Your Wealth Reserve: Is your Advisor/Broker really 'Acting in your best interest'?

Is your Advisor/Broker really ‘Acting in your best interest’?

Advisors/Brokers mislead Americans about ‘acting in our best interest.’ Two years ago, 46% of investors incorrectly believed that their financial advisor would only make recommendations in their best interest. In 2019, that statistic has risen to 65%. Most of us don’t trust salespeople whether selling used cars or financials. However, when asked about their own experience, they have become a victim of a salesperson’s strategy. Presumably once we make a commitment by giving them money, we defend our decision. No one wants to admit they made a mistake. Yet the number of frauds and ‘death by a thousand cuts’ goes on. A salesperson is under tremendous pressure now because there are many alternatives to reach financial goals at less cost with unbiased advice. Brokers hide the total costs because the costs can take over 63% of your total accumulations. Only RIAs are legally required to act in our best interest. Brokers have little accountability. Trump killed the Obama Fiduciary Rule for all firms and sellers. Actually, all advisors/brokers only sell products chosen for profit by their firm. Only a fee-only financial planner can provide ‘unbiased’ advice. Only one firm is unbiased.

Don’t surrender your common sense: https://www.amazon.com/Avoid-Scams-Brokers-Advisors-Sender/dp/1726328023

Where FREE tax preparation?

The free AARP tax-aide sites are filling up quickly: aarp.org/money/taxes/aarp_taxaide/. Before spending $200-400 for a paid preparer, try filling in the screens using the IRS partners at irs.gov https://apps.irs.gov/app/freeFile/. The instructions are easy to follow especially if you have last year’s return to compare what forms you need. I have found https://www.freetaxusa.com very easy to negotiate and respond to email questions. This one charges only $15 for your state return: Fed is free. It is still $15 when complicated like mine. Basically, you must pay tax on all your taxable income—wages, pensions, etc. This year you have less to deduct because the standard deduction was doubled. However, you lost the personal exemption of $4,050 for yourself, your spouse and each of your dependents. For each child under age 17 you receive $2,000. In high property tax states—NY, NJ, CA, CT, etc you will probably owe this year. The deduction cap is now $10,000 and the average homeowners in these states pay about $20,000 property tax. The law was written by a Rep from a Red state.

Try software at irs.gov https://apps.irs.gov/app/freeFile/ before you go to paid preparers.

Is that ‘fixed’ annuity offered at a seminar really paying 12%?

No, of course not. Use your common sense. If it were true, don’t you know everyone would buy one at their local office—no ‘seminar’ hype on Social Security would be needed? Recently, a client using the AARP Taxaide service said he sat through one. He did not bite. Some sellers use 12% in tag line: https://annuityguys.org/annuity-types/fixed-annuities/. They show the real rates below on their site. Perhaps the client heard what he wanted to hear. For instance, many ‘fixed’ annuities claim to pay you 80% of the market return so if the S&P 500 hits 15%, your credit (not money) is 12% for that period (month, day, year?). Since there are 125 different ways insurers ‘figure’ returns, you may want to take your accountant with you to the meeting. Read the contract: Cap is 10%: no 12%! An insurance company creates marketing ‘talk’ to sell. Once you give them your hard-earned dollars, they invest it like you could. What would you buy to make sure you earn a profit and pay claims in later years (surrender charges for 12-20 years)? You would buy stocks and bonds with most of your money. NYLife has been around since 1845 so they have done the same. I managed the sale of annuities at banks and security firms. The average return of all actual fixed ‘indexed’ annuities was 3.27% [inflation is 3%]. The range of returns over many years was 5.5% average annualized (best) and 1.2% (worst). Sales people save the bad news—3-4% annual costs—for their lawyers to explain in small print. Consider the alternative: income AND growth.

Best annuity: https://www.amazon.com/Best-Annuity-Strategy-Income-and-Growth/dp/1497532019

Which mix of stocks and bonds should we use?

As in anything, it depends--it depends on our time frame. Our daughter’s money is in 100% stocks with earnings from all over the world. She has 50 years to enjoy the 10-12% growth from low-cost index funds. At the other end of the age/risk continuum, ultra safe

treasuries have a 30-day yield of 2.92%. However, bond value goes down as interest rates go up. Our time frame is very important. As we get nearer the date we will need more of the income than the asset growth, we have to move from market ups and downs to a balanced trend. Starting 10 years away from living on dividends and interest, we need to pick a fund that maintains the balance automatically. Retirement Date funds do that for us without wasting our money with high-fee managers. RDFs are new so some investors have found 50-year old ‘managed’ funds that don’t often lose money and earn 9.58% over time, a better deal. So the main part of successful investing is understanding Warren Buffett’s famous advice: “The stock market is a device for transferring money from the impatient to the patient." Our daughter will stay in the 500 Index Fund costing only 0.04% for years. We have moved most of our nest egg to Wellesley Income Fund and can now enjoy steady income.

Can it be that simple: https://www.amazon.com/You-Beat-Wall-Street-professionals/dp/1986031373

More American Socialism

Amazon’s Bezos, the man with more wealth than half the nations of the world, takes government money to locate in VA. If Bezos needed another place to work, he could have built anywhere and people would work for him and pay taxes. It will take years for government to earn back this Socialist handout. Many taxpayers across the country are putting their hard-earned money in the pockets of the already wealthy business owners. Governments give money to the elites:

Russia

helps Putin’s big businesses just as

China

helps its businesses. In many studies, subsidies are ineffective for the public since the payback never happens. Once we give money to one, everyone wants the same deal. Of course most businesses that receive tax money don’t really need it like a small business starting out would. An estimated $18 Trillion was transferred from taxpayers to private hands between 2000 and 2015. 99% of it went to large companies, even foreign banks. Yet when those same taxpayers could not pay their mortgages from temporary layoffs, they were ignored. Many lost the home they had put their savings into.

Avoid paying corporate subsidies: https://www.amazon.com/Pay-No-Taxes-Retirement-legally/dp/1507527977

Corporations ‘move’ overseas to avoid tax but we can’t

Congress encourages all corporations to move out of

America

to pay lower taxes. However, if I do that, I am a felon. I am taxed on any income created anywhere in the world but if I incorporate overseas, it is OK to avoid US taxes. Tax avoidance through offshore tax loopholes is a significant reason why corporations, which paid one-third of federal revenues 60 years ago, now pay one-tenth of federal revenues.

U.S.

corporations dodge $90 billion a year in income taxes by shifting profits to subsidiaries — often no more than a post office box — in tax havens.

U.S.

corporations hold $2.1 trillion in profits offshore — much in tax havens — that have not been taxed. For instance, GE uses offshore financial profits to claimed tax refunds of $3.1 billion. Apple made $74 billion from 2009-2012 on worldwide sales (excluding the

Americas

) and paid almost nothing in taxes to any country. 26 profitable Fortune 500 firms paid no federal income taxes from 2008-2012. We actually pay large corporations with refunds and subsidies. 111 large, profitable corporations paid zero federal income taxes in at least one of those five years. $90 billion could help fund Medicare for All.

We can avoid paying their taxes: https://www.amazon.com/Trump-Tax-Shelter-Avoid-taxes/dp/1985448300

**************

Make

~~America~~

, “The Don”, Great Again

Senile Psychosis or Parkinson’s delusions? quetiapine and clozapine

Truth isn’t truth, his lawyer says

“The campaign -- for him -- was always a marketing opportunity.”

Two

Americas

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

***********************