This is the very best tax shelter there is, if you qualify. A HSA, Health Savings Account is the only triple tax-advantaged program in the whole IRS tax world. You are able to put in pretax contributions, you are able to enjoy tax-free compounding, as long as the money stays inside of the HSA. Then you are able to enjoy tax-free withdrawals for qualified healthcare expenses. It doesn’t get any better than that.

So how do you get one and how much can you contribute? The first requirement is that you have some type of high-deductible healthcare plan, and the IRS has specific rules defining these plan. Therefore if you have a HDHP, you are eligible to contribute to an HSA. In 2016 the contribution limit is $3,350 for single filers or for single individuals participating in HDHPs. And $6,750 for people who are part of a family plan.

You can of course use your HSA to pay day to day medical expenses. However, the tax advantage is to pay your medical expenses out of pocket if you can afford it, deduct them on your taxes and accumulate your HSA for the future. When you reach age 65, your HSA functions like an IRA. So, if you are using the money for qualified healthcare expenditures those withdrawals are all tax-free. If you are using the money for other things beyond healthcare expenses those withdrawals are taxed at your ordinary income-tax rate. Keep in mind that this can be reimbursed back to you for your Medicare costs each year.

If you can stay healthy the HSA can be a savings account that you can hold onto for many years. You can just fund the HSA to the extent that you possibly can, and then leave the money in your HSA to compound for your use during retirement. This compounding will take place if you have your money in a HSA account that allows you to invest in stocks or bonds, similar to your IRA account.

One problem many people contributing to HSAs face is that their employer-provided HSAs are just bank accounts and have no provision for investing. There is however a workaround, just go ahead and contribute to that employer-provided HSA. Have your pretax contributions come right out of your paycheck and into their HSA, and then periodically throughout the year, you can transfer the HSA assets from their HSA provider account to the HSA account of your own choosing (one that allows investing). Keep in mind that if you don’t have employee health insurance you can get an Obama Care HSA private insurance plan and just set up the HSA at a private bank or institution. In this case your HSA contributions are 100% credited on against your income on your 1040 tax return, along with the other benefits mentioned above. The bottom line is that if you qualify for an HSA, you want to be able to not just save but invest the money in your HSA account.

If you qualify for an HSA it can be a great tax shelter.

To many people the decision on when to start taking Social Security can be a difficult decision. As we all know those that can claim Social Security may start getting benefits as early as age 62, or as late as age 70. So how do you decide when you should take yours? This actually turns out to be a Year by Year decision.

The first decision is, “Do I absolutely need the money to live on, with few other options”, if so then go ahead and start receiving benefits at age 62. However, you should also consider the idea that the longer you wait, the more you get and the difference is substantial.

Let’s look at some examples.

If you are an unmarried person, currently age 61 and trying to decide whether or not to claim Social Security at 62, you can compare claiming at 62 vs. claiming at 63. Based on a calculation the breakeven point is age 78. (If you live to age 78, you are better off having claimed at 63 than having claimed at 62.)

Using the 2011 actuarial tables from the SSA, we can calculate that for an average 62 year old male, there is a 67% probability of living to age 78. For a 62 year old female, there is a 76% probability. For most unmarried people, it makes sense to wait at least until 63, because there is a much greater than 50% probability of living to the breakeven point.

Then, at age 63, you would want to see if it makes sense to wait until 64. The breakeven point between claiming at 63 and claiming at 64 is age 76. Using the same actuarial tables, we can calculate that for an average 63 year old male, there is a 74% probability of living to age 76. For a 62 year old female, there is an 82% probability. It probably makes sense to wait another year.

And then you would repeat this analysis every year. For somebody with a full retirement age of 66, the year-by-year breakeven ages would be as follows:

Full retirement 66

 Full retirement 67

The above analysis is just a simplification, to show the general idea that the decision should be made year-by-year rather than simply asking “Should I claim at 70 or at 62?”

A real-life analysis of your situation could include a few other factors, such as:

• What would my returns be if I invested my on early-received benefits? In the above discussion I assumed a 0% real return, just a match for low inflation. This can be determined by just looking at the yields on TIPS, (the investment with a risk level most similar to that of Social Security), they are currently at or near zero, a pretty reasonable assumption. If real interest rates were higher, the breakeven points would be pushed back a little bit.
• There is a BIG difference in the actual cash payout between the years and the early claiming penalty is substantial. Keep in mind that Social Security gains a guaranteed 8% a year, tax free if you wait from “full retirement age” to age 70. That is excellent in this market.
• Tax planning can be an issue. Specifics vary from person to person, but in most cases tax planning is a point in favor of waiting to claim benefits, because of Social Security’s tax-advantaged nature.
• Spousal and survivor benefits for married couples can make a big difference.
• For anybody who is concerned about running out of money due to a very long retirement, delaying Social Security is often a good decision, even if there is a less than 50% probability that they will live to the breakeven point in question.

What should you do? If you think you are going to live into your 80”s, which has a high probability, they longer you wait, the more money you’ll have to live on.

Here is another interesting article on the real value of Social Security as if it were a bond!

Choosing individual stocks that you can “buy and hold” for growth is always a challenge. You need to have a great reason to choose each stock for your portfolio, and then make sure the story doesn’t change.

Even in a flat or slightly down market you can still have great stocks making 52 – week highs. 14 of my 66 stocks hit new 52 week or all-time highs this week, and the market was quite weak.

Altria (MO) – Very long time holding, 4% at costs bond like yield

AMN HEALTHCARE SERVICES (AHS) – My favorite stock last 2 years, all-time high

Amazon (AMZN) – Bought in February 40% gain, all-time high

Constellation Brands (STZ) – My favorite stock last 2 years, all-time high

Facebook (FB) – Bought at $70, now $119 in 2 years, all-time high

Home Depot (HD) – Very long time holding, all-time high

Johnson & Johnson (JNJ) – Very long time holding, nice dividend, all-time high

Lockheed Martin (LMT) – Very long time holding, all-time high

Martin Marietta (MLM) – Bought March 2016, all-time high

McDonalds (MCD) – Bought in December, all-time high

3M (MMM) – Very long time holding, all-time high

Nvida Corp (NVDA) – Bought at $20 in 2014 now $40, all-time high

Nuveen Preferred (JPC) – 8% yield CEF bond like yield

Raytheon (RTN) – Long time holding, all-time high

Just so that you don’t think that all of my stocks are 52 – week winners I had 4 core holdings that hit 52 – week lows this week:

American Airlines – Still up over 30% since purchased, I’ll keep for awhile

Apple – Core holding forever

Gilead Sciences – Core holding, but I’m down about 10%, has lots of cash

Under Armour – Core holding, still up 18%, should rebound big in 12 months

Many active investors only “buy stocks by going long” and at some later date they sell. However, traders really don’t care if they buy or “sell short”, as long as they make money.

Many times there are just obvious opportunities to “short” a stock and make fast money in just a few days. Here is an example from this week. Retail companies have been reporting poor earnings this last week, all the talking heads on CNBC have been agreeing that retail will report lower revenue and profits for the quarter.

Therefore I took a quick look at Macy’s (M), saw that it has already been weak and decided it was an obvious “short” opportunity. On Monday, May 9^th I “shorted” 300 shares of Macy’s at, $37.80 my cost was $11,384.

Here is what the transaction looked like in my Fidelity account.

This morning before the market opened, I added a limit “Buy to Cover” order for M at $34.00.

Here is what the order looked like:

As expected Macy’s reported earning this morning and as expected they were terrible, the stock crashed and my stock automatically sold as the market opened at $33.84. I made a profit of $1,232 in two days on a very low risk simple, obvious trade. Shorted cost $11,384 bought back for $10,152, profit $1,232.

I could have sold short much more than this but I never get greedy.

Smart investors aren’t afraid to “short” stocks that are going down just as often as they buy stocks to go long.

Mother’s Day is just two days away and I thought it would be appropriate to post some financial suggestions just for Mom’s. If you are a mom and completely control your own finances in your family, well congratulations, you may not need any of this advice. However, many women might be similar to my family and my parents where the “man” in the family “handles’ all that financial and tax stuff and the mom’s aren’t really involved. Women these days can be very busy and as duties may be allocated to another spouse their need for financial understanding is critical.

Here are my Mom’s Suggestions:

1. Get involved, at least to the point where you have an accurate and updated list of all financial matters within the household. Check out the “In Case of Emergency Document” article I last updated HERE. I literally update this document monthly, there are always new debit card numbers, new services you sign up for and so forth. Your income tax planning changes almost every year. Every few months I quickly review this document with my wife and adult daughter. God forbid something happens to me I want them to be as prepared as possible, with step by step instructions and all the details required to carry on their lives. This is the biggest gift I can give them.
2. Since many women work these days and most have company 401K plans or personal IRA’s. It is imperative that you designate the proper “beneficiary” on these plans. Always keep it up to date as situations change in life. A very common mistake is to just think that you already have a will or estate plan and you don’t need to name a beneficiary. Please keep in mind that the named beneficiary on a 401K plan takes precedent over any instructions in a will or estate plan. If you don’t have a simple will get one immediately! You just can’t be a mom and not have a will. If you have special needs children, or special situations in your family, you may want an estate plan that includes a Revocable Living Trust, individual Wills, Durable Powers of Attorney and Healthcare Surrogate. Here is more information on that topic.
3. Save and Invest. Learn how to make financial choices. Develop a budget that includes not only expenses but a savings and investment plan. I can assure you, nobody cares more about your money than YOU. You can trust your spouse, a relative, paid advisor or friend to help but no one cares like you do. I have friends that wanted to be “safe” and went to well-known national banks and found a financial “advisor” to help them manage their investments. In almost all cases they were not only disappointed, but in many cases lost a fair bit of money. There are really simple thinks moms can do to completely protect their investments, just take warren Buffet’s advice, put your money in an inexpensive S&P 500 Index fund or ETF and leave it there. You will automatically beat 90% of the “talking heads” on TV that are stock market “experts”. For example, Schwab® S&P 500 Index, or Vanguard Total Stock Mkt Index.
4. Get out of debt and stay that way. The single biggest reason why people struggle financially is not because of their income or routine expenses, it is because or huge interest payments on debt. Forget about the stock market or any other investment, NOTHING pays you anything remotely close to the costs of debt. Credit cards charge you 20+% if you carry a balance. Car loans, consumer loans etc. can carry very high interest rates. Pay off all credit card debt and other loans BEFORE your next vacation, or wardrobe “enhancement” shopping trip. Here is more on debt reduction.

 To all the mom’s out there HAPPY MOTHERS DAY!