DID YOU KNOW THERE ARE MANY USES FOR MONEY BESIDES SPENDING, SAVING, OR INVESTING IT?
Here are some fun ways to use your coins:
- Increase the bloom time of cut flowers by adding a copper penny to the water in your vase
- Measuring—a US quarter measures exactly 1 inch in diameter
- Scratching lottery tickets
- Coin flipping “heads and tails”
- Weapon—flick at the tender spots of your opponent
- Golf or bocce ball marker
- Jewelry creations
- Wishing well sacrifice
- Worn in the shoe or another “safe” region of the body for good luck
- Collection for investment or hobby purposes
- Impromptu screw driver for “Coin-struction” Toys and miscellaneous uses
- Swallowing, if you’ve got the rare condition known as “pica,” which causes you to eat inedible objects: like coins!
- Magic tricks like the coin behind the ear favorite
- Relieve boredom—flatten on train tracks
As always, below are some efficiency of money ideas.
OUT-OF-THE-BOX THINKING ABOUT MONEY
1. The first phase of the Bipartisan Act of 2016 is completed. What’s next? If you were born after May 2, 1950, but before January 2, 1954, voluntary suspension of your own benefits up to age 70 is still available. However, by electing to suspend your own benefits, spousal and children’s benefits are also suspended. In other words, the option to suspend your own benefit while your spouse and eligible children collect benefits based upon 50% of your full retirement benefit has been eliminated.
2. The current phase (2nd part) of the Bipartisan Act is complicated. We recommend you work with an advisor that has the capability of running sophisticated reports that will help with your options. There is a lot of money at stake especially if you expect a long life expectancy.
3. Are you orchestrating your financial future or tap dancing around it? Planning is the key, and it is important to know the six hidden secrets of successful planning.
- There is more to be gained by avoiding losses than picking apparent winners with your money.
- You must first plan for expected and unexpected events.
- Our lives are governed by cash flow.
- Developing strategies with your money is more important than finding the perfect product.
- You can substantially increase your rate of return on your existing assets by minimizing, correcting, or avoiding wealth transfers.
- Asset location is as important as asset allocation.
4. Are you thinking about purchasing a new car? It is a lifestyle decision. A car is a non-appreciating expense. You might consider financing the car if the interest rate on the cash you would have used for the purchase is greater than the finance rate. It is important to decide “what is the most efficient use of my money?”
5. Do you want to know the details that determine when you can become financially independent. Listed are the questions that need answering:
- Rate of Return—What must you earn on your savings and investment dollars?
- Savings—How much do you need to save annually?
- Work—How long will you need to produce income?
- Standard of Living—Will you have to reduce your current lifestyle to save enough to meet your goals?
- Income Interruption—Are you protected?
6. Crossing the line—it happens! A client in his mid 60’s wanted to leave a legacy to his grown children. He decided the best strategy was to buy permanent life insurance, insuring that the policy would be in-force at the time of his passing. Permanent life insurance is available to persons in good health. He postponed the underwriting process for almost a year, and finally decided to move forward. In the meantime, he developed a health condition. He crossed the “DOU” (date of un-insurability) line. Life insurance as an option is now “off the table.”
7. Why am I losing money? My advisor says my average annual rate of return on my investments during the last two years is over 7%. Average rate of return is a math calculation not a financial calculation. You could have a gain of 100% in a year, and lose 50% in the next year. Your average rate of return is 25%, but your actual return is 0%. Be sure to use actual rates of returns to get an accurate picture of your account.
8. The Federal estate tax turned 100 in 2016. It was initiated in 1916. World War I was raging in Europe. Congress wanted a backstop in case America joined the fighting, and they thought it was a reasonable way to increase revenue. The tax has been on the books since its inception. Don’t fret about getting caught paying estate taxes. According to the tax policy only about 4,400 people are expected to have taxable estates this year. The current exemption is $5 million dollars per person. For questions about your personal situation, see a qualified Estate Planning Attorney.
9. The jury is still out on the final verdict on the total money that belongs to you in your IRA or 401K!
- Your money is under government control.
- The final amount you will be able to keep won’t be determined until you withdraw the funds.
- Uncle Sam doesn’t care about your tax bracket when you make the contribution. His only concern is your tax bracket when you withdraw.
- Mandatory distribution at 70 1/2 years old may put you in a higher tax bracket by default especially if you delay taking social security benefits.
- You don’t receive a tax deduction when you put money into an IRA or qualified plan. It is a tax postponement. Your income is less so you pay fewer taxes in the year you make the contribution. You will pay the tax at a later date.
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