Hot topics in City of Palo Alto, California
Hot topics in City of Palo Alto, California
- scholarship program, for low income families to be able to take classes.2)no smoking policy in public areas
- Affordable housing for low to middle income families
- Job-share options for parents and apprenticeships for teens
- Free shuttle between East Palo Alto and Palo Alto so youth can partake in afterschool activities.
- Transportation: less traffic, more parking, more shuttles.
- Authorize mother-in-law units before approving anymore housing projects.
- Build a modern, secure law enforcement facility.
- Improve accessibility by bicycle and public transit to reduce auto traffic in the city
- Continue to maintain the city’s wonderful investment in tree-lined streets
- Keep Palo Alto economically vibrant
- Plan for University Avenue to become a pedestrian mall, closed to traffic
- Traffic remediation for the abomination which is Town & Country Shopping Center
- City-supplied free Wifi in major commercial zones
- Serving current residents and preserving quality of life first
- Updating, maintaining infrastructure
- Sound financial future
And more…
Indexed Annuity contributions are part of the distribution process in retirement
Index Annuities Gains
In 2008, the SP500 lost about 40% of its value. Investors in indexed annuities did not lose a cent which took nearly 4 years for the SP500 to get back to 2007 levels.
For individuals who were retiring in 2008, or had tax qualified accounts in an Indexed annuity and passed away, that was a great deal. Some use an indexed annuity as the “safe” portion of a portfolio as an asset class
Fees
Most indexed annuities have “$0” fees and $0 admin and maint. fees. An estimated 95% of indexed annuities have zero fees associated with their policies unless you add a specific rider for income or death benefit guarantees. That commission is paid to the agent from the company, it doesn’t come out of the clients portfolio.
Many agents take their commission over a 5 year period, meaning that their commission is <1% annually, which is less than most brokerage account manager’s charge.
Surrender charges
State regulators limit the surrender charges. The highest surrender charge that I can find is 14% in year one (two financial companies), and that is only available in a few states. Surrender charges in annuities function very similar to Bank CD surrender charges. If you pull the investment before maturity, you will pay a penalty. That is why it is called a “contract”.
There is built in liquidity that every policy has by state law. Usually this amount is 10% annually, and some companies allow that 10% to aggregate (i.e. if you don’t pull funds for 5 years, you can pull up to 50% of the contract in one withdraw without penalty).
Taxes
Taxes are the same as any 401k, IRA, or qualified plan (the same thing that the author recommends in the final section). Suitability practices over the past five to ten years or so have increased substantially to prevent mis-representation by agents or the companies.
Personalized client investment goals
Not every client is trying to maximize return, some simply want the guarantee that they won’t lose any of their principal, their taxes are deferred, and don’t mind if it’s in a 5- 10 year contract with minimum guarantees. There are very few annuities that have flexible premiums and allow annual contributions, most are single premium rollovers. Putting money into an indexed annuity or an ongoing contribution strategies are part of the “Accumulation” process leading to retirement.
Email Connie at motherhealth@gmail.com or conniedbuono@gmail.com to have a chat with a sr investment advisor to help you reduce your income taxes and protect your cash flow. 408-854-1883
Where to fit Voya’s Fixed Index Annuity in your diversified asset base
Fixed Index Annuity
Now you have an option to accumulate your money outside of the bank CDs. At age 40plus, you want a stronger vehicle with protection of principal and growth up to 5% with no market risks.
vs Bank CD
Contact Connie Dello Buono for a Fixed index annuity that is favorable than the bank CDs. 408-854-1883 motherhealth@gmail.com or conniedbuono@gmail.com
How to invest with a goal and a coach
You have a fitness trainer because you need motivation and fast rules to maximize the use of the gym or get in shape with strength training very fast or be fit based on your lifestyle and body.
In investing, you have many options and you have to start with a strategy, goal and a coach.
Based on your situation, goals, age and capacity to invest, you will need to start with an investing strategy and a tactician coach. How much risk can you afford? How can you lower the many kinds of risks?
- 1. Have an investment goal and coach.
- Specific: goals should be written down
- Measurable: have a way to quantify progress
- Ask: seek advice when you have questions
- Responsible: adjust your portfolio as needed
- Transparent: share your goals with family and others
- Prepare for jumpy markets. In recent years, markets have been quite calm, with few dramatic ups and downs. This isn’t normal. The successful investor knows that when the market dips, it’s not time to flee but to buy “on sale”. People tend to miss out on investment gains because they sell when the market goes through a rough patch. Get familiar with normal market bumps (otherwise known as volatility) and stick to your strategy.
- Diversify. Really. You may know the term “diversify” as an investment directive to not put all of your eggs in one basket, but what does that mean, exactly? I had a client during my financial advisor days who spread his assets among five different banks and called himself diversified. Diversification means balancing risks in your portfolio by combining investments that differ from one another. It’s a way of finding opportunity for growth while minimizing the overall bumpiness from year to year.
- Rethink the safety of cash. I’ve discussed this before on The Blog and I can’t stress it enough. Cash is not an investment strategy. People know this, but they stick with cash because they think it’s safer. What they’re ignoring is the risk to their future spending power. Not only does cash provide virtually no return, it can lose you money thanks to taxes and inflation. Sure, inflation may be low today, but even a nominal amount of inflation can really pack a punch over time. If you’re holding too much cash, you should consider putting it to work.
- Don’t set it and forget it. There’s an old rule of thumb that you should have the same percentage of bonds as your current age. So if you’re 40, the rule is that 40% of your portfolio should be bonds and the rest should be equities. But this shortcut, like many others, is oversimplified. It doesn’t take into account changes in the market environment, not to mention your life and circumstances over time. Successful investors fully and optimistically engage in their financial lives. That doesn’t mean being a day trader, but rather owning your financial future. Make the most of it.
8.69% return to break even upon home purchase
8.69% return to break even upon home purchase
1. Home Maintenance Costs
Home maintenance expenditures include cash outlays for services such as appliance repair, pest control, house cleaning, chimney cleaning, gutter and downspout cleaning, landscaping, lawn maintenance and home security. (To save money on home expenses, see Fifteen Insurance Policies You Don’t Need, Extended Warranties: Should You Take The Bait? and Five Money-Saving Shopping Tips.)
Tip: Although these costs can be minimized by purchasing a new home, many experts recommend budgeting 1% of the home purchase price every year in order to cover the costs of these expenditures.
2. Property Insurance
Insurance premiums for coverage against certain natural disasters such as fire, flood, tornadoes, earthquakes, or hurricanes may cost 0.55% of the home purchase price. Therefore, the home would need to appreciate in value by this amount each year in order to offset this expenditure. Now, clearly the costs for natural disaster insurance will vary significantly based on the geographic area in which the home is located. However, regardless of the locale, the mechanics of this concept can be tailored by the reader in order to determine his or her break-even rate. (Read more on this subject in Insurance Tips For Homeowners.)
3. Private Mortgage Insurance
Private mortgage insurance (PMI) is charged to homeowners that fail to put down at least 20% of their home purchase price as collateral for a loan. Homeowners are charged this amount each year to help protect the lender against default. In Figure 1, we have assumed that the homeowner will make a 5% down payment and that PMI insurance will cost 0.5% of the home purchase price. As such, PMI expense will directly increase the required annual home appreciation rate by this amount. (To learn more about PMI, see Six Reasons To Avoid Private Mortgage Insurance.)
4. Brokerage Costs
Brokerage costs are typically paid by the homeowner to a real estate agent for help with selling the home. In this analysis, we assumed that the homeowners will pay the real estate agent a 6% commission. However, because transaction costs are a one-time expenditure and we are trying to determine how much the home will need to appreciate each year in order to offset this cost, we need to spread the brokerage commission over the estimated length of time the home is expected to be owned. For this analysis, we use an industry accepted standard of seven years. By spreading the brokerage cost over this period of time, we determined that a home must appreciate in value each year by 0.86% in order to offset the cost of this expenditure.
5. Closing Costs
Closing costs are another expenditure that needs to be factored into our model. However, closing costs are more difficult to equate with the home purchase price, because these costs tend to be more closely tied to other factors. For this illustration, we assumed that the homeowner will pay a fee of $3,000 at the time the home is purchased. Therefore, assuming that the purchase price of the home is $225,000, closing costs would translate into an expenditure of 1.3%.
Closing costs are a one-time expenditure, but they should be allocated over the length of time the home is owned for the purposes of this exercise. As previously explained, we are making this adjustment because we are trying to determine how much the home will need to appreciate each year in order to cover this one-time cost. Following the seven-year home ownership assumption used in this analysis, closing costs would increase the annual break-even rate by 0.19%. We realize that closing costs depend on the institution that provides the loan. Therefore, the impact of this expenditure must be tailored by the homeowner in order to accurately determine its impact on his or her own break-even rate.
6. Property Taxes
In 2007, the median property tax rate in the U.S. was approximately 0.93% of the home purchase price. Therefore, a home would need to appreciate by 0.93% in order to offset this expenditure. However, the current provisions set forth in the U.S. income tax code allow property tax payments to be deductible for the purpose of calculating taxable income. Therefore, assuming that the homeowner is in the 28% federal income tax bracket, and that the purchase price of the home is $225,000, the tax deduction benefit associated with property tax payments would reduce the required home appreciation rate by 0.26%.
This property tax deduction factor is determined by multiplying the property tax rate and the amount paid for the home by the homeowner’s federal income tax rate, and then dividing the result by the purchase price of the home. Again, to apply this methodology, the impact of the property tax factor will have to be adjusted in order to reflect the individual homeowner’s federal income tax rate. (To learn more about property taxes, see Five Tricks For Lowering Your Property Tax.)
7. Interest Expense
We are assuming a fixed rate on a mortgage loan is 6.25% and that 95% of the home will be purchased with debt capital (with a 5% down payment). As a result, the impact of the equity made through the down payment will reduce the interest expense from 6.25% to 5.94%; as only 95% of the $225,000 home is being charged the 6.25% interest.
Like property taxes, mortgage loan interest is also a qualified tax deduction. The homeowner should pay around $13,359 in interest in the first year and, assuming the homeowner is in a 28% income-tax bracket, the interest tax shield would be $3,741. This amount is calculated by multiplying the amount of interest expense the homeowner will pay in the first year by the homeowner’s income tax rate.
However, because non-homeowners are entitled to a standard deduction when completing federal income taxes, the benefit of owning a home should only include the portion of the income tax shield that is above the eligible federal deduction amounts granted to non-homeowners. For this illustration, we have assumed that the homeowner is single, and therefore is eligible for a $5,150 standard tax deduction. In comparison, if the homeowner were married, he or she would be entitled to a $10,300 deduction. By factoring the standard deduction into our equation, the interest tax expense would be reduced from $13,359 to $8,209. This amount is simply determined by subtracting the standard deduction amount from the amount of interest expense paid by the homeowner in the first year. Again, assuming that the homeowner is in the 28% income tax bracket, we determined that the interest tax shield would reduce the break-even rate by 1.02% ($8209 x 28%/$225,000).
Total Impact of Home Ownership Costs
Based on the methodology outlined in this article, the assumptions made about the homeowner and the estimated cost expenditures used in this analysis, we determined that a home will need to appreciate 8.69% during the first year after it is purchased in order for it to offset the costs associated with owning the home.
Income you won’t outlive, safer than bonds,diversify your asset class
Income you won’t outlive, safer than bonds,diversify your asset class
Tax deductions for your corporation, from ABA CPA: auto,home,travel,airplane,boat
Tax deductions for your corporation, from ABA CPA: auto,home,travel,airplane,boat
Federal Tax Deductions for Home Renovation by Turbotax
Federal Tax Deductions for Home Renovation by Turbotax
There are a number of ways that you can use home renovations and improvements to minimize your taxes.
Looking to spruce up your home without breaking the bank?
Renovation of a home is not generally an expense that can be deducted from your federal taxes, but there are a number of ways that you can use home renovations and improvements to minimize your taxes. These include both tax deductions and tax credits for renovations and improvements made to your home either at the time of purchase or after.
Using your mortgage to make home improvements
One way to save on the costs of home renovation is to make the improvements to the home at the time it is purchased.
If the mortgage you take out to buy a home includes additional money to make renovations, your acquisition cost for the home includes this amount. You can then deduct the interest on this amount from your income as part of your mortgage interest deduction.
Improvements that qualify as medical expenses
Improvements to your home can also be deducted from your income as medical expenses if they are medically necessary.
The cost of installing entrance or exit ramps, modifying bathrooms, lowering cabinets, widening doors and hallways and adding handrails, among others, are home improvements that can be deducted as medical expenses. But the deduction amounts must be reasonable, given their medical purpose, and expenses incurred for aesthetic or architectural reasons cannot be deducted.
In other words, making a residence wheelchair accessible qualifies, but adding a sculpture garden does not.
Additionally, any amounts spent for these improvements that increase the value of your home cannot be claimed as a medical related expense.
Tax credits for energy generation
One of the best ways to lower your taxes is to take advantage of energy tax credits by installing qualified energy generating systems.
You can get a one-time federal tax credit of 30% of the cost of qualifying geothermal heat pumps, solar water heaters, solar panels, small wind turbines, or fuel cells placed in service for an existing or new construction home through December 31, 2016.
Except for fuel cells (which must be installed in your primary residence to qualify), the credit can be used for items installed in vacation or second homes as well.
The 30% credit applies to the cost, including labor and installation, and there is no maximum limit (except for fuel cells). For example, if you purchase and install a small wind turbine for $10,000, you get a $3,000 tax credit right off the bat – not counting the future savings on your electric bill.
This tax credit must be taken in the tax year that the item was placed in service, and a Manufacturer Certification Statement must accompany the item to qualify. For complete details, visit Federal Tax Credits for Energy Efficiency.
Home sale exemption
Under the home sale exemption, you do not have to pay capital gains on appreciation of your primary residence when you sell it if your profit is $250,000 or less. Because home renovations increase your basis in your home, they can help reduce the amount of your sale price that is counted as profit, and therefore can potentially help get you under the home sale exemption to avoid capital gains altogether. Even if not, the increased basis will limit the taxable portion of the sale price.