Financial Advice That Can Be Trusted

Financial Advice

Barack Obama Elected President

New York Times

The Obama Agenda
By PAUL KRUGMAN

Tuesday, Nov. 4, 2008, is a date that will live in fame (the opposite of infamy) forever. If the election of our first African-American president didn’t stir you, if it didn’t leave you teary-eyed and proud of your country, there’s something wrong with you.

But will the election also mark a turning point in the actual substance of policy? Can Barack Obama really usher in a new era of progressive policies? Yes, he can.

Right now, many commentators are urging Mr. Obama to think small. Some make the case on political grounds: America, they say, is still a conservative country, and voters will punish Democrats if they move to the left. Others say that the financial and economic crisis leaves no room for action on, say, health care reform.

Let’s hope that Mr. Obama has the good sense to ignore this advice.

About the political argument: Anyone who doubts that we’ve had a major political realignment should look at what’s happened to Congress. After the 2004 election, there were many declarations that we’d entered a long-term, perhaps permanent era of Republican dominance. Since then, Democrats have won back-to-back victories, picking up at least 12 Senate seats and more than 50 House seats. They now have bigger majorities in both houses than the G.O.P. ever achieved in its 12-year reign.

Bear in mind, also, that this year’s presidential election was a clear referendum on political philosophies — and the progressive philosophy won.

Maybe the best way to highlight the importance of that fact is to contrast this year’s campaign with what happened four years ago. In 2004, President Bush concealed his real agenda. He basically ran as the nation’s defender against gay married terrorists, leaving even his supporters nonplussed when he announced, soon after the election was over, that his first priority was Social Security privatization. That wasn’t what people thought they had been voting for, and the privatization campaign quickly devolved from juggernaut to farce.

This year, however, Mr. Obama ran on a platform of guaranteed health care and tax breaks for the middle class, paid for with higher taxes on the affluent. John McCain denounced his opponent as a socialist and a “redistributor,” but America voted for him anyway. That’s a real mandate.

What about the argument that the economic crisis will make a progressive agenda unaffordable?

Well, there’s no question that fighting the crisis will cost a lot of money. Rescuing the financial system will probably require large outlays beyond the funds already disbursed. And on top of that, we badly need a program of increased government spending to support output and employment. Could next year’s federal budget deficit reach trillion? Yes.

But standard textbook economics says that it’s O.K., in fact appropriate, to run temporary deficits in the face of a depressed economy. Meanwhile, one or two years of red ink, while it would add modestly to future federal interest expenses, shouldn’t stand in the way of a health care plan that, even if quickly enacted into law, probably wouldn’t take effect until 2011.

Beyond that, the response to the economic crisis is, in itself, a chance to advance the progressive agenda.

Now, the Obama administration shouldn’t emulate the Bush administration’s habit of turning anything and everything into an argument for its preferred policies. (Recession? The economy needs help — let’s cut taxes on rich people! Recovery? Tax cuts for rich people work — let’s do some more!)

But it would be fair for the new administration to point out how conservative ideology, the belief that greed is always good, helped create this crisis. What F.D.R. said in his second inaugural address — “We have always known that heedless self-interest was bad morals; we know now that it is bad economics” — has never rung truer.

And right now happens to be one of those times when the converse is also true, and good morals are good economics. Helping the neediest in a time of crisis, through expanded health and unemployment benefits, is the morally right thing to do; it’s also a far more effective form of economic stimulus than cutting the capital gains tax. Providing aid to beleaguered state and local governments, so that they can sustain essential public services, is important for those who depend on those services; it’s also a way to avoid job losses and limit the depth of the economy’s slump.

So a serious progressive agenda — call it a new New Deal — isn’t just economically possible, it’s exactly what the economy needs.

The bottom line, then, is that Barack Obama shouldn’t listen to the people trying to scare him into being a do-nothing president. He has the political mandate; he has good economics on his side. You might say that the only thing he has to fear is fear itself.

By PAUL KRUGMAN

Financial Advice That Can Be Trusted

Article by Art Gib

Planning for a secure financial future is a necessity, but accomplishing that goal successfully is challenging for most. There are so many choices, tools, and products, with big claims and promises of financial growth and security. With the extreme volatility of the marketplace in recent years, it’s certainly wise to be wary, though equally unwise to do nothing for fear of making unfortunate or uninformed choices. Even seeking professional assistance can seem complicated and fraught with risk these days. Where does one start?

The first place to begin is with an understanding of the difference between a broker and a Registered Investment Advisor. Professionals in the financial business have the right to call themselves whatever they want, such as financial planner, financial advisor or consultant, but these terms really don’t say much about who they work for and how they earn their money. This is important information to have.

A broker is a salesperson, selling stocks, bonds, mutual funds, and often, annuity products. Brokers get paid a commission based on the sale of the products, and only then, meaning they are not paid for giving objective advice. Though they may refer to themselves as advisors, the only advice they offer is the advice that will make them the most money in commissions and in the interest of their firm. Neither are they paid for servicing the products they have already sold, so clients can only expect to hear from them when there’s a new product to sell.

Registered Investment Advisors (RIA) are not sales people and do not sell products. They are paid a transparent fee by their clients for professional advice and service. They do not earn commissions from the sale of products, so they can offer objective advice that is in the client’s best interest at all times. A Registered Investment Advisor works only for the client without any conflict of interest of also representing a company with products to sell. They are motivated to ensure the client’s success in order to maintain the relationship and the ability to keep the client’s business.

For someone who is confident in researching and monitoring investment portfolios, working with a stock broker may be a good choice. For comprehensive advice and guidance that may include estate planning, retirement advice, insurance, and more, in addition to portfolio management, a Registered Investment Advisor is the way to go. Required by law to act in the best interest of the client at all times, the advice of an experienced RIA can be confidently trusted.

Financial Advice question by tsavatanem: Does anyone have financial advice for live-in parents who stay at home to watch the kids?
We are interested in reducing tax burden, ensuring for retirement, and making sure that our mother has health insurance. She’s a 60-year-old immigrant without any outside source of income. She watches the kids which allows us to work and support her.

Financial Advice best answer:

Answer by VaTreasures
I assume your situation is your mother is watching your kids while you and your husband work.

You should pay her 3K a year if it is one kid or 6K if you have 2 assuming you are eligible for the child care tax credit. Another alternative is a dependent car spending account at your work if that is available.

She will have to report this income, but she could then put it into an ROTH IRA. She would probably be eligible for the retirement savings tax credit, which would wipe out most if not all of her taxes.