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?
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!
According to the Treasury Department, 4,279 people renounced their American citizenship in 2015. This is up 864 from the previous high of 3,415 in 2014. From 2013 to 2015, 10,693 citizens have renounced their citizenship, which is more than the 10,189 renouncements in the previous 15 years from 1998 to 2012. So why are so many more citizens renouncing their citizenship now more than ever?
One theory is the Foreign Account Tax Compliance Act (FATCA) that was passed in 2010. This act introduced reporting rules for foreign financial institutions, as well as American citizens that hold money in foreign accounts. This bill was introduced to combat tax avoidance for Americans that hold money in foreign accounts, but it also makes life more difficult for Americans that are living overseas. Since the installment of this bill in 2010, 14,940 Americans have renounced their citizenship. In 2010, the first year after the bill was put into effect, the number of citizens that renounced their citizenship doubled.
This bill makes the U.S. one of only two countries in the world that taxes their citizens on all income earned, whether they live in the U.S., or in another country. This means that American citizens working in a foreign country are taxed twice on their income. This double taxation could be one of the main reasons why citizens are choosing to renounce their citizenship now more than ever.