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IRS 2018 Retirement Plan Changes

1/31/2018

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Here’s a rundown of the changes that will apply for 2018 -

401(k), 403(b), most 457 Plans, and the Federal Thrift Savings Plan (TSP)
The annual contribution for employer-sponsored plans is increasing from $18,000 in 2017, to $18,500 in 2018. The catch-up provision for taxpayers 50 and older remains unchanged at $6,000. The total maximum contribution by older taxpayers effectively increases the $24,500.

Changes with IRA plans
The basic contribution of $5,500 is not changing, nor is the catch-up provision of $1,000 for taxpayers age 50 and older ($6,500 combined maximum). Contributions to a SIMPLE IRA also remain unchanged, at $12,500.

But there have been changes to the income limits for Roth IRA contributions, and for tax-deductible traditional IRA contributions, for those who are already covered by an employer-sponsored retirement plan.

For a traditional IRA, if you’re covered by an employer plan, the income limits are as follows:
  • Single taxpayers—Contributions are fully deductible up to an income of $63,000. The contribution deduction is phased out between $63,000 and $73,000, after which no deduction is permitted. The old limits were between $62,000 and $72,000.
  • Married couples filing jointly—Contributions are fully deductible up to an income of $101,000. The contribution deduction is phased out between $101,000 and $121,000, after which no deduction is permitted. The old limits were $99,000 and $119,000.
  • Married couples filing separately—Contributions are only partially deductible with an income between $0 and $10,000. This is unchanged from 2017.
  • If you’re not covered by an employer-sponsored plan, but you’re married to a spouse who is, your IRA contribution is fully deductible up to an income of $189,000. The deduction phases out between $189,000 and $199,000. The old limits were $186,000 and $196,000.

With a traditional IRA, you always have the option to make a nondeductible contribution if your income exceeds IRS limits.

Roth IRA income limits
Just as a reminder, if you exceed IRS income limits, you’re not permitted to make a contribution to a Roth IRA plan at all.
  • For single taxpayers and heads of household, you can make a full contribution with an income up to $120,000. A partial contribution is permitted with an income between $120,000 and $135,000. The old limits were between $118,000 and $133,000.
  • For married couples filing jointly, a Roth IRA contribution is fully permitted up to an income of $189,000. A partial contribution is permitted with an income between $189,000 and $199,000. The old limits were between $186,000 and $196,000.
  • For married couples filing separately, a partial contribution is permitted with an income between $0 and $10,000. This is unchanged from 2017.

Retirement savings contribution credit
Referred to simply as the “Savers Credit”, it’s an opportunity for low to moderate income taxpayers the claimant tax a credit for making retirement contributions. The credit can be as much is $1,000 for single filers, and up to $2,000 for married filing jointly. There are income limits to qualify for the credit.
  • The income limit is $63,000 for married couples filing jointly, which is up from $62,000 in 2017.
  • For heads of household, the income limit is $47,250, up from $46,500 in 2017.
  • For single filers and married taxpayers filing separately, the income limit is $31,500, up from $31,000 in 2017.

Changes in the maximum retirement contributions to all plans
The IRS imposes a maximum on the amount of contributions that you can make to all retirement plans. That includes the combination of IRAs and multiple employer-sponsored plans. The contribution limit is per individual, and not for a married couple filing jointly.

For 2017, the maximum contribution was $54,000. In 2018, it is increasing to $55,000.

Annual compensation maximum limits are increased from 270,000 in 2017, to $275,000 for 2018 (20% X $275,000 = the $55,000 maximum contributions to all plans).

The maximum contribution level for taxpayers age 50 and older increases from $60,000 in 2017, to $61,000 in 2018. This is comprised of the base maximum contribution amount of $55,000, plus the catch-up contribution of $6,000.

The dollar limitation concerning the definition of “key employees” in a top-heavy plan is unchanged at $175,000.

Standard deductions and personal exemptions
These have nothing to do with retirement plans, but we are including the changes since they apply to virtually all taxpayers—and they’re probably what you’ve heard most about when it comes to the new tax bill.

For 2018, the standard deduction for those who are married filing jointly has increased to $13,000. That’s a $300 jump from the $12,700 permitted in 2017. Single taxpayers and those who are married filing separately will see their standard deduction increase to $6,500, up $150 from $6,350 in 2017. The deduction for heads of household will be $9,550.

The personal exemption is increasing from $4,050 in 2017, to $4,150 in 2018. However, personal exemptions are phased out on higher incomes. For individuals, it begins to phase out with an income of $266,700, and is lost completely at $389,200. For married couples filing jointly, the phaseout begins at $320,000, and is gone with an income of $442,500.

That’s where we stand as we roll into 2018. But as has been the case in previous years, additional changes can’t be entirely ruled out.

Summary
The retirement plan changes for 2018 are mostly positive. But it’s important to know what income limits have changed and how much you can deduct on your taxes this year.

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5 Questions to Ask If You Are Ready for Retirement - Question 4

1/30/2018

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We discussed the question of which retirement income account to tap first last time, now question 4 -

When to take social security? 

This is a critical question and one that is (rightly) receiving more attention each year in the financial press.  Social Security benefits can be taken as early as age 62.  Waiting until your full retirement age of 66 and two months, (67 if born in 1960 or later) results in a benefit that is about 30% percent higher.  Waiting until age 70 adds roughly another 32% to the benefit.  Not only are benefits higher but any cost of living increases will be higher as they are based on the higher benefit amounts. 

For those who are working, any income over $16,920 (for 2018) will result in a $1 reduction in your benefit for every $2 in income over that amount. This restriction goes away once you reach the FRA age.

Additionally, there are various claiming strategies for married couples that can work well, depending on your situation, for example, this article discusses 4 unusual ways to boost social security benefits. 

Please see question 5 in our next blog post.
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5 Questions to Ask If You Are Ready for Retirement - Question 3

1/29/2018

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We discussed how to fund your retirement in last blog post, now the third question -

Which retirement accounts will you tap first? 

If you have multiple accounts, this is a critical question to address.  The answer may also change over time as your situation changes.  Some people might automatically tap the accounts with the lowest tax bill first.  However, in terms of overall long-term retirement planning, this might not be the optimal answer.


For people who are younger than the age where required minimum distributions kick in (age 70½) it may make sense, for example, to tap tax-deferred retirement accounts at least to some extent.  This is especially true if your incomes are relatively low and you have room for more income within your current tax bracket.  This will also serve to reduce your RMDs down the road, which is helpful if you really don’t need this income.
Things can change year to year, for example, if you have high medical expenses that allow for part of them to be tax deductible.  You may consider taking more from your tax-deferred accounts as the medical deduction can offset the tax due on these distributions.

We will discuss the fourth question next time.



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5 Questions to Ask If You Are Ready for Retirement - Question 2

1/28/2018

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In our last blog post, we discussed the first question everyone needs to ask first when prepare for retirement - what does your retirement lifestyle look like?  Now question 2 -

How will you fund retirement? 

Below is a list of common financial resources available to fund your retirement:
  • Taxable investment accounts
  • Retirement accounts such as IRAs, 401(k) plans, 403(b)s and other workplace retirement plans
  • Annuities
  • Pensions including those from old employers
  • Social Security
  • Stock options or restricted stock units from their employer
  • Interest in a business
There certainly could be other financial assets available for retirement as well.  The key here is to determine what type of ongoing retirement cash flow your various financial assets will translate into. This is also a good time to run financial planning projections to determine how much income can be supported and for how long.  Projections out to at least age 100 are certainly wise given increases in life expectancy.
Ideally, these questions should begin to be addressed at least 10 years prior to retirement and then revisited periodically as retirement gets closer.  If retirement cash cannot support the desired lifestyle then choices have to be made.  These might include working a bit longer, working part-time in retirement, reducing anticipated expenses and saving more in the remaining years until retirement.  The longer the time until retirement, the more time you will have to make any required adjustments to your financial plan.

Next blog post will discuss the third question.


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5 Questions to Ask If You Are Ready for Retirement - Question 1

1/27/2018

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We will discuss 5 questions and answers to help you assess if you are ready for retirement.  Now, question 1 - 

What does your ideal retirement lifestyle look like? 

This is a good time to dream big and visualize what you would like be doing once you retire.  This could include travel, moving to a different location, doing charity and community service work or any number of other activities, or maybe even quitting your job and starting a business in an area you are passionate about.

It is important to understand how much your desired retirement lifestyle will cost.  While there are rules of thumb regarding the percentage of your pre-retirement income, everyone is different. Further, this spending is not linear.  Often, the earlier years of retirement tend to be more active in terms of things like travel, but these types of activities might slow down a bit as people age.  The best approach is to do a budget factoring in things like where you will live, will you be downsizing (or upsizing) your house, your activities and other factors.  In short, you need to prepare a retirement budget. 

A good article from Investopedia discusses 6 phases of retirement life.

We will discuss the second question in next blog post.




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2018 Retirement Plan Contribution Limits

1/26/2018

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Each year the IRS makes cost of living adjustments to many of the limits on benefits from - and contributions to - qualified and non-qualified retirement plans. Here are the new limits for 2018:
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Can I Trust the Debt-Settlement Firms' Claims?

1/25/2018

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Q. Can I trust the debt-settlement firms who claim can fix my credit reports?

A.
 The truth is that no person or company can remove accurate entries from your credit report.

The Fair Credit Reporting Act says that information about a delinquent account (late payments, nonpayments) can remain on your file with the credit reporting agencies for seven years, starting 180 days after the account becomes delinquent.


Many so-called debt-settlement firms leave consumers worse off than when they came to the firms for help.  According to the Department of Justice, only one person in 10 who goes to such companies emerges debt-free.  The rest wind up deeper in debt and with worse credit scores than they had, because the companies charge them high fees to set up an account, then monthly fees, and sometimes the companies take some of the money that was supposed to be used to repay the debt.

Some of these outfits tell you to stop paying your bills, claiming that companies won’t negotiate with you while you’re still making payments.  Don’t believe those statements. Not making payments will only cause you to incur more fees, higher interest rates — and lawsuits.

To find a list of legitimate, government-approved credit counseling organizations, visit usdoj.gov/ust.
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Can Bankruptcy Discharge All Debts?

1/24/2018

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Q. Can bankruptcy discharge all debts?

A. 
That’s not true. 

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 requires one to complete a counseling course before filing for bankruptcy. 

​
A number of debts don’t go away through bankruptcy, such as:
  • Back taxes less than three years old
  • Student loans
  • Child support and debts incurred through fraud.


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How to Take Advantage of the Falling US Dollar in Stock Market?

1/23/2018

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Q. If I want to bet the continued fall of US dollar, how should I adjust my investment?

A.
 In the current environment, investing in foreign stocks have two major benefits:
1) Foreign stocks are less expensive than stocks n the U.S.
2) Foreign stocks benefit from rising foreign currencies.

The chart below illustrates such benefits:
  • The blue line is a ratio of Germany iShares (EWG) divided by the DAX Index. 
  • The red line is a ratio of UK iShares (EWU) divided by the FTSE Index. 
  • The green area is the US dollar.
​
Since the start of 2017, Germany iShares outpaced the DAX by 20%. That was mainly due to a 16% gain in the euro. UK iShares outpaced the FTSE by 18%.  That was largely due to a 12% jump in the pound.  And that was mainly due to a falling dollar.  Which demonstrates that foreign stock ETFs are one of the best ways to benefit from rising foreign stocks and a falling dollar.

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3 Methods to Crack Down Robocalls

1/22/2018

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Q. How can I crack down robocalls?

A. 
Robocalls have been illegal since 2009 (unless the telemarketer has your prior consent).  In mid-2017, federal agencies announced they are ramping up enforcement by fining violators and encouraging blocking technologies.  What should you do if you want to help put an end to this nuisance?

  1. Don’t answer calls when you don’t recognize the phone number. If you pick up an unwanted robocall, just hang up. Don’t answer “yes” or “no” questions, provide personal information, or press a number to “opt out.” Responding to the call in any way verifies that it has reached a real number and could prompt additional calls.
  2. Look into robocall blocking solutions that may be offered by your phone service provider. If they’re available, you may need to follow specific instructions to “opt in.” Otherwise, consider a mobile app or cloud-based service designed to block robocalls; some of them are free or cost just a few dollars.
  3. Consider registering your phone number on the National Do Not Call Registry. While taking this step can help mitigate the amount of robocalls you receive, it’s only a partial solution to the problem.  The Federal Trade Commission advises consumers whose numbers are on the registry but still receive unwanted calls to report robocall violations at complaints.donotcall.gov. The phone numbers provided by consumers will be released each day to companies that are working on call-blocking technologies, which largely depend on “blacklists” with numbers associated with multiple complaints.
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3 Portfolio Risk Related Questions Every Investor Should Ask

1/21/2018

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Q. What questions I need to ask in order to assess my portfolio's ability to endure market risks?

A.
Here are 3 questions that may help you evaluate your personal relationship with risk.

How much risk can you afford?
Your capacity for risk generally depends on your current financial position (income, assets, and expenses) as well as your age, health, future earning potential, and time horizon. Your time horizon is the length of time before you expect to tap your investment assets for specific financial goals. The more time you have to keep the money invested, the more likely it is that you can ride out the volatility associated with riskier investments. An aggressive risk profile may be appropriate if you’re investing for a retirement that is many years away. However, investing for a teenager’s upcoming college education may call for a conservative approach.

How much risk may be needed to meet your goals?
lf you know how much money you have to invest and can estimate how much you will need in the future, then it’s possible to calculate a “required return” (and a corresponding level of risk) for your investments. Older retirees who have sufficient income and assets to cover expenses for the rest of their lives may not need to expose their savings to risk. On the other hand, some risk-averse individuals may need to invest more aggressively to accumulate enough money for retirement and offset another risk: that inflation could erode the purchasing power of their assets over the long term.

How much risk are you comfortable taking?
Some people seem to be born risk-takers, whereas others are cautious by nature, but an investor’s true psychological risk tolerance can be difficult to assess. Some people who describe their personality a certain way on a questionnaire may act differently when they are tested by real events.

Moreover, an investor’s attitude toward risk can change over time, with experience and age. New investors may be more fearful of potential losses. Investors who have experienced the cyclical and ever-changing nature of the economy and investment performance may be more comfortable with short-term market swings.
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3 Ways to Stretch Your Retirement Savings

1/21/2018

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The video below from Kiplinger is a few years old but all 3 ideas still apply today -
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How to Maximize Social Security Survivor Benefits - the Factors

1/20/2018

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In our last blogpost, we discussed the basics of social security benefits and survivor benefits.  Now we will lay out all the factors one needs to consider before coming up with the optimal social security benefits claiming strategy.

Factors to Consider
First, earnings - for a couple, who is a higher earner and who is a lower earner, in terms of social security benefits.

Second, age - who is older and who is younger.

Third, death age - who dies first at what age.  To make it more complicated - did the higher earner die first?

Fourth, first claiming age - should the survivor claim right away (assume reaches age 60), or wait later?  If wait, should wait till age 66 or age 70?

Fifth, when to switch - if the survivor claims survivor benefits as soon as possible, when should he or she switches to claim her own benefits, at age 66 or wait till age 70?

In short, there are many factors in the consideration, there is not a cookie cutter answer.  One thing is for sure, many survivors could be better off by claiming a survivor benefits first, then switch to their own benefits at age 70.
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How to Maximize Social Security Survivor Benefits - the Basics

1/19/2018

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Q. When a higher earner dies first, what's the best strategy for the surviving spouse to claim social security benefits?

A. 
If a higher-earnings spouse dies first, for the survivor, should he or she claim the social security benefits based on his or her own earnings or based on the survivor benefits?  This could be a quite complicated questions because there are many factors to consider.  But we will review the basics of social security survivor benefits first below.

Basics of Survivor Benefits
Anyone's full social security benefits start at age 66, however, you can collect from age 62, but the benefit amount will be permanently reduced by a certain percentage for each month you claim before age 66.  For example, you can collect about 75% of your full benefit at age 62.  For each month you delay after age 66, your benefit will increase by a certain percentage - up to 8% - until age 70.

A widow or widower is entitled to a survivor benefit that is equal to 100% of the deceased spouse's benefit, as long as the survivor waits until full retirement age to collect.  However, the survivor can claim a survivor benefit as early as age 60, although the benefit will be reduced.

In our next blogpost, we will analyze the factors that impact the surviving spouse's benefit claim decision.
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4 Ways to Fight Inflation: Part B - 4 Inflation Hedging Tools

1/18/2018

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In our last blogpost, we discussed why inflation is something most investors should worry about, now we will discuss 4 inflation hedging tools -

1. Stocks
Stocks in theory could grow with inflation because the companies could raise prices, but in order to effectively use stocks to hedge against inflation, you need a portfolio of Large and Small caps stocks, and U.S. and International stocks.  This allocation is especially important for retirees' portfolios because they tend to concentrate on large U.S. stocks only.

2. TIPS
Treasury Inflation Protected Securities (TIPS) have principals tied to inflation, therefore is a good inflation hedging tool.  However, TIPS are not perfect, because they are vulnerable to rising rates - when rates rise, bond prices fall.  To minimize such risk, choose a short-term TIPS fund such as Vanguard Short Term Inflation Protected Securities (VTIP).

3. Commodities
Commodities are good inflation hedgers because they tend to deliver superior returns in a high inflation environment.  Choose a good commodities fund, for example, the Harbor Commodity Real Return Strategy fund (HACMX) offers both commodity and TIPS exposure.  However, commodities are only effective for commodity-driven inflations.

4. A Balanced Fund
You can also choose a multi-asset inflation fighting fund, such as the Pimco All Asset (PASDX) which holds a mix of commodities, emerging markets stocks, and other assets.
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4 Ways to Fight Inflation: Part A - Why Be Worried About Inflation

1/17/2018

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Q. I am about to retire, how to prepare my retirement investment against the threat of inflation?

A.
Inflation is a risk that most retirees should be worried about, but if the inflation rate has been pretty low, why worry about it now?

The reason is, despite the actual level of inflation might be low - for example, in the upper 1% or low 2%, what's the most damaging for investment portfolio is the surprising uptick of inflation, because stocks and bonds have factored in low interest rates, but if there is a surprising uptick of inflation, the Fed is going to adjust the interest rates more aggressively, which will drive down both stocks and bonds' prices.

How do you hedge against inflation?  We will discuss 4 tools in our next blog post. 
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How To Determine If Fixed Annuity Is Right For Me?

1/16/2018

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Q. What are the benefits of fixed annuities?

A.
Managing taxes, outpacing inflation, and securing stable income are the key considerations as you plan for financial security in retirement.  A fixed annuity may help address these challenges, see the table below that summarizes the benefits of fixed annuity.

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The Best Month To Buy Things

1/15/2018

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​Here is a list of the best month to buy things, put on your calendar and enjoy the savings -

January
Bedding
Carpeting
Cds and Dvds
Computer monitors *
Cookware
Houses and condos *
Furniture *
Linens
Swimwear
Toys
Exercise equipment like treadmills
Tax filing software
Winter clothes*

February
Electronics
Humidifiers
TVs *
Home theaters

March
Digital cameras
Small electronics
Smart phones

April
Computers *
Lawnmowers
Spring clothing
Jewelry
Vacuum cleaners *

May
Athletic apparel and shoes
Camping and outdoor gear
Carpeting*
Cordless phones
Mattresses
Small consumer electronics *
Refrigerators

June
Camcorders*
Gym memberships
Indoor furniture
Pots, pans, and dish ware
Summer sports gear

July
Furniture
Swimwear
Suits
Tools

August
Air conditioners
School supplies*
Dehumidifiers
Lawnmowers*
Outdoor furniture
Snow blowers*
Swimwear

September
Big appliances (except for refrigerators) *
Bikes*
Cars*
Gas grills *
Outdoor perennial plants*
Thanksgiving travel tickets
Wine*

October
Air conditioners
Camcorders*
Christmas travel tickets
Digital cameras*
Toys*
Wedding supplies and services requiring vendors*

November
Baby goods
Fresh Christmas trees
Recreational vehicles
GPS navigators
TVs*

December
Home appliances
iTunes gift cards
Tools
Holiday decorations (after Christmas)*

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How Not To Become A Financial Scam's Victim?

1/14/2018

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Q. How to invest safely and not to become a victim of financial scams?

A.
Below are 4 things every investor should do in order not to fall victim of financial scams -

1. Recognize the art of scam
Even you are financially sophisticated, you could still fall victim of financial scams, because investment fraud is a crime of persuasion.  Be wary of high-yield and low-risk offers, as well as anything with a guarantee, question anyone who claims to have a special connection, experience, or affiliation to gain credibility.

2. Resist pressure
Do not be swayed by the claims that some celebrities or your friends are already on board, or take the small favors such as a free meal, lower commission, and walk away when hear the product has limited support or an imminent deadline, as con artists create such a false sense of urgency.

3. Do a background check
You can find registered securities firms and brokers, employment history, licensing status, criminal events, investor complaints, and pending investigations at https://brokercheck.finra.org

You can check an adviser at https://adviserinfo.sec.gov and https://www.nasaa.org, check out commodities, futures, and foreign exchange dealers at http://www.nfa.futures.org/basicnet

4. Research the pitch
You can use SEC's Edgar database to research securities https://www.sec.gov/edgar.shtml 

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2000 Years of Economic History in One Chart

1/13/2018

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The following chart tells the story of how global economy evolves for each country from 1 AD until now,  it compares economic productivity over a mind-boggling time period.
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Does Vanguard Offer Actively Managed Funds?

1/12/2018

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Q. Does Vanguard offer actively managed funds?

A
. Not yet, but will soon.

It was reported that after years of internal debate, Vanguard has taken one of the final steps necessary to sell its first smart beta ETFs in the U.S. Vanguard registered seven actively managed factor funds with the SEC that are expected to begin trading in the first quarter of 2018, according to a company statement.

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How to Build a 60/40 Portfolio?

1/11/2018

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For decades, a 60% large-cap U.S. stocks and 40% U.S. bonds portfolio has been the conventional way to provide moderate-risk, long-term growth in a retirement portfolio.
For now, we won’t mess with the 60% stock portion, but how about the 40% component?

Candidates for the 40% Portfolio
This chart below lists many of the contenders to replace the 40% bonds asset.


Picture
Performance of the New 60/40 Portfolio

If you pick one of the above assets to replace bonds, what will the new 60/40 portfolio perform?  The following table gives the answer:
Picture
You can read the article that produces the above tables here.
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The Most Important Chart on Investment

1/10/2018

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Below is probably the most important chart on investment -
Picture
The learning?  Market rises and falls!  Be happy when the market falls, because it gives you an opportunity to participate the next rise!
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401(k) Loan 101 - The Downsides

1/9/2018

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We discussed the key benefits of 401(k) loan in last blog post, now we will discuss the downsides of borrowing from 401(k).

Not Truly Cost Free
​Despite the view that net cost is zero, the true cost of a 401(k) loan is the foregone growth on the account — and not the 401(k) loan interest rate, which is really just a transfer into the account of money the borrower already had, and not a cost of the loan — the best way to evaluate a potential 401(k) loan is to compare not the 401(k) loan interest rate to available alternatives, but the 401(k) account’s growth rate to available borrowing alternatives.

For example, if you borrowed $10,000 from your 401(k), paying 5% interest back.  It looks like the $10,000 part of your 401(k) account grows by 5%, however, it is just you are moving the $500 money from one pocket (outside of 401k) to another pocket (inside your 401k).

Tax Implications
Furthermore, 
the interest contributed into the 401(k) plan isn’t deductible as interest, nor is it deductible as a contribution — even though once inside the plan, it will be taxed again when it is ultimately distributed.
Of course, any money that gets invested will eventually be taxed when it grows.  But in the case of 401(k) loan interest paid to yourself, not only will the future growth of those loan payments be taxed, but the loan payments themselves will be taxed — even though those dollar amounts would have been principal if simply held outside the 401(k) plan and invested.
Viewed another way, if the saver actually has the available cash to contribute to the 401(k) plan, it would be better to not contribute it in the form of 401(k) loan interest, and instead contribute it as an actual, fully deductible 401(k) plan contribution instead.  This would allow the individual to save even more, thanks to the tax savings generated by the 401(k) contribution itself.

Missed Employer Match
Finally, a 401(k) loan borrower may miss the employer 401(k) contribution match which will be a real cost. 



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401(k) Loan 101 - The Benefits

1/8/2018

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In our last two blog posts, we discussed the rules on 401(k) loan.  Now we will show the main benefits of borrowing from 401(k).

The Benefits of Using 401(k) Loan

1) Easy to Borrow
A 401(k) loan is easy to get - there is no loan underwriting or credit score requirements.

2) Net Cost of Zero

Borrowing money has a cost.  However, a 401(k) loan means the employee borrows his or her own money out of his or her own retirement savings account, such that the borrower’s 401(k) loan repayments of principal and interest get paid right back to themselves.  Consequently, even though the stated 401(k) loan interest rate might be 5%, the borrower pays the 5% to themselves, for a net cost of zero.

However, this doesn’t mean a 401(k) loan should be considered part of an investment strategy.  We will discuss in the next several blog posts the downsides of 401K loan. 

​
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