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    Buying an Air Conditioner on a Budget
    When it comes to buying a new air conditioner, bigger isn't always better. While you may think that more BTUs means a cooler room, that's not always the case.

    An air conditioner needs about 20 BTUs for each square foot of space, so if you've got a small to medium-sized room, 5000 BTUs will usually do the trick. Plus, you can find one that size for under $150, so you can stay cool without overspending.

    Here's another thing to consider. While you're shopping, look for an air conditioner with an Energy Star label on it. Energy Star models use 10 percent less energy than standard models, which means that little blue sticker can save you lots of money on your utility bill each month.

    If you're starting to feel the heat this summer, don't sweat it. You can cool off with a new AC, without burning your budget.

    View Poll

     

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    McDonalds
    Carlos Osorio/AP
    By Brian Sozzi

    NEW YORK -- Devouring a McDonald's (MCD) Big Mac or a Chipotle (CMG) burrito is on a fast-track to becoming a luxury for many U.S. consumers.

    It's not as crazy as it sounds, given the surging costs for beef and, above all else, hourly workers.

    In May, San Francisco joined the city of Oakland in having the highest minimum wage in the nation at $12.25 an hour. Minimum wages in San Francisco will reach $15 an hour by 2018. These hikes have led to recent price increases at Chipotle of 10 percent in San Francisco and 7 percent in Oakland.

    "In San Francisco, our occupancy costs are about double the Chipotle average as a percentage of sales, and our menu prices there [were] right around the average for Chipotle restaurants around the country, so increases to wages can have a greater impact than they might elsewhere," Chipotle spokesman Chris Arnold said in an email. Occupancy costs are the expenses related to doing business in a location, including charges for rent, electricity and water.

    On its second-quarter earnings call Tuesday, however, Chipotle noted that "just because the minimum wage increases, doesn't mean we will raise prices."

    According to the company, it doesn't plan to lift prices at all in Chicago this year due to higher minimum wages, and it will continue to look at menu-price increases related to higher worker wages on a "market-by-market basis."

    Also not helping Chipotle's profit line is the precipitous rise in the cost of beef, especially for the type of beef that meets the chain's rigorous breeding standards. Subsequently, Chipotle has estimated that it will have to raise prices nationwide later this year to compensate for beef price inflation. The anticipated hike is in the range of 4 percent to 6 percent.

    "We're just not charging the going rate," Chipotle CFO John Hartung said on the company's first-quarter earnings call April 21. "We actually lose money anytime somebody comes in thinking about getting chicken and instead gets steak, for example, so we'd like to fix that."

    Embattled McDonald's is also feeling the squeeze on its profits, in large part due to minimum-wage increases that went into effect in a number of cities at the beginning of 2015.

    Similar to Chipotle, the Golden Arches is considering price increases to protect its profits. "The minimum-wage cost, as well as all other costs, certainly impact how we look at pricing," McDonald's CFO Kevin Ozan said on the company's April 22 earnings call. The wage increase will impact McDonald's margins in the "near term," Ozan said, something investors will surely be on the lookout for when the company reports its second quarter earnings Thursday morning.

    One of the other inflationary costs for McDonald's is ground beef, whose price has skyrocketed in the past five years. Droughts in Texas, California and other cattle-producing areas have hindered the development of livestock.

    According to the Bureau of Labor Statistics, the price per pound for ground beef hit $4.22 in June, up a whopping 76 percent from June 2010. Ground beef prices have remained stable since the start of this year.

    Now both Chipotle and McDonald's, along with fast food competitors such as Burger King (QSR) and Yum Brands (YUM), are staring down the barrel of another loaded gun -- namely, a possible spike in the minimum wage for fast-food workers in the populous state of New York.

    According to The Wall Street Journal, New York State's wage board is expected Wednesday to recommend raising the minimum wage for fast-food workers to $15 an hour. New York's current minimum wage is $8.75, and it is poised to increase to $9 at the end of the year.

    Such a big spike to hourly wages could deal a major blow to the franchisees that operate in the state, causing well-established brands such as Dunkin' Donuts (DNKN) and McDonald's to drastically boost prices on food and possibly to reconsider their expansion plans.

    For the very smallest of the fast-food operators in New York, it could force them right out of business in a state already known for high occupancy costs.

    Should the wage board approve the hourly pay increase on entities it sees as "fast-food" companies, it could also be the first step for a broader pay hike for restaurant industry workers.

    Workers not in the fast-food business, but instead in traditional dining, often receive what is known as tip wages, which are usually below the minimum wage rate. Tip wages were already rising before the latest move by Cuomo.

    In February, New York approved an increase in the minimum wage for tipped workers in the hospitality industry to $7.50 from $5. Restaurants will have to enact the order by the end of the year.

    "It's catastrophic, quite frankly," Applebee's owner-operator Zane Tankel said in an interview with TheStreet, referring to the mandated increase in wages.

    According to Tankel, the government's push to better compensate fast food workers, and the restaurant industry workforce at large, could lead to "substantially" higher prices for consumers and possibly to service charges. It could also lead to the use of more tablet technology to wait on guests, thereby reducing the number of human workers needed but also raising the prospect of mishandled orders, Tankel said.

     

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    In this June 4, 2015, photo, a real estate sign is posted in front of a newly constructed luxury home in Roswell Ga. Freddie Mac reports on average U.S. mortgage rates on Thursday, June 25, 2015. (AP Photo/John Bazemore)
    John Bazemore/AP
    By Lucia Mutikani

    WASHINGTON -- Existing home sales rose in June to their highest level in nearly 8½ years, a sign of pent-up demand that should buoy the housing market recovery and likely keep the Federal Reserve on track to raise interest rates later this year.

    The National Association of Realtors said Wednesday existing home sales increased 3.2 percent to an annual rate of 5.49 million units, the highest level since February 2007.

    Existing sales this year are on track to record their biggest gain in eight years, the NAR said. Economists had forecast home resales rising to a 5.4 million-unit pace last month. Sales were up 9.6 percent from a year ago.

    June's solid home sales report came on the heels of last week's strong housing starts and building permits data. A tightening labor market is starting to push up wages, helping to boost demand for housing, especially among young adults.

    But a tight supply of properties for sale remains a constraint. The string of strong housing reports indicate the economy remains on firmer footing despite a drop in retail sales and a slowdown in job growth last month.

    The NAR said sales last month were likely boosted by buyers rushing into the market to beat rising mortgage rates, but added that strong economic fundamentals were the main driver. Those who already own a home accounted for the bulk of transactions in June, with the share of first-time buyers slipping a bit.

    First-time homebuyers accounted for 30 percent of the sales, down from 32 percent in May. It was the fourth straight month that this segment remained at or near 30 percent, although it remained well below the 40 percent to 45 percent that economists and realtors say is required for a robust housing market.

    The housing index rose 1.64 percent on the data, outperforming the overall stock market, which fell after Apple Inc late on Tuesday gave a fourth-quarter revenue forecast that fell short of estimates and missed some targets for iPhone sales.

    Shares in D.R. Horton (DRI), the largest U.S. homebuilder, rose 2.7 percent. Lennar (LEN) was trading 2.2 percent higher.

    Economists expect that housing will soften the drag on the economy from manufacturing, which continues to struggle with the lingering effects of a strong dollar and spending cuts in the energy sector, and contribute to growth this year.

    Still, housing gains continue to be curbed by a shortage of properties for sale. Residential construction has accelerated but is not keeping up with household formation, which should keep homebuilders busy.

    Last month, the stock of unsold homes on the market rose 0.9 percent from May to 2.3 million units. Supply was up only 0.4 percent from a year ago.

    At June's sales pace, it would take 5 months to clear houses from the market, down from 5.1 months in May. A six-month supply is viewed as a healthy balance between supply and demand. With supply well below what it was during the housing bubble in 2006, the median price for a previously owned home increased 6.5 percent from a year ago to a record $236,400.

    While some buyers may be forced out of the market by higher prices, homeowners are seeing their equity rise. That could lead to more houses being put on the market. Realtors and economists say insufficient equity has contributed to the tight housing inventories.

     

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    Woman holding empty savings jar
    Getty Images
    Right out of the gate, I should point out that this title is disingenuous. I think working for myself is great. It has made an enormous difference in my happiness and the amount of time I am able to invest in people and things I'm interested in. But, self-employment has some major pitfalls, ones I understand completely after years of self-employment. I'm going to share these with you, as well as the ways that I compensate for them.

    But first, I generally find that you can argue against any major life decision. As someone I know once put it, "No matter what you do, you'll regret it." As a recovering fatalist, I choose to reconsider that statement. Instead, whatever I do, I will make the most of it. This attitude has made big decisions like marriage, moves to other cities, and homeownership take on a completely different light. Self-employment can suck or it can be the best choice you make in your life. It all depends on how you react to these voices in your head, saying things like:

    1. You are giving up such great benefits. I put the big one first. This one is real. If you work for yourself, you won't have a 401(k), you won't have employer subsidized health insurance, you won't have a free gym membership, you won't have your old workplace's "Free Acupuncture and Pretzel Tuesdays", and what have you. You'll be on your own. Benefits are nice; I won't deny that. This isn't much of a problem in Canada where I live (universal health care!), but if you live in the United States, it may be really tough to walk away from employer sponsored health care. But it can be done, especially if you are still on your parents' plan or you have a spouse/partner with employer health care coverage. As for the rest of these cushy perks I described, the company I worked for offered nothing close. That's how it is for most of you. Your employer benefits are nothing fancy. If you work for Google (GOOG), go on working at Google. If you have a normal job with normal perks, maybe you could do without.

    Rebuttal: Unless your benefits are so good that you can't afford to live without them ... you can live without them.

    2. The work is going to be inconsistent. Yes it will. This is the real world my friends. As a self-employed person, you won't have some benevolent dictator handing out a steady stream of juicy assignments to you, along with a reliable paycheck. Nope. If you want it to rain, you've got to make it rain. And that means creating work for yourself, providing reliable results, and basically just being a badass. If you think about it, this is how businesses get created. One person takes so much work on that they can't do it all themselves. Then -- BOOM -- employees!

    Rebuttal: At first, maybe. Eventually, I'll have all the work I can handle.

    3. You won't be able to build good credit or get a loan. This can be true, at the beginning. Banks and lending agencies like consistency on the part of their borrowers. If you have just started working for yourself, they may think that you're selling seashell necklaces on Etsy (ETSY), at a rate of three a month. They might not know that you work 60 hours a week creating your blog or designing websites. Until you can prove that you are a gainfully self-employed grown up person, you may not be able to get the banks to give you money for things like a house. Luckily, I have a conventionally employed significant other, and we've been able to squeak by in this regard while I've built my self-employed career.

    Rebuttal: If you provide consistent results, lenders will see you as a legitimate borrower.

    4. You'll get lazy. Sometimes you do. But this is both a danger and a perk. As a self-employed person, I can afford to take a day off once in a very great while. In the future, I expect to be able to take a lot more time off. But in the meantime, it's important that I stay busy: to build my business, to maintain/increase my income, to make connections, etc. In the early days, I was a lot more slack about my work. But one day I realized that self-employment was now or never. If I didn't make it work in the next 6 months, I would either have to quit and rejoin the rat race, or I would have to do a lazy job in eternal poverty. I chose to work hard, and I'm glad I did.

    Rebuttal: Just work hard, you layabout!

    5. You'll lose your career path. It's true. If you leave a conventional career to go it alone, it will be harder and harder to reenter that career path, the longer you stay off of it. That's why it's important not to do self-employment halfway. If you are going to do it, DO IT! Within a year of starting this path, I was able to more than replace the income I was making at my normal job. That's after taxes, folks. You too can do this. If you get to this point, you won't need to go back to your former career path. You'll have crafted one of your very own.

    Rebuttal: I didn't need that old career path anyway. I made one of my own.

    If you are considering self-employment, you have experienced these doubts. Maybe they have even come out of the mouth of someone you care about. These are big considerations, but as I've shown you, you can get over the hump and have an even better career than you had before. As someone who works in personal finance, this was important to me. I know the value of money, I like money, I don't want to give up money. But it's also important to me to live my own life. You probably feel the same, on some level. So figure out what you're going to do as a self-employed person, work hard at it, and stick to it. Chances are you'll be able to overcome all of these doubts I described.

     

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    Volatile Day Of Trading Leaves Dow Closing 180 Points Down
    Spencer Platt/Getty Images
    By Chuck Mikolajczak

    NEW YORK -- Wall Street declined for a second straight session Wednesday as the technology sector fell on disappointing results from giants including Apple.

    Apple (AAPL) shares slumped 4.3 percent to $125.14, a day after the iPhone maker's revenue forecast for the fourth quarter fell below expectations, its biggest percentage drop since January 2014.

    The world's largest publicly-traded company was the biggest drag on all three major indexes and contributed nearly 37 points to the Dow's overall decline. The S&P technology sector fell 1.6 percent as the worst performing of the 10 major S&P sectors.

    We are getting a little bit of indigestion in the market over the past two sessions from tech earnings.

    Microsoft (MSFT) fell 3.7 percent, its biggest percentage drop since January, to $45.54 after reporting its biggest-ever quarterly loss, as the company wrote down its Nokia phone business and demand fell for its Windows operating system.

    "We are getting a little bit of indigestion in the market over the past two sessions from tech earnings," said David Schiegoleit, managing director of investments at the Private Client Reserve of U.S. Bank in Los Angeles.

    "We stepped right into the beginning of this week with IBM disappointing, followed by Microsoft, Apple and a couple of others, so we are just getting a little bit of heartburn in the market from those earnings releases on the tech side."

    Yahoo (YHOO) shed 1.2 percent at $39.24 after it forecast lower-than-expected revenue for the current quarter as it struggles to revive its core online advertising business.

    The Dow Jones industrial average (^DJI) fell 68.25 points, or 0.4 percent, to 17,851.04, the Standard & Poor's 500 index (^GSPC) lost 5.06 points, or 0.2 percent, to 2,114.15 and the Nasdaq composite (^IXIC) dropped 36.35 points, or 0.7 percent, to 5,171.77.

    Earnings Drop

    While markets remain near record highs, June-quarter S&P 500 earnings are expected to fall 1.5 percent, according to Thomson Reuters (TRI) data, well below the 5.9 percent gain forecast on Jan. 1, but above the 3-percent decline expected at the start of July.

    Of the 102 companies to report through Wednesday morning, 70 percent beat earnings expectations, matching the rate over the past four quarters and above the 63-percent average beat rate since 1994.

    However, only 55 percent have topped revenue forecasts, below the 61-percent average beat rate since 2002. U.S. companies are expected to post their worst sales decline in nearly six years in the second quarter, in part due to the strong dollar that reduces the value of U.S. companies' overseas income.

    Shares in housing companies were a bright spot Wednesday, with the PHLX housing sector index up 1.7 percent after data showed existing home sales rose to their highest level in nearly 8½ years in June. Lennar (LEN) gained 2.3 percent to $53.19.

    After the closing bell, SanDisk (SNDK) shares jumped 6.5 percent to $57.72 after the data storage products maker posted quarterly results.

    NYSE decliners outnumbered advancers 1,791 to 1,283, for a 1.40-to-1 ratio; on the Nasdaq, 1,437 issues fell and 1,339 advanced for a 1.07-to-1 ratio favoring decliners.

    The S&P 500 posted 34 new 52-week highs and 41 lows; the Nasdaq recorded 102 new highs and 140 lows.

    About 6.8 billion shares traded on U.S. exchanges, slightly above the average volume so far this month, according to BATS Global Markets.

    What to watch Thursday:
    • At 8:30 a.m Eastern time, the Labor Department reports weekly jobless claims, and the Federal Reserve Bank of Chicago releases its national activity index for June.
    • The Conference Board releases leading economic indicators for June at 10 a.m.
    Earnings Season
    These selected companies are scheduled to release quarterly financial results:
    • 3M (MMM)
    • Amazon.com (AMZN)
    • AT&T (T)
    • Bristol-Myers Squibb (BMY)
    • Comcast (CMCSA)(CMCSK)
    • Eli Lilly (LLY)
    • General Motors (GM)
    • McDonald's (MCD)
    • Starbucks (SBUX)
    • Union Pacific (UNP)
    • Visa (V)

     

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    Young woman looking worried over finances
    Getty Images
    By Donna Fuscaldo

    Rising home prices and stricter borrowing standards have put saving for a down payment back on the agenda for many homebuyers. The days of low or no down payment borrowing are gone, even as mortgage rates have remained low for the time being.

    Saving to buy property can be tricky, however. Investors preparing to make a down payment typically face a short time horizon, and possibly a moving target, as real estate prices rise rapidly in many parts of the country.

    This makes the traditional advice for short-term goals -- keep your savings liquid and protected -- a test in patience and restraint. It cannot be easy to watch home prices rise steadily each month while you are slowly stashing away funds in an account that earns next to nothing in a low-yield environment.

    What should investors do? When it comes to saving for a short-term goal, there is no secret trick. Resist the temptation to seek higher returns, when those higher returns come at the cost of higher risk. "If you need money for the short term, you need to be more conservative," says Bob Stammers, director of investor education at CFA Institute. "You can't take swings in asset prices. You can't have the market take a downturn before you need the money."

    The Bucket Approach

    When you have goals with different time horizons, working towards those goals in separate investment accounts can help you stick to your plan.

    It can be frustrating to funnel cash into a savings account month after month and watch it do nothing for you while your stock portfolio grows. You have several decades for your portfolio to grow, why not throw in the house down payment money in there and take your chances? You can always sell out when or if the stock market takes a downturn, right?

    It is this line of thinking that can lead to bad investing behavior, says Aaron Gubin, head of research and wealth management at investment firm SigFig. Investors are more likely to panic during a market dip and sell out when assets earmarked for a short-term goal are bundled together with longer-term assets.

    Keeping short- and long-term assets separate, on the other hand, will help you stay on course.
    Gubin offers the following guidelines for investors looking for the optimal saving and investment vehicles for their shorter-term goals:
    • If you anticipate needing the money within six months to a year, keep it in an FDIC-insured checking or savings account.
    • With a time horizon of a year to three years, CDs or a short-term fixed income portfolio might make sense. This way, you protect your principal, but still get some growth to offset inflation.
    • If you have three to 10 years before you need the money, a blend primarily composed of investment grade fixed income and some equities provides risk management through asset class diversification, while still providing quality returns.
    • If your goal is 10 or more years in the future, consider a balanced portfolio of 60 percent equities, 40 percent bonds and adjust it, if necessary, for your risk tolerance (Or take SigFig's online risk questionnaire to determine an asset allocation based on your time horizon, risk appetite and other factors.) As your goal approaches, gradually dial down the equity portion, until you find yourself a year out. Then move the assets to the safety of an FDIC-insured bank account.
    As always when making financial decisions, investors should make sure they understand the tax consequences. Everyone's situation is different, and a tax professional can help in figuring out what is most beneficial for you.

    Donna Fuscaldo is a contributing writer at SigFig. Nearly a million people use SigFig to track, improve and manage over $300 billion in investments.

     

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    USA, New Jersey, Jersey City, Senior woman reading labels on canned food
    Getty Images
    By Eric Reed

    Does your retirement adviser have your back? A recent study by the White House suggests the answer might be no, and that's costing Americans $17 billion a year. Every retirement fund comes with associated fees, taken out by the managing broker in the form of a percentage on the return. It's how the financial adviser who manages your 401(k) makes his money and is supposed to incentivize him to do the same for you.

    The trouble is that this creates a conflict of interest between brokers and their clients in the form of high-fee funds and back end incentives. You see, not every investment fund is priced the same. One might cost a simple 0.25 percent on the dollar, while another will claim the potential for far greater returns but charge 1 percent.

    Financial advisers are supposed to represent the best interests of their clients in navigating this issue, given the specialized knowledge it generally takes to make a meaningful distinction between what one investment package means versus another. Unfortunately, when the higher priced fund means a lot more money for your broker, even if a more conservative approach could be the wiser course for an investor, incentives get muddled. It gets even worse when third party firms offer explicit commissions for brokers who steer their clients into particular investments.

    "These conflicts of interest are costing middle class families and individuals billions of dollars every year," according to the White House's press release.

    "Working and middle class families receiving conflicted advice earn returns roughly 1 percentage point lower each year (for example, conflicted advice reduces what would be a 6 percent return to a 5 percent return) ... [I]f a worker has $100,000 in retirement savings at age 45, without conflicted advice it would grow to an estimated $216,000 by age 65 adjusted for inflation, but if she receives conflicted advice it would only grow to $179,000."

    Portfolio disclosure forms are supposed to protect investors from this kind of predatory behavior, but the reality is that these are generally of little or no use to the average consumer. Stuffed with dense accounting information, disclosures are difficult or impossible for most people to understand meaningfully beyond whether their account made or lost money recently.

    Worst of all, according to David Madland with the Center for American Progress, disclosure forms fail to discuss the single most important part of a broker's fees: compound interest.

    'Significant Sums'

    "People are being charged significant sums of money in their retirement accounts and they're often unaware," he said. "The existing disclosures for fees and returns are many, many pages long. Fees are listed in different places and in different fonts for different types of accounts, and you would almost have to be a forensic accountant to know what you're paying."

    Even when a consumer can find the fee information associated with his retirement account funds, it discloses only annual dollars. So, a 0.5 percent fee account would only report that it costs $5 a year per $1,000 invested. That doesn't sound like a lot ... until you consider what it means over the course of several decades. The difference between a $5 a year account and a $10 a year account can add up through compound interest to tens of thousands of dollars, but disclosures don't have to inform consumers of that.

    So Madland did the math himself. In a recent article written with economist Jennifer Erickson, Madland estimated that for a median-income worker investing 5 percent of his salary, the difference between a low and high cost account comes to over $70,000 by retirement age.

    "Another way of thinking about it," he said, "is you'd have to work three additional years to save up the same balance for someone with a high fee as opposed to someone with a low one."

    In fact, according to the CAP's research, many investors don't even realize when they've been enrolled in high-fee funds.

    All of this would be less important if these products actually delivered on their promised returns. Financial advisers price funds and sell them on the basis that more expensive ones promise the ever elusive dream of "beating the market." Unfortunately research has consistently shown that this dream remains just that.

    For the most part, you're actually getting the opposite of something good when you pay high fees.

    In fact, high-fee funds tend to do a little bit worse than average.

    "For the most part, you're actually getting the opposite of something good when you pay high fees," Madland said. "Most goods, when you think of paying more, you're going to better value, but with retirement, the research shows that there's actually an inverse relationship with the fee. The return is going to be average or worse."

    "You're actually paying additional money to get a lower quality product in most cases," he added.

    The consumer choice that's supposed to counterbalance this problem gets lost in the glut of misleading paperwork and industry jargon. Average investors can't push back against bad advice when they can't actually understand what a given fund will actually cost and what they're getting for their money.

    Hard to Comprehend

    That's where the CAP's proposal comes in: far from the dense envelopes we receive today, retirement account disclosures should look more like something off the back of a cereal box and should be just as easy to fully comprehend.

    "Study after study shows that people don't know what they pay for their retirement," Madland said. "I would give people a receipt just like you get with any other purchase that spells out in dollars how much you paid for the year for your 401(k) in fees."

    The receipt should also line-item compare an investor's options in broad, easy-to-read language. Madland envisions something like calorie counter charts with well labeled boxes showing how each available fund compares to another in terms of costs and historic returns.

    The whole key to breaking this shaky fiduciary responsibility cycle is demystifying the process. Retirement funds are products just like any other, but with costs and benefits are spread over generations, it can be difficult to shop around properly. Giving investors the relevant information up front can make it accessible again and help reinstill the consumer choice that is supposed to push back on improperly motivated advisers.

    Ultimately, though, it's most important for consumers to understand how important it is to monitor their own long term savings and retirement regardless of third party reform and to keep in mind the power of compound interest. Individual dollars may not matter much when choosing a cup of coffee or pair of pants, but allowed to grow over decades, $5 here and there can add up to tens of thousands.

    It's better not to lose that between someone else's sofa cushions.

     

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    Businessman with bag over head relaxing
    Getty ImagesOne expert says the worst mistake an investor can make is "sticking your head in the sand." Or in this case a paper bag.
    By Lou Carlozo

    No investor is perfect, but hanging onto an imperfection a bit too long can add up to the point where it wrecks a portfolio, cuts a hole in your wallet or costs you a ton of money somewhere down the line.

    Here's the rub: How do you know you've made a mistake when you had no idea you were chasing your tail in the first place? Ignorance is one thing; smart investing requires a never-ending cycle of learning. But blissful ignorance is quite another.

    "The absolute worst money mistake is sticking your head in the sand," says Cary Guffey, a financial adviser with PNC Wealth Management. "Whatever the issue you are dealing with, the problem won't simply go away. The very first thing you have to do is confront and admit you have an issue. Until this happens, your situation will not improve."

    Here are 10 common gaffes investors make -- some emotional, some behavioral, but all avoidable.

    1. Chasing a stock, no matter the price. It's too easy to get intoxicated by a growth industry or sizzling stock. "Ben Graham's famous quote [that] short term, the market is a voting machine but long term, a weighing machine, is still applicable," says Yale Bock, founder and president of YH&C Investments in Las Vegas and manager of two portfolios on Covestor, an online investment management platform. Highflying growth companies "are always part of the investment landscape, but the potential for severe capital losses increases if those companies fail to continue growing their revenues, cash flow and profits," he says.

    2. Not keeping your emotions in check. Nothing hurts an investor quite like irrational feelings that override rational choices. "Don't let your emotions allow you to fall prey to gimmicks and trying to beat the market," says Scott Puritz, managing director of Rebalance IRA, an online retirement investment advisory. "Instead, opt for a simple, straightforward investing strategy. Likewise, investors who go it alone often feel anxious and ashamed by their lack of experience, and these emotions can cloud judgment."

    3. Ignoring the contrarians. Contrarians aren't always right -- but when they establish a track record over the long run, they're worth listening to. "Often the best investment ideas are contrarian," says Daniel Beckerman, president of Beckerman Institutional in Oakhurst, New Jersey, and a portfolio manager on Covestor. "Sentiment was extremely low in early 2009 after the financial crisis when stocks hit their lows. In retrospect, this was the best entry point for stocks in recent years."

    4. Misreading probabilities. Yes, it's "buy low, sell high" -- but sometimes what's perceived as high is really somewhere in the middle, if given enough time. "I constantly hear folks say that markets are at an all-time high, so we should get out of the stocks before they drop," says Benjamin Schwartz, a senior financial planning associate with Plancorp, headquartered in St. Louis. "While that may seem intuitive, statistically this logic does not hold up. Future returns are independent of past returns -- just as a coin toss does not determine how it will land based on previous flips."

    5. Failing to ask the right questions. Too many people blindly hand their money over to financial firms and money managers, hoping for the best, says Bobby Monks, co-author of "Invested: How Wall Street Hijacks Your Money and How to Fight Back." These investors "dramatically increase their risk of ending up with lousy investments and overpaying for them. And it's not enough to simply ask questions. You need to understand the answers; for example, how they're compensated and whether they put a meaningful amount of their own money in the investments they sell you," Monks says.

    6. Not periodically rebalancing your portfolio. Whether they're winning or losing, many investors are reluctant to sell, Guffey says. "The thinking goes that if something has made money in the past, it will continue in the future. The other side of the coin is when something is down, an investor starts telling themselves they will sell it when it gets back to a certain value," he says. Because rebalancing is an ongoing, systematic process, it takes the nonproductive guesswork out.

    7. Counting on Uncle Sam for retirement. Some investors may put off retirement investing, thinking Social Security will make up the difference. "They should know that Social Security will only cover 10 to 30 percent of retirement living expenses," says Edward Kohlhepp, an independent financial adviser in Doylestown, Pennsylvania. People who don't hit on this at the right time "often start investing with too little, too late," Kohlhepp says.

    8. Letting your bad behavior get in the way. Some investors might blame the market or rotten luck when they're responsible. "Ultimately it's our own behavior that does us in," says Peter Mallouk, author of "The 5 Mistakes Every Investor Makes and How to Avoid Them." "The key to dodging the pitfall is to be aware of what your instincts tell you and recognize behavioral land mines." These include overconfidence and succumbing to herding mentality.

    9. Assuming retirement equals a lower tax bracket. Retirees ready to thumb their noses at the Internal Revenue Service might be in for a rude awakening, says Dave Henderson, a financial planner based in Greenwood Village, Colorado. "Many times when people get to retirement, they have paid off their mortgage, their kids are out on their own and they are no longer contributing to deductible retirement plans," he says. But between pension plans, withdrawals from retirement accounts and partial taxation of Social Security, "their income may not be much lower, and they have very few things to deduct, resulting in higher taxation than they planned for."

    10. Assuming your adviser is a legal fiduciary. In investment, legal fiduciaries act solely in the investor's interests. And while only a small percentage of financial advisers have a legal fiduciary relationship with clients, "most investors believe their relationship includes a fiduciary duty," says George H. Walper Jr., president of Spectrem Group in Chicago. "This disconnect could lead to major conflict between the investor and the adviser if the reality does not match the expectation."

     

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    Couple in kitchen with paperwork using laptop look
    Getty ImagesIf your goal is to get out of debt "someday," it's time to pick a payoff deadline.
    By Erin El Issa

    It's easy to let your credit card debt slip out of control. Despite your good intentions, one or two purchases over your budget can snowball from a small balance to a heap of debt. In fact, the average U.S. household carries more than $15,000 in credit card debt, according to NerdWallet's July analysis.

    No matter how much credit card debt you have, it's important to face the problem and make a plan to pay it off for good. Here are five signs your credit card debt is out of control and tips for regaining mastery of your finances.

    1. You're in denial. Neglecting your bills, dodging calls from unknown numbers and refraining from discussing finances with your significant other are clues you may be in denial about your debt.

    But ignoring debt will only make it grow: Your accounts will continue to accrue interest and late payment penalties.

    How to regain control: Look at your balance statements. List each of your debts, along with their due dates, minimum payments and interest rates. Pay the minimums on all of them.

    Prioritize your debts, starting with the one with the highest interest rate, and use any additional funds you have to pay down the first debt on the list. Then, move onto the next one, and so on, until all of the balances drop to zero dollars.

    2. Your repayment deadline is vague. If the date you'll be debt-free is "someday," that lack of clarity may be preventing you from getting your credit card debt under control.

    A specific payoff date is important for several reasons: It forces you to devote your time and resources to meet a deadline. It also gives you a sense of when the stress of paying off debt will end. Knowing that your situation won't last forever could motivate you to resist the urge to spend.

    How to regain control: Write down your take-home income and subtract necessary expenses, including your minimum debt payments. If you already have a small emergency fund, your leftover income can supplement debt payments. Use a debt payoff calculator to find out how long it will take you to get rid of your debt if you apply that extra payment to your balance. The result is your debt-free date.

    If the date seems too far away, re-evaluate your income and expenses. By increasing your income or lowering your expenses, you can free up more cash and pay down your debt faster. Consider asking for a raise, freelancing on the side or selling unused belongings to bring in more money. Trim costs by canceling old subscriptions, finding cheaper entertainment or eating out less.

    3. You jump from balance transfer to balance transfer. Credit card balance transfer offers with zero percent introductory APRs are a great way to alleviate your interest burden and help you pay off debt faster.

    However, if you find yourself shifting your debt from one card to another without making any progress on reducing it, you may be stuck on the balance transfer hamster wheel: You make minimum payments -- which are largely negated by balance transfer fees -- and then transfer the remaining balance to a new card each time the introductory APR expires.

    How to regain control: Moving a balance isn't the same as paying it off. If you have a balance transfer card with a limited zero percent interest rate, divide your balance by the number of months until the offer expires. That's your new monthly payment.

    If you can't pay off the balance before the APR expires, make as much progress as you can. When the rate expires, transfer it to a zero percent card for the last time. Then make a plan to knock it out in the allotted time period without accruing interest.

    4. You're sacrificing savings to pay off debt. You probably can't save much if your extra money goes toward credit card debt payments. But it's important to make room in your monthly budget to save, especially if you don't have an emergency fund to keep you from sliding back into debt if an unexpected expense arises.

    How to regain control: Aim to save part of each paycheck, even if you have debt. If you don't have an emergency fund, set your first savings goal at $1,000 and make a plan to get there as quickly as you can. You can expedite the process by tightening your budget or making some money on the side and depositing it directly into your savings.

    If you already have an emergency fund, start putting a small sum, such as $10, $20 or $50, in your general savings account each month. These deposits can help you reach longer-term savings goals or prevent you from falling back into debt if you exceed your budget.

    5. You are constantly anxious about your debt. It's a red flag if thoughts about your debt are keeping you up at night or if your debt is affecting your professional or family life. Your debt shouldn't make you overwhelmingly stressed.

    How to regain control: If you're anxious because you don't know how much you owe or what your terms are, refer to the steps for getting out of denial above. However, if your debt load is too big to pay off, you may have to find alternatives.

    You may want to consider consolidation. Choose a registered debt consolidation company by looking for positive reviews on the Better Business Bureau site, or get recommendations from trusted loved ones who have consolidated their own debt with a reputable company.

    Bankruptcy should be a last resort, but it's an option if you need it. Keep in mind that bankruptcy will stay on your credit report for seven to 10 years, and it's unlikely that you'll be able to pay back student loans in a bankruptcy.

    By confronting the problem and taking these steps, you can lift both the mental and financial burdens of your credit card debt.

    Erin El Issa is a former accountant and a staff writer for NerdWallet. She covers credit reporting and scoring, credit cards, consumer debt and other personal finance topics.

     

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    cheap gas
    Flickr
    By Jeff Cox

    Americans aren't spending much of the money they're saving at the pump.

    Some benefit in home prices and employment have come to areas with long commutes, but effects on retail spending have been "more ambiguous," according to an analysis from Goldman Sachs economists.

    While consumer spending has picked up since Q1, results for the year so far have fallen short of our expectations.

    "Our view has been that the boost to real incomes from lower energy prices -- and its positive impact on consumer spending -- would offset the drag from energy-related investment, resulting in gains for US GDP growth on net," Hui Shan and Zach Pandl said in their report. "While consumer spending has picked up since Q1, results for the year so far have fallen short of our expectations."

    Indeed, retail spending has been disappointing despite expectations for a rejuvenated U.S. economy boosted by the decline in oil prices. Crude tumbled 55 percent and gasoline dropped 42 percent from June 2014 to January 2015. The decline in both has abated since then, but prices at the pump are still 30 percent lower than they were a year ago, according to AAA.

    In a study that looked at U.S. regions where at least 80 percent of workers commute, Goldman found uneven results: Improving labor markets and declines in mortgage delinquency, but not enough to translate to substantial retail spending gains on a national level.

    The reason lies primarily in the beneficiaries: Less wealthy people likely used the savings to pay down debt and put in savings, with only the wealthy spending.

    "County and ZIP code level data suggest that areas with long commute times -- which benefit disproportionally from lower gasoline prices -- have experienced a boost in their labor and housing markets relative to other locations," Shan and Pandl wrote. "We therefore see evidence that consumers are responding to cheaper gasoline, and in our view a portion of this extra spending power remains in the tank."

    How much is still "in the tank" will be critical toward the arc of U.S. growth. Gross domestic product fell well short of expectations in the first quarter, contracting 0.2 percent. Economists blamed the slowdown on poor weather and the West Coast port strike, though a recent paper from the New York Federal Reserve found the latter event to have only a modest drag on growth. GDP, however, is on track for 3 percent gains in the subsequent two quarters, according to the CNBC/Moody's Analytics Current Quarter GDP Survey.

    Inflation Pressures Elsewhere

    That upswing may have to come without as much help as expected from consumers. The National Retail Federation cut its full-year sales growth expectations Wednesday to 3.5 percent from 4.1 percent, due to what NRF president and CEO Matthew Shay deemed "lackluster growth in our economy."

    Relief at the gas pump has been offset by pressures elsewhere.

    Hourly wages are growing at just 2 percent annually and real wages, accounting for inflation, actually declined 0.3 percent in June, according to the Labor Department.

    Prices also have surged in several areas, most notably eggs, which rose 31 percent in June just in a month, thanks to an avian flu outbreak in chickens. Wine surged 20 percent, beer was up more than 5 percent and gasoline rose more than 2 percent, according to the Bureau of Labor Statistics.

    In recent research, Nick Colas, chief market strategist at Convergex who keeps a lookout for consumer trends, found a strong correlation between the fall in gas prices, miles driven and employment trends. In a nutshell, he surmised that the lower prices were resulting in more driving, primarily to work.

    "At the tail end of last year, most economists were dead sure that lower gasoline prices would spark a wave of incremental spending, as most periods of declining energy prices had in the past. Makes sense -- less money at the pump means more money to spend elsewhere," Colas wrote. "Except this mystery turned into something more akin to the 'Hound of the Baskervilles,' where the central clue was the absence of a barking dog. As is now painfully obvious, the American consumer took their gas savings, bypassed the mall, and just went home."

     

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    McDonald's
    JeepersMedia/Flickr
    By Lisa Baertlein

    The new chief executive at McDonald's (MCD) expects global sales at established restaurants to grow in the current quarter, reversing more than a year of declines, and said his turnaround plan is showing early signs of taking hold.

    The world's biggest fast-food chain, which popularized burgers and french fries, is battling nimble rivals who are doing a better job of meeting consumers' growing appetite for fresher, less processed food.

    Since taking the helm in March, McDonald's CEO Steve Easterbrook repeatedly has vowed to turn McDonald's into "a modern, progressive burger company."

    While our second quarter results were disappointing, we are seeing early signs of momentum.

    Easterbrook, who debuted his turnaround plan in May, said Thursday: "While our second quarter results were disappointing, we are seeing early signs of momentum."

    But McDonald's still has a long way to go.

    Net income tumbled 13 percent to $1.2 billion, or $1.26 a share, in the second quarter. Total revenue fell 10 percent to $6.5 billion.

    Global sales at McDonald's restaurants open at least 13 months fell a slightly steeper-than-expected 0.7 percent in the quarter that ended June 30, due to a drop in traffic in all major markets.

    Same-restaurant sales in the United States, McDonald's No. 1 profit market, were down 2 percent in the latest quarter as customer visits fell and featured products and promotions missed their mark.

    Easterbrook has responded to intense U.S. competition from rivals such as Chipotle Mexican Grill (CMG), Chick-fil-A and "better burger" chains like Shake Shack (SHAK), by experimenting with custom burger toppings, regional menus and breakfast all day.

    McDonald's U.S. restaurants also plans to switch to chicken raised with fewer antibiotics and revamp its national value menu.

    The chain's U.S. restaurant operators, many of whom are grappling with significant renovation debt and slumping sales, have urged Easterbrook to move more aggressively on his plan to simplify McDonald's large menu.

    Analysts noted McDonald's global same-restaurant sales had dropped a steep 3.3 percent in the third quarter of 2014, suggesting it should be easy for the company to show year-over-year growth.

    McDonald's, which already has cut jobs and begun closing underperforming restaurants, also is evaluating its capital allocation. That review will include dividend payments that make McDonald's shares popular with many investors.

    As a result of the review, McDonald's is moving its annual dividend announcement to November from September, Chief Financial Officer Kevin Ozan said.

    The dividend news erased early gains for McDonald's shares. At midday they were down 0.4 percent to $97.15.

    -Siddharth Cavale contributed reporting from Bangalore, India.

     

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    Unemployment Benefits
    M. Spencer Green/AP
    By Lucia Mutikani

    WASHINGTON -- The number of Americans filing new applications for unemployment benefits last week dropped to its lowest level in nearly 42 years, suggesting the labor market maintained a sturdy pace of job growth in July.

    Other data Thursday also offered an upbeat assessment of the economy. A gauge of future economic activity increased solidly in June and another measure suggested growth picked up slightly last month.

    This should reassure policymakers that their objective of maximum employment is coming closer into view.

    The bullish jobs picture, together with a firming housing market brings the Federal Reserve a step closer to hike interest rates this year.

    "This should reassure policymakers that their objective of maximum employment is coming closer into view," said John Ryding, chief economist at RDQ Economics in New York.

    Initial claims for state unemployment benefits fell 26,000 to a seasonally adjusted 255,000 for the week ended July 18, the lowest level since November 1973, the Labor Department said.

    However, last week's drop likely exaggerates the strength of the labor market as claims are volatile during summer when automakers usually shut assembly plants for annual retooling.

    Some firms keep production lines running, which can throw off a model the government uses to smooth the data for seasonal variations. A Labor Department analyst, however, said there were no special factors influencing the data.

    Still, the decline unwound the increase in claims in June.

    The dollar was trading weaker against a basket of currencies and prices for U.S. Treasuries fell marginally.

    Technology shares on Wall Street rebounded from the prior sessions' losses, while the rest of the market was little changed after weak earnings from Caterpillar (CAT), the world's largest construction and mining equipment maker, and diversified technology firm 3M (MMM).

    Fed officials meet next week, but they are not expected to tighten monetary policy before September. The Fed has kept its short-term lending rate near zero since December 2008.

    Firming Trend

    The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, fell 4,000 to 278,500 last week.

    "We believe that retooling shutdowns were likely much smaller in 2015 than in previous years due to lower auto inventories and very strong vehicle sales," said Cheng Chen, an economist at TD Securities in New York.

    As such, that would suggest an acceleration in motor vehicle assembly this month, which would support the struggling manufacturing sector and lift industrial production.

    The claims data covered the survey week for the nonfarm payrolls portion of July's employment report.

    Though the four-week average of claims increased 1,500 between the June and July survey periods, payroll growth likely remained above the 200,000 threshold this month.

    The four-week moving average of claims has been below the key 300,000 mark, which is normally associated with sturdy job gains, for 17 straight weeks -- an unusually long stretch.

    Payrolls increased 223,000 in June after rising 254,000 in May. Job growth has exceeded 200,000 in 14 of the last 16 months and at 5.3 percent, the unemployment rate is close to the 5 percent to 5.2 percent range that most Fed officials consider consistent with full employment.

    In a separate report, the Conference Board said its leading economic index rose 0.6 percent last month after advancing 0.8 percent in May. The increase reflected the strengthening housing market, which has been characterized by a surge in housing starts and building permits, as well as very strong sales.

    The upbeat growth picture was also supported by another report from the Federal Reserve Bank of Chicago, which showed its National Activity Index rising to +0.08 in June after five straight months of negative readings. The gain was led by improvements in production and employment related indicators.

     

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    Rogue Dairy Queen
    Dave Kolpack/APKristin Drechsel, foreground, gives Madison Brenamen tips on making a Blizzard at the Dairy Queen in downtown Moorhead, Minn., while store owner Troy DeLeon looks on.
    By DAVE KOLPACK

    MOORHEAD, Minn. -- The Dairy Queen in downtown Moorhead has been thumbing its nose at corporate HQ pretty much since it opened in 1949, despite some efforts from the home office to have the store mind its Ds and Qs.

    And it's a recipe that seems to be working for one of the few DQs in the country still operating under a 66-year-old contract that allows them to dish up throwback treats alongside the standard corporate-approved items, a combination that turns Main Avenue and 8th Street into a hopping, slightly retro summer hangout.

    Though the restaurant shuts down in the winter and unlike newer shops has no indoor seating and no drive-thru, customers gladly line up on the sidewalk for frosty treats no matter what the weather. Two years ago at least 1,200 people showed up on opening day, March 1.

    The temperature was 11-below.

    Why do they do it? Tradition, generous portions, reasonable prices and treats you just can't get at most other shops help. And in an era of corporate ubiquity, it's a subtle reminder that sometimes different can be delicious.

    They are good to their customers. They are so generous with their product. They don't skimp on what they put in your treats.

    Diann Mikula, 78, has been visiting the shop since the year it opened. And along with her husband, she continues to make almost daily pilgrimages there, even though there are other DQs across the river in Fargo, North Dakota, where she lives.

    "They don't even need an inside place to eat like they have in Fargo," Mikula said. "They are good to their customers. They are so generous with their product. They don't skimp on what they put in your treats."

    While newer contracts stipulate adherence to strict corporate guidelines, messaging and menus, the Moorhead shop still operates mostly under the terms of a contract signed in 1949. And that allows owners Troy and Diane DeLeon the freedom to dish out what might be considered rogue menu items.

    There's the Mr. Maltie, a chocolate malt on the stick; the Monkey Tail, a chocolate-covered frozen banana; and of course the Chipper Sandwich, which is vanilla ice cream sandwiched between two chocolate chip cookies and dipped in chocolate.

    The DeLeons also offer unique toppings, some of which have been discontinued by headquarters, as well as non-corporate approved food items, including barbecue sandwiches and Polish sausages. And the ice cream cakes? Let the other shops take HQ's premade cakes; Troy DeLeon assembles his himself.

    "If we changed to the new corporate way, virtually all our food items would be gone," said Troy DeLeon, who took over the store in 1995 from original owner Bob Litherland, who also was considered something of a company maverick. "The corporate way is everything exactly the same."

    DeLeon has said that corporate would like for his store to melt away, which drew a chuckle and a "no comment" from company spokesman Dean Peters. The Minneapolis-based chain -- which launched in 1940 -- values all of its more than 6,500 locations, Peters said, and it "understands and appreciates" the heritage and popularity of the downtown Moorhead Dairy Queen.

    However, Peters said the company cannot promote the store "as a brand and a system," and added that most DQ lovers are looking for uniformity and the indoor dining experience provided by the company's newer DQ Grill and Chill restaurants.

    "That's what our fans are telling us they want and that's what we are trying to provide them with," Peters said.

    Playing the Corporate Game

    Mind you, the Moorhead store still plays the corporate game. To a degree. The lineup of typical DQ treats is featured on the window. But nearby is a "Local Menu" sign that includes a Nathan's-brand hot dog for $1.50, a bowl of chili for $2, a large Polish sausage for $2.75 and the super chili cheese dog for $4. Another poster promotes a "Curly Shake," which is advertised as a shake with a sundae on top, for $3.25.

    Peters said a small percentage of Dairy Queen stores around the country have contracts dating back to the 1940s. He said those contracts allow for "very limited" products to be sold that are not available at most locations.

    Customers at the DeLeons' restaurant are welcome, if not encouraged, to order treats just the way they like them. For example, Moorhead Mayor Del Rae Williams said her son likes the Crunch Blizzard, but substituted with chocolate ice cream.

    "We'll do whatever. It doesn't take any longer," DeLeon said.

    Said Williams, "People feel like it tastes differently and they give better service. Where else would you mind standing in line? It has become an experience in our community. It's very personalized and people know it."

    DeLeon said he has been encouraged by corporate lawyers to enter into a new contract, but there "aren't enough zeroes" that could convince him to dump the flavors and feelings customers like Diann and Leroy Mikula have enjoyed for decades.

    "They come here almost every day, like a lot of customers," Troy DeLeon said. "We want people to take a step back in time and experience something they don't get a chance to experience very often."

     

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    A sign that reads ?Begin Construction?
    Getty Images
    NEW YORK -- Congress should bite the bullet and raise the gas tax to fund highway repairs and construction. It should also make sure highway taxes are used for the roads not to finance politicians' pet projects and line union pockets.

    The Federal Highway Trust Fund was established in 1956 with a 3-cent gasoline tax to finance the construction of the Interstate Highway System and federal contributions to other projects undertaken with the states.

    The gasoline tax was last raised in 1993 to 18.4 cents a gallon and is supplemented by a 24.4 cents diesel tax and levies on truck tires and other assorted fees on trucks and trailers. However, a quarter of these highway use taxes are tapped off for other purposes -- about 15 percent for mass transit construction and the remainder for bike paths, recreational trails, scenic overlooks and other noble purposes.

    Initially, the fund built up a surplus, but spending has outpaced revenue since 2001. Since 2008, the fund has been teetering on insolvency, and Congress -- reluctant to raise the unpopular gas tax -- has passed 34 temporary trust fund extensions and funding patches.

    If Congress doesn't pass a new funding measure before it adjourns for its August recess, the fund will be out of money to finance badly needed highway maintenance and new projects.

    To keep it going another three years, Majority Leader Mitch McConnell and California Sen. Barbara Boxer have crafted a bill that includes 15 separate funding sources including sales from the strategic petroleum reserves and cutting the dividends banks receive on their paid-in capital to the regional Federal Reserve banks. Unrelated to highway use and benefits, many of those revenue raisers have attracted opposition in both houses of Congress.

    Going forward, the Trust Fund will spend about $50 billion a year, and taxes on fuel and commercial vehicles only generate about $35 billion. The McConnell-Boxer fix is temporary at best. For example, only so much oil can be sold from the strategic reserve.

    More importantly, the fuel taxes do not rise with inflation, Americans are using less gasoline, bigger trucks put more wear and tear on the nation's roads, and the Interstate Highway System and other federally assisted projects are aging -- some 60,000 bridges in the United States are structurally deficient.

    Gasoline usage has declined since 2007, because vehicles are becoming ever more fuel efficient, an aging population drives less and Millennials prefer to live closer to jobs and use mass transit more.

    Moreover, a lot of the money is misspent or badly spent. In addition to tapping off highway money for subways, bike paths and the like, the "prevailing wage" provisions of the Davis-Bacon Act generally requires excessively high union wages and cumbersome work rules on federally assisted projects -- no matter that unions only represent less than 7 percent of private sector workers.

    One solution offered to deal with rising vehicle fuel efficiency is to levy the tax on the basis of miles driven instead of fuel consumption, but that would require tracking cars with GPS devices, the Internet or some other method that raises privacy issues. Moreover, as opposed to a per-gallon tax, a mileage-based system would discourage conservation and reward those who chose to drive around town in 5,000 pound SUVs.

    To fix the highway trust fund, Congress should stop tapping it for other purposes -- tax mass transit rides to finance the federal contribution to new system construction and improvements; impose an excise tax on bikes, tires and repairs; and raise national park fees to finance scenic overlooks and outdoor recreational projects.

    Along with canceling Davis-Bacon so that we get our money's worth from highway dollars spent, making up the difference by raising the gas tax and then indexing it to inflation makes good environmental sense and is the fairest policy.

     

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    Volatile Day Of Trading Leaves Dow Closing 180 Points Down
    Spencer Platt/Getty Images
    By Caroline Valetkevitch

    NEW YORK - U.S. stocks fell for the third straight day Thursday after disappointing corporate results and forecasts added to concerns about the U.S. profit outlook.

    The Dow Jones industrial average fell back into the red for the year, with 3M, American Express and Caterpillar contributing the most to the average's fall.

    The Dow Jones transportation average was off 2.1 percent, with only one of its 20 components ending in the black. Union Pacific (UNP), down 5.7 percent at $92.12 after posting a lower quarterly profit, led the decline in transportation shares and was among the S&P 500's biggest drags.

    The initial take on big earnings reports has been lukewarm at best.

    "The initial take on big earnings reports has been lukewarm at best," said Bruce Zaro, chief technical strategist at Bolton Global Asset Management in Boston.

    "The strong dollar certainly has been mentioned a lot, and I think there are still questions about demand in the economy and what would translate into revenue growth for most reporting companies."

    Caterpillar (CAT) shares fell 3.6 percent to $76.88 and touched a four-year low. The world's largest construction and mining equipment maker reported sales declines in key markets in a sluggish global economy.

    American Express (AXP) was down 2.5 percent at $77.01 after its revenue missed expectations, while diversified manufacturer 3M (MMM) was down 3.8 percent at $149.50 after cutting its full-year forecast.

    The Dow Jones industrial average fell 119.09 points, or 0.7 percent, to 17,731.95 (^DJI), the Standard & Poor's 500 index (^GSPC) lost 12 points, or 0.6 percent, to 2,102.15 and the Nasdaq composite (^IXIC) dropped 25.36 points, or 0.5 percent, to 5,146.41.

    After the bell, however, Nasdaq 100 e-mini futures turned positive following results from Amazon, whose shares jumped 15 percent in extended trading.

    During the regular session, all of the 10 major S&P 500 sectors were lower with the utilities index leading the decline with a 1.5 percent fall along with the materials index, also down 1.5 percent.

    Dow Chemical's (DOW) 5.2 percent drop to $47.45 weighed the most on the sector. Dow Chemical warned of soft demand in China after posting stronger-than-expected results.

    Mixed Earnings Picture

    Second-quarter S&P 500 earnings have been mixed, with 75 percent of companies so far beating analyst expectations and just 52 percent surpassing revenue expectations, according to Thomson Reuters (TRI) data.

    The S&P 500 is currently trading at 16.9 times forward 12 months earnings, above the 10-year median of 14.7 times, according to StarMine data.

    Qualcomm (QCOM) fell 3.8 percent to $61.78, a day after the chipmaker said it may break itself up as it delivered its third profit warning this year.

    On the plus side, SanDisk (SNDK) jumped 17.6 percent to $63.70, a day after the data storage products maker reported a quarterly profit double what analysts had expected.

    NYSE decliners outnumbered advancers 2,099 to 965, for a 2.18-to-1 ratio; on the Nasdaq, 1,908 issues fell and 869 advanced for a 2.20-to-1 ratio favoring decliners.

    The S&P 500 posted 31 new 52-week highs and 40 new lows; the Nasdaq composite recorded 103 new highs and 143 new lows.

    What to watch Friday:
    • The Commerce Department releases new home sales for June at 10 a.m. Eastern time.
    Earnings Season
    These selected companies are scheduled to release quarterly financial results:
    • American Airlines Group (AAL)
    • DTE Energy (DTE)
    • Johnson Controls (JCI)
    • Moody's (MCO)
    • State Street Corp. (STT)
    • V.F. Corp. (VFC)
    • Ventas (VTR)
    • Vodafone Group (VOD)
    • Xerox (XRX)

     

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    Earns Amazon
    Ross D. Franklin/AP
    By MAE ANDERSON

    NEW YORK -- Investors helped Amazon celebrate its 20th birthday, pushing the online retailer's stock up 17 percent in aftermarket trading Thursday after it reported a surprise second-quarter profit.

    If the jump holds in Friday trading, Amazon's stock-market value could surpass that of its longtime retail rival Walmart Stores (WMT), signaling a sea change in the U.S. retail landscape.

    Amazon (AMZN), which turned 20 on July 16, credited the profit to continued strength of its cloud-computing business and strong revenue growth both domestically and abroad. That came as it held costs for marketing and package delivery in check.

    Seattle-based Amazon has held a long-time strategy of investing the money it earns back into the company, resulting in quarterly losses or thin profits. But helped by surging revenue, it has begun to turn a bigger profit more frequently, although results vary quarter to quarter. In the first quarter, for example, Amazon reported a loss, though it was smaller than expected.

    In a call with analysts, new Amazon CFO Brian Olsavsky said the company would continue to look for ways to keep costs in check while at the same time investing in "things that we think are big and important."

    Amazon got a boost in revenue from Amazon Web Services, a suite of products and services offered to businesses by way of the "cloud," or remote servers that enable users to access applications on any machine with an Internet connection. Revenue from that business climbed 81 percent to $1.82 billion. Amazon only began breaking out results from that business during the first quarter.

    Amazon also said its $99-a-year Prime loyalty program helped drive growth during the quarter. The company won't say how many Prime members it has, but it's estimated to be as many as 40 million, and Prime members typically spend more than other shoppers.

    Last week, Amazon offered sales for one day to members only. Amazon said the Prime Day promotion helped drive 18 percent more sales than last year's Black Friday -- typically the busiest day in retail. The company also said it got hundreds of thousands of new signups from its Prime Day promotion. The second-quarter results don't include revenue from that day.

    In the three months ending June 30, Amazon's net income was $92 million, or 19 cents a share, compared with a loss of $126 million, or 27 cents a share, a year earlier. The results surpassed Wall Street expectations. The average estimate of 15 analysts surveyed by Zacks Investment Research was for a loss of 15 cents a share.

    The online retailer posted revenue up 20 percent to $23.2 billion in the period, also beating Street forecasts. Fifteen analysts surveyed by Zacks expected $22.3 billion.

    For the current quarter ending in September, Amazon said it expects revenue in the range of $23.3 billion to $25.5 billion. Analysts surveyed by Zacks had expected revenue of $23.8 billion.

    Amazon shares have climbed 55 percent since the beginning of the year. They closed Thursday's regular trading session at $482.18, an increase of 35 percent in the last 12 months. After the earnings came out, shares jumped $85.54 to $567.72 in aftermarket trading.

    At Thursday's closing price, Amazon's market value totaled about $224.5 billion. But factoring in the surge aftermarket, Amazon's value would be worth about $265 billion.

    Walmart Stores' market cap was $233.5 billion at close. But Walmart is still the world's biggest retailer by far measured by total revenue.

    Last month Facebook became more highly valued than the world's largest retailer, knocking it out of the top 10 list of the highest-valued companies in the Standard & Poor's 500 index.

    A company's market value is calculated by multiplying the number of shares of stock it has in circulation by the current price of one share.

     

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    By Cameron Huddleston

    After college, I moved back in with my mom because I couldn't afford to live on my own. Fortunately, she didn't have to cut me off and kick me out because I moved out after a few months once I had enough money coming in to cover rent for an apartment.

    I consider myself lucky that my mom was willing to help me in a time of need, but her generosity was by no means uncommon. A Clark University poll of parents found that 44 percent said they provide their 18- to 29-year-olds with frequent support when needed or regular support of living expenses. Another 30 percent said they provide occasional support.

    There are several reasons parents offer their adult kids financial assistance, but a common motivation is the belief that their children really need help, according to a 2015 Bank of America/USA Today survey. "Parents will be parents," said Janet Bodnar, author of "Raising Money Smart Kids" and Kiplinger's Personal Finance Money Smart Kids columnist. "They will never really turn their kids away."

    But, you don't want to your adult children to rely on your support indefinitely. "Your kids should expect to be cut off at some point," said Bodnar said. And they shouldn't resent you when that time comes. "That's called growing up," she said.

    Why You Need to Cut Off Your Adult Children

    Providing financial support to children through their 20s and 30s could hurt both them and you, said David Bader, a certified financial planner and regional director at Merrill Edge. "If children begin to rely on their parents as a continuing source of income, they won't learn to become financially independent and prepare accordingly for their own life milestones," he added.

    Parents often put their kids' needs first, but it's important to plan, invest and save for their own financial future, specifically their retirement.

    And you can put their own finances at risk if you go into debt or sacrifice retirement savings to help your children. "Parents often put their kids' needs first, but it's important to plan, invest and save for their own financial future, specifically their retirement," said Bader.

    Plus, you could be sabotaging more than your financial future by supporting your kids -- especially if you're letting them live at home.

    For example, you could be creating emotional stress for yourself or damaging your relationship with your spouse. According to the Clark University survey, 40 percent of parents said they worry more about their kids when they live at home with them because they witness all of their ups and downs. Also, most said they were able to enjoy more time with their spouse when their children moved out.

    "You do have to have your own life at some point," Bodnar said. "And it's hard to do when your life has been tied up with your kids for decades."

    How to Cut Off Financial Support to Your Kids

    The best way to cut off your kids without causing resentment is to agree upon the extent of support you're willing to provide before you start giving them any assistance, Bodnar said. Ideally, the conversations would begin while your children are in college. Get them thinking about becoming financially independent, and let them know then what sort of help you're willing to provide once they graduate. If you arm them with the necessary tools and resources to manage their own finances, it will be easier to wean them from your support.

    If your kids move back in after college, you need to come up with a plan with a capital "P," Bodnar said. Decide whether they should pay rent -- they should if they have income -- whether they'll help pay for groceries or household bills, what household chores they'll be responsible for, whether they'll have a curfew and how long you'll allow them to live with you. Some parents actually have written contracts with their children, Bodnar said.

    "It's your house," she said. "You can have rules." You just need to tell your kids what those rules are upfront so there won't be any disputes down the road. And after hearing the rules, they might even reconsider moving back home.

    If your kids ask for financial support rather than a place to live, ask how they plan to use the money. You shouldn't provide unlimited resources, but you can help with expenses that are worthwhile to fund and will help with your children's financial independence, such as health insurance or continuing education, said Bader.

    How to Support Your Kids Without Giving Them Money

    You can help your kids gain financial independence without giving them actual financial support -- and keep the bond with them strong in the process.

    For starters, offer them advice. More than half of the millennials surveyed for the Bank of America/USA Today report said their parents had the greatest impact on their handling of finances through advice they gave them and money lessons they learned from them. Bader recommends sharing some financial lessons with your kids that you wish you had learned when you were their age.

    You can also help your children get a job or jump-start their careers by helping them make contacts. Bodnar said she put her daughter in touch with her former college roommate, who worked in the field her daughter wanted to enter, and helped her get her foot in the door.

    Of course, every family's situation is different. But by letting your children know what your expectations are and creating a plan for their financial independence, you can avoid surprises and conflict.

    This article originally appeared on GOBankingRates.com.

     

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    By Emma Miller

    Life in plastic? Not always fantastic.

    New research shows that credit card providers are going the way of airlines and slamming customers with more fees.

    In an analysis of 100 U.S. credit cards, CreditCards.com found that the average card now charges six fees -- though some tip the scales at double that number.

    They include some of the usual suspects, such as late payment and cash advance fees (charged by 99 and 98 percent of credit card providers, respectively).

    But others might surprise you. For instance, some providers hit credit card holders with annual fees for adding an authorized user to an account, while others are guilty of charging customers for copies of monthly statements.

    The survey even found one provider that charges a $25 reopening fee to clients who have second thoughts about closing their accounts.

    And as mobile payments grow increasingly popular, watch out for alternative payment method fees -- which might fine you for making a plastic-free payment.

    Avoiding paying by phone will let you bypass that particular fee, but it's harder to escape others, like a one-time processing fee. In some cases, a consumer has to fork over $95 before even swiping a card for the first time.

    These research findings are a reminder to use credit with caution, and there are some general best practices that can still help you minimize fees.

    Setting up automatic payments or calendar reminders to pay your bill can save you from late fees, while resolving to make your cash withdrawals with a debit card frees you from worrying about cash advance charges.

    And if you're in the market for a new card, shop around for products with no annual fee.

     

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    By Sharon Epperson

    About half of American workers are employed by a company or are part of a union that sponsors a pension or retirement plan. But that doesn't mean the 77 million U.S. workers who don't have a 401(k) or employer-sponsored retirement plan are out of luck when it comes to building a nest egg. There is no reason you can't save for retirement on your own. Here are three steps you need to take now:

    Open a traditional or Roth IRA. Contribute as much as you can every month and increase your allocation every year until you reach the maximum contribution limit. Depending on your income, you can save up to $5,500 in 2015 -- up to $6.500 if you're 50 or older.

    IRA contribution limits are far lower than for a regular or Roth 401(k), which allow maximum contributions of $18,000 this year or $24,000 if you're 50 or older. But you'll still get the benefits of compounded earnings growth as well as certain tax advantages. Regular IRA contributions may be tax-deductible and Roth IRAs allow you to withdraw those funds tax-free in retirement.

    Self-employed? Consider these three tax-advantaged ways to save:
    • SEP IRA: Contribute as much as 25 percent of your net earnings from self-employment income, up to $53,000 this year.
    • Solo 401(k): In addition to salary deferrals of up to $18,000 (or $24,000 if you're 50 or older), a worker who is self-employed can contribute an additional 25 percent of your net earnings, up to $53,000.
    • SIMPLE IRA: You can put all of your net earnings from self-employment in the plan up to $12,500 in 2015, plus a "catch-up contribution" of $3,000 if you're 50 or older.
    Add to retirement savings in a taxable account. Pick investments -- stocks, bonds, mutual funds and other assets -- based on your appetite for risk and when you want to retire. If you have extra money to stash in brokerage account in addition to tax-advantaged plans that can also help you build long-term growth to ensure you are able to retire on your terms.

     

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    By Ellen Chang

    NEW YORK -- Fraudsters are becoming increasingly savvy by mining social media for their victims' personal details, forcing banks and other financial institutions to turn to more sophisticated technology to thwart cyberattackers.

    When consumers call their bank to make changes in their accounts, the software used by financial institutions is going beyond asking basic questions such as a consumer's mother's maiden last name since that option is becoming obsolete rapidly now that hackers already have this data.

    By employing other technological advances in the biometrics sphere such as voice authentication, fingerprint ID and iris authentication, banks are striving to impede hackers and slow down their efforts to hack into their systems to retrieve sensitive financial and personal data.

    Authenticating legitimate customers has been a challenge for businesses. Around 85% of customers tell companies they dislike the current methods of verifying who they are, because the process is cumbersome and wieldy, said Nadav Doron, head of real-time solutions at NICE Systems, a Ra'anana, Israel-based software solutions provider. On top of that, ensuring that customers themselves can remember their complex usernames and passwords is no longer a simple task with three out of four people who have failed the log-in process at least once, he said.

    Voice Biometrics Stymies Fraudsters

    Technology such as voice identification will help determine whether it is the actual customer calling, instead of a fraudster who is part of team of hackers targeting a specific bank. A handful of U.S. banks have started using NICE System's software to compare a legitimate customer's voice with the one they have in their database, said Doron.

    "The software can compare the incoming call with a watch list of fraudsters and tell the company if it is a high risk call in real time," he said.

    If there is a hint of a doubt, the customer service representative can follow up with additional personal questions to ensure it's the right person. The software works by recognizing an individual's voice or also analyzing a particular phrase, Doron said. The technology can break down the voice on the phone and analyze the lexicon being used.

    "It's a better experience for customers and reduces their risk of being hacked," he said.

    Identify theft is becoming one of the largest growing industries globally and has risen to $200 billion in lost data and fraud, according to the Identity Theft Resource Center. Combatting this issue has become essential for banks in light of the major hack at JPMorgan Chase.

    Hackers are only becoming more steadfast and relentless in their efforts, since the black market for data is growing. At a major bank, a known perpetrator would call 15 times daily, because he was familiar with the bank's protocol and knew exactly what personal details he needed to provide to gain access into someone's account, said Doron. Similar to other hackers, this one had most likely purchased a list of customers from the bank, complete with the last four digits of Social Security numbers and spent only $1,000 for 1,000 people, he said.

    Once additional fraud software is installed at a bank or insurance company, the hacker will "realize the door is closed at bank A," Doron said. "They will keep buying lists from websites to manipulate agents. It's an open buffet."

    The majority of customers have responded positively to voice authentication technology, because staying one step ahead of the cybercriminals is an endless and formidable task, said Doron.

    "Customers will wise up to it," he said. "Voice authentication is more intuitive and efficient."

    Behavioral Biometrics Is Better Than Big Brother

    Beyond how a person speaks, technology is now capturing how people hold and type on their smartphones, interact with websites and respond to subtle hidden challenges. Another method to thwart cybercriminals is to use biometrics to determine the individual's behavior on a website or app.

    "Much like a person's signature, people have a distinct way in which they touch the screen, hold a device or type on a keyboard," said Oren Kedem, vice president of product management of BioCatch, a Tel Aviv, Israel-based software company.

    In turn, the technology can create a behavioral biometric for the actual user and use it for comparison when a person goes online to validate their identity. BioCatch is working primarily with banks and e-commerce sites in the U.S., Latin America and Europe. The software does not collect or store private data and is installed by the bank or e-commerce site so it does not require any download from the customer.

    "Our behavioral biometric technology is a continuous one, meaning there is no single point of authentication," Kedem said. "We continue to authenticate the customer through the entire session."

    Using SmartPhones to Authenticate People

    Leaving your bank card at home may prevent more fraud from occurring. The latest software can detect if you are the actual user by using an app from your smartphone to distinguish you from an image or video. This technology means you can also skip remembering complicated passwords or utilize extra gadgets.

    Withdrawing cash from an ATM could prove to be safer for customers who use a biometrics-based mobile app called 1U, invented by Hoyos Labs, the New York-based software company. Once you download the app, it will link the ATM with your bank account. The camera in your phone will identify a person through the shape of his face and iris of his eyes. Hoyos Labs is currently in discussions with major financial institutions in the U.S. who plan to implement the technology soon.

    This technology bypasses other types of commonly used methods of fraud such as skimmers or hacking into a username and password combo. The latest technology is to use your smartphone as the "something that you have," said Hector Hoyos, CEO of Hoyos Labs.

    "It's convenient as most people have their phones with them and every smartphone is uniquely identifiable," he said.

    How the Technologies Compete With Others

    oice biometrics will continue to play a greater role beyond financial institutions, because technology such as iris and vein scans can be intrusive to consumers and cannot be used in all situations, Doron said.

    We think that a number of biometrics show considerable promise, including iris, face and fingerprint recognition.

    Smartphones will continue to play a key position, because their sensors and processing powers are sufficient to provide a "convenient biometric capture platform," Hoyos said. Indeed, smartphones can perform both facial and fingerprint ID, eliminating the need for username and password combos in the future, Hoyos added.

    "We think that a number of biometrics show considerable promise, including iris, face and fingerprint recognition," he said. "We are in the process of developing a new way of working with fingerprints to provide a system that is more reliable than reading a single fingerprint."

    The best way to combat fraud is to combine the various biometrics options, said Mark Cornett, chief operating officer of NexID Biometrics, a Potsdam, New York, fingerprint liveness detection software company.

    The NexID Biometrics technology is currently used at scanners in airports for passengers and is expected to be available to consumers in their portable devices such as tablets and smartphones by the first half 2016, he said. The company dedicates its research to come up with the best spoofs so that its technology can "stay head of the bad guys," Cornett said.

    "Our technology is not a cure-all," he said. "We see ourselves as a piece of the puzzle since it is more convenient."

    Bottomline

    Using multiple types of authentication methods will become the norm as more biometric options are added onto mobiles, said Geoff Sanders, CEO of LaunchKey, a Las Vegas-based mobile authentication platform. Fingerprint scanners are now popular on Apple and Samsung phones because of "their ease of use and enhanced security, while iris scanners are beginning to hit the market," he said.

     

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