Trump's tax bill plan adds to federal debt, prompting investor backlash
Investor unease over President Donald Trump's economic program drove the government's borrowing costs to their highest level in nearly two decades, following House approval of tax legislation that is expected to add trillions of dollars to the ballooning U.S. national debt.
The yield or interest rate on the 30-year Treasury bond briefly topped 5.1 percent Thursday morning, reflecting investors' demands for greater compensation in return for lending money to the U.S. government.
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Yahoo
16 minutes ago
- Yahoo
Should you buy an annuity? Here's 4 times when it doesn't make sense to do so
Annuities can be a solid tool for generating guaranteed income in retirement, but they're not for everyone. Despite promises of financial peace of mind, annuities come with some big trade-offs. They're complex, often expensive and restrict access to your funds. Before you tie up your money potentially for decades, it's worth asking yourself if an annuity truly fits your financial situation. In plenty of cases, it might not. Annuities are essentially a bet that you'll live long enough to make the upfront investment worth it. You give an insurance company a lump sum or series of payments, and in return, they promise to pay you income — sometimes for life. The longer you live, the better your investment pays off, because no matter how long you live, those guaranteed payments keep coming. However, if you have concerns about your health or your family history points to a shorter life expectancy, you may be better off keeping your money elsewhere. You could spend $100,000 or more to buy an annuity and only get a few years of payments before passing away — leaving little to nothing for your heirs. Some annuities include a standard death benefit, which pays out the remaining contributions minus fees and withdrawals. (You contribute $100,000, receive $60,000 in payouts and your heirs inherit $40,000 minus fees.) You can also add a death benefit rider to your annuity, but that protection comes at an added cost — one you could avoid by skipping an annuity altogether. Similarly, since annuities restrict access to your initial investment, it can be costly — if not nearly impossible — to access your money if your health rapidly declines and your financial outlook shifts. In short, if your health isn't solid, keep your cash more liquid and flexible somewhere else. Learn more: Here's what you should know about inheriting an annuity. An annuity is often described as a do-it-yourself pension. If you're lucky enough to have a traditional pension from your job when you retire, you may already have guaranteed lifetime income. Let's say you're set to get $3,000 per month from your pension, and your expenses are $4,000 per month. Maybe an annuity could cover the $1,000 gap — but so could a smart systematic withdrawal plan, not to mention the ultimate source of guaranteed income in retirement, Social Security. If your pension covers all your essential expenses, an annuity contract will only complicate your retirement plan. You're likely better off keeping additional funds in an IRA or a high-yield savings account for emergencies and nondiscretionary spending. Annuities are complex and a bit different than other financial products. Learn how annuity fees and commissions work and the common annuity terms that every investor should know. You may also want to consult with a financial advisor if you're considering an annuity. Annuities are for people who already have their basic financial house in order. If you're still working on building up your emergency fund or paying off considerable debt, buying an annuity could make your overall financial situation worse, not better. Why? Because annuities generally require a large upfront investment in order to produce any sort of meaningful income in retirement — think $100,000 and up. Most financial experts recommend putting no more than 25 percent of your savings into an annuity, so you should have plenty of money elsewhere before signing a contract. Because once you buy an annuity, getting your money out can be difficult. Annuity funds are notoriously difficult to access without getting hit with surrender charges and tax penalties. And once you annuitize your contract, meaning you start receiving payouts from the insurer, you may not be able to take an early withdrawal at all. Annuities also generally don't offer great growth potential or adjust payouts to keep pace with inflation (unless you pay extra). If you're still trying to build wealth, you're likely better off keeping your money in a Roth IRA or a brokerage account. Get started: Match with an advisor who can help you achieve your financial goals Annuities are most useful for people who want to outsource some of their retirement planning decisions — particularly when it comes to managing investment risk and timing withdrawals. The insurance company handles the investment, the payouts and manages the risk of outliving your money. But that convenience comes at a cost: high fees, rigid rules and less flexibility. If you feel confident managing your own portfolio, it's not very useful to pay an insurance company to do what you can already handle yourself. You're likely to get better returns and more control by keeping your money invested and drawing it down in a tax-efficient way. If you want a second opinion, a one-time session with a fee-only financial advisor could go a long way and cost only a few hundred dollars — a drop in the bucket compared to the potential hidden fees baked into many annuity contracts. While annuities aren't the right choice for everyone, there are valid reasons why they continue to be part of retirement planning conversations. The trade-offs are real, but so are the benefits — especially if you're focused on long-term financial security. First, not all annuities are expensive or inflexible. Multi-year guaranteed annuities (MYGAs): These are fixed-rate annuities that act more like CDs, but with deferred taxes. They're simple, low-cost and don't require giving up access to your money forever. Longevity annuities: These deferred income annuities are purchased at retirement but don't start paying out until later — usually around age 80 or 85. Because they're designed to cover only the later years of retirement, they require a much smaller upfront investment than annuities with lifetime payouts. Second, you might feel confident managing your investments now — but what about in your 80s or 90s? Cognitive decline is a real possibility, and not everyone has a reliable person to step in and manage their finances. An annuity can automate your income and help protect you from poor decision-making later in life. And finally, while annuities are often seen as rigid, there are ways to build flexibility into your contract. For example, you can add a long-term care rider if you're worried about your declining health. Many contracts also allow annual withdrawals of up to 10 percent before you fully annuitize, giving you access to a portion of your money if you need it. Ultimately, buying an annuity is a deeply personal decision. The best move is to talk through your options with a qualified financial advisor before moving ahead. Annuities are heavily promoted as a solution to retirement planning, especially by sales reps and agents who make commissions selling them. But in reality, they're far from a one-size-fits-all fix and there are plenty of times when buying an annuity simply doesn't make sense. If you're on the fence, ask yourself what problem you're actually trying to solve by purchasing an annuity. If it's peace of mind, reliable income or protection against market volatility, there might be simpler, cheaper ways to get there. Compare advisors: Bankrate's list of the best financial advisors Editorial Disclaimer: All investors are advised to conduct their own independent research into investment strategies before making an investment decision. In addition, investors are advised that past investment product performance is no guarantee of future price appreciation. Sign in to access your portfolio
Yahoo
21 minutes ago
- Yahoo
ASX slips after Trump/Musk stoush
Cautious investors sold down the ASX on a quiet day of trading on Friday, despite the US and China resuming trade talks, as markets await critical jobs data out of the US. The benchmark ASX 200 index slipped for the second consecutive day of trading falling by 23.20 points or 0.27 per cent to 8,515.70. The ASX200 has now recorded four consecutive weekly gains. The broader All Ordinaries fell during Friday's trading, down 26.70 points or 0.30 power cent to 8,741.90. The Australian dollar also is down 0.21 per cent and is now buying 64.95 US cents. On an overall bleak day on the market, nine of the 11 sectors finished in the red with just energy, industrials and utilities gaining ground. Woodside Energy gained 0.97 per cent to $22.94, while Santos is up 0.61 per cent to $6.58 as the price of Brent crude oil continues to recover over the week's trading. Industrials also had a strong day led by Qantas Airways which jumped 3.46 per cent to $10.76 despite the news Virgin Australia is looking to re-list. Transurban shares also rose 0.63 per cent to $14.38, and Computershares Limited rose 0.83 per cent to $41.08. CBA shares slipped from its record highs down 0.79 per cent to $179.90, Westpac fell 0.24 per cent to $33.18 and ANZ traded 0.44 per cent lower to $29.50. NAB was the only big four bank to finish in the eking out a 0.18 per cent gain and to close Friday's trading at $38.58. eToro market analyst Josh Gilbert said initially there was optimism on the markets following 'very good' trade talks between Washington and Beijing. But this quickly changed after a public spat between former friends President Donald Trump and Tesla chief executive Elon Musk. 'This will provide a hit to overall market sentiment, particularly tech, but may not be long-lasting for anyone other than Tesla,' Mr Gilbert said. The overall lower volumes on the ASX comes as investors await the latest payroll data out of the US. 'The uncertain macro backdrop continues to provide a hurdle for risk-on sentiment, and cooling US economic data is leaving investors unassured,' Mr Gilbert said. 'With the labour market heavily in focus, the print this evening will be essential for market direction.' Mr Gilbert said negative economic data released throughout the week could actually help drive the ASX 200 higher. 'The weaker-than-expected GDP data this week also drives the expectation for further rate cuts, further supporting the market optimism,' he said. In corporate news, Worley shares fell 0.46 per cent to $13.08 despite the business announcing it had won a contract with Glenfarne to help support engineering work on its Alaska LNG pipeline. Shares in gold miner West Cobar Metals soared 60 per cent to $0.024 after announcing it has completed the acquisition of the Mystique Gold Project in Fraser Range, Western Australia. Error in retrieving data Sign in to access your portfolio Error in retrieving data
Yahoo
21 minutes ago
- Yahoo
Hungary's Orban lauds MAGA advance after Nawrocki's win in Poland
BUDAPEST (Reuters) -Hungarian Prime Minister Viktor Orban said on Friday that nationalist Karol Nawrocki's victory in Poland's presidential election was "fantastically good", hailing the success of an ally of U.S. President Donald Trump. Eurosceptic Karol Nawrocki narrowly won the Polish presidential election on Sunday, delivering a big blow to the efforts of Donald Tusk's centrist government to cement Warsaw's pro-European orientation. "From a Hungarian perspective, I think the outcome is fantastically good, as there is a pro-Ukrainian, pro-war, pro-Brussels liberal government operating in Poland," Orban said in an interview on state Kossuth radio. Orban, also an ally of Trump, said he interpreted Nawrocki's victory as the "continuation of the patriot's advance." "One could also say that the 'Washington Express' has arrived in Warsaw," Orban said, alluding to Nawrocki's election as a victory for European conservatives inspired by Trump and his Make America Great Again (MAGA) movement. Both Tusk's government and its conservative nationalist predecessor have been staunch supporters of Ukraine in the war triggered by Russia's 2022 invasion and have been critical of Orban's tilt towards Moscow. Nawrocki has said Poland must continue to support Kyiv's war effort, but in a break with the policy of previous governments in Warsaw, he opposes NATO membership for Ukraine. For his part, Orban has refused to send weapons to Ukraine since the start of the war and kept close relations with Moscow. Orban publicly endorsed Nawrocki ahead of the second round of Poland's election.
