Kiplinger's Personal Finance January 2021

Written to help you do a better job of managing your personal and family financial affairs and to help you get more for your money. You get ideas on saving, investing, cutting taxes, making major purchases, advancing your career, buying a home, paying for education, health care and travel, plus much, much more. Special issues cover the latest information about car buying (December) and Mutual Funds (March and September).

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1 min

STOCK PICKS FOR A BIDEN PRESIDENCY These 15 stocks and funds stand to benefit from the president-elect’s focus on renewable energy and modern infrastructure. CALCULATE YOUR NET WORTH As you embark on a new year, see where your finances stand with our easy-to-use net worth calculator. BEST, WORST STATES FOR TAXES Freshly updated, our exclusive Tax Map for Middle-Class Families reveals how each state taxes your income, property and everything you buy. Kiplinger Today Profit from the best of Kiplinger delivered to your e-mail inbox every weekday. Sign up for our Kiplinger Today e-newsletter at FACEBOOK: KiplingerPersonalFinance TWITTER: @Kiplinger INSTAGRAM: @KiplingerFinance…

3 min
portfolio fixes

Your information on market timing (“Sleep Tight Portfolio Fixes,” Nov.) is not 100% accurate. The most glaring omission is the table titled “The Perils of Market Timing,” which does not show the S&P 500 return excluding the 10 worst days per decade—which would demonstrate much better results than missing the 10 best days. Plus, you state that, “It’s hard to beat a buy-and-hold approach over time.” This is not true if the person uses a handful of technical indicators, such as a 200-day moving average or the moving average convergence/divergence indicator, available on and many other websites. Sitting through 50% declines twice in the 2000–2010 time frame was impossible for most investors, and they may have given up and sold at the bottom. Market timing does work when one uses…

3 min
certainty is a blessing

No matter where you are on the political spectrum, I hope you were able to feel relief to see our democracy play out as intended, peacefully, during the election and the days following. As we went to press, a couple of states were considering recounts, and President Trump was contesting some states’ results in the courts. But like other media outlets and the majority of Americans, Kiplinger has accepted the likelihood of a Biden-Harris administration come January 20. The uncertainty leading up to Election Day and beyond was disquieting for an anxious nation, and it put our staff in limbo, too. Once the call for the election was made on November 7, the magazine still had a week before press time to consider what a Biden presidency means for the markets…

4 min
hope for the best, plan for the worst

IF ADVERSITY BUILDS STRENGTH, many of us will start 2021 with the muscles of a professional bodybuilder. The past year delivered multiple gut punches: a pandemic, an economic downturn, a volatile stock market and a vituperative election. However, the calamitous year also provided valuable lessons, particularly where your finances are concerned. Because while pandemics are rare, personal setbacks are distressingly common. Your roof could fall in. Someone in your household could become seriously ill. You could lose your job. An emergency fund is your first line of defense against such disasters, particularly unemployment. The standard rule of thumb is to save enough to cover basic living expenses for three to six months, but that may no longer be sufficient, says Liz Windisch, a certified financial planner with Aspen Wealth Management in Denver.…

2 min
bad news for super savers

EVERY YEAR, THE IRS adjusts the maximum amount taxpayers can contribute to tax-advantaged retirement savings plans to reflect increases in the cost of living. Unfortunately, inflation was so low in 2020 that the maximum you can contribute to tax-advantaged retirement savings accounts is unchanged for 2021. Here’s how that breaks down: Employer-sponsored retirement savings plans. The most you can stash in 401(k)s, Roth 401(k)s and other employer plans in 2021 is $19,500. The catchup contribution for people 50 and older is $6,500. Traditional or Roth IRAs. The maximum you can contribute to an IRA in 2021 is $6,000. The catch-up contribution for savers 50 and older remains at $1,000. There is a glimmer of good news: The IRS increased the amount of money that workers covered by an employer-sponsored plan can earn in…

1 min
save more for health care costs

The maximum you can stash in a health savings account goes up in 2021—although not by much. In 2021, you can save $3,600 for individual coverage, up from $3,550 in 2020. For family coverage, you can save as much as $7,200, up from $7,100 in 2020. The maximum catch-up contribution for people 50 and older remains unchanged at $1,000 for both individual and family accounts. HSAs provide a powerful way to save for out-of-pocket medical expenses. Contributions are pretax (or deductible if your HSA isn’t employer-sponsored), the funds grow tax-deferred in the account, and withdrawals are tax-free for qualified medical expenses. If you don’t use the money, you can roll it over for future years. An HSA is also a smart way to save for medical expenses in retirement. To qualify for…