In this episode
1:50 The Rear View Mirror -
The Federal Reserve opened the door to more quantitative easing, commonly called QE2, which pushed the dollar down and gold up.
Link to Fed statement
Take away: There’s no easy solution that results in a quick recovery. Look for a long slow process going forward and plan accordingly.
7:40 The Foggy Windshield -
Gold hits an all time high and looks to go higher. But in this case what goes up can come down, potential quickly.
Take away: Beware of investments in which demand is driven solely by increasing prices. When prices start falling, the process reverses, the reason to own it disappears and everyone wants out at the same time.
11:42 Critical Thinking -
There’s lots of talk about fiscal policy, spending cuts, tax cuts, and the deficit. But how much of it is wishful thinking and how much is reality? That’s the critical thinking issue this week.
Link to OMB data
Take away: You know how to get someone to like you? Tell them what they want to hear. Think critically about who’s telling you the truth and who’s telling you what you hope is the truth.
18:31 Quiz -
Last week’s questions:
- What happens when intervention stops?
- What should you be thinking when someone tells you the rewards are high and the risk is low?
- When someone tells you what they think, what should you ask?
- Which system of investing always works?
This week’s questions:
- If the money supply in increased what is the likely impact on the dollar?
- What would cause gold prices to fall?
- When someone wants you to like them, what do they tell you?
- How should you save for college?
20:22 Viewer Mail – Send your questions in directly to Doug@riskandrewardtv.org
Mark from Ann Arbor, MI writes “I’ve heard two schools of thought regarding college 529 plans. One says they are the best way to save for your child’s education because returns are tax free as long as they are used for education expenses.
The other says they are very restrictive. For example, the invest choices are limited, many have high fees and only allow changes once a year. This school (0f thought) says saving in a taxable account where you have absolute control is preferable. I tend to agree with the latter. What is your opinion?
I like your podcast and will tune in each week.”
Another option would be a Coverdale or educational account. This would allow the avoiding taxes and provide more flexibility than a 529 plan, but it’s much more limited in how much you can contribute per year.
If you have a lump sum deposit the 529 plan is the only way to get favorable tax treatment. But if your going to dribble it in year by year, the educational IRA may be the ticket. Of course, you can outside of that and have maximum flexibility, but at the price of paying taxes on the money.
Take Away: Find the option that best fits your situation.
24:10 Upcoming events and wrap up -
Good progress on the websites. If you would like to host my seminar or have me speak at an event, email doug@riskandrewardtv.org.
What’s for dinner?
We’re going out this week. Too busy to cook!