The S&P 500 Dividends Reinvested Price Calculator (With Inflation Adjustment)

I just found this… what an awesome comparative resource!

The S&P 500 Dividends Reinvested Price Calculator (With Inflation Adjustment)
http://dqydj.net/sp-500-return-calculator/

This is a calculator with a benefit not seen on any other calculators I’ve seen online – one which includes dividend reinvestment.  It uses data from Robert Shiller, available here

Note: This calculator works for any two dates.  Many searchers actually want a summary of historic returns over 1, 5, 10, 20, or 40 years.

What is Fixed Reset Indexing (FRI)?

What is Fixed Reset Indexing (FRI)?

Fixed Reset Indexing is a financially sound strategy of achieving superior rates of return for the investor who desires to completely eliminate the risk of market loss.

Let’s break down the term;
Fixed: Unlike in the banking world, where the term ‘fixed’ means interest rates never change… in our safe investment world, the term ‘fixed’ is synonymous with ‘Principal Guaranteed.’ Principal guaranteed strategies are such that the company offering the crediting returns puts up their own capital to backstop and protect the customer/client/investor against any market losses.

Reset; The term ‘reset’ refers to the regularly scheduled (monthly, quarterly, annually, or otherwise) recharacterization of growth/profits that are upside returns, into the category of ‘client principal’ which is then subject to the capital reserve guarantees described by the ‘fixed’ term.

Indexing: The term ‘indexing’ refers to the practice of pegging account returns to a single, or multiple blend, of published financial market indexes. The most popular and most commonly used is the Standard and Poors 500 index (S&P500,) but there are many others, including bonds indexes, metals indexes (such as gold, silver, etc.,) and of course myriads of alternative stock & futures indexes.

Fixed Reset Indexing strategies allow an individual to grow their money to the upside *ONLY* of their specified index actions, locking in the profits every period as principal, and having their original principal plus their locked profits protected by cash-reserves-backed guarantees by the provider companies.

There are three financial products at present that make Fixed Reset Indexing strategies available.

1. Fixed Indexed Annuities. These are offered by certain insurance companies, and generally have no physical underwriting requirements of the investors that want to use them. These have a moderate and reasonable average rate of return over time, with zero market downside risks, guaranteed by deep-pocket cash reserves kept in place by regular audits.
2. Indexed Universal Life. These are also offered by certain insurance companies, and generally offer returns that are significantly better than fixed indexed annuities, however in order to be able to use these accounts there must be an individual who can qualify for a minimum amount of life insurance coverage.
3. Individually Managed Accounts (also known as ‘wrap accounts.’) These may be offered by sufficiently experienced, licensed and qualified securities traders. At present these are extremely rare, as the current applicable tax laws (as of 2013) force such traders to have to seek much greater returns than the insurance company traders in order to provide an equivalent net rate of return (with no risk of principal loss) to their clients.

Current tax law makes Fixed Reset Indexing offered by insurance companies generally outperform anything that can be achieved by securities or futures traders, on an equally guaranteed and safe basis.

Seattle rental market increasingly competitive and expensive – Local News – Seattle, WA | NBC News

Seattle rental market increasingly competitive and expensive – Local News – Seattle, WA | NBC News

Good!
http://www.nbcnews.com/id/52168425/ns/local_news-seattle_wa/
There’s a huge influx of people relocating for corporate jobs at places like Amazon, Microsoft, Nordstrom and Starbucks and looking for a place to live, according to Seattle Rental Group.

“As the inventory is shrinking a lot of the private rentals owners are choosing to actually sell instead of continuing to lease out the property. So that’s also taking away from the inventory too,” said Ashley Hayes, with Seattle Rental Group.

According to Mike Scott of Dupre + Scott Apartment Advisors Inc., the average rent for a one bedroom apartment in Seattle is $1,223 this Spring. Plus, rental rates are higher compared to last year. Rates are going for $2.50 to $3 a square foot around Seattle for a one bedroom, one bath, nice view and building. Last year, the rental rate was in the low $2.00 range, according to Hayes.

The trend is your friend…. do *NOT* miss out on the trend!

David Donhoff, Advisor
Leverage Planners
(425) 223-4520 desk
(425) 652-1001 cell
413 14th Ave West
Kirkland, WA 98033
David@LeveragePlanners.com
www.LeveragePlanners.com

Who is *GUARANTEEING* the return of your money?

Who is *GUARANTEEING* the return of your money?

Maybe you thought municipal bonds were a safe place for your money, did you? After all, that’s what ‘everyone says’… especially the financial talking heads & commentators, right?

Via Bloomberg, June 5th;
Jefferson County, Alabama, reached an agreement to pay its largest creditors $1.84 billion, or 60 percent of what they’re owed, as part of a plan to end the biggest U.S. municipal bankruptcy by the end of the year.
http://www.bloomberg.com/news/2013-06-04/jefferson-county-reaches-deal-with-creditors-on-bankruptcy-exit.html

That’s a 40% “adios!” to your nest egg from what most stockbrokers & Wall Street salespeople promise as the “safe” alternatives! The fact is, however, neither these bonds, nor the mutual funds that buy them in bulk for you, nor the salespeople who put you into them… take any responsibility at all for the money they have now lost “for you.”

There *ARE* companies who *WILL* stand accountable & responsible however, and will guarantee (yes, an actual, real, written, reliable GUARANTEE… backed by cold hard cash reserves, and recourse for the individual by law) the safety and 100% return *OF* your money… AND provide market-based returns far greater than individual bond or CD purchases. If the markets tank, they still make your account 100% whole!

The truth is, *ANY* company *COULD* offer this kind of accountable guarantee… in fact many of the Wall Street investment houses could structure this for you today, but they are not required to do so by law, and it is much more profitable to have the individual account holder carry all the risks than for the Wall Street company to take the responsibility.

The remaining industry niche left standing responsible, reliable and accountable is a seemingly unlikely one; The permanent life insurance industry niche. Only in this financial realm is it required that the account providers maintain proof of sufficient reserves and strenght to make good on actual Principal Guarantees to their customers.

Dave Donhoff
Leverage Planner

Why traditional investing strategies will break you going forward

Why traditional investing strategies will break you going forward;
(Its impossible for taxable investing to beat the government’s coming inflation!)
http://www.usdebtclock.org/

Notice the US National Debt in the upper left corner, 16.5 Trillion. Now work your way down to the Money Creation section. The M2 money supply is only 10.7 Trillion. So even if the US Treasury were to confiscate every last penny held in circulation; the country would still be almost 6 Trillion dollars short of paying off the National Debt. As a side note, check the far right end of this section titled Currency and Credit Derivatives. This figure, 627 Trillion dollars is not currency at all. It results from all the ponzi schemes our financial institutions create out of thin air to skim more money out of the system. “Credit Default Swaps” and “Rehypothecation” are the tools used to create these many Trillions that don’t actually exist.

Now for the truly frightening numbers. Down at the bottom, not quite all the way to the right, are listed the US Unfunded Liabilities. They total 122 Trillion dollars. How do you think the nation is going to be able to meet these promised benefits? We can’t get there through taxation, as there are only 10.7 Trillion in circulation. So either the government has to break their promise or they have to create greater than 10 times more currency to pay the unfunded liabilities.

Given the option, to break the promise or to print the currency, which do you think they will chose? So from this you can expect that today’s dollar will only be worth a dime by the time they get through paying off the unfunded liabilities.

Dave Donhoff
Leverage Planner

Public Storage founder Hughes; long 10,000+ rental SFRs

Pub. Stor. founder Hughes; long 10,000+ rental SFRs

Billionaire Hughes Chasing Blackstone as U.S. Rental King
http://www.bloomberg.com/news/2013-02-13/billionaire-hughes-chasing-blackstone-as-u-s-rental-king.html

Hughes, 79, has purchased about 10,000 properties through his American Homes 4 Rent, making the Malibu, California-based firm the second-biggest owner of single-family rentals after Stephen Schwarzman’s Blackstone Group LP. Hughes is using $600 million from the Alaska Permanent Fund Corp. and other fundraising to buy real estate, mostly at foreclosure auctions, according to Paul Saylor, chairman of CS Capital Management Inc., who advises the Alaska fund.
“Wayne founded Public Storage at a time when the industry was run by Moms and Pops out of their garages, and it’s kind of the same pattern,” said Saylor, whose Atlanta-based firm manages $1.4 billion and advises institutions with $4.3 billion in real-estate assets. Buying “single-family homes has been dominated until very recently by small investors across the country doing it locally.”

Macro implications that are usable by those who won’t/can’t go long rental homes directly;

The “big boys” and institutions foresee, have accepted & settled into the fact that our stable, middle-class, established population is going to overwhelmingly be renters for the long-term foreseeable future. Housing in many markets is now recognized as over-sold, and the rental pricing markets appear to be emerging out of the prior suppression caused by easy credit (which has disappeared as a suppressant.)

How to exploit?
OBVIOUSLY, #1 opportunity is to acquire your own rental property(s.)

Participation on an indirect basis, via securities speculation, is still anybody’s guess.

Dave Donhoff
Leverage Planner

Long-term rent trend on the hockeystick…

Long-term rent trend on the hockeystick…

GSE Reform Could Have Dire Unintended Consequences for Renters
http://www.mortgagenewsdaily.com/12112012_multifamily_housing.asp

Renters face a long-term and growing affordability crisis. The demand for rental housing has skyrocketed and production has failed to keep up. As a result rents have climbed 4 percent this year while middle class wages have stalled and now one of every four renters spends more than half their monthly income on housing. Rents are projected to increase by at least another 4.6 percent next year and 4 percent in both 2014 and 2015.

This reality is supported by the 80,000 pound federal gorrilla… “skate to where the puck is going”! When the housing market (home owners) are subsidized, landlords rake in the benefits!

This is the trade of the century;
1) Residential rental property (the ultimate yield-producing hard assets,)
2) Acquired at depressed low prices (likely never to be lower again,)
3) After 20 years of rent suppression, with a reversal of financial forces,
4) Maximum leveraged (in decaying U.S. dollar currency,)
5) Leveraged at lifetime low interest rates,
6) Artificially supported by market distorting regulation!

Get ‘em while they last!
Dave Donhoff
Leverage Planner

Qualified Accounts cliffhanging !?!?

Qualified Accounts cliffhanging !?!?

You *REALLY* thought Congress would respect Qualified accounts!?!?!

Fiscal Cliff: Why Congress Might Have to Mess with the 401(k)

http://business.time.com/2012/11/28/fiscal-cliff-why-congress-might-have-to-mess-with-the-401k/#ixzz2DeYp1w2A

One of the earliest fears about tax-favored savings accounts like IRAs and 401(k) plans was that when this pool of savings grew large enough Congress would not be able to resist tapping it to help solve the nation’s debt problems. We’re about to find out if those fears—persistent for decades—have been justified.

Everything including the sacred mortgage deduction is on the table as lawmakers wrestle with the fiscal cliff, a year-end avalanche of scheduled spending cuts and tax increases. With a combined $10 trillion sitting in IRAs and 401(k) plans, retirement accounts make a juicy target. Some of this money has never been taxed, and under current law never will be.

To maintain this savings incentive the government “spends” $100 billion a year in the form of tax breaks to those who stash money in these kinds of accounts. Now, a new study suggests this tax incentive does little to change saving behavior. Some lawmakers, no doubt, are wondering: Why keep an expensive tax incentive that does not incent?

http://business.time.com/2012/11/28/fiscal-cliff-why-congress-might-have-to-mess-with-the-401k/#ixzz2DeYp1w2A

If the hint isn’t explicit enough, here’s the downstroke;
GET YOUR QUALIFIED MONEY *OUT* OF CONGRESS’ EASY REACH!

Superior tax-advantaged alternatives I personally use (there may be others of equivalent power, but I haven’t found them);
Income Real Estate (lucrative high yields & leveraged returns, high direct participation,)
Indexed Universal Life (consistently moderate tax-free compounding @ 6-8% on average, passive.)

OR… just ride it out, trust the politicians & hope for the best, of course.

Dave Donhoff
Leverage Planner

30 FRM in the high 2%s…

30 FRM in the high 2%s…

OK… not *quite* there yet…. Wholesale 30 FRMs are paying a few bips rebate at the 3.0 coupon today at close.

The Mortgage BONDS are actually already there… LONG ago there, with an extending spike up today as well;

The lender’s secondary trading desks, however, have a significant loss backlog from hedging costs on broken locks (due to people locking rates then abandoning the locks to shift to another lender as rates moved down during the process.) Because of this carried sunken costs, the lenders are going to be equally non-competitive amongst each other while trying to let swelling margins recoup the broken lock costs.

I’m going to make a guess that this will take from a week to 4 weeks… and with virtually zero chance of global economic and geo-political optimism breaking out in the coming 2-24 months, I hereby declare 30 FRM mortgages *WILL* be in the mid-to-high 2% range before Christmas.

David Donhoff, Advisor
Leverage Planners
(425) 223-4520 desk
(425) 652-1001 cell

*CRAZY* new FNMA bond highs today

*CRAZY* new FNMA bond highs today… and still climbing.

Likely at least 5/8 to ¾ better in rate over just the past 2 weeks… but ratesheets don’t reflect it yet, because secondary (at all banks) has to digest a lot of abandoned lock hedging costs… that will probably take a solid 4-6 weeks, minimum… but the bond trend is solid (with Europe melting & the Middle East burning in front of our eyes, and the President’s masters doing everything possible to add sugar to the immediate economy.)

David Donhoff, Advisor
Leverage Planners
(425) 223-4520 desk
(425) 652-1001 cell

Cat Racist Real Estate INSANITY!

Cat Racist Real Estate INSANITY!

I usually do a quick skim over these guy’s content because they’re usually a bit more sales-push-ish than is my style…. HOWEVER, today’s 5 minute content is pure insane gold!

Skip to the 1:00 mark… to see the *insanity* we are dealing with on literally an everyday basis in the mortgage industry at present.

David Donhoff, Advisor
Leverage Planners
(425) 223-4520 desk
(425) 652-1001 cell

Another economic canary died… anyone noticing?

Another economic canary died… anyone noticing?
I am…

For Unpaid College Loans, Feds Dock Social Security
http://www.smartmoney.com/borrow/student-loans/grandmas-new-financial-problem-college-debt-1344292084111/#article_tab_article

<_SNIP_>
It’s no secret that falling behind on student loan payments can squash a borrower’s hopes of building savings, buying a home or even finding work. Now, thousands of retirees are learning that defaulting on student-debt can threaten something that used to be untouchable: their Social Security benefits.

<_SNIP_>
The government’s withholding power also extends to Social Security disability benefits. Tammy Brown of Redding, Calif. says that the government has been taking $179 out of her Social Security disability check each month for the past five years. Brown, 52, became disabled in 1986 after being involved in a car accident. Unable to work, she fell behind on her student loan payments. She says the Social Security check is now too small to cover her food and medical bills, so she quit taking prescription pain pills. “It’s kind of hard to live on this amount of money,” she says.

<_SNIP_>
FROM THE READER COMMENTS:
Posted by VINNYNY.
“BOO, HOO, HOO!…
As a mortgage banker after graduation, I had dozens of clients who did not qualify for mortgages because they had defaulted on student loans. The absolute worst offenders were doctors and lawyers. In fact, I stopped taking applications from doctors because virtually all had bad education debts.”

Dave’s Comments;
Of course, the mature and responsible thing for everyone to do is to repay one’s debts, preferably on time and in full. Then again, sometimes “life happens” and adjustments have to be made… sometimes in the timing (and even the certainty of timing,) and sometimes ultimately in partial or complete default… sometimes leading to derogatory credit or bankruptcy. The most critical thing every person must do is manage their economics to remain self-sufficient and survive.

Its easily arguable in favor of the government (as lender) garnishing wages (social security) as the income payor… but there is a more critical point here.

When a person takes out a credit card loan, both the lender and borrower understand that the loan is unsecured, and that any delay or default is at the lender’s risks… and the loans are subsequently priced in rates & fee for those risks, plus the lenders cautiously measure how much credit they offer.

When a person takes out a real estate mortgage, both the lender and the borrower understand that the outstanding balance is collateralized by the value of the real estate itself… and in some instances *ONLY* the value of the real estate can be used to offset any delay or default costs to the lender (so if the value ends up less than the outstanding loan balance, in some cases that unsecured balance is again at the lender’s full risk.) This reduction of risks is priced into the rates & fees & terms as well. MORE IMPORTANTLY, this allows a smart and responsible borrower to SEGREGATE RISKS… like a large ship tanker with compartmentalization so that the ship can take a direct torpedo hit, and still proceed without sinking.

MANY federal student loan borrowers were probably unaware that although their student loans were unsecured, the lender (the government) still reserved garnishment rights against their future social security income and disability benefits. Being unaware is no excuse, and earns no sympathy…

However social security benefits are commonly expected to be “last resort safety net” benefits, not any kind of luxury lifestyle supplementation therefore easily tapped for repayment of student loans. There is something that seems viscerally sinister in the idea of a lender squeezing out repayments from someone’s ‘last resort’ sustenance income source.

ULTIMATE MORAL OF THE STORY: Risk Compartmentalization!
Better to never put yourself in the position of relying on *anything* from government benefits… but if you are given no choice (such as a career in a position where paying into the social security system is mandatory,) then be fully aware that the government can determine in the future, for whatever reason convenient at the time, that you owe them money. In this particular story case, the “balance owed” is obvious and “bright line” in student loans… but I think its safe to realize that politicians can be ruthless when the system is financially starving, and every asset they have access to is vulnerable, in order of their ease of access.

The most obviously and immediately vulnerable are accumulated payout benefits, as described above. The close second most vulnerable are the so-called “qualified plans” (401k/403b/TSP plans, IRAs, ROTHs, etc.)

Everything has its own measures of risks… and a previously under-recognized risk is now making itself known; Government economic desperation strong enough to break the sanctity of last-resort social safety nets.

Build your safety nets beyond the risks of liens & garnishments, whenever possible.

Dave Donhoff
Leverage Planner