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The ABCs of Mutual Fund Share Classes
When investing in a mutual fund, you may have the opportunity to choose among several share classes, most commonly Class A, Class B, and Class C. This multi-class structure offers you the opportunity to select a share class that is best suited to your investment goals. The only differences among these share classes typically revolve around how much you will be charged for buying the fund, when you will pay any sales charges that apply, and the amount you will pay in annual fees and expenses. Read More
Back to Basics: Diversification and Asset Allocation
When investing, particularly for long-term goals, there are two concepts you will likely hear about over and over again — diversification and asset allocation. Diversification helps limit exposure to loss in any one investment or one type of investment, while asset allocation provides a blueprint to help guide your investment decisions. Read More
GameStop, Reddit, and Market Mania: What You Need to Know
Over the course of 11 trading days from January 13 to January 28, 2021, the stock of GameStop, a struggling brick-and-mortar video game retailer, skyrocketed by more than 2,200% — creating a mix of excitement and concern throughout the financial world, as well as among many people who pay little attention to the stock market. Read More
The Traits of a Good Investor and How Women Can Make the Most of Them
Many women manage their own money. This includes women who have always been doing so and women who are relatively new to the world of investing, for whatever reason. Regardless of your level of investing experience, there are certain investor traits that can prove advantageous for anyone. Read More
Lump Sum vs. Dollar Cost Averaging: Which Is Better?
Some people go swimming by diving into the pool; others prefer to edge into the water gradually, especially if the water's cold. A decision about putting money into an investment can be somewhat similar. Is it best to invest your money all at once, putting a lump sum into something you believe will do well? Or should you invest smaller amounts regularly over time to try to minimize the risk that you might invest at precisely the wrong moment? Read More
Holding Equities For The Long Term: Time vs. Timing
Legendary investor Warren Buffett is famous for his long-term perspective. He has said that he likes to make investments he would be comfortable holding even if the market shut down for 10 years. Investing with an eye to the long term is particularly important with stocks. Historically, equities have typically outperformed bonds, cash, and inflation, though past performance is no guarantee of future results and those returns also have involved higher volatility.Read More
Balancing Your Investment Choices With Asset Allocation
A chocolate cake. Pasta. A pancake. They're all very different, but they generally involve flour, eggs, and perhaps a liquid. Depending on how much of each ingredient you use, you can get very different outcomes. The same is true of your investments. Balancing a portfolio means combining various types of investments using a recipe that's appropriate for you. Read More
The Power of Dividends In A Portfolio
Since 2003, when the top federal income tax rate on qualified dividends was reduced from a maximum of 38.6%, dividends have acquired renewed respect. Favorable tax treatment isn't the only reason, either; the ability of dividends to provide income and potentially help mitigate market volatility is also attractive to investors. As baby boomers approach retirement and begin to focus on income-producing investments, the long-term demand for high-quality, reliable dividends is likely to increase. Read More
Socially Responsible Investing
Investing with an eye toward promoting social, political, or environmental concerns (or at least not supporting activities you feel are harmful) doesn't mean you have to forgo pursuing a return on your money. Socially responsible investing may allow you to further both your own economic interests and a greater good, in whatever way you define that term. Read More
Active vs. Passive Portfolio Management
One of the longest-standing debates in investing is over the relative merits of active portfolio management versus passive management. With an actively managed portfolio, a manager tries to beat the performance of a given benchmark index by using his or her judgment in selecting individual securities and deciding when to buy and sell them. A passively managed portfolio attempts to match that benchmark performance, and in the process, minimize expenses that can reduce an investor's net return. Each camp has strong advocates who argue that the advantages of its approach outweigh those for the opposite side. Read More
Bonds, Interest Rates, And The Impact Of Inflation
There are two fundamental ways that you can profit from owning bonds: from the interest that bonds pay, or from any increase in the bond's price. Many people who invest in bonds because they want a steady stream of income are surprised to learn that bond prices can fluctuate, just as they do with any security traded in the secondary market. Read More
Charitable Giving
Charitable giving can play an important role in many estate plans. Philanthropy cannot only give you great personal satisfaction, it can also give you a current income tax deduction, let you avoid capital gains tax, and reduce the amount of taxes your estate may owe when you die. There are many ways to give to charity. You can make gifts during your lifetime or at your death. You can make gifts outright or use a trust. You can name a charity as a beneficiary in your will, or designate a charity as a beneficiary of your retirement plan or life insurance policy. Or, if your gift is substantial, you can establish a private foundation, community foundation, or donor-advised fund. Read More
Managing a Concentrated Stock Position
A large holding of a single stock that dominates your portfolio carries unique challenges. On the one hand, it may represent a large portion of your portfolio because it has done well in the past. On the other hand, you may feel you need more diversification. You may have new financial goals that require a shift in strategy; for example, you may hold a growth stock, but now want your assets to produce additional income. Or, your investing focus may simply have shifted from growing your net worth to protecting what you've accumulated. Read More
Evaluating Volatility
Figures that show an average return on an investment are only part of the story. They don't tell how that return was achieved. Is the investment a volatile one, with a lot of ups and downs in price or returns that varied dramatically? Or was its performance relatively steady, with prices and returns that were very similar month to month or year after year? Understanding volatility measures can help you evaluate whether a particular investment is suited to your own investing style. Read More
Monitoring Your Portfolio
You probably already know you need to monitor your investment portfolio and update it periodically. Even if you've chosen an asset allocation, market forces may quickly begin to tweak it. For example, if stock prices go up, you may eventually find yourself with a greater percentage of stocks in your portfolio than you want. If stock prices go down, you might worry that you won't be able to reach your financial goals. Read More
Upside Down: What Does the Yield Curve Suggest About Growth?
On August 14, 2019, the Dow Jones Industrial Average plunged 800 points, losing 3% of its value in its biggest drop of the year. The Nasdaq Composite also lost 3%, while the S&P 500 lost 2.9%. The slide started with bad economic news from Germany and China, which triggered a flight to the relative safety of U.S. Treasury securities. High demand briefly pushed the yield on the benchmark 10-year Treasury note below the two-year note for the first time since 2007. Read More
Exchange-Traded Funds: Do They Belong in Your Portfolio?
Exchange-traded funds (ETFs) have become increasingly popular since they were introduced in the United States in the mid-1990s. Their tax efficiencies and relatively low investing costs have attracted investors who like the idea of combining the diversification of mutual funds with the trading flexibility of stocks. The proliferation of ETF choices means they can now be used to create a broad portfolio of core investments, to target narrower sectors, or to gain market exposure that might otherwise be too difficult or costly to access. Read More
2021 Key Numbers For Individual Income Tax Planning
'Tis the season to start thinking about income tax planning. What are the 2021 Federal Income Tax Schedules? Has the threshold for the Alternative Minimum Tax (AMT) changed? What about charitable deductions or the child tax credit? Read More
Isn’t Estate Planning Only For The Rich?
In a word, no. Estate planning allows you or anyone to implement certain tools now to ensure that your concerns and goals are fulfilled after you die. Your objective may be to simply make sure that your loved ones are provided for. Or you may have more complex goals, such as avoiding probate or reducing estate taxes. Read More
What Will You Pay for Medicare in 2021?
Medicare premiums, deductibles, and coinsurance amounts change annually. Here's a look at some of the costs that will apply in 2021 if you're enrolled in Original Medicare Part A and Part B. Read More
IRA and Retirement Plan Limits for 2021
Many IRA and retirement plan limits are indexed for inflation each year. While some of the limits remain unchanged for 2021, other key numbers have increased. The maximum amount you can contribute to a traditional IRA or a Roth IRA in 2021 is $6,000 (or 100% of your earned income, if less), unchanged from 2020. The maximum catch-up contribution for those age 50 or older remains $1,000. You can contribute to both a traditional IRA and a Roth IRA in 2021, but your total contributions cannot exceed these annual limits. Read More
Student Loan Relief Extended Through End of Year
In March 2020, Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which provided a six-month automatic payment suspension on federal student loans through September 30, 2020. In August, the president signed a memorandum to extend federal student loan relief through December 31, 2020. Read More
Market Week: December 14, 2020
The Nasdaq opened the week by reaching a new high last Monday after climbing for the ninth straight day. Otherwise, stocks tumbled, as the rapid rise in COVID-19 cases had investors worried that more restrictions might be forthcoming. The Global Dow and the Dow each fell 0.5%, followed by the S&P 500 (-0.2%) and the Russell 2000 (-0.1%). Communication, technology, and utilities were the only sectors to gain ground. Treasury yields and crude oil prices declined, while the dollar was mostly higher. Read More
Coronavirus Concerns? Consider Past Health Crises
During the last week of February 2020, the S&P 500 lost 11.49% — the worst week for stocks since the 2008 financial crisis — only to jump by 4.6% on the first Monday in March.1 By all accounts, the drop was largely driven by ever-increasing fears about the potential effects of the coronavirus (COVID-19) and its ultimate impact on the global economy. If recent volatility is causing you to consider cashing out of your stock holdings, it may be worthwhile to pause and put recent events into perspective, using history as a guide. Read More
Watch Out for Coronavirus Scams
Fraudsters and scam artists are always looking for new ways to prey on consumers. Now they are using the same tactics to take advantage of consumers' heightened financial and health concerns over the coronavirus pandemic. Federal, state, and local law enforcement have begun issuing warnings on the surge of coronavirus scams and how consumers can protect themselves. Here are some of the more prevalent coronavirus scams that consumers need to watch out for. Read More
IRS Clarifies COVID-19 Relief Measures for Retirement Savers
The Coronavirus Aid, Relief, and Economic Security (CARES) Act passed in March 2020 ushered in several measures designed to help IRA and retirement plan account holders cope with financial fallout from the virus. The rules were welcome relief to many people, but left questions about the details unanswered. In late June, the IRS released Notices 2020-50 and 2020-51, which shed light on these outstanding issues. Read More
The Bull Is Back… Will It Keep Charging?
On August 18, 2020, the S&P 500 set a record high for the first time since COVID-19 ushered in a bear market on February 19. The cycle from peak to peak was just 126 trading days, the fastest recovery in the history of the index, erasing losses from an equally historic plunge of almost 34% in February and March. Although the strong comeback is good news for investors, there is a striking disconnect between the buoyant market and an economy still struggling with high unemployment and a public health crisis. Read More
Four Things Women Need To Know About Social Security
Ever since a legal secretary named Ida May Fuller received the first retirement benefit check in 1940, women have been counting on Social Security to provide much-needed retirement income. Social Security provides other important benefits too, including disability and survivor benefits that can help you and your family members. Read More
Investing In Bonds
Bonds may not be as glamorous as stocks or commodities, but they are a significant component of most investment portfolios. Bonds are traded in huge volumes every day, but their full usefulness is often underappreciated and underestimated. Read More
Other Investments
A well-diversified investment portfolio contains a mix of stocks, bonds, short-term cash investments, and savings accounts that is tailored to your investment goals and risk tolerance. If you want to diversify your investment portfolio further, you can look to other investment possibilities. Here are a few of these, with brief explanations of what they are, how they can be used, and what the risks and potential rewards may be. Read More
Medicare Open Enrollment for 2021 Begins October 15
The annual Medicare Open Enrollment Period is the time during which Medicare beneficiaries can make new choices and pick plans that work best for them. Each year, Medicare plan costs and coverage typically change. In addition, your health-care needs may have changed over the past year. Read More
Dollar Cost Averaging
You may not realize it, but if you're investing a regular amount in a 401(k) or another employer-sponsored retirement plan via payroll deduction, you're already using dollar cost averaging. In fact, you can use dollar cost averaging to invest for any long-term goal. It's easy to get started, too. Read More
Social Security Retirement Benefits
Social Security was originally intended to provide older Americans with continuing income after retirement. Today, though the scope of Social Security has been widened to include survivor, disability, and other benefits, retirement benefits are still the cornerstone of the program. Read More
Investing in Stocks
Businesses sell shares of stock to investors as a way to raise money to finance expansion, pay off debt, and provide operating capital. Each share of stock represents a proportional share of ownership in the company. As a stockholder, you share in a portion of any profits and growth of the company. Dividends from earnings are paid to shareholders, and growth is realized by the increase in value of the stock. Read More
Social Security and Medicare Face Financial Challenges
Most Americans will eventually receive Social Security and Medicare benefits. Each year, the Trustees of the Social Security and Medicare Trust Funds release lengthy reports to Congress that assess the health of these important programs. The newest reports, released on April 22, 2020, discuss the current financial condition and ongoing financial challenges that both programs face, and project a Social Security cost-of-living adjustment (COLA) for 2021. Read More
Understanding Defined Benefit Plans
You may be counting on funds from a defined benefit plan to help you achieve a comfortable retirement. Often referred to as traditional pension plans, defined benefit plans promise to pay you a specified amount at retirement. To help you understand the role a defined benefit plan might play in your retirement savings strategy, here's a look at some basic plan attributes. Read More
Nonqualified Stock Options
A stock option is a written offer from an employer to sell stock to an employee at a specified price within a specific time period. A stock option can be a valuable form of additional compensation to your employees, because it provides your employees with the benefits of company ownership along with potential tax benefits. Read More
Reaching Retirement: Now What?
You've worked hard your whole life anticipating the day you could finally retire. Well, that day has arrived! But with it comes the realization that you'll need to carefully manage your assets to give them lasting potential. Read More
Converting Savings to Retirement Income
During your working years, you've probably set aside funds in retirement accounts such as IRAs, 401(k)s, or other workplace savings plans, as well as in taxable accounts. Your challenge during retirement is to convert those savings into an ongoing income stream that will provide adequate income throughout your retirement years. Read More
Election 2020: Political Uncertainty Creates Potential for Market Swings
There are clear differences between President Donald Trump and Former Vice President Joe Biden (and the political parties they represent) when it comes to tax policies, spending priorities, and overall economic strategies. For this reason, a shift in the balance of power could have wide-ranging implications for future policies and the financial prospects of individuals and businesses. Read More
Employee Stock Purchase Plans
An employee stock purchase plan allows your employees to purchase a specific amount of stock at a specific price (usually at a discount from the stock's fair market value (FMV)). The employee usually purchases the stock through a salary deduction program. Funds are withheld from your employee's after-tax salary and accumulate in an account. The employee can then make stock purchases from the account. Read More
The Shape of Economic Recovery
On June 8, 2020, the National Bureau of Economic Research (NBER), which has official responsibility for determining U.S. business cycles, announced that February 2020 marked the end of an expansion that began in 2009 and the beginning of a recession. This was no great surprise considering widespread business closures due to the coronavirus pandemic and the resulting spike in unemployment, but it was an unusually quick official announcement. Read More
Separately Managed Accounts: Tailored to Suit You
Mutual funds have been one alternative for many investors seeking professional money management. But when you buy shares of a mutual fund, your assets are pooled with those of other fund shareholders. You gain professional money management, but the fund's manager certainly can't tailor its portfolio to meet your individual requirements. Read More
Balancing Your Investment Choices with Asset Allocation
A chocolate cake. Pasta. A pancake. They're all very different, but they generally involve flour, eggs, and perhaps a liquid. Depending on how much of each ingredient you use, you can get very different outcomes. The same is true of your investments. Read More
Growth vs. Value: What’s the Difference?
With the wide variety of stocks in the market, figuring out which ones you want to invest in can be a challenging task. Many investors feel it's useful to have a system for finding stocks that might be worth buying, deciding what price to pay, and identifying when a stock should be sold. Read More
The Coronavirus And The Global Economy
Many U.S. technology companies have manufacturing operations in China while also selling to Chinese businesses and/or consumers. Companies with substantial exposure to the slowdown in China include big tech brands such as Apple, Dell, Hewlett Packard, Intel, and Qualcomm, as well as many smaller tech businesses. Read More
Handling Market Volatility
Conventional wisdom says that what goes up must come down. But even if you view market volatility as a normal occurrence, it can be tough to handle when your money is at stake. Though there's no foolproof way to handle the ups and downs of the stock market, the following common-sense tips can help. Read More
Dealing with Periods of Crisis
By definition, a crisis is a turning point, a time when you have to make crucial decisions (often suddenly) that will affect your future. Although smart planning is the key to effectively dealing with periods of crisis, you may find yourself suddenly dealing with an unexpected event that you didn’t prepare for, and you wonder what to do next. Whether you’re planning ahead or dealing with a crisis now, take control. There’s no escaping the fact that a crisis is a life-changing event, but how you handle a crisis will, in part, determine whether your life changes for the better or for the worse. Read More
New Spending Package Includes Sweeping Retirement Plan Changes (SECURE Act)
The $1.4 trillion spending package enacted on December 20, 2019, included the Setting Every Community Up for Retirement Enhancement (SECURE) Act, which had overwhelmingly passed the House of Representatives in the spring of 2019, but then subsequently stalled in the Senate. The SECURE Act represents the most sweeping set of changes to retirement legislation in more than a decade. Read More
IRA and Retirement Plan Limits For 2020
The maximum amount you can contribute to a traditional IRA or a Roth IRA in 2020 is $6,000 (or 100% of your earned income, if less), unchanged from 2019. The maximum catch-up contribution for those age 50 or older remains at $1,000. You can contribute to both a traditional IRA and a Roth IRA in 2020, but your total contributions can't exceed these annual limits. Read More
Understanding Risk
Few terms in personal finance are as important, or used as frequently, as "risk." Nevertheless, few terms are as imprecisely defined. Generally, when financial advisors or the media talk about investment risk, their focus is on the historical price volatility of the asset or investment under discussion. Read More
Sudden Wealth
What would you do with an extra $10,000? Maybe you'd pay off some debt, get rid of some college loans, or take a much-needed vacation. What if you suddenly had an extra million or 10 million or more? Now that you've come into a windfall, you have some issues to deal with. You'll need to evaluate your new financial position and consider how your sudden wealth will affect your financial goals. Read More
Data Breaches: Tips For Protecting Your Identity And Your Money
Large-scale data breaches are in the news again, but that's hardly surprising. Breaches have become more frequent — a byproduct of living in an increasingly digital world. During the first six months of 2019, the Identity Theft Resource Center (ITRC), a nonprofit organization whose mission includes broadening public awareness of data breaches and identity theft, had already tracked 713 data breaches, with more than 39 million records exposed. Once a breach has occurred, the "aftershocks" can last for years as cyberthieves exploit stolen information. Here are some ways to help protect yourself. Read More
Investment Planning Throughout Retirement
Investment planning during retirement is not the same as investing for retirement and, in many ways, is more complicated. Your working years are your saving years. With luck, your income increases from year to year as you receive promotions and/or pay raises; those increases offer some protection against rising costs caused by inflation. Read More
Estate Planning: An Introduction
By definition, estate planning is a process designed to help you manage and preserve your assets while you are alive, and to conserve and control their distribution after your death according to your goals and objectives. But what estate planning means to you specifically depends on who you are. Your age, health, wealth, lifestyle, life stage, goals, and many other factors determine your particular estate planning needs. Read More
Financial Planning: Helping You See the Big Picture
Do you picture yourself owning a new home, starting a business, or retiring comfortably? These are a few of the financial goals that may be important to you, and each comes with a price tag attached. That's where financial planning comes in. Financial planning is a process that can help you target your goals by evaluating your whole financial picture, then outlining strategies that are tailored to your individual needs and available resources. Read More
What Will You Pay for Medicare in 2020?
Medicare premiums, deductibles, and coinsurance amounts change annually. Here's a look at some of the costs that will apply in 2020 if you're enrolled in Original Medicare Part A and Part B. Read More
Six Keys to More Successful Investing
A successful investor maximizes gain and minimizes loss. Though there can be no guarantee that any investment strategy will be successful and all investing involves risk, including the possible loss of principal, here are six basic principles that may help you invest more successfully. Read More