Two distinct economies exist today. Surprised? The wealthiest 10% of Americans controlled 87% of all outstanding stocks in the first quarter.

This Week's Financial Insights: Exploring Dual Economies

During a family dinner, my husband and I discussed the pivotal factors influencing the upcoming election. Three of us believed the virus would dominate the discussions, while I felt the economy would also play a crucial role. As I enjoyed a delicious shrimp and cannellini bean dish, I worried I hadn’t articulated my point well enough. The next morning, however, I found validation in a piece by a Washington Post columnist.

This columnist described, much like Dickens, how the U.S. has two separate economies. One is comprised of mostly college-educated professionals who’ve managed to maintain their jobs throughout the pandemic, working remotely and seeing their 401(k)s recover nicely. I’m fortunate to be part of this group.

The other economy includes those who must work on-site in sectors like retail, hospitality, and entertainment; many of these businesses remain closed. These individuals relied on the enhanced $600 weekly unemployment benefits from the CARES Act, alongside eviction moratoriums and lender leniency—though unemployment claims recently hit 1.1 million. Currently, only about half of states are set to distribute the additional $300 in unemployment benefits authorized by an executive order, and funds may run out by early September if Congress doesn’t act.

And what about that booming stock market? The S&P 500 recently hit a new record, yet many in the struggling economy don’t benefit from it. A Forbes article highlighted the best way to build wealth through stock ownership, while the Wall Street Journal reported that stock ownership is increasingly concentrated among the wealthy. The top 10% owned 87% of all stocks in Q1, according to Federal Reserve data. That's alarming.

Beware of Scams: A Cautionary Note!

This week brought news of a new scam involving callers pretending to be contact tracers. Contact tracing aims to track COVID-19 exposure, and legitimate state health departments are hiring tracers. However, an influx of fake tracers is now asking for sensitive personal information. Real contact tracers won’t request credit card numbers or Social Security details. If they do, hang up. They also won’t disclose names of individuals who tested positive. Be wary of texts with links inviting you to click; these could install harmful software on your device, as warned by Julie Appleby from Kaiser Health News.

To verify a contact tracer's legitimacy, ask for their name, title, employer, and phone number, and let them know you'll return the call. This can often deter scammers.

When Is a Withdrawal Not Just a Withdrawal?

When it comes from your 401(k). According to an expert, “In BC (Before Covid) times, early withdrawals from retirement accounts were strongly discouraged.” However, the CARES Act has altered this guidance, allowing for what can feel like a three-year interest-free loan from your 401(k). While this may seem appealing, remember that withdrawing funds means they’re not growing. The CARES Act passed on March 27, and the S&P 500 gained 32% since then. Missing out on this growth would be costly.

If cash flow is tight, consider this option, but ensure that your employer adheres to the CARES Act provisions, and have a repayment plan ready. Unlike a standard loan, there’s no mandatory repayment schedule for withdrawals.

Concierge Medicine: A Growing Trend

Have you noticed the rise of concierge medicine lately? This model allows patients to pay a flat fee for access to medical services, often resulting in a smaller patient load for doctors. This means patients might receive their doctor's personal contact information and even have house calls available. While costs can range from $50 monthly to $25,000 annually, this method has gained traction during the pandemic, as patients value direct access to their physicians without waiting rooms.

Period. Full Stop.

When I discovered that my typing habits—such as double spacing after periods—mark me as non-millennial, I was surprised. I learned that using periods in texts can seem impolite, and the same applies to some emails. This might explain the increased use of exclamation points in communication today. Now I’m feeling self-conscious about my punctuation as I write.