How much does your advisor really cost you?
Your advisor may
have given you a choice between paying commissions and paying a 1%
flat fee to manage your money. This may seem like an easy choice but it is
a false choice that can cost you $80,000 a year. My client Lisa M. had over $1
million in her IRA account at Fidelity. She rolled over her 401k from work. She
was offered a ‘managed’ account for 1% per year or $10,000 or a per trade
commission account. She met with her advisor when she transferred her money to
Fidelity and agreed that it was probably cheaper to pay a flat fee than
commissions per trade. When I met with her about her tax situation, I went
through her brokerage statement in detail. Fidelity was buying and selling
fixed income securities so fast they had churned $250,842 in 2016 alone. What
was the net result? Fidelity lost
$16,278 of her money plus the $10,256 in fees.
I showed her that a
low-cost (0.08%) balanced fund would have earned 8.77% in 2016 and cost her
only $864. A balanced account with 60% bonds 40% stocks would have averaged 6%
a year even with the losses in 2008. Over the next 15 years, she may have
gained $1.5 million in a low-cost balanced fund managed by a licensed advisor
on salary and backed by the largest mutual fund company in the world. If she
had stayed in a 1% “managed” Fidelity account, she would have lost at least
$150,000 in fees and perhaps another
$1.5 million in possible gains from a low-cost balanced fund. Since her
Required Minimum Distribution (RMD) for the IRS was $60,456 last year, her
account will keep falling. In 15 years her account will be reduced to about
$100,000. Churning trades and account fees are killers.
Missed the tax
filing deadline?
If you are due a
refund, Uncle Sam will hold your money as long as you want. Taxpayers due a
refund have no
penalty for filing a late return. If you owe, file as soon as possible and
pay as much as you can. Avoid the $200-$300 preparer charge: Use IRS Free
File. Nearly everyone can use IRS Free File to e-file their federal taxes for free. My
favorite is FreeTaxUSA. Deadline for extension filers is Oct. 16 but you must
pay what you think you owe now. Tax bill too big? Get a payment plan: https://www.irs.gov/individuals/payment-plans-installment-agreements.
Why are investors
leaving “managed” investment advisors?
Your advisor and the
traditional retail
Wall Street firms are being put out of business. Vanguard has scooped
up about 8.5 times as much money as all of its competitors combined.
Vanguard must invest $2 billion a day. It does it without the theater of the famous
Wolf of Wall Street. It turns out
that it is impossible to predict the future so Vanguard invests in WHOLE markets.
Vanguard’s investors are betting that most of the companies in the market will
continue to grow. Vanguard is efficient: you get to keep almost every penny
you earn. Vanguard means low cost. When your advisor recommends a buy, they
are assuming a rosy future for their picks. Stock picking is difficult and
predicting the market forces is even harder. That is why the best stock picker,
Warren
Buffett, with over 20.8% a year earnings,
does not trade. He buys companies with value and holds them. Vanguard’s
low-cost investing is Buffett’s choice.
Go with Warren
The Don could be a
great president
Trump has a GOP
House and Senate to support him. He could make a lasting legacy in American
history. He could settle health care for all Americans by working out a
Medicare type plan for everyone. Almost
everyone who has Medicare likes it. Most Americans appreciate the fact that
they can receive care and not have to fill in a ton of forms and pay more than
a week’s pay to get better. Most Americans who are NOT millionaires want to pay
one price for everything—hospital, doctor, meds and devices. Most Americans
understand that Walmart pays less for the stuff they sell because they
negotiate the price with manufacturers in bulk. We appreciate the fact we don’t
have to negotiate the price of each item at Walmart by ourselves. Example: Walmart
buys big TVs at wholesale for ALL their stores around the world so I can buy
one at a discount.
Why can’t our Leader
do that? Wouldn’t America and Trump be better for it?
Is waiting to take
Social Security benefits worth it?
If you have a choice
about when to sign up and you have parents/family with a normal life expectancy,
you would do well to wait. If you take it at age 70, the age with the highest
payout, you can expect to receive a lot more. Here is an example. Abigail
worked her whole life in the social service field making an average salary. She
worked and paid FICA to age 70 and then began her monthly benefits of $2,769 in
2016. If she lives to age 90, as per this formula, https://www.ssa.gov/oact/population/longevity.html,
she will collect $911,340 in today’s dollars assuming inflation factor
of 3%. If she had started at age 62, she would lose one fourth of the benefit
every year. She would have received $1,485 a month in 2016 or $782,431 total
in today’s dollars by age 90. She would have benefits for longer, 28 years, but
the higher amount (by waiting) makes a big difference. Plus we don’t know for
sure she will live to age 90. There is some evidence that working longer will
increase your lifetime. If we die early, it is better to receive the higher
amount each month. And her benefits are recalculated every year she worked and
paid into the system. The formula uses the last 35 highest salary years
so she raised her benefit every year after age 62 because her salary increased
every year.
If you do not have
this situation and know you must supplement your SS benefits to have enough,
use your tax-FREE account while you are working: https://www.amazon.com/
Forget-Social-Security-Medicare-Lifestyle/dp/1466394285
GOP creates America
The Ryan tax
structure would move America to the economic structure favored by South
American countries: tax our spending. Ryan pushes the border
tariff which means we pay more when we buy imports, including cars that
contain imported parts. Trump would claim Mexico paid for The Wall this way. Ryan could then slash income taxes for the
wealthy and their corporations. But wait! Let’s look at the results of
taxing our spending. According to the experiences of countries using this
method, revenue
falls because everyone evades tax by using the black market. Consumption
taxes hit the poor hardest. Most of us spend all of our income so we would pay this
regressive tax—more spent, more tax, higher tax rate—20-25%. Wealthy people
save or invest most of their income so they pay the least tax rate. They have
many ways to avoid income and consumption taxes. For instance, their business
could buy expensive items so they would pay no “consumption” tax. Their
firm could provide home, cars, air travel, clothes, etc etc. Right now, a corporate
CEO does not pay tax on most of their compensation because most of it is in
a deferred comp plan, percs, benefits, severance and stock options. Exemptions,
deductions and loopholes we don’t even hear about cut their share of taxes
even more. Avoid paying THEIR taxes.
Use a legal tax
shelter: https://www.amazon.com/Only-little-people-pay-taxes/dp/1478222441
How do you invest
for retirement?
Long-term investing is about TIME not about smart stock picking. Fidelity found that the accounts that did the best were the ones owned by the dead because they never SOLD. Few managers can keep producing top returns for 10, 20 or 30 years. The largest public pension is the one for CA public employees. Recently they decided to stop wasting employees’ money on advisor fees and picked low-cost funds. Their reasoning is simple: reduce expenses, keep more. And what type of securities do they invest in? 61% is in Growth stocks (growing companies), 20% in bonds, 10% in real estate, 10% in infrastructure. Using this asset model, you can earn 10-12% per year on average. Over the last 30 years, clients who used a market index fund earned 11% as measured by the Vanguard 500. This is the one Warren Buffett recommends.
Long-term investing is about TIME not about smart stock picking. Fidelity found that the accounts that did the best were the ones owned by the dead because they never SOLD. Few managers can keep producing top returns for 10, 20 or 30 years. The largest public pension is the one for CA public employees. Recently they decided to stop wasting employees’ money on advisor fees and picked low-cost funds. Their reasoning is simple: reduce expenses, keep more. And what type of securities do they invest in? 61% is in Growth stocks (growing companies), 20% in bonds, 10% in real estate, 10% in infrastructure. Using this asset model, you can earn 10-12% per year on average. Over the last 30 years, clients who used a market index fund earned 11% as measured by the Vanguard 500. This is the one Warren Buffett recommends.
Use all 10 of the
Top Vanguard funds: https://www.amazon.com/Warren-Buffetts-Vanguard-Funds-Retirement/dp/1496148592
Where did The Don’s post-truth world come from?
Remember the film
about “teaching”
the scientific theory of evolution with Spencer Tracy? The teacher, John
Scopes, was found guilty of violating TN law. The law, which changed only
recently, said any school or university could not discuss any science about the
history of man. The Butler Act prohibited teachers from denying
the Biblical account of man's origin. The law was repealed
on free speech grounds not on evidence of evolution grounds. In fact, the point
of the movie was that Scopes was not allowed to think—to teach the act of examining any
theory about man’s origin. In effect, facts were and still are, not recognized by people of many
states who were taught in this way. Biblical accounts of phenomena were not
explained by science. They learned that the “sun stood still” and the earth was
not affected. (p 44, http://www.davis.k12.ut.us/
cms/lib09/UT01001306/Centricity/Domain/385/Inherit%20the%20Wind%20PDF.pdf ). Today’s evangelical Christians are taught “The
deep distrust of the media, of scientific consensus — those were prevalent
narratives growing up,” Christian writer Rachel Held Evans tells writer Molly
Worthen. Evans
was taught to distrust science and media elites. Trump and the Alt Right
use this historical trend to manipulate those who do not know the scientific
method. The doctrine of biblical inerrancy is the official
alternative and today Christian schools drive out those teachers who promote a
questioning mind. If you are raised on Rush Limbaugh and Glenn Beck, you distrust
the mainstream news media. You do NOT revise your conclusions based on evidence
available to everyone. You think TN was right to punish Scopes for questioning
the Biblical account with real evidence.
Why does this
matter? Trump’s education head
is a proponent
of religious schools for all.
"Trump is
much more likely to bring Christ into the world," DeVos friend
explained. Observe Saturday’s
March for Science. Prepare for TrumpWorld: https://www.amazon.com/Your-Retirement-Income-Checklist-TrumpWorld/dp/1544703260
Are ETF ‘model
portfolios’ right for you?
JPMorgan has just offered their suite of exchange traded funds to their customers. Using their version of the index funds that trade daily, Morgan hopes to capture new money and keep customers from moving. This multi-asset set of funds are also offered to advisors through GeoWealth’s online platform. You will probably pay two advisors’ fees and since a model portfolio follows a set formula for all takers, you are wasting your money. Model portfolios mean no stock picking for you personally. Since these funds have little track record and fees have not been disclosed, we see no value in changing from funds with low-costs and a proven history. JPM diversified equity ETF has provided 14.54% in one year ended 3/31. A comparable fund provided 18.07% and cost 0.05%.
JPMorgan has just offered their suite of exchange traded funds to their customers. Using their version of the index funds that trade daily, Morgan hopes to capture new money and keep customers from moving. This multi-asset set of funds are also offered to advisors through GeoWealth’s online platform. You will probably pay two advisors’ fees and since a model portfolio follows a set formula for all takers, you are wasting your money. Model portfolios mean no stock picking for you personally. Since these funds have little track record and fees have not been disclosed, we see no value in changing from funds with low-costs and a proven history. JPM diversified equity ETF has provided 14.54% in one year ended 3/31. A comparable fund provided 18.07% and cost 0.05%.
Better to use the
Vanguard Top Ten: https://www.amazon.com/Vanguards-Top-Ten-mutual-funds/dp/150073909X
Fact: Maserati, Mercedes,
Land Rover make bad cars too
Consumer Reports has its list of 10
worst cars for 2017. The reviews are not good. If you are into nameplates,
take the bad reviews to the dealer and see if you can cut a better deal. Or
better, take the reviews and negotiate on a used version. The
used versions have probably lost more value than most cars—30-40%. Each
company has their Alt-facts but the evidence from owners and drivers carries
more weight if you have to live with their defects. Car companies spend more on marketing than engineering
so you need the real facts about a car’s poor engine, ride, parts, and
reliability. Poster
child for poor quality is Fiat Chrysler. Buy the Warren Buffett way not the
Don Trump way. Facts matter. True
evidence in transportation.
Don’t forget to
claim your car insurance discounts: https://www.amazon.com/Vehicle-Insurance-Beware-Double-Coverage/dp/1480027634
*****************
We have entered the
Twilight Zone:
"There is a fifth dimension beyond that which is known
to man. It is a dimension as vast as space and timeless as infinity. It is the
middle ground between light and shadow, between
science and superstition, and it lies between the pit of man's fears
and the summit of his knowledge. It is an area which we call the Twilight
Zone" where “alternative
facts” and illusions of conspiracies are lived out. Lies are considered
true. Incompetence
is praised. Truth is what the loudest voice says it is over and over.
Rod Serling
Trump GOP budget
GOP cuts programs of
folks who have no
power to oppose cuts. Cowardly. The Don does not
like diplomacy, aid to poor, US
19 Agencies you may use being cut
from American society: The Don does not like Meals on Wheels, Sesame St. NPR
radio, Arts, Miners retraining, Seniors volunteers for poor, Americorp youth help poor, 62 in all for $343 billion.
Trump’s budget man wants to cut Medicare and delay Social Security
benefits to age 70.
What GOP does NOT cut:
No cuts to subsidies to Boeing,
GE, Intel, Nike, Shell, Fiat, GM, Ford,
hundreds more.
No cuts to govt cost overruns of $ trillions
each year. And Congressperson subsidies.
Wealthy 1% will
receive a $165
billion tax break, Seniors
go back to food stamps.
No
cuts to United Airlines subsidy even after rip a paying customer from his
seat.
Tax returns do
matter:
Trump and GOP are
working to cut
their own taxes which average 12% now. Yours?
Trump says he is under
another new audit so can’t show taxes: continuous audit?
Trump may owe $
millions to Putin’s banks. Trump wants permit to build in Russia
Tea
party founder denounces Trump: He is now “head monster of the swamp.”
Highest US
law enforcement Sessions
does not understand US judiciary system.
Little
Dictator congratulates Turkey dictator in limiting democratic rights.
Why did The Don pick Exxon’s Tillerson for Sec
State
Exxon’s Tillerson is ending
sanctions for invading Ukraine; Exxon gains largest oil field.
Why did Trump pick DeVos, Blackwater’s Prince’s sister after
Prince
meets with Putin’s man in remote Indian Ocean Island?
Why did Trump pick Wilbur Ross for Commerce?—he
ran the Cyprus bank known for laundering Russian money for oligarchs like
Manafort.
Why did Trump pick Flynn,
Page,
Manafort
for his regime?—all are paid foreign agents with ties to Putin. Why would Putin
put Flynn
at his RT table except control?
Why is Jared
doing deals with Putin’s banker? What did junior mean by “We
see a lot of money pouring in from Russia.”? Trump
has received $ millions from Russian oligarchs. Why did Sessions
(Justice Dept) meet with Russian Ambassador but not UK
or German?
What happens if the FBI finds evidence of Russian
collusion/influence? Putin puppet?
Trump is not just any old American businessman like
Ross Perot.
Will Trump resign or be impeached
*
The
Don hides People’s House visitor register so spies can come and go?
Crazy
Don complements Italian PM on Pavarotti “a great friend of mine” Dead 2007
Little Dictator claims N.
Korea will be ‘taken care of.’ Armada
did not go to Korea! because it was “lost”. Actually in Indian
Ocean . Jared
needs GPS on armadas.
The Don will let
churches and religionists pay for candidates. Gov to subsidize GOP?
The Don claims NEW TrumpCare
is better plan: eliminates 10 essentials of coverage!
The Don’s Justice Dept wants to stop
democratic process for certain Americans.
IN
cuts 10% of Dems from voter rolls to increase voter participation rate
The
Don shows his bigger one to impress instead of fixing our
tunnels/bridges/roads. N.Korea Kim
shows his to impress. Presidents act like children on playground.
Trump supporters love him—now he runs The Swamp—even
McCain loves bombing
Even though he
has flipped on a series of economic and foreign policy issues, including
relations with Russia ,
NATO’s relevance, Federal Reserve Chief Janet Yellen's future, whether China
is a currency manipulator and the usefulness of the Export-Import Bank.
The
Don insists on riding in UK queen’s toy carriage but no bullet protection.
The Don to downgrade
renewable energy sources helps coal oil gas industry.
The
Don using KS voter suppression laws to keep all Dems from voting.
The Don is cementing
his family businesses in China—‘friends’ in high places helps. "Ivanka
has so many China
ties and conflicts, yet she and Jared appear deeply involved in China
contacts and policy. I would never have allowed it," former WH ethics
officer.
The Don blames
Obama for MS13 gang moving to US in 2000, during Bush II regime.
The Don’s promise
of respecting DACA protection for kids is lie. 11 million more to go.
The Don promised
to end Iran nuclear ban deal and yet Iran
kept its word: no nukes.
ObamaCare replacement without
10 key protections gains with House ‘Freedom’ group.
*************
Regulators are the only protection against
corporations since we
can’t sue anymore
“It is nearly
impossible for one individual to take on a corporation with vast resources.”
Supremes
stop us from suing—State courts no
longer available to sue corporations!
Supremes
tilt toward wealthy and big business already: violators get pass on illegal
gains.
Ocwen Financial caught injuring
mortgage customers in every possible way; enjoin.
Tesla to recall
53,000 cars over parking brake issue
We need regulation—GOP wrong—companies/cities
wouldn’t fix bad products on own
GM
killed 124 because ignition switch pin not replaced after knew it
killed first in 2006.
Police want gun control.
When everyone has guns; your
chance of being killed goes up. Police don’t know who
to shoot. They assume everyone has one and shoot
first. You and thief have guns. CO schools now allow
teachers/administrators to carry
guns in the classroom. Kid lesson! Since 2015, police have killed
86 people with realistic looking FAKE guns--suicide?
Teen kills self for video. Dodge
City knew you can’t trust hot heads with guns.
Barber
shot dead by patron for refusing to cut for less than going rate.
SCAMS:
Wealthy
are paying to change our Constitution in TX. TX GOP wants to limit federal power
and jurisdiction, and create term limits for federal officials and members of
Congress. Midland oilman Tim Dunn helps pay for this convention. marginal
reactionaries!
Does the IRS really come to your house? Yes,
but not unannounced.
Ignoramus Award:
MS
rejects 11,717 low-income residents for $170 month temporary federal aide.
Guess where all our plastic
bags end up after we discard them?
How our government
wastes our money:
Big bomb hit Afghanistan
costs
us $314 million to develop and $16 million per hit—perhaps $1
million per terrorist to scare terrorist.
"… weapon will have a substantial psychological
effect on those who witness its use." No terrorist surrendered or ran.
Where have all the
jobs gone?
Mining
employment rose by 11,000 in March, largely in support activities for
mining (+9,000). Since a recent employment low in October, mining has added
35,000 jobs. But you don’t get full time: average weekly hours were unchanged
at 34.3 hours in March.
Obama grew more
jobs in health care than manufacturing.
Which job board sites are best
for your job search?
Ransomware recovery: http://securityaffairs.co/wordpress/53438/malware/ransomware-recover-guide.html
Cancel Robo calls with Mr NoMoRobo: https://www.nomorobo.com/
Miracle: WOW—police
try new thing!
LA Police Commission now requires officers to try
to defuse encounters before shooting.
Pope’s
welcoming positive message being undermined by negative old bishops.
IAN
41 Watchung Plaza, B242
973.746.2014
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