jeopardy

1) Answer is: 4%

Questions

a) What is the average mutual fund load?
b) What percent of a $100,000.00 home purchase would closing costs total?
c) What percent of all people born retire comfortably (with the same or better standard of living currently enjoyed) according to the SSA?
d) What has inflation averaged since WWII, according to the DOL?

 

2) Answer is: Level term life insurance

Questions

a) What is the most expensive form of life insurance the majority of the time?
b) What is the least expensive form of life insurance the majority of the time?
c) What pays a death benefit in three out of one hundred policies placed in force?
d) What form of life insurance, once in force, does not keep pace with inflation?

 

3) Answer is: The thirty-year mortgage

  Data: $250,000.00 home
  10% down payment
  30% marginal tax bracket (did you know they changed the brackets?)
  6.50% net cost of money
  15 year fixed rate of 6.50%
  30 year fixed rate of 6.75%
  3.0% home appreciation rate

Questions

a) What is the least expensive way to purchase this home?
b) What is the most expensive way to purchase this home?
c) Which financing plan does cash beat?
d) What does a thirty-year mortgage with a $100.00 additional monthly payment beat?
e) What does a thirty-year mortgage with bi-monthly payments beat?

 

4) Answer is: Short term capital gains and dividends

Questions

a) What is treated as ordinary income for FIT purposes?
b) What will reduce the average growth mutual fund’s performance by over 75%?
c) What do most tax-advantaged mutual funds declare little of?

 

5) Answer is: Compound interest

Questions

a) What is considered the ninth wonder of the world?
b) What causes most people to lose substantial wealth over their lifetime?
c) What causes most people to gain substantial wealth over their lifetime?

 

6) Answer is: An ILIT with second-to-die life insurance (irrevocable life insurance trust)

Questions

a) What popular estate-planning move usually saves estates millions of dollars in estate tax?
b) What is sold as a, ”How can you pre-pay the estate tax with ‘pennies on the dollar’ plan”?
c) Actuarially, what has less than a 50% chance of being used 20 years after it’s execution?
d) What popular estate-planning move costs estates millions more than the estate tax?

 

7) Answer is: Creditor and predator protection

Questions

a) What benefits does a primary homestead offer?
b) What benefits does a stock portfolio offer?
c) What benefits does cash-value life insurance offer?
d) What benefits does an annuity offer?
e) What benefits does a sole-proprietor business entity offer?
f) What benefits does a qualified pension offer?

 

8) Answer is: The investment would shrink from $483,002.00 to $7,689.00

  Data: $100.00 invested in the market @10% compounded IRR for 89 years

Questions

a) What would happen if you netted an average 50% tax from the account every year?
b) What would have happened in 2001 if you had invested in Enron stock?
c) What would happen if inflation averaged 4% over 50 years?
d) What would happen if inflation averaged 4.5% over 50 years?