For the next six to eight weeks my theme or focus will be money mistakes people make. Par usual I got my inspiration during the 2014 30A Songwriters Festival at Messina’s. Pundits may assume Messina’s expansive single barrel bourbon tasting list was my muse, au contraire; it was Charlie Hunt-Black, a Hall of Fame Songwriter.
I hope he doesn’t mind me stealing one of his lines, being honest I’m only borrowing an idea. Someone once asked Hunt-Black what inspired him to write hit songs. His reply “I got up and went to work.” In the personal finance world, people often scramble for some financial magical mojo and end up with derailed financial goals. polo
Before we bid the 30A Songwriters Festival adieu, the Robert Randolph Family Band on Sunday afternoon was magical. Listening to “America the Beautiful” with Old Glory waving on a glorious Sunday Funday afternoon, the TDC could not have ordered a better day. I got homemade fried chicken and pound cake, too. Life is good!
Miss Lucille’s sold out of sushi and taxicabs did summer time business. After the music died there was no Spring Break trash pile. Yes a Fulton County, Ga., car parked illegally; ahh the price of affluenza. As a Georgia native, such arrogance embarrasses me but I accept it plus it beats smashed LSU Styrofoam coolers strewn willy-nilly.
Please, please, please if you sell more tickets next year, add more venues. Ditch the video feeds, too.
Where was I? Beam me back to the financial world, Scotty.
If strict IRS regulations are followed regarding replacement property, Internal Revenue Code Section 1031 allows capital gains tax liability on property sales to be deferred. While no one likes paying taxes, the replacement property can lose value. Tax rates may be higher in the future, too. Finally, a complex 1031 Exchange may scare potential buyers away. There’s nothing wrong with using a 1031 Exchange but sometimes cash money on the barrel head is a pretty good thing, too, especially if making the sale helps you reach your goals.
Quite likely millions of dollars were lost along Scenic 30A via 1031 Exchanges during The Great Recession. For certain, the tax problem went away. A 1031 Exchange remains a useful planning tool but focusing solely on taxes can cost more than the tax bill.
People often buy annuities for the guaranteed benefit while ignoring the fees they pay. The insurance company is not a charity and you pay for your benefit. On some occasions buying a variable annuity worked out for the client but not frequently. More often than not, buying a deferred variable annuity with an expensive guaranteed benefit rider returns less than a broad market index fund. Like lambs to slaughter, folks turn over their hard-earned dollars.
Searching for some magic bullet often costs annuity purchasers money. They didn’t need inspiration just common sense; if something sounds too good to be true, beware.
Keep it simple. Beware of any investment concept you cannot explain to a third grader with a color crayon.
Name the two artists musically linked to this column and win a copy of “Investing in an Uncertain Economy… for Dummies”.
Buz Livingston, CFP has a Blue Mountain Beach based fee-only, hourly financial planning and investment management firm. For more information, visit www.livingstonfinancial.net or come by our new office at 2050 Scenic 30A, M1-Unit 230, Redfish Village.