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To Roth or Not to Roth, That Is The Question
Conventional wisdom would have us believe that after-tax Roth IRA contributions only make sense if we expect higher taxable income and higher income tax rates in retirement than now. Is conventional wisdom wrong? Not completely but it is woefully simplistic in a complex financial world. Especially for client-facing advisors, the client implications of the Roth…
Bond Yields
Course: Investment Planning Lesson 9: Equity Securities Student Question: Greetings Dan, I am in the Investment Planning course, on Topic 36. In the sample questions that ask to determine bond yields, how do I determine the value for the end of period payment? For example, refer to Page 36.11, the practice question gives $37.50 as…
Understanding Medicare Part A
Which of the following individuals currently covered by Medicare Part A will not have any of their expenses covered by Medicare Part A? Evan, who spent one week in hospice care before losing his battle with cancer. Felicia, who was treated by her doctor for strep throat. Greg, who was needed a walker following hip…
Good to Know: Cryptocurrency Tax Myths Can Hurt You
At one time in the not so distant past, the sky was the limit (where have investors heard that before?) for cryptocurrency. Back then, it seemed like all of the cool kids had cryptocurrency and subsequently, despite ups and downs, its popularity continues. But what is the attraction of this phenomenon? Three potential explanations follow.…
Impact of Market Risk Premium on Price of Common Stock
Course: Investment Planning Lesson 14: Evaluating Portfolio Performance Student Question: I’ve seen this question come up a couple times, but can’t seem to grasp the answer. “If the Market Risk Premium were to increase, all other things being equal, the value of common stock would…” The answer is “decrease”, but that makes no sense to…
Homeowner’s Insurance
Frank carries an H0-3 policy with $400,000 of coverage and a $1,000 deductible. It would cost $600,000 to rebuild Frank’s house. How much will his insurance company pay on a $100,000 claim related to a fire that started in Frank’s kitchen? $79,000 $82,333 $83,333 $99,000 CLICK TO REVEAL ANSWER B is the answer. Frank should…
Reverse Stock Splits
Course: Investment Planning Lesson 14: Evaluating Portfolio Performance Student Question: Hello! Re: Reverse Splits: When companies decide to do a reverse stock split, does the company always take in the outstanding shares as “treasury stock”? If not, what happens to the outstanding stock that has been taken away? Where does it go on the balance…
Risk Exposure
Olivia is a 25-year-old single mother with twin girls who just turned three. Olivia has worked for the last 5 years as an administrative assistant for a local law firm. Olivia’s firm provides her with a basic medical insurance policy and a split definition disability. Which of the following is the biggest risk exposure for…
Good to Know: Tricks, Traps and Opportunities in the 20% Qualified Business Income Deduction
Today, we conclude our 4-part series with insights into tricks, traps and planning opportunities in the 20% Qualified Business Income Deduction (QBID) under Internal Revenue Code Section 199A, brought to us courtesy of the Tax Cuts and Jobs Act. But first, here’s an uber quick refresher of key concepts from the previous three QBID blogs:…