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DailyFinance.com

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    Financial Markets Wall Street
    Richard Drew/AP
    By Caroline Valetkevitch

    NEW YORK -- Gains in utilities offset a retreat in energy shares Monday, leaving U.S. stocks slightly higher as investors remained nervous about third-quarter corporate results.

    The Dow rose for a seventh straight session, led by gains in UnitedHealth Group (UNH), which rose 2.7 percent at $122.51.

    This week brings results from some toup U.S. banks, among other companies, and investors are eyeing a projected 4.8 percent year-over-year decline in third-quarter S&P 500 earnings, according to Thomson Reuters data. That would be the worst earnings season in six years.

    Given how strong last week was, and we're going to get into the heart of the Q3 earnings season, the market has been relatively resilient.

    A 1.1-percent drop in the energy index was the biggest drag on the S&P 500 as oil prices retreated 5 percent. The utility index jumped 0.9 percent.

    Traders are "taking profits on some very nice moves, particularly on the oil patch," said Jim Paulsen, chief investment officer at Wells Capital Management in Minneapolis. Gains in utility stocks showed "people are getting a little defensive."

    Other analysts said it may be a somewhat bullish sign that the market did not sell off after last week's sharp gains.

    "Given how strong last week was, and we're going to get into the heart of the Q3 earnings season, the market has been relatively resilient," said Michael James, managing director of equity trading at Wedbush Securities in Los Angeles.

    "As long as the tone of the guidance isn't totally negative, I think we have a decent chance of having an OK fourth quarter."

    The Dow Jones industrial average (^DJI) rose 47.37 points, or 0.3 percent, to 17,131.86, the Standard & Poor's 500 index (^GSPC) gained 2.57 points, or 0.1 percent, to 2,017.46 and the Nasdaq composite (^IXIC) added 8.17 points, or 0.2 percent, to 4,838.64.

    Trading volume was light with the bond market, banks and the government closed for Columbus Day.

    Earnings Season

    Focus will be on results from banks this week. JPMorgan (JPM) reports Tuesday, with Goldman Sachs (GS), Bank of America (BAC), Wells Fargo (WFC) and Citigroup (C) posting results through the week.

    Third-quarter earnings for the S&P financial sector are expected to have grown 7.6 percent versus a year ago, Thomson Reuters data showed.

    Along with the banks, several Dow 30 components are scheduled to report results this week, including Johnson & Johnson (JNJ), Intel (INTC) and General Electric (GE).

    Eli Lilly's (LLY) shares fell 7.8 percent to $79.44, its biggest single-day percentage decline in seven years, after the drugmaker said it was scrapping an experimental heart drug.

    EMC (EMC) shares were up 1.8 percent at $28.35 after Dell said it would buy the data storage company in a $67 billion deal.

    NYSE advancers outnumbered decliners 1,584 to 1,441, a 1.10-to-1 ratio; on the Nasdaq, 1,435 issues fell and 1,328 advanced, for a 1.08-to-1 ratio favoring decliners.

    The S&P 500 posted 25 new 52-week highs and 1 low; the Nasdaq recorded 78 new highs and 30 lows.

    About 5.1 billion shares changed hands on U.S. exchanges, below the 7.6 billion daily average for the past 20 trading days, according to Thomson Reuters (TRI) data.

    -Abhiram Nandakumar contributed reporting from Bangalore.

    What to watch Tuesday:
    • The Treasury Department releases the federal budget for September at 2 p.m.
    Earnings Calendar
    These selected companies are scheduled to release quarterly financial results:
    • CSX (CSX)
    • Fastenal (FAST)
    • Intel (INTC)
    • JPMorgan Chase (JPM)
    • Johnson & Johnson (JNJ)

     

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    Expect Scary October but Happy Holiday Markets: Pro

    By Lou Carlozo

    Who needs scary vampires and Frankenstein monsters to spook even seasoned traders when October could bring a month of tricks and no treats? To be sure, a 2015 stock market crash is highly unlikely. But there's always the chance it can be ghoulish for some sectors or off-guard traders.

    'October Surprise' In 1972, Secretary of State Henry Kissinger pointed to Vietnam and declared, "Peace is at hand" in what has become known as the October Surprise, a news event deliberately created to have a deciding impact on a presidential election. But when money is on the line, October has often meant blood in the trading pit. Consider these wretched events.
    • In 1869, October saw jittery markets a week after the first infamous Black Friday, which occurred on Sept. 24 after the gold market collapsed. Harper's Weekly ran an editorial cartoon immortalizing the event on Oct. 16, 1869.
    • With the October Panic of 1907, multiple bank runs and heavy panic selling threatened to engulf Wall Street. In an age before the Federal Reserve, it took a consortium led by tycoon J.P. Morgan to save the market from certain collapse.
    • Wall Street suffered the worst crash in U.S. market history in October 1929, an event so gruesome that starting on Oct. 24, it spawned its own Black Thursday, Black Friday, Black Monday and Black Tuesday. Banks began to fail. Big shots rolling in dough one day were beggars standing in bread lines the next. The Dow lost 89 percent of its pre-crash high in the years that followed the Great Depression.
    As October approaches, here are five signs that the month could usher in market madness.

    1. China Breaks, Wall Street Quakes

    There's no Great Wall of Wall Street that can keep China's economic woes from impacting U.S. markets. The China stock market crash happened less than two months ago, leading to a tumble that's since been dubbed "the Flash Crash of 2015." For brief a period, the Vanguard Consumer Staples fund (VDC) was down 32 percent. That was all many market watchers needed to make them wary of "the China Syndrome."

    "It happened so fast and was so powerful that no one could've predicted it even a week earlier," said Jay Sukits, a clinical assistant professor of business administration finance at the University of Pittsburgh's Katz Graduate School of Business. "But the worst thing you can do is panic: to sell right at the bottom of the market."

    2. Technology Goes Haywire

    The Flash Crash in August also demonstrated that Wall Street can suffer from technology woes. Published reports described how, amidst the commotion, traders were frozen out as they attempted to execute the simplest of moves. The impact was horrific. In six minutes, the Dow suffered its biggest drop in history. Millions of investors were locked out as markets opened and stocks tumbled. Popular trading platforms run by TD Ameritrade, Scottrade and others ran slow or not at all as panic ensued.

    The computer crash scenario isn't nearly as far-fetched as you might think. In July, the New York Stock Exchange computers went down for four hours. Traders began to go green -- not with money or envy but with nausea. The disruption rattled investors already on edge with the Greek debt crisis and an overnight market rout in China. For this to happen in October, you would have to witness a big-time tech foul-up combined with unwelcome news from China, Greece, the European Union or Russia.

    3. Interest Rates Rise

    The possibility of interest rate hikes continues to make investors nervous. Most everyone who owns even a single share of stock has watched the Federal Reserve meetings as though they were lost episodes of "Breaking Bad." Not that the Fed broke bad when it held the line on rates at its September meeting, but a future rate hike is now all but certain. Federal Reserve Chairwoman Janet Yellen indicated Sept. 24 that the Fed still intends to raise its benchmark rate this year.

    Does that late month assertion set the stage for October panic? "I would encourage investors to act as if the Fed has already begun to raise rates," said Robert R. Johnson, president and CEO of The American College for Financial Services in Bryn Mawr, Pennsylvania, and co-author of the book "Invest With the Fed."

    4. Recession Redux

    The Great Recession has been over for six years but it's possible that investors could see a brief rerun in the next few months if foreign turmoil kicks up. "Things are slowing down everywhere and the U.S. won't be unscathed," said David Twibell, president of the Custom Portfolio Group. "In fact, there's a decent chance the U.S. economy will tip into recession sometime in the next few quarters.

    "If so, the U.S. stock market is going to go much lower than most analysts expect. So buckle up, look for buying opportunities later this year but don't jump the gun," he said. "Now more than ever, patience is a virtue."

    Twibell isn't the only one who sees uncertainty in the economy. "There are a number of indicators that point to a potential fall in stock prices as early as October," said Derek Peterson, president and CEO of Terra Tech and a former vice president with Morgan Stanley (MS).

    He pointed out that while the U.S. unemployment rate has fallen to 5.1 percent in August, about 10 percent of workers, or 6.5 million people, are underemployed. Moreover, wages have been flat and 22 million households, or nearly 20 percent, are on food stamps.

    5. October Is Historically Horrible

    While the stock market crash of 1929 is etched in most everyone's memory, investment experts have more detailed knowledge of disastrous sessions where stock prices fell faster than dead autumn leaves.

    "October tends to stick out in people's memories because of the memorable crashes that have occurred," says Scott Laue, a senior adviser with Savant Capital Management in Rockford, Illinois.

    He recalled "Black Monday" on Oct. 19, 1987, when the Dow Jones Industrial Average (^DJI) sank by 508 points, a drop of more than 21 percent. He also cited these events: "The markets bottomed out in 1990; in 1997 the 'Asian Contagion' dropped the Standard & Poor's 500 index (^GSPC) by 11 percent in 4 days; in 2002, there was a technology bubble bottom; and in 2008, after Lehman Brothers filed for bankruptcy, the S&P dropped by 26 percent during October." Yikes. Why not sell everything now and move to a hut in Maui? As Laue put it, "The month of October has had some challenging periods. But we always need to remember that 'past performance is not indicative of future results.' "

    This story, 5 Signs the Stock Market Will Crash in October, originally appeared on GOBankingRates.com.

     

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    Pricing Tricks That Make You Spend More

    By Renee Morad

    If you find yourself reaching for a $39.99 sweater or loading up on $11.99 albums on iTunes, you're not alone. The strategy of ending prices with 99 cents has been around for decades and has worked its magic on almost all of us. But it's certainly not the only trick retailers use when pricing products.

    Merchants use a variety of strategies to get us to spend more -- from labeling prices without dollar signs to setting a per-customer limit. And this takes place at all ends of the spectrum -- from buying food and toys to cars and houses.

    Whether you're shopping for the holidays or for everyday items, even you could be susceptible to simple pricing tricks, warns Money Talks News money expert Stacy Johnson.

    "While you probably don't stop to consider the pennies on a price tag, let me assure you, your friendly merchant does," Johnson says.

    1. Prices ending in 9, 99 or 95. Known as "charm prices," prices ending in 9, 99 or 95 make items appear cheaper than they really are. Since people read from left to right, they are more likely to register the first number and make an immediate conclusion as to whether the price is reasonable.

    When professor Robert Schindler of the Rutgers Business School studied prices at a women's clothing store, he found the 1 cent difference between prices ending in .99 and .00 had "a considerable effect on sales," with prices ending with .99 far outselling those ending with .00.

    While this works right down to the last digit on a product as small as a $1.29 iTunes download, it's also effective on anything from a pair of jeans to a car or house. Homes selling for $299,000 often sell faster than those costing $300,000. The reason? It's under, rather than at, the upper limit of those shopping for houses in the $250,000 -- $300,000 price range.

    Pricing that doesn't end in 9 also tells our minds a story. If a price ends in 4 or 7, for example, it's likely to stand out because it doesn't end in 9. And it subliminally suggests the seller has seriously considered the price.

    2. Dollars without cents. If you see prices with no change, the retailer or restaurateur is sending the message that you're in a high-end place. The implication is that if you're concerned about pocket change, you should move on.

    3. Prices without dollar signs. In Tricks of the Trade: Restaurants, we explained the rationale behind restaurants intentionally leaving dollar signs off menus: It makes customers spend more. In a Cornell study, guests given a menu with only numbers and no dollar signs spent significantly more than those who received a menu with either prices showing dollar signs or prices written out in words.

    The same tactic translates to retail stores. When items are marked, say, "20" without the dollar sign, retailers are hoping customers won't associate the amount with money and thus be less likely to keep a running tally of how much they're spending as they shop.

    4. 10 for $10 trick. Stores push deals like "10 for $10," aiming to get shoppers to buy items like soup, cereal, etc., in bulk. But here's something stores don't advertise: You don't always have to buy in bulk to get the deal. In many cases, you could just as easily buy 1 for $1. It's something worth asking your retailer about before loading up your cart.

    5. Per-customer limits. When stores add limits to products, like "limit 4 per customer," it tricks shoppers into thinking the product is scarce, the price low, or both. It also gives the impression of big demand. You find yourself buying several when you would normally buy just one, to avoid missing out.

    6. "Free" promotion. Retailers know "free" is the magic word. So they roll out deals like buy-one-get-one-free -- sometimes persuading us to buy things we wouldn't normally purchase. Free shipping incentives requiring us to spend a certain amount of money also draw us in.

    7. Simple prices. Simple prices, especially on products susceptible to future markdowns, allow shoppers to quickly compare how much they're saving. It's easy to compute the discount on a product originally priced at $50 that now costs $35, as opposed to an item originally priced at $49.97, now on sale for $34.97.

    The bottom line. These tricks are so simple, it's easy to believe you're too sophisticated to fall for them. Odds are, however, you do, and so do millions of other people. Otherwise, they wouldn't be used. The psychology of shopping affects virtually everything you buy from toys to houses and food to Ferraris.

    But being aware they exist -- and work -- may help you overcome them and make you a smarter shopper.

    -Jim Gold contributed to this report.

    How do you resist pricing psychology? Share with us in the 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!

     

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    the tiny house on a hot summer morning
    nicolas.boullosa/FlickrThe tiny house movement isn't for everyone.
    By John Schmoll

    Tiny house living has been a growing trend over the past few years. In fact, there are numerous television programs that follow supporters of the lifestyle. In an effort to scale back, live in a more environmentally friendly way and be more frugal, tiny house supporters have cast aside sprawling homes in favor of much tighter living quarters. For those of you still unfamiliar with the concept, it's a house that is 500 square feet or less in size.

    According to the American Enterprise Institute, the average house size has increased by more than 1,000 square feet from 1973 to 2013. With that fact in mind, it's understandable why some people pursue the tiny living model instead. A starter home for a couple or small family doesn't need to be nearly 3,000 square feet.

    A smaller house can mean less consumption and mindless spending and a more positive impact on the environment. But there are also other factors to consider when weighing whether it makes sense for you and your budget to join the tiny house movement. Here are three reasons why living in a tiny home can end up costing you more money, not less:

    1. It's not sustainable. The main argument against living in a tiny home is that it's not sustainable. That argument makes sense. Consider some of the following questions: Will your family grow to include additional members? Do you or your family members prefer privacy? What are you going to do when you're too old to climb over your kitchen to get in your bed? Where are you going to store personal keepsakes that you don't want to part with?

    Those are just but a few of the questions to consider. For some people, answering these questions might confirm that a tiny house is right for them. But that will be true for a very small portion of the population.

    2. It's too expensive. How can a tiny house be expensive? Many who pursue tiny house living do so to spend and consume less. When you look at the cost of an average tiny house compared to more traditional homes, you actually see tiny houses often cost more, relatively speaking.

    Forbes reports the average cost of a tiny home is $200 to $400 a square foot. Compare that against what a standard house costs per square foot. The 2010 Census breaks down the average cost of a new, single-family house at just over $84. The highest region of the county, the Northeast, averages just over $110.

    A quick check reveals that a tiny house is anywhere from two to nearly five times higher than the cost of a single-family home. They also tend to come with less land attached.

    3. Potential legal issues. Zoning related to tiny houses pose another issue. As many tiny houses come on wheels, they can run into issues with municipalities who have little to no legal establishments for tiny house dwellers.

    This isn't meant to say living in a tiny house is illegal, per se, but rather that many regions of the country simply aren't set up to allow for tiny house living. Safety issues, potential difficulties hooking up to utilities and more can lead to expensive and time-consuming legal challenges.

    As long as you are mindful of these challenges to frugality, then tiny house living might still make sense for you. The point is to be mindful. Benefits include lower utility bills, less of a temptation to fill your home with expensive things and a lower or no mortgage.

    The desire to live more frugally and be free of debt are great things to pursue. But you can also reduce your impact on the environment while living in an average-sized house.

    Living in a tiny house has been glamorized as a way to cut down. That might work for some people, but for others, the factors mentioned above can change the equation. Be sure to consider all costs, including long-term ones, before deciding to move into a tiny house. Ultimately, the best frugal choice for you depends on more than just the size of your home.

    John Schmoll is the founder of Frugal Rules, a finance blog that regularly discusses investing, budgeting and frugal living. He is a father, husband and veteran of the financial services industry who's passionate about helping people find freedom through frugality.

     

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    Nest egg IOU.
    Getty Images
    By Ellen Chang

    NEW YORK -- Tapping into your 401(k) plan for a loan or a distribution should be considered only as a last resort for consumers who are short on cash.

    Faced with long-term unemployment or an emergency, some consumers turn to taking out a loan or a distribution from their 401(k) if they lack enough savings. A 401(k) loan can appear to be a good option because the interest rates are relatively low, but the ramifications can put you in a jam: if you leave your job for any reason, the loan must be repaid back quickly -- within 60 days. If you are under 59½ years old and miss that mark, you'll typically be on the hook for a 10 percent early withdrawal penalty on the outstanding loan amount, plus federal and state income tax on the distribution.

    When 401(k) Loans Are a Good Option

    The lower interest rates make these loan an attractive option, especially for people planning to pay down their credit cards, which typically carry rates into the teens.

    "For those really serious about paying off credit card debt, by all means, take the 401(k) loan, pay off credit card debt and repay yourself," said Bill DeShurko, a portfolio manager at Covestor and president of 401 Advisor, a registered investment adviser in Centerville, Ohio.

    While the terms for each plan varies, the rate on a 401(k) loan is "usually a few percentage points above the prime rate, which is currently 3.25 percent," said Canon Hickman, regional director at Equity Concepts, a Richmond, Virginia-based investment and financial services company. One benefit is that the interest payments "will go back" to the individual once the entire loan is repaid.

    "It's also helpful for short-term needs if you can't qualify for a traditional loan," he said. "Since there's no underwriting process, getting the money you need isn't limited by your credit score."

    401(k) Loans Are Risky

    The duration on 401(k) loans has a much shorter span, and they must be repaid within five years. These loans aren't a good alternative to pay for large ticket items, because your monthly payments will still remain high.

    "For big expense items, that is typically too short of an amortization period to keep payments low enough to consider a 401(k) loan as an option," DeShurko said.

    In this current environment of stagnant job growth, these loans should be avoided if "there is any chance of wanting to change jobs or being laid off," he advised.

    Borrowing money from your retirement plan for a personal loan isn't a good strategy, because if you not have paid off the entire loan when you quit or are laid off, the remaining balance is taxable as income.

    "Even if things seem solid, I would eliminate personal loans as a valid use for this reason," DeShurko said.

    401(k) Distributions

    All employer-sponsored 401(k) plans have their own rules. Some of them may not allow employees to take loans. In that case, some employees opt to take out an in-service distribution during a hardship or even to pay for their child's college tuition.

    "All plans do not allow for in-service withdrawals, but if they do, its often for financial hardships, which can be college education, first-time homebuying or medical expenses," said Jamie Hopkins, retirement professor at the American College of Financial Services in Bryn Mawr, Pennsylvania.

    Withdrawals from your 401(k) plan are frowned upon, because of the 10 percent early withdrawal penalty, plus federal and state income tax for investors younger than 59½.

    There are some exemptions for the 10 percent penalty tax, and they include people who become disabled or to help pay for reimbursed medical expenses over 10 percent of your adjusted gross income, he said.

    "It is important to remember that access is different than taxation," Hopkins said. "While you might have access to your 401(k) funds through the hardship provision, a withdrawal for college education expenses before you are 59.5, you will not be exempt for the additional 10 percent penalty tax for early withdrawals."

    Another huge catch is that the money you withdraw from your 401(k) can't be replaced, so you can't simply catch up on your retirement savings later on when you get raise or a bonus.

    "Withdrawals are permanent," he said. "Once you take the money out of your 401(k) and use it, you will no longer be able to get that money back into the 401(k) or into an IRA."

    Why Loans Are Better Than Withdrawals

    For consumers who are strapped for cash, getting a loan is a better bet, because there are no limitations on what the purpose of the funds and doesn't get taxed as income.

    "Usually the best way to get access to your 401(k) while you are still working is to take a loan from the plan," Hopkins said. "Loans give you much needed access to funds today without excessive taxes and penalty fees. Remember that the loan will need to be paid back into your account, usually through payroll deductions over a five year period."

    Withdrawing Money From Your IRA Instead

    Although you can't take out a loan from an IRA, you have greater flexibility in accessing funds from it. You are allowed to withdraw money from it any time.

    "In some cases, you just won't have access to the funds in your 401(k) immediately while an IRA is a much more liquid account, so for fast or short-term use it can be the best way to go," Hopkins said.

    Another benefit of an IRA is that if you borrow the money for less than 60 days, you can withdraw money from it and pay it back within that time period without being subject to the 10 percent penalty tax. The catch is that the IRS only allows you to do this once a year and if you fail to repay all the money, it will be treated as a taxable distribution.

     

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    Friends sitting on mattress in furniture store
    Alamy
    By Louis DeNicola

    Buying a mattress is generally an unpleasant experience, with the kind of high-pressure salesmanship associated with buying a used car. Comparison shopping is all but futile; many mattresses from different brands or lines are essentially the same inside.

    Shoppers anxious to make a good investment -- considering how much time they spend lying in bed and the importance of sleep for physical and mental health -- can easily overspend. Certain Serta, Simmons and Royal-Pedic models cost upward of $4,000 and are hardly the fanciest available. Constant "blowout" sales offering 50 percent or more off the list price suggest substantial retailer markups.

    By contrast, a growing number of online mattress sellers price their products under $1,000. They keep costs low by bypassing showrooms and commission-driven sales. The best ones offer high-quality products with free shipping, long test periods, free returns and 10-year warranties. Cheapism.com compared the offerings from six companies with predominantly 4- and 5-star ratings in online reviews.

    The Mattresses. Boutique online retailers generally sell foam mattresses, often a combination of high-density polyurethane (memory) foam and latex foam. Casper, Tuft and Needle, Leesa and Yogabed take a one-mattress-fits-all approach and offer a single product in different sizes.

    Mattresses from Helix Sleep are customized along four dimensions -- feel, support, temperature regulation and point elasticity -- based on answers to a short questionnaire. For couples, both partners can take the survey and the middle point can be used or the mattress can be split into two sides (which costs another $100 for queen size and larger).

    The cheapest option is a foam mattress from Signature Sleep. With 4.5 out of 5 stars based on thousands of Amazon reviews, the 8-inch Signature Sleep Memoir may be a good option for some frugal consumers. A 12-inch version represents a step up in comfort and still offers significant savings over other companies' products.
    Brand Full Queen King Shipping Return Shipping Trial Period Warranty Height
    Signature Sleep Memoir
    $210
    $204
    $296
    Included (from Amazon)
    Included
    30 days
    1 year
    8 inches
    Tuft and Needle
    $500
    $600
    $750
    Included
    Included
    100 days
    10 years
    10 inches
    Casper
    $750
    $850
    $950
    Included
    Included
    100 days
    10 years
    10 inches
    Leesa
    $790
    $890
    $990
    Included
    Included
    100 days
    10 years
    10 inches
    Yogabed
    $799
    $849
    $949
    Included
    Included
    101 days
    10 years
    10 inches
    Helix Sleep
    $800
    $900
    $995
    Included
    Included
    100 days
    10 years
    10 inches

    How does shipping work? Mattresses bought online are rolled and vacuum sealed for shipping. When unpacked, they expand slowly, reaching their general form within a few minutes, although some may take days to reach full size. They sometimes have a strong odor that can take several days to dissipate.

    Dissatisfied customers can return mattresses to many online sellers for a full refund within the first 100 days. Mattresses returned in good condition are often given to local charities, although in some places laws require that they be recycled or thrown out.

    Does one size really fit all? Buying a mattress online can be nerve-racking; it's a product many shoppers are inclined to try before buying. Testing a mattress at home for weeks or even months is likely the best way to see if the mattress is a good fit and many online retailers make this easy.

    But if customers' experiences are a good indication, it is unlikely a mattress purchased online will need to be returned. There might be some slight differences between the products, but all the mattresses listed here consistently earn positive reviews from consumers -- with expectations somewhat narrowed by the fact that the buyers had already decided on a foam mattress (as opposed to a traditional innerspring or other type of mattress).

    Additional Discounts. Online mattress retailers don't have the same negotiable prices and clearance sales found at the local mall. But many offer $50 to $75 off with the use of a coupon code or referral from a "friend" (there are many people eager to supply one online). Some also include add-ons such as a pillow or set of sheets with a purchase.

     

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    Social Media Illustrations
    Chris Ratcliffe/Bloomberg via Getty Images
    By Lehar Maan and Abhirup Roy

    Twitter will lay off up to 336 employees, or about 8 percent of its workforce, as co-founder Jack Dorsey readies to revive growth in the microblogging service provider's user base in his second stint as chief executive.

    The layoffs, primarily in the company's product and engineering functions, come a week after Dorsey took over as permanent CEO.

    Shares of Twitter (TWTR), which had about 4,100 employees globally as of June 30, rose as much as 6 percent in morning trading Tuesday.

    "We feel strongly that engineering will move much faster with a smaller and nimbler team, while remaining the biggest percentage of our workforce," Dorsey said in a letter to employees. "And the rest of the organization will be streamlined in parallel."

    FBN Securities analyst Shebly Seyrafi, however, said the company needed to focus also on "rationalizing sales" along with engineering to achieve its margin targets.

    The general thinking is that Twitter has a product problem, which is why they picked Jack to come in.

    Dorsey, who took over as Twitter's interim CEO in July after Dick Costolo resigned, has been candid about the company's problems.

    Twitter's second-quarter growth in average monthly users was the slowest since the company went public on Nov. 7, 2013. Its stock nearly tripled to a record high of $74.73 in December 2013, but has fallen about 60 percent since.

    "The general thinking is that Twitter has a product problem, which is why they picked Jack to come in. You would normally not be cutting in engineering if you have a product problem. So I scratched my head a little bit on that," Seyrafi told Reuters.

    Since Dorsey took over as CEO for the second time, Twitter has rolled out a "buy now" button that allows users to make purchases and a feature that highlights the best tweets and content.

    The company said it expected about $10 million to $20 million in severance costs and $5 million to $15 million in restructuring charges. Twitter expects to record most of these pretax restructuring charges in the fourth quarter.

    Technology news website Re/code first reported the planned layoffs on Oct. 9.

    Twitter also estimated its third-quarter revenue at or above the higher end of its forecast range of $545 million-$560 million, and adjusted EBITDA at or above the higher end of its forecast range of $110 million-$115 million.

    The company will report its third-quarter results on Oct. 27.

    -Devika Krishna Kumar contributed reporting.

     

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    playboy no more nude women
    Ian West/PA via APPlayboy founder Hugh Hefner signs copies of the Playboy calendar and Playboy Cover To Cover: The 50's DVD box set in Los Angeles.
    By JOHN ROGERS

    LOS ANGELES -- Playboy is about to find out how many people really do read it for the articles.

    The magazine that helped usher in the sexual revolution in the 1950s and '60s by bringing nudity into America's living rooms -- or at least its sock drawers -- announced this week that it will no longer run photos of naked women.

    Playboy has seen its circulation plunge in recent decades as it has fallen victim to some of the very forces it helped set in motion. First it had to deal with competition from more sexually explicit magazines like Penthouse and Hustler. Now the Internet is awash in high-definition porn.

    You're now one click away from every sex act imaginable for free. And so it's just passe at this juncture.

    Playboy has decided that the answer is less skin, not more.

    "You're now one click away from every sex act imaginable for free. And so it's just passe at this juncture," Playboy Enterprises CEO Scott Flanders told The New York Times.

    Starting in March, Playboy's print edition will still feature women in sexy, provocative poses, but they will no longer be fully nude. It will become more like Esquire and other magazines with PG-13-type pictures.

    The Times said the magazine has not decided whether to continue having a centerfold.

    Playboy became famous for publishing nude photos of some of the world's most famous women. Marilyn Monroe was its first centerfold, 62 years ago.

    Although the change represents a major shift for the magazine, it is also the latest step away from full nudity, which was banned from Playboy's website in August 2014. That helped make the site safer for work and public places, and enabled Playboy to get onto Facebook, Twitter and other platforms.

    The magazine has said its online audience soared with that move, averaging a fourfold increase in monthly unique visitors.

    During Playboy's print heyday, readers could plausibly, if not always convincingly, claim they read it for its fiction, journalism and interviews.

    It published the work of such writers as John Updike, Jack Kerouac, Norman Mailer, Ray Bradbury and Joseph Heller, and interviewed the likes of Jimmy Carter, Fidel Castro, Malcolm X, Muhammad Ali, Miles Davis, Frank Sinatra and Bob Dylan.

    One of the magazine's veteran contributors, celebrity interviewer David Rensin, praised the move away from full nudity as something Playboy should have done years ago.

    "It's a good business move. The magazine's got to keep up with the times," said Rensin, whose long list of interview subjects includes Bill Gates, Jerry Seinfeld, Martin Scorsese and, more recently, Lena Dunham and Scarlett Johansson.

    For every newsmaker or celebrity who said yes to a Playboy interview, Rensin told The Associated Press on Tuesday, there were others who said no because they didn't want their words to appear next to or near photographs of naked women.

    The Times said taking full nudity out of the magazine was something the 89-year-old Hugh Hefner signed off on when Playboy editor Cory Jones ran the idea by him.

    "The political and sexual climate of 1953, the year Hugh Hefner introduced Playboy to the world, bears almost no resemblance to today," Flanders said in a statement. "We are more free to express ourselves politically, sexually and culturally today, and that's in large part thanks to Hef's heroic mission to expand those freedoms."

    The shift will be accompanied by other changes in the magazine, including a slightly larger size and heavier, higher-quality paper meant to give the magazine a more collectible feel.

    Playboy's print circulation, measured at 5.6 million in the 1975, is now about 800,000, according to Alliance for Audited Media, the Times reported.

     

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    The headquarter of GE Money Bank, sign Prague Czech Republic
    Alamy
    By Lewis Krauskopf and Ankit Ajmera

    General Electric (GE) took a big step Tuesday in its plan to unload most of its financing operations, saying it has agreed to sell commercial lending and leasing businesses worth more than $30 billion to Wells Fargo & Co. (WFC).

    The U.S. conglomerate has now inked $126 billion in transactions -- more than half of its overall target -- since announcing in April it would seek to reduce its GE Capital financing business to less than 10 percent of earnings as it focuses more on industrial manufacturing. GE Capital accounted for 42 percent of the company's profit in 2014.

    Only one remaining significant GE Capital business in the United States remains: its franchise finance unit, which has about $5.5 billion worth of assets.

    The ability to move fast on its U.S. transactions is critical because once those deals close, GE plans to apply to shed GE Capital's regulatory designation as a Systemically Important Financial Institution, or SIFI, a label it gained after the 2008 financial crisis.

    The sale to Wells, the price of which wasn't disclosed, involves three lines of business: commercial distribution finance, vendor finance and corporate finance.

    Commercial distribution finance offers lending to dealers and manufacturers of durable goods, such as boats, recreational vehicles and off-road vehicles. Vendor finance involves dealer networks for commercial equipment such as copiers, materials handling and construction machines.

    Corporate finance includes asset-based loans and equipment leasing to a range of mid-size and larger companies.

    About 3,000 GE employees of the 3,500 in those businesses will shift to Wells through the deal, GE said.

    The transaction is expected to be completed in the first quarter of 2016, GE said.

    Reuters first reported last week that GE was nearing a deal to sell the massive portfolio of loans to Wells.

    Goldman Sachs (GS) and Credit Suisse (CS) advised GE on the deal.

     

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    Netflix Price Increase
    Elise Amendola/AP
    Netflix (NFLX) moving to increase its monthly rate for new subscribers last week came as a bit of a surprise. Didn't CEO Reed Hastings say just this summer that he wants his company "to take it slow" with any potential increases?

    Obviously, Netflix thinks that the time is right to give the monthly rate for its standard streaming plan a boost. This is the second time in two years that Netflix has jacked up its fees, but -- deep down inside -- you know that you're not going anywhere.

    You will continue to be a Netflix subscriber. Let's go over a few reasons that last week's move may not be enough to scare you away.

    1. The New Rate May Not Apply to You Just Yet

    Keep in mind that Thursday's push to charge $9.99 a month is just for new subscribers. Existing customers won't be hit with the new price until next October, and that's probably a pretty good incentive to stick around.

    If you were planning on canceling the service after you got up to speed with "Orange Is the New Black," you may want to rethink losing your place at $7.99 or $8.99 a month. Netflix seems to have a steady flow of original programming and existing content. You may as well stick around.

    2. Netflix Is Honest About Investing in Its Catalog

    Netflix is justifying the increase by saying that it's investing in content. That's not lip service: We've seen its streaming content obligations balloon from $7.7 billion to $10.1 billion over the past year. Armed with more money being paid by a wider user base, it's a safe bet that the tab will continue to move higher.

    3. Customers Didn't Bail Last Time

    Browse the comments section of stories detailing last week's move and you'll find a few people threatening to cancel. That may seem ominous, but there was a similar level of mumbling last year, too.

    Folks stuck around then. Netflix has 15.5 million more subscribers now than it had a year earlier. It's a safe bet that the count will continue to rise beyond the 65 million streaming accounts that it was watching over at the end of June.

    4. Movies Could Be a Game Changer

    Folks pay more for a single premium movie channel than they do for Netflix. The appeal is mostly that HBO has "Game of Thrones" and Showtime has "Homeland," but those channels also have a steady flow of recent releases.

    Netflix is about to shake up that market. Friday's debut of "Beasts of No Nation" is the first original film that the video service is bankrolling, but it won't be the last. We have several original Adam Sandler flicks, and even the long-anticipated sequel to "Crouching Tiger, Hidden Dragon" that will debut exclusively on Netflix next year. This is a new page in the Netflix playbook, and since it's incremental, it will make it that much harder to quit the platform.

    5. Even at $9.99 It Is Still a Good Value

    It's hard to complain about Netflix at $9.99. Rival Hulu just rolled out a higher-priced ad-free version of Hulu Plus at $11.99, and even that's a reasonable ransom for a growing catalog of digital content.

    Cable bills run several times what Netflix is now charging, which basically is about the price of a single movie ticket. It's true that Netflix going from $7.99 to $8.99 last year and $9.99 now represents a 25 percent overall increase, but if your $100 cable bill went up by two bucks, would folks be bothered by the 2 percent increase? As far as monthly costs go, it's the same thing.

    We may very well get to the point where Netflix is charging too much, but that isn't happening now.

    Motley Fool contributor Rick Munarriz owns shares of Netflix. The Motley Fool owns shares of and recommends Netflix. Try any of our Foolish newsletter services free for 30 days. Check out The Motley Fool's one great stock to buy for 2015 and beyond.

     

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    DEM 2016 Iowa
    Charlie Neibergall/APDemocratic presidential candidates, from left, Bernie Sanders, Martin O'Malley, Hillary Rodham Clinton and Lincoln Chafee.
    By Linda Keslar

    With the larger-than-life personalities that are the Republican candidates dominating the media spotlight as of late, it's easy to forget about that other political party -- you know, the Democrats. Perhaps that's because the Democratic race hasn't been as unpredictable as that of the GOP: Former Secretary of State Hillary Clinton has yet to give up her lead, appearing unbeatable ... for now.

    After all, it's still early in the race. Vice President Joe Biden hasn't officially announced his candidacy. And Sen. Bernie Sanders of Vermont has shed his dark-horse status as more voters become intrigued by his populist stance.

    So as a follow-up to the cheat sheet we brought you last month on the Republicans, here's a rundown on where the Democratic hopefuls stand on five key personal-finance issues -- from taxes to health care -- just in time for tonight's CNN debate.

    They are listed in order of their average poll rankings as of Monday. Tune in tonight to see which candidate could win your vote -- and who might fall to the bottom of your ballot.

    1. Hillary Clinton

    Thousands of pages of her emails are being released every month as part of the ongoing investigation into her use of private email as secretary of state -- yet Clinton is "[still the] most likely nominee for the Democrats," says Dean Baker, co-director of the Center for Economic and Policy Research.

    That said, Clinton's lead over Sanders is narrowing -- so tonight's debate will be crucial to this former FLOTUS hoping to become the next POTUS.

    Here's where Clinton stands ...

    Taxes: Wants to roll out a 39.6 percent short-term capital gains tax rate for top earners on investments held for up to two years (the current short-term capital gains period is one year) -- and a lower, sliding-scale rate (down to 20 percent) on investments held for at least six years. She'd also cap itemized tax deductions for higher earners at 28 percent.

    Also proposes big banks pay a "risk fee" designed to discourage reckless financial practices on Wall St.

    Jobs: Raise federal minimum wage to $12 an hour. Supports President Barack Obama's efforts to expand the definition of who qualifies for overtime. Also advocates for better paid family and medical leave policies.

    Health care: Defender of the Affordable Care Act. Critical of what she sees as drug-industry price gouging -- with a proposal to cap out-of-pocket prescription costs at $250 a month.

    Student loans: Her proposed $350 billion New College Compact plan would provide states with funding to help students pay for tuition, make community college free, cut student loan interest rates, cap loan payments at 10 percent of income -- and forgive loans after 20 years of payments.

    "This would have an incredible impact on [enrollment numbers at] private universities, since she's advocating that the government subsidize tuition at public schools, so students don't have loans," says Donald Williamson, a professor and executive director of the Kogod Tax Center at American University.

    Big-picture economy: Plans to invest federal funds in infrastructure, research and education. Also wants to make America a clean-energy leader by, for instance, installing more than half a billion solar panels across the country.


    2. Bernie Sanders

    The former Vermont mayor, congressman, and second-term senator's straight-talking ways have made him every progressive's hope for the White House.

    "He's the left wing of the Democratic party -- very much a populist," says Elaine Kamarck, a senior fellow in the governance studies program at the Brookings Institution. "He's the 'get corporations' guy, the pro-union guy -- and he's doing extremely well ... to the horror of Clinton."

    Here's where Sanders stands ...

    Taxes: Plans to create a progressive estate tax on people who inherit more than $3.5 million -- and apply a payroll tax on earnings above $250,000 a year to buoy Social Security.

    Also proposes levying a small "Robin Hood" tax on Wall Street trading to help fund public tuition.

    "So every time you trade a stock, there would be a fee -- [even] for individuals," Williamson says. "It's feasible in this day and age, and could be easily collected by brokerage houses."

    Jobs: Raise minimum wage to $15 an hour, and invest $5.5 billion in a jobs program for young people. Would also require companies to provide 12 weeks of paid family and medical leave.

    And wants to put the kibosh on offshore corporate tax havens to keep jobs from going abroad.

    Health care: Would transform the Affordable Care Act into a single-payer system funded by the federal and state governments. Wants to push Medicare to negotiate for lower prescription drug prices, as well as allow Americans to import lower-priced medications from Canada.

    Student loans: With the help of the Robin Hood tax, would make tuition free at public colleges and universities. Also plans to help student loan borrowers refinance at lower rates.

    Big-picture economy: Would spend $1 trillion over five years to improve America's infrastructure -- and break up "too big to fail" banks.

    Also wants to create a U.S. Employee Ownership Bank that would provide loans to help workers buy businesses through employee stock ownership plans or worker-owned cooperatives.


    3. Joseph Biden

    Will he or won't he?

    Apparently, many voters are hoping Biden's answer is "I will!" given his number three spot in the polls -- despite not having officially entered the race.

    Until he decides later this month, his supporters are keeping his spot warm, in the hopes that a third presidential run will be the charm.

    Here's where Biden stands ...

    Taxes: Supports current White House plan geared toward the middle class, including improving tax breaks for middle-income earners, increasing taxes for those making more than $250,000 a year and closing loopholes for top-bracket investors.

    In favor of a 0.07 percent tax on liabilities held by banks, in an effort to discourage them from taking on too much debt.

    "That new bank tax could [raise a lot of revenue] since there are trillions of dollars being traded," Williamson says.

    Jobs: Leads the White House's Ready to Work Initiative to help workers develop skills for higher-paying jobs. Supported Gov. Andrew Cuomo's push to raise New York's minimum wage to $15 per hour.

    "He's been pro worker, pro union," says Baker, noting that Biden was a big proponent of Obama's proposal to raise the salary threshold for who qualifies for overtime.

    Health care: Played key role in campaigning for the Affordable Care Act and raising public awareness around the health exchanges.

    Student loans: Supports Obama's plan for two years of free community college. And was chair of the task force that created rules expanding income-based repayment plans and forgiving loans after 20 years.

    Big-picture economy: Took the lead on implementing the American Recovery and Reinvestment Act, a stimulus package aimed at promoting infrastructure projects across the country.

    Will likely continue to run on White House platform of strengthening the middle class.

    "I would expect he'd run on the Obama administration's record," Baker says. "That doesn't mean he has to say he'd back everything Obama did, but I'd expect that would be the main theme of his campaign."


    4. Jim Webb

    Despite the fact that Webb is a Vietnam War hero, former Virginia senator and author of 10 military-themed books, it's likely that many viewers will be getting their first glimpse of him at tonight's debate.

    "We've heard little about him, so it's hard to take him seriously," Baker says.

    That said, Webb knows a thing or two about being a long-shot -- he won his Senate seat by upsetting an incumbent Republican.

    Here's where the more conservative Webb stands ...

    Taxes: Favors raising capital-gains taxes -- but is against raising regular income taxes. Wants to reform and simplify the tax code to focus less on income and more on consumption.

    Jobs: Webb's a lifetime union member, so he's pro labor and supports workers' collective bargaining rights. Also supports job training and creation through infrastructure spending programs, similar to the Civilian Conservation Corps created by Franklin D. Roosevelt.

    "That's a common Democratic [platform] -- having some sort of universal national service," Kamarck says. "But you always run into trouble from organized unions with this, over fear of undercutting union jobs and pay."

    Health care: Voted for the Affordable Care Act, but was critical of its implementation -- and voted for more than a dozen Republican-sponsored amendments to the bill.

    Student loans: Was the only Democrat to vote against his party's 2012 bill to keep student-loan interest rates from doubling. Favors public service as an incentive for student-loan forgiveness -- as senator, he created a bill that expanded education benefits for veterans.

    Big-picture economy: Supports cutting the federal budget and reducing the national debt. Advocates for the construction of the controversial Keystone XL pipeline.


    5. Martin O'Malley

    The former Baltimore mayor and two-term Maryland governor is known for inspiring the ambitious politician character Tommy Carcetti on the HBO series "The Wire."

    His biggest campaign hurdle, however, may be that "he's hard to distinguish from Clinton," Kamarck says. "[So] he wants to challenge Hillary from the left."

    Here's where O'Malley stands ...

    Taxes: In favor of raising capital-gains taxes, and supports a tax on Wall Street transactions. To expand Social Security, would lift the cap on the payroll tax for those earning more than $250,000.

    Also isn't hesitant to raise taxes to fund government projects: As governor, imposed 40 new state taxes to help balance the budget -- like a "rain tax" on property owners to help fund storm-water management.

    Jobs: Would raise minimum wage to $15, and increase the cap on overtime pay to $1,000 per week. Also plans to help cut the gender pay gap in half through paycheck-fairness laws and better access to family leave and affordable child care.

    Health care: Advocated for the Affordable Care Act. As governor, overhauled the Maryland hospital system to an "all payer" model, in which all patients pay the same amount for services based on rates set by the state. Has said he'd like it to be a health care model for the entire country.

    Student loans: Would allow borrowers to refinance student loans at lower rates, and automatically enroll grads in income-based repayment plans. Also believes private borrowers should be allowed to refinance into federal programs.

    Big-picture economy: Wants to increase the number of Americans with adequate retirement savings by 50 percent over eight years by expanding Social Security and access to employer-based retirement plans.

    Would revive the Glass-Steagall Act, which separated investment and commercial banking activities. And wants to achieve 100 percent clean energy by 2050 through a clean-energy job corps.


    6. Lincoln Chafee

    Like Webb, the former mayor, governor and senator from Rhode Island has flown under the radar.

    He's known for taking over his late father John Chafee's Senate seat in 1999, and for crossing multiple party lines -- he's been a Republican, an independent and a Democrat.

    Here's where Chafee stands ...

    Taxes: Would reduce tax cuts and loopholes for the wealthy and corporations -- and add a new 45 percent tax bracket for those earning more than $750,000. Those taxes would fund a $1,000 increase in the personal exemption.

    Jobs: Plans to raise the federal minimum wage to $10.10. Supports passage of a Paycheck Fairness Act to close the gender wage gap.

    Health care: Supports the Affordable Care Act, but wants to expand it to provide universal coverage. As senator, wrote legislation that pushed for insurers to cover pre-existing conditions.

    Student loans: Wants to make higher education more affordable by increasing Pell grants and reducing student-loan interest rates.

    Big-picture economy: Supporter of immigration reform that provides a path to citizenship. Opposes the Keystone XL pipeline -- as an environmentalist, wants to reduce greenhouse gases.

    But he's perhaps most infamous for his push to move the U.S. to the metric system.

    "I don't think that would go very far," Baker says. "We did have a commitment to do that back in the '70s -- and people rebelled against it."

     

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    Financial Markets Wall Street Twitter Layoffs
    Richard Drew/APThe Twitter logo appears on the floor of the New York Stock Exchange. The microblogging site said Tuesday it would lay off about 8 percent of its global workforce.
    By Caroline Valetkevitch

    NEW YORK -- U.S. stocks fell Tuesday, with the Dow snapping a seven-day winning streak, on renewed fears of slowing growth in China and another bout of selling in biotech shares.

    Biotechs led the S&P 500 and Nasdaq lower and the S&P health care index, down 1.2 percent, had the biggest losses among S&P sectors, followed by industrials, down 1.2 percent. The Nasdaq biotech index was down 3.2 percent, extending recent declines.

    There's a little nervousness about earnings reports that we'll be seeing over the next couple or three weeks.

    Worries about third-quarter earnings reports continued to weigh on sentiment. S&P 500 companies are expected to report a nearly 5 percent fall in profit, the biggest decline in six years, according to Thomson Reuters data.

    "There's a little nervousness about earnings reports that we'll be seeing over the next couple or three weeks," said John Carey, portfolio manager at Pioneer Investment Management in Boston.

    "The international situation continues to weigh on people's minds, and commodities were weaker earlier. In the absence of any strong new economic data or blow-away type earnings results, people are still cautious, waiting for the Fed to decide on whether it's going to raise rates or not," he said.

    After the bell on Tuesday, shares of Intel (INTC) were nearly flat in choppy trade following results, while shares of JPMorgan Chase (JPM), which also reported results, were down 1.7 percent.

    Earlier in the day, data showed Chinese imports fell 20 percent in September due to weak domestic demand, indicating growth in the world's second-largest economy was sputtering.

    The Dow Jones industrial average (^DJI) fell 49.97 points, or 0.3 percent, to 17,081.89, the Standard & Poor's 500 index (^GSPC) lost 13.77 points, or 0.7 percent, to 2,003.69 and the Nasdaq composite (^IXIC) dropped 42.03 points, or 0.9 percent, to 4,796.61.

    A devaluation of the yuan currency in late August triggered a steep sell-off in global equities. A bounce back in commodities has helped stocks recover in recent sessions, as well as investors' bets that the Federal Reserve will keep rates near zero until next year.

    On tap this week are results from the big banks and other earnings bellwethers, including Goldman Sachs (GS), Bank of America (BAC) and General Electric (GE).

    Shares of Ryder System (R) were down 9.3 percent at $68.63 -- the biggest percentage decliner in the S&P 500 -- while FMC Corp. (FMC) was down 3.1 percent at $36.35, both following disappointing forecasts late Monday.

    About 6.1 billion shares changed hands on U.S. exchanges, below the 7.5 billion daily average for the past 20 trading days, according to Thomson Reuters (TRI) data.

    What to watch Wednesday:
    • At 8:30 a.m., the Labor Department reports producer prices for September, and the Commerce Department reports retail sales for September.
    • The Commerce Department reports business inventories at 10 a.m.
    • The Federal Reserve releases its survey of regional economic conditions for end of summer and early fall at 2 p.m.
    Earnings Season
    These selected companies are scheduled to release quarterly financial results:
    • Bank of America (BAC)
    • BlackRock (BLK)
    • Delta Air Lines (DAL)
    • Netflix (NFLX)
    • PNC Financial Services (PNC)
    • Wells Fargo (WFC)

     

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    Se5_Ep271_SmartAppliances.Mov
    As our devices get smarter, our appliances are starting to catch up. Smart appliances actually work in similar ways, by doing tasks for you so you don't have to. But is buying a smart appliance a dumb investment? Let's look at the pros and cons.

    First, a great advantage to smart appliances is their energy savings. Smart machines like dishwashers, water heaters and thermostats are especially good at reducing energy usage. Some of these devices can even determine the best time to run base on electricity peak hours on your grid. You'll quickly see the savings on your electric bill.

    Next, while some smart appliances are worth buying, you may want to hold off on others. Machines like refrigerators, ovens, washers and dryers have also been given the energy saving treatment, but in some cases you're paying for extra features that can be done just as easily with your smartphone. For these gadgets, do a little more research before you buy.

    Before you buy a smart appliance, consider if it has features you'll be using in the long run. By smartening up on these devices, you'll be sure to make a wise investment.

    View Poll

     

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    Distressed woman on telephone
    Getty ImagesHere's how to decide if you should cut ties with your landline.
    By Geoff Williams

    Consumers have been dumping their landlines for years now, but if you're still hanging onto yours, you aren't crazy. There are good reasons to keep it.

    Still, 41 percent of U.S. households only have a wireless phone, according to a study that came out last year from the National Center of Health Statistics.

    If you're looking for reasons to keep or ditch your landline, let's spell out some of the pros and cons.

    Con: Landlines can be expensive. According to CostHelper.com, the average cost for a landline is $15 to $30, which may not sound like much, but that's for basic service. Odds are, you have caller ID, call waiting and voice mail, and your price is considerably higher. Throw in taxes and additional fees, and your price goes up as well.

    If you bundle with your cable or Internet, your phone bill may go down, but unfortunately, it may still feel expensive, since a cable/Internet/phone bill can easily go north of $100 or even $200 a month.

    I've known plenty of people who run successful businesses with only a mobile phone, but I don't think it's for me. I need the hard line option.

    Pro: Landlines sound better. You may disagree, but talk with your friends and family, and you'll likely come up with a consensus that the landline sounds a little better -- and if nothing else, you'll have far fewer dropped calls on a landline.

    That's why Heath Fradkoff, who lives and works in Brooklyn, recently added a landline to his home office after starting his own public relations business, Ward 6 Marketing.

    "I've known plenty of people who run successful businesses with only a mobile phone, but I don't think it's for me. I need the hard line option," Fradkoff says, adding: "Honestly, it's mostly for sound quality. I'm old enough to remember those late-80s Sprint long distance commercials with the pin dropping. Sound quality used to be really important to consumers. Since the mobile revolution, however, that's gone mostly by the wayside."

    Con: Landlines are conduits for spam. In 2003, the Federal Trade Commission launched a "Do Not Call Registry," which allowed consumers to put themselves on a list, stating that they didn't want to receive phone calls from telemarketers. For a while, it seemed to have stopped telemarketers cold.

    But it appears to have been an epic failure. In 2013, apparently the last numbers available, there were more than 3.7 million complaints to the FTC about telemarketers (and think about all the consumers besieged by calls who didn't complain).

    According to the Federal Communications Commission, it's illegal for telemarketers to call you on your cellphone. The phone industry might want to consider trying to get similar regulations in place for landlines.

    "Marketers killed it for us. Ironic, considering my business," says Ben Landers, a resident of Gaithersburg, Maryland, and the owner of a company that specializes in online marketing. "When we had a home phone, the only calls we ever received were from marketers."

    Landers got rid of his landline five years ago and has thought about getting his landline reinstalled, but because of all the telemarketing calls, he says, "I highly doubt we'll ever switch back."

    On the other hand, you may enjoy the marketing calls, to an extent. Brent Csutoras, a business owner in Boca Rotan, Florida, says when Caller ID shows that the call isn't coming from someone he knows and he is positive it's a telemarketer, he lets his young son answer the phone.

    "It makes for a great experience as well for my 3-year-old, who loves answering the phone," Csutoras says. "When it rings, I just let him have fun with it."

    Pro: They're useful in emergencies. The reason Landers has considered returning a landline to his house is because he worries about what might happen in an emergency, and what might happen if his kids were somehow trapped in their room and needed to call for help.

    "Back in the old days, there would almost certainly be a phone in the room. Today, that's not the case," Landers says, adding that he realizes it's unlikely that his kids would really wind up trapped in their room and need a phone.

    Still, Frankie Wood-Black, an owner of Sophic Pursuits, a firm that specializes in environmental and safety regulatory compliance in Ponca City, Oklahoma, says, "From an emergency-planning perspective, keep the landline. Not a [Voice over Internet Protocol] or cell -- the landline, and make sure that it is hard line connected or at least has that ability. During [hurricanes] Katrina and Rita, when all other power and infrastructures went down, the landlines still worked," she adds.

    Rhonda Moret, a public relations professional who lives in Del Mar, California, agrees with Wood-Black. She says she didn't have a landline to save money, but after going on a nighttime run in December of last year with her Siberian husky, she missed a pothole in the road and fell flat on her face. She hobbled back home with a broken ankle, half in shock and her face covered in blood, and her 10-year-old was able to use Moret's cellphone to call 911.

    After that incident, and after her daughter received a 911 hero award from the San Diego Fire Department, Moret had a landline installed. She figures she was lucky that time. She wonders now: "What if we couldn't find a cellphone, or the cellphone is dead? These situations are realities which I would rather not deal with if and when we are dealing with a situation where we need help."

    Con: It may be more expensive to drop the landline. It will drive you crazy if you think about it for too long, but with bundling phone services into your Internet and cable, you may find that when you try to drop your phone service, the price goes up.

    Csutoras says his landline phone service is bundled with his cable and Internet, and he recently looked into dropping it. But as is the trend lately, companies often charge you more if you don't keep your phone connected to your home, which was the case for Csutoras, and he decided to keep his.

    Until that falls out of favor, it may be a while before it's the end of the line for landlines.

     

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    Florida Houses Ahead Of Existing Home Sales FiguresBy Farran Powell

    NEW YORK -- Similar to stock brokers feeling queasy over their job security with the advent of online trading, real agents are feeling anxious given that their commissions are expected to change with the rise of consumer savvy real estate sites. The role of this long-standing middleman is expected to evolve with most multiple listing services available online. With many people finding information online, new models for home sales are changing commission rates -- creating some savings for sellers and buyers.

    A recent survey conducted by SurveyMonkey Audience for Seattle-based Redfin, an online real estate brokerage, finds that 17 percent of people bought a house in the last two years without an agent. The same survey also reports that discounting commissions is widespread. A third of those polled said they received some form refund or commission savings of $500 or more.

    Listing a typical home with a conventional Realtor costs around 6 percent of the sales price. On a $230,000 home, which is close to the National Association of Realtor's median value for a single-family home, that commission would tally up to $13,800.

    Selling a home without a Realtor is estimated to save the owner at least 3 percent in commission fees.

    Recent research by ForSalebyOwner.com, a site for self-directed real estate sales, reports around a half of Americans would consider selling their homes themselves. The same report found that 55 percent of Millennials would like to use the "for sale be owner" model to sell their home despite representing only 21 percent of sales on the site. Generation X leads the majority of for-sale-buy-owner sales.

    "We're seeing a dramatic transformation of the real estate industry with today's consumers, especially millennials exerting more control over the buying and selling process than we have ever seen before," said Lisa Edwards, director of business strategy at ForSaleByOwner.com. ForSaleByOwner.com says its site increased its listings by over 57 percent during the height of the spring selling season this year. The majority of the site's sellers are in Northeast, living in major metro cities -- such as New York, Boston and Philadelphia.

    A for-sale-by-owner sale is more likely to happen in an urban area, according to the National Association of Realtors.

    "In the past, data and tools like MLS weren't available to consumers," Edwards said. "Today [sellers] can quickly understand market conditions by using free online pricing tools, reviewing recently sold homes and homes currently for sale online without the help of an agent."

    But, some real estate experts say savvy buyers know about the 6 percent commission savings and will try to negotiate sellers out of that extra cash. The advantage of using Realtors is they know a hot market, handle the paperwork and coordinate the effort to complete the sales transaction.

    Redfin charges a 1.5 percent fee to sellers. The 1.5 percent transaction can be significant savings compared to the traditional 3 percent charge on the seller side. On a $500,000 home, that discounting represents a $7,500 saving.

    In some markets, such as the Washington, D.C., metro area, Redfin only charges sellers 1 percent for their listing.

    The [commission] savings is gaining market share," says Rachel Musiker, spokeswoman for Redfin."We use technology, so our agents can work more efficiency. And, so consumers shouldn't have to pay the 3 or 6 percent commission."

    The tech-driven real estate brokerage firm's biggest markets are Seattle and the Washington, D.C., metro area. The brokerage now operates in some parts of New York City's boroughs, such as the Bronx and Brooklyn, but is still working on its plans to bring its service to Manhattan.

    Musiker says that the growing tech in the real estate is causing the industry to respond and change.

    "Real estate agents are reacting to more competition in the market," the Redfin spokesperson said, adding that traditional brokers are offering different forms of refunds and commission reductions to be competitive.

     

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    Applying or cosigning for a credit card with your loved one has its risks. The credit card and its activity appear on both of your credit reports, and you're both responsible for the balance. If your loved one has good financial habits, however, a joint credit card account comes with a lot of perks.

    From helping you combine your finances to building credit and racking up rewards, a joint credit card is a great financial tool for couples. Here are seven reasons why you should open one.

    1. Earn Credit Card Rewards Faster A credit card rewards program offers one of the fastest and simplest ways to earn freebies. If your card features this perk, you can earn points or cash back on every purchase. After you accumulate enough points, you can redeem them for merchandise, travel, statement credits or cash. But even if you're earning one point or 1 percent cash back on every dollar you spend, it takes time to accumulate rewards. A joint credit card, on the other hand, helps you rack up more points.

    Since you and your loved one will have access to the same credit line, you will have more opportunities to earn points. In this way, a joint credit card can be an excellent tool if you and your partner are planning a vacation and want to accumulate as many points as possible to redeem for free airline tickets, hotel stays and more.

    2. Boost Both of Your Credit Scores A joint credit card appears on both of your credit reports and affects both of your credit scores. This can be a good or bad thing depending on how the two of you manage the account. It might be your partner's responsibility to send payments each month. Just know that if he consistently makes late payments, your credit report will reflect this.

    On the other hand, if you both manage the credit card responsibly by paying the bill on time and only charging what you can afford, both of your credit scores will benefit. A higher credit score means you'll be able to qualify for lower rates when applying for financing in the future.

    3. Qualify for Credit Cards With Lower Rates

    One in three U.S. adults say their households carry credit card debt from one month to the next, according to the 2015 Consumer Financial Literacy Survey prepared for the National Foundation for Credit Counseling. If you don't pay off your credit cards every month, it's important to find a card with the lowest rate possible. This reduces interest charges, allowing you to pay off balances faster.

    Unfortunately, if you have less-than-perfect credit and apply for a credit card alone, you're not likely to get a low-rate card. The higher your rate, the more you'll pay in the long run. If you apply for a joint credit card with your partner, however, and they have excellent credit, you might qualify for a card with a lower rate and higher credit limit.

    Your credit card company will evaluate both of your credit scores when determining whether to approve your joint credit card application. In some cases, one applicant's good credit history can compensate for the other applicant's fair or bad credit history.

    4. You Are More Accountable for Purchases

    If you have your own credit card and you're the only one managing the account, it's easier to overspend, purchase things you don't need and ring up a huge credit card bill. When you share an account with your partner, there's an accountability factor.

    "It just gives both parties a reason to pause a moment and give some extra thought before making a purchase. You know that another person will see what is being charged," said Joan Fradella, a certified family mediator at Divorce thru Mediation. "It causes you to think about whether you are being reasonable about your total charges compared to income."

    When you're fully aware that another person will see every single charge you make -- and likely ask questions or become upset over unreasonable charges -- you're liable to be more responsible, forgoing impulse purchases and maintaining a reasonable balance.

    5. Joint Credit Card Accounts Are Easier to Close

    Nobody wants to think about death, but it's an unfortunate part of life. If your spouse dies, you might decide to close all of his or her personal credit card accounts after paying off the balances. But when you're not an account holder, shutting down an account for someone isn't as simple as calling the credit card company and making a request.

    It's faster and easier to close a credit card account when you're a joint account holder. Marcia Noyes, director of communications at Catalyze, learned this lesson the hard way when her husband died in 2013. "With a joint credit card, one person can shut down the account when the other dies," she said. "Without it being a joint account, it takes an act of Congress -- death certificate, Letters of Testamentary and your information."

    6. Manage Shared Expenses More Easily

    If you share expenses with your spouse, such as groceries, entertainment or recreation, using a joint credit card might be one of the best ways to track and split expenses down the middle. Since everything appears on the statement, you'll know exactly what was spent between the two of you. You and your partner don't have to worry about exchanging money or writing each other a check. Simply use the joint credit card and then pay off your share of the balance.

    7. You Have Full Privileges and Access

    Getting a joint credit card isn't the only way to share an account with someone. You can also add someone as an authorized user to one of your credit cards. This person can use your credit card account, and this account might appear on his credit report -- allowing him to benefit from your good credit habits. But since this person isn't a primary account holder, he doesn't receive the same privileges as a joint account holder.

    He can't call the credit card company to inquire about balances, request a credit limit increase, ask for a lower rate or dispute a charge. A joint account holder, however, has full account privileges.

    Some people might discourage you from getting a joint credit card account because of the inherent risks. But depending on your situation, a joint account can be financially beneficial. When opening your joint credit card make sure you understand the risks and benefits, and only share a credit card if you trust that the other person will use the account responsibly.

    This story, 7 Perks of a Joint Credit Card, originally appeared on GOBankingRates.com.

     

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    By Jason Notte

    NEW YORK -- Well, U.S. workers, feel better: you aren't the only ones failing to make long-term financial plans.

    The deVere Group, a U.K.-based financial advisory group recently surveyed 650 people around the world who aren't using a financial adviser. They asked simply, "Do you plan your finances a year ahead, one to three years ahead, or three years or more ahead?" Of that group, 71 percent chose the first option.

    Many people believe the myth that planning for the longer-term is more difficult than planning for the short term -- this is not true.

    Granted, that's an improvement from 2013, when the same poll had 82 percent of respondents provided that answer. However, when nearly three-quarters of a group from the U.S., U.K., Spain, Australia, France, South Africa and the United Arab Emirates gives that answer, it makes the financial advisers a little nervous.

    "Many people believe the myth that planning for the longer-term is more difficult than planning for the short term -- this is not true," said Nigel Green, deVere Group chief executive and founder, when those findings were announced "The difficult part is starting to plan long-term. But procrastination will leave you in limbo and is likely to cost you dearly." The upside -- sort of -- is that it isn't just the U.S. that isn't planning or saving. Earlier this month, a survey by GOBankingRates found that 62 percent of U.S. bankers have less than $1,000 in their savings account. Sure, nobody wants to stash cash in accounts that earn some of the lowest yields in banking, but the GOBankingRates folks see that revelation as a symptom of a much larger illness.

    "It's troubling how many Americans aren't thinking about long-term planning or retirement, with little to nothing stashed away in a savings account," said Casey Bond, editor-in-chief of GOBankingRates. "Saving money is an uphill battle for many, but there are a number of simple ways people can consistently grow their nest egg over time, such as automating their savings. Even a small contribution is better than nothing at all."

    Savings Delayed

    Procrastination is something U.S. workers excel at, and the financial straits of the recent economic crisis haven't helped matters. According to a survey earlier this year by financial firm Edward Jones, 45 percent of non-retired U.S. workers aren't saving for retirement. We put it off by age (90 percent of young workers say they'll start saving in their 30s or earlier, but only 64 percent of folks ages 35 to 44 follow through), we put it off until the kids get older (39 percent of singles aren't saving, compared to 51 percent those in a household of three or more) and, according to a survey by financial services firm Franklin Templeton, we put it off altogether (30 percent of those 18 to 24 say they'll never retire).

    But why is the rest of the world suddenly in the same year-to-year financial scenario. Well, there was a reason why it was a global economic crisis. Thanks to austerity measures implemented by countries around the world, some of the more socialized benefits offered to retirees just aren't available anymore.

    "Long-term financial planning has never been more important because governments are being forced to cut age-related benefits, meaning that in the future most people will not be able to rely on governmental support to the same extent they have done in the past, so we have to be more financially self-reliant in retirement," Green says. "Plus, as we're all living longer, and as such the money we accumulate throughout our lives has to go further than it ever has done before."

    Also, much of the joblessness that swept Western nations over the duration of the crisis affected the youngest workers. The Principal found that 63 percent of workers ages 23 to 35 began saving before they turned 25, but fewer than a third saved 10 percent of their salary. With cash tight thanks to either joblessness or settling for low-wage employment until better positions opened up, long-term saving for retirement competed with rent (65 percent), food (38 percent) transportation (30 percent), student loans (20 percent) and credit card debt (16 percent) for their dollars.

    Obstacles to Saving

    "Many millennials may see these large expenses -- especially student loans and other debt -- as primary obstacles to saving anything for retirement," says Jerry Patterson, senior vice president of retirement and investor services at The Principal. "But in most situations, it's possible and necessary to both save for retirement and pay down debt by creating a plan and sticking to it."

    According to Voya Financial, nearly 6 in 10 (59 percent) working Americans say they are very or extremely concerned about outliving their savings in retirement and 74 percent have never calculated their monthly retirement income needs. However, if they just think ahead a bit, they can start making sound savings decisions now. A diverse and somewhat non-conservative portfolio helps.

    "Generally, people should have at least 70 percent of their annual income in order to have a secure retirement with a similar lifestyle," says James Nichols, head of retirement income and advice strategy and Voya Financial. "Of course, some people will need more than that and some will need less depending of their lifestyle desires, health expenses, retirement plans and other factors. You may have 30 years or more of retirement, so your money needs to continue to grow during that time."

    Sometimes, that saving means sacrificing in the short-term in favor of your long-term goals. Joe Boyle, a retirement coach with Voya in Beverly Hills who specializes in helping Millennial clients, notes that some of his younger clients with good jobs, who can afford to live on their own, make the choice (in concert with their parents) to live at home so that they can save money towards buying their first home. In one case, a younger client who is an attorney had no student loans or credit card debt lived at home for three years to save a 20 percent down payment on a home near her office.

    "She said that 'there were some small sacrifices' to her social life that came with living with her folks, but that it allowed her to buy her first home and it was definitely worth it," Boyle says. "The trade-off for many millennials living at home is giving up some of their independence today for greater financial freedom tomorrow."

    With The Principal's survey noting that, though 84 percent of millennials believe that they should be independent by age 25, many still rely on parents for help with their cellphone bill (12 percent), car insurance (8 percent), health insurance (7 percent) and rent (7 percent). However, deVere's Green warns that current conditions shouldn't always put a damper on future plans.

    "If you're serious about reaching your big, life-enhancing financial objectives," he says, "you must think and plan with a perspective that's longer than 12 months."

    This article is commentary by an independent contributor.

     

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    Getty ImagesIn places like Dallas, Minneapolis and Phoenix (shown above) retirees can pay for housing, food, transportation, health care and utilities on $100 a day.
    By Emily Brandon

    You can retire sooner or with less savings if you are willing to significantly cut your expenses. One way to quickly lower your retirement costs is to move to a place with a low cost of living.

    Reducing your housing costs can add to your retirement savings and make your ongoing bills more affordable. "Downsizing to a less expensive, more manageable house has numerous benefits," says Paul Staib, a certified financial planner for Staib Financial Planning in Aurora, Colorado. "You could use the proceeds from the sale of your current home to add to your retirement savings, thereby providing a bigger source of retirement income, while significantly potentially cutting other housing-related costs, including property taxes, insurance, utilities and ongoing maintenance and management costs."

    U.S. News analyzed U.S. Census Bureau and Bureau of Labor Statistics data to determine where a retiree could cover his or her basic expenses, including typical costs for housing, food, transportation, health care and utilities, with less than $100 a day, or $36,500 a year, in retirement income.

    It's important to note that in many of these cities $100 a day just barely covered these five basic expenses. The analysis does not factor in the costs for recreation, clothing, consumer goods, hobbies or travel. A little extra income from savings or a part-time job would make you much more comfortable living in many of these places.

    Housing costs are the biggest driver of retirement expenses, but they also vary considerably based on whether retirees rent, own or have paid off their mortgage, with homeowners who are living mortgage-free paying the lowest housing costs. "You can't eliminate housing costs 100 percent because you still have property taxes to pay and insurance, but you could live with less if you find someplace that is cheaper for you to live or if you can get rid of your mortgage," says Edward Fulbright, a certified public accountant and CEO of Fulbright Financial Consulting in Durham, North Carolina. It's also important to factor in the transaction and moving costs when you relocate to a new city.

    Here are 10 places where it's possible to cover basic monthly costs on just $100 a day:

    Aurora, Colorado. Aurora has 97 parks and over 5,000 acres of open space for hiking, biking and fishing. The Aurora Center for Active Adults has exercise equipment and fitness classes that Aurora resident seniors can use for as little as $18 a month, with further discounts available if you purchase your membership as a retired couple. The city also has a day trip program for retirees that provides low-cost excursions that might include transportation to a local hike, sporting event, concert or tour. Health care is available at the University of Colorado Hospital. Housing costs for retirees are $1,623 with a mortgage, $904 for renters and just $440 monthly with a paid-off house.

    Cleveland. Located on the shore of Lake Erie, Cleveland's reasonable housing prices for retirees include a median of $1,278 monthly with a mortgage, $652 a month if you rent and $478 each month if you own a paid-off house. And the bargain housing costs get you a high quality of life. The Cleveland Clinic is a top-ranked hospital for geriatric care. Music lovers will delight in attending events at the Rock and Roll Hall of Fame or the many free concerts at the Cleveland Institute of Music. And Case Western Reserve University has an audit program for senior citizens that permits those age 65 and older to take courses at a reduced tuition rate of $40 a credit hour.

    Dallas. This city in the Lone Star State has many innovative programs specifically for retirees. The Senior Source manages the Retired Senior Volunteer Program, which helps connect seniors to volunteer opportunities that match their desires and talents. The Dallas Arboretum and Botanical Garden holds weekly events specifically for people ages 65 and older and offers a senior discount on admission. And the University of Texas Southwestern Medical Center is nationally ranked for its geriatric care. Retiree renters in Dallas pay a median of $911 a month, while homeowners pay $1,544 monthly if they have a mortgage or $518 a month if they are mortgage-free. Texas doesn't have a state income tax, but remember to factor in the property tax bill when purchasing a home.

    Durham, North Carolina. Durham is the home of Duke University, which includes Duke University Hospital, and is one of the corners of the research triangle, known for its high-tech research and development. People ages 65 and older are eligible to ride the Triangle Transit bus system free of charge. There's also an affordable door-to-door van option for people with disabilities. Median housing costs for older homeowners are $1,420 with a mortgage and $456 without one. Retiree renters pay a median of $857 in monthly housing costs.

    Jacksonville, Florida. Jacksonville provides pleasantly mild winters and is just a short drive from white-sand Atlantic Ocean beaches. But housing in Jacksonville costs far less than many other parts of Florida. Retirees age 65 and older pay a median of $910 monthly to rent an apartment in Jacksonville. That cost climbs to $1,340 among homeowners with a mortgage, but that dips to $433 for retirees who have paid off their house. There's also no state income tax in Florida.

    Kansas City, Kansas. There are many ways to live on less money in Kansas City. Google Fiber built a pilot fiber optic network in Kansas City, and after a one-time $300 installation fee, basic broadband is free for up to 7 years. The median housing cost for retirees is $1,388 with a mortgage, but that drops to $486 among people without a mortgage. The median rent is $772 a month. The University of Kansas Hospital is nationally ranked for its geriatric care.

    Madison, Wisconsin. Wisconsin's state capital is the home of the University of Wisconsin-Madison, where Wisconsin residents age 60 and older are eligible to audit classes for free. This college town is affordable for students as well as retirees. Housing costs a median of $1,624 a month with a mortgage, but it decreases to $622 once you pay off your home and $868 if you rent. There's also plenty of scenic beauty. The city is located near five lakes -- Kegonsa, Mendota, Monona, Waubesa and Wingra -- which are popular for boating and recreation.

    Minneapolis. Those who dream of a retirement on the water have many options in Minneapolis, which offers access to a chain of lakes and the Mississippi River. The Grand Rounds National Scenic Byway provides plenty of walking and bicycle paths to enjoy the parks and scenery. Housing for retirees in the Minneapolis metro area, which includes St. Paul and Bloomington, costs a median of $1,594 a month with a mortgage, $520 with a paid-off house and $843 if you rent. Health care is available at the Abbott Northwestern Hospital. In nearby Rochester, Minnesota, you'll find the top-ranked hospital in the country for geriatric care, the Mayo Clinic.

    Phoenix. Arizona's state capital is among the sunniest places in the country and is known for its hot summers and mild winters. Whatever professional sport you enjoy, Phoenix is likely to have a nearby team to root for, perhaps including the Cardinals, Diamondbacks, Suns or Coyotes. Phoenix has its own branch of the Mayo Clinic, as well as the Banner Good Samaritan Medical Center. Housing costs a median of $905 a month for renters and $1,330 for homeowners with a mortgage, while people who own their home mortgage-free pay just $392.

    Pittsburgh. Sports fans have many professional teams to choose from, including the Pirates, Steelers and Penguins. The UPMC-University of Pittsburgh Medical Center is ranked 11th in the country in geriatrics. But this city full of noteworthy museums and colleges continues to have affordable housing prices. The median monthly housing cost is $1,227 with a mortgage, $453 without a mortgage and $642 if you rent. Plus, Pittsburgh retirees age 65 and older are eligible to ride the bus, T or Monongahela Incline for free.

    Emily Brandon is the senior editor for Retirement at U.S. News. You can contact her on Twitter @aiming2retire, circle her on Google Plus or email her at ebrandon@usnews.com.

     

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    By Lucia Mutikani

    WASHINGTON -- U.S. retail sales barely rose in September and producer prices recorded their biggest decline in eight years, raising further doubts about whether the Federal Reserve will raise interest rates this year.

    The weak reports Wednesday were the latest suggestion that the economy was losing momentum in the face of slowing global growth, a strong dollar, an inventory correction and lower oil prices that are hampering capital spending in the energy sector. Job growth braked sharply in the past two months.

    The softness of September's figures supports our view that the Fed probably isn't going to hike interest rates until early next year.

    "The softness of September's figures supports our view that the Fed probably isn't going to hike interest rates until early next year," said Paul Ashworth, chief U.S. economist at Capital Economics in Toronto.

    The Commerce Department said retail sales edged up 0.1 percent last month largely as cheaper gasoline pushed service station receipts down 3.2 percent. Giving the report a weak tone, sales in August were revised down to show them unchanged instead of rising 0.2 percent.

    Retail sales excluding automobiles, gasoline, building materials and food services slipped 0.1 percent last month after a downwardly revised 0.2 percent gain in August.

    These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product and were previously said to have advanced 0.4 percent in August.

    Last month's weak core sales and the downward revision to August's figure, together with another report from the Commerce Department showing business inventories were again unchanged in August, prompted JPMorgan to cut its third-quarter GDP estimate by half a percentage point to an annual rate of 1 percent.

    The economy grew at a 3.9 percent pace in the second quarter. Some economists, however, cautioned against reading too much into the soft retail sales report, noting that discretionary spending remained fairly healthy.

    Consumers boosted their purchases of automobiles and furniture and spent more on hobbies, clothing and eating out. That points to underlying strength in domestic demand which should provide some cushion against softening global growth.

    Consumer Spending Still Strong

    "But the overall message is that consumer spending has remained extremely strong. If sentiment had indeed shifted, it would be hard to explain why sales of cars, certainly among the more expensive items, jumped in September to their highest level since July 2005," said Harm Bandholz, chief economist at UniCredit Research in New York.

    Sales of electronic goods were soft despite the launch of Apple's (AAPL) latest iPhone. Some economists said they expected the boost from the iPhone in October.

    Stocks on Wall Street fell after Walmart Stores (WMT) warned that its full-year sales would be flat because of dollar strength. Prices for U.S. Treasury debt rose, while the dollar dropped against a basket of currencies.

    In a separate report, the Labor Department said its producer price index fell 0.5 percent in September, the largest drop since January, after being unchanged in August.

    In the 12 months through September, the PPI fell 1.1 percent after declining 0.8 percent in August. It was the eighth straight 12-month decrease in the index.

    The weak inflation environment is one of the obstacles confronting Fed policymakers who are contemplating raising rates for the first time in nearly a decade. The U.S. central bank has kept its short-term interest rate near zero since late 2008.

    "It is the uncertain course of inflation that could keep the Fed from hiking rates this year. Unfortunately, the gang that cannot communicate straight is still sending out as many unclear signals as possible," said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania.

    Top Fed officials are divided on whether to tighten monetary policy, with Governor Daniel Tarullo saying Tuesday the central bank should not hike rates this year. Fed Chair Janet Yellen and Vice Chair Stanley Fischer have recently said they support raising rates this year.

     

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    Debate Over Vehicle Emissions Intensifies As Volkswagen Scandal Widens
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    By Georgina Prodhan and Jan Schwartz

    FRANKFURT and HAMBURG, Germany -- The man Volkswagen (VLKAY) tapped less than three weeks ago to head its North American business resigned Wednesday, dealing a blow to the German carmaker's efforts to recover from a scandal over its rigging of U.S. diesel emissions tests.

    News of the resignation of company veteran Winfried Vahland came as Germany's Spiegel magazine reported that at least 30 Volkswagen managers were involved in the test cheating. VW said the figure was without any basis.

    Last week, the head of Volkswagen's U.S. business, Michael Horn, said he thought only "a couple of software engineers" were responsible.

    VW is facing massive challenges and a completely new start.

    "Vahland was a good manager," said London-based analyst Arndt Ellinghorst at banking advisory firm Evercore ISI. "VW is facing massive challenges and a completely new start."

    Europe's largest carmaker is in crisis after admitting last month it installed software in diesel vehicles to deceive U.S. regulators about their true level of toxic emissions.

    The scandal has wiped about a quarter off Volkswagen's market value, forced out its long-time chief executive and rocked both the global car industry and the German economy.

    On Tuesday, the company said it would cut investment plans at its core VW division by 1 billion euros ($1.1 billion) a year through 2019 and speed up savings as it braces for a clean-up bill which some analysts believe could reach 35 billion euros to cover regulatory fines, vehicle recall costs and lawsuits.

    The premium Audi division, source of about 40 percent of group profit, will also cut spending in the coming years, two Volkswagen sources told Reuters on Wednesday.

    Audi managers are reviewing the brand's 2015-19 budget of 24 billion euros and are due to outline possible cost cuts to its supervisory board by its next meeting on Dec. 3, they added.

    Differences of Opinion

    Vahland was at Volkswagen for more than 25 years, leading its rapid expansion in China before heading Czech division Skoda.

    Skoda said he was leaving of his own choice because of unspecified differences of opinion over the company's organization of its North American business, confirming what sources close to the matter earlier told Reuters.

    "This decision is expressly not connected to the current events around the diesel topic," a Skoda statement said.

    German weekly Auto Bild earlier reported Vahland's departure, noting he was passed over for the top job at Volkswagen after Chief Executive Officer Martin Winterkorn resigned Sept. 23 because of the scandal.

    Volkswagen had appointed 58-year-old Vahland to join the management of the VW brand on Nov. 1 as head of its operations in the United States, Mexico and Canada as part of a broader reshuffle that led to Porsche CEO Matthias Mueller taking the helm of the group.

    Sources had told Reuters before Vahland's appointment that he was also the favorite to get a new management board position to oversee the group's North American operations, which were struggling even before the test rigging scandal.

    Investigations

    Volkswagen is under pressure to identify those responsible for the wrongdoing and fix up to 11 million affected diesel vehicles. It has been criticized by politicians, investors and consumers for the time it is taking to produce answers.

    Spiegel, citing preliminary results of investigations by law firm Jones Day and Volkswagen itself, said the dozens of managers implicated in test rigging would be suspended.

    It also cited a person familiar with the matter as saying the circle of those involved or who knew about the cheating could widen further.

    New CEO Mueller is expected to speak to top management Thursday about the current state of the investigations, steps to refit affected models and possible spending cuts.

    As part of its response to the crisis, the company announced plans on Tuesday to step up development of electric and hybrid vehicles.

    German Economy Minister Sigmar Gabriel warned Wednesday against condemning diesel technology as a whole due to the problems at Volkswagen, but said Germany needed to do better in switching to alternative engines.

    The car industry employs more than 750,000 people in Germany and is a major source of export income. Diesel vehicles are particularly important in Europe, accounting for about a half of sales compared with just a small fraction in the United States.

    Gabriel said he was in favor of incentives to reduce the price difference between electric and conventional vehicles. However, the German finance ministry said it saw such incentives as "problematic."

     

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