Prosperity Pitfalls

When it comes to the financial products you have and strategies you use with them, we’ve found many of our clients stumble unknowingly into “prosperity pitfalls”.

If you’re curious, take the next 5 minutes to identify if there are any prosperity pitfalls lurking among your own prosperity pathway.

  1. _ No _ Yes   Are your vehicle and home insurance deductibles as high as possible?
  1. _ No _ Yes   Do you have a liability umbrella?
  1. _ No _ Yes   Do you have medical and disability insurance?
  1. _ Yes _ No    Are you using only term life insurance?
  1. _ No _ Yes   Do you have a current will or trust?
  1. _ No _ Yes   Have you appointed guardians for your minor children?
  1. _ No _ Yes   Do you have a place for important papers?
  1. _ No _ Yes   Are you saving money on a regular basis?
  1. _ Yes _ No    Are you compounding or reinvesting in a taxable account?
  1. _ Yes _ No    Are you dollar cost averaging into mutual funds?
  1. _ Yes _ No    Are you using only the stock market for building wealth?
  1. _ Yes _ No    Are you using only real estate for building wealth?
  1. _ Yes _ No    Are you using annuities to build wealth?
  1. _ Yes _ No    Are you contributing to 529 plans or uniform gifts on minor’s accounts?
  1. _ Yes _ No    Are you contributing more than the match to 401(k)s or 403(b)s?
  1. _ Yes _ No    Are you adding new money to IRSs and Roth IRAs?
  1. _ No _ Yes   Are you counting opportunity costs?
  1. _ No _ Yes   Are you learning how to use your death benefit while living?



If you have checked more than 10 boxes in the left column:

You’re facing a lot of pitfalls and we recommend you call us immediately; the sooner you address these pitfalls, the faster you’ll accelerate your prosperity and avoid “opportunity costs”.

If you checked 5-10 boxes in the left column:

You’re in decent shape, but addressing these pitfalls can accelerate your prosperity even more; we would suggest you contact us and we can help you address these areas.

If you checked less than 5 boxes in the left column:

You are doing well.  Even so, why not eliminate the opportunity costs associated with these remaining pitfalls?  Doing so will only accelerate your prosperity even more.  Contact us and we’ll help you step on the accelerator!

  1. Does it surprise you we suggest high deductibles. This is only if you have cash to pay the deductibles, of course.  You’ll want to THINK of this as an “opportunity cost” decision.  High deductibles mean lower premiums, even if only slightly lower, for many years.  How long will you drive a car or own a home?
  2. Liability umbrellas cover you above and beyond standard car and home insurance for bodily injury, property damage and other liabilities. Many agents never bring these up because they are small and inconvenient to write.  Yet as soon as you start to build any wealth, SEE how you can protect that wealth.  The personal liability policy is the simplest form of asset protection to acquire.  Further steps are trusts, limited partnerships, and corporations.
  3. Medical insurance obviously pays hospital bills and possible prescriptions. Disability insurance pays you so you can pay your bills.   Many people have these benefits at work, yet know very little about them.  Your questions should be: a) what is the maximum amount?  b) What is the deductible or waiting period?  c) How much is the premium?  Make sure you SEE the big picture.
  4. We say “only” term because its costs (premium plus opportunity cost) exceed its benefits if you have no future strategy to convert the term to permanent – preferably whole life. Term is fine for a short to medium period of time but proves inefficient over time.  Make sure you are MEASURING your opportunity costs.
  5. Current being the operative word here, defined by being less than 5 years old. However, the more important issue is that the documents reflect your current wishes and current tax law.  Be aware that any year could bring a potential estate tax law change that may render all documents obsolete.
  6. Your will or trust should appoint a guardian for minor children or the state will do it for you in the event both parents die. The state has no knowledge of your family, so please don’t let this pitfall catch anyone off guard.  THINK for yourself how you would like this handled.
  7. Important papers, such as wills and trusts, pictures of your possessions in your house, closets, cupboards, even treasured family photos can all be stored on line. CONTROL of your documents is critical.
  8. Saving 15 – 20% of your gross income (no matter how large or small it is) is one of the most important steps to take towards prosperity. Boring but effective: constant saving to your Prosperity FLOW Through Account will be the fuel that feeds all other investments as well as your own financial freedom.
  9. Typical financial planners extol the “miracle of compound interest” yet rarely discuss the underlying taxes and opportunity costs that implode the account (not to mention the management fees). Reinvesting should rarely occur in a taxable account.  Instead, ask for the interest, dividends and capital gains (short and long term) to be paid in cash to your PFT Account so your earnings will be MOVED through another asset.
  10. Dollar cost averaging is the financial institution’s way to get you to help them build assets they use, even though the asset is in your name. Adding money on a monthly basis (FLOW) is a good thing to do, but potentially more effective into your PFT Account, where you aren’t trying to track basis (very difficult to do in a dollar cost averaged account).
  11. The stock market always has been a roller coaster ride. While there can be effective ways to increase your prosperity in it, we find that management fees and opportunity costs erode the value.  Consequently using only the stock market is a pitfall since it subjects you to lack of CONTROL.  Ask your Prosperity Economics Advisor™ to show you the whole truth about management fees on the Truth Concepts Accumulation Calculator.
  12. Similarly to using only the stock market, using only real estate is a pitfall as well because it too has high and low periods of time which you can’t CONTROL. Importantly, many owners don’t know the true ROI on their particular deals.  Ask your Prosperity Economics Advisor™ to quantify your ROI on the Truth Concepts Real Estate Calculator.
  13. We view deferred annuities as a potential prosperity pitfall due to your inability to MOVE the money through the product. Additionally, while they are tax deferred, income from them is taxed on the LIFO method, meaning last in first out, so it’s taxed on earnings first and at income tax rates, not capital gain tax rates.  We acknowledge there are some cases where both deferred and immediate annuities may be helpful.
  14. Your desire to educate your children often causes pitfalls in the form of money being locked up into 529 plans and other government sponsored accounts. These only do one job and, due to the opportunity costs one must MEASURE, are very ineffective because those dollars are now gone from your wealth forever.
  15. While we could argue that the entire qualified plan arena (401k, 403b, IRA, etc.) is a pitfall, we’ll focus here on contribution levels above any match. It’s clear that any dollars in these plans are unable to MOVE through them and consequently those dollars are limited.  Funding them above match maximums hinders true prosperity
  16. Adding new money or additional savings is smart. You always want to be conscious of the FLOW of income towards prosperity, and adding 15 – 20% of your income is good.  However, locking it up in IRA’s and even Roth’s limits its usefulness so we view these as pitfalls.
  17. Opportunity costs are a basic economic concept that should be applied to every financial decision you make, yet typical financial planning rarely addresses them. Opportunity cost is the value of the best alternative given up.  Make sure you MEASURE costs in building wealth, such as educating children, management fees, term life insurance premiums, etc.
  18. Using your death benefit during your 80’s and 90’s is an easy way to MULTIPLY dollars easily. The strategies required to do this are spelled out in the book available at and may require a Prosperity Economics Advisor™ to tailor a strategy for you.