There’s a clearer picture now of what direction the nation may be taking in the next four years, so it’s somewhat easier to plan for our immediate personal financial futures.
Reuters writer Linda Stern in “What Those Election Results Mean for Your Wallet” suggests making an appointment now with both your tax adviser and your broker between Christmas and the new year.
“If Washington does anything to extend important tax breaks that expired at the end of 2011, like the alternative minimum tax patch, it is likely to finish that work the week before Christmas. That means you don’t have to jump now to implement your year-end tax and investment strategy. You just have to plan ahead for what that strategy should be under the extended/not extended alternatives.”
The wallets of many Americans are likely to hold a little less money, as tax rates are expected to go up.
Other advice includes:
“Max out your tax-favored retirement contributions. There’s no reason to hold off on contributions to individual retirement accounts, Roth IRAs, and 401(k) accounts, even though you have until April 15, 2013, to make 2012 contributions. Here’s why: (1) If you miss a year’s contribution you can’t make it up in another year; (2) Tea-leaf readers do expect some income tax rates to rise over the next several years, making the tax-favored buildup in those accounts more valuable; (3) An Obama-driven tax reform measure could hurt the tax breaks people get for 401(k)s and other retirement accounts.”
And the article suggests that investors buy stocks strategically: “Some sectors will do better than others under a second Obama administration, says Sam Stovall, chief equity strategist at S&P Capital IQ. He has highlighted alternative energy areas, such as hydro, geothermal, wind and solar power, and also, surprisingly, aluminum — it can be produced with lower carbon emissions than steel. He also thinks homebuilders stand to profit from administration efforts to slow or stall foreclosures; fewer homes will come onto the market and more will need to be built. He also believes healthy dividend-paying stocks will hold up well and that taxes on dividends won’t revert to punishing pre-Bush era levels. His favorites in a variety of sectors: Darden Restaurants Inc., Atria Group Inc., Chevron Corp., Bank of Nova Scotia, Waste Management Inc., Microsoft Corp. and UGI Corp.”
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