Investing

Year-end Planning

The Matthew Perry Foundation is using a donor-advised fund to create a legacy in the late actor’s name.
Experts say the strategy is not just for the rich and famous.
A donor-advised fund may help provide immediate tax benefits and lasting estate planning.

Matthew Perry attends the GQ Men of the Year Party 2022 at The West Hollywood EDITION on November 17, 2022 in West Hollywood, California.
Phillip Faraone | Getty Images

A new foundation has been established in the late actor Matthew Perry’s name to help others who struggle with addiction.
“Addiction is far too powerful for anyone to defeat alone,” the foundation’s website quotes the late actor saying. “But together, one day at a time, we can beat it down.”

The Matthew Perry Foundation is structured as a donor-advised fund, according to its website, a charitable investment fund that experts say offers certain advantages.
Perry may have chosen to have the donor-advised fund as a beneficiary of his estate, which would have let him donate anonymously, according to Charlie Douglas, a certified financial planner and president at HH Legacy Investments in Atlanta.
Donor-advised funds allow donors to choose how much personal information may be shared when making grants from the funds and how they are acknowledged, according to the website of the National Philanthropic Trust, which sponsors and maintains the Matthew Perry Foundation’s donor-advised fund.
“Among celebrities, the best plans are plans of privacy,” Douglas said.
National Philanthropic Trust, through a spokesman, declined to be interviewed for this article.

More from Year-End Planning

Here’s a look at more coverage on what to do finance-wise as the end of the year approaches:

How donor-advised funds work

Donor-advised funds allow donors to receive immediate tax deductions for their contributions to the fund.
However, they may choose to grant the money to nonprofits over time, giving them more flexibility when choosing the causes and amounts to which they would like to dedicate their funds.
Many clients and their financial advisors establish donor-advised funds during the estate planning process, which allows for the distribution of the money per their wishes when they pass away, according to Brandon O’Neill, a certified financial planner and vice president and charitable planning consultant at Fidelity Charitable.
Donor-advised fund charitable assets represent 20% of those in private foundations, according to National Philanthropic Trust’s 2023 annual report.

While wealthy donors may have both a foundation and a donor-advised fund, many are moving to just donor-advised funds, according to Douglas. A donor-advised fund comes with fewer restrictions than a foundation, which requires filing of certain tax forms, annual charitable payouts of at least 5% of the value of its endowment and payment of an excise tax on net investment income.
“With a donor-advised fund, what it does is more streamlined,” O’Neill said. “There’s not as much of an administrative burden or oversight that happens with a foundation.”
Donor-advised funds are not limited to just wealthy donors. Some firms may allow for an account to be opened with $0 in initial contributions.
The average size of individual donor-advised accounts was an estimated $117,466 in 2022, according to National Philanthropic Trust, down 3.8% from $122,162 in 2021.

Advantages of using a donor-advised fund

For all donors, regardless of income, there may be benefits to using a donor-advised fund.
For one, if you donate checks throughout the year, it may be difficult to keep track of all the money you have given away during the year when it comes time to report it on your tax return, Douglas noted.
Donor-advised funds offer a way to keep a “running tally,” that lets you see exactly who you donated to, when and where, Douglas said.
A second advantage is that instead of writing checks to give money, donors may instead choose to give to the fund appreciated assets such as stocks, bonds or mutual funds that would otherwise incur capital gains tax when sold, O’Neill said.
“These accounts do have the ability to provide the opportunity for tax-free growth,” O’Neill said. “So that also creates additional funds for charity.”

Another perk is the ability to use a tax strategy known as bunching donations, which allows for the consolidation of donations in a single year in order to maximize itemized deductions.
This tactic has become more valuable since the Tax Cuts and Jobs Act increased the standard deduction until 2025, raising the bar to meet thresholds to qualify for itemized deductions. In 2023, the standard deduction is $13,850 for single filers and $27,700 for those who are married and file jointly.
Although it’s already late November, it is possible to get donor-advised funds open, established and funded by year-end, O’Neill said. But how fast that can happen may vary, particularly depending on where the assets come from, he said.
At Fidelity, O’Neill said, the vast majority of contributions come in the last few weeks of the year. However, it is best to get the process started as early as possible, he said. More

Climate change costs the U.S. about $150 billion a year. That toll is expected to worsen.
Extreme weather events may lead people to evacuate, causing costs related to transportation, lodging and employment, for example.
Health costs, insurance rates, food prices and property damage will also likely increase.
There are some steps to take to prepare, experts said.

Andrew Merry | Moment | Getty Images

The following is an excerpt from “This week, your wallet,” an audio program produced by CNBC’s Personal Finance team. Listen to the latest episode here. [Editor’s note: Audio clip begins at the 2:33 minute mark.]
Climate change has been described as a ticking time bomb, the threats of which extend beyond ecosystems and biodiversity to big financial impacts on households and the U.S. economy.

Those financial costs are largely the result of extreme weather events.
The White House issued a report last week — the Fifth National Climate Assessment, issued every four to five years by the federal government — warning that heat waves, heavy rains, drought, hurricanes, floods and wildfires “are becoming more frequent and/or severe,” with a “cascade of effects” in all areas of the U.S.
“It’s no longer just a problem for Florida, or just a problem for Louisiana and New Orleans,” said Andrew Rumbach, senior fellow and co-lead of the climate and communities program at the Urban Institute. “More and more people are experiencing these extreme events and they carry all kinds of different costs, both direct and indirect, for those families.”
Here’s what to know, according to experts interviewed by CNBC during a recent discussion about climate change and its impact on personal finance.

We already feel the impact — and it’s likely to worsen

Tim Wright | Corbis Documentary | Getty Images

Weather-related disasters cost the U.S. at least $150 billion a year, according to the White House report, which calls that estimate “conservative.”

The U.S. now experiences a billion-dollar disaster every three weeks, on average; during the 1980s, that happened every four months, the report notes.

More from Your Money:

Here’s a look at more stories on how to manage, grow and protect your money for the years ahead.

The economic toll — due to such things as water stress, agricultural loss, tourism impacts, falling real estate value, and property and infrastructure damage — is expected to grow.
“Over time, each incremental increase in climate change is going to up the economic cost bit by bit,” Rumbach said.
Every additional degree of global warming translates to “increasingly adverse consequences”: Warming by 2°F is projected to more than double the economic harm from 1°F of warming, for example, the report said.

The effects can be ‘weird and unpredictable’

Bloomberg Creative | Bloomberg Creative Photos | Getty Images

Climate change’s impacts can be “weird and unpredictable,” said David Pogue, host of the podcast “Unsung Science” and author of “How to Prepare for Climate Change: A Practical Guide to Surviving the Chaos.”
“I prefer the term ‘global weirding,’ because warming is only just part of it,” Pogue said.

For example, more than 3 million U.S. adults reported being displaced from their home by an extreme weather event just within the past year, Rumbach said, citing data from the U.S. Census Bureau’s Household Pulse Survey.
In other words, 1 in 70 adults were displaced because of events such as hurricanes, floods and fires, according to an Urban Institute report. Many of them were away from their homes for less than a month, but others were away for at least six months.
Even absent property damage, an evacuation leads to transportation costs, hotel costs, and time away from work, which may disrupt pay and workplace benefits, Rumbach said.  
“All those costs really add up,” he said.

I prefer the term ‘global weirding,’ because warming is only just part of it.

David Pogue
author of “How to Prepare for Climate Change: A Practical Guide to Surviving the Chaos”

Further, for every additional “hot day” per year, especially in Western states, the prevalence of workplace injuries increases by 5% to 15%, Rumbach said, citing peer-reviewed scientific analyses. There’s also $10,000 in additional emergency room costs per 100,000 people, especially among the elderly, he said.
Plus, for every 1% decline in crop yields, there’s an estimated 0.1% out-migration of the population — a significant impact both for places losing people and for those receiving them, Rumbach said.
Declining agricultural output may fuel higher food prices, experts said, and greater property damage will likely fuel higher insurance rates.

There are ways consumers can prepare

Justin Paget | Digitalvision | Getty Images

Americans may frequently hear about ways to reduce their carbon footprint. But there are also steps they can take to prepare for the worsening effects of climate change.
“Governments and corporations have been adapting for a long time: That’s why they build sea walls, and Starbucks is finding new mountains to grow coffee on,” Pogue said. “But nobody ever talks about the little guy.”
The first thing to do, Pogue said: Look at your homeowners or renters insurance policy.
“You probably bought it years ago, trying to make it as cheap as possible,” he said. “But things have changed, and I think a lot of people are stunned to find out that homeowner’s insurance does not cover flooding. It just doesn’t.”

It’s no longer just a problem for Florida, or just a problem for Louisiana and New Orleans.

Andrew Rumbach
senior fellow at the Urban Institute

Those with renters or homeowners insurance should make sure they’re not underinsured, Rumbach said.
Prospective homebuyers can consult tools to choose homes in areas with reduced climate risk, he added. For example, Redfin offers climate risk assessments based on geography, he said.
There are also potential ways for investors to bolster their investment portfolio and have a positive impact on the environment, Pogue said.
Supporting an industry or company that’s “green” is “in effect helping everyone,” he said.
The best approach wouldn’t be to invest broadly in solar and wind companies, for example — those are commodities that keep getting cheaper, Pogue said.
Instead, it may involve investing in utility companies that get all their electricity from renewable energy sources, Pogue said. Thirty-eight states now have mandates about getting a certain amount of power from renewable energy, he added.
Investing in the electric-vehicle revolution may include buying into companies that produce electric car batteries or those that mine lithium, a key component in electric car batteries, for example, he said. More

“House hacking” refers to renting out a portion of your home for an additional stream of income.
More than half of millennial and Gen Z homebuyers say house hacking is a “very” or “extremely” important opportunity, according to a report by housing market site Zillow.
That extra money can “help make those dreams of homeownership penciled into reality, given that there’s so many affordability constraints on the current market,” said Manny Garcia, senior population scientist at Zillow. 

A couple assembling furniture.
Drazen_ | E+ | Getty Images

Gen Z and millennials are “hacking” the housing market as high prices and interest rates make affordability difficult.
The term “house hacking” refers to the practice of renting out a portion of your home or an entire property for an additional stream of income.

Almost 4 in 10, 39%, of recent homebuyers say the practice represents a “very” or “extremely” important opportunity, according to a new report by housing market site Zillow. That share is up eight percentage points in the past two years.
Younger generations are especially keen on the idea. In Zillow’s survey, more than half of millennial, 55%, and Gen Z home buyers, 51%, expressed positive views on house hacking.
Zillow polled more than 6,500 recent homebuyers between April 2023 and July 2023. Respondents were adults who moved to a new primary residence they purchased in the past two years.
More from Personal Finance:Homeowners associations can be a boon, or bust, for buyersHomebuyers must earn over $400,000 to afford a home in metro areasAs mortgage rates hit 8%, home ‘affordability is incredibly difficult’
The additional income from house hacking can “help make those dreams of homeownership penciled into reality, given that there’s so many affordability constraints on the current market,” said Manny Garcia, senior population scientist at Zillow. 

The median sale price for a house in the U.S. was $413,874 in October, up 3.5% from a year ago, according to a report by real estate site Redfin.
The average rate for 30-year mortgages hit 8% in October, the highest level seen in 23 years, according to Bankrate. To compare, rates bottomed out slightly below 3% in January 2021.
While renting out portions of a newly owned property can help offset higher costs of a home, potential buyers will need to make a few considerations beforehand.

‘You need to earn six figures to afford a starter home’

As home prices and interest rates have risen, potential homebuyers need a salary of $114,627 to afford a median-priced house in the U.S., a recent report by Redfin found. Redfin’s analysis used the median home price of $420,000 in August.
“In many places, you need to earn six figures to afford a starter home, so it makes sense for young people who are seeing how expensive homeownership is to want options,” said Daryl Fairweather, chief economist at Redfin. 

With few small starter homes available, a millennial or Gen Z buyer may have to jump on a more expensive home than they would have wanted, Fairweather said.
“Having the option to rent or have a roommate is important in an environment where there just aren’t that many small homes for sale,” she said. 
House hacking may help those homeowners by providing them additional income for expenses or even help cover the mortgage.

More apartment buildings are available

The opportunity to house hack may be short lived. In some markets, new apartment buildings are under construction that will have available units next year, especially smaller, one bedrooms. 
Rental market inflation, which had been stubbornly high for much of 2023, has cooled due to new inventory, pushing the rental vacancy rate up to 6.6% in the third quarter, the highest level since the first quarter of 2021, according to Redfin data. 
“We’ve already seen rent prices stabilize, especially for single occupancy rentals,” Fairweather said. It’s going to be harder to rent out a room as more rentals become affordable, she added.
Despite the growth in available apartments, the U.S. is facing a “massive shortage of housing, especially affordable housing options,” said Zillow’s Garcia. 
“If you’re pricing your home competitively, renting out can be a reliable source of income because there’s no shortage of people looking for a place to live,” he said. 

What to consider before ‘house hacking’

While renting out a portion of your home can serve as an additional income, interested buyers would still need to gather a sufficient down payment and proof of income to show they can already afford the monthly payments.
“If you’re going to rely on rental income in order to qualify, you’ll have a problem,” said Melissa Cohn, mortgage banker and regional vice president of William Raveis Mortgage.
“They need to prove they can afford the mortgage without the rent,” she said.
Banks won’t consider potential rental income and they will require the buyer to be able to qualify for the financing without the support of potential rental income, she said.

There is another risk to buying a bigger house with the intention of renting out part of it: You could wind up stuck with an expensive mortgage and a room you can’t rent out.
If renting out part of your home — or the entire property — is optimal for you, do your research on what the current rate is for your type of home. Consult with rental managers who can help draft leases and give you a good estimate on the going rate in your area, said Garcia. 
“There’s a lot of homework to be done to make sure that you’re pricing correctly when you’re posting your unit for rent,” Garcia said. 
Additionally, keep in mind that there is a big chance the house you are considering may be subject to local ordinances on renting or homeowners association regulations.Don’t miss these stories from CNBC PRO: More

Domino’s will roll out 800 custom-branded 2023 Chevy Bolt electric vehicles at locations across the U.S. in the coming months.

Investors are on pace to wrap up a strong November, but it can be a challenge to pick out the best plays for the long run.
All three of the major averages are tracking for sizeable monthly gains. Wall Street experts are able to delve into the details and determine which stocks might have the best prospects for the long term.

Here are five stocks favored by the top pros on the Street, according to TipRanks, a platform that ranks analysts based on their past performance.

Domino’s Pizza

Restaurant chain Domino’s Pizza (DPZ) is first on this week’s list. Following recent meetings with the company’s management about several of its activities, including sales initiatives, a loyalty program and its aggregator strategy, BTIG analyst Peter Saleh reiterated a buy rating on the stock with a “top pick” designation and a price target of $465.
The analyst expects the change in Domino’s rewards program to enhance traffic among lower-frequency carryout customers, while third-party aggregators are targeting higher-income consumers who value convenience. In particular, management thinks that the reduction of the spend hurdle under the revamped rewards program, to $5 from $10, along with lower redemption tiers, will drive higher transactions from lower-frequency members.
Saleh added that talks with management suggest that the deal with Uber Eats, which marks Domino’s foray into third-party aggregators, is expected to boost sales and margins for franchisees.
“We expect these initiatives will be significantly accretive to both sales and earnings in the near and long term, helping Domino’s recapture its prior momentum,” said Saleh.

Saleh holds the 504th position among more than 8,600 analysts on TipRanks. His ratings have been successful 58% of the time, with each one delivering an average return of 9.1%. (See Domino’s Options Activity on TipRanks)

Palo Alto Networks

Another BTIG analyst, Gray Powell, is bullish on cybersecurity company Palo Alto Networks (PANW). The company delivered better-than-expected fiscal first-quarter results. However, investors were concerned about the billings outlook.
Powell noted that the company missed the quarterly billings estimate and issued weak billings guidance as customers are less likely to sign multiyear pay-in-advance deals due to a high interest rate environment. That said, he highlighted management’s commentary about a strong demand backdrop and higher pipeline visibility.
The analyst contended that there was weakness in billings, but there was strength in metrics like the current remaining performance obligation. There were several other positive aspects: These include the solid growth in next-generation security annual recurring revenue and the increase in full-year operating margin and earnings per share guidance.   
“All in, we think the FQ1 performance demonstrates that a number of factors can help PANW offset slowing growth in the firewall appliance market,” said Powell, who ranks 904th out of over 8,600 analysts tracked on TipRanks.
Powell reiterated a buy rating and a price target of $292. His ratings have been successful 53% of the time, with each delivering an average return of 7.2%. (See Palo Alto Hedge Fund Trading Activity on TipRanks)

Monday.com

We move to the work management platform Monday.com (MNDY), which recently impressed investors with better-than-anticipated third-quarter results. The company also raised its full-year guidance.
In reaction to the solid print and forecast, Goldman Sachs analyst Kash Rangan raised his price target for MNDY stock to $270 from $250 and reaffirmed a buy rating. The analyst noted the upbeat revenue and outsized margin momentum, with the company’s operating margin of 13% handily exceeding the consensus estimate of 3%.
“Management’s strong execution, coupled with a sustained beat-and-raise cadence reinforces the view laid out in our preview that while macro pressures weigh on expectations, there is minimal disruption to near-term performance,” said Rangan.
The analyst thinks that management’s tone is growing incrementally more constructive, thanks to improving top-of-funnel activity, stabilization within the company’s larger cohorts’ net expansion rate and growing demand for new offerings.
Rangan also highlighted that the company is building its sales capacity and investing in infrastructure-layer improvements to enhance scale and speed, which would help pipeline conversion, improve retention and drive larger contract deals.
Rangan ranks No. 440 among more than 8,600 analysts tracked by TipRanks. His ratings have been profitable 59% of the time, with each delivering an average return of 8.2%. (See Monday.com Technical Analysis on TipRanks) 

Alphabet

Search engine giant Google’s parent Alphabet (GOOGL) is next. Last month, the company reported upbeat third-quarter results. However, Google Cloud missed revenue expectations despite generating 22% growth.
Nonetheless, Tigress Financial analyst Ivan Feinseth is bullish on GOOGL stock and recently reiterated a buy rating, raising the price target to $176 from $172.
The analyst expects notable reacceleration in GOOGL’s revenue growth in Q4 2023 and 2024 and beyond, fueled by improved monetization due to the ongoing artificial intelligence integration and other capabilities that will drive further growth, mainly in Search and YouTube.  
“GOOGL remains an incredible value as it is at the forefront of every secular technology trend, including Search, mobile, Cloud, data center, e-commerce, entertainment, home automation, autonomous vehicle technology, and health and fitness,” said Feinseth.
The analyst emphasized that Alphabet’s solid balance sheet and cash flow support the funding of its growth initiatives, strategic acquisitions and improvement in shareholder returns through share repurchases.
Feinseth ranks No.337 among more than 8,600 analysts on TipRanks. His ratings have been successful 58% of the time, with each delivering an average return of 9%. (See Alphabet Insider Trading Activity on TipRanks)

Intel

Finally, we’ll look at semiconductor giant Intel (INTC). The stock has witnessed a solid run after the chipmaker reported better-than-expected third-quarter results and displayed good execution of its cost-saving initiatives.
On Nov. 15, Mizuho analyst Vijay Rakesh upgraded INTC stock to buy from hold and increased the price target to $50 from $37, saying, “We believe INTC is lining up significant NEW Server product launches and Foundry customer announcements in the next six months.”
The analyst also sees a better roadmap in 2024 for the compute and data center businesses, compared to competitors and the company’s historical rollouts. In particular, he expects the data center business to gain from “the most prolific product launches,” including Emerald Rapids, Sierra Forest and Gaudi2/3 Accelerators. He also expects the company to benefit from an anticipated PC and data center industry upcycle.
Further, Rakesh highlighted that the Altera FPGA business spinoff is estimated to add value at $17 per share. The analyst expects 2025 to be a key transition year due to the Intel Foundry Services ramp and the rollout of the 18A, the company’s most advanced node.     
Rakesh holds the 62nd position among more than 8,600 analysts on TipRanks. His ratings have been successful 60% of the time, with each delivering an average return of 19.1%. (See Intel’s Financial Statements on TipRanks). More

Private investments such as private equity, hedge funds, venture capital and stock in start-up companies generally require investors to be “accredited.”
In the early 1980s, the top 1% to 2% of households were accredited. In 2019, the share was 13%, according to the SEC.
Private investments can offer higher returns than publicly available ones such as mutual funds but come with more risks, experts said.

Fg Trade | E+ | Getty Images

More investors are getting access to investments previously earmarked for the wealthiest members of society — but it may be risky for some to participate, experts said.
Private investments — such as private equity funds, hedge funds, venture capital funds and stock in early stage companies — typically require investors to be “accredited.”

Generally, that means investors must have a certain income or household wealth to participate. Criteria include earned income of at least $200,000 a year for a single individual or at least $300,000 with a spouse, or a $1 million net worth, alone or with a spouse.
Such rules are meant to protect against the “unique risks” of private investments relative to public stocks and mutual funds, according to the Securities and Exchange Commission. For example, private investments may have fewer disclosures for investors. Accredited investors are seen as more financially sophisticated and able to sustain the risk of loss, the SEC said.
More from Personal Finance:How to use ETFs in your portfolioMore part-timers to get access to company retirement plansYou could owe 0% capital gains tax for cryptocurrency in 2023

Why more people may meet accredited criteria

But there’s a problem, according to investor advocates: The financial thresholds to become an accredited investor aren’t indexed to inflation; they haven’t changed in decades. As a result, the protective bar of “accredited” status has been diluted as wealth and incomes have naturally increased over time.
In 1983, “accredited” status was reserved for the richest households — roughly the top 1% to 2%, according to the SEC. However, 13% — about 16 million total households — qualified in 2019.

That expansion lets some middle- and upper-middle-class households into the fold — but many may not have the risk capacity or financial savvy to invest in private markets, said Micah Hauptman, director of investor protection at the Consumer Federation of America, a consumer advocacy group.
If it had been indexed to inflation since 1983, the threshold to be an accredited investor would be $629,000 of earned income for individuals, or a combined $3.1 million net worth today.
“A $1 million net worth doesn’t mean that much these days,” said Charles Failla, a certified financial planner and founder of Sovereign Financial Group. “You don’t have to be that sophisticated an investor to be in your 70s and have $1 million.”

The risks and rewards of private investments

Private investments are, as their name suggests, different from their publicly offered counterparts.  
Anyone can generally buy the stock of public companies on a stock exchange, or buy pools of stocks or bonds via publicly available mutual funds and exchange-traded funds. By comparison, private investments let people invest in companies that aren’t listed on a public exchange.
Even investing in, or possibly lending to, a friend’s or family member’s private startup may require accreditation, said Cassandra Borchers, a partner at law firm Thompson Hine.
Nonaccredited investors can invest in private start-ups via crowdfunding campaigns. However, there are limits on how much they can invest — generally up to 5% or 10% of their net worth — unlike with accredited investors.

A $1 million net worth doesn’t mean that much these days. You don’t have to be that sophisticated an investor to be in your 70s and have $1 million.

Charles Failla
founder of Sovereign Financial Group

The allure of private investments is they often “just have better returns” than their public counterparts, Borchers said. This is why she thinks it’s generally a good thing more people have gained access.
Private equity returns, for example, have outperformed the S&P 500 stock index by 1% to 5% on an annualized basis since 2009, according to a 2021 report by Michael Cembalest, chair of market and investment strategy for J.P. Morgan Asset & Wealth Management.
Mike Curtis, 58, an accredited investor based in Honolulu, Hawaii, has invested in more than a dozen private companies in the past 15 years. One he’s especially fond of: an investment in Shaka Tea, which earned him a profit of at least 400%, he said.
Julio Estela, 41, who lives in Wantagh, New York, made his largest private investment in 2021, in Green Coffee Company. Estela, an accountant and director of people at the insurer Lemonade, estimates he’s made a 60% to 70% return on his money since then.
Curtis and Estela declined to disclose the value of their respective investments.

But Curtis and Estela have also had some losers.
For example, one of Curtis’ failed ventures aimed to recycle wooden shipping pallets that arrived in Hawaii by rehabbing and putting them back into circulation.
“It was a neat idea,” said Curtis, managing director of finance at Elemental Excelerator, a nonprofit that invests in climate-focused startups. “We probably hadn’t researched it as thoroughly as we needed to, and it ended up going south.”

Why private markets are ‘two-tiered’

Hxyume | E+ | Getty Images

Some of the largest U.S. investors, such as pension funds, often have some exposure to private investments, proponents say. For example, 89% of public pension plans have private equity investments, which account for 11% of their total assets, according to a 2022 study of 176 plans conducted by the American Investment Council, a trade group. Public stock accounts for 46% of the plans’ assets.
However, private markets are “two-tiered,” said Hauptman of the Consumer Federation of America.
Mom-and-pop investors don’t get access to the best deals, which are often reserved for institutional investors such as pensions, Hauptman said. Pensions also generally have teams of consultants who specialize in evaluating the merits of private companies and funds — something most average investors can’t easily do, he added.
“I really think … people need to start with their 401(k), invest in [mutual] funds, learn the basics,” said Curtis, the accredited investor. “Investing in private companies is more of a graduate-level course. You don’t start without the prerequisite.”

Private investments also have a wider “dispersion” of returns than public markets. That means the range of investment outcomes, from high to low, is wider.
For example, from 2005-2019, private equity funds had a 21% average dispersion, as measured from the 5th percentile to the median fund return; by contrast, publicly traded stock pools had a dispersion of 3% or less, according to a 2021 SEC report, which cited data from Cambridge Associates.
As with public stock, betting on one private investment instead of pooling risk in a fund of many private companies is an even riskier strategy, experts said.
“If we’re talking about a startup, they have great rates of return when they work, but pretty horrible rates of return when they don’t,” Failla said. “It’s by nature a much higher risk potential and a much higher return potential, arguably,” he added.

What to know if you’re buying private investments

What this all means: Only invest the amount of money you’re willing to lose in private companies, Hauptman said.
Only invest in industries with which you’re familiar, he said. Investors should ask themselves: Do I have access to information — such as company financials, its business plan and its standing in the competitive marketplace — to determine if this is a viable business and is likely to succeed?

Often, mutual funds and ETFs are a better long-term approach for most people, Hauptman added.
“I know there are a lot of shiny objects. Sometimes it’s private investments, sometimes it’s crypto,” he said. “[But] slow and steady wins the race.” More

President Joe Biden’s new plan to forgive student debt is likely to look much different than his first.
Here’s what we know, so far.

U.S. President Joe Biden speaks about administration plans to forgive federal student loan debt during remarks in the Roosevelt Room at the White House in Washington, U.S., August 24, 2022.
Leah Millis | Reuters

President Joe Biden’s new plan to forgive student debt is likely to look much different than his first.
After the Supreme Court ultimately blocked Biden’s policy that would have cancelled up to $20,000 in student debt for tens of millions of people in June, the president immediately announced that he would attempt to deliver the relief another way.

His administration has already started that process, and established a “Student Loan Debt Relief Committee” — including Wisdom Cole at the NAACP, Kyra Taylor at the National Consumer Law Center and several student loan borrowers — to hash out the details.
Here’s what we know so far.

Reach of relief could drop to 10% of borrowers

Nearly 40 million Americans stood to benefit from Biden’s original student loan forgiveness plan.
More from Personal Finance:60% of adults live paycheck to paycheck before the holidaysShoppers embrace ‘girl math’ to justify luxury purchasesPaying in cash helps shoppers ‘forget’ guilty pleasures
The president’s Plan B for relief is likely to be much narrower in its reach, said higher education expert Mark Kantrowitz. That’s because the justices ruled that the president’s original plan, which would have covered more than 90% of federal student loan borrowers, was too far-reaching.

″’Can the Secretary use his powers to abolish $430 billion in student loans, completely canceling loan balances for 20 million borrowers, as a pandemic winds down to its end?'” wrote Chief Justice John Roberts in the majority opinion for Biden v. Nebraska. “We can’t believe the answer would be yes.”
Less than 10% of federal student loan borrowers are likely to qualify this round, Kantrowitz said.
Luke Herrine, an assistant professor of law at the University of Alabama, also believes the next forgiveness policy will include far fewer borrowers.
“I think it would be easier to justify in front of a court that is skeptical of broad authority,” Herrine said in an earlier interview with CNBC.

Five groups of borrowers may be eligible

The Biden administration seems focused on still delivering relief to five specific groups of borrowers, according to a recent paper issued by the U.S. Department of Education. Those are:

Borrowers with current balances greater than what they originally borrowed.
Those who entered into repayment on their student loans 25 or more years ago.
Students who attended programs of questionable value.
Borrowers eligible for existing relief programs, including Public Service Loan Forgiveness, who just haven’t applied.
Debtors in financial hardship.

This forgiveness process is likely to take longer, experts say. Biden first tried to cancel student debt with an executive order in August 2022, and had promised borrowers the relief within six weeks of them completing their paperwork.
This time he’s turning to the rulemaking process. That procedure is lengthier, typically involving a public comment period and other time-consuming steps.
“Issuing new regulations can take as long as a year,” Kantrowitz said.
If the administration is successful this time, he said, borrowers could see their debt cancellation around the time of the 2024 presidential election. More

Year-end Planning

If you’re retired and giving to charity this season, there’s a planning move that can reduce your 2023 taxes, experts say. 
Qualified charitable distributions are direct gifts from an individual retirement account to an eligible charity and the transfer isn’t part of your adjusted gross income.
For 2023, investors age 70½ or older can use QCDs to donate up to $100,000 directly to their favorite causes.

Ольга Носова | Istock | Getty Images

If you’re retired and giving to charity this season, there’s a planning move that can reduce your 2023 taxes while donating to a worthy cause, experts say.
The strategy, known as qualified charitable distributions, or QCDs, allows retirees to transfer money from an individual retirement account to an eligible nonprofit organization.

“It’s like hitting two birds with one stone,” said certified financial planner Sean Lovison, founder of Philadelphia-area Purpose Built Financial Services. “You can donate up to $100,000 directly from your IRA to your favorite charity, and it doesn’t even count as taxable income.” 

More from Year-End Planning

Here’s a look at more coverage on what to do finance-wise as the end of the year approaches:

If you’re age 70½ or older, you can use a QCD to donate up to $100,000 for 2023. And thanks to Secure 2.0, that number adjusts annually for inflation starting in 2024.
Next year, the QCD limit jumps to $105,000, according to the IRS.

How QCDs provide a tax break

Since 2018, there’s been a higher standard deduction, which makes it tougher to claim a tax break for charitable gifts. But retirees can still benefit from a QCD — even when claiming the standard deduction — because the withdrawal isn’t counted toward adjusted gross income.   
If you’re age 73 or older, QCDs can also cover your required minimum distributions, which otherwise would have boosted income, experts say.

After preparing tax projections, you should aim to make QCDs in higher-earning years to maximize the tax break, added Lovison, who is also a certified public accountant.

Prevent other tax issues

Reducing adjusted gross income also minimizes the chance of other tax issues, according to Marguerita Cheng, a CFP and CEO of Blue Ocean Global Wealth in Gaithersburg, Maryland. She is a member of CNBC’s Financial Advisor Council.
For example, more income can push retirees into a higher tax bracket, boost Medicare Part B and Part D premiums or increase taxes on Social Security benefits, she said.

QCDs can be ‘more cumbersome’ 

While QCDs may offer benefits, the strategy is “more cumbersome” for tax reporting and administration, explained CFP Kevin Brady, a vice president at New York-based Wealthspire Advisors.
Typically, QCDs aren’t separated on Form 1099-R, which reports retirement plan distributions to the IRS.
For example, if you withdraw $60,000 from an IRA and $30,000 is for a QCD, the form will still show $60,000 in distributions in Box 1 (with no special code for QCDs), even though only $30,000 is taxable income.

To avoid issues, you’ll want to keep records of QCDs and other IRA distributions and flag for your preparer at tax time.
Plus, each QCD must be authorized with a signature from the donor, which requires donors to plan further in advance, Brady said. Like other charitable donations, you must get a written acknowledgement of the gift from the organization before filing your tax return. More

Subaru, Volkswagen, General Motors, Mercedes-Benz, Toyota and Honda Motor are among the vehicle manufacturers that have issued recall notices with the National Highway Traffic Safety Administration in November.
Luckily, the cost of recall repairs is covered by the automaker, not the driver.
Long-distance travel plans may change depending on the recall’s severity, experts say.

Rear view of couple traveling through car.
Maskot | Maskot | Getty Images

A recall on your vehicle can derail your travel plans, depending on the issue at hand. 
It’s an issue plenty of drivers have to consider this fall. Subaru, Volkswagen, General Motors, Mercedes-Benz, Toyota and Honda Motor are among the vehicle manufacturers that have issued recall notices with the National Highway Traffic Safety Administration in November — collectively affecting more than 2.3 million vehicles.

Among those, Toyota recalled nearly 1.9 million RAV4s to fix a battery issue that could potentially cause a fire. Honda Motor issued a recall last week on nearly 250,000 Honda and Acura vehicles due to a manufacturing error that may cause engine damage.
Luckily, “recalls are covered repairs by the automaker at no cost to the consumer,” said Tom McParland, contributing writer for automotive website Jalopnik and operator of vehicle-buying service Automatch Consulting. If a driver’s vehicle was recalled, they should make an appointment at their local dealer for the repair.
More from Personal Finance:Turkeys are cheaper this year, yet food costs are high. Here’s how to saveHoliday shoppers are bracing for more financial strain this yearThese credit cards have had ‘increasingly notable’ high rates
Yet, as many Americans prepare to drive long distances to see family and loved ones for the holiday weekend, travel plans may need to change depending on the severity of a recall affecting your vehicle, experts say. 

Recalls occur ‘when there haven’t been any incidents’

Sometimes the government can compel automakers to recall their vehicles, but these notices usually occur after multiple people report the same problem or the automaker finds a flaw in the manufacturing process after an investigation, said Brian Moody, executive editor for Kelley Blue Book.

“It’s common for there to be a recall when there haven’t been any incidents yet,” said Moody.
Once the recall notice is issued, the manufacturer will send out mailed notifications to drivers, but those can arrive weeks or months later.
For example, the NHTSA notices say owner notification letters for Honda’s Nov. 2 steering control recall are expected to be mailed Dec. 18. For the Nov. 16 recall on damaged engines, drivers should expect to receive a notification on Jan. 2, 2024.
If you hear about a recall in the news, it can help to call the dealer or the automaker’s customer service line to determine if your car is affected, experts say.
“It’s not always that a recall applies equally to every single version of a model that you have. There may be limitations,” Moody said.

Travel plans ‘will depend on the nature of the recall’

As to whether or not travel plans should be altered, the decision will depend on the nature of the recall, said McParland.
“If the recall says possible transmission failure, that’s a lot more risky for long-distance travel versus a glitchy navigation system,” McParland said.
If you decide to rent a car instead of driving your own due to a recall notice, it’s unlikely to be reimbursed by the automaker.
“Usually rentals are not covered” as part of the recall repair, McParland said.

While some insurance policies may have a breakdown coverage and may provide rentals if the vehicle is in the shop for a major recall service, it is not the norm.
“It’s worth calling your carrier to ask,” added McParland.
It is more common for luxury automakers to provide their customers with loaner cars. Otherwise, it is up to the individual dealership or the manufacturer’s terms of sale, Moody said.
Here are three tips to help drivers navigate recalls:
1. Figure out if your car is affected
“There is a government database where folks can look up if their car is impacted by the recall,” McParland said. Drivers can put in their VIN into the NHTSA site. It will pull up all the recalls your car model has had, said Moody.
To see if the recall was already addressed, you can either check the government website or look through the manufacturer site, said Moody.
Drivers can also look into different online resources in addition to the government data, Moody said. Other website services can help you locate nearby repair shops and typical car issues your model may have.
If you receive a mailed notification from the manufacturer, follow the instructions and call your dealership as soon as you can.
2. Book an appointment ‘as soon as possible’
If your car is affected by a recall, “you want to make an appointment as soon as possible,” Moody said.
While the repair will be completed at no cost to the consumer, some dealers may have a backlog of appointments for a certain issue, said McParland. “An immediate repair may not be available,” he said.
3. Check if a mechanic is covered under the warranty
If you are facing a backlog of recall appointments at your local dealer and would opt to take the vehicle elsewhere for a faster service, ask the manufacturer first, said Moody. Contact customer service and explain your situation. The company may be able to cover the recall repair done by outside official channels, he said.
Otherwise, the rule of thumb for a recall is to take your vehicle to your local dealership of that automaker. There is a system in place where the manufacturer reimburses the local dealer and the service is free for the customer, Moody said.
Altogether, if you don’t know what the recall is for or don’t understand what the affected car part does, call your local dealer or manufacturer to ask, especially before you head out on a long trip.
“If you see something like ‘may lose control’, or ‘vehicle fire’ … maybe don’t drive until you find out for sure if the car is covered,” Moody said.Don’t miss these stories from CNBC PRO: More