45 Lessons
This is something we should all read at least once a week. It was written By Regina Brett, of The Plain Dealer, Cleveland , Ohio. When she turned 90 years old, she wrote the 45 lessons life taught her to celebrate growing older. It was her most-requested column:
Father of Modern Finance Weighs In
Eugene Fama, Professor of Finance at the University of Chicago, was internviewd about the recent financial crisis, capitalism, efficent markets and financial regulatory reform. The video is worth watching to get past the hype and back to the basics.
How High Can the Retirement Age Go?
How high can or should the retirement age go, and should it be tied to increases in life expectancy? What will changes in retirement patterns mean for the United States, compared with Western Europe?
Words to Invest By
Raise your right hand and repeat after me. "An Investor's Manifesto":
Source: Kiplinger By Knight Kiplinger June 2009
I am an investor. I do not trade my assets frequently. That's speculation, not investing.
I am also a saver, fueling my investments with continuous savings from current income.
I know that every kind of asset entails risk -- even cash, which can be eroded by inflation.
I know that higher returns entail higher risk, in every kind of asset.
I accept those risks, but I mitigate them by owning a diversity of assets.
I regard my home as a place to live, not as an investment. It is not a substitute for retirement savings.
I have an investment plan and a plan for asset allocation, in consultation with a financial adviser.
I invest regular amounts every month, in both rising and falling markets. I know I can not gauge market tops and bottoms. If I receive a windfall -- a bonus, bequest or gift -- I gradually feed it into my regular investment mix.
I don't pour more money into hot markets nor completely cash out of plunging markets.
I spread my investments among several asset classes, in a mix fitting my age and risk tolerance.
I force myself to sell high and buy low by periodic rebalancing-just what is temperamentally difficult for most investors to do.
I know that stocks are risky in the short run, so I hold in equities no money for which I have a likely need in the next three years.
But stocks are not too risky in the long run. They have outperformed all other commonly traded assets over periods of 15 years and longer.
Foreign stocks account for at least 15% of my stock allocation. I believe that developing economies will enjoy much higher growth than the U.S. in the decades ahead.
I never borrow against my stocks. Margin calls could force me to sell good assets at a bad time.
I stick with my game plan. I do not check the value of my investments every day or even every week.
I try to keep my cool when other folks are losing theirs.
I remind myself often: I am an investor.
Money Tips from Mom
Your mother may have taught you more about managing your finances than you realize. Here's a list of those lessons.
Long Term Care included in Health Care Reform Bill
A topic most people would rather avoid – how to pay for care as you age - is getting some much-needed attention thanks to its place in the federal health care overhaul. Included in the reform bill is the Community Living Assistance Services and Support (CLASS) Act, a long-term care program that will be administered by the federal government.
The Number No One Mentions
Unlike anything else we buy, the amount of healthcare we recieve is unrelated to what we pay for it. The following article by David Gratzer articulates this phenomenon:
The Health Care Number You Didn't Hear
On Thursday, the President gathered with Congressional members to discuss health reform. The President and Democratic leaders spoke of many numbers in their attempt to rebuild support for their proposals.
Money Madness
Similar to many of you, I watched with amazement as Northern Iowa beat Kansas in the men's NCAA basketball tournament. Kansas was favored to win the entire tournament. The last time Northern Iowa made it past the second round was in 1990. Farther east, 12th seeded Cornell upset 4th seeded Wisconsin to move onto the Sweet 16. Cornell had yet to win a tournament game before this year. As of March 19th, there were 4.8 million brackets submitted to ESPN. After the first day of the tournament, only 56 were correct. There were so many upsets that only .001% of participants were correct. And that was just after the first day.
Concise Summary of Tax Effects of New Health Reform Law
How will the new health-reform law affect your taxes? Here are 10 provisions that could affect you, with some kicking in sooner rather than later. This is a good summary by Kristen Gerencher of the tax effects of the new heath reform law that appeared in MarketWatch Blogs:
1. A 10% tax on the use of indoor tanning beds will take effect for services on or after July 1.
2. Later this year, people with flexible spending accounts will see a slight change: No more using those pretax dollars to buy over-the-counter medications.
3. The bigger change to FSAs comes in 2013, when the amount you can sock away for health expenses will be capped at $2,500 a year. Many people lowball the amount they set aside anyway because they’re afraid of forfeiting money with the use-it-or-lose-it nature of these accounts, but others who use their FSAs to get a break on expenses for chronic illnesses may have to change their financial planning accordingly.
4. Starting next year, the penalty for using a health savings account for nonqualified medical expenses rises to 20% — double what is now.
5. Starting in 2013, people with income above $200,000 for singles or $250,000 for married couples will see their Medicare payroll taxes rise nearly 1 percentage point to 2.35%.
6. A new Medicare tax of 3.8% will be levied on high earners’ investment income including interest, dividends and capital gains that exceed those two $200,000-plus thresholds.
7. Also in 2013, if you itemize on your income taxes, the amount you’ll need to claim a deduction for medical expenses will rise to 10% of adjusted gross income from today’s 7.5%. But people age 65 and older won’t face the 10% threshold until 2017.
8. Starting in 2014, for the first time most Americans will be required to carry health insurance, with government subsidies if they can’t afford it, or face a fine. The fines for noncompliance are set to rise annually, beginning with $95 or 1% of income, whichever is greater, and growing to as much as $695 or 2.5% of taxable income by 2016. While some state attorneys general are challenging the legality of this provision, many experts say it’s likely to stand. Enforcement mechanisms are still being worked out, but one may be that taxpayers have to submit proof of insurance on their tax forms.
9. Looking further out, an excise tax of 40% on high-cost health insurance begins in 2018. It will apply to the amount of annual premiums exceeding $10,200 for individuals or $27,500 for families, but the thresholds are higher for early retirees and workers in certain high-risk jobs. The tax is supposed to hit insurers or plan administrators, who may or may not pass it on to workers.
10. There’s good news for small businesses. Those with up to 25 employees will be eligible for new tax credits starting later this year to help them provide coverage for their workers. The tax credits would cover up to 35% of the cost of health-insurance premiums. About 4 million small businesses are expected to qualify.