Your Unbiased Advisor: Should the wealthy pay Social Security too?

Is it time to have the wealthy pay the Social Security tax too?

On our pay stubs it lists FICA—the Social Security tax we all pay. Well not all—the wealthy stop paying the tax when the tax becomes ‘serious.’ For 2019, the maximum wage base is $132,900. They pay nothing on most of their income. But now that most of us wage earners are paying a higher rate than the wealthy, isn’t it time for them to pay their fair share? Since our incomes have remained flat since the 1960s, we cannot save for retirement like we used to. We have no more employer-funded pensions. More of us are relying on Social Security for the bulk of our retirement income but few of us can live on $1,460 a month. It would only be fair for those earning over $132,000 to pay the same rate as we do. We all should pay the 6.2% we pay. The income tax is no longer a progressive tax. More of us pay 32.9% compared with less than 20% that the wealthy pay. As Buffett pointed out, he pays only 17.7% with no special tax shelter. Corporations like Apple, Google, Amazon, Boeing, and GE have overseas shelters to hide their incomes. So 2/3rds of all businesses pay $0 tax. Plus we taxpayers must subsidize many profitable businesses like oil, gas, agribusiness, air carriers, etc, etc. Many aren’t even American. It is time for the wealthy to contribute to this society like they once did. Besides, they will never miss the 6.2% of income anyway. We all need a tax shelter.

Use your tax-free account: https://www.amazon.com/Tax-FREE-Retirement-code-lifetime-income/dp/1475206976

Why do car dealers make the financing so ‘sweet’-looking?

Low payments for 84 months make your dealer the highest profit--$982 on finance and insurance. The dealer’s F&I person is one of the highest paid. The salesperson is just the demonstrator since they don’t have the actual financial contract details. They don’t know your credit score so can’t make the deal. So negotiate everything with the real seller, not the salesperson. It is the person who can change your financial deal. They are the most important person in the deal. When I bought my used Camry, the salesperson failed to disclose a bad battery and damage to the backseat upholstery. When I was handed off to the F&I lady, I asked for an extra $500 off so I could live with the ‘bad’ upholstery. I had to charge my own battery to drive back so they could replace the battery. This dealer did not have bad ratings. I told them I would pay cash for the deal but they said they would redo the deal if I financed. I financed half the deal and then paid it off within 6 months using my HELOC to save money. Extras like ‘gap’ and glass coverage in a car deal are where they make their profits. Extras like health and life coverage in vehicle insurance are where insurers make profits. Decline the extras. Ask for each discount by name.

Buy only what you need: https://www.amazon.com/Vehicle-Insurance-Beware-Double-Coverage/dp/1480027634

Is ‘sector rotation’ right for you?

This is a market timing strategy involving the movement of money from one industry sector to another in an attempt to beat the market. However, you know how well market timing and forecasting has done in the past. It does not work. This strategy took root in the past when some investors noticed that the ‘business cycle’ has winners and losers. Since it is impossible to predict what happens to individual equities, this strategy thinks whole industries rise and fall together. Consider the Callan Periodic Table: https://www.callan.com/wp-content/uploads/2019/03/Classic-Periodic-Table-2019.pdf.

Can you see the pattern? I can’t either. How about this chart of market returns? https://www.businessinsider.com/typical-investor-returns-20-years-2014-8. There seems to be some pattern here—at least for this 20 year period. This pattern says buy Energy, Health, Info Tech, Small Cap Value ONLY since the returns are above 10%. However, most of us are barely earning above inflation probably because we try to time the market. And lately, these 4 sectors have done poorly. So we should stop trying to time the market and listen to Buffett. He maintains that we win if we are patient. In fact he won a $million bet recently by betting on the top 500 stocks OF ALL INDUSTRIES. Forget Wall Street strategies and take the 21.5% YTD from Buffett’s favorite index fund.

Let Buffett be your guide: https://www.amazon.com/Warren-Buffett-Your-Investment-Advisor/dp/1518690963

Is your advisor’s firm cited for lack of controls?

Officials at FINRA the financial industry ‘self-regulatory’ body have cited a number of unnamed firms as having “nonexistent supervision” allowing salespeople to take advantage of customers who have no idea what they are buying. Firms let reps ‘run amok’ without any idea what goes on in their branches. They don’t even correct the mistakes that they find. Unfortunately, this report keeps the firm’s name secret so that the report does no one any good. We can’t avoid the firms that will let their staff steal from us and the firms can hide their misdeeds from public pressure. There is no incentive for the unscrupulous firms to get better. Obviously, the SEC authorities have done nothing to change their behavior over the years they have had the legal means to do so or we wouldn’t be in this spot after numerous reports on the same firm malfeasance. One of the FINRA staff told me they never divulge the violators. Clearly, this organization has no interest in cleaning up its own industry. Avoid the unscrupulous firms and advisors.

Move to the best RoboAdvisor: https://www.amazon.com/Best-Robo-Advisor-Ultimate-Automatic-Management/dp/1537111957

10 vehicles you might want to avoid

These models and perhaps they’re parts will not be available in the future. On the other hand, you may be able to pick up a bargain if you are flexible: Volkswagen Beetle and Golf-based SportWagen, Ford Taurus and Fiesta, Chevrolet Volt and Cruze, Cadillac ATS Coupe and CT5, Lincoln MKT, Buick Opel Cascada. Instead, consider the current best sellers like Hyundai Elantra: https://www.kbb.com/car-reviews-and-news/top-10/25-best-selling-cars-trucks-suvs/2100006323.

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

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SCAMS/SPINS:

Dain Stokes caught taking $½ million for fake charity: promised 20% return

Michael Siva caught insider trading penny stock scheme MorganStanley: defrocked

Keith Wakefield IFS Securities, caught "fraud" and "placing fictitious trades" defrocked

George Marwieh caught $5 million notes misleading, high commissions: defrocked