HOUSEKEEPING
See the impact of taxes and inflation
No matter how much you add to savings or the rate of return you get on your money, there’s no denying that taxes and inflation will hold down your growth.
The question is “by how much?”
By adjusting your savings pattern to adjust for or anticipate the tax and inflation burdens, you can increase the likelihood that your nest egg will be sufficient. To that end, the Lincoln Financial Group has a “savings, taxes and inflation calculator” that can help you see just how big a bite Uncle Sam is taking of your money as well as the effect of state taxes and inflation. You can find the interactive tool at , by looking in the “planning tools” section of the site for “financial calculators.”
SHORT COURSE
January barometer
The January barometer is a market forecasting theory that was popularized by the “Stock Traders Almanac,” which says the movement of the Standard & Poor’s 500 during January sets the direction for the market for the entire year, meaning if the stock market, as measured by the S&P 500, is up in January, the stock market would be expected to rise for the rest of the year.
An investor truly committed to the January barometer’s effectiveness, therefore, would only invest in the market during years when the barometer forecasts an upturn. While history shows that the January barometer has correctly predicted the market’s annual direction about two-thirds of the time, most observers do not think that makes it worth following, as investors miss significant growth opportunities by sitting on the sidelines during the times when the forecast is wrong.
