Your Broker Will Hate This Smart, Easy Portfolio

January 7, 2015, 10:00 pm

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Filed under: ETFs, Investing Basics, Investing

The securities industry has a vested interest in making investing as complicated as possible. If you're dazed and confused, you are more likely to trade too frequently and purchase complicated, high-commission investments. Good for your broker. Bad for you.

The secret the securities industry doesn't want you to know is that responsible, intelligent investing is disarmingly simple. It requires relatively little time or effort. Almost anyone can put together a risk-adjusted portfolio that will have higher expected returns than those suggested by the typical broker. I am going to give you one such portfolio. Your broker will hate it.

The Smart, Easy Portfolio

The portfolio I describe in this example consists of only two holdings, both of which are low-cost exchange-traded funds.

For the stock portion of the portfolio: iShares MSCI ACWI (ACWI). For the bond portion of the portfolio: Vanguard Total Bond Market ETF (BND).

Initially, investors have to determine the allocation of the portfolio between stocks and bonds. This is a critical decision because it will determine the amount of risk the portfolio contains. The higher the allocation to stocks, the greater the risk assumed. Lessen the amount of risk by allocating a higher percentage of the portfolio to bonds.

There are many helpful asset allocation questionnaires online.

Should You Consider This Portfolio?

If you have significant assets that meet the minimum of a reputable registered investment adviser, you would be well advised not to make investing a do-it-yourself project.

This portfolio, however, may make sense in some situations for long-term investors who have the discipline to stay the course during periods of market volatility. If your time horizon is less than five years, you should have little or no exposure to stock market risk.

How Risky Is the Stock Portion of This Portfolio?

IShares MSCI ACWI tracks the performance, before fees and expenses, of the MSCI World Index. This index captures large- and mid-cap stocks across 23 developed markets, and it's designed to measure the performance of the global stock markets. Think of it as giving you broad exposure to stocks in the major developed countries.

You can expect the volatility of this portfolio to be slightly higher than the volatility of a portfolio holding an S&P 500 (^GPSC) index fund. Even though you could describe this risk as "moderate," in periods of extreme volatility, it can lose a significant portion of its value. For example, in 2008 the index lost 40.33 percent.

How Risky Is the Bond Portion of This Portfolio?

In my view, the purpose of the bond portion of your portfolio is to mitigate risk during periods of stock market volatility. I do not believe bonds should be used to increase returns. If you want higher expected returns, you should increase your allocation to stocks. Vanguard's Total Bond Market ETF is a conservative fund designed to track the performance of the Barclays U.S. Aggregate Float Adjusted Index. This index consists of a broad spectrum of public, investment-grade, taxable, fixed income bonds in the United States.

Because of these holdings, this bond fund is very conservative with low volatility.

Long-Term Performance

The inception date for ACWI was March 2008, so it's more instructive to look at the long-term returns of the MSCI World Index. Since May 31, 1994, the index had an annualized return of 7.41 percent. Its 10-year return ending 2014 was 6.61 percent.

Remember these returns assume that 100 percent of your portfolio was allocated to stocks. This would be far too risky for most investors. Depending upon the portion allocated to bonds, your overall portfolio returns would have been lower.

Compared to the returns of the typical investor, these returns are impressive. By some estimates, for the 20-year period from Dec. 31, 1993 to Dec. 31, 2013, the average investor had returns of a puny 2.5 percent.

The Importance of Discipline

Despite what your broker and the financial media want you to believe, deciding how to invest is relatively simple. The hard part is staying the course during periods of market volatility. As respected author William Bernstein noted: "'Stay the course': it sounds so easy when uttered at high tide. Unfortunately, when the water recedes, it is not."

Keeping you on track so that you don't panic when the market drops is one of the primary reasons most investors benefit from using competent registered investment advisors.

Ease of Maintenance

Once investors set their asset allocation and purchases these two ETFs, there's very little left to do.

All investors should rebalance periodically. This ensures your risk profile remains intact. When appropriate, you should engage in tax-loss harvesting. If you have a life event that changes your tolerance for risk (like a divorce or an inheritance), you will have to adjust your asset allocation.

Your primary challenge will be to do nothing. Ignore the financial news. Pay no attention to predictions or the musings of pundits. Make no effort to time the market. Ignore short-term market volatility. Keep this sage advice from columnist Mitch Tuchman at the forefront of your thinking: "By far, the most effective long-term investments are the most boring -- low-volatility stocks and indexes, sleepy collections of bonds and portfolios that don't change for months."

Daniel Solin is the director of investor advocacy for the BAM Alliance and a wealth adviser with Buckingham. He is a New York Times best-selling author of the Smartest series of books. His latest book is "The Smartest Sales Book You'll Ever Read."

 

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The 10 Weirdest, Wackiest Financial Factoids of 2014

January 7, 2015, 10:00 pm

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Filed under: Personal Finance, Spending, Financial Education

By Jeff Yeager

Here are the 10 most fascinating factoids I stumbled across in 2014 that pertain to your money (not all of which originated in 2014):

10. $558,328.83: The Cost of Every Item in 2014 Super Bowl Ads

This staggering calculation comes from former "The Price Is Right" contestant Alex Zeldin on Guff.com. Just for the record, the vast majority of that expenditure would be on automobiles advertised during the game -- you'd get about a dozen and a half vehicles for a total of almost $557,000. And if you're wondering, all cost figures are before taxes.

9. 73 Percent of Parents Ages 40 to 59 Support a Boomerang Child

A 2013 survey by the Pew Research Center found that a staggering 73 percent of parents ages 40 to 59 have helped to financially support an adult child in the last year. Where did that financial support go?

A 2013 survey by Bank of America Merrill Lynch (BAC) found that, of parents who supported their grown children over the last five years, about 10 percent helped with credit card debit, student loans, and insurance, while 15 to 20 percent said that their help went toward health care costs, car loans, cell phone bills, and rent or mortgage expenses. The biggest shocker? In 36 percent of cases, parents forking over dough to their adult kids weren't sure how their money was being used.

8. Men Are More Likely to Make Tipsy Purchases

Two booze-related spending studies caught my attention in 2014. First, a 2014 study by CreditCards.com reported that 13 percent of men admitted to buying items they hadn't intended to buy while they were under the influence of alcohol; that's compared to only about 5 percent of women. This is supported by a 2012 Nielsen study, which showed that 31 percent of all purchases in liquor stores are impulse buys, with the most being shelled out on fancy, premixed bottled cocktails.

So, I guess if you're a guy who's already been drinking and you stumble into a liquor store, you should just throw in the towel, load a couple of bottles of kumquat-flavored schnapps daiquiris in your shopping cart and head for checkout.

7. Millennials Believe Losing a Phone Is Worse Than Auto Theft

A 2013 Zipcar study found that many millennials value their phones more than their cars. Nearly 40 percent of millennials believe losing their phones would be a bigger hardship than losing their automobiles, while only 16 percent of people age 35 and up felt the same way.

Millennials also said their phone use allows them to cut back on driving, as 47 percent of them said they substitute texting, email, and video chats for meeting with friends in person. A 2013 Kent State University research study found that cell phone use was linked to anxiety, lower grades and reduced happiness in students.

6. Credit Reports Reveal Errors 25 Percent of the Time

According to a 2013 study from the Federal Trade Commission, more than 25 percent of consumers who took the time to check their credit reports identified errors that might affect their credit scores. This might partially explain why, according to Time, 56 percent of Americans have subprime credit. Looks like more people should be taking advantage of their free yearly credit reports. The Fair Credit Reporting Act requires each of the three nationwide credit reporting companies -- Equifax (EFX), Experian and TransUnion -- to provide a free copy of your credit report once every 12 months, upon your request.

5. Cyberattacks Cost the Global Economy $500 Billion Annually

It seems like nearly everyone was a victim of cyberattacks in 2014, or at least became worried due to the sheer number of them and their scope. According to a 2013 report by McAfee, cyberattacks on companies are costing the global economy an estimated $500 billion per year. That's roughly the size of Norway's GDP.

4. Women Hit the Glass Ceiling Sooner (and by $35,000 Less)

According to a 2012 study by PayScale, the average ages at which pay peaks -- and stops growing significantly faster than inflation for U.S. workers with a college degree or higher -- is 39 for women and 48 for men.The typical pay for such a male worker at 48 is $95,000 a year, and the average pay for his female counterpart is only $60,000 a year when it peaks at age 39. So not only do men earn more than women, but men earn higher wages sooner and for a longer period of time.

3. People Buy a Lot of Harry Potter Books, Corollas and Lay's Chips

The folks at FinancesOnline.com are obviously as enamored with wacky financial facts as I am, having compiled their own comparison of "10 Best-Selling Products in the World." Among their fascinating findings:

• 450 million copies of Harry Potter books have been sold since 1997, which is equivalent to 90 percent of all books sold in the world in 2013.
• 40.7 million Toyota (TM) Corollas have been sold since 1966, which if put bumper-to-bumper would stretched from New York City to Los Angeles 48 times over.
• 633 million bags of Lay's potato chips are sold each year in the U.S., weighing more than an aircraft carrier.

2. Forget the 1 Percent -- It's More About the Top 85 People

In my opinion, the rapidly growing wealth gap in the U.S. and around the world is one of the most critical issues facing civilization today. Over the last few years, we've heard a lot about the "top 1 percent," and the wealth they control is indeed staggering: In 2014, Oxfam reported that just 1 percent of the world's population controls nearly half of the planet's wealth.

But now, even within that top 1 percent, the relative divides are growing: Oxfam said that the world's 85 richest people now own as much as the poorest 50 percent of humanity. Eighty-five people is roughly the capacity of a public bus, which is something I'm guessing you don't know if you're among that busload of super wealthy folks.

1. Less Is More (and Longer) When It Comes to Marriage

This from researchers at Emory University: The more money spent on an engagement ring, the greater the chance that the marriage will end in divorce. For example, couples who spent $2,000 to $4,000 on an engagement ring were 1.3 times more likely to get divorced than those who spent $500 to $2,000 on a ring. And the same research showed that weddings costing $20,000 or more were 3.5 times more likely to end up in divorce that weddings costing $5,000 to $10,000. With the average U.S. wedding now costing more than $30,000, I guess today's weddings vows should be, "For richer, for poorer, until debt do us part."

 

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Ohio Bridal Store Linked to Ebola Survivor to Close

January 8, 2015, 12:09 am

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Filed under: Retail, Scandals and Lawsuits

AKRON, Ohio -- Operators of a northeast Ohio bridal shop linked to an Ebola survivor say the store is closing because it lost significant business and has been stigmatized.

Dallas nurse Amber Vinson was diagnosed with Ebola days after visiting Coming Attractions Bridal & Formal store in Akron in October. The store temporarily closed and cleaned before reopening in November, but business hasn't bounced back.

Owner Anna Younker says her shop has become known as the Ebola store. She tells the Akron Beacon Journal the temporary closure and canceled orders cost the store at least $100,000. That wasn't covered by her insurance because it excludes viral illnesses.

The store will take orders until the end of January and then sell dresses at discounts and liquidate all assets.

 

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5 Reasons to Reconsider Groupon and LivingSocial

January 8, 2015, 1:00 am

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Filed under: Fantastic Freebies, Deals, Coupons

By Mel Bondar

After a few years of celebrating Groupon (GRPN) and LivingSocial, many bloggers seem to have turned on these sites. Lately, I've noticed a trend in people stating that one of the best ways to save money is to just stay away from coupon sites altogether. I couldn't disagree more.

Don't get me wrong, if buy Groupons and LivingSocial coupons and never use them, then these sites are not for you, but for budget shoppers, Groupon and LivingSocial can save a lot of money and offer new experiences, too. Here are five reasons to reconsider group coupon sites:

1. If You're New in Town

Groupon and LivingSocial both have terrific coupons for local events, restaurants and activities. If you've just moved or are interested in getting to know your town better, these should be your first stops. With discounts topping out at over 75 percent, you can find coupons for activities like photography classes, karate classes, painting classes, comedy clubs, museums and more. It's a great way to dip your toe into a new hobby or check out a new spot in town without fully committing your wallet, too.

2. If You're Looking for Gifts

If a friend moves to a new location, check out Groupon or LivingSocial for an affordable, local restaurant coupon. Groupon has done a good job of developing its image into a place that offers you new and exciting experiences. That can help make a coupon from the site feel like a welcome housewarming gift.

Birthdays, holidays and thank you gifts can all be covered through these sites, as well. LivingSocial has a section dedicated to gifts, with a subsection called "under $25" for you frugal shoppers out there.

3. If You Like to Shop

Groupon and LivingSocial can be fantastic places to shop for home furnishings and electronics. You can find things like a $90 sewing machine for $20, a $3,400 mattress for $1,300 and a $400 luggage set for $130. I also saw a $60 bathroom set for $18.

These sites also have deals on clothing for men and women. Did you know that Groupon has a clearance section? You can snag some great deals at bargain prices right before they disappear.

4. If You Like Traveling

If you have flexible travel plans, Groupon and LivingSocial provide incredible savings, especially if you live near a major airport. How about $999 for a trip to China that includes flights, hotels, several meals and a tour guide? You have to be able to go on Feb. 27. For those not ready to head that far or that fast, you can pick up a coupon for an all-inclusive resort in Cozumel for less than $400.

Headed to Vegas? Check out the LivingSocial deals for hotels. You can get the Luxor for as low as $35 a night. These coupon sites can even make a romantic weekend getaway much more affordable. It's pretty common to find deals for local adorable bed and breakfasts, too.

5. If You Like Hunting for Coupon Codes

Be sure to check Groupon or LivingSocial for coupon codes at the store you're shopping at online, such as Nordstrom (JWN), Kohl's (KSS), Home Depot (HD) and PetSmart (PETM). (Don't forget RetailMeNot for more codes.)

 

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Will a New Chevy Volt Revive GM's Green-Car Program?

January 8, 2015, 1:00 am

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Filed under: Company News, General Motors, Rumors, Automotive Industry, This Built America

General Motors (GM) is expected to take the wraps off an all-new Chevy Volt in Detroit next week.

The new Volt will replace a car that was touted as a symbol of GM's post-bankruptcy renaissance -- and targeted by critics of GM's bailout, who saw it as a symbol of misplaced priorities. But will it outperform its predecessor?

The Current Volt Is a Good Car That Never Sold as Well as GM Hoped

Despite the criticism (and the hype), the current Volt did a pretty good job of living up to the technical expectations set for it by GM. But it never lived up to GM's sales expectations: Former CEO Dan Akerson wanted to sell 45,000 Volts a year starting in 2012, but U.S. sales peaked at 23,461 that year and have fallen short since.

Still, the Volt has been an important model for GM in several ways. For one thing, it proved that a Detroit automaker could build a fuel-efficient car using advanced hybrid technology. For another, Volt owners love their rides: The Volt's customer-satisfaction ratings have consistently been among the highest in the business.

Building on that legacy will be important for GM. Also important: advancing the electric technology that powers the Volt, so that it can be extended to other models across GM's product line. So what can we expect with this new model?

How GM Will Improve the Chevy Volt

We won't know for sure until GM reveals the new Volt on Jan. 12. But GM has dropped some hints -- and a few details have leaked.

• Improved range: The new Volt is expected to get about 50 miles of electric-only range before its gasoline-powered "range extender" engine kicks in, up from 38 miles in the current version. That'll give more Volt owners the ability to get through their daily commute without using any gas. And when they do use gas, they should use a bit less: The new Volt will get a new 1.5-liter four-cylinder gas engine that is expected to be more fuel-efficient than the 1.4-liter engine in the current Volt.
• Improved charging. Of course, owners only get that electric-only range if they recharge their Volts every night. GM is making recharging the new Volt a bit easier, with improved chargers that allow owners to preset charging time and levels (to take advantage of off-peak electricity rates, for instance) and provide better indicators and other enhancements.
• More power. GM says that the new Volt's propulsion system is all-new from scratch, with only a single part -- a shipping cap -- in common with the current model's. Those who've seen it say that the new Volt has a much-improved transmission and a re-thought operating system that gives it better acceleration. And the new gasoline engine is expected to be a bit more powerful than the current car's four-cylinder.
• More room. One of the few consistent complaints about the current Volt is its tight backseat, which is strictly for two. The new model is expected to have more room in back, with seating for three.

Long story short: The new model will be an evolutionary step forward from the current Volt -- but given what we know now, it's not a game-changer.

Will the New Volt's Changes Be Enough to Boost Sales?

It depends. Some were hoping that GM would make a more radical leap with the new Volt, but from what we know so far, the new model will be evolutionary, not revolutionary.

If the new Volt's features are in line with those expectations, its success may come down to one big factor: sticker price.

Early sales of the current Volt were limited by the car's relatively high price -- almost $40,000, nearly double the cost of a Toyota (TM) Prius hybrid. The Volt's price has come down since its introduction, with new 2015 models starting at just over $34,000, not counting the $7,500 U.S. tax credit. But in the meantime, gas prices have plummeted. The case for a premium-priced plug-in hybrid has become a bit harder to make.

The price drops have helped Volt sales. But the current Volt is still more expensive than even the plug-in version of the latest Prius, which starts at just under $30,000, or the similarly-priced all-electric Nissan (NSANY) Leaf.

And looming in the distance is another car the Volt is likely to be competing with in a few years: Tesla Motors' (TSLA) much-anticipated Model 3. The Model 3 will almost certainly be more expensive -- over $40,000, most analysts think -- but it'll likely be more luxurious and considerably sportier.

The upshot: GM may feel pressure to price the new Volt under $30,000. That could turn out to be the revolutionary move that jump-starts Volt sales. Will it happen? Stay tuned.

Motley Fool contributor John Rosevear owns shares of General Motors. The Motley Fool recommends General Motors and Tesla Motors. The Motley Fool owns shares of Tesla Motors. Try any of our Foolish newsletter services free for 30 days. Find out the easy way for investors to ride the new mega-trend in the automotive industry in our free report.​

 

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Is Sonic a Better Investment Than Shake Shack's IPO?

January 8, 2015, 1:00 am

≫ Next: 5 Credit Reporting Mistakes That Can Hurt Your Score

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Filed under: Company News, Earnings, Market News, Restaurants, IPOs

There will soon be a new gourmet burger chain for investors to chew on, but let's not forget a thriving throwback player that's storming back into public fancy. Last week may have been dominated by news of Shake Shack's upcoming IPO, but this week it was Sonic (SONC) bringing the beef.

The chain of more than 3,500 drive-in restaurants posted blowout quarterly results. Revenue moved higher for the fiscal first quarter that ended in November, fueled by an 8.5 percent spike in comparable-restaurant sales. Keep in mind that burger-flipping bellwether McDonald's (MCD) posted negative comps in each of the three months that make up Sonic's report.

Earnings excluding a one-time tax benefit a year earlier soared 38 percent to top $10 million or 18 cents a share. Analysts were only holding out for a profit of 16 cents a share, but that's not much of a surprise: Sonic has topped Wall Street's earnings forecasts in three of the past four quarters.

The strong report was enough to send Sonic shares up to an all-time high in after-hours trading on Tuesday. Given the challenges at McDonald's, it's comforting to know that you can still carve out a cozy living serving up cheap burgers and shakes. We'll soon find out if it pays to serve up pricier fare.

Love Shack

Investors hoping for a chance to buy into West Coast darling In-N-Out or East Coast darling Five Guys will have to settle for the smaller yet equally cult-followed Shake Shack.

True to its name, Shake Shack serves up shakes and other frozen custard-based treats. However, it's just as famous for its burgers. The first location opened in the heart of New York City's Madison Square Park 10 years ago, but the concept's growing up in a hurry.

Shake Shack has seen its store count triple from 21 at the end of 2012 to 63 today. You won't find too many chains tripling in two years, and naturally Shake Shack's going to hit the market with some impressive top-line growth.

The average Shake Shack rings up an impressive $5 million a year. Back out the frenzied Manhattan locations, and the average unit volume is still an impressive $3.8 million.

Shake Shack is profitable, though margins have contracted since peaking two years ago. This isn't necessarily problematic. The chain is expanding aggressively, and it's worth noting that 27 of its locations are licensed internationally.

Shake It Up

Given Shake Shack's healthy growth, strong unit-level economics, and ample expansion potential, it's going to be a hot IPO. There are plenty of fans of the chain's chilly treats, Angus beef burgers and original flat-top hot dogs, but the stock should attract an even larger following.

That could be dangerous. We still don't have any pricing information on the IPO. It isn't likely to be cheap, and that's before investors bid it up at the open when it likely begins trading in a few weeks. It's at a time like this that investors may want to warm up to Sonic instead. Yes, Sonic isn't cheap: It's now trading at nearly 30 times this fiscal year's projected earnings. However, it has proven itself as a public company. Sure, it's not expanding as quickly as Shake Shack. It can't, given its already large presence. However, with Shake Shack's comparable-restaurant sales growth decelerating from 7.1 percent in 2012 to 5.9 percent in 2013 to just 3 percent through the first nine months of fiscal 2014, it frames the monster quarter that Sonic just reported as a pretty meaty achievement.

There's no point in chasing Shake Shack when Sonic is right there in all of its retro drive-in splendor. It's parked right in front of you.

Motley Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends McDonald's. Try any of our Foolish newsletter services free for 30 days. Check out The Motley Fool's one great stock to buy for 2015 and beyond.​

 

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5 Credit Reporting Mistakes That Can Hurt Your Score

January 8, 2015, 1:15 am

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Filed under: Personal Finance, Credit History, Credit Score, Credit Repair, Financial Education

By GoBankingRates staff

A quick Google search on "credit report errors" will net several reputable studies confirming that anywhere from 20 to 70 percent of all credit reports contain some sort of error. For those keeping count, that means up to hundreds of millions of Americans must contend with inaccurate information reported about them. These errors can have a major affect on one's personal finances.

When credit repair is your No. 1 priority, working within a faulty system can be frustrating and inefficient. Take a step in the right direction by meeting examples of unfair credit reporting head-on and keep an eye out for credit report errors. Here are five common ones you should be aware of:

1. Personal Information

Never has the correct spelling of your name been so important. As the foundation of your credit report, basic information includes your:

• Name
• Address
• Birthday
• Social Security number (SSN)
• Status as an "authorized user" on an account

These factors all play a pivotal role in fair and accurate credit reporting. A single mistake could mean living with a mistaken identity and someone else's credit score. Avoid this possibility by checking your contact information thoroughly.

2. Duplicate Reporting or Missing Accounts

Mistakes occur everywhere, especially when credit bureaus receive mistakes from credit companies. Unfortunately, such problems could stand between you and fair financing. Keep a watchful eye and be aware of clerical errors such as:

• Duplicate reporting. When a loan is listed twice, the effects on your credit report are daunting. Duplicate reporting can affect your credit utilization ratio (outstanding debt versus total amount of credit extended to you), causing a decrease in your credit score. Another damaging example: When one collection company "sells" an account to another, causing one derogatory account to appear as two or more. Make sure you're not seeing double when it comes to listed accounts -- mistakes like this will unjustifiably impact your financial reputation.
• Missing accounts. While duplicate reporting has its downsides, missing accounts can be just as damaging. Credit history and length are important parts of the scoring system. Let your past work for you by ensuring its presence on your credit report. Contact creditors and the credit bureaus if you notice that information is missing.

3. Incorrect Credit Limits

While your credit limit might seem like an arbitrary number, its affect on your credit score is anything but random. False information can also negatively affect your credit utilization ratio. Consider the following example:

James has a credit card with a limit of $16,000. His total balance on the card is $4,000, resulting in an acceptable debt utilization ratio of 25 percent (4,000/16,000 = 0.25). Unfortunately for James, the credit card company mistakenly reported his limit as $10,000. He is faced with a reported utilization ratio of 40 percent, a lower credit score and fewer financing options.

Take a lesson from James's situation and check each revolving account listing for its accuracy. Why settle for less than the truth?

4. Identity Theft

Many people don't realize that they're victims of identity theft until it's too late. As a byproduct of technology, it's now easier for potential thieves to get their hands on everything from your Social Security Number to the PIN number on your debit card.

Avoid credit report errors as a result of identity theft by reviewing your report for suspicious activity or strange charges. Report these instances to your creditor immediately and place a hold on any affected cards. Recovering from identity theft can be a long process, one made worse without diligence.

5. Settled Accounts

OK, so you had some financial trouble in the past. An account went into collections, you forgot to pay enough tax or perhaps you even filed for bankruptcy. Effective credit repair means knowing your rights even when you've made mistakes. By law, credit reports are required to list all accounts accurately, negative or otherwise.

Review the dark spots on your report and make sure they are not causing more damage than necessary. For example, if you settled an account, make sure it's been updated. The bottom line: Don't let past blunders hurt you more than they should. Work to ensure a better future, and don't hesitate to contact a professional if you need help correcting credit report errors.

This post was contributed by our Financial Literacy Movement partner Lexington Law. Lexington Law is the trusted leader in credit report repair and has been helping consumers take action on their credit reports since 1991. Lexington Law has served over 500,000 clients, and has led to the removal of millions of questionable items from client credit reports such as collections, late payments, bankruptcies and more.

 

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Subaru Recalls 199,000 Vehicles to Fix Brake Line Rust

January 8, 2015, 2:22 am

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Filed under: Automotive Industry, Manufacturing, Consumer Protection, Auto Recalls, Products

DETROIT -- Subaru is recalling about 199,000 cars and SUVs for a second time to fix rusty brake lines that can leak fluid and cause longer stopping distances.

The recall covers the 2009 through 2013 Forester, 2008 through 2011 Impreza, and the 2008 through 2014 WRX and WRX-STI models. It affects vehicles in 20 U.S. cold weather states and Washington, D.C., where salt is used to clear roads in the winter.

Subaru says in documents posted Thursday by the National Highway Traffic Safety Administration that salty water can splash on the brake lines through a gap in the fuel tank protector. That can cause rust and leaks. A recall from last year for the same problem didn't work due to incomplete repair instructions to dealers.

Dealers will apply a corrosion-fighting wax to a brake line connector at no cost to owners.

The recall affects vehicles now registered or originally sold in Connecticut, Delaware, Illinois, Indiana, Iowa, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, New Hampshire, New Jersey, New York, Ohio, Pennsylvania, Rhode Island, Vermont, West Virginia, Wisconsin and Washington, D.C.

Subaru says in the documents that drivers will be alerted to brake line leaks by a light on the instrument panel. Brakes will continue to work even if there's a leak, but drivers may need to push the pedal harder to stop.

 

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Coca-Cola to Cut Up to 1,800 Jobs in Bid to Trim Costs

January 8, 2015, 3:40 am

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Filed under: Company News, Coca-Cola Company, Layoffs, Food & Beverage

NEW YORK -- Coca-Cola (KO) says it will cut between 1,600 and 1,800 jobs in coming months to trim costs.

The Atlanta-based company says it began notifying workers in the U.S. and some international locations Thursday. The company said job types are across all parts of its business and include about 500 at its Atlanta headquarters.

The company, which makes Sprite, Powerade, VitaminWater and other drinks, has about 130,600 employees around the world, according to FactSet.

In an emailed statement Thursday, Coca-Cola said it will "continuously look for ways to streamline our business," suggesting additional cuts could be announced later.

Coca-Cola Co. and rival PepsiCo (PEP) have been looking for ways to cut costs as their soda businesses have flagged in North America. In October, Coca-Cola said it planned to slash costs by $3 billion a year through a variety of measures. It said the savings would be used to help fund the stepped-up marketing it believes is needed to drive up beverage sales. The announcement came as the company reported disappointing revenue for its third quarter, with global beverage volume up just 1 percent.

In addition to the proliferation of alternatives like flavored water and energy drinks, Coke and Pepsi are trying to overcome perceptions that soda makes people fat. Soda consumption in the U.S. has been declining for years, with public health officials calling for special taxes and warning labels to discourage people from drinking it.

In an emailed statement Thursday, Coca-Cola said it doesn't "take decisions about job impacts lightly."

"We have committed that we will ensure fair, equitable and compassionate treatment of our people throughout this process," the statement said.

Coca-Cola's shares rose 30 cents to $43.29 in midday trading.

 

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Got a Problem? Here's How to Complain Effectively

January 8, 2015, 3:47 am

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Filed under: Holiday Shopping, Consumer Ally, Shopping, Consumer Issues

I am a master complainer -- a consumer asset that's as much art as skill.

Years ago, when my son was a toddler, our GE (GE) washer broke, leaking water over the floor and through the basement ceiling. GE repair said they'd send someone in a week. I said, "I don't think so."

My next call was to Jack Welch's office, then GE head honcho. I announced myself as a business associate -- I owned 10 shares of GE back then -- and asked to talk to Jack. I knew I'd never be connected to the big guy. But my target was his secretary, the real consumer powerhouse in the CEO office who asked, "Is there something I can help you with?"

"My washer broke, flooded the house, and your repair department won't send someone for a week," I said.

Within 10 minutes -- I kid you not -- the senior vice president in charge of consumer blah-blah called me in McLean, Virginia, apologized for the inconvenience and promised to solve my problem pronto. The next day a repairman showed up and, when he couldn't find the problem, gave me a new washer. Done and done!

Complaints flow like New Year's Eve champagne this time of year. The Federal Trade Commission and I feel your pain, and we provide these tips.

Return to Store/Website ASAP

Time is not on your side when you have a reasonable complaint -- warranties and time limits on returns and refunds tick by faster than you think. So contact your point of purchase as soon as you discover the problem and get the complaint ball rolling. If your first contact doesn't solve the problem, start working your way up the chain of consumer command -- taking names and notes along the way. Nothing signals you're serious faster than asking a manager to spell his last name.

Contact Corporate

Studies have shown that a complaining customer who is treated fairly becomes a loyal customer. Corporate cares, so talk with the customer service department and tell your story. If you don't get results, ask to talk with supervisors and work your way to the top. I once received six, newly designed baby bottles when I finally reached the company president and told her that the older bottles were spilling milk all over my baby's face.

Use Social Media

The Internet is forever, and no company wants its good name sullied by a customer with a legitimate complaint. The trick here is to be the voice of reason, not the voice of a wacko. Calmly write the facts of your dispute and use spell check (nothing takes the wind out of a reasonable complaint faster than misspellings). But be warned: Companies have sued customers who have complained online. So make sure you fairly represent your complaint and the company's response.

Write a Letter

Writing an effective complaint letter is a talent. It should be the perfect mix of legitimate points, reasonable umbrage and the exact steps you want the company to take to solve your problem. Always include copies of relevant documents and your contact information -- name, address, phone number and email. It's also a good idea to send it certified and receipt request mail, so you have a record that the company received it.

The FTC has a letter template to help your pursuit:

[Your Address]

[Your City, State, ZIP Code]

[Date]

[Name of Contact Person]

[Title]

[Company Name]

[Street Address]

[City, State, ZIP Code]

Dear [Contact Person]:

On [date], I bought [or had repaired] a [name of the product with the serial or model number or service performed]. I made this purchase at [location, date, and other important details of the transaction].

Unfortunately, your product has not performed well [or the service was inadequate] because [state the problem].

To resolve the problem, I would appreciate your [state the specific action you want]. Enclosed are copies [copies, not originals] of my records [receipts, guarantees, warranties, cancelled checks, contracts, model and serial numbers, and any other documents] concerning this purchase/repair.

I look forward to your reply and a resolution to my problem. I will wait [set a time limit] before seeking third-party assistance. Please contact me at the above address or by phone [home or office numbers with area codes].

Sincerely,

[Your Name]

[Account Number]

 

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J.C. Penney to Shut 40 Stores, Cut 2,250 Jobs

January 8, 2015, 6:43 am

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Filed under: Company News, JC Penney, Retail, Layoffs, Stores

NEW YORK -- J.C. Penney Co. said that it will close about 40 stores this year and cut approximately 2,250 jobs, as it tries to improve its profitability.

Most of the stores, located in malls around the country, will close by April 4. The Plano, Texas, company currently runs about 1,060 stores.

The announcement Thursday comes two days after J.C. Penney reported a rise in sales during the critical holiday shopping season, an encouraging sign as the company tries to recover from a botched plan to reinvent itself under former CEO Ron Johnson.

It has tapped a new CEO, former Home Depot (HD) executive Marvin Ellison, who will replace current CEO Mike Ullman in August. Ullman was rehired as CEO in April 2013 after retiring from the top job in 2011.

J.C. Penney said all employees at stores being closed will be offered career training classes, including help writing resumes and filling out applications. The company said that some employees are eligible to receive separation benefits.

Last January, the company announced plans to close about 33 stores and cut approximately 2,000 jobs.

Shares of J.C. Penney (JCP) rose 4 cents to $7.93 in afternoon trading Thursday. Its shares are up about 7.5 percent versus a year ago.

Here is a list of the location of the announced store closings:

Georgia

• Gwinnett Place Mall in Duluth
• LaGrange Mall in LaGrange
• Walnut Square Mall in Dalton

Iowa

• Crossroads Shopping Center in Waterloo
• Southbridge Mall in Mason City
• Westland Mall in West Burlington

Illinois

• Northland Plaza in DeKalb
• Quincy Mall in Quincy

Indiana

• Marquette Mall in Michigan City

Massachusetts

• Hanover Mall in Hanover
• Silver City Galleria in Taunton

Michigan

• Adrian South Mall in Adrian

New Jersey

• Cumberland Mall in Vineland

New York

• Hudson Valley Mall in Kingston

North Carolina

• Parkwood Mall in Wilson
• Randolph Mall in Asheboro
• Signal Hill Mall in Statesville
• Southgate Mall in Elizabeth City

Ohio

• Eastland Mall in Columbus
• North Towne Plaza in Greenville
• Upper Valley Mall in Springfield

Oregon

• Pony Village Mall in North Bend

Pennsylvania

• Chambersburg Mall in Chambersburg
• Granite Run Mall in Media
• Nittany Mall in State College
• Susquehanna Valley Mall in Hummels Wharf
• York Galleria in York

Rhode Island

• Providence Place Mall in Providence

South Carolina

• Aiken Mall in Aiken
• Inlet Square Mall in Murrells Inlet

South Dakota

• Lakewood Mall in Aberdeen

Texas

• Market Square Mall in Brenham

Virginia

• Manassas Mall in Manassas
• The Marquis in Williamsburg

Vermont

• Diamond Run Mall in Rutland
• St. Albans Shopping Center in St. Albans

Wisconsin

• Aviation Plaza in Oshkosh
• Regency Mall in Racine
• Shawano Plaza in Shawano

 

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4 Snazziest Trends from World's Biggest Tech Show

January 8, 2015, 7:04 am

≫ Next: U.S. Consumer Debt Rises Over $14 Billion in November

≪ Previous: J.C. Penney to Shut 40 Stores, Cut 2,250 Jobs

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Filed under: Company News, Technology, Industry News, Consumer Electronics, Investing

It wouldn't be January if new tech didn't dazzle attendees at the annual International Consumer Electronics Show -- or CES, for short. With more than 3,500 exhibitors attempting to grab the attention of an estimated 150,000 attendees in Las Vegas, let's go over some of the tech and exhibitors that are turning heads this month at the world's largest technology show.

1. Bring in the Drones

This is the first year that drones have an official presence at CES, complete with their own netted area for folks to kick the tires on the high-tech playthings. The past year has been filled with dreams of drones delivering everything from burritos to Amazon shipments, but the more practical emphasis at the expo is on more reasonably priced drones that can be used for filming purposes.

GoPro (GPRO) is the biggest beneficiary here, as the gold standard for drones appear to be rugged enough to lift one of GoPro's wearable cameras and achieve smooth flight trajectories. With several exhibitors showcasing footage filmed from their drones, it's a safe bet that your video feeds will have even more aerial drone footage in the near future.

2. We're Not Giving Up on 3-D Printing

One of the hardest-hit industries on Wall Street last year was 3-D printing. Makers of 3-D printers that delivered big gains in 2012 and 2013 crashed in 2014 as sales slowed and the highly touted push for mainstream markets failed to reach the masses.

Well, CES featured its first 3-D printing pavilion, and the makers of these high-tech machines that crank out physical objects have heard the complaints that have been holding them back. The 3-D exhibitors are focusing on making modeling software easier, allowing for a wider variety of raw materials and making a bigger push in the classrooms so the new generation warms up to 3-D printing.

3. This Could Be the Year for Wearables

Wearable computing's bark has been more appealing than its bite. We're not buying smart watches, Google (GOOG) (GOOGL) Glass specs or anything beyond basic fitness bracelets. That should change this year. Apple (AAPL) should be a big driver when the Apple Watch hits retailers in a couple of months, but there were several companies big and small pumping up the prospects for their wearables.

GPS-tracking wristwatches for kids, Bluetooth-activated rings, and plenty of smart watches that aren't hailing from Cupertino were on display. Intel (INTC) even made waves by introducing a computer the size of a penny, inspiring what could be even more ambitious wearables in the future.

4. The Internet of Real Things

The term "Internet of Things" has been gaining steam over the past year, particularly in the home, where automation is being made easier as devices communicate with one another to simplify routine tasks around the kitchen and even man the thermostat.

Google validated the niche when it shelled out $3.2 billion for learning-thermostat darling Nest last year, and this year's CES had plenty of companies displaying ways that they will make appliances and gadgetry smarter inside and outside the home. Products like Belkin's WeMo with home sensors to automate several home appliances and Nest expanding its reach beyond its flagship remotely controlled home thermostat are paving the way for a Jetsons-like future that will be here sooner than you think -- except for the hover cars. Now where's Rosie the robotic maid?

Motley Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends Apple, Google (A and C shares), GoPro and Intel. The Motley Fool owns shares of Apple, Google (A and C shares), and Intel. Try any of our Foolish newsletter services free for 30 days. Check out The Motley Fool's free report for one great stock to buy for 2015 and beyond.

 

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U.S. Consumer Debt Rises Over $14 Billion in November

January 8, 2015, 7:45 am

≫ Next: Mortgage Rates Hit New Lows, but Buyers Remain Hesitant

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Filed under: Student Loans, Personal Finance, Credit Cards, Auto Loans, Financial Education

By MARTIN CRUTSINGER

WASHINGTON -- U.S. consumers increased their borrowing in November, as stronger demand for auto and student loans offset a drop in credit card debt.

The Federal Reserve said Thursday that consumer borrowing rose by $14.1 billion following a $16 billion increase in October. The gains have pushed consumer debt excluding real estate loans to a record level of $3.3 trillion.

The latest figures suggest that an improving economy and strong employment gains over the past year may be making consumers more comfortable with ramping up their borrowing.

The category that includes credit card debt fell by $946 million after an increase of $1.48 billion in October. The decline was outweighed by a $15 billion increase in the category that covers auto and student loans. Borrowing for education and cars has risen rapidly this year.

The Fed's monthly consumer credit report excludes mortgages and other loans secured by real estate. It also doesn't immediately provide separate data for auto loans and student loans for November.

But a quarterly report issued by the New York Federal Reserve Bank that tracks all types of consumer borrowing shows that total household debt, including home mortgages, increased by $78 billion in the July-September quarter to $11.7 trillion.

That is still slightly below the peak for total debt of $12.7 trillion reached in the third quarter of 2008 amid a deepening recession and job losses that prompted households to cut back on their borrowing.

Because of the severity of the recession, consumers had been more hesitant about adding to debt. In particular, mortgage debt has been slower to recover after millions of homeowners lost their homes to foreclosures and banks tightened lending standards.

But economists say that a stronger labor market may be setting the stage for increases in borrowing as consumers grow more confident about the future.

The November increase in the Fed's monthly credit survey put total borrowing 7 percent above where it was a year ago. Auto and student loans are up 8.4 percent, while credit card debt has risen a much smaller 3.4 percent from year-ago levels.

The big rise in auto loans reflects the strong sales year enjoyed by automakers. Student loans have been surging since the recession ended as many people who couldn't find jobs decided to go back to school to improve their job skills.

But there is a concern that young Americans are being saddled with debt that will keep them from buying homes or spending as previous generations have been able to do after college.

 

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Mortgage Rates Hit New Lows, but Buyers Remain Hesitant

January 8, 2015, 8:40 am

≫ Next: Market Wrap: After Rough Start to '15, Stocks Bounce Back

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Filed under: Mortgages, Real Estate, Housing Market, Home Buying, Interest Rates

By MARCY GORDON

WASHINGTON -- Average U.S. mortgage rates started the year by falling to new lows, with the benchmark 30-year rate marking its lowest level since May 2013.

The ongoing decline in mortgage rates would appear to be a boon for prospective homebuyers. But it hasn't yet significantly enticed more buyers into the market. At the same time, there are fewer distressed properties and bargains coming onto the market that attract real estate investors.

This week the nationwide average rate on the 30-year loan fell to 3.73 percent from 3.87 percent last week, mortgage giant Freddie Mac reported. The average for a 15-year mortgage, a popular choice for people who are refinancing, slid to 3.05 percent from 3.15 percent last week.

A year ago, the 30-year mortgage stood at 4.51 percent and the 15-year mortgage at 3.56 percent. Mortgage rates have remained low even though the Federal Reserve in October ended its monthly bond purchases, which were meant to hold down long-term rates.

The key issue for first-time buyers has not been mortgage rates.

The housing market has struggled to fully rebound since the recession ended more than five years ago. Many potential buyers lack the savings and strong credit history needed to afford a home, causing them to rent or remain in their existing houses instead of upgrading. Higher home prices and relatively stagnant incomes have also curtailed buying.

"The key issue for first-time buyers has not been mortgage rates," said Jonathan Smoke, chief economist for realtor.com. It's been concerns like not being able to qualify for a mortgage or to put together a down payment, he noted.

Median household incomes have yet to completely recover and remain below their 2007 levels after adjusting for inflation. Limited income gains have cut into the cash flow and down payment savings needed to buy a home. Meanwhile, home prices have risen and lenders have kept standards tight for making mortgage loans.

And experts see a trend toward millennials putting off buying their first home.

Reasons for Caution

The hesitation can be glimpsed in the number of Americans signing contracts to buy homes. It rose only modestly in November, according to the National Association of Realtors.

At the same time, the bulk of homeowners who could refinance appear to have already done so in recent years. With many home borrowers already carrying mortgages in the range of 3.5 percent to 4 percent, it may not be worth it for them to refinance at current rates. Refinancing carries its own costs and fees.

The picture could improve, though, as the effect of recent changes kicks in. Fannie Mae and Freddie Mac, which back the overwhelming majority of new mortgages, recently relaxed their standards for borrowers' credit scores to qualify.

And on Thursday, President Barack Obama announced a plan to reduce some mortgage insurance premiums, a move the White House says could save homeowners $900 a year and attract 250,000 first-time homebuyers.

Under the plan, the Federal Housing Administration will reduce its annual insurance premiums for first-time buyers for mortgages it backs by 0.5 percentage point, to 0.85 percent.

The changes, together with an anticipated stronger economy and improved job market this year, are a "clear positive" for the housing market, realtor.com's Smoke said.

Record-Low Bond Yields

The decline in mortgage rates also has come as bond yields have hit record low levels. Mortgage rates often follow the yield on the 10-year Treasury note, which has fallen below 2 percent. Bond yields rise as prices fall.

Bond prices were an unexpected strong spot for the financial markets last year, reflecting concerns over global economic weakness.

The 10-year note traded at 1.97 percent Wednesday, down from 2.17 percent a week earlier. It recovered to trade at 2 percent Thursday morning.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country at the beginning of 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 0.6 point, unchanged from last week. The fee for a 15-year mortgage declined to 0.5 point from 0.6 point.
• The average rate on a five-year adjustable-rate mortgage fell to 2.98 percent from 3.01 percent. The fee was unchanged at 0.5 point.
• For a one-year ARM, the average rate slipped to 2.39 percent from 2.40 percent. The fee held at 0.4 point.

 

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Market Wrap: After Rough Start to '15, Stocks Bounce Back

January 8, 2015, 8:46 am

≫ Next: 4 Ways Your Home Is About to Get a Lot Smarter

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Filed under: Energy, Market News, Food & Beverage, Oil & Gas Industry, Stocks

By STEVE ROTHWELL

NEW YORK -- The stock market is bouncing back from a tough start to 2015.

Investors sent shares sharply higher for a second straight day Thursday, erasing the market's heavy losses from the first few days of the year.

The gains were driven by a combination of positive economic news from the U.S. and hopes for stimulus from Europe's central bank. The price of oil is also showing signs of stabilizing after six months of heavy losses, and there is renewed confidence that the Federal Reserve will keep supporting the economy as growth outside the U.S. appears to be flagging.

People will have to get used to volatility at a higher level.

The wild swings in stock prices will likely become more common this year as investors try and anticipate when, if at all, the Fed will start to raise interest rates, said JJ Kinahan, chief market strategist at TD Ameritrade.

"People will have to get used to volatility at a higher level," Kinahan said. It's going to be "one of the primary stories for 2015."

The Standard & Poor's 500 index (^GPSC) climbed 36.24 points, or 1.8 percent, to 2,062.14. The index is now up 0.2 percent for the year, after falling 2.7 percent in the first three days of trading.

The Dow Jones industrial average (^DJI) gained 323.35 points, or 1.8 percent, to 17,907.87. The Nasdaq composite (^IXIC) gained 85.72 points, or 1.8 percent, to 4,736.19.

Comments from Charles Evans, president of the Fed's Chicago branch, late Wednesday gave stocks a lift. Evans said that the U.S. central bank shouldn't rush to raise interest rates, because inflation was likely to remain tame for several years, according to Bloomberg.

The prospect of more stimulus from other central banks is also driving the rebound.

European data Wednesday showed that consumer prices fell in December for the first time since 2009. That increased pressure on the European Central Bank president Mario Draghi to act to support the region's flagging economy.

Many analysts expect the bank to announce a plan this month to buy European government bonds. Such a move, known as quantitative easing, is designed to hold down long-term interest rates and stimulate borrowing and spending.

"Oddly enough, the market was helped by some of the weaker data out of the eurozone," said Quincy Krosby, a market strategist at Prudential Financial. "In many ways, the bad news was the good news."

Investors also got encouraging news on hiring Thursday.

A report showed that fewer Americans applied for unemployment benefits last week. That's a sign that employers expect the economy to keep growing, prompting them to hold on to workers. The Labor Department said Thursday that applications for unemployment benefits fell 4,000 last week to 294,000.

Economists forecast that a government report Friday will show that U.S. employers added 243,000 jobs last month.

Among individual stocks, Constellation Brands (STZ) was one of the day's biggest gainers.

The company, which owns the Corona and Modelo beer brands, said its fiscal third-quarter earnings climbed thanks to increased beer sales. The earnings surpassed the expectations of Wall Street analysts, and the company also raised its full-year profit forecast. The stock gained $4.59, or 4.5 percent, to $107.64.

Oil Prices Rise

In energy trading, oil ended the day fractionally higher after fluctuating between small gains and losses for most of the day.

U.S. crude oil gained 14 cents, or 0.3 percent, to $48.79 a barrel. Brent crude, a benchmark for international oils used by many U.S. refineries, fell 19 cents to close at $50.96 in London.

A big fall in the price of oil earlier in the week helped spark a big sell off in the stock market.

The price of the commodity has fallen by more than half since June last year as traders try to price in a glut of supply due to increased production. The sharp drop in prices has also prompted concern that economies outside the U.S. remain weak.

In bond trading, prices fell. The yield on the benchmark 10-year Treasury note rose to 2.01 percent from 1.97 percent on Wednesday.

The dollar rose against most major currencies. Against the Japanese yen, the dollar rose to 119.63 from 119.65. It rose to its highest in nine years against the euro, trading at $1.1790.

In metals trading, gold edged down $2.20 to $1,208.50 an ounce, silver fell 16 cents to $16.39 an ounce and copper rose a penny to $2.77 a pound.

In other futures trading on the NYMEX:

• Wholesale gasoline rose 0.3 cent to close at $1.341 a gallon.
• Heating oil rose 1.1 cents to close at $1.711 a gallon.
• Natural gas rose 5.6 cents to close at $2.927 per 1,000 cubic feet.

What to watch Friday:

• The Labor Department releases employment data for December at 8:30 a.m. Eastern time.
• The Commerce Department reports wholesale trade data for November at 10 a.m.

 

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4 Ways Your Home Is About to Get a Lot Smarter

January 8, 2015, 10:00 pm

≫ Next: 4 Ideas to Save the Multiplex and the Future of Movies

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Filed under: Energy, Technology, Google, Apple, Home & Garden

The last decade has been full of incredible technological advancements, from the smartphone to electric vehicles. But companies are far from finished innovating, and one of the areas of focus for the next decade will be your home.

Intelligence within the home is improving, with devices and apps learning from our interactions with them. For example, "smart" devices can understand when you're home, what your preferred temperature is, and when it's cheapest to use energy.

Products like Wink, Control 4 and Apple's (AAPL) HomeKit are just a few of the platforms giving consumers the ability to control their homes in ways we've never been able to before, and as these grow, the number of smart devices in the home will increase as well. Here are a few advancements these platforms can look forward to in the next decade.

1. Your Thermostat Will Enable Effortless Comfort

One advance already making its way into homes is smarter heating, ventilation and air conditioning. Google's (GOOG) (GOOGL) Nest is probably the best-known smart thermostat, learning when you like the temperature to be warmer or cooler, detecting when you're away from home and allowing remote connectivity even when you're away. Instead of you always having to program the thermostat, it will learn to save energy during the day when you're gone and turn the heat or A/C on in time for comfortable temperatures when you get home.

I think the next advancement for the masses -- it's something Bill Gates built into his house five years ago -- will be integrating smartphone capabilities and communication, like location services, into HVAC controls. Your home will be able to tell when you leave work and turn the A/C on just in time for when you get home. Maybe you're away for the week and forgot to turn down the A/C before you left. Your home could be set to adjust automatically based on your location. Your home may even be able to tell who is inside and what their preferred temperature or music is, adjusting automatically.

2. Solar Energy Will Play a Big Role

Millions of homes will be run by solar power within the next decade, and smart homes of the future will provide smart energy production to go along with smarter energy demand. Solar panels produce energy during the day, when you may not be home, making it a perfect time to run the washing machine, use air conditioning and even do the dishes with on-site energy production. Solar systems can tie into your home platform to use your energy production as you choose, whether it's to minimize cost or maximize use of your own solar energy.

Energy storage for solar energy will also play a role in energy choice, not only providing security in case of a power outage, but allowing you to use some of that extra energy you produce during the day, at night. The solar power system will also be able to talk to your home control platform to intelligently plan when and how to use energy depending on your desires.

SunPower (SPWR) is one of the leaders in this area and is introducing solar and energy storage systems that integrate with Apple's iOS HomeKit and other platforms. This will allow consumers to choose if they want to use most of the energy they produce during the day, save the most money or consume the least energy. Then the solar power system will make decisions on when to turn on the A/C, run the dishwasher or perform any other controllable function.

3. Appliances Will Strive for Efficiency

Consequently, then, in this solar-run home of the future, smart appliances like washing machines, dryers and dishwashers will be a huge component, communicating with the home's control platform and solar power system to run at the most efficient times. Already, some smart capabilities are popping up in appliances from LG and GE (GE) that can be set and started with mobile apps. The ability to control when appliances use energy will be key to making smarter choices about energy consumption.

4. Electric Vehicles Will Coordinate With the Smart Home

Tying into the solar system might be an electric vehicle. The EV could act as a key component to the home, taking abundant solar energy during the day, reducing consumption during peak evening hours, and completing a charge at night when demand is low. Some companies -- like German semiconductor company Infineon -- plan on using the EV as an extra battery to power the home at peak times.

In the future, we'll not only be charging our vehicles at home, we'll be doing so intelligently to save money and still have a full charge in time for the drive to work.

Whether it's comfort, environmental impact, or cost savings that drive consumers to a smarter home, it's a revolution that is set to pick up steam in the next few years.

Motley Fool contributor Travis Hoium owns shares of Apple and General Electric and is long SunPower. The Motley Fool recommends Apple and Google (A and C shares). The Motley Fool owns shares of Apple, General Electric Company, and Google (A and C shares). Try any of our Foolish newsletter services free for 30 days.​

 

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4 Ideas to Save the Multiplex and the Future of Movies

January 8, 2015, 10:00 pm

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Filed under: Company News, Walt Disney, Entertainment Industry, Music & Entertainment, Investing

There's less gold in silver screens these days. Box office watcher Rentrak is reporting that ticket revenue in the U.S. and Canada slipped 5.3 percent in 2014. Ticket prices are creeping higher with every year, so the decline in multiplex attendance is actually even more pronounced than Rentrak's revenue tally. You have to go back to 1995 to find the last time that movie theaters sold fewer than the roughly 1.25 billion tickets sold last year.

How bad was 2014 for exhibitors? Well, Disney's (DIS) "Guardians of the Galaxy" was the top draw, ringing up a little more than $333 million in domestic ticket sales. You have to go back to 2001 to find a year in which the highest-grossing film made less than that.

Something's not right at the multiplex. Let's go over a few ways to make it right.

1. Improve the In-Theater Experience

The home theater experience has improved dramatically over the past decade. High-def, Blu-ray and now 4K Ultra HD make pictures screened at home richer than ever before. The popularity of streaming services opens up the options beyond what's on TV, available on demand, or in one's physical media collection. Even something as simple as the DVR that allows someone to pause live TV to take a call, run for a snack in the kitchen or take a bathroom break makes staying at home more compelling than it used to be.

A night at the movies hasn't had the same kind of transformational upgrade. Stadium seating and freestyle fountain drink stations aren't enough. If anything, technology has made it worse since there's always somebody checking a smartphone during a movie. It doesn't matter if the device is respectfully on silent; it distracts your peripheral vision.

It certainly wouldn't be cost effective for a multiplex to divide into hundreds of personalized screening rooms. That's as creepy as it would be expensive. However, exhibitors can help immerse patrons into movies with deeper bucket seats that recline more and optional side blinders to eliminate neighboring distractions.

2. Take Mobile Ordering to the Next Level

Moviegoers have been able to preorder movie tickets for years, but why are they then forced to queue up for concessions? Long lines often lead to folks walking away from ordering tubs of popcorn, buckets of soda and boxes of overpriced candy. That's bad news for everybody. It means exhibitors forgo high-margin add-on sales to the ticket revenue they have to split with Hollywood.

I'm sure that some forward-thinking theaters have already embraced mobile ordering for concessions, but this needs to be the norm. Exhibitors may counter that concessions are visual impulse items, and mobile buyers may spend less than those whose eyes widen as they approach the glass display case or visual menu boards. Well, that only means that they haven't mastered the art of e-tailers with thriving mobile shopping businesses that have thrived at selling the invisible.

3. Make Movies More Interactive

Most theaters have migrated from physical reels of film to digital projection systems. The move saves the industry a bundle in terms of printing and shipping costs, but the ultimate benefit of digital is that movies can be enhanced and updated more easily.

We're not just talking about adding blooper reels after the first week or two. The moment that Hollywood can crack the code on making movies more interactive -- giving actual moviegoers at a single screening a say on actions, alternate endings or soundtracks -- the more fun the experience becomes to jaded millennials who would rather spend their time gaming than at a multiplex. Interactive integration translates into the desire to see the same movie more than once. With theater audiences drying out since peaking in 2002 -- and it's been fairly consistent, with attendance now declining in four of the past five years -- finding ways to encourage repeat viewings from those still going to the movies is important.

4. Embrace Subscriptions

This is the week that AMC Entertainment (AMC) begins its partnership with Movie Pass to offer a month of daily screenings for as little as $35. The test is limited to the Denver and Boston metro markets, but we're living in times where media buffets are trumping piecemeal experiences.

Multiplex owners can't live in a vacuum. DVD and MP3 sales have dried up, but we're not consuming less video or music. Consumers simply appreciate access to a growing catalog of content at a flat rate. AMC tried a subscriptions model a decade ago. It flopped, but it was too soon. The time is right, even if it means devaluing the perceived value of a single screening.

Motley Fool contributor Rick Munarriz owns shares of Walt Disney. The Motley Fool recommends and owns shares of Walt Disney. Try any of our Foolish newsletter services free for 30 days. Is your portfolio ready for a change? Check out our free report on one great stock to buy for 2015 and beyond.​

 

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Still Little or No Equity in Your Home? Try This Solution

January 8, 2015, 10:00 pm

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Filed under: Housing Market, Home Loans, Foreclosure, Renting, Home Rental

Even with nice bounce-back appreciation over the last few years, almost 10 million homeowners are underwater, according to Forbes. And more than one third of American homeowners are effectively underwater, meaning they have less than 20 percent equity.

I salute homeowners who are riding out the storm, but life can get in the way of our best intentions. Many negative-equity homes will be forced on the market by job transfers, divorces, job losses and deaths. What can you do if you are forced to sell a home with negative equity? Many people don't have the cash to make up the shortfall but don't want to consider a foreclosure or a short sale.

The only cure is time, and the property needs time for two things. The first is future appreciation, which of course is not guaranteed. What is guaranteed is that regular payments over time will reduce the mortgage. If you don't have time, use a long-term lease option to turn the payments over to someone who would be thrilled to have the benefits of any future appreciation and debt reduction.

For Example

Let's say eight years ago you bought a $250,000 home. It's now worth $200,000, and your mortgage balance is $221,000. This loan is current and was taken on a 30-year amortization at 6.5 percent. The principle and interest payment is an affordable $1,580, plus taxes and insurance.

Market your home to people interested in putting down roots for longer period than most leases allow. Offer them a two-year lease with the right to renew that lease four more times for a total of 10 years. During that time or after the 10 years are up, they have the right to buy the home for the mortgage balance. Their monthly payment is $1,800 (which includes taxes and insurance), and they agree to handle all maintenance and repairs. You could expect to receive a $5,000 to $10,000 nonrefundable option deposit from the tenant/buyer because of these very attractive terms.

After 10 years, that original $250,000 mortgage now has a balance of $158,000. The value of the home with modest 3 percent appreciation could be $270,000. This gives the new tenant/buyer $112,000 equity in the home, and you get out from a bad financial situation with your credit and honor intact. You also would have depreciated the property for all those years, giving you some annual tax benefits. Plus, you had very few headaches during because the tenants/buyers agreed to handle maintenance.

You hope obviously that the tenants buy you out by refinancing or selling. If they default, you evict them just like a normal tenant. Then the play would be to sell the home and pocket any extra equity yourself or re-lease the property. This strategy puts time and current market forces in your favor.

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

 

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Allan Mecham: Is This Stock Guru the Next Warren Buffett?

January 8, 2015, 10:00 pm

≫ Next: A Lot Changes in Your Taxes When You Get Married

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Filed under: Warren Buffett, Investing

By Paul Sisolak

Some phenomena happen so rarely that we'll wait years before seeing them, like the reappearance of Halley's Comet or the Detroit Lions winning their first Super Bowl. In the same vein, there are rare visionaries like Albert Einstein, Steve Jobs and Warren Buffett.

In the business world, Buffett is one of the biggest names in the 21st century, with an unerring, almost psychic ability to predict the best market ventures -- and a subsequently enormous net worth ($72.2 billion, according to Forbes). Of course, that's all offset by his humble, folksy attitude toward life and money. Sure, he has his contemporaries, but nobody even comes close to mastering his investing touch.

At 84, Buffett can't hog the mantle of top investor forever. Industry experts and columnists point to several people who could replace Buffett as the de facto investing powerhouse; one name that keeps getting mentioned as an up-and-coming investing star is that of 37-year-old Allan Mecham, a Utah-based investor known as "The 400 Percent Man" for his mind-boggling rate of return that's left Wall Street in the dust. Mecham's background and uncomplicated approach to investing also bear an uncanny resemblance to Buffett's.

Meet Mecham

What makes Mecham such a curious potential successor to Buffett is that he's as equally auspicious as he is enigmatic. He's a young investor and partner with a small firm in Salt Lake City -- Arlington Value Capital -- whose hedge fund structure regularly turns profits, even during the 2008 economic downturn, according to MarketWatch. Mecham has been in the investing game for 15 years and, according to MarketWatch, has "earned an astounding cumulative return of more than 400 percent by investing in the stock of U.S. companies - many of them larger ones like Philip Morris (PM), AutoZone (AZO) and PepsiCo (PEP)."

Mecham's portfolio is valued at more than $443 million, according to Dataroma. Some of those investments are similar to Buffett's, including a 23 percent stake in Bank of America (BAC) and over 10 percent in none other than Berkshire Hathaway (BRK-A), bought up when Buffett's stock was low. Mecham's strategy -- and trusty gut instincts -- are also reminiscent of the Oracle of Omaha.

"What's particularly interesting is that Mecham simply seems to follow his nose after reading anything and everything and then just thinking about the best route to take," writes Michelle Jones of ValueWalk. "Does that sound familiar? He doesn't use complicated algorithms or technical data to figure out where to put his money. He simply does the homework and thinks before making a decision."

He Reads and Thinks

"Mecham doesn't even like to build spreadsheets. He doesn't care about the next quarter, he cares about the next ten years," writes Brett Arends of Forbes. "He doesn't subscribe to expensive data terminals. He rarely even uses the Internet. Mecham downloads company 10-K filings and reads and reads and reads ... and thinks and thinks and thinks."

These aren't the only ways Mecham is like a modern-day Buffett. A college dropout, his investment savvy and success are largely self-made. Somewhat shy and reclusive, he's not the ostentatious banker type, but low-key and humble, not unlike Buffett -- who, with more money in the world than God, still lives in the same Omaha house he bought back in the 1950s.

"Mecham doesn't look, talk or act like a typical Wall Street manager," writes Arends. "He's soft-spoken. He doesn't use jargon. He dresses like he works in a bookshop, with a patterned shirt and a plain tie. And the story of his success, arguably, says a lot about the flaws of the fund-management industry. By his own account, and those of other investors who have vetted his fund, Mecham has no secret sauce or amazing algorithm; what's extraordinary about this young man is how ordinary he is."

A Simple Investment Style

Buffett took a seemingly archaic approach to investing in the 1950s, was a millionaire by the 1960s, and by the 1990s, a billionaire. In the 21st century, an investor like Mecham is following this simple, linear path.

"What makes Mecham's story especially interesting is that he has produced this extraordinary performance without being an astrophysics PhD or having access to a more powerful computer than anyone else," writes Arends. "Most investors turn gooey-eyed over talk of 'proprietary algorithms' or quantitative analysis. The more complicated it sounds, the more excited they get. But Mecham hasn't done things that are really complicated. He's done things that are really quite simple."

"The way Mecham runs money is very different from how typical asset managers operate," writes Ashby Monk of the Institutional Investor. In fact, Mecham's basic investment style will sound familiar to anyone familiar with Warren Buffett. Mecham seeks to invest in businesses with healthy long-term prospects, a steady revenue stream, impressive, solid management, and a defense system against competitors -- sort of a financial barrier. Another Buffett-ism Mecham seems to have picked up is financial patience.

The World According to Mecham

Here are some of Mecham's favored investments rules, according to MarketWatch:

• Focus on the positive. Ignore the drops and dips in the economy and look instead at stable businesses that can thrive during any financial climate.
• Keep only a few investments. Mecham believes against stock diversification; the most successful private-investment firms have the advantage of keeping just a few key investments close to the belt in order to see some financial returns.
• Favor comprehension over spreadsheets. Instead of deciphering spreadsheet upon spreadsheet, Mecham prefers to get a better understanding of a company, like its operations, management and clients, in order to make the best investment decisions. (Taken right out of Buffett's playbook -- the Oracle only invests in what he knows.)
• Think about the long term. Warren Buffett has been doing this for years: Forecast where a company will be, and what it'll be doing, in decades, not quarters or even years.
• "Activity is the enemy of returns." Mecham's signature quote emphasizes that inactivity - sitting still and doing nothing -- is a big secret for success in the long run, rather than responding to every single market fluctuation, blip or change.

Other Contenders for the Next Warren Buffett

Who else might assume the Buffett throne? There's Ted Weshcler and Todd Combs, two of Buffett's stock pickers at Berkshire Hathaway.

Forbes' Ken Kam taps four men from the Marketocracy Explore Team -- Justin Uyehara, Mike Koza, Kai Petainen and Marcus Eder -- as potential future Buffetts.

Guo Guangchang is known in the Far East as the "Warren Buffett of China," according to The Motley Fool, which also pegs Biglari Holdings' Sardar Biglari (who shares the same birthday as Buffett) as a contender.

But do they have what it takes to match the investment hype of an Allan Mecham? Only time will tell who'll become America's next biggest investor. In Buffett's own words, "Time is the friend of the wonderful business, the enemy of the mediocre."

 

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A Lot Changes in Your Taxes When You Get Married

January 8, 2015, 10:00 pm

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Filed under: Taxes, Marriage, Income Tax, State Income Tax

Getting married is an incredibly important event in your life. With your wedding, you and your new spouse start your life together as a family. A lot changes as soon as you say "I do," not the least of which is the way you're treated by the taxing authorities.

While taxes probably aren't the first thing you think about when you're planning a wedding, they are a part of your life. Understanding how your taxes change once you're married will help you get the right financial start to your life together. Money troubles are a leading cause of divorce and taxes can be a big drain on your available money. Put those two facts together and you just might find that getting in control of your taxes early on might help you hold that new marriage of yours together.

The Big Change: Income Taxes

Of the taxes that affect you as an individual, your income taxes will likely change the most. In the United States, the three biggest drivers of your income tax rate are your marriage status, how you choose to file if you're married, and your income level. Whether the change from "single" to "married" is a help or a hurt depends on how much each of you make and whether you choose to file jointly or separately.

If you're married as of Dec. 31, you're considered married for the year, and you can either file "married filing separately" or "married filing jointly." For 2015, assuming nothing changes in the tax laws by the end of the year, the table below shows the tax brackets you'll face depending on your status:

Marginal Tax Rate	Single	Married Filing Jointly	Married Filing Separately
10%	$0 - $9,225	$0 - $18,450	$0 - $9,225
15%	$9,226 - $37,450	$18,451 - $74,900	$9,226 - $37,450
25%	$37,451 - $90,750	$74,901 - $151,200	$37,451 - $75,600
28%	$90,751 - $189,300	$151,201 - $230,450	$75,601 - $115,225
33%	$189,301 - $411,500	$230,451 - $411,500	$115,226 - $205,750
35%	$411,501 - $413,200	$411,501 - $464,850	$205,751 - $232,425
39.6%	$413,201 or more	$464,851 or more	$232,426 or more
Brackets based on your taxable income level.

Source: U.S. Internal Revenue Service.

Generally speaking, the higher your income level and the closer your income and your spouse's income levels are, the more likely you are to be hit with a "marriage penalty" of higher taxes for being married. On the flip side, the lower your income or the further apart your income levels are, the better the chances that you'll get a "marriage bonus" of lower taxes for being married (particularly if filing jointly).

In many but not all cases, "married filing jointly" will result in a lower tax bill at the federal level, but things may change once your state taxes are considered as well. In addition, some deductions, credits, or other benefits may not be available if you file separate returns. For instance, your ability to contribute to a Roth IRA starts to phase out at $1 of earned income if you file separate returns while living together at all during the year, but the phase-out doesn't start until $181,000 if you file jointly.

Still, even if your tax bill is higher filing separately instead of jointly, you might want to file separately. That's particularly true if your marriage is in the process of dissolving or if you don't trust your spouse to be honest on his or her tax reporting.

Any Other Major Changes?

Another big tax change that happens to married couples has to do with gifts and inheritances. In most circumstances, spouses can give each other gifts of unlimited size without triggering a gift tax, and spouses can typically inherit from each other without triggering any estate taxes. Both the gift and inheritance rules work as long as both you and your spouse are U.S. citizens, but if your spouse isn't a citizen, there are limits to both.

Additionally, married couples can qualify to exclude up to $500,000 in capital gains on the sale of their primary home, compared with $250,000 for single people. Being married also allows a person to collect on his or her spouse's record for Social Security benefits. That's a useful tax-supported supplement in retirement or if a member of the couple dies or becomes disabled.

Love, Marriage, and Taxes

The tax consequences of getting hitched may not be the first thing on your mind when you're planning your wedding, but they will be with you throughout your married life. Understanding what changes with your taxes before you tie the knot can help keep the financial surprises in your marriage to a minimum. And that should help you focus your attention on what really counts -- your new life together.

Chuck Saletta is a Motley Fool contributor Try any of our Foolish newsletter services free for 30 days. Check out our free report on one great stock to buy.​

 

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