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Most Americans Pay No Taxes

August 19, 2021 by Finance Gourmet

Estimates by The Tax Policy Center show that 61% of U.S. households pay no federal incomes taxes. Before you go off on a rant about the rich not paying their fair share of taxes by using tricky tax-dodging tactics, the reality is that many people are too poor to pay taxes. Why the Majority of Americans Pay No Taxes Ask around America and you’ll find an impression of taxes and the IRS as heartless thugs that squeeze the poor to get money for the “king” back in Washington D.C. This impression is carefully cultivated by politicians as a way to garner votes by saying that you pay too much in taxes and get too little in return. The truth is that there is a lot of compassion built into the tax system. Poor People Don’t Pay Taxes What most people don’t realize while they scream at the rich for not paying their taxes and lamenting how much the poor have to pay, is that poor people don’t pay taxes. If you look at the tax brackets, it certainly seems poorer Americans pay taxes. The lowest tax bracket starts takes 10% and that is only up to $9,950 for those filing …

Dividend Stocks Coca Cola

August 31, 2021August 18, 2021 by Finance Gourmet

Dividend stocks are often an overlooked investment by many Main Street Americans. It isn’t hard to see why. A 3 percent yield on a $5,000 investment isn’t all that impressive, a mere $150 per year, or so. When you are thinking about turning a lifetime of 401k contributions into a retirement plan, that isn’t really the kind of number that gets your mind racing about possibilities. However, the more investable assets you actually have, the more dividend stocks start to look interesting. Consider that many dividend stocks are fairly safe from anything but the most catastrophic downturns. Stocks like McDonalds, and Coca Cola, for example. Those stocks can, and will, trade up and down, but if you don’t really plan on selling them anytime soon, they are sort of like corporate bonds where if you hold them until retirement (or just several years) chances are you will at least get all of your original investment back. What makes dividend stocks like Coca Cola so interesting in a growing portfolio is that they offer potential growth, plus the ability to outpace inflation, all while kicking off real income. Asset Allocation and Dividend Stocks As always, you shouldn’t be thinking about investing …

Federal Reserve Meeting Notes Meaning

August 18, 2021 by Finance Gourmet

The Federal Reserve meets once a quarter. After that meeting, they announce what, if any changes, they have made to the Fed’s interest rate policy. At the last meeting, there were no changes to the Federal Reserve’s interest rate targets. The Federal Reserve meeting notes refine the details of the main Fed announcement. Fed’s Meeting Notes Later, after they have been reviewed and made viewable for the public, the Fed releases the notes from it’s meeting. Financial analysts and market pundits then parse these notes for clues to the Fed’s thinking. This time, everyone is looking toward how the notes take about bond-buying tapering. What does this mean? The short version is that when the economy went so bad back during the Great Recession following the real estate market crash, the Fed had to do more than just cut interest rates to stabilize the economy. In my opinion, the Fed Chairman Ben Bernake saved the US economy from a hard recession by flooding the market with liquidity and saying that he would keep doing it for as long as it takes. Check out my Acorns review is Acorns Legit? Basically, as long as it takes, has never really come. One …

Procter & Gamble Stock Investment

August 8, 2021 by Finance Gourmet

Procter & Gamble, known mostly as PG, announced their new CEO and predicted solid earnings ahead even though most of the commodities used to make its wide variety of products are increasing in price. PG currently trades around $140 per share, which is the top of its V-shaped chart from the last 12 months. At this price PG offers a 2.46% annual dividend. This is way more than any of your bank accounts, and comes from a stock that really isn’t going anywhere, up or down, fast. Here is the best part. “Activist shareholder” Nelson Peltz is stepping down from the PG board after the company was able to refuse his proposals to break up the company and move its headquarters in a bid to make more money for himself and other short-term shareholders, without regard to the company’s future, or long-term shareholders. Although Peltz never prevailed on any of his major proposals, the fact that he is stepping down indicates that he is done trying to leverage his “large” position of stock into moves that might not be in the best long-term interests of the company. In all of this commotion, the company also named a new CEO. Jon …

House Poor Family Trades in For RV

July 31, 2021 by Finance Gourmet

While this isn’t my usual fare, this recent article on CNBC struck a chord with me, and not necessarily in a good way. Not a bad way either, but… odd? This article details the troubles of a family that had a $4,200 per month mortgage on their home in California. Couple that with a paragraph about $110,000 in student loans, and you’ve got yourself a clickbait ready, shareable personal finance article. Here is the weird part. The article, as all of these articles do, leaves out a lot of the details that likely make this a one-off article that isn’t shareable, or doable by pretty much anyone. For example, there was a months-long road trip that has now lasted over a year. That’s cool. Where does son Aiden (8) go to school? There’s also the part about how it “helps” that neither parent had traditional 9 to 5 jobs. You mean, it’s absolutely essential that they don’t have 9 to 5 jobs, or at least that they can be full-time remote. Lastly, while living in an RV cut their living expenses from that $4,200 mortgage, the RV that they make this lifestyle work in was apparently gifted after the initial …

Baker Hughes Stock Buyback from GE

July 30, 2021 by Finance Gourmet

So, weird little bit of financial news today. There are a couple of moving parts, so let’s get those out of the way first. Last summer in July 2020, GE announced that intended to “fully monetized” its stake in Baker Hughes over the next three years. Fully monetize is lingo for sell. Earlier this year, GE said it sold $1 billion worth of Baker Hughes during the second quarter. GE also announced that it planned to sell another $1.3 billion worth of BKR during the third quarter. That brings us up to date. Baker Hughes announces a $2 billion stock repurchase program In part, the idea behind the share buyback is that Baker Hughes is using some of the profits it has reaped recently thanks to a recovering economy and a carefully controlled quota by OPEC. Buying $2 billion worth of stock would essentially soak up the $2 billion that GE is selling right now. In a world where supply and demand are the only factors that impact a stock’s price, GE’s selling would be pushing the price of BKR down. You can kind of see that in the April to May dip in BKR. Assuming that BKR sold its …

Should I Pay Off My Mortgage Instead of Investing

October 3, 2022July 19, 2021 by Finance Gourmet

Figuring out what the best thing to do with your money can be difficult. Many people get caught up in all the possibilities. They wonder if it is wise to pay off your house mortgage. Should they pay off credit cards or put higher down payment on a new home? Should I pay off my car loan with a home equity loan? Is it better to pay off your house or keep the money? And, most of all, should I pay my house off at retirement? We have discussed if it is smart to pay off your home early before. Unless paying off your home still leaves you with a sizable amount of cashable assets, the answer usually is not what you think. For people without substantial assets remaining after paying off the mortgage, owning your house free and clear does nothing but trap a lot of money where you can’t get it, inside your house. Financial professionals call the equity in your home that you are not going to sell “dead equity.” Here is what to do with your assets before you pay off your mortgage, and, a quick look at understanding the pros and cons of a reverse …

Best High-Yield Investing Strategy

July 17, 2022July 17, 2021 by Finance Gourmet

The high-yield investing strategy is typically thought of as buying high-yield stocks. High-yield stocks are those stocks that pay a high dividend. The flaw in this strategy is that too often the focus is on yield to the exclusion of some really great investing opportunities that result in high-quality capital appreciation chances as well. Buying those stocks, however, is the best high yield investing strategy. High-yield investing is not the same thing as high-yield savings. If you are looking for information on high-yield savings accounts, try here. Smart High-Yield Investing Let’s start from the beginning. Your best investing strategy for long-term goals like retirement and college investing is a well-diversified portfolio tailored to your goals and risk tolerance. Only after your main portfolio is set up in this manner should you consider other investing strategies. So, go out, get 10% going into your 401k, put a nice hunk of change into your kids’ 529 college savings plans, and fill out your emergency savings. Only after those are taken care of should you be looking at high yield investing. But, if you are going to look at investing strategies, I love what I call smart, high yield. High-Yield with Capital Appreciation …

IRA Yearly Fee

November 2, 2021July 14, 2021 by Finance Gourmet

Update: You can easily get a free IRA account almost anywhere these days. If you are paying a custodial or maintenance fee, consider switching IRA custodians. Free IRA Companies: Fidelity Charles Schwab E-Trade SoFi Betterment Ameritrade Vanguard And tons of banks… If you do still have an annual IRA fee… Here it comes, the annual fee on your IRA account. Many brokerages charge their yearly IRA fee, or custodial fee, on their customer’s IRA account during the third quarter. If you take a positive view of the industry, they do it then because there are many other things that have to happen during the fourth quarter, tax reporting is at the top of that list, so the third quarter is less busy. If you take a less a less charitable view of the financial industry, then they do it in the third quarter because that is when financial clients are the least likely to be paying attention. It’s summer, you aren’t really thinking about rebalancing your investments, or closely reviewing your paperwork for taxes, and so on. In other words, the third quarter is the best time to slip in an annual fee unnoticed. Why Is There an Annual Fee …

Fed Stays Steady

June 22, 2021 by Finance Gourmet

The Federal Reserve left interest rates unchanged, BUT they are beginning to taper off their bond buying program which will soak up some of the cheap money floating around out there and gently tighten the money supply. This is a smart move that helps reduce inflationary pressures while at the same time avoiding strangling the recovery growing out of the pandemic recession.