Why Study Accounting?Posted on July 18th, 2013
Accounting is the most employable, sought-after major for 2012, according to entry-level job site CollegeGrad.com
Accounting affects private investors
In 2007 65% of U.S households held Equities. The number has dropped down to 54% as of April 2012. (Source: www.gallup.com)
Eighty-seven percent of upper-income Americans — those making $75,000 or more annually — own stocks, as do 83% of postgraduates and 73% of college graduates. Sixty-four percent of Republicans hold stocks, compared with half of Democrats and independents. Men are more likely than women to be stock owners. Those aged 50 to 64 are the most likely of any age group to say they have money invested in the stock market.
According to Gallup.com, this drastic reduction can be attributable to:
The financial crisis of 2008 and the losses it produced for many investors have combined with government bailouts and Wall Street scandals to turn many Americans away from investing in stocks. Even as stocks have surged over the past couple of years, it has been hard for most Americans to understand what is happening on Wall Street and why, leaving them hesitant to invest in the stock market.
Balancing your retirement goals and helping immediate family?Posted on May 28th, 2012
This article raises multiple thorny issues. How do you maintain an appropriate balance between your retirement goals and helping immediate family? For starters, these are economically challenging times. Families have to pitch in one way or the other – grandparents helping their kids, and kids helping their parents/grandparents etc. Here’s one of many recipe’s for retirement:
- Begin with the end in mind – what are your values?
- Establish a plan, and buy insurance to protect any gaps. Make sure you plan for the kids college fund, taking care of your parents, retirement etc.
- Use a budget and develop the habit of saving – tight budget? Eliminate luxury items
- Setup an emergency fund for yourself – whether you are single, couple without kids, or married with kids
- Depending on your take home pay, setup an emergency fund for unexpected events – like helping a family member out with mortgage/rent payments or with food and utilities while they get back on their feet. Its more prudent to help out by sending checks directly to the bank/landlord or utility company.
- Review your plan on an annual basis and make necessary adjustments
- Do your due diligence so you know when to help and when to hold back
Should you think like an “investor” when investing in College?Posted on May 9th, 2012
According to a recent poll conducted by The New York Times and CBS News, 70% of parents surveyed were “very concerned” about how they would pay for college. Only 6% of parents reported that they were not concerned with college costs.
Yes it’s true that college grads earn a gazillion more dollars than high school grads, but is that true for all college degrees? Would it have made a difference if you earned a degree in Computer Software Engineering, Mathematics, Nursing, or Sociology? Would it have made a difference if you earned the nursing degree at an $80,000/year ivy league?
Geographic boundaries are quickly dissolving and its becoming apparent that countries need to find what they are comparatively good at and stick to it. Have you seen the TV ads on countries like Georgia?
Parents should employ this same tactic. They need to work closely with their child or children to try and figure out what they are comparatively good at. How young? The sooner the better. Some parents have mistaken this discovery phase as a means of “steering” or getting their kids to do what they couldn’t.
Determining which college your child eventually goes to, should start during this early discovery phase. Try and expose the child to as many opportunities as time, budget, and resources allow – a second language, learning how to play an instrument, visiting museums, traveling, gardening, reading books from the library etc. With ample resources available via the internet, it’s now easier trying to figure out which schools would be best suited to your child’s personality and interests. Start with a large pool and narrow that down to a handful when your child is in high school.
The Funding Process
Engage the child during the discovery phase. Help them set aside some of their weekly allowance towards the college fund. This is likely to continue when your child starts selling lemonade, delivering the weekend paper or bagging groceries for a couple of hours when they are in high school. Structure the College fund as a portfolio – partly funded by the parent (family members), the child, and financial aid. The goal is to find the college that will provide the greatest return on investment (both tangible and intangible) – in finance we call it the “least variance portfolio”. (The greatest return for the least amount of risk)
Insurance You can Live WithoutPosted on May 8th, 2012
We received a call a couple of weeks ago informing us that one of our clients had just passed away. This was hard to believe since one of our advisers had just gotten in touch with her a couple of days ago. This particular case was different though. The client’s policy had lapsed due to financial hardship and we were in the process of getting it reinstated when she passed. Unfortunately the named beneficiary did not get the benefit. The truth is, the family really needed the payout to help pay for final expenses like unpaid medical bills, funeral arrangements, and to fund her legacy.
Our client isn’t alone. Millions of policy holders allow their policies to lapse without getting it reinstated. Here are a few tips, if you are going through financial difficulties and are wondering which policies to keep and which to ditch.
Pet insurance: Considering all the restrictions on most pet-insurance policies, you would be better off setting aside money every year for your pet’s health care. Plus, with most plans, the premiums rise and coverage declines as your pets get older—when they are more likely to need costly procedures.
Medigap Insurance: Consider shopping around for a Medicare Advantage plan. These plans have to offer at least the same benefits you would get with original Medicare insurance, and then some. Some of these plans offer zero premium medicare advantage plans.
Flight insurance: This isn’t travel insurance, it only pays out if your flight crashes. It really isn’t necessary if you already have life insurance.
Dental Insurance: Most dentists will offer you a discount if you ask.
Travel Insurance: Do you have enough money saved up in the bank to pay for emergency care when you travel? If no, then buy.
Medical Insurance: It just doesn’t make sense to plan for the future and not have medical insurance. We all get sick. Start with a catastrophic plan, and start saving money to cover the co-pays, co-insurance, deductibles and medication.
Auto Insurance: This is mandatory in almost every state. You are better off paying for insurance and getting coverage, than paying tickets for no coverage. You do the math.
Life Insurance: Begin with the end in mind. What do you want to accomplish? What legacy do you want to leave behind? Get in touch with a licensed agent to help you figure how you can use life insurance to protect the people you love and your legacy.
The most important thing is to sit down with a licensed insurance agent, and figure out what’s important and what’s not. That’s the only way you will be able to determine your insurance needs.
Getting returns greater than your tax rate?Posted on June 21st, 2011
Do not confuse tax evasion with tax avoidance. On the surface they might look like similar strategies, but these are totally different ways of trying to keep more of your money. Whats the difference? One will land you in prison, while the other will ensure you keep most of your hard earned dollars! It’s important to know what your tax rate was for 2010, 2009, and 2008 – whether you are self-employed, or gainfully employed. Your tax rate will enable you figure out whether an investment in stock, corporate or municipal bonds will generate the best yield. Why invest in high yield bonds and end up with a lower return, when you could have just bought municipal bonds and generated a higher return?
I always advise my clients to utilize tax planning strategies for their life, health, dental, and long-term care insurance needs. I start by getting them enrolled in a High Deductible Health Insurance Plan with a Health Savings Account. A family with a 35 percent tax rate in 2010 will have required almost $9,500 in after- tax money if they had not taken advantage of the maximum contribution of $6,150 to their Health Savings Account. You can use your HSA to pay for qualified medical expenses like your copay’s, deductibles, coinsurance, root canals, crowns, acupuncture, and chiropractic services. HSAs are simply medical IRAs. Contributions to HSAs are tax deductible and grow tax-deferred. Unlike FSAs, you will not lose any unused contributions at the end of the year.
Worried about long-term care expenses in the future? Take advantage of your HSA. You can use your HSA to pay for qualified long-term care services and premiums for qualified long-term care insurance contracts.
Your current and future tax rate will enable you determine whether a traditional or Roth IRA will be better suited for your retirement goals. Remember its never too late to start taking advantage of your 401(k), Traditional IRA, Roth IRA or HSA. Its hard to get a return as much as your tax rate in the stock market!
- TurboTax – What Is the IRS Form 8889? (turbotax.intuit.com)
- Are Losses on a Roth IRA Tax Deductible? (turbotax.intuit.com)
Question- Will My Health Insurance Cover Dental Procedures?Posted on March 1st, 2011
Will my health insurance cover dental procedures?
The best way to determine if your health insurance will cover dental work is to check your health insurance benefits to determine what is covered and what is not. Another way to approach this is call the health insurance provider and find out what they will cover. Knowing your benefits could save you a tremendous amount of money should your need the services of a Maxillo-facial surgeon.
- Why do I need separate dental insurance? (ask.metafilter.com)
Question- Do All Dental Insurance Plans Have A Tier System?Posted on March 1st, 2011
The first tier or level consists of preventive services, such as examinations, cleanings, fluoride treatments, space maintainers for children, and pit and fissure sealants to help prevent decay in biting surfaces of back teeth. Basic services usually don’t require a deductible and are covered at 100 percent.
The second tier or level consists of basic services. These dental treatments are of relatively simple complexity or do not involve significant extra expense to the dentist. Examples include, fillings, routine extractions, and single crowns. Most plans will require you to pay anywhere from 20 – 50 percent.
The third tier or level consists of major services. Examples include fixed bridges, removable full dentures, or periodontal surgery. Most plans will also require you to pay anywhere from 20 – 50 percent.
Here are some questions to ask if your employer offers more than one dental plan, or you are looking to purchase an individual dental insurance plan:
1. Are there any maximums?
2. What are the deductibles?
3. Do I have to fill out claim forms?
4. Are there any waiting periods?
5. Does the plan cover preventive, basic, and major services?
6. How much do I have to pay for using non-preferred providers?
- Why do I need separate dental insurance? (ask.metafilter.com)
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