Stock Market Today: Bulls Retreat in Face of Growing Political, Health Risks

A host of new concerns dragged the major indices lower to start the week and put the S&P 500 closer to an official correction after weeks of declines.

Supreme Court Justice Ruth Bader Ginsburg passed away late Friday, throwing even more turmoil into 2020's political landscape as elected officials and Americans argue over the process of nominating an RBG replacement who might drastically shift the balance of the Supreme Court.

SEE MORE Hedge Funds' 25 Top Blue-Chip Stocks to Buy Now

And across the pond, several European nations are considering new restrictions to fight off what appears to be a second wave of COVID-19 outbreaks, spurring concerns about a similar fate in the U.S.

The S&P 500 dropped 1.2% to 3,281, putting it less than 2% away from correction territory (a decline of 10% or more from a peak) and putting it in danger of absorbing its worst September performance since sliding 11% in 2002.

While most of the major indices finished well off their lows, the Nasdaq Composite rebounded sharply and finished with a much more modest 0.1% decline to 10,778. Apple (AAPL, +3.0%) and Microsoft (MSFT, +1.1%) both finished well in the black.

"Investors should take a binary approach to the market at this point," says Marc Chaikin, founder of Chaikin Analytics, a quantitative investment research firm, based in Philadelphia. "Remain bullish but raise some cash as technology stocks bounce in the near-term. Look for opportunities to redeploy that cash as this short-term pullback plays out over the next 2-4 weeks."

"Buying the dips still makes sense, but upside expectations need to be scaled back," he adds.

Other action in the stock market today:

The Dow Jones Industrial Average declined 1.8% to 27,147.The small-cap Russell 2000 plunged 3.4% to 1,485. Could Selling Accelerate Into the Election?

Turbulent trading is nothing new for the early fall months, but experts are cautioning that even more selling could be in store.

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"September and October are not the best months historically for stocks, and have seen significant declines before like the 1929 and 1987 crashes," say

Read more: https://www.kiplinger.com/investing/stocks/601421/stock-market-today-092120-bulls-retreat-growing-political-health-risks

11 Dividend-Paying Stocks You Should Think Twice About

Income investors have been forced to become far more selective about the dividend-paying stocks they stash in their portfolios.

More than 60 S&P 500 firms have cut or suspended their dividends in 2020. In some cases, the companies involved have been trying to maintain their financial flexibility in the midst of a pandemic-sparked recession, while others have simply had no choice but to cut all but the most vital of cash expenditures.

While the market has come roaring back from the depths that prompted those dividend-paying stocks to cut back, we're not out of the woods yet. A number of dividend stocks still look like potential payout-cut risks, while others simply look unattractive given lackluster recovery prospects.

The DIVCON system from exchange-traded fund provider Reality Shares can help investors weed out some of these riskier dividend payers. This system uses a five-tier rating, from 1 to 5, to gauge companies' dividend health. A DIVCON 5 rating indicates not just a healthy dividend, but a high likelihood of dividend growth. DIVCON 1 dividend stocks, on the other hand, are the likeliest to cut or suspend their payouts.

Within each DIVCON rating is a composite score based on factors including free cash flow-to-dividends, profit growth, buybacks as a percentage of dividends and more.

Here are 11 dividend-paying stocks that you should avoid at the moment. Each of these stocks has a DIVCON rating of either 2 or 1, awarded based on various metric readings that point to dividend and other difficulties in the months ahead. Long-term investors are better off focusing their efforts (and money) on dividend investments with more stability and better prospects.

SEE MORE The Pros' Picks: 9 Stocks to Sell Now Data as of Sept. 20. Dividend yields are calculated by annualizing the most recent payout and dividing by the share price. Stocks listed in reverse order of DIVCON score.

Read more: https://www.kiplinger.com/investing/stocks/dividend-stocks/601416/11-dividend-paying-stocks-think-twice

Being a Woman Cost Me $2 Million, But Ruth Bader Ginsburg Stood Up for Me

Supreme Court Justice Ruth Bader Ginsburg was the personification of women’s and people’s rights to have a seat at the table. She taught the court that, “A gender line … helps to keep women not on a pedestal, but in a cage.”

She was an inspiration to me and so many others.  I wore my RGB socks proudly, heard her speak live, saw her on a plane and went running up to her and she was way too gracious, and even had a bracelet made that I wear with a charm that reads LIVE ORGAN DONOR FOR RBG. 

SEE MORE 4 Ways Women Can Win with the SECURE Act

RBG changed so many rights for men and women.  One really hit home for me: a woman’s right to get credit.  I applied for my first credit card in the 1970s.  I was a bank executive, yet I was not entitled to get credit on my own name. Instead, the card was issued in my husband’s name (which was not the same as mine), and I was told to carry a permission letter from him allowing me to use the card.  RBG fought and won to change all of that. Again, “Thank you, RBG.”

With her recent death, let’s take a moment to think about how far we have come.

The Gender Wage Gap: My Own Story

RBG fought for ending to the difference in earnings between men and women. Women consistently earn less than men, and the gap is wider for women of color.

If you look at the most recent Census Bureau data from 2018, women earned, on average, 82 cents for every $1 earned by men. Let’s talk about reality: The National Committee on Pay Equity estimates that “over a working lifetime, this wage disparity costs the average American woman and her family an estimated $700,000 to $2 million, impacting Social Security benefits and pensions.”

I experienced this myself when I joined one of the top banks on Wall Street in 1972, long before affirmative action was passed.  I was lucky enough to be trained to become one of the few female executives at that time, but I was in for a rude awakening.  I started at the same salary as my male counterparts, $11,000 a year.  After two weeks, I was called into the office of the head of personnel. She said, “You are a young girl and you are taking the place of a male who has a family to support.  We are reducing your salary to $6,500 a year.”  I asked her what I could do to earn what th

Read more: https://www.kiplinger.com/personal-finance/601420/being-a-woman-cost-me-2-million-but-ruth-bader-ginsburg-stood-up-for-me

The Annuity With a Tax-Planning Twist

Retirees sometimes feel like they’re being squeezed by two opposing goals. On the one hand, they should conserve their nest egg to prepare for longer life expectancies and the rising cost of long-term care. On the other, the IRS requires retirees to start drawing down their savings with required minimum distributions at age 72.

SEE MORE QLACs Can Deliver Late-in-Life Income

A qualified life annuity contract satisfies both goals. QLACs are a type of deferred income annuity. You transfer a portion of your savings from a retirement account, like an IRA or a 401(k), to an annuity company to purchase your contract. As of 2020, you can invest the lesser of $135,000 or 25% of your retirement account balance in a QLAC. The annuity company turns your deposit into payments, which you can delay taking until as late as age 85. Once you start receiving annuity income, the payments are guaranteed to last your entire life.

Steven Kaye, managing director at Wealth Enhancement Group in Warren, N.J., describes QLACs as a form of longevity insurance. “If life expectancy at retirement is 85, that means half of retirees will live longer than age 85,” Kaye says. “By converting a portion of their savings into a QLAC, they create a stream of future income that they cannot outlive.” 

Although QLACs have been on the scene since 2014, they are hardly a household name, but legislation in 2019 and a rising tide of baby boomers entering their 70s could launch these contracts out of obscurity and into the retirement planning spotlight.

An RMD-Minimizing Benefit

Besides generating lifetime income, QLACs can also help reduce required minimum distributions. When you turn 72, you must draw down your retirement accounts, even if you don’t need the money. While you could reinvest your RMDs and keep saving, Kaye says this goes against human nature. “When money comes out of a retirement plan, people tend to spend it. This increases the chance they outlive their nest egg.”

SEE MORE Calculate Your Required Minimum Distribution From IRAs

With a QLAC, the portion of savings used for the annuity is excluded from the calculation to determine RMDs. For example, if you have $500,000 in an IRA but then transfer $100,000 into a QLAC, your RMD is based only on the remaining $400,000.

Minimizin

Read more: https://www.kiplinger.com/retirement/601417/the-annuity-with-a-tax-planning-twist

HSA Limits and Minimums

For many people, health savings accounts (HSAs) offer a tax-friendly way to pay medical bills. You can deduct your contributions to an HSA (even if you don't itemize), contributions made by your employer are excluded from gross income, earnings are tax free, and distributions aren't taxed if you use them to pay qualified medical expenses. Plus, you can hold on to the account past your working years and use it tax-free for medical expenses in retirement. All-in-all, HSAs can be a great tool for covering your health care costs.

SEE MORE Health Savings Accounts Get Even Better

There are, however, a few HSA limitations and requirements that are adjusted for inflation each year. They apply to the amount you can contribute to an HSA for the year, the minimum deductible for your health insurance plan, and your annual out-of-pocket expenses. If you or your health plan are not in compliance with the restrictions in place for any particular year, then you can say goodbye to the HSA tax savings for that year.

HSA Contribution Limits

Your contributions to an HSA are limited each year. You can contribute up to $3,600 in 2021 if you have self-only coverage or up to $7,200 for family coverage. If you're 55 or older at the end of the year, you can put in an extra $1,000 in "catch up" contributions. However, your contribution limit is reduced by the amount of any contributions made by your employer that are excludable from your income, including amounts contributed to your HSA account through a cafeteria plan.

SEE MORE Tax Changes and Key Amounts for the 2020 Tax Year

The 2021 HSA contribution limits are higher than the 2020 amounts. For self-only coverage, you can contribute $50 more in 2021 than you could in 2020. For family coverage, the 2021 limit is $100 higher than the 2020 cap. The table below shows how the contribution limits have increased over the past five years.

Year

Self-Only Coverage

Family Coverage

Catch-Up Contributions

2021

$3,600

$7,200

$1,000

2020

$3,550

$7,100

$1,000

2019

$3,500

$7,000

$1,000

2018

$3,450

$6,900

$1,000

2017<

Read more: https://www.kiplinger.com/personal-finance/insurance/health-insurance/health-savings-accounts/601415/hsa-limits-and-minimums

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