Friday, June 27, 2014

Tax evaders go to PR now

Your broker/advisor now evades taxes in Puerto Rico—Socialism for the rich
Puerto Rico signed a law that creates a tax haven for U.S. citizens. If they live on the island for at least 183 days a year, they pay minimal or no taxes, and unlike Singapore or Bermuda, Americans don’t have to turn in their passports. Stock traders, moguls and entrepreneurs have moved. Billionaire John Paulson is spearheading the tax evasion. So the government gives them all the privileges of citizenship and we pay for their FREE ride.

What do the working millionaires know that your kids don’t?
The Picture Book of Wealth: How to save and invest in pictures and stories

Harvard got taken by its advisors—how about you?
Harvard’s endowment posted annual average gains of just 1.7 percent vs 18.47% (market index fund) in the five years ended June 30, 2013. That compares with annual returns of 6.8 percent at Columbia University, 5.4 percent at University of Pennsylvania and 3.3 percent at Yale University. Advisors are paid even when they give bad advice. Harvard should follow Buffett’s advice—buy good value not advisors:

Will you have enough retirement income?
Use our calculator to illustrate if you will have enough retirement income by earning 8-10% on your contributions. How many years will it take to have enough to live on?
This calculator shows you how much retirement income your accumulation will provide after years of growth. It estimates your future buying power compared to your current one. It assumes you pay no taxes each year and your fees are low. It assumes your current income will rise with 3% inflation and then converts your nest egg into income stated in today's dollars. Your 30-year nest egg should last for 30 years or more:

Are Target-date funds for you?
For 5 years, target-date investors earned median annual returns of 15.3% vs. 14% for those managing on their own. The do-it-youselfers also had a wide range of outcomes, with the 25% earning median annual returns of less than 9%. These days more plans are providing guidance in the form of online tools and target date funds: 72% of 401(k) plans offer target-date funds, up from 57% in 2006, according to the Investment Company Institute. Unfortunately, nearly two-thirds of target-date fund users also had other funds and lowered their returns by 2.62%. Target date funds for 2035 and beyond have 90% stock now but reduce the ratio as you near retirement. Since Buffett advises compounding low-cost funds, this choice can be great:

Are alternative investments right for you?
Arguments over the importance of alternative investments in the average investor’s portfolio continue. Meanwhile, their results are not keeping up with more traditional portfolios, according to a new Morningstar study.  Emory University's professor Klaas Baks recently argued in favor of including alternatives in the Wall Street Journal. Advisor George Papadopoulos argued against alternatives. “Exotic assets may make a portfolio seem a lot sexier, but they may not get it to perform better over the long term. Factor in risks and expenses, and alternative investments just aren't worth the trouble,” Papadopoulos explained. The simple strategies work best:

GOP crazies
Nice guy Boehner says he is suing the President but not sure what for, exactly. I thought that was called “impeachment” in Washington. While we are at it, let’s add all of our so-called ‘representatives’ in the suit. They have done nothing while being paid. Isn’t that “breach of contract’ or something? Let’s ask Ms Palin and Mr Calvuto to be the prosecutors. It would be a new “Law and Order” series that would have better ratings than Survivors.  

GOP-led Supremes cut Obama recess appointments
Ronald Reagan made 232 recess appointments during his eight years in office. Bill Clinton and George W. Bush each made well more than 100. To date, Obama has made only 32 recess appointments. The recess appointments power was more pertinent when senators left town on "horseback," Justice Ruth Bader Ginsburg said, but the Supremes didn’t act in 1900 when Washington had cars.
Can we undue Reagan-Bush-Clinton appointments too? Only fair, right?

Supremes back Cheney’s Halliburton against shareholders—the corporate elites
Supreme Court limited shareholder class actions; stopping short of abolishing such cases altogether, in a case involving Halliburton which still pays Cheney. The Houston-based energy and engineering company, supported by business groups, asked the high court to overturn a 1988 precedent establishing “fraud on the market” that supported shareholder class actions. Cheney lied in 2003 about his  ties to his old company. Supreme’s Scalia is his hunting buddy and got him in with Bush in 2000. 

FL insurers raise rates for all to cover Wild West shootings
Florida Gov. Rick Scott signed a bill saying insurers cannot deny coverage or charge more because of gun or ammunition ownership in Florida. GOP bill interferes with the free market—force insurers to charge all for gun-related risks. Bill biased against women and minorities. The Florida Insurance Council, warned as the bill was being debated it could have unintended consequences. Ask for the no-guns, dogs, art, jewels, pool-discounts:

Supremes split on gun-buying deceit—Lying is OK according to 4 of 9.
Justice Scalia noted that it is permissible to buy guns as gifts, for later resale or as raffle prizes. The majority erred, he said, in interpreting the law to make it “a federal crime for one lawful gun owner to buy a gun for another lawful gun owner.” Roberts, Thomas and Alito joined Scalia in allowing buyers to lie on application about ownership and let them sell or give to others. Let buyers decide who is “lawful” owner—Really?

NJ business insurers lower rates
Horizon BCBS NJ new small employer plans slash premiums 15 percent and waive deductibles for network doctors. Horizon faces strong competition in the under-50 group market. Buy only what you need:

Two Americas--end of middle-income
Since 2000, jobs traditionally done by teenagers, such as retail and food service, are increasingly shifting to older workers. The number of people aged 20-24 working in retail has risen 24%, while the number of those in food service has shot up 57% during that time. Meanwhile, the number of teens working retail jobs has plunged 47%. And the shares of people 65 and over working in retail and food service are up 52% and 55%, respectively, over that period. Because jobs in areas like restaurants and retail are lower-paying, those who start their adult careers in such industries may be doomed to a lifetime of lower wages. And closing off opportunities to younger people while leaving older ones stuck in place stifles economic mobility. The promise of college has always constituted what Shierholz calls "an implicit contract." If job gains continue to be concentrated in low-paying, low-skilled areas, that contract may have to be rethought.

Your advisor doesn’t even know how much they charge you?
Nearly 63 percent of advisors surveyed underestimated their fees. The advisors believed their fees were below 1.5 percent of assets, while the actual average was about 1.83 percent. In addition, Cerulli says that 60 percent of clients do not understand how their financial advisor is charging them.
Your advisor can take up to 63% of your nest egg over time. Use Warren Buffett’s secret:

Did you already suspect?
Watching television isn't just slowly killing your brain cells, it may be slowly killing you. Researchers found that people who watched three or more hours of television a day were at twice the risk of an early death than those who watched less. The study found a correlation to television watching time but found no significant association with computer or driving time. "If you're driving or using a computer for working, you are stressed." The study took 8 years so it was too late to warn those who died from TV.

SCAMS           Why are we still paying $700 Billion a year for WWII deployments?
We are paying for 164,253 of our active-duty armed personnel to be in 150 countries around the world. We have about 50,000 in Japan and 50,000 in Germany.
Are we preparing for WWII again? There are 1,208,083[1] armed personnel in the United States. Our taxes pay for about HALF of the WORLD’s military expenditures every year.
We just can’t afford to pay for everyone else’s defenses anymore.
Japan, Germany and S. Korea can pay for their own defense.

Your IRA money may now go to creditors—not beneficiary
Thanks to a recent decision by the U.S. Supreme Court, IRAs no longer have the same level of bankruptcy protection as some other retirement assets. In the case of Clark v. Rameker, the land's highest court said that “the term ‘retirement account’ is narrowly-defined,” explains attorney Edwin Morrow, wealth specialist with Key Private Bank. Translation: “retirement account” does not apply to assets you receive from someone else.

Obama set to allow crude exports—higher gas prices likely—switch to electric?
1975 law banning exports may be relaxed so big oil can sell at higher prices and refiners of gasoline will need to pay more on world oil markets.

41 Watchung Plaza, B242
MontclairNJ 07042

Friday, June 20, 2014

Tax evaders' loophole

Tax evaders who renounce US don’t get help
Should we defend their foreign property and CEOs if attacked? Medtronic Is Biggest Yet to Renounce U.S. Tax Citizenship. Medtronic takes a legal address in tax-friendly Ireland as part of a $42.9 billion takeover of Covidien Plc (Tyco). Although Covidien is run from MansfieldMassachusetts, it’s been incorporated in Ireland since 2009.
Minneapolis-based Medtronic joins some 44 American companies that have reincorporated abroad or struck plans to do so, including 14 in a recent wave of moves that began in 2012. Earlier this year, Pfizer Inc., the largest U.S. drugmaker, briefly proposed taking a U.K. address, a move that might have cut its tax bills by as much as $1 billion a year.
Will Ireland pay for US marines if needed at Medtronic’s non US factory?

Clintons evade taxes yet talk the opposite—wealthy hypocrisy
Bill and Hillary Clinton have long supported an estate tax to prevent the U.S. from being dominated by inherited wealth. That doesn’t mean they want to pay it. To reduce the tax pinch, the Clintons are using financial planning strategies befitting the top 1 percent of U.S. households in wealth. These moves, common among multimillionaires, will help shield some of their estate from tax at 40 percent of assets upon death.
No one seems to pay their fair share, so save tax-FREE:

Will you have enough retirement income?
Use this calculator to illustrate if you will have enough retirement income by earning 8-10% on your contributions. How many years will it take to have enough to live on?
This calculator shows you how much retirement income your accumulation will provide after years of growth. It estimates your future buying power compared to your current one. It assumes you pay no taxes each year and your fees are low. It assumes your current income will rise with 3% inflation and then converts your nest egg into income stated in today's dollars. Your 30-year nest egg should last for 30 years or more:

Brokers/advisors steal employees’ nest eggs
A three-month investigation found that former employees at major companies have complained that brokers lured them into rolling over their 401(k) nest eggs into unsuitable IRA investments. Some lost $ thousands while salesperson got rich and won trips. Regulators have delayed requirement that product sale must be “best” for client not salesperson. Use the Buffett strategy:

1% grew 15% in 2013—how about you?
Individuals with investible assets of more than $1 million grew by 15% in 2013, while combined wealth grew by almost 14% to reach a record high of $56.6 trillion, according Capgemini and RBC Wealth Management. North America’s high-net-worth population expanded by 16% to 4.33 million in 2013, while Asia’s grew by 17% to reach 4.32 million. In Asia, people in the high-net-worth category saw their wealth increase by 18% to $14.2 trillion last year, while the same category in North America saw an increase in wealth of 17% to $14.9 trillion. Asia due to lead in 2014.  Make your own Tax-FREE fund:

Companies that evade taxes--Will you pay their share?

Supremes revoke parent legacy to heirs
On June 12, 2014, a unanimous Supreme Court ruling claimed that “inherited Individual Retirement Accounts” are not shielded from creditors in bankruptcy proceedings. The ruling comes from a Wisconsin case where a couple declared bankruptcy yet wanted to prevent creditors from going after a $300,000 IRA that was inherited from a passing parent. Previously, bankruptcy law typically protected retirement assets from the reach of creditors. Your spouse inheritance of IRA is still protected. You just can’t leave IRA to the kids for future. Right trust may work. Better to give your IRA in small amounts and let them put it in their own Tax-FREE fund:

Tax evaders get great deal
The IRS has rolled out important changes to its offshore account amnesty programs. More than 45,000 taxpayers have fixed their tax problems via the IRS programs, paying about $6.5 billion in taxes, interest and penalties. As FATCA and global bank transparency kick in July 1, 2014, the IRS can expect even more mea culpas. But one group unhappy with the rules so far has been expats. Americans abroad have long complained that they have foreign accounts for legitimate reasons and shouldn’t be penalized for technical reporting failures.
Pay your fair share: Zero retirement income taxes:

Is income inequality getting worse?
The two U.S. counties with the worst income inequality couldn't be more different. No. 1 is Manhattan. The second is a rural Native American reservation in North Dakota.
Polls show inequality to be a growing public concern. A Pew Research Center survey this year found 65 percent of all Americans believed inequality was growing, and Gallup found similar results. Partisan differences abound: 90 percent of Democrats in the Pew poll thought there was "a lot" or "some" actions government could take about inequality. Half of Republicans said there was "not much" or "nothing" government could do.
We have only one way to beat inequality according to Warren Buffett. $100 a month can become $250,000:

GOP crazies
House passes tax breaks for the rich that costs over $600 Billion without including offsets so the projected deficit for 2014 -- $492 billion -- would be doubled. "It's really so interesting to see: We must have unemployment insurance extension paid for, but hundreds of billions of dollars in tax breaks not paid for," House dems said. The cost of making tax gifts permanent is proving to be prohibitive—almost $1 trillion over the next decade. But many of the breaks are so popular or important that lawmakers are reluctant to eliminate them.
Where is fiscal responsibility? In campaign coffers by now!

Is the “new” uncapped index annuity right for you?
Uncapped indexes, as the name suggests, don't use index caps to limit returns. But that doesn't mean that clients are now able to grab equity-like returns from this fixed income product. Rather, carriers use another lever to limit the returns in the form of a spread.
So insurers have changed the name to trick us into buying equity-indexed annuities but we know they are not going to lose money. “With uncapped strategies, if the market is up by 30%, by the time you work through the formula and subtract the spread, the client will get about 8% or 9%,” he said. Clients need to understand that “uncapped” doesn't mean that they'll get equity-like returns, but rather they may beat the capped strategy by 1% to 1.5%, as one analyst confessed. Best annuity:

ObamaCare to double insureds in 2015
The number of Americans who buy ObamaCare health insurance in the next Open Enrollment period will far surpass the eight million who enrolled in plans earlier this year, according to an analysis by "We expect between 12-16 million people will purchase plans during the next Open Enrollment period which starts on November 15, 2014 and ends on February 15, 2015," said Jeff Smedsrud, CEO of "This surge in activity will demand that both private companies and federal and state marketplaces become more efficient in serving new buyers of ObamaCare." Smedsrud notes, however, that some of those who previously enrolled have already discontinued their plans, a typical occurrence in the individual health market.
"About 20% of individuals do not pay their initial premium and historically between 3-4 percent of those with plans drop coverage each month as they migrate to new jobs, have a change in their income or family status, or determine they no longer need it, etc. Despite reforms to the individual market, this normal churn is continuing," Smedsrud said.

Look for higher premiums for your CUV?
“Compact CUVs had the highest number of thefts by class, but the high dollar value premium SUV class was the most unrecovered,” NICB said. With 15,785, CUVs had more thefts than SUVs, with 5,926. CUV thefts rose 31 percent from the prior report, while SUV thefts decreased by 25 percent, NICB said. Compact CUVs were the most popular with thieves with 6,981 being reported stolen. Out of the SUV classes, Large SUVs had the most thefts with 2,902, NICB said. The top five sport utility vehicles and crossover utility vehicles reported stolen between Jan. 1, 2010 and Dec. 31, 2013 are the Ford Escape, Ford Edge, Ford Explorer, Jeep Grand Cherokee and the Kia Sorento.

Merrill gauged seniors and got caught … this time
Bank of America Merrill Lynch slapped with an $8 million fine and ordered to pay $89 million in restitution for failing to waive mutual fund sales charges for certain charities and retirement accounts. Most of the mutual funds waive certain fees for eligible retirement plans and charities. But the firm failed to make sure its advisers were properly applying those waivers to as many as 28,800 accounts.
Don’t leave it to regulators to stop broker theft:

6 popular cars to avoid when you shop--Surprises
They drove real models they purchased so you get the real skinny on benefits. The alternatives are also mentioned. You will not expect some of the reviews based on reliability, handling, ride, etc.  

Coastal homes’ premiums rise to luxury level
Property insurance policies are costlier in coastal counties because hurricanes create higher losses, insurance companies and state regulators maintain, but a grassroots homeowners' group in Alabama says the actual cost is greatly exaggerated. Insist on all your discounts:

50 new changes in the way we do things—SURPRISE!

SCAMS           Why are we still paying $700 Billion a year for WWII deployments?
We are paying for 164,253 of our active-duty armed personnel to be in 150 countries around the world. We have about 50,000 in Japan and 50,000 in Germany.
Are we preparing for WWII again? There are 1,208,083[1] armed personnel in the United States. Our taxes pay for about HALF of the WORLD’s military expenditures every year.
We just can’t afford to pay for everyone else’s defenses anymore.

Are pension ‘loans’ right for you?
AARP reports on retirees signing over their pension payments for years in return for a ‘lump sum advance.’ Some pay $100,000 over time for $40,000 today. That is over 100% interest. This is a desperate act. So called ‘settlement’ firms target vets and other public service workers with solid DB pensions. Some transactions are illegal and some may void Medicaid benefits. Banks turn people down so the scam predators come out. Some states are trying to help. Banks get free money from taxpayers but don’t make loans to needy.
Pennsylvania has Low Marks for Serving Older, Disabled Residents
AARP Pennsylvania today warned that a new study ranking Pennsylvania 42nd nationally in meeting the long-term care needs of older residents calls for across the board improvements, with particular emphasis on enhancing caregiving affordability and access. The ranking comes from a new comprehensive state-by-state Scorecard from AARP with support of the nation's leading organizations behind quality long-term care, The Commonwealth Fund andSCAN Foundation.
Raising Expectations 2014: A State Scorecard on Long-Term Services and Supports for Older Adults, People with Physical Disabilities, and Family Caregivers – an update of the inaugural 2011 Scorecard – ranks each state overall and within 26 performance indicators along five key dimensions: affordability and access; choice of setting and provider; quality of life and quality of care; support for family caregivers; and, effective transitions.  New indicators this year include length of stay in nursing homes and use of anti-psychotic drugs by nursing homes, raising serious concerns about the quality of institutional care.

Recall your Caddy too
GM put bad switch in other models not just the cheap ones. Saving $.90 will cost them $700 million. Suit seeks $10 billion from GM because diminished value of all GMs. Would you buy a used GM now? What else are they hiding?

Bad advisors
Dee Allen Randall was charged with 22 counts of second-degree felony securities fraud Randall allegedly engaged in investment fraud using several financial organizations which at the time he owned or managed, including the Horizon Financial & Insurance Group, Horizon Auto Funding, Horizon Financial Center and Horizon Mortgage & Investment, among others. Randall told them their investment was backed by real estate or car titles. For some investors, Randall stated or led them to believe that they would be placed on the car titles or deed of trust."

Texas ranks among most dangerous states in America—bring your guns!
Texas is among the most dangerous states in America, falling in the bottom five on the 2014 list of Safest States To Live In. For the personal finance website, the term "safety" does not refer exclusively to protection from violence and crime; it encompasses various categories, including workplace and traffic safety, natural disasters, home and community stability, and financial security. To determine its rankings, Wallet Hub looked at 26 key metrics for all 50 states and the District of Columbia. 

41 Watchung Plaza, B242
MontclairNJ 07042

Friday, June 13, 2014

Taxes from advisor 'rebalancing'?

Tax increase due to advisor “rebalancing”?
Advisors promote this buy and sell activity to justify their quarterly fee charges. Is it really helpful to you? You pay more tax. Vanguard did a test of many types of rebalancing strategies. None were superior. Selling your winners and buying your losers creates taxes, fees and commissions. It lowers your annual total return as well as your overall volatility. The costs reduce the total return so this strategy seems to have only one result: fee generation. Quarterly rebalancing also justifies your advisor’s lifestyle. ‘Doing nothing’ is hard to justify for a fee.  
A better strategy—‘Do Nothing’ as Warren Buffett says.

Advisers NOT telling total costs so we lose up to 63% of earnings
The average total cost their clients actually pay is 1.83% of assets, the survey of 159 advisers found. Total costs include the adviser fee, administrative fee, platform fee and product fee. Most advisers are required to list their fees but don’t. The costs that some advisers don't fully account for include administrative fees, which can be buried in prospectus documents, and platform fees, Mr. Carson said. John Bogle, Vanguard founder, estimates we can lose 63% of possible nest egg to costs.
No need to lose up to 63% of your TOTAL accumulations:

401k up 12.7% (if you left your money alone)
Vanguard reports that the average 401(k) account balance rose from $56,000 in 2008 to $102,000 in 2013. And even factoring in contributions, Vanguard research analyst Jean Young reports that one study of 401(k) participants, conducted by the firm, showed an average annual return rate of 12.7% over the same five-year period. Household income averaged up much less at the current median figure of $52,959. Tune up your 401k:

American Dream dead?
CNN/ORC International poll in 2014 showed that 59 percent of Americans believe the
American dream is impossible, compared to 40 percent who say they believe it is. College grads under age 30 have huge student loan payment at gouge rates and can’t find jobs that can carry the debt. Some have gone home to parents. Many share rooms. Some work many part time jobs. Some try starting new business with no money. Few average students are making their way. Fewer still are starting their savings/investing plan. Starting early is key to having enough tax-FREE:

Advisers escape responsibility for mistakes by filing
“Bankruptcy offers advisers a chance to transform a crisis into an opportunity — not just to clear their financial slate, but to better relate to clients' struggles with money.” So says adviser industry.
What about our money? Their opportunity—but our losses.
Wealth without Wall Street’s fees, commissions, expenses, charges, etc:

Wall Street exec sees another tax payer bailout!
BlackRock Inc.'s Laurence Fink, who oversees the world's biggest ETF lineup, said leveraged ETFs are a structural problem and have the potential to "blow up" the industry. These index funds (exchange-traded funds) are becoming popular with advisors because they can earn fees/commissions. Leveraging (using bank money) creates bigger losses or gains.

Smart investors earn 13% a year
A survey of defined contribution investors (401k) shows that simple rules of investing pay off. Savvy savers use only low-fee, high-yield compounding accounts. The study found the more financially literate held a greater share of stocks in their portfolios and more volatile holdings than the less knowledgeable. Keep more of what you contribute and earn:

GOP crazies say God helped him stop amnesty for kids
“God acted through people on my behalf,” new tea party winner Dave Brat said on Fox News shortly after his victory over House leader Cantor. Cantor wasn’t exactly caught sleeping. He spent $1 million in the weeks leading up to the primary on television ads calling Brat a “liberal college professor,” and sent out mailers boasting he’d blocked “amnesty” on Capitol Hill. Apparently not enough. Far right voters saw those 47,000 kids in prison camps awaiting deportation and didn’t want the House giving them amnesty. So we are giving the kids lawyers so they can fight! Where are the embassies?

MN Uninsured Has Plunged 40 Percent Under Obamacare
Minnesota has seen its uninsured rate plunge by more than 40% since the implementation of the Affordable Care Act, according to a new study released this week. 
The study, released by researchers at the University of Minnesota, provided the first look at Obamacare's effect on a single state's insured rate. It found that the number of uninsured in Minnesota fell from 445,000 (about 8.2% of the population) to about 264,500 (about 4.9% of the population).
The decrease is similar to the effects in Massachusetts after similar healthcare reforms were implemented there in 2006. It's a larger increase than the Congressional Budget Office has projected for the entire United States — a drop from 54 million under previous law to 42 million under the Affordable Care Act.

Insurers now racing to join ObamaCare
Ten insurers are seeking approval to sell 504 separate health plans next year on the Illinois health insurance exchange, a dramatic increase from 2014, Illinois said Thursday. The surge in interest in the Illinois exchange allays widespread concerns that carriers would walk away from offering coverage under the Affordable Care Act next year because sicker-than-expected pools of patients would sign up and raise financial risks associated with participating. Last year, just six insurers offered 165 policies in Illinois.
More insurance companies are expressing an interest in selling policies on Kentucky's health-benefit exchange next year -- a move state officials say will benefit consumers.
All five insurance companies that sold policies this year on the exchange known as Kynect want to come back for 2015, and at least one other -- CareSource -- wants to join them. State officials said they are optimistic that several other insurers will file in the next few weeks to sell policies in the coming year on the exchange. Kynect is an online insurance marketplace offering health insurance plans for Kentuckians. It was created last year by Gov. Steve Beshear, as called for in the federal Affordable Care Act.

Unbiased car insurer for vets picks best value cars
USAA unveiled its fourth-annual Best Value list identifying the top 2014 automobiles rating highest in safety, reliability and affordability. The 2014 Best Value vehicles are almost all made in USA but designed (ignitions too) by others.

SCAMS           Why are we still paying $700 Billion a year for WWII deployments?
We are paying for 164,253 of our active-duty armed personnel to be in 150 countries around the world. We have about 50,000 in Japan and 50,000 in Germany.
Are we preparing for WWII again? There are 1,208,083[1] armed personnel in the United States. Our taxes pay for about HALF of the WORLD’s military expenditures every year.
We just can’t afford to pay for everyone else’s defenses anymore.

SEC says Scott Valente convinced 80 investors in upstate New York to turn over $8.8 million in the last four years. SEC is closing him.

41 Watchung Plaza, B242
Montclair, NJ 07042