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DailyFinance.com

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    business man and his bicycle ...
    Shutterstock
    I'm not one to think too much about retirement. Some of my money-blogging friends have their sites on full retirement by 35. I'm not one of those people. I like my work. I like the people I've met through what I do. And I would be doing some version of what I'm doing now, whether it paid well or not. But I also like the freedom to do what I want with my time. Self-employment and passive/semi-passive income gives me some of this. But you can never have too much freedom. I am looking forward to a future when I will work ... even though I don't really have to. This is the kind of retirement that I'm shooting for and I'm going after it in a lot of ways. One of them is in the method I use to get from point A to point B.

    AAA estimates that it costs 60 cents to drive a midsize sedan for a mile. That's not just accounting for gas, but maintenance, insurance and all manner of upkeep -- even non-essentials. When you look at it that way, it makes you think twice before driving across town to the grocery store. If you live in an area with high traffic, you can tack on a few more cents to every mile. If we assume an average annual driving distance of 15,000 miles, you can total the annual cost of owning and operating a car at $9,000.

    Maybe you're made of money, but I'm not. $9,000 is no mean sum. That's just about exactly as much as the average American paid for health care in 2012. That's about as much as it costs to go to an American public college for a whole year. Clearly, it's a lot of money. And for the typical car owner, it's money that is thrown away without thinking twice about it. Because you have to have a car. Right?

    Well, nobody tells me what I have to do. A year ago, I stopped driving very much at all. My used 23-year-old Jeep was on its last legs. I wasn't going to pay for its high cost of maintenance. So when it died, I sold it for scrap and bought a bicycle instead. Now, let's compare the cost of riding a bike to the cost of driving a car. Some sources estimate that the cost of a good bicycle, accessories, and maintenance will set you back about 5 to 15 cents a mile. When I think of how much healthier I am as a result of riding a bicycle, I think this has to be cutting down on future medical costs, making bike-riding either free or possibly even profitable. Who has to have a car now?

    I know some of you have a commute. But consider the alternative. By finding a job closer to your house (or working from home), you can sell your car or drive it a lot less. By relying entirely on a bicycle and public transportation, you will save approximately $90,000 over 10 years. That's more than my house costs me during that same amount of time, folks. It's numbers like these that made me seriously reconsider my gas-guzzler. Simply giving up my car and traveling on two wheels isn't going to be enough to allow me an early retirement. But it's the kind of habit which is going to help. I'm going to be writing a series of the ways I'm cutting down in certain areas to beef up savings, investments and all-around frugality. In the end, it'll give me something resembling early retirement. And I hope you can join me there.

     

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    APTOPIX Federal Reserve Yellen
    Manuel Balce Ceneta/APFederal Reserve Chair Janet Yellen
    By MARTIN CRUTSINGER

    WASHINGTON -- Will they or won't they?

    Nine years after they last raised their benchmark interest rate and after months of feverish speculation, Federal Reserve policymakers this week may finally raise that rate from a record low near zero.

    Unless they don't.

    Financial markets have been zigzagging with anxiety as investors have tried to divine whether the Fed will start phasing out the period of extraordinarily low borrowing rates it launched at a time of crisis in 2008. With the job market now considered essentially recovered from the Great Recession, many economists say it's time to start edging toward normal rates.

    Others argue that many other factors -- from a sharply slowing China to the tumult in markets to persistently less-than-optimal inflation -- raise serious concerns. They say the Fed should wait, until later this year or even until 2016.

    It's kind of wild that we still don't know what they are going to do so close to the meeting.

    When the Fed announces its decision Thursday, followed by Chair Janet Yellen's news conference, no one is sure what to expect. Economists appear evenly split on the likelihood of a rate hike.

    "It's kind of wild that we still don't know what they are going to do so close to the meeting," said Diane Swonk, chief economist at Mesirow Financial in Chicago.

    Even if the Fed does raise its benchmark short-term rate, no one expects a sharp or rapid sequence of hikes. The Fed's vice chair, Stanley Fischer, has suggested that the first hike would be a modest quarter-point increase in its benchmark rate from a range of zero to 0.25 percent to a range of 0.25 to 0.5 percent.

    The anxiety gripping investors stems in part from concern that once the Fed starts raising its key rate, other rates -- for mortgages, car loans, business borrowing -- will eventually rise. Some fear the economy might suffer.

    Yet the Fed's influence on many consumer and business rates is only indirect. In the short run at least, those rates could continue to stay low, held down by low inflation globally and by a flow of money into U.S Treasurys.

    Gradual Process

    Fed officials have stressed that once the central bank starts raising rates, the process will be extremely gradual. The Fed might pause for months after its first hike and assess the consequences before proceeding further.

    Until turmoil struck markets this summer, a September rate hike seemed a lock. Then, China's surprise decision to devalue its currency ignited fears that the world's second-largest economy was weakening faster than assumed. Stocks tumbled.

    At an economic conference last month in Jackson Hole, Wyoming, Fed officials sent mixed signals about this week's meeting. Some indicated they were ready to raise rates if markets had settled and if the economy kept improving. The unemployment rate reached a seven-year low of 5.1 percent in August, while job growth, though solid, slowed a bit.

    In July, when Yellen delivered a midyear economic report to Congress, she reiterated that the Fed would likely raise rates before year's end. But she wasn't specific.

    Swonk foresees no rate hike this week. She noted that a hallmark of the Fed is to move cautiously when facing risks.

    'Ripple' or 'Storm'

    "There is more to be lost by being wrong and moving too soon than waiting a few months to see if China is just a ripple in the global economy or the precursor of a bigger storm," Swonk said.

    Likewise, Sung Won Sohn, an economics professor at California State University, Channel Islands, thinks the Fed will delay a hike.

    "A quarter-point won't mean much to the U.S. economy, but it could mean significant additional turbulence in emerging markets such as Brazil, Indonesia and India, which are already seeing sizable outflows of capital," Sohn said.

    On the other side of the debate is Mark Zandi, chief economist at Moody's Analytics, who thinks the Fed will lift its rate by a quarter-point.

    "Given that the economy is strong and rapidly approaching full employment, zero interest rates don't make a whole lot of sense," Zandi said. "The longer they wait, the more uncertainty and volatility they are creating in financial markets."

    One reason for the likely gradual pace of rate hikes is that Fed officials want to make sure the new machinery they will deploy to control rates will work effectively.

    Before the Great Recession, the Fed would control its federal funds rate -- the rate banks charge each other for overnight loans -- by adjusting how much money the banks held. To lower rates, the Fed would buy Treasurys held by the banks. And the banks would use the money they received to step up lending.

    If the Fed wanted to raise short-term rates, it would sell Treasurys to the banks, thereby reducing the money the banks held and driving loan rates up.

    But all the bond buying the Fed did to cut rates left banks swimming in reserves. So the Fed needs other tools to influence rates. A key plan is to raise the interest the Fed pays banks on their reserves. The idea would be to set a floor on interest the banks charge their customers: Banks wouldn't be willing to lend at lower rates than they're receiving from the Fed. This could have the effect of reducing lending.

    Negligible Effect

    Yet economists generally say the effects of a series of small rate hikes will be negligible.

    David Jones, an economist and Fed historian, thinks a 1 percentage point increase in the Fed's rate would cause the yield on the 10-year Treasury note to rise only to about 3 percent by the end of 2016, from 2.2 percent now. That would mean only slightly higher mortgage rates -- not enough to derail the housing recovery.

    The dollar, which has risen sharply in the past year, could also increase further, which could slow exports. American producers have already suffered a slowdown in exports from the dollar's strength and weakness in overseas markets.

    Still, many economists predict little initial reaction to the Fed's first rate hike in nine years. A modest rate has likely already been discounted by investors, they say.

    "So long as the Fed doesn't send a signal that it is going to start moving rates up more aggressively, I don't expect any big changes in stocks, bonds or currency levels," Zandi said.


    Anatomy of a Rate Hike

     

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    Reynolds American
    Gene J. Puskar/APPackages of Camel Crush Bold and other Camel brand cigarettes on display at a shop in Pittsburgh.
    By Toni Clarke

    WASHINGTON -- Reynolds American (RAI) can no longer sell Camel Crush Bold or three other cigarette products in the United States because they may be more dangerous than similar older cigarettes, the Food and Drug Administration said Tuesday.

    The 2009 Tobacco Control Act requires that new cigarettes be reviewed by the FDA before being allowed on the market. No product introduced after Feb. 15, 2007 can carry a greater health risk when measured against an earlier, "predicate" product.

    The FDA found that the four Reynolds products, Camel Crush Bold, Pall Mall Deep Set Recessed Filter, Pall Mall Deep Set Recessed Filter Menthol and Vantage Tech 13 cigarettes, have different characteristics from their predicates that raise new health questions.

    Reynolds wasn't immediately available for comment.

    The FDA has received thousands of marketing applications from companies seeking to keep selling currently marketed products and from companies seeking authorization to sell brand new products.

    Products introduced after Feb. 15, 2007 were allowed under the 2009 law to remain on the market on a provisional basis as long as the manufacturer submitted an application by March 22, 2011. The agency has authorized 257 applications and denied 113, Mitch Zeller, director of the FDA's tobacco products division told reporters on a conference call.

    The Reynolds ruling is the most high-profile to date and comes three weeks after the agency told Reynolds and two of its rivals they couldn't claim their products are "natural" or "additive-free" without regulatory approval. Reynolds sells Natural American Spirit cigarettes through its subsidiary, Santa Fe Natural Tobacco Co.

    Mitch Zeller, director of the FDA's tobacco division, told reporters on a conference call that the Reynolds products included increased yields of harmful or potentially harmful constituents, higher levels of menthol and the addition of new ingredients. The company couldn't show that the changes don't raise new health questions, he said.

    In the case of Camel Crush Bold, Reynolds also failed to show that the addition of a menthol capsule in the filter didn't affect consumer perception and use.

    The FDA said it doesn't intend to enforce the ban on the Reynolds products for 30 days to allow retailers to get rid of their inventory.

    -Rosmi Shaji contributed reporting from Bangalore.

     

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    Friendship on a Budget
    We all love spending time with friends, but between dining out and shopping, hanging out with your pals can quickly add up. Here are some tips on how to spend time with your friends without overspending.

    First, try checking out some free community events happening in your neighborhood. Simply go online and check out your city's website to see what kind of free recreational activities are being offered. Between free concerts, museum exhibits, and volunteer work, there are a lot of low-budget options to choose from.

    Next, a great way to save with your friends is by taking up urban foraging. Urban foraging, is all about picking fruits, vegetables and edible plants from sanctioned areas around your city. Go to FallingFruit.org to find out where you can forage near you. Simply input your neighborhood, and you'll find a detailed map of all the great foraging opportunities nearby.

    Lastly, try to be creative with your plans. You can browse for treasures at the thrift store, throw a YouTube karaoke night, or start a book club, just to name a few ideas.

    So remember these tips the next time you hang out with your pals -- because building your friendships doesn't have to mean breaking the bank.

    View Poll

     

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    Earns Target
    Chris O'Meara/AP
    By Joseph Ax

    NEW YORK -- A U.S. judge Tuesday certified a class action against Target (TGT) brought by several banks over the retailer's massive data breach in 2013.

    U.S. District Judge Paul Magnuson in St. Paul, Minnesota, said the banks could pursue their claims together over the breach, which compromised at least 40 million credit cards during the holiday season.

    This important ruling brings financial institutions one step closer to collectively holding Target accountable for its unprecedented data breach.

    In a statement, Charles Zimmerman, one of the lead lawyers representing the banks, said, "This important ruling brings financial institutions one step closer to collectively holding Target accountable for its unprecedented data breach."

    Target spokeswoman Molly Snyder said the company was "disappointed" and would evaluate its next steps after reviewing the decision.

    The ruling, which makes a settlement with the banks more likely, comes four weeks after Target agreed to pay as much as $67 million to financial institutions that issue Visa (V) cards, in a deal struck directly with the credit card network.

    Earlier this year, a proposed $19 million settlement with MasterCard (MA) fell through when not enough banks accepted the agreement.

    It isn't clear how many Visa card issuers accepted the terms of that deal by the deadline of Sept. 4.

    Snyder declined to comment on the number of institutions that have agreed to participate in the Visa deal but emphasized that the class action includes only those card issuers that haven't settled their claims.

    Attorney Zimmerman has said the Visa deal, like the failed MasterCard settlement, doesn't fully reimburse banks for their losses and was negotiated without input from the plaintiffs.

    Carrie Hunt, the general counsel for the National Association of Federal Credit Unions, praised the judge's decision and said it "constitutes one important avenue for recovery" for credit unions affected by the breach.

    The Target breach was one in a series of high-profile data security failures to hit major retailers, including Home Depot (HD) and Staples (SPLS).

    -Nandita Bose contributed reporting from Chicago.

     

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    Dow Rallies Nearly 400 Points After Uptick In Chinese Markets
    Andrew Burton/Getty Images
    By Noel Randewich

    NEW YORK -- U.S. stocks rallied more than 1 percent Tuesday after data showed healthy growth in consumer spending but did little to remove uncertainty about whether the Federal Reserve will raise rates this week.

    Speculation about when the Fed will end seven years of near-zero interest rates has dogged Wall Street for several months, with the picture complicated by recent market turbulence that some see as justification for the central bank to hold off.

    The debate around the Fed continues, but the Fed will do more damage waiting for December to raise rather than start the normalization process.

    "The debate around the Fed continues, but the Fed will do more damage waiting for December to raise rather than start the normalization process," said Art Hogan, chief market strategist at Wunderlich Securities.

    "If they don't raise rates this week, it's a bad signal."

    The Commerce Department said core retail sales rose 0.4 percent in August after an upwardly revised 0.6 percent increase in July. It was the latest sign of sturdy economic momentum and suggested the recent stock market sell-off had little immediate impact on U.S. household spending.

    U.S. interest rates futures implied traders place a 27 percent chance the Fed would end its near-zero interest rate policy Thursday, up from 23 percent late Monday, according to CME Group's FedWatch program.

    "It's tough to call," said Peter Jankovskis, co-chief investment officer at OakBrook Investments in Lisle, Illinois. "In the context of the world economy and the uncertainty around China, they might give it another month."

    The Dow Jones industrial average (^DJI) rose 228.89 points, or 1.4 percent, to end at 16,599.85 points. The Standard & Poor's 500 index (^GSPC) gained 1.3 percent to 1,978.09 and the Nasdaq composite (^IXIC) added 1.1 percent to 4,860.52.

    Movers and Shakers

    All 10 major S&P sectors were up, with the industrials index's 1.7 percent gain leading advancers and General Electric (GE) rising 2.1 percent. Microsoft (MSFT) jumped 2.18 percent, making the biggest single contribution to the S&P's rally. The financial index rose 1.7 percent, led by JPMorgan's (JPM) 2.2 percent rise.

    Stocks have been volatile since China devalued its currency in August. The S&P 500 has had moves of at least 1 percent in 12 of the past 18 sessions.

    The S&P remains down 4 percent for 2015 and recently traded at 15.4 times expected earnings, a tad cheaper than the 15-year average of 15.6 times earnings, according to Thomson Reuters Starmine.

    Shares of Fiat Chrysler Automobiles (FCAU) rose 3.4 percent. The United Auto Workers union said it will keep talking with the automaker to reach a new contract for the company's U.S. factory workers, delaying a possible strike at its most profitable operations.

    Gray Television (GTN) jumped 13.3 percent after the broadcaster said it would buy Schurz Communications' television and radio stations for $442.5 million.

    Advancing issues outnumbered decliners on the NYSE by 2,124 to 926. On the Nasdaq, 1,930 issues rose and 869 fell.

    The S&P 500 index showed three new 52-week highs and five new lows, while the Nasdaq recorded 39 new highs and 67 new lows.

    About 5.8 billion shares changed hands on U.S. exchanges, below the 8.0 billion daily average for the previous 20 trading days, according to Thomson Reuters (TRI) data.

    -Tanya Agrawal contributed reporting.

    What to watch Wednesday:
    • Federal Reserve policymakers begin a two-day meeting to set interest rates.
    • The Labor Department releases the Consumer Price Index for August at 8:30 a.m. Eastern time.
    • The National Association of Home Builders releases its housing market index for September at 10 a.m.
    Earnings Season
    These selected companies are scheduled to release quarterly financial results:

     

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    Ebay
    Jeff Chiu/AP
    By Angela Colley

    Online auction giant eBay celebrated its 20th birthday this month. It's a big milestone for any company, especially an Internet-based one, but eBay (EBAY) isn't a stranger to milestones. From ground breaking innovations to quirky successes, the Internet giant has been in the thick of it since 1995.

    From its humble beginnings as AuctionWeb, developed by then relatively unknown software developer Pierre Omidyar, to the Internet retail superstar with 157 million active buyers, eBay has helped shape the consumer world. These are some of the company's biggest -- and strangest -- legacies.

    Developed the Peer-to-Peer Model

    Online peer-to-peer buying is huge. Sites such as Etsy (ETSY) connect independent artists with buyers all over the world. Hundreds of small time retailers boost profits through Amazon (AMZN). You can even donate to charity, or help out a family member through sites like GoFundMe.

    It's big business now, but in the 90s buyers were firing up their dial-up Internet to bid on rare Beanie Babies through the company that made the peer-to-peer industry huge.

    Made Online Shopping Easier

    Now we can order almost anything in one click with our smartphones, but it wasn't always that way. When online shopping was first getting off the ground, many retailers didn't even have integrated carts. Instead, every time you wanted to buy something, you were sent to a third-party merchant, where you entered in all of your information and waited.

    It wasn't an easy or secure way to pay, but eBay helped launch paying online 2.0 first by trying to develop their own payment system and then by acquiring PayPal in 2002.

    Created Millionaires

    Before online auction and selling sites, there were few ways anyone could make a bit of extra cash here and there. But the popularity and ease of eBay helped many people make a lot of extra cash -- even millions.

    Chris and Lisa Rush made an estimated $8 million in 2006 selling audio and stereo equipment, according to Entrepreneur. Dan Glasure brought in $2.5 million selling model trains and accessories. And Mark and Robin LeVine hit the million mark selling Bubble Wrap, according to The Huffington Post.

    Proved That Weird Sells Online

    Whether its underpants for your hands or inflatable toast, if it's quirky, someone is going to buy it. And eBay is the reigning king of quirky sales. In 2004, a casino paid $65,000 for a walking cane. The cane owner's son believed it was haunted by his grandfather. Then in 2008 two sisters from Virginia sold a cornflake in the shape of Illinois for $1,350.

    Helped Lead the Mobile Shopping Revolution

    Mobile retail wasn't invented by eBay, but the company's success in the field helped legitimize the idea for consumers, investors, and even businesses. The company also proved it was still a retail powerhouse.

    Back in 2009, eBay had hit a slump. The company's stock was barely more than $10, an 80 percent drop from its peak, according to The New York Times. But mobile shopping changed that.

    After eBay went mobile, sales jumped. More than 90 million users downloaded the mobile app, and in one quarter, 600,000 users made their first mobile purchase, according to eBay's then-CEO John Donahoe.

    Pioneered Reinventing Yourself Online

    Many online retailers have tried to reinvent themselves with varied success, but eBay proved that any company, even overnight successes, can roll with the times.

    While eBay started as a traditional auction model, consumers grew impatient with the auction times. As online shopping became more common, and competitors like Amazon started offering faster shipping times, consumers wanted a faster shopping experience and eBay provided it. "Buy it Now" replaced most traditional auctions. By 2010, "Buy it Now" sales accounted for 59 percent of eBay's business, according to Mashable.

    Ahead of the Game in Transparency

    In 2012, eBay's corporate blogger Richard Brewer-Hay was the first to live-tweet a company's quarterly earnings call, according to Mashable. Today, companies live-tweet or stream practically anything in an effort to seem more transparent to their customers.

    All told, eBay has had a record breaking-tenure on the Internet landscape, but we're betting we'll be celebrating its 40th birthday as well. After all, according to Time, at any given time there are an average of 800 million listings on the site -- and that certainly isn't a sign the giant is ready to slow down.

    Angela Colley has covered everything from money saving technology to how the Mayans might affect your savings. She's appeared on publications like MainStreet and MSN Money. You can follow her on Twitter @angelancolley.

     

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    Mature Woman Looking at Household Bills
    Getty ImagesNot all of the common knowledge about retirement is true.
    By Tom Sightings

    You don't really know how you're going to live in retirement until you start doing it. But that doesn't mean you can't plan ahead, start to envision your retirement lifestyle and begin to put pieces of the puzzle together.

    There's lots of advice, and many guidelines, to help you chart your way through retirement. Here are seven common assumptions, and the reasons why some of them are true, some are false and a few of them are in between.

    1. Social Security will be there for you. True. Many workers in America have lost faith in Social Security, thinking the system will be bankrupt by the time they become eligible to collect their benefits. But the fact is, the current system is sound, just the way it is, for another two decades. Yes, lawmakers may make some modest cuts to extend the system. Or, if nothing gets done, there could be deeper cuts later on. But Social Security won't go bust.

    2. Social Security will pay the bills. False. The average Social Security retirement benefit is currently $1,331 a month. That's $15,972 a year, which happens to be the poverty line for a couple with no dependents. Meanwhile, the maximum benefit for someone at full retirement age (currently 66) is $2,685, and even for those who wait until age 70 to retire, the maximum is $3,501 a month. That sounds better, but if you qualify for the maximum benefit, you were earning over $100,000 annually, and so you're probably not going to be happy on $32,220 a year.

    3. Inflation is no longer a worry. Maybe. The pundits have declared that inflation is dead, and now actually worry about a decline in the cost of living. Last year the average consumer price index went up barely 1 percent. But remember the 1970s and 1980s, when inflation routinely came in at 5 percent or more? Even in the early 2000s, inflation chugged along at closer to 3 percent. So, $100 from the year 2000 is worth only about $72 today. If you retire at age 66, and expect to live another 20 years, $100 will then be worth only about $64 today, or maybe less.

    4. The stock market will pump up your income. Maybe. The stock market has been ratcheting up since 2009, and it's produced a lot of wealth for retirees who have invested in stocks and mutual funds. But, as recent events remind us, while the stock market is a good place to invest for the long term, it can put a pretty painful dent in your finances in the short run. So stay invested with your long-term savings, but don't keep any money in the market that you might need in the next five years.

    5. You can always keep working. Maybe. Many baby boomers express an interest in working after they retire, usually as a consultant or in a part-time job. This pans out for many people, especially those who are able to keep options open with their old company. But the fact is, only a small fraction of retired people are actually working. Why the discrepancy? Jobs are not that easy to get for people over 65, and as we hit our 70s we may find that we don't have the interest or the stamina to continue in the labor force.

    6. You'll receive an inheritance. Maybe. But even the most affluent aging parents can be bled dry if they end up in a nursing home, especially if they don't have long-term care insurance. The average nursing home costs several thousand dollars a month, and fees can go much higher depending on where you live and what kind of services are needed. But even without punishing care giving costs, many elderly parents live well into their 90s, and simply spend down most of their children's inheritance.

    7. You can live on less money. True. It doesn't take a genius to figure out that you'll have less money in retirement than you did when you were working. The good news is that you need less money. You will likely pay lower taxes and won't be subject to the payroll tax. Your kids are probably grown up, so you're not supporting them anymore. And there are many ways to cut your bills, such as downsizing your home, traveling off season and taking advantage of a wide array of senior discounts.

    Tom Sightings blogs at Sightings at 60.


    Are You Saving Enough for Retirement?

     

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    Mother and daughter shopping with coupons in grocery store
    Getty Images
    By Raechel Conover

    Who doesn't love a good bargain? Well, many of the discounts on this list are right in front of consumers but often overlooked. Others take a bit of digging. If you think you've uncovered every last source of savings, read on to make sure.

    Receipt Coupons. Many store receipts bear coupons on the back -- especially those from supermarket registers. I recently picked up a free watch battery by using the coupon on the back of a receipt. Other discounts I've noticed on receipts include $3 off a pizza.

    Customer Surveys. Think about all the times there's a request at the bottom of a receipt to participate in a survey. Now think about the number of times you've taken action to be eligible for a freebie or discount. Taco Bell enters participants into a $500 sweepstakes drawing (three to five winners a month); taking a Subway survey brings a free cookie; and Chick-fil-A offers something free on the next visit, such as a sandwich. Many retail outlets and other restaurants want feedback and are willing to pay for it. Don't pass up the opportunity.

    Ticket Stubs. Sporting events and concerts are well known for teaming up with restaurant and fast-food sponsors. Next time, check the back of the ticket stub for a coupon. Sometimes event sponsors give away freebies if the home team wins or scores. Fans in Ohio have been offered free chili at Wendy's when the Columbus Blue Jackets hockey team scores three goals and two free toppings at Donatos Pizza for each goal by the Columbus Crew soccer team.

    Work Discounts. Before signing on with a cellphone provider, for example, check to see whether your employer (or your spouse's employer) qualifies you and family members for a discount (usually up to 10 percent). If you already have a plan, the discounted rate can probably be activated starting with the next billing cycle. The same goes for fitness clubs, although this deal is generally available through the employer's health insurance provider.

    Home Insurance Discounts. There are several ways to qualify for discounts on home insurance. Deadbolts on every entry/exit door as well as up-to-code smoke detectors can easily net a 5 percent rate cut. Installing a smoke detector system that alerts the authorities may qualify for even more money off. Check with your insurance company for these and other overlooked discounts on homeowners insurance.

    Car Insurance Discounts. Excellent driving record? That could justify a discount on car insurance. The same goes for student drivers who earn good grades, but these discounts are often not well advertised. Calling and speaking directly to a representative is a good way to start.

    Coupon Mailers. Coupon packets from the likes of Valpak probably show up in the mail on a regular basis. Look closely instead of just tossing them in the recycling bin; there may be unneeded coupons for big-ticket items, but often there are also everyday coupons that can yield savings. For example, I've used a coupon from Paper Mint (now Local Flavor) to save $5 on $40 worth of plants for the yard and bought three rooms of carpet cleaning for the price of one. The mailers also include coupons for local dining that are worth clipping.

    Cash Coupons. Retailers such as Kohl's and Old Navy run cash promotions regularly. Customers who spend a certain amount get "Kohl's Cash" or "Old Navy Super Cash" that can be used on a subsequent shopping trip (the dates usually are specified). For every $50 spent at Kohl's, for example, the retailer offers a coupon for $10 that can be used just like cash in the store, with no minimum purchase.

    On the Packaging. Sometimes there's a coupon right on a package; batteries, electronic gadgets, and even foodstuffs come to mind. Look carefully while shopping and peel off this easy-to-overlook discount upon reaching the checkout lane.

    Online Coupons. Before heading out to shop, do a quick search online for coupons. Some require printing at home, and others can be pulled up on a smartphone. Customers at Michaels, for example, can often find 40 percent-off coupons and use them just by flashing a smartphone at the register. Jo-Ann Fabric and Craft Stores and Hobby Lobby post similar coupons on their websites.

    Social Media Deals. Deal sites such as Groupon and LivingSocial offer rewards for referring people through social media. For example, consumers who refer a friend can earn $10 in Groupon Bucks if the friend buys a Groupon using the referral link. LivingSocial has a similar program and also gives members the deal they want for free if they refer three friends who buy the deal.

    Check-In Discounts. Shoppers can earn freebies and discounts just for walking into a store and checking in via Facebook or another social networking site. (Not all stores offer deals this way, but it's worth checking.) Smartphone apps such as ShopKick let customers earn points or credit just for walking into retailers on their list. Users who accumulate enough "kicks" can cash them in for gift cards.

     

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    fitting solar panels to roof of ...
    Shutterstock
    By Ellen Chang

    NEW YORK -- Reducing energy costs on a daily basis can help consumers and small business owners save thousands of dollars each year. Energy bills can easily add up, of course, but in addition to finding cheaper rates online for electricity, heat or air conditioning, there are some other nimble ways to slash costs.

    First of all, determine if your city qualifies for deregulated electricity or natural gas. A lower rate can result in savings quickly, especially during months of higher usage of air conditioning or heating.

    Determine the pricing structures and if the local utility company offers any incentives. Many electricity companies offer discounts when power is used during off-peak hours.

    "Understanding how you pay for energy gives you the ability to develop and implement strategies for things like peak pricing, points in time that can make or break an energy management program," said John Rajchert, president of Honeywell Building Solutions, the Morristown, New Jersey, technology and manufacturing company.

    Robust energy management is about striking a balance between what a household or business needs and what's most effective for comfort and operational effectiveness.

    "Start off by taking an inventory of the equipment used in the office or building, and figure out the baseline of performance during various times throughout the day," Raichert said.

    This centers on doing a simple energy audit-- whether by yourself or with an outside contractor or consultant.

    "Improving energy efficiency is all about determining how to manage a building's [or house's] base load and making adjustments when grid-wide energy use and costs peak," he said. "It's not one or the other. With this insight, you can ensure your building is only using the amount of power necessary at specific times, helping to squeeze out as much energy savings as possible."

    Consolidated Edison, for example, offers lower rates on weekends, holidays and weekdays from 10 p.m. to 10 a.m. Planning accordingly -- for when demand and costs are low -- can help garner savings. It's possible for a homeowner to save some $30 a month with this strategy -- $360 annually. Consider replacing your current light bulbs with LEDs since lighting remains a "significant portion of electricity usage," said Alexander Goldstein, CEO of Eligo Energy, an energy retailer based in Chicago which provides electricity to residential and commercial customers in deregulated states.

    Another plus is that LED bulbs are up to 10 times as efficient and last up to 50 times longer compared to incandescent bulbs. To boot, they are better for the environment compared to florescent or CFL bulbs. In fact, given that lighting can total 5 to 10 precent of household energy costs, the average consumer can save $75 to $200 annually by switching over to more efficient bulbs.

    Those older model computer monitors or televisions that have the cathode ray tubes, or CRTs, should also be replaced with the newer liquid crystal-display, or LCD, screens, because they use less power.

    At home or in your business, examine your current servers for your data and consider "consolidating multiple older servers into new more efficient hardware" or simply using the cloud, he said. Servers are large consumers of power and also emit heat, requiring additional air conditioning to keep them at a very low temperature constantly.

    If you haven't swapped them already, power switches with motion sensors are a good method to reduce the use of electricity when a room is empty. The lights will automatically turn off when inhabitants or employees leave for an extended period, making the task of saving power relatively easy.

    Upgrading Technology

    Some older homes and offices still have their original thermostats. Opt for a programmable thermostat, because you can program temperatures for peak hours of business or use, Goldstein says. With a smart thermostat, consumers can save 30 percent on their home's heating and cooling bills.

    The amount of electricity being used in a home or office is substantial, said Ernest Freeman, vice president of engineering in Hartford Steam Boiler's Loss Control Engineering Group, a Hartford, Connecticut-based equipment breakdown insurance company. Leaving on various appliances "not only draws power, but also generates heat that can contribute to higher cooling bills," he said.

    Using tools that can automatically shut down appliances such as coffee makers, water coolers, vending machines and registers can lower the amount of vampire loads. Devices that are plugged in, but shut off, are still using electricity. A better option is to plug equipment in the office into power strips. A smart power strip is a good investment, because it "senses when a product is not in use and eliminates its standby power consumption," Freeman said in a blog post.

    For homeowners and business owners who want to invest in long-term infrastructure, installing solar panels could yield additional savings. A lower reliance on the power grid is a benefit and companies can either lease or buy panels. Although the solar panels are expensive to install at first, the savings range from six to eight times over 25 years, the duration of most panels, said Jim Nelson, CEO of Solar3D, the Santa Barbara, California, company that produces technology for solar cells.

     

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    3 Worst Things to Buy New for Kids

    By Andrea N. Browne

    Kids cost a lot to raise. During the first 18 years of a child's life you'll spend on average about $245,000 for food, housing, child care, education and other related expenses. Considering how costly it is just to provide them with the essentials, it makes financial sense to look for ways to save on the things your kids want but don't actually need. One easy way to do this is to buy used rather than new.

    Here are three things that you should avoid buying new for your kids to cut costs.

    While older children might balk at the thought of wearing slightly used clothing, little kids won't know the difference. You can save big by buying gently worn baby and toddler clothes at consignment sales hosted by your local church or by going to an actual consignment store. You can even look online.

    At ThredUp.com, the online consignment retailer sells more than 4,000 kids' brands in like-new condition for an average of 65 percent off the original retail price.

    Kids tend to break or lose their cellphones pretty easily, so it could be a waste of money to buy a brand new smartphone that costs hundreds of dollars. Instead, you could buy your child a pre-owned phone for much less. On Gazelle.com, for example, you can buy pre-owned phones that have gone through a 30-point inspection for about 40 percent less than newer models. You can also find refurbished phones on websites such as Glyde.com or Overstock.com.

    Your son or daughter may like a certain sport and want to join a team, but they could lose interest after a few tough practices. And even if they remain committed, they will probably outgrow equipment quickly. So it would be wise to buy most sporting equipment used rather than new. One mom we talked to saved 50 percent on boxing, lacrosse and horseback riding equipment she bought at resale stores such as Play It Again Sports. Some sports leagues even have trade-in days when parents can swap kids' equipment at no additional cost.

    Check out five more of the worst things to buy new for your kids.

     

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    Consumer Price Index Rises For First Time Since October
    Scott Olson/Getty Images
    By Lucia Mutikani

    WASHINGTON -- U.S. consumer prices unexpectedly fell in August as gasoline prices resumed their decline and a strong dollar curbed the cost of other goods, pointing to tame inflation that complicates the Federal Reserve's decision whether to hike interest rates.

    The Labor Department said Wednesday its Consumer Price Index slipped 0.1 percent, the first drop since January, after edging up 0.1 percent in July. In the 12 months through August, the CPI rose 0.2 percent after a similar gain in July.

    Signs of a disinflationary trend reasserting itself are in stark contrast with a fairly healthy economy and a rapidly tightening labor market, and highlight the dilemma Fed officials face as they contemplate raising interest rates for the first time in nearly a decade.

    You can make a strong case either way for the Fed to begin raising interest rates or waiting.

    The U.S. central bank's policy-setting committee was due to start a two-day meeting later Wednesday. While solid data on consumer spending, housing and employment have been supportive of a rate hike, the case for higher borrowing costs has been undermined by recent global financial markets turmoil.

    "You can make a strong case either way for the Fed to begin raising interest rates or waiting," said Ryan Sweet, a senior economist at Moody's Analytics in West Chester, Pennsylvania.

    "The prudent risk management approach would argue for them to hold off, but if the Fed was really data dependent there is a very a strong case to raise rates on Thursday."

    U.S. financial markets were pricing a 29 percent probability of a lift-off in the Fed's benchmark overnight interest rate Thursday, little changed from before the data's release.

    A Reuters survey of 80 economists showed 45 expected the U.S. central bank to keep its short-term interest rate near zero.

    Stocks on Wall Street were trading higher in the wake of the soft CPI data. Prices for U.S. Treasuries rose marginally, while the dollar fell against a basket of currencies.

    Tightening labor market conditions, marked by record high job openings and a 5.1 percent unemployment rate, have so far not spurred faster wage growth.

    Sluggish wage gains and a strong dollar have contributed to keeping inflation below the Fed's 2 percent target. Economists had forecast the CPI unchanged in August and rising 0.2 percent from a year ago.

    Dollar Dampening Inflation

    The so-called core CPI, which strips out food and energy costs, ticked up 0.1 percent last month after a similar rise in July. The muted gains in the core CPI reflect the dollar's impact on the cost of imported goods.

    The dollar has gained 17.1 percent against the currencies of the United States' main trading partners since June 2014.

    In the 12 months through August, the core CPI increased 1.8 percent. It was the fifth time in six months that the 12-month change was 1.8 percent. The Fed tracks the personal consumption expenditures price index, excluding food and energy, which is running well below the core CPI.

    "One thorn in the Fed's side is inflation. I don't think today's CPI number really advances the debate on whether we are any closer to getting to that 2 percent target that the Fed is clearly focused on," said Mike Moran, head of economic research for the Americas at Standard Chartered Bank in New York.

    Last month, gasoline prices fell 4.1 percent, the biggest drop since January, after rising 0.9 percent in July. Gasoline prices had risen for three straight months. Food prices gained 0.2 percent as the cost of eggs increased 7.7 percent.

    Egg prices are now up 35.3 percent from a year ago, following the avian flu that struck some parts of the country early in the year. There were increases in prices for tobacco and apparel. However, airline fares fell 3.1 percent and used car prices declined for a fourth straight month.

    The rental index increased 0.3 percent last month, matching July's gain. Demand for rental accommodation is being driven by rising household formation as the sturdy labor market encourages young adults to leave their parental homes.

    The hot rental market is helping to fuel home building activity, with a separate report Wednesday showing homebuilder confidence near a decade high in September.

     

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    olive garden pasta pass returns
    Olive Garden via AP
    By CANDICE CHOI

    NEW YORK -- Olive Garden is bringing back its "Pasta Pass" that lets people gorge on as much pasta as they want for seven weeks. And friends and family are welcome to pig out too this year.

    The restaurant chain known for its free breadsticks says it will sell 1,000 of the $100 regular Pasta Passes starting Thursday at 2 p.m. Eastern time on its website. It will also sell 1,000 family Pasta Passes, which will cost $300 and let cardholders bring along up to three guests.

    The return of the promotional stunt comes after the passes sold out in 45 minutes last year and generated considerable publicity for Olive Garden, which is trying to modernize its image as customers have turned elsewhere in recent years. Late night talk show host David Letterman even devoted a top 10 list to the Pasta Pass, saying that one of its clauses is that a person's dignity is not refundable.

    The passes will let people mix and match from a selection of sauces and pastas, including a gluten-free variety this year. The passes also come with unlimited soft drinks and, as with other Olive Garden meals, unlimited soup or salad and breadsticks. The passes are good from Oct. 5 through Nov. 22 at the chain's more than 800 U.S. locations.

    The passes aren't transferable, so the cardholder has to be the one using it.

    Jose Duenas, executive vice president of marketing at Olive Garden, said the media attention the passes generated last year was an affirmation that people still have strong feelings for the chain. The promotion this year is a way to celebrate the 20th anniversary of Olive Garden's Never Ending Pasta Bowl, which cost $9.99 and lets people eat as much pasta as they can in a single visit.

    Olive Garden isn't necessarily trying to tap into Americans' love of unlimited food with the Pasta Pass, Duenas said.

    "We see it as a manifestation of Italian generosity," he said.

    Whether the Pasta Passes are worthwhile for customers depends on how often people use them. Last year, cardholders used their Pasta Passes an average of more than twice a week, according to Olive Garden.

    Even though the Pasta Passes generated a lot of attention for Olive Garden, parent company Darden Restaurants Inc. (DRI) is still working on turning around the chain's performance after its board was taken over by investor Starboard Value.

    Sales at established Olive Garden locations have edged higher for each of the past three quarters. But the lift has been a result of higher pricing and menu mix; customer visits have continued to slip.

    Darden, based in Orlando, Florida, reports its latest quarterly results Tuesday.

     

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    Federal Reserve The Great Debate
    Andrew Harnik/APThe Marriner S. Eccles Federal Reserve Board Building in Washington.
    By Casey Bond

    NEW YORK -- It's not uncommon for today's employees to feel as though they'll work until the day they die. Thanks to the Fed, that could be reality for much of the American workforce.

    According to the new 2015 Life and Money survey released by GOBankingRates, 1 in 5 respondents identified "planning for retirement" as their biggest financial challenge. Some 16 percent of Americans said their biggest fear was never being able to retire at all.

    This data isn't surprising. Monetary policy over the last seven years has motivated borrowers while punishing savers. The Federal Funds rate has hovered from 0 to 0.25 percent since December 2008, making debt alluringly cheap. On the other hand, sources of safe, fixed interest income such as savings and CD accounts have become negative-return investments once inflation is factored in.

    Why The Fed Doesn't Want You To Retire

    If it seems as though the Federal Reserve is discouraging Americans from retiring, you're right.

    One of the major goals behind keeping rates down is encouraging spending and spurring economic growth following the Great Recession. Our national income to support domestic GDP could drop significantly if a large number of people retired. "The more people who work, the more money they have," said Paul Morrow, assistant professor at Husson University's College of Business in Bangor, Maine. "The more money they have, the more money they spend,"

    Hoarding cash with the goal of permanently exiting the workforce contradicts everything the Fed wants to accomplish.

    When Will Interest Rates Rise?

    That said, the Fed presumably can't keep interest rates at near-zero forever -- though experts have been predicting a rate hike for a long time.

    "The rate hike is becoming something like the Great Pumpkin from the Peanuts cartoons ... higher interest rates from the Fed are out there somewhere, but never quite seem to materialize, no matter how patiently we wait," said Lawrence Solomon, a certified financial planner and director of investments and financial planning at OptiFour Integrated Wealth Management. Like many, however, he expects interest rates will finally go up sometime in the fourth quarter of this year or early first quarter 2016.

    The longer we're all held in interest rate limbo, the more unpredictable -- and dramatic -- the results of a rate hike will likely be on markets and American's finances. Unfortunately, no one can say with certainty whether the effects will be mostly positive or negative until it happens. For those who hope to retire some day, that uncertainty is disconcerting at best.

    To be sure, some observers of the monetary policy say that a rate hike will be beneficial. "I actually believe that a rate hike will be well-received by the market, as it has been much anticipated," said Robert R. Johnson, president and CEO of The American College of Financial Services. "The market is suffering from Fed fatigue, and a rate hike would eliminate any uncertainty that market participants have with respect to the Fed. One investment truism that seems universal is that markets abhor uncertainty."In anticipation of rising rates, there are a few steps future retirees can take to preserve their wealth.

    Equities

    "Investors would be well served to do some sector rotation in their portfolios," Johnson said. He recommended selling some stocks from industries that perform well during falling rate environments, such as apparel, retail, construction, durable goods and autos, and buying stocks in industries that perform well during rising rate environments, such as energy, consumer goods, utilities, food and steel products.

    In the long-run, however, Johnson advised investors to temper their expectations in a rising interest rate environment, as returns on equities will be lower in general.

    Bonds

    Investors should get out of bonds and look for other safe, secure options to protect their money, said Michael Foguth, president and founder of financial services firm Foguth Financial Group in Howell, Michigan. "History shows when interest rates go up, bond values go down. Most people use bonds for safe money -- when interest rates go up, bonds will no longer hold the title of safe."

    Long-Term Debt

    Increasing the fed funds rate directly affects how much it costs banks to borrow from each other. The direct effect for consumers will be that the cost to borrow will increase. "If you have a variable rate mortgage loan or are in the market to borrow money for a large purchase, the fed rate hike will make borrowing slightly more expensive," said Kyle Winkfield, managing partner at Englewood, Colorado-based O'Dell, Winkfield, Roseman & Shipp, which provides retirement financial services. Borrowers should either lock in today's low rates, or work to eliminate potentially expensive debt that could eat at future retirement savings.


    How the Fed Rate Hike Affects the Stock Market

     

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    GOP 2016 Debates
    Tom Stathis/APTechnicians work behind the candidate podiums before the start of the CNN Republican presidential debates at the Ronald Reagan Presidential Library and Museum.
    By Linda Keslar

    Between Donald Trump's insults, Rand Paul's selfies and Jeb Bush's "anchor babies," the crowded race for the GOP presidential nomination is providing plenty of fodder for the headlines. And if tonight's second Republican debate on CNN is anything like the first, viewers should expect to see more of a boxing match than a detailed discourse on the issues.

    Sure, it's entertaining television, but the one-liners and big personalities make it hard to know where exactly the presidential candidates stand on personal finance issues -- key topics like taxes, health care and student loan debt.

    But most importantly, it's the economy, stupid: A spring Gallup survey showed Americans ranked the economy as their top concern at the polls.

    So in honor of tonight's main event, we've pulled together a cheat sheet on the 11 featured Republican contenders (listed accorded to CNN's rankings) to show you their stances -- so far -- on five key issues, with added insight from political pundits.

    And be sure to look for our second installment on the Democratic candidates next month -- in time for their Oct. 13 debate.

    1. Donald Trump

    The real estate tycoon turned Republican dark horse turned Republican front-runner is doing so well in the polls that America may just say, "You're hired!"

    "He's polling so far ahead of everyone else, he's really in a league by himself at this point," says Dean Baker, co-director of the Center for Economic and Policy Research.

    Here's where Trump stands ...

    Taxes: Raise taxes on the rich -- especially hedge fund managers -- to help relieve the middle class. Impose a one-time tax on the wealthiest Americans to help pay down the national debt.

    Jobs: No minimum wage increase. Impose tariffs on goods manufactured in China and Mexico to encourage U.S. companies to hire locally.

    Health care: Repeal the Affordable Care Act. Has spoken favorably of a single-payer universal health care system in the past. Now advocates for a private system "without the artificial lines around every state."

    Student loans: Critical of the federal government profiting off borrowers, but is less focused on refinancing student loans and more focused on creating jobs for recent college grads.

    Big-picture economy: Cut government spending to reduce the deficit. Wants to build a wall along the border with Mexico, and deport undocumented immigrants, saying they have a drag on U.S. taxpayers.

    2. Jeb Bush

    What political pedigree? The former two-term Florida governor hasn't been the shoo-in candidate many expected he would be because of the Bush name.

    Here's where Bush stands ...

    Taxes: Proposes having just three individual tax brackets: 28, 25 and 10 percent. Also plans to expand the earned income tax credit and get rid of the estate tax and alternative minimum tax.

    Jobs: Wants to create 19 million new jobs, although his game plan is light on details. Opposes the federal minimum wage, but is OK with a state-level minimum wage.

    Health care: Replace the Affordable Care Act with a consumer-driven plan at the state and local levels. He also wants to provide government funding to help cover major medical events for the needy.

    Student loans: Calls on colleges to be more accountable for helping students graduate on time -- and for helping them choose degrees that lead to employment, so they aren't piling on student loan debt.

    We've had Medicare and Medicaid for a long time, and they're popular programs. It's hard for me to see anyone getting elected saying they want to overhaul them.

    Big-picture economy: Says he'll achieve 4 percent gross domestic product growth over two terms -- a rate that Elaine Kamarck, a senior fellow in the Governance Studies program at the Brookings Institution, questions. "I like to be optimistic, but 4 percent growth for eight years isn't in the ballpark [of possibility]," she says.

    3. Scott Walker

    The second-term Wisconsin governor was unbeatable in his home state -- even surviving a recall election -- but he's been struggling to make strides on the national stage.

    Here's where Walker stands ...

    Taxes: He says more details are to come, but Walker has called for returning federal tax rates to Reagan-era levels, when the top rate was 33 percent.

    Jobs: Walker and unions are like oil and water. As governor, he passed legislation that curbed the ability of public-sector workers to bargain collectively -- and pushed for right-to-work laws that barred workplaces from requiring union dues.

    Health care: Repeal the Affordable Care Act and provide tax credits to Americans at all income levels who don't have employer-sponsored insurance.

    Student loans: Favors giving universities incentives to keep tuition down. As governor, let student-loan refinancing laws fall by the wayside.

    Big-picture economy: Dismantle big government's involvement in areas like education, transportation, infrastructure and Medicaid. According to Baker, that last goal could prove to be problematic for Walker. "We've had Medicare and Medicaid for a long time, and they're efficient, popular programs," Baker says. "It's hard for me to see anyone getting elected saying they want to overhaul them."

    Ben Carson Campaigns At South Carolina Farmer's Market
    Joe Raedle/Getty ImagesBen Carson counts New York Times-bestselling author among his achievements.
    4. Ben Carson

    This former pediatric neurosurgeon -- known for being the first physician to separate twins joined at the head -- is a true political outsider. Despite this, the ultraconservative candidate has experienced a quiet surge as of late.

    Here's where Carson stands ...

    Taxes: Wants a flat-tax system in which every American would pay the same rate, between 10 and 15 percent.

    Jobs: No clear plan yet other than to say jobs will come with economic growth. Was quick to say that he had served on corporate boards after Trump criticized him for having no experience in creating jobs.

    Health care: Once called the Affordable Care Act "the worst thing to happen to this nation since slavery." Proposes giving every American $2,000 a year to add to a health savings account.

    Student loans: Opposed President Barack Obama's plan calling for two free years of community college, noting that Pell grants already assist poor students. Emphasizes taking personal responsibility for college costs through hard work.

    Big-picture economy: Ratify a balanced budget amendment. Revive the Glass-Steagall Act, which would force big banks to separate their investment and commercial banking practices. The latter is a typically Democratic stance, but as Baker notes, "there are substantial segments within the Republican party who are anti-Wall Street."

    5. Ted Cruz

    The first-term Texas senator is a Tea Party favorite, but "he's had the most air taken out of his balloon by Trump, who's very similar to Cruz in his extreme views," Kamarck says.

    Here's where Cruz stands ...

    Taxes: He has big plans, like abolishing the IRS, cutting corporate taxes to 15 percent and establishing an unspecified flat individual income tax that still allows for a large standard deduction for lower income earners.

    Jobs: His position: Raising the minimum wage will kill jobs. A strong oil and gas industry will create them.

    Health care: Introduced legislation to repeal the Affordable Care Act. Supports allowing people to buy insurance across state lines.

    Student loan debt: Voted against legislation to allow student loan refinancing, and believes student loans should be controlled by states.

    Big-picture economy: Supports a balanced-budget amendment. Wants to privatize Social Security and eliminate the Department of Energy. Cruz introduced the American Energy Renaissance Act -- legislation that would deregulate and expand domestic energy production.

    GOP 2016 Rubio South Carolina
    Paul Vernon/APMarco Rubio's charisma made the freshman senator an early favorite.
    6. Marco Rubio

    Obey your thirst? That's what rising conservative star Rubio did during his infamous water-bottle moment in 2013, when he took a big swig while giving the GOP response to President Obama's State of the Union address.

    Kamarck says, "Rubio is not as much a red-meat Republican as some of the other [candidates], but his up-and-comer status could get him on the ticket."

    Here's where Rubio stands ...

    Taxes: Wants just two brackets -- 15 and 35 percent. Would get rid of estate, capital gains and dividend taxes -- as well as institute a new, $2,500-a-child tax credit.

    Jobs: Says they will come with economic growth and higher-education reform. Also advocates for more vocational training and for expanding apprentice programs.

    Health care: Wants to replace the Affordable Care Act with tax credits that will help people buy health insurance.

    Student loans: Supports income-based repayment, as well as "pay it forward" plans that allow individuals or organizations to provide students with money for school. In exchange, after graduation the student agrees to pay back a portion of their income for a set number of years.

    Big-picture economy: Says he will balance the federal budget within 10 years, instituting across-the-board spending cuts -- save for defense. Also plans to deregulate small businesses.

    7. Mike Huckabee

    The Southern Baptist preacher and former Arkansas governor has made a name for himself by regularly making the TV rounds as a conservative talking head.

    Here's where Huckabee stands ...

    Taxes: Huckabee hearts tax reform -- and wants to eliminate corporate and individual income taxes, replacing them with a 23 percent federal sales tax that he dubs the FairTax. But Baker notes that likely won't sit well with modest-income voters. "Do people earning $40,000 a year really want to pay 23 percent on everything they buy?" he asks.

    Jobs: Believes his tax plan will help bring offshore jobs back to the U.S.

    Health care: Repeal the Affordable Care Act and let states "road-test" health care reform, although he hasn't provided details on what exactly that means.

    Student loans: Thinks students should be able to refinance all of their loans -- like mortgages and car loans -- to take advantage of low interest rates.

    Big-picture economy: Did we say "tax plan" already? Says FairTax will stimulate economic growth, and provide enough money to fund Medicare and Social Security.

    8. Rand Paul

    The former ophthalmologist, Kentucky senator and neo-libertarian has "gotten sidelined by the Trump phenomena, but he does represent a small but important faction of the Republican Party," Kamarck says.

    Here's where Paul stands ...

    Taxes: Wants to institute a flat tax of 14.5 percent on ordinary income, increase the standard deduction to $15,000 and offer a personal exemption of $5,000 a person. Paul also wants to lower the rate on capital gains and dividend income to 14.5 percent.

    Jobs: Blames big government for high unemployment rates. Wants to deregulate the oil and gas industry to create more jobs. Health care: Replace the Affordable Care Act with health savings accounts.

    Student loans: Make college tuition and student loan debt fully tax deductible -- and nix the Department of Education.

    She's like Trump. She's not a career politician, so her business record is going to be looked at carefully -- and she may have problems there.

    Big-picture economy: Plans to aggressively cut federal spending, raise the Social Security eligibility age and privatize Medicare. Also once proposed that bankrupt or economically distressed cities become "Economic Freedom Zones" that offer tax breaks for residents and businesses alike.

    9. John Kasich

    A former investment banker, nine-term congressman and second-term Ohio governor, "[Kasich is] probably the best-qualified person in the race," Kamarck says.

    Here's where Kasich stands ...

    Taxes: Cut corporate and individual income taxes -- and impose a flat personal-income tax. As governor, Kasich supported increasing sales taxes to help pay for income tax cuts.

    Jobs: Opposes raising the minimum wage, and as governor was against expanding unemployment compensation.

    Health care: Wants to replace the Affordable Care Act with a market-driven system, but stirred some controversy when he expanded Medicaid in Ohio -- a provision of Obamacare. "Given Obamacare was there, he said he would take advantage of it," Baker says.

    Student loans: As governor, proposed a 2 percent cap on annual tuition increases, and $120 million in college debt relief to help graduates of Ohio's public colleges.

    Big-picture economy: Big on a balanced budget. As chairman of the House Budget Committee, helped write the nation's most-recent balanced federal budget in the late 1990s.

    10. Chris Christie

    Second-term New Jersey governor whose campaign may have been hurt early on by Bridgegate -- and who's now contending with a bout of falling job-approval ratings.

    Here's where Christie stands ...

    Taxes: Wants three tax brackets, with top rate at 28 percent -- and would cut the corporate tax rate to 25 percent. Also wants to cap total amount of deductions and credits that individuals or married couples can take.

    Jobs: Use corporate tax incentives to grow jobs.

    Health care: Repeal the Affordable Care Act, but hasn't offered details yet on a replacement plan.

    Student loans: Supports boosting federal grant programs, income-share agreements and "pay it forward" plans with employers.

    Big-picture economy: Rein in government spending and reform entitlement programs, particularly Medicare and Medicaid. Plus, Christie wants to raise the full retirement age for Social Security to 69. Baker's take: "For seniors who have nothing but Social Security to support themselves, that's like a 12 percent cut in benefits -- and a big hit for a group that's not wealthy."

    GOP 2016 Debate
    Jim Cole/APCarly Fiorina was the first woman to run a Fortune 20 company.
    11. Carly Fiorina

    The former CEO of Hewlett-Packard and the first woman to run a Fortune 20 company, Fiorina unsuccessfully ran for the Senate in 2010.

    "She's like Trump," Kamarck says. "She's not a career politician, so her business record is going to be looked at carefully -- and she may have some problems there."

    Here's where Fiorina stands ...

    Taxes: Simplify the tax code, eliminating the estate tax and capital gains taxes on small-business investments.

    Jobs: Let states set the minimum wage and give small business the freedom to grow and create jobs.

    Health care: Repeal the Affordable Care Act and let the federal government subsidize state-run insurance programs for the most needy.

    Student loans: They should be a competitive business -- not a government "racket."

    Big-picture economy: Big believer in "zero-based budgeting," which would force federal agencies to justify their budgets fresh every year rather than build on prior-year funding. Says deregulation will grow small businesses.

    Look for our next article on the Democratic contenders in October.

     

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    Miss America 2016, Betty Cantrell Rings The New York Stock Exchange Opening Bell
    Steve Mack/Getty ImagesMiss America 2016, Betty Cantrel, rings the opening bell Wednesday at the New York Stock Exchange.
    By Sinead Carew

    NEW YORK -- Energy stocks pushed Wall Street higher Wednesday due to an almost 6 percent jump in oil prices, but many investors stayed on the sidelines a day ahead of the Federal Reserve's decision on interest rates.

    The energy index led a broad rally for the S&P 500 benchmark index with a 2.8 percent increase as crude oil prices settled up 5.7 percent after an unexpected drawdown in U.S. stockpiles.

    "Energy was what gave it the initial spark and the fact the energy rally kept rolling gave people reassurance they could step into other sectors as well," said Peter Jankovskis, co-chief investment officer at OakBrook Investments in Lisle, Illinois.

    Trading was relatively thin with only 6.6 billion shares changing hands on U.S. exchanges Wednesday, below the 8.03 billion daily average for the previous 20 trading days, according to Thomson Reuters (TRI) data.

    The Fed is due to announce a decision Thursday afternoon to either end or extend seven years of near-zero interest rates, potentially relieving markets of months of uncertainty as investors have been trying to predict the timing of a hike.

    But the market's rise didn't indicate any real conviction about what the Fed will decide, said Tom Donino, co-head of trading at FNY Capital Management in New York.

    "It's either shorts covering, because they don't want to be short tomorrow ahead of the Fed meeting, or it's people that want to be long getting long in front of the Fed," said Donino. "The market's going to be volatile tomorrow."

    Wall Street's top economists are on unfamiliar ground: as the Federal Reserve decides whether to raise interest rates for the first time in years, they are deeply divided on what will happen.

    Fed fund futures see only a 30-percent chance that Janet Yellen and her colleagues will pull the trigger this week. Of the 80 economists polled by Reuters, only 35 said the central bank is likely to raise rates this week.

    The Dow Jones industrial average (^DJI) closed up 140.1 points, or 0.8 percent, to 16,739.95, the Standard & Poor's 500 index (^GSPC) gained 17.22 points, or 0.9 percent, to 1,995.31 and the Nasdaq composite (^IXIC) added 28.72 points, or 0.6 percent, to 4,889.24.

    'Bit of Backbone'

    The materials sector was the next best gainer behind energy with an 1.4 percent rise after Glencore raised $2.5 billion through a share placement, boosting mining stocks and metals prices.

    "That put a little bit of backbone behind people who want to start buying these mining stocks here," said FNY's Donino.

    The S&P's telecommunications index, the only sector out of 10 in negative territory, fell 0.2 percent.

    Stocks have been volatile since China devalued its currency in August. The S&P 500 has had moves of at least 1 percent in 12 out of the last 19 sessions.

    NYSE advancing issues outnumbered decliners 2,358 to 707, for a 3.34-to-1 ratio; on the Nasdaq, 1,753 issues rose and 1,056 fell, for a 1.66-to-1 ratio favoring advancers. The S&P 500 posted 9 new 52-week highs and 1 low; the Nasdaq recorded 39 new highs and 34 lows.

    -Tanya Agrawal contributed reporting.

    What to watch Thursday:
    • At 8:30 a.m. Eastern time, the Labor Department releases weekly jobless claims, 8:30 a.m., and the Commerce Department releases housing starts for August and the current account trade deficit for the second quarter.
    • At 10 a.m., Freddie Mac releases weekly mortgage rates, and the Federal Reserve Bank of Philadelphia releases its survey of manufacturing conditions in the Mid-Atlantic states.
    • Federal Reserve policymakers meet to set interest rates. A statement is scheduled for 2 p.m.
    Earnings Season
    These selected companies are scheduled to release quarterly financial results:
    • Adobe Systems (ADBE)
    • Rite Aid (RAD)

     

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    Sneaky Credit Card Tricks

    By Jeffrey Tull

    Credit card companies love to dangle juicy offers in front of you. You might be "preapproved" for a zero-percent interest credit card or valuable sign-up bonus. Maybe it's even that fancy "gold" or "platinum" card you never knew you were eligible for.

    Unfortunately, some offers that sound too good to be true probably are. The amazing benefits you see in the bold lettering aren't always what you get once you understand the fine print.

    To sort out the credit card deals from duds, take a closer look before you apply, and be sure to keep these five red flags in mind:

    1. Rates that aren't guaranteed. One of the big draws of new credit cards is a low interest rate. But what you might not notice are the subtle caveats to the special rate that's prominently displayed. Some offers will have "as low as" printed in small letters in front of the APR. You might also see asterisks and superscripts that refer you to the fine print, where the text explains the best interest rate is only available to applicants with the best credit. In other words, the rate they're using to lure you in isn't necessarily the one you'll get.

    The best defense? Read the fine print, especially the "Rates and Disclosures" information. It's not exciting, but it will reveal what, if anything, is actually guaranteed. Banks are legally required to furnish this information in the easy-to-read format shown on the website of the federal Consumer Finance Protection Bureau. And if you're uncomfortable because you can't tell what the ultimate rate will be, don't apply.

    2. Fool's gold. "Gold cards" have been around for decades, with American Express debuting theirs in 1966. Since then, credit card companies have added silver, platinum and even palladium to the list of precious metals used in card names.

    While such cards may have indicated prestige in the past -- and there are still elite cards requiring exceptional income and expenditures -- most precious-metals labeling is meaningless.

    Solution? Choose a credit card by comparing the benefits that really matter, like low interest rates, low fees or rewards. Money Talks News has a credit card page, complete with reviews and a search function that can help you find the right card.

    3. Bogus business credit cards. Offers for small-business credit cards might seem like a great way to track business expenses and develop a credit history for your company. But these cards seldom live up to the hype and offer fewer consumer protections than consumer cards.

    With most small-business cards, it's your personal credit on the line, not that of your business. So using it doesn't create or develop a credit file for your business.

    In addition, small-business cards lack important protections that consumer cards have. The Credit Card Act of 2009 applies only to consumer cards, which means your business card can still be hit with fees and rate hikes that would be illegal for your personal plastic. So even if a particular business credit card has advantages, such as enabling you to track business expenses separately, you could be sacrificing consumer protections to get them.

    4. Big bonuses with a catch. It's easy to get drawn in by the sign-up bonuses offered on new cards. You might see an offer of $150 back or 25,000 airline miles just for opening an account. But there's often a catch.

    In many cases, you'll need to ring up a certain amount on your card within a specified time period, like $1,000 in purchases to get that $150, or $2,000 charged to earn 25,000 airline miles. While the details vary, completing these offers as stipulated may be difficult or even impossible, depending on your budget.

    Percent cash-back bonuses might not be all they seem, either. Some offers boast "up to 5 percent back" on your purchases, but that may be only at certain retailers, and not for every purchase you make. Some cash-back deals might be for a limited period after you open the account and may cap how much you can earn.

    When it comes to reward cards, understand what it takes to get the advertised perk. Consider the reason rewards exist: to make people spend (and borrow) more than they otherwise would. If that's a trap you feel likely to fall into, a rewards card may be, in fact, punishing you.

    Shop rewards cards and all other cards before you commit. Check out our credit card page to find additional choices.

    5. Not-so-special offers. Credit card offers come crammed with language that makes you feel like you're getting a special deal. Envelopes might be stamped with "Important" or "Confidential" to heighten the urgency. Once opened, you might be excited to find you're "preapproved" for a new credit card.

    Unfortunately, being "preapproved" doesn't actually mean the new card is yours. In fact, it doesn't really mean anything. You'll still need to apply for the card and go through the whole approval process as you otherwise would.

    Be careful when choosing a card because it appears to be a special offer made just for you. It may just be another trick to reel you in.

    Share your thoughts on credit card offers in comments below or on our Facebook page.

    Like this article? Sign up for our newsletter, and we'll send you a regular digest of our newest stories, full of money-saving tips and advice, free!

    Ari Cetron contributed to this report.

     

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    By Elizabeth Sheer

    A health insurance policy is no guarantee that prescription medications will be cheap. Many plans include a very high deductible, which means paying the drugs' full cost out of pocket, at least for a while. If this proves financially taxing, several pharmacies, insurance plans, pharmaceutical companies and nonprofits offer assistance in lowering the cost of necessary medications.

    Chain store prices. The drugstore isn't necessarily the best place to shop for cheap prescription drugs. A 2013 study by Consumer Reports found that prices for the same medicine varied widely by pharmacy, with the warehouse club Costco charging the least overall and CVS the most. The generic form of the anti-depressant Lexapro cost $7 at Costco, for example, and $126 at CVS (and you don't have to be a Costco member to use the pharmacy). A more recent search by Cheapism.com found Lexapro to be cheapest at Walmart ($8.71) and most expensive at Rite Aid ($64.08).

    Tip: Don't assume that national chains post the lowest prices. Independent drugstores often are willing to negotiate prices because they have more leeway in setting prices than the chains do.

    Discount programs. Pharmacy chains such as Walmart, Walgreens, Kmart, Target and even Kroger offer discount drug programs that cover hundreds of commonly prescribed generics. Some stores require an upfront membership fee to be eligible for these cheap prices. The Costco program is free for members, but CVS charges $15 a person, Kmart charges $10 for a household and Walgreen's costs $20 a person or $35 for a family. (Fees may vary by location.) These in-store pharmacies charge $4 for a monthly supply of generics and $10 for a 90-day supply. That's all well and good, but a generic may not be what your doctor prescribes even though the medication adheres to the identical formulation of the original patented drug.

    Generic medications. Consumer spending on pharmaceuticals jumped 13.1 percent to $374 billion in 2014, according to IMS Institute for Healthcare Informatics, in part due to the introduction of new brands and strong demand for specialty medicines. These drugs, and many of the top 10 sellers (total prescriptions), have no generic counterparts; only medications that have been available long enough for their patents to expire have generic equivalents. And inevitably, the original brand name drug is really expensive. Still, it always pays to ask the doctor if a cheaper generic is available. If not, there are alternative paths to lower-cost meds.

    Assistance programs. Health insurance companies usually offer tiered co-pays for prescription drugs, with the generic version being cheaper and brand names more expensive. Brand name drug manufacturers may subsidize the cost for financially strapped patients with health insurance through Patient Assistance Programs, or PAPs. This is often the only way that medications, particularly new formulations, are affordable. Sometimes doctors hand out discount cards along with the prescription; if they don't, ask for one. Most pharmaceutical companies also offer low-cost medications, with prices varying by income, for patients who lack health insurance or prescription coverage.

    If your doctor doesn't have a discount card and the medication is costly, go to NeedyMeds for information about PAPs and access to a discount card that opens the door to deals from drug manufacturers. The card is good for prescription drugs that aren't covered by insurance or if the pharmacy price with the discount card is lower than your co-pay. Look up the drug on the site to see if you can get help paying for it.

    Online resources. GoodRx provides coupons and discounts for use at pharmacies (e.g., Walgreens, Target, Rite Aid and Safeway) and identifies the cheapest local source for your prescription. A search for the medication turns up the prices at your neighborhood drugstores and at online mail-order houses. GoodRx also indicates if there is a generic formulation and, if not, when the drug comes off patent.

    Another money-saving resource is Rx Pharmacy Coupons. This site posts discount coupons for drugs, both brand name and generic, that can be used at dozens of drugstore chains and supermarket pharmacies across the country, as well as some independent pharmacies.

    Using any or all of these resources can save consumers money. For example, the rosacea medication Oracea costs between $263 and $483 for a one-month supply, according to GoodRx, and a generic equivalent won't be available until 2022. The manufacturer has a PAP, which provides a discount to people without insurance if their income is within 200 percent of the poverty line. Another alternative would be visiting Rx Pharmacy Coupons, which offers a coupon worth 50 percent off at participating pharmacies.

    Co-pay relief. Several sites offer help with co-pays for people presenting with conditions that require expensive drugs not covered by insurance.

    The Patient Access Network Foundation focuses on people with chronic conditions who are insured but whose income falls at, or below, the poverty line. The site contains a list of the covered drugs and a referral service to other organizations that offer co-payment assistance.

    Cancer drugs are among the most expensive and insurance doesn't always cover them. Cancer Care Co-Payment Assistance Foundation helps out with chemotherapy and FDA-approved "targeted therapy" drugs aimed at cancers. Assistance is available to patients with insurance or Medicare policies that cover a portion of the cost.

    Free samples. Pharmaceutical companies are constantly giving away free samples to doctors, who often pass them on to patients. The samples are always relatively new brand names without generic equivalents.

    Beware the moment when it's time to get more of the same, though. A study published in JAMA Dermatology in 2014 found that dermatologists who pass out free samples continue to prescribe the sample drugs, which cost more than alternative medications. If the drug is needed for an acute condition that's not likely to recur, a free sample could be just the ticket. If the condition is chronic, ask for more samples. Or, turn to another money-saving option.

     

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    By Anne Kates Smith

    You can't blame investors for being skittish about investing abroad, with volatility in Europe and an outright implosion in Chinese stocks. The recent trepidation exacerbates a bias that investors already have in favor of homegrown investments -- a misplaced patriotism that can pummel your portfolio.

    Recent research shows that U.S. stocks account for less than half of the global stock market but make up nearly three-fourths of U.S. investors' stock holdings. Investors from other countries are even more provincial. Canadian stocks represent just 4 percent of the world market but 60 percent of Canadians' stock holdings. And get this: Even in beleaguered Greece, where the stock market accounts for less than 1 percent of global market capitalization, the share of domestic stock holdings was recently 82 percent.

    Our home bias comes at a price: a dangerous lack of diversification that increases the volatility of returns over time and robs us of opportunities to invest in promising companies that just happen to be based elsewhere. True, in recent years a U.S.-based portfolio has been the best bet, but that's not always the case. For instance, international stocks in developed countries outperformed U.S. stocks from 1983 through 1988, and again from 2002 through 2007.

    Our preference for homegrown stocks goes deeper than nationality. A survey by Openfolio, a portfolio-sharing platform, found regional biases as well. For example, West Coast investors are 10 percent more likely than the average investor to hold tech companies, while Southerners are 14 percent more likely to load up on energy stocks.

    There are rational explanations for our home-country preference, especially when it comes to international investing. Foreign assets carry an additional currency risk. Trading costs might be higher. Information may be limited. But none of these fully explain what's known as the "home bias puzzle," says Hisham Foad, an economics professor at San Diego State University. Instead, says Foad, blame it on "the predictably irrational behavior of investors."

    Overconfident investors. Start with overconfidence. Studies have shown that investors have more faith in their ability to forecast domestic returns, even when it's unwarranted -- for instance, when they're presented with equivalent information about both foreign and domestic holdings.

    Loss aversion also plays a role. Investors typically feel pain from losses more acutely than they feel satisfaction from gains. "So you stick with a portfolio that's stable and safe in your own mind, even though empirical evidence says a diversified portfolio would be safer," Foad says.

    Finally, toss in some patriotism. Experiments with investors who spoke different languages and hailed from various countries found that they repeatedly chose to invest in companies with which they identified culturally.

    Is it so bad to invest in what you know, a philosophy espoused by many investment greats? No, but there's a difference between the investment savvy of an insider (or keen observer) and mere familiarity. The former conveys a real informational advantage; the latter doesn't. And the risk of concentrating your holdings -- nationally and, especially, locally -- are huge, says Scott Yonker, a finance professor at Cornell University who has studied home bias in fund managers. "If your local economy tanks, your portfolio tanks just when you lose your job."

    How much in overseas holdings is enough? Research by Vanguard, the giant investment firm, has found that you don't get any additional diversification benefit (chiefly a reduction in volatility) once you top 40 percent in foreign stock holdings. A 20 percent stake, which delivers 85 percent of the benefit, is a reasonable start.

     

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    By Maryalene LaPonsie

    How would you like to have an extra $155,000 to spend during your retirement years?

    You could have at least a portion of that if you worked on minimizing your 401(k) fees, says Yoav Zurel, CEO of cost assessment website FeeX.com. A 2012 study by public policy organization Demos found a median-income, two-earner household will lose nearly a third of their investment return to fees over their lifetimes. "One-hundred and fifty-five thousand dollars are basically evaporating from your retirement savings," Zurel says.

    While the government has taken steps to improve fee disclosure for 401(k) plans, many finance professionals say the current rules don't go far enough. Plus, IRAs don't come with all the same financial protections afforded to 401(k)s.

    The murky waters surrounding retirement fund fees may leave workers feeling confused, but experts say too much money is at stake to let yourself be nickel-and-dimed by excessive charges.

    Fees, Fees and More Fees

    Fees for 401(k) plans come in many forms, with some based on transactions, such as loans and distributions, while others are related to account and fund management. Of these, industry experts say investment management expenses can do the most damage to a retirement portfolio.

    Chad Parks, CEO of Ubiquity Retirement + Savings, runs a company specializing in low-cost 401(k) plans for self-employed workers and small businesses. He says Ubiquity Retirement + Savings is able to keep expenses to a minimum because it focuses on index funds. These, as well as target-date funds, typically have lower expense fees than actively managed mutual funds, which can charge above 1 percent of the invested balance.

    A 1 percent fee may not seem like a lot, but Parks says workers shouldn't be fooled. "A 1 percent difference in fees -- that's literally hundreds of thousands out of [your] retirement account over the course of a lifetime," he says.

    Workers with IRAs have other charges to worry about. In addition to management expense fees, brokers may get a commission off some IRA sales. Beyond that, advisers tack on fees for management services. "People have no clue their adviser is charging them anything," Zurel says. And yet adviser fees can double the amount some investors pay.

    Fee Transparency Rules May Not be Working

    In 2012, the Department of Labor issued rules intended to provide greater transparency of 401(k) fees. Unfortunately, the consensus seems to be the rules are doing little to increase consumer awareness.

    Zurel says that's because while the rules mandate fees be disclosed, it is left up to the companies to determine how best to do that. "[The government] didn't give any instructions on how to write it, how long [the disclosure] should be, etc.," he says. As a result, he's seen some disclosure forms that are pages long with key details buried in the text.

    "A lot of providers are making it difficult to find the fees [in plan documents]," Parks says. However, he adds that about 20 states are considering legislative or regulatory action to either limit fees or increase fee transparency within their borders.

    What's more, there is some talk at the federal level of extending the fee protections currently offered to 401(k) plans to IRAs as well. Parks explains that, traditionally, IRAs have been considered the domain of the IRS and are not subject to the same laws as other pension and retirement accounts. As a result, IRAs don't carry the same fiduciary duty -- that is, the requirement to limit fees and act in an investor's best interests -- as 401(k)s.

    Earlier this year, the Department of Labor issued a proposed rule that would require all financial advisers to work in their clients' best interests. Under the current system, there is nothing to prevent a broker from directing people to investments that carry higher commissions or other rewards for the adviser.

    How Much Is Too Much to Pay?

    While the government wrangles over how to best address the issue of fee transparency, it remains the responsibility of workers and investors to dig into their plan records and compare fee costs.

    As they do so, some people may undoubtedly wonder: At what point do fees go from being reasonable to excessive? That's a gray area, but Parks suggests anything over 1 percent for expense fees could be too much. "There's definitely an argument to be made that even 1 percent is high," he says. "I'd say under half a percent should be the goal in [the next] three to four years."

    Keith Klein, a certified financial planner and owner of Turning Pointe Wealth Management in Phoenix, argues investment decisions shouldn't boil down to a specific fee percentage. For investments tied to index funds, such as the S&P 500, it may be best to go with the least expensive option, but for other investments, fund growth may be just as important. "Does the fee really matter if you get a better return?" Klein asks.

    Reining in Your Retirement Fund Fees

    For those who decide the fee really does matter, there are a number of online tools available to help compare costs and see how funds stack up. Morningstar (MORN), for instance, offers a fund comparison tool that includes information on fees, and Zurel's free website FeeX analyzes the fees associated with specific IRA and 401(k) portfolios.

    "They are shocked time and time again," he says of the feedback he receives from the site's users. "They only thought they were paying load or transaction fees [rather than a management expense fee]." Once FeeX analyzes a user's portfolio, it then recommends a lower-cost plan.

    Klein agrees keeping fees low is a good thing for consumers, but he also says people shouldn't lose sight of the big picture. "Simple things like comparing expense ratios will help [increase retirement savings], but reducing fees on investments can only help so much," he says. "The biggest problem we have is Americans don't save enough."

    In other words, it's great to save 1 percent on investment fees, but you need to have money in your account for it to make a difference. After all, saving 1 percent of nothing doesn't amount to much of anything.

     

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