Housing and Insurance are better investments than stocks

The stock market has had a bit of a run. Not bad considering that our economy is riddled with woe. Our elected officials do not seem to be able to get along and pass policy that will help us financially heal.

p.s. - I blame both political groups equally.

Now, there is a new tax that imposes a 3.5% tax surcharge on earnings from passive income like stock trades or dividends. As of January 1st, the Medicare Surtax, part of the Health Care and Education Reconciliation Act of 2010, went into effect. This act was not effected by the "fiscal cliff" tax legislation passed at the beginning of the year.

I find these things very perplexing. When I ask people if they are aware of these new taxes, everyone says "no!" Frankly, I would be in the same boat if I did not have an elite financial advisor - and pay attention to what he sends me. Fortunately, I became a client of his before he became a big deal in his industry. Otherwise, I would need to place a minimum of $5 Million under his management to get his level of services today. In other words - he would not take me as a client.

The perplexing bit is that families with old money, the newly wealthy, and super wealthy have access to financial and tax information consulting that the middle class does not. With the same tongue, our government talks about preserving and building a strong middle class in America while undermining the middle class with a tax code that is too complex to navigate without professional help. The type of professional help that the middle class cannot afford.

As many of you know, my career is focused on real estate, and real estate technology. By comparison to any financial investment category, housing is HOT! Prices are rising as much as 5% per month in some areas. Hedge funds like Carrington are buying homes in bulk from banks. They do not care if the homes do not sell because there is such a glut of rental properties available. Rents are rising in every metropolitan area. 50% of consumers took a credit hit over the past 5 years, so it will be awhile before they have the credit score and the money down to buy back into the housing market. The run should last awhile.

Don't leave your cash in the bank. CDs and other secured investments are not paying enough interest, barely hedging inflation.

Insurance may be a good buy right now. You avoid many of the tax implications of the stock market. The interest and growth rates are higher than bank rates. By the way - if you have enough money - buy insurance for your kids and other family members. It is a great way to pass along a financial legacy.

Anyway, as the old saying goes. The rich get richer and the poor get poorer. Don't believe the political rhetoric. They talk a good game, but undermine you with the tax code.

Here is another fun fact - historically, stock values double every 7 years. This has not happened during our investment life - (graduated college in 1989). Rather, our county's debt has doubled less than every 7 years.  Today, our per capita debt is $53,000 for every US citizen and child. When I was born in 1967, it was $1640.  The debt rate doubled between 1966 and 1977. Then again by 1984 (6.75 years). Then again by 1990 (6.25 years)..... you get the picture, right?

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