I want to thank the fabulous Blog Research-Team for covering the program for me today. As it turned out my family celebration was scheduled for the exact hours Moneytalk was on the air. My sincere thanks to Jeffchristie, FrankJ and ETF1 Robert!
Jeffchristie's Caller's Summary from HOUR ONE and TWO:
* Bob began by saying that the latest jobs report was soft. Estimates for 1st quarter GDP are also soft. Reasons are cold weather, the port strike, oil price collapse and the strong dollar.
* Matt from Washington wanted to prepay his mortgage. Bob advised against it.
* Mike from Missouri wanted to how to know when he had enough to retire. Bob told him to figure a 4% withdrawal rate on his investment portfolio then add that to his other retirement income and see if he can live off of the annual income.
* Mark from Arizona was one of the most interesting calls in the history of Moneytalk. He met his future wife on an online Christian dating service. They will marry in a few months and she will inherit around $70,000.000. He told Bob that the money was invested in natural resources. Bob told him to look at the fees that are being charged.
Honey EC: What this caller said was either a late April Fool's joke on Brinker or he was about to become shark bait. Brinker played him along by asking if he had known about this money coming to his "future wife" BEFORE he decided to marry her. He said he didn't know about it, that her deceased father's attorney had contacted him after they decided to marry, and told him that her father set it up so that she couldn't touch the $70 million until she married. And then.....yep....wait for it....Then the new husband would be given control of it. ROFLOL!* Bob from Des Moines was underwater in his Mortgage and wanted to know if he should take money from an annuity to pay down enough of it to refinance at a lower rate. Brinker chided him for buying an annuity that had a withdrawal penalty. He told the caller to think about a part-time job.
* Bob started the second hour by saying he sees no reason for the Fed to raise interest rates given the economy and jobs data. His estimate for GDP growth for this year is 2 to 3%.
* Dave from Alabama said he was enjoying todays show. He wanted to know the number for the Christian dating service that Mark was using. He noted the possibility that Mark was being scammed. Bob said if he was ask to wire money so he could get the inheritance he should watch out.
Honey EC: Yes, Dave also said that in Alabama these kinds of hookups are called Mating Services. LOL!* Bob praised the WSJ for an article exposing non traded REITS. They called them Zombie investments.
* Connie from Kansas city was 60 years old and fully invested in portfolio 1. Bob suggested going 60/40 using the income portfolio on page 7 or the fixed income funds in portfolio 3. She thanked Bob for getting her in and out of the market at the right times over the years.
Frankj's Summary of HOUR TWO:
MoneyTalk: 2nd hour, April 5, 2015
Bob started the second hour discussing the March jobs report which came in at a net of 126,000 new jobs. He sees no way that the Fed will increase rates at the April FOMC meeting. The economy is expanding although gradually:
· Home sales up year over year, 5%
· Home prices up 4.7%.
· Mortgage rates are close to the bottom of range for the last 12 months.
· Collection of withholding tax is up 7% -- another sign of expansion.
Bob predicts 2-3% GDP growth for 2015. He said his prediction is in line with the Fed’s estimate.
He spent a while talking about the headwind to expansion which is the strong dollar. When the dollar is strong, our EXPORTS cost more to buy overseas. US companies may have to cut prices to stay competitive. The things we buy here that are IMPORTED cost less, which is nice, but if there is a competing product made in the US, the domestic company many have to cut its price to stay competitive.
After 2:20 Dave from Alabama called and he and Bob ran out the clock to the bottom of the hour bantering about a caller in the first hour who met someone on-line and could come into $70 million if he married her.
Honey EC: Again...LOL!
After the half-hour break Bob lauded Robbie Whelan’s March 24, 2015 article in the Wall Street Journal which shone a light on non-traded REITs, or “Zombie REITs” as they are referred to in the article. You can find this article simply by typing that term into a search engine. Billions of dollars are tied up in these securities and shareholders, in some instances, can’t get out. Bob reminded the listeners that he has been warning people away from these investments.
Connie from Kansas City called with a couple questions. She and her husband are 60, plan to work to age 70 and have a cool million in equities. Bob advised a 60/40 or 65/35 allocation, stocks/bonds and pointed Connie toward the Income Portfolio on page 7. A listener with access to the newsletter could better follow this call as Bob jumped back and forth between the Income Portfolio and another one of his (numbered) portfolios that contains bond funds.
Interestingly, Bob said that “we’ve solved the bond market problem…” referring to the page 7 portfolio yielding 3%. Connie said she’s signed up for Bob’s alerts. Her next topic: the business they own has its 401K plan with a company other than Vanguard and she asked about switching to save money. Bob helped her with the math: if they have $2 million in this plan and Vanguard charges 18 basis points and the current firm charges 36 bp, then she’ll save $3600 per year.
Honey EC: Brinker's answers to Connie were very important in that Brinker claimed the risk has been taken out of his bond fund holdings. That is not so. I will be writing more on this subject later.David from Chicago wants to up his 15% allocation in fixed income to a 25% allocation. He asked whether he should use a managed account or mutual funds. Bob sounded a little suspicious that a managed account might not add much value given the low interest rates on bonds. A one-percent annual fee from a financial planner could wipe out a significant part of any bond yield.
ETF1 Robert's Summary of Brinker's second hour monologue:
2:08 pm Monologue: BB says he can’t think of any reason the Fed would want to raise rates with the recent report that came out………[I think this was a poor employment report]
BB says he doesn’t think the Fed will raise rates anytime soon……..and no way they will raise rates at their April FOMC Meeting
BB’s 2015 forecast: 2-3% real GDP growth
We had a negative GDP figure in the first quarter, a lot of which had to do with the cold weather……..but the weather will not affect the economy for the rest of this year since ‘Spring has sprung’
The Long Beach port strike is now over……….it was a factor in the first quarter but won’t be a factor the rest of the year
The dollar is something we have to tune into…….there are a lot of benefits to a strong dollar, such as attracting foreign capital into the US………….but some negative factors with a strong dollar:
1. Exports cost more overseas on the shelf for the foreign buyer…….when the dollar is strong. So our price competitiveness is degraded…….the foreign products we are competing with have an advantage [price advantage due to a strong dollar]. So you are either going to have reduced sales…..or the company can reduce their prices overseas, which will reduce the profit margins…….Both of these factors are important. The winter of 2014-2015, and the port strike is over……but the above 2 factors caused by the strong dollar has a headwind effect on the economy; it is very very real
2. Imported products available here are cheaper…….due to the strong dollar……….so increased price competition for products produced in the US and sold in the US…….imported products are cheaper than the products produced in the US and sold in the US……
Frankj's Summary of Third-Hour Moneytalk Guest:
Bob’s third hour interview, April 5, 2015
The ever popular Barbara Welkman was Bob’s guest in the third hour. She is an editor of the J.K. Lasser Tax Guide. J.K. Lasser's Your Income Tax 2015: For Preparing Your 2014 Tax Return
Previously she has been a regular on December MoneyTalk shows, advising on last minute things to do as the tax year closes out. My own comments are in italics.
The biggest change to the 2014 tax returns concerns the Affordable Care Act, requiring filers to check a box that they had a government approved health care plan in force during 2014. Barbara pointed out that if you did not, then you may have to make a “shared responsibility payment.”
Here is a link to the 14 ways you can get an exemption from having to have health care coverage.
14 Ways To Avoid The Obamacare Tax (Actually 15 if you include 'brief incarceration')
“Shared responsibility payment” is “Newspeak” (hats off to George Orwell) for a tax, as the Supreme Court called it, or a penalty as Barbara called it. It is based on “household income,” which Barbara referred to as a new tax term. Bob threw her a softball question, “Why is it called the Affordable Care Act?” Barbara said that was part of politics intended to sell the plan.
Procrastinators can submit a Form 4868 to the IRS before April 15 and get a no questions asked extension to October 15. But… you must send in a payment representing what you think you’ll owe. AND, you if you are subject making quarterly tax payments, you’ll need to send in your first quarterly payment for 2015 taxes by April 15.
Figuring out whether to itemize or not should be easy if you go to a preparer or use a tax software package or do it on-line. Otherwise, be aware of the standard deduction for your filing status and whether you might have itemized deductions that add up to more than the standard deduction.
You can Google “Schedule A” to see what the one page Itemized Deduction schedule looks like. Be aware of a couple important things:
· Medical expenses can be deducted only to the extent that they EXCEED 10% of your Adjusted Gross Income. (Thanks, Obama, Pelosi and Reid!). So, if your AGI was $90,000 and you had 10,000 in medical expenses, you can deduct only $1000. This hurdle used to be 7.5%.
· Some expenses you might deduct have to exceed 2% of your AGI, then you can deduct the amount in excess of that 2% number.
More bullet points:
· Barbara said that because Congress makes tweaks to the 2014 rules on into 2015, Lasser offers an on-line supplement to people using their tax guide.
· When considering a Roth-IRA, a Traditional IRA or a 401K, make sure you qualify. Generally this means checking your income against the income limits. Then, figure out how much you can afford to contribute. Barbara thinks choosing a Roth-IRA makes sense if you are young.
· When to use a tax expert? Consider how much time do you want to spend preparing your taxes and realize there is a free, on-line filing option for people who make up to $60,000.
· Be very skeptical of the ads for help in shedding tax debt.
· Watch out for advice you might get from the IRS help line …. That is, if you can get through. Ask for the name of the person and their tax ID and write it down in case you get bad advice, you can refer to who it was who gave it to you. They will give this information when they take the call, but I guarantee you will not get it the first time. Don’t be afraid to ask them to repeat themselves.
· Mistakes people make, whether filing on-line or on paper: they transpose numbers, drop zeroes (1000 becomes 100), end up with the wrong filing status.
· Bob asked with 18 trillion if national debt do we have to worry about Congress changing the rules on taxability of Roth-IRAs? Barbara said yes, the “Congress could decide tomorrow,” (to change the rules.
· As for getting rid of the IRS, it isn’t going to happen. Some dept. of government needs to collect the revenue. They were called the Internal Revenue Bureau prior to 1954.
· Simplifying the tax code will result in more revenue in Barbara’s opinion.
Margaret from San Leandro asked something about audits. Her phone connection was so bad I couldn’t hear what she said. Barbara said most audits take the form of a correspondence audit. The IRS computer generates a form letter if it identifies an error. Then you respond. These can identify an error that resulted in underpayment or one that resulted in overpayment, in which case you get a refund.
Joe from Chicago gets $10K a year from Social Security Disability Insurance. He wanted to know if he has to file taxes. If that is his ONLY income, then no. But Barbara made it clear she was not on the show to offer specific tax advice to individuals.
Becky from Kansas wanted to know about converting the RMD from a 401K account to a Roth-IRA. Barbara said when you take a RMD you cannot put it back in a Roth-IRA, but you can convert a 401K to a Roth 401K or a Roth-IRA.
Jeffchristie's Moneytalk Final Exam Question:
Bob referred to non traded REITS as:
A) Vampire investments.
B) Voodoo investments.
C) Zombie investments.
D) Phantom investments.
ANSWER
San Francisco, Ca. KSFO 560: 2-4pm UPDATE January 2015: KSFO no longer carries the first hour of Moneytalk. (KSFO archives Moneytalk (2pm & 3pm) Free on Demand for seven days after broadcast.
Los Angeles, Ca. KABC 790
Summaries posted at 7:59 PDT
READ AND POST COMMENTS
READ AND POST COMMENTS
22 comments:
"“Shared responsibility payment” is “Newspeak” (hats off to George Orwell) for a tax, as the Supreme Court called it, or a penalty as Barbara called it."
Actually, the Supreme Court had no problem calling it "the penalty" and Chief Justice Roberts does so throughout the text of his Court's majority ruling opinion.
The Supreme Court's Obamacare Decision: Full Text
June 28, 2012
http://www.theatlantic.com/politics/archive/2012/06/the-supreme-courts-obamacare-decision-full-text/259102/
The controversy (some would say confusion) comes from the fact that their ruling relied on "the penalty" being covered in the government's constitutionally established power to collect taxes, fees, fines...and penalties. But all of that falls within the same concept; the government's power to collect taxes. As Roberts writes in pages 7-8 of the majority ruling opinion on the matter, "the penalty" is no more (or less) a "tax" than the penalty issued for other tax code-related violations, such as under reporting income or filing late.
ETF Robert: I believe the threshold is 7.5% for seniors.
Gabe
Gabe is right. My omission. From the instructions for Schedule A:
You generally can deduct only the part of your medical and dental expenses that exceeds 10% of the amount on Form 1040, line 38. However, if either you or your spouse was born before January 2, 1950, you can deduct the part of your medical and dental expenses that exceeds 7.5% of the amount on Form 1040, line 38. See the instructions for line 3.
Thank you, frank J.
Gabe
Another hit of bad news for Bob Brinker's economic-Utopia:
The dollar fell a fourth day, the longest streak in nine months, as traders speculated the Federal Reserve will hold borrowing costs lower for longer amid signs of weakness in the jobs market.
Weaker jobs data will “set the tone for the coming month, particularly for the dollar, which is likely to see some consolidation,” said Sireen Harajli, a strategist at Mizuho Bank Ltd. in New York. “In terms of monetary policy, it’s a stronger reason to be more cautious and not rush into anything.”
Read More: Bloomberg
Gabe and frankj:
For those over age 65, it would also be prudent to review IRS Pub. 554 - Tax Guide for Seniors - (worksheet 4-1).
Depending on one's circumstances, he or she may be entitled to a larger standard deduction which could be more favorable than itemized deductions. (Be sure to check to see if your State follows Federal guidelines regarding this!)
Bob: Will do, though I've already filed.
Thanks!
Gabe
Now I am curious, are you folks whom are filing early all in tax deferred or tax free accounts? I typically get issues new statements in my taxable accounts in late March.
In fact I checked my Scottrade account late Saturday night and noted it still showed a date of 02/17 on my 1099. :(
Much to my surprise I received an amended 1099 in the mail today, dated 04/03!
I also have received amended 1099s from other companies and suspect one or two may trail in over the next couple of days.
So I am guessing you early filers are in tax privileged accounts?
I hate waiting for the last minute to file, especially given my jobresponsibilities, but I see no other way, or filing an extension.
tfb
tfb said:
"Now I am curious, are you folks whom are filing early all in tax deferred or tax free accounts? I typically get issues new statements in my taxable accounts in late March.
I have taxable accounts with both Vanguard and Schwab. I usually file in mid-March. I only remember ever getting one amended 1099 ever. That was from Schwab, but it was before my usual mid-March filing time. Maybe I've just been lucky.
I file four returns, 1) my wife and myself; 2) my parents; 3) a Special Needs Trust; 4) my sister. #1 and 2 have CDs in an aggregate fund family, so we do receive amended 1099s sometimes as late as March 10. The institutions have to file and are sometimes late or have to amend, then the fund family aggregates and is sometimes late. Ugh! Taxpayers are hostage to the vagaries of bureaucracy.
In other news, the Kotlikoff book promoted on MoneyTalk several weeks back is now #6 on Amazon overall. Amazing, and my thought is that it indicates a demand from many people out of the workforce not by choice, who need information on increasing their cashflow.
The "Get What's Yours" book has been on the New York Times top ten list for Advice and How To books for a couple weeks. It was #1 a little while ago, now it is #2, getting nudged out by a book about how to "de-clutter" your life.
The Market fizzled at the end of the day.
Gabe
Thanks to A.D. for providing this information:
Federal debt interest payments go from $350 billion per year in 2015 to $650 billion per year in 2020.
See Government Spending Charts
Yeah that guy who hit the MatrimonyBall Lotto Jackpot was THE most memorable call I've ever heard in 25+ years listening to BB.
It SCREAMED April Fools but as it went along the guy never broke selling it and BB played it as a legit caller.
Only when a later caller mocked the story did BB "kinda" break bad on the guy.
"Mid-50s" guy meets a 30-something
multi MULTI millionairess at an online dating service?
Sure why not? And I'm Warren uffett's & his secretary's lovechild given up for adoption - And I'm ThisClose to proving it!
The Fed, which is the main topics in both of The Bob Brinker (redundant) newsletters, sez mebbe we will and mebbe we won't raise rates in June:
NEW YORK (Reuters) - New York Federal Reserve President William Dudley said on Wednesday the Fed could still hike rates in June despite a weak start to the year, if economic data pick up over the next two months.
“I could imagine circumstances where a June rate hike is still in play. If the next jobs report is strong...if second-quarter GDP look like it is bouncing quite sharply," Dudley said in an interview with Reuters.
He said there were still good reasons for the Fed to err on the side of hiking rates too late, in order to make sure as many workers as possible are pulled into the labour force. In addition the weak first-quarter data and recent weak jobs report means "the bar is probably a little bit higher" for a June hike.
Read more: Reuters
Jjinchitown....I guess this is one of the Moneytalk Mysteries that we will never solve for sure.
Was it an April Fool's joke played out perfectly on Brinker, or did this guy really believe that he hit the jackpot on a "dating service."
All he had to do was marry this much-younger woman and he was going to be handed a $70 million dowry.
Bob is getting some weird calls nowadays. 70 million LOL
With the tax season drawing to an end, it would be wise for Congress to look at the Flat Tax as well as the Fair tax. I understand there is good support out there for either one of these programs.
Spoke with Vanguard about their Advisory Services. $100,000 is the minimum portfolio they'll manage for 30 basis points. They will reduce their fee (not known so far) for a portfolio of 5 million for those who are fortunate enough to have accumulated this amount.
Gabe
Gabe, I agree we need a much-simplified system. I'd like to see members of Congress on committees who oversee the tax code be forced to do their own taxes.
Some might say this is not a very good use of their time, but I say I'd rather have them attempt this than do some of the other things they get up to. When 3 questions to the IRS can yield 3 different answers, something is wrong.
I'm suprised Bob was live Sunday, given that it is the weekend after the newsletter was published.
Easter 2013 he was a rerun; in fact that was the first rerun program that I ever heard be played.
Gabe writes:
Spoke with Vanguard about their Advisory Services. $100,000 is the minimum portfolio they'll manage for 30 basis points. They will reduce their fee (not known so far) for a portfolio of 5 million for those who are fortunate enough to have accumulated this amount.
My comment:
Is anyone else scrathin' their head over this? I do not get it. Why do you want Vanguard to manage anything? You always seemed to be your man, walking to the beat of your own drummer. What is Vanguard going to do for you?
Why would you trust them? John Bogle I might trust, but the rest of that outfit is far more questionable.
Seeing "you" write this leaves me scrathin' my ol' head.
Sign me the confused bunny
Bob Brinker said:
"Bob began by saying that the latest jobs report was soft. Estimates for 1st quarter GDP are also soft. Reasons are cold weather, the port strike, oil price collapse and the strong dollar."
The National Climate Data Center released temperature data for March yesterday. The data for the lower 48 states show the full first quarter of 2015 ranked 75th out of 121 years for HDD (heating degree days). The coldest year, ranking 121st, was 1912. 2014 ranked 104th, the 16th coldest. This means 2015's 1Q was just slightly colder than average. Typical HDD total 2317 on average. 2015 came in at 2370.
As I've shown in previous threads, GDP figures for many previous years outside of recessions were positive despite more severe winters experienced. Reasons may or may not include softer leadership and softer people in the country today compared to the past.
jm
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