27 December, 2006

Important Thoughts, Financial and Economic Advice

Posted by alex in Alex Linder, Financial Column, George Lenz at 7:29 am | Permanent Link

By George Lenz

Choosing appropriate life insurance is an important decision to make, either for young single White men and women or for a newly-wed White couple. The right choice would provide their dear ones with financial security in case of misfortune, while choosing the wrong kind of life insurance often means years of wasted premiums and financial distress in the old age. Unfortunately, while in the past the decision about choosing the insurance policy was one of the most important financial decisions young White people made, now more and more Whites are misled by unscrupulous financial advisors, who recklessly suggest them minimal coverage, in order to be able to manipulate their savings in risky stock speculations. Such investment advice often left decent and hard-working White men and women broke and unable to meet their living expenses. Life insurance in contrast, provided for many a safe and reliable financial lifeline when White people need it the most – in the old age.

The simplest form of life insurance is term life insurance – a contract that covers a pre-determined period of time. If during this time insured is deceased, the insurance benefit is paid to beneficiary. It is the cheapest but also the least reliable type of insurance, since the survival rates have increased dramatically, and so did insurance premiums. The drawback of such type of insurance is that the contract often expires when coverage is needed the most: in the advanced old age. This type of insurance makes most sense for well-to-do professionals with combined incomes exceeding $100K, who do not advance insurance coverage, and for lower and lower middle-class employees with combined incomes below $40K, looking for affordable minimal coverage. The best way to choose term insurance is to shop around for best rates in your age category. If you value security of the policy above all else, I suggest Fidelity and Guarantee Life Insurance (http://www.omfn.com/) or American General Life Insurance Company (http://www.aigtermlife.com/) – both offer competitive rates, and possess unquestionable financial security and reputation.

Whole life insurance contract in contrast is valid till the death of the insured, with rising coverage, guaranteed by the insurance company no matter how the invested premiums perform. Yet it requires continuous payment of specified premiums as the condition of policy being valid, unless the provision is inserted in the policy that declares the policy fully paid when a specified amount of paid premiums is reached. The advantages of whole life insurance are its continuity, reliability and significant rising coverage obtained at a time when it most needed. Yet given the inflationary environment the modern U. S. economy is at, this type of insurance is likely to suffer the most from fiscal irresponsibility of the ruling democratic regime, and thus is likely to trail other saving vehicles or even other types of insurance. I wouldn’t suggest this type of coverage for most customers, unless the policy is denominated in a currency with strong reputation – euro, or even better Swiss franc. In such instance the policy most makes sense for middle class professionals with combines incomes in $40-60K range. Here I would suggest American General Life Insurance Company (http://www.aigtermlife.com/) – based on continuous superior performance of its whole life policies.

Both universal life insurance and variable universal life insurance allow greater transparency and flexibility than two previous types. Here the insurance benefit is recalculated every year as the difference between paid premiums plus interest and costs of insurance, and thus provide a better protection against inflation. At the same time the number of allowed investment vehicles is greater, especially in case variable universal life insurance, and there are significant tax advantages as well, since the IRS does not regard income on the policy as a current income up to a specified amount of premiums. Yet these advantages come at the expense of the much greater risk, even though this type of insurance may perform best in an inflationary environment. This type of insurance makes the most sense in case of affluent managers and business owners, since it works best at coverage level above $500K. The choice of the company in this case would depend mainly on specifics of each customer’s situation, and would require a local insurance broker, since rates may vary significantly.

Thus for a White Nationalist term insurance makes the most sense. If he is in $40-60K income range and has an access to a whole life insurance denominated in a reputable currency, euro or Swiss franc, he may consider whole life insurance. Otherwise, I would suggest as starting point term insurance with returned premiums, term no less than 30 years, coverage nor less than $500K, depending on income, from Fidelity and Guarantee Life Insurance (http://www.omfn.com/) or American General Life Insurance Company (http://www.aigtermlife.com/) or more competitive local provider, should it be available.

Those respected VNN readers, that follow the column, know, that I am skeptical of mutual funds, partially because of their significant fees, but mainly because I believe investment in individual stocks, when done with appropriate due diligence can deliver superior returns. Yet, if a gentleman is determined to invest in mutual funds, I suggest to him investing in exchange traded funds, instead of investing in traditional mutual funds.

Exchange traded funds (ETFs) are similar to traditional mutual funds except that they are bought and sold on a stock exchange, just like stocks. That is, each ETF is a stock that represents ownership in a portfolio of companies. The ETFs currently available are all indexed funds. That is, you can buy one share of stock that represents ownership in the S&P 500 Index, the Dow Jones Industrial Average, or the NASDAQ 100 index. These three ETFs are nicknamed Spiders, Diamonds, and Qubes. In general, ETFs have very low expense ratios. Every year, actively managed traditional mutual funds cost their investors 1% to 3% in fees and commissions. It is hard to increase your wealth when you are constantly losing your profits to expenses. Indexed ETFs have much lower costs, about 0.18% to 0.70% each year. The structure of the current ETFs allows for even lower annual expenses. Annual expenses for the ETFs tracking domestic stocks range from below 0.10% to 0.60%, with most around 0.25% or less. The ETFs tracking international indices have a slightly higher fee.

Why are ETF expenses so low? First, since these ETFs are all indexed portfolios, they can charge a lower management fee and experience low turnover. The portfolio does not have to pay for an expensive portfolio manager to pick stocks. Instead, the portfolio just buys the index it is tracking. Indexing also reduces the amount of buying and selling action of the portfolio. After all, a portfolio indexed to the S&P 500 Index only has to change its portfolio when the index changes. The second reason for low expenses is the small overhead of ETFs. Mutual funds have to do all the record keeping of who owns shares, mail monthly statements, and allow for daily fund sales and purchases. For ETFs, these overhead costs are born by the stock brokerages. That is, your broker keeps track of your shares and allows for trading, just as for your other stock purchases. The lower overhead allows ETFs to charge a lower annual fee.

One popular advantage of the ETF is tax efficiency greater than that of traditional mutual funds. Actively managed traditional mutual funds will buy and sell stocks throughout the year and thus generate capital gains liability. You receive mutual fund distributions at the end of each year. But remember, you only pay capital gains tax on stock investments when you sell the stock. For the long-term buy-and-hold investor, stocks are more tax efficient than mutual funds. ETFs are stocks that represent ownership in the underlying portfolio. Although they are portfolio stocks, they have the tax advantage of company stocks. That is, you will only owe capital gains taxes when you sell your ETF shares. For the buy-and-hold investor, this could be far into the future.

Other advantages of ETFs also stem from the fact that they are traded like company stocks. For example, ETFs can be purchased through any brokerage, whereas traditional mutual fund trades must be conducted directly with the fund, through an advisor, or on some brokerage’s “mutual fund supermarket.” Traditional mutual funds are also typically only traded at the end of the day. You tell your traditional mutual fund broker you wish to sell shares, and he or she will wait until the end of the day, determine the price (net asset value), and then execute your trade. ETFs are traded on the exchange like other stocks. This means you can get real-time prices throughout the day and make your trades any time. Lastly, most traditional mutual funds require minimum investments. To purchase these funds, you must have the $2,000 to $5,000 initial investment, although most funds wave this minimum if you sign up for monthly contributions. On the other hand, the minimum investment for an ETF is one share. One share will cost the price of the share (typically $50 to $200) plus the cost of the commission.

* * *

I am often asked whether a particular business idea makes sense; sometimes informally, sometimes formally, while evaluating business plans. Today I’d like to share with you a business idea, I was thinking over the Christmas Holidays – White Nationalist e-card shop. Sending Christmas cards, I thought, how wonderful that be if I would be able to choose from old time e-cards, be they 19th century Christmas cards, or in some cases National-Socialist Germany holiday cards, to congratulate my family, friends, comrades and acquaintances. I searched at AmericanGreetings web-site, and over the internet – but in vain, there were few old times Christmas cards, and no national-socialist e-cards. Basically I was disappointed, and thought: why wouldn’t a White Nationalist start such e-card shop. There initial capital required is below $10K, what is required is minimal knowledge of graphic software and little creative skills to reframe the old style holiday cards. Personally I would rather pay $10 to a White Nationalist e-card web site for annual membership, than $14 to a globalistic capitalist website that caters to non-Whites. I talked to local comrades over that, they are currently thinking over the possibilities, and urge all respected VNN readers to do the same.


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