EMPIRE OF INFORMATION
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COMMERCIAL INVESTMENT. ALL THAT CAN HELP! COMMERCIAL REAL ESTATE; A
BETTER WAY TO INVEST AND GET RICHER! MULTI-WAYS TO WIN BIG IN
REAL ESTATE. WHAT IS COMMERCIAL REAL ESTATE?
FINANCIAL REPORT: HOW TO GET A MORTGAGE HOME LOAN? Securing a home loan
is the most important step in the home-buying process. Here are the basics for
getting your financing.
HOW TO GET PRE-QUALIFY FOR A HOME LOAN? 8 Fundamental Reasons to Get Pre-
Approved for a Home Loan!
The first and most important step in buying a home is getting pre-qualified for a
home loan.
BY GETTING PREQUALIFIED, YOU IMMEDIATELY FIND YOURSELF IN A STRONGER
NEGOTIATION POSITION.
YOU MADE YOURSELF MORE ATTRACTIVE TO SELLERS.
IDENTITY THEFT: WATCH OUT, STOP IT FROM HAPPENING, GET THE TOOLS YOU NEED
TO PREVENT IT RIGHT HERE! AT KNOWLEDGE FINANCIAL.COM
CREDIT HELP: Use Your Credit Clout: Credit Laws That are on Your Side;
Understanding Your Debt Collection Rights
CREDIT INFO: SAVE YOUR CREDIT, RESCUE IT, PROTECT IT, INCREASE YOUR SCORE.
WE HAVE VALUABLE INFORMATION TO HELP YOU
CREDIT CARDS: The American Credit Cards are very important to have; but credit
cards represent a danger for those who may not have the discipline, order or those
who don't think what a plastic card can do for them or to them! The borrowers are
the slaves of the lenders. Credit cards issuers are monsters the can eat the average
consumers alive.
CREDIT RATING: THE IMPORTANCE OF YOUR CREDIT RATING! Credit Card Fraud: 21
Tips to Protect Yourself. More about your credit Score. Companies base your credit
scores on five categories
ID-THEFT: HOW TO PROTECT AND DEFEND YOURSELF AGAINST IDENTITY THEFT?
-----DETER, DETECT AND DEFEND?
Credit & Loans: Credit Cards & Consumer Loans ...
WHAT DO YOU KNOW ABOUT IDENTITY THEFT?
Consumer Reports' advice on steps you can take to protect your identity and what to
do if you believe it's already been compromised
Government's general information; Local, State, and Federal.
TAX SAVING TIPS FOR INDIVIDUAL INVESTOR, GREAT INFORMATION FOR ALL. Taxes
The More You Know, the Less You’ll Pay
Business structures 101
LLP, LLC, S-corp and C-corp: It's not just alphabet soup! A breakdown of what you
need to know, in layman's terms.
INVESTMENT: MAKE YOURSELF RICHER BY INVESTING THE RIGHT WAY IN THE RIGHT
PRODUCTS. REAL ESTATE INVESTMENTS CAN HELP
STOCK MARKET: STOCK MARKET A WAY TO INVEST AND MULTIPLY YOUR PROFITS.
THESE INDUSTRIES HAS THOUSANDS OF COMPANIES TO BUY STOCKS FROM.
MUTUAL FUNDS: MUTUAL FUNDS A WONDERFUL WAY TO INVEST YOUR MONEY.
Buying and Selling mutual funds
You can buy some mutual funds (no-load) by contacting the fund companies directly.
Other funds are sold through brokers, banks, financial planners, or insurance
agents.
BOND FUNDS: INVESTING IN THE BONDS MARKET. WHAT ARE BONDS?
Have you ever borrowed money? Of course you have! Whether we hit our parents up
for a few bucks to buy candy as children or asked the bank for a mortgage, most of
us have borrowed money at some point in our lives.
FOREX MARKET: THE LARGEST MARKET IN THE WORLD TO INVEST AND GET RICHER
IF YOU USE THE RIGHT TOOL.
FOREIGN EXCHANGE-(forex or FX for short) is one of the most exciting, fast-paced
markets around. Until recently, trading in the forex market had been the domain of
large financial institutions, corporations, central banks, hedge funds and extremely
wealthy individuals. The emergence of the internet has changed all of this, and now
it is possible for average investors to buy and sell currencies easily with the click of
a mouse.
TAX CERTIFICATES: TAX CERTIFICATE / TAX DEED: A BETTER WAY TO INVEST MONEY
AND GET RICHER.
TAX LIENS: How Can You Safely Earn 18% to 240% Per Year On Your Investments?
Yes you can... By investing in Government Issued
what are you doing with your money in the wake of the financial crisis?
Where is the safe place to put MONEY?
BETTER WAY TO INVEST AND GET RICHER! MULTI-WAYS TO WIN BIG IN
REAL ESTATE. WHAT IS COMMERCIAL REAL ESTATE?
FINANCIAL REPORT: HOW TO GET A MORTGAGE HOME LOAN? Securing a home loan
is the most important step in the home-buying process. Here are the basics for
getting your financing.
HOW TO GET PRE-QUALIFY FOR A HOME LOAN? 8 Fundamental Reasons to Get Pre-
Approved for a Home Loan!
The first and most important step in buying a home is getting pre-qualified for a
home loan.
BY GETTING PREQUALIFIED, YOU IMMEDIATELY FIND YOURSELF IN A STRONGER
NEGOTIATION POSITION.
YOU MADE YOURSELF MORE ATTRACTIVE TO SELLERS.
IDENTITY THEFT: WATCH OUT, STOP IT FROM HAPPENING, GET THE TOOLS YOU NEED
TO PREVENT IT RIGHT HERE! AT KNOWLEDGE FINANCIAL.COM
CREDIT HELP: Use Your Credit Clout: Credit Laws That are on Your Side;
Understanding Your Debt Collection Rights
CREDIT INFO: SAVE YOUR CREDIT, RESCUE IT, PROTECT IT, INCREASE YOUR SCORE.
WE HAVE VALUABLE INFORMATION TO HELP YOU
CREDIT CARDS: The American Credit Cards are very important to have; but credit
cards represent a danger for those who may not have the discipline, order or those
who don't think what a plastic card can do for them or to them! The borrowers are
the slaves of the lenders. Credit cards issuers are monsters the can eat the average
consumers alive.
CREDIT RATING: THE IMPORTANCE OF YOUR CREDIT RATING! Credit Card Fraud: 21
Tips to Protect Yourself. More about your credit Score. Companies base your credit
scores on five categories
ID-THEFT: HOW TO PROTECT AND DEFEND YOURSELF AGAINST IDENTITY THEFT?
-----DETER, DETECT AND DEFEND?
Credit & Loans: Credit Cards & Consumer Loans ...
WHAT DO YOU KNOW ABOUT IDENTITY THEFT?
Consumer Reports' advice on steps you can take to protect your identity and what to
do if you believe it's already been compromised
Government's general information; Local, State, and Federal.
TAX SAVING TIPS FOR INDIVIDUAL INVESTOR, GREAT INFORMATION FOR ALL. Taxes
The More You Know, the Less You’ll Pay
Business structures 101
LLP, LLC, S-corp and C-corp: It's not just alphabet soup! A breakdown of what you
need to know, in layman's terms.
INVESTMENT: MAKE YOURSELF RICHER BY INVESTING THE RIGHT WAY IN THE RIGHT
PRODUCTS. REAL ESTATE INVESTMENTS CAN HELP
STOCK MARKET: STOCK MARKET A WAY TO INVEST AND MULTIPLY YOUR PROFITS.
THESE INDUSTRIES HAS THOUSANDS OF COMPANIES TO BUY STOCKS FROM.
MUTUAL FUNDS: MUTUAL FUNDS A WONDERFUL WAY TO INVEST YOUR MONEY.
Buying and Selling mutual funds
You can buy some mutual funds (no-load) by contacting the fund companies directly.
Other funds are sold through brokers, banks, financial planners, or insurance
agents.
BOND FUNDS: INVESTING IN THE BONDS MARKET. WHAT ARE BONDS?
Have you ever borrowed money? Of course you have! Whether we hit our parents up
for a few bucks to buy candy as children or asked the bank for a mortgage, most of
us have borrowed money at some point in our lives.
FOREX MARKET: THE LARGEST MARKET IN THE WORLD TO INVEST AND GET RICHER
IF YOU USE THE RIGHT TOOL.
FOREIGN EXCHANGE-(forex or FX for short) is one of the most exciting, fast-paced
markets around. Until recently, trading in the forex market had been the domain of
large financial institutions, corporations, central banks, hedge funds and extremely
wealthy individuals. The emergence of the internet has changed all of this, and now
it is possible for average investors to buy and sell currencies easily with the click of
a mouse.
TAX CERTIFICATES: TAX CERTIFICATE / TAX DEED: A BETTER WAY TO INVEST MONEY
AND GET RICHER.
TAX LIENS: How Can You Safely Earn 18% to 240% Per Year On Your Investments?
Yes you can... By investing in Government Issued
what are you doing with your money in the wake of the financial crisis?
Where is the safe place to put MONEY?
CREDIT:--- CREDIT: SAVE YOUR CREDIT, RESCUE IT, PROTECT IT, INCREASE YOUR
SCORE. WE HAVE VALUABLE INFORMATION TO HELP YOU. LEARN MORE...
INVESTING:--- INVESMENT: METHOD AND TECHNIQUES TO INVEST IN TODAY'S
MARKET FOR A BETTER TOMORROW!
CREDIT REPORT:--- Consumer Credit Report: What's On It? Your Access to Free
Credit Reports. How do I get my free online Credit Report?
SAVING MONEY:---SAVING MONEY IMPORTANT TIPS... 66 WAYS TO SAVE MONEY
CREDIT INFO:--- REVEAL GUARDED SECRETS OF AMERICAN CREDIT
SYSTEM. Your credit has to do with everything in life today. Credit Repair: Self Help
May Be Best.
MORTGAGE GENERAL INFORMATION:--- FLORIDA REAL ESTATE FINANCING &
REFINANCING, MORTGAGE HOME LOANS...
ID-THEFT--- HOW TO PROTECT AND DEFEND YOURSELF AGAINST IDENTITY THEFT?
-----DETER, DETECT AND DEFEND?
REAL ESTATE INFORMATION CENTER:--- Information You'll Need to Succeed in Your
Real Estate Investments. MONEY MAKING MACHINE REAL ESTATE INVESTMENT
OPPORTUNITIES FOR ALL!..
CREDIT CARDS:--- Six Smart Credit Card Strategies. Have a questions about credit
cards? We have answers the top ten most frequently asked credit card questions.
PROTECTION AGAINST IDENTITY THEFT:--- DEFEND YOURSELF AGAINST IDENTITY
THEFT; LEARN THE IMPORTANT METHODS AND TECHNIQUES TO RECOVER FROM ID
THEFT!
CREDIT HELP:--- Understanding Your Debt Collection Rights. LEARN THE REAL
TRUTH ABOUT CREDIT REPAIR! How to Use Your Credit Clout: Credit Laws That are
on Your Side?
BANKING FINANCE Knowledge:--- The more you know the closer you are to
accomplish great success.
CREDIT RATING:--- THE IMPORTANCE OF YOUR CREDIT RATING. Tips to Improve or
Maintain a High Credit Score... Credit Card Fraud: 21 Tips to Protect Yourself
TAXES:--- TAX KNOWLEDGE: MEANING TAX SAVING, EQUAL
MORE MONEY FOR YOU! TAX SAVING,
TAX HELP: What to do if you Can’t Pay your Tax Bill? How to Cut Your Property
Taxes
GOVERNMENT:--- Government's general information;
Local, State, and Federal, and Housing Finance Authority of Miami dade, Monroe,
Broward, and Palm Beach County.
THE BLOG:--- WHERE AND HOW TO FIND MONEY TO INVEST IN REAL ESTATE? THE
MOST LUCRATIVE, SECURED PROFITABLE BUSINESS?
FINANCIAL HELP:--- FREE FINANCIAL ADVICE. WAYS TO SAVE MONEY, TO MAKE
MONEY, AND GET OUT OF DEBT!
SCORE. WE HAVE VALUABLE INFORMATION TO HELP YOU. LEARN MORE...
INVESTING:--- INVESMENT: METHOD AND TECHNIQUES TO INVEST IN TODAY'S
MARKET FOR A BETTER TOMORROW!
CREDIT REPORT:--- Consumer Credit Report: What's On It? Your Access to Free
Credit Reports. How do I get my free online Credit Report?
SAVING MONEY:---SAVING MONEY IMPORTANT TIPS... 66 WAYS TO SAVE MONEY
CREDIT INFO:--- REVEAL GUARDED SECRETS OF AMERICAN CREDIT
SYSTEM. Your credit has to do with everything in life today. Credit Repair: Self Help
May Be Best.
MORTGAGE GENERAL INFORMATION:--- FLORIDA REAL ESTATE FINANCING &
REFINANCING, MORTGAGE HOME LOANS...
ID-THEFT--- HOW TO PROTECT AND DEFEND YOURSELF AGAINST IDENTITY THEFT?
-----DETER, DETECT AND DEFEND?
REAL ESTATE INFORMATION CENTER:--- Information You'll Need to Succeed in Your
Real Estate Investments. MONEY MAKING MACHINE REAL ESTATE INVESTMENT
OPPORTUNITIES FOR ALL!..
CREDIT CARDS:--- Six Smart Credit Card Strategies. Have a questions about credit
cards? We have answers the top ten most frequently asked credit card questions.
PROTECTION AGAINST IDENTITY THEFT:--- DEFEND YOURSELF AGAINST IDENTITY
THEFT; LEARN THE IMPORTANT METHODS AND TECHNIQUES TO RECOVER FROM ID
THEFT!
CREDIT HELP:--- Understanding Your Debt Collection Rights. LEARN THE REAL
TRUTH ABOUT CREDIT REPAIR! How to Use Your Credit Clout: Credit Laws That are
on Your Side?
BANKING FINANCE Knowledge:--- The more you know the closer you are to
accomplish great success.
CREDIT RATING:--- THE IMPORTANCE OF YOUR CREDIT RATING. Tips to Improve or
Maintain a High Credit Score... Credit Card Fraud: 21 Tips to Protect Yourself
TAXES:--- TAX KNOWLEDGE: MEANING TAX SAVING, EQUAL
MORE MONEY FOR YOU! TAX SAVING,
TAX HELP: What to do if you Can’t Pay your Tax Bill? How to Cut Your Property
Taxes
GOVERNMENT:--- Government's general information;
Local, State, and Federal, and Housing Finance Authority of Miami dade, Monroe,
Broward, and Palm Beach County.
THE BLOG:--- WHERE AND HOW TO FIND MONEY TO INVEST IN REAL ESTATE? THE
MOST LUCRATIVE, SECURED PROFITABLE BUSINESS?
FINANCIAL HELP:--- FREE FINANCIAL ADVICE. WAYS TO SAVE MONEY, TO MAKE
MONEY, AND GET OUT OF DEBT!
| Financial Education is Why the Rich are Getting Excessively Richer Your Financial Success Depends on What you Know About Money Most people set out to get an education in hopes of getting a safe and secure job and ultimately being able to provide for themselves and their family. However, the education most people receive doesn’t actually teach them what they need to know to be truly successful and in command of their finances. Consider the three types of education: --------------------------------------------- Academic Education This is what we all have gone to school to learn. It is very important and teaches us the foundation of how to read, write, learn and function in the world. --------------------------------------------------- Professional Education This is what we learn to help us be successful in our careers. We may learn this in college or trade school or the job. It is the information and skills we need to be successful at our work. -------------------------------------------------- Financial Education This is the type of education that teaches us what we should be doing with our money to be successful. In today’s world, financial education is crucial, especially with the world economy in recession or depression. However, our school systems don’t teach us about financial education and so most people have never been taught what they need to know in order to take control of their financial lives. ------------------------------------------------------------ THINK LIKE THE RICH THINK... Thoughts drive behavior. Before you start down the path to financial freedom, you must first understand how the rich think about money and how it differs from the poor and middle-class way of thinking. Regardless of how much money you make, you will end up right back where you started if you don’t change your thoughts about money. Don’t let old habits get the best of you and your finances. |
THE ABC's OF INVESTMENTS
Ways to Save
While savings are not an avenue toward wealth, they are a way of
earning low interest on liquid assets. Passbook or statement
savings accounts pay low interest and give you immediate
access to cash, with no limit on withdrawals. NOW accounts are
checking accounts that pay interest, provided you maintain a set
minimum balance.
Money market deposit accounts pay slightly more interest than
savings or NOW accounts but limit your withdrawals to a few a
month. Certificates of deposit pay more interest and guarantee
preservation of principal, yet funds are obligated for specified
terms, and penalties are charged for early withdrawal.
A true investor does not become attached to any one investment
option but uses different vehicles to assemble a financial plan. In
general, investments come in one of three forms: paper
securities, such as stocks and bonds; tangible objects, such as
gold and real estate; and business ventures, such as franchises
or start-up companies.
Paper Securities
Bonds
When a government agency or private corporation needs to raise
money, it offers or issues a bond. An investment banker
determines how much money the agency or corporation needs,
what the interest rate on the loan will be, and when the loan will
be repaid. A bond pays interest over a fixed period. An investor
who buys a bond intending to hold it to maturity need not worry
about fluctuations in the interest rate. However, for those who
want to sell before maturity, current interest rates are crucial. In
the bond market, lower interest rates in the marketplace raise
bond prices, and higher rates lower them. Thus as interest rates
go up and down, a fixed-rate bond becomes either more or less
valuable.
The Bond Market
Unlike stocks, which are traded through organized stock
exchanges, bonds are traded in the over-the-counter (OTC)
market. The OTC is not a place; it is a market of dealers who do
business over the phone or by computer. All U.S. government,
municipal, and most corporate bonds are traded over the counter.
In addition, U.S. government securities may be purchased by
investors directly from the U.S. Treasury through Federal Reserve
banks located throughout the country.
Types of bonds. There are many kinds of bonds, including the
following:
U.S. treasuries. By purchasing a treasury, an investor
lends money to the U.S. government for a specified amount of
time in exchange for interest payments. Because treasuries have
the backing of Uncle Sam, they are among the safest investments
available.
Treasury bills, or T-bills, are issued in thousand-
dollar increments and mature within three, six, or twelve months.
An investor receives an up-front interest payment called the
discount, which runs around 5 percent, lower or higher depending
on the economic climate.
When the bill matures, the principal can be returned or reinvested
for another discount. Treasury notes mature in two,
five, or ten years, and require a minimum investment of
between $1,000 and $5,000. Treasury bonds
mature in ten to thirty years and require a
minimum investment of $1,000. Both notes and bonds pay
interest semi-annually.
Savings bonds. These U.S. government bonds are issued in
denominations ranging from $50 to $10,000. Sold at a discount
price, they are redeemed at face value at maturity.
Municipal bonds. These are issued by state and local
governments. You pay no federal income tax on the interest
earned, and no state or local income tax if the bond is issued by
the state in which you live. Municipal bonds tend to pay less
interest than taxable bonds. While the interest payment may
remain steady, the price of the bond may rise and fall with
changes in the markets.
Corporate bonds. These are issued by companies
that need to borrow money. The minimum investment in
corporate bonds is $1,000. The interest is taxable, so to induce
investors, rates are typically higher than for municipal bonds.
Here, too, the interest rate may remain steady, but the price of the
bond may rise and fall with changes in the markets.
Corporate bonds may be riskier than
government bonds because businesses can go
bankrupt.
High-yield (junk) bonds. These are issued by corporations without
solid sales and earnings records, or with a dubious credit rating.
The chance that the investor will not be repaid is higher with a
junk bond because of the issuer’s instability. To attract investors,
the issuer offers a relatively high interest rate. The price of a junk
bond is more likely to fluctuate than that of any other type of bond.
Bond ratings. A bond rating is a method of evaluating
the possibility of default by a bond issuer. Bonds are graded
periodically by analysts at companies that do evaluations, such
as Standard and Poor’s Ratings Services and Moody’s Investors
Service. U.S. government bonds are not rated, because there is
very little chance that the U.S. government will default on a bond.
Ways to Save
While savings are not an avenue toward wealth, they are a way of
earning low interest on liquid assets. Passbook or statement
savings accounts pay low interest and give you immediate
access to cash, with no limit on withdrawals. NOW accounts are
checking accounts that pay interest, provided you maintain a set
minimum balance.
Money market deposit accounts pay slightly more interest than
savings or NOW accounts but limit your withdrawals to a few a
month. Certificates of deposit pay more interest and guarantee
preservation of principal, yet funds are obligated for specified
terms, and penalties are charged for early withdrawal.
A true investor does not become attached to any one investment
option but uses different vehicles to assemble a financial plan. In
general, investments come in one of three forms: paper
securities, such as stocks and bonds; tangible objects, such as
gold and real estate; and business ventures, such as franchises
or start-up companies.
Paper Securities
Bonds
When a government agency or private corporation needs to raise
money, it offers or issues a bond. An investment banker
determines how much money the agency or corporation needs,
what the interest rate on the loan will be, and when the loan will
be repaid. A bond pays interest over a fixed period. An investor
who buys a bond intending to hold it to maturity need not worry
about fluctuations in the interest rate. However, for those who
want to sell before maturity, current interest rates are crucial. In
the bond market, lower interest rates in the marketplace raise
bond prices, and higher rates lower them. Thus as interest rates
go up and down, a fixed-rate bond becomes either more or less
valuable.
The Bond Market
Unlike stocks, which are traded through organized stock
exchanges, bonds are traded in the over-the-counter (OTC)
market. The OTC is not a place; it is a market of dealers who do
business over the phone or by computer. All U.S. government,
municipal, and most corporate bonds are traded over the counter.
In addition, U.S. government securities may be purchased by
investors directly from the U.S. Treasury through Federal Reserve
banks located throughout the country.
Types of bonds. There are many kinds of bonds, including the
following:
U.S. treasuries. By purchasing a treasury, an investor
lends money to the U.S. government for a specified amount of
time in exchange for interest payments. Because treasuries have
the backing of Uncle Sam, they are among the safest investments
available.
Treasury bills, or T-bills, are issued in thousand-
dollar increments and mature within three, six, or twelve months.
An investor receives an up-front interest payment called the
discount, which runs around 5 percent, lower or higher depending
on the economic climate.
When the bill matures, the principal can be returned or reinvested
for another discount. Treasury notes mature in two,
five, or ten years, and require a minimum investment of
between $1,000 and $5,000. Treasury bonds
mature in ten to thirty years and require a
minimum investment of $1,000. Both notes and bonds pay
interest semi-annually.
Savings bonds. These U.S. government bonds are issued in
denominations ranging from $50 to $10,000. Sold at a discount
price, they are redeemed at face value at maturity.
Municipal bonds. These are issued by state and local
governments. You pay no federal income tax on the interest
earned, and no state or local income tax if the bond is issued by
the state in which you live. Municipal bonds tend to pay less
interest than taxable bonds. While the interest payment may
remain steady, the price of the bond may rise and fall with
changes in the markets.
Corporate bonds. These are issued by companies
that need to borrow money. The minimum investment in
corporate bonds is $1,000. The interest is taxable, so to induce
investors, rates are typically higher than for municipal bonds.
Here, too, the interest rate may remain steady, but the price of the
bond may rise and fall with changes in the markets.
Corporate bonds may be riskier than
government bonds because businesses can go
bankrupt.
High-yield (junk) bonds. These are issued by corporations without
solid sales and earnings records, or with a dubious credit rating.
The chance that the investor will not be repaid is higher with a
junk bond because of the issuer’s instability. To attract investors,
the issuer offers a relatively high interest rate. The price of a junk
bond is more likely to fluctuate than that of any other type of bond.
Bond ratings. A bond rating is a method of evaluating
the possibility of default by a bond issuer. Bonds are graded
periodically by analysts at companies that do evaluations, such
as Standard and Poor’s Ratings Services and Moody’s Investors
Service. U.S. government bonds are not rated, because there is
very little chance that the U.S. government will default on a bond.
HISTORY OF THE US PAPER MONEY
In 1862 the U.S. government issued
paper money, or scrip. The bills were called
greenbacks because the backs were printed with green ink.
Technically, scrip was commodity currency, because it could be
exchanged for silver or gold. Individual banks using scrip,
however, couldn’t always meet customer demand for hard
currency, or specie. Sometimes a dollar bill would be exchanged
for only a fraction of its value in gold.
In the early twentieth century, the
United States put into effect a full gold
standard, providing for full convertibility of currency into
gold coin; dollars could also be exchanged for silver. But then in
1971 the United States went off the gold standard and abandoned
silver exchange. No longer could the dollar be exchanged for
something tangible. It had no intrinsic value.
Money that has no intrinsic value and can’t be redeemed for a
precious metal is called fiat currency. Fiat currency is backed by
nothing but the stability of the government that issues it and the
confidence of that government’s citizenry.
THE FED... FEDERAL RESERVE
BOARD
In 1913 Congress established a central
banking network called the Federal
Reserve System, or simply, the Fed. The Fed, although
the central bank of the United States, is not really one bank. It
consists of twelve regional banks, so that no one region of the
country can unfairly gain an economic advantage. The Fed is run
by a seven-member team called the Board of Governors, whose
main job is to control the money supply, or the amount of cash
circulating through the economy.
The Fed has to keep enough money circulating so that the
economy expands, but not too quickly. Too much money in
circulation drives down its value, leading to inflation, while too
little money results in consumers having less to spend, leading to
recession.
The Fed controls the money supply, and thus keeps the economy
relatively balanced, by buying and selling securities, printing
money, and establishing interest rates.
How the Fed Keeps Track of Our
Money Supply
If you take a look in your wallet, empty out your piggy bank,
rummage for change between the sofa cushions, and count up
everything in your checking and savings accounts, the amount
you come up with is your own personal money supply. That’s
what the Fed periodically does—tally the country’s money supply.
Without such a count, it can’t know for sure how much money is
in circulation and whether the economy needs more.
The Fed has a system for keeping
track and it works like this:
M1 money, or narrow money, is money that
people can spend immediately, such as cash and checking
account balances.
M2 money, or broad money, is M1 money plus any money
that can’t be spent immediately but can be converted easily into
cash, such as money in savings and certificates of deposit.
M3 money is M1 and M2 money plus the assets and liabilities of
financial institutions that can’t be easily converted into cash.
Together, the three Ms are known as the monetary aggregates.
LEARN THIS...
Did You Know?
The term dollar comes from a silver coin minted in sixteenth-
century Bohemia, where it was called the Joachimsthaler tolar.
The unit of currency was called the daalder in Holland, the daler in
Scandinavia, and the dollar in England
In 1862 the U.S. government issued
paper money, or scrip. The bills were called
greenbacks because the backs were printed with green ink.
Technically, scrip was commodity currency, because it could be
exchanged for silver or gold. Individual banks using scrip,
however, couldn’t always meet customer demand for hard
currency, or specie. Sometimes a dollar bill would be exchanged
for only a fraction of its value in gold.
In the early twentieth century, the
United States put into effect a full gold
standard, providing for full convertibility of currency into
gold coin; dollars could also be exchanged for silver. But then in
1971 the United States went off the gold standard and abandoned
silver exchange. No longer could the dollar be exchanged for
something tangible. It had no intrinsic value.
Money that has no intrinsic value and can’t be redeemed for a
precious metal is called fiat currency. Fiat currency is backed by
nothing but the stability of the government that issues it and the
confidence of that government’s citizenry.
THE FED... FEDERAL RESERVE
BOARD
In 1913 Congress established a central
banking network called the Federal
Reserve System, or simply, the Fed. The Fed, although
the central bank of the United States, is not really one bank. It
consists of twelve regional banks, so that no one region of the
country can unfairly gain an economic advantage. The Fed is run
by a seven-member team called the Board of Governors, whose
main job is to control the money supply, or the amount of cash
circulating through the economy.
The Fed has to keep enough money circulating so that the
economy expands, but not too quickly. Too much money in
circulation drives down its value, leading to inflation, while too
little money results in consumers having less to spend, leading to
recession.
The Fed controls the money supply, and thus keeps the economy
relatively balanced, by buying and selling securities, printing
money, and establishing interest rates.
How the Fed Keeps Track of Our
Money Supply
If you take a look in your wallet, empty out your piggy bank,
rummage for change between the sofa cushions, and count up
everything in your checking and savings accounts, the amount
you come up with is your own personal money supply. That’s
what the Fed periodically does—tally the country’s money supply.
Without such a count, it can’t know for sure how much money is
in circulation and whether the economy needs more.
The Fed has a system for keeping
track and it works like this:
M1 money, or narrow money, is money that
people can spend immediately, such as cash and checking
account balances.
M2 money, or broad money, is M1 money plus any money
that can’t be spent immediately but can be converted easily into
cash, such as money in savings and certificates of deposit.
M3 money is M1 and M2 money plus the assets and liabilities of
financial institutions that can’t be easily converted into cash.
Together, the three Ms are known as the monetary aggregates.
LEARN THIS...
Did You Know?
The term dollar comes from a silver coin minted in sixteenth-
century Bohemia, where it was called the Joachimsthaler tolar.
The unit of currency was called the daalder in Holland, the daler in
Scandinavia, and the dollar in England
The Money Supply
The Fed’s main customer is the U.S. Treasury. The Fed collects
tax payments for the Treasury (the Fed is the bank that receives
the money that is withheld from your paycheck if you’re
employed).
It pays the government’s bills, for example, sending out Social
Security checks and making interest payments on treasury bills,
notes, and bonds. And it oversees the operations of the nation’s
commercial banks.
But the main job of the Fed is to
establish U.S. economic policy. Every six
weeks a special committee of the Fed, the Open Market
Committee, meets to review the state of the economy, then tells
the Federal Reserve Bank of New York whether to increase or
decrease the money supply.
To slow down a rapidly expanding economy that
has too much money in circulation, the Fed sells
the securities it owns, removing from the market some
cash that would otherwise be available for lending. In this way,
the Fed slows borrowing, forces interest rates up, and cools the
overheated economy.
If there isn’t enough money in circulation, the
Fed puts it back on the market by buying
securities and, if necessary, ordering the U.S.
Mint to print more money for the purchases.
Depending on economic conditions, the Fed might put into
circulation anywhere from $1 million to $4 million in a given
month, causing a ripple effect throughout the economy as more
money is made available for banks to lend out.
The Ripple Effect
The Fed requires all banks to set aside a portion of their deposits,
usually 10 percent, to meet any unexpected demands for cash by
customers. But the remaining 90 percent can be lent.
A brokerage firm that sells securities in exchange for cash
received from the Fed deposits that cash in a bank. The bank sets
aside 10 percent in accordance with the banking rules and loans
out the remaining 90 percent.
Customers who borrow from that bank to make purchases such
as real estate give the cash to sellers, who in turn deposit the
money in their banks. Those banks each set aside 10 percent of
their deposits and loan out the remaining 90 percent to
customers.
The ripple effect involves more and more banks and customers,
causing the amount of money in circulation to multiply.
Interest Rates
Another tool the Fed has at its disposal when it wants to change
the direction of the economy is the interest rate it charges banks.
This in turn determines what banks will charge their customers.
An interest rate is nothing more than the price of a loan.
It’s expressed as a percentage per year of the amount loaned. For
instance, if you borrow $100 at 10 percent interest for one year,
you’ll owe $110 at the end of the year. The cost of the borrowed
money is $10.
Banks, like people, borrow money.
They borrow money from the Fed or
from each other, depending on their particular needs
and which lender offers more attractive terms. The interest rate
banks are charged when they borrow from the Fed is called the
discount rate.
The rate they’re charged when they borrow from each other is
called the federal funds rate. When the Fed increases the
discount rate, banks borrow less and have less cash to lend their
customers.
When the Fed lowers the rate, banks are encouraged to borrow
more freely, from both the Fed and each other, which makes
more cash available for banking customers to borrow and at
more attractive rates.
Interest Rates, Investing Trends, and
You
The way the Fed handles money affects the economy, which in
turn may affect the way you invest. The money the Fed collects in
the form of taxes enables the government to pay for such things
as maintaining the highway system. When the Fed doesn’t collect
enough money to meet the government’s obligations, which is
often the case, the government borrows by selling U.S. Treasury
securities.
When buyers purchase securities, there is less money circulating
in the economy. The money supply becomes scarcer, which
drives up interest rates. In short, the more the government
borrows, the higher interest rates go.
A change in interest rates affects the
financial markets and, ultimately, the
decisions investors make. When interest rates are
high, yields on bonds go up and investors buy more bonds; when
interest rates are low, it’s cheaper for businesses to borrow
money for growth, and when businesses are growing, investors
flock to stocks.
Once you learn the Rich Dad program, you may
find yourself bucking these investing trends. For
instance, when interest rates are high and other investors are
fleeing stocks, you might be buying stocks at bargain prices,
positioning your money for growth.
Banks don’t lend to their customers at a single
rate of interest. Their best customers—usually their biggest,
for example, a large corporation that needs money to expand its
operations—are charged the more favorable rate, known as the
prime rate, since the risk to the bank in lending is lower.
Their individual customers—say, people who want to buy
houses—are usually charged a higher rate, calculated by adding
a few points to the prime.
The Fed’s main customer is the U.S. Treasury. The Fed collects
tax payments for the Treasury (the Fed is the bank that receives
the money that is withheld from your paycheck if you’re
employed).
It pays the government’s bills, for example, sending out Social
Security checks and making interest payments on treasury bills,
notes, and bonds. And it oversees the operations of the nation’s
commercial banks.
But the main job of the Fed is to
establish U.S. economic policy. Every six
weeks a special committee of the Fed, the Open Market
Committee, meets to review the state of the economy, then tells
the Federal Reserve Bank of New York whether to increase or
decrease the money supply.
To slow down a rapidly expanding economy that
has too much money in circulation, the Fed sells
the securities it owns, removing from the market some
cash that would otherwise be available for lending. In this way,
the Fed slows borrowing, forces interest rates up, and cools the
overheated economy.
If there isn’t enough money in circulation, the
Fed puts it back on the market by buying
securities and, if necessary, ordering the U.S.
Mint to print more money for the purchases.
Depending on economic conditions, the Fed might put into
circulation anywhere from $1 million to $4 million in a given
month, causing a ripple effect throughout the economy as more
money is made available for banks to lend out.
The Ripple Effect
The Fed requires all banks to set aside a portion of their deposits,
usually 10 percent, to meet any unexpected demands for cash by
customers. But the remaining 90 percent can be lent.
A brokerage firm that sells securities in exchange for cash
received from the Fed deposits that cash in a bank. The bank sets
aside 10 percent in accordance with the banking rules and loans
out the remaining 90 percent.
Customers who borrow from that bank to make purchases such
as real estate give the cash to sellers, who in turn deposit the
money in their banks. Those banks each set aside 10 percent of
their deposits and loan out the remaining 90 percent to
customers.
The ripple effect involves more and more banks and customers,
causing the amount of money in circulation to multiply.
Interest Rates
Another tool the Fed has at its disposal when it wants to change
the direction of the economy is the interest rate it charges banks.
This in turn determines what banks will charge their customers.
An interest rate is nothing more than the price of a loan.
It’s expressed as a percentage per year of the amount loaned. For
instance, if you borrow $100 at 10 percent interest for one year,
you’ll owe $110 at the end of the year. The cost of the borrowed
money is $10.
Banks, like people, borrow money.
They borrow money from the Fed or
from each other, depending on their particular needs
and which lender offers more attractive terms. The interest rate
banks are charged when they borrow from the Fed is called the
discount rate.
The rate they’re charged when they borrow from each other is
called the federal funds rate. When the Fed increases the
discount rate, banks borrow less and have less cash to lend their
customers.
When the Fed lowers the rate, banks are encouraged to borrow
more freely, from both the Fed and each other, which makes
more cash available for banking customers to borrow and at
more attractive rates.
Interest Rates, Investing Trends, and
You
The way the Fed handles money affects the economy, which in
turn may affect the way you invest. The money the Fed collects in
the form of taxes enables the government to pay for such things
as maintaining the highway system. When the Fed doesn’t collect
enough money to meet the government’s obligations, which is
often the case, the government borrows by selling U.S. Treasury
securities.
When buyers purchase securities, there is less money circulating
in the economy. The money supply becomes scarcer, which
drives up interest rates. In short, the more the government
borrows, the higher interest rates go.
A change in interest rates affects the
financial markets and, ultimately, the
decisions investors make. When interest rates are
high, yields on bonds go up and investors buy more bonds; when
interest rates are low, it’s cheaper for businesses to borrow
money for growth, and when businesses are growing, investors
flock to stocks.
Once you learn the Rich Dad program, you may
find yourself bucking these investing trends. For
instance, when interest rates are high and other investors are
fleeing stocks, you might be buying stocks at bargain prices,
positioning your money for growth.
Banks don’t lend to their customers at a single
rate of interest. Their best customers—usually their biggest,
for example, a large corporation that needs money to expand its
operations—are charged the more favorable rate, known as the
prime rate, since the risk to the bank in lending is lower.
Their individual customers—say, people who want to buy
houses—are usually charged a higher rate, calculated by adding
a few points to the prime.
Inflation
By 1990 the value of the dollar had eroded to the point
where it was worth many times less than in 1790.
Inflation is the increase in prices over time that causes
the purchasing power of money to decline. Inflation is
an unavoidable fact of economic life.
KNOWLEDGE FINANCIAL TIP
“Those who work the hardest and are paid the least
suffer the most from the constant erosion of money’s
value. Since money has an ever-declining value, a
financially wise person must constantly seek ways to
create value and produce more and more money.”
One way economists keep tabs on inflation is by a
measurement called the gross domestic product
(GDP). The GDP is the total value of all goods and
services produced in the United States in a given
period. Whenever prices rise owing to increased costs
associated with production but production itself stays
the same, inflation occurs.
Small price increases are considered normal for a
growing economy. Employees may receive slight
increases in salary to match inflation, so that
purchasing power remains roughly the same and
rising prices aren’t all that noticeable. But salaries don’
t always keep pace with inflation, and over time, when
it takes more money to buy the same amount,
purchasing power is reduced.
Who Wins, Who Loses?
Any financial plan you put in place for yourself should
take inflation into account. Inflation mostly hurts those
living on fixed incomes, such as Social Security
payments or pensions. It’s also detrimental to those
whose savings are tied to fixed interest rates, such as
savings accounts or bank certificates of deposit,
unless of course the fixed interest earnings exceed
the inflation rate.
But inflation isn’t always bad. High inflation usually
favors those who owe money. Each year that a debtor
makes payments on a fixed loan, he or she is repaying
it with dollars that have declined in value since the
previous year. Sometimes inflation can even help
create wealth, especially when investments increase
in value faster than the inflation rate, as can happen,
for example, in real estate.
How Does the Business Cycle Work?
The supply of goods and services available and the
demand for those goods and services—known as
supply and demand—help indicate what part of the
business cycle the country is in, that is, its general
economic health. Simply put, supply describes the
behavior of sellers, while demand describes the
behavior of buyers. Over time the economy expands
and contracts in accordance with the behavior of
buyers and sellers. You’ve probably heard of the law of
supply and demand. It’s really quite simple: When
demand exceeds supply, prices rise, but when supply
exceeds demand, prices fall. This law shapes the
business cycle.
Take Note
The law of supply and demand, one of
the fundamental economic principles, is
really quite simple. When demand
exceeds supply, prices rise, but when
supply exceeds demand, prices fall.
So how does the business cycle work? Let’s say more
people want to buy cars than there are cars available.
Sellers increase prices, because demand is greater
than supply and some people will pay more to get what
they want. Once prices go up, people—including those
working in automobile factories—will demand higher
wages so they can buy cars.
By 1990 the value of the dollar had eroded to the point
where it was worth many times less than in 1790.
Inflation is the increase in prices over time that causes
the purchasing power of money to decline. Inflation is
an unavoidable fact of economic life.
KNOWLEDGE FINANCIAL TIP
“Those who work the hardest and are paid the least
suffer the most from the constant erosion of money’s
value. Since money has an ever-declining value, a
financially wise person must constantly seek ways to
create value and produce more and more money.”
One way economists keep tabs on inflation is by a
measurement called the gross domestic product
(GDP). The GDP is the total value of all goods and
services produced in the United States in a given
period. Whenever prices rise owing to increased costs
associated with production but production itself stays
the same, inflation occurs.
Small price increases are considered normal for a
growing economy. Employees may receive slight
increases in salary to match inflation, so that
purchasing power remains roughly the same and
rising prices aren’t all that noticeable. But salaries don’
t always keep pace with inflation, and over time, when
it takes more money to buy the same amount,
purchasing power is reduced.
Who Wins, Who Loses?
Any financial plan you put in place for yourself should
take inflation into account. Inflation mostly hurts those
living on fixed incomes, such as Social Security
payments or pensions. It’s also detrimental to those
whose savings are tied to fixed interest rates, such as
savings accounts or bank certificates of deposit,
unless of course the fixed interest earnings exceed
the inflation rate.
But inflation isn’t always bad. High inflation usually
favors those who owe money. Each year that a debtor
makes payments on a fixed loan, he or she is repaying
it with dollars that have declined in value since the
previous year. Sometimes inflation can even help
create wealth, especially when investments increase
in value faster than the inflation rate, as can happen,
for example, in real estate.
How Does the Business Cycle Work?
The supply of goods and services available and the
demand for those goods and services—known as
supply and demand—help indicate what part of the
business cycle the country is in, that is, its general
economic health. Simply put, supply describes the
behavior of sellers, while demand describes the
behavior of buyers. Over time the economy expands
and contracts in accordance with the behavior of
buyers and sellers. You’ve probably heard of the law of
supply and demand. It’s really quite simple: When
demand exceeds supply, prices rise, but when supply
exceeds demand, prices fall. This law shapes the
business cycle.
Take Note
The law of supply and demand, one of
the fundamental economic principles, is
really quite simple. When demand
exceeds supply, prices rise, but when
supply exceeds demand, prices fall.
So how does the business cycle work? Let’s say more
people want to buy cars than there are cars available.
Sellers increase prices, because demand is greater
than supply and some people will pay more to get what
they want. Once prices go up, people—including those
working in automobile factories—will demand higher
wages so they can buy cars.
THE TRIANGLE OF SUCCESS
There are many people with great ideas but few people
with great
fortunes. The B-I triangle has
the power to turn ordinary ideas
into great fortunes.”
Anyone can start a company, yet how many can start a
company that survives and thrives? Anyone can
purchase real estate, yet how many know how to
analyze a property or how to structure the purchase to
take advantage of the tax savings available for real
estate? The key to business success in either
business development or real estate lies in the so-
called business-investor triangle, or B-I triangle.
Take away any one side of a triangle, and what do you
have? An unstable angle. Take away any one side of
the B-I triangle and what do you have? A company
doomed to failure. There are three sides to the B-I
triangle: mission, teamwork, and leadership. Each side
is critical to the stability and long-term success of the
business.
The MissionAt the base of the triangle is its most
important component: the mission. As the world
market becomes ever more glutted with products and
competition becomes increasingly fierce, the
businesses that thrive will be those that use their
mission as their beacon.
What does mission mean?
In truth, it is an intangible concept that, in the hands of
a devoted entrepreneur, can take on spiritual
overtones. The best way to define mission is by
example. Henry Ford’s mission—one he fulfilled with
messianic fervor—was to make the automobile
available to the masses. Hence his mission statement,
“Democratize the automobile.” It was Ford’s ability to
maintain his focus on this mission that helped fuel his
financial success. Or consider the case of Johnson &
Johnson. Back in 1890, the brothers Johnson invented
a first-aid kit for railroad workers who were getting cut
up as they laid tracks across the United States. For
over a century the company has remained true to its
original mission, and today the name Johnson &
Johnson remains synonymous with on-site first aid.
KNOWLEDGEFINANCIAL Tip
“Just to make money is not a strong enough mission.
The mission of a business should be to fill the
customer’s need.”
In the case of both Ford and Johnson & Johnson, the
mission came first, not the lure of profits. Too many
would-be business owners are driven by the desire for
profit alone. Unfortunately, money alone won’t provide
the entrepreneur with sufficient stamina to weather
the storms his or her young company will inevitably
face. A glaring example is the owner who becomes an
instant millionaire by taking the company public
through an initial public offering (IPO)—then watches
as the company falls apart. The problem with the profit-
only mission is that it doesn’t take into account
customer need. After all, without customers there can
be no profits. The mission of a business should be to
meet customer need by providing a product or service.
If customers are well satisfied, then profits will follow.
A mission that serves customers first, and serves
them well, will:
Keep the entrepreneurial flame alive
Serve as a beacon in the early years
Eventually reap profits
Keep your business focused
The Customer as Mission
The story of Levi Strauss suggests the importance of
defining a mission with customers—rather than
profits—in mind. During the Gold Rush, Strauss, a 20-
year-old Bavarian immigrant, boarded a ship for San
Francisco with hopes of selling dry goods to
prospectors. Included in his stock was a roll of rough
canvas for tents and wagon covers. When Strauss
landed on the West Coast he met a prospector.
“You should be selling pants,” said the prospector,
dubiously eyeing the roll of canvas.
“Why pants?” asked the would-be merchant.
“Because pants aren’t worth a damn up in the diggins,”
came the reply.
So Strauss took the roll of canvas to a tailor and had
him sew it into pants for his new acquaintance, giving
birth to Levi’s. Because of Strauss’s primary
commitment to customer satisfaction, eventually the
profits rolled in and today his casual denim pants are
worn the world over.
knowledgefinancial.com Tip
“If the mission is clear and strong, the business will
weather the trials every business goes through during
its first ten years. When a business gets big and it
forgets its mission ... the business begins to die.”
Your mission may be obvious if you’re building a
business to provide a specific product or service. If
your business is to own real estate, you still have a
mission. It may be to build assets for your family, or it
may be to provide housing to your tenants. If you stay
focused on your mission and pay attention to your
customers’ or tenants’ needs, you’ll fulfill your mission.
There are many people with great ideas but few people
with great
fortunes. The B-I triangle has
the power to turn ordinary ideas
into great fortunes.”
Anyone can start a company, yet how many can start a
company that survives and thrives? Anyone can
purchase real estate, yet how many know how to
analyze a property or how to structure the purchase to
take advantage of the tax savings available for real
estate? The key to business success in either
business development or real estate lies in the so-
called business-investor triangle, or B-I triangle.
Take away any one side of a triangle, and what do you
have? An unstable angle. Take away any one side of
the B-I triangle and what do you have? A company
doomed to failure. There are three sides to the B-I
triangle: mission, teamwork, and leadership. Each side
is critical to the stability and long-term success of the
business.
The MissionAt the base of the triangle is its most
important component: the mission. As the world
market becomes ever more glutted with products and
competition becomes increasingly fierce, the
businesses that thrive will be those that use their
mission as their beacon.
What does mission mean?
In truth, it is an intangible concept that, in the hands of
a devoted entrepreneur, can take on spiritual
overtones. The best way to define mission is by
example. Henry Ford’s mission—one he fulfilled with
messianic fervor—was to make the automobile
available to the masses. Hence his mission statement,
“Democratize the automobile.” It was Ford’s ability to
maintain his focus on this mission that helped fuel his
financial success. Or consider the case of Johnson &
Johnson. Back in 1890, the brothers Johnson invented
a first-aid kit for railroad workers who were getting cut
up as they laid tracks across the United States. For
over a century the company has remained true to its
original mission, and today the name Johnson &
Johnson remains synonymous with on-site first aid.
KNOWLEDGEFINANCIAL Tip
“Just to make money is not a strong enough mission.
The mission of a business should be to fill the
customer’s need.”
In the case of both Ford and Johnson & Johnson, the
mission came first, not the lure of profits. Too many
would-be business owners are driven by the desire for
profit alone. Unfortunately, money alone won’t provide
the entrepreneur with sufficient stamina to weather
the storms his or her young company will inevitably
face. A glaring example is the owner who becomes an
instant millionaire by taking the company public
through an initial public offering (IPO)—then watches
as the company falls apart. The problem with the profit-
only mission is that it doesn’t take into account
customer need. After all, without customers there can
be no profits. The mission of a business should be to
meet customer need by providing a product or service.
If customers are well satisfied, then profits will follow.
A mission that serves customers first, and serves
them well, will:
Keep the entrepreneurial flame alive
Serve as a beacon in the early years
Eventually reap profits
Keep your business focused
The Customer as Mission
The story of Levi Strauss suggests the importance of
defining a mission with customers—rather than
profits—in mind. During the Gold Rush, Strauss, a 20-
year-old Bavarian immigrant, boarded a ship for San
Francisco with hopes of selling dry goods to
prospectors. Included in his stock was a roll of rough
canvas for tents and wagon covers. When Strauss
landed on the West Coast he met a prospector.
“You should be selling pants,” said the prospector,
dubiously eyeing the roll of canvas.
“Why pants?” asked the would-be merchant.
“Because pants aren’t worth a damn up in the diggins,”
came the reply.
So Strauss took the roll of canvas to a tailor and had
him sew it into pants for his new acquaintance, giving
birth to Levi’s. Because of Strauss’s primary
commitment to customer satisfaction, eventually the
profits rolled in and today his casual denim pants are
worn the world over.
knowledgefinancial.com Tip
“If the mission is clear and strong, the business will
weather the trials every business goes through during
its first ten years. When a business gets big and it
forgets its mission ... the business begins to die.”
Your mission may be obvious if you’re building a
business to provide a specific product or service. If
your business is to own real estate, you still have a
mission. It may be to build assets for your family, or it
may be to provide housing to your tenants. If you stay
focused on your mission and pay attention to your
customers’ or tenants’ needs, you’ll fulfill your mission.
KNOWLEDGEFINANCIALGROUP.COM
INVESTMENT'S SECRETS REVEALED. THE ABC's OF INVESTMENTS, Ways to Save. THE TRIANGLE OF SUCCESS!
LEARN MORE...
LEARN MORE...
-- SOUTH FLORIDA REAL ESTATE INVESTMENTS. ---
FIVE IMPORTANT THINGS EVERY REAL ESTATE INVESTOR SHOULD KNOW ABOUT?...
ATTENTION, ATTENTION HOME-BUYERS AND SELLERS...
--- REAL ESTATE INVESTMENTS: WHY INVESTING IN REAL ESTATE TODAY IS A GOOD
IDEA FOR FIRST TIME HOME-BUYERS AND FOR EVERYONE?
--- INVESTMENT GENERAL KNOWLEDGE AND FINANCING STRATEGY...
INVEST NOW AND GET RICHER LATER. INVEST YOUR MONEY TODAY AND GET RICHER
TOMORROW
--- REAL ESTATE FINANCING: WHERE AND HOW TO FIND MONEY TO INVEST IN REAL
ESTATE?
Bringing the Dream of Home-ownership Within Reach... THE DREAM NOW CAN BECOME
A REALITY.
--- What are the advantages of commercial property investment?
--- REAL ESTATE ADVANTAGE AND GREAT OPPORTUNITY FOR EVERYONE. LEARN
MORE...
--- How to Step Up and Build Wealth by Investing in Commercial Real Estate?
FIVE IMPORTANT THINGS EVERY REAL ESTATE INVESTOR SHOULD KNOW ABOUT?...
ATTENTION, ATTENTION HOME-BUYERS AND SELLERS...
--- REAL ESTATE INVESTMENTS: WHY INVESTING IN REAL ESTATE TODAY IS A GOOD
IDEA FOR FIRST TIME HOME-BUYERS AND FOR EVERYONE?
--- INVESTMENT GENERAL KNOWLEDGE AND FINANCING STRATEGY...
INVEST NOW AND GET RICHER LATER. INVEST YOUR MONEY TODAY AND GET RICHER
TOMORROW
--- REAL ESTATE FINANCING: WHERE AND HOW TO FIND MONEY TO INVEST IN REAL
ESTATE?
Bringing the Dream of Home-ownership Within Reach... THE DREAM NOW CAN BECOME
A REALITY.
--- What are the advantages of commercial property investment?
--- REAL ESTATE ADVANTAGE AND GREAT OPPORTUNITY FOR EVERYONE. LEARN
MORE...
--- How to Step Up and Build Wealth by Investing in Commercial Real Estate?
PERSONAL FINANCE. What are you doing with
your money in the wake of the financial crisis?
--- Where is the safe place to put money? My
personal finance!
FINANCIAL FREEDOM: A SMARTEST WAY TO
PREPARE A BETTER FUTURE. Money-Making
Information You'll Need to Succeed
US ECONOMY, THE FINANCIAL SYSTEM, THE
CREDIT MARKET. WHAT'S GOING?
MONEY MANAGEMENT. Ten Resolutions to Make
Your Financial Life Easier
FINANCE: THE BANKING AND THE AMERICAN
FINANCIAL SYSTEM HISTORY, SUCCESS AND
FAILURE
SAVING MONEY: THE SECRETS OF SAVING;
WAYS TO SAVE A LOT OF MONEY AND GETTING
RICHER
IRA / INDIVIDUAL RETIREMENT ACCOUNT. What is
an IRA? And what does it matter?
SOCIAL SECURITY; THE ULTIMATE RETIREMENT
GUIDE. HOW DOES SOCIAL SECURITY WORK?
FINANCIAL REPORT: How to bring your spending
under control, so that you get the most out of
every dollar. 8 Reasons to get pre-qualified for a
mortgage loan!
ESTATE PLANNING: Estate planning, is it really
the process of accumulating and disposing of an
estate to maximize the goals of the estate
owner to avoid probate, to lower the tax?
Assets Protection: Don't Get Sued: Five Tips To
Protect Your Company! Types of Asset-
Protection Vehicles;
Many different strategies have been developed
over the years claiming to protect assets. How
to protect yourself from...?
BUILDING WEALTH! How to Become Wealthy?
Nine Truths That Can Set You on the Path to
Financial Freedom
FINANCIAL KNOWLEDGE: The Successful
Investment Journey, Ten Tips For The
Successful Long-Term Investor
FINANCIAL SYSTEM: AMERICA’S MONEY CRISIS /
Bailout 101.
LEARN ABOUT: Top 6 Biggest U.S. Government
Financial Bailouts In History!
2-LEARN ABOUT MARKET CRASHES HISTORY.
HOW AND WHEN?
3-LEARN ABOUT: THE UNITED STATE, AND THE
WORLD MOST IMPORTANT FINANCIAL
INSTITUTIONS!
4-LEARN ABOUT THE COMPLETE FINANCIAL
TURMOIL, THE CREDIT CRISIS!
BANKING & FINANCE / Knowledge Financial.com;
an educational, a life changing website with
great ideas of small business, with important
things to know about our economy, and
investment
INVESTMENT: MAKE YOURSELF RICHER BY
INVESTING THE RIGHT WAY IN THE RIGHT
PRODUCTS. REAL ESTATE INVESTMENTS CAN
HELP
STOCK MARKET: STOCK MARKET A WAY TO
INVEST AND MULTIPLY YOUR PROFITS. THESE
INDUSTRIES HAS THOUSANDS OF COMPANIES
TO BUY STOCKS FROM.
FOREX MARKET: THE LARGEST MARKET IN THE
WORLD TO INVEST AND GET RICHER IF YOU USE
THE RIGHT TOOL.
TAX CERTIFICATES: / TAX DEED: A BETTER WAY
TO INVEST MONEY AND GET RICHER.
TAX LIENS: How Can You Safely Earn 18% to
240% Per Year On Your Investments? Yes you
can... By investing in Government Issued Tax
Liens, Tax deed, Tax Certificates.
REITs: REIT: Real Estate Investment Trust. A
GREAT WAY TO INVEST IN REAL ESTATE
WITHOUT TAKING A MORTGAGE LOAN
COMMERCIAL INVESTMENT. COMMERCIAL REAL
ESTATE; A BETTER WAY TO INVEST AND GET
RICHER! MULTI-WAYS TO WIN BIG IN REAL
ESTATE. WHAT IS COMMERCIAL REAL ESTATE?
PENSION PLANS: THE ULTIMATE RETIREMENT
GUIDE; HOW TO RETIRE EARLY AND RETIRE
REACH. WHAT ARE 401K, ROTH 401K,
INDIVIDUAL 401K, 403B, 457 PLAN, THRIFT
SAVINGS PLAN.
IDENTITY THEFT: WATCH OUT, STOP IT FROM
HAPPENING, GET THE TOOLS YOU NEED TO
PREVENT IT RIGHT HERE! AT KNOWLEDGE
FINANCIAL.COM
INSURANCE 101: THE IMPORTANCE OF
INSURANCE IN SOMEONE'S LIFE.
EVERYTHING YOU NEED TO KNOW ABOUT
INSURANCE; NOW IS YOUR CHANCE TO KNOW
HOW TO SAVE MONEY ON YOUR INSURANCE!
LEARN ABOUT THE 15 INSURANCE POLICIES YOU
DON'T NEED!
your money in the wake of the financial crisis?
--- Where is the safe place to put money? My
personal finance!
FINANCIAL FREEDOM: A SMARTEST WAY TO
PREPARE A BETTER FUTURE. Money-Making
Information You'll Need to Succeed
US ECONOMY, THE FINANCIAL SYSTEM, THE
CREDIT MARKET. WHAT'S GOING?
MONEY MANAGEMENT. Ten Resolutions to Make
Your Financial Life Easier
FINANCE: THE BANKING AND THE AMERICAN
FINANCIAL SYSTEM HISTORY, SUCCESS AND
FAILURE
SAVING MONEY: THE SECRETS OF SAVING;
WAYS TO SAVE A LOT OF MONEY AND GETTING
RICHER
IRA / INDIVIDUAL RETIREMENT ACCOUNT. What is
an IRA? And what does it matter?
SOCIAL SECURITY; THE ULTIMATE RETIREMENT
GUIDE. HOW DOES SOCIAL SECURITY WORK?
FINANCIAL REPORT: How to bring your spending
under control, so that you get the most out of
every dollar. 8 Reasons to get pre-qualified for a
mortgage loan!
ESTATE PLANNING: Estate planning, is it really
the process of accumulating and disposing of an
estate to maximize the goals of the estate
owner to avoid probate, to lower the tax?
Assets Protection: Don't Get Sued: Five Tips To
Protect Your Company! Types of Asset-
Protection Vehicles;
Many different strategies have been developed
over the years claiming to protect assets. How
to protect yourself from...?
BUILDING WEALTH! How to Become Wealthy?
Nine Truths That Can Set You on the Path to
Financial Freedom
FINANCIAL KNOWLEDGE: The Successful
Investment Journey, Ten Tips For The
Successful Long-Term Investor
FINANCIAL SYSTEM: AMERICA’S MONEY CRISIS /
Bailout 101.
LEARN ABOUT: Top 6 Biggest U.S. Government
Financial Bailouts In History!
2-LEARN ABOUT MARKET CRASHES HISTORY.
HOW AND WHEN?
3-LEARN ABOUT: THE UNITED STATE, AND THE
WORLD MOST IMPORTANT FINANCIAL
INSTITUTIONS!
4-LEARN ABOUT THE COMPLETE FINANCIAL
TURMOIL, THE CREDIT CRISIS!
BANKING & FINANCE / Knowledge Financial.com;
an educational, a life changing website with
great ideas of small business, with important
things to know about our economy, and
investment
INVESTMENT: MAKE YOURSELF RICHER BY
INVESTING THE RIGHT WAY IN THE RIGHT
PRODUCTS. REAL ESTATE INVESTMENTS CAN
HELP
STOCK MARKET: STOCK MARKET A WAY TO
INVEST AND MULTIPLY YOUR PROFITS. THESE
INDUSTRIES HAS THOUSANDS OF COMPANIES
TO BUY STOCKS FROM.
FOREX MARKET: THE LARGEST MARKET IN THE
WORLD TO INVEST AND GET RICHER IF YOU USE
THE RIGHT TOOL.
TAX CERTIFICATES: / TAX DEED: A BETTER WAY
TO INVEST MONEY AND GET RICHER.
TAX LIENS: How Can You Safely Earn 18% to
240% Per Year On Your Investments? Yes you
can... By investing in Government Issued Tax
Liens, Tax deed, Tax Certificates.
REITs: REIT: Real Estate Investment Trust. A
GREAT WAY TO INVEST IN REAL ESTATE
WITHOUT TAKING A MORTGAGE LOAN
COMMERCIAL INVESTMENT. COMMERCIAL REAL
ESTATE; A BETTER WAY TO INVEST AND GET
RICHER! MULTI-WAYS TO WIN BIG IN REAL
ESTATE. WHAT IS COMMERCIAL REAL ESTATE?
PENSION PLANS: THE ULTIMATE RETIREMENT
GUIDE; HOW TO RETIRE EARLY AND RETIRE
REACH. WHAT ARE 401K, ROTH 401K,
INDIVIDUAL 401K, 403B, 457 PLAN, THRIFT
SAVINGS PLAN.
IDENTITY THEFT: WATCH OUT, STOP IT FROM
HAPPENING, GET THE TOOLS YOU NEED TO
PREVENT IT RIGHT HERE! AT KNOWLEDGE
FINANCIAL.COM
INSURANCE 101: THE IMPORTANCE OF
INSURANCE IN SOMEONE'S LIFE.
EVERYTHING YOU NEED TO KNOW ABOUT
INSURANCE; NOW IS YOUR CHANCE TO KNOW
HOW TO SAVE MONEY ON YOUR INSURANCE!
LEARN ABOUT THE 15 INSURANCE POLICIES YOU
DON'T NEED!
..RICH GUIDE, WHY AREN'T RICH?
BUILDING FINANCIAL WEALTH, OBTAIN FINANCIAL
FREEDOM, BECOME A RICH PERSON; YES YOU CAN...
..RULE OF 72: The compound interest and financial
success. Rule Of 72 is the most important and simple
rule of financial success.
..MILLIONAIRE: How To Make Your First $1 Million? The
Millionaire's Mindset
..FORTUNE: BEFORE INVESTING IN THE STOCK MARKET
LEARN THIS FIRST!...
..GOVERNMENT: Government's general information;
Local, State, and Federal.
Housing Finance Authority of Miami dade, Monroe,
Broward, and Palm Beach County
..EMPIRE: THE ABC's OF INVESTMENTS, Ways to Save.
THE TRIANGLE OF SUCCESS...
..INVESTORS: CREATIVE FINANCING:
TOP 10 CREATIVE FINANCING TECHNIQUES AND
STRATEGIES TO FIND MONEY TO INVEST!
The Five C’s of Credit: LEARN MORE..
CREATIVE FINANCE CAN AND WILL MAKE ALL THE
DIFFERENCE WHEN AN INVESTOR DECIDES TO INVEST
IN REAL ESTATE...
..HOME INSPECTION: HOW TO GET THE BEST OUT OF IT..
Top 10 home-buying mistakes to avoid!
HOW TO USE HOME INSPECTION REPORTS TO
NEGOTIATE SALE PRICE?...
...ACCOUNTING: The Basics of Accounting...
...TAXES: THE FUNDAMENTAL OF TAXES. THE MORE
YOU KNOW, THE LESS YOU PAY...
...ANALYTICS: Top 9 Real Estate Financial Calculator
Problems every investors should know about...
BUILDING FINANCIAL WEALTH, OBTAIN FINANCIAL
FREEDOM, BECOME A RICH PERSON; YES YOU CAN...
..RULE OF 72: The compound interest and financial
success. Rule Of 72 is the most important and simple
rule of financial success.
..MILLIONAIRE: How To Make Your First $1 Million? The
Millionaire's Mindset
..FORTUNE: BEFORE INVESTING IN THE STOCK MARKET
LEARN THIS FIRST!...
..GOVERNMENT: Government's general information;
Local, State, and Federal.
Housing Finance Authority of Miami dade, Monroe,
Broward, and Palm Beach County
..EMPIRE: THE ABC's OF INVESTMENTS, Ways to Save.
THE TRIANGLE OF SUCCESS...
..INVESTORS: CREATIVE FINANCING:
TOP 10 CREATIVE FINANCING TECHNIQUES AND
STRATEGIES TO FIND MONEY TO INVEST!
The Five C’s of Credit: LEARN MORE..
CREATIVE FINANCE CAN AND WILL MAKE ALL THE
DIFFERENCE WHEN AN INVESTOR DECIDES TO INVEST
IN REAL ESTATE...
..HOME INSPECTION: HOW TO GET THE BEST OUT OF IT..
Top 10 home-buying mistakes to avoid!
HOW TO USE HOME INSPECTION REPORTS TO
NEGOTIATE SALE PRICE?...
...ACCOUNTING: The Basics of Accounting...
...TAXES: THE FUNDAMENTAL OF TAXES. THE MORE
YOU KNOW, THE LESS YOU PAY...
...ANALYTICS: Top 9 Real Estate Financial Calculator
Problems every investors should know about...
REAL ESTATE FOR SALE, SEE THE ACTUAL LISTINGS NOW!
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Fast, Easy and Simple. Click Here to Search!
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SEARCH FOR CONDOMINIUM, APARTMENTS
SEARCH FOR COMMERCIAL PROPERTIES RIGHT HERE!
SEARCH FOR WATERFRONT PROPERTIES
Motivated Sellers; Selling at Unbelievable Prices... LOOK FOR, FOR SALE PROPERTIES
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Live Your Dream
Search it, Find it, Learn about it, Negotiate it, Buy it.
Obtain and retain our contact information to further assist you.! Click Here to contact us
& get immediate help! We're Licensed Realtor & Licensed Mortgage Broker.
Getting Your Retirement Money Early -- Without Penalty
Can't wait for your retirement funds? Learn how to get your retirement
money early..
If you need to dip into a retirement account -- whether it's a 401(k), IRA, or
something else -- before you retire, you will likely pay a penalty. However,
there are a few ways to avoid the penalty..
----------------
If you take a distribution from your retirement plan early (meaning before
the day you turn 59 1/2) you will generally have to pay a 10% early
distribution tax above and beyond any regular income taxes you may owe
on the money.
That extra 10% might be called a tax, but it looks and feels like a penalty. In
fact, the early distribution tax is the cornerstone of the government's
campaign to encourage us to save for retirement -- or put another way, to
discourage us from plundering our savings before our golden years
Can't wait for your retirement funds? Learn how to get your retirement
money early..
If you need to dip into a retirement account -- whether it's a 401(k), IRA, or
something else -- before you retire, you will likely pay a penalty. However,
there are a few ways to avoid the penalty..
----------------
If you take a distribution from your retirement plan early (meaning before
the day you turn 59 1/2) you will generally have to pay a 10% early
distribution tax above and beyond any regular income taxes you may owe
on the money.
That extra 10% might be called a tax, but it looks and feels like a penalty. In
fact, the early distribution tax is the cornerstone of the government's
campaign to encourage us to save for retirement -- or put another way, to
discourage us from plundering our savings before our golden years
Substantially Equal Periodic Payments
The substantially equal periodic payment exception is available to anyone
with an IRA or a retirement plan, regardless of age.
Theoretically, if you begin taking distributions from your retirement plan in
equal annual installments, and those payments are designed to be spread
out over your entire life or the joint life of you and your retirement plan
beneficiary, then the payments will not be subject to an early distribution tax.
If you think you might need to tap your retirement plan early, this is the
option that is most likely to work for you.
One caveat: If you want to begin receiving installment payments from
your employer's plan without penalty, you must have terminated your
employment before payments begin. If the payments are from an IRA,
however, the status of your employment is irrelevant.
The substantially equal periodic payment exception is available to anyone
with an IRA or a retirement plan, regardless of age.
Theoretically, if you begin taking distributions from your retirement plan in
equal annual installments, and those payments are designed to be spread
out over your entire life or the joint life of you and your retirement plan
beneficiary, then the payments will not be subject to an early distribution tax.
If you think you might need to tap your retirement plan early, this is the
option that is most likely to work for you.
One caveat: If you want to begin receiving installment payments from
your employer's plan without penalty, you must have terminated your
employment before payments begin. If the payments are from an IRA,
however, the status of your employment is irrelevant.
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Leaving Your Job After Age 55
If you are at least 55 years old when you leave your job, you will not have to pay
an early distribution tax on any distribution you receive from your former
employer's retirement plan. (You will have to pay income tax on it, however.)
This exception applies only to distributions you receive after you have
separated from service, or terminated your employment with the company that
sponsors the plan. You don't have to retire permanently.
You can go to work for another employer, or even return to work for the same
employer at a later date. But you cannot receive a distribution from your
employer's retirement plan while you are still employed with the company if you
want to use the age 55 exception to the early distribution tax.
This exception is relevant only if you are between ages 55 and 59 1/2. After age
59 1/2, the early distribution tax does not apply to any retirement plan
distribution
------------
For this exception, you need not be age 55 on the day you leave your job, as
long as you turn 55 by December 31 of the same year.
The strategy falls apart if you retire in a year that precedes the year you turn 55,
even if you postpone receiving the retirement benefits until you reach age 55.
This exception does not apply to IRAs
If you are at least 55 years old when you leave your job, you will not have to pay
an early distribution tax on any distribution you receive from your former
employer's retirement plan. (You will have to pay income tax on it, however.)
This exception applies only to distributions you receive after you have
separated from service, or terminated your employment with the company that
sponsors the plan. You don't have to retire permanently.
You can go to work for another employer, or even return to work for the same
employer at a later date. But you cannot receive a distribution from your
employer's retirement plan while you are still employed with the company if you
want to use the age 55 exception to the early distribution tax.
This exception is relevant only if you are between ages 55 and 59 1/2. After age
59 1/2, the early distribution tax does not apply to any retirement plan
distribution
------------
For this exception, you need not be age 55 on the day you leave your job, as
long as you turn 55 by December 31 of the same year.
The strategy falls apart if you retire in a year that precedes the year you turn 55,
even if you postpone receiving the retirement benefits until you reach age 55.
This exception does not apply to IRAs
Dividends from ESOPs
An employee stock ownership plan, or ESOP, is a type of stock bonus plan
which may have some features of a more traditional pension plan.
ESOPs are designed to be funded primarily or even exclusively with
employer stock. An ESOP can allow cash distributions, however, as long as
the employee has the right to demand that benefits be paid in employer stock.
Distributions of dividends from employer stock held inside an ESOP are not
subject to the early distribution tax, no matter when you receive the dividend.
------------------
Medical Expenses
If you withdraw money from a retirement plan to pay medical expenses, a
portion of that distribution might escape the early distribution tax. But once
again, the exception is not as simple or as generous as it sounds.
The tax exemption applies only to the portion of your medical expenses that
would be deductible if you itemized deductions on your tax return.
Medical expenses are deductible if they are yours, your spouse's, or your
dependent's. They are deductible only to the extent they exceed 7.5% of your
adjusted gross income. Consequently,
your retirement plan distribution will avoid the early distribution tax only to
the extent it also exceeds the 7.5% threshold.
An employee stock ownership plan, or ESOP, is a type of stock bonus plan
which may have some features of a more traditional pension plan.
ESOPs are designed to be funded primarily or even exclusively with
employer stock. An ESOP can allow cash distributions, however, as long as
the employee has the right to demand that benefits be paid in employer stock.
Distributions of dividends from employer stock held inside an ESOP are not
subject to the early distribution tax, no matter when you receive the dividend.
------------------
Medical Expenses
If you withdraw money from a retirement plan to pay medical expenses, a
portion of that distribution might escape the early distribution tax. But once
again, the exception is not as simple or as generous as it sounds.
The tax exemption applies only to the portion of your medical expenses that
would be deductible if you itemized deductions on your tax return.
Medical expenses are deductible if they are yours, your spouse's, or your
dependent's. They are deductible only to the extent they exceed 7.5% of your
adjusted gross income. Consequently,
your retirement plan distribution will avoid the early distribution tax only to
the extent it also exceeds the 7.5% threshold.
QDRO Payments
If you are paying child support or alimony from
your retirement plan, or if you intend to
distribute some or all of the plan to your former
spouse as part of a property settlement, none of
those payments are subject to the early
distribution tax as long as there is a Qualified
Domestic Relations Order (QDRO) in place that
orders the payments.
A QDRO usually arises from a separation or
divorce agreement, and involves court-ordered
payments to an "alternate payee," such as an
ex-spouse or minor child. This exception does
not apply to IRAs. (See below.)
-------------------
Death
Another way to escape the early distribution tax,
albeit a rather unattractive one, is to die before
the distribution is made.
None of the funds distributed from your
retirement plan after your death -- for instance,
to a named beneficiary -- will be subject to the
early distribution tax, as long as the account is
still in your name when the distribution occurs.
If you are the beneficiary of your spouse's
retirement plan or IRA, then upon your spouse's
death you may roll over a distribution from your
spouse's retirement plan or IRA to an IRA or
plan of your own and avoid paying the tax. This
benefit is available only to a spouse.
If you are paying child support or alimony from
your retirement plan, or if you intend to
distribute some or all of the plan to your former
spouse as part of a property settlement, none of
those payments are subject to the early
distribution tax as long as there is a Qualified
Domestic Relations Order (QDRO) in place that
orders the payments.
A QDRO usually arises from a separation or
divorce agreement, and involves court-ordered
payments to an "alternate payee," such as an
ex-spouse or minor child. This exception does
not apply to IRAs. (See below.)
-------------------
Death
Another way to escape the early distribution tax,
albeit a rather unattractive one, is to die before
the distribution is made.
None of the funds distributed from your
retirement plan after your death -- for instance,
to a named beneficiary -- will be subject to the
early distribution tax, as long as the account is
still in your name when the distribution occurs.
If you are the beneficiary of your spouse's
retirement plan or IRA, then upon your spouse's
death you may roll over a distribution from your
spouse's retirement plan or IRA to an IRA or
plan of your own and avoid paying the tax. This
benefit is available only to a spouse.
Disability and Retirement
If you become disabled, all subsequent
distributions from your retirement plan are free of
the early distribution tax. But what does it mean
to be disabled?
And who decides? The law defines disabled as
the inability to "engage in any substantial gainful
activity by reason of any medically determinable
physical or mental impairment which can be
expected to result in death or to be of
long-continued and indefinite duration." Hmmm.
----------------
The key to the disability
exception seems to lie in the
permanence of the condition, not
the severity. Disability exceptions have been
denied for chemical dependence and chronic
depression, even when the taxpayers were
hospitalized for those conditions. It also appears
that the disability must be deemed permanent at
the time of the distribution -- regardless of
whether it is later found to be permanent.
If you become disabled, all subsequent
distributions from your retirement plan are free of
the early distribution tax. But what does it mean
to be disabled?
And who decides? The law defines disabled as
the inability to "engage in any substantial gainful
activity by reason of any medically determinable
physical or mental impairment which can be
expected to result in death or to be of
long-continued and indefinite duration." Hmmm.
----------------
The key to the disability
exception seems to lie in the
permanence of the condition, not
the severity. Disability exceptions have been
denied for chemical dependence and chronic
depression, even when the taxpayers were
hospitalized for those conditions. It also appears
that the disability must be deemed permanent at
the time of the distribution -- regardless of
whether it is later found to be permanent.
Refunds
If you receive a refund of a contribution to your retirement plan because you
contributed more than you were permitted to deduct during the year, those
"corrective" distributions will not be subject to the early distribution tax, although
they might be subject to other taxes and penalties.
In order to avoid the early distribution tax, the excess must come out of the plan
within a prescribed time -- usually before you file your tax return. Corrective
distributions are usually handled by the plan administrator.
-----------------------
Special Rules for Traditional IRAs
The early distribution tax rules apply to traditional IRAs (non-Roth IRAs) in much the
same way they apply to qualified plans, with just a few exceptions and variations.
No Age 55 Exception. With qualified plans, employees who are at least age 55 in the
year they terminate their employment will not be subject to an early distribution tax
on distributions from their former employer's qualified plan.
This rule does not apply to IRAs, however. If you have an IRA, the only age-related
way to escape the early distribution tax is to reach the age of 59 1/2 before taking a
distribution -- in other words, not to take the distribution "early."
No QDRO Exception.
The special QDRO rules in the Tax Code do not apply to IRAs. Even if your divorce
agreement or court order mandates child support or alimony payments from an IRA,
the payments will be subject to an early distribution tax (unless one of the other
exceptions applies).
------------------
Health Insurance Premiums.
If you are unemployed or were recently unemployed and use money from your IRA
to pay health insurance premiums, the IRA funds used specifically for that purpose
will not be subject to an early distribution tax, as long as you satisfy the following
conditions:
•you received unemployment compensation for at least
12 consecutive weeks
•you received the funds from the IRA during a year in which you received
unemployment compensation or during the following year, and
•the IRA distribution is received no more than 60 days after you return to work.
You may also make a penalty-free withdrawal from your IRA to pay for health
insurance if you were self-employed before you stopped working, as long as you
would have qualified for unemployment compensation had you not been self-
employed.
-----------------
Higher Education Expenses.
Distributions that you use to pay higher education expenses are not subject to the
early distribution tax, as long as those distributions meet the following requirements:
•The distributions are used to pay for tuition, fees, books, supplies, and equipment.
They may also be used for room and board if the student is carrying at least half of a
normal study load (or is considered at least a half-time student).
-----------------------
•The expenses are paid on behalf of the IRA owner, or the
owner's spouse, child, or grandchild.
•The distributions do not exceed the amount of the higher education expenses.
(When calculating expenses, you must reduce the total by any tax-free scholarships
or other tax-free assistance the student receives, not including loans, gifts, or
inheritances.)
-------------------
First Home Purchase.
You may take a penalty-free distribution from your IRA to purchase a home. This
exception is not as straightforward as it seems, however, and you should be aware
of the details:
•You must use the distribution within 120 days of the date that you receive it.
•The funds must be used to purchase a principal
residence for a first-time homebuyer. If the homebuyer is married,
then neither the homebuyer nor his or her spouse may have owned any part of a
principal residence during the preceding two-year period.
•The first-time homebuyer must be the IRA owner, the
owner's spouse, or an ancestor, child, or grandchild of the owner or the owner's
spouse.
•There is a lifetime limit of $10,000.
---------------
Refunds.
There is a limit to how much you may contribute to an IRA each year. If you
contribute too much, then you have made an "excess contribution."
If you withdraw the excess by the time you file your tax return, the excess will not be
subject to the early distribution tax. You must also withdraw the income earned on
the excess while it was in the IRA, however, and that portion will be subject to the
early distribution tax, unless it qualifies for another exception
If you receive a refund of a contribution to your retirement plan because you
contributed more than you were permitted to deduct during the year, those
"corrective" distributions will not be subject to the early distribution tax, although
they might be subject to other taxes and penalties.
In order to avoid the early distribution tax, the excess must come out of the plan
within a prescribed time -- usually before you file your tax return. Corrective
distributions are usually handled by the plan administrator.
-----------------------
Special Rules for Traditional IRAs
The early distribution tax rules apply to traditional IRAs (non-Roth IRAs) in much the
same way they apply to qualified plans, with just a few exceptions and variations.
No Age 55 Exception. With qualified plans, employees who are at least age 55 in the
year they terminate their employment will not be subject to an early distribution tax
on distributions from their former employer's qualified plan.
This rule does not apply to IRAs, however. If you have an IRA, the only age-related
way to escape the early distribution tax is to reach the age of 59 1/2 before taking a
distribution -- in other words, not to take the distribution "early."
No QDRO Exception.
The special QDRO rules in the Tax Code do not apply to IRAs. Even if your divorce
agreement or court order mandates child support or alimony payments from an IRA,
the payments will be subject to an early distribution tax (unless one of the other
exceptions applies).
------------------
Health Insurance Premiums.
If you are unemployed or were recently unemployed and use money from your IRA
to pay health insurance premiums, the IRA funds used specifically for that purpose
will not be subject to an early distribution tax, as long as you satisfy the following
conditions:
•you received unemployment compensation for at least
12 consecutive weeks
•you received the funds from the IRA during a year in which you received
unemployment compensation or during the following year, and
•the IRA distribution is received no more than 60 days after you return to work.
You may also make a penalty-free withdrawal from your IRA to pay for health
insurance if you were self-employed before you stopped working, as long as you
would have qualified for unemployment compensation had you not been self-
employed.
-----------------
Higher Education Expenses.
Distributions that you use to pay higher education expenses are not subject to the
early distribution tax, as long as those distributions meet the following requirements:
•The distributions are used to pay for tuition, fees, books, supplies, and equipment.
They may also be used for room and board if the student is carrying at least half of a
normal study load (or is considered at least a half-time student).
-----------------------
•The expenses are paid on behalf of the IRA owner, or the
owner's spouse, child, or grandchild.
•The distributions do not exceed the amount of the higher education expenses.
(When calculating expenses, you must reduce the total by any tax-free scholarships
or other tax-free assistance the student receives, not including loans, gifts, or
inheritances.)
-------------------
First Home Purchase.
You may take a penalty-free distribution from your IRA to purchase a home. This
exception is not as straightforward as it seems, however, and you should be aware
of the details:
•You must use the distribution within 120 days of the date that you receive it.
•The funds must be used to purchase a principal
residence for a first-time homebuyer. If the homebuyer is married,
then neither the homebuyer nor his or her spouse may have owned any part of a
principal residence during the preceding two-year period.
•The first-time homebuyer must be the IRA owner, the
owner's spouse, or an ancestor, child, or grandchild of the owner or the owner's
spouse.
•There is a lifetime limit of $10,000.
---------------
Refunds.
There is a limit to how much you may contribute to an IRA each year. If you
contribute too much, then you have made an "excess contribution."
If you withdraw the excess by the time you file your tax return, the excess will not be
subject to the early distribution tax. You must also withdraw the income earned on
the excess while it was in the IRA, however, and that portion will be subject to the
early distribution tax, unless it qualifies for another exception
Getting Your Retirement Money Early -- Without Penalty....
// Self Directed IRA // Retirement Planning // Rollover Account // Social Security // Life Insurance // IRA/Roth IRA
// Estate Planning // Annuity // Trust Account // Pension Plan // Living Trust // Financial Planning //
- Personal Finance // = Affirmative Action - // - Terminsurance // = Custodial Account - // Inurancequote = //
// Estate Planning // Annuity // Trust Account // Pension Plan // Living Trust // Financial Planning //
- Personal Finance // = Affirmative Action - // - Terminsurance // = Custodial Account - // Inurancequote = //
'' ' ''Real Estate Investing: Here are more than 15 ways to start investing in real estate to make money...''
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'' Investment Properties Knowledge And Useful Information... Everything To Know About Rental Property For Monthly Cash-flow From A To Z. ... LEARN MORE...
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''Types of Property Ownership: There are a variety of forms of ownership of
property people need to know about...
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''Find 55+ Communities and Senior Living. Affordable Retirement
Communities. Resort Properties For Seniors...
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''How to Make Money in Real Estate? Types of Real Estate to Invest in... Real Estate Invesing, Active vs Passive??
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'' Ways To Invest In Real Estate Without Buying Property... How to Better Investing in Real Estate With No MORTGAGE?
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How to Make Money in Real Estate: 10 basic Ways ...
There are many ways to make money in real estate / Investors can realize attractive returns from
multiple income streams in real estate investments'''
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'' Ways to Value a Real Estate Rental Property
Determining the cost of and the return on an investment property are just as important as figuring out its value.''
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'' Income Property - Everything People Need To Know About Rental Property. What are the best ways to
make money in real estate? LEARN MORE..
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'' Types of Property Ownership...
There are a variety of forms of ownership of property.----
'' How to Invest In Real Estate without Having to Buy Houses?
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'' Home Warranties, Why Many People Need Them?
Owning a home is a pricey endeavor. It requires attention and upkeep simply because things get old a need to be replaced...
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'' How to invest and Make Money in Real Estate?…
''Making Money On These Major Types of Properties''
There are many different property types that you can use to make money...
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''General Knowledge For Investing in Commercial Real Estate:
''cash for today or wealth for tomorrow?-
'' Residential Vs. Commercial'' LEARN MORE...
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'' How To Make Money In Real Estate When Buying Investments
It’s often said “You make your money when you buy.” There are many different
strategies you can use to ensure profitability... LEARN MORE''
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'' How To Make Money In These Real Estate Related Careers...
You don’t need to invest in real estate to begin making money from it...''LEARN
MORE...
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'' Invest In Real Estate With less than $1,000 To Start With. Get Your Fair Share.
Easy And Simple To Build Your Portfolio / Real Estate Investment Trust Can
Help..
Personal Finance: Where are the safe places to put your money in time of
financial crises, economic turmoil?
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Finance: Fixed Income Security Investment: Types Of Fixed Income Investments..
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Preferred Stocks vs. Common Stocks. = // Types of Preferred
Stocks... Why Do Companies Issue Preferred Stock? = LEARN MORE HERE...
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'' How the Fed Keeps Track of Our Money Supply? // INVESTMENT'S
SECRETS REVEALED, THE ABC's OF INVESTMENTS...
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Femkonsa Capital: Best Index Funds vs Best ETF"s = Exchange Traded
Funds.
LEARN MORE HERE...
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Millionaire Portfolio: Passive Income - Residual Income - Earned Income -
Portfolio Income. HERE ARE MUCH MORE... = Research & Learning -/
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Dividend Stocks: List Of Dividend Paying Companies. Quarterly monthly
cash-flow = Return On Investment... LEARN MUCH MORE HERE...
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Knowledge Center: 101 Ways to Make Money Online We often recommend
earning some extra income on the side .
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Entrepreneur: Business Ideas And Opportunities.
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Economic: Different Types Of Market To Invest in...
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Freeknowledge: Things to Know About Government Bonds & Municipal
Bonds...
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Resource Center: Different ways to protect your money…
What to do when we have a market panic, or economic uncertainty...
Last Will And Testament...
What Not to Include When Making a Will...
Ways to Avoid Probate... LEARN MORE HERE...
financial crises, economic turmoil?
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Finance: Fixed Income Security Investment: Types Of Fixed Income Investments..
---------------
Preferred Stocks vs. Common Stocks. = // Types of Preferred
Stocks... Why Do Companies Issue Preferred Stock? = LEARN MORE HERE...
--------------
'' How the Fed Keeps Track of Our Money Supply? // INVESTMENT'S
SECRETS REVEALED, THE ABC's OF INVESTMENTS...
-----------------
Femkonsa Capital: Best Index Funds vs Best ETF"s = Exchange Traded
Funds.
LEARN MORE HERE...
-------------------
Millionaire Portfolio: Passive Income - Residual Income - Earned Income -
Portfolio Income. HERE ARE MUCH MORE... = Research & Learning -/
-----------------
Dividend Stocks: List Of Dividend Paying Companies. Quarterly monthly
cash-flow = Return On Investment... LEARN MUCH MORE HERE...
-----------------
Knowledge Center: 101 Ways to Make Money Online We often recommend
earning some extra income on the side .
---------------
Entrepreneur: Business Ideas And Opportunities.
---------------
Economic: Different Types Of Market To Invest in...
--------------
Freeknowledge: Things to Know About Government Bonds & Municipal
Bonds...
-------------
Resource Center: Different ways to protect your money…
What to do when we have a market panic, or economic uncertainty...
Last Will And Testament...
What Not to Include When Making a Will...
Ways to Avoid Probate... LEARN MORE HERE...