President Barack Obama first proposed the new fiduciary rule in April 2015 that could mean trouble for financial talk show superstars such as Dave Ramsey, Suze Orman and Jim Cramer. It requires them to be regulated by the government based on the money advice they give to their audience. The new law could take effect next month makes these financial talk show hosts to disclose more on third-party compensations. “Under the proposed regulation, investment advice from a radio host to a caller regarding the caller’s own investment issues would appear to be fiduciary advice if the advice addresses specific investments,” said Kent Mason, a partner in the Washington law firm of Davis & Harman. The new law covers the compensation from these hosts’ stations and book publishers to stop “backdoor payments and hidden fees” to financial advisors who could be facing a conflict of interest. (theblaze.com)
27 Giant Profitable Companies Paid Less Taxes Than You
Benjamin Franklin said death and taxes are the only two things certain in life, but some megacorps have escaped the taxes completely. According to a USA TODAY analysis of data from S&P Global Market Intelligence, there are 27 companies in S&P 500 that paid no income tax in 2015 despite having profits for the year. These big corporations include General Motors and United Continental. While you might pay dearly in taxes, there are certain loop holes for major companies to take advantage such as lower oversea tax rates. Even if the megacorps show profits, they can avoid tax completely for the year when they use tax credit after years of previous losses. (usatoday.com)
Don’t Want To Retire At 30? How To Retire On Time
We have covered on how to retire at age 30 and how to semi-retire in your 30s. Well, if you don’t want to retire or financially unable to retire at 30, then here is the guide for retiring normally in your 60s with enough money to live on, collected by Forbes personal finance writer Samantha Sharf. There are no get-rich quickly strategies in the guide, but you can apply some practical ways such as the need to start saving and where to start. You will find the answers to what to invest in your 401(k), what to do with target date fund, the fees for mutual fund and contribution limit. Take these practical steps to save for retirement right now in order to retire comfortably with enough money to last a lifetime. (forbes.com)
Finance Is Important. So Is Life
Personal finance is more personal than just finance. That’s the message in Tim Maurer’s new personal finance book, Simple Money, detailing a road map to achieve both financial and life goals. Maurer explains: “The real point of investing is not actually to make money but to have a better life and facilitate Enough.” You should not focus only on accumulating the most wealth but on your values and life goals. As respected author and investment advisor Larry Swedroe reviewed: “Tim Maurer’s new personal finance book, Simple Money, isn’t just about how to improve your financial situation for the sake of making more money. While it does contain a helpful chapter on a simple, winning investment strategy that’s virtually guaranteed to outperform the vast majority of investors (both individual and institutional), the focus of the book is ultimately about how to live a more fulfilling life.” (etf.com)
Unscrupulous Financial Advisers Prey On The Elderly and Poorly Educated
Managing personal finance successfully is becoming one of the most important area in life, and less sophisticated investors are in need of good financial advice to deal with the complexities of personal finance. But new research finds that the financial advising industry preys on the elderly and poorly educated. Often advisers don’t act in the best interest of the customers and they steer clients to inappropriate products. Bad financial advice can cost unsophisticated investors tens of thousands of dollars in loss. The study shows that “the median settlement for misconduct is $40,000, and a quarter of damages exceed $120,000.” Also, the research finds the disturbing trend that “advisers who engage in misconduct aren’t necessarily forced out of the industry. Instead, after being fired from their previous firm, they are often able to find jobs at new firms that make it a habit of hiring ethically challenged advisers.” The best way to protect against bad advise is to educate yourself about personal finance.
3 Psychological Biases That Can Impact How You Invest
According to BlackRock’s 2015 Global Investor Pulse Survey, 49% of American have negative feeling toward investing and 72% of Americans don’t even think of investing in the markets as a way to save for their long-term goals. Our emotion brains are not designed for investing in the long run and there are 3 psychological biases that can impact how you invest: Negativity bias, recency bias and status quo bias. It’s important, therefore, to recognize and acknowledge these common cognitive biases. Doing so can help us invest smartly and ultimately achieve the goals we really need. (learnvest.com)
4 Tax Deductions for New Homeowners
Owning a home offers many tax break. If you’re among the new property owners, Dan Rafter on Wise bread urges that you should not skip these 4 tax deductions: Mortgage interest, property taxes, points and private mortgage insurance. The only downside is your tax will be more complicated as you have to itemize when filing tax to take full advantage of these tax deductions. (wisebread.com)
How to Semi-Retire in Your 30s
Emma, 32 and a mother with young kid, writes: “It wasn’t until I discovered personal finance blogs that I realized early retirement was possible without a multi-million dollar property portfolio.” But circumstance changes when when life throws you a curveball, and early retirement isn’t just possible. Emma explains the alternative to early retirement and how to semi-retire in your 30s. The main ingredients to semi-retire are as follow: Clear debt and adjust to a frugal life. Find multiple sources of income with an affordable housing. Lastly, accept and embrace social status change. (moneycanbuymehappiness.com)
True Costs of A Bad Credit
Personal finance blogger Allan Liwanag writes: “Wouldn’t it be nice to have a good, excellent, or even a perfect credit score? Of course, it would be. When you have a good credit, you are able to apply and get approved for loans with little to no problem at all. You are able to avail low-interest rates on credit cards, car loans, and other debts because lenders see you as a low-risk borrower. In truth, there are many benefits of having a good credit. But what if you have a bad credit? One thing I can say is that life won’t be so easy. I had my share of living a life with a bad credit. The repercussions of that bad credit score were far worse that I could have ever imagined.” With a bad credit, not only you will have difficulty in getting loans but you will also face a hard time getting a job. So beware of the true costs of a bad credit and take steps to improve your credit scores. (thepracticalsaver.com)
Financial Worries Are Linked to Stress
Michael J. O’Brien writes on Human Resource Executive Online that financial worries are linked to stress, underperformance and absentee for employees. “The research revealed that financial worries, which are strongly linked to stress, ultimately have an impact on people’s ability to perform their best work. In fact, 28% of people who are struggling with their finances admitted that it prevents them doing their best at work. In addition, higher levels of absenteeism can occur in employees with financial concerns. The survey found that people who are not worried about their finances reported they took an average of 1.9 absence days from work per year, whereas employees who are struggling financially are absent for an average of 3.5 days per year. Further, those who are struggling financially report being highly distracted on the job 12.4 days per year on average, compared to 8.6 days for those not worried about their finances. ‘Financial security is a top-of-mind issue for employees,’ said Shane Bartling, senior retirement consultant at Willis Towers Watson. Financial worries can have a negative impact on an employee’s personal and work life, and inevitably affect productivity, employee engagement and satisfaction.” (hreonline.com)
U.S. Consumers Waste $161.6 Billion Per Year
According to National Institutes of Health, U.S. consumers waste up to 50 percent more food than Americans did in the 1970s. In fact, 31 percent—or 133 billion pounds—of the 430 billion pounds of the available food supply at the retail and consumer levels in 2010 went uneaten. The estimated value of this food loss was $161.6 billion using retail prices. The main culprit is the trend toward fresh food. “A lot of product is excluded earlier in the supply chain because not everything grows that perfectly,” said Dana Gunders, a scientist focused on food and agriculture for the Natural Resources Defense Council. In California alone, 25% of all state landfill waste is from food and agricultural waste. As the world’s population projected to add 2.4 billion more people in the next three decades, food demand is expected to grow and food waste will become a big issue. According to the U.S. Department of Agriculture, a U.S. family of four discards around $1,500 a year on food. Don’t be a part of the problem. We all can address this issue of food waste starting in our own household. (cnbc.com)
9 Things to Do in Your 20s to Become a Millionaire by 30
Becoming a millionaire by 30 is not an easy task, but reaching the seven-figure mark is possible if you start the path right. Drawing from advice of young millionaires to improve your chance of becoming one, Kathleen Elkins describes in details 9 things to do in your 20s to become a millionaire by 30. Check the link to Business Insider below to learn the secrets behind these 9 pieces of advice:
- Focus on earning
- Save to invest, don’t save to save
- Ask for help
- Be decisive
- Don’t show off — show up
- Know when to take the right risks and act on them
- Invest in yourself
- Master soft skills and cooperate with others
- Shoot for $10 million, not $1 million
Three-Fund Portfolio As A Simple Investing Strategy
A three-fund portfolio is a great way for investors to keep their investments simple, low cost and diversified across both domestic and international markets. While it’s important to make sure that you match your risk tolerance to your percentages of stocks and bonds according to your allocation, having a simplified portfolio in major index funds will ensure that your costs are low and your returns are maximized in the long run.
Introduction to a Three-Fund Portfolio
A three-fund portfolio is basically a portfolio often recommended for and by Bogleheads where you use three asset classes for your investment: US stock index fund, international stock index fund, and bond index fund. By following three-fund portfolios, it makes investment simple and less time-consuming so you can focus more on important stuff in life and spend more time with your loved ones.
A three-fund portfolio is a portfolio that uses only basic asset classes — usually a domestic stock “total market” index fund, an international stock “total market” index fund and a bond “total market” index fund. It is often recommended for and by Bogleheads attracted by “the majesty of simplicity”, and for those who want finer control and better tax-efficiency than they would get in an all-in-one fund like a target retirement fund.
How to Implement a Three-Fund Portfolio
First you decide how much of the three basic assets to hold in your portfolio — domestic stocks, international stocks, and bonds. Second, choose where to hold each of these asset classes such as in your 401(k), roth IRA or taxable brokerage accounts. Finally, choose the corresponding mutual fund to use for each asset class.
Here are Vanguard funds that are best for a three-fund portfolio:
- Vanguard Total Stock Market Index Fund (VTSMX)
- Vanguard Total International Stock Index Fund (VGTSX)
- Vanguard Total Bond Market Fund (VBMFX)
Final Thought
Personally, we follow the three-fund portfolio for our investments. Currently we have 70% in stocks and 30% in bonds. Our stocks are split between US and International. We will review our allocations once per year and we will make adjustments by adding new money to adjust percentages back to targets. Our plan allows for reduction in equity allocation as retirement gets closer and risk tolerance decreases. Rebalance will be done during monthly contributions with net cash inflows to be used to meet the target allocation.
The 10 Best Places to Live in America
U.S. News has released the ranking of the best places to live in America after analyzing the 100 most populous metro areas. The ranking is based on quality of life, local job market, affordability and desirability to live. Here are the top 10 places to live out of 100 metro areas:
- Denver, CO
- Austin, TX
- Fayetteville, AR
- Raleigh-Durham, NC
- Colorado Springs, CO
- Boise, ID
- Seattle, WA
- Washington, DC
- San Francisco, CA
- San Jose, CA
(usnews.com)
8 Critical Things Successful People Do Before 8 AM
Starbucks’ CEO Howard Schultz rises up every morning at 4:30 a.m.to follow the same routine driven by his personal values. He even applies his values into Starbucks business that is much more than making money selling coffee by focus on selling an experience and a lifestyle. Drawing examples from ridiculously successful people like Schultz, Dr. Travis Bradberry discusses 8 critical things to utilize effectively in the morning. Make sure you wake up early, eat right and exercise to get the energy up. By disconnecting from digital devices and setting achievable goals you can increase your productivity for the day tremendously. (linkedin.com)
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