Whither 2013? Here Are Four Financial Ideas for the Year Ahead

Nobody knows for sure what will happen in the financial markets in 2013. But that doesn't mean you should sit on your hands. Here are four financial ideas for the year ahead:

• Get tax smart. With federal taxes currently scheduled to rise in 2013, there's an even bigger incentive to pay close attention to taxes. Some good news: The annual contribution limit for an Individual Retirement Account climbs to $5,500 in 2013 from 2012's $5,000, while the 401(k) plan limit will be $17,500, up from 2012's $17,000. That means you may be able to shelter even more retirement money from taxes.


• No rate relief in sight. The Federal Reserve has said it will likely keep short-term interest rates low through at least mid-2015. The upshot: Payouts on savings accounts and certificates of deposit could be modest for another two years or more, so you may want to explore higher-yielding alternatives that may offer better returns, but are typically more volatile.


• Two cheers for home buyers. Looking to buy a home in 2013? You have two things going for you. First, 30-year fixed-rate mortgages are available at less than 4%. Second, some reports show that home prices remain around 30% below their mid-2006 peak. To be sure, that doesn't mean real-estate prices couldn't fall further. But at least you can take comfort in knowing that houses are significantly cheaper than they were.


• Rig up a strong safety net. According to the Labor Department, November's unemployment rate was 7.7%, the lowest level in four years. Despite the improving job market, layoffs remain a constant threat, so you should make sure your finances are prepared. To that end, consider building up your emergency fund, holding down your fixed monthly expenses and setting up credit lines, so you'll have easy access to borrowed money if you find yourself in a cash crunch.

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