- How liquid is it (can you access your money quickly and without a lot of cost)?
- How safe is it (can you lose some/all of your principal)?
- What rate of return can you reasonably expect?
- Are ther any tax benefits?
How much would you deposit in the following investment accounts?
- The customer determines the amount and length of time for monthly contributions to continue.
- The customer can pay more than the minimum monthly contribution, but not less.
- If the customer attempts to pay less, the financial institution keeps all of the previouus contributions.
- The money deposited in the account is not safe from loss of principal.
- Each contribution made to the account results in less safety.
- The money in the acount is not liquid.
- The money in the account earns a 0% rate of return.
- The customer's income tax liability increases with each contribution.
- When the plan is fully funded, there is no income paid out.
Whenever we ask people this question, they say "I wouldn't put any money in that." Yet, most homeowners are putting their hard earned dollars into that each and every month. If you have a traditional mortgage, part of your monthly payment is applied toward principal. That money, once handed over to your mortgage lender, is no longer liquid, it is not safe, nor does it earn a rate of return. On top of that, your tax benefits are declining each month.
