think about the least amount that you could probably average on a monthly basis.
If you can set aside $500 a month in today’s dollars, that’s $6,000 a year. You can put in more or less than that, but if you throw in $10,000 or $20,000 and then have to stop and not put anything in, you can do that if the minimum amount was $500. It allows for flexibility. If your goal is to have a million bucks and you’ve got 35 years to get there, the minimum might be $500 a month.
To maximize your IUL investment, you need to determine how much money you need in today’s dollars and take into consideration inflation. What do you think inflation will average? Let’s say 5%. That means the cost of living will double every 15 years. So, you’re going to need more money to buy the same things in the future. If you’re looking 30 years down the road, you’re going to need even more money. In order to hit your goals, you may need to accumulate $2 million or $4 million.
Using max-funded IUL, structured correctly and funded properly under the TEFRA, DEFRA, and TAMRA guidelines, can turn into a cash cow for you. It’s important to think about what’s the most that you can put in to achieve your goals and to use the flexibility allowed to put in nothing or a very low amount. By socking away $500 a month for 30 years at 7.5% interest, you could become a millionaire. But maybe a million is not going to be enough for you. It’s all about determining your goals and investing accordingly.
Impact of Inflation on Retirement Savings
When planning for retirement, it’s important to consider the impact of inflation on your savings. Inflation can erode the value of your money over time, making it harder to afford the same goods and services in the future.
To combat the effects of inflation, it’s important to invest in vehicles that offer a rate of return that outpaces inflation. One such vehicle is an indexed universal life (IUL) insurance policy, which can provide tax-free growth and access to funds.
By contributing as little as $500 a month to an IUL policy, you can accumulate a significant nest egg over time. However, it’s important to consider your long-term financial goals and the potential impact of inflation on your purchasing power.
For example, if you need $3,000 a month in today’s dollars to cover your expenses in retirement, you may actually need $6,000 a month in 15 years and $12,000 a month in 30 years due to the effects of inflation. To achieve this level of income, you may need to accumulate a nest egg of $1.5 million, $2 million, or even $4 million depending on your rate of return and other factors.
Overall, investing in an IUL policy can be a powerful tool for retirement planning, but it’s important to consider the impact of inflation and plan accordingly. By working with a financial professional and setting clear goals, you can create a retirement plan that meets your needs and helps you achieve financial security in your golden years.
Achieving Your Financial Goals
Indexed Universal Life (IUL) is an excellent option for accumulating your money tax-free, safely, and earning predictable rates of return between 7 to 10 percent. It is a great way to prepare for long-term goals such as retirement, business, real estate management, and college funding for your kids.
The minimum amount you can put into or invest in an IUL is not what counts, but what you end up with. The real question is, “What’s the most that you want to put in?” Generally, this is called the guideline single premium. It allows you to put in the most you could put in over the first 11 years.
If you’re trying to set up a contract, a policy, a savings vehicle using indexed universal life with the least amount of premium, then you want to think about “Well, what’s the least amount that I could probably average on a monthly basis?” You can set aside 500 bucks a month in today’s dollars, which is 6,000 a year. You can put in more or less than that. If you throw in 10 or 20 thousand and then you have to stop and not put anything in, you can do that if the minimum amount was 500 because you just divide that into how much you’ve already put into the policy. It allows for flexibility.
The minimum amount might be 500 bucks a month if your goal is to have a million bucks, and you’ve got 35 years to get there. Or if you had a lump sum, you can set aside an amount so that 30 years from now, you have a million if you have 125,000 right now.
People who have used max-funded indexed universal life, IUL, where it was structured correctly and funded properly under the TEFRA, DEFRA, and TAMRA guidelines, have turned it into a cash cow. It’s a great way to achieve your financial goals and accumulate your money tax-free.
Related articles:
- What Are TEFRA And DEFRA Tax Citations?
- What’s The Minimum Amount You Can Invest In A Tax-Free IUL?
- Why You May Consider Purchasing an Indexed Annuity
- Indexed Universal Life: A Reliable Retirement Plan?
- What Does It Mean To Max-Fund An IUL?
- Why Rich People Choose IUL?
Becoming a Millionaire with IUL
If you’re looking to become a millionaire with Indexed Universal Life (IUL), the minimum amount you can invest is not what counts, it’s what you end up with. According to financial strategist Doug Andrew, IUL is one of the best places to accumulate money tax-free, safely, and with predictable rates of return between 7 to 10 percent.
The guideline single premium is the maximum amount you can put into the policy over the life of the policy and no faster than the first 11 years. If you want to set up a policy with the least amount of premium, you need to think about the least amount that you could probably average on a monthly basis.
For example, if you can set aside $500 a month in today’s dollars, that’s $6,000 a year. You can put in more or less than that amount, but if your goal is to have a million bucks and you’ve got 35 years to get there, the minimum might be $500 a month.
Using the rule of 72, which says that you take the interest rate that you’re earning on any investment and divide that interest rate into the number 72, you can estimate how much you need to accumulate to generate tax-free income at the end of the day. If you started socking away $500 a month and you earned an average of 7.5%, you would have a million fifteen thousand dollars in 35 years.
In order to hit your financial goals, you need to figure out how much you need to set aside and then with flexibility, you’re allowed to put in nothing or a very low amount. So, it’s not about the minimum amount you can put in, it’s about what’s the most that you can put in to achieve your goals.
Max-funded IUL can turn into a cash cow for you, and it’s called the Laser Fund. With proper structuring and funding, IUL allows you to accumulate, access, and transfer your money totally tax-free. It’s the only vehicle in the internal revenue code that allows you to do so.
The Laser Fund
If you’re looking to accumulate your money tax-free, safely, and earn predictable rates of return between 7 to 10 percent, indexed universal life (IUL) may be one of the best places to do so. With IUL, you don’t have to pay tax when you take out your money, and you don’t have to pay tax when you transfer it to your heirs.
The guideline single premium is the most you’re allowed to put into the policy over the life of the policy and no faster than the first 11 years. You can put in more than the minimum, but you can’t put in less than the cost of insurance dictated under the tax citations under TEFRA, DEFRA, and TAMRA to accommodate the maximum amount you wanted to put in.
When it comes to setting up a contract, a policy, or a savings vehicle using IUL with the least amount of premium, you want to think about the least amount that you could probably average on a monthly basis. If you can set aside 500 dollars a month in today’s dollars, that’s 6,000 dollars a year. You can put in more than that, or you can put in less than that. If you put in more, you can coast. So, if you throw in 10 or 20 thousand and then you have to stop and not put anything in, you can do that if the minimum amount was 500 dollars because you just divide that into how much you’ve already put into the policy. It allows for flexibility.
The minimum amount you can put in depends on how much you need to accumulate to generate tax-free income at the end of the day. Based on the rates of return, the rule of 72 says that you take the interest rate that you’re earning on any investment and divide that interest rate into the number 72. If you started socking away 500 dollars a month and you earned an average of 7.5%, you would have a million fifteen thousand dollars in 35 years.
Max-funded IUL has turned into a cash cow for many people. It’s called the Laser Fund, and it’s a great way to accumulate your money tax-free and earn predictable rates of return.
How to Become a Bookkeeper: A Step-by-Step Guide
If you’re searching for a job that can provide you with a flexible lifestyle, becoming a bookkeeper from home might be the perfect career choice for you. This article will provide you with the background information you need to get started.
In the following sections, you’ll learn about the benefits of a virtual bookkeeping job and how to become a bookkeeper from the comfort of your own home.
Whether you have experience in the field or not, this guide will give you the tools you need to succeed as a bookkeeper.
Key Takeaways
- Learning how to become a bookkeeper from home can provide you with a lifestyle-friendly job.
- This article will provide you with information on the benefits of a virtual bookkeeping job and how to become a bookkeeper from home.
- Whether you have experience in the field or not, this guide will give you the tools you need to succeed as a bookkeeper.
How to Become a Bookkeeper with No Experience
The Perks of a Virtual Bookkeeping Job
If you want to learn how to become a bookkeeper, you might want to consider a virtual bookkeeping job. Telecommuting is a popular work arrangement where you work outside of an office. You can work from home or any public location closer to your home. Telecommuting is similar to remote bookkeeping jobs because both work arrangements offer more freedom when it comes to working hours and where you do your work. As a virtual bookkeeper, you have the unique freedom to choose who to work with. You’ll be the one to source out your clients, and you can carefully select the ones you can serve best. However, you must also be self-motivated, organized, and good with time management. These are key traits you must possess and master to succeed in your virtual bookkeeping job.
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How to Become a Bookkeeper from Home
If you want to become a bookkeeper from home, you need to invest in your work tools. You’re essentially training to become a virtual bookkeeper, which means you’ll be working remotely as a third-party service provider to businesses. It’s only fitting that your first investments are a good computer and a reliable internet connection. These are the two work tools you’ll use the most, so they must be up to the task. It’s also good to invest in a mobile or landline phone service as they are your means to reach customers and colleagues. You can use your personal mobile and landline while you’re still setting up your business, but eventually, you’ll have to separate your business communications.
Step 1: Invest in Your Work Tools
Deciding to learn how to become a bookkeeper means you should also be willing to invest in this career path. You’re essentially training to become a virtual bookkeeper, which means you’ll be working remotely — most likely as a third-party service provider to businesses. It’s only fitting that your first investments are a good computer and a reliable internet connection. These are the two work tools you’ll use the most, so they must be up to the task. It’s also good to invest in a mobile or landline phone service as they are your means to reach customers and colleagues. You can use your personal mobile and landline while you’re still setting up your business, but eventually, you’ll have to separate your business communications.
Step 2: Get Basic Bookkeeping Training
If you have no previous experience in the accounting industry, you need to pick your bookkeeping courses wisely. They should cover all the essentials you need to learn to be a competent and capable bookkeeper. A good bookkeeping training program will teach you bookkeeping skills that business owners are more than willing to pay for. Specifically, the bookkeeping skills taught need to show how to record financial transactions, keep financial records, prepare financial reports, use the right kind of bookkeeping software, and record accounts receivable and accounts payable. With Bookkeeper Launch, not only will you learn the technical side of online bookkeeping, but you’ll also get guidance on how to start your own bookkeeping business.
Step 3: Learn How to Use Accounting Software
Aside from learning the essential concepts and how-to’s of bookkeeping, you also need to familiarize yourself with accounting software. You can study the basics through online tutorials or get hands-on training from professional bookkeepers. Accounting software know-how can make you an even more valuable asset to clients. Software tools help streamline the bookkeeping process, which means you can do your job efficiently. Accounting software like QuickBooks also helps keep startup costs at a minimum. When you pick an online accounting program, you should take into consideration both your clients’ and your personal financial management. Remember that you’ll also use it to manage your own finances.
Step 4: Launch Your Bookkeeping Business
After learning how to become a bookkeeper and equipping yourself with business know-how, it’s time to launch your bookkeeping business. Or, you can choose to become a freelance bookkeeper. Acquire a tax identification number, apply for licenses and business permits as needed, and select a structure for your business (sole proprietorship, LLC, etc.). Aside from formalizing your bookkeeping business, you also need to market your services. There are several ways to do this: networking, word of mouth, creating a website, creating a LinkedIn profile, and handing out business cards. Look for potential clients on career websites that cater to remote bookkeeping jobs. Freelance marketplace websites also exist where you can find short- and long-term projects you can apply for.
Step 5: Negotiate a Reasonable Rate
When you’re starting out as a bookkeeper, it’s important to negotiate a reasonable rate. You can research the average rate for bookkeeping services in your area to give you an idea of what to charge. However,
Frequently Asked Questions
What qualifications are required to become a bookkeeper?
To become a bookkeeper, you typically need a high school diploma or equivalent. However, some employers may prefer or require an associate’s or bachelor’s degree in accounting or a related field. Additionally, having experience with accounting software and strong math and organizational skills is essential.
How can you start a career in bookkeeping without a degree?
While having a degree can be helpful, it is not always required to start a career in bookkeeping. You can gain experience and skills through on-the-job training, internships, or taking courses in bookkeeping or accounting. Additionally, obtaining a certification, such as the Certified Bookkeeper (CB) designation, can demonstrate your expertise and make you a more competitive candidate for job opportunities.
What skills do you need to become a successful bookkeeper?
To become a successful bookkeeper, you need to have strong math and organizational skills, attention to detail, and the ability to work independently. Additionally, having excellent communication skills, proficiency in accounting software, and knowledge of tax laws and regulations can be beneficial.
Is bookkeeper certification necessary to pursue a career in bookkeeping?
While certification is not always required, obtaining a certification can demonstrate your expertise and make you a more competitive candidate for job opportunities. Additionally, some employers may prefer or require certification for certain positions. The Certified Bookkeeper (CB) designation is a widely recognized certification for bookkeepers.
What is the average salary of a bookkeeper?
According to the Bureau of Labor Statistics, the median annual wage for bookkeeping, accounting, and auditing clerks was $42,410 as of May 2022. However, salaries can vary based on experience, location, and industry.
Are bookkeeping courses like QuickBooks worth taking for aspiring bookkeepers?
Yes, taking courses in bookkeeping software such as QuickBooks can be highly beneficial for aspiring bookkeepers. QuickBooks is a widely used accounting software and having proficiency in it can make you a more competitive candidate for job opportunities. Additionally, taking courses in other software programs or accounting principles can also be helpful in developing your skills and expertise as a bookkeeper.
Why You May Consider Purchasing an Indexed Annuity
If you’re interested in learning about annuities and indexed universal life (IUL), you’ve come to the right place. In this article, we’ll be discussing the differences between annuities and indexed universal life, as well as the pros and cons of each.
We’ll also touch on when it might be appropriate to consider an annuity over an indexed universal life policy.
Annuities are often considered a safe repository for serious cash, as they’re essentially a savings account with an insurance company. When you start accessing money out of an annuity, it becomes taxable, whether it’s a qualified plan like an IRA or a non-qualified annuity.
On the other hand, indexed universal life policies can provide tax-free income, making them an attractive option for many. We’ll dive into the specifics of each, as well as some considerations to keep in mind when deciding which one is right for you.
Key Takeaways
- Annuities are like a savings account with an insurance company and become taxable when you start accessing money out of them.
- Indexed universal life policies can provide tax-free income and may be a good option for those who want to diversify their investments and have access to tax-free income.
- When deciding between an annuity and indexed universal life policy, consider factors such as age, insurability, and diversification.
Understanding Annuities
An annuity is a financial product offered by an insurance company that allows you to save money and receive a steady stream of income in the future. It is like a savings account with an insurance company where you are putting your money in. Annuities are generally considered to be safe investments because they are backed by the multi-trillion dollar insurance industry.
The money you put into an annuity can be either after-tax or pre-tax, and the growth is tax-deferred. However, when you start accessing money out of an annuity, it becomes taxable. If it is a qualified plan like an IRA, 401K or 403b, you will have to pay tax on the back end. If it is a non-qualified annuity, you are putting in after-tax dollars, and the growth is tax-deferred. But when you start turning on income out of an annuity, it becomes taxable.
An indexed universal life (IUL) is a type of life insurance policy that allows you to accumulate cash value on a tax-deferred basis. It is Doug Andrew’s favorite vehicle because it can give tax-free income. Historically, IUL has had higher caps than a lot of annuities. It is a good option if you can qualify and fund it.
However, some factors might make an annuity a better option. If you are uninsurable or at a certain age, it might make more sense to do an annuity because of the amount of time you have between now and your life expectancy. Sometimes, your money is tied up in IRAs and 401ks, and it doesn’t make sense with certain tax brackets to take it all out. You can put it into an annuity as an IRA, which you couldn’t do in an IUL.
There are different types of annuities, including fixed indexed annuities and index annuities. They have a fixed account and indexing just like the IUL, where you link to an index and have a floor and a cap. There are also volatility control index accounts that have high participation rates and no cap. Some annuities have a guaranteed income for life, while others are good for a short period. Some have no fees and indexing caps of like 7.5 to 9 percent.
Recently, some indexed annuities have higher caps than some indexed universal life policies. This is why Doug Andrew is rethinking his stance on annuities. However, an IUL can still be a better option if you can qualify and fund it.
Learn more about using IUL in this article: Indexed Universal Life: A Reliable Retirement Plan?
Differences Between Annuities and Indexed Universal Life
If you’re considering an annuity or an indexed universal life (IUL), it’s important to understand the differences between the two. Here are some key points to consider:
- An annuity is like a savings account with an insurance company, where you put money into an insurance company and the growth is tax-deferred. However, when you start accessing money out of an annuity, it becomes taxable.
- On the other hand, an IUL is a life insurance policy with a savings component that allows you to accumulate cash value on a tax-deferred basis. You can take out tax-free loans against the cash value to supplement your retirement income.
- Annuities are usually deemed some of the safest repositories for serious cash, making them a good option for those who want to be guaranteed they’ll never run out of income. However, annuities generally don’t increase in value when you die.
- IULs, on the other hand, can give you tax-free income and historically have had higher caps than many annuities. Plus, you can put money in and take it out tax-free even beyond your basis.
- When it comes to choosing between an annuity and an IUL, several factors come into play. Age, uninsurability, and diversification are some of the main considerations. An annuity might make more sense for those who are uninsurable or at a certain age where they have less time between now and their life expectancy. An IUL might be a better option for those who want to diversify their investments or take advantage of tax-free income.
- Annuities usually have no fees, but some IULs may have charges for the cost of insurance. However, for a long-term investment, an IUL policy can usually outperform an indexed annuity with the same company.
- Fixed index annuities or index annuities might be a better option over an IUL if you’re uninsurable or at a certain age. Some clients might want to put their money into an annuity as an IRA, which is possible with an annuity but not with an IUL.
- Annuities have different options, such as fixed accounts, indexing, and volatility control index accounts. Some annuities have a guaranteed income for life, while others are just a place to put money for a few years with a good return but no loss.
Overall, both annuities and IULs have their pros and cons, and the right choice depends on your individual circumstances and financial goals.
Pros and Cons of Annuities
An annuity is a savings account with an insurance company where you put your money in and it grows tax-deferred until you start accessing it. When you start withdrawing money out of an annuity, it becomes taxable whether it’s a qualified plan or a non-qualified plan. The growth is taxable on a non-qualified annuity, and the basis would be a return of principle, but the growth would be taxable. If you start turning on income, it’s taxed life, meaning last in first out.
Pros:
- Annuities are considered some of the safest repositories for serious cash.
- They can provide a guaranteed income for life, like a pension.
- They can be a good option for people who want to be guaranteed they’ll never run out of money.
- There are many different types of annuities, including indexed and fixed index annuities, and they offer different options for different needs.
Cons:
- Annuities generally don’t increase in value when you die, and some may only offer small death benefits.
- When you start taking income out of an annuity, it becomes taxable.
- Annuities may have fees or charges, depending on the type.
- Annuities may not be the best option for everyone, depending on factors such as age, insurability, and diversification needs.
When considering an annuity versus an indexed universal life (IUL), it’s important to weigh the pros and cons of each and determine which one is the best fit for your needs. An IUL can provide tax-free income and historically has had higher caps than many annuities, but an annuity may be a good option for those who want a guaranteed income for life or who are uninsurable. Ultimately, it’s important to do your research and consult with a financial professional before making any investment decisions.
When to Consider an Annuity
If you are looking for a safe repository for your serious cash, then you may want to consider an annuity. An annuity is like a savings account with an insurance company. It is considered one of the safest places to store your money. However, keep in mind that when you start accessing money out of an annuity, it becomes taxable.
An indexed universal life (IUL) is still a great vehicle if you can qualify and fund it. It can provide you with tax-free income. Historically, IUL has had higher caps than many annuities. However, recently, there are a few indexed annuities that have higher caps than some indexed universal life policies.
You may want to consider an annuity over an IUL if you are uninsurable or at a certain age where it makes more sense to do an annuity due to the amount of time you have between now and your life expectancy. If your money is tied up in IRAs and 401ks, an annuity may be a good option. You can put it into an annuity as an IRA, which you cannot do with an IUL.
There are many types of annuities, including fixed indexed annuities and index annuities. Some annuities have a guaranteed income for life, while others are a good place to put your money for five, seven, or ten years. Some annuities have no fees and indexing caps of 7.5% to 9%.
In summary, consider an annuity if you want a safe place to store your money and do not mind it becoming taxable when you access it. Consider an IUL if you want tax-free income and historically higher caps.
The Role of Age and Insurability
When it comes to choosing between an annuity and an indexed universal life (IUL), there are several factors to consider. One of the most important factors is your age and insurability.
If you are uninsurable or at a certain age, it may make more sense to choose an annuity over an IUL. An annuity is like a savings account with an insurance company, and it is deemed one of the safest repositories for serious cash. It is usually designed for people who want to be guaranteed that they will never run out of income.
However, when you start accessing money out of an annuity, it becomes taxable. Whether it’s a qualified plan like an IRA, 401K, or 403b, or any type of a qualified plan, you’re going to have to pay tax on the back end. If it’s a non-qualified annuity, you’re putting in after-tax dollars, and the growth is tax-deferred. But when you start turning on income out of an annuity, it’s now taxable. The growth is taxable on a non-qualified annuity, and the basis would be a return of principle.
On the other hand, an IUL is still a favorite vehicle if you can qualify and fund it. You can put money in and take it out tax-free even beyond your basis. Historically, IUL has had higher caps than a lot of annuities.
In some cases, an annuity might make more sense if you want to diversify your investments. Sometimes, your money is tied up in IRAs and 401ks, and it doesn’t make sense with certain tax brackets to take it all out. You can put it into an annuity as an IRA, and it will be an IRA annuity. The iul, on the other hand, you’d have to pay taxes to get it in there.
In conclusion, when deciding between an annuity and an IUL, you need to consider your age, insurability, and diversification needs. There are pros and cons to both options, and it’s important to weigh them carefully before making a decision.
Diversification and Tax Considerations
If you are looking for a safe place to put your money, annuities are a great option. An annuity is like a savings account with an insurance company. It is considered one of the safest repositories for serious cash. However, when you start accessing money out of an annuity, it becomes taxable. Whether it’s a qualified plan like an IRA 401K 403 b or any type of a qualified plan, you are going to have to pay tax on the back end. If it’s a non-qualified annuity, you’re putting in after-tax dollars, and the growth is tax-deferred. But when you start turning on income out of an annuity, it becomes taxable.
On the other hand, indexed universal life (IUL) is still a favorite vehicle because it can give you tax-free income. Historically, IUL has had higher caps than many annuities. With IUL, you can put money in and take it out tax-free, even beyond your basis. That’s why some people prefer IUL over annuities.
However, there are situations where an annuity might be more appropriate. For example, if you are uninsurable or at a certain age, it might make more sense to do an annuity because of the amount of time you have between now and your life expectancy. Also, if your money is tied up in IRAs and 401ks, it might not make sense to take it all out. You can put it into an annuity as an IRA, which you couldn’t do in IUL.
There are many types of annuities, including fixed indexed annuities or index annuities. They have a fixed account and indexing just like IUL, where you link to an index and have a floor and a cap. The volatility control index accounts have high participation rates and no cap. Different options are available, including some with a guaranteed income for life.
In recent times, some indexed annuities have higher caps than some indexed universal life, which is why some people are rethinking their decision to never own an annuity. However, it’s important to consider the pros and cons of each option and choose the one that best suits your specific needs and situation.
Guaranteed Income and Death Benefits
If you’re looking for a safe place to put your money, annuities may be a good option. An annuity is a savings account with an insurance company. When you put money into an annuity, the insurance company guarantees to pay you a certain amount of income for the rest of your life. An annuity can be a good choice if you want to be guaranteed that you’ll never run out of income.
An indexed annuity is a type of annuity that is linked to the performance of an index, such as the S&P 500. The insurance company guarantees a minimum rate of return, and your account value will increase based on the performance of the index, up to a certain cap. Indexed annuities can be a good choice if you want to participate in the stock market without risking your principal.
Indexed universal life (IUL) is another option for tax-free income. IUL policies have historically had higher caps than many annuities, making them a popular choice for those looking to accumulate wealth. With an IUL, you can put money in and take it out tax-free, even beyond your basis.
When it comes to choosing between an annuity and an IUL, there are a few things to consider. If you’re uninsurable or at a certain age, an annuity may make more sense. An annuity can also be a good choice if you want a guaranteed income for life, even if you outlive your projected cash value. On the other hand, an IUL can be a good choice if you want tax-free income and higher caps.
There are many types of annuities, including fixed index annuities and volatility control index accounts. Some annuities have a guaranteed income for life rider, while others have no fees and high participation rates. The key is to find the annuity that best fits your needs and financial goals.
The Impact of Market Changes on Annuities
If you’re considering investing in an annuity, you should be aware of how market changes can impact your investment. An annuity is a savings account with an insurance company where you put your money in, and the insurance company invests it for you. Annuities are generally considered one of the safest places to store your cash, as the multi-trillion dollar insurance industry is the backbone of America and the world.
When you start accessing money from an annuity, it becomes taxable. Whether it’s a qualified plan like an IRA, 401K, or 403b, or if it’s any type of a non-qualified plan, you will have to pay taxes on the back-end. If you have a non-qualified annuity, you’re putting in after-tax dollars, and the growth is tax-deferred. Still, when you start turning on income out of an annuity, it becomes taxable.
Indexed universal life (IUL) is a favorite vehicle for many investors because it can provide tax-free income. Historically, IUL has had higher caps than many annuities, making it a more attractive option. Additionally, IUL policies can outperform indexed annuities with the same company.
However, some indexed annuities now have higher caps than some indexed universal life policies. The rates have gone up quite a bit recently, with interest rates increasing, especially on the 10-year Treasury. Insurance companies can react more quickly with caps and participation rates with new money rates, so many fixed index annuities have gone up significantly in their caps and participation rates.
When considering whether an annuity or an IUL is right for you, there are several factors to consider. Age, insurability, diversification, and tax brackets are all important considerations. For example, if you’re uninsurable or at a certain age, it may make more sense to invest in an annuity. Additionally, if your money is tied up in IRAs and 401ks, it may not make sense to take it all out and put it into an IUL.
In conclusion, market changes can impact your investment in an annuity. It’s essential to consider all the factors when deciding whether to invest in an annuity or an IUL.
How To Own An Asset and Become Your Own Banker
Learn to become your own banker and how to purchase assets.
There is a cost of pulling money out of your investment account to purchase an asset.
Pulling money out of investment accounts to purchase assets can be a costly decision, and it is a concept that many people do not fully understand.
Doug Andrew, a financial strategist and retirement planning specialist with over five decades of experience, and someone I have followed for over fifteen years, explains in the following video why he typically does not pay cash for assets, and nor should you and I. He cites four main reasons for this decision, including the importance of maintaining liquidity, ensuring safety, earning a rate of return, and taking advantage of tax benefits.
Doug explains in this video how to become your own banker and that maintaining liquidity is crucial in ensuring financial flexibility in the face of unexpected events such as recessions or pandemics. When assets are paid off, they can be difficult to access when needed, and borrowing against them can be challenging.
Safety is also a significant concern, as assets can lose value during tough times, leading to financial difficulties. Earning a rate of return and taking advantage of tax benefits can further sweeten the deal and make asset management more profitable. In the following sections, we will delve deeper into each of these four reasons.
Key Takeaways
- Pulling money out of investment accounts to purchase assets can be costly.
- Doug Andrew cites four main reasons for not paying cash for assets: maintaining liquidity, ensuring safety, earning a rate of return, and taking advantage of tax benefits.
- Each of these reasons plays a crucial role in effective asset management.
Understanding the Concept of Pulling Money Out of Investment Accounts
Pulling money out of investment accounts to purchase an asset is a dynamic concept that many people do not fully understand. Doug Andrew, a financial strategist and retirement planning specialist, explains why he usually does not pay cash for assets and instead teaches people how to become their own banker to make money and utilize the three miracles of wealth accumulation: compound interest, tax-free accumulation, and safe positive leverage.
There are four big reasons why Andrew does not pay cash for assets. The first reason is to maintain liquidity. If money is tied up in paid-off assets, it can be difficult to access in times of cash flow crunches or unexpected situations such as recessions or pandemics. Borrowing against an asset can be challenging when the money is needed the most. Banks and credit unions often loan money based on the ability to repay, and borrowing may not be possible if the borrower cannot repay the loan. As a result, the asset may need to be sold at a lower value than it was at one point.
The second reason is safety. During tough times, assets like real estate, machinery, equipment, or automobiles can go down in value. Real estate, for example, can take a 30-40% hit during a recession. If a lot of money is tied up in an asset, it can be challenging to access it because banks may not loan money based on the appraised value of the asset. Instead, they may loan money based on the ability to repay, which may not be possible during tough times. Andrew’s strategy of separating his money from his assets allows him to maintain control and safety of his money.
The third reason is earning a rate of return. By separating his money from his assets, Andrew can earn a rate of return on his money while still having access to it. For example, he may borrow money at a net cost of 4% and earn a rate of return of 8-9%. This allows him to be in control of his money and make double or triple the rate of return over the cost of the funds. Sending extra principal payments against a mortgage may not be the best strategy because it gives up liquidity, safety, and earning a rate of return.
The fourth reason Andrew separates his money from his assets is for tax advantages. Interest on most assets, whether it’s a business asset or personal rental real estate, is tax-deductible. Borrowing against an asset at a lower interest rate and using the tax benefits can sweeten the rate of return.
Overall, understanding the cost of pulling money out of investment accounts to purchase an asset is crucial. Maintaining liquidity, safety, earning a rate of return, and tax advantages are all important factors to consider when deciding whether to pay cash for an asset or separate money from assets.
The Four Reasons He Does Not Pay Cash for Assets
Doug Andrew, a financial strategist and retirement planning specialist, explains why he usually does not pay cash for assets. There are four main reasons why he follows this approach.
- Maintaining Liquidity: Doug Andrew believes that maintaining liquidity is crucial. He has learned this lesson the hard way and understands that when assets are paid off, they become illiquid. In case of a cash flow crunch, disability, unemployment, or any other unexpected situation, it becomes challenging to access the money tied up in paid-off assets. Banks and credit unions do not loan money based on the appraised value of the asset but on the ability to repay. This makes it difficult to borrow money when it is needed the most. Therefore, Doug Andrew prefers to keep his money liquid and not tied up in assets.
- Ensuring Safety: Doug Andrew believes that assets, including real estate, machinery, equipment, and automobiles, can go down in value during recessions or tough times. If an individual has invested all their money in an asset, they might face difficulties meeting the mortgage payment during a market downturn. Doug Andrew prefers to keep his money safe by not investing all his money in an asset. He borrows against the equity of the asset and keeps his money separate.
- Earning a Rate of Return: Doug Andrew believes that investing all the money in an asset does not give a good rate of return. By separating his money, he can earn a rate of return on his investment. He borrows against the equity of the asset and invests the money in other investments that provide a good rate of return. This way, he can earn a rate of return on his investment, which is more than the cost of borrowing.
- Tax Advantages: Doug Andrew believes that separating his money gives him tax advantages. He can deduct the interest paid on the borrowed money from his taxes, which lowers the net cost of borrowing. This makes his rate of return even better.
In summary, Doug Andrew prefers to keep his money liquid, safe, and separate to earn a good rate of return and to take advantage of tax benefits.
The Three Miracles of Wealth Accumulation
Doug Andrew, a financial strategist and retirement planning specialist, teaches people how to become their own banker and utilize the three miracles of wealth accumulation: compound interest, tax-free accumulation, and safe positive leverage.
Safe positive leverage is the ability to own and control assets with very little or none of your money tied up or at risk in that asset. This concept may be difficult for some Americans to understand, but it can be a powerful tool for wealth accumulation.
There are four big reasons why Doug Andrew does not pay cash for assets when acquiring them.
- The first reason is to maintain liquidity. When an asset is paid off and tied up in it, it can be difficult to access the money when it is needed the most. Borrowing against the asset can be challenging, and selling it in a soft market can result in a loss of value.
- The second reason is safety. During recessions or tough times, assets can go down in value, which can result in a loss of money. By keeping money separated from assets, Doug Andrew is able to protect his principal and maintain control over his finances.
- The third reason is earning a rate of return. By utilizing safe positive leverage, Doug Andrew is able to earn a rate of return that is higher than the cost of borrowing. This allows him to make money while still maintaining control over his assets.
- The fourth reason is tax advantages. By borrowing against assets, Doug Andrew is able to deduct the interest on his taxes, which can sweeten the rate of return even further.
Overall, the three miracles of wealth accumulation can be a powerful tool for those looking to optimize their assets, minimize taxes, and empower their authentic wealth.
Understanding Opportunity Cost
Opportunity cost is the cost of pulling money out of investment accounts to purchase an asset. It is a dynamic concept that many people do not understand. Doug Andrew, a financial strategist and retirement planning specialist, teaches people how to become their own banker to make money and utilize the three miracles of wealth accumulation: compound interest, tax-free accumulation, and safe positive leverage. Safe positive leverage is the ability to own and control assets with very little or none of your money tied up or at risk in that asset.
Doug Andrew does not pay cash for assets for four big reasons. The first reason is to maintain liquidity. Liquidity is important because it gives you the ability to access money when you need it. If your money is tied up in paid-off assets and you need money, you may have to borrow against it or sell the asset in a soft market for less than its value.
The second reason is safety. Assets such as real estate, machinery, equipment, or automobiles can go down in value during recessions or tough times. If you have a lot of money tied up in an asset, you may not have the ability to access it because banks will not loan you the money.
The third reason is earning a rate of return. If you have all your money tied up in equity in a property, you will not be able to earn a rate of return. By keeping your money separated, you can earn a rate of return.
The fourth reason is for tax advantages. Interest on most assets is tax-deductible, which sweetens the rate of return. By borrowing out of a home at 4.5% interest on a first mortgage, you are paying 4.5% but that’s tax-deductible, and in a 33% bracket, it’s only a net cost of 3%.
Overall, understanding opportunity cost is important in making financial decisions. It is important to maintain liquidity, safety, and earning a rate of return while also taking advantage of tax benefits.
The Importance of Maintaining Liquidity
Maintaining liquidity is crucial when it comes to acquiring assets. The ability to access cash quickly is essential in times of financial hardship, such as during a recession or pandemic. Doug Andrew, a financial strategist and retirement planning specialist, emphasizes the importance of liquidity as one of the four big reasons why he does not pay cash for assets.
Having liquidity means that an individual has access to cash without having to borrow against their assets or sell them at a loss. This is especially important when an individual faces unexpected financial difficulties, such as a cash flow crunch or unemployment. Borrowing against an asset can be difficult when an individual needs the money the most, as banks and credit unions often base loan approvals on the ability to repay, which may not be feasible in times of financial hardship.
Furthermore, owning an asset outright can be risky, as the asset may lose value during a recession or tough economic times. This is especially true for assets such as real estate, which can experience a significant drop in value during a recession. By maintaining liquidity, an individual can protect their assets and avoid losing money when the value of their assets decreases.
In addition to protecting assets and providing access to cash, maintaining liquidity can also provide a rate of return and tax benefits. By not tying up all of their money in an asset, an individual can earn a rate of return on their cash while still maintaining liquidity. Additionally, borrowing against an asset can provide tax benefits, as the interest paid on the loan may be tax-deductible.
Overall, maintaining liquidity is essential for individuals looking to acquire assets. It provides access to cash in times of financial hardship, protects assets from losing value, and can provide a rate of return and tax benefits. By keeping cash separate from assets, individuals can optimize their financial strategies and empower their authentic wealth.
The Role of Safety in Asset Management
Doug Andrew, a financial strategist and retirement planning specialist, emphasizes the importance of maintaining liquidity and safety when managing assets. He advises against paying cash for assets and instead utilizes safe positive leverage to own and control assets with little or no money tied up or at risk in the asset.
There are four main reasons why Doug Andrew prefers to maintain liquidity and safety when managing assets. Firstly, maintaining liquidity ensures that individuals have access to their money when they need it. This is especially important during tough times, such as recessions or pandemics, where cash flow crunches can occur. Borrowing against assets or selling them in a soft market can be difficult and result in a loss of value.
Secondly, safety is crucial when managing assets. Assets such as real estate, machinery, equipment, or automobiles can decrease in value during tough times. For example, commercial real estate took a hit during the COVID-19 pandemic. If an individual has all their money tied up in an asset, they may not have the ability to access it during tough times. Doug Andrew advises keeping money separated from assets to ensure safety of principal.
Thirdly, earning a rate of return is important when managing assets. By utilizing safe positive leverage, individuals can earn a rate of return on their assets. For example, Doug Andrew was earning a rate of return of 8-10% while paying a net cost of 3-4% on his borrowed funds. By earning a rate of return, individuals can compound their money and pay off their assets faster.
Lastly, tax advantages can sweeten the rate of return when managing assets. Interest on most business assets or personal rental real estate is tax-deductible, resulting in a lower net cost. By utilizing tax advantages, individuals can increase their rate of return even further.
In summary, maintaining liquidity, safety, earning a rate of return, and utilizing tax advantages are crucial when managing assets. By utilizing safe positive leverage, individuals can optimize their assets, minimize taxes, and empower their authentic wealth.
Earning a Rate of Return
When acquiring assets, it is not always advisable to pay cash upfront. Doug Andrew, a financial strategist and retirement planning specialist, suggests that there are four big reasons for this. One of these reasons is to maintain liquidity. When an asset is paid off, it ties up all the money in that asset, which can be problematic during a cash flow crunch. If money is needed, the only way to get it is to borrow against the asset or sell it. However, borrowing against an asset can be difficult when it is needed the most, and selling it during a soft market can result in less than the asset’s value.
The second reason to avoid paying cash for assets is safety. During recessions or tough times, assets such as real estate, machinery, and equipment can decrease in value. If a significant amount of money is tied up in these assets, it can be challenging to access it when needed. For instance, if all the positive rental cash flow is sent against the mortgage for years, and then there are 30 to 40 percent vacancies, it can be difficult to meet the mortgage payment even though extra principal payments have been made. This is because banks do not loan money based on the appraised value of an asset but on the ability to repay.
The third reason is earning a rate of return. By not tying up all the money in an asset, one can earn a rate of return. For instance, if an individual borrows money at a net cost of four percent and earns eight percent, they are making a 100 percent rate of return on that money. By keeping the money separated, the individual can earn a rate of return while maintaining liquidity and safety.
The fourth reason is tax advantages. By borrowing against an asset, an individual can deduct the interest on their taxes. This makes the rate of return even better since the net cost of borrowing is lower due to the tax benefits.
In conclusion, paying cash for assets may not always be the best option. Maintaining liquidity, safety, earning a rate of return, and tax advantages are four reasons why one should consider borrowing against an asset instead of paying cash upfront.
The Tax Advantages of Asset Management
When acquiring assets, it is recommended to avoid paying cash for them. There are four main reasons for this, as explained by Doug Andrew, a financial strategist and retirement planning specialist.
The first reason is to maintain liquidity. Having assets paid off and tied up in them may cause trouble during recessions or cash flow crunches. In such situations, borrowing against the asset or selling it may be the only options, which can lead to losses. Therefore, maintaining liquidity is crucial.
The second reason is safety. Assets may go down in value during recessions or tough times, causing losses. By keeping assets separated from one another, individuals can protect their money from such losses.
The third reason is earning a rate of return. By keeping assets separated, individuals can earn a rate of return on their money, even during tough times. This is because their money is not tied up in the asset, and they can use it for other investments.
The fourth reason is tax advantages. Interest paid on most assets, whether they are business assets or personal rental real estate, is tax-deductible. This can sweeten the rate of return and make it even better.
By keeping these reasons in mind and avoiding paying cash for assets, individuals can optimize their assets, minimize taxes, and empower their authentic wealth.
The Impact of Recessions on Asset Value
During a recession, assets such as real estate, machinery, equipment, and automobiles can go down in value. For instance, commercial real estate took a 30 to 40 percent hit after the COVID-19 pandemic. This decline in asset value can be problematic for those who have a lot of their money tied up in these assets.
To avoid this problem, it is recommended to keep assets separate from the money used to purchase them. This means not pulling money out of investment accounts to purchase an asset, whether it is an appreciating asset like a home or a depreciating asset like a car.
There are four big reasons why it is not recommended to pay cash for an asset. The first reason is to maintain liquidity. When an asset is paid off, and all of a sudden, there is a cash flow crunch, it can be challenging to get money out of the asset. Borrowing against the asset is one way to get money, but it is difficult to qualify for a loan when you need it the most.
The second reason is safety. When assets go down in value, it can be challenging to access the equity tied up in them. If all of your positive rental cash flow has been sent against the mortgages for years, and all of a sudden, there are 30 to 40 percent vacancies, it can be difficult to meet the mortgage payment. By keeping assets separate from the money used to purchase them, the safety of the principal is protected.
The third reason is to earn a rate of return. By keeping assets separate from the money used to purchase them, it is possible to earn a rate of return. For instance, if you are earning 8 percent and paying a net of 4 percent, you are making a 100 percent rate of return on the last 400,000 dollars.
The fourth reason is for the tax advantages. Interest on most assets is tax-deductible, which makes the rate of return even better. By borrowing out of a home at 4.5 percent interest on a first mortgage, it is possible to pay a net cost of 3 percent.
Overall, it is recommended to keep assets separate from the money used to purchase them to maintain liquidity, safety, earn a rate of return, and take advantage of tax benefits. This can help mitigate the impact of recessions on asset value.
The Role of Banks and Credit Unions in Asset Liquidity
Maintaining liquidity is one of the primary reasons why financial strategist and retirement planning specialist Doug Andrew recommends not paying cash for assets. When an asset is paid off, it becomes difficult to access the money tied up in it during cash flow crunches or tough times. Banks and credit unions usually do not loan money based on the appraised value of the asset but on the ability to repay, which can make borrowing or selling the asset difficult when you need the money the most.
Safety is another crucial factor in keeping assets separate from your investment accounts. Assets such as real estate, machinery, equipment, and automobiles can go down in value during recessions or tough times. If you have a lot of money tied up in an asset, you may have a hard time accessing it when you need it the most. However, if you keep your money separate, you can access it without losing your principal.
Earning a rate of return is also essential when it comes to asset liquidity. By keeping your money separate, you can earn a rate of return on your assets while paying a lower net cost. This can help you pay off your home faster and provide you with more financial control.
Finally, tax advantages are another reason why keeping assets separate is beneficial. Interest on most assets, such as business assets or personal rental real estate, is tax-deductible. This can sweeten the rate of return and make it more profitable for you.
In summary, banks and credit unions play a crucial role in asset liquidity. By keeping your assets separate from your investment accounts, you can maintain liquidity, safety, earn a rate of return, and take advantage of tax benefits.
The Advantages of Separating Assets and Cash
Doug Andrew, a financial strategist and retirement planning specialist, recommends separating assets and cash for four big reasons.
Firstly, maintaining liquidity is crucial. If all of your money is tied up in paid-off assets and you encounter a cash flow crunch, you may have to borrow against the asset or sell it to get the money you need. Banks and credit unions may not loan you money based on the appraised value of the asset, but rather on your ability to repay the loan. This may be difficult if you are already struggling financially. By keeping assets and cash separate, you can maintain liquidity and avoid being forced into a situation where you have to borrow or sell.
Secondly, separating assets and cash provides safety. During recessions or tough times, assets such as real estate, machinery, equipment, and automobiles can decrease in value. If all of your money is tied up in these assets, you may not have the ability to access it when you need it most. By separating assets and cash, you can protect your principal and ensure that your money is safe.
Thirdly, separating assets and cash allows you to earn a rate of return. By utilizing safe positive leverage, you can own and control assets with very little or none of your money tied up or at risk in that asset. This enables you to earn a rate of return on your investment while maintaining liquidity and safety.
Finally, separating assets and cash provides tax advantages. By borrowing against assets, you can deduct the interest from your taxes, which sweetens the rate of return and makes it even better.
Overall, separating assets and cash can provide numerous advantages, including maintaining liquidity, providing safety, earning a rate of return, and providing tax benefits. By utilizing safe positive leverage and keeping assets and cash separate, individuals can optimize their assets, minimize taxes, and empower their authentic wealth.
The Importance of Control in Asset Management
In asset management, control is a crucial aspect that helps individuals to optimize their assets, minimize taxes, and empower their authentic wealth. The ability to own and control assets with little or no money tied up or at risk in that asset is referred to as safe positive leverage. It is one of the reasons why individuals are taught how money works and the actual cost of pulling money out of investment accounts to purchase an asset.
Here are the four big reasons why one should not pay cash for an asset:
- Maintain Liquidity: Liquidity is crucial in asset management. When an asset is paid off, and a cash flow crunch occurs, it may be challenging to borrow against it or sell it. Most banks and credit unions do not loan money based on the asset’s appraised value, but rather on the ability to repay the loan. Therefore, individuals are forced to sell their assets in a soft market for less than the value it was at one point. To avoid this, individuals should maintain liquidity by not paying cash for property.
- Safety: In recessions or tough times, assets such as real estate, machinery, equipment, or automobiles can go down in value. If an individual takes all the positive rental cash flow and sends it against the mortgage for years, they may have a hard time meeting the mortgage payment when the asset goes down in value. To avoid this, individuals should separate their money to ensure safety when their assets go down in value.
- Earning a Rate of Return: By not tying up all their money in equity in a property, individuals can earn a rate of return by borrowing against their assets. This way, they can earn a rate of return of double or triple the cost of the funds. This is because they are in control and earning a rate of return, making their money work for them.
- Tax Advantages: By borrowing against their assets, individuals can enjoy tax benefits. The interest on most assets, whether it’s a business asset or personal rental real estate, is tax-deductible. Therefore, individuals can enjoy tax advantages that sweeten the rate of return.
In conclusion, control is essential in asset management. By maintaining liquidity, ensuring safety, earning a rate of return, and enjoying tax advantages, individuals can optimize their assets, minimize taxes, and empower their authentic wealth.
Indexed Universal Life: A Reliable Retirement Plan?
Indexed Universal Life insurance is a type of permanent life insurance that offers a death benefit to beneficiaries, as well as a cash value component that can be used for retirement savings.
It is a popular option for those who want to combine life insurance and retirement planning into one policy. However, like any financial product, it is important to understand the potential benefits and risks before making a decision.
Indexed Universal Life insurance allows policyholders to allocate a portion of their premiums to an indexed account, which is tied to the performance of a stock market index such as the S&P 500.
The policyholder’s cash value grows based on the performance of the index, subject to a cap and a floor. This means that the policyholder can potentially earn higher returns than a traditional fixed-rate policy, while also having a level of protection against market downturns.
One of the main benefits of Indexed Universal Life insurance for retirement planning is the tax-deferred growth of the cash value component. This means that policyholders can accumulate savings without paying taxes on the gains.
Indexed universal life insurance has some significant differences compared to IRAs and 401(k)s. Mainly it offers a death benefit and an option for tax-free withdrawals during retirement.
Additionally, policyholders can access the cash value through tax-free loans or withdrawals, providing a source of retirement income that is not subject to income taxes.
Key Takeaways
- Indexed Universal Life insurance combines life insurance and retirement planning into one policy.
- The cash value component grows based on the performance of a stock market index, subject to a cap and a floor.
- Indexed Universal Life insurance offers tax-deferred growth and tax-free access to cash value for retirement income.
Understanding Indexed Universal Life Insurance
Indexed Universal Life Insurance (IUL) is a type of life insurance policy that offers both a death benefit and a savings component. Unlike traditional universal life insurance policies, the cash value of an IUL policy is tied to the performance of a stock market index, such as the S&P 500.
The policyholder can allocate a portion of their premium payments to a fixed account or an indexed account. The fixed account earns a guaranteed interest rate, while the indexed account earns a return based on the performance of the chosen index.
IUL policies typically have a cap on the amount of interest that can be earned in the indexed account, as well as a floor that guarantees a minimum interest rate. The policyholder can also choose from various crediting methods, which determine how the interest is calculated and credited to the policy’s cash value.
One of the main benefits of IUL policies is that they offer the potential for higher returns than traditional universal life insurance policies, while still providing a death benefit for the policyholder’s beneficiaries. Additionally, the cash value of an IUL policy grows tax-deferred, meaning the policyholder does not pay taxes on the gains until they withdraw the funds.
However, it’s important to note that IUL policies can be complex and may come with higher fees and charges than other types of life insurance policies. Policyholders should carefully review the terms of the policy and consider working with a financial advisor to determine if an IUL policy is right for their retirement plan.
Benefits of Indexed Universal Life for Retirement
Indexed Universal Life (IUL) is a type of permanent life insurance policy that offers both a death benefit and a cash value component. It is designed to provide lifelong coverage and can also be used as a retirement planning tool. Here are some of the benefits of IUL for retirement:
Tax-Free Growth
One of the main benefits of IUL is tax-free growth. The cash value component of an IUL policy grows tax-deferred, meaning that you won’t pay taxes on the gains. Indexed universal life insurance has some significant differences compared to IRAs and 401(k)s. Mainly it offers a death benefit and an option for tax-free withdrawals during retirement. This can be a significant advantage for retirement planning, as it allows your money to grow more quickly without being eroded by taxes.
Flexible Premiums
IUL policies also offer flexible premiums, which can be adjusted to fit your changing financial situation. This means that you can increase or decrease your premium payments as needed, depending on your income and expenses. This can be especially helpful for retirement planning, as it allows you to adjust your contributions to your IUL policy as your retirement income changes.
Protection Against Market Losses
IUL policies also offer protection against market losses. The cash value component of an IUL policy is tied to a stock market index, but it has a floor that protects it from market downturns. This means that you can benefit from market gains without worrying about losing your money in a market crash.
Multiple Retirement Income Streams
Finally, IUL policies can provide multiple retirement income streams. When you retire, you can withdraw money from your IUL policy tax-free, which can supplement your other retirement income sources, such as Social Security or a pension. You can also take out a loan against the cash value of your policy, which can provide additional income without triggering taxes or penalties.
Overall, IUL can be a valuable retirement planning tool for those who are looking for tax-free growth, flexible premiums, protection against market losses, and multiple retirement income streams. However, it’s important to work with a financial advisor to determine whether IUL is the right choice for your individual needs and goals.
Potential Risks of Indexed Universal Life in Retirement Planning
While indexed universal life insurance can be an attractive option for retirement planning, it is important to consider the potential risks before making a decision. Here are some of the potential risks to keep in mind:
Market Volatility
Indexed universal life insurance policies are tied to the performance of a stock market index, which means that the policy’s cash value can fluctuate with market volatility. This can be a risk for those who are close to retirement age and cannot afford to lose a significant portion of their retirement savings due to market downturns. Keep in mind the positive aspect of an IUL in that it has a floor.
High Fees
Indexed universal life insurance policies can come with high fees, including administrative fees, mortality and expense charges, and surrender charges. These fees can eat into the policy’s cash value and reduce the overall return on investment. These can vary depending on which company and representative writes the policy.
Complexity
Indexed universal life insurance policies can be complex and difficult to understand, especially for those who are not familiar with the insurance industry. This can make it difficult to compare policies and determine which one is the best fit for a particular individual’s needs.
Insolvency Risk
Indexed universal life insurance policies are only as strong as the insurance company that issues them. If the insurance company becomes insolvent, policyholders may not receive the full value of their policy’s cash value or death benefit. It is important to research the financial strength of any insurance company before purchasing an indexed universal life insurance policy.
Surrender Charges
Indexed universal life insurance policies typically come with surrender charges, which can be steep if the policy is surrendered early. This can be a risk for those who may need to access their cash value before the end of the policy term.
Overall, while indexed universal life insurance can be a good option for some individuals as part of their retirement planning strategy, it is important to carefully consider the potential risks before making a decision.
Indexed Universal Life vs Traditional Retirement Plans
Indexed Universal Life vs 401(k)
Indexed Universal Life (IUL) and 401(k) are two popular retirement plans that people often consider. A 401(k) is a traditional retirement plan that allows individuals to contribute a portion of their pre-tax income to a retirement account. The money in the account grows tax-deferred. Indexed universal life insurance has some significant differences compared other retirement plans. Mainly it offers a death benefit and an option for tax-free withdrawals during retirement. IUL is a type of permanent life insurance policy that offers a death benefit and a cash value component that can be used for retirement income.
One advantage of IUL over a 401(k) is that the money in an IUL policy grows tax-free, not just tax-deferred. Additionally, IUL policies typically have fewer restrictions on when and how the money can be withdrawn, whereas 401(k) withdrawals are subject to strict rules and penalties for early withdrawals.
However, 401(k) plans often offer employer matching contributions, which can help boost retirement savings. IUL policies do not offer this benefit.
Indexed Universal Life vs IRA
Individual Retirement Accounts (IRAs) are another popular retirement savings option. Like 401(k)s, IRAs allow individuals to contribute pre-tax income to an account that grows tax-deferred until retirement. IRAs also offer a wider range of investment options than 401(k)s.
One advantage of IUL over IRAs is that IUL policies have no contribution limits other than what’s called the 7-pay limit or MEC limit, and is based on rules established by the Internal Revenue Code, setting the maximum amount of premium that can be paid into the contract during the first seven years from the date of issue in order to avoid MEC status.
IRAs have annual contribution limits that can be restrictive for high-income earners. Additionally, IUL policies offer a death benefit that can provide financial security for loved ones in the event of the policyholder’s death.
However, IRAs may offer lower fees than IUL policies, and IRAs do not require the purchase of life insurance, which can be expensive.
Indexed Universal Life vs Roth IRA
Roth IRAs are similar to traditional IRAs, but contributions are made with after-tax income, and withdrawals during retirement are tax-free. Like traditional IRAs, Roth IRAs have annual contribution limits.
One advantage of IUL over Roth IRAs is that IUL policies offer a death benefit, whereas Roth IRAs do not. Additionally, IUL policies have no income limits, whereas Roth IRAs have income limits that can restrict contributions for high earners.
However, both Roth IRAs and IULs offer tax-free withdrawals during retirement, which can be advantageous for individuals who expect to be in a higher tax bracket during retirement.
Indexed Universal Life vs Purchasing an Indexed Annuity
Annuities are like a savings account with an insurance company and become taxable when you start accessing money out of them. Indexed universal life policies can provide tax-free income and may be a good option for those who want to diversify their investments and have access to tax-free income.
When deciding between an annuity and indexed universal life policy, consider factors such as age, insurability, and diversification. For a deeper understanding of the pros and cons of each I’ve written a full article on why you may consider purchasing an indexed annuity.
Considerations Before Choosing Indexed Universal Life for Retirement
When considering indexed universal life (IUL) as a retirement plan, there are several factors to consider. IUL can be a good option for some individuals, but it is not suitable for everyone.
One of the primary considerations is the cost. IUL policies can be expensive, and the fees associated with them can be complex. It is essential to understand the fees and how they will impact the policy’s performance over time.
Another consideration is the potential for market risk. IUL policies are tied to the performance of the stock market, which means that there is a risk of loss. However, IUL policies also have a floor, which means that they will not lose value if the market performs poorly.
It is also important to consider the policy’s flexibility. IUL policies typically offer more flexibility than traditional life insurance policies, but they may not be as flexible as other investment options. It is important to understand the policy’s terms and conditions and how they will impact the policyholder’s ability to access funds in retirement.
Finally, it is crucial to consider the policyholder’s overall financial situation. IUL policies may not be the best option for individuals with significant debt or those who have not yet maximized their other retirement savings options, such as 401(k) plans or IRAs.
Overall, IUL can be a good option for some individuals, but it is essential to carefully consider the costs, potential risks, flexibility, and overall financial situation before choosing this option for retirement planning.
Related articles:
- What Are TEFRA And DEFRA Tax Citations?
- What’s The Minimum Amount You Can Invest In A Tax-Free IUL?
- Why You May Consider Purchasing an Indexed Annuity
- Indexed Universal Life: A Reliable Retirement Plan?
- What Does It Mean To Max-Fund An IUL?
- Why Rich People Choose IUL?
Conclusion
Indexed Universal Life (IUL) is a complex financial product that can be used as a retirement planning tool. While it has its advantages, such as tax-deferred growth and flexible premiums, it also has its drawbacks, such as high fees and potential market risk.
Overall, whether IUL is a good retirement plan depends on an individual’s specific financial goals and circumstances. It is important to carefully consider the costs and benefits of IUL and work with a trusted financial advisor to determine if it is the right choice.
One key consideration is the level of risk an individual is willing to take on. While IUL offers the potential for higher returns than traditional fixed annuities, it also carries the risk of market downturns. Individuals who are more risk-averse may be better suited for a more conservative retirement plan.
Another factor to consider is the fees associated with IUL. These can be high, particularly in the early years of the policy. It is important to understand these costs and how they will impact the overall returns of the policy.
In conclusion, IUL can be a good retirement planning tool for some individuals, but it is not a one-size-fits-all solution. Careful consideration of an individual’s financial goals and circumstances is necessary to determine if IUL is the right choice. Working with a trusted financial advisor can help ensure that the right decision is made.
This Week’s Action Step
Start learning even more about what Indexed Universal Life is and further refine why you want to use it as a solid retirement vehicle. I have written an in depth article entitled What Is Indexed Universal Life Insurance?
Build a simple spreadsheet or document you can take notes on and begin making notes using the Ben Franklin style decision making method. That entails making a list for in one column and a list against in another.
That’s it for today.
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