Contrary to conventional wisdom, there are some regular money moves that are better done at the beginning of the year rather than the end.
Topsy-Turvy Money Ideas to Set You Right-From The Wall Street Journal
When the financial world looks upside down—and news out of Europe and Washington suggests it is that bad—maybe it's time to follow suit and turn your money habits topsy-turvy as well.
Contrary to conventional wisdom, there are some regular money moves that are better done at the beginning of the year rather than the end.
Here are five big ones:
1. Tap your flex-spend account early
Opticians routinely urge you to spend your unused medical flexible-spending account in December.That's backward. Start the year with a trip to the eyeglass store for a new pair of spectacles or two.
Your FSA is provided by your employer but funded with your pretax dollars. You elect an amount for the whole year (say, $2,400), but it's funded through equal payroll contributions throughout the calendar year ($200 a month).
The bonus is that you get to start spending the whole amount (in this case, $2,400) on Jan. 1 as long as it is for eligible medical expenses, like eyeglasses and prescriptions.
If you spend it all by February, then it's better than a low-interest loan. It's a no-interest loan and there's a chance you may not have to "pay it back." If you get fired or quit before year-end, in general your employer has lost out, not you. (That's the way the government set up the rules.)
2. Make your charitable donations now
Some people wait until December to make charitable donations. The idea is that you have a better handle on how much money you can spare.That's upside down.
If giving to charity is important to you, why wait? Write your check now and feel satisfied. If you are worried whether you will have enough money to live on during the year, then write a smaller check or cut back on other expenses. I've never heard of anyone going broke because he gave too much to charity.
You'll get the same tax deduction making a donation early in the year as you would later, but the charity benefits by having the money sooner.
3. Contribute to your IRA in the spring
It can be tempting to wait and see what money you have left after Christmas before committing anything to an individual retirement account. Don't wait. Do it as soon as you can.If you fund the account early, you will find a way to make your remaining dollars stretch. What's more, the funds in the account will grow tax free. Any interest you earn outside the IRA will be taxed, so the sooner you get your contribution done the better.
If, like many people, you wait until mid-April to contribute to last year's plan, then this year make a change. Double down by contributing to both this year's and last year's accounts at the same time.
You'll get an extra year of earnings inside your plan.
4. Don't wait for your fitness reimbursement
If your employer is generous enough to reimburse all, or part, of your gym membership (and many do), don't wait until the end of the year to claim your money. In the first place you might forget, and that's just throwing away money.In addition, since everyone else mails claims at year-end, it's more likely that yours will be lost or delayed.
What you should do instead is start the year with an annual fitness membership. You should pay the full amount upfront rather than monthly. Then you should get it all reimbursed.
In the winter gyms often offer sales, so you may get a discount as well. And if you get fired before the membership expires, you'll still have a (paid for) place to exercise.
5. Don't wait to take investment losses
Around Christmas time you often hear people talk of the need to make so-called "tax-loss sales" of stocks. The idea is to lock in the loss before year-end so that it can be used to offset taxable investment gains.It's a dumb idea.
The time to ditch a losing investment is when the reasons you originally got into it are no longer valid.
For example: You might feel like you made a bad investment if you bought Tiffany last year. Perhaps at the time you thought shoppers would go nuts for luxury goods. Now you could be thinking another stock makes more sense in these austere times, like Wal-Mart.
Well, if that's what you think, then get out. Take your loss, and use what's left to choose a better investment.
2) In the Markets today:
Stocks drifted lower, putting on hold five weeks of gains for the broader market, as investors shifted their focus to wrangling in Greece over fiscal austerity.
U.S. stocks down as Greece struggles for accord-From MarketWatch
| U.S. stocks fell Monday, with the S&P 500 retreating after extended gains, as Greece struggled for an agreement on spending cuts needed to ensure another round of rescue funds. |
“This week the focus is on central banks, with the Bank of England meeting and the European Central Bank talking about their monetary policy. There’s not a ton of market-moving data for the U.S., so that along with Greece is going to keep us focused on things overseas,” said Paul Nolte, managing director at Dearborn Partners in Chicago. |
Losing ground after finishing Friday at its highest level since May 2008, the Dow Jones Industrial Average on Monday shed 34.32 points, or 0.3%, to 12,827.87. |
Twenty-two of the Dow’s 30 components slid, with Boeing Co. leading the drop a day after the plane manufacturer said work had begun to repair a fault in its 787 Dreamliner. |
The S&P 500 shed 2.27 points, or 0.2%, at 1,342.63, with financials the worst performing and energy the best of its 10 industry groups. |
Investors are rotating out of utilities, consumer staples and other defensive sectors and buying into those viewed as more risky, noted Nolte. |
After they’re done with this rotation, however, a broader pullback could be in store, says Elliot Spar, strategist at Stifel Nicolaus. |
“If this is the beginning of a rotational correction, (and) we’ve already seen corrective action in oil and gold, then I expect a rotational correction to end with a pullback or correction in the average,” Spar said. |
The Nasdaq Composite declined 6.94 points, or 0.2%, to 2,898.72. |
For every two stocks rising, three fell on the New York Stock Exchange, where nearly 432 million shares traded as of 3:10 p.m. Eastern. |
In Europe, leaders turned up the heat on Greek politicians to accept the conditions for another round of rescue funds needed to avoid a government default. In Athens, a meeting of Greek political leaders was postponed until Tuesday as they worked to devise a uniform reply. |
Commodities fell along with equities, with crude futures down 93 cents to settle at $96.91 a barrel and gold futures down $15.40 to close at $1,724.90 an ounce. |
Monday’s fall follows a five-week advance, which marked the best start to a year for the S&P 500 since 1987, after the government on Friday reported the jobless rate fell to 8.3%. |
The recent advance in global equities can be chalked up to quantitative-easing moves by the Federal Reserve and its counterparts elsewhere. “It’s not just the Fed, but central banks in Europe, Japan — they are all embarking on their own forms of easing,” according to Nolte. |
Economic strength is better gauged by checking the 10-year Treasury note , which is relaying higher interest rates ahead, he said. “If not right now, it’s in the offing,” added Nolte, who views bonds as representative of a “broader, deeper market than the equity market, and not as prone to knee-jerk reaction.” |
Last month, the Fed said it would likely hold rates exceptionally low through the end of 2014. |
3) Top financial story of the day:
Gold futures ended lower Monday, pressured by a rising dollar and moving alongside oil and U.S. stocks as the deteriorating situation in Greece failed to ignite safe-haven flows for gold.
Gold futures fall on dollar strength-From MarketWatch
Gold futures declined Monday, with prices pulling back by as much as $26 an ounce as strength in the U.S. dollar dampened interest in metals.
Gold for April delivery (XCEC:GC2J) declined $15.40, or 0.9%, to settle at $1,724.90 an ounce on Comex division of the New York Mercantile Exchange. It fell by as much as $26.30 to touch a low of $1,714 an ounce earlier.
Upbeat data on U.S. employment helped fuel a drop of $19 in gold on Friday, as its safe-haven appeal took a hit. Read more on Friday's gold session.
A stronger dollar added further pressure to gold on Monday. The dollar index (IFUS:DX-Y.NYB), which measures the greenback against a basket of six currencies, traded at 79.135, from 78.969 in late North American trading on Friday.
A rising greenback is a negative for gold and other dollar-priced commodities as it makes them more expensive to holders of other currencies. Read more on Monday’s currencies trading.
Gold traded lower Monday “due to dollar strength, oil weakness, and renewed short-term correlation with equities due to concerns about the intractable Greek debt crisis,” said Mark O’Byrne, an executive director at GoldCore.
U.S. stocks traded lower and oil also lost as investors kept a worried eye on Greece, where government leaders tried to convince the heads of main political parties to support additional austerity measures, seen as crucial to a deal with Greece’s bondholders and more international financial aid.
An agreement wasn’t reached on Monday and talks were postponed till Tuesday.
The “persistent uncertainty surrounding the euro-zone debt crisis” has limited losses for gold, analysts at ICICI Bank said in a note to clients.
Across the wider metals complex, silver for March delivery (XCEC:SI2H) declined 6 cents, or 0.2%, to $33.69 an ounce.
Copper for March delivery (XCEC:HG2H) lost 4 cents, or 0.9%, to $3.87 per pound.
Platinum for April delivery (XNYM:PL2J) dropped $3.90, or 0.2%, to $1,628 an ounce, while March palladium futures (XNYM:PA2H) shed $4.05, or 0.6%, to $704.80 an ounce.
4) Quote of the Day from Dave Ramsey.com:
Wealth, like happiness, is never attained when sought after directly. It comes as a by-product of providing a useful service. — Henry Ford
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