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Update March 9, 2017
"Winter isn't over until it snows on the Dogwoods"
Carl Plaza- a dear friend
Marc's notes,
Howdy all and Jambo~ Into spring we go~ Everybody happy with the new president and the markets? (No need to answer because I am not sure everyone will agree!) Some new year eh?
Take a look at the above photo for those who can see it in color. This is a COLOR photo but the snow makes it appear much like a black and white photo except for our birdhouse. Occasionally my eye catches a perspective that enlightens the world we live in just a little more. I hope you enjoy it as much as I do.
Money Matters show airs March 16, 2017 NOON PST on KVMR and on the web so tune in. I am around now after much travel last month and am traveling more soon but I do have some spots for meetings at no cost to you to review your portfolio, your retirement plans or insurance concerns. Many are asking about guaranteed for life income and long term care so contact me to discuss what is out there.
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Gut feelings?
"Sometimes the writing on the wall is a forgery"
Many times we base our decisions on fate or feeling. Whether investing or in life changes, our decisions we base on many of the inputs we witness around us yet other times we go on a gut feeling. Stock investing is often a gut feeling for some but in my experience such gut feelings seldom pay off. The same may go with our non-investing decisions. Too many times it might feel right but in hindsight we might say "What was I thinking!" Such is the lesson learned from the statement: "Sometimes the writing on the wall is a forgery".
We just never know where our gut feeling and its subsequent decision will take us. Sometimes they work out and sometimes they don't
Unfortunately we won't know until later. But if our gut feelings sometimes work and at other times do not, then it demonstrates that a gut feeling is nothing more than a gamble. We may think its a "feeling" but in actuality it is just our brains tricking us into a bias we already have inside us. I have learned never to trade on "gut". I also have learned never to make other decisions on "gut". The only time I do listen to my gut is when I am sizing up some person. The gut feeling I get is usually an accurate assessment of that persons character. Most other decisions I ignore my gut feeling. I instead use my brain and my pragmatism and weigh all factors out with intent and diligence. I find doing otherwise can lead to regret and once again saying "What the hell was i thinking". I have learned "gut" feelings are just fathom unconscious bias trying to trick us.
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"Ahhh... I am so glad we are retired and can afford it. Thank goodness my financial consultant talked me into opening up some retirement accounts"
193950 approved
Retirement accounts for individuals run the gamut and there are many to choose from depending on where you work, if you work, and your particular financial situation.
One of these accounts is called a Roth IRA. Unlike other IRA’s, money put into a Roth is done after you paid your taxes. This is in contrast to many other IRA’s where any money you put in may be deducted from income before arriving at your final figure you will pay taxes on.
Imagine Mr. John Q. Public makes $100,000 a year and puts $5,000 into his regular IRA. His taxable income for this illustration is now $95,000.00. The 5k he put into his IRA came off his gross income, reducing his taxable income by the amount he put in. When he withdraws from his IRA and assuming he obeyed all the rules in doing so, whatever he takes out will be part of his income tax total for the year he made the withdrawal.
Now imagine Ms. Jane Q. Doe makes the same $100,000.00 a year but instead funds a Roth with 5k as well. Her taxable income stays at $100,000.00. It did not go down by the 5k she put in to the Roth. Not so good right? Maybe.
When she pulls money out of the Roth, there will be no tax on the contribution amount OR the earnings because she paid the tax going in by not being allowed to deduct the contribution. If the 5K grows to a million dollars (I wish!) the entire million can be withdrawn tax free. How nice is that?
Other advantages include being able to contribute no matter what your age. That includes any child having earned income. Another nice perk from a Roth is, unlike some other IRAs, there is no minimum distributions required once you reach a certain age which means money in a Roth can be another way to pass along some of your estate to your heirs.
Another advantage is because you contributed after tax money, the government lets you withdraw any contributions you have made (but not the earnings) at any age without taxes or penalties. So if you change your mind or need some funds before retirement age, the Roth is a source you could consider.
Keep in the back of your mind that although tax current rules allow for the tax free withdrawals from a Roth when done within the confines of IRS tax regulations, Congress can change almost anything at any time. Some possible changes could be limits on gains or eliminating all or part of the tax free withdrawal amounts. In light of soaring Federal deficits growing larger by the second (usdebtclock.org), politicians can and usually will find a way to fill the holes. Changes in IRA regulations could be one of them.
There are restrictions and rules regarding all the above and investors should be aware of all the ins and outs of all IRA strategies by consulting with a CPA or tax expert before making any decisions as making mistakes can be costly.
This article expresses the opinions of Marc Cuniberti and should not be construed or acted upon as individual investment advice or tax advice of any kind. Since regulations are constantly changing, the accuracy of the above is not guaranteed. Mr. Cuniberti is an Investment Advisor Representative through Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Marc can be contacted at MKB Financial Services 164 Maple St #1, Auburn, CA 95603 (530) 823-2792. MKB Financial Services and Cambridge are not affiliated. His website is www.moneymanagementradio.com. California Insurance License # OL34249
Watch for my next update! It will have a doosey of an article on the types of people, their work habits and outlooks.
All the best,
Marc
