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RECENTLY, I STARTED advising three entrepreneurial brothers who are the controlling shareholders of three companies with several hundred employees. All of their companies are presently short of operating cash and unable to borrow from banks or other conventional sources. Without quick infusions of funds, they’ll likely go under.
They won’t be able to pay skittish suppliers who refuse to extend additional credit, even if the brothers guarantee payment. Nor will they be able to meet payroll for employees.
SOME OF MY CLIENTS incur hefty medical expenses for themselves and family members. I tell them not to expect too much help from the IRS when it comes to deducting such expenses—unless the costs are well into five figures.
To deduct medical costs, taxpayers have to forego the standard deduction and instead itemize on Schedule A of Form 1040. Their expenses also have to be for bills that aren’t covered by insurance or reimbursed by employers.
THESE BEING THE TIMES they are, I frequently field queries from clients who are asked for loans by relatives or friends. These would-be borrowers plead their inability to come up with the down payments for homes or who want to launch “can’t fail” business ventures. Suppose, as so often happens, the loans go sour and the borrowers’ last messages mention their entry into witness protection programs.
I remind wannabe lenders who intend to stake friends or relatives to familiarize themselves beforehand with long-standing tax rules.
IN THE FIELD OF epidemiology, researchers have long used the term “tipping point” to describe how epidemics occur. At first, an ordinary disease moves slowly, not gaining much attention. But then, seemingly overnight, it snowballs into something far larger.
Within the world of public health, this concept is well understood. But about 20 years ago, the author Malcolm Gladwell took a closer look and pointed out that tipping points can be found in a whole host of other situations far beyond epidemiology.
MY FRIEND ROSTISLAV, who would know, tells me that in Russian there’s no equivalent for the word “privacy.” That’s because privacy—as we understand it—is a foreign concept. Children’s grades are posted publicly in schools and it isn’t considered impolite to ask someone’s salary.
Why is this relevant? As a stock market investor, if you have international exposure, you’ll want to be aware of these cultural differences, because they impact how other countries run their economies and how they regulate—or don’t regulate—their investment markets.
SOME PEOPLE SAY I eat like a dog. I eat the same food everyday. For breakfast, I have egg whites with mushrooms on a whole wheat tortilla, and oatmeal with fruit and almonds. For lunch, I have a salad of tomatoes, cucumbers, carrots, avocado and baby spring mixed lettuce, and usually a nonfat bean and rice burrito. For dinner, I have vegetables like broccoli, cauliflower, spinach and squash with fish or poultry. When I feel adventurous,
EVERYBODY WANTS easy answers. But often, things aren’t so simple, especially when it comes to financial conundrums. Consider the four common money questions below—and the rules of thumb that folks frequently rely on.
1. How much do I need saved for retirement? Type this question into Google and most of the answers will recommend that you save some multiple of your income. Some suggest eight-to-10 times income, while others recommend as much as 25 times.
WHEN I FIRST encountered the acronym FIRE on Bogleheads.org, I had no idea what it stood for. It didn’t take me long to decipher the wordplay. More problematic: figuring out what FIRE—financial independence/retire early—is all about.
Studies show over two-thirds of Americans have left behind fulltime work by the time they’re age 66. But many retirees continue to work part-time because they don’t have the financial resources to avoid working altogether. A 2015 GAO study found that 52% of households age 65 to 74 had no retirement savings—and,
FOR REASONS THAT make lots of sense to my clients, many of them place their homes, securities and other assets in joint ownership with their spouse or children. A characteristic of joint ownership is the right of survivorship—the co-owner who dies first loses all ownership in the property and the surviving co-owner acquires all ownership.
Many individuals mistakenly believe that joint ownership relieves them of the need to write a will. To be sure,
IN AUGUST 2004, venture capitalist Peter Thiel sat down to listen to a pitch from a 20-year-old entrepreneur named Mark Zuckerberg. It didn’t take long for Thiel to make up his mind. According to most accounts, they met in the morning and, after a short break for lunch, Thiel committed to buying 10% of Zuckerberg’s new company, Facebook.
In hindsight, this was clearly a smart move, making Thiel a billionaire. But while it was certainly a great investment,
THERE ARE MANY WHO claim to speak with authority on Social Security. I am not one of them. But I’m nothing if not curious. I recently set about testing some notions I have heard with regard to Social Security retirement benefits. A family member had asked for help understanding her Social Security statement, so I had some real numbers to work with. The statement predicted that her monthly benefits would be as follows, depending on when she begins benefits:
$1,907 at age 62.
AT SEVEN O’CLOCK THIS morning, as my wife and I tried in vain to wake our children for school, we heard a similar response as we went from room to room: “My head hurts.” Nobody wanted to get up.
I have to say, I don’t blame them. It’s the middle of winter here in Boston. The sky is gray and the thermometer seems stuck below zero. It can be hard for anyone to feel motivated,
JUST BEFORE SANTA arrived in 2017, President Trump signed legislation officially titled the Tax Cuts and Jobs Act, which was described by both supporters and opponents as the most comprehensive overhaul of the Internal Revenue Code since the Tax Reform Act of 1986.
The many new rules that are now on the books are mostly prospective, meaning they apply to returns to be filed for calendar years 2018 through 2025. They aren’t retroactive to calendar year 2017.
THE TAX LAWS severely restricts deductions for losses claimed by individuals whose homes, household goods and other properties suffer damage or are destroyed due to events that, in IRS lingo, are “sudden, unexpected, or unusual.”
In many cases, the allowable write-offs turn out to be shockingly smaller than anticipated. Furthermore, those with high incomes and low losses will find they can’t claim any deductions. What follows are answers to some often-asked questions.
What are the usual restrictions on writing off casualty losses?
IMAGINE AN IDEALIZED chart that summarizes our finances over the course of our lives. What would the chart look like? Picture these five lines:
Our nest egg grows, slowly at first and then ever faster, hitting a peak of around 12 times our final salary when we retire.
Our portfolio in our 20s stands at perhaps 90% or even 100% stocks. We dial down our allocation in the years that follow, especially during our final decade in the workforce,