STOCK MARKET.....Honey sez: I have read the June issue of Marketimer. As Brinker indicated to several Moneytalk callers today, there is no change to his bullish stock market stance. As he says each week, he advises a balanced approach for those near or in retirement - and recommends using dollar-cost-averaging to put new money in the market.
PENNY STOCKS FOR GAMBLERS.... BB replied to Bill that penny stocks are like going to the "race track. They are strictly for gambling."
INTEREST RATES MAY GO UP.....Brinker expects the Federal Reserve to raise rates 2 or even 3 times this year
RISK IN BOND FUNDS....BB told caller Erick from Connecticut that he recommends keeping bond duration very low now, but has no problem with credit risk - he's okay with high-yield bonds now.
Honey EC: This indicates to me that Brinker sees no major recession coming, and expects the economy to continue to grow.
JOBS REPORTS.....Brinker commented that the jobs report was very good and unemployment is down to 4.3%. He gave the racial and educational demographics. As always, there are huge differences between those with high school (and less) and those with college (or some college) educations. There are also much higher levels of unemployment among Blacks and Hispanics. .
NOT ENOUGH QUALIFIED WORKERS TO HIRE.....Brinker did not mention that the U6 unemployment numbers have dropped a full percentage point since the beginning of the year, however, he did mention that the labor market was beginning to have difficulty finding qualified workers to hire.
ROBOTICS, AUTOMATION AND DRIVERLESS CARS AND TRUCKS....BB said that as qualified workers became scarce that would lead to more automation.
Honey EC: Another thing that will lead to automation is the big push for a $15 per hour minimum wage for totally unskilled (and often illiterate) workers - like at McDonalds.
POSSIBLE TAX CUTS.... BB said that because of Congress, no one knows yet what is going to happen with proposed tax cuts. However, Brinker stated that, in his opinion, couples with income under $24,000 should pay NO tax.
ECONOMY.... Last year, GDP came it at about 2%.....First quarter GDP was slow at 1.2%.....The Federal Reserves estimate is 2.1%. Brinker said he expects moderate to good economic expansion in the second quarter. His current estimate for 2017 is 2.3%. He commented today that those who are predicting 4 to 6% GDP are totally wrong.
LIGHT VEHICLES SALES DECLINED....BB said that sales on light vehicles - he mentioned trucks in particular - have declined. This could create a condition of "inventory accumulation."
Honey EC: For all you macho men who prefer (or need) a small truck, this might be an ideal time to shop.
MULTI-MILLIONAIRE CALLERS....The first professed multi-millionaire today was Bill in Grants Pass, Oregon. Bill said thanks to Bob, he has accumulated $1.5 Million and was in the Land of Critical Mass. Bill was afraid he might become a victim of a "Shark Attack." Someone wanted to sell him some investments that might include penny stocks.
MULTIMILLIONAIRE CALL OF THE DAY: BRINKER said: "Some callers have more money than they know what to do with."....Caller Bob from NY said he was in his 70's and had worked at a University for 15 years then moved into industry - and now has to take $200,000 each year in RMDs (Required Minimum Distributions). He said he needed to "do something about all this income" because he also gets Social Security, his other pension, plus his wife's - who is 20 years younger than him. He asked Briinker about annuities. (Thanks to FrankJ for doing the math: $200,000 in RMD's would translate into $4.6 Million in the IRA.)
THANKS TO DRAHME......listen to the call and Brinker's reply.
Honey here: There have already been some comments on that call. :)
FRANKJ'S MONEYTALK GUEST-AUTHOR FROM AUSTRALIA
Bob’s guest on this first Sunday of June 2017 was Prof. Mervyn Lewis, calling in from the township of Stirling in South Australia. The title of his 27th book is, “Understanding Ponzi Schemes: Can Better Financial Regulation Prevent Investors from Being Defrauded?.
(Ed. note: South Australia is one of the several “states” in the country. Adelaide is the capital. So. Australia is located in the “center-bottom” as the guest said. I’ve visited there many years ago. Vineyards and agriculture were big at the time. I also got one of the worst sunburns EVER there after a day at the beach. My own stupid fault.)
What makes for a “successful” Ponzi scheme?
The scamster first needs to bring in some initial investors. Then he (I’ll use the male pronoun for convenience) needs to continue recruiting while paying the promised return to the first investors. With luck, they’ll turn into what the guest referred to as “songbirds.” These first investors would sing the praises of the investment scheme to friends.
The scheme should be pretty simple. The original Ponzi, Charles Ponzi dealt in Italian postage stamps. Allen Stanford offered certificates of deposit through a bank he owned in Antigua. His phony certificates only paid 1-2% above legitimate ones. Stanford was well-known in the upper crust of society – an “affinity group” referred to by the guest. His was the second biggest Ponzi scheme in the US, following Madoff. He is serving a 110 year sentence in a federal prison.
Bernie Madoff’s affinity group was wealthy Jewish people and organizations as well as contacts he had among the investment community. Madoff played his victims by pretending to be indifferent to their requests to invest with his fund.
Why do people get suckered by these scam artists?
People are willing to accept what an authority figure says. Madoff had a reputation in New York ‘s Wall Street and among his affinity group. A scamster the guest mentioned from his town of Stirling, SA was a preacher. This local scheme prompted him to write this book. People lost $3 million, US or Aus $ -- he didn’t say.
Confirmation bias is at work here too. In this context, the tendency is to look for information that supports the decision to invest and reject information that says caution is called for.
There were two callers but neither call is worth mentioning.
Honey here: Thank you, Frankj. Yikes....That's a long ways to go for a sunburn. :) I spent some time in Sidney back in the mid-1990's. We stayed near the Opera house, and saw a performance there. We took some trips out into the countryside - and the ferry across the harbor to the most magnificent zoo I have ever seen. It was nice but way too long of a plane trip for me. I have no desire to go that far away from home again.
710KNUS Denver
WNTK KION 1460 Monterey
66 comments:
Wow, color me amazed at the confusion today over what an "account" is vs. actual holdings.
LOL @ the clueless people who blindly put money into the various markets and not knowing the basics beforehand.
Missed most of the call during the second hour concerning caller’s RMD situation and something possibly available for TIAA investors that could mitigate the problem.
Any additional information/clarification from the blog team would be greatly appreciated.
Thx
sn: My understanding was that the caller was told by TIAA that in order to alleviate his tax issue, he was offered a special type of annuity not available elsewhere at no cost. My question is how does TIAA make any money!
Gabe
There are some later broadcasts of Starship MoneyTalk. Look here:
http://www.talkstreamlive.com/program/bob_brinker/
Sometimes WLS will repeat the whole show.
WLS is repeating Bob's show:
http://player.listenlive.co/22231
Thanks to SuzyPie and Gabe for your input.
I caught a delayed broadcast on WBAP. WOW, critical mass, a $200,000 yearly RMD plus a professor’s pension and SS, a wife 20 years your junior, and no-cost investing in a “special annuity” . . . all way out of my league. The key point that settled my question was the annuity investment had to be with after-tax funds (if I heard correctly)
Thanks again HB blog.
.
So SN.....I need opinons on that call. Did you understand Bob from New York in the second hour to say that all of that RMD came out of his University retirement, or did it include another retirement?
HB said . . .
So SN.....I need opinions on that call. Did you understand Bob from New York in the second hour to say that all of that RMD came out of his University retirement, or did it include another retirement?
MY guess is all came out of his University retirement since he was getting advice from TIAA. Bob always speaks so highly about the “young sprouts” getting a good education. Perhaps the good professor could help some young sprouts with their student loans. How much does a professor pull in? $200,000 RMD for someone in their 70s would be about $5 mil. Bob has been getting a lot of calls from mult-mils lately.
That's a big RMD. SN's estimate of the principal is about right. The caller just said he was in his 70's. I think one of the tax laws made permanent was that you could make a direct contribution to a charity with your IRA and take a tax deduction.
Bob from New York certainly has a terrible problem - an enormous nest egg and huge RMDs, with pensions and SS to boot. It seems that a number of Bob's callers have this kind of problem: They spent their lives squirreling away a lot of money and now they cannot bear to part with it. No spending suggestion is acceptable. The caller did not want his money to go anywhere ... not to the government, not towards education, not to improve his lifestyle, not to charities. Poor fellow certainly has a dilemma.
Um I don't think you get a deduction. I think you just don't count the distribution as income. So - you pay no tax on it AND it doesn't count towards your modified Gross income. If you've done your sums correctly you won't be pushed into higher Medicare parts B & D premiums.
If I've got this wrong please tell me - I know someone will.
You could of course count it as income and deduct your contribution but it's not nearly as valuable. To do it the 1st way it must pass directly to the charity from your custodian.
Billy
I sure would like to learn about that special annuity that is no cost that the caller made reference.
Gabe
Just listened to the call from Bob from New York again (thanks HB & DRHAME). As frankj mentioned, NY Bob (not That Bob) should take a look at the Qualified Charitable Distribution (QCD). He could have his IRA custodian transfer up to 100K total per year to his charity(ies) of choice, thus cutting the taxable portion of his RMD in half. BB did suggest increased giving, but didn't mention the QCD during this call. The QCD is generally considered the most tax efficient conduit for giving from an IRA once one is over age 70-1/2. See:
http://www.kiplinger.com/article/retirement/T045-C001-S003-faqs-about-giving-your-rmd-to-charity.html
Hi, I am new here but have listening to Bob Brinker since the late 1990's. My question is how good is Bob as a market timer?
I use Vanguard and I understand the confusion of some of the callers today. Vanguard used to require separate accounts for mutual funds vs. stocks, which was confusing itself. Now they suggest customers consolidate accounts. It sounds simple, but the process is complicated and irreversible - with no ability to "undo" if something goes wrong. I've started it twice and chickened out both times.
The critical mass professor has a problem that does goes under valued. Spending may be the most important half of the power of money. We always receive advice on making money or saving money. During one's lifetime common advice is always to save more, invest more, and avoid risk. This is all good and well, but what is the end need for the money? What are we attempting to improve or minimize? What are we truly happy doing? Is it to purchase that more expensive toy? More luxurious vacation with to much alcohol and rich food? To view ever more mountain vistas or whales with bigger boats and larger RV equipment?
Recently, I've keep up with blogs that address maximizing one life style for happiness. One very popular blog is a Canadian Engineer that had a hectic demanding lifestyle that was basically stealing his life energy. He is one smart guy with excellent financial sense. He calculates income, taxes, expenses and all within the time value of money quotient. He has some amazing conclusions for the critical mass we all desire. You know the power of spending is more lucrative than investing? Very large returns are capable with life style change and scrutinizing spending habits. As a high paid Engineer he had little leisure time and maximum stress. He realized the madness of the lifestyle. He did a 180 and within a a few years was able to retire. His basic living expenses run $12k per year. He did get bored with the life style and has did some house flipping in Denver area. He is an advocate of having an extra $100k sitting around for opportunity investing. Like I said he is a smart cookie. They guy has been know to donate $100k to charity. Also, I've read blogs of youth stepping into full time RV lifestyle as they think that is the end all. To minimize expenses and travel with family. It's great for a while, but I do notice it appears they get sick of the lifestyle. Many desire the freedom, but once doing it full time it is not so fun. My take away from this is the most happiness to be found is to moderate lifestyle. To down size and simplify and remove all stress. To spend more time helping friends and family and plan more theme vacations, not to elaborate, but variety is nice with maximum flexibility. Know your finances and don't be afraid to spend more early in life while in the go go years. Keep your financial investments simple as more money can be made with saving. Realise their is a diminishing return on happiness with above optimum wealth. More money will often result in less and less return on happiness. Time is your most precious asset.
Billy, You are right, it is not counted as income if you give directly to a charity. Big difference, thanks for the correction.
I have a question about the caller that uses Vanguard and didn't have a brokerage account.
I thought everyone was forced to have a brokerage account a few years ago.
I was and didn't want one, I don't trade stocks or ETFs.
Anyone have any details about being required to have a brokerage account with Vanguard?
Today is the first time I noticed your multi millionaire caller section -
I for one have been skeptical of callers who say they have accumulated millions, and then call a radio show for investment advice
Mark Livingston asked how good is Bobby at market timing?
Lousy, just like all other market timers. Honey has documented his failures going back to the '80s.
Forest and Jan: My conclusion in reading your blog entry is that in the final analysis that in the end, we are all dead!
Gabe
Lamont Cranston,
Anyone who wants to use Vanguard to buy a stock, ETF, or non-Vanguard mutual fund needs a brokerage account. If you simply want to buy a Vanguard mutual fund then all you need is a Vanguard mutual fund account.
The market is up almost 10% this year alone and we are not even at the half way point. Market has been up eight straight years. A nine year up streak has only occurred once before (1991-1999) and we all know what happened after that. I found some historical S&P 500 data going back to the 1930s and compiled some stats that I thought might interest the readers of this blog. For each of the bull/bear periods, I’ve listed the compounded rate of return (not average) and well as the number of up or positive return years.
1929-1941 -3.3% 4/13
1942-1965 +15.5% 20/24
1966-1981 +6.0% 10/16
1982-1999 +18.3% 17/18
2000-2008 -3.6% 5/9
2009-2016 +14.3% 8/8
Comments:
I can’t imagine being an investor during the Great Depression. $1000 invested in ’29 was worth $651 at end of ’41. Ouch!
The ’66-’81 period is misleading. 6% return sounds pretty good but inflation averaged 6.9% during that time and was over 9% in five of those years! Inflation averaged just over 2% in all other years.
The ’82-’99 period consisted of an eight year positive streak (yes, even ’87) followed by a nine year streak. A -3% year in the buildup of first Iraq war was only blemish on that incredible period.
Note that the 2000-2008 period had a lower return than the Great Depression, but shorter in duration. A $1000 investment in 2000 was worth $721 at end of 2008. The lost decade.
The highest one year return occurred in 1954 (+52.6%). Two of the top three years and two of the worst three years occurred during Depression. (+50.0% in 1933, +46.7 in 1935, -43.8% in 1931 and -35.3% in 1937.) Our all-to-familiar 2008 year was second worst all time, -36.5%
Enjoy!
I for one have been skeptical of callers who say they have accumulated millions, and then call a radio show for investment advice
I'm always amazed at how not-too-bright people can accumulate a few million over 40 years without making a massive salary. It's not about being intelligent per se, just being conservative in spending habits (often getting married to another conservative spender early on to prevent the costs of courtship/display), getting a decent job and not rocking the boat there (often a government job), and not having many kids.
I agree a lot of intelligent folk (say the Canadian Engineer above) would never call BB for advice. But I know a LOT of not-very-smart people who should have called BB years ago for investing advice.
Forrest & Jan: I agree with your comment. Many people get their investing right but their life is not so well organized. Time/money/stress are connected. Screw one up the others can go south.
Mark Livingston asked how good is Bobby at market timing? Lousy, just like all other market timers. Honey has documented his failures going back to the '80s.
Agreed. But one thing BB has done the many don't do? He tries to stay in the market most of the time, and this covers a multitude of sins when in a bull market. And most of BB life has been a bull market. Ergo, he's done well and so tries to claim he's got market timing skills.
Jim is correct!
Gabe
Yo, Bluce,
I know that you are a HUGE fan of NYC (just kidding). So, I came across this article and found it quite interesting...dare I say amazing!
At the top of the article there is a static slide show, so you need to advance it frame-by-frame via the nav buttons - by mouse click (or touchscreen).
Maybe you will see one of THAT Bob's ancestors sitting at a desk operating an abacus? (If you do, it most likely is an unannounced rerun).
Enjoy!
New York, New York
Preserved Remnants of 17th Century New York
Under a glass sidewalk lie the remains of some of Manhattan's oldest buildings.
Link:
https://goo.gl/6fhtoC
JC
Oops, the Canadian Engineer "MMM" blog guy in '16 is spending $18k/yr for his basic living expenses. I commented $12k. His blog and real estate dealings has pushed income to $200k, but he is spending 10% for living needs. By the way the guy does live in a nice Loveland, CO home, nice car, etc. His blog is a study on quality of life and minimizing one's requirement for spending. Also, the other half on what that extra savings will accomplish. BB's has a lot of poor millionaires that call in that are old and don't know what to do with their money. They comment of having enough and don't want to change lifestyle to extravagance. So, what did their saving's buy them?
For example for the power of saving, consider a million dollars if held within the safety of bonds will net you, $25,000/year income discounting inflation. Inflation would wipe out all earnings. Compare that to the poor schlub who family only makes $50/year, but they only spends half. Ya, they beat the millionaire's income and do so inflation free and save an actual $25k. Having a huge nest egg may not be the greatest. I would rate health, physical fitness, skills, and moral code above money. We all read stories of immigrants that arrive with zero money in pocket that quickly gain wealth. Part of their success is living in a country with freedom to accomplish such and the other half is skill set, strength, health, and moral code to make the difference. The Canadian Engineer guy has figured the early retirement crowd needs only $300k in bank to retire if disciplined with his strategy. Also, the 4% withdrawal rule does not apply with youth. When they play the game, if a market crash happens, they just go back to employment. They have cash reserves and not afraid to put a mortgage on home for market and real estate timing investments. They have high credit rating and usually self finance. This guy even review stats for insurance needs. His house and location with his skill set makes house insurance a waste of money. There is no guarantee even with insurance. Insurance will lower risk, but you still have risk. It doesn't make sense to pay for insurance so other high risk homes can benefit. The insurance companies would beg to differ and run many an ad to scare you you into sheep herd compliance.
"Compare that to the poor schlub who family only makes $50/year, but they only spends half. Ya, they beat the millionaire's income and do so inflation free and save an actual $25k."
OK, Forrest, I'll bite. Please explain to us how a family making $50K a year manages to live a somewhat "normal" life and save $25K a year. And what is the size of this family? I call BS.
Forrest: BB's has a lot of poor millionaires that call in that are old and don't know what to do with their money. They comment of having enough and don't want to change lifestyle to extravagance.
The personality that allows folk to save all that money (conservative, put the blinders on and plow forward and don't rock the boat) is the exact personality that causes them to not be able to spend their money when they retire. I worked with a DINK who was worth 10 million between him and his wife (30 years of high-pay professional work x2) and they had nothing to spend it on. No life. No kids. Sad, really IMO.
frankj: OK, Forrest, I'll bite. Please explain to us how a family making $50K a year manages to live a somewhat "normal" life and save $25K a year. And what is the size of this family? I call BS.
It can be done, seriously. We have a large family (double-digit) yet still spend <$50k. We own everything outright, walk and bike most places, cook from scratch, eat whole foods only, rarely see a doctor, garden/hunt/fish, fix our own stuff. Vacation where we live. I've been retired for years & was semi-retired a decade before that so my income now is nearly all from investments (including rental prop) yet still generate income to invest. There are quite a few people like this out there, albeit I agree most don't have a large family, that takes more skill and initial income to manage.
Two good books about changing priorities in life to living over spending: Your Money or Your Life, and Happy Are You Poor.
Hi F and JB,
I have been a reader of the MMM blog and forum for two years and have different "facts than you posted.
The Canadian worked in IT.
His family 2016" spending was $30k in 2015" $24K.
http://www.mrmoneymustache.com/2017/05/19/2016-spending/
I'm pretty sure I saw one of MMM's posts where he said the blog produced $400,000 a year of income. I can only find one link but it is not direct from him so I won't post it.
Last I knew he lived in Longmont Colorado.
Over the years he has driven older cars, in Sept 2016 he bought a new electric Leaf, at a cost of $16,000 including tax.
http://www.mrmoneymustache.com/2016/10/04/so-i-bought-an-electric-car/
MMM quit his job with a little over $720,000 and had $800,000 by the end that year.
He never said you can retire with $300,000. (I don't think $800,000 is enough for a young retiree)
http://www.mrmoneymustache.com/2011/09/15/a-brief-history-of-the-stash-how-we-saved-from-zero-to-retirement-in-ten-years/
MMM does have a skillset that allows him to travel and earn his keep where ever he is.
Nuf for now
frankj- Personally, I'm not far from that at $30k/yr for basic living. I've kept track of spending since Quicken first came out, 80's. I don't want to pull the discussion to far off course, but it's really not that hard. Even when we had two kids at home. Our family didn't suffer and we enjoyed life. I just read a blog on RV young couple that post their monthly expenses. They have no kids and spend $1,200 on average per month. They are traveling the U.S. and enjoying the great outdoors. Check out the blog that I made reference to mrmoneymustache. I don't know if this is allowed to post? He is living the good life with spouse and one child under $20k/year. One of the blogs post was of an oriental girl that desired to travel. Her plan of action was a good law degree and high paying job. She did both and worked just a few years (3-4) and retired. She lived close to work and split living expenses with friend. No car. She travels the world now.
I would be interested in seeing the household budget of a married couple with or without young kids -- a couple in the "accumulation" phase of life who is able to stash half of the household income of $50K.
MK, you said you spend less than $50K, that's not what Forrest is talking about. He said a family EARNS $50K and saves $25K.
Our tax dollars at work:
According to a 6/4/17 article in the LA Times, the cost of imprisoning each of California’s 130,000 inmates is expected to reach a record $75,560 in the next year.
This makes me Mad as HELL!
Bonds did well today!
Gabe
Gosh, listening to Bob and the last caller during Sunday's second hour (Richard in Hawaii) sounded like fingernails on a chalkboard or a midnight cat fight. The two duffers went round-n-round, like Grandma and Gramps, for at least 10 minutes while trying to reconcile their non-tangential inputs while the other wasn't listening (with Bob interrupting a ton.)
To answer Richard's question, since Bob didn't: Rich's son's Vanguard account probably contains only Vanguard mutual funds, so he wasn't solicited to convert it to a Vanguard brokerage account.
On the other hand, Rich claims to have only mutual funds but was solicited by Vanguard to convert to a brokerage account. I'm guessing (been there) that he has at least one non-Vanguard mutual fund.
Bob advised that a brokerage account allows for transacting the gamut, which seems to be true. I converted, and it felt like "a sideways move."
Too bad Bob couldn't tell the guy, "Hey Rich, don't worry. Vanguard has your back. If it saves them expenses to structure the accounts that way, they will pass it back to you via lower fees."
What's not to like?
Harry, Searchlight
frankj: I would be interested in seeing the household budget of a married couple with or without young kids in the "accumulation" phase able to stash half $50K.
I Quicken religiously & checked 2016: Taxes 9k, Food $8k, Utilities 4k. Other <$2k. And stay low income you can even dodge the medical insurance scam.
MK, you said you spend <$50K...He said a family EARNS $50K & saves $25K.
I'm similar to him in spend ($25k spend but w/ gardening, harvesting, repairing, etc.). Similar saving too (1M blue-chips w/dividends ~2.5% generates $25k & 1M rent property is another $25k+ for investment self-landlord/repairs). My point: what he's doing isn't that unusual for guys who park capital in a bull market for 20 years & don't spend much. A Japan-style bear market would have told a different tale, methinks.
Harry said:
Too bad Bob couldn't tell the guy, "Hey Rich, don't worry. Vanguard has your back. If it saves them expenses to structure the accounts that way, they will pass it back to you via lower fees."
----
Not only that, but (although I do not have a Vanguard brokerage account) I would think that they would generate additional, useful information on the monthly statement reports.
I have accounts at Schwab and Fidelity and they both offer "Paperless" statements. I persisted in receiving mailed copies for awhile, but finally took the leap to go paperless some time ago. The electronic statements are GREAT and I will never go back to the "old way." Both companies offer electronic statements on a "rolling 10 year" basis, and (if requested) can alert you by email when a new statement is available to view.
JC
Honeybee,
She would definitely have my vote - Melissa Melendez for President in 2024!
Melissa Melendez to Xavier Becerra – where’s my investigation?
http://www.pe.com/2017/06/06/melissa-melendez-to-xavier-becerra-wheres-my-investigation/
JC: The "old way" is my preference. Difficult to "break the habit".
Gabe
Anyone have thoughts about what needs to be compiled for RMDs. I'm still 8 years away, but I know Vanguard only started keeping those type of records in 2012?
I have 35 years of investments, where do I start to get these records in order?
Whatrecords am I looking for?
Made a few bucks today!
Gabe
.
This is a question that came to me via email. I am doing two Handbell Choir performances this weekend so swamped with practice/rehearsal right now.
Will some of you investing experts please answer this for me?
I just discovered your blog about Bob Brinker’s radio show. I am a new listener. Money Talk airs on Sunday afternoon in Wichita, KS. There was something I heard on Bob’s Sunday show that I don’t see on your blog. Maybe you can help me remember what 4 things (I think there were 4) to find out about funds:
Duration
Date of Inception
Check if low fees exist
What assets make up the Mutual Fund.
I hope I got this right.
Thank you!
Lamont Cranston said...
Anyone have thoughts about what needs to be compiled for RMDs...
Hi Lamont,
While I commend you for getting started so early, there is always a possibility of IRS changes (minor or major) between now and when you actually begin the process in 8 years.
With that in mind, here are a few suggestions.
1. Contact Vanguard to see if they have a Retirement and/or Tax Center Representative that can address your questions.
2. If you have a CPA or other person that does your taxes seek out their advice. Bear in mind that they may charge you for their advice. Ask them up front so there are no misunderstandings.
3. Lastly (and probably most importantly), review the current (for 2016 Tax Year) IRS guidelines. This info is available online, and I believe they can also mail it to you on request.
Here is the link for the online version (you will need to have Adobe Acrobat Reader (free download) installed on your computer to view the actual IRS Instructions and Forms).
Retirement Plan and IRA Required Minimum Distributions FAQs
https://www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-required-minimum-distributions
If you would prefer a hard copy mailed to you, contact the IRS forms request center at:
IRS Forms and Publications by U.S. Mail
https://www.irs.gov/uac/newsroom/how-to-get-irs-forms-and-publications/
Good luck!
It's always loads of fun and an adventure to deal with the IRS. Enjoy!
JC
PS: I might be incorrect on this, but I don't believe you need records for years prior to the year you are reporting. I believe the only record you would need is your total IRA account value as of December 31 for the tax year being reported. Again this may be incorrect, so I would appreciate input from fellow posters and BRT-ers if it is.
PPS: Here is a link to various RMD calculators that you may find helpful:
https://www.google.com/search?q=Required+Minimum+Distribution+Calculator&ie=utf-8&oe=utf-8
http://money.cnn.com/data/fear-and-greed/
AD
To Lamont-
Luckily, you are in luck. Any accounts that requires an RMD will be taxed at your ordinary income rate. You don't need to show any original cost basis for the investments.
But if you are asking "what is my RMD?", just add-up the value of all your tax-deferred accounts (IRA, 401k, etc.) as of Dec 31st of the previous year (they will send you statements aplenty) and then check the IRS Pub 590, Appendix C, to find your "life expectancy number". The "number" (typically 27 or some such) is the divisor (bottom number in the division calculation) in your equation.
For example, a lucky soul with a $1,000,000 account required to RMD can just divide by 27 (or your actual number from Appendix C) to see the required minimum distribution, approx. $37,000 in this example.
The math is easy. The paying of the taxes is the hard part.
Dean (my 100th birthday)
Record keeping for RMD purposes looks very simple. RMD amount for year X is generally based on your IRA balance(s) on Dec 31 of year X-1.
https://individual.troweprice.com/public/Retail/Retirement/Required-Minimum-Distributions/RMD-Basics
Advance planning so as to minimize taxation (including the effect of any RMDs during a lifetime) is an entirely different matter.
RMD's are a god sent in that it assures that folks spend their money and avoid being hoarders and have the grand opportunity of shoveling some money to the IRS!
Just a thought!
Gabe
To try and answer the question HB forwarded, the correspondent mentioned 4 things he thought Bob said about funds: Duration, date of inception, fees and what assets the fund holds. (I did not hear this part of the show.)
If duration was one of the items then we're probably thinking about bond funds. The importance of duration has been covered so many times I won't do it again.
Date of inception? Well, you want the fund to have been around a while. Just as important is how long the fund manager has run the fund. I remember Bob warning that if the fund manager leaves, then you need to watch things.
Fees? Yeah, especially with a bond fund.
Assets (what's in the fund.) I'd be more interested in how the holdings are distributed among credit rating categories: AAA, AA, A, BBB, etc.
Not mentioned, but stuff I'd look at: managed vs. index. Managed is not the worst thing in a bond fund. Performance against benchmark and peers. Yield. Size of fund.
RMD calculation simplified.
http://apps.finra.org/Calcs/1/RMD
Bellevue Mike
Made a few pesos today!
Gabe
http://www.businessinsider.com/jim-rogers-worst-crash-lifetime-coming-2017-6
Some doomsday predictions from the guy Brink used to call Mr. Bowtie
The RMD's can make me move money out of my IRA and give the IRS their cut, but they can't make me spend my portion if I'm a true money hoarder.
My current thought is to move money from my IRA to Roth IRA in the next few years so I can have lower RMD's when I have to start taking them. I'll still have to pay the taxes, but I'm thinking I'll have better access to the money in the Roth and better control of staying in my tax bracket in an emergency.
I admit that I still have a lot of adjustment to do moving from the accumulation to distribution phase of my life, but I haven't gotten professional help yet.
Les
Les:
Excellent book to assist you! Die Broke by Stephen M. Pollan is my recommendation.
Gabe
Schiller PE @ 29.87 chart here: http://www.multpl.com/shiller-pe/
seems to coincide with doomsayers: http://thesovereigninvestor.com/exclusives/stocks-economy-on-verge-of-collapse/
Hussman: http://www.hussman.net/weeklyMarketComment.html
I think timing they are spot on but see nothing on horizon. If you look at Schiller chart there is a lot of runway to get to the overvaluation seen in 1999 but seem to be right there even with the '29 crash
Interesting market action today with nasdaq rollover/selloff
I did a quick look at projected or forward "operating earnings" and "as reported" and saw a pe of 16.71 and 18.19 respectively. The yoy growth projection in earnings was about 14% which is a bit high IMO and may come in a little.
Let's see if bottom fishers come in to swoop up the sale on nasdaq stocks like amzn aapl and tsla
I'm staying the course for now.
smile
The Nas in the cellar....Dow did well. A crazy market to end the week.
Gabe
Doom sayers usually selling gold or attempting a media buzz. They get paid upon the popularity of their headlines. They have attention gathering headlines, but little substance. We know this time it is different, but history does rhyme.
Evaluations are not within crazy. They are high, but with good reason. First, baby boomers and international investment money is pumping money into the markets. The bonds and government issues are a joke. Everyone wants a bond per the security, but not at the current interest rate. Stocks have a long history and within modern times a better investment. Sure, they will drop in value, but if one believes the U.S. commerce, open markets, legal system, regulations, and ability to cleanse (thank you Donald Trump) is above any other country and it is, stay the course per investments. In the long run who knows. Some troubling trends do exist. Millennials thinking appears to have infected the planet wherein free education, socialism, government pensions, and free lunch thinking is a pandemic. This is the thinking that we march together hand in hand with union card and force our will upon government to tax the doers or the productive class amongst use as "it isn't fair". Venezuela Hugo Chavez results could be s in our future, unless we can manage to update our educational institutions to moral code and propagate critical thinking skills within class lectures.
My advice is to pay attention to the changes at hand. If the country is headed within conservative time tested values pump more into storck. If Bernie gets more popular pull money out. It is at it's core just a gut decision. Don't panic, but pay attention. Plan ahead and step money out if scared. It's ok to keep cash. Having 20% cash will allow value investing in down market and go a long way to moderate loss. Don't do it upon headlines, but do act. If you had 50% cash, you would have not worry if the market tanked. If you have 25% in cash your insured.
S&P down 0.3% for the week.
AMZN and AAPL and MFST down a bunch. So happy I pulled out some cash earlier
Perhaps, repricing is going on at the Nasdaq.
In any event, 6 horses going this weekend.
Gabe
Forrest: Millennials thinking appears to have infected the planet wherein free education, socialism, government pensions, and free lunch thinking is a pandemic.
One of the reasons I pay attention to BB is keep abreast of what mainstream people out there are thinking. The danger is real. I thought Sanders would happen a decade ago. Sanders & Trump are the canaries in the coal mine IMO. America is no longer what it was, in terms of freedom, family, and government. More like a Fascist economy with the government pulling the strings. So I'm not sure the US ever gets her middle class back. And that seems unlikely with family decline. We will soon look like Mexico haves and have nots. Why I always keep 10% in physical precious metals even as I play the game....
Forrest: Evaluations are not within crazy. They are high, but with good reason.
Yep, big companies are making big money for now. But value is getting thin out there. And since FED ZIRP prevents staying out of the market, so who knows how high this could go? But I'm in at least until the Dow dividend yield gets to 2.2%. We've got a ways to go. Maybe even a Trumpslide 2020? Gotta be in.
Honeybee,
Great News! I just heard on the radio that the City of Los Angeles no longer has any criminals! Yes, it's true.
It seems that the Mayor of Los Angeles now refers to such people as "justice involved" or "justice affected". I'm not sure what the difference between the two is, if any.
But it sure is refreshing to know that Los Angeles is now criminal-free.
And, I bet you thought that no city could ever top San Francisco in terms of liberalness, progressiveness, outrageousness, and general nuttiness. If so, you were wrong! :-)
I'm signing off now and taking my play-doh, coloring books and animal toys to a safe space.
Hi Gabe,
Thanks for the book/life advice, but I think I'm stuck on the Critical Mass train for now. But if the Nasdaq activity Friday becomes a trend, I might have to reconsider.
Les
A side bar on financial critical mass and why spending is more lucrative than ROI.
I just read another post on the subject. An experience of a Lawyer in Houston that bikes to downtown work. He avoided the usual trappings expectations from peer group and instead used his head. He is a biker and wanted to avoid the hassle of car commuting. He purchased a home 4 miles from work. The daily commute is pleasurable as compared. He avoided the BMW mentality of wealth display and instead kept a single car within family resources. If you do the math and time value of money investment, that decision is presently saving him $250,000 every decade. Oh, the commute is just as fast, no parking cost, and keeps him in shape.
As a youth I've noticed the sad reality that retirees often blow a large chunk their life savings on new and expensive cars. Really, that's the priority? I would have chosen to retire a decade early instead and keep my beater car.
Also, just read an article from Newsmax on the four things couples need to manage to keep finances in check. Again, this is an example of wherein spending is more lucrative return on wealth than ROI. The three points worth mentioning:
1. Pay cash for your car even if you have to down grade to do it.
2. Pay off the monthly balance on credit cards or burn them.
3. Avoid the financial shackles of often a life time of indebtedness. Avoid the over valued private schools and colleges. Better to home school with or without public ed then Junior college for two years living at home. Then get a job and finish college at employer paid pace or if not be certain to go to state college.
"Thanks for the book/life advice, but I think I'm stuck on the Critical Mass train for now. But if the Nasdaq activity Friday becomes a trend, I might have to reconsider."
On the other hand, the 1.8% drop in the Nasdaq was only a 0.05% drop in the VTSAX.
I'm done with the critical mass train and have looked back and reviewed with current articles on what I did right and wrong. I'm trying to impart the idea to readership that spending/savings are just as important as investing and more lucrative. Another post on food budget. The average family of four in U.S. spends $944/mo. It is possible to minimize food cost with a target of $400/mo. One has to be a frugal shoppers and be a wise food preparer making the most of leftovers and food preservation. So, what is the uptick? $100,000 over a decade. This the kind of money the "poor" should strike hard upon, but they don't. Our federal and state Social Services charities just a money hand out with few strings attached. This is always bad for citizenry, because it will provide a moral jeopardy. Government should never do such things. So, much of our misguided empathy goes to government easy money solutions that will (in the end) will increase human sufferage. This post infers that even the poor have a very high ability to maximise the power of financial gains. They have personal power to sway savings to the investment locomotive that will pull their resources for a ever brighter future. The public treasury should never incentivised income/work avoidance nor to degrade education availability per political power gain. Education appears to be the keystone for a successful life. We instruct the public very poorly as if they are all going to have white collars jobs, go to college, and live within high society. Calculus, algebra, or reading liberal classics are o.k., but most would benefit form training on such subjects as family rearing, diet, home economics, trade, or shop talent development. Also, finances, budgeting, statistics, obtaining wealth, healthy life style habits, and always to train youth within business and employment. Our modern education is stuck in the "The Jungle" classic of fiction and impart on youth that they should never work. These kids often get the idea that work is a bad thing. To much time within the class room is devoted to imparting to minds of mush the horrors of history wherein there were no Labor Unions, regulations, and public ed.
Forrest: Please make use of the Enter key to create paragraphs.
My college age daughter wants to have a surprise birthday diner for my wife. The kids would come into town and go to the restaurant and surprise her when we show up.
My daughter suggested the restaurant and ask me to look over the menu. I did.
With 5 of us, the bill would be over $200 and probably closer to $250. That would sure tear up a food cost target of $400/mo.
I sent her an email telling her to look for someplace cheaper, we can certainly afford it, but after living frugauly for 35 years, I'm not going waste $100 for no great benefit. Ambience shambience, I can have a great steak at home for $10.
It ultimately comes down to productivity or standard of living such as Output / Input. A high input relative to output can be representative of a country like Venezuela, which output (i.e., revenue for oil exports) has significantly dropped relative to input (i.e., social welfare costs, etc.).
Look at the USA's stalled productivity. A lot of economists are admitting one major reason for this is the oversupply of poor, uneducated immigrants who are taxing the USA's infrastructure and social services like public schools. In some cases, state governments may re-program infrastructure repair in order to provide more social spending like ESL training in local public schools.
Larry Sabato of UVa once said something to the effect of demographics is destiny in that if a country brings in a large percentage of 3rd world immigrants, then the country becomes more and more 3rd world. He appeared to be speaking to many points about an oversupply of certain groups, and how it impacts the country's well being in terms of education and IQ levels, social unrest, productivity, infrastructure condition, etc.
And what's the bottomline to the investors like you, well it means higher capital gains taxes even for those are the lower end in order to support an oversupply of very poor immigrants.
AD
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