HELPING PHYSICIANS ATTAIN FINANCIAL SECURITY
By Robert M. Doroghazi, M.D., F.A.C.C.
Many of the presenters at the Barron’s Art of Successful Investing Conference this last fall brought up this point; you must be very cognizant of where your money is domiciled. Many predicted that before this crisis is over there could be capital controls on moving your money. If things get hairy, just when you need your money, you can’t get it.
As Barton Biggs points out in Wealth, War & Wisdom, bad things happen once or twice a century, and they may occur so quickly that you don’t have time to react. I will devote one of the January issues to how you can open a foreign bank account or safe deposit box.
The Government Will Increasingly
Interfere in Your Life
The Obama health care plan is just a taste of what the government would like to do; they want to control everything.
1) Starting in 2012, if you do $600 or more of business with anyone during a year, you must file a form with the IRS. You buy a $700 lawn mower at Home Depot, a form must be filed. You have a 1909S VDB penny your grandfather gave you and you sell it to the local coin dealer for $1,000, a form must be filed. You bought a one oz US Gold Eagle in 2005 for $500 and sell it for $1,500 on January 1, 2012, a form must be filed. If you don’t, you have broken the law, you are a criminal. This is Big Brother. Washington, Franklin, Jefferson, Madison and Jackson said the government is not your friend.
2) Starting in 2013; when you sell your home, there will be a sales tax of 3.8%. I will repeat that if you missed it; there will be a sales tax when you sell your home. What does that have to do with health care? Answer: nothing; it is government intrusion into your life, using health care to redistribute wealth.
3) If you earn more than $200K (the average physician salary in the US is $250K), there would be a 3.8% Medicare tax on investment income.
I have two recommendations.
1) Lobby your US Rep. and Senators to have these Draconian measures repealed.
2) Many subscribers hold positions of influence in the medical or business community. For example; some are on national committees that write guidelines for Medicare or for their professional societies. Use this position to do what you can to rein in government intrusion. Unfortunately, sometimes people won’t speak up because they are more interested in staying on the committee than voicing their true opinion.
Your Taxes Will Go Up
Mr. Obama says he wants to increase your taxes. Take his word for it (vide supra; means see above). The government borrowed $1.6T last year. The budget was 25% of GDP (recent average about 18-19%). There are only two ways to decrease the deficit: 1) decrease spending and 2) increase taxes.
Wall Street Journal, 12/14. “Temporary Tax Code Puts Nation in a Lasting Bind”. The article notes that in the late 1990s, there were typically fewer than a dozen tax provisions that had just a limited lease on life and needed to be renewed very year or two.
Now there are 141.
As pointed out at the Barron’s Conference, the greatest risk to your investments is political. You bust your chops, work hard, save your money, and the government changes the rules. What a sad commentary on our Republic.
Many people have been asking about the best way to buy physical gold. I will devote the next Issue, Part III of my outlook for 2011, to this topic.
RMD
No matter what is discussed in these newsletters, you must never forget that thrift is the most important factor in building wealth. Some time ago I read about what to do when the bar of soap gets really small—meld/smash it into the new bar. You will never waste any soap.
Wall Street Journal, 11/15/10. “GM’s Drive: Getting Out of Debt”. “Its high debt was among the problems that landed the company in a US-funded bankruptcy…Now, new managers from outside the industry are rethinking…GM’s…addiction to debt”.
RMD comment: No matter where you are in life, how much you make, how much you have, current economic conditions, whatever investments appears hot, you can never go wrong with paying off debt.
A subscriber from my hometown of Granite City, IL, sent me this.
In 1928, Allen Swift’s father gave him a new Rolls Royce Picadilly P1 Roadster as a graduation present. At the time of his death last year at age 102, Swift was the oldest living owner of a new car.
RMD comment: Issue #127 (10/18/10) was entitled “Always Buy Quality”. Buy a good product and take care of it. It will be the best investment and will provide you with superior service.
These are true.
A man comes onto the Emergency Ward after suffering a cardiac arrest at home and was resuscitated by the medics.
Doc. “Sir, do you smoke or used to smoke?”
Man. “Nope. I stopped when I woke up on the floor after my wife called 911”.
A man comes into the Emergency Ward with complications of chronic alcoholism.
Doc (me). “Sir, how much do you drink a day?”
Patient. “Nothing”. Then he looks at me with a smile and says “But man, Doc, do I drink a lot at night”.
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