The Rule of 72 is a mental shortcut to estimate the effect of compound interest. Simply, by dividing 72 by an interest rate, you can estimate how long it will take for funds to double. In formula form:
All individuals have the opportunity to give gifts annually to any person without having to file a gift tax return. For 2012, the amount of the annual exclusion is $13,000.
This means that anyone can give a gift of up to $13,000 to any person for any reason without worrying about possible gift tax implications. A married couple can double this amount to $26,000.
In 2013, this annual exclusion amount will increase to $14,000 ($28,000 for couples).
For amounts given in excess of the annual exclusion amount, every individual has a lifetime exclusion amount, against which the excess gifts are …Read More
Last week, we mentioned that it is a good idea to sign up for online statements about your Social Security benefits. However, when it comes to retirement planning, Social Security is just the beginning. In a USA Today Money Watch column, Linda Leitz, a NAPFA-registered financial planner, fielded a question from a reader who is soon to retire and wondering about whether it is better to invest Social Security checks or us that money pay off a mortgage.
Leitz comments that you can pay off your mortgage if this is what really important to you but adds …Read More
For the economy to get better people need to pay down excessive debt, which is called deleveraging. This typically takes seven years. The process started with the 2008 crash but has almost stalled out and is proceeding at a very slow pace. The ratio of debt balances to income has grown steadily for several decades. Its growth was reasonable until the over-exuberance of the 1990’s bubble years and continued at unreasonable pace until the Lehman crash of 2008.
To recover from the recession, unemployment needs to come down to the full employment number of 4% unemployment. This will happen through …Read More
According to a March 2012 study by the Federal Reserve Bank of New York, the average outstanding student loan balance per borrower is $23,300; a quarter of borrowers owe more than $28,000, and 0.45 percent of borrowers owe more than $200,000. If you continued on to medical, business, or law school, you are probably in the latter debt category with a six-figure student loan balance wondering how to tackle that monkey on your back. Students have a variety of loan options to choose from when deciding how to fund college expenses, but it is critical to understand the details and …Read More