50% Return on Investment?

People often quote the old adage "If it seems too good to be true, it probably is," without acknowledging the "probably is" part.  "It probably is" doesn't equal "It absolutely is".  Being able recognize the difference is often what separates the "haves" from the "have nots".

DISCLAIMER:  I AM NOT A TAX ADVISOR.  THIS IS NOT TAX ADVICE.  YOU SHOULD CONSULT WITH A TAX PROFESSIONAL REGARDING THIS BEFORE TAKING ANY ACTION.

For those who are in the niche to take advantage of it, here is the not-to-good-to-be-true opportunity of 50% (initial) return on investment (ROI).  This is from the instructions for IRS Form 8880. (Link includes form and instructions.)

Often called, "the saver's credit", it should be available to (again, consult your tax advisor)  a person whose Adjusted Gross Income is under $19,250 (or $38,500 for married filing jointly) for 2019 taxes. Voluntary contributions up to $2,000 result in a tax credit of .5 (50%) of the contributions, with lower credits for those with AGI up to $32,000 for an individual.  Here are a few of my favorite things regarding this:

• It applies to money put into a Roth IRA, not just traditional IRA.  
• Because of filing deadline moved to July 15, deadline to contributing to or opening an account for 2019 tax year has also moved.
• If a person is on the edge of qualifying for a higher credit or for the credit at all, your tax advisor should be able to tell if a contribution would reduce the AGI resulting in a higher credit.
• Once an account is established, it's much easier to contribute for the current and future years.
• Increased retirement savings!

It definitely is a niche since there are a lot of things that would disqualify someone from getting the credit such as being claimed as a dependent or being a full-time student.  And many of those making $32,000 or less are not going to have the money to save.  But here are some situations that may work.  You can probably think of more.

• Semi-retired person who is working but doesn't "need" the money from work.
• Young part-time student or non student with low expenses because of living with parents.
• Person with assets but lower earned income for 2019 (and/or expected for 2020) tax year because of not working part of the year or reduced hours, intentionally or involuntarily.
• Person with intentionally low expenses and intentional low taxable income.
• Person who gets a Covid 19 stimulus payment but doesn't "need" the money.

Bottom line:  If in the right niche, $2,000 contribution to retirement savings gets a $1,000 tax credit, AND the $2,000 is still in the retirement savings.

If your tax advisor says it's a good idea and you need helping set up an IRA or Roth IRA, I am happy to help.  Since it's still the month of 4/20, I'll make the gratuitous Willie Nelson reference.  "If you've got the money, honey, I've got the time".

Chaos Creates Opportunity!

It is not without reason that the 1% is the 1% and the 99% is the 99%.  Hindsight is 20/20.  A few weeks ago I saw a Facebook post where a friend's status was something like, "I think the overall stock market is going to drop.  What do people think are good investments?"  There was a lively discussion among some very smart people, people who would probably be considered by many "rich".  I don't know many of them personally, but from the little I can see, they appear to be mostly self-made entrepreneurs willing to take calculated risks.  The discussion went into predicting that the U.S. would essentially be shut down soon, overall markets would plummet, but companies who facilitated people being able to work from home, get food delivered, stream movies, etc. would do very well.  Some of them discussed specific companies they were investing in.  They were way ahead of those that lost in the market drops because they were paying attention to information that was available to everyone who was looking.

Chaos creates opportunity.  But opportunity is worthless without action.  I have been digging into the chaos of the CARES Act looking for opportunities.  It's over 800 pages, but if you also want to read it and find opportunities, you can see it here.
[Edit:  I forgot to include a music link like I usually do. Looking at CARES, it’s good to remember, “life ain’t forever, and lunch isn’t free”.  And no legislation will ever change that.]

This is far from a complete list, but here are some I found related to my profession, both from this document and outside of it:

• Extended time to make contributions to IRA and/or Roth IRA
• Because the tax filing and paying deadline has been moved from April to July, anyone who has not maxed their 2019 contributions has an extra 3 months to contribute.
• Combining 2019 and 2020 contributions may result in eligibility for a higher interest rate because of a larger deposit.
• $1200 stimulus check is enough to start an account if you don't have immediate need to spend it.  And buying a contract pays the agent (hopefully me!) which does help stimulate the economy.
• Some accounts have guaranteed rates that can be locked in for extended periods, which is an advantage if interest rates drop.  
• Roth IRA in particular has advantage of interest and withdrawals not being subject to income tax.  This is particularly advantageous if for you personally and/or the country as a whole has higher taxation in the future, whether due to increased deficit or any other reason.
• Require Minimum Distribution (RMD’s) won’t be required for 2020 for inherited IRA’s and others who are normally required to take distributions due to age.
• Insurance companies have dramatically relaxed requirements regarding face to face meetings, electronic signatures, etc.  Companies who in the past would only accept original paper documents are now accepting electronic signatures, allow documents to be sent electronically, and are even sometimes allowing a person to sign by texting a picture of the signed document.
• Because insurance companies move slowly, I have not seen a big change in underwriting requirements regarding COVID-19.  Because insurance companies and underwriters hate uncertainty and risks for which they don't have large amounts of data to study, I will be shocked if they don't take steps to screen out people who have had or are at risk in ways they never have done before.  However, if you buy a policy now before those changes are filed with the state and approved, you will have legal protections that would normally prevent them from being able to change your policy when they do eventually change procedures.  You would essentially be "grandfathered"
• For many this will be a motivator to put things in order, and now many of us have the time to do so.  It worked for me.  I have said for a few years I needed to implement this platform that allows people to figure out how much life insurance they might need and purchase it without even talking to me, if that is their preference.  It's not as personalized as I want it yet, but it works. So if you are one of those people who have been putting it off, here's your chance!
• Health insurance coverage for virtual visits has gotten much better!  A month ago a few companies were sort of dabbling in it, but now they have pretty much all dived in.
• Speaking of health insurance, if you have a high-deductible plan that allows you to have an HSA, the delay in tax deadlines means you also have more time to max your contributions in an existing account or start a new one for the 2019 tax year. 

Many of us, including myself, have gotten much better at online conversations with audio and video.  Part of me posting this is to commit myself to sharing through Facebook Live on Friday.  You can join me here at 4:30 p.m.

SOCIAL DISTANCING IS WRONG!!!

Now that I have your attention, read all of this, then show me I'm wrong.  I'm listening.

We are social animals.  We need and crave social interaction.  Telling us to avoid social interaction isn't working and isn't going to work.  We should be practicing PHYSICAL distancing, not SOCIAL distancing.  Thank you Larry Sharpe for the phrase and the idea to write about this.

I was going to write a bunch about depression and social distancing, but there's no need for me to reinvent the wheel.  Here is one of the better and simple prescriptions.

Throughout the Wuhan Virus crisis (I made a rhyme; give me a dime!), I have been saying that the marketing is wrong.  The message needs to be to maintain at least a 6' distance from anyone not part of your quarantine group.  It's as simple as that.  If someone isn't part of your group (most likely just the people you live with, but maybe people you work with too, don't get closer than 6'.  That doesn't mean you have to stop working (for most people) or that you can't go anywhere.  Just don't get within range of possibly spreading the virus if one of you coughs or sneezes.  That's it!  If you aren't any closer than that and practice good hygiene, you'll be fine.  And you won't spread it to anyone else.

Here are some ways I am practicing physical distancing without being socially distant.  I had a good conversation with my neighbor yesterday, with him standing on his deck and me standing in my back yard 40 or 50 feet away.  Great social interaction without any risk because we were physically distant.  He gave me another example of physical distancing without social distancing.  He had a phone conversation with his elderly mom, got her grocery list, delivered it to her garage, and she picked it up later without her getting within 6' of him.  I even made a new friend and business connection yesterday.  The bike path I ride has a small section under construction where we have to walk our bikes for a bit.  Another guy and I were headed opposite directions, joked about staying 6' apart, complimented each other's vintage steel bikes, etc.  We talked for several minutes, from a safe distance, and I found out that his company does work that I will need done soon for my company.  He is probably going to be the one I hire, and there's a good chance he will purchase from me in the future.  Business shouldn't be stopping.

On the negative side, people are doing all kinds of things to spread the virus because of misinformation and bad "marketing".  Much of it is because of the emphasis being on the number of people gathered rather than other factors like physical distance, where people have been, etc.  For awhile we were being told that gatherings should be under 250 people.  Then 50.  Now maybe it's 10?  I don't even know.  But it's not the number that's important.  It's physical distance.  Examples I am seeing are things like a friend whose coworker was at a wedding yesterday with 20 people.  Probably from a variety of locations.  I would bet they didn't  maintain a 6' distance.  So now those 20 people are going back to their workplaces, homes, etc. with the potential of spreading it.  But my friend should be safe anyway, if she can maintain a 6' distance and practice good hygeine.  I am seeing stuff all over social media where people are gathering in small groups of less than 10 people, but not maintaining distance.  I have to admit that I was guilty of this myself last week.  But I won't be repeating that behavior.

Another thing that needs to stop for the spread to stop is the attitude that it's ok if it's "essential".  Like going out and getting food or medicine.  Just because the grocery store is open doesn't mean it's safe.  Even if they sanitize all their carts, it's still going to be difficult to stay 6' from everyone, and there's no way to tell who could be a carrier.  And no way to know if that item you picked up wasn't just coughed or sneezed on.

No one has yet convinced me that the virus itself is the big threat that we are being told.  I still think the biggest threat is the reaction to it.  People are a much bigger threat than any disease.  However, I am acting with an insurance agent mindset, where I don't expect to have high medical bills or for my house to burn down or to die at a young age, but I am protected if any of those things do happen.  I am acting as if it is a big deal, but expecting it to not be.  If I am right, I will come out of it in a better position than when it started because I am taking advantage of the situation.  If I am wrong, I will still be ok because I am protecting myself and others with PHYSICAL distancing and good hygeine.

Chaos creates opportunity for those who are looking for it and take action.  What do I mean by "taking advantage of the situation"?  No, it's not buying up all the hand sanitizer and trying to sell it at a huge profit by jacking up the prices like the guy in Tennessee.  It's differentiating oneself from the competition and meeting demands.  Like Lucky Devil Lounge in Portland, Oregon which now has their dancers delivering food and providing entertainment from a safe distance after the club was shut down.  It's smart investing.  A few weeks ago I saw an open Facebook discussion among people who were saying the stock market was going to drop, were moving their money into cash and looking for places to invest.  They were going heavy into companies providing technology for people to work from home, movie streaming, medical protection equipment, home delivery, etc.  They were actively looking for opportunity in the chaos, and took advantage.  Plenty of people are complaining about the US Senators who bailed on the markets, but those people complaining had the same opportunity, had they been paying attention.

Professionally, here are some opportunities I am taking advantage of.  I have been talking for years about increasing my ability to work from anywhere by updating my website, incorporating a platform for selling life insurance online without having to meet with people face to face, creating a bunch of videos, and doing much more online marketing.  And launching at least one other company.  Now is a great opportunity to do that, and I am taking advantage of it.  I also need to organize my office better (haven't taken advantage of that opportunity yet, but I will).

Personally, I am cleaning and organizing my home to be able to get more exercise here instead of at the gym.  I am dramatically expanding my garden.  Doing more reading and writing more songs.  I might even work on learning to play a new musical instrument.

This has been more of a brain dump for me than anything, but Social distancing is still wrong.  And it would also be wrong of me to have a blog post without sharing some music, so here's one from Corb Lund I've been listening to a lot in my bunker.

Why Libertarian?

For most of my life I have not been politically active.  However, I am becoming more so, and will be attending and participating in the Libertarian convention for the state of Iowa this coming weekend.  Additionally, I found out today I was elected to be a “Precinct Committee Person to the Central Committee” for Des Moines Precinct 8 for the Polk County Libertarian Party.  I’m not really sure what that entails.  I guess that’s what I get for not showing up at the meeting when the vote was taken.  Regardless, I will do whatever it is that I’m supposed to do, and probably overdo it.

I’m usually the one asking, “why?”, so I suppose I should also tell my “why”, as in why I identify as a Libertarian.

The biggest influence on my political beliefs has been the years working at Clarinda and Tarkio Academies.  I have often said, “People who say the Peace Corps is ‘the toughest job you’ll ever love’ never worked at The Academy”.  We worked at those facilities with juvenile delinquents who everyone else had given up on.  We didn’t rehabilitate every one of them, or even close to a majority of them, but we had some success stories.  We didn’t just say things like, “No one rises to low expectations,” “PRIDE is Personal Responsibility In Determining Excellence”, “Confront all negative behavior”, and “Natural consequence is the best teacher”, rather we lived those things every day.  And we achieved more than anyone thought was possible.  The more popular and commonly known version of that mentality is from Winnie the Pooh: “You are braver than you believe, stronger than you seem, and smarter than you think.”  I believe all that stuff, deep down, about every U.S. citizen.  And in some ways I feel sorry for those who don’t believe that way.

When I look at what the two major political parties do and advocate, I do almost feel sorry for them for not having that belief in people, but especially those who align with the Democratic Party.  Across the board, the underlying message of all their social programs is, “people are worthless and weak.  Without the government handling things for them, they will fail miserably.”  Or, if they are advocating new social programs to “help” others succeed when they are themselves successful, I see that as pretentious and condescending, an attitude of, “well, I succeeded without __________ program, but others aren’t as good as me, so they need help”.   And I put “help” in quotes because it is not really help.  It’s enabling.  The vast majority of government “help” for those who have less is the equivalent of buying another bottle of  Thunderbird for the alcoholic who doesn’t have the money to buy more booze.   As long as the government keeps handing out fish, there is not an incentive for those who don’t know how to fish to learn.

I can’t have a blog post get too serious and not have a musical interlude, so here’s some Talking Thunderbird Blues   Can’t go wrong with Townes Van Zandt.

From a practical point of view, even if someone thinks all this “help” is good, I can’t wrap my head around how anyone can think that the government, especially the federal government, is the best way to provide that help on a local level.  Which is what really matters.  As my favorite author Robert Heinlein said, “An elephant is just a mouse built to government specifications”.

The response I almost always get when I disagree with someone promoting a government mandated social welfare program is something like, “You’re an uncaring, heartless, son of a bitch!”  And the worst part is that they never get the cultural reference when I say, “When you call me that, smile”.  Actually, that is not the worst part.  The worst part of all of it is what government social programs do to us as a society.  They make it ok to not help our neighbor.  To not be “The Good Samaritan”.  To stay home and gaze into our phones instead of going out and gazing into the eyes of someone who needs our help.  When “help” is forcibly taken from citizens and distributed to others by the government (after the government has taken its cut, of course), it’s no longer a gift, and both the giver and the receiver of the gift are robbed of the beauty and joy of giving.  That’s the biggest casualty of government social programs, and the biggest reason I am against them.

And for my Republican friends who have been enjoying what I said about the Democrats, now it’s your turn.

The Republican justifications and twisting of morality boggle my mind.  The same people who chastised Bill Clinton for his affair with Monica Lewinsky idolize a serial adulterer who paid hush money to a porn star.  Yeah, I know, “All have sinned and come short of the glory of God”.  But don’t forget all the other stuff like, “Go and sin no more”, having a contrite heart, repenting, etc.  And all the, “but ________ did/does it too!”  How childish are you?  Didn’t your parents ever teach you that two wrongs don’t make a right?

A huge appeal of the Libertarian Party for me is its stance regarding foreign wars.  We need to mind our own business and concentrate on our own country.  Republicans saying that we are protecting others from evil, give it a rest (that’s my cleaned up version of what I’m thinking).  It’s about business interests, mostly oil.  If it wasn’t, we’d be involved in a lot of other countries.  “Don’t piss down my back and tell me it’s raining.”

All the “tax breaks for the rich” arguments between the two major parties miss the point.  It’s not that the wrong or right people are getting tax breaks, it’s that those taxes shouldn’t be levied on anyone.  I wasn’t around for it, but I think I read somewhere that we fought the British over something regarding that.

The bottom line is this:  Democrats and Republicans are two sides of the same dirty coin.  Both sides are power-hungry liars full of hate.  They just tell different lies and hate different people.  If you are saying or thinking, “But I’m not hateful!  I’m not a liar!” then you’re probably aligned with the wrong party.  Maybe you should join the Libertarians too.

Many people disdain the Libertarian Party, scoffing, “You’re throwing your vote away!”  I don’t see it that way.  I see it as disrespectful to the right to vote and those who fought to secure my right to vote to do anything but vote for who I think is the best candidate, regardless of party.  A vote for “the lesser of two evils” is still a vote for evil.  I refuse to vote for evil.

I also hear that it’s impossible to break the stranglehold the Democrats and Republicans have.  Let me ask you.  Do you know who Gunder Haag and Arne Andersson  are?  Probably not, but from 1942 to 1954, the two of them went back and forth as the world record holders for the mile run, and Hagg’s 1945 record of 4:01.4 stood for almost a full NINE YEARS!  Why?  Because until Dr. Roger Bannister did it, it was “impossible” for a human to run a mile in under four minutes.  Do you know who Larry Owings is?  Rulon Gardner?  If you’re not a wrestling aficionado, probably not.  But they proved that the “unbeatable” can be beaten.  I’m a believer.

Contrary to what many today may think, not every POTUS belonged to either the Democratic or Republican Party.  George Washington didn’t have an affiliation to a political party.  Although every POTUS in my lifetime (so far) has been a Republican or Democrat, there has been a Federalist,  Democratic-Republicans ( 4),  Whigs (4),  and National Union candidates (2) who ascended to the Presidency.   There is no reason a Libertarian could not win the office, except for all the “group thinkers“ thinking “it’s impossible”.

Some of you may be thinking, “Sure, 200 or so years ago someone other than the Democrats or Republicans won, but we live in a different time”.  You are absolutely right.  For most of my life it has been virtually impossible for someone to break through and gain national/international recognition without lots of money and big business behind him or her.   One had to have big record company backing to get music recorded and played on the radio.  Being a movie star meant going to Hollywood and required getting in with a big movie studio, maybe via “couch auditions”.  Being a published author was really only available through the big publishers.  That’s not the case any more.  Why couldn’t a politician of the Libertarian Party, or any other party, become a mega star using social media, YouTube, email, etc.  It’s worked for every other aspect of pop culture, and what is politics, if not pop culture?

Since this is my “Insurance Nerd” blog, I need to bring it back to insurance.  For this post, it’s pretty simple.  Insurance is pretty darn Libertarian.  I love freedom.  With freedom comes responsibility.  Insurance is a great way to keep our freedom by taking care of responsibilities.  If I die prematurely, it’s not the government’s responsibility to take care of my obligations to support my family.  Life insurance is the tool I use to fulfill my responsibility and assure their freedom.  I take care of a small part my responsibility to take care of my health (the majority is diet and exercise, not insurance) by buying health insurance.  And if I use insurance to responsibly fund my retirement, I paid for the freedom that comes with it.