Daily Gains Letter

401(k)


Why These Two China-Based Internet Stocks Are Worth a Closer Look

By for Daily Gains Letter | Mar 3, 2014

China-Based Internet StocksWe all know how hot the social media space is with some sizzling returns shown by such stock market heavyweights as Facebook, Inc. (NASDAQ/FB), Twitter, Inc. (NYSE/TWTR), Yelp, Inc. (NYSE/YELP), and LinkedIn Corporation (NYSE/LNKD) to name a handful.

The valuation of these momentum stocks is especially high, but as long as there are buyers, these stocks will continue to attract major market surges.

Much of the easy money may be gone for now, but there are still some Internet stocks trading here that offer excellent potential for some staggering gains for aggressive traders.

Yet the stocks I’m referring to are based out of China, where the added risk is high due to the questionable reliability of the auditors and subsequent results.

If you are confident on the numbers of these Chinese stocks, it may be worth a speculative trade, but be warned that the risk is high, so don’t go and bet your 401(k) on these speculative Chinese stocks. Use only risk capital and make sure you are diversified; this will take some of the edge off the trade in case the stock goes against you.

If you like Amazon.com, Inc. (NASDAQ/AMZN) but aren’t willing to chase the high stock price and valuation, you may want to take a look at China-based E-Commerce China Dangdang Inc. (NYSE/DANG), which has been referred to as the Amazon of China. The online seller of books, home products, footwear, electronic and personal products, and related accessories has about 8.9 million active users as of its fourth quarter (ended December 31, 2013). The company also said it added about 3.1 million new users in that … Read More


Your 401(k): How It Can Really Profit from Patience and Conservative Plays

By for Daily Gains Letter | Sep 13, 2013

How It Can Really Profit from Patience and Conservative PlaysYour 401(k) is supposed to be a retirement account with a long investing horizon—not a day trading platform. Unfortunately, there are a growing number of investors doing just that, throwing not just caution to the wind, but also their long-term financial stability.

Way, way back in 1978, Congress enacted the Revenue Act to help encourage Americans to save more for retirement. The Act allows Americans to save for retirement while, at the same time, lowering their state and federal taxes. The term “401(k)” refers to the section number and paragraph in the Internal Revenue Code: section 401, paragraph (k).

The most widely used investment vehicle, your 401(k) is a long-term diversified investment strategy designed to (ideally) minimize risk while helping you realize your retirement goals. With a 401(k), you make money on long-term investing in a diversified portfolio that takes advantage of capital gains growth and compound interest.

As an added incentive, many employers will match your contribution. In 2013, employees can tuck $17,500 away in their account, and those over 50 years old can put away an additional $5,500.

While plunking down a solid portion of every paycheck into your 401(k) may take discipline, you do so because you want to have some sort of safety net when you retire, which is a long-term strategy. Too many investors, however, are tired of the returns they’re seeing with their 401(k)s, especially in light of the major strides the S&P 500 and Dow Jones Industrial Average are making.

In an effort to chase higher returns on their 401(k)s, many investors are now tapping into it for day trading purposes. This is … Read More


Is Retirement at Risk for Late Baby Boomers?

By for Daily Gains Letter | Jul 29, 2013

Retirement at Risk for Late Baby BoomersOn July 23, the Dow Jones Industrial Average hit an all-time intraday high of 15,604.22. That same day, the S&P 500 also hit a new high of 1,698.78. With the markets doing so well, you could be forgiven for thinking today’s baby boomers are laughing all the way to the bank.

But that’s not so! Most baby boomers haven’t really benefited from the bull market. While it runs with reckless abandon, it’s leaving behind most Americans who are in retirement. Over the last five years, stocks and bonds have rallied, but the housing market has remained relatively flat. That means affluent Americans who park their assets in stocks and other financial products have done quite well. Those Americans with their wealth tied up in the value of their homes, however, have not.

Since the beginning of the current bull market in 2009, the S&P 500 has climbed more than 160%. U.S. housing prices, on the other hand, are still more than 25% below their 2006 highs.

Retiring baby boomers are also facing another challenge. Early boomers—those between 61 and 65—are more financially stable (for the most part) than their younger peers (those between 50 and 55). The early boomers worked during a period of economic stability in an era when defined benefit plans were the norm. In 1965, the inflation rate was 1.59%; by 1970, it had risen to 5.84%.

The late boomers, in contrast, started working in a more unsettled economic time. In the 1980s, many companies rolled their retirement plans over to 401(k) accounts, tying their self-directed retirement savings to the ups and downs of the stock market. … Read More


The Stocks You Need to Know About Now to Protect Your Retirement

By for Daily Gains Letter | Jun 27, 2013

retirement savingsThe dream of retiring comfortably is a mirage for the vast majority of Americans. According to the National Institute on Retirement Security (NIRS), the retirement savings shortfall in the U.S. is worse than anyone thought. But it’s not an impossible dream for wise investors.

After the U.S. markets crashed in 2008, many Americans saw the value of their hard-earned nest egg evaporate. While the S&P 500 and Dow Jones Industrial Average have been on a five-year bull run, this hasn’t trickled down to the average American. In fact, unemployment remains high, a record number of Americans receive food stamps, wages are stagnant, and personal debt is up.

All of that makes it difficult to set aside money to save for retirement.

And we are now bearing witness to the number of Americans who are sorely unprepared for retirement. In fact, the NIRS study found that roughly 45%, or 38 million, working-age households do not have any retirement account assets. (Source: “The Retirement Savings Crisis: Is It Worse Than We Think?,” National Institute of Retirement Security web site, June 2013.)

More specifically, when all working-age families are accounted for, the typical family has just $3,000 saved for retirement. Those nearing retirement don’t fare much better, with only $12,000 in the bank.

On top of that, 80% of working families have retirement savings less than one times their annual income. As a result, the U.S. retirement savings deficit has ballooned to between $6.8 and $14.0 trillion.

Even at the best of times it can be difficult to plan for retirement. After two recessions (2001 and 2008), even the most optimistic can give … Read More


The Ultimate Retirement ETFs for Conservative Investors?

By for Daily Gains Letter | May 23, 2013

Ultimate Retirement ETFs for Conservative InvestorsDo you want to save more or less by the time you reach 65? It might seem like a question with an obvious answer, but…

Back in the 1950s and 1960s, Americans on the cusp of retirement had their defined pension plans to look forward to and didn’t really worry too much about saving for retirement—or running out of money. All of that changed in the 1980s, when many companies rolled their retirement plans over to 401(k) accounts. That one simple act meant a worker’s retirement savings now fluctuated with the ebb and flow of the stock market.

While it’s important to invest in your 401(k), it’s also important to know what your money’s being invested in and where it’s going. Unfortunately, most of us don’t. A recent study that looked at American investing knowledge found there’s a large gap between what we think we know and what we really know.

The study found that “nine out of 10 Americans (92.6%) dramatically underestimated the total 401(k) fees the average household will pay over the course of a lifetime.” When asked how much the average American household with two working adults will pay in 401(k) fees over the course of their lifetime, only 3.3% of respondents answered correctly, at $150,000–$200,000. The largest group (38.1%) was the most off the mark, saying it would cost less than $10,000. (Source: “The Online Investing Knowledge Gap: 2013 Investment Literacy Survey,” NerdWallet, March 18, 2013.)

So if you want to save more money for your retirement, there may be better options out there. If you’re looking to take advantage of the stock market, whether it’s … Read More


Three Stress-Free Strategies for a Streamlined Retirement Portfolio

By for Daily Gains Letter | May 9, 2013

Strategies for a Streamlined RetirementWhen it comes to money, more is better. But when it comes to your retirement portfolio, less might be more. With over 8,000 mutual funds and exchange-traded funds (ETFs); roughly 3,000 stocks traded on the NASDAQ, 2,800 on the NYSE, and 3,800 on the AMEX to choose from; and 401(k)s, individual retirement accounts (IRAs), and countless asset management strategies, it’s easy to see how an investment portfolio can get complicated.

And cluttering complicated investment portfolios with too many assets and vehicles can make them difficult to understand. A failure to streamline a complicated portfolio means there could be overlap, which means you could be funneling money into one asset class when it could better serve you elsewhere.

A streamlined retirement portfolio does not mean it gets gutted to the lowest common denominator; it means you know what you’re invested in, ensuring there are few or no redundancies. It also means rebalancing your portfolio’s asset allocation, which will depend on your age, desired outcome, and risk level. Here are three stress-free strategies for simplifying your portfolio while increasing its possibility for success.

Consolidate: While the U.S. Bureau of Labor Statistics doesn’t track lifetime careers, it’s fair to say most Americans have held more than a few jobs before retiring. It’s quite possible, then, that you have more than a few 401(k) accounts. Simplify things by collating all of the old plans into a current workplace plan. If that isn’t an option, roll them into a single rollover IRA.

To make life even less stressful, you could also consolidate your bank accounts, mutual funds, and bonds. Having everything in one centralized account … Read More


Top Tax-Deferred Savings Tips for Retirees

By for Daily Gains Letter | Mar 18, 2013

180313_DL_whitefootRetirement isn’t the finish line when it comes to retirement savings; it’s just another stage, and it’s one that retirees need to adjust to. After decades of contributing to tax-deferred retirement savings plans that reduce taxes, you’re now withdrawing from those accounts and paying taxes at the regular rate.

For those on the cusp of retirement, there’s more to making smart financial decisions than just making money. At this stage, there are a number of unique tax-planning opportunities that can help you save money over the long run.

What’s next for your 401(k)? Workers about to retire should do everything they can do increase or max out their contributions to tax-deferred retirement plans, like individual retirement accounts (IRAs), 401(k)s, or 403(b)s. In 2013, you can contribute a maximum of $17,500, or $23,000 if you’re over age 50.

Depending on your tax bracket, every dollar deposited into a 401(k) could save you anywhere between $0.10 and $0.40 in income taxes for the year in which the contributions are made. For example, if you contribute $5,000 to a 401(k) the year before you retire, it would be taxed at 35%. Withdrawn in retirement, the funds are taxed at 15%, meaning the 20% difference in tax rates translates into a savings of $1,000.

Should You Delay Claiming Social Security?

For those already retired, you can consider delaying your Social Security checks. One benefit of waiting to collect Social Security until you’re older is that your checks will be larger. Even though you can start collecting Social Security any time between 62 and 70 years old, for every year you wait, your check will … Read More


It’s Never Too Late to Save for Retirement: Four Easy Retirement Steps for Late Planners

By for Daily Gains Letter | Mar 5, 2013

050313_DL_whitefootWhether you’re on the precipice of retirement or still a few years away, it’s never too late to start saving. That said, the longer you wait, the harder it’ll be to meet your retirement goals.

What’s the best way to increase retirement wealth? While many may think the key is picking the best investments, the truth of the matter is that the best place to start is by simply saving. Regardless of where you’re at, if you start saving now and stay diligent, you can significantly improve your retirement prospects.

Savings that can have a positive impact on your retirement plans can only come from choices that affect your day-to-day life. And by saving, I don’t mean giving up your daily coffee; I mean changing your lifestyle—saving 10% of your gross income right off the top, or more if possible.

Granted, there isn’t one single path to fulfilling your retirement planning goals. However, there are certain steps everyone can take to help prepare financially for retirement.

A Little Goes a Long Way

How much of your salary should you put aside? There is no definite equation, but some experts recommend 10%–15% of your annual income, or more if you’re closer to retirement and haven’t started saving.

By living off of 70% of your salary or working a few more years, you can cut the savings levels you must reach by 10%–25%, or by even more if you save and work past the average retirement age.

How can you set aside that much from each paycheck? Again, it comes down to lifestyle choices. Cut back on everyday expenses where possible: the … Read More