Category: Uncategorized

The Rogue Agent goes to the archives!

  • How Walt Disney’s schleppy business plan made him a superstar

    True story:

    Every other year (or so) mom and dad would take me to Disney World.

    But…

    I was always upset because we only ever made it into The Magic Kingdom and I really wanted to go to Epcot. I remember thinking this thing must be really great because it’s impossible to get tickets for it.

    Anyway, we would stay with my aunt in Bartow and make the trek over to Orlando.

    I didn’t know it at the time but those precious moments I spent talking to Mickey and riding Big Thunder Mountain and visiting Tomorrowland… they almost didn’t happen.

    See…

    Walt Disney was such an amazing guy… I mean if you read about him… and I suggest that you do…

    … dood was fierce.

    He had a vision no one else could conceive of.

    … least of all the ex-spurts in the banking business.

    Here’s what I mean:

    One of his first projects was to start a movie company.

    Cost: $750.

    He asked his bank and they said…

    dun, Dun, DUN!

    “No.”

    They all believed it was a stoopid idea.

    So, he borrowed the money against his whole life policy (the insurer couldn’t turn him down because of the guaranteed loan provisions in his contract).

    Repaid it with interest… built up his cash values even higher and…

    Decided he wanted to do something more…

    He needed a lot of money for this crazy hair-brained scheme of an amusement park called…

    Disneyland.

    At the time, all the amusement parks in America were like something out of a graphic novel… seedy, dirty, places with characters you would absolutely NOT want in a photograph with your children.

    Disney had this idea that he could build a park that was clean, friendly, and so safe you could leave your child there unattended.

    Went to his bank… asked for the startup capital…

    And the bank said…

    dun, Dun, DUN!

    “No.”

    Well… not EVERYONE said no. He was able to secure SOME money… but not enough.

    Again… most banks and investors thought he was crazy… that this Disneyland idea was stooopid…. that the park would be closed and out of business in a year and totally forgotten.

    So… he went back to his life insurance company.

    In a later interview he commented on just how hard it was to get that project off the ground…

    ===

    “It takes a lot of money to make these dreams come true. From the very start it was a prob­lem. Get­ting the money to open Dis­ney­land. About $17 mil­lion it took. And we had every­thing mort­gaged, includ­ing my per­sonal insur­ance…”

    ===

    And the rest is history.

    What was the return on that investment he made with his boring old life insurance policy?

    I honestly have no idea off the top of my head.

    But it wasn’t 2% or whatever the ex-spurts and geew-roos are saying nowadays.

    Anywhoo…

    If you have absolutely no interest in that kind of control over your moolah, then away with ye. I can help you not.

    BUT…

    If that kind of flexibility and control over your money DOES appeal to you… and you’re tired of begging for money from lenders for a dream you KNOW will work, come check out what me and my minions are doing with life insurance and how we might be able to help you build a custom insurance plan of your own.

    More info here:

    https://therogueagent.com/

     

  • J.C. Penney’s Depression-proof financial strategy

    Most people don’t realize how terrible the Great Depression was (and how awfully close we are to another Recession/Depression).

    1930s?

    That was like a bazillion years ago, right?

    People singing for food.

    People sleeping on in the streets.

    The breadlines.

    People standing in long lines at the bank… unable to withdraw money from their SAVINGS account (shout out to IndyMac Bank!).

    But… it wasn’t just bad for middle America.

    Wealthy businessmen had it rough too.

    How rough?

    Like… some of the most successful people in the U.S. were on the verge of bankruptcy.

    Like… James Cash Penney.

    Founder of J.C. Penney.

    His investments all tanked and he almost lost his store.

    Fact is… the Depression sent him into a very real personal depression of his own.

    He was barely able to function.

    If you’ve ever had the rug yanked out from under you, I’m sure you can relate.

    Maybe your boss firing you at the most inopportune moment… or you’re riding high and business is going well and then… BOOM.

    Everything blows up in your face.

    Well… this is EXACTLY what happened to Penney.

    By the 1930s, his name recognition was awesome and people trusted his brand…

    And at the same time… he was having trouble keeping the doors open.

    The one thing… the ONLY thing… that saved him was his $3 million life insurance policy.

    He borrowed against it to pay salaries and to keep the lights on.

    It is THE reason (financially-speaking) J.C. Penney is still around today.

    It really should have failed.

    But life insurance companies were some of the only institutions that were handing out money… because they were actually making a profit.

    Not banks.

    Life insurance companies.

    So… he was spared.

    Americans who didn’t own whole life insurance?

    Or… people who opted for investments INSTEAD OF life insurance (instead of in addition to)?

    Not so much.

    And today… these same life insurers are still around financially STRONGER than they were in the ’30s.

    Anyway, I teach clients how to take advantage of the same types of policies Penney used to save his store… today, they work a little bit better due to the customizability of the contracts.

    If that kind of financial security appeals to ye, then come book an appointment so you can join the club:

    https://therogueagent.com/

  • The dark side of whole life insurance

    Subscriber, new client, and all-around great guy Thomas, sends in a question to Yours Gluteny:

    ****

    David,

    I’ve talked to a couple of people about whole life who’ve had it in the past, and they said that they had eventually dropped it because after a certain point, their premiums rose to a level they couldn’t afford. My policy illustration shows it never changing. Do you have an idea of what they’re referring to?

    ****

    This is a great question.

    Most whole life policies on the market today are level premium whole life.

    However, there are advisors selling hybrids and other “lookalike” policies.

    If you read or hear about people having problems with rising insurance premiums, here’s why that happens:

    1) They do not have guaranteed level premiums. A policy illustration (and the insurance contract itself) will tell you flat-out whether or not you have guaranteed level premiums. If it doesn’t say so, assume your premiums may rise.

    In my business, I ALWAYS use guaranteed level premium contracts because it’s simpler, there’s less risk of people having to drop their policy later, and I haven’t found a disadvantage to that approach.
    2) The policy is a variable whole life policy as opposed to a fixed (guaranteed) contract. This means cash values are invested in the stock market, which WILL affect premiums.
    3) The policy is a graded premium whole life (which is a type of policy where premiums start low and eventually rise, sometimes substantially–it’s usually sold as a low-cost way to “dip your toe into” the product).
    4) The policy is a blended whole life (a blend of term and whole life, where the term premium continues to rise each year and eventually becomes prohibitively expensive if kept).
    I sometimes use blended whole life… but mostly when someone wants to put a large lump sum of money in in the first couple of years of the policy. We then pay off the term pronto to avoid the ongoing costs. The underlying reasons why we do it this way gets a bit technical but basically it allows the policy to keep its tax-advantaged status and gives the client some flexibility as to how premiums are paid using lump sum amounts.

    If you don’t pay off the term insurance, what happens is… those premiums keep rising, causing your whole life premiums to rise. Blended whole life is sometimes sold as a cheap way to purchase whole life… but agents often neglect to tell the client they need to keep converting the term to whole life to keep the premiums from getting out of control.

    5) Sometimes agents try to do weird funding options where they assume from the outset that dividends will permanently reduce the premium payments (which makes it look more affordable). If dividends are insufficient to cover premiums, premiums appear to rise (when in reality they were initially higher than what the client could have afforded).

    6) Another possibility is the client is confused about what they actually own, either because they mixed it up in their mind or the agent lied to them or misrepresented it. For example… Universal life LOOKS like whole life, but is a combination of non-level term insurance and a cash value account… on paper, it looks like a more sophisticated version of whole life…

    … but it has variable premiums that almost always rise over time unless you do a lot of maintenance to keep the internal costs in check. I had to fix a LOT of these when I worked for MetLife (back in 2005) and a lot of people thought they had whole life because the agent told them they had “universal whole life insurance”.

    Argh!
    No no no no no!

    That’s “the dark side” of the life insurance industry… the financial advisors, investment advisors, and life insurance agents who… quite frankly… don’t know what the fugk they’re doing.

    I hate to hear about cases where people have a bad experience with a financial product that SHOULD make their life simpler… not more complicated.

    It’s one reason I stick to the basics (and suggest my clients do too) when designing thse things. It’s also why I don’t think it pays to DIY or cut corners when putting together a comprehensive insurance and savings plan.

    Now, some of my subscribers will undoubtedly take this to heart. They don’t want to be scrwed over.

    But, sadly, many will not heed my advice

    ¯\_(ツ)_/¯

    Simple is boring.

    It’s not secksy.

    It’s not what [insert guru who complicates the crap out of financial planning] says you should be doing.

    For those people, I bid thee farewell. Good luck to you.

    As for me?

    No thank you. No thank you. No thank you.

    If you happen to think like me, come join my merry band.

    More info about my custom life insurance services here:

    https://therogueagent.com/

  • Heathen financial secrets

    Every once in awhile, someone will ask:

    “What do you think of Dave Ramsey?”

    He be very popular.

    And for good reason. His advice is very “feel good.” It gets you going down the path of being debt-free. He also tells you to save moolah and pay cash for everything.

    Once you’ve mastered the basics, he tells you what to invest in to make 12% returns (I think he’s still using that figure but don’t quote me on it).

    What’s not to like?

    More:

    One of the things people LOOOOOOVE about him is his “no nonsense” attitude and a (very) healthy dose of religion that goes with it.

    He ain’t afraid to tell you you’re being dumb with your money.

    And he ain’t afraid to quote scripture to back up his financial advice.

    And if you AREN’T doing things his way… he’s going to whip you with his biblical noodle.

    And (for the most part) this works for him.

    And it works for his legions of followers.

    The fanboys (and girls).

    And pretty much anyone who needs to be constantly told what to do with their money, what to think, and how to act.

    Me?

    I take a different approach.

    My methods require people think for themselves and follow a value and principle-based approach to finance.

    And if you read my email from the other day, you know I’m an atheist so everything I do is (by definition) not faith-based (the complete opposite of Ramsey).

    The ONLY tools I have are science and reason.

    More info here (if you’re not afraid of my heretical ways):

    https://therogueagent.com/