THE DOWNLOAD MONEY MATTERS
Diversification is making sure that your investment portfolio is not too
concentrated on one company or one sector to avoid a potential pitfall.”
— Nicole Strbich, CFP, CPWA, EA, director of financial planning at Buckingham Advisors in Dayton, Ohio
of account, savings or money markets are good choices, because nearly all are FDIC-insured.
PAY OFF DEBT AND CREDIT CARDS
“Credit cards are really where things can start snowballing in the wrong direction,” Landsberg says. Because interest rates typically fall in the high teens, balances can pile up easily in normal times. Add in a job loss or other life-
altering circumstance, and the debt may quickly become unmanageable. The solution: Prioritize paying off high-interest credit card debt before you’re hit with a shock.
DE-RISK YOUR INVESTMENT PORTFOLIO
You know the merits of holding a mix of stocks and bonds in your investment portfolio. To prepare for a financial shock, it’s important to diversify even further. “Diversification is making sure
that your investment portfolio is not too concentrated on one company or one sector to avoid a potential pitfall,” says Nicole Strbich, CFP, CPWA, EA, director of financial planning at Buckingham Advisors in Dayton, Ohio. In any crisis, certain sectors will
be affected more than others, she explains. “You could stumble into having an area where your investment portfolio is really hit hard.” Strbich suggests taking action as
soon as one sector or company reaches more than 5% of your net worth. That’s the time to take the gains and rediversify into another investment.
Diversification applies to your
employment situation, too. Strbich recommends limiting the amount of stock you own in the company you work for. Any major incident that affects
your company or industry becomes a double whammy: You may lose your job and your company’s stock price may plummet, risking your nest egg when you may need it most.
RETAIN FINANCIAL FLEXIBILITY
Having financial flexibility means preserving your access to money longer or setting up future access to credit. A few examples to consider: Save for retirement using a mix of account types. With a Roth IRA or Roth 401(k), you can always access your contributions without penalties, unlike traditional 401(k)s. Open a home equity line of credit proactively (don’t withdraw from it yet), suggests Strbich. “It then functions as additional emergency credit you can access with lower interest rates than credit cards.” Consider refinancing your mortgage. You may be able to create more breathing room in your monthly payment, while retaining the flexibility to pay more, McBride notes. If you aspire to pay off a mortgage or car loan early, Strbich suggests collecting the money until you can pay in full, rather than making extra payments. “If something happened, you have the ability to access that balance, as opposed to having a payment-free car but no other income,” she notes.
AMEX REWARDS CHECKING If you love racking up perks and
rewards from your credit card, now you can do the same with your banking. American Express just launched the Amex Rewards Checking account. The no-fee, no- minimum balance account offers one reward point for every $2 you spend.
SENIOR SAVINGS Most states offer seniors a discount on their home property taxes. Several, including Connecticut and Tennessee, freeze property tax for seniors. Others increase homestead exemptions. In Florida, there’s an additional $50,000 exemption for people over 65. In Colorado, seniors can exempt up to 50% of their home’s first $200,000 value. In some states people with disabilities, low annual income, and veterans may also qualify for additional discounts.
SHOW US THE MONEY The reason behind the
Great Resignation — 4.4 million employees walking away from their jobs since the pandemic began — appears to be all about their finances. A report by Betterment found workers rank a high-quality 401(k) plan, 401(k) matching program, FSA and HSA accounts, employer-sponsored emergency fund, childcare support, and access to a live financial adviser as the top financial benefits they want.
CHEAPER ONLINE DRUGS Business mogul Mark Cuban and Amazon have gotten into the prescription drug business. Cuban’s Cost Plus and Amazon’s PillPack both debuted online recently. Cost Plus says it offers drugs at deeply discounted prices that are often cheaper than your insurance’s copay. Amazon offers free two-day shipping to Prime customers, with 80% discounts on generic drugs and 40% discounts on brand names if you forgo using insurance.
MAY 2022 | NEWSMAX MAXLIFE 75
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