FBN’s Charles Payne, NewOak Capital President James Frischling, small business expert Susan Solovic, Tea Party News Network News Director Scottie Nell Hughes, retail analyst Hitha Prabhakar and Penn Financial Group founder Matt McCall on the U.S. stocks to watch.
FBN’s Charles Payne, retail analyst Hitha Prabhakar, Penn Financial Group founder Matt McCall, Monster Worldwide Senior V.P. Joanie Courtney, small business expert Susan Solovic and FBN’s Tracy Byrnes on the outlook for Middleby.
Financial Engineer Discusses Ways to Troubleshoot
Unnecessary Financial Burdens
Taxes account for the most expensive burden you’ll experience in your lifetime, says engineer-turned-independent financial planning coach Rao K. Garuda.
In addition to federal, state, city and death taxes, there are 59 other varieties. Relatively few taxes, however, account for the bulk of the burden on citizens, says Garuda, whose clients include retirees, people planning for retirement, physicians, business owners and other professionals.
He thinks his fellow Americans deserve a shot at keeping more of their money.
“When I came to the United States, I had less than $10 in my pocket, but I had an excellent education as an engineer. When I married a physician, I realized how expensive it is to make a good living here,” says Garuda, (www.aca-incorp.com), who quickly applied his analytical engineering mind to understanding the complicated tax system.
“Since this country has given me so much, I wanted to repay my fellow Americans with strategies for keeping more of their own money.”
Garuda identifies some of the most expensive and common tax hurdles affecting Americans and offers advice on troubleshooting our tax system.
• Problem: The IRA tax: great on the front end, terrible down the road.
Solution: An IRA is tax-deferred, which means it will accumulate value over time. But when you withdraw from it, you will be heavily penalized with high taxes. That’s why you should convert this asset to a Roth IRA, which allows your money to grow tax-free. Since the money put in was already taxed you don’t have to pay any taxes when you take it out, and, overall, you’ll save a significant amount of money.
• Problem: Too many people don’t take advantage of creating tax-free income via insurance products.
Solution: From a financial perspective, retirees and professional planners run into a significant issue: seniors, blessed with good health, who outlive their money. But with certain insurance products, retirees can create tax-free income while covering the later years of retirement – and protect their wealth if they become severely ill. There are certain insurance products tied to the stock market that can help people accumulate assets in the long run. Many of these products offer a tremendous upside for potential without the downside of increased risk.
• Problem: Missed opportunities – people who don’t take advantage of free money in a 401k.
Solution: Perhaps the company you work for is, like many others, bureaucratic to the point of being impractical. Your employer may not have done the best job communicating details about benefits such as matching 401k contributions, or you may not have taken the time to learn them. Now’s the time; this is free money! If your employer is offering a 50 percent match on your first 6 percent of contributions to the 401k, you should be contributing at least 6 percent. Educate yourself on your company’s plan so you can take full advantage.
About Rao K. Garuda
Rao K. Garuda, CLU, ChFC, is president and CEO of Associated Concepts Agency, Inc. – “The Missing Piece” of financial planning — founded in 1978, and a popular speaker at seminars and conferences for financial industry professionals. He came to the United States from India 35 years ago with a degree in engineering and, after marrying a physician, realized he had to learn how to reduce the couple’s taxes. Disappointed in the financial advice he received from professionals, he went to business school and developed expertise in tax reduction, and protecting money from stock market losses. Rao is a founding member of First Financial Resources, a national organization with over 75 partners in the USA; a life member of the Million Dollar Round Table (MDRT), and a life member of MDRT’s Top of the Table for 21 consecutive years.
Network Solutions and the Center for Excellence at the University of Maryland’s Smith School of Business just recently released their Small Business Success Index survey, shedding some light on the current state of entrepreneurs and the small business world.
Let’s get the bad news over with. The primary focus of the index is to trace small business competitiveness over time. And the news here is unsurprisingly not so good. “The competitive health of America’s small businesses is as low as it has been since the Small Business Success Survey began tracking at the onset of the recession,” the report notes.
So what’s stifling competitiveness? Lack of access to capital is the leading culprit. “For the past two years, small businesses have consistently suffered from weaknesses in the critical [area] of Capital Access,” the report states.
Perhaps more disheartening is that competitiveness in the Innovation and Marketing dimension declined as well. Specifically, small businesses’ ability to identify new customers and to position themselves efficiently and effectively vis-à-vis larger competitors is worsening. The result, according to the report, is “an unprecedented lack of confidence in competing with big business.”
But there’s good news too! The survey found that more than 25 percent of respondents will hire this year; technology investments are increasing; and more companies are employing social media. There is a widespread awareness among entrepreneurs of social media tools. The two most commonly used social media platforms are Facebook (27%) and LinkedIn (18%). The growth in social media use, however, is not cutting into the company’s budget, but rather it is actually contributing to small business expansion.
Despite their poor competitive health, the survey found business owners were growing increasingly optimistic about the economy’s prosperity and their own business’s financial future. Small businesses are also more hopeful about the economic milieu for the next 12 months than they were a year ago. The percentage who say they are being affected by the recession is also declining, after peaking last year.