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Congress at Work: Punishing Terrorists and Kiddie Porn Traffickers; Reinforcing Cybersecurity and Patents

Hizballah International Financing Prevention Amendments Act of 2018 (S. 1595) – This bill amends the Hizballah International Financing Prevention Act of 2015 to impose sanctions on foreign nationals and governments that knowingly assist in funding or recruitment activities for the Hizballah terrorist organization. This includes providing arms or other assistance, as well as narcotics trafficking and criminal activities. The bill was introduced by Sen. Marco Rubio (R-FL) on July 20, 2017 and signed into law by the president on Oct. 25.

Amy, Vicky and Andy Child Pornography Victim Assistance Act of 2018 (S. 2152) – This bill authorizes the federal criminal code to compensate victims of child pornography. Specifically, a defendant convicted of trafficking in child pornography must pay between $3,000 and 1 percent of the full amount of the victim’s losses. Furthermore, the victim may receive a one-time payment of $35,000 from the Child Pornography Victims Reserve Fund, a separate account created within the Crime Victims Fund and funded through assessments on persons convicted of child pornography offenses. The bill was sponsored by Sen. Orrin Hatch (R-UT) on Nov. 16, 2017 and signed into law by the president on Nov. 15.

Cybersecurity and Infrastructure Security Agency Act of 2018 (H.R. 3359) – Sponsored by Rep. Michael McCaul (R-TX), this bill redesignates the Department of Homeland Security’s National Protection and Programs Directorate as the Cybersecurity and Infrastructure Security Agency (CISA). CISA is to name a director to lead the national effort to protect and enhance the security and resiliency of U.S. cybersecurity, emergency communications and critical infrastructure. The bill was introduced on July 24, 2017 and was signed into law by the president on Nov. 16.

SUCCESS Act (H.R. 6758) – This legislation reauthorizes the U.S. Patent and Trademark Office’s authority to set fees for the services it provides for an additional eight years. This bill also mandates that the office conduct a study and provide recommendations for closing the gender, race and income gap in patenting rates. The bill was introduced by Rep. Steve Chabot (R-OH) on Sept. 10 and enacted on Oct. 31.

9/11 Heroes Medal of Valor Act of 2017 (H.R. 3834) – This bill was introduced by Rep. Joe Crowley (D-NY) on Sept. 26, 2017 and signed into law by the president on Nov. 3. It makes members of public safety agencies who died of 9/11-related health conditions eligible for the Presidential 9/11 Heroes Medal of Valor.

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Online Home Appraisal Tools

Real estate appraisal and land valuation is the process of putting a price on the value of property. Buy and sell transactions generally require an up-to-date appraisal because each property is unique and values are based on the current economic landscape.

In the past, it was necessary to hire a professional real estate appraiser to conduct an onsite property visit to make this assessment. Granted, an onsite appraisal is still considered the most accurate because it involves a thorough review of the home, including the roof, siding, foundation, windows and doors, flooring, walls, plumbing, electrical, kitchen and bath updates.

However, it is also possible to get a relatively accurate appraisal using automated valuation models. Fortunately, there are a variety of websites that can provide this valuation for free. In addition to basic criteria such as square footage and the number of bedrooms and baths, online appraisals rely substantially on a comparative market analysis (CMA). This is basically a calculation of data from similar homes that have recently sold (within six months to a year) in the same geographical proximity. Online appraiser tools generally utilize publicly available data to estimate a home’s value without having to consult an appraiser or real estate professional.

The following is an overview of some of the most popular websites for establishing a home’s value. By comparing the estimates of several sites, you might be able to establish a reliable value or value range.

Zillow.com

The real estate website Zillow offers a tool called “Zestimate,” which basically compiles an appraisal based on comparable homes in the same general locale. For most homes where public data is accessible, Zillow provides an automatic home value evaluation based on comparable home sales, local tax assessments, and market appreciation of local home values over 1-, 5- and 10-year periods.

A homeowner also has the opportunity to adjust his own real estate appraisal. To use this function, he should set up a free user account. This will require an email-based verification process to ensure that he is the actual owner of the property. Once he is logged into his Zillow account, he should enter his home address to get started.

Zillow automatically uses public data in its proprietary formula to estimate the value of a home. The formula looks at factors such as number of bedrooms, number of baths, square footage and location, and assigns a weight to each factor. However, the website also enables a homeowner to edit the home’s information, such as upgrades like a new bath, deck, swimming pool, renovated kitchen, new roof or HVAC. Next, the homeowner can choose comparable homes in the area that have sold recently. This means if one home sold way under market price for the neighborhood because it was a fixer upper or private sale, he can exclude that home from the CMA calculation. Comparables also can be viewed on a map to determine if they are in a similar neighborhood from a value perspective. Once the owner has selected comparable homes, his Zestimate will be updated as a Private Estimate.

RealtyTrac.com

RealtyTrac works similarly to Zillow, using publicly available data to generate an online appraisal tool called Home ValueTrac. Enter the street address, city and state or zip code to receive an estimate of median value as well as an estimated change in value over the last month.

Chase Mortgage Services

Chase Bank offers a free home property value tool for online users. Enter the property address to receive a price range rather than an exact number. This tool also provides an estimate value for surrounding homes in the neighborhood.

ForSalebyOwner.com

Not only can you list your home for sale at this website, but it offers a simple tool to help establish your home value. Simply enter your address and the Pricing Scout instantly estimates your home’s value based on nearby comparables. The tool provides an exhaustive list of the most recent sales of comparable homes in the area, detailing their address, bed/baths, square footage and sales price. The property valuation tool illustrates where your home value lies on a scale of nearby properties.

While online tools can provide a general estimate, they do not necessarily dictate the price you would receive at sale. In addition to using a home appraiser, you will want to meet with two or three real estate agents for their market value estimate, as they probably have better insights into your local market. Clearly, home appraisals are not an exact science. Whether using an online tool or personalized estimates from professionals, your estimates will almost always vary within a range.

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6 Ways to Avoid the Holiday Blues

Despite the never-ending flurry of merry salutations, the holidays can be emotionally challenging — if not downright depressing. Here are a few practical ways to take care of yourself during this time of year.

Set a Budget. When you’re out shopping, it’s so easy to cave to “spending sprawl” – irresistible gifts that seem to call your name, obliterating any control you thought you had before you left the house. Truth is, you can’t buy happiness with an avalanche of gifts. Instead, you might want to make something for someone (cookies or a homemade ornament), organize a gift exchange and set a spending limit, or donate to a charity in a person’s name. Another way to save money and infuse your gifts with meaning is to barter. For example, you might offer to weed someone’s garden in exchange for organizing your pantry. Design a website in exchange for painting your house. The list goes on and on. This way, you strip the season of its suck-your-wallet-dry tendency and replace it with the true meaning of the season, which is not about things at all.

Learn to Say No. Saying yes to a holiday party or event when you really want to say no can breed resentment, which is never a good thing. Give yourself permission to decline invitations. Your friends will understand. Besides, a little alone time during the holidays might help you enjoy the things you do participate in that much more.

Step Outside Your Comfort Zone. If you find yourself longing for companionship or are in a new city where you don’t know anyone, select some holiday events in your neighborhood or city, take a deep breath and show up. Chances are, you’ll meet others who might be in the same situation and make some new friends.

Carve Out A Bit of “Me” Time. December is month that is notoriously busy, but you don’t have to be. Do something that celebrates you: get a massage or facial, read a book that’s been on your list, put on your favorite music and enjoy a cup of tea or take a walk and look at the stars. You’ll feel refreshed and centered.

Move Your Body. If you’re an exerciser, don’t abandon your routine. Keep up the good work. Getting your heart rate up and sweating not only helps get rid of cortisol, the stress hormone, it also triggers the release of endorphins – neurotransmitters that interact with your opiate receptors in the brain to generate positive feelings. If you’re not an exerciser, don’t worry. A simple 20-minute walk can help reduce cortisol and alleviate anxiety. But that’s not all. Walking can also help reduce your risk of heart disease and strengthen your bones, among many other health benefits.

Acknowledge Your Feelings. If you’ve lost a loved one or recently gone through a divorce or break up, accept that feeling sad and lonely is normal. It’s okay to cry, get angry and grieve. As difficult as these emotions may be, getting them out might be the best remedy for healing. If you feel you need a little extra help, you can always try light therapy. Like exercise, these light therapy devices release endorphins by emitting UV-free light. Your mood and sleep pattern will improve, and best of all, they’re affordable. Varilux sells them starting at $40. However, if you feel that you’re really spiraling downward, pick up the phone and call a friend, a relative or a professional. Just being able to release what you’re feeling and hearing someone’s voice can be comforting and dilute what you thought was an impending disaster.

Remember: Keep your chin up. The holidays are temporary and will be over before you know it. Soon you’ll be into a new year with a fresh start.

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Financial Planning Advice for Women

The path for women is a little like two steps forward, one step back. For example, almost 40 percent of all privately held firms in the United States today are owned by women. Furthermore, the 2018 midterm elections yielded 23 female senators and more than 100 in the House of Representatives.

And yet, despite the fact that women comprise 51 percent of the U.S. population, their ranks account for less than one-quarter of Congress. And women hold only 10 percent of chief executive and chief financial officer positions in S&P 1500 companies.

What is most unfortunate about the lack of women in powerful positions is that they continue to trail men in terms of income and investment assets. When it comes to managing money, this means women are at a disadvantage because they tend to live longer than men, often are financially responsible caregivers – both as single moms of dependent children and elderly parents – and tend to have higher health and long-term care expenses as they age.

Earning Discrepancy

While younger, well-educated professional women are starting to level the playing field when it comes to earning salaries on par with male counterparts, this does nothing to help the mid-career, near-retirement or retiree with long-term financial security. Women still earn an average of 20 percent less than men in the same positions despite the fact that women have earned the majority of master’s degrees in the United States since as far back as 1981.

To add insult to injury, women’s earnings tend to peak at an earlier age and their income level drops at a faster rate than men as they grow older.

The income component of the financial picture has far-reaching impacts, such as:

  • Less disposable income than men
  • Less savings
  • Less money invested
  • Lower Social Security benefits during retirement

One of the oft-cited reasons for women earning less is because they tend leave the workforce for extended periods of time to raise children. Not only does career interruption leave them with fewer opportunities for promotion, but it reinforces the perception that women are less reliable and easily distracted by home-life responsibilities. However, the opposite is true of men. Employer surveys have revealed that when a man starts a family, he is perceived as more reliable and dedicated.

Lifestyle Benefits

While the financial scenario appears bleak for women, there are ways that they can take advantage of inherent lifestyle benefits to improve long-term security. Consider the following tips:

  • Firsthand knowledge – Because women are often in charge of the household budget, they are in a position to know where and how to cut costs.
  • Diligent – When it comes to saving money, studies show that at every salary level women consistently save a higher percentage of their income than men.
  • Communication skills – women tend to ask lots of questions, especially about things they don’t understand. When working with a financial advisor, they are more likely than men to ask about fees and expenses.
  • Practical – Women tend to value money in terms of what it can provide, thus they are not just interested in accruing money for the sake of wealth – and less inclined to chase investment performance.
  • Conservative – Women tend to be more conservative investors than men. They prefer lower-risk, conservative growth and are more focused on asset preservation.
  • Longevity – Women tend to have a longer time period for their investments to grow because, demographically speaking, they live longer than men. This means women benefit from their conservative style of investing slow and steady for the long game.
  • Outperformance – Despite their penchant for lower-risk investing, on average women’s investments have performed better than men by 0.4 percent, according to research by Fidelity Investments. While the variance is small, it can have a substantial impact over their longer lifespan.

By utilizing inherent lifestyle, disposition and life expectancy advantages, women can work toward long-term financial savings and investment earnings to help secure their future.

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Will the United States Become a Bond Haven in 2019?

With Italian bond yields rising quickly from 2 percent to 3 percent since the middle of 2018, it begs the question if the United States will become a bond haven. There are many reasons why the United States Bond Market has the potential to became a refuge for many global investors.

According to a 2016 paper from the National Bureau of Economic Research, safety is in the eye of the beholder – in the case of the global markets, it’s the investor. When there are global economic worries, the paper credits a “nowhere else to go” theory for investors that choose U.S. debt versus others. Along with a country’s ability to handle its own debt, the National Bureau of Economic Research found that even if a country’s “fiscal position deteriorates,” its debt is more attractive as long as the country’s fiscal health is in better shape than others, relatively speaking.

Understanding How the United States’ Situation is More Attractive Globally

Since virtually every country uses debt to run the government, they issue bonds in their respective currencies. The returns on bonds are the interest rates offered by the borrowing country to pay the borrower (either the domestic or foreign buyer of the debt). Looking at 10-year bonds is one way to evaluate interest rates among different countries, be it the United States, Italy, China, etc.

Understanding How Yields or Bond Interest Rates are Determined   

With Italian bond rates currently at 3 percent – up from 2 percent in about 6 months during 2018 – this has given many a cause for concern due to the rate of increase. Coupled with the Italian government’s existing debt obligations exceeding its yearly economic output by more than 30 percent, compared to the United States’ debt obligations at about 100 percent of its current economic output, those looking to buy government debt would have a lower risk of not getting paid with the U.S. government issued debt.

When it comes to the global markets determining interest rates, there are two primary factors. The first is how much inflation is expected between purchase and redemption date. This is important because bond buyers want to know how much inflation will impact their investment. The second, and arguably more important, is what are the chances of the issuing government failing to repay its bond or debt obligations in the case of a default.

Understanding the Rise in Italian Bond Rates

While some economies across the world can and do print money to deal with paying off debt, Italy, as part of the European Union, cannot print additional Euros. While inflation is not a major fear for the Italian economy, the recent back and forth between the Italian government and officials from the European Union has raised concerns about excess spending and Italy’s ability to pay for it in the future. The proposal would reduce taxes and increase spending for the public and private sector investment. This is what’s adding to uncertainty about Italy’s ability to service its debt, thus negatively impacting its 10-year bond rates – similar to what eventually happened in Greece.

Sources

https://www.nber.org/papers/w22017

Used the following PDF from that main site: https://www.nber.org/papers/w22017.pdf   

https://www.marketwatch.com/story/italy-bond-yields-jump-as-investors-brace-for-budget-clash-2018-10-08

https://tradingeconomics.com/italy/government-bond-yield

https://www.pbs.org/newshour/economy/todays-italian-bond-crisis-explained

https://www.reuters.com/article/us-eurozone-bonds/italian-debt-set-for-one-of-its-best-weeks-since-crisis-era-idUSKCN1LM10F

https://www.bloomberg.com/news/articles/2018-05-29/italian-two-year-bond-yields-climb-to-highest-level-since-2013

https://www.marketwatch.com/story/italy-bond-yields-jump-as-investors-brace-for-budget-clash-2018-10-08

https://www.cnbc.com/2018/10/05/italy-government-announces-brave-and-responsible-budget-2019plan.html

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How to Maximize Subscription Marketing Efforts

According to research from McKinsey & Company, 15 percent of Internet consumers have become members of at least one subscription service in 2018. The consulting firm also found that these subscription-based models cover a multitude of products, including food, drinks, meal kits, clothing, vitamins and razors. While these are well-known by consumers, there are many other types of subscriptions – such cloud computing or storage technology services – available for purchase by both consumer and business customers.

According to McKinsey & Company, the online subscription industry has increased in size from $57 million in 2011 to $2.6 billion in 2016. With this rapid growth, it’s best to know how to maximize one’s approach in this increasingly crowded and competitive industry.       

Give a Little, Get More Back

One way to run a subscription-based service is to let customers get a trial or have access to only limited functionality of the product or service. From there, businesses can offer additional options to upgrade to – demonstrating the product’s value while helping monetize additional functions. Whether it’s a cloud-based storage or computing service, one that provides web hosting or on-demand applications, those with access to limited options or select software titles of a software suite might discover a need for additional computational hours or storage. If they can learn more about the full suite of available software titles, they can see the potential to accommodate new clients or expand their service offerings.

In other scenarios, it’s not necessary for businesses to monetize their entire user base. On job networking websites, for example, individuals can register for free, uploading their resume to the network to list publicly. This can also help self-employed individuals look for new clients through cold prospecting or from companies posting advertisements for contract help.

In exchange for workers having a free opportunity to post their resumes, recruiters or HR managers will be more likely to sign up for paid accounts because there’s a continuous pool of talent with a diverse skill set. Along with being mutually beneficial for business owners and individuals, job networking websites themselves can benefit through a subscription model by monetizing advertising traffic through means such as ad revenue.

Another way to maximize subscription-based marketing tactics is for businesses that specialize in surveys to incentivize their existing customers with referrals. If a self-employed person doesn’t have the budget for a premium plan that features surveys with dozens of questions and highly technical analytics for each customer survey, the company running the online survey won’t be able to count it as a revenue generator.

However, if the customer who is taking the survey is a small business owner with more advanced needs or is employed as a customer service manager, the individual might end up subscribing to the paid tiers during a company meeting at the same online survey company. So, while the initial customer with the online survey company might not be generating revenue, this action can act as an indirect marketing funnel to convert new customers into paying customers.

Sources

https://www.mckinsey.com/industries/high-tech/our-insights/thinking-inside-the-subscription-box-new-research-on-ecommerce-consumers

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What’s the Best Type of Business Entity for Tax Purposes

There are several major types of business entities, including S Corporations, C Corporations, Limited Liability Companies (LLCs) and being self-employed. Each type of structure has its own advantages and disadvantages when it comes to taxes, assets and liability protection.

Generally, certain types of businesses are best for certain professions from a tax perspective; however, with the tax law changes last year it may be time to reconsider. Under the current tax law, what used to be the best business entity type for certain scenarios may no longer be the same due to the pass-through deduction and corporate tax rate changes. Let’s look at the most common business entity types and see what’s best.

Self-employed

The self-employed includes everyone who is a freelancer, independent contractor and many business owners who don’t have any partners. The nice thing about being self-employed is that it’s simple; you don’t need to set up any type of legal entity. Moreover, if you qualify for the 20 percent pass-through deduction, you’ll pay even less. Being self-employed is best for simple businesses without major assets and little potential legal liability due to the lack of protection.

The self-employed are required to pay both halves of self-employment taxes on top of their regular income (if you are an employee, you pay one half and your employer pays the other) so you’ll need to take this into account.

S Corporations

Aside from taxation, asset protection is a major consideration when selecting a corporate entity. For those who have significant assets that need protection, especially if they don’t have any partners in the business, an S Corporation may be the best bet. There are restrictions on ownership structure; for example, S Corporations are limited to 100 shareholders, so this might be a limitation for some.

As a pass-through entity, an S Corporation doesn’t pay taxes on income at the corporate level; instead, it passes through to the business owners. As a result, S Corporations can benefit from the 20 percent pass-through deduction as well, though high earners may be phased out. S Corporations are generally favored by certain professions such as doctors, dentists and certain types of consultants.

C Corporations

Unlike S Corporations, there are no restrictions on ownership for C Corporations, and they provide great asset protection. Therefore, almost all public companies and those that want to go public are C Corporations, such as start-ups.

The downside of C Corporations is that they are subject to “double taxation.” The corporation is taxed on entity level profits and then shareholders are taxed again on dividend distributions. The dividend distributions are not deductible to the entity, hence the double taxation issue.

The new tax law lowered the top corporate tax rate to 21 percent, so for high earners the double taxation issue is not as much of a consideration as it used to be. Also, Section 1202 allows shareholders of start-ups to sell their stock without any taxes on the first $5 million in gain after five years.

Limited Liability Company (LLCs)

LLCs are generally the preferred entity structure for certain professionals and landlords. LLCs have flexibility as the owners can file as a partnership, S Corporation or even sole proprietor since the LLC is really a legal and not tax designation. LLCs benefit from the 20 percent pass-through deduction if the owner elects to be taxed as a pass-through, depending on the income level and nature of the business.

Many states do charge annual fees or minimum taxes on LLCs, but it’s usually insignificant. California is one of the most onerous with an $800 minimum fee per year.

Conclusion

Tax savings are often the main motivator in selecting a corporate entity, with asset protection right behind it. The new tax law’s 20 percent pass-through deduction and corporation tax rate reductions make the choice a little tougher than in the past, but generally unless a company wants to go public most businesses will either choose an LLC or S Corporation structure. Every situation is unique, so make sure to consult a professional that can help you choose the right entity type for your situation.

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