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Ponderings For the Week of January 20 to 26, 2020

All-Time Highs Again as Dow Flirts With 30,000

2020 opened with the customary cautious outlooks by Wall Street prognosticators. After all, 2019 saw robust gains in most market segments, so there was only so much juice left in the stock market. But the year has started off where 2019 left off. The big three indexes – the Dow Industrials, the S&P 500, and the NASDAQ - have all surpassed their previous records. Last week alone the three each gained about 2%. It won’t take much to bring the Dow over 30,000. It reached 20,000 for the first time in January 2017.

Last week’s jump was attributed to the signing of a phase one U.S. – China trade agreement and some positive economic news on employment, housing, and manufacturing. Earnings season proceeded apace with mixed results. Forecasters expect corporate profits to be unspectacular. Perhaps this time they’ll be correct for a change.  


20 Financial Resolutions for 2020 (Part III)

Here is the third round of my 18 financial resolutions for the New Year. More resolutions will follow next week.

  1. Help your kids become financially savvy. The more you can help your children or other younger generation family members learn about the value of money, the better their chances of becoming financially responsible adults. The best way to show your children how to handle money is by setting a good example in your own financial life. Don’t keep family finances a secret. A survey of top investment managers reveals that their interest in investing was kindled by discussions with their parents about money at a young age.
  2. Don’t let cars drag you down financially. Avoid the temptation to always drive a costly late model vehicle. Some people never get out from under monthly car loan payments that may not seem significant now, but will when they get ready to retire and then it’s too late. A recent study indicated that the number of people who lease cars has increased from 20% to 30% in just a few years, and the increase has been fueled by millennials. Leasing is almost always a bad way to finance cars. My suggestion is to buy cars that come off a lease. You’ll get a great car that will serve you well for many years at a reasonable cost because the poor sap who leased the vehicle has given it up at a much-depreciated value.
  3. Budget without a budget.  Preparing a household budget can be a useful exercise, but most people have neither the time nor the inclination to do so. The purpose of a budget is to motivate you to live beneath your means, to spend less than you earn. Of course, even a well-prepared budget is of no use unless you are prepared to live within its strictures. But there is another way to spend less than you earn without going through the drudgery of budgeting. All you need to do is to regularly and automatically contribute to a retirement, brokerage, or savings account. Automatic investing is a great way to both begin and stick with a regular savings program. The result is relatively painless budgeting. Since you never get your hands on the money, it shouldn’t be missed, particularly if you start small and gradually increase the amount that’s transferred.



Smart Money Tips

  • Always think long-term with your investments. Investor concern is rampant yet again after the largely unpredicted gains in stocks worldwide last year. If this pretty much sums up your feelings, you’re in abundant company. Here’s a suggestion that might reduce your anxiety and help you avoid making any mistakes in the near future: Worry less about what’s going to happen over the next ten days or ten months and consider how your money will fare in ten years. You’ll probably say that you’re glad you stuck with stocks despite their all- time highs back in 2019 and 2020.
  • Avoid a lifelong penalty by signing up for Medicare Part D when you enroll in Medicare. Here’s something a lot of people are unaware of. If you don’t sign up for a prescription drug plan, called Medicare Part D, at the same time you enroll in Medicare, you will be penalized for delaying. Right now, the “late enrollment penalty” is about thirty-three cents for each month you delay. For example, if you wait two years to enroll in Part D, you will have to pay about eight dollars more per month. That doesn’t sound like much, but (brace yourself) the penalty is assessed for the rest of your life and if average Medicare Part D plan costs rise in the future, which is bound to happen, your late enrollment penalty will be increased as well. Ouch, ouch, ouch!




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