A Golden Opportunity for a Scam

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Dear Rich Lifer,

If a rising tide floats all boats, what do rising gold prices get you?

Con artists…a lot of them!

With talk of a looming recession, the price of gold has risen to a level we haven’t seen in over five years.

And with climbing gold prices, we’re seeing more and more con artists crawl out of the woodwork.

A U.S. Senate Special Committee on Aging report found that over 10,000 Americans have been the victims of precious metal cons, with losses amounting to $300 million.

The stories are tragic, with some couples losing their entire life savings to the scams.

Con artists will do anything to get your money. From ads claiming gold prices below market value, to bait-and-switch tactics, and overcharging.

But have you ever wondered why gold attracts so many bad characters?

The Largest Gold “Scam” in History

Part of the reason could stem from the fact that gold as an investment was illegal for 42 years.

Executive Order 6102 — often considered the largest gold “scam” in history — was signed in 1933, by President Franklin Roosevelt, “forbidding the Hoarding of Gold Coin, Gold Bullion, and Gold Certificates” by U.S. citizens.

This led to a massive seizure of gold from safety deposit boxes around the country.

Some U.S. citizens were lucky and able to transfer their gold to countries like Switzerland, but others had to take the $20.67 per ounce offered by the government in exchange for their gold.

The gold prohibition lasted until 1975. During this time the black market for precious metals grew rapidly and when Uncle Sam finally re-legalized gold, con artists took advantage.

The gold prohibition also led to a patchwork regulatory environment that lasted decades. The Securities and Exchange Commission said precious metals weren’t securities, and thus did not fall under its domain.

The Commodity and Futures Trading Commission had jurisdiction over some gold-selling arrangements, but not others.

Although the CFTC now has clear jurisdiction, there are still several exemptions that make enforcement tricky. That’s why today you see a lot of gold fraud scams being exposed through a state attorney general or financial regulator rather than a federal agency.

Why Is Gold So Attractive to Scammers?

There’s something about the yellow metal that makes it easy to pull the wool over the eyes of even relatively sophisticated investors. Probably due to the fact there are so many ways you can pitch it.

If you don’t want to buy gold bullion, you can buy gold “collector” coins. If you don’t like gold coins, you can invest in a gold mine. Scam artists can spin it any which way they want to suit their motives.

Now I’m not saying you shouldn’t invest in gold or that the aforementioned are illegitimate in any way. I’m just warning you that given the current climate, you need to be extra cautious.

So here are my five gold scams to watch out for:

Scam 1: The Bait-and-Switch

A common ploy is for fraudsters to lie about the condition of a gold coin. MS-70 is a “mint state” coin that has never been handled.

Con artists will try to sell you a mint condition coin and then swap it for a lesser grade coin hoping you won’t notice. For instance, a 2002-P $25 half oz. Gold Eagle is worth $857 at a grade of MS-65 — really good condition, but not perfect.

MS-70 for the same coin is worth $1,650. Inexperienced coin buyers might not be able to tell the difference, so they end up overpaying hundreds of dollars.

If you’re buying gold coins always check the grade of coins with a third party before buying. Reputable dealers will have no issue with third-party appraisal. And if they do, that’s a sign you should shop elsewhere.

Scam 2: Lipstick on a Pig

Another scam you’ll run into with gold coins is grading certificates and fancy plastic casings. Fraudsters will try to trick you with inferior grade coins by hiding them behind layers of plastic or sticking them to some kind of ornamental holder.

They might even go as far as selling you gold-copper alloy if they think they can get away with it. The fix here is to steer clear of collectors’ items and gold coins in fancy packages. Serious collectors and investors generally don’t care whether their gold coins are displayed in nice cases or not.

Scam 3: The Salomon Brothers Index

If the reason you’re buying gold is to make a decent return or hedge against inflation, beware of this next scam. Unscrupulous dealers like to reference the Salomon Brothers Index to make it seem like you’ll get rich quick if you buy now.

The annual index, was compiled by the New York investment bank Salomon Brothers, and often showed appreciation of 12% to 25% a year. The truth is the Salomon Brothers index was based on a list of 20 very rare coins.

The Gold Eagles you find at your local coin shop are more common than you know and don’t appreciate at nearly the same rate. So be realistic in your expectations for returns. Don’t let scammers pressure you into buying under the guise that what you’re buying is going to be worth a lot more in the future.

Scam 4: The Empty Safe

While it might seem inconvenient to store your own gold, or downright foolish if there’s a chance someone robs you, the alternative is you place your gold in the trust of someone else.

Shady dealers will prey off this fear by offering to store your gold in escrow for a small fee. The problem is these dealers don’t actually have any gold to sell you. They’re essentially charging you a storage fee for an empty safe.

Unless you find a dealer that can store your gold whom you absolutely trust, you’ll have to take the necessary steps to be able to store your own gold. Like any investment, gold carries its share of risk. Storage and theft is part of that risk you need to be willing to take on.

Scam 5: Swiss Procedure

Have you ever received an email, out of the blue, asking for your help to arrange a huge gold deal?

It’s surprising this works but it must, because this type of scam is still prevalent today.

The first question you need to ask is why would anyone need my help? If someone is mining gold in Afrifa or south-east Asia, why would they be contacting you.

Ignore any email that talks about “Swiss procedure,” or “release payments,” or “5,000 metric tonnes.” It’s all fake news.

Done right, investing in gold can be safe, lucrative, and fun. Just be overly cautious if someone is trying to sell you something that seems too good to be true.

To a richer life,

Nilus Mattive

Nilus Mattive

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Winter is Coming

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Dear Rich Lifer,

October has come and gone: the leaves have changed, Halloween is behind us, and winter is speedily approaching. If you happen to live, or own a home in an area that is prone to snow, ice, and freezing temperatures in the winter, then it is time to start preparing your home for the coming cold.

While winterizing your home may not be the most exciting task, doing so is crucial. Many of us tend to overlook the importance of winter-proofing our homes, and you may be surprised to learn how much you can save in the long run by taking a few simple steps.

Today, I will share with you 5 painless things you can do to winter-proof your home and, by doing so, save money.

Protect Your Outdoor Faucets

Leaving outdoor water sources on and exposed to the elements is a surefire way to invite frozen, bursting pipes and expensive repairs. While taking care of them may seem like an obvious step, it is one that many forget about as seasons change and temperatures drop.

You can shut off your home’s internal water valve so that no water is pooling in faucets and pipes, and open all of your external taps to make sure they are drained completely. Once you’ve emptied all your taps, pipes and garden hoses, if you live in a particularly frigid northern state, consider using insulated faucet-covers to provide some further protection.

You can find good quality covers from stores like Walmart or Home Depot for well under twenty dollars a piece that can be reused year after year. Which is much cheaper the $280 average price you would have to pay to fix just a single foot of water pipe damaged from water freezing in your pipes.

As Benjamin Franklin said, “An ounce of prevention is worth a pound of cure.”

Clean Out Your Gutters

Whether you choose to do it yourself, borrow the services of a friend, neighbor, or family member, or you choose to hire a professional, cleaning out your gutters is crucial to prolonging the life of your roof.

By the time winter rolls around, your gutters have collected at 9 months worth of leaves, twigs, debris and maybe even a few frisbees, depending on your neighborhood. Failing to clean out your gutters before ice and snowfall grace your with their frosty presence creates a significant amount of added weight and stress on your gutters and roof.

That added weight can damage your roof over time and the debris left in gutters can make it nearly impossible for melting snow and ice to effectively drain, rendering your gutters essentially useless. Take care of this task now, before you end up paying to reattach or replace collapsed gutters.

Take Care of Your Furnace

Having a professional come in to service your furnace or gas heater may seem like an unnecessary expense, but in reality, you may be saving yourself from waking up with icicles hanging from your ears and a whammy of a repair bill in your hand.

Most companies charge under $100 to service a furnace or gas heater, and may even clean out your ducts for you (more on that in a minute). Regularly servicing your furnace will significantly increase the life and efficiency of your appliance.

And I’m not sure about you, but I’d much rather pay to have my furnace serviced than pay for a new one which will run you $5,000 for just the furnace. Installation and fees sold separately.

While you’re taking care of your furnace you should also…

Clean Your Air Filters and Ducts

If you’ve never taken the time to inspect your vents you may be surprised by the amount of dust, dirt, and allergens that gather inside over time.

If you don’t clean out your vents before turning on your heat, it means all that gunk will now be sent through the air and into your home, food, and lungs.

Cleaning out your vents and ducts before turning on your heat is not only more sanitary, it’s better for your health.

While you’re at it, you should also replace your furnace’s air filter to ensure your heated air is as clean as can be.

Seal Cracks and Gaps

Did you know that using a draft stopper could potentially save you 15% or more on your heating bill? If your doors and windows are far from new, they waste more energy than you may realize.

Placing a draft stopper in front of outside-connecting doors is a cheap and easy way to keep the heat inside where it belongs.

You should also check your windows to make sure you can’t feel a draft. Weather stripping on windows may need to be replaced, or if you fancy yourself a bit of a handyman, you can use caulk to seal a small gap yourself. So if you feel a draft, make sure you find the source.

While you’re walking around feeling doors and windows, you might as well inspect your outlets too. Outlets that are on your home’s outer walls should be insulated, but if the builders of your home cut corners, they may not be! If you feel a draft around your outlets, open them up and see if they are missing insulation. Fortunately, if they are, this is a cheap and easy fix.

While winter-proofing your home may seem like just another thing to add to an endless to-do list, it is a chore that has the potential to make your life significantly easier, and save you quite a bit of money on your heating bill this winter. Set yourself up for a budget-friendly, relaxing, and ‘no-surprises’ season, and winterize your home today!

To a richer life,

Nilus Mattive

Nilus Mattive

The post Winter is Coming appeared first on Daily Reckoning.

Fascinating Frugal Fitness

This post Fascinating Frugal Fitness appeared first on Daily Reckoning.

Dear Rich Lifer,

When people start thinking about saving money, they often look for areas to cut costs, and gym memberships are usually one of the first line items to get cut.

It makes perfect sense – with some gyms charging upwards of $200 per month, it just doesn’t work out to be worth the price tag for most people.

On the other hand, exercise is important, and it becomes evenmore important as we age.

After all, people who remain active tend to have great health benefits – things like better bone density, improved flexibility, and lower incidences of diabetes and heart disease.

And it’s not just the physical benefits, there are mental health benefits, too. Per the CDC, exercising in our later years has been linked to a reduction in “symptoms of anxiety and depression and fosters improvements in mood and feelings of well-being.”

In other words, even though gyms and fancy exercise equipment might be costly, we really need to find ways to stay active and fit.

That unfortunately leaves many feeling like they have to pony up $200 per month to stay healthy and mentally fit.

Luckily, there are tons of programs out there that will help you get your exercise in without breaking the bank.

Here are a few of my favorites:

Exercising At Home

Load Up On Multipurpose Equipment

Instead of splashing out and spending five grand or more on one of those big do-it-all weight machines, look for quality multi-purpose equipment you can score on the cheap.

Things like kettlebells, exercise balls, and adjustable-weight dumbbells can be used for a variety of exercises, and they can usually be purchased for $50 or less.

You should also consider purchasing a yoga mat, thera-bands, a foam roller, and a Bosu ball. They will make great additions to your home gym set up.

Turn On Your TV

Remember back in the day how people would put a check in the mail to order a tape of the latest exercise program from Jane Fonda or Billy Blanks?

Updated versions of those classic programs are still available, and getting access to them is easier than ever, thanks to smart TVs and streaming services. Popular services like Beachbody on Demand are less than $100 for the whole year. Depending on your provider, you might already have access to some fitness channels for free!

For example, if you’re an Amazon Prime member, you already have access to full body workouts, ab workouts, and HIIT (High Intensity Interval Training) programs at no additional charge.

If you don’t have any of these channels, and you still don’t want to spend a dime, you’re in luck! There are hundreds of fitness channels available on YouTube, so you can start working out any time you want without any additional cost.

Fit It In With Apps

Let’s say it’s been a while since you worked out and you’re feeling guilty but you just don’t have enough time to get in a good workout, even with your home gym.

Apps like 7 Minute Workout could be a great addition for you. This free app is the #1 fitness app in 127 countries – and for good reason. It guides you through a full body workout in under ten minutes, there are text and video descriptions of every exercise so there’s no confusion – and again, it’s free!

If 7 Minute Workout doesn’t suit your fancy, there are tons of other free workout apps you can try out until you find one that you like.

Exercising Out And About

Get Into Running

Running, jogging, and even walking are wonderful exercises for everyone, and you can’t beat the $0 price tag. If you do choose to take up running or walking seriously, you should consider spending money on a good pair of shoes and you’ll be good to go for miles and miles.

Community Yoga Classes

If yoga is more your speed, look into local events and classes. Many communities and municipalities offer yoga in the park on a regular basis. This is a great way to get outside, meet new people, and improve your mental, physical, and spiritual fitness.

Swimming, Tennis, and Basketball

You might not have a pool or court of your own, but that’s ok!

Look around your community. Many subdivisions have shared basketball and tennis courts, and some have shared pools, as well. If your community doesn’t have one, check out the neighboring subdivisions. Some of them will have these amenities and you might be able to access them for a small fee, too.

Fitness Trails

If you enjoy communing with nature while you get fit, look at your local and state parks. Many parks have great hiking trails, and some parks even have extra fitness goodies installed, too.

At my local parks, I’ve seen everything from rock walls, high-quality resistance equipment and even a suggested exercise parcourses.

Your neighborhood park probably has these hidden gems, too, and even if they don’t? A walk in nature beats just sitting around the house any day!

Shop Around

Even with all these tips, some people are simply more motivated to work out and stay in shape when they are surrounded by other people doing the same. So if you are going to stick with the gym, keep in mind, there are gyms, and then there are mega-gyms.

These “mega-gyms” are massive buildings that often have workout floors and classes, cafes and even spas inside, but with all that luxury comes a mega price tag. If you’re the type to want a luxurious experience, this might be the right choice for you, but if you want to just get in, work out, and move on with your life, there’s really no sense in paying for all the extra bells and whistles.

Instead of signing up at the flashiest gym with the best commercials, shop around. You might find something smaller, less expensive and ultimately perfect for you.

If you do decide the mega-gym is more your speed, wait until January to join. These centers of all things health and wellness will often drop prices and waive enrollment fees just to capitalize on the New Year’s Resolution crowd, and these savings are significant enough to be worth the wait.

With all of these ways to save while you get fit, there’s practically no reason to turn into a couch potato in your retirement.

Get out there, get fit, and look and feel as good as you possibly can!

To a richer life,

Nilus Mattive

Nilus Mattive

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A Special Message from Brian Rose

This post A Special Message from Brian Rose appeared first on Daily Reckoning.

Editor’s Note:

Today, I want to bring you a special message from Brian Rose.

Brian is a colleague of mine. He worked as a banker and trader in London and on Wall Street for over a decade, but found the “Wall Street” life hollow and unfulfilling. Instead, Brian found purpose in helping people transform their lives and achieve their full potential. He now hosts the London Real, and interviews personalities from all walks of life all over the world.

Our mission at the Rich Life Letter is to bring you information that can help you grow your wealth and live better. As you read what Brian has to say, I think you’ll find, as I did, his vision aligns with both  missions of our newsletter. Read on and I’m sure you’ll agree…

Brian RoseHello Rich Lifer,

If you ask ten successful people what sets them apart, you’ll probably get ten different answers.

They’ll probably say things like education, hard work, setting goals, being in the right place at the right time…

And to a certain extent, all of these things are mostly true. Sure, there will be some people who don’t have much of an education, but they’re a hell of a hard worker. There will be someone who didn’t really have a goal in mind, but they fell into their field and ended up loving it.

So those elements of success are important, but not universal.

But there’s one thing that they do all have in common. That invisible but essential element is…

Confidence.

Yes, it’s that simple. They have the confidence to go the extra mile, to shake the hand of the person they’re dying to meet, to introduce themselves to a crowd, to stand up and say who they are and what they do and why this matters.

It all sounds so simple when it’s in black and white, but in practice? Most people don’t live with this kind of confidence day to day.

Instead, most people stay in their lane. They don’t introduce themselves to new people. They don’t ask for a raise or speak up in meetings, and when they have an idea that would mean going their own way? They shut it down before even giving it a second’s thought.

Yes, confidence is what “separates the men from the boys,” as they say.

So why is it so rare?

And if you don’t have it, can you develop it?

Is Confidence Something You Were Born With?

Not too long ago, I had Priyanka Chopra into London Real and I asked her these exact questions.

Priyanka is a world-famous Indian actress, singer, philanthropist, and film producer. She originally planned to become an engineer, but after her mother sent her photo to the Miss India pageant on a whim, she took the pageant world by storm and went on to win Miss World instead.

With a history like this, you’d think Priyanka was always a woman with take-no-prisoners confidence, right?

Wrong. She describes her young years as awkward and gawky, and details an experience with a bully as a reason she decided to leave American high school – she didn’t want to be tormented, so she no longer wanted to be seen.

How’d she make the leap from victim to victor?

It goes right back to what we’re talking about. Confidence.

When Priyanka saw the opportunities in front of her, she decided she had to choose between staying shy and comfortable and forcing herself to be confident. As you can guess, she decided she had to “fake it until she made it” and the rest, as they say, is history.

Now, Priyanka is as cool, calm, and collected as she seems to be. With all sorts of credits and accolades under her belt, she is as confident as she once portrayed herself to be.

Nothing Comes Easy. It’s a Journey

If you’re struggling to break through to the next level yourself, you might be wondering, “How is that possible? ‘Fake it ‘til you make it’ is way too simplistic – how do I actually become confident enough to attain the things I want from life?”

And the answer is it’s a journey, and it’s different for everyone, but here are some specific practices you can try while you’re on that journey.

Dress To Impress

It’s hard to feel like a bigshot in pajamas – or even in a T-shirt and jeans. If you want to feel important, and you have this idea of an important guy in a three piece suit, guess what you should wear when you want to feel powerful and in charge? You got it – it’s time to break out your best suit. From the moment you look the part, there will be a subtle shift in your subconscious. You’ll start to feel the part, too.

Here’s a hint – why do you think I wear suits on the set on London Real? Yes, you got it – it’s because that’s how I want to show up for my guests and my viewers. I show them I value their presence with my attire. You can use this trick, too.

Flip Your Thinking

When you feel unconfident, it’s easy to have a negative inner monologue. No matter what you want to achieve, when you feel like it’s not attainable for you, it’s very likely that you’ll stack up reasons why.

Everything from, “I’m bad at math” to “I’m terrible at public speaking. Why would anyone pick me?” will run through your head. The key to ditching the negativity behind these thoughts is to turn them around. Even if you don’t have skills in a certain area, you can be honest AND kind with yourself. Instead of, “I’m bad at math,” try “Math is an area I’m trying to improve in.”

Instead of hating yourself for struggling with public speaking, try, “I prefer written communications, so instead of making speeches, I can wow people with my written communications instead.”

Take Small Steps

Know that progress is progress – no matter how small. When you’re trying to develop a new way of life, it can seem overwhelming. When you’re trying to be more organized, for example – that encompasses a lot of things. Find the first step in that process – maybe it’s making your bed everyday, maybe it’s answering all emails within the first 48 hours – and then commit to that step and only that step.

Once you’ve mastered it, let the momentum of success carry you forward into the next step… and the next… and the one after that, too.

If you can master your outward appearance, your inner monologue, and your daily habits, you won’t be faking confidence anymore. You’ll be a paragon of accomplishment. Just remember – none of this is hard, and no one is born with it.

It’s a skill you can and should develop for yourself. Once you do, there’s nothing that can stand in your way.

To a richer life,

Brian Rose

Brian Rose
Editor, Brian Rose Uncensored

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Would You Like $100 Today, or $110 Tomorrow?

This post Would You Like $100 Today, or $110 Tomorrow? appeared first on Daily Reckoning.

Dear Rich Lifer,

Imagine you’re offered two choices:

Get $100 today or $110 tomorrow.

Statistically speaking, most people would choose to take the $100 today.

But, if you reframe this scenario and offer someone $100 in one year and $110 in one year and one day from now, the majority of people will wait the extra day for the $10.

This makes absolutely no sense.

Why do most people choose a bigger reward when the wait is longer versus a smaller reward when the wait is shorter?

The answer has to do with a cognitive bias behavioral economists call hyperbolic discounting.

Hyperbolic What?

Hyperbolic discounting essentially states that people tend to choose smaller-sooner rewards over larger-later rewards as the delay occurs sooner rather than later in time.

Or, put another way, we prefer immediate rewards in the short term. But, we’re more patient and wait for better rewards in the long term.

Then why is saving for retirement so hard?

The reason people struggle with saving for the long term is because most day-to-day decisions are competing with immediate rewards in the short term.

Do you go out for dinner tonight, or save that $50 so it will grow to 4x that amount when you retire?

The reason I bring this up is to show you what your brain is doing when you start to think about taking money out of your 401(k) early.

According to Fidelity, 1 in 3 investors have cashed out of their 401(k) before reaching age 59 and a half, often when changing jobs.

Most people considering cashing out early are doing so because of short term needs.

Maybe your car breaks down and you need an extra $10,000. Maybe you lose your job and you need to pay your mortgage.

Whatever the situation may be, taking money out of your 401(k) probably seems like your only option.

What Happens When You Withdraw Early?

Three things happen when you take money out of your 401(k) before you turn 59 and a half:

1) The IRS Takes 20%

The IRS usually requires automatic withholding of 20% of a 401(k) early withdrawal for taxes. So if you withdraw $10,000 in your 401(k) at age 50, you may only get back $8,000.

2) The IRS Will Penalize You 10%

If you withdraw money from your 401(k) before age 59 and a half, the IRS will hit you with a 10% penalty when you file your tax return.

3) It Could Mean a LOT Less Money Later

If you’re pulling money out when the market is down, you’re killing your chances of a rebound. It’s also erasing all the hard work and saving you did up until this point.

That’s why withdrawing early from a 401(k) is not an option in my opinion.

There are other ways to meet your short term financial needs without sacrificing your retirement nest egg…or at least not giving so much of it away to the government.

401(k) Loans

Rather than lose a portion of your investment account forever, some 401(k) plans offer loans that allow you to replace the money through payments deducted from your paycheck.

You’ll have to check with your plan provider and see if you’re eligible but a 401(k) loan is better than taking a withdrawal and incurring those aforementioned penalties.

Exceptions to the 10% Penalty

If you’re really stuck and it seems like tapping your 401(k) is the only option, before you do make sure you check to see if you qualify for any exceptions to the 10% early distribution penalty.

If your situation falls under the following conditions you are exempt from the 10% penalty:

  • You leave your job and are at least 55 years old
  • You have to divide your 401(k) in a divorce
  • You withdraw an amount less than is allowable as a medical expense deduction
  • You rolled the account over to another retirement plan (within a certain time).
  • You begin substantially equal periodic payments
  • The money paid an IRS levy
  • You overcontributed or were auto-enrolled in a 401(k) and want out (time limits apply).
  • Your withdrawal is related to a qualified domestic relations order
  • You die, and the account is paid to your beneficiary
  • You become disabled

Other exceptions to the 10% penalty are hardship distributions. In order to qualify, the IRS needs to decide whether “an immediate and heavy financial need,” is merited. This includes:

  • Medical bills for you, your spouse or dependents
  • Money to buy a house (if you’re a first time home buyer)
  • College tuition, fees, and room and board for you, your spouse or your dependents
  • Money to avoid foreclosure or eviction
  • Funeral expenses
  • Certain costs to repair damage to your home

Your employer’s plan administrator should be able to determine whether you qualify for a hardship distribution or not, and you’ll definitely need to explain why you can’t get the money elsewhere.

Withdrawals in all of these scenarios would only be subject to ordinary income taxes and not the additional 10% penalty.

But you have to make the withdrawal according to your 401(k) plan rules and have appropriate documentation.

The reason why early withdrawals can be so devastating is because you lose the potential future investment growth of that retirement money. 401(k) plans have annual contribution limits, so you can’t make up for a previous withdrawal later.

“Catching up” is almost impossible.

This is why it’s so important to consider the implications of your decision fully. Remember that your brain is wired to choose short term gratification over long term gain.

Do your best to override this thinking and make sure you protect your future self.

To a richer life,

Nilus Mattive

Nilus Mattive

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The Truth About the Dollar

This post The Truth About the Dollar appeared first on Daily Reckoning.

I’ve been to Italy four times, including my most recent trip two weeks ago. So it’s really interesting to look at the different foreign exchange rates in place at the time of my various visits.

Just as an example, on this most recent trip I was getting roughly 21% more for my money than the last time I visited four years ago. That makes a huge difference!

Of course, unless they’re frequent travelers, most people don’t really pay attention to how well the greenback is doing against other world currencies. And that’s a shame … especially if they invest.

A Strong Dollar

After the Fed cut rates for the third time this year, the greenback slipped a bit, but the dollar is still pretty darn strong relative to a basket of the world’s major currencies.

So it pays to look at how that affects different types of investments …

For starters, a strengthening dollar can have a big impact on gold, oil, and other commodities.

Now, there are a lot of forces driving gold’s price at any given point in time.

But pull up a chart of the yellow metal and you’ll see that the dollar’s strength typically keeps gold down.

Pull up a chart of oil, and you’ll often see the same basic pattern.

Again, there are all kinds of other factors at play in the oil market – everything from seasonal demand, to geopolitical developments.

But the point is that the greenback has direct – and clearly visible – impacts on various natural resource markets.

It also affects many U.S. stock investments that are unrelated to resources.

Foreign Money, U.S. Companies

A lot of people assume that currency exchange rates don’t matter a whole lot, especially if they stick to domestic stocks.

That’s not necessarily true.

When American companies sell their products abroad, they typically collect the money in foreign currencies then translate those sales back into U.S. dollars.

That means their results can end up getting crimped by unfavorable exchange rates unless they’re using futures or other hedges.

Therefore, foreign exchange rates can become a big theme during earnings reports.

That’s especially true for big multinational companies, some of which derive more revenue from overseas markets than they do domestically.

Just a few that come to mind based on 2018 numbers …

  • Apple Computer (63% of revenues from foreign markets)
  • General Electric (61%)
  • Johnson and Johnson (71%)
  • Intel (80%)

The list goes on and on.

Meanwhile, a stronger dollar also makes a substantial difference for anyone investing in FOREIGN companies.

First off, it affects the value of your holdings as they’re translated back into U.S. currency.

In addition, if your foreign shares pay out dividends, a stronger dollar also affects the value of those distributions in the same way it affects a U.S. company’s earnings – i.e. payments initially issued in other currencies become smaller distributions when they’re translated back into greenbacks.

If you’re holding for the long-term I wouldn’t worry all that much about this. And I still think it always makes sense to have some of your money invested in overseas investments, precisely because it can provide a nice hedge for times when the dollar is falling.

Keep One Eye Overseas

My overall point is that it pays to watch what’s happening in the foreign exchange market– whether you’re planning to leave the country or not.

Not only can you directly profit from moves in the forex (foreign exchange) market through various types of investments – everything from exchange-traded funds to futures.

But understanding what the dollar is doing – and what it’s likely to do going forward – also has big implications for the various companies you might be invested in as well. So even if you don’t directly invest in forex, keep an eye on the dollar. It’ll pay to do so in the long run.

To a richer life,

Nilus Mattive

Nilus Mattive

The post The Truth About the Dollar appeared first on Daily Reckoning.

Don’t Get Stuck With a Money Pit

This post Don’t Get Stuck With a Money Pit appeared first on Daily Reckoning.

Dear Rich Lifer,

Whether you’re a bright-eyed youngster just beginning the walk of adulthood, or a seasoned veteran of the world, basking in the joys of retirement, the home-buying process can be daunting.

Buying a home, even if you have done it in the past, requires an incredible amount of work.

Selecting a location, finding a house, filing all the appropriate paperwork with what feels like a dozen different agencies, selling your current house… It can be quite a chore.

Once you find a place that you find appealing, it’s easy to get so bogged down in numbers and paperwork that you never adequately look at the home you are consenting to purchase and take full responsibility for.

I’ll go over the small, but critical details you need to take notice of before you sit down and sign the bottom line and commit yourself to ownership of a new home.

Try It Before You Buy It

Many people feel uncomfortable getting down and dirty with a home during a walkthrough or open-house.

Don’t be!

If you are looking to purchase a home, you must explore every nook and cranny, even if it makes you feel or look a little odd to your realtor or other potential homebuyers. Buying a home is a commitment of unlike any other, and you need to make an educated decision and learn as much about the home as you can.

If you’ve ever watched the movie, “The Money Pit”, you’ll understand why! If you’ve never seen it and, and you want a good laugh, I would recommend renting it. Alright back to business.

Here are my top 5 suggestions for what to explore when walking through your potential new home:

The Outlet Test

Bring a small nightlight with you when touring a home that strikes your fancy.

Plug it in and test each and every outlet you can find. This will alert you of potential (and costly) electrical issues right off the bat! No one wants to go through the work of purchasing a home, unloading a ton of boxes, and committing to a new life, only to find out you can’t plug in your lamps or television.

While you’re at it, the outlet test is a great way to help you figure out if the home even has enough outlets, or if they are appropriately placed for your needs. Having too few outlets in a room can quickly determine that there is little option for creativity in the way you lay out your furniture.

Get Acquainted with Windows

It might seem odd to walk into a home that is not yet your own and open up and inspect all of the windows, but this is actually a key part to discovering the energy-efficiency of your (potential) new home.

Are windows completely stuck or difficult to open? Is there any damage to panes, screens, or casings? Do the windows close and lock securely?

Arguably most importantly, with the windows closed, can you feel a draft? Shockingly, windows are responsible for upwards of 30% of heating and cooling waste.

Obviously, energy inefficient windows waste energy. Energy wasted is money lost.

If you do notice that the windows are drafty or stick, it’s not the end of the world, but it’s certainly something that you should use in your negotiations before you sign on the dotted line.

Check out the Terrain

I strongly recommend walking the outside of the property, regardless of the weather. While it may be miserable, the rainier, the better for a home tour!

If it’s raining while you explore a potential new property, this will alert you of flooding or puddling concerns near the home. Even if you don’t specifically see any areas of concern, you should still ask your agent about flood or water damage history to the home.

Flood damage can be devastating and costly! While you’re looking at the property, take notice of the land you would have to maintain. Is it realistic for you to mow, or will you need to consider a lawn care service?

Will you be up to the task of shoveling driveways and sidewalks should you be moving to an area that experiences heavy snowfall?

Consider the Neighborhood

When you were young, and worried about raising a family, moving to a neighborhood filled with children may have been perfect for you! However, if you’re in search of your retirement home, the sounds that inevitably come with a child-filled neighborhood may not be music to your ears.

Consider what you’re looking for in a new neighborhood. Your neighbors, could have a big impact on your life in your new home, so don’t forget to think about them, even if you find yourself face-to-face with your dream home.

Consider your Timeline

Maybe you’ve always dreamed about owning a multi-level home with a gorgeous winding staircase. But if you’re looking at living in a home as long as your body allows you to, will those stairs still be practical down the road?

While many of us would rather ignore the future and enjoy living in the now, this is certainly not the best practice when it comes to purchasing a home.

Consider how long you’re realistically looking to live in the home. Consider your health and capabilities – it may be disheartening, but it is best to be practical when making such an expensive commitment.

Should An Inspector Take Care of All That?

You may be asking yourself: Doesn’t a home inspector take responsibility for finding problems with a house? Yes and no. You shouldn’t rely on a home inspector to locate all areas of concern.

Think about it: if you go to the doctor with a concern about pain, who is more invested in finding a cure? The doctor, who honestly doesn’t know how you feel, or you, the patient actually experiencing the pain?

Look, it may sound cynical, but when buying a home, you need to protect yourself. A home inspector is not committing themselves to living in your home: you are!

While an inspector will check out the basics and make sure appearances are up to snuff, most will only do a visual inspection. So before you have an inspector visit the home, you should have looked into everything yourself and if you notice anything or you have concerns you can point them out so the inspector, and they can inspect them with an expert eye.

So be sure to protect yourself: do as much research and ask as many questions as you can to make an informed decision about the place you plan on spending your golden years.

To a richer life,

Nilus Mattive

Nilus Mattive

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Make Your Money Last Forever With 2 Simple Rules

This post Make Your Money Last Forever With 2 Simple Rules appeared first on Daily Reckoning.

Nilus MattiveDear Rich Lifer,

You’re probably familiar with the ‘4 percent rule’ and ‘Multiply by 25’ rule.

If you haven’t heard of these rules, don’t worry! I’ll explain in second.

But first, I’m willing to bet that those of you who have heard of these rules are getting them confused.

Multiply by 25

The ‘Multiply by 25’ rule estimates how much money you need to retire worry free.

Here’s how it works: multiply your annual expenses by 25.

That’s it. Simple right?

For example: if you estimate your annual expenses in retirement will be $40,000, you will need $1 million saved in your retirement portfolio ($40,000 x 25 = $1mm).

If your lifestyle is a bit more extravagant and you spend $70,000 per year, you’ll need $1.75 million ($70,000 x 25 = $1.75mm).

Notice that this rule doesn’t take into account any other sources of retirement income, like Social Security, pensions, rental properties, etc.?

This is because the rule was created for early retirees, who likely won’t have access to Social Security or pension income until later.

Since you will likely have some form of guaranteed income if you’re already close to retirement age, you can easily adjust your annual expenses accordingly.

For example: if you expect to receive $20,000 from Social Security, your nest egg will only need to cover $50,000 in expenses (instead of $70,000). Your retirement goal would then be adjusted to $1.25 million ($50,000 x 25 = $1.25mm).

The ‘Multiply by 25’ rule also assumes your portfolio will generate a 4 percent return per year. It’s estimating that stocks will produce an average return of 7 percent per year.

If that 7% figure is accurate, and we assume inflation keeps pace at roughly 3 percent per year, then your return — after inflation — will be about 4 percent.

Then What is the 4 Percent Rule?

Where most people get confused is assuming the 4 percent rule is referring to the 4 percent return, like we just calculated.

But, the 4 percent rule is only telling you how much money you can safely withdraw once you’re retired, without dipping into your original investment principal.

Here’s how it works: the 4 percent rule states that you should withdraw 4 percent of your retirement portfolio in the first year, and continue withdrawing the same amount, adjusted for inflation, each year after that.

For example, if you retire with $1 million, then in your first year of retirement, you should withdraw $40,000 ($1mm x 0.04 = $40,000). The following year you withdraw the same amount, adjusted for inflation. If we assume 3 percent inflation, you withdraw $41,200 ($40,000 x 0.03 = $41,200).

Depending on how the stock market performed that year, your $41,200 might be worth more than 4 percent of your remaining portfolio or less. The good news is this rule of thumb has been tested over decades. William Bengen, who pioneered the 4 percent rule, tested 30-year spending rates against the historical returns of US stock and Treasury bonds.

Some years the markets went up and some years they went down, but the 4 percent rule takes this into account. As long as you withdraw a steady amount, plus inflation, you shouldn’t run out of money.

Bengen says this rule would have protected your annual income even during 30-year periods that included the Great Depression of the 1930s and Great Stagflation of the 1970s.

What Exactly is the Difference?

The ‘Multiply by 25’ rule estimates how much money you need to save to retire. The 4 percent rule estimates how much you can safely withdraw from that portfolio.

I’ve heard the 4 percent rule is risky

Some financial experts will tell you the 4 percent rule is too aggressive. And that you should be withdrawing 3 percent. They also believe that the ‘Multiply by 25’ rule should really be ‘Multiply by 33’.

There are three caveats to the 4 percent rule:

  1. It’s not guaranteed. Yes, it’s been tested multiple times and it works almost every time. But, a bad market in the first few years of retirement could make for trouble.
  1. Asset allocation matters. William Bergen says your allocation to stocks should be no less than 50 percent and closer to 75 percent.
  1. Don’t forget investment fees. If you invest with an advisor and you’re paying even one percent a year in fees, this can affect the 4 percent rule.

If you’re really worried about running out of money in retirement, then following the 3 percent rule and ‘Multiply by 33’ rule will give you a more conservative estimate. But, which one you choose to follow also depends on your unique situation, risk tolerance, and taxes — all of which I’ll save for another day.

To a richer life,

Nilus Mattive

Nilus Mattive

The post Make Your Money Last Forever With 2 Simple Rules appeared first on Daily Reckoning.

Put Away Your Scissors, the Future is NOW

This post Put Away Your Scissors, the Future is NOW appeared first on Daily Reckoning.

Dear Rich Lifer,

Sales, in-store financing, and even frequent customer discount programs are nothing new. Since the first proprietor hung the first shingle on the first store, there have been sellers looking for ways to entice people to purchase more from them.

What is new, is the host of savings and cash-back apps available on your laptop or smartphone.

With just a few clicks or taps, you can get the lowest prices, save money, and even build up a stash of cash back on all your purchases.

I’ve compiled a list of the best apps for you. Some are smartphone apps and others are plug-ins for your internet browser. They’re all user friendly, and they all promise one thing: more money in your pocket.

Ibotta
Ibotta is an app for your phone that allows users to redeem coupons, earn cash back, and participate in rewards programs. It even lets you stack offers to get the biggest savings.

You can also earn cash rewards for every user you refer. This app is free, and its very user friendly. All you have to do after you make a purchase is to scan your receipt and let Ibotta do the work.

Dosh
Dosh is also a smartphone app, and it may be even easier to use than Ibotta. With this app, once you’re set up, you earn cash back at participating retailers. Best of all, you don’t even have to lift a finger – the cash back is automatic!

This works both online and in person, and you can earn cash back on travel, too. Like many of the others on this list, Dosh has a referral program, so if you like it, be sure to share it with family and friends.

Honey
Honey is an extension you install on your favorite browser (like Google Chrome, Firefox, and Safari). With this extension, you’ll be able to use automatic coupons (Honey finds them for you) and search Amazon price histories so you’ll be sure you’re getting the best possible price.

This app works on thousands of different shopping sites, so you can get discounts everywhere from Nike to Nordstrom.

Groupon
Groupon is one of the older companies on this list. This site and companion app are aimed at getting you specific deals from businesses in your area. From restaurant deals to coupons for skydiving, you never know what bargain will pop up next.

If you keep your eyes peeled, you can get some pretty cool things at insanely low prices with Groupon.

ShopKick
ShopKick is a free smartphone app that lets you earn points (called Kicks) that you can exchange for gift cards. Compared to some of the others on this list, ShopKick is the granddaddy of money saving apps as it was founded in 2009.

Since their inception, ShopKick members have earned a combined $85 million in free gift cards! All you have to do to start racking up gift cards is to download the app store and follow the registration instructions. From there, you’ll get instructions on how to start earning your Kicks.

Coupons.com
Remember clipping coupons from the Sunday paper? The Coupons.com app makes that practice a thing of the past.

When you download it, you can access hundreds of coupons for your favorite products and grocery stores, and even your favorite big box stores like Target and Walmart, too! If you like to save on groceries, you can put the paper away and use this app instead.

Swagbucks
Swagbucks is a little different than the other apps on this list. Instead of giving you cash back for shopping at certain stores, you get rewards (aka Swagbucks) for other online activities like watching videos, answering surveys, and even playing games.

You can then exchange those Swagbucks for gift cards. Swagbucks is available for both computer and smartphone use, it can be a fun way to earn a little extra money in your spare time.

Paribus
You know that terrible feeling you get when you buy something… and then it goes on sale the next week? Paribus aims to make sure you never get that feeling again.

This free smartphone app monitors your online receipts for stores like Target, Walmart, and Costco, and then if your item goes on sale, Paribus gets you a refund for that difference back to your original payment method. It’s so simple – you don’t even have to do a thing and money appears back in your account just like that.

Rakuten
Formerly known as Ebates, Rakuten is a browser extension for your computer (like Honey). When you install Rakuten, you can get cashback from your purchases at hundreds of online stores. They also compile coupon codes, too, so you can get even deeper discounts with just a few clicks.

Rakuten has one of the best referral programs around, and they also frequently offer double cash back days, especially around big shopping days (like Black Friday and Cyber Monday). Rakuten recently rolled out a smartphone app, too, so you can earn money back in store and online now.

There you have it! Nine fantastic apps and extensions to help you save, and even earn money with minimal effort.

As with anything on the internet, look into the apps that sound the best to you, and make sure they’re right for your situation.

Do a little research, download the ones that sound good to you, and start cashing in! There is no reason not to give it a shot. You may be surprised to find out how much you could be saving.

To a richer life,

Nilus Mattive

Nilus Mattive

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Are You Ready for Open Enrollment?

This post Are You Ready for Open Enrollment? appeared first on Daily Reckoning.

Dear Rich Lifer,

Every year at this time, millions of Americans age 65 and older have to make a choice:

Do I sign up for a new Medicare Advantage plan, shop around for another provider, or return to Original Medicare (Part A and Part B)?

Medicare Open Enrollment Period for 2020 coverage runs from October 15 – December 7. This year the government also added a second open enrollment period for Medicare Advantage plan owners.

Between January 1 and March 31, you can leave your Medicare Advantage plan and return to Original Medicare, or you have the option to switch to a different Medicare Advantage plan altogether during this time.

But like all insurance policies, Medicare has its fair share of restrictions, so knowing what costs are covered and which ones are not is critical when choosing a new plan..

That’s why today I’m giving you a cheat sheet on what Original Medicare does NOT cover so there are no surprises in the new year. Here’s what you need to know:

  1. Eye Exams and Glasses

Unless you have diabetes or cataracts, Original Medicare does not cover routine eye care, including exams, eyeglasses or contact lenses.

Some Medicare Advantage plans offer vision coverage, but it can be pricey. A cheaper option is buying stand-alone vision insurance.

If you don’t need glasses or your vision seems to be stable, paying out of pocket for an annual eye exam might cost less than premiums. Whatever you do, don’t skip going to the eye doctor to save a few bucks. A lot of serious eye conditions can be treated with early detection.

  1. Dental Checkups and Dentures

The American College of Prosthodontists reports that 30 percent of seniors over 65 have no natural teeth. This is due to a number of causes, like gum disease and trauma.

You would think such a large population of people should receive some dental coverage from our government — but they don’t. A soap box for another day perhaps.

Medicare does not cover routine dental care like cleanings, fillings, root canals, tooth extractions, or dentures.

Other dental procedures like crowns, bridges, and plates are also excluded. So, at the end of the day you’re left paying a hefty out of pocket bill to maintain good dental hygiene.

So what are your options?

Some Medicare Advantage plans offer dental coverage, you can also buy private secondary insurance. But another good strategy is to use money from a tax-advantaged health savings account. The only catch is you can’t contribute to an HSA once you’re on Medicare, so plan ahead!

  1. Hearing Aids

According to the National Institute of Health, one-third of people between 65 and 74 years old and half the people over 75 years old have hearing loss.

Despite the high number of seniors with hearing loss, Medicare does not cover routine hearing exams. Medicare will only pay for a test if you specifically complain of symptoms to your doctor and they deem the tests necessary.

This is unfortunate because a lot of seniors gradually lose their hearing and won’t speak up about symptoms until it’s too late. Although basic Medicare won’t cover hearing aids, some Medicare Advantage plans will cover them. HSAs are also an option to fund hearing aids.

  1. Long-Term Care

Long-term care is typically one of the largest expenses in retirement. On average, the cost of a private nursing home is $97,000 a year, and assisted living will set you back $45,000 a year.

Basic Medicare does not cover long-term non-medical (custodial) care. However, you may be covered under Medicaid.

But if your income is too high, you’ll end up paying for long-term care out of pocket until your income reaches Medicaid eligibility. This is called a spend-down.

  1. Prescription Drugs

Another thing original Medicare (Parts A and B) does not really cover is prescription drugs. Only part B covers some prescription medicines. If you need prescription drug coverage, you’ll need to enroll in either a Medicare Part D drug plan or a Medicare Advantage plan.

Either way, you’re going to be paying premiums. Medicare Part D has annual premiums averaging around $34 a month. But overall costs vary depending on your provider and individual needs.

  1. Foreign Travel

There’s no better time to see the world then when you’re retired. (If you haven’t already, check out this post about how you can fly free, or how you can get a 2 week trip to Europe covered by Volvo) But the last thing you want to run into while you’re abroad is a medical emergency. Unfortunately, original Medicare does not cover health care outside the United States unless very specific criteria are met.

Medicare will pay for emergency services when you travel to/from Alaska through Canada, when you are on a cruise ship within six hours of a United States port, or when the nearest hospital is over the border to the United States.

Other than that, you’re stuck footing the bill if anything were to happen outside the US. Some Medicare Advantage plans offer decent coverage. But your best bet would be to find a Medicare Supplement Insurance (aka Medigap plan) that offers foreign travel benefits.

  1. Acupuncture

Original Medicare does not cover acupuncture period. It views it as an alternative medicine that’s not medically necessary.

The good news is you can find some private Medicare Advantage plans that will pay for acupuncture and other alternative therapies. It’s also worth talking to your acupuncturist to see if they’re willing to give you a lower rate or offer payment plans for seniors on fixed incomes.

Choose Carefully

Choosing a new Medicare plans can be overwhelming, but at least you have options. My advice would be to take your time and research different plans carefully so you know exactly what you’re getting and how much it’s going to cost you.

To a richer life,

Nilus Mattive

Nilus Mattive

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