Hi Bethesdamanman, My apologies then, Dave. I thought that I had recalled you posting on the other board that mortgage rates would stay low for years and years, and that we would never return to the high rates of years past. My error. Eeeesschhh .... well.... actually... kinda sorta, YES.... your apologies in this case are NOT warranted. Herein lies a case of "text failing where a verbal conversation *may* have worked better." I've never said rates would stay low "well... forever".... I HAVE said rates (30 FRM rates to be precise) will unlikely climb over 7% in our lifetimes. I *STILL* stand by that.... albeit, I am now offering that we are entering a territory of government-induced inflation at levels I (perhaps naively) thought the United States political system was above. If we continue down the path of dollar-dilution that we've begun accelerating along, there are only two end-game results; A) we reverse course back out of it before we self-destruct in revolution, B) we self-destruct (and the devil we do not know is always a potential problem.) *IF* we successfully reverse and dig ourselves out of the hole of trouble our most recent past and our current government administrations are hell-bent on digging us into... there are only two ways of "sopping back & vacuuming up" the diluted unbacked funny-money that has been injected out into the system; A) The Treasury collects more taxes than it provides to the government to spend, and/or, B) The Fed increases interest rates higher than its blended payout on the treasury bonds (and then some... the greater the positive income spread to the Fed, the more painful to the "fixed-income retired crowd" which is our baby-boomer bubble... who will rally with AARP-sponsored pitchforks.) Both A & B will be met with *MASSIVE* resistance from the only crowd that the poloticos *KNOW* will consistently show up to vote, and have almost unlimited spare time to write, call, email, and generally pester the daylights out of the politicians; The Seniors. SO.... I've learned to never rely on "common sense" when it comes to anticipating "government logic" (an oxymoron if there ever was one.) Obama has enlisted the original architect of option B... Paul Volcker... as a "senior economic advisor." ("Senior" may (MAY) work somewhat to our advantage here... as Gramps Volcker *MIGHT* have some age-gained sensitivity to his classmate comrade's plight.) Volcker is the one who decided to fight inflation in the 1970's by driving short-term interest rates up to the 20%'s... The late '70's and early '80's result was that Volcker recaptured (in a VERY painful way) the excess liquidity (flooding of funny money) our country created by going off the gold standard and adopting a "weak dollar" policy through the 1960's. WHAT WILL WA DC DO??????????????? I dunno.... (I know what I pray/chant/meditate they will do...) *IF* the government (both the loonie left & jackthug right) get OUT of the way of the naturally balancing markets... then my expectations and predictions stand, with virtually my 100% confidence. My fears are that the United States idea of a market-based capitalist self-righting system has been a grand and wonderful social experiment... but that the human frailties (compounded in mob psychology) are sabotaging the underlying DNA strands that made it possible to stand. My COMFORTING REALIZATION... is that despite my egoistic pride for being part of a "successful system".... even if that system turns out to be a decaying failure, INDIDIVIDUALLY I and my family, and those I guide, can still retain their own personal success and quality of life. Cheers, Dave Donhoff Leverage Planner

I have to take a Minimum Required Distribution every year from my retirement account since I turned 69-1/2. However, every year Congress allows an up to $100,000 non-taxable distribution from such retirement accounts to whichever IRS-sanctioned charity or charities you specify. Since we don't even approach using an itemized deduction on our income tax to take advantage of a non-taxable charitable contribution there, but rather have to use a standard deduction, this is a neat way to take advantage of the US tax laws & a win for the the charity I would annually select anyway.

My suggestion to clients (and others - like, for example, here) was that I don't like getting tax refunds - which means that I paid too much from every payment, last year. If a person gets $1,200.00 back, it means that $100.00/mo. too much was deducted and sent to the income tax people every month last year, on which they paid no interest. Then your loan to them stayed at $1,200. from Jan. 1 till (Canada) the end of April, on which they paid no interest. It used to be that they'd start paying interest on overpaid money beginning May 1 ... but a few years ago they dropped that date back to June 15 (by which time a major part of the refunds had been sent out). If you'd like to make interest-free loans for even a short period, I'd like to stand in line to get some - where should I stand? And how soon do you want it paid back? Heck - I have to pay the bank 5.0% (or, did, until the Bank of Canada cut the Prime Rate this morning ... and most of the banks immediately followed suit - maybe it'll be 4.5% now). I like 0% better than that. When I put my money into the bank, they give me a bit over 0% ... but not much. Have a lovely week, everyone. ole joyful ... who doesn't like to either earn - or pay - interest Why not earn? Taxed too high! (Canadian dividends much lower). o j

Hi chemicals that'd curl yer hair, As I mentioned, this seems a useful strategy for Canadians as an alternative to a tax-deferred retirement fund. Here, if I borrowed to invest in the tax-deferred retirement system, interest paid on the loan is not deductible. If I borrow to purchase stocks outside of the tax-deferred system which have a good possibility of being profitable, the interest is deductible. When in regular account I buy Canadian stocks that pay dividends, I pay tax on them at a much lower rate - 4% interest earnings and 3% dividend earnings produce about the same after-tax result. If that dividend income is in my tax-deferred account, that tax benefit is lost. If I invest to earn interest, usually the value of the underlying asset, while it can't shrink ... ... it can't grow, either. So - all that it will ever earn for me is earned - NOW! And taxed now - at top rate. But - the value of the underlying asset deteriorates each year, due to the depradations of inflation ... which means that I must put part of current earnings with the asset in order to preserve purchasing power. I expect that you've read my story about the two rats that eat your cheese. But - if I borrow to invest, and pay interest-only on the loan each month ... ... a few years down the road, I pay back precisely the number of dollars that I borrowed. Each one of which will buy less than when I borrowed it, so I gained from inflation. One wants solid, strong companies in his/her projectred retirement fund, and share prices of such companies tend to stay more stable during down markets ... especially if they are paying a fairly good dividend. If I buy a stock inside of the tax-deferred account, when I sell it, if before the time that I'm to withdraw it, I pay no tax on the capital gain, either, at that time. But the problem is - that when I withdraw funds from that account, which I must do, beginning at age 70, I must add every dollar to my income at the time that I withdraw, with no deductions - and whether or not I'd prefer another course of action, e.g. if I had a substantial other source of income in one year, to put me into a higher tax bracket. And I'm required to withdraw an increasing percentage annually, to 20%, I think it is, at age 90 and at that rate annually from then on. In the regular system, if prices of the stocks that I've bought go up, when I sell them (or die) I deduct the amount that I paid originally, then pay tax on half of the gains, at regular rate - but I pay no tax on half of that gain. When I invest in stocks inside the tax-deferred system, I lose the tax advantage of both the dividend tax credit, and of the deductibility of half of the capital gain. If I hold those quality stocks for long periods, which I tend to do, I don't have to answer to the income tax people till I sell them, which gives me most of the advantage gained by the people who use tax-deferred retirement accounts. When the value of my assets increase, I laugh some. If they go down, I cry a bit. I don't want to be in a position where I must get out at a time not of my choosing. And as I showed you in the message to you the other day - the major composite index in the U.S. has always been up in the last 50 years, give it a 10 year span. You expect to be around for more than that, don't you? If not - no doubt your kids will ... and if they inherit a stock that's doing well, they'll not likely dump it. However - if I buy a chunk of the index here, I can't get share certificates issued, which means that I can't use them as collateral for a loan at the bank - but I can from the broker (as far as I know). Broker's interest rate charged is usually about 1% above the rate that the bank charges. Ideologically speaking, I'd rather do business with the local credit unions, but the rates that they charge are usually substantially higher than those charged by the bank. I've had gains, and I've had losses, but I've never been caught where I had to sell stocks when the market was low in order to keep the bank off of my tail. As some people in the investment group that I've attended for years say - "Losses are the tuition in the learning-how-money-works game". Good wishes for your skillful participation in that game. ole joyful