Bottom Line Inc

The Shrewdest Money Moves You Can Make in 2016

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It’s no secret that you should try to take advantage of financial opportunities while protecting yourself from the dangers. But it’s especially important as we enter 2016, a year in which rising interest rates are likely to challenge our ability to maneuver through volatile stock and bond markets and in which investment opportunities will be harder to find.

Bottom Line/Personal asked seven top money experts for their favorite strategies to improve our readers’ personal finances in 2016…

Better Stock Returns

Invest in a mutual fund that focuses on stocks of large, fast-growing US companies. This asset class outperformed all others in 2015 and should continue to do so in 2016. And as turbulence is likely to continue to shake US and foreign stock markets, investors want the stability of big American companies.

My favorite large-cap growth stock fund now: T. Rowe Price Blue Chip Growth (TRBCX), deftly managed by Larry Puglia over the past 22 years, ranks in the top 9% of its category over the past 10 years and in the top 5% over the past year. It holds about 125 stocks—with a heavy emphasis on health care and Internet retailing. 10-year annualized performance: 9.4%.

Mark Salzinger is chief investment officer of Salzinger Sheaff Brock, LLC, a money-­management firm in Indianapolis. He is editor of the newsletters Investor’s ETF Report and No-Load Fund Investor. NoLoadFundInvestor.com


Better Yields

Choose bonds with “step-up” protection. Many bond investors are keeping maturities short to lessen the effect of rising interest rates on bond prices…and they are reaching for higher yields with lower-quality bonds. That’s a risky strategy, especially if the bond issuer’s credit quality is downgraded, which can cause the value of your bonds to drop. Many companies are issuing bonds with a special feature—for every downgrade in credit quality, there is an increase in the coupon rate, which is the fixed annual interest paid by the issuer. Example: Fiserv, which provides technology such as electronic-payment-processing products and services to banks, has bonds rated BBB, due in October 2020, with a coupon rate of 4.625%. Bondholders receive a 0.25 percentage point increase in the coupon rate for each downgrade below investment grade.

Marilyn Cohen is CEO of ­Envision Capital Management, which manages bond portfolios for wealthy investors, El Segundo, California. She is author of The Little Bond eBooklet.


Invest in an exchange-traded fund that focuses on preferred stocks. Preferreds are hybrid investments—part stock and part bond—often issued by companies with low investment-grade quality just above junk-bond status. Preferreds provide steady income with annual yields recently in the 5%-to-7% range. They tend to hold up better than junk bonds in rising-rate ­environments.

My favorite preferred ETF: iShares S&P US Preferred Stock ETF (PFF) is the most diversified ETF tracking preferreds. It has about 290 holdings and a recent yield of 5.5%. Five-year annualized perfor­mance: 6.5%.

Stephen L. McKee is editor of the newsletter No-Load Mutual Fund Selections & Timing, based in Bella Vista, Arkansas.The Hulbert Financial Digest ranks it among the top five fund newsletters for risk-adjusted performance over the past 10 years. SelectionsAndTiming.com


For savings, choose banks likely to offer the highest yields as interest rates rise. In response to Federal Reserve increases in short-term interest rates, traditional brick-and-mortar giants such as Citibank, Bank of America and Chase may barely raise the rates they pay on savings, money-market and rewards-checking accounts, and it could take weeks or months for them to do so. In contrast, Internet banks and credit unions, which already offer the highest rates and are eager to attract new accounts, are likely to increase rates within days.

Attractive accounts now…

Savings and money-market accounts: Incredible Bank with a recent APY of 1.17% on balances up to $250,000. IncredibleBank.com

Checking: MyCBB Digital Bank, 0.79% on all balances. MyCBB.com

High-interest checking: Consumers Credit Union with 3.09% for balances up to $10,000 if monthly requirements are met, including 12 debit purchases and one direct deposit or online bill payment. Although the credit union is based in Lake County, Illinois, you can join online for a onetime $5 membership fee. MyConsumers.org

Ken Tumin is founder of DepositAccounts.com, which monitors interest rates and new developments at more than 8,000 banks and credit unions. He is based in Longwood, Florida.


Better Consumer Deals

Take advantage of automobile bargains created by low gasoline ­prices. In response to the plunge in gas prices, carmakers have overproduced 2015-model-year large SUVs, sedans and pickup trucks. That has left dealerships with a glut that needs to be cleared for 2016 models—and very good deals available for savvy buyers. Best 2015-model-year new-car deals: Chevrolet Suburban SUV…Chrysler 300 sedan…Ford F-150 pickup. Cheap gas also has hurt the resale value of used hybrid, plug-in hybrid and electric cars. Best used-car deals: Honda Insight hybrid…Ford C-Max hybrid…Nissan Leaf electric car.

Jesse Toprak is president of ­Toprak Consulting Group, which advises automotive industry companies on pricing, branding and new-product development, Beverly Hills, California. ToprakCG.com


Challenge your doctor over lab tests. Since the implementation of the Afford­able Care Act, increases in health insurance premiums have slowed, but the consumer’s share, such as insurance deductibles, has increased. Example: The average deductible for the cheapest health-care plan is expected to rise by 11% in 2016. In particular, lab tests can cost patients hundreds of dollars out-of-pocket until the annual deductible is met.

What to do: When your doctor brings up any tests he/she wants to order, ask, “How will the result of these tests affect my specific treatment?” If the doctor doesn’t have a convincing answer, tell him/her that you are on a budget and want only lab tests that are necessary to evaluate and treat your condition. Your goal is to get the best possible care without spending money unnecessarily.

Carolyn McClanahan, MD, CFP, is director of financial planning at Life Planning Partners, a fee-only financial-planning firm in Jacksonville, Florida. Formerly she practiced family medicine and emergency medicine. LifePlanningPartners.com


Transfer your credit card debt to cards with a long period of 0% introductory rates. With most variable-rate cards, if you carry debt, rising short-term interest rates will mean immediate increases in the rates you’re paying.

My favorite 0% card: Chase Slate has no balance transfer fee if you make the transfer within the first 60 days that you have the card…and a 0% APR for 15 months on balance transfers and new purchases, after which variable rates apply. The recent variable APR ranged from 12.99% to 22.99% based on ­creditworthiness. And if you miss payments, there is no penalty increase in the APR (you will have to pay a late fee).

Bill Hardekopf is CEO of LowCards.com, Birmingham, Alabama, and coauthor of The Credit Card Guidebook: Understanding the Complex World of Credit Cards.

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