Kiplinger's Personal Finance - May 2018

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7 GREAT GROWTH STOCKS TO BUY

7 GREAT GROWTH STOCKS TO BUY NOW

NOW

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T T O O M M K K U U B B I I K K

AHEAD

9

9 TOPIC A:TOPIC A: What to make of the market’s What to make of the market’s

turmoil . . . Beware closing-cost scams.

20

20 OPENING SHOT OPENING SHOT Should you invest in Should you invest in

commodities

commodities? by JAMES K. ? by JAMES K. GLASSMAN.GLASSMAN.

24

24 SUCCESS STORYSUCCESS STORY Farm living is the life Farm living is the life

for them, by PATRICIA MERTZ ESSWEIN.

25

25 MILLENNIAL MONEY MILLENNIAL MONEY The power of living The power of living

within your means, by MIRIAM CROSS.

26

26 LIVING IN LIVING IN RETIREMENTRETIREMENT Get help with Get help with

Medicare coverage, by JANET BODNAR.

28

28 CROWDSOURCING CROWDSOURCING What was your What was your

biggest financial mistake?

30

30_{YOUR MIND}_{YOUR MIND}_{AND YOUR MONEY}_{AND YOUR MONEY}_Tap_Tap

into your emotions, by ANNE KATES SMITH.

MONEY

32

32 COVER STORYCOVER STORY

STOP WASTING MONEY

STOP WASTING MONEYThose little leaksThose little leaks

that may seem like no big deal can add up to

big bucks down the drain. Here’s how to save

on insurance, investing costs, tech and more.

42

42 HOME PRICES KEEP HOME PRICES KEEP CLIMBINGCLIMBING Most areas Most areas

are on the upswing, but rising interest rates

and the new tax law may slow the market.

49

49 COUNTDCOUNTDOWN TO TOWN TO TAX DAYAX DAY You may You may

still be able to save on your 2017 taxes.

46

46 ASK KIM ASK KIM Insurance for home sharers, Insurance for home sharers,

by KIMBERLY LANKFORD.

48

48 GAME PLAN GAME PLAN How do I get in on a class- How do I get in on a

class-action lawsuit against Equifax?

action lawsuit against Equifax?

INVESTING

52

52 TOMORROW’S GREATOMORROW’S GREAT GROWTHT GROWTH

STOCKS

STOCKSWe found seven small and midsizeWe found seven small and midsize

companies with big potential.

60

60 WHAT YWHAT YOU NEED TO KNOW ABOUTOU NEED TO KNOW ABOUT

BITCOIN

BITCOINDon’t invest more than you canDon’t invest more than you can

afford to lose.

58

58 INCOME INVESTING INCOME INVESTINGThe silver lining ofThe silver lining of

rising rates, by JEFFREY R.

rising rates, by JEFFREY R. KOSNETT.KOSNETT.

64

64PRACTICAL INVESTINGPRACTICAL INVESTINGWhat I boughtWhat I bought

when stoc

when stocks tanked, ks tanked, by KATHY KRISTOFby KATHY KRISTOF..

59

59MORE ABOUT MORE ABOUT INVESTINGINVESTINGDividend 15Dividend 15

update (59). Kiplinger 25

update (59). Kiplinger 25 update (63). Fundupdate (63). Fund

spotlight

spotlight (65(65).).

LIVING

66

66THE NEW RULES THE NEW RULES OF PHILANTHROPYOF PHILANTHROPY Fewer people will itemize under the new tax

Fewer people will itemize under the new tax

law, but our strategies will help you get the

most out of your charitable giving.

71

71 TO YOUR TO YOUR HEALTHHEALTHKeep out-of-pocketKeep out-of-pocket

costs in check, by NELLIE S. HUANG.

IN EVERY ISSUE

4

4FROM THE FROM THE EDITOREDITORMy investing misstep.My investing misstep.

6

6 LETTERS LETTERSA run for your money.A run for your money.

72

72 TAKE TAKEAWAAWAYYIs it taxable? Take our quiz.Is it taxable? Take our quiz.

■

■THE SOSOOS OFTHE SOSOOS OF TEANECK, N.J., ARE TEANECK, N.J., ARE PREPARING TO BUY A PREPARING TO BUY A NEW HOME, EVEN NEW HOME, EVEN THOUGH THE NEW TAX THOUGH THE NEW TAX LAW WILL BOOST THEIR LAW WILL BOOST THEIR

COSTS.

COSTS.PAGE 42PAGE 42

ON THE CO

ON THE COVER: VER: Photo-Illustration by C.J. BurtonPhoto-Illustration by C.J. Burton

04/2018

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P O O N W A T C H A R A - A M P H A I W A N

FROM THE EDITOR

Mark Solheim

My Investing Misstep

B

ack in June 2000, this magazine

ran an article titled “True Con-fessions,” which related the tale of one editor’s foray into the dark ex-cesses of the dot-com-era stock mar-ket. The author, who chose to remain anonymous, confessed not only to in-vesting in a number of wildly inflated tech stocks but also to buying them—

gasp—on margin. “In retrospect,” he

wrote, “I admit that I succumbed to greed and hubris, betraying the princi-ples of responsible investing by play-ing the market with borrowed money.”

If you haven’t already guessed, the author was me. Five years earlier, I had opened a Schwab account with $10,000, invested in Microsoft and a few other solid prospects, and watched the account grow to $100,000. That’s when the greed and day-trader mental-ity took over. I bought into the philosophy that corporate earnings didn’t really matter in the internet era, that momentum would pro-pel popular stocks ever higher. I started invest-ing in companies whose products and services I didn’t understand, and doing so with other people’s money. Then the market crashed, and I got not one but two margin calls.

Volatility and valuation.

The same impulsive mindset that pushed stocks to the breaking point in 2000 has paral-lels today in the

crypto-currency markets. A lot of novice investors have been buying bitcoin, watching its value swing wildly up and down. Like stocks 20 years ago and home prices 10 years ago, cryptocur-rencies have crept into watercooler conversations. When our UPS guy reported that he has bought in, we took it as a sure sign that bitcoin has entered bubble territory.

In her cryptocurrency FAQ on page 60, Nellie Huang points out that bit-coin has no revenue, no earnings and no underlying asset value, so prices are driven by demand alone. When an ordinary stock’s price rises, it’s usually based on expectations of earnings or

revenue growth. At worst, she writes, bitcoin’s rise fits the

“classic definition of Wall Street’s ‘greater fool

theory,’ and at best, it describes specu-lation, not

invest-ment.” It also reminds me of

late ’90s blind investing

be-cause few inves-tors understand its blockchain-technology underpinnings.

The stock mar-ket is easier to call. As investing editor Anne Smith explains in “Topic A,” on page 9, the triggers for the February

downdraft were threats of higher inflation and a rise in interest rates. But we don’t think the bull is ready to expire; it’s still supported by strong corporate profits and healthy econo-mies around the globe. Some excess valuation has been wrung out of stocks, but as yields on Treasuries tick up, many stocks will be vulnerable to selling, and you can expect more anxiety-producing trading days in the months ahead. If you’re buying, Anne recommends investing overseas and in sectors that won’t get socked by higher rates. And if you get queasy when stocks tumble, it’s a sign that you might want to pare back your holdings.

My hard-won lesson. Finally, please take a look at “Crowdsourcing,” on page 28. The question we asked readers this time around was “What was your big-gest financial mistake—and how did you recover from it?” As you now know, my biggest stumble was playing

stocks like roulette nearly 20 years ago. I stayed out of the market for a few years while I licked my wounds, but my lesson in investing (and humil-ity) has served me well. In 2008 and 2009, I took advantage of bargain prices to get back into the market. Now I am fully invested in a mix of stocks and bonds that I won’t have to tweak much until I am a couple of years from retirement—no matter which direction the market goes.■

MY SCHWAB ACCOUNT BALLOONED TO $100,000. THAT’S

WHEN THE GREED AND DAY-TRADER MENTALITY TOOK OVER.

MARK SOLHEIM,EDITOR

[email protected] TWITTER: @MARKSOLHEIM

KIPLINGER’S PERSONAL FINANCE 04/2018

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6 KIPLINGER’S PERSONAL FINANCE 04/2018

6 LETTERS S O U R C E : P O L L S U R V E Y E D 3 3 3 K I P L I N G E R ’ S R E A D E R S .

Your story on great ideas for ways to spend your cash in-cludes suggestions—all ter-rific—on giving back (“Great Ideas for $1,000, $10,000 or $100,000,” Feb.). Especially heartening is the idea to run for public office. By identi-fying the dollars needed for a candidacy for municipal office or a seat in a state leg-islature, you’ve provided us with a lesson in campaign financing—and some of us with a draft budget for step-ping forward to serve.

ANGELA S. LIPTACK RIDGEFIELD, CONN.

We were disappointed that you did not include donor-advised funds as one of your

great ideas. If invested wisely, an initial donation of $10,000 can increase in value and enable the donor to make gifts for years to come. Our donor-advised fund enables us to be more charitable than would oth-erwise be possible. Through it, we can support causes like the ones in your article.

DAVID AND ROSEMARY REST WESTMINSTER, MD.

EDITOR’S NOTE: We spotlight donor-advised funds in our article about charitable giving strategies. See “The New Rules of Philan-thropy,” on page 66.

A vote for college coverage.

Mark Solheim’s column suggests your (presumably older) readership doesn’t appreciate your college arti-cles (“From the Editor,” Feb.). I am 69 and retired, yet I value this kind of cov-erage very much. Many of us have college-age chil-dren, and I have found this coverage very valuable in helping to select a college for my daughter, as well as in finding an appropriate 529 plan.

DON LEONARD BROOMALL, PA.

Fraud restitution. A big thank you for Thomas Blanton’s article “Relief for Fraud Victims” (“Ahead,” Feb.).

My mother was scammed in 2008, thinking her grandson needed money. When she discovered the scam, she filed a police re-port, but nothing came of it (she passed away in 2016). Imagine my surprise to read that there could be restitu-tion. I visited the Federal Trade Commission website

mentioned in the article, then called the FTC to have a representative walk me through the process. I know my mother would be very happy to think that her grandson might get the money after all!

A.R. SEATTLE

Keep ’em coming. I just felt compelled to tell Janet Bod-nar how much I enjoy her articles (“Living in Retire-ment,” Feb.). Great insight always, and her delivery may be even better. I know she’s semi-retired, but I can sincerely ask: Please don’t quit your day job.

CARL ROHRER FREDERICK, COLO.

An honest investor. I respect Kathy Kristof’s advice be-cause of her honesty. It is so refreshing to find a stock columnist who admits to having a few losses (“Practi-cal Investing,” March). Many writers and talking heads boast about their gains but seem to never have a single loss. If they are such financial geniuses, why do they still need to work for a living by handing out advice?

RICHARD COHEN BAYSIDE, N.Y.

A Run for Your Money

LETTERS TO THE EDITOR

Letters to the editor may be edited for clarity and space, and initials will be used on request only if you include your name. Mail to Letters Editor, Kiplinger’s Personal Finance, 1100 13th St., N.W., Washington, DC 20005, fax to 202-778-8976 or e-mail to [email protected]. Please include your name, address and daytime tele-phone number.

READER POLL

Q

How will you give to charity in 2018 if your

gift isn’t tax deductible?

To learn how you can maximize your charitable giving under the new tax law, turn to page 66. Continue to give, regardless of tax deductions

Give less

“Bunch up” donations to get some tax break

Via a donor-advised fund

3%

11%

20%

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EDITORIAL

EDITOR IN CHIEFKnight A. Kiplinger

EDITOR Mark K. Solheim

EXECUTIVE EDITOR Anne Kates Smith

MANAGING EDITOR Frederic Fane Wolfer

SENIOR EDITORSEileen Ambrose, Sandra Block, Jeﬀrey R. Kosnett EDITOR AT LARGE Janet Bodnar

SENIOR ASSOCIATE EDITORS Daren Fonda, Nellie S. Huang, Marc A. Wojno (research) ASSOCIATE EDITOR Patricia Mertz Esswein

STAFF WRITERS Miriam Cross, Ryan Ermey, Kaitlin Pitsker

CONTRIBUTING EDITORSLisa Gerstner, James K. Glassman, Kathy Kristof, Kimberly Lankford

OFFICE MANAGER Glen Mayers

COPY AND RESEARCH

COPY EDITORS Rachel McVearry, Denise E. Mitchell

REPORTERS Thomas H. Blanton, Rivan V. Stinson

ART

ART DIRECTOR Stacie A. Harrison

ASSOCIATE ART DIRECTOR Yajaira St. FleurantASSISTANT ART DIRECTOR Natalie F. Kress

EDITORIAL PRODUCTION MANAGER Kevin Childers

KIPLINGER.COM

GENERAL MANAGER Robert J.M. Long

EXECUTIVE EDITOR Michael DeSenne

SENIOR INVESTING EDITORKyle WoodleySENIOR ONLINE EDITORDavid Muhlbaum

ONLINE EDITORSRobert Niedt, Andrea Browne Taylor

CONTRIBUTING EDITORSLisa Kiplinger, Stacy Rapacon CONTRIBUTING WRITER Dan Burrows

ONLINE BUSINESS DEVELOPMENT MANAGER Phil Hawken

DIGITAL PRODUCT AND DESIGN MANAGER Jenny Cohan

AUDIENCE ENGAGEMENT MANAGER Ben Demers

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PUBLISHING

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Austin H. Kiplinger (1918–2015), Former Chairman and Editor

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KIPLINGER’S PERSONAL FINANCE (ISSN 1528-9729) is published mont hly by THE KIPLINGER WASHINGTON EDITORS INC. Editorial & Execu tive Oﬃ ces: 1100 13th St., N.W., Suite 750, Washington, DC 20005 (202-887-6400). Subscription Center/Customer Service: Visit us online at kiplinger.com/customer-service, call 800-544-0155, or e-mail [email protected]. POSTMASTER: Send change of address to: Kiplinger’s Personal Finance, P.O. Box 62300, Tampa, FL 33662. GST# 123395253. Volume 72, Issue 4. Copyright©_{2018 by the Kiplinger Washington Editors Inc. Periodical posta ge paid at Washington, DC, and at additional mailing oﬃ ces. Subscri ption}

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04/2018 KIPLINGER’S PERSONAL FINANCE 9

AHEAD

FOLLOWING A STOCK MARKET correction that seemed to come and go in the blink of an eye, investors are hoping that the worst is behind them—but many aren’t con-vinced. Their anxiety is well founded. To be clear, with no recession on the horizon, we don’t think the bull mar-ket is over. But more scary downdrafts are likely, and some tweaking of your port-folio may be in order.

Just shy of its ninth

birth-day, the bull market took a breather in late January and early February, sinking a lit-tle more than 10% in less than two weeks. That was the first official correction (defined as a drop of 10% to 19% from a peak) in two years. The downturn may have been exacerbated by a flash-crash-style meltdown in exchange-traded funds that had bet against volatil-ity. But there was nothing mysterious about the

funda-mental triggers: threats of higher inflation and a rise in interest rates. “The secret sauce of this bull market has been the economy’s ability to grow without aggravat-ing inflation or sparkaggravat-ing higher interest rates,” says Jim Paulsen, chief invest-ment strategist at the Leu-thold Group, a market re-search firm in Minneapolis. “That’s changed.”

Inflationary pressures are coming from wages that are starting to rise in a tight labor market. More pres-sure might arise from the fiscal stimulus of tax cuts and increased spending on infrastructure a nd defense. Yields on 10-year

Treasur-ies jumped from 2.5% in the beginning of 2018 to 2.9% recently, and Kiplinger fore-casts that they could trade

at 3.3% at year-end. “Now that rates have picked up and the threat of inflation is on the rise, it makes investors less secure in owning stocks at elevated prices,” says Sam Stovall, chief investment strategist at research firm CFRA.

The bull market still has strong underpinnings. Con-fidence among corporate executives and consumers alike is sky-high, global economies are on a syn-chronized growth track, and corporate profits— buoyed by lower tax rates— are forecast to increase a remarkable 18% this year. “Once I’m convinced that a recession is coming, it’s over. Short of t hat, a cor-rection is a buying opportu-nity,” says Paulsen.

Another jolt is almost

ILLUSTRATION BY JOE ANDERSON

WHAT TO MAKE OF THE

MARKET’S DOWNTURN

The bull market lives, but it will stumble again.

Here’s what to do now.

BY ANNE KATES SMITH

(13)

10

AHEAD

certainly on the way. Going back to 1950, Stovall found 25 calendar years in which stock prices fell by 5% to 20% (more than 20% would be a full-fledged bear mar-ket). In five of those years, the market turned down three times, and in three of the years—1980, 1988 and 1997—the market logged four pullbacks of 5% or more. Last year, Standard & Poor’s 500-stock index logged one-day price swings of 1% or more on only eight occasions; the law of aver-ages says to expect 50 such days this year.

What to do.Use the volatil-ity to position your portfolio wisely. Stocks overall will represent good value if the S&P 500 sinks below 2500, says Paulsen. He recom-mends thinning out interest-rate-sensitive sectors— utilities, real estate invest-ment trusts and telecom-munication firms. Focus on stocks that prosper when the economy is growing and inflation is ticking higher, including energy, industri-als, raw materials and tech. Consider investing 5% of your portfolio in a com-modity fund, says Paulsen. Make sure you have some money invested overseas, where markets are cheaper and economies are growing but far from overheating.

Lastly, think of the recent market mayhem as a dress rehearsal for the next bear market. If your stomach churned and you couldn’t sleep at night, it’s a sign that you need to reevaluate your stock holdings in relation to your risk tolerance and your stage in life.

INTERVIEW

HOW TO COMPLAIN

AND GET RESULTS

Keep your cool, create a paper trail and take

it all the way to the top if you need to.

dent and then the CEO. Names and e-mail ad-dresses of executives at many major companies are on my website.

If all else fails, you have two nuclear options: disput-ing the purchase on your credit card, if you used one, or going to court. Judges often side with consumers, but even if you win a judg-ment, companies some-times make it difficult for you to collect the money.

How can a customer avoid encountering a problem in the first place? If you know about the product you’re buying, there’s less of a chance that you’ll be disap-pointed later. Read the ter ms of your purchase, such as the license agreement for

a software prod-uct or the warranty on electronics or appliances. Check out product reviews. LISA GERSTNER

Christopher Elliott is the founder of www.elliot.org,

which helps consumers re-solve disputes with busi-nesses, free of charge.

What’s the most effective strategy to get a satisfying resolution? Follow what I call the three Ps. First is po-liteness. Take a deep breath, maybe wait 24 hours, and then contact the company. Avoid using emotiona lly charged language. If you say, “I’m a loyal customer, and it would make me really happy if you could address this one issue,” it’ll be much more effective than saying, “You destroyed my life, and my lawyer is preparing to file a lawsuit.”

Second is pat ience. You’ll usually get a response that will ideally solve the prob-lem within about a week. But if it’s an issue that re-quires a lot of research— say, involving an insurance claim—it could take six to eight weeks or longer.

Third is persistence. Sometimes call centers are designed to make you go away. If you hit a brick wall, try to talk to someone higher up the food chain.

What’s the best way to contact a company? Create a paper trail, which provides writ-ten evidence that you’ve tried to fix the problem.

If you can submit a com-plaint on a form through the company’s website, start there. Put your message into one paragraph, if possible. Include a short timeline of events, such as the date you bought the product or ser-vice and when the problem occurred. You’ll more likely succeed with an issue that the company can fix right away, such as a hotel offer-ing a voucher for a spa treat-ment during your stay be-cause of construction noise near your room. Go over the rules sur rounding the purchase. Some hotel rooms and airline tickets are nonrefund-able no matter what your personal circum-stances are.

And if the initial appeal doesn’t work? Write to someone a little higher up. The typical hierarchy might in-clude a cus-tomer service manager, then a vice president of customer ser-vice, then an executive vice

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I S T O C K P H O T O . C O M

12

STICKER SHOCK

CHECK ALL LIVING

COSTS BEFORE MOVING

Home prices are just one factor you should

consider when choosing a city.

IF YOU’RE A RETIREE LOOKING for a change of scenery, or you’ve been offered a job in another city, you may want to consider more than just the cost of housing.

Prices for groceries, utili-ties, health care and other necessities can also var y significantly.

For example, the average

cost of a doctor’s appoint-ment in Rockford, Ill., is $139, compared with $75 in Bloomington, Ind., ac-cording to the Council for Community and Economic Research’s cost of living index, or COLI. The general rule of thumb is that you should spend no more than 50% of your budget

PARKS GET

PRICIER

PAY TO PLAY

The National Park Service plans to more than double the peak-season entrance fees at 17 of its most popular parks, including Grand Canyon, Se-quoia and Yosemite, as early as May 1. The proposal, which is expected to be approved by the NPS, will hike fees from about $25 or $30 per carload to $70 during the park’s busi-est five months.

Only 118 of the country’s 417 national park sites charge an entrance fee, so most will still be free to enter. If you frequent national parks that charge admission, consider buying an annual pass ($80 at federal recreation sites, $85 at Store.usgs.gov/pass). Park visitors who are 62 or older can purchase a lifetime pass for $80 in person or $90 online or by mail. Current members of the military and their dependents can receive a free annual pass by showing a military ID at a federal recre-ation site that issues passes.

If you visit parks with ad-mission fees only occasionally, look for fee-free days. The Na-tional Park Service waives en-trance fees several times a year at parks that charge for admission, but be prepared for crowds. To learn more, visit NPS.gov/planyourvisit. KAITLIN PITSKER L O S A N G E L E S COMPOSITE INDEX O R L A N D O I N D I A N A P O L I S P H I L A D E L P H I A D A L L A S D E N T I S T $

_106.80

$

_79.99

$

_91.22

$

_96.14

$

_96.42

P R E S C R I P T I O N D R U G S $

_410.11

$

_449.88

$

_443.70

$

_387.28

$

_428.97

D R Y C L E A N I N G $

_9.88

$

_10.34

$

_8.62

$

_8.63

$

_8.73

B E E R $

_13.15

147.8 $

_10.60

95.3 $

_13.20

92.4 $

_12.97

117.0 $

_10.03

101.9 S T E A K $

_12.10

$

_9.24

$

_12.44

$

_11.82

$

_10.44

A SAMPLING OF

COSTS IN FIVE CITIES

FOR 2017. COMPOSITE INDEX NATIONAL AVERAGE: 100. SOURCE: THE COUNCIL FOR COMMUNITY AND ECONOMIC RESEARCH

on necessities such as housing, food and trans-portation. But relocating to a high-cost area may make this gu ideline unworkable.

The table below shows what you would pay for commonly used products and services in four cities that made the list of 20 fi-nalists for Amaz on’s second headquarters—which is ex-pected to add 50,000 jobs. We added Orlando because that area is attractive to retirees.

You can find a COLI calculator at www.pay scale.com/cost-of-living-calculator.RIVAN STINSON

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KIPLINGER’S PERSONAL FINANCE 04/2018 14 AHEAD I S T O C K P H O T O . C O M ( 2 )

CALENDAR

04/2018

SUNDAY, APRIL 1

The Centers for Medicare and Medicaid Services will begin mailing new Medicare cards that are less vulnerable to ID theft. The new cards will contain randomly

assigned numbers in place of Social Security numbers. The rollout will take up to 12 months, with old cards remaining active until December 31, 2019. Medicare beneficiaries should destroy their old card once the new one arrives.

▲

SUNDAY, APRIL 8

It’s National Library Week. Celebrate by checking out a book, either in person or through the Libby app (available for Apple and Android devices). Or take advantage of other services many local libraries offer, including coding classes, musical instrument rentals, and access to 3-D printers.

TUESDAY, APRIL 17

Today is the deadline to file your 2017 federal tax return or request an extension until October 15.

For last- minute ideas on how to lower your tax bill, see “Countdown to Tax Day,” on page 49.

MONDAY, APRIL 30

Prepare for speedier store

checkouts. All credit card networks in the U.S.— including American Express, Visa, MasterCard and Discover—will no longer require merchants to get a signature from their customers for transactions.

THOMAS H. BLANTON

* DEAL OF THE MONTH

April is a good time to book cruise deals. The hurricane season starts in June, which means the months before then are often cheaper (with-out being as high risk for bad weather). Typically, that means great deals on any unsold cruise inventory. For example, you and another person could set sail for a week to Mexico for about $600, according to DealNews.com.

YOU’VE FOUND YOUR DRE AM HOUSE AND made a winning offer on it. Now all that’s left is a transfer of funds to get you in the door. That’s when the closing-cost scam-mers strike.

Posing as real estate or settlement agents, these con artists swindled home buyers out of nearly $1 billion last year, up from $19 million in 2016, the FBI says. The scheme works like this: Thieves hack into a real estate professional’s e-mail ac-count to track upcoming transactions. When a deal’s closing date nears, they send the home buyer an e-mail that appears to come from the real estate agent or title company that’s handling the closing. The e-mail directs the home buyer to wire funds for the closing costs and the down payment to a fraudulent account.

To protect yourself from this scam, don’t trust e-mails containing money-wiring instructions. Don’t click on links or

call phone numbers provided in such e-mails, and

don’t share your financial infor-mation with the sender. Talk to your real estate or settlement agent about the closing process and wire-trans-fer protocols. Once you’ve made the transfer, confirm that the funds were received. If you’re victimized, catching problems quickly increases your chances of getting the money back. THOMAS H. BLANTON

PHISHING EXPEDITIONS

BEWARE CLOSING

COST SCAMS

Home buyers are being tricked

into wiring their money to crooks.

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is just your first line of defense.

Should disaster strike when you have little time to recover your losses, you may need to make other changes to your plan. For example, you might have to consider working longer, reducing your withdrawals, or downsizing your

retire-ment expectations.

Fixed, but flexible

A lot gets thrown at you during the de-cades you’re saving for retirement. Much of it is out of your hands. Focus on what you can control, but also be aware of the

things you can’t. That way, you’ll be ready for anything.�

I

n retirement, the less uncertainty, the better. Unfortunately, some events are impossible to predict, like changes to tax legislation or the direction of the stock market.

But that doesn’t mean you can’t pre-pare. There are some areas of retirement planning where taking action now can reduce the risk of running out of money later.

Plan for tax changes

Some taxpayers in high tax states like New York, California and New Jersey might be facing higher taxes because the tax law limits the amount of state, local and property t axes that can be deducted from federal income taxes. As a result, retirees—and soon-to-be retirees— should think carefully about where they want to live.

On the portfolio side, pay close atten-tion to the account types you use for dif-ferent investments. Your choices can have big tax consequences.

� Tax-sheltered accounts are good for

investments that pay dividends and inter-est because no tax is owed until the money is withdrawn. (If it’s a Roth, you never have to pay taxes on that income).

� Taxable accounts, on the other hand,

are better suited for investments such as growth stocks. That’s because those gains, when held in taxable accounts, are only taxed 15% or 20 % for most people.

Be smart about income

One of the new tax law’s provisions raises the income level on higher tax brackets. That will help alleviate income pressure in retirement by giving you added flexi-bility. You’ll now be able to take bigger withdrawals from IR As and 401(k)s

with-out moving into a higher tax bracket (at least until those changes expire in 2025).

In addition, municipal bonds provide

interest free from federal income tax. Bonds from your home state also give you a break on state income taxes.

Strike the right asset balance

Your mix of stocks, bonds and alternative investments, otherwise known as asset allocation, is the top driver of your portfo -lio’s long-term returns. If your goal is to grow your portfolio for retirement so that it can support you for several decades, you’ll want an asset allocation that’s his

-torically been able to achieve stronger returns. That generally points to stocks.

However, as your age and life circum-stances change, you’ll need to tweak your asset allocation. What’s appropriate

at 25 may carry too much risk when you’re in your late 50s or early 60s.

The challenge is to find the ri ght balance between an asset allocation that feels comfortable and one that can outpace inflation, so you can maintain your purchasing power throughout your

retirement.

Make contingency plans

Retirement planning isn’t just about what you invest in, it’s also about timing. Just

ask anyone who planned to leave the workplace in 20 08 or 200 9. Even those who had an appropriate asset alloc ation

still saw their portfolio values fall due to the severe financial crisis.

Of course, it’s nearly impossible to pre -dict when the next bear market will strike. And that’s why an asset allocation that matches your age and time horizon

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