We always talk about the fundamentals and how in the short term they mean very little, but in the long term they can make a big difference. Each quarter we review the financials and listen to or read the conference calls to see what is going on with that company over the last quarter and find out what management sees going forward. Every Monday we go over all the ratios, growth rates, forward earnings and roughly a total of 25 other numbers to keep asking, is this a business we want to continue to hold? This discipline and strategy is what keeps us on course with good quality companies over the long term.
Two companies come to mind, Baldwin United and Executive Life Insurance Company. After these bankruptcies some policy holders only received 2/3 or so of their investment and no interest at all. I was curious how some annuities were paying high yields over the last few years with interest rates so low. According to the report, private placements now are about 20% of all life insurance bond holdings, which is up from 15% just five years ago. I believe holders of these annuities have no idea that their annuity is backed by private loans from soccer teams, film financing, and even sports broadcast rights.
I was surprised to see Apple move more than 7% higher a day after the developer conference on Monday and close at a record high. There was a lot of hype leading up to the event as the company was anticipated to detail more about its AI strategy. I’m not sure if I saw the same conference, but I was not overly impressed by the details.
Paying down debt makes more sense if the expected return from investing is less than or similar to the interest rate for the debt. By bringing all your accounts together, we can take a holistic view of your portfolio, understand what changes could help you seek the most tax-efficient outcome. But if some of your assets are not visible, you may not reach full potential. However, when all is said and done, the sell and buy portfolio would be worth roughly 2 million dollars, while the exchange fund would be worth roughly 3 million dollars.
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If you want to get really mathy with the numbers and move over one more decimal place there was actual a positive move in the number considering it came in at 2.75% vs slightly over 2.8% in the month of March. Headline PCE which includes food and energy was up 2.7% compared to last year, which also matched last month’s reading and the estimate. While I can’t say the numbers were overly impressive and point to enough evidence for a cut, I also don’t see any reason for the Federal Reserve to discuss rate hikes. My estimate at this point in time is for the Fed to cut once, maybe twice this year. Social Security can be collected between the ages of 62 and 70, but if you apply before your “full retirement age”, which is usually 67, you will be subject to an earnings limit. This rule states that for every $2 of earned income, such as wages, you have above the annual limit of $22,320, $1 of your Social Security will be withheld from you.
Past performance is not a guarantee of the future performance of an investment. Trade blue-chip stocks and ETFs in US, Singapore and Hong Kong markets and fractional shares with as little as USD $1. When deciding to invest or pay off debt, you should compare the interest rate of the debt to your expected returns.
It appears as the comparisons have gotten more challenging sales growth at food services and drinking places is slowing as sales were up 3.8%. Overall, I think this report should provide further evidence that a rate cut by the Fed should be warranted as we exit the year. There is no doubt that with inflation, prices for many items have increased over the last five years. https://investmentalk.com/ But are businesses taking advantage of these higher prices to increase their profit margins? Looking at just the companies in the S&P 500, the average price markup between the selling price and the cost is 54%. You may not like the information because we want to blame somebody for paying higher prices, but based on these numbers companies are not price gouging.
Smart investing is an extension of the basic principles of investing and entails making the right investment choices that meet your specific needs to help you achieve your future financial goals. With a plethora of investment opportunities available today, it is easy to pick a financial product that may not be most suitable for you. It is hence important to be a smart investor to plan your time and money well. Morgan Stanley Smith Barney LLC (“Morgan Stanley”), its affiliates and Morgan Stanley Financial Advisors or Private Wealth Advisors do not provide tax or legal advice.
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This flexibility keeps your tax bill down but also reduces the chance of triggering AGI related issues like the net investment income tax or additional Medicare premiums. If you’re in the 4th tax bracket with an 8% investment return of $40,000, you’re only paying $1,500 in federal taxes from the dividends, plus $930 in state taxes if you’re in California. Comparing that with your 5% cash return of $25,000, you’d pay $6,000 in ordinary income taxes, $2,325 in state taxes, plus potentially an extra $570 net investment income tax, and/or another $3,000 in extra Medicare premiums. Now that 5% yield becomes 2.6% after tax while the invested dollars return 7.5% after tax. Investing can be volatile in the short-term, but over time it is a much better option than hoarding cash.
We know there’s people out there who wait to time the market and invest their cash right at the bottom, but that generally doesn’t work out. From a tax perspective, cash produces interest which is taxed at a higher rate than investment income like dividends or capital gains. When interest is taxed at 10% or 12%, investment income would be taxed at 0%, and when interest is taxed at 22%, 24%, or 32%, investment income would be taxed at 15%. Not only is cash taxed at a higher rate, but its entire return is reportable as income every year, there’s no appreciation with cash. For example, if you have $500,000 of cash earning 5% for a total of $25,000, that entire $25,000 is reportable as interest income that year. If instead that $500,000 was invested in equities earning on average 8% made up of 2% dividends and 6% appreciation, you would only need to report the 2% dividend income of $10,000 as long as nothing is sold.
Forward-looking statements should not be considered as guarantees or predictions of future events. However, as you near your target date, especially if it’s your retirement, you want to protect yourself from sudden losses that derail your plans. Maybe you’re driving around in a car that is six- or seven-years cryptocurrency guides old thinking gosh my car is old, perhaps I should replace it with a new one. The age of your car is well below the average vehicle on the road which is currently 12.6 years as reported by S&P Global Mobility. This is caused by many factors, not just the average cost of a new vehicle which is around $47,000.