7 Income Streams That Make Millionaires Rich

7 Income Streams That Make Millionaires Rich

Andrew Lisa   Mon, May 1, 2023

You can tell a lot about how rich people make their money by looking at their taxes -- which is probably why they work so hard to keep people from nosing around in their returns.

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The IRS gave regular people a glimpse into that insulated world in 2015 when it published the results of a research study titled, "Over the Top: How Tax Returns Show that the Very Rich Are Different from You and Me."

It remains the most comprehensive examination of how rich people get and keep their fortunes. It used estate tax data dating back decades, specifically from Form 706, the United States Estate (and Generation-Skipping Transfer) Tax Return.

If your estate's executor isn't planning to file one of those on your behalf after you die, you probably need to keep saving.

The study's findings revealed seven income streams that millionaires -- and even richer people with real money -- tend to have in common. Are you looking to turn on a new financial faucet in your own life? If you want to get rich, the following various income streams of millionaires are a good place to start.

Capital Gains From Appreciated Assets

Many people face the familiar problem of wanting to buy a giant social media company to assert control over the national dialogue without upsetting their day-to-day cash flow.

Elon Musk faced this very dilemma in when he needed cash on hand in case his now-infamous Twitter deal went through. He solved the problem by selling roughly $7 billion of his Tesla stock, which he exercised the option to buy for pennies on the dollar as part of his compensation package.

While it's not exactly an income stream, millionaires buy and hold appreciating liquid assets like stocks because they can convert them to cash any time they need an infusion of capital.

Dividend Income

Once Elon Musk sold his shares, they were gone forever unless he decided to buy them back.

Dividend stocks, on the other hand, let millionaires have their cake and eat it, too, by making regular payments to their shareholders without requiring them to sell. As the stocks appreciate over time, the dividend payments get bigger. Like the goose that lays the golden egg, dividend stocks are the ultimate passive income stream -- and if you ever need a shot in the arm, you can also sell the goose for a lump-sum windfall.

Interest Payments

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

https://www.yahoo.com/finance/news/7-income-streams-millionaires-rich-200008107.html

5 Things You Should Never Spend Money on If You Want To Be Rich

I’m a Financial Planning Expert: Here Are 5 Things You Should Never Spend Money on If You Want To Be Rich

Heather Taylor   Mon, May 1, 2023

If you’re not rich, you may wonder how you can get rich at various intervals of your life. Building long-term wealth generally means making smart decisions with your finances like investing consistently and prioritizing paying off any debt.  What it doesn’t include is spending money on stuff that does not have lasting value. How do you know which purchases are preventing you from building wealth? Here’s what one financial planning expert does not recommend spending your money on if you want to be rich.

Luxury Items

This includes designer clothing, expensive watches, vintage cars and any other high-priced status symbol items.

“Buying luxury items you can’t afford can be a significant drain on your finances,” said Ryan Cullen, co-founder and CEO of Cullen Cioffi Capital Management. Cullen recommends concentrating on building your wealth by investing in assets that appreciate in value over time, like stocks or real estate.

Impulse Purchases

Impulse purchases can be lottery tickets or anything you might buy when you’re feeling a bit emotional, like going on a shopping spree after a difficult day at work. These add up over time and can drain your finances. The better approach, Cullen said, is to focus on building a solid financial plan and sticking to it.

Rent

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

https://finance.yahoo.com/news/m-financial-planning-expert-5-152841032.html

New IRS Rules, Itemized Deductions: Expert Explains Filing Taxes In 2023

New IRS Rules, Itemized Deductions: Expert Explains Filing Taxes In 2023

Bethan Moorcraft    Sat, April 29, 2023

'Unwarranted and unfair': The IRS is now watching how much you make selling any items online — how even casual sellers could get dinged by the new tax rules

A battle has been brewing between e-commerce giants and the Internal Revenue Service (IRS) — and once again, millions of Americans are stuck in the middle. Online shopping giants like Etsy, eBay and StubHub — and the third-party payment networks they use, including PayPal, Square and CashApp — have called on Congress to give relief to millions of online sellers by raising the income reporting threshold on IRS form 1099-K.

The American Rescue Plan of 2021 lowered the 1099-K reporting threshold from $20,000 over 200 transactions to just $600 from any number of transactions, effective January 1.

Nearly 40% of Americans sold items online early in the pandemic, netting about $1,800 on average, according to a MoneyMagnify survey. For those who continue to sell goods on sites like Poshmark, Facebook Marketplace or Etsy to make some extra cash, here’s what you need to know about the new tax rules.

What is the new rule?

The American Rescue Plan of 2021 requires third-party settlement organizations and credit card companies — including payment apps — to report payments for goods and services if they exceed $600 per year.

What that means is if you sell handmade jewelry, art or home décor on Etsy and your transactions total $600 or more in 2023, Etsy will send you a 1099-K form that you should use to report your income to the IRS.

The same rule applies if you sell any personal items online like a car, refrigerator, furniture, stereo or even clothes — and your transactions for the year add up to $600 or more.

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

'Unwarranted and unfair': The IRS is now watching how much you make selling any items online — how even casual sellers could get dinged by the new tax rules

What To Know If You Deposit More Than $10K Into Your Checking Account

What To Know If You Deposit More Than $10K Into Your Checking Account

Angela Mae  Mon, May 1, 2023

If you plan to deposit $10,000 or more into your checking account, there are a few things you should consider first. By law, banks have to report deposits that exceed a certain amount.  Not only that, but many bank accounts come with maximum deposit restrictions. You may also be subject to certain fees when making such a large deposit. If you frequently make large deposits, you should also watch out for any potential scams or fraudulent activity. But even if this is a one-time thing, it’s still important to know about these factors and how they might affect you.

Banks Must Report Large Deposits

“According to the Bank Secrecy Act, banks are required to file Currency Transaction Reports (CTR) for any cash deposits over $10,000,” said Lyle Solomon, principal attorney at Oak View Law Group. CTRs typically include the name of the individual, their account number, Social Security number and taxpayer identification number — all of which are verified and recorded by the bank.

Banks must file CTRs to the Financial Crimes Enforcement Network (FinCEN), which is part of the U.S. Department of the Treasury. Some banks will do this manually, while others will automate the process.

“The creation of a CTR does not mean that your account will be frozen, nor that the Men in Black will be visiting your home,” said Herman (Tommy) Thompson Jr., CFP, ChSNC, ChFC certified financial planner at Innovative Financial Group. For banks, it’s considered standard procedure and isn’t a cause for concern if the deposit is legitimate.

These procedures exist to help prevent money laundering, counterfeit deposits and similar financial crimes from occurring. By requiring banks to report deposits of $10,000 or more, the government can more easily keep track of monetary transactions. As long as your deposits are legitimate, you won’t have anything to worry about.

Structuring Is Illegal

Some people will try to avoid the federal cash-reporting rules by making smaller deposits that total $10,000 or more over a short period — say, a few days or weeks. This is known as “structuring” and is considered illegal. Structuring is essentially the “practice of conducting financial transactions in a specific pattern calculated to avoid the creation of certain records and reports, according to the IRS,” said Solomon.

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

https://finance.yahoo.com/news/know-deposit-more-10k-checking-130016900.html

4 Money Lessons From High-Net-Worth People That You Need Right Now

4 Money Lessons From High-Net-Worth People That You Need Right Now

Wola Odeniran, CEPF®  Tue, April 25, 2023

Advisors often work with high-net-worth clients and are able to understand the expectations wealthy clients have about managing their finances. The good news is that some of those takeaways can be applied to clients who are not high-net-worth individuals.

Read on to understand four lessons advisors can take from high-net-worth clients – and how they can be applied to any client.

If you are looking to grow your financial advisory business, check out SmartAsset’s SmartAdvisor platform.

Almost Everyone Needs an Estate Plan

Estate-planning practices apply to every client, no matter their tax bracket, says Renee Fry, co-founder and CEO of Gentreo, a company that provides estate-planning document services.

“Financial advisors should take the example of their high-net-worth clients and apply estate-planning principles to all their customers, regardless of income bracket,” Fry says. “Every person has an estate, regardless of their income level, and thus, everyone should have a plan in place to ensure that their assets are distributed according to their wishes.”

Proper planning can help advisors build a bigger client base. “By doing so, advisors can help ensure their client’s financial security, build long-term trust and differentiate themselves from their competitors,” Fry says.

If you’re ready to be matched with local advisors that can help you achieve your financial goals, get started now.

Outside Advice Is Valuable, Even When Clients Are Knowledgeable

Some clients may be titans of business or professional heavyweights, which has helped them benefit financially. “But that doesn’t mean that they know how to budget, how much insurance to have, how to invest or what to do with their wealth in terms of estate and charitable giving,” says Amy Jo Lauber, a certified financial planner and founder of Lauber Financial Planning.

Lauber also says that non-high-net-worth clients, especially those looking to improve their financial situation, often have more financial awareness than those who are wealthy.

“I find people who are living paycheck-to-paycheck are much more aware of their financial situation because they need to be,” Lauber says.

Index Funds Can Be a Foundation for Client Portfolios

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

https://finance.yahoo.com/news/4-lessons-advisors-learn-high-170850089.html

It’s Okay to Be in Debt, Just Not Okay to Stay in Debt

It’s Okay to Be in Debt, Just Not Okay to Stay in Debt

APRIL 26, 2023  Financial Pilgrimage

Ever since college, I have always thought I was good with money. At least, that’s what I’d tell myself in my 20s. At the age of 25, I was completely debt-free! Yet, we accumulated nearly $200,000 in debt by age 30.  Most purchases were normal today: a house, student loans, newer cars, a wedding, a condo at the lake. Oh wait, a lake house is not typical, but it happened. While getting into debt was not ideal, I don’t regret any of it, and thankfully we had the financial means to dig out. However, I know not everyone is as fortunate. Regardless, this is our story.

Going Nearly $200,000 in Debt

After graduating with a master’s degree at 25, I started life with a clean slate. I had a little bit of savings in the bank that I could scrape together over the years. My “college fund” was $6,000, and since I never had to use it, my parents gave it to me after graduating.

In addition, I had saved a few thousand dollars more over the years from my job, waiting tables and bartending in college. So at age 25, I had no debt and a decent amount of money to start my life.

If I could do it all over again, there are things I would do differently. Regardless, by my 30th birthday, we had accumulated nearly $200,000 in debt. How did this happen?

Our road to accumulating this debt is not all that uncommon. Many life events can take place soon after graduating from college.

First was the newer car “needed” since I had a better-paying job and could afford it. That, of course, came with a five-figure loan.

Next was planning for a wedding. This included purchasing an engagement ring and paying for our wedding. In total, this cost us somewhere between $20,000 and $25,000. We mostly paid with savings, but it still set us back financially.

Along the way, Mrs. FP returned to school to get her teaching certificate. But unfortunately, we stared at almost $50,000 in student loan debt once she graduated.

Then, of course, we needed to live somewhere. We purchased my grandparents’ old house shortly after my grandmother passed away. The house was purchased below market value though we still ended up with a $100,000 mortgage and a home that needed completely renovated. We are still spending money renovating this house ten years later.

And last but not least, we ended up buying a lake house with family. This also included buying a wave runner and chipping in to buy a boat. My parents paid for the down payment, and we’ve split the monthly payments with my two other brothers for nearly ten years.

Shortly after agreeing to buy the lake house, we found ourselves in a bank lobby taking out a home equity loan because two bathrooms were leaking into our basement.

More debt.

And yes, we went in on the lake house purchase already nearly $200,000 in debt. I’m a terrible personal finance blogger, I know.

Drowning in Debt

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

https://financialpilgrimage.com/okay-to-be-in-debt/

Some Things I Think

Some Things I Think

APR 26, 2023  by Morgan Housel@morganhousel

The fastest way to get rich is to go slow.

Many beliefs are held because there is a social and tribal benefit to holding them, not necessarily because they’re true.  Nothing is more blinding than success caused by luck, because when you succeed without effort it’s easy to think, “I must be naturally talented.”  Social media makes more sense when you view it as a place people go to perform rather than a place to communicate.  Comedy is the best way to teach about human behavior. George Carlin, Chris Rock, and Jerry Seinfeld have done more to enlighten others than 99.9% of psychology PhDs.

The best measure of wealth is what you have minus what you want. (By this measure, some billionaires are broke.)   The most valuable personal finance asset is not needing to impress anyone.

Most financial debates are people with different time horizons talking over each other.

From school, I remember: Every good story I was told, but none of the formulas I memorized before a test.

It’s easiest to convince people that you’re special if they don’t know you well enough to see all the ways you’re not.

“People like you more when you are working towards something, not when you have it.” - Drake

A lot of people seem to have a necessary level of stress, and when their life is going well they make up imaginary problems to fill the void.

Few things are as persuasive as your own BS, while nothing is easier to identify than other people’s BS.

Everything is sales.

Every employee is replaceable.

Those we admire most in sports, business, politics, and entertainment tend to share one quality: They knew when it was time to quit, time to pass the baton, time to disappear, in a way that preserved, even enhanced, their reputation. Nothing diminishes past success like overstaying your welcome.

The hardest thing when studying history is that you know how the story ends, which makes it impossible to put yourself in people’s shoes and imagine what they were thinking or feeling in the past.

You can only ignore the critics if you also discount the praise.

There are two types of people: Those who want to know more and those who want to defend what they already know.

My jealousy of dogs: They can sit for hours doing absolutely nothing, appearing perfectly content.

A lot of people like making money more than they enjoy having money. The change, not the accumulated amount, is the thrill.

Matt Damon says, “You retard socially and emotionally the moment you become famous. Your experience of the world is never the same.” The same may be true – and far more common – for those who become wealthy.

Most beliefs are self-validating. Angry people look for problems and find them everywhere, happy people seek out smiles and find them everywhere, pessimists look for trouble and find it everywhere. Brains are good at filtering inputs to focus on what you want to believe.

Few traits are as attractive as humility, but few are as common as vanity.

Everyone wants to be lucky and to be admired, but no one admires a person for their luck.

The market is rational but investors play different games and those games look irrational to people playing a different game.

A big problem with bubbles is the reflexive association between wealth and wisdom, so a bunch of crazy ideas are taken seriously because a temporarily rich person said it.

Logic doesn’t persuade people. Clarity, storytelling, and appealing to self-interest do.

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

 https://collabfund.com/blog/thoughts/

Is It Better to Be Rich or Wealthy?

Is It Better to Be Rich or Wealthy?

Rebecca Lake  Fri, April 28, 2023

Being rich and being wealthy are often seen as being the same thing. After all, people who are rich or wealthy tend to have more assets and greater financial freedom than the typical person. In reality, there are some major differences that define what it means to be rich vs. wealthy. If your financial goals include rising to the ranks of the rich or growing wealth, it’s important to know how they compare.

A financial advisor can help you create a financial plan for your wealth management needs and goals.

Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to 3 fiduciary financial advisors in your area in 5 minutes. Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests.

If you’re ready to be matched with local advisors that can help you achieve your financial goals, get started now.

What Does It Mean to Be Rich?

Income is often used as a standard when measuring what it means to be a rich person. So what income is considered rich?

If you’re looking at the top 1% of earners, then you’d need an annual income of $540,009 to be rich, according to the Internal Revenue Service (IRS). The Economic Policy Institute (EPI) defines the top 1% as people who earn $819,324 or more per year.

What about the top 5% or the top 20%? If you think of the top 5% as being rich, then you’d need to make $335,891 per year according to the EPI. If you’d like to crack the top 20%, you’d need to earn $130,545 per year, according to a SmartAsset analysis of income distributions in the top 100 largest U.S. cities.

It’s important to keep in mind that income alone does not necessarily determine whether you’re rich or not. Someone who makes a higher income but spends instead of saving or has significant amounts of debt, for example, may live a rich lifestyle but be broke on paper.

What Does It Mean to Be Wealthy?

Wealth is often defined in terms of net worth. Net worth is a measurement of the difference between your assets and liabilities.

Generally, a liquid net worth of $1 million would make you a high net worth (HNW) individual. To reach very high net worth status, you’d need a net worth of $5 million to $10 million. Individuals with a net worth of $30 million or more might qualify as ultra-high net worth.

Those numbers reflect how the financial industry typically views wealth. The average American views a net worth of $774,000 as enough to be financially comfortable, with a net worth of $2.2 million required to be wealthy. That’s according to Schwab’s 2022 Modern Wealth Survey.

If you’re ready to be matched with local advisors that can help you achieve your financial goals, get started now.

Differences Between Rich vs. Wealthy

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

https://finance.yahoo.com/news/key-differences-between-rich-wealthy-140035053.html

Experts: How To Spot Money Scams Via Email and Text Messaging

Experts: How To Spot Money Scams Via Email and Text Messaging

Heather Taylor  Thu, April 27, 2023

Have you ever received a text message or email making an unusual money request? This is a type of social engineering scam often referred to as phishing, and it is quickly becoming all too common among the masses.  According to Kevin Lee, VP of trust and safety at Sift, 98% of cybercrime involves social engineering. Fraudsters using social engineering scams will trick or manipulate people into revealing confidential information including passwords, credit card numbers or other credentials. Cybercriminals will use this information to commit payment fraud or account takeover (ATO) attacks. According to a recent Sift report, ATO attacks jumped by 131% in the first half of 2022.

As phishing and money scams become increasingly convincing, what can people do to protect themselves? Here’s how you can spot money scams through email and text messaging and what to do next if you think you’re the target of a scammer.

Signs of a Money Scam

The next time you receive an unusual or suspicious text or email, keep your eyes peeled for the following signs of a social engineering scam.

Sense of Urgency

One of the most common tactics fraudsters use is creating a sense of urgency.

This is an attempt to prompt you to quickly take action without thinking all the way through about the text or email you just received. Lee uses the example of receiving a text that says your bank account will be shut down unless you immediately share a password, download something or click a link.

Grammatical Errors

Grammatical errors are common red flags indicating scammy messages. These will include obvious misspellings or strange wording and can easily be spotted.

Mismatching Sender Email and Domain Name

Look out for sender emails and domain names that don’t match. “It’s important to pay attention to missing letters or numbers that stand in for letters, like the number 0 instead of an O,” Lee said.

Jason Zirkle, certified fraud examiner (CFE) at the Association of Certified Fraud Examiners (ACFE), said to keep an eye out to see whether the sender’s email address looks like a suspicious variation of a well-known company. A good example is receiving an email from “Google” that has the email address google-support-us.com.

Texts or Emails “Claiming” Something

Zirkle said you can spot money scams through texts or emails “claiming” the following have happened:

You won a prize in a contest, even if you don’t remember entering the contest.

The email or text is from law enforcement or a government agency.

The text or email claims it is from a shipping company, like UPS or FedEx, and it needs you to click on a tracking link.

Zirkle said, “Any text messages asking you to click a link, no matter who they purport to be from, are a red flag.”

Email Attachments

Do not open or download any attachments you are not expecting in an email.

Hyperlinks in Email

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

https://news.yahoo.com/finance/news/experts-spot-money-scams-via-130038136.html

Here's What Happens When You Don't Roll Over Your 401(k)

Here's What Happens When You Don't Roll Over Your 401(k)

by Maurie Backman | Published on April 25, 2023

Key points

When you leave a job, you may have the option to keep your money in your old 401(k).

If you don't roll that 401(k) into a new one or an IRA, you might lose track of your money or leave it invested in assets that don't serve you well.

Many companies offer the benefit of a 401(k) plan, and it's a good option to take advantage of. Often, when you contribute money to a 401(k), your employer will match your contributions to some degree, allowing you to grow your long-term savings nicely.

But you may reach a point when you're ready to leave your job. You may, upon getting a new job, have the option to leave your 401(k) where it is rather than roll it over into an IRA or a new 401(k) plan. But that's not necessarily your best choice.

The problem with leaving your 401(k) where it is

Often, as long as your balance meets a certain threshold, you'll be allowed to keep your money in an old 401(k) even if you're no longer employed by the company sponsoring it. But if you leave your money alone rather than roll it over, a couple of bad things might happen.

First, you might forget that money exists. Capitalize, a service that helps people recover old 401(k)s, estimates there are more than 25 million "orphaned" 401(k) accounts that have been left behind at a former employer and forgotten about.

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

https://www.fool.com/the-ascent/buying-stocks/articles/heres-what-happens-when-you-dont-roll-over-your-401k/?source=eptyholnk0000202&utm_source=yahoo-host&utm_medium=feed&utm_campaign=article

Can You Lose the Rights to Your 401(k)?

Can You Lose the Rights to Your 401(k)?

Laura Gariepy  Wed, April 26, 2023

Your employer can’t seize your 401(k) contributions or the investment earnings from those contributions when you change jobs voluntarily or when you get fired or laid off. However, your retirement plan is subject to rules imposed by the company and the IRS. Those rules could limit your rights to the funds in your account.

Here are three factors that can impact what happens to your 401(k) when you leave an organization:

Account Balance

The amount of money in your 401(k) plays a significant role in determining what happens to your account when your employment gets terminated.

Here’s what the company can do at various balance levels:

Under $1,000: Cut you a check for the total amount

$1,000-$5,000: Move the funds to an employer-selected individual retirement account

$5,000+: Leave the money where it is or ask your permission to move it

Legal Update Ahead: The government recently passed the SECURE 2.0 Act, which makes several changes to how retirement accounts get handled. One such change is that the $5,000 threshold mentioned above will increase to $7,000 for distributions processed after Dec. 31, 2023.

Vesting Schedule

You own every penny of the money you contribute to your 401(k). However, companies can set vesting schedules to determine when you can keep the employer’s contributions to your account should you leave the firm.

Many companies use a tiered vesting schedule, where you earn the right to keep a percentage of the employer match based on your years of service. For example, you may earn 20% each year during years two through six. In that case, you’d need to remain employed for six years to be fully vested, which means you’re eligible to receive all of the company’s contributions upon termination.

Outstanding Loans

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

https://news.yahoo.com/finance/news/lose-rights-401-k-123730039.html