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Investopedia has a great short article on 7 tax savings tips for 2011. While I typically spend my time on this site discussing how to increase your income by buying good stocks and understanding how to invest your money, paying attention to your tax bill is very important.

I won’t recreate their entire list but instead will give you the highlights here and you can jump over to Investopedia if you are interested.

  1. Convert a regular IRA to a Roth IRA this year.
  2. Higher Standard Deductions
  3. No limit on Itemized or Standard Deductions
  4. Larger Earned Income Credit
  5. Bigger Credit for College Expenses
  6. Tax-Free Employer-Paid Parking and Transit Costs
  7. Health Insurance Deduction for the Self-Employed

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If you have been investing for any length of time, you have probably heard the saying: buy on rumor and sell on fact. This old saying basically means that the price of a stock will tend to run up prior to a quarterly announcement and then drop immediately afterward. This drop can be gradual or fairly drastic. In the best of cases, the stock will actually increase after the “facts” are widely known.

Earlier this week, Apple Inc. [stckqut]AAPL[/stckqut] announced their revenue for the latest quarter. By most accounts it was a great quarter having surpassed their revenue attainment for any quarter since the company’s founding. However, the stock dropped immediately on the day after the announcement! This is because the analysts that follow Apple thought that the company would do better on some of its products, than it actually did. The analysts were slightly incorrect in their predictions and therefore the stock dropped several percentage points after what many people would think was a great quarter.

This is a perfect example of buying on the rumor of great revenue in all products and selling after the facts of the revenue are well know. It is quite likely that Apple’s stock will cover this short-term loss but the change in direction of the price could have hurt your portfolio.  Also, this is just one recent example and other companies have seen their stock price drop even farther on good news that is not good enough.

So how do you protect yourself from these sudden drops?

  1. You should know the date of the quarterly updates for your major holdings. If you see the stock moving up immediately before the announcement, you may want to take some of your earnings off the table and lock in your profits. You can always jump back into the stock if the price continues to move up.
  2. You should setup your account to automatically get you out of a stock if it has a major price move. This should be standard practice for all of your holdings as it will protect you in the event that news breaks that adversely affects your holding or the market in general. Your broker should have a way of allowing you to do a conditional trade. A conditional trade should be set up like this: Sell 100 shares of AAPL as a market order if the price of AAPL drops over 7% in a single day. This order is different than a trailing loss order as it is only looking for a rapid drop in a single day rather than just a gradual decline over the course of time. You could have a trailing loss order of 10% but the conditional order will get you out faster if the stock is moving very rapidly due to bad news.
  3. If you are watching the quarterly announcement of your holding, you can easily check what the after hours trading is doing based on the news. If you see the stock has dropped, then you can let your conditional order save you. If you think the reaction is incorrect and you want to weather the short-term loss, you can log into your account in the evening, cancel your conditional order, and then replace the conditional order at about noon the following day after the market has stabilized. Most bad news will take place in the first hour of trading if it is just going to be a quick correction. If the price is still rapidly dropping at noon then you may want to exit the stock as well, as the news is probably worse than you thought.

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Do you want to retire in luxury or do you want to work as a greeter in Wal-Mart in your retirement?

Let’s be perfectly blunt. We all admire and respect the elderly person that is a greeter at Wal-Mart or taking your order at McDonald’s. We typically think this is a good thing as these people are still active and they are still able to do some work to have a living. Hurray for them. However, aren’t we a little more envious of the retired gentleman that is playing golf 4 times a week?

Don’t we look at the candy-striper in the hospital that is volunteering time to wheel new mothers to their cars and think that they are having a very fulfilling retirement. They aren’t there to make money – they are volunteering their time. When they are done, they are having a nice lunch with their friends and playing golf, tennis, or bridge later in the day at the club. These people did the right things during their working years to allow themselves to be in a position to retire in luxury and afford their leisure time.

When you go into the store next time and see the elderly person helping you, think about their life. Sure, they are probably having a rewarding time. Sure, it allows them to be busy and not staring at the four walls of their bedroom. But, don’t you think they would rather be volunteering at their church or the local museum or hospital rather than WORKING? Don’t you think they would rather be enjoying a recreational activity with their friends instead of WORKING?

Do you want to spend your retirement years WORKING at an hourly job or enjoying the leisure years of your life in luxury?

This is not a last minute desperation attempt to overcome years of not planning. If you are going to retire next year, don’t waste your time on this whitepaper. Instead, this is a practical first step primer on what you need to do a decade or two before you need the money.

This 25 page whitepaper is designed to give you some basic guidance on the first basic questions that you should be asking.

The secret to a retiring in luxury is to realize three main facts:

  1. You are going to live longer than you thought you would
  2. You need more money than you think to retire in luxury
  3. Most mutual funds don’t earn enough to really beat inflation

It is important to understand that I am not suggesting you will retire with wealth. I am not suggesting that you will be able to own a mansion on beach, a ski chalet in the mountains, and a condo in downtown New York with a private jet and a Bentley to assist you in your roaming. This is a goal that is simply out of reach for most people unless they are already wealthy.

Retiring in a luxury lifestyle means:

  • Enjoying the best the world has to offer. When you travel you get to fly in first class. You stay in the best five-star hotels.
  • The car that you drive is no more than a few years old. It is equipped with all of the safety and creature comforts that you could want in a car.
  • If your interests include golf or tennis, then you belong to a private club. Regardless, of your interest in an athletic hobby, you belong to the finest health club to keep you fit and happy.
  • Fine dining is a must. There are many restaurants with the world’s greatest chefs creating amazing meals.
  • A beautiful luxury dream home to relax in is a wonderful reward for all the long hours and hard work. This will allow you to host parties for friends and family.
  • Looking your best so that you turn heads when you walk down the street is a great boost to your self-esteem; so knowing the best women fashion designers and the best men’s stylists is important.
  • Having relationships are important especially when celebrating success. Sharing life with loved ones makes life worth living.
  • Personal development is very important. Working on your spiritual side to be your best and helping others do the same is another of life’s great rewards. This includes charity work.

This whitepaper is completely free. I am not going to try to sell you anything. I could have written the information in this whitepaper as a series of posts on this website but then it would have been too long. Plus, by giving it to you as a document, I can easily include tables and charts for you to investigate. When you register for the paper, I will sent you an email that will allow you to download the whitepaper in the format that is easiest for you (as a PDF or as an ebook for your Kindle or iPad).

Your data is safe. I will not sell or lend your information to ANYONE else. I hope that the whitepaper that I am about to send you will help you make the correct first actions that will allow you to Retire In Luxury.

All you have to do to receive this absolutely free and no strings attached whitepaper is fill out this quick form and I will send you the download link.

So what’s the catch????

Really, there isn’t one. The only time I am going to use your name and email address again is when one of my books is published (hopefully soon – the publishing process is a bit long and cumbersome). At that time, I will send you a notice of my book, what it is about, and how to get it. I may publish other whitepapers in the future so I will send you an email to see if you want those as well. At anytime that I send you an email, it will include a link to be taken off of my list.

Sign up for Retire In Luxury whitepaper.

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As you probably have read, Berkshire Hathaway has offered to purchase the remaining shares of Wesco Financial [stckqut]WSC[/stckqut] that the company currently does not own. I assume this offer will be accepted (although there is a chance that the price will have to increase). Based on this news, I am removing Wesco from my Watch List as I cannot confidently say that the price of the stock will increase dramatically from this point.

I do not encourage you to expand your position in the stock from this point. If you would like to hold on to the stock to look for a better price from Warren Buffett, that is your choice.