This is the Variant Perspectives Conference, happening in Omaha at the same time as this weekend’s Berkshire Hathaway annual shareholders event. It’s a conference about empowering female investors. And then Warren made a surprise appearance! Hat tip Paul. ... The post Warren Buffett makes a surprise appearance at women’s investing conference appeared first on The Reformed Broker.
Today I’m going to teach you what to do if you ever win the lottery, a massive inheritance, or any other huge infusion of cash.
1/3 of lottery winners go bankrupt and I’ll be damned if I’m going to let that happen to you. So just listen and do what I say, please.
RULE #1: Shut The Hell Up
Shut your mouth right now, seriously. Do not tell anyone. Do not tell your boss, your loud-mouthed cousin with the mustache, or even your kids. You can tell 1 person: your spouse. And then tell them this: Shut The Hell Up. This is your new motto for the next 6 months.
Lotto winner Mavis Wanczyk (who won the 758.7 million Powerball) did not follow this advice and decided to tell her boss, the press, and therefore the whole world. Immediately after, random people came out of the woodwork and the police have had to watch her house.
Here are the scariest people who will try to find you, in descending order:
Kidnappers who will hold you for ransom
Scammy “wealth managers” who will bleed you dry
Uncle Joe, who wants you to invest in his dumb idea for a themed bar
DON’T DO IT. You can always choose to reveal your new wealth later once you have the proper precautions set up. But once the genie is out of the bottle, you can never put it back in. Be quiet and tell no one for now.
RULE #2: You have 2 new best friends: your lawyer and your financial advisor
I get it, you don’t have a lawyer. Now you do. You call up the biggest, most white-collar law firm in the country (just google “highest paid law firm”) and tell them you want a lawyer to help with taxes and trusts. When they ask why, tell them “I’ve recently come into some money and I’d like someone to coordinate my affairs.” They will charge you $500 or $600/hour. Pay it, happily.
This lawyer is now your conduit with the outside world. Who contacts the lottery to tell them about the winning ticket? Not you (see Rule #1). Your lawyer will handle that. Who do they make the check out to? Is it to you? Oh hell no. Your lawyer will set up an anonymous trust for you.
Your other new best friend is your financial advisor. Considering I hate most financial advisors and most of you don’t need one (see page 153 of my book for why), this might seem unusual. However, you just received millions of dollars out of the blue. It’s worth a few thousand bucks to get set up. Go to napfa.org to find a fee-only financial advisor who can guide you through the next few months of setting up your new financial systems.
I have a list of questions to ask financial advisors in my book and signs to watch out for. The one thing you want to look out for — the one sign you’ve chosen a salesperson, not a real advisor — is if they take a percentage of your assets. DO NOT sign up with some nutty wealth advisor who sweet talks you with a beautiful British accent. Just follow my directions from the book and your advisor can help you with the rest.
RULE #3: Do not change anything (with 3 exceptions)
You know all those movies about how a group of criminals gets away with a heist, but one idiot gets the entire crew caught because he goes out the next day and buys a fur coat and a $200,000 car? Do not do that.
For 6 months, don’t change anything. No new car, no extravagant trips, don’t quit your job. Your lawyer and financial advisor will help you get set up. This falls under Advice Everyone Says But Nobody Takes: When someone dies or you get a huge amount of sudden money, do not change anything for 6 months.
If you really need to quit your job, when people ask what you’re doing now, your line is, “I’m doing some consulting.” However, if you were a cashier at 7-11, I’m not sure if people are going to believe you’re a consultant. Anyway, your call.
I know most of you won’t follow this advice, so I came up with a list of acceptable things to spend money on:
Extra guac at Chipotle
Taco Bell Mexican Pizza
I also hereby authorize you to buy every product from iwillteachyoutoberich.com/products
After 6 months? Just don’t spend it all in one place.
If you haven’t won the lottery (yet…)
Let’s be real, 99.999999% of you reading this right now have not and will not ever win the lottery. But luckily, winning the lottery isn’t the only way to make a lot of money.
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Download a FREE copy of the Ultimate Guide today by entering your name and email below — and start blowing up your net worth today.
What to do if you win the lottery is a post from: I Will Teach You To Be Rich. [...]
Time to read: 4 min
Infrastructure is a topic that has been in the news consistently over the past year. Importantly, everyone seems to agree that whatever infrastructure is, the country needs more of it. Given this rare moment of national consensus, I want to welcome you to the second installment of my blog series focusing on the different types of alternative investments. My last blog focused on real estate. Today, we will drill down into the infrastructure sector and a popular subsector, master limited partnerships (MLPs).
Overview of infrastructure
Merriam-Webster defines infrastructure as “the basic equipment and structures (such as roads and bridges) that are needed for a country, region, or organization to function properly.” This definition is a good starting point as it links infrastructure to meeting the needs of society. Roads, bridges, airports, tunnels, power lines, water distribution systems, shipping ports and railroads are examples of infrastructure assets.
On a global basis, there is a need for increased investment in infrastructure, both among emerging and developed economies. Emerging economies need infrastructure to support growth and increased urbanization. Developed countries need to make ongoing investments to maintain and upgrade existing infrastructure. For example, New York recently replaced the dilapidated Tappan Zee Bridge with the new Mario M. Cuomo Bridge, and is also in the middle of a multi-year redevelopment of LaGuardia Airport. If you’ve ever had the misfortune of driving over the old Tappan Zee or flying through LaGuardia (as I have), you know those projects were desperately needed!
As shown below, there is a global need (currently estimated at $49 trillion1) for sizeable investments in infrastructure. The challenge is how to pay for investments of such magnitude when global gross domestic product (GDP) is approximately $86 trillion.2
Global infrastructure investment need estimated at $49 trillion
Map Source: Invesco Real Estate, IHS Global Insight, ITF, GWI, National Statistics, McKinsey Global Institute analysis. This is not financial advice or a recommendation to buy / hold / sell these securities. There is no guarantee that Invesco will hold these securities within its funds in the future. Chart Source: OECD; IHS Global Insight; GWI; IEA; McKinsey Global Institute analysis as of June 2018. $=US. OECD telecom estimate covers only OECD members plus Brazil, China and India. Energy estimate through 2023. There is no guarantee that these estimated needs will be funded.
While many governments acknowledge their strong need to make infrastructure investments, resources are often limited due in part to ongoing budget deficits. For this reason, government investment in infrastructure has been falling as a percentage of GDP, as illustrated below:
Despite need, global infrastructure investment has been declining as a percentage of GDP
Source: Invesco Real Estate using data from World Bank and McKinsey Global Institute Analysis as of 2015. Latest available data. Europe is represented by the European Union. Infrastructure investment is defined by gross fixed capital investment as a percent of GDP. Past performance is no guarantee of future results.
Given the limited ability of governments to meet the need for infrastructure investment, private investors have rushed in to fill the void. For example, the LaGuardia Airport project is being built through a public-private partnership.
While the use of private funds for infrastructure is viewed as novel within the US, it is actually quite common elsewhere. Most airports outside the US are publicly listed and generate significant earnings from their retail business tenants (in addition to airline passenger fees). During my recent trip to Spain, I was struck by how much the airports resembled shopping malls.
Infrastructure investment options
Investors looking to gain exposure to infrastructure have several options:
Listed infrastructure securities (such as the equity of firms that own and operate infrastructure)
Mutual funds that invest in listed infrastructure securities
Unlisted infrastructure investments (either through direct asset purchases or shares of privately placed funds)
Typically, only large investors such as institutions and high-net-worth individuals can access unlisted investments, whereas listed infrastructure securities can be purchased by anyone, either directly or through mutual funds.
Overview of master limited partnerships (MLPs)
MLPs represent a subset of infrastructure securities – these are publicly traded limited partnerships that are generally focused on energy infrastructure within the US. Pipelines, storage facilities and processing plants are all examples of assets that MLPs build, own and operate.
MLPs are typically classified into three categories:
Upstream MLPs are involved in the exploration, recovery, development and production of crude oil and natural gas.
Midstream MLPs are involved in the gathering, processing, storage and transportation of oil and gas.
Downstream MLPs are involved in the distribution of fuels to end customers such as residential, industrial and agricultural entities.
MLPs are limited partnerships and, as such, do not pay federal income tax. Rather, MLPs pass income through to the limited partners who are then subject to income tax. Also, unlike many private limited partnerships with limited liquidity, MLPs are publicly traded and provide investors with the same liquidity as a publicly traded stock.
Production gains create corresponding need for more infrastructure
From 1980 through 2006, US production of crude oil and natural gas fell by approximately 20%.3 We believe this decline was primarily caused by the decreasing productivity of existing oil wells. Since 2006, the US has enjoyed strong growth in energy production and is projected to become a net exporter of energy in 2020.4
The growth in US energy production has been driven by new technologies such as hydraulic fracturing. This has allowed upstream producers to extract oil and gas from previously uneconomical locations.
As production has increased and new technologies have come online, the geography of US energy production has changed. For example, the Bakken formation in North Dakota and Montana and the Marcellus formation that spans New York, New Jersey, Pennsylvania, Ohio, West Virginia, Kentucky and Tennessee has turned those states into energy producers. One of the biggest challenges in those regions is how to transport and ship all the oil and gas. For natural gas, this challenge can be seen in the illustration below.
The challenge of getting natural gas to ports
Sources: Invesco Real Estate Research and Bloomberg as of December 2018. For illustrative purposes only.
The increasingly diverse geography of US energy production, combined with gains in overall production, has created a strong need for more energy infrastructure. The American Petroleum Institute estimates as much as $1.3 trillion in total direct investment of oil and gas transportation and storage infrastructure will be needed through 2035 to support US energy production levels.5 MLPs are expected to play an important role in providing the capital to build this infrastructure.
The evolution of MLPs
As the energy industry has evolved, so have MLPs. Today, most MLPs focus on midstream energy infrastructure with natural gas (rather than oil) as the primary focus.
MLPs often favor midstream infrastructure because demand has been growing for the plumbing that transports and stores oil and gas. Furthermore, revenue from midstream infrastructure is based on the volume of oil and gas processed and tends to be insulated from price fluctuations.
Gas MLPs have emerged as a popular investment for a number of reasons. The US is now the world’s top producer of natural gas with several compet [...]
Time to read: 2 min
Sunday, May 12 is Mother’s Day, providing an opportunity for those everywhere to celebrate the special mothers in their lives. And when I say mothers, I do not mean just yours — I mean any wonderful woman in your world who is a mother. Someone who nurtures, provides and loves without hesitation or qualification. This could be your sister, daughter, best friend or even a cousin twice removed.
As you celebrate Mother’s Day, consider honoring these special moms in a way that will leave a lasting legacy. By contributing to a 529 plan for their children, you celebrate motherhood while helping build a future for the recipients. You can even put your contribution in mom’s name to celebrate all she’s done for her kids.
Costs continue to rise
According to the most recent figures, the cost of higher education is heading in only one direction — higher. The most recent data from The College Board reports the cost of room and board, fees and tuition as exceeding $21,000 for the 2018-2019 academic year for in-state, public institutions and $48,000 for private universities.1 When you consider the burden that student loans place on young graduates, a 529 contribution could be the perfect Mother’s Day gift because every dollar saved is one less to be borrowed.
529 savings plans are tax-advantaged, meaning that contributions are after-tax, earnings grow tax-deferred and qualified distributions are tax-free.
529 plans can be used to pay for qualified educational expenses such as tuition, room and board, books, equipment and school supplies at any eligible institution.
In some states, 529 plans can be used to cover up to $10,000 per year of public, private or religious elementary or secondary school tuition.
A 529 plan can be opened for anyone with a valid Social Security number. There are no account minimums to get started and no income limits to contribute.
Honor the moms in your life
So this Mother’s Day, consider giving the gift of college savings. It honors the special mothers in your life while providing their children with a gift that lasts a lifetime.
Interested in learning more about 529 plans? Visit CollegeBound529.com to explore helpful resources and tools to plan your own education savings strategy.
Before you invest, consider whether your (or the beneficiary’s) home state offers any state tax or other state benefits such as financial aid, scholarship funds, and protection from creditors that are only available for investments in that state’s qualified tuition program.
For more information about CollegeBound 529, contact your financial advisor, call 877-615-4116, or visit http://www.collegebound529.com/ to obtain a Program Description, which includes investment objectives, risks, charges, expenses, and other important information; read and consider it carefully before investing. Invesco Distributors, Inc. is the distributor of CollegeBound 529.
1 Source: The College Board, Trends in College Pricing 2018
Earnings on non-qualified withdrawals may be subject to federal income tax and a 10% federal penalty tax, as well as state and local income taxes. Tax and other benefits are contingent on meeting other requirements and certain withdrawals are subject to federal, state, and local taxes.
For beneficiary changes to occur without federal or state income tax consequences, the new beneficiary must be a family member of the current beneficiary.
Blog header image: monkeybusinessimages/iStockphoto.com
Director, Retirement and Education Strategies
Thomas Rowley is director of retirement and education strategies and one of Invesco’s most frequently requested speakers. He provides analysis of the evolving retirement landscape and develops actionable strategies to help investors and financial advisors maximize their retirement-planning opportunities. Mr. Rowley regularly shares his insights online at invesco.com/us in addition to his speaking engagements.
Mr. Rowley’s insights reflect more than 20 years of experience in the investment industry. He translates his comprehensive knowledge of retirement planning into lively, clear explanations of the complexities of legislative, investing, tax and social issues.
Mr. Rowley shares his analyses of retirement-related issues through regular personal appearances, continuing education webinars and Web-based commentaries. [...]