After surging 116 points last week, the Dow Jones industrial average drifted 16.49 points lower yesterday, closing at 3,790.70. For readers interested in Wall Street and Main Street year-end financial suggestions, read on:
YEAR-END "MUST": At this time every year, each family head should make a list called "Where Things Are" (or a similar title) and give copies to your spouse, children, lawyer, accountant, person to whom you have given a power of attorney, etc. Update the list every year. The list should show the location of your savings and checking accounts, passports, safe-deposit box and its keys, brokerage accounts, will, premarital agreement (if any), insurance policies and so on. Also, list any debts you owe, names and phone numbers of your lawyers, accountants, bank trust officers and so on.
YEAR-END TIMING: "In the last few weeks in December, look ahead and realize that for shrewder retirement saving, make the maximum allowable annual contribution -- $2,000 -- to your Individual Retirement Account in January. By making the deposit right after the first of the year rather than dollar-cost averaging or waiting until later in the year, your money will earn more through a longer time period of compounding." (Morningstar Mutual Funds)
YEAR-END TAX MOVES: "It's not too late to lower your 1994 tax bill. Suggestions: Create capital losses by selling depreciated securities you no longer wish to own. Capital losses can be used to lower your 1994 income because they are deductible to the extent that they offset capital gains plus $3,000 . . . Pay 1994 fourth-quarter estimated tax payments either this month or in January 1995, in the year you need most deductions . . . Maximize retirement plan contributions. Your 1994 contributions to most retirement plans will reduce your 1994 taxable income." (Tax Hotline) For more tax moves, see your accountant promptly.
YEAR-END TIPPING: Want suggestions about how much to tip at year-end? From Kiplinger's Personal Finance Magazine, December, here are some guidelines: "Day-care provider: a small, inexpensive gift, such as a bottle of perfume. Nanny and au pair: between $200 to $500 extra during the holidays. Neighborhood baby sitter: about $25. Hair stylist or barber: wide range, from $5 to $50. Newspaper carrier: $5 to $15. Sanitation workers: $5 to $15. Letter carrier: cash is illegal, but a letter of appreciation to his/her supervisor is a nice touch. Apartment-building custodian: $25 to $100. Parking-garage attendant: $5. Waiters and bartenders: Add 5 percent to your tab during the holidays."
YEAR-END GIFTS: "Very often, people wait until the last possible moment, at year-end, to make charitable gifts by check. Remember: A check that is mailed to a charity is considered delivered on the date it is mailed. The date that the check is cashed is not critical. Example: If a check is mailed to the United Way on Dec. 31, 1994, and cashed on Jan. 1, 1995, it is considered to be delivered on Dec. 31, 1994. Thus, the donor is eligible for an income tax deduction this year." (National Underwriter, sent in by Gary Hornbacker)
YEAR-END OPTIMISM: "At year-end, make plans for early 1995 investing. Look for the stock market to gradually rise through the first quarter of the year," says Wayne Angell, former Federal Reserve governor, adding, "The reason is that 1994 fourth-quarter corporate earnings will probably be stronger than expected, boosting U.S. stocks. The market has already discounted President Clinton's political weakness and Republican congressional harmony will fuel economic growth."
YEAR-END MONEY-SAVER: "Looking for a Christmas present for your heirs? Even in late December -- when everybody else is Christmas shopping -- think carefully about buying insurance to pay off future estate tax bills. The sooner you do it, the less you will pay and the more you will save for your heirs. Trap: If you don't buy insurance to pay estate taxes, your estate will have to finance the tax bill by paying cash, liquidating assets or borrowing and then repaying the lender. All three options will leave your heirs much poorer." ("Die Rich and Tax Free" by Barry Kaye, $29.95)
YEAR-END QUICKIES: Between now and year-end, meet with your broker or financial planner, to review where you were, where you are now and where you're headed with your money and investments . . . Remember to give "money" gifts to children, grandchildren, etc.: mutual funds, shares of stock, savings bonds, etc. In selecting gifts for young people, remember that stocks and stock funds have outperformed every other type of investment over the long run. (Of course, as economist John Maynard Keynes once quipped, "In the long run we'll all be dead.") . . . Review your retirement plans where you work (401k, 403b, etc.) to make sure that you are contributing the maximum amount possible.