Wealth Management Secrets – Unveiling Money Myths

[00:00:00] Paula: Welcome everyone to chatting with the experts, the TV show that showcases the professional excellence of women from Africa and the Caribbean. We live in Europe, North America, the UK or Australia, as well as those who live in Africa and in the Caribbean. Today, I have an amazing woman on as a guest because she is going to be talking about the lies we’ve been told about money.
[00:01:12] Paula: So for those of us who have connections with Africa and the Caribbean. I’m sure many of you have been told that the best place to keep your money is in the bank. And then there’s some who tell you the bank isn’t even safe enough for your money. That you it’s best if you keep your money under your mattress.
[00:01:36] Paula: My guest Sharon Carter is here to debunk those myths. I’ll tell you a bit about Sharon. She is a wealth management professional at Northeast Planning Group in Long Island and specializes in life insurance, annuity, and long-term disability. She focuses on a lot of wealth strategy for individuals, small business owners, and families.
[00:02:07] Paula: Sharon is licensed in 29 states across the country. And so she’s able to help many in multiple states. Sharon is of Barbadian descent. Welcome, Sharon.
[00:02:24] Sharon: Hi, Paula. How are you?
[00:02:27] Paula: I’m great. And I’m even better because you’re here to debunk some of these lies that we’ve heard about money. Tell us about that.
[00:02:35] Sharon: Yes, this will be an interesting conversation for sure.
[00:02:37] Paula: Alright. I’m sure you heard me say that some people said, the best place to keep your money is under the mattress. Do you agree?
[00:02:47] Sharon: I do not agree. Of course I’ve heard that growing up being of a Bajan descent, you hear different things.
[00:02:58] Sharon: We’re conditioned to believe in and do certain things, both culturally and, even being in this country in America but being in the wealth management space I’ve learned a great deal on it’s all about money management. We can make money, but it’s where do we put our money? That’s going to be the difference between someone retiring with a substantial amount or someone who has to go back to work at 75 to go get a job at Walmart. We’ve got to learn to have these conversations and not only that, but then to take action on what you learn.
[00:03:37] Sharon: To, one thing I will let start off is that there’s a book that I’ve read and your viewers. I think they should look into it as well. It’s called Rich and Righteous by a guy named Julian Gordon. I follow him on …
[00:03:50] Paula: Rich and righteous.
[00:03:51] Sharon: Yes, correct. I follow him on Instagram. He’s a very intelligent gentleman. And one thing he said is putting money in a bank, like in a savings account at 0.03%. Interest rate means it will take a person 2, 400 years to double their money. Wow. Okay. So that doesn’t even account for inflation being at 5 percent or greater with inflation, you’re losing money by saving it.
[00:04:24] Sharon: So a person has to find assets that have a 6 percent or greater rate of return, at least. In order to preserve their wealth and then 10 percent or greater to grow it.
[00:04:38] Paula: 6 percent in order to maintain?
[00:04:43] Sharon: Maintain, and then 10 percent or greater to grow it. Now, I don’t know about you, when I was growing up and going to school, I didn’t, I never heard that.
[00:04:55] Paula: I didn’t hear that either.
[00:04:56] Sharon: I heard that and I share that because we are in this economic environment with inflation, rising costs of food and all these different things. And, we just keep doing the same old thing is putting our money in a savings account. I spoke to someone a few weeks ago. They told me they got proceeds from selling a home and they put the money in a CD. I’m like in the back of my mind, you don’t put that type of money in a CD, but again, this is why we have to have these conversations and not be ashamed to ask questions and reach out to people who probably know more than you. But I say all that to say is that we can’t keep doing the same thing we’ve been doing, especially when the economy was different.
[00:05:43] Sharon: We have to do something different to get a different result. Okay. So one of the things I wanted to talk about here is that there’s three kinds of money. Okay, Paula, there’s the tax- deferred bucket, right? We’re gonna talk about that, the taxable bucket, and then there’s the tax-exempt bucket.
[00:06:01] Paula: Say that again so that can stick. There’s this tax.
[00:06:05] Sharon: Okay. The tax-deferred, right? . And that is, and I’ll give an example. Those are the 401k plans. The 4 0 3 B plans, the traditional IRAs, the pensions, the annuities, so that’s where you can grow your money. However, you’re deferring paying taxes, but you’re gonna pay taxes…
[00:06:24] Paula: in the end.
[00:06:26] Sharon: At the end. Okay? Okay. Then there’s the taxable bucket where the CDs, the money market accounts, the bank accounts, mutual funds, stocks, dividends, corporate and treasury bonds in real estate. Okay. So that’s where whatever money, you sell a house, you got to pay taxes on, you got to pay taxes, right?
[00:06:47] Sharon: Then there’s the tax-exempt bucket. There’s the municipal bonds, the Roth IRAs. And then permanent life insurance. Now, before I was in the insurance space, my career was in corporate America, right? So when I was working and, saving for retirement, I had the majority of my money in the tax-deferred and the taxable.
[00:07:15] Sharon: So when I got laid off eight years ago and the unemployment ran out, And I couldn’t find a job and I had to dip into my emergency savings when that ran out, I went where? To my tax-deferred 401k account. And because I was not over 59 and a half, what did I do? I had to pay a 10% tax penalty on my money. But if I had a permanent life insurance policy at that time with cash value, because I was almost turning 40 that time.
[00:07:54] Sharon: And I had it say maybe from like a client of mine, he told me he had his first policy at 2021. If I had that I’ve been able to tap into the cash value tax free and leave the 401k, right? Leave that there and then I wouldn’t have been in such a financial bind. So I say all that to say is that when I talk to people about this stuff, I’m talking from experience.
[00:08:24] Sharon: I’m not just reading a textbook. I’ve been there. I’ve tapped into the 401k. I’ve depleted it. I’ve got laid off, multiple times. I had to start, so I have bought a home. I’ve sold a home, I’ve done these different things that require money that require knowledge that require, taking action, but because I didn’t know everything.
[00:08:45] Sharon: And a lot of people, you go to school, you get a job, but you don’t have the financial literacy. That’s something different. And that’s gonna require effort on an individual’s part. Whereas you learn about the three different kinds of money and maybe not putting all your money in one bucket and then you’re paying more tax.
[00:09:07] These types of conversations need to become more of a regular especially in our community, Paula. We are lacking greatly when it comes to understanding how these things work.
[00:09:20] Paula: You are so right. As you said, you are talking from experience. You had to dip into your 401k,
[00:09:28] Paula: and you didn’t know at that time about permanent
[00:09:31] Paula: life insurance.
[00:09:32] Sharon: I didn’t know that it was tax free. I didn’t because growing up, I just thought, Oh, someone dies. You get a lump sum of cash, but I didn’t see life insurance as a way of a vehicle of money management, where it can be a money management vehicle. I didn’t understand that. And having an MBA, I didn’t understand that.
[00:09:54] Paula: Look at my eyes. What?!
[00:09:55] Sharon: I didn’t learn that in grad school. I didn’t. I got my MBA in fine, but I didn’t learn that in grad school. I didn’t. I’ve told people I’ve learned more about money now, being in the wealth management space than I did when I was getting my MBA. And it’s true.
[00:10:09] Paula: And that’s interesting. Wealth management. So you’re managing people’s wealth. That’s how they become wealthy because they know how to manage. They understand that money is a tool.
[00:10:20] Sharon: Yeah.
[00:10:20] Paula: I want to hear a bit more about the permanent life insurance and how that benefited you and how that can even help somebody.
[00:10:26] Paula: Because as you said, most of us think about life insurance as something that you need to have. You want to kill me?! Why do you want to know about? Why do you want to encourage me to have life insurance? So tell us a bit more about that.
[00:10:41] Sharon: So I encourage people to get it because 1. It’s a robust sophisticated vehicle, permanent life insurance.
[00:10:49] Sharon: There’s two types. There’s whole-life and then there’s indexed universal life. But, they both have the ability to accrue cash. They both, are tax-free. If you pull money out, put money in it, there’s no taxes. They both have the ability to be a wealth building tool to accelerate someone’s wealth especially the index universal life. You get the gains from the market without your money being directly in the market. If that makes sense.
[00:11:20] Paula: It doesn’t make sense. Tell us more about that.
[00:11:24] Sharon: So what that means is someone pays a monthly premium, I’m just throwing out a number, $400 a month, just as an example.
[00:11:31] Out of that $400 a month that someone pays for their policy every month, say it costs the insurance company money to ensure that, to take on that person’s as a risk, right? For example, with that 400 scenario, say it cost the insurance company a hundred dollars to ensure this particular person, right?
[00:11:50] Sharon: So that other 300 is then deposited into something called a cash value account, where now the individual will reap the gains of the S& P 500. Next year, I heard interest rates are supposed to go down, say the market does well, say it’s, I don’t know, the S& P grows to 10% – 12%, whatever.
[00:12:13] Sharon: There’s some products that we have where the cap, I think, I believe in some states it’s 8%. The individual won’t get the 10 or 12%, but they’ll get an 8 percent rate of return on their money. And that’ll be applied to that cash value account. Does that make sense, Paul?
[00:12:30] Paula: That makes sense.
[00:12:32] Sharon: And then their money is not directly in the market. Say with stocks or bonds or mutual funds, the money is from the insurance company. However, they’re getting the gains from the market without it being directly in the market.
[00:12:46] Paula: Ah, okay. That makes sense. Alright. So what about whole-life? Because the fees on the whole-life, your premiums are so high. It’s almost like …
[00:12:57] Sharon: whole-life is right. It’s a more expensive product because whole-life policies pay dividends. At least some companies still do pay dividends. So it’s, that’s like the, I guess the Rolls Royce of life insurance and index universal life is more flexible. It has the ability to …say someone’s annual premium is, I don’t know, 15, 000, 20, 000.
[00:13:23] Sharon: As long as that insurance company gets that 20, 000 by the end of the year, they don’t care if you pay 500 in January, 300 in February. 600 and more, as long as they get their money by the end of the year, they’re good. It’s flex. I have an index universal life myself. It has that flexibility built in, which a lot of people like versus with the whole-life.
[00:13:44] Sharon: It’s just the straight, if it’s 500 a month, it’s 500 a month. But you do get the dividends with whole-life policies that you don’t get with the IULs. So it all depends on really what the person, what they desire, where they are now, and how, what vehicle may be the best vehicle for them at that time.
[00:14:06] Paula: So this is financial class 101. So someone who’s listening, this is making sense, but what is even dividends? Talk about dividends. What are
[00:14:15] Paula: those?
[00:14:16] Sharon: Dividends are what an insurance company pays out to the clients because mutual companies pay out dividends. So that’s what those are. That’s a good question.
[00:14:26] Sharon: One of the things too, that I like to tell people is it’s the diversification of your money. Like I said, I had it, I had a majority of my money in a 401k and cause I just, you, the company matches and that’s great. I take advantage of the company.
[00:14:41] Sharon: You should do that. However, you shouldn’t put all your eggs in one basket. Because again if something happens and you can’t access your money, you don’t want to pin yourself in the corner financially. So that’s why I tell people even, Oh, I hear all the time, Oh, I have life insurance through the job.
[00:15:02] Sharon: That’s great. But do you know that policy does not belong to you, it belongs to the company. And if you are not actively at work and something happens to you, sometimes that policy may not even be valid. So it’s important to have your own. So that it’s
[00:15:23] Paula: okay. You lost me there. So you’re saying the life insurance policy belongs to the insurance company, but so it’s good to have your own. When you take out the life insurance policy, isn’t
[00:15:32] Paula: it your own?
[00:15:33] Sharon: No. So when someone works at a company, say someone works at Verizon or something, and Verizon offers benefits to the employee, like a life insurance policy.
[00:15:43] Paula: Oh, okay.
[00:15:44] Sharon: That policy does not belong to the individual. It belongs to Verizon.
[00:15:51] Paula: Gotcha.
[00:15:52] Sharon: That’s what I’m saying. If someone, I remember when I was studying for my insurance license years ago, I was watching a video in the class. It was a couple, I think they were in the Midwest if I’m not mistaken. The husband worked on a job. He only had life insurance through his job, he got hurt, but when he got hurt, he wasn’t actively at work anymore. The man ended up passing away and the wife went to collect the money from the job policy. She didn’t get it because he wasn’t actively at work. You see what I’m saying? So that’s why I say when people tell me, Oh, I have insurance through the job.
[00:16:30] Sharon: Yeah, that’s great. But that’s not your policy. That’s Verizon’s policy or whoever-you-work-for’s policy. It’s not yours individually. You need to have your own and that’s where there’s some disconnect with people who have jobs and again everything they think is to the job, but that’s not yours. It’s the company’s.
[00:16:51] Paula: I wonder how many people really know that Sharon, life insurance and whether it’s on the company. Because you’re working there. You think it’s my life insurance because those are part of the benefit, but they don’t think that they need to have their own. Wow.
[00:17:09] Sharon: They think that’s sufficient because but that’s the company’s policy, not yours. The company has a certificate and they have a whole bunch of employees and all that. That’s their policy, not yours. Yeah. So that’s why, and then you leave your family exposed if something happens now.
[00:17:28] Sharon: Again, and this is where we’re gonna, I’ll mention this the no life insurance wheel is something that I saw online and I wanted to share with you because, we think about, oh, I got to pay a premium. I got, no, listen if a person doesn’t have life insurance, Paula, one, there’s no money for the funeral.
[00:17:45] Sharon: That’s the first thing, right? There’s no money for the funeral. Then there’s family members who can’t afford to travel to your funeral. That happens. The family is forced to cremate the person’s remains for financial, it’s cheaper to cremate people than to do the casket and all that other stuff.
[00:18:03] Sharon: Then there’s no grief counseling for devastated family members. There’s no money to cover lost wages. That’s a big thing. Then family members have to go back to work before they’re ready. Especially if there’s small kids involved. They don’t have time to console a kid and take a kid to therapy if their father passed away or their mother passed.
[00:18:26] Sharon: There’s no time for that. They gotta pay bills. Then the family must repay your debts. Yes, out of their own money.
[00:18:32] Paula: Yes. That’s not that individual’s own. Now you are the survivor, spouse or whatever, and you’re responsible for that person’s death. Yep?
[00:18:43] Sharon: Yes . Someone I know, they have a whole lot of debt on their back right now when their father passed away, because their father left things in disarray.
[00:18:52] Sharon: And I’m talking millions of dollars. But I’m not talking about a little bit of money. It’s the point where there’s liens on stuff and yeah, so there’s things that, we really don’t, and this is something my manager said to me, and I say all the time, when someone dies, they die, but their responsibilities don’t die.
[00:19:15] Sharon: They’re still alive and well. And they can go on for years. I had a conversation with a friend just this past week. We were talking about life insurance months ago and she stopped. She’s oh, my husband. She just told me that they got in a car accident, her and her son, right? And thankfully, no casket is involved, no one died, but the car got completely totaled. She was scared, and I said to her. Now, if this had turned a different way, do you have money? Do you have $15,000-$20,000 to do a funeral right now? She said nope. So you had a question?
[00:19:51] Paula: Yeah. You were talking about a friend who was in an accident and thank God nobody passed away, but you said, she said, okay, so let’s do insurance.
[00:20:04] Sharon: Yes.
[00:20:05] Paula: So my question is because I hear about this, we talked about whole-life insurance, and how much more you said that’s the Rolls Royce of life insurance. So what about term life insurance?
[00:20:15] Sharon: Term can work. Some coverage is better than no coverage, and, they’re on a budget. They’re blended family on a budget.
[00:20:21] Sharon: I said, you know what, let’s just get a term with a conversion rider on there so that when things do change for the better financially, you can convert that to a permanent with cash value. Okay. Yeah.
[00:20:35] Paula: Sorry. Go ahead.
[00:20:36] Sharon: No, at least have some type of coverage. And if something happens. You’re not scrambling to pay for a funeral.
[00:20:43] Sharon: You’re not trying to and this is a blended family. They have quite a bit of kids. So the thing is though, if anything happens to the parents, the kids’ lives are gonna be interrupted financially.
[00:20:53] Paula: Yes. That’s a big thing. I do wanna ask you though, because I hear a lot of ads on, and I know you work for. This may not be what your company does, but I hear a lot of ads on the radio or TV about you can get to term life insurance without, any medical value for $10 or, a ridiculous amount of those things that are true. Should people really be fall for that?
[00:21:17] Sharon: So that’s a good question. So the first thing is about the medical exam, there are some companies that, if a person is a certain age and they have a certain medical history, they can bypass the medical exam, that’s more in the less than 50, no meds kind of scenario, pretty healthy. Once someone’s over, 50,60 and on meds, they’re going to do a medical exam.
[00:21:43] Sharon: So that’s how that works. And then if a policy is really $10 a month. Someone asked me this a few months ago that and I know one of them was like colonial pin. They always do those ads. That’s one of the lowest of it’s like usually for $750 of coverage. Like when someone died, it’s very low, but yeah, because they break those down like into units. That $10 a month, you’d have to multiply that by unit. They’re just trying to get your attention. But you would not get substantial coverage for $10 a month, which is …
[00:22:18] Paula: too good to be true.
[00:22:20] Sharon: Yes, it is. Yeah, but it’s best to reach out to someone like myself. If you don’t know, ask someone that you know for, hey, do you know someone that does life insurance? Someone who’s a financial advisor. Reach out for a trusted individual. Don’t just go off of commercials on television or those types or the internet. That’s not the best thing to do. Yeah.
[00:22:44] Paula: You talked about the three types of money. It’s the tax-deferred.
[00:22:48] Sharon: Yes, the taxable and the tax-exempt.
[00:22:52] Paula: Okay.
[00:22:54] Sharon: Yes.
[00:22:54] Paula: We’ve touched on the tax-deferred. Okay.
[00:22:57] Sharon: Yes, the taxable. Now that’s the CDs. You put money in a CD, you’re going to pay taxes on the gains. Money market accounts, bank accounts. You put bank accounts, you do pay taxes on your money. Mutual funds, this stock dividends, you pay taxes on it. Corporate and treasury bonds and real estate. You sell a house, you get proceeds, you gotta pay taxes on the proceeds. The government wants their cut, Paula.
[00:23:23] Paula: Yeah for things to work.
[00:23:24] Sharon: Yeah.
[00:23:26] Paula: For the lights to work on the streets and, the garbage to be picked up. Yeah, I understand that.
[00:23:30] Sharon: And you gotta pay taxes, right? Those are some great vehicles. Real estate’s a great vehicle for building wealth. Mutual funds are great, not in this climate right now, but those are great. So it’s not you shouldn’t use the tax-deferred or taxable buckets. You should, again, diversify. It’s just incorporate the tax-exempt. Rethink about how you think about life insurance. Oh, it’s just a policy. No. There’s so many things that you could do. There, there’s something called a lifetime income rider that you can put on a life insurance policy. What that means is someone can use that policy cash value, say it, 65, 70, in their later years or whatever age they want.
[00:24:14] Sharon: And then start receiving income from that policy till the day they die. Lifetime income. We’re using it like it’s an annuity. That’s a great way to supplement your retirement.
[00:24:27] Paula: What did you call it again?
[00:24:29] Sharon: It’s a lifetime income rider.
[00:24:31] Paula: Lifetime income rider, which is similar to an annuity, but it isn’t an annuity.
[00:24:37] Sharon: It’s a rider that is on, when I help my clients, I always put it on there. It’s free of charge. If someone does use it, I think it’s 50 bucks if you do want to use it in the future or whatever. But what it allows a person, and I usually set it for like age 65 that common retirement age or 60 whatever they desire.
[00:24:58] Sharon: And they can say, Hey, Sharon, you know what? I want to activate my rider. I want to get my lifetime income from my policy, and that’s a great way to say, Hey, you’re going to get, I don’t know, 2, 000 a month to the day you die or whatever it is. It helps. It’s definitely help.
[00:25:17] Paula: Is that for any particular time? Can you use that for term life? Can you use till term life comes to an end?
[00:25:22] Sharon: There’s no cash, right? It’s only for the permanent policies that you have that option. So again, that’s the beauty of, paying a policy and having cash value accumulate. You have options, and another thing I got my permanent policy for was for the medical writers, the writers got rid of any kind of illness. That was a main concern for me as I was. Approaching my forties and stuff I didn’t, there was nothing on the term that I had and, I know people around me who were catching cancer and different types of things.
[00:25:55] Sharon: And I wanted to have something that if anything bad would happen to me, I’m able to use some of that money tax-free. Just this past week, one of my clients she got approved on Monday. I kid you not, Paula, text me on Wednesday. She was diagnosed with cancer.
[00:26:14] Paula: Whoa. It’s real life. This is not a fiction. This is not a fairy tale. This is the truth.
[00:26:24] Sharon: This is the truth. And I’m just grateful that I know just let’s move forward with this policy and kind of, because now , she’s not writable for at least five years.
[00:26:35] Paula: Wow. That’s scary.
[00:26:37] Sharon: Again that’s about protecting your insurability. That is getting life insurance before something happens. You don’t get it when it, you can’t get it when it happens. You get it before.
[00:26:48] Paula: Yeah. Wow, Sharon, we could talk about..
[00:26:52] Sharon: I know you could talk about it.
[00:26:54] Sharon: Yeah, I have stories every week. I get stories every week. Yeah.
[00:26:58] Paula: Yeah. So we’re about to wrap up. Is there anything else that you really feel is crucial that we haven’t touched on, but you’d like to touch on a bit and maybe we can continue on the next year.
[00:27:10] Sharon: Okay. I would say look, this is the end of the year. We’re approaching a new year. The economic climate is not the best. Everybody’s worried about this, worried about inflation and look, seek out for help. If it’s not me, find someone that you can trust to try to guide you in the right direction. You can’t keep doing the same thing and expect a different result. It’s not going to work.
[00:27:38] Paula: Don’t keep doing the same thing and expect a different result. Yeah, we hear that, but sometimes we need to hear it again
[00:27:46] Paula: and again.
[00:27:47] Sharon: Yeah, and this is changing our financial future or planning for it is not an overnight. It’s like cleaning a house. You clean the bathroom today, right? You clean the kitchen tomorrow. It’s putting pieces in place. The foundation in place. It’s one step at a time. It’s not easy, but it’s possible. You know what I mean?
[00:28:07] Paula: Yeah. Awesome. So Sharon, where can people find you online? Every time I speak with you, I learn something new and people are listening, viewing. I keep having to remind myself now, this is TV, so how can people find you online?
[00:28:23] Sharon: They can find me on LinkedIn, Sharon Carter MBA. They can find me on Instagram. I am Sharon P. Carter. They can find me on Facebook, Sharon the Resource.
[00:28:36] Paula: I like that one. Sharon, the resource.
[00:28:39] Sharon: Yes, that’s it. That’s why I’m a resource.
[00:28:42] Paula: Yeah. Sharon is always such a blessing to talk with you. And I know that my viewers and listeners must feel the same. And so to my listeners and viewers, if you enjoyed what you just heard from Sharon Carter, please tune in next week for another episode to learn something new and to be inspired by these amazing women guests that I bring on. I had a male last week and he was amazing too. And for me, you can find me online on my website, which is www. chatwithexperts. com or on LinkedIn as Paula Okonneh or on Instagram. And my IG handle there is at chat_experts_podcast.
[00:29:36] Paula: And as usual, my mantra is that I learn something new every day. I learned something new and this is not my first time talking to you about one or two. But I learned again something new. Thank
[00:29:50] Paula: you.
[00:29:50] Sharon: Thank you for having me here again it’s always a pleasure to talk with you, Paula.
[00:29:54] Paula: Always a pleasure.
[00:29:56] Sharon: Yes.
[00:30:02]