First-Time Advertisers Gamble Big on Super Bowl Ads

January 28, 2015, 4:57 am

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Filed under: Media, Advertising & Marketing, Economic Recovery, Economy, This Built America

By MAE ANDERSON

NEW YORK -- More Super Bowl ad rookies will be trying to get a touchdown this Sunday.

There will be 15 new Super Bowl advertisers this year, the most since 2000, before the economy fell into what would be the first of two recessions since. Advertising experts say the rookie interest in Super Bowl ads is a positive sign that companies are feeling good in the most recent economic recovery.

New advertisers like Carnival cruises and Skittles candy are hoping to capitalize on the massive size of the Super Bowl audience: The game Bowl is advertising's greatest showcase, with more than 110 million people expected to tune in to watch to the Seattle Seahawks and New England Patriots. And more than the sheer size of the audience, ad experts say new advertisers also are hoping to draw from the goodwill people feel toward Super Bowl ads.

But at about $4.5 million for a 30-second spot, advertising during the Super Bowl is a huge gamble too. Some first time advertisers succeed in becoming a household name: Godaddy.com established itself with a racy Super Bowl spot 11 years ago. But others misfire: Groupon's (GRPN) first and only Super Bowl effort in 2011 aimed to be a tongue-in-cheek take on public service announcements, but was criticized for being insensitive.

"If you need go get a huge audience you can get it here," said Kelly O'Keefe, a professor at VCU Brandcenter in Richmond, Virginia. "There will be more losers than winners as there are every year. But for the brands who manage it well it can be a great place to reach consumers."

Here some Super Bowl rookies you'll see on Sunday:

A Sweet Deal

Skittles has had a major presence at NFL games thanks to Seahawks running back Marshawn Lynch's professed love of the candy. Lynch has been a fan of the chewy candies since he was a kid playing sports, and fans throw Skittles candy on the field when Lynch makes a big touchdown run. Skittles became an official NFL sponsor this season, and decided to advertise during the big game for the first time -- even before they knew the Seahawks would be playing in the big game, said Matt Montei, senior marketing director for confections at Wrigley. The 30-second ad focuses on how Skittles settles differences.

Teaser ad: http://youtu.be/tqvSTAZRbCk

Cruising Ahead

Carnival Corp. (CCL), the world's largest cruise company, is trying to boost the image of cruises with its first ever Super Bowl ad after several years of bad publicity from illnesses on cruise ships and the sinking of the Costa Concordia wreck in 2012.

"We want to start a new conversation about cruising," said Ken Jones, vice president of corporate marketing for Carnival.

The company created six ads and let people vote on them online. One ad shows the fairytale moments that happen during a cruise and features "cruise virgins" talking about their first time on a cruise. Only one will air on Super Bowl Sunday, but the company isn't saying which one.

Ad contest: http://www.carnivalmarketingchallenge.com

Sticking Like Glue

Chances are, the name Loctite doesn't spring to mind when you think of glue. Loctite, part of consumer products group Henkel, will try to change that in its Super Bowl spot.

Henkel started an ad campaign for Loctite in May with the theme, "Win at Glue," including an ad featuring people dancing around in Loctite-branded fanny packs.

Loctite's 30-second Super Bowl ad could expand on that theme. Pierre Tannoux, Loctite's director of marketing, said the company wanted to break out of the way the category is normally advertised "in a very expected, boring way, in expected places."

Online: https://www.youtube.com/watch?v=sMMr9EMZX7U

Bringing Life to Batteries

Mophie, which makes phone cases that hold extra batteries, says its 30-second Super Bowl ad focuses on raising awareness that everyone faces the same issue with too-short battery life on the smartphone rather than beating the brand name into people's heads.

Ross Howe, Mophie vice president of marketing, said while the company is the dominant battery case player, they have hit a plateau after several years of growth and thought it was time to expand awareness of the brand.

Funny Business

Wix.com, which hosts customizable web sites, said its 30-second Super Bowl is right for the company right now: it went public in 2013 and has been growing its user base. Now it's ready to reach a broader audience. The ad shows retired NFL players like Terrell Owens and Brett Farve starting humorous fictional businesses post NFL -- Owens, for example, starts a pie company.

Click here for an extended version of the spot.

 

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Fed Stays 'Patient' But Voices New Low Inflation Concerns

January 28, 2015, 6:03 am

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Filed under: Inflation, Unemployment Rate, Economic Recovery, Federal Reserve, Interest Rates

By MARTIN CRUTSINGER

WASHINGTON -- The Federal Reserve reiterated Wednesday that it will be "patient" in raising rates from record lows but noted that inflation remains well below its target rate.

In a statement after its latest policy meeting, the Fed made clear that no rate increase is imminent. Chair Janet Yellen said after last month's meeting that by saying it would be "patient," the Fed was signaling there would be no rate increase for at least two meetings.

The Fed's statement Wednesday said the factors holding inflation below its 2 percent target rate have intensified since its last meeting in December. Inflation has stayed ultra-low partly because of a plunge in energy prices and a steadily strengthening dollar.

The central bank said it thinks inflation will decline further before starting to rise gradually.

The Fed statement's emphasis on low inflation could affect when it decides to raise its key short-term rate from near zero. Many economists have forecast a Fed rate hike in June but some have pushed back that timetable.

The U.S. economy's steady growth and a strengthening job market would normally argue for a move to begin raising rates to prevent high inflation. The Fed has kept its benchmark rate near zero since December 2008 to encourage borrowing, spending and investment and support the economy's recovery from the Great Recession. The Fed's key rate affects rates on many consumer and business loans.

But concerns about global economic weakness and low inflation have raised doubts about when the Fed's first rate increase will occur. A growing number of economists say the date could slip to September or even later. Economists at Morgan Stanley (MS) this week pushed back their forecast for the first rake hike to March 2016 because of the factors holding inflation down.

If the Fed wants to signal that a rate hike is coming in June, it would need to alter the "patient" wording at its next meeting in mid-March

A complicating factor is the European Central Bank's new plan to flood its sputtering economy with more than 1 trillion euros. That money should keep the eurozone's interest rates ultra-low and could lead some investors to buy higher-yielding U.S. Treasurys. That would further strengthen the dollar and could push U.S. inflation further below the Fed's 2 percent target.

Growth in China, the world's second largest economy, is slowing, too.

By contrast, the U.S. economy added nearly 3 million jobs added last year, enough to cut the unemployment rate to 5.6 percent. That is just above the Fed's goal of 5.2 percent to 5.5 percent unemployment.

But Yellen and other Fed officials have pointed to other factors -- such as weak pay growth and a still-high number of part-time workers who can't find full-time jobs -- as evidence that more must be done to achieve a healthy job market.

U.S. prices rose just 1.2 percent in the 12 months that ended in November, according to the Fed's preferred gauge of inflation. When inflation is too low, consumer spending -- and economic growth -- can slow as people delay purchases on the assumption that the same or lower prices will be available later.

The biggest fear is deflation -- a broad decline in prices and income that can further restrain spending and even tip an economy into recession.

 

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Market Wrap: Stocks End Lower After Fed Statement, Oil Drop

January 28, 2015, 8:50 am

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

By Sinead Carew

NEW YORK -- U.S. stocks ended Wednesday's session lower, driven by a sharp decline in the S&P 500 energy sector, after the Federal Reserve said the domestic economy was growing at a solid pace, signaling it remains on track to raise interest rates later this year.

Concluding their first policy-setting meeting of the year, Fed officials said they would be "patient" on raising rates as they looked past the urgent moves made by other central banks this month to boost their struggling economies.

The dollar strengthened further after the Fed statement, putting renewed pressure on oil, which fell to its lowest level since early 2009. This pushed energy stocks down further.

While many market participants said they were unsurprised by the Fed comments, Stephen Massocca, chief investment officer at Wedbush Equity Management in San Francisco said the Fed's language looked slightly stronger in support of a rate hike.

"It was more hawkish than people thought. But you are counting grains of sand coming through the hourglass so I don't think you will see it resonate much longer than what we've seen in the last hour or so," Massocca said.

"I don't think anyone is going to overreact here, but it was a surprising to me. I thought they would turn the dial 2 degrees and they turned it 6 degrees," he said.

Bond prices rose after the statement, which may also have put some pressure on stocks.

The Dow Jones industrial average (^DJI) fell 195.84 points, or 1.13 percent, to 17,191.37, the Standard & Poor's 500 index (^GPSC) lost 27.39 points, or 1.35 percent, to 2,002.16 and the Nasdaq composite (^IXIC) dropped 43.50 points, or 0.93 percent, to 4,637.99.

The S&P energy sector finished down 3.9 percent as U.S. crude futures tumbled more than 4 percent to $44.31 a barrel. Barclays (BCS) and Goldman Sachs (GS) posted bearish notes on oil earlier in the day.

Rising Rates?

"Today's statement makes it apparent that they are less convinced that the core can stay insulated from the drop in oil prices," said Brian Jacobsen, chief portfolio strategist at Wells Fargo Funds Management in Menomonee Falls, Wisconsin. "Now, September is when I think the Fed will lift rates off zero."

The market had been boosted earlier by earnings from companies including Apple and Boeing.

A 5.7 percent advance in Apple (AAPL) shares limited losses on the Nasdaq. Apple smashed Wall Street expectations with record sales of big-screen iPhones in the holiday shopping season, which helped the company post the largest quarterly profit in corporate history.

Boeing (BA) added 5.4 percent after handily beating top- and bottom-line expectations.

NYSE decliners outnumbered advancers 2,284 to 825, for a 2.77-to-1 ratio; on the Nasdaq, 2,077 issues fell and 665 advanced for a 3.12-to-1 ratio.

The S&P 500 posted 58 new 52-week highs and 14 lows; the Nasdaq composite recorded 72 new highs and 71 lows.

Volume was heavier, with about 7.6 billion shares traded on U.S. exchanges, above the 7.16 billion average for the month so far, according to BATS Global Markets.

-With additional reporting by Ryan Vlastelica, Rodrigo Campos, Chuck Mikolajczak and Richard Leong.

What to watch Thursday:

• The Labor Department reports weekly jobless claims at 8:30 a.m. Eastern time.
• The National Association of Realtors releases the pending homes sales index at 10 a.m.

These selected companies are scheduled to release quarterly financial results:

• Abbott Laboratories (ABT)
• Alibaba Group (BABA)
• Ally Financial (ALLY)
• Amazon.com (AMZN)
• Broadcom (BRCM)
• Cardinal Health (CAH)
• Celgene (CELG)
• Chubb (CB)
• Coach (COH)
• Colgate-Palmolive (CL)
• Conoco-Phillips (COP)
• Deutsche Bank (DB)
• Diageo (DEO)
• Dow Chemical (DOW)
• EMC (EMC)
• Ford Motor (F)
• Google (GOOG) (GOOGL)
• Harley-Davidson (HOG)
• Hershey Co. (HSH)
• JetBlue Airways (JBLU)
• Kate Spade (KATE)
• L-3 Communications (LLL)
• Nokia (NOK)
• Northrop Grumman (NOC)
• Occidental Petroleum (OXY)
• PulteGroup (PHM)
• Raytheon (RTN)
• Robert Half International (RHI)
• Rogers Communication (RCI)
• Royal Caribbean Cruises (RCL)
• Sherwin-Williams (SHW)
• Stanley Black & Decker (SWK)
• Nasdaq OMX Group (NDAQ)
• Time Warner Cable (TWC)
• Valero Energy (VLO)
• Viacom (VIAB)
• Visa (V)

 

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1040, 1040A, 1040EZ: Which Tax Form Should You File?

January 28, 2015, 10:00 pm

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Filed under: Taxes, Income Tax, Tax Credits, Tax Laws, Planning

Choosing which 1040 tax form you need to file your return on can be a lot harder to figure out than you'd think, but answering just a few basic questions will lead you to the right version.

The Most Important Rule: Keep It Simple

First of all, if you use tax software to prepare your return, then it will generally take the decision of which tax form to file out of your hands. Instead, the software will evaluate the answers you provide to its list of questions and then select the most appropriate form for your needs.

For those who prepare their own returns, though, the basic Internal Revenue Service rule is that the best form to file is the simplest one that addresses all of your needs. The 1040EZ is the easiest form to fill out, with the 1040A being more complicated but still less difficult than the full 1040 form.

Can You File Form 1040EZ?

Form 1040EZ is designed for the simplest returns. In order to use it, you have to meet several requirements.

First of all, Form 1040EZ is only available for filing status of single or married filing jointly, and those who have dependents to claim can't use the form. Taxpayers have to be under age 65 and ineligible for higher standard deductions for the blind.

In addition, there are income-related restrictions. You can't have more than $100,000 in taxable income, and in general, it can only come from wages, salaries, tips, unemployment compensation and taxable scholarship and fellowship grants. Some taxable interest is allowed, but only if it's less than $1,500 for the year. Alaska residents are also allowed to use 1040EZ even if they receive Permanent Fund dividends from the state.

Finally, the only credit you can claim on the 1040EZ is the Earned Income Credit, and you can't itemize deductions or make any other adjustments to income. Those who received advance payments of premium tax credits under the Affordable Care Act aren't eligible to file Form 1040EZ. Those who hire household employees like babysitters or nannies for whom they have to pay employment taxes also can't file 1040EZ, as well as those who are debtors in bankruptcy filings after Oct. 16, 2005.

What 1040A Covers

Form 1040A has some of the same restrictions as 1040EZ. Income has to be less than $100,000, and you still can't itemize deductions. But it's more flexible in other areas. For instance, heads of household, qualifying widows and widowers, and married people filing separately can use Form 1040A.

Form 1040A allows you to include more types of income. In addition to those allowed on 1040EZ, you can have ordinary dividends, capital gains distributions from mutual funds, pension and annuity income, IRA distributions, and taxable Social Security benefits and still file a 1040A. You can also claim deductions for IRA contributions, student loan interest, tuition and fee payments, and expenses that educators pay for supplies for their own classrooms.

You can also claim more credits on a 1040A. Those seeking credits for child and dependent care expenses, education expenses, and retirement savings contributions can use the form, as can those claiming credits for the elderly or disabled. Both the child tax credit and the additional child tax credit are available to 1040A filers.

Lastly, you can handle a limited number of special situations on 1040A. Those receiving dependent care benefits from work can use the form, as can those who have to pay taxes due to having past educational credits recaptured. Even some people who owe alternative minimum taxes can use Form 1040A.

The Last Resort: Form 1040

If you don't qualify for 1040EZ or 1040A treatment, then your only choice is the long Form 1040. Most notably, that includes taxpayers who want to itemize deductions.

For those who want it, the IRS has developed a tool to help you figure out which form is the simplest available for your needs. You can access it at this IRS website, and it will take information from the tax forms you've received from your employer, financial institutions, and other sources to make a recommendation.

Filing your taxes can seem complicated. But by starting with the right form, you'll be able to keep things as simple as possible and avoid biting off more than you need to chew at tax time.

Motley Fool contributor Dan Caplinger hasn't been able to file a simple tax return in a long time, but he's not complaining. You can follow him on Twitter @DanCaplinger or on Google Plus. To read about our favorite high-yielding dividend stocks for any investor, check out our free report.

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You Can Easily Save Hundreds by Sharing Your Accounts

January 28, 2015, 10:00 pm

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Filed under: Cell Phones, Music & Entertainment, Saving

By Christina Lavingia

As evidenced by GOBankingRates' annual financial resolutions survey, saving money is a top priority for people in the new year. Although it's a simple concept, there are so many ways to go about saving money that it can almost be overwhelming. From participating in the 52-week savings challenge to looking up listicles that promise to save you several thousand dollars in a year, following each and every piece of savings advice can be daunting -- and impractical.

One surefire way to save money is to share your subscription accounts. Just contact friends or family members and your providers once to set up a family or shared account plan. From then on, the savings are automated.

1. Netflix (NFLX)

Netflix has embraced the idea of shared accounts. Previously, customers would share their login information with others to split costs, but users faced issues with conflicting streaming requests, mixed recommendations and inaccurate tracking of a progress through a given television show or film.

Netflix did away with this, allowing accounts to have up to five profiles that distinctly record each user's behavior to create accurate recommendations and keep tabs on their progress through programs. The monthly streaming plan costs $8.99, or $108 a year. Splitting the costs five ways means it goes down to $22 per user.

Competing service Hulu Plus is designed only for one personal account, because streaming is limited to one device at a given time, versus two or four depending on your Netflix plan. If you have a roommate, you can coordinate your Hulu use fairly easily and share the $7.99 monthly bill.

2. Spotify Premium

If you're that guy who always has his headphones in and enjoys discovering the newest music before it breaks, you likely have a Spotify account. Unlike other music services, however, which you can mute during commercials, Spotify's free service pauses commercials when the sound is turned off, forcing listeners to sit through these interruptions.

Spotify Premium accounts cost $9.99 per month for commercial-free enjoyment; however, you can cut that cost a good amount by getting a few friends and family members in on your account.

Spotify Family charges an additional $5 for every member of your account, up to five users. So, if you get four friends in on the fun, your monthly bill will drop from $10 to $6 per person, saving you nearly $50 each year. Spotify Family users still benefit from separate playlists and profiles, as well as curated recommendations based on their music preferences and listening habits. Competitor Rdio offers the same discount for up to five subscribers.

3. Amazon (AMZN) Prime

If you have Amazon Prime for your personal or business use, you can share its shipping benefits with up to four family members or coworkers. This doesn't apply to Prime Instant Video, Prime Music or the Kindle Owners' Lending Library.

Amazon Prime is normally $99 annually, but if you're sharing the benefits with four others, your costs could be reduced to $19.80 annually, or just $1.65 per month, per person -- a real bargain.

4. Gym Membership

A healthy family is a happy family, so consider adding a family member to your gym membership. Individual fees and family member prices vary per gym and even by location for nationwide chains like 24 Hour Fitness; however, it's safe to say that even an extra $25 to $50 per member, when the total is divided up, will lead to a reduced cost for your membership.

Take this shared account even further by creating a support system in your family to help motivate one another to hit the gym. If you live in the same city as a family member, use this opportunity to spend additional time together when you visit a group workout class or do some cardio.

5. Cell Phone Bill

If you have anything beyond the bare bones of a cell phone plan, you likely pay a good deal each month for your privileges. From texting to data and roaming charges, many factors can affect your cell phone bill -- the one certainty is that it's expensive. According to a recent survey by research firm Cowen and Company, the average post-tax cell phone bill was $141 at AT&T (T), $144 at Sprint (S), $120 at T-Mobile (TMUS) and $148 at Verizon (VZ).

Comparing family-plan pricing, here's how much you'd save at these carriers:

• AT&T. With 10 GB plans costing $100 and additional lines adding just $15 more per device (up to 10 total), two users could share a plan for $130. Assuming a nuclear family of four, that would be $160 -- or $40 a piece. Compare that with the average bill of $141. You'll be spending $101 less a month, for $1,212 in savings per person for the year.
• Sprint. Sprint, which provides a helpful comparison chart between the four major cell carriers, offers four lines and 5 GB per line of data monthly for $100 per month - a special for 2015. Split that between four other people, and you'll end up paying $20 a person, versus $144 as an average payment. That's a savings of $124 per month -- or $1,488 annually.
• T-Mobile. ArsTechnica reported T-Mobile is the cheapest of the main cell phone providers, at $120 a month, on average. It also offers a $100 per month deal for four lines and 2.5 GB of data, amounting to a total savings of $95 monthly per participant or $1,140 annually.
• Verizon. The most expensive average bill goes to Verizon, charging an average of $148 each month. However, for $140 a month for four lines, you're saving $113 each month, or $1,356 per person annually.

If you're worried about how transferring dollars and cents on a family plan will occur, especially if you live far apart, mobile payment apps make transferring money effortless.

6. E-Reader Book Purchases

Whether you're an Amazon Kindle or Barnes & Noble (BKS) Nook user, if you use an e-reader, you can share your book purchases to cut down on costs. Amazon allows Kindle users to lend and borrow books from other users for up to two weeks. Borrowers don't even need to own their own Kindles, as borrowed books can be read through the free Kindle reading app, according to Amazon.com.

Using a similar concept, through Barnes & Noble's LendMe technology, users can borrow and lend books to use on non-Nook devices, like iPads, iPhones and iPod Touches, Android devices, PCs and Macs, according to Barnesandnoble.com.

To keep things fair, come up with a list of books with a friend that you both want to read and take turns purchasing and borrowing to cut your e-reader costs in half.

7. PlayStation Network

Those who enjoy video games can reduce their costs greatly by opting for a game rental service like GameFly, Redbox or Gamerang, or by sharing games purchased through their Sony (SNE) PlayStation consoles. Available for PS4, you can game-share with friends and family, according to IGN.com, simply by activating your PS4 as the primary console. From there, others should be able to download your files to their PS4 consoles without needing your login credentials. Alternate who pays for which games and share to save on this entertainment cost.

 

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Murder Holes: 5 Products That Will Kill Your Net Worth

January 28, 2015, 10:00 pm

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Filed under: Investing Basics, Alternative Investment, Biotechnology, Investment Fraud, Investing

Thanks to Hollywood, most Americans imagine that the castles and keeps of medieval Europe were romantic places where princesses found their true loves and benevolent kings hosted sumptuous banquets for their subjects. The reality is that they were fortified strongholds, designed to defend against foreign marauders and hostile clans.

One of the most ominous features of these structures was an opening in the ceiling through which rocks, hot sand or boiling oil could be rained down upon attackers. The concept behind the murder hole was that once your were caught in it, you were doomed.

In 2012, Josh Brown, aka The Reformed Broker, appropriated this term in his book "Backstage Wall Street" and applied it to a number of financial products sold by aggressive salespeople chasing fat commissions. Like the murder holes of old, if you find yourself in one of these products, you stand very little chance of escaping unscathed.

1. Structured Notes with Principal Protection

Often billed with reassuring names like "capital guarantee," "absolute return" or "minimum return," these products claim to protect your principal investment and give you a guaranteed (but fixed) return, even if the market goes down. In essence, they promise you a no-lose situation.

The problem is that most of these products are derivatives -- backed by no underlying assent -- and thus are only as good as the company behind it. If the company goes out of business or bankrupt, your entire investment is gone.

The other downside is that these type of notes are generally offered after the market has experienced a large decline. Investors who see them as safe will pile in, but when the market eventually recovers, these investments will underperform because their maximum return is capped.

2. Private Placements

A private placement is a stock offering by a company that is not registered with the Securities and Exchange Commission and is not offered to the general public. The exclusivity associated with such an offering and the ability to get in on the ground floor make for a good sales pitch by less than scrupulous salespeople.

But with an unregulated entity, you will generally get limited information about the management team and little or no financial reporting. Many companies that offer private placements are not required to file financial reports, so you may also have a hard time finding out how the company -- and your investment -- is performing.

And worst of all, private placement shares are not actively traded on an exchange or in the open market, so they are virtually impossible to sell if needed. Your investment for all intents and purposes becomes worthless unless the company issuing the shares is bought or goes public -- two things that may never happen.

3. Currency and Forex Trading

Investors who trade in stocks and options can be rest assure that there is a highly level of transparency and regulation in the industry. The SEC, the Financial Industry Regulatory Authority and other agencies are tasked to see that brokers follow the letter of the law and that programs like Securities Investor Protection Corp. insurance safeguard client funds in case of financial malfeasance.

The currency market however is largely unregulated, with the Commodities Futures Trading Commission having nominal oversight in the U.S. But currency trading is an international game and many of the brokerages are based in offshore safe havens like Cyprus and the Maldives -- far beyond the reach of the CFTC.

Forex trading also allows for extremely high levels of leverage -- in some cases as high as 100 to 1 -- which increases the risk that a sudden more in the price of a currency can wipe out your account or the brokerage where your account is held.

4. Any Type of Financial 'System'

Charles Ponzi is merely one of the most notorious of the never-ending stream of scam artists claiming to have a surefire way to make money in the markets. But usually the only person who makes money is the fraudster themselves.

Common sense says that if somebody truly had such a system, they would hole up in a room and spend all their free time using that system to coin money. Why would then need to sell it to anybody? Why would they want to sell it to anybody?

Most systems, like the A/B scam, for example, will initially show a return, making them seem legitimate. Unfortunately this is just a ruse to get investors' confidence up, encouraging them to make a large investment. When they do, the system invariably fails, and the perpetrator disappears.

5. One-Drug Biotech Companies

Nothing can shoot a stock up faster than getting approval from the Federal Drug Administration on a breakthrough drug. Many of the current giants in the biotech field started out just that way, but many more companies went bust when their only viable product was rejected.

When you are investing in a one-drug company, not only are pinning your hopes on a single product, but a product will be judged to be either a complete failure or a complete success by a government entity. And the chance, historically, is small: a low as 10 percent, one study found.

Like what you read? Want more? Then sign up for my free weekly newsletter The Lund Loop to get exclusive insights into what I am writing, reading, and hearing about the stock market. Click here to sign up.

 

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Where the Banks Earn, You Lose - So Here's How to Win

January 28, 2015, 10:00 pm

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Filed under: Banking, Personal Finance, Credit Cards, Banks

When you visit bank websites, you can be overwhelmed by marketing messages. Clever ads try to convince you that their credit cards are rewarding, their savings accounts will help you prepare for the future and their banks accounts are basically free. However, when you visit the investor relations section of the websites, you can quickly discover that truth about where we are getting a good deal -- and where we aren't.

After reviewing the recent earnings announcements of the big banks, a few trends have emerged:

• Rewards on credit cards are actually improving, as banks continue to fight for new customers.
• Despite interest rates at close to 0 percent, you won't find low purchase interest rates on credit cards. The high interest rates charged for borrowing on credit cards show no signs of reducing. That is why credit card businesses are generating returns of more than 25 percent for banks.
• The interest paid on savings accounts by the big banks remains shockingly low, and the deposit war that is heating up online has not impacted traditional banks. Banks continue to brag about being able to raise cheap deposits, and we shouldn't expect that trend to change any time soon.
• For the first time, the cost of short-term borrowing is showing signs of declining, thanks to action from the Consumer Financial Protection Bureau. Expect to see these costs continue to decline.

Rewards on Credit Cards

Credit card growth continues. According to Experian Decision Analytics, banks issued $319 billion of new credit cards in 2014, up 20 percent from 2013.

To entice people to open credit cards, banks are forced to offer bigger and better rewards to consumers. Citibank (C) launched the Citi Double Cash credit card that pays 2 percent un-limited cash back, a first for a big bank, beating the previous high of 1.5 percent from Capital One (COF).

We witnessed Discover (DFS) remove its minimum redemption policy. Now, you can redeem your cash back at any time. And, in the earnings announcement, Discover announced that it took a hit of $178 million as a result. Another way to think about it: that is $178 million out of Discover's pocket, and into your pocket in the form of cash back. Discover has also hinted that it will launch a new credit card early in 2015 that will have an even richer rewards scheme.

Credit card companies make most of their money when you do not pay the balance in full each month and are charged interest as a result. To win your business (and your debt), they are giving away more in rewards, tempting you to spend more than you planned.

If you are a savvy consumer with self-discipline, and are able to pay your balance in full every month, you should expect rewards on credit cards to continue to improve in 2015. I used to say that everyone should earn at least 1.5 percent cash back. Now everyone should be earning at least 2 percent, and that figure can be even higher with a bit of work. However, make sure you pay your balance in full and on time every month. Failure to do so means that you will likely pay far more interest than you would ever receive as cash back. You can search for the best cash back credit cards, updated daily, here.

High Interest Rates on Credit Cards

Interest rates and fees on credit cards remain shockingly high, especially in a low interest rate environment. And the earnings announcements show that we should not expect interest rates to start decreasing any time soon.

As an example, Capital One disclosed that its net revenue margin is 17.29 percent, which remained relatively flat compared to last year.

If you have credit card debt that you can't afford to pay off in the next six months, you should really consider transferring that balance away from the big banks. There are some great offers out there, and many of them come from places whose names you have never before heard. For example, American Heritage Credit Union offers 2.99 percent for 24 months if you move your debt to its credit card. Anyone can join the credit union, and they have a great customer service team. You can search balance transfer offers, updated daily, here.

Savings Account Interest Rates

In the last few months, a pricing war has erupted for online deposits. A savings account only makes sense as a place to keep your emergency fund (approximately six months of living expenses). Although you will never get rich from a savings account, you can at least earn something. Some of the best deals include:

• UFB Savings Direct, which is paying 1.25 percent if you keep at least $25,000 in the account.
• GE Capital Bank, which is paying 1.05 percent, with no minimum.
• Barclays (BCS), which is paying 1 percent, with no minimum.
• Ally (ALLY), which is paying 0.99 percent, with no minimum.

No one should be earning less than 1 percent. However, the basic savings account rate at Bank of America (BAC), Citibank, Wells Fargo (WFC) and Chase (JPM) are all paying 0.01 percent. That may not seem like a big difference, but if you keep $20,000 in a savings account, that is the difference between $200 or interest or $2 of interest in a year.

And, in the earnings announcements of the big banks, we see that they continue to brag about the low rate on deposits. For example, Wells Fargo boasted that its total deposits grew, while "the average deposit cost for fourth quarter 2014 was 9 basis points, an improvement of 2 basis points from a year ago." To translate: an improvement for the banks is a worsening for us. Every year, we get paid less on our deposits, especially at the big banks.

Short-Term Borrowing

The CFPB has made it clear that overdrafts and deposit advance products will be under intense scrutiny this year. And they should be. If you went overdraft by $6 for six days at Bank of America, you could be charged $70 of fees. Even opting out of overdraft protection will not save you. Checks, bill-pay and electronic payments are all outside of existing regulations. I have worked in banking all over the world, and I have never seen a more expensive form of short-term borrowing than overdrafts in America.

However, some banks have recognized that they can cut their margins by 70 percent and still make money. Fifth Third (FITB) cut the fee on its deposit advance product from $10 per $100 borrowed to $3 per $100 borrowed. By charging 70 percent less, the bank can still make a good return. Firth Third indicated that it will generate $100 million less revenue this year, which is essentially a wealth transfer from banks to the poorest customers of the banks. Expect to see this trend continue.

From the earnings, we can see that banks will provide lucrative rewards on credit cards. However, we should move our debt and our savings somewhere else.

Nick Clements is the co-founder of MagnifyMoney, a price comparison website that helps you find the cheapest bank accounts, and the best interest rates on your savings and your debt. He spent nearly 15 years in consumer banking, and most recently he ran the largest credit card business in the U.K.

 

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10 Ways to Teach Your Kids to Be Frugal

January 28, 2015, 10:00 pm

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Filed under: Family Money, Financial Education

Teaching your kids to be smart with their money sets them up for a happier, healthier relationship with their finances as an adult.

It's never too early to start talking to your children about money. Young kids can grasp basic financial concepts, such as understanding that one hour of work equals some amount of money, and that money gets traded for toys or food.

But after you explain the nuts-and-bolts behind budgeting, how do you instill a nebulous mindset like frugality in a young child? Here are 10 ways to introduce your children to a frugal lifestyle.

Paula Pant ditched her 9-to-5 job in 2008. She's traveled to 32 countries, owns seven rental units and runs a business from her laptop. Her blog, Afford Anything, is a gathering spot for revolutionaries who understand that they can afford anything -- just not everything. Visit Afford Anything to learn how to crush limits, create wealth and live life on your own terms.

 

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McDonald's CEO Steps Down, Shares Rise

January 29, 2015, 12:10 am

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Filed under: McDonald's, Food & Beverage, Restaurants, CEOs, This Built America

Shares of McDonald's (MCD) rose early Thursday morning, a day after the world's biggest hamburger chain announced a CEO change as it struggles with intense competition and changing attitudes about food.

The company said Wednesday after markets closed that Don Thompson, who has been CEO for 2½ years, was stepping down and would be replaced by Steve Easterbrook, the chief brand officer. A company representative also said an unspecified number of employees at the company's headquarters in Oak Brook, Illinois, and elsewhere also were notified of layoffs.

The fast-food chain has reported falling customer traffic in its established stores and is dealing with a menu that many feel has become bloated. It also faces competition from chains such as Chipotle Mexican Grill (CMG) and Panera Bread (PNRA) as customers increasingly look for toward food that they feel is better quality.

Janney Capital Markets analyst Mark Kalinowski said the new CEO faces several key questions like whether the company's menu simplification can be meaningfully accelerated and what can be done to improve its domestic reputation. The analyst also questioned, in a research note, the extent to which the company will allow Easterbrook to act as a change agent it "sorely needs."

"Just the act of naming him the new CEO suggests to us that the board is growing less patient, and we mean that in a positive way," Kalinowski wrote.

McDonald's Corp. shares started climbing Wednesday evening and were up 3.2 percent, or $2.82, to $91.60 a couple hours before markets opened Thursday.

 

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A $29 Smartphone? Yup - and It's From Microsoft

January 29, 2015, 12:20 am

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Filed under: Mobile Technology, Cell Phones

By Krystal Steinmetz

It may be small, but the Nokia (NOK) 215 has Internet connectivity and a camera and it costs just $29, making it the world's cheapest smartphone. But don't get too excited: Launched by Microsoft (MSFT), the Nokia 215 will only be released in areas of the Middle East, Africa, Asia and Europe, CNN Money reports.

Microsoft calls the 215 the "most affordable Internet-ready phone." Joe Harlow, corporate vice president of Microsoft Devices Group, said in a statement: "With our ultra-affordable mobile phones and digital services, we see an inspiring opportunity to connect the next billion people to the Internet for the first time. The Nokia 215 is perfect for people looking for their first mobile device, or those wanting to upgrade to enjoy affordable digital and social media services."

The phone comes in three colors (black, white and bright green) and includes a built-in flashlight, as well as MSN Weather, Bing search, Twitter (TWTR) and Facebook (FB). Its battery can last up to 29 days on standby, "an absolute must for some customers around the world who have infrequent access to electricity," CNN Money said.

A 2014 report by Swedish communications giant Ericsson predicted that 90 percent of the world's population older than 6 will have a mobile phone by 2020. It seems like a distinct possibility if phone makers are able to sell smartphones to people in developing areas of the world for as little as $29.

So whatever you've paid, the video shows how to make any smartphone pay for itself. What do you think of Microsoft's cheap smartphone? Share your thoughts below or on the Money Talks News Facebook page.

 

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Is Chili's the New Market Darling in Casual Restaurants?

January 29, 2015, 1:00 am

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

Casual dining may not seem to be a hot industry these days, but it can pay off if you buy the right chain. Shares of Brinker International (EAT) hit a new all-time high earlier this week, and then the company followed that up with an encouraging quarterly report on Wednesday morning.

Brinker isn't a household name, but its flagship eatery is the popular Chili's Grill & Bar, with 1,585 locations. Brinker also owns Maggiano's Little Italy, with 49 restaurants.

Brinker's fiscal second quarter was largely a success. Revenue inched 5 percent higher to $742.9 million, fueled primarily by a 3.7 percent increase in comparable-restaurant sales at its company-owned locations. Adjusted earnings per share soared 20 percent to 71 cents a share, ahead of the 69 cents a share that analysts were expecting. It's the first time that Brinker lands ahead of Wall Street's profit target in the past three quarters.

It wasn't perfect. International franchisees suffered a slight dip in sales. Brinker also had to tackle rising food costs on everything from salmon to avocados. However, at the end of the day we find net margins widening as earnings grew faster than sales.

Eating Up the Competition

Brinker's healthy performance is refreshing to see, but the same can't be said about some of its casual-dining rivals. Shares of Ruby Tuesday (RT) took a hit three weeks ago after it posted a dreadful report. Sales and comps declined, with Ruby Tuesday serving up another quarterly loss.

It's not just Ruby Tuesday that isn't keeping up the pace with Brinker. Darden Restaurants (DRI) has also been a relative disappointment. Brinker's Italian concept -- Maggiano's Little Italy -- has come through with 20 consecutive quarters of year-over-year growth in comparable restaurant sales. Darden's larger Olive Garden eatery hasn't been as consistent.

Brinker and Darden have unloaded concepts to focus on what's working. Darden sold off Red Lobster last year. Brinker has cut ties with Corner Bakery, On the Border and Macaroni Grill in 2006, 2010 and 2013, respectively. However, while activists have taken over the boardroom at Darden to try to improve shareholder value, Brinker investors can't complain, with the stock hitting new highs this week.

Tech and Trends Are on the Desserts Menu

Things should continue to improve for Brinker. It's not providing guidance, but there are plenty of favorable trends that should benefit the casual-dining industry. Cheap gasoline places more money in the hands of consumers while at the same time making it easier to justify driving out to eat. The economy also continues to take baby steps in the right direction, and the improving employment picture is naturally going to allow more folks to head out to restaurants more often.

Brinker has also taken the lead on technology, being one of the first chains to roll out tabletop devices at Chili's where customers can order drink refills and desserts, scroll through colorful new menu options, and even pay the bill at the end of a meal. Having the tablets at every table should help increase orders and customer satisfaction. Waiter-free checkouts also speed up the pace at which tables turn around, allowing Chili's to seat more patrons during the course of the day.

With a casual-dining concept that's resonating with consumers, improving margins, and the added upside of tabletop technology to potentially beef up sales, Brinker's getting things done right by Wall Street's finicky dining standards.

Motley Fool analyst Rick Munarriz has no position in any stocks mentioned. He still sings the old Chili's "babyback ribs" jingle, even if no one is around to hear it. The Motley Fool has no position in any of the stocks mentioned. 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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Will the Chevy Bolt Be the Electric Car That We Adore?

January 29, 2015, 1:00 am

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Filed under: Company News, General Motors, Automotive Industry, Transportation & Logistics, Stocks

General Motors (GM) unveiled a surprise at the North American International Auto Show in Detroit: The Chevrolet Bolt, an all-electric car said to have a range of about 200 miles -- at a price around $30,000.

It's just a "concept" for now, meaning that GM hasn't announced plans to produce it. But there have been some big hints that the Bolt, or something very much like it, will arrive at Chevy dealers as a 2017 model.

With good range, a good price, cute styling, and an all-American nameplate, will the Bolt be the electric car that finally wins over the American mass market?

Electric-Car Sales Are a Tiny Part of the Overall Market -- for Now

Certainly, electric cars have attracted a lot of attention. And a few have racked up decent sales numbers. Nissan (NSANY) sold 30,200 copies of its battery-electric Leaf in the U.S. last year. Tesla Motors (TSLA) hasn't released its 2014 sales totals yet, but the Silicon Valley automaker probably sold about 33,000 examples of its Model S luxury sedan.

Those numbers are impressive for an automotive market segment that didn't really exist until a few years ago. But they pale against the size of the overall market. To take just one example, Ford (F) sold 753,891 F-Series pickups in the U.S. last year -- or an average of almost 63,000 a month.

Back in 2011, President Obama predicted that there would be 1 million electric cars on U.S. roads by 2015. That hasn't happened -- not even close. Why haven't more Americans rushed to buy electric cars?

The Big Reason Most Americans Have Shied Away From Electric Cars

Part of it is probably people's tendency to be cautious with new technology. But part of it is the cars themselves, or more to the point, their batteries.

Despite the millions and millions of dollars that have been invested in trying to make them better, electric-car batteries are still heavy, expensive, and limited in capacity.

All electric cars on the market represent compromises among those factors. The Leaf is compact and affordable, but its range is limited -- because its battery pack is limited in size. The Model S has great range, but it's big and heavy and expensive, because it's engineered (artfully) around a big, heavy, expensive battery pack.

President Obama's prediction assumed that we'd have better, less-expensive batteries by now. We don't. But after years of research, better batteries are finally on the horizon. The secret to the Bolt is a new type of battery being developed by GM partner LG Chem that promises to be more affordable than current options.

Likewise, Tesla and its partner Panasonic (PCRFY) are working on improved batteries that will be built in Tesla's "Gigafactory," under construction in Nevada. One of the premises behind the Gigafactory is that even if batteries aren't significantly improved over the next few years, the factory's scale will help bring costs down.

But even if battery-electric cars become more affordable, will enough Americans want them to make a difference?

Will Better Batteries Help Electric Cars Outpace Rival Technologies?

Electric-car advocates argue that battery-electric vehicles just make too much sense not to be widely adopted: They're clean, they're quiet, they can be recharged with electricity made from renewable resources like solar panels and windmills, and -- as Tesla has proven -- they can be stylish and fun to drive.

Tesla CEO Elon Musk says that his company is showing the way, proving that electric cars can be a "gotta-have" product that can work for mainstream customers (albeit well-heeled ones). With the Bolt, GM (an electric-car pioneer in its own right) is saying that it has received the message and is determined not to be left behind.

But right now, it's far from settled that battery-electric cars are the way forward. Toyota (TM) is making a huge investment in hydrogen fuel-cell technology. Ford (F), after a big initial push into the world of hybrids and electric cars, is focusing on wringing more power from ever-cleaner gasoline engines.

Most of the other automakers are hedging their bets in similar fashion, waiting to see which way the market goes. So will battery-electric cars like Chevy's Bolt win over the American mass market? It's still far from a sure thing.

Motley Fool contributor John Rosevear owns shares of Ford and General Motors. The Motley Fool recommends Ford, General Motors, and Tesla Motors. The Motley Fool owns shares of Ford and 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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Ford Beats Estimates Despite Declines in Earnings, Revenue

January 29, 2015, 1:17 am

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Filed under: Company News, Earnings, Automotive Industry, Ford, Manufacturing

By DEE-ANN DURBIN

DEARBORN, Mich. -- Ford's net income tumbled in the fourth quarter as the company took an expected charge to deal with its struggling Venezuelan operations.

But without the charge and other one-time items, Ford came out ahead of Wall Street's expectations for the fourth quarter and the full year.

Ford (F) shares rose 2 percent in premarket trading about an hour before the market open.

Ford's net income fell to $52 million in the fourth quarter, largely due to an $800 million charge because of Venezuelan currency controls and constraints on what in can build and sell in the country. Ford announced last week that it would remove its Venezuelan operations from its financial reporting in future quarters.

Ford's earnings of a penny a share compared to earnings of 75 cents a share in the fourth quarter a year ago.

Without one-time items, including the Venezuela charge and separation payments due to plant closures in Europe and Australia, Ford earned $1.1 billion in the quarter, down 15 percent from a year ago.

But its adjusted earnings of 26 cents a share beat Wall Street's forecast of 22 cents a share, according to FactSet.

Fourth-quarter revenue fell 4.5 percent to $35.9 billion, but also beat analyst expectations.

For the full year, Ford's earnings fell 56 percent to $3.2 billion, or 80 cents a share. On a pretax basis, the company earned $6.3 billion, down from a near-record of $8.6 billion a year ago.

Worldwide sales fell less than 1 percent to 6.3 million cars and trucks. Sales were down in North America, South America and the Middle East but rose in Europe and Asia.

Dearborn, Michigan-based Ford had repeatedly warned that its profits would be down in 2014. Last fall, the company cut its full-year pretax earnings forecast to $6 billion from $7 billion to $8 billion.

Big Spender

Ford spent heavily to introduce a record 24 vehicles worldwide, including a redesigned Mustang and the new aluminum-bodied F-150 pickup truck. Ford is spending more than $1 billion to retrofit its two U.S. plants to make the new truck; while shipments have already begun, the Dearborn and Kansas City plants that make the lucrative trucks won't be fully operational until the second quarter of this year.

Ford struggled with higher warranty costs, including a $500 million charge for the recall of 850,000 vehicles with defective air bags. The company is also rapidly expanding in Asia, where it's building five plants and launching the Lincoln brand.

The losses were offset by Ford Credit, the company's finance arm, which earned a pretax profit of $1.9 billion. That was the unit's best result since 2011. Ford also earned a record full-year profit of $589 million in Asia.

In North America, Ford's full-year profit fell 22 percent to $6.9 billion, largely the result of a slowdown in pickup truck sales as the company prepared to introduce the new F-150. Ford said profit-sharing checks for its 50,000 U.S. hourly workers, which are based on North American profits, will total around $6,900 when paid in March. That's down from a record $8,800 per worker last year.

Losses in Europe

In Europe, Ford narrowed its full-year loss to $1.1 billion. Ford's European sales improved thanks to new vehicles, but results were hurt by the economic slowdown in Russia. In South America, Ford's losses ballooned to $1.2 billion as the company was hit by import restrictions in Argentina and a weaker economy in Brazil.

Profit-sharing payments to each of Ford's 50,000 U.S. hourly workers will be about $6,900 when paid in March. That's $1,900 less than last year, which was a record.

Things are expected to improve this year. Ford expects a pretax profit of $8.5 billion to $9.5 billion in 2015. The company is launching just 15 vehicles and it expects warranty costs to fall.

Ford shares rose 25 cents to $14.71 in premarket trading about an hour ahead of the market open.

 

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Oprah Winfrey's Net Worth and Legacy as She Turns 61

January 29, 2015, 2:02 am

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Filed under: Media, Entertainment Industry, Celebrities, Entrepreneurs, Investing

By Elyssa Kirkham

Today, GOBankingRates says "Happy birthday, Oprah," as we take a look at her legacy and financial journey.

Oprah's Early Life and Career: She Made Just $227 a Week

Oprah was born in Mississippi and spent her adolescence between her mother's home in Milwaukee and her father's in Nashville, where she moved permanently at14. As a teen working at a Nashville radio station, she seemed to find her calling. Oprah attended college at Tennessee State University, though she left to take a job at a television news station in Nashville.

Oprah has said that her upbringing didn't hold her back, because her core values of hard work and responsibility pushed her to success. "I don't think of myself as a poor deprived ghetto girl who made good," she said. "I think of myself as somebody who from an early age knew I was responsible for myself, and I had to make good."

In her early 20s, Oprah moved to Baltimore to anchor WJZ's nightly news hour, with a salary of $22,000 (nearly $92,000 today), according to Baltimore Magazine. She and her veteran co-anchor were a mismatch, however, and Oprah was demoted. But another opportunity soon followed to co-host a new TV chat show, "People Are Talking," with established newsman Richard Sher. While Winfrey originally resisted the idea, wanting to keep her focus on TV journalism, she agreed and the show began airing in August of 1978.

"From that first day, I knew instantly this is what I was supposed to do," Oprah told Baltimore Magazine. "I felt like I had come home to myself." She and Sher had great chemistry together, and within months turned the program into a hit. Even early in her career with modest earnings, Oprah made a point to give to charity. She gave 10 percent of her income, $22.70 a week, to Bethel A.M.E. Church in Baltimore, she told Baltimore Magazine, on a salary that would be roughly equal to $43,000 annually today.

In 1983, Oprah heard about a morning show in Chicago, "A.M. Chicago," that was looking for a host. After sending in an audition tape, Winfrey landed the job and made the move to Chicago as the host of her own morning show in January 1984. In no time at all, Oprah had pushed "A.M Chicago" from last to first place in ratings.

1987: Oprah Became a Multimillionaire in Just One Year of "The Oprah Winfrey Show"

The success of "A.M. Chicago" and Oprah's nominations for "The Color Purple" had gained the talk show host massive exposure. Riding this success, Oprah led a move to expand her show to an hour, rebrand it as "The Oprah Winfrey Show," and nationally syndicate it to 120 channels in 1986. According to Biography.com, in its first season, the show's audience grew to 10 million, grossing an astounding $125 million, $30 million of which went to Oprah. As a still-new show, it also nabbed the 1987 Daytime Emmy Awards for Outstanding Talk Show and Outstanding Talk Show Host.

This success continued throughout the late '80s and '90s, during which "The Oprah Winfrey Show" owned daytime television. During these peak years, the talk show often averaged over 12 million viewers a day. In 1998 Oprah was given a Lifetime Achievement Award at the 25th Annual Daytime Emmy Awards. By the time Winfrey removed herself from consideration for Daytime Emmys in 1999, she and "The Oprah Winfrey Show" had rounded up 17 Emmy wins. Meanwhile, Oprah's net worth steadily grew, reaching the high hundreds of millions of dollars at the turn of the millennium.

2003: Oprah Is First Black Female Billionaire

2000 brought a new endeavor with the launch of the highly-successful O: The Oprah Magazine. 2003 brought a new milestone for Oprah, when Forbes announced that, at age 49, Oprah was the first black woman to become a billionaire with a reported net worth of $1.1 billion.

Oprah said that her focus on opportunities, hard work and an appreciation for what she had led to her substantial monetary success, and that keeping a gratitude journal was "one of the most important things I've ever done," as it helped her recognize her abundance and grow it. "Focusing on the $3 in your wallet will bring you $5 sooner than focusing on the $50 you don't have," she said.

"The Oprah Winfrey Show" continued to rule daytime ratings throughout the early aughts, finally ending its run in 2012 after 25 seasons. But that hardly meant Oprah was retiring, as the move to step away from her talk show coincided with the 2011 launch of her own television network, The Oprah Winfrey Network, or OWN.

Oprah's Legacy Today: Worth Billions, Giving Hundreds of Millions

Today Oprah continues to run O magazine and the OWN channel, which turned profitable in 2013 and is still growing despite initially disappointing ratings. She also came on as an executive producer of "Selma," a historical film centering on a black civil rights march, which was nominated for the 2015 Academy Awards in the categories of Best Picture and Original Song.

While her annual earnings took a dip after she ended "The Oprah Winfrey Show," Oprah still managed to earn a whopping $82 million from June 2013 to June 2014, reports Forbes. Today Oprah Winfrey's net worth is $3 billion, according to Celebrity Net Worth, meaning Oprah has tripled her net worth in 11 years since making her first billion dollars in 2003. She is currently the richest black American in the world, according to Forbes.

There's no doubt that Oprah's legacy extends beyond her insane wealth. Throughout her career, Oprah has used her celebrity and her platform to promote issues she is passionate about, most notably racism and sexual abuse, of which Oprah herself was a victim as a child. Oprah also busted down barriers and forged a bigger space for black women in media, television and in business.

A discussion of Oprah's legacy and finances wouldn't be complete without a discussion or her generous philanthropic efforts and charitable giving. Oprah regularly gives generous portions of her massive wealth to educational causes. "I am fueled by my own personal passion to do good in the world," Oprah said in an interview with The Huffington Post.

Much of her charitable efforts have been focused on her own Oprah Winfrey Leadership Academy for Girls in South Africa, which she has spent approximately $100 million to fund since its founding in 2007, reports Forbes.

This school is a central part of Oprah's legacy, but she defines that in her own way: "The truth is your legacy is every life you have ever touched," she told The Huffington Post. "The imprint, the heart print that you leave on every person's life that you're exposed to -- that is your real legacy."

 

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Tax Hacks 2015: 6 Things Sneaky Tax Preparers Won't Tell You

January 29, 2015, 2:16 am

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Filed under: Taxes, Income Tax, Tax Refunds, Ripoffs & Scams

By Marilyn Lewis

It's sad. Many highly ethical tax professionals are working hard to help taxpayers, but tax season brings out fraudsters, scammers and plain vanilla take-advantage-of-you-while-your-guard-is-down types. It can be hard to tell the difference.

From fraud to incompetence to hinky tricks to outright ripoffs, the field of tax preparation is a magnet for some of the worst consumer abuses. In the video above, Money Talks News founder Stacy Johnson describes common tax-time schemes to part you from your money. After watching, read on to find out what the worst tax preparers won't tell you.

1. I'm incompetent and untrained. Tax preparation is a mostly unregulated field. According to The National Consumer Law Center, in a report called "Riddled Returns: How Errors and Fraud by Paid Tax Preparers Put Consumers at Risk and What States Can Do":

There are no minimum educational, training, competency or other standards. In 47 states, there are more regulatory requirements for hairdressers than tax preparers.

Preparers commit errors, misclassify taxpayers' filing status, mishandle tax credits and even falsify information on tax returns, the report says. These aren't just a few bad eggs, either. The problems involve "a significant percentage of the preparers tested," the report says.

It's no joke for taxpayers. "Consumers who select incompetent or unscrupulous preparers could face audits by the Internal Revenue Service or even criminal sanctions," a NCLC statement warns.

Stay safe with tax preparation experts who are:

• Licensed CPAs (certified public accountant).
• IRS enrolled agents.
• Trained volunteers with one of two programs, Volunteer Income Tax Assistance or AARP Tax Aide (details below).

2. You could do this yourself. Doing your own taxes saves the $273, on average, that National Society of Accountants says taxpayers will spend for tax preparation assistance this year. According to Huffington Post financial contributor Carrie Smith, you're a good DIY candidate if you:

• Have just one job.
• No major changes in your income or filing status last year.
• Own no property or investments.
• Can understand the tax laws.
• Are "a numbers person."
• Didn't marry, divorce, lose a spouse or have a child last year.
• Didn't start a new business.
• Aren't easily overwhelmed by money issues.

One possible reason to consult an expert, Smith says, is that tax credits and deductions for dependents expire, depending on their ages:

If your child goes to college full-time, you can still claim them -- and any education expenses -- until they're 24. Determining these situations accurately takes someone who is knowledgeable.

If you made less than $60,000 last year, you may use the IRS Free File tax prep software to prepare and file free of charge online. Free File uses electronic versions of IRS paper forms. You fill them out and file your taxes online. The software includes basic guidance only, however, so it's best used if you've done your own taxes before.

3. You shouldn't pay so much. It can be hard to comparison shop for tax preparation services because preparers may be unwilling to quote a price or, if they do, give inaccurate quotes, according to The National Consumer Law Center report. If you can't get a ballpark figure after describing your situation to a preparer, look for someone else.

It's easy to try and compare the many tax preparation software products offered for free or cheap online for federal taxes, says Consumer Reports. Most don't charge until you file your completed tax form, so CR recommends that you try programs and then close them before filing if you don't like the price they quote.

4. Don't click on those pop-ups. There's a cavalcade of free online tax preparation products, but they are free only if you ignore the options for upgrades. Stick with the no-frills versions of online products by turning a blind eye to pop-ups that offer enhanced services with fees attached.

5. You could get free help. Some tax preparers will take your money although they know full well you qualify for free tax prep services. Before paying for tax help, check the options.

• Free tax preparation is available from IRS-trained volunteers through VITA, Volunteer Income Tax Assistance. You qualify if you are older than 65 or make less than $53,000 a year. People with disabilities and limited English-speaking abilities are eligible, too. VITA volunteers help with basic state and federal tax returns. Use VITA's online locator tool to find help near you.
• The AARP Foundation's Tax-Aide program offers free tax help from IRS-trained volunteer for anyone, although it is focused especially on older Americans. Use AARP's online locator to find help near you or call 888-227-7669.
• For more free tax prep options, read Tax Hacks 2015: 8 Ways to Get Free Help Preparing Your Taxes.

6. You can get your refund quickly without these crazy fees. Try to wait the roughly two-to-three weeks it takes to receive your refund and, if you can, avoid instant-refund products because of the ridiculously steep fees. The IRS describes these products:

If you file electronically, your tax preparer or tax preparation and filing software may suggest you purchase a bank product that typically sets up a temporary bank account to receive your income tax refund. Such bank products include, but are not limited to, refund anticipation loans, refund anticipation checks, gift cards and debit cards.

Federally regulated banks no longer make refund anticipation loans. But you'll find them elsewhere, writes USA Today, citing an example of a refund loan with 273 percent interest.

Here are safe ways to get your refund as quickly as possible:

• If you can't pay the tax prep fee. Instead of getting a refund anticipation check to cover your tax prep costs, see if you can use one of the many no-cost tax preparation options.
• If you don't have a bank account. If you e-file, you can get your refund loaded onto a prepaid card or payroll card, says CreditCards.com. Or consider Walmart's (WMT) new Direct2Cash tax refund service: Use a participating (non-electronic) tax-prep service (Walmart often has them in-store) and pick up your refund at a Walmart location after receiving a confirmation code in the mail. "Cash refunds will be available in roughly the same amount of time it takes for a direct deposit to show up in a filer's account," USA Today says. Walmart charges nothing, and the tax preparer can charge no more than $7 for the service.
• If you have a checking account. Have the IRS deposit your refund directly into it, saving you from waiting for the mail to deliver your check.
• If you just want the money fast. Also, U.S. News says that IRS data shows early filers get their returns in 21 days, on average, compared with longer waits for those who file later. Also, e-filing (filing electronically rather than sending a paper form by snail mail) puts your return in IRS hands faster.

Have you prepared your own taxes? Were the savings worth the effort? Post a comment below or at Money Talks News' Facebook page.

 

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Campbell Soup to Reorganize, Shift Focus From Soup Business

January 29, 2015, 2:45 am

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Filed under: Company News, Food & Beverage, Products, This Built America

By Yashaswini Swamynathan

Campbell Soup (CPB) said it would reorganize its business into product divisions, instead of geographies or brand groups, as it focuses on growth areas in the face of cooling soup sales.

The company said the reorganization would shift its "center of gravity," a reference to its troubled soup business that has managed to boost sales only twice in the past five quarters.

The world's largest soup maker said it would now have three divisions -- Americas simple meals and beverages, global biscuits and snacks, and packaged fresh products, which include seasoned baby carrots. Currently, the company has five divisions.

Weak sales prompted Chief Executive Officer Denise Morrison to launch a turnaround program after taking office in 2011, spending hundreds of millions of dollars to revamp the company's marketing and packaging strategies.

Products under development include "to-go" soups that could be made in a Keurig Green Mountain (GMCR) coffee machine.

The company also acquired or developed a slew of brands and products such as puffed Goldfish snacks and Bolthouse Farms, a producer of fresh carrots and beverages.

The turnaround efforts have yet to bear fruit on a sustained basis, however.

Increasing competition from store brands, private labels and niche producers such as Pacific of Oregon, Harris Foods and Amy's Kitchen, have also hurt the company's soup business.

Thursday's reorganization will make the company more streamlined and simplified, Campbell said.

Campbell's shares were little changed at $45.73 in early trading on the New York Stock Exchange.

The company is scheduled to report second-quarter results on Feb. 25.

 

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Weekly Jobless Claims Drop Sharply to Near 15-Year Low

January 29, 2015, 3:11 am

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Filed under: Labor, Economic Indicators, Job Market, Unemployment, Economy

By Lucia Mutikani

WASHINGTON -- The number of Americans filing new claims for unemployment benefits tumbled last week to its lowest level in nearly 15 years, adding to bullish signals on the labor market.

Though the decline probably exaggerates the jobs market's strength given a holiday-shortened week, Thursday's report suggested the economy was fairly healthy and weathering weakening global demand.

Claims are a welcome shot in the arm for those believing the economy is strong.

"Claims are a welcome shot in the arm for those believing the economy is strong. The U.S. remains an oasis of prosperity in the world and will continue to do so," said Chris Rupkey, chief financial economist at MUFG Union Bank in New York.

Initial claims for state unemployment benefits dropped 43,000 to a seasonally adjusted 265,000 for the week ended Jan. 24, the lowest since April 2000, the Labor Department said. It was the biggest weekly decline since November 2012.

The drop exceeded economists' expectations for a fall to only 300,000, but last week also included the Martin Luther King Jr. holiday, which means fewer claims were likely processed.

The fall unwound the prior weeks' increases, which had pushed claims above the key 300,000 threshold. Economists had largely dismissed that rise as "noise," given difficulties adjusting the data for seasonal fluctuations at the start of the year.

The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, fell 8,250 last week to 298,500.

Tightening Conditions

U.S. Treasury debt prices were trading lower, with the yield on the 10-year bond at session highs. The dollar was little changed against a basket of currencies, while U.S. stocks fell marginally.

The latest decline in applications for unemployment aid bolsters views of tightening labor market conditions and comes a day after the Federal Reserve ramped up its assessment of the labor market and the overall economy.

While the United States is bucking a weakening global economy, housing remains a soft spot.

The National Association of Realtors said Thursday signed contracts to purchase previously owned homes tumbled to an eight-month low in December.

Separately, the Commerce Department said the homeownership rate dropped to a 20-year low in the fourth quarter.

But with the labor market strengthening, housing should regain momentum this year.

January's employment report next week is expected to show nonfarm payrolls increased 230,000 after rising 252,000 in December, according to a Reuters survey of economists. That would mark the 12th consecutive month of jobs gains above 200,000, the longest stretch since 1994.

The claims report showed the number of people still receiving benefits after an initial week of aid fell 71,000 to 2.39 million in the week ended Jan. 17. The so-called continuing claims covered the period during which the government surveyed households for the unemployment rate.

Continuing claims fell 22,000 between the December and January survey periods, suggesting another drop in the jobless rate, which is currently at a 6½-year low of 5.6 percent.

 

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Obama Seeks to Bust Spending Limits by $74 Billion

January 29, 2015, 3:56 am

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Filed under: U.S. Government, Government Spending, Barack Obama, Budgeting, This Built America

By JOSH LEDERMAN

WASHINGTON -- President Barack Obama will ask Congress to boost government spending by roughly 7 percent above current limits, the White House said Thursday, setting up a certain clash with Republicans who insist that federal spending must be held in check.

Obama's budget, to be formally released Monday, will call for $74 billion more than the levels frozen in place by across-the-board cuts agreed to by both Democrats and Republicans and signed by Obama into law. The White House said his new budget proposals will "fully reverse" the so-called sequestration on the domestic side, while raising military spending.

If Congress rejects my plan and refuses to undo these arbitrary cuts, it will threaten our economy and our military.

Under Obama's proposal, national security programs would see an increase of $38 billion over current spending limits, raising the defense budget to $561 billion. On the domestic side, Obama is calling for $530 billion in spending -- an increase of $37 billion.

"If Congress rejects my plan and refuses to undo these arbitrary cuts, it will threaten our economy and our military," Obama warned in an op-ed article Thursday in The Huffington Post.

The proposal from the president, two months after voters booted his party from control of the Senate, reflects the White House's newfound confidence in the economy. Obama's aides believe that improving conditions give Obama credibility to push his spending priorities unabashedly -- despite the fact that Republicans still believe government spends far too much.

Improving Economy

Federal deficits, gas prices and unemployment are all falling, while Obama's poll numbers have crept upward. The president has been newly combative as he argues it's time to ease the harsh measures that were taken to help pull the economy out of recession.

Obama was to promote his proposed spending levels to House Democrats at their annual retreat in Philadelphia on Thursday evening. The White House said his budget will be "fully paid for with cuts to inefficient spending programs and closing tax loopholes," but taxpayers will have to wait until the budget is made public to find out exactly how.

While the proposal to spend more on things like education, sick leave and health care was sure to delight many members of Obama's own party, the Republicans now fully control Congress.

"This is not a surprise," said Don Stewart, Senate Majority Leader Mitch McConnell's deputy chief of staff. "Previous budgets submitted by the president have purported to reverse the bipartisan spending limits through tax increases that the Congress -- even under Democrats -- could never accept."

Yet Obama's move also puts Republicans in a precarious position.

Finding Money

Many in the GOP want to spend more on defense, especially in light of threats from terrorism and extremist groups. But Republicans are divided about how to pay. While some have argued for ignoring the spending limits, others want to offset the hikes with cuts to either domestic programs or so-called mandatory programs such as Social Security and Medicare.

By proposing to raise defense spending by about the same amount as domestic programs, Obama is putting the GOP on notice that he won't accept cuts to his own priorities just to make way for more spending on national security programs that both parties are in the mood to support.

The Pentagon's base budget is currently $496 billion, plus another $64 billion for overseas missions. Obama's increases would allow for next-generation F-35 fighter jets, for ships and submarines and for long-range Air Force tankers. Military leaders have also said the earlier cuts forced reductions in pilots' flying hours, training and equipment maintenance.

On the domestic side, Obama has proposed two free years of community college and creating new or expanded tax credits for child care and spouses who both work. He's called for raising the top capital gains rate on some wealthy couples and consolidating education tax breaks, although some of those ideas have already faced intense opposition.

"Until he gets serious about solving our long-term spending problem, it's hard to take him seriously," said Cory Fritz, a spokesman for House Speaker John Boehner.

Just a Proposal

The president's budget proposal is just that -- a proposal-- and won't become law.

The budget frames Obama's opening offer as Democrats and Republicans head toward an inevitable clash. It's an agenda that Obama started selling in the run-up to his State of the Union address this month, and that House Democrats have sought to echo as they regroup after losing more members in the midterms.

In his meeting Thursday with House Democrats, Obama was also to insist that House Republicans not use a funding bill for the Homeland Security Department to try to quash the executive actions he took late last year on immigration and deportations. The White House called that a "dangerous view" by the GOP that would risk the country's national security.

-Associated Press writers Jim Kuhnhenn and Andrew Taylor contributed to this report.

 

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Ford's Profit Drops on Investments for Future Growth

January 29, 2015, 4:07 am

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Filed under: Company News, Earnings, Automotive Industry, Ford, Manufacturing

Ford's (F) fourth-quarter earnings beat Wall Street estimates but fell sharply from a year ago, as overseas challenges and the the costs of launching its new F-150 bit into its bottom line.

Ford's net income of $52 million reflected the impact of several one-time items, including an $800 million charge in Venezuela. Excluding those one-time items, Ford made 26 cents a share, beating Wall Street analysts' estimate of 22 cents.

For the full year, Ford earned $6.3 billion before taxes, ahead of the $6 billion it had forecast in September, but down significantly from the $8.6 billion it earned in 2013.

Big Expenses Related to Ford's All-New F-150 and Other Products

Simply put, Ford's earnings dipped in 2014 in part because of overseas challenges, but primarily because the company has cranked up its spending on new products and new factories.

Ford was working on more than 20 new or refreshed products in 2014, led by a ground-up overhaul of its most profitable product, the F-150 pickup. Its aluminum-alloy body panels are an industry first. Also an industry first: Building an aluminum-bodied vehicle in the volumes required for the F-150, an effort that required expensive and time-consuming changes to Ford's two truck factories.

Those changes meant that Ford's Dearborn Truck factory was closed for 12 weeks, reopening in late November. That closure limited supplies of pickups available to Ford's dealers, and that in turn hurt sales (and profits) during the fourth quarter.

The disruption will continue until late spring, as Ford's other pickup factory near Kansas City is closed for its own refitting now. Other new-product launches, including an all-new version of Ford's Edge SUV, will also weigh down earnings in the first half of 2015. But Ford expects to have full supplies of its new pickups by the middle of the year, and its sales and profits should improve substantially after that.

Challenges in Russia and Venezuela Hurt Ford's Profits, Too

Ford's overseas business units are dealing with different challenges. In Europe, Ford managed to improve over year-ago results thanks in part to market-share gains -- but severe economic conditions in Russia have affected Ford's substantial operations there, and will continue to have a negative effect in 2015.

Challenges in Latin America also continue to hamper Ford's efforts there. Currency controls in Venezuela have led Ford to essentially write off its investments in the country -- the $800 million charge reflects the change in the way Ford accounts for its Venezuelan operation.

But Venezuela isn't the only challenge. Economic slowdowns and rising inflation in Brazil and Argentina have hurt Ford (and its regional competitors). The good news is that new products, such as Ford's new Brazilian-made Ka minicar, helped Ford offset those challenges.

Ford Expects Things to Start Looking Up Soon

The good news is that Ford expects all of this work to set it up well for a big rebound in 2015. "Very strong growth and financial performance are expected in 2015," CEO Mark Fields said on Thursday, as he delivered Ford's guidance: a full-year pre-tax profit between $8.5 billion and $9.5 billion, with higher profit margins in North America, "substantial" improvements in South America, an improvement in money-losing Europe, and higher profits in its Asia-Pacific region, which includes its huge investments in China.

And Ford starts the year in good financial shape, despite the subdued results in 2014. It had $32.4 billion in cash and available credit lines as of the end of the year, a more-than-ample reserve for rainy economic days to come. On the other side of the ledger, its total debt of $13.8 billion was $1.9 billion less than a year ago.

That all provides the context for Ford's subdued 2014 results. Yes, profits were down substantially -- but much of the decline was due to Ford's investments for future growth, and that growth should start to appear as 2015 unfolds.

Motley Fool contributor John Rosevear owns shares of Ford. The Motley Fool recommends and owns shares of Ford. 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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Spending-Free Weekend Challenge -- Savings Experiment

January 29, 2015, 7:24 am

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Filed under: Savings Experiment

Looking for a new, fun way to reduce your expenses and balance out your budget? If so, this could be the perfect time to challenge yourself to a spending-free weekend. If you think you have what it takes, here are a few tips to get you started.

A spending-free weekend is exactly what it sounds like -- it's a few days where no money leaves your wallet, bank account or credit card. While this may sound a bit scary for some of you shopaholics, it's not as tough as it seems, especially if you fill your time with some productive, free activities.

One great place to start is with your favorite hobbies. Look into ways you can explore your interests without spending a dime.

For example, instead of heading out to the movies, go online and look into all your existing streaming options. And if you like reading, try heading over to the public library instead of spending more on new books.

And let's not forget about all those little household tasks sitting on the back burner. Now is a great time to clean and organize the things you've been putting off. Also, check your appliances to make sure they're maintained. Your household will run smoother, saving you time and money down the line.

And speaking of time, when it comes to planning a spend-free weekend, always try to be spontaneous. Don't plan too far in advance, because chances are you'll spend more ahead of time to prepare for the weekend.

What are you waiting for? Get your entire household together and start your spending-free weekend now. Think of it as putting your budget on a diet. It might be tough at first, but in the long run, the savings you get will be the kind that last.

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