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This Week In Your Wallet: Time’s Up, Time Out (Not) And Time On Your Side

Like many of you, I’m sure, I love a good awards show. They’re a fun diversion on a Sunday night. But inspiring? Not usually. This year’s Golden Globes — and the in-force arrival of the Time’s Up Now movement — was the exception. I caught the show from a hotel room in Phoenix, where I donned my PJs, ordered room service and hunkered down for the night. (Yes, it was not even 5:30 p.m. Don’t judge.) My throat caught when Reese Witherspoon mouthed “love you” to her friend Nicole Kidman as both women’s names were read in the nomination for the first award of the night. (Kidman won.) And I clapped out loud (who cares that no one could hear me?) for Frances McDormand, Natalie Portman and, of course, Oprah.

The Time’s Up co-founders — Witherspoon, America Ferrera, Eva Longoria, Kerry Washington and others — were joined by all but a handful of women in wearing all black and talking about actual issues on the carpet. Their aim: Work across all industries to eliminate gender imbalance and workplace sexual harassment. And the organization is making progress. Before the end of its first week, Time’s Up raised more than $15 million for its legal defense fund. If you are in need of advice or legal help when it comes to workplace sexual harassment, Time’s Up has a request form to fill out here, as well as additional resources — like guides and advocates — here.

Now, onto the rest of this week’s headlines…

Stock Market Sureties in 2018

As of yesterday, the Dow Jones Industrial Average, which closed over 25,000 in the first week after the new year, is still charging ahead. Does that mean it’s time for a market time-out? Not so fast, says WSJ columnist Jason Zweig.  His most recent column points to four things that are sure to happen — i.e. not the market moving up or moving down — this year. Among them: Correlations — e.g., the amount companies move up or down together in the market — are down, according to T. Rowe Price. That means you’ll likely get a lot of portfolio managers telling you it’s a “stock pickers’ market” — and that taking an active approach to beating the market will yield greater returns than investing in passive funds that follow it. Take this with a grain of salt. Historically, actively managed funds tend to struggle to outperform their passive counterparts, and they charge higher fees, which can lead to significantly lower returns in the long run.

Another surety: Stocks are about to get a lot better-looking in the rear-view mirror. Zweig notes that we’re about to put September and October of 2008 behind us as far as 10-year-trailing returns are concerned. Once they vanish, “that would nearly double the average 10-year gain [in the S&P 500] to 11.5 percent annually from 6.2 percent without even counting dividends,” he writes. Finally, Zweig notes that dips in the market — like everything else in life — are relative. The averages have been going up so steadily for so long that even a 5 to 10 percent drop has the potential to feel a lot more dramatic and life-sucking than it would in a period of volatility.

It’s coming. I don’t know when. So let’s keep our heads down and our focus long-term. And if you have short-term money in the market, move it. It never belonged there anyway.

Attention All Personnel

Anyone else hooked on the latest round of M*A*S*H reruns? Even if you’re not, you may be interested in the major change coming to military retirement plans, which Pentagon officials are calling “the biggest update to the military’s pension and benefits since World War II,” reports CNBC. Here’s the rundown:

The Old: Military members could potentially receive a pension of at least 50 percent of their base pay for life — as long as they served for at least 20 years. The potential problem — and one reported reason for the change — is that many members don’t serve that long.

The New: Called the Blended Retirement System (BRS), this program will combine a traditional pension with a defined contribution plan. Members who opt in will choose how much money to contribute to the latter — the government’s Thrift Savings Plan (TSP). Depending on how much they put in, members can receive matching contributions of up to 5 percent of pay immediately and still be eligible for a pension after 20 years of service. However, that pension will be reduced by 20 percent from the old plan. (The government encourages members to contribute more to the TSP to make up the difference.)

New members of the military will be automatically enrolled in the BRS as of January 1. As for current members? If they’d already served 12 years as of December 31, 2017, they’ll remain with the old plan, but if they’ve served less time, they need to decide whether to stick with the old or enroll in the new by the end of 2018. If you’ll be making your decision in the coming months, more information on the new system is available here. And thank you for your service.

Tax Refunds And Healthcare Costs

Raise your hand if were waiting for this year’s tax refund to see a doctor or specialist. This is disturbing, yes, but it’s more common than you might think. Research from the JPMorgan Chase Institute found the overall level of healthcare spending is 60 percent higher the week after receiving a tax refund payment than in a typical week over the 100 days before. Not surprisingly, the difference was even higher among those seemingly cash-strapped families that keep around $500 or less in their checking accounts.

What we can take away from this: Many people are waiting to go to the doctor until they have their tax refund — and until they can pay for it with their own cash instead of credit. Although not spending money you don’t have is generally a positive rule of thumb, it’s also important to get the care you need when you need it (if at all possible). Consider services like Medgotiate that negotiate medical bills on your behalf. Their fee is 20 percent of what they save you (no cost otherwise), and customers often save 30 to 40 percent on their bills. As for prescription drugs, I wrote a piece for The Balance on how to cut costs.

Have a great week,

Jean

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