Why do actual investors earn less than their benchmarks?

 

Why do actual investors earn less than their benchmarks?

A recent study found that, while certain mutual funds and ETFs delivered a 9.4% average annual total return for the past decade, the average investor in these funds got only 7.7% due to poorly timed trading activity. This really hurts those who are investing for a big goal like house down payment or retirement or business start up. Over time, a $250 a month investment would reach $1.3 million WITHOUT the trading activity. Timing the markets would result in total accumulation of only $805,605—a loss of $494,395. In another study, Fidelity found that its accounts that did the best were those for which the owners forgot about them. Investing is simple to be successful but not easy. Gambling is hard to be successful but easy to do. Successful investors have 3 ‘pots’ of money: Patience for the long-term goals and impatience for the short-term get-rich-quick schemes. The third pot pays for living expenses.

Go simple: https://www.amazon.com/Keep-Simple-Essential-Financial-Life/dp/1492258849

 

What is the single most important reason for financial failure?

You are right; it is debt. If we had no debt, especially interest debt that can NOT be deducted, we could easily reach our long-term goals. We have credit card debt, mortgage debt and car debt. We borrow an average $34,635 for new vehicles and $21,438 for used vehicles. The average loan term is 70 months for new cars, 65 months for used cars and 37 months for leased vehicles. The average monthly payments for new, used and leased vehicles is $563, $397, $450. And this is an era of low interest rates. Interest is NOT deductible unless your company leases your car. So how is financial failure defined? How much do we lose with our vehicle loans? Investing $563 for 70 months could yield $59,541. Investing instead of buying on time provides enough money to buy a vehicle outright. This is why the wealthy pay cash for their rides. Their cash is special: their cash is compounded cash. They earn the money we pay on debt. We pay 9.46% they earn 9%.

Earn interest; don’t pay interest: https://www.amazon.com/Compounded-Cash-Save-your-Self-Funded/dp/1515066096

 

Most Americans are paying more taxes than US corporations pay

In fact many large profitable companies have Negative tax rates—taking our money as a refund. Most tech companies, including Oracle, Adobe and Microsoft are still paying much less by using an accounting trick to report profits outside the US. Many large profitable firms like Wells Fargo, Salesforce, AbbVie, Duke Energy, Adobe, Broadcom, IBM, Medtronic, and GE have a negative rate—We actually give them our tax payments. The rest pay lower rates than we do: NVIDIA, NextEra Energy, Bank of America, Pfizer, and Texas Instruments pay the lowest rates. The average overall company tax rate is only 19.7%. Our average is 32.9% including Fed, state, SS, Medicare, sales and gas taxes. This does not include property tax which some of us pay. We don’t receive a state subsidy like the $3 billion state subsidy that Foxconn got in 2018. Some call government-supported corporate tax refunds and grants US socialism.

Avoid paying their taxes: https://www.amazon.com/New-American-Retirement-System-ReserveTaxFree/dp/1461030072

 

Insurers may be overcharging you for coverage

Insurers use our credit scores and history to set premiums for car, home and rent insurance. Other service providers (rental agent, mortgage and auto loan) may use credit scores to set their charges. The CARES Act placed a temporary hold on reporting negative credit information to bureaus that collect credit history. When the hold is lifted, you may get whacked with increases in everything if the pandemic has disrupted your life. Some insurers recognize that the pandemic has had a disproportionate impact on the credit scores of some racial and income groups. Some are making it their business model to switch to a usage-based approach. Insurer Root’s usage-based approach can define a new industry approach that ties driving risk directly to driving habits rather than proxies. Thus drivers who speed, text and cause accidents may have a lower premium than safe drivers who have filed bankruptcy due to a medical catastrophe. Thus some insurers may offer you a better deal but unless you shop every 2 years you won’t know. And don’t forget to check for excessive car repair problems before you buy again.

Shop and save: https://www.amazon.com/Vehicle-Insurance-Beware-Double-Coverage/dp/1480027634

 

What is your plan for your next financial stress?

Most of us have no plan to deal with a financial emergency. A plan BEFORE a crisis while in retirement would provide us with peace of mind—one of the most important goals we have. I hear about folks that are overwhelmed by a medical expense event, a family member money request, and a huge loss in retirement savings. In a recent survey, the most common answers given by folks age 40-73 were ask family and friends, children, church/state agencies, work and downsize to live on SS benefits. These are desperation measures, not a plan. My experience with folks who made a plan shows that building an emergency fund of HALF a year’s expenses works best. These folks kept that emergency money in a balanced fund like Vanguard’s Wellesley Income not a bank: they earn 7% not 1%. First, you feel better. Second, the money gives you time to figure out what to do. Third, the crisis may be over in a year. Make a plan using the tools that are available online for FREE.

https://www.amazon.com/What-your-RMD-much-spend/dp/1718946716

 

How to protect your retirement funds and keep them growing

The best protection is not putting your money in bank products, money market funds, an annuity, or bonds. These are the vehicles I see folks using because their advisors told them to “protect” savings in “safe” accounts. However, as inflation rises, they will lose buying power—probably for a long time to come. Unless you know you will die in a couple of years, fixed return investments will starve you to death. All of the traditional “safe” places are providing Wall Street with great revenue. However, these places don’t help you. Over the next 30 years, you could be giving away HALF your potential nest egg. The best way to protect your funds is to grow them—the best defense is a great offense.  Growth and security come from a combination of stocks, bonds and real estate holdings. Over time, your nest egg will continue to grow with stocks while bonds and real estate provide stability. A low cost balanced fund provides steady total returns of over 7%. For instance, Vanguard’s Wellesley Income Fund has provided 40 years of solid returns over 7% on average. Retirement income is thus a combination of interest and dividends. As part of the Vanguard Top Ten funds, investors shift more of their assets to this fund as they progress in retirement.

Pick growth and income: https://www.amazon.com/Vanguards-Top-Ten-mutual-funds/dp/150073909X/

 

 

 

 

 

 

**********ACCOUNTABILITY**************

 

 

Like 1776, this period is a test of democracy—We rejected an "American fascist" once

 

 

Our Jan 6 ‘Truth and Reconciliation Commission’

 

9/11 Bush warns of “domestic terrorism”

 

Will “domestic terrorists” install Trump Sat?

 

Generals planned to stop Trump from starting WWIII

 

How Govt wastes our money:

GOP requires gov ID to vote and drive but requires no Covid vax card to touch kids

 

Your freedom; their deaths: Anti-vax anti-mask Christians killing babies with Covid plague

 

Saudis caught helping terrorists kill us: why we still giving them weapons/intelligence?

 

Lindsey wants to re-invade Afghanistan but he won’t be leading the charge: sending kids

 

Biden lawyers against chokehold/knee on neck UNLESS cop “feels threatened” they do!

 

Plan to lower drug prices was defeated in Dem committee: Lobbyists paid 3 Dems

 

SCAMS/SPINS:

GOP will reach 675,000, the 1918 flu pandemic death rate: Govs fight Prez mandate

Fox: If mandatory polio vaccine is OK, why not COVID-19? Drive, hunt, visit England

All of a sudden police/public service workers get religion: religion exemption kills folks

 

Trump on Pence, his chosen VP: insults 5-year old kids: This is your new GOP ?

Supremes not "a bunch of partisan hacks": just liars: each pledged Roe was “settled law”

Abortion pills for TX market booming: Mexico lightens up just in time: employers help?

 

FL court: Gov can continue to let Covid kill kids—no masks in schools is law

FL airport dogs ID the Covid killers: sniff employees’ masks despite Gov ban

FL refuses to total Covid deaths: must be extreme not to tell. GOP going for record!

WV highest rate of new Covid cases per day: low vax rate; closing schools

Fake vax cards are readily available: masks may still be prudent indoors

Fake mask tests in TX go viral: confirm sources before you believe internet

TX women beat up NYC restaurant hostess over valid vax cards:

 

San Diego healthcare workers seek religious vaccine exemptions: Bible saves you?

 

243,000 Covid cases in kids 1 week 500,000 in 2weeks: Do it for the kids: GET VAX

 

CA Vax mandates keep Trumpist out of power: Covid case reduction continues

 

FL 13 & 14 year olds with gun planned mass shooting at middle school: peers heard talk

mass-shootings-increased-in-pandemic/index.html

 

 

FBI caught allowing sex abuse by USA Gymnastics to continue w/o proper probe:

 

Larry Nassar in jail: why aren’t his bosses at USAG and USOPC? Cardinals never jailed

 

Felix Gorovodsky caught forged gift letter stole $253,000 promised to advise w/o license

Stephen C Peters caught selling bogus 9% notes stole $15 million: 40 yrs; lost appeal

Trumpists Lindell, Gen Flynn caught at 10,000 KY rally with only 300 showing up

American Airlines caught changing refund rules: you may be stranded

3 military caught helping foreign gov hack US companies for profit: fine, no firing squad

 

Drank the Kool-Aid: Most Republicans: It’s Important to Believe Trump Won Election

FL Gov guest claims Covid changes DNA but Gov did NOT disclaim lie: more FL deaths

 

Jobs

Hospital staff loses benefits when refuse vax: Covid staff kill babies “unable to staff”

Tech job pay by state: $123,000 in WA to $70K in SD

Renewed tax credit can help employers hire workers

 

Most promising jobs in ’21: Amazon wage increase; college

More Ford electric truck jobs in MI: chip shortage weighs cars/trucks down

 

Who owns your account now?

Reports suggest that seniors in poorer health may be better served by Original Medicare.

Average credit scores by age: Many errors in credit reports: fix for free

Most reliable appliances: CR reviews show most expensive not the most reliable.

 

Miracles:

Lutheran church installs 1st transgender bishop: SF Grace Cathedral where else?

A widow, doctor, mother of three running for president of Somalia: yes, Somalia

Bangladesh has reopened schools: 97% teachers and staff vaccinated

 

Miami football fans save cat falling from upper level with flag not masks

CA wildfires closing in on world’s largest oldest trees: Sequoia National Park

NYC vaccinated 6 million for smallpox in 1 MONTH to save lives: no mandate

3 million more obtain health care during special Covid enrollment

 

We can apply for Medicare online: https://blog.ssa.gov/apply-for-medicare-online

We can apply for Social Security online: https://www.ssa.gov/benefits/retirement/

We can apply for health care online: https://www.healthcare.gov/

 

IAN

41 Watchung Plaza, B242

Montclair, NJ   07042

973.746.2014

www.InsuranceAdvisorsNetwork.com

Alerts available at http://dankeppel.blogspot.com/

 

 

Which tax-advantaged account is best?

Which tax-advantaged account is best?

IRA postpones your income tax until age 70.5 Roth IRA allows after-tax income to grow with no tax ever. Which is best for you? Clearly, if you begin with your first job, say age 20, you can end up with a lot more if you invest in stocks with no taxes. The long-term growth of your low-cost stock index fund is 10-12%. Assuming you invest $250 a month for 50 years, you will have over $6.5 million. Of course inflation will reduce that to about $2 million in today’s value. But $2 million tax-free is worth another 22% because you avoid income taxes. You spend all the money. Traditional 401ks and IRAs let you avoid taxes now but your income is lower now so it hurts less. Plus as the deficit gets larger income taxes will only go up. Unless you have your legal tax avoidance strategy, we working folks will pay for it. If you have IRAs already, you can convert part of them as you go paying taxes as you can afford it.

Start now: https://www.amazon.com/Build-Your-Tax-FREE-Wealth-Reserve/dp/1456505041

How do you save for the future?

Only 14% of all employers offer a 401(k) or defined contribution plan to their workers. That 14% includes a huge swath of small employers with fewer than ten employees, according to 2017 research from the U.S. Census Bureau. Among the 1,825 employers surveyed by Transamerica, 1,512 companies employed 10 or more people and 72% offered a 401(k) or similar plan. So if you do not have a tax-advantaged plan at work, what can you use to save for the future? As with a 401k, you can have your contributions go automatically to your tax-advantaged account. This makes saving a ‘no brainer’—the trustee of your account makes the investments for you. In fact, with certain mutual fund trustee companies, you can avoid the high-cost funds your employer may offer. And you can choose to have your savings avoid taxes now or later when you retire. And you save without a brokerage fee—you buy directly from the largest providers of employer plans. You don’t need a salesperson since you are using Warren Buffett’s advice.

https://www.amazon.com/Your-Pension-Box-tax-FREE-employer/dp/1481945157

Your legal will doesn’t tell where most of your assets go

When we die, most of our money goes to those NOT specified in our will. That’s right, all of our common documents: life insurance policies, bank accounts, brokerage firm accounts, retirement accounts, and home go to those designated in the documents years ago. Better check them NOW before you die and the wrong folks get your money.That is why many people don’t have a will. Some assets like your home, bank accounts and brokerage accounts are held jointly. In fact, brokerage accounts are titled joint tenants with right of survivorship (JTWROS). When one co-owner dies, the survivor inherits. Life insurance and retirement accounts have a primary beneficiary or many prime ‘benes.’ If that person or entity is not around, the ‘contingent’ inherits. The money does NOT go to those named in the will. Retirement accounts have complicated rules after the owner’s death. The IRS has a book on it: https://www.irs.gov/pub/irs-pdf/p590b.pdf

https://www.amazon.com/Ensure-Your-Financial-Health-with-Wealth/dp/1466388293

Tax law changes mean check NOW before 2019

Trump’s new tax breaks for the rich mean you need to take advantage of what you can before the end of the year. For instance, if you must take an RMD by year-end and you don’t get to itemize anymore, you can use the qualified charitable distribution (QCD) provision and make your contribution directly from your IRA and still take the tax benefit as a reduction of income. This could put you in a lower tax bracket. A Roth conversion gets money out of your IRA but it must be done by year’s end. The conversion taxes this year may save you future tax headaches. Converting when your taxes are low means no tax when your nest egg grows huge. For your business, check the effect a conversion of a Roth might have on the new 20% deduction for qualified business income. You can avoid your tax due in April (possible penalty) if you have withholding taken from your year-end RMD distribution. You also avoid the 4 quarter estimated payment burden.

Take advantage of Trump’s Tax Shelter: https://www.amazon.com/Trump-Tax-Shelter-Avoid-taxes/dp/1985448300

Are you moving money to try to time the end of the Bull?

Legendary investor Peter Lynch said: Far more money has been lost by investors trying to anticipate corrections, than has been lost in the corrections themselves.” Those who exited the markets in 2007-8 are unhappy they missed the run so far. Depending on where you are in your retirement saving or spending, you should “take the fork in the road”: do both. Instead of trying to time the market, own the whole thing—growth and income stocks and bonds. How? Take Warren Buffett’s advice: His advice when the future is NOT certain: ‘buy hold’ 2 low-cost funds. No timing, trading, sector rotation, no BS.

https://www.amazon.com/Warren-Buffetts-Vanguard-Funds-Retirement/dp/1496148592

Younger generation does not need financial industry any more

Survey respondents were risk averse and skeptical of the financial planning and investment industries in a survey of 1,000 affluent millennials with at least $50,000 in net worth or $100,000 in annual income. Why? Affluent millennials are still most likely to be do-it-yourself investors, with 35% claiming that they make all their own financial decisions without any help or advice. Another 27% said they consult financial professionals for affirmation, but continue to make their own decisions. Only 15% of affluent millennials retain a professional money manager. According to the survey, 77% view the financial system as rigged to favor the rich and powerful at the expense of ordinary people like them. Millennials also don’t trust recommendations from advisors working on commission: 80% said that they were suspicious of the commission revenue model in the financial services industry. Things have changed since I was at firm—good!

Use a better way: https://www.amazon.com/Avoid-Scams-Brokers-Advisors-Sender/dp/1726328023

Manage your money stress easily

You getting nickel d and dime d at your bank? Consider $0 fees at a Credit union. $0 fees require you to plan purchases so there is no panic at the unexpected. You can learn to manage money without the stress. No sweat money is now being taught to bank employees because they have to give customers confidence. Once you know what your plan is—how much to save, invest, spend, charge on credit, and hold as reserve, you can make decisions without the stress. Leah learned to manage her own money by living on a small income in New York City. When money obligations are tight, she learned to plan ahead—get money at the bank in advance so no ATM fees. Use the free services by smart phone. Put money aside in time for special expenses like courses. She learned that credit cards are the convenient way to fall into the debt hole that’s hard to climb out of.

Personal finance made easy: https://www.amazon.com/Leahs-Money-Book-control-money/dp/1448654408

How much does that 401k LOAN really cost?

40% of 401(k) plan participants have taken advantage of a loan to finance their current consumption. Approximately 10% of 401(k) loans default each year on average. That means $ TRILLIONS lost in potential future retirement money. Everyone needs emergency money in a hurry and we don’t all qualify for a loan. However, we usually don’t calculate what we are giving up when we take money from our future. A $20,000 loan from your retirement account means you will have $400,000 (stock fund) less 30 years later when you need it. If you are smart and pay it back within 10 years, you still will have about $150,000 in 20 years. But that is a huge bite out of your future--$20,000 now costs you $250,000 later. You may have to work longer when you don’t want to. Also business is changing so fast, you may not be able to work. https://www.bankrate.com/personal-finance/smart-money/easy-ways-to-discover-extra-cash

Find another alternative: https://www.nerdwallet.com/blog/loans/quick-ways-to-borrow-money/

Grieving spouse—what this woman learned in re-making her life

Many spouses have no firm hold on family finances so when the money-conscious spouse passes, there is a crisis. “There were dozens of little things concerning our finances that we never discussed.” Life happens and all of a sudden, you have no idea how to deal. A lawyer can’t help you find passwords or legal paperwork in your home. Do you know what happens to your credit and ownership accounts? Can you answer the 10 steps for spouse questions?

https://www.amazon.com/Your-Plan-Live-Age-100/dp/1548180793

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

Make America, “The Don”, Great Again

Senile Psychosis

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

McGahn is ‘lodestar’: Told Trump ‘NO’ - saved Mueller!

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

How Govt wastes our money: Congress spends $1.3 Trillion we don’t have!

Congress does believe in warming: funds to safeguard bases from climate change. 

SCAMS/SPINS:

Caller scam claims they need your PIN to fix your account then takes your money

‘Guaranteed 15% interest multiplier helps power your retirement goals’

Delta trip insurance sued misled on profits from selling

TrumpCare not really working out GOP discovers while talking to their voters.

Record 3.4 billion robocalls were placed in April of 2018. Don’t answer your phone.

GOP holding voter registration so Dems can NOT vote in GA gov race. Only way to win

Why do scammers call you? How much do they profit? The easy answer to scam calls.

----------------------------------

The Mob Boss can never go to jail: Trump has Kava as Supreme so no indicted.

‘No man is above the law’ … well up till now. Dictators nullify courts first, then votes.

Young lady explains what Trump means by “scary time for men.” Respect not rape Don.

----------------------------------

Jobs:

Women business owners thrive but have to work hard. Immigrants work harder.

Who owns your account now?

Medicare open enrollment runs from Oct. 15 through Dec. 7: Pick your best choice.

A retirement timeline: qualifying for benefits on time is required.

Parents Spend Twice as Much on Their Adult Children as They Save for Retirement

Miracle:

She has an extended ‘family’ now. Quick action saves a life.

Singer’s tweet may turn red into blue: VP Gore smiling again!

IAN

41 Watchung Plaza, B242

Montclair ,  NJ   07042

973.746.2014

www.InsuranceAdvisorsNetwork.com

Alerts