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Write You - Investing - Fear Of Taxes Can Harm Seniors
When it comes to investing, avoiding taxes should not be your primary concern. Regardless of how much that financial salesperson talks about the importance of deferring taxes, you need to stop a
According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product
nd consider these important facts before you make a decision. Otherwise, you can actually lose money instead of saving it.
As I talk with seniors from across the nation, it’s obvious they loath
As I talk with seniors from across the nation, it’s obvious they loath
; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.
Examples of combination products may in
Examples of combination products may in
e paying taxes. Financial salespeople often play on this dislike of paying taxes to motivate seniors into buying a high-commission investment even though it will earn the senior less in the long
lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.
run. The only one earning more in this situation is the salesperson!
There are two basic kinds of tax-advantaged investments—tax-free and tax-deferred. The two are often confused even though t
There are two basic kinds of tax-advantaged investments—tax-free and tax-deferred. The two are often confused even though t
here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe
hey are very different. For instance, municipal bonds are tax-free. You don’t have to pay any Federal income tax on the interest that you earn on a municipal bond—ever. This allows municipalitie
d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.
Combination pro
Combination pro
s to borrow money for public works projects at lower interest rates, saving the public money.
The simple way to calculate whether you are better buying a tax-free municipal bond versus a taxabl
The simple way to calculate whether you are better buying a tax-free municipal bond versus a taxabl
ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc
e bond is to divide the tax-free yield by 1 minus your tax rate. For instance, if you are in the 28% tax bracket and a 10-year municipal bond is yielding 3.78% then you divide 3.78 by .72, which
easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi
equals 5.25%. That means that you would have to earn over 5.25% on a taxable bond to give you more after tax income then the municipal bond.
Tax-deferred investments work quite differently. An
Tax-deferred investments work quite differently. An
nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically
nuities are the most often used tax-deferred investment. You don’t avoid paying income tax in a tax-deferred investment. You only delay paying taxes, which are due when money is taken out of the
and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ
tax-deferred vehicle. If you don’t plan on using the money yourself, the taxes will still have to be paid at your death.
Not only will you have to pay taxes on tax-deferred investments in the
Not only will you have to pay taxes on tax-deferred investments in the
ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi
future, it is likely that you will have to pay more in taxes then compared to paying the tax now for two reasons.
First, any earnings on a tax-deferred vehicle will be taxed at ordinary income
First, any earnings on a tax-deferred vehicle will be taxed at ordinary income
ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.
Following aspects would a
Following aspects would a
rates—for instance the 28% we assumed earlier. If you invested that money in an investment that paid dividends and/or capital gains and paid the taxes now, you would only have to pay taxes at th
dd to the challenges in developing combination products:
Which markets to tap where the combination products can do fairly well?
Which combination prod
Which markets to tap where the combination products can do fairly well?
Which combination prod
e 10% or 15% level.
That’s a huge difference. In our example, earnings taken out of an annuity will be taxed at 28%. Dividends and capital gains off of a mutual fund will be taxed at 15%. That’
That’s a huge difference. In our example, earnings taken out of an annuity will be taxed at 28%. Dividends and capital gains off of a mutual fund will be taxed at 15%. That’
cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin
s a 13% difference!
Financial salespeople will use the fear of paying taxes in an attempt to convince a 70 or 80 year old that they should buy an annuity. That is completely bogus! Studies have
Financial salespeople will use the fear of paying taxes in an attempt to convince a 70 or 80 year old that they should buy an annuity. That is completely bogus! Studies have
tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen
What would be the developing cost?
How to tackle the risks encountered during combination product developmen
shown that your money must be left in an annuity for 20-30 years before you begin to see the benefits of tax-deferral. Again, the only one benefiting from the transaction is the salesperson. Do
t?
As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel
As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel
n’t fall for this trap.
Another trick that financial salespeople will use to sell an annuity is to say that it will keep your Social Security from being taxed. That’s true, but if you use an an
Another trick that financial salespeople will use to sell an annuity is to say that it will keep your Social Security from being taxed. That’s true, but if you use an an
ping new procedures for reviewing their safety, efficacy and quality.
Professional from academic institutions, pharmaceutical industries, health care indust
Professional from academic institutions, pharmaceutical industries, health care indust
nuity you’ll push all those taxes down the road. Later on, that could force you (or your heirs if you’re deceased) into a higher tax bracket and you’d end up paying more.
Here’s the bottom line
Here’s the bottom line
y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products
. If you’re in a tax bracket of 27% or higher then use tax-free municipal bonds for the income portion of your portfolio. For the equity portion of your portfolio, use tax-efficient vehicles lik
.
As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de
As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de
e Exchange-Traded Funds where you can control the timing of the tax event while having the dividends and capital gains taxed at much lower rates.
As you can see, there isn’t a single case in my
As you can see, there isn’t a single case in my
elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.
Companies that provide selfless information through particip
Companies that provide selfless information through particip
opinion where an older investor will benefit from a tax-deferred annuity. With current tax rates it just doesn’t make dollars and sense. Be smart, do the simple math, and you’ll come out ahead.
tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products
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