The Last Assets Standing: Securing Wealth in Uncertain Times
Adrian C. Spitters, CFP?
Private Wealth Advisor | Author | Commentator | Speaker | Offering De-Risking Wealth Solutions For Affluent Business Owners, Farmers, Families & Family Estates | Contact: [email protected]
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Source: The Forgotten Asset
The Forgotten Asset: Mutual Life Insurance Companies
In times of financial instability, one often overlooked asset is mutual life insurance companies. These companies differ significantly from life insurance stock companies in that they are owned by their policyholders rather than shareholders. This fundamental difference means that profits generated by the company are distributed to policyholders, not to stockholders. This structure makes mutual life insurance companies a more stable and secure option during financial turmoil, as they are not driven by the same profit-maximizing pressures that can affect stock companies. In a financial collapse, mutual life insurance companies could be one of the last assets standing, providing a reliable safety net for those who hold policies with them.
A Closer Look at the Current Financial Risks
In his recent presentation, "The Forgotten Asset," Peter J. Merrick delved deeply into the risks embedded in the current financial system. He pointed out the worrying concentration of market power within a small number of companies, which poses significant risks to the overall stability of the market. Merrick illustrated this with a graph showing that over 50% of the market's movement is controlled by just a handful of companies within the S&P 500. This concentration creates a precarious situation where any significant disruption to these companies could send shockwaves through the entire financial system.
Additionally, Merrick highlighted the dangerous levels of debt held by banks, particularly focusing on the risks associated with bonds and mortgages that are currently underwater. He pointed out that the last major market correction in 2008 was a small dip compared to the potential impact of the current levels of debt. Merrick emphasized that the financial system is more vulnerable now than it was in 2008, making it critical for investors to consider safer, more stable assets.
The Threat of Bail-Ins
One of the most alarming risks Merrick discussed is the concept of "bail-ins." Unlike bailouts, where the government injects taxpayer money into failing financial institutions, bail-ins involve the bank seizing depositors' funds to stabilize itself during a crisis. Merrick referenced the 2013 financial crisis in Cyprus, where bank accounts with more than $100,000 were seized, and depositors were issued paper instead of retaining their money. This example serves as a stark reminder that just because something hasn’t happened recently or locally doesn’t mean it can’t occur.
Bail-ins are now a legal option in many countries, including major economies and the European Union. This legislation allows banks to convert deposits into equity in times of financial distress, effectively turning depositors into involuntary shareholders in a failing bank. Merrick’s presentation stressed the importance of being aware of these risks and preparing for them by diversifying into assets that are less susceptible to such drastic measures.
Mutual Life Insurance Companies: A Safe Haven
In contrast to banks, mutual life insurance companies operate under much stricter regulations. Merrick explained that mutual life insurance companies are required to maintain 100% reserves for their liabilities, unlike banks that operate under a fractional reserve system with minimal reserve requirements. This makes mutual life insurance companies a significantly safer place to store wealth.
Furthermore, the growth within a participating life insurance policy is tax-free, and policyholders can access these funds without triggering tax events. This provides a level of financial flexibility that is difficult to achieve with other investment vehicles. Upon death, the policy’s death benefit is paid out tax-free, offering substantial advantages for estate planning and wealth transfer.
The Waterfall Method: Protecting Generational Wealth
Merrick introduced the "waterfall method," a strategy used by wealthy families to pass on wealth through generations using life insurance policies held within trusts. This approach allows families to live off tax-free policy loans while simultaneously growing the trust’s assets, ensuring a legacy of financial security. By placing assets, particularly life insurance policies, into trusts, families can access funds without triggering tax liabilities, safeguarding their wealth against financial market uncertainties.
This method is not only about preserving wealth but also about ensuring that future generations benefit from today's financial decisions. The trust structure, combined with the stability of mutual life insurance companies and the enduring value of Gold, provides a robust foundation for long-term wealth preservation.
The Strategic Value of Gold
Gold’s role as a foundational asset in any portfolio cannot be overstated. As Merrick discussed, Gold serves as a hedge against inflation, market volatility, and the systemic risks inherent in the financial system. During his presentation, Merrick made it clear that while many assets can lose value during economic downturns, Gold often retains or even increases its value, making it an essential component of a well-rounded investment strategy.
Merrick’s insights into the concentration of market power and the risks associated with the current debt levels highlight the importance of holding tangible assets like Gold. Unlike paper assets, Gold is not subject to the same risks of devaluation or seizure, making it a reliable store of value during times of crisis.
Contact New World Precious Metals to discuss your purchase options.
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Call to Action
The time to act is now. The financial landscape is shifting, and the security of your assets could depend on the steps you take today. Don’t wait until the collapse is upon us—prepare now by reviewing your financial strategy, focusing on risk mitigation, and considering the strength of your assets. Whether you're a seasoned investor or just starting, it’s crucial to ensure that your wealth is protected and positioned to thrive in whatever the future may hold. If you haven’t already, consider the role of mutual life insurance companies in your portfolio and explore the most secure assets that will stand the test of time. Let’s work together to keep your financial future secure.
If you need Peter Merrick's invaluable expertise in Executing Tax Solutions Through Life Insurance so that your Business, Family, Wealth, and You are De-Risked and Protected, let's schedule an introduction to Peter J. Merrick by CLICKING HERE.
Watch Full Presentation of The Forgotten Asset Here:
Exploring the U.S. for Wealth Security
Amid economic uncertainty and high taxes in Canada, many affluent Canadians are considering relocating their wealth to the United States. The U.S. offers a more favourable tax environment and stronger asset protection laws. Peter J. Merrick, a renowned cross-border specialist, assists Canadians in navigating international wealth management complexities, facilitating seamless asset transfers to diversify holdings and safeguard their hard-earned assets from potential risks.
For Full Details, CLICK HERE
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