The SEC Commission has approved rules that require institutional money market funds to implement floating share values and other restrictions, such as restricting withdrawals and imposing redemption fees of up to 2% if fund assets drop below prescribed levels.Â The shares would float based on changes to NAV (changes to the underlying market value of the fund’s assets).Â Currently, these funds have a fixed price of $1 per share.
Investors are well aware that financial markets go up and down.Â That is the essence of business and economic cycles.Â What is difficult for individual investors to master is how to act in the face of market advances and declines.Â Unfortunately, most people become very tolerant of risk and increase their exposure to the stock market when the market is advancing.Â Similarly, they avoid risk and clip their exposure to stocks when markets are declining, or after a large correction.Â It is human nature and â€śrecency biasâ€ť that create this visceral response to market perturbations.Â Recency bias occurs when investors believe that the most recent performance of their investment portfolios will continue indefinitely in the future.Â It is just one factor that results in investors consistently underperforming the stock market.
A common mistake investors make is to continue to contribute to their Roth IRA even though they are no longer eligible.Â Most people will start a Roth IRA when there income is lower and mistakenly think that they can continue to make annual contributions; but unfortunately, the IRS limits Roth contributions at higher income levels.Â Luckily, there are ways to continue to build these accounts, regardless of income.Â Here is what you need to consider if you want to increase your investments to Roth accounts.
Remember your first paycheck and how shocked you were when you noticed how much was being taken out for taxes?Â My son had the shock of his life when he saw his first paystub for his summer internship at Textron, Inc.Â Â Although he instructed his HR department to withhold the minimum amount out of his paycheck due to his small amount of income (he is getting paid $16.50/hr.), his effective Federal tax rate was well over 20%.
The economy appears to be making strides as it emerges from critical condition and enters into rehabilitative mode.Â Some positive signs include increasing bank lending, auto sales, and consumer confidence.Â Unemployment is also declining, especially for skilled labor. Both the US budget deficit and state budgets are improving. Â Corporate infrastructure such as plants, buildings, and equipment are overdue for upgrades, suggesting substantial future increases in capital expenditures.
According to the Center for Medicare and Medicaid services, 70% of people over 65 will need long term care support at some point.Â Since health insurance and Medisupp policies do not pay for long term custodial care (Medicare only pays for up to 100 days of care in a skilled nursing facility), it is important that you have a plan to fund these costs, which can be exorbitant.Â You can choose to self-fund by spending your own assets or purchase a long term care policy.Â A less desirable option would be to rely on family members.