Apprise’s Five Favorite Reads for the Week of November 1, 2020

Man Carrying Large Amount of Debt on His Shoulders
Discover Our Five Favorite Reads Discussing Teaching Your College-Age Kids About Debt, Retirement Saving Tips, and Tax-Advantaged Option for Retirement Planning. Learn More Here!

I hope you are staying safe and healthy.

On Thursday, November 12th at 5:00 pm, I will host “7 Things Tax-Savvy Investors Should Consider Before Year-End 2020,” the next session in my “Ask Me Anything” webinar series. Click here to register.

While many of us have an aversion to debt, not all debt is bad. Going to college can mark a coming of age for our children. It can also provide an opportunity for us to start teaching our children about debt. Not sure what to say or do? Check this week’s first article for some suggestions.

It appears that the continued uncertainty around the outcome of Tuesday’s elections has benefited stocks., at least for the short-term. It looks like neither party will have control of the presidency, Senate, and House. Perhaps investors like the idea of more gridlock.  Stocks rose 6.1% over the last week. Despite the volatility over the last few weeks, stocks closed Friday about even with their levels of October 13th. They are up 4.4% so far in the fourth quarter and 8.7% year-to-date.

While earnings season has been relatively positive for stocks, uncertainty abounds. No decisions have been made about additional stimulus payments. While it seems that a winner should be announced soon, the election results are not final. COVID cases reached new highs this week as well.

In general, it is not recommended that you adjust your portfolio due to short-term concerns. Very few – if any – investors can successfully time the market. That’s why time in the market matters more than timing the market. I recommend ignoring the noise.  Remaining focused on the long term makes the most sense.

Here are the links to this week’s articles as well as a brief description of each:

1.  How to Teach Your College-Age Kids About Debt. Many families must borrow to fund the cost of a college education. This provides parents with an opportunity to teach their kids about debt. There are many kinds of student loans and many lenders. It pays to research how the loans work and their potential impact over both the short- and long-term. Not all debt is bad. It can be used to your advantage. Your college student may also receive credit card offers. You can help her understand how to use credit cards responsibly. Building credit is also important. In our home, our kids are required to have some student loan debt when they go to college. It gives them some skin in the game. It also allows them to start building a credit history. We have a deal in place that helps determine who is responsible for paying student loan debt after graduation, too.

2.  Stop Wiping Down Groceries and Focus on Bigger Risks, Say Experts on Coronavirus Transmission. We should do all we can to minimize the risk of getting the coronavirus. Whether we like it or not, wearing masks should be a requirement. So should regular handwashing. But according to the scientists quoted in this article and the latest advice from the Centers for Disease Control and Prevention, the virus does not commonly spread from touching surfaces. Washing down everything in our environment does not necessarily provide protection. Our behaviors matter much more. We need to wear masks, socially distance, not touch ourselves above the neck, and keep our hands as clean as possible.

3.   Working After Age 70? Think Twice Before Saving in This Retirement Account. Late last year, the Secure Act was signed into law. This Act allows workers to add cash to their individual retirement account (IRA) after they turn 70 ½. In some situations, adding money to an IRA can have unexpected planning implications. For example, it can hurt your charitable giving strategy. A Roth IRA could be the better choice.

4.   Absolute Success is Luck. Relative Success Is Hard Work. What determines success? Luck, randomness, or good fortune? Effort and hard work? All of these factors play a role. Does luck matter more in an absolute sense? Could hard work matter more in a relative sense? It seems there is a balance between the two. Your habits can also put you on the path toward success. Positive action can increase our chances of success as well. While we cannot control our luck – good or bad – we can control our effort and preparation. Those who put forth the effort may be better able to take advantage of good luck when it happens.

5.   Another Tax-Advantaged Option for Retirement Planning. When it comes to retirement savings, many of us rely heavily on tax-sheltered accounts like 401(k)s or IRA. We often overlook an account with more tax advantages. Health Savings Accounts (HSAs) may be even more useful in retirement planning. HSAs are often misunderstood by those I encounter as well. HSAs are not use-it or lose-it accounts like flex spending accounts. If you use contributions to an HSA to cover ongoing healthcare costs, you are missing out. You don’t get the tax-free compounding an HSA can provide.

Our practice continues to benefit from referrals from our clients and friends. Thank you for your trust and confidence.

We hope you find the above posts valuable. If you would like to talk to us about financial topics including your investments, creating a financial plan, saving for college, or saving for retirement, please complete our contact form. We will be in touch. We can schedule a call or a virtual meeting via Apprise Wealth Management’s Zoom account.

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