Here's How Much Money You Need For Bankers To Think You're Rich

Here's How Much Money You Need For Bankers To Think You're Rich

Suzanne Woolley, Bloomberg News

Just how rich is “rich?”

The answer, of course, depends on who’s asking—and these days, many are.

In rich-tropolises such as New York and London, 1 per centers moan that living on US$500,000 a year feels Dickensian. With a pot of US$40 million—and private schools, a Hamptons retreat, a horse and a charity to feed—a hedge funder on the Showtime drama “Billions” exclaims: “F---! I’m broke!”

Here, then, is a real answer, courtesy of the hush-hush world of private banking: US$25 million.

Twenty-five million dollars in investable wealth. The kind of money you could afford to see dip into the red for a quarter or three, maybe even a year or two, without breaking a sweat. With US$25 million, maybe, just maybe, you're starting to be rich.

Because in this era of hyper-wealth and hyper-inequality, that is simply where rich begins—a ticket, in truth, to the first, lowly rung of rich. For most of the planet, US$25 million represents unfathomable wealth. For elite private bankers, it buys their basic service.

Call it economy-class rich. Business class? That's US$100 million. First class? US$200 million. Private-jet rich? Try US$1 billion.

We all know the wealth gap between the rich and poor, and the rich and the really rich, is only getting wider, due in large part to the bull market in stocks and wealth generated in private businesses around the world.

What may be less apparent, at least outside financial circles, is what all that money is worth to the bankers who discreetly tend those fortunes. No private bankers worth their wingtips will say they don’t care about clients with “only” a few million. Northern Trust Corp., which works with many of the world’s richest families, stresses that in recent quarters more than 50 per cent of new clients have had investable assets in excess of US$10 million. But “to get the highest level, companies have raised the bar,” said Brent Beardsley, who leads Boston Consulting Group’s work in asset and wealth management globally.

The measure of what makes someone rich has changed dramatically in the past two decades. In 1994, when Peter Charrington, global head of Citi Private Bank, first joined the firm, “Three million was largely considered ultra-high net worth across the industry,” he recalled. “Fast-forward almost 25 years, and US$25 million is how we define ultra-high net worth.”

Wealth managers like to frame the type of client they target in terms of the services needed. For example, a married couple with an estate valued well below US$22 million, held largely in a diversified portfolio of publicly traded stocks, may not need a lot of fancy trusts-and-estates work, since about US$22 million can go to heirs without worrying about estate and gift taxes. (That US$11.18 million per person is up from US$5.49 million in 2017, and sunsets in 2025.)

A much wealthier family with homes and assets in multiple countries and currencies might require more cash flow management, customized financing for mortgages, yachts or planes, and the ability to borrow against art or investment portfolios. It may make sense for a client to house business interests in a trust, with the adviser as trustee.

At a private bank with an investment banking arm, “sometimes the investment bank collaborates with the private bank client in doing a recapitalization of the company, or maybe sells a non-core division to create liquidity so a family member can exit the business,” said John Duffy, global head of Institutional Wealth Management for J.P. Morgan Private Bank.

“Getting rich is complicated,” said Steven Fradkin, president of wealth management at Northern Trust. “It’s just a good complication to have.”

To continue reading, please go to the original article here:

https://www.bnnbloomberg.ca/here-s-how-much-money-you-need-for-bankers-to-think-you-re-rich-1.1081416

Proof Of Time: A Different Way To Think About Gold

Proof Of Time: A Different Way To Think About Gold

February 3, 2023  Simon Black

Gold is really an amazing metal when you think about it.  It doesn’t corrode. Coins buried underground or sunk at the bottom of the ocean for hundreds of years are routinely pulled up and brushed off, and they’re good as new.  This strength and durability is precisely what makes gold so interesting as an inflation hedge.

It undoubtedly takes a lot of work to produce a gold coin or bar-- so much labor, energy, technology, etc.  A gold coin essentially represents all of the work… all of the effort and labor… that went into producing it.

This is not unique. In the same way, a bushel of wheat represents all the labor that went into producing the grain. An iPhone represents all the labor and effort that went into producing it. Except that wheat doesn’t last. iPhones don’t last. Gold does.

So gold essentially encapsulates all of the resources, including TIME, that went into producing it… in a way that lasts forever.

Right now, for example, it costs major mining companies about $1,270 to mine a single ounce of gold. So if you buy gold today, you’re essentially locking in a $1,270 production cost.

This is the reason that gold does such a great job of maintaining its value against inflation, because, over time, production costs tend to increase. And higher production costs eventually result in higher prices.

This is true with just about any product or industry. We’ve seen companies like Procter&Gamble, Unilever, CocaCola, McDonalds, etc. all increase prices because their production costs are rising.

Again, though, you cannot use a Big Mac as a store of value. It won’t last forever. It won’t even last a day.

But gold lasts. You can buy a Canadian Maple Leaf coin today, and, ten years from now, your 2023 coin will be worth exactly the same as a brand new coin minted in 2033.

And if you anticipate that inflation will push up production costs over the next decade (which tends to happen), you can easily make a case that gold prices will be higher by then.

This is the topic of our podcast episode today; we take a deeper look at why gold has long-term value-- a variation of ‘proof of work’ that I call Proof of Time.

We start out in Yap Island, in Micronesia, and discuss how the natives there developed one of the most advanced financial systems in the history of the world based on the concept of ‘Proof of Work’.

Anthropologist William Furness wrote that, despite the Yapese having no understanding of economics, they realized that “labor is the true medium of exchange and the true standard of value.”

I believe this is true. But more than labor, I believe that TIME is real standard of value.

Time is the ultimate scarce resource. No one, no matter how rich or powerful, can create any more of it. And once it is used, it is gone forever.  Labor is one of the ways that we use time. And gold is a rare asset that transmits both time and labor… forever.

We also talk about different BUY signals for gold. We talk about miners’ gross profits-- and why it makes sense to think about buying when profits are low… or even when the price of gold falls below the price of production.

In a way that’s like buying a house for less than the cost of construction; it’s a SCREAMING deal and definitely worth considering.

Gold isn’t at that level right now. But it could be soon… and that’s why it’s worth understanding how to think about gold, and many other assets, through this lens of ‘time’.

You can listen to this week’s episode here.

To your freedom,   Simon Black, Founder   Sovereign Research & Advisory

https://www.sovereignman.com/podcast/proof-of-time-a-different-way-to-think-about-gold-145695/

How the Principles of Fitness Apply to Personal Finance

How the Principles of Fitness Apply to Personal Finance

January 25, 2023  Financial Pilgrimage

What do physical fitness and personal finance have in common? On the surface, there are a lot of differences between your fitness program and financial wellness. One involves income, spending, saving, and investing. The other involves physical activity, nutrition, and overall health. The reality is that financial fitness (and just fitness) are some of the most critical areas of our lives. It’s no coincidence that there are striking similarities between fitness and finance once you start digging in.

Financial Fitness is Behavioral

Fitness programs have always been a big part of my life. So when referring to fitness, we’ll discuss both sides of the equation, including physical activity and nutrition. Being raised by a dietitian and having a love of sports had me interested in both early on. Looking back, I feel fortunate to have built habits in both areas at a relatively young age.

Growing up in a house with two younger brothers and a junk food-loving dad, the competition for unhealthy food was fierce. My mom would grocery shop every ten days, and the one bag of chips or a package of cookies would be gone within a day, sometimes minutes. That would leave us with rice cakes, fruits and veggies, and other healthy options for the rest of the week and a half. It was rough.

We had home-cooked meals that consisted of protein, carbs, and vegetables most nights. But, as I got older, I realized that having home-cooked meals was a rarity compared to other households.

We’d still get fast food on occasion. My dad was a fast-food manager, after all. With three kids in the house, sometimes the easy thing was to bring home a big bag of burgers and fries so we could eat and then make our way to evening activities. This taught me that one of the most critical nutrition lessons is “everything in moderation.” Eating fast food, sweets, or potato chips is fine occasionally as long as most of what you put into your body is more healthy.

Whenever a new diet fad becomes popular, I’ll ask my mom about it to get her thoughts. Usually, she rolls her eyes. Over the years, there have been so many diet fads—Atkins, Paleo, Intermittent Fasting, Mediterranean, South Beach, and on and on. Almost everyone will swear by one of these diets and back it with “science.” I understand that some diets result from personal beliefs or food allergies. However, most people latch onto these fad diets, stick with them for a while, and then end up right back where they started. We’ll hit on this topic more below.

Personal Finance is Personal – So Is Fitness

To continue reading, please go to the original article here:

https://financialpilgrimage.com/fitness-and-personal-finance/

Do I Need a Living Trust Lawyer?

Do I Need a Living Trust Lawyer?

Geoff Williams   Thu, February 2, 2023

If you plan to create a living trust or already have one, you may wonder if you need a living trust lawyer. The short answer is that you don't. But just because you don't technically need an attorney to put together your trust doesn't mean you shouldn't hire one. Living trusts can be complicated and if you worry about your own ability to create a trust, you may want to hire a living trust lawyer who you can consult with. Living trust lawyers can help your trustee distribute assets after your death, keep your information private and avoid probate. You may also want to work with a financial advisor who can help you create the right estate plan.

When Do You Need a Living Trust Attorney?

Everyone will feel differently about how much their net worth should be before they need a living trust attorney. Certainly, there are no hard and fast rules on when you should hire one. But you should strongly consider enlisting the help of a living trust attorney if:

Passing on Assets: If you have a lot of assets that you want to pass on to family members. If you have more than $100,000, for instance, you may want to enlist the services of a living trust lawyer. Perhaps not, however, if your financial portfolio isn't complicated and your will states that one or two family members will get your money.

Special Trust Conditions: If you have certain conditions attached to the trust then it might be right to hire a lawyer. For instance, if you want your money to go to some key family members but not others, such as your grandchildren instead of your kids or you only want the assets to go to a beneficiary if they meet certain conditions that you have set up. (In fact, if you give money to your grandchildren instead of your kids, you may want your attorney to set up what is called a generation-skipping trust.)

Tax Liability: If you are going to owe federal estate tax. The federal estate tax exemption for 2023 is $12.92 million. If your estate is larger than that, you will owe estate taxes. That said, even if you have an estate worth less than $12.92 million, you would likely want to hire a living trust attorney.

Unique Beneficiary Situation: If one or more beneficiaries have a unique situation then it can be another reason to use an attorney. For instance, if one or multiple beneficiaries has special needs or is receiving assistance from the federal government, a living trust attorney could be very helpful. You don't want to risk setting something up yourself only for your beneficiary to someday learn that you did it wrong.

For Peace of Mind: If you simply have a complicated estate and are overwhelmed by the idea of setting up a trust.

In short, the more complex your estate is and if you have a lot of wealth to give away and perhaps property as well, the more of an argument you have for hiring a living trust lawyer.

Should I Make My Living Trust Lawyer the Trustee?

To continue reading, please go to the original article here:

https://www.yahoo.com/finance/news/living-trust-lawyer-140008680.html

Can The Bank Take Your House Even If You Pay Your Mortgage?

Can The Bank Take Your House Even If You Pay Your Mortgage?

by Wanderer / January 30, 2023

The Wanderer retired from his engineering job at a major Silicon Valley semiconductor company at the age of 33. He now travels the world, seeking out knowledge from other wealthy people, so that he can teach people how to become Financially Independent themselves.

It’s every home-owner’s worst nightmare. Already drowning in debt, and with a rampaging cost of living crisis causing many families to barely be able to make ends meet, they get a notice from their mortgage company that says something to the effect of:

You have 30 days to pay back your entire mortgage balance in full, or we’re taking your house. Have a great day!

Sound like a bad dream? Like something that would never happen here in Canada? Well, I got bad news for you: There are early signs of rough times ahead in the GTA real estate market, with some Toronto mortgage brokers reporting a rise in the forced sale of homes by private and alternative lenders.

Mortgage brokers report an uptick in forced sales of GTA homes, TheStar.com

I have to admit, even I was surprised that this was even possible. In my head, if you still have a job, and you’ve kept up to date with your mortgage payments, the bank can’t just foreclose on your house like that.

And the reason why this is happening is that these aren’t technically foreclosures. They’re called power of sales, and this is how they work.

Say you’re a mortgage company that gave out a mortgage on a $1,000,000 property in, say, early 2022. Then interest rates shot up over the course of the year. Depending on the type of mortgage this was, the mortgage holder may or may not see their monthly payment change, but regardless when the mortgage comes up for renewal, the property is now worth considerably less on the open market. The Toronto housing market has seen an average decline of about 20%, so let’s say this property is now worth $800,000. But the outstanding mortgage is still way more than that, say, $900,000.

It’s completely up to the lender whether they want to renew your mortgage for another term. In the above scenario, they might look at your salary, your credit worthiness, and the fact that you’ve kept up your payments so far and approve you for renewal. But if there’s anything different about your financial situation, like a change in job status, or if they’re simply feeling spooked about whether the house may fall in value even further, then they may reject you and demand the entire mortgage balance back all at once.

And if you can’t pay it, they can sell your house out from under you.

Welcome to the wonderful world of power of sales.

The big difference between a foreclosure and a power of sale is that technically, the borrower hasn’t done anything wrong. A foreclosure requires the borrower to miss multiple payments and ignore repeated requests from the bank to comply with their lending obligations. In a power of sale, the borrower may lose their house simply because their bank doesn’t think lending to you is a good bet anymore.

Is this fair? Not really. Again, the borrower didn’t do anything wrong here. But is it legal? You betcha.

To continue reading, please go to the original article here:

https://www.millennial-revolution.com/rent/can-the-bank-take-your-house-even-if-you-pay-your-mortgage/?utm_source=rss&utm_medium=rss&utm_campaign=can-the-bank-take-your-house-even-if-you-pay-your-mortgage

Everything You Can’t Have

Everything You Can’t Have 

JAN 31, 2023  by Morgan Housel@morganhousel

Nothing is as desired as much as the thing you want but can’t have.

In fact for most people there’s a hierarchy of wants that goes something like this:

If you don’t want something and don’t have it, you don’t think about it.

If you want something and have it, you might feel OK.

If you want something and don’t have it, you might feel motivated.

If you want something and can’t have it, you drive yourself mad.

A few years after leaving office, Richard Nixon mentioned that the richest people in the world are some of the unhappiest, because they can afford to never struggle.

“Drinking too much. Talking too much. Thinking too little. Retired. No purpose,” he said.

To ordinary people, it sounds amazing. To those who can afford to do anything, it often falls flat.

Nixon elaborated:

You feel that, gee, isn’t it just great to have enough money to afford to live in a very nice house, to be able to play golf, to have nice parties, to wear good clothes, to travel if you want to?

And the answer is: If you don’t have those things, then they can mean a great deal to you.

When you do have them, they mean nothing to you.

This is a little exaggerated. But the idea of valuing only what you’ve struggled for is real.

In 1905, author William Dawson wrote in his book *The Quest for The Simple Life* about how the hardest thing to understand about money is the thrill of the chase. Something you can easily afford brings less joy than something you must save and struggle for. “The man who can buy anything he covets values nothing that he buys,” Dawson wrote.

He went on:

There is a subtle pleasure … in the anxious debates which we hold with ourselves whether we can or cannot afford a certain thing; in our attempts to justify our wisdom; in the risk and recklessness of our operations; in the long deferred and final joy of our possession.

But this is a kind of pleasure which the man of boundless means never knows.

The buying of pictures affords us an excellent illustration on this point. [Ordinary people] … have to walk weary miles and wait long weeks to get upon the track of their treasure; to use all their knowledge of art and men to circumvent the malignity of dealers; to experience the extremes of trepidation and of hope; to deny themselves comforts, and perhaps food, that they may pay the price which has at last, after infinite dispute, reached an irreducible minimum; and the pleasure of their possession is in the ratio of their pains.

But the man who enters a sale-room with the knowledge that he can have everything he wishes by the signing of a cheque feels none of these emotions.

This all makes sense when you understand what your brain wants.

 To continue reading, please go to the original article here:

https://collabfund.com/blog/everything-you-cant-have/

12 Life-Changing Millionaire Lessons I Learned From Working with the World’s Richest People

12 Life-Changing Millionaire Lessons I Learned From Working with the World’s Richest People

10. December 2022   Financial Imaginer

Over the years, I’ve had the opportunity to meet hundreds of millionaires and learn valuable millionaire life lessons from them first-hand on and off my job as their wealth manager.  While their backgrounds, lifestyles, and fortunes vary greatly, there are some common traits that all millionaires seem to share.

In this blog post, I will share with you 12 life-changing millionaire lessons that I’ve learned from the world’s richest people.  My goal in sharing these lessons is to “inspire” and help you become the best version of yourself and build a path to financial freedom!

Let’s get started:

1. Investing in Personal Growth:

All millionaires invest heavily in themselves and their personal growth. They understand that growing as a person is a foundation for becoming wealthy and successful. Most wealthy people I’ve come across read a lot, meet with others more often, and usually have found ways how to satisfy their interest in many things to grow.

There is no more profitable investment than investing in yourself.

They invest time, money, and effort in their personal growth continuously.

2. Working Harder and Smarter Than the Average:

Successful millionaires usually work much harder, smarter (!) and longer than average people. This doesn’t mean that they sacrifice their time with family and friends or their health, but rather this is how they structure their life — to get more done in less time.

They don’t work for money and status, but to unlock more time and freedom.

A dream does not become reality through magic; it takes sweat, determination, and hard work.

They understand that hard and mostly smart work will take them further faster while they still maintain balance in their lives. They’ve learned to be very efficient, delegate, and automate as much as possible in their doings and focus on where they are needed the most: Putting the rubber on the ground.

3. Taking Bigger Risks:

The Millionaires I’ve served have developed skills to differentiate between good and bad risks. They understand risks are part of life and are not scared of them. They know that taking risks can open up new opportunities for them.

The biggest risk is not taking any risk.

Wealthy people know when to walk away from an investment or situation if it is no longer beneficial. They are smart in calculating their chances and setting themselves up with the right team around them. Success is about smart risk management, not about wild risk-taking.

To continue reading, please go to the original article here:

https://www.financial-imagineer.com/12-life-changing-millionaire-lessons-i-learned-from-working-with-the-worlds-richest-people/

When to Use A Cashier's Check vs. Money Order

When to Use A Cashier's Check vs. Money Order

Andrew J. Dehanb   Tue, January 31, 2023

There are a few options when you need a secure way of paying for something. Sure, cash is king, but not everyone feels safe carrying a thick wad around. Cashier's checks and money orders are two of the more secure options for making a payment. Each comes with its own set of advantages and disadvantages. Let's start by defining cashier's checks vs. money orders and going over their individual pros and cons. Consider working with a financial advisor as you decide where to put your money.

What's a Cashier's Check?

A cashier's check is a check issued and guaranteed by a bank or credit union. Unlike a personal check, a cashier's check comes directly out of the bank's funds instead of your checking account. These checks are more secure than personal checks for both parties as they are fully backed by the bank. That makes them great for large purchases, such as closing costs on a house or buying a car.

To get a cashier's check, you'll need the exact amount, your ID and the recipient's name. You'll be able to order one at your local branch or potentially online. You'll need to pay the bank the amount of the cashier's check, plus whatever fees they may charge. Cashier's check fees may be discounted or waived for certain accountholders. If you do a lot of business with a bank or credit union, it doesn't hurt to ask.

Lastly, get a receipt as proof of purchasing the check. You'll be able to use your receipt to track when the check is cashed.

Pros of Cashier's Checks

Great for large purchases: Cashier's checks are best used for purchases over $1,000.

Are more secure than money orders: Cashier's checks generally have more security features than money orders. And while there are cashier's check scams, there are fewer compared to money orders.

Cons of Cashier's Checks

Higher fees than a money order: A cashier's check can cost between two and 10 times more than a money order.

You must have access to a financial institution that will write your check: This can be a problem if you don't have a checking account, have recently moved or are on vacation.

What's a Money Order?

Cashier's Check vs. Money Order

 To continue reading, please go to the original article here:

https://news.yahoo.com/cashiers-check-vs-money-order-140001962.html   

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Speed Of Time

Speed Of Time 

23. October 2020 Financial Imaginer

Today I’m celebrating my birthday. I’m turning 41. Translated for you: It means I’m now closer to 50 than to 30 and closer to 60 than to 20. At least that’s what I’m thinking about right now. Also, 41 years means I’ve spent now more time living after the year 2000 than before. Hell, just think about it, 1990 is now further away than 2050.

Yes, birthdays get me thinking “about time” every single time. And I like it. Because time flies.

The speed of time is exactly 365.242189 days per year!

Is this fast? Is it slow? Well, that’s where it gets interesting, you see:

It depends!

What’s for sure is this: Time moves forward and forward only.

The past five years I kept thinking of ways how to “slow down” time in my life. We’ve experimented a lot with life and “this time around” I’m happy to write a blog post to share my findings and thoughts with you.

Hope you too can slow down time in your life!

Today is the oldest you’ve ever been.

And the youngest you’ll ever be again.

Five years ago, on my 36th birthday my dad called me. He was 72.

He said:

First: “Congrats, you’ve already reached half my age!”

Second: “You’re catching up!”

Last: “Beware, the second half goes faster…”

Like so many other lessons I could learn from my dad:

This sunk in.

Deeply.

While I appreciate every single day that is given to me, it’s terrifying how fast time actually flies.

Where did all the time go? Tomorrow isn’t promised.

The fair part of it is: It’s the same for everyone.

Nobody has figured out how to stop – or even reverse – time.

Time keeps flying no matter what you do.

Besides eliminating Time Bandits in your life, there are many more things you can do!

Create your own life progress-bar t-shirt at NAS daily, it shows how many % of your life as vs. your life-expectancy have passed already. [no affiliate link]

Time is Relative

The futurist Peter Diamandis once said, “The faster you move, the slower time passes, the longer you live.” At first sight, this quote simply explains Einstein’s relativity theory.

But there’s more to it than meets the eye.

Let’s take the relativity theory apart and apply the findings to enrich our lives!

What does “time is relative” mean? It simply means that depending on the perspective of an observer, the passage of very same amount of time is perceived differently. I fully appreciated this meaning once we started living in Singapore.

Singapore is located almost at the equator. Every day you got about the same amount of sunshine and darkness. Further, every day, year around, the weather will be mostly the same. There is no more seasonality in Singapore as for in places where you take notice of spring, summer, autumn, or winter.

Due to missing seasonality, every day looks and feels the same. Lack of weather stimulating our brains will make perceived time speed up. It will get hard to “archive” your memories according to a season. For me in the beginning it felt like living “out of time”.

While this concept can be well explained with seasonality or the lack of it, it also works with your personal life experience.

Think of it like this: The older you get, the more you’ve experienced life, the less “interesting” or “new” normal experiences or habits will be for your brain. As a result, given no new stimulations, your brain will switch into autopilot and cruise-control through your ordinary life. Your brain zooms out!

Remember when you were a kid, how did waiting for Christmas feel? Waiting those 25 days through December? It took an eternity! On one hand our brain has a relativity function, so let’s say when you’re a five year old, your total accrued life experience is merely (5 x 365) 1,825 days, hence, waiting 25 days translates to a relatively long time as compared to your accumulated total. Once you’re turning 41 like me today, the brain has 14,965 days to put 30 days in relation to.

The older you get, the more you’ve seen and experienced, the easier it will get for your brain to essentially put your life on FASTFORWARD – if you stick to your current habits!

Have you ever watched the movie “Click” with Adam Sandler?

To continue reading, please go to the original article here:

https://www.financial-imagineer.com/speed-of-time/

The Eight-State Suicide Pact Is Advancing Quickly...

The Eight-State Suicide Pact Is Advancing Quickly...

January 30, 2023  By Simon Black

By the early 300s AD, ancient Rome’s population was in significant decline.  Modern historians haven’t nailed down a precise number for Rome’s population— and estimates vary— but the clear consensus is that population peaked in the first or second century AD, and then began a rapid fall.

We know the reasons why. Roman citizens were sick and tired of the corruption, inflation, taxes, crime, social decline, constant chaos, etc. and they sought greener pastures elsewhere.

Bear in mind that this was happening at a time when the barbarian invasions had already begun. Every year there were more and more border incursions from the Goths, Alemanni, etc., many of whom stayed and settled in Roman territory.

This is important to understand; even though Rome was gaining population from these migrant tribes, its overall NET population was still declining.

This means that the number of Roman citizens leaving must have been staggering.

But Emperor Diocletian decided to put a stop to all of it, and in the late autumn of 301 AD, he proclaimed his infamous Edictum De Pretiis Rerum Venalium, or Edict on Maximum Prices.

In addition to setting strict wage and price controls on EVERYTHING across the empire (in an absurd attempt to ‘fix’ inflation), Diocletian also ordered for taxes to increase... AND for everyone to be tied to the land.

No one could leave. No one could quit their job. All occupations were made herediatry, so children had to follow their parents’ profession. It was essentially the start of the feudal system.

Naturally Diocletian’s decree did not have its desired effect. Despite the emperor imposing the death penalty on anyone who did not comply, Roman citizens flouted the rules, and the population declined even more.

It’s hard to not think of this story when reading about the nascent suicide pact being discussed between several of the most ultra-progressive, high tax US states.

Earlier this month, the states of California, Connecticut, Hawaii, Illinois, Maryland, Minnesota, New York and Washington each introduced bills to impose state-level wealth taxes on residents.

This is not a coincidence. Politicians are deliberately coordinating with their counterparts in other states to ensure that the legislation passes in ALL of the eight states.

As one state senator put it, they are working together to ensure they don’t “get pitted against each other.”

Heavens forbid there’s actually competition among the states to reduce their tax rates and attract the most productive talent and businesses. That would be unthinkable.

So instead they’re all signing up for a terrible, destructive idea so that they can all be anti-competitive at the same time. It’s genius!

But of course, these people are totally delusional.

These are the states who, like Ancient Rome in the first and second centuries AD, have already been losing a LOT of people.

California has said bye bye to hundreds of thousands of residents over the past few years since the start of the pandemic.

This isn’t a huge number in terms of the state’s overall population. The problem is, though, that a huge percentage of these people fleeing California are wealthy, high-income earners.

In other words, California is losing some of its most valuable taxpayers.

Remember that the top 1% of taxpayers in California pays roughly FIFTY PERCENT of the state taxes. So losing even a few hundred thousand people can be devastating to the state budget.

Ditto for some of the other states who have joined this suicide pact, like New York and Connecticut.

In fact Census Bureau data show these eight states are among those with the fastest declining populations. And those who leave tend to be higher-earning taxpayers. So their state budgets are being gutted.

It’s also clear that the people who leave aren’t going to other high-tax, ultra-progressive states. Californians aren’t leaving en masse so they can live in New Jersey or Illinois.

Instead, they are moving to low tax, low regulation states like Nevada, Idaho, Texas and Florida. And this new wealth tax movement will likely cause an even greater exodus.

Of course, California has a plan for that too. If its wealthier citizens decide to leave, California’s government will simply continue to enforce the tax even AFTER people relocate to another state. Not even Diocletian thought of that!

(Naturally that would be completely illegal, and the State of California’s petty arrogance will be eviscerated by the Supreme Court at some point down the road.)

It’s not just individuals; businesses are also relocating out of these states. A report from the Hoover Institute found that Texas was the number one destination, attracting at least 114 businesses which were previously based in California from 2018-2021.

Obviously this business migration trend is going to have an even deeper impact on California’s state tax revenue.

But, just like Diocletian, they’re willfully taking a bad situation and making it much worse. Rather than simply stop the destructive behavior that’s making everyone want to leave in the first place, the politicians are doubling down and giving people even more incentive to relocate.

It’s hard to imagine that such a level of incompetence could actually be real. And yet it is.

Fortunately this is a very easy problem to solve.

First, it’s important to recognize that, whatever these politicians promise, their so-called wealth tax is NOT just for the ultra-wealthy.

Perhaps at first it will only affect $50MM+ households. But like nearly all taxes, it will eventually find its way down to the professional class, then upper middle class, etc.

Remember that even the original income tax was first meant to only hit the ultra-wealthy.

But soon the thresholds were lowered and the tax brackets expanded to cast a very wide net.

Same with the Alternative Minimum Tax; it was initially passed as a tax on a handful of people. Today it ensnares millions.

Wealth taxes will likely be no different. The tax base will expand, the tax rates will increase, and before you know it, it will be part of your annual tax ritual. Never underestimate the potential creep of a new tax.

Second, also recognize that where you live ought to be a deliberate decision. Obviously everyone has a personal choice to make. But it’s an important decision, affecting everything ranging from potential wealth taxes, to how your children are being educated (indoctrinated).

It makes sense to examine your values and priorities, and then make a decision about the best place to be. Prioritization is important. No place is perfect. No place will tick every single box on your list. But you will likely find somewhere that matches the most important priorities, plus a few nice-to-have’s.

If taxes and freedom are priorities, you might see a significant boost by moving to another state where your values are shared.

There’s also the possibility of moving abroad, which can often have an even larger impact on lifestyle.

And although US residents are taxed on their global income, you can use the Foreign Earned Income Exclusion to make $120,000 in 2023 without owing taxes to the US. When you double that for married couples, and add in the housing benefit, you’re at roughly $250,000+ in nearly tax-free earnings.

You could also consider going to Puerto Rico— a US territory that sets its own tax rates.

In Puerto Rico you could cut your income tax rate to 4% and your capital gains to 0%. Those who qualify, and meet some other conditions, will owe nothing to the federal government. In many cases you don’t even have to file a federal return anymore.

Even if you’re not ready to go... or you have certain constraints in your life preventing a move at this time, it at least makes sense to consider where you might go just in case you need to make that decision down the road. Do the research and analysis now. It will make life much easier in the future.

To your freedom,  Simon Black, Founder  Sovereign Research & Advisory

https://www.sovereignman.com/trends/the-eight-state-suicide-pact-is-advancing-quickly-145533/

Price and Value

Price and Value

February 2022  Financial Imaginer

When it comes to price and value, most people think that they are one and the same.

This could not be further from the truth.

In this blog post, we will discuss why there is always a difference between price and value, and why this is so important in the world of business. We will also cover how different markets work, and how you can become a better investor by understanding this concept.

A fool knows the price of everything and the value of nothing.

Two Sides of a Coin

Did you ever wonder why people transact and exchange goods, services, and work at a certain price? Who gets to decide how much something is worth? Why do we even have price tags in the first place? If price and value were the same, then it would be easy to know what something was worth.

Price is just one of the factors to consider when evaluating value.

For a better understanding of how people determine price and value, we got to look at some examples that show why price and value are not always the same thing. This will lead us to the concept of supply and demand.

Trust me, understanding these concepts will help you make better decisions in your life as an investor, an employee, or a business person.

Price is what you pay, value is what you get.

We know that markets exist because there are always buyers and sellers ready to transact if the price is acceptable to both sides. This creates supply-and-demand dynamics where prices fluctuate based on factors such as scarcity or desirability. Prices always aim to find an equilibrium where the quantity demanded by buyers is equal to the quantity supplied by sellers.

This is the so-called macro perspective. However, on a 1:1 basis, it gets more complicated than that. It gets very subjective.

How much do you think this tree is worth?

Each and every one of us does have a different view about how much something should be worth.

The intelligent investor is a realist who sells to optimists and buys from pessimists.

In most markets, price and value are not always in line with each other. The price of a good or service is usually based on what the buyer is willing to pay. The value is then determined by what the seller thinks it’s worth. In some cases, like when there is a lot of competition for a product or service, prices may be lower than the perceived value. In other cases (like rare collectibles), prices may be higher than the perceived value.

This creates tons of opportunities for merchants, business people, and investors.

To continue reading, please go to the original article here:

https://www.financial-imagineer.com/price-and-value/