Yearly Archives: 2010

Time To Sell Year End Capital Losses?

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It’s the end of the year and time to consider if it’s wise to sell capital losses from investments or not!  I had some stinkers from “The Great Recession” still lingering, so I do have some losses to apply!

Of course, I don’t always get to apply capital losses (luckily) every year because I don’t always have stock losses, but this year I do.

In addition to countering the capital gains I had this year, I decided to use some of my capital losses counter the gains in the earnings I have from blogging.  Since my earned income from blogging is low, the capital losses from selling stocks help to reduce my income taxes.

The rules of applying capital losses to earned income is as follows:

Capital losses. Losses on sales of capital assets offset capital gains on a dollar-for-dollar basis. That makes your gains potentially tax-free. Any excess losses can offset as much as $3,000 in other non-capital income. Losses in excess of this $3,000 annual limit in 2005 will be carried forward into your 2006 pot. How much is the $3,000 loss worth at tax time: if you’re in the 25% bracket this year, it’s worth $750. If you’re in the 28% bracket, it’s worth $840. At the top rate of 35%, the deduction trims your taxes by $1,050 — more than a third of the total loss.  Check out the article “Sharing your losses with Uncle Sam”  from Forbes, that this excerpt was taken from for more details!

So in a nutshell, once your capital losses exceeds your capital gains, you can take up to $3,000 of the losses against other forms of income (earned income in my case this year).  If you have capital losses greater than $3,000, you must take that excess loss and apply it to the future year(s).  Luckily, I don’t have to carry my loss forward!

So what is a capital gain and a capital loss?
A capital gain is the results when the price of an investment rises above its purchase price when the security is sold (realized gain).

If you bought stock A for $200 and today you sold if from $350, you capital gain is $150.  (sell price – investment cost) = capital gain if it’s positive, or capital loss if negative.

The opposite (a capital loss) is if you bought stock B for $100 and today you sold if from $50, you would have a capital loss of -$50.  (sell price – investment cost) = capital loss if it’s negative, or capital gain if positive.

So this is my battle plan against the upcoming tax bite, what strategies do you have?

-MR

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Does Money Have Value?

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What do you think?  Does Money Have Value?

Sometimes I open my wallet and look at the paper money there within!  While the paper is a lovely shade of green with some very special effects in the print, I have to wonder if it’s really worth it!

I often wonder what would happen if aliens from another planet came down and saw us working away for a few, relatively small, rectangular pieces of paper?  Do you think that they would conclude that we aren’t the smartest animal on earth…  Perhaps they would give up on us and try to communicate with the dolphins instead?

Money has had different forms throughout the ages ranging from shells to such things as ancient metal knives (in china) and even stones!

The thing about paper money is that it has no intrinsic value!  The only way it has value is if a group or society believes that it has value, and are willing to trade other things (such a labor) for the belief of the value in that paper money.

At one time in the past, many countries backed up their paper currency with precious metals.  For example, in the United States, at one time in the not to long ago past, each dollar had a certain amount of gold locked away in a safe that was reserved to represent the money.

So at one time, paper money did have value, but the gold standard has been given up (in 1971), and now the money floats.  Now paper has nothing backing it up other than an a believe that it has value (and it does).

Even though I’m not currently buying gold, if something were to happen to my country, my paper money would become worthless (see the confederate currency for a great example).  However if I did own gold, even if something were to happen to make my countriy’s currency practically worthless, gold would still have value!

So tell me, what do you think, does money have value?  Do you think it would be worth it to diversify your investment portfolio by owning some precious metals?  Maybe 10%, or more?

-MR

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3 Strategies to Maximize Benefits from your Pension Annuity

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3 Strategies to Maximize Benefits from your Pension Annuity

If you are in the process of looking for a pension annuity that will protect both you and your spouse from financial problems in the future and provide you with income for your retirement, it goes without saying that you will want to do everything in your power to find the annuities with the most benefits for the money that you invest. This is an extremely important thing to make sure of, since a pension annuity is an investment that will protect you during a time of your life when your age and physical condition can restrict the type of work that you are capable of doing.

The first thing that most people think of when they are looking for the best pension annuity to invest in for their future is the interest rate that it provides. They are also often heavily concerned about which plans will offer the most benefits as well. But in order to get the most out of a pension annuity, it is important to carefully choose which features should be purchased in which combination in order to get the most out of the plan. There are several different ways in which this can be accomplished.

Here are 3 ways in which to combine features to get the most out of a pension annuity.

1. One option that you have is to wait a while before you decide to purchase an annuity if this is a possibility for you. In most cases, you can only buy an annuity if you are between the ages of 55 and 75. The later on in your life you are when you decide to purchase an annuity, the more money you can expect to receive in return for your investment. The reason for this is that you will receive larger monthly payments. This is because your remaining lifespan is expected to be shorter. The shorter the amount of time remaining in your life, the more money the insurance company can pay out each month, which gives you more money to live off of without having to continue working.

2. Another possibility is to think about is who to purchase an annuity under if it is a joint annuity. It is often a good idea to purchase the annuity under the husband’s name. The reason for this is the fact that men are expected, on average, to live for a shorter period of time. For this reason, when an annuity is purchased under the husband’s name instead of the wife’s, the payments are typically larger because fewer years of life are expected.

3. When looking at the plan, it is also a good idea to look at it in order to find out if impaired life benefits are included in the annuity. As an example, if you have a medical condition that reduces you life expectancy, this should also be another reason that the insurance company will offer larger payments each month. This might seem backward to people who are used to shopping for health insurance, which will charge higher premiums if you have a health condition. Even so, this is how it works. The shorter your expected lifespan, the larger the monthly payments.

Of course, these three strategies are not everything when it comes to deciding on a plan that is right for you. It is also very important to shop around in order to find the best company available. The company should not only offer good rates, it should have a long history demonstrating that it is financially stable.

Annuities are one of the few financial topics that I don’t have much experience with, so the guest post Lisa is very welcome!

I hope you enjoyed and learned something new from this post on annuities!

-MR

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How To Win Without Even Trying

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So How does one win without even trying?  2 words:

Blogger Giveaways!

Yep, that’s right!  It’s so easy winning stuff via Blogger giveaways that sometimes all you need to do is visit one of many great sites, and just leave a comment!  I’ve personally won 2 giveaway prizes this way!

You see, very often a newer growing blog site will have an occasional giveaway in celebration of a milestone accomplished!  Being a reader of many different sites, I’ll leave a comment saying “Congratulations”.  Now with these celebrations, the bloggers may have a giveaway, and the criteria for the giveaway is just for a comment to be left on the site.  So even though I didn’t really try to win a prize, my name would be entered anyway because I left a comment, thus enabling me to win without me really trying!

When you play the lottery, your changes of winning are minuscule  let’s be generous and say .0001% (that’s pretty slim!)

But when you try for a giveaway on a blog site, you chances might be 1 in 8 for a $50 and higher gift certificate!  That’s a 12.5 percent chance of winning!!!  If you consider sometimes there are more than 1 prize your odds even go up higher!  I’ve seen some sites literally give 1 prize for all commenters!  How’s that for great odds!!

Giveaways are also great  because they are win-wins!  Often you get to check out a great site, and at the same time you get to enter a winnable contest! it’s fun to win (especially when you aren’t trying to)!

My Thoughts:

The point of this post is to get you to see the alternatives instead of just the huge wins.  Contests don’t always have to have a huge payout and the odds of winning is drastically better than of winning the state lottery.

This past year, I blogged about such a win in my blog post called “My Close Friend Won A House“!  Now granted the total value of the house and prizes equaled hundreds of thousands of dollars, but the odds were much better than winning the state lottery.  Would it surprise you to learn that she said she hasn’t ever played the state lottery?  Yep, as lucky as this friend was, she realize that the odds of her winning the state lottery was so incredible low that she didn’t think it was worth it!  I think I calculated she really had only a bit better than 1% chance of winning her house, but that was well over 1000 times better odds than trying to win the State lottery!

Plus the beauty of blogger giveaways/contests are that they don’t cost anything to enter!  You don’t have to pay for a ticket or even pay for a stamp for submission!  And even the shipping of the gift to your house the blogger typically pick up!  It’s a win-win!

The only reason that I bring this point up is that I myself didn’t realize how easy it was to get free stuff from these blogger’s giveaways… until I won a few by accident!

-MR

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