Comments on: The Wealthy Barber: Planning For The Future http://www.thesimpledollar.com/2007/01/17/the-wealthy-barber-planning-for-the-future/ Financial talk for the rest of us Sat, 16 Feb 2013 01:14:45 +0000 hourly 1 http://wordpress.org/?v=3.5.1 By: Tim Maynard http://www.thesimpledollar.com/2007/01/17/the-wealthy-barber-planning-for-the-future/#comment-302236 Tim Maynard Thu, 12 Jun 2008 22:59:09 +0000 http://www.thesimpledollar.com/2007/01/17/the-wealthy-barber-planning-for-the-future/#comment-302236 I found the wealthy barber to be a great book. However, I feel that the books take on life insurance is dated. It basically says to buy term insurance and invest the rest. This philosophy is certainly not the best solution for all people and in some cases can leave people vulnerable as they get older and can no longer afford term insurance. Not everyone gets rich enough to be “self-insured” as the book suggests. Many people have a life long need for life insurance, and term policies do not deal with this scenario. 98% of term policies never pay out, since they usually become unaffordable before you actually die.

Picking up a small amount of Permanent Insurance can be a life saver for many aging couples. Yes, it is not as good an investment as stashing it into you RRSP, but who cares. It is apples & oranges. They are different, and it shouldn’t be a case of one or the other. Do you go to the store and say to yourself, “I shouldn’t buy thins shirt because it is better to put the money in an RRSP?” No, of course not. You need the shirt, so you get it. It’s the same with Permanent Insurance (albeit, you can argue that a shirt is a necessity). On that note, I would argue that to some degree Permanent Insurance is a necessity, even if you are putting as little as $50/month into it.

My in-laws can no longer afford their term insurance, so now they have to deal with 20-30 years of not having any coverage. They have no money to pay for funerals and can not afford to take it out of their RRSP. They read the wealthy barber when it first came out and that is why they are in this position.

In closing, there are very good things that can be taken from the book, but not everything should be followed to the letter (specifically the section on life insurance). People should read various books, talk to a financial planner and then figure out what will be best for them.

]]> By: Terry http://www.thesimpledollar.com/2007/01/17/the-wealthy-barber-planning-for-the-future/#comment-3404 Terry Thu, 18 Jan 2007 04:29:13 +0000 http://www.thesimpledollar.com/2007/01/17/the-wealthy-barber-planning-for-the-future/#comment-3404 Is there a “The Wealthy Hamburger Flipper”? That’s what I need.

]]> By: Trent http://www.thesimpledollar.com/2007/01/17/the-wealthy-barber-planning-for-the-future/#comment-3369 Trent Wed, 17 Jan 2007 15:53:58 +0000 http://www.thesimpledollar.com/2007/01/17/the-wealthy-barber-planning-for-the-future/#comment-3369 Rich: 10% in your 401k should work just fine, though you might want to look at other options for the amount above what your employer is matching. For example, if you’re eligible for a Roth IRA, you might be better off putting some percentage into that for the tax benefits (money that comes out of a Roth IRA when you’re retired is not taxed, while 401(k) money is taxed when it’s withdrawn).

]]> By: Rich http://www.thesimpledollar.com/2007/01/17/the-wealthy-barber-planning-for-the-future/#comment-3366 Rich Wed, 17 Jan 2007 15:23:51 +0000 http://www.thesimpledollar.com/2007/01/17/the-wealthy-barber-planning-for-the-future/#comment-3366 With respect to the 10% rule, is it widely accepted that 10% into a 401k with company match covers this philosophy? I’m assuming so, but I thought it might include another 10% into some sort of savings account or other vehicle.

I think I need to re-read through your ‘magic number’ post to determine what my family needs in retirement.

Excellent stuff Trent.

Rich

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