Friday, July 19, 2019

Best way to start investing

What is the best way to start investing for the future?
The best way to start and continue to invest for a lifetime is a Target-Date or ‘balanced’ fund. Because we don’t know when the market will fall, we can’t time the market to get out at the right time. People who try this strategy usually lose. In fact, over time, they usually earn just 3.79% versus 11% for the ‘keep-investing’ folks. Inflation of nearly 3% reduces their buying power even further. Why does this happen? Most of us take the short view; not the long view with our savings/investing dollar. If our quarterly statement account shows a loss, we opt out of the long-term 11% return. We can ride out a market fall by using a balanced fund like the low-cost Wellesley Income Fund. Its allocation of 60% bonds/40% stocks has provided nearly 10% a year since 1970. So even when stocks fell 37% in 2008, this fund had less of a ‘statement’ loss to overcome. Also, some folks seem to think that when the market falls 37% they actually lose 37% of their money. If you don’t sell, your fund holds the same number of shares so when the shares rose 27% and 32% as in 2009 and 2013, your account value still maintain the 10% a year over time. Stay invested for more:

Are women better investors than men?
Studies show that women are willing to wait for their accumulations to grow. Patience pays, according to Warren Buffett. When women in one study worked with woman advisors, they held less cash and considered themselves to be more risk tolerant than men. Consequently, their returns were higher. Among the participants, those working with an advisor had a cash allocation almost 15% lower than those with no professional financial advice. However, when female investors worked with male advisors, two-thirds of this affect was offset. The data parallels the experience of master investor, Warren Buffett. Recently, he won his bet with a hedge fund manager using 5 different strategies. Buffett bet $1 million that a simple low-cost index fund (Vanguard 500 Index fund) would outperform stock-picking investing. DALBAR keeps track of investor returns and has shown that over time, a low-cost index wins: No trading, no market timing, and no chasing earnings. In each period, advisor-managed accounts earned less than ‘buy and hold’ investors: 3.79% versus 11%. Wall Street is wrong.

How much can your money earn without you?
Do you expect your money to work for a living? If not, you are losing the largest potential earnings available. Fidelity looked at its most successful investment accounts. Guess what? The most successful accounts were owned by people who died or who forgot they had them. Lesson: don’t pay anyone to ‘manage’ your accounts. How can this be true? Warren Buffett the greatest investor of our time says his success is from ‘compounding.’ If we leave our stock/bond account alone, it will earn money by itself. We do nothing! For example: Invest $250 a month in Buffett’s recommended account and 33 years later you have about $993,000. You invested $99,000 (3,000 x 33 years). Your money earned $894,400. You did NOTHING but allow $250/month to work!

When Fed rates fall, retirees need inflation-buster
If you rely on ‘high’ savings rates to float your retirement income then you better plunge into 2.5% paper now. However, with inflation running at over 2%, you are losing your purchasing power. All your costs are going up and your earnings down. What to do? The answer is having enough for expenses now and growing your assets for the future. You must bust inflation wide open or your future income is in jeopardy. How can you do that safely? A little risk goes a long way. Think of it this way: part of your assets are for 2 years out and part for 10 years out and part for 15+ years out. Don’t think that all your assets will be needed at the same time. You can afford a little risk with those 15 year assets. Your 2.5% works for now but won’t cut it for later. For later, a balanced fund is best. A long-term winner is the 40% bond/60% stock fund from Vanguard. Balanced Index shows solid a 6% return since 2000 with only 0.07% cost. Or the low-cost Wellesley Income Fund. Its allocation of 60% bonds/40% stocks has provided nearly 10% a year since 1970. Plan 2 year, 10 year and 15+ buckets.


Planned Parenthood barred from doing family planning. GOP needs more SSI kids.
Trumper defies Congress subpoena: respect for law ended by GOP? No jail time!

More troops to Saudi and Mexico as US ready for wars again.
EPA cancels inspections that catch polluters in the act: Koch etc donations ‘speak’
Labor secretary worked against labor for Ford, Boeing, etc to kill protections.

Government can’t stop Robo calls; can phone companies? For a price?
How many times can you cry wolf?  Any credibility left?

NJ, NY, CT sue IRS: SALT tax cap $10K discriminates against one group of people

Todd Ficeto, CA caught ‘pump and dump’ penny stock scheme: $200 M fraud—jail?
Henry Wieniewitz caught selling securities w/o license 630 customers $3 M commission 
People’s pain concentrated in certain markets: solution creates the problem

Beware: ‘Extensions’ you download may sell the info you don’t want people to have.
Beware: Financial ‘research’ is commodity like discount airline seat: cheap buys cheap?

Criminal contempt of Congress?: Barr and Ross are NOT arrested; business as usual.

Who owns your account now?
Summit Brokerage to Cetera Financial Group’s previous parent company, RCS Capital


Barefoot woman climbs Mt Rushmore: No gear/shoes--$1000 fine but not to top

41 Watchung Plaza, B242
MontclairNJ   07042

Friday, July 12, 2019

Avoid the market panic

Avoid a market downturn panic
We are now in the longest positive market period. But there will be pain in the future. We just can’t know when. Our best defense is a Target-Date or ‘balanced’ fund. Because we don’t know when the market will fall, we can’t time the market to get out at the right time. People who try this strategy usually lose. In fact, over time, they usually earn just 3.79% versus 11% for the buy-hold folks. Inflation of nearly 3% reduces their buying power even further. Why does this happen? Most of us take the short view; not the long view with our savings/investing dollar. If our statement account could show a loss, we opt out of the long-term 11% return. We can prepare for market falls by using a balanced fund like the low-cost Wellesley Income Fund. Its allocation of 60% bonds/40% stocks has provided nearly 10% a year since 1970. So even when stocks fell 37% in 2008, this fund had less of a ‘statement’ loss to overcome. Also, some folks seem to think that when the market falls 37% they actually lose 37% of their money. If you don’t sell, your fund holds the same number of shares so when the shares rose 27% and 32% as in 2009 and 2013, your account value still rose about 10% a year over time. No panic investing.

Are you planning to retire early?
If this is your dream, here are the lessons that will make it happen. Any goal requires changing your habits and not necessarily making hard sacrifices. When I wanted that Chevelle SS 396 at age 18, I had no problem giving up stuff I usually wasted money on. If you are going to retire from the daily grind, you need a plan and you need to stick with it. The goal is financial security and independence: freedom and flexibility. First, start early. “Saving becomes ingrained in everything” you do. It makes you feel better—in control. Second, reaching the goal takes time but investing 29% of your income (vs 6% for others) makes you proud of your annual statement. Third, spending smart does not mean you must become a hermit. It means getting your money’s worth—especially when it comes to investment products. Why waste 1-3% of your ballooning account by sharing it with a salesperson. Today, a low-cost ETF or fund in the most aggressive sectors is all you need. According to Warren Buffett, the smart money just keeps buying the best stock market sectors. Trading and timing just defeat your best friends—compounding and tax- FREE accounts. About 53% of savings overachievers have Roth IRA accounts, versus 29% of other savers. Taxed money goes in and tax-FREE money is what you live on later, when you have escaped the GRIND. Change habits: used car vs new car—just $350 a month in a simple index can compound to $1 million in 30 years.

Which IRA withdrawal plan is best for you?
At 70.5 years we must start taking out our life-long accumulations. If you have already taken money out and paid your tax and/or penalty, you need to re-examine how much you will take out going forward. Taking out too much can cause serious problems down the line. This is the number one fear of retirees—not having enough to last your whole life. Since we don’t know how many years we will need this income, it is good to review. Your advisor may have mentioned the classic 4% rule: take 4% your first year and increase it by the cost of inflation each year. But the rule was made when the average retiree was earning 8-10%. Your money was still growing each year to beat inflation. Back then, the average retirement last to age 75 or so. Things have changed: we will need income for longer and our money may not be earning as much. You must design a plan for your special situation. Since the IRS has a required percentage based on our age each year, we can start with their table. Since the IRS design assumes we will live to age 115, it’s ratio is less than 4%. Our benefits are recalculated each year so that if our account increases, we spend more and if it decreases we spend less. This makes sense for most of us and has the benefit of complying with the regs each year.

DIY financial services and save every year
When you buy any electronics, appliances or even a vehicle, don’t you shop around for the best quality at lowest price? How much can you save by buying direct from low-cost providers? Example: this saver was using a brokerage IRA. However, the company had chosen to use an expensive record keeper and investment option. Their costs were hidden in the plan document given when the saver Tom began. Tom is conservative and put his contributions in the fixed accumulation option. Tom was paying 1.5% a year but earning only 5% so his net was 3.5%. By the time he retires, Tom will have $159,000 instead of $208,000. The brokerage will have the other $67,000 for little work. Tom does not change options or call his broker often. Tom could have chosen Vanguard, Schwab or other low-cost company. Save $67,000 or more!


Court affirms Trump making money directly from his political position.

$15 wage would help 1.3 million people leave poverty; 27.3 million workers buy more.

John G Schmidt OH caught fraud Ponzi-like scheme elderly disabled—5 years prison
Steven Pagartanis, Cadaret caught misrepresenting, omission, etc $2.7 million. No jail.
Kyung Soo Kim caught trading crypto outside Merrill: fine no jail

Freedom Debt Relief caught charging fees, misleading clients of rights: fine, no jail
Anthem Health caught overcharging 401k participants: $18 million fees/loss
Ford knew Focus and Fiesta bad transmissions deadly but sold cars anyway

Google Assistant taping your statements, incl names, addresses, details, all. Fed crime?
Sugar soda/juice tied to cancer: stick with diet or water without arsenic, lead, plastic, etc.

Marriott caught misleading overcharging deception fraud for years: warnings ignored

CNN to emulate FoxNews on selected stories: which news do you want? Pick your bias.

Where to retire: Make a list of what you like and don’t like and try it out for a month.

Who owns your account now?

Woman needed food but got caught shoplifting: Cops pay for food--no arrest.

41 Watchung Plaza, B242
MontclairNJ   07042

Friday, July 5, 2019

Most important factor in investing success!

What is the most important factor in investing success?
Picking the right stock? Using the star advisor? Investing with the largest firm? Using the advice of a trusted friend/family member? Doing your own research? Buying the most successful tip sheet? Listening to TV gurus? If you are relying on any of these investing patterns, you may be surprised to learn that for your long-term goals, cost is the secret to success. Wall Street is finally getting the message that John Bogle prophesied years ago: Cost Matters. Bogle thought this was just common sense. If your investment returns cost you too much, you are earning less than you could. For most of us saving/investing for retirement, the results are in: stock index funds over time earn 11%. Even more interesting are the returns by stock sector compared to other investment vehicles. Most advisor-led investors are earning 3.79% or less over time. Trading securities is a losing game! The house is the only winner. What are the best stock sectors to own: Energy, Health, Info Tech, Consumer Staples—from 12% to 10% over 20 years?

Are you saving/investing enough for the retirement you want?
This is the No 1 question people ask. First, take the FREE money from you employer if you have a 401k. It is FREE money! Of course the earlier and the more you save/invest the happier you will be. However, since most people take home about what they did since they began working (inflation-adjusted) it may be impossible to save/invest more. If this is your situation, rethink the type of investments you use. Why? This may be the only way you will have enough later. EX: $250 a month invested in a low-cost S&P Index fund for 35 years provides enough ($1 million) for most retirement income needs. If you wait just 10 years, the same benefit will cost you $825 a month. If you use stable value funds, you will need 55 years to match this goal. The lesson is that stock index funds are better for your goal IF you have more than 15 years before retirement. Either more time or more money. That is how investing works. Over time stocks have LESS risk of goal failure than bonds. Bond earnings don’t beat inflation.

Will Social Security survive for your benefits to be paid?
No one can predict the future but actuaries come pretty close. By 2035, benefits will have to be cut according to a recent trustee report. However, since many people will receive less because they are taking the lower-benefit option early, it may not be as bad as it seems. New research says beneficiaries are giving up $3.4 Trillion. A person eligible for a $725 monthly check at 62 could get a $1,280 check if they wait to start at age 70. About half of older Americans get most of their income from the program. Only 4% of retirees are waiting until age 70 to claim Social Security even though they could earn an extra 8% per year. Originally, the plan was set up for benefits to end soon after age 65. Now a 65 year old will need 20 years of benefits. Unfortunately, the techies have not made an ‘algorithm’ for the optimum benefit age. Paid advisors have not been much help since they get paid to sell products not calculating your best benefit age. Politicians are not going to raise taxes to help the poor. Other solutions have been discussed but none are likely by the 2020 D.C. officials.

Broker/advisor skills are changing
With the industry maturing, advisors need to become specialists for our specific needs. Robo advisors, planners, target-date and sector funds, ETF and discount trading platforms will take each segment and provide very specific services. We need to know what we need so we don’t become victims of fraud and excessive costs. Like medicine, we obtain a diagnosis (plan) from a fee-only planner, and then fill the script (product or service) from a drug store automatically (stock or monthly IRA contribution). Only the rich can afford a full-service brokerage firm like their lawyer on retainer. We will be better served by getting what we know we need and not paying for stuff we will never use (global asset management). Most people need nothing more than a low-cost 401k or IRA invested in stock or stock/bond fund. The rest is just a drag on our future Wealth Reserve.

Are you following Warren Buffett’s strategy?
Buffett’s simple strategy beat 5 different hedge fund strategies over 10 years. Buffett bet $1 million he would win for his charity. He won. Buffett’s strategy is simple—but hard. Over time, this strategy produces over 11% whereas the average investor managed by an advisor produces 3.79% according to DALBAR. Unless you enjoy gambling with your future retirement income, why would you give most of your potential nest egg to your broker/advisor? Buffett’s strategy is hard because we are not allowed to stop investing or trade or market time with our long-term investment money. This is why the Target-date funds are so popular. We are having our contributions invested every month automatically. We can’t miss a stock sale if we don’t think about our money as bank savings that we lose permanently like a bank failure. Even if the market falls 50%, we still own the same number of shares so when it rises we will still be able to meet our goals. If you would rather have $1 million in 35 years (@11%) vs $220,000 (@3.79%) after investing $250 a month then you must leave your money alone to work. You own the shares of the biggest 500 firms in the world. They aren’t going to fail.

Easy way to save for the future—
Use the money you save by buying direct: auto, home, life, other insurance and expensive 401k and mutual funds. Create a Wealth Reserve: use savings on financials you already pay for. The financial industry has changed so you can buy with discounts or at Costco-type outlets. Example: MetLife charged $983 for the same $300,000 30-year term policy as SBLI provided for $384. Their financial strength ratings are A+ and their underwriting requirements are the same. The difference, $599, over 30 years is $17,970. If invested, this difference can add $175,000 to YOUR Wealth Reserve later when you need it. The SHOCKER: the median net worth of a 33-year-old is just $8,525 including home and car! Buy direct—cut out the middleperson: benefits are the same.

CA employers gain easy way to offer retirement fund
CA has created an IRA-type account for workers who have no 401k. In coming years, employers with at least five California workers will be required by law to provide retirement savings benefits to their workforce, which can be done through CalSavers or the private market. CalSavers solves 3 problems: “it’s easy to facilitate, employers have no fiduciary liability, and there are no fees for employers. Employers are only responsible for providing us with their employee roster and then remitting employee payroll contributions each pay period.” Employees keep the account when they change jobs. They can pick their own investment options. The account is a Roth IRA for tax-FREE retirement. Employees don’t have to do a thing—automatic enrollment. Unfortunately CA has chosen State Street as the money manager which costs 0.825 to 0.95% of assets every year whether you do well or not. This is high compared with Vanguard and Schwab at 0.04%. However, for most working people who do not have an alternative, this is great.


Can gov do anything? How about shutting RoboCallers, Scammers, Fraud?

Drugs that are associated with dementia: strong anticholinergic drugs
Assault is crime for some and not for others: Pick ‘Good Family’ every time!
Is Ted Cruz really like Rosa Parks? He wore blackface in the back of the bus?

Will gerrymandering and Citizens United kill democracy: 1 person; 1 vote?

Kristofor Behn Fieldstone caught stealing $1 M by misleading clients: no jail

Your cash keeps your brokerage firm afloat: Sweep Accounts steal your cash

10 best entry-level jobs for college grads: electronics, nursing, etc. 

Who owns your account now?
NJ creates own state health exchange to maintain ACA protection of coverage.
28% of us have no emergency savings; One in four have a rainy day fund, but not enough

Chick-fil-a worker jumps from window to free child choking on seatbelt: cut with knife.

Radio listener heard plight of payday loan victim and paid off the loan.

Arctic fox walks 2,700 miles from Norway to Canada in 4 months in the [really] cold.

Teachers learn how their students worship: diversity training for adults

41 Watchung Plaza, B242
MontclairNJ   07042

Friday, June 28, 2019

Just $9 a day provides great retirement fund

What is $9 a day worth compounded over time?
Unfortunately my public schools never told me about compounding. Or if they did, they never showed me how much a stock fund compounding can be worth to me. As a teen, I found out the value of a dollar I earned did not go very far. However, if they had shown me this string of earnings, I might have been inspired to invest part of my salary. $9 a day is about $3,000 a year. Using a simple calculator like this, I see that my investment might  ( be worth $50,000 in 10 years, $190,000 in 20, $570,000 in 30, and $1,600,000 in 40 years at 10%. If you think you could not find $3,000 a year to invest, remember that the average tax refund is over $3,000. If you think only the most sophisticated traders could compound their investments to $1.6 million, remember that a low-cost stock market index fund like the one Warren Buffett recommends, earned over 11% in the last 30 years. So even if I had learned nothing about investing in school, I didn’t need to know a thing except to call a low-cost mutual fund like Vanguard to sign up for automatic monthly contributions of $250. I could have managed that instead of buying/leasing a new car. Yes compounding!

Are Target-Date Funds right for you?
Automatic rebalancing from stocks to bonds can work well because you don’t need an expensive advisor to handle this mechanical task. Paying someone for 30 to 40 years to keep you invested in the right mix is not cost effective. Almost every advisor suggests you invest in stocks during your working life. Once you are 10 years from ending full-time work, you should be at 50-50 stocks/bonds. Some research shows that your accumulation is at risk if the market dives at the beginning of your drawdown period. However, for most of us, we don’t use all of our retirement dollars the first years of non-payroll living. Given time, we can recover our nest egg for later years. Researchers have hindsight so they noticed that some retirees suffered a loss just as they retired. However, they don’t realize that no advisor can foresee the downturn and so help you avoid it. Timing the market is the number one reason most people don’t have enough to retire. Since your advisor can’t foretell the future and help you avoid the market fall, you don’t need to waste money on their timing guesses. There are other ways to make up for any temporary shortfall at the wrong time. Use emergency funds saved from advisor fees.

How were investors hurt by killing the Fiduciary Rule?
Lawmakers are asking the GAO to study several items related to the DOL fiduciary rule: The degree to which financial services firms and advisers serving defined-contribution plans and IRAs assumed a fiduciary role due to the regulation; how firms' product line, compensation structure, product sales and revenue, and compliance costs changed; and the extent to which firms and advisers maintained or abandoned a fiduciary role following the 2018 appellate court ruling. Also, for those firms that didn't continue to be fiduciaries, what was the effect on product line, product sales and revenue, compensation structure and compliance cost? Instead of our broker/advisor having to disclose their conflicts, we must ‘understand and ask them’ about ‘these conflicts.’ Since we don’t know the industry tricks, we would not know the conflicts. Sales people can make sales legal if they can show customers were not harmed by the product. They don’t need to act as fiduciaries—giving us the ‘best’ deal. Most firms don’t even offer the best deal because the owners must make money. Fiduciaries are required to protect us=Conflict.

Half of employees moving their 401k do not know fees spent
According to a new survey, 47% of departing employees don’t know the cost of staying in their old plan. Most don’t know the options of leaving, transferring or rolling over their funds so they may mistakenly pay tax, penalty and an advisor’s expensive fees. Most people don’t have a paid advisor. On the other hand, if they use an advisor, they may get locked into an expensive alternative like annuities. There are few unbiased sources of information. Employers, old and new, don’t want the responsibility of helping. 69% of survey participants didn’t consult an advisor. Most fear the cost or don’t know about unbiased information sources. Regulators have thousands of cases where the employee was misled in those dinner seminars. Unfortunately, the requirement for advisors to act as a fiduciary (customer comes first) was overturned in 2018 after heavy lobbying by the industry. There are only two financial providers that are not-for-profit: Vanguard, USAA and TIAA. Their staffs are well trained and licensed to offer unbiased advice.

How does your advisor get paid?
The industry is changing. Its compensation plans change too. Be sure to ask for details. Don’t be surprised if they are ready to answer your questions with a printed statement. More experienced advisors are using the old revenue model: product sales are rewarded by a percentage of revenue from the product on a grid. For instance, a $100,000 annuity sale earns the firm 4-6% or more and your advisor earns 30-40% of that before taxes and expenses. A new incentive is a specific bonus: bonuses for net new assets, the breadth of the household relationship and penetration of financial planning, among other business objectives. Salary is favored for some wealthy clients. Specific activity fees like asset planning and customer satisfaction and quality outcome achievement. This leads you to be very specific in your needs. If you only need a financial plan for retirement income conservation, a single fee is cheaper than paying 1.5% of your growing assets for years.


How Govt wastes our money: Congress spends $1.3 Trillion we don’t have! 
Trump changes mind: Delays deportations he promised at 2020 kickoff.
Trump: U.S. to ‘obliterate’ a whole country: nuclear winter to follow
Did US send the drone into Iran to provoke event to justify our attack, then cancel?

When concentration camps are not concentration camps: no hygiene, beds, guards fences.
Border guards refuse needed supplies (soap, diapers, etc) just like concentration camps.

Patrick Churchville caught selling through own firm: $21 million Ponzi scheme
Citigroup caught overcharging on unit investment trusts sales: refund and fine.
Donald Fowler NY caught excessive trading of customer accounts: fine

John Schmidt Ohio caught stealing from elderly in Ponzi-like scheme. Jail 5 years
State Street Bank caught overcharging clients for asset custody 20 years: Fine no jail.
Jason Sugarman CA caught $43 M tribal bonds fraud; stole $9 M.

Bitcoin’s rise to $14,000; then fall to $10,640 same week: speculator dream.
NJ millionaires caught a break: no tax increase by Gov this year: Dems baulk

Home prices rise faster: share of homes bought by ‘investors’ reached 11.3%, new high
Marketing magic: Brain Health Council says supplements waste of $3 Billion spent.

He plans to stay in our White House: even if it takes outside help—rigged 2020 election?
Manufacturing jobs under pressure as automation costs go down: Robots are cheaper.

Who owns your account now?
Consumer Reports on appliances: you DO NOT get what you pay for. EG:Viking.
3M Co. cut retirees benefits of life insurance nearly in half to $8,000.

When is an election debate no debate at all? 10 get to talk 30 seconds at a time. Bedtime.

GOP plans another tax cut for the rich: just in time for the election!

41 Watchung Plaza, B242
MontclairNJ   07042

Friday, June 21, 2019

Is converting IRA to Roth IRA right for you?

Is converting IRA to Roth IRA right for you?
Pro: your future income is tax-FREE. Con: you pay taxes now on the amount you convert. Even with lower current income tax rates, you still pay taxes at your income tax bracket, not at capital gains rates. Converting is a good move if you are early in your career and don’t have a large IRA. Converting is a bad move if you have a sizeable IRA and your tax rate will be lower in retirement. You may not need to convert if your employer now offers a Roth 401k. So instead of getting the break on taxes now you may have a HUGE break on all the compounded earnings over the next 20-30 years. Since you do not pay tax on the earnings later nor the contributions anytime, you could retire early. If you don’t need this money for income, Roth accounts go tax-free to heirs. A regular IRA inheritance is taxable at the heirs’ income tax rate. Even if you can’t contribute directly because your income is too high, you can make non-deductible IRA contributions and then convert to a Roth so that your future gains are tax-FREE. Another attractive option is to buy no-dividend stocks and then sell off when needed in retirement. The capital gains tax is less than income taxes and when left to heirs, there is no tax. Heirs receive your gift tax-free due to the “stepped up basis” rule.
Roth IRAs make a great gift for your grandchild too. Roth funding even from their early teen job income means they will have a tax-FREE retirement.

Is an HRA right for you?
New rules provide a hint of Trump’s new and “something terrific” health insurance plan announced June 18. The new plan won’t actually be available until 2021 but the promise may be enough to sway some voters. The new health reimbursement arrangements (HRAs) rules make individual markets purchase of a policy more attractive to businesses. Thus a small business does not need to provide health insurance—it can just give pre-tax dollars to employees so they can shoulder the responsibility of finding/paying for a policy. Any unused portion of the HRA in one year may be carried forward to subsequent years. If certain rules are followed, neither employer contributions nor employee reimbursements from an HRA are subject to income or employment taxes under federal law. The old rules excluded premium payments with HRA money. Employers will have an incentive to dump ‘at-risk’ employees to fend for themselves in the individual market. Thus young and healthy employees are encouraged by their employers to use the HRA plan and buy stripped down health plans. Older and sicker employees would be given untaxed money to help them purchase whatever plan they could afford. Thus the new TrumpCare plan of 2021 can claim to be ‘something terrific’ for most employees in that they can buy whatever coverage they prefer. They have the ‘freedom’ to make the ‘choice’ to buy incomplete insurance. If an accident required more care than their plan was scheduled to pay, they would be forced to declare bankruptcy because they made the ‘choice’ for that plan. Thus everyone COULD have ‘something terrific’ for health coverage or choose to go bankrupt.
Will voters pick a candidate based on their need for adequate health insurance?

SEC ruling now puts the burden on us to ask about advisor ‘conflicts’
The new industry-friendly statement shifts the burden to us regarding broker/advisor ‘conflicts of interest.’ In its final version of Form CRS, the disclosure document that will be given to retail investors, RIAs (advisors) will be required to say, “When we act as your investment adviser, we have to act in your best interest and not put our interest ahead of yours. At the same time, the way we make money creates some conflicts with your interests. You should understand and ask us about these conflicts because they can affect the investment advice we provide you.” WOW. Instead of our broker/advisor having to disclose their conflicts, we must ‘understand and ask them’ about ‘these conflicts.’ WRONG! We can’t ask how they conflict with our interests if they are not disclosed. How can we know about the sales contest for a Hawaii vacation if we buy their product? How do we know about the firm’s soft dollar rewards for buying the expensive mutual funds? And how could investors know they are getting a deal that reflects ‘MY best interest’? Mutual funds can cost 0.05% or 9.86% per year and annuities can cost 0.1% or 10% and sales fees can be 5% upfront or 0.75% for 30 years (22.5%). Which would you sell if you were a broker/advisor making a living from other people’s money?

Need a graduation gift?
The greatest gift you can give is financial knowledge. No matter how much your young graduate makes, it is up to YOU to show them the Buffett investment strategy. Make sure they can make and manage money. At my first job, I had no clue which investment to use for my 401k contributions and company match. The HR person told me to put it into the 'safe' stable value fund. That was the worst choice at my age I learned later when I got my securities’ licenses. If I had followed their advice I would have ended up with about $150,000 instead of a Wealth Reserve of $877,233 about 33 years later.


How Govt wastes our money: Congress spends $1.3 Trillion we don’t have! 
Multiple election security bills are dead: killed by Senator McConnell: Putin’s hackers!

Strike Iran then not strike Iran: Bolton, Pompeo, Haspel for war but they’re too old to go

Govt report: we don’t know how to handle money: mandate college financial course?
Kids are to be interned in World War II-era Japanese American concentration camps.
Millions to be deported but home country must give ‘travel paperwork’: internment.

Trump EPA to go ahead with catastrophic warming of the planet. Increase, not reduce C

Art of the ‘bad’ Deal: Buying bad land for another golf place turns into HUGE tax deduct
“Do you think the people would demand that I stay longer? KEEP AMERICA GREAT”
Israel/Syria: Golan Heights town renamed "Trump Heights

‘Facility fee’ new bogus charges for any medical procedure, even if no ‘facility.’ 

Trump cuts 70,000 from health care: will we vote our health care needs 2020?

Trump’s convicted felon, Manafort, moved from Rikers to comfortable
Stephen Bratton TX Baptist clergy caught sex abuse on teen multiple times: bond
Brokers screaming ‘fire fire’ as NJ regulator plans to require putting client interest first.
Ways to cheat on taxes for the wealthy: IRS doesn’t have auditors to catch them.

Head ‘phone hooks’ growing on younger people who use phone hands-free often?

Investors in a event-rental space in Carmel IN lost $6.2 mil promised steady flow income.
Annuity earning 8%: Marketing hype to sell sales leads—“Truth is not truth”
Vermont Creates Restitution Fund For Investment Fraud Victims: Senior Scams
Kansas City Life caught overcharging customers: taking cash value they earned

Are you still getting low wages with the employment rate low? Won’t get better than this
Average employer 401(k) match reached 4.7% this year: new high will last?
Highest salary cities/regions shift from auto makers to digital makers: things to processes.

Employers use unique ways to pay student loans for employees: get smart
Wages are going down for most: lower than in 1968 with inflation we can buy much less.
Trump threatened TIME reporter with jail: Not fake news—on tape.

Who owns your account now?
Drug prices in Canada: $1,200 or $12,000? Why Americans must travel for health!
Where did your broker or advisor go—the industry changes quickly now.

Baby left in forest is alive: Outlawing choice for women in GA does not stop intercourse.

41 Watchung Plaza, B242
MontclairNJ   07042

Friday, June 14, 2019

Easy Emergency Fund Options

How can you make an emergency fund?
My clients used many methods to have cash available when they needed it. Some strategies are just not possible for some folks. Of course, if you have a large Wealth Reserve, you already have your money for any contingency. I made mine by saving on all my insurance, mutual funds, brokerage, and banking costs. The other options: HELOC, CC, liquid 401k, brokerage stocks, CDs, IRAs, high pay job. Several obtained a Home Equity Line of Credit from their bank. They have $100,000 loan they don’t use which is backed by a 2nd mortgage on the equity in their home. It cost nothing to set up. Use it to make upgrades to your home and the amount borrowed is tax-deductible. Another group has tons of credit cards they keep in check so charging a couple of thousand is no problem. Unfortunately, a few think their 401k future nest egg can be cracked anytime. They would need to invest 5 times their withdrawal to make up for the Miracle of Compounding they gave up. Some have been playing the market and can easily cash in enough stocks to pay for an emergency. If they sell a stock that has not done well, they may take a deduction too. Most clients use CDs for their emergencies even if it costs an early penalty. It’s tax deductible too. IRAs are not like a 401k loan—whatever you take out will cost you taxes and sometimes a penalty. A loan shark’s loan would be cheaper than giving up your future. Obviously, some people make enough money that they don’t need cash sitting around earning 1% a year. They could get a bank loan with one phone call. Finally, my choice when we recently needed a new used car: $12,000 HELOC loan at 3.5% put me into a 3-year-old Camry, made right here in the
USA’s Georgetown, KY. I didn’t have to touch my Wealth Reserve still growing to $1 million.

Which annuity is right for you?
An annuity in its simplest terms is a string of benefits. Lottery winners often have a choice: annuity or cash. Last Saturday’s $344.6 million Powerball jackpot winner was Charles Jackson. He claimed his prize: cash option of $223 million or 35% less.
Jackson will have almost 50% taxes taken out. If Jackson took the annuity, his annual total would increase over the next 30 years. Annuity ‘certain’ means his heirs would receive the annual amount if he dies sooner. You have the same choice with your nest egg. For example, $100,000 buys a monthly benefit of $549 for a 65 year old male. If you want your heirs to receive the rest of your annuity if you die early, you can pick life--10 years certain. Your benefit is $553 monthly. You could chose to receive $941 monthly for just 10 years and then buy a new annuity with your growing nest egg. This way you can keep up with inflation since $549 will be worth about HALF that in 20 years.

Value over price
Warren Buffett has maintained his rep as one of the greatest investors of all time because he knows the difference between price and value. His teacher at Columbia, Benjamin Graham, said that we should buy securities like we buy "groceries, ... not perfume." It is like buying a Land Rover or Volvo—expensive AND the most UN-dependable cars available. Only outdone by cheaper Fiat, they cost $87,350 and $68,000.  Accumulating wealth requires that we buy value--quality at the right price. We want to avoid the two KILLERS of building wealth--fees and taxes. We pay high fees and taxes from security turnover by assuming our advisor is adding value: higher price because better performance. But a recent study shows that most advisors use standard portfolios. And the performance is horrific compared to the boring index: 3.79% vs 11.06%.

Need a graduation gift?
The greatest gift you can give is financial knowledge. No matter how much your young graduate makes, it is up to YOU to show them the Buffett investment strategy. Make sure they can make and manage money. At my first job, I had no clue which investment to use for my 401k contributions and company match. The HR person told me to put it into the 'safe' stable value fund. That was the worst choice at my age I learned later when I got my securities’ licenses. If I had followed their advice I would have ended up with about $150,000 instead of a Wealth Reserve of $877,233 about 33 years later.

Is your advisor giving you their ‘Best Interest’ or Fiduciary advice?
Your brokerage firm is rejoicing with the recent decision: SEC has downgraded the client treatment rules just for them. The issue comes down to this: Brokerage owners need profits and you have the money. You can pay more for their facilities over time or you can pay a planner only when you need a full plan. My family CFP got paid for a comprehensive plan that shows how we can pay our bills for the rest of our life using the Vanguard funds we’ve built up for years. The SEC terminated the Fiduciary Rule to make brokerage happy. Brokerage sells products and if they don’t hurt you, that is in their ‘best interest.’ Helping you reach your goals is NOT "solely incidental" to you even though this is the exception brokerage uses to NOT do the right thing for you. How is putting a 90 year old widow’s nest egg into an annuity the ‘right’ plan. That model is not the best for you. Your financial picture is not helped by giving up 63% of your total possible accumulation during your working years. That is the effect of paying 1-2% of your nest egg as it grows over time. The DALBAR study shows a shocking 3.79% average earnings in investor’s managed equity accounts over time. You deserve the Fiduciary Rule which requires sellers to put your profits ahead of their profits.

Where have all the increases in productivity gone?
In 1978 our boss made 30 times our salary. Now, the average CEO pay is 271 times the nearly $58,000 annual average pay of the typical American worker, according to a report from the Economic Policy Institute. We were promised that we would not have to work as much since the value of our use of automation quadrupled our output over previous generations. In 1981, I worked with an outside company’s computer programmers to automate our data capture and reporting system. We saved thousands of man hours of hand-tabulating and writing reports. But I and the 50 or so of my staff were not rewarded. Instead I could not fill positions of retirees. Instead of training our folks to handle the data process, management outsourced it until the ‘systems people’ handled everything. This process has been repeated thousands of times in America. I left because I found a better-paying job. My staff had no updated skills so couldn’t leave. Their salaries have stayed the same given their 1-2% COLA increases. Are the CEOs smarter now or have they just updated their skills—learning how to consolidate many firms—creating fewer firms; employing fewer people. Learning that customer inquiry can be handled by a group in India for a whole lot less than the 50 experienced people here. Since 1978, CEO’s have seen a 937% increase in earnings. That salary growth is even 70 percent faster than the rise in the stock market. Are CEOs 271 times smarter than us? “CEOs are getting more because of their power to set pay, not because they are more productive or have special talent or have more education,” says this report.

Is your advisor honest? Truth in financial selling
Advisors are sales people. The firm decides the products and price you are offered. How do you know their product recommendations are the best for you? Do you know what the product is worth to the advisor? Is the firm licensed to sell this ‘great deal’? What other options are available? Could you negotiate your advisor’s charges? Do you know all the good and bad about this product? Does your advisor share the product experiences of others? What happens to your account if your advisor moves to another firm? Does your advisor explain the tax consequences of this product in future years? What happened at your advisor/broker’s last firm to make them leave? How do you know when you are overcharged? Does your advisor speak ‘financial jagon’? What does __ mean?


How Govt wastes our money: Congress spends $1.3 Trillion we don’t have! 
Today Trump changes his mind about raising prices on all food, cars etc from Mexico.
US to Send 1,000 More Troops to Poland: 5,000 troops to scare Putin?
GOP halts funds for election integrity: no voting machine ‘hacker-blocks’--paper ballots?

IRS says OK to discriminate against NJ homeowners: Trump decides who pays taxes
Defense Dept not allowed to protect bases from climate changes: Words actions banned!
Arming both Israel and Saudis etc is asking for another war: Can Congress block sales?
WA state allows personal use of drugs: empty jails or cost more later?

GOP pays to put ‘citizen’ on census even tho Constitution says ‘people’: democracy??
Govt study says catastrophic climate change unless extensive fixes started.

Catholics to discuss their child abuse and accountability AGAIN: dodge the law?
Religious leaders, above the law, want to control abuse reporting to legal authorities

SCAM: undelivered email being held for you—don’t click link
Insurance agents caught rolling 401k retirement money to annuity: it’s illegal so cancel.
When NOT to file a car or home claim: It may cost you more than it’s worth!

WalgreenBoots taking health benefits from retirees before Medicare kicks in.

Nina Jessee, Cetera caught doing outside business, not cooperating with its investigations
Jovannie Aquino, Windsor Street Capital caught churning clients' accounts—defrocked.

Brokers can’t call themselves advisors anymore: SEC rules against this marketing tool

Balance or out of network surprise billing: challenge any who you did not pre-approve.

WI GOP courts reinstate Scott Walker bias laws that voters threw out: Model for all US?

Are you still getting low wages with the employment rate low? Won’t get better than this
Average employer 401(k) match reached 4.7% this year: new high will last?

Who owns your account now?
CA to shore up Obamacare: State fills in gaps created by GOP.
Monopolies raising health care prices throughout the systems of care: no competition.

HELOC or Home Equity Loan: Pros & Cons which is right for you!
Where are your old employer 401ks? Frozen in bankruptcy? Never leave it with others.

AZ law protects seniors from financial abuse but gives advisors immunity.
Who are these kids who saved the life of a neighbor? They’re your next door neighbor.

41 Watchung Plaza, B242
MontclairNJ   07042