Essential Lesson #1

Feeding the Problem-Solving the Problem

Many products in the financial services industry are sold for the right reason but result in the wrong solution. Many of the projected results of these products contain elements that are problematic for the average American. These are problems that they would rather avoid. There are fears that a desperate government may change the tax laws that will impact everyone’s financial future. These thoughts may lead many to believe that, in the financial world, we continue to feed the problems instead of solving the problems. Think of all the products the financial services industry offers that result in feeding the problems we fear such as higher taxes, lower benefits and inflation and the devaluation of the dollar.

The Problems

The problems that concern many people now and in the future are TAXES, RISK, INFLATION, THE VALUE OF THE DOLLAR and GOVERNMENT or PRODUCT PENALTIES. Unfortunately, many Americans have already experienced how devastating these problems can be. You would think the common-sense solution to these problems would be to avoid them at all costs, but traditional financial thinking to lead average Americans down a path they really don’t want to go. In the end, they are surrounded by problems they desperately wanted to avoid. Average Americans continue to outsource their money to companies whose only concern is the success of the company’s bottom line, not theirs.

If a program designed by the Federal Government such as 401(k) uses products that are sold by a bank or financial company, who do you believe will profit from this process – the government, the financial-services industry, the banks or you, the public? Having answered that, now put into order the entities that are guaranteed payment from these transactions. Upon further examination, you may discover wen a financial product is purchased that the consumer, you, is typically the last one to get paid. Finally, do these products and programs solve your problems as a consumer when it comes to taxes, risk, inflation, penalties, and the value of the dollar?

Predictable Results

The financial-services industry offers up a mind-numbing variety of products that are surrounded by rules, regulations, penalties and in many cases, some amount of risk and taxation. Their solutions in many cases include stocks, mutual funds, bonds, retirement programs (401)k, (IRAs) and bank savings programs (CDs and saving accounts). The marketing of these companies and banks is almost inescapable and overwhelming. The average person is led to believe that these products are the financial solution he needs.

You must now STOP and ask yourself a question: Do these products solve the problems of taxes, risk, inflation, penalties, and the value of the dollar in the future or do they continue to feed these problems for the rest of my life? It seems the only thing that is predictable in traditional financial thinking are the problems these products create. These problems may be the only things that can be guaranteed in the future.

The Deception

Any attempt to solve a problem will be difficult if all the factors surrounding that problem are not considered. Einstein once said that you can’t solve a problem by using the same thought process that created the problem in the first place. Many times, traditional thinking focuses on a desired math result, not a desired life result. There is a big difference between predicting the future results and planning. Predicting future results uses math as its center point while planning takes into consideration all the factors surrounding the problem. The deception is that demographic shifts and current economic trends will not impact the future, yet these elements will impact future results the most. One must understand that the future trends and shifts are vital to stabilization of the planning process. Without knowledge of trends and shifts, most predictions and projections will come up short. The success of traditional financial products is not controlled within the products themselves. The success of a product is decided on how that product reacts to the demographic shift and the economic trends of the time. Much of today’s traditional thinking doesn’t solve the problems we face: it continues to feed the problem far into the future where it will simply compound the unintended consequences.

The Devastating Impact On Your Financial Success

What you know today will determine where you will be financially five to 10 years from now. The products available to you in the financial world will not make you smarter simply by purchasing them. Success can be achieved only when you understand how these products impact your future. Will these products solve the problems of taxes, risk, inflation, penalties, and the value of the dollar, or will they simply compound the same problems in the future? The challenge is to avoid as many future problems as you can.

The flaw in traditional thinking is the belief that simply purchasing a financial product assures some type of success. But products over a period of time do not adjust with trends and shifts in the economy. The question is, who or what will impact the trends and shifts in the economy? Who or what will have will have a direct impact on the problems you face in the future? It will be the government.

The government will determine your financial success. The government controls the elements of the economy that determine the success of the financial products you purchase. The government’s actions will determine future taxes in your life. The government controls elements of inflation, which is determined by the amount of money they print. It is the government that controls the penalties and regulations on industries and the financial products you purchase. Government actions also impact the financial marketplace, which could create substantial risk to individual investors. It is the government’s action that ultimately depreciates the value of the dollar worldwide. No product can solve these problems. Without having some knowledge of economic trends and shifts, buying financial products could be an aimless shot in the dark.

Let’s measure the impact the government has on the problems you want to avoid and how these problems will limit your financial success and growth in the future. The government has selected the option of continuing to feed the problems they face in the future. Their solution is to simply throw more money at the problem….your money. The government’s problem is that they need more revenue (taxes) from a declining workforce, an aging population and citizens that have an inability to save and invest for their futures. The government has direct control over the problems you face, so it may be fair to say that your financial future is connected to the financial success of the government.

The real success of any financial product will be directly affected by the challenges that the government faces. The unsolved mysteries of the Federal Government will impact government spending, debt, and the ability to collect the taxes needed to pay for these challenges. The government’s only source of revenue is to collect taxes and print more money. Both of their solutions will create problems for you. Taxes on investments, savings, property and purchases will reduce you spendable income. Simply printing more money could create inflation, increase the price of goods you buy and decrease the value of your hard-earned money. To compensate for these government solutions, you may to reduce your standard of living.