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There’s pretty much nothing to like about Project 2025’s dystopian vision for America. Whether it’s the elimination of abortion rights or the elimination of the Department of Education, it’s all horrifying. Here’s just one of the many appalling declarations in Project 2025: “Our Constitution grants each of us the liberty to do not what we want, but what we ought.”

Given the radical overall thrust of Project 2025, it’s easy to lose sight of its more mundane contents, like its tax agenda. But the tax proposals of Project 2025, if ever enacted, would be no less dangerous to our happiness and well-being than the restrictions on individual freedom. They would practically guarantee the concentration of the country’s wealth in the hands of a group of billionaires and trillionaires who would be insulated from meaningful federal taxation. The resulting concentration of political power would destroy whatever is left of our democracy, clearing the way for the imposition of Project 2025’s extreme social agenda.

The most often discussed tax proposals of Project 2025—reducing the corporate tax rate to 18% or less, the individual income tax rate to 30%, the tax rate on dividends and capital gains to 15%, and the maximum estate tax rate to 20%—all obviously move us in that direction.

But a Project 2025 proposal that is receiving much less public attention, Universal Savings Accounts (USA), could do far more damage.

On the surface, Project 2025’s USA proposal seems like just one more misguided retirement savings incentive that favors the rich. It would allow any taxpayer to contribute up to $15,000 of after-tax earnings to a USA.

Functionally, USAs would be similar to Roth IRAs. A contribution to a USA, like a contribution to a Roth IRA, would not by itself reduce a person’s tax liability. And, as is the case with a Roth IRA, all the earnings of a USA would escape tax.

But USAs would not function merely as larger Roth IRAs. Their tax avoidance potential would be infinitely greater. They would have the potential to exempt multi-billion dollar gains, even trillion-dollar gains, from taxation.

Investigative journalists have shown that some of America’s wealthiest billionaires have gigantic Roth IRAs. But these big names grew their Roth IRA fortunes, at least technically, by savvy investing. And that’s where the tax avoidance potential of USAs will be far greater. The Project 2025 white paper calls for USAs to be “highly flexible and for taxpayers to be able to invest their USAs as they see fit, including, for example, in a closely held business.” Current rules applicable to Roth IRAs make investing in a closely held business virtually impossible, except as a purely passive investor.

That’s a huge difference. If USA holders are able to invest in their own closely held businesses, as Project 2025 contemplates, the potential income tax avoidance is unlimited. After all, although $15,000 is not a lot of money, it’s enough, and certainly, several years of $15,000 deposits into a USA are enough to start a business in one’s garage. This means that the growth of a garage-based business could be shielded entirely from federal income tax.

The list of businesses that started in the founder’s garage include, to name a few, Disney, Mattel, Microsoft, Amazon, Dell, and Google. Subway started as a single small shop and grew to its current size of approximately 37,000 locations. Had USAs been available to the founders of those now enormous companies, several of which now have market capitalizations in the trillions of dollars, the bulk of their lifetime gains would be entirely exempt from federal income tax.

Here’s how it would work: When the next Bill Gates or Jeff Bezos conceives an idea for a business, they will create a corporation by simply submitting documents to a state government office. The corporation’s value initially will be zero. Then, our future billionaire (or trillionaire) will cause the corporation to issue stock to their tax-free USA in exchange for the modest seed capital needed to start the business. The corporation then can borrow money, issue more stock to outside investors, and hire employees. Eventually, our future mogul will be sitting on a stupefying fortune, all held in a USA, and all entirely exempt from income tax.

The bottom line here is that Project 2025 would have the founders of future mega businesses that start small—and pretty much every business starts small—paying little or no tax on what could be a trillion dollars or more of income over the course of a lifetime. The resulting concentration of the country’s wealth will dwarf even the Gilded Age-like level of wealth concentration that exists today.

More must-read commentary published by Fortune:

The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Fortune.

This story was originally featured on Fortune.com

Imagine you’ve worked hard, saved up, and now you’re ready to enjoy retirement. You’re 68, debt-free, and living comfortably in a paid-off co-op. Sounds pretty good, right? But then, your financial advisor suggests something that makes you do a double-take – start taking Social Security early and take out a new mortgage just to avoid dipping into your 401(k). Wait, what?

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That’s the scenario Helene, a retiree, found herself in. She’s been living mortgage-free for over 30 years and plans to buy a home in a 55-plus community in New Jersey. But when her advisor told her to take out a bigger mortgage and start Social Security early, Helene decided to get a second opinion from none other than Suze Orman.

If you’ve ever heard Orman’s advice, you know she’s not one to bite her tongue. When Helene asked whether she should follow her advisor’s advice, her response was loud and clear: “Absolutely not – over my dead body!”

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Orman didn’t hold back. She pointed out that if Helene truly trusted her advisor’s recommendation, she wouldn’t be asking for a second opinion in the first place. And let’s be real – taking out a mortgage just to cover bills when you’re already debt-free? Orman was having none of it.

Taking on new debt in retirement might seem like a big deal to some, but when you’ve been debt-free – going back into debt electively isn’t ideal. Having debt in retirement isn’t uncommon, though. A 2019 study found that 37% of homeowners aged 65 and older had mortgage debt, up from just 22% in 2001. Even more surprising? The median amount owed by these older homeowners more than doubled from $43,400 in 2001 to a whopping $95,000 in 2019. That’s a lot of stress to carry into your golden years, and Suze is all about avoiding unnecessary financial burdens.

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“Why would you want to take on new debt at today’s interest rates to pay some bills?” Suze questioned. She reminded Helene that the whole point of saving and investing is to feel secure, not to create more financial stress. Owning your home outright is a huge part of that security.

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But Suze didn’t just dismiss the idea without giving Helene solid advice. She encouraged her to think about what makes her most secure – starting Social Security now, waiting, or deciding when to dip into her 401(k). Suze emphasized Helene controlling her financial decisions: “You make that decision, girlfriend.”

And speaking of Social Security, it’s worth noting that delaying it until age 70 can bump up your monthly benefits by as much as 32% compared to claiming it at full retirement age. But guess what? Only about 10% of Americans wait until 70 to claim Social Security, according to a Schroder survey, even though the financial benefits are pretty clear. Suze wants Helene to think long and hard about what will make her feel the most secure in the long run.

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Before making big financial decisions, especially in retirement, consider talking to a qualified financial advisor who understands your goals and situation. While Helene’s advisor might have given her questionable advice, it’s still worth getting an expert opinion. But remember, it’s your money and your future – make sure the advice you’re getting feels right for you.

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This article 68-Year-Old Is Told To Take Out A Bigger Mortgage For Bills Rather Than Tap Into 401(k): Suze Orman Says ‘Absolutely Not – Over My Dead Body!’ originally appeared on Benzinga.com

© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

Key Takeaways

• Qualcomm is reportedly considering buying parts of Intel.

• A Reuters story said company executives are especially interested in Intel’s PC chip design business.

• It’s the latest report to detail possible deal activity for Intel as the chip giant looks to revive interest in its flagging shares.

Qualcomm (QCOM) shares fell following a report that the company has looked into buying segments of Intel (INTC), potentially including its PC chip design business.

Reuters on Friday the maker of semiconductors for mobile devices has explored the idea of purchasing different parts of Intel. One of its sources said that the PC design unit is of “significant interest,” although they are considering all of Intel’s design operations.

The report is the latest to describe possible deal activity for Intel, which is seeking to reinvigorate interest in its shares. One recent story indicated that it might sell some of its stake in MobilEye (MBLY); another discussed options regarding its foundry business. Intel’s shares were recently down about 2%, whileQualcomm’s were off more than 3%.

Reuters’ Friday story quoted an Intel spokesperson as saying Qualcomm has not approached the company about any acquisitions, and that Intel is “deeply committed” to its PC business. Qualcomm did not immediately respond to Investopedia’s request for comment.

Shares of Qualcomm are up some 9% year-to-date, while Intel shares have lost about 60% of their value.

Read the original article on Investopedia.

Is there a point at which I should stop reinvesting stock dividends and invest the money or save the cash?

-Anonymous

Many financial experts recommend that you reinvest dividends most of the time – and I’m inclined to agree. The process is typically automated, doesn’t incur any fees and gives your holdings a little (or a lot) of extra oomph.

For example, if you had invested in Microsoft stock 10 years ago and consistently reinvested your dividends since then, your holdings would be worth 63% more today than if you hadn’t reinvested. That’s a lot of oomph.

Still, there is hardly ever a one-size-fits-all answer to any investment question. Accordingly, it may be wiser in some situations to just take the money rather than reinvest it.

Here’s what investors should know about when it makes sense not to reinvest dividends.

A financial advisor can help you finetune your investment strategy. Find a fiduciary advisor today.

3 Good Reasons to Not Reinvest Dividends

While reinvesting dividends will almost always give your stock holdings a shot in the arm, sometimes your big-picture needs as an investor will trump those potential benefits.

Here are three common examples of situations in which it makes sense to not reinvest dividends:

1. Balancing your portfolio. Reinvesting dividends will increase your position in the company paying them. If that company already represents, say, 5% or more of your portfolio, it may be wise to avoid getting too concentrated and not reinvest your dividends.

2. Phasing out risk. In many cases, it’s a good idea to make your investments less aggressive over the years. If you’ve been reinvesting dividends, diverting that cash toward less aggressive assets (like bonds) can be a good way to “risk-off” smoothly.

3. Income. Remember: Money is ultimately for spending, and sometimes you just need the cash. There’s nothing wrong with that, especially if you’re in or approaching retirement when short-term income becomes a bigger priority than long-term growth.

1 Bad Reason to Not Reinvest Dividends

Some people will say that you shouldn’t reinvest dividends if the underlying stock isn’t performing well. Here, however, I completely disagree.

Remember, one of the main benefits of dividends is that they pay out regardless of the stock’s recent price movement. This indicates that the company paying them has an established track record of earning profits – a clear sign that the company is fundamentally worth investing in.

In other words, even if the share price is in a slump, odds are it will recover eventually. So if you’re going to hold onto the stock anyway, and therefore keep receiving dividends, why not keep getting the extra boost from reinvesting them?

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As I like to remind my clients, we invest in companies, not stocks. The share price is only one indication of a company’s value, and sometimes a very unreliable one. That truth is often forgotten and always important. Consider consulting a financial advisor for more personalized advice on your portfolio.

What to Do Next

If you’re receiving dividends and are unsure of what to do with them, remember the fundamentals.

Deciding what to do with your dividends boils down to answering three questions:

1. Am I confident in the company’s underlying health?

2. Can I afford to reinvest the dividend income right now?

3. Is increasing my position in this company consistent with my overall portfolio strategy?

If the answer to any of these questions is “no” or “I’m not sure” then you may want to spend that dividend cash elsewhere.

If you can answer all of them with “yes,” however, then let the reinvestment machine keep doing its thing.

Investing and Retirement Planning Tips

• If you have questions specific to your investing and retirement situation, a financial advisor can help. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.

• For more about dividend investing check out this article on the subject.

• As you plan for income in retirement, keep an eye on Social Security. Use SmartAsset’s Social Security calculator to get an idea of what your benefits could look like in retirement.

• Keep an emergency fund on hand in case you run into unexpected expenses. An emergency fund should be liquid — in an account that isn’t at risk of significant fluctuation like the stock market. The tradeoff is that the value of liquid cash can be eroded by inflation. But a high-interest account allows you to earn compound interest. Compare savings accounts from these banks.

• Are you a financial advisor looking to grow your business? SmartAsset AMP helps advisors connect with leads and offers marketing automation solutions so you can spend more time making conversions. Learn more about SmartAsset AMP.

Graham Miller, CFP® is a SmartAsset financial planning columnist and answers reader questions on personal finance topics. Got a question you’d like answered? Email AskAnAdvisor@smartasset.com and your question may be answered in a future column.

Please note that Graham is not a participant in the SmartAsset AMP platform, nor is he an employee of SmartAsset. He was compensated for this article.

Photo credit: ©iStock.com/visualspace, ©iStock.com/gorodenkoff

The post Ask an Advisor: Should I Stop Reinvesting Dividends? appeared first on SmartAsset Blog.