Posts Tagged income
High Yields Aren’t Always a Good Thing
Posted by Tetyana Matychak in Investing on March 1st, 2010
In the parched landscape of income investing, dozens of closed-end funds yield more than 10%.
Just as wanderers in the desert shouldn’t mistake a mirage for an oasis, investors shouldn’t regard these funds as salvation. Often, the income you earn in the short run mightn’t be worth the principal you lose in the long run.
Like mutual funds, closed-ends are baskets of stocks or bonds. Unlike a mutual fund, a closed-end trades like a stock; you can buy shares only from other investors. Thus the price isn’t set merely by the value of a closed-end’s investments, but by the whims of those who trade its shares. When investors pay more than the portfolio’s net asset value, that is called a “premium.” When the shares trade at less than NAV, that is a “discount.”
As of last week, 11 of the roughly 650 closed-ends tracked by Lipper Inc. traded for at least 20% more than their portfolios are worth. In many cases, investors are paying those big premiums in pursuit of high yields.
Buy such a fund, and you may double-dose on risk. A yield that looks stable can crumble; then the premium may collapse as panicked investors dump the fund. That leaves you with less income than you expected—and a big market loss to boot. Read the rest of this entry »
The Great Recession Continues
Posted by Tetyana Matychak in Budget on January 27th, 2010
The December jobs report has doused the hope that we were at the beginning of a sustained economic recovery.
The unemployment rate managed to hold at 10% in December only because of an extraordinary shrinkage in the labor force: Some 661,000 gave up looking for a job.
Bureau of Labor Statistics’ (BLS) nonfarm payroll data indicate that December job losses totaled 85,000. But the bureau’s household survey, a better and more comprehensive measure of both the unemployed and underemployed, indicated a loss of 589,000 jobs. Since the Great Recession began in 2007, some 8.6 million jobs have been lost, according to the bureau; and small businesses, the normal source for new jobs, are still shedding workers. Fewer than 10% added employees, while more than 20% cut back—and the cuts averaged nearly twice as many per firm as the hires at the expanding companies.
Unemployment, in short, has graduated from being a difficulty, a worry. It is now a catastrophe, with some 15.3 million Americans out of work, according to the BLS. Read the rest of this entry »
Efile Day is January 15
Posted by Tetyana Matychak in Budget on January 14th, 2010
Filing taxes on paper is on the way out. Efile is the new way to go.
Filing your income tax return using paper forms is not quite as common as it once was. This is due in large part to the IRS efile option. With efile you have the ability to file your return electronically. For anyone with access to the internet this is the best possible filing option.
First Day to Efile
The IRS tax calendar shows that the first day to efile in 2010 is January 15. The last day to efile without being penalized is April 15, 2010.
This gives you plenty of time to decide if efile is right for you, to collect all the proper documents, and to hire a tax professional if necessary. Read the rest of this entry »
Look Who’s Peeking at Your Paycheck
Posted by Tetyana Matychak in Budget, Favourites on January 13th, 2010
You may think your income is private information. But the credit bureaus may have your number.
And starting in February, your income—as estimated by the bureaus—may be used to help determine whether you get a new credit card.
Tuesday, the Federal Reserve issued its final rules related to last year’s Credit Card Act, which, among other things, will require credit-card companies to consider an applicant’s income or assets and current debts before approving credit. To provide flexibility, however, the Fed said that issuers can use “a reasonable estimate” of income or assets based on “statistically sound models.”
In hopes of such a decision, the three big credit bureaus have been updating or rolling out products that seek to estimate consumers’ incomes, based on information in their credit reports, such as the size and age of their mortgages or the size of their credit limits.
The products also are responding to banks’ efforts to tighten credit standards in order to reduce losses and risk. “We look to fill in the blanks where they need the blanks filled in,” says John Cullerton, vice president, product management, for Equifax Inc., an Atlanta-based credit bureau. Read the rest of this entry »
How much you’ll need in retirement
Posted by Tetyana Matychak in Budget, Favourites on January 8th, 2010
Conventional wisdom says you need 80% of your pre-retirement income. But ensuring a comfortable retirement will take more than just a rule of thumb.
Question: I always heard that you will need 80% or so of your working salary to live on in retirement. But is that a percentage of your gross income or your take-home pay? –Mary Taylor, Chalfont, Pennsylvania
Answer: This rule of thumb has long confused many people who are trying to get a handle on their retirement planning. But the question of how much income you’ll need to live comfortably after calling it a career has taken on a special urgency the last year or so as retirement account balances wilted during the market’s meltdown.
After all, if you earn roughly $100,000 a year and take home, say, $80,000 after taxes, the difference between requiring 80% of your gross income ($80,000) and 80% of your net income after taxes ($64,000) is substantial. Unless you’ve got a pretty sizeable nest egg, the difference between coming up with $80,000 a year (plus inflation increases to maintain purchasing power) and $64,000 can have a significant impact on whether your money can support you the rest of your life. Read the rest of this entry »
Nobel Laureate: How to Get Out of the Financial Crisis
Posted by Tetyana Matychak in Budget, Favourites on December 18th, 2009
The amount of bad news over the past weeks has been bewildering for many people in the world. Stock markets have plunged, banks have stopped lending to one another, and central bankers and treasury secretaries appear daily on television looking worried. Many economists have warned that we are facing the worst economic crisis the world has seen since 1929. The only good news is that oil prices have finally started to come down.
While these times are scary and strange for many Americans, a number of people in other countries feel a sense of deja vu. Asia went through a similar crisis in the late 1990s, and various other countries (including Argentina, Turkey, Mexico, Norway, Sweden, Indonesia and South Korea) have suffered through banking crises, stock-market collapses and credit crunches.
Capitalism may be the best economic system that man has come up with, but no one ever said it would create stability. In fact, over the past 30 years, market economies have faced more than 100 crises. That is why I and many other economists believe that government regulation and oversight are an essential part of a functioning market economy. Without them, there will continue to be frequent severe economic crises in different parts of the world. The market on its own is not enough. Government must play a role.
It’s good news that Treasury Secretary Henry Paulson seems to finally be coming around to the idea that the U.S. government needs to help recapitalize our banks and should receive stakes in the banks that it bails out. But more must be done to prevent the crisis from spreading around the world. Here’s what it will take. Read the rest of this entry »
Tax Form Help
Posted by Tetyana Matychak in Budget on December 16th, 2009
Have you found yourself in a bind as far as your tax situation is concerned? If so, you need to know one thing: what type of tax help is best for your situation. Once you know this you can then make the proper decisions about how to best move forward.
Download free tax forms.
For some, basic tax help is all they need. This would hold true if you just need some assistance filing your final income tax return. While this is difficult for you, a professional can handle anything you throw their way.
Of course, some situations are way more serious. Has the IRS sent you a notice of a tax lien? Are you being audited? If you are facing a serious situation you have to hire the right type of professional. Your best bet may be a tax attorney or enrolled agent – somebody with specialized experience.
Dealing with the IRS is never fun. To make the process a bit easier you can hire a tax professional who will represent you to the IRS while handling all necessary details. Read the rest of this entry »
Fix Mistakes On Your Tax Return
Posted by Tetyana Matychak in Budget, Favourites on December 15th, 2009
Mistakes on tax returns are fairly common–leading to miscalculated taxes or refunds. IRS offers easy ways to fix mistakes on taxes.
Adjust or amend your tax past tax return using the 1040x form.
Have you made mistakes in the past when filing your income tax return? For many, mistakes lead to owing the IRS money. Doing taxes can be a frustrating experience even when you get it right and while such mistakes are especially upsetting, you can learn to avoid the same mistakes in the future.
Take for instance a self-employed professional who did not pay enough in quarterly taxes. The end result is a balance due along with their final return – this can really sting. The good thing is that this never has to happen twice. Stay informed about tax rules and you’ll find there are easy ways to stay in compliance no matter the situation.
At some point in time you are probably going to make a mistake on your tax return. Those who learn from their mistakes are going to be on easy street in the future. Read the rest of this entry »
Are You Eligible for Recovery Tax Credits?
Posted by Tetyana Matychak in Budget on November 5th, 2009
Weatherizing your home not only helps lower energy bills, but can also qualify you for tax credits under the government’s economic stimulus plan.
Learn more about getting your government grants.
Heading into the winter weather season, families are challenged with the basic need of heating the home. But the economic crisis has many Americans wondering if they can afford to ratchet up the thermostat. The fact is many do not have the money to spend.
Fortunately, the added expense of home heating can be partially offset by tax credit programs the government put in place through the American Recovery and Reinvestment Act this year.
One of those programs is the Nonbusiness Energy Property Credit. This tax incentive gives money back to people who buy eligible energy-saving improvements for the home. This includes efficient heating and air conditioning, water heaters, and stoves. The cost of installing such appliances may also be credited. Other weatherizing equipment such as insulation, windows, and doors that increase energy efficiency also trigger the 30% tax credit. Read the rest of this entry »
Jobless claims show labor market may slow recovery
Posted by Tetyana Matychak in Budget on September 7th, 2009
New claims for jobless aid fell less than expected last week, and the number of people continuing to receive unemployment benefits rose - further signs that any economic recovery will be hindered by a weak job market and flat incomes.
Most economists think the recession is over, but they say the jobless rate will keep rising until at least next summer as the economy struggles to mount a sustained recovery. That means household incomes will remain depressed and consumer spending, which accounts for 70 percent of the economy, will continue to lag.
“Firms are still not hiring, and that reflects deep pessimism about the sustainability of the economic recovery once government stimulus programs wear off,”said Sal Guatieri, senior economist at BMO Capital Markets.”The lack of job creation remains a big headwind for cash-starved and credit-constrained consumers.”
The nation’s major retailers on Thursday reported lackluster results from August back-to-school sales. Results in established stores fell 2.1 percent in August compared with the same month last year, a compilation of 31 retailers’ results by the International Council of Shopping Centers and Goldman Sachs indicated. Some major discounters managed to exceed expectations. Read the rest of this entry »
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