GMB Ep #75: The Biden Proposal to Raise Long Term Capital Gains Rates & Eliminate the Step Up In Basis

“Animal spirits” is a term coined by the celebrated economist John Maynard Keynes, which describes the financial decision-making behaviors of people in times of uncertainty. The behavior of animal spirits has a clear relationship with consumer confidence. In today’s episode, Grant dives into how we can measure animal spirits and consumer confidence and what these concepts mean for the financial markets, our lifestyles, and portfolios.

Show Notes

[01:26] New Tax Plan – Grant reviews some of the key goals of President Biden’s new tax plan and what they mean for the general public and investors.

[05:32] Long-term Capital Gains – How long-term capital gains work, how they’re different from their short-term counterparts, and how taxation comes into play.

[08:53] Proposed Rates – Grant reviews the new tax rates proposed in President Biden’s tax plan and new planning opportunities that come with the new changes.

[13:48] Selling a Business – Selling a business is one of the instances where a business owner can end up paying substantial amounts in tax according to the proposed tax rates. Grant shares his take on How business owners can work around this.

[18:30] Step Up in Basis – Step up in basis is a tool widely used by financial planners to minimize the tax impact, and President Biden’s new proposal substantially limits this opportunity. Grant shares his thoughts on how we can adapt to these proposed changes.

[25:47] Estate Planning – How the elimination of step up in basis affects estate planning and how to minimize the tax impact for people who inherit assets.

Resources

Reviewing the Biden Tax Plan
www.abovethecanopy.us/reviewing-the-biden-tax-plan/

GMB Ep #74: Animal Spirits & Consumer Confidence

Show Notes

[01:03] Background – Grant reviews how the term “animal spirits” was coined, the historical background of it, and what constitutes the concept of animal spirits.

[05:19] Consumer Confidence Index – How consumer confidence can be quantified with an index, how it reflects the economic impact of global events, and what it can tell us about the status of the economy.

[10:00] Mergers & Acquisitions – In the last few months, there’s been a big surge in mergers and acquisitions. Grant shares his thoughts on the reason for this surge and how this trend relates to animal spirits.

[15:52] Other Examples – Grant reviews some of the other trends in the economy that relates to animal spirits, such as non-fungible tokens and cryptocurrencies.

[18:15] Consumer Confidence and Predictions – High consumer confidence is a clear indicator of good economic growth. Grant shares his thoughts on what the current status of consumer confidence tells us about the next few months.

[22:22] Negative Possibilities – Grant shares his take on what challenges we may have to face if the economic rebound does not go as expected.

Resources

Understanding the Consumer Confidence Index:
investopedia.com/insights/understanding-consumer-confidence-index

Animal Spirits:
investopedia.com/terms/a/animal-spirits.asp

Market Update: Q2 2021

Even though the global stock and bond markets feel relatively calm as I write this, there’s been a whole heck of a lot that happened in Q1. In no particular order, we saw:

A mob breach the capitol building
The entire GameStop saga
Virtually all crypto currencies post massive gains
A $1.9 trillion stimulus package passed
U.S. interest rates spike
An NFT (piece of digital artwork) sell for over $69 million

Perhaps my senses have dulled a bit over the last year, because that’s a whopper of a list for feeling relatively calm.

We are at a crossroads in the financial markets right now. Stock prices continue to climb higher and break records, as investors have priced in a substantial economic recovery over the coming 18-24 months. If the global economy is able to deliver that rebound the march upward should continue. But any misstep or hiccup could send us into correction territory at the drop of a hat.

Here’s this quarter’s market review.

Continue reading→

GMB Ep #73: The Few Circumstances Where Variable Annuities Make a Lot of Sense

Variable annuities are a set of commonly offered insurance products that promise consumers a consistent income stream. In general, these products tend to become more beneficial to insurance companies and representatives who sell these products rather than consumers buying them. However, in recent years insurance companies have started to offer products that may be more consumer friendly. Throughout today’s episode, we dive deep into what variable annuities are, how they’re structured, and some of the scenarios where you might want to consider them.

Show Notes

[01:07] Background – How professionals in the financial planning and insurance industries view variable annuities and why there are different perspectives on the integrity of the insurance-based investment solutions.

[05:23] Annuities – Different configurations of annuities and how the returns vary according to the type of investment.

[11:23] Understanding Variable Annuities – Grant reviews what variable annuities are, how they work, and why Grant isn’t a big fan of variable annuities.

[16:45] Features and Fees – Over the years, Grant has reviewed lots of annuity policies. He dives into the most common types of fees insurance companies charge their customers in exchange for various features in the policies and some of the issues associated with the fees and commissions.

[22:13] New Developments – In recent years insurance companies have started making adjustments and improvements to their products. Grant talks about some of these updates and how they address the issues from older policies.

[25:36] Reasonable Options – Grant dives into some of the scenarios where obtaining a variable annuities policy may make sense to a consumer.

Resources:

How to Analyze a Variable Annuity

GMB Ep #72: Here’s an Opportunity to Pay Less For Health Insurance

State exchange programs for health insurance are one of the provisions introduced in the Affordable Care Act back in 2010. Under this provision, the federal government may subsidize some of your insurance premiums if your income is low enough. The new stimulus package passed by President Biden extends this provision to allow more people to reduce the amount they pay out of pocket for insurance premiums. In today’s episode, Grant covers how this legislation works, who qualifies for these benefits, how and when to enroll, and things you should consider before switching from your current health insurance plan.

Show Notes

[02:47] The Legislation – Grant reviews the legislation that facilitates this opportunity and the motive behind passing this law.

[04:03] State Exchange – How the state exchange program works, criteria for qualifications, and how taxes come into play when you receive the benefits of this.

[10:02] New Updates – Grant reviews the changes that have been added to this legislation with the most recent stimulus package and some of the planning opportunities that come with the new changes.

[13:43] Breaking Down the Math – Grant explains a couple of examples of the premium subsidies and how much money you might save by utilizing this opportunity.

[16:53] Enrollment – Gant reviews the special window for enrolling in this program that expires on May 15 and why you should consider taking advantage of this opportunity.

[20:46] Deciding Whether to Enroll for Exchange Policies – Grant shares his take on a few things to consider when deciding whether it’s a good idea to obtain a policy under this program based on your current healthcare plan and some other factors.

Resources

Ep # 68 – Dissecting the New Stimulus Checks & Recovery Legislation: The American Rescue Plan Act of 2021

GMB Ep #71: Why Robinhood Needs More Oversight

In recent years, the online trading platform Robinhood has been gaining popularity among typically younger and novice investors, mainly because they have no minimums or commissions. However, there are some things about the way Robinhood operates that are not always in the best interests of the users. In this episode, Grant reviews how this brokerage firm is set up, how they make money, and what you should keep in mind if you’re trading on Robinhood.

Show Notes

[01:37] Background – Robinhood’s origin story and how it forced many other brokerage firms to drop commissions to zero.

[04:39] Day Trading Mishaps – Grant reviews one of the horror stories related to day trading on Robinhood, where one investor ended up getting a massive tax bill because they didn’t understand the rules around trading.

[08:09] Wash-Sale Rule – The IRS has set up a rule related to wash sales that get triggered when you trade frequently. Grant dives into how this rule can lead to massive tax bills for day traders on Robinhood.

[12:24] How Robinhood Makes Money – Grant reviews how Robinhood’s commission-free business model works, how it differs from a traditional brokerage firm, and one revenue source that put Robinhood under scrutiny in the investor community.

[22:56] Unnecessary Trading – Some of Robinhood’s features are designed to encourage users to make more transactions. Grant explains why this practice does not work in the best interests of Robinhood users.

[29:47] Strategies for Robinhood Users – Grant shares his take on some of the strategies Robinhood users could implement to build a robust investment portfolio.

Resources

Episode #63 – Anatomy of a Short Squeeze: GameStop FAQs

GMB Ep #70: Real Estate Syndication With Anthony Scandariato

A real estate syndication is essentially a partnership between a set of limited partners who pool their money together to purchase a piece of real estate they cannot afford on their own. This week on Grow Money Business we have a distinguished guest who has been working on real estate syndications for quite a while. Anthony Scandariato, co-founder and managing principal of Red Knight Properties, joins us today to talk about what you need to know before investing in a real estate syndication.

Show Notes

[02:42] Introduction – What real estate syndication is, how it differs from property management, and available opportunities for investors.

[07:02] Legal Background – Rules, regulations, limitations, and liabilities associated with real estate syndicates.

[10:33] Lifecycle of Investment – The process of setting up a real estate syndication and getting into deals with investors.

[14:54] Sourcing Properties – Anthony talks about his process of finding properties, acquiring them, and preparing for business.

[20:35] Managing Properties – Anthony shares his thoughts on the ideal way to manage the properties and working with tenants to make smooth rent adjustments.

[24:02] Communication with Investors – How general partners maintain the relationship with investors in terms of cash flow, reporting, and profit-sharing.

[27:31] 1031 Exchange – Anthony shares his take on the purpose of the 1031 exchange and why it should not be repealed.

Resources

Discovering Multifamily Podcast – Real Estate For Medical Professionals With Grant Bledsoe

Connect with Anthony

Episode #69: Interest Rates Are Rising….Does That Mean You Should Adjust Your Bond Allocation?

The Federal Reserve recently announced that they are going to maintain very low short-term interest rates for bonds over the next couple of years. On the other hand, long-term interest rates seem to be rising in recent weeks. We dedicated this week’s episode to reviewing how a savvy investor may respond to these developments. Throughout the episode, we discuss how bonds work, the risks associated with bonds, interest rates, why bonds are a crucial element of a healthy portfolio, and more. Stay tuned until the end of the episode, where Grant talks about why having non-US-denominated bonds could be beneficial to you.Continue reading→

Episode #68: Dissecting the New Stimulus Checks & Recovery Legislation: The American Rescue Plan Act of 2021

The American Rescue Plan Act of 2021 was signed into law on March 11 to help the United States recover from the economic impact of the COVID-19 pandemic. This new legislation includes direct financial payments, extended unemployment benefits, expanded child tax credit, and numerous other provisions. Throughout this episode, Grant reviews several key provisions of the American Rescue Plan Act and what they mean for individuals and businesses.Continue reading→

Episode #67: How & Why to Employ Your Kids In Your Small Business

This week on Grow Money Business we talk about a powerful long-term tax planning opportunity available to business owners. Employing your kids in your business gives you and your kids numerous benefits in terms of taxation and retirement savings. Throughout this episode, Grant dives into what these benefits are, how you can contribute to your kids’ retirement savings, and some tax planning opportunities related to employing your kids.

We’re planning to post another mailbag episode in the next few weeks. If you have specific questions you’d like Grant to answer in an upcoming episode, visit growmoneybusiness.com, and drop your questions in the Mailbag section.Continue reading→