Wealth is what you don’t see

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“Spending money to show people how much money you have is the fastest way to have less money.” ~ Morgan Housel, The Psychology of Money

The definition of wealth, in its simplest form, is the total value of assets that are owned by an individual. Wealth is also defined as a person’s Net Worth. This is calculated by adding up all the assets and subtracting all the liabilities.

Wealth means different things to different people. The first and most obvious definition of wealth is owning appreciable and income producing assets. On the other hand, wealth can mean to some people the ability to travel wherever you want, and to do things on your own schedule. But chances are, everybody has a completely different definition of wealth.

Wealth is what you don’t see.

Being wealthy means that you have assets that generate you income as well as a store of wealth. A wealthy person is typically invested in real estate, the stock market, and might own a business or two. These individuals have assets that can be passed down generation to generation and don’t waste time keeping up with the Joneses. They focus on amassing assets and wealth.

“Wealth is the nice cars not purchased. The diamonds not bought. The watches not worn, the clothes forgone and the first-class upgrade declined. Wealth is financial assets that haven’t yet been converted into the stuff you see,” explains Morgan Housel, author of The Psychology of Money.

“That’s not how we think about wealth, because you can’t contextualize what you can’t see.

When most people say they want to be a millionaire, what they might actually mean is ‘I’d like to spend a million dollars.’ And that is literally the opposite of being a millionaire.”

Wealth defined

In their groundbreaking book, The Millionaire Next Door, authors Thomas J. Stanley, Ph.D, and William D. Danko, Ph.D, do not define wealthy, affluent, or rich in terms of material possessions. They opined that many people who display a high-consumption lifestyle have little or no investments, appreciable assets, income-producing assets, common stocks, bonds, private businesses, oil/gas rights, or timber land.

Conversely, those people whom they define as being wealthy get much more pleasure from owning substantial amounts of appreciable assets than from displaying a high-consumption lifestyle.

Bottomline, the most important parts of wealth and personal finance are how you behave with it and your related habits.

Wealth gives you freedom

Wealth give you time to do what you want and give you Freedom. When you are wealthy, you don’t have to sell hours of your day working. You can instead choose to spend your day doing the things you love and enjoy it.

And, freedom is defined as “the power or right to act, speak, or think as one wants without hindrance or restraint.” When you have wealth, you have the freedom to do things that you have always wanted to do, with minimal hindrances.

References:

  1. https://retirementfieldguide.com/wealth-is-what-you-dont-see/
  2. https://themillionairenextdoor.com/publications/the-millionaire-next-door/
  3. https://www.msn.com/en-us/money/personalfinance/definition-of-wealth-what-does-being-wealthy-mean/ar-AAWpqRq

Discipline and Patience are two great personal superpowers.

Good Relationships Equate to Happiness

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“Satisfaction with relationships was a better predictor of how people would age more than cholesterol, socioeconomic conditions, or genetics.” ~ Motley Fool contributors Brian Feroldi, Brian Stoffel, & Brian Withers

Positive and strong relationships keep you happier, healthier and living longer, according to the results of a 75+ year experiment started at Harvard during the Great Depression and according to dozens of other studies.

In 2002, two pioneers of Positive Psychology, Ed Diener and Martin Seligman, conducted a study at the University of Illinois on the 10% of students with the highest scores recorded on a survey of personal happiness. They found that the most salient characteristics shared by students who were very happy and showed the fewest signs of depression were “their strong ties to friends and family and commitment to spending time with them.” The New Wallis, 2005).

“Social connections are really good for you; and loneliness kills. “People who are more socially connected to family, to friends, to community are happier; they are physically healthier; and they live longer than people who are less socially connected.”

A relative lack of social connections has been associated with depression and later-life cognitive decline, as well as with increased mortality. One study, found that lack of strong relationships increased the risk of premature death from all causes by 50% — an effect on mortality risk roughly comparable to smoking up to 15 cigarettes a day, and greater than obesity and physical inactivity.

Thus, satisfaction with relationships was a better predictor of how people would age more than cholesterol, socioeconomic conditions, or genetics.

Social connections give you pleasure, they also influence your long-term health in ways every bit as powerful as adequate sleep, a healthy whole real food diet, physical activity and not smoking.

Understanding finance and investing your personal capital are just a means to an end. The whole point of financial freedom is using that time that’s freed up to strengthen your personal relationships.

There’s nothing more important to a long-term mindset than good social relationships. The quality of your personal relations with other people is the number one factor that effects your level of life-satisfaction.

So, make it a priority to take time to foster your most meaningful relationships. Choose activities that are most likely to bring joy to you and the people you have the strongest personal relationships.

“You’ll never change your life until you change something you do daily. The secret of your success is found in your daily routine.” ~ John C. Maxwell

References:

  1. https://www.health.harvard.edu/staying-healthy/the-health-benefits-of-strong-relationships
  2. https://www.pursuit-of-happiness.org/science-of-happiness/relationships-and-happiness/

Strong Jobs and Weakening Global Oil Demand

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Strong September U.S. job data showed that the U.S. economy is still running faster than the Federal Reserve would like, making it all but inevitable the central bank will continue to raise the federal fund interest rates through the end of the year in an attempt to curb inflation, according to Charles Schwab’s Schwab Market Perspective.

The Federal Reserve is trying to slow down economic growth to prevent inflation from becoming entrenched. WSJ

Higher interest rates imposed by the Federal Reserve don’t affect the U.S. economy only—the pain spreads around the globe as other countries’ currencies weaken against the U.S. dollar.

The Fed combats inflation by slowing the economy through tighter financial conditions — such as higher borrowing costs and lower stock prices — which curb spending, further reducing employment, income and spending.

The Fed has raised its benchmark lending rate by three percentage points so far this year, but you wouldn’t know that from the burgeoning jobs market.

Fed Chair Jerome Powell has acknowledged that the central bank’s fight against inflation will likely involve “pain for some households and businesses,” alluding to the risk of recession and rising unemployment. However, the Fed’s moves are also causing pain beyond U.S. borders.

The Fed is often referred to as the “central bank to the world” because its policies have a big influence on the global economy. Because the dollar is the world’s reserve currency, U.S. interest rate changes ripple across the globe in the form of currency volatility.

Meanwhile, this month’s announcement by OPEC+ members that they will curb oil production may not have as big an impact on oil prices and global inflation as some investors fear.

Source: Charles Schwab, Bloomberg data as of 10/8/2022.

Historically, OPEC hasn’t driven oil prices—it has followed them. OPEC output tends to lag changes in oil prices by about three months, meaning the cartel tends to cut oil production after prices fall when demand weakens, and increase it after prices are already rising when demand improves.

And demand for oil has been weakening. The International Energy Agency’s September Oil Market Report projected that oil markets would be oversupplied by 1 million barrels per day (mbpd) in the second half of calendar year 2022.

As a result, the OPEC cuts aren’t likely to be a meaningful driver of global inflation or the economy, but could instead serve as a lagging indicator of the slowing demand for oil as the global economy weakens, projects the Charles Schwab Schwab Market Perspective.

  1. https://www.schwab.com/learn/story/market-perspective
  2. Nick Timiraos, Flush Consumers Vex Fed Strategy, The Wall Street Journal, October 31, 2022, pp. A2.

November is Military Family Appreciation Month.

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Let’s celebrate how special military families are and recognize all the ways they support their service members.

November is Military Family Appreciation Month—a time when America honors and recognizes those unique sacrifices and challenges family members make in support of their loved ones in uniform.

“Military Families Serve, Too.”

No matter what rank or branch, or where life has taken them, our nation’s military families share the common threads of service and sacrifice.

November is a month to celebrate the Military Family and honor the commitment made by the families of the nation’s service members. It is a time to honor the military family – a time to celebrate their successes.

85% of military families surveyed feel the American public does not understand the sacrifices they make. ~ Source: USO

During Military Family Month, we thank military families for the tremendous contribution they make in support of our service members, the military mission and the nation.

Military life imposes unique demands on them, and during these difficult times, they have exhibited exceptional sacrifice, resiliency and courage.

The sacrifices and duty involved in service to the nation by military families often goes unnoticed by those in the civilian world. Their countless moves, school changes, friends and sports teams left behind, job changes, months missing their loved one, and nonstop deployments.

Over two million children have parents who served in Iraq or Afghanistan alone.

All Americans should share in the responsibility of caring for our military families. These families have stepped up to the plate at great personal cost, and the toll that multiple and extended deployments take can be very high.

Stress levels sky rocket, and spouses and children can struggle when service members are gone for prolonged periods, and some may even have a difficult time adjusting when the service member returns.

At a minimum, these families deserve some recognition and our appreciation.

Families provide our Servicemembers with invaluable encouragement and love, and manage the home front while their loved ones are deployed.

As we approach the winter holiday season when families across the world come together, we pay special tribute to our deployed forces and their families, who are separated this holiday season.

The dedication and strength of military families during a sustained high operational tempo, increased deployment and long separations is an inspiration to us all. The nation understands that families also serve, and is honored to pay tribute to them.

References:

  1. https://www.dodea.edu/dodeacelebrates/militaryfamilyappreciation.cfm
  2. https://www.militaryfamily.org/november-is-military-family-appreciation-month/

Have an Attitude of Gratitude

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“If you look at what you have in life, you’ll always have more. If you look at what you don’t have in life, you’ll never have enough” – Oprah Winfrey

Life isn’t always butterflies and rainbows. Sometimes life can be difficult, complicated and messy.

And, you don’t have the power to always control all the external factors to be exactly how you may want them to be in your life. However, you can choose your thoughts, feelings and words. You can choose your response or reaction to those external factors.

You have a choice when it comes to your perspective and you can decide which mindset you choose to navigate your experiences through, one of lack (fixed) or one of abundance (abundance).

Choose an Attitude of Gratitude.

It’s imperative to find and focus on the good. And allow yourself to soak up all the abundance and wonder life has to offer. It’s so much more fun than complaining and being negative all the time.

Practicing gratitude: Remember to be thankful when you wake up in the morning!

Research shows that practicing and expressing gratitude is associated with improvements to one’s mental well-being, as well as decreased stress and anxiety. Additionally, success in life starts with acknowledging what you already have.

Many successful people share a similar daily ritual that helps them achieve short-term and long-term success: making a list of what they are grateful for.

“What we focus on, what we put our attention on really determines how we feel about that particular day or our life in general,” states Arianna Huffington.

A study in the Journal of Personality and Social Psychology found that people who wrote about their gratitude over a period of time showed greater signs of emotional well-being compared to people who wrote about negative or neutral life events.

Practicing gratitude trains your brain to feel more positive emotions, appreciate good experiences, deal with adversity, and build strong relationships; all of which contribute to improved mental health.

“Gratitude is like a muscle. The more you exercise it, the more powerful it becomes. And being grateful doesn’t just make other people happy—it makes you happy, too! That’s because it focuses your attention on the positive things in your life, not the negative ones,” explains Oprah Winfrey.

When you begin to focus more on what really matters and choosing to see your reality from the lens of contentment. This allows you to eliminate unnecessary wants that could sabotage your vision and purpose. It might derail your pursuit of true happiness.

It may not feel natural at first to focus on appreciating what you already have, but by faithfully practicing the daily habits of gratitude, you’ll begin to change your conditioning and strengthen the gratitude muscle.

Bottomline: Always live in gratitude for what you have.

“Opportunities, relationships, even money flowed my way when I learned to be grateful no matter what happened in my life.” — Oprah Winfrey

References:

  1. https://www.oprah.com/spirit/oprahs gratitude-journal-oprah-on-gratitude
  2. https://www.cnbc.com/amp/2018/02/16/how-arianna-huffington-tony-robbins-and-oprah-use-gratitude-to-succeed.html

Inflation…a Monetary Phenomenon

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“Inflation is always and everywhere a monetary phenomenon in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output.” ~ Milton Friedman.

Inflation hurts all Americans and represents a crushing blow to the pocketbooks of working families and seniors living on a fixed income.

Inflation, in its most basic sense, is a lost of purchasing power. For example, a dollar held at the start of calendar year 2021 is now worth only 88.3 cents, according to .

Unfortunately, inflation seems likely to remain higher for longer than policymakers expected, and the Federal Reserve will therefore need to maintain a tighter policy stance of raising federal fund rate and quantitative tightening for an extended period of time, according to Franklin Templeton Fixed Income CIO Sonal Desai.

Consumer inflation remains at record highs across major developed economies: in September it ran at 8.2% year-over-year (Y/Y) in the United States, 10% Y/Y in the eurozone and 9.9% Y/Y in the United Kingdom (in August).1

These numbers represent inflation rates not seen in four decades. Many incorrectly assume the causes are the energy shock and supply chain disruptions which have played an important global role.

Additionally, the United States experienced a massive fiscal budget expansion during the pandemic, and fiscal stimulus continues to flow in the form of subsidies and debt forgiveness programs.

Excess demand therefore is a major inflation driver; in September, even as lower energy prices brought headline inflation down, core inflation (excluding food and energy) accelerated above expectations to 6.6%, the highest in 40 years.

Core inflation has averaged 6.2% so far this year and shows no signs of coming down—to the contrary, it’s rising. The last time it sat below 2% was in March last year.

Meanwhile, aggregate demand remains resilient and the labor market remains as tight as it’s ever been. Excess demand is an important inflation driver—as the Fed has belatedly recognized. So, the Fed can’t stop and won’t stop hiking rates anytime soon—Americans should expect that the federal funds rate could easily go above 5%.

Simply, inflation is a monetary phenomenon. It is a result of too much money, of a more rapid increase in the quantity of money than an output. “Inflation is always and everywhere a monetary phenomenon in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output,” states economist Milton Friedman.

Moreover, it’s important to recognize that governments control the quantity of money. So that as a result, inflation in the United States is made and produced in Washington and nowhere else.

It is a byproduct excessive printing of green pieces of paper we call the U.S. dollar (USD) that increases the money supply, funds uncontrolled fiscal spending and devalues the fiat currency.

References:

  1. https://www.heritage.org/budget-and-spending/heritage-explains/the-real-story-behind-inflation

VA Disability Payments to Increase in 2023

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Veterans Administration (VA) disability compensation rates are increasing in 2023 based on Social Security’s cost of living adjustment (COLA).

The official compensation tables will be provided by VA in December 2022.

Veterans who meet the requirements for a 100 percent VA disability rating become eligible for a host of additional benefits. Here are fourteen potential VA Disability benefits:

  1. Monetary compensation
  2. Free health care and medication
  3. Travel allowance for scheduled medical appointments
  4. Dental care
  5. Funding fee waiver with VA Home loans
  6. Employment assistance
  7. Veterans Readiness and Employment
  8. Additional compensation for eligible dependents
  9. Concurrent receipt of Military Retirement pay
  10. Educational assistance for dependents
  11. CHAMPVA – dependents can receive health care
  12. Burial and plot allowance
  13. Uniformed services ID card
  14. Adaptive housing and automobile grants.

In 2022, a veteran with a 100 percent VA disability rating receives compensation of at least $3,332.06 per month.

Monthly compensation amounts increase if a veteran has qualifying dependents, such as a spouse, children, or parents.

References:

  1. https://www.benefits.gov/agencies/U.S.%20Department%20of%20Veterans%20Affairs
  2. https://vaclaimsinsider.com/100-disabled-veterans-benefits/

High-Income Taxpayers Paid the Majority of Federal Income Taxes

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In 2018, the top 1 percent of taxpayers (taxpayers with AGI of $540,009 and above) accounted for more income taxes paid than the bottom 90 percent combined. ~ Tax Foundation

Federal individual income tax (or personal income tax) is levied on the wages, salaries, investments, or other forms of income an individual or household earns. The U.S. imposes a progressive income tax where rates increase with income, explains the Tax Foundation.

Federal individual income tax represent for more than 25 percent of the nation’s taxes paid (at all levels of government). Federal income taxes are much more progressive than federal payroll taxes, which are responsible for about 20 percent of all taxes paid (at all levels of government) and are more progressive than most state and local taxes.

Federal individual income taxes are the largest source of tax revenue in the U.S. In 2018, 144.3 million taxpayers reported earning $11.6 trillion in adjusted gross income (AGI) and paid $1.5 trillion in individual income taxes. Adjusted gross income is a taxpayer’s total income minus certain “above-the-line” deductions. It is a broad measure that includes income from wages, salaries, interest, dividends, retirement income, Social Security benefits, capital gains, business, and other sources, and subtracts specific deductions.

AGI is a fairly narrow income concept and does not include income items like government transfers (except for the portion of Social Security benefits that is taxed), the value of employer-provided health insurance, underreported or unreported income (most notably that of sole proprietors), income derived from municipal bond interest, net imputed rental income, and others.

In 2018, the top 1 percent of all taxpayers (taxpayers with AGI of $540,009 and above) earned 20.9 percent of all AGI in 2018 and paid 40.1 percent of all federal income taxes.

In contrast, the top 1 percent of all taxpayers (taxpayers with AGI of $540,009 and above) earned 20.9 percent of all AGI in 2018 and paid 40.1 percent of all federal income taxes.

In 2018, the top 1 percent paid a greater share of individual income taxes (40.1 percent) than the bottom 90 percent combined (28.6 percent). The top 1 percent of taxpayers paid roughly $616 billion, or 38.5 percent of all income taxes, while the bottom 90 percent paid about $479 billion, or 29.9 percent of all income taxes.

The top 1 percent of taxpayers (AGI of $540,009 and above) paid the highest average tax rate, 25.4 percent.

References:

  1. https://taxfoundation.org/federal-income-tax-data-2021/
  2. https://taxfoundation.org/summary-of-the-latest-federal-income-tax-data-2020-update/
  3. Internal Revenue Service, Statistics of Income, “Number of Returns, Shares of AGI and Total Income Tax, AGI Floor on Percentiles in Current and Constant Dollars, and Average Tax Rates,” Table 1, and “Number of Returns, Shares of AGI and Total Income Tax, and Average Tax Rates,” Table 2, https://www.irs.gov/statistics/soi-tax-stats-individual-income-tax-rates-and-tax-shares.

President Xi Jinping’s “Great Struggle”

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“Institutional U.S. investors in China better be paying attention to Xi’s speech with regard to ‘Common Prosperity’.” Kyle Bass

69-year-old Xi-Jinping was appointed to a precedent-defying third term as Chinese Communist Party (CCP) leader, but his third term is unlikely to be a charm, states Dr. Richard Haass, President of the Council on Foreign Relation. Xi has arguably inherited, largely of his own making, one of the most difficult economic, health, environmental, and national security challenges.

Attracting capital seen less important than Xi’s ideology.

Xi’s growing dominance has increased concern among global investors that Beijing has abandoned pragmatism for ideology, as the party shifts its focus from economic development toward security. Effectively, President Xi Jinping has put in place a wartime cabinet, warns Kyle Bass, Founder and Chief Investment Officer of Hayman Capital Management, and an ardent critic of China, in a Twitter post.

Bass commented that China’s 20th Party Congress purge not only installed Xi loyalists, but also installed two spy chiefs, and military leaders responsible for China’s ‘reunification’ strategy for Taiwan.

Moreover, President Xi Jinping sacked the only three men with markets experience (the heads of the PBOC, the CSRC, and finance minister). Xi also added the Ministry of State Security head to the Politburo and the Central Committee (Chen Wenqing).

“Chinese Communist Party (CCP) and its state champions have been using US capital markets to fund the development of China’s armed forces.” ~ Kyle Bass

These moves send a clear message to the world that conflict and ‘Great Struggle’ are coming soon, warns Bass. Not since Mao has a Chinese leader stacked his cabinet with hardliners with aerospace, weapons, surveillance, and military expertise. These moves by Xi signal that conflict with Taiwan is now around the corner.

Additionally, the Great Chinese Liquidation of public and private equity is in full swing, according to Bass. Today’s 10-20% crash in Chinese shares is just the beginning of the destruction of western capital invested in Chinese companies.

It appears that Xi’s ‘Great Struggle’ is also meant to inflict maximum pain to those who believed ‘reform and opening’.

Just think about what Henry Fernández (MSCI), Larry Fink (Blackrock), and Steve Schwarzman (Blackstone) have done to retirees with their pushing Chinese investments into everyone’s portfolios, states Bass.

Beijing’s sweeping regulatory crackdown on technology, education, food delivery and property sectors has sent shockwaves across global markets, driving Chinese markets down, Bass says. “It’s ‘unconscionable’ for global fund managers to invest in China.”

The writing was always on the Great Wall, opines Kyle Bass. Here comes the ‘Great Struggle’.

References:

  1. https://www.cfr.org/expert/richard-haass
  2. https://hiddenforces.io/podcasts/kyle-bass-china-hong-kong/
  3. https://www.realvision.com/shows/the-kyle-bass-interviews
  4. https://thesoundingline.com/kyle-bass-predicts-chinese-invasion-of-taiwan-in-next-24-months/

Social Security Administration (SSA) Benefits Increase in 2023

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Social Security Administration announced that the COLA will increase Social Security benefits by 8.7% beginning January 2023 — the largest since 1981. 

Approximately 70 million Americans will see a 8.7% increase in their Social Security benefits and Supplemental Security Income (SSI) payments in 2023. On average, Social Security benefits will increase by more than $140 per month starting in January 2023.

A COLA at the this level is almost unprecedented. There were only three other times since the start of automatic inflation adjustments that COLAs were higher (1979-1981)

The Social Security Administration (SSA) will mail COLA notices throughout the month of December to retirement, survivors, and disability beneficiaries, SSI recipients, and representative payees.

But if you want to know your new benefit amount as soon as possible, you can securely obtain your Social Security COLA notice online using the Message Center in your personal my Social Security account. Your personal my Social Security account gives you immediate access to important information and tools.

According to The Motley Fool, December 2022, the Social Security Administration estimates monthly payouts for an assortment of beneficiaries will be as follows:

  • Average retired worker: $1,681/month
  • Average worker with disabilities: $1,364/month
  • Average aged couple, both receiving benefits: $2,734/month
  • Average widowed mother and two children: $3,238/month
  • Average aged widow(er) with no children: $1,567/month

Here’s what these same monthly Social Security checks will look like once the 2023 COLA takes effect in January:

  • Average retired worker: $1,827 ($146/month increase)
  • Average worker with disabilities: $1,483 ($119/month increase)
  • Average aged couple, both receiving benefits: $2,972 ($238/month increase)
  • Average widowed mother and two children: $3,520 ($282/month increase)
  • Average aged widow(er) with no children: $1,704 ($137/month increase)

For a majority of recipients, a triple-digit monthly “raise” is on the way, explains The Motley Fool.

January 2023 marks when other changes will happen based on the increase in the national average wage index. For example, the maximum amount of earnings subject to Social Security payroll tax in 2023 will be higher. The retirement earnings test exempt amount will also change in 2023.

There are few, if any, federal agencies that impact the lives of the American people to the extent that the Social Security Administration (SSA) does. Millions count on SSA—retirees who worked hard their whole lives, people who are no longer able to work due to disability, and many more.

SSA’s programs touch the lives of almost every person in the nation. SSA employees work diligently to ensure that they receive critical benefits and other services, and it is my honor and privilege to lead them in their efforts.

References:

  1. https://blog.ssa.gov/social-security-benefits-increase-in-2023/
  2. https://www.ssa.gov/news/newsletter/
  3. https://www.fool.com/retirement/2022/10/18/how-much-social-security-checks-increasing-in-2023/
  4. https://seniorsleague.org/week-ending-october-15-2022/