Hector_LaMarque_-_Carryback_Proposal_-_03_Securities_Proposal

The speaker is discussing the benefits of moving $100,000 from a CD to a mutual fund portfolio. They explain that CD interest rates are low and won't help the client achieve their financial goals. They compare the potential returns of the CD ($574,000) to the mutual fund portfolio ($4.6 million) over 30 years. They emphasize the importance of beating taxes and inflation and show how the mutual fund can provide a higher retirement income. They also mention the need to educate the client about the portfolio and its performance. Ultimately, they encourage the client to invest in the mutual fund for better long-term results. Hi everybody, the next section we're going to be covering is a carry back of a proposal this client had $100,000 in a CD and we're going to show them how it's in their best interest to move that into a mutual fund portfolio that we've put together for them. All right guys, what we're going to talk about next is remember that $100,000 you have sitting there in the CD at the bank, you know, because the client didn't really know what to do with it. We know with current in CD interest rates are, you know, hovering around 1 or 2 or 3%, that there's no way for you to get where you want to go financially and to retire and to have the kind of money you need there, right? We know that that's a no-brainer. You've got to make a move on that, got to do something different. So I just wanted to make sure that you're clear about where you're at right now. With that $100,000 CD, the potential investment value in 30 years, assuming a 6% return, which it is even that, this is being very generous by the way, is $574,000 and that would represent at 8% a potential $35,000 a year income to you in 30 years. Okay. Okay. What I'm proposing is taking that $100,000 and putting 5% in Van Kampen Comstock Mutual Fund and 5% in Van Kampen Equity and Income Mutual Fund and the potential investment based on using the past 30-year return, what it's actually done is as opposed to $574,000 is $4.6 million, which represents a $278,000 a year retirement income versus a $35,000 a year income. Wow. Big difference or little difference? Huge. Yeah. Okay. Good. Good. I want to show you how we got there, okay? Okay. That's what I'm going to do right now. I just want to show you what the actual, what it looked like. Okay. What I want to talk to you about is this is the historical illustration of the CD over the last 30 years. If you would have had that money in that CD during the same time period that we're talking about from 1976, which is roughly about a 30-year time period. During that time period, that $100,000 in a fixed rate 6% return, like I mentioned earlier, is $574,000. Okay. That's the average rate of return. Okay. Then what that represents, to give you a little more detail, it shows you if you took that money and you deposited it into the same type of investment and you started a withdrawal, right? Withdrawing 8% of that each year, you would have withdrawn $746,000, which is about $35,000 per year over that 20-year period. Okay. Your account value would be worth $363,000. Which isn't, you know, you've done okay, but it's not as good as you can do. Okay. I mean, it's a relatively safe place to be, but I'm going to show you how that doesn't work for you. Okay? Because if you did something a little bit different, if you put it in the 50% Comstock Fund and Bancamp Equity Fund, this is what it would do here. Okay. The same time period, 1976 to 2006, right? This account would have grown from $96,000, or $100,000 rather, to $4,653,000 during that same time period. Wow. So that's $574,000 versus $4,000,000. It's a $4,000,000 difference is what it is during that time period. Wow. That's huge. Yeah. You can't afford to stay in a CD when there's this kind of potential performance. Can you see that? Yeah. Because if you always want to accomplish the goals that you want to accomplish, you want to get where you want to go. If you've got to out, you've got to beat taxes and inflation, and you're not going to beat taxes and inflation in a CD, it's not possible. Yeah. That's a place, CDs are really parking places where you park your money for a very short period of time, and then you move it to somewhere where it can actually work for you. Yeah. And so we need to get that money out of that parking place and into some place where it can work for you. Absolutely. So that's a big difference, right? And during that time frame, that money, this is the amount of income, capital gains, and the money reinvested, all of this, you can put all of that together. That's what it works out to $4.6 million. Oh, okay. Okay? So, but this is the part that I'm really excited about for you guys, because one of the things we want to do is get you to retirement and be able to retire well and do well. So let's assume that you have that for 30, because you guys are younger, you're in your 30s right now, right? Yes. So let's assume that about 30 years down the road, you've accumulated that $4.6 million, and you need income now, because you're retired and you don't want to work anymore. This is assuming you're withdrawing 8% of that amount annually. And you can see that that amount the first year is $278,000. Wow. Pretty good retirement, huh? Yeah. Wow. Okay? And the next year it's $405,000. Wow. Right? And so it fluctuates a little bit, but you can see it never drops below $300,000 or any time frame. And over the total period of, let's say that's a 20-year time frame right there, so you're 65 and now it takes you to 85, hypothetically. So in this scenario, you would have withdrawn, had you had that money in there for that time period, you would have withdrawn $10,483,000. Wow. Pretty good, huh? That's excellent. Yeah. That's really fantastic. But the most exciting part of that, not only do you withdraw that money, you would have your account value is $8.6 million. So you could help your kids out. A lot. Yeah. Absolutely. So that's $8.6 million versus $362,000 in the CD. Huge difference. Yeah. Wow. Do you guys have any questions about whether this is right for you or not? No. It makes total sense. It makes total sense, doesn't it? Yeah. So where would our money be placed? Okay. Well, I want to show you that. I'm going to show you what the portfolio is made up of here. At this point, what I would do is I would get the literature on the mutual fund and go over step-by-step exactly what companies are investing, what percentage. I would show you all that information so that you'd be very comfortable with that. So that's what I would do during that time period is just take that information and go over that with you. Once you show that to the client, they're going to understand where it's invested. They're going to be very comfortable. Okay. Right? All right. One of the questions that are going to come up, as you saw a little earlier, is that they're going to ask, well, where does that money go? How does that work exactly? All right. Well, one of the things you're going to do at that point then, if they're having some questions, you're going to take the sales literature from the mutual fund and show them the portfolio, where that money is invested, what companies, what percentages, that sort of thing. You're going to explain to them why you've selected those particular funds versus other funds and based on their investment risk profile questionnaire, you're going to talk to them based on the kind of investor, this is the reason I chose these particular investments for you, and then just explain to them, show them the track record, if that's what they want to know, and then make it clear to them the reasoning for the selection of that particular fund group. Make that. That's all they want to know. They're not going to want to know every single detail. It's going to be rare that they're going to want to know a lot more than that. If they do, you're going to give them whatever they want. Whatever they need to know, you'll absolutely let them give them that information. My experience is that most people don't want to know every little last detail. They want to know that where I'm at right now and where I'm going is better, that I'm going to do better by doing this. If you can show them historical illustrations of exactly what's actually happened, not what you wished happened, but what did happen, then when you're making any kind of purchase on a car or an appliance or anything like that, the way we select things like that is based on what's the performance of that particular brand in the past. That's what you do. Basically, that's what we're going to do with this mutual. We're going to see what the performance is of that particular brand in the past, how they've done, because there's no way to guarantee future results, but we can always go back and see how they've performed in the past, and that's typically how we make our decisions on everything. We're going to do the same thing here. You get the client comfortable with the process, what they need to do, where they're going to be at. You understand it clearly. You understand how a mutual fund works. You'll probably go over some of the things like dollar cost averaging and all the different things of how they can withdraw their money and explain to them what that is and any fees that are associated with that as well, so they know what the fee structure is. You get them comfortable with all that information. You're not going to have any problem getting people to invest $1,000, $100,000, $1 million. It's all the same. It's just different zeros. That's all it is. The information stays the same.