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In case you want to know what's really been happening lately with the Fed and its latest round of "Quantitative Easing", check out this video that tells the whole story!
http://video.godlikeproductions.com/video/Quantitative_Easing_Explained?id=435bb317755ac0e1df7
Friday, November 19, 2010
Friday, September 17, 2010
Lessons about Retirement
Great new article written by Vanguard titled Lessons about retirement - learned in retirement. They interviewed Stan Hinden who used to work for The Washington Post but at age 83 has now been retired for a number of years. Some of the takeaways from this piece:
- Make sure you have a steady flow of income that will allow you to maintain a comfortable standard of living for the rest of your life.
- Maximize your Social Security by waiting to receive full benefits at age 70 versus taking early.
- Consider buying an annuity - can help you mitigate longevity risk and risk of long term market underperformance.
- Only take RMDs from your tax-deferred accounts if possible or else taxes will eat you alive.
- Health care will most likely cost a lot more than you expect.
- Prescription drug costs could be substantial if you are heavily dependent on them.
- Have a budget with a clear view of what your income/expenses are going to be.
- Find a well-qualified financial planner - don't do this yourself.
- Wait until age 70 at earliest before you retire.
- Have children/family nearby.
- Stay healthy well before you retire.
- Don't negelect your friends.
Stan makes lots of great points here! He has also written a book "How to Retire Happy: The 12 Most Important Decisions You Must Make Before You Retire" which should be work checking out as well.
Carleton
McHenry Capital, LLC helps Baby Boomers on the verge of retirement overcome all their financial fears, worries, and anxieties they have and associate with retirement. We help our clients get crystal clear about envisioning the kind of retirement they want, and we create a real strategy to help them accomplish this. We work with our clients in a Fee-Only, Fiduciary, Product Neutral approach to ensure their best interests always come first. For more information, please contact us at 888-968-9815 or visit us on the web at http://www.mchenrycapital.com/.
- Make sure you have a steady flow of income that will allow you to maintain a comfortable standard of living for the rest of your life.
- Maximize your Social Security by waiting to receive full benefits at age 70 versus taking early.
- Consider buying an annuity - can help you mitigate longevity risk and risk of long term market underperformance.
- Only take RMDs from your tax-deferred accounts if possible or else taxes will eat you alive.
- Health care will most likely cost a lot more than you expect.
- Prescription drug costs could be substantial if you are heavily dependent on them.
- Have a budget with a clear view of what your income/expenses are going to be.
- Find a well-qualified financial planner - don't do this yourself.
- Wait until age 70 at earliest before you retire.
- Have children/family nearby.
- Stay healthy well before you retire.
- Don't negelect your friends.
Stan makes lots of great points here! He has also written a book "How to Retire Happy: The 12 Most Important Decisions You Must Make Before You Retire" which should be work checking out as well.
Carleton
McHenry Capital, LLC helps Baby Boomers on the verge of retirement overcome all their financial fears, worries, and anxieties they have and associate with retirement. We help our clients get crystal clear about envisioning the kind of retirement they want, and we create a real strategy to help them accomplish this. We work with our clients in a Fee-Only, Fiduciary, Product Neutral approach to ensure their best interests always come first. For more information, please contact us at 888-968-9815 or visit us on the web at http://www.mchenrycapital.com/.
Monday, May 24, 2010
Employer Tax Breaks for Your Kids?
Good article in the WSJ over the weekend which talks about getting tax incentives for employers who hire their relatives. The article is Hire Your Kids, Get a Tax Break, by Laura Saunders.
Congress this past March passed the HIRE (Hiring Incentives to Restore Employment) Act. It gives employers incentive to hire and not have to pay FICA taxes on the worker's wages from 3/19 until the end of 2010. It also gives the employer a dollar for dollar tax credit up to $1,000 for 2011 if the employee stays with the company and is on the payroll next year.
The restrictions are pretty lax in that qualified employees are considered those who have not worked for more than 40 hours in the prior 60 days before being hired. No restriction on size or type of company and no limit to the number of new hires. The act also states firms can rehire laid-off workers with no set period that this rehire has to work for the firm again. Eligible hires can be either full or part time but they can't be independent contractors. These new employees are still responsible for their own payroll taxes and Medicare. They must also provide the employer with a form certifying they meet all of the conditions as outlined above.
How does HIRE apply to relatives such as your kids or your spouse? This is where there are restrictions based on the type of business entity you have:
- Sole Proprietor - you can claim HIRE benefits on your spouse but no other relatives.
- Partnerships (LLC, LLP) - if partners are husband/wife only - you can't get benefits from hiring relatives. You can't get the benefit either if you hire a relative who has more than a 50% interest in the partnership. If the partners are completely unrelated, full HIRE benefits apply to any relative hired.
- Subchapter S and C corporations - no benefits for either directly or indirectly greater than 50% shareholders. Any related owners must add their interests together and if greater than 50% no benefits allowed for these owners.
If you are a small business owner, you should consider taking advantage of these HIRE benefits. Put your kids to work for you and get a tax break for yourself and allow your kids the ability to earn some income this summer. If you are really smart (and lucky), you should get your kids to save their earned income and contribute to a Roth IRA to be invested for their future.
Take advantage of the HIRE Act!
Carleton
Congress this past March passed the HIRE (Hiring Incentives to Restore Employment) Act. It gives employers incentive to hire and not have to pay FICA taxes on the worker's wages from 3/19 until the end of 2010. It also gives the employer a dollar for dollar tax credit up to $1,000 for 2011 if the employee stays with the company and is on the payroll next year.
The restrictions are pretty lax in that qualified employees are considered those who have not worked for more than 40 hours in the prior 60 days before being hired. No restriction on size or type of company and no limit to the number of new hires. The act also states firms can rehire laid-off workers with no set period that this rehire has to work for the firm again. Eligible hires can be either full or part time but they can't be independent contractors. These new employees are still responsible for their own payroll taxes and Medicare. They must also provide the employer with a form certifying they meet all of the conditions as outlined above.
How does HIRE apply to relatives such as your kids or your spouse? This is where there are restrictions based on the type of business entity you have:
- Sole Proprietor - you can claim HIRE benefits on your spouse but no other relatives.
- Partnerships (LLC, LLP) - if partners are husband/wife only - you can't get benefits from hiring relatives. You can't get the benefit either if you hire a relative who has more than a 50% interest in the partnership. If the partners are completely unrelated, full HIRE benefits apply to any relative hired.
- Subchapter S and C corporations - no benefits for either directly or indirectly greater than 50% shareholders. Any related owners must add their interests together and if greater than 50% no benefits allowed for these owners.
If you are a small business owner, you should consider taking advantage of these HIRE benefits. Put your kids to work for you and get a tax break for yourself and allow your kids the ability to earn some income this summer. If you are really smart (and lucky), you should get your kids to save their earned income and contribute to a Roth IRA to be invested for their future.
Take advantage of the HIRE Act!
Carleton
Thursday, April 15, 2010
5 Traits to Seek for Financial Advice
I get asked on a fairly regular basis how does one go about finding good, quality financial advice? This is a tough question for me to answer without coming across as sounding too biased or too self serving. However I truly believe in my personal opinion the best advisors out there operate as such:
1.) Fee-Only - what this means is the advisor is solely compensated by fees paid directly to him by the client. The advisor does not earn a commission for buying/selling investments for the client. The advisor does not get paid a % up front for buying a particular mutual fund for the client. The advisor does not get financial kickbacks from a broker-dealer or mutual fund company for doing business with them. The advisor does not collect referral fees for sending the client to another service provider. The only revenue generated to the advisor is from the fees the client pays him or her for providing advice to them.
2.) Certified Financial Planner (CFP) - the advisor should have CFP after their name. This designation is given by the Certified Financial Planner Board of Standards to those who have successfully passed a two day, 10 hour exam that covers a wide range of topics such as financial planning, insurance, retirement planning, investments, estate planning, and tax. I know from personal experience that this is a very challenging exam that tests your ability to understand all of these concepts and how they interrelate with one another as it pertains to a person's total financial picture. Being able to use this designation after passing the exam also requires having at least 3 years of relevant work experience. Working with a CFP practitioner should be essential for anyone who is serious about having someone look over their complete financial affairs.
3.) Experience - finding someone who has at least 10 years of experience in the field will help you weed out career changers and newcomers who have not been through a number of different market cycles. This is very important because it gives the advisor a better historical perspective especially when things seem really bad like what has happened recently. Even though we preach to our clients that we can help them take emotion out of the game, newer advisors have never been through the emotional roller coaster the markets can bring. Many prognosticators expect this roller coaster ride to get even bumpier going forward into the future.
4.) Fiduciary - in this day and age of Bernie Madoff, entrusting someone with all of your wealth can be a very scary undertaking. You need to find someone that you can put all of your faith in that they will do the right thing. But even this may not be enough as many advisors on the surface appear to be trustworthy people. Find someone who is willing to go beyond this and take on the added responsibility of being a Fiduciary. Check the wiki link out for what Fiduciary means by clicking here. The key part of this definition is to act at all times for the sole benefit and interest of another. Wouldn't you want your advisor to be a Fiduciary?
5.) Independent - the advisor is not tied to a broker-dealer which limits him to certain investment products to work with and tells him how he should operate his practice. Instead the advisor can work with any brokerage firm he chooses and pick and choose amongst any investment out there in the universe. Many of the larger brokerage firms have either gone under or merged with others in the last few years. A lot of these firms have been in the news for a lot of negative things which has caused quite a public backlash against them. You now see more and more brokers breaking away from these firms and starting their own companies as Fee-Only advisors. When you think about it, at the end of the day, the larger publicly traded firms have to do what's best for their shareholders which may or may not be in the complete best interest of the retail client. Look for someone who is totally independent and operates on their own as a Registered Investment Advisor (RIA).
If you are looking for someone to help you, I highly recommend finding someone who has these 5 traits. There are never any guarantees but working with someone who possesses these qualities should give you a comfort level that you've found someone competent, qualified, objective and who is truly looking out for your best interest at all times. Good luck!
Carleton
1.) Fee-Only - what this means is the advisor is solely compensated by fees paid directly to him by the client. The advisor does not earn a commission for buying/selling investments for the client. The advisor does not get paid a % up front for buying a particular mutual fund for the client. The advisor does not get financial kickbacks from a broker-dealer or mutual fund company for doing business with them. The advisor does not collect referral fees for sending the client to another service provider. The only revenue generated to the advisor is from the fees the client pays him or her for providing advice to them.
2.) Certified Financial Planner (CFP) - the advisor should have CFP after their name. This designation is given by the Certified Financial Planner Board of Standards to those who have successfully passed a two day, 10 hour exam that covers a wide range of topics such as financial planning, insurance, retirement planning, investments, estate planning, and tax. I know from personal experience that this is a very challenging exam that tests your ability to understand all of these concepts and how they interrelate with one another as it pertains to a person's total financial picture. Being able to use this designation after passing the exam also requires having at least 3 years of relevant work experience. Working with a CFP practitioner should be essential for anyone who is serious about having someone look over their complete financial affairs.
3.) Experience - finding someone who has at least 10 years of experience in the field will help you weed out career changers and newcomers who have not been through a number of different market cycles. This is very important because it gives the advisor a better historical perspective especially when things seem really bad like what has happened recently. Even though we preach to our clients that we can help them take emotion out of the game, newer advisors have never been through the emotional roller coaster the markets can bring. Many prognosticators expect this roller coaster ride to get even bumpier going forward into the future.
4.) Fiduciary - in this day and age of Bernie Madoff, entrusting someone with all of your wealth can be a very scary undertaking. You need to find someone that you can put all of your faith in that they will do the right thing. But even this may not be enough as many advisors on the surface appear to be trustworthy people. Find someone who is willing to go beyond this and take on the added responsibility of being a Fiduciary. Check the wiki link out for what Fiduciary means by clicking here. The key part of this definition is to act at all times for the sole benefit and interest of another. Wouldn't you want your advisor to be a Fiduciary?
5.) Independent - the advisor is not tied to a broker-dealer which limits him to certain investment products to work with and tells him how he should operate his practice. Instead the advisor can work with any brokerage firm he chooses and pick and choose amongst any investment out there in the universe. Many of the larger brokerage firms have either gone under or merged with others in the last few years. A lot of these firms have been in the news for a lot of negative things which has caused quite a public backlash against them. You now see more and more brokers breaking away from these firms and starting their own companies as Fee-Only advisors. When you think about it, at the end of the day, the larger publicly traded firms have to do what's best for their shareholders which may or may not be in the complete best interest of the retail client. Look for someone who is totally independent and operates on their own as a Registered Investment Advisor (RIA).
If you are looking for someone to help you, I highly recommend finding someone who has these 5 traits. There are never any guarantees but working with someone who possesses these qualities should give you a comfort level that you've found someone competent, qualified, objective and who is truly looking out for your best interest at all times. Good luck!
Carleton
Tuesday, March 30, 2010
15 Money Rules
There is a great article written by Jeff D. Opdyke in the WSJ this past Sunday called The 15 Money Rules Kids Should Learn. It gives a list of 15 rules kids should live by and you as a parent should teach them.
An interesting statistic that is pointed out is only 10% of 12th graders could answer correctly basic personal finance questions asked by the nonprofit JumpStart Coalition for Personal Finance. This seems to coincide with everything I've read on teenagers and finance. As mentioned in this article, most don't even know how to balance their own checkbook. Back when I was that age, there was very little in terms of financial education for kids. Now there are plenty of resources available to help your kids better understand the basics of personal finance.
Even though there are more resources available now than ever before, don't assume your kids are learning this on their own. You need to educate them early on yourself and instill in them the confidence to understand these principles. Jeff makes this same point which I believe is very important especially since you will have the biggest financial influence and impact on your children at a very young age.
As the list states - Teach Your Children Well.
Carleton
An interesting statistic that is pointed out is only 10% of 12th graders could answer correctly basic personal finance questions asked by the nonprofit JumpStart Coalition for Personal Finance. This seems to coincide with everything I've read on teenagers and finance. As mentioned in this article, most don't even know how to balance their own checkbook. Back when I was that age, there was very little in terms of financial education for kids. Now there are plenty of resources available to help your kids better understand the basics of personal finance.
Even though there are more resources available now than ever before, don't assume your kids are learning this on their own. You need to educate them early on yourself and instill in them the confidence to understand these principles. Jeff makes this same point which I believe is very important especially since you will have the biggest financial influence and impact on your children at a very young age.
As the list states - Teach Your Children Well.
Carleton
Wednesday, February 24, 2010
Dangerous Daily Aspirin?
There is an article in the WSJ about the dangers of taking a daily aspirin. It states that many people have been following the guidelines to take a low dose or "baby" aspirin to reduce the chance of heart attack or stroke. It cites from IMS Health that 44 million packages of low dose aspirin were purchased over the previous 12 months ending this past September - a 12% increase from 2005.
New research suggests normal, healthy adults may be doing more harm than good by following this regimen. The risks are the side effects caused by aspirin which can cause a depletion of the stomach's protective lining which can lead to gastrointestinal bleeding, bleeding ulcers, and bleeding of the brain. There is also controversy over what is right for each sex.
What guidelines are you following? According to the U.S. Preventive Services Task Force, men age 45 to 79 with elevated heart-disease risk due to high cholesterol levels and who are smokers, should take a daily aspirin. Women, age 55 to 79 who are in danger of an ischemic stroke due to high blood pressure and diabetes, should take a daily aspirin. The best advice in my opinion is always to talk to your own doctor to determine what is right for you!
Carleton
McHenry Capital, LLC helps Baby Boomers on the verge of retirement overcome all their financial fears, worries, and anxieties they have and associate with retirement. We help our clients get crystal clear about envisioning the kind of retirement they want, and we create a real strategy to help them accomplish this. We work with our clients in a Fee-Only, Fiduciary, Product Neutral approach to ensure their best interests always come first. For more information, please contact us at 888-968-9815 or visit us on the web at www.mchenrycapital.com.
New research suggests normal, healthy adults may be doing more harm than good by following this regimen. The risks are the side effects caused by aspirin which can cause a depletion of the stomach's protective lining which can lead to gastrointestinal bleeding, bleeding ulcers, and bleeding of the brain. There is also controversy over what is right for each sex.
What guidelines are you following? According to the U.S. Preventive Services Task Force, men age 45 to 79 with elevated heart-disease risk due to high cholesterol levels and who are smokers, should take a daily aspirin. Women, age 55 to 79 who are in danger of an ischemic stroke due to high blood pressure and diabetes, should take a daily aspirin. The best advice in my opinion is always to talk to your own doctor to determine what is right for you!
Carleton
McHenry Capital, LLC helps Baby Boomers on the verge of retirement overcome all their financial fears, worries, and anxieties they have and associate with retirement. We help our clients get crystal clear about envisioning the kind of retirement they want, and we create a real strategy to help them accomplish this. We work with our clients in a Fee-Only, Fiduciary, Product Neutral approach to ensure their best interests always come first. For more information, please contact us at 888-968-9815 or visit us on the web at www.mchenrycapital.com.
Friday, January 29, 2010
Welcome to the iPad
In case you haven't heard, Apple announced its latest toy this week called the iPad. This device is 1/2 inch think and weighs 1 1/2 pounds. It has a 9.7 inch touch screen that works just like the iPhone.
After quite a lot of buildup and secrecy over this announcement, many people seemed to be disappointed over this new device from what I can tell. A lot of people are calling it a larger version of the iPod Touch.
I'm not so sure that this isn't another home run for Apple. The real success of Apple's turnaround years ago was the iPod. I can remember when I got my first iPod back in 2004 and was so blown away that I could put all of my music (which is a lot) on this one little device. It seemed like within a year all my friends had one and even the Baby Boomer generation started hopping on board!
Not long after the iPod, Apple introduced the iPhone. The iPhone has revolutionized the smart phone industry and created an entirely new industry with iPhone application software that never even existed before.
I sense the iPad is going to be more successful than many people think. Although there are already other devices out there such as Netbooks and Amazon's Kindle Book Reader, none of them have the captive audience that Apple has.
I think the real question will be can this product become another essential toy that we can't live without like our iPods and iPhones. Only time will tell.
After quite a lot of buildup and secrecy over this announcement, many people seemed to be disappointed over this new device from what I can tell. A lot of people are calling it a larger version of the iPod Touch.
I'm not so sure that this isn't another home run for Apple. The real success of Apple's turnaround years ago was the iPod. I can remember when I got my first iPod back in 2004 and was so blown away that I could put all of my music (which is a lot) on this one little device. It seemed like within a year all my friends had one and even the Baby Boomer generation started hopping on board!
Not long after the iPod, Apple introduced the iPhone. The iPhone has revolutionized the smart phone industry and created an entirely new industry with iPhone application software that never even existed before.
I sense the iPad is going to be more successful than many people think. Although there are already other devices out there such as Netbooks and Amazon's Kindle Book Reader, none of them have the captive audience that Apple has.
I think the real question will be can this product become another essential toy that we can't live without like our iPods and iPhones. Only time will tell.
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