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Our Crash Proof Principle for this week exposes the best kept secret in the banking industry— credit unions.

A credit union is a financial institution in which members cooperate by pooling their money together to provide traditional bank services like loans, savings accounts, and CDs to its members. In the United States, credit unions are nonprofit entities, and their structure is designed to ensure fair dealing and safety.

What makes credit unions such a hidden gem is how they stack up against the commercial banking industry. When you deal with a commercial bank, the profits come from you, the depositor, and go to shareholders who buy stock in the firm. Credit Unions, on the other hand, are non-profit and designed to work for you, the depositor.

All profits in credit unions come back to you in the form of higher CD rates, lower interest rates on loans, higher money market rates and more protection on your accounts. By becoming a member of your local credit union, it’s like you belong to a family business in which all members share in the success, rather than the firm’s investors.

It is no longer true that you must be employed to qualify as a member of a credit union. In fact, any credit union within your zip code will be happy to receive you. And remember, when choosing a credit union always favor the larger ones, because the bigger the family, the more support you’ll have with your accounts.

Our Crash Proof Principle this week is never be a customer when you can be a partner. Find out about how your local credit union can better serve you.

One thing I continually tell my clients is that opinions from financial professionals aren’t worth much unless they’re put in writing with the professional’s signature and company letterhead. Anyone can give a verbal opinion, but unless they’re willing to back it up in writing, verbal opinions can become just vague memories or “words in the wind” over time. It’s harder to claim misunderstanding or miscommunication with words on paper. Any licensed professional is going to be 100% sure they believe in that opinion before they write it down and sign their name to it, because their reputations, licenses, and certifications are on the line.

This week’s principle is fundamental and translates across many spectrums of life. It is most famously conveyed through the age-old tale of The Tortoise and the Hare. This story has been passed on for generations and provides a very sound lesson on taking direction in life. When asked why the tortoise won the race, those familiar with the tale will likely respond “because he was slow and steady.”

Although slow and steady did prove valuable for the tortoise, as it represents his focus and drive, it is a common misconception to attribute this to the tortoise’s victory. When attempting to reach a major goal like establishing a comfortable retirement, moving slowly and steadily will get you nowhere if you’re not moving in the right direction.

Constantly moving in the direction of his destination is what truly allowed the tortoise to prevail over the speedy, yet distracted hare. The hare got caught up in chasing glory, which often took him off his path to his destination. The tortoise stayed focused and took each step towards his end goal.

The same story applies to retirees, who want to achieve comfort throughout retirement. If you follow the path of the hare and take on risk in pursuit of high returns you will be taken off track in the event of any market downturns. Especially during a market crash, you will find that one step forward can be followed by several steps back.

As you get closer to retirement age, you simply cannot afford to lose the hard earned gains you have made over a lifetime. That’s why it is especially important to take the direction of the tortoise and keep moving forward, away from the high risk and fees that come with securities investing, and closer to a secure retirement.

A Crash Proof Retirement® abides by this principle and protects you from setbacks, while guaranteeing your retirement savings only moves in one direction: towards your destination.

It almost sounds too simple, but the best way to make money is not to lose it to begin with. And the best way to meet your retirement goals is to make sure the money you have spent a lifetime accumulating can only move forward. Prevent your life’s savings from ever taking a step back, and ensure that you’re always moving safely through your retirement – which then becomes the recess of your life.

The Rule of 100 is an age-old rule of thumb in investing. It is used to establish a limit to the amount of risk you are exposed to in retirement, protecting your financial wellbeing from the potentially crippling volatility of the market.

The Rule of 100 is a simple mathematical formula.

You simply take 100 and subtract your age. The resulting number is the maximum percentage of your portfolio that should be subject to the uncertainties of the market.

In the example of a 70-year-old retiree: 100 minus 70 = 30

This investor should have no more than 30% of their life’s savings at the mercy of the markets.

The Rule of 100 has long been recognized within the investment community for its sound logic. As you age and get closer to being dependent on your retirement nest egg, the less of it you can afford to lose with risky securities investments like stocks, bonds and mutual funds.

The Rule of 100 was created to protect you, the everyday investor, who otherwise may not appreciate how vital it is to reduce risk as you get closer to enjoying the fruits of your lifetime of labor.

Unfortunately, although this rule is one of the most commonly acknowledged investment principles, it is also one of the most frequently broken in investing. Financial advisors within the securities industry are trained to recommend risk; therefore they are not equipped with the knowledge of how to truly shield you in retired years. Rather, most advisors prefer to keep clients exposed to the hazards of the market, because that is how they make a living.

A Crash Proof Retirement follows the rule of 100, and then some. When you are in or near retirement, you need to ensure that you are protecting the savings you need to carry you for the rest of your life. This requires a more intricate breakdown of your portfolio and finding the exact percentage of your assets to be placed in a safe haven.

To protect your assets, you need guarantees and not just hope, which is all that securities can offer. Those guarantees do exist in fixed class investments, which offer appealing asset growth without fees or loss of principal.

Knowing the exact percentage of your nest egg that belongs in fixed class investments is essential to achieving a truly Crash Proof Retirement, which can map out the rest of your years with guarantees, and not just the hopes that come with rolling the dice on the stock market.

Many people have different types of retirement accounts, such as 401ks 403bs or otherwise IRAs. Does your retirement account need a bypass from the IRS? If not, you may have an immediate tax attack in the future.

Right now the current income tax levels are at historic lows compared to where they were. In 1941 to 1963 the highest income tax rate in the United States was 94%. In 1964 through the mid-80s the highest income tax rate averaged over 70%. And in the early 90s the tax brackets were as high as 55%. Only in 2003 did the highest tax bracket drop to a historic low of 35%. You should strongly consider buying out your junior partner, before the IRS becomes your senior partner.

However, a Roth isn’t for everyone. If you’re depending on your retirement accounts to pay your everyday expenses, chances are you may dilute the account by paying taxes that are due on this account and you may end up hurting yourself. So you should seek the advice of a Retirement Phase Advisor who has been schooled on IRA laws.

This is a critical time in our country’s economy, and you should get educated on what is known as a Roth conversion. A Roth conversion is a vaccine shot that will make your IRA, and all retirement accounts, immune to any federal tax increase in the future. And not just for the owner’s lifetime, but for three generations— right down to the owner’s grandchildren.

Finding the right advisor is critical to understanding the difference between the accumulation phase and the retirement phase of life and learning how to adjust your investment strategy for the phase you’re in.

Imagine selecting your Financial Advisor as you would your doctor. If you had a heart condition would you see a proctologist or a cardiologist?

Don’t be so quick to laugh.

They’re both doctors. They both went to medical school. So, why can’t you just see the proctologist for your heart condition?

Because he’s looking at and analyzing the wrong end!

Many people in or near retirement are dealing with Accumulation Phase advisors who are trained and focus on risk investments: stocks, bonds and mutual funds. These advisors may be appropriate for your working years when you’re accumulating your retirement nest egg, but not when you’re trying to safeguard what you’ve worked all your life for and cannot go back out and re-accumulate.

When you’re in or near retirement, you don’t have the luxury of time to rebuild what took you a lifetime to accumulate. The crucial difference in retirement is that you’re dependent on your assets to last as long as you do, making market risk a potentially crippling financial problem. It’s wise to find a Retirement Phase Advisor who will protect your investments, because you simply don’t have the time to recover from losses to your nest egg.

Most advisors are trained in risk investments, like stocks, bonds and mutual funds, and they don’t have the specialized training to address the concerns and crucial issues retirees face on a daily basis. You need an advisor with the proper training in safe alternatives outside the securities industry, because the securities industry deals only in risk. Retirement phase advisors can educate you on the little-known IRA and IRS laws that will protect your nest egg from its two biggest threats—taxes and market risk.

Knowing the difference between an Accumulation Phase advisor and a Retirement Phase advisor could save your portfolio. In retirement investing, it’s always better to be safe than sorry.

Our Crash Proof Principle this week is seek out the right advisor for the phase that you’re in, one with the specialized training to guide you through retirement and seek out safe alternatives outside the securities industry, which grant market-like returns without any of the market risks.

Recognizing the uncertainties associated with your investment portfolio is crucial to properly protecting your financial wellbeing. This is especially true for those of you in or near retirement, because you simply don’t have the time to rebuild your shattered finances, which you intend to see you through the harvest of life, when you reap the rewards from a lifetime of hard work.

It is vital to have a firm awareness of how much danger your assets are exposed to, which means it is your duty to know the true risk associated with every vehicle you are invested in. Failing to understand how much risk you are exposed to could have catastrophic consequences for your retirement, forcing you to spend more time growing your crops before you can enjoy the harvest.

One common misconception that can spell doom for hopeful investors is the belief that the word “bond” is a synonym for “investment safety.” The truth of the matter is that bonds, by their very definition, are the opposite of safe, they are a risk class investment.

Bonds, like all securities such as stocks and mutual funds, are very volatile investments which can rob you of your life’s work overnight. Just ask anyone who was invested in General Motors bonds when the company filed for bankruptcy in 2009. These people were deceived by the reputation of bonds, which they thought would protect their assets from harm.

Municipal bonds have also proven to be notoriously unreliable, as cities like Detroit, MI, Harrisburg, PA, Stockton, CA and others have declared bankruptcy, delaying bond payments indefinitely.

Even Treasury bonds, which are touted by most financial advisors as a keystone of stability, have the potential to impoverish retirees who had too much faith in their “safety.”

In fact many experts are suggesting that due to the masses of investors fleeing to the false sense of safety in bonds following the financial crisis of 2008, the bond market is now in a bubble and could be set to burst soon. Ironically, because of this unwarranted belief in the safety of bonds, those who are invested in the bond market will learn the truth about risk class investments when the bubble bursts.

If you, like many other investors, were under the impression that the bond market was a safe place for your retirement savings, you should consider re-evaluating the risks associated with securities investments.

Like many of our Crash Proof Principles, this week’s principle comes down to education. The best shield against the many threats to one’s nest egg is proper education on retirement finances. So get educated on the true risks associated with your retirement portfolio and the safe investment alternatives outside of the securities industry that guarantee a fruitful harvest in retirement.

Have you ever looked back on your life and said, “I wish I knew then what I know now?” Everyone has; it’s only natural to wish you could go back in time and tell yourself everything you learned in your journey through life.  This concept can be used to illustrate an important philosophy in retirement preparation.

Working exclusively with those in or near retirement for nearly four decades, I have gained an incredible appreciation for making the best of every moment while we still have them.

I have asked consumers who lost more than half of their nest egg from market crashes what they would do differently looking back. They always reply, “I would have taken more time to learn about my investments and do things differently.”

We all know retirement is coming, and most of us have some idea of what we need to do to get there, but most don’t take the time to learn how to get through retirement once we’re there.

The problem is most of us don’t take our own advice. So when you’re thinking about retirement, imagine yourself twenty years from now.  What would you want to tell yourself about retirement?

You can prepare for the future, all it takes is education.  Learn everything you can about retirement, the sooner the better. Educating yourself now is like taking a glimpse into the future, and it will ensure that you’re not Looking Back with regret.

When you get properly educated you might identify some steps you can take now to be better prepared for the future.

The Look Back Principle is allowing yourself to take what you have learned from your past, apply it to the present and avoid regret in the future.

Every type of investment is like a tool; each has a specific and unique purpose.  Consider a master craftsman working on a blue print of his new project. With his end goal in mind, he knows exactly which tools are needed to complete the job. If your end goal is a safe and comfortable retirement, do you know which tools you need to build that masterpiece?

It is vital that you educate yourself on the designed purpose of investments before you employ them to bring you to your end goal. Let’s break down some common investments used today, and the designed purpose of each.

Stocks were invented to grow companies, not to grow your money.  That’s why they are so risky for people in or near retirement.  The same can be said for mutual funds, because they are usually made up of different stocks.  When you invest in stocks, you’re giving money to a company hoping it will grow and then give you a return on your investment. If the company fails to grow, or the stock market crashes and takes all stocks along with it, your nest egg pays the price.  You must remember that stocks were never intended to grow your money, and they absolutely were not designed to protect it from losses, which you simply cannot afford in retirement.

Bank accounts are a good place to temporarily hold your money and protect it, however, they’re not designed to grow your money.  Because they’re FDIC insured, savings accounts and CDs can provide some safety for your money while you decide what to do with it.  If you’re placing your money in a bank account until you are ready to live off of it in retirement, you’re using it the wrong way.  You won’t keep up with inflation and you certainly won’t be getting the kind of growth you need to build and maintain a nest egg.

Bonds have a completely different purpose: they’re intended to give you an income stream.  They weren’t designed to grow your money or protect it from losses.  Bonds carry a lot of risk and do not guarantee growth. If you’re using bonds to grow your money while protecting it from losses, you’re using the wrong tool for the job.

When you are finished working and accumulating money, you can’t just settle for getting to retirement; you need to make sure you can get through retirement as well.  The tools you need for this job are investment vehicles that have earned the Crash Proof™ seal of approval.

Crash Proof Retirement vehicles are investments designed to both grow and protect your retirement assets. When you’re in or near retirement, you can’t afford to take the risks associated with stocks and bonds, and you also can’t afford to let your money erode in a bank account.  You need to select the tool that’s going to build the retirement you deserve.

Crash Proof Retirement investments offer the best of both worlds—they provide steady growth and prevent your accounts from taking a step backwards.  Investments used in a Crash Proof Retirement™ are carefully selected by their designed purpose, to ensure that you’re picking the right tool for the job and your retirement years will be safe, secure and comfortable.