Money Monday

Topic A:

Here in the Tri-State, we're really lucky to have so many great Fortune 500 companies to work for: P&G, Kroger, Fifth Third, Macy's, GE… just to name a few. But one of these companies in particular has had a really rough few years - especially when it comes to its stock.

General Electric employs about 9,000 people in the Tri-State… so it's probably a reasonable guess to say some of you listening tonight work for GE. And, it's also reasonable to guess, that some of you probably own a lot of GE stock…. Which isn't a good thing if you're banking on all that stock to be your retirement plan.

First off, at one point last week, the value of GE stock dropped to its lowest level since 2009 (less than $13/share). This year it's down about 25%, and it was down 42% last year.

To add insult to injury, GE is expected to announce a decision to break itself up as early as this spring, with a split likely, CNBC reported on Jan. 16.

Always remember ths SMA rule: Indivdiual stocks should make up no more than 10% of your total investments. This is especially true if you WORK for the company as well. You don't want to tie your current income AND too much of your future income to one company. This rule applies to EVERYONE, no matter who you work for!

And also keep this in mind... there are 3 general reasons to sell a stock:

If you need the money: There may be times when you are strapped for cash. You may have underestimated your tax bill or need extra cash for some house repairs. Whatever you need the money for, make sure you talk to your tax advisor and financial advisor before selling any stock.

There is something fundamentally wrong with the company: Remember Blockbuster? With the creation of Netflix and on-demand services, it was a struggle to compete. Blockbuster didn’t change its business plan in enough time to turn the company around.

Other investment options might be better for you: It could be the case that owning that stock you have just doesn't make sense any more for your risk tolerance, retiremement goals, whatever.

HERE'S THE SIMPLY MONEY POINT

Just because you work for a "big" company doesn't mean its stock isn't vulnerable to price drops. Be smart about how much you own.

#2: Enquirer

Every Sunday, Simply Money is answering your money questions in the Cincinnati Enquirer.

James in Sayler Park: I’m 58 and just learned that my company allows for a 401(k) in-service distribution at age 59 1/2. Is this something you recommend doing?

#3: Budgeting

About 57 million American workers now "freelance," and by 2027, it's expected that the majority of the workforce will be freelancers. 

And while freelancing comes with perks like your own hours and not answering to a boss, it ALSO comes with some money challenges. Here a a few Simply Money tips for budgeting if you're a freelancer (or if you're thinking of becoming a freelancer):

Make a budget (and then make another one): As a freelancer, your pay can be unpredictable. So as you create a budget, start with your EXPENSES (not your income). This will help you determine how much you need to be making each month to keep the lights on, so to speak.

Also, you should try to make TWO budgets: one for your business needs and one for your personal needs. This will help you know how much you'll need to earn to live the lifestyle you want.

Build an emergency fund: Simply Money generally suggests having an emergency fund that covers 3 to 6 months work of expenses. But if you're a freelancer, you might want to bump up that coverage (6 to 9 months, or even 9 to 12 months). This will give you a cushion if you are between projects or you face an unexpected expense.

File your taxes quarterly: If you’re self-employed and expect to owe $1,000 or more in federal income tax, the IRS requires that you file estimated quarterly taxes. You might also have to make estimated tax payments if your tax in the previous year was greater than zero.

Save for retirement: As your own boss, you’ll have to take retirement savings into your own hands— and you won’t have perks like matching funds to incentivize you. But you still have options. Self-employed workers have several options for retirement savings accounts, including an "individual 401(k) / Solo 401(k)," Roth IRA, and taxable investment accounts.

HERE'S THE SIMPLY MONEY POINT

Just because your paycheck might be unpredictable as a freelancer doesn't mean your personal finances have to be. Make sure you're taking budgeting and saving seriously.

Brian Thomas

Brian Thomas

Based in Cincinnati, OH, the Brian Thomas Morning Show covers news and politics, both local and national, from a conservative point of view. Read more

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