Reject Status  -  Embrace Wealth

Most anyone who is not-yet-rich understands that it is not easy to get rich (without lottery winnings, rich uncles, unique inventions, or magic beans); however, the mechanics of the difficulty may not be on the forefront of every reader’s mind.

Suggested Reform: Congress should amend the National Bank Act to prohibit any FDIC member bank from accepting customer deposits that are not either directly insured by the FDIC or indirectly insured through an affliliate bank mechansim, such as the Certificate of Deposit Account Registry Service (CDARS)¹. In short, the idea of FDIC member banks accepting and holding any un-insured deposits must be ...Read More

Price volatility is a fact of life when it comes to investment assets. That is, once you decide to purchase investment assets, such as corporate securities (stocks and bonds), pools of securities (mutual funds), or real estate, you must contend with the ups and downs of market forces. The fundamental question, however, is when should a person be concerned about volatility, or major price fluctuations.

Question: How can I determine the financial health of an annuity with the XYZ Insurance Co.? I assume that FDIC does not apply.¹

Answer:
To answer the last part of your question first, you are correct; the FDIC bank deposit coverage does not apply to annuities purchased through an insurance company. The FDIC strictly provides coverage for deposits in commercial banks.

The average taxpayer may not be familiar with some of the rules that control the rate of tax on different types of income. You may find that you make better investment decisions when you understand the tax implications of certain choices.

Question: Is there an easy way to figure out how long it takes for an investment to double in value?

This essay is intended to highlight only one key aspect of financially-savvy real estate investing: a targeted area’s improvement of its infrastructure. Significantly improved infrastructure is one key marker for the real estate investor to distinguish between sustainable higher home prices and a group of factors that indicate an un-sustainable real estate bubble. The decision whether to invest and when will most likely be affected by the question of whether large gains in real estate prices are sustainable or not. Below is a short list of some of the factors that contribute to long term, sustainable gains in home values. Additionally, there is also a list of the factors that tend to make for unsustainable rise in home prices. Where the second list of factors plays an overwhelmingly dominant role, you can predict ...Read More

Question: There’s been a lot of news about a few large bank failures and their takeover by the FDIC. Is it possible to have more than $250,000 in one bank and still have all the money insured by the federal government?

Synopsis: The typical savings account, which consists of demand deposits, offers the convenience of immediate withdrawal; however, where on-demand withdrawal of funds is not paramount, U.S. savings bonds, generally, and the Series I Bond, ...Read More

Question: What are the benefits of U.S. savings bonds?

Answer:
Although the typical investor may find clear advantages of holding "series I" savings bonds to offset the negative effects of both taxes and inflation, anyone interested in saving for a child’s college expenses may be particularly interested in U.S. savings bonds. The following advantages are specifically meant to be contrasted against what investor/taxpayers do not receive with bank savings accounts (including CDs).

1) Income Tax Advantages (click here for more on this topic):

Many consumers may not know that when someone else fraudulently uses their credit card, a federal statute protects them against their issuing bank’s attempt to collect on unauthorized charges. To clear some definitions, individual consumers who use credit cards are cardholders; and banks that provide credit cards are card issuers. The federal statute imposes a $50 maximum liability against cardholders when someone else engages in unauthorized use of the holder’s card. Unauthorized use occurs when a person other than the cardholder without actual, implied, or apparent authority (think of most any stranger) uses the card and no benefit is realized by the cardholder.¹

Question: What are some quick ideas to ensure wealth building?

Answer:
Here are some very basic ideas that help build wealth every day:

1) Without fail, save an absolute minimum of 10%, and ideally 15% of monthly pre-tax (gross) income.

Exotic home loans are those loans that do not depend on the fundamental question of a borrowers ability to repay a loan before such a loan will be extended. During 2002-2007 mortgage lenders greatly accelerated a trend that started in the mid-1990s to lend to people who had dubious qualfications for home mortgage borrowing.  This recent steep departure from traditional lending norms was punctuated by the banks looking much, much less to an individual borrower’s ability to repay a loan (which has been a standard for many decades), and instead placing much more emphasis on ...Read More

Question: I have read somewhere that among America’s millionaires there is a disproportionate number who are small business people. Why is this so?

Website: www.ditech.com

Exotic Mortgage: click here to see the Exotic Mortgage

Important Disclaimer: Ditechs advertisement is not intentionally misleading; it just does not explain the implications to the would-be borrower. The analysis below views the loan offering from the perspective that most consumers may not fully comprehend the implications that underlay what is being offered. Here, the required monthly payment will jump dramatically in the first month of Year 11 on a 30-year loan.

Question: How Does a Middle Income Earner Get Rich Faster than a High Income Professional?

Answer: The average American household in 2004 saved less than 1 percent of pre-tax income, according to the United States Federal Reserve Board¹. You need to fully appreciate what an astonishing figure this is. In the mid-1980s, the average household saved approximately 11 percent of income; that is, only 20 years ago the typical household had a savings rate 10 times better than now.

Synopsis:

www.freecreditreport.com does not offer the federally mandated free annual credit report; it offers a paid subscription that must be timely cancelled before a consumer can receive a free credit report through this domain.

The Web Address: http://www.freecreditreport.com/ (you may have seen the annoying TV ads)                          

Short Essay:

Question: Besides saving and investing, what are some other steps that a person can take to build up financial power?

Answer: Some people are born to wealth; and many of those who are born to it take up an inordinate amount of media attention. For the overwhelming majority of Americans however, financial power is not handed out at the dinner table. Your challenge is to make your own financial power, even if you have to do so incrementally.

Commercial banks, private, and semi-private institutional investors provide the great bulk of conventional mortgage loan proceeds in the United States. Subsequent essays will address such governmental mortgage lending as that sponsored by the Federal Housing Administration (FHA) or the Veteran’s Administration (VA).

Question: I’m trying to figure out by how much my 401k will grow over time, or for that matter even the exact amount to expect from a bank CD that I’m thinking about buying. Any easy ways to figure this out?

Answer:
If you want to see an excellent site that provides calculators to help answer your questions, check out www.moneychimp.com. To answer your questions directly, we’ll use a couple of hypothetical examples. You can change the inputs accordingly.

Please click here to follow along with MoneyChimp’s financial calculator.

Quick Summary: A Roth 401k combines tax-free withdrawals and lack of mandatory distributions found in the Roth IRA with the higher contribution limits ($15,500) and lack of high income prohibitions found in the traditional 401k qualified retirement plans.

A June 2008 edition of the Washington Post recently provided an excellent opportunity to compare and contrast the significant differences between two banks’ invitations for individuals to deposit money. As the point of this article is to get readers to comprehend just how critical the fine print can be in advertising (rather than to evaluate a particular bank’s advertising practices), the two banks will be called Bank #1 and Bank #2.

Bank #1’s Ad:

Question: How can young adults establish a very strong credit record?

Answer: Multiple factors comprise a credit score. Payment history is an important one; however, the length of time that an account has been open, total amount of debt owed, the total number of credit accounts that are open, the amount of available credit, the length of time with the same employer, are some of the other factors that can help or hurt a credit score.

Here are some of the ways that people cripple their credit:

• Late 30 days or more on a bill; the longer a person is delinquent, the worse the score gets. That is, 60 days late is worse than ...Read More

Insolvency:  According to Black’s Law Dictionary, the definition of insolvency is "Such a relative condition of … assets and liabilities that the former, if all made immediately available, would not be sufficient to discharge the latter."

Question: How are my taxes affected, depending on where I live in the U.S.?

Growth in purchasing power of every dollar that you hold is indispensable to your wealth-building. The growth of investment assets, over and above the growth necessary to offset the negative effects of inflation and income taxes, is the key to wealth enhancement. That said, it is essential that you optimize your investment capital (dollars set aside for investment); however, you cannot optimize your capital allocation, unless you comprehend return on investment.

Calculating Return on Investment (ROI)

Many consumers may not know that a federal law protects them, via their credit card company, when dealing with dishonest or otherwise disreputable vendors. Specifically, 15 U.S.C. (U.S. Code) section 1666i allows consumers to request their credit card issuers to reverse a charge against offending vendors of goods and services, under specified circumstances.

An aggrieved consumer must meet certain requirements before seeking a reversal of a charge. The requirements are:

a. the Consumer must have made a ...Read More

Question: What are some physical defects that can seriously undermine the purchase of a home?

Answer:
Certain physical defects can be considered as absolute deal killers, unless you have very specific knowledge and proven expertise in remedying these issues:

Question: Do people waste their time saving for a down payment when they are paying rent in the meantime?

Answer: Certain implied assumptions are built into this kind of question. Some of those assumptions are:

1. Housing values in the zip code where you want to purchase are rising.

2. You lose money by paying rent…

Question: How does a regular person gain wealth? I don’t make nearly enough money to get rich.

Introduction

Question: "How much money should I be saving to invest"?

If you ignore the continually debilitating effects of taxes and inflation on your financial goals, then you may be doomed to wallow in permanently lower purchasing power. These factors hurt you financially, whether or not you think of yourself as an investor. Even if you simply keep a small amount of your excess income in a savings account, you cannot escape the plight that haunts every serious investor.