12 posts tagged “retirement”
Mainstream media continues to state that traditional IRAs are tax deferred until retirement. Well, that depends. If your IRA owns mortgage-leveraged real estate, you owe UBIT. If your IRA or 401(k) owns an active business structured as a pass through entity (such as an LLC or partnership), you owe UBIT. UBIT, or Unrelated Business Income Tax, applies to tax exempt organizations including retirement plans. To pay UBIT, Form 990-T must be filed with the IRS.
Gold is a very popular investment these days. Is it possibble to own collectibles such as art, coins, and physical gold inside an IRA? No. When an IRA purchases a collectible, the amount used to make the purchase is treated as distribution to the owner. It is included in the owner's gross income, and if the owner is under age 59½ and does not qualify for one of the exceptions, a 10% early distribution penalty is imposed on top of the income taxes.
IMHO, US Treasuries are the next financial bubble to burst.
- The Fed has been buying Treasuries bonds in an effort to lower borrowing costs and end the worst U.S. economic downturn in 70 years. Its holdings of Treasuries edged up to $759.80 billion from $757.77 billion last week. However, the Federal Reserve's program of buying Treasuries will end in October.
- Even the Chinese, one of the largest buyers of Treasury securities, are buying fewer treasuries. They are buying gold with their US Dollars.
- Yet investors are making huge bets on bonds. In the last six months they have allocated double the amount of new money to bond mutual funds as they did over the entire four years from 2003 through 2006! All academic studies agree that poor market timing decisions are the rule rather than the exception among mutual fund investors.
- Besides that, the federal government actually needs high inflation down the road. Why? So they can pay off this low interest debt with cheapened dollars. Debtors gain during inflationary times.
- It's not just me questioning the current price of treasuries.
Looking at the next 18 months, I see higher yields on the
10-year and the 30-year. Bond prices fall when interest rates rise. With
fewer buyers and a falling US dollar, higher rates are inevitable. Get into TMV or TBT while they are on sale! My earlier posts on bonds should help you.
I talked about water being the new blue gold. It is more precious that oil, yet grossly under priced. Since I made the call on June 11th, CGW has soared from $15.95 to $17.53 - a 9.9% gain. Plus you get a nice dividend at the end of the year - 7.36%.
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The picks I shared with you on this blog included the following tickers - DGP | GAZ | TBT | DXDDX.
Here were my original posts so you know I'm not just faking things and you can get some further analysis:
how-to-play-the-demise-of-the-us-dollar | where-should-i-put-my-money | where-should-i-put-my-money-part-2
Based on the date of those original posts and Monday's closing price, here is what they did:
DGP went from 19.75 to 23.35
GAZ went from 16.11 to 15.92
TBT went from 46.30 to 46.20
DXDDX went from 20.98 to 23.60
A 5.75% gain if you owned all of them.
Stay away from GAZ because of the crackdown on commodity based exchange traded funds and notes. Replace it with a natural gas company like CLNE or CHK (both of which I own).
Start averaging into TBT. I'll explain why you should short the Treasury market in a future blog post.
Thinking of chucking it all and retiring early, long before you start getting a pension or Social Security, and before you have ready access to your 401k and IRA?
Better run through this calculator and get a dose of reality. http://www.firecalc.com/
We all have seen the real estate bubble unfold because banks, brokers, buyers, regulators, and Wall Street all looked a blind eye. Less conspicuous, but just as damaging, was the greatest financial crime in history. Today I will attempt to document how governments, regulators, brokerage firms, and foreign banks are crushing the retail investor.
- Deutsche Bank is liquidating the PowerShares DB Crude Oil Double Long ETN (DXO). Deutsche Bank said: “Limitations imposed by the exchange on which Deutsche Bank manages the exposure of the Notes have resulted in a “regulatory event” as defined in the terms of the Notes, which has caused Deutsche Bank to redeem the Notes.”
- In an effort to stem the effect that the seemingly inevitable regulation will have on futures-based commodity funds, multiple ETF issuers have halted share creation. Thus, these securities trade at huge premiums to the underlying commodity (market distortions).
- FINRA announced that it would be increasing margin requirements for leveraged ETFs as of Dec. 1. These changes will require margin for leveraged funds to be "commensurate" with the degree to which they are leveraged. FINRA's warning set off a domino effect as firms like Edward Jones, Ameriprise, and UBS ceased selling leveraged funds to investors.
- Switzerland’s oldest bank, is telling wealthy clients to sell their U.S. assets, or switch banks, because of concerns new rules will saddle investors with tax obligations in the USA. U.S. proposals to extend reporting requirements for banks whose clients buy American stocks and bonds coupled with estate tax liabilities have put Switzerland’s traditional bank secrecy at risk.
- Canada's Royalty Trusts are similar to U.S. master limited partnerships in that they generally pay out a substantial portion of their cash flow in the form of monthly distributions. The Canadian government wants a piece of that. In 2001, in what has come to be known as the "Halloween Surprise" for its announcement on October 31st, 2006, these trusts will have to change their structure and their payouts or face huge tax consequences.
Back in April of this year I wrote about natural gas and the Pickens'' Plan. The fundamentals are looking even better now.
Natural gas rig numbers have fallen the most in modern history over a rolling 12 month period (a fall of approximately 56%) and there appears to be no let up in the numbers falling over the last few months. In addition, it is a relatively simple task to shut a rig down but it is a much more difficult task to get it back on stream.
So once demand picks up, look for a price spike! My favorite way to play this is the exchange trade note GAZ
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