Ponderings For the Week of July 29 to August 4, 2019

Busy Week Ahead for Wall Street

Stocks rose last week an average of 1½%, shrugging off nagging signs of economic travails ahead. Both the Standard & Poor’s 500 and Nasdaq Composite indexes yet again reached all-time highs last Friday. Two cheers for abundant Wall Street optimism and positive market momentum.

This week – the last week of July – is chock full of earnings reports from the likes of Altria, Pfizer, P&G, GE, GM, DuPont, and Exxon. Despite dour predictions, the previously-issued corporate reports have been okay, if not spectacular. In addition, some important economic statistics for July are forthcoming this week, including consumer confidence, manufacturing activity, factory orders, and unemployment. But most important of all, on Wednesday the Federal Reserve Board announces its monetary-policy decision that is widely expected to be a small cut in interest rates.


Helping But Not Enabling Younger Generation Family Members

One of the best ways to teach children, grandchildren, nieces, and nephews about the importance of saving for retirement and investing is to help them fund their retirement plans. Anyone who has job income, even from summer or part time jobs, can contribute to an IRA, even if they are minors. Once a younger generation family member gets a “real job,” you might be able to afford to help him or her contribute to a retirement savings plan at work. I know this is a good investment for the youngster. But it may also be a good investment for you insofar as the sooner you can teach younger generation family members about financial responsibility, the better chance of your not having to help them out later on.

Nevertheless, despite your good efforts, you may need to provide financial help to a young adult in need. Whether you are already helping or may want to in the future, keep these two caveats in mind. First, can you easily afford the outlay? I have received a number of disturbing emails from parents who themselves are living on the edge financially, but still feel compelled to help out their kids. While this may be a natural inclination, you don’t want to impair you own financial future. As callous as it may sound, you may simply have to say that you can’t afford to help. Second, if you are providing financial assistance, don’t let temporary aid turn into an annuity for the family member. You have to draw the line somewhere or otherwise you will end up enabling the child who may come to view the periodic assistance as an entitlement. If that’s what you want to do and can afford to send money indefinitely, so be it, but still be wary of how this might adversely affect your child’s or other relative’s initiative and self-esteem.


Smart Money Tips


  • Reimburse your employer for your disability insurance premium. You may think that’s a crazy idea. But if your employer pays your disability insurance premiums and you eventually collect benefits, they’ll be taxable. If, on the other hand, you pay the premiums, the benefits will not be subject to income taxes. That could make a big difference in the amount you collect at a time when you could really use the extra money. So do consider reimbursing your employer for your disability insurance premium if they will permit you to do so or if the employer offers you the option of paying your premiums with after-tax dollars. The premium is probably not anywhere near as costly as you imagine.
  • Vacation home follies. The temptation to buy a vacation home rises with the temperature. If you really want to buy one, high season is the worst time to do so. Rather, wait until the tourists are gone, the weather’s lousy, and the sellers are anxious. By the way, don’t buy a vacation home thinking that you’ll get a lot of money renting it. Sometimes it works as a rental, but usually it doesn’t pan out very well, despite the breathless attestations of the owner or broker who are desperate to unload the property.






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