Time for a portfolio gut check
And more of the week's best financial advice
Here are three of the week's top pieces of financial advice, gathered from around the web:
Time for a portfolio gut check"There's another activity you should be squeezing into your schedule this summer: giving your retirement portfolio a stress test," said Walter Updegrave at Money. After eight-and-a-half years of healthy stock gains, you may be more exposed to market shocks than you realize. "A portfolio that started out 70 percent in stocks and 30 percent in bonds at the beginning of this bull market in March 2009 would be closer to 90 percent stocks and 10 percent bonds today," assuming reinvestment of the gains and no rebalancing. A similar portfolio mix would have lost more than 33 percent in the 2008 financial crisis. Unless you're confident you can wait for your investments to rebound after such a setback, you'll want to consider scaling back to a risk level you can "tolerate during the market's inevitable routs."
Opening an ABLE accountAn ABLE account can be a powerful savings tool for people with disabilities, but not everyone with a disability qualifies, said Kimberly Lankford at Kiplinger. ABLE account holders can set aside $14,000 per year, which "can be used tax-free for any expenses that benefit the person with the disability." Just as important is the fact that savers can put aside up to $100,000 in the account and not have it count toward the $2,000 asset limit for Supplemental Security Income benefits. Applicants "must meet Social Security's definition of having 'severe functional limitations,'" with a disability that was developed before age 26. ABLE plans, which are administered by the states, differ in how much documentation they require. It's a good idea to keep a written diagnosis from a doctor, "even if your plan doesn't require" it.
Sad news for saversWaiting for a higher interest rate on your savings account? Hope you're patient, said Christina Rexrode at The Wall Street Journal. "For now, most bankers are happy to keep deposit yields low, standing pat even as the Federal Reserve hikes short-term rates." Awash in deposits — commercial banks set an all-time record in May — banks feel little pressure to compete for more. That might change if customers start to move their money en masse — to online banks, for example, many of which currently offer interest rates in the 1 percent range. But that's not expected to happen any time soon. Thanks to the Fed, "depositors haven't thought of bank accounts as income-producing instruments in nearly a decade."