It’s difficult to turn on the television these days without seeing a slew of commercials for reverse mortgages. They feature past-their-prime celebrities such as Henry Winkler and Fred Thompson, extolling the benefits of “guaranteed tax-free income” for those 62-years-old and over. What they don’t tell you is that reverse mortgages can be dangerous and can put your biggest asset—your home—at risk. A reverse mortgage is simply a regular mortgage where the proceeds are paid out over a series of installment payments instead of all at once. This plan will use the existing equity of your home, and doesn’t need to be repaid until you sell the home or die. This type of loan can be beneficial under a scenario of a senior citizen using the proceeds to stay in his home while using the proceeds for medical expenses vs. selling his home. There are six dangers to keep in mind: complexity, pressure, future health, eligibility for government programs, high fees, and spousal eviction. The article goes into detail on these dangers. Reverse mortgages can be an important source of emergency funds for some seniors who would otherwise have to sell their homes to access their equity. There are several dangers to these plans. However, that can put your home at risk and sap your asset base. In all honesty, this article is presented to bring awareness that this type of product exists, and I personally am not advocating it. I do encourage the reader to pay attention to the fact that the writer of the article used the term asset base. Remember to grow your income-producing asset column to prevent forced into this type of a scenario.
According to a report in the Wall Street Journal, billionaire investor and philanthropist George Soros lost approximately a billion dollars following President-elect Donald Trump’s victory last November. Soros, who donated generously to the Clinton campaign, had bet that a Trump victory would lead to a sustained depression in market performance. However, the markets have responded with enthusiasm to Trump’s election in hopes that he would cut taxes and red tape. Soros also has investments in major technology companies, such as Amazon.com Inc. (AMZN) and Netflix Inc. (NFLX), whose stock prices fell following the President-elect’s shock victory. (For more, see also: How Did George Soros Get Rich?)
In contrast, Stanley Druckenmiller, a one-time Soros protegé, seems to have moved ahead of his old boss. The Wall Street Journal report states that Duquesne Family Office LLC, Druckenmiller’s firm, saw “gains of 10% in 2016.” This is because Druckenmiller, who has voted for Republican candidates in the past, predicted that the markets would swoon initially but rally later on a Trump victory.
Druckenmiller’s bearish stance on bonds and his bullish take on the dollar vs euro did help his profits. Gold prices, which were expected to rise after a Trump win, dropped sharply after the elections. Liberty Broadband Corporation (LBRDA), which was one of Soros’s big buys has rallied 12.5% since election night at the time this article was written.
If you need are interested in creating a budget, then contact me for a financial checkup in the contact me section.
For this week, I’ve included Learning From Your Mistakes – Motivational Video from the Endless Motivation YouTube channel.
“If you think you know it all, you’re a fool for sure; real survivors learn wisdom from others.” Proverbs