Connect with us

Uncategorized

‘Reducing inflation will come at a great cost’: Ray Dalio warns that the Fed will likely trigger something far worse than high prices. Here’s what he likes today

Published

on

'Reducing inflation will come at a great cost': Ray Dalio warns that the Fed will likely trigger something far worse than high prices. Here's what he likes today

‘Reducing inflation will come at a great cost’: Ray Dalio warns that the Fed will likely trigger something far worse than high prices. Here’s what he likes today

Some say cash is king. But according to Ray Dalio, founder of the world’s largest hedge fund Bridgewater Associates, it may not be wise to keep too much of your investment money in cash these days.

“Cash is not a safe investment, is not a safe place because it will be taxed by inflation,” Dalio told CNBC last year.

But 40-year high inflation isn’t the only thing that’s concerning the billionaire investor at the moment.

In a LinkedIn post last month, Dalio warns that Fed’s tightening could lead to stagflation – an economic condition marked by high inflation, but without the robust economic growth and employment that usually come with it.

“My main point is that while tightening reduces inflation because it results in people spending less, it doesn’t make things better because it takes buying power away. It just shifts some of the squeezing of people via inflation to squeezing them via giving them less buying power,” he writes.

“[O]ver the long run the Fed will most likely chart a middle course that will take the form of stagflation.”

If you are wondering what to do given this gloomy outlook, here’s a look at some of the biggest holdings at Dalio’s hedge fund.

Don’t miss

Vanguard FTSE Emerging Markets ETF (VWO)

According to Bridgewater’s latest 13F filing to the SEC, the fund held 22.72 million shares of Vanguard FTSE Emerging Markets ETF at the end of March. With a market value of around $1.05 billion at the time, VWO was the largest holding in Dalio’s portfolio.

VWO tracks the FTSE Emerging Markets All Cap China A Inclusion Index and provides investors with convenient exposure to stocks in emerging markets like China, Brazil, and South Africa.

The ETF holds more than 5,000 stocks. Its top holdings include industry heavyweights like chipmaking giant Taiwan Semiconductor Manufacturing, Chinese tech behemoth Tencent Holdings, and Indian multinational conglomerate Reliance Industries.

In a recent conversation with another investing legend, Jeremy Grantham, Dalio said he’s looking at countries with good income statements and balance sheets that can weather the storm.

“Emerging Asia is very interesting. India is interesting,” he adds.

Procter & Gamble (PG)

Bridgewater’s second-largest holding is a defensive stock with the ability to deliver cash returns to investors in different economic environments: Procter & Gamble.

In April, P&G’s board announced a 5% dividend increase, marking the company’s 66th consecutive annual payout increase. The stock currently offers an annual dividend yield of 2.5%.

It’s easy to see why the company is able to maintain such a streak.

P&G is a consumer staples giant with a portfolio of trusted brands like Bounty paper towels, Crest toothpaste, Gillette razor blades, and Tide detergent. These are products that households buy on a regular basis, regardless of what the economy is doing.

Alibaba Group Holding (BABA)

Chinese tech stocks haven’t exactly been market darlings. Ecommerce giant Alibaba Group, for instance, is down 40% over the last 12 months.

But Bridgewater Associates still likes the company. As of Mar. 31, it owned 7.5 million shares of Alibaba — a stake valued at $813.9 million at the time.

The downturn in Alibaba shares could give contrarian investors something to think about. In fact, we might be at an inflection point already.

According to the latest earnings report, Alibaba’s revenue grew 9% year over year to $32.2 billion in the March quarter. Its adjusted earnings of $1.55 per share handsomely beat Wall Street’s expectation of $1.07 per share.

Since that earnings report, Alibaba stock has surged nearly 50%.

What to read next

  • Sign up for our MoneyWise newsletter to receive a steady flow of actionable ideas from Wall Street’s top firms.

  • US is only a few days away from an ‘absolute explosion’ on inflation — here are 3 shockproof sectors to help protect your portfolio

  • ‘There’s always a bull market somewhere’: Jim Cramer’s famous words suggest you can make money no matter what. Here are 2 powerful tailwinds to take advantage of today

This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

Uncategorized

American Weed Stocks Are Cheap. They’re About to Get a Sales Bump.

Published

on

However bad the year has been for most stocks, it has been especially harsh for state-licensed cannabis sellers.

In just the past month, the


AdvisorShares Pure US Cannabis


exchange-traded fund (ticker: MSOS), which tracks America’s multistate operators—or MSOs—fell 25%, while the


S&P 500


dropped 7%.

Continue Reading

Uncategorized

How Do Mega Backdoor Roths Work?

Published

on

A mega backdoor Roth is a unique 401(k) rollover strategy that’s designed for people whose incomes would ordinarily keep them from saving in a Roth Individual Retirement Account. The advantage of using a Roth IRA to save for retirement is being able to make tax-free qualified withdrawals. But not everyone can contribute to these accounts; higher-income earners are excluded. That’s where the mega backdoor Roth comes into play. If you have a 401(k) you’d like to roll over, you could use this strategy to enjoy the tax benefits of a Roth IRA without having income be an obstacle.

Make sure you’re taking advantage of every opportunity to maximize your retirement assets by working with a financial advisor.

Roth Account Basics

Before diving into the specifics of a mega backdoor Roth, there are a few things to know about Roth accounts, including Roth IRAs and Roth 401(k)s.

First, these accounts are both funded with after-tax dollars. That means when you make qualified withdrawals later, you won’t pay income tax on the money since you already paid it upfront. This is the key characteristic of Roth accounts and what makes them so appealing to investors who anticipate being in a higher tax bracket at retirement.

Next, your ability to contribute to a Roth 401(k) is not restricted by your income. But it is for a Roth IRA. For the 2021 tax year, you must be within these modified adjusted gross income limits to make a full Roth IRA contribution:

  • Single filers: MAGI of $125,000 or less

  • Married filing jointly: MAGI of $198,000 or less

  • Head of household: MAGI of $125,000 or less

You can make partial contributions above those income limits. But your ability to contribute phases out completely once your MAGI hits $140,000 (if you file single or head of household) or $208,000 if you’re married and file a joint return. For 2021, the full contribution allowed is $6,000 with a $1,000 catch-up contribution for savers aged 50 and older.

Finally, Roth 401(k) accounts are subject to required minimum distribution rules just like traditional 401(k) accounts. This rule requires you to begin taking money from your 401(k) starting at age 72. A Roth IRA, on the other hand, is not subject to RMD rules.

What Is a Backdoor Roth?

A backdoor Roth offers a work-around for people whose incomes are above the limits set by the IRS. When you execute a backdoor Roth, you roll money over from a traditional IRA to a Roth account. This way, you won’t have to pay taxes on your retirement savings in the Roth IRA when it’s time to make withdrawals. And you’re not subject to required minimum distribution rules either.

But there is a catch. You have to pay income tax on the money you roll over to a Roth account. So while you could save money on taxes in retirement, you’re not escaping the tax liability of a traditional IRA altogether.

How a Mega Backdoor Roth Works

A mega backdoor Roth is a backdoor Roth that’s designed specifically for people who have a 401(k) plan at work. This type of backdoor Roth allows you to contribute up to $38,500 to a Roth IRA or a Roth 401(k) in 2021. This is in addition to the regular annual contribution limits the IRS allows for these types of accounts. To execute a mega backdoor Roth, two conditions have to be met. Your 401(k) plan needs to allow the following:

You can ask your plan administrator whether your 401(k) meets these criteria. And if your plan doesn’t allow for in-service withdrawals or distributions, you could still attempt a mega backdoor Roth if you plan to leave your job in the near future.

If your plan meets the criteria, then you can take the next steps to execute a mega backdoor Roth. This is typically a two-step process that involves maxing out after-tax 401(k) contributions, then withdrawing the after-tax portion of your account to a Roth IRA.

Again, whether you can follow through on the second step depends on whether your plan allows in-service withdrawals. If it doesn’t, you’ll have to wait until you separate from your employer to roll over any after-tax money in your 401(k) into a Roth IRA.

You also need to watch out for the pro rata rule. This IRS rule says you can’t only withdraw pre- or post-tax contributions from a traditional 401(k). So if you’re completing a mega backdoor Roth, you couldn’t just withdraw post-tax contributions if your account holds both pre- and post-tax funds. In that case, you may have to roll over the entire balance to a Roth IRA.

Benefits of a Mega Backdoor Roth

There are three key benefits associated with executing a mega backdoor Roth. First, you can contribute significantly more to a Roth IRA upfront this way. For 2021, the contribution limit is $38,500 on top of the regular annual contribution limit and any catch-up contribution limits that may apply.

You’ll need to know the maximum amount you’re allowed to contribute to the after-tax portion of your 401(k). So for 2021, the IRS allows a maximum contribution of $58,000 or $64,500 if you’re 50 or older. You’d subtract your 401(k) contributions and anything your employer adds in matching contributions to figure out how much you could add to the after-tax portion.

Next, you can enjoy tax-free withdrawals in retirement. This is a benefit you may otherwise not being able to get if your income is too high to contribute to a Roth IRA. By reducing your tax liability in retirement, you can help your investment dollars go further. And you may have a larger legacy of wealth to pass on to future generations.

Finally, a mega backdoor Roth IRA would allow you to sidestep required minimum distribution rules. This means that you could retain control over when you choose to take distributions from a Roth IRA.

So who is a mega backdoor Roth right for? You may consider this move if you:

  • Have an eligible 401(k) plan at work

  • Have maxed out traditional 401(k) contributions

  • Are not eligible to contribute to a Roth IRA because of your income

  • Have additional money that you want to invest for retirement

  • Want to leverage the higher Roth IRA contribution limits allowed by a mega backdoor rollover

Talking to your financial advisor can help you decide if a mega backdoor Roth makes sense. And your 401(k) plan administrator should be able to tell you if it’s possible, based on your plan’s guidelines.

Mega Backdoor Roth Alternatives

If you can’t execute a mega backdoor Roth because your plan doesn’t allow it, there are other ways to increase your retirement savings. For example, you could try a regular backdoor Roth instead. This might be something to consider if you still want to enjoy the tax benefits of a Roth IRA but your plan doesn’t fit the criteria for a mega rollover. You could also elect to make Roth 401(k) contributions to your retirement plan at work. This way, you still get the benefit of contributing after-tax dollars and making tax-free withdrawals. You’d be subject to the regular contribution limits and you’d still have to take the required minimum distribution. But that may outweigh the value of tax savings in retirement.

Investing in a Health Savings Account (HSA) is another option. While these accounts are not specifically designed for retirement, they can yield multiple tax benefits. Contributions are tax-deductible and grow tax-deferred. Withdrawals are tax-free when used for eligible healthcare expenses. And at 65, you can take money out of an HSA for any reason without a tax penalty. You’ll just owe ordinary income tax on any withdrawals that are not used for healthcare expenses.

Finally, you could open a taxable brokerage account to invest. This doesn’t necessarily save you money on taxes since you’ll owe capital gains tax when you sell investments at a profit. But it could help you to diversify your investments and there are no limits on how much you can invest in a brokerage account annually.

Bottom Line

A mega backdoor Roth strategy could work well for higher-income earners who want to take advantage of Roth account benefits. There are certain rules that need to be followed to make it work, however, so you may want to talk to your plan administrator or a tax professional before going ahead. Keep in mind also that even if you can’t complete a mega backdoor Roth rollover, you still have other options for growing retirement savings.

Tips for Retirement Planning

  • If you’re saving for retirement in a 401(k) or IRA, pay attention to the fees you’re paying. For instance, check the expense ratios for each fund you’re invested in to understand how much you pay to own that fund on an annual basis. You can then compare that to the fund’s performance to determine whether the fees are justified. Also, consider any administrative fees you might be paying and how those affect your net returns.

  • Consider talking to your financial advisor about a mega backdoor Roth and whether it could be right for you. If you don’t have a financial advisor yet, finding one doesn’t have to be complicated. SmartAsset’s financial advisor matching tool makes it easy to connect with professional advisors in your local area. You can get your personalized recommendations in minutes just by answering a few simple questions. If you’re ready, get started now.

Photo credit: ©iStock.com/designer491

Continue Reading

Uncategorized

Alibaba Is Tumbling. Chinese Tech Stocks Have a New Headache.

Published

on

Chinese tech stocks were tumbling on Monday as two of the embattled sector’s leading players faced fresh fines from market regulators over disclosure rules.

China’s State Administration for Market Regulation announced Sunday a wave of penalties for improperly reporting past deals, in breach of competition law.


Alibaba


(ticker: BABA) and


Tencent


(0700.H.K.) were among the companies fined as a result.

Continue Reading

News

Copper price chart Copper price chart
Commodities3 hours ago

Copper price chart fluctuates at previous closing levels

Copper prices chart are fluctuating slightly near the level of the previous close as investors estimate a lot of factors,...

Natural gas price europe per m3 Natural gas price europe per m3
Commodities3 hours ago

Natural gas price in Europe per 1,000 m3 hits $2,100 on the exchange

Natural gas price Europe per 1,000m3: September gas futures contracts (benchmark TTF) were trading at $2,100 per 1,000m3 on Monday,...

Portugal and cryptocurrency Portugal and cryptocurrency
Cryptocurrency3 hours ago

Portugal and cryptocurrency: 12 companies await permission to operate

Portugal and cryptocurrency news: Central Bank is considering 12 applications submitted by companies that intend to provide cryptocurrency services in...

Ethereum PoS algorithm Ethereum PoS algorithm
Cryptocurrency3 hours ago

Vitalik Buterin: Transition to Ethereum PoS algorithm could make crypto payments popular again

During the Korea Blockchain Week 2022 conference, Ethereum co-founder Vitalik Buterin said that the network’s move to Ethereum PoS algorithm...

Hodlnaut news Hodlnaut news
Cryptocurrency4 hours ago

Hodlnaut news: cryptocurrency lender halted cryptocurrency withdrawals

Urgent Hodlnaut news: Cryptocurrency lending site Hodlnaut has unilaterally frozen cryptocurrency withdrawals. This is reported in the blog of the...

why worldwide food prices are rising why worldwide food prices are rising
Economy10 hours ago

World food prices chart: World food prices have plummeted

Why are worldwide food prices rising? First, because of the current world situation. But world food prices fell sharply in...

are hedge funds bad are hedge funds bad
Economy10 hours ago

Are hedge funds bad? Investors are disappointed in hedge funds

Are hedge funds bad? This year is sure to be one of the worst years in hedge fund history. In...

chinese economy 2022 chinese economy 2022
Economy10 hours ago

Chinese economy 2022: China will give up first place in the list of the largest importers of raw materials

Chinese economy 2022 news: China’s commodity-buying companies will be adversely affected by government debt and demographic problems. Over the next...

fed rate hikes this year fed rate hikes this year
Forex10 hours ago

Positive news from the U.S. labor market has raised fears of further FED rate hikes this year

FED rate hikes and inflation this year are at record highs. The U.S. jobs data released on Friday were truly...

recession announcement recession announcement
Forex11 hours ago

The strength of the U.S. dollar delayed the recession announcement

The jobs report was released at the end of last week’s work week. Economists were confident that 258,000 jobs were...

us market today us market today
Forex11 hours ago

The US market today maintains growth. Inflation Ahead

The main U.S. index closed the week near the highs of recent months, the highest prices since early May. The...

price of gold falls price of gold falls
Commodities11 hours ago

Price of gold falls on expectations of further US Federal Reserve rate hike

Price of gold falls: the price of the precious metal on Monday morning slightly decreased on the prospects of further...

goldman sachs oil price forecast 2022 goldman sachs oil price forecast 2022
Commodities11 hours ago

Goldman Sachs oil price forecast 2022: Oil price forecast worsens in Q3 and Q4

Current Goldman Sachs oil price forecast 2022: Analysts (NYSE:GS) believe another drop in Brent prices has been driven by low...

why is oil rising in price why is oil rising in price
Commodities11 hours ago

Why is oil rising in price today after a decline last week

Why is oil rising in price? The price of October futures on London’s ICE Futures Exchange for Brent amounted to...

bitcoin bearish trend bitcoin bearish trend
Cryptocurrency11 hours ago

The Balance: Bitcoin bearish trend hasn’t stopped Americans from investing more in cryptocurrencies

Analytical resource The Balance posted a report stating that 39% of U.S. investors have become more invested in cryptocurrencies, despite...

bitcoin growth prediction bitcoin growth prediction
Cryptocurrency11 hours ago

Cumberland: institutional investors give bitcoin growth predictions as high as $32,000 as early as 2022

US market maker Cumberland conducted a survey of institutional investors and found that most respondents were making bitcoin growth predictions...

is dogecoin a good investment is dogecoin a good investment
Cryptocurrency12 hours ago

Is dogecoin a good investment? Elon Musk: Dogecoin is much faster than the Bitcoin network

Is dogecoin a good investment? The CEO of Tesla again spoke out in support of Dogecoin. He stressed that the...

voyager crypto voyager crypto
Cryptocurrency12 hours ago

Voyager Digital is restructuring and preparing for sale

Cryptocurrency broker Voyager Digital said it is preparing a plan to restructure and resume cash withdrawals from the platform According...

Bitcoin oversold Bitcoin oversold
Cryptocurrency12 hours ago

Mike McGlone: Ethereum and Bitcoin oversold

A senior commodities strategist at Bloomberg Intelligence believes that according to technical analysis of the market, leading cryptocurrencies are selling...

next ethereum fork next ethereum fork
Cryptocurrency12 hours ago

Chainlink protocol developers refused to support next Ethereum fork

Ethereum is preparing to switch to PoS, and the community expects forks of the second cryptocurrency to appear on the...

predictit news predictit news
Cryptocurrency12 hours ago

PredictIt news: CFTC shuts down PredictIt prediction market in US

Important PredictIt news: The U.S. Commodity Futures Trading Commission (CFTC) has issued an order to shut down one of the...

is bitcoin mining profitable is bitcoin mining profitable
Cryptocurrency13 hours ago

Is bitcoin mining profitable today? Bitcoin mining difficulty drops for third month in a row

Is bitcoin mining profitable? The difficulty of mining bitcoin began to drop precipitously as the largest-capitalization cryptocurrency’s price fell below...

wazirx news wazirx news
Cryptocurrency13 hours ago

WazirX news: Indian authorities froze assets of WazirX

WazirX news: India’s economic intelligence agency froze assets of Binance-bought WazirX after allegations of money laundering Indian authorities have seized...

us recession and stock market us recession and stock market
Forex2 days ago

US recession and stock market. Thomas Barkin, Fed: Recession is virtually impossible

The U.S. recession and the stock market are closely linked. The key U.S. stock market indices – Dow Jones, NASDAQ...

usd to euro rate usd to euro rate
Forex2 days ago

Euro rate chart: the euro is not going into a trap

No matter how much FOMC officials try to convince investors of the Fed’s commitment to aggressive tightening of monetary policy,...

european stock market news european stock market news
Forex2 days ago

European stock market news: Europe started to lag behind the rise in U.S. stock prices

Current European stock market news: U.S. stock futures rose slightly Friday, helped by tech stocks as investors prepare for the...

dollar rate exchange dollar rate exchange
Forex2 days ago

Dollar rate today live: What is happening to the dollar today?

As you know, the dollar exchange rate has been lagging lately. We all wish wars would end as quickly as...

u.s. stock market capitalization 2022 u.s. stock market capitalization 2022
Forex2 days ago

U.S. stock market capitalization 2022: Morgan Stanley advises against buying U.S. stocks

U.S. stock market capitalization by 2022 leaves much to be desired. The key U.S. stock market indexes – DOW Jones,...

eur/usd chart eur/usd chart
Forex2 days ago

EUR/USD: European Union’s main currency problems

EUR/USD: The pair stayed in the flat, as investors refrained from making big bets before the U.S. labor market data...

asian stock market charts asian stock market charts
Forex2 days ago

Asian stock market charts: Major Asian indicators are up 0.88%

What’s happening on the Asian stock market charts right now? The major Asian indicators are mostly up 0.88%. Some indicators,...

Trending

©2021-2022 Letizo All Rights Reserved