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  • Wealth Protection: Protect Your Purchasing Power With Everbank 0 comments
    Jun 24, 2009 11:56 AM

    by Karim Rahemtulla, Investment Director, Smart Profits Report

    I consider this to be one of the greatest threats to our future wealth protection efforts.

    So great, in fact, that over the past few months, I’ve developed a portfolio with EverBank in order to combat it.

    You see, it’s not enough today to just make money (a hard task in itself)… now more than ever, we have the added concern of having to protect our hard-earned assets from the ravages of inflation that is sure to come.

    Much of this is caused by the fact that the United States boasts the biggest and most active printing press in the developed world. And because of that, it’s become too easy and too convenient to take the path of least resistance to try and mask long term issues with short-term fixes.

    But printing money is not an activity limited to the U.S. The European Union and Japan are right up there with us. And it’s contributing to an enormous destruction of wealth.

    Here’s what to do to fight back…

    Bailout Nation

    I’m appalled by current events in the U.S.

    By bailing out those who’ve acted irresponsibly, hard-working, honest people are seeing their future wealth and prosperity undermined.

    Nowhere is this more apparent than in the real estate market - a point driven home to me last weekend when I met with a realtor friend of mine. Yes, we’ve all heard about the bailouts for homeowners who were happy to sign, but now claim they were defrauded by lenders, mortgage brokers and realtors. Funny… I don’t recall anyone ever holding a gun to my head, telling me I just had to buy that condo on South Beach or the Vegas Strip.

    We all make choices in life - some good; some bad. But apparently, some folks think they’re entitled to get bailed out of the bad ones while enjoying the fruits of the good ones. Specifically, here’s what I mean…

    Dude, Where’s My Bailout?

    • Let’s say Joe buys a home for $200,000.
    • His house appreciates to $400,000 and he then takes out a home equity loan. The house appraising at $400,000 when he does so.
    • Joe’s home equity loan was for $100,000 and he used the money to buy a couple of nice cars, some gold coins, and a nice trip to Europe.
    • But today, Joe’s home is only worth $170,000 and his mortgages total $300,000.
    • Joe tells the bank he’s leaving and that they either need to modify the loan or consider a short sale.

    A short sale is where the bank and homeowner reaches an agreement on the minimum amount that the house should be sold for - basically what the bank is willing to recoup from the bad debt.

    Trouble is, regardless of the talk of penalties for this or that, people like Joe walk away from the debt while someone eats the difference.

    That “someone else” is you and I - the responsible folks who pay all their bills on time, yet are stuck with the bill for deadbeats. That’s bad enough in itself.

    But what’s worse is that Joe still gets to keep his cars, his coins and his great vacation memories… because this is not a bankruptcy.

    It’s essentially a free handout. A total redistribution of wealth. And it makes me mad to have to witness this.

    Whatever happened to the “American Way” and the “Land of the Proud” etc? It sounds more like “bailout nation” to me, with the most irresponsible ones who mess up that end up benefiting the most.

    This is the picture that worries me - and one that should worry you, too. It will impact your wealth and you have to begin protecting it today. Here’s how…

    The Ultimate Wealth Protection-Wealth Building Instrument

    When I spoke to the folks at EverBank, it was with the intention of creating a portfolio that would perform better over time once the bad seeds that we’re sowing today begin to sprout in the years ahead.

    The portfolio needed two key things…

    • It had to be based on logical and realistic assumptions about the future.
    • It had to be made of investment vehicles that should not only outperform the U.S. Dollar, but also protect wealth - and hopefully increase in short-term value, as the stimuli around the world spur short-term growth (even though the same stimuli may lead to longer-term chaos).

    The Purchasing Power Portfolio consists of five components - ones that you’ll only find here and, as creators, long before you see it anywhere else.

    The Five Elements Of The “Purchasing Power Portfolio”

    The five components are made up of three currencies and two metals.

    Ordinarily, it would be virtually impossible to create a portfolio of this breadth, yet still be able to invest in it with small amounts. It’s usually the kind of thing for mega-institutional investors and those in the high net worth realm.

    But because of the economies of scale, this one is open to the smallest of investors. Let’s run through the five investments…

    1: The Canadian Dollar

    There are several key reasons for the “loonie.”

    • To have a currency that will benefit from a rise in resource prices. Canada is rich in oil and gold - and hard assets will be beneficiaries of a weakening U.S. dollar.
    • Canada is in a much stronger fiscal/deficit position than the U.S., which is good for its dollar.
    • Canada’s geographic proximity to the U.S. means it can both gain the benefits from a recovery, plus it’s the closest place for capital to take flight to.

    2: The Norwegian Krone

    Four reasons for our inclusion of Norway’s currency…

    • Norway boasts huge monetary reserves.
    • It has an extremely sound fiscal and monetary system.
    • It has access to a huge resource base, with oil and timber being two of the biggest.
    • It has a conservative investment philosophy and it is arguably the strongest and soundest economy in Europe.


    3: The Australian Dollar

    While Australia isn’t quite as sound as places like Norway, it’s nevertheless another very strong resource-based economy that offers us a gateway into Asia. And since trade with Asia is a big reason for Australia’s boom, it has a distinct edge.

    I expect the Asian economies to lead the way over the next decades in terms of economic growth - and economies that will benefit from this growth will be ones that supply the resources for that growth.

    All three currency CDs are FDIC-insured.

    4 & 5: Metals

    The fourth and fifth elements of the “Purchasing Power Portfolio” are gold and silver. Both components are pure hedges against wealth destruction and inflation, because they increase in value as currencies devalue - and especially since they are priced in U.S. dollars.

    The “Purchasing Power Portfolio” is not a stock or bond investment. It’s a way to diversify your money and risk through one single vehicle.

    So if you’re wondering what you can do to protect yourself from the inevitable - and even profit if somehow things don’t crash - take a look at this brand new opportunity now. You won’t find it anywhere else. Click this link for the full details on EverBank’s Purchasing Power Portfolio.

    Karim Rahemtulla

    Disclosure: No positions

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