Your Unbiased Advisor: Do you really need an advisor?

Do you really need an advisor?

In the 12 months through Friday, the S&P 500 stock market index returned more than 50%, including dividends. From the market’s low point in March 2020 through Friday, it returned more than 80%. Between March 18, 2020, and April 12, 2021, the collective wealth of American billionaires increased from $2.95 trillion to $4.56 trillion, a 55% leap. This increase was NOT from savvy trading by financial advisors. Warren Buffett, one of the most successful investors, gives credit to compounding: “My wealth has come from a combination of living in America, some lucky genes, and compound interest.” Compounding is money earning money on its earnings over time. We can reach $1,000,000 by investing our money in businesses sharing profits with us over time. A special IRS account, available to most working Americans, makes our money tax-FREE. Tax-FREE is like a $300,000 bonus—We avoid paying taxes— federal and state income taxes on our earnings when we take them. Buffett shows us how to invest fee-FREE too. Set up your tax- and fee-FREE accounts in 1 hour. He recommends holding a low-cost S&P stock fund: 9% a year 1971-2020 and 12.36% per year if you compound reinvested dividends.

Make Buffett your advisor: https://www.amazon.com/Warren-Buffett-Your-Investment-Advisor/dp/1518690963

Estimate how much income you will have in the future

Many of us start to worry about having enough income in retirement to see us through the final 30-40 years. A financial planner can run an analysis for a one-time fee so you have a better idea of your income and expenses once you hit pre-retirement years. In the analysis, an advisor uses software that takes into account how much you will earn on your money and how much inflation will reduce your buying power. You can do this analysis yourself with an online calculator called Monte Carlo simulation. So for instance, Vanguard’s Nest Egg Calc can let you adjust income, expenses and portfolio to target: https://retirementplans.vanguard.com/VGApp/pe/pubeducation/calculators/ RetirementNestEggCalc.jsf. By playing with the level of stocks, bonds, and cash you can optimize your chances of having enough money for 30 to 50 years of income. Thus we found that over 65% stocks provided us with 91% probability of having enough income for 30 years. Usually, advisors tell us to sell stocks and buy bonds in retirement. When you do this in 100,000 simulations, you only have 58% chance of having enough for 30 years. That is because over time, bonds lose to inflation and we are living longer.

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

Can Biden’s capital gains tax increase hurt you?

Biden wants to actually pay for his spending for infrastructure needs, something republicans did not do for their 2017-18 tax breaks for the wealthy: “Tax reform that rewards work and not wealth.” He would raise the corporate tax rate from 21 percent to 28 percent, implement a minimum corporate tax, nearly double taxes on investment gains for the wealthiest and tweak inheritance laws. Most corporations pay no taxes now. Many receive our taxes as refunds. When the wealthy sell their investment gains, they pay a rate HALF the rate we pay on our wages. Trump’s inheritance tax rate allows families to create tax-FREE family dynasties of $23 millions. Biden’s tax increases are targeted at the top 0.3 percent of taxpayers. Those folks have increased their wealth by 55% during the pandemic when many lost their jobs. When the wealthy sell their assets, they pay only 20% tax while we pay 33% total tax on wages. Thus billionaires like Warren Buffett pay only 17% of their income versus 33% for his staff. Many billionaires agree this is not a fair system. Since the wealthy and corporations have more than enough capital to increase production, Biden’s tax increases will not hurt our economy. The increases will fix our failing bridges and roads; thus allowing business to expand in the future. Is it not better for those who can afford it to pay for improvements than those who need the jobs from the structural improvements? His plan may actually help us pay our tax bills.

Tax shelter for workers: https://www.amazon.com/Tax-Shelter-Young-Americans/dp/1500426520

Now that I can trade at little cost; should I?

Wall Street has always been the lure of quick get rich strategies. But do they work? Insiders are usually the most successful at fast trades since they have information we don’t have. The most famous are Congress people who do it legally and Martha Stewart who got caught and went to jail. Congress people use info from secret meetings to get away with insider trading legally. Most amateurs who trade lose money. Despite free trades, most will still lose money since they must be right twice—buying and selling on time. To be successful, you must know enough about the stocks you buy that your purchase can still overcome the hurdle of random price movements. Recently, Gamestop price rose quickly because bloggers promoted it to offset large investors who bet on its decline. So unless you have access to secret insider information, fast trading is a myth. Warren Buffett, one of the most successful company analysts, advises the opposite: "Our Favorite Holding Period Is Forever." Trading stocks may kill the powerful effect of compounding. He recommends holding a low-cost S&P stock fund: 9% a year 1971-2020 and 12.36% per year if you compound dividends by reinvesting them. Check the years you have invested: http://www.moneychimp.com/features/market_cagr.htm.

Listen to Buffett not your advisor: https://www.amazon.com/Warren-Buffetts-Vanguard-Funds-Retirement/dp/1496148592

Is it time to fear the effects of inflation?

Advisors are trying to look smart about inflation. Sure gas prices have risen but we are not commuting as much. Sure some food/staples prices have risen. However, just because the gov is printing more money to keep people alive who still have no work, that is no reason to panic. Besides, advisors don’t have the answer. Alternative investment vehicles have their downsides. Bonds are not a good choice at this time. Gambling on cyber that have no fundamental value is OK for the wealthy but we can’t buy groceries or pay the rent/mortgage. Inflation is often a valid risk when everyone has extra money and is chasing fewer goods. Most working people don’t have extra cash to pay for stuff they don’t need. Keep an eye on mortgage rates to learn when inflation becomes a worry. Most investors maintain a broad comprehensive portfolio since no one knows what will happen in the future. It is hard to prepare if you don’t know what to prepare for.

Use wise advisors: https://www.amazon.com/Buffett-Bogle-Holy-Bible-Investment/dp/1523693045/

Make your retirement income tax-FREE

Working people can save and invest in an IRS-approved Tax Haven. Deposit up to $7,000 per year in your choice of investment options so that when you retire or need emergency funds, you pay no state or federal income tax. Almost all financial firms offer this account so you have your choice of the fee structure and type of securities. Compare the Best firm choice for your tax-FREE Roth IRA. If your employer does not offer a Roth 401k, you can set up automatic contributions from your account. Since you pay no tax on this income, you may reduce your income tax from other retirement income sources like Social Security. SS benefits can be taxed up to 85% when you begin taking withdrawals.

Tax-FREE income: https://www.amazon.com/Tax-FREE-Retirement-code-lifetime-income/dp/1475206976

Where is that refund?

The Internal Revenue Service today reminds taxpayers that the most convenient way to check on a tax refund is by using the “Where’s My Refund?” tool at IRS.gov or through the IRS2Go Mobile App.

Where is the stimulus 1 or 2? If you did not receive stimulus 1 or 2, start filing here: https://www.irs.gov/newsroom/recovery-rebate-credit.

Stimulus 3? https://www.irs.gov/coronavirus/third-economic-impact-payment

Estimated tax payments are still due April 15. If you are self-employed or do not have enough withheld from a paycheck, pension or Social Security, you may have to send quarterly payments to the IRS. Tax returns for 2020 are due May 17 not April 15 but the estimated tax payments are still required on schedule.

IRS will redo your taxes and send refund if you paid tax on Unemployment 2020 or you paid ObamaCare’s excess advance premium tax credit repayment.

Have tax forms; will file … for FREE but WAIT . . .

If you have unemployment income, ObamaCare coverage you should wait to file since the IRS has not yet implemented tax-FREE provisions of the new Covid law. If you already filed and paid tax on your unemployment income, IRS says it will send you a refund of the tax automatically. DO NOT FILE an amended return to obtain a refund on this tax. Taxes due MAY 17 not April 15. Input the W-2, unemployment, SS benefits, IRAs, pensions, RMD, brokerage, etc. forms you have. You can file for FREE online. If you didn’t receive a correct form, file a Form 4852. Usually filing your state return costs as little as $15 unless you buy the Pro helpline. Avoid $300-400 paid preparer fees—new IRS forms mean higher fees. Unemployment insurance is TAXABLE on the Federal income tax return; not on some state returns. Some states do not tax your SS and pension benefits.

Retirees did not have to take their RMDs in 2020 so taxes may be less: it was a good time to convert IRA to Roth IRA for tax-FREE future. Unless you were self-employed, you can’t deduct home office expenses of working from home. You can deduct as medical expense all Covid prevention supplies. Some states continue the health insurance mandate and penalty unless you have an exemption. Since the IRA contribution deduction has no age limit now, you may reduce your income/taxes by making a contribution of up to $7,000. The standard deduction went up to $12,400 single; $24,800 joint. Jan 15 last day to make 2020 estimated payments. You have to report your April/May and December/January stimulus payments even though they are not taxable. Some of us receive a bank credit; some a debit card; some a check. Even if you don’t have to file, you should file so scammers can’t use your SS number to mess up your IRS file. Tested E file software ratings. Efile Jan 15; IRS processing Feb 12.

E file avoids covid at your preparers’ office: https://www.irs.gov/filing/free-file-do-your-federal-taxes-for-free

What to do if you can’t pay by May 17?

Avoid the penalty for not paying estimated tax. Ask for an automatic extension to file till October. If that does not work for you, you can apply for a payment plan. An individual can setup an IRS installment plan if you owe $50,000 or less and can pay back the amount owed in 3 years. If you are a business owner, you can setup an installment plan if you owe $25,000 or less. The IRS will charge a one-time fee of $105.

If you own less than $25,000 and can pay the amount owed within six years, ask the IRS for a streamlined payment agreement. The IRS will charge a one-time fee of $102.

Request an Offer in Compromise if you cannot pay the total amount owed. This allows you to settle your tax debt for less than the total amount owed if you will be unable to pay back the total amount owed within 10 years. The IRS will charge a one-time fee of $150. Given the pandemic economic hardship, apply for the extension to file now: https://www.irs.gov/pub/irs-pdf/f4868.pdf

Special circumstances help: call the IRS Taxpayer Advocate Service 1-877-777-4778 for free assistance.

More ways: https://www.irs.gov/newsroom/heres-how-people-can-pay-their-federal-taxes

IRS has $1.3 billion refunds for 2017 tax returns

Unclaimed income tax refunds worth more than $1.3 billion await an estimated 1.3 million taxpayers who did not file a 2017 return, according to the IRS. “Time is quickly running out for these taxpayers. There’s only a three-year window to claim these refunds, and the window closes on May 17.” If they do not file a tax return within three years, the money becomes the property of the U.S. Treasury. Filing instructions are available on the IRS.gov Forms and Publications page or 800-829-3676.

You have 17 days to collect your cash!

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

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

First Trump terrorist found guilty

Where ‘Truth and Reconciliation Commission’?

How Govt wastes our money:

Dick Cheney insisted 20 years ago, “Ronald Reagan proved deficits don’t matter.”

GOP concerned about spending on working people: Trump tax breaks were no sweat

GOP still trying to lock people they don’t like out of voting opportunities

GOP still suing to overturn election in AZ: voter audit firm unknown Ninjas

$5 billion two new Air Force One jetliners: bigger fridge costs extra?

SCAMS/SPINS: