Monday’s need-to-know money news

Today’s top story: How to invest $50,000. Also in the news: Ditching student debt through monster payments, funding a wedding while paying student debt, and what we can learn from rich people who are bad with money.

How to Invest $50,000
Making the wise choices.

How I Ditched Student Debt: ‘Monster Payments’
Using monster payments to pay off your student debt faster.

Ask Brianna: How Can I Fund a Wedding and Pay Student Debt?
Managing two large expenses.

What We Can Learn From Rich People Who Are Bad With Money
Learning from other people’s mistakes.

Friday’s need-to-know money news

Today’s top story: Disputing credit card purchases. Also in the news: Accepting money from parents, 3 investing lessons from the First Lady of Wall Street, and why the IRS wants a piece of your March Madness winnings.

You Can Dispute Credit Card Purchases, But Should You?
Use, don’t abuse.

Ask Brianna: Should I Accept Money From My Parents?
The pitfalls of being an adult.

3 Investing Lessons From the First Lady of Wall Street
Meet Muriel “Mickie” Siebert.

You won your March Madness office pool! Congratulations! now pay your taxes
One shining moment for both you and the IRS.

Q&A: Investing during retirement

Dear Liz: I’ll be retiring shortly. After 30 years of public service, I’m fortunate to have a generous pension. I’ll be paying off all my debts upon retirement, including my mortgage. I have a deferred compensation account that I will leave untouched until I’m required to take disbursements at 70 1/2 (15 years from now). Until then I will have disposable income but no significant tax deductions. Short of investing on my own in a brokerage account (and perhaps incurring capital gains taxes), are there any other investment vehicles that perhaps would be tax friendlier?

Answer: A variable annuity could provide tax deferral, but any gains you take out would be subject to income tax rates, which are typically higher than capital gains rates. (Annuities held within IRAs are subject to required minimum distributions starting after age 70 1/2. Those held outside of retirement funds will be annuitized, or paid out, starting at the date specified in the annuity contract.) Also, annuities often have high fees, so you’d need to shop carefully and understand how the surrender charges work.

Many advisors would recommend investing on your own instead and holding those investments at least a year to qualify for lower capital gains rates. This approach is particularly good for any funds you may want to leave your heirs, since assets in a brokerage account would get a “step up” in tax basis that could eliminate capital gains taxes for those heirs. Annuities don’t receive that step-up in basis.

You also shouldn’t assume that waiting to take required minimum distributions is the most tax-effective strategy. The typical advice is to put off tapping retirement funds as long as possible, but some retirees find their required minimum distributions push them into higher tax brackets. You may be better off taking distributions earlier — just enough to “fill out” your current tax bracket, rather than pushing you into a higher one.

Monday’s need-to-know money news

Today’s top story: 5 essential investing moves for Millennials. Also in the news: Why your tax refund is ideal for paying credit card debt, how to make sure retirement isn’t a drag, and why you need to do your homework before meeting with a financial advisor.

5 Essential Investing Moves for Millennials
Planning for the future.

Why Your Tax Refund Is Ideal for Paying Credit Card Debt
Use it wisely.

Retirement Can Be a Drag. Here’s How to Fix That
Making the most of it.

Before You Meet With A Personal Financial Advisor, Do Your Homework
Know who you’re dealing with.

Monday’s need-to-know money news

Today’s top story: NerdWallet’s best bank accounts and credit unions of 2017. Also in the news: Tips for investing in your 30s, using apps to save money without thinking, and the five biggest tax breaks for the self-employed.

NerdWallet’s Best Bank Accounts and Credit Unions of 2017
Where you should do business.

5 Tips for Investing in Your 30s
Taking the long view.

Want to Save Money Without Thinking? Try These Apps
You won’t even notice.

5 biggest tax breaks for the self-employed
How to keep more of your money.

Tuesday’s need-to-know money news

Today’s top story: A financial advisor’s tips for starting an emergency fund. Also in the news: How small homes can offer big returns, why partner’s wealth is very important to only 5% of OKCupid users, and how to raise financially savvy kids.

Emergency Funds: A Financial Advisor’s Tips for Getting Started
Start your fund today.

Small Homes Can Offer Big Returns
Bigger homes aren’t always better.

Partner’s Wealth ‘Very Important’ to Only 5% of OkCupid Users, Survey Finds
Why money doesn’t seem to matter.

How to raise financially savvy kids
Getting them off on the right foot.

Q&A: Advice for an investing newcomer

Dear Liz: I am not versed at all in money matters. I have no clue where to invest or even if I should invest. I have $5,000 squirreled away that I am totally comfortable investing for 12 months because I feel I would have no need for it before then. Can you make a suggestion where I should put it to make a safe return?

Answer: An FDIC-insured bank account.

Investing requires a longer time horizon and a willingness to risk losing some of your principal. If you can’t do either, you need to stick with low-risk, low-reward options.

Q&A: How much risk is too much in retirement?

Dear Liz: If you have all your required obligations covered during retirement, is having 70% of your portfolio in equities too risky?

Answer: Probably not, but a lot depends on your stomach.

Retirees typically need a hefty dollop of stocks to preserve their purchasing power over a long retirement, with many planners recommending a 40% to 60% allocation in early retirement. A heftier allocation isn’t unreasonable if all of your basic expenses are covered by guaranteed income, such as Social Security, pensions and annuities. Ideally, those pensions and annuities would have cost-of-living adjustments, especially if they’re meant to pay expenses that rise with inflation.

Historically, retirees have been told they need to reduce their equity exposure as they age, but there’s some evidence that the opposite is true. Research by financial planners Wade Pfau and Michael Kitces found that increasing your stock holdings in retirement, where the allocation starts out more conservative and gets more aggressive, may reduce the chances of running short of money. Their paper, “Reducing Retirement Risk with a Rising Equity Glide-Path,” was published in the Journal for Financial Planning and is available online for free.

That said, you don’t want your investments to give you ulcers. If you couldn’t withstand a big downturn — one that cuts your portfolio in half, say — then you may want to cushion your retirement funds with less risky alternatives.

Thursday’s need-to-know money news

twrmn81mopj80nvlk4zqToday’s top story: Manage your debt for a smoother divorce. Also in the news: Giving your child the gift of stocks, how to donate credit card points and miles to charity, and six ways to make the most of your holiday bonus.

Manage Your Debt for a Smoother Divorce
Making a difficult situation a bit easier.

Give Your Child the Gift of Stocks
The gift that keeps on giving.

How to Donate Credit Card Points, Miles or Cash Back to Charity
Put those forgotten miles to good use.

6 Ways to Make the Most of Your Holiday Bonus
Stretching it out.

Tuesday’s need-to-know money news

shutterstock_102945899Today’s top story: With a new Education Secretary on the horizon, the outlook for student loan debt relief is unclear. Also in the news: The 5 best ways to invest $10,000, where people are banking off the grid, and 5 apps to make donating easier on this Giving Tuesday.

Outlook for Student Loan Debt Relief Unclear With Education Secretary Pick
What student loan holders need to know about Betsy DeVos.

The 5 Best Ways to Invest $10,000
What to do with your windfall.

Here’s Where People Are Off the Banking Grid
In 2015, 7% of American households were unbanked.

These 5 apps will make donating easy this Giving Tuesday
Help is just an app away.