Personal Finance: Financial Planning & Investing

[DzynKingRTR]

Just got my tax info this past weekend for last 2025. I had a much better year than I thought.

 

[4Q Basket Case]

The current unsettled markets are a great example of an old adage, "The markets don't like bad news. But they can handle it. What they can't handle is uncertainty." That's really referring to an ex cathedra injection of uncertainty beyond the normal everyday level that's just part of life.

When we and the Israelis attacked Iran, that injected a new level of uncertainty and the markets reacted in a predictable manner.

Note that oil tankers aren't moving out of the Strait of Hormuz because anybody's blockading it. They're not moving because they're afraid of being hit by a drone. While I have exactly zero experience with maritime insurance, I do know that property insurance underwriters typically exclude damage caused by a war, declared or undeclared. So I'm guessing a tanker sunk by an Iranian drone would be an uninsured loss.

The owner of the tanker and the owner of the oil it carries would rather wait a bit than risk the loss, especially if it's uninsured. The very definition of uncertainty.

There is no stoppage of oil production except because there's no place to put it. The US is the world's largest exporter of oil, so there's no problem here. But prices are increasing because nobody knows what's going to happen or how long the disruption will last.

This too will pass. If it passes quickly, things will likewise return to normal quickly. If it takes a while, the higher level of uncertainty will become the new normal and the markets will incorporate it into their evaluations.

Either way, keep calm and invest on.

 

[4Q Basket Case]

Great article from Morningstar on things investment salespeople tell you to get you to part with your money -- that aren't exactly accurate.

https://www.morningstar.com/personal-finance/dont-be-fooled-by-these-3-investing-tricks?utm_source=eloqua&utm_medium=email&utm_campaign=MorningDigest&utm_content=None_72768&utm_id=37935

I'd add another one to the mortgage warning -- they tell you that your mortgage interest is tax deductible. And it might be. Or maybe not.

The deal is, you can take the Standard Deduction, or you can Itemize your deductions. You can't do both.

The standard deduction for a married couple is now $32K. So you have to have more than $32K of itemized deductions (mortgage interest, charitable contributions, etc.) in order to benefit from Itemizing.

If you don't have that much in Itemized deductions, you just take the Standard Deduction. Meaning you get to deduct the full $32K even if you have $0 in mortgage interest and didn't give anything to any charities.

So maybe your mortgage interest can reduce your taxable income. Maybe not. You need to understand your own personal situation.

 

[4Q Basket Case]

Schwab is now offering an investment account for teens -- 13-17.

Charles Schwab

It's jointly owned by a parent and the teen, has no maintenance fees or minimum investment amounts, and includes access to a lot of financial education material.

Note: Not having teens myself, I have no personal experience with the account. As always, caveat emptor.

Still, it might be a fit for you and your teenager. Worth a look anyway.

 

[PA Tide Fan]

It appears the midterm correction I mentioned in an earlier post is now underway. The Nasdaq hit correction territory today and the Dow and S&P could shortly follow in the days and weeks ahead. Like any correction it needed something to trigger it and in this case it was the war with Iran. The severity of the correction will depend on the duration and the successes and failures of the war. War is not new for the market. Only our adversary is different each time. If we put boots on the ground there will no doubt be casualties that could cause additional panic selling but I'd advise everyone to stick to their plan. Corrections end and the market recovers the losses. The only move anyone could consider is perhaps adding to their stock investments on extreme weakness IF they are under-invested. Everyone else should sit tight, don't panic and the market turmoil will pass in time.

 

[4Q Basket Case]

It appears the midterm correction I mentioned in an earlier post is now underway. The Nasdaq hit correction territory today and the Dow and S&P could shortly follow in the days and weeks ahead. Like any correction it needed something to trigger it and in this case it was the war with Iran. The severity of the correction will depend on the duration and the successes and failures of the war. War is not new for the market. Only our adversary is different each time. If we put boots on the ground there will no doubt be casualties that could cause additional panic selling but I'd advise everyone to stick to their plan. Corrections end and the market recovers the losses. The only move anyone could consider is perhaps adding to their stock investments on extreme weakness IF they are under-invested. Everyone else should sit tight, don't panic and the market turmoil will pass in time.

The downturn is not the result of fundamental economic over-extension. It's the result of an ex cathedra injection of risk.

The stock market may swing too far the other way. That happens a lot with external shocks.

So long as you have at least one business cycle left in your investing career, you're absolutely right to keep on keeping on.