Which Debt Is ‘Good Debt’ and Which Is ‘Bad Debt’?

Let’s talk about debt baby.  Let’s talk about you and me.  Let’s talk about all the good things and the bad things that may be.  Let’s talk about debt.  

Do I have you humming the tune to a popular Salt-N-Pepa song circa 1990?  

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I have to bring some joy during the pandemic!  OK. We talked about the importance of budgeting and cash flow analysis. Now, let’s focus on a related topic: debt. 

True or false? Some debt can be good. Answer: True. But there’s a catch.  You should be responsible with debt and use it to acquire an appreciating asset; in other words, an asset that will increase in value over time.  This takes discipline and focus. 

Good Debt: Mortgages and Student Loans

Most people can’t afford to purchase a home outright, or entirely with cash.  They rely on a mortgage to finance the home purchase.  If you are a first-time homebuyer, I’d strongly urge you to save at least 20% of the home’s purchase price for a down payment.  Otherwise, you may have to take out a secondary loan at a higher interest rate or pay private mortgage insurance, also known as PMI.  What if the value of the value of your home declines after the initial purchase, as happened to me in 2005 near the peak of the real estate market?  I wasn’t a financial adviser then and had only saved 10% for the down payment.  My first home was a big financial mistake — at least a $15,000 loss on a $150,000 starter home when you factor in closing costs, realtor commissions and renovations.  Yet, I learned valuable lessons.

Mortgage debt can be good. In fact, my husband and I recently had the option of taking our Missouri home sale proceeds and providing even more than a 20% down payment on our new home in Florida. However, with the mortgage rates so compelling, we kept the extra cash and invested it in other long-term goals. You can exercise the same judgment when purchasing a new home.

The other “good debt” could be student loans.  In many cases, bachelor’s degrees are required to get into any white-collar position.  Some professions demand additional schooling.  A newly minted doctor or lawyer could easily have over $200,000 in student loan debt.

Is your child entering college soon?  If so, have a candid

Read more: https://www.kiplinger.com/personal-finance/credit-debt/debt/debt-management/601811/which-debt-is-good-debt-and-which-is-bad

Stock Market Today: Dow Lunges Over 30,000 as Recovery Rally Continues

The Dow Jones Industrial Average crossed the 30,000 threshold for the first time Tuesday as investors seemed to cheer what they hope will be a less politically tumultuous next couple months.

The General Services Administration on Monday evening acknowledged Joe Biden’s presidential election victory, allowing the already-delayed presidential transition process to move forward. Biden spent Tuesday introducing new members of national security and foreign policy teams, though the biggest excitement on Wall Street came from Monday's reports that former Fed chair Janet Yellen could be America's next Treasury Secretary.

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Financial stocks such as JPMorgan Chase (JPM, +4.6%) and American Express (AXP, +3.7%) raced out of the blocks, as did the Dow’s lone energy component, Chevron (CVX, +5.0%). But it wasn’t just the “rotation” at work today: Communication services plays such as Disney (DIS, +3.8%) and Comcast (CMCSA, +5.1%) fared well, as did much of the rest of the market.

The industrial average finished with a 1.5% gain to an all-time high 30,046, while the S&P 500 (+1.6% to 3,635) and Russell 2000 (+1.9% to 1,853) also rewrote the record books.

Other action in the stock market today:

The Nasdaq Composite closed 1.3% higher to 12,036, just 20 points shy of its Sept. 2 high.Gold futures dropped yet again, to multi-month lows, off 1.8% to $1,804.60 per ounce. U.S. crude oil futures climbed 4.3% to settle at $44.91 per barrel. Experts' Reactions to Dow 30,000

What’s in a number? At least for this one, not much more than a bit of hoopla. Here's what a few on Wall Street had to say Tuesday:

SEE MORE All 30 Dow Stocks Ranked: The Pros Weigh In

Ryan Detrick, chief market strategist for LPL Financial: “Although 30,000 isn't much different than 29,999, there is something special about those big milestone numbers."

James McDonald, CEO of alternative investment manager Hercules Investments: “At the end of the day, Dow 30,000 is just a number and the milestone doesn't ho

Read more: https://www.kiplinger.com/investing/stocks/601810/stock-market-today-112420-dow-30000

19 Best Costco Kirkland Signature Products to Buy for the Holidays

If you're feeling the holiday spirit and your Costco membership is up to speed, you'll find plenty of opportunities to score holiday goods, from gifts to house-party foods, at bargain rates at the warehouse club. In particular, many of Costco's Kirkland Signature store-branded products offer both quality and savings when it comes to holiday entertaining and gift giving.

The difference this year for Costco shoppers? Well, everything’s different in 2020. The ongoing pandemic has, for many, dashed any thoughts of large holiday gatherings. At most, there may be small, socially distanced friends-and-family events. Some of these items will pull double duty for proper everyday cleaning at bargain prices as well as for holiday gift-giving and small celebrations.

After talking to shopping experts and doing our own research, here are 19 great Kirkland Signature products to stock up on for the holidays.

SEE MORE 30 Great Black Friday Deals and Doorbusters for the 2020 Holiday Season

Read more: https://www.kiplinger.com/personal-finance/spending/601808/19-best-costco-kirkland-signature-products-to-buy-for-the-holidays

Build a Bond Ladder with ETFs

The bond world can seem set in its ways, but once in a while an innovative product comes along to upend the notion. In this case, we’re talking about target-maturity bond exchange-traded funds, currently offered by Invesco and iShares. The ETFs invest in bonds in a particular sector—corporate debt or municipals, say—with all of the bonds maturing in a specific year. How the ETFs work takes some explaining, and they’re not right for everyone. But they offer investors some unique benefits.

SEE MORE The 5 Best iShares ETFs for a Core Portfolio

Though not well known to many investors, these ETFs are not exactly new. The earliest of these types of funds, an iShares series of target-maturity muni bond ETFs, arrived in 2010. But target-date bond ETFs are growing in popularity, especially among investors who are nearing retirement or already retired.

There’s a lot to like, starting with the fact that, like individual bonds that you buy and hold to maturity, these ETFs “mature.” Come December of their target year, the funds close and return all of the capital to shareholders. “It’s like buying and holding to maturity a single bond, except that it’s a fund that holds hundreds of bonds,” says Karen Schenone, head of fixed-income strategy for iShares.

That’s chiefly what makes these funds easy to incorporate into a bond ladder, an old-school technique to boost yields and reduce interest rate risk without locking up all of your money for the long term. You spread your investments across bonds with staggered maturities—the “rungs” of the ladder—and as portions of your portfolio mature at regular intervals, you reinvest the proceeds in another rung further up the maturity line (or spend the cash or invest it elsewhere).

We’ll walk you through the basics of laddering, how these ETFs work and how to use them in your portfolio. (Returns and data are through November 6.)

The upside of laddering

Fans of bond laddering can sound like a late-night commercial. (It slices, it dices—and so much more!) That’s because laddering addresses multiple goals: It provides a steady stream of income, it smooths out interest rate risk in a bond portfolio, and it can offer risk-averse investors some stability.

Bond prices and interest rates tend to move in opposite

Read more: https://www.kiplinger.com/investing/bonds/601759/build-a-bond-ladder

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