FINANCE & TECH Archives - The Prefectures

Does Kamala Harris Support Student Loans Forgiveness?

January 9, 2022 Daily Comments Off

Here’s what Vice President Kamala Harris could mean for your student loans.
Here’s what you need to know.

Student Loans
Since last year, student loan borrowers have been wondering where President Joe Biden stands on student loan cancellation. They’ve asked questions like:

Will Biden cancel your student loans?
Will Biden extend student loan relief?
Will I get student loan forgiveness?

With congressional leaders focsued on pressuring Biden to enact wide-scale student loan forgiveness, there’s another principal who also has important opinions on student loans. Harris, a former U.S. senator (D-CA) and presidential candidate, has proposed several reforms to student loans and higher education. Let’s explore. (What Biden’s last student loan relief means for your student loans).

Student loans: student loan cancellation up to $20,000
Is student debt cancellation next? As a presidential candidate, Harris proposed to cancel up to $20,000 of student loan debt. Under Harris’ plan, student loan forgiveness would not be available to everyone. Rather, Harris sought to make student loan forgiveness available to certain borrowers. For example, borrowers who received Pell Grants, which are available to low-income students to help pay for college, could receive student loan forgiveness if they started and ran a business for at least three years in a disadvantaged community. The goal was to help spur economic stimulus in disadvantaged opportunities, encourage entrepreneurship, and to forgive student loans. (Biden extended student loan relief, but advocates really want student loan cancellation).

Student loan cancellation: not for everyone
As a moderate U.S. senator and presidential candidate, Harris did not support cancellation of all student loans. Sen. Bernie Sanders (I-VT) proposed cancellation of all $1.7 trillion of student loans, including all private and federal student loan debt. That said, Harris, like Biden, supports up to $10,000 of student loan debt cancellation. (Student loan borrowers will get $15 billion of student loan cancellation). As vice president, Harris has said that the student loan crisis “is real” and recognizes the need to find solutions. Similarly, while Senate Majority Leader Chuck Schumer (D-NY) and Sen. Elizabeth Warren (D-MA) proposed student loan forgiveness up to $50,000, they too don’t support total cancellation of student loans. Under their plan, Schumer and Warren would limit student loan forgiveness only to federal student loans and for borrowers who earn up to $125,000 annually. (Here’s who qualifies for student loan forgiveness right now).

Student loans: Harris supports tuition-free college
One way Harris has proposed to lessen the burden of student loans is to make two-year college tuition-free. Specifically, Harris has supported:

tuition-free college at two-year and four-year public colleges and universities for borrowers who earn up to $125,000 in annual income; and
doubling the maximum Pell Grant award.

Sanders and Warren both championed tuition-free college in the U.S. Senate and on the presidential campaign trail. Like wide-scale student loan cancellation, Congress has yet to pass tuition-free college. (If you’re waiting for student loan forgiveness, do this).

Harris also would cancel student loans for these student loan borrowers
Harris, like Biden, has advocated for cancelling student loan debt for student loan borrowers at at Historically Black Colleges and Universities (HCBU’s) and Minority-Serving Institutions (MSI’s). “In relation to the history of HBCUs, [students] decide to take on a profession of service, which often does not pay as well as if they go into the private sector and do other things,” Harris said. “So for those students who come out and have jobs that pay less than $125,000, student-loan debt will also be forgiven.”
Over the coming months and year, Harris, with Biden, could play a key role to shape the future of student loans, student loan forgiveness and student loan relief. The most recent extension of student loan relief for 90 days is one example. However, student loan relief won’t last forever. It’s also possible that Congress won’t pass legislation that reforms student loans. Until then, make sure you understand your options for student loan repayment.
Here are some popular ways to pay off student loans faster:

Student loan refinancing (lower interest rate + lower payment)
Income-driven repayment plans (lower payment)
Public service loan forgiveness (student loan forgiveness)

Student Loans: Related Reading
Is student debt cancellation next?
Student loan borrowers will get $15 billion of student loan cancellation
Do this while waiting for student loan forgiveness
Biden extended student loan relief, but advocates really want student loan cancellation […]

Financial Stress is REAL. Here is what to do about it…

January 9, 2022 Daily Comments Off

Are you feeling stress these days? Perhaps financial stress? You’re not alone. Some 55% of women, ages 30 to 55, with minor kids and household incomes less than $60,000 a year, report “high” or overwhelming” levels of financial stress. They aren’t the only ones experiencing high or overwhelming stress. So what is causing this stress?
Causes of financial stress
In his 2020 blog post, Jim Yih, a Canadian Financial Advisor highlighted seven causes in his blog post, 7 Causes of Financial Stress:

High debt levels.
Low savings rates
Volatile Stock markets
Real estate won’t be our financial savior
Demographics means more fear
The financial marketplace is increasingly complex
No formal education on money

Let’s examine debt, savings, and education further. Many people have the best of intentions to pay the debt. Unfortunately, many of those intentions were clouded by short-term desires or calamities. After the debt was added, then a breadwinner may have lost a job or a payment was missed while juggling other life issues.

Then ‘wham o!’, the interest rate doubled or even tripled overnight. An emergency fund seems like a nice idea but where would the funds for that come from?
Start saving into your retirement plan

If you are like 50% of Americans with workplace retirement plans, you aren’t saving into it. If you are participating and your company offers a match, you’re not getting the full match. You may have either taken a loan on your 401(k) or depleted it and suffered the 10% penalty when a short-term need arose.

There is no formal education in the schools about money. There is a hope by some policymakers and voter, that your parents had good financial saving and spending habits, was an expert in comprehending disability and life insurance, and actuarial retirement calculations. Yeah right!

Who’s teaching you about money? Herein lies the root of the problem. There is little formal financial education in the school system. There is very little offered in the workplace.
So many people have to learn from friends or family but that creates its own set of problems because many of them don’t have the knowledge, ability, or resources to teach others about money.
Financial stress is all too common in our society and we need to do something about it. The starting point is a little knowledge but true success comes from action. It comes from taking control of your financial affairs and developing good financial habits.
A financial stress reliever
While financial education is great, it is time-consuming and doesn’t in itself provide a calming voice for your financial stress if it comes from reading books. If you are getting your education from the media, they may have conflicts of interest and are not held to the same standard as a financial professional registered with the SEC or FINRA.
Moreover, what financial education should you start with?
If you are like most people you need an accountability coach and maybe someone to help you figure out how to pay down the debt. A lack of a sense of control is a primary factor for those employees reporting high or overwhelming financial stress. A CERTIFIED FINANCIAL PLANNER™ professional (CFP®) can help you get control.
Look for a CFP® professional who has a breadth of knowledge in financial fundamentals like setting up a cash reserve, developing a spending plan to address your debt.
If you are one of those stressed-out moms, they can help you address college planning and choosing a guardian for your child should something happen to you. This designation is one of a few accredited designations highlighted on the FINRA website.
f you are one of those stressed-out moms, they can help you address college planning and choosing a guardian for your child should something happen to you. This designation is one of a few accredited designations highlighted on the FINRA website.
A CFP® to combat financial stress
A CFP® professional takes an oath to keep your financial interests ahead of their own. All CFP® professionals aren’t clones so you should spend some time learning about their business practices and themselves.
For example, some charge a flat fee for all of their services, some charge an hourly rate, and some a fee for planning and a fee for monies you invest with them. Look for one who is empathetic and understands behavioral finance!
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. […]

Should I Pay Off My Mortgage?

January 9, 2022 Daily Comments Off

If you have a question like this one, send it in. I’ll tackle case studies that have educational value.

“I am anxious to pay off my mortgage since, with the current standard deduction, there is no advantage in claiming mortgage interest.
“My wife and I are retired. I am 72, with a pension along with Social Security, and have $850,000 in my IRA. I have a mortgage balance of $134,000. To get that after tax I would have to take a distribution of $185,000, which obviously will reduce my portfolio dramatically.
“Is this a good move? My return on investment with Fidelity has been 10-15 percent annually with a 60/40 mix of stock and bond funds.”
Michael, Missouri
Readers send in queries like this. I’m going to be answering the ones that illustrate tricky tax and investment decisions.
My answer to the Missourian:

Good move? Probably. Retirees should pay off their mortgages. You’re lucky to be in a position to do that.
For many people, no doubt you included, taking out a mortgage in order to get into a house turned out to be a good decision. But we have to deconstruct home ownership. A mortgaged house is two things, an asset and a liability. Having a house is a good investment. Having a mortgage is a bad investment. The goal of a retiree should be to have a house without a mortgage.
The 40% of your IRA in bond funds means you are a lender. If the funds track the U.S. bond market then a good portion of your savings is being lent out, at low rates, to the U.S. Treasury. This part of your portfolio is earning 2% at best. Your mortgage is probably costing you 3% or more.
Borrowing at 3% in order to lend at 2% is a bad idea.
Two things cause people like you to hesitate before cashing in an IRA in order to pay down a debt: the taxes they’d owe and the IRA returns they’d miss.
Yes, the IRA withdrawal means writing out a check to tax collectors. You’re probably in a 27.4% bracket (state and federal combined), so you’re going to owe $51,000 on a $185,000 withdrawal.

But taxes on this money are inevitable. If you are past 59-1/2 (the cut-off to avoid penalties) and not expecting to see your tax bracket go down, postponing the inevitable does not leave you better off. If the IRA grows, so do the tax bills.
The arithmetic becomes clearer if you rethink what an IRA is. Where you see an $850,000 asset, I see something different. I see you as the custodian for an account that has two beneficiaries. You’re sitting on $617,000 that belongs to you and also on $233,000 that already belongs to tax collectors.
Look at what growth does to this account. If, for example, you’re able to double the portfolio at Fidelity, the account will then have in it $1.7 million. Of this, $1,234,000 will belong to you and $466,000 will belong to the tax guys. You’ve doubled your money and you’ve doubled the government’s money.
In effect, what you have is not an $850,000 asset but a $617,000 asset that’s all yours and that grows tax-free.
What, then, are you sacrificing when you take a big distribution? Assuming you take it out of the bond portion of your portfolio, you’re losing a return that comes to 2% pretax and, thanks to the wonders of IRAs, the same 2% after taxes.
And what are you gaining by ripping up the mortgage? You’re getting a guaranteed return of 3% before taxes. Thanks to the wonders of the standard deduction, you’re not deducting interest and that 3% mortgage is costing you the same 3% after taxes. So getting rid of a mortgage earns you 3%.

There it is. Paying off the mortgage costs you an aftertax 2% and earns you an aftertax 3%. It’s a winning move. It would still be a winner, albeit a more modest one, if tax rules change and you go back to deducting interest.
Now let’s tackle the other reason people stick with 3% mortgages, which is that they are investing money to earn 10% or 15%. This is a faulty comparison. High returns come from risky assets like stocks. The mortgage is a sure-thing liability (you can’t duck the debt), so it must be compared to a sure-thing asset (a loan to the U.S. Treasury).
The apples-to-apples comparison comes into sharper focus when I hypothesize that your entire $185,000 withdrawal comes out of low-risk bonds. At this first stage of your financial makeover, then, the stock funds aren’t touched.
Now you take a look at what’s left and see a Fidelity account that has a high percentage in stocks. Is that allocation too high? Maybe, maybe not. But that’s a separate discussion.
Selling bonds to pay off a mortgage leaves you better off no matter what happens to the stock market. Meanwhile, whether you have too much money in the stock market is an independent decision that shouldn’t influence your thinking about the mortgage.
Unlike comparing 2% to 3%, determining the correct level of risk for a 72-year-old is not a question that has a clear answer. Taking money out of stocks would lower your expected return but might be wise anyway. What are your living costs and how well are they covered by pensions and Social Security? Would your retirement survive a stock market crash with the portfolio you have now? Have a talk with your wealth advisor about this.

Whatever you do, don’t compare 10% stock market returns to 3% mortgages.
I said, above, that the mortgage paydown is probably a good move. Now here are some things to be cautious about.
First, your tax bracket. You may need to carve up the $185,000 distribution into thirds, spreading it over 2022-2024, in order to avoid being kicked from a 22% federal rate into 24%.
Next, your near-term plans. Any chance you’ll be moving to Texas or Florida? If so, hold off on excess distributions until you’re out of reach of the 5.4% Missouri tax.
Last, your end game. Is there a good chance that a diminished IRA will run dry while you’re still healthy enough to live independently? Would you at that point be averse to moving out—to a rental or to a smaller house—in order to extract some cash? And would you, in order to stay put, probably use a reverse mortgage to cover monthly expenses? If this outcome is likely, and if your existing mortgage has a lot of years to run, you should perhaps hang onto it. Its terms are much better than anything you’d get on a reverse mortgage down the road.
Do you have a financial situation like this? Send a description to williambaldwinfinance—at—gmail—dot—com. Put “Query” in the subject field. Include a first name and a state of residence. Include enough detail to generate a useful analysis.
Letters will be edited for clarity and brevity; only some will be selected; the answers are intended to be educational and not a substitute for professional advice. […]

Indian Car Sales To Overtake Chip Shortage And Coronavirus Stricken Germany’s; Report

December 6, 2021 Daily Comments Off

More cars will be sold in India this year and next than in Germany, thanks to European shortages in semiconductors lasting into the first half of 2022 and the latest version of the coronavirus now causing much disruption to sales in Europe, according to a report by the Center for Automotive Research (CAR).
Don’t expect a full-throttle global recovery until 2023.
Over the years, the automotive industry has traditionally battled overcapacity and seen its profitability threatened by manufacturers seeking to offload a surplus of vehicles sometimes at any price. Now, as demand has revived following the long coronavirus shutdown, the reverse is true, as buyers clamour to replace old vehicles and find supply thin and long waiting lists.

Not surprisingly, profits for mass car makers like VW crumbled as sales dived, but paradoxically premium manufacturers like BMW, Mercedes and Tesla

TSLA
were able to concentrate on selling high margin cars and SUVs. High demand meant little pressure to cut margins to encourage sales and overall profits were boosted.

Duisberg, Germany-based CAR said global sales will rise 3% this year to 70.5 million after falling 14% the previous year. Sales in Germany will slide 8% to 2.7 million, while India’s will jump 20% to 2.9 million. Sales in the U.S. will gain 4% to 15 million and China’s will be up 2% to 20.2 million.

The pre-pandemic peak of 79.7 million won’t be achieved by 2023, but this might be approached in 2025.
Things will start to turn around next year as German sales advance to 3 million, U.S. and China rise 5%, while India slows to 5% growth and 3.1 million.

Electric cars will give a big boost to German sales in 2023.
“It’s (the global car market) currently a rare phenomenon. The supply side of the market is paralyzing. Overcapacity has caused problems in the last 30 years. There are currently production downtimes due to the side effects of the coronavirus pandemic, delivery bottlenecks for semiconductors, logistic turbulence, and increases in raw material prices. A full recovery is unlikely to take hold until 2023,” CAR director Professor Ferdinand Dudenhoeffer said.

“Only in the 2nd half of 2023 can one expect strong double-digit growth in the German car market,” Dudenhoeffer said.
“It remains to be seen whether Germany can overtake India again. In 2023 the supply backlog in Germany will be resolved, while with the average age of German cars and SUVs more than 10 years, high new vehicle sales are expected and electric cars will driving the wave of renewal,” he said.
Meanwhile, the total value of German car sales is likely to remain well ahead of India’s for a while yet.
Maruti Suzuki has close to a 50% market share in India, followed by Hyundai Motor India, Mahindra & Mahindra, and Tata Motors. […]

What’s Next For Bitcoin After It Fell To $42,000 And Recovered?

December 6, 2021 Daily Comments Off

Bitcoin prices have suffered some intense volatility lately, falling to their lowest since September.
The digital currency reached $42,019.86 yesterday, CoinDesk figures show.

At this point, the cryptocurrency was down close to 40% from the all-time high of nearly $69,000 it reached last month, additional CoinDesk data reveals.
When explaining this sharp decline, several analysts pointed to spot selling. The downward price movement that resulted fueled a long squeeze, creating further losses, CoinDesk reported.
Since that time, the digital asset has bounced back, repeatedly moving toward $50,000 both yesterday and today.
[Ed note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]

Following these latest price movements, several technical analysts weighed in on the key levels of support and resistance that market observers should watch going forward.
Crucial Resistance Levels

Ben McMillan, CIO at IDX Digital Assets, commented on the matter, stating that “$50k will be a key psychological level that bitcoin bulls will be eyeing to see if bitcoin can bounce back into $50k territory quickly and hold.”

“After that, $53k has been the key level that saw some resistance back in September as well as during the rally in October,” he stated.
Armando Aguilar, vice president of Digital Assets Strategy for Fundstrat Global Advisors, also pointed out the key levels bitcoin could hit if it keeps rising.

“Tradingview.com indicators show us that [the] resistance area is at $52k – $53k, if resistance breaks those levels we see the next resistance level coming around $57k-$58k.”
Aguilar also spoke to recent improvement in the Relative Strength Index, a momentum indicator that analysts use to get a better sense of whether an asset is either oversold or overbought.

“RSI saw a higher low despite the market downturn,” he stated. “This is important because it provided a good sign for the speed of recovery.”
Important Support Levels
Experts also shed some light on where bitcoin could go if traders push it lower.
“As predicted, after breaking below the daily Ichimoku cloud, Bitcoin’s price touched on two out of three key psychological levels traced by Fibonacci on Saturday before correcting some of the losses,” said Kiana Danial, CEO of Invest Diva.
The indicator she mentioned, the Ichimoku cloud, takes several averages and incorporates them into a single chart, which then displays an asset’s trend, momentum, support and resistance.
“On Sunday, the BTC/USD pair opened below the 50% Fibonacci retracement level of $49,500,” she stated. “This indicates the bearish momentum has not completely stopped yet.”
“The key support levels following the Fibonacci retracement strategy are now at $44,800 and $40,700, with the neckline of the potential long-term double top chart pattern laying on $31K.”
McMillan also commented on important price levels the world’s most prominent digital currency could encounter if it pushed lower.
“On the downside, $47-$48k is the support level that bulls would want to see hold. If bitcoin breaks back below that threshold, then it could re-test $40k-$42k quickly,” he stated.
Aguilar also offered some input on the matter, noting that “Traders should keep a close eye on resistance levels of $52k – $53k as it may lead to market over reaction and retest levels in the mid $40ks.”
Katie Stockton, the founder and managing partner of Fairlead Strategies, LLC, provided additional perspective on bitcoin’s recent price movements and outlook, suggesting that traders use a “wait and see” approach in a tweet she posted yesterday.
“An overnight downdraft has #bitcoin below widely watched $53K support – rarely a good idea to sell into this kind of move, rather wait to see if the breakdown is confirmed (we will know by Monday),” she wrote.
Disclosure: I own some bitcoin, bitcoin cash, litecoin, ether, EOS and sol. […]

Billionaire Hui Ka Yan Gets Help From Guangdong Government Amid Evergrande Debt Crisis

December 6, 2021 Daily Comments Off

Hui Ka Yan, the chairman of embattled property developer Evergrande, was summoned by the provincial government of Guangdong late Friday night, after the deeply indebted company warned on the same day that it may not be able to meet its financial obligations.

Hong Kong-listed Evergrande, now close to collapsing under more than $300 billion in total liabilities, sought help from the southern province, according to a short post published via its website. Authorities in Guangdong, where Evergrande is based, agreed to dispatch a “work group,” and help the company “resolve risks, strengthen internal control and sustain its normal operations.”
The Guangdong government also “paid close attention” to Evergrande’s latest warning, the post says. In a stock exchange filing on December 3, the company said it had received a demand to pay creditors in the amount of $260 million.

“In light of the current liquidity status of the group, there is no guarantee that the group will have sufficient funds to continue to perform its financial obligations,” Evergrande said in the filing.

“In the event that the group is unable to meet its guarantee obligations or certain other financial obligations, it may lead to creditors demanding acceleration of repayment,” the company added.

Chinese authorities, in the meantime, have been busy issuing statements intended to reassure investors. Regulators at the China Banking and Insurance Regulatory Commission, China Securities Regulatory Commission, as well as the country’s central bank, the People’s Bank of China, have all recently published separate statements related to Evergrande.

For example, the central bank said in an online statement that it would work with the Guangdong government and relevant government departments to help resolve risks and promote the “stable and healthy” development of the country’s property market.

“Evergrande’s crisis is mainly a result of its own mismanagement and blind expansion,” the PBOC said in the statement. “The risks of individual companies won’t affect normal market fundraising in the mid to long term.” […]

A Smart 6% Dividend Strategy For The Omicron Era

December 6, 2021 Daily Comments Off

The Omicron variant is here—what does it mean for us dividend investors?
Simple—we’ll simply do the same thing we did the last time COVID spooked markets: buy tech-focused closed-end funds (CEFs) with huge payouts!

Members of my CEF Insider service will remember that we did just that in March 2020, at the trough of the market’s initial pandemic plunge, buying the BlackRock Science & Technology Trust II (BSTZ) when it yielded 7.3% and traded at a 6.6% discount to NAV. We then rode it to a nice 21% total return in just two months!
Our first hint that tech is the right thing to buy now is came in last Friday’s chaos, in which all countries saw their markets dip, but interestingly only the tech-focused NASDAQ 100

NDAQ
(QQQ)

QQQ
fell less than 2%

That’s telling, because if governments around the world institute new shutdowns, the last sector to suffer will be tech. Remember that tech was a beacon for investors throughout the pandemic, with the benchmark Invesco QQQ Trust (QQQ) eclipsing the S&P 500 coming out of the March 2020 crash.

If Omicron is bad enough to bring back lockdowns, tech will be less affected because lockdowns leave people more dependent on technology for the basics in life. And if Omicron turns out to be not as bad as scientists are worried it may be, tech still stands to gain, because it has become an increasingly integral part of our everyday lives.

If you’re looking to play the rise of tech and still hedge against volatility, consider a CEF called the Nuveen Nasdaq 100 Dynamic Overwrite Fund (QQQX).
This 6% yielder gets you exposure to the same stocks in the NASDAQ 100 index—large caps like Apple

AAPL
(AAPL), Microsoft

MSFT
(MSFT) and Alphabet (GOOGL)—but with a twist: QQQX sells call options (contracts giving buyers the option to buy its holdings in the future at a higher price) on its portfolio in exchange for cash, which it then hands off to investors.

Those option contracts’ value goes up when volatility rises, which is why QQQX beat all of the indexes from the very start of the selloff to a few weeks later, when markets began to adjust to the new COVID reality.

This demonstrates why selling and going to cash in a panicked market is the worst thing you can do. Instead, we want to capitalize on a pullback while hedging our returns with high dividends and smart approaches like QQQX’s option-selling strategy, which performs best in stormy markets. That makes QQQX a good way to play the Omicron wave—at least for a short while until we know whether it’s really going to be disruptive or not.
Michael Foster is the Lead Research Analyst for Contrarian Outlook. For more great income ideas, click here for our latest report “Indestructible Income: 5 Bargain Funds with Safe 7.3% Dividends.”
Disclosure: none […]

Biden Won’t Cancel Student Loans Before Student Loan Relief Ends

December 6, 2021 Daily Comments Off

President Joe Biden likely won’t cancel student loans before student loan relief ends.
Here’s what you need to know — and what it means for your student loans.

Student Loans
Progressives in Congress and other student loan activists are increasing pressure on Biden to enact wide-scale student loan cancellation before temporary student loan relief as a result of the Covid-19 pandemic expires on January 31, 2022. However, don’t expect student loan cancellation for all your student loan debt. While Biden has cancelled $11.5 billion of student loans this year, progressives say it’s a small fraction of the $1.7 trillion of total outstanding student loan debt. (3 things to do for your student loans right now). Some activists want up to $50,000 of student loans cancelled for each borrower. Others advocate for total student loan cancellation. Despite these repeated calls — which have ranged from in-persona rallies to online conferences to social media posts — it appears that Biden likely will not cancel student loans for every student loan borrower before temporary student loan relief ends. That said, Biden may continue to cancel student loans on a targeted basis. (For example, the Education Department announced $2 billion of student loans will be cancelled within weeks).

Student loan forgiveness: mixed message hurts the cause
While progressives champion “student loan forgiveness” or “student loan cancellation,” there are disparate and often conflicting messages that complicate the overall message. While progressives are united on the idea of cancelling student loans, different voices express different perspectives. For example, it’s not uncommon to find proposals from legislators and advocates that include, among others:

Cancel all student debt
Cancel $50,000 of student loans
Cancel up to $50,000 of student loans
Cancel up to $50,000 of student loans, but only federal student loans for borrowers who earn up to $125,000.

(Here’s who qualifies for student loan forgiveness right now). While legislators are entitled to their own opinions, it would be more effective to agree on a specific, unifying principle. For example, Senate Majority Leader Chuck Schumer (D-NY) and Sen. Elizabeth Warren (D-MA) support the final proposal, which is the leading proposal in Congress. (These borrowers don’t qualify for limited student loan forgiveness).

Student loan cancellation isn’t zero sum game
Progressives in Congress are intently focused on $50,000 of student loan cancellation. There doesn’t appear on any wavering or compromise on this number. Their main strategy is to “pressure” Biden to cancel student loan debt through an executive order. (How to apply for student loan forgiveness during the Biden administration). Congress won’t pass legislation — or even hold a vote — to enact student loan cancellation. Biden has said for years now that he doesn’t support cancelling up to $50,000 of student loans. He has consistently supported up to $10,000 of student loan cancellation for student loan borrowers, has Congress to pass legislation, and said he would gladly sign a bill. The president has acknowledged repeatedly that he doesn’t have the executive authority to cancel everyone’s student loans. (Here’s how to qualify for automatic student loan cancellation). Speaker of the House Nancy Pelosi (D-CA) has echoed this position, noting that the president doesn’t have such authority; only Congress does. So, why are progressives in Congress continuing to focus on $50,000 of student loan cancellation? It’s important to stick to principles and defend your position. However, if their goal is to get wide-scale student loan cancellation in the next two months, this seems like a futile attempt to reach consensus. (Prepare for the end of student loan relief). Some may argue that the president also could compromise his position. However, Congress makes laws and authorizes federal spending, not the president. If progressives in Congress want student loan cancellation for their constituents, a more pragmatic approach both on the amount of student loan cancellation and an alternative legislative pathway to student loan forgiveness would be practical. Otherwise, a stalemate will continue. (How to apply for limited student loan forgiveness).

What this means for your student loans
This has important implications for your student loans. While Biden could change his position any time, it’s unlikely that Biden will cancel student loans before temporary student loan relief from the Covid-19 pandemic ends. This means that you should expect to restart federal student loan payments beginning February 1, 2022. You should also develop a game plan for student loan repayment. Now is the time to take control of your student loans and fully understand all your options to pay off student loan debt. Here are some popular ways to pay off student loans and save money:

Student loan refinancing (lower interest rate + lower monthly payment)
Income-driven repayment plans (lower payment, but same interest rate)
Public service loan forgiveness (student loan forgiveness for public servants)

Student Loans: Related Reading
How to qualify for automatic student loan forgiveness
How to apply for limited student loan forgiveness
Education Department will cancel $2 billion of student loans
Here’s who qualifies for student loan forgiveness right now […]

As Nadella, Musk, And Bezos Sell To Pay Less Tax, Buy Microsoft Stock

December 6, 2021 Daily Comments Off

The NASDAQ Composite has lost 7% of its value since peaking at 16,212. This drop has accompanied big stock sales by Microsoft CEO Satya Nadella, Tesla CEO Elon Musk, and Amazon Executive Chair Jeff Bezos.

Is that drop a sign that we are in for a major tech stock downturn — along the lines of the 77% plunge in the NASDAQ between October 1999 and July 2002 (when it bottomed out at 1,160)?
Or is it a buying opportunity caused by CEOs dumping their shares in advance of higher tax rates on their capital gains?
I don’t know the answer, but I am holding on to my stocks as I did during the NASDAQ crash and all the stock market breaks since.
The reason is simple — when stocks sell off, investors eventually seem to conclude that compared to the alternatives, stocks are the best place to put your money over the long-term. Since I can’t pick market peaks or floors, I hold on through the painful declines.

If forced to choose — I favor the scenario that investors will start off 2022 with the idea that stocks are a better place than cash or bonds for their money. I don’t see the recent downturn as the beginning of a two year plunge in the value of tech stocks.

Comparing Microsoft, Amazon, and Tesla, I would be most comfortable betting on Microsoft.
(I have no financial interest in the securities mentioned).

Some Tax Rates To Rise in 2022
Washington State has passed a new 7% capital gains tax that goes into effect at the beginning of 2022. The new tax imposes a 7% tax on capital gains over $250,000, according to the Seattle Times.

What’s more Federal taxes could also increase for high earners. As CNBC reported, The House has proposed a new 5% surtax on income over $10 million and 8% on income over $25 million.

How Tech CEOs Are Responding To Higher Taxes on Their Stock Profits
Corporate insiders have sold a record amount of stock in 2021 and the leading sellers are technology CEOs.
As CNBC reported, the combination of high stock prices and looming tax increases, drove corporate insiders to sell $69 billion in stock in 2021. As of November 29, that total represented a 30% increase from 2020 and a 79% jump above the 10-year average.
Nadella dumped more than half his shares last month in a $285 million transaction which CNBC estimates saved him up to $20 million in state taxes.
A Microsoft spokesperson said Nadella sold the shares “for personal financial planning and diversification reasons,” and added that Nadella, who is also company chairman, “is committed to the continued success of the company and his holdings significantly exceed the holding requirements set by the Microsoft Board of Directors,” according to the Seattle Times.
Bezos sold around $3.3 billion in Amazon shares in November. By selling before January, Bezos could save up to $700 million in Washington state taxes, noted CNBC.
So far in 2021, he’s sold a total of $9.97 billion in Amazon stock. That’s about the same level of sales as in 2020 — but four times more than he sold in 2019 and “far higher than his sales of $1 billion a year in earlier years,” noted CNBC.
Meanwhile, Musk has sold more than $10 billion in Tesla stock, according to Fortune, with the intent to sell 10% of his stake. His aim is to use the sale proceeds to pay taxes “amid continued pressure from U.S. lawmakers like Sen. Bernie Sanders that billionaires pay ‘their fair share.’”
Shares of all three of these companies are well-below their highs. Microsoft shares are down 8% from their November 22 peak; Amazon trades 10% below its high while Tesla has dropped 19% from its all-time high.
Prospects For Rapid Growth Look Best for Microsoft
Of the three companies, Microsoft looks to be the one with the most predictable and rapid stock market growth. Sporting a $2.53 trillion market capitalization, up about 780% since he was appointed CEO, Microsoft stock has gained more than 50% in 2021.
In the third quarter, Microsoft revenue rose 22% to $45.32 billion — about $1.3 billion ahead of analysts’ expectations. For the current quarter Microsoft forecast $50.6 billion in revenue — about $1.7 billion more than the analyst consensus, according to CNBC, and 17% more than the year before.
Tesla has done well — but its stock market performance has been much choppier. Musk gets no salary and is paid solely stock-based compensation. To pay his bills, Musk has been borrowing money — pledging his shares as collateral.
Musk controls about 22% of Tesla’s outstanding shares awarded in a 2012 incentive package. Since then, Tesla’s market capitalization has soared from $3.2 billion to more than $1 trillion. This year, Tesla stock has risen about 49%.
The strike price on his options is $6.24 — about 99% below its current price. Unless he exercises the options by next August, they expire. So he is in the middle of exercising and selling them — using much of the proceeds to pay his taxes, noted Fortune.
Tesla delivered expectations beating growth for its third quarter. According to CNBC, Tesla reported $13.76 billion in revenue — $150 million above Refinitiv expectations and about 57% more than the year before. Net income of $1.62 billion was 388% more than the $331 million Tesla earned in Q3 2020.
Amazon is really slowing down. Its shares are up a mere 6.4% so far in 2021. On October 28, Amazon fell short of investor expectations and forecast an even worse fourth quarter. According to CNBC, third quarter revenue rose 15% to $110.8 billion — about $810 million short of analysts surveyed by Refinitiv while earnings per share of $6.12 were 31% below expectations.
Amazon forecast fourth quarter revenue growth that was way below analysts’ estimates. Amazon predicts revenue to rise in a range between 4% and 12%, the midpoint of which — $135 billion — is $7.2 billion short of analysts’ expectations for 13.2% growth.
Microsoft looks to me like the safest bet of the bunch with Tesla continuing to drop at least until Musk is done selling to pay his taxes and Amazon stock on hold until it can post much faster revenue growth. […]

Public App Review: Free Stock Market App With Fractional Shares

July 15, 2021 Daily Comments Off

Platform FeaturesMany newer investing apps are severely limited in what you can do, but Public actually offers some great functionality.You can buy any stock regardless of its share price, and the platform also has some interesting educational and social features that can help investors of all experience levels. Buying Partial Share Slices – Fractional SharesWith the traditional stock market model, to buy a share, you need to pay the full share amount and receive a percentage of the company. While this usually works fine for most investors, there are some great companies that have incredibly high stock values. Google, Amazon, and other giants can command thousands of dollars per share. So for small time or newbie investors it may not be an option to buy even a single share of stock in these companies. Public works a little differently. This platform allows you to invest whatever you can afford. So, if you have $100, you can buy a $100 slice of one share, allowing you to invest in your favorite companies without the high dollar barrier to entry. Public does also allow you to buy full shares of stock. When you do this, you can access market, stop order, and limit types. This allows you to trade more extensively. Share slices just provide a unique bonus for the platform. Instant, Real Time Fractional StocksGenerally, many investment brokers will queue up orders for fractional shares of stock. They may only put them through once a day or even once a week. This can create a problem of a lack of accuracy on the price you receive when you buy the stock. So, you wont know the precise price you are working with until the buy order goes through.Public, however, is a little different as it immediately executes your stock order. This allows you to see in real time the price you are getting, which will give you a more accurate picture. Additionally, Public will also reinvest your dividends if you ask, so you can increase your earnings by quickly reinvesting your money, instead of letting it sit dormant in your account.Friendly Categorization Of StocksFor many new investors, looking at a list of stock options can be daunting. Since you may not be familiar with the stocks, they may appear to be in a strange order that doesn’t appear logical. This is because the stocks are arranged by industry. So, you need to know how a company is categorized to find it. However, Public has turned this on its head. On the app, the stocks are organized into themes, creating more user friendly categories. So, if you are interested in new age industries or female led companies, you can quickly browse these sectors and invest in companies of interest to you. Just some of the examples of the themes, include New Kids on the Block, Bio-Tech, Cannabis, and The Future is Female. Social InvestmentAs we touched on above, Public takes its name from the social investment aspect that its platform has. Public has a large community forum where traders can ask questions or make comments about trade related issues. You can share your experience or ask questions from people with some direct experience in the specific category. This creates a social aspect where you can get insight and feedback to enable smart trading. This social feed can be a real game changer. Historically, financial institutions are closed off from a free flow of information about the investment approach taken by other users. Since you can follow people on Public and see their portfolios, you’ll be able to get some really good information and insight into how others are investing. Of course, you’ll want to make sure you establish whether someone you follow is reliable before you take note of any tips or make major investments. But, the platform will give you an overall feel that you are not going it alone. Investing can feel like a jungle filled with aggressive investors who dominate while the little guy struggles to get ahead. For newbies, this can be intimidating. Public can help you to feel that you have some support and guidance to help you over your first few hurdles as you’re learning to invest. Chat SupportLike many free stock app options, Public does not have physical locations where you can speak face to face with a broker. However, the platform does provide chat support. This provides access to the customer support team if you have an investing questions or technical issues using the app. Referral ProgramOne of the nice features of Public is that it has a generous referral program. When you sign up you’ll receive a referral link, and when someone you refer signs up, you’ll receive a slice of stock. Additionally, your friend will get one too. Currently referrers and referees will receive a free stock worth up to $15.To get your referral link go to the gift icon in your app, select to “copy invite link” and then send that referral link to your friend, family member or acquaintance. Once they have established a “qualified account” through your link, you’ll both get your free stock.See the Public FAQ site for full referral program details.The Pros and Cons of PublicAs with any financial platform or product, Public is not perfect. There are both pros and cons that you should assess to make an informed decision about whether it is a good choice for your specific needs. The Pros:Free Investing: The biggest pro for Public is that it is completely free to use. Of course, this will be appealing for first time investors who only have small amounts to buy shares. However, it will also benefit the savvy investor who doesn’t want to pay exorbitant fees and commissions. Public allows you to invest, trade money in, and take money out without paying a penny. Bear in mind that some advanced features such as order flow payments or share lending will attract a fee. Investment Community: Public helps you to feel that you are not alone on your investment journey. There is both chat support and an investor community. This can help you navigate your first time investments and gain insight into some more advanced options. Real-Time Fractional Stocks: Public is quite unique as it also offers real-time fractional investing. While Acorns, Betterment, or Robinhood may offer fractional shares or free commissions, they don’t typically combine both features.Ample Investing Information: Many free investment apps have very basic information. However, Public aims to help you learn more about investing, including seldom discussed topics. This includes areas such as best practices and investment trends. There is even background information on individual companies. So, it can help you if you want to invest while supporting a cause.The ConsStill A New Company: Public has only been operating for a few years, and while the company does seem to be promising in what it offers, it doesn’t have a decade long (or longer) track record to show that they’re around for the long haulUSA Only: Public is currently only available to residents of the USA. If you’re in other areas of the world, you will be unable to open an account. Getting StartedIf you like what you’ve read so far and want to get started, rest assured that Public aims to make the sign up process as easy as possible.The entire process starts by downloading the app. The app is available for both Android and iOS devices. Just visit the website through our link below, enter your cell phone number, and then download the app on the device of your choice. The company is constantly releasing updates and improving the app.You can do download it here:Create a ProfileAfter you download the app, you’ll need to answer some basic questions.Public will ask you for information such as your name, social security number, bank details, and age. Bear in mind that you need to be 18+ to open an account. Choose Stocks To Start Real Time TradingPublic has over 5,000 stocks listed that you can trade. These are organized into themes. This will help you to discover new companies in categories of interest to you. Simply choose a category, browse the list, and pick a company that seems interesting. Public does provide lots of information on each company. So, you can explore company histories, comments, and trends. There is even a list of sub brands. You can even see what other brands a parent company owns. This will help you to learn a great deal before you choose to invest. This app works incredibly quickly. After you open your account, you can immediately start investing, regardless of how much you deposit. The moment your funds transfer clears, you can start real time trading. As long as the market is open, you can immediately execute trades. Investment TrackingAfter you’ve selected and bought some stocks, you can sit back and watch how they do in the markets. If you choose to buy small fractional slices of stock, you’re not likely to make a fortune right away, but it can be interesting to view and track your investments as they grow over time. Public automatically deposits dividends in cash as a default. You can opt into Public automatically reinvesting your dividends, however.Simply message the support team, and they can activate the service. Or, if you prefer, you can go to your “Account” page, click on the “settings” icon and then scroll down to the “Dividend Reinvestment” section to enable it yourself. I would recommend reinvesting your dividends, that way none of your money remains un-invested in non interest-bearing cash deposits, it will go back into the markets to grow as the dividends come in.Is Public a Good Option for You?Public has some great features for newbie investors and those looking for fee-free trading. That makes it an attractive proposition that is worthy of serious consideration.If you don’t have a lot of money but want to get started investing, or need help and guidance to develop your investing skills, Public has a lot to offer. Additionally, the lack of commissions or fees will also be attractive to most investors. Public is an excellent app for many investors, but it may not be for everyone. If you live outside the US, regularly day trade, or need more automation tools, you may be better suited to another platform. It is also worth bearing in mind that Public does not facilitate more complex trade options such as cryptocurrencies or OTC stocks. Want to get started with this free trading platform? Click on the button below to sign up! […]