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I pay rent to my boyfriend and help run his property business. He takes my commissions and won’t discuss marriage. What can I do?

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My boyfriend of 10 years and I became acquainted because I was his tenant. He is 25 years my senior. I agreed to continue to pay rent because he told me that I would get the house when he died. To be fair, I also was not going to be able to move because the rents in my area began to skyrocket, and as a young single mother I wanted to work part-time so that I could care for my (then) young son.

In the years that followed, we started two businesses together using the property that he owns. One was a short-term rental in a unit of the duplex house that we live in, and the other was a theater. Both were very popular. However, I did a lot of unpaid labor to get the businesses started as well as day to day operations. I did make some money managing the rental and received tips from working the bar at the theater, but my boyfriend kept the rest of the money.


‘He began taking part of my commissions without telling me. He also started treating me like an employee and not like a partner.’

At the time, this arrangement was fine because there were discussions that the money on the rental would go to renovating the house, turning it into a single home for us to share. But he quit his day job and lived off the money instead. He then began taking part of my commissions without telling me. He also started treating me like an employee and not like a partner. All of this was very upsetting, and we have had a lot of difficult conversations about his behavior.

Since the pandemic, we have had to close our businesses and he has had to go back to work. I started an apparel company in 2019, but the pandemic has affected that business as well, and so I have been living off of unemployment benefits. I have a congenital heart condition, and I do not feel comfortable looking for work until I have been vaccinated. I have not paid rent since August 2020. I helped get long-term tenants to occupy the short-term rental, as well as labor to prepare the property for their occupancy.

I have begged my boyfriend to sit down with me and look at the numbers. He has never once been willing to show me the mortgage, taxes and insurance payments, nor have we had a real discussion about money. Every time I bring it up, the conversation ends with a promise of something that will happen in the future. However, I no longer think that any of it will happen. Every time I feel we have reached an understanding, he will say or do something that contradicts it, leaving me feeling very confused.


‘He has never once been willing to show me what the mortgage, taxes and insurance payments are monthly nor have a real discussion about money.’

If I had known then what I know now, I never would have not gotten involved with this man, and the two businesses we started together would have never happened. I worry that with the real-estate market the way that it is right now that he will be tempted to sell one or both of his properties without consulting me. Since we don’t have any agreements on paper, I am wondering how I can protect myself from losing out in this arrangement. I have been led to believe that I am making investments with my time and money.

Six months ago, I became very frustrated and made a few spreadsheets: one documenting the rent I have paid over the last 10 years, one for all of the unpaid labor, and another documenting anything I felt he has paid for me (which isn’t much). I sent it to him and explained that I felt he did not value my contributions, and he complained that I had “sent him a bill.” I didn’t think of it like that, but rather as a negotiating tool for what I felt I have invested in the businesses, property, and ultimately our relationship.

We live in Louisiana and while we have never made any formal arrangements, we have been in a committed, monogamous relationship for over a decade. I want to protect myself in the event that this relationship were to end, either through separation or an untimely death (mine or his), but I don’t know what leverage I actually have legally. Any thoughts or advice you have is welcome.

Feeling Exploited

The Moneyist:We were friendly with our neighbors for decades, until recently. One day, they introduced us to their financial adviser…

You can email The Moneyist with any financial and ethical questions related to coronavirus at qfottrell@marketwatch.com

Dear Exploited,

You are both living in the same house, and working side by side, but you are also living in alternate worlds. Yes, you are in a committed, monogamous relationship, but you are not quite committed to the same things. You are committed to helping him start his businesses, and turning his property into a money-making enterprise, while living there on below-market rent, and dreaming of a future where you marry, and commingle all your financial assets.

He is committed to you helping him to start his businesses, and turning his property into a money-making enterprise, while you live there on below-market rent, and never telling you outright not to dream of a future where you marry and commingle all of your financial assets. He has a girlfriend and an employee who he pays in promises and sweet nothings and commissions until he decides he wants them for himself. It’s a win-win for him.


You are in a committed, monogamous relationship, but you are not quite committed to the same things.


— The Moneyist

This is more a game of cat and mouse than a love affair. If you were partners in business or in life, there would be something on paper. There is nothing on paper. That is not an oversight or something that belongs on a “to do” list. That is entirely by design. When you wrote: “He quit his day job and lived off the money instead,” I thought, ‘Well, of course he did.’ You must judge people not by their dreams or promises, but by their actions.

I don’t believe you are an entirely victim of his financial malfeasance or romantic misdemeanors, and I urge you not to see yourself as one either. It will help you see your part. You knew nothing was committed to paper. You were not an employee or a partner, and he can’t “steal” a commission if you have no legal standing. You say you would never have gotten into a relationship with him if you knew then what you know now. But he only had to obfuscate once to reveal himself.

Your boyfriend sounds more of a lazy scoundrel than sophisticated con man. Your growing impatience was, I suspect, confirmation of what you knew all along. Your doubts grew, but the evidence was there very early on for you to see and act upon. He showed you who he was from the very beginning. Ask yourself why you accepted this. Was it lower rent at a vulnerable time in your life, companionship, romance and/or the promise of financial security?


He can wait you out for another decade, or more. It costs him nothing to do that. He holds all the cards.

He can wait you out for another decade, or more. It costs him nothing to do that. He holds all the cards. Sure, he can feign outrage: “How could you be so crude as to calculate every last red cent? You have reduced our 10 years to these unseemly transactions. I thought I meant more to you than that!” Or: “This is not the right time to pressure me about marriage, especially when you seem so terribly unhappy, and we are in the midst of a pandemic. If you feel this way, why do you stay?”

Here is one way this could shake out: You finally reach your breaking point, perhaps threaten to leave him, his house and his businesses. You finally walk out the door, quietly hoping that he comes to his senses and realizes what he is about to lose. And next? He yet again takes the path of least resistance, shows you who he is for the very last time, and does exactly what he has done for 10 years to move this business partnership and relationship forward: Nothing.

The Moneyist:My wife has homeschooled our son and our best friends’ son since September due to COVID-19. Is it too late to bring up money?

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This investment mix beats the S&P 500 — by a mile

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This article is the core of my best advice for long-term investors. If you want the very best equity portfolio, you’re about to learn what it is and how to put it together.

This article has three parts. The first is what might be called an “executive summary” of key points. The second outlines the step-by-step process of creating my recommended portfolio. The third digs deeper into a few related topics.

This is one of a series of articles I’ve written and updated annually for many years. Together, they outline a lifetime wealth accumulation strategy for do-it-yourself investors.

The other articles will tackle how to accumulate investment savings, how much to hold in bonds, and how to plan retirement withdrawals.

Part one

“Ultimate” isn’t a term to toss around lightly. But in the case of the ultimate buy-and-hold strategy, it fits. I believe this is the absolute best way for most investors to achieve long-term growth in the stock markets.

This strategy is based on the best academic research I can find — and it is the basis of most of my own investments.

Here are some key takeaways:

Because nobody can know the future of investment returns, massive diversification gives investors the highest probability for long-term success.

Most investors rely almost exclusively on the S&P 500
SPX,
-0.48%
.
But by adding equal portions of nine other equity asset classes, long-term investors can double or even triple their returns.

The additional return comes primarily from taking advantage of long-term favorable returns of value stocks and small-cap stocks. Taking this step involves only minimal additional risk.

The ultimate buy-and-hold portfolio works best for investors who don’t want or try to predict the future, time the market’s inevitable swings or pick individual stocks.

By investing in passively managed index funds or exchange-traded funds, this strategy offers investors a convenient, low-cost way to own thousands of stocks.

Read: Will Social Security still be there if I wait to claim it?

Part two

This “ultimate” all-equity portfolio automatically takes advantage of stock-market opportunities wherever they are.

It’s best to roll this out in steps so you can see how it goes together. To help you follow along, here’s a table showing the components.

The base “ingredient” in this portfolio is the S&P 500, which is a good investment by itself. For the past 51 calendar years, from 1970 through 2020, the S&P 500 compounded at 10.7%. An initial investment of $100,000 in 1970 would have grown to nearly $18 million by the end of 2020. Keep that figure in mind as a benchmark to see the results of the diversification I’m about to describe.

For the sake of our discussion, think of the S&P 500 index as Portfolio 1.

The next step involves shifting 10% of your portfolio from the S&P 500 to large-cap value stocks, which are regarded as relatively underpriced (hence the term value).

This results in Portfolio 2, which is still 90% in the S&P 500. Assuming annual rebalancing (an assumption that applies throughout this discussion), the 51-year compound return rises from 10.7% to 10.9%. That would turn $100,000 investment in 1970 into $19.4 million.

In dollars, this simple step adds nearly 15 times the amount of your entire original investment of $100,000 — the result of changing only one-tenth of the portfolio. If that’s not enough to convince you of the power of diversification, keep reading.

Read: We want to scale back to an up-and-coming town out West where we can retire — where should we go?

In Portfolio 3, we move another 10% into U.S. small-cap blend stocks, decreasing the weight of the S&P 500 to 80%.

This boosts the 51-year compound return to 11%; an initial $100,000 investment would grow to $20.7 million — an increase of nearly $2.8 million from Portfolio 1.

To create Portfolio 4, we move 10% of the portfolio into U.S. small-cap value stocks, reducing the weight of the S&P 500 to 70%. Small-cap value stocks historically have been the most productive of all major U.S. asset classes, and they boost the compound return to 11.4%, enough to turn that initial $100,000 investment into $24.4 million — with more than two-thirds of the portfolio still in the S&P 500.

Read: Is COVID-19 a preview of what retirement will be like?

To continue diversifying, we create Portfolio 5 by shifting another 10% into U.S. REITs funds. Result: a compound return of 11.4% and an ending cash value of just under $25 million.

I understand that many investors are uncomfortable with international equities. But I believe any portfolio worth being described as “ultimate” must venture beyond the U.S. borders.

Accordingly, to create Portfolio 6, we shift another 40% of the portfolio to four more important asset classes: international large-cap blend stocks, international large-cap value stocks, international small-cap blend stocks and international small-cap value stocks.

This reduces the influence of the S&P 500 to 20%. The result is a compound return of 12% and a 51-year portfolio value of $32.4 million — an increase of 81% over the S&P 500 by itself.

The final step, Portfolio 7, comes from adding 10% in emerging markets stocks, representing countries with expanding economies and prospects for rapid growth.

This boosts the compound return to 12.4% and a final value of $34.4 million.

This massively diversified 10-part portfolio is as far removed as possible from any effort to predict the future. Over 51 calendar years, it met all the asset-class predictions of academic researchers—and more than doubled the dollar return of the S&P 500.

Here are my specific recommendations:

Asset class

Recommended ETF (ticker)

Standard & Poor’s 500 Index

AVUS

U.S. large-cap value

RPV

U.S. small-cap blend

IJR

U.S. small-cap value

AVUV

U.S. real-estate investment trusts

VNQ

International large blend

AVDE

International large-cap value

EFV

International small-cap blend

FNDC

International small-cap value

AVDV

Emerging markets

AVEM

Unfortunately, this portfolio has an important drawback: It requires owning and periodically rebalancing 10 component parts. Relatively few investors have the time or inclination to do that.

Fortunately, we have devised a four-fund alternative that’s much easier to implement.

Since 1970, this “lite” version of the ultimate buy and hold strategy would have produced virtually the same compound return, dollar return and standard deviation as the 10-fund portfolio I outlined above.

In an upcoming article, I’ll roll out this new version.

Part three

It won’t surprise you to learn that there’s much more to say about this portfolio.

In 2020, we recalculated results from the 1970s to reflect new data we did not have in previous years. We also changed our assumptions about fund expenses that investors would have been charge in the 1970s. We believe our recalculations will better reflect what 21st century investors can reasonably expect.

Yet even after all these calculations, the returns did not change materially, and there’s no change in my beliefs or recommendations.

This updated data is as good as I can make it.

To learn more about these changes as well as some other reasons I think so highly of this portfolio, I hope you’ll tune in to my latest podcast.

Richard Buck contributed to this article.

Paul Merriman and Richard Buck are the authors of We’re Talking Millions! 12 Simple Ways To Supercharge Your Retirement.



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‘She is a financial idiot and partier’: I loaned my sister $4,780 for a lawyer during her divorce. I am still chasing repayments

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Two years ago, my sister called me from a divorce-settlement meeting without a lawyer. Her soon-to-be ex-spouse had a lawyer there. She was being pressured into giving up her portion of his pension that she was legally entitled to (their marriage was over 20 years). She was freaking out, in tears and realized she needed a lawyer.

I told her to leave that meeting and get a lawyer. Afterward, she asked me for money to pay for the lawyer and promised to pay me back. I testified for her regarding other marital financial issues (I was executor of our father’s estate, in which her husband had made false statements on his entitlements to some of her inheritance). She thanked me again and again in front of her lawyer and promised to repay me.


‘She borrowed another $5,000 from an aunt for a child-custody battle, which she lost.’

I am not wealthy and did not have $4,780 on hand, but I have good credit and used my line of credit. It will be two years in May and I have not received any payment. She was supposed to give me some monthly payments and lump sums at tax-refund time. Last year’s excuse for no tax-refund reimbursement was that she borrowed another $5,000 from an aunt for a child-custody battle, which she lost.

She earns $90,000 to $95,000 a year, but this year’s excuse is that she is in arrears for child-support payments. She is not destitute; she is a financial idiot and partier. I do have texts saying she will pay me back and others that say she has no money. She swore before Thanksgiving this year that she would start paying me in January. January came and went, no payment.

During a text discussion in early February, she informed me about her child-support arrears (so no lump payment from her tax-refund again) and is only planning $25 per month repayments when she could. That plan doesn’t cover the interest on the loan, and even if I was OK with covering the interest, it would be more than 20 years.

I told her that was not acceptable, and that she left me no choice. I didn’t say what action I would take. So I am planning to take her to small-claims court, and garnish her wages. The Virginia statute of limitations is two years, so I need to do this by early May. Now the financial idiot sent me a check for $25.

If I cash it, would it extend the statute of limitations? Should I cash it? What is the best approach? Also, she is a social-media junkie; on her Facebook and Instagram, there are multiple examples of vacations, drunken outings and other expenditures since May 2019 that could have helped to dig her out of the financial heap.

There is a capability to reimburse, but zero will. Any advice is appreciated.

Deadbeat’s Sibling

Dear Sibling,

Only gamble what you can afford to lose. Only invest what you can afford to lose. Only lend what you can afford to lose. I don’t believe you will be getting this money, so I advise you to write it off as a bad debt sooner rather than later. Sure, try the small-claims court, but failing that there will come a time when you will have to say enough is enough: “I tried to do the right thing, she didn’t repay it, and I can’t change her.” I do have questions about what you hope to achieve.


‘I see two unhealthy patterns: Your sister’s grifting and your gifting. Each serves a purpose.’

If she repaid you the principal sum, would you then start to feel similar rumblings of injustice over the interest? If she repaid you with interest, would you then suffer pangs of annoyance over the hoops of fire she made you jump through in order to be repaid? After all, you were doing her the favor, right? How dare she put you through this. And, thirdly, what is this $4,780 worth to you? It’s already been two years of self-righteous fury, stress and anxiety.

None of this should come as a surprise to you. I see two unhealthy patterns: your sister’s grifting and your gifting. But each of these serves a purpose. Yes, your sister reactivates the statute of limitations by repaying a small part of the loan and, thereby, acknowledging that she still owes you money — five years for breaching a written contract or three for an oral contract, but talk to a lawyer about that. When it does, this tortured game of cat and mouse begins anew.

How far are you willing to go to retrieve this debt? How long will you pursue it? And aside from the prospect of knowing that you are still in with a shot of getting the $4,780 back, what do you get out of feeling perpetually angry and frustrated at your sister? Does it reaffirm that you are the principled, upstanding one in the family? Or does pursuing your sister for this money remind her on a daily basis that she appears to be incapable of keeping a promise?


‘In order to truly move on, you too need to take responsibility for lending it to her in the first place.’


— The Moneyist

I ask you these questions for a reason. Of course, she’s behind on child support. You already know that your sister is a dramatic (and possibly irresponsible and/or reckless) person who has learned how to leverage her alleged victimhood to her advantage. She may see herself as a victim of a bad marriage, cruel husband, biased judicial system, and any other circumstance that does not include her own choices and actions.

Your sister may or may not accept responsibility for borrowing this money, but in order for you to truly move on, you too need to take responsibility for lending it to her in the first place. Few could fault you for wanting this money back. But in the game of life, you already win. You are the sister who endeavors to keep her word, look out for others, and be the adult in the room. Your sister loses. You get to be right. Your sister is wrong. And, for exactly $4,780, everyone else will see that.

I understand that you would like this money back, but many people lead uneven, tumultuous lives. You may also ask yourself if this unrelenting pursuit of money from such a person serves you and does what I hope you originally had intended to do by telling your sister to walk out of those divorce talks and hire a lawyer: help your sibling and, in some small way, help make her chaotic life easier.

You are not a credit company or debt collector. You are, for better or for worse, her sister.

You can email The Moneyist with any financial and ethical questions related to coronavirus at qfottrell@marketwatch.com

The Moneyist: ‘Warren Buffett and Harry Potter couldn’t get those two retired early’: Our spendthrift neighbors said our adviser was ‘lousy.’ So how come WE retired early?

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Americans can’t file their income taxes fast enough — but they should brace for some unwelcome news in their 2020 returns

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It seems like you can’t get people to file their 2020 tax returns fast enough.

People are filing their taxes at a blistering pace so far this year, underscoring how serious Americans are about getting any tax refund due or any stimulus-check money they missed last year. The IRS began accepting and processing 2020 tax returns slightly later than usual because its systems needed a breather after distributing a second round of stimulus checks in late December.

However, there is some bad news that many Americans should be prepared for when they finally get their return: The average refund so far is $2,880 — as unemployed skyrocketed in 2020 due to restrictions on businesses and shelter-in-place orders due to COVID-19 — significantly less than the $3,125 average refund at roughly the same point last year.

New IRS statistics released Thursday, when put in context, show people are submitting their individual tax returns at a much greater rate than they were early into last year’s tax season. As of Feb. 19, only eight full days into the 2021 filing season, the IRS received 34.69 million individual returns, agency statistics show.

That’s 30.5% fewer returns than the 49.8 million received by Feb. 21 last year — but that was 26 days into the 2020 filing season and weeks before conformation that the coronavirus had really taken hold in the U.S. Simple math, in fact, suggests the volume of individual returns this year.


Simple math suggests the volume of individual returns this year.

When dividing the nearly 34.7 million returns so far this year by eight filing days, the result is 4.3 million returns filed per day. The 49.8 million returns filed last year, divided by 26 filing days comes to 1.91 million returns per day.

Put another way: The IRS has received approximately 21% more individual returns than the agency received last year by Feb. 7, which was 12 days into the tax season last year. Right now, Americans are facing an April 15 deadline to file and pay their taxes (June 15 in Texas), unless they get an extension to Oct. 15, which gives them more time to file their return, but not to pay.

However, they don’t yet factor in refunds that include payments for the Earned Income Tax Credit, a powerful anti-poverty tax credit geared towards low- and moderate-income working families. Refunds incorporating the EITC and the Additional Child Tax Credit will start hitting bank accounts during the first week of March, according to the IRS.

After the Internal Revenue Service started accepting tax returns on Friday, Feb. 12, the agency took in 55 million returns in the first weekend alone, Internal Revenue Service Commissioner Charles Rettig said this week. These 55 million tax returns were not just individual tax returns. They also included business returns and a variety of other returns, IRS spokesman Anthony Burke said.



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