We've all heard the saying  " If something seems to good to be true, it probably is". However, we should always research something before discounting it as not legitimate. No doubt, many people believed that Edison was crazy in his relentless pursuit of his inventions. His critics most certainly thought his ideas were "Too good to be true", they simply weren't possible.   What about radio? How could people's voices magically fly through the atmosphere? I'm quite sure many people thought these things were too good to be true.  The point is, we should always investigate the facts for ourselves before resolving that something is too good to be true.

When it comes to many topics, we often only hear half-truths. The world of finance is no exception. One such topic that deserves investigation is that of the infamous 0% financing that many of the car manufacturing finance companies offer.  Most all auto manufactures have a finance division. It's a fact that many of the financing companies owned by the car manufactures are more profitable than the car manufacturer themselves.   One such company is General Motors. For years their finance division was immensely profitable in comparison to General Motors. GM was famous for offering their 0% financing offers on their new cars. This begs the question, how could a auto finance company offering zero percent loans still make a sizable profit?

Listen David break down the math behind the "Zero Percent" loans. Too good to be true? Or great deal?

Our apologies, David was feeling a little too sick to do the video he mentioned on air. Check back early next week and it will be posted here! In the mean time, listen to the broadcast. Thanks for your patience!

Please remember to click on "Extras" from your David Lukas Show Smart Phone App to access the video covering how banks make money. Listen to this broadcast and then watch the video. 

This week David dives into the topic of how banks make money. Few people understand this topic, yet almost everyone has a bank account. They use their debit card, they make deposits and they apply for loans for major purchases. Listen to this week's broadcast  and watch the video below to understand the power financial leverage. You will never look at banking the same way again. Who controls the banking equation in your life?

Where to begin? Watch this video and listen to this week's broadcast. Lastly, pick up a copy of David's new book: Whose Future Are You Financing?  Learn how to turn the banking equation in your favor and apply these powerful banking principals in your life.

How Banks Make Money

This week David talks about why The Federal Reserve Can't stop printing Money (Currency).

The real question should be, When will they increase their printing? The fact is, The Federal Reserve Can NOT stop printing. Tune in to learn why.

Now more than ever,  following the common advice propagated by those whom represent Wall Street, The Big Banks and  The Federal Reserve will separate millions of Americans  from their hard earned money. It's absolutely critical to not follow the herd in these less than certain economic times.  Doing so could be at your own peril.

Do you own research,  seek the truth, don't take our word for it. The events that will take place in the coming years will devastate many retirement savings plans and place millions of savers at the mercy of those who control much of the retirement planning industry and the money supply. Banking is misunderstood by almost everyone, yet it has a significant impact on our lives.  Who controls the Banking function in your life? You should be in two professions throughout your lifetime. 1. Your Day Job  2. You must understand and control the banking equation in your life. If you don't, by default the financial institutions will.

Learn The Truth, Study the Facts, and Get Educated.

Where to begin? Be sure to check out David's Recommended Reading List HERE. If you don't own David's new book, Whose Future Are You Financing?,  we recommend you start by reading his book first.

If you would like to learn how to apply sound banking principals in your financial life, contact David's firm, Infinite Financial Services . David  can be reached by calling: 800-559-0933

This Week's Show Prep

CNBC: Did the Fed Just Pop The Stock Market Bubble? 

Forbes: Bernanke Admits To Congress: We Are Printing Money, Just "Not Literally" 

Money News: Easy Money Is A Narcotic

CNBC: The Fed's Hidden agenda behind money-printi

***Please NOTE*** Go to "Extras" from your David Lukas Show App and click on "VIEW PDF" to view the PDF file for this episode. If you want to truely unerstand all that David discussed in this episode, this is a must. (The images referenced below are viewable on the PDF file) Any outside links referenced during this broadcast can be accessed by going to "Extras" and clicking on "Episode Links".

This week, David discusses the history of  The three market periods. David discuses the importance of understanding the difference between average rates of return and actual rates of return. In the financial word this is known as Compound Annual Growth Rate (CAGR) or Real Rate of return. Understanding the difference between these two will help you understand why so many people do not realize the returns or the gains that they expected in terms of the real dollars that they accumulate. Much of the financial world speaks in terms of average rates of return. The problem is, that average returns do not determine how much of your money you get to keep at the end of the journey.  In the real wold, it is the actual rate of return(CAGR)  that determines what you end up with. When you participate in all of the losses in the down years, it has an enormous affect on the actual dollars you will save.

 Note, all of the returns below are BEFORE the eroding effects of taxation or management fees. This substantially reduces the actual or REAL rate of return that one receives on their savings.

During the first market period the actual rate of return on an initial lump sum investment from 1901-1979  would have given you an actual rate of return of 3.57% (Down Jones)

The second market period was the longest running bull market in the history of the markets. There were two key events that caused such growth. The primary reason was the introduction of the qualified plan (401k). For the first time in history millions of Americans were dumping there money in the stock market via payroll deductions and yet were provided NO guarantees. This meant that for the first time hundreds of millions of dollars were flooding the market for the first time in history. There is a direct correlation between the introduction of the 401k and the sharp increase in market growth during this market period.  Prior to this point, the majority  of Americans were not speculating on Wall Street. In fact, in the 1950's the average American had less than 3% of the savings financial vehicles that offered no safety of their principal or guarantees.  Tune in to hear David talk about the 2nd event in history that contributed heavily to the growth during this time period.

The third market period is very telling. Many people have already forgotten 2008. Participating in market losses has an enormous negative impact on your savings. If one had all of the life savings in the sock market let's hope they weren't planning on retiring in 2008!

Below is the S & P 500 (with Dividends) for the last 50 years (1962-2012) At first glance you might think that the there's no big difference between the Average and ACTUAL rate of return. Let's assume that a $10,000 lump sum was invested in 1962-2012 which results in an average rate of return of 10.6%  and an ACTUAL ROR of 9.19% during this 50-year period. This would mean you end up with $811,229 (before fees and taxation). If you received an REAL rate of return of 10.6% (vs. Actual 9.19%) during this time period, you would end up with: $1,540,836!! That's a difference of:  $729,607!! This is validated with a simple future Value financial calculator (see below)

Lastly, if this same $10,000  lump sum was invested in 1962-2012 one was in the 33% tax marginal tax bracket during this period, it would reduce their ACTUAL rate of return to: %6.47 which would mean you would end up with just: $230,035!! This is a far cry from the $1.5 million that the 10.6% that so many confuse with Real returns.  Therefore the 10.6% average rate of return after taxation resulted in $230,035 real dollars that you could spend, NOT $1.5 million. What if this account were subject to management and market based fees? If we assume a this is just 1.5% (see The Hidden Cost of Doing Business, and The Hidden Cost of Mutual Funds) then the REAL rate of return falls to: 5.37%  in which case the 10.6% average rate of return would provide you just $136,929. If you received an REAL rate of return of 10.6% vs. Actual 5.37% (based on assumption above) during this time period, you would end up with: $1,540,836!! NOT the $136,929 (Actual Rate of Return).   The reasons above are why so many Americans gambling their entire life's savings in the market never realize the substantial savings they had hoped and prayed for.

David can be reached at: (800) 559-0933 or David@DLShowOnline.com or visit: InfiniteFinancialServices.com