Making money: What the experts say

Gift cards to avoid

If you give gift cards this holiday season, make sure they’re not ones “loaded with sneaky fees,” said Martha C. White in Time.com. The Federal Reserve cracked down on retailer gift cards in 2010, ruling that they can’t expire in less than five years and that issuers can’t charge any fees until the card has been inactive for a year. But those rules don’t apply to promotional gift cards, which retailers often offer as a reward to customers who spend a set amount. Those cards can bear fees and often expire not long after Christmas. Cards offered by banks or credit card companies are also not ideal. They may seem convenient since they can be spent anywhere, but they sometimes charge “the recipient a monthly maintenance fee, a fee to check their balance, or even a fee to use the card.” If you want to give a gift with no strings attached, “retailer-specific cards are the way to go.”

Snagging year-end dividends

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Some companies are issuing special year-end dividends so investors can avoid possible higher tax rates in 2013, said David Randall and Linda Stern in Reuters.com. Costco, Oracle, and Ethan Allen Interiors have all made extra dividend payments or accelerated payouts originally scheduled for next year. Investors hoping to get in on the action should note that spotting companies likely to issue such special dividends “is easier said than done.” Those with businesses focused on the U.S. are good candidates, as are those with “a lot of cash on hand, a payout ratio of less than 40 percent, and board members who themselves hold a lot of shares.” But investors need to act fast. “Time is not on your side,” said Paul Rubillo, founder of Dividend.com.

Trouble for defense firms

Investors in defense stocks are being “too complacent” about the risks of deep cuts to the defense budget, said Brett Arends in The Wall Street Journal. The S&P 500 Aerospace & Defense Index of leading defense companies is trading within 10 percent of its 2007 high. But even if lawmakers avoid big defense cuts next year, “budget pressures and the end of two wars” will push down military spending, and the profits at companies heavily reliant on government contracts will likely take a hit. “Lockheed Martin and General Dynamics could be among those more at risk,” because their big-ticket projects could come under budget pressure, while Raytheon appears “best positioned to weather the storm.”