Is There Love In The Air For Your Financial Advisor?

Is There Love In The Air For Your Financial Advisor?

Nothing solidifies a relationship more than trust. It’s been said that if you’re able to say you have one best friend you can trust with your life, you’re in pretty good shape. If you find a car guy you can trust, he’s your car guy for life. And as far as romance, if you don’t have trust, “till death do us part” is out of the question.


When computers found their way into more and more people’s households around the mid-90’s, computer dating soon followed.  Back then, finding a date through your home computer was at best a stigma and at worst, downright creepy. Over time, as technology evolved and became ingrained into our everyday lives, computer dating became accepted, popular and ironically enough, safer. Dating services are so thorough with their screening process nowadays that you end up knowing more about your blind date than you do about members of your own family.


Why not take the concept a step further; say with financial advisors? That’s a question Shelley Hackler is asking with her new business, Investorclarity.org; a business that uses computer-based algorithms to match financial advisers to the user. Instead of just a simple directory, Hackler has each advisor fill out more extensive and detailed profiles to better match a potential investor’s specific needs. Much like picking a life-partner, what’s more important than choosing a person you intend on entrusting with your financial future and being as picky as you please?


The more you know about someone, the less intimidating they become. And sometimes, like dating, a simple recommendation from a friend may not be enough to be the best fit for you. In fact in some cases it could backfire drastically for no other reason than, despite the best intentions, your friend is not you.


By no means should people frivolously, haphazardly and carelessly pick a financial advisor. But there’s no denying the intrigue of this potentially groundbreaking concept. While most ask, why people should try it, the cautious optimist in me asks, “Why not?”

Taxing Tax-Deductions

Taxing Tax-Deductions

It’s no secret the US Federal Government spends more than it brings in; nor is it news to anyone who’s been paying any attention this election season that the gap has increased exponentially within the last few years. In an ever ongoing attempt to reduce the trillion-dollar-plus deficits, politicians are always brainstorming new-fangled revenue sources to tap into instead of, God forbid, reducing their obscene spending of other people’s money. The latest government account yet to be pillaged is the $18 trillion or so in 401(k) accounts that are, at present, untaxed. According to a new proposal, all that may change.


Not only is there a plan under consideration to limit employer-employee 401(k) contributions to 20% up to a $20,000 ceiling, but the tax deductions would be replaced by an 18% credit sent directly to everyone’s retirement account; making any contributions to a 401(k) plan treated as taxable income. The credit is said to increase revenues by approximately $458 billion; another short term Band-Aid on a long term financial cancerous cliff, especially if programs like Medicare and Social Security are left rudderless.


What’s interesting to note here is the possibility of an unintended lesser-of-two-evils result for the taxpayer, assuming this outrageous and irresponsible proposal is given the green light. Who’s to say that your present tax deferral won’t wind up becoming a costly tax-procrastination when it’s time to retire, cash out and pay up? Getting it over with, a little at a time, one payment at a time, in order to enjoy a tax free harvest via ROTH plans and ROTH-LIKE plans, may very well be worth the temporary and immediate pain of taxable income you can’t spend. Not to mention the very real possibility that the tax rate, according to experts, will be higher at the time of the withdrawal than during the contribution process today. A possibility made ironically clearer by the very proposal laid out by a political system whose spending has reached a level of complete insanity.


Of course, none of this would be relevant if most workers opted out of the program and companies eventually eliminated the option all-together. Hopefully, someday they’ll finally realize you can’t simply tax your way out of a financial crisis.



It Matters If You Think It Matters

It Matters If You Think It Matters

After reading an article about GOP Vice-Presidential candidate entitled, ‘Does Paul Ryan’s Black Ex-Girlfriend Matter?’, I asked myself the same question (Only after I first asked, “Is this what vetting a candidate is like?”). After some thought from all angles from both sides, I concluded that reality isn’t something that necessarily falls under the category of right or wrong. So the short answer for me would be, absolutely.


Now, should it matter? I’m sure we can all agree that, of course, it most definitely should not. Race, while a conversation taboo at the Thanksgiving table along with politics and religion, is a topic that everyone inescapably has an opinion about whether they decide to say it out loud or not. In a campaign with clearly much more important issues at stake such as unemployment, debt and deficit, taxes, housing and immigration, the pigmentation of Ryan’s dating experiences or in-laws shouldn’t even be on the radar.


But it is.


Racism comes in many forms and not all of which can be necessarily considered racist. Some people admittedly voted for Obama because he’s black. In this case, race by definition, was as much of an issue as another voter who did not vote for Obama for the same reason. A vote is a vote.


Interestingly, politics has its own bigotry not unlike racial bigotry. There are voters who categorically think you are a racist if you’re a Republican. They may know nothing else about you, but that’s that. So, is it relevant to the individual if a Republican candidate attempts to defend himself with real life examples? It might and it might not.


In an era where voters select candidates for the silliest of reasons (age, hair, articulation, physique, saw them in person, MTV told them to, an actor told them to, etc.), politicians must address all issues, no matter how trivial. And if a significant enough amount of people thinks an issue is relevant, it doesn’t matter that it shouldn’t matter.


It matters.

Shoes, Priorities and Economics

Shoes, Priorities and Economics

There are two very interesting schools of thought as it pertains to pricing and consumerism. One theory is if you want to move more product, reduce the cost; thereby increase your target market to include a wider economic base as well as make your current market more tempted to buy because everyone simply loves a good deal. The other theory, fascinatingly enough, is jack up the price a ridiculous amount; thereby draw attention to it, both positive and negative, and create the perception of an inflated demand for such an elite, exclusive item. An item that must be worth the extra money because why else would it be priced that way? Such is the case of Nike’s new LeBron James shoe, priced at a record setting $315.


Predictably, despite the floundering economy, consumers are expected the flock the stores and snap up these overpriced status symbols like hotcakes, spurring praise and criticism of every layer of the transaction. Some question what kind of message it sends that in spite of people struggling to make ends meet, they still find it perfectly acceptable to drop an outrageous amount of money on shoes. Others question the lack of social responsibility of the athletes the shoes are named after, by suggesting their influence on young people is being abused.


Nothing democratizes power more than the free market. If Nike wants to charge too much for a pair of sneakers and people are willing to shell out their own money to pay for them, who are we to judge?

Notice I said, “their own money.”

While some may look at the booming sales of such an extravagant item as a sign of a recovering economy, I caution that optimism. How many customers are on food stamps, welfare, or unemployment? How many people have you seen below the poverty line talking on a bedazzled smartphone? How many kids will be walking around wearing the LeBron shoe with parents on government assistance of some kind? These are real issues that justify the criticism of an otherwise innocuous economic scenario.


This country definitely has real economic problems. But just as real is the problem with priorities; Fueled by out of control and easily abused entitlement programs. When I drive by a mall on Saturdays and see full parking lots, my first thought isn’t, “The economy is improving”. Unfortunately it’s, “How many people whose basic needs are being supported by tax payers so they can buy Gucci jeans?”

The Olympic Games, Just Like The Money Game, Have Winners And Losers

The Olympic Games, Just Like The Money Game, Have Winners And Losers

If an investment had no risk, no downside, no threat of loss, then success is meaningless. Such is the apparent case of the 2012 games in London as far as the assumptive shot-in-the-arm to the economy is concerned. This is according to economist, Nouriel Roubini in an MSN article entitled, London Olympics an Economic Failure.


“…London is totally empty: hotels, restaurants, streets,” Roubini tweeted. “…A zombie city.”


In many economic scenarios from a consumer confidence standpoint, perception can equal reality. Example: People perceive a bank is losing money and going broke. The result? People get scared, take their money out of the bank and the bank loses money and goes out of business. In some cases however, perception can equal the direct opposite effect. The positive economic predictions were also accompanied by a wave of apprehension. In this particular case, UK Policymakers warned that the expected extra million visitors a day would surely bring enormous pressure on the city’s public transport network and overcrowding in the city’s busiest districts. The result? Most Londoners left town or worked from home during the games while most of the tourists kept to the Olympic venues, villages and private parties; thereby avoiding the city’s biggest attractions located in London’s West End.


Almost exactly the same thing occurred 16 years ago at the Atlanta games. The weeks leading up to the Olympics were buzzing with rumors which saturated the city’s residents of the catastrophic traffic nightmares that would most assuredly gridlock their entire infrastructure. As a result, the brave folks that took the risk enjoyed a veritable highway heaven on the way to work because of the mass avoidance of the interstate system.


The bottom line is this: With as much preparation, research, and comparables you have at your disposal, there simply is no sure thing when it comes to investments. There’s always a risk, whether it be from the millions invested by a booming metropolis like London, to a five dollar bet at the Blackjack table. It’s not exactly Las Vegas. But it isn’t entirely unlike it either.

Your Home – A Place To Live, Not A Place To Park Money

Your Home – A Place To Live, Not A Place To Park Money

Pop Quiz: If someone were to offer you an investment where you can pay more than the minimum contribution, but not less, which would result in loss of previous contributions, the money is not safe from loss of principal, is less safe with each payment, is not liquid, earns 0% rate of return, the tax liability increases with each payment, and when fully funded, no income is paid out, would you be interested? Before you passionately answer “no” with possible expletives, I just described your home.


The ripple effects of a bad economy permeate every facet of our lives in a very real way, and your house is no exception. In fact, recent reports on the significant drop in median net worth of families are in part a direct result of the dropping housing values. Your home as an investment these days look more and more like automobiles; which as most of us know, are no investment at all, especially when taking into account the interest, taxes, repairs, insurance and other costs of maintaining it.  They’re more of an accomplishment, a status symbol, a check box off your American dream list; which is fine as long as houses are similarly regarded.


To ensure that you continue to win the money game, view your home as a place to live…not an investment, not a place to park your money and certainly not an ATM for heaven’s sake. The only tangible benefit to owning a home is hopefully over time, you will build enough equity to be able to transfer your debt over to a bigger home. In the meantime, I refer you to the inspirational phrase, “Life Is What Happens When You’re Making Plans” as it pertains to being a homeowner. You have a house. Enjoy it, make it a home, make memories and be thankful you can still pay the bills on time. It is a nest, not a nest egg.


The days of mortgage burning parties are over.