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What Is an LLC? And How Is It Different Than a Corporation?

July 23, 2021 by

I know a thing or two about the complexities of launching a new business. As the owner of several businesses in the Los Angeles entertainment industry, I know from experience that you’ll have a quadrillion questions.

Difference Between a Corp and an LLC
You should take notes like this dude.

And one of the initial questions you’ll certainly need to ask is, “What is an LLC, and how does it compare to a corp?” Then naturally, your next question will be, “So…which one should I set up?”

Most “movers and shakers” need to pick between establishing a corporation (aka Inc.) or a limited liability company (aka LLC). This can be a tough decision, largely because it’s difficult to understand the differences (let alone which might benefit you more)!

DISCLAIMER: I want to quickly stop and say that I am not a CPA or Attorney. I am an entrepreneur that has started multiple companies and other entities for real estate purposes. So what I write here is what I have learned for myself over the years (much of which was from my CPA and attorney). Before you make your final decision on what to do for your company, please consult your own CPA or attorney!

Now, before we look at some of the more important factors that differentiate the two, let me first answer the question of…

What is an LLC?

An LLC, or limited liability company, is a legal business entity you form to protect your personal assets from liability. It will also establish how your business income is treated come tax time.

It’s not the only business entity that does this, though. It’s one of a handful.

What is a corporation?

The other most common option is a corporation (aka a corp or Inc.). Corporations are another business entity that also provides liability protection. But, they are set up a little differently from an LLC.

They are an entirely separate entity from their owners, who hold ownership through shares (or stock) of the company.

What are the differences between an LLC and a Corp?

These two business entity options have some similarities and, of course, differences. Choosing between the two will depend on your business type and needs and your own liability and tax planning goals.

Ownership

An LLC is typically either owned by one person or a small group of co-founders. But technically, an LLC doesn’t have “owners”; it has “members.”

The governing rules of an LLC are spelled out in an “operating agreement.” Additionally, it’s worth noting that all members can manage the LLC (aka “member-managed”), or one designated member can manage it (aka the “managing member”).

Meanwhile, an Inc. effectively belongs to the people who hold shares in it, and the company management is accountable to those shareholders. Because a corporation is very distinct from its shareholders, a shareholder can sell their stock to someone else, and the company can continue doing business fairly seamlessly.

This is why most private investors will want to have the entity be a corp rather than an LLC. And eventually, if the company grows and goes public, that step will be much easier.

Liability Protection

One reason why making your business an LLC is worthwhile is because, as the name “limited liability company” suggests, it creates a barrier between the business activity and the member’s personal assets from a legal standpoint. Any debts it accrues will not fall to you to repay should it encounter legal issues, for example. (Unless, of course, the debts are personally guaranteed.)

That said, an Inc. pretty much offers the same liability protection that an LLC does, especially for an Inc. owned by one person or spouses. This information comes from my long-time attorney, by the way, so you can rest assured it’s accurate.

In the end, they both will protect you similarly if the company gets sued. However, if you personally get sued, an LLC might be better. Why? If you personally get sued (say from a car accident), and you lose, the suit can take ownership of the stock of your Inc. and consequently control over any assets. Yikes.

Now, if you have an LLC, a winning suitor can’t take ownership of your share of the LLC. They can get a charging order to garnish your income from the LLC, but you can remain in control of what income you get. Bonus for the LLC!

Paperwork

One of the common issues discussed when deciding between an Inc. or LLC is the amount of paperwork hassle you have to undertake.

Generally speaking, LLCs indeed have less paperwork, particularly because it doesn’t have to hold “annual meetings” of the directors and take meeting minutes. It also does not have to issue “stock certificates” to its members.

It’s also true that a single-member LLC doesn’t have to do payroll or even file a tax return (because all profit is taken on the individual owner’s “Schedule C”). Now, that would be beneficial; except that, as you will see below, it comes at a relatively high financial cost.

So, if you make your LLC an S corp to save on taxes, you will have to, in fact, do payroll and file a tax return for the entity. But again, that still does leave the LLC/S corp with fewer paperwork hassles overall.

Tax Treatment

Tax savings used to be the most important deciding factor between an Inc. and an LLC. Oddly, since both can be classified as C corps and S corps for tax purposes, they can be pretty much the same. But let’s take a closer look…

A little corporate tax humor for ya!

Federal Taxes

Just as independent contractor taxes are applied on the basis that this is personal income, the same status is relevant if you generate income from an LLC as a sole owner. In plain English, a single-member LLC does not have to do a tax return. Instead, the net income goes right on your personal return on the “Schedule C.”

Multi-owner LLCs will be taxed as partnerships, which means the entity does have to file a tax return. However, the net income still passes through directly to the members’ personal return; only it’s in the form of a K1.

In both of these cases, being the profit of the LLC is passed directly onto the members, the entity itself pays no taxes. Thus, this is a so-called “pass-through entity.”

Furthermore, in both cases (specifically of LLCs), those profits that are passed through are subject to “self-employment tax” (of an extra 15%) on the personal return. It’s the same for 1099 income as well. This is very important to note! (More on this below.)

NOTE: K1s are the tax document a company owner will get at the end of the year to represent the income they received from the company. It’s similar to the W2 that an “employee” receives or 1099 that a freelancer would get.

On the other hand, corporations are taxed as if they were an entity in their own right. Revenues gained through sales are considered the equivalent of income earned by individuals.

A C corp earns money, has expenses it deducts, pays federal (and often state tax) on the net income. It does not “pass through” to the shareholders. That said, you can make an Inc. a pass-through entity by giving it an S corp election (see below).

A tax on profits and dividends will also apply. If you are a shareholder, the dividends, in particular, will be taxed twice since they are not deductible (which is why people often avoid C corps).

This rule encourages owners to inject cash back into the business rather than extracting it as it grows (to avoid this double taxation). In addition, this means that the C corp does not have to pass on the profits if it doesn’t want to. Instead, it can just keep them and reinvest them back into the company.

State Taxes

Now don’t think you are out of the tax woods yet! Your state will want to get its hands on some tax as well, most likely.

There are actually two types of state tax you may run into. First, you have tax on “net profits,” which you would commonly refer to as “income tax.” But again, income tax will only be paid by a C corp (or a non-pass-through entity).

That said, some states also have a “privilege tax” (which can also often be called a “franchise tax” or “minimum business tax”).

The privilege tax is just that. A tax for the privilege of doing business in that state. This tax is often based on the gross revenue of the company, with a minimum amount imposed.

NOTE: The privilege tax percentage may be the same for both LLCs and Inc.’s, but often it’s different…yah! I have found that the privilege taxes imposed on LLCs are often higher than that of INCs. But it varies state by state.

To confuse matters a bit more, most states also require you to file an “annual report” where you update them on any changes (or lack of) that have happened with your entity. Unfortunately, with this report, you usually pay a fee.

In some states, the annual report fee is one-in-the-same as the privilege tax. In others, you may have no privilege tax, but you have an annual fee. To confuse matters more, in some, you have just a privilege tax and no annual fee! Aye, Yai Yai!

Suffice it to say, you should do some investigation on this. You can check out my post about Annual S Corporation Filing Requirements for All 50 States, where I lay much of this out!

S Corp (Tax) Status

At some point, it became possible to give your corporation (which by default is a “C” corp) an “S” corp designation. This basically makes the corp a pass-through entity. But an S corp exists only as a taxation option rather than as a specific type of entity.

Now it’s true that this means all profits are no longer taxed at the corporate level but passed through to the shareholders. HOWEVER, being that in a corporation, the (active) owners are also considered employees, you have to do some amount of payroll for the owners.

The common practice (for single-owner entities) is to give yourself a percentage of your profits in the form of “W2 Salary” and the rest as profits. What that percentage is, you have to figure out with your CPA, of course. But this is also a crucial tax distinction (more on this below).

This practice can also be useful in preventing the full profits of a business from being taxed if you are only taking a small proportion of this as income.

Interestingly, it’s possible for LLCs also to request to be classified as an S corp by the IRS. In the case of an LLC classified as an S corp, the owner is considered an employee (just like in an Inc./S corp).

So rather than simply equating the income and expenses of the organization to personal income on their tax returns (i.e., on their “Schedule C”), they must take part of their profits in the form of a W2 salary.

Effectively, both LLCs and corporations can be classified as S corps if they wish, although there are some restrictions. For example, an S corp cannot have over 75 shareholders, and everyone needs to be a resident within the US.

The CRITICAL Self-Employment Tax Distinction (for an S corp) **VERY IMPORTANT**

Ok, this is one of the MOST IMPORTANT things to know in all of this bologna! A little ways back, I wrote that…

1) An LLC passes through all the profits to the members and then has a 15% “self-employment tax” imposed.

Well, the reason this is the case is that the fed and state want to get some money for social security, medicare, and UI. But being you don’t receive W2 payroll, they don’t collect it through your paycheck. Instead, they collect in the form of a self-employment tax.

2) I also said that an S corp considers the owners “employees,” which requires you to pay yourself via a W2 paycheck…and is therefore taxed via employment taxes.

HERE’S THE THING. With an S corp, you only have to pay yourself “reasonable” compensation in the form of W2. Commonly this is considered to be somewhere between 40-60% of your profits, but it could be more, and it definitely depends on what your CPA advises.

The remainder of your profits come to you from that K1 that I mentioned earlier. BUT, for whatever reason, that K1 income is NOT SUBJECT TO SELF-EMPLOYMENT TAX. Thereby saving you money in taxes!

Here is a tax calculator I made illustrating how the tax savings can potentially work. But again, you do have to check with your CPA to see if you and your business can capture these potential tax savings.

This calculator will show you the difference in taxes you will pay when making income as a W2 employee, a 1099 contractor, or as an S corp. Again, it’s just an estimate. Check with your CPA about your specific situation!

Now, if you are interested in getting your hands on this calculator, you can do so by checking out my free course on Incorporating Your Business.

Some other semi-important random points about the entities

  • LLCs can have INC/C corps, INC/S corps, LLC/S corps, LLCs, and people as members.
  • S corps can only have individuals (or a living trust) as a shareholder.
  • S corp can change back to C corp, but you have to wait 10 years to switch again once you do that.
  • Per my CPA: Except for medical write-offs, S corps are usually more tax-favorable.
  • Per my CPA: Statistically, S corps get audited the least of all entities.
  • If you have losses on a C corp, no one benefits, as it does not pass through. However, losses are passed through to the owners for S corps and straight LLCs.
  • Customers are required to send Single-Member LLCs and Partnership LLCs a 1099. But, they don’t have to send a 1099 to an INC/C corp, INC/S corp, or an LLC/S corp. You are on the honor system for those entities in terms of reporting your income to the IRS.

Which is right for you?

For small businesses, becoming an LLC (with an S corp election) could be the best option, particularly if the organization is small and is aiming to minimize the complexity of its tax affairs while still protecting the owners from unwanted legal ramifications.

But again, you should double-check the state-based taxes for LLCs before going that route. I personally feel that the INC/S corp is the best way to go for individual owners or spouses. That’s what I do, but I can’t tell you what to do. You have to decide for yourself.

Growing firms with several owners who are looking at the option of becoming a corporation, but do not want to commit to being a fully-fledged C corp, should consider the advantages of S corp status. You can even go back to being a C corp if you need to.

This post originally appeared on Your Money Geek. It was written by Joe DiSanto and republished with permission.  

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Peter Schiff Net Worth – Everything You Want to Know

People Are Celebrating The $1,400 Stimulus Check With A Hilarious New Meme (50 Memes)

Filed Under: Investing

Peter Schiff Net Worth – Everything You Want to Know

April 26, 2021 by

What is Peter Schiff’s net worth in 2021, and how did he create his luxurious lifestyle? Let’s take a look at this controversial figure in the world of finance.

Peter Schiff is either loved or laughed at. While his supporters view him as a savant and hero who predicted the stock market crash and housing crisis of 2008, his critics write him off as a “doomsdayer” conspiracy theorist who will have you stockpiling gold bouillon while you wait for the economy to collapse.  

Whether you agree with his theories or not, you can’t deny that he has made a windfall as a TV personality, author, podcast host, chairman of precious metals dealer SchiffGold, and CEO and chief global strategist of Euro Pacific Capital. Let’s dive into who he is, what he stands for, and how he makes his money.

 

 

Peter Schiff Net Worth

As of 2021, Schiff’s net worth is estimated at around 150 million dollars.

Who Is Peter Schiff?

The name Peter Schiff is impossible to separate from the moniker “Dr. Doom.” For years before the 2008 stock market crash, he preached economic collapse and was often ridiculed. In an August 2006 interview, Schiff said, “The United States is like the Titanic, and I am here with the lifeboat trying to get people to leave the ship…I see a real financial crisis coming for the United States.”

He also released a book in 2007 right before the crash titled “Crash Proof: How to Profit From the Coming Economic Collapse.” In his book, he predicted the upcoming economic collapse and the decline of the American dollar. It turned out he was absolutely correct…and his star began to rise.

In the 20+ years since he started his brokerage firm, Euro Pacific Capital, Schiff has amassed a fortune. He founded a full reserve bank, Euro Pacific Bank, which operates in the Granadines and St. Vincent.

He also brings in a paycheck as the owner of the Euro Pacific Asset Management and SchiffGold, which deals in precious metals. Schiff brings in more gravy as the author of six books, all of which deal with the threat of an imminent crash in the U.S. economy and how investors should prepare.

His notoriety in the investment world leads to his own podcast, The Peter Schiff Show, and frequent invitations to appear as a financial commentator on networks such CNBC, FOX News, and Bloomberg TV. As a vocal libertarian, Schiff became Ron Paul’s economic advisor in his bid for the presidency in 2008. In 2011 Peter Schiff was listed as one of the Who’s Who of Wall Street.

 

Peter Schiff Net Worth Gold

Investment Style

Schiff’s investment style is strongly influenced by his Libertarian political views and his belief that U.S. economic policies and the Federal Reserve are fundamentally unsound. His strategy stems from the free-market Austrian School of economics. This theory posits that investors will be repeatedly fooled (by temporarily low-interest rates) to make unprofitable investment decisions. According to Schiff, the fed sets artificially low interest rates that encourage Americans to rack up credit card debt and discourages them from prudently saving their money.

He is opposed to government economic regulation and intervention through stimulus programs and corporate bailouts. He would like to dismantle most of the government agencies and restore economic freedom and small government. He refers to the American economy as a “house of cards” economy that will eventually collapse. In his book, ‘The Little Book of Bull Moves,’ Schiff says, “The most important part of any U.S. allocation would be to avoid, like the plague, any stocks largely dependent on American consumers, especially when it comes to discretionary purchases or repaying their debts. That includes financials, retailers, home builders, and consumer discretionary. I would also avoid any high-multiple stocks, which excludes most technology or biotechnology companies.”

He also describes bitcoin as another “tulip bubble.” He doesn’t believe it will ever be actual currency. Ironically, his son, Spencer Schiff, transferred 100% of his portfolio into bitcoin in 2021. In response, Peter Schiff tweeted, “If my own son is this brainwashed, imagine how vulnerable most kids are.” Peter further commented on bitcoin, claiming, “The young generation likes bitcoin because most lack the knowledge or experience to see through the hype. When they get older, they will prefer gold too, assuming bitcoin is even still around.”

All of his 6 books and appearances center around the idea that we are on the brink of another economic collapse. His recommendation is to invest mostly in gold and foreign markets. He is known for his advocacy for commodity-focused investments in countries with growth-friendly fiscal policy. Since 2000, he has been forecasting that gold would soar to $5,000 an ounce. Currently, the highest gold price was $2,067.15 on August 7, 2020. Not surprisingly, the mutual funds his company manages focus on long-term investments in gold, crude oil and agricultural commodities, and international holdings. These are a hedge, he contends, against his prediction of the economic decline the U.S. will suffer due to its high debt and the fed’s market intervention.

He tells people to put 10 – 15% of their money in gold, with some of his clients adding another 10% in gold-mining shares. The number one holding in his Gold Fund, as of Jan 2021, was Metalla Royalty & Streaming. Mr. Schiff built this company to increase share value by accumulating a diversified portfolio of royalties and streams with attractive returns. The second-largest holding was Fortuna Silver Mines Inc., a company with operations in Peru, Mexico, and Argentina.

The largest holding in his International Dividend Income Fund was Newmont Corp, a gold mining company. It’s fair to say that Schiff’s business is selling gold, so he will continue to advocate for it whether it performs or not. Peter Schiff’s market predictions hinge on whether or not gold rises significantly. But his net worth will continue to grow as long as investors keep putting their trust and money into his funds.

Real Estate Investment

Real estate is not a substantial factor in the success of the Peter Schiff net worth equation. Peter Schiff does not advocate buying a home as an investment. He sees it as a lifestyle choice. Nonetheless, he owns homes himself, in both Connecticut and Puerto Rico. Schiff purchased his 8,469sf Connecticut home in 2009 for $2.4 million. It is currently valued at more than $3.3 million.

He also owns a boat, which he doesn’t see as a good investment either. He believes that, like a car or a boat, a home will depreciate over time…and he says that he hates watching as it slowly falls apart. His massive Connecticut property requires constant upkeep and repair.

Regardless of his opinion, it doesn’t stop him from booking speaking engagements at real estate investment conferences to talk about the fiscal cliff, the dollar’s collapse, and government debt. Schiff says that if you do own a house, you have to take advantage of the money. He doesn’t advise owning a home free and clear.

On the ‘Real Estate Radio & Podcast’ in 2013, Schiff explains his opinion that “The only way that you make money as a homeowner is by being a debtor. You are not really making money on the value of your house going up, but rather on the value of the debt being wiped clean.

If you can buy a property with a 3.5% down payment, which you can with an FHA loan, you get a lot of leverage and take advantage of the chief financing. When inflation wipes out all the savers and debtors, they also wipe out your mortgage debt.”

Schiff goes on to say that, “Brokers try to con you into thinking you’re throwing away money if you rent. You’re not throwing away money because you get a place to live out of it.”

 

Income Breakdown

We can break down Schiff’s income into 4 main categories: salary and profit from Euro Pacific Capital and SchiffGold, his investments, his radio shows, and current podcast & other appearances, and lastly, his book sales. By 2009, Euro Pacific Capital was managing $1.5 billion for nearly 15,000 clients. The mutual funds charge fees on the capital invested, usually around 1.5% annually. Schiff’s income comes from the profit and the salary he earns from his firm.

For example, between 2008 and 2010, he earned $17 million as his salary from the firm and reported dividends, interest, and capital gains between $1.4 million and $6.34 million. Further, the profits from the sale of his books on economics and other media products. Given that his book ‘Crash Proof 2.0: How to Profit from the Economic Collapse’ was on the New York Times best-sellers list, it is likely he could have sold around 20,000 books in a week. According to standard contract royalties, at about $15 per book, that would earn him around 40k in one week.

You can see how this can add up. Schiff keeps himself in the zeitgeist and maintains his celebrity through social media, his podcast, “The Peter Schiff Show,” and other media appearances. He’s a true master at his own marketing. Schiff’s sometimes controversial and inflammatory statements, such as “All bitcoin is the latest iteration of fool’s gold and anybody buying it is ultimately a fool,” make headlines and draw in readers, viewers, and clicks.

https://twitter.com/BitcoinMemeHub/status/1381894037821661184?s=20 Regardless of his accuracy at predicting the stock market or the track record of his management firm’s portfolios, his appearances as a TV and internet personality and commentator generate more celebrity and continue to pad his income. His podcast on Apple Podcast has almost 5,000 reviews of 4.6 out of 5 stars. His revenue for the podcast has been recorded at $3 million. His youtube advertising revenue is estimated at around 30k+ for 2021. It is unknown what he rakes in as a speaker.

Family and History

Peter Schiff was born on March 23, 1963, in New Haven, Connecticut. His father, Irwin Schiff (a prominent figure of the US tax protest movement), died in prison, serving 13 years for tax evasion. He attended Beverly Hills High School in California. He graduated with a bachelor’s degree in finance and accounting from the University of California at Berkeley in 1987. Peter Schiff started his career in the early 90s as a stockbroker at Shearson Lehman Brothers.

In 1996 he and his business partner acquired an inactive brokerage firm and renamed it Euro Pacific Capital. His firm operated in Los Angeles, California, until 2005, when they moved it to Darien, Connecticut and later to Westport, Connecticut. He is married to Lauren Schiff, and together they have 3 children. He currently splits his time between Puerto Rico and Connecticut.

Puerto Rico Move to Save Taxes

Schiff lives in a gorgeous luxury beachfront home in Puerto Rico. He moved to Puerto Rico full time in 2017 because of the tax benefits and the beautiful weather. He encourages Americans to move to Puerto Rico and use it as a tax haven. Euro Pacific Asset Management and Euro Pacific Bank are now both based in Puerto Rico.

The Tax Incentive Code (Act 60), which incorporates tax incentives from 2012 into a single law, became effective in January 2020. The legislation provides tax exemptions to businesses and investors that relocate to Puerto Rico. Industries that are eligible for the incentives in Act 60 include advertising, education, graphic design, trading companies, health services, legal services, taxes, and accounting, and more.

How do these industries benefit? Here are all the goodies Peter and his businesses can enjoy in Puerto Rico:

  • 4% corporate tax rate on net income from sources outside Puerto Rico for 15 years, renewable for 15 more years
  • 100% tax-exempt dividends
  • 50% exemption on municipal license taxes
  • 75% exemption on property taxes

In summary, by moving to Puerto Rico, Peter can keep most of what he earns. He doesn’t pay taxes on his earnings to the US government. He pays only 4% to the Puerto Rican government and pays 0% on capital gains.

Peter Schiff Net Worth – Conclusion

We can learn great takeaways from the way Peter Schiff has built his enormous net worth.

Never pay more in taxes than you need to. While we can’t all move our businesses to Puerto Rico, we can make the most US tax benefits. For example, if you are self-employed, understanding how to incorporate yourself is essential for keeping more of your money in your pocket and protecting your assets.

Be willing to leave the party early. Schiff was predicting that the stock market bubble would pop years ahead of 2008. And he’s predicting it will happen again. No one can exactly time the market. If you want to get out before the market crashes, you have to be willing to leave some money on the table. You might feel like the only one missing out on huge wins, but eventually, you’ll be right. If you wait for an obvious sign, you’ll be too late.

Invest in the stock market with a strategy (and stick to it). If you want to become rich, you need to invest your money to watch it grow. Peter Schiff has a mistrust of any stocks largely dependent on American consumers. Many investors would disagree. But Schiff always sticks with his investment plan; no matter what happens, that could shake his faith. He is nothing but consistent. There are myriad philosophies about investing in the market, and you need to understand how to make your money work for you.

Take advantage of FHA loans to buy your first home. While Schiff doesn’t believe owning a home is an “investment,” he does recommend that you take advantage of the low down payment available for FHA loans. With a minimum credit score of 580, you can be eligible to make a 3.5% down payment. You must also have a debt-to-income ratio of 50% or less– meaning you must spend only 50% or less on your pre-tax income on your debts.

Invest internationally. Peter doesn’t have faith in the US economy or its markets and therefore invests his clients in many international holdings, as well as gold. Everyone would do well to diversify their portfolios with international holdings. If you choose to invest in real estate, consider looking outside the US for markets with upward mobility, such as Belize real estate.

 

This article originally appeared on Your Money Geek and has been republished with permission.

Filed Under: Net Worth

People Are Celebrating The $1,400 Stimulus Check With A Hilarious New Meme (50 Memes)

April 6, 2021 by

Waiting for that direct deposit from Biden? Trying to think about how you’re going to spend it? Why not read some Stimmy memes in the meantime…

Some a relatable. Some are strange. All of them show that we as a society would probably stand to learn about how money and investments work.

The $1400 stimulus check meme template (or “Stimmy Memes template) is pretty simple:

“Bank account: +$1400”

And then it breaks down in a few ways, first…

1. Lots of people took an absurd approach to suddenly having a lot of money…

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2.

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5.

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How Much Do Real Estate Agents Make and How to be Successful At It

March 23, 2021 by

If you’re considering starting a new career as a real estate agent, you’re probably wondering, “How much do real estate agents make?”

However, before you begin ordering business cards, you first need to consider a couple of factors.

For instance, being a real estate agent is a commission-based job, which means there is potential to make serious money. On the other hand, your success is a function of your efforts. In other words, you can’t show up and expect to get paid for doing nothing.

This article will explain how much real agents make and what other factors to consider. I’ll also cover the steps needed to become a real estate agent. Furthermore, I’ll share some insights from experienced REALTORS on why some agents fail and what advice they would give to have a successful real estate career.

How Do Real Estate Agents Get Paid?

Real estate agents don’t receive a base salary. Instead, real estate agents earn money when they sell a real estate property, such as a house, and receive a commission for it. The commission is a percentage of the property’s purchase price, which the seller pays for. Thus, the buyer isn’t responsible for paying either the buyer’s agent or the seller’s agent.

On average, a real estate agent commission is five to six percent of the purchase price. However, some agents are willing to negotiate with clients and offer a discount. For example, an agent may represent both the buyer and seller or the agent has received repeated business from the client.

However, it’s essential to understand that the real estate commissions do not entirely go to the seller’s listing agent. Instead, the seller’s and buyer’s brokerages split the commission 50/50—afterward, the agent and broker divide it between themselves.

Those who share the commission:

  • Seller’s broker
  • Seller’s agent
  • Buyer’s broker
  • Buyer’s agent

The split between the agent and the broker varies, such as 50/50, 60/40, or 30/70. The agent’s years of service or production can positively affect how much of the split they receive. Therefore, it’s normal for a real estate agent just starting to receive a smaller cut.

For example, a listing agent helped their client sell their house for $300,000. For a 5% commission, the commission upon a sale is $15,000 ($300,000 x 5%). The seller’s and buyer’s brokerages split the commission between them. Therefore, each brokerage receives $7,500 ($15,000 / 2).

Afterward, the seller’s broker and seller’s agent agree amongst themselves to share their commission 50/50. Thus, each receive $3,750 ($7,500 / 2).

When Do Real Estate Agents Get Paid?

Real estate agents only get paid when a seller transfers their property ownership to the buyer. Real estate professionals refer to this transaction as closing. This closing day usually includes the lender, the title company, and the real estate agent.

Therefore, if the buyer and seller’s purchase agreement contained a contingency, such as a failed home inspection, the buyer has the right to walk away from the deal. In this case, the real estate agent will not get paid for their efforts.

Another example that can prevent closing on a property is when a lender does not approve a buyer for financing. Lenders hire a third-party to perform an independent appraisal of the property.

Lenders won’t finance a property if the purchase price exceeds the appraiser’s valuation. For this reason, sellers prefer accepting full cash offers, especially in bidding wars.

How Much Do Real Estate Agents Make?

The average real estate wage for real estate agents ranges from $42,000 to $49,000 annually, according to the following reports:

  • The U.S. of Labor Statistics shows that the median annual wage for real estate agents is $48,930 (May 2019).
  • Salary.com reported a lower median yearly salary of $42,821 (December 2020).
Real Estate Agent Sales Agent by Percentile From Salary.com

However, these figures don’t specify how many years of experience for the real estate agents. According to Salary.com, a real estate agent with more than ten years had a median annual wage of $47,166, which is $4,345 above the median.

Also, the NAR reported that a REALTOR with more than 16 years of experience had a median gross income of $71,000. This increase in gross income for a seasoned real agent can result from various things.

For example, a broker may be more willing to share a larger percentage of commission to reward a real estate agent’s experience. Furthermore, a seasoned agent has also built more relationships and connections over time, allowing them to produce more efficient results.

Below is a table showing the median annual income for different years of experience from Salary.com:

Years of ExperienceMedian Annual Income
Less than two years$42,304
3 to 4 years$42,452
5 to 6 years$42,599
7 to 9 years$43,168
10 to 14 years$47,166
More than 15 years$49,426
Median Annual Income Per Years of Experience From Salary.com

Out-of-Pocket Expenses

Although a real estate agent technically works for a brokerage, they operate like contractors or small business owners. Several expenses can chip away at their commission check. A broker may be willing to help their agent with costs, but ultimately it’s the agent’s responsibility.

A couple of out-of-pocket expenses are the following: brokerage fees, REALTOR membership fees, access to the Multiple Listing Service (MLS), and Error and Omissions Insurance. Additionally, real estate agents have to pay for their marketing, website, and any travel expenses.

Factors That Can Improve A Real Estate Agent’s Income

Real estate agents make money when a property sells. However, certain factors can help increase an agent’s income above the average salary.

Experience

Although a 6% commission rate is the average, some real estate agents charge a higher commission on the listing agreement due to their experience. However, more years of service doesn’t necessarily guarantee someone is the best real estate agent.

Property Type

Agents that expand their clientele outside homeowners can also increase their take-home pay. Real estate agents can make a lot more money selling commercial real estate than residential real estate, mainly because commercial properties have a significantly greater purchase price.

Lead Generation

A real estate sales agent can make more annually by generating more leads and selling more houses. Developing an efficient prospecting system usually comes with time, along with building connections with other agents.

A young real estate agent can achieve success and make good money. They have to hustle and put in the work like any good business owner.

How to Become a Real Estate Agent in 3 Steps

Step 1: Take Pre-Licensing Courses

Each state has different requirements to be a licensed real estate agent. For example, in California, a person must take three real estate classes for 165 hours. On the other hand, New York only requires 75 hours of salesperson qualifying education courses in real estate.

Therefore, it’s essential to research a state’s real estate licensing information. Being licensed in one state doesn’t permit an agent to practice in another.

Courses can be completed on-line or in person. But, make sure the classes are recognized and accepted by the state.

Step 2: Take Real Estate Salesperson Exam

Your course instructor should be your first resource in helping you apply for the real estate salesperson exam. Be sure to follow the application process to avoid delaying the exam.

It’s to your advantage to take the exam sooner rather than later while the information is still fresh in your mind. Most states require a background check, which can take weeks to finish. So, keep on studying!

Step 3: Join a Brokerage

Agents are not allowed to sell houses independently. Instead, agents must join a real estate brokerage, where a broker will oversee all the agent’s transactions.

Interview several brokerages to find the one that works best for you regarding assistance, guidelines, and commission. Real estate is all about relationships. So, it’s essential to have a good one with your broker.

Some agents prefer a brokerage associated with a known real estate brand. They believe that it can help market themselves.

However, the name of a brokerage doesn’t automatically provide success. Other successful and seasoned agents decide to become a real estate broker and start a new brokerage.

How To Be Successful in Real Estate

There is a misconception that being a real estate is an easy career. Although acquiring a real estate license is a straightforward process, new agents quit within five years.

I interviewed two seasoned real estate agents to get their opinion on what it takes to be successful. They have a combined 30+ years of experience in the real estate industry, helping people sell and buy a home.

Heeran Workman, an Associate Broker for eXp Realty, says about real estate agents, “They assume that once they get their license, everyone they know will automatically hire them for the job. Most fail because they don’t prospect for clients.”

Shawn Prouse, a REALTOR with Berkshire Hathaway, adds, “An agent doesn’t run their profession as a legitimate business and cuts corners or isn’t dedicate to the process, not fully committed.”

Furthermore, like any sales job, being a successful real estate agent is all about time management and creating a process to generate more leads. Prouse states, “If you fill [your time] with business generating activities, you will become successful.”

Workman adds, “A successful agent will most likely be a well-rounded person who has a great prospecting system to look for new clients…and continues to keep this funnel moving.”

What Else Can a Real Estate Agent Do With a License?

If you’re having difficulty as a real estate agent finding clients wanting to sell a house, there are other things you can do to leverage your license.

Become a REALTOR

A REALTOR is a licensed real estate agent who is a member of the National Association of REALTORS® (NAR). However, a licensed real estate agent is not necessary a REALTOR. The NAR holds REALTORS to a higher standard by adhering to the Code of Ethics & Standards of Practice.

Many real estate agents decide to become REALTORS. This title can build confidence with potential clients and help agents gain more business.

Start a Property Management Company

A majority of states require that a property manager be licensed. A property manager’s responsibilities include marketing properties for rent, calculate rent affordability for a tenant, and handle repairs.

Running a property management company is an excellent way to supplement their income. A manager’s fee ranges from 6% to 10% of the monthly rental income. A property manager that takes care of multiple rental properties can make a sizable income.

For example, a rental property with a monthly rental of $1,500 and a 10% property management fee would yield $150 a month ($1,500 x 10%). Imagine managing 20 properties with the same monthly rental income; That is $3,000 a month ($150 x 20).

Perform Broker Price Opinion (BPO) Work

A Broker Price Opinion (BPO) is a report created by a licensed real estate agent that estimates a property’s value, similar to an appraisal.

The difference between an appraisal and a BPO is that the appraisal must conform to the Uniform Standards of Professional Appraisal Practice(USPAP). Also, a BPO can be relatively less expensive compared to a formal appraisal.

Conclusion

Acquiring a real estate agent license or registering as a REALTOR is a straightforward process. However, what you do after you pass the examinations is ultimately up to you.

A real estate agent’s salary can vary, which shows that the level of effort can directly affect success. You’ll need a good understanding of real estate legal knowledge and personal skills to coordinate a closing. If you have excellent sales ability and market skills, you may fit well for a real estate career.

However, don’t spend your time chasing commission checks. Instead, always put your clients first. A satisfied client can lead to referrals, which can generate more real estate sales.

Real estate is all about relationships. Sellers want to choose a real estate agent that they can trust.

 

This article originally appeared on Your Money Geek and has been republished with permission.

Filed Under: Career, real estate

How to Make $500 Fast in 2021 (29 Proven Ways)

March 22, 2021 by

This post may contain affiliates & sponsors. Learn more & why here.

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No doubt, by the end of this article I can teach you how to make $500 fast. And, who couldn’t use an extra $500 right now?

Imagine if $500 was just sitting in your bank account seven days from now. That would be pretty cool, right? (That is enough money to get one Chipotle burrito a week for a year!)

Well, unless it’s tax refund season, the chances of you seeing $500 magically appear in your bank account are slim to none. However, below you will find a list of strategies and a wide variety of ideas to help you make $500 fast.

This article will provide you with tips to earn money online as well as some long-term passive income ideas that could help you make more money down the road too!

 


How to Make $500 Fast in 2020:

Table of Contents

 

This article was originally posted on Money Life Wax.

ABOUT THE AUTHOR:
Josh Hastings writes about ways to make money, pay off debt, and improve yourself. After paying off $200,000 in student loans with his wife in less than four years, Josh started Money Life Wax and has been featured on Forbes, Business Insider, Huffington Post and more! In addition to being a life-long entrepreneur, Josh and his wife enjoy spending time with their chocolate lab named Morgan, working out, helping others with their debt and recommend using Personal Capital to track your finances.

Filed Under: Hints and Tools, Money, Saving

3 Things You Need to Know Before Taking a Payday Loan

December 18, 2020 by

As inflation continues to rise across the UK, the disposable income levels of British citizens have come under sharp focus.

The most recent studies have been carried out by the Resolution Foundation, who have revealed that only the top 1% of households in the UK have fully recovered from the financial crisis.

As citizens continue to struggle with real wage stagnation and the rising cost of living, there may be a growing temptation to seek out unsecured, short-term loans. While this can provide relief, however, it is important to consider the following before taking out a payday loan.

  1. Payday Loans Still Carry Fixed Interest Rates

While the days of excessive interest rates on payday loans may have come to an end, it is still important to understand the nature of short-term lending and calculate the precise amount you will be required to pay back.

Regulations introduced in 2015 by the Financial Conduct Authority (FCA) capped all payday loan interest rates at 0.8% a day, minimising the cost of borrowing nationwide. This is still slightly higher than secured loans, however, so you must factor this when determining whether or not you can make a full repayment according to the terms of the agreement.

So, do your own calculations when determining how much you can actually afford to borrow, before reading through the necessary small print to highlight any other factors that may affect your repayment.

  1. Not All Lenders Are Created Equal

While all payday loan firms offer a similar service, they are not all created equal. There are even some that have forged their own unique niche within the marketplace, to the point where they would even classify themselves as payday loan firms.

Take Smart Pig, for example, which delivers a loan service aimed at students and positioned itself as a viable alternative to a classic payday loan. Not only does it cap interest rates at 0.8% per day as stipulated, but it has also placed further restrictions and eliminated hidden fees to create a fair pricing structure.

It is important to keep this in mind, as ideally you should seek out specialist short-term loans that are designed to meet your specific circumstances.

  1. Payday Loans Are There for Emergencies, Not Cash-flow Shortages

While payday loans have historically been demonized, they do serve a viable purpose in the modern age so long as they are used responsibly.

More specifically, they should only ever be used to cover an unexpected payment or emergency, so long as the value can be comfortably repaid from your next pay-packet. Conversely, they should not be used to fund a lifestyle or plug gaps in your cash-flow, as this becomes unsustainable due to the mounting interest and late payment charges associated by some operators.

Filed Under: Debt Tagged With: , ,

How Far Back Can I Claim My PPI? A Question On The Minds Of Many

November 26, 2020 by

At present there is the ongoing scandal of insurance mis-selling (this has been going on in the UK for a number of years and there are cases of miss sold PPI dating back more than 20 years), this is a financial scandal that has been raging for more than a decade with a number of different ppi claims companies’ handling claims for customers (in some cases claimants have hired their own independent solicitors or even pursued a PPI claim themselves).

When it comes to payment protection insurance claims (PPI claims for short) some examples of important questions on peoples minds at the moment are questions such as “how far back can I claim PPI?” Expanded Meaning: “how far back in time can my payment protection insurance policy be before I’ll be unable to make a claim for compensation?”.

The reality is: with a PPI claim there is officially no formal time limit (some people have successfully claimed compensation from miss sold insurance policies dating back over a decade).

However there is a complexity: Something which is known as the “six year time limit”

Six Year Time Limit?

This is basically the statutory time limit for which banks and other financial corporations have to keep a record of payment protection insurance policies.

If your claim is dating back to longer than six years ago this does not necessarily mean that you will have issues with making a PPI claim, what it means is that it is possible that the company that miss sold the PPI to you in the first place has no record of your PPI policy.

What Happens If They Have No Record Of My PPI Policy?

There are ways around this, the most obvious way is to check if you have any of the original paperwork that goes with your original PPI policy, if not, this is not necessarily an issue, there may be other ways to prove you paid into a PPI plan, this is more a matter for expert PPI solicitors to look into rather than something to make speculative estimations on however.

Rest assured: people have successfully reclaimed PPI on policies that go back much longer than six years, so as stated above this does not necessarily pose a threat to a potential claim at all.

How About If I Have My Original Paperwork?

If you have your original paperwork there is no problem, you have supporting evidence to prove you paid into a PPI policy and thus you have a solid foundation to find out whether or not you have a valid PPI claim.

Many PPI Claims companies can help you claim PPI even if you don’t have the original paperwork, one example of such a company is: this company who are known to be actual “PPI solicitors” which gives them additional abilities to facilitate your claim, however there are also other PPI companies’ that can handle your PPI rebates, a simple search will reveal a number of companies that can handle your case for you.

You also have the option to handle the claim by yourself and save having to pay any commissions out to claims management firms, however this can be a lengthy process and may require more than just patience, (many PPI claims end up having to be submitted to the financial ombudsman service and pursued further should the banks try to reject a claim.) However, on the balance it is possible also to claim PPI without the use of a solicitor or a claims management company.

The PPI Scandal is one of the largest scale mis-selling scandals of all time, there are funds allocated to compensate members of the public who have experienced this kind of mis-selling so it is advisable to at least make enquiries if you have a suspicion that you have had PPI on either a loan, credit card, mortgage, or other financial arrangement.

Final Tip: If you do intend to claim compensation it is sensible to claim as soon as possible due to the fact that there is a deadline being implemented by the FCA meaning that any outstanding PPI claims will need to be submitted before the deadline of August 29th 2019, so submit your case as soon as possible.

Filed Under: Insurance Tagged With: ,

Does Your Bumper Sticker Put You at Risk of Being Pulled Over?

November 22, 2020 by

We’ve all heard the myth (yes, it is a myth) that drivers of red cars are issued speeding tickets more often than other cars. We’ve been told that tickets riddled with mistakes are null and void, again untrue. But here’s something that’ll make you do a spit take—your choice of bumper sticker is cause enough to get you pulled over.

What-the-what now?

When I got my first car, my parents warned me against plastering my bumper with bumper stickers. According to them, having a unique bumper sticker (or several) would make it easier for people up to no good to recognize my car, whether it was parked at the store, at my job or in the driveway. If they didn’t agree with the message, they could vandalize my car.

As it would happen, police officers look at bumper sticker messages and pull motorists over based on those messages. Here are a couple of examples:

DARE Leads to Arrest

In 2011, a Texas couple was driving down the highway going two miles per hour over the speed limit. An officer pulled them over, and after noting a rosary hanging on the rearview mirror, an air freshener and a DARE bumper sticker, believed they were smuggling drugs. The officer did not find any drugs upon searching the vehicle, but did find a lump sum of cash that he then confiscated. After confiscating the cash, the officer arrested one half of the couple.

At appeal, the judge ruled in the officer’s favor, arguing that through the use of the rosary, air freshener and DARE bumper sticker, they were trying to hide contraband. Again, no contraband was found. And remember what DARE stands for, we learned about it school: Drug Abuse Resistance Education. An officer believed a couple with a rosary, air freshener and an anti-drug bumper sticker were hiding something.

Pulled Over for Buckeye Support

In 2013, a bereft couple was driving home from a funeral when they were pulled over by a police officer. They weren’t going over the speed limit and they weren’t driving erratically. The couple had been pulled over after another officer (not the one who pulled them over) notified two patrol officers that a vehicle with a marijuana bumper sticker was on their route.

The patrol officers flanked the vehicle on either side, and the driver, Bonnie Jonas-Boggioni reported that “they had body armor and guns.” They asked her why she had a marijuana bumper sticker on her car, and she explained to the officers that it was not an image of a marijuana leaf, but was in fact a Buckeye leaf decal. The decal is an exact replica of the stickers Ohio State Buckeye football players receive when they have performed a good play.

In an interview with Think Progress, Jonas-Boggioni stated that “the officer explained that someone from outside his jurisdiction—apparently another officer—had spotted the leaf sticker and thought it might indicate that the car was carrying marijuana.”

Upon realizing the mistake, the patrol officers let the couple go on their way.

As you well know from your years of driving, a ticket can increase your auto insurance rates. It’s not exactly fair to be written up a ticket just because you have a bumper sticker that might be misconstrued as supporting something illegal.

Sites like CoverHound help drivers compare auto insurance rates in real time. You’ll be paired with an agency that understands not all tickets are created equal, and that one ticket shouldn’t cost you an affordable rate.

Have any bumper stickers that might get you pulled over and cost you a ticket?

Filed Under: Legal Tagged With: ,

Installment Loans and Payday Loans: What’s the Difference?

November 20, 2020 by

When your personal expenditures exceed your income, the quickest solution is to borrow the money. Fortunately, there are short-term lending options that make getting several hundred dollars in your bank account quick and easy. Two of the most commonly used short-term options are payday loans and installment loans. On the surface, the two options may seem identical, however, there are some differences you should be made aware of to make the most informed decision on which loan type is best for you.

 

Payday Loans

Payday loans are short-term loans for small amounts of cash. The loans are provided to the borrower with the understanding that the funds will be repaid on their next pay cycle (usually within 14 days). Applying is generally easy and can be done online. Eligible applicants will need to be at least 18 years old, have verifiable income, and a valid checking or savings account.

 

Installment Loans

Installment loans are alternative payday loans. Unlike payday loans that have to be repaid within 14 days, installment loans can be spread out over the course of several months or years depending on how much is borrowed and the agreed upon terms.  Like payday loans, installment loans can be applied for online and only require proof of income and a checking or savings account. Since they’re geared towards those with low or no credit, your chances of approval are a lot higher.

 

What’s the Difference?

Short-term installment loans and payday loans may sound a lot alike, however, there are some key differences you’ll want to be aware of.

Loan Amounts – The amount that can be borrowed is different. While a payday loan is typically $100 – $500, depending on the type of installment loan, customers could borrow a thousand dollars or more.

Repayment Period – Since payday loans are as the name implies, to be paid back on your next payday, the ideal repayment term is 14 days. Since there was only a small amount borrowed, lenders expect it to be paid back faster. Failure to do so could result in much higher interest rates and extension fees added to the total.

Installment loans, on the other hand, provide borrowers with more time to repay. Since they’ve borrowed more money, the loan is broken up into several small payments over the course of a few months or years.

Extended Fees – When a borrower is unable to pay their payday loan on the agreed upon date, they are required to pay an extension fee. This fee can be as much as $30 per $100 borrowed and does not count towards the payment of the loan. This, in turn, wastes more money and prolongs the goal of paying off the loan altogether.

Installment loans do not have extension fees. Instead, the loan and interest rate are divided up into small payments over the course of several months. The fixed monthly amount goes towards paying down the balance.

Flexibility – Another significance in payday loans and installment loans is flexibility in repayment. Payday loan balances, fees, and interest must be repaid within 14 days to avoid higher fees and interest. Installment loan providers, however, give you an option of how long you’ll need to pay off your loan. You can choose to pay it off early to save on interest, or make timely, fixed monthly payments until the balance is paid in full.

 

Choose Carefully

There are a lot of differences between payday loans and installment loans. Whatever your financial problems might be you don’t want to make them worse by choosing in haste. Review your circumstances carefully and then choose a lending product that best matches those needs. Remember, the idea is to get out of a jam, not put yourself further into debt. Review payment terms, payment amounts, interest rates, fees, eligibility requirements, and more to discern if you’ve chosen the right loan for you.

There may come a time when your finances are in disarray and you need a lifesaver to help you out. Though short-term loans like payday loans and installment loans can be beneficial for getting cash fast, it is imperative that you make an informed decision on which loan option is better for you. As you can see, while payday loans might be okay for small needs like a higher than normal bill, installment loans can be best for more expensive things like a car repair or home improvement task that will take longer to pay off. Whichever you choose, be sure that you know what to do and how to be a responsible borrower to avoid going further into debt.

Filed Under: Investing

How Much Do You Need to Retire?

November 8, 2020 by

retirementMany times when planning for retirement people focus on maximizing contributions. It’s often assumed that by doing so everything about retirement will fall into place. That may be so, but how do you know if you’re succeeding until you’ve defined your target?

When it comes to retirement, the target❠is a credible income number, as in how much will you need to live the life you want to live, taking into account your expected living expenses, sources of income, and the effect inflation will have on it. You can do that by going through some steps.

Figure out how much income you’ll need in retirement

To keep the calculations simple, many financial planners advise using a simple method, such as 80% of pre-retirement income, but I think this can also be an oversimplification. The fact is, you don’t live on your gross income, but on your take home pay, so basing retirement needs off of gross income can easily be distorted.

When you retire you won’t have as many off the top expenses, such as contributions to pension schemes, retirement plan contributions, FICA taxes (which apply only to earned income) and cafeteria plan deductions. Instead calculate how much you spend in a typical month based on an analysis of your spending. You may need to review your checking accounts and credit card statements to get a complete picture.

Once you have an average spending number, it’s time to make adjustments. If you plan on having your mortgage and any other debts paid off by the time you retire you won’t need to factor these into your retirement income requirement. Obviously if you have children you can also subtract any expenses related to their care. And if you plan to be fully retired, or at least not working outside your home, you can also deduct work related expenses, such as gas, tolls and higher maintenance owing to more miles driven.

On the flip side there may be expenses that you anticipate being higher because of retirement. It may be hard to estimate, but if you plan to travel more than you do now you’ll have to do your best to calculate how much to add for it. Premiums for long term care insurance are also a possibility, as are a higher allowance for medical costs.

Factor in inflation

Once you have a have a baseline annual income requirement, you’ll have to make an adjustment for inflation. This is a completely necessary step since your retirement is probably decades away.

The idea is to be sure that the income you’re preparing for at retirement will be relevant for that time and not one that’s based on today’s price levels.

Estimating inflation is not an exact science; you have to make what you hope will be a reasonable estimate of what inflation will be in the future and that can be little better than a guess. Perhaps the most accurate way to do this is to take the number of years between now and when you expect to retire, and let’s say its 30 years, then use the inflation factor for the past 30 years to make the projection. You can get the inflation number for previous years by using an inflation calculator.

You might determine from this, for example, that the $36,000 income you need now might be something like $100,000 30 years from now. That’s the income you must prepare your investments to deliver by your retirement.

Consider your sources of retirement income

OK, when you calculate inflation into retirement plans the numbers can get scary. But it’s not really as bad as it looks. You will probably have other sources of retirement income beyond that which will be provided by your retirement investments alone. These sources include Social Security, employer pensions and any earned income you expect to have at that time.

You can actually deduct these from your income requirements before making inflation adjustments, but with questions surrounding the future of both Social Security and employer pension funding, it might be a safer bet to be at least a bit conservative as to how much you expect to receive from these sources.

Your investment retirement choices

Once you have a solid idea as to how much income your investments will need to provide in retirement, it’s time to consider what vehicles you’ll use to hold and grow that money. Fortunately, there’s a wide selection here, and you can work this to suit your anticipated future needs.

For most people, an employer 401k or 403b plan is the best way to build up large amounts of retirement savings. But even if you have these plans to invest in, don’t stop there. Traditional IRA’s often provide greater investment flexibility than employer plans and they can be an excellent supplement to a company plan, especially if you need to accelerate your retirement savings.

Still another choice is a Roth IRA. You have the same contribution limits as with a traditional IRA, but the Roth adds tax diversification to the mix. There is no deduction for Roth IRA contributions in the year they’re made, but you will have tax free withdrawals of both principal contributed and the earnings they accumulate if you hold the plan until retirement. This means that at least some of your retirement income can be taken tax free, which will also have the benefit of reducing the amount of income you’ll need for retirement.
If this all seems a bit complicated, that’s because it really is. That’s why it’s so important to know exactly how much income you’ll need, and to have a solid strategy for how you’ll accumulate the assets to provide it. But once you know what those numbers are, it’s just a matter of setting your plan and sticking to it. The payoff is the retirement of your dreams.

photo by kheelcenter

About the Author: Joe DiSanto is the founder of the firm Play Louder. He is an independent CFO, providing financial management and business consulting to small firms and family offices. You can read more about his ideas on the financial planning process here.

Filed Under: Retirement