Personal Finance News

Kiplinger’s: What do you see ahead for 2021?

Link: To talk about 2021, you have to put it in the context of 2020. We have to deal with the increase of COVID cases versus progress with vaccines and with testing. The time line is uncertain for the next round of fiscal stimulus, but the fact that we need it is absolutely certain. All of this is against the backdrop of way-better-than-expected corporate earnings. So, companies are dealing with all these uncertainties, but sometimes investors cannot, and this is why you have fluctuations in the market.

Where is the economy headed? The economy has been uneven, and that will continue until we get a vaccine—which is why the Pfizer news of a successful trial is so important. Pockets have done well—housing, autos and manufacturing have seen a V-shaped recovery. But there’s a lot of bad: travel, leisure and hospitality, small and medium-size businesses closing every day, 10 million people unemployed. It’s important for the good pieces to pick up the slack until we get another stimulus package. You could potentially see gross domestic product growth of 4% to 5% in 2021.

How will the market adjust to a new president? I think the market likes a Biden win with a split Congress because it’s gridlock—you don’t get many surprises. But research from Capital Group shows that over the past eight decades, in 18 of 19 presidential elections, no matter which party won, a hypothetical $10,000 investment made at the beginning of each election year would have gained in value over the next 10 years, and in 15 of those 10-year periods, it would have more than doubled. I don’t want to say the election is meaningless, but it really is less important than other fundamentals over the long term.

What would you focus on? I have learned over my career that stocks follow profits, and if profits are going higher, stocks eventually will. Earnings are recovering nicely, which tells me that fiscal and monetary stimulus is doing its job. Next year we could see earnings growth of 30%-plus. Find good companies with high market

Read more: https://www.kiplinger.com/investing/economy/601757/expect-above-average-gains-in-2021

After vaccine euphoria drove several major indices to all-time highs earlier this week, COVID realities led to a more mixed session heading into the Thanksgiving holiday.

The Labor Department released weekly unemployment data a day early, reporting a second consecutive week of rising filings, to 778,000 last week — a number that remains significantly higher than the pre-pandemic record of just under 700,000 in 1982.

Barclays Investment Bank analysts think a particular nuance is worthy of note, however.

"We continue to believe declines in claims reflect expiring benefits from the usual state programs, and not necessarily elevated re-hiring," write Barclays' Michael Gapen and Pooja Sriram. "In the post-lockdown period, we have generally drawn signals from continuing claims about the pace of re-hiring and changes in labor market conditions. However, we now believe that a sizable portion of the recent week-to-week decline in continuing claims reflects the expiration of benefits under state programs, which generally last up to 26 weeks."

Meanwhile, the U.S. reported a record number of COVID-related hospitalizations, with 88,080 such cases straining the nation’s healthcare infrastructure and personnel.

The Dow Jones Industrial Average, weighed down by a 5.4% decline in Salesforce.com (CRM) after the Wall Street Journal reported it has been in talks to buy workplace-communications company Slack Technologies (WORK, +37.6%), declined 0.6% to 29,872.

However, gains by the likes of Amazon.com (AMZN, +2.2%) and PayPal (PYPL, +4.1%) helped lead the Nasdaq Composite 0.5% higher to a record-high 12,094.

Other action in the stock market today:

Read more: https://www.kiplinger.com/investing/stocks/601817/stock-market-today-112520-jobs-data-weighs-stocks-nasdaq-new-highs

The biggest barrier between people who want to invest, and actually investing, isn't money. With funds and apps that let you get started for as little as $1, you can start investing with your pocket change.

No, the biggest barrier for today's beginning investors is simply knowing how to get started.

Unfortunately, you'll be hard-pressed to find investing as part of most educational curricula, so it's up to aspiring investors to create their own course, so to speak. That's actually quite easy given a plethora of engaging investing books available, but the abundance of choices can be a little overwhelming.

We'll help you narrow it down.

Here are 10 of the best books for beginning investors, from quick reads you can knock out in the time it takes you to drink a cup of coffee, to hefty tomes that leave nothing uncovered. And if you want to buy any of these books for yourself or someone in your life who's just getting started, we've included links to purchase pages.

Read more: https://www.kiplinger.com/investing/601813/best-books-for-beginning-investors

Every year, the IRS adjusts the maximum amount taxpayers can contribute to tax-advantaged retirement savings plans to reflect increases in the cost of living. Unfortunately, inflation was so low in 2020 that the maximum you can contribute to tax-advantaged retirement savings accounts is unchanged for 2021. Here’s how that breaks down:

Employer-sponsored retirement savings plans. The most you can stash in 401(k)s, Roth 401(k)s and other employer plans in 2021 is $19,500. The catch-up contribution for people 50 and older is $6,500.

Traditional or Roth IRAs. The maximum you can contribute to an IRA in 2021 is $6,000. The catch-up contribution for savers 50 and older remains at $1,000.

There is a glimmer of good news: The IRS increased the amount of money that workers covered by an employer-sponsored plan can earn in 2021 and still deduct contributions to an IRA. (There are no income cutoffs for individuals who aren’t covered by an employer-sponsored plan; they can deduct the maximum allowed.)

Single taxpayers who are covered by a 401(k) or other workplace retirement plan can deduct their full contribution to an IRA if their income is $66,000 or less; the deduction gradually phases out until income reaches $76,000. That’s up from $65,000 to $75,000 in 2020. For married couples filing jointly, if the spouse making the IRA contribution is covered by a workplace retirement plan, the phase-out range is $105,000 to $125,000, up from $104,000 to $124,000.

If one spouse is covered by an employer-provided plan and the other is not, the second spouse can deduct IRA contributions if the couple’s joint income is between $198,000 and $208,000, up from $196,000 and $206,000 in 2020.

The IRS also adjusted the amount of money you can earn and still contribute to a Roth IRA. Roth contributions aren’t deductible, but as long as you’ve owned your Roth for at least five years and are 59½ or older, withdrawals are tax-free. Singles with modified adjusted gross income (MAGI) of less than $125,000 (up from $124,000 in 2020) can make the maximum contribution to a Roth. The amount phases out at $140,000

Read more: https://www.kiplinger.com/personal-finance/how-to-save-money/family-savings/601737/bad-news-for-super-savers

Being with family and friends during COVID was easier last spring and summer, when you were able to feel reasonably safe gathering outdoors at sidewalk cafés and restaurants, picnic areas, and porches and patios. Now, with the pandemic still raging and winter weather arriving, options for lingering outdoors in most parts of the U.S. have diminished.

But with the right furniture, equipment and gear, you can transform your backyard into an inviting space to socialize and still stay warm. Here’s where to start.

Read more: https://www.kiplinger.com/personal-finance/shopping/home/601804/how-to-safely-socialize-and-work-at-home-during-the-pandemic

If adversity builds strength, many of us will start 2021 with the muscles of a professional bodybuilder. The past year de­livered multiple gut punches: a pandemic, an economic downturn, a volatile stock market and a vituperative election.

However, the calamitous year also provided valuable lessons, particularly where your finances are concerned. Because while pandemics are rare, personal setbacks are distressingly common. Your roof could fall in. Someone in your household could become seriously ill. You could lose your job.

An emergency fund is your first line of defense against such disasters, particularly unemployment. The standard rule of thumb is to save enough to cover basic living expenses for three to six months, but that may no longer be sufficient, says Liz Windisch, a certified financial planner with Aspen Wealth Management in Denver. “When entire industries disappear overnight, it can take much longer than that to find new work or train for a new career,” she says. The amount you need to save will depend on your personal circumstances. Three to six months of expenses may be enough if you’re in a dual-income household. If you are the sole wage earner, you may need to save up to 12 months of expenses, or more.

This is money you can’t afford to lose, so keep your emergency fund locked down in a federally insured bank account or short-term certificate of deposit (see Find Higher Yields for Your Cash). Sadly, with interest rates at historic lows, you won’t earn much, but look at it this way: If your income drops or disappears, you won’t have to turn to credit cards—which, despite a low-rate environment, still charge interest of 15% or more—to pay the bills.

Have a Plan B. Another lesson from the pandemic: The best-laid plans can be derailed by events beyond your control. Andrew Marshall, a CFP in Carlsbad, Calif., says he has heard from several people who are close to retirement age who fear that they’ll be laid off and won’t ever be able to find another job that pays what they’re earning now.

“The lesson from these situations is that you should be prepared for alternative scenarios in case you are no

Read more: https://www.kiplinger.com/personal-finance/how-to-save-money/family-savings/601739/hope-for-the-best-plan-for-the-worst

My paralegal, Anne, buzzed me: “You have a woman on the phone who is crying. Her car was stolen from the parking lot of a motel, and she can’t get anyone to help her.” I took the call immediately.

“Emma” explained that she and her husband were fleeing Northern California fires, spent a night at a motel, discovering, ‘Our 2009 Hummer H2 with 45,000 miles on it was stolen sometime in the early morning hours. The motel’s parking lot is not gated or fenced, and there were no video cameras, bright lighting or security guards.”

“The motel’s insurance company has denied responsibility, but because it happened on their property, doesn’t this make them liable? Also, a police officer said there have been several vehicle thefts in this general area.”

Is the motel on the hook for her Hummer?  And how much is it worth?

“This was the last year Hummers were manufactured. An H2 with this low mileage, in good to excellent condition would sell for around $70,000,” Cooper Johnson of A&L Imports in Colleyville, Texas, told me.

Does the fact of being parked on the motel’s property alone make the motel financially responsible? And what about the couple’s auto insurance?

For an answer, I turned to La Jolla, Calif., attorney Evan Walker (evanwalkerlaw.com), whose practice concentrates on property damage cases.

“The operative legal terms and concepts here are negligence and reasonable. A business owner must use reasonable care to protect customers and guests from another person’s harmful conduct on the property if that conduct can be reasonably predicted. Walker lists three questions that must be answered:

So, what is reasonable care? Cameras, security guards, security lights? 

“What’s reasonable in each case is determined by the circ

Read more: https://www.kiplinger.com/business/small-business/601812/are-you-liable-when-a-customers-hummer-gets-stolen-from-your-parking