4 Ways You May Be Sabotaging Your Career Success

We all want to do well on the job, right? But how often do we get ourselves into a real pickle — instead of being thought of as a go to person, it feels like stay away from me is tattooed on your forehead.

“Nobody wants to be in that category,” best-selling author and business consultant Bruce Tulgan says, “but so often people with great technical abilities lack insight into the human dimension of working with others. And, at one time or another, we have all said or done something that had the potential to harm our reputation.”

In his new book, The Art of Being Indispensable at Work, Tulgan gives readers the keys to the castle. He reveals how go to people think and behave differently, are valued, highly thought of and, in short, become indispensable.

Tulgan isn’t offering a “quick fix” for personality issues or communication problems we might have. Read his book and I’ll bet you will see some of your own weaknesses discussed, as I did. If our lives are jigsaw puzzles, Tulgan shows us how to better assemble the pieces that will make us happier, respected and an MVE, a Most Valued Employee.

A Recipe for Failure at Work

I asked him to turn the question of “How to succeed at work” upside down. Of course, by definition, if you know what will make you fail, there is a good chance of avoiding it completely. Here are four ways people fail at work:

1. Think that you must say yes to everyone and everything until you are drowning.

Consequences: You end up overcommitted, according to Tulgan. You start failing, creating unnecessary problems and delays, which will undermine your relationships and your reputation, leading to a siege mentality. Then, you will start saying “no” not because you have a bad attitude, but because you are drowning!

Instead of letting yourself become overwhelmed by trying to do too much, the key to being indispensable is in realizing that you have limited productive capacity and can’t say yes to every request.

2. When you don’t have authority, try to use influence.

Consequences: You will undermine your real influence, and people will think less of you. Here’s why:

Conventional thinking says, “If you do not have authority, you have to use influence — find a way of getting people to do what you want when you can’t require it of them.” This can take innocent forms, such as baking brownies for the staff.

But it can become unethical influence peddling: setting up a quid pro quo, badgering or extorting, by saying, “If you don’t help me with this, then don’t count on me when you need my help.”  

We need to think of the word “influence” as a noun, not a verb. It is an asset you build, not an action you do to people. Real influence is more powerful than authority, because it is your reputation in the hearts and minds of others, when people want to do things for you, want to work with you, and want you to work with them.

3. Be so busy that you are juggling – bouncing from one task to another.

Consequences: People who are always juggling end up as bottlenecks in their organizations. Collaborative projects stop as the juggler has not finished critical tasks. This person is seen as having dropped the ball.

It’s OK to have a long to-do list, but juggling is a step away from multi-tasking, which is a fiction, Tulgan says.  Research has showed the brain to be much less efficient when shifting back and forth from one task to another, often none of them completed on time or correctly.

Jugglers overcommit out of fear of not giving the impression they can accomplish anything. Reluctant to delegate work, they are their own worst enemy, and often the reason projects are not completed on time or within budget.

A common example of a juggler — the multitasker — is someone writing emails during meetings and not paying attention. Sound familiar?

4. Fake it till you make it. Pretend that you know how to do something you don’t.

Consequences: You are likely to set false expectations for your colleagues and customers, and will not be able to make a good prediction about outcomes. When you attempt to tackle something that you aren’t prepared to do, you will be reinventing the wheel. In the end, you are not likely to do a competent job.

Instead over overpromising, the proper conversation should be, “That’s not my specialty, but I am happy to look into it. I’ll get back to you with an idea of what I will need and how long it will take to get this done, so please give me some time to come up to speed.”

Concluding our interview, Tulgan offers this insight for anyone wanting to become an MVE – A Most Valued Employee, which I think applies equally well to our lives at home, with family:

“The way to become indispensable is by being service minded. Listen. By taking the time to understand someone’s needs you are showing them respect and building confidence. Know when to say no. Don’t waste your yeses.”

Attorney at Law, Author of “You and the Law”

After attending Loyola University School of Law, H. Dennis Beaver joined California’s Kern County District Attorney’s Office, where he established a Consumer Fraud section. He is in the general practice of law and writes a syndicated newspaper column, “You and the Law.” Through his column he offers readers in need of down-to-earth advice his help free of charge. “I know it sounds corny, but I just love to be able to use my education and experience to help, simply to help. When a reader contacts me, it is a gift.” 

Source: kiplinger.com

ESG Investing: You Can Align Your Investments with Your Values, But Should You?

When it comes to growing your money, sometimes what you do or do not invest in matters as much as how well your investment performs. It’s not just about risk, it’s about personal values. In this modern era, we have the unique opportunity to not only feel good about our portfolio returns, but also what we invested in and how we achieved those returns. That is precisely why sustainable investing is gaining popularity as investors increasingly seek to align their investments with their personal values and seek to work with financial professionals who not only understand them as an investor, but also as a value-driven individual.

One way to accomplish this goal is to use an investment approach that focuses on environmental, social and governance (ESG) criteria. An ESG lens considers issues such as climate change, pollution control, gender equality and diversity, human rights or corporate board composition. ESG-aware investing pursues opportunities by managing risks associated with corporate actions, policies and trends related to things like sustainable business, environmental impact, societal and community contributions, DI&E (diversity, inclusion and equity practices) practices and the demonstration of sound corporate governance.

Since the 1960s, sustainable investment strategies have shifted from an exclusionary approach to an inclusionary one. Over time, this shift has broadened the supply of investment offerings to meet growing investor demand. Interest in sustainable investing accelerated significantly in the 2000s. According to a recent McKinsey & Company study, assets in these types of investments grew by an estimated 38% from 2016 to 2018 in the U.S., rising from $8.7 trillion in 2016 to $12 trillion in 2018. Globally, sustainable investments total $23 trillion, which represents 26% of all professionally managed assets.

Debunking 2 Myths about ESG Investing

A common misconception is that sustainable investing — including ESG-driven strategies — imposes hurdles on performance. After all, aren’t most companies more motivated by profits than they are values? You might be surprised to find out reality is quite the contrary. Thankfully, you do not need to throw ethics and values out the window to achieve good returns. Studies of longer-term historical performance suggest that ESG strategies have performed similarly to comparable traditional investments on an absolute basis and a risk-adjusted basis. Remember, though, sustainable investment strategies do come with risks, like any investment.

Another misconception is that demand is being driven mainly by younger investors. Yet, research suggests that investors across generations are interested in sustainable investing. While Millennials are apt to discuss sustainable investing with their financial advisers, other generations have expressed interest as well. A 2020 Wells Fargo/Gallup survey found that 82% of surveyed investors showed interest in choosing investments based on the environment, human rights, diversity, and other social issues — if those investments provided returns similar to the market average.

One interesting case in point: Thompson Reuters, under the corporate brand Refinitiv, created an index to transparently and objectively measure the relative performance of companies against factors that define diverse and inclusive workplaces. The index ranks more than 7,000 companies globally and identifies the top 100 publicly traded companies with the most diverse and inclusive workplaces, as measured by 24 metrics across four key pillars: diversity, inclusion, people development and news and controversies. Not only have these companies scored well, but the index has outperformed the Thompson Reuters Global Total Return benchmark, demonstrating that diversity and inclusion can also lead to profitability. Perhaps values really can drive growth!

A Growing Investment Sector

Industry professionals predict that sustainable investment choices for investors will continue to expand. In fact, some analysts predict that ESG factors could become a normal consideration of most investment strategies, particularly those intended for younger investors who tend to expect greater transparency from their investments. In fact, it may surprise you to know that today, sustainable investing accounts for about $1 out of every $3 under professional management in the U.S.

If you are new to socially responsible investing, a good idea is to seek an adviser with expertise in SRI and ESG investing. While most advisers remain investment agnostic, acknowledging that either an S&P 500 index fund or a socially responsible green fund can accomplish your objectives if that is what fits best, some practitioners have chosen to specialize more in this area. Advisers helping consumers interested in values investing may perform rigorous invest selection and screening processes that not only support optimal performance but also measure the societal and environmental impact of the firms themselves.

 Find an adviser who is confident about utilizing traditional vehicles, but passionate about finding unconventional ways to accomplish your goals, especially if doing so better aligns with your personal beliefs. The right adviser’s role should be simple: to understand not just where you want to go, but who you are and what values you have so that he/she can examine all the appropriate options that can fit and empower you to move forward.

Founder, Vice President, The Haney Company

Brian Haney is proud to say he was recently voted (by his daughter) to the illustrious title of “World’s Most Embarrassing Dad!” So that’s his full-time gig, but he also masquerades as a Certified Income Specialist, advising clients on how to achieve the retirement of their dreams. Founder of The Haney Company, Brian is a speaker and also the author of “The Retirement Income Pyramid,” your retirement income road map.

Source: kiplinger.com

IRS Extends April 15 and Other Tax Deadlines for Texas and Oklahoma Residents

Victims of February’s winter storms in Texas and Oklahoma can wait until June 15, 2021, to file their 2020 federal income tax return. This announcement from the IRS follows a disaster area declaration from the Federal Emergency Management Agency (FEMA) for those two states. Taxpayers in other states impacted by the storms that receive similar FEMA disaster declarations will automatically receive the same filing and payment relief.

Various federal tax filing and payment due dates for individuals and businesses from February 8 (Oklahoma) or February 11 (Texas) to June 14 will be shifted to June 15. In addition to the April 15 personal income tax filing deadline, this includes:

  • Various 2020 business returns usually due on March 15;
  • 2020 IRA contributions originally due on April 15;
  • Quarterly estimated income tax payments normally due on April 15;
  • Quarterly payroll and excise tax returns ordinarily due on April 30; and
  • 2020 returns for tax-exempt organizations typically due on May 17.

In Oklahoma, penalties on payroll and excise tax deposits due from February 8 to February 23 will also be waived if the deposits are made by February 23. In Texas, the same applies for deposits due from February 11 to February 26 they’re are made by February 26.

You don’t have to contact the IRS to get this relief. However, if you receive a late filing or late payment penalty notice from the IRS that has an original or extended filing, payment or deposit due date falling within the postponement period, you should call the number on the notice to have the penalty abated.

In addition, the IRS will work with any taxpayer who live elsewhere, but whose records necessary to meet a deadline occurring during the postponement period are located in Texas or Oklahoma. Taxpayers qualifying for relief who live in another state need to contact the IRS at 866-562-5227. This also includes workers assisting the relief activities who are affiliated with a recognized government or philanthropic organization.

Individuals and businesses in a federally declared disaster area who suffered uninsured or unreimbursed disaster-related losses can choose to claim them on either the return for the year the loss occurred (in this instance, the 2021 return normally filed next year), or the return for the prior year. This means that taxpayers can, if they choose, claim these losses on the 2020 return they are filling out this tax season. Be sure to write the FEMA declaration number (4586 for Texas or 4587 for Oklahoma) on any return claiming a loss. It’s also a good idea for affected taxpayers claiming the disaster loss on a 2020 return to put the Disaster Designation (e.g., “Oklahoma – Severe Winter Storms”) in bold letters at the top of the form. See IRS Publication 547 for details.

Source: kiplinger.com

Interest Rates: Improving Economy, Looming Fiscal Stimulus Boost Long-Term Rates

A better economy and the prospect of Congress passing a third stimulus package in March are pushing up 10-year Treasury note yields. Yields also ticked up this week when initial unemployment claims declined. But they have been on an uptrend ever since the second stimulus package in December. With razor-thin control of the Senate, plus the House of Representatives and the White House, Democrats are in a position to pass more stimulus legislation, such as $1,400 payments to individuals and aid to state and local governments. Any boost to economic growth tends to push up interest rates, as the demand for funds grows and inflation possibly rises, as well. Larger budget deficits will also raise rates as the supply of government debt offered to investors grows. The 10-year rate is currently around 1.5%. Expect it to rise to at least 2% by the end of the year.

The rise in the 10-year rate will also push up mortgage rates, from 3.0% currently to 3.5% by the end of the year. The upward drift may cause some panic home-buying, as buyers rush to lock in a low mortgage rate, giving an extra boost to rising home prices. Rates on long-term car loans should also bump up.

Short-term consumer loan rates such as home equity lines of credit will stay where they are. These tend to be tied to the federal funds interest rate, which is controlled by the Federal Reserve and which will be held constant for an extended period of time.

The Federal Reserve at its most recent FOMC meeting recommitted itself to keeping short-term interest rates near zero for the foreseeable future, which likely means into 2023 or 2024. The Fed is also continuing to purchase $80 billion of Treasury securities and $40 billion of mortgage-backed securities every month, adding to its balance sheet. The Fed is “all in” to do whatever it takes to support the economy. It has said that it will be willing to tolerate inflation levels above 2% for a time. That means that the Fed will not raise short-term rates even if inflation begins to pick up. But if inflation rises strongly later on, the Fed would likely respond.

Corporate high-yield bond rates have continued to ease, perhaps indicating greater business confidence. CCC-rated bond yields are at 7.2%, down from 11.7% at the end of October, and have closed the gap slightly with higher-rated bonds. AAA bonds yielded 1.9% and BBB bonds, 2.3%.

Source: Federal Reserve Open Market Committee

Source: kiplinger.com

GDP: Growth Estimates Keep Rising

GDP will likely grow by 6.2% or more this year because of the additional fiscal stimulus coming from Congress. Growth estimates keep rising as it becomes more apparent that a package close to the administration’s $1.9 trillion request will make it through Congress in March. The Democrats’ wins in the Georgia Senate races give them control of both Congress and the White House, though with only razor-thin control of the Senate.

As the pandemic recedes, consumers’ savings could be used to splurge on services that they have been skipping, setting up a possible boom in the service sector, beginning mid-year. The consumer savings rate was 13.7% in December, well above its normal level of 7.5%. Consumers saved 16.3% of their disposable income in 2020, and thus will have plenty of cash to boost spending on travel, dining out and other services after the pandemic is brought under control.

GDP growth of 4.1% in the fourth quarter indicated momentum for the economy at the end of last year. Consumers spent more on services, despite a COVID-related decline in eating out, and maintained the same level of goods spending. Businesses increased spending on equipment and inventories, and housing construction rose to its highest level since 2007. All of this spending worsened the trade deficit, since much of it went to imported goods.

First-quarter growth in 2021 should be around 5.5%. It is likely that the economy will regain its prepandemic level by March.

Source: Department of Commerce: GDP Data

Source: kiplinger.com

8 Insurance Products You May Not Need

These days, it seems like every other television commercial is for yet another insurance product. While consumer choice can be a good thing, not all insurance is as essential as the ads make it seem. “There’s a lot of sales and marketing based on fear that especially targets retirees,” says Jonathan Howard, a certified financial planner with SeaCure Advisors in Lexington, Ky., as well as a former insurance salesman. “People end up buying because they’re terrified of a loss rather than to cover an actual insurance need.”

Although Howard believes insurance plays an important role in anyone’s financial plan, some products are more about protecting the insurance company’s bottom line rather than yours. Insurance decisions shouldn’t be made in a vacuum. They should consider your entire financial picture. That way, you can identify the gaps and figure out the coverage you truly need, along with any you could do without. Above all, never buy insurance hastily based on fear, especially if it involves the products on this list.

1 of 8

Long-Term Disability

If you’re still working but nearing retirement, consider whether your long-term disability coverage is worth keeping. The premium for an employer group plan typically increases with age, says Greg Klingler, director of wealth management at the Government Employees’ Benefit Association in Fort Meade, Md. 

The policy also will limit the payout period until a particular age, such as 65. As this age nears, your maximum possible benefit shrinks. This is especially true for someone who could have retired earlier but is still working. “You’re no longer dependent on your salary, so weigh the value of protecting this extra income versus the high insurance cost,” says Klingler.

2 of 8

Product Warranties

A woman standing next to a broken dishwasher A woman standing next to a broken dishwasher

When you buy merchandise like computers, televisions, smartphones, and home appliances, chances are the vendor will try to sell you an additional warranty to replace or repair the item after you buy it. Ask yourself whether you have enough savings to replace the product yourself.

By design, insurance must collect more in premiums than it pays out, making it a net negative for the average policyholder. Most policyholders collect nothing. 

For major assets like a house or vehicle, most people would find it difficult, if not impossible, to replace them out-of-pocket, so insuring these assets with a home or auto policy makes sense. But for smaller things that you could easily replace yourself, like a $700 laptop, skip the warranty and self-insure instead.

3 of 8

Critical Illness Insurance

Doctors wheeling a patient on a gurneyDoctors wheeling a patient on a gurney

A stroke, heart attack, life-threatening cancer and an organ transplant are just some of the serious health issues that critical illness insurance covers. If you develop one of these conditions, the insurer sends you a lump sum cash payment, ranging between $10,000 and $50,000, that can be spent however you want. 

Despite this flexibility, Howard isn’t crazy about this type of insurance, “where unless a specific situation happens, you don’t get anything back.” He suggests reviewing your potential out-of-pocket costs for health insurance to see whether you need critical illness insurance or if you could manage the bills with savings.

4 of 8

Social Security Insurance

All the dysfunction and uncertainty in Washington has led to a new product: Social Security insurance. It’s a type of annuity, an insurance contract that turns part of your savings into future income. When you add this insurance to an annuity, the insurer promises your annuity payment will increase to cover any government shortfall that results in a smaller Social Security benefit.

Howard doesn’t think this is a good return on your money. “Retirees vote, and they predominantly live in swing states,” he says. “If the government ever reduced Social Security for people already claiming it, they’d never hear the end of it.”

Perhaps benefits will be cut for future generations, but Howard doesn’t expect those already collecting benefits to have a problem.

5 of 8

Individual Dental and Vision Policies

A woman undergoing an eye examA woman undergoing an eye exam

Travis Price, a Medicare insurance agent in Traverse City, Mich., does not think individual dental and vision policies are worth buying in retirement. “When people are working and get group dental/vision, the insurance coverage is heavily subsidized in the group and by their employer. When they get into the individual marketplace, the coverage costs can increase 10-fold for less coverage.”

Not only are premiums higher for individual plans, but they could also have high out-of-pocket costs for care, an exclusion of major services for the first year of coverage, and a limited annual coverage limit. Price says an entry level plan meant to cover both dental and vision can be capped at $1,500 per year. “Often, seniors are better off simply being a cash patient and negotiating cash costs with their provider,” says Price. Another alternative, he says, is finding a Medicare Advantage plan that includes dental and vision coverage.

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Long-Term Care Insurance

A doctor shaking hands with a patientA doctor shaking hands with a patient

No one disputes that long-term care in the United States is an expensive risk. A private room in a nursing home costs more than $90,000 a year, on average, according to the U.S. Department of Health and Human Services. 

Still, both Howard and Klingler dislike traditional long-term care insurance policies because of their high premiums. “The cost varies based on the carrier, the amount of coverage and the applicant’s health, but I’ve seen [premiums] around $5,000 a year for a couple in their 60s, $10,000 a year when they’re in their 70s,” says Howard. He also notes that premiums rise over time based on age even after you sign up. 

Howard says traditional long-term care insurance is another example of insurance that only applies under such narrow, specific circumstances that it’s not worthwhile, particularly given its hefty cost. As an alternative, he prefers an LTC-hybrid life insurance policy because that way, if someone doesn’t need long-term care, the heirs receive the death benefit instead.

Klingler suggests considering other resources before buying any long-term care policy. “In almost all cases, you don’t need to cover the full cost [of care],” he says, because some expenses, like food, housing and utilities, would be provided by the long-term care facility.

Even when one spouse enters long-term care while the other remains in the couple’s home, some daily living expenses are still reduced. If you’re considering long-term care insurance, ask yourself whether you need to cover the full cost of a nursing facility or if you could go with a partial benefit that’s more affordable.

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Rental Car and Travel Insurance

It happens in a flash. You’re at the rental car counter at the start of a trip, when the agent asks if you want insurance. Well, why not get it? It’s only another $12 to $15 a day. The thing is you might already have rental car insurance through your credit cards, auto policy and membership in an organization like AAA. 

Your credit card may provide other types of travel insurance as well, such as coverage for lost bags, trip cancelation, emergency evacuation, and emergency medical and dental insurance during the trip. Your health insurance may cover you for medical emergencies, too. Before buying any travel insurance, study what you already have through your existing benefits.

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Any Redundant Insurance Coverage

File folders with different financial products written on them, including insuranceFile folders with different financial products written on them, including insurance

Although the classic example is rental car insurance, there’s often a fair amount of overlap with the insurance people have. Your auto insurance covers medical bills after a car accident, but so could your health insurance. Your homeowners insurance covers liability for an injury on your property and so does an umbrella policy, which should offer enough supplementary coverage, if needed, to protect your net worth. 

But don’t go overboard buying insurance. Given this overlap, it’s possible that the limits on your existing policies are higher than necessary because they cover the same risk. It’s also possible that the coverage provided by even one of those policies exceeds what you truly need. Howard recently found that his homeowner’s coverage was for $100,000 more than the replacement cost of his home. 

Source: kiplinger.com

$15 Minimum Wage Won’t Be in Final Stimulus Bill

It looks like President Biden’s plan to increase the federal minimum wage to $15 per hour won’t make it into the final version of the massive COVID-relief bill working its way through Congress. To pass the $1.9 trillion stimulus package without support from Republicans, Democratic lawmakers are applying the rarely used budget reconciliation rules to enact the president’s plan. Under these rules, legislation can be passed in the Senate with a simple majority vote, instead of the 60 votes normally needed to avoid a filibuster. However, only provisions that “change spending or revenues” can be included in a reconciliation bill. On Thursday, the Senate Parliamentarian ruled that the minimum wage provisions in the COVID-relief bill do not satisfy that standard.

Although they’re disappointed, the ruling doesn’t come as a surprise to most Democratic lawmakers. Even President Biden predicted that the $15 minimum wage provisions would eventually wind up on the cutting room floor. “I put it in, but I don’t think it’s going to survive,” he recently told CBS News.

The House is expected to pass the current reconciliation bill on Friday – with the $15 minimum wage provisions included. However, once the bill reaches the Senate, the minimum wage language will have to be removed unless the Democrats can come up with an alternative plan. One possibility is to overrule the Parliamentarian. However, White House Chief of Staff Ron Klain publicly stated that the Biden administration would not support such a move. Another option is to somehow amend the language to satisfy the reconciliation rules, but that could be difficult and slow down the legislative process.

If the minimum wage language is stripped out, Senate Democrats might try to add new language that urges, but doesn’t require, employers to increase wages. For instance, Sen. Bernie Sanders (I-Vt.) said that he will offer an amendment to the reconciliation bill that would “take tax deductions away from large, profitable corporations that don’t pay workers at least $15 an hour and to provide small businesses with the incentives they need to raise wages.”

Any efforts to keep or amend the $15 minimum wage provisions are likely to fail, though. That’s because there are a handful of moderate Senate Democrats who oppose the planned increase – most notably, Sens. Joe Manchin (D-W.Va.) and Kyrsten Sinema (D-Ariz.). Since the Senate is split 50-50 between Democrats and Republicans (with Vice President Kamala Harris casting the deciding vote to break any ties), the Democrats can’t afford to lose any votes unless they can pick up an equal number of Republican votes, which is doubtful. Although some Republican Senators support raising the federal minimum wage, their plans typically call for smaller increases and have strings attached. For instance, Sens. Mitt Romney (R-Utah) and Tom Cotton (R-Ark.) recently released a plan for a $10 minimum wage, but employers would be required to use the E-Verify system to prevent the hiring of undocumented workers.

In a way, the Parliamentarian’s decision may be a blessing in disguise for Democrats. They can now move forward and pass the reconciliation bill quickly without having to go through an inter-party fight between progressive and moderates over the minimum wage provisions. They pledged to pass the stimulus package and send it to the president’s desk before March 14 – when enhanced unemployment benefits run out – and now that becomes a bit easier.

[Stay on top of all the new stimulus bill developments – Sign up for the Kiplinger Today E-Newsletter. It’s FREE!]

The Failed Minimum Wage Plan

The current federal minimum wage is $7.25 per hour. (States can have their own minimum wage, which can be higher than the federal amount, but not lower.) Under the current reconciliation bill, the federal minimum wage would jump to $9.50 per hour starting a few months after the bill is enacted. The rate would then go up to $11 per hour in 2022, $12.50 per hour in 2023, $14 per hour in 2024, and $15.00 per hour in 2025. After that, it will be increased each year by the annual percentage increase, if any, in the median hourly wage of all employees.

Employees who work for tips would also see a pay increase under the reconciliation bill in the House. The current federal minimum wage for tipped employees is $2.13 per hour. That would shoot up to $4.95 per hour this year. Then, starting in 2022, the tipped minimum wage would increase by $2 per hour each year until it equals the federal minimum wage for other workers.

The “youth minimum wage” would go up under the current reconciliation bill, too. Today, employers can pay a new worker who is under 20 years of age $4.25 per hour during the first 90 days of employment. That rate would rise to $6 per hour in 2021 under the House bill. That hourly rate would then be increased by $1.75 each year thereafter until it’s the same as the standard minimum wage.

Finally, disabled workers would also get a pay increase under the reconciliation bill before the House. Right now, employees with a disability can be paid below the standard minimum wage at a rate based on his or her productivity. That would change under the House bill. Instead, disabled workers would have to be paid at least $5 per hour in 2021, $7.50 per hour in 2022, $10.00 per hour in 2023, $12.50 per hour in 2024, and $15.00 per hour starting in 2025. After that, they would be paid the standard federal minimum wage.

Future Fights for a Higher Minimum Wage

The White House released a statement saying that the president is “disappointed” with the Parliamentarian’s decision, but that he will “work with leaders in Congress to determine the best path forward because no one in this country should work full time and live in poverty.” Senate Majority Leader Chuck Schumer (D-N.Y.) has similar feelings. “We are not going to give up the fight to raise the minimum wage to $15 to help millions of struggling American workers and their families,” he said in a statement. “The American people deserve it, and we are committed to making it a reality.”

So, don’t expect this issue to go away too easily. President Biden is expected to release another economic stimulus plan in March. Perhaps a minimum wage increase will be included in that proposal. A standalone minimum wage bill could also be introduced in the near future. Sen. Manchin has suggested an $11 minimum wage. So, maybe a compromise can be negotiated that will gain enough support to get through Congress.

Source: kiplinger.com

Stock Market Today: Tech Gets Respite From Recent Selling

Wall Street flipped the week’s script on Friday, with a cooling-off in interest rates stunting value-oriented stocks while providing much-needed relief for “growthier” names.

The Dow Jones Industrial Average lagged the broader indices with a 1.5% decline to 30,932, while the S&P 500 declined 0.5% to 3,811. The Nasdaq Composite, meanwhile, got a lift from the recently sold-off technology and communications sectors; stocks such as Facebook (FB, +1.2%), Nvidia (NVDA, +3.1%) and Microsoft (MSFT, +1.5%) helped lead a modest 0.6% rebound in the tech-heavy index.

Despite the rebound, the Nasdaq remained down 4.9% for the week, the result of interest-rate fears, versus 1.8% and 2.4% losses for the Dow and S&P 500, respectively.

“Many market participants have referenced the infamous ‘Taper Tantrum’ in 2013 as a similar playbook to today as a reason why we’re seeing equity market weakness,” says Brian Price, head of investment management for Commonwealth Financial Network. But he also points out that “the notable difference today … is that the Fed seems very committed to letting the economy run a little hotter than normal and will tolerate higher inflation.” 

Other action in the stock market today:

  • The small-cap Russell 2000 eked out a marginal gain to 2,201.
  • U.S. crude oil futures sank 3.2% to $61.50 per barrel, but still finished February up 18%.
  • Gold futures sank, too, dropping 2.6% to $1,728.80 per ounce, plumbing nine-month lows.
  • Bitcoin prices, at $48,870 on Thursday, dropped 5.1% to $46,381. (Bitcoin trades 24 hours a day; prices reported here are as of 4 p.m. each trading day.)

stock chart for 022621stock chart for 022621

Earnings Estimates Are Looking Up!

Whatever the market faces in the short term, analysts see better times further on in the year.

Economic expectations are improving as more Americans are inoculated against COVID-19; nearly 14% of the population has received at least one dose, according to the Centers for Disease Control and Prevention.

That has analysts quickly scaling up their earnings estimates. Current-quarter profit expectations have improved by 5% over the first two months of Q1. According to FactSet Senior Earnings Analyst John Butters, that’s “the second-highest increase in the bottom-up EPS estimate during the first two months of a quarter since FactSet began tracking this metric in Q2 2002,” trailing only Q1 2018’s 5.7% increase.

That augurs well for much of the market – including a number of dividend-rich sectors and industries. Many real estate investment trusts (REITs), especially in the retail and hospitality industries, are poised for better results as foot traffic picks up. And an economic recovery bodes well for business development companies (BDCs), as well as the small and midsized businesses in which they invest.

Investors will find plenty of attractive income opportunities across the equity board – though if you’re looking for somewhere to start, we suggest you begin with our list of 21 high-quality (and high-yielding) stocks that are suitable for those looking to retirement (or even in it). These names offer an appealing blend of payout potential and income stability that just about any long-term buy-and-holder can appreciate.

Kyle Woodley was long NVDA and Bitcoin as of this writing.

Source: kiplinger.com

What to Know Before Exercising Your Pre-IPO Stock Options

First of all, if you are reading this for personal financial reasons, then congratulations. As a recipient of employer stock options, you have the opportunity to own shares of your company. Stock options can be a powerful wealth-builder. If granted, chances are you have a windfall headed your way. Be sure to have a plan in place regarding the exercise of those options and subsequent sale of stock.

There are several considerations that should factor prominently in your decision-making process. These actions may have major tax implications and, if done improperly, could effectively reduce the amount of that windfall.

When formulating a plan to exercise your stock options, there are some important questions to ask: What exactly is your stock option? When can you move on that stock? What are the tax implications? What valuation does your company have?

Stock Options

Understanding what type of stock options you own is significant when considering your financial position and determining your next move. Stock options come in a few varieties. Incentive stock options (ISOs) are a company benefit that give an employee the right to buy shares at a discounted price, while delaying taxes due until those shares are sold. With non-qualified stock options (NSOs) taxes are due both when you exercise the option (purchase shares) and sell those shares.

Another common employee compensation package is restricted stock units (RSUs). RSUs give an employee interest in company stock but have no tangible value until vesting is complete. It is important to know which type of options you have, and the implications of each.

Timing the Sale of Your Stock

Be sure to understand the earliest date at which your stock can be sold as a long-term capital gain. This tax-advantaged rate applies to stock held more than one year. Additionally, two years must have passed since the option to buy those shares was granted. Remember, you may have a post-IPO lockup period during which you will not be able to sell stock. A lockup period is a window of time when company insiders are not allowed to redeem or sell shares of their company. Lockup periods can vary but typically span six months post-offering.

A common strategy is exercising options six months before the IPO, which starts your stock holding period. Assuming a six-month lockup, any stock you sell thereafter will be taxed as a long-term gain, as you have now held the stock for one year. This strategy gives you flexibility to exit your position at the lower capital gains rate and earliest calendar date possible if you have concerns about your company’s prospects or need liquidity. On the contrary, if you think the stock could soar, you can hold it. Regardless, the early exercise of options gives you, well, options.

Plan Ahead for Alternative Minimum Tax Issues

If you exercise ISOs be aware of the rules surrounding the Alternative Minimum Tax (AMT.) The AMT applies to taxpayers with high income by setting a limit on deductions and exclusions. It helps to ensure that certain taxpayers pay at least a minimum amount of tax.

If you are subject to the AMT, exercising ISOs may count against you in the year in which they are exercised, so take into account the probability that your company will be successfully brought to market. Early exercise could negatively affect your balance sheet if the IPO is delayed or canceled and you were planning to pay that AMT with proceeds from the sale of stock to the public. For example, COVID-19 surely threw a wrench in the gears of recent IPOs such as Airbnb and likely in the plans of many executives standing to profit from it.

On the other hand, if you pay AMT on exercised ISOs when company stock is low, you may not get hit with it again after selling the stock at a later date. If it soars after the IPO, then exercising and paying AMT early would have been a smart move.

Valuation: Get an Idea of What Shares Are Worth

In the public stock market, there is a published bid-ask spread for each security throughout the trading day, thus providing a means of valuation for a stock or option. In the private marketplace, the valuation of a company is less clear because it is calculated infrequently. While there are some “exchanges” for private shares, transactions occur infrequently, and the bid-ask spread is often wide. You could certainly estimate based upon the most recent funding round or Venture Capital firm valuation.

Additionally, many private company values are based on the most recent 409(a) valuation. A 409(a) is an independent appraisal of the fair market value (FMV) of a private company’s common stock. Long story short: You can’t make a decision to exercise an option without understanding what a share of stock is worth.

Hire a Pro

DIY projects frequently end up costing a homeowner more money than just hiring a pro in the first place. As you review your stock options, it’s important to consider all variables. Having a team of trusted advisers by your side who can properly evaluate your stock options, portfolio and goals can bring you confidence that you are making informed decisions.

A certified public accountant (CPA), a financial planner and estate attorney should be vital members of your decision-making team when navigating your ownership interests from private to public. A CPA can typically model your estimated tax liabilities given your unique circumstances. If your windfall is substantial enough, a financial planner and estate attorney will strive to ensure your wealth is preserved for yourself and future generations through proper planning. Be sure to hire the right person for the job — preferably someone who has dealt with the complex circumstances surrounding private stock, stock options and IPOs.

Every company is different, as is every IPO. It is important to read the fine print regarding your rights and requirements as the holder of options or stock in a private company before deciding what to do in the months before and after an IPO. If uncertain, be sure to consult professionals with experience in this area.

Content in this material is for general information only and not intended to provide specific advice, tax advice or recommendations for any individual. We suggest that you discuss your specific tax issues with a qualified tax adviser. Securities and advisory services offered through LPL Financial, a Registered Investment Adviser, Member FINRA/SIPC.

Source: kiplinger.com