Keep your money intact...

Since Dayna and I now have children, it's more important than ever to ensure we have our will in order.  Not only do I need to spell out the details of our life insurance and investments, but I owe it to Dayna and Morgan to lay out as much detail as possible regarding how to wisely handle the proceeds of the life insurance policy and my retirement funds ( i.e. 401K and Roth IRA ).  Below are a few things I've learned that will help families keep as much money intact as possible such that the government does not strip it away through taxes.

life insurance proceeds are tax-free

estates with a net worth under $2 million are exempt from federal estate taxes

record value of inheritance on date of benefactor's death ( for tax purposes )

Roth IRA proceeds can be inherited tax-free

if you are not the spouse, get professional advice regarding 401K fund inheritance

if you are designated as beneficiary, you should not have legal issues accessing funds

inheriting a traditional IRA will probably require some professional advice

avoid emotional purchases immediately after acquiring money ( wait 6 month to a year )

Next time, I want to try include specifics about how/where to move money from the benefactor's accounts to your own.

The Devil's Derivative Dictionary

Day Trading Audio Clip

The financial market's equivalent of the little old lady who spends every day at the casino, sticking quarters into a slot machine. One who believes you can lose a nickel on every trade and make it up on volume.    --  The Devil's Derivative Dictionary

The Securities and Exchange Commission Study chart below is a little dated (from 2000) and some Day Trading companies have lower transaction fees now, but the graph highlights the uphill battle one has when contending with mounting transaction costs.

Property Tax Appraisal

We just received this year's property tax appraisal.  The assessed value of our home has gone up and the property taxes increased by about $100 for the year.  Oklahoma has a state income tax and this results in lower property taxes than most states.  We only pay $1,800/year as opposed to the $6,000+ I was paying in Austin.  Of course, Texas does not have a state income tax so they make up the difference with higher property taxes.  Anyway, I came across a good write up in this month's Kiplinger's Magazine.  Apparantly, there is a good online resource that explains how to appeal the tax increase.  According to this organization, about 33% of all property-tax appeals succeed.

Work has been very busy these past few weeks and will only get worse.  I needed to take this time to update Morgan's blog pages.  Morgan will be nine months old on Thursday and she just keeps getting more beautiful each day.

Morgan's Growth Tracker Web Page

Morgan in January

Japanese Invasion of Nanking, China

Dayna's mom and step-father gave me the book, Flyboys, for Christmas.  It's a fascinating read (particularly the first five chapters).  The author discusses much of the Nanking holocaust in the first few chapters.  Personally, this was a portion of history that I rarely received any formal education about.  It's a tragic bit of history about the Japanese invasion of Nanking, China and the subsequent brutality that followed upon the civilian population.  As a result, China, along with the Soviet Union, actually suffered more civilian deaths than military deaths.  This episode in history, commonly referred to as the Rape of Nanking (warning:explicit photos), is a very sad story of human rage against another culture.

Facts About Rare Coins

Great resource with facts about historic returns on rare coins.

From the article, below are some of the key diversification benefits provided by including rare coins in your investment portfolio.

High returns (12.7% compounded annual return over the past 35 years)

Short-term returns that are uncorrelated with stocks

Protection against inflation

Reduced portfolio volatility

Hedge against longer-term equity market downturns

Tax-deferred exchanges

Limited downside risk

Socially responsible

Below are some of the core holdings that should be a part of beginner investor's portfolio.  If possible, try to find at least an MS-65 graded coin.

Liberty Nickel

Buffalo Nickel

Mercury Dime

Standing Liberty Quarter

Walk Liberty Half Dollar

Morgan Dollar

Peace Dollar

Rare Coins

Read about rare coins.

Professional Coin Grading

Rare coins are high risk investments, but can be a lot of fun if one has a bit of extra investable cash.  I don't have any in my portfolio, but I'm considering some options.  I clearly have a lot to learn about the process of grading and buying coins, but it's fun to investigate different options.  There is a vast array of price ranges that one can participate in.  You certainly don't need a lot of cash to get started.  However, like so many other collectibles, there can be a lot of fees associated with the purchase of rare coins through reputable auction houses.  You will pay a Buyer's Premium of about 15% everytime you make a purchase.

You'll want to start with the Professional Coin Grading Service to help ensure that you do not overpay for a coin.  You can then peruse auction houses like Heritage Auction Galleries to help locate a coin for sale that you may be searching for.  Below are some of the more exquisite options for investors.

1860 Three Dollar Gold ( PCGS MS63 Rating ) - 2006 Price = $16,000

1851-O One Dollar Gold ( PCGS MS65 Rating ) - 2006 Price = $13,500

1878 Morgan Silver Dollar ( PCGS MS66 Rating ) - 2006 Price = $8,000

Happy New Year everyone.

I came across a resource ( ebri.org ) this weekend that you may find interesting.

The 2006 Retirement Confidence Survey is a particularly fascinating read.
According to the statistics below, 74% of all retirees have less than $150,000 in retirement savings.  56% have less than $50,000.