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PENSACOLA , FLA., AHEAD IS ONE OF OUR TOP PICKS FOR RETIREES. 9 TOPIC A How the Fed’s moves affect you . . . PAGE 44 Using less cash is a trend . . . Working from home? Don’t expect a tax break.

INVESTING

14 INVEST IN THE HEALTH CARE REVOLUTION The world is keeping a close eye on firms that are working to develop a vaccine for COVID-19. But investors should also be keeping an eye on companies at the forefront of rapid innovation in health care. We highlight stocks that stand to benefit—industry giants, leading-edge biotech firms, medical-equipment makers and even insurers. PLUS: Five health care funds.

19 NEW BULL? OR SAME OLD BEAR? The S&P 500 has bounced back from its March lows. Here’s why some think the stock market will keep heading up—and why others aren’t so sure.

20 STREET SMART I’m still bullish on China, by JAMES K. GLASSMAN.

23 5 GREAT REITS TO BUY NOW Many real estate investment trusts are suffering amid the recession, but we found ones that are weather- ing the storm and have bright futures.

25 MORE ABOUT INVESTING ETF spotlight (25). News of the Dividend 15 (26). Kiplinger 25 update (27). Mutual fund spotlight (28).

MONEY

29 THE BEST BANK FOR YOU The pandemic has touched just about everything—including how we use banks. Check out our top picks among national banks, internet banks and credit unions. PLUS: Best banks for retirees, parents

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CONTENTS.FINAL.indd 1 6/19/20 1:36 PM CONTENTS CONTINUED

40 CREDIT/YIELDS Find the best money FUNDAMENTALS cleaning procedures and social-distancing market for you. measures in place, the Great American Road 54 PRACTICAL PORTFOLIO Understand the Trip is poised to make a comeback. 42 HSAS GET EVEN BETTER New rules expand major indexes. what health savings accounts cover. Flexible spending accounts have relaxed their rules, too. 56 MILLENNIAL MONEY Class of COVID-19, IN EVERY ISSUE by EMMA PATCH. 6 FROM THE EDITOR Test-driving retirement. COVER STORY RETIREMENT REWARDS 7 READER FEEDBACK Best rewards cards.

44 FIND A GREAT PLACE TO RETIRE Does the 58 ARE YOU READY TO TRAVEL AGAIN? 64 MAKING IT WORK Nursing in the time pandemic have you rethinking your retirement Travel restrictions are still in place, and you of COVID. destination? We found some places to consider— might still think flying is too risky. But bargains vibrant cities with low density, good health care, for future travel may be worth a look. Plus, with below-average living costs and moderate taxes. national parks open and hotels putting new

FACING THE CHALLENGES OF COVID-19. PAGE 64 SARAH RUBINSTEIN

2 KIPLINGER’S PERSONAL FINANCE 08/2020

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TAX BREAKS FOR COLLEGE Our list includes write-offs for people saving for college, as well as deductions and credits for tuition and books while you’re a student. kiplinger.com/kpf/collegebreaks

RECESSION STOCKS It’s official—we’re in a recession. Consider these defensive stocks that provide products and services people simply can’t live without. kiplinger.com/kpf/recessionstocks

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4 KIPLINGER’S PERSONAL FINANCE 08/2020

CONTENTS.FINAL.indd 4 6/19/20 1:37 PM

FROM THE EDITOR Mark Solheim

mid March and the staff began to work re- Test-Driving Retirement motely, we decided to pack up the car and move to our new home for a few months. Yes, we are working as hard as ever, but with com- muting time freed up, we are also taking post- workday hikes and long weekend bike rides. e debated whether we should go far away from family and friends. That trip in- When we don’t fret about COVID, we realize ahead with our cover story this spired us to commit to staying in Washington, we are far less stressed because we are Wmonth—our annual list of great D.C., for the time being. We hired an architect surrounded by natural beauty (so what if places to retire—in light of the pandemic. Are to design an addition for our house and it takes longer for the flowers to bloom?). new retirees rethinking the list of places they started to interview builders. Then last sum- We’ve even made friends with neighbors. might go? Are retirees even contemplating mer, while we were vacationing with family Allyson and I are both able to do our jobs moving right now? Particularly with a reluc- in Michigan’s Leelanau Peninsula, we decided remotely, and our paychecks are intact. tance to fly, at least in the near future, prox- to look at homes for sale. We fell in love with (Thankfully, Leelanau County has had a total imity to family and grandkids might be a a house with a view of Lake Michigan, took our of only 12 COVID infections.) We realize how higher priority. In the end, we decided to go renovation money and made a fat down pay- fortunate we are as we acknowledge that a ahead with the article (see page 44), but with ment on it. lot of people have been hit hard by the pan- a slightly modified list of criteria. We looked The pandemic hasn’t pushed up our retire- demic and the recession. Many near-retirees for smaller cities with less density but not ment time line, but it has presented a serendip- have had to rethink their retirement plans, isolated—excellent broadband coverage was itous opportunity to test-drive our retirement and the fallout from the coronavirus has laid a must. Good health care was high on the list, lifestyle. When the Kiplinger offices closed in bare the imbalance in equity and privilege in as were recreational and fitness opportunities. America. (See page 64 for a new feature that And as always, we profiles workers who are grappling with chal- chose places with lenges sparked by COVID and the recession.) a moderate cost THE PANDEMIC of living that are Our commitment. The mission of this maga- HASN’T PUSHED UP also tax-friendly zine is to make your financial lives more se- or tax-neutral, OUR RETIREMENT cure, with advice that is actionable, accurate per our Retiree TIMELINE, BUT IT and accessible. The word accessible implies Tax Map. HAS PRESENTED easy to digest and, as much as possible, per- sonal. More broadly, that means we attempt Relocating for AN OPPORTUNITY to reflect situations that apply to all of our retirement. Our TO TRY OUT OUR readers, of all races and backgrounds. roundup of retire- RETIREMENT At Kiplinger, we have had discussions about ment places acti- inclusion, some motivated by readers who LIFESTYLE. vates a part of me think the pages of our magazine don’t reflect that looks forward enough diversity. Please know that we are to a simpler, less working on it. We are also having discussions stressful life, free of commuting and meetings about how to promote diversity in hiring com- and deadlines. A couple of years ago, to ac- panywide. If you have suggestions about how company one of our retirement places round- we can improve diversity or would like to vol- ups, I wrote about how my wife, Allyson, and unteer to be featured in one of our personal I had been exploring retirement in Michigan. finance stories, I’d love to hear from you. ■ We spent a few days in Petosky, Mich., to see how we’d like living there full-time. The con- clusion: maybe not so much. Residents we talked to said the town had a different vibe when the summer MARK SOLHEIM, EDITOR crowds left and the long, cold MARK_ [email protected] TWITTER: @MARKSOLHEIM winter descended. And it felt POON WATCHARA-AMPHAIWAN

6 KIPLINGER’S PERSONAL FINANCE 08/2020

NOTES.FINAL.indd 6 6/19/20 8:41 AM READER FEEDBACK

you should have three to standing is that a person six months’ worth of living with a Roth IRA will not Best Rewards Cards expenses in a liquid emer- pay any taxes on any with- I think you’ve made a serious omission: the no-annual-fee Citi gency fund and to invest drawal if it is a “qualified Costco Anywhere Visa card (“The Best Rewards Cards for You,” in stocks when you have distribution.” The require- June). If you’re a Costco member (who isn’t?), you get 4% back on decades to allow gains to ments for this are that it compound. If the advice is made after the five-year Costco gas and at most other gas stations (superstore and super- in that sentence was to be period beginning with the market stations are exceptions), 3% back on dining and travel, 2% followed, the vast majority first taxable year for which back on all other Costco purchases, and 1% back on everything else. of those in their twenties a contribution was made It’s my second-most-used card. The only reason I pay for Costco in- and thirties would not be to a Roth IRA set up for store purchases with my Fidelity card is that I can collect my Costco invested in “volatile, high- your benefit. Plus that the cash reward only once a year on my anniversary date, but that’s a risk/high-return asset payment or distribution is minor drawback. classes such as stocks”— made on or after the date JOHN McCASLIN precisely the opposite of you reach age 59½. KIRKLAND, WASH. reasoned advice to invest SAM CARDINALE in stocks for the long term. MONTEREY, CALIF. I’ve used the Citi Double interest income that is STEVE THUR Cash Mastercard for many exempt from federal, state, COLUMBIA, MD. Editor’s note: Our reader is cor- years, and you routinely and local taxes. rect. We should have elaborated. recommend it. But here’s SHELDON KIMEL Editor’s note: The advice should a little nuance with it: You GLEN VIEW, ILL. have been qualified as a caveat for Decluttering. I was disap- get 1% on purchases, and retirees, not for younger savers pointed you didn’t mention it pays 1% cash back when Did Kiplinger’s really write with years to go before retirement. FreeCycle or ReUseIt for you pay the bill, as you point that you should ensure that getting rid of stuff without out. But last time I checked, you have one to two years’ Roths and taxes. In the para- sending it to the garbage if you take the rewards as a worth of cash and five to graph about Roth IRAs, you stream (“The Complete statement credit, they don’t seven years’ worth of stable say “you won’t pay taxes on Guide to Decluttering,” give you the 1% on that type assets before investing in withdrawals until you’ve June). It likely is dependent of “payment.” So the lesson stocks? This statement is depleted your contribu- on what your local chapter is, take the reward as a counter to valuable advice tions.” (“Best Ways to Raise is like, but I have found check or direct deposit, not elsewhere in the issue that Cash,” June). My under- it a good way to get rid of a statement credit. things. Also, Craigslist is an BRAD GEORGE option. The problem is you OLATHE, KAN. READER POLL might find stuff being given away that you want, defeat- Muni bonds. In your recom- Do you have plans to travel this summer? ing the declutter purpose. mendations regarding mu- E.S. nicipal bonds, you state NEW FAIRFIELD, CONN. that “interest income is free from federal taxes— Correction: The free-trial period No, I’m and, for bonds issued in staying for the Peloton app is 30 days, not your state of residence, free close to 90 days (“Ahead,” June). from state and local taxes home. 26% Yes, as well.” (“Get Up to 9% on but I’m CONTACT US Your Money,” June). I can- driving. 63% Reader Feedback may be edited not speak for other states, for clarity and space, and initials but for us in Illinois there is will be used on request only if a specific list of municipal 10% you include your name. Send to bonds that are exempt from Kiplinger’s Personal Finance, 1% Yes, I am state and local taxes. In 1100 13th St., N.W., Suite 1000, Yes, I’m taking a trip in an RV. booking flights. Washington, DC 20005, or e-mail addition, there are taxable to [email protected]. Please municipal bonds. So not all For our take on what travelers should expect, see page 58. include your name, address and municipal bonds generate daytime telephone number.

08/2020 KIPLINGER’S PERSONAL FINANCE 7

LETTERS.FINAL.indd 7 6/19/20 8:43 AM When EDITORIAL “my mom EDITOR Mark K. Solheim EXECUTIVE EDITOR Anne Kates Smith was diagnosed with cancer, MANAGING EDITOR Frederic Fane Wolfer I wanted her SENIOR EDITORS Sandra Block, Jeffrey R. Kosnett to have access to EDITOR AT LARGE Janet Bodnar SENIOR ASSOCIATE EDITOR Nellie S. Huang the best ASSOCIATE EDITOR Ryan Ermey CONTRIBUTING EDITORS Lisa Gerstner, James K. Glassman treatments STAFF WRITER Emma Patch available. ART SONEQUA MARTIN-GREEN DESIGN DIRECTOR Stacie A. Harrison Stand Up To Cancer Ambassador” ASSISTANT ART DIRECTOR Natalie F. Kress

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MASTHEAD.FINAL.indd 8 6/19/20 9:00 AM AHEAD

TOPIC A

NOT ALL THAT LONG AGO, THE only major decision the Federal HOW THE FED’S Reserve Board had to make was where to set short-term interest MOVES AFFECT YOU rates. But in the past decade, the Fed has become increasingly It’s pumping trillions of dollars into the economy and aggressive in its efforts to pump keeping rates near zero. Savers are sunk, but borrowers up the economy—and there’s no sign it will slow down anytime get a boost. BY DAVID PAYNE soon. Whether you’re a borrower,

ILLUSTRATION BY KOTRYNA ZUKAUSKAITE 08/2020 KIPLINGER’S PERSONAL FINANCE 9

AHEAD.FINAL.indd 9 6/19/20 7:58 AM AHEAD

saver or investor, this matters to you. its Main Street Lending Facility est rates until 2023 at the earliest. Some history: As the economy cra- and lending to city, county and state If inflation remains contained, rates tered in 2008, the Fed made the un- governments through its Municipal could stay low for even longer. How- precedented move of purchasing large Liquidity Facility. The Fed is also ever, although the European Central sums of Treasury bonds and mortgage- backing loans issued through the Bank has experimented with negative backed securities, which pumped an Paycheck Protection Program, a interest rates by allowing commercial extra $1 trillion into the economy. Over federal loan-forgiveness program banks to borrow at negative 1%, the the course of the next 10 years, it pur- designed to help small businesses Fed isn’t inclined to go that far. chased an additional $2.5 trillion. Then, survive the coronavirus pandemic. when the coronavirus crisis hit, the As for interest rates, it’s likely they Good news, bad news. Borrowers will Fed purchased another $3 trillion in will remain low for a very long time benefit from the low-rate environ- bonds and securities, bringing its lia- in order to encourage borrowing and ment. The 30-year fixed mortgage bilities so far to a record $7.2 trillion. keep the money flowing. Fed chairman rate is likely to remain below 4% for (The total size of the U.S. economy is Jerome Powell announced at the June the foreseeable future (although home currently $21.5 trillion.) 10 meeting of the Federal Open Market prices typically rise faster when rates And the Fed isn’t done. It now has Committee that the corona virus could are low). Auto, home-equity and other the authority to support up to $2.6 tril- continue to have an impact on the consumer loan rates will also likely lion in new lending, which includes economy for the next two years and remain at historic lows. making loans to businesses through that the Fed isn’t likely to raise inter- The news is not good, though, for savers and income investors. Bank deposits, certificates of deposit and short-term U.S. government securities will pay almost nothing. Returns for longer-term government and corpo- rate bonds will also be much lower than historical norms. Annuities and life insurance premiums will cost more, because the insurance com- panies that back those products are earning less in the fixed-income mar- kets where they invest those proceeds. The stock market has typically cele- brated low interest rates, but low rates are a mixed blessing for investors in general. The stock market is now the only game in town for those looking for decent returns on their retirement savings. But without a bond market that provides a reasonable rate of The Fed’s Money Machine return, it will be more difficult for investors to protect themselves from Unlike the rest of us, the Fed doesn’t have a budget constraint. It can buy assets by market downturns by investing in a writing checks on itself. Because the Fed doesn’t ever have to pay off its liabilities, mix of stocks and bonds. Investors it can never go bankrupt. seeking higher returns may be driven So what’s to prevent the Fed from creating as much money as it wants? Again, into much riskier investments, such as nothing. The only problem with creating money is that it might cause inflation, as high-yield junk bonds, commodities more paper and electronic dollars chase a slowly growing supply of goods and ser- and private equity. vices. This is what has caused hyper-inflations in smaller countries in the past. Consider investing in high-quality But so far, that hasn’t been a problem. In the past decade, no matter how many dividend-paying stocks, which may securities the Fed has purchased, inflation has remained stubbornly low, breaching yield more than fixed-income invest- 2% only when oil price run-ups occurred. The mechanisms that drove inflation in ments while providing some ballast in past decades don’t seem to be working the same way anymore, and for that reason down markets. You can find an update it appears that inflation is going to remain low for some time to come. of our favorite dividend-paying stocks

on page 26. ISTOCKPHOTO.COM

10 KIPLINGER’S PERSONAL FINANCE 08/2020

AHEAD.FINAL.indd 10 6/19/20 7:59 AM INTERVIEW auto-lock the screen—to keep their phones pro- IF YOU’RE USING CASH LESS tected. And make sure you choose a reputable digital OFTEN, YOU’RE PART OF A TREND wallet provider, because you are storing your payment The pandemic is speeding up the use of digital payments. credentials with them.

Other countries, such as Sweden, are essentially cash- Dayna Ford is senior director- concerns about health and purchases using a digital less. How far is the U.S. from analyst for Gartner, a market hygiene could get consum- wallet, only the wallet becoming a cashless society? research firm. She focuses ers to try digital wallets. provider sees your credit I don’t think cash is going on digital wallets and other Once they try them, some or debit card information. away anytime soon. We’ve forms of electronic payment. will continue to use them. Consumers should follow seen a number of legislative best practices for protecting initiatives to protect cash, Electronic payments have What about contactless, data on their phones—use such as banning cashless soared since the pandemic peer-to-peer payment sys- passwords and biometric stores in San Francisco, began. Do you expect that tems? We will continue authenti- New Jersey and Philadel- trend to continue after the to see the growth of peer- cation, phia because they’re seen crisis is over? I do, though to-peer systems such as as discriminating against the trend toward digital Venmo. You also have consumers who don’t have payments due to the pan- programs such as Zelle, a bank account. Plastic demic has taken different which caters more to cards may go away before forms: shopping online, consumers who use cash. I do think we will paying digitally while traditional banks. see some reduction in the doing a physical pickup The pandemic adds amount of cash in circula- or using contactless meth- momentum because tion due to the pandemic. ods of payment, such as some consumers digital wallets. All were don’t want to touch What are the prospects existing trends that had cash. Concerns for the Federal Re- been steadily climbing over about hygiene serve introducing a the past couple of years but will get some digital form of the have accelerated since the people over U.S. dollar? The pandemic began. After the the inertia U.S. Federal Re- crisis is over, the rate of dig- that prevented serve, along with ital payments will drop, but them from central banks not to what it was before. trying these in Europe and systems. other regions, has Apple, Google and other considered de- providers offer apps designed How can con- veloping its own to eliminate the physical wal- sumers protect digital currency. let in favor of a digital one, themselves Other coun- but they’re not widely used. from identity tries, such as Do you think they’ll become theft when China, are far- more popular now? In places using these ther along this such as Asia, the use of digi- products? In path. It seems tal wallets is very pervasive. some ways, likely that the U.S. A key reason we don’t have digital wallets will watch to see more adoption here is con- are more secure how these initia- sumer inertia. Consumers than credit and tives fare in other in the U.S. and Europe are debit cards. For regions before it accustomed to using plastic example, when makes a decision. credit and debit cards. But you make online SANDRA BLOCK

PHOTO BY JARED LEEDS 11

AHEAD.FINAL.indd 11 6/19/20 2:37 PM AHEAD

THE SWEATPANTS BRIGADE of two methods. With the actual ex- pense method, you multiply all of your WORKING FROM HOME? home-related expenses, such as your mortgage or rent, utilities, and home- DON’T EXPECT A TAX BREAK owners (or renters) insurance, by the percentage of your home dedicated to The tax overhaul scrapped the home office deduction for your home office. For ex ample, if your remote employees. office takes up 10% of your home, you would deduct 10% of those bills. The IRS offers a simplified method to calculate this deduction: Measure AS ANYONE WHOSE ZOOM MEETING HAS To claim this deduction, you must the square footage and multiply it by been interrupted by an inquisitive have a place in your home that’s used $5, up to a maximum deduction of child or a barking dog can tell you, “exclusively and regularly” for busi- $1,500. If your home office takes up working from home has its drawbacks. ness. It doesn’t have to be a separate 200 square feet, for example, you But in the past, there was a money- room, as long as the space you use—a would deduct $1,000. Although the saving upside: Employees who were desk in the corner of your bedroom, first method requires more record- required to work remotely could de- for example—is used exclusively for keeping, you’ll probably get a larger duct the cost of their home office. business purposes. deduction by deducting a percentage Unfortunately, that’s no longer the Once you’ve set up your home office, of your actual costs, Rigney says. case. The new tax law eliminated a you can claim the deduction using one SANDRA BLOCK provision in the tax code that allowed workers to deduct unreimbursed busi- ness expenses, including the cost of a home office, as long as the expenses Can You Claim a Home Office Deduction? exceeded 2% of their adjusted gross income. Start here Even before 2018, it was difficult No Is part of your home for employees to claim this deduction used in connection with because they had to meet the “conve- a trade or business? nience of the employer” test—which Yes meant that they were required to work remotely. Those who merely had the Yes Are you using that option of working from home were in- part of your home eligible. Working from home during as an employee? the pandemic likely would have met the test because most employees No whose offices were closed had no say in the matter, says Nathan Rigney, lead No Is the use regular and exclusive? tax research analyst for H&R Block. Yes Who can claim the deduction. Workers who are self-employed or have a side Is it your principal Yes hustle can still claim the home office place of business? deduction, and expenses don’t have No to exceed 2% of their AGI. Likewise, you’re eligible to claim the home office Do you meet patients, Yes deduction if you’re an independent clients, or customers contractor, even if you worked in an in your home? office before the pandemic, Rigney No says. Keep a record of the day you No Yes started working from home, because No deduction Is it a separate structure? Deduction allowed you’re only permitted to claim ex- penses incurred since that time.

12 KIPLINGER’S PERSONAL FINANCE 08/2020

AHEAD.FINAL.indd 12 6/19/20 7:58 AM DIGITAL DO-OVER CALENDAR AMENDING YOUR 08/2020 TAX RETURN WILL GET EASIER

STARTING THIS SUMMER, FIXING ERRORS ON your tax return will be less of a hassle. For the first time, taxpayers will be able to file Form 1040X, the document used to amend tax returns, electronically. Taxpayers amend their federal tax re- turns for all kinds of reasons—for failing to report some income, for example, or because of an overlooked deduction that would have lowered their tax bill. But in the past, you had to submit the form by mail. You could use tax software to fill out the form, but you had to print it out and mail it in. “E-filing has been one of the great suc- FRIDAY, AUGUST 7 pandemic lockdown, don’t overlook cess stories of the IRS, and more than 90% Several states are waiving sales your eyes. Eye appointments, along of taxpayers use it routinely,” IRS commis- taxes for back-to-school supplies, with contact lenses and glasses, sioner Chuck Rettig said in a statement. clothing and other items. States are covered by health care flexible “But the big hurdle that’s been remaining sponsoring sales tax holidays this spending accounts and health for years is to convert amended returns to weekend include Florida, Iowa, savings accounts. Congress recently this electronic process.” Missouri, Ohio, Oklahoma, South added some other expenses to Although taxpayers generally have up the list of eligible costs, including to three years from the date they filed their Carolina, Texas and Virginia. For nonprescription drugs. For more original return (or two years from the date a complete rundown on sales tax on the changes, turn to page 42. they paid any tax due) to amend a return, holidays, go to www.taxadmin e-filing will initially be limited to 2019 .org/2020-sales-tax-holiday. tax returns, the IRS says. If you want to SATURDAY, AUGUST 22 amend an earlier return on Form 1040X, SUNDAY, AUGUST 9 The fall shoulder season for travel you’ll still have to print it out and mail it It’s National Book Lovers Day. Even is just around the corner. Not sure in. SANDRA BLOCK if your library hasn’t reopened, you if you’re ready to hit the road yet? can download e-books to your For a run-down of what the travel Kindle or other device. Libby, a industry is doing to protect and smartphone app provided by digital- attract travelers, turn to page 58. content distributor Overdrive, gives you access to multiple libraries as long as you have a library card— * DEAL OF THE MONTH handy if you have homes in more August is a great time to rejuve- than one state. nate your patio, according to Deal ▲ MONDAY, AUGUST 17 News.com. Home Depot, Amazon .com and Target will knock up to August is National Eye Exam 40% off patio furniture, while Month. If you’re starting to stores such as Walmart and eBay reschedule appointments you will offer many smaller outdoor postponed during your personal ISTOCKPHOTO.COM items for $20 or less.

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AHEAD.FINAL.indd 13 6/19/20 7:58 AM HEALTHCARE STOCKS.FINAL.indd 14 6/19/20 8:38 AM INVESTING

INVEST IN THE Health Care Revolution

These companies are fighting disease and improving our standard of care. BY NELLIE S. HUANG

HE PANDEMIC HAS PUT THE HEALTH CARE INDUSTRY under a global spotlight. Biotechnology and big pharmaceutical firms are front and center as the world races toward a vaccine for COVID-19. There may be many winners, and there may be a few losers, Tbut the current crisis has reminded the world that we are living in a new age of science. // Cures for chronic infectious diseases, targeted cancer therapies and gene editing are just a few of the breakthroughs made in the past decade. And more discoveries are coming. “The speed of science is increasing,” says Joshua Riegelhaupt, assistant manager of Baron Health Care

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HEALTHCARE STOCKS.FINAL.indd 15 6/19/20 8:38 AM INVESTING

fund. “That’s why we think this is the The stocks in all three groups are century of biology,” he says. poised to drive change and find new These developments are improving approaches in health care that can the standard of care, says Julia Angliss, save costs and improve outcomes. an investment manager with a spe- Returns are through June 12. cialty in health care at investment firm Baillie Gifford. “We understand BELLWETHERS more what drives diseases, and we’re AMGEN (SYMBOL AMGN, $218). The stock able to develop drugs that are more price of Amgen, the grandfather of precise, more efficient and more effec- biotech companies, is soaring. Like tive,” she says. The investing land- many firms, Amgen is working on a scape is changing, too. Many health COVID-19 vaccine, which has in part care stocks that were once considered fueled the stock’s rise. It’s also testing defensive, nest-egg investments have Otezla, a psoriasis drug it recently ac- morphed into growth stocks. Inves- quired, as a potential COVID treatment. tors can bank on more change. We are But the firm’s fortunes have also re- in “the early innings of transformative vived thanks to a major cost-cutting global change due to innovation in push, expansion in China and Japan, health care,” says Riegelhaupt. and new products on the market, in- With that in mind, we set out to find cluding Kanjinti, for breast cancer. exciting opportunities in health care All told, analysts expect a 9% jump flux across many industries because of today. Some stocks are well-known in earnings in 2021 over 2020 levels, the pandemic and the recession, Value bellwethers, industry leaders with and 6% average annual growth over Line gives Amgen a top score, 100, for steady revenues and profits that pay the next five years. That’s considerable, earnings predictability. nice dividends. Others provide the given Amgen’s hefty $128 billion mar- necessary technology or medical ket value. More important, the firm ANTHEM (ANTM, $266). If you know Blue equipment for drug firms to discover wins an “A++” for financial strength Cross Blue Shield, then you know new therapies. Then there are the from Value Line. The stock yields Anthem. It is the largest Blue Cross innovators. They are riskier under- 2.9%. At current prices, shares are medical benefits provider, with more takings but will give you a chance a bargain relative to peers, at roughly than 40 million Americans on its rolls to invest in next-era biotechnology 14 times estimated earnings for the through employer-sponsored plans, that is changing lives for the better. year ahead. Though earnings are in Medicare and individual plans. Its diverse client roster gives Anthem “recession-favorable characteristics Vital Statistics that have been largely ignored,” says A SHOT FOR YOUR PORTFOLIO UBS analyst Whit Mayo. Each of these companies is poised to drive change and discover new approaches in health Anthem is a steady business. Over care that can save costs and improve outcomes. the past 10 years, revenue has increased 6% annualized; earnings, 12%. The firm Market Price- Recent cap earnings has strategic initiatives in play to im- Stock Symbol price (millions)# ratio* Yield prove results and drive costs down, in- Acceleron Pharma XLRN $95 $5,133 NM — cluding its newly launched IngenioRX, Amgen AMGN 218 128,179 14 2.9% a drug benefit management platform, Anthem ANTM 266 66,997 12 1.4 and LiveHealth Online, a telehealth Bristol-Myers Squibb BMY 56 127,095 12 3.2 platform. Anthem hopes these moves Guardant Health GH 77 7,624 NM — and others will boost growth in reve- Iovance Biotherapeutics IOVA 30 4,318 NM — nue by up to 12% and earnings by up Iqvia Holdings IQV 139 26,510 26 — to 15% over the next three years, an- Medtronic MDT 93 124,917 27 2.5 nualized. Pandemic-related job losses Veeva Systems VEEV 217 32,534 119 — may curb these goals, if the number West Pharmaceutical Services WST 201 14,774 56 0.3 of insured members on Anthem’s employer-sponsored rolls falls, but As of June 12. #Daily. *Based on estimated earnings for the next four quarters. NM Not meaningful. —Not applicable; company doesn’t pay a dividend. SOURCES: Morningstar, Zacks Investment Research. Morningstar analyst Julie Utterback

still expects low-double-digit annual- ISTOCKPHOTO.COM. PREVIOUS PAGE: GETTY IMAGES AND ISTOCKPHOTO.COM (2)

1616 KIPLINGER’S PERSONAL FINANCE 08/2020

HEALTHCARE STOCKS.FINAL.indd 16 6/19/20 8:38 AM and a discount to the average forward which will be suitable for a higher price-earnings ratio of 23 for large drug number of cardio patients, and the firms. Plus, the stock yields 3.2%. debut of the firm’s long-anticipated robotic-assisted surgery system. SUPPORTING PLAYERS IQVIA HOLDINGS (IQV, $139). Iqvia (pro- VEEVA SYSTEMS (VEEV, $217). Veeva offers nounced i-Q-via) is a play on biotech cloud-computing services, among advances and technology. Its research- other tech offerings, to health care and-development business helps bio- companies including Eli Lilly, Gilead tech and drug firms as they develop Sciences and Merck. The stock has therapies, from clinical-trial design to soared recently because of high post-launch monitoring. The tech side pandemic-related demand for Veeva’s offers drug companies ways to measure, services. Consider buying on a dip. analyze and improve efficacy and out- The firm’s flagship content manage- comes, using its cloud-based software. ment system, Vault eTMF, used during COVID-19 has disrupted many clini- clinical trials, is a top choice among cal trials. But CFRA analyst Sel Hardy drug companies of all sizes, says says Iqvia is one of the “best-positioned William Blair analyst Bhavan Suri. clinical research organizations, thanks It organizes essential documents so to its global diversity and leadership that they are always regulator-ready, ized earnings growth through 2024. position in health care information allowing all participants in the study— The shares are a bargain. They cur- and technology services.” drug firms and outside contractors, rently trade at 12 times projected earn- One worry: The company has $11 bil- for instance—to communicate in real ings for the year ahead; peers trade at lion in long-term debt. But Hardy ex- time. The system is a launching plat- 18. “The company’s earnings are going pects the firm to deploy its free cash form that allows Veeva to cross-sell re- to do just fine through this crisis,” says flow—more than $800 million in 2019— lated data management services. Suri Artisan Select Equity manager Dan to pay that down. And earnings are on expects earnings to climb by 11% for O’Keefe. The stock yields 1.4%. the rise. Analysts expect a jump in an- the fiscal year ending in January 2021, nual earnings of 20% in 2021 and 11% and by 21% for fiscal 2022. Meanwhile, BRISTOL-MYERS SQUIBB (BMY, $56). The in 2022. The stock currently trades at the company is financially strong, drug giant’s 2019 acquisition of bio- 26 times expected earnings, a bit above with little debt and just over $1 billion tech firm Celgene added $18 billion in its average historical forward P/E. in cash and securities. debt to its balance sheet, and some in- vestors frowned on the deal. But Cel- MEDTRONIC (MDT, $93). Medtronic is a WEST PHARMACEUTICAL SERVICES (WST, gene has catapulted Bristol’s revenue big kahuna in medical devices. Its $201). West makes the thumb-size vials and earnings to double-digit growth, broad offerings include products that that hold injectable drugs. “These are following static results in recent years. address cardiac, vascular and neuro- not commodity products,” says Baron The first three months of 2020, the logical disorders, among other ail- Health Care manager Neal Kaufman, first measure of the combined com- ments. It also makes surgical and sur- meaning they’re not mass-produced. pany, saw sales jump 82%, thanks gery products, such as stapling devices They have specialty coatings to pre- mostly to Celgene drugs. and mesh implants. vent drug contamination. West domi- The deal also beefed up Bristol’s Competition is stiff, and COVID-19 nates many of the markets in which it pipeline of new drugs and its cancer- has delayed nonessential procedures, sells products. treatment portfolio. Morgan Stanley slowing demand for some Medtronic West’s product lineup also includes analyst David Risinger says the com- products. But Medtronic dominates items for drug delivery and research, bined firm has trials underway for many of its markets, and the pace of including syringes that can be pre- treatments for seven cancer types, in- elective surgeries is picking up. filled, auto-injection syringes, and cluding lung, bladder and liver cancer, Medtronic shares trade at 27 times devices used to reconstitute, mix with key results expected in 2020 or estimated earnings; the typical medical- and transfer drugs. Many will be 2021. The drugs could bring in $12 bil- products stock trades at a P/E of 36. used by various companies to develop lion in annual U.S. sales over the next BofA Securities analyst Bob Hopkins a COVID-19 vaccine. With West, you three to five years. expects Medtronic revenue to jump “benefit from the potential for a vac- The stock trades at 12 times esti- after 2021, with the launch of a new cine without having to place a bet on mated earnings—close to historic lows version of its leadless pacemaker, the winner,” says Kaufman.

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HEALTHCARE STOCKS.FINAL.indd 17 6/19/20 8:38 AM INVESTING

The COVID factor has boosted West’s progressive type of high blood pres- the business, says T. Rowe Price stock, and shares are expensive rela- sure that weakens arteries in the lungs Health Care manager Ziad Bakri. tive to other medical-products stocks. and heart. “Most PAH patients die But Kaufman says the shares could sig- within five to seven years,” says Bar- GUARDANT HEALTH (GH, $77). One day soon, nificantly exceed expectations. “This on’s Riegelhaupt. Acceleron’s PAH a routine Guardant Health blood test company will generate strong revenue drug, unlike others that treat only the may be able to detect cancer before growth for many years to come.” symptoms, has indicated it can slow symptoms appear. “That’s the biggest the disease by “telling the arterial and most exciting part of the business,” INNOVATORS muscles to relax,” he says. says Kaufman, and it could open a ACCELERON PHARMA (XLRN, $95). This bio- The risks are high. If clinical trials billion-dollar market for the company. tech firm has one drug already on the fail, the shares will suffer. Plus, the Although that test is still in clinical market in partnership with Bristol- company has little in the way of reve- trials, revenue from Guardant’s other Myers Squibb. The treatment, for two nue and no earnings. But the firm has business, precision oncology testing, blood disorders, is a potential block- low debt and $414 million in cash on has doubled every year since 2016. The buster. Another drug in late-stage trials the balance sheet. And royalty checks tests rely on a patient’s blood or urine could be a big seller, too. It treats pul- from Bristol-Myers Squibb for the to help doctors match patients with monary arterial hypertension, a rare, joint-venture drug will help buoy personalized therapies based on the molecular profile of their tumors. The company logged $214 million Funds in revenue in 2019, but profits aren’t expected until at least 2022. Even Baskets of Health Care Stocks so, Canaccord Genuity analyst Max Masucci says Guardant Health has good long-term growth prospects. In A fund is a good option for investors who want a lower-risk path to investing in health the meantime, the company has no debt care stocks. Here are our favorites. Returns are through June 12. and $520 million in cash on its books. At BARON HEALTH CARE (SYMBOL BHCFX, EXPENSE RATIO 1.10%), manager Neal Kaufman and assistant manager Joshua Riegelhaupt look for fast-growing companies with “open- IOVANCE BIOTHERAPEUTICS (IOVA, $30). ended opportunities in large markets and competitive advantages over peers,” says The science behind Iovance’s drugs is Kaufman. This fund has only a two-year history, but it has returned 16.1% annualized “next-wave technology,” says William since its launch, which beats the S&P 500 Health Care index. UnitedHealth Group, Ab- Blair analyst Madhu Kumar. The com- bott Laboratories and AstraZeneca are top holdings. pany’s treatments spur your immune FIDELITY SELECT HEALTH CARE (FSPHX, 0.70%) is a member of the Kiplinger 25, our system to fight cancer cells. favorite no-load funds. Since Eddie Yoon took over in 2008, the fund has returned 16.5% In the treatment, tumor-infiltrating annualized, beating the 13.2% average gain for health funds. Yoon invests big slugs in es- lymphocytes, which can recognize and tablished firms, such as Roche Holdings and UnitedHealth, and boosts returns with light kill cancer cells, are removed from a bets (less than 1% of assets each) in burgeoning biotech and medical-equipment stocks. patient’s tumor, grown in a lab, then Ziad Bakri, a former physician, has run T. ROWE PRICE HEALTH SCIENCES (PRHSX, 0.76%) returned to the patient to help fight since 2016. He focuses on firms that are transforming and improving care, “making leaps cancers. Mid-stage tests of the firm’s in advances in human health,” he says. More than one-third of the fund’s assets are in- treatment for melanoma show that in vested in biotech firms. Top holdings include UnitedHealth Group, Vertex Pharmaceuticals 30% of cases, the therapy can shrink and Thermo Fisher Scientific. Over the past three years, Health Sciences has returned cancers, “head and shoulders above 13.9% annualized, ahead of 80% of its peers. the 10% standard efficacy rate of other Our favorite exchange-traded fund in this sector is INVESCO S&P 500 EQUAL WEIGHT drugs,” says Kumar. The treatment still HEALTH CARE (RYH, PRICE $215, EXPENSE RATIO 0.40%), a Kiplinger ETF 20 member. The fund needs FDA approval, but Kumar says rebalances quarterly; each stock gets an equal portion of assets. Over the past three years, he has “high conviction for success.” the ETF has returned 9.1% annualized. ETFs offer investors a way to dive deep into a sector. Iovance is a risky bet until the FDA ISHARES US MEDICAL DEVICES (IHI, $256, 0.43%) and SPDR S&P BIOTECH (XHE, $84, 0.35%) approves the firm’s TIL treatment. But are worth a look. The Medical Devices ETF has a three-year, 16.7% annualized return, which the firm has little debt, and it raised beats 91% of its peers. Top holdings include Abbott Labs and Thermo Fisher. The S&P another $604 million in a public offer- Biotech ETF has gained 12.8% annualized over the same period, and it counts among its ing in June, adding to an existing $245 top holdings Quidel, which makes rapid diagnostic tests (including one for COVID-19) million cash balance on its books. ■ and DexCom, a maker of high-tech glucose-monitoring systems for diabetes patients.

CONTACT THE AUTHOR AT [email protected].

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HEALTHCARE STOCKS.FINAL.indd 18 6/19/20 8:39 AM STOCKS New Bull? Or Same Old Bear? The rally since March has been historic, but it still needs to prove itself.

STOCKS HAVE RALLIED SO Stay in the game. The debate sharply in the past few Volatile Returns makes clear that trying to months that it prompts a A TRAMPOLINE MARKET time your investments to question: Are we in a new Since its peak in February, the S&P 500 stock index has made coincide with market tops bull market? With the S&P 30%-plus moves in both directions. and bottoms is rarely the 500 index up 36% since its best strategy. Keeping your 0% March 23 low through mid S&P 500 percentage change portfolio aligned with your –5 June, the answer seems an February 19 to June 12, 2020 age and stage in life, with –10 obvious yes. And yet, plenty more-frequent rebalancing –15 of veteran Wall Streeters in volatile markets, is a –20 say the bull isn’t official yet, better way to reap more- –25 and we’ve seen some cracks consistent rewards. –30 in the rally. –35 It’s also important to re- Conventional wisdom March April May June member that even young 2020 2020 2020 2020 says stocks are in a bull bulls need an occasional market once they’re up at As of June 12. SOURCE: Ycharts breather. It took only 50 least 20% from the market’s trading days for the S&P low. (A bear market is typi- the massive amount of stim- priciest bear-market low 500 to climb nearly 40% cally thought of as a 20% ulus” injected into the mar- in history—if it stands. “I from its March low—the drop from the high.) But ket and the economy by the still think there’s a chance biggest 50-day surge since given that bear markets are Federal Reserve and Con- we could break below those the 1950s, eclipsing the often punctuated by power- gress. CFRA is most bullish lows,” he says. “I’m trying lightning-fast start of the ful rallies that ultimately on the communication ser- to look at the glass as half- 1982 bull market. That’s a fade, it’s important to add vices, health care and infor- full, but how can we embark good sign, says senior mar- a time element to a bull- mation technology sectors. on a multiyear bull market ket strategist Ryan Detrick market assessment. Sam Doug Ramsey, chief in- when we’re at valuations at investment firm LPL Stovall, the chief investment vestment officer and portfo- that are so much higher Financial. He says stock strategist at investment re- lio manager at the Leuthold than what they were at the prices could be higher this search firm CFRA, defines Group, remains dubious. same stage of the last bull time next year. More imme- a bull market as a gain of at “The current rally is either market?” diately, the market looks least 20% plus a span of six the first up-leg of a new A close above the 3386 a little frothy. “We have months without the market bull market or the second- level for the S&P 500, near-term worries given undercutting its prior low. largest bear-market rally in eclipsing its February high, this historic run,” he says. Official or not, however, the past 125 years,” he says. would settle the question Don’t be surprised by Stovall is a bull. CFRA’s On the one hand, you’ve got of bull-market status. But more volatility—a hallmark 12-month target for the S&P unprecedented monetary investors who wait for that of both the bull and bear 500 is 3435, 13% higher and fiscal stimulus. On the will have missed out on a aspects of this market. As than its June 12 close. “I other hand, says Ramsey, 50% gain. Conversely, “even Detrick reminds us: “There think the March 23 low will price-earnings multiples at if you’re very confident that are no roller coasters that eventually be regarded as the market’s March low re- a new bull market has be- can replicate what stocks the start of the new bull mained much higher than gun, that doesn’t mean you have done so far in 2020.” ■ market,” says Stovall. “The in other post-WWII mar- can’t lose serious money ANNE KATES SMITH reason for my optimism is ket troughs, making it the from here,” Ramsey says. [email protected]

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new bull market.FINAL.indd 19 6/19/20 8:53 AM GLASSMAN.FINAL.indd 20 I’m Still Bullish on China INVESTING STREET SMART SMART STREET 20 a loss of 35% over the same period for period same of 35%a loss over the with That compares 23. low on March its of 2020 through start 16% the from just dropped companies, Chinese tive representa- and of 50large stitutions) in- foreign large and citizens Chinese by only traded be can that shares is, “A” of the composed index (that shares 50,an Exchange Stock The Shanghai declined. dramatically has volatility and by5.7%. GDPU.S. toshrink projects currently Kiplinger of 8.0%; adecline is for Europe The estimate company. Group media Economist of the adivision Unit, Intelligence Economist bythe toprojections ing accord- major countries, among mance perfor- best the year, easily by 1% this togrow GDP expected is Chinese COVID, idly. with Even rap- closing gap nomic eco- the with product, domestic gross of the two-thirds and U.S. of the population the times four has China todo without. America big too for is China U.S., the from despite threats that, is obvious most The for alot of reasons. investment of June 12.) as are data other and returns MSCI’s (Prices, USA index. 8.6% for with compared annualized, 2.5% just returning index China MSCI the with years, five arough been it has stocks, for Chinese fact, In America. in of rate decline the than worse points two nearly quarter, first the in 6.8% economy shrank the and sharply, deteriorated U.S. the with relations Wuhan, in start its got COVID-19 C China’s markets have also matured, matured, also have markets China’s along-term as China Ilike Still, KIPLINGER’S PERSONAL FINANCE PERSONAL KIPLINGER’S erupted in political protests, protests, political in erupted year. Hong Konglenges this chal- daunting faced has hina Commentary

James K. Glassman K. James 08/2020 REFLECTED IN STOCK PRICES. STOCK REFLECTED IN ALREADY AND KNOWN WELL ALSO ECONOMY ARE REAL. BUT THEY ARE POLITICAL THREATS TO CHINA’S the MSCI USA index. USA index. MSCI the aP/E for with of 22.0 That contrasts end of May. atthe 12.5 was markets, country’s of the value 85% of the tures cap- which index, China MSCI of the ratio The price-earnings ignored. be can’t they wide, so are differences the Still, distorted. are measures valuation traditional employment, un- high and disruption of business time unusual cheap. Atthis relatively analogue. U.S. its average, Jones Dow industrial the (BABA, $218) (BABA, CONSTRUCTION BANK a telecom company, carries Chinese P/E of The of 12. aP/Ehas nications Commu- Verizon behemoth wireless trast, U.S. bycon- ahead; year for the ings earn- on estimated P/E 9, of just based capitalized capitalized Well- Amazon.com. of that one-quarter about is platform, tail re- online zhou-based Best of all, Chinese stocks are are stocks Chinese of all, Best CHINA MOBILE CHINA ALIBABA , the Hang- , the CHINA CHINA (SYMBOL CHL, $35) CHL, (SYMBOL

, the giant giant , the are. U.S. shareholders would still still would shareholders U.S. are. firms Chinese many as government,” byaforeign or controlled “owned are they if delisted would be companies and disclosure, accounting greater York It would require Exchange. Stock New the and on Nasdaq listed firms atChinese aimed abill passed May in The Senate U.S. pandemic. of the stages early the in behavior China’s of because atalow part ebb, in are Growing tensions. Growing $16) (CICHY, Chase at 15. (Stocks I like are in bold.) in are (Stocks at15. Ilike Chase JPMorgan a P/E with of 5,compared , with 15,000 branches, has has branches, 15,000 , with be able to trade Chinese Chinese ablebe totrade stocks, political threats threats political stocks, much effect on Chinese on Chinese much effect stocks in the U.S. over- U.S. the in stocks bill is unlikely to have tohave unlikely is bill the-counter market market the-counter or on foreign exchanges. or on foreign listings) sheet” “pink (in Although the delisting delisting the Although U.S.–China relations relations U.S.–China to China’s economyto China’s companies are EDUCATION GROUP at good prices. good at $64) TAL AND EDUCATION good companies companies good Two of those of those Two are real. But real. are and and they are also also are they focus on buying on buying focus well known known well and already already and reflected in in reflected should simply simply should stock prices. prices. stock investors Rather than du jour, being dis- the crisis by tracted NEW ORIEN- TAL TAL 6/19/20 8:54 AM (TAL,

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A rollover is not your only alternative when dealing with old retirement plans. Please visit tdameritrade.com/rollover for more information on rollover alternatives. TD Ameritrade, Inc., member FINRA/SIPC. © 2020 TD Ameritrade. GLASSMAN.FINAL.indd 22 INVESTING 22 TECHNOLOGY GROUP nues have tripled in just two years. years. two just in tripled nues have reve- Meituan’s attractive. but still it is March, doubled mid since has stock The put. stayed of Chinese millions as epidemic, the from benefited have may service, delivery and ordering food alarge with platform e-commerce tial is it. recommend but Istill share, at$18 a 2010,in trading whenit was back ahead year for the of 10 stocks list on my was New Oriental enormous. is potential growth but the months, 12 past 75% the up in nearly are shares doubled. have TAL New Oriental’s and years, three past the in tripled have training. language and preparation on test focuses lion, of cap $20 bil- amarket with Oriental, New cities. 50Chinese in centers 1,000 more than through students toK-12 tutoring offers $38 billion, of value amarket with TAL, ucation. ed- agood children their getting with obsessed are families whose a country in sector awhite-hot players in huge gain. abar- tobe appears stock buta bit, the rebounded $39 They to$22. since have from dropped shares and by COVID, hammered was Trip.com nationally. inter- and China within services travel other and reservations tours, provides A riskier choice with strong poten- strong choice with A riskier on atear. TAL’s are Both revenues KIPLINGER’S PERSONAL FINANCE PERSONAL KIPLINGER’S MEITUAN DIANPING TRIP.COM GROUP Commentary (EDU, $128) (TCOM, $27) 08/2020 (MPNGY, $43) . Both are are . Both , which , which , an , an portfolio with with portfolio You amore balanced get can of assets. one-third about representing together national social-media conglomerate, multi- the Tencent and Holdings, aba Alib- it’s top-heavy, with Still, stocks. mid-cap and of large- broad swath a owns and index the tracks which (PNGAY, $21) Bet on the home market. Another example is is example Another sell to domesticmarily customers. pri- that Iprefer stocks turmoil, trade been a fan of the stock pickers at stock of the afan been index. MSCI on the based ETF for the 0.59% with compared 0.74%, is ratio expense Its index. China (FXI, $40) (FXI, consider economy. long-term Chinese on the bet it’s agood of 3.5%, ayield With P/E non-techie avery of 10.lion and of cap $226 amarket bil- has An Ping technology). for financial buzzword (the fintech into aggressively moved has It’s that company ahuge cards. credit and services banking offers also and protection casualty and property Among mutual funds, I have long Ihave funds, mutual Among Among exchange-traded funds, funds, exchange-traded Among , which follows the FTSE 50 FTSE follows the , which WITH ALL THE TRADE TURMOIL, IPREFER STOCKS THAT ISHARES MSCI CHINA , which sells life, health, health, life, sells , which ISHARES CHINA LARGE-CAP PRIMARILY CUSTOMERS. CHINESE TO SELL CHINA TO POST POSITIVE POSITIVE POST TO CHINA ■

ECONOMISTS EXPECT GROWTH THIS YEAR. PING AN INSURANCE With all the the all With (MCHI, $64) (MCHI, ,

Alibaba and Tencent but also Tencent and but also Alibaba notonly in investing technology, on bets heavy making are Mattlock Andrew and Chwang Winnie agers Man- years. five past over the points percentage of 3.5 average annual by an index MSCI the bybeating ratio pense preneurial and eager to succeed. tosucceed. eager and preneurial entre- talented, large, so population a with acountry toignore foolish be would But epidemic. investors other or even an- barriers newtrade severe prices, energy muchKong, higher Hong in rebellion uncontrollable an confrontation, military economy: Chinese for the scenarios up disastrous toconjure it’s nothard and investors, aproblem telecom is for and banking as sectors such in decisions business one. this like why you buy afund But that’s condiments. other and ings Teway Food Group, of season- amaker or Sichuan use, energy commercial cut that devices high-tech makes which Silergy, as of holdings such never heard probably you have exchanges; on U.S. don’t trade stocks fund’s Most of the of 15.0%. return average annual year afive- record: track aspectacular has but of 1.38% expenses hefty It charges company. (JD, $58) (JD, yet another booming e-commerce play. e-commerce booming another yet Matthews Asia. Their Asia. Matthews portfolio includes includes portfolio of 0.95%, its fund China a managed for ratio expense modest a relatively With too. record, index-beating an has U.S., the Korea and South Taiwan, from afewoutliers owns also which YOU CAN REACH HIM AT HIM [email protected]. REACH CAN YOU TURBULENCE. OF ATIME IN INVESTMENTS YOUR DE-RISKING IS BOOK RECENT MOST HIS MENTIONED. STOCKS THE OF NONE OWNS HE CLIENTS. HIS ABOUT WRITE NOT DOES HE FIRM. CONSULTING LIC-AFFAIRS APUB- ADVISORY, GLASSMAN CHAIRS GLASSMAN K. JAMES THEWS CHINA SMALL COMPANIES SMALL CHINA THEWS (MCHFX) Chinese government influence over influence government Chinese For a riskier approach, turn to turn approach, For ariskier , a fast-growing e-commerce e-commerce , afast-growing fund has justified its 1.09% ex- 1.09% its justified has fund FIDELITY CHINA REGION CHINA FIDELITY SAFETY NET: STRATEGYSAFETY THE FOR PINDUODUO MATTHEWS CHINA (MCSMX) (PDD, $73) JD.COM

(FHKCX) MAT- ■ 6/19/20 8:55 AM .

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ISTOCKPHOTO.COM ■ THE PACKAGE ON YOUR DOORSTEP MIGHT START OUT FROM A PROLOGIS DISTRIBUTION CENTER.

REAL ESTATE 5 Great REITs to Buy Now In an awful year for many real estate investment trusts, our picks should thrive. BY RYAN ERMEY

IT HASN’T BEEN A GOOD YEAR require little human contact permanently scarred, as develops and operates life for landlords. Publicly have bright long-term pros- buying preferences shift sciences office and labora- traded real estate invest- pects, says Fidelity Real toward e-commerce. tory space. The company ment trusts—which own Estate fund manager Steve The REITs below are rents to pharmaceutical and income-producing real Buller. Trusts that own data poised to thrive. All yield biotech firms such as No- estate—have been clobbered centers, industrial ware- less than the 4.6% average vartis, Eli Lilly and Biogen, in 2020, with the category houses for online retailers or for REITs overall but sport as well as to research firms overall losing 13.6%, com- cell-phone towers will bene- impressive profit-growth and the U.S. government. pared with a 5.0% loss for fit in a world that is shifting prospects, healthy balance Dozens of Alexandria’s ten- the S&P 500 index. When increasingly online, he says. sheets and a history of rais- ants are focused on COVID the COVID-19 pandemic Some of this optimism is ing payouts. Note that in- testing, treatment and pre- struck, whole sectors of priced into the stocks—tech- stead of using traditional vention programs. the economy shuttered oriented REITs in the S&P corporate earnings yard- The firm’s property practically overnight, and 500 have returned 11% in sticks to measure profitabil- portfolio, with 30.9 million millions of Americans lost 2020, on average. But that ity, REITs use funds from square feet of space, is 95% their jobs. For REITs that shouldn’t scare off long- operations, or FFO, which occupied. As landlords in owned apartment buildings, term investors. adjusts for depreciation and other parts of the market shopping malls, hotels or Buller sees value in select property sales. REIT distri- saw large amounts of rent office buildings, collecting housing and office REITs butions are taxed as ordi- go unpaid, Alexandria col- rent became a tall task, and that will regain steam as nary income, which can lected 98.4% of its April investors took notice. the economy reopens, but sting high-net-worth inves- rent. Leases among the But the sell-off presents he says investors will face tors who hold them in tax- trust’s top 20 tenants last an opportunity for inves- an uphill climb investing able accounts (prices and for 11.4 years, on average. tors who buy REITs that in trusts that own restau- other data are as of June 12). Analysts at BofA Securi- stand to prosper in a post- rants, child care facilities, ties recommend the REIT, pandemic world and avoid gyms and senior living facil- 1. Alexandria Real Estate citing its strong demand the ones that might falter. ities. REITs that own retail Equities (symbol ARE, price $159, and healthy balance sheet.

COURTESY PROLOGIS REITs with properties that properties, he says, may be yield 2.7%). Alexandria owns, The firm has hiked its pay-

08/2020 KIPLINGER’S PERSONAL FINANCE 23

REITs.FINAL.indd 23 6/19/20 8:57 AM INVESTING ■ NETWORK UPGRADES ARE GOOD NEWS FOR out by an average of 11% per AMERICAN to capitalize on long-term TOWER. year over the past decade. trends, such as a preference among millennial renters 2. American Tower (AMT, $258, for spacious suburban 1.7%). American Tower oper- homes as they begin to start ates some 180,000 cell- families, says Kolitch. In- phone and broadcast towers vitation should see strong worldwide, with more than demand due to the relative half of the firm’s revenues affordability of rentals coming from 41,000 towers (renting is cheaper than in the U.S. Wireless provid- buying in 13 of the firm’s 15 ers rent space on the towers markets) and the dearth of to install the equipment housing supply. Wall Street that powers their networks, analysts expect the firm to and they sign long leases increase FFO by 3% in 2020, (typically five to 10 years) followed by a 10% boost in that include annual rent with hikes of 23% annual- ing data-center business, 2021. Invitation hiked its hikes of 3% to 5% per year. ized since 2012. With the says Dolgin. With more payout 15% in February. Growth in mobile data stock not far off its all-time people working from home usage and the number of high, investors may want and businesses shifting to 5. Prologis (PLD, $94, 2.5%). internet-connected devices to wait for a pullback. a model that includes a com- COVID-induced stay- should bolster revenues as bination of their own hard- at-home orders likely ac- wireless carriers upgrade 3. Equinix (EQIX, $677, 1.6%). ware and multiple cloud celerated the shift toward their equipment and lease Equinix operates data cen- services, Equinix’s pros- internet shopping, says Kyle more tower space to keep ters, which provide cooling, pects look bright, he says. Sanders, a stock analyst at up with demand. Analyst storage and security for The stock has returned investment firm Edward Matthew Dolgin at invest- equipment that companies 36% over the past 12 months Jones. That bodes well for ment firm Morningstar says pay to house at Equinix and isn’t cheap. But this post- Prologis, which owns and the upgrade to 5G network sites. Through fiber-optic pandemic beneficiary should develops high-tech distribu- service should help Ameri- cables, the firm connects pay off for long-term inves- tion facilities needed to can Tower boost tenant bill- more than 9,700 tenants tors, says Baron Real Estate store, track and ship the ings by 7% per year over the to their customers, to each fund manager Jeff Kolitch, items you buy online at re- next five years. other, and to cloud service who expects the firm to tailers such as Amazon.com, At 1.7%, the shares yield providers and telecom net- boost FFO by an annualized Home Depot and Walmart. less than the S&P 500’s works. Equinix allows busi- 10% through 2022. In February, Prologis 1.9%. But the firm’s payout nesses to access more cloud acquired rival logistics has grown consistently, providers than any compet- 4. Invitation Homes (INVH, landlord Liberty Property $28, 2.2%). Shares of Invita- Trust for $13 billion, boost- tion Homes, which owns ing the Prologis portfolio Hot Properties some 80,000 single-family to 965 million square feet REITs WITH ROOM TO RUN rental homes, plunged 51% spread across 4,660 build- These real estate investment trusts stand out in a troubled crowd. between late February and ings. Strong demand among late March as investors retailers for well-located Property 1-year feared that tenants would warehouses has contributed REIT (Symbol) Price type return Yield skip rent payments. But col- to the firm’s high occu- Alexandria Real Estate (ARE) $159 Life science 7.5% 2.7% lections amid the pandemic pancy rates (96%) and abil- American Tower Corp (AMT) 258 Wireless tower 23.9 1.7 hovered around Invitation’s ity to consistently raise Equinix Inc (EQIX) 677 Data center 36.4 1.6 historical average. Less rents, says analyst Chris than 2% of tenants deferred Kuiper at investment re- Invitation Homes Inc (INVH) 28 Single-family home 4.7 2.2 a portion of April’s rent. search firm CFRA. The Prologis Inc (PLD) 94 Industrial 21.9 2.5 The stock has bounced REIT hiked its dividend S&P 500 INDEX 7.8% 1.9% back accordingly. But it’s 9.4% in March. ■

As of June 12. SOURCE: Morningstar Direct still 15% below its February YOU CAN CONTACT THE AUTHOR AT RYAN_

high, despite looking poised [email protected]. AMERICANCOURTESY TOWER

24 KIPLINGER’S PERSONAL FINANCE 08/2020

REITs.FINAL.indd 24 6/19/20 8:57 AM ETF SPOTLIGHT In the Game Global X Video Games & Esports ETF Cash in on the video gaming KEY FACTS PERFORMANCE SINCE INCEPTION $20 SYMBOL: HERO craze with this fund. Weekly closing prices RECENT PRICE: $21 20 ASSETS: $92.3 million 18 START DATE: October 25, 2019 16 STOCK HOLDINGS: 40 VIDEO GAMES AREN’T JUST GAMES. THEY AVG. PRICE-EARNINGS RATIO: 23 14 are also TV content, judging by the AVG. MARKET VALUE: $13.5 billion Nov. Dec. Jan. Feb. Mar. Apr. May June millions of people who watched some 2019 2020 1.75 billion hours of streamed video- gaming programming on Twitch, the TOP FIVE HOLDINGS live-stream platform for gamers, just Represent 32.5% of assets in May alone. They’re live events, too, with thousands of people showing up SEA LTD (SE) 8.3% 50% to watch top-level gamers face off in e-sports arenas. That makes video NVIDIA (NVDA) 7.0% games big, big business. Consultant REVENUES DERIVED Research and Markets forecasts that BILIBILI (BILI) 5.8% FROM VIDEO GAMES the global video-game market will in- AND RELATED ACTIVISION OPERATIONS crease revenues at a 6.4% annualized BLIZZARD (ATVI) 5.7% rate between 2019 and 2024, when it The minimum required for will hit $179.1 billion in sales. NETEASE (NTES) 5.7% inclusion in HERO. GLOBAL X VIDEO GAMES & ESPORTS ETF is one of a handful of funds that allow investors to cash in on that growth. COUNTRY BREAKDOWN: Worldwide Gaming HERO sports a tight portfolio of 40 <1% firms involved in developing, publish- <1% TAIWAN IRELAND 29% ing, distributing or streaming video UNITED STATES games, producing related hardware, 4% or operating e-sports leagues or teams. FRANCE The fund weights holdings by market 5% value, so the larger the stock, the more SWEDEN HERO invests in it. Gaming is global, 25% and so is HERO; it has 71% of assets 8% JAPAN invested outside of the U.S. SINGAPORE The ETF will only invest in compa- nies that derive at least 50% of their revenues from video game–related 10% SOUTH KOREA 18% businesses. That means you won’t see CHINA tech conglomerates such as Sony and Video Game ETFs Ranked by year-to-date return Microsoft in the fund. You will see graphics chipmaker Nvidia, whose Assets Annualized total return* Dividend Expense products power high-end gaming rigs; Rank/Fund Symbol (millions) YTD 1 yr. 3 yrs. yield ratio Chinese internet and video gaming 1. Global X Video Games & Esports HERO $92 29.9% — — — 0.50% company NetEase; and familiar Japa- 2. VanEck Vectors Video Gaming and eSports ESPO 248 28.0 50.1% — 0.18% 0.55 nese powerhouse Nintendo. “If it’s a 3. Wedbush ETFMG Video Game Tech GAMR 91 19.5 26.8 10.5% 1.27 0.75 leading company in the theme, we 4. Roundhill BITKRAFT Esports & Digital Ent NERD 18 17.3 21.8 — — 0.25 want to own that company,” says –5.0% 7.8% 10.0% Pedro Palandrani, research analyst S&P 500 INDEX at Global X ETFs. KYLE WOODLEY All data as of June 12. *Assumes reinvestment of dividends and capital gains; three-year returns are annualized. —Not applicable; fund not in existence for the entire period and/or does not pay a dividend. Expense ratio is the percentage of assets claimed annu- [email protected] ally for operating a fund. SOURCES: Morningstar, Yahoo Finance, YCharts.

08/2020 KIPLINGER’S PERSONAL FINANCE 25

ETF Spotlight.pag1.ar1.indd 25 6/19/20 8:58 AM INVESTING

THE KIPLINGER DIVIDEND 15 UPDATE not sell, and we acknowledge Exxon’s juicy 7.4% yield. But the shares are no longer among our favorites given the Running Out of Gas uncertainty about energy prices. Added to our lineup: MCDONALD’S (PRICE $189, YIELD 2.6%). The pandemic NONE OF THE MEMBERS OF THE KIPLINGER 2020. If oil prices stay low, Exxon will was hard on food-service firms, and Dividend 15—the list of our favorite have to borrow money and sell assets the fast-food icon is likely to see steep dividend-paying stocks—has cut to maintain its payout, which CEO declines in sales and earnings this or suspended its dividend this year. Darren Woods says the firm is com- year. But the firm looks positioned In most years, that wouldn’t be news. mitted to doing. Exxon held its divi- to outperform peers as the economy But in response to the pandemic, more dend steady in April—the month when reopens, given the strength of its than 60 firms in the S&P 500 index the firm has historically hiked its balance sheet and its ability to main- have battened down the financial payout. Whether Exxon continues its tain customer demand during reces- hatches by slashing or eliminating 37-year streak of raising the dividend sions because of its affordable meal their payout. The Dividend 15 yield or merely holds it steady, we’re con- offerings. Investors have long been 3.4%, on average, well above the 1.9% cerned that a prolonged period of low able to rely on the Golden Arches yield of the S&P 500 and the paltry oil prices could damage the firm’s bal- for steadily increasing income, with 0.7% from 10-year Treasury notes. ance sheet and diminish future spend- McDonald’s having raised its payout (Prices, returns, yields and other data ing on growth projects. Investors who every year since 1976. RYAN ERMEY are as of June 12.) hold the shares strictly for income need [email protected] Stocks on our list, like the broad market, tumbled in February, then rallied mostly back. In 2020, our picks THE KIPLINGER DIVIDEND 15: BY THE NUMBERS have lost 6.5%, on average, compared Picking some stocks from each of the groups below will give you a mix of dividend income with a 5.0% loss in the S&P 500. But and growth. 5-year amid plummeting fuel demand and Consecutive dividend 1-year Share Dividend Annual years of growth total sagging oil prices, energy stocks in the Company (Symbol) price yield dividend* increases rate† return S&P 500 have surrendered an average DIVIDEND STALWARTS Companies in this category have raised dividends for at least 20 straight years. of 32% in 2020. Among our energy $155 3.8% $5.88 61 7.5% –4.9% picks, Enterprise Products Partners 3M (MMM) lost 29.7% and ExxonMobil, 30.1%. Air Products & Chemicals (APD) 235 2.3 5.36 39 12.3 9.2 Enterprise Products Partners charges Emerson Electric (EMR) 61 3.3 2.00 63 1.3 0.9 other energy firms to transport and Johnson & Johnson (JNJ) 142 2.8 4.04 58 6.1 3.2 store oil, natural gas and other petro- McDonald’s (MCD) 189 2.6 5.00 21 8.0 –5.4 chemicals using its network of pipe- Procter & Gamble (PG) 116 2.7 3.16 64 3.6 8.1 lines and oil facilities. Slowdowns Walmart (WMT) 118 1.8 2.16 46 2.0 10.2 in exploration and pro duction have dinged profits. But Enterprise enjoys DIVIDEND GROWTH Companies in this category should continue a history of robust dividend increases. a diverse array of high-quality clients AbbVie (ABBV) $92 5.1% $4.72 7 18.3% 24.6% and produces ample cash to fund its Home Depot (HD) 242 2.5 6.00 11 20.5 25.0 payout. The firm pays 66% of excess Lockheed Martin (LMT) 384 2.5 9.60 17 9.9 13.3 cash as a distribution, well below the Texas Instruments (TXN) 124 2.9 3.60 16 21.5 15.7 90% threshold that would be concern- HIGH YIELD Companies in this category have a five-year average yield of 4% or more. ing for a master limited partnership, Blackstone Group (BX) $56 2.8% $1.56 1 –15.2% 34.5% says Brian Bollinger, president of re- 19 9.4 1.78 22 3.5 –29.5 search firm Simply Safe Dividends. It Enterprise Product Ptnrs (EPD) stays on our list. Realty Income (O) 60 4.4 2.68 25 4.2 –13.9 But Exxon comes off. Oil prices have Verizon Communications (VZ) 57 4.4 2.46 13 2.3 12.4 come up from their April lows, but the INDEX recent per-barrel price of $36 is still S&P 500 INDEX 1.9% $78.60‡ 12 5.8% 7.8% a losing proposition for ExxonMobil, As of June 12. *Annualized based on the most recent dividend. †Annualized. ‡The weighted sum of dividends paid by and Wall Street analysts expect it to companies in the index. SOURCES: Company websites, Morningstar, S&P Dow Jones Indices, Yahoo Finance. lose more than a dollar per share in

26 KIPLINGER’S PERSONAL FINANCE 08/2020

DIV 15.FINAL.indd 26 6/19/20 9:02 AM KEY DATA FOR OUR MUTUAL FUND PICKS Kiplinger 25 funds are no-load; you can buy them without sales THE KIPLINGER 25 UPDATE charges. For more about the funds, visit kiplinger.com/links/kip25. Annualized total return Expense U.S. Stock Funds Symbol 1 yr. 5 yrs. 10 yrs. Yield ratio A Mid-Cap Fund DF Dent Midcap Growth DFDMX 13.2% 13.9% — 0.5% 0.98% Dodge & Cox Stock DODGX –4.3 5.6 11.0% 3.8 0.52 With Big Gains Mairs & Power Growth MPGFX 5.4 8.3 11.9 2.5 0.65 Parnassus Mid-Cap PARMX –4.6 7.1 11.2 1.7 0.99

T. Rowe Price Blue Chip Growth TRBCX 17.6 15.0 17.0 0.6 0.69

T. Rowe Price Dividend Growth PRDGX 3.2 9.8 12.7 2.5 0.62 THE MANAGERS OF DF DENT a niche in their industry, MIDCAP GROWTH are back and have talented and eth- T. Rowe Price QM US Sm-Cp Gro PRDSX 1.6 7.6 13.7 0.9 0.79 in the office after months ical executives. They wait T. Rowe Price Small-Cap Value PRSVX –10.3 4.6 9.0 2.3 0.83 of remote work. But the for a stock to trade at the Primecap Odyssey Growth POGRX 3.7 9.3 13.2 1.7 0.65 quarantine did not hold right price relative to its Vanguard Equity-Income VEIPX –4.0 6.7 11.4 4.2 0.27 them back. Midcap expected risk-adjusted re- Growth returned 13.2% turn before buying. “We’re Wasatch Small Cap Value WMCVX–12.3 3.6 10.0 3.2 1.20 over the past year—far picky, and we do deep re- Annualized International total return Expense better than the 1.6% loss search,” Kennedy says. Stock Funds Symbol 1 yr. 5 yrs. 10 yrs. Yield ratio in the Russell Mid Cap At the end of 2019, the AMG TimesSquare Intl Sm-Cap TCMPX –0.3% 3.9% — 2.6% 1.23% index. Some of the fund’s fund’s cash position rose best performers over the to 5% of assets because Baron Emerging Markets BEXFX –1.3 2.2 — 2.1 1.35 past year were software there were “more names Fidelity International Growth FIGFX 8.5 6.0 9.2% 1.8 0.99 firms, including BlackLine we wanted to sell than to Oakmark International OAKIX –12.9 –2.0 4.7 6.0 0.98 (up 45%) and Ansys (up buy,” Kennedy says. When Annualized 37%). Shares in financial- stock prices collapsed, the Specialized/ total return Expense services firm Moody’s managers deployed that Go-Anywhere Funds Symbol 1 yr. 5 yrs. 10 yrs. Yield ratio rose 41%. cash, as well as more cash Fidelity Select Health Care FSPHX 25.6% 8.7% 18.4% 0.9% 0.70% A few holdings that raised by trimming stakes Vanguard Wellington‡ VWELX 5.6 7.3 9.5 3.1 0.25 lost ground were COVID in a few top performers, Annualized casualties, in part. Insur- into four new stocks: total return Expense ance company Markel Heico, a seller of aftermar- Bond Funds Symbol 1 yr. 5 yrs. 10 yrs. Yield ratio (down 12% over the past ket aircraft parts; veteri- DoubleLine Total Return Bond DLTNX 3.8% 3.1% 5.0% 3.1% 0.73% 12 months) suffered from nary diagnostics company Fidelity Strategic Income FADMX 3.1 — — 3.7 0.68 its exposure to business- Idexx Laboratories; and Fidelity Interm Muni Income FLTMX 3.4 3.2 3.4 1.6 0.35 interruption claims filed software firms Atlassian because of the shutdown. and Coupa Software. Cash Fidelity New Markets Income FNMIX –2.0 3.9 5.4 6.2 0.82 The travel slowdown has is now just 1% of assets. Met West Total Return Bond MWTRX 9.6 4.1 4.7 1.6 0.67 hurt digital-commerce In recent years, the fund TIAA-CREF Core Impact Bond TSBRX 7.0 3.9 — 1.6 0.65 software provider Pros has expanded its research Vanguard High-Yield Corporate VWEHX 2.8 4.6 6.6 5.1 0.23 Holdings (down 32%); bench and hired five ana- VFSTX 4.9 2.9 2.7 1.6 0.20 the airline industry is lysts. “They’ve been in- Vanguard Sht-Trm Inv-Grade a key customer. Despite strumental in reducing Annualized total return the declines, comanager the number of mistakes Indexes 1 yr. 5 yrs. 10 yrs. Yield Bruce Kennedy says he we make,” says Kennedy. S&P 500 INDEX 7.8% 10.0% 13.1% 1.8% has “strong confidence” The fund has been on a in these businesses. torrid run of late. Over RUSSELL 2000 INDEX* –7.3 3.3 9.4 1.6 Kennedy and his co- the past three years, Mid- MSCI EAFE INDEX† –4.0 1.4 5.5 2.9 managers, Matthew Dent, cap Growth has returned MSCI EMERGING MARKETS INDEX –1.4 2.6 3.2 2.8 Gary Mitchell and Thomas 19.0% annualized, beating BLOOMBERG BARCLAYS AGG BND IDX# 9.4 4.3 3.9 1.3 O’Neil, work to find 30 to the 5.3% average annual As of June 12. ‡Open to new investors if purchased directly through the fund company. 40 growing midsize busi- return of the Russell Mid *Small-company U.S. stocks. †Foreign stocks. #High-grade U.S. bonds. —Fund not in existence for nesses that generate large Cap index. NELLIE S. HUANG the entire period. SOURCES: Fund companies, FTSE Russell, Morningstar Inc., MSCI, S&P Dow Jones Indices. Yields listed are SEC yields for bond funds; weighted average portfolio yields for stock funds. amounts of cash, dominate [email protected]

08/2020 KIPLINGER’S PERSONAL FINANCE 27

KIP 25.FINAL.indd 27 6/19/20 9:03 AM INVESTING

MUTUAL FUND SPOTLIGHT rate, compared with the 5% long-term industry average. The fastest-growing utili- Keeping the Lights On ties are expanding and up- This fund bets big on utilities with good growth prospects. dating their infrastructure to produce renewable en- ergy, says Simmons. This requires favorable regula- UTILITIES STOCKS CAN BE EASY tion from state and local to overlook. The sector ac- UTILITIES STOCK FUNDS commissions that oversee Ranked by one-year returns counts for just 3% of the S&P Annualized Max. utilities’ operations. 500, and the stocks, even total return sales Exp. The portfolio holds a mix Rank/Name Symbol 1 yr. 5 yrs. charge ratio in hot markets, are lauded of best-in-class alternative 1. Wells Fargo Util and Telecomms A EVUAX 2.5% 9.6% 5.75% 1.14% mostly for being Steady energy players—such as 2. PGIM Jennison Utility A PRUAX 1.8 6.8 5.50 0.84 Eddies. “People buy utilities NextEra Energy, based in 3. FIUIX 0.2 7.1 none 0.75 for defense and income,” Fidelity Telecom and Utilities Florida—and heretofore slow- 4. MMUFX –1.0 4.4 5.75 1.01 says Douglas Simmons, MFS Utilities A growing firms whose regu- 5. Franklin Utilities A FKUQX –2.4 —3.750.83 manager of FIDELITY SELECT latory landscape is poised 6. Fidelity Select Utilities@ FSUTX –3.1 8.5 none 0.75 UTILITIES. Historically, to improve. Simmons says they’ve delivered. During 7. ICON Utilities A ICTVX –5.2 8.5 5.75 1.47 he added to positions in Cal- the 2007–09 bear market, 8. American Century Utilities Inv BULIX –5.6 5.6 none 0.67 ifornia utilities, such as San for instance, utilities in the 9. Rydex Utilities Inv RYUIX –6.7 7.6 none 1.47 Diego–based Sempra En- r S&P 500 lost an annualized 10. Gabelli Utilities AAA GABUX –8.7 4.1 2.00 1.37 ergy, in 2019, after the state 32.8%, compared with a CATEGORY AVERAGE –2.7% 6.8% passed ambitious updates to 43% slide in the broad in- its renewable-energy goals. dex. And over the past half- Amid COVID-19 market bounded. The S&P 500 Util- The top 10 holdings in the decade, utilities in the S&P panic, the sell-off in utilities ities index has lost 8.4% so 27-stock portfolio account 500 index sport an average was slightly steeper than far this year; the broader for 72% of assets. Over time, yield of 3.4%—a percentage in the S&P 500, driven by index is off 5.0%. big bets on favored names point higher than the five- investor fears of prolonged But utilities are well situ- have paid off. The fund has year average for the broad- declines in commercial and ated to get back on track as beaten its average peer in market benchmark. (Returns industrial demand. Despite the world emerges from the eight of the past 10 calendar and other data are as of strong trends on the resi- pandemic, says Simmons. years and outpaced 83% of June 12.) dential side of the business, He favors firms that can peers over the past decade. The defense hasn’t been utilities were slower to increase earnings and divi- RYAN ERMEY quite as stout this year. recover as the market re- dends at a 7% to 8.5% annual [email protected]

20 LARGEST STOCK AND BOND MUTUAL FUNDS Ranked by size. See returns for thousands of funds at kiplinger.com/tools/fundfinder. Annualized Max. 1-year Max. STOCK MUTUAL FUNDS Assets† total return sales BOND MUTUAL FUNDS Assets† total Current sales Rank/Name Symbol(billions) 1 yr. 5 yrs. charge Rank/Name Symbol (billions) return yield charge 1. Vanguard Total Stock Market Idx Adm VTSAX $715.1 6.5% 9.2% none 1. Vanguard Total Bond Market Index Adm VBTLX $216.8 9.6% 1.4% none 2. Vanguard 500 Index Adm VFIAX 379.2 7.7 9.9 none 2. Vanguard Total Intl Bd Idx Adm VTABX 116.9 4.7 0.5 none 3. Vanguard Total Intl Stock Idx Adm VTIAX 376.1 –2.7 1.8 none 3. Pimco Income A PONAX 116.9 0.5 2.7 3.75% 4. Fidelity 500 Index@ FXAIX 224.2 7.7 10.0 none 4. Metropolitan West Total Return Bd M MWTRX 84.3 9.6 1.6 none 5. American Growth Fund of America A AGTHX 199.6 15.8 11.7 5.75% 5. Vanguard Interm-Term Tax-Ex Inv VWITX 73.2 4.3 1.4 none 6. American Balanced A ABALX 158.8 7.0 7.4 5.75 6. Pimco Total Return A PTTAX 68.0 8.4 1.6 3.75 7. American EuroPacific Growth A AEPGX 151.4 3.4 3.8 5.75 7. Dodge & Cox Income@ DODIX 63.2 8.9 2.9 none 8. Fidelity Contrafund FCNTX 117.9 16.0 13.0 none 8. Vanguard Short-Term Inv-Grade Inv VFSTX 59.5 4.1 1.6 none 9. American Washington Mutual A AWSHX 117.1 1.2 8.3 5.75 9. American Bond Fund of America A ABNDX 57.7 10.6 1.2 3.75 10. American Income Fund of America A AMECX 104.5 –0.2 4.8 5.75 10. PGIM Total Return Bond A PDBAX 56.3 7.1 2.9 3.25 S&P 500 INDEX 7.8% 10.0% BLOOMBERG BARCLAYS US AGGREGATE BOND INDEX 9.4% 1.3% MSCI EAFE INDEX –4.0% 1.4% B OF A MERRILL LYNCH MUNICIPAL MASTER INDEX 4.3% 1.8%

As of June 12. @Only share class. Unless otherwise indicated, funds come in multiple share classes; we list the share class that is best suited for individual investors. rMaximum redemption fee. †For all share classes combined. MSCI EAFE tracks stocks in developed foreign markets. SOURCES: Bank of America Merrill Lynch, Morningstar Inc., Vanguard.

28 KIPLINGER’S PERSONAL FINANCE 08/2020

fund trends.FINAL.indd 28 6/19/20 9:05 AM We’ve identified the banks and credit unions that offer the best combination of high rates, low fees and a customer-friendly focus. By Lisa Gerstner

TYPOGRAPHY BY THE LUMINOR SIGN CO. 08/2020 KIPLINGER’S PERSONAL FINANCE 29

BEST BANKS.FINAL.indd 29 6/19/20 9:06 AM MONEY

f you’re in the market for a new bank, your priorities may be Whether you’re on the hunt for a higher yield on your checking or shifting as the U.S. faces a recession and grapples with the savings account, aiming to do more of your banking online, or looking continuing effects of the coronavirus pandemic. The interest for a bank with branches nearby, you’ll likely find an institution to paid on bank accounts has declined sharply since the Federal suit your needs among our list of the best banks and credit unions, Reserve slashed short-term rates earlier this year. At the same time, which we evaluated with the help of Informa Financial Intelligence, the personal savings rate among consumers hit a record 33% in April, a financial research service. All of them offer mobile apps that allow according to the U.S. Bureau of Economic Analysis, and bank deposits you to deposit checks, review account balances and perform other are on the rise. banking activities on the go, and you can often open accounts online Another change: Going to a branch is less than desirable when so- or over the phone. cial distancing is the norm. Branch visits in many areas were down by To help you narrow the choices, we’ve divided our winners into 30% to 40% this spring, according to research firm Novantas, and several categories. We’ve awarded gold, silver and bronze medals to many banks closed their lobbies or reduced hours to minimize the national banks, internet banks and credit unions. We’ve also named spread of COVID-19. Only 45% of customers expect to go back to their winners and runners-up among institutions best suited for high-net- regular branch activities after social distancing ends, according to a worth families, retirees, and parents and kids. (For more on how we Novantas survey. As Americans began receiving government stimu- selected the top institutions, see the box on page 34.) lus checks in April, new registrations for bank mobile apps increased As you evaluate your options, keep in mind that account interest by about 200%, and bank app usage more than doubled at one rates fluctuate regularly, so it’s wise to check an institution’s current point, according to financial-technology company FIS. yields before you commit. Rates listed here are as of mid June.

These big institutions have branches (Terms and rates listed here are for a minimum balance of $100—a low that stretch into various regions of customers in Cherry Hill, N.J.) threshold compared with those of the country, and they offer plenty of Year after year, TD Bank tops our many other major banks—to avoid a online and mobile tools, too. They also list of the best national banks. Along $15 monthly fee. For those age 17 to provide wealth-management and advi- with a strong selection of deposit ac- 23, the Convenience account is free, sory services. counts, TD offers extra touches that and so is the Simple Savings account. make the banking experience more If you can keep a checking balance inviting. Normally, most branches are of at least $2,500, you have monthly TD Bank open on Saturdays and Sundays and direct deposits of at least $5,000 or Why it won: Whether into the evening on weekdays, al- you maintain a $25,000 minimum bal- GOLD you’re looking for a though hours have been reduced be- ance for all your TD deposit accounts basic, low-minimum cause of COVID-19 recently. The free and loans (excluding credit cards), account or one to suit lollipops and pens typically offered scale up to the Beyond Checking ac- students, seniors or in the lobby may not appeal during a count. Perks include free standard travelers, TD Bank has you covered. pandemic, but branches are putting checks, cashier’s checks, money or- Standout account: BEYOND CHECKING out hand sanitizer and accommodating ders, stop payments, paper statements comes with an alluring collection of social distancing by offering virtual and transfers from a linked savings ac- perks, and it offers three ways to avoid check-ins (allowing customers to wait count to cover overdrafts. If you elect the monthly fee. in their cars until a bank representa- to have the bank pay overdrafts for Where it is: More than 1,200 branches tive is available) and installing plexi- you, you’ll be reimbursed two over- in 15 states (and Washington, D.C.), glass screens at teller stands and desks. draft fees ($35 each) per year, and stretching down the east side of the With TD’s basic Convenience you’ll be refunded all fees for rush country from Maine to Florida. Checking account, you need to have bill payments ($2 each) and one fee

30 KIPLINGER’S PERSONAL FINANCE 08/2020

BEST BANKS.FINAL.indd 30 6/19/20 9:07 AM Best for HIGH-NET-WORTHNENET-WEETET-WTT-TWOT-W-W-WWOWORTOROORTHRRTTTHH FAMILIES MMI IESES

These banks cut fees and load on benefits forfor customerscucusstomeerersrss whowhwhhoo available.)aavvvaaiailila At more than 100 Citigold lounges worldwideiddee keep sizable amounts in deposit and investmenttmmem nt aaccounts.co nnttstts.s.s. PlusPPlus,PlPlulusuus,usss,, (attached((at(att(attattacacch to bank properties), members can kick backacckk andanndd they offer wealth-management services andd aaccaccessccessceeesessssss tto o brbbrabranchesraranaanancheanchesanchchecheshehesess enjoyenjoyfreerefreshmentsandWi-Fi.TheCulturePassprogram free refreshments and Wi-Fi. The Culture Pass programgraamm for in-person service. providespprprorov invitation-only access to special events and privaterivaivavatatetee toursttotou at museums and other venues, complimentary admissionadmismissiomissssionsiononn BEST: CITIBANK to institutions such as the Los Angeles County Museum of Art,Artrtrt,t, Why it won: Citi caters to customers whoho cancaannmn maintainmmaaiaaininnntntattaaainaiinn heftyhhehefeftftytyy andaanndd a 30% discount on performances at venues such ass tthethhee balances with a compelling premium checkingkingnggag account.acaaccaccocccccouccounccooouountount.uununt.nnttt.. NewNNe York Philharmonic. You’ll also enjoy premium seatingngg atat Standout account: For those who have att leastlleeaeasastt $200,000$200$$200,2200,0200,00000,0000,000000000 certaincerta sporting events (such as New York Mets gamesmesess at CitiCititttii in linked deposit, retirement and investmenten accounts,accounnts,, thtthehhee Field),FFiFieelelddd)), seminars on the economy and financial markets,ettss,, andanandd CITIGOLD package tucks in plenty of benefits.eefiits. privatepgprprivriivvavatee diningdinindini gy events. Currently, y,g, Citigoldg customersmers ini a hand-hanandnd Where it is: Almost 700 branches in 10 states,eses,, withwwitiithhhco coreccocoroorrree fulfulofstatescangetrebatesofupto$200ayearoncertainffuulofstatescangetrebatesofupto$200ayearoncertauulllofstatescangetrebatesofupto$200ayearoncerta ofof statesstastatst teees can getgp$ygpyg rebates of up to $200$ a yearar onn certaincertacecerttataiaiinn markets of Chicago, Los Angeles, New York City, Miami,MiMiamiammi, SanSSa anan subscriptionssuubscriptionservicesubscrb ripttionioonn servicesservices,serviservicerv includingincludingAmazonPrimeclu Amazon mazon PrimePrime,Prim CostcoC CostcomeCooststcoc memmem-mmeeemmm-- Francisco and Washington, D.C. Plus, Citi has morerree thanhan 1,800,88800000 berships,bbershipsberships,Hulu,andTSAPrecheckorGlobalEntryforexpeditedbershiperships,eerships,Hulu,andTSAPrecheckorGlobalEntryforexpeditedrships,ships,hips,iips,Hulu,andTSAPrecheckorGlobalEntryforeips,ps,ps,s,Hulu,andTSAPrecheckorGlobalEntryfs,,H Hulu,H HuluHulu,andTSAPrecheckorGlobalEntryulu,u, ananda nd TSA SAA PPrecheckPr PrecPre ckk or Global obalbalall Entry EnEnt y forfofor expeeexpeditexpediexpediteexpeditedexpedexexp editeedd branches overseas. (Terms and rates are for New YorkYYorkk City.)Cityty) airportairportsecurityscreening;theprogramwillreachairportsecurityscreening;theprogramwairporirportirportsecurityscreening;theprogramwillreacrportrpyg;pyportortrtttse securityssecuseecurityecurityscreening;theprogramwillreachecuritycuurityy screening;sccrrereening;reening;eening;theprogramwillreacheeeening;ening;ingng the tthhee program rograrogramograggr m willwwiillllll reachreacch CitigoldCitigCCitCitiCitigoitigoldtigolttigoldggoldd cus-cusccu usus- The Citigold premium checking package keeps shining,hininingning,g,ggiv giv- givv- tomersttometomtomeromersoommersmeersrrss nationwide nationwnatinanaationwidettionwidetioiionwideinearly2021ionwideoononwidewidewiwiidddeeeinearly2 in innearly early e y 2021. 20220212020021022211.1. ing Citi a boost to the top of our high-net-worth-families rank-nk ing for four years running. Citigold customers get a bountifull RUNNER-UP:RUNNRUNUNNNERNNER-UP:NNENER-UPEERER-UPRR-R-UR-UP:UPUUP: PP:: CHASECHCHAHASASEASSEE assortment of freebies and discounts, including waived fees WhyWhh iitttw wwo won:oonn: ChaseChasehhhsee hahashasasvaryinglevelsofaccounts vvaryingvaryinglevelsofaccountsavaryinglevelsofaccountsvaraaryingryinglevelsofaccountsandryryinryingying igllfiglnggl levlelevels lleveeevelsevelsofaccountsavevelseleels llfsofs ofo f accountsaccoaccouna ounnt ts an andand servic seservicesi s for standard checks, money orders, incoming wire transfers, for customersststomerstotomersommerss withit bigbbigdepositsandawggp depositsddeepoepositsposipositsitss anand andd aaw widespwidespreadwwidespread reaad brick-and-brb stop payments, overdraft transfers and foreign transactions mortar presenceresenceeseence foror thosetthhohoshosese whowwhho preferprefepre p efeerr in-personin-persoin-n-n-personna attention.aatt with your debit card. You are reimbursed for all out-of-network Standout account: Keepeppatlpatleas ata leasleastast $75,000$ 0i in ddeposit and in- ATM fees worldwide and get preferred rates on deposit ac- vestment accounts to avoid a monthly fee and get premium counts and loans. (Citigold customers earn a 0.03% rate on benefits with SAPPHIRE CHECKING. checking and up to 0.15% on a savings account, depending on Where it is: About 4,900 branches in 38 states, with many the balance. Citi’s top CD rates include 0.45% on a three- or six- locations concentrated in the West, South, Midwest and Mid month term with a $500 minimum deposit.) If you have a Citi Atlantic. (Terms and rates are for Columbus, Ohio.) investment account, you’ll pay no annual fee, and online or If you have $75,000 or more in deposits and investments, mobile equity trades are a discounted $2.95 each. Citigold you may find appeal in Chase’s Sapphire Checking account. members who use the Citi Prestige premium credit card ($495 You’re refunded for out-of-network ATM fees both domesti- annual fee) get a $145 statement credit each year. Citigold also cally and internationally, and you pay no fee for personal comes with a dedicated banking team, including a relationship checks, cashier’s checks, money orders, stop payments, wire manager and a financial adviser. Analytics company J.D. Power transfers or foreign transactions with your debit card. Trades recently ranked Citibank highest among banks for customer of stocks, exchange-traded funds and options are commission- satisfaction with its advisory services. free through online investment service You Invest Trade by J.P. Those who keep at least $1 million in linked accounts are Morgan. Sapphire customers pay no monthly fee on Chase’s eligible for Citigold Private Client, which comes with enhanced Premier Savings account, and they get a rate of 0.02% to benefits such as additional wealth planning and investing 0.05%, depending on the balance, if they make at least five services, higher daily limits for purchases, transfers and cash monthly transactions (including debit card purchases, ATM withdrawals (for example, Private Client customers can make withdrawals and online transfers) with their checking account. up to $5,000 in ATM withdrawals per account each business Those who keep at least $250,000 in personal and business day, compared with $2,000 for the standard Citigold package), deposit accounts as well as investment accounts qualify for and free domestic and international outgoing wire transfers. Chase Private Client, which comes with assistance from a team Citigold offers refreshing perks that go beyond everyday of professionals, including a personal banker and investment banking needs, too. (Note that because of the pandemic, many adviser. Private Client services are available at about 3,300 of the following events and services may be temporarily un- Chase branches; Chase plans to offer it at all branches soon.

08/2020 KIPLINGER’S PERSONAL FINANCE 31

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monthly for an outgoing domestic or (Terms and rates listed here are for ATM fee reimbursements, free ca- international wire transfer ($30 and customers in Pittsburgh.) shier’s checks and discounts on a safe- $50 each, respectively). If you’re looking for a big institution deposit box. College students can use Beyond Checking is a good choice that integrates money-management a free Virtual Wallet account package, for travelers, too: If you keep a $2,500 tools into everyday banking, PNC is which comes with limited ATM fee checking balance, you’ll be reimbursed a good place to go. With its Virtual reimbursements and a refund of the for withdrawal fees charged by opera- Wallet program, you get a primary first overdraft or returned-item fee tors of out-of-network ATMs—both in “Spend” checking account for most associated with the account. the U.S. and in foreign countries. Plus, of your transactions, a secondary Interest rates on PNC’s savings TD charges no foreign-transaction “Reserve” checking account to hold accounts vary depending on the ac- fee to Beyond account holders who money for short-term goals, and a count package you have and whether use their debit card abroad. TD also “Growth” savings account for long- you meet certain requirements. For recently launched an online platform term goals. You can set up rules to example, with the Virtual Wallet on which everyone (even noncus- have money automatically transferred With Performance Select package, tomers) can order more than 60 for- from your Spend account to Reserve you’ll get a rate of 0.1% to 0.35% eign currencies for pickup at bank or Growth—say, each time you receive (depending on the balance) on your locations, and some currencies are a paycheck. Other tools help you to Growth savings account if you have available for immediate exchange. see how much money you have left to $5,000 in monthly direct deposits to The basic Simple Savings account spend after accounting for scheduled your Spend account or use your PNC recently yielded 0.05%, and you have bills and to create budgets to track debit or credit card for purchases at multiple ways to avoid the $5 monthly spending. If you open an account with least five times monthly. Fixed Rate fee—one is to keep a $300 minimum PNC online, you’re directed to the CDs require a $1,000 minimum de- balance. The Beyond Savings account Virtual Wallet offerings. But to open posit, and you could recently earn as rate ranges from 0.1% to 0.75%, de- a single checking account without the much as 0.35% with a $25,000 deposit pending on the balance, if you link it to extras, you’ll have to visit a branch. in a 13-month promotional CD. an eligible TD active checking account The basic Virtual Wallet package PNC’s wealth-management arm in- or loan. Maintain a $20,000 minimum waives the $7 monthly fee if you have cludes retirement, tax and other per- balance or link an eligible checking a $500 average monthly minimum sonal financial planning; investment account (including Beyond Checking) in your Spend and Reserve accounts management; and trust and estate ser- to avoid a $15 monthly fee. or $500 in monthly direct deposits vices. Wealth-management clients get For information on TD’s checking to Spend, and it’s free for those 62 access to a personal banking adviser account for those 60 and older, as or older. Each month, the account re- and other financial professionals. well as the bank’s other savings and imburses up to two fees charged by wealth-management options, see the PNC for using out-of-network ATMs “Best for Retirees” winner. and up to $5 in fees that other ATM KeyBank operators charge to use their ma- Why it won: KeyBank chines. The Performance Spend and BRONZE covers the spectrum, PNC Bank Performance Select account packages offering a free check- Why it won: Even through Virtual Wallet have bigger ing account—a rare SILVER PNC’s basic checking minimums to avoid monthly fees find among large institu- account provides but offer more perks, such as higher tions—and a broad selection of accounts some perks, and the bank ties together checking and savings accounts with HOW WE CHOSE THE TOP FINANCIAL INSTITUTIONS a program to help customers budget With data from Informa Financial Intelligence, as well as from financial institutions and other sources, and save. we evaluated 17 national and large regional banks, 14 credit unions, and 14 internet banks (including on- Standout account: The basic VIRTUAL line accounts from brokerage firms). We reviewed checking accounts, savings accounts, money market WALLET account package comes with deposit accounts and certificates of deposit from each institution. We looked at interest rates; minimum ATM fee reimbursements (up to deposit and balance requirements; monthly maintenance fees and the ease of waiving those fees; ATM certain limits) and offers relatively benefits, such as waived or reimbursed fees for out-of-network withdrawals; free or discounted bene- fits, such as personal checks, cashier’s checks, paper statements, overdraft-protection transfers and easy ways to avoid the monthly fee. other items; and online and mobile banking features, such as the availability of peer-to-peer payment Where it is: About 2,400 branches in services. // Informa Financial Intelligence (https://financialintelligence.informa.com) compiled the 21 states in the Midwest, South and data as reported by the financial institutions that it tracks; the information is subject to change. Mid Atlantic, plus Washington, D.C.

34 KIPLINGER’S PERSONAL FINANCE 08/2020

BEST BANKS.FINAL.indd 34 6/19/20 9:08 AM for those who can keep bigger balances. Standout accounts: The HASSLE-FREE checking account has no monthly fee. Best for RETIREES For those who can keep big balances in linked accounts, PRIVILEGE SELECT Low or no minimum account balances, free checks and paper statements, and access checking is packed with perks. to investment and advisory services make these banks attractive for retirees. Where it is: More than 1,100 branches in 15 states, sprinkled in the North- east, Midwest and West. (Terms and BEST: TD BANK rates are for customers in Cleveland.) Why it won: TD has a large footprint of branches for in-person service and a strong

No matter what size your bank checking account for those 60 and older. account, you’ll likely find a fit with Standout account: 60 PLUS CHECKING folds in features that make sense for retirees. KeyBank. The Hassle-Free checking Where it is: More than 1,200 branches in 15 states (and Washington, D.C.), stretching account lives up to its name—it down the east side of the country from Maine to Florida. (Terms and rates listed here charges no monthly fee and no over- are for customers in Cherry Hill, N.J.) draft or non-sufficient funds fees. With a reasonable balance minimum of $250, you avoid a $10 monthly fee on Check-writing is not available, but you the 60 Plus Checking account. Standard checks, cashier’s checks, money orders can use the bill-payment feature to and paper statements are free, and as with other TD personal checking accounts, send money to almost anyone you’d you get a discount of 0.25 percentage point on a TD home equity or personal loan. If typically pay by check. If you want you’re 62 or older, the Simple Savings account (0.05% yield) and the Growth Money more benefits, choose among several Market (0.01% to 0.15% rate, depending on the balance, if you have a monthly trans- other checking options, which require fer of at least $50 into the account) are free. For a higher yield, check out the TD varying account minimums to waive Beyond Savings account (see details in the gold medalist entry in the “Best National the monthly fee. At the high end, you’ll Banks” section). Certificates of deposit have a low minimum of $250; recently, the typically need a minimum $100,000 three-month Promotional CD offered a 0.5% rate for those with an eligible personal balance in KeyBank deposit and in- checking account (longer terms had lower yields). vestment accounts to avoid a $50 On the investment and wealth management side, you can use TD Ameritrade’s monthly fee, but you’ll enjoy unlimited brokerage services. (Keep in mind that investment options may change after Charles rebates of out-of-network ATM fees; Schwab completes its buyout of TD Ameritrade.) With investable assets of at least free standard checks, cashier’s checks $750,000, you’re eligible for TD’s private banking and retirement and wealth plan- and money orders; daily automatic ning services, which come with a dedicated, local relationship manager. sweeps of extra cash from checking into a savings account to maximize interest earnings; and access to finan- RUNNER-UP: CHARLES SCHWAB BANK cial-management services. Why it won: With an attractive checking account and high marks for customer sat- KeyBank’s Active Saver account is isfaction, the investment company’s banking division is a good choice for retirees free if you have a personal checking who don’t mind managing their accounts online. account with the bank, but the yield is Standout account: HIGH YIELD INVESTOR CHECKING is free and comes with a paltry 0.01%. You can get better rates perks well suited for retirees—especially those who like to travel. with a money market deposit account. Schwab’s online High Yield Investor Checking account has no minimum balance The Gold Money Market account, for requirement or monthly fee, personal checks and paper statements are free, and example, waives the $18 monthly fee out-of-network ATM fees are reimbursed both in the U.S. and internationally. Plus, and offers a 0.25% rate if you have a bal- you’ll be charged no foreign-exchange fee when you use your debit card to make ance of $25,000 or more and an active purchases overseas, and the account yields 0.03%. To use the checking account, personal checking account with the you must open a Schwab One brokerage account, but you don’t have to keep a bank. Among CDs, the 14-month pro- minimum balance or pay a monthly fee, and you can transfer money free between motional CD recently yielded 0.25% on the accounts. For two years in a row, J.D. Power has ranked Charles Schwab Bank up to $500,000 ($10,000 minimum de- highest for overall customer satisfaction among internet banks. posit) for those who use certain eligible Schwab also offers the High Yield Investor Savings account free with no mini- checking accounts. KeyBank’s private mum, and it yields 0.05%. As a major investment firm, Schwab has a range of bank, which requires a $1 million asset wealth and advisory services, from a robo-advisory platform to assistance from minimum, offers investment and finan- a full-fledged wealth-management team. cial-planning services and a checking account with premium benefits.

08/2020 KIPLINGER’S PERSONAL FINANCE 35

BEST BANKS.FINAL.indd 35 6/19/20 9:08 AM MONEY

Thanks to smaller overhead costs, banks (studying cash flow, spending pat- 1.05% for a one-year term and 1.6% that operate primarily online usually terns, upcoming bills and other de- for a five-year certificate. offer higher interest rates and lower tails) and transfer money that it deems In 2017, investment and advisory fees than brick-and-mortar institutions. available to your savings. company TIAA acquired online bank And during a pandemic, their no-touch The Interest Checking account of- EverBank and rebranded it as TIAA services are more attractive than ever. fers free access to more than 43,000 Bank. The bank’s no-fee Yield Pledge ATMs in the Allpoint network nation- checking account, money market ac- wide. Plus, Ally reimburses up to $10 count and CDs come with an interest- Ally Bank monthly in out-of-network fees that ing twist: They promise that their in- Why it won: Ally pro- other U.S. ATM operators charge. terest rates will be among the top 5% GOLD vides a simple and There’s no fee for standard or expe- of competitive accounts—by TIAA’s attractive lineup dited fund transfers, incoming domes- definition, those are similar accounts of checking and tic or international wires ($20 per out- from the country’s 10 largest banks savings options, with going domestic wire), cashier’s checks, and thrifts in 10 large markets. no monthly fees and no minimums or overdraft transfers from a linked After a one-year introductory rate required to open or maintain the savings account. of 0.4% on balances of up to $250,000, accounts. Besides putting funds in the Online Yield Pledge Checking offers an ongo- Standout accounts: INTEREST CHECKING Savings account, savers have the op- ing rate of 0.15% to 0.3%, depending offers 0.1% interest on balances of less tion of using the bank’s money market on the balance. If you have less than than $15,000 or 0.5% on $15,000 or account, which recently yielded 0.5%. $5,000 in the account, you get up to more. ONLINE SAVINGS yields 1.1% on Ally also offers a variety of CDs, in- $15 reimbursed monthly in out-of-net- all balances. cluding the High Yield CD, with a 1.1% work ATM fees; for those with higher Ally Bank is a familiar name in our rate on a one-year term and 1.25% on a balances, refunds are unlimited. For rankings, topping the list of best inter- five-year term. The early-withdrawal purchases that you make with the net banks each of the four years we’ve penalty is relatively light—for example, debit card, you’ll enjoy perks that often crowned winners. A consistently you’ll lose 60 days’ worth of interest if come only with credit cards: an exten- strong selection of deposit accounts you withdraw money early from a CD sion of up to one year of manufacturer with minimal fees and decent interest with a term of two years or less—but warranties, price protection (provid- rates pushes Ally to the number-one you can also choose a No-Penalty CD, ing reimbursement of the difference if slot, and the bank makes the most of with a 1.05% yield on an 11-month term. you find a lower price on an item that its online platform. you purchased within the past 60 Earlier this year, Ally introduced days), and return protection, which re- digital tools to its Online Savings ac- TIAA Bank imburses you if a retailer won’t accept count that help customers reach their SILVER Why it won: TIAA a return within 90 days of purchase. savings goals. With the Buckets fea- guarantees com- The Yield Pledge money market ac- ture, you can dedicate funds to differ- petitive interest count has a 1.01% rate the first year ent goals—say, with one “bucket” to rates on its selection (0.65% to 0.95% thereafter, depending save for a vacation and another for of free Yield Pledge de- on the balance). holiday shopping. The Boosters tool posit accounts. TIAA also offers a basic checking helps you increase savings by arrang- Standout accounts: For the first year and savings account, and each re- ing automated transfers into the ac- you’re a customer, YIELD PLEDGE quires a $25 minimum balance to count or allowing Ally to periodically CHECKING has a 0.4% rate. The YIELD waive a $5 monthly fee; the savings analyze your linked checking account PLEDGE CD ($5,000 minimum) offers account yields 0.75%. The basic CD

36 KIPLINGER’S PERSONAL FINANCE 08/2020

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requires a $1,000 minimum deposit and yields 0.9% on a one-year term and 1.45% on a five-year term.

Axos Bank Why it won: Axos BRONZE offers several flexible no-fee checking accounts, and the savings ac- count has a competitive rate. Credit unions are not-for-profit institu- CDs require a $5,000 minimum, and Standout accounts: REWARDS CHECK- tions owned by their members, and the the money market deposit account pays ING yields 1.25% if you meet certain ones listed here offer membership to interest on deposits of at least $1,000. requirements. HIGH YIELD SAVINGS anyone in the U.S. These credit unions If you have an active checking account offers a 1.3% rate on all balances. also participate in the CO-OP Shared with Connexus, the money market You shouldn’t have trouble find- Branch network, through which cus- rate ranges from 0.5% on balances ing a free checking account to fit tomers can get account services at any between $1,000 and $10,000 to 1.15% your needs with Axos. If you have participating credit union branch. on $100,000 or more. The savings ac- monthly direct deposits of $1,000 count yields 0.25% on $100 or more. or more and make at least 15 debit Headquartered in Wausau, Wis., card purchases per month (mini- Connexus Connexus opens membership to any- mum $3 per transaction), you’ll Credit Union one who makes a one-time, $5 dona- earn a healthy 1.25% on your bal- GOLD Why it won: All of tion to the Connexus Association and ance with Rewards Checking. With Connexus’s checking deposits $5 into a savings account. CashBack checking, keep a $1,500 and savings accounts balance to get 1% back each time are free, and some of you make a purchase with your them offer enticing interest rates, too. Hiway debit card and sign for the transac- Standout accounts: XTRAORDINARY tion (rather than enter a PIN). The CHECKING yields 1.75% if you meet cer- SILVER Federal no-frills Essential Checking pays tain activity requirements. Among CDs, Credit Union no interest, but like Rewards and a ONE-YEAR CERTIFICATE yields 1.01%, Why it won: A new CashBack checking, it provides un- and a FIVE-YEAR CD has a 1.56% rate. high-interest checking limited reimbursement of domestic Where it is: 11 branches in Minnesota, account gives Hiway a boost, out-of-network ATM fees. Axos New Hampshire, Ohio and Wisconsin. and the CDs pay pretty good rates. also offers Golden Checking for Connexus offers a solid set of free Standout accounts: Meet activity re- those age 55 and older—with free checking accounts. Xtraordinary quirements to get an impressive 2.22% personal checks, a 0.2% interest Checking has a 1.75% rate on balances rate with the free HI YIELD CHECKING rate and $8 monthly in ATM fee of up to $25,000 (0.25% on the portion account. A ONE-YEAR CD yields up to reimbursements—and an account higher than $25,000) and reimburses 1.1%, and a FIVE-YEAR CD up to 1.6%. for teens (see the “Best for Parents up to $25 monthly for out-of-network Where it is: Three branches in Minne- and Kids” category). ATM surcharges in the U.S. if you re- apolis and St. Paul, Minn. The no-fee High Yield Savings ceive electronic statements and either Hiway Federal Credit Union opened account offers a 1.3% rate, and you make at least 15 debit card purchases in 1931 for employees of the Minnesota can get an ATM card upon request. monthly or spend $400 or more each Department of Transportation. You The High Yield Money Market month with your debit card. Have a can become a member by joining the yields 1.05% and requires an open- child between age 10 and 17? Steer him Minnesota Recreation and Park Foun- ing deposit of at least $1,000 (no or her to Teen Checking, which earns dation with a $10 fee or the Association ongoing balance minimum is re- 2% on a balance of up to $1,000 (0.25% of the U.S. Army ($40 for a two-year quired), but it comes with check on the portion higher than $1,000). If membership). Members must also writing and a debit card. Axos of- you want just the essentials, Innova- keep $5 in a savings account. fers CDs with a $1,000 minimum, tive Checking does the job, with free Hiway’s Hi Yield Checking account with rates hovering at 0.4% for access to more than 54,000 ATMs in offers a 2.22% yield on up to $25,000 to both a one-year and five-year term. the CO-OP and MoneyPass networks. those who keep a $1,000 minimum bal-

38 KIPLINGER’S PERSONAL FINANCE 08/2020

BEST BANKS.FINAL.indd 38 6/19/20 9:09 AM 0.05%. Platinum Checking waives Bellco the $12 monthly fee if you keep at Credit Union least $15,000 in deposits and loans BRONZE Why it won: Bellco with Bellco, and it provides free stan- offers a well-rounded dard checks, cashier’s checks, money group of checking ac- orders, wire transfers and overdraft counts and a few savings transfers (it yields 0.03% to 0.15%, options with decent yields. depending on the balance). Free Standout accounts: BOOST INTEREST Checking is best for customers who CHECKING yields a remarkable 2.25%, want a simple account. ance (0.1% on the portion of the balance and the PREMIER MONEY MARKET Keep at least $50,000 in the Premier higher than $25,000), make 15 or more ACCOUNT has a 1.25% rate if you keep Money Market to earn a 1.25% rate Hiway debit or credit card purchases a substantial balance. (lower yields apply to smaller balances, monthly, and receive electronic state- Where it is: 25 branches in Colorado, and you must keep a $10,000 minimum ments. The Free Checking account is mainly in the Denver area. balance to avoid a $10 monthly fee). The a good basic option, and Minnesota Bellco’s free Boost Interest checking Youth Savings account yields 2% on up Wild checking is a fun choice for fans rewards customers with a 2.25% rate to $500 and 0.5% on higher balances. of the state’s professional hockey team. on balances of up to $25,000 if each With a $500 minimum deposit, Bellco’s The money market account yields up month they make at least 15 debit card one-year CD yields 0.95%, and a five- to 0.5%, and the savings account yields purchases, have a direct deposit, and year CD has a 1.25% rate. (For details up to 0.15%. Recently, a five-year CD log in to online or mobile banking on how to join, see www.bellco.org.) ■ offered 1.4% with a balance of at least at least once. Even if you don’t meet $500, and 1.6% with at least $25,000. those requirements, the account yields CONTACT THE AUTHOR AT [email protected].

Best for PARENTS AND KIDS

These banks offer dedicated accounts for children and teens, For parents, 360 Checking yields 0.1% and provides free plus a host of great accounts for parents, too. access to tens of thousands of ATMs. The 360 Performance Savings account yields 1% on any balance—and if you’d like your BEST: CAPITAL ONE 360 child to earn a higher interest rate than with Kids Savings, you Why it won: Parents and their children both benefit from can own the Performance account jointly with him or her. The an appealing selection of no-fee, no-minimum accounts. no-minimum 360 CDs recently yielded 0.5% for a one-year term Standout accounts: The free MONEY TEEN CHECKING and 1% for a five-year term. account has friendly features for kids age 8 to 17, and the free KIDS SAVINGS account offers a 0.5% yield. RUNNER-UP: AXOS BANK Where it is: Accounts are internet-based, but for in-person Why it won: Axos, an internet bank, has a checking account for service, Capital One has more than 450 branches in eight teens, and parents can choose from a range of no-fee accounts. eastern and southern states, plus Washington, D.C. Standout account: FIRST CHECKING, for teens ages 13 to 17. The Money Teen Checking account yields 0.1% and offers free If you have a teen younger than 18, you can open and manage access to more than 39,000 ATMs in the Capital One and Allpoint the free First Checking account jointly with your kid with a de- networks. Your kid gets a debit card (check-writing is unavail- posit of $50 (no ongoing minimum). It yields 0.25% and offers able), but as a joint owner, you can manage the account and re- up to $12 in out-of-network ATM fee reimbursements per month. ceive alerts for each transaction. Your teen can also check the First Checking has other features well suited to this age group: account balance, deposit checks and set up savings goals. Over- no overdraft fees (overdrafts will be declined, or money can be draft services aren’t available, so if your child tries to make a transferred free from a linked savings account); daily transactions debit card purchase with nonsufficient funds, it will generally be limited to $100 for cash withdrawals and $500 for debit card pur- rejected (if a transaction causing the account to go negative does chases; and blacklisted purchases for teens with certain types of make it through, Capital One won’t charge interest or a fee). With merchants—including bars, liquor stores and gambling establish- the Kids Savings account, children younger than 18 can deposit ments. Check-writing isn’t available. (See more on Axos in the checks, set savings goals and monitor account balances. bronze medalist entry in the “Best Internet Banks” section.)

08/202008/ 200 KIPLINGER’SPPLINGE PPERSONALERSONALO FIFINANCEFINANC 39

BEST BANKS.FINAL.indd 39 6/19/20 9:09 AM MONEY TOP-YIELDING SAVINGS

30-day Taxable Money Market yield as Minimum Website Mutual Funds of June 2 investment (www.) SAVINGS T Rowe Price Cash Res (TSCXX) 0.60% $2,500 troweprice.com Vanguard Prime MMF (VMMXX) 0.39 3,000 vanguard.com Gabelli US Treas AAA (GABXX) 0.38 10,000 gabelli.com Find the Best Money Meeder Prime MMF (FFMXX)* 0.32 2,500 meederinvestment.com 30-day Tax eq. yield Tax-Free Money Market yield as of 24%/35% Minimum Website Market for You Mutual Funds June 1 bracket investment (www.) Vanguard Muni MMF (VMSXX) 0.32% 0.42%/0.49% $3,000 vanguard.com Fidelity Muni MMF (FTEXX) 0.08 0.11/0.12 1 fidelity.com M Stanley T-F Daily Inc (DSTXX)* 0.05 0.07/0.08 5,000 morganstanley.com THE TABLES AT RIGHT LIST sponse, money-fund yields BNY Mellon Ntl Muni (MOMXX) 0.04 0.05/0.06 10,000 bnymellon.com two kinds of money market have fallen more quickly Annual vehicles: money market than those of money market Savings and Money Market yield as of Minimum Website mutual funds and money accounts. “Yields on bank Deposit Accounts June 12 amount (www.) market deposit accounts. deposits tend to lag the Fed, Affinity Plus FCU (Minn.)&# 2.02%^ none affinityplus.org For those looking for a place and that’s a benefit when First Foundation Bank (Calif.)† 1.45 $1,000 firstfoundationinc.com to park cash, the difference rates are going down,” says DollarSavingsDirect (N.Y.)† 1.40 none dollarsavingsdirect.com is often a point of confusion. Peter Crane, president of SFGI Direct (W.V.)†‡ 1.36 500 sfgidirect.com Banks and credit unions Crane Data, which tracks Annual offer the deposit-account money market funds. As Certificates of Deposit yield as of Minimum Website 1-Year June 12 amount (www.) version, usually called a shown in the tables, you Lafayette FCU (Md.)& 1.61% $500 lfcu.org money market account, or could recently get as much Pen Air FCU (Fla.)& 1.35 500 penair.org MMDA. These accounts as 0.6% on a taxable money Financial Partners CU (Calif.)& 1.35 1,000 fpcu.org come without market risk fund, 0.32% on a tax-free Marcus by Goldman Sachs (N.Y.)†** 1.30 500 marcus.com fund and about 2% on a Annual money market account. Certificates of Deposit yield as of Minimum Website RATE UPDATES Taxable money market 5-Year June 12 amount (www.) For the latest savings yields funds recently had an aver- Lafayette FCU (Md.)& 2.02% $500 lfcu.org and loan rates, visit kiplinger age 30-day compound yield Generations CU (Wash.)& 1.97 500 generationscreditunion.com .com/links/rates. For our top of 0.09%, and tax-free funds Georgia’s Own CU (Ga.)& 1.90 500 georgiasown.org rewards cards, go to kiplinger yielded 0.05%, according Financial Partners CU (Calif.)& 1.85 1,000 fpcu.org .com/links/rewards. to iMoneyNet. Money mar- *Fund is waiving all or a portion of its expenses. &Must be a member; to become a member, see web- ket account yields averaged site. #Money market deposit account. ^Must receive electronic statements and have a $500 monthly direct deposit into an Affinity Plus deposit account. †Internet only.‡ CFG Bank offers a similar yield. and are protected by the 0.09% on balances of less **Georgia’s Own CU and Signature FCU offer a similar yield. SOURCES: Bankrate, DepositAccounts, Federal Deposit Insurance than $100,000, according Money Fund Report (iMoneyNet). Corp. (see “Are Your Bank to the FDIC. Deposits Insured?” June). The decision of whether TOP CHECKING ACCOUNTS The mutual fund version— to use a money market Must meet activity requirements* Annual yield as of Balance Website often called a money market fund or account largely High-Yield Checking June 12 range† (www.) fund, or just money fund— boils down to the money’s La Capitol FCU (La.)& 4.25% $0–$3,000 lacapfcu.org holds such short-term in- purpose. For emergency Consumers Credit Union (Ill.)& 4.09‡ 0–10,000 myconsumers.org vestments as Treasury bills savings or other cash that Evansville Teachers FCU (Ind.)& 3.30 0–20,000 etfcu.org and other government secu- needs to be safe and readily Western Vista CU (Wyo.)& 3.25 0–15,000 wvista.com rities, commercial paper, accessible from your bank, *To earn the maximum rate, you must meet requirements such as using your debit card several times and certificates of deposit. a money market account monthly and receiving electronic statements. †Portion of the balance higher than the listed range Money market funds are makes sense. Money that earns a lower rate or no interest. &Must be a member; to become a member, see website. ‡Requires spending $1,000 or more in CCU Visa credit card purchases. SOURCE: DepositAccounts. low-risk—but they don’t you may want to quickly

match the safety of money move into the market—say, Month- Year- As of June 12, 2020. market accounts, and they to scoop up stocks at low YIELD BENCHMARKS Yield ago ago ● EE savings bonds purchased 0.10% 0.10% 0.10% after May 1, 2005, have a are not FDIC-insured. prices during a dip—is often U.S. Series EE savings bonds fixed rate of interest. 1.06 1.06 1.90 best parked in a money mar- U.S. Series I savings bonds ● Bonds purchased before 0.18 0.16 2.20 May 1, 1995, earn a minimum Starved for yield. The Federal ket fund linked to the rest of Six-month Treasury bills of 4% or a market-based Reserve lopped short-term your investment portfolio. Five-year Treasury notes 0.33 0.34 1.88 rate from date of purchase. ● LISA GERSTNER Ten-year Treasury notes 0.71 0.69 2.13 Bonds bought between interest rates to near zero May 1, 1995, and May 1, 2005, earlier this year, and in re- [email protected] earn a market-based rate SOURCE FOR TREASURIES: U.S. Treasury from date of purchase.

40 KIPLINGER’S PERSONAL FINANCE 08/2020

CREDIT YIELDS.fro.indd 40 6/19/20 9:11 AM The Main Advantages of Municipal Bonds Investors are attracted to municipal bonds for three reasons; safety of A BOND principal, regular predictable income and the tax-free benefi ts. Together, these three elements can make a compelling case for including tax-free municipal bonds in your portfolio. YOU’RE NOT Potential Safety of Principal When investing in municipal bonds, investors are paid back the full face value of their investment at maturity or earlier if called, unless the bond defaults. This is important because many investors, particularly those FAMILIAR nearing retirement or in retirement,are concerned about protecting their principal. In June of 2017, Moody’s published research that showed that rated investment grade municipal bonds had an average cumulative 10-year default rate of just 0.09% between 1970 and 2016.* That means WITH FROM while there is some risk of principal loss, investing in rated investment-grade municipal bonds can be an important part of your portfolio. Potential Regular Predictable Income A COMPANY Municipal bonds typically pay interest every six months unless they get called or default. That means that you can count on a regular, predictable income stream. Because most bonds have call options, which means you get your principal back before the maturity date, subsequent municipal YOU’VE bonds you purchase can earn more or less interest than the called bond. According to Moody’s 2017 research,* default rates are historically low for the rated investment-grade bonds favored by Hennion & Walsh. Potential Tax-Free Income NEVER Income from municipal bonds is not subject to federal income tax and, depending on where you live, may also be exempt from state and local taxes. Tax-free can be a big attraction for many investors. HEARD OF? About Hennion & Walsh Since 1990 Hennion & Walsh has specialized in investment-grade It could be the tax-free municipal bonds.The company supervises over $3 billion in assets in over 16,000 accounts, providing individual investors with institutional smartest retirement quality service and personal attention. Our FREE Gift To You investment you make. We’re sure you’ll want to know more about the benefi ts of tax-free Municipal Bonds. So our specialists have written a helpful Bond Guide for FREE Bond Guide investors. It’s free and comes with no obligation whatsoever. Without cost or obligation Call (800) 318-4850

© 2020 Hennion & Walsh, Inc. Securities offered through Hennion & Walsh Inc. Member of FINRA, SIPC. Investing in bonds involves risk including possible loss of principal. Income may be subject to state, local or federal alternative minimum tax. When interest rates rise, bond prices fall, and when interest rates fall, bond prices rise. *Source: Moody’s Investor Service, June 27, 2017 “US Municipal Bond Defaults and Recoveries, 1970–2016. Past performance is not a guarantee of future results. MONEY

HEALTH CARE HSAs Get Even Better Workers have more options with flexible spending accounts, too. BY LISA GERSTNER

AS THE COUNTRY DEALT WITH THE FALLOUT expense is telehealth, through which not employer-sponsored), the funds from the coronavirus pandemic this patients and clinicians consult re- grow tax-deferred in the account, and spring, lawmakers and regulators motely over the phone or by using withdrawals are tax-free for qualified scrambled to ease the pain of record a video chat tool, such as FaceTime. medical expenses, without a time job losses and other blows to Ameri- Telehealth services have been on limit. An HSA is a smart way to save cans’ pocketbooks and health. One the rise now that social distancing for medical expenses in retirement, result that has largely flown under is encouraged—and high-deductible too. The money in your account can

the radar: Health savings accounts plans with plan years that start on grow over time through investments, ISTOCKPHOTOC.OM and flexible spending accounts, which or before December 31, 2021, are per- and “it can be the best tax-sheltering offer a tax-advantaged way to save mitted to cover the services even if account of them all,” says Dennis money for certain medical or depen- you haven’t reached your deductible. Nolte, a certified fi- dent-care expenses, have become High-deductible plans may also pay nancial planner in more generous. Some of the changes for testing and treatment related to Winter Park, Fla. are temporary, but others have no COVID-19 before you’ve reached your If you had an expiration. deductible. If a corona virus vaccine HSA through becomes available, receiving one an employer- More expenses are covered. Thanks would be considered preventive care sponsored plan to the Coronavirus Aid, Relief and and may be excluded from your de- and you lost Economic Security (CARES) Act, ductible, too. you can use money from an HSA A health savings account or a health care FSA to pay more is a powerful tool to cover expenses—and these changes are out-of-pocket medical permanent. Over-the-counter drugs expenses: Contribu- purchased January 1, 2020, or later tions are pretax (or are now HSA- and FSA-eligible with- tax-deductible, out a prescription. Those include pain if your HSA is relievers, cough suppressants, anti- histamines and other drugs that treat issues from heartburn to acne, says Shobin Uralil, cofounder and chief operating officer of Lively, an HSA provider. Feminine-hygiene products such as tampons, pads and menstrual cups are also qualifying expenses under the law. Other new rules give a high- deductible health plan paired with an HSA the green light to cover certain expenses you incur as a result of the pandemic before you meet your deductible. One such

42 KIPLINGER’S PERSONAL FINANCE 08/2020

HSA.FINAL.indd 42 6/19/20 9:12 AM your job, the account is yours to keep, offers a grace period. Alternatively, and you can still use the funds anytime, you may be permitted to roll up to KipTip tax-free, for qualified medical ex- $500 of your unused balance in a penses. Although health insurance health care FSA to the following plan How Much premiums are typically not considered year. If you lose your job, you may have qualified medical expenses, there’s an up to 90 days from termination (de- You Can Save exception if you use withdrawals to pay pending on your former employer’s premiums for COBRA coverage (which rules) to submit receipts for expenses The IRS imposes caps on the amount lets you continue employer-based in- you incurred while you were still em- you can contribute to a health savings surance for up to 18 months after you ployed. But you can’t make claims for account or flexible spending account. leave your job) or to pay for other expenses incurred after you lost your For 2020, the HSA limit is $3,550 for health insurance premiums if you’re job—unless you get COBRA continua- self-only coverage or $7,100 for family collecting unemployment benefits. tion coverage for your FSA. coverage. In 2021, the HSA maximum To help those who are dealing with contribution will be $3,600 for self-only FSAs are even more flexible. FSAs allow pay cuts, fluctuating expenses or other coverage or $7,200 for a family. For employees to set aside pretax money unexpected effects of the pandemic, both years, those age 55 or older at the for certain health care or dependent- the IRS is allowing certain midyear end of the year can add an extra $1,000. care expenses, but they come with changes to employee health insurance If you have a health care FSA, you more limitations than HSAs. While benefits and FSAs that are typically can put in no more than $2,750 for 2020 you’re employed, you have only until permitted only during open enrollment (limits for 2021 have not yet been an- the end of your plan year to or when a worker has a qualifying life nounced). In a dependent-care FSA, use the funds, or until event, such as the birth of a child or a singles or married who file a joint tax March 15 if marriage. return can stash a total of up to $5,000 your em- Employers are not required to offer ($2,500 if married filing separately). ployer these midyear plan adjustments, and a little more than half say they aren’t planning to do so, according to a sur- not apply to 2019 funds carried into vey by benefits consultant Mercer. But 2020). Companies may also extend 43% said they will let workers alter the grace period from March 15 until contributions to a dependent- the end of the year. So an employer care FSA, and 29% will may, for example, let employees use permit contribution funds from their 2019 FSAs through changes to a health the end of 2020. care FSA. Money stashed in a dependent-care Depending on FSA may be used to pay for child or what your em- adult day care; a babysitter or nanny; ployer offers, preschool; before- and after-school you may be programs; and summer day camp. able to start The ability to modify contributions setting aside to these accounts midyear could be funds in an especially beneficial for parents who FSA or stop set aside funds in a dependent-care contributing FSA but have had lower child-care to one that you expenses than expected during the currently have. Or pandemic—for example, because you may have the op- child-care centers were closed or tion of raising or lowering a summer camp was canceled. The the amount that you put into changes could also be a big help for your current plan. What’s those who are saving in a health care more, for 2020 plans, em- FSA—for example, because a planned ployers may increase the medical procedure was delayed as a amount of unused funds result of the pandemic. ■ that can be carried over to the YOU CAN CONTACT THE AUTHOR AT LISA_GERSTNER@ following year to $550 (that does KIPLINGER.COM.

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44 KIPLINGER’S PERSONAL FINANCE 08/2020

GREAT PLACES TO RETIRE.pag1.indd 44 6/19/20 10:04 AM THE FLORIDA PANHANDLE LOCALE OFFERS BEAUTIFUL BEACHES, AN ESCAPE FROM CROWDED CITIES AND A REFRESHINGLY LOW COST OF LIVING.

Our cities provide plenty of space to spread out without skimping on health care or other amenities. BY STACY RAPACON AND SANDRA BLOCK

CHOOSING A PLACE TO SPEND YOUR retirement years has never been easy, but these days, it’s particularly challenging. The coronavirus pandemic has caused some retirees to rethink plans to move to urban or suburban walkable communities. But rural communities, while offering plenty of opportunities for social distancing, may not offer adequate health care—which is a priority for many retirees, particularly while COVID-19 infection rates are still high. Some of these concerns could dissipate after a vaccine becomes widely available. But in the interim, it’s a good idea to re- evaluate plans to move—especially if you are considering relocating to an urban area, says Bert Sperling, founder of Best Places (www.bestplaces.net), which ranks cities around the country on a variety of factors. “One of the reasons people are moving to those places is their vibrancy,” he says. “If the restaurants are going away, if it’s difficult to go to shows and museums, then what is the point?” That doesn’t mean it’s too early to start thinking about where you’d like to retire, and, once you feel comfortable traveling, you’ll probably want to test-drive some

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destinations. We’ve selected Services. The star ratings or other types of insurance Taxes. State taxes can take a seven cities that offer a are based on numerous if you live in a part of the big bite out of your savings, combination of good health factors, including the rate country that’s prone to nat- which is why states with no care, low density, a modest of surgical infections, pa- ural disasters? What will income tax, such as Florida cost of living and low to tient satisfaction and how you pay for electricity, and Tennessee, are popular moderate taxes (see our quickly patients are treated. water and other utilities? with retirees. But don’t focus methodology in the box on You can use Medicare’s Or for personal services, solely on a state’s income page 49). For example, the “Hospital Compare” tool, such as housecleaning or tax (or lack of one). High cost of living in Pensacola, available at Medicare.gov, lawn care? property and sales taxes can Fla., is below the national to research hospitals in any If you haven’t done it al- eat into your savings, too. average and there are three city you’re considering as a ready, conduct a thorough All of our cities are located top-rated hospitals within retirement destination. You inventory of your expenses in states that are rated tax- an hour’s drive or less. The can also find general infor- in retirement, keeping in friendly or neutral by the beach is lovely, too. mation, such as the names mind that your spending Kiplinger State-by-State Your own decision will and addresses of all hospi- habits will change as you Guide to Taxes on Retirees, be based on personal pref- tals in a particular area and age (see “Plan Now to Re- our annual ranking of all 50 erences, including the type the types of services they tire Worry-Free,” Feb.). states based on the tax situ- of climate you favor, near- provide. Once you’ve estimated how ations they offer retired res- ness to family and even Consider the cost of much you’ll spend on every- idents (kiplinger.com/links/ your political views. But health care, too. The aver- thing from groceries to pet retireetaxmap). Our analysis as you conduct your search, age 65-year-old couple will care, you can estimate your is based on the estimated some factors should be at spend $285,000 on out-of- own cost of living in a par- state and local tax burden

the top of your list, because pocket medical expenses ticular city. for a hypothetical retired VISITPENSACOLA.COM COURTESY PAGE: PREVIOUS HUNTSVILLE.ORG, COURTESY they’ll continue to play an over their retirement, ac- important role in your re- cording to Fidelity Invest- tirement lifestyle long after ments, and those costs the coronavirus threat has could vary depending on THE CITY HAS 26 MILES diminished. where you live. Life flights OF WALKING AND BIKING for emergency surgery TRAILS. Health care. The rapid could cost you thousands of growth of telehealth means dollars. Even for non-emer- you may be able to consult gencies, traveling several with specialists outside hours to visit a doctor or your community (see “Rx hospital will drive up your for Health Care,” July), but out-of-pocket costs. there will still be times when you’re going to need Cost of living. If you live in in-person visits and treat- a high-cost city on one of ment. For both emergencies the coasts, retiring to a part and planned surgeries, it’s of the country where living important to have a reputa- costs are lower will make ble hospital nearby. Having your retirement savings last access to reliable health longer. care is particularly impor- All of our seven cities tant if you have preexisting have lower-than-average medical issues, says Aaron expenses, based on the Clarke, a certified financial Council for Community and planner in Ashburn, Va. Economic Research’s cost- Our seven cities have at of-living index. But it’s still least one hospital within important to do your own a 50-mile radius that has research to get an idea of received a four- or five-star what your costs will be. rating from the Centers for How much will you spend Medicare and Medicaid on homeowners insurance,

46 KIPLINGER’S PERSONAL FINANCE 08/2020

GREAT PLACES TO RETIRE.pag1.indd 46 6/19/20 10:05 AM KipTip TAKE A couple with a mixture of in- meantime, many states may come from Social Security, be forced to raise taxes, cut PENSACOLA, FLA. TEST-DRIVE an IRA, a private pension, services or both. Population: 52,975 interest and dividends, and Living costs for retirees: 2% Bert Sperling, founder of capital gains. Proximity to family and below the national average Best Places (www.best In an effort to attract and friends. Until recently, fre- Median home value: $165,700 places.net), recalls chatting retain senior residents, sev- quent flights and affordable Number of 4- and 5-star with a real estate agent in eral states have taken steps airfares for fliers with flex- hospitals within 50 miles: 3 southern Oregon who sold to ease taxes on retirees. ible schedules made it easy Nearest airport: Pensacola the same home on the coast But the pandemic-induced for seniors to hop on a International Airport about once every five years. economic downturn has plane for a visit with the The home is spacious with wreaked havoc on state grandkids. Now, though, f course, Florida. The ocean views, making it ap- budgets, so monitor the many seniors are reluctant Sunshine State is a pealing to retirees from fiscal health of any state to fly, and the pandemic quintessential U.S. retire- other parts of the country. you’re considering as your could compel airlines to ment destination with 4.4 But once the new owners retirement home. Unlike make long-term structural million residents who are move in, they discover that the federal government, changes—such as more age 65 or older—a whopping there are only two restau- most states are required to space for passengers—that 20.5% of the state’s total rants in the nearby small balance their budgets. States would raise the cost of tick- population—calling it home, town. The nearest airport are hopeful they’ll receive ets. Airlines are also ex- according to the U.S. Cen- is three hours away, and it’s federal aid to help close their pected to reduce the num- sus Bureau. The appeal is a three- to four-hour drive budget gaps, but recovery ber of flights, at least in the obvious: warm winters, to the closest hospital. could still take years. In the near term, and some may beautiful beaches and tax Consequently, most retir- go out of business. “If you’re advantages. Florida levies ees don’t stay for more than unable to fly for any reason, no state income tax, leaving a few years. “They say, ‘This a one-hour flight becomes a Social Security benefits and has been great—now we’re seven- or eight-hour drive,” other retirement income in- going back to civilization,’ ” says Brandon Opre, a certi- tact. Nor does it charge an Sperling says. fied financial planner in estate or inheritance tax. To avoid buyer’s remorse, Huntersville, N.C. Indeed, Florida consistently rent an Airbnb for a few ranks among Kiplinger’s weeks and live within the Internet access. If you live in most tax-friendly states for area you’re considering,” a big city, you may take fast retirees. says Lisa Ellis, a real estate and reliable internet service Pensacola offers all those agent in Durham, N.C. “Learn for granted. But in large desirable Florida retirement the roadways, parks, hospi- swaths of the U.S., broad- attractions, plus affordabil- tals, restaurants, theaters band is unreliable or non- ity. The median home value and museums. That way, existent. BroadbandNow, a is more than $25,000 lower you can get a feel for the consumer website, estimates than the $191,600 median vibe without committing to that 42 million Americans in Clearwater, another re- housing right up front.” don’t have access to broad- tiree hotspot on Florida’s Keeping your options band service. Even after a west coast. open is even more impor- vaccine makes it safe to go Beyond being budget- tant now, when the post- shopping again, you’re going friendly, Pensacola has pandemic future is so uncer- to need the internet for ev- plenty to offer retirees. The tain. Paul Irving, chairman erything from telehealth Florida panhandle city’s of the Milken Institute’s appointments to video chat sugar-sand beaches provide Center for the Future of meet-ups with the grand- the perfect setting for rest Aging, isn’t ready to give kids. In most of our seven and relaxation or more ac- up on transit-friendly, walk- cities, an above-average per- tive endeavors, from fishing able cities, particularly for centage of the population and paddle boarding to seniors. “We’re pack ani- has a broadband subscrip- snorkeling, scuba diving and mals,” he says. “We need tion, according to data from even surfing. Downtown, human connections.” the U.S. Census Bureau. you can stroll the streets

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A LIVELY DOWNTOWN AND STRONG ECONOMY MAKE IT A POPULAR RETIREMENT DESTINATION.

and enjoy a growing list of Florida has been hit by six of and tax advantages. The help make it a solid choice restaurants, shops, muse- the 10 costliest hurricanes in state does levy income taxes, as a retirement destination. ums and art galleries, as U.S. history, according to the but rates are low—ranging Rattling off names of sev- well as Historic Pensacola, Insurance Information In- from 2% to 5%—and Social eral major employers in which includes 30 historic stitute. And being on the Security benefits and de- aptly dubbed Rocket City, sites and living history Gulf Coast, Pensacola resi- fined benefit plan payouts Mayor Tommy Battle notes exhibitions on nine acres. dents must always be pre- are exempt. that Blue Origin, Aerojet Home to Naval Air Sta- pared for the next one. Fi- Huntsville is about 400 Rocketdyne, GE Aviation tion Pensacola (and the nancially, that means paying miles north of Alabama’s and Redstone Arsenal are iconic Blue Angels flight more for homeowners insur- Gulf coast beaches, but in- all adding thousands more demonstration squadron), ance and any extra coverage, land you can still find many jobs to the area. “We have the area also has a strong including for hurricane and ways to enjoy the outdoors. a growing economy, and military presence, which flood damage. The city has a number of I think we’ll continue to helps drive the local econ- green spaces, such as Big grow over the next five to omy. Not surprisingly, more Spring International Park 10 years,” he says. than 35,000 military retir- HUNTSVILLE, ALA. and Fern Bell, and 26 miles The local health care ees have chosen to settle in Population: 200,574 of walking and biking trails. system is another strength. the greater Pensacola area, Living costs for retirees: 7.1% You can also head to Ditto Lincoln Medical Center according to the Florida below the national average Landing on the Tennessee in Fayetteville, Tenn., is West Economic Develop- Median home value: $176,100 River for fishing, boating, the only four-star hospital ment Alliance. Number of 4- and 5-star kayaking, canoeing and within 50 miles of the city “I guess I could sum it up hospitals within 50 miles: 1 paddle boarding. Cultural center, according to the by saying there is something Nearest airport: Huntsville attractions—including a Centers for Medicare and for everyone here,” says International Airport historic downtown, top- Medicaid Services. But Donna Jordan, a financial quality museums, and a 11 more four-star-rated planner based in Pensacola labama offers retirees vibrant arts community— hospitals are within a 100- who has been an area resi- many of the same at- are plentiful in town, too. mile radius of the city, and dent for more than 40 years. tractions as Florida: warm The area’s fiscal health five-star Lakeland Com-

The downside: hurricanes. weather, beautiful beaches and economic strength also munity Hospital is about VISITKNOXVILLE.COM VISITNC.COM, COURTESY

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GREAT PLACES TO RETIRE.pag1.indd 48 6/19/20 10:17 AM “If anything, it furthers (near Chapel Hill) and RALEIGH, N.C. their desire to live amongst Regency at Brier Creek Population: 474,069 more green space, open air Country Club in Raleigh. Living costs for retirees: 3.3% and room to spread out,” below the national average she says. Median home value: $236,700 Median home values in KNOXVILLE, TENN. Number of 4- and 5-star all three cities are higher Population: 187,603 hospitals within 50 miles: 6 than the national median Living costs for retirees: 16.3% Nearest airport: RDU Interna- of $204,900. Among the below the national average tional Airport trio, Durham sports the Median home value: $128,800 lowest median home value, Number of 4- and 5-star orth Carolina State at $207,900, while Chapel hospitals within 50 miles: 2 University, Duke Uni- Hill has the highest median Nearest airport: McGhee versity and the University price, at $409,200. And Ellis Tyson Airport of North Carolina at Chapel says that prices are quickly Hill may form a triad of going up, with homes in he Volunteer State is bitter sports rivals. But the area’s active adult com- another tax-friendly teaming up, they help form munities ranging from less choice for retirees. Like a strong economic base than $400,000 to more than Florida, it charges no in- for North Carolina’s Re- $600,000. come tax, allowing your re- search Triangle of Raleigh, And it may be well worth tirement income to stretch RETIREES LOVE THE FLOURISHING MUSIC Durham and Chapel Hill. it. On top of the economic further. And though it cur- AND ARTS SCENE. Moody’s Analytics ranked stability and ample green rently taxes stock dividends both Raleigh and Durham space, the area enjoys easy and interest income from separately among the top 10 access to quality health care bonds and other invest- 83 miles from Huntsville. U.S. cities best positioned to facilities—also boosted by ments, that tax is being And while Huntsville recover from the pandemic- the university presence— phased out and should be Hospital only holds a two- induced economic slump. as well as an abundance of gone by 2022. star rating, it led the way One positive for the area, educational, cultural and Knoxville is among the in response to the novel especially in light of the recreational opportunities. cheapest metro areas in coronavirus outbreak in coronavirus outbreak, is The Raleigh–Durham area the U.S., according to the U.S. Along with Mayor its relatively low popula- markets “are perfect for re- CCER. And it boasts the Battle and other local lead- tion density. The Triangle tirees who want to down- lowest living costs for re- ers, hospital representatives holds about 3,000 people size to typically one-level tired households among held the area’s first press per square mile—far less living and give up yard main- our seven cities. Housing conference on February 27, than, say, New York City’s tenance,” Ellis says. Among costs for retirees are partic- a couple weeks before Mad- pop ulation of 27,547 people the Triangle’s growing ularly low, at 30.6% below ison County, where Hunts- per square mile. Durham- number of active adult com- the $204,900 U.S. median ville is located, confirmed based real estate broker munities, she recommends (and 40.5% lower than its first case. In the follow- Lisa Ellis notes that COVID- checking out Carolina Ar- the $216,500 median in ing weeks, it created testing 19 has done little to turn bors in Durham, Carolina Nashville). Median rent in opportunities, opening a away home buyers from Preserve in Cary, Fearring- Knoxville is $815, compared Flu and Fever Clinic, a the Raleigh-Durham area. ton Village in Pittsboro with $1,033 in Nashville and drive-through testing site at John Hunt Park and a OUR METHODOLOGY mobile testing unit to reach To select our cities, we sifted through data on 212 U.S. metropolitan statistical areas. We sought out places with underserved areas, even relatively low population density, low living costs for retirees and high rates of internet connectivity, as well as checking the local homeless high median incomes and low poverty rates among residents who are age 65 and older. We also limited our search population. to states with retiree-friendly or neutral tax situations and to places near high-quality health care facilities. “We got a little bit ahead Sources. Population data, incomes, poverty rates, internet-subscription rates and median home values are of the coronavirus and were provided by the U.S. Census Bureau. Figures for living costs for retirees are based on the Council for Community able to ask our population to and Economic Research’s Cost of Living Index for Q1 2020. Hospital ratings are from the Centers for Medicare and stay safe, stay sanitized and Medicaid Services. stay separated,” Battle says.

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My Search for the Perfect Place to Retire We home in on two places with less traffic and lower costs. BY ROBERT NIEDT

THIS ISN’T ABOUT YOU, never lived in a small rural town South Carolina is ranked as other taxable income ($30,000 Northern Virginia. On second before and deeply miss Virginia one of the most tax-friendly for joint filers). The first $50,000 thought, maybe it is. We must and the cultural attractions in states for retirees. Taxpayers in value of a senior’s home is ex- be going. Not right now, but the D.C. area,” Symes wrote. age 65 and older can exclude empt from local property taxes. when we retire. “Yes, the cost of living and up to $10,000 of retirement in- And property taxes overall are My wife and I have found a housing are much less, but the come (up to $3,000 for taxpay- the fourth-lowest in the nation. lot to like about our bedroom absence of a metropolitan area ers younger than 65). Seniors (You can see how each state community near Washington, is deeply missed; lower costs can also deduct $15,000 from taxes retirees and compare up D.C. Access to the best of the don’t make up for this. I’ve met arts, the soulful vibe of the other retirees here who feel the city, professional sports and same way.” the historical sites make my We’ve been scouting poten- heart sing. Point the car west tial retirement regions for a few and we can be in the foothills years, and we’re keeping metro of the Blue Ridge mountains in access top of mind. Two areas 45 minutes, or on Skyline Drive are making the cut: the Shenan- in Shenandoah National Park doah Valley of Virginia (close to in not much longer. D.C. but worlds away) and the But as we approach retire- Lowcountry region of South ment, we have to look at Carolina, close to Myrtle Beach. whether it makes financial or In both cases—and to a greater lifestyle sense to continue living extent in South Carolina—hous- in busy Northern Virginia after ing and taxes, among other we retire. For us, it just doesn’t. things, are less expensive than In pre-pandemic times, traffic in Northern Virginia. was always nightmarish—and, According to the Kiplinger due to construction of even State-by-State Guide to Taxes more federal government build- on Retirees, Virginia ranks as a ings a mile from our house, it tax-friendly state for retirees. was getting worse. Plus, the Residents 65 and older can de- cost of living here is high. duct up to $12,000 per person After I mentioned in an ear- of retirement income, subject lier column about our plans to to income-eligibility limits. leave this area in retirement, Property taxes in Virginia are reader Denis Symes of Fort modest, and sales taxes are Collins, Colo., warned me that I low. And there are no inheri- might regret it. He and his wife tance or estate taxes. And yes, retired and moved from North- we’re already living in Virginia, ern Virginia to Fort Collins to be but other parts of the state close to grandchildren. “We’ve have a lower cost of living.

ILLUSTRATION BY KOTRYNA ZUKAUSKAITE 50 KIPLINGER’S PERSONAL FINANCE 08/2020

GREAT PLACES TO RETIRE.pag1.indd 50 6/19/20 10:06 AM to five states at kiplinger.com/ (the pre–Civil War buildings outdoor adventures on the entertainment options, several links/retireetaxmap.) are testimony to the fact that Shenandoah River and in the supermarket chains offering Staunton was spared from Blue Ridge and Appalachian good options and, high on the Historic Staunton. The severe damage during the mountains. list, Costco. Make that Costcos— reason for our first visit to conflict). Staunton has six with attached liquor stores, Staunton, Va., in the Shenan- connected historic districts, all Lowcountry charm. Pulling up because that’s how South Caro- doah Valley, was a weekend listed on the National Register roots from your longtime home lina rolls. outdoor art festival in a down- of Historic Places. may mean leaving behind your Another plus for that region town park, where we were The historic Main Street and grown children, grandchildren is its proximity to even bigger quickly corrected on the pro- its downtown arteries are and friends. It’s why many retir- cities and resort destinations. nunciation of the town’s name. chock-full of independent gift ees—particularly northerners One of my favorites, Charleston, The city’s name is pronounced shops, bookstores, art studios escaping the harsher weather— is a couple of hours away from Stanton and always has been, and galleries, and artisans. Res- become “halfbacks.” They the Myrtle Beach area. Savan- even back in its 19th-century taurants and breweries, along move to the Deep South, tire of nah, Ga., another city I like a lot, heyday as a busy railroad hub with the retail and art studios, the missed connections, and is just about four hours away. are housed in one historic build- end up moving halfway back For many retirees, the lure of ing after another. north toward their former the Myrtle Beach area is its rep- Woodrow Wilson grew up home, family and friends. utation as a top golf destina- here, and Wilson’s Presidential The Carolinas are popular tion, with about 80 private, Museum and Library is one of halfback states. And for us, one semiprivate and public golf the attractions. Fan out further of the appeals of South Caro- courses. It’s not my game at this into the Shenandoah Valley and lina is the climate: It’s not as hot point (perhaps someone can you’ll find plenty of other his- in the summer as Florida and teach this lefty), but another torical sites and towns, includ- Georgia, two popular states for type of golf is: Miniature golf, ing another of our favorites, retirees. which is also a very big deal in Lexington. Charlottesville and Should we decide to make Myrtle Beach, is my jam. Per- Thomas Jefferson’s Monticello South Carolina our retirement haps I should pack clubs. (They are about an hour away back destination, we won’t be alone do sell miniature-golf club sets, across the mountains, too. in our journey, because we’ve don’t they?) The American Shakespeare had several friends move there In making frequent week- Center offers productions recently. And according to the and weekend-long ventures year-round. Should we land U.S. Census Bureau, about 17% to Staunton as well as Myrtle in Staunton, I fully intend to of the state’s population of 5.1 Beach, we’re following Kip- volunteer or somehow be a million are age 65 or older. For linger’s advice. Our list of “16 part of it and finally put my the past several years, South Retirement Mistakes You Will college theater degree to work Carolina has seen about 63,000 Regret Forever” (see kiplinger after all these years. There’s people move there annually. .com/kpf/regret) includes “re- also the Heifetz International Our South Carolina desti- locating on a whim.” You can Music Institute summer festival, nation of choice right now is get a taste for a place in a one- events at the city’s Mary Bald- Myrtle Beach, but anywhere week visit, but ideally, if you can win College, the Staunton Music in the Lowcountry is game. swing a month (and go at dif- Festival and the Virginia Hot We like the proximity to the ferent times of the year), that’s Glass Festival. Nearby, events beaches, as well as to friends even better. Airbnb and Vrbo abound at the Frontier Culture who live in the area. Myrtle offer less-expensive options Museum. Beach is a big enough city that than a month at a hotel. Staunton’s hub location also we would have access to excel- YOU CAN CONTACT THE AUTHOR AT makes it a launching pad for lent health services, multiple [email protected].

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$1,023 in the U.S., according below the national average* Lafayette across the Wabash has a campus at Purdue.) to the Census Bureau. Median home value: $217,300 River and into Lafayette. Both are about 30 miles Still, the city is rich in Number of 4- and 5-star There, you can enjoy an from West Lafayette’s city attractions and activities hospitals within 50 miles: 7 array of restaurants, shops, center—one in Frankfort to fill your retirement years. Nearest airport: Indianapolis art galleries, museums and and the other in Monticello. With its proximity to the International Airport theaters. The Wabash Riv- Within 100 miles of the Great Smoky Mountains and erfront District—one of city, you have even more 85 miles of paved greenways *Cost of living data is for the metro- three downtown districts— high-quality health care in town, Knoxville offers an politan statistical area that includes is particularly lively. Attrac- options: a total of 26 four- abundance of outdoor recre- Lafayette and West Lafayette. tions include the John Myers star hospitals and six five- ation opportunities, includ- Pedestrian Bridge, the out- star hospitals. St. Vincent ing hiking, biking and rock ome to Purdue Univer- door Riehle Plaza and the Carmel Hospital is the climbing. The many area sity, West Lafayette of- 20-acre Tapawingo Park, closest five-star choice, lakes, streams and other fers all the amenities which offers access to ice about 63 miles away. nearby blue spaces, includ- retirees typically love in skating, fishing and the ing the Tennessee River a nice college town: excit- 13-mile Wabash Heritage running through down- ing sporting events, excel- Trail. The river district COLUMBIA, MO. town, provide nice spots lent health care facilities also hosts a number of an- Population: 123,195 for fishing, kayaking, paddle and a vibrant social and nual festivals, such as the Living costs for retirees: 8.2% boarding and even white- cultural scene. The college Wabash Riverfest (which below the national average water rafting. The local even offers its own airport, includes a 5K run/walk and Median home value: $185,700 music and arts scene is also though it does not currently the voyageur canoe race), Number of 4- and 5-star thriving. And the University serve commercial flights— the Art on the Wabash hospitals within 50 miles: 2 of Tennessee helps enhance you’ll still have to head festival and Beers Across Nearest airport: Columbia the cultural attractions and about 75 miles southeast to the Wabash, a local craft- Regional Airport support the economy. Indianapolis International beer tasting event. Airport for conventional air Two of the seven four- olumbia’s three institu- service. star hospitals in the area tions of higher educa- WEST LAFAYETTE, IND. The downtown area are members of the Indiana tion—the University of Mis- Population: 50,996 spans from the edge of University Health system. souri, Columbia College and Living costs for retirees: 9.9% Purdue University in West (The IU School of Medicine Stephens College—provide COURTESY VISITINDIANA.COM, ISTOCKPHOTO.COM, VISITOKC.COM

DOWNTOWN FEATURES MORE THAN 70 BARS AND RESTAURANTS.

THE RIVER DISTRICT HOSTS A NUMBER OF FESTIVALS.

52 KIPLINGER’S PERSONAL FINANCE 08/2020

GREAT PLACES TO RETIRE.pag1.indd 52 6/19/20 10:06 AM the city with a solid eco- nomic base and a steady stream of educational, cul- tural and social activities for the entire community. Sandwiched between their campuses is the 50-square- block area of downtown Co- lumbia, dubbed The District, where you can enjoy more than 70 bars and restau- rants, 110 shops and an array of art galleries, con- cert venues and theaters. More fitness-focused retirees may prefer to take advantage of the city’s 72 parks on 3,397 acres, 58 ACTIVE RETIREES CAN ENJOY miles of trails and 11 indoor KAYAKING OR CANOEING ON recreation facilities. The THE OKLAHOMA RIVER . Parks and Rec department also offers a program for resident who are age 50 Missouri’s Osher Lifelong klahoma City dubs restaurants and nightlife and older to participate Learning Institute. itself the Modern venues. And just south of in classes, tours and other Mizzou also brings to Frontier, a place that cele- there, the Boathouse Dis- events. Membership costs town MU Health Care’s brates both its Native trict, along the Oklahoma $25 a year. Or you can University Hospital. The American and Wild West River, offers opportunities upgrade to a $40 member- Centers for Medicare and roots and its current big- for canoeing, kayaking and ship and get access to book Medicaid Services gives it city status. Honoring its paddle boarding, as well talks, seminars and clubs only two stars, but it might history, the state capital as more than 13 miles of offered by the University of deserve some bonus points is home to the Oklahoma paved trails for walking, for housing central Mis- History Center and the Na- running and biking. It’s souri’s only Acute Care for tional Cowboy and Western even home to a U.S. Olympic Elders unit. This approach Heritage Museum, as well and Paralympic Training to care is specifically de- as the annual Chuck Wagon Site for rowing (a bonus signed to help older adults Festival (a family-friendly benefit, just in case your maintain their indepen- two-day event that includes encore career is Olympic dence even as they cope trying chuck wagon food athlete). with illness, hospitalization samples, butter-making and One city project—the de- and recovery. If you prefer Western re-enactors) and velopment of Senior Health a higher-rated facility, five- Red Earth Events, featuring and Wellness Centers—spe- star Boone Hospital Center American Indian arts and cifically aims to serve older is also right in town. culture. residents. Two centers have Revitalization efforts over already opened in different the past several years have locations of the city, and two OKLAHOMA CITY, OKLA. helped refresh the city and more are slated for comple- Population: 655,057 its seven distinct downtown tion in 2021 and 2022. All Living costs for retirees: 12.9% districts. The Arts District will provide social and rec- below the national average houses the Civic Center reational settings for adults Median home value: $153,700 Music Hall, Oklahoma City age 50 and older to promote Number of 4- and 5-star Museum of Art and other and support a healthy and hospitals within 50 miles: 7 cultural attractions. The active lifestyle. ■ Nearest airport: Will Rogers Bricktown Entertainment FOR QUESTIONS ABOUT THIS ARTICLE, World Airport District has a variety of PLEASE E-MAIL [email protected].

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GREAT PLACES TO RETIRE.pag1.indd 53 6/19/20 10:07 AM FUNDAMENTALS

PRACTICAL PORTFOLIO Ryan Ermey Understand the Major Indexes “The market” has many proxies, but there are important differences among them.

HOW’S THE STOCK MARKET DOING? fund that tracks an index—investments in 1896 and still carries some old- Whether you track the market from that now claim more investor dollars school features. The index holds only the opening bell to the close or you get than actively managed funds. “If you’re 30 stocks, and factors such as com- most of your financial news a day late, considering an index fund, you should pany reputation and investor interest for any given weekday you’re likely to do just as much due diligence on the count significantly in selecting them see three measures of the market from index construction as you would to (in contrast to the predominantly three market barometers: the Dow assess an active manager,” Johnson quantitative criteria that govern inclu- Jones industrial average, the Nasdaq says. Here’s a look under the hood of sion for other indexes). The Dow has Composite index and the S&P 500. three of the most widely quoted mar- larger allocations to industrial, finan- For long periods, they tend to provide ket measures. cial and energy sectors than the other a similar sense of where things are two indexes, which helps explains its headed: Over the past 15 years, the Dow Jones industrial average. The grand- subpar performance so far in 2020. Dow had a 97% correlation (a measure daddy of all indexes, the Dow debuted Boeing, among the top 10 names in of how similarly assets move) with the S&P, meaning that the two indexes tended to rise and fall in lock step. The Benchmarks Nasdaq’s correlation to the S&P: 95%. Finding Their Own Paths But lately, the market’s three most prominent yardsticks have been giving The often-quoted indexes below are popular gauges of the U.S. stock market. Although they vastly different answers to investors’ track each other over time, different methodologies can lead to variations in returns . fundamental question. In a wildly up- and-down year for stocks, the S&P 500 10% has lost 5.0% in 2020. The Dow has surrendered 9.2%. But the Nasdaq re- cently recorded an all-time high, and has returned 7.4% on the year. (Returns 0 and other data are as of June 12.) For investors to gauge how the Daily percentage change from stock market is behaving, it’s essen- January 1 to June 12, 2020 tial to understand the index they’re –10 ■ Nasdaq Composite Index tracking, says Ben Johnson, director ■ S&P 500 Index of exchange-traded fund research at ■ Dow Jones Industrial Average Morningstar. “Each index is a unique –20 snowflake. They come with different origins, universes of stocks and weightings. Some are rigidly rules- based with transparently quantitative –30 criteria, and in other cases there’s a Jan. Feb. March April bit more subjectivity,” he says. 2020 2020 2020 2020 This becomes especially important As of June 12. SOURCE: YCharts if you’re investing in an ETF or mutual

54 KIPLINGER’S PERSONAL FINANCE 08/2020

PRACTICAL PORTFOLIO.FINAL.indd 54 6/19/20 9:14 AM the index, has shed 41.5% this year. highest of the three indexes. the S&P 500 is meant to provide a Instead of weighting stocks by mar- Investors looking for Dow expo- “true barometer of the U.S. economy ket capitalization (stock price times sure can try SPDR DOW JONES INDUSTRIAL and equity market,” says Aye Soe, of shares outstanding), the Dow weights AVERAGE ETF TRUST (SYMBOL DIA, PRICE $257), S&P Dow Jones Indices. The index constituents by share price, allocating which tracks the index; income seek- covers 80% of the U.S. stock market more assets to higher-priced names, ers should consider the INVESCO DOW by capitalization. Though it sports the regardless of the number of shares JONES INDUSTRIAL AVERAGE DIVIDEND ETF same top five holdings as the Nasdaq, outstanding. That has led the index (DJD, $34), which holds Dow dividend they make up a more modest 21% of keepers at S&P Dow Jones Indices and payers weighted by yield. the S&P’s assets. Still, at 23% of the the Wall Street Journal to shy away index, tech is the best-represented from including stocks with ultra-high Nasdaq Composite. This well-populated sector. “The history of the index shows share prices, such as Alphabet and index tracks about 2,700 stocks that us that it reflects the point in U.S. eco- Amazon.com—prominent members trade exclusively on the Nasdaq ex- nomic history we’re in. Big tech has of other indexes that have recently change, the first fully electronic stock seeped into the way we live our lives, helped propel returns. Given the small exchange. The benchmark tilts toward and the index reflects that,” says Soe. number of stocks in the index, a high- fast-growing businesses—particularly Because of its more diversified ap- priced name can have a dispropor- tech stocks (currently 40% of the in- proach to tracking the U.S. stock market tionate effect on performance. dex), but also communications, con- and relatively transparent methodol- But the Dow still has its fans, and sumer and biotech names—which has ogy, the S&P 500 is widely used as a for good reason. Over the past 15 fueled the push to new highs. The in- bogey for mutual funds, and it is Kip- years, the index’s 8.9% annualized dex is market-cap-weighted, which linger’s preferred proxy for the broad return edges the S&P 500. The Dow’s means widely held, high-priced shares U.S. stock market. Several funds and blue-chip stocks held up better than dominate, making it top-heavy with ETFs replicate the index. Our favorite: the S&P and the Nasdaq during the tech behemoths. The Nasdaq’s top five ISHARES S&P 500 INDEX (IVV, $304), a mem- 2007–09 bear market, and the Dow stocks—Microsoft, Apple, Amazon ber of the Kiplinger ETF 20 (our favor- sports a 2.4% dividend yield—the .com, Facebook and Alphabet—repre- ite ETFs), which charges just 0.04% in sent 39% of the index. expenses. For a less top-heavy version Over the past 15 years, the Nasdaq, of the index, consider INVESCO S&P 500 although highly correlated with the EQUAL WEIGHT ETF (RSP, $102), which, as other headline indexes, has returned the name implies, tracks a version of an annualized 11.9%, more than three the S&P that assigns equal weighting percentage points more than the Dow to all 505 stocks, from Apple to Zoetis. and S&P 500. Of course, when tech The fund, which has outpaced the S&P flames out, so does the Nasdaq. During since the market bottomed in March, the 2000–02 bear market following has an expense ratio of 0.20%. 7.4% the dot-com bubble, the price of the in- dex sank by 78%, compared with 49% The whole ball of wax. For the most neu- for the S&P and 34% for the Dow. tral representation of the entire U.S. Fidelity offers two funds that stock market, Morningstar’s Johnson –5.0% replicate the Nasdaq: FIDELITY NASDAQ recommends investing in a fund that COMPOSITE INDEX FUND (FNCMX), which tracks a total-market index, such as –9.2% charges 0.36% of assets in expenses, the S&P 1500 or the Russell 3000. The and FIDELITY NASDAQ COMPOSITE INDEX Wilshire 5000 Total Market index has TRACKING STOCK (ONEQ, $374), an ETF with long been considered a broad-market an expense ratio of 0.21%. Investors benchmark, though it has shrunk to looking for a more concentrated play fewer than 3,500 stocks over the years. on big tech might like INVESCO QQQ VANGUARD TOTAL STOCK MARKET ETF (VTI, TRUST (QQQ, $236). The ETF mirrors $154) tracks the CRSP Total Stock Mar- the Nasdaq-100 index, which includes ket index, a market-cap-weighted in- the 100 largest non-financial stocks in dex that folds in large-, midsize- and May June the composite index by market cap. small-company stocks. One of the ETF 2020 2020 20, it charges 0.03% in expenses. ■ S&P 500. Actually composed of 505 of the largest U.S. stocks by market cap, CONTACT THE AUTHOR AT [email protected].

08/2020 KIPLINGER’S PERSONAL FINANCE 55

PRACTICAL PORTFOLIO.FINAL.indd 55 6/19/20 9:15 AM FUNDAMENTALS Commentary

MILLENNIAL MONEY EMMA PATCH Class of COVID-19

hough most recent graduates education at Handshake, an online engineering teams, and Nestlé factory/ aren’t technically millennials, platform that connects recent gradu- distribution and corporate sites are Tboth Gen Zers and millennials ates with employers. hiring. You can find a comprehensive who are new to the job market face Steer clear of cluttered job-posting list of companies hiring recent grads unprecedented challenges in 2020. sites that will send you down a rabbit on Handshake’s 500 List, a compila- Hiring has picked up as the economy hole to out-of-date or filled jobs. tion of the top 500 hiring employers, reopens, but even so, the class of 2020 And you don’t have to pay an expen- at https://learn.joinhandshake.com/ is entering one of the most depressed sive service to get access to the jobs students/hiring-on-handshake-500. job markets in decades. that are suited to your skills. Websites If you’re living at home while you I was hired as a staff writer at Kip- such as LinkedIn and Handshake search for a job, get your finances in linger in March, just weeks after I allow you to filter your searches order, says Lori Atwood, a certified graduated from Middlebury College by location, industry and financial planner based in Wash- (full confession: I am a member of Gen job type so you can con- ington, D.C. If you have earnings Z, not the millennial cohort). As an nect with employers who from a temporary or part-time employed recent graduate, job, use the money you’re sav- I feel very fortunate. But ing on rent to build up your I can’t say the same for cash reserves. That way, you’ll RECENT GRADUATES ARE many of my friends. Much have an emergency fund of the tried-and-true advice STARTING THEIR CAREERS when you move out. for job seekers no longer AT A TIME OF TREMENDOUS You may need to applies. You can’t, for ex- UNCERTAINTY, BUT HIRING be flexible about lo- ample, stack your calendar cation, too. The job with networking coffee IS UP IN SEVERAL JOB market is shifting, chats and obey social dis- CATEGORIES. and the best places tancing guidelines at the to find a job might same time. surprise you. Some of the best Hone your strategy. Though unemploy- are hiring. To ac- cities for job seek- ment is high across the board, people cess Handshake, ers right now are age 18 to 34 have been disproportion- you’ll need to Madison, Wis., ately affected, according to a recent sign in with Charlottesville, Va., Axios-Harris study. One-third of people your academic and Fargo, N.D., ac- who are 18 to 34 have been laid off or credentials and cording to a study by placed on temporary leave, compared have an .edu Zippia.com, a career with 22% of those who are 35 to 49, e-mail address. expert website. These and 15% of those who are 50 to 64, Hiring is cities have low un- according to the study. But even in up in several employment, which this environment, many companies employment means less competi- still need employees, and firms are categories, in- tion, and a high number of eager to hire recent college graduates. cluding delivery jobs in essential industries, Even if you’re unable (or unwilling) services, call cen- such as health care, tele- to travel, keep an eye out for virtual ters, e-commerce communications, informa- networking events and remote job warehouses and on- tion technology systems, postings. “We have definitely seen line tutors. Among and public works. Q an increase in remote postings as major companies, Ama- well as remote events,” says Christine zon fulfillment centers, TO SHARE THIS COLUMN, PLEASE GO TO KIPLINGER.COM/LINKS/MILLENNIALS. CONTACT

Cruzvergara, vice president of higher Facebook product and THE AUTHOR AT [email protected]. KETTERMANRYAN

56 KIPLINGER’S PERSONAL FINANCE 08/2020

MILLENNIALS.FINAL.1.indd 56 6/19/20 2:42 PM Download your FREE issue… Investing for PREFERRED INVESTOR COMPLIMENTARY ISSUE

Unless otherwise noted, all prices are current as of March 13, 2020. Subscribe to Strategies toIncome Boost Your Cash Yield After the Deluge: Picking UpKiplinger’s the Investing Pieces for Income for more timely rates and yields in every monthly issue.

ou—and us, too- are still Earn 5% to 7% cash yield unnerved by the power of Ythis sudden bear market and For example, BBB-rated cor- traders’ inability to prevent massive porate bonds, which are long-term daily and hourly swings. But stock winners and still a core income are resilient and backed by gener- and fund prices can recover. Mean- category, caught contagion from ally sound credit. There’s been while, it’s a calamity to lose critical March’s violent selloff in junk some markdowns of municipal portfolio income. So, it’s essential bonds and the poor prospects for fund shares, but that’s because to look beyond principal losses performance-chasing fund buyers— and evaluate the certainty of every “tourists” as fund managers call safely and reliably, scheduled income payment. Our 12 IssuesVolatility and at portfolio them—cut and run and the munici- letter’s first mission is to discuss pal marketplace isn’t equipped for and advise on investment income. damage will ease massive exit volumes. Losses like If you’re sensibly diversified, when fear turns into a 13% drop in the share price of as we suggest, you’re drawing cash the closed-end Nuveen Municipal from bank interest; municipal, annoyance with daily life. Value fund (NUV) thus had little to government and corporate bonds; do with creditworthiness and every- dividend-paying corporations; industries like auto and airplane thing to do with trading mechanics even under challenging mortgage, credit and bank-loan manufacturing. IShares iBoxx and herd mischief. That and similar funds; and pass-through income 61%Investment Grade Corporate Bond funds’ income distributions remain from real estate, oil and gas, and ETF (symbol LQD) owns $35 bil- safe. Ratings agencies have put transportation providers. Some lion of single-A and triple-B bonds some tax-free borrowers on watch of the news from these fronts, and its 8.4% loss in the second week for a possible downgrade, but such such as grounded airplanes that of March was as ugly and unex- downgrades don’t come quickly or threaten airport savingsrevenue and have pected as anything in stocks. But in in bunches. If you own individual already ended airline dividends, is the subsequent three weeks, ending bonds, you need not worry anyway market conditions. dismal. Oil and gas income is also April 3, the fund regained more than about daily price quotes. way down as pipeline and storage half of its share price from before revenue suffers from surpluses and Preferred stocks, another of the coronavirus and reduced its our favored income categories, also reduced consumption and exports. monthly dividend only by a little. took some punches although pre- But other trends aren’t nearly ferred shareholders must be paid as dire. It’s true that banks, state and Municipal bonds also got caught in the storm, but they, too, before common stockholders get local governments, major corpora- their dividends. Shares of the tions and consumers’ cash positions Inside This Issue... were robust entering this crisis and continued on next page ... can withstand a few more months, Fixed-Income Fund Payouts Become UnfixedUnless 3 otherwise noted, prices and data are as of March 13, 2020 provided the government’s financial Debt and high-speed trading lead to an unpleasant fact of bond-fund life. assistance and other relief actually Ask Jeff REITs, UtilitiesSpecial and the ReportCrash for subscribers to AreKiplinger’sInvesting these investments safe; what’s for going Income feeds more cash into the economy This is trading panic, not a business issue, on with Annaly and Compass; and how to6 and prevents mass bankruptcies and and isn’t the death of investing in real 4 shelter from crashing oil and gas prices. estate or water and power. foreclosures. There will be some What’s New in Cash t dividend cuts and bond defaults, but Timely Tactic of the Month The impact of machine trading on market i There’s still room for a REIT that owns g volatility; beware of rising longer-term is the shock-and-awe phase is over, 7 V in and manages student residences. 4 rates; and bank-loan-fund troubles. . now replaced by worry and concern. f Kiplinger’s 25 for Income sel t Flashback ur s Bloody red galore, but we don’t think o Model Portfolios y e dividends will get the ax. or 5 f 7 See nv The latest on our four rotating models: i Copyright 2020 • The Kiplinger Washington Editors, Inc. • 1100 13th Street NW • Washington, DC 20005-4051Dividend-A-Month, • www.kiplingerincome Tax-Exempt Income, 8 /go/ Going for the Max, and Juiced-Up Cash. www.kiplinger.com Safe Ways to Boost.com Your Cash Yield in Any Kind of Market nterest rates are up from near- narrowed, or that short-term yields are should divide it evenly between debt zero, but they aren’t so high almost the equal of long-term bond and equity, or interest and dividends that you can live entirely off the and mortgage rates, you should be extra if you will. The combination of 2% on interest on bank deposits and wary. But we’ve heard that for years. cash, 2% to 3% dividends on common government securities. Better, Until and unless we see evidence that stocks, 5% or more on gadgets like pipe- though,I is that most of the many low- and moderate-risk income investments we follow in this newsletter yield enough now that you can earn respect- Whether you call it a sideways market, There’s always something working to generate cash with able income in a diversified portfolio without endangering your principal. or call it range-bound, don’t call it scary. Kiplinger’s economic team fore- casts continued low inflation, hovering between 2% and 3%. And even once either a recession or a credit crunch will line investments—and the likelihood of the economy slows, probably in the cause large numbers of borrowers to be some moderate capital gains—should manageable risk, year in and year out, in any kind of market. next year, it will stay robust enough for unable to repay their debts, we see the generate a total return of between 5% middle-of-the-road investments such current financial climate as ideal for and 10% under current conditions. as triple-B-rated corporate bonds and balancing safety with opportunity. The blessing of a sideways market funds of bank loans to hold their value Whether you call it a sideways is that some things, if not most things, while paying you 3% and up. FREE market, or call it range-bound, don’t call it that you can select are working well. Some advisers and commentators scary. The Federal Reserve gets its share of Americans are fortunate to have the worry that because the yield spread, complaints, but its officialwith responsibility is world’s your widest array of income-paying or gap, between bank deposits and to steer the nation towards high employ- investments, many of them profession- certain higher-risk investments has ment with stable prices. We have both ally managed and inexpensive to buy along with great demand for stocks and and keep. Here are our guidelines for bonds thatsubscription! support their market values. arranging your savings and investments Kiplinger’s Investing for Income will show you how to earn At Kiplinger’s Investing for Income, to profit from this comfortable situation: we strongly recommend that when you assemble an income portfolio, you continued on next page ... as much as 5%, 6%, even 7% a year right now — and stay well ahead of the pack no matter which way the economy goes Preferred Investor Invitation, You Save 61%! from here. ✓ ❑ Yes! Start my service to 1 year/12 issues of Kiplinger’s Investing for Income for just $79. I save 61% off the cover price of $204 including fi rst-class postage. Download your FREE issue at ❑ $79 check enclosed (payable to Kiplinger’s Investing for Income). ❑ Bill me. www.kiplinger.com/go/investing Please add applicable state sales tax. State sales tax will be added to credit card and bill-me orders. For credit card orders call toll free 1-866-610-1671. 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KII_Ad_Mag_Right_06_16_20_Final.indd 1 6/18/20 6:39 AM REWARDS

Hotel closures, travel bans and an economic shutdown have painted a grim picture for travelers this year, and it’s going to be a long time before the travel industry begins to look anything like it did before COVID-19. But we may have hit the bottom, says Melanie Lieberman, senior travel editor for travel website ThePointsGuy.com. In other words, the worst has likely passed, and after months of staying at home, people are eager to start going places again. “Traveling is on everyone’s mind these days—mainly because we can’t,” says Jeff D. Opdyke, editor of The Savvy Retiree, which is published by International Living, an organization for U.S. expats. Even so, in a survey released by the ThePointsGuy.com in late May, 30% of Americans

58 KIPLINGER’S PERSONAL FINANCE 08/2020

TRAVEL.FINAL.indd 58 6/19/20 9:57 AM Deals abound, but the risks and rules— especially for international travel—may keep you at home a while longer. BY EMMA PATCH

■ SELJALANDSFOSS WATERFALL, ICELAND: NOW OPEN FOR TOURISTS.

08/2020 KIPLINGER’S PERSONAL FINANCE 59

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said they would be comfortable taking ing flight. If you’re thinking about a trip before the end of the summer. With demand for flying still low, changing your travel plans, consider That’s a relatively high number, con- fares are at record-low prices. Typi- waiting to do so until 48 hours before sidering that only half of Americans cally, you would begin tracking prices your flight. If the airline cancels or planned to take a summer vacation for holiday travel in July and book by alters your flight, you can collect the in 2019, according to a special report September, says Hayley Berg, an econ- cash instead of getting a voucher. accompanying the survey. omist for Hopper, an app that analyzes Some carriers, such as American Certain kinds of travel will emerge flight prices. (Using a tool such as Airlines, have also introduced a policy before others. Travel for leisure will Google Flights or the Hopper app can allowing travelers to switch flights if come back before travel for business, alert you when fares to your destina- their plane is crowded so that they can and business travel will precede group tion drop.) more easily practice social distancing. travel, says Chris Nassetta, CEO of But for now, there’s no strict time Most airlines are also requiring pas- Hilton. Warmer destinations where line to follow to book a flight, says sengers to use protective masks, which travelers can relax outside and feel Scott Keyes, of ScottsCheapFlights the airlines will provide to passengers safer against exposure to the corona- .com: “We’re seeing $350 flights that who do not bring their own. Many air- virus will be popular choices among are usually $700 or $800.” If you’re ports have also improved their board- those who do take trips in the near ready to travel, he says, book when ing and deplaning protocols to lessen future. Domestic trips, particularly your price point comes up instead of crowding while entering and exiting to U.S. national parks, will also be trying to pinpoint the best time to buy the plane. popular, says Lieberman. a ticket. Just keep in mind that if the If you’re looking to book an interna- CARES Act expires in September, as tional trip for the holidays or for 2021, expected, and federal government Travelers are likelier to trust big ho-

some destinations are more promising support wanes, airlines could cut back tels more than small ones, given the COURTESY HILTON HOTELS; PREVIOUS PAGE: ISTOCKPHOTO.COM than others. South America, for ex- on their routes—or they may increase ample, is mainly off the list for the them, depending on consumer behav- time being—some countries, including ior, says Berg. Brazil and Peru, have been hit hard by To make future bookings more the pandemic, and it’s home to some palatable, airlines are offering un- of the world’s strictest travel bans. precedented flexibility to travelers Argentina announced it would restrict who want to cancel or postpone a trip. travel until September, with the poten- For example, tickets for flights on tial to extend the restriction. But des- Delta Airlines for travel between tinations such as Iceland have made March 1 and September 30, 2020, can an effort to welcome tourists signifi- be rebooked until September 30, 2022, cantly sooner, inviting them as early with no change fees. Other airlines as June 15 (or July 1 for travelers from have similar policies. the U.S.) and providing COVID-19 Though you won’t pay a fee if you tests—which are required in the first cancel your trip, you’re likely to get phase of reopening—free upon entry. a credit or voucher for future travel The European Union banned most instead of a full refund. To get a cash nonessential travel to EU countries by refund, you’ll need to wait for the air- U.S. travelers until July 1; lifting of re- line to cancel your trip; the Depart- strictions will be staggered and vary ment of Transportation requires all by destination. Review the travel advi- airlines, domestic and foreign, taking sories at http://travel.state.gov for any off or landing at a U.S. airport to issue region you hope to visit to weigh the a refund for a canceled flight. You may risks. And remember that few plans also be eligible for a cash refund if the for reopening to tourism are set in airline makes a “significant schedule stone; requirements for travelers from change,” according to the DOT. The the U.S. could change. Also, a negative DOT doesn’t define a significant ■ HILTON HOTELS COVID-19 test may be a requirement change, but in general, you should HAVE PARTNERED WITH THE MAYO CLINIC to avoid a 14-day quarantine in some get a refund if the schedule is altered TO UPGRADE THEIR places, even as travel bans and manda- by two or more hours, or if you’re CLEANING PRACTICES. tory quarantines are lifted. switched from a nonstop to a connect-

60 KIPLINGER’S PERSONAL FINANCE 08/2020

TRAVEL.FINAL.indd 60 6/19/20 9:58 AM institutionalized sanitation practices are largely subject to the same cancel- many big hotels have announced to lation policies that were in place pre- Just In Case ensure the safe reopening of their COVID, but some discounted rates locations, says Lieberman. The Hilton come with a catch. For example, some- PACK TRAVEL hotels have partnered with the Mayo times the room is nonrefundable, or Clinic to upgrade their sanitation you may purchase a discounted gift INSURANCE practices, for example. And Hilton card that could soon expire. Although isn’t the only hotel chain to strengthen the reduced prices for hotel rooms Between border closures and travel its protocols to improve hygiene; Choice may be tempting, in some cases you bans, sales of travel insurance policies Hotels, Best Western, Omni, IHG, may not be able to redeem your pur- have plummeted, says Kasara Barto, Four Seasons, Wyndham, Mandarin chase, says Lieberman. of SquareMouth.com, an aggregator of Oriental, Marriott and Hyatt have all A vacation rental is a promising travel insurance policies. The number rolled out new cleaning programs. choice, partly because you can usually of policies purchased through the site be- You’re likely to find social-distancing cook for yourself and not worry about tween April 1 and May 10, 2020, for travel signs, seals identifying that a room has social-distancing policies at restau- in June, July or August 2020 dropped been disinfected and Plexiglas parti- rants. But it may be more difficult to 90% compared with a year earlier. tions between you and the hotel staff. book a short-term rental than a longer In the wake of the pandemic, travel One of the biggest changes to look for stay because many vacation-rental insurance providers have expanded is an emphasis on digital check-ins businesses, such as Airbnb, have insti- coverage in some cases. For example, and contactless delivery of food and tuted a buffer-period policy to space to be covered for any event, you must other items, says Lieberman. out consecutive stays. If you’re plan- purchase a travel insurance policy before Like airlines and cruise lines, hotels ning to rent independently of one of the event occurs. Although many travel are offering lower rates. Reservations these vacation-rental companies, you insurance providers stopped covering losses related to COVID-19 as early as January 21—when the Centers for Disease Control and Prevention first is- sued an alert—some providers extended coverage and are still offering it for can- cellation and medical benefits relating to COVID-19 on new policies. Insurers are also developing policies that will offer more coverage for some of the impacts of a future pandemic, says Barto. Cancel-for-any-reason policies are the best option for travelers concerned about COVID-19. For example, APRIL’s Pandemic Plus cancel-for-any-reason policy offers cancellation coverage for a $2,000 trip for $117. It may make sense to look for financial-default benefits that come with some policies, in case your hotel or cruise or tour company goes bankrupt. And if you book a trip and then lose your job, you could be covered if you purchase employment-layoff coverage before your job loss, says Barto. Be strategic as you shop travel insur- ance options. As long as trains and air- lines offer refundable trips, you won’t need insurance for those. And your health insurance typically covers you if you stay in the U.S. Visit SquareMouth .com to see a wide range of policies.

08/2020 KIPLINGER’S PERSONAL FINANCE 61

TRAVEL.FINAL.indd 61 6/19/20 9:58 AM REWARDS

KipTip ■ ARCHES NATIONAL PARK, UTAH: RV RENTALS HAVE WHERE TO BEEN HOT. FIND DEALS

You can lock in stellar prices if you take advantage of a book-now-and-travel- later deal. For a wide variety of offer- ings for travel of all kinds, explore TravelZoo (www.travelzoo.com), which publishes deals from more than 2,000 travel and entertainment compa- nies and local businesses, including res- taurants and spas. Travel auction websites such as AndreHarperTravel.com and Luxury Link.com let you browse hotels and travel packages. Virtuoso (www.virtuoso.com) offers luxury hotel and travel advice and will connect you to professional travel advisers. For air travel, check out the airlines’ websites, plus ScottsCheapFlights.com and go-to travel sites such as Kayak and Expedia. For cruises, visit Shermans Travel.com and CruiseCritic.com.

may have to work out a plan with the property owner that meets your expectations for cleaning. You may also have to be flexible with your dates for travel and even provide proof of a negative COVID-19 test result. In some smaller islands in the Caribbean, for instance, rental safety arrange- may permanently replace hotel shower as the Rocky Mountaineer, a luxury ments must be worked out on a case- dispensers. rail tour that transverses Canada— by-case basis. Domestically, many have postponed all trips until later localities have implemented vacation- in the summer, he says. Even so, the rental safety plans—in some cases Due to reduced demand at the peak future of train travel looks promising. banning travelers from COVID-19 of the coronavirus pandemic, Amtrak For one thing, a new generation of the hotspots from booking. Some localities suspended service in late March on its Acela high-speed trains that will reach in Florida, for example, have banned high-speed Acela trains in the North- speeds of 165 miles per hour will be bookings from travelers coming from east corridor of the U.S. But as locali- introduced in 2021. New York, New Jersey, Connecticut ties began to lift stay-at-home orders Like flights, trains have instituted and Louisiana. in May, it announced a schedule of more-rigorous sanitation practices. As they reopen, vacation rentals three weekday round-trips. But train-ticket prices don’t fluctuate and hotels may offer fewer amenities; All train routes in the U.S. are now wildly the way airfares do, so you can access to fitness centers, steam rooms, operating, albeit with limited sched- safely buy your tickets well in advance. saunas and hot tubs may be limited. ules, says Ted Blank, a luxury travel And Amtrak is waiving all change fees However, says Lieberman, sample-size specialist with Travel Leaders, in Still- and cancellation fees for reservations

bottles of shampoo and conditioner water, Minn. But certain lines—such made by August 31, 2020. PETER UNGER/GETTY IMAGES

62 KIPLINGER’S PERSONAL FINANCE 08/2020

TRAVEL.FINAL.indd 62 6/19/20 9:59 AM want to book further out, you can snag some great deals for 2021 sailings in the Caribbean. A weeklong tropical getaway aboard the new Celebrity Edge, sailing from Fort Lauderdale with stops in Costa Maya, Cozumel and the Cayman Islands, starts at $695 and sails through March 2021. Along with lower prices and flexible cancel- lation policies, many cruise lines are offering more onboard perks—for ex- ample, bundling packages for Wi-Fi service and drinks.

The COVID-19 pandemic may revive the Great American Road Trip. In- terest in journeying by car (or truck or any other vehicle) is very high, says Lieberman, especially since national parks reopened and gas prices plunged. If you’re planning a road trip, now more than ever, preparation is key. Res- taurants in some states are resuming dine-in services, but in some places you may have to depend on drive-through and take-out fare. Consider calling ahead to make reservations at hotels. Many national parks are free to enter, and wide-open spaces are conducive to social distancing, so venturing out into the outdoors promises a relatively low-cost, low-risk travel option. For many Americans, the best way to see the country is in a recreational vehicle. Interest in renting an RV has spiked the industry, says Colleen McDaniel, because RVs allow you to prepare Cruise lines, which have suspended all editor-in-chief of Cruise Critic. Several meals and sleep in a safe space. Note service worldwide, are working with cruise lines will offer flexible policies that even with cheap gas, it might cost global organizations such as the Cen- for bookings well into next year. more than $300 to fill an RV’s 150- ters for Disease Control and Preven- You’ll likely see a staggered return gallon tank, and the fuel economy is tion, the U.S. Coast Guard and the to service, with cruise lines slowly and nothing to write home about. But rent- World Health Organization to imple- strategically reintroducing ships and ing an RV (if you can find one; check ment return-to-service plans. itineraries, says McDaniel. She says Outdoorsy.com or RVShare.com to Because so many cruises were can- that 2021 bookings have been strong. rent from your location) may be more celed due to the coronavirus outbreak, In fact, in a recent poll among visitors cost-effective than driving and paying travelers struggled to get their money to Cruise Critic forums, nearly 75% of for lodging if you would otherwise back. Going forward, a number of respondents said they plan to cruise stay at hotels going for more than $130 cruise lines have introduced new, flex- “about the same as ever” or “more to $150 a night, says Eric Simonson, a ible cancellation policies—some, such than ever,” once they’re able. certified financial planner in Minne- as Azamara Cruises, will allow cancel- In the near term, cruise lines may apolis who specializes in travel. ■ lations as late as 48 hours prior to sail- introduce shorter cruises, focusing on YOU CAN CONTACT THE AUTHOR AT EMMA_PATCH@ ing. Such flexibility is unheard of for home ports people can drive to. If you KIPLINGER.COM.

08/2020 KIPLINGER’S PERSONAL FINANCE 63

TRAVEL.FINAL.indd 63 6/19/20 9:59 AM MAKING IT WORK Nursing in the Time of COVID This health care professional warns that the pandemic will worsen the nursing shortage.

PROFILE is gone. I earn too much as a professor to qualify for unem- WHO: Leah Gordon, 43 ployment. But I have a $1,900- OCCUPATION: Nurse anesthetist a-month student loan payment, WHERE: Hugo, Minn. and to not have my side job right now is challenging—and I’m not What does a nurse anesthetist do? sure if I’m going to get it back. When you heard about patients with COVID getting breathing tubes, it was What about the rest of your primarily nurse anesthetists manning family? My partner is a regis- those intensive care units, placing tered nurse who works for the the lines to give the medications same surgery center—that’s and putting the breathing how we met. He was furloughed tubes between the vocal for a few months, but now he’s cords into their lungs. back at work.

How has the pandemic Will your students be able to affected your job? graduate? We’re still figuring it My full-time job is as a out. Right now, most classes are professor and the nurse online, and it’s really hard to anesthetist program learn a medical specialty at your director at St. Mary’s house. You have to be able to University of Minne- do lab work and learn skills with sota. I did work one your instructor side by side with day a week at an you. We don’t really have simu- outpatient gastro- lation capability to teach our enterology center. students how to put in an epi- In order to be a really dural or a spinal. At a minimum, good instructor, it’s im- our students have to complete portant to keep my skills fresh. 2,000 hours of bedside care, and our program is only 2 ½ Your side gig is on hold? When COVID years long. We’re talking about hit, the first thing our governor did whether we’re going to add a was suspend elective surgeries. semester and try to create some Plus, they wanted all the personal credits for them so they can protective equipment brought to qualify for student loans. a central location. That meant we couldn’t do any cases because Do you think COVID will affect we couldn’t use our gowns, we the health care system longer couldn’t use our shields and we term? I’m very concerned about couldn’t use our masks. everybody being able to get to the bedside and through their You must have taken a financial training. If you look at the nurs- hit. A nurse anesthetist out of ing shortage in the country right school right now is earning $180,000 now—which is only projected to to $190,000. I feel like a jerk even get bigger—to not have nurses talking about it because I’m very, very getting their clinicals, we’re fortunate, but when you lose that going to have some workforce side hustle, all of a sudden $50,000 issues. MARK SOLHEIM

64 KIPLINGER’S PERSONAL FINANCE 08/2020 PHOTOGRAPH BY SARA RUBINSTEIN

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