Auremar/Shutterstock
In 2001, the government gave self-employed workers a gift: a 401(k) plan that allows for greater amounts of tax-deferred income with less hassle to set up than any other retirement plan. The new plan, mostly called a Solo 401(k) or a Solo-k, beats traditional corporate 401(k)s in higher savings limits and in the ability to invest in a variety of options.
You are an excellent candidate for a Solo-k if:
You are self-employed or a solo-business owner and have no full-time employees (except for your spouse).
You have enough profit/earnings to save up to $52,000 (younger than 50) or $57,500 (50 and older) and still pay your mortgage, eat and pay taxes. Your spouse can save the same amounts depending on her earnings.
You need to boost your retirement savings because you are behind.
You wish to pay less taxes.
You like the tax-free benefits of a Roth Individual Retirement Account, but haven't been able to open one due to income limitations.
You want the option to take out a loan if necessary.
You income is inconsistent, and you want flexibility in the amount you save each year.
You don't like lots of paperwork and complicated requirements.
This Is How It Works
Open your Solo-k (or direct your financial adviser to open it for you) at a plan sponsor, including TD Ameritrade (AMTD), Charles Schwab (SCHW), T. Rowe Price (TROW), Fidelity or many other financial institutions. In addition to the application, you will sign an adoption agreement. The deadline for establishing a Solo-k is Dec. 31 of the year in which you like to receive the tax deduction, or for corporations, at fiscal year-end. There is no extra paperwork or annual reporting requirement until the account balance reaches $250,000, and then it is minimal.
Each year, decide how much to contribute to your plan and whether you want to make a pre-tax or after-tax contribution. Acting as an employee, you can defer up to $17,500, plus $5,500 if you are 50 or older. As the employer, you can make a profit-sharing contribution up to 25 percent of your W-2 earnings or 20 percent of your net self-employment income. Total possible contribution in 2014: $52,000, plus $5,500 in catch-up. If your spouse works in the business, these limits apply as well for a total contribution of $104,000/$115,000.
As with anything related for the Internal Revenue Service, deadlines aren't negotiable. They are slightly different depending upon whether your business is incorporated (C, S, Partnership) or not (Sole P, LLC). For corporations, the deadline to make employee salary deferrals is 15 days after the close of the fiscal year, and for the unincorporated, the deadline is April 15 plus extensions. For the profit-sharing amount, the deadline is the same for both: tax filing deadline, plus extensions.
Invest the funds. You can do this yourself or work with a financial adviser. Depending on the plan sponsor (your 401(k) custodian), you can invest in a wide array of mutual funds, exchange-traded funds, stocks and even alternative investments.
Solo 401(k) or SEP IRA
Many self-employed business owners have a SEP IRA. This isn't a bad choice, but once your business takes off, you can sock so much more away in a Solo-k. For example, a sole proprietor under the age of 50 making $150,000 in net pre-tax business profit can save $45,467.00 to a Solo 401(k), while the same person could contribute $28,147.48 to a SEP IRA. This equates to thousands of dollars in tax savings.
Other interesting things to know about the Solo-k. Contribution limits are per person, not per plan. If you are a corporate employee with a 401(k) plan and have your own business on the side, you can contribute to both as long as you don't exceed the annual limits.
You can borrow against your Solo 401(k) limited to $50,000 or half of your account balance, whichever is smaller. Caveat: some plans do not have a loan feature; be sure and check if this is important to you.
Designated Roth Accounts in a Solo-k have unique features. The Roth contribution limits don't apply to designated Roth accounts in a Solo-k, making it possible for high-income earners to take advantage of the Roth's long-term tax-free benefits.
Roth 401(k)'s are subject to required minimum distributions at age 70½. However, you can avoid those distributions by rolling the Roth Solo-k into a Roth IRA at retirement.
Not all Solo-k plans allow a Roth feature, so be sure and check with the plan sponsor if this option is important to you.
One last note: if your business is growing and you plan to hire full-time employees down the road, it makes more sense to set up a traditional 401(k) plan. But if you are committed to staying Solo, the Solo-K is for you.
Pension plans have been in bad shape for a long time. Even as many private companies froze or eliminated pension plans, public pensions represent a big threat to the workers and retirees who depend on them, and one recent study from Bridgewater Associates found that 85% of public pensions could fail within the next 30 years.
In the following video, Dan Caplinger, The Motley Fool's director of investment planning, runs through Bridgewater's analysis, noting its estimate that public pensions have $3 trillion in assets to cover $10 trillion in eventual liability. The study notes the huge gap between the returns you'd have to earn to bridge that gap and realistic assumptions about future returns, and Dan points out that while some think Bridgewater's estimates are too low, most pension plans themselves don't expect to earn high enough returns to cover future liabilities. Dan concludes that some combination of better investments and possible benefit reductions could be necessary to ensure the health of public pensions in the long run.
How to get even more income during retirement Pensions play a key role in your financial security, but they're not the only way to boost your retirement income. In our brand-new free report, our retirement experts give their insight on a simple strategy to take advantage of a little-known IRS rule that can help ensure a more comfortable retirement for you and your family. Click here to get your copy today.
Have general questions about pensions or Social Security? Email them to SocialSecurity@fool.com, and they might be the subject of a future video!
April 15 has come and gone, and most Americans have either filed their federal tax returns or gotten an extension. If you did neither, the consequences can be disastrous. But for some, there will be absolutely no downside to missing the April 15 deadline.
In the following video, Dan Caplinger, The Motley Fool's director of investment planning, explains why some people who ignore the April 15 tax filing deadline escape without paying anything extra. Dan notes that those who don't file generally owe interest and penalties on the amount of tax they owe. But he points out that if you're due a refund, then the way the IRS calculates interest and penalties leads to a $0 amount. Dan concludes that although you'll still want to file your return sooner than later in order to receive your refund faster, many people in that situation don't have the same pressure to file on time that those who actually owe additional tax face.
Take advantage of this little-known tax "loophole" Recent tax increases have affected nearly every American taxpayer. But with the right planning, you can take steps to take control of your taxes and potentially even lower your tax bill. In our brand-new special report "The IRS Is Daring You to Make This Investment Now!," you'll learn about the simple strategy to take advantage of a little-known IRS rule. Don't miss out on advice that could help you cut taxes for decades to come. Click here to learn more.
Want your favorite burrito, bowl, or taco from Chipotle ? Starting in a few weeks it will cost you a little more.
The popular Mexican chain told the Associated Press it plans to raise price for the first time in three years. Menu boards featuring the new prices will start to show up in the chain's restaurants next week with the rollout completing by the summer.
Chipotle executives have said in the past they were considering a hike of about 3% to 5%, USA Today reported. That works out to an extra $0.24 to $0.50 for an $8 burrito bowl.
Jack Hartung, Chipotle's chief financial officer, said during a conference call with analysts that price is not the main reason customers visit its restaurants anyway.
"Most of the value comes from the experience," he said.
That might be true, but raising prices also could remind customers that there is a Yum Brands Taco Bell somewhere nearby that may not be as good but is certainly cheaper.
Chipotle is really popular
Part of the reason Chipotle can justify a price increase is that the chain has been doing blockbuster business. In the first quarter of 2014 Chipotle reported that revenue increased 24.4% to $904.2 million and comparable restaurant sales increased 13.4%. That's impressive in a competitive climate that saw fast food leader McDonald's report a .3% global sales decrease in February including a 1.4% drop in the U.S. Yum Brands (which owns Taco Bell, Pizza Hut, and KFC) has yet to release 2014 numbers, but the company reported a 2% increase in global sales in 2013.
Chipotle's food costs are rising
Remember "Guacapocalypse" back in March when the media (and some Chipotle customers) were up in arms over this throwaway line in Chipotle's annual report?
"In the event of cost increases with respect to one or more of our raw ingredients, we may choose to temporarily suspend serving menu items, such as guacamole or one or more of our salsas, rather than paying the increased cost for the ingredients."
The company was quick to release statements assuring fans of the avocado-based treat that Chipotle was merely covering all hypothetical situations as the SEC requires in annual reports.
Company spokesperson Chris Arnold, in calming the masses of panicked guac lovers, did explain that rising costs were a factor.
"Weather-related price volatility is just part of doing business when a company relies on fresh ingredients," he told NPR.
Higher prices are likely part of the reason for the increased prices as restaurant profit margins fell in the first quarter of 2014 largely due to increasing food costs.
"Food costs were 34.5% of revenue, an increase of 150 basis points driven by higher commodity costs. Higher commodity costs were primarily driven by inflationary pressures in beef, avocados, and cheese prices," the company said in its Q1 2014 financial release.
If a company has to pay more for its basic ingredients it's pretty rare it doesn't pass at least some of that cost onto customers.
Prices rise in general
Delish.com looked at price increases on common menu items across a number of fast food chains from 2002 to 2013. The general trend was for prices to rise -- the Taco Bell bean burrito, which cost $0.69 in 2002 and $1.19 in 2013 -- a 72% increase -- is a pretty typical example. While Chipotle is considered more of a fast casual restaurant than fast food, it's certainly competing for customers with fast food chains.
In general fast food pricing trends are much harder to decipher than Chipotle's straightforward prices. McDonald's and other chains run regular pricing deals, rotate items on and off their value menus, and use other tricks that make it hard to know when prices go up. Still the same Delish article shows that the average price of a Big Mac increased from $2.39 in 2002 to $4.19 in 2013 -- a 75% increase. (Prices vary market by market so these numbers are just an example of the overall trend).
Chipotle has not only been remarkably reasonable to is customers in not inching prices up every year, it also offers a very simple menu that does not rely on gimmicks or specials.
Customers love Chipotle
Chipotle has a strong relationship with its customers partially due to its efforts to be a good corporate citizen and partially because the chain serves high-quality food at a reasonable price. The closest comparison for how regular customers feel about the brand might be Starbucks , which has a similar socially conscious message and devoted customers that buy into the idea that the chain is about more than maximizing profits.
Starbucks has increased prices on numerous occasions and while there are grumbles, business has not suffered. Chipotle is not likely to lose audience over a small price hike when it has held the line for so long. In fact the only reason people will notice is because the chain had not had an increase in three years.
Of course there will be a few people who considered Chipotle an indulgence over cheaper fast food options that can't bear the increase, but the number will be very small. It's hard to begrudge a chain a tiny price increase after three years when food costs have clearly risen and high standards have been maintained.
Are you ready to profit from this $14.4 trillion revolution? Let's face it, every investor wants to get in on revolutionary ideas before they hit it big. Like buying PC-maker Dell in the late 1980s, before the consumer computing boom. Or purchasing stock in e-commerce pioneer Amazon.com in the late 1990s, when it was nothing more than an upstart online bookstore. The problem is, most investors don't understand the key to investing in hyper-growth markets. The real trick is to find a small-cap "pure-play" and then watch as it grows in EXPLOSIVE lockstep with its industry. Our expert team of equity analysts has identified one stock that's poised to produce rocket-ship returns with the next $14.4 TRILLION industry. Click here to get the full story in this eye-opening report.
Daniel Kline has no position in any stocks mentioned. He eats at Chipotle often but wishes they would melt the cheese. The Motley Fool recommends Chipotle Mexican Grill, McDonald's, and Starbucks. The Motley Fool owns shares of Chipotle Mexican Grill, McDonald's, and Starbucks. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
How much is Goldcorp willing to pay for peace of mind?
That seems to be the real deciding factor in whether the gold miner will up its offer for Osisko Mining after its recently raised offer was trumped once again by Yamana Gold , which stripped out much of the complexity of its original white knight bid by adding in a partner, Agnico Eagle .
Osisko's Canadian Malartic mine is largely seen as a quality mine in and of itself, estimated to have 10.1 million ounces of gold reserves that could produce as much as 500,000 to 600,000 ounces of gold annually over its 16-year life, with all-in sustaining costs estimated to be between $1,000 and $1,100 per ounce. Of equal importance, though, is its location in the politically stable, mining-friendly region of northern Quebec. That alone ought to put a premium on the price an acquirer is willing to pay.
Source: Goldcorp
Although much of Goldcorp's principal properties are spread throughout North America, its greatest concentration is in Mexico, where 40% of its proven and probable reserves are located, with another 21% in Canada. However, more than half of the gold it produced in 2013 came from Mexico, while 26% was out of Canada -- although its Eleonore project in James Bay, Canada is on target for its first production later this year.
Source: Goldcorp SEC filings. Excludes the Marigold project in Nevada in which it owned a 66.7% interest, as that was just sold to Silver Standard Resources on Feb. 3.
Perhaps more stable politically than either Argentina or Chile, where Goldcorp's environmental permit for its El Morro project was suspended, Mexico has adopted policies recently that make it the highest cost country in which the company operates. The government passed a 7.5% tax on profits from resources plus an additional 0.5% on precious-metals miners, a levy that raises Goldcorp's effective tax rate to more than 40%. It might not pull out of Mexico as a result, but expansion there becomes untenable and is why it needs projects like Canadian Malartic to expand its operations.
It also suggests that the miner may be willing to go to the well one more time at least to see if it can entice investors to choose its deal over the one made by Yamana and Agnico. The markets, though, probably won't like it, as Yamana's stock fell 4% yesterday and Agnico's was down 9% on the belief they're paying too rich a premium for the asset. Goldcorp's stock, on the other hand, edged higher, perhaps in relief as it may now wriggle out from having to overpay.
Even though the gold miner has previously stated it would do no such thing, having started the ball rolling and angered its adversary in the process, Goldcorp may have no choice but to see this through to the end.
Someone who never overpays for a stock As every savvy investor knows, Warren Buffett didn't make billions by betting on half-baked stocks. He isolated his best few ideas, bet big, and rode them to riches, hardly ever selling. You deserve the same. That's why our CEO, legendary investor Tom Gardner, has permitted us to reveal The Motley Fool's 3 Stocks to Own Forever. These picks are free today! Just click here now to uncover the three companies we love.
Rich Duprey has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Master limited partnerships are a popular way for investors to earn income. But a recent Bloomberg report suggests that many MLPs pay high management fees that reduce your investment income.
In the following video, Dan Caplinger, The Motley Fool's director of investment planning, looks more closely at the issue of MLPs and management fees. Dan notes that MLPs are popular because of the income that they pay to investors, with tax provisions that require extensive distributions of income and cash flow. But Dan also points out that many MLPs have relationships with outside management companies, such as Kinder Morgan Energy Partners and its management company, Kinder Morgan . Dan emphasizes how important it is to understand the relationship between the MLP and its management company to ensure no conflicts of interest, suggesting MLPs like Enterprise Products Partners that took their management in-house could make things simpler to evaluate. Dan concludes that your income relies on paying as little in fees as possible, making it important for you to know where your money is going.
3 stock picks to ride America's energy bonanza Record oil and natural gas production is revolutionizing the United States' energy position. Finding the right plays while historic amounts of capital expenditures are flooding the industry will pad your investment nest egg. For this reason, the Motley Fool is offering a look at three energy companies using a small IRS "loophole" to help line investor pockets. Learn this strategy, and the energy companies taking advantage, in our special report "The IRS Is Daring You To Make This Energy Investment." Don't miss out on this timely opportunity; click here to access your report -- it's absolutely free.
Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends Enterprise Products Partners L.P. and Kinder Morgan. The Motley Fool owns shares of Kinder Morgan. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Attention, online shoppers! You can get free shipping on your purchases even if the site doesn't offer it. Yes, it's true.
All you have to do is haggle. Customer service agents often have access to internal promotion codes that you can't find anywhere else, and they're willing to give them out to make a sale.
Simply contact the merchant's customer service center and ask for free shipping on your order. If that doesn't work, wait it out, literally. Let your order linger in your online cart and see what happens.
Retailers know that shoppers sometimes need a little push to complete a transaction, so they tend to send out special offers for free shipping to get you to click that checkout button.
So, the next time you want to buy something online, take advantage of these simple tips. You may never have to pay for shipping again.
The offshore oil and gas drilling market is, according to many analysts, heading into a two year slowdown.
With this forecast the outlook for many drillers has been downgraded by Wall Street analysts as they prepare for the worst. Even Rowan Companies (NYSE: RDC), previously one of Wall Street's favorite drillers,has not escaped the negative coverage.
Falling out of favor At the end of February, Maersk Drilling,a unit of Danish shipping conglomerate A.P. Moller-Maersk and one of the offshore drilling industry's heavyweights, became the latest offshore driller to issue a dismal forecast for the sector.
Maersk Drilling CEO Claus Hemmingsen told news agency Reuters that the current slowdown in the offshore industry will last 12 to 18 months, and the market for rigs will rebound in 2015.
In a telephone interview Claus stated, "I would rather call it a short-term softness than anything dramatic...We see postponements, not cancellations."
This opinion differs slight from the outlooks of the industry's other giants, Transocean (NYSE: RIG)and Seadrill (NYSE: SDRL).
In particular, Transocean, which owns the world's biggest drilling fleet, believes that it will take 18 to 24 months for the industry to recover. Meanwhile, Seadrill, the world's biggest offshore driller by market capitalization has warned that the slowdown could also last for two years.
Still, one thing that remains certain is the fact that a slowdown is coming.
Slammed by downgrades With a industry slowdown almost a certainty, Wall Street analysts have turned negative on offshore drillers.
Since the beginning of the year Transocean's 2014 EPS estimates have been downgraded 15.3% to $4.81 from $5.68. In addition, Seadrill has seen earnings estimates downgraded 7% for 2014, from $3.58 per share to $3.33.
Unfortunately, Rowan has been hit the hardest, with earnings estimates for this year being revised down by a shocking 24%.
However, looking through Rowan's fleet status reports issued during the last few months or so, it would appear that, as of yet, the company is not feeling, or reporting any kind of slowdown at all.
Indeed, Rowan has issued three fleet status reports so far this year, and the notable events relating to rigs coming on/off contract have been as follows:
EXL IV: Awarded a one-year extension with Carigali Hess in Malaysia commencing in late December 2014 at $159,500 per day, above the previous day rate of $151,000.
Joe Douglas: Awarded a one-well contract estimated at 75 days with LLOG in the Gulf of Mexico at $160,000 per day, in line with the previous day rate, commencing late February 2014.
J.P. Bussell: Awarded an estimated 209 day contract with Petrofac in Malaysia at $143,000 per day, above the prior day rate at $140,000, which commenced at the beginning of March 2014 .
These are all of Rowan's rig movements that have taken place during the past three months, and to me it seems that things are still ticking along nicely for the company.
Analysts have other ideas It would appear that so far rates in the jackup market have held up well, although analysts believe that in the near term jackup rates are likely to come under significant pressure. According to Morgan Stanley's Ole Slorer and Jacob Ng:
Jackup dayrates have held up vs. what has unfolded in the floater market. We nevertheless highlight a surge in jackup orders, driven largely by speculative drillers at Chinese shipyards The jackup orderbook now stands at a record 140 units, of which only ~20 have been contracted...
It remains to be seen if this forecast will come true, but so far Rowan doesn't seem to be feeling any effects of a slowdown.
Better positioned Nevertheless, Rowan has four new UDW high-spec jack-up drillships currently under construction in South Korea, and when these units are put to use, the company will report a huge jump in earnings.
These units are set for delivery between now and 2015, and three out of four units are already contracted out for multi-year periods, with day rates in excess of $600,000.
Now, a day rate of $600,000 is a game-changer for Rowan. Currently, as reported at the end of the fiscal third quarter, the company's average day rate was $169,200, less than one-third of the rate that the new units will provide.
With four new drillships in the company's fleet, each demanding day rates upwards of $600,000, Rowan's top and bottom lines are likely to rapidly expand as the new units come online. What's more, with contracts already signed for these units, Rowan is likely to miss much of the downturn in the industry
Overall, when Rowan's four new units come online, they will add $2.4 million per day to Rowan's revenue, approximately $876 million per year assuming 100% utilization. Rowan's revenue was just under $1.4 billion during 2012, so we can see how much of an effect this will have on earnings.
Foolish summary Overall then, it would seem as if the whole offshore drilling industry is gearing up for a slowdown and decline in dayrates over the next few years.
However, as of yet Rowan's day rates have not come under pressure, and the company is well placed for growth during the next year or two.
You can still profit from the offshore drilling market Imagine a company that rents a very specific and valuable piece of machinery for $41,000... per hour (that's almost as much as the average American makes in a year!). And Warren Buffett is so confident in this company's can't-live-without-it business model, he just loaded up on 8.8 million shares. An exclusive, brand-new Motley Fool report reveals the company we're calling OPEC's Worst Nightmare. Just click HERE to uncover the name of this industry-leading stock... and join Buffett in his quest for a veritable LANDSLIDE of profits!
Rupert Hargreaves owns shares of Rowan Companies. The Motley Fool recommends Seadrill. The Motley Fool owns shares of Seadrill and Transocean. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
The restaurant industry says higher same-store sales in March are lifting it out of winter's deep freeze, but McDonald's may not similarly enjoy the spring thaw. In fact, I'd question whether the fast-food industry as a whole will find the balmier temperatures enough to change its outlook.
Black Box Intelligence and People Report said restaurant comps rose 0.7% in March, up 1.4 percentage points from February's 0.7% decline, but that's less than half the rate other surveys found -- the MillerPulse report found sales 1.8% higher last month. Still, since they're both reporting things are trending higher now, that's good, right?
Not so fast. The weather shouldered a lot of blame for the poor showing restaurants recorded this past winter, but both surveys also show that store traffic is still falling. That means it's likely higher average check values, which themselves are up as a result of higher prices, that are driving the growth. Restaurants aren't pulling in customers.
McDonald's has recorded months of steep declines despite making rebuilding foot traffic a priority. It admits both guest counts and pricing have a greater impact on the average check size than any mix of products it may sell in driving comps at its restaurants. If industry peers continue having problems attracting customers, then McDonald's is sure to have another disappointing month.
Source: McDonald's SEC filings.
According to Janney Capital Markets, however, a survey of the restaurant operator's franchisees show they're hopeful that March comps -- and April's, too! -- will be positive, a welcome trend from the four-straight months of falling comps they've endured thus far (80% of McDonald's restaurants worldwide are franchised).
On the whole, they're looking for a 0.6% rise in March; it's not evenly distributed, as stores on the East Coast forecast a 1.3% increase while those in the West see flat sales and the central division is looking for sales to creep just 0.4% higher. A 1.5% increase is expected for April, but that could be a lot of wishful thinking.
Nation's Restaurant News said franchisees aren't happy with the free coffee promotion McDonald's started as a means of fending off encroachment by rival chains on its breakfast daypart. The Janney survey found it was a failed effort that didn't drive sales, similar to the $5 20-piece chicken nugget campaign during the Olympics that also did not lift sales.
There may be a thaw coming for restaurants that caught the winter blues, but investors ought to be prepared for McDonald's failure to bloom with the rest.
3 stocks to own for the rest of your life As every savvy investor knows, Warren Buffett didn't make billions by betting on half-baked stocks. He isolated his best few ideas, bet big, and rode them to riches, hardly ever selling. You deserve the same. That's why our CEO, legendary investor Tom Gardner, has permitted us to reveal The Motley Fool's 3 Stocks to Own Forever. These picks are free today! Just click here now to uncover the three companies we love.
Rich Duprey has no position in any stocks mentioned. The Motley Fool recommends and owns shares of McDonald's. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
The current year has not been a kind one for investors in 3-D printing companies. In fact, shares of the two largest players in the field, 3D Systems and Stratasys , were down 50% and 30%, respectively, by the start of this week.
Does that mean you should go out and buy these stocks? Maybe, but it depends on how you're trying to build your portfolio. Motley Fool contributor Brian Stoffel, for instance, is busy building out a basket of 3-D printing stocks for his portfolio, but won't be buying shares of either of these industry leaders.
He already owns shares of both 3D Systems and Stratasys, but watch the video below to see why he's looking elsewhere right now, and find out what 3-D printing company he just put his own money behind.
A secret play to benefit from 3-D printing? By now, you've probably heard a little something about how the world could change because of a single, revolutionary technology: 3-D printing. There are lots of companies going public on the hype of 3-D printing, but not all will be winners. To see the three companies that are currently positioned to do so, simply download our invaluable free report.
Two of the companies are already mentioned in this piece, but many investors have never heard of the third. You can find out what it is by clicking here now.
Brian Stoffel owns shares of 3D Systems, Organovo, ExOne, and Stratasys. The Motley Fool recommends 3D Systems, ExOne, and Stratasys. The Motley Fool owns shares of 3D Systems, ExOne, and Stratasys. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Timothy A. Clary/AFP/Getty ImagesA Bernie Madoff Halloween mask.
Putting together any type of Top 10 list is a dicey business. Once you get past the usual subjects, the criteria for the rest of the candidates is a matter of personal opinion. So for my list of the Top 10 Financial Scandals of all time I'm taking the approach of a blockbuster Hollywood movie and throwing in everything.
Want massive financial losses? We have those, but there are also political double-dealings, public spectacles, massive pyramid schemes, celebrity downfalls, rogue traders and a sprinkling of Nazis.
1. The Scandal: The Panic of 1792
The players: Alexander Hamilton, William Duer, George Washington.
The story: In 1791, George Washington signed a charter creating the Bank of the United States, a precursor to the Federal Reserve. During its initial public offering, investors aggressively bought up shares of the bank, causing them to soar in value.
William Duer, a speculator and signer of the Article of Confederation, attempted to corner the market by buying all available shares with borrowed funds. Using them as collateral, he then attempted to start a rival bank but overextended himself, forcing the liquidation of his holdings and sending share prices plummeting. Duer lost everything and was thrown into debtors' prison, where he died seven years later.
The credentials: Considered the first crash ever in the United States, it prompted securities dealers to enter into the Buttonwood Agreement, named for the location where it was signed at 68 Wall St. This created the first exchange for buying and selling securities, what we now call the stock market.
Fun fact: Treasury Secretary Alexander Hamilton's quick action contained the financial damage. A friend of Duer, he tried to intervene on his behalf but couldn't keep him out of prison.
2. The Scandal: The Ponzi Scheme
The players: Charles Ponzi.
The story: In 1918, Charles Ponzi came up with an idea to buy and sell international reply coupons, which due to high inflation, could be purchased cheaply in his home country of Italy and sold for a profit in the U.S.
With promises of 400 percent returns, he formed an "investment company" to expand his still-legitimate scheme. The public dumped millions of dollars into his company but soon the coupons were ignore. Instead, early investors were paid off with money from new investors until authorities uncovered the fraud, shut it down and sent Ponzi to prison.
The credentials: Though not the first scheme of its kind, it was the most well-known and by far the largest of its time - losing investors the equivalent of $200 million. So much so that the name "Ponzi" is now forever inexorably linked with financial fraud.
Fun fact: While out on bail, Ponzi shaved his head, grew a mustache and tried to flee the U.S. on a merchant ship bound for Italy.
3. The Scandal: Teapot Dome
The players: Warren Harding, Albert B. Fall.
The story: In 1921, President Harding issued an executive order transferring control of the Teapot Dome, Wyoming, oil fields from the U.S. Navy to the Department of the Interior. Interior Secretary Fall then awarded drilling rights to private oil companies, without competitive bidding. That was technically legal. However, accepting money to award those rights was illegal.
Fall personally profited to the tune of $7 million in today's money, but when he couldn't explain his new-found wealth to a Senate committee, he was investigated, charged with bribery and sent to prison.
The credentials: Until Watergate, Teapot Dome was considered the greatest and most sensational scandal in the history of American politics, effectively rendering the Harding presidency irrelevant.
Fun fact: Fall has the dubious distinction of being the first former Cabinet member to be sentenced to prison.
4. The Scandal:Hitler Defaults
The players: Adolf Hitler, Franklin D. Roosevelt, Wall Street bankers.
The story: In 1919, the Versailles Treaty that ended World War I obligated Germany to pay reparations, which it did by issuing bonds. By the time Hitler came to power in 1933, most of those bonds ended up on Wall Street and servicing them was crushing the German economy.
Seeking to free up funds to build his war machine, Hitler sent his top banker, Hjalmar Schacht, to the White House to discuss refinancing the bonds. President Roosevelt listened intently, then asked, "Who owns the bonds?" "Mostly Republican bankers," replied Schacht. Slapping his knee, Roosevelt responded, "Well, serves them right." Three weeks later, Hitler repudiated all foreign debt, and the bonds, which totaled $600 billion in today's dollars, became worthless.
The credentials: Even without the political partisanship, global intrigue and Nazi connection, the sheer size of this default alone puts this on the list.
Fun fact: In 1953, West Germany agreed to service the debt obligation of these bonds, making the final interest payment in 2010, 92 years after they were issued.
5. The Scandal:Albanian Pyramid
The players: Albanian government, banking system, most Albanians.
The story: In the early 1990s Albania emerged from 40 years of Communist rule, which unfortunately left its citizens extremely naive about investment fraud. As the new private sector started to emerge, so-called "fund companies" began soliciting the public to invest, promising up to 30 percent return a month.
At the scheme's height, Albanians sold their houses, personal possessions and even their livestock in order to invest in these funds, which held little or no assets. Like all pyramid schemes, it eventually fell apart under its own weight, but not before conning more than two-thirds of the population to the tune of $1.5 billion.
The credentials: Financial scandals happen all the time, but finding one that directly effects practically the entire population of country is unprecedented. It is the largest pyramid scheme in history in terms of the number of victims involved.
Fun fact: The five largest investment funds companies were named Gjallica, VEFA, Cenaj, Kamberi and Sude.
6. The Scandal:Barings Bank Collapse
The players: Nick Leeson.
The story: In 1995, Leeson, the head derivatives trader for Barings' Singapore operation, began to conceal his losing trades in a secret account. He was able to do this because he was also in charge of auditing and reporting all trading activity.
As his losses piled up, Leeson took on riskier trades, unknown to his superiors in London, in an attempt to make back the money. But things went from bad to worse as he ultimately lost more than $1.3 billion, twice Barings' total available capital, causing the bank to collapse and sending Leeson to jail.
The credentials: Never before, or since, had a single person been able to destroy a major financial institution like Barings, which had been in business for 238 years and counted the Queen of England as a client at the time of its demise.
Fun fact: In 2007, the trading jacket that Leeson wore was sold on eBay (EBAY) for $35,000 -- all of which went towards paying Barings' creditors.
7. The Scandal: ImClone Systems Insider Trading
The players: Martha Stewart.
The story: On Dec. 28, 2001, ImClone Systems stock dropped dramatically after the U.S. Food and Drug Administration announced that its drug Erbitux didn't receive regulatory approval. Numerous ImClone executives, including the founder, were eventually found guilty of insider trading, selling their shares before the announcement was public.
But then it was revealed that Martha Stewart had sold her shares one day before the announcement after receiving a "tip" from her broker. Stewart tried to conceal that fact from investigators which eventually led to her conviction on conspiracy, obstruction and making false statements to federal investigators.
The credentials: Arguably the first celebrity financial scandal of the 24/7 media age, Stewart was the talk of the nation for weeks, which probably didn't make her list of "good things." As she famously said on CBS's morning show that summer: "I just want to focus on my salad."
Fun fact: While incarcerated at the Alderson, Va., Federal Prison Camp, Stewart received more than 15,000 pieces of fan mail.
8. The Scandal:Enron Bankruptcy
The players: Ken Lay, Jeffrey Skilling, Andrew Fastow.
The story: Named "America's Most Innovative Company" six years in a row by Fortune magazine, Enron was a major energy player with revenues of $101 billion in 2000. In reality, much of that revenue was due to "planned accounting fraud," which created "limited liability special purpose entities" in which the company hid its liabilities.
After a whistle-blower revealed Enron's deception to authorities, the stock dropped from a high of $90 to just a few pennies. Authorities struck a plea-deal with CFO Andrew Fastow to testify against CEO Jeffrey Skilling and founder Ken Lay, both of whom were convicted of securities and wire fraud and sentenced to prison.
The credentials: Enron's bankruptcy was the largest in U.S. history at the time, but more importantly, was the most egregious example of planned accounting fraud ever seen. So much so that it was a major factor in the creation of the Sarbanes-Oxley act of 2002 and the cause of "Big Five" accounting firm Arthur Anderson to go out of business.
Fun fact: Recipients of the Enron Prize for Distinguished Service -- a $10,000 honorarium, $15,000 sculpture and a crystal trophy --included Colin Powell, Mikhail Gorbachev, Nelson Mandela and Alan Greenspan.
9. The Scandal:Lehman Brothers Collapse
The players: Dick Fuld, Timothy Geithner, Hank Paulson.
The story: Lehman Brothers was a major buyer of sub-prime loans - aka toxic debt -- during the housing boom of the mid-2000s. Using an accounting trick, it "sold" much of this debt to Cayman Island entities -- agreeing to buy it back at a later date - in order to make its balance sheet look stronger than it was.
When housing values began to drop in 2007, Lehman was forced to disclose its losses, which rendered the company fiscally unsound. Treasury Secretary Hank Paulson and New York Federal Reserve President Tim Geithner arraigned a meeting with Lehman' Chairman Dick Fuld and the CEOs of other major banks in order to find a buyer for the company. When none could be found, the 158-year old company filed for bankruptcy.
The credentials: Lehman's bankruptcy - at $691 billion, the largest in U.S. history - is widely considered the cause of the 2008 financial crisis.
Fun fact: Lehman was such a global powerhouse that its collapse even effected the economy of countries like Iceland, Latvia and Pakistan.
The story: Madoff claimed to use a strategy of buying blue chips stocks and then hedging them with options, the "proprietary" nature of which allowed him to deliver investors consistently larger returns than the S&P 500 (^GPSC) . In reality, Madoff was just running an elaborate Ponzi scheme that falsified its numbers and relied on a continuing stream of new investor money to stay afloat.
When the market began to weaken due to the 2008 financial crisis, investors requested $7 billion in withdrawals. Madoff confessed to his sons that his firm was "one big lie," and they turned him in. Madoff pleaded guilty to 11 federal crimes: securities fraud, investment adviser fraud, mail fraud, wire fraud, three counts of money laundering, false statements, perjury, making false filings with the SEC and theft from an employee benefit plan. He received a sentence of 150 years in prison.
The credentials: Prosecutors allege the fraud -- easily the largest Ponzi scheme in history -- to be $64.8 billion. It may also be the longest-running Ponzi scheme, having started as early as the 1980s, according to prosecutors.
Fun fact: In a letter to his daughter-in-law, Madoff wrote about his prison treatment, stating, "As you can imagine, I am quite the celebrity, and am treated like a Mafia don. They call me either Uncle Bernie or Mr. Madoff. I can't walk anywhere without someone shouting their greetings and encouragement, to keep my spirit up."
Blasius Chocolate Factory/Facebook
PHILADELPHIA -- A Philadelphia chocolate maker and candy store says it has resolved a tax issue that threatened to shutter the establishment days before Easter.
Blasius Chocolate Factory says on its Facebook page that the problem had been solved and the store "is open now forever. No more tax issues."
Mark McDonald, spokesman for Mayor Michael Nutter, told Philly.com that the shop signed an agreement to pay delinquent taxes and made a down payment on Thursday afternoon.
City officials had moved to close the store in the city's Kensington neighborhood Wednesday over $12,000 in unpaid taxes. Owner Phil Kerwick had disputed the amount.
The firm has been hand-making chocolates since the 1920s. It's noted for buttercreams and giant Easter eggs.
The deadline for filing your taxes was April 15, but tax scammers have no deadline.
In a quest for personal information and money even after filing deadlines, scammers often impersonate the Internal Revenue Service.
"The IRS encourages taxpayers to be vigilant year round against phone and email scams that use the IRS as a lure," the IRS said in a statement emailed to CNBC.com. "These scams won't likely end with the filing season so the IRS urges everyone to remain on guard," the IRS said in the email.
The scam begins with a phone call claiming to be from the IRS. Usually the scammer will say either the call recipient is entitled to a big refund, or they owe money that must be paid immediately. If the recipient refuses to pay, the scamming caller often becomes hostile and threatens jail time or a revocation of the individual's drivers' license.
The phone scam is so sophisticated that the scammers are able to outsmart caller ID technology so that the IRS's number appears. Adding to the appearance of legitimacy, the scammers will offer fake IRS badge numbers and often know the last four digits of the victim's Social Security number.
When receiving one of these calls, "people have to step back and take a deep breath," said Laura Iwan, senior vice president of programs for the Center for Internet Security, a nonprofit that focuses on cybersecurity. She suggests targeted individuals immediately contact the IRS to see if the original call was legitimate.
Other signs the call may be from a scammer include the caller asking for payment using a pre-paid debit card or wire transfer, or asking for a credit card number. The IRS will not ask for this type of payment, nor will they ask for your credit card number over the phone.
Additionally, the IRS's primary correspondence method is through the U.S. Postal Service.
Watch Out for Phishing Emails
While the phone scams are a new threat, phishing emails continue to be a pervasive scam tactic. These phishing emails sometimes contain links to websites that are infected with malware, and purport to be from the IRS and try to convince you to volunteer your personal information.
"We definitely see more phishing, often with a malware component [after April 15]. The messages may pretend to be from the IRS, or one of the popular companies people tend to use for e-filing their taxes," said Roel Schouwenberg, principal security researcher at Kaspersky Lab in an email to CNBC.com.
Like the scam phone calls, these phishing emails will either promise the taxpayer a refund or claim the taxpayer owes money and usually threatens dire consequences if not paid, said Iwan of the Center for Internet Security.
The IRS will not initiate contact with taxpayers by email or any other form of electronic communication. If you receive an email claiming to be from the IRS, you should avoid clicking on any links or opening any attachment. You should also report the email to the IRS by forwarding it to phishing@irs.gov.
Be Careful Where You Store Your Taxes
More than 90 percent of Americans now electronically file their taxes, according to the IRS. While computers have expedited tax return preparation, security experts warn they are a risky place to store your personal tax data.
"Tax returns are a treasure trove. They contain everything someone needs to steal yours and your spouse's identity. They can be easily stolen," Schouwenberg said.
Iwan suggests once you file, store your taxes on an external hard drive or flash drive. You should also make sure you have up-to-date anti-virus, anti-malware, and firewall software.
If you believe you are the victim of identity theft, contact the IRS Identity Protection Specialized Unit at 800-908-4490, extension 245.
Stable/Shutterstock
This is the last installment in my compilation of the best financial tips from 30 of today's top personal finance bloggers. When it comes to money, these folks don't just talk the talk; they walk the walk. The first two articles in this series had some great tips, so if you missed them, you might want to look back.
These tips are not numbered, by the way, because I'm not ranking them. But I'd love to know what your opinions are: In the comments section, let me know which ones you think are the best of the best.
FrugalTrader, Million Dollar Journey. If you are looking to build wealth or improve in any area of your life, track it. The intention is stay focused on the task at hand by finding out where you stand now, make a goal, and work towards making improvements in baby steps towards that goal. For example, I started the Million Dollar Journey blog in 2006, which is when I started tracking our family net worth (age 27). Our net worth started at $200,000 with the goal of reaching $1 million by the age of 35. To help achieve that goal, I write monthly net worth updates, or basically I keep score. Along the journey, seeing the numbers made me realize what I had to do differently, or improve, in order to achieve the goal. It could be that we had to save more of our monthly income, and/or that I had to work a little harder to increase our income. I'm happy to say that at age 34, we are just about there, and now onto the next goal.
Sam Dogen, Financial Samurai. Building wealth starts with developing the proper positive mindset. If you don't believe you deserve to be wealthy, then you never will be wealthy. Someone is amassing a large fortune every single day. They can be immigrants or fifth-generation Americans. It does not matter. In addition to believing that you belong, it's also important to know your place. Respect your elders and latch on to a mentor who can save you from heartache and also help accelerate your career or business idea.
Len Penzo, Personal Blog. Although it was unthinkable to me a decade ago, I'm now having very serious concerns about the continuing viability of the U.S. dollar. In fact, I think a real currency crisis is on the horizon. I don't think most people realize that if the dollar fails, their nest eggs will be annihilated. For that reason, I've been urging my readers to consider purchasing wealth insurance by diversifying into physical gold and silver (not paper-based exchange-traded funds). Remember, a silver quarter in 1964 bought a gallon of gas -- and it's no coincidence that the melt value of that same silver quarter will still buy a gallon of gas today.
Steve Chou, My Wife Quit Her Job. When it comes to building wealth, I believe in doing three things. One, you should live below your means. Two, you should find a steady job to pay the bills. And three, you should start a business on the side in order to give yourself a chance of making life-changing money. While frugality is an excellent strategy for saving money, becoming your own boss is the best way to break out of the cycle.
Kelly Whalen, The Centsible Life. My best personal finance tip is to never stop negotiating. You work hard for every dollar you earn, so don't give it up too easily. The small wins like saving 20 percent on a clothing purchase or using coupons to save $30 at the grocery store are valuable. The big wins will save you much more so don't be afraid to ask for additional savings on a big purchase. You shouldn't just think of negotiation when you buy things though -- you should be constantly looking for ways to increase your earnings as well.
"Lazy Man," Lazy Man and Money. The bigger a purchase is, the more research I put into it and the more time I take to think about it. I'll impulsively buy something that is a couple of dollars. However, for something like a tablet, laptop or a new television, I really try to find the best value. Then I ask myself if I really need a new one or if what I have still does a reasonably good job. Sometimes I end up not spending the money after all, and sometimes I do. When I do, I have no regrets.
Jefferson McDowell, See Debt Run. Life is too short to spend your adulthood nickel-and-diming all of your expenses. You certainly should show restraint when appropriate and avoid taking on debt in most situations, but you shouldn't feel bad for buying yourself a morning coffee or tickets to see your favorite band when they come through town. If you don't have the budget for such items, then you have to be willing to find additional sources of income. From selling items on eBay, to taking part in surveys and focus groups, there are tons of opportunities out there to hustle for a little bit of extra cash to live the life that you want. The life of an extreme cheapskate is one where self-deprivation becomes the norm, and it just doesn't have to be that way. Instead, choose to make a hobby out of finding ways to earn extra income. Doing this will lead to a life where its perfectly acceptable to buy yourself a little something every now and then.
Miranda Marquit, Planting Money Seeds. Figure out what's important to you. Not what's important to your neighbors, in-laws, co-workers or anyone else. Decide what's important to you and your family, and determine what would contribute to your desired lifestyle. Spend your money on those things, whether it's socking money away for retirement, giving to charity, travel or anything else that boosts improves your quality of life. Stop spending on what's not important to you; stop making purchases because it's "normal" and "what people do." You'll be in a better financial position, and feel more satisfaction with your life.
Crystal Stemberger, Budgeting in the Fun Stuff. Prioritize your spending. It's much easier to say no to a fancy new car if you know that you rather fully fund your Roth Individual Retirement Account. Make a list of all of your expenses and planned savings accounts. Then cut the unnecessary ones with super-low priority, and rank the remainder. Pay attention to your spending and make sure you are spending and saving based on your priorities. This will not only save you money, but it ensures that you aren't wasting assets on things you don't actually value. Prioritization is the key.
Robert Pagliarini, Pacifica Wealth Advisors. One of my favorite financial tips to give clients is to increase their human capital. Financial advisors are always so focused on investment capital -- things such as stocks, bonds, and real estate -- but they don't pay any attention to the client's largest asset -- their income potential. Use your free time (what I call "the other eight hours") to boost your skills, get new certifications and credentials and increase your marketability. These things are your human capital and it is your human capital -- especially if you're younger than 50 -- that can have the most positive impact on your finances.
Robert Pagliarini is a national expert on sudden wealth. His wealth management firm has developed a unique process for handling the financial -- and often psychological -- issues of sudden wealth from inheritance, lottery, divorce, stock options, lawsuits, and sports/entertainment contracts. Connect with him on Twitter @rpagliarini or Google+.
Getty ImagesWant to get a better grasp on personal finance? Check out free workshops offered by your local library and online college courses.By Jennifer Calonia
Tax season can be a painful reminder of how adequately (or inadequately) you tracked and budgeted your lifestyle the previous year. Knowing how to set up budgets, goals and financial processes isn't only handy for filing taxes -- it's a lifelong skill you'll need year after year to remain financially strong.
But you don't have to be a certified financial planner to understand the basics of personal finance. In fact, there are a multitude of free resources available to help you expand your financial know-how. In celebration of National Financial Literacy month, here are a few ideas:
1. Visit your public library. Your local library is a hub of all kinds of information, including educational personal finance workshops. Public libraries across the country have stepped it up when it comes to educating their local communities, from the Affordable Care Act to helping people balance a checkbook.
For example, the Kansas City Public Library system is hosting Money Smart Month throughout April. One workshop held this week called "Teens and Money" taught young attendees about key financial concepts and saving money.
Free sessions like these are just some of the many workshops available throughout the country.
2. Find a powerful expert voice. Some of the most famous personal finance experts have achieved success only after experiencing a financial low. They're real people who have been there and done that, and have written extensively about the knowledge they gained the hard way.
Their struggles are manifest in insightful personal finance books about the best practices for managing money and planning for your future.
One example is Dave Ramsey, who coined the "7 Baby Steps" for getting out of debt in his book "The Total Money Makeover." These types of books offer a detailed look at financial remedies when challenges start to mount.
Similarly, planning ahead is equally important. Robert Kiyosaki, author of the "Rich Dad Poor Dad" series, shares how generating income through assets, such as real estate and rental properties, can help you achieve wealth in the future.
3. Take a college course. The word "college" might make you cringe by stirring up dollar signs in your mind. But not all college courses come at a price.
For example, the University of California-Irvine's Distance Learning Center provides the personal finance foundation you need to excel through an online learning platform. The free course, "Fundamentals of Personal Financial Planning," was developed by the learning center with the help of a grant from the Certified Financial Planner Board of Standards. The course includes 22 lessons ranging from goal-setting to estate planning.
4. Stalk personal finance websites. More and more websites, on-air personalities and even the personal finance experts noted above have adapted social media into their outreach strategy. Follow or like your favorite finance gurus to get fresh tips on how to manage your money now and in the future.
Also, following the finance pages of news outlets on Facebook (FB) and Twitter (TWTR) can help you stay on top of current events and how they affect your wallet. By staying aware of financial news stories, you can apply this knowledge to your everyday life.
5. Get immersed in a TED talk. TED talks began as a discussion on innovation within the technology and science fields, but have since grown in scope to include topics ranging from music to money. While attending a TED conference can be financially daunting at $4,000 or more per attendee, hungry personal finance disciples can find thought-provoking finance lectures on ted.com.
This knowledge hub goes beyond humdrum personal finance topics by offering a fresh perspective on conventional advice. The concepts shared at TED talks might best serve someone who's well attuned to the basics of personal finance, but could be equally engaging for someone who's just starting with financial planning.
Whether you incorporate all of these resources into your personal finance repertoire or just one, you'll be closer to achieving tangible financial success by improving your financial literacy.
Jennifer Calonia writes for GoBankingRates.com, a source for online banking, the best CD rates, savings account rates, personal finance news and more.
WASHINGTON -- People who have accounts on the enrollment website for President Barack Obama's signature health care law are being told to change their passwords following an administration-wide review of the government's vulnerability to the confounding Heartbleed Internet security flaw.
Senior administration officials said there is no indication that the HealthCare.gov site has been compromised and the action is being taken out of an abundance of caution. The government's Heartbleed review is ongoing, the officials said, and users of other websites may also be told to change their passwords in the coming days, including those with accounts on the popular WhiteHouse.gov petitions page.
The Heartbleed programming flaw has caused major security concerns across the Internet and affected a widely used encryption technology that was designed to protect online accounts. Major Internet services have been working to insulate themselves against the problem and are also recommending that users change their website passwords.
Officials said the administration was prioritizing its analysis of websites with heavy traffic and the most sensitive user information. A message that will be posted on the health care website starting Saturday reads: "While there's no indication that any personal information has ever been at risk, we have taken steps to address Heartbleed issues and reset consumers' passwords out of an abundance of caution."
The health care website became a prime target for critics of the Obamacare law last fall when the opening of the insurance enrollment period revealed widespread flaws in the online system. Critics have also raised concerns about potential security vulnerabilities on a site where users input large amounts of personal data.
The website troubles were largely fixed during the second month of enrollment and sign-ups ultimately surpassed initial expectations. Obama announced this week that about 8 million people had enrolled in the insurance plans.
The full extent of the damage caused by the Heartbleed is unknown. The security hole exists on a vast number of the Internet's Web servers and went undetected for more than two years. Although it's conceivable that the flaw was never discovered by hackers, it's difficult to tell.
The White House has said the federal government was not aware of the Heartbleed vulnerability until it was made public in a private sector cybersecurity report earlier this month. The federal government relies on the encryption technology that is impacted -- OpenSSL -- to protect the privacy of users of government websites and other online services.
The Homeland Security Department has been leading the review of the government's potential vulnerabilities. The Internal Revenue Service, a widely used website with massive amounts of personal data on Americans, has already said it was not impacted by Heartbleed.
"We will continue to focus on this issue until government agencies have mitigated the vulnerability in their systems," Phyllis Schneck, DHS deputy undersecretary for cybersecurity and communications, wrote in a blog post on the agenda website. "And we will continue to adapt our response if we learn about additional issues created by the vulnerability."
Officials wouldn't say how government websites they expect to flag as part of the Heartbleed security review, but said it's likely to be a limited number. The officials insisted on anonymity because they were not authorized to discuss the security review by name.
I passionately believe in tithing -- the practice of giving a tenth of your income to your church or mission, or to charity. It's a simple idea but not so easily accomplished; only an estimated 5 percent of Americans actually tithe.
My story begins with a legacy of grandparents and parents who faithfully tithed and taught me at an early age to do the same. Even before owning my wealth management company, I remember interning at a financial firm at the age of 14 and observing that the families who seemed to enjoy the most blessed lives were those who were faithful and obedient. Not all of them were wealthy, but they had everything they needed.
Wealth comes in many forms. Money can buy you a house, but it won't buy you a home. Money will you buy you a bed, but it won't buy you a good night's sleep. Money will fill the offering plate, but it won't fulfill you or save you. Those early experiences helped frame my world perspective on placing a priority on tithing.
The easy answer to "Why tithe?" is because it works and God tells us to do this in Malachi 3:10. "Bring all the tithes into the storehouse, that there may be food in My house, and try Me now in this," quotes the Bible. "If I will not open for you the windows of heaven and pour out for you such blessing that there will not be room enough to receive it."
When I First Began Tithing
When I first started tithing, I thought it was crazy. I worked so hard for every dollar, dealing with unruly customers and picking up spitballs under the table at a local Denny's, only to give 10 percent of it to the church.
Even today, everyone in my peer group knows me as the "cheap guy" (although, I prefer the term "frugal"). I have been teased that I squeak when I walk. Yes, giving 10 percent was hard at first, but so is anything worthwhile in life.
Back then I was making $10 an hour. However, I chose to tithe because, in addition to be commanded to be obedient, I felt grateful to be able to give. Sure, I may have sacrificed things along the way -- possibly a new wardrobe or a new car. Instead, I traded worldly things, which are temporary, for things I believe to be eternally lasting. Luckily, I didn't succumb to those selfish luxuries because I had already learned a valuable lesson: Live without some things now and invest in things that will live forever.
Giving 10 percent of your income is a huge leap of faith for anyone. How do you start something great like tithing? Zig Ziglar once said you don't have to be great to start, but you have to start to be great. Could you start tithing a full 10 percent of your income overnight? For many families, that's not so easy. As a personal wealth manager, I have found myself helping my clients roll up their sleeves and get dirty with their cash flow and budgeting to squeeze out inefficiencies in their financial plan. The key is to start and draw a timeline of how and when you will be able to fully tithe.
Excuses, Excuses
Avoid getting caught in the web of excuses I find ensnaring many families. My favorite: "I'll tithe when I finally make more money, or when I receive that promotion or raise." No, you won't.
If you haven't been able to give $400 out of the $4,000 you make every month, what makes you think anything will change if you make $6,000? More money doesn't fix anything. As John D. Rockefeller said, "I never would have been able to tithe the first million dollars I ever made if I had not tithed my first salary, which was $1.50 per week."
One more excuse I will share is one that I've used in the past. When I was a volunteer, I would say, "Well, I'm involved. Isn't that enough"? Time is money, right? No, time is time and money is money. When you give to a cause that you believe in, be it a charity or a church, you connect in a higher manner to the cause. There is a lot of truth to the idiom, "Put your money where your mouth is."
How to Fit Tithing Into Your Budget
I've included a number of tips in my book, "Tithe: A Living Testimony." The most fundamental starts with that ugly old word: budgeting. (I prefer to call it "creating a spending plan.")
You can either build a plan that allocates a certain amount of your income to certain things, or you can create what I call "an artificial environment of scarcity." The latter is what works best for me and many families. With a budget, you can make a mistake and slip up. However, if you create an artificial environment of scarcity, you can learn to live life comfortably and never realize that you are tithing 10 percent and saving more than 20 percent of your income.
The gist of this involves allocating your income first to the most important items: 10 percent to tithing and 20 percent to savings, and condition yourself to live on 70 percent. Conditioning is just like exercising -- you can't run a marathon the first time you put running shoes on.
If you have children, what better legacy is there to leave than teaching these principles of giving back? And the earlier they pick up this habit, the better. Start with their allowance. When you give them $20 a week for their chores, where does it go? You might be saying, "Who cares? They're just kids. What does it hurt if they blow it all?" When would you like that to stop? When they are 65 and broke?
Share these fundamentals with your kids and teach them to label three piggy banks: church/charity, savings and everything else. In the first, place 10 percent for the charity and/or church. In the second, put 20 percent to savings, and put the rest in the last piggy bank. This will be a tangible reminder that you first allocate money to the most important things. They will grow accustomed to living on 70 percent instead of living on 105 percent, like many families do today.
Andrew McNair, founder and CEO of Swan Capital, is the author of "Tithe: A Living Testimony" and "Don't Be Penny Wise & Dollar Foolish." He specializes in wealth management and retirement income. After earning a degree in business administration/finance and with two books on his financial strategies already published, McNair launched Swan. At 22, he was hosting a radio show, "What Your Money Would Say," which provides financial guidance to retirees. He is also the founder and CEO of the Veteran Benefit Project, which works with veterans and their families at no charge to ensure they receive all of the benefits to which they're entitled.
Interest has increased in recent years about whether reverse mortgages are a practical way to supplement retirement income. In a reverse mortgage, a lender makes payments to you based on a percentage of your home's appraised value.
Three Types
Proprietary/private: Where a private company creates and backs the loan.
Single-purpose: Where the loan proceeds can only be used for a specific purpose, stated by the lender. For example, money from a single purpose reverse mortgage could only be used to cover property expenses, including repairs, energy efficient improvements, taxes and insurance. Single purpose loans are not available everywhere, and are usually offered through local government agencies or nonprofit organizations. This also makes them the least expensive option.
The Home Equity Conversion Mortgage: This is the most popular type of reverse mortgage and is backed by the Federal Housing Authority and is federally insured.
HECMs allow a homeowner or homeowners, aged 62 and older, who either own their home outright or have a small existing mortgage, to borrow money against the equity of their home. Only single-family houses, occupied by the borrower or two to four unit homes, with at least one unit occupied by the borrower, are eligible. During the application process, you're required to meet with a government-approved housing counselor who will determine if you're financially capable of paying the costs associated with the loan.
Because you're taking out a loan against your home's value, you're still the property owner until the loan is due. This means you'll continue to pay property taxes, homeowners' insurance and maintenance costs. The balance of the loan becomes due when the borrower moves out of the house, or passes away. The house is then liquidated, and the proceeds are used to pay off the balance of the loan.
There are limits to how much a person can borrow using a HECM. A person can only take up to the FHA HECM mortgage limit of $625,500. If the home's value is under that cap, then the borrower is able to access a percentage of home's appraised value. However, owners with a highly valued home and little or no mortgage, may qualify for larger loan advances through a propriety-reverse mortgage, though the cost will likely be higher.
Lots of Rules
A reverse mortgage is typically structured so that the total loan amount, including interest and fees, will not exceed the value of the home over the life of the loan. However, if the proceeds from your home's sale exceed the balance of the loan, then you, your spouse or your heirs will receive the difference. Should the sale not cover the loan balance, then, in most cases, the lender's insurance will cover the difference.
The fact that reverse mortgages allow people to stay in their own homes is one of its major benefits, but if you're considering relocating or renting, then this isn't your best option. If you become sick and have to move into an assisted living facility for 12 consecutive months, then your home is no longer considered a primary residence, and the bank has the ability to take control over the house. This can become a major problem if only one borrower is listed on the mortgage.
The amount of money you can expect to receive from a reverse mortgage depends on several factors. The major components are your age, value of the home and the length of the loan. If there are two people listed on the mortgage, then the age of the youngest borrower is used. The current interest rate, initial mortgage insurance premium, closing costs and repair costs can also play a role in determining the monthly amount that you can expect to receive.
Current interest rates are important to consider, because they play two very important roles in the reverse mortgage process. First, they help determine a borrower's loan advance amounts. Second, they determine the interest charged on the outstanding balance. It's important to understand that the interest accrues over time, increasing the loan amount. This means that interest payments can take up a decent portion of your reverse mortgage payments, leaving you with less money than expected.
Payment Structures
Tenure payments: You'll receive equal monthly payments, as long as at least one borrower is living and continues to occupy the property as the principal resident.
Term payments: equal monthly payments for a fixed period of selected months.
Line of credit: unscheduled payments, in varying amounts, based upon your needs, until the loan is exhausted.
Single disbursement lump sum: a single payment when the loan is closed. However, recent rule changes could see payouts reduced by 10 percent to 18 percent, depending on underwriting factors.
Insurance Premiums and Fees
All FHA-backed loans require lenders to collect mortgage insurance premiums. If you withdraw less than 60 percent of the available loan amount, during the first year, the mortgage insurance premium is 0.5 percent of the maximum claim amount. If you take over 60 percent, the mortgage insurance premium increases to 2.5 percent. Borrowers will also pay a 1.25 percent annual premium that based on the maximum claim amount.
Outside of the insurance costs, reverse mortgages also tend to have high fees, including above-average origination costs, closing costs and numerous service fees. The maximum allowed origination fee on federally insured loans is 2 percent of the initial $200,000 of a home's value and 1 percent of the remaining value, with a cap of $6,000.
Closing Thoughts
A reverse mortgage isn't right for everyone. You should consult a financial professional who is familiar with your situation before you would take this option. Although being able to access the equity in your house without having to make monthly payments is attractive, the costs and fees associated with a reverse mortgage are negatives that must be considered. People should remember they might not be able to bequeath their house to heirs, which could also be a significant deterrent.
Seniors with a high credit score should carefully consider and analyze their options, including traditional mortgages and home equity loans. If you can comfortably make the monthly payments, then a home equity loan might be a way to accomplish the same goal, while also avoiding the fees associated with a reverse mortgage.
Justin Sullivan/Getty ImagesA clerk rings up a customer at Cal-Mart Grocery in San Francisco.By John W. Schoen
Alert shoppers are accustomed to watching food prices go up and down. But a string of forces -- from droughts to diseases -- is raising the cost of a trip to the grocery store at a rapid clip.
And it looks like it will be a while before the price pressure eases.
Some of that pressure is coming from California -- the source of roughly half the nation's fruits and vegetables -- where a long-running drought is forcing farmers and ranchers to cut production. After the driest year on record, large sections of farmland are expected to lay fallow this year as the Golden State copes with an ongoing water crisis
That could have "large and lasting effects on fruit, vegetable, dairy and egg prices," according to a recent USDA report, which said the full impact has yet to be felt.
Smaller cattle herds have forced meat prices higher in March -- up more than 5 percent from a year ago, as demand remained strong despite tightener supplies. Ranchers are getting higher prices for cattle and food companies are able to pass them along.
Pork prices also have been rising after higher feed costs last year forced hog farmers to cut production. The upward price pressure on pork intensified this winter when a deadly virus thinned pig herds. That's expected to bring even higher prices for this summer's grilling season, when demand typically picks up."I think consumer should expect record high meat prices his year," Tyson Foods (TSN) CEO Donnie Smith told CNBC last month. "You should expect to see very high prices for your ground beef, your other meat cuts, all the pork cuts will be higher this year."
Food prices are notoriously volatile, subject to short term spikes and drops based on weather-related shortages and surpluses. But the forces at work this year are longer-lasting.
An ongoing contraction in the U.S. dairy herd, for example, is pushing up retail prices of cheese, ice cream, and other processed dairy foods.
Farm egg prices have been among the most volatile, jumping by 20 percent in February after dropping by 28 percent in January.
U.S. farmers aren't the only ones facing a production squeeze. A drought in coffee growing regions of southern Brazil, the world's largest coffee producer, has pushed up the cost of a cup of Java worldwide. Coffee futures have surged 57 percent this year and rose above $2 a pound last month for the first time in two years.
With bacon and coffee prices surging, breakfast is becoming more expensive -- especially if you include a glass of orange juice. Future prices are up 12 percent this year, hitting two-year highs, after Florida's orange crop was hit by an insect-borne disease that's expected to cut yields to the lowest levels in nearly a quarter century. Production could fall by about 15 percent to 114 million boxes this year, according to government forecasts, the lowest level since 1990.The recent series of food price hikes follow a relatively long stretch of stable consumer prices. Since 1990, retail food prices have risen by an average of 2.8 percent a year, according to USDA. From February through December of last year, average supermarket prices fell by 0.2 percent.
Consumers are also coping with higher costs beyond their supermarket shopping cart. After a brutal winter in much of the country kept shoppers home, a pickup in demand has sent clothing and used car prices higher in March.
Rents are also going up in most of the country, up 2.7 percent in the latest 12-months, a pace not seen since the housing market collapsed in 2007. Medical costs are also rising.
Because food prices are typically more volatile than other consumer costs, economists and policy makers at the Federal Reserve usually ignore them when looking at the so-called "core rate" of inflation. But after a long period of inflation running less than 2 percent a year, the latest surge in prices bears closer watching, according to Capital Insight senior economist Paul Dales.
"We suspect that core inflation will rise to 2 percent this year and beyond it next year, which would catch the Fed off guard," he wrote in a recent note to clients.
Creatista/Shutterstock
Money lessons from "The Big Bang Theory," things parents shouldn't get their children and the grimmer side of Sears were among this week's most shared articles. In case you missed them, check out these stories, along with the rest of DailyFinance's top stories of the week.
