Top tips for positioning your portfolio, paying taxes: Wealth!

On today's episode of Wealth!, Host Alexandra Canal breaks down key personal finance tips, from balancing your portfolio to preparing to file your taxes.

Matt Powers, Powers Advisory Group managing partner, discusses how to best position your portfolio in a rate-easing cycle and an election year. In a lower interest rate environment, Powers focuses on traditional defensive sectors like utilities (XLU), consumer staples XLP (XLP), and financials XLF (XLF), noting that “we still expect some short-term volatility as we enter October, which is historically the most volatile month of the year in election years.”

As mortgage rates hit a two-year low, Yahoo Finance's Dani Romero breaks down what it means for potential homebuyers as they navigate the housing market. Meanwhile, Danielle Hale, Realtor.com's chief economist, breaks down the pros and cons between buying now and waiting. "Now we're at that seasonal slowdown sweet spot for buyers. So there's less competition which can make it easier to snag a deal on a home. At the same time, you might see lower rates if you wait into the spring. But you might have to offset those lower rates with more competition and better prices. You know, in essence, I don't think buyers can go wrong either way," she tells Yahoo Finance.

In August, LegalShield's Consumer Stress Legal Index ticked up to its highest level since November 2020. In presidential battleground states, stress rose even more, and historically, that elevated battleground stress during October and November has resulted in a Republican White House win. LegalShield SVP of Consumer Analytics Matt Layton explains, "Our index is really made up of three different subindices: The bankruptcy index, foreclosure index, and a consumer finance index. Each of those three individuals are also increasing over the last several months. But when we speak to our lawyers, we hear issues like job security, layoffs — folks are concerned about their jobs. They don't have enough money at the end of the month to pay their bills."

If you received a tax extension in April, the due date is October 15 — just over two weeks away. Tom O’Saben, National Association of Tax Professionals director of tax content, notes that it is crucial to pay your taxes on time to avoid any penalties, which could be as much as 5% per month. In addition, failure to pay the penalty could end up being as much as 25% of the tax itself. He warns that the statute of limitations for the IRS to audit a return is unlimited for returns that aren't filed, compared to the normal three-year window. If you don't have the ability to pay your taxes in full, O’Saben explains that the IRS offers both short-term and long-term payment plans.

This post was written by Melanie Riehl

Video transcript

Welcome to welcome them Alexander Canal in Fort Smith and this is Yahoo Finances guide to building your financial footprint.

Our community of experts will give you the resources, tools, tips and tricks you need to grow your money on today's show.

I look at some of the best position sectors and stocks in a lower rate and timing the market.

Real.com chief economist joins us later in the hour to discuss the best time to buy a home.

Plus if you requested an extension on your taxes, your new filing deadline is fast approaching.

We've got all the details you need ahead of October 15th.

But first, we take a look at some of the market action 90 minutes into the trading day.

We're looking at games for both the Dow Jones industrial average and benchmark S and P 500 after the S and pe out its third record close of the week on Thursday.

Meanwhile, the tech heavy NASDAQ which is still on track for weekly gains is trading right around the flat line.

The moves come after this morning's August inflation data came in mostly in line with expectations here to discuss the current market state of play.

And what it means for your portfolio is that Powers Powers Advisory Group managing partner that we just said that P ce coming in favorable after that 50 basis point right up from the FED, what sectors are best positioned as we now enter this lower interest rate environment?

Yeah, good morning.

And thanks for having me.

It's uh it's, it looks like it's exactly what the fed wanted to see, maybe a little bit better.

Uh The 50 basis point cut.

Really?

Uh it, it, this inflation numbers validated that and it now looks like November cuts are likely.

Um but as far as sectors that we look at, you know, we're traditional defensive sectors, we, we still expect some short term volatility as we enter October, which is historically, uh the most volatile month of the year in election years.

We like uh utilities, um consumer staples, financials and outside of sectors, you also have some stocks that you like.

Target being one of those names here.

We've been talking a lot about the state of the consumer, especially consumer.

That is more choosy.

Why do you like Target Target?

You know, we're a dividend growth firm.

That's kind of our, our core focus, but they've got a great history of growing their dividend.

But beyond that, um their recent earnings report, they beat on both earnings per share and revenue and they returned to a growth mode after really a long stretch of underperformance.

Um improved digital sales last quarter, 8% was up in in store sales as well.

So we just think their position nicely moving forward.

And I want to, I want to get your take on the treasury market because you pointed out that we're seeing the fifth straight monthly advances for treasury the first since 2010.

How should investors be looking at the treasury market?

The bond market especially as the fed is expected to continue its easing cycle.

Yeah, on the fixed side, you know, we really say target the intermediate, the the middle and you know, keep some short term liquidity available.

But recent you know, re returns come into form.

It's it's interest and appreciation and the theme really is to move away from the short term, extend your duration slightly before more rate cuts, which as we know, it causes the underlying value of the the the bond to appreciate in a cutting cycle and uh you need duration to benefit for bonding rates.

So without it returns only gonna come from the income coupon side.

So really, I mean, the the short of that is just increase your your duration and we're about to enter October 1 month before the election, typically a volatile time for stocks.

If you're an investor, should you be changing your positionings ahead of November or should you really try to stay the course at this point?

You know, maybe a combination of the two.

So you gradually shift.

I don't think that any big knee jerk changes before an election are a good idea because we don't know obviously who's going to, to, to win the election.

So, and as I mentioned before, we like an overweight stance towards the defensive sectors and uh you know, the markets in general are becoming much more balanced and the broadening has increased significantly.

And, you know, really adding to it, as I mentioned before, the easy safe money has been made that the days of the, the 5% yields on cash or are slowly going to pass.

And um we're looking at a reallocation really towards dividend based side and dividend based ETF S so some broad based exposure and, and capturing higher yields and, and likely some appreciations as f funds flow into this area.

Um and dividend stocks are the highest inflows and that they've had in six months.

Uh So it just appears investors are looking for some, some low risk returns, longer term type returns.

And I wanna let you out on this and talk about inflation, we still have inflation above the fed's 2% target.

There's always that risk that inflation could tick up again.

Are there signs in the market or, or, or things that investors should be looking out for ahead of that reality?

You know, it's kind of the same thing what I said earlier, you know, it, we're already kind of to see and we'll continue to see there's a, there's a gradual shift um away from that, that short term fixed side which that all ties in with inflation, obviously, interest rates.

And yeah, it's that, that likely decrease in those types of assets, the money market C DS.

And, you know, with our clients, we're, we're seeing it as rates reset, they're starting to look around it at some different opportunities.

So, you know, I would say that might be a uh something to consider, but the attractiveness of holding those types of assets uh as a risk off return that you know that options kind of dwindling at this point.

All right, Matt Powers Powers Advisory Group managing partner.

Thanks so much for joining us.

Thank you for having me.

Well, cash is king.

So they say, well, sort of if you're looking for bigger returns on your investment, equities may be a better bet, but cash can still have a place in a balanced portfolio.

Now, when we say cash, what do we really mean?

Cash isn't technically an investment.

It's not invested in the stock market.

It has very little to no risk.

So any headlines about a major sell off won't impact your cash investments much.

There are a few cash management projects, products that fall under umbrella of cash, a cash management account, a money market fund and a certificate of deposit A K A CD First Cash Management accounts.

They are advertised as combining the best of both the checking and savings account.

But instead of a bank, they are offered by brokerage firms, you can deposit cash, write checks and use ATM S. They also offer an above average interest rate, which would be the incentive for putting your money there instead of a standard savings account.

Next money market funds.

That's a type of mutual fund that has a very short term maturity.

They invest in the lowest risk assets like treasury bills or corporate bonds and focus on stability and liquidity.

And finally C DS, this is a type of savings account with a fixed interest rate and a set term.

You'll be insulated from things like rate cuts once you've locked in your rate, but you also can't access that money without penalty for a set period of time.

Maturity dates vary by CD from months to years.

C DS with the maturity date of less than three months are considered a cash, cash equivalent.

So why not go all in on cash while cash investments tend to generate much smaller returns in stocks or bonds, that's the price you can pay for keeping your money safer.

And with cash management accounts and money market funds, interest rates and T bills are impacted by the federal funds rate.

So all the, as the fed begins to cut, you could see smaller returns in the months to come.

Well, the A I trade stumbled over the summer after a monster start to the year.

This week, it got a boost from an earnings report and a big new prediction to break down exactly what we've seen and what might be next.

We have market domination, co anchor Julie Hyman and Julie.

It has been interesting to track the moves of some of these A I names like NVIDIA, for example, that's up about 5% this week.

Yes, it is up this week.

Still down off its highs this year.

So I wanted to look, first of all at what we have seen in the so called A I trade this year, there are a couple of different ways you can do that there.

In fact, are a lot of different ways you can do it.

So I'm going to do it in a couple different ways.

First of all, by looking at the NASDAQ 100 the 100 largest stocks in the NASDAQ composite.

Now, this index peaked back on July 10th after having this big run up to start the year of more than 20%.

Since then, we've had kind of a downturn and then an attempt at a rally, another downturn.

And now we are again in this current attempt at a rally to regain those record highs, the record high by the way, 20,006 75 for the NASDAQ 100 specifically, we're off about 3% from those levels.

Another way to measure it is to look at the magnificent seven.

Specifically, you can do that by tracking it through an ETF among other ways.

Now, this too, July 10th is that magical date where we saw it peak and it too has seen sort of these ups and downs since then to your point.

All we've seen sort of a comeback in many of these this week and really over the past several weeks, up 1.5% another way of slicing and dicing.

This is by looking at the semiconductor stocks.

And indeed NVIDIA is sort of the prime example of what we have seen here in the A I trade NVIDIA two actually didn't peak on July 10th.

It peaked on June 18th, but then made an attempt to do so again.

And also it's down about 10% from those levels.

So what's been happening recently here that has sort of given a little bit of a little bit of magic back to that A I trade.

There's been a couple of things that have been going on here.

I'm just going to equal weight this year to date to get a better look and find the stock that I am looking for, which is my Miron, a part of the story this week, this memory chip maker coming out with its earnings and an earnings forecast, the sales forecast specifically, that was ahead of what the street was looking for.

And in particular is demand for its high bandwidth memory product, which is A I related that is really juicing some of the enthusiasm.

The other thing that has been giving a lot of enthusiasm to the A I Trade this week is a new report out of consulting giant Bain and company.

Now, Bain said uh through 2027 we could see an annual pace of A I demand on an annual basis.

So each year of 40 to 55% that would mean you could see up to $990 billion in demand by the end of 2027 where is that demand going to come from?

Because we're all still trying to figure out exactly what the deal is with A I, how it's going to play out.

Well, they talk about a lot of that, at least half of it really being what they call the infrastructure enablers.

And Kate Moore Blackrock in an interview with us this week, had some interesting commentary about that.

She said we're not, we're not anywhere near the midpoint of this A I upside and cycle.

And she said right now, we're in the city building phase, right?

The infrastructure providers are building the sewers and the streets, what's gonna be necessary for then the other stuff to continue to happen, things like applications A I related it services, which some of the other things that the bain report looks for.

So obviously, you're seeing a huge expectations for gains from here.

There is at least a little bit of skepticism in some quarters, maybe not about the underlying A I story, although there is a little skepticism around that, but also about the valuations that we have, of course, seen as a result of all of, you know, the run up that we have seen in many of these names.

I mean, you know, we know the conversation that we have been having around the likes of and just the monster game that it has had still even with the pullback, not just this year, but over the past several years, we talked to Mike Darta of Roth MKM yesterday and he said typically, you know, this doesn't just go up and keep going up and it also doesn't flat line and go sideways.

It does tend to roll over a little bit.

He said, maybe that's part of what is happening right now.

Ali, yeah, Julie and that valuation, the demand story, especially when it comes to some of these A I A. I'm certainly not going away anytime soon.

Thank you so much for joining us coming up.

We're taking a look at the latest in mortgage rates.

Stay tuned.

You're watching Yahoo.

Finance mortgage rates dropped to the lowest level in two years.

Incentivizing buyers back into the market.

Yahoo, finances housing reporter, Danny Romero joins us now with the breakdown.

Danny, what's the latest?

All it was a week of big moves.

Freddie Mac reported that the average 30 year fixed mortgage rate fell one basis point from last week now, this was the lowest level in two years.

Like you said, remember, rates have dropped more than a percentage point since May and lower rates has been a great opportunity for homeowners, homeowners who had a 7% mortgage rate are now refinancing.

The monthly mortgage payment is $300 cheaper from April.

The median house payment is about $2500.

That's during the four weeks ending in September, September 15th.

So the big question is, will mortgage rates even move lower from now?

And that really depends.

Economists at Fannie Mae and mortgage Bankers Association expect the 30 year fixed mortgage rate will end this year at 6.2% so higher than the current range.

Ali Danny important stuff to keep track of, especially for those looking to buy a home.

Thank you so much.

Well, if you're strolling through some open houses this weekend, it might actually be a good time to buy one.

According to realtor dot coms annual report, we're about to approach the best week of 2024 to purchase a house here to discuss is Daniel Hale real.com, chief economist.

And now can you just talk to the seasonality factor of all this because this is really separate from the mortgage rate conversation, correct?

Yeah, that's right.

We've got two different things going on the market momentum which you know, falling mortgage rates should help boost momentum and we should see some additional buyers come into the market, but seasonally fall is a relatively slower period for the housing market.

We typically see demand pull back.

It's about 30% lower this time of year than at the peak of the year.

And that lower demand, while we still a decent number of options on the market, create some imbalance.

So we see prices tend to fall seasonally this year, it could be as much as $14,000 down from peak price.

And we also tend to see homes sit for a little bit longer on the market perhaps two weeks longer than they did in the summer this year.

So it gives buyers more time to make decisions and they might see a bit of a reprieve on home prices as well.

We're also seeing a rise in co buying homes, meaning people are buying homes with other folks, maybe their friends, maybe their family.

What are some of the advantages to something like that?

And, and what is maybe a downside risk to something like that?

Yeah.

So realtor.com has done a couple of surveys looking at this phenomenon and we do see that a lot of people are open to the idea of buying with someone other than a spouse, typically friends, other family members, maybe romantic partners.

They're usually doing this to afford a better location, get a more updated home with better features, maybe find some more space sometimes, although less frequently sighted, people are looking to get into the housing market and start to build equity sooner.

So a lot of different reasons I think the housing market has been challenging for a lot of buyers to get into for a very long while.

And people are getting creative and working with friends and other family to make their dream of homeownership happen.

And on the conversation of mortgage rates, we know the fed cut interest rates by 50 basis points.

However, the expectation of the fed easing cycle that's really been priced into mortgages, which is why we've seen those rates decline.

Given that, how much more relief do you expect through the end of the year?

I think we're going to see pretty, pretty modest relief between now and the end of the year.

I think we're likely to see rates hover about where they are.

So somewhere between six and 6.2%.

So not a whole lot of additional improvement.

But as Danny noted, we have seen some increase in buyer purchasing power as a result of the improvement that we've seen to date.

So if buyers haven't looked at their mortgage affordability and while it would be worth taking a look to see what they can afford, how that might lead to an adjusted home price target, or maybe they want to pocket some of the savings.

Thanks to lower mortgage rates as we move into spring season 2025 we may see rates stripped a little bit lower, but I think it's going to be 2025.

So before we see mortgage rates that start with a five will probably be in the high fives as we move into the spring 2025 buying season.

So given that is, is there any strategy to try and time this market?

Especially if you're someone that maybe can wait a little bit and doesn't have to move right now.

Yeah, that's a great question.

So there are pros for buying now.

We're at that seasonal slowdown, sweet spot for buyers.

So there's less competition which can make it easier to snag a deal on a home.

At the same time, you might see lower rates if you rate into the spring, but you might have to offset those lower rates with more competition and better prices.

You know, in essence, I don't think buyers can go wrong either way.

I think if you're shopping and you have a good idea of what you want and you find it and it fits within your budget, it makes sense to move forward if rates do indeed drop further, that may create an opportunity to refinance.

But in the meanwhile, you'll have started building up equity.

So buyers are in a really good position right now.

The best position that they've seen in quite some time in the housing market and let's say you're someone that really is anxious to move needs to move right now.

What should be on that checklist when it comes to looking at the the the various options out there and really maximizing savings as well.

Yeah, so if you're looking to get a good deal.

Realtor.com recently did some research looking at listing descriptions, sellers that put the phrase price to sell or other similar value signals in the listing description are in fact more willing to make a deal and their pricing tends to be better.

So shoppers can get 8.5% or $38,000 discount below the median price if they're looking for terms like price to sell.

And if you don't want to wait for lower mortgage rates, there are tips to lower your mortgage rates.

The number one that results in the biggest savings is to shop around among mortgage lenders and that can net you a better mortgage rate than just going with the first offer.

And finally, what other trends are really sticking out to you in this very unique housing environment, especially when we think about the affordability factor of it all along with the differences among regions as well.

Yeah, so the housing market is really interesting right now, the northeast and the Midwest, which are relatively affordable outside of the major cities have tended to see home sales and pricing activity do relatively well.

In the South.

Pricing hasn't been as strong because we've seen more building activity.

So that's created a lot more inventory for buyers.

And out west we've seen sellers continue to engage with the market a little bit better.

So we look at the west and the south.

We're looking at more inventory or the closest regions to recovery when it comes to pre pandemic levels.

So, shoppers in these regions have more options and are seeing a little bit better pricing conditions in these regions as well.

Daniel Hale realtor.com, chief economist.

Thanks so much for joining us today.

Have a great weekend.

Thanks, you too.

Coming up.

One study of Americans legal worries may point to a Trump 2024 win.

We'll take a closer look at the numbers next on wealth.

Are you a passionate investing?

B maybe love scooping up shares in video on every single dip because well A I is changing the game fascinated by pe ratios and how the presidential election outcome may impact them.

Then come on and come all to the 2024 best conference, huge power players all under one roof, thought provoking discussions on November 12 at second in New York City.

We can't wait to welcome you to invest 2024 live Yahoo Finance all day.

A new study from Legal Shield which assesses Americans demand for legal services points to a possible Trump victory in November in August.

The firm's consumer stress legal index ticked up slightly to its highest level since November 2020 presidential battleground states stress rose even more and historically that elevated battleground stress during Uber in November has resulted in a Republican White House win to discuss.

I'm joined by Matt Le and Legal Shield, Senior Vice president of Consumer Analytics.

Matt, thanks for being here to, to start.

Can you first describe what exactly this legal index tracks and how is this different from some of the other national polls out there?

Which do show Kamala Harris leading former president Trump?

Sure.

And thank you for having me today and you, you hit it right on.

We're seeing two months in a row now of increased consumer financial stress.

We had a, we had a record increase in July for the 22 years of the index in August, not only maintained that increase but also had an increase in and of itself.

And really what this says is we serve, we provide legal benefits for millions of people all across North America to the tune of 100 and 50,000 requests for service per month.

And what that allows us to do is we're, we, we get out ahead of the issue.

We can take the pulse of the consumer instead of waiting for more lagging measures which are uh polls and surveys.

And what exactly does the stress lie in?

What, what is making you the people that you speak with really on edge.

So our index is really made up of three different sub indices, the bankruptcy index, foreclosure index and a Consumer Finance Index.

Each of those three individuals are also increasing over the last several months.

But when we speak to our, to our lawyers, we hear, uh we, we hear issues like job security layoffs.

Folks are concerned about their, about their jobs.

They, they, they don't have enough money at the end of the month to pay their bills.

So you know what, which bill can I pay, which is ok not to, not to pay.

And then even on into housing, what happens if I don't make my mortgage payment?

What happens if I can't pay my rent?

These are the types of issues that we're seeing an increase in that's causing our index to go up.

And why at least in this index do we often see higher stress levels equal a Republican win?

Is it because there's just more confidence in GOP policies when it comes to economic revivals?

So really what we're mainly focused on is the data and those core correlations.

So over the last five presidential elections, what we found is that when the stress level in battleground states rise above the stress level of the national that has shown the a Republican victory in the presidential elections.

And conversely when uh when the battleground stress levels are below the national level that has shown a democratic victory again over the last five presidential elections.

And what's important about our data in August and then even continuing in on through November is that in August that battleground stress level rose above the national average for the first time since, since February.

And how have you seen the index?

And therefore the stress levels change throughout the course of the year?

And how do you expect something like the Federal Reserve cutting interest rates to sort of ease some of those fears?

Yeah.

So I think that's a really, really good, good question.

And again, our index measures people's actions today which gives us a good polls on how people are feeling right now.

While the, while the interest rate cut is, you know, potentially a good thing for everyone that doesn't really affect pocketbooks today.

And our early September data really begins to suggest that because what we're seeing on the early data is the consumer stress is continuing to rise, not only nationally, but that battleground stress is also rising faster than the national average currently.

And we'll have to see what comes up in November, Matt Lee and Legal shield.

SVP of consumer analytics.

Thanks so much for joining us.

Thank you.

One important tax deadline is looming.

What you need to know to avoid penalties much more on wealth after the break.

You're watching out who finance if you received a tax extension in April and the due day is just over two weeks away on October 15th, we're breaking down everything you need to know.

And joining me now is Tom Osan National Association of Tax Professionals, Director of tax content.

So I, Tom, how important is this deadline?

And what happens if you miss it?

Well, it really is important because you just hit the nail on the head that the April 15th filing extension is an extension in time to file, not in time to pay.

So we've had the clock ticking on any balance due since, since April the 15th.

So we're really going to get that return filed for a couple of reasons.

One, so we can stop the clock ticking on the failure to file penalties, which could be as much as 5% per month.

But we still have the issue of that failure to pay penalty, which also can, yes, the two, the two combination can end up being as much as 25% of the tax.

And I want to say something more when it comes to the standpoint of getting that tax return filed.

I think many times human nature tells us that, well, if I don't have the money to pay, I just won't go ahead and file.

And I think that's really a mistake because one of the things that happens is, well, there's a couple of things that happened.

One is that the statute of limitations.

In other words, the IRS ability to come back and challenge what was on that return for a return that isn't filed.

The statute is unlimited when it's typically three years after you file a return.

When you don't file a return, the IRS has an open window forever.

The second thing is if you want to, for example, work out some kind of a payment plan with the IRS.

The first thing they have to have is the return.

And what I do is I liken that to imagine going to the bank to borrow money.

And the bank says, well, we need some documentation.

Why don't have any documentation?

I just want you to lend me money because II I conduct myself well or I speak well.

Well, that's the same thing at the IRS.

The IRS says, yeah, we'll work with you.

But the first thing we gotta have is we gotta have that return.

So we know what we're looking at.

And Tom, you mentioned one of those common misconceptions that if I file for an extension, I don't have to pay, but that is not the case.

Let's say you applied for that extension, but you didn't submit an estimated payment on your taxes.

What's the first step you should be making the first step you should be making number one, like I said is to file the return because the the horse is out of the barn now because the interest and the failure to file penalties have been a have been accumulating since April 15th.

That was the due date.

So the fact of the matter is let's get that return filed and at least get that failure to file penalty stopping and then once the return is filed, work with the IRS to get the, to get the payments in and there's a variety of means to go ahead and do that and, and let's dig into some of those options because what if you're someone that, that can pay or struggling to pay, what options are available to you?

That's really a great question, Alexander.

And I, and I think that's the point that, that our viewers should really take away is that, listen, the IRS doesn't want to pull up to your house in a black sedan and pull you away for not paying your taxes.

They wanna work with you.

And the graphics graphics says it all, let's say, first of all, let's get the return filed by October 15th, even if you don't have the money on that day, from the standpoint of the IRS even asking, hey, where's the money?

It's probably a 4 to 6 week process.

Again, interest is still accruing, but you've got some time to get that, get that money together.

Secondly, then again, as the graphic shows, once the return is filed, you can then apply for a short term payment plan or maybe even a long term payment plan.

I especially like the second one, the long term payment plan saying that if you can satisfy that debt within 72 months, that's six years.

Ladies and gentlemen, the IRS will likely accept that payment installment plan.

The IRS is going to charge interest a couple of factors that I want to throw out there, but their interest rates are running at about 8% which personally, I think is a lot cheaper than trying to put your tax debt on a credit card or getting a personal loan, uh, in a quick turnaround here.

And then, um, secondly, you know, the, the idea that being that we have that time to get it paid and maybe that'll help us planning for next year.

In other words, if we can put 2023 on a payment plan now, well, guess what's right around the corner in a little more than six months, 2024 tax returns are due.

So if we can kind of rectify the situation now, um and, and get that moving, then you might be better off in the future.

So we can be a little bit reactive and proactive at the same time.

Yeah, that, that's some great advice there.

And I also wanted to get your thoughts on those who are self employed because taxes can be very complicated.

There.

Are there certain strategies that, that cohort of workers should be really implementing?

Absolutely.

Great.

Again, great question.

Uh In the, I've been a tax professional a long, long time, 30 plus years.

Most of the taxpayers that I've had that have financial difficulty paying their taxes are self employed people because if you're an employee, well, that mechanism occurs every payday where taxes are being withheld.

Well, that self employed person has to get into a process of paying estimated tax payments, which we all know the reality in a small business is that cash, cash flow is king.

So a lot of times you're just lucky to pay your vendors and your employees.

Uh But nonetheless, here you are with the tax problem.

But yes, let's say you're getting ready to file your return and you're a self employed person, you could actually have an impact on that 2023 return.

And about the only thing left to do right now would be to set up a self employed retirement program which you can establish and fund by October 15th for last year.

Now, it, in real, real simple terms, what it really means is you can put away about 20% of the net profit of your business into one of these.

They call them a SE P plan self employed pension, but that's something you could still do for 2023 get it established and funded by October 15th and that will reduce your taxable income for 2023.

And then I would recommend again if there's a balance due, I would suggest possibly going the route of an installment plan and then get some estimated tax payments in for 2024.

Since as we just mentioned, we're a little more than six months away from having to file 2024 returns some simple ways to break down.

What can be a very daunting topic, Thomas Ean National Association of Tax Professionals, Director of Tax Content.

Thank you so much for joining us.

It's been my pleasure looking to begin your investment journey, but I'm sure where to start.

ETF S could be a good place here to discuss.

The pros and cons is Yahoo finance contributor, Ross Mack and Ross.

Before we get into the pros and cons, I often get asked this question and for a new investor, this can be confusing difference between ETF S mutual funds, index funds.

What's your, what's your say there?

I love, it's a one, right?

I'm always gonna recommend when a person is starting out.

Definitely look at some type of fund, right?

Which is gonna provide you diversification.

However, what is an exchange traded fund?

I'm sorry, what's an ETF it's an exchange traded fund, which is a investment vehicle that's gonna give you the ability to own several different assets across different asset classes sectors, etcetera, all within just one individual transaction.

And so when you think about, you know what's an ETF and why you might wanna look at it, right?

The very first pro of it is diversification, right?

Just like I said, you have the ability to own different assets, whether it's tens, hundreds or thousands, literally just by buying one single transaction.

And so when you think about that, why that's a good thing, imagine if you only own travel stocks in 2020 COVID happened, right?

The world shuts down, guess what your portfolio might be down over 50% because you own in what airlines hos, I mean, hotels, etcetera.

Right.

So, having diversification gives you the ability to have different, own different sectors where, you know, from a risk standpoint, you know, sure, maybe my travel stocks might be down.

But hey, I also my own communication, stocks and technology stocks, etcetera.

And those are the things that were kinda off weight or, you know, make up for some of the lack of performance in some of the other sectors.

Another thing to think about is overall fees, right?

So when you asked earlier, what's the difference between ETF S and mutual funds?

ETF S and mutual funds are very similar?

However, one's open in one's closed in, right?

Or actively managed, passively managed.

So ETF S are passively managed and therefore they're gonna have lower expense ratios relative to, to mutual funds.

And why that's big is because over the course of call it 30 years, you know, half a percent, 1% et cetera that can add up to be tens of thousands of dollars over the long course.

And so ETF S are gonna be a lot cheaper than mutual funds, right?

Um And then another thing to think about is just the overall liquidity, right?

ETF S have the ability to be traded very similar to stocks and therefore you can buy and sell them throughout the day, mutual funds only at the end of the day.

Right.

And so that's something to think about now.

Right.

You might have some people that have some, you know, drawbacks.

I don't, I don't, I won't say there are many cons, however, there are some things that will make you say, well, I actually might wanna do this.

Right.

And I think one cons on to an ETF is just, maybe it's over diversification.

Right.

So if you look over, you know, the past several years in the stock market, well, technology companies have been doing extremely well.

So by being overly diversified, you might own some um you know, retail stocks, you might own some oil energy stocks, right?

If you only would own technology companies, right?

Only technology stocks that would have probably given you a much higher return.

So at times it could be uh a a very small negative, right where it's like over diversification.

Another thing to think about are well, fees, right.

At the end of the day, we talked about fees which makes a ETF cheaper than mutual funds.

However, there are fees associated with it, which are expense ratios, which is saying literally, there's a professional that's managing this basket of goods.

And so ETF are gonna have fees that are obviously higher than just buying individual stocks.

And on your new podcast episode, if I for your style, you dive deeper into the ETF conversation.

Who did you speak with?

And can you give us a little little preview into that episode.

Yes, it's a phenomenal episode, right?

Like at the end of the day, if you're just starting out investing, my first investment recommendation will always be ETF S diversification out the gate, right?

If you look at the S and P 500 the average return over the past 30 years is roughly 10%.

And so when I talked to Kristen Myers who's editor in chief at etf.com, we actually talked about a lot of strategies that help a a small investors actually start understanding right?

Being able to go to etf.com and look up say, hey, I actually wanna look at semiconductors.

There's a lot of talk about NVIDIA.

So you can actually just type in NVIDIA to see which other actual ETF S own NVIDIA.

So it's a phenomenal episode coming out Monday.

Love it, love it.

Thank you for the teaser there, Ross Mack.

You can catch his podcast, financial freestyle new episodes every Monday at 12 p.m. Eastern.

Can't wait to tune in.

Thanks so much.

Coming up.

It's almost holiday shopping season.

We dive into the trends to watch next on Wealth Costco.

It's one of the hottest memberships in the world with over 128 million cardholders globally.

Three types of Costco memberships exist.

The base also known as Gold Star Business and the executive membership, which is the highest here.

All three had their first price hike in seven years with prices officially rising on September 1st today.

Gold star members pay $65 per year to get access to Costco online and warehouses.

It also includes two free membership cards so you can bring a friend and shop for some big deals.

And if you own a business, the business membership is for you, it's pretty much the same as a gold star, but you're allowed to purchase for resale.

Now, the highest tier, the executive membership, it's double the price of the gold star and business tiers clocking in at $130.

But there are some added benefits.

There is a 2% annual reward on all eligible Costco purchases for up to $1250.

So if you spend 500 bucks a month at Costco, you'll get $120 back annually.

And there are some extra discounts on Costco services as well.

Just like the gold star membership.

It comes with two membership cards.

All three of the memberships gets you exclusive access to the wholesaler warehouses.

You, you can buy pretty much anything and everything from music instruments and jewelry to even a barn.

And of course, the infamously hard to get Costco gold bar, but ultimately, a membership isn't right for everybody.

First.

If you don't live near Costco, it probably is not a good idea to get a membership.

And you also need to evaluate how much use you would actually get out of that.

Card.

How many people live in your home?

How often do you plan on going?

How much do you plan on spending all questions?

You need to ask yourself before coughing up that annual fee.

It's almost time for what will be a shorter holiday shopping season with only 27 days between Thanksgiving and Christmas.

Now, shoppers are starting early with three quarters beginning to see out holiday deals according to a new consumer spending report.

Joining me now with more insights is Ed Holland Cla co founder and chief product officer.

And you know, I was surprised going through this report to see that 26% of the shoppers you pulled said that October is the best month for holiday shopping feels a bit early to me.

But what's the motivation behind some of these earlier shopping trends?

Yeah, you know, I think what we're seeing is that customers are uh really feeling inflation and so people are spending more on essentials and do expect to equally spend on the holidays the this year have not increased spending, but they're very focused on price and they're very focused on deals and discounts.

And so what we see is that customers are totally willing to start earlier and think about where they can, you know, make their money go the furthest and find that best deal during the holiday season, even if that means, you know, going ahead and buying in early October.

And uh is there an ideal time to shop when it comes to finding some of those best deals.

And does that differ whether it's online or in store, brick and mortar?

You know, what we see is that it really depends by brand.

And so the the key thing is that, you know, consumers think about all the different ways uh to connect with brands, whether that's browsing in person, whether that's signing up for their email list or S MS list, um different brands approach where the best, the best discounts are um in different ways.

And so the key thing for consumers is just think about, you know, if, you know, there's a brand out there that the person you're giving a gift to loves, make sure that you've, you know, signed up for that email list, signed up for that S MS list, but also look in store and, and go to their website online.

What exactly are people spending their money on these days?

Especially as we've seen a more choosy consumer amid higher prices.

Yeah, I mean, in some ways we haven't seen that change.

So the, the thing that applies, you know, basically across all age groups, across all generations is the the top category fashion.

So, apparel and accessories uh followed by effectively hobbies.

And so other than Gen Z, where we see that the, the second most popular category is watches and jewelry for all other age groups, it really is, you know, whatever those hobbies may be um that's where consumers are focused.

And the same is true.

We see that parents spend a lot more during the holidays and they're much more likely to spend over $500.

But it's still the exact same uh prioritized category.

So it still comes back to fashion and fun.

And even with the, the different inflationary environment, it really hasn't changed, you know, where consumers are focused.

And I also want to talk the tiktok effect, how has social media impacted shopping behaviors?

Yeah, I mean, you know, social media is everywhere, you know, nearly every consumer talks about how they're likely to be influenced by social media in some way.

Um I think something that really surprised us coming out of this report is that, you know, we've seen a lot of brands very focused on these uh glossy large, you know, campaigns with celebrities and influencers.

And while we see those are certainly important, we see actually see that consumers are say they're four times more likely to actually be influenced by the rest of their social media.

So those day to day relationships on tiktok or Instagram are much more likely to influence buying behavior than the 11 off big celebrities or influencer campaigns.

Yeah, that's, that's something I think that has been a change over the past several years.

Another thing I want to point out is price over quality, 70% of consumers selected price range and say they prefer you know, a cheaper option over the quality.

What does that say to brands that are maybe looking at their inventory and thinking about things like discounts?

Yeah.

So, you know, I think what we see is that, you know, consumers uh still desire quality.

So the, the second, you know, most common sided factor was quality but they're gonna, you know, really want strong value for their dollar.

So I, I think for brands it's, it's thinking a lot about, ok, who are the consumers that we know, love the brand?

What are the ways that we can, uh, build those relationships and offer those discounts and consumers are going to be looking for them, you know, really across all consumers.

We see that uh across spin levels.

If they're spending little on the holidays, if they're spending a lot, they're looking for discounts and they're thinking about where they can make their dollar go a long way.

And are you seeing any year over year comparison trends yet?

When you look at last year or, or even pre pandemic, has there been any differences that you've seen this year that stick out?

Yeah, I think it's been a surprise, you know, we, we thought that when customers, you know, everyone reports feeling inflation and they report, you know, feeling the price of essentials go up, we're seeing that cut, you know, consumers don't intend to, to cut holiday spending.

In fact, they actually intend to increase it and so, and so the big change is just how they approach the whole holiday season is that people are more focused on discounts.

They're more focused on getting value for their dollar and they're willing to, to start earlier in the, in the season to actually, you know, make that, make that happen.

Hey, well, holiday shopping season quickly approaching, I need to get started on my shopping as well.

Ed Hallen Clavier, co-founder and Chief Product Officer.

Thank you so much for joining us.

Hey, thanks for having me.

Let's do a final check of the markets here.

We're seeing the tech heavy NASDAQ take a leg lower here off about 3/10 of a percent.

We're seeing the dow up nearly 1% on the day where the S and P 500 is pretty much flat.

Now, if the S and P closes in the green, today will be the four record close for the index this week.

So we continue to track that.

But for now that's it for wealth and Alexander can now thank you so much for watching and stay tuned for market.

No nation with Julie and Josh left in.

That's coming up at 3 p.m. Eastern.

You won't want to miss it.