Connect with us

Uncategorized

Warren Buffett says inflation ‘swindles almost everybody’ — here’s 10 ways his frugal habits can help you save money

Published

on

Warren Buffett says inflation 'swindles almost everybody' — here's 10 ways his frugal habits can help you save money

Warren Buffett says inflation ‘swindles almost everybody’ — here’s 10 ways his frugal habits can help you save money

Warren Buffett might have billions of dollars to his name, but unlike other celebrities and financial gurus, he prefers to live life simply.

The investing icon practices what he preaches when it comes to financial discipline, saving and paying off debt.

That pays off during times of financial trouble like this. Consider what Buffett had to say during Berkshire Hathaway’s annual shareholder meeting in May, when he acknowledged inflation was already one of the economy’s biggest problems.

Asked whether inflation “swindles equity investors,” he replied: “Inflation swindles the bond investor, too. It swindles the person who keeps their cash under their mattress. It swindles almost everybody.”

When one of the world’s most successful investors says it’s hard to come out on top in an environment like this, it’s probably a good time to apply some well-tested strategies to tighten your belt. Here are nine ways Buffett’s frugality can help you save and spend wisely.

Don’t miss

1. He lives in the same home he bought back in 1958

Warren Buffett home

TEDizen / Flickr

While many billionaires bulk up on expensive real estate, Buffett originally paid $31,500 for his Omaha, Nebraska, home — that’s about $318,600 in today’s dollars — and he’s lived there for over 60 years.

His home is by no means tiny, however. The 6,570-square-foot, five-bedroom house has had plenty of renovations and additions over the decades and is worth about $1 million today. It’s also protected by fences and security cameras.

Buffett has no plans to move out, calling the house “the third best investment I ever made” in a 2010 letter to Berkshire Hathaway’s shareholders.

2. He rarely takes out loans

Buffett’s one-and-only mortgage was on a vacation home in Laguna Beach, California, that he purchased in 1971, although he certainly had the cash to afford the $150,000-listed seaside property.

He told CNBC that he took out the 30-year mortgage loan because “I thought I could probably do better with the money than have it be an all-equity purchase of the house.”

He decided to use the extra cash on hand for shares in Berkshire Hathaway — the company that brought him billions.

3. He buys breakfast cheap

Warren Buffett eating a burger

@BusinessInsider / Twitter

While Buffett could simply have a personal chef cook him a gourmet breakfast, he often grabs Mickey D’s on his way to work. He says he doesn’t like to spend more than $3.17 on his morning meal.

“When I’m not feeling quite so prosperous, I might go with the $2.61, which is two sausage patties, and then I put them together and pour myself a Coke,” he says in HBO’s 2017 documentary Becoming Warren Buffett.

He continues: “$3.17 is a bacon, egg and cheese biscuit, but the market’s down this morning, so I’ll pass up the $3.17 and go with the $2.95.”

4. He doesn’t splurge on brands

Buffett doesn’t much care for designer suits or the latest iPhone model — he relied on his $20 flip phone for years before swapping it out for an Apple smartphone in 2020.

The Oracle of Omaha avoids unnecessary spending and once said, “Do not save what is left after spending, but spend what is left after saving.”

5. He doesn’t invest with borrowed money (anymore)

“I’ve never borrowed a significant amount of money in my life. Never. Never will. I’ve got no interest in it,” he told students at Notre Dame in 1991.

Although a young Buffett once borrowed 25% of his net wealth to buy shares, he warns investors against repeating the same mistake.

Even skilled stock traders will tell you borrowing to invest can be risky.

6. He buys marked-down cars

Warren Buffett in his car

Andrew Gombert / EPA / Shutterstock

Many billionaires and millionaires keep a collection of flashy sports cars and vintage models in their garages, but Buffett allegedly prefers fixed-up automobiles he can acquire at reduced prices.

He upgraded from his 2006 Cadillac DTS to a Cadillac XTS for just $45,000 in 2014.

“The truth is, I only drive about 3,500 miles a year, so I will buy a new car very infrequently,” he told Forbes.

7. He finds creative ways to save

When Buffett’s first child was born, he converted a dresser drawer into a bassinet. For his second, he borrowed a crib.

“If you buy things you don’t need, you will soon sell things you need,” the billionaire says.

Take a good, hard look at your purchases and figure out where you can cut down.

8. He does what he loves

Warren Buffett playing ukelele

Financial Freedom / YouTube

Buffett credits some of his success to his passion for investing.

“You have to love something to do well at it,” he says, urging people to take the jobs they love instead of positions that look good on your resume.

Even if you can’t quit your full-time job to focus on the things you truly enjoy, you can focus on affordable hobbies. Buffett himself enjoys card games and playing the ukulele.

9. He uses cash, not credit

While most of us prefer the convenience of a credit card for our everyday purchases, Buffett uses hard cash.

He told Yahoo Finance in 2019 that he uses cash “98% of the time. If I’m in a restaurant, I’ll always pay cash. It’s just easier.”

While the method may sound a bit old school, relying less on your credit card can stop you from spending money you don’t have.

Using most of your available credit — or worse, falling behind on your monthly payments — damages your credit score. If you’re struggling to pay off your credit card debt, you might consider bundling it into a debt consolidation loan with a lower interest rate.

10. He still clips coupons

Warren Buffett and Bill Gates at McDonald's

Gates Foundation / Facebook

Buffett’s a sucker for a good deal and once treated buddy and fellow billionaire Bill Gates to a meal at his favorite fast-food restaurant with — yes — coupons.

“Remember the laugh we had when we traveled together to Hong Kong and decided to get lunch at McDonald’s? You offered to pay, dug into your pocket, and pulled out … coupons!” Gates wrote in a 2017 annual letter.

“Melinda just found this photo of me and ‘the big spender.’ It reminded us how much you value a good deal.”

What to read next

  • Get the latest personal finance news sent straight to your inbox with the MoneyWise newsletter

  • A TikToker paid off $17,000 in credit card debt by ‘cash stuffing’ — can it work for you?

  • Bill Gates just won legal approval to buy 2,100 acres of North Dakota farmland worth $13.5M — and people are ‘livid’

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

Uncategorized

American Weed Stocks Are Cheap. They’re About to Get a Sales Bump.

Published

on

However bad the year has been for most stocks, it has been especially harsh for state-licensed cannabis sellers.

In just the past month, the


AdvisorShares Pure US Cannabis


exchange-traded fund (ticker: MSOS), which tracks America’s multistate operators—or MSOs—fell 25%, while the


S&P 500


dropped 7%.

Continue Reading

Uncategorized

How Do Mega Backdoor Roths Work?

Published

on

A mega backdoor Roth is a unique 401(k) rollover strategy that’s designed for people whose incomes would ordinarily keep them from saving in a Roth Individual Retirement Account. The advantage of using a Roth IRA to save for retirement is being able to make tax-free qualified withdrawals. But not everyone can contribute to these accounts; higher-income earners are excluded. That’s where the mega backdoor Roth comes into play. If you have a 401(k) you’d like to roll over, you could use this strategy to enjoy the tax benefits of a Roth IRA without having income be an obstacle.

Make sure you’re taking advantage of every opportunity to maximize your retirement assets by working with a financial advisor.

Roth Account Basics

Before diving into the specifics of a mega backdoor Roth, there are a few things to know about Roth accounts, including Roth IRAs and Roth 401(k)s.

First, these accounts are both funded with after-tax dollars. That means when you make qualified withdrawals later, you won’t pay income tax on the money since you already paid it upfront. This is the key characteristic of Roth accounts and what makes them so appealing to investors who anticipate being in a higher tax bracket at retirement.

Next, your ability to contribute to a Roth 401(k) is not restricted by your income. But it is for a Roth IRA. For the 2021 tax year, you must be within these modified adjusted gross income limits to make a full Roth IRA contribution:

  • Single filers: MAGI of $125,000 or less

  • Married filing jointly: MAGI of $198,000 or less

  • Head of household: MAGI of $125,000 or less

You can make partial contributions above those income limits. But your ability to contribute phases out completely once your MAGI hits $140,000 (if you file single or head of household) or $208,000 if you’re married and file a joint return. For 2021, the full contribution allowed is $6,000 with a $1,000 catch-up contribution for savers aged 50 and older.

Finally, Roth 401(k) accounts are subject to required minimum distribution rules just like traditional 401(k) accounts. This rule requires you to begin taking money from your 401(k) starting at age 72. A Roth IRA, on the other hand, is not subject to RMD rules.

What Is a Backdoor Roth?

A backdoor Roth offers a work-around for people whose incomes are above the limits set by the IRS. When you execute a backdoor Roth, you roll money over from a traditional IRA to a Roth account. This way, you won’t have to pay taxes on your retirement savings in the Roth IRA when it’s time to make withdrawals. And you’re not subject to required minimum distribution rules either.

But there is a catch. You have to pay income tax on the money you roll over to a Roth account. So while you could save money on taxes in retirement, you’re not escaping the tax liability of a traditional IRA altogether.

How a Mega Backdoor Roth Works

A mega backdoor Roth is a backdoor Roth that’s designed specifically for people who have a 401(k) plan at work. This type of backdoor Roth allows you to contribute up to $38,500 to a Roth IRA or a Roth 401(k) in 2021. This is in addition to the regular annual contribution limits the IRS allows for these types of accounts. To execute a mega backdoor Roth, two conditions have to be met. Your 401(k) plan needs to allow the following:

You can ask your plan administrator whether your 401(k) meets these criteria. And if your plan doesn’t allow for in-service withdrawals or distributions, you could still attempt a mega backdoor Roth if you plan to leave your job in the near future.

If your plan meets the criteria, then you can take the next steps to execute a mega backdoor Roth. This is typically a two-step process that involves maxing out after-tax 401(k) contributions, then withdrawing the after-tax portion of your account to a Roth IRA.

Again, whether you can follow through on the second step depends on whether your plan allows in-service withdrawals. If it doesn’t, you’ll have to wait until you separate from your employer to roll over any after-tax money in your 401(k) into a Roth IRA.

You also need to watch out for the pro rata rule. This IRS rule says you can’t only withdraw pre- or post-tax contributions from a traditional 401(k). So if you’re completing a mega backdoor Roth, you couldn’t just withdraw post-tax contributions if your account holds both pre- and post-tax funds. In that case, you may have to roll over the entire balance to a Roth IRA.

Benefits of a Mega Backdoor Roth

There are three key benefits associated with executing a mega backdoor Roth. First, you can contribute significantly more to a Roth IRA upfront this way. For 2021, the contribution limit is $38,500 on top of the regular annual contribution limit and any catch-up contribution limits that may apply.

You’ll need to know the maximum amount you’re allowed to contribute to the after-tax portion of your 401(k). So for 2021, the IRS allows a maximum contribution of $58,000 or $64,500 if you’re 50 or older. You’d subtract your 401(k) contributions and anything your employer adds in matching contributions to figure out how much you could add to the after-tax portion.

Next, you can enjoy tax-free withdrawals in retirement. This is a benefit you may otherwise not being able to get if your income is too high to contribute to a Roth IRA. By reducing your tax liability in retirement, you can help your investment dollars go further. And you may have a larger legacy of wealth to pass on to future generations.

Finally, a mega backdoor Roth IRA would allow you to sidestep required minimum distribution rules. This means that you could retain control over when you choose to take distributions from a Roth IRA.

So who is a mega backdoor Roth right for? You may consider this move if you:

  • Have an eligible 401(k) plan at work

  • Have maxed out traditional 401(k) contributions

  • Are not eligible to contribute to a Roth IRA because of your income

  • Have additional money that you want to invest for retirement

  • Want to leverage the higher Roth IRA contribution limits allowed by a mega backdoor rollover

Talking to your financial advisor can help you decide if a mega backdoor Roth makes sense. And your 401(k) plan administrator should be able to tell you if it’s possible, based on your plan’s guidelines.

Mega Backdoor Roth Alternatives

If you can’t execute a mega backdoor Roth because your plan doesn’t allow it, there are other ways to increase your retirement savings. For example, you could try a regular backdoor Roth instead. This might be something to consider if you still want to enjoy the tax benefits of a Roth IRA but your plan doesn’t fit the criteria for a mega rollover. You could also elect to make Roth 401(k) contributions to your retirement plan at work. This way, you still get the benefit of contributing after-tax dollars and making tax-free withdrawals. You’d be subject to the regular contribution limits and you’d still have to take the required minimum distribution. But that may outweigh the value of tax savings in retirement.

Investing in a Health Savings Account (HSA) is another option. While these accounts are not specifically designed for retirement, they can yield multiple tax benefits. Contributions are tax-deductible and grow tax-deferred. Withdrawals are tax-free when used for eligible healthcare expenses. And at 65, you can take money out of an HSA for any reason without a tax penalty. You’ll just owe ordinary income tax on any withdrawals that are not used for healthcare expenses.

Finally, you could open a taxable brokerage account to invest. This doesn’t necessarily save you money on taxes since you’ll owe capital gains tax when you sell investments at a profit. But it could help you to diversify your investments and there are no limits on how much you can invest in a brokerage account annually.

Bottom Line

A mega backdoor Roth strategy could work well for higher-income earners who want to take advantage of Roth account benefits. There are certain rules that need to be followed to make it work, however, so you may want to talk to your plan administrator or a tax professional before going ahead. Keep in mind also that even if you can’t complete a mega backdoor Roth rollover, you still have other options for growing retirement savings.

Tips for Retirement Planning

  • If you’re saving for retirement in a 401(k) or IRA, pay attention to the fees you’re paying. For instance, check the expense ratios for each fund you’re invested in to understand how much you pay to own that fund on an annual basis. You can then compare that to the fund’s performance to determine whether the fees are justified. Also, consider any administrative fees you might be paying and how those affect your net returns.

  • Consider talking to your financial advisor about a mega backdoor Roth and whether it could be right for you. If you don’t have a financial advisor yet, finding one doesn’t have to be complicated. SmartAsset’s financial advisor matching tool makes it easy to connect with professional advisors in your local area. You can get your personalized recommendations in minutes just by answering a few simple questions. If you’re ready, get started now.

Photo credit: ©iStock.com/designer491

Continue Reading

Uncategorized

Alibaba Is Tumbling. Chinese Tech Stocks Have a New Headache.

Published

on

Chinese tech stocks were tumbling on Monday as two of the embattled sector’s leading players faced fresh fines from market regulators over disclosure rules.

China’s State Administration for Market Regulation announced Sunday a wave of penalties for improperly reporting past deals, in breach of competition law.


Alibaba


(ticker: BABA) and


Tencent


(0700.H.K.) were among the companies fined as a result.

Continue Reading

News

voyager crypto voyager crypto
Cryptocurrency2 mins ago

Voyager Digital is restructuring and preparing for sale

Cryptocurrency broker Voyager Digital said it is preparing a plan to restructure and resume cash withdrawals from the platform According...

Bitcoin oversold Bitcoin oversold
Cryptocurrency10 mins ago

Mike McGlone: Ethereum and Bitcoin oversold

A senior commodities strategist at Bloomberg Intelligence believes that according to technical analysis of the market, leading cryptocurrencies are selling...

next ethereum fork next ethereum fork
Cryptocurrency18 mins ago

Chainlink protocol developers refused to support next Ethereum fork

Ethereum is preparing to switch to PoS, and the community expects forks of the second cryptocurrency to appear on the...

predictit news predictit news
Cryptocurrency23 mins ago

PredictIt news: CFTC shuts down PredictIt prediction market in US

Important PredictIt news: The U.S. Commodity Futures Trading Commission (CFTC) has issued an order to shut down one of the...

is bitcoin mining profitable is bitcoin mining profitable
Cryptocurrency42 mins ago

Is bitcoin mining profitable today? Bitcoin mining difficulty drops for third month in a row

Is bitcoin mining profitable? The difficulty of mining bitcoin began to drop precipitously as the largest-capitalization cryptocurrency’s price fell below...

wazirx news wazirx news
Cryptocurrency50 mins ago

WazirX news: Indian authorities froze assets of WazirX

WazirX news: India’s economic intelligence agency froze assets of Binance-bought WazirX after allegations of money laundering Indian authorities have seized...

us recession and stock market us recession and stock market
Forex2 days ago

US recession and stock market. Thomas Barkin, Fed: Recession is virtually impossible

The U.S. recession and the stock market are closely linked. The key U.S. stock market indices – Dow Jones, NASDAQ...

usd to euro rate usd to euro rate
Forex2 days ago

Euro rate chart: the euro is not going into a trap

No matter how much FOMC officials try to convince investors of the Fed’s commitment to aggressive tightening of monetary policy,...

european stock market news european stock market news
Forex2 days ago

European stock market news: Europe started to lag behind the rise in U.S. stock prices

Current European stock market news: U.S. stock futures rose slightly Friday, helped by tech stocks as investors prepare for the...

dollar rate exchange dollar rate exchange
Forex2 days ago

Dollar rate today live: What is happening to the dollar today?

As you know, the dollar exchange rate has been lagging lately. We all wish wars would end as quickly as...

u.s. stock market capitalization 2022 u.s. stock market capitalization 2022
Forex2 days ago

U.S. stock market capitalization 2022: Morgan Stanley advises against buying U.S. stocks

U.S. stock market capitalization by 2022 leaves much to be desired. The key U.S. stock market indexes – DOW Jones,...

eur/usd chart eur/usd chart
Forex2 days ago

EUR/USD: European Union’s main currency problems

EUR/USD: The pair stayed in the flat, as investors refrained from making big bets before the U.S. labor market data...

asian stock market charts asian stock market charts
Forex2 days ago

Asian stock market charts: Major Asian indicators are up 0.88%

What’s happening on the Asian stock market charts right now? The major Asian indicators are mostly up 0.88%. Some indicators,...

nonfarm payrolls and recession nonfarm payrolls and recession
Forex2 days ago

Nonfarm Payrolls and Recession: July’s NonFarm Payrolls Surprise – What Next?

As you know, nonfarm payrolls and the recession are always closely related. The U.S. Federal Reserve sees its main goal...

stock market today stock market today
Forex2 days ago

Stock market today: Stock Europe closes the week with a fall

Stock market today: In trading on Friday, key stock indicators in Western Europe are showing a decline amid weak financial...

Best US brokers Best US brokers
Forex2 days ago

Top brokers USA

Due to the strictness of the supervisory agencies to the investment market in the United States, traders who choose a...

nasdaq chart today nasdaq chart today
Commodities2 days ago

Nasdaq 100 index rises for third straight week 

The Nasdaq chart today, which reflects the value of stocks of U.S. technology companies, rose 20% from its June low....

carbon emissions and climate change carbon emissions and climate change
Commodities2 days ago

4 Dividend Stocks Offering Double-Digit Yields: An Easy Way To Earn Passive Income

Carbon emissions and climate change are well known, so many global companies are concerned about this factor. Today it is...

China's military exercises near Taiwan China's military exercises near Taiwan
Commodities2 days ago

Situation in Taiwan leads to detours and delays in global transport

China’s military exercises near Taiwan have pushed the situation in the region to the limit. Therefore, some ships carrying liquefied...

historical price of gasoline in the US historical price of gasoline in the US
Commodities2 days ago

Demand for gasoline in the U.S. has fallen below pandemic levels

According to the U.S. Energy Information Administration, average monthly gasoline consumption has fallen below the 2020 level. The demand surge...

oil prices in asian countries oil prices in asian countries
Commodities2 days ago

Saudi Arabia raises oil prices in Asian countries to record levels

Aramco is raising Arab Light oil prices by 50 cents in September. It is a record increase in oil prices...

current electricity prices UK current electricity prices UK
Commodities2 days ago

Current electricity prices UK: Marginal annual energy costs in the UK jump above £4,000

Current electricity prices in the UK are rising fast. According to Investec Bank Plc, the price ceiling paid by households...

oil prices chart oil prices chart
Commodities2 days ago

Oil prices daily adjusted upward

The price of October futures for Brent at London’s ICE Futures Exchange stood at $95.74 per barrel, up $1.62 (1.72%)...

current gold price current gold price
Commodities2 days ago

Current gold price stabilizes after rally

Current gold prices on Thursday morning grew slightly; with the second day remaining above $1,800 per troy ounce; markets are...

futures wheat price futures wheat price
Commodities2 days ago

Futures wheat prices: wheat rose sharply on the Chicago Exchange

Futures wheat prices as well as soybeans in Chicago rose sharply on Thursday. Wheat quotations recovered from 6-month lows on...

daily crypto news daily crypto news
Cryptocurrency4 days ago

Latest crypto news: What happened on the crypto market as of August 4 morning

Daily crypto news: Starbucks will develop loyalty program with web3 tools, Solana developers found alleged culprit of ecosystem exploit, ZBExchange...

staking cardano ada staking cardano ada
Cryptocurrency4 days ago

Bank Sygnum adds support for staking Cardano (ADA)

Swiss digital bank Sygnum announced that staking Cardano ADA is now available to its users.  Sygnum Bank customers can now...

next ethereum update next ethereum update
Cryptocurrency4 days ago

Next Ethereum update will attract more investment from institutions

Next Ethereum update will be a deciding factor in increasing institutional investment in cryptocurrency A Bloomberg Intelligence report suggests that...

news about coinbase news about coinbase
Cryptocurrency4 days ago

Breaking news about Coinbase: Court finds ex-Coinbase employee accused of insider trading not guilty

Breaking news about Coinbase: A federal court in Manhattan has found not guilty a former employee of Ishan Wahi, whom...

inflation in Europe by country inflation in Europe by country
Forex4 days ago

Inflation in European Union: Producer prices in the euro area rose by 1.1% in June and by 1.3% in the EU

Inflation in the European Union: Euro-area producer prices (PPI) rose 1.1% in June 2022 compared to the previous month, when...

Trending

©2021-2022 Letizo All Rights Reserved