For most retirees, healthcare costs will be the biggest expense. It’s not a pleasant prospect, but it is a reality.
At OLV Investment Group, we have had the pleasure of hiring an international intern who is attending the University of Michigan. Muhammad Ammar is hardworking and eager to learn. In fact, when asked during his first week if he was willing to work an unscheduled, 13-hour day, he jumped at the opportunity. This very long day included an hour-plus drive to our Livonia office where we had a seminar regarding risk tolerance and tools we utilize when determining how much risk a client is willing to take. During the 60-minute trip to Livonia, I may have accidentally driven significantly above the speed limit. We were engaged in fun conversation regarding cultural differences and politics. Our intern, who has asked to be known as Ammar, his given name in Dubai, was very engaged in our discussion when I received a phone call from my business partner. We had been talking on the phone for a few minutes when a sea of red brake lights lit up both of our faces. Looking at the speedometer, I realized that I was driving in excess of 85 MPH. As I hit the brakes, phone in hand, Ammar let out a very small shriek as he realized the seriousness of the situation. He was genuinely afraid that he was about to be involved in a high-speed auto accident. But, the car was very much under control, as that is the type of traffic I often experience during my business excursions.
For a certain group of investors, conversion of their Traditional IRA into a Roth IRA could be an effective move to hedge long-term bets against higher tax rates in the future. For some living in Michigan, this strategy could also be a very viable way to pass assets onto the next generation and help manage taxation to them at both federal and state levels.
To say that there have been a lot of changes in Washington could be the understatement of the decade; but one change that should be beneficial to taxpayers, in the short term, is the new Tax Reform Act that was passed by congress in December 2017. Not only is this going to lower the corporate tax from 35 percent to 21 percent indefinitely, but it will also be lowering individual and joint marginal income tax rates, as well. Although the tax cuts for individuals sunsets in 2026*, it should provide a well-needed shot in the arm to the American Middle Class.
Tuesday April 17,2018: the last day that we can file our income taxes on our 2017 individual earnings. That is, of course, without filing an extension. We also have from now until that day to make our contributions into an Individual Retirement Account. Many are asking whether the new tax law is going to affect what type of retirement account they should be using. In short, it is very much dependent upon the individual’s situation and goals; but, it is also a function of their household income level and whether they are being covered by an employer-sponsored qualified plan.
So many people I run into lately seem to be in a complete state of confusion regarding our current economy and the overall stock market. They can’t understand why the markets “feel okay” about such a politically incorrect, volatile and sometimes downright vile person in the Oval Office. My response to this sentiment lies in something that I’ve never done before; I’m going to quote myself from my November 2017 My City article: “The possibility of pro-economic growth policies could inspire animal spirits in the markets for hope of a brighter economic future.”
I hope all of My City’s readers had a wonderful Thanksgiving, as we all have much to give thanks for. As we move into the Christmas season, we often feel an urge to give a little extra during this time of the year, as it is a season revolving around the giving and receiving of gifts. One other thing that a lot of older investors associate with the year end, is what is called the Required Minimum Distribution. The Required Minimum Distribution (RMD) is a required amount that people who have attained the age of 70.5 need to withdraw from their retirement accounts. For some investors, this RMD has become very substantial, to the tune of tens of thousands of dollars. Many investors don’t really even want to take these distributions, and the main reasons for that is that are: 1) they don’t need the money at that point in time, and 2) they have to pay taxes on these funds that they don’t want in the first place.
As we roll into the one-year mark since the 2016 Presidential Election, we have much to be thankful for. The stock market as measured by the S&P 500* recently closed at its very highest level ever recorded. The unemployment rate is at 4.2% as measured by the Bureau of Labor statistics. Genesee County’s housing market has returned to pre-financial crisis levels. Clients ask me if these stats really have to do with our current President or not, and my response is often, “It doesn’t hurt that the only thing President Trump cares about is business and the economy.” I won’t give him credit for everything; but, I do believe that the American capitalists have had their animal spirits awakened and are making business decisions based on the new reality that businesses and the economy will remain the Trump Administration’s primary focus. Whether this administration lasts six more months, three more years, or seven more years, it’s almost a sure thing that President Trump hopes to be known as the “most pro-business President” in history.
Do you know where your Pension Plan is? Many people know they have a pension plan, but they’re not quite sure how it works, how stable it is, or exactly how their money is invested. The details are often hazy.
Markets continue to baffle investors as mediocre news, lunacy in Washington D.C., and threats of nuclear war with North Korea seem to be hitting the headlines on a weekly, if not daily basis. One would think that with these types of events going on, the markets could easily be in free-fall; but for the time being, it seems the exact opposite is happening. Per bigcharts.com, the markets continue to grind to all-time highs on the Dow Jones Industrial Average to higher than 22,000. In previous writings, I eluded to the possibility that the next great crash probably won’t come until everyone stops asking about the next crash. We may need to be wary of getting too comfortable with the markets parading higher.
