4 Money Behaviors You Need To Change Now To Build Your Wealth

I Became a Millionaire by 30: 4 Money Behaviors You Need To Change Now To Build Your Wealth

Adam Palasciano   Mon, Mar 18, 2024

Amid what seems like out-of-control inflation, becoming a millionaire seems like a dream. However, as of 2024, there are about 22 million millionaires in the U.S., according to Millennial Money. It’s even possible to become a millionaire in your 20s.

CNBC spoke with Vivian Tu, a former Wall Street trader-turned expert, educator, podcast host, and founder of the financial equity phenomenon Your Rich BFF. Amazingly, she made her first million by age 27

Tu grew up in an immigrant household that focused on frugality. Then, she started her career on Wall Street and realized the wealthy focus less on saving and more on earning and finding ways to grow their wealth.

4 Tips To Build Your Wealth

Here are four tips Tu suggested to help you become a millionaire yourself:

Focus on the Long Term: Becoming wealthy means developing patience when it comes to growing your wealth. Investing your money and holding it for many years before selling your assets typically results in much more growth. For example, if you sock away thousands of dollars per year in your retirement account, not touching it until at least age 59 and half will mean significant wealth later on.

Stop Trying To Impress Others: Instead of spending money on designer clothes, luxury vacations or a fancy apartment, wealthy people invest in assets that pay them back. Investing to earn passive income is the true way to build long-term wealth and have financial freedom.

To Read More Please Go to Original Article Here:

https://finance.yahoo.com/news/became-millionaire-30-4-money-190456885.html

All Eyes on the Federal Reserve - What to know this week

All Eyes on the Federal Reserve: What to know this week

Josh Schafer·Reporter  Sun, March 17, 2024

The major US stock indexes have backed off record highs ahead of the Federal Reserve's all-important March meeting.

On Wednesday, that tension will finally be resolved.

The US central bank is set to release its latest monetary policy decision and updated economic projections at 2:00 p.m. ET on Wednesday afternoon, with investors looking for an answer to one key question: Does the Fed still think it will cut rates three times in 2024?

Recent data showing inflation hasn't dropped as fast as expected has pushed out market forecasts for Fed rate cuts this year to three from six. The question, then, is whether a few months of stubborn inflation data will be enough to prompt a further tweak from the Fed.

What the Fed rate decision means for bank accounts, CDs, loans, and credit cards

Hal Bundrick  Updated Thu, Feb 1, 2024

Fed watchers are still holding their breath for an interest rate cut.

After inflation peaked at 9.1% in June 2022, the Federal Reserve worked to tame consumer prices with a series of 11 interest rate hikes over the ensuing months, and inflation stood at 3.4% in December 2023.

With a target of 2%, the Fed's decision on Jan. 31, 2024, to pause rate hikes for the fourth month in a row shows the central bank believes it's winning the fight against inflation — but remains watchful.

So, interest rates are still elevated, and any hope of the Fed lowering rates remains just that. Hope.

How Monetary Policy Works

The Fed controls one interest rate: the federal funds rate, which is the short-term rate banks use to borrow from each other. The latest action keeps the target range for the federal funds rate at 5.25-5.50%. Fed interest rate decisions filter through the financial world, impacting virtually every facet of borrowing costs and saving rates.

Interest rate management is monetary medicine the Fed uses to:

Slow the economy by raising interest rates in an effort to tame rising costs (high inflation) as measured by the consumer price index.

Help mount a recovery when we're at the opposite end of an economic cycle by lowering interest rates as an injection of liquidity into the financial system.

Allow past moves to take root while the Fed considers future actions by holding rates steady.

What the Fed says is ahead for interest rates

In a statement on Jan. 31, the Federal Open Market Committee said it "does not expect it will be appropriate to reduce the target [interest rate] range until it has gained greater confidence that inflation is moving sustainably toward 2%."

However, the FOMC didn't hint as to when that "confidence" would be achieved.

Here’s How The Fed’s Current Interest Rate Stance Could Trickle Down To Your Loans And Accounts.

To Read More Go to the Article Here:

https://finance.yahoo.com/personal-finance/what-the-fed-rate-decision-means-for-bank-accounts-cds-loans-and-credit-cards-223702963.html

How Much Should You Keep in Different Banks and Investment Accounts?

How Much Should You Keep in Different Banks and Investment Accounts?

Americans’ 4 Favorite Wealth ‘Hiding Places’

Karen Doyle   Sun, Mar 10, 2024, GoBankingRates

Once you’ve amassed some savings, you’ll want to decide where to keep it. Deciding how much to keep in what type of account is a good problem to have, certainly, but there are some things you should keep in mind. Here’s what to know about how much money you should keep in different places.

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Cash in the Bank

Most Americans have at least one bank account, typically a checking or savings account. Some people have different bank accounts for different purposes — a checking account for monthly bills, a savings account for long-term savings for big expenses and maybe even a money market account for medium-term purchases.

Bank accounts should make it easier for you to save and spend your money, so make sure the number and type of accounts works for the way you manage your money. Keep in mind, however, that there is a limit to the amount of money you should keep in any given bank.

Deposits in banks in the U.S. are insured by the Federal Deposit Insurance Corporation, or FDIC. The FDIC was created in 1933 in response to the bank runs of the Great Depression. Many banks went out of business during the Depression, and many consumers lost their entire life savings. The government formed the FDIC to protect consumers from losing everything if their bank failed.

Today, the FDIC insures deposits up to $250,000 per person, per account type, per bank. Account types include individual accounts, joint accounts, some retirement accounts, trust accounts, and more.

This means that if a married couple, for example, each has their own checking account, plus they have a joint savings account, they would be insured for up to $750,000. Each of their three accounts would be insured for $250,000. IRAs and some self-directed retirement plans fall under a different ownership category, so that same married couple could be insured for up to $250,000 for each of their retirement accounts as well.

IF you have more than $250,000 in cash in a given account type, it’s time to move some of that money to a different bank. You can have as much money in the bank as you want, but anything over $250,000 in a single account type at a single bank won’t be insured.

Deposits at Credit Unions are similarly insured by the National Credit Union Insurance Association, or NCUA.

To Read More Go to Original Article Here:

https://finance.yahoo.com/news/americans-4-favorite-wealth-hiding-120032065.html

5 Things You Should Discuss During Your First Meeting With a Financial Advisor

5 Things You Should Discuss During Your First Meeting With a Financial Advisor

Gabrielle Olya  

A financial advisor can be an excellent resource to help you make a plan for your money both now and in the future. But if you’re new to this world, you might not know how to make the most of your time during an initial meeting. In today’s “Financially Savvy Female” column, we’re chatting with Jane Voorhees, CFP, director of financial planning at ALINE Wealth, about how to prepare for a first meeting with a financial advisor and what topics you should be discussing.

What To Do Before Your Meeting

Before an initial meeting with a financial advisor, do some research into who they are and how they work.  “Go to the advisor’s website and read through it,” Voorhees said.

She recommends looking for the answers to the following questions:

What are the advisor’s credentials (education, professional designations and licenses)?

What is the overall wealth management philosophy that is coming through or being portrayed?

Does the advisor have a team and if so, what role does each team member play?

Does the advisor work as a registered investment advisor (RIA) or do they work under the umbrella of a brokerage firm?

“Understand that RIAs operate under a higher fiduciary standard than broker-dealer firms,” Voorhees said.

What To Bring to an Initial Meeting

Once you’ve done some basic research to ensure you feel confident about the advisor you are meeting with, it’s time to set up the meeting. To make the most of this first meeting, come prepared with the proper financial documents.

“Bring investment and bank account statements, insurance policies, statements/details on debts you owe, your most recent tax return and a budget (if you have one),” Voorhees said.

What To Discuss During Your First Meeting With an Advisor

The first meeting is the time to make sure that you and your advisor would work well together, and that they are someone you are comfortable working with. Voorhees recommends asking about the following topics.

To Read More Go To Original Article Here:

https://news.yahoo.com/5-things-discuss-during-first-130017129.html

6 Smart Hiding Spots for Your Emergency Cash

6 Smart Hiding Spots for Your Emergency Cash

Life savings ready to to be buried in the back yard.

Those who keep extra money, like an emergency fund, in their homes may be curious about some of the best spaces to store it. Since traditional savings vehicles like high-yield savings accounts are not applicable in this situation, those in possession of excess funds need to get creative with where they keep this money.

Consider stashing your emergency cash into some of these clever spots.

Fake Personal Items

This is a helpful tip for those traveling overseas as well as those seeking hacks for keeping their money safe at home. Consider fake personal items, like the following, to discreetly store any emergency funds:

A hairbrush. Use a round hairbrush with a hollowed-out middle and store cash inside the brush.

Empty lip balm tubes. Do you need to tuck a tiny bit of cash somewhere safe? Store it inside an empty lip balm tube. Try a sunscreen lotion tube or an empty shaving can if you need a larger container for your savings. Always make sure the tubes are cleaned out before use!

Feminine napkins. Carefully open a sanitary napkin and hide folded money inside it. Then, fold it all back up and re-stick the sticker in place. These items are seldom, if ever, suspected for hiding excessive amounts of cash.

Remember, though: When storing emergency cash in fake personal items, keep the items tucked away in places you won’t forget.

The Bathroom

When it comes to hiding emergency cash, there are a number of hidden spaces inside your bathroom where the money can be easily stashed.

One of the most common is the toilet’s water tank. Seal your emergency cash into a jar or another watertight container to ensure it doesn’t get wet and store it carefully inside. A toilet’s water tank also makes for a great place to store other valuable items beyond emergency cash, like jewelry or stock certificates. (Again, we can’t stress enough the importance of storing these items into watertight containers.)

Where else in the bathroom can you hide emergency cash? Have you tried using your toilet spring bar? The spring bar is what holds your toilet paper roll in place. Carefully take it apart, roll up extra money, put it inside and reassemble into place.

Fake Electrical Outlets

It’s becoming much more popular for homeowners to construct fake infrastructure in their homes where you can hide emergency cash inside.

To Read More Go to the Original Article Here:

https://www.gobankingrates.com/money/financial-planning/hidden-places-to-stash-your-emergency-cash/

The Day I Put $50,000 in a Shoe Box and Handed It to a Stranger

The Day I Put $50,000 in a Shoe Box and Handed It to a Stranger

I never thought I was the kind of person to fall for a scam.

By Charlotte Cowles

On a Tuesday evening this past October, I put $50,000 in cash in a shoe box, taped it shut as instructed, and carried it to the sidewalk in front of my apartment, my phone clasped to my ear. “Don’t let anyone hurt me,” I told the man on the line, feeling pathetic.

“You won’t be hurt,” he answered. “Just keep doing exactly as I say.”

Three minutes later, a white Mercedes SUV pulled up to the curb. “The back window will open,” said the man on the phone. “Do not look at the driver or talk to him. Put the box through the window, say ‘thank you,’ and go back inside.”

The man on the phone knew my home address, my Social Security number, the names of my family members, and that my 2-year-old son was playing in our living room. He told me my home was being watched, my laptop had been hacked, and we were in imminent danger. “I can help you, but only if you cooperate,” he said. His first orders: I could not tell anyone about our conversation, not even my spouse, or talk to the police or a lawyer.

Now I know this was all a scam — a cruel and violating one but painfully obvious in retrospect. Here’s what I can’t figure out: Why didn’t I just hang up and call 911? Why didn’t I text my husband, or my brother (a lawyer), or my best friend (also a lawyer), or my parents, or one of the many other people who would have helped me? Why did I hand over all that money — the contents of my savings account, strictly for emergencies — without a bigger fight?

When I’ve told people this story, most of them say the same thing: You don’t seem like the type of person this would happen to. What they mean is that I’m not senile, or hysterical, or a rube. But these stereotypes are actually false. Younger adults — Gen Z, millennials, and Gen X — are 34 percent more likely to report losing money to fraud compared with those over 60, according to a recent report from the Federal Trade Commission. Another study found that well-educated people or those with good jobs were just as vulnerable to scams as everyone else.

Still, how could I have been such easy prey? Scam victims tend to be single, lonely, and economically insecure with low financial literacy. I am none of those things. I’m closer to the opposite. I’m a journalist who had a weekly column in the “Business” section of the New York Times. I’ve written a personal-finance column for this magazine for the past seven years. I interview money experts all the time and take their advice seriously. I’m married and talk to my friends, family, and colleagues every day.

And while this is harder to quantify — how do I even put it? — I’m not someone who loses her head. My mother-in-law has described me as even-keeled; my own mom has called me “maddeningly rational.” I am listed as an emergency contact for several friends — and their kids. I vote, floss, cook, and exercise. In other words, I’m not a person who panics under pressure and falls for a conspiracy involving drug smuggling, money laundering, and CIA officers at my door. Until, suddenly, I was.

That morning — it was October 31 — I dressed my toddler in a pizza costume for Halloween and kissed him good-bye before school. I wrote some work emails. At about 12:30 p.m., my phone buzzed. The caller ID said it was Amazon. I answered. A polite woman with a vague accent told me she was calling from Amazon customer service to check some unusual activity on my account. The call was being recorded for quality assurance. Had I recently spent $8,000 on MacBooks and iPads?

I had not. I checked my Amazon account. My order history showed diapers and groceries, no iPads. The woman, who said her name was Krista, told me the purchases had been made under my business account. “I don’t have a business account,” I said. “Hmm,” she said. “Our system shows that you have two.”

Krista and I concurred that I was the victim of identity theft, and she said she would flag the fraudulent accounts and freeze their activity. She provided me with a case-ID number for future reference and recommended that I check my credit cards. I did, and everything looked normal. I thanked her for her help.

Then Krista explained that Amazon had been having a lot of problems with identity theft and false accounts lately. It had become so pervasive that the company was working with a liaison at the Federal Trade Commission and was referring defrauded customers to him. Could she connect me?

“Um, sure?” I said.

Krista transferred the call to a man who identified himself as Calvin Mitchell. He said he was an investigator with the FTC, gave me his badge number, and had me write down his direct phone line in case I needed to contact him again. He also told me our call was being recorded. He asked me to verify the spelling of my name. Then he read me the last four digits of my Social Security number, my home address, and my date of birth to confirm that they were correct. The fact that he had my Social Security number threw me. I was getting nervous.

To Read More Go to the Original Article Here:

https://www.thecut.com/article/amazon-scam-call-ftc-arrest-warrants.html?utm_source=apexmoney&utm_medium=dailynewsletter&utm_campaign=how-to-be-rich

I Lost $11,300 to Identity Fraud

I lost $11,300 to identity fraud.

What I learned: Usual safeguards don’t work.

Janna Herron·Senior Columnist  Sat, Mar 2, 2024,

"Looks like someone is trying to take more than $10,000 from us."

That's the message my husband typed to me on a Monday morning in October. By the time I wrote back, he was on the phone with our bank. The weekend before, someone walked into a bank branch, pretended to be one of us, and took thousands of dollars from our checking account.

We joined the tens of millions of Americans who each year are victims of identity fraud, where criminals steal a bank or credit card number and use the personal information to achieve illegal financial gain.

We were lucky in so many ways, most notably that our bank reimbursed our losses within 36 hours.

What we learned is this: The many steps we take to safeguard our personal data don’t always work.

Experts suggest creating strong passwords with extra layers of authentication, changing them often, and not using the same one on multiple accounts.

Having text alerts on your credit and debit cards for all transactions can also thwart illegal activity in real time, as can email alerts when someone tries to change an email or address associated with your account.

You should do all these — and we did — but they wouldn't have prevented the fraud we experienced. Our data was already out there for the picking.

Hacks that expose the personal financial information of Americans soared to a record high of 3,205 in 2023, according to the nonprofit Identity Theft Resource Center. That total includes breaches of companies across many industries such as healthcare, utilities, financial services, and transportation.

A well-known example of this was the massive Equifax data breach in 2017 that affected 147 million Americans — including us. That motivated us to freeze our credit reports at Equifax, Experian, and TransUnion.

“At this point, all of our information is out on the dark web," Suzanne Sando, senior analyst for fraud and security at Javelin Strategy & Research, told me. "It's now just a matter of when is it going to be used against me."

'Huge time suck'Here’s what else we learned: Knowing how to respond to one of these frauds after they happen is also crucial — and time consuming.

Because of my past reporting on this subject, I knew we needed to act quickly. We checked our other accounts — bank, credit, and retirement — for any suspicious activity. There was none. We then met up at our local bank branch to shut down the old account, establish another, and identify which upcoming transactions to allow to go through.

It took more than two hours, and we weren’t close to done.  "Fixing a run-in with identity fraud, it's a huge time suck," Sando said, "and people don't necessarily have the time to do it."

My husband fortunately was able to take the day off and spent the afternoon undoing automatic transactions from the old account and rerouting them to the new one. I also took off the day from work and headed to our local police precinct to file a report to provide to other financial institutions if the fraud followed us elsewhere.

Our local precinct took our report immediately. That’s not often the case for identity theft, according to Identity Theft Resource Center CEO Eva Velasquez, because it’s so hard to solve these cases.

Several factors worked in our favor, she said. In New York, the total amount stolen — which ended up being $11,300 — made the crime a Class D felony, which includes thefts of more than $3,000 but less than $50,000.

The bank also gave me copies of the withdrawal slips, which became critical evidence. The criminal made the withdrawals under my maiden name, albeit misspelled on each slip. It’s a name that hadn't appeared on my checking account for well over a decade.

 To Read More Go to the Original Article Here:

https://finance.yahoo.com/news/i-lost-11300-to-identity-fraud-what-i-learned-usual-safeguards-dont-work-220720605.html

What Lies Beneath Monday Afternoon 3-4-24

What Lies Beneath Monday Afternoon 3-4-24

Jonathan Clements  |  Feb 24, 2024 Humble Dollar

MONEY IS A TOOL. But a tool for what? We might imagine it’s simply a way to purchase the goods and services we need or want. But in truth, there are all kinds of things that money can do for us—some worthy, some not so much.

Want to use your wealth more wisely? I think all of us should spend time pondering what money represents to us, how we use it and why we like to have it. Here are just nine of the reasons that folks look to amass money:

1. More options. I’ve heard folks describe their savings as “-— you” money, offering the chance to give the middle finger to the boss whenever work becomes unbearable. Less crassly, others have said money represents “stored energy” or “financial freedom.”

The notion: Even if we aren’t currently putting our money to use, we know we could—and that potential is one of money’s most appealing qualities. I agree, though I’m also aware that the seemingly endless options offered by money come with a catch: As soon as we take advantage of them, our pool of money dwindles, and with it our financial options.

2. Financial security. “You’ve saved all that money. When are you going to spend it?” I’ve long thought “never” was a perfectly fine answer.

Money may represent the financial freedom to purchase all manner of goods and services. But instead of buying things, we can use money to buy freedom from worry. In a world where many—and perhaps most—folks fret constantly about their finances, I think the freedom not to worry about money is one of the top reasons to amass some savings.

3. More time. Research has found that, if our goal is greater happiness, one of the more effective strategies is using money to pay others to do tasks we find distasteful, whether it’s cleaning the house, mowing the lawn, painting the bathroom or whatever else makes our personal list of loathsome tasks.

This strikes me as a wise way to spend money: Time is the ultimate limited resource, and we don’t want to squander it on tasks we loathe. But—fingers crossed—having money should also save us time for another reason: Once we have a healthy sum set aside, we should be able to spend less time worrying about financial issues.

4. Fewer hassles. Money doesn’t just allow us to pay others to do tasks we find distasteful. It can also make life easier and less stressful. Travel is an obvious example. Thanks to money, we might take a taxi rather than a bus, or fly first class rather than economy.

Still, if we aren’t careful, money can have the opposite effect, resulting in even more hassles. For instance, emboldened by our fat financial accounts, we might buy another car or purchase a second home. These additional items might seem like they’d enhance our life. But often, they quickly become a burden, because we now have to care for these possessions, with all the wasted time and hassles that are involved.

https://humbledollar.com/2024/02/what-lies-beneath/

Yesterday’s Influence Sunday Afternoon 3-3-24

Yesterday’s Influence Sunday Afternoon 3-3-24

Adam M. Grossman  |  Humble Dollar

MY FIRST DAY IN the investment industry was—unfortunately—not so great. On the morning of Sept. 15, 2008, the investment bank Lehman Brothers filed for bankruptcy, sending the stock market into a free fall. The rest of 2008 was equally ugly, with the S&P 500 losing 37% for the year. But that experience provided investors with a valuable lesson—about the power of recency bias.

Recency bias is the mind’s tendency to extrapolate. When things are terrible, as they were on that day in 2008, it’s hard to imagine how or when things might ever get better. On the other hand, when markets are rising, it’s hard to imagine what might cause that positive momentum to slow.

Recency bias causes us to look backward—to assume that what happened yesterday will happen again tomorrow. That can lead investors to do the opposite of what would be best. Consider what we’ve experienced in just the past two years.

At the beginning of 2022, the stock market was on a tear. After hitting bottom in the spring of 2020, investment markets had been delivering steady gains for nearly two years. The economy was strong, and it looked like this good fortune would continue. But it was at that point that inflation readings began to become more problematic and, in response, the Federal Reserve began lifting interest rates. In all, the Fed raised rates seven times in 2022. The result for investors was punishing, with both stocks and bonds dropping at the same time—a rare occurrence. Stocks lost nearly 20% for the year, and bonds lost more than 10%.

By the end of 2022, investors weren’t feeling so good. Markets were down, inflation was still running high, and it was hard to see how things could improve. The notion that the Fed could engineer a “soft landing”—bringing down inflation without causing a recession—appeared remote. But just when sentiment seemed to be at its worst, inflation turned a corner. The Fed did continue raising rates into 2023, but the increases were smaller and sentiment improved. The result: Just when investors least expected it, stocks took off, gaining more than 25% for the year.

This describes just the past two years, but it’s a microcosm of investors’ experience nearly every year. Just when one trend appears to be well entrenched, something changes, upending expectations. It’s at times like this that recency bias can lead us astray. What can you do to combat it?

The simple answer would be to ignore the news. In fact, a famous study once tested this idea. Participants were given paper portfolios to trade and were split into two groups. The first group received regular news reports on their investments, while the second received less information. The result:

https://humbledollar.com/2024/03/yesterdays-influence/

Even The FDIC Doesn’t Want To Pay Its Tax Bill…

Even The FDIC Doesn’t Want To Pay Its Tax Bill…

Hotes From the Field By Simon Black/James Hickman February 28, 2024

[Important Reminder: In case you missed our announcement from January 24, Sovereign Man has merged with Peter Schiff's media group. We are now called Schiff Sovereign, and our founder (Simon Black) has dropped the pen name and is now writing under his real name, James Hickman.]

Almost one year ago to the day-- on February 24, 2023-- Silicon Valley Bank released its 2022 annual report. And senior executives must have been pretty nervous since the report showed that the bank was nearly insolvent.

The bank had acquired a massive portfolio of more than $100 billion of US government bonds-- supposedly the ‘safest’ asset class in the world-- during 2020 and 2021 back when interest rates were at historic lows.

But then the Fed started hiking rates very quickly in 2022. And higher rates cause bond prices to fall-- even the ‘safest’ ones like US Treasury bonds.

By the end of 2022, Silicon Valley Bank’s portfolio of US government bonds was down by more than $15 billion. And with barely $16 billion in total capital, Silicon Valley Bank was nearly wiped out.

Their 2022 annual report communicated this insolvency risk very clearly. And the bank’s leadership must have probably been expecting the stock to crash almost immediately.

And yet it didn’t. After the annual report was released and all the ‘experts’ on Wall Street had a chance to see the alarming data, Silicon Valley Bank’s stock price barely budged.

Then, just ten days later, the Chairman of the Federal Reserve testified to Congress that the Fed’s rapid interest rate hikes presented absolutely zero risk to the financial system:

“Nothing about the data suggests to me that we’ve [raised rates] too much. . .” he said.

Of course, the Fed’s rapid interest rate hikes were precisely the reason why Silicon Valley Bank’s bond portfolio had lost so much value.

But again, neither Wall Street nor the Fed (which, as a financial regulator, had unfettered access to Silicon Valley Bank’s real-time financial condition) thought there was any risk whatsoever.

We know what happened next, and Silicon Valley Bank collapsed within a week.

But there’s now a new, and even more bizarre chapter to the story.

Typically, when banks in the US fail, one of the federal banking regulators (usually the FDIC, or Federal Deposit Insurance Corporation) steps in to take over. 

And that’s what happened with Silicon Valley Bank: the FDIC took over operations almost immediately to try and sort out the mess.

Bank restructurings, however, are almost always chaotic. They take time. The FDIC must liquidate assets in an orderly manner to maximize the value of the balance sheet, then prioritize claims against those assets.

Depositors obviously need to be paid. Creditors and lenders want their money too. And so, of course, does the government.

It turns out that Silicon Valley Bank also owed a tax bill to the IRS… $1.45 billion to be exact.

And since the FDIC became the legally responsible party of Silicon Valley Bank, the IRS went knocking on the door of its fellow government agency to ask for the money.

The FDIC refused.

In fact, according to the FDIC, they owe absolutely zero tax and will pay nothing.

Hilarious, right? This is literally government agency versus government agency in a dispute over taxes. And they can’t even settle the matter like grown adults, so the case is now going to federal court.

This raises an obvious point: if even a government agency like the FDIC is going out of its way to minimize its tax bill, then why shouldn’t everyone else?

There are way too many hard-core Marxists in the United States these days who insist on higher taxes, new taxes, punitive taxes. Activist groups like Pro Publica have published the illegally acquired tax returns of wealthy Americans in an effort to shame people… as if following the tax code and taking completely legitimate steps to reduce what you owe is some mortal sin.

But this case between the FDIC and IRS only proves the point made by Judge ‘Learned’ Hand decades ago, that “Anyone may so arrange his affairs that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury.”

Taking legal steps to reduce your taxes is completely sensible. And frankly tax reduction isn’t even part of a Plan B; it should be Plan A!

Fortunately, there are plenty of ways to do this. In 2024, for example, you can reduce your taxable income by $23,000 (or $27,000 if you're 50 or older), through pre-tax contributions to a Traditional 401(k).

For those who are self-employed or have a side business, a solo 401(k) allows an even greater tax-free contribution of up to $69,000 (and $76,500 for those aged 50 or older).

Plus, you have more freedom to invest your money as you see fit-- real estate, crypto, and more.

And while you do eventually have to pay taxes when you withdraw the funds in retirement, most retirees will be in a lower tax bracket at that point. Plus, your investments will have grown and compounded tax-free for that entire time.

If you’re willing to move across state lines, you can reduce or eliminate state and local taxes. If you are willing and able to move abroad, you can potentially eliminate federal taxes as well.

For US citizens living abroad, the Foreign Earned Income Exclusion (FEIE) allows you to earn up to $126,500 as an individual, or $253,000 as a couple, tax-free (though this does not include investment income).

Plus, you can exclude even more as a housing expense, which varies depending on where you live overseas.

And for people who move to Puerto Rico, as both myself and my partner Peter Schiff did, tax rates go down to 0% on capital gains, and just 4% on business income.

To your freedom,   James Hickman  Co-Founder, Schiff Sovereign LLC

https://www.schiffsovereign.com/trends/even-the-fdic-doesnt-want-to-pay-its-tax-bill-150216/

Even Warren Buffett’s Legendary Optimism Is Fading

Even Warren Buffett’s Legendary Optimism Is Fading..

Notes From the Field By Simon Black/James Hickman February 26, 2024

[Important Reminder: In case you missed our announcement from January 24, Sovereign Man has merged with Peter Schiff's media group. We are now called Schiff Sovereign, and our founder (Simon Black) has dropped the pen name and is now writing under his real name, James Hickman.]

Early in the spring of 1956, only weeks after Elvis Presley released his debut studio album, and actress Norma Jean Mortenson had her name legally changed to Marilyn Monroe, a budding 25-year-old businessman from the American Midwest fatefully registered his first-ever company.

His name, of course, was Warren Buffett. And the company he founded was called Buffett Associates-- which was formed with $105,000 of capital from his friends and family.

The US economy at the time was absolutely booming. Interest rates in 1956 were at historic lows. Inflation was practically zero. Economic growth was a dizzying 7%. Productivity growth was strong.

The US was no longer at war. And the national debt-- which had reached a peak of 120% of GDP in the 1940s due to the costs of World War II-- had been cut in half… and was falling further each year.

America was proudly capitalist, and the government actually made sound and effective investments, like the US federal highway system. Businesses reaped the benefits: corporate earnings across the S&P 500 index soared.

Yet, at the time when Buffett formed his business in 1956, stocks were still cheap… trading at less than 12x earnings (versus nearly 30x today).

It’s hard to imagine better economic or market conditions: a high growth, capitalist economy with low inflation, low debt, high productivity, and cheap stocks? Buffett could have hardly picked a better time to get started.

And, although there were plenty of ups and downs along the way, those pristine conditions lasted throughout the first several decades of his career.

Buffett is obviously one of the most talented investors to have ever lived, and he surrounded himself with other incredibly talented people.

But (and he would probably be the first to admit) his success would not have been as great without the power and dynamism of the US economy behind him.

And this is why Warren Buffett has long been one of America’s biggest economic cheerleaders.

Over the past 15+ years, Buffett has had an insider’s view of some very concerning trends. The US national debt has been rising out of control. The Federal Reserve has made a mess of the dollar. Woke fanatics have hijacked capitalism.

Yet through it all, Buffett has maintained a calm, persistent optimism in America; he routinely dismisses concerns over the debt, or the dollar, or the future of the US economy, and has seemed to believe that nothing could ever derail American progress.

But as I read through his annual letter this past weekend, it seems that even Buffett’s legendary optimism is starting to crack.

First, it’s clear that even Buffett thinks that government regulation has gone way too far.

Buffett explains, for example, that utility companies were “once regarded as among the most stable industries in America” because of their consistent profitability.

Yet he laments that the utility companies he acquired were a “severe earnings disappointment” in 2023 due to over-regulation from fanatical politicians.

Buffet complains that “the regulatory climate in a few states has raised the specter of zero profitability or even bankruptcy (an actual outcome at California’s largest utility and a current threat in Hawaii).”

“In such jurisdictions,” he writes, “it is difficult to project both earnings and asset values in what was once regarded as among the most stable industries in America.”

In the end, he tells shareholders that he “did not anticipate or even consider the adverse developments in regulatory [changes] and . . . made a costly mistake in not doing so.”

He goes on to talk about America’s dilapidated infrastructure, which is in critical need of maintenance and reinvestment. And Buffett cites the case of BNSF Railway (the largest freight rail in the US) which he acquired in 2009.

BNSF, he explains, has had to spend tens of billions of dollars to fix up its rail network “simply [to] maintain its present level of business. This reality is bad for owners. . .”

But it’s not just BNSF. And it’s not just railways. Almost ALL infrastructure in the US is in serious need of repair.

Obviously, the US government made a halfhearted attempted to address infrastructure challenges when it passed a $1 trillion investment package in 2021. But “the consequent capital expenditure” that’s truly required to fix it, Buffett writes, “will be staggering.”

One final point worth mentioning is Buffett’s comments on size. Again, when he started his first partnership in 1956, he only had $105k to invest, and he could move nimbly in and out of the market.

Today, Buffett’s company has almost $170 billion in cash, which is virtually impossible to manage efficiently. He writes that it’s “like turning a battleship”, and that the days of being quick and nimble “are long behind us; size did us in...”

Buffett, of course, is talking about his own company (Berkshire Hathaway). But the same could just as easily be said for the US government.

Think about it-- if someone of Buffett’s extraordinary talent admits that he cannot efficiently deploy $170 billion, how are Joe Biden or Transportation Secretary Pete Buttigieg supposed to be able to invest that $1 trillion infrastructure money?

Quite poorly, I’d imagine.

Buffett does acknowledge that “America has been a terrific country for investors.” And he’s absolutely right. It still is, for the most part.

Nvidia is an easy example: it simply would not have been able to achieve the same level of success had it been based in most other countries. If Nvidia were a Chinese company, for example, it would have been taken over by the CCP long ago, and CEO Jensen Huang would have probably been disappeared.

But one of the most important caveats of investing applies to the US economy as well: “past performance does not guarantee future results.”

Warren Buffett enjoyed some of the most pristine economic conditions imaginable for the vast majority of his nearly 70-year career. And as I have written several times, it is absolutely possible that America’s best days are still ahead.

There is clearly a future scenario in which small-scale nuclear reactors generate clean, low-carbon, ultra-cheap energy which powers highly productive AI and robotic automation. Economic growth is off the charts, and tax revenue soars as a result. The national debt eventually melts away, and the US re-establishes its primacy by out-producing and out-innovating the competition.

But at the moment there are serious issues to contend with.

US productivity is anemic. So is economic growth. War, inflation, cyberattacks, border crisis, social conflict, the rise of adversary nations, decline of the US dollar’s dominance, etc. are all pervasive challenges.

(Not to mention potential near-term consequences-- like the impact of Russia, China, North Korea, and terrorist groups sending so many of their operatives across the southern border.)

The government not only isn’t fixing these problems, but they seem to be making them worse by the day.  So, it’s important to take notice when even someone as optimistic as Buffett starts complaining.

To your freedom,  James Hickman  Co-Founder, Schiff Sovereign LLC

https://www.schiffsovereign.com/trends/even-warren-buffetts-legendary-optimism-is-fading-150201/