Day: September 16, 2020

Personal Finance Daily: If you relocated across state lines, beware of this big tax headache and wealthy Americans prep their finances for a possible Joe Biden presidency

This post was originally published on this site

Stay safe, MarketWatchers, and don’t miss these top stories:

Personal Finance
If you relocated across state lines, beware of this big tax headache

If the pandemic has you working remotely in another state, even temporarily, you might have to file an extra tax return.

Stocks, bonds and more: A primer on diversification for new investors

There are many ways to diversify your portfolio—here are three steps to get you there.

‘You may never see it as good as it is now’: Wealthy Americans prep their finances for a possible Joe Biden presidency — here’s how

One San Francisco accountant finishes every client conversation with a discussion about what a Biden administration could mean for portfolios.

Home-builder confidence soars to all-time high despite rising material costs

Lumber prices have increased more than 170% since April, but that hasn’t turned builders pessimistic on the industry’s overall trajectory.

How long the $300 unemployment benefit lasts all depends on which state you live in

More than $30 billion — two-thirds of the FEMA disaster-relief funds being used to fund the extra benefits — has been distributed to make the $300-a-week payments across more than 20 states

Worried about COVID-19? New $399 Apple Watch tests blood-oxygen levels. Other products do this for $17 — but what does the FDA say?

‘What we don’t want is for people to go, Oh s—! I’m looking at my oxygen levels and it’s low, it must be COVID,’ said the medical director of Respiratory Care Services at Houston Methodist Hospital.

Elsewhere on MarketWatch
Fed sees interest rates near zero until end of 2023, sets new economic conditions to be met before raising rates

The Federal Reserve on Wednesday said it doesn’t expect to raise rates until the end of 2023 at the earliest and it set out new economic conditions that must be met before it will raise them.

Trump shares fake video of Biden playing NWA’s anti-police hit and Twitter labels it ‘manipulated’

Joe Biden steps up to the podium, presses play on his phone and starts bobbing his head to the beat of N.W.A.’s “F— the Police.” Obviously a fake.

Prisoners who fight wildfires and clean up after hurricanes get paid as little as 14 cents an hour

Some of the tasks put incarcerated workers at risk of injury or ill health.

Howard Gold's No-Nonsense Investing: Long-term care insurance: There’s no good alternative

This post was originally published on this site

As I wrote recently, many fewer carriers are selling traditional long-term care insurance policies and premiums are higher than they used to be. People who bought those policies years ago recently have been hit with huge premium increases because policyholders held on longer than carriers expected and have collected huge payouts insurers hadn’t prepared for.

Right now, if you’re in your mid-50s and healthy, a typical individual long-term care policy would cost around $3,000 a year. Even without premium increases, that would be close to $100,000 over 30 years.

80% of older Americans can’t afford to retire – COVID-19 isn’t helping

But because of the heavy costs of policies they wrote decades ago, insurers who are still in the market are getting much more selective. According to the American Association for Long-Term Care Insurance, 44% to 51.5% of people over 70 who apply for a long-term care policy are declined by insurers. Almost one-third of those between 65 and 60 are turned down, as are 24% of people between 60 and 64 and 21% — about one in five — of people in their 50s.

“Underwriting’s gotten a lot tougher,” says Grace Gulden, founder of Life Resources Group LLC, a Golden Valley, Minn.-based adviser specializing in long-term care solutions. “Are you diabetic taking insulin? That’s usually a knockout question. You’re not going to qualify for long-term care insurance if you have two chronic conditions,” such as AIDS, MS, or two or more strokes.

“When they’re looking at your current health, weight has become a much bigger factor than it ever has before,” she notes. An underwriting guide for long-term care insurance prepared by Mutual of Omaha laid out explicit weight guidelines. Insurers also will look at applicants’ immediate family history of conditions like heart disease, stroke, or dementia that would put someone at higher risk of needing long-term care.

So, what do you do if you want coverage but either can’t afford it or were turned down for a policy? Retirement Weekly explored some options, but unfortunately there are not a lot of good choices. Why? These products tend to be hybrids, designed for another purpose, with long-term care almost as an afterthought.

For example, you can buy a rider to a life insurance policy that lets policyholders use a portion of their death benefit to cover the cost of critical or chronic illnesses or long-term care. “When you add the long-term care rider to it, it does greatly increase the premium that you’re paying,” says Gulden. The reason is obvious: Insurers need to cover the same costs a straight-up long-term care policy would cover.

She ran a hypothetical quote for Retirement Weekly for a $500,000 term life policy for a 55-year-old woman who doesn’t smoke and is in good health. Premiums would run $225-239 a month, or just shy of $3,000 a year, which sounds great on paper. After all, you’re getting half a million dollars’ worth of life insurance with long-term care thrown in for the same price of a full long-term care policy, right?

But there’s a catch — or a couple of them. First of all, every dollar that goes to pay long-term care expenses is a dollar your heirs won’t see, because it’s subtracted from the death benefit. “If…they take a portion of that death benefit while they’re still alive, that’s going to greatly reduce what their beneficiary is going to get,” says Gulden, though she adds that most policies stipulate at least 10% of the death benefit must be reserved for heirs.

Second, this term life policy runs for 30 years, so it would run out when Jane Doe turns 85, maybe just the time she’ll need to pay for long-term care.

“The question to ask is, ‘Will I outlive the term before I need care?’” Gulden adds in a follow-up email to me. One alternative is whole life insurance with a long-term care rider, which doesn’t have an expiration date but costs — wait for it — more than $1,000 a month for $500,000 worth of coverage for this same healthy 55-year-old woman. That simply doesn’t make economic sense for most people.

There are other choices, too, including deferred annuities with long-term care riders, which may work for people who have certain pre-existing conditions that cause them to be denied long-term care because underwriting standards are less stringent for annuities. But you’ll have to shell out tens of thousands of dollars upfront to buy one.

Also, older people who own their homes free and clear may consider getting a reverse mortgage and tapping it to pay long-term care expenses. We’ll take a deeper dive into reverse mortgages in a future column.

But when you look at it, it’s hard to avoid Gulden’s conclusion: “If you want a plan that is really designed for long-term care insurance, then you go with long- term care insurance, if you can afford it, and also if you qualify.”

It’s still the best choice among a lot of not-so-great alternatives.

Outside the Box: Why you’re not getting the premium from value stocks

This post was originally published on this site

Every week I get emails from investors telling me they’re fed up with investing in value stocks.

These people are eager to see results. Their patience is wearing thin — and in many cases it’s worn out. Obviously, value stocks are poor performers, they tell me.

This issue has two important components: value stocks — and the people who invest in them.

The long-term case for value stocks is easy to make.

Value stocks are different from popular growth stocks like Microsoft MSFT, +0.08%, Google parent Alphabet GOOG, +0.43%, Apple AAPL, -1.28%, and Facebook FB, -1.00%, to name just four examples. Those stocks seem to have bright futures, and they don’t come cheap in relation to their current profits.

Read: Why Biden’s 401(k) plan is a great idea

By contrast, you’ll find plenty of relative bargains among well-known value stocks like Walt Disney, Berkshire Hathaway BRK.A, +1.07%   BRK.B, +1.10%, Johnson & Johnson JNJ, +0.12%, and Intel INTC, +1.28% — again to name just four of the largest.

Buying stocks at bargain prices has paid off very well over the long haul — especially over the VERY long haul. From 1928 through 2019, an index of large-cap U.S. value stocks had a compound annual return of 11.8%, compared with 9.9% for the S&P 500 index SPX, +0.53%.

I don’t know anybody who invested money for 92 years, but plenty of folks are investors for at least 40 years.

Read: Saving for retirement already challenged women. Then COVID-19 hit

In the average 40-year period, an index of large-cap value stocks grew at 13.5%, compared with “only” 10.9% for the S&P 500. That’s enough extra return to make an enormous difference to long-term investors.

So why are so many people ready to bail out of value investing? In blunt terms, I think there are four main reasons.

• Not enough time.

• Not enough patience.

• Not enough good luck.

• Not enough good sense.

1. If you’re relatively advanced in age (as I am, in my mid-70s), you may not have time to reliably cash in on value investing.

As you know, investment returns don’t happen in straight, predictable lines. This means the value premium doesn’t show up on your investing statement every quarter or every year — or even every decade.

Over the past 92 years, there have been long “dry spells” when portfolios heavy in value stocks and small-cap stocks have failed to outperform the more popular stocks in the S&P 500.

During my own investing lifetime, since the late 1960s, there were three of those dry spells that lasted for eight years, 17 years, and 14 years, respectively. (Later on I’ll give you a link to a chart that shows this.) Interspersed with these were several multiyear periods when value stocks and small-cap stocks dramatically outperformed the S&P 500.

Long-term investors could benefit from those periods. But short-termers could have easily missed them.

Read: The 2 things that are most likely wrecking your retirement savings

2. One of the most reliable attributes of successful investors is patience. Yeah, I know what you’re probably thinking: You’ve heard this over and over, starting with your mother or maybe even your grandfather.

I know investors who figure out what their goals are, determine a realistic way to try to achieve them, and then sit tight for as long as it takes. I know others who pay insufficient attention when they’re setting up their portfolios, only to be startled when they DO start paying attention and learn that they haven’t reaped the big rewards they were hoping for.

Being patient isn’t as easy as it might seem. The powers-that-be on Wall Street always have a new and better solution for any investor who’s frustrated, nervous or tired of waiting for results.

And yet patience, as I have written before, is one of the hallmarks of the most successful investors. Unless you are blessed with ample good luck (see below), you’ll need patience to be a successful value investor.

Read: Do you really need $8 million saved for retirement?

3. Some investors who have sufficient time and plenty of patience still come up short — through no fault of their own — because of bad luck.

Imagine that back in the early 1980s, you had decided to hitch your wagon to the long-term track record of small-cap stocks and value stocks (in a four-fund portfolio I’ll describe below). As it turned out, you had to cool your heels for 17 years before you enjoyed five years of outperforming the S&P 500. Bad luck.

If on the other hand you had jumped on that small-cap-and-value bandwagon in the mid-70s or in 2001, your payoff would have been immediate, perhaps making you a believer for life. Good luck.

More than we like to think, investing performance is determined by this sheer luck of timing.

4. If you’re blessed with ample time, patience and good luck, you are likely to do well if you invest in index funds.

But some people seem willing to toss those three advantages out the window by engaging in active management (either by buying actively managed funds or by picking stocks themselves.) Active management can easily derail a lot of good investment choices — a topic that deserves an article by itself.

The question remains: What’s the best way to capture the long-term benefits of investing in value stocks and small-cap stocks?

My recommendation is a four-part portfolio of index funds (or exchange-traded funds) that includes the most basic U.S. equity asset classes: large-cap blend stocks (the S&P 500, in other words), large-cap value stocks, small-cap blend stocks, and small-cap value stocks.

That combination will give you the familiarity and comfort of the S&P 500 index, along with exposure to the historical performance advantages of value stocks and stocks of smaller companies.

This combination has outperformed the S&P 500 in six of the past nine decades.

I promised you a chart showing this four-fund combination vs. the S&P 500 by itself.

What you’ll see is a blue squiggly line that represents the relative difference, year by year, between the accumulative return of the four-fund combo and the S&P 500. Whenever that blue line slopes down, the four-fund combination underperformed; whenever the blue line slopes upward, it outperformed.

You’ll see five flat black lines, each representing a period from eight to 20 years. At the end of each of these periods, these two returns were essentially even with one other.

And you’ll see four bold upward-sloping green lines, each representing a period for which the four-fund combination outperformed the S&P 500.

Once you grasp the elements of this chart, I think you’ll start to see the importance of time, patience and luck in capturing the small-cap and value premiums.

For a more complete discussion of capturing the small-cap and large-cap value premium, join me for a free one-hour presentation sponsored by the American Institute of Individual Investors (AAII) at 8:30 p.m. Eastern time, Sept. 23.

The title is: “Which Is the Best 1-, 2-, 3- and 4-Fund Strategy?” You can register here.

Richard Buck contributed to this article.

Home-builder confidence soars to all-time high despite rising material costs

This post was originally published on this site

The numbers: Home builders are more confident about the state of their industry than ever before as foot traffic of prospective buyers continues to improve, according to research from a trade group released Wednesday.

The National Association of Home Builders’ monthly confidence index rose five points to a reading of 83 in September. The index reading was the highest on record in the 35-year history of the data series, surpassing the previous month’s record high.

“The suburban shift for home building is keeping builders busy, supported on the demand side by low interest rates,” Robert Dietz, chief economist for the National Association of Home Builders, said in the report. “In another sign of this growing trend, builders in other parts of the country have reported receiving calls from customers in high-density markets asking about relocating.”

Index readings over 50 are a sign of improving confidence. The index had fallen below 50 in April and May as concerns about the impact of the coronavirus pandemic mounted.

What happened: The main indicators underpinning the overall index all increased notably this month.

The index that measures sentiment regarding prospective buyer traffic soared nine points to a record high of 73. The index of expectations for future sales over the next six months increased six points to 84, and the index of current single-family home sales increased four points to 88.

Regionally, the Midwest index signaled the biggest increase, rising nine points to 78, followed by the South’s six-point increase to 85. The regional index for the West dropped one point to 87, but the three-month moving averages for all four regions were higher in September.

The big picture: The real-estate sector — and the market for new homes in particular — has been a bright spot in the country’s economic recovery from COVID-19.

The jury may still be out whether the nation is truly seeing an exodus from major cities, yet demand in the suburbs has notably risen across many parts of the country, according to economists. Buyers in these areas may have been planning to buy in March or April and were delayed by the pandemic — or they may have been planning to buy in the next few years and have been coaxed to speed up those plans thanks to record-low mortgage rates. (Though, low mortgage rates may not be available to all Americans.)

Buyers, however, are encountering a dearth of existing homes for sale in a continuation of a trend that was seen at the beginning of the year before the pandemic. With few existing homes available, more people are turning to the market for new homes.

Still, builders do face headwinds, including the rising cost of building materials. Lumber prices are up more than 170% since April, Dietz said, a reflection of production constraints caused by the pandemic. Up till now, builders have passed that cost on to consumers, but it could become a burden.

“While thus far builders have been able to pass along higher costs in the form of higher prices for finished new homes, there is a limit to their ability to do so, even if we can’t precisely peg where that limit is,” Richard F. Moody, chief economist at Regions Financial Corp., wrote in a recent research note.

And while low mortgage rates create a buffer for high home prices, as home prices continue to rise that buffer is shrinking, Moody said. Over time, if rates increase, affordability will become an even bigger constraint for buyers.

What they’re saying: “Housing continues to be an outlier in that the sector has rebounded strongly after a reopening of the economy,” Rubeela Farooqi, chief U.S. economist at High Frequency Economics, wrote in a research note. “This has occurred even as the labor market remains weak and the economic outlook uncertain.”

Next Avenue: Does your community have what it takes to help you live longer?

This post was originally published on this site

This article is reprinted by permission from

We all want to live healthier, happier, longer lives. But did you know there are three factors about where you live that can help make that happen?

A study published in the July 2020 International Journal of Environmental Research and Public Health found that when cities, neighborhoods and community organizations create healthy environments for area residents, the impact on the longevity of their residents can be huge.

Four researchers at Washington State University (WSU) examined data on the deaths of Washingtonians aged 75 and older between 2011 and 2015. They found that many of the 2,698 people there who’d been centenarians — 1.8% of the sample — were clustered into a few geographic areas. That led the study authors to look for the environmental, or community, factors most highly associated with living to 100 and beyond.

What the researchers found

Three of the common factors were a high working-age population percentage, walkability and an area with a higher socioeconomic status, said Rajan Bhardwaj, one of the study’s authors.

Each of those factors can be directly impacted by public policy and city planning. And it seems that’s what’s going on in some centenarian hot spots.

One of the standout locales in the study was Pullman, Wash., a hilly, midsize college town of around 35,000 in the southeast part of the state.

“Our public works director says it’s the water!” Pullman’s mayor, Glenn Johnson, 76, joked.

In reality, though, a number of other factors make Pullman an ideal town for healthy aging.

Don’t miss: How to get older without screwing it up

“We’ve always encouraged a wellness attitude. We’re a ‘Well City, ‘which is a public health initiative in the state of Washington,” Johnson explained. “A lot of the businesses around town also have wellness programs.”

From an age diversity standpoint, Pullman is light years ahead of where it used to be.

Making Pullman, Wash. a better place to grow older

When Johnson came to teach at Washington State University, Pullman back in 1979, he said, “anyone who wanted to retire back then sort of left the area, because there wasn’t anything to attract them or keep them here.”

Now, Johnson noted, “we’ve got a senior center with all kinds of activities, there are three top-notch retirement communities or facilities in the area and WSU has a retiree’s association. There are just a ton of amenities.”

Ron Wachter, 82, a local businessman who’s lived in Pullman since 1963, agrees.

“The golf course is world famous. We’ve got world-class athletes competing at the college and we’ve got the arts and music. I mean, where else can you get a better seat or better entertainment for less money? There’s just a lot to do,” said Wachter.

Many of WSU Pullman’s staff and faculty members now retire in Pullman only to start second careers locally, keeping them vibrant and active.

How Durant, Okla., is trying to become a better place to age well

But nearly 2,000 miles away, in Durant, Okla., residents aren’t aging as well — yet.

Life expectancy for residents in and around Durant is at, or slightly below, the national average of 78.6 years.

Charla Hall, a professor of psychology at Southeastern Oklahoma State University and 22-year resident of Durant, gave some clues why: “I know that our part of the state deals with diabetes, as an example. Our rates are quite high. And when I’m out in the community, it’s evident that a large percentage of the population struggles with weight. And I see a lot of people smoking; more than when I’m out in other communities.”

But things in this college town of 18,000 are starting to change for the better, thanks to a community initiative and partnership with The Blue Zones Project, whose mission is to help people live healthier, longer lives through certain types of environmental design.

“We’ll model The Blue Zones’ nine underlying denominators and try to replicate those,” says Ashton Gabbart, the marketing and engagement lead for Blue Zones Project by Sharecare in Durant. “The long-term goal, obviously, is to create a sustainable impact for generations on into the future. We want to lower chronic disease and increase longevity. We’ll measure results in the shorter term, but ultimately this will be a 20- or 30-year project.”

To produce those changes, Gabbart and other Blue Zones Project staffers will work with Durant’s city government, business leaders, community development organizations and citizen volunteers to implement a specific and ambitious plan for the future health of Durant’s residents.

“We’ll work with restaurants to try to get them to offer more fruits and vegetables, so that making the healthy option is the easy option,” said Gabbart. “Ten of our top 20 worksites [in the area] will need to take the Blue Zones Pledge, creating healthier break rooms — like replacing soda with water or green teas; swapping donuts in the conference room with fresh fruit and scheduling more breaks throughout the day to get up and move naturally.”

Durant will also put in biking lanes and more sidewalks, which are lacking in some parts of the community.

Also see: COVID-19 has dashed the retirement dreams of these people

There will also be specific initiatives for older adults, such as creating volunteer opportunities around social engagement and healthy habits.

If the pandemic allows, “we want to get our seniors volunteering at farmers markets, for example and we’re looking at setting up a ‘Walking School Bus’ program, which would pair seniors and elementary school kids to walk to school together,” said Gabbart.

Durant is also stepping up to address the socioeconomic factor to help all people in the community live longer, healthier lives.

“We want to make sure our lower-income residents have access to healthy food. So, one of the things we’ve talked about is having mobile grocery stores. This addresses food deserts as well as transportation issues that lower-income folks might be facing,” Gabbart said.

Hall, who volunteers with the Blue Zones Project in Durant when she’s not teaching, is excited for her hometown’s future.

“Over the past several years, we’ve been moving in the right direction. But with Blue Zones coming in, it offers a number of resources that we didn’t have before and that’s exciting.”

Rashelle Brown is a longtime fitness professional and freelance writer with hundreds of bylines in print and online. She is a regular contributor for NextAvenue and the Active Network, and is the author of “Reboot Your Body: Unlocking the Genetic Secrets to Permanent Weight Loss” (Turner Publishing). Connect with her on Twitter and Instagram @RashelleBrownMN.

This article is reprinted by permission from, © 2020 Twin Cities Public Television, Inc. All rights reserved.

NerdWallet: Stocks, bonds and more: A primer on diversification for new investors

This post was originally published on this site

This article is reprinted by permission from NerdWallet.

A majority of U.S. adults (59%) are curious about alternative investments, according to a new NerdWallet survey. Alternative investments, or “alts,” are just about any asset that isn’t a stock, a bond or cash, like real estate, cryptocurrencies or commodities such as gold or oil. The most popular reason Americans cite for their alt interest? Diversification.

More than 2 in 5 Americans interested in alternative investments in the future (44%) say it’s because they want to diversify the type of investments they have, while a quarter (25%) say it’s because the stock market is too volatile. In truth, history shows that despite periods of volatility, the stock market tends to go up over time. And there are many ways to diversify your portfolio — from solely within the stock market to a mix of assets that includes alts — depending on your interests, tolerance for risk and the time you have to dedicate to investing.

Should I even invest right now?

According to the survey, about a third of Americans (33%) don’t think now is a good time for them to invest in the stock market. While investing is a great strategy for building wealth over a long period, it’s best to make sure immediate needs are met first, particularly during financially precarious times.

Start by assessing your financial stability. Ideally, you want to have a steady job that allows you to pay for necessities, no high-interest debt and an emergency fund. One rule of thumb for such a fund is to set aside three to six months of expenses, but even $1,000 can help you weather a few unexpected hits to your finances. And if you have a retirement plan at work, such as a 401(k), and your employer offers matching dollars, contribute at least enough to earn the full match, because that’s free money.

Watch: What if I keep my money in a savings account instead of investing it?

Once those foundations are in place, investing more broadly is a great next step to securing your financial future. And diversification is key.

Why is diversification important?

The saying “Don’t put all your eggs in one basket” certainly applies to investing: Don’t put all your money in one stock. Because if that stock tanks, it could put your future goals at risk.

Instead, diversifying your investments across a range of assets can decrease the chances that one poor performer will significantly harm your progress. It may sound daunting, but you don’t have to be an expert stock picker to diversify your portfolio.

Diversifying your investment portfolio in 3 steps

Choose funds that include many different stocks

An easy, affordable way to diversify within the stock market is through index funds. An index fund is a type of mutual fund whose holdings match or track some market index. For example, a fund that tracks the S&P 500 SPX, +0.52%  , which comprises 500 of the largest companies in the U.S., might buy shares from each company on the index. An investor then buys into the fund, whose value will mirror the gains and losses of the full index it tracks, and it costs far less than if you tried to buy 500 individual stocks.

Also see: The Fed has a new approach to inflation: What it means for your savings, credit-card debt — and your mortgage rate

When choosing an index fund, pay attention to the costs — primarily the expense ratio, essentially an annual fee that’s expressed as a percentage of your investment — and the minimum amount of money required. If you don’t have the time or desire to dig into specific index funds, a robo adviser can also be a good choice. Robo advisers use computer algorithms to manage investment portfolios and will choose investments for you that take into account your goals, timeline and risk tolerance. They charge their own management fees but are cheaper than hiring a human investment adviser.

Consider adding bonds

For some, an all-stock portfolio, even when diversified using index funds, may be too risky for comfort. Enter bonds, which can diversify your portfolio even more.

Bonds are a fixed-income security that promises regular interest payments over time. As you get closer to retirement and start to need the money you’ve saved, you might allocate more money to bonds to protect your portfolio from market swings. One rule of thumb is that the percentage of stocks you carry is 100 minus your age, with the rest going to bonds. So if you’re 25, you’d invest 75% in stocks and 25% in bonds.

Also see: The U.S. dropped majorly on the index that measures well-being — here’s where it ranks now

But everyone’s situation is different, and you should take your goals and your tolerance for risk into account when deciding how to invest. Again, a robo adviser can handle this for you if you opt to go that route.

Keep alts as a small part of your portfolio

Adding alternative investments to your portfolio can also diversify it, but consider the downsides of investing heavily in them. Alternative investments may net higher returns than the stock market, but they also may come with higher fees, less liquidity and more overall risk. Many financial advisers say to keep these investments to less than 10% of your portfolio.

More from NerdWallet:

Erin El Issa is a writer at NerdWallet. Email: Twitter: @Erin_El_Issa.

Autotrader: Five cars we wish were still being made

This post was originally published on this site

“It was just too far ahead of its time” the saying goes. It’s not uncommon for a vehicle to fall victim to this fate, often due to a design too bold or an attempt to create a new segment that the buying public just isn’t ready for. Here we’ll discuss five cars that were discontinued too soon before they had a chance to catch on. Had they stuck around, the modern-day versions of the vehicles below would likely be strong sellers today.

Subaru Baja

The 2006 Subaru Baja.

Mr. Choppers/Wikipedia

The Baja was essentially a pickup version of the Outback station wagon and was sold from the 2003 through 2006 model years. It was available with either a four-speed automatic transmission, or a five-speed manual, and both turbocharged and non-turbocharged engines were offered. In place of the Outback’s enclosed cargo area was a 41-in bed that could be extended via both an optional bed extender and door that allowed items to pass through into the cabin.

Despite it only being sold new for four short model years, the Baja has developed a cult following, and used examples now sell for a premium, despite the fact that even the newest ones are now 15 years old. Given their utility, not to mention the current popularity of both trucks and modified Subarus, we can’t help but wonder if Subaru FUJHY, -0.97%   isn’t wishing it has something with the Baja’s utility in its lineup today. 

Toyota FJ Cruiser

The Toyota FJ Cruiser at the 2005 Chicago Auto Show.

Getty Images

The FJ Cruiser was meant to be both a tribute to the original FJ40 Land Cruiser and a competitor to the venerable Jeep Wrangler. While it certainly fits the heritage aesthetic, Toyota’s refusal to give it a removable roof or removable doors – arguably the Wrangler’s best features – meant it never quite achieved the popularity of the legendary Jeep during its years on sale, which lasted from 2007 through 2014.

Unfortunately for Toyota TM, +0.19%  , shortly after the company canceled the FJ Cruiser, off-road vehicles and overland travel experienced a massive jump in popularity, and used FJ Cruisers have held their value remarkably well to this day. It’s fair to say that the FJ Cruiser was discontinued too soon and that a dedicated Toyota off-roader smaller than the 4Runner would likely be a hot commodity today. 

See: Automakers are gambling on electric pickup trucks—will consumers buy them?


The EV-1 was an experimental electric vehicle offered by GM GM, +1.28%   from 1996 through 1999. It was technically sold over two generations; Gen I vehicles were built for the 1997 model year, while Gen II EV-1s were technically built for 1999. Altogether, 1,117 EV-1s were produced and were only available to the public via lease from GM. The cars had a range of between 70 and 100 miles.

There are conflicting reports on what caused the cancellation of the project, which by most accounts was looking like a major success. Sources from outside of General Motors point toward the oil lobby playing a strong role, but either way, with the broader acceptance of EVs today, we can’t help but wonder where the technology would be if GM had kept the momentum it built through the EV-1 project, rather than waiting a full decade to get back into the electric vehicle game.

See: Did you miss out on Tesla’s big run? There are still good alternatives to play the electric-car revolution

Nissan Xterra

The Nissan Xterra


There hasn’t been much to get excited about from Nissan NSANY, -1.57%   in recent years, which makes this one sting even more. The Xterra was sold over two generations; the first lasting from 2000 through 2004, and the second covering 2005 through 2015, after which it was discontinued. (Toyota still has some new ones left.)

Like the Toyota 4Runner and FJ Cruiser, the Xterra was a body-on-frame SUV with a solid rear axle and good off-road capability; the exact kind of vehicle that’s enormously popular today. Despite the fact that it shared its platform with the midsize Frontier pickup, which undoubtedly led to cost efficiencies, Nissan for whatever reason discontinued the Xterra after the 2015 model year, only for this type of vehicle to skyrocket in popularity shortly thereafter.

Unlike Toyota, which continued producing the 4Runner after discontinuing the FJ Cruiser, dropping the Xterra left a hole in Nissan’s lineup and has almost certainly cost the company sales and overall market share. Discontinued too soon doesn’t even begin to describe it. 

Also on MarketWatch: A look at Cadillac’s first electric car, promising a range greater than 300 miles

Honda S2000

A Honda S2000 driven in the film “2 Fast 2 Furious” on display in Los Angeles.

Getty Images

One of the most beloved modern sports cars, the Honda S2000 was built from 2000 through 2009. Offering 240 horsepower from a naturally-aspirated 2.0-liter four-cylinder engine, the S2000 had an impressively high ratio of horsepower to liters of engine displacement.  Combine that with rear-wheel drive, a six-speed manual transmission, attractive design, and a convertible top, and the S2000 was near perfect.

Despite its formulaic excellence, the S2000 was discontinued in the midst of the 2009 financial crisis, and there’s still no indication of any plans to roll out a proper replacement. Given how well S2000s have held their value over the years, we can’t help but think a revival might be in order. 

Also see: These 3 EVs are the lowest cost to own over 5 years

This story originally ran on

The Moneyist: ‘We obviously bet on the wrong horse’: I co-signed my nephew’s $55K student loan: He has no degree and no job. Aside from a time machine, how can we get out of this mess?

This post was originally published on this site

Dear Moneyist,

My wife and I co-signed her nephew’s student loans so he could attend a small private college. Six years later, he has no degree, no job, no prospects, nor do I believe he has any ability to repay the loan. It’s around $55,000. He lives with his mother, and only on rare occasions does he return our calls or emails.

His mother and grandparents have no means to repay this loan either. Aside from a time machine, what solutions do we have to avoid getting stuck with the tab for this mess? We believed in good faith that this smart young man would be successful and keep his word. We obviously bet on the wrong horse.

Don’t want to be holding the bag in Des Moines

Dear Niece,

You loaned money to your nephew by co-signing his loan with the expectation that he would finish college, get a job and repay it. In other words, you co-signed the loan so your nephew would make the investment in his own future. The hard, difficult truth is that the actual investment here was his to make, not yours, and that was the risk you took on when you gave your nephew this money.

It’s similar for people who choose to invest in stocks. They have the expectation that the company will pursue strategies to increase revenue and market share, build investor confidence, and increase the share price. But once you hand the money — whether it’s co-signing a loan, investing in a stock, or playing blackjack — it’s out of your hands. Only loan money that you can afford to lose.

Unfortunately, if your nephew does not repay this loan, you are on the hook for it, and non-payment could affect your credit score, and ability to take out a loan or refinance your home. This is a conversation you should have as a family. Interest rates are low. You could pay off this loan, if you can afford it, on the condition that you co-sign on a loan with a lower interest rate.

The Moneyist: My late husband did not see his son in 30 years. Should I mail his son photos and other memorabilia — and risk him making a claim on his estate?

This is a cautionary tale for others who may be tempted to co-sign a private student loan for a family member. Private student loans make up $120 billion of the $1.5 trillion student-loan industry. Among adults 50 and older, co-signing a private loan is the most common way to help pay for someone else’s education, according to the AARP. One quarter had to make at least one co-payment.

“Historically, people tended to incur debt at younger ages — to pay for their college education and buy homes — and then paid the debt off during their working years,” the AARP report said. “This enabled them to enter retirement debt-free and gave them a better chance of obtaining and retaining financial security as they aged.” Not anymore.

But the other big investment you made here is the emotional investment. You did something good, and you feel cheated and disrespected by your nephew not finishing college, not getting a job, moving back in with his parents, and avoiding your calls. Make peace with that before you approach your sister and your nephew to talk about what steps he (hopefully) plans to take to repay it.

You can email The Moneyist with any financial and ethical questions related to coronavirus at Want to read more?Follow Quentin Fottrell on Twitterand read more of his columns here.

Hello there, MarketWatchers. Check out the Moneyist private Facebook FB, +2.35%  group where we look for answers to life’s thorniest money issues. Readers write in to me with all sorts of dilemmas. Post your questions, tell me what you want to know more about, or weigh in on the latest Moneyist columns.

TaxWatch: ‘You may never see it as good as it is now’: Some wealthy Americans are prepping their finances for a possible Joe Biden presidency — here’s how

This post was originally published on this site

San Francisco accountant Scott Hoppe had a client who was planning to stretch the sale of founder shares in a tech-sector company over a three-year period.

Instead, the client compressed the installment sale into a one-shot transaction this month.

What accelerated the deal?

The 2020 presidential race. “Assuming all else was equal, that was the driver of the choice,” said Hoppe, principal of the accounting firm Why Blu.

Right now, Hoppe’s client, worth between $10 million and $20 million, will be taxed on capital gains at a rate of 23.8%.

If Democratic candidate Joe Biden beats President Donald Trump — and Democrats retain the House of Representatives and flip the Senate — that client could have potentially been staring at a 39.6% tax rate on two out of the installment sale’s three years.

The compressed transaction saved the client approximately $320,000 in taxes on the $6 million sale. “The seller, for sure, was motivated and the buyer had the wherewithal” to pay the full price upfront, said Hoppe.

Biden’s tax proposal would put the marginal rate for top earners back to the Obama-era 39.6% rate, from the current 37% rate. That 39.6% rate would apply to the capital gains of people worth more than $1 million. It’s one aspect of a tax proposal where the top 1% of earners would pay for almost 80% of the increase in taxes, according to a budget model from the University of Pennsylvania’s Wharton School of Business.

Don’t miss:Possible payroll tax cuts and lowering rates on long-term capital gains — what a win for Donald Trump could mean for your taxes

Election Day is eight weeks away, and the mass of expected mail-in ballots could prolong a final result. Though polling averages in swing states currently give Biden an edge over President Donald Trump, there was a time when polls indicated Hillary Clinton would beat Trump in 2016. Either way, America’s affluent households, and the experts who advise them, aren’t waiting.

Hoppe finishes every client conversation with a discussion about what a Biden administration could mean for portfolios. One Illinois financial planning firm has carried out approximately 50 Roth IRA conversions this year with an eye on the election.

One adviser’s left-leaning clients don’t think a Biden win will upend their finances but the adviser’s right-leaning ones think a Biden win could send their portfolio to ‘hell in a hand basket.’

In Houston, Scott Bishop, executive vice president at STA Wealth Management, has fielded election-related calls and emails from half his clients in the past two months.

Bishop’s liberal-leaning clients want to hear about potential opportunities and tend to downplay the idea of new tax rules upending their finances. As for Bishop’s conservative-leaning clients, “they think this is going to hell in a hand basket” and want to get ready to quickly lock in rates and tax exposure if Biden wins.

Bishop — someone who talked down a client who wanted to “sell everything” after Trump won in 2016 — counsels everyone to think things through. “I try to get them to not to act on their biases,” he told MarketWatch.

See also:Higher rates for upper-income folks and a bigger child tax credit — what Joe Biden’s tax plan could mean for you

The flurry in planning comes at a time when income inequality is at its starkest point in 50 years — and a coronavirus pandemic that could further deepen the divide between the rich and poor. Biden says his tax plan would make sure corporations and wealthy Americans pay their “fair share.”

‘We are working in the boundaries that are given to us.’

— Scott Hoppe, principal of Why Blu

And what about the fairness of rich Americans using the tax rules to their full advantage? “We are working in the boundaries that are given to us,” Hoppe said, echoing a point others made to MarketWatch. Tax rules are written to discourage or encourage all sorts of activity, he said — like a lower capital gains rate to promote financial investments. If lawmakers “want to change our behavior, the code evolves.”

A Biden campaign spokesman couldn’t be reached for comment.

Here are three ways affluent Americans aren’t waiting for election results when it comes to tax planning.

Estate planning

Americans will inherit $765 billion this year in gifts and bequests and the sum will generate $16 billion in taxes, according to a New York University Law School professor who says that’s a 2%t effective tax rate.

Trump’s 2017 Tax Cuts and Jobs Act elevated the threshold when the 40% federal gift and estate tax exemption stops working. Starting in 2018, the exemption level went from $5.45 million to $11.4 million for individuals ($22.8 million for married couples) and is indexed for inflation.

The provision ends in 2025, but observers say Biden wants to end it a lot sooner and bring the estate tax back to its “historical norm.”

Biden wants to end the so-called “step up in basis.” This is the tax rule stating that if an heir sells an inherited asset, (like 7,000 shares of Apple AAPL, +0.16% ) capital gains taxation on any future sale is pegged to an asset’s value at the time of inheritance, not the original purchase. If an asset appreciates greatly over time, the step-up in basis saves an heir plenty in capital gains.

Michael Whitty, a partner specializing in estate law at Freeborn & Peters in Chicago, is telling his clients to schedule one-hour calls with him now to game out potential contingency plans if Democrats prevail.

How much to give away and what to give away are some of the topics, he said. Whitty wants to have the talks sooner rather than later — especially seeing that lawmakers in the past have been known to make estate tax rates retroactive when passing new laws.

‘The client who waits until after Election Day, and some will wait until towards Thanksgiving, well, we’re going to be really behind the eight ball to put together a well-prepared, well-documented transfer.’

— Michael Whitty, a partner at Freeborn & Peters

“The client who waits until after Election Day, and some will wait until towards Thanksgiving, well, we’re going to be really behind the eight ball to put together a well-prepared, well-documented transfer,” Whitty said.

At Playfair Planning in Brooklyn, CEO Kim Bourne is advising clients more than ever to file estate tax returns even when they don’t have to. This gets asset valuations on paper — a move that will ease cost basis determinations later on, she said.

Bourne’s clients aren’t speeding up gifts right now, but Bourne is recommending they think about loans between family members. A loan doesn’t eat into the gift and estate exemption and it can always be converted to a “gift” later on, once planners know the legal landscape, Bourne said. “Intra-family loans are a simple way to navigate the uncertainty and take advantage of the low interest environment,” she said.

The election is influencing other long-term financial planning.

Don’t miss: Opinion: Will Biden’s 401(k) plan help you or hurt you?

The upcoming election “was a very critical component, but it wasn’t everything that was discussed,” when Randy Bruns’ Naperville, Ill.-based financial advisory firm, Model Wealth, carried out approximately 50 conversions this year from IRAs to Roth IRAs.

Investors pay tax on IRA distributions once they start tapping it. In a Roth IRA, they pay taxes during the contribution and the money comes out tax-free at distribution — so the reasoning for a Roth account is to avoid a higher tax rate in the future.

‘This is all going up and you may never see it as good as it is now.’

— Randy Bruns, president of Model Wealth

When Bruns explains the election implications to clients, he’s not taking a political stance on the merits of potential tax hikes, he notes. Focusing on rates, he tells his clients, “This is all going up and you may never see it as good as it is now.”

Capital Gains and Ordinary Income

Unlike his onetime rivals Sen. Bernie Sanders and Sen. Elizabeth Warren, Biden is not proposing a “wealth tax” on the highest earners. But the Democratic nominee does want to reset the top income bracket at 39.6%.

He also wants the rich to pay more into Social Security. Employers and employees currently pay a combined 12.4% in payroll taxes on the first $137,700 an employee earns. Biden’s proposal would re-start the 12.4% payroll taxation at the next $400,000 a person makes.

Under the circumstances, Stacy Francis, president and CEO of Francis Financial in Manhattan, says she’s telling clients expecting a bonus or other end-of-year compensation to see if they can arrange for the money to arrive by the end of this year and not at the start of next year.

Capital gains rates are another consideration. Biden would raise the capital gains tax rate to 39.6% for people making at least $1 million. That would go up from 23.8% (which is the 20% rate, plus the 3.8% net investment income tax).

That’s “nearly doubling the tax bite for higher earners,” Francis pointed out — and it could have repercussions for people with large transactions coming up. For example, if a family needs to sell off a brokerage account because of an upcoming college tuition bill or a house purchase, Francis said “it makes sense to do that sooner than later.”

‘It’s only if you know that you’re going to have to sell investments in the next year or so that we recommend you do that now versus later.’

— Stacy Francis, president and CEO of Francis Financial

Francis is not advising investors with long-term positions and goals to contemplate sell-offs now.

Election Day 2020 is uncertain, but it’s even more so beyond that. “10 years from now, the tax landscape is so uncharted,” Francis said. “It’s only if you know that you’re going to have to sell investments in the next year or so that we recommend you do that now versus later.”

‘We can only protect what we know about’ Are more audits coming?

Broader tax rules are one way to generate more revenue. Another way is making sure taxpayers are paying all their taxes to begin with.

The 2020 presidential campaign comes while the increasingly short-staffed Internal Revenue Service is auditing fewer returns. The agency data shows the IRS audited 1.73 million returns (almost 1% of all returns) in fiscal year 2010. The IRS audited just over 770,000 returns in fiscal year 2019, which is less than .5%.

Figures like former Treasury Secretary Lawrence Summers — a Biden campaign advisor — say the IRS could reap an extra $535 billion if it brought audit rates back to their point 10 years ago and trained its focus on the super-rich.

This summer, the IRS announced it would be launching hundreds of new audits on high-net worth individuals. Around the same time, Biden unveiled a plan for universal preschool and higher caregiver pay; the campaign says it’s a $775 billion plan underwritten, in part, by increased “tax compliance for high-income earners.”

Tax attorney Cameron Hess expects both parties to support more high-net worth audits.

Political attitudes about the IRS’s audit rates swing like a pendulum, said Hess, a partner at the California-based law firm Wagner Kirkman Blaine Klomparens & Youmans. At one point, starting around the 1990s, the IRS was seen as too aggressive.

‘Perhaps there’s more support by Democrats than Republicans, but there is a push to swing the pendulum back the other way.’

— Cameron Hess

Now it’s a question whether the IRS is doing enough. “Perhaps there’s more support by Democrats than Republicans,” said Hess, “but there is a push to swing the pendulum back the other way.”

Looking ahead to Election Day and beyond, Hess has been telling clients, and tax industry colleagues, how important it is for them to have access to permanent records related to the costs of their capital assets That’s something the IRS has become increasingly curious about, Hess said.

When Hoppe talks to clients about the election, one thing he’s doing is flagging the potential for an audit. Specifically, Hoppe is making sure he knows about all the offshore accounts a client may have, or if they have any cryptocurrency holdings he is unaware of. Hoppe says he’s already meticulous in his documentation, but still, “We can only protect what we know about.”