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If the Democrats sweep, they might seek to pass the original $3.4 trillion Heroes Act that cleared the House in May.


ANGELA WEISS/AFP/Getty Images

Sometimes the “why” is less important than the “what.” And that’s particularly true for investors right now.

Try explaining this: The

Dow Jones Industrial Average

advanced 904.09 points, or 3.3%, to 28,586.90 this past week, its second consecutive weekly gain, while the

S&P 500 index

rose 3.8%, to 3477.13, and the

Nasdaq Composite

gained 4.6%, to 11,579.94. Even more shocking, the small-company

Russell 2000

index climbed 6.4%, to 1637.55.

A possible stimulus package got much of the credit—and attention—this week, and there’s no doubt that the market would love to see a bill get passed. The Federal Reserve would too, as Fed Chairman Jerome Powell continued to call for the government to act sooner rather than later. But if it was all about stimulus, we suspect that the swings to the downside would have been larger when President Donald Trump said he was calling off negotiations, and the market wouldn’t simply have shrugged off every other misstep along the way.

Another possibility for the rapidly rising market: It’s looking ahead to a Blue Wave, which would see not only Joe Biden win the election, but Democrats hold the House of Representatives and take the Senate too. In that case, the stimulus might be even larger than a package now would be.

Jefferies economist Aneta Markowska, for instance, removed a stimulus package from her 2020 forecast two weeks ago and still doesn’t expect it to become law this year. She does, however, suspect that if the Democrats sweep, they will seek to pass the original

While investors may like the safety and security of large caps, particularly in today’s uncertain market environment with Covid-19 and a forthcoming presidential election, small caps are starting to show signs of life. What exactly is causing small cap ETFs to heat up right?

“Wall Street has been experiencing a roller-coaster ride over the past few weeks as election uncertainty and lack of additional stimulus continue to weigh on investor sentiments,” a Yahoo! Finance article noted. “Against this backdrop, small caps are clearly outperforming. This is especially true, as the Russell 2000 Index has risen 11.4% over the past three months compared to gains of 6.9% for the S&P 500, 7.8% for the Nasdaq Composite Index and 7.3% for the Dow Jones.”

One of the reasons the article cited was growing optimism from investors.

“Though the latest economic data has been mixed, Americans have become optimistic about the economy with their confidence rising to the highest level in September since the coronavirus pandemic began,” the article added.

If investors still believe that strength could be ahead for small caps, one fund to take a look at is the Vanguard Small-Cap Value Index Fund ETF Shares (NYSEArca: VBR). VBR seeks to track the performance of a benchmark index that measures the investment return of small-capitalization value stocks. The fund employs an indexing investment approach designed to track the performance of the CRSP US Small Cap Value Index, a broadly diversified index of value stocks of small U.S. companies.

^MSACWISCAP Chart

^MSACWISCAP data by YCharts

A Small Cap Fund with a Multi-Factor Approach

In today’s market that’s brimming with uncertainty surrounding the coronavirus outbreak, it can also help investors to use factor investing to filter out the best opportunities. Nowadays, the focus has been quality and value amid the market uncertainty caused by

If you find yourself in a situation where you need a little financial help, take time to think about your options. Automatically reaching for a credit card — or applying for a personal loan — might not be the best money move.

According to the Federal Reserve, consumer debt increased $12.3 billion month over month in July 2020. Interestingly, revolving debt, which includes credit card debt, decreased about $300 million. But nonrevolving debt, which includes personal loans, grew by $12.6 billion.

Bottom line: If you have debt or are facing an expensive but necessary purchase, you can choose how you want to attack the debt. Your goal is to minimize the risk of making your debt worse than it already is. Make the right choice, and before you know it, you’ll be on your way to fiscal sanity again.

So let’s take a look at how to decide whether you need a credit card or a personal loan for your debt situation. Keep reading , and here’s what you’ll learn:

When to use a credit card.

Pros and cons of credit cards.

When to use a personal loan.

Pros and cons of personal loans.

What if you need to consolidate debt?

When to Use a Credit Card

Several years ago, I had a giant hole in my kitchen ceiling. It was the unfortunate result of a leaking roof and a monsoonlike storm that lasted for five days.

The bill for this fiasco? A cool $16,000. I was fortunate to have an emergency fund and a credit card with a ridiculously low annual percentage rate (the perks of having a long, currently drama-free credit history). It was going to take my insurer some time to approve the coverage, and I needed to fix the roof before

Q. After a long court battle, my sister and I, both 65, will inherit an uncle’s IRA worth more than $1 million. He had already been taking Required Minimum Distributions when he died. We are both over 65. I’m looking for options other than just liquidating the account and paying the IRS off. What should I expect?

— Beneficiary

A. It’s time to get together with your tax preparer.

The rules governing Required Minimum Distributions depend on when the original account owner died and what the relationship was between the original owner and the inheritor.

“When, as here, the original account owner died before Dec. 31, 2019, a non-spouse inheritor has the option of withdrawing all of the money from the inherited IRA within five years or taking Required Minimum Distributions over his or her lifetime,” said Shirley Whitenack, an estate planning attorney with Schenck, Price, Smith & King in Florham Park.

For inherited IRAs after that time, non-spouse beneficiaries must draw down the entire account in 10 years, but distributions don’t have to come out every year. When to take the distributions should depend on your tax situation.

In cases like yours, you must directly roll over the assets to an inherited IRA in your own name and then you’d use your age and the IRS Single Life Expectancy Table for calculating the RMD, Whitenack said.

“The CARES act temporarily waived Required Minimum Distributions for all retirement plans for the calendar year 2020,” she said.

Email your questions to [email protected].

Karin Price Mueller writes the Bamboozled column for NJ Advance Media and is the founder of NJMoneyHelp.com. Follow NJMoneyHelp on Twitter @NJMoneyHelp. Find NJMoneyHelp on Facebook. Sign up for NJMoneyHelp.com’s weekly e-newsletter.

Source Article

MARK HULBERT



a cat sitting on top of each other: You may be worrying about the wrong things.


© Getty Images/iStockphoto
You may be worrying about the wrong things.

Today’s investment pop quiz focuses on stock market volatility:

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How much does the stock market in a typical year deviate from its long-term average?

I’m willing to bet that your answer was way off, since virtually everyone gets it wrong. And that’s disturbing, since the incorrect answer leads to major retirement portfolio mistakes. Underestimate stocks’ volatility and you most likely will be led to make your retirement portfolio too risky. Overestimate it and you will be scared away from equities.

Read: Half of Americans over 55 may retire poor

To understand the answer to my quiz, consider that in the 123 calendar years since the Dow Jones Industrial Average (DJIA) was created in the late 1800s, it has produced an average price-only gain of 7.7%. On average, each individual year’s Dow return has been 16.3 percentage points above or below this 7.7%.

Last year came close to this, for example. The Dow in 2019 gained 22.3%, which was 14.6 percentage points above the historical mean.

Believe it or not, the typical investor believes stocks’ annual volatility is more than twice as high, according to recent research from the Center for Retirement Research at Boston College. The author, Wenliang Hou, a research economist at the Center, discovered this after analyzing the data contained in the most recent Health and Retirement Study (HRS) from the University of Michigan. The HRS, which is conducted every two years, is perhaps the most comprehensive examination available of attitudes toward retirement; it is based on a survey of around 20,000 Americans over the age of 50.

Read: What are Medicare Advantage plans, and are they worth the risk?

Gallery: Robinhood Has ‘App-ified’ Investing — How To Dive In Without Big Losses