To celebrate the birth of our nation and the freedoms that we are afforded, I am writing three posts this week with a twist. Each post is based on an influential document which has given us rights.
On Monday, I outlined the Financial Declaration of Independence. Today’s post, based on the United States’ Bill of Rights, is the Financial Bill of Rights.
- First Amendment – Freedom from debt, credit cards, and HELOCs
We shall take out no unnecessary debt living beyond our means, which prohibits free exercise of other rights; or overspend through the use of credit cards; or enslave ourselves through the use of HELOCs; rather save the necessary sum to pay cash for wants and needs. - Second Amendment – Right to keep and have savings
A well regulated Automatic Savings Plan, being necessary to the security of a financially free Family, the right to an Emergency Fund, shall not be infringed. - Third Amendment – Protection from bank failure through FDIC insurance
No Investor shall, in time of peace place cash savings in any bank, without FDIC insurance, nor in time of war, but use multiple banks as necessary. - Fourth Amendment – Refusal of Interest Only and Adjustable Rate Mortgages
The right of the people to be secure in their houses, condos, and town houses, against needless foreclosures and bankruptcies, shall not be violated, and no Interest Only or ARMs shall be issued, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized. - Fifth Amendment – Health, life, AD&D and LTD insurance
No person shall be without Health insurance, or adequate Life insurance, sufficient for final expenses and income replacement, except in cases when no financial means to purchase insurance exists, while actively seeking new employment or other income source; nor shall any income producing person be without Accidental Death and Dismemberment insurance; nor shall any income producing person be without Long Term Disability, sufficient to replace 60% of the normal wage. - Sixth Amendment – Right to steady, growing mutual fund returns
In all mutual fund investments, the investor shall enjoy the expectation of steady, growing returns, by careful fund selection based on principles of positive alpha, fair management fees, consistent performance, and passive management where appropriate; each fund consistent with a target asset allocation plan; to have compulsory purchases avoided and decisions based on sound investing principles. - Seventh Amendment – Consistent asset allocation by rebalancing
In accordance with a predetermined asset allocation plan, where the values are determined through evaluation of your risk and investing objectives, the right of rebalancing, or realigning investments which have deviated from their allocation, shall be exercised, and no given investment, shall be allowed to overwhelm the returns of other investments, which may result in large, unexpected losses. - Eighth Amendment – Abolishment of excessive management fees
Excessive management fees shall be avoided, nor 12b-1 fees paid, nor front end or back end loads paid. - Ninth Amendment – Protection of rights not specifically enumerated in credit card agreements
Where credit cards are used, the enumeration in the Agreement, of certain rights, shall not be construed to deny or disparage others retained by the credit card account holder. - Tenth Amendment – Powers of spouses and family councils
The powers delegated to the Head of Household by the Family, are reserved to the Spouses respectively, and decisions discussed in family council.
Signed this 30th day of June, 2010,
Adam Williams and the Rabbit Funds team
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