Category Archives: Finance

China’s Seven Deadly Trade Sins

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China has not been partners in good faith in trade and economic negotiations. They’re an authoritative Communist Dictatorship that enslaves it citizens for the empowerment of the Party

The U.S. and the Western multinational enterprises have enabled and fueled China’s extraordinary quarter century economic and global geopolitical growth. While the U.S. goal is Free Trade, Individual Freedom and Democratic Capitalism. U.S. companies are getting fed up with the force technology transfer by companies doing business in China and the Chinese firms exporting and selling those products in the U.S. market.

China’s Seven Deadly Sins

1. Stop stealing Western intellectual property,

2. Stop forcing technology transfers,

3. Stop hacking U.S. computers,

4. Stop dumping into U.S. and Western markets and putting our companies out of business,

5. Stop state-owned enterprises from heavy subsidies,

6. Stop the importation of fentanyl, and

7. Stop the currency manipulation

They’ve reneged on the Hong Kong autonomy agreement, they reneged on the agreement signed in the Oval Office with President Obama regarding the militarization of the South China Sea. In 2015, China’s President Xi stood with President Obama in the Rose Garden at the White House and promised (lied) that “there is no intention to militarize” a collection of disputed reefs in the South China Sea known as the Spratlys.

President Obama stated on his way to the 2016 G20 Summit in Hangzhou China. That “If you sign a treaty that calls for international arbitration around maritime issues, the fact that you’re bigger than the Philippines or Vietnam or other countries … is not a reason for you to go around and flex your muscles,” Obama added, according to Reuters. “You’ve got to abide by international law.”

Military analysts have criticized President Barack Obama’s administration for having been too timid in countering China aggression and militarization in the South China Sea. Critics, for instance, have faulted the previous administration for not conducting more frequent freedom of navigation patrols. “China’s militarization of the South China Sea has been a gradual process,

Source: https://www.nytimes.com/2018/09/20/world/asia/south-china-sea-navy.html

William Ackman: Everything You Need to Know About Finance and Investing in Under an Hour

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WILLIAM ACKMAN, Activist Investor and Hedge-Fund Manager

We all want to be financially stable and enjoy a well-funded retirement, and we don’t want to throw out our hard earned money on poor investments. But most of us don’t know the first thing about finance and investing. Acclaimed value investor William Ackman teaches you what it takes to finance and grow a successful business and how to make sound investments that will get you to a cash-comfy retirement.

The Importance of Cash Flow in Your Personal Financial Planning – Penn Mutual

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Cash flow is our financial life-blood. We tend to think of cash flow as something that only businesses or governments contend with, but it is integral to our personal financial lives as well. Cash flow enables us to do what we want, and to help achieve our goals or objectives — whether that is to get a mortgage, save for a college education, take a vacation, and of course, save and invest for retirement.

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3 reasons investors might not be benefiting from rock-bottom fund fees – MarketWatch

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There’s more to successful investing than just watching costs

The index fund fee-cutting battle reached its seemingly inevitable conclusion more than a year ago, when Fidelity Investments launched four zero-cost index funds. You can’t get any lower than zero, right? Apparently, you can. One small fund company is now effectively paying investors to own one of its index funds.

Still, the price war among financial companies has clearly moved on, with some firms eliminating brokerage commissions in 2019 or touting the high interest rate paid by their brokerage cash account. Cutting index-fund expenses is, it seems, so last year.
— Read on www.marketwatch.com/story/3-reasons-investors-arent-benefiting-from-rock-bottom-fund-fees-2019-12-18

Trusts: An estate planning tool | Fidelity

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Trusts can help you control your assets and build a legacy.
FIDELITY VIEWPOINTS

Key takeaways
Trusts can help pass and preserve wealth efficiently and privately.
Trusts can help reduce estate taxes for married couples.
Gain control over distribution of your assets by using trusts.
With a trust, you can ensure that your retirement assets are distributed as you’ve planned.

If you haven’t stopped to consider how a trust may help you pass your wishes and wealth on, you could be making a critical estate planning mistake. Especially for individuals with substantial assets, protecting wealth for future generations should be top of mind.

“People often fail to appreciate the power a trust can have as part of a well-crafted estate plan, but that can be a costly mistake,” says Rodney Weaver, VP, Advanced Planning at Fidelity. “Trusts are flexible and powerful tools that can be used to gain greater control over how they pass their wealth to future generations.”

A trust is a legal structure that contains a set of instructions on exactly how and when to pass assets to trust beneficiaries. There are many types of trusts to consider, each designed to help achieve a specific goal. An estate planning professional can help you determine which type (or types) of trusts are most appropriate for you. However, an understanding of the estate planning goals that a trust may help you achieve is a good starting point.

— Read on www.fidelity.com/viewpoints/personal-finance/reasons-to-consider-a-trust

Simple Index Fund Investment

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On page 20 of a 2013 letter to shareholders, Berkshire Hathaway’s Chairman and CEO Warren Buffett, an individual who knows quite a bit about successful investing, wrote:

“My advice to the trustee could not be more simple: Put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund. (I suggest Vanguard’s.) I believe the trust’s long-term results from this policy will be superior to those attained by most investors – whether pension funds, institutions or individuals – who employ high-fee managers.”

In other words, the “Oracle of Omaha” advises that a broadly diversified market-cap-weighted index fund is a valuable starting point for all retail investors.

Index funds are typically lower cost mutual funds or Exchange-Traded Funds (ETFs) that passively track the performance of the benchmark index. For example, an S&P 500 Index mutual fund or ETF would hold the same stocks that are in the widely followed S&P 500 stock market index.

airport bank board business

Photo by Pixabay on Pexels.com

The S&P 500 Fund is a stock market index that tracks the stocks of 500 large-cap U.S. companies. Over the last 10 years, the S&P 500 has returned 9.49 percent per year. In 2017, it returned 21.83 percent. S&P stands for Standard and Poor, the names of the two founding financial companies.

These 500 Index Funds are typically a low-cost way to gain diversified exposure to the U.S. equity market. These funds offer exposure to 500 of the largest U.S. companies, which span many different industries and account for about three-fourths of the U.S. stock market’s value.

The S&P 500 only measures large-cap U.S. stocks and is often used as a leading economic indicator of how well the U.S. economy is currently doing or may due in the coming six to twelve months. If investors are confident in the economy, they will buy stocks.  Some experts believe the stock market can predict what the savviest investors think the economy will do in about six months.

The key take-away regarding index fund investing comes again from the investment wisdom of  Warren Buffett.   In Berkshire Hathaway’s 2013 letter to shareholders, he wrote on page 20 that “…The typical investor doesn’t need this skill [the ability to predict their future earning power of specific businesses five years out]. In aggregate, American business has done wonderfully over time and will continue to do so (though, most assuredly, in unpredictable fits and starts). In the 20th Century, the Dow Jones Industrials index advanced from 66 to 11,497, paying a rising stream of dividends to boot. The 21st Century will witness further gains, almost certain to be substantial. The goal of the non-professional should not be to pick winners – neither he nor his “helpers” can do that – but should rather be to own a cross-section of businesses that in aggregate are bound to do well. A low-cost S&P 500 index fund will achieve this goal.”

Sources:

  1. https://www.thebalance.com/what-is-the-sandp-500-3305888
  2. Warren Buffett, Letter to Shareholders, 2013 Annual Report, Berkshire Hathaway, Inc., pg. 20

 

2019 Taxes: 9 Things to Know Now | Charles Schwab

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The Tax Cuts and Jobs Act of 2017 (TCJA) ushered in big changes that significantly affected many taxpayers’ 2018 returns. By contrast, 2019 tax changes are subtle, mostly reflecting inflation adjustments to exemptions and tax brackets.

Still, the cutoffs for specific rates and exemptions may affect your final investment decisions for 2019. Here are nine things to keep in mind as you prepare to file your 2019 taxes.
— Read on www.schwab.com/resource-center/insights/content/taxes-9-things-to-know-now

To Retire in Harmony, Get Your Plan in Sync

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Must have a fundamental knowledge of all the investments and strategies available, as well as the ability to put together a comprehensive retirement plan that addresses each individual client’s needs, goals, strengths and weaknesses.

There are five important parts in a comprehensive retirement plan that should play well together.

— Read on www.kiplinger.com/article/retirement/T047-C032-S014-to-retire-in-harmony-get-your-plan-in-sync.html

What this man regrets about going from $2.26 to $1 million in five years

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BY MARKETWATCH — 12/12/2019 3:37 PM ET

Achieving financial independence took time and sacrifice — and came with some regrets
In five years, Grant Sabatier went from having just a few bucks in his bank account to more than $1 million — and he did it through side hustles, sacrifice and investing. But if he had to do it all over again, he said he probably wouldn’t have done it quite the same way.
He made many trade-offs, and a few mistakes, like “making money my God and chasing the next thing, no matter what,” he admitted.
The young millionaire, who blogs at MillennialMoney.com (https://millennialmoney.com/) and is the author of “Financial Freedom,” accomplished financial independence by making small goals for himself — first, shooting to save $1,000, then $2,000, then $4,000. As he reached his goals, he’d double them. “We usually focus on the million-dollar goal or retiring early, and while it is important to set goals, don’t let those goals distract you from taking the next step,” he said. Starting small and consistently doubling his figures made the goal accessible, mentally and physically. “If you are completely in debt and you don’t have anything saved, just save your first $1,000, and see how it makes you feel,” he said. “You’ll feel better than you thought you would.”
But there needs to be balance, something he did not account for on his path to $1 million. That means enjoying life, and that looks differently for everyone (http://www.marketwatch.com/story/its-time-to-stop-judging-people-for-drinking- lattes-and-getting-regular-haircuts-2019-05-14). Stripping yourself of experiences and items that are meaningful can backfire. Sabatier said he had to detox after five years of working 100-hour weeks and traveling, for example.
Hitting a financial goal should be less about quantitative reasons, like having $1 million in an investment portfolio, and more about qualitative reasons, like leaving a job you hate or paying for an annual family trip. “It’s about looking at your life. Do you feel like you’re growing? Do you feel like you’re in a place you like and you have friends you like? Do you like your life?” Sabatier said. “If the answer to that question is no, then the first place you need to look is your money.”

— Read on www.marketwatch.com/story/what-this-man-regrets-about-going-from-226-to-1-million-in-five-years-2019-12-12

2020 Market Outlook: U.S. Stocks and Economy | Charles Schwab

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Key Point

  • The U.S. economy likely will remain bifurcated in early 2020. Manufacturing and business investment may continue to struggle amid trade uncertainty, but services activity and consumer spending may continue to be healthy.
  • The Federal Reserve’s 2019 rate cuts should support stock prices, as well as rate-sensitive areas of the economy. However, rate cuts are only a partial cure for what ails manufacturing and corporate animal spirits.
  • A preliminary U.S.-China trade deal could stabilize the decline in corporate confidence. However, returning to a strong business investment environment likely requires a more comprehensive trade deal.

The dividing line remains firm

U.S. economic growth slowed in 2019, pulled down by weak business investment and manufacturing activity. Although strength in consumer spending and services persists heading into 2020, we expect stabilization—at best—in growth next year.

Myriad uncertainties are clouding the outlook, including earnings and the presidential election. Ongoing trade war ambiguity could further depress corporate confidence and investment.

A key risk in 2020 is that manufacturing weakness and business investment fatigue could hurt services activity and consumer spending, by depressing job growth. Although the U.S. unemployment rate (a lagging indicator) remains low, weekly initial jobless claims (a leading indicator) in manufacturing-oriented states have been rising.

As such, U.S. payroll growth may weaken if limited headway is made on a comprehensive trade deal. However, global economic stabilization could be positive for U.S. growth.

— Read on www.schwab.com/resource-center/insights/content/outlook-us-stocks-and-economy