Thursday’s need-to-know money news

Today’s top story: How gratitude can help your financial life. Also in the news: What’s being fixed with student loan forgiveness, a new Smart Money podcast deep dive on investing strategies, and what happens when you’re too sick to pay your credit card bills.

How Gratitude Can Help Your Financial Life
Taking stock of what you have.

Student Loan Forgiveness: What’s Getting Fixed?
Public service loan forgiveness is being repaired.

Smart Money Podcast: Nerdy Deep Dives: Investing, Part 3
Exploring investment strategies.

I Was in a Coma and Couldn’t Pay My Credit Card Bills
After a medical emergency, your card issuer may be able to make accommodations to lessen the financial strain.

Thursday’s need-to-know money news

Today’s top story: Don’t let Social Security steer you wrong. Also in the news: 3 times to think twice about paying for your kid’s college, a new episode of the Smart Money podcast on investing, and how to spot the signs of a better market for homebuyers.

Don’t Let Social Security Steer You Wrong
When to claim benefits is a complex decision. Don’t rely on the help line staff, and consider getting a pro’s help.

Pay for Your Kid’s College? 3 Times to Think Twice
Don’t take on college debt for your child if your financial health will suffer when your kid doesn’t pay the bill.

Smart Money Podcast: Nerdy Deep Dives: Investing, Part 1
Exploring your personal money background and how it can affect your investing choices.

The Property Line: Watch for Signs of a Better Market for Buyers
Home buyers can track the number of offers, days on market and inventory to see whether the market is becoming more favorable.

Q&A: Investing a windfall

Dear Liz: My husband and I are retired and recently inherited a large sum of money. We already have money of our own invested and have a good income. Would a whole-life insurance policy based on an index account be a good place to put this money?

Answer: The insurance agent trying to sell you that policy certainly thinks so, because it’s an expensive product that would generate a substantial commission. You’d be smart to get a second opinion from a fee-only financial planner that doesn’t profit from the investments they recommend.

Thursday’s need-to-know money news

Today’s top story: What Biden’s free college plan could mean for you. Also in the news: Overrated travel gear that you should (probably) never pack, what to do with extra money, and how to get a refund on federal student loan payments you made during the pandemic.

What Biden’s Free College Plan Could Mean for YouThe president announced plans for more student aid, including free community college and higher Pell Grants.

Overrated Travel Gear That You Should (Probably) Never Pack
Don’t waste money or suitcase space on these unnecessary items for travel.

What to Do With Extra Money
Extra cash is great, but what should you do with it? Investing is often the answer.

How to Get a Refund on Federal Student Loan Payments You Made During the Pandemic
It’s your money until the moratorium expires.

Q&A: Where to find the most bang for your savings buck. Spoiler: On Wall Street

Dear Liz: I recently sold my home and want to put away funds for my daughters. I want to place $130,000 each in an account that will earn 7% to 10% interest for 30 years or so, providing them with a comfortable retirement fund. I’m thinking of having them start with a low-cost index mutual fund. What are the drawbacks to placing all of the funds in one mutual fund account?

What are the tax implications?

Answer: Stock market index funds mimic a benchmark, such as the Standard & Poor’s 500. That means you’re typically getting at least some diversification, which can help reduce the volatility of your investment.

You could reduce volatility even more by including bond market index funds, or opting for a target date fund that spreads the money across a mix of investments — stocks, bonds, cash. Target date funds are labeled with a specific year in the future and gradually reduce risk as that date approaches. Or you could consider a robo-advisor, which uses computer algorithms and ultra-low-cost exchange-traded funds to create and manage a portfolio.

These investments typically will generate taxable returns, so you’ll want to discuss the implications with a tax pro.

Also, you mentioned earning interest, but interest is what is paid on bonds and savings accounts. Returns are what investors earn on stocks and other higher-risk investments. No investment currently pays 7% to 10% interest. Over time, stocks typically generate average annual returns of 8% or so, but returns aren’t guaranteed and some years your stocks may lose money.

Monday’s need-to-know money news

Today’s top story: Does Medicare cover COVID testing and vaccines? Also in the news: A new episode of the Smart Money podcast on procrastination and paying student loans vs investing, 3 ways COVID has reshuffled our finances, and how the car you drive can raise your auto insurance rates.

Does Medicare Cover COVID Testing and Vaccines?
In general, Medicare and Medicare Advantage plans cover COVID-19 tests, treatments and vaccines.

Smart Money Podcast: Procrastination, and Paying Student Loans vs. Investing
How to stop procrastinating on big money tasks.

3 Ways COVID-19 Reshuffled Our Finances
Three financial trends we can chalk up to the coronavirus pandemic.

How the Car You Drive Can Raise Your Auto Insurance Rates
The cost of your car isn’t the only way your vehicle affects your auto insurance bill.

Thursday’s need-to-know money news

Today’s top story: How to prioritize debt payments in the pandemic. Also in the news: The fairness of airline fees, the influence of 2020 on investing, and how to avoid paying certain car dealership fees.

How to Prioritize Debt Payments in the Pandemic
The rules have changed.

Ask a Travel Nerd: Are Airline Fees Fair?
The process of buying a plane ticket can be misleading because you aren’t shown all of the fees upfront.

Will 2020 Make Us More Empathetic Investors?
Investment dollars can make an impact, so be sure your impact is a good one.

Avoid Paying These Car Dealership Fees
Know which fees you have to pay, which ones you can negotiate, and which ones you can avoid altogether.

Q&A: Here’s why trying to time the stock market is a really bad idea

Dear Liz: I confess that I am one of those people who panicked and sold a portion of my portfolio in March, against the advice of many who said, “Hold, don’t fold.” Thus, when the market bounced back, I was left standing out in the cold.

I am filled with a tremendous sense of stupidity. I have no idea what I should do with the cash, which remains in a money market account.

Do I wait for a 5% or 10% market correction to reenter the market? Do I leave the money in a money market account, where it earns 0.01% interest, and wait for interest rates to rise?

Answer: You tried to time the market once, with painful results. Why would you want to make the same mistake again?

That’s what you’re doing when you wait for a correction to enter the market. Many people think they’ll have the discipline to do this, but the reality can be quite different.

Once the market drops 5% to 10%, what’s to keep it from dropping further? Would you be able to jump in as others are bailing out? And what if the correction is manageably small but happens after the market has climbed considerably? You would still have missed out on a substantial amount of growth.

You may have panicked because you were taking too much risk with your portfolio. Perhaps you were trying for maximum returns or the proportion devoted to stocks had increased during the previous bull market.

The solution is to craft an asset allocation that reflects your goals and risk tolerance. Then you regularly rebalance back to that asset allocation.

Having such a plan can help you resist the urge to cash out in a downturn. So too can having an advisor who can help you craft a plan and talk you down when anxiety has you climbing the walls.

Thursday’s need-to-know money news

Today’s top story: The tax credit fix many can’t afford to miss. Also in the news: Being the first in the family to invest, how to right your retirement savings after coronavirus setbacks, and why your credit karma score seems to high.

The Tax Credit Fix Many Can’t Afford to Miss
Working families could miss out on the refundable tax credits they need to make ends meet.

First in the Family to Invest: How I Saved Almost $700K
Frugality and a commitment to invest at least 20% of his earnings have paid off for this Missouri man.

How to Right Your Retirement Savings After Coronavirus Setbacks
For investors whose retirement savings have been disrupted by the pandemic, there’s a path to replenishment in 2021 and beyond.

Why Your Credit Karma Score Seems Too High
Not all scores are the same.

Monday’s need-to-know money news

Today’s top story: 4 financial experts who could steer you wrong. Also in the news: Treating investing like a subscription, 7 credit card perks to prioritize in 2021, and Disney cancels its annual Passport Program.

4 Financial ‘Experts’ Who Could Steer You Wrong
Be cautious about taking advice from sources who care more about their profits than your financial health.

Want to Invest More This Year? Treat It Like a Subscription
A better financial future for just $49.99 a month sounds like a late-night infomercial, but it’s not as crazy as it seems.

7 Credit Card Perks to Prioritize in 2021
Resolve to examine your cards’ features and ensure they’re still getting the job done and saving you money.

Disney Cancels Its Annual Passport Program
Over one million customers impacted.