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3 Accounts You Should Think About Saving In for Retirement — at the Same Time

by CoinNews
written by CoinNews

When we think about saving for retirement, many of us may be inclined to put all of our money into a single account. And that’s not necessarily a terrible thing.

Let’s imagine you open a single retirement account, but you invest your money across a range of assets. As long as you’re well diversified, you may be setting yourself up to retire comfortably. Plus, sticking to just one account could make your wealth easier to track.

But it could also very much pay to spread your retirement savings across a few different accounts. Here are three in particular that you may want to use in conjunction with one another.

A smiling person at a laptop.

Image source: Getty Images.

1. A Roth IRA

The nice thing about Roth IRAs is that they give you plenty of flexibility with your money. Don’t want to take withdrawals in retirement? No problem. Unlike traditional retirement plans, Roth IRAs don’t impose required minimum distributions.

Plus, with a Roth IRA, you get to enjoy the benefit of tax-free gains while you’re building savings, and then tax-free withdrawals in retirement once you decide you are looking to tap that account.

2. A taxable brokerage account

Some people struggle to retire on time, but if you save enough money, you may end up in a position to retire early. That’s why it pays to save for your future in a taxable brokerage account on top of a tax-advantaged one. This way, you won’t be limited in how much you can contribute each year. Plus, you’ll have the flexibility to take withdrawals whenever you please without having to worry about penalties.

3. An HSA

A health savings account (HSA) is a terrific savings account from a tax perspective. Contributions go in tax-free, investment gains are tax-free, and withdrawals are tax-free when used to pay for qualified medical expenses.

The nice thing about having money in an HSA is that you have separate funds available to cover healthcare costs. Those could be more expensive than expected once you move over to Medicare (and not just because of Medicare itself, but also, your age may mean you need more healthcare).

A winning combination

You could opt to save for retirement in a single account. But the combination of these three in particular gives you a lot of benefits. You get a good number of tax breaks, a fair amount of flexibility, and some separation of your money, so to speak, so that you’re not leaving yourself short on funds for healthcare spending.

Now, that said, Roth IRAs and HSAs do have eligibility requirements. With the former, there are income limits, and with the latter, your health plan needs to have a certain minimum deductible and out-of-pocket maximum that changes from year to year.

Anyone can save in a taxable brokerage account, though. So if you’re not able to fund a Roth IRA or HSA, you may want to sit down with a financial advisor and come up with your own combination of accounts that makes it possible to enjoy the comfortable retirement lifestyle you deserve — on a timeline that works well for you.

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Lejilex and Crypto Freedom Alliance of Texas Sue SEC for Unlawfully Targeting the Digital Asset Industry

by CoinNews
written by CoinNews

Lejilex and Crypto Freedom Alliance of Texas Sue SEC for Unlawfully Targeting the Digital Asset IndustryLejilex and the Crypto Freedom Alliance of Texas, a crypto nonprofit, have teamed up to introduce a complaint against the actions of the SEC towards actors in the digital asset industry in America. The complaint alleges that the SEC has no regulatory powers over these crypto companies, having usurped functions not given to it by […]

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Finance

Nvidia Stock: Headed to $1,100?

by CoinNews
written by CoinNews

Benefiting from the current boom in artificial intelligence, semiconductor company Nvidia (NVDA 0.35%) was arguably the hottest stock on Wall Street in 2023. Even more impressive, it’s off to an explosive start in 2024 as well. Helped by a big move higher this week, when the company reported a 265% year-over-year growth in fiscal fourth-quarter revenue, shares are now up more than 55% year to date as of this writing.

But here’s the crazy thing: In response to Nvidia’s better-than-expected quarterly results, well over a dozen analysts have raised their 12-month price targets for the growth stock to levels well beyond where shares are trading now. Indeed, several analysts have raised their price targets for the stock to levels of $1,000 or higher.

Let’s see what has some of the most bullish Nvidia analysts on Wall Street so upbeat.

The path to $1,000 and beyond

One of the most-cited reasons analysts are optimistic about Nvidia stock following its latest earnings report is management’s guidance. The company said it expected fiscal first-quarter revenue of about $24 billion — more than $2 billion more than what the consensus analyst forecast was.

KeyBanc analyst John Vinh raised his 12-month price target on the stock from $740 to $1,100. His optimism, like analysts at Bernstein and Benchmark (analysts who raised their price target for Nvidia shares to $1,000 after the earnings report), was based on the company’s incredible momentum, shown by its explosive sales growth in fiscal Q4 and management’s fiscal first-quarter guidance.

Further, Vinh praised the company’s surging sales in its data center specifically. Data center revenue rose 27% sequentially and a whopping 409% year over year in fiscal Q4.

In the company’s fiscal fourth-quarter earnings release, Nvidia CEO Jensen Huang said demand for its data center products was coming from various industries. “Our Data Center platform is powered by increasingly diverse drivers — demand for data processing, training, and inference from large cloud-service providers and GPU-specialized ones, as well as from enterprise software and consumer internet companies,” Jensen explained. Even demand from auto, financial services, and healthcare industries “are now at the multibillion-dollar level,” he added.

Nvidia stock isn’t for everyone

Combining a staggeringly good fiscal fourth quarter with management’s guidance for fiscal first-quarter revenue to increase by about $16.8 billion year over year, it’s easy to see why analysts are upbeat about the stock. But does this mean investors should still be piling in at the stock’s current price?

Sure, with Nvidia’s earnings per share in fiscal 2024 soaring 586% to $11.93, the stock deserves to trade at a high valuation. Even more, the stock’s current price-to-earnings multiple of 65 actually sounds quite reasonable for a stock with earnings growing this fast.

Despite these factors providing some support for the stock’s current valuation, there’s one looming concern that should keep investors on their toes: Much of the demand for Nvidia’s data center products is driven by surging interest in generative artificial intelligence (AI). Not only is this a new technology that is incredibly difficult to predict, but it’s tough to know what sales trends surrounding it will look like after this initial demand boom moderates at some point in the future when the industry for these products matures.

On a similar note, competition in the space could prove more adept than expected. This wouldn’t be the first time Wall Street underestimates competition. Few would have guessed 20 years ago that Intel would fall from grace and be surpassed in size by multiple competitors.

Based on Nvidia’s guidance for fiscal Q1 revenue and comments from management during the earnings call about some key products remaining supply constrained, there’s no sign yet of a pullback in sales on the horizon. But this is a risk investors should be aware of.

For this reason, investors should tread carefully when reading about analysts’ rosy 12-month price targets for the stock, opting to do their own due diligence and focus on the long term. Sure, maybe the stock is worth its current price tag. But it’s OK to stay on the sidelines if you’re unsure about the company’s future. There are plenty of other stocks to consider.

Daniel Sparks has no position in any of the stocks mentioned. His clients may own shares of the companies mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool recommends Intel and recommends the following options: long January 2023 $57.50 calls on Intel, long January 2025 $45 calls on Intel, and short February 2024 $47 calls on Intel. The Motley Fool has a disclosure policy.

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Finance

2 Stocks I Just Bought — Even With the Market Near All-Time Highs

by CoinNews
written by CoinNews

The S&P 500 is at its highest level ever, but that doesn’t mean that there aren’t any bargains to be found in the market. In fact, both I and colleague Tyler Crowe recently bought some stocks that look like incredible values for long-term investors, and in this video, we’ll tell you all about them.

*Stock prices used were the afternoon prices of Feb. 22, 2024. The video was published on Feb. 23, 2024.

Matt Frankel has positions in PayPal. Tyler Crowe has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends PayPal. The Motley Fool recommends the following options: short March 2024 $67.50 calls on PayPal. The Motley Fool has a disclosure policy. Matthew Frankel is an affiliate of The Motley Fool and may be compensated for promoting its services. If you choose to subscribe through their link they will earn some extra money that supports their channel. Their opinions remain their own and are unaffected by The Motley Fool.

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Finance

Warren Buffett’s Most Baffling Decision in Q4 — and Why Buying This Stock He Sold Could Be a Brilliant Move

by CoinNews
written by CoinNews

Warren Buffett bought only three stocks in the fourth quarter of 2023 for Berkshire Hathaway‘s portfolio. He sold seven stocks, including fully exiting four positions.

Most of Buffett’s transactions made sense. However, not all of them did. One of the legendary investor’s decisions was downright baffling.

Buffett’s baffling decision

Let me address one thing right off the bat. Buffett’s most baffling decision in Q4 had nothing to do with the trimming of Berkshire’s huge stake in Apple. It’s possible that Buffett didn’t want Apple to become even more heavily weighted in Berkshire’s portfolio than it already was. Another likely scenario is that one of Berkshire’s other two investment managers (Todd Combs and Ted Weschler) sold some of their Apple shares in the part of the portfolio that they manage.

Instead, I think that the biggest head-scratcher with Buffett’s Q4 transactions was the sale of all of Berkshire’s shares of D.R. Horton (NYSE: DHI). Granted, D.R. Horton was only a small holding for Berkshire — a little under 6 million shares worth close to $642 million at the end of the third quarter. However, the complete exit of the position is still puzzling to me.

Berkshire didn’t sell any shares of the other two homebuilders in its portfolio — Lennar and NVR. Exiting the D.R. Horton position without selling any shares of these other two stocks might make sense if D.R. Horton’s valuation was much higher. However, that’s not the case. D.R. Horton is the least expensive of the three stocks based on forward earnings multiples.

The long-term prospects for D.R. Horton and the market in which it competes haven’t diminished since the stock was first added to Berkshire’s portfolio in the second quarter of 2023. Even if they had, Lennar and NVR would have likely been negatively impacted as well.

The one change for D.R. Horton in Q4

There was one change made by D.R. Horton in Q4 that perhaps could explain why Buffett or his team sold the stock. The homebuilder appointed a new CEO on Oct. 1, 2023.

However, I’m not convinced this was the reason for the sale. D.R. Horton’s new CEO is Paul Romanowski. He previously served as the company’s executive vice president and co-chief operating officer. Romanowski has been a member of D.R. Horton’s management team for more than 20 years. He knows the business well.

Importantly, former CEO David Auld isn’t leaving D.R. Horton. He moved into the role of executive vice chair of the company’s board of directors.

Why buying D.R. Horton stock could be a brilliant move

I think that buying D.R. Horton stock could be a brilliant move for investors even though Buffett (or his lieutenants) sold the stock. Why? For the same reasons that made Berkshire’s exit from the position so perplexing.

The U.S. continues to face a serious housing shortage. Moody’s Analytics recently estimated the country still needs as many as 2 million homes. The company acknowledged that its number is near the lower end of the range of estimates made by others.

There’s only one practical solution to this shortage: Build more homes. D.R. Horton ranks as the largest homebuilder in the U.S., a position it’s held for more than 20 years. The laws of supply and demand are working in the company’s favor.

Sure, high interest rates have been a barrier for some Americans who would like to buy a house. However, the Federal Reserve has hinted that rate cuts are on the way this year. Mortgage rates are also impacted by inflation. Even with inflation remaining higher than hoped, though, National Association of Realtors chief economist Lawrence Yun told CBS News earlier in February that he expects mortgage rates will decrease to around 6% later this year. It should bode well for D.R. Horton if he’s right.

As for valuation, D.R. Horton’s shares trade at only 10.3 times forward earnings. That’s a lower multiple, by the way, than any of the three stocks that Buffett bought in Q4. When growth prospects are factored in, D.R. Horton stock looks like a steal with a price/earnings-to-growth (PEG) ratio of 0.57.

All in all, D.R. Horton looks like a great stock to buy right now — and definitely not one to sell.

Should you invest $1,000 in D.r. Horton right now?

Before you buy stock in D.r. Horton, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and D.r. Horton wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

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See the 10 stocks

*Stock Advisor returns as of February 20, 2024

Keith Speights has positions in Apple and Berkshire Hathaway. The Motley Fool has positions in and recommends Apple, Berkshire Hathaway, Lennar, Moody’s, and NVR. The Motley Fool has a disclosure policy.

Warren Buffett’s Most Baffling Decision in Q4 — and Why Buying This Stock He Sold Could Be a Brilliant Move was originally published by The Motley Fool

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Finance

Some investors switch direction as Nvidia and AI stocks soar

by CoinNews
written by CoinNews

Coverage of the stock market has been dominated by Nvidia Corp. this week, as another eye-popping set of numbers has made the case that we are still in an early phase of the infrastructure rollout to support artificial intelligence technology.

But something else has been happening, as explained by Isabel Wang in the ETF Wrap newsletter, with record inflows of new money into a different pocket of the stock market.

Nvidia’s results and the reaction

An Nvidia graphics processing unit (GPU).


AFP via Getty Images

Therese Poletti looked beyond sales growth to focus on Nvidia’s improving profit margins.

Steve Goldstein shared a chart that paints Nvidia in contrast to the other members of the “Magnificent Seven” group of companies: Microsoft Corp.
MSFT,
-0.32%,
Apple Inc.
AAPL,
-1.00%,
Amazon.com Inc.
AMZN,
+0.23%,
Meta Platforms Inc.
META,
-0.43%,
Alphabet Inc.
GOOGL,
-0.09%
and Tesla Inc.
TSLA,
-2.76%.

More reaction to Nvidia:

Stock-market warnings

A period of exuberance, with the S&P 500
SPX
and Dow Jones Industrial Average
DJIA
hitting record highs on Thursday, leads to inevitable warnings.

Some of the warnings are based on what is perceived to be a high valuation for the market as a whole. The forward price-to-earnings ratio for the S&P 500, based on Thursday’s closing prices and weighted earnings-per-share estimates for the next 12 months among analysts polled by FactSet, was 20.2, up from 17.9 a year earlier.

Here are long-term average forward P/E ratios for the index:

Forward P/E

 3-year average P/E

 5-year average P/E

 10-year average P/E

 15-year average P/E

 20-year average P/E
20.24

 19.23

 19.35

 17.97

 16.28

 15.83
Source: FactSet

Here’s how the S&P 500’s current forward P/E compares to the long-term averages:

Current P/E to 3-year avg.

 Current P/E to 5-year avg.

 Current P/E to 10-year av.

 Current P/E to 15-year avg.

 Current P/E to 20-year avg.
105%

 105%

 113%

 124%

 128%
Source: FactSet

And now for the warnings:

Nvidia makes the case for looking beyond P/E ratios


Nvidia Corp.

An aversion to high P/E ratios might cause investors to miss out on extraordinary growth.

Wedbush analyst Dan Ives wrote in a note to clients on Thursday that “investors that have missed the biggest transformational tech stocks the last decade, including Amazon, Netflix, Meta, Apple, Alphabet among many others, have dogmatically stuck with the forward P/E valuation approach on these unique tech stories.”

He wrote that for “transformational tech stories,” including Nvidia and the other companies involved with the AI build-out, “investors must see the forest through the trees to where this spending wave (and estimates) can head over the next 3 years.”

Nvidia’s forward P/E ratio was 31.6 early Friday, reflecting rising estimates for the company’s profit over the next year, as well as this week’s price increase. The stock’s forward P/E was 52.6 a year ago. Meanwhile, the share price has risen 232%.

Back to the moon — there is money to be made

Harrison Schmitt, the Apollo 17 lunar module pilot who walked on the moon in 1972, discussed the Moon’s potential as an energy source before the successful landing of the Odysseus spacecraft.


Harrison Schmitt, NASA

For the first time since 1972, a U.S. spacecraft landed on the moon on Thursday. Shares of Intuitive Machines Inc.
LUNR,
+15.82%,
which built the Odysseus lander, were up 24% for one week through Thursday. The stock was up another 17% Friday morning.

James Rogers covered the Odysseus landing, and before that had an email exchange with Apollo 17 astronaut Harrison Schmitt, who walked on the moon in 1972 with Gene Cernan, the mission commander. Here’s what Schmitt had to say about the moon’s potential for investment and development.

Advice from the Moneyist


MarketWatch illustration

This week Quentin Fottrell — the Moneyist — helped a woman whose parents have died, but whose sister seems not to be motivated to settle their estate.

More from the Moneyist: I have $1.5 million in stocks and bonds. I asked my broker to convert my bonds to cash. He didn’t and my portfolio fell by $100,000. Can I sue?

Two years since Russia invaded Ukraine

The Alley of Heroes where Ukrainian soldiers who died in the Russian-Ukrainian war are buried, in Kramatorsk, on Feb. 22.


Agence France-Presse/Getty Image

When Russia began its invasion of Ukraine on Feb. 24, 2022, some expected a quick surrender. But the battle continues. Sanctions against Russia by the U.S. and other governments have helped to cause a contraction of the invader’s economy.

Hundreds of Western companies have also taken action against Russia, as James Rogers reported.

How one active fund manager keeps things simple and beats the market

Michael Brush interviewed Ryan Kelley, who co-manages the Hennessy Cornerstone Mid Cap 30 Fund HIMDX, which has been an outstanding performer and has a five-star rating (the highest rating) from Morningstar.

Kelley outlines five investing lessons — one of them is to be optimistic.

Passive vs. active investing: Has it become easier to beat index funds?

Thoughts on retirement and planning for it

Chef Jacques Torres is now 65 — he says he didn’t begin to think about retirement until he was in his 40s.


Photo by Ilya S. Savenok/Getty Images for Wholesome Wave

Beth Pinsker interviewed Jacques Torres, who is now 65 and talks about his business’s changing fortunes and plans for retirement at his chocolate factory in Brooklyn.

Mark Hulbert has been inundated with material from brokerage firms and money managers with results of retirement-readiness surveys. Here’s what he thinks of the surveys and what might be a better approach for people and their financial advisers to take when thinking of retirement.

In the Help Me Retire column, Alessandra Malito helped a woman in her early 30s to decide whether or not to raid her tax-deferred retirement account to pay for tuition as she heads back to college.

Want more from MarketWatch? Sign up for this and other newsletters to get the latest news and advice on personal finance and investing.

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Coinbase on Grayscale Ethereum Spot ETF Application: ‘ETH Is a Commodity, Not a Security’

by CoinNews
written by CoinNews

Coinbase on Grayscale Ethereum ETF Application: "ETH Is a Commodity, Not a Security"Coinbase has answered the SEC request for comments on the proposed rule change to list the ETH Grayscale Fund as a spot ETF. Coinbase stated that ether was a commodity, and its status has been publicly recognized in a variety of circumstances by U.S. agencies and courts. Coinbase Supports Ethereum Grayscale Fund Conversion as a […]

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Fluidkey Launches to Tackle the Transaction Privacy Issues on EVM Chains

by CoinNews
written by CoinNews

Fluidkey Launches to Tackle the Privacy Issues on EVM ChainsFluidkey has announced it has opened its Optimism-based alpha to more users, allowing them to test their private solutions. Fluidkey seeks to solve the transaction privacy problem in EVM chains by leveraging ENS and stealth addresses, allowing users to use a new self-custodial asset for each payment, and segregating these movements to avoid linkability. Fluidkey […]

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Donald Trump Acknowledges Bitcoin’s Popularity — Says BTC Has Taken on ‘a Life of Its Own’ and ‘I Can Live With It’

by CoinNews
written by CoinNews

Donald Trump Acknowledges Bitcoin's Popularity — Says BTC Has Taken on 'a Life of Its Own' and 'I Can Live With It'U.S. presidential candidate and former President Donald Trump has acknowledged the growing popularity of bitcoin, stating that “a lot of people are doing it” and the crypto has taken on “a life of its own.” Trump further shared: “More and more I’m seeing people wanting to pay bitcoin and you’re seeing something that’s interesting so […]

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Could It Hit $6 Trillion Market Cap?

by CoinNews
written by CoinNews

In recent years, the debate surrounding Bitcoin’s (BTC) potential market share relative to gold has garnered significant attention, as recently approved Bitcoin Exchange-Traded Funds (ETFs) can bring Bitcoin significantly closer to gold in key metrics.

Jurrien Timmer, Director of Global Macro at Fidelity Investments, has put forward an analysis that sheds light on this subject. By examining the value of “monetary gold” and Bitcoin’s market capitalization, as well as considering the impact of halvings on Bitcoin’s supply, Timmer presents insights into the future dynamics of these two assets. 

Gold Vs Bitcoin

Timmer’s analysis begins by estimating the share of gold held by central banks and private investors for monetary purposes, excluding jewelry and industrial usage. While this estimation is not exact, based on data from the World Gold Council, Timmer suggests that monetary gold accounts for approximately 40% of the total above-ground gold.

Drawing upon his previous calculations, Timmer posits that Bitcoin has the potential to capture around a quarter of the monetary gold market, with monetary gold valued at around $6 trillion and Bitcoin’s market capitalization at $1 trillion.

Timmer further delves into the impact of Bitcoin halvings on its price. Historically, halvings have had a substantial effect on Bitcoin’s value. However, Timmer raises the hypothesis that diminishing returns may occur in the future as the incremental supply of new Bitcoin decreases.

By comparing the outstanding supply and incremental supply of Bitcoin with those of gold, Timmer demonstrates that the diminishing impact of the halvings is likely to be more pronounced in the future. 

As the number of coins available for mining dwindles, the influence of each subsequent halving event on Bitcoin’s price may diminish. This insight prompts Timmer to explore alternative ways to project Bitcoin’s price trajectory.

BTC’s Price Projections

To account for the diminishing impact of halvings, Timmer introduces the concept of a modified Stock To Flow (S2F) curve. This curve is derived by overlaying an asymptotic supply curve, representing the percentage of coins mined relative to the final supply cap, onto the original S2F curve.

Timmer proposes using a regression formula incorporating PlanB’s original S2F curve and the asymptotic supply curve as independent variables. This modified S2F curve aligns more closely with the supply dynamics of gold, reflecting a scenario in which Bitcoin’s scarcity advantage continues, but its impact on price gradually diminishes over time.

Bitcoin
BTC’s price projections from gold’s S2F. Source: Jurrien Timmer on X

Using the modified S2F model and considering the supply characteristics of gold, Timmer generates hypothetical price projections for Bitcoin that place the cryptocurrency at approximately $100,000 by the end of 2024.

According to Timmer, if Bitcoin were to capture a quarter of the monetary gold market, it would represent a remarkable shift in the global distribution of wealth, which would gradually drive up the cryptocurrency’s price over the coming years.

Bitcoin
BTC’s price is currently valued at $51,100 on the daily chart. Source: BTCUSD on TradingView.com

Featured image from Shutterstock, chart from TradingView.com

Disclaimer: The article is provided for educational purposes only. It does not represent the opinions of NewsBTC on whether to buy, sell or hold any investments and naturally investing carries risks. You are advised to conduct your own research before making any investment decisions. Use information provided on this website entirely at your own risk.

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