Friday, January 4, 2019

Save $3,000 this year on financials for a brighter tomorrow

Save $3,000 this year on financials for a brighter tomorrow
My future nest egg is always my concern at the start of a year. Where can I find a permanent $3,000 a year to increase my future Wealth Reserve? I use my tax refund. I shop for lower car, house and liability insurance. I ask for a better price on my phone, TV and Internet deal. Yesterday I bought stamps for the year because the price is going from 50 to 55 cents—that’s 10% Mr Trump! This doesn’t save much but it is the principle I value. I told the clerk Allan that we will just mail fewer cards if he keeps raising prices. I will buy more soup this week as it is on sale—10 for $8.99. I already stopped my life insurance, annuity, accident and disability at work. We dropped TurboTax in favor of FreeTaxUSA. We shifted to gas from electric appliances. The largest cut was in moving all our high-rate debts to a HELOC at 3.49%. Our student loan interest is still deductible so we kept that. We gave up our brokerage account and non-Vanguard mutual funds and moved them all to Vanguard for their lower Admiral expense rate averaging 0.11%. We have moved most of our money to the lower end with 500 Index and Wellesley Income funds. Our brokerage and non-Vanguard funds cost over 1% or $2,500 a year. We bought stocks on sale in December for future gains.
We estimate adding another $150,000 to our Wealth Reserve over time:

Check ALL your tax credits
2018 was first year of the new Trump tax rules. Don’t leave it up to your preparer to find all your credits. Use the Trump administration as your guide to pay less. Find your tax credits and pay Zero tax like Jared. One year, The Don had $916 million tax LOSS on paper so he paid NO taxes for up to 18 years. If you have any kind of business, take his new 20% pass-thru deduction against your income. Other deductions/credits include education, medical, savings, electric cars, child, etc. Trump had the IRS create 6 new Schedules so that he could boast that he made the ‘post card’ tax return. HE LIED. Truth is he just created more paper. 1040 looks like the old EZ-1040 which is eliminated. Now with more schedules and worksheets, a middle-income joint return will be over 25 pages up from 15. Since most preparers use a software package, the winners are the paid preparers who charge by the page. Our average cost is now $250-300. The least expensive way to file is to use the IRS approved preparers at Free File. Some have no income limits: File advanced and simple federal taxes for free.

Another way you and I can’t avoid taxes like the wealthy do
When you are really wealthy, you can hide some of your assets and gains inside an insurance policy. For non-taxable income you use policy loans. Athletes, celebrities, and family offices are embracing private placement life insurance to avoid taxes and create a family legacy. Investments that produce earnings taxed as regular income are the best candidates to put in these policies. For insurers, these multi-million dollar contracts carry reduced fees justified by size. 0.7% on $3 million is worth more than 1.5% on $ ½ million normal life. All gains on the $3,000,000 are tax free. The Treasury estimated in October that it will lose about $166 billion over the next decade by not taxing insured death benefits. One tax shelter is available to avoid paying the taxes the wealthy avoid.

Is your company the best place to save for retirement?
“They did everyone dirty,” said Kilby Baker, 70, a retired warehouse worker whose pension check was cut by about 25 percent after Marsh Supermarkets withdrew from the pension. The owners got all their money back in the bankruptcy—taking the workers’ pensions  with them. Even a large business like Marsh fell victim to private equity buy-outs. Maybe using your firm’s 401k isn’t so smart after all. Unless your company is providing a contribution match, an IRA with low-cost funds may be a smarter move. An IRA can provide tax-deferred savings with direct debit from your checking account. Your trustee does the investing for you by using a low-cost Target Date fund or broad stock fund. You can reduce the income that gets taxed just like a 401k. You avoid the plan fees charged by some 401k administrators. You use the investment strategy recommended by Warren Buffett. Your IRA is protected from your firm and your personal creditors. You avoid your company stealing your money. Sears pensioners may be next.

Why are retirement plans failing most of us?
When we change jobs, almost HALF of us cash out our retirement funds. Most of us have no savings to tide us over to the next job so we spend our ‘future’ security. Cashing out is possibly the single most harmful decision to achieving a financially secure retirement that an employee can make — next to not contributing at all. The penalty and back taxes are the least of the problem. About 22% of active and contributed defined-contribution participants will change jobs each year. Of these job changers, Retirement Clearinghouse reports some 41% will cash out their retirement plan. We give up $250,000 or more by not allowing our money to compound in a low-cost stock fund. Based on the average stock market (S&P 500) earnings of 11% a year, our $25,000 cash out could have grown to $1 million if we had just left it alone for 40 years. Even at $12,500, our cash out would grow to $247,967 in 30 years at 10% even if we never added another dime. As Warren Buffett said: “My wealth has come from a combination of living in America, some lucky genes, and compound interest.” It is compounding over time that makes wealth.

McConnell’s GOP calls for cuts in our Social Security and Medicare
Now that the Dems own the House, GOP is worried about paying for the WALL and the tax breaks and $17 Trillion debt so they want Dems to be blamed for cuts. We can avoid the cuts by using a legal tax shelter for working people. We can avoid paying for some of this huge overspending by putting our retirement money in an IRS-approved tax shelter. We then avoid tax on the money and the earnings after age 59 ½. We don’t need a lawyer or offshore account to avoid the future taxes and cuts in SS and Medicare. We can rely on our compounded earnings. $3,000 a year goes into the account over time and $1,000,000 comes out tax FREE. We spend it all with no increased taxes. SS benefits get reduced in 2034 so we need a supplement. We avoid paying for the tax breaks for the rich too.

How did you do in 2018?
Our clients use Vanguard funds to maintain a broad diversified portfolio which has provided over 11% total returns for years. 2018 was negative 7.7%--not as bad as some years like 2008 not as good as others like 2013. Since the overall market has produced a steady 10-12% over any 10 year period, we consider it the safest place for our long-term funds. Even in retirement, our clients are counting on equities to maintain a higher return than the alternatives. Above all, we consider low-cost in any investment to be key. Our clients have learned over time that neither moving in and out of the market nor putting money in hot topics has worked out well for them. There is no guarantee for the future but inflation requires more than a bank CD.

2018 Total Return Fund                    Long-term Return Longevity
-4.4%              500 Index                     10.7%* since 1976
-17.1%            Energy                           9.8% since 1984
-9.4%              Extended Market          10.2% since 1987
1.2%                Health                          16.0% since 1984
-12.7%            International Growth     10.1% since 1981
-1.9%              PRIMECAP                 13.4% since 1984
-9.3%              Small Cap Index           10.4% since 1960
-2.6%              Wellesley Income         9.6% since 1970
-12.5%            Windsor                       11.0% since 1958
-8.9%              Windsor II                    10.2% since 1985
-7.7%                                                  Average 11.1%
*Average Annual Returns as of 12/31/18.

They are not bored by holding Vanguard’s Top Ten:


Make America, “The Don”, Great Again
Truth isn’t truth, his lawyer

Two Americas: A Banana Republic? Do we really want an infant king? Daddy Putin!


How Govt wastes our money: Congress spends $1.3 Trillion we don’t have! 
Exiting lawmakers become high-priced lobbyists to steal money from us for their firms.
GOP leaves dirty work of fixing gov to Dems—spending to help worker-citizens.
Trump scraps Obama oil-train brakes so more spills more likely to occur. Penny wise …

WealthFront & Hedgeable caught making false statements/fake adverts etc
Comcast caught overcharging & underperforming; fraud on equipment and cards.
Fraud rampant on theme of bogus requests for funds from your relatives/firms/lottery.

Summit Equities NJ caught mishandled personal information selling to 3rd party.

WellsFargo to stop charging for insurance customers did not order or want.
WellsFargo caught foreclosing on homeowner they should have helped.
Mutual Omaha caught overcharging its own employees for 401k plan.

BEWARE: Cardless ATM may cost more than they are worth. No cards, no drivers, no -?

As promised: Don could kill someone on 5th Ave--not lose voters: 33% say 4 more years.
The Don lies to the troops too. Real fake news: “10% pay raise” is BS. Con the military?
Trump is dishonest and immoral according to generals. Some would not work for him.

Con Man still claims Mexico will pay for the WALL but insists on $5.6 B to save face

The Mob Boss can never go to jail: Trump has Kava as Supreme so no indictment.
‘No man is above the law’ … well up till now. Dictators nullify courts first, then votes.

Hiring remains strong despite Wall Street: Those who gave up are coming back.

Who owns your account now?
Tired of high-price tax prep plans: import data to FreeTaxUSA and pay just 12.95 state.

7 year old has found homes for 1,400 abandoned dogs: OK, everyone can do 1 good turn!

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