Your Unbiased Advisor: Are Series I savings bonds at 7.12% right for you?

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Are Series I savings bonds at 7.12% right for you?

Rates change with CPI every 6 months so you may be disappointed next May. However, this is a good way to ride the inflation wave if you believe inflation will be with us forever. You must use www.treasurydirect.gov to make an account and buy and sell ‘I’ bonds. If the proceeds are cashed in and then used to pay for qualified higher education expenses of the owner or a dependent in the calendar year of redemption, the applicable interest is tax-free. For now, this is a better deal than the bank CD offerings. There are some other rules so be sure to read the fine print at https://www.treasurydirect.gov/.

Another way we taxpayers make up for wealthy tax avoidance

Wyoming is another place for them to place their assets and never pay tax on the income. A Wyoming trust and layers of private companies with concealed ownership allow the world’s wealthy to move and spend money in extraordinary secrecy, protected by some of the strongest privacy laws in the country and, in some cases, without even the cursory oversight performed by regulators in other states. One analyst said, “Very few people know what you’re doing, basically.” In Wyoming, with the support of state lawmakers, the industry charged ahead, promoting a suite of financial arrangements to potential customers around the world. A former GOP member named Bunky said, “It’s friendly for business is the bottom line.” "We don't pay taxes. Only the little people pay taxes."

American Socialism: https://www.amazon.com/Americas-Socialism-Rich-little-people-pay/dp/1535218584/

More funds cut fees for more profits

Investors finally realize John Bogle was right: pay less and earn more: Fund Managers Slash Expense Ratios Before Year-End. Vanguard said its changes would save investors an estimated $18.9 million: save more earn more. Vanguard is owned by its investors not private firm. Schwab cut fees and added $37.8 billion in new assets to its ETFs over the first 11 months of 2021. Higher volume; higher profits. Taking the Costco strategy works for securities too. Since almost every stock picker and hedge fund operator can’t beat the market averages over time, investors realize that paying more for less is a waste of money. Paying for marketing hype does not help them. Vanguard has become the center of self-directed investing. Bogle eliminated the middleman because they were not needed. Amazon, Home Depot did the same. If you followed Warren Buffett’s advice and bet on the Vanguard 500 Fund, you have earned about 30% again this year. You paid only 0.04% to own America’s top providers. Like Buffett, you have beat the professionals. Since 2013, your portfolio is averaging over 15% per annum. There is no reason to make it complicated and expensive.

Pay less; earn more: https://www.amazon.com/Best-Robo-Advisor-Ultimate-Automatic-Management/dp/1537111957

Is claiming Social Security benefits now right for you?

Before you apply for your benefits, check on your account. Yes, you need to make an account first. See if the SSA has all your earnings listed. If there is an error, you may receive less than you deserve. You need at least 40 work credits to qualify for benefits. Working longer at higher wages, even after attaining your full retirement age, means you can increase your benefits. SSA recalculates your benefits each year and uses the highest incomes you earned. If you start benefits early, your lesser amount is locked in. For your exact full retirement age, see the “Age to Receive Full Social Security Benefits” chart. Waiting to claim the maximum benefits means a lifetime of the highest amount per month—for 30-40 years. But you may need to start benefits early due to loss of work, illness, lifestyle change and personal choice. Instead, you may qualify for Social Security benefits under your spouse’s work record even if you are divorced. Your may qualify for survivor’s benefit. Another planning issue is tax on your SS benefits. Some readers must pay tax on 85% of their benefits. Another issue: In the years before you reach full retirement age, your Social Security benefit is reduced by $1 for every $2 you earn over the annual limit. Another issue: benefits can never cover all your expenses. You must obtain an estimate of monthly income before you retire at https://www.ssa.gov/benefits/retirement. Plan ahead.

Maximize retirement income: https://www.amazon.com/Maximize-Social-Security-Benefits-Retirement/dp/1495439224

How much can you spend each month in retirement?

You know how much you will receive from Social Security, from a fixed pension, from a IRA via the IRS RMD table and a fixed annuity if you have one. What is your estimate? If you own rental real estate, equities and bonds in a cash account, bank and Treasury interest, you need to rely on projections. What are needed: sources that can be easily tapped to make up any unexpected expenses? Here are some readers’ suggestions. Home equity line of credit, Roth IRA assets, Savings bonds, collectibles and hard assets like land and gold coins. If you are lucky to have a family trust or legacy like Warren Buffett has set up for his family, your trustee can provide extra protection. Buffett has established in his will that most of his cash assets will generate gains via a low-cost Vanguard 500 Index Fund and a couple of years of income in a low-cost government bond fund.

Plan for no surprises: https://www.amazon.com/Warren-Buffetts-Vanguard-Funds-Retirement/dp/1496148592

How the rich beat inflation?

Very few assets grow high returns that can be guaranteed. Long-term stock market returns average 11% so they are the classic inflation hedge. I bonds were established to deal with some inflation, but don’t always over turn rising prices. Usually the rich include folks who are careful with their money—that is how they stay rich. Some are very good at economizing and dropping expenses they realize they can cut. Most rich people maximize legal tax deferral/free investment accounts. They may shop diligently for the best price on all big buys. Some look for alternatives: paying for a streaming service instead of the rising cable bill. I have found that most people are wasting at least $3,000 a year on insurance and financial fees. They simply did not cancel coverage and products they no longer use. Most wealthy people use many strategies to control what they spend, including higher prices for everything. In short, they are careful about money. Investing $3,000 a year can produce a $1-2 million nest egg which can easily conquer inflation.

https://www.amazon.com/New-American-Retirement-System-WealthReserve/dp/1461030072

Why your advisor/broker cannot beat the index

How many advisors picked the right money manager or fund manager to beat the simple market index 27%? You can count them on one hand and they may have just been lucky. When you play Powerball, someone may win but usually not you. We call this gambling. In financial services, they call it ‘sophisticated algorithms’ or ‘smart analyses.’ The firm/ manager is paid for a lucky bet. But remember the Oakland A’s story in the movie Moneyball. The success could only be achieved by thinking differently, re-inventing a player’s worth and focusing on value. Ultimately, it relied on facts and fundamentals and disregarded the unknowable future. Despite its reference to money management, such an approach has largely been ignored by traditional asset managers who continue to look for an “edge.” Overly confident in their ability to pick winners, these managers promote themselves as if they have some predictive ability and knowledge of the future. No one has that. They have greed. This outdated approach fuels a portfolio pricing risk that can significantly erode your returns over time. Best: avoid high costs; avoid losers. Like the A’s, we should focus on the numbers—the known information—to avoid strikeouts in the market. A walk equals a hit. It is time and compounding of returns that make us rich.

https://www.amazon.com/Money-Ball-Investing-Winning-unfair/dp/1548831409

Great gift idea: tax-free ‘Wealth Reserve’ for their future

Help you child or grandchild get off to a great start in life: open a tax-FREE account for a secure future. You can open an account with them for $1000 and as they make contributions from earnings and holiday gifts, you can show them how their money compounds at over 11% a year. There are no broker fees, charges, or commissions so every $1 works for their future benefit. They never have to pay Uncle Sam either. This is a legal IRS tax shelter. It is the ultimate wealth management system for their whole life. A ‘Wealth Reserve’ is the New American Retirement System: all earnings are tax FREE.

Get them started right: https://www.amazon.com/Give-your-child-leg-manage/dp/1096505355

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