Personal Finance Archives - Page 32 of 76

July 22, 2022

3 Reasons to Avoid Dividend-Paying Stocks | Smart Change: Personal Finance

(Maurie Backman)

You can find a purpose lots of traders are fast to load up on dividend-having to pay stocks. The idea of a continuous earnings stream can be rather desirable. And also, all through a down sector, ongoing dividend payments could support offset losses in your portfolio. At the time you safe a constant stream of dividend payments, you can have the possibility to reinvest that money for included advancement.

Whilst it can be simple to see the attraction of shares that pay out dividends, they have their pitfalls, as properly. As these kinds of, below are a number of good reasons why you may not want to go way too heavy on dividend shares in your portfolio.

Impression source: Getty Pictures.

1. They could maximize your tax load

If you maintain dividend shares in a tax-advantaged account like an IRA or 401(k) plan, you would not have to stress about paying out taxes on your dividend money calendar year soon after 12 months. But if you obtain dividends in a taxable brokerage account, these payments could insert to your IRS load in a massive way. This holds correct even if you come to a decision to reinvest your dividends, as opposed to cashing them out and expending that dollars.

The superior news is that capable dividends are taxed at a far more favorable price than normal profits, so that tax strike may well not be as extreme. But you can expect to continue to have to have to preserve that tax consequence in head, particularly if you are inclined to owe the IRS a whole lot of income most tax seasons.

2. You could possibly sacrifice share-rate appreciation

Firms that pay generous dividends generally do so at the expenditure of reinvesting in the enterprise itself. And that could limit the extent to which all those firms are equipped to grow and create profits.

Whilst dividend-shelling out stocks may possibly serve as a great supply of ongoing profits for you, your shares may not respect at the similar charge as the stocks you personal that you should not pay out dividends. If your principal goal is to produce a whole lot of long-time period growth in your portfolio, that could be a dilemma.

3. You could make investments in firms that aren’t seriously sturdy enterprises

It truly is simple to see the enchantment of a stock with a generous dividend — you get a continual stream of income to glimpse ahead to. But do recall that a high dividend produce isn’t normally indicative of a sturdy underlying business.

In simple fact, if you are going to buy dividend shares, somewhat than look at a firm’s existing dividend, you may possibly want to glance at its dividend payment record. A firm which is regularly paid or lifted dividends might be a a great deal far better, more secure wager than a corporation with a dividend produce that not too long ago amplified to a substantial degree.

Glance at the large photo

It is simple to get caught up in the notion of chasing dividends. But a greater strategy is to devote in high-quality corporations with potent advancement possible. If people providers transpire to pay dividends together the way, wonderful — but that really shouldn’t be the principal driver in your determination to make investments in a supplied enterprise or not.

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July 21, 2022

3 Times You’ll Regret Claiming Social Security Early | Personal-finance

(Maurie Backman)

When it arrives to signing up for Social Safety, you get a choice. You can decide to get gains at comprehensive retirement age (FRA), which is when you get your entire monthly benefit primarily based on your wage history, or you can signal up at an before or later age.

If you hold off your submitting past FRA, your Social Protection positive aspects will boost on a long-lasting foundation. But if you sign up in advance of FRA, your rewards will be completely lowered.

The extent of that reduction will depend on how early you indicator up. The soonest you can file for Social Protection is age 62, and if you go that route, you are going to be hunting at a 25{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} to 30{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} reduction in added benefits, depending on your specific FRA. If you indicator up for positive aspects at age 65, you’ll be on the lookout at a scaled-down reduction — more like 6.67{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} to 13.34{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}, dependent on your FRA.

Picture source: Getty Photographs.

But all told, boasting Social Protection before FRA commonly suggests locking in a lower advantage for everyday living. And you may well regret going that route if these variables use to you.

1. When you never have much retirement personal savings

If you have a generous nest egg, the revenue you get from Social Safety may possibly only be secondary. In that circumstance, you might be in a placement exactly where you can probably manage a strike to your benefits.

But if you never have substantially income socked absent for retirement, then you may possibly require all the earnings you can get from Social Security. Submitting early could place you in a hard placement wherever you are not able to control even your primary bills.

2. When you’re even now doing work

The moment you achieve FRA, you can gain any amount of cash without the need of it impacting your Social Safety added benefits. But if you declare rewards prior to FRA and are nevertheless operating, you may risk owning some of that revenue withheld if your wages exceed the earnings-exam restrict.

That limit modifications each individual 12 months. In 2022, you can get paid up to $19,560 a year with no affecting your gains. But from there, you are going to have $1 in Social Security withheld for each $2 of earnings higher than that threshold. So if you are nevertheless operating, you may regret filing for positive aspects early simply because you may perhaps not get to hold them in total, but you are going to nevertheless slash them owing to not waiting around until finally FRA.

3. When you reside a lengthy daily life

If you will not be expecting to are living pretty extended, then declaring Social Security ahead of FRA could make sense, due to the fact it could consequence in a greater quantity of total lifetime money. But if you count on to dwell a long existence, then submitting early will commonly mean shortchanging yourself on life span gains as properly as monthly rewards.

What’s the appropriate simply call?

Some persons have no alternative but to claim Social Security early, these kinds of as if they reduce their work opportunities in their early or mid-60s and want the revenue. But if the higher than eventualities use to you (or if you imagine they’re going to utilize to you in the situation of living a extensive existence), then it could fork out to hold out until eventually FRA comes to signal up for gains. Executing so could imply preventing not just a reduction, but a entire world of money anxiety to stick to.

The $18,984 Social Safety bonus most retirees fully ignore

If you are like most Us citizens, you are a several years (or much more) driving on your retirement cost savings. But a handful of minimal-acknowledged “Social Safety strategies” could enable ensure a improve in your retirement money. For example: one particular straightforward trick could pay you as a lot as $18,984 much more… every single 12 months! Once you study how to improve your Social Security rewards, we assume you could retire confidently with the peace of mind we’re all immediately after. Merely click listed here to discover how to master additional about these methods.

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July 20, 2022

Worried About a Recession? Here’s Warren Buffett’s Advice | Smart Change: Personal Finance

(Katie Brockman)

It can be been a rough calendar year so far for the overall economy. Inflation is the maximum its been in more than 40 several years, the S&P 500 is inching closer to bear industry territory, and you will find a probability that we could be headed toward a economic downturn.

Though no person knows for particular what the foreseeable future holds for the economy, some specialists imagine that there is certainly at least a 50{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a} opportunity that we could facial area a economic downturn in the following 18 months.

If you are worried about a possible economic downturn and its impression on your investments, that is standard. But right here are a handful of strategies from famed trader Warren Buffett that could aid calm your nerves.

1. Never be afraid to carry on investing

When stock costs are falling and the economic system is sinking, it might not seem to be like the finest time to make investments. Even so, downturns can be the excellent opportunity to invest in additional simply because costs are reduce.

Back again in 2008, at the top of the Excellent Recession, Buffett wrote an Belief piece for The New York Instances. In it, he mentioned: “In small, terrible information is an investor’s ideal friend. It lets you obtain a slice of America’s potential at a marked-down cost.”

If past recessions have taught us anything at all, it really is that the industry will get well sooner or later. By continuing to make investments throughout a downturn, not only can you snag substantial-top quality investments at a low cost, but you can also established by yourself up for substantial gains when inventory costs rebound.

2. Invest for the long time period

No one — even Warren Buffett — can forecast particularly how the stock market place will accomplish in the coming months or months. If we encounter a recession, no person is aware of how serious it will be or how lengthy it may possibly previous.

What we do know, while, is that in excess of the extensive phrase, the market place will see favourable average returns. No make any difference how bad points get in the short phrase, they will make improvements to more than time.

It can be not normally effortless to target on the lengthy time period, specially when the potential seems to be bleak. But do your most effective to remind oneself that the market place has faced many crises in the earlier. Regardless of almost everything, though, it really is thrived above time. Said Buffett in the New York Moments article:

Over the long expression, the stock current market news will be excellent. In the 20th century, the United States endured two earth wars and other traumatic and high-priced army conflicts the Despair a dozen or so recessions and financial panics oil shocks a flu epidemic and the resignation of a disgraced president. Yet the Dow rose from 66 to 11,497.

3. Decide on the ideal shares

Continuing to spend in the course of a industry slump can be a sensible plan, but the important to good results is picking out the right investments.

In a letter to shareholders, Buffett describes that he and organization associate Charlie Munger concentrate very first and foremost and investing in corporations fairly than shares, saying: “[W]e very own stocks based upon our expectations about their extended-time period enterprise functionality and not since we check out them as autos for well timed marketplace moves. That level is very important: Charlie and I are not stock pickers we are business pickers.”

Not all stocks will be capable to endure a recession, but healthier firms have the greatest odds. Organizations with strong fundamentals are the most probable to see growth over time, and the far more of these providers you individual, the far better off you are going to be.

Producing the most of a economic downturn

Recessions usually are not effortless, and even the most experienced can wrestle sometimes. But it’s doable to get by way of them with the suitable strategy.

By investing in potent stocks and trying to keep a very long-term outlook, you can rest a lot easier being aware of you might be doing all the things doable to guard your funds — irrespective of what takes place with the overall economy.

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July 19, 2022July 19, 2022

What is a Bail Bond?

If you need to bail out a friend or relative, you should know what a bail bond is. Bail bonds are pledges of money or property that a bail bondsman agrees to back if the defendant is arrested and cannot pay bail on their own. They help people escape jail, but not everyone knows how they work. This article will walk you through the procedures and costs of bail bonds. Here are some of the types of bail bonds.

Procedures for obtaining a bail bond

If you have been arrested for a crime, you may want to know the procedures for obtaining bail bonds Pittsburgh. In many cases, you can be released on your recognizance if you can promise to return to court. However, you may also be required to post a certain amount of money, usually bail, to get out of jail. Alternatively, you can hire a bail bond company to provide you with a surety bond.

After paying the bail amount, you must go to the courtroom where the case is being heard. You will need to fill out some paperwork. In some cases, speaking to the defendant’s attorney may be helpful. However, if you are not a lawyer, you can hire another. You will have to answer several questions about your finances, including whether you have the money to pay the full bail amount.

Cost of a bail bond

The cost of a bail bond depends on some factors, including the amount of collateral required, the percentage of the bail amount, and the agent’s fees. Bail agents often charge a percentage of the total bail amount, although this can be negotiable. Additionally, the bail bondsman may ask for collateral, which they may use if their client fails to appear in court. Finally, many states have special laws regarding bail bonds, and some may require a higher percentage of collateral.

The cost of bail depends on several factors, including the amount of bail set by the court, the defendant’s criminal history, and whether or not they hire a bail bond company. The latter option is the cheapest and is typically much more cost-effective. For example, if the defendant’s bail amount is between $1000 and $3000, the fees may be as little as 6{1b90e59fe8a6c14b55fbbae1d9373c165823754d058ebf80beecafc6dee5063a}. The fees for smaller bonds, though, may vary considerably.

Types of bail bonds

There are several types of bail bonds, including cash and property bonds. Cash bonds must be paid in full in cash, but some courtrooms allow credit card payments or checks. On the other hand, property bonds use the defendant’s property as collateral. The court may seize the property if the defendant fails to show up for their court appearances. This option is not suitable for all cases. Before deciding on a bail bond for yourself, make sure you know the rules and regulations in your state.

Unlike unsecured bonds, secured bonds require financial security, such as a car or home. The lender, however, will give the property back if the defendant shows up for court. In return, the lender will take ownership of the house, car, stock, or jewelry the defendant pledged to secure the bond. However, this option may be difficult to obtain for some people. For these reasons, secured bonds are a better option.

Getting a friend or relative released on bail

Posting bail can help you ensure a friend or family member will appear in court. However, it’s important to be careful when choosing a bail agent. If they aren’t available to answer questions, you should look elsewhere. Other bail agents can be found in a phonebook, through a lawyer, or online. If you’re a family member or friend, it’s a good idea to get involved as soon as possible. In some cases, bail bonds can be very expensive. Even if the bail is small, it can add up very quickly.

July 19, 2022

Is Life Too Short to Delay Social Security Benefits? | Personal-finance

(Stefon Walters)

Social Security is a great source of retirement income for many people. For some, it’s their only source. The amount of Social Security benefits you’ll receive largely depends on how many years you’ve worked, how much you earned during your working years, and when you decide to begin receiving your benefits. You can start taking Social Security benefits at age 62, but your baseline benefit amount is based on your full retirement age (FRA), which is determined by the year you were born:

Birth Year	Full Retirement Age
1943 to 1954	66
1955	66 and 2 months
1956	66 and 4 months
1957	66 and 6 months
1958	66 and 8 months
1959	66 and 10 months
1960 or after	67

Data source: Social Security Administration

Image source: Getty Images.

Delaying your benefits

If you’re fortunate enough to not have to take your Social Security benefits early or at your FRA, you can delay them until you reach age 70, increasing the monthly benefit. Even though the monthly benefits may be higher, delaying your Social Security benefits can be overrated. Here are the maximum monthly payouts allowed for those retiring at their FRA in 2022:

Age 62: $2,364
Full Retirement Age: $3,345
Age 70: $4,194

The jump in benefit amount between age 62 to 70 may seem enticing, but it’s important to keep one thing in mind: There are a lot of months — and therefore checks — between 62 and 70 that you’d be foregoing. Ninety-six months, to be exact. Even if you decide to delay benefits from your FRA, that’s 36 months of no checks if your FRA is 67.

It takes a while to play catch-up

One of the most important things to consider when deciding whether delaying benefits for fewer, larger checks is worth it is your “breakeven point.” Your breakeven point occurs when the total amount you’ve received from larger, delayed benefit checks equals and begins to surpass the total amount you would have received by taking smaller checks earlier.

Let’s imagine you were born July 1, 1970, and make $80,000 annually. Based on Social Security’s benefits calculator, here are your approximate monthly benefits and the total amount awarded by different ages:

Age	Monthly Benefit	Total Received by 80	Total Received by 85
62	$1,594	$344,304	$439,944
67	$2,396	$373,776	$517,536
70	$3,060	$367,200	$550,800

Data source: Social Security Administration

Even with more than a $1,400 monthly increase by taking benefits at 70 versus 62, you would have “only” received around $23,000 more total by the time you reached 80. If you had waited until FRA to claim benefits, you would still have received more in total by age 80 than if you had delayed your benefits until 70. Again, what’s important here is your breakeven point. In this example, it happens around age 78. At age 78, the total amount you would have received by delaying benefits outpaces the total amount received by taking benefits at 62. Your breakeven point will vary based on your specific benefit, so it’s important to make the calculations based on your personal total.

Life can be too short

Average life expectancy in the U.S. is 77. Delaying Social Security benefits because you assume you’ll live long enough to justify the years of missed benefits might not be the best move for everyone. Of course, nobody wants to assume they won’t make it to see their breakeven point. And many people will live to see it and years beyond, but it’s important not to rely too heavily in your decision-making on what is ultimately an unknown assumption.

Deciding whether to delay benefits is a challenging decision based on some variables you can’t know for certain. It’s also a decision that requires you to consider many personal things, like your family history, health history, and retirement goals. There is no right or wrong decision you can make, just an informed decision that best benefits you and your personal situation.

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July 18, 2022

How to Control Your Business Exit

Owning a business is all-encompassing. The buck stops at your front door. It often feels like no one else cares quite as much or works quite as hard as you do. And it’s easy to get caught up in a false mindset of, “If I don’t do it, it’ll never get done.”

It’s why walking away when the time comes can feel like such a wrench. A bit like selling a much-loved home or seeing your kids head off to college. For some owners, this will mean passing the company onto the next generation of the family, while for others it will involve selling to a third party. And spoiler alert: There’s nothing I can suggest that will completely remove the emotional upheaval of saying goodbye to a business that you’ve poured your heart and soul into for years.

However, the good news is that there are ways to control the financial elements of exiting, especially if you’re planning to sell and therefore need to find a buyer. This is something many owners leave right until the moment they want to step aside and, as a result, they can often find themselves locked inside a gilded cage. After all, it’s perfectly normal for the process of finding the right buyer to take three, four or even five years. Which means no matter how much your business is worth, the amount of time between deciding you want to exit and actually doing so can be frustratingly long.

Here are three ways to get ahead of the game now and control your exit on your terms:

1. Set your timeline well in advance

Rather than wait until you’re starting to wind down, the moment to decide how and when you want to sell your business is while you’re at the top of your game. For most owners, that probably means somewhere around their early 50s, well ahead of retirement age but with enough experience to get the process right.

Having this clear timeline in place helps create a sense of structure and orderliness for both the sale itself and for how you go about steering the company toward it in the meantime.

2. Identify the who

Of course, a major part of preparing your business to be bought is finding someone to sell it to. As previously discussed, this is a process that can take several years and should involve carefully vetting potential buyers for whether their values, aspirations and ideas for the business’s performance and culture align with yours. That way, you can ensure the company continues to be run in your image even after you exit. (This is equally relevant if you’re passing the baton to a loved one too).

3. Be smart about the how

Once you’ve identified your buyer, the key question to answer is how the purchase will be financed. One option here is that that your buyer has sufficient cash or bank financing to purchase your business outright – which is great! Another is that they don’t have sufficient capital (either owned or borrowed) to finance the deal in one transaction. So instead, you complete an installment sale where you allow the buyer to make payments to you over an extended period.

Or you could opt for a tax efficient third option: the hybrid. Here you set up a tax-sheltered Institutional Corporate Life Insurance policy that you regularly add money to in the years between identifying your buyer and completing your exit. At point of sale, you then invest this fund into the business (giving you an increased cost basis) before bonusing it to the buyer as a salary expense. They then use the money to help finance their purchase of the company, which also makes them more “bankable” for the rest of the loan they need. Unlike in the first two options, this hybrid path lets you benefit from several significant tax breaks. So, make sure you speak to a qualified financial adviser who can help you structure it as effectively as possible.

Whichever path you plan to take, whatever the value of your business and whenever you intend to exit, these three steps can help you do so in a way that ensures you get the best possible financial outcome for yourself and for future generations of your family.

What’s more, it can even lessen the emotional strain of stepping away by giving you more time to mentally prepare for it. So, when the time comes, it will feel like less of a shock and more of an exciting transition into a relaxing and enjoyable life after business ownership. Because let’s be honest, you’ll have earned it!

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Director of Diversity & Inclusion, Executive VP, Equitable Advisors

Stephen Dunbar, Executive VP of Equitable, has built a thriving financial services practice where he empowers others to make informed decisions and take charge of their future. He and his team advise on over $3B in AUM and $1.5B in protection coverage. As a National Director of DEI for Equitable, Stephen acts as a change agent for the organization, creating a culture of diversity and inclusion. He earned a bachelor’s in Finance from Rutgers and a J.D. from Stanford.

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