4 Steps to Prepare for Retirement

4 Steps to Prepare for Retirement
According to the 2017 Retirement Confidence Survey by the Employee Benefits Research Institute (ERBI) and Greenwald & Associates “many American workers today are feeling stressed about retirement and are not taking steps to prepare for it.” Naturally they’re less confident or secure around their finances. Here are some startling facts taken right from EBRI’s March 2017 issue brief followed by 4 steps you can take today to prepare for retirement:
Findings include:
  • Six out of 10 American workers feel very or somewhat confident about having enough money for a comfortable retirement, though just 18 percent feel very confident. The share of workers reporting that they feel either very or somewhat confident has declined compared with last year (60 percent from 64 percent in 2016). Worker confidence now resembles levels measured in 2015 (when 59 percent were either very or somewhat confident).

Bone Broth For Beginners

Bone Broth For Beginners

The doctor told my friend Jack, not to eat gluten, corn or dairy and to have 2 cups of bone broth a day. The diagnosis was Leaky Gut Syndrome. This happens when the processed food everyone eats creates little holes in your intestines. Food particles, not fully digested, seep out into your body, going places they were not meant to go, creating allergic reactions. Apparently, the syndrome is pretty common today and may account for premature aging and other maladies.

Bone broth is said to repair the holes. The collagen and amino acids coat the lining of your intestine. The doctor also told Jack to avoid gluten, corn and dairy, which are among the foods with the most allergens and hardest to digest. Okay, I am not a doctor, but I have a black belt in google-fu and I like to experiment in cooking. So here is what I figured out:

The Nutrients Contained In Bone Broth

1. Glycosaminoglycans, glucosamine, hyaluronic acid and chondroitin sulfate.
2. Essential minerals and electrolytes like calcium, magnesium, potassium and phosphorus.
3. Collagen which contains 19 amino acids, including glutamine, glycine, and arginine.

The Health Benefits Of Drinking Bone Broth

1. Protects joints
2. Benefits the gut
3. Maintains healthy skin
4. Supports immune system function
5. Boosts detoxification
6. Aids the metabolism, the chemical processes inside a living organism
7. Aids the storage of energy
8. Tastes good
9. Aids sexual stamina

How To Make Bone Broth


Risky Business

Risky Business

Actor Tom Cruise has famously played a fighter pilot, a sports agent and a secret agent but his first starring role was as a budding entrepreneur in the 1983 film which supplies the title of today’s article. Based on a young man’s attempt to create a small business, the story chronicles his misadventures while his parents are out of town.

The movie was a popular and critical success with
96% positive reviews. However, seen in a different light, it also offers a catalogue of things that might go wrong in someone’s life, things that might have been best dealt with through appropriate risk management.

I reviewed the chapter titles from my Risk Management 501


What's the Best Way to Buy Gold?

What's the Best Way to Buy Gold?

Admit it, you like it. You want it. You want to touch it, feel the coldness in your hand, feel the weight, it is too heavy for its size. It makes you feel good.

Prince, the rockstar - the man who only has a first name — he liked gold. Prince didn't have any name for a while, he lost even his first name. They called him "the entertainer formerly known as Prince.” But he got his first name back, and he died owning lots of gold bars.

You don't have to apologize for liking gold. People through the ages like gold. They like silver also. Silver has a patina that changes over time and each piece looks different. You like silver also.

How to Understand Municipal Securities

How to Understand Municipal Securities

The bond market is the largest public securities market in the world, and substantially larger than the stock market. When investors allocate assets in their investment portfolios, oftentimes those in higher tax brackets will opt to utilize municipal securities for the added tax benefits.

What are municipal bonds?

A muni bond, like any other bond or fixed income investment is a debt instrument. You as the investor loan your money to the issuer for a stated period of time at a specific interest rate. The single biggest difference with the muni market is the potential for tax free income. A municipal bond is generally issued as a debt instrument offered by a
State, City, County or Local Municipality. The assets collected are used to finance things such as schools, highways, bridges, and various other projects that require funding. They may also be financing the general budget of a municipality.

Generally speaking, income derived from a municipal bond is free from Federal income taxes. Should you live in a state or city that assesses an income tax, if the bond was issued by a municipality in the state you reside in for income tax purposes, it will typically be exempt from State/City income tax as well. If you reside in a state that does not levy an income tax, the Federal exemption on the income applies regardless of which state you purchase the issue from.

General Obligation vs Revenue Bonds

Muni bonds break down into two broad categories with many sub-categories. The first of which is the
general obligation bond, which is exactly what it states. The issue is not financed by any single project of the municipality. Rather it is funded by the full faith and credit of the municipality and its ability to meet its general obligations.
revenue bond is a bit different. In general they are subject to the ability of a specific project or a specific agency of that municipality. For example, should you purchase a bond that was designed to cover the financing of a new bridge, and the bridge collapsed, the ability for you to redeem your funds will potentially be in jeopardy, as the tolls are no longer being collected. However under such a circumstance the state or city may still be in excellent fiscal condition with no impairment to its ability to repay its other debt obligations. It is for this reason revenue bonds are typically viewed as carrying more risk, which in turn can carry more of an income to compensate for the added risk.

In the case of municipal bonds, there can be other avenues of added protection that you may want when buying an issue. One such feature is
insurance. Unlike the Federal government, a municipality cannot simply create more money when there is a budget shortfall whenever it sees fit to do so. It is certainly not impossible for a local municipality to go bankrupt. While this is a fairly rare occurrence, it has happened. The bond issuer can issue these debt instruments with an added layer of insurance against a default by a private insurer. There are a relatively small number of companies that specialize in this type of insurance.

It should be noted that a bankruptcy in a local municipality does not meet the same definition of an individual bankruptcy and does not usually mean a total loss to the investor. Rather in such instances, the schedule of interest and principal payments may be renegotiated along with the issues duration. Typically a municipality would have to file under the Chapter 9 bankruptcy rules.

Another aspect to consider when buying a muni bond is a sinking fund protection. A sinking fund is a separate pool of dollars that are set aside for the purpose of the municipality to retire its debt. This can provide an added layer of protection against the possibility of default.
There are some added tax concerns that too few investors often realize. In some instances when a revenue bond is purchased, if the bond is issued for certain types of projects that are not considered to be issued for
public purposes such as the financing of a new football stadium, the interest may be an added liability in the dreaded Alternative Minimum Tax calculation. When buying the bond, you can inquire about this in advance as to whether or not he bond will be exempted from AMT. Furthermore, tax free income derived from municipal securities is an add back for the purpose of calculating Modified Adjusted Gross Income (MAGI), which may impact various aspects of an income tax return.

Unlike US treasury issues, most muni bonds typically have what is known as a
callable feature. This permits the issuer to retire the debt sooner than expected and return to you your principal at specific points in time should the issuer deem it favorable to do so. This can alter your expected return from what you originally anticipated. When buying a muni bond it is important to obtain two separate quotes. One is yield to maturity, which indicates a rate of return should the bond be held the full duration. The other is yield to call, which indicates a potential return if the issue is retired early.

The bond market in general is a large and fairly complex investment arena with many twists and turns. You need to be keenly aware of the potential markups by the broker-dealer, which can be quite significant. In addition, an investor needs to be aware of issues trading with what is known as
accrued interest in the secondary market. You should understand whether or not you are buying an issue at a premium or a discount. The municipal market can be a bit more complex in terms of its liquidity risks as well as potential tax implications. In general, the average investor is much more likely best suited to be using active fund managers and/or ETF securities to participate in the fixed income markets. These vehicles provide greater liquidity, as well as potential investment expertise.

In what may be a very challenging environment for interest rate sensitive securities in the future, as well as questionable areas of sound credit, and an active fund manager may be well worth it. The recent crisis related to Puerto Rico bonds is a very good example of how many active managers were able to avert the liability well in advance. Municipals, like most fixed income instruments are subject to both interest rate and credit risk. While interest rates remain close to record lows, it is still important to diversify portfolio holdings and lower the correlation of assets you own to ensure they are not always moving in perfect tandem. Fixed income investing is still an important component to achieving this outcome. Ultimately, one’s tax status will determine the benefits of using tax free municipal securities. As such, it is typically prudent your consult your tax advisor, as well as your financial advisor.

This month’s post comes to us from Joseph M. Favorito, CFP® a Financial Advisor at Landmark Wealth Management, located on Long Island in Melville, NY. Read More...

The Reality of the DOL Fiduciary Rule

The Reality of the DOL Fiduciary Rule

I rarely write opinion pieces. I’m not sure why to be honest, but I prefer to stick to facts, figures, and strategies. Opinion pieces are far more grey rather than clear cut.

On the eve of when the Department of Labor Fiduciary Rule was supposed to go into effect, I’m both infuriated and ecstatic all at the same time. I suppose I’m somewhat bipolar when it comes to the new fiduciary rule.

Why so emotional? The rule is great for investors, bad for brokers, and neutral to negative for current fiduciaries. It’s a hot bed of “what ifs” and “what could be” when it comes to how financial advisors interact and guide their clients.


Is it time to rebalance?

To rebalance or not to rebalance; that is the question. Alright, that may be a slight overstatement but with the Dow Jones reaching all-time highs and closing at 21,005.19 on March 3, 2017 (LINK:https://www.bloomberg.com/news/articles/2017-03-03/s-p-500-makes-it-six-weeks-of-gains-as-economic-signals-brighten) if it’s not on your mind perhaps it ought to be. Rebalancing sounds simple in theory but in practice can actually be quite complicated. In this post we will look at the what, why and when of rebalancing your portfolio.

What Is Rebalancing?

Let’s start with the question you may be wondering but don’t want to ask - what is rebalancing?

Dance Your Way To A Healthy And Happy Retirement.

Dance Your Way To A Healthy And Happy Retirement.
I used to think dancing is something young people did in noisy downtown bars or nightclubs. There were two varieties, the free-style sixties dance and the cowboy line dance. I thought dancers were mostly inebriated or snorting something or both. I thought dance clubs were noisy, with loud obnoxious music and dirty.

Then I met Paul Mallin. I met him at the gym where I train. He is slim and in excellent physical shape for a man in his 80s. He explained to me that he is having the time of his life, traveling the world, teaching dance and judging dance contests. He was just back from Spain and Portugal where people entertained him in their own homes. He is off to Argentina and Brazil for more of the same. Warren Buffet says he skips his way to work every morning. Paul dances his way to work. I wanted what he had.

How Bitcoin Works, Explained for English Majors.

How Bitcoin Works, Explained for English Majors.

A bitcoin is essentially a large number. A very large number. If you know the number, the bitcoin is yours to spend. If someone else knows the number, they can spend the bitcoin and your money is gone.

Secret Password

So the very large bitcoin number needs to be kept secret. Bitcoin owners call this your private key. We will call it your “secret password”. You can assign your own secret password as long as it has the required number of digits. Most people get a random number assigned as their secret password. The problem is that it is hard to remember. If you forget your secret password, there is no way to recover it. So special care must be given to writing down or save your password somewhere safe, but also somewhere where you have access to it at all times. Remember, you never tell anyone your secret password otherwise they may use it.

The bitcoin program takes the secret password and does a calculation on it resulting in another number, which is unique to your secret password. This other number is your public key. We will call it your “account number”. Anyone can know your account number. In fact, they need to know your account number to send money to you, or to verify that you sent them money. Some people post their account numbers on the web and say "please send me a tip". It is totally safe to give this number to everyone.


Understanding the FAFSA and College Financial Aid

Understanding the FAFSA and College Financial Aid
Ann Garcia, Independent Progressive Advisors

Filing for college financial aid is a lot like filing for taxes, especially in that if you understand how the process and formulas work, you can use that to your advantage. As the new year kicks off, many families of college-bound high school students start thinking about how to juggle their finances to improve their chances of receiving financial aid. Here is an overview of the aid process and formulas so your family can make the most effective choices.
Step 1: What type of aid are you eligible for?
Before making changes to your financial picture, you need to first determine what type of aid your student is likely to get: need-based or merit. To do that, use the FAFSA4caster
here to estimate your Expected Family Contribution, or EFC. (To get a more accurate result, add back any pre-tax retirement plan contributions to your AGI from your tax return.) If your EFC is greater than the net cost to attend at the schools you’re considering, then you are more likely to be a merit aid candidate than a need-based aid candidate. Unless you have a lot of flexibility in income and assets, trying to move things around to outsmart the aid process is not likely to be a good use of your time. For example, if your EFC is $32,000 and you’re looking at public colleges costing $25,000 annually, you don’t need to juggle. On the other hand, if you’re looking at schools costing $40,000 and up, there might be opportunities to receive some need-based aid.
Step 2: Understand What Goes into the Aid Formula
The FAFSA EFC has four components:
  • Parents’ Income
  • Parents’ Assets
  • Student’s Income
  • Student’s Assets
Each of these is treated slightly differently in the formula, and the parents’ items are treated more favorably than the student’s.
Each component other than student assets gets an “allowance” amount that doesn’t count in the formula. The allowances are pretty small: for parent income, the allowance is approximately the federal poverty level for a family of that size. Married parents get an asset protection allowance of about $18,000. Students get an income protection allowance of about $6,400. Everything above those amounts, and all included student assets, count towards the EFC, albeit in different percentages.
Step 3: Know What Counts and What Doesn’t
More important than the allowances, though, is what is included or excluded from each component in the formulas. When it comes to income, in addition to the income protection allowance, several items are subtracted:
  • Taxes paid (the exact amount of federal taxes, plus an allowance for FICA and state income taxes)
  • An “employment expense allowance” if all parents in the household work
Other items are added back:
  • Untaxed income such as child support or Roth IRA distributions
  • Pre-tax retirement savings contributions
  • Added to student income is any money received from anyone other than the parent filing the FAFSA. This includes distributions from grandparent-owned 529 accounts and contributions from a non-custodial (on the FAFSA) parent.
On the asset side, the FAFSA excludes several big assets:
  • Retirement accounts
  • Home equity
  • Cash value life insurance
529 plans owned by the parents have many advantages, but being excluded from assets in the aid formula is not one of them.
Step 4: Replace Myths with Facts
One of the biggest myths in college planning is that the formulas penalize savings. In fact, the contribution from assets is negligible: 5.64% of assets in excess of the asset protection allowance actually count towards the EFC. So if a family saved $50,000 for college, after subtracting the asset protection allowance—let’s say $23,600 for this family—their EFC would only increase by ($50,000 - $23,600) * 0.0563 = $1,488. In this case, they come out ahead by $48,512.
Income is by far the bigger factor. As with taxes, income is assessed at progressive rates in the FAFSA formula, with the highest parent “bracket”—47%-- kicking in at “available income” of just $32,300 on the current FAFSA. Students get an income protection allowance of about $6400; all student income above that is assessed at 50%. So a student with $10,000 of income would see their EFC increase by ($10,000 - $6,400) * 0.5 = $1,800.
Which leads us to another myth: that college money coming from grandparents or others never counts in the formula. While it’s true that third-party college savings accounts aren’t reported as assets, any money coming out of them counts as student income in the year in which it’s received. Student income also includes funds coming from the non-custodial (on the FAFSA) parent, if the parents are divorced.
Perhaps the biggest myth is this: You won’t qualify for financial aid, so filling out the FAFSA is a waste of time. The FAFSA serves purposes besides need-based federal aid. Chief among them: it’s required for access to federal student loans (including both Direct Student Loans and Parent PLUS loans), and schools may require it for their own aid programs—even some merit awards.
If that’s the biggest myth, then the second biggest myth is this: Having a low EFC means you will get lots of scholarships. Unfortunately, there is no requirement that a school meet your financial need; in fact, few colleges commit to meeting 100% of financial need, and even among those that do, a substantial portion of the aid package tends to be “self-help” aid, i.e. loans and work study. Knowing how the FAFSA formula works can help you to qualify for additional aid, but a low EFC should only be one of several tools you use to prepare financially for college. Your advisor can recommend appropriate savings and cash flow strategies to supplement your likely aid package.
For more, visit
The College Financial Lady.

Why Should You Care About Bitcoin?

Why Should You Care About Bitcoin?


Bits are computer lingo for ones and zeros, the elementary particles of information. A bitcoin is a coin made out of bits. Suppose you had a gold coin, a 1 ounce Gold Eagle minted by the US Government. Now suppose by some magic, it could be converted into bits, 1s and 0s. This is a good way to think of bitcoins.

They are coins, with all the properties of a coin but they are made of bits and can therefore live on the internet. They can move across a continent in milliseconds. They don't have weight or bulk. You can carry a million bitcoins in your pocket and still run a marathon. They contain their value in themselves. Their value is not determined by any human authority, just like gold. This is not a perfect image of a bitcoin, but it is a good start.

There is a mystery surrounding the creator of bitcoin. Nobody knows who this creator is and nobody can deny that there is definitely the touch of genius involved. Many people are talking about bitcoin. You will be increasing your distance from younger generations if you do not understand what it is and how it can shape the future.

1. Bitcoin is Here to Stay

Mobile Apps come and go. Bitcoin is not a mobile app. Products come and go. Bitcoin is not a product. It's not a brand, not a technology, not a trademark, not a patent. Bitcoin is an elegant solution to a mathematical problem. This is timeless. The Pythagorian Theorem: A^2 + B^2 = C^2 is timeless. It is fad-less and fad-proof.

It is more than a currency. Currencies come and go, usually because the sponsoring government disappears or changes the rules. Bitcoin has no government, so change is unlikely.

It is more than a commodity. Commodities come and go, because uses change or supplies are found. Whale Oil used to be a vital commodity. Natural gas has replaced it. Cotton used to be called King Cotton, the commodity that built the South. Diamonds used to be a symbol of wealth. Now diamonds are made in the lab and are purer, clearer, and more perfect, than the ones that come from the ground. Bitcoin has a fixed supply that never can be changed.

It is more than a payment system. Think of all the computer code that is contained in the computers of J. P. Morgan Chase. Millions of lines of code. Think of all the people who maintain and operate all these bank systems. Now multiply this by all the banks over the world. Did you know that all this could be replaced by two Bitcoin programs? The user program and the processor program. Bitcoin is a global payments system in a box. A small box. It is a disrupter of the banking system, and of the modern mode of commerce.

How is it a disrupter of commerce? Just think of this scenario: A small African nation has a coup. The new dictator decides they need to establish banking relationships with the rest of the world, which they used to have before the war, but all of which is now destroyed. He doesn't have MBAs in Finance from Harvard in his cabinet, so he approaches Deutche Bank, Credit Suisse and the Bank of America.

A few weeks later, a plane load of overdressed bankers wearing Brooks Brothers arrive in the capital city, which has one hotel. They each present a plan that involves building infrastructure, bank branches, and correspondent relationships that cost millions of Euros (or Dollars). This is hard currency they have in short supply. So they also include an easy repayment plan that lasts decades.

Then a bright, young nephew to the dictator says, "Why don't we just run bitcoin? I can download it and have it running in about 30 minutes. We can do it on a laptop. What have we got to lose?" Bitcoin is also a central bank in a box.

2. Bitcoin is Firmly Established and Growing.

What do Tesla, Dell, Microsoft, Subway, Home Depot, Kmart, Sears, Bloomberg, Wordpress.com, Overstock.com, Newegg.com, TigerDirect, LOT Polish Airlines all have in common? Here is a list, although not updated, of some of the largest vendors accepting bitcoin. https://99bitcoins.com/who-accepts-bitcoins-payment-companies-stores-take-bitcoins/

We don't know the number of actual bitcoin users. One large bitcoin wallet provider has seen a constant increase in the number of users. In fact, the graph, looks identical to an upward sloping line. https://blockchain.info/charts/my-wallet-n-users

More businesses are using it as a means of payment. In 2015, there were 100 thousand businesses accepting bitcoin. http://www.ibtimes.co.uk/bitcoin-now-accepted-by-100000-merchants-worldwide-1486613. Today, 2017, we don’t know how many business there are except to say there are multitudes more. It is difficult to count because there is no central registry, businesses are changing daily, and because there are workarounds. For instance, amazon.com doesn’t presently accept bitcoins, but one can exchange bitcoins for amazon gift cards. https://paxful.com/buy-bitcoin/amazon-gift-card

Approximated $2.3 million are earned daily by bitcoin processors, these are people who lend their computer resources to the global bitcoin network and get paid for processing transactions. They are processing 300,000 bitcoin transactions per day and the average value per day is 400,000 BTC. Or approximately $361,200,000 daily dollar volume.
https://blockchain.info/charts https://blockchain.info/charts/miners-revenue.

The bitcoin processing network has been the most powerful computer in the world since 2013. Bigger than any known computer network and some believe bigger than NSA, CIA and KGB computers. It is bigger than 500 googles, and 10,000 banks.

3. Bitcoin is driven by the Rest of the World

Do Americans need bitcoin? Not presently. We are blessed with an efficient banking system, a stable currency and excellent point-of-sale technology. I can use ten different methods to pay at Starbucks. ApplePay, ChasePay being the newest methods. But do not forget that Bitcoin is a world phenomenon.

In other parts of the world it is more necessary. For example:

In 2009, the North Korean people were wiped out by new Won. The government decreed that old Wons were no longer allowed. People were forced to exchange the old Wons for new Wons. Unfortunately, the maximum amount allowed to be exchanged was 300 USD. There were riots in Pyongyang, and many people were killed by the police. https://en.wikipedia.org/wiki/North_Korean_won.

In 2013, Cyprus enacted a one-time 10% tax on savings accounts. Originally, they proposed a 20% tax. Suppose, you just sold your house and had the money siting in the bank waiting to close on your new residence. One student just received money for her tuition, when the government confiscated 10%. https://www.theguardian.com/world/2013/mar/16/cyprus-savings-levy-imposed-eurozone

This year, 2016, India recalls 1000 and 500 rupee notes. There are reports of people spending all day waiting in lines at their banks. http://www.newsmax.com/TheWire/500-1000-rupee-notes-india/2016/11/08/id/757783/.

Will we ever need it in America? Maybe. Harvard professor and advisor to president Obama, Lawrence Summers is proposing eliminating the 100 dollar bill and the 500 Euro bill. With the November election it is less likely this will happen, however, many powerful government officials still like the idea. https://www.washingtonpost.com/news/wonk/wp/2016/02/16/its-time-to-kill-the-100-bill/

So in conclusion, Bitcoin is a genius mathematical solution that defies categorization, the number of users are growing daily and it is worldwide phenomena led by many countries. If nothing else, Americans should learn about bitcoin for tourism reasons. But I believe bitcoin will soon find ways in the lives of every person.

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