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Beat Index Funds Every Year

Beating the average is “not” about finding the best of the best winners every year! It is about avoiding the clunkers. (Remember Buffett’s two rules!!! The secret is buried in there when you understand what he was saying.)

Winners are harder to find. But losers? Some are hard to spot and others stand out like a sore thumb. These deadbeats will break the Buffett rules and put you in the position of catchup. Hard to beat the indexes coming from behind.

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When to and Not to Do a Roth Conversion

Personal factors, your tax bracket, expected future income and when you plan on retiring all play a role. The answer isn’t as simple as playing the tax bracket game (convert be low a certain tax bracket only).

Other considerations can affect you taxes down the road. Even Medicare premiums are an issue. A high required minimum distribution (RMD)(currently starts at age 72, but pending legislation will gradually raise that to 75, if passed) can cost more than just a tax bill. It can also increase your cost for Medicare.

The best way to handle a Roth conversion discussion is to break it into two parts: the conversion phase and the retirement phase.

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Profit from Inflation

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%. 

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Outsourcing vs Technology in the Tax Industry

The tax profession is aging. Attracting new people to the profession is difficult because it lacks the glamour of other professions. But sit in any public forum and mention you are a tax professional and you will be inundated with tax questions and offers to take them on as new clients. The tax profession is a good field with ample opportunity to do good, but few even consider accounting or tax as a career option.

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Recovering from Identity Theft

Identity theft went from a nuisance to a problem nearly everyone needs to address. It has become the number one question from clients this year as more people fall victim.

There was a time identity theft meant you did something wrong, exposing your personal data. A few simple precautions prevented problems.

Today it is rare for a day to go by without news of yet another data breach or ransomware attack. Through no fault of your own criminals can gain access to your personal data, account information (including login credentials) and tax returns.

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18 Tax-Free Sources of Income

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. 

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