1/23/2012 3:08 PM ET|
Where Mitt Romney keeps his money
The wealthy GOP presidential candidate is taking heat for his hedge fund work and his Cayman Island accounts. But his investment portfolio is mostly bland -- perhaps by design.
This article was updated Jan. 24 to include just-released tax information.
Mitt Romney's presidential campaign has an increasingly difficult problem: People can't stop talking about his money -- how he made it, how he spends it, where he stashes it and how he invests it.
As much as Romney tries to divert attention from Bain Capital, the private equity firm he co-founded in 1984, questions remain about the way Bain handled company restructurings and layoffs.
People also want to know why he wouldn't release his tax returns early on, why his tax rates are so low and why some of his money is parked in the Cayman Islands. He did release two years of tax information late on Monday, Jan. 23, showing $42.5 million in income for 2010 and 2011, mostly from gains on investments, the Associated Press reports.
Romney lost the South Carolina primary contest last weekend, grabbing only 28% of the vote compared with the 40% that went to winner Newt Gingrich. His performance was clearly hurt by a less-than-stellar debate performance and mounting questions about his finances.
So Romney finds himself in an absurd paradox. He hoped to win American hearts as the savvy businessman who could turn the economy around. Instead, his business experience is almost a liability as his campaign faces deep-rooted antagonism toward Wall Street and the richest 1%.
The former Massachusetts governor grew up in a wealthy family, but he really brought in the big bucks after co-founding Bain. Now, he and his wife have a fortune that his campaign estimates is between $190 million and $250 million.
Amid all the questions, here's a look at what we do know about what he earns -- and how he invests his fortune.
A diverse portfolio
Romney probably has much more money than anyone else running for president. And the financial disclosure documents (.pdf file) he filed last year as a presidential candidate show a vast array of investments. This man takes diversification seriously. His wife even owns horses valued at as much as $500,000 through a limited-liability company. He owns as much as $500,000 in gold.
(Dollar amounts on the form are reported in wide ranges, from $250,001 to $500,000, for example, and from $1 million to $5 million.)
Romney's assets are mostly held in some 160 funds managed by several investment firms, including Goldman Sachs and Thornburg Investment Management. Romney has wisely put nearly all of his assets in blind trusts and individual retirement accounts in his and his wife's names. In each case, a trustee or a third-party investment manager has complete investment discretion over the assets.
Romney's portfolio is unusual in many aspects, including this one: His individual retirement account has between $20.7 million and $101.6 million in it. But IRA gains are tax-deferred, and The Wall Street Journal reported that Romney likely contributed pretax dollars to the account. That means Romney has been able to defer paying taxes on much of his wealth -- at least until he withdraws the money.
It's very rare to have more than $100 million in an IRA, the Journal report said.
You'd be hard-pressed to find any stocks that Romney or his investment managers appear to favor. It doesn't really look as if his portfolio is hot on individual stocks, with the exception of Ford Motor (F, news). Romney's trust owns between $250,000 and $500,000 worth of Ford shares.
Romney's portfolio is instead filled with other types of investments, including exchange-traded funds, bonds and mutual funds. For example, he has between $1 million and $5 million in the iShares MSCI EAFE Index (EFA), an ETF that tracks stocks in developed markets outside the U.S.
He also has tens of millions of dollars in Federal Home Loan Bank bonds with a wide range of maturity dates.
You get the sense that Romney's portfolio has been carefully engineered to be as noncontroversial as possible -- exactly what you would expect from someone who is smart, incredibly wealthy and making his second run for the presidency.
In fact, it doesn't seem as if these investments were chosen primarily for their profit potential. Rather, it appears his money managers have stashed his assets in the blandest and least-offensive places possible to wait out the election. That takes skill in and of itself.
Given his wealth, he may be aiming his investments at preserving capital rather than growing it. Still, he recorded $42.5 million in income over two years, most of it capital gains -- gains on investments.
His financial disclosures, though, suggest Romney's fortunes didn't increase much in the four years between campaigns. His campaign estimates the range of his assets at between $190 million and $250 million -- exactly the same range the last time he ran for president, The New York Times reported.
Continued on the next page. Funds mentioned in this article include Goldman Sachs Small Cap Value A (GSSMX), Goldman Sachs Strategic Income A (GSZAX)and Goldman Sachs Local Emerging Markets Debt Fund A (GAMDX).
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Let Them Eat Cake ~
Quote: " It's very rare to ever have more than $100 million in an IRA" the Journal reported.....
I have some news; these days it's very rare for almost any average American to even have an IRA, (or an other financial instrument), let alone with anything in it approaching nine figures. The 'glitteratti' of the country are not only unbelievably fortunate to be so comfortably esconced in such wealth ... they are also extremely insulated. They have no real sense of the plight of millions of hard working Americans whose finances are so tight that they have to make daily decisions between buying some gas to get to the job, a bag of groceries so the family can eat one more day or for a rent or utility bill that has come due.This nation is in the deep dark woods and the big bad wolf comes knocking on almost everyone's door on a daily basis ... unless you are among the privileged and the landed gentry.
Peace to all ....
I see Romney is like the rest on the rich, hiding money in Caymen Island, Switzerland and who knows where else. Somehow it is a shady deal to me. When he claims he knows how hard things are for the lower and middle class, I cannot believe that, he is out of touch with most of the American people. Maybe the lower and middle class people should be creating the laws, see how Congress likes that.
This is an idea that should be passed, we need a Congressional Reform Act for 2012 1- No Tenure/No Pension. ACongressman/Woman collects salary while in office and receives no pay when their in office. 2- Congress (past, present & Future participates in Social Security. All funds in Congressional retirement fund move to the Social Security system immedicately. All future funds flow into the Social Security system, and Congress Participates with the American people. It may not be used for any other purpose. 3- Congress can purchase their own retirement plan, just as all Americans do. 4- Congress will no longer vote themselves a pay raise. Congressional pay will rise by the lower CPI or 3%. 5- Congress loses their current healthcare system and participates in the same healthcare system as the American people. 6- Congress must equally abide by all laws they impose on the American people. 7- All contracts with pass and present Congressmen/Women. Congressment/Women made all these contracts for themselves. Serving in Congress is an honor, not a career. The Founding Fathers envisioned citizen legislators, so ours should serve their terms, then go home and back to work. If each person contacts a minimum of twenty people then it will only take 3 days for most people (in the U.S.) to receive the message. Don't you think its time? If you agree, you need to send this to you friends and let it get to our Officials.
They should be made to live on the laws they made for us, then you will see changes. I don't trust any of them. Its a real shame those representing us have so much greed in them.
What kind of "patriot" shelters their money in the Cayman Islands?
So the guy is criticized for using the existing laws to reduce his taxes, instead of applauded for maximizing profits, creating and saving jobs, which is what America was formerly about.
- We have a tax code of over 54,000 pages and one should question if these "existing laws" create a healthy economy that benefits ALL Americans or are they special tax breaks and shelters that only help the rich while putting the American economy at risk by shipping jobs overseas and for speculative behavior.
- Bain capital does have winners like Staples and Sports Authority but there are also questions about the failures that Bain and other capital equity firms invest in. There is no doubt that some of these companies were doomed to failure but the equity firms finance these deals by loading these companies with debt so their investments are paid back with a 'maximized' profit. Sometimes these new debt loads were what kill the companies. If these equity firms had lost money on some of these investments then I would conclude that these were real attempts to turn the companies around. If they only made profits off of these failed companies then I would have to wonder what their motives were.
- As for job growth 2000-2010 was the first decade since the 1930 with zero job growth. Federal taxes are at historic lows yet job growth is anemic. Again, have our tax and business policies been created to maximize job growth or to maximize profits for those at the very top.
- Yes, at one time America had a vibrant middle class which created demand for many of the goods that companies produced and sell. Companies had healthy profits and Americans had good paying jobs. THIS is what America was formerly about.
All these attacks on Romney over his money is all BS, I wouldn't have released a damn thing even if it casused me to lose, let America have Newt if that's what they want, even worse let them keep the Clown show in the white house going another four years for all I care! What he has released will not be enough you hard it in today's debate already Brian Williams saying that some will ask for more years, why because that is precisly the Obama game plan, keep Romney looking like the rich boogie man, why don't we get tax returns from Nancy Pelosi, Reid and all the other rich bastards in politics, say what you want about Romney he looks to me like a man who has worked for what he has and is smart enough to know how to keep it, just like everyone else would do if they knew how period! This man has been married to the same woman for over 40 years, raised great productive kids, and has made alot of money, why would this man want to be president if it wern't just to want to help this country? He doesn't need money, power, or the headache!
There are so many ways to keep the govt from taxing money it's ridiculous - but you've got to have money first to hire the CPAs and Attorneys who know how to do it - money put into an IRA is supposed to be taxed when its taken out, but it can be dribbled out and the balance at death does not have to be taxed immediately - it can go to a beneficiary who may have 70 yrs to live ... the rules are made to avoid taxes; those rules are put into place by the rich and can only realistically be used by the rich. Just like the "no estate taxes" BS. Only the rich (top 1%) are even subject to the estate tax, for the 99% its a non-issue. Why should huge fortunes be passed on without tax to generation after generation of kids who never have to work a day in their life? Capital gains tax is another way the rich get richer without paying significant tax. I believe a major overhaul of tax code is overdue and the result should be simpler more straight forward and offer more transparency. The VAT should be looked at closely and considered. Property taxes are of more concern to me than income taxes. At least with income tax, if you don't make the money you don't have to pay the tax. And sales tax is pretty high but at least with sales tax, if you don't have the money and don't spend money then sales tax is more controlable. I'm happy to pay U.S. taxes if I earn money here in the good ol USA - I think its despicable for people who are so fortunate to live in a country where they can succeed and have the freedoms and benefits and government services we do and then not want to help support the general welfare of our friends and neighbors. We have problems but the "government" is not the cause of them. The people we elect to represent us have failed us and our government.
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