Used Car Loans' Sky-High Rates Latest Banking Scandal

July 20, 2014, 11:33 pm

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Filed under: Saving

By Maria Vultaggio | @mariamzzarella | m.vultaggio@ibtimes.com

Millions of Americans with shoddy credit are being offered auto loans by used car dealerships, regardless of their ability to pay back the money, the New York Times reported Sunday. As a result, the loans come with terms that take advantage of desperate customers who aren't financially savvy.

The trend is similar to the frenzied subprime market in 2008, which in turn helped kick off the 2008 financial crisis.

The Times told the story of a man who received a loan for more than $15,000 even though he hadn't worked since 1991, was living off Social Security and whose application said he made $35,000 annually. The bank ultimately repossessed his car.

The number of auto loans being given to people who have tarnished credit has risen more than 130 percent in the five years since the financial crisis, the Times wrote. One in four people, who aren't considered prime candidates or those with a credit score of less than 640, are being granted auto loans.

These loans have exploded with investors benefiting from the high interest rates. The Times found interests rates could exceed 23 percent after looking at more than 100 bankruptcy court cases, dozens of civil lawsuits against lenders and hundreds of loan documents. The payments would total many times the actual purchase price, potentially hurling vulnerable borrowers into further debt and sometimes bankruptcy.

Following the mortgage boom, the Times found dozens of loans that included falsified information about borrowers' income and employment, which led people who had lost their jobs, in bankruptcy or living on Social Security to qualify for loans they couldn't afford.

 

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Shark Sightings Off Cape Cod Give Tourism a Big Boost

July 21, 2014, 12:07 am

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Filed under: Retail, Travel Industry, Financial Education

By RODRIQUE NGOWI

CHATHAM, Mass. -- In "Jaws," the fictional mayor tried to protect the summer tourism season by keeping a lid on reports of the man-eater lurking offshore. As sightings of great white sharks mount off Cape Cod in real life, however, businesses in the Massachusetts town of Chatham are embracing the frenzy.

Shark T-shirts are everywhere, "Jaws" has been playing in local theaters and boat tours are taking more tourists out to see the huge seal population that keeps the sharks coming. Harbormasters have issued warnings but -- unlike the sharks in the movies -- the great whites generally aren't seen as a threat to human swimmers.

Among the entrepreneurs is Justin Labdon, owner of the Cape Cod Beach Chair Co., who started selling "Chatham Whites" T-shirts after customers who were renting paddle boards and kayaks began asking whether it was safe to go to sea.

"I mean, truthfully, we've probably grown about 500 percent in terms of the sale of our shark apparel," he said. The T-shirts, hoodies, hats, belts, dog collars and other accessories bear the iconic, torpedo-shaped image of great whites and sell for between $10 and $45.

He said his store brings in thousands of dollars in sales of the shark-themed merchandise.

Tourists peer through coin-operated binoculars in hopes of catching a glimpse of a shark fin from the beaches of Chatham. The posh resort town is on the elbow of the cape that has a large population of gray seals -- the massive animals whose blubber is the fuel of choice for great white sharks. Local shops sell jewelry, candy, clothes, stuffed animals and beverages with shark motifs.

A study released last month by scientists at the National Oceanic and Atmospheric Administration found the number of great white sharks off the Eastern U.S. and Canada is surging after decades of decline. Conservation efforts and the greater availability of prey such as Massachusetts' seals, are credited with the reversal.

Shark sightings have soared from generally fewer than two annually before 2004 to more than 20 in each of the last few years off Cape Cod, where the economy depends heavily on the summer tourism season. Despite notices urging boaters and swimmers to use caution, the official reaction has been nearly the opposite of the panic depicted in "Jaws," the 1975 film shot mainly on the Massachusetts island of Martha's Vineyard.

"White sharks are this iconic species in society and it draws amazing amounts of attention," said Gregory Skomal, a senior marine fisheries biologist who also leads the Massachusetts Shark Research Program, who said people are coming in hopes of witnessing the animals in their splendor. "I have not been approached by anyone who has said to me 'let's go kill these sharks.' "

Skomal said sharks have been coming closer to shore to feed on the seals, which he said have been coming on shore in greater numbers because of successful conservation efforts.

Confrontations with people are rare, with only 106 unprovoked white shark attacks -- 13 of them fatal -- in U.S. waters since 1916, according to data provided by the University of Florida.

Still, officials are wary of the damage that could be done to tourism if one of the predators bites a person. Brochures have been distributed to raise awareness of sharks and safe practices in the event of a sighting.

"You have to make sure people understand," Cape Cod Chamber of Commerce CEO Wendy Northcross said, "if they go to the beach and they see a family of seals there, that's probably not the best place to hang out."

Laurie Moss McCandless of Memphis, Tennessee, has vacationed on Cape Cod every summer since she was a little girl and doesn't remember hearing about sharks back then. But her son is obsessed with sharks, she said, and she's hoping to hear more about them on their vacation in Chatham.

"He loves all his sharks paraphernalia," McCandless, 39, said as she bought a shark-themed sweatshirt for one of her three children.

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Hasbro's Sales Climb but Profit Slips

July 21, 2014, 12:42 am

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Filed under: Earnings, Consumer Goods, Toys

By Shailaja Sharma

Hasbro (HAS), the second-largest U.S. toymaker, reported lower-than-expected quarterly revenue as sales of its games and preschool products fell for the second straight quarter.

Shares of the company, known for its My Little Pony toys and action figures based on "Transformers" films and Marvel Comics characters, fell as much as 3.6 percent Monday on the Nasdaq exchange.

Hasbro's U.S. and Canada sales declined 2 percent in the second quarter on lower demand for games as children shift to the electronic versions of the games on smartphones and tablets.

Sales of games, Hasbro's second-largest business that includes the high-margin trading card game Duel Masters, fell 12 percent, the highest decline in three years.

Hasbro expects games including My Monopoly, Simon Swipe and Battle Masters featuring "Transformers" and Marvel Comics characters to boost sales in the holiday season, Chief Executive Officer Brian Goldner said on a post-earnings conference call.

"We have compelling new innovative games across consumer groups," Goldner said.

Last week, larger rival Mattel (MAT) reported a 17 percent fall in quarterly sales of its Fisher-Price preschool products.

Mattel also posted its third straight fall in quarterly revenue as demand for its traditional toys in North America remained weak and sales of its Barbie doll declined the most since mid-2009.

While Hasbro's sales of games and preschool products remained weak in the quarter ended June 29, the company saw strong demand for its action toys amid the release of the latest "Transformers" and "Spider-Man" movies.

Hasbro owns the "Transformers" brand and holds toy licenses for Marvel Comics' characters such as Spider-Man and Iron Man, who have had phenomenal box office success over the past few years.

Total revenue rose about 8 percent to $829.3 million as international sales jumped 17 percent, driven by double-digit growth in Europe, Latin America and Asia-Pacific region.

Sales of boys' toys, Hasbro's largest business, rose 32 percent. Sales of girls' toys such as My Little Pony and Nerf Rebelle bow and arrow toys, which drove the company's revenue in the March quarter, rose 10 percent.

The company's net income fell 8.2 percent to $33.5 million, or 26 cents a share. Excluding items, Hasbro earned 36 cents a share.

Analysts on average had expected a profit of 36 cents a share on revenue of $839 million, according to Thomson Reuters I/B/E/S.

Hasbro's shares were down 2.9 percent at $51.64 in late morning trading. The stock had risen 14 percent this year to Friday's close.

 

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Latest Batch of Earnings Will Test Economy's Strength

July 21, 2014, 1:08 am

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Filed under: Earnings, Market News, Wall Street Watch, Stocks

By Caroline Valetkevitch

A long hoped for improvement in the economy appears to be manifesting itself in second-quarter U.S. earnings, but the next two weeks could be the real test.

Companies such as General Electric (GE) and Intel (INTC) have reported solid results. In addition, GE believes now is a ripe moment to spin off its private label credit card division in the hopes growing consumer demand will make it more attractive.

Intel declared that personal computer sales have stabilized, while it forecast third-quarter revenue above Wall Street's expectations.

Profit growth for the second quarter is now estimated at 6.7 percent -- excluding results from Citigroup (C), which was hit by a big adjustment from a mortgage settlement -- better than where they stood at the end of June.

In addition, 68 percent of S&P 500 (^GSPC) companies so far are beating analysts' profit expectations, above the 63 percent long-term average, according to Thomson Reuters data. A similarly high percentage of companies are beating revenue forecasts.

"Analysts may be underestimating the level of prospective improvement in the second quarter," wrote Carmine Grigoli, chief investment strategist at Mizuho Securities in New York.

The latest profit estimate is up from a July 1 forecast of 6.2 percent, while revenue growth, now 3.2 percent, is on track to be the highest since the third quarter.

Still, it's easy to overestimate the excitement. Many of the early reporting is by financial companies, not always the best barometer of Main Street activity.

The next two weeks, however, will see 60 percent of the S&P 500 release their results. That is key for investors looking for confirmation the anticipated economic rebound from the first quarter is more than just weather related.

Among the companies set to release figures are Apple (AAPL), McDonald's (MCD), Coca-Cola (KO), and Caterpillar (CAT). So far in July, six of 10 S&P sectors -- particularly health care, consumer staples and energy -- have shown upward revisions from June, according to Citigroup.

"The second quarter is going to be much stronger than the first for the reasons we all know, the weather. Investors are trying to decipher whether this improvement is a weather-related bounce or if there's actually internal growth happening," said Bucky Hellwig, senior vice president at BB&T Wealth Management in Birmingham, Alabama.

The U.S. economy contracted at a 2.9 percent annual pace in the January-March period, its worst performance in five years.

Recent jobs and other economic data suggest the economy was growing briskly heading into the second half, with growth forecasts for the second quarter now topping a 3 percent annual pace.

June's payrolls report showed a surge in job growth and the jobless rate closing in on a six-year low.
One promising sign for the second quarter: typically pessimistic analysts' forecasts, which most S&P 500 companies still tend to beat, declined just 2.2 percentage points between April 1 and July 1.

That is the smallest overall decline since the first quarter of 2011, Thomson Reuters data showed, and about half the average decline seen in the last five years.

Mike Jackson, founder of investment firm T3 Equity Labs in Denver, said his research shows eight out of the 10 S&P 500 sectors -- all but staples and utilities -- should post surprises this quarter.

"It probably suggests the earnings increases are occurring across a broader sector of the economy than what was previously believed," he said.

GE's quarterly report Friday showed the profit margin for its industrial businesses, a closely watched barometer by Wall Street, expanded 0.2 percentage point to 15.5 percent.

To be sure, not all reports are positive. Container Store Group (TCS) and Lumber Liquidators (LL) both warned about upcoming results, suggesting that retail weakness remains.

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GDP Watch: National Growth Decelerated in June

July 21, 2014, 2:20 am

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Filed under: Economy

After a 2.9% drop in gross domestic product (GDP) in the first quarter of 2014, all eyes have been on June economic readings. After all, June marks the end of the second quarter. Now we have news from the Chicago Federal Reserve Bank that growth around the country came in a tad weaker in the month of June.

The Chicago Fed National Activity Index (CFNAI) edged down to +0.12 in June. The reading was +0.16 in May, but this was also revised lower from a reading of +0.21 initially. This slowing growth trend was led by slower growth in production-related indicators.

The Chicago Fed showed that two of the four broad categories of indicators that make up the index made what were referred to as "non-positive contributions to the index" in June. Two other categories posted gains.

The sales, orders, inventories component was unchanged at +0.04 and the while the consumption and housing component remained negative at -0.14 in June, versus -0.16 in May.

We would point out that the three-month average is above zero, at +0.13 but. Still, this is down handily from an upwardly revised plus 0.28 in May. This is still growth, but it is a deceleration of that growth.

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Filed under: Economy

 

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Building a Solid Nest Egg: It's Location, Location, Location

July 21, 2014, 2:40 am

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Filed under: Saving

By Sharon Epperson | @sharon_epperson

Saving enough money for retirement is the first step toward building your nest egg, but just as important is where you invest that money.

When it comes to investing your retirement dollars, consider not only your asset allocation, but also asset location. Should put your money in a taxable or nontaxable account? Should you set up a traditional or Roth IRA?

Millions of Americans use IRAs to save for retirement. While the majority of retirement savers have traditional IRAs, Roth IRAs -- only available since 1998 -- have grown in popularity. New research shows savers contribute more readily to Roth IRAs than traditional IRAs, with more than 7 in 10 new Roth IRAs opened exclusively with contributions.

In contrast, traditional IRAs are largely created through rollovers from employer-sponsored retirement plans, according to new data from the Investment Company Institute.

Still many Americans may not understand the differences between traditional and Roth IRAs to determine which accounts may be best for them. Here are some key points to keep in mind:

Differences Between Traditional and Roth IRAs

Traditional IRAs offer the benefit of tax deferred growth since contributions are generally made with before-tax dollars and you don't pay taxes on that money until you take it out. Contributions are deductible, unless you are covered under an employer-retirement-plan and your income exceeds certain limits, but anyone can make a nondeductible IRA contribution. You're taxed at your ordinary income tax rate on the money when you take the money out. Distributions of nondeductible contributions are not taxable.

Roth IRAs are another terrific way to save and invest for retirement. But they work a bit differently. The benefit to a Roth is tax-free growth. You make after-tax contributions and earnings grow tax-free. Unlike regular IRAs, your contributions can be withdrawn tax free at any time. Earnings from a Roth account can also be withdrawn tax-free after age 59½, as long as you have held a Roth IRA for five years. You an also withdraw up to $10,000 for a first time home purchase before age 59½.

Income and Contribution Limits

Contributions to traditional and Roth IRAs are the same: $5,500 this year or $6,500 for those 50 or older.

Anyone under age 70½ with eligible compensation, such as wages, can contribute to a traditional IRA, but there are income limits if you are covered under an employer retirement plan and you want to take a tax deduction on your contributions. For married couples filing jointly, the income limits for deductible IRA contributions start at $96,000 (for a fully deductible IRA) and ends at $116,000 (for a partial deduction); for single filers it's $60,000 to $70,000. The closer you get to the end of the range, the lower the amount you are able to deduct.

"There is no age limit on Roth IRA contributions. You can contribute as long as you have eligible compensation, and your income does not exceed certain amounts," notes retirement expert Denise Appleby. The income limits for Roth IRAs are much higher, making them attractive to many higher income savers. Individuals filing as single and making less than $114,000 this year and married couples who make less than $181,000 and file taxes jointly are eligible to contribute the full amount to a Roth IRA. "The eligible contribution is reduced as the income gets closer to $129,000 for single filers and $191,000 for married-filing jointly. No contribution is allowed if income exceeds these amounts," Appleby said.

Why Contribute to a Roth IRA

If you're deciding between contributing to a deductible IRA and Roth IRA, there a several things to keep in mind.

Roth IRAs are a great location for the assets of many savers, particularly if you think you may need to tap into those funds at some point before retirement because you can withdraw contributions from a Roth IRA tax-free at any time.

But even if you plan to keep your money earmarked for retirement, there are several reasons why Roth IRAs make sense. If you think you'll be in a higher tax bracket when you retire, especially if you're a younger worker and have yet to reach your peak earning years, then a Roth IRA is better than a traditional IRA from a tax standpoint. Also, you don't have to take required minimum distributions from a Roth IRA at age 70½ like you do from a traditional IRA. A Roth IRA is also a great estate planning tool, since you can leave the account to your heirs and stretch out distributions tax free.

On the other hand, if you think your income tax bracket will be much lower when you retire than it is now, you may be better off taking the upfront tax deduction of a traditional IRA. If you think your income tax bracket will be the same when you retire, then it's almost a wash for income tax purposes. But again, with a Roth, you aren't subject to minimum distributions and if you leave a Roth behind when you die, your heirs can stretch out their own income free tax distributions.

 

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Verizon's Rewards Program: It Wants to Get to Know You

July 21, 2014, 3:20 am

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Filed under: Internet, Telecommunications, Mobile Technology, Cell Phones, Saving

By PETER SVENSSON

NEW YORK -- Verizon Wireless is launching a nationwide loyalty program this week for its 100-million-plus subscribers. There's a twist, though: To earn points for every dollar spent, subscribers must consent to have their movements tracked so the company can help target ads that match their interests.

Verizon is the first wireless carrier to roll out a comprehensive rewards program, and it's expecting big benefits from it. The program has already been offered for a few months in some states. Jeffrey Nelson, vice president of wireless marketing, suggested that even that limited program helped with customer retention, though he didn't provide details. On July 10, Verizon said customer retention was "very good" in the second quarter.

Because nearly every adult American now has a cellphone, the industry is past its days of heady growth. Any new customers have to be lured over from other carriers, and defending the customers you have against such overtures is paramount.

Nelson said Smart Rewards is designed as a loyalty program, but the company is also using that to encourage enrollment in Verizon Selects. That program, launched in 2012, uses subscriber surfing and location data to better target ads they see on the phone.

Enrollment in Selects is mandatory for subscribers who want to start taking advantage of Smart Rewards, but they can then leave Selects and keep using Smart Rewards. Those who stay with Selects get additional Smart Rewards points every month.

Verizon Wireless says the Selects program doesn't give any personally identifiable information to advertisers. Verizon says the program differs little from Web advertising programs like Google Inc.'s, which uses vast amounts of personal data for ad-targeting. But the addition of location data gleaned from cell towers makes Selects a test of where subscribers will set their privacy limits.

Customers will also earn points for every dollar spent on wireless service, as well as for upgrading to smartphones and recycling old phones, among other activities. The points can be used for discounts on hotel rooms, car rentals and products from a Verizon catalog, or they can be used to bid on phones and other devices in auctions on Verizon's site.

The rewards program is run by Destination Rewards, a private company that lists Citibank, Coca-Cola and Time Warner Cable among its clients.

Verizon Wireless is the country's largest wireless carrier and is a subsidiary of New York-based Verizon Communications (VZ).

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The Secret 770 Account: What It Is, Why You Should Have One

July 21, 2014, 3:40 am

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Filed under: Personal Finance, Estate Planning, Life Insurance, Income Tax, Financial Education

For at least the last few years, the Internet has been abuzz about the "secret 770 account" that you simply must make a part of your investing strategy. Well, it's not a secret -- but it should be in your portfolio.

In this case, "770" refers to the section of the tax code covering funds inside a life insurance policy. Using the tax code to name a type of account is common: Think of the 401(k) and the 1031 exchange.

Whole life insurance has been used for generations by corporations and dynasties to grow money safely, securely and in a tax-favored environment.

I was taught by financial gurus 25 years ago that you never put any money into a whole life insurance policy, and that theory is still being taught by some big names today. So when a friend whom I respect showed me how to use a life policy to grow and protect wealth, I spent three weeks trying to poke holes in his presentation -- and I failed. Apparently, what I "knew" previously about whole life insurance was wrong.

If you are buying life insurance strictly for the protection, many advisers will recommend you buy term because it is much cheaper than whole life in the early years of the policy for the same death benefit. For example, if a 40-year-old man in good health wants $500,000 of coverage for his family, he can buy a straight term policy for 20 years for around $500 per year. The same coverage in a whole life policy might be $3,500 a year.

Financially Astute People Count on Many Benefits

If your main reason for setting up a whole life insurance policy is for the death benefit, that policy will differ from a policy whose main goal is to grow cash. Banks and Fortune 400 corporations have hundreds of billions of dollars in whole life. There are many benefits to purchasing a well-done life insurance contract. In fact, you will not find all these benefits in any other financial product.

• Your cash value balance is guaranteed by the insurance carrier to not go backward, assuming all premiums are paid.
• You will have guaranteed growth every year no matter how the stock market performs.
• All growth and dividends grow tax-deferred inside the policy.
• You have tax- and penalty-free access to your cash through policy loans at any age.
• There are no restrictions on when loans have to be paid back.
• Cash value may still increase even on borrowed funds, depending on the carrier.
• There are no restrictions -- personal, business or investment -- on using your cash value.
• There are very high limits on how much money can be put inside the policy (though avoid becoming a Modified Endowment Contract).
• It is possible to overcome the cost of insurance in the first few years and have the policy "self-complete" thereafter by paying remaining base premiums out of cash value -- with cash value still growing larger
• You can borrow funds out of the policy and pay those funds back with much of the interest getting credited to your cash value, more quickly driving up the cash value.
• You maintain total control of your funds and cash flow.
• Access to the cash value is tax-free for the rest of your life.
• Since all this is done inside a life insurance contract, when you pass from this world, you will leave a large tax-free benefit to your estate (some limits apply).

If you say, "How much is the premium?" I know you are not grasping this concept. I know you understand if you ask, "How much money can I get in the policy?"

Traditional life policies are usually based on the income replacement needs of the insured. Properly designed life policies (or 770 accounts) are built more for the living benefits and less for the death benefit. The more financially astute understand the many other benefits and put as much cash in the policy as possible. The death benefit is the icing on an already fantastic cake.

John Jamieson is the best-selling author of "The Perpetual Wealth System." Follow him on Facebook and Twitter.

 

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The Momentum Is With American Manufacturing Again

July 21, 2014, 4:04 am

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Filed under: Manufacturing, This Built America

By Bill Greiner, Forbes contributor

For the last three years, manufacturing activity has been growing more rapidly than the gross domestic product. This is the first time this has happened in more than 50 years.

I believe the factors that have led to this oddity are sustainable and that manufacturing and overall industrial growth will probably continue to outpace overall GDP growth rates in the United States for some time. Many manufacturing costs are becoming more level. Since the 1970s, many foreign countries have been leveraging their low cost-of-labor advantage to gain market share of the global manufacturing pie. It now appears that, in many cases, this cost advantage is becoming less acute.

Most manufacturing organizations can break their major cost structures down into the following broad categories:

• Raw materials, including energy.
• Cost of capital, including interest.
• Labor.
• Transportation.
• Inventory costs.
• Research and development.
• Selling, general and administrative expenses.
• Taxes and regulations.

Positive Long-Term Developments

Here is a quick summary of what has changed over the last three to five years regarding many of these costs within the U.S. manufacturing complex.

• Raw material costs in the United States are among the lowest in the world. As of this year, the United States is the largest producer of not only natural gas, but oil. Thanks to fracking activities, the United States has now surpassed Saudi Arabia as the world's No. 1 producer of oil. U.S. natural gas prices are among the lowest in the world. Due to the number of manufacturing processes that are very energy-intense, these low prices serve as an advantage to U.S. manufacturers.
• Cost of capital. Outside of Europe and Japan, the United States sports very low interest rates in relation to other less-developed countries.
• Labor-to-capital investment decision. Perhaps the biggest development favoring U.S. manufacturers vs. their foreign competitors is the outright structure of the factory floor. No longer a haven for wrench-turners and unskilled labor, the modern factory floor is staffed with industrial robots, computers and instrument precision tools. Fewer workers are needed in today's modern factory than in the past. Those who are working at the factory often need skills laborers of the past didn't require -- and skills many foreign factory workers don't possess. These changes have reduced the headcount needed in many manufacturing operations. Automation and technological advancement has been put to work in the modern factory floor, significantly reducing the low cost-of-labor advantage of many less-developed manufacturing economies.
• Transportation. Generally, it costs less to ship goods within the United States than bring them across the Pacific Ocean via ship. Consequently, many domestic manufacturers have a built-in advantage on transportation costs as compared to their foreign competition.

What seems to continue to hold manufacturers back in the United States? One easy answer to this question is obvious -- taxes and regulations are among the most anti-business in the world. Federal tax rates on businesses are among the highest in the world and provide a burden to our manufacturing base and an advantage to our foreign competitors. Regulatory burdens have been building dramatically over the last several years. Indeed, the move by many companies to transfer their domicile from the United States to foreign shores has intensified. Some place this exodus of U.S. corporations directly on the tax/regulatory catalyst doorstep.

Bringing It Forward

U.S. and global economies have been growing at a very sluggish rate. We expect to see an uptick in overall economic activity during the second half of 2014, with manufacturing activity leading that growth push. The Purchasing Managers Index -- surveys of manufacturing purchasing managers -- isn't skewed by governmental bias. A reading above 50 suggests manufacturing activity is expanding.

	June Purchasing Managers Index	May Purchasing Managers Index
U.S.	55.3	55.5
Japan	51.5	49.9
Eurozone	51.8	52.2
U.K.	57.5	57.0
China	51.0	50.8
Emerging economies (estimate)	50.6	50.1

Secular vs. Cyclical

The secular (long-term) trends I noted earlier outline why, in my opinion, manufacturing activity within the United States should continue to expand. From a cyclical (short-term) standpoint based on the most recent data from the global PMI survey, it appears activity on the factory floor should continue to expand over the next three to six months.

Indeed, U.S. factories are huffin' and puffin.'

Bill Greiner is chief investment officer of Mariner Wealth Advisors.

 

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Goldman Sachs Grows a Bit Cautious on Small-Cap Stocks

July 21, 2014, 4:20 am

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Filed under: Investing

Investors who prefer to invest in small-cap stocks instead of Dow Jones Industrial Average and S&P 500 Index stocks may have a difficult time through the rest of 2014. That is the take of a report from Goldman Sachs, signaling that the gains in small-cap stocks will be less than in large-cap stocks.

Goldman Sachs strategist David Kostin raised his price target for the S&P 500 in the past week, up to 2,050 from 1,900. It sounded more bullish, but the reality is that this is just very limited upside. Kostin's new call implies upside of roughly 4% for small-cap stocks, versus roughly 6% upside in large caps.

Kostin believes the Russell 2000 has gotten pricier than the large-cap indexes. The ratio that he represents is 21.3 times forward price-to-earnings ratios. Another issue that was pointed out is that the average is less than 16 times forward earnings over the past five years.

Much of the Goldman Sachs call refers to Fed Chair Janet Yellen's comments just last week that certain aspects of small caps had gotten pricey. Yellen did not specify any company names outside of selecting a brief reference to tech (social) and biotech.

Another concern brought up by Kostin is that small-cap stocks saw a deeper correction earlier this year and are now up only 1% so far this year.

Goldman Sachs can move markets when it makes major changes. That is not really up for debate. Still, its bearish-to-bullish bias change was very late — and it is still calling for upside.

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When Comparison Shopping Is Worth It -- and When It's Not

July 21, 2014, 4:23 am

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Filed under: Shopping, How to Save Money, Shopping Trends, Saving

Consumers are advised to comparison-shop for everything, but a new survey reveals that not all time spent bargain hunting is time well spent.

Insurance.com surveyed 2,000 men and women about their comparison-shopping habits, asking people how much time they spent comparison-shopping for common purchases and how much they saved when they did the research. The company then calculated the savings per minute to illustrate when it makes the most sense to shop around.

The bottom line, if you've got a limited amount of time to comparison shop:

• Savings per minute are highest for car insurance, cellphones and cable services.
• Savings per minute are lowest for gas and new cars.

Given that the survey was conducted by a comparison-shopping service for insurance, it's not surprising that car insurance scored the highest in the savings per minute measurement, with an average of $54 saved for each of the 10 minutes spent comparison shopping, for a total of $540 saved. However, that calculation was based on consumers who did their comparison shopping using Insurance.com. All the rest were based on self-reported metrics about how much time the respondents spent comparison shopping and how much they saved.

Other findings:

Cellphone plans
Average shopping time: 97 minutes
Average annual savings: $179
Savings per minute: $1.86

Cable TV or other programming
Average shopping time: 144 minutes
Average annual savings: $248
Savings per minute: $1.72

New cars
Average shopping time: 13.6 hours
One-time savings: $1,054
Savings per minute: $1.29

Gasoline
Average shopping, driving, or wait time: 320 minutes
Average annual savings: $119
Savings per minute: 37 cents

Tthe survey asked consumers about how often they comparison-shop. More than half (54 percent) said the hassle of going to multiple stores or even just to multiple websites was a factor when they decided not to comparison-shop, and 40 percent said the time commitment of comparison shopping was too big.

Time Is Money -- Spend Yours Smartly

Convenience, no surprise, is key. The survey showed that consumers are typically more willing to spend time price shopping on items they can compare online as opposed to ones where the research needs to be at multiple physical locations. Even if the savings is small, so is the time commitment if it takes just a few clicks.

Another way to use your time in the wisest way is to focus on items that have the biggest savings potential in dollar terms (like major appliances), but also consider things that will reward you with an ongoing savings payoff.

For example, spending time comparison-shopping for prescription drugs -- ones that you have to take on an ongoing basis, such as ones for allergies or blood pressure -- means that you're saving money on every refill. Shopping around to find the best price for a baby shower gift, however, saves you money just once.

How Much Time Are You Willing to Spend Shopping?

The following list shows how much time on average that consumers said that they were willing to spend looking for a better price on these items:

• Airfare: 68 minutes
• Laptop computer: 68 minutes
• Auto insurance: 63 minutes
• Hotel rooms: 53 minutes
• Rental car: 48 minutes
• Clothing: 41 minutes
• Children's toys: 36 minutes
• Prescription drugs: 34 minutes
• Groceries: 33 minutes
• Pet food: 26 minutes
• Beer or alcohol: 17 minutes
• Cigarettes: 16 minutes

So, how much time are you willing to put in comparison shopping? Chime in below.

Michele Lerner is a Motley Fool contributing writer.

 

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How to Cut Your Summer Electric Bill Now

July 21, 2014, 5:50 am

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Filed under: Saving

By Abby Hayes

You don't have to replace your entire air-conditioning system to lower your summer electric bills. Maybe a higher-efficiency system is in your future. But until then, take these eight steps right now to reduce your electric bill right away:

1. Install a programmable thermostat. Raising the heat a few degrees in your home is a no-brainer when it comes to saving on electricity. The warmer you let your home get, the less work your air conditioner needs to put in. But who has time to mess with the thermostat every hour?

Instead, install a programmable thermostat. Pick up a basic model at your local hardware store for 30 bucks. Or splurge on a self-regulating model, like the Nest Learning Thermostat, which learns your home-and-away patterns over time.

2. Only use ceiling fans when you're under them. Ceiling fans are more efficient than air conditioners, but leaving them on all the time won't do you much good. A ceiling fan merely circulates air. It won't actually lower the temperature.

Ceiling fans work by making you feel cooler by circulating air against your skin. So only use a ceiling fan when there's someone in the room to feel it. Otherwise, you're just wasting electricity.

3. Install air conditioners in the warmest rooms. Many houses -- especially older ones -- have that one room that just doesn't cool off as well as the other rooms. That one room can cost you a lot of money, especially if it's a bedroom or an often-occupied room. To keep it cool, you may be tempted to turn your thermostat down into the arctic range. The rest of the house will be freezing, but that room will finally be comfortable.

But this just wastes money by making your central air-conditioning system work overtime. Instead, spend $75 to $100 on a window or floor unit for that one room. Turn the unit on when you're in the room and need it to be a bit cooler, and then turn it off when you leave again.

4. Keep it clean. Cleaning the air-conditioner filters -- whether you have window units or a central unit -- is just as important as replacing your furnace filter regularly in the winter. When the filter gets dirty, the unit has to work extra hard to pull air into the system, which just costs more energy.

So figure out how to clean your unit's filter, and check it every few weeks in the summer. Many outdoor units can be hosed off regularly, and window units often come with removable filters that you can wash in the sink.

5. Close the drapes or blinds. It's nice to let a little sunshine in -- except that sunny corner the cat enjoys so much is costing you big bucks this summer. When you let the sun in, it radiates heat.

So especially on the south and west sides of your home, keep the blinds or drapes shut unless there's someone in the room actually enjoying the sun.

6. Hang out the laundry. Your dryer is probably one of your home's biggest energy suckers. It takes a lot of electricity (or gas) to generate heat that dries your clothes. Plus, some of that heat escapes the dryer and winds up heating your home unnecessarily.

Let the hot sun work for you instead of against you this summer by hanging your clothes to dry outside on a clothesline. The sun is great for bleaching stains out of white clothes and towels, too!

7. Caulk up cracks. We often talk about using caulk to seal cracks -- especially around doors and windows -- in the winter. And it's true that in the winter, it's especially easy to feel the cold air leaking in through even the tiniest of cracks and gaps.

But caulk is just as important a tool in the summertime, too. If you notice one area or doorway in your home is particularly warm, check for leaks and cracks. Then, use caulk or an expanding foam to fill up the gaps. That keeps the cold air in so that you use less energy to heat your home.

8. Keep the kitchen cool. One way to quickly heat up your home is to use your kitchen appliances to fix meals. Sure, you still need to eat in the summer, but you don't always have to heat up the whole kitchen to do it.

Instead, plan no-cook meals like salads. Or use smaller appliances, like a toaster oven, for moderate amounts of warm food. Another option is to use a slow cooker. For even better results with your slow cooker, move it outside to a shady back porch. Then it won't heat your house at all!

Even if your air conditioner is 10 years old and on its last leg, you can make it last a little longer and cost less money to run this summer with these eight simple steps.

Abby Hayes is a freelance blogger and journalist who writes for personal finance blog The Dough Roller and contributes to Dough Roller's weekly newsletter.

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Moms and Dads Attaching More Strings to Paying for College

July 21, 2014, 6:40 am

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Filed under: Student Loans, Careers, College, Financial Aid, Scholarships, Education

More parents are behaving like business executives when it comes to helping to finance their children's college education: They're open to putting in some cash, but they want to know what the return on their investment will be.

"The trend now is that parents and students are looking beyond college," said Jodi Okun, founder of the College Financial Aid Advisors and a brand ambassador for Discover Student Loans, a division of Discover Financial Services. "They're looking at what you accomplish in those four to six years in order to get what you want after college."

While 96 percent of the parents responding to a Discover Student Loans survey said they see college as a worthwhile investment, one third said they would limit the amount of assistance they provide a child based on their offspring's major. It's no longer good enough to get a college diploma. You need to get one that puts you in a position to get a good job.

Okun says parents aren't talking about specific majors, but rather taking a big-picture look at their children's career direction, and what they need to study in order to achieve their career goals?

The Rewards of Engineering

Georgetown University provides information on the average starting salary for students graduate who with bachelor's degrees in 171 majors. Chemical engineering majors, for example, earn an average of $86,000, compared to an average salary of $39,000 for those who majored in social work.

The long-term earnings benefits of a college degree are clear, but that doesn't make it any easier to pay for it. So 74 percent of parents say they are very worried or somewhat worried about having enough money to pay for their children's education.

Okun says parents need have open conversations with their children starting as early as middle school about what they are willing and able to spend on college. That will help students start to set more realistic goals about where to apply. Young people need to understand that their parents have a lot of priorities competing for their money -- everything from paying day-to-day expenses to putting away money for retirement.

The Discover survey finds 48 percent say cost is not a factor when the student is choosing a college. "They're not saying you can't go there," according to Okun. "But if mom and dad can't pay for it, and students want to go to a particular college, the student needs to understand that this is what it will cost, and here's how much the gap is." But 44 percent of parents said they would limit college choices based on cost.

The survey found that 52 percent of college students depend on student loans, and 15 percent of parents believe their children should be responsible for paying the full tab of going to college. As a result, Okun says "when students are going to college, they should make sure their very best friend is the financial aid office."

(Correction: A previous version of this article misidentified Jodi Okun as the founder of Discover Student Loans.)

 

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Weak Earnings, Ukraine Tensions Weigh on Stocks

July 21, 2014, 9:30 am

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Filed under: Earnings, Market News, Investing

By MATTHEW CRAFT

NEW YORK -- The stock market started the week with a slight loss on Monday as investors weighed a mixed batch of corporate earnings against mounting political turmoil.

European leaders called for imposing tougher sanctions on Russia for its backing of separatists accused of shooting down a Malaysia Airways passenger plane in Ukraine last week. The European Union's foreign ministers will meet Tuesday to discuss their next steps.

In Washington, President Barack Obama demanded that international investigators get full access to the crash site and said the separatists had blocked investigators.

"It looks like we hit a speed bump," said Jack Ablin, chief investment officer at BMO Private Bank in Chicago. "Earnings are coming through quite nicely so far, but geopolitics trump earnings today."

The Standard & Poor's 500 index (^GSPC) fell 4.59 points, or 0.2 percent, to close at 1,973.63. Seven of the 10 industry groups fell, led by retailers and other consumer-discretionary companies.

The Dow Jones industrial average (^DJI) fell 48.45 points, or 0.3 percent, to 17,051.73, while the Nasdaq composite (^IXIC) lost 7.44 points, or 0.2 percent, to 4,424.70.

European markets ended lower. Germany's DAX dropped 1.1 percent while France's CAC-40 lost 0.7 percent. Britain's FTSE 100 slipped 0.3 percent.

A few well-known companies turned in results that fell short of estimates on Monday. The toy maker Hasbro (HAS) reported second-quarter earnings and revenue that came in below analysts' targets. Rising sales of My Little Pony, Transformers and other toys weren't enough to stem a decline in sales of games such as Twister. Hasbro's stock sank $1.43, or 2.7 percent, to $51.78.

Six Flags Entertainment (SIX) posted higher profits and sales in the second quarter, but the theme-park operator's revenue came up short of what analysts had expected, partially a result of sluggish attendance. Six Flags slumped $1.69, or 4.1 percent, to $39.31.

Despite the dour news, the second-quarter earnings season is off to a strong start: Of the 88 companies that have reported results so far, 58 have beaten analysts' estimates.

Nearly a third of the companies in the S&P 500 index will hand in their quarterly results this week, including such heavyweights as Apple (AAPL) on Tuesday, Boeing (BA) on Wednesday and Amazon (AMZN) on Thursday.

In other trading on Monday, benchmark U.S. crude oil rose $1.46 to $104.59 a barrel on the New York Mercantile Exchange. In the market for U.S. government bonds, the yield on the 10-year Treasury note slipped to 2.47 percent from 2.48 percent late Friday.

Among other companies in the news, Yum Brands (YUM) fell $3.29, or 4.3 percent, to $74.13 amid a new food-safety scare in China. The operator of KFC and Pizza Hut restaurants said its stores in China stopped buying products from a Shanghai supplier, while local officials investigate allegations that the supplier repackaged old beef and chicken and stamped new expiration dates on them.

What to Watch Tuesday:

• The Labor Department releases its Consumer Price Index for June at 8:30 a.m. Eastern time.
• The National Association of Realtors releases existing home sales for June at 10 a.m.

These major companies are scheduled to release quarterly financial statements:

• Apple (AAPL)
• Broadcom (BRCM)
• CIT Group (CIT)
• Coca-Cola (KO)
• Comcast (CMCSA) (CMCSK)
• Credit Suisse (CS)
• Discover Financial Services (DFS)
• Domino's Pizza (DPZ)
• Dupont (DD)
• Gannett (GCI)
• Harley-Davidson (HOG)
• Ingersoll-Rand (IR)
• Jupiter Networks (JNPR)
• Kimberly-Clark (KMB)
• Lockheed Martin (LMT)
• McDonald's (MCD)
• Mead Johnson Nutrition (MJN)
• Microsoft (MSFT)
• TD Ameritrade Holding (AMTD)
• Travelers Cos. (TRV)
• United Technologies (UTX)
• Verizon Communications (VZ)
• Vmware (VMW)

 

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Market Close: Stocks Climb as Solid Earnings Reports Roll In

July 22, 2014, 9:34 am

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Filed under: Earnings, Market News, Investing

NEW YORK -- Solid earnings for a range of big companies helped nudge the stock market higher on Tuesday.

The restaurant chain Chipotle Mexican Grill (CMG) and the cable giant Comcast (CMCSK) surged after reporting better results than Wall Street expected.

"The news today is pretty good," said JJ Kinahan, chief strategist at TD Ameritrade. Kinahan pointed to a report out Tuesday that showed little sign of inflation and an overall stronger outlook for earnings. During conference calls to discuss quarterly results, more CEOs are taking an optimistic tone, he said, instead of warning about possible dangers.

"In the past, they all spent their time tempering expectations," Kinahan said. "This earnings season we're not seeing that at all. I think people are taking comfort in it."

The Standard & Poor's 500 index (^GPSC) added 9.90 points, or 0.5 percent, to 1,983.53. The Dow Jones industrial average (^DJI) rose 61.81 points, or 0.4 percent, to 17,113.54. The Nasdaq composite (^IXIC) advanced 31.31 points, or 0.7 percent, to 4,456.02.

Chipotle surged $69.84, or 12 percent, to $659.77, the biggest gain in the S&P 500 index. The burrito chain reported that stronger sales drove its quarterly profit up 26 percent. The restaurant chain's results beat analysts' expectations, even as it raised prices on a range of menu items.

Comcast, the country's largest cable company, reported quarterly profits that topped Wall Street's targets as more people signed up for Internet service. Comcast gained 81 cents, or 1.5 percent, to $54.63.

Wall Street is in the middle of corporate earnings season, when companies release their quarterly results. Investors pore over those reports to gauge the financial health of Corporate America, and in turn, the U.S. economy. Roughly 150 companies in the S&P 500 will report their results this week, including AT&T (T) and Boeing (BA) on Wednesday. Visa (V) and Amazon (AMZN) will report on Thursday.

Not all the results released Tuesday were positive. Weak sales of Diet Coke and fruit juice weighed down Coca-Cola's (KO) second-quarter results, leading the company to post weaker revenue than Wall Street expected. Overall profit fell slightly. Coca-Cola's stock sank $1.21, or 3 percent, to $41.19.

Even though companies continue to post higher profits, the market still looks expensive compared to its historical average. The S&P 500 currently trades for 17.4 times earnings over the previous 12 months. The long-run average is closer to 15.

"In the short term, I expect the market to continue higher," said Brad McMillan, the chief investment officer at Commonwealth Financial. "But I am concerned about the market's valuation."

On the economic front, investors got another tame report on inflation. U.S. consumer prices inched up 0.3 percent in June, with most of the increase coming from higher gasoline prices, according to the Labor Department. Core prices, which exclude the volatile food and energy sectors, were up just 0.1 percent. Over the past year, core prices are up 1.9 percent, close to the Federal Reserve's target rate for inflation.

U.S. government bond prices rose, pushing the yield on the 10-year Treasury note down to 2.46 percent. Benchmark U.S. crude oil fell 17 cents to $104.42 a barrel.

In other company news:

Herbalife (HLF) jumped $13.75, or 26 percent, to $67.77. Activist investor Bill Ackman, who has a $1 billion bet against the company, lobbed his latest attack against the nutritional supplement and weight-loss company, but investors appeared to dismiss it.

What to Watch Wednesday:

• The Mortgage Bankers Association reports weekly mortgage applications at 7 a.m. Eastern time.

These major companies are scheduled to release quarterly financial statements:

• AT&T (T)
• ABB (ABB)
• Biogen Idec (BIIB)
• Boeing (BA)
• Cheesecake Factory (CAKE)
• CoreLogic (CLGX)
• Delta Air Lines (DAL)
• Dow Chemical (DOW)
• E-Trade Financial (ETFC)
• EMC (EMC)
• Equifax (EFX)
• Facebook (FB)
• General Dynamics (GD)
• Gilead Sciences (GILD)
• GlaxoSmithKline (GSK)
• Hanesbrands (HBI)
• Morningstar (MORN)
• Norfolk Southern (NSC)
• Northrop Grumman (NOC)
• Owens Corning (OC)
• PepsiCo (PEP)
• Qualcomm (QCOM)
• Simon Property Group (SPG)
• TripAdvisor (TRIP)
• Tupperware Brands (TUP)
• W.R. Grace (GRA)
• Whirlpool (WHR)

 

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Bill Ackman Slams Herbalife's Nutrition Clubs: 'It's a Pyramid Scheme'

July 22, 2014, 10:14 am

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Filed under: Investment Fraud, CEOs, Ripoffs & Scams, Investing

By KEN SWEET

NEW YORK -- Activist investor Bill Ackman fired his latest salvo at the weight loss and nutritional supplements company Herbalife (HLF) on Tuesday, alleging that one of the business models used by its distributors is evidence that the company operates as an illegal pyramid scheme.

Ackman's presentation focused Herbalife's "nutrition clubs," private settings where Herbalife's distributors sell the company's products like weight-loss shakes and also recruit others to sell Herbalife's products.

In a three-hour presentation, Ackman laid out a case that because Herbalife's nutrition clubs focus heavily on recruiting new members instead of selling products to consumers, the clubs are by definition functioning as a pyramid scheme.

Ackman, who runs Pershing Square Capital Management, an activist hedge fund, has bet heavily against Herbalife by using "short" trades that will be profitable if the value of the company's stock falls. Ackman has been trying to convince other investors to take similar positions, most memorably in a shouting match he got into with Carl Icahn, a rival investor, on live television in January 2013. Icahn has taken the opposite position from Ackman and has defended Herbalife.

The company has not been accused of any crime and insists that its operations are legal. The Securities and Exchange Commission, the Federal Trade Commission and the Attorneys General of New York and Illinois are investigating Herbalife, but no charges have been brought against the company since Ackman announced his short position in 2012.

Investors appeared to dismiss Ackman's latest allegations and sent the company's stock soaring. Herbalife ended the day up $13.75, or 25 percent, to $67.77. Trading volume was more than 15 times the daily average. The stock is still down 14 percent so far this year.

Nutrition clubs have become an increasingly lucrative business model for Herbalife in the last 10 years, with more than 4,000 operating in the U.S. alone, according to the company.

However, Ackman alleged that nutrition club attendees were not actually end consumers of the product. Instead nutrition club attendees were often recruits to become nutrition club operators of their own. These recruits should not be thought of as retail users of the product, but instead thought of as the next layer in the pyramid.

A pyramid scheme occurs when a company's primary mode of doing business is not selling a product or service to a consumer, but instead recruiting new participants to the company who in turn try to recruit new members. Pyramid schemes are illegal because they eventually collapse once there are no more people to recruit. They are similar to Ponzi schemes.

Herbalife has vigorously and repeatedly denied Ackman's arguments, and says it operates like a multi-level marketing company similar to Avon, Amway and Mary Kay.

"Once again, Bill Ackman has over-promised and under-delivered on his $1 billion bet against our company," Herbalife said in a statement.

Ackman bet $1 billion against Herbalife back in 2012, alleging that the company is a pyramid scheme and should be shut down by the government. Ackman said he spent $50 million of investors' money and two years investigating Herbalife.

Ackman argues he is in it for "the long haul" when it comes to Herbalife. He has also repeatedly said that any personal profits he would make from the collapse of Herbalife would be donated to charity.

At the end of his presentation in midtown Manhattan, Ackman appeared to tear up when discussing his campaign against the company. Ackman alleged that Herbalife's business model takes advantage of often poor people with minimal educations who are trying to find a way to start a business. Ackman called Herbalife CEO Michael Johnson "a predator."

"I hope he is listening," Ackman said.

 

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Agencies Help Seniors Find Roommates, Companionship

July 22, 2014, 10:46 pm

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Filed under: Personal Finance, Housing Market, Social Security, Financial Education

NEW YORK -- It's not exactly "The Golden Girls," but for Marcia Rosenfeld, it'll do.

Rosenfeld is among thousands of aging Americans taking part in home-sharing programs around the country that allow seniors to stay in their homes and save money while getting some much-needed companionship.

"It's a wonderful arrangement," said the white-haired Rosenfeld, who when asked her age will only say she's a senior citizen. "The way the rents are these days, I couldn't stay here without it."

She shares her two-bedroom, $1,000-a-month Brooklyn apartment with Carolyn Allen, a 69-year-old widow who has suffered two strokes and no longer wants to live alone.

Agencies who put such seniors together say the need appears to be growing as baby boomers age and struggle to deal with foreclosures, property taxes and rising rents. The typical situation involves an elderly woman, widowed or divorced, who has a house or an apartment with extra room and needs help with the upkeep.

"Our seniors want to remain part of the community they were raised in, where they worked and went to church," said Jackie Grossman, director of the home-sharing program at Open Communities in the Chicago suburbs. "They don't want to be just with other seniors. Maybe they love their garden, their tool shed, and they would have to give that up if they move into senior housing."

At the New York Foundation for Senior Citizens, where applicants have tripled since 2008, the average boarder pays about $700 a month. The same average holds at the HIP Housing program in San Mateo, California, but it is about $500 at the St. Ambrose Housing Aid Center in Baltimore.

Agencies handle the background checks and other screening and consider various lifestyle criteria -- smoking, pets, disposable income -- in making matches. When a match is made the new roommates sign an agreement covering chores, overnight visitors, telephone use, etc.

Not all agencies limit applicants to seniors. In the New York program, only one of the two people has to be 60 or older.

The agencies' services mean people who want a roommate don't have to post notices in neighborhood weeklies or online and worry about who will respond.

Finding Companionship Safely

"Craigslist can be very scary, especially for women," said Connie Skillingstad, president of Golden Girl Homes Inc. in Robbinsdale, Minnesota, which refers women to housing resources including home-sharing. "They'd rather go through a respectable organization."

In the past, program directors say, many of the people offering space were willing to take household help -- grocery shopping, housecleaning, repair work -- in lieu or some or all of the rent.

Recently, though, more people have insisted on dollars rather than services.

"In the last five years, we've really seen more people looking for financial aid rather than barter," said Kirby Dunn, executive director of Homeshare Vermont in Burlington.

Companionship is an important side benefit.

"Independence is great but isolation as we age is a growing concern, so companionship can be almost life-altering," Dunn said. "People are telling us they're happier, sleeping better, eating better. If I could sell you a drug that did that, you'd pay a lot of money."

Long-Lasting Friendships

Grossman said many long-lasting friendships develop, "and for others there's just mutual respect and that's fine, too."

Rosenfeld and Allen, who have been roommates for three years, both said they feel more like business associates than longtime friends like TV's "Golden Girls," but they gabbed like sisters and giggled about the apparent highlight of their time together: "The bathtub incident."

Allen, who gets around with the help of a walker, had slipped in the bathtub and gotten stuck, with one leg wedged awkwardly behind her. She tried and tried but couldn't get up.

"If I was living alone I might have been there for days," she said. But Rosenfeld was home, and although she's too petite to extract Allen from the tub, she was able to call 911 -- and provide a towel for Allen to cover herself when rescuers arrived.

"Thank God Marcia was there," Allen said.

 

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3 Steps You'll Want to Take Before You Invest in Anything

July 22, 2014, 10:58 pm

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Filed under: Investing Basics, Investing

If you've accumulated some extra cash, you'd be smart to get it out of the bank and invest it. But if you're going to take your money plans to the next level, resist the urge rush into putting that money to work. If you act precipitously, you could get sucked up into an investment that earns sub-par returns for many years -- or worse, one that loses you a big part of your nest egg.

Here are three steps you can take to reduce the chances of those calamities happening.

1. Take Time to Educate Yourself

You might get wind of a fantastic stock opportunity or hear about a company that has discovered the cure to cancer. It doesn't matter. Cool your jets. For every genuine "once in a lifetime" opportunity, there are 10,000 duds and scams. It's hard to tell the difference, and almost impossible to do so if you don't understand the basics.

Take your time. Learn how stock, bonds and mutual funds work. Block out 30 minutes a day and study for three or four weeks before you make a move. You won't become an expert that fast, but you'll have the tools you will need to make informed decisions. It's a small price to pay for improving your investment performance over a lifetime.

2. Make Sure Each Investment Fits Your Plan

Once you see understand how investments work, it's time to create your financial plan. Once you do that, you can evaluate each prospective investment on how it helps or hinders your goals. This will make it far easier to make good investment decisions and avoid the temptation of jumping on "hot deals" that come your way. You probably don't need a fancy or expensive financial plan. All you need to do is:

• Identify your short-term, mid-term and long-term goals.
• Calculate how much each of these goals will cost you.
• Do some reverse-engineering to determine how much money you need to set aside over what period to fund each goal. Then, set up an automatic-investment plan and watch the magic happen.

A little brainstorming will help you come up with good goals. And you can use any number of online calculators to do the math.

As an alternative, you can hire a professional to run your plan. Sometimes this is a smart move. But if you go this route, make sure the adviser doesn't just sell you a financial plan just to sell his brand of financial schlock investments.

3. Safeguard Your Money From Yourself

Once you've created and implemented your plan, you have to make sure you stay on the path. Understand that the biggest risk to your financial success is you -- yes, you. Fortunately, there are several things you can do to make sure you don't sabotage your own success.

• Set up an emergency fund. Just make sure you have the proper amount set aside. The old rule of thumb of having six months expenses set aside is antiquated. You may need a lot less -- or a lot more. This depends on your particular situation, earning stability and financial condition.
• Protect your family for an emergency. I'm talking about having an appropriate amount of life insurance so they aren't thrown under the bus if you are. Fortunately, term life insurance is very inexpensive and is a great fit for most people who want to protect their families against a catastrophe.
• Track and budget your spending. This prevents "surprises" that can sink your plan. I strongly suggest that you think of your monthly investments as an expense rather than a discretionary item. Saving for your future is not a luxury. It is a mandate. And the best way to make sure you fulfill that obligation is to automate monthly investments so the money is put to work before you have a chance to spend it.

It's not difficult to put this foundation in place before you invest. Get yourself a basic understanding of how investments work and which investments are most appropriate for your specific goals. Then create your plan and fund it every month with automatic investments. For an added measure of safety, make sure to handle the roadblocks that keep many people from reaching their financial destinations. Have an adequate emergency fund set up and get yourself some inexpensive life insurance if you need it.

You don't have to do any of this perfectly. You'll learn as you go. There is nothing wrong with that. But you do need to get started. What's stopping you?

Neal Frankle is an independent certified financial planner and editor for WealthPilgrim.com and MCMHA.org.

 

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Witness Wednesdays Promote Plight of the Long-Term Jobless

July 22, 2014, 11:00 pm

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Filed under: Recession, Job Market, Unemployment, U.S. Government, Economy

You've heard the story many times about good people who lose their jobs through no fault of their own, and find their lives turned upside down.

That's Debra's story, too. She's a vivacious 48-year-old single mother who's worked all of her life, up until one year ago. What's different about Debra is that in addition to looking for a job and trying to retrain for a new career, she's become an advocate for millions of others just like her.

Debra had been in sales at a small family-owned kitchen and bath business in West Texas, but within a year both owners died and the heirs laid off most of the staff. She knew she had the skills and energy to be a good employee, but she couldn't even get an interview for another job.

"I didn't realize it was this bad until it affected me," said Debra, who asked that her last name be omitted. "I want to work. If you've been looking every day for six months, you have to have good work ethic."

No More Extended Federal Aid

Like millions of others, she signed up to receive unemployment benefits, which helped her make ends meet. She checked online and found out that she was eligible for 99 weeks of benefits -- or so she thought. Texas paid the first 26 weeks, and then federal emergency benefits kicked in. But after just one week, the checks stopped coming. Congress had cut the aid to 73 weeks and at the end of 2013 eliminated federal aid altogether.

Online, she found many others in her same predicament. "This issue found us," said Katherine McFate, CEO of the Center for Effective Government. "People started sending us their stories, and we became their voice."

That led the group to start "Witness Wednesdays," a series of weekly events that began in June at which members of Congress push to reinstate federal jobless benefits. The Congressmen read the stories of individuals who have been out of work for more than 26 weeks, the standard definition of long-term unemployment.

The Senate approved an extension earlier this year, and a bipartisan group of eight members of Congress is pushing to get a a vote in the House. "We continue to see up to three million Americans who lost their benefits," said Rep. Dan Kildee, D-Mich., one of the co-sponsors and leader of last week's Witness Wednesday. "Congress seems to be oblivious. We want to show that these are real people facing the worst days of their lives. They deserve a vote."

"If you look at their stories and have one ounce of empathy," according to McFate, "you couldn't turn your back on these people."

Plan Doesn't Satisfy Boehner

Michael Steel, a spokesman for House Speaker John Boehner, R-Ohio, says the Republican leadership "is willing to look at any proposal that is fiscally responsible and creates private sector jobs." He says the plan being offered by Kildee and others does not meet those standards.

"It's frustrating," admits Kildee. "Virtually every issue is twisted to be a political issue. This is not a Monopoly game. These are real people."

Advocates for renewing federal benefits say that many of the long-term unemployed are seen as too old to hire but too young to retire.

Debra, the Texas woman trying desperately to get back into the workforce, has become a voice for many of the long-term unemployed. Her son is now in college, thanks to financial aid, and she is enrolled in a program to get a real estate license to start a new career. She says, "I thought for sure that after the first bill passed we had so much momentum, but I can't believe someone could be so heartless to not allow a vote."

 

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Disney Wants You to See Dumbo Fly Again - in Live Action

July 22, 2014, 11:00 pm

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Filed under: Company News, Walt Disney, Rumors, Industry News, Entertainment Industry

Dumbo is coming to the silver screen again, but we're not talking about a remastered re-release or even a computer-animated update of the 1941 full-length classic about an orphaned circus elephant who can fly.

Disney's (DIS) is developing a live-action "Dumbo." It may sound ludicrous at first, but if there's anything that Disney has proven this summer, it's that it knows how to tap its rich catalog of animated classics for material that translates well in live action. "Maleficent" -- the Angelina Jolie-anchored movie that delves into the villain's side of Disney's "Sleeping Beauty" -- has topped $225 million in domestic ticket sales to become the fourth highest grossing movie of 2014.

Doing Dumbo Differently

"Dumbo" is probably more relevant now than you think. The movie's plot is heavily focused on the fact that others taunted Dumbo for the size of his ears, until he discovers that he can fly. At a time when American society is attempting to deal with the long pervasive problems of teens getting bullied for being different, a tale about overcoming such abusive reactions has the potential to resonate, even if the hero is a pachyderm.

Disney is unlikely to go with real animals here the way it did earlier this year, when Disneynature's "Bears" tried to weave a tale out of a documentary. The easiest path would seem to involve primarily computer-generated elephants, especially since they are likely to talk, engage in some lavish scenes, and fly.

Disney might also give the tale a darker twist, as it did in 2010, when "Alice in Wonderland" got a live-action version with an updated plot.

More Than Meets the Eye

Disney is rebooting other classics. As Variety points out, Kenneth Branagh's "Cinderella" will hit theaters early next year. Jon Favreau is working on "The Jungle Book," and Bill Condon is developing "Beauty and the Beast."

"Dumbo" has Ehren Kruger writing the script fresh off of the last two "Transformers" movies. This should tip moviegoers off that this isn't going to be entertainment solely for the kiddies. There will be a need to stretch the original tale, which ran just 64 minutes. At a time when even animated releases have to run at least 90 minutes to justify today's buoyant ticket prices, a short film isn't going to fly.

Motley Fool contributor Rick Munarriz owns shares of Walt Disney. The Motley Fool recommends Walt Disney. The Motley Fool owns shares of Walt Disney.

 

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