The Investment Scientist

Archive for September 2012

FSA: It’s all about flexibility

Flexible Spending Accounts (FSAs) are benefits offered by some employers. Money put in the accounts is exempted from income tax, payroll tax, and in most cases state and local taxes.

There are generally two types of FSA: health care FSA and dependent care FSA. As the names imply, money in a health (dependent) care FSA can only be used towards eligible health (dependent) care expenses.

Take my wife as an example; she put $2,000 into her health FSA and another $5,000 into her dependent care FSA. Since we are in the highest tax bracket and we live in a high tax state, the total tax saving is close to $3,500, or 50%.

Read the rest of this entry »

Last week, the Fed announced another round of quantitative easing (QE3).

This time around, they plan to buy $40 billion worth of mortgage-backed securities with created money until the employment picture improves.  Compared to QE1 and QE2, QE3 is open-ended.

How does this affect your personal finances?

Read the rest of this entry »

Commercial property investment

For investors who can’t stomach the volatility of real estate investment trusts (REITs), but also don’t want to get their hands dirty, there is the middle way in real estate investment, namely through a private partnership.

A real estate investment private partnership (REIPP) is a pool of investors’ money that is invested in commercial or residential properties. As an investor, you can contribute capital as a limited partner and let the general partner do all the dirty work. Sounds like the best of both worlds, doesn’t it?

It is emphatically not.

Read the rest of this entry »

house for sale

House for sale

My wife and I own a couple of rental properties, so I feel like I am qualified to give my 2 cents worth on another way of investing in real estate – owning rental properties directly.

Now let me be clear: owning rental properties is a business; it is no longer an arm’s-length investment. It is great for some people, people who are hands-on and disciplined, but it could be a disaster for others.

When we posted a notice to rent out our townhouse, the first person to answer was a single mother with three kids. My wife checked her credit – it was bad. When my wife said no to her, she could not hear the pleas of my bleeding heart: Rent it to her! She has three kids to take care of! We’ll waive her rent if she can’t pay!

Read the rest of this entry »

financial blogging

I was in Denver attending the Financial Blogger Conference (FinCon12), and I was thrilled to meet Allan Roth there.

If you don’t know Allan Roth, for the sake of your financial wellbeing, you should.

Allan is an hourly fee-only financial advisor practicing in Colorado Spring. He also writes an investment column for CBS MoneyWatch. Recently, Jason Zweig invited him to write a column in the Wall Street Journal as well. Read the rest of this entry »

New York Stock Exchange

When talking to prospective clients, I am upfront about what I can and can not do. I can NOT beat the market.

Recently, that straightforwardness caused me to lose a prospective client to a major Wall Street firm. Apparently, the financial advisor from that firm was able to convince him that with their exclusive location, expensive brochure, and nice Armani suits, they could beat the market.

This led me to do a mental exercise.

Read the rest of this entry »


Author

Michael Zhuang is principal of MZ Capital, a fee-only independent advisory firm based in Washington, DC. He is also a regular contributor to Morningstar Advisor and Physicians Practice. To explore a long-term wealth advisory relationship, schedule a discovery meeting (phone call) with him.



You may also get his monthly newsletter, or join his Facebook page for regular wealth management insights. Michael's email is info[at]mzcap.com.

Twitter: @mzhuang

Error: Please make sure the Twitter account is public.

Archives

%d bloggers like this: