Archive - April 2012

1
Will the Cost of Long-Term Care Destroy Your Nest Egg?
2
Facebook Valuation Problem’s Effect On Your 401(k)
3
Knowing if You Afford to be a Stay-At-Home Parent
4
How and When to Make Estimated Tax Payments
5
Will Interest Rates Ever Be Normal?

Will the Cost of Long-Term Care Destroy Your Nest Egg?

The possibility of long-term care costs financially wiping out a retirement nest egg is not minimal. Estimates of the likelihood of a 65-year-old needing long-term care vary between 35% and 55%, depending upon definitions. Further, the average cost for a semi-private room in a nursing home is about $75,000 a year. Assuming this cost increases by 4% per year, as many experts expect nursing home costs to rise faster than general inflation, the average cost will be $164,300 per year in 20 years, right as a person turning age 65 today will enter the high-incidence years for needing long-term care. …

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Facebook Valuation Problem’s Effect On Your 401(k)

Facebook experienced a profit decline and a revenue decline. See the Wall Street Journal article “Facebook Growth Slows as IPO Nears”. The past six quarters have seen profit decline slightly. For a company that is very young this is a huge part of its history during which profits have shrunk. Profits of $800 million annually using a PE ratio of 15 imply a valuation of $12 billion, yet the company’s shares may trade in the market at $100 billion, which would be a PE ratio of 125. I’m sorry, but being a cool, hip, happening tech company's stock …

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Knowing if You Afford to be a Stay-At-Home Parent

How do you decide if it makes sense to leave a job and become a stay-at-home parent? As a financial planner, I approach this topic strictly from the financial standpoint – I’m NOT saying it’s better be a stay-at-home Mom and I’m NOT saying it’s better to use child care and go to work.

For the record, I’ve been both a stay-at-home Mom and a working parent. Any parent will tell you being a stay-at-home IS a job – it’s just not a paid job.

What prompts me to look at this topic is a recent CNN Money article (4/18/12) …

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How and When to Make Estimated Tax Payments

If your income, or part of your income, is from a source other than an employer who provides you with a W2 and therefore withholds taxes on your behalf through the year, you may need to make estimated tax payments.  There are ways around this, such as having tax withheld from your pension or Social Security payments.  But for some folks, estimated tax payments are the way to get your tax paid through the year.

If your only income for the year is from withdrawals from an IRA, you don’t need to make quarterly payments, you can wait until the …

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Will Interest Rates Ever Be Normal?

Interest rates are at historical lows and have been low for a long time. Last night Janet Yellen, Federal Reserve Vice-Chair, said rates should stay near zero until late 2014. The WSJ quoted her: “Some of the Fed's internal economic models, in fact, suggested rates should stay low for even longer than planned, she noted.” Numerous bearish economists have forecasted the economy will remain weak (which means low interest rates) until 2016 or 2018 or even 2023. This reminds me of the concept that it takes years to recover from a burned down home but only an hour for …

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