Too Much Tax!

Have you ever had the paranormal experience of holding a mutual fund that went down in value, only to discover that you somehow wound up owing taxes on it? As strange as it sounds, it could happen. How and why it happens is beyond the scope of this preview, but the bottom line is sad but true — when investing in a managed mutual fund, you have virtually no control of the taxes you pay while holding the fund.

If someone is interested in reducing tax, one of the first things they should ask themselves is whether or not they are investing in managed mutual funds outside an IRA. Investing in managed funds outside an IRA could result in taxable consequences that are beyond your control. As a result, paying taxes each year on a fund only reduces your return and that’s certainly not an efficient way to invest.

How much tax does your fund cause? Your tax return should give you a good idea as to how much tax you’re paying on your funds. Another way of checking out the taxable consequences of holding a fund(s) is to investigate something called “turnover” and Morningstar.com is a good place to research this.

“Turnover” simply means “the amount of times a year the fund manager replaces the portfolio with a different set of stocks.” If the fund manager changes the portfolio once a year, that’s a 100% turnover. If the fund manager changes the portfolio two times a year, that’s a 200% turnover, if the manager changes half the portfolio that’s a 50% turnover, etc., etc.. Each time the fund manager “turns over” a portfolio that usually leads to one thing: paying tax, and in some cases, too much tax.

Certainly, there are some funds out there that are more tax efficient than others, but as far as I’m concerned, the simplest way to reduce taxes on managed mutual funds is to invest in the indexes instead.

Remember: an index is a “passive” investment. There is no one trading stocks within the index and given there are typically few trades (if any) done within the index, there is often zero “turnover” that would cause taxable events from taking place. Investing in the indexes often puts you in control of when you pay the tax, not a fund manager out there making those decisions for you.

Phillip R.

Insurance… In a Nut-Shell!

Life Insurance

Life Insurance is the best way to transfer wealth tax free. The major advantage of life insurance is, if titled properly the death benefit is tax free. We are experts with over 75 years combined experience in this field, plus advanced degrees in law and accounting.

The purpose of life insurance is to:

a) Create Wealth for Heirs Instant Wealth:

Recently, we had a person approach us with some cash on hand, wanting to make an investment in the stock market that would provide the best possible returns for his granddaughter. He had little need for the money, had plenty of money outside this investment, and was quite clear that this money was being put to use for one reason and one reason only: to leave behind to his granddaughter. In his case, we told him to stay away from the stock markets and instead invest the money into a life insurance policy. Why?…..The investment into the life insurance policy instantly more than doubled his money and guaranteed it to his granddaughter upon his demise.
The risk of the market and the time it would take to potentially grow the money to equal the life insurance’s guaranteed death benefit were completely eliminated, thereby making the investment into the life policy well worth the effort and the monies left to her are tax free.

b) Replace Income:

If a pension and or social security doesn’t carry over to a spouse or special needs child upon death, life insurance is the best source to replace needed
income.

c) Cover estate taxes:

Paying The Tax: In most cases, taxes are due at death, creating a burden for those who are left behind. Estates can be taxed; so can IRA’s, annuities and a long list of other investments. Needless to say, someone has to write a check to pay the tax, and the “liquidity” of an estate is sometimes limited, especially when one passes away with generally liquid large real estate holdings and relatively speaking low cash amounts. In many cases, a quality life insurance
policy can be a beneficial “gift” to leave behind so that taxes are paid from the tax-free death benefit the life insurance provides.

d) Tax Free Income Tax Free Income:

Depending on how the life insurance policy was designed, there could be significant cash buildup within the policy. With cash in the account, as mentioned above, it is highly possible that you could withdraw cash from a life policy tax-free. Generating income from the cash value within a low-cost, high-quality life insurance policy could make this one of the strongest benefits of adding some life into your life.

e) Free Up Principal:

We meet many people in retirement who are saving as much as they possibly can for their family. For a fraction of the estate value, they may want to consider investing a small portion of their investments into a life insurance policy that guarantees the value of the estate at death. Doing so often provides the insured peace of mind knowing that if they wind up spending all of their money down to the last penny, they will still leave the value of the estate behind thanks to the life insurance policy.

Tax-free Wealth Transfer- Saving you and your family a lot in taxes!

No matter how much money or possessions you amass in life, they will be of no use when you die. Unfortunately, taxes in this country are so rampant and repugnant, wealth planning at the hands of inexperienced or ill informed advisers can make your money a tax magnet for every government leach on the dole for your hard earned money.

This is why you need Tax-Free Wealth Transfer to help put the power of your money back in your hand and keep it away from those who didn’t work for it.

The Secret is Out In The Openphillipwassermaninsurancelogo.png

Consider a situation where you worked for years at the same job, and struggled every day to take care of your family and set some money aside for a rainy day.

While you have been paying tax on every dime of interest you earned, rich people have been getting off scot-free because they know how to invest their money in specialized life insurance plans. This one tiny secret and loophole in the tax code is so highly guarded, it is often referred to as the “770 Club”.

Normally, you don’t get access to this “club” or find out about it unless you have the very best wealth planner and enough money to associate with elites that know the secret.

Today, more people are finding out about Tax-Free Wealth Transfer. If you have annuities, IRAs, regular life insurance, stocks, bonds, and other investments, they can all be transferred into a tax free haven in a matter of moments.

We will give you all the information you need, as well as provide you with a list of the best and most stable insurance companies. Don’t wait another minute to protect your assets from estate taxes and secure them for future generations in the bargain.

– Phil Wasserman

“The 10 Most Common Mistakes People Make With Their Money…” By: Alan Haft (Part Four)

common-money-mistakes Alan HaftPhil Wassermans partner, Alan Haft, reveals his fourth most common mistake people make with their money. Alan Haft has written many educational books and articles to help retirees navigate through the confusing world of retirement.

Mistake Four:  “Too Much Tax!”

“Have you ever had the paranormal experience of holding a mutual fund that went down in value, only to discover that you somehow wound up owing taxes on it? As strange as it sounds, it could happen. How and why it happens is beyond the scope of this preview, but the bottom line is sad but true — when investing in a managed mutual fund, you have virtually no control of the taxes you pay while holding the fund.

If someone is interested in reducing tax, one of the first things they should ask themselves is whether or not they are investing in managed mutual funds outside an IRA. Investing in managed funds outside an IRA could result in taxable consequences that are beyond your control. As a result, paying taxes each year on a fund only reduces your return and that’s certainly not an efficient way to invest.

How much tax does your fund cause? Your tax return should give you a good idea as to how much tax you’re paying on your funds. Another way of checking out the taxable consequences of holding a fund(s) is to investigate something called “turnover” and Morningstar.com is a good place to research this.

“Turnover” simply means “the amount of times a year the fund manager replaces the portfolio with a different set of stocks.” If the fund manager changes the portfolio once a year, that’s a 100% turnover. If the fund manager changes the portfolio two times a year, that’s a 200% turnover, if the manager changes
half the portfolio that’s a 50% turnover, etc., etc.. Each time the fund manager “turns over” a portfolio, that usually leads to one
thing: paying tax, and in some cases, too much tax.

Certainly, there are some funds out there that are more tax efficient than others, but as far as I’m concerned, the simplest way to reduce taxes on managed mutual funds is to invest in the indexes instead.

Remember: an index is a “passive” investment. There is no one trading stocks within the index and given there are typically few trades (if any) done within the index, there is often zero “turnover” that would cause taxable events from taking place. Investing in the indexes often puts you in control of when you pay the tax, not a fund manager out there making those decisions for you.”

By Alan Haft 

Diversifying Your Portfolio

Phil Wasserman, Sarasota FL.

“In uncertain times, you need to diversify a portfolio to protect your capital, and capture the upside of markets. When you diversify you look toward uncorrelated or lesser correlated items. Diversification allows you to spread your money into different stable economies around the world. Diversification is what helps to protect you and your money for the future. The “Rainbow Strategy” allows for you to never have to guess or worry about global growth. A Rainbow Strategy spreads capital between different markets around the world. Talk with your financial planner about how advantageous this strategy is to your portfolio.”

The Top Ten Retirement Planning Tips

  1. Have money in your savings.
  2. Save on fees.
  3. Save on taxes.
  4. Be realistic about life expectancy.
  5. Use annuities for guaranteed income.
  6. Don’t listen to what neighbors, friends or relatives say about money.
  7. You don’t need 2-3 homes. Ever hear of a hotel?
  8. Question your doctor and get a second opinion.
  9. Enjoy your money. After all, you cant take it with you.
  10. Don’t believe everything you read. Everyone has an agenda. 

Accelerated Benefits for Annuities

Today it is common for annuities to allow for accelerated benefits to pay for the following:

  • Home Health Care Rider
    •  If you require Home Health Care Services by a licensed Home Health Care provider as a result of being impaired in performing two out of six activities of daily living.
  • Nursing Home Benefit Rider
    •  If you are confined to a licensed nursing home for more than 60 days, and your confinement begins at least one year after the annuity’s effective date.
  • Terminal Illness Benefit Rider
    •  If a licensed physician certifies that you have been diagnosed with an illness or condition that causes your life expectancy to be less than one year.

These powerful benefits are usually included at no cost, although not all annuities have them.

 

“The 10 Most Common Mistakes People Make With Their Money…” By: Alan Haft (Part Three)

common-money-mistakes Alan Haft

“The 10 Most Common Mistakes People Make with Their Money,” written by Phil Wasserman’s partner, Alan Haft. In this section we are going to show you the third mistake people make with their money.

 Mistake Number Three; “Using the Wrong Gas.”

Let’s go back to my very simplistic “diversified”
portfolio outlined in Mistake #2:
1. US Stocks: 20%,
2. International Stocks: 20%,
3. Technology: 20%,
4. Real Estate: 20%,
5. Flavors of the Day: 20%.
If the above portfolio met the investor’s requirements for diversification, the next logical step would be to select “something” to represent each sector within the portfolio. The “something” I’m referring to basically comes down to one of three possible choices:

1. Rocket fuel: Individual stocks,
2. Watered-down fuel: Managed Mutual Funds
3. Diesel Fuel: Stock indexes

By Alan Haft

“The 10 Most Common Mistakes People Make With Their Money…” By: Alan Haft (Part Two)

Phil Wasserman’s partner, Alan Haft announced “The 10 Most Common Mistakes People Make With Their Money.” We are going to reveal a brief preview of the second  mistake.

In its most simplistic form, “re-balancing” a portfolio simply means maintaining its original balance when the portfolio was first established.
Let’s take a closer look at what this really means…Failing to re-balance a diversified portfolio is like forgetting to cook that pizza mentioned in the last common mistake. Without this critical step, what would typically be my personal all-time favorite food could easily turn out to be the worst meal ever.

Here’s why:

Suppose we turn back the clock to the late ‘90s. For sheer simplicity, suppose I listened to prudent advice and diversified my investment portfolio into five sectors of the market, dividing my money up equally amongst them:

• US Stocks: 20%
• International Stocks: 20%
• Technology: 20%
• Real Estate: 20%
• Flavors of the Day: 20%

Given the gains and losses of various market sectors, suppose a year later the value of my diversified portfolio (in percentages) winds up looking like this:

• US Stocks (up in value): 30%
• International Stocks (down in value): 10%,
• Technology (surged in value): 40%,
• Real Estate (down in value): 5%,
• Flavors of the Day (down in value): 15%.

True, I may have been diversified but do I just end the process there? Not if I want to give myself the best possible chances for sustained and consistent investment success. If I just held my portfolio above without re-balancing it, as the market later went down, I would have very likely lost the gains I made within the US Stocks and Technology sectors.