Your Unbiased Advisor: Is $1,000 advisor fee too much?

Is $1,000 advisor fee too much?

Many investors are happy to pay their advisors $1,000 a year in fees for the satisfaction of having a human to call when they panic. But everything is relative as they say. The average investor balance is about $96,000 but the median is only 27,000. Some wealthy people have $ millions in their 401k. An expense of 3.8% is just over the inflation rate so most of us are not making money. Our advisor is eating our lunch AND dinner. On the other hand, if you have $600,000 in your retirement accounts, $1000 sounds about right. That is 0.16% and assures you of a growing nest egg for almost any asset mix. Some Robos charge 0.25 and Vanguard’s human charges 0.30%. The larger your account, the smaller percentage you need. Since we are worried about OUR future not our advisor, total fees during our lifetimes should be less than 0.5%. If we pay 2% or more, we give up 63% of our total potential nest egg. It is our money. We take all the risk and we need every cent for the future escalating costs.

Avoid the high fees: https://www.amazon.com/Your-Plan-Live-Age-100/dp/1548180793

Is Fidelity’s ZERO fee mutual fund right for you?

Your advisor is probably squirming in their chair today. No fee is the final stage of the price war Vanguard set in motion years ago. Fidelity’s two new funds will have an expense ratio of zero and require no minimum investment. Compared to 0.14% and 0.09% (9 basis point) costs of the equivalent “Total Stock Market” index funds of Vanguard and Charles Schwab, that gets attention. The average cost of US bond and equity funds has slipped from 0.76 per cent and 0.99 per cent respectively in 2000 to 0.48 per cent and 0.59 per cent last year, according to the Investment Company Institute. Investment groups can still make some money from zero-cost funds thanks to the revenue they get from lending out the shares they own to short-sellers, a practice known as securities lending. However, they need huge deposits to make up for the lost fees. Since Fido is owned by the Johnson family they can probably use the loss leaders for a while. However, legal disclaimers say they could up the fees or other charges at any time. Your money is still being handled by a profit-seeking manager. Vanguard funds are owned by the investors themselves so investors lower costs by ending inefficiencies like small account paperwork. They pay only $200 a year on half a million dollars for support.

https://www.amazon.com/Best-Robo-Advisor-Ultimate-Automatic-Management/dp/1537111957

How is your spending plan? Meeting goals?

I know there is no ‘average family’ when it comes to spending. We are all different so it is instructive to look at what others spend for the same things. Averages from Labor Bureau are 2.5 people family; 1.3 were wage-earners earning $74,664 with 1.9 vehicles. 62% owned homes, going down. They spent $57,311: Food 12.6% with HALF spent on meals at home, but going down. Home 33% going down. Transport: 15.8--$755 a month—new vehicles? Apparel and services: 3% going down. Healthcare 8% going up; Entertainment 5% going up; Contributions 3.6%; Pension & SS 11.9% going up. Misc 4%. Taxes were not in the survey but gross-net=$17,353 or 23%.

Make saving/investing low-cost: https://www.amazon.com/One-Decision-Investing-Buffetts-strategy-ebook/dp/B07FRMRC7F

Are the new short-term health plans right for you?

Trump promised to replace Obamacare with “something terrific.” Trump’s mob has just completed rules that let insurers offer a new kind of health insurance. So-called short-term plans will be offered for relatively longer periods — just under a year at a time, with renewals for up to 36 months. They are cheap. Cheaper than the Obamacare plans—for good reason: They tend to cover fewer medical services than comprehensive insurance, and they will charge higher prices to people with pre-existing health problems, if they’ll cover them at all. In three months, who will buy these plans? Young healthy folks who are short on cash or those in between jobs are the users and they have always been the target. However, an accident or illness can strike anytime. Trump has made the plans renewable so he can claim we have it cheaper, better “terrific”. Sickness not covered.

Buy carefully or face bankruptcy: https://www.amazon.com/Health-Insurance-ONLY-right-policy/dp/1480125083

New ways the wealthy avoid their fair share of taxes

Though President Trump’s tax law increases the amount that can be passed to heirs, these thresholds expire in 2025—if a new federal administration doesn’t change them first. Wealthy people might look to longer-lasting vehicle to pass on wealth: dynasty trusts. With a dynasty trust a taxpayer transfers assets to the trust. The trust assets move from generation to generation with no corresponding payment of taxes. America ends up with a class society even though the upper class hates to admit it. Since the trusts can foot the bills of the next generation without taxes, we have to make up the loss of govt revenue since the rich use the courts, police, military, roads, airports, etc. As long as the estate tax and generation-skipping transfer tax GST lifetime exemptions of $22.36 million per couple are applied to the assets placed in the trust, the assets and their growth are out of the estate of the grantor and they can pass to multiple generations free of taxes.

Use your tax credits to avoid paying their tax: https://www.amazon.com/Tax-Credit-Class-your-credits-ZERO/dp/1539462382

How is your Wall Street guru doing these days?

If you are looking for a STAR who will consistently beat the market—any market—you will need to keep looking. Popular myth says that consistent high performance over time indicates skilled active management. However, you probably are not with a fund that performed well across three- and five-year periods, according to “Does Past Performance Matter? The Persistence Scorecard,” a July 2018 report by S&P Dow Jones Indices. Famous investor Warren Buffett recently won a $1 million bet that proved it is almost impossible to find the 1 or 2 out of 557 funds that beats a low-cost index fund. Fixed income vehicles are little better. So is ‘skilled management’ just Wall Street hype to entice us to move our money around? More ordinary investors are coming to that conclusion. Many studies show that understanding all the variables of a company’s success is just not possible—even for expensive computer software. Plus, there is the unknown future. The one consistent factor: low-cost funds beat high cost funds.

Control costs first: https://www.amazon.com/Best-Predictor-Investment-Success-Cost/dp/1502524082

Do you take all the deductions for your small business?
Most small businesses are headquartered in the home. Yet fear of audit keeps many law-abiding taxpayers from taking home office deduction. Unless you measure every square inch of space used exclusively for it, your business is missing the $1,500 deduction. That is the recognized IRS amount for home businesses using the simplified method. Make sure you are taking your fair share of deductions. Don’t rely on your accountant to explain them all. There are just too many. Reading is fundamental.

https://www.amazon.com/J-K-Lassers-Small-Business-Taxes/dp/1119380413

New ways the wealthy avoid taxes that we have to pay for them

The Trump tax breaks did not reduce the amount the well off firms can deduct from their taxes. The rich get richer. We have to pay for the courts, police, military, roads, airports, etc. US firms use but don’t pay for. Trump sold the cuts as a way to dissuade companies from moving profits overseas. The cuts may make moving profits a lot more rewarding. For example, pharma firm AbbVie (Humira) told investors it expects its tax rate to fall to 9% from 22% because of the change. Many profitable firms have moved their patents and subsidiaries to low tax countries to accomplish similar tax avoidance schemes. Bermuda has a zero tax rate on corporate profits. Despite recording over half its $28.2 billion in 2017 sales in the US and basing most of its research facilities there, AbbVie has never ‘reported’ a profit in the US. They all do it: Pfizer Expedia Boston Scientific Microsoft.

Stop paying AbbVie’s taxes: https://www.amazon.com/Trump-Tax-Shelter-Avoid-taxes/dp/1985448300

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America

, “The Don”, Great Again

Two

Americas

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Conspiracy against the United States, conspiracy to launder money, conspiracy to receive Emoluments from foreign states, false statements, subverting constitutional tax power, obstructing justice, failure to secure voting systems from attacks, and Foundation self-dealing.

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

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