Few occasions in life are more joyous than a wedding. It’s typically filled with celebration, romance, and the promise of spending a lifetime together.

Conversely, there are few things as painful as the ending of a marriage that began with such promise. The unfortunate reality is there’s a 50-50 chance that what started out in wedded bliss will end bitterly in a court of law.

If you are heading into a divorce, here are a few tips that may make the transition a little easier financially.

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Maybe Warren Buffett, the second richest man on the planet, doesn’t care how much he pays in taxes. For the rest of us, what our investments earn after taxes is much more important than what they earn before taxes. Federal and state income taxes, capital gains taxes, and alternative minimum taxes can reduce your investment earnings by up to 50%.

It doesn’t take much to substantially reduce your nest egg. If you earned an average of 8% and were taxed at 28%, your after-tax rate of return is 5.76%. A $50,000 investment earning 5.76% grows to $87,536 in 10 years. If that same $50,000 investment isn’t subject to taxes, it grows to $107,946. The higher tax bracket you are in, the more important it is for you to seek out ways to lower your tax bill.

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“Rick Kahler’s blog communicates insights on investing through a tight coordination of text, video, and audio.” That’s what John Kador from the online Registered Rep. magazine had to say about the KFG blog in naming it one of the top ten advisor blogs for 2011.

His article, which you can read here, has some good advice about blogging. It would be useful information for anyone, not just financial advisors, who is considering a business-related blog or website.

It’s an honor to be named one of the top ten sites, and I’m grateful to the staff members who help keep the blog and website functioning smoothly. Thank you, as well, to all the readers who take time to comment. Your questions and insights add a great deal to the site, and I appreciate them.

Don’t invest in your own small business. Cash in your 401(k) to pay off credit card debt. Borrow on a credit card to buy your college textbooks.

All these qualify as “The Worst Money Advice I Ever Got,” according to an article by Kristin Colella published October 13 in the online magazine Main Street. She asked six people about the worst piece of financial advice they had received, then interviewed several financial planners. She found that what was bad advice for one person might be great advice for someone else in different circumstances.

Rick was among the planners Colella interviewed for the piece. You can read it here.

The latest bubble forming on the horizon isn’t in real estate or stocks. It’s the cost of a college education, up four times the rate of inflation since 1985—twice as much as health care costs.

What’s driving this stratospheric rise? Just like the housing crisis, easy credit and poor government policy.

For decades governments have championed making a college education affordable for all, just as they did home ownership. Since some segments of society couldn’t afford an education or a house, the answer was to encourage lenders to make loans they wouldn’t normally have made. This was done by guaranteeing lenders that if the loans went bad, the government would take them over.

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For a long time investment advisors have relied on commodities as one of the asset classes in a diversified portfolio that is “uncorrelated” with stocks. In other words, commodity prices tended to increase when stock values decreased, and vice versa.
In the past few years, though, commodities have begun moving more in line with securities. For this reason, Rick has begun recommending clients invest less in commodities and more in managed futures to keep their portfolios diversified.
Financial writer Daisy Maxey interviewed Rick for an article discussing this trend. The piece, “Commodities track broad market more closely,” was published online in MarketWatch on October 12, 2011. You can read it here.

Michael Haubrich, CFP, discusses the impact of money scripts in a guest column published in the Racine County, Wisconsin, newspaper The Journal Times. He writes:

“A friend shared the story of finding her mother in tears one day while paying the family’s monthly bills. Upon asking her mother what was causing her distress, the mother replied ‘there’s never enough money.’

This early experience rooted a belief in that child that no matter what, under any circumstance, there would never be enough money and without it, misery and sorrow would follow. Today, she is a successful business woman, who also happens to be a workaholic who rarely takes time to enjoy the abundant fruit of her labors. She is anchored in a fear of running out of money and therefore is missing out on the opportunities having money affords her.”

To read more, click here.

What would it take for you to become financially independent? It’s a common goal, and it means different things to different people. I define financial independence as maintaining a lifestyle that supports wellness without having to earn an income.

Happiness and wellness are not necessarily the same, but recent studies suggest an income of around $60,000 is optimum for producing happiness. This is an average, so the equivalent amount might be around $50,000 in areas like the Black Hills and $100,000 in places like New York City.

How much of a nest egg do you need to save to produce an annual income of $60,000? To maintain the purchasing power of your portfolio throughout your lifetime, you will want to limit your annual withdrawals to 3% of the principal. This assumes you’ve invested for the long term in a diversified portfolio with the majority in stocks and alternative investments. To throw off the needed income, you will need $2,000,000.

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Just when you think Rapid City couldn’t get better civic leaders unveiled the much anticipated “Main Street Square” last night.  Located at the site of a former parking lot in the heart of historic downtown Rapid City, the square cost $6 million to build coming from private and public donations.  Organizers anticipate the revenues to operate the square will come from events and an additional tax on downtown properties, which a majority of downtown property owners supported.

The square has a real metropolitan feel to it, featuring a bandstand, lawn, fountains, tables, vendor services, walking path, a fire pit, and an ice rink.  The square promises to be a popular gathering place for hundreds of annual events for many years to come.

While a large number of Rapid Citians don’t support the square, this isn’t unusual.    A lot of folks opposed putting the statues of the Presidents on downtown street corners and building the Rushmore Plaza Civic Center.  Both have become huge successes and today are embraced by most as a good thing. I suspect Main Street Square will be viewed in the same manner five years from now.

As one friend I met in the square last night commented, “This makes me proud to live in Rapid City.”

P.S. - For those of you wthinking Rapid City is somewhere near the Arctic Circle, think again.  Notice that Rick is not wearing a jacket and kids are playing in the fountain behind him at 9pm on Oct 7th.

At the heart of America’s overspending are two popular entitlement programs, Social Security and Medicare. Most Americans count on Social Security for a significant portion of their retirement income and on Medicare for all their retirement health care needs.

One question I’m often asked is, “Will Social Security be there for me when I retire?” That’s a fair concern when you consider the staggering size of our national debt, which is small compared to the “off balance sheet” liability represented by the unfunded obligations of Social Security and Medicare. Most lawmakers agree off-record that the only way these programs will continue to exist is if we make cuts in benefits and broadly raise income taxes on all taxpayers, not just the rich. Such a scenario probably includes a European-style national VAT (value added tax).

The good news is that when you take politics out of the equation, saving Social Security could be fairly simple. Continue Reading »