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Stocks That Might Benefit From a Trump Or Hilary President

8/31/2016

In our previous blog posts, we compared Trump and Hilary's various tax reform and economic growth plans. Now we will speculate which stocks that might benefit from a Trump or Hilary President.

Stocks That Might Benefit From a Trump President -

Defense manufacturers: Trump has pledged to seek a declaration of war against ISIS and to make the military so strong that "nobody's going to mess with us".
Energy companies: would enjoy a more favorable regulatory environment, as Trump has vowed to resuscitate the coal industry and virtually eliminate the EPA.

Stocks That Might Benefit From a Hilary President -

Managed-care companies and hospital operators: would continue to do well under the Affordable Care Act and would benefit greatly from any expansion.
Gun and ammunition manufacturers: gun-control efforts by President Obama have spurred record gun sales even though no major federal gun-control legislation has passed. Clinton would seek even tougher restrictions - efforts would continue to boost gun sales.

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Economic Growth Plans of Trump and Hilary

8/30/2016

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In our previous blog posts, we compared Trump and Hilary's various tax reform plans. Now we will turn to their economic growth plans.

Both candidates would likely seek an economic stimulus package focusing on improving and repairing the nation's transportation infrastructure, including highways, bridges and airports.

Trump's Economic Growth Plans -

Trump initially opposed raising the minimum wage, now he would "like to raise it to at least $10" but prefers the states do it.
Seek to develop a "trillion-dollar" spending plan over five years to create 13 million infrastructure jobs.
Oppose the TPP and pursue changes in NAFTA.
Impose a 45% tariff on goods from China and 35% tariff on auto imports from Mexico.

Hilary's Economic Growth Plans -

Spend $275 billion on infrastructure over 5 years and create more than 3.6 million jobs.
Raise the federal minimum wage from $7.25 to $12 an hour.
No longer supports TPP.

In the last blog post of this series, we will mention which stocks might benefit from Trump or Hilary Presidency.

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Top 6 Insurance Mistakes People Make - Part I

8/29/2016

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Choosing a life insurance policy is a major decision for many people. The decision that you make will ultimately affect your future and the future of your loved ones. Here is a list of the top life insurance mistakes people and how to avoid them.

1. Not Knowing What You Are Buying
A lack of knowledge and education can be extremely costly for you. Life insurance is not one-size-fits-all. You need a high degree of comfort with the insurance carrier, the agent and the products being considered before purchasing anything. Do the research and take the time to fully understand all of the benefits and risks of each option you consider. Keeping an open line of communication with your agent and build a level of understanding and trust.

Next mistake - 3 people on a policy.

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Tax Reform Plans of Trump and Hilary - Estate Taxes

8/28/2016

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In our previous two blog posts, we compared Trump and Hilary's individual income tax and business tax reform plans. Now we will turn to their Estate Tax plans.

Trump's Estate Tax Reform Plans -

Eliminates the federal Estate Tax

Hilary's Estate Tax Reform Plans -

Restores the federal estate tax to 2009 levels. This would increase the estate tax rate to 45% and reduce the estate tax exemption to $3,500,000 ($7,000,000 married).

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Tax Reform Plans of Trump and Hilary - Business Taxes

8/27/2016

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In our last blog post, we compared Trump and Hilary's individual income tax reform proposals. Now we will compare their business tax reform plans.

Trump's Business Tax Reform Plans -

Cuts the corporate income tax rate from the current top rate of 35% to a top rate of 15%
Enact a one-time deemed repatriation tax of 10% on all foreign corporate profits currently deferred
Taxes pass-through business entities (S Corps and LLCs) at a maximum personal rate of 15% on K-1 profit which is commensurate with the proposed top rate for regular C Corps

Hilary's Business Tax Reform Plans -

Makes no substantial changes to current business tax rates. Keeps the top corporate income tax rate at 35% for C Corps.
Keeps taxes on K-1 profit for pass-through entities (S Corps and LLCs) at personal income tax bracket as high as 39.6%

In our next blog post, we will compare the two candidates' estate tax plans.

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Perspective on Market Moves - August 27 2016

8/27/2016

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Tax Reform Plans of Trump and Hilary - Individual Income Taxes

8/26/2016

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If you are confused about Trump and Hilary's tax plans, don't worry, in today's and next two day's blogs, we will compare them side by side so you can clearly see their differences.

We will cover 3 taxes areas: individual income taxes, business taxes, and estate taxes. Today, we will start with Individual Income Taxes.

Trump's tax reform plans -

Consolidates the current seven tax brackets into four brackets (0%, 12%, 25%, 33%), with a top marginal rate of 25%. The top marginal rate of 25% would be for married filers with taxable income of $300,000 and single filers with taxable income of $150,000
Taxes long term capital gains and qualified dividends at rates of 0%, 15%, or 20% depending on taxable income. Gains would be taxed at 0% for married filers with taxable income up to $100,000 and single filers with taxable income up to $50,000. The top capital gain rate of 20% would be for married filers with taxable income of $300,000 and single filers with taxable income of $150,000
Eliminates the personal Alternative Minimum Tax
Eliminates the passive Investment Income Tax of 3.8% which is part of the Affordable Care Act
Taxes carried interest for hedge fund traders at ordinary income rates instead of capital gains and dividend rates

Hilary's tax reform plans -

Keeps the current seven tax brackets (10%, 15%, 25%, 28%, 33%, 35%, 39.6%) with a top marginal rate of 39.6%
Creates a 4% “surcharge” on high income taxpayers which effectively adds an additional marginal tax rate of 43.6% (39.6% + 4.0%) for taxable income over $5,000,000
Creates a 4% “surcharge” on capital gains and dividends which effectively adds an additional marginal rate of 24% (20% + 4.0%) for taxable income over $5,000,000
Enacts the so-called “Warren Buffet Rule” which would establish a 30% minimum tax on taxpayers with adjusted gross income (AGI) over $1,000,000. This tax would phase-in between $1,000,000 and $2,000,000 AGI
Caps all Form 1040 Schedule A itemized deductions at a tax value of 28%
Preserves the passive Investment Income Tax of 3.8% and the Medicare surtax on earned income of 0.9% which were part of the Affordable Care Act
Limits the account value of tax deferred and tax free retirement accounts. Excess account value above the threshold amount would be forced out as a taxable distribution
Taxes carried interest for hedge fund traders at ordinary income rates instead of capital gains and dividend rates

In our next blog post, we will compare the two candidates' business tax reform plans.

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Annuities - Explained In Plain English

8/25/2016

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Q. I am confused by the many different types of annuities, can you explain it in simple language?

A. An annuity is a contract between you and an insurance company. Here are some basic types:

1. Variable annuity: funds invested in mutual funds or a pool of managed investments. You have the upside if the market rises, but you have to pay fees and could lose money in a down market.

2. Fixed annuity: no fee and it pays you a guaranteed rate of return, for example, 5% per year.

3. Fixed-index annuity: this gives you exposure to the equity market but at no risk of losing principal. It is basically a fixed annuity with a variable return that is based on an index, such as the S&P 500 index. There is a cap on the upside.

4. Immediate annuity; you give the insurer a lump sum in return for a set ratio of return and regular income payments until death, or for a specified period. There is no fee.

Except Variable annuity, you can think that annuities lower the risk of your investment portfolio, with no investment expense and no fee. The disadvantage is your upside is limited.

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A Common Wrong Perception on Spousal Benefit

8/24/2016

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Q. Jane (62) and John (66) are a couple married for 30 years and are planning for their retirement. John intends to file for social security benefits at age 70 and will receive $2,400. Jane wants to take her own benefit at age 62 for $600, then trade it for the larger spousal benefit when John files at his full retirement age 70, and receives half of John's benefit amount, which will be $1200. Is this a sound plan?

A. While this plan is sound, there is a wrong calculation.

It is correct that Jane is eligible to receive spousal benefits based on John's record. However, Jane's benefit will NOT double when she reaches 70, because of a common misperception.

Jane cannot “trade” her retirement benefit for the larger "spousal only" benefit at the time of her husband’s filing. Jane's base benefit will always be the $600 reduced personal benefit, she will be entitled to an increase in benefits at the time of John’s filing as she will then be entitled to some spousal benefit based on his record, which is [$1,200 (50 percent of John’s PIA) minus $800 (Jane's full benefit amount)] = $400. Therefore, subsequent to John’s filing, Jane will continue to receive a single check from SSA, but it will represent two separate payments: $600 based on her personal record and $400 of spousal benefit based on John’s record for a total benefit amount at her age 66 (which is when John reaches at 70) of $1000 per month. This is $200 less per month than Jane anticipated!

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401(k) Providers For Small Businesses

8/23/2016

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Q. I own a small business, which 401K provider is the best for small businesses?

A. According to an estimate by the Government Accountability Office, only 14% of businesses with less than 100 employees sponsor a retirement plan. But the reality is, there are many 401k options available for small business owners.

Below is an incomplete list of options:

a. Insurance Companies
Their advantage is its vast sales force, they could approach the busy small business owners and explain the details of 401(k) well.

b. Established Providers
Such as Employee Fiduciary LLC and Vanguard which have entered into the small business 401(k) service space.

c. Start Ups
Such as ForUsAll, Dream Forward Financial, SaveDay, Captain401. They aim to bring robo-advisor style 401k plans to the small business space.

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How Does Life Insurance Payout?

8/22/2016

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Q. How does life insurance payout?

A. Here is how it works -

Upon the death of the policy insured, the policy owner and/or the policy beneficiary notify the life insurance company.
The company sends their death claim form upon request.
Mail back the filled out form, along with the certificate of death and newspaper obituary.
The life insurance company sends out the payment.

The proceeds could be paid out in a lump sum, or in regular payments over a set period of time. If paid out in several payments, interest is added to compensate for the insurance company being able to hang onto the proceeds of the policy longer.

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Could Life Insurance Company Drop My Policy If I Got Cancer?

8/21/2016

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Q. If I got cancer later, could my insurance company drop my policy?

A. There are only two circumstances when an insurance company decline your claim -

a. You cheated
If there is reason for the insurer to believe that you had prior knowledge of your cancer when you applied for it, and said nothing about it, they can drop you. There is a two-year window at the beginning of the policy that allows them that right. After that two year window, you are covered even you cheated!

b. You didn't pay the premium
If you failed to pay the policy premiums, the insurance company could drop you. But of course in the case of a cancer, every insured would do their best to keep paying the policy premium to prevent a policy lapse.

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Best Short Term Investing Options

8/20/2016

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Q. I have a large sum of money won't need for a few months. Where should I invest it?

A. The best place to park your free money for such a short time is saving or money market accounts instead of CD that locks up your money for a certain period of time.

You can go to Depositaccounts.com to search for hundreds of thousands of savings and money market accounts and pick the one with the best yield.

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Can I Deduct Expenses Incurred For Volunteers?

8/19/2016

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Q. Can I deduct expenses for volunteers?

A. Yes, you can write off many out of pocket expenses if you itemize deductions, but it's best to keep detailed records.

For example, you can deduct 14 cents per mile for driving in 2016. You can deduct travel related expenses for trips that involve work for a qualified charity.

You must get an acknowledgement from the charity for expenses you cover of $250 or more.

See IRS publication 526, Charitable Contributions, for more details.

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A New Cashing Strategy For Grandparent-owned 529 Savings Plans

8/18/2016

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Q. Wat is the new strategy for grandparent-owned 529 college savings plan with the new financial aid application process?

A. Starting 2016 Fall, the process of applying for financial aid has a major change.

Change of Financial Aid Process
Students and their families will be able to file the Free Application for Federal Student Aid (used to determine financial aid from the government as we ll as from colleges) 3 months earlier, or as early as October 1st. Instead of estimating tax data that has not been filed, families will use past year's filings to report income and assets.

Change of Grandparent-owned 529 Cashing Strategy
This change brings a new strategy for grandparent-owned 529 plans -

Previously, withdrawals from such accounts counted as student income during the first three years of college. Now distributions made during the last 2 years are NOT reported on the FAFSA. So the new strategy is to delay cashing in on the grandparents' 529 accounts until the final 2 college years in order to maximize your chance of getting financial aid.

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Which Remodeling Project Has The Highest Return?

8/17/2016

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Below is a infographic that shows you the returns you may get with various home remodeling projects:

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What Does Face Value of a Term Life Policy Mean?

8/16/2016

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Q. What does Face Value of a term life policy mean?

A. Face Value is also called Death Benefit, Coverage Amount, or Face Amount.

The face value of a life insurance policy is the amount that the beneficiary would receive if the insured person passed away. It is set at the time when you purchase the policy and once set, will not change before the term life ends.

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How Much Do Americans Save For Retirement By Age?

8/15/2016

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Investorpedia has a good article answers this question and discusses this topic -

The Average Retirement Savings by Age for 2016

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Does Pension Affect My Social Security Benefits? Part II

8/14/2016

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In our last blog post, we discussed the pension impact on social security benefits. Now we will discuss how pension affects how your social security benefits are taxed.

For Federal income tax, how your social security benefits are taxed is based on your income level. According to Social Security Administration, benefits are taxed as follows:

If you file as "single" on your federal income tax return and your combined income is:

Between $25,000 and $34,000, you may have to pay income tax on up to 50% of your social security benefits
More than $34,000, up to 85% of your social security benefits may be taxable

If you file as married filing jointly, and your and your spouse have a combined income of:

Between $32,000 and $44,000, you may have to pay income tax on up to 50% of your social security benefits
More than $44,000, up to 85% of your social security benefits may be taxable

How to Calculate "Combined Income"?
Combined Income is calculated as the sum of your adjusted gross income (not including your social security benefits), your nontaxable interest (e.g. municipal bond interests), and half of your social security benefits

Once you have combined income, you can compare it with the income numbers mentioned above to determine what percentage of your social security benefits will be taxable. Since pension income is part of your adjusted gross income, it will have an impact on how much of your social security benefits are taxable.

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Does Pension Affect My Social Security Benefits? Part I

8/13/2016

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Q. Does pension affect my social security benefits payment? If yes, how?

A. The answer is it depends on what kind of pension do you receive, and do you consider your social security benefits only or the after-tax social security benefits you would actually receive.

Corporate Pensions
If you have a corporate pension, it will not affect your social security benefits payment. However, your pension will impact your after-tax social security benefits.

Government Pensions
There are Federal pension, state pension and local pensions.

If you receive Federal pension, chances are you will not receive social security benefits.

If you receive state or local pensions, it depends on whether your state or local government agencies participate Social Security program. If they do, they you won't see any impact on your social security benefits, but like corporate pensions, you will see impact on your after-tax social security benefits. If they do not, then you will not have social security benefits.

In our next blog post, we will discuss how your pension will affect how much your social security benefits will be taxed.

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Pros and Cons of Real Estate Crowdfunding

8/12/2016

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Q. What are the pros and cons of investing in real estate crowdfunding deals?

A. Equity crowdfunding has been popular lately, where crowdfunding and real estate intersect, you have real estate crowdfunding.

Cons of Real Estate Crowdfunding
While real estate crowdfunding offers small investors opportunities to get into real estate deals previously inaccessible, everyone should realize that the real estate fund raisers are self-promoting real estate developers and investors, for small mom and pop investors, the lack of risk knowledge and risk management skills are a good combination to investment disaster.

Pros of Real Estate Crowdfunding
On the other hand, historically, real estate has produced stable return, although the journey has ups and downs. If you have some spare money that earning little return, and losing it won't cause you a heartburn, it will be good to diversify your portfolio by including some money invested in real estate crowdfunding deals.

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How Can I Prepare For A Coming Recession As A Small Investor?

8/11/2016

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Q. I am a small investor, how can I be prepared for the coming recession?

A. The truth is, no one could accurately predict the timing of the next recession. The late Nobel Prize winner Paul Samuelson once said - the markets have predicted nine of the last five recessions!

But we do know if a recession hits, stocks' performance will suffer. But you don't want to park all your money in a saving or CD account earning nearly nothing. The best thing a small investor could do, when prepare for the coming recession is the 3-step investment strategy we advocated here.

Specifically, here are the 3 steps:

Step 1. Develop a diversified portfolio that fits your investment style and time horizon.

Step 2. Use dollar cost averaging and keep investing in the market, even when recession hits.

Step 3. Periodically rebalance your portfolio.

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Where to Find Legit Crowdfunding Portals?

8/10/2016

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Q. I want to invest like a venture capitalist, how can I find legit crowdfunding sites?

A. As we have discussed here, small investors now have a way to invest like venture capitalists. However, you want to make sure to find deals at legitimate crowdfunding portals.

Where to find legit crowdfunding sites? You should check the regulatory agency, in this case, FINRA, as it keeps a list of registered crowdfunding sites here.

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Which Investments Will Prosper In the Silver Economy

8/9/2016

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Q. Which investments could take advantage of the massive demographic shift in the coming decades?

A. As birth rates fall and life expectancy rise, it is estimated that by 2050, 2.1 billion people will be 60 or older, more than double 2015's count.

Here are some ideas for investors to take advantage of the massive demographic shift:

1. Dividend-paying stocks, a good example is Vanguard Dividend Growth (VDIGX)
2. Bonds that matures in 20 or 30 years, as funds try to match pensioners' longer life spans.
3. Financial service firms that cater to the wealthy baby boomers, such as Morgan Stanley, Principal Financial Group
4. Bio-tech and healthcare related companies such as Celgene and United Health Group
5. Home renovation centers such as Lowe's and Home Depot
6. REITs that invest in senior centers, such as Ventas
7. Leisure travel companies such as Carnival
8. Products that fight aging such as Botox maker Allergan

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Does Diabetes Affect My Life Insurance Premium?

8/8/2016

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Q. Does diabetes affect life insurance premium?

A. Yes, although the actual impact varies, it depends on your level of diabetic control.

What matters the most is not whether you are type 1 or type 2, or whether you use oral med or use insulin, or whether you were diagnosed at age 10 or diagnosed at age 50, what matteris is your A1C number.

If your A1C number is over 10, your life insurance application will be subject to great scrutiny and your premium, if approved, will be very high. If under 8, you could still get affordable rates, although most likely will be higher than someone who has no health issue at all.

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<<Previous

Stocks That Might Benefit From a Trump Or Hilary President

Economic Growth Plans of Trump and Hilary

Top 6 Insurance Mistakes People Make - Part I

Tax Reform Plans of Trump and Hilary - Estate Taxes

Tax Reform Plans of Trump and Hilary - Business Taxes

Perspective on Market Moves - August 27 2016

Tax Reform Plans of Trump and Hilary - Individual Income Taxes

Annuities - Explained In Plain English

A Common Wrong Perception on Spousal Benefit

401(k) Providers For Small Businesses

How Does Life Insurance Payout?

Could Life Insurance Company Drop My Policy If I Got Cancer?

Best Short Term Investing Options

Can I Deduct Expenses Incurred For Volunteers?

A New Cashing Strategy For Grandparent-owned 529 Savings Plans

Which Remodeling Project Has The Highest Return?

What Does Face Value of a Term Life Policy Mean?

How Much Do Americans Save For Retirement By Age?

Does Pension Affect My Social Security Benefits? Part II

Does Pension Affect My Social Security Benefits? Part I

Pros and Cons of Real Estate Crowdfunding

How Can I Prepare For A Coming Recession As A Small Investor?

Where to Find Legit Crowdfunding Portals?

Which Investments Will Prosper In the Silver Economy

Does Diabetes Affect My Life Insurance Premium?

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