Down market is a good time to make stock gifts, shift to Roth IRA

The Ticker

October 14, 1998|By Julius Westheimer

HOW CAN you profit in such a volatile market?

"Look at the plus side," says Tax Hotline. "A down market presents a unique opportunity to make stock gifts to reduce your estate tax. Your $10,000-per-recipient annual gift exclusion stretches farther when you use stocks down in value."

The newsletter adds, "This is an ideal time to convert your regular IRA into a Roth IRA. Because the market is down, you'll have less income tax to pay on the conversion."

And when many investors are suffering paper losses, remember that you can save taxes by offsetting capital gains with losses. See your broker and accountant for details.

LOOKING UP: When will stocks recover? Black Enterprise says, "Despite thick gloom, economic conditions are very favorable for stocks. Interest rates are low, inflation dormant, consumer sentiment still up, people feel good about the economy and they're spending money. And cash is flowing freely into stocks because of 401(k)s and investors' continuing long-term interest in mutual funds."

Adds Barron's: "Many investors are shell-shocked with the first major stock correction in eight years, but for the long-term investor there are many opportunities today for considerable long-term gains."

However, Kiplinger Washington Letter warns: "Global economic storms" could threaten a recession here.

"No doubt about it; half the world is in a recession or close to it and we're not immune." The letter adds that U.S. economic growth is slowing and will slow further in 1999.

"Investors must prepare for the worst. The bull run has clearly ended," observed Hegarty's Options Navigator, "and stocks will become more severely depressed."

Pub Date: 10/14/98

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