Even before the Affordable Care Act people were looking for alternatives to traditional health insurance. The biggest desire to change was insurance premiums that were getting out of control. Some also wanted to cut a middleman out of the equation. Payment of claims is an even more important consideration, however.
How do you invest during times of war? Do you change investing strategy during periods of heightened geopolitical tensions? These and similar questions need to be asked by wealthy people and those wishing to become wealthy.
It has been a long time since developed nations have tasted serious inflation. Unless you are near 60 or older you will not have experienced the last time inflation was a serious issue in the 1970s into the early 1980s.
Coupled with low inflation is low interest rates. It is hard to miss the pattern of interest rates since 1982. Each increase in interest rates was followed by a new low in interest rates until we bumped against zero and stayed there for much of the past decade.
The stock market loves low interest rates. The constantly declining interest rates gave us a stock market that has relentlessly climbed. In the early 1980s the price/earnings (p/e) ratio for large capitalization stocks was in the single digits and the dividend yield was in the 6% vicinity. Now the p/e multiple is closer to 30 and the dividend yield is below 2%.
A government would be considered intolerable if it taxed people 10% of their time in service of the government. Yet idleness taxes many of us much more if we consider all the time spent checking email, our phone, social media and news feeds. All these activities add nothing of value to our lives or to those around us and is no worse than the government taxing you a percent of your time.
Not all income is treated equal. Ordinary income is treated the worst by the tax code. Long-term capital gains are granted preferential tax treatment. And some income is excluded from income entirely.
When planning for retirement or any financial goal, taxes play a vital role in how quickly the goal is reached. The more tax-free income you acquire the better.
The tax code in the U.S. taxes all income unless specifically excluded by the code. Many sources of tax-free income is limited in scope, applying to very unique and special situations.
The list below contains 18 sources of federal tax-free income. States usually follow federal, but may have more or fewer items of tax-free income. Every reader should find several types of non-taxable income available to them from the list.
Benjamin Franklin might be the most important of the Founding Fathers. His steady hand and silence shouted more than hours of oratory. When younger minds became heated at the Constitutional Convention, Franklin sat quietly until it was obvious the attendees were at an impasse. Franklin, silent during most of the proceedings, suggested a break. Gently, he spoke with several delegates during the pause in the debate. Cooler minds returned and a nation was formed. It is fair to say the United States of America owes its existence to the virtues of a single man.
Ben Franklin knew he was not perfect by any stretch of the imagination. As a young man he set out to make himself a better person. He learned and shared sage advice still relevant today. At the core he listed 13 virtues he felt were important to master. They provided the formula for happiness, wealth and success.
Long before the modern FIRE (financial independence/retire early) movement, there was Benjamin Franklin. I learned from Franklin that retirement is overrated if you find those things you love to do and keep a healthy level of curiosity in your life. Unhappiness breeds the desire for retirement.
Winning at life, in marriage, financially, in your health, spiritually and physically were covered by Franklin. It was simple to set up, yet difficult to follow. Franklin, fully aware of his shortcomings, listed the virtues he wanted to uphold. Then he held himself accountable each day; never beating himself up for failing, but gently encouraging improvement each and every day.
Having money can change you, and not always in good ways. The risk is greatest for those who start out poor. For those lucky people, they have an additional challenge before them. If they fail they go all the way back into the swamp.
Money doesn’t make you a better person; it makes the kind of person you are more pronounced. If you are a kind and generous person, money will tend to make you more kind and generous. And if you are a a-hole, money will make you a much larger one.
Today I will share with you three stories: two personal and the other from a client. My hope is that you, kind readers, will learn from these lessons rather experience them personally.
I work hard sharing ideas on building wealth and lowering taxes. These are worthy goals that make the world a better place. What I don’t talk about often is the risks people face once they make it. There is no greater thrill than to watch someone born in poverty finding their way to an abundant life. All too often this is the moment they destroy their lives. Usually it is temporary; sometimes not. These lessons can help you avoid the same fate.
Once you reach 50 retirement planning takes on a new level of seriousness. Avoiding a setback is more important than ever as there is less time to recover.
There are tools available to help you build for retirement and plan for life in retirement. You can reduce taxes and increase income with these tools. Anybody can use these tools at any age; for those 50 and older these tools have added benefits reducing taxes and increasing retirement income.