In the last installment I discussed what a terrific investment Microsoft ended up being for my family during a 20 year, and counting, holding period. I really do attribute much of that success to the risky behavior of youth and pure luck. But as has been said in the past, “I’d rather be lucky than smart.”
In this post I will describe some income tax strategies I have used for my family in the past. As a CPA and retired Certified Financial Planner I have more expertise than most in these areas; however, this post is not income tax advice which should be sought by you from an expert prior to trying any of these techniques. Continue reading →
Can you save too much in your tax deferred retirement accounts? The short answer is, yes. The longer answer is perhaps, but most Boomers will never have to worry about it. The press is full of stories detailing the sad state of retirement funding for the Boomer generation and how they are woefully unprepared for what once was a distant retirement and is now upon them. Only recently have I started picking up on articles dealing with the equally serious problem of families who have saved too much, or at least too much in tax deferred accounts. Continue reading →
As a CPA and former Certified Financial Planner people often ask me for investment advice. Please understand any advice given on my blog should be run by your investment and tax advisors prior to implementation. Goes without saying, but I said it anyway. My favorite question centers on what the best investment I ever made was. My usual answer is Mr. Softy – Microsoft (msft). It’s my favorite because my wife and I made a substantial investment in the company early in our marriage and held on for over twenty years. This investment allows me to demonstrate risk and patience with the same investment.
In the early 90s not every desk had a computer on it and certainly most families had not yet purchased a home computer. Though unless you were living in a cave you knew something of the Bill Gates story and recognized that personal computers were being purchased for office workers like crazy. The reason I took the plunge was an article I read in a business periodical on hot Texas afternoon, more of a biography of Bill Gates really. In the article he described how he had no intentions of getting into the pc business but rather wanted all of the pc manufacturers to use his software. With every pc sold Microsoft would receive a royalty for its operating system. As he explained it, there might be a dozen companies that fight it out in the pc marketplace, but it really didn’t matter to Microsoft who the winners were because they would win with every sale. I bought his argument and a few days later purchased 100 shares of msft. Continue reading →
Tiger 21, more formally known as The Investment Group for Enhanced Results in the 21st Century, is in large regard a glorified investment club. It is an investment club with a $30 thousand annual membership fee. Collectively, the club’s 230 members control assets valued in excess of $20 billion and have a median net worth $75 million. I rather doubt anyone reading my Blog would qualify for membership. Yet the truly wealthy are worth studying in terms of how they invest and what it is that motivates them to take action. This is true because, as we have observed since the financial meltdown of 2008 – the rich indeed do get richer. The wealth of the rich has recovered while the middleclass in America continues to struggle. Continue reading →
My previous post demonstrated how a young guy named Rich got out of school, worked 40 years and saved enough to retire with an income equal to his final year salary from actually working. The key assumptions I discussed were that he would need to save 21% of his income for all 40 years and get a modest salary increase every year. What I did not discuss was the probability that he would be able to earn a steady 8% rate-of-return (ROR) on his 401k year in and year out.
I should note that his discussion is for your entertainment and designed to get you thinking about the future. Implementation of any concepts described should be reviewed with a professional financial planner beforehand.
As any student of personal finance, you should readily ascertain, the actual ROR you earn may jump around considerably. I’ve been an active investor for over thirty years and I have had years with double digit gains and years with double digit losses. On balance, I am far ahead for having been in the market of stocks and bonds since the early ‘80s. Continue reading →
As a CPA and a former financial advisor, it seems people are always asking me one of two questions: 1) how much should I be saving and 2) what do you think my number is? My usual answer is 15 to 20 percent and more than you think! The people asking the questions are usually looking for free advice and, after I give them the advice they seek, I add the simple disclaimer, “It’s worth every penny you paid.” All kidding aside, the financial discussions on this blog are to entertain and to get you thinking. When it comes time that you actually want to take action you should meet face to face with a qualified advisor, who should take the time to understand your individual situation. Continue reading →
With summer’s end, come the merchandise sales at the lake. Over the weekend I purchased a ball cap that I had my eye on for some time. That morning the $19.95 hat was in a large bin of hats offered for $5.00. As the young woman at the counter is checking us out she tells my wife Sue, “That will be $8.33.” Sue says, “That seems kind of high”, to which the sales clerk replies, “Well there’s sales tax”.
Mildly amused up to this point, I jump into the conversation. “ Do you agree the hat is five dollars?” “Yes”, she replies. “Is the Idaho sales tax rate still 6%?” Again, “Yes.” “Well then, the tax would be thirty cents and the total is $5.30.” At this point she presents us with a printed receipt and says, “But it says $8.33!” I offer, “Maybe if you tell it that the hat is $5.00 it will print the correct receipt.” She says, “Okay, I can override the price”. Me, “Really, they let you do that?” Oh my. Continue reading →