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Kiplinger Personal Financial Planning News

  • 5 Booming Biotech Stocks to Buy
    on July 31, 2020 at 4:34 pm

    You could say biotechnology companies' shares were merely "interrupted" this year. Biotech stocks, as measured by the iShares Nasdaq Biotechnology ETF (IBB), started to rally furiously in the back half of 2019. The COVID-sparked market downturn knocked them down, but they've returned to outperformance and are now up 15% year-to-date. The party likely isn't over, either. New markets in areas such as anti-aging therapies and gene editing could be worth billions of dollars over the coming decade. That means biotech stocks should continue to get a bid over the coming years. While you can get access to many of these firms via exchange-traded funds (ETFs) like IBB, individual equities will typically give you more "bang for the buck" if you're willing to accept more risk. Conversely, you don't have to gamble on tiny biotech plays to put the industry's growth in your portfolio, either. Here are five booming individual biotech stocks to buy. All of these mid- and large-sized stocks boast 30% or more gains year-to-date, but all of them still have room to run as they continue to develop game-changing technologies. Better still: They generally boast strong financial fundamentals to boot. Data is as of July 2. 19 of the Best Stocks You've Never Heard Of

  • 5 Great REITs to Buy Now
    on July 4, 2020 at 4:20 pm

    It hasn’t been a good year for landlords. Publicly traded real estate investment trusts—which own income-producing real estate—have been clobbered in 2020, with the category overall losing 13.6%, compared with a 5.0% loss for the S&P 500 index. When the COVID-19 pandemic struck, whole sectors of the economy shuttered practically overnight, and millions of Americans lost their jobs. For REITs that owned apartment buildings, shopping malls, hotels or office buildings, collecting rent became a tall task, and investors took notice. But the sell-off presents an opportunity for investors who buy REITs that stand to prosper in a post-pandemic world and avoid the ones that might falter. REITs with properties that require little human contact have bright long-term prospects, says Fidelity Real Estate fund manager Steve Buller. Trusts that own data centers, industrial warehouses for online retailers or cell-phone towers will benefit in a world that is shifting increasingly online, he says. Some of this optimism is priced into the stocks—tech-oriented REITs in the S&P 500 have returned 11% in 2020, on average. But that shouldn’t scare off long-term investors. Buller sees value in select housing and office REITs that will regain steam as the economy reopens, but he says investors will face an uphill climb investing in trusts that own restaurants, child care facilities, gyms and senior living facilities. REITs that own retail properties, he says, may be permanently scarred, as buying preferences shift toward e-commerce. The REITs below are poised to thrive. All yield less than the 4.6% average for REITs overall but sport impressive profit-growth prospects, healthy balance sheets and a history of raising payouts. Note that instead of using traditional corporate earnings yardsticks to measure profitability, REITs use funds from operations, or FFO, which adjusts for depreciation and property sales. REIT distributions are taxed as ordinary income, which can sting high-net-worth investors who hold them in taxable accounts (prices and other data are as of June 12). 9 Best REITs to Buy for COVID-19 Protection

  • The Awkward Relationship Between Markets and the Economy
    on July 3, 2020 at 1:00 pm

    In March 2020, COVID-19 began to ravage the United States, putting the nation into lockdown and skyrocketing unemployment. The 7 Mistakes That Investors Keep on Making Entering a bear market for the first time in 11 years, stocks plummeted by 30% on March 23, a substantial drop from its record in February. But while the stock market and the economy were both declining, troubles for the markets were short-lived. The 33-day bear market, spanning from Feb. 19 to March 23, soon rebounded. In fact, the S&P 500 soared 40% in the 50 days following its March 23 low. Despite the presence of many indicators (e.g., rising unemployment, businesses closing left and right, etc.) that the economy is crumbling, stocks are staying relatively strong. There are a number of reasons this phenomenon can occur. The stock market and the economy have a fascinating relationship; the two are not one and the same. Current Economic Climate Unemployment levels shot up to 14.7% in April, the highest recorded since the Great Depression. The rise of unemployment, currently at 13.3% as of May, may be even more telling of the state of the economy: disaster around every corner. Yet, the stock market doesn’t seem to reflect that. In fact, despite the (hopefully) temporary shocks to our economy, the stock market is going strong. 12 Ways to Get Your Retirement Plan Back on Track Why? One reason is that a common assumption about unemployment is it tends to be temporary, lasting no longer than half a year in the most extreme cases. This assumption is so common that it's built into the very fabric of the unemployment system in the United States: The maximum length of unemployment benefits is 26 weeks, or 39 with the passage of the CARES Act of 2020. That means — according to the assumption — that there's likely little cause for worry, because many of the recently unemployed will soon find re-employment when the government reopens states for business. Another promising indicator of the current state of affairs is the U.S. gross domestic product (GDP). According to the Bureau of Economic Analysis (BEA), only about 10% of the GDP comprises industries at high risk for COVID-related losses. Therefore, catastrophic economic collapse from financial loss alone is extremely unlikely. How the Stock Market Works Amid all of this economic strife, how does the stock market continue to be at worst a minor loss and at best a rising success? Stock market decisions are based on history, research and statistics, so one theory is that people are buying stocks because they're conditioned to follow the trends. With bond yields in the negative, the most common alternative to equity investments is all but lost, leaving investors with nowhere else to go. "Buy low, sell high," the creed of brokers and investors alike, may be behind the stock's performance. When stock prices crumbled in March, investors leaped at the chance to round up as much stock as they could buy to ride the ramp back up when the economy improved. This buying strategy could potentially prove massively successful for those individuals who acted quickly. Given the market's forward-looking perspective and upward trajectory, it may appear as though the worst of the COVID-19 economic scare is now behind us, paving the path to future prosperity. However, the future still remains unpredictable, and a second wave isn’t out of the question. The Future of Our Economy To grasp the phrase "future prosperity," one needs to understand where our economy is headed. It's helpful to keep an eye on Europe and China. These locations began suffering through COVID well before it hit the U.S. and have since reopened. And the U.S. has followed suit with its own journey into reopening. This ray of sunshine has shown investors the economy may be on the verge of recovery. With investors looking forward, the stock market's high ticker prices represent that ray of sunshine. Moreover, the Federal Reserve has a history of intervening in the market, particularly during times of economic turmoil. 5 Tips to Help Your Retirement Savings Last as Long as You Live So, although the stock market plays a role in the economy, it’s important to remember that they are not the same. The bottom line: Regardless of economic indicators, investors should focus on sustaining a portfolio that doesn’t exceed their risk tolerance. Moving forward, there’s still plenty unknown, and we’ll continue to learn about the market��s recovery as businesses continue to open up. If there’s one takeaway from COVID-19, it’s that now is the time to put a plan in place to ensure security when the markets enter unpredictable times.

  • HSAs Get Even Better
    on July 2, 2020 at 11:54 pm

    As the country dealt with the fallout from the coronavirus pandemic this spring, lawmakers and regulators scrambled to ease the pain of record job losses and other blows to Americans’ pocketbooks and health. One result that has largely flown under the radar: Health savings accounts and flexible spending accounts, which offer a tax-advantaged way to save money for certain medical or dependent-care expenses, have become more generous. Some of the changes are temporary, but others have no expiration. A Healthy Way to Increase Your Retirement Savings: HSAs More expenses are covered. Thanks to the Coronavirus Aid, Relief and Economic Security (CARES) Act, you can use money from an HSA or a health care FSA to pay more expenses—and these changes are permanent. Over-the-counter drugs purchased January 1, 2020, or later are now HSA- and FSA-eligible without a prescription. Those include pain relievers, cough suppressants, anti­histamines and other drugs that treat issues from heartburn to acne, says Shobin Uralil, cofounder and chief operating officer of Lively, an HSA provider. Feminine-hygiene products such as tampons, pads and menstrual cups are also qualifying expenses under the law. Other new rules give a high-deductible health plan paired with an HSA the green light to cover certain expenses you incur as a result of the pandemic before you meet your deductible. One suchexpense is telehealth, through which patients and clinicians consult remotely over the phone or by using a video chat tool, such as FaceTime. Telehealth services have been on the rise now that social distancing is encouraged — and high-deductible plans with plan years that start on or before December 31, 2021, are permitted to cover the services even if you haven’t reached your deductible. High-deductible plans may also pay for testing and treatment related to COVID-19 before you’ve reached your deductible. If a corona­virus vaccine becomes available, receiving one would be considered preventive care and may be excluded from your deductible, too. A health savings account is a powerful tool to cover out-of-pocket medical expenses: Contributions are pretax (or tax-deductible, if your HSA is not employer-sponsored), the funds grow tax-deferred in the account, and withdrawals are tax-free for qualified medical expenses, without a time limit. An HSA is a smart way to save for medical expenses in retirement, too. The money in your account can grow over time through investments, and “it can be the best tax-sheltering account of them all,” says Dennis Nolte, a certified financial planner in Winter Park, Fla. If you had an HSA through an employer-sponsored plan and you lost your job, the account is yours to keep, and you can still use the funds anytime, tax-free, for qualified medical expenses. Although health insurance premiums are typically not considered qualified medical expenses, there’s an exception if you use withdrawals to pay premiums for COBRA coverage (which lets you continue employer-based insurance for up to 18 months after you leave your job) or to pay for other health insurance premiums if you’re collecting unemployment benefits. FSAs are even more flexible. FSAs allow employees to set aside pretax money for certain health care or dependent-care expenses, but they come with more limitations than HSAs. While you’re employed, you have only until the end of your plan year to use the funds, or until March 15 if your employer offers a grace period. Alternatively, you may be permitted to roll up to $500 of your unused balance in a health care FSA to the following plan year. If you lose your job, you may have up to 90 days from termination (depending on your former employer’s rules) to submit receipts for expenses you incurred while you were still employed. But you can’t make claims for expenses incurred after you lost your job—unless you get COBRA continuation coverage for your FSA. To help those who are dealing with pay cuts, fluctuating expenses or other unexpected effects of the pandemic, the IRS is allowing certain midyear changes to employee health insurance benefits and FSAs that are typically permitted only during open enrollment or when a worker has a qualifying life event, such as the birth of a child or a marriage. Employers are not required to offer these midyear plan adjustments, and a little more than half say they aren’t planning to do so, according to a survey by benefits consultant Mercer. But 43% said they will let workers alter contributions to a dependent-care FSA, and 29% will permit contribution changes to a health care FSA. Depending on what your employer offers, you may be able to start setting aside funds in an FSA or stop contributing to one that you currently have. Or you may have the option of raising or lowering the amount that you put into your current plan. What’s more, for 2020 plans, employers may increase the amount of unused funds that can be carried over to the following year to $550 (that does not apply to 2019 funds carried into 2020). Companies may also extend the grace period from March 15 until the end of the year. So an employer may, for example, let employees use funds from their 2019 FSAs through the end of 2020. Answers to Questions About Health Savings Accounts and Medicare Money stashed in a dependent-care FSA may be used to pay for child or adult day care; a babysitter or nanny; preschool; before- and after-school programs; and summer day camp. The ability to modify contributions to these accounts midyear could be especially beneficial for parents who set aside funds in a dependent-care FSA but have had lower child-care expenses than expected during the pandemic—for example, because child-care centers were closed or a summer camp was canceled. The changes could also be a big help for those who are saving in a health care FSA—for example, because a planned medical procedure was delayed as a result of the pandemic.

  • Nursing in the Time of COVID
    on July 2, 2020 at 10:01 pm

    Leah Gordon, 43, lives in Hugo, Minn., and directs the nurse anesthetist program at St. Mary's University of Minnesota. Kiplinger's talked to her about the challenges created by COVID 19 for nurse anesthetists and the problem student nurses--and the health care industry—are facing because they can't complete their bedside clinicals. What does a nurse anesthetist do? When you heard about patients with COVID getting breathing tubes, it was primarily nurse anesthetists manning those intensive care units, placing the lines to give the medications and putting the breathing tubes between the vocal cords into their lungs. How has the pandemic affected your job? My full-time job is as a professor and the nurse anesthetist program director at St. Mary’s University of Minnesota. I did work one day a week at an outpatient gastro­enterology center. In order to be a really good instructor, it’s important to keep my skills fresh. Your side gig is on hold? When COVID hit, the first thing our governor did was suspend elective surgeries. Plus, they wanted all the personal protective equipment brought to a central location. That meant we couldn’t do any cases because we couldn’t use our gowns, we couldn’t use our shields and we couldn’t use our masks. You must have taken a financial hit. A nurse anesthetist out of school right now is earning $180,000 to $190,000. I feel like a jerk even talking about it because I’m very, very fortunate, but when you lose that side hustle, all of a sudden $50,000 is gone. I earn too much as a professor to qualify for unemployment. But I have a $1,900-a-month student loan payment, and to not have my side job right now is challenging—and I’m not sure if I’m going to get it back. What about the rest of your family? My partner is a registered nurse who works for the same surgery center—that’s how we met. He was furloughed for a few months, but now he’s back at work. Will your students be able to graduate? We’re still figuring it out. Right now, most classes are online, and it’s really hard to learn a medical specialty at your house. You have to be able to do lab work and learn skills with your instructor side by side with you. We don’t really have simulation capability to teach our students how to put in an epidural or a spinal. At a minimum, our students have to complete 2,000 hours of bedside care, and our program is only 2 1/2 years long. We’re talking about whether we’re going to add a semester and try to create some credits for them so they can qualify for student loans. Do you think COVID will affect the health care system longer term? I’m very concerned about everybody being able to get to the bedside and through their training. If you look at the nursing shortage in the country right now—which is only projected to get bigger—to not have nurses getting their clinicals, we’re going to have some workforce issues. 

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