Public Safety Retirement Tips (part 2)

This is part 2 of my video series short dedicated to the men and women in public safety with tips and advice for cops, firefighters, and paramedics to retire wealthy.

In the first video we covered how to get your budget in-line, get out of high-interest debt, and begin your retirement accounts, so if you haven’t already watched that video, please pause this one and watch video 1. 

Ok, finished video 1?  Ok, great, onto today’s content.

But first, please make sure you like, subscribe, and comment on my video.  Doing so helps with the YouTube algorithm, thanks.

To start I took the average national pay for law enforcement (patrol), EMT/Paramedics in the EMS setting, and Firefighters from the US Bureau of Labor and Statistics.  Of course, pay varies throughout the nation, this was the just national average, so slight adjustments will need to be made in your own personal calculations.

Nationally Emergency Room RNs make $73,000, LEO makes an average of $65,400, firefighters make $50,850, and sadly for my EMS friends you guys get the least at $39,400.  I think the EMS numbers are skewed as they average both EMT and Paramedic salaries, but that was the best stats they had.

For this video, I averaged all three of these industries together to get $57,237.50 and that is the number I am working within this video.  I am sure you are wondering why I didn’t include RNs, etc.?  Well, I love my nurses, but you guys make far more money and it messed with my averages. 

Then I took the average American household expenses of $5,102.  Don’t worry, this video will NOT be a ton of math, so even my firefighter friends can keep up.

So, let’s summarize, the average front-line public safety worker makes $57,237.50 a year, which is about $4,769 per month, yet the average American household spend $5,102.  Umm, Houston we have a problem.

Of course, the household expenses in many cases include a spouse also contributing to the monthly income.

For the rest of my calculations, I will presume you either have a spouse generating additional income, find ways to live below the average household cost of just over $5k per month, or you have a side hustle making extra money and you now have $500 per month to invest into your retirement.

With your $500 per month, what could, or should you do?  First off, if your employer offers a 401k or similar retirement account with matching funds, I would suggest maxing out whatever their matching offer is.

The employer’s contribution is a certain percentage of the employee’s contribution. A generous employer will match the entire employee amount, making a dollar-for-dollar, or 100%, contribution.

Other companies contribute 50% or less of what the employee pays in.

Let’s use a worker with a salary of $50,000 as an example. If she contributes 6% of her salary into the company 401(k), she will have $3,000 in the plan after the first year. If her employer does a 100% match, she will have $6,000 in the plan. If her employer does a 50% match (or 3% of the employee’s salary), she will have $4,500 in the plan.

Most employers have a max percentage they will contribute to, usually around 5%.  Find out from your HR department what the options are, whatever it is, max out the amount you get from your employer for free, but do not go over.

Sadly, many 401ks have seriously high annual fees and are poorly managed.  Yes, there are some great ones out there, but since they are selected by your employer, usually the employer opts for one that is cheapest for them to implement, which may leave you with a less than optimally performing plan.

Now that you have maxed out the 401k let’s focus on my favorite investment strategy ROTH IRAs.  I have already covered Roth IRAs extensively in a few of my other videos including “Is Meet Kevin Wrong? React: “3 Reasons I Won’t Use the Roth IRA.”  You should check out that video to get a better idea of a ROTH IRA.

In Summary, it is an investment account that allows you to invest money from your paycheck today, and when you retire all of your profits are tax-free.

Using Webull let’s open a ROTH IRA and set up automatic deposits to your account each month of $500.  First Webull is going to be awesome and give you two free stocks just for depositing $100, with one of those stocks being worth up to $1,400.

As long as you continue with your automatic deposits, after 40 years, yes, I know this sounds like a long time, but if you are in your 20s this is typically the earliest you can take from your IRA without early withdrawal penalties.  Anyways, after 40 years you will be invested $240k, but you actually have just over $1.5 million dollars in your IRA all tax-free!

The IRS does cap you at $6000 per year, which comes out to $500 per month you can put in your IRA without penalty.  Keep this in mind but pause on this thought for a moment.

If you can squeeze an extra $100 each month into your investment per month.  After the same 40 years, you will have deposited an extra 88k into your investments, but that 88k brought your retirement account up $300k to $1.8 million.

If you can somehow fight to get $1,000 per month into your investments, once again, after 40 years, your retirement account would now be worth over $3.1 million dollars.

500 – $1,565,201.37 ($240,000)

600 – $1,878,241.65 ($288,000)

1000 – $3,130,402.75 ($480,000)

https://www.investor.gov/financial-tools-calculators/calculators/compound-interest-calculator

Ok, remember how I said you have a maximum of $6000 per year in ROTH IRA.  This is true, so you are currently capped at your $500 per month, but that doesn’t mean you cannot put another $100 or more into a standard brokerage account, all part of the Webull platform you already opened.

Of course, this second part of your investment is taxable, and you do not get the tax-free benefits for this part of the money.

Now that you have your money deposited into your ROTH IRA and your traditional brokerage account, of course, you need to invest in something that will actually make you money.  Just putting cash into the accounts will not generate you any income by itself.

I recommend you invest in funds that track the S&P.  In general, I split my investments this way:

60% to Vanguard Total Stock Market Index Fund (VTSAX)

20% to Vanguard Total International Stock Index (VTIAX)

10% to Vanguard Total Bond Market Index Fund (VBTLX)

Fidelity and iShares also have similar funds that track the same basic investments.

This leaves me with 10% to buy individual stocks that I enjoy.  This also limits any “Stupid” mistakes that I make to only 10% of my portfolio.  For example, my investment in Boeing at $330 a share, which is now trading a $131 a share, I lost about $3,000 there in that one stock alone.  Oops.

A bonus tip, place stocks of funds that pay dividends into your ROTH IRA brokerage account instead of your regular taxable brokerage account.  As dividends are taxes at a higher rate, so putting those earnings into a tax-free account will save you the most.

Public Safety Retirement Tips (part 1)

Today’s video is dedicated to the men and women in public on the front line every day. 

Now, while this video is geared towards these cops, firefighters, paramedics, and nurses, the information here is sound advice for all, and everyone from any line of work can benefit from it.

It doesn’t matter what sector of public safety you choose, going through paramedic school, or fire academy, or police academy, just graduating and getting a job is your number one goal.  I totally get it, during paramedic school, I couldn’t wait for class to be finally over and have the National Registry ‘glitter patch’ on my shoulder.  No one in the class was thinking about their retirement years, only graduation but this is a mistake and one that will follow you for the rest of your life.  But do not fret, if you follow my advice in this video when you retire, you will be a millionaire.

You are going to work an ambulance, fire truck, or patrol car for the better part of the next 25-years before you can retire with a pension.  This is hard work and at the end of it – we all hope there is a comfortable retirement ahead.

Over the years you watch your buddies retire, some live great lives on the golf course, or fishing at the lake, or whatever it is that they love to do. 

Others are forced to sell their homes, not out of a desire to downsize to a smaller home, no this is because they cannot afford the same lifestyle during retirement.  Sadly no one ever taught them how to build financial freedom.

So what can cops, firefighters, and paramedics do to almost guarantee a comfortable retirement?  Follow these simple steps.

But before we get to that, please make sure you like this video, subscribe to my channel and comment down below.  Doing so really helps with the YouTube algorithm. Thanks.

This video is sponsored by Police.Link – a mobile app that provides driver’s license scanning, VIN barcode decoding, GPS positioning, property location checks, and more to law enforcement agencies nationwide.  Check it out at www.Police.Link – a link is in the description below.

As you know I am a volunteer paramedic, a tech entrepreneur, and a real estate investor. What I haven’t already told you is how I grew up in a law enforcement family, my grandfather, dad, and step-dad all retired after long careers as cops and my stepbrother is nearing his 20th year as a police officer.  I have been in Fire/EMS for over 20 years.  So, yea, basically, public safety is in my blood.

Ok, now let’s get to it.  I will list these out as steps to go in-order, but actually many of them you can do concurrently.  Stay to the end of this video for a few tips to accurate this process.

Step #1: Budget

The first step is to create a budget, yes, yes, I know nobody wants to make a budget, but making a budget does not need to be difficult.  Gone are the days of having to memorize Excel spreadsheet formulas, no, now there are great free and inexpensive budgeting tools.  A simple one to use is Mint by Intuit, you know the guys that make TurboTax and QuickBooks, yes, those guys.

A budget puts you in control and tells your money where to go, instead of you wondering where it all went at the end of the month.  It is proactive instead of reactive. Budgeting is a process and by mastering this process you unlock the door to your financial future

Don’t worry, you’re not going to get your budget right the first time.  Just relax.  If you notice you did not budget enough in a specific category, say maybe groceries for example.  Then next month increase it a little.  But you must remember your paycheck is finite, so what you give to one category you must take from another category.

It doesn’t matter how much you make, whether you are pulling in extra overtime, or have a side-hustle where you make extra money.  You still need to budget.

So you’ve got your budget, right?  Ok, cool, onto the next step.

Step #2: Get out of debt

Now that you have your budget, you know where your money goes in and goes out each month.  You need to allocate as much of your income as possible to pay off high-interest credit cards and vehicle payments.

Now is NOT the time to be investing large sums in the stock market.  Think about it.  On average the S&P returns between 7-10% per year annually if you invest for at least 10 years.  But your credit card interest is probably like 15-30% per year.  Just paying off your credit cards now, you instantly make an extra 8-20% because you did not waste it on interest payments.  This is by far the biggest obstacle to overcome for most people, but it really is not difficult.  It just takes time and dedication.

There are many strategies to getting out of debt.  One is called the snowball – in summary, you take the credit card you owe the least on and put as much money towards it each month.  The goal is to get it paid off, while at the same time all of your other cards just pay the minimum monthly payment.  Once that first card is paid off, take the amount you were paying on it, and add that to the next lowest card.  Rinse and repeat.

Another strategy is to work on paying off the cards with the highest interest rate first.  EX: If your Capital One card has 19% interest, but your Amazon store card has 26%, focus on the 26% card first.

Either strategy can work, choose one that works for you.  The first has the emotional benefit of seeing more cards go to a $0 balance quicker.

Step #3: Emergency Fund

It is imperative that you set aside in a savings account a minimum of 3-6 months cash reserve to cover all of your expenses.  Yes, I know, this is easier said than done, so start off with a savings of $1,000.  Then work your way towards one full month’s of your expenses, then two-months, three-months, etc.  With the goal of getting 6 full months of all of your expenses saved up.

This way if something unexpected happens, like losing your job, or getting hurt off-the-clock, etc., you can pay your bills without going past due until you get back on your feet.

Step #4: Build your credit

Many underestimate the power of having good credit.  Having a good score makes the difference in getting good interest rate on your house mortgage, your car loan, it also impacts your insurance rates and in some cases also your career options.

Now that you have completed step #2, getting out of debt.  Use your credit cards wisely.  Keeping less than 10% of your total available balance used at any time.  For example, if you have one credit card with a $10,000 limit, then you should not charge more than $1,000 on it.

I know, you are saying, “what?  Only $1,000?”  – yup, do not charge more than $1,000 on it, and in fact, you also need to pay it down to zero each month as to not waste money on interest.  Remember, we are trying to build wealth for you, not the bank.

As you expand your credit you can take advantage of those zero-interest programs, you know the one that gives you 12-month, 18-month, 24-month, you get the point.  But you still need to keep your total utilization to less than 10%.

This step really requires a full video, I will work on one to cover all the details of building a solid credit score.

Step #5: Start your retirement accounts

As I covered in my video “Starting at age 16 – How to become a millionaire with only $16 a day in the stock market.” And in my other video “Response to Meet Kevin: 3 Reason I Won’t Use the Roth IRA’ it is vitally important for you to get your retirement accounts set up as early in your life as possible and to set up automatic investments.

A great option for getting started is to use Webull stock trading app, as they give you two free stocks to start out, with one of them being valued up to $1,400 when you open your account and deposit $100.  I love their app because they also allow you to buy and sell after-hours, so when a great deal on a stock is available you can snap it up with Webull before anyone else.

Also, If your employer has a 401k or SIMPLE IRA with matching, you would be a fool to not take advantage of this.  You should max this out without question because the money they contribute is free money.  In fact, in this case, you should start this even if you are still in debt as the free money your employer is giving is just too good to pass up.

Bonus Optional Step: Start a side-hustle

Like I said earlier in the video, your paycheck is finite.  Of course, you can pick up some overtime, get promoted, or get hired at a different department for better pay, but you are still limited to the pay per hour.

Create a side hustle that generates extra cash.  This could be anything from producing YouTube videos, writing a book, selling real estate, teaching/coaching, etc.  Honestly, this is limitless.  Pick a subject you enjoy, learn as much as you can about it, then find a creative way to make some extra cash each month.

For me, my book America Hijacked brings in $500-1,000 a month in revenue.  Some months are better than others, some pretty much suck.  But it is continuous money each month, auto deposited from Amazon.

While I’m on that subject, if you enjoy politics, or at least enjoy learning how both parties have lied, cheated, and stole from the American people, you should grab a copy of my book.  A link is in the description below. 

Should I make a whole video dedicated to how to create a side-hustle and generate an extra $500 a month cash?  If so, comment down below and tell me what ideas you would like me to cover.

Bonus Tip: How to accelerate this process

While I listed the five items as a ‘step-by-step’ to be done in order, you actually can do most of them at the same time.  Creating your budget with a service like Mint only take you 20 or 30 minutes to get started.  Then open a savings account with an automatic deposit of $50 or whatever you can afford per paycheck into it.  This is to build up your $1,000 first milestone.  Open your Webull stock trading account and deposit $100 in it today, as they are going to give you two free stocks with one stock valued up to $1,400.  That is just free money waiting for you.

While you are building your emergency fund, max out on all retirement accounts that have matching from your employer. 

Now you are ready to start coasting.  Knocking down your debt and building your credit concurrently.

Depending on your debt-level within a year or two, you should be debt-free from your credit cards.  Now is the time to go full force into your retirement investments.

Thank you very much for watching, I hope you enjoyed this video.  Please make sure you like, subscribe, and comment on this video.  Doing so really helps with the YouTube algorithm.


Is Meet Kevin Wrong? React: “3 Reasons I Won’t Use the Roth IRA”

I want to respond to some of the statements Meet Kevin made in his video ‘3 Reason I Won’t Use the Roth IRA’.  First off, I want to make it clear I am a big fan of Kevin, and I usually have mad love for his content.  That being said, I cannot let my appreciation for him cloud my judgment.  There is something about this video that just rubbed me wrong, and I need to set the record straight. 

I’m sure I will piss off some fanboys, thinking I am just hating on him, but making money requires attention to detail, and no sugar-coating will change the facts. 

Of course, we are all just dudes on the internet sharing our opinion, and with that in mind no one is right or wrong . . . . well, except for me, because I am always right.

This is so true about schools not teaching students about finances.  Heck, I remember back in elementary school, going to “Enterprise Village,” a program designed to teach students to be good little consumers.  Without going into a long-winded story, I will summarize it quickly, and then we can get back to Kevin. 

The concept is each student is given a job with one of a dozen or so businesses; for me, I worked as a bank teller at Barnett Bank.  Each student is given a paycheck & checkbook (I guess now debit-cards).  Throughout the day, you leave your job and interact with other students working at other businesses and purchase products or services.  Any items you purchase with your virtual money, you get to take home and keep.  In my case, none of the items for sale were of any use to me, so I decided to save my money.

The stupid thing was, this was against the rules.  All students must spend their money by the end of the day; for this reason, I was given a low grade for the assignment for not spending my money in the economy.  

This is hardly a good way to teach students to be financially responsible, it only teaches you to spend all your money, and when you run out of money, charge it on a credit card instead of saving and investing your money.

Ok, enough of me complaining, now back to Kevin.

[after main vid]

Ok, here is where I have an issue with Kevin.  He is presuming the status-quo will continue, and I think it is more reasonable to conclude the opposite is more likely, and here is why.

Historically, the Top Federal Tax Rates have been on a decline since their highs in the 1960s, with a few blips up and down, they have averaged about the same now for 30 years. 

After the great depression, we saw an almost 40% uptick in the Top Federal Tax Rates from 24% in 1929 to 63% during the Great Depression, and this steadily increased, reaching 94% in 1944.

In 2020, due to the [illness that will remain nameless, so YouTube algorithm doesn’t screw with my video], we see historically high unemployment and the most substantial financial impact on small, medium, and large businesses since the great depression. 

As we all know, this has spurred the US Congress, the US Department of the Treasury, and the Trump Administration to pass unprecedented stimulus and financial rescue packages to help the people and businesses weather this storm.  Overall, I agree with this and feel it was necessary; however, the downside is an ever-expanding national debt.

The debt, in and of itself, is not the primary concern I have here.  The more significant concern I see is the growing sentiment for the Democratic Socialist platform, encouraging both political parties to pass ever-increasing spending bills.  I am not here to argue the nuances of the pros and cons; this video is strictly about facts and finances.  Once you turn on the faucet of free, easy money, it is tough to turn it off. 

This is not a right vs. left issue, in-fact if you want to read about how both political parties have lied, cheated, and stole from the people, check out my book America Hijacked.

Ok, now, back to my reason for disagreement with Kevin.

With all of this in mind, I feel there is a strong likelihood over the coming decade or two; Congress will be forced to raise taxes to cover the costs of ever-expanding social programs.

With Kevin’s idea of 1031 Exchanges for real estate, yes, currently, this works excellent for legal tax mitigation.  However, there is no guarantee this will remain the same for decades to come.

I can very quickly see a political talking point from someone like Representative Omar (D-Minnesota) claiming that “evil landlords are getting rich off the backs of the people,” and the “1031-loophole” needs to be removed.

In the short term I see a lowering of payroll taxes coming out in President Trump’s second term, yes, I am pretty sure he will be reelected. 

However, in the long term, 15-20 or more years, we can reasonably deduce that payroll and income taxes will either stay the same as they are today or get higher, not lower and you quickly lose the benefits Kevin outlines.

Congress can easily change the rules by saying, “after today new real estate purchased cannot use a 1031 exchange, or new IRA accounts cannot be tax-free, or new investments in Opportunity Zones no longer qualify”.

Yes, those would all suck, but from a legal perspective, and of course, remember, I’m just a dude on the internet, not a lawyer.

Whereas, with a ROTH IRA, it would be almost impossible for a law to get passed that, retroactively changes tax law to force you now to pay taxes on the money in your ROTH IRA. 

It would be easier to say no NEW transactions can take place tax-free.  

But it would be nearly impossible for Congress to go back and say “hey, senior citizens, remember the money you put in that Roth IRA that we told you for the past 40 years was tax-free, well j/k . . . now pay up”.

Such a deal would be contested legally in the courts and, just as importantly, would be political suicide for any party.

So, with all of this in mind, what am I doing to protect my finances?  Honestly, I am doing everything.  I am buying real estate, holding and renting these properties, investing in the stock market, and investing in tech startups.

While my general goal is not necessarily to sell any of my properties, a 1031 Exchange is the perfect option should I choose to divest some of my portfolio and transition to different properties.

I also max out my Roth IRA Contribution each year; this is currently set at $6,000 if you are under 50 years old.  I have a SIMPLE IRA with one of the businesses I own, and I participate in an HSA.  Then lastly, I have a few normal taxable brokerage accounts as well. 

I have a mixture of tax-free, tax-advantage, and normal tax investments.

This way, no matter how the laws change, I can take advantage of them.  If a bill comes out giving you a tax break on tax-advantaged accounts I can use it.  If there is a different law for normal tax investments, I can use that one as well.

No options are perfect, but spreading the risk across multiple tax strategies, I feel, is the best.

Thank you very much for watching, please make sure you like, subscribe, and comment on this video as it helps with the YouTube algorithm.  Also, please check out my book America Hijacked and last, checkout Webull with the link in the description below to use what you have learned about investments to open a brokerage account today.  If you deposit $100 into the account, Webull will give you two free stocks, with one of them valued up to $1,400.

Lastly, make sure you check out Meet Kevin if you haven’t already.  His channel is linked in the description.  Also, checkout his online video courses, from what I have heard they are pretty decent. I hope to make a fully review of his course work in a coming video.

Thanks again, and I’ll see you on the next one.

HOW TO INVEST $100 in 2020 (THE BEST WAY TO BECOME RICH)

Let’s say you have $100 to invest, where is the best place to put it to work for you?  I know everyone else on Youtube has already made videos on how to invest your $1,000, but very few over what to do with $100 – an amount that just about everyone here in Youtube-land can get their hands on.  – Legally, get their hands on that is.  Don’t do anything stupid like rob a bank or something, remember cash destroyed with a dye pack cannot be used to buy stocks.

With your first $100 invested you can easily turn what you learn here into $1k, $10k, $100k, $1 million, or more. This video is geared for the beginning investor so I will take it step-by-step, but even more, experienced investors will still get a tip or two out of this video, so please watch to the very end of the video as YouTube grades content providers on how long you watch the video, and if you click like & subscribe, thanks.

A quick reminder: I am not a lawyer, CPA, etc., I have no licenses in finances or the law, everything in this video is my opinion and is for entertainment purposes only. So check with your CPA.  Sorry for the annoying disclaimer, but the lawyer I have tied up in the basement reading these scripts made me say it.

Now, let’s get to it.

Even after two sold weeks of gain, the Dow is still down almost 7,000 points since late February, wiping out trillions of dollars in wealth as the world faces the biggest health crisis and economic shock in decades. And while there could be more pain ahead, history is a clear guide, that people who take advantage of big market crashes like this to buy are the ones who profit in the long term.

It’s understandable if your first thought was to start by taking your $100 and buying small amounts of stock. After all, there’s a lot of compelling evidence that investing in stocks is the best way for regular people to attain financial independence. But a lot of people don’t understand how important it is to also have a strong margin of safety with their finances. For most of us, the best way to get that margin of safety is by having cold, hard cash.

If you don’t already have three to six months’ worth of living expenses set aside — maybe even more if you have a family and a mortgage — then the best place for you to start with that $100 per month is putting it in a high yield savings account as an emergency fund.

I know this really isn’t what you were expecting, but it is solid advice.

Now, let’s presume you already have an emergency fund set aside.  Then, in this case, where should you invest your money?

As you guys know, I love real estate investments, but $100 is not exactly going to get your very far purchasing a property.  Of course, I did purchase an apartment building with $0 down out of my pocket well . . . actually I did pay $900 for a commercial building inspection, but aside from that, I put $0 down out of pocket.  In fact, the $900 was on a credit card with 0% interest for 1-year and pays me 3% cashback.  Should I make a video explaining how I did this?  If so, leave a comment below telling me you want to see this.

Ok, now, back to what to do with your first $100. 

To invest you first need a brokerage account.  I highly recommend Webull (a link is in the description below) as they give you two free stocks to get you started, with one of those stocks being valued up to $1400 as long as you deposit $100.  Which is perfect as today we will be investing our first $100 in Webull.  If you use the link in the description below to open your Webull account, they will give me the same two free stocks they give you. It costs you nothing extra but helps support me and this channel and I really appreciate that.

Of course, right about now I am sure people are screaming at their monitors saying “Steven, you’re wrong, $100 invested in stocks will never make you rich.”  Well, ok, those [donkey] are not completely wrong here. 

Yes, if you ONLY invest a single $100, once, and do nothing else, you will not make it rich.  I guess hypothetically you could have purchased Amazon in the summer of 1997 for around $1.50 a share. In that case, your original 66 shares, after multiple stock splits would be worth approximately $1,908,894.24, so yes, yea, I guess, for that one dude that was lucky enough, you could turn $100 into nearly $2 million.

But no, the goal here with your first $100 is to give you actual real-world experience buying, selling, and holding stocks.  There is no better life lesson that buying a stock and watching it immediately loose value the next day and the discipline it takes for you to map out a strategy and invest in the long term. 

Long term investments is where money is made, just ask Warren Buffett:

“You can’t produce a baby in one month by getting nine women pregnant.”

In other words, some things just take time and can’t be rushed.  He followed that comment up with this: “If you aren’t willing to own a stock for ten years, don’t even think about owning it for ten minutes.”

Choosing your stocks can be the most difficult, or the easiest part of investing.  It depends mostly on how well you are at making decisions?  Do you agonize for hours or days on choosing “the perfect stock”?  If so, honestly, get over yourself.  I do not care who you are, no one is perfect in their investments.  Some will go up, some will go down. 

The best suggestion I can give here is to choose an Exchange Traded Fund (ETF) in a market you understand.  What is an ETF, you are asking?  Simply put, an ETF is a collection of stocks held and managed on your behalf.  It is similar to a mutual fund, however, unlike a mutual fund, an ETF can be purchased or sold by you any time of the day, whereas a mutual fund typically you can only purchase in the evening.  Also, the ETF usually holds its assets for long term investments.  Honestly, the differences are so vast I really should make a video on ETFs vs Mutual Funds, but for today, just know that you can purchase 1 stock of ‘X, Y, Z ETF” and have your investment spread over dozens or hundreds of individual holdings the ETF invests in.

For example, as of today, you could purchase a single share of Global X Cloud Computing ETF for $16.70.  You now own a very small percentage of Alibaba, Microsoft, Amazon, Box, Dropbox, Salesforce, Twillo, Paycom, Akamai, LogMeIn, Netflix, Shopify, and more.

The beauty of the ETF is if one company does poorly, for example, Alibaba is hurt due to the worldwide pandemic (currently down 3.65% YTD), Amazon does better (it is up 30.43% YTD) this all keeps your investment in the green.

Just remember, stocks go up and stocks go down – don’t get me started on how my 15 Boeing shares are doing after buying them at $320 a share, of course, I did snap up another 10 shares of Boeing when it dropped to $100, which helped take some of the sting off, but it still hurts.

Another benefit of an ETF is allowing you to purchase into a company that you cannot afford a whole stock of.  EX: Amazon is currently at $2,408.10 to purchase a whole stock, but if you but the example I just gave you would have a small percentage of Amazon in your portfolio.

There are tons of ETFs out there, for multiple different markets.  Choose the one you are interested in.  Do you like gaming, choose an ETF that has holdings in gaming companies you like.  There are ETFs in every industry you can think of from real estate, cell phones, computers, etc.

Choose whichever works best for you, remember the goal here is to not necessarily pick the “next Amazon” stock, no, instead you are learning a foundation that will serve you well for the rest of your investment life.

Without getting too far into the weeds here, there are a few things to think about regarding long-term tax ramifications.  Of course, I cannot give you legal advice, remember, I’m just a dude on the internet, you should definitely check with your CPA.

You might be best served by opening a ROTH IRA, which in simple terms means you pay you to invest your after-tax money (the money you get in your paycheck after taxes are already taken out by your employer) into a special retirement account.  All earnings made from this investment grow tax-free.  I have a whole video on Roth IRA you should check out. 

In quick simple terms if you put $100 in a ROTH IRA today and when you retire it is worth $1,000, you pay no taxes on that $900 worth of profit.  Whereas, if you purchase the exact same stocks in a normal brokerage account, everything else being equal, you would owe taxes on your $900 when you cash out.  And I don’t know about you, but I hate paying more in taxes than that I am required to pay.  Like my old RDC said in Navy Bootcamp, “work smarter, not harder recruit!”

Luckily Webull allows you to open a ROTH IRA account, easily, without any extra fuss.

Thanks for watching, I really hope you enjoyed the video.  Please make sure you like & subscribe.  Let me know what free stocks you get from Webull by commenting down below. 

Why SBA PPP and EIDL Stimulus Package Failed – How to Fix!

Day after day, news is released that shows how Congress, SBA, and Treasury completely botch the rollout of this stimulus package.  I only partially blame Treasury and SBA, as they are just implementing what the Congress passed in the Coronavirus Aid, Relief, and Economic Security Act, or better known as the CARES Act.

However, this video is not a blame this guy vs the other guy.  I only want to bring up discussion on some issues with the PPP and EIDL in hopes that we as a country can learn from these mistakes and better handle a large-scale disaster.

Part of my analysis is in hindsight, and I know we have all heard the phrase: “hindsight is 20/20.”  Yet, I still think much of this was so obvious at the beginning, there really is no valid excuse.

I know most of my viewers have been following along, but for anyone new here let me give you a quick 30-second overview. 

Congress passed the CARES Act which has multiple stimulus programs wrap into this piece of legislation. 

Today I will be focusing on the Payroll Protection Program (PPP) and the Economic Injury Disaster Loan (EIDL).  The PPP is the “free money/forgivable loan” program you hear about that gives a small business 2.5 months of payroll money to help keep Americans employed. 

Then there is the EIDL and this is a low-interest emergency loan for small businesses to help with other business costs.  This was originally supposed to give all businesses a $10k free grant within three days to any business that applied for the loan, but that never materialized.  See my other video about the grant money.

Ok, now with all of that out of the way, but before I get to today’s update.  Please make sure you like and subscribe to this channel.  I know it sounds like I am begging, and yup, I am!  By liking, subscribing, and commenting on my videos it really helps with the YouTube algorithm.  Thanks

No matter how well-intentioned the members of Congress were, they are all career politicians, and most have never worked in, or owned a small business.  I am not talking about their side hustles where they sell books or go on speaking tours, no!  I mean real small businesses: laundromats, gas stations, hair salons, small restaurants, plumbers, electricians, family-owned retail stores, etc.  Obviously, this list could go on forever, but you guys get the point – and because they have never been in this situation, they do not really understand small businesses.

Couple their lack of understanding of small businesses and add on top of that the inefficiency of government bureaucracy and you have a perfect recipe for a cluster [you-know-what].

A little mentioned fact of the $350 billion dollars allocated to the PPP loan.  Banks were paid a commission of between 1- 5% of the loan value, which equates to between $3.5 – $17.5 billion dollars wasted, not going to small businesses. 

Look, I am an entrepreneur, and I have no problems with a business (even a bank) making money.  But this program never needed to loop the banks into this process to the level they did.  Trust me, in just a few minutes I will go over a nearly foolproof plan that would have been much easier to implement and would have fixed all of these problems.

Not to mention the largest elephant in the room.  $350 Billion dollars is supposed to cover 2.5 months of payroll, right?  Hmm . . . well, Houston we have a problem.

Per the IRS there were $5.5 trillion dollars in payroll for the calendar year 2017 for individuals making less than $250,000 per year.  If you divide that by 12 you get a monthly payroll nationwide of $485.5 billion.  So, the $350 billion allocated would be spent in about three weeks, not the 10 weeks it is proposed to cover.  

I know, you are going to say “but wait, the PPP is only for small businesses, not big corporations.”  Ok, true.  Based upon IRS statistics 50% of persons employed in the US work for a small business, so even if you half the numbers I just mentioned, you only get about 5.5 – 6 weeks covered with the PPP, not the 2.5 months.

This whole stimulus package is like an ice-cream sundae of governmental incompetence.  First, a few scoops of ‘ain’t got a clue flavored ice-cream’, add some bureaucracy sprinkles, then finally cover the whole mess in abuse and corruption flavored hot fudge.  Sounds yummy, right?

I want to make it clear this is not a Republican vs Democrat issue, this is an issue of the ruling class in DC, not understanding Main Street.  Of course, both sides played politics, but come on, they are politicians, what do you expect?

Ok, so I have complained enough.  If I, a non-politician, businessman were in charge, what would I have proposed instead?

I would have had Treasury take the data from IRS 940: Employer’s Annual Federal Unemployment (FUTA) Tax Return, specifically line #3 “Total payments to all employees” and used this number to know what the annual payroll spend of each business is. 


For example, if a business has an annual payroll spend of $482,653, divide that by 12 to find a monthly spend of $40,221.08. 

Ok, so far this is similar to the current PPP, here is where it gets improved:

Instead of the current PPP forgivable loan that must be applied for through a local bank with all of the complexities of a loan process.  A simple online verification process where a business enters the numbers from his 940 (or 941 for Quarterly) and his banking routing number information into the SBA website.

This online portal could print out a verification sheet showing the bi-weekly, monthly, or quarterly payments the business makes to the IRS as part of their payroll tax withholdings.  This would list the transaction amounts to the penny.

With this piece of paper, the business owner can take that information to their bank.  The bank would be paid a flat $1,000 fee to “verify” the business checking account on the paper is the same bank account used for employee payroll and cross-reference the exact amounts listed on the single-page verification document.

This verification process should take no more than 10 to 15 minutes at the bank.

Once verification is made, the bank could log in to a secure online portal at the SBA to “ok” this business.  Within 24 hours Treasury could begin depositing weekly amounts into the business’ account to cover payroll while the country is on lockdown.

This entire process, should, start to finish take the business no more than an hour or two to complete and would have had money flowing in days, not many, many, weeks like the current PPP.  With many businesses 3+ weeks into the current process, still with no money.

As long as businesses keep their employees on payroll (even if the business is shut down to customers, payroll continues) then the money is a grant.  If the business mass fires employees, the money is a loan and paid back in full within 1-year.  The goal is to keep people employed.

This solution would fix the payroll issue, but of course, businesses have many other expenses beyond just payroll.  This is where the EIDL comes in.

First off, the $10,000 grant should be removed and not be part of this process.  With my proposed idea it is not needed.

EIDL should have been awarded as a loan based upon the business’s 2019 tax returns.  SBA could have taken the US Corporation Income Tax Return form 1120 from the IRS, read line 11 for Total Income, divided that number by 52 to find an average weekly income for the business.

SBA could utilize the same bank verification process as the PPP, in-fact if a business uses the same checking account number for the PPP and the EIDL then they can combine the verification into a single step at their bank.  If they use different checking accounts, then a second verification paper would be required.  Once again, this should only take about 10 minutes with a teller at your bank.

Once verified, SBA would begin weekly deposits into the business bank account for as long as the nationwide shutdown takes place.

The EIDL would be a LOAN, not a grant, but with a 30-fixed rate at 1.75%, payments delayed for 1-year starting on the date of the last weekly payment.  Businesses could opt-out at any time.  The loan would have the same protections for the government as IRS tax liens and would not be forgivable in bankruptcy to prevent abuse.

As long as a business is opted-in, they do not need to reapply each week.  The auto-deposits continue until either the nationwide shutdown is removed, or the business chooses to opt-out. 

The EIDL would not continue past the last day of a nationwide shutdown, even if a state or local city chooses to keep lockdowns in place for a longer time.  It would then be the responsibility of the state or town to offer loans/grants to businesses for this additional time.

These two programs, as I proposed would have simplified the process, removed processing costs, and most importantly shorten the time from the beginning of the pandemic to people getting the money they need.

Of course, no program is perfect, this will be expensive and generations to come will be paying for this in the form of inflation and higher taxes, but I argue my proposal would be lightyears ahead of the current program.

This then brings me to the topic of who pays for this, do we leave it for our grandchildren or do we have other plans? 

Some in the US Government and a few in the media have been talking about making China pay for these costs which collectively will be more than $5 trillion dollars in losses by the US alone.

It is very clear that China and the WHO covered up and downplayed the initial situation of the COVID 19 outbreak in Wuhan, China. 

Personally, I do not think, China released this virus on purpose, it appears to be an accident, and they originally thought they could contain it.  If instead, they would have been more open and honest about the infection and transmission it would have seriously cut the death rate and financial losses worldwide.  Their negligence contributed to the loss.

Currently, our national debt sits at around $24.4 trillion as of March 17, which I do not think includes the current stimulus costs and projections.  Out of this $24.4 trillion, China holds about $1.1 trillion of that debt.  The idea that is bouncing around is to have the Congress pass a bill to ‘write-off’ the balance we owe to China as part of a settlement of the costs of the COVID outbreak. 

While I am not defending China, my issue with this proposal; I feel this may cause more problems in the long run.

For example, would this cause other countries to fear to invest in the United States if there is concern that the US could just writeoff that debt at any time and refuse to pay a specific country for political reasons?

Thanks for watching, I really hope you enjoyed the video.  Please make sure you like & subscribe.  Don’t forget to check out the webull link and grab your two free stocks today!

Get your $1 Million Dollar Stimulus Check

As millions of Americans are hitting the refresh button over and over again on their online banking app, desperately hoping to receive their $1,200 stimulus check today, a new proposal would give you $2,000 a month for the next year.  Yes, that is right, $2,000 per month.

Two House Democrats want to enhance the $2.2 trillion stimulus package known as the CARES Act. Representatives Tim Ryan (D-OH) and Ro Khanna (D-CA) have introduced new congressional legislation called the Emergency Money for the People Act.

The concept is to provide $2,000 per month to Americans who have been impacted by the COVID-19 pandemic. 

Basically this would work like this:

  • Eligible Americans would receive $2,000 in cash per month guaranteed for at least six months, up to 1-year
  • These monthly cash payments would continue until the employment to population ratio for people ages 16 and older is greater than 60%.
  • The monthly cash payments would not count as income.
  • The monthly cash payments would not adversely impact anyone’s ability to qualify for an income-based federal or state assistance program.

So this is basically, once again, tax free money, being printed by the Fed without much concern to the long-term economic impact this will have to inflation, but that is another video.  Just think for a moment there are about 203,508,504 people in the US over the age of 16.  Multiply that by $24,000 and this proposal now spends $4,884,204,102,240.00.  This would put the national debt to about $28 trillion.  This would be insane and would drive the costs of everything through the roof, but that is not what I am going to cover in this view.

No, today I want to focus on what you could do with this stimulus money if it was deposited into your account.  I will base this on a married couple pooling their money, which means the couple could get $48k in free money in this hypothetical situation.

Well you could spend it, remember this is a stimulus check right?  A brand-New 2020 Mercedes-Benz C 300 AWD 4MATIC would be $48,475.  Of course there are taxes and a few other fees, so you probably would need to kick in a few grand cash to get this car.  Or you could tax advantage of Mercedes-Benz 0% interest option, put $45k down and finance the rest?

But, no, that’s probably not a wise financial decision.  As nice as a new Benz would look sitting in the driveway, I wouldn’t recommend this. 

No, I think the wise idea would be to invest.  So this got me thinking.  If you and your spouse take the $48,000, what could you invest it in and how long would it take to get $1 million dollars?

Well you could put it in your savings account and if you are LUCKILY to have a high-interest rate savings account of 1% (most are WAY less than this) it would take you 306 years to earn just over $1million dollars  1,008,281.07 to be exact, but honestly, who cares.  Because, I don’t know about you, but 306 years seems a little long to wait and anyone that knows me personally, knows I am NOT that patient.

Ok, so many a high-interest CD, you know those Certificates of Deposit your grandmother gets at the local bank?  Well, the best rate I can find today online is 1.85%.  It may not sound like much but that extra .85% did shave off 140 years off your time horizon.  Now it would only take 166 years for your $48,000 to equal $1,006,404.97.

Ok, ok, I know, that is still WAY TOO LONG. 

So how about some more realistic ways?

How about the stock market?  If you look back at the S&P over the past 100 years, the S&P averages a return of a little over 8% per year.  Now of course there are good days and bad days, but that is the average of the past 100 years.

Now if somehow you magically could step into a time machine and deposit $48,000 into a trading account how far back would you need Doc Brown to set the Delorean?  You would need to go back to 34 years, back to 1986.  Then if you were smart enough to cash out all of your stocks the beginning of February, 2020 (come on now, you have a time machine, no excuses), you would have $1,131,226.50. 

Of course, I know you do not have a time machine, I have one, but I only share it with my friends.  But, we are friends right?  My best of friends always smash the like button for the YouTube algorithm.

If you are one of those that didn’t smash the like button, I guess your only option would be to buy the stocks now and cash out in the year 2054. 

Using this same plan of putting your $48k into the S&P, if you make one slight change and also add $250 per month, every month, as part of a Roth IRA plan.  Check out my video on Roth IRAs, you can knock five years off your wait and now cash out with just over 1 million dollars around year 2049.

Double that to $500 per month extra into your Roth IRA and you can knock off an extra 5 years.  Now we are down to 2044.

Yea, I know 24 years is a long time, but think of it this way.  If you are 16 now, which is the lowest age eligible for this hypothetical stimulus plan you would only be 40 years old and a millionaire.

No work, easy, free work from the government.  You were smart and took their free money and turned it into a nice retirement for yourself.  Come on, you know your dumb friends will blow the money every month and have absolutely NOTHING to show for it at the end of the year.

In summary.  If you spend your money, you will not be a millionaire when you retire.  If you put it in a savings account . . . well in 306 years you can be a millionaire, a CD remember that was 166 years.

But if you are smart you invest it in a good S&P  fund anywhere from 25’ish to 35 or so years and, boom you are a millionaire!

In closing, do I really think this will get passed by the House, a Republican lead Senate, and then finally signed by President Trump, well . . . no, not really, but it still makes for some good time thinking about it.

Thanks for watching, I really hope you enjoyed the video.  Please make sure you like & subscribe.  Don’t forget to check out the webull link and grab your two free stocks today, then you can start putting your $48k in webull as soon as this gets signed into law 🙂

https://www.stevencarlson.show/@WeBull

SBA is BROKE — NO MORE PPP Small Business Stimulus Money CARES Act

Today is April 17th and here is a quick video to give you guys an update on the EIDL and PPP status.  As I shared with everyone last Thursday, April 9th, our PPP loan was approved and funded using a local community bank Blue Ridge Bank, this was a quick and painless process and community banks across the country have really stepped up to the plate to help out with small businesses.

Many of the large national banks, just could not get their act together and they have failed miserably.

For any of you that isn’t exactly sure what I am talking about, a quick summary:  The Payroll Protection Program (PPP) is a forgivable loan given to small businesses to help cover payroll for 2.5 months.  I cover this in greater detail in my April 9th and April 13th videos, link in the description.

This is a great program that basically gives small businesses free money to keep Americans employed.  One of my small businesses, AutoCorner, took out one of these loans as it was foolish not to accept free money.

Sadly, today the SBA announced they have exhausted ALL PPP funds and until Congress authorizes additional funds, no other US businesses can get a PPP loan/grant.

Now over to the Economic Injury Disaster Loan (EIDL) and this has turned into a cluster-[you-know-what].  Remember this was the one that originally was touted as giving all small businesses a free grant of $10,000 within three days, then it changed to $1,000 per employee and would be paid “in days” no longer giving a number of days, just saying “in days.”

I guess this could mean 3 days, 10 days, 30 days.

For me, it has been 18 days since I applied for the EIDL and I still have not received any advance of grants.  But, I’ll get to that in a minute.

On Friday, April 10th and Monday, April 13th, respectfully, I found two credit inquires on my Experian credit report from the SBA.  This made sense as I applied for the loan for two of my businesses. 

Yesterday morning (April 16th), I received my first communication from the SBA since applying.  The email told me to generate a login and review my loan options.

I followed the link, created my account, and logged in to the SBA had approved us for a $265,600, 30-year fixed rate at 3.75% with no payments due for the first year. 

Honestly, I am not sure how they calculate the amount of the loan as a friend of mine has more revenue per year in his business, but he was only approved for $175k and I have another friend that makes less than us and was given just under $500k. 

Obviously, there is something in the SBA’s calculations that determine the numbers, but I am not sure how they arrive at these numbers.

The funds can be used for normal business operating expenses, however, if you also have a PPP (which we do) then you cannot use the funds from EIDL and PPP in the same expense category.  For example, if you use your PPP for payroll you cannot use the EIDL funds for payroll as well.  This is slightly different from my original understanding, based upon media reports.

Of course, I am not a CPA, I’m just a dude on the internet.  So, you should check with your CPA.

So, in my opinion, because we keep very diligent accounting, it will be simple for us to allocate the funds from each of the EIDL and PPP appropriately.   We will use the PPP to cover 2 months’ payroll and the EIDL for a few months of on-going business overhead expenses.

With a 30-year fixed rate at 3.75%, it is basically borrowing money for free to run your business.  Of course, this is a loan, so you must pay it back, but the beauty is you are paying it back with future money and when you factor in an annual inflation rate of 2%, the money is only costing you 1.75%. 

The process of accepting this loan was simple but still took me about 2-hours.  The reason for that was the SBA website was slammed with traffic and I kept getting error messages from the website.  It took me 20-30 minutes to make it through each “click here to do something” link, then finally I received my confirmation.

This was the loan for only one of my businesses, and I am still not sure if or when I will be approved for the other business of mine.  I also still have not received any of the advances, so I am not sure if, or when that will be deposited either.

I did get a follow-up email sent to me this morning from my loan officer at the SBA.  She needed some additional information from me, I replied back immediately and hope now we can move to sign the loan documents and funding.

I know this was a short video, but I wanted to give you guys a quick update on the status.   Please make sure you like & subscribe, it really helps. 

Also, please use the link in the description to open and fund your Webull stock trading account with $100 today and get two free stocks, with one of them, valued up to $1,400.  NOW is the perfect time to invest in stocks while the market is down.

I hope everyone is safe out there.  I don’t know about you, but dang I really need a haircut so I hope this shutdown is over soon.

Are Insurance Annuities As Retirement Income a Scam???

Are whole life insurance annuities a scam? In one word . . . yes, but also a little bit of no, and a little bit of maybe. 

Good Morning and welcome to the Steven Carlson, of course it may not be morning for you when you are watching this, but it is “very” morning for me.  5:27am on a Saturday morning to be exact, yes, I am one of weird people that loves mornings.  Anyways, like I was saying, welcome to the Steven Carlson Show, I’m Steven Carlson.

I’m sure you have heard it before, Wall Street is like a Casino, and only the wealthy make money, normal people like you and me just get slaughtered. 

The problem with this mindset is throughout the past 100 years every significant drop in the stock market has fully recovered all loses and turned profitable in less than five years.  So as long as your investment strategy is for longer than five years, you can make an average of 7% annually.

More importantly who is the person giving you the advice to stay out of stocks and instead purchase a life insurance annuity policy?  Are you being told that by your insurance broker?

What alterative motives, if any, do they have? Or are they only trying to sell you on the “safe investment strategy” of life insurance annuities so they can make their hefty sales commission?

If you listen to their sales pitch it sounds amazing: “guaranteed payments for life, no matter what happens in that risky stock market.”  On the surface that sounds great, but once you dig into the numbers you quickly see how bad of a deal annuities are for almost all people. 

There are a few very unique situations where annuities may be helpful, such as parents providing for a special needs child that will require medical care for the remainder of their life, etc.  But for most people, annuities are a bad idea and I’ll explain why.

But first, please smash the like button and subscribe to this channel.  Doing so really helps with the YouTube algorithm. Also, I’d love to hear from you if you already have an annuity, comment down below.

If you’re unfamiliar with whole life annuities, the basic concept is: you give an insurance company your money and in return they pay you an income stream, for the rest of your life. In some annuities, if you die before you’ve received all of your money back, sucks to be you. The insurance company keeps the money.

I’m not making it up, for many policies that is how it works.  Of course, there are also plenty of annuities where that’s not the case. Family members can receive cash back or even continued monthly income after your death — but you pay extra for that.

The stupid thing is annuities are sold to you by using “fear” that the stock market is a gamble.  Yet, in reality an annuity is basically a gamble as well. You’re making a bet with the insurance company that you’re going to live longer than they think you will.

They take your money, invest it in the stock market themselves, and they give you a very small portion of the profit they make off your investment. 

Yes, you heard me right.  They take your money, they invest it, and they give you a small percentage of the profit, while they keep the rest of the profit. 

Of course, they are guaranteeing a specific return to you, so if the stock market has a bad year, you still get paid.  Like for example how the fears about the Coronavirus dropped all of the major indices nearly 13% in three days this week. 

But they know statistically, while there may be a year or two that is bad, over your entire lifespan the market will be up and the insurance company will profit.

Annuities are such terrible investments that just after the US Government passed a law in 2016, specifying that financial professionals had to act in their client’s best interest, sales of annuities fell 8%. They slid an additional 18% in the first quarter of 2017, and have continued to fall since. 

A $500,000 benefit policy, your broker usually makes between 2-7% of the total up front, so in this case he could have made up to $35,000 as his fee for convincing you to sign on the dotted line.

So how exactly does an annuity work?  In the most basic form, you pay a monthly premium to your insurance company, for example: $500 per month. 

Part of that is allocated to the “costs of providing your insurance” and some of it is allocated to the “Cash Value”, this is where the insurance company invests part of your money tax-deferred.  

This Cash Value account pays you a dividend around 4-6% per year. 

The purpose of the Cash Value account is to offset the cost of providing you insurance as you get older without changing the monthly premium cost you are required to pay.

How about we break these numbers down with an example:

Let me introduce you to two sisters, Suzy and Stephanie.  Like most siblings sometimes they are best of friends and other times they are at each other’s throats. 

This is one of the times where the sisters cannot agree, they each want an insurance policy with a $500k death benefit, but they cannot agree on which one to get, term or whole life?

Suzy purchases a whole life insurance annuity and pays approximately $563/month, but part of her monthly premium goes towards her Cash Value and she expects to get paid a dividend of 5.5% per year.  Not bad right? Well . . . the problem is you are not paid 5.5% on the whole $563/month, only on her Cash Value.  Based upon a recent study the average annuity paid out closer to 2% of the total premium amount.

Thirty years later Suzy would have paid in $202,680 in total premiums, but her Cash Value account will have a balance of almost $250k.  So, she “made $50k” . . . right?

Well let’s take a look at her sister Stephanie.  Once again, she also has a life insurance policy with a death benefit of $500,000, but her policy was a 30-year term life policy and her monthly premium is only about $52/month.  After 30 years, Stephanie has only paid in $18,720 towards her insurance. 

The 30 year term is up, so she gets nothing, and the insurance company kept the $18k.  Wait, that sounds like a crappy deal for Stephanie!

Suzy must have been better off right?  Heck, she MADE money, didn’t she?

Not exactly, and here is why:

Stephanie was a little bit smarter than her sister Suzy, and she invested the difference between her insurance policy cost and that of her sister’s annuity policy.  In this case about $511/month and she invested that into an fund that tracks the S&P, which averages about 7% return per year.

Now her investment is worth nearly $580,000, when Suzy only has $250,000.  This is an over 2x better return. 

But that is only part of the story.  Remember how I said the Cash Value investments are “Tax- deferred” that is a fancy way of saying, you are not paying the taxes now, but you will pay them when you retire and oh boy will you pay. 

The crappy part is annuities are taxed as ordinary income, not long-term capital gains, like any other normal stock investment that you have held for 30 years.  Additionally, if you had invested your $511/month in a ROTH IRA, all of your investment is now tax-free.  Check out my video on ROTH IRA investments, a link is in the description below.

So, in summary is a whole life annuity policy a scam or bad idea?

For most people, especially those in their 20s, 30s, or 40s, yes it is most likely a waste of money.  You would be far better served by investing your money in a wide-ranging index fund that follows the S&P as that will average slightly better than 7% per year growth, even after calculating for inflation if you invest for longer than 10-years.

If you are older or have a unique health situation an annuity may be right for you, but you will need to carefully consider the options to determine if it is right for you.

What should you do if you are already in a poor-preforming annuity term?  Well, I am not a lawyer, nor a certified financial advisor, so I cannot provide you advice, but I would suggest you sit down with a qualified financial advisor that you can trust to go over your options. 

You may be stuck in a bad deal, as many of these policies have horrible early termination clauses that penalize you 15-25%, plus there may also be tax ramifications of cashing out your tax-deferred benefits early.  It is very possible you will have to pay all the taxes now PLUS a 10% tax penalty. 

I really hope this video has helped you.  Please like & subscribe.

April 13 PPP and EIDL Update – CARES Act stimulus package for small business

Hello and welcome to the Steven Carlson Show, I’m Steven Carlson.

Wow . . . just wow. . . I do not even know where to start.

Of course, I know you are all smart people and already know this, but just in case a very quick background.  Even if the first few seconds is a review for you, stick with me through the end of the video as I will give updates, tips I’ve learned, a few tricks I think might help, and my analysis of what I think is going to happen next.

Don’t forget to like & subscribe to this video, it really helps with the YouTube algorithm and I really appreciate that, Thanks!

The US Congress has tasked the Small Business Administration (the SBA) with administering a large percentage of the $2 trillion-dollar economic stimulus package referred to as the CARES Act.  Specifically, the Paycheck Protection Program (PPP) and Economic Injury Disaster Loan program (EIDL).

The PPP gives small businesses with less than 500-employees, a forgivable loan (basically free money) to help pay 2.5 months of payroll.

And the EIDL gives you the option of taking out a low-interest loan to help cover other business-related expenses.  Originally, it was reported that small-businesses would get a $10k advance of their loan money within 3-days, but since it has been two weeks and people only started getting some of it last Friday, well . . . we know how this goes with government bureaucracy.

While on the subject of government bureaucracy, I do prefer to keep my channel free from the ‘right vs. left’ narrative as this is a business channel not a political science channel.  For anyone that is interested in learning how both parties have profited from and seriously endanger the American Dream, check out my book ‘America Hijacked’ – link in the description.

Ok, now back to the current topic at hand.

The whole situation is one major cluster-[you-know-what] with the Treasury, SBA, Senators, Congress, business reporters, YouTubers, etc., all giving conflicting information.  It is not that any of these people or groups are trying to give out misinformation, the problem is there is no single concise set of guidelines for these programs and they are being interpreted by each person slightly differently.

As I covered in the previous video ‘SBA $10,000 Small Business Grant EIDL – COVID 19 CARES Act Stimulus #Fail’ (link in description) people were originally expecting a flat $10k free grant to all small businesses that applied.  Whereas, after more careful reading of the law, and some slight updated guidance from the SBA, it was discovered businesses would get UP TO $10,000 based upon a formula of $1,000 per employee.

On Friday, April 10th, around 7pm I received an email from Experian notifying me that a credit inquiry had been placed on my credit report from the SBA.  This was a good sign as it was the first indication from the SBA that anything was taking place on my loan application and grant.

As reported by Meet Kevin earlier on Friday afternoon he suggested that some people may be skipped by the loan/grant process if they have a Credit Freeze on their credit report.  While this is only speculation, it does make sense, because the SBA is probably triaging the applications and they are processing the ‘easy ones’ first.  

In my case, by pure luck, I had already removed my freeze as I was working with Wells Fargo on some real estate deals right as this whole pandemic kicked off.

Now this morning, Monday, April 13, I received another Experian notification of a second credit inquiry on my report.  While this sucks having two inquires on my report, as it knocked my score down 5 points, it makes sense as I have two businesses that applied for the EIDL.

As of the time of me recording this video I have yet to actually receiving the EIDL grant money, nor have I received any additional communications from the SBA, based upon what others have said that within about a business day of the inquiry showing up others have received their grant money.  So, I presume it will come in today. 

Now, let’s switch over to the PPP loan debacle.

As I covered in more detail my video ‘SBA COVID 19 Stimulus Package – Payroll Protection (PPP) Loan Update: Loan Funded’ (link in description) the national banks completely failed small businesses here and a vast majority of loans at the big banks are being delayed, stonewalled, denied, or just ignored, whereas the small, local, community banks are processing these loans assembly-line style.

A few asked in my previous video what bank we used to get our PPP loan processed and approved.  We went through Blue Ridge Bank, they have about a dozen or so locations throughout Maryland, DC, Virginia, and North Carolina, with their biggest concentration in the ‘Blue Ridge’ mountains area of Virginia and North Carolina.

For any viewers in those areas I would highly recommend Blue Ridge Bank.  If you are outside of their banking area you can check out the Independent Community Bankers of America at www.icba.org and click on “Find A Community Bank”

At least 75% of the funds from the PPP must be used to pay payroll, check out my previous video for a full breakdown of the numbers.

Once you apply for the PPP, and I hope you get it, you then have some things to think about.  If you also applied for the EIDL, you are free to keep the advance of $1,000 – $10,000 even if you choose not to take the EIDL.  This might be the best option for you, of course, remember I am just a dude on the internet, so check with your CPA.

The reason why I feel this might be the best case is if you get both the PPP and the EIDL, you must use the PPP funds to pay off the EIDL loan.  So basically, it was a waste of time getting the EIDL. 

One thing that I do not know the answer to, so if you know, please comment below.  I wonder for a moment, in a hypothetical situation.  Let’s say you get an EIDL for $30,000 and a PPP for $75,000.  The PPP rules say you must use 75% of it to pay payroll, but if you also have an EIDL you must first pay off the EIDL with your PPP loan. 

So, my thought is, and of course you most definitely should check with your CPA first as I am not sure if this is even legal or not: if you use the $30,000 EIDL to pay other business expenses, that would reduce your PPP funds down to $45,000.  In theory, now are now only obligated to spend 75% of $45,000 on payroll.  Thus, giving you extra funds to pay emergency business expenses that you would not technically fall under the PPP.

Remember the EIDL is a loan with low interest, whereas the PPP (if used per the rules) can be converted into a forgivable loan of free money.

So, you are probably wondering why I am encouraging small business owners to put less of their money towards payroll.  Actually, I am not, allow me to explain.  My bigger concern is how the 75% is mandated and if a business falls short of this, even if out of no fault of their own, they may lose the convertibility to a grant and risk having to pay back the full amount.

Why would this be a concern of mine?  The reason is simple.  Also, part of the CARES Act was an increase in unemployment benefits.  Depending on a number of factors that are too complex for me to give justice in this short YouTube video, depending on where a person lives in the country, they may be able to file for unemployment and actually get paid MORE than their previous pay at their former job.  In many cases employees can get between $15-25 per hour with these benefits, and with many employees that is way more money than when they worked, all for just staying at home.

The issue here lies in how some less than honorable individuals will choose to stay on unemployment rather than return to their jobs at small businesses. 

What happens to small businesses if they are unable to rehire their previous employees and maintain the 75% funds to payroll ratio?  Yes, you guessed it, they get screwed and this is what scares me the most for these small businesses, because I feel, many of them will get trapped by the PPP and be forced to file for bankruptcy and close their doors.

Do not let this happen to you.

Luckily, AutoCorner runs a very small ship of 3 employees that are all very dedicated to keeping the business running and especially our head of Tech Support Bryan, I know his morals and personal character would never allow him to take unemployment for a few months rather than continue to work for us.  Other small businesses many not have the luxury of dedicated employees with strong personal character.

Stay tuned for my other videos.  I have one coming out tomorrow that explains the pluses and minuses of Life Insurance Annuities and if they are a smart investment or not, perfect discussion during a financial crisis.  I am also working on a video that will be out shortly on where you should invest $100 or $1,000 in today’s market that will almost guarantee you amazing returns.

Until those videos launch make sure you check out the Webull link in the description, as they are giving away 2 FREE stocks when you open and fund your trading account. 

Thanks for watching, I really hope you enjoyed the video.  Please make sure you like & subscribe. 

SBA PPP Loan Update: Loan Funded

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Just a quick video to give a little update on the PPP loan status.

Today my bank deposited the funds from our Paycheck Protection Program Loan, more commonly referred to as the SBA PPP Loan. This is all part of the COVID-19 Stimulus package, CARES Act passed by the US Congress. This is different from the Economic Injury Disaster Loan (EIDL) and grant, I cover that in another video, link in the description below.

The loan package provides US-based small businesses, with less than 500 employees a much-needed cash infusion to offset the cost of payroll while most of the country is shuttered because of the coronavirus.

This loan provides for a fully forgivable grant to help you pay your payroll.

To calculate the amount of the loan, you take your total monthly payroll costs which can include actual payroll, health insurance, and retirement plan contributions and multiple that by 2.5.

So for example, let’s say you have 10 employees that each get paid $15/hour and they all work exactly 40 hours per week. You also give each employee a $250 monthly contribution to their retirement accounts, such as a 401k or SIMPLE IRA, and you spend $250 per month for each employee’s health insurance.

That is a cost of $2,900 per employee, per month. Sadly, you cannot include your payroll taxes in this calculation.

Let’s multiple this by 10 to cover your 10 employees and this gives us a monthly payroll overhead cost of $29,000.

The PPP is designed to give you 2 1/2 months of payroll assistance, so we need to take our $29,000 and multiply this by 2.5, giving us a final number of $72,500.

If a business uses at least 75% of their loan to cover payroll expenses, which appears to also include company contributions for retirement and employee healthcare, then, in this case, the loan is converted to a grant and is fully forgiven. You can also use up to 25% to cover some business-related expenses like rent, utilities, and a few others.

Using our example that means you need to spend at least $54,375 of your loan on payroll costs and you can spend the other $18,125 on approved business expenses like rent, mortgage interest, and utilities.

As long as you stick to these numbers your loan is forgiven.

Worse case if you use some of the money for other non-approved business expenses, you only have to pay back that amount used. So for example, if you used $55,000 for payroll, $7,500 for rent & utilities, and $10,000 for other business expenses. You only need to pay back the $10,000 to your bank, plus, of course, the interest. The other $62,500 is forgiven.

Originally the PPP loans were supposed to be available on Friday, April 3, but many of the large national banks were unable to get things ready on time. It appears that the only national bank that was ready to handle PPP loans on April 3, was Bank of America, the rest of the big banks were telling their clients “we will accept loan applications soon.”

For small business owners, “taking loan applications soon” is completely inexcusable as they need this money to pay their employees. Even a delay of two or three days maybe just enough to cause some small businesses to not be able to cover their employee’s payroll.

It looks like Wells Fargo started accepting applications over the weekend, but Chase wasn’t able to until Tuesday afternoon.

From what I have read and heard from other small business owners, pretty much all banks both locally owned and large national banks are accepting applications for loans now.

Most PPP loans are being approved the same day or within a day or two, depending on the bank.

While you wait to make sure you check out webull at the link in the description below and get two free stocks for opening and funding your brokerage account. It is super simple and a great way to get stocks at today’s low prices so you can ride the upswing.

Of course, I am still waiting on the EIDL loan approval and cash-advance grant that I covered in my other video. When that finally comes in I will make a quick update video to let you all know.

Thanks for watching, I really hope you enjoyed the video. Please make sure you like & subscribe. Don’t forget to check out the webull link and grab your two free stocks today!

PPP #Payroll #SBA

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In closing a quick statement: I am not a lawyer, CPA, tax advisor, realtor, financial advisor, etc., etc., I have absolutely no licenses/certifications in anything related to these industries, I am just a dude on the internet. So, in full disclosure: the information I provide here is for “entertainment purposes only” and you should seek counsel from competent and certified individuals if you have questions.