 | | |
| The Last Chance Millionaire: It's Not Too Late to Become Wealthy | 
 enlarge | Author: Douglas R. Andrew
Publisher: Business Plus
Category: Book
List Price: $24.99
Buy New: $2.08
You Save: $22.91 (92%)
Buy New/Used/Collectible from $2.08
Avg. Customer Rating:  (25 reviews)
Sales Rank: 135224
Languages: English (Original Language), English (Unknown), English (Published)
Media: Hardcover
Number Of Items: 1
Pages: 368
Shipping Weight (lbs): 1.3
Dimensions (in): 9.1 x 6.2 x 1.5
ISBN: 0446580538
Dewey Decimal Number: 332.02401
EAN: 9780446580533
ASIN: 0446580538
Publication Date: June 12, 2007
Release Date: June 12, 2007
Availability: Usually ships in 1-2 business days
|
| Customer Reviews:
 Compelling, But Glosses Over Significant Risks August 10, 2007
68 out of 99 found this review helpful
This book presents a seemingly compelling case for a particular investment strategy. However, it gives only a pro forma nod to the risks. I will address those risks, later in this review.
Regardless of any analysis of the author's recommendations, the issues he addresses are ones everyone should look into carefully. Even if you decide his investment strategy is not for you, this book is worth the read if it prompts you to look at how you are investing now. I agree with Andrew that most of us don't handle our money or our equity very well.
Andrew brings up many good points that can help people improve their personal balance sheets. In that sense, he does us all a service by offering this book. On the other hand, he takes the reader beyond that onto ice so thin I can hear it cracking as I read. If you can tell where the cracks start, you can make good use of this book and not fall into the abyss.
I caution the reader against assuming that because some of the author's conclusions and opinions are correct that all of them are. In this case, there are some notable exceptions. Let's look at three examples.
In the first paragraph on page 52, he claims the motivation for tax breaks derives from the government's understanding and desire for social good. I felt like leaving a quarter under his pillow when I read that. Tax policy has nothing to do with anything benevolent, except for bestowing goodies on the special interest groups who control the legislative body. Our federal income tax code runs something like 65,000 pages. Even after a century of tinkering with this code, Congress still hasn't come up with something that makes any sense.
The federal income tax is not needed for funding the government, and that's not its purpose. It is a tool for redistributing wealth to pay back campaign donors at the expense of the Treasury and those who are not in positions of influence. There is no wise wizard in Congress showering tax breaks on ordinary Americans to help create jobs or to reduce the cost of funding social programs, as Andrew appears to believe.
Here's how it does work. Federal politicians curry favor and make promises, so they can raise the millions of dollars needed to win an election. (Obama raised $80 million for a presidential election as of July, 2007, for the November, 2008 election). Once in office, they have to make good on those promises or face ruin (or worse). There's a reason the Demopublicans consistently present us with a slate of losers, incompetents, and the ethically bankrupt. By "electing" those folks, we an be assured the reigns of government remain firmly in the hands of special interest groups. This pattern is consistent all the way back to post Civil War Reconstruction.
One way to pay back special interest groups is to develop a hopelessly complex federal income tax code that gives these people millions of dollars in an indirect manner. If Congress were properly concerned about funding the cost of government, the first thing they would do is abolish the income tax. The federal income tax is not the main way the federal government feeds its spending habit. Many experts believe that the compliance costs, administrative costs, and costs of economic drag generated by this whacko system are greater than the revenue raised.
In a second example, when discussing how a (scissor) jack works, he claims a car weighs 2,000 lbs. That's light even for a small car. A 2007 Toyota Corolla weighs in at over 2600 lbs. Upgrade to a Camry, and you're at 3200 lbs. Go with the 2007 Nissan Maxima, and you're at 3600 lbs. Mini-cars, such as the Chevy Metro, Honda Insight, and Suzuki Swift do fall into the 2,000lb and under group. But even the Chevrolet Prism and Ford Escort exceed that weight. One could say, "Let's not quibble over numbers," but what is this book about?
The typical scissor jack is rated for 2,000 lbs, and that makes it sufficient for changing a tire. But it's not raising the whole car. It's merely tipping up one side of it, which means it's lifting far less than the weight of the car. This is an example of where he gets the basic facts wrong, but uses them to explain one of his key concepts. He's discussing leverage, so this makes me question his understanding of how leverage works.
A third example is his referring to transactions as "tax free." You pay 128 taxes on a single loaf of bread. Nothing in America is tax-free. As the late economist, Nobel Prize winning Dr. Milton Friedman, explained, your level of true taxation is equal to the amount spent by the government. We have federal, state, county, and city governments all spending like there's no tomorrow. The federal debt alone is some $9 trillion, and future obligations with no apparent source of funding are around $52 trillion. Yes, we can probably assume what he meant was "free from federal income tax." But that's not what he said, and what he said was wrong. When you're talking about using your home equity in a complicated investment strategy, getting even one "little" detail wrong can cause you to lose everything.
Andrew brushes off the risk involved in tax-based investment strategies by claiming that revenuers would be shooting themselves in the foot if they messed with these tax breaks. News flash. They do this all the time.
On page 288, he gives advice that makes me shudder. Basically, he's advocating calling a withdrawal a loan and then treating it that way for tax purposes. The IRS loves this kind of thing. This is called a "sham transaction for tax avoidance purposes" and IRS can come back on you at any time to nail you with more interest and penalties than you are capable of earning in a lifetime.
IRS has lots of fine print that allows them to ignore the Statute of Limitations and anything else you might mistakenly believe protects you from actions of theirs that might be illegal, immoral, unethical, unfair, unjust, illogical, unduly burdensome, or just plain crazy. There is no protection of that sort, period..
So you might be sailing along merrily for 20 or 30 years before suddenly finding yourself with no home, no assets, and no income. IRS does not have to notify you of an assessment. They merely need to assess (enter into their records) that you owe a tax and let that simmer while interests and penalties pile up. Then, after they seize your assets, you can spend several million dollars in tax court pretending the judge will care about what's right or will actually give evidence any weight. That's not how Tax Court works.
The way Tax Court works is the court tries to find some fine print somewhere justifying whatever IRS did. The taxpayer doesn't just have the burden of proving he isn't guilty, the taxpayer also has the burden of proving IRS hasn't got some loosely interpreted statute backing whatever action they've taken. Read Tax Court cases, and you'll see this.
IRS also has a history of welching on their written letters of approval, after people have strung out sufficient rope with which to hang themselves. This is one of the things that happened in the Hoyt Fiasco. Investors asked IRS for clarification, and they got it in writing--but IRS later recanted while leaving those folks who relied on IRS' word to twist in the breeze. IRS also told the Hoyt investors, in writing, to contact their Tax Matters Partner (Hoyt)--despite the fact IRS had known for 20 years proving Hoyt was defrauding both the investors and the U.S. Treasury. IRS employees just watched the whole thing, biding their time until they could destroy the very people who trusted them.
Yes, it may be possible to skate along with Andrew' investment strategy. But it seems doubtful. Any tax-favored investment strategy is basically a field of landmines. We can look at the Hoyt Fiasco or the AMCOR mess as prime examples. In the Hoyt Fiasco, 4300 people invested in a tax-favored business that allowed them to defer taxes and build wealth using OPM (Other People's Money, which Andrew refers to constantly).
People didn't just lose the money they had invested. They were on the hook for huge sums they could never pay back. When IRS is involved, you can expect all kinds of games to be played such that you have no recourse. If they decide to retroactively deny tax-favored status, for whatever reason, they will. The IRS answers to nobody, which is why they get away with these things.
So if the government approves of a tax-deferred or tax-favored investment strategy, the strategy makes sense on paper, and the person promoting it is very convincing, does that make it safe? Ask the 4300 victims of the Hoyt Fiasco what they think.
It is with this thought that I caution the reader against following Andrew the whole way. Before "thinking outside the box," learn why the box is there in the first place. Maybe those other financial advisors aren't stupid for recommending those "slow" investments.
Andrews may be right, and he may be crossing all of this T's and dotting all of his I's so that IRS is a happy camper. But IRS is also capricious. And when IRS changes its mind, for whatever reason (or no particular reason at all), the "gray area" that you thought was safe turns into the very definition of terror.
Until such time as the US replaces the federal income tax with a system that is fair, ethical, and logical, any investment that relies on tax-favored rules is highly risky. Andrews points to a prime example himself, when he talks about IRA's and 401(k)s. These tax-favored investments were not designed with the best interests of the investor in mind. Andrew does us a service by pointing this out quite clearly.
But then he goes on to recommend other tax-favored investments, but ones that he admits are complex and can trigger various undesirable results. I'm very uncomfortable with his treating a withdrawal as a loan. As they say, "Wishin' don't make it so." You may recall that Microsoft had to pay millions in employment taxes, penalties, and other payments after IRS told them that calling people contractors doesn't make them contractors. The fact Andrew recommends stepping out onto this particular plank should give anyone pause.
Your best be may be to read Chapters 1 through 5, and readjust your portfolio. Then, look at your spending patterns so you can keep more of what you earn. Finally, look at where you can add value using your talents and experience. Many people live quite nicely in retirement by running a small business and working part-time. This gives them a sense of purpose, plus that financial cushion and some modest tax breaks. What is it you enjoy doing?
 Very Analytical Read July 30, 2007
2 out of 9 found this review helpful
I felt like I was reading a text book out of my econ class when I picked this up. Though, he gives some excellent statistics and his opinions are backed by some very strong evidence.
If you think you'd like this book, I'd recommend you take a look at Bubble Proof: Real Estate Strategies that Work in any Market. Tonja's book is a much easier read, and she'll show you how to invest in ANY market.
Last Chance Millionaire July 18, 2007
8 out of 13 found this review helpful
The first 80% of the book was informative. The last 20% was a sales job for Universal Life Insurance. They make a strong case, but do not tell you about the loss of your capital when you borrow it before you die. When that happens, the borrowed amount is deducted from the death benifit. Your heirs end up with less, as they do not recieve the cash balance in the policy nor the full death benifit.
 Now, and not later, is the time to plan your future retirement July 16, 2007
35 out of 49 found this review helpful
Douglas Andrew, author of "The Last Chance Millionaire," is the perfect person to write a book such as this one. He is the owner and president of Paramount Financial Services and one of America's leading financial experts. What he offers in this excellent work is an alternative to traditional retirement planning, one that may be counterintuitive to many readers (and many financial advisers), but one which he explains and justifies using facts, figures, and many explanatory illustrations. For those of the so-called "baby-boomer" generation, he has both good news and bad news. The bad news is that soon-to-be and future retirees will discover that the Social Security funds they had counted on to provide income through their "golden years" will not be adequate to sustain the lifestyle to which they have become accustomed. The good news is that financial alternatives exist which can overcome or displace the bad news, but only if one starts implementing them now, that is, before the day of reckoning is upon one.
This is one book I wished I had had in my hands twenty or even ten years ago. I was not a great planner when it came to my future retirement; I just never thought I really would retire and, furthermore, if I did, Social Security would provide adequate income for my needs and wants. Way back when, we were never informed as to the precarious nature of the Social Security system or private pensions. After all, the government took money out of our paychecks every month and "promised" us it would take care of us in our old age. Private companies provided pensions. Well, so much for government promises. Well, so much for companies that went bankrupt. The situation will become critical shortly and the baby-boomers (and, of course, those who are thirty years or more away from retirement) are going to suffer some mighty financial sticker-shock if they don't plan now for their future retirement.
It is too late for me to actually benefit personally from the valuable information that the author has to offer. I came into the world in the latter years of the Great Depression, under the influence of a society that had experienced the worst. By the time it was realized that retirement was not going to be what everyone at that time thought it was going to be, it was too late for many of my generation to make the financial plans suggested in this book. I have my Social Security and other income, all my personal possessions paid for and no outstanding debts of consequence, a nice house to live in -- all in all, a comfortable, if not wealthy lifestyle. But this is now. The future is another thing. It is time for the baby-boomer generation and the one coming after it to start planning now before retirement is imminent.
There is one thing that Andrew emphasizes that came as a revelation to me. I was raised with the idea that one ought to pay off one's home mortgage as rapidly as possible. That way you weren't paying any more interest to the bank or lending company and no one could repossess your castle (a constant fear at the time in the "middling" classes). "People were so happy when they made the final payment," the author notes, "they would throw a party and burn the mortgage." Yes, I recall a couple of those. Then he continues: "Perhaps you have heard echoes of this from the previous generation." Yes, exactly; my parents were quite emphatic about this. But, says Andrew, "What you don't hear is that once you pay off your mortgage, you won't have mortgage interest to deduct from your income taxes. The result is that you lose a crucial tax break, and you kill your best partner, Uncle Sam." Well, now, a tax deduction? That's something to think about. Moreover, he addresses some other real advantages to having a mortgage, rather than paying it off. Doing it all over again, I certainly would now follow his advice.
Andrew dispels some of the common misconceptions that baby-boomers have regarding financial planning and their future retirement. Actually, he discusses ten of them and I have heard some young people talk about a few of them now and then, except they were suffering from one or more of the misconceptions. So, I think, it behooves those planning for their retirement to access their own thinking in regard to the common misconceptions listed by the author. It could make the difference between a merely subsistence retirement income and a really comfortable, even wealthy, retirement lifestyle. In fact, being a "last chance millionaire" could be in anyone's future. And, above all, Andrew argues, "It's not too late to become wealthy"; hence, the subtitle of the book.
There is too much detail given in Andrew's work to offer even an outline here in a brief review. One important discussion does stand out, however. The basis for his financial recommendations is called the "Three Marvels of Wealth Accumulation." These three "marvels" are: The Miracle of Compound Interest, the Miracle of Tax-Favored Accumulation, and the Miracle of Positive, Safe Leverage. Each of these is explained in detail and strategies offered in a way that anyone can understand them. And, by the way, this is not a textbook for the financial expert, but a guidebook for the general reader. So no one has to worry about things getting too technical and esoteric. If I, who am not all that literate in professional-level economics, can understand and make sense of what Andrew says, most anyone can.
So, if you are a baby-boomer, or even if you are a lot younger than one and retirement seems far off in the future, this is must reading for you. There is no preparation like early preparation. Social Security and pension plans are subject to all sorts of unknowns. Promises made all too easily become promises broken. No one can depend on any outside "guarantee" when it comes to his or her financial future in retirement. Now is the time to plan your own retirement. And Douglas Andrew can definitely help you. It shouldn't be necessary to say this, but I will just to be clear. This is not some sort of "get rich quick" or "golden nest-egg" scheme, but a sober and practical methodology for accumulating wealth over time, written by a professional financial planner. This book is highly recommended because I have no doubt that the strategies suggested will work. And there's no time like now to get started on them.
Review of the Last Chance July 15, 2007
Excellent!!! In keeping with the quality of his previous works - Missed Fortune and Missed Fortune 101.
|
|
|
Powered by Associate-O-Matic
| | |