Kevin Kroskey's Money & Mind

Will Congress pass it? What difference could it potentially make? On September 8, President Obama announced a new plan to improve the economy – the $447 billion American Jobs Act, a sequel of sorts to his past economic stimulus proposals. His announced goal: job creation without new taxation. What’s in this bill? The AJA would try to boost the economy through seven different tactics – extensions and expansions of tax breaks, and infusions of federal dollars. The current payroll tax holiday would be extended through the end of 2012. The payroll tax would fall to 3.1% - not only for workers, but also for businesses with payrolls of $5 million or less. Companies could get a tax credit as large as $4,000 for hiring the long-term unemployed (people who have been out of work for at least 6 months). Long-term jobless benefits would again be extended. $80 billion of federal money would be assigned to new infrastructure projects (highways, bridges and s...

I find that retirees often have erroneous beliefs of Social Security and are blind to planning opportunities in claiming their benefits. Elaine Floyd, CFP is one of the foremost experts on Social Security planning within the financial planning community. In a recent newsletter she listed common mistakes both retirees and advisors make in addition to common misperceptions. These are posted below. 3 of the most common mistakes RETIREES make: Thinking of 62 as being "Social Security age" without realizing the penalties they pay by claiming early benefits.  Filing for benefits without understanding all the ramifications as to spousal benefits, survivor benefits, the earnings test, etc.  Failing to consider the lifetime value of Social Security over a long life expectancy and how it provides longevity insurance in the event of a very long life. 3 of the most common mistakes ADVISORS make: Focusing too much on the breakeven age without considering the importance of income...

Stock prices slumped around the world yesterday [Monday, July 18], but shares of Apple Inc. shrugged off worries about a Greek government bond default and record gold prices and surged to an all-time high of $373.80. With a market value of over $344 billion, Apple has already shouldered aside Microsoft to become the world's largest technology firm measured by market capitalization and is now second only to energy giant ExxonMobil among US stocks. It has all happened so quickly that despite its heavyweight stature in the US stock market, Apple shares are still conspicuously absent from the Dow Jones Industrial Average. Apple's innovative products are the gold standard for personal communication and entertainment gadgets, and the company's fresh approach to store design generates sales-per-square-foot numbers other retailers can only dream about. As the company goes from strength to strength and the billions pile up on the balance sheet, it's worth recalling how uninspi...

Below is a brief article from Weston Wellington of Dimensional Fund Advisors, reviewing the markets over the last year and concurrent headlines from the media. It always helps to keep things in perspective and not get caught up in the financial pornography that is put upon us. -Kevin Kroskey --------- For the twelve-month period ending May 31, 2011, equity investors around the world enjoyed the equivalent of blue skies and bright sunshine while the economic news was partly cloudy at best. Among forty-five developed and emerging-country stock markets tracked by MSCI, all but four had double-digit total returns (in US dollar terms), and twenty-six had returns of 30% or more. If someone had told us a year ago that global markets would stage such a broad-based rally, we would have been inclined to think that trends in employment, housing, and financial distress were about to take a pronounced turn for the better. It seems hard to argue they have done anything of the sort. ...

The IRS has enhanced mileage reimbursement rates for the second half of 2011 to 55.5 cents for business and 23.5 cents for medical and moving per mile. This is an increase from the first half rate of 51 cents for business and 19 cents for medical and moving per mile. The full announcement is below. It's nice to get a little help from our friends at the IRS. To Your Prosperity, Kevin Kroskey, CFP ====== Optional Standard Mileage Rates  Announcement 2011-40   This announcement informs taxpayers that the Internal Revenue Service is modifying Notice 2010-88, 2010-51 I.R.B. 882, by revising the optional standard mileage rates for computing the deductible costs of operating an automobile for business, medical, or moving expense purposes and for determining the reimbursed amount of these expenses that is deemed substantiated.  This modification results from recent increases in the price of fuel. The revised standard mileage rates are: (1) Business = 55.5 cen...

Limiting spending to interest or dividends received is a common idea that many retirees have about managing spending in retirement. This idea causes some retirees to reach for yield in both stock and bond investments. In an annual report for Berkshire Hathway, Warren Buffett wrote, "More money has been lost reaching for yield than at the point of a gun." Pursuing an interest-and-dividend-only strategy is sub-optimal for a multitude of reasons, man of which I'll be explaining in an upcoming article to be posted at the Money & Mind blog. Meanwhile, click on the video below to listen to Ken French of Dartmouth College answer the question whether retirees should limit their spending to interest and dividends.

Weston Wellington of Dimensional Fund Advisors often displays an ability to make unique observations and simplify complex concepts not unlike Warren Buffet. Below Wellington looks through Berkshire Hathaway's annual report and Buffett's letter to shareholders and makes some unique observations about the Berkshire portfolio and underlying investment principles that the every-day investor can learn from. To Your Prosperity, Kevin Kroskey, CFP, MBA -------------------------------------------------------------------------------- Berkshire Hathaway released its 2010 annual report last weekend, including the letter to shareholders from Chairman Warren Buffett that is always eagerly awaited by the investment community. We are gratified to find that Mr. Buffett's legendary ability to simplify complex issues remains undiminished and his trademark wit is as sharp as ever. Financial journalists, eager for clues that might reveal Buffett's thoughts on where markets are he...