January 18, 2017

http://www.investopedia.com/financial-edge/0113/the-dangers-of-a-reverse-mortgage.aspx

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.

http://www.investopedia.com/news/george-soros-lost-nearly-1b-due-trump-win-gld-nflx

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
28:26 MSG‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬

Advertisements

November 16, 2016

http://www.fool.com/investing/2016/11/10/trump-wins-3-stocks-to-buy.aspx

Donald Trump has secured the White House and investor attention is quickly turning to finding companies perfectly positioned to profit from his plans. While no one can know for certain what’s in store, Trump’s plans to ramp up infrastructure spending could make this the right time to pick up shares in Chicago Bridge & Iron (NYSE:CBI), Caterpillar Inc. (NYSE:CAT), and Cliffs Natural Resources (NYSE:CLF). Trump’s vision for America involves rebuilding bridges, roads, and railroads. It’s estimated that $3.3 trillion is needed to fund this process. Chicago Bridge & Iron has its roots in bridge-building, but the company, which now goes by the name CB&I, has transformed itself into a major player in energy and water infrastructure. This company receives 70% of its revenues from US Projects so it could be a good buy if infrastructure spending increases. Industry watchers target EPS of $4.54 in 2017, and that means that investors can buy shares for less than seven times next year’s estimates. 
Caterpillar’s machines are a staple of construction sites everywhere, but slow global economic growth has caused a downturn in the company’s business over the past few years, and that’s been a drag on its shares. Last quarter, North America sales, which represent about half of the company’s global revenue, fell 20% year over year because of lower infrastructure and mining demand and lower oil prices. If Trump can kick-start U.S. construction activity, then Caterpillar’s North American construction equipment and diesel and natural gas generators revenue should climb. If the company can properly manage its expenses, and its global demand doesn’t decline, then Caterpillar could be a good addition to your portfolio during the Trump presidency. Cliffs Natural Resources is an iron ore company that is the largest producer of iron ore pellets for American steel companies and producers. Over the past year, the company has reduced its debt and cost of goods sold which means a higher net income. The author recommends these stocks, but I encourage you to seek more than one source when adding to your portfolio, and another factor to consider is are you holding to sell or are you holding to hold onto forever? I’d research to see if these stocks are paying a dividend, and if they aren’t what is your exit strategy when you buy this stock? Ultimately ask yourself am I investing for cash flow or capital gains?


http://www.investopedia.com/advisor-network/articles/111116/if-you-win-1-million-can-you-minimize-taxes/

Due to the value of the author’s content, there is heavy quotation:

You may dream of having $1 million, but if you got it what would your tax plan be? One school of thought says just get the money and you can figure out what to do then. I reject that idea and I’ll show you why – the goal should be to keep more of what you make. Let’s start by thinking about professional athletes and entertainers, who often come into large sums of money but find themselves in a different situation regarding taxes. If they are considered independent contractors and not employees, then they would receive their million dollars without any taxes taken out. With even more up-front money in gross income, they could end up spending even more money, only to receive a surprise at tax time when they find out how much they still owe.

In the 1980s I met someone whose boyfriend won $4 million in the lottery. He opted to take the payments whereas most people take the lump sum payment. Was that a good idea? Today, if you take the lump sum in a $1 million lottery, your total federal income taxes are estimated at $356,875. Instead, let’s look at what happens if you take the million dollars as 20 payments of $50,000. Your total federal income taxes are estimated at $5,684. You have saved $243,195 over the 20-year period.

Total Winnings  $1,000,000 $1,000,000
Payments 1 20
Paid Out in Year 1  $1,000,000  $50,000
Taxes in Year 1 $356,875.00 $5,684
Total Received in 20 Years $356,875.00 $113,680
Savings $0 $243,195


This example above shows the power of delayed gratification, and at the same time how much taxes can affect the money you receive. When someone says, they make $50,000 a year, ask yourself is this amount gross income, take home (gross profit) or net income? Most of the time the number is gross income. This amount is before taxes and deductions, so your actual take home pay is a lot loss. In the above scenario, if you were given only $4 million to live in, would you be able to manage it properly to grow or would you spend it all? When you’re investing in assets always think of cash flow, and return on investment. How long will it take for me to get my money back when I put it in on an investment? Remember it’s not about how much money you make, it’s about much money you keep and what you do with it afterwards. With a financial checkup, I can help analyze how much your net income is, and I can show you what I look for when it comes to cash flow.

If you need a financial checkup you can reach me in the contact me section.

For this week, I’ve included Marcus Lemonis’s Top 10 Rules For Success from Evan Carmichael’s YouTube channel.

“If you think you know it all, you’re a fool for sure; real survivors learn wisdom from others.” Proverbs
28:26 MSG‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬‬