[00:00:22] Hi, everyone, welcome to another wealthy and wise Wednesday. I hope you’ve had a good week this week, hope everything is going well for you. You know I got a thinking here today, I almost say the same intro every time, so if you are listening to two or three podcast in a row, I am always asking you how your week went and it might be the same day, so I am trying to curb that a little bit. So I am always looking for the safe side of things, you know when I think about the wealth tree and how that works and making sure that our money is safe first and then we built up a big stockpile of it, I am always trying to compare what is really happening inside the safe investment to you know obviously we want to make sure we are getting the biggest bang out of our safe money as well and when we think of safety, a lot of times our mind goes to those commercials.
[00:01:23] Right now, there is just a ton of them on TV, seems to see one or two every time I turn it on and the safety is always built around gold. I can’t remember the actor name. William [00:01:37] I think his name, you know he is always talking about taking money and buying gold, so and I think in history, people have thought of gold as a safe haven so to speak and of course as you know if you have listen to my videos and podcast, we like building high cash value, life insurance policy for our safe, accessible capital. So I got to thinking how this might look, I went back to 1872 and the price of one ounce of gold at the time in 1872 is 23bucks.
[00:02:21] Okay, so if you have a 100 dollars, you basically will just call five ounces of gold. You could buy 5 ounces a gold for 100 bucks. Well, today gold is 1335 as of today’s podcast. So five ounces’ times 1335 dollars is 6675 bucks. So gold grew from a 100 to 6600 hundred.
We know that same hundred bucks if it was in a whole life policy would be worth over 244,000 dollars. Just a thousand bucks back then will be worth over 2.4 million and by the way, it did about 1280% better than treasury bonds and it did about 200% more return than the DOW. [00:03:13]
Now, you might ask well how can that be. [00:03:17] certainly the DOW has an average that is higher than the rate of return inside of a whole life policy right?
[00:03:22] well there is a financial rule when it comes to fluctuating investment and I have said it a million times, actual return does not equal average returns and when there is loses involved, it is never going to be the same.
Well as the [00:03:43] in the last 100 years, every has a losing year, well of course it has may years losing years, some very significant. So we know immediately that when an average return is quoted, that it certainly not going to reflect the average return. It is probably one of the biggest, we don’t want to call it a lie but it is kind of the biggest lie of wall street is to quote averages rather than actual returns.
[00:04:13] So the real financial wonder if you will of whole life is that there has never being a loss and if you couple that with what we like to use, a mutual dividend paying company who has never miss paying a dividend in well over a 100 years, so certainly in that same time period. Now you have annual compounding with no loses and Einstein actually called that the eighth wonder of the world or something like that because with no losses, guarantees are continuing compounding, it is quite a wonder and you just don’t have that with a [00:04:56] well gold going back to our gold conversation, you know it is an interesting commodity and again I am sure you heard the commercial as well as I do how gold can protect your asset and if the economy just taint then gold is going to be only thing of value and you know maybe some of that is true. I don’t think any of us living today have really lived in a situation where the entire economy collapse and we have to basically start over from scratch and so we basically got this I call them gold bugs, we got this gold bugs that they see gold in the future as some sort of currency replacement that they seem to think that if the US dollar crash, that gold will somehow jump in and be the currency replacement.
[00:06:02] Well now, you got to think about that for just a second, gold is a hard tangible asset, right now when we use US currency, we use it often times with a piece of paper called the cheque, we often use it with a credit card and then money exchange is that way but we don’t carry around you know cash so to speak and if the US dollars fails that means huge bank building are just basically goes down and so we don’t really have any currency. Now that is the point where they feel like gold is going to step in and be the safe haven but do you really see people packing around gold for their transactions. I mean gold is pretty heavy and what would have to happen is [00:06:57] would essentially have to seize and only exist between two people that are in the same location to trade their you know gold for food or whatever it is.
[00:07:12] If you want to purchase something for someone and the next State for instance, how are you going to get that gold there, do you drive, will we have airplanes, will we even have cars, how are we going to make that trade, so all trading will be localized almost instantaneously. So gold really becomes a very clumsy solution when or if the dollar would have fail. So I don’t know, you know certainly it might be a safe haven to some of your capitals and maybe a money to just make sure you are going to have something because the reality is the most important thing and circumstance like that is food. Anyway, what is always interest to me is that if you call the number of on the gold commercial, 1800 buy gold right? You know the ones, you know these are the one who are advertising that economy could be crashing down and you need to run to gold for the safe haven but this was very interesting to me.
[00:08:18] How do you buy gold, what do they accept from you to buy their gold? You got it right, it is the dollar. So they take your dollars and sell you gold and it always make me just feel that little hmm, why would they ever sell gold for the dollar, if the dollars are going to become worthless, I mean wouldn’t you be hoarding all the gold you could and not selling out if you really believe that. So it is funny to me that they can tell you how bad things are going to be, how the dollars could collapse but yet, they will still take dollars if you are willing to buy their gold. Well anyway, and alternative for the same two hundred years’ period has always being that has kept your money safe, accessible, liquid in the tax advantaged environment. It is guaranteed, it has always been inside of a mutual dividend paying life insurance company. This goes back to your grandparent and your great grandparent who use this kind of vehicle and it is even so much better now because we can over fund and put in more cash than our parent, grandparents, and great grandparents most likely could have.
[00:09:46] So things have changed and it is proven to be a very secure safe haven for both good and bad time, through the depression, through recession, through good markets, through bad markets. So it really does become a very good alternative and a safe place to have your safe money, it is also very good bond alternative, a lot of people get out there and they buy bond fund and they buy bond directly and the reality is those could just get beat up like crazy if interest rate starts to go up like the feds would like them to and that is not going to bold well for bond holder. So this becomes a very good place, a very good alternative for those who wants bonds but don’t want to take the risk nor the losses if interest rate starts to creep up and it becomes, if we go back to our wealth tree conception where the root asset are what hold up our wealth tree.
[00:10:51] That is our strong and stable money, it becomes a very good place to store those rude assets and if we overfund this policy and we pack them full of cash, it also becomes our opportunity fund as well. So anyway just something to think about especially when you see this commercial, you might want to ask yourself, why do they want my cash for their gold, if this all is going to come crashing down and we all do want some sort of safe haven, some place to store our capital and it has just being proven that even better than gold, better than the dough over the last number of decades that whole life can be a really good solid place and especially if we can over fund it and really build that cash quicker.
[00:11:41] So alright that is it for this podcast and video, hope you enjoyed it, hope it got your mind thinking and if you have any question as always send them to firstname.lastname@example.org, I will answer them as quick as I can and in the meantime you have a great remainder of the weekend, the good weekend and we will see next week and until then take care.