Landing on the Fortune 500 is a pie-in-the-sky dream of many business owners. The most profitable U.S. companies that make up the latest list collectively employ 27.9 million individuals across the world and represent $840 billion in profits and $12 trillion in revenues. Who are these business dynamos and where are many of them based?

The Top 10
In June 2016, Fortune magazine took a look at 2015’s top moneymakers, most of which are household names. The No. 1 spot goes to the Arkansas-based big-box retailer Wal-Mart, followed by oil and gas giant Exxon Mobil, tech innovator Apple, insurance and investment outfit Berkshire Hathaway, and pharmaceutical distributor McKesson. Health care companies, auto manufacturers and a communications company round out the top 10.

Hot Areas for Headquarters
Many Fortune 500 company headquarters are on the East Coast — from Comcast (No. 37) in Philadelphia, Pennsylvania; to JetBlue Airlines (No. 405) in Long Island City, New York; to General Electric (No. 11) in Fairfield, Connecticut.

The Midwest also houses several successful centers of operation, including Motorola Solutions (No. 451) in Schaumburg, Illinois; Harley-Davidson (No. 432) in Milwaukee, Wisconsin; and Dow Chemical (No. 56) in Midland, Michigan.

How States Rank for Business
Knowing where a state ranks on business matters and understanding their differing approaches to incentives, tax rates and more may narrow down where to move next, even if a job isn’t waiting for you upon arrival. According to Chief Executive magazine’s “Best and Worst States for Business,” Texas is the most beneficial, pro-growth spot for business owners, while California ranks lowest.

As we begin a new year, one way of exploring the economic landscape ahead of us is to examine the biggest revenue generators in America and the impact they have on national and local scales.

The information provided in Eddleman’s Economic Insight is not intended to be used as investment advice; rather it is provided as general economic news and information for your awareness or for discussions with your investment professional. Please consult your investment professional or CPA for advice specific to your situation! Past performance is not indicative of future results.

It may seem early, but the start of a new year is an ideal time to get your ducks in a row when it comes to tax preparation. Use the following tips to get some work done now and avoid the panic of procrastination.

Revisit Your Usual Routine
The bulk of tax prep comes down to organized paperwork, so take stock of your documents. To report income, you’ll want W-2 statements if you’re salaried, 1099s if you do any freelance work and end-of-year statements for taxable investment accounts. Keep in mind that employers have until Jan. 31 to file and provide copies of W-2s and most 1099s to employees and contractors.

Strategize Your Upcoming Tax Bill
One significant benefit to gearing up for tax season now: You can potentially owe less to the IRS by stashing away some funds in tax-advantaged accounts. You have until April 17, 2017, to max out 2016 contributions in a Traditional IRA, solo 401(k) or health savings account and potentially net a nice deduction as a result. Or if 2016 resulted in lower-than-usual income and you can afford to pay more taxes (but at a lower rate), consider whether a Roth conversion makes sense for the year.

Note What’s New
High-income earners should be aware of phaseout limits for itemized deductions, the Medicare surtax and a new higher rate for dividends and long-term capital gains. And if you were without healthcare coverage in 2016, don’t be surprised when the IRS levies a penalty fine.

Square away your tax situation early in the year so you have plenty of time to identify potential gaps, valuable opportunities and strategies to protect your hard-earned wealth for this year and the next.

The information provided in Eddleman’s Economic Insight is not intended to be used as investment advice; rather it is provided as general economic news and information for your awareness or for discussions with your investment professional. Please consult your investment professional or CPA for advice specific to your situation! Past performance is not indicative of future results.

One common trait among the highly successful is their endless drive to improve and learn. Take a page from their book during your downtime this holiday season by feeding your curiosity and keeping your mind engaged. Make space on your digital device for some of these popular finance-focused podcasts:

  1. National Public Radio’s Planet Money tackles broad economic topics with a fun, inventive approach. One example: In August, a five-episode series chronicled their 100-barrel oil purchase, following it from a Kansas well to its final stop at an Iowa gas station. Look for new podcasts once or twice a week.
  2. Marketplace delivers a daily podcast that takes a detailed look at the day’s business and financial news in a relatable and highly digestible format.
  3. What started in 1997 as a syndicated newspaper feature has evolved into Motley Fool Money, a weekly radio show and podcast. A team of analysts helms this production, deciphering technical jargon and covering investing-related stories and interviews.
  4. Fans of the 2005 nonfiction bestseller “Freakonomics” may appreciate the eponymous weekly podcast, which looks at economic systems from fresh perspectives. Podcast topics range from an economist’s take on ride-sharing apps to conversations with innovative entrepreneurs like Tim Ferriss and more.
  5. Stacking Benjamins focuses on personal finance, alternating between guest interviews that touch on earning, saving and spending, and a roundtable format that features other podcasters and bloggers.

Time is money, so spend it wisely. Put your downtime to good use with these and other informative podcasts.

spending-your-bonus

Whether it’s tied to performance, holiday profits or a tax refund, nothing beats the joy of receiving a bonus. But resist the temptation to blow it all on something that could be short-lived. Instead, consider the following, all of which can have a lasting impact.

  • Pay down debt. If you’re carrying a credit card balance or another high-interest, short-term debt, here’s a chance to reduce it. With average credit card debt at nearly $8,000 per household, even a modest holiday bonus can make a serious dent and minimize the snowball effect.
  • Refresh your emergency fund. Are you one of the 63 percent of Americans who doesn’t have the savings to cover an unexpected $500 expense? Consider building a cash cushion that will help prevent you from reaching for your credit card at the next emergency.
  • Superfund your retirement savings. Take this opportunity to max out your IRA or 401(k). Using a bonus to put more long-term money into tax-advantaged accounts lets you avoid the end-of-year funding rush.
  • Leap ahead a few payments. Overpaying your usual mortgage amount means you’re shaving down the principal faster, which results in less interest. You can do the same with student loans and other long-term payments, just make sure there isn’t a prepayment penalty.
  • Don’t just treat yourself; invest in yourself. Reserve 10 to 20 percent of your bonus for a home, health or education upgrade. Spending in areas that are likely to generate more money in the future is a smart way to rationalize a purchase since you’re putting the unexpected funds to good use.

Consider dividing your bonus among multiple categories, giving higher percentages to your more urgent priorities. Using this strategy for a lump-sum windfall can turbocharge your existing short-term and long-term financial goals while still giving you a little breathing room to enjoy your reward.

dealing-with-financial-anxiety1

When unexpected or worrisome financial news hits, what do you do? Constantly checking your portfolio can derail you from long-term goals, while having zero awareness of your finances can lead to reckless overspending or other bad behavior.

Information travels faster than ever these days, and it’s easy for investors to feel alarmed or panicked about finances when they read the headlines. Get a handle on financial anxiety with a few helpful strategies.

  • Start to see others’ fears as opportunities. When the markets go down, investments can lose value and appear on sale. That’s when some say it’s time to buy rather than sell. Whatever you choose, zoom out on S&P 500 charts to get some perspective and look at the long-term picture.
  • Revisit your goal-based investment plan regularly but not necessarily in response to world events. Sometimes all it takes is a check-in to remember why you have a particular portfolio set up just so. If changes must be made, consider timing them with significant life events like a birth, death, career move or change in marital status.
  • Begin incorporating mindfulness techniques and meditation into your daily life. Not only are these practices ideal for reducing anxiety and stress, which can lead to larger health conditions that are expensive to treat, but they can also improve cognition and concentration.

With the potential for more volatility on the horizon as markets tend to fluctuate during presidential election years, there’s no time like the present to practice taming financial anxiety with the above suggestions. Employing thoughtful techniques can help you stay balanced and on track, both mentally and financially.

With higher education costs escalating faster than traditional inflation, it’s important to treat the college selection process as the serious investment it is. Whether you, your child, grandchild or other loved one is researching colleges and universities, calculating the actual value of higher education can help whittle down the options and justify the escalating costs. Here are three interesting metrics to consider:

  1. Total Debt at Graduation — Earning an undergraduate degree is a crucial milestone, but starting a new life chapter saddled with tremendous debt can disrupt that momentum. States and institutions can take different approaches to student loans, so pay attention to the student debt trends at each university or college to set realistic expectations.
  2. Alumni Earnings Above Expectations — While U.S. News & World Report provides a popular college ranking list each year, the minds behind The Economist created their version with a unique, finance-oriented premise. The magazine’s first-ever ranking of four-year, nonvocational colleges is based on how much money graduates earn compared to how much they could have made had they studied elsewhere.
  3. Highest 4-Year Graduation Rates — While overall graduation rates matter, the ideal situation is earning the degree in as little time as possible since college costs can skyrocket as more semesters are added. Looking at graduation rates for those who completed college in four years can help prospective students find campuses with similar work ethics.

College is a booming business, and it’s critical to consider the financial impact from a variety of angles, especially if your goal is to help yourself or someone else on the path to lasting success

 

The information provided in Eddleman’s Economic Insight is not intended to be used as investment advice; rather it is provided as general economic news and information for your awareness or for discussions with your investment professional. Please consult your investment professional or CPA for advice specific to your situation! Past performance is not indicative of future results.

2016-0928-life-changes-pregnancy1

Financial planning is an ongoing process meant to build and protect your wealth as you go through life. Along the way, certain milestones can have an impact on your financial goals. When these crop up, it’s important to consider making adjustments to your strategy sooner rather than later.

While it’s by no means a conclusive list, here are some major life events that can warrant a revision of your financial plan:

  • Coming Into Sudden Wealth — Whether you’ve just landed a whale of a gig or been left a sizable inheritance, sudden wealth can have an impact on your financial goals. In addition to allocating these new dollars in a tax-aware fashion, your estate plan may need updating too.
  • Changing Jobs — Remember that 401(k)s are essentially portable. When switching jobs, be mindful of your accounts and handle them properly to avoid paying costly fees and penalties. It’s also important to maintain proper life, health and disability insurance coverage for you and your family; this may require special timing or out-of-pocket coverage.
  • Evolving Family Structure — Whether you’re getting married or divorced, expecting a baby or supporting an aging parent with escalating medical needs, these changes have financial implications. From education funding and estate planning to exploring long-term care options, waiting too long to put a plan into action can be a costly mistake. Taking the time for a review of your accounts and strategy can benefit you down the road.

There may be hidden costs or advantages with life’s changes. Maintaining a close working relationship with a trusted professional can help you stay on track.

The information provided in Eddleman’s Economic Insight is not intended to be used as investment advice; rather it is provided as general economic news and information for your awareness or for discussions with your investment professional. Please consult your investment professional or CPA for advice specific to your situation! Past performance is not indicative of future results.

College graduate with large tuition bill, horizontal

Significant student loan debt is certainly a growing trend. If you’re the parent of a child . . . you already know! Either you’re looking at the impending costs with concern, looking at the checking account and contemplating if you should take that elaborate vacation instead, or you’re counting what the costs were and hoping your child is making the educational investment worthwhile. Certainly, there are scholarships and grants; furthermore, we’d be the first to encourage students work, save, and help pay their own way. But, when it’s all said and done, parents usually end up helping and students usually end up finishing with some debt.

The Good

The good news is that most students who actually graduate are eventually finding decent employment. According to the New York Federal Reserve, persons with a bachelor’s between the ages of 22 and 27 have 4.6% unemployment. Now, we can argue about what the true unemployment figure is, however this 4.6% figure is at least in line with general unemployment currently reported.  Also, of note, is that both the average salary ($50,651) and the median salary ($43,000) are up in 2015 from previous years for Bachelorettes.

The Bad

That said, student debt is becoming a much bigger concern. There are over 40 million Americans who collectively owe over $1.2 Trillion in student debt. Furthermore, the variance from the average wage after graduation is significant with upper margins being held mostly by information technology, healthcare, finance, and engineering majors. The lowest paying majors are varied, but include sociology, theology, and education. Also to consider is work experience when graduating and where the student is willing to move for a job, which can also impact income greatly. The average student loan debt is also at a record high of over $37,000 with seven in ten graduates borrowing for their education, according to Cappex, a website that connects students to colleges and scholarships.

The Ugly

As if the bad, was not bad enough, we have the ugly. The ugly truth is that it’s not the graduates with student loan debt, which are the greatest concern. According to Mark Kantrowitz, publisher of Cappex, most graduates’ debt burdens are “manageable” meaning they can be paid off in 10 years. The bigger problem is non-graduates who take on the debt, but don’t earn the degree. Kantrowitz states, “We don’t have a student-loan problem so much as we have a graduation problem.” And to exemplify how this could impact all of us, Lori Harfenist of The Resident summarizes a Wall Street Journal article stating, “7 million Americans are flat-out refusing to pay back their student loans because they feel scammed by their universities and government.” And, who are all student loan programs now managed by? You guessed it, the federal government, which means the American taxpayer is the one on the hook. In conclusion Kantrowitz states, “ . . . if current trends continue, we may be in a crisis point in two decades from now.” We think it could be sooner than that.

The information provided in Eddleman’s Economic Insight is not intended to be used as investment advice; rather it is provided as general economic news and information for your awareness or for discussions with your investment professional. Please consult your investment professional or CPA for advice specific to your situation! Past performance is not indicative of future results.

beautiful beach and tropical sea

If you’re like most of our clients, you’ve thought long and hard about the financial aspects of your retirement. You’ve likely worked hard and saved diligently. But, retirement for each person is different. Perhaps you plan on a working retirement with a new job and less stress, focused on what you love. Or, perhaps you plan to travel, play golf, or just rock on the porch. Or, maybe you want to downsize to a smaller house, spend time with the grand-kids, or take up sky diving. Who knows? Whatever the plan, don’t forget to consider the location you plan to call home.

Where you “officially” call home can make a difference in your retirement lifestyle. Even if you plan to travel or live out of your RV, the place you officially live can impact your taxes and other living cost factors. Obviously, most people realize that retiring to California or New York will be generally more expensive than retiring to Tennessee. So, what are some of the factors to consider when picking a retirement destination?

For most retirees, the two largest expenses in retirement will be medical care and taxes. Yes, a milder climate not only means a more enjoyable tennis match, but it can also mean lower utility bills. However, lower utilities are not likely to be as big of a financial factor as other considerations. Regarding medical expenses, BenefitsPRO recently completed an analysis on healthcare costs in the US. Now, keep in mind that the analysis merely compares Medicare premiums, but this can still be a fair comparison on what average medical costs by state may be because Medicare premiums consider medical costs as a major factor. Believe it or not, the cost to have a heart attack is different in different parts of the country. So, on average, Florida has the highest Medicare premiums running 35% more than Hawaii, which has the lowest. This makes sense from a supply and demand standpoint; there are many more retirees in Florida needing medical care, which likely means there are consistent strains on supply, which in turn drives up the cost. Tennessee did not make the top ten lowest or highest for Medicare premiums.

Taxes are the other major factor for most retirees. Kiplinger recently listed six factors to consider when picking a retirement destination and each of the six factors were different types of taxes. Most retirees consider income taxes and while income taxes can be a major factor for some retirees, Sales Tax, Property Tax, and Estate Tax can be even more important. This is because once you reach retirement, you may have already earned most of your income; now it is more a matter of spending it. If income taxes are really your biggest issue, you might actually consider life outside the US. Over half-a-dozen countries actually have no income tax, but keep in mind, you’ll have to give up your US citizenship and other expenses may far outweigh the income tax savings unless your income is significant. Also keep in mind, the IRS will make you pay tax on your IRA before you expatriate, so don’t look to leaving the US as a way to avoid your Required Minimum Distribution (RMD). One income tax you may want to watch out for is income tax on certain investments. For instance, Tennessee has no income tax on earned income; however, it does have income tax on interest income over a certain level. These hidden taxes can sneak up on you and make a difference. Another somewhat hidden income tax is Social Security income tax. Some states have been moving away from taxing SS, but as of this writing, thirteen states still do tax it.

If you are less affluent, then sales taxes and property taxes will likely be more significant factors. When considering property tax, keep in mind that most often this is a function of county government rather than state or federal government. If you own or plan to own significant amounts of real property, moving across the county line could mean a significant difference. Also consider if the county/state allows for a property tax “freeze” for owners who reside in the property. This can ensure that property taxes do not go up for you.

As for sales taxes, this is a function of states and local municipalities, but usually more dependent upon the state’s rate. Again, moving across a state or county line or even out of city limits can be factor. Also be aware that the sales tax rate may vary by item. For instance, some states do not charge sales tax on food or may charge a different rate on certain large purchases.

Finally, there are estate and inheritance taxes. The difference in these two is the way they are calculated. Estate taxes are charged to the estate, but inheritance taxes are charged to the inheritor, which may have differing rates depending upon whether the inheritor is a spouse, child, sibling, or unrelated. And, not only do the rates vary, the exemption amounts (how much you can pass on without having the tax) varies by state. Some states match the federal government’s exemption, but most don’t.

In all determining where to retire is an important consideration for which weather may be a big consideration. Just don’t forget to look at the financial implications of location too. And, if you need help evaluating those consideration, call us at 877-5WEALTH.

The information provided in Eddleman’s Economic Insight is not intended to be used as investment advice; rather it is provided as general economic news and information for your awareness or for discussions with your investment professional. Please consult your investment professional or CPA for advice specific to your situation! Past performance is not indicative of future results.

 

This is a scenario everyone has played out in their head hundreds of times. What would I do if I suddenly came into $1 million? Most of us already have a plan, to either get out of debt, or to buy a new car or a new house. But, assuming those things were already taken care of, what would most of America do with $1 million?

Million dollar question

According to a recent survey of Mirador Wealth, most Americans would choose to invest their newly acquired fortune in land. In fact, Americans in 17 different states choose to invest in land. The respondents were given five choices: land, investments and business, travel, a small plane, or a boat. So given these options, why are more people choosing to either buy a boat or plane rather than invest? There are a few reasons why this could be the case. First of all, when given a large sum of money, history shows us that most people tend to be spenders, and not savers. According to Forbes, 44% of lottery winners who have won a large prize have gone broke within 5 years. If people already have a lack of financial discipline, access to more money merely amplifies financial mistakes. Another reason people are choosing to spend instead of invest is because of a lack of financial knowledge. According to a recent Gallup poll, 43% of Americans are not financially literate. This means that they struggle with paying bills and building their credit. So when these people receive a large quantity of money, they already have bad habits, and their money will not last as long.

Interestingly enough, the people in states with the lowest median household income chose to buy land, while the people in states with the highest median household income chose investments and business. So that leaves you with the question, what would you do with $1 million?

If you’d like to gain more financial knowledge and discipline to handle your first $1 million or even have a little guidance to help you get there, give us a call!