Cornerstone

The Sound of "Lawnmowers" Creating Wealth and a Work Ethic

OK, so its summertime and your kids are out of school once again.  Concerned about what they'll do this summer?  Let's create something powerful for your kids without them knowing it.  I'll use the "lawnmower" example for boys and the "day care" example for girls.  Let's say that your children were able to earn $4,000 or more during the summer months and throughout the school year mowing lawns and daysitting other young children.  You have them establish a Roth IRA and start investing using Dimensional Fund Advisors Global Equity Fund.

You have them do this for 10 years, in my example, from 14 through age 23.  In that 10-year period, they would have put away $40,000 into their Roth IRA.  Assuming a 9% compounded annual rate of return until they are age 70 (probably retirement age then), your children would have approixmatgely $6,000,000 in their Roth IRA that is totally income tax free when they take it out.

Obviously, you will need to allow your children to spend some of their hard-earned money, but just think of all the lessons you have to show them.  I only wish these kind of savings vehicles were available when I was a young farm boy.  And yes, a work ethic was created within me.  It serves me well today.  I wish your children "Good Lawnmowing and Daysitting".

IRA's, CPA's and DBA's

I love how the financial world has an acronym for everything...I wonder sometime if it's our unintentional way of causing outsiders to view us with awe...or we're to lazy to say the entire word? 

Regardless, it's the DBA in this article that requires some prodding.  I recently completed a client's tax return and noticed that he hadn't received a statement regarding the distribution of his inherited IRA.  Much to my surprise, I learned that the money in the IRA had been rolled into a new IRA investment...you guessed it, no distribution and no provisions for the required minimum distribution. 

The person doing business as (DBA) my clients advisor was clueless and somewhat disinterested about having to "Fix" the "error".   

Make sure your advisor is qualified and comes highly recommended.  That someone owes it to you to understand the operations of the investments being recommended.  Equally important is their responsibility to listen and ask appropriate fact finding questions. 

When the dust settled and the problem was solved, I wasn't sure what the DBA's role was.  He handed the calculation off to me and was off...Maybe he's trying to figure out what business he's in?