EBRI on retirement

From CNNMoney.com "Have less than $25K in savings? Get in line"


Employee Benefit Research Institute (EBRI) estimated that all, but the lowest earning men, should have saving at least 12X their income when they retire. That's $1,200,000 for a man earning $100,000. A woman, because of higher life expectancies, should have 14X.

Your nest egg, combine with your Social Security benefits (and pension benefits if you have them) should be large enough to generate at least 70% to 80% of your pre-retirement income.

What is Pentium Dual-Core processor?

The Intel Pentium Dual-Core T2060 is an unannounced Intel processor that mysteriously shown up in budget laptops at retailing stores in early 2007.

The T2060 is an off-roadmap processor (i.e. not on Intel's roadmap). It was developed at the request of some of Intel's customers.

It is a variant of the value Core Duo processor (T2050).

But the T2060's L2 cache is smaller than the L2 cache of Core Duo; and it may lacks some of Intel's latest power management features.

5 keys to investing success

I read it somewhere ...

1 - Make investing a habit

2 - Set reach goals that are not impossible for you; but should be achievable if you put in some efforts.

3 - Avoid unnecessary risks - asset allocation

4 - Be patient

5 - Diversify

Favors of Windows Vista

* Windows Vista Business

* Windows Vista Enterprise

* Windows Vista Home Basic
-- Requires at least 512 Mb of memory

* Windows Vista Home Premium
-- Requires at least 1.0 Gb of memory

* Windows Vista Ultimate

There is also the Windows Vista Starter which is only available in developing technology markets.


Last Windows OS has

* Windows XP Home

* Windows XP Professional

* Windows XP Media Center Edition 2005

Tax filing strategies

Use tax professional

+ A must for complex returns
- Expensive (see below)
+ Through
+ Usually provide supports for audit

Do it yourself

+ Inexpensive
- Time & efforts (it takes an estimated 28 hours and 30 minutes to prepare a return)
- Require good knowledge in tax laws
- Possible errors or may missed tax saving opportunities

Use VITA /TCE programs

+ Preparation & e-filing for free
- Limited to simple returns
+ Preparers are trained & certified, but with uneven experiences
- No support for audit

Use tax preparation software

Software buys convenience!
+ Avoids arithmetical errors
+ Step by step interview process – reduces need for tax knowledge
+ Interview process minimizes errors from tax situation changes such as retirement
+ Convenient import of previous years info
+ Can do what if scenarios – see impact of different filing strategies
+ E-file available & convenient storage in PDF format

However
- Expenses – costs of software & e-filing
- Accuracy in data entry is very important!
- Lengthy interview process
- It may not handle special or complicate tax situations


The IRS estimates that $200 is the average cost for taxpayers to file basic federal income tax returns.
Professional tax preparers also calculated that the average fees their clients paid last season ranged from about $155 at H&R Block to just under $178 at Jackson Hewitt.

Cash & clothing donations

The Pension Protection Act made changes related to how taxpayers document their cash and clothing donations.

Cash donations

Before the new law, taxpayers did not need to document monetary donations less than $250.

Starting in 2007, taxpayers will need to keep receipts documenting all monetary donations they claim as a charitable deduction on their tax return.

"Now, for any monetary gift, you need a bank receipt or written acknowledgement from the charity, including charity's name, the date of the gift, the amount of the gift."

A cancelled check or a credit card statement will also suffice. Taxpayers' best bet is to avoid cash donations and instead focus on check or credit card payments.

Taxpayers don't send these receipts to the IRS, but simply keep with their records in case of an audit.

Clothing donations

The new rule for clothing and other household donations which goes into effect for 2006 is that they must be in good or better condition to qualify for the deduction.

The law does not specify what "good" or "better" means, but taxpayers might consider taking photos of the items or getting a written acknowledgment from the charity that the items are in such conditions.

Make a detailed list of the items, such as "three pairs of pants, two shirts." Then the charity can acknowledge the exact items were received in "good" or "better" condition.

Sale of stocks & mutual funds

Key points

Stock sales cannot use average cost to calculate the cost basis.

Mutual funds can use average cost if the shares were held at the agent or the custodian.


How do I figure the cost basis when the stocks I'm selling were purchased at various times and at different prices?

If you can identify which shares of stock you sold, your basis is what you paid for the shares sold (plus sales commissions).

If you sell a block of the same kind of stock, you can report all the shares sold at the same time as one sale, writing VARIOUS in the "date acquired" column of Form 1040, Schedule D (PDF).

However, what you enter into the "cost or other basis" column is the total of all the acquisition costs of the shares sold.

If you cannot adequately identify the shares you sold and you bought the shares at various times for different prices, the basis of the stock sold is the basis of the shares you acquired first (first-in first-out).

Except for certain mutual fund shares, you cannot use the average price per share to figure gain or loss on the sale of stock.

Deadline for amending tax returns

Generally, to claim credits or refund, your tax returns or amended tax returns must be filed within three years of the original filing deadline.

You are too late to amend your 2002 return now. The deadline was April 15, 2006.

If you want to amend your 2003 return (which was due April 15, 2004), you have until April 15, 2007 to do so.


Note: the tax code says that the IRS has three years to give you a refund, three years to audit your tax return, and ten years to collect any tax due. Together, these laws are called the "statutes of limitations."

2006 federal tax rates

Taxable Income = Adjusted Gross Income - Deduction - Exemption(s)

Single

tax rate	taxable income	plus
10%	between $0 & $7,550	-
15%	between $7,550 & $30,650	$755
25%	between $30,650 & $74,200	$4,220
28%	between $74,200 & $154,800	$15,107.50
33%	between $154,800 & $336,550	$37,675.50
35%	over $336,550	$97,653

MFJ

tax rate	taxable income	plus
10%	between $0 & $15,100	-
15%	between $15,100 & $61,300	$1,510
25%	between $61,300 & $123,700	$8,440
28%	between $123,700 & $188,450	$24,040
33%	between $188,450 & $336,550	$42,170
35%	over $336,550	$91,043

LTCG & Qualified Dividends
5% for taxpayers in the 10% & 15% tax brackets
15% for taxpayers in the 25%, 28%, 33%, & 35% tax brackets

Tips for individuals to donate old computers

Original source: http://www.techsoup.org/products/recycle/articlepage.cfm?ArticleId=524

These are the reasons that we should find the appropriate way to discard old computers:

* According to the U.S. EPA, nearly 250 million computers will become obsolete in the next five years. In 2001, only 11 percent of personal computers retired in the U.S. were recycled.

* Each computer dumped in a landfill is a missed opportunity to provide Information Age tools for people to cross the digital divide.

* To reuse a old computer is more environmental friendly than to manufacture a new computer.

Tips for donating computers

Donate old computer to a refurbisher or recycler, rather than to the schools and nonprofits directly.

Out-of-date computer systems can be more a burden than a blessing to the schools and nonprofits; as it is very costly for them to bring a old computer up to today's standards.

Determine if your old computer can be reused.

It is okay to donate a “slow” computer or a computer with minor glitch. If it is less than seven years old, chances are that it can be upgraded and put to good use by someone else. If your computer is more than seven years old, consider to send it to a commercial recycler.

Recycle any broken computers.

Any computers that could not turn on should be recycled. Most recyclers are businesses or organizations that can remove useful parts and then break down the rest of the materials, as we do with bottles and cans. They also remove hazardous materials safely.

Note: Some of these organizations may charge a fee to accept computers for recycling -- especially computer monitors.

Contact the refurbisher or recycler before donating.

Call the organization or check for details on its Web site to ensure that it accepts the computer that you plan to give away.

Many recycling and refurbishing organizations also have specific locations where a PC can be donated, while others have delivery instructions they expect donors to follow.

Donate the accessories too.

If you can, include the keyboard, mouse, printer, modem, speakers, or any other accessories.

Keep the proof of the operating system intact if possible.

Microsoft XP operating system can only be reinstalled on the computers that had XP.

Clean your computer of personal information by yourself.

Best to use a disk wiping utility that overwrites whole hard drive so that no data is recoverable.

Keep a record of what you donated.

You are eligible for a tax donation if you donate to a nonprofit refurbisher. Most school or nonprofit refurbishers can provide a tax receipt upon request. The tax laws pertaining to this are Section 170 of the Federal Income Tax Code, the New Millennium Classrooms Act, and the 21st Century Classrooms Act.

Note: Individuals can deduct the current market value of donated computer on their tax returns.

To determine the fair market value of a computer

Go to the Computers for Schools Canada for free computer "valuator".

Plan for future donations.

Do not put away any unused computer in storage or basement. Most people will not use their old computer again. Donate it as soon as you brought a new computer.

Why volunteering for CASH

CASH is an IRS Volunteer Income Tax Assistance (VITA) program in Rochester, New York.

In this nationally recognized program, the volunteers assisting low income taxpayers to prepare and e-file their tax returns free. The volunteers are trained & certified by IRS.

Five good reasons ...

5. You will give something back to the community.

4. You will help to increase the tax law compliance in the community - taxpayers paying their fair share of taxes (not a dollar more or less than they are obligate to pay).

3. Saves taxpayers some money (~ $100 to $200, see below for an example) on getting their tax returns done.

2. Helps low income taxpayers to avoid the Refund Anticipation Loan which many people considered as a form of predatory lending. CASH program does not offer any RAL.

1. You could also get your own (federal and state) returns done for free!


Here is an example for a single mother (with a child and a W-2) getting her tax returns done at H.

Form 1040A	$59
Form W-2	$2.25
Dependent	$10.75
Head of Household Filing Status	$10.75
Head of Household Worksheet	$5
Child Tax Credit Worksheet	$30.75
Form 8812 Child Tax Credit	$11
EIC	$17.50
EIC Worksheet	$3
8867 EIC Checklist	$2.75
Phone Excise Tax	$3
State Return	$28.50
Total Fees	$184.25

50 top money tips

Source: Ric Edelman

1. If you want to achieve real wealth, forget about stocks selection. Focus instead on asset allocation.
Stop trying to pick winners. It doesn’t matter much what you buy, or when you buy. What counts is how you allocate your money across the 18 major asset classes.

2. Never send in extra mortgage payments.
Your mortgage will not affect your home’s value, so send your money where it can grow. That means into investments, not the walls of your house.

3. Never choose investments because they’ve made a lot of money.
Remember: past performance is no indication of future results.

4. Want to save for college? Open a 529 College Savings Plan.
529 plans let you grow money tax-free. And you can use the account for all college expenses, not just tuition, and at any school in the country!

5. When you get a lump sum of money, invest it all at once, not slowly over time.
Investing all at once is best because the financial markets tend to rise more often than not, so the sooner you invest, the better you’re likely to do.

6. Never make an investment decision based on taxes.
Too often, people take big investment risks because they want to avoid taxes. Remember: Taxes are good, because you pay them only when you make money!

7. Always work with a buyer-broker when buying a home.
Realtors always represent the seller, unless you hire a buyer-broker. This type of broker represents you when you are buying a home.

8. Take advantage of dollar cost averaging — but make sure you do it the right way.
The best way to invest is to do so regularly – invest the same amount at regular intervals. Over long periods, especially through down markets, dollar cost averaging can help you get the boost you need to create wealth!

9. Never spend coins.

10. A 30-year mortgage is better than 15.
With longer mortgages you get a lower monthly payment and a higher tax deduction. The lower cost helps boost your monthly investing, leading to greater wealth!

11. Never buy a home unless you plan to live in it for at least 5 years.
It takes a lot of cash to buy a home. Down payments, settlement charges, moving expenses, decorating, maintenance and repairs all add up. Unless you plan to live there for at least five years, it’ll likely be a money loser, not a money maker.

12. Retired and need income from your investments? Forget bonds. Use a systematic withdrawal plan instead.
Your advisor can show you how to receive a steady income from your portfolio. No need to rely on bonds, where the interest you get frequently changes.

13. Pay yourself first.
Next time you pay your bills, write a check to yourself first. You run out of money every month anyway, but at least this way, you’ll run out after you’ve saved!

14. Never rollover an IRA to a Roth IRA.
The Roth IRA is a scam. It doesn’t increase your wealth; all it does is accelerate government's tax revenue.

Ric thinks that withdrawal from Roth IRA won't be taxfree in the future!

15. If you insist on annuities, go variable not fixed, and not EIAs.
Fixed annuities give you a fixed return, like a bank CD. Equity index annuities offer you a portion of the stock market’s profits. Only variable annuities give you the opportunity to earn the full returns offered by the stock market. So when investing for long periods – that’s the way to go.

16. Don’t name your minor children as heirs.
Minors can’t own assets. Have their inheritance placed into a trust until they are old enough to maturely handle the money.

17. Always carry a big, long mortgage — and never pay it off.
Today, carrying a big, long mortgage is the smarter, safer, way to handle your finances.

18. If the coupon says SAVE ONE DOLLAR, make sure you do. Don’t use that dollar to buy more instead.

19. Never use a bi-weekly mortgage plan.
Send that thirteenth payment into your investments instead.

20. There is no assurance that higher risks lead to higher returns
The only thing certain about taking greater risk is that you’ll get - greater risk. A better approach is to build a diversified portfolio; you’re far more likely to get competitive returns with far less risk.

21. Stay away from tuition prepayment plans.
Tuition prepayment plans grow your money only at the rate of inflation, and are valid for only tuition, not room and board, and only at public schools in your state. There are better ways to pay for college.

22. Grandparents! Think twice before setting up a 529 plan for the grandkids!
Grandparents want to help, and likely have the money to do so. But setting up college funds for the grandkids is often a big mistake.

Why?

23. Stop pretending your home is the best investment you ever made. It isn’t!
Your home is not an investment at all! It’s merely a place to live. If it grows in value, consider yourself lucky, not smart.

24. Never buy a mutual fund because it is rated 5 stars.
Even Morningstar admits that the star ratings have no predictive quality. You’re as likely to do well with a 1-star fund as with a 5-star fund!

I disagree. It will take time for 1-star funds to improve their performances.

25. Stockbrokers are not financial advisors.
The SEC says so. Stockbrokers are salespeople, not advisors, says the Securities and Exchange Commission. If you want genuine financial advice that is in your best interests, work only with a Registered Investment Advisor.

26. Don’t assume you’ll pay lower taxes in retirement.
Income taxes rates are rather flat today compared to a decade ago. Chances are your tax rate will not decline once you retire, so plan accordingly.

27. Two words for EE Savings Bonds: Dump them.
The return on U.S. Savings Bonds pales besides that of other long-term investments. If you own savings bonds, consider cashing them in.

28. Worried about future college costs? Forget it! Save for your retirement first.
Kids can pay off college loans throughout their working career. But you can’t pay for retirement while you’re in retirement! So if it’s a choice, there is no choice. Save for retirement first, then college.

29. Don’t always assume that both parents must work when raising young children.
Many parents assume that both must work because they need the money. But after factoring in the cost of child care, commuting, wardrobe, lunch – and the hassle factor – sending the second spouse to work might not be the good idea you thought it was.

30. Getting a pension? Be careful if someone tries to sell you insurance instead of taking your pension’s joint and survivor option.
Instead of choosing the joint and survivor pension plan, you might be told to take single life pension and buy insurance. This is often not a good idea.

31. Never “invest” in life insurance.
The purpose of life insurance is to protect against a financial loss – not to produce a profit. Buy your insurance, and get your investments separately.

32. Market timing works only for the guy who makes a living selling market timing services.
The only way you can be sure you’ll be invested at the right time is to be invested all the time.

33. Get yourself a charge card.
Get a charge card, like the American Express card, which requires you to pay in full every month. That’ll help you stay out of trouble!

34. Never title assets between the generations.
Mom, never add a child’s name to your house, bank account or investments.If you add your kid’s name to your accounts, you could be disinheriting other children and creating huge tax problems.

35. Always work with a realtor when selling a home.
Would you hire a Realtor who has never sold a house before, knows nothing about real estate law, contract negotiation, or sales? Of course not – but that describes you. Don’t hire yourself – hire a real estate sales professional.

36. Never buy investment real estate with borrowed funds.
What happens if the person renting your property fails to pay the rent? You could lose the property! If you want to own a rental, pay cash.

37. Stop paying for private mortgage insurance.
If you have more than 20% equity in your home, cancel your PMI! You’ll save hundreds, even thousands, of dollars every year.

38. Do you plan to leave everything to your spouse? Could be a big mistake!
If your spouse remarries, your assets could go to the kids of a person you don’t know! Protect your spouse and your kids with a QTIP trust.

39. Got money in a UTMA account? Never save money in your child’s name. Get that money out now.
Starting 2008, Kiddie tax will be imposed on the children's investment until they're 24 years old.

40. Never buy mortgage life insurance.
Mortgage life is a policy that pays off your mortgage if you die. Instead, buy insurance that pays your surviving spouse or kids. They’ll need the money more than the mortgage company.

41. For most people, municipal bonds are a fraud.
Muni’s are tax-free, but they pay lower rates of interest than taxable bonds. If you reinvest at the muni’s lower rate, you’ll end up with less money than if you invested in a taxable account!

42. Never contribute to a nondeductible IRA account.
You’ll be stuck with filing Form 8606, and if you fail to maintain proper records, you could wind up double-paying your income taxes.

43. Are you handling your money the way your parents handled theirs? Big mistake!
The rules of money have changed. If you handle your money the way your parents handled theirs, you will fail where they succeeded.

44. Take Social Security at 62, don’t wait till 65.
Taking eighty percent of your Social Security benefit at age sixty-two is more profitable than taking one hundred percent at age sixty-five.

45. If you’ve lived in your home for more than three years, it’s probably not properly insured.
Your homeowner’s policy offers coverage based on the value of your house when you bought it. But if it has grown in value, your policy might no longer be enough to rebuild after a fire. Review your policy now.

46. Place 100% of your retirement plan contributions into stock funds.
Since you add to your company retirement plan in equal amounts with each payment, you’re taking advantage of dollar cost averaging. Over long periods, especially through declining markets, this can be an effective approach.

47. Getting a pension? Choose the lump sum option instead.
Your employer might become unable to pay your pension. By taking the lump sum, you take control of your money – and your future.

48. Never buy separate insurance policies on your kids.

49. Buying long-term care insurance? You probably don’t need lifetime benefits.
The average nursing home stay is less than three years. A policy that offers 5 or 6 years of benefits is probably sufficient – and much more affordable.

50. When leasing a car, never pay a cap cost reduction and always obtain gap insurance.
Never make a down payment on a car you don’t own – and always get gap insurance to make up the difference between what the car is worth and what the dealer says it’s worth.

Smartest investment advice

By Dan Solin

1) Asset allocation

Determine what % should the stocks and bonds be in your portfolio.

2) Index mutual funds

All you really need is only three low-cost index funds in your portfolio

- Total U.S. stock market index fund
- Total international stock market index fund (10% to 20% of stocks allocation)
- Total bond market index fund

3) Rebalance the allocation once or twice every year

2006 federal exemption & deductions

Personal exemption

$3,300

Personal exemption phase-outs

Joint return
$225,750 - $348,250

Head of household
$188,150 - $310,650

Single
$150,500 - $273,000

Married couple filing separately
$112,875 - $174,125

Standard Deductions

Married filling jointly or qualifying widow(er)
$10,300

Heads of households
$7,550

Singles
$5,150

Married filling separately
$5,150

OPN of AMD processors

Let's take an example to see what information can be obtained from an OPN.

Assume that the OPN is A1400AMS3C.

• The first "A" indicates that this is an Athlon processor.
  "AX" would indicates that this is an Athlon XP processor,
  "D" would indicates that this is an Duron processor, and
  "SDA" would indicates that this is an Sempron processor.
• The "1400" after the letter indicates the speed of the processor, which is 1,400MHz in this case.
• The next "A" describes the package type, which is a PGA (pin-grid array) in this case.
• The "M" after that indicates the operating voltage.
  ("M" means operating voltage is 1.75V whereas "P" means it operates at 1.7V.)
• The next position indicates the maximum case temperature.
  An "S" indicates a maximum case temperature of 95C whereas a "T" indicates a maximum case temperature of 90C.
• The number "3" which comes next describes the Level 2 cache size, which is 256KB in this case. (In addition to 128KB Level 1 cache.)
• The last one - a "C" indicates that the processor runs with a 266MHz bus whereas a "B" indicates that the processor is only capable of being operated with a 200MHz bus.

Telephone excise tax refund for tax year 2006

IRS to provide refunds of the federal excise tax on long-distance service billed between Feb. 28, 2003 and Aug. 1, 2006:

• The standard amounts are
  $30 for a person filing a return with one exemption,
  $40 for two exemptions, $50 for three exemptions and
  $60 for four or more exemptions.
  
  
• To get the standard amount, eligible taxpayers will fill out an additional line on their regular 2006 1040 return. (Line 71 on Form 1040; Line 42 on Form 1040A; Line 9 on Form 1040EZ.)
  
  
• Or, people who don’t need to file a regular tax return can file Form 1040EZ-T to request the telephone refund.
  
  
• Or, file Form 8913 to request a refund of the actual amount of tax paid.

Extended tax breaks for tax year 2006

The Internal Revenue Service plans a Feb. 3 start date for processing tax returns that claim the following key tax provisions enacted in December of 2006

• State and local sales tax deduction on Schedule A, line 5



• Higher education tuition and fees deduction on Form 1040, line 35



• Educator expense deduction on Form 1040, line 23



• IRS Publication 600

Free tax tools

From IRS

State sale tax calculator

AMT assistant

10 rules for building wealth

From FORTUNE

1. Start early



2. 401(k)



3. Keep it simple - invest index funds
   
   Most likely picking stocks isn't your full-time job.
   
   Choosing three or four index funds - such as, a S&P 500 fund, an EAFE fund, and a small-cap stock fund - will give you broad exposure.



4. Don't try to beat the market



5. Don't chase trends
   
   You want to grow your money for the long haul, so you don't switch your strategy every time you read the headlines.



6. Make saving automatic



7. Stocks in your portfolio should be (120 - age)
   
   And the rest should be in bonds



8. Minimize investment costs



9. Minimize credit card costs



10. Defer taxes as long as possible

Where I keep my emergency fund?

Where I keep my emergency reserve of 6-months living expenses?

1-month of living expenses at the checking accounts at the banks of brick and mortar

2-months at the virtual banks to earn some interest

Examples

ING DIRECT
- High interest savings accounts - 4.50% APY
- Certificates of deposit - 5.25% for 9 months
- Paperless checking - 4% APY

SCHWAB BANK
- Investor checking - 4.25% APY

3-months at TREASURY DIRECT & FIDELITY where I purchase treasury bills

TREASURY DIRECT
- Treasury bills (savings bonds are for long-term savings)
- Interest rates are slightly higher and free from state and local income taxes
- Easy process to repurchase the bills automatically.
- Paperless

The money at the brokerage accounts at Fidelity (& Charles Schwab too) could be invested in Treasury bills without any fees.

I have all these accounts linked to my checking accounts at the local banks; so that most money can be available in 1 -2 business days.