Market Wrap: 1 Day Later, Investors Decide They Like iWatches

September 10, 2014, 10:03 am

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Filed under: Market News

By BERNARD CONDON

NEW YORK -- U.S. stocks broke two days of losses on Wednesday as a jump in Apple (AAPL) shares helped push indexes higher.

Apple rose 3.1 percent, its biggest gain since April, a day after announcing updated versions of the iPhone, a new smartwatch and a mobile payment system. The company is the largest component of both the Standard & Poor's 500 and Nasdaq composite indexes.

Gains in the broad market were muted as investors fretted over the timing and pace of Federal Reserve increases in interest rates, which are widely expected next year.

"The economy is getting better, and that worries people," said John Manley, chief equity strategist at Wells Fargo Fund Management. "People are afraid the Fed will raise rates too quickly."

A drop in a key oil price to the lowest level since in nearly 1½ years also weighed on the market. Several oil companies fell. Chevron dropped 0.7 percent.

Apple made the biggest splash on a slow day for news. Investors scrambled to understand the impact of its new products on the fortunes of other companies, sending a number of stocks sharply higher, and others sharply lower.

EBay (EBAY) fell 3 percent over fears its PayPal division will lose business to Apple's new payment system. But GPS device maker Garmin (GRMN) reversed big losses from Tuesday with a gain of 4 percent as investors seemed to dismiss the threat from the Apple's smartwatch.

Apple closed at $101, up $3.01. It is has gained 26 percent since the beginning of the year.

The Dow Jones industrial average (^DJI) ended the day up 54.84 points, or 0.3 percent, to 17,068.71. The S&P 500 (^GPSC) rose 7.25 points, or 0.4 percent, to 1,995.69.

The Nasdaq (^IXIC) rose 34.24 points, or 0.8 percent, to 4,586.52. Apple comprises 8.5 percent of the tech-heavy index, so a big move in its stock price has an outsize influence on tech-heavy index.

Investors were questioning whether the Federal Reserve might raise its benchmark interest rate earlier than many had expected as the economy gains strength. In a note to clients Wednesday morning, Steven Ricchiuto, chief economist at Mizuho Securities, says he thinks the consensus over the timing of the first increase will soon shift to early next year, rather than over the summer.

"The worst things for stocks would be the Fed to raise rates sooner rather than later," said Ricchiuto in a phone interview.

Adding to the nervousness was a paper earlier this week from two San Francisco Fed economists that said the public appears to expect a "more accommodative" policy, meaning low rates for longer, than do Fed board members.

Investors will be watching a report on unemployment claims out Thursday and one on retail sales Friday for a read on the economy.

Also weighing on markets was a $1.12 drop in Brent crude to close at $98.04 a barrel, the lowest price since May 2013. It was the fifth straight drop for Brent crude, a benchmark for international oils used by many U.S. refineries.

The price of U.S. benchmark oil also fell to its lowest level since January after the Energy Department reported large increases in stocks of gasoline and diesel. Benchmark U.S. crude fell $1.08 cents to close at $91.67 a barrel on the New York Mercantile Exchange.

In other energy futures trading, wholesale gasoline fell 2.1 cents to close at $2.527 a gallon and natural gas fell 3 cents to close at $3.954 per 1,000 cubic feet.

Among stocks making big moves:

o. Krispy Kreme Doughnuts (KKD) fell 54 cents, or 3 percent, to $17.07 after its second-quarter earnings fell short of analysts' expectations. The stock is down 12 percent since the start of the year.

o. Palo Alto Networks (PANW) rose $9.47, or 11 percent, to $98.75 after the security-software maker forecast healthier revenue in its first quarter.

The price of the 10-year Treasury note fell. The yield rose to 2.54 percent from 2.50 percent on Tuesday.

In metals trading, the price of gold fell $3.20 to $1,245.30 an ounce. Silver was flat at $18.93 an ounce and copper edged up a penny to $3.11 a pound.

What to Watch Thursday:

• The Labor Department releases weekly jobless claims at 8:30 a.m. Eastern time.
• Freddie Mac releases weekly mortgage rates at 10 a.m.
• The Treasury Department releases the federal budget for August at 2 p.m.

These major companies are scheduled to release quarterly financial statements:

• Kroger (KR)
• Ulta Salon, Cosmetics & Fragrance (ULTA)
• Lululemon Athletica (LULU)
• 1-800-Flowers.com (FLWS)
• RadioShack (RSH)

 

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How to Make Your Income Last for Decades During Retirement

September 10, 2014, 11:00 pm

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Filed under: Retirement, Family Money, Personal Finance, Financial Advisors, Mutual Funds

By Tom Halloran

As your retirement date approaches, it is natural to find yourself looking back at all that's happened over the course of your career, from personal and professional accomplishments to lessons learned and challenges overcome.

As you look to the next phase of your life, you may realize that, despite all of those experiences, you have more questions than answers. What will your finances look like post-employment? Will your resources and personal savings last into and through retirement? Often, one spouse lives well into old age. What key decisions do you need to make now to ensure you are prepared to have decades of financial security in retirement?

Here are a few tips to help you make informed decisions today so you can work to avoid retirement pitfalls tomorrow.

1. Identify your needs, wants and wishes. Make a plan to determine when, ideally, you would like to retire and, once you have retired, the type of lifestyle you would like to enjoy. This process will help you to develop a list of financial "needs," "wants" and "wishes" in retirement. Start with your "needs," which will include all day-to-day living expenses, such as housing, utilities, food, transportation and out-of-pocket medical expenses. Your "wants" will be "fun expenses" like travel, vacation and social activities or discretionary items such as cars, recreational vehicles, second homes and other consumer goods. Categorize your "wishes" as gifts you would like to make to friends, family or even charity. By allotting your finances in these three categories, you'll have a better idea of how to budget for retirement.

2. Estimate how long your personal savings may need to last. Thinking about how long your money will last in retirement may not be the most fun part of financial planning, but it is a vital component. It helps you make informed decisions about when to start Social Security, pension payments, survivorship benefits and tapping personal savings. By creating a timeline, you can decide when to start different income streams and how you'll distribute your income across your retirement years. You also need to take into consideration how expenses may change. For instance, your "wants" bucket may shrink later in retirement as you spend more time relaxing at home rather than traveling the globe.

3. Understand your Social Security and Medicare options. Even though there isn't any wrong answer on when and how much to receive in Social Security income, there are different options you should consider so you can leverage these benefits to best suit your situation. A July 2013 Voya Financial Retirement Experience study, which surveyed 2,442 adults over the age of 50 who were within five years of retirement or in retirement, found 78 percent of retirees started taking Social Security benefits before age 65, while 65 percent of them started benefits at age 62. Yet, if you plan to continue to work, anticipate a long retirement, or feel confident in your current savings, you probably want to wait to claim Social Security benefits until your full retirement age, which is between 66 and 67 years old, depending on your birth year. Delaying Social Security up until age 70 increases your benefit amount in retirement.

Adding another wrinkle to your plan, if you are married, divorced or widowed, you have many options to consider based on how you file for benefits. Generally, a smart plan of action is to meet with your financial adviser, who can explain how different filing options impact your personal retirement goals. He or she can take into account life expectancy and anticipated income from savings.

Through their professional experience and the use of planning software, financial advisers can indicate your probability of success when claiming retirement benefits. If you don't meet with an adviser, it is important to remember that although the Social Security Administration provides valuable educational resources, they are trained not to provide advice on timing and when it would be most opportune for you to begin collecting benefits.

4. Develop a strategy on how and when to withdraw money from your portfolio. Generating income during retirement is often one of preretirees' greatest concerns. Luckily, there are a few different approaches you can take to keep your mind at ease once you've stopped working. Your portfolio composition will vary based on the type of vehicle you are using and how you plan to spend your money. If you are looking for regular, predictable income, an annuity contract may be a good fit.

An income-only strategy makes sense in a situation where you wish to only spend income generated by investment assets through dividends or interest income. A third strategy would aim to generate income and growth within your investments. This strategy helps you take "as needed" withdrawals to complement other primary and more predictable sources of income. The higher-risk portion of the portfolio is invested for the long term (greater than 10 years) for growth, while the lower risk portion is invested for the short term (less than 10 years) for income. This strategy generally poses more risk with your investments, but does have greater upside potential than the previous two strategies.

To achieve your retirement income goals, the best strategy often ends up being a combination of these or other investment strategies -- delivering income strategically for your specific "needs," "wants" and "wishes."

5. Get help from a professional. Setting goals and making plans are all steps that you can take on your own, but a financial adviser will help ensure you've taken care of every detail. These tips will help get you started on your road to retirement readiness, but with the help of an adviser who can offer you ongoing advice and guidance, you will likely feel more confident about "needs," "wants" and "wishes" for a long and happy retirement.

Tom Halloran is a blogger for The Smarter Investor. You can connect with him on LinkedIn, follow his company Voya Financial on Twitter or like it on Facebook.

 

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State of the Genders: Pay, Opportunities Still Lag for Women

September 10, 2014, 11:00 pm

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Filed under: Careers, Labor, Job Market, Career Change, This Built America

Two recent studies, one global and the other domestic, have made it disappointingly clear that the gender gap in the U.S. isn't even close to being closed. The Global Gender Gap Index 2013, by the World Economic Forum -- measured gender gaps on economic, political, education and health criteria in 136 countries. The U.S. ranked No. 23 -- but No. 67 when it came to wage equality for equal work. The domestic study, conducted in August by WalletHub, used similar criteria, and returned results that were just as bleak for women -- pay inequality and job rank inequality exists in all 50 states.

What Causes the Pay Gap?

WalletHub surveyed 25 experts, mostly professors of sociology with a sprinkling from psychology and law, from all over the country, to give their opinions about what causes the pay and opportunity gaps, and to suggest possible solutions. There were many common themes in their answers:

• Occupational segregation. Men and women tend to work in different fields and occupations, but male-dominated jobs pay more -- even with the same level of education. In addition, men start at higher-paid jobs and are promoted more than women.
• Gender bias, discrimination and stereotyping. This includes sexual harassment, old-fashioned sexism and roadblocks that pregnant women and mothers face in the workplace.
• Laws and policies. Lack of effective federal family leave policies and inflexible workplace environments make for businesses that are not family-friendly.

What Can Be Done?

Most experts agreed that the problem was not an individual one. Sure, individual women can network more effectively (vertically and horizontally), seek out companies that make gender diversity a priority and find mentors or sponsors, but for real change, the solutions need to be systemic. For example:

• The U.S. could take a cue from the Nordic countries, and improve family leave policies to include paid leave for parents and require all companies to offer parental leave.
• Enforcement against workplace bias by governments and within companies could become more effective. One law professor suggested that the damage caps on Title VII of the Civil Rights Act be removed or raised as an incentive for companies to create more effective preventive measures in regards to gender discrimination.
• Women need to unionize, and the Equal Employment Opportunity Commission should require that salaries be made public.

A New York Times analysis last week -- headlined "The Motherhood Penalty vs. the Fatherhood Bonus" -- boldly begins with the line: "One of the worst career moves a woman can make is to have children." It goes on to describe the disturbing double standard for male and female parents in corporate America. In a nutshell: men's pay and career opportunities blossom when they become dads, while women's careers and pay falter when they become moms.

Experts interviewed for the article offered up causes and solutions similar to those from the WalletHub survey. They attributed the problem to discrimination and cultural bias against mothers in the workplace and suggested instituting two policies -- "publicly funded high-quality child-care for babies and toddlers" and two, "moderate-length paid parental leave" -- was the best hope for solving the problem.

Will this decade see a positive change for family (and therefore female) friendly policies in the workplace? Let's hope that studies and articles like these raise greater awareness and prompt change at the policy level.

 

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6 Times When Being Frugal Doesn't Pay

September 10, 2014, 11:00 pm

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Filed under: Saving

For some reason, the word "frugal" has always made me cringe. Growing up, it was usually accompanied by my parents telling me that whatever I'd asked for was too expensive. Thus, it became a pejorative term, one I despise to this day. And yet, as a recently minted adult, I live a frugal life with my husband. With our trusty budget by our side, I now use the word "frugal" with reckless abandon.

But frugality still isn't always a good thing. There are times when being cheap just isn't worth it. As someone who still loves a good splurge, this fact is music to my ears. Here are six times when it doesn't pay to be frugal.

1. Life Insurance

If you're married, and especially if you're married with kids, life insurance is a must. And while we don't recommend splurging on whole life insurance, we do recommend a sizable amount of term life insurance. For instance, for an extra $12 per month, my husband and I could go from having $250,000 in life insurance to $500,000 in life insurance. If the worst case scenario hit, and one of us were collecting on a life insurance policy, would we really feel like it had been worth saving that extra $12 a month? We don't think so.

2. Healthy Eating

When I first met my husband, he was living off frozen burritos and ramen. And while his grocery bill was a fraction of my own, his health was a different story. From mono to strep throat, he was getting sick far more often than I was. Once we got married, we put a few extra dollars into our grocery budget to ensure we'd eat a balanced diet and have a constant supply of fresh vegetables and fruits. But now, we spend much less time at the doctor, which means fewer copays and medical bills. And we still find deals by buying in bulk, taking advantage of coupons and discounts and shopping at inexpensive grocery stores. In the grand scheme of things, eating healthy might mean you'll save in the long run while (fingers crossed) adding a few years to your life.

3. Retirement

Putting money away for retirement isn't much fun when your paycheck is already being drained by taxes and other financial obligations. But if your employer offers a 401(k) match, you're leaving free money on the table if you don't contribute. How does it work? Let's say your company offers a 6 percent match at 50 percent. That means if you put in its maximum (6 percent), it will contribute 3 perfect of your total paycheck each and every month. If you're not contributing or you don't know where to start, do the right thing today and contact your human resources department and claim that free money.

4. Toilet Paper

This is a serious one, folks. We all use toilet paper every day. And the difference between the plush stuff and the single ply is stark. And while their prices also vary, at the end of the day, neither costs that much. So when our daily comfort or discomfort is at stake, why settle for discomfort? It's an easy choice -- say no to single ply.

5. Car Maintenance

When my husband and I have auto work done, you better believe we try to find the best deal. But what we don't do is avoid car maintenance all together. Getting your car's oil changed, tires rotated, brake pads checked and any other routine maintenance may seem like an unnecessary cost. But in the long run, they can save you big by avoiding the need for larger fixes or replacements. And keeping a record of your car's routine maintenance can be a great tool when it comes time to sell your car.

6. Gifts for Others

While it's important to budget how much you can spend on gifts, it's also important to make sure you don't sacrifice generosity in the process. If you splurge on "gifts" for yourself, but skimp on gifts for everyone else, it won't go unnoticed. While we've had to slash our gift-giving budget some years, we make up for it by creating homemade or more thoughtful gifts. So if you're going to go frugal in this area, do it in a thoughtful way.

 

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Home Foreclosure Activity on the Rise in August

September 10, 2014, 11:00 pm

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Filed under: Mortgages, Real Estate, Housing Market, Home Buying, Foreclosure

By Elvina Nawaguna

WASHINGTON -- Foreclosure activity jumped in August for the second consecutive month as banks started the process on more properties and scheduled more housing auctions, industry firm RealtyTrac said Thursday.

Overall, 116,913 properties were at some stage of the foreclosure process, which includes foreclosure notices, scheduled auctions and bank repossessions, the group said.

That pushed overall activity up 7 percent from July, it said. From a year ago, U.S. foreclosure activity was down 9 percent.

Lenders started the foreclosure process on about 55,000 properties in August, up 12 percent from July, but unchanged from a year ago. It was the second consecutive month in which foreclosure starts were up month-over-month.

A total of 51,192 properties were set for foreclosure auctions last month, a 1 percent drop from July but up 1 percent from a year ago, ending a 44-month streak of annual decreases.

"It's not time to get worried about another tsunami of foreclosures hitting anything close to what we saw back in 2008 to 2010," Daren Blomquist, vice president at RealtyTrac, told Reuters. "However, it is reason to wake up and realize the housing recovery we've seen over the past two years is not as strong as it might have seemed."

State legislation aimed at protecting homeowners and court rulings that imposed new requirements on lenders had helped dampen foreclosures. Blomquist said the increase in auctions indicated mortgage servicers were adjusting to the new rules.

Lenders reclaimed 26,343 properties in August, up 2 percent from the prior month but down 33 percent from a year ago.

Florida continued to have the nation's highest foreclosure rate last month, followed by Nevada, Maryland, New Jersey and Georgia.

 

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Get Aid After Superstorm Sandy? FEMA May Want It Back

September 10, 2014, 11:21 pm

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Filed under: U.S. Government, Homeowners Insurance, People

By MICHAEL KUNZELMAN and DAVID B. CARUSO

NEW YORK -- After Superstorm Sandy hit the East Coast nearly two years ago, the federal government quickly sent out $1.4 billion in emergency disaster aid to the hurricane's victims.

Now, thousands of people might have to pay back their share.

The Federal Emergency Management Agency is scrutinizing about 4,500 households that it suspects received improper payments after the storm, according to program officials and data obtained by The Associated Press through a public records request. As of early September, FEMA had asked around 850 of those households to return a collective $5.8 million. The other cases were still under review.

FEMA's campaign to recover overpayments, called "recoupment" in agency lingo, typically involves inadvertent violations of eligibility rules, bureaucratic mistakes or missing documentation, rather than outright fraud.

Many people asked to return money were deemed ineligible because their damaged properties were vacation houses or rental properties, not their primary residences. Others had double dipped into the aid pool, with more than one household member getting payments. Some received FEMA money for things later covered by insurance.

As of July 30, the average demanded refund was $6,987, a sum that could be difficult for many, given the modest annual incomes of most aid applicants. Roughly half of the households under scrutiny reported an annual gross income of $30,000 or less.

"I lost my home. I lost everything. I don't have $17,000 to give back.

The larger pool of cases still under review as of that date involved $53 million in aid payments -- or about 3.7 percent of the total given out by FEMA through its individuals and households program -- though any potential refunds would likely involve only a portion of that money.

"For most people, the money is long gone and long ago spent on storm recovery," said Ann Dibble, director of the New York Legal Assistance Group's storm response unit, which has been helping about a dozen families fight a FEMA clawback.

The list of people asked to return cash includes Gary Silberman of Lindenhurst, New York, who got a letter last November demanding just under $17,000. The agency said he was ineligible partly because he and his elderly father had both applied for disaster funds even though they were living together.

The Silbermans also were barred from getting some types of aid because they had failed to buy flood insurance after getting $25,000 in FEMA aid for flood damage during Hurricane Irene a year earlier.

Silberman says he should still qualify for the money because he was a rent-paying tenant in his father's house, not a dependent, but FEMA has so far rejected his appeals.

"I lost my home. I lost everything. I don't have $17,000 to give back," Silberman said.

Costly Storm

Sandy was among the costliest hurricanes in U.S. history. More than 280 people died in the U.S. and the Caribbean. When the storm struck the New York and New Jersey coastlines, the surging ocean poured into densely populated seaside neighborhoods and turned entire communities into soggy, moldy wrecks.

About 179,000 households in New York and New Jersey received FEMA payments following the storm. The agency is also reviewing payments to some households in Connecticut, Maryland and Rhode Island.

FEMA mobilized for Sandy hoping to avoid problems that plagued the aid distribution process following Hurricane Katrina's strike on the Gulf Coast in 2005. That destructive storm forced the overwhelmed agency to relax internal controls to speed up relief efforts, which led to huge numbers of people getting money they shouldn't have received.

FEMA's attempts to recover hundreds of millions of dollars, often from people who couldn't afford to pay, led to a court fight and a procedural overhaul. By 2011, the agency had mailed out letters to at least 90,000 households asking for aid refunds. Congress authorized the agency to waive much of that debt.

The agency says it has since gotten better at making sure aid only goes to the right people, and in proper amounts.

"They have a lot more controls in place," said John Kelly, the Department of Homeland Security's assistant inspector general for emergency management oversight.

-Kunzelman reported from Baton Rouge, La.

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5 Things Consumers Should Know About Dangerous Products

September 10, 2014, 11:47 pm

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Filed under: Recalls, U.S. Government, Consumer Goods, Consumer Issues, Consumer Protection

By Kimberly Palmer

Product recall announcements from the Consumer Product Safety Commission are often met with a mixed reaction: Some companies complain that the recalls are costly and not always necessary. Some companies decline to cooperate with recalls, insisting that their products are safe when used correctly. And some parents report feeling so overwhelmed with the constant barrage of recalls that they simply ignore them; this response is so common that it spawned the term "recall fatigue."

In a recent speech to the American Council on Consumer Interests, Inez Tenenbaum, chairman of the CPSC until last year, noted that the commission has expanded greatly in the past five years, increasing from 175 employees to 500, and made it easier to search for products with the launch of the website saferproducts.gov. The commission also opened a product testing facility in Rockville, Maryland, and the first foreign office in Beijing to look at products headed toward U.S. consumers.

A recent slew of high-profile announcements from the commission within the last several weeks, including a recent recall of bean bag chairs and warnings about the risks of small, strong magnets, renews the debate about the role of the safety commission, and how parents can best use the information it provides to protect their families. Here are five safety facts consumers should consider before ignoring the next round of recall announcements:

1. Many recalls originate from a parent complaint or reported injury.

The first sign of a potential danger is not usually from the government announcements, but from rumblings of parental concerns on advocacy websites or even blogs. In fact, the safety commission is often tipped off to potential problems from consumers themselves; the website cpsc.gov offers an easy way to lodge complaints and concerns. (Just click the "report an unsafe product" button in the top left corner.)

2. Companies sometimes fight recalls at first, but that doesn't mean the products are safe.

While companies often cooperate with CPSC in the wake of a recall and offer consumers an easy fix to make their products safer, they don't always. One of the most controversial recalls in recent years involved the powerful magnets called Buckyballs. When ingested by children, those magnets can wreak havoc on organs, resulting in hospitalization and even death. The company behind those magnets fought back, saying that the balls are not intended to be played with by children. The company has since gone out of business. But as recently as last month, CPSC announced a recall of another type of high-powered magnet, Magnicubes.

3. Just because products have been around for a long time doesn't mean they're safe.

In June, a post on the website flashbak.com titled, "8 Reasons Children of the 1970s Should All Be Dead," went viral, and the accompanying pictures made it easy to see why: Today's 40-somethings grew up largely without mandatory five-point harness car seats, SPF 50 sunscreen and the advanced bike helmets kids use today.

However, over the past five years, the CPSC has recalled a slew of items that parents have used for years, including drop-side cribs (because of the entrapment hazard), certain types of baby slings (because of the suffocation hazard) and those bean bags (again, because of a suffocation hazard). Certain types of strollers have also made the list, which is why it's important for new parents to check recalls.gov before making secondhand purchases. (Recall items are prohibited from being resold.)

4. It's not just about children's safety.

Many recalls issued by the CPSC also affect adults. One recent recall involved computer power cords that can overheat and potentially cause a fire, and another involved an adult bicycle that can crack, leading to an increased risk of falling. The commission's mission is focused on consumer safety, not just child safety, although many of the recalled products involve keeping children safe.

5. Staying on top of recalls is easy and getting easier.

In addition to looking up recalls at recalls.gov or cpsc.gov, where you can also sign up to receive alerts over email, the General Services Administration offers an app called Recalls​ for Android that includes announcements from CPSC, National Highway Traffic Safety Administration, Food and Drug Administration and Department of Agriculture. Websites like SafetyMom.com offer parents other options for tracking the latest developments in the field. Consumers should also register new products after they purchase them to get alerts if the product ends up being recalled.

Organizations like CPSC can be consumers' friend when it comes to avoiding dangerous products -- but you have to resist giving in to "recall fatigue," because you never know when an announcement will affect you.

Kimberly Palmer is a senior editor for U.S. News Money. She is the author of the new book, "The Economy of You." You can follow her on Twitter @alphaconsumer, circle her on Google Plus or email her at kpalmer@usnews.com.

 

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Walmart Bets These Toys Are On Your Kid's Holiday Gift List

September 11, 2014, 1:07 am

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Filed under: Wal-Mart, Gift Guides, Toys, This Built America

By Krystina Gustafson | @KrystinaGustafs

With back-to-school promotions in the rearview mirror, retailers are already looking for ways to promote their brands for the holidays.

Following Kmart's anti-Christmas commercial that rolled out last week, Walmart (WMT) on Wednesday released its second annual Chosen by Kids Top 20 Toys List -- a list it hopes will get parents spending on the troubled toy category, and help it identify hot items to prevent out-of-stocks and lost sales.

The discounter also said it would "continue to be unwavering" on offering the lowest price.

"When we saw specific trends emerge, we worked closely with our toy suppliers to make sure we were stocking our toy shelves ... with the items kids really want," said Anne Marie Kehoe, vice president of toys for Walmart U.S.

By putting hundreds of kids between ages 18 months and 12 years old in a room to play with 80 toys -- and then having them vote on their favorites -- the company identified five toy trends ahead of the holidays:


Walmart said it would promote the toys through in-store displays that call them out as chosen by kids, on a landing page on Walmart.com, and through online, social and print marketing.

The company on Sept. 12 will also kick off its layaway program for toys that cost $15 or more in baskets worth $50 or more, and will use its Savings Catcher program to match prices from local competitors. The tool compares local advertised prices frorom a customer's receipt, and if it locates a lower price, it will make up the difference on a Walmart gift card. This price matching doesn't include Amazon.com (AMZN).

"Our focus is on having great prices all season long across our toy assortment," Kehoe said.

Trouble in Toyland

Toys have been a trouble spot for retailers over the past few years, as extreme price competition, the lack of a must-have toy and the popularity of mobile gaming have cut into profits. In 2013, toy sales fell 1 percent to $22.1 billion, according to The NPD Group.

The sting has been felt at companies from Toys R Us to Mattel (MAT), with declining sales at Barbie contributing to Mattel's 9 percent sales drop in the most recent quarter.

The industry's bright spot has been for brands that have ties to popular movies or TV shows. Lego, for example, which has gotten a boost from the "The Lego Movie" product line, and recently surpassed Mattel as the largest toy maker when its first-half sales rose 15 percent compared with the prior year.

The findings are in line with a report released by the NPD Group reported earlier this year, which said sales of licensed toys outperformed the industry as a whole by rising 3 percent in 2013.

"I think 'Frozen' has definitely shown everyone this year how strong kids and little girls are engaging with that property," Kehoe said, adding she predicts the Jakks' Snow Glow Elsa Doll will be the hottest item this year.

Another Race to the Bottom in 2014?

Walmart's affirmation that it will once again compete to bring shoppers the lowest price may sound alarm bells in the industry, which last year saw margins take a beating as retailers made aggressive pricing moves to undercut one another.

According to data from price intelligence firm 360pi, over the past year through June -- which includes the past holiday season -- Walmart has consistently offered lower prices than Target (TGT) or Sears (SHLD) in the sports and toys category (though a severe price dip over the summer brought Sears' prices much closer to Walmart's). Amazon's prices were consistently cheaper.

In a recent call with 360pi and Retail Systems Research, RSR analyst Paula Rosenblum said the "big lie" is that in a race to the bottom on pricing, the company with the lowest costs wins.

"In fact what we find is that in a race to the bottom nobody wins," she said.

 

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RadioShack Inches Closer to Bankruptcy

September 11, 2014, 1:43 am

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Filed under: Bankruptcy, Earnings, Retail, Consumer Electronics, This Built America

By Ramkumar Iyer and Tanya Agrawal

Troubled electronics retailer RadioShack (RSH) said it may need to file for bankruptcy protection if its cash situation worsens, after reporting its tenth straight quarterly loss.

The company said it was also exploring other options, including a sale or an investment, and liquidation as the last resort.

RadioShack, whose sales have been in free-fall since 2010 as it struggles to compete with internet retailers, said in a regulatory filing it was working with its lenders and landlords to restructure its debt and cut costs.

"It would surprise me if we got to Nov. 1 without a bankruptcy," Wedbush Securities analyst Michael Pachter told Reuters.

RadioShack shares, which are in danger of being delisted from the New York Stock Exchange, were up 2 percent at 95 cents in volatile early trading.

The company said same-store sales declined 20 percent in the latest quarter, while total sales plunged to their lowest in more than 20 years.

The company is being advised by a restructuring attorney at law firm Jones Day as it tries to strike a deal with creditors to close stores, two people close to the matter told Reuters on Wednesday.

RadioShack tried to close 1,100 stores this year, but reduced that number to 200 a year when lenders didn't agree to the plans.

RadioShack's landlords, however, may be open to mass store closures if they believe it will allow them to find new tenants more quickly than in a bankruptcy, a source close to the matter told Reuters.

David Tawil, president of hedge fund Maglan Capital that focuses on companies approaching bankruptcy, said he saw "major execution risks" to RadioShack's recapitalization and turnaround efforts.

"I don't think that the chances are great that RadioShack survives," Tawil said, adding that the company's credit default swaps were trading higher, pointing to market expectations of a near-term debt default.

The company ended the second quarter with $30.5 million in cash and $658.0 million in debt, which matures between 2018 and 2019.

Last Resort

The company Thursday raised doubts about its ability to continue as a going concern and said it may have to liquidate if it fails to restructure its balance sheet.

RadioShack stores, which have been around for more than 90 years, were once the go-to shops for budding innovators and engineers for products that ranged from vacuum tube speakers to the first mass-produced personal computer.

The retailer, however, has done little to transform itself into a destination for mobile phone buyers, with its e-commerce strategy lagging far behind rivals such as Best Buy (BBY) and Amazon.com (AMZN).

The stock plummeted as much as 20 percent to 76 cents on Wednesday after Pachter said the company could file for bankruptcy soon, making the stock worthless by the end of this year. The stock has fallen from a high of $78 at the peak of the dotcom boom.

The company's net loss widened to $137.4 million, or $1.35 a share, in the second quarter ended Aug. 2 from $52.2 million, or 51 cents a share, a year earlier.

Revenue fell nearly 22 percent to $673.8 million.

 

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Weekly Jobless Claims Unexpectedly Rise

September 11, 2014, 2:51 am

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Filed under: Economy

The U.S. Department of Labor has released its report on weekly jobless claims. Some economists were wondering if the Employment Situation's weak payrolls report from the previous week would have any play in the weekly jobless report, and the answer to this question is yes.

This Bureau of Labor Statistics' reading on weekly jobless claims was 315,000, compared to the Bloomberg estimate of 300,000. This week's reading is up 11,000 from the previous week's revised reading of 304,000, which was first reported as 302,000. Prior to the revision, the Labor Department said that there were no special factors that influenced this report.

To recap from the Employment Situation report, the notable readings were a fall in nonfarm payrolls to 142,000 from 212,000, against the Bloomberg estimate of 230,000. Also private payrolls fell to 134,000 from 213,000, against an estimate of 220,000.

The moving four-week average came to 304,000, which is up only 1,250 from the previous week's revision of 303,250. Continuing claims, which are reported with a one-week lag, rose to 2.487 million from the previous week, which read at 2.464 million — a recovery low 64,000 less than a week before.

READ ALSO: The Best Economies in the World

Filed under: Economy

 

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Our Emergency Fund? It's Already Topped By Our Medical Debt

September 11, 2014, 3:29 am

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Filed under: Health Care, Economic Recovery, Barack Obama, Health Insurance, Saving

Our health and our wealth are more closely tied than many of us realize. For example, you're more likely to make necessary lifestyle changes to improve your health if you're also saving for retirement. But a recent Bankrate.com study suggests that a big reason many American don't save, even for emergencies, is because they have far too much health care debt.

It's not exactly news that many Americans aren't financially ready for an emergency, let alone for retirement. But a quarter of people completing the Bankrate survey reported that their medical debt was higher than their emergency savings fund. By comparison, 51 percent said they had more in emergency savings, and 24 percent either didn't know or refused to answer. What that actually means is that 25 percent is, in fact, the lowest possible percentage among those surveyed with more medical debt than emergency savings -- the true percentage is likely higher.

Depending on demographics, it gets worse. Among people who make less than $30,000, the percentage was 41 percent, and more than a third of parents with children under 18 had medical debt that outweighed savings.

More Financial Stress

"One of the messages we're always emphasizing is the need to have some cash in case of emergency," said Bankrate.com insurance analyst Doug Whiteman in an interview. "That's difficult for a quarter of Americans who have more medical debt than they have emergency savings. This is another cause of financial stress for a lot of people, like stagnant wages and school loans [also are]."

And 55 percent said that they were either somewhat or very worried that they might not have affordable health insurance in the future. Half of men were worried, compared to 60 percent of women. Only 22 percent of all respondents weren't worried at all.

Even the problem of medical debt doesn't affect you personally, it still does indirectly. "I think this is an important issue that affects consumer confidence and the broader economy," Whiteman said. "[People's worries] about their health insurance or medical cost[s] ... are additional reasons why they might hold back on their spending, which is something the economy needs to keep powering forward."

What About the Affordable Care Act?

You might wonder why so many people still live in fear of medical debt -- the potential future variety, not debt they've already taken on -- given that Obamacare is designed to relieve some of the pressure and subsidize health care for lower income families and individuals. But there are a number of reasons why the Affordable Care Act isn't making more of a dent in their pessimism.

• The ACA only came into full force this year. The most recent Health Reform Monitoring Survey from the Urban Institute's Health Policy Center said that the uninsured rate among non-elderly adults is 13.9 percent. But there's a great deal of existing debt that was incurred before the law took affect.
• Despite a nationwide campaign to get the word out, some people's fears are likely due to a "lack of awareness of the Affordable Care Act," according to Whiteman, who also said that "maybe people aren't buying the promises being made by the law."
• And then, 59.4 percent of uninsured adults said that they can't afford coverage. That is likely due in part to the fact that in 20 states, Republican governors, legislatures, or both, have refused to expand Medicaid coverage, a move that has had a deep impact on the level of care available to the poor. (Currently, 27 states have expanded Medicaid; three more are considering doing so, or are floating alternative plans.)
• Many people opting for subsidized plans are choosing cheaper bronze plans that can have out-of-pocket deductibles as high as $6,350 for an individual or $12,700 for a family. Those options can easily lead to hard to manage debts after a significant accident or hospitalization -- though far less than if the patient was uninsured.

Although critics have complained that the ACA and its attempts to remake the U.S. health care system would put the brakes on the economy, the numbers make it clear that it's the converse that is true. Those millions of Americans who are still unable to get quality health care that they can afford are an anchor, dragging on economic growth. With their households in perpetual jeopardy of financial collapse, they can't participate fully in the consumer economy -- and consumer spending is the largest driver of GDP growth in America. Even those who firmly believe in the sink-or-swim school of economics should recognize that strapping lead weights to people runs counter to the twin goals of promoting personal responsibility and national economic recovery.

 

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Mortgage Rates Tick Up a Bit in Latest Survey

September 11, 2014, 3:56 am

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Filed under: Mortgages, Refinancing, Housing Market, Home Buying, Interest Rates

WASHINGTON -- Average long-term U.S. mortgage rates rose slightly this week but remained near their lows for the year.

Mortgage company Freddie Mac said Thursday the nationwide average for a 30-year loan edged up to 4.12 percent from 4.10 percent last week, where it had stayed for three straight weeks.

The average for a 15-year mortgage, a popular choice for people who are refinancing, rose to 3.26 percent from 3.24 percent.

At 4.12 percent, the rate on a 30-year mortgage is down from 4.53 percent at the start of the year. Rates have fallen even though the Federal Reserve has been trimming its monthly bond purchases, which are intended to keep long-term borrowing rates low. The purchases are set to end next month.

Mortgage rates often follow the yield on the 10-year Treasury note. The 10-year note traded at 2.54 percent Wednesday, up from 2.41 percent a week earlier. It was trading at 2.53 percent Thursday morning. Bond yields rise when bond prices fall.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country between Monday and Wednesday each week. The average doesn't include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.

• The average fee for a 30-year mortgage was unchanged from last week at 0.5 point. The fee for a 15-year mortgage also remained at 0.5 point.
• The average rate on a five-year adjustable-rate mortgage rose to 2.99 percent from 2.97 percent. The fee was stable at 0.5 point.
• For a one-year ARM, the average rate increased to 2.45 percent from 2.40 percent. The fee held at 0.4 point.

 

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These Elite Musicians Are Rockin' in the Business World

September 11, 2014, 4:11 am

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Filed under: Company News, Technology, Entertainment Industry, Entrepreneurs, People

Over the course of a nearly 50-year music career, Neil Young has touched nearly every genre, from country to post-punk to blues. But his most recent venture is unusual even for him -- he's now the CEO of a tech company.

PonoMusic is the company, and its signature product is a player that stores high-resolution music (essentially, much richer versions than the current MP3 standard -- closer to the sound on the studio masters). Along the lines of Apple's (AAPL) iDevice/iTunes one-two punch, PonoMusic will also sell digital content for the device. PonoMusic's player and service have yet to hit the market, so it's too soon to tell whether Young's new venture will rise up the charts. If it does, perhaps he can join the elite club of musicians who successfully made the leap into top ranks of the business world, like these three busy musical entrepreneurs.

50 Cent

Known to his mom as Curtis Jackson, hip-hop artist 50 Cent has a fat net worth at great odds with his stage name. This is due in no small part to his involvement with vitaminwater, the flavored "enhanced water" beverage.

"Fiddy" was originally just a devotee of the product, but that changed after he was seen holding it in an advertisement for adidas' (ADDYY) Reebok shoe line. The drink's maker, Energy Brands, was made aware of the ad and it recruited him for promotional work.

The clever musician wangled an equity stake in the company instead of a fee for the new gig. His association with vitaminwater greatly boosted Energy Brands' visibility, so much so that it eventually attracted the interest of beverage behemoth Coca-Cola (KO). In 2007, Coke paid more than $4 billion to acquire the company. 50 Cent cashed out at an estimated $100 million.

That was far from the rapper's last business move. Since his vitaminwater adventure, among other investments 50 has expanded his G-Unit brand (named for his first group) into such ventures as athletic shoes, launched a film production company and introduced a new drink, SK Energy.

Bono

When not singing with his obscure European bar band U2, Bono (name on birth certificate: Paul Hewson) keeps an eye on his private equity investments.

That's because he's a managing director of Elevation Partners, a company that he co-founded in 2004, named after a U2 song. The following year, Elevation raised $1.9 billion for its initial investment fund and went shopping.

Its success has been mixed. In 2006, the company bought a piece of fading Forbes Media, publishers of the eponymous business magazine. According to the New York Times, Elevation didn't clear much of a profit when the media firm was sold this past July. Meanwhile, Elevation eked out a small gain on its position in personal digital assistant maker Palm when that company was sold to Hewlett-Packard (HPQ) for $1.2 billion.

A more promising investment was the one Elevation made in Facebook (FB) two years before the social media giant's ultimately lucrative initial public offering. After two investments totaling $210 million, the company holds a 1.5 percent share.

Such a percentage at Facebook's current market capitalization would value the stake at nearly $3 billion. That's enough to make even a wealthy rock star sing out loud.

Dr. Dre and Jimmy Iovine

Is the music leaking from your headphones or earbuds weak and tinny? If so, hip-hop impresario Dr. Dre (aka Andre Young) and star record producer/executive Jimmy Iovine can solve your problem.
The two music veterans teamed up to form Beats Electronics in 2006, a company anchored on high-end headphones and earbuds that aim to bring "the energy, emotion and excitement of playback in the recording studio to the listening experience."

That pitch struck a chord. According to research from NPD Group quoted in The Guardian, Beats had a commanding 64 percent of the high-end (i.e., over $100) headphone market in 2012.

This made the company a serious power in the market, and soon a bigger entity came to jam with it. That was Apple, which this past May committed $3 billion to buy the company and its sister entity, streaming service Beats Music. That's the priciest acquisition in the tech powerhouse's history, by the way.

This was sweet music to the ears of Dre and Iovine, who held the majority of the company, with asset management firm Carlyle Group (CG) owning a smaller stake.

Into the Black?

As for Young's new venture, early reviews of PonoMusic's player and service are mixed, with some commentators pointing out that the human ear can't readily distinguish between high-resolution audio and MP3.

But perhaps Neil Young's strong association with the brand will carry it through to success; celebrity cachet certainly didn't hurt the prospects of vitaminwater, Elevation Partners or Beats, after all.

Motley Fool contributor Eric Volkman owns shares of Facebook. The Motley Fool recommends Apple, Coca-Cola and Facebook. The Motley Fool owns shares of Apple and Facebook and has the following options: long January 2016 $37 calls on Coca-Cola and short January 2016 $37 puts on Coca-Cola. Try any of our Foolish newsletter services free for 30 days. Turn up the profits in your portfolio with our free report on high-yielding dividend stocks.

 

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The 5 Best Places to Hide Emergency Cash at Home

September 11, 2014, 4:46 am

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Filed under: Banking, Family Money, Personal Finance, Emergencies

By Paul Sisolak

They call it saving for a rainy day, but when we wait for the rainy day before we begin saving, we're left in a quandary if we need funds on hand in the event of an emergency. Personal finance experts suggest keeping a financial reserve of three to six months of living expenses at all times. But according to a recent poll by the nonprofit Corporation for Enterprise Development, 44 percent of Americans don't readily have the liquid assets they need to cover surprise expenses -- and even fewer people hold it in the form of that classic currency: cash.

In the event of some national emergency, major catastrophe or just a bad power outage, financial institutions could be rendered temporarily inoperable, as well as your ability to withdraw money or use your credit or debit card. Having some physical cash is practical, though you might hesitate to position any in your home since a suitable, theft-proof hiding spot is hard to find. The old money-taped-to-the-underside-of-the-toilet-lid trick doesn't work. (Just like under your mattress, it's one of the first places burglars look.)

Consider these unique and safe hiding places right in your own home to tuck your emergency savings fund.

1. Inside false infrastructure. Constructing fake fixtures around the house, like a drain pipe in the basement, return air vent in the living room or power outlet on a bedroom wall, gives the appearance of working household parts, but in fact, acts as a facade for hiding your emergency money inside. Some homeowners may need to be on the handier side for this idea, since it may involve some do-it-yourself drilling, fitting and securing. Too DIY intensive? Many online vendors sell installation-ready versions that double as light switches or electrical plates.

2. Buried outside. What better way to hide money inside your house than hiding it outside? Pick a reasonably conspicuous spot in your yard or garden to bury your money, and carefully protected, nobody will find it -- except you, as long as you remember where you dug. Be sure not to leave your $20s, $50s and $100s uncovered, since the elements can decompose the paper over time. Instead, zip cash up in bags, put it in glass jars and/or wrap the bills in plastic or a small tarp. Unless would-be thieves have a shovel, light and plenty of time on their side, they're unlikely to look in the ground.

3. Disguised and dispersed. Sometimes, hiding your money in less conspicuous places can be the most inconspicuous hiding spot that a thief might overlook. Are you a devout bibliophile? Hollowing out a book to stuff some bills into is an outdated method, but not for anyone with an extensive library of tomes floor to ceiling, where the "money book" is hidden among hundreds of other books and more difficult to find. What about hiding some cash in an envelope in a box of blank envelopes? Odds are the irony will be lost on a burglar with a low IQ. Money doesn't have to be folded or stacked, either: It can be rolled into bike tires, curtain rods, hollow broom handles, table legs, or anything cylindrical that needs more than a bit of dismantling. (Remember, you don't need to keep all your emergency money in one place, either.)

4. Sleeping with the fishes. If you own some pets of the aquatic kind, and their tank is large enough, roll your emergency proceeds securely in a solid color jar and hide it among the coral, seaweed, Atlantis ruins or behind the water filter -- places that even the most concentrated, keen eye might miss. If that's not opaque enough, go for an envelope wrapped in plastic, more plastic and a Ziplock bag, and place it flat at the bottom of the tank under colored gravel. Homeowners with a fish pond can do better by nestling a jar of money at the pond bottom, making sure it's submerged and heavy enough to prevent flotation to the top. Don't worry -- the fish won't tell.

5. Fail-safe in a safe. Another options is simply to invest in a heavy duty safe that proclaims its presence with the confidence that it won't be compromised by anyone or anything. A steel or cast iron floor safe can cost anywhere from a few hundred to several thousand dollars, but when it comes to security, you do get what you pay for. Find one that can be bolted firmly to the floor, heavy enough to deter easy lifting, and with a series of locks, combinations or, if applicable, one linked to a home alarm system.

Can hiding your emergency fund in plain sight work? It wouldn't be wise to leave your hard-earned savings out in the clear blue open, but some experts believe leaving a bit of "bait money" in view -- $50 or $100 out in the open -- can satisfy a thief looking for a quick cash grab. Should the distraction be successful, the real savings you've stealthily stashed throughout your household, thanks to these tips, will stay safe and sound. Now, the real challenge is saving up that emergency fund for when it matters most.

Paul Sisolak writes for GoBankingRates.com, a source for the interest rates on savings accounts, CDs, mortgages, auto loans and more.

 

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3 Things Barnes & Noble Must Do to Survive Its Next Chapter

September 11, 2014, 4:53 am

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Filed under: Company News, Earnings, Barnes & Noble, Market News, Investing

Like a played-out fiction series, Barnes & Noble's (BKS) quarterly reports are starting to get predictable -- and depressing. Its latest, which came out on Tuesday, was another stinker. Revenue slipped 7 percent to $1.24 billion, lower than analysts were forecasting. The stock opened higher on the report as a result of the superstore chain's loss clocking in smaller than expected, but a loss is still a loss.

The fading Nook business is a major reason for shrinking sales at Barnes & Noble, but it's hardly the only trouble spot. The company's guidance calls for comparable-store sales at its retail and college bookstores to continue to decline. Folks aren't reading traditional books the way they used to, and Barnes & Noble's is waking up from its dream of being a leader in digital delivery to find itself in a Nook nightmare.

Let's not be completely negative. The market obviously likes some aspects of Barnes & Noble's performance, and it's not too late for the company to engineer a turnaround. Let's go over a few things that the book giant could do to get itself back on track.

1. Fix the Nook

The drag that the Nook has been on Barnes & Noble is real. The e-reader platform that was supposed to make B&N as relevant in digital books as it is in leafy reads has failed. Its Nook business experienced a brutal 79 percent plunge in hardware sales, but a perhaps even more problematic 24 percent drop in digital content sales.

Let's talk content. Nook readers and tablets aren't selling well, but the installed base is still growing incrementally. If content sales are sliding, it means that it's not just potential buyers who are giving up.

Barnes & Noble's stock rallied earlier this summer when the company announced that it would be separating its Nook business. On Tuesday's call the retailer explained that it's still working toward that goal. However, it is making some interesting moves in case it gets stuck with the business that few are likely to want at the moment.

Barnes & Noble is taking a page out of the Android playbook by having others do the heavy lifting. Samsung (SSNLF) recently put out the Galaxy Tab 4 Nook, an Android tablet that is the first Nook device to offer front- and rear-facing cameras as well as GPS. It's a Samsung tablet that just happens to play nice with Barnes & Noble's digital ecosystem, and the bookseller is offering it for $179 with $200 in free book, magazine and video content.

This is what Barnes & Noble should've done from the start. It's unfortunate that it's getting it right on specs, pricing and external partners now, when tablet sales are starting to fade. However, at least it has more of a fighting chance here. Give the market a reason to believe that Nook will stick around, and everything else will follow.

2. Beef Up the Website

Barnes & Noble was supposed to update BN.com this summer. It didn't happen, and the company explained in Tuesday's call that it will hold off until after the holidays. It doesn't want to risk alienating customers during the pivotal time of year when it actually turns a profit.

Really? Since when is BN.com hallowed ground? Online sales actually declined during Barnes & Noble's last holiday quarter -- a period during which Amazon.com (AMZN), that Kindle-peddling powerhouse, saw a 20 percent spike in sales. There seems to be little to gain by sticking to the status quo. If Barnes & Noble has an e-commerce platform that it thinks can improve sales, it's an even better idea to introduce it before holiday shoppers ignore BN.com again.

3. Update the Stores

America's last book superstore chain standing is struggling to grow sales at a time when the costs of operating a bricks-and-mortar retail business are continuing to increase. That's a bad combination, but that only makes it that much more important the the company shake up its stores while it still has the clean balance sheet to do so successfully.

No one is surprised anymore to walk into a Barnes & Noble only to find more people in the coffee shop and bakery than in the actual bookstore. Sometimes it seems as if the expanding retail space dedicated to learning toys and children's games is busier than its aisles of books. These trends aren't going to reverse themselves, so Barnes & Noble may as well give the customers what they want.

Along the way it may want to embrace the visual translation of books into movies and TV shows. Barnes & Noble's report highlighted the success of "Frozen," "Divergent" and "Gone Girl." Well, it's no coincidence that two of those three have also been Hollywood hits over the past year, and the third hits a multiplex near you in a few weeks. Barnes & Noble needs to get some more skin in that game. It needs to become a force that aids writers in getting their works produced as filmes in exchange for the juicy licensing fees that await in the future -- and that will mean embracing the fact that books may be the first step in a property's life cycle, but not necessarily the juiciest step. Barnes & Noble needs to become a multimedia content distributor while it's still a tastemaker. If not, it's in for a long fall that will only end when it crashes alongside the ruins of Borders and the other once-beloved, now-shuttered book chains.

Motley Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends Amazon.com. The Motley Fool owns shares of Amazon.com and Barnes & Noble. Try any of our Foolish newsletter services free for 30 days. To read about our favorite high-yielding dividend stocks for any investor, check out our free report.

 

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Buying the Best TV Streaming Device -- Savings Experiment

September 11, 2014, 7:27 am

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Filed under: Savings Experiment, Shopping, Home & Garden

When it comes to streaming videos from your computer to your TV, there are many devices to choose from. So, how do you find the best one for your needs, at a reasonable price?

For those of you who want a device for $50 and under, the two top contenders in this category are Google Chromecast and the Roku Streaming Stick. While the Chromecast is a bit lower in cost, the Roku Stick carries Amazon, Vudu and Showtime, as well as a great cross-platform search that scans through major TV and movie services for content. It also comes with an actual remote for an easier, traditional TV experience. So even though it costs $15 more, these extra features make the Roku Streaming stick a better value.

In the $100 category we have Roku 3, Apple TV and Amazon Fire TV. Once again, the Roku 3 came out on top in terms of channels and cross-platform compatibility. The main disadvantage of Apple and Amazon is that they both tend to favor content from their respective companies, so your channel options won't be as vast as the Roku 3. As added bonus, it even has a headphone jack so you can watch that late-night movie without waking anyone up.

In the end, it's really about content and how much it's worth to you. If you just want to stream YouTube and Netflix videos for the lowest price, go with Google Chromecast, but if more channels and features are what you need, the Roku 3 and Streaming stick are the best deals for your money.

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Treasury Budget Deficit Narrows in August

September 11, 2014, 7:28 am

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Filed under: Economy

The U.S. Treasury has issued its budget for the month of August 2014, showing a deficit of $128.708 billion. The report is based upon receipts (taxes and income) of $194.248 billion and outlays (payouts and expenses) of $322.956 billion.

The first thing that should come to mind (besides this being the third highest deficit reading of calendar 2014) is that the budget deficit in August is always a high number. Versus this $128.7 billion in August of 2014, the same month's deficit was $147.9 billion in 2013 and $190.5 billion in August of 2012.

The numbers sound atrocious on the surface, but if you look at the fiscal year 2014 this is the lowest deficit for the first 11 months since 2008. This 11-month deficit figure is now $589.2 billion, which is 22% of a narrower deficit than the same period of 2013.

We would note that the Congressional Budget Office projected in August that the fiscal 2014 budget deficit would be closer to $506 billion. September is generally a month that has higher receipts than outlays, but the $589.2 billion is still quite a bit higher than $506 billion.

August's improvement was due to almost 5% higher taxes on individuals and more than 14% better tax receipts from corporations. Lower spending was seen as well - defense at -5.1% and Medicare -1.6%.

The U.S Treasury Budget deficit is rarely a market mover. Even if it was going to be a moving force, the -$128.7 billion compared to a Bloomberg economist consensus estimate of -$130 billion.

Filed under: Economy

 

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Market Wrap: A Mixed Day for Stocks as Health Care Slumps

September 11, 2014, 9:55 am

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Filed under: Market News, Commodities & Futures, Investing

By STEVE ROTHWELL

NEW YORK -- A sluggish September continued for U.S. stocks as investors assessed the outlook for interest rates, the latest sanctions against Russia and volatile energy prices.

Stocks ended the day mixed after gains for dividend-rich utilities stocks largely offset a slump in health care companies. Lululemon (LULU), the high-end yoga apparel maker, surged after reporting earnings that surpassed analyst's forecasts.

The stock market has had a slow start to the month, and the Standard & Poor's is on track to end the week with a loss for the first time in six weeks. Investors are struggling to find an impetus to push prices higher with the market close to all-time highs.

"The market might just be pausing here to digest and see what we have to propel it one way or the other," said Jeff Morris, Head of U.S. Equities at Standard Life Investments.

The Standard & Poor's 500 index (^GPSC) rose 1.76 points, or 0.1 percent, to 1,997.45. The Dow Jones industrial average (^DJI) dropped 19.71 points, or 0.1 percent, to 17,049. The Nasdaq composite (^IXIC) rose 5.28 points, or 0.1 percent, to 4,591.81.

Stocks started the day lower, led by a big decline for energy stocks as the price of oil extended its declines from a day earlier. Oil futures turned higher throughout the morning as traders judged that new sanctions against Russia over its involvement in Ukraine might crimp supplies. As oil prices rebounded, so did energy stocks.

The price of oil rose $1.16 to close at $92.83 a barrel on the New York Mercantile Exchange, after dropping close to $90 a barrel in early trading.

The stock market gains were led by utilities, which climbed 0.9 percent.

Health care stocks fell the most, declining 0.3 percent. The industry has been the best performing sector this year, climbing 15.5 percent, compared to a gain of 8.1 percent for the broader index.

The Federal Reserve is never far from investors' minds, and many are already looking forward to next week's meeting of policy makers. The Fed is currently winding down its economic stimulus measures, and investors will be expecting an update on the economy and more insight into when the central bank might begin raising interest rates. The Fed concludes its latest two-day policy meeting next Wednesday.

"Interest rates have not been a headwind [for stocks] for some time now," said Jim Russell, a regional investment director at USBank. "We are entering into a period now where they will have to be considered again."

In currency trading, the dollar continued its ascent against the Japanese yen. The U.S. currency is at its highest level in six years against the yen. On Thursday one dollar bought 107.30 yen. The dollar fell to $1.292 against the euro.

Government bond prices were little changed. The yield on the 10-year Treasury note, which rises when prices fall, rose to 2.55 percent from 2.54 percent on Wednesday.

The price of gold fell $6.30 to $1,239 an ounce, silver fell 33 cents to $18.60 an ounce and copper fell two cents to $3.09 a pound.

In other energy trading, Brent crude, a benchmark for international oils used by many U.S. refineries, rose 4 cents to close at $98.08 on the ICE Futures exchange in London. Wholesale gasoline 0.3 cent to close at $2.524 a gallon, and natural gas fell 13.1 cents to close at $3.823 per 1,000 cubic feet after the Energy Department reported a larger-than-expected increase in natural gas inventories.

Among individual stocks making big moves:

o. Lululemon jumped $5.34, or 14 percent, to $43.73 after the troubled yoga-gear retailer reported earnings that beat analysts' expectations. The company also raised its full-year forecast. Lululemon has been trying to turn itself around since last spring, when it pulled one of its popular yoga pants from stores because they were too sheer.

o. Pandora Media (P) rose 84 cents, or 3 percent, to $26.94. The streaming music company said it had agreed to a multiyear deal with BMG, a music rights management company. BMG represents the music rights of artists including John Legend and Bruno Mars.

AP Business Writer Youkyung Lee contributed from Seoul, South Korea.

What to Watch Friday:

• Darden Restaurants (DRI) releases quarterly financial results before U.S. stock markets open in New York.
• The Labor Department reports import and export prices for August at 8:30 a.m. Eastern time.
• The Commerce Department releases retail sales data for August at 8:30 a.m. and business inventories for July 10 a.m.
• The University of Michigan releases its preliminary survey of consumer sentiment for September at 9:55 a.m.

 

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What Joan Rivers Just Taught Pet Lovers About Estate Planning

September 11, 2014, 10:21 am

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Filed under: Celebrities, Estate Planning, Wills, Planning

The death of comedienne Joan Rivers has left millions of fans mourning her loss. The acclaim is sincere: In her arena, the 81-year-old Rivers was a master whose career spanned half a century and represented a huge step forward for women in comedy.

And, when it came to making sure that her loved ones were provided for after she was gone, Rivers did a masterful job of taking care of her family -- by no means a guarantee among the Hollywood set.

But interestingly, she (like her recently departed colleague, Robin Williams) has also left behind a valuable estate-planning lesson that millions could benefit from: In her case, how to ensure that your pets are cared for as you'd want after you die.

Taking Care of Business

For the most part, Rivers had a pretty simple estate plan. Dying unmarried, Rivers left the bulk of her estate to her sole daughter, Melissa, and to her grandson, Cooper. Rivers used a family trust to buy her Manhattan apartment, and while the provisions of such trusts aren't required to be made public, Rivers herself made it clear publicly some time ago that Melissa would inherit most of her belongings. Given Rivers' acting and comedy career, which also included time as a spokeswoman on the QVC shopping network and regular appearances on E! Entertainment Television, estimates put the size of Rivers' estate at $150 million.

Then there was that less simple estate planning maneuver: Rivers also made sure that the dogs in her life would be taken care of after her death. Her pets included two rescue dogs who lived in her New York residence and two other dogs who resided at her home in California. As Rivers' goddaughter Tracie Hotchner told the Daily Mail, "She loved her dogs dearly, and they meant so much to her ... dogs have become accepted as such essential family members that providing for them well in life, and after death, is considered quite normal."

You Don't Have to Be Rich to Protect Your Pets

Given the size of Rivers' estate, leaving money for her dogs' care didn't represent a huge burden on her or her other heirs. But most pet owners might worry that providing for pets through formal estate planning techniques could be more costly than it's worth.

Fortunately, it isn't as hard as you might think. Although trust laws vary from state to state, traditional pet trusts are effective everywhere, according to Texas Tech University law professor Gerry Beyer. Such trusts allow you to make very specific arrangements about the type of care you want your pets to receive and how the money you use to fund the trust will be managed and used over the pets' lifetimes. In addition to naming particular caretakers both for the pets themselves and for the money left for their care, traditional pet trusts let you go into as much detail as you want about how exactly your pets should be treated.

For many people, though, the traditional pet trust is complicated enough and involves enough up-front cost that pet owners who consider it don't always follow through. In the vast majority of states, another type of trust called a statutory pet trust makes it far simpler for pet owners to provide for their animals. Rather than requiring the owner to list duties and responsibilities, these trusts incorporate basic default provisions that give caretakers broad discretion to use their judgment to care for the pets.

Despite the rising popularity of pet trusts, there are some precautions you should follow in order to ensure that your wishes are met. The American Society for the Prevention of Cruelty to Animals recommends that you take photos of your pets or even use more sophisticated methods like microchip identification or DNA samples to protect against fraud after your death. Specifically requiring regular vet visits as well as the meeting of special needs will ensure that caretakers truly use the trust assets for the benefit of your pets. More broadly, describing the standard of living to which your pets are accustomed will help give everyone a better idea of what you have in mind.

Some people will undoubtedly see Joan Rivers' last provisions for her dogs as just another example of her humor. But for those who love their pets as much as she did, Rivers was a role model who could help raise awareness of the issue and therefore help millions of pets live better lives in the future.

You can follow Motley Fool contributor Dan Caplinger on Twitter @DanCaplinger or on Google Plus.

 

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Why It's a Mistake to Put More Than 20% Down on a Home

September 11, 2014, 11:00 pm

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Filed under: Mortgages, Real Estate, Home Buying, Home Loans, Tax Deductions

For many families across the country, the concept of buying their next home with cash may sound like a fantasy. Yet according to RealtyTrac, the nation's leading source for housing data, nearly 40 percent of all U.S. homes purchased in the second quarter of 2014 were cash deals.

In Orange County, California, where I live, there were 7,500 all-cash purchases in 2012 and 2013, and only 10 percent of those subsequently refinanced the property. But while the buyers' initial reactions to making buying a home without taking on any debt may be to celebrate your fiscal responsibility and fist-bump your poker buddies, these buyers may not actually be so financially smart. Using your cash in this fashion may cost you money in the long run.

Here are three things to consider before bringing a full price cashier's check to the escrow office at closing:

1. Home Mortgage Interest Deduction

The first benefit of financing your home purchase is the home mortgage interest deduction offered by the Internal Revenue Service. A homeowner is allowed to deduct the interest paid on his or her first and second homes (up to $1 million of debt), which means a tax savings. For example, a buyer with a $300,000 loan will realize a tax savings of nearly $4,000 in the first year of the loan, when compared to the all-cash buyer. The tax savings can be considered a subsidy from Uncle Sam, which lowers the effective interest rate on your loan.

In the above example, if the borrower had a 30-year fixed rate loan at 4.25 percent and pays an effective income tax rate of 25 percent, the after-tax rate on the loan becomes less than 3 percent. If you shorten the loan term to 15 years at a rate of 3.5 percent, you can lower the effective interest rate to less than 2.5 percent. The opportunity to borrow money at these rates is hard to pass up.

If you are a high-income earner, watch out. Up to 80 percent of your deductions could be phased out based on your earnings.

2. Real Estate Leverage

The next benefit of financing your real estate purchase is that it gives you the power of leverage. As the owner of real estate, you are entitled to the full market value fluctuation whether you paid all cash or borrowed 90 percent of the purchase price.

For example, let's say you paid all cash for a $300,000 home, and it appreciates 2 percent in a year. Your return on the cash you invested is 2 percent ($6,000 divided by $300,000). Now let's say your neighbor bought the same model house for the same price but only made a 20 percent down payment ($60,000). Your neighbor realizes the same $6,000 in appreciation but only invested $80,588 (the $60,000 down payment plus 12 monthly payments of $1,716), generating a return of 7.44 percent on the cash invested in the first year -- compared to your 2 percent return.

Using this leverage is one of the great benefits of buying real estate that is unmatched in other areas of investing. Imagine if you were allowed to buy stock with only 20 percent down -- but were allowed to keep all of the appreciation.

3. Best Return on Money?

Before making a decision to use all cash for a real estate purchase, you should also evaluate the return you could earn from other uses of the cash. Based on the example above where the cost of borrowing money is only 2.5 percent, the borrower should look for alternative investment options that would earn more than 2.5 percent. If the alternative investment produces a net return greater than 2.5 percent, the buyer is better off borrowing money to purchase the house and investing the cash.

Being in a position to purchase your home with cash is certainly an achievement worth celebrating, but it may not be the best financial decision to continue building wealth. "Engaging your loan officer before you start looking for a property can save you time and eliminate a lot of the stress in the home buying process," says Jeff Beckman, a loan consultant with the Kappel Mortgage Group in Sacramento, California.

Consider the impact of the home mortgage interest deduction, the ability to leverage a real estate asset and the alternative investment options for your cash before deciding how much cash to put toward your home purchase. Include an experienced financial adviser in your decision-making process to examine all of the implications to your personal financial situation.

Robert Pagliarini is a best-selling author and Mission Viejo financial planner who focuses on sudden wealth recipients. Connect with him on Twitter at @rpagliarini.

 

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