PFwise.com
Search
  • Home
  • Blog
  • Tools
  • Know-how
    • Insurance 101
    • Annuity 101
    • College Planning
    • Real Estate
    • Retirement Planning
    • Smart Investment
    • Stock Ideas
    • Tax Planning
  • About Us
  • 中文
  • Resources
    • Personal Finance Reading List
    • Financial Aid Resources
    • Personal Finance Calendar
    • Retirement Planning Calendar
    • ETF list
    • Financial Glossary
  • Newsletters Archive

Perspective on Market Moves - July 30 2016

7/31/2016

0 Comments

 
0 Comments

10 Advantages of Term Life Insurance - Part I

7/30/2016

0 Comments

 
Although term insurance is not always the most effective type of life insurance for all of a person's death benefit needs, it can be useful in many circumstances.  Since term insurance is not just one product, but rather many variations on a general theme, different types of term insurance could be used for different people's needs.

Below we will discuss 10 advantages of a term life insurance policy.

Advantage 1.
Term insurance allows a person to acquire the greatest death benefit for the lowest premium outlay when the policy is first issued. However, this does not mean that term insurance is necessarily the least expensive form of insurance over the full duration of needed coverage.  Because term premiums increase at each renewal, at the later ages the premium cost will far exceed the level premium that would have been charged for an ordinary whole life policy issued at the same age as the original term policy.

Advantage 2.
Term insurance is the best alternative for temporary life insurance needs.  Usually term insurance is the best alternative if protection is needed for less than ten years.  Conversely, some form of cash value life insurance will generally be the best alternative if protection must continue for fifteen or more years.  If the duration of the needed protection is between ten and fifteen years, the best alternative depends upon the facts and circumstances of the case.  As a general rule of thumb, term insurance will tend to be better than cash value insurance at issue ages below age 45, and worse at older issue ages if the length of the need for protection is between 10 and 15 years.


We will discuss next sets of advantages in our next blog post.



0 Comments

More Than Half of Your Social Security Benefits Will Go To Health Care Costs

7/29/2016

0 Comments

 
Q. I heard talks that health care costs will be very high in one's entire retirement life.  How much should I prepare for the retirement health care costs?

A.
Based on HealthView Service's 2016 Retirement Health Care Costs Data Report:
  • For couples who retire in 2016, they could expect to spend $288,400 in today's dollars on lifetime Medicare Parts B, D, and supplement insurance premiums!
  • When you add in dental, hearing, vision, and all other out of pocket expenses, that number rises to $377,412!

More than half of your social security benefits will go to health care costs:
  • A 66-year old couple retiring this year will spend 57% of their social security to cover total health care costs
  • A 55-year old couple retiring in 10 years will require 88%
  • A 45-year old couple will require 116%
  • A 30-year old female retiring at 65 can expect to pay $548,098 which is $118,632 than a male the same age
0 Comments

How to Shop Mortgage Refinance the Smart Way?

7/28/2016

0 Comments

 
Q. I heard the mortgage rate is near historical low again.  What's the best way to refinance my mortgage?

A.
Like any other purchases, the best way to refinance your mortgage is to shop around!

You can start from Bankrate.com, on its front page, there is a section on the right for "Compare Rates", you can check the Refinance tab, then enter your zip code below, you will see a list of mortgage refinance offers in your area.

Make sure you let the numbers talk, and don't be easily fooled to believe zero cost refinance is truly zero cost, as it could mean you are paying a higher interest rate, or roll the cost of refinance into your mortgage loan.

Finally, note that the final offer will be dependent upon your credit score, so make sure take time to clean up and improve your credit score before you shop around, and this could take a few months to complete. 

0 Comments

2 Ways of Delaying Social Security Benefits Could Impact Spousal Benefits

7/27/2016

0 Comments

 
Q. Is it true that delaying one's collection of social security benefits could always bring higher spousal benefits?

A.
Not necessarily true!

When one delays collecting social security benefits, the payout always increases.  However, that doesn't necessarily mean the spousal benefits would increase as well.  Here are two scenarios:

Scenario A.

A husband is eligible for a monthly benefit of $A at his full retirement age of 66, but waits till age 70 to claim social security benefits at amount $B (higher than $A).

However, the delayed retirement credits (difference of $B-$A) are not used in calculating spousal benefits!  So if the husband's wife claims social security at her full retirement age, her spousal benefit would be only half of $A, or half of the amount the husband would have received at age 66.

Scenario B.
The same husband starts collecting social security benefits at age 66 $A.  As time passes, his benefits will gradually increase, due to annual cost of living adjustments and was recalculation.  Let's assume at age 70, his monthly payout has increased to $C ($C will be a figure greater than $A but less than $B).

Now, this husband's wife, if she first claims a spousal benefit at her full retirement age 66, would be eligible for a monthly sposal benefits of half of $C (higher than half of $A), or half of husband's current benefit.


0 Comments

2 Types of Stock Chart Gap Ups

7/26/2016

0 Comments

 
Q. How to interpret a stock price's gap up?

A.
When a stock opens higher and stays there or even higher, it creates a gap in the stock's price chart.  There are two types of stock price gap ups and they have different implications:

Breakaway Gaps
What is it
In a breakaway gap, stock price breaks out a trading pattern and a new trend is starting.

Implications
 
It is a sign that a bullish trend is about to begin.

Exhaustion Gaps
What is it
An exhaustion gap typically happens at the end of an up or down trend, it is caused by investors abandon previous bets (shorts) against the stock.

Implications

It is a sign that the run-up or the decline is ending, and a reversal is around the corner.

0 Comments

A Few Retirement Planning Related Questions Everyone Should Ask

7/26/2016

0 Comments

 
Retirement Goals
  1. What does my retirement lifestyle look like?
  2. How much will it cost me to maintain this lifestyle?
  3. How will I fund my retirement?



Understand Annuities

  1. Does the annuity have a guaranteed interest rate?
  2. How long the interest rate is guaranteed?
  3. How volatility control indexes work?
 
Living Benefit Riders
  1. Does my life insurance policy include living benefits riders?
  2. How does living benefits value differ from cash accumulation value?
0 Comments

U.S. Federal Estate and Gift Tax Challenges For Foreign Nationals

7/25/2016

0 Comments

 
Q. What are the U.S. estate and gift tax challenges faced by foreign nationals?

A.
Foreign nationals may be subject to large U.S. Federal estate and gift taxes.

Specifically, foreign nationals who do not permanently reside in the U.S. but who have assets in the U.S. cannot take advantage of some of the tax provisions available to U.S. citizens and resident aliens  When a person with these circumstances and did not plan ahead, when they pass away they could owe a large estate tax bill.

Furthermore, many people are confused about the definition of Non-resident Alien and Resident Alien, you can read one of our previous blog posts that discussed this topic.


0 Comments

Permanent Life and Retirement Dreams - An In-depth Case Study Part II

7/24/2016

0 Comments

 
In our last blog post, we introduced a case study about a couple Jane and Joe and their retirement goals and challenges.  Now we will describe the solution below:

The Solution
Jane and Joe's financial advisor decided that the best course of action to better align them with their goals would be to offer them both permanent life insurance.  This strategy gives them the potential to accumulate cash value as well as adding a long term care rider to the policy.

Death Benefit
The permanent life policy will provide individual protection in the event that one of them dies suddenly.  The remaining spouse would be able to live out the rest of their retirement as they had planned.  A permanent policy with a death benefit guarantee can help ensure that the coverage will remain in place until advanced ages or even to age 121, depending on the policy and the way they choose to pay their premiums. 

Long Term Care Rider
If Jane and Joe choose to add a long term care rider they would be covered if either one of them became chronically, critically, or terminally ill.  The rider will also give them the ability to accelerate their policy’s death benefit when they are alive so they can have money for whatever they need (i.e., building ramps to the home, adding a stair lift, etc.). This type of flexibility in the policy will give them added security.  However, if they accelerate the death benefit while they are alive there will be less, if any, remaining death benefit available for their beneficiaries.

Tax Benefits
When Joe and Jane die, their estate will be passed on to their children.  If their estate passes directly to their children, there is a possibility for a significant tax bill.  All of the inheritance from their retirement accounts (the IRAs, 401(k)s, etc.) may be taxed at income tax rates as high as 39.6% since it would be impacted by their children’s other income and the way in which they withdraw the funds.  That tax bill alone could cost them tens of thousands of dollars.  With a life insurance policy, between the death benefit and any cash value it has accumulated, the children have a ready source of generally tax-free funds that they can use to pay off any taxes that are due and still have any remaining policy values for their own without any income tax obligation.

The Conclusion
Life insurance in retirement planning is a critical asset to ensuring you have a retirement free of financial burden.  As we've seen with this case study there are many ways to incorporate life insurance into any retirement plan.  Please contact us if you want to discuss any solution that fits your unique needs.


0 Comments

Permanent Life and Retirement Dreams - An In-depth Case Study Part I

7/23/2016

0 Comments

 
When you plan for your future with your eyes toward retirement, a permanent life insurance can be a smart and simple solution to the challenges you may face.

A Case Study
Joe is a 55 year old CPA and his wife Jane is a 51 year old Teacher. They have been married for 20 years and have 2 kids. 

The Current Situation
  • Joe has been working for over 20 years for his accounting firm. He is highly successful and has a nice, six-figure salary.
  • He has been saving for retirement for years. He contributes to his company’s 401(k) program, has IRAs, and investments.
  • Jane was a teacher in her twenties but left the workforce for 18 years to raise their children. She has been teaching again for the last 3 years.
  • Jane has an IRA and not much else toward retirement.
  • They are both planning to retire at 65.
  • They want life insurance to help maintain their lifestyle, no matter when one of them dies.

The Challenge
  • Jane’s years out of the workforce have put her behind in building her pension through her job. She will be on the lower end of the scale when she retires at 65, having only worked 16 years in her current job.
  • Joe has maxed out his retirement savings since the kids are on their own and college expenses are over.
  • They have life insurance to protect their mortgage and to ensure that, should one of them pass away before or early in retirement, the surviving spouse will be able to keep their home and have the lifestyle they want. But, they have concerns about the tax bill their children may face when they both pass away.
  • They want to make sure that they have enough income in retirement to last well into their high 90’s since their parents lived to age 95+.

Jane & Joe's Retirement Goals
  • Provide individual life insurance protection in case one of them dies unexpectedly.
  • Protect their retirement goals for each other for potentially 30 years or more.
  • Offset the taxes due on their estate when it passes to their children.
  • Provide a way to help supplement retirement income due to Jane’s 18 years out of the workforce.

​In our next blog post, we will discuss the solution.

0 Comments

Does Your State Have Estate and Inheritance Tax?

7/22/2016

0 Comments

 
Q. Do you have a list of states with estate and inheritance taxes?

​A.
Check out the map below that shows states with estate and inheritance taxes and their rates -
Picture
0 Comments

How to Profit From the Market Turmoil

7/21/2016

0 Comments

 
Q. It appears the recent market turmoil is actually a buying opportunity, what's the best way to take advantage of the market turmoil?

A.
If you are the kind of investor that are always ready to snatch a bargain, the recent events like Brexit presents such an opportunity.  One thing you could do is to sell a put of the stock you wanted to buy, now with the market turmoil, the stocks' volatilizes will increase which drives up the put's value.  If the stock price drops, you could buy the stock at a lower price before the market turmoil.  If the put wasn't executed by the buyer, you can keep the premium of the put.



0 Comments

3 Metrics to Evaluate a Successful Investor

7/20/2016

0 Comments

 
In our last blog post, we showed the 3 myths people usually have about successful investors.  Now we will share 3 ways to evaluate a truly successful investor.

Annual Compound Growth Rate Over a Long Time
It's best to check the return history of the investor - over a long period of time that includes at least two cycles of the stock market  If the annual compound rate could beat the market considerably during such a long time period, then we have a truly successful investor!

Stable Returns Over a Long Time
The second metric to evaluate an investor is to see if the investor could keep stable returns over a long time.  If an investor lost to the market consistently over many years, then had a huge successful year that led to a good annual compound growth rate, obviously the investor still couldn't be called a successful investor.

Maximum Draw Down Over a Long Time
The third metric to evaluate an investor is to observe the maximum draw down the investor experiences during the stock market cycle, especially during the worst time.  Stock market often has the black swans, when it happens, it is a great time to test the investor's risk control ability, which is a must have for any successful investor.

It's extremely hard to become a successful investor.  For most ordinary investors, there is a practical way to be successful in the long term, we will discuss in the next blog post.

0 Comments

3 Myths of a Successful Investor

7/19/2016

0 Comments

 
It's very hard to be a successful investor.  A truly successful investor is rare to find, but many people had wrong perception of a successful investor, as described below:

Accurate Predictions of Stock Market Moves
Someone who made accurate predictions stock market's movements recently doesn't mean that person is a successful investor.  You won't have a hard time to find stock predictors from the media, however, the truth is, while we could have a reasonable confidence about the long term stock market's movement, no one could consistently and accurately predict stock market's moves in the short term or medium term.

High Short Term Returns
Someone made great returns lately, or even over past several years doesn't mean that person is a successful investor.  Just like in the casinos, there are always some winners, but a truly successful investor should be able to withstand the test of time.  To judge someone who is a successful investor or not, you need to see if that person could survive and beat the market in several market cycles - not just when the market is up, but also when the market is down.

High Risk High Returns
Someone achieved great returns by taking great risks doesn't mean that person is a successful investor.  For example, two investors achieved same return, but one took a leverage and one didn't, clearly we shouldn't just evaluate an investor's returns, more importantly, we need to evaluate risk-adjusted returns.

In our next blog post, we would look at what are the measures we should use to evaluate a truly successful investor.


0 Comments

Top 10 Financial Scams Targeting Seniors

7/18/2016

0 Comments

 
Q. What are the most popular scams targeting seniors?

A.
Based on National Council on Aging, here is a list of top 10 financial scams targeting seniors:
  1. Medicare/health insurance
  2. Counterfeit prescription drugs
  3. Funeral and cemetery
  4. Fraudulent anti-aging products
  5. Telemarketing/phone
  6. Internet fraud
  7. Investment schemes
  8. Homeowner/reverse mortgage
  9. Sweepstakes and lottery
  10. The grandparent scam
0 Comments

5 Questions to Ask Before Investing As an Early Stage Investor

7/17/2016

0 Comments

 
Q. I could qualify to invest in startups as an early stage investor.  What are the factors I should consider?

A.
Now if your income is over $100,000 and have a net worth over $100,000, you could invest in startups as an early stage investor.  Millions of working class people might try their lucks in this new investment area.  Below are 5 questions a recent Wall Street Journal article mentioned that everyone should ask before reaching to the pocket:

1. Could I afford to lose what I invested?

The chance of the failure of a startup is very high, which means the chance of you losing your entire investment is very high.  Can you afford losing it entirely?

2. How many investments have I looked into?

Successful venture capitalists screen hundreds of deals before committing to a few startups, how many pitches have you gone through and feel comfortable the one before you is the one to go?

3. Did I do my homework?

We have discussed before the due diligence required when invest in startups, and keep in mind, you are not evaluating a product, you are evaluating a business!

4. Was I overconfident?

Are you overly confident on your investment decision making ability?  Do you have a good track record that justifies so or not?

5. What is the exit path?
Success early stage investments typically take at least a few years to exit with a profit.  Can you sell your investment in any private exchange or stuck it for as long as it takes to cash out?

0 Comments

What Tax to Pay If Primary Home Sale Gain Exceeds $500,000?

7/16/2016

0 Comments

 
Q. When I sell my primary residency, my gain will be above $500,000.  What tax do I have to pay on the gain?
 
A.
If you are married filing jointly, for your gain that exceeds the $500,000 maximum exclusion amount, it will be treated as long term capital gain and subject to the long term capital gain tax.

In addition, the portion of your gain that is taxable is also treated as investment income for purpose of the 3.8% tax on net investment income.

0 Comments

Can I Deduct Loss From Selling Primary Residence?

7/15/2016

0 Comments

 
Q. Can I deduct loss as a long term capital loss from selling my primary residence?

A.
The answer is No.

Based on IRS ruling - married couples filing jointly could exclude up to $500,000 of the gain on the sale of their primary residence, if they have owned their home and used it as the main home for at least two of the past 5 years before the sale date.  Any gain after the $500,000 amount will be subject to capital gain tax.

Unfortunately, if you suffer a loss from selling your primary residency, you can NOT deduct the loss on the sale.

0 Comments

Is Life Insurance Portable?

7/14/2016

0 Comments

 
Q. Is life insurance portable?

A.
 
If you got your life insurance through your employer, when you leave the company, you lose the insurance.

If you purchase a life insurance policy on your own (outside what your employer offers), it is always portable.  You can move from one state to another state, or to another country, as long as you pay the premium, your policy will be in force.

0 Comments

Is No Medical Exam Life Insurance Better or Worse Than Medical Exam Life Insurance?

7/13/2016

0 Comments

 
Q. What is no medical exam life insurance?  Is it better or worse than normal life insurance?

A.
The answer is, it depends.

No Medical Exam Life Insurance (aka No Exam Life Insurance, Nonmed Life Insurance, Simplified Life Insurance, Guaranteed Life Insurance) is life insurance that does not require a paramed exam.  Specifically, it does not require a blood sample, which many insurance applicants want to avoid.

No Medical Exam Life Insurance is usually bad for very healthy people because of higher premium costs.

However, it is good for people who have various health conditions, such as high blood pressure, high cholesterol, overweight, etc.  For these people, if they apply for a medically underwritten policy, they could be table rated and have to pay a very high premium.  Usually a No Exam policy would have a lower premium

Also, for people with serious health conditions they would be declined normal life policies, No Medical Exam Life Insurance is the only option available to them. 

Please contact us if you have serious health conditions and have been declined life insurance elsewhere, we will find one No Med Exam policy for you.

0 Comments

What's the Relationship Between Low Interest Rate and Stock Price?

7/12/2016

0 Comments

 
Q. Does low interest rate have anything to do with stock price?

A.
The relationship between interest rate and stock price seems to be remote, but it's real, and complicated.

When you evaluate a potential investment, you want to estimate its intrinsic value, which is based on future estimated cash flow divided by a discount rate.  When interest rates are lower, there are two implications.

First, lower interest rates imply distressed economic environment, a company's ability to generate superb cash flow will be impacted in such an environment.

Second, lower interest rates imply lower discount rates, meaning an investor's expectation on return will be lower as well.

Combine the above two implications, you will find it's hard to pinpoint the exact direction the lower interest rates on stock prices.  However, we know one thing, if you forecast a company's ability to generate future cash flow based on its past (when interest rates were higher) records, you will greatly exaggerate its intrinsic value.


  
0 Comments

What Can I Do If My Life Insurance Application Was Denied?

7/11/2016

0 Comments

 
Q. What can I do if my life insurance application was denied?

A.
First, do not panic.  Sometime simply by providing some additional medical records or getting a letter from your doctor could change the insurance underwriter's decision.

Second, make sure you work with an experienced agent who represents many different life insurance companies, an experienced agent could you find out what're the issues that led to the denial of your application, and find an alternative company who might give you a pass in those areas.  

So far, we have not had any single client who was denied, we could always find the least cost solution for our clients.  Please contact us if you have any concern for your health conditions and worried that might lead to denial.  We will make you happy!
0 Comments

Can A Foreign National Be The Beneficiary of Life Insurance Policy?

7/10/2016

0 Comments

 
Q. My mother is not a U.S. citizen, can I have her as the beneficiary of my life insurance policy?

A.
Yes, your parents, even as non-U.S. citizens, can be your life insurance policy's beneficiaries, although typically as contingent beneficiaries.  You just list their name in the beneficiary form, no further documents required at the time of application.

0 Comments

4 Major Tax Advantages of Annuity

7/9/2016

0 Comments

 
Q. What are the tax advantages of annuity?

A.
Annuity has the following 4 major tax advantages:

1. Tax-deferred growth
The money you put in an annuity grows tax free as the interest compounds.  This creates an attractive accumulation opportunity because your money will be able to grow on an annual basis without paying any income tax during the year.

2. Pay tax on profits only
Unlike most other investments, you only pay tax on gains when you withdraw money out of annuity.  This alleviates any worries about paying taxes on dividends, interest, or capital gains associated with most other financial products.

3. Reduce taxation of social security benefits
Fixed and indexed annuities generate tax-deferred income, which has no impact on social security benefits, as long as the money stays in the annuity.  This contrasts to many other "safe" products such as CDs, savings and money market accounts and municipal bonds that all contribute to provisional income, which often causes more of the owner's social security benefits to be taxed.

4. Flexible tax reporting and payment
You can purchase an annuity, then wait till retirement to take distributions, in that time you're more likely to be in a lower tax bracket.  You can essentially defer tax payments until it becomes more favorable for you to do so.  No reporting is required as long as income isn't taken out of the annuity.
0 Comments

U.S. Life Insurance For Foreign Nationals - How It Solves Problems

7/8/2016

0 Comments

 
In our last blog post, we discussed who are foreign nationals and what problems do they face.  Now we will discuss how life insurance solves their problems.

Purchase life insurance in many foreign countries (e.g. China) can be very expensive and uncertain, U.S. life insurance has a strong appeal to foreign nationals.  Specifically, here are some of the major benefits of having U.S. life insurance policies:
​
  • Provide liquidity for paying for a U.S. estate, while enhancing an estate plan
  • Avoid the need to sell assets, most likely at a discount, in order to meet estate tax obligations
  • Transfer additional funds to a non-citizen spouse
  • Non-Resident Aliens can own life insurance on their own without the complication of setting up a third-party trust or some other legal entity, and the death benefit will not be subject to U.S. estate taxes.
  • Life insurance-based estate plans can be modified to fit changing life requirements.
  • Gain tax-deferred cash value accumulation.

Can a foreign visitor with B1/B2 visa purchase life insurance in the U.S.?  Are there any reputable life insurance companies cater these foreign nationals?  The answers are Yes to both questions and you can find out the answer from one of our previous blog post.

If you or someone you know who are foreign nationals and are interested in purchasing U.S. life insurance, please contact us, we have the expertise to help the out.
0 Comments
<<Previous

    Author

    PFwise's goal is to help ordinary people make wise personal finance decisions.

    Archives

    April 2022
    March 2022
    February 2022
    January 2022
    December 2021
    November 2021
    October 2021
    September 2021
    August 2021
    July 2021
    June 2021
    May 2021
    April 2021
    March 2021
    February 2021
    January 2021
    December 2020
    November 2020
    October 2020
    September 2020
    August 2020
    July 2020
    June 2020
    May 2020
    April 2020
    March 2020
    February 2020
    January 2020
    December 2019
    November 2019
    October 2019
    September 2019
    August 2019
    July 2019
    June 2019
    May 2019
    April 2019
    March 2019
    February 2019
    January 2019
    December 2018
    November 2018
    October 2018
    September 2018
    August 2018
    July 2018
    June 2018
    May 2018
    April 2018
    March 2018
    February 2018
    January 2018
    December 2017
    November 2017
    October 2017
    September 2017
    August 2017
    July 2017
    June 2017
    May 2017
    April 2017
    March 2017
    February 2017
    January 2017
    December 2016
    November 2016
    October 2016
    September 2016
    August 2016
    July 2016
    June 2016
    May 2016
    April 2016
    March 2016
    February 2016
    January 2016
    December 2015
    November 2015
    October 2015
    September 2015
    August 2015
    July 2015
    June 2015
    May 2015
    April 2015
    March 2015
    February 2015
    January 2015
    December 2014
    November 2014
    October 2014
    September 2014
    August 2014
    July 2014
    June 2014
    May 2014
    April 2014
    March 2014
    February 2014
    January 2014
    December 2013
    November 2013
    October 2013
    September 2013
    August 2013
    July 2013
    June 2013
    May 2013

    Categories

    All
    Annuity
    Book Reviews
    College Finance
    Finance In Formula
    Financial Scams
    For Entrepreneurs
    Healthcare
    Insurance
    Investment
    Miscellaneous
    Real Estate
    Retirement
    Savings
    Savings Ideas
    Stock-ideas
    Tax
    Tax-related

    RSS Feed

Copyright © 2013 - 2022 PFWise.com, All Rights Reserved. 
IMPORTANT DISCLOSURES
PFwise.com does not provide investment, tax, or legal advice. The information presented here is not specific to any individual's personal circumstances.

To the extent that any material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.

These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable—we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.
About Us | Contact Us 
中文