Many influential financial stories broke in 2013. And the headlines of yesterday could continue to affect finances in 2014.
From market highs to Obamacare, keep these stories on your radar to help prepare for the new year:
One of the biggest was the record highs for stock indices. The Dow closed above 16,000 for the first time Nov. 21, the NASDAQ is up more than 30 percent for the year, and the S&P 500 is up more than 25 percent. But not everyone is sure the gains will continue into 2014. Some experts worry that a correction, a 10 percent drop or more, could be on the horizon. Worst fears are that this record climb could be a repeat of 2008 when, following record gains, the market dropped 38 percent. For investors and businesses in Las Vegas, this means cautious optimism is the name of the game. Don’t assume the markets will keep going up, and make sure you can handle the risks when dealing with equities.
Another important story throughout 2013 was the possible changes the Federal Reserve could make to its $85 billion-per-month bond buying program, known as QE3. Just the mention of tapering bond buying caused markets to roller coaster throughout the year. Then, Dec. 18, the Federal Open Markets Committee unexpectedly announced it would reduce its bond-buying to $75 billion per month starting in January. As tapering occurs, watch out for interest rates. Though the Fed announced it would keep the Federal Funds Rate at record lows for the time being, rates for mortgages, bonds and other borrowing could still increase, hurting bond yields and increasing the cost of borrowing.
If you saw an increase in your income in 2013, be prepared for the possibility of higher taxes when you file. Not only is there a new top tax bracket of 39.6 percent for individuals making more than $400,000, 2013 saw the introduction of two new Medicare taxes for high-income earners. The Medicare surtax to help fund Obamacare is an additional 3.8 percent for either net investment income or modified adjusted gross income above $200,000, whichever is less. The Medicare Hospital Insurance tax is a 0.9 percent tax on earnings of self-employed individuals or wages of employees over $200,000. Make sure you stay in the know about what your tax obligations are and research if there are any deductions or credits you can take advantage of to lessen the bill.
Finally, no summary of this year’s news is complete without one of the biggest national stories: Obamacare. The botched rollout and mass confusion has created plenty of news that’s likely to continue into 2014. Many Americans are expecting to see higher health insurance costs: one study estimates that health care premiums for the average American could increase by 41 percent. No matter who you are, it’s important to stay informed of your health care obligations under the new law. You don’t want to get hit with tax penalties during 2014.
As Las Vegas continues its rebound, we’re likely to keep seeing the effects of 2013’s biggest financial news stories. Not all news is bad news, though. A record market, tapering of the bond program and increasing interest rates are all signs that the economy is on an upswing. And a good economy means good business for Vegas.
Bradley Zucker is president and chief financial adviser of Safe Money Advisors, Inc., a Las Vegas-based independent financial advisory firm. For more information, visit www.SafeMoneyAdvisorsNV.com.