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401k Tax Rules on Withdrawals and Contributions
Employer-sponsored retirement plans like a 401(k) are a common way for workers to save for retirement. A little more than half of employees participate in a retirement plan at work, according to the Bureau of Labor Statistics. So itâs important for participants to understand how 401(k) taxes work. With a traditional 401(k) plan, employees can […]
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Lyft vs. Uber: Hereâs the Ridesharing Service You Should Choose
Lyft vs. Uber: Which is the best for making money driving people around? Hereâs an in-depth look at the differences between the two ridesharing companies.
This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.
Walmart (WMT): Expectations High Ahead of Q4 Earnings
Walmart (WMT, $137.09) will headline this week’s busy earnings calendar, with the discount mega-retailer set to unveil its fourth-quarter results ahead of Thursday’s open.Â
“Fourth-quarter earnings season has continued to show that corporate sentiment is focused on labor shortages, supply chain related issues and ability to manage inflation,” says Gargi Chaudhuri, head of iShares Investment Strategy, Americas. And all three themes are likely to be front and center in WMT’s 4Q report.
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Yes, higher supply chain costs and inflation will likely be drags on Walmart’s quarterly results, says UBS analyst Michael Lasser (Buy). “That said, we believe that WMT benefited from fewer markdowns and increased contributions from ad revenues.”
Lasser also believes the Dow Jones stock picked up some additional market share in Q4.Â
Why?Â
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WMT was “well-positioned to capture holiday demand, and its everyday low prices strategy likely attracted incremental consumers as inflation remained elevated,” the analyst writes in a note. “Its gross margin was likely impacted by supply chain costs and not fully passing along inflation, though our expectation for a strong top line and a reduction in COVID costs should have provided meaningful SG&A [selling, general & administrative] leverage.”
Elsewhere, BofA analysts (Buy) project a solid fourth quarter for Walmart too, especially on the heels of an impressive third quarter which saw the retailer post U.S. same-store sales growth above 9%.Â
Also helping WMT is its “strong inventory positioning (supported by more favorable port access, long-term container shipping agreements and chartered vessel capacity) that likely supported share gains vs. smaller competitors this holiday,” they write.Â
Analysts, on average, are expecting Walmart to report fourth-quarter earnings of $1.49 per share, +7.2% year-over-year (YoY) and revenue of $151.5 billion, a marginal decrease from the year-ago period.
Shopify Stock Could Use a Post-Earnings Spark
Shopify (SHOP, $885.83) stock was not immune to the early 2022 selloff, with shares down nearly 36% for the year-to-date.
Can the e-commerce company’s fourth-quarter earnings report â due out before the Feb. 16 open â spark some much-needed upside in the shares?
Analyst earnings per share (EPS) estimates are broad, coming in at 74 cents per share on the low end and $2.64 per share on the high end. The consensus estimate is for SHOP to report fourth-quarter EPS of $1.58, unchanged from the year prior. Revenue is expected to arrive at $1.69 billion (+72.9% YoY).
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“We expect Shopify will report a solid end to calendar year 2021 as the company continues to benefit from new merchant growth and the shift to online commerce,” says Deutsche Bank analyst Bhavin Shah (Hold).
However, the analyst will be watching for any commentary related to a potential shift in the company’s Shopify Fulfillment (SFN) strategy, which has been key to SHOP’s investment thesis, according to Shah.
Wedbush analyst Ygal Arounian will also be watching for SFN updates, as it is expected to be a bigger contributor in 2022. As for SHOP’s Q4, he expects the company to post solid results, “with stronger growth earlier in the quarter offsetting slower overall Black Friday/Cyber Monday and December spend.”
What’s more, even with the stock’s early 2022 slump, “Shopify continues to take share of e-commerce and is the best operator in the space,” Arounian writes. He has an Outperform (Buy) rating on SHOP.
Analyst: DraftKings Selloff Creates Buying Opportunity
DraftKings (DKNG, $23.64) stock has been trending lower since its mid-March peak near $74. All told, shares are off about 68%, but Morgan Stanley analyst Thomas Allen sees this as a buying opportunity.
Certainly there are some near- and medium-term profit concerns, but investors “should not ignore that DKNG is a leading market share player in what will be a very large profitable market,” Allen says.
Needham analysts Bernie McTernan and Chris Pierce seem to agree. “We see DKNG as a leader in the emerging North America online gambling market, a $35B market opportunity,” they write in a note. “We are bullish on the potential for near-term market access gains, per capita spending continues to ramp in existing states and DKNG maintains its first or second place position in all states.”
The sports betting company will report its fourth-quarter results ahead of the Feb. 18 open. Analysts, on average, expect DraftKings to report a per-share loss of 78 cents, a dime wider than the 68 cents per-share loss it recorded in the year-ago period. On the top line, Wall Street pros are targeting $445.1 million (+38.1% YoY).
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Health Care Cost Basics: What They Are and Ways to Save
Putting aside money for emergencies, like replacing a roof or a major car repair, is one of the age-old mantras of personal finance.
But today thereâs one major potential expense that, until relatively recently, few working people rarely thought about: Paying for out-of-pocket medical costs.
Why? Because until the past decade or so, most employer health care plans covered the majority of employeesâ medical costs.
Not anymore.
The spiraling cost of health care has resulted in many employers shifting more of these expenses to employees. Monthly premiums for traditional health care plans that used to be fairly reasonable now may cost $600 per month or more. And most of these plans have annual deductibles â money you must pay out of pocket for medical expenses before the plan takes over most of the costs.
- SEE MORE 20 Ways to Save on Health Care
Since most employees canât afford these plans, many companies now also offer high-deductible health plans (HDHPs). How pervasive are these plans? In 2019 51% of all U.S. employees were enrolled in HDHPs.
And for those who arenât covered at work and have to purchase their own health insurance, HDHPs generally offer the lowest premiums of plans available in state and Affordable Care Act insurance marketplaces.
However, someday â maybe a few years from now, maybe next week â you will need medical treatment for an injury or a major illness. If youâre not financially prepared, you may discover the hard way what âhigh-deductibleâ really means.
Three kinds of expenses
Deductibles
Your HDHP may state that it has a $4,000 annual deductible. That means youâll have to use $4,000 of your own money to pay for medical treatments before the plan starts covering some of the costs. If you donât believe youâll have to pay that much, think again. In 2018, the average cost for a knee replacement was $35,000. For spinal fusion, $110,000. Thinking of having a child? It could cost you $4,500 or more once all pre-natal care, delivery and post-partum expenses are tabulated.
As a participant in an HDHP, Iâve personally experienced the painful price of health care. Last year I was healthy for most of the year, but the costs for one visit to an out-of-state emergency room and follow-up appointments ate up my entire $2,800 deductible.
Thankfully, my deductible was relatively reasonable, considering that in 2020 the average deductible for individual subscribers was $4,364 and $8,439 for those with family coverage, according to research conducted by eHealth.
But your expenses may not end when you hit your deductible limit. Many HDHPs require to you to continue to pay partial costs through co-payments and co-insurance.
Co-payments
Co-payments are fixed amounts you pay out of pocket for health care expenses. How much you pay depends on whether youâve hit the deductible or not. For example, if a procedure costs $500 and your co-payment for such a procedure is $20, you’ll pay $20 only if youâve paid the maximum deductible. Otherwise, youâll pay the full $500 out of pocket.
Co-insurance
If deductibles and co-pays werenât enough, co-insurance can add even more to your medical tab. Itâs a percentage of covered health care services you may still have to pay on your own even when youâve maxed out your deductible.
Letâs say your plan has a 25% co-insurance requirement. If youâve already hit your deductible and then have another procedure that costs $1,000, youâll still have to pay $250 out of pocket.
When does it end?
Fortunately, the IRS sets maximum annual limits for total out-of-pocket medical expenses for HDHPs. In 2022, this limit is $7,050 for individuals and $14,100 for families. Any expenses above that level will be fully covered by your HDHP.
But remember â these limits reset every plan year.
Health Savings Accounts to the rescue
If thereâs one silver lining in this scenario, itâs that many employers that offer HDHPs also offer Health Savings Accounts (HSAs).
With an HSA, you make pre-tax contributions from your paycheck to an investment account that allows you to withdraw contributions and earnings tax-free to pay for qualified health care expenses.
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In addition to medical treatments, you can use your HSA to pay for prescription and over-the-counter drugs, medical equipment, dental expenses, physical therapy and even acupuncture and aromatherapy. You can also use your HSA to help pay for long-term-care insurance premiums.
For 2022, the maximum amount you can contribute is $3,650 per individual ($7,300 per family) with an additional $1,000 in âcatch-upâ contributions per person for those 55 and older. Some employers also make periodic contributions to their employeesâ HSAs to help offset some of these out-of-pocket expenses.
Completely portable
The great thing about HSAs is that you never have to make withdrawals. For example, you may choose to pay your current medical bills from your savings and reserve your HSA money for health care costs during retirement. (Note that once you enroll in Medicare you can no longer contribute to an HSA.)
If you start a new job with an employer that has an HDHP and HSA, you can transfer the assets from your old HSA into the new HSA. If they donât offer an HSA, you can move assets from your old HSA into one offered by a financial services company. Keep in mind that if you donât enroll in your new employerâs HDHP (or they donât have one) you canât make additional contributions to your HSA.
Having an HSA can help take the sting out of out-of-pocket medical expenses when they occur â but only if you contribute to it.
This may be challenging if youâre also trying to save for retirement, your childrenâs higher education or a new home. But considering that the pre-tax contributions you make to your HSA have the same taxable-income-lowering benefits as contributing on a 401(k) account, there are advantages to contributing as much as you can to both accounts.
If youâre fortunate enough to receive a tax refund, consider contributing some of it to your HSA. Even though these contributions are after-tax, they may be deductible. If youâre planning on doing this, make sure that your combined pre-tax and after-tax contributions donât exceed the annual limit.
Other ways to lower health care expenses
This may sound like a tough-love situation, but the fewer family members covered by your plan the lower your premiums and out-of-pocket expenses may be. If your adult children are covered by your HDHP but work for a company that offers its own health care plan, it might be time to encourage them to experience the âjoysâ of managing their own health care expenses. Theyâll have to do it anyway, since at some point theyâll be too old to be covered by your plan (generally age 26, but higher in a few states).
If you and your spouse both have HDHPs at work, compare the monthly premiums, deductibles, co-pays, co-insurance and maximum out-of-pocket expenses for each option. If both options let your use your current primary care physicians and specialists, you may both want to switch to the more potentially affordable option.
And if youâre thinking of having a procedure done, you may also want to estimate total costs in your area.Â
Itâs unfortunate that people may need to add âfuture health care costsâ to their list of savings goals, but this is a reality that many will have to plan for. If you need help figuring out how to balance these competing priorities, a qualified financial planner can provide guidance to help you make sure that staying healthy doesnât significantly harm your financial well-being.
- SEE MORE 3 Ways Early Retirees Can Minimize Their Health Insurance Costs
17 Most Common Tax Questions Answered By a CPA
Everything You Need to Know About AXIE Infinity
With the invention of cryptocurrency, smart contracts, and NFTs has come a new business model for the gaming world: play-to-earn. Play-to-earn games are those in which participants have the ability to earn digital assets that have real market value by simply playing a game. Axie Infinity tops numerous lists as the current most popular play-to-earn […]
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Stock Market Today: Nasdaq Recovery Continues as Comms, Tech Rebound
Stocks delivered another solid day of gains ahead of Thursday’s pivotal January consumer price index (CPI) report.
Gov. Kathy Hochul on Wednesday announced that New York would join a growing group of large states that are lifting some or all mask mandates. That â and a plunge in new COVID cases, to 250,000 new cases daily from an all-time peak of about 800,000 in January â have stoked optimism about the country’s omicron situation, driving up cyclical sectors including materials (+2.2%) and industrials (+1.4%).
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Meanwhile, several beaten-up sectors received something of a reprieve, thanks to a small pullback in 10-year Treasury rates and potential dip-buying.
Troubled-of-late Facebook parent Meta Platforms (FB, +5.4%) and Twitter (TWTR, +5.1%) helped the communication services sector (+2.8%) finish on top; chipmakers including Nvidia (NVDA, +6.4%) and Micron (MU, +4.8%) lifted technology (+2.2%); and real estate, 2022’s worst sector so far, posted a solid 2.4% gain.
And for a second straight day, an afternoon hiccup failed to materialize into anything worse, leaving investors with pleasant results from the major indexes. The Nasdaq Composite led, up 2.1% to 14,490, followed by the S&P 500 (+1.5% to 4,587) and Dow Jones Industrial Average (+0.9% to 35,768).
Looking ahead to the next two days, Tom Essaye, founder of the Sevens Report, outlines the importance of Thursday’s CPI report and Friday’s producer price index (PPI) announcement:
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“Bottom line, inflation remains the single biggest potential influence over Fed policy, and Fed policy will determine whether stocks continue to rally, or decline,” he says. “Tomorrow and Friday we get the next two inflation readings that could either make the Fed more hawkish (and hit stocks again) or make the Fed less hawkish (and spark a rally).
“But it’s not just CPI that needs to peak. Inflation expectations, which in many ways are more important from a Fed standpoint than the monthly inflation data, also need to peak. And they have not yet.”
Other news in the stock market today:
- The small-cap Russell 2000Â also enjoyed robust gains, closing 1.9% higher to 2,083.
- U.S. crude futures gained 0.3% to end at $89.66 per barrel.
- Gold futures rose 0.5% to settle at $1,836.60 an ounce.
- Bitcoin improved by 1.2% to $44,744.13. (Bitcoin trades 24 hours a day; prices reported here are as of 4 p.m.)Â
- Enphase Energy (ENPH) jumped 12.0% after the solar power company reported earnings. In its fourth quarter, ENPH reported adjusted earnings of 73 cents per share on $412.7 million in revenue, easily beating analysts’ consensus estimates for earnings of 59 cents per share and revenue of $410.2 million. Oppenheimer analyst Colin Rusch reiterated his Outperform (Buy) rating on the stock. “We are encouraged ENPH is pushing through a 7% price increase in March on its energy storage product to offset its battery expense,” Rusch says. “We believe this points to the depth of demand and relative price inelasticity for the product, which we believe bodes well for top-line growth and margins.” ENPH’s positive earnings reaction helped lift other solar stocks, including First Solar (FSLR, +5.4%), Sunrun (RUN, +6.5%) and SunPower (SPWR, +6.6%).
- A solid earnings report boosted Lyft (LYFT, +6.8%) shares today too. The ride-hailing firm reported fourth-quarter adjusted earnings of 9 cents per share on $970 million in revenue â more than the 8 cents per share and $940.1 million analysts were expecting. And while LYFT had fewer active riders than the Street was anticipating in the three-month period (18.73 million actual vs. 20.2 million expected), revenue per active rider ($51.79) was higher than the $46.54 analysts projected. “We still expect a gradual recovery in commuting, higher airport volume and greater momentum in bikes/scooters supporting accelerating growth in 2022 vs. 2021,” says CFRA Research analyst Angelo Zino (Buy). “Rides remain about 30% below pre-pandemic levels in the U.S., but LYFT’s profitability has drastically improved.”
The Biggest Wealth Destroyers of All Time
When you think about historic corporate failures, a few names probably come first to mind. Enron. Lehman. Perhaps Arthur Andersen.
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But it might surprise you to find that none of these three holds a candle to the 20 worst destroyers of shareholder wealth from the past three decades.
Hendrik Bessembinder, a finance professor at the W.P. Carey School of Business at Arizona State University, put together a study of stocks between 1990 and 2020 â from the worst stock collapses to the absolute best generators of wealth â meant to underscore the importance of diversification.
As Kiplinger’s Dan Burrows sums it up:
“Investors were highly unlikely to buy and hold a concentrated portfolio of the market’s vanishingly small handful of outsized wealth creators. At the same time, the market’s biggest wealth destroyers were out there helping to crush investors’ long-term plans and goals.”
So, which companies managed to out-implode the likes of Enron and Lehman Brothers? Here’s our quick look at these 20 wealth destroyers from around the globe â spanning disasters including the Great Financial Crisis, the tech-bubble burst, the Japanese banking crisis and more.
Kyle Woodley was long FB and NVDA as of this writing.
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Comparing Cardano (ADA) vs Ethereum (ETH)
Cardano (ADA) and Ethereum (ETH) are two different types of crypto that are actually quite similar. Cardano and Ethereum both provide the same functionality â developers use both platforms to create smart contracts and decentralized applications (dApps). But while the use cases are the same, the approach and philosophy behind each platform is different. Notably, […]
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The Ultimate Guide to How to Files Taxes for 2022
This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.