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The 10 Best Stocks for a Bear Market
Bear markets are an inevitable if particularly unpleasant part of the market cycle. But investors who hold the best stocks to buy for bear markets can mitigate at least some of the damage.
No, the S&P 500 isn’t in a bear market â a 20% decline from its peak â just yet. It has, however, been flirting with one for some time. The Nasdaq Composite, for its part, fell into a bear market a while ago.Â
Either way, 2022 has been a dismal year for equities with no clear end in sight. Bottoms are hard to call in real time anyway, and, besides, stocks can trade sideways for as long as they feel like it.Â
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And so if this is how things are going to continue, investors might want to arm themselves with the best stocks they can find. And right now, those stock picks should focus on resiliency during deep downturns.
The best bear market stocks tend to be found in defensive sectors, such as consumer staples, utilities, healthcare and even some real estate equities. Furthermore, companies with long histories of dividend growth can offer ballast when seemingly everything is selling off. And, of course, low-volatility stocks with relatively low correlations to the broader market often hold up better in down markets.
To find the best stocks to buy for bear markets, we screened the S&P 500 for stocks with the highest conviction consensus Buy recommendations from Wall Street industry analysts. We further limited ourselves to low-volatility stocks that reside in defensive sectors and offer reliable and rising dividends. Lastly, we eliminated any name that was underperforming the broader market during the current downturn.
That process left us the following 10 picks as our top candidates for the best stocks to buy for a bear market.
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Share prices, price targets, analysts’ recommendations and other market data are as of May 17, courtesy of S&P Global Market Intelligence and YCharts, unless otherwise noted. Stocks are listed by conviction of analysts’ Buy calls, from weakest to strongest.
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The post How to Build a Capsule Wardrobe appeared first on MintLife Blog.
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Should You Consider a Roth Conversion While the Market is Down?
While a down market may not be a fun time for investors, there are some bright spots and opportunities to be had. Stock market drops like weâve seen recently might make a Roth IRA conversion more appealing as a strategy for investors.
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Should you consider converting a traditional IRA to a Roth during a down market? There are a few things to consider before pulling the trigger.
What is a Roth Conversion?
Before you embark on a Roth conversion, you need to fully understand what it is. When you have a traditional IRA, those are pre-tax dollars that youâre investing. While the money grows tax-free, when you later go to take a withdrawal, every dollar you pull will be taxed.
With a Roth IRA you are investing post-tax dollars, and when you convert a traditional IRA to a Roth, you pay the full tax during the year that you convert, at ordinary income rates. Then, the dollars that youâve converted will grow tax-free for the remainder of the time that they sit within the investment. When you later take money out of a Roth, itâs all tax-free, as long as you are 59½ or older and follow a few other rules.
What You Need to Know About a Roth Conversion in a Down Market
When you trigger a Roth conversion, youâll be responsible for paying the tax due on any pre-tax contributions or earnings within the traditional IRA. The benefit here is that if the market has dropped, itâs likely that your IRA value has dropped along with it â so your full value has gone down, and youâll be paying taxes on the current value (which is lower, due to the market being down than it was months ago). So, in theory, you can convert a larger portion of your IRA in a down market and pay less in taxes than you could in years when the market is up.
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Here’s an example: If you had a traditional IRA with $100,000 at the start of the year, and due to the market, it is now down to $85,000, you could choose to convert that entire IRA to a Roth and only pay tax on the $85,000 instead of the $100,000 that it was months ago. Assuming that these dollars will rebound in the market in the future, youâve picked a good opportunity to convert.
Itâs important to work with both a financial adviser and your tax professional to determine not only the amount of tax youâll owe during the year that you perform the Roth conversion, but also how long it would potentially take you to break even.
What are the Pros of a Roth Conversion?
Converting from a traditional IRA to a Roth has many potential benefits for investors. Because a Roth IRA allows for dollars to grow tax-free, all the growth is also tax-free. There are also no RMDs, or required minimum distributions, on a Roth IRA once you turn 72. With a traditional IRA or 401(k), you have a set minimum you must withdraw each year once you hit RMD age, but Roth IRAs do not adhere to this rule.
Tax rates are still relatively low, historically, which means now is as good of a time as any for a Roth conversion, from a tax perspective. Tax parity is another benefit of Roth IRAs because you have different âbucketsâ of income to pull from at retirement in an effort to keep your taxes low during retirement. Roth IRAs also benefit your spouse and heirs at inheritance time, as the tax-free benefits pass along to them in various ways, depending on the time limit and amount, and their relationship with you, the deceased.
A Few Cautions on Conversions
Roth IRA conversions arenât all benefits though, there are a few things to be aware of. Thereâs the five-year rule, where you must wait five years after a conversion before making a withdrawal or else you could incur a 10% penalty. Keep in mind that this five-year rule only applies to those who are younger than 59½. After you reach that age, the five-year rule and its penalties no longer apply.
Triggering a Roth conversion may also increase your adjusted gross income (AGI), which could compound other issues, such as Medicare premiums. This may also increase your tax rate.
The best way to determine if a Roth conversion is the right move for you during the down market is to work with a financial adviser and a tax professional so you can get feedback on your specific financial situation.
Diversified, LLC does not provide tax advice and should not be relied upon for purposes of filing taxes, estimating tax liabilities or avoiding any tax or penalty imposed by law. The information provided by Diversified, LLC should not be a substitute for consulting a qualified tax adviser, accountant, or other professional concerning the application of tax law or an individual tax situation.
Nothing provided on this site constitutes tax advice. Individuals should seek the advice of their own tax adviser for specific information regarding tax consequences of investments. Investments in securities entail risk and are not suitable for all investors. This site is not a recommendation nor an offer to sell (or solicitation of an offer to buy) securities in the United States or in any other jurisdiction.
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The post 3 Instances When a Landlord Can Legally Break a Rental Lease appeared first on The Rent.com Blog : A Renterâs Guide for Tips & Advice.