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Tag: Personal Finance

  • The Supreme Court blocked student-loan cancellation. Here’s what happens next for your loans.

    The Supreme Court blocked student-loan cancellation. Here’s what happens next for your loans.

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    Student-loan payments are poised to resume this fall without smaller balances now that the U.S. Supreme Court has blocked President Joe Biden’s loan cancellation plan.

    The Biden administration’s loan forgiveness initiative would have canceled up to $10,000 of debt for eligible borrowers, and in some cases up to $20,000.

    But the Supreme Court’s conservative majority ruled on Friday that the executive branch overstepped its authority by trying to wipe out billions in student loan debt on its own.

    “Six States sued, arguing that the HEROES Act does not authorize the loan cancellation plan. We agree,” Chief Judge John Roberts said, writing for the 6-3 majority.

    Now it’s time for more than 40 million borrowers with federal student loans to figure out their next move. They are staring at more than $1.6 trillion in student loan debt. Add on private student loans, and the number climbs to $1.7 trillion.

    Federal student loan payments have been on hold since March 2020.

    On Friday, the Department of Education filed notice saying it would embark on a regulatory process that would seek an alternative pathway to student-debt relief. Activists have focused on a provision in the Higher Education Act, allowing the Department of Education to “compromise, waive, or release,” any right to collect on student loans. 

    Approximately 26 million people had either applied for loan forgiveness or were already eligible for the relief as of late last year, the  White House said.

    Here’s what to know.

    When do student-loan payments restart?

    In October, according to the Department of Education. Expect more specifics soon on those payments. “We will notify borrowers well before payments restart,” the department said.

    While payments start coming in October, interest starts accumulating on the loans in September. Loan balances have not been accumulating interest since the payment pause started in March 2020, during the pandemic’s early days.

    “We will also be in direct touch with borrowers and ramping up our communications with servicers well before repayment resumes to ensure borrowers and their families are receiving accurate and timely information about the return to repayment,” an Education Department spokesperson said.

    There’s a range of estimates on how much student-loan borrowers typically pay each month on their loans.

    According to Bank of America data, $180 was the median monthly student-loan payment as of January 2020. Federal Reserve research before the pause said the average monthly payment was $393, while the median payment was $222.

    Can I lower my payments?

    Possibly yes, with a range of income-driven repayment plans through the Education Department. These plans are supposed to make repaying loans more affordable by letting borrowers modify their monthly payments based on their income.

    While these plans already exist, the department is reworking them. As a result, more monthly income will be shielded from the calculations on what a person could repay for student loans each month, meaning payments will become more affordable. While the revised plans are not in effect yet, the existing plans are up and running.

    Many people will likely struggle to fit a student-loan bill back into their budget — the question is how far that financial hardship will go. Student-loan payments would be hitting at a time when car loan and credit-card delinquencies are already rising from their pandemic lows, according to the Federal Reserve Bank of New York.

    Part of the Biden administration’s Supreme Court arguments pointed to the possible economic consequences of resuming student-loan payments without canceling some of the debt.

    Without cancellation, there will be a “surge” of loan defaults and delinquencies once payments resume, Solicitor General Elizabeth Prelogar told the justices during oral arguments earlier this year.

    Analysts at Bank of America agree more delinquencies are coming once student loan payments resume.

    What if I miss my first payment?

    When deciding which debts have to get paid first, a student-loan bill might fall behind other monthly debts like a mortgage or a credit-card bill.

    Anywhere from roughly one-third to three-quarters of borrowers could miss their first student-loan bill when payments resume, according to projections from the credit score company VantageScore.

    A missed first payment — in theory — could eventually lead to an average 49- to 82-point reduction in a credit score ranging from 350 to 850, VantageScore researchers said.

    However, President Biden on Friday announced a temporary “ramp-up” — a 12-month grace period for borrowers who miss student-loan payments. If borrowers miss payments during this time, they won’t be reported to any of three main credit bureaus — Equifax 
    EFX,
    +0.37%    ,
     TransUnion 
    TRU,
    +1.06%
     and Experian
    EXPGF,
    +0.80%
     — and they won’t go into default.

    The ramp-up will run from Oct. 1, 2023 through Sept. 30, 2024. 

    “This is not the same as the student-loan pause, but during this period — if you miss payments — this ‘on ramp’ will temporarily remove the threat of default or having your credit harmed,” Biden wrote in a tweet Friday.

    Prior to the payment pause and Biden’s ramp-up announcement, loan servicers waited for a borrower to miss three straight payments before they reported it to the credit reporting bureaus, according to Scott Buchanan, executive director of the Student Loan Servicing Alliance.

    In the meantime, brace for potentially long call hold times, curtailed hours and loan servicer glitches, borrower advocates say. It stems back to Congressional cuts on the funding for vendor contracts that handle the day-to-day details of student-loan repayments.

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  • Supreme Court strikes down Biden’s student loan forgiveness plan

    Supreme Court strikes down Biden’s student loan forgiveness plan

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    Supporters of student debt forgiveness demonstrate outside the US Supreme Court on June 30, 2023, in Washington, DC. 

    Olivier Douliery | AFP | Getty Images

    The Supreme Court on Friday struck down President Joe Biden’s student loan forgiveness plan, denying tens of millions of Americans the chance to get up to $20,000 of their debt erased.

    The ruling, which matched expert predictions given the justices’ conservative majority, is a massive blow to borrowers who were promised loan forgiveness by the Biden administration last summer.

    The 6-3 majority ruled that at least one of the six states that challenged the loan relief program had the proper legal footing, known as standing, to do so.

    The high court said the president didn’t have the authority to cancel such a large amount of consumer debt without authorization from Congress and agreed the program would cause harm to the plaintiffs.

    Financial experts also expressed concern about what could come next for borrowers.

    The U.S. Department of Education recently warned that pushing people into repayment after an over three-year-long pause and a pandemic that disrupted the financial security of many households without Biden’s loan cancellation could trigger a historic rise in delinquencies and defaults.

    Consumer advocates slammed the ruling, and accused the court of bias.

    “Today’s decision is an absolute betrayal to 40 million student loan borrowers counting on an impartial court to decide their financial future based upon the established rule of law,” said Persis Yu, deputy executive director at the Student Borrower Protection Center, an advocacy group.

    More from Personal Finance:
    Millions of borrowers to have new student loan servicer
    1 in 5 student loan borrowers may stuggle when payments resume
    What Supreme Court case could mean for wealth tax ideas

    Yet the decision is a major win for the plaintiffs who’d worked to block the forgiveness and were worried about the executive branch interfering in the lending sector. At an estimated cost of $400 billion, Biden’s policy would have been among the most expensive executive actions in U.S. history.

    The justices heard oral arguments at the end of February.

    This is breaking news. Please check back for updates.

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  • Supreme Court knocks down Biden’s student-debt forgiveness plan

    Supreme Court knocks down Biden’s student-debt forgiveness plan

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    The Supreme Court knocked down the Biden administration’s plan to cancel up to $20,000 in student debt for a wide swath of borrowers, the court announced Friday. 

    The decision means that the White House won’t move forward with the plan for now, though it’s possible officials could try to launch a new version of the debt-forgiveness initiative using a different legal authority. Roughly 26 million borrowers applied for or were automatically eligible for debt relief under the Biden administration’s plan, which canceled up to $10,000 in student debt for borrowers earning less than $125,000 and up to $20,000 in federal loans for borrowers who met that criteria and also used a Pell grant in college. 

    Americans owe $1.7 trillion of student loans and the White House had estimated that more than 40 million borrowers would benefit from the initiative. But almost as soon as the Biden administration announced the debt-forgiveness plan last year, opponents looked for ways to challenge it legally. Ultimately, two cases made it to the high court. 

    In one case, two student-loan borrowers sued over the debt-relief plan in part because the Department of Education didn’t submit it for public comment. That, they said, resulted in an initiative that arbitrarily left out or limited the amount of relief available to some student loan borrowers, like themselves. The suit filed by the borrowers was backed by the Job Creators Network, a conservative advocacy organization co-founded by Bernard Marcus, the co-founder of Home Depot, who also supported former President Donald Trump. 

    Six Republican-led states brought the other case on the basis that canceling debt could harm their state coffers. 

    The court considered two issues in these cases. The first is whether the plaintiffs had standing, or the ability to bring a lawsuit because they’ve been directly harmed by the policy. The second is whether the Biden administration overstepped in its executive authority when issuing the policy. In order for the justices to reach the second issue, or the merits of the case, they had to find that the plaintiffs had standing to sue. 

    Legal experts, including some who believed the Biden administration didn’t have the authority to authorize the debt-relief plan, were skeptical of the notion that the parties bringing the cases had standing to sue. During oral arguments in February, the court’s three liberal justices also questioned whether the parties who challenged debt forgiveness were actually injured by the policy. 

    In addition, one of the members of the court’s conservative wing, Justice Amy Coney Barrett, asked pointed questions about the six states’ argument that they had standing to sue in part because the debt-relief plan would injure the state of Missouri. That claim surrounded the Missouri Higher Education Loan Authority, or MOHELA, a state-affiliated organization that services federal student loans. The states had argued if MOHELA lost accounts due to the debt-relief plan, its revenue would decline and that loss would hurt Missouri because of MOHELA’s ties to the state. 

    Despite these questions, Barrett agreed with the court’s five other conservative judges and found that the states have standing to sue. The three liberal justices dissented.

    “MOHELA is, by law and function, an instrumentality of Missouri,” Chief Justice John Roberts wrote in the majority opinion. “It was created by the State, is supervised by the State, and serves a public function. The harm to MOHELA in the performance of its public function is necessarily a direct injury to Missouri itself.”

    The court’s decision in the states’ suit allowed the justices to get to the merits of the case. The parties challenging the debt-relief plan argued that the Department of Education went beyond the authority Congress delegated it in discharging student debt. Solicitor General Elizabeth Prelogar argued to the justices that in canceling student debt, the Secretary of Education acted “within the heartland” of the authority Congress provided to him under the HEROES Act, a 2003 law that aims to ensure student-loan borrowers aren’t left worse off by a national emergency. 

    The court’s conservative majority sided with the states, with a 6-3 decision, striking down the debt-relief plan in its current form. 

    “The HEROES Act allows the Secretary to ‘waive or modify’ existing statutory or regulatory provisions applicable to financial assistance programs under the Education Act, but does not allow the Secretary to rewrite that statute to the extent of canceling $430 billion of student loan principal,” Roberts wrote.

    In the months leading up to the court’s decision, White House officials said there was no backup plan for if the Supreme Court knocked down the debt-forgiveness initiative. Advocates and activists have said that student-loan repayments shouldn’t resume until the Biden administration fulfills its promise to cancel some student debt.

    The bill President Joe Biden signed in June to raise the nation’s debt limit requires that the Department of Education end the pause on federal student loan, interest payments and collections 60 days after June 30, 2023. Interest on federal student loans will resume starting September 1 and payments will start to come due in October, according to the Department’s website.

    Advocates and activists have said for years that the Higher Education Act provides the Secretary of Education with the authority to discharge student loans. In ruling that the HEROES Act didn’t authorize the Biden administration’s debt-relief plan, the court left the option open for the Biden administration to create a loan-forgiveness program authorized under the HEA. 

    The court’s decision marks the latest development in a more-than-decade-long push to get the government to cancel student debt en masse. The idea, which has its origins in the Occupy Wall Street movement, made it to the presidential campaign stage during the 2020 cycle and was adopted by the White House last year.    

    Proponents of student debt cancellation and the Biden administration, have expressed concern that without some kind of relief a large swath of borrowers could slip into delinquency and default with the return of student loan payments later this year.

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  • The unexpected group the Supreme Court’s student-loan decision will impact

    The unexpected group the Supreme Court’s student-loan decision will impact

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    Student loan borrowers aren’t just the freshly graduated and mid-30s working generations — millions of Americans in their retirement years have student debt to pay back, too. 

    There are six times as many borrowers ages 60 and older now than there were in 2004, but their debt has increased “19-fold,” according to a report from New America, a public policy think tank. About 3.5 million Americans in this age bracket carry $125 billion in student debt, the report found. 

    Overall, Americans hold $1.75 trillion in student debt, the World Economic Forum found. The president’s student loan forgiveness plan, which was announced last August and is now in the midst of legal battles in the Supreme Court, would alleviate $10,000 for qualifying borrowers, or $20,000 for those with Pell Grants. At the time of the announcement, the White House said 20 million borrowers would see their debt washed away, and a total of 40 million would find benefit from cancellation.

    See: What you need to know about the student-loan cases before the Supreme Court as the decision looms

    Student debt has been especially problematic because of “stagnant wages and soaring tuition prices,” AARP said in another report highlighting older borrowers. Around 3% of families headed by someone who was 50 or older had student debt in 1989, with an average balance of $10,000, but by 2016, that figure rose to 9.6%, with an average of $33,000, AARP said. 

    Whether student debt forgiveness will happen or not is still to be determined. Borrowers have been anxiously awaiting an answer from the Supreme Court over two cases linked to the plan — one that argues whether or not the president had the legal authority to forgive loans, and another case about whether the program has standing. The Supreme Court is expected to release its decision on Friday, the last day of the court’s term before summer break. 

    Older borrowers have various reasons to carry debt. Some are paying off their own education, while others have taken on student debt for their loved ones. Federal PLUS loans, for example, allow parents to take loans out for their children’s education. Older Americans may have also taken on debt to refine their skills for a promotion, AARP noted in its report. 

    Also see: Elizabeth Warren: ‘President Biden has the legal authority to cancel student-loan debt’

    Student loans can have a rippling impact on retirement savings — not just in allocating a portion of retirement income toward this debt, but also in accruing enough wealth for old age. Graduates with student loans had 50% less in retirement wealth by age 30 than the graduates without this debt, a Boston College Center for Retirement Research study found.

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  • Annuity Plans Will Never Be the Same | Entrepreneur

    Annuity Plans Will Never Be the Same | Entrepreneur

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    I want to ask you a personal question. When was the last time you thought about your retirement?

    I’m not trying to put you on the spot or embarrass you. And, I’m certainly not trying to wig you out. But, in reality, we’re experiencing a retirement crisis.

    Before you assume that I’m exaggerating here, the Federal Reserve report found that around 38% of people between the ages of 18 to 29 have zilch in retirement savings. And, that’s also true for 27% of people between the ages of 30 and 44.

    Before ganging up on Gen Z and Millennials, 17% of the 45 to 59 age brackets have nothing set aside for retirement. What about those over 60? Well, 12% of people in this demographic also lack a retirement cushion.

    Even if you do have a retirement plan, like a 401(k) from your employer or a self-employed option, such as a Solo 401(k) or SEP IRA, that alone probably isn’t going to cut it as far as a livable income. Instead, you’re going to need several different vehicles of retirement savings if you want to reach your retirement destination. And, one of the more appealing retirement plans to consider is an annuity.

    Let’s Talk Annuities

    A few years back, TIAA, which describes itself as a unique financial partner, posed an interesting question in its “Lifetime Income Survey.” Would you rather receive a lump sum of $500,000 or $2,700/month for life? Sixty-two of respondents went with the monthly income?

    But why? I mean, a cool, half-million dollars in cold, hard cash seems like a sweet deal to me.

    “A steady stream of income in retirement helps cover your expenses, no matter how long your retirement lasts,” said Ron Pressman, chief executive officer of Institutional Financial Services at TIAA. “Lifetime income helps ensure Americans have the financial security they need in their retired years – it’s not a “nice-to-have,’ it’s an absolute necessity.”

    The survey also showed that an overwhelming percentage of people, 71% to be exact, “support legislation to make it easier for employer-based retirement plans to include lifetime income products, such as annuities, as investment options.” And, 67% “favor legislation that requires retirement account statements to include an estimate of monthly income in retirement.”

    That’s all well and good, But what exactly is an annuity?

    Fair question. Short answer? They’re a contract between you and an insurance company. You give money to said insurance company and they’ll invest it for you. In return, you’ll be guaranteed a retirement income for the rest of your life.

    What’s interesting about annuities is that they have been around for thousands of years, going back to Ancient Rome. It wasn’t until the early 20th Century when the American public could join in annuity fun.

    Annuities sound pretty simple to me. How can I make it a part of my retirement strategy?

    Let’s cool the jets down real fast. I’m glad you want to jump on board. But, annuities are both simple and complex. They come in various shapes and sizes. And, depending on which type of annuity you chose and how much you’re investing, payouts will also fluctuate.

    So, here’s a very brief rundown on how annuities work.

    You have two different types of annuities to chose between. A fixed annuity is pretty much a savings account with an insurance company where you know exactly what your guaranteed payout will. A variable annuity is more like mutual funds and is determined by how your investments are performing.

    Still with me? Good. Because there are also different ways, you can put your annuity together. It’s like when you want your barista to customize your latte.

    • Single vs. Multiple Premiums: How do you want to pay for the annuity? You can make one big payment, like if you just received an inheritance, or make smaller payments throughout the years.
    • Immediate vs. Deferred: When do you want to receive payments? Inheritances, or make smaller payments throughout the years. You cash everything out at retirement or practice self-gratification and receive payments down the old.
    • Lifetime vs. Fixed Period: How long will your annuity payments last? Do you want to receive money for the rest of your life or for a specific timeframe, like 5 to 25 years?

    Overall, annuities require commitment and can get really complicated fast. That’s why you should do your due diligence and learn more about them from trusted online sources or your financial advisor.

    Sounds good. But, are there any drawbacks to annuities.

    Let’s be honest. Annuities have some excellent advantages — depending on the type. Mainly, that’s because you’ll receive a guaranteed income, which is tax-deferred. Also, unlike a401(k) or an IRA, that aren’t contribution limits, and you can pass what’s left to a beneficiary.

    There are also some drawbacks to mention. Most notably, you’ll need to watch that you don’t get bogged down by fees. I’m talking about commissions from the person selling you the annuity to insurance charges and investment management fees. There are also surrender and rider charges if you aren’t paying attention.

    Besides being pricey, there’s also some risk involved. Because annuities aren’t backed by any national insurance program, if you picked the wrong insurer, you might be SOL. That’s why you need to make sure that the insurer has a financial-strength rating of A or better.

    I think I’m sold on annuities. But should I actually buy an annuity?

    You won’t like this answer. It depends. If you’ve maxed out your other retirement investment methods, such as 401(k) plans and IRA, then taking advantage of the tax-deferred growth from an annuity isn’t too shabby of an idea.

    Also, annuities can be an awesome idea if you want to diversify your retirement portfolio, are in decent health and want to reduce financial stress in retirement. Again, the main selling point is that you’ll receive a monthly payment for the rest of your life. That makes budgeting a whole lot easier.

    If you do decide to follow through, you can purchase annuities from;

    • Annuity distributors. I’m talking large brokerage firms here, think Merrill Lynch and Morgan Stanley.
    • Independent broker-dealers, such as Raymond James.
    • Well-known national banks like Bank of America.
    • Mutual fund companies including Vanguard and T. Rowe Price.
    • Independent agents, brokers, and financial advisors.

    And, there’s also a new player called Due who might have upped the annuity-antre.

    How Due is Changing the Annuity Game Forever

    What’s that? You’ve never heard of Due. Well, the company has been around since 2015. Originally, Due solely focused on being a top-notch invoicing platform. The company still offers a wide range of payment options, including eCash, eChecks, and ACH, but has now expanded into an annuity and pension-like program to help people just like you retire.

    Can Due help stop my head from spinning from all this annuity talk?

    I hear ya. Annuities can be confusing. And, if you’re in unfamiliar territory here, it can be tough to wrap your head around.

    But that’s not the case with Due. In fact, I would say that Due might have cracked “the annuity puzzle.”

    The annuity puzzle?

    Yeah. This was a phrase the economist Menahem Yaari coined over 60 years. The idea is that while more retirees would prefer and even be happier with an annuity, few actually did. There are several reasons why. But, it really boils down to annuities being complex and misunderstood.

    With the Due, the process couldn’t be any more straightforward.

    • Head over to Due.com and click sign-up.
    • Fill in the required information and determine how much money you’d like to deposit into your account each month. It literally only takes a couple of minutes to do this.
    • Don’t know how much to invest? No worries. The Due Calculator can help you quickly figure this out. Just add the sum of all the payments and interest received. Next, divide this up among the months you’ll live. You can invest however much you want, though.
    • Due will then set up an account in your name and invest your money. It’s managed by two of the top investment firms in the nation: Blackstone (NYSE: BX) and ATHOS Private Wealth.
    • You’ll earn 3% interest (guaranteed) on whatever money you have placed in the Due platform.
    • When you turn 65, you’ll receive a “deposit” into your bank account on either the 1st or 15th of each month — you get to choose the date.

    That’s pretty much it. Easy, peasy.

    Due Annuity sounds too good to be true? What’s the catch?

    There’s no BS with Due. The platform tells you how much money you’ll receive for the rest of your life at any time. And, you don’t have to lose sleep over changing markets because, again, you will always earn 3% interest.

    You also don’t need to be concerned about security. Due has received regulatory certificates and only works with highly reputable insurance companies who have A++ or AAA ratings.

    What about those expensive annuity fees you mentioned previously?

    Due charges $10 a month. That’s it. If you make a withdrawal before 65, you will have to pay a 10% penalty fee.

    Speaking of withdrawals, what if I need to withdraw my money?

    No problem. You can do this just by logging into your account and requesting a withdrawal. After verification, you should have your money within five business days. Just remember about that 10% penalty fee.

    It sounds like Due is the “annuity for the modern-day person.”

    It really is. Due has taken the complexity out of annuities. More importantly, it’s also made it accessible for the average person — not just the wealthy who have been gobbling up annuities.

    If you think that an annuity is right for you, give a Due a chance.

    The post Annuity Plans Will Never Be the Same appeared first on Due.

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    John Rampton

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  • Top 5 Tools to Build Your Financial Literacy | Entrepreneur

    Top 5 Tools to Build Your Financial Literacy | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    There are several reasons why Americans may lack in financial literacy. That is why I decided to write the financial literacy book entitled Woke Doesn’t Mean Broke. It is a 688-page financial bible. Most Americans have a limited education. Many schools do not prioritize financial literacy education in their curriculum. As a result, individuals may not receive formal education on financial topics, leaving them ill-prepared to navigate complex financial decisions. Lack of access to resources also comes into play.

    Some individuals may not have access to resources and tools that promote financial literacy, such as personal finance courses, books or online platforms. Limited access to financial education materials can hinder the development of financial knowledge and skills. There are also cultural factors and cultural attitudes around money and financial discussions that can influence financial literacy levels. In some cultures, discussing personal finances openly may be considered taboo or impolite.

    The financial industry can be complex, with various products, services and regulations. Understanding financial jargon, investment options or retirement planning can be challenging for individuals without a strong financial background. Lack of personal finance role models plays a big role. Individuals who grow up without positive financial role models may struggle to develop good financial habits and may not have access to guidance or support in managing their finances effectively. A culture that prioritizes immediate consumption and instant gratification can contribute to poor financial habits, such as overspending, relying on credit and not prioritizing long-term financial goals.

    Related: How Can We Improve Through Financial Education

    Most Americans have high levels of consumer debt. Individuals burdened by debt may focus on managing immediate financial obligations rather than developing broader financial literacy skills. Some individuals may lack confidence in their ability to understand and manage personal finances. Financial topics can be intimidating, and individuals may feel overwhelmed or embarrassed to seek help or admit their lack of knowledge.

    Addressing the lack of financial literacy requires a multi-faceted approach that includes improvements in educational systems, increased access to financial resources and tools, cultural shifts in attitudes toward money and targeted efforts to promote financial education and awareness. Encouraging open discussions about personal finance, providing accessible financial education resources and promoting financial literacy initiatives can all contribute to improving financial literacy levels among Americans.

    Financial literacy refers to the knowledge and understanding of various financial concepts, tools and practices that enable individuals to make informed decisions about their personal finances.

    Being financially literate

    Being financially literate involves having skills and knowledge in the following areas:

    Budgeting: Creating and maintaining a budget to track income, expenses and savings and ensuring that spending aligns with financial goals.

    Debt management: Understanding different types of debt, interest rates, repayment options and strategies for managing and reducing debt effectively.

    Saving and investing: Understanding the importance of saving money and making informed decisions about investment options, such as stocks, bonds, mutual funds and retirement accounts.

    Financial goal-setting: Setting short-term and long-term financial goals and developing strategies to achieve them, such as saving for emergencies, education, homeownership or retirement.

    Banking and financial services: Understanding banking products, such as checking and savings accounts, credit cards, loans and mortgages — and knowing how to choose the right financial services that meet individual needs.

    Insurance and risk management: Understanding the purpose and importance of insurance — including health, life, home and auto insurance — and assessing risk management strategies to protect against unexpected financial losses.

    Taxation: Understanding basic tax principles and obligations, including filing tax returns, deductions, credits and tax-efficient strategies for saving and investing.

    Consumer rights and responsibilities: Knowing consumer rights, understanding financial agreements and contracts, and making informed decisions when purchasing goods and services.

    Financial literacy empowers individuals to make informed financial decisions, achieve financial stability and work towards long-term financial well-being. It equips people with the knowledge and skills to navigate the complexities of the financial world, avoid common pitfalls and make choices that align with their financial goals and values.

    Related: Financial Literacy is Not Taught in Schools: Here’s How It Can Be Learned

    5 tools to help improve your understanding and management of personal finances

    1. Personal finance apps: Utilize personal finance apps such as Mint, Personal Capital or YNAB (You Need a Budget). These apps help you track your income, expenses and savings goals, providing insights into your spending habits and offering budgeting tools. They often offer visualizations, alerts and goal-setting features to enhance financial awareness and encourage better money management.

    2. Online courses and educational platforms: Take advantage of online courses and educational platforms dedicated to improving financial literacy. Websites like Coursera, Khan Academy and Udemy offer courses on various financial topics, including budgeting, investing, debt management and retirement planning. These courses provide structured learning and practical knowledge to enhance your financial literacy.

    3. Financial literacy websites and blogs: Explore reputable financial literacy websites and blogs like Investopedia, The Balance or NerdWallet. These platforms offer comprehensive guides, articles and resources covering a wide range of financial topics. They can help you understand key concepts, terminology and best practices related to budgeting, saving, investing and more.

    4. Personal finance books: Dive into personal finance books written by experts in the field. Titles like Rich Dad Poor Dad by Robert Kiyosaki, The Total Money Makeover by Dave Ramsey and The Intelligent Investor by Benjamin Graham provide valuable insights and practical advice on building wealth, managing debt and making sound investment decisions. Reading these books can broaden your financial knowledge and help you develop a solid foundation for financial literacy.

    5. Financial planning tools: Utilize financial planning tools like retirement calculators, investment calculators and debt payoff calculators. Websites and apps such as SmartAsset, Vanguard or Bankrate offer these tools to help you plan for specific financial goals. They enable you to evaluate different scenarios, understand the impact of your financial decisions and make informed choices based on your current situation and future aspirations.

    Remember, it’s important to combine these tools with ongoing self-education, practice and seeking advice from financial professionals when necessary. Building financial literacy is a continuous process that requires consistent effort, discipline and a willingness to learn.

    Related: ‘Financial Illiteracy’ Cost Americans an Average of $1,819 in 2022 — Here Are The Most Common Mistakes People Make

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    Billy Carson

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  • The company supplying water to millions of Londoners is in deep trouble | CNN Business

    The company supplying water to millions of Londoners is in deep trouble | CNN Business

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    London
    CNN
     — 

    Britain’s biggest water supplier said Wednesday it needed to raise more cash from investors, as UK media reported the government was preparing contingency plans to rescue the company.

    Thames Water provides drinking water and waste water services to 15 million customers in London and the southeast of England. The utility, which counts one of Canada’s largest public pension funds among its top investors, has around £14 billion ($17.5 billion) of debt on its balance sheet.

    News that it needs more money came just a day after CEO Sarah Bentley resigned with immediate effect after three years in the role. She was in the second year of an eight-year turnaround plan to address aging infrastructure, tackle leakage and reduce pollution in rivers, a legacy of underinvestment.

    Thames Water received £500 million ($635 million) from shareholders in March, but said Wednesday it would need more.

    The firm “is continuing to work constructively with its shareholders in relation to the equity funding expected to be required to support Thames Water’s turnaround and investment plans,” it added.

    The company said it was keeping the water industry regulator Ofwat “fully informed” of its progress and added that it had a “strong liquidity position,” including £4.4 billion ($5.6 billion) of cash.

    Ofwat said it was in “ongoing discussions” with Thames Water “on the need for a robust and credible plan to turn the business around.”

    “We will continue to focus on protecting customers’ interests,” it added.

    Government ministers, including representatives from the UK Treasury and the environment department, Defra, are holding emergency talks with Ofwat over Thames Water’s future, according to UK media reports.

    One possibility would be to place the company into a special administration regime that effectively takes the firm into temporary public ownership. Sky News was first to report the discussions.

    A government spokesperson told CNN: “This is a matter for the company and its shareholders. We prepare for a range of scenarios across our regulated industries — including water — as any responsible government would.”

    The spokesperson added that the UK water sector “as a whole is financially resilient.”

    Thames Water says about 24% of the water it supplies to customers is lost through leakage.

    The company’s single biggest shareholder is the Ontario Municipal Employees Retirement System, which holds a stake of around 32%. The Universities Superannuation Scheme, a pension fund for the academic staff of UK universities, owns nearly 20%.

    Other large investors include the Chinese and Abu Dhabi sovereign wealth funds, as well as British Columbia Investment Management Corporation, which invests on behalf of public sector workers.

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  • ‘This is a game changer’: Ahead of Amazon Prime Day, a new law makes it harder for online sellers to hawk fake or stolen products

    ‘This is a game changer’: Ahead of Amazon Prime Day, a new law makes it harder for online sellers to hawk fake or stolen products

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    Shopping online has just gotten safer.

    The INFORM Consumers Act, which went into effect Tuesday, aims to limit the sales of stolen and counterfeit products on e-commerce platforms. 

    The measure, which requires e-commerce sites to verify and disclose information about their high-volume third-party sellers, was passed into law following a lobbying campaign to address counterfeit products after being left out of the bipartisan Chips and Science Act last year.

    All online marketplaces, including eBay, Etsy, Poshmark and Amazon’s third-party sales platform, will now be required to collect information from high-volume sellers, defined as those selling 200 items or more totaling at least $5,000 over the previous 12 months. These third-party sellers must submit information such as a government-issued ID, a bank-account number, a working email address and phone number, and a taxpayer identification number. 

    Customers will also be able to find the verified contact information for bigger third-party sellers — those with sales of over $20,000 a year — and to get in touch with them outside of the e-commerce platform. In the past, consumers often had to engage within the platform operator in order to communicate with a seller. 

    Those bigger sellers will also have their full names and physical addresses listed on their product pages in addition to their contact information, according to the Federal Trade Commission’s business guide. 

    “This is a game changer,” said Teresa Murray, director of the consumer watchdog office at U.S. PIRG, a nonprofit that lobbies on behalf of the public interest. “For bad guys, stealing items has generally been the difficult part. Selling things online once you’ve stolen them is easy. We hope that with the INFORM Act, it’s not nearly as easy in the future.”

    “‘The only people opposing this may be thieves.’”


    — Teresa Murray, U.S. PIRG

    The act goes into effect just weeks before Amazon Prime Day, when the world’s biggest e-commerce site rolls out discounts for Prime members. This year, Prime Day will be held over two days, on July 11 and 12.

    Picks: Amazon Prime Day is July 11-12. You’ll need the $139-a-year Prime membership to access the deals, but is it actually worth it?

    Also see: Amazon sued by FTC, which alleges people were ‘tricked and trapped’ into Prime subscriptions

    Several e-commerce platforms, including Amazon and eBay, supported the INFORM Consumers Act. TechNet, a national network of technology CEOs and senior executives representing what it calls the innovation economy, wrote to leaders in Congress last December, saying the law would improve consumer safety and increase transparency. 

    In a statement provided to MarketWatch, eBay
    EBAY,
    +2.32%
    said it “fully supports transparency and is committed to a safe selling and buying experience for our customers. We were proud to support” the law “to protect consumers from bad actors who seek to misuse online marketplaces, while also ensuring important protections for sellers. We are fully prepared to comply with the new law.”

    Etsy
    ETSY,
    +3.45%
    said it “has long been supportive of the INFORM Act passing into law, as a balanced and thoughtful approach to make the ecommerce landscape safer for both consumers and sellers.” In a statement provided to MarketWatch, the company said, “We are taking appropriate steps to comply with the INFORM Act requirements.”

    Amazon
    AMZN,
    +1.45%
    and Poshmark, owned by South Korea–based Naver Corp.
    035420,
    -0.59%    ,
    did not immediately respond to MarketWatch requests for comment.

    Some analysts, however, said the new law lacks stronger protections that were included the SHOP SAFE Act, an earlier bill that did not get passed by Congress. The INFORM Act, they noted, does not hold online platforms liable when a third party sells harmful counterfeit products or when the platform has not followed certain best practices. 

    “Notably, the legislation is supported by Amazon and other marketplaces as it’s seen as a watered-down bill that would head off more stringent legislation like the SHOP SAFE Act,” Ben Koltun, director of research at Beacon Policy Advisors, wrote in a note last year.

    So how can consumers spot counterfeit or stolen items? A guide from PIRG has tips, such as keeping an eye out for products with suspiciously low prices or featuring misspellings or mislabeling or low-quality, photoshopped photos in their listings.

    PIRG also cautions consumers about purchasing medications online. Always check the legitimacy of online pharmacies, it says. 

    “Many online marketplaces haven’t been doing enough to protect consumers from sellers who appear to be peddling stolen or counterfeit goods,” Murray said. “The only people opposing this [new law] may be thieves.”

    Victor Reklaitis contributed.

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  • How to Build an Impressive Investment Portfolio | Entrepreneur

    How to Build an Impressive Investment Portfolio | Entrepreneur

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    Opinions expressed by Entrepreneur contributors are their own.

    Building an impressive investment portfolio is a pursuit that requires careful planning, strategic decision-making and a long-term perspective. While there is no one-size-fits-all approach, several key principles and strategies can help investors construct a portfolio that maximizes returns while managing risks.

    Here are some of the best ways to build an impressive investing portfolio, highlighting diversification, asset allocation, thorough research and the importance of patience and discipline.

    Diversification (foundations of success)

    Diversification lies at the core of building an impressive investing portfolio. By spreading investments across various asset classes, industries and geographical regions, investors can reduce the impact of individual investment failures and potentially enhance overall returns.

    Diversification helps to mitigate risk and protect against market volatility. A well-diversified portfolio encompasses different types of assets such as stocks, bonds, real estate, commodities and even alternative investments like cryptocurrencies. The right mix of assets depends on an investor’s risk tolerance, investment goals and time horizon.

    Related: How to Diversify Investments: 4 Easy Tips to Help You Get Started

    Asset allocation (balancing risk and return)

    Asset allocation refers to the strategic distribution of investments among different asset classes. It plays a vital role in determining the risk and return profile of a portfolio. Investors should carefully assess their risk tolerance and financial goals to allocate assets accordingly.

    Generally, younger investors with a longer time horizon can afford to take more risks and allocate a higher proportion of their portfolio to equities. On the other hand, older investors nearing retirement may opt for a more conservative approach with a larger allocation to fixed-income investments.

    Regular rebalancing of the portfolio is crucial to maintain the desired asset allocation over time.

    Thorough research (keys to informed decisions)

    Thorough research is a critical component of building an impressive investment portfolio. Investors should dedicate time and effort to understand the companies, industries and trends they invest in. Fundamental analysis, which involves studying financial statements, evaluating business models and assessing competitive advantages, can help identify companies with solid growth potential.

    Additionally, staying informed about macroeconomic trends, geopolitical events and regulatory changes can provide valuable insights into the investment landscape. Investing in what you understand and conducting due diligence can significantly increase the chances of making informed investment decisions.

    Related: The Investing Strategy That Can Lower Risk in Your Portfolio

    Patience and discipline (long-term perspectives)

    Successful investing requires patience and discipline. Markets can be unpredictable, and short-term fluctuations are inevitable. Investors should resist the temptation to chase quick gains or make impulsive decisions based on short-term market movements. Instead, adopting a long-term perspective allows investors to weather market downturns and benefit from compounding returns.

    Regularly reviewing and adjusting the portfolio is necessary, but knee-jerk reactions to short-term market volatility often lead to suboptimal results. Staying focused on long-term goals and adhering to a well-defined investment strategy are crucial elements of building an impressive portfolio.

    Below are two handfuls worth of simple ways to set investors on the right path:

    1. Set clear financial goals: Define your investment objectives, and align them with your overall financial goals. This will help you determine the appropriate investment strategy and time horizon.

    2. Conduct thorough research: Before making any investment, conduct comprehensive research on the asset or company you plan to invest in. Understand the fundamentals, financial health, competitive position and growth potential to make informed decisions.

    3. Diversify your portfolio: Spread your investments across different asset classes, sectors and geographical regions. Diversification helps mitigate risks and allows you to benefit from various market opportunities.

    4. Follow a long-term perspective: Successful investing requires a long-term outlook. Avoid short-term market noise, and focus on the long-term potential of your investments. This approach allows you to ride out market volatility and benefit from compounding returns.

    5. Understand risk tolerance: Assess your risk tolerance, and invest accordingly. Be honest with yourself about how much risk you can handle, and adjust your investments to align with your comfort level. Balancing risk and return is crucial for long-term success.

    6. Stay informed: Keep yourself updated on market trends, economic indicators and industry developments. Stay informed about the companies you invest in, and monitor their performance regularly. Knowledge is power when it comes to making smart investment decisions.

    7. Avoid emotional decision-making: Emotions can cloud judgment and lead to impulsive investment decisions. Avoid making investment choices based on fear or greed. Instead, rely on research, analysis and your predetermined investment strategy.

    8. Consider dollar-cost averaging: Invest a fixed amount of money at regular intervals, regardless of market conditions. This strategy, known as dollar-cost averaging, allows you to buy more shares when prices are low and fewer shares when prices are high, potentially lowering your average cost per share over time.

    9. Take advantage of tax-efficient strategies: Be mindful of taxes, and consider tax-efficient investment strategies. Utilize tax-advantaged accounts like IRAs or 401(k)s to minimize tax liabilities. Also, understand the tax implications of different investment vehicles, and seek professional advice if needed.

    10. Monitor and rebalance: Regularly review your portfolio’s performance, and make necessary adjustments. Rebalance your portfolio periodically to maintain the desired asset allocation. Changes in market conditions or your financial situation may require reallocation to align with your goals.

    Related: Want to Make Smart Investments? Use These Expert Tips.

    Following these 10 steps can help investors make smarter investment decisions that align with their financial goals, manage risks effectively and increase the likelihood of long-term success.

    Building an impressive investing portfolio is a gradual and continuous process that requires careful planning, strategic decision-making and patience. By diversifying across different asset classes, allocating assets based on risk tolerance and financial goals, conducting thorough research and maintaining discipline, investors can increase their chances of achieving their investment objectives. While the investing landscape may present challenges and uncertainties, adhering to these best practices can help navigate the complexities and build a portfolio that stands the test of time.

    Ultimately, building an impressive investment portfolio requires a blend of art and science, combining knowledge, experience and the ability to make sound decisions in pursuit of long-term financial success.

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    Michael Stagno

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  • Inside Jeffrey Epstein’s final days: Extra bed sheets, secret phone calls and last-minute changes to his will

    Inside Jeffrey Epstein’s final days: Extra bed sheets, secret phone calls and last-minute changes to his will

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    Less than 48 hours before being found dead in prison, Jeffrey Epstein met with his lawyers to sign a new version of his last will and testament. 

    The disgraced financier had been under psychological observation from a previous episode in which he was found hanging in his prison cell, but the provocative step of signing a new will went unnoticed by prison officials until after Epstein’s death.

    That lapse was one of many missteps and missed opportunities to stop Epstein from killing himself sometime in the early morning hours of Aug. 10, 2019, contained in an official report released Tuesday by the Department of Justice’s internal, investigative watchdog.

    The report stands by the initial determination that Epstein’s death was the result of suicide as there were no signs of foul play or that anyone had been anywhere near his cell after he was last seen alive by prison guards the night before.

    But the report also lays out in detail Epstein’s final days, including a number of curious steps he took in that time and a series of serious protocol breaches made by prison staff that would contribute to him being left unwatched long enough to kill himself.

    Epstein was arrested on July 6 of that year on federal sex-trafficking charges. He was ordered held without bail and eventually placed in the special housing unit of the Manhattan Correctional Center in New York while he awaited trial. There, inmates were kept in their cells for 23 hours a day, although Epstein spent much of his time meeting with his attorneys, the report said.

    From the beginning, Epstein had a cellmate. On the night of July 23, the cellmate began banging on the cell door and screaming for the guards. When officers arrived, they found Epstein hanging from the bunk bed ladder with an orange piece of cloth wrapped around his neck.

    The officers pulled Epstein down and managed to resuscitate him. When he later came to, he initially said he thought his cellmate had tried to kill him, but later said he could not recall what had happened. An investigation could not definitively conclude what had happened, the DOJ report said.

    Following the episode, Epstein was placed on suicide watch — in which he was continuously monitored by staff. When prison psychologists later determined that Epstein was no longer a risk to himself, they downgraded his status to “psychological observation,” meaning he could be returned to a cell and not be kept under continual watch. 

    Curiously, Epstein said he wanted his original cellmate back. When prison officials said they weren’t sure that was such a good idea, Epstein replied: “Yeah, but I don’t understand, you know, we were bunkies, everything was cool,” the report quoted him as saying.

    On July 30, prison staff were informed that Epstein needed to be assigned an “appropriate cellmate,” and he was housed with another inmate in a cell just 15 feet away from the guard station. That inmate later reported that Epstein was allowed to sleep on a mattress on the floor and was given an extra blanket, in violation of prison rules.

    On August 8, Epstein signed the new will. The following morning, Epstein’s cellmate was transferred out of the prison, leaving Epstein alone. 

    Later that day, more than 2,000 pages of documents were publicly released as part of court proceedings against Epstein’s long-time companion, Ghislaine Maxwell. The documents included extensive information that was damaging to Epstein.

    Maxwell was found guilty in 2021 of conspiring with Epstein to sexually abuse minors and sentenced to 20 years in prison.

    That evening, after meeting with his lawyers, Epstein  was allowed to place an unmonitored phone call. The report said that while Epstein claimed he was calling his mother, he actually phoned “someone with whom he allegedly has a personal relationship,” the report stated.

    Epstein was last seen alive in his cell at 10:40 p.m. and was discovered dead by prison staff at 6:30 a.m. the following morning. He was once again found hanging from the upper bunk with a cord tied around his neck.

    According to the report, prison officials discovered extra sheets and bedding in the cell. An investigation revealed that the prison guards on duty that night, failed to conduct rounds of the cell block and check on Epstein every 30 minutes like they were supposed to, meaning Epstein was unwatched for nearly eight hours.

    The guards were later charged with falsifying records to show that they had done the required rounds while they were actually sleeping and surfing the internet. The two guards later reached deferred prosecution agreements with the federal prosecutors, in which charges against them were dropped after they performed community service and kept out of trouble for six months.  

    Some of the prison cameras in the cell block also had been malfunctioning for weeks so that while they provided a live feed of the area, they failed to record. A nearby camera that was fully operational showed no one entering the area after the guards last locked Epstein in his cell at 10:40 p.m. the night before he was found dead, the report said.

    An autopsy showed no signs of foul play or that Epstein had struggled with anyone prior to his death. Officials say they believe he had hanged himself.

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  • Intuit Inc. (INTU) Stock Forecasts

    Intuit Inc. (INTU) Stock Forecasts

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    The Argus Dividend Growth Model Portfolio

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  • Get hotel credit, room upgrades and free Wi-Fi with Capital One’s new Lifestyle Collection

    Get hotel credit, room upgrades and free Wi-Fi with Capital One’s new Lifestyle Collection

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    Capital One Lifestyle Collection

    When you book a hotel through Capital One’s Lifestyle Collection you can take advantage of the following benefits:

    • $50 experience credit for food, drinks or other activities
    • Complimentary Wi-Fi
    • Room upgrades (when available)
    • Early check-in and late check-out (when available)

    These perks only marginally improve on what you could receive when you have basic or mid-tier elite status with that particular hotel or hotel chain, but this could be a useful benefit for hotel brands you visit less frequently. The Lifestyle Collection includes hotel chains such as The LINE, Virgin Hotels, Design Hotels, and The Standard, as well as independent locations.

    The Lifestyle Collection is available to select Capital One cardholders and these bookings earn bonus rewards depending on which card you have. You can earn 10X miles for Lifestyle Collection bookings you make with the Capital One Venture X Rewards Credit Card and 5X miles with the Capital One Venture Rewards Credit Card. Venture X cardholders also can redeem their $300 annual travel credit on Lifestyle Collection bookings.

    Capital One Venture X Rewards Credit Card

    Information about the Capital One Venture X Rewards Credit Card has been collected independently by Select and has not been reviewed or provided by the issuer of the card prior to publication.

    • Rewards

      10 Miles per dollar on hotels and rental cars, 5 Miles per dollar on flights when booked via Capital One Travel; unlimited 2X miles on all other eligible purchases

    • Welcome bonus

      Earn 75,000 bonus miles once you spend $4,000 on purchases within the first 3 months from account opening

    • Annual fee

    • Intro APR

    • Regular APR

      21.74% – 28.74% variable APR

    • Balance transfer fee

      0% at the regular transfer APR

    • Foreign transaction fees

    • Credit needed

    Capital One Venture Rewards Credit Card

    Information about the Capital One Venture Rewards Credit Card has been collected independently by Select and has not been reviewed or provided by the issuer of the card prior to publication.

    • Rewards

      5 Miles per dollar on hotel and rental cars booked through Capital One Travel, 2X miles per dollar on every other purchase

    • Welcome bonus

      Earn 75,000 bonus miles once you spend $4,000 on purchases within 3 months from account opening

    • Annual fee

    • Intro APR

      N/A for purchases and balance transfers

    • Regular APR

    • Balance transfer fee

      0% at the regular transfer APR

    • Foreign transaction fee

    • Credit needed

    Capital One Travel Premier Collection

    The Premier Collection is a step up from the Lifestyle Collection, but it’s only available to Capital One Venture X Rewards Credit Card and Capital One Venture X Business cardholders. The upgraded benefits include:

    • $100 experience credit (or the local equivalent) to use on dining, spa, and other activities
    • Daily breakfast for two
    • Complimentary Wi-Fi
    • Early check-in, late check-out and a room upgrade (when available)

    The Premier Collection encompasses many luxury hotels you can book through Capital One Travel, such as Small Luxury Hotels, The Leading Hotels of the World and Six Senses.

    Capital One Lifestyle Collection alternatives

    American Express® Gold Card

    On the American Express secure site

    • Rewards

      4X Membership Rewards® points at Restaurants (plus takeout and delivery in the U.S.) and at U.S. supermarkets (on up to $25,000 per calendar year in purchases, then 1X), 3X points on flights booked directly with airlines or on amextravel.com, 1X points on all other purchases

    • Welcome bonus

      Earn 60,000 Membership Rewards® points after you spend $4,000 on eligible purchases within the first 6 months of card membership

    • Annual fee

    • Intro APR

    • Regular APR

    • Balance transfer fee

    • Foreign transaction fee

    • Credit needed

    If you have a premium American Express card, such as The Platinum Card® from American Express, you’ll be able to take advantage of the Fine Hotels and Resorts program (FHR) in addition to The Hotel Collection. FHR offers more robust benefits and is comparable to Capital One’s Premier Collection. Terms apply.

    Citi

    The Citi Hotel Collection is available through the new Citi Travel Portal and is open to all cards that earn Citi ThankYou points, including no-annual-fee cards like the Citi® Double Cash Card (see rates and fees). Citi Hotel Collection benefits include:

    • Daily breakfast for two people
    • Free Wi-Fi
    • Early check-in and late check-out (when available)

    For those with Citi Premier® Card and Citi Prestige® Card (no longer available to new applicants), you’ll have access to Citi’s Luxury Collection perks on top of the Hotel Collection benefits. To use either of these benefits, you’ll need to search for hotels through the Citi Travel Portal. Within the search results, eligible hotels will be labeled with Hotel Collection or Luxury Collection tags.

    Citi Premier® Card

    • Rewards

      3X points per $1 spent at restaurants, supermarkets, gas stations, and on hotels and air travel, 1X points on all other purchases

    • Welcome bonus

      Earn 60,000 bonus ThankYou® Points after you spend $4,000 in purchases within the first 3 months of account opening. Plus, for a limited time, earn a total of 10 ThankYou® Points per $1 spent on hotel, car rentals, and attractions (excluding air travel) booked on the Citi Travel℠ portal through June 30, 2024.

    • Annual fee

    • Intro APR

    • Regular APR

    • Balance transfer fee

      5% of each balance transfer, $5 minimum

    • Foreign transaction fee

    • Credit needed

    Chase Sapphire Reserve®

    • Rewards

      Earn 5X total points on flights and 10X total points on hotels and car rentals when you purchase travel through Chase Ultimate Rewards® immediately after the first $300 is spent on travel purchases annually. Earn 3X points on other travel and dining & 1 point per $1 spent on all other purchases plus, 10X points on Lyft rides through March 2025

    • Welcome bonus

      Earn 60,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That’s $900 toward travel when you redeem through Chase Ultimate Rewards®

    • Annual fee

    • Intro APR

    • Regular APR

    • Balance transfer fee

    • Foreign transaction fee

    • Credit needed

    Subscribe to the CNBC Select Newsletter!

    Money matters — so make the most of it. Get expert tips, strategies, news and everything else you need to maximize your money, right to your inbox. Sign up here.

    Bottom line

    For rates and fees of the American Express® Gold Card, click here.

    Information about the Capital One Venture X Business, Spark Miles for Business, Citi Prestige® Card has been collected independently by Select and has not been reviewed or provided by the issuer of the card prior to publication.

    Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.

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  • Is Your Retirement Administered by Qualified People? | Entrepreneur

    Is Your Retirement Administered by Qualified People? | Entrepreneur

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    With an insurmountable amount of tools and resources at your fingertips, you could theoretically plan your own retirement. Examples include Money’s asset allocation calculator and retirement planning calculator, as well as the following guides from Due;

    But, let’s be honest here. Preparing for your retirement can get complicated. Gone are the days of pension plans. The cost of living is skyrocketing across the country. And, even if you’re in good health today, you have to take into account the high cost of prescription medication and long-term care.

    As if that weren’t enough to lose sleep over, you also need to be aware of RMD rules and when to claim Social security. There are also withdrawal rates and investments to consider as well.

    If you aren’t familiar with all this, retirement suddenly becomes overwhelming. Even worse? You may end up making retirement mistakes that could cost you millions.

    As such, it’s probably in your best interest with a retirement advisor. But, to ensure that you avoid these costly missteps and achieve your retirement goals, you need to work with a qualified retirement advisor.

    What is a retirement advisor?

    A retirement advisor is someone who can assist you in planning and saving for your financial future. However, they should also be knowledgeable in a variety of areas, such as investing and insurance. They should also have some familiarity with estate planning and long-term care too.

    Generally, you can identify these experts by their credentials and titles, such as;

    • Certified Financial Planner
    • Certified Senior Consultant
    • Chartered Financial Analyst
    • Chartered Retirement Plans Specialist or Counselor
    • Personal Financial Specialist
    • Registered Investment Advisor
    • Retirement Income Certified Professional

    Each of these professionals has various training and expertise. They also provide different services. To give you peace of mind though, in order to earn these distinctions they must have enrolled in specialized education and passed an exam.

    What do retirement advisors do?

    Depending on their specific certification, this will vary among retirement advisors. In most cases, however, they should be able to help you with the following;

    • Help you create a retirement savings goal and the steps you must take to achieve that.
    • Identify any gaps in your retirement savings plan.
    • Which types of retirement accounts to open and how to maximize them.
    • Which accounts to take withdrawals from each year in order to avoid fees and minimize taxes in retirement.
    • Devise a strategy for eliminating your debt.
    • Discuss a plan for medical and healthcare expenses.
    • How to start and diversify an investment portfolio.
    • Whether you should keep life insurance or not.
    • When you should claim Social Security benefits.
    • Inform you about ways to supplement your retirement income, such as through annuities.
    • If you’re self-employed, they can help you pick the right plan and catch up on your retirement.

    This is by no means an extensive list. It’s only to give you an idea of how a financial advisor can help you secure your financial future. Just note that they will not make recommendations until they get to know you and understand factors like your goals, time horizon, and investment knowledge.

    When do I hire a retirement advisor?

    You won’t like this answer. But, it depends. Some experts recommend that you hire a retirement advisor when you’re 10 years away from retirement. Others state that you can actually wait until you’re five years out. And, some even suggest that you don’t have to do this until you’re nearing a decision regarding Social Security or pension elections.

    At the same time, it wouldn’t hurt to do this sooner than later. Working with a retirement advisor gives you more time to strategize, plan, and save. They can also protect your savings and investments from market volatility so that you’re no longer sweating your retirement.

    What should I expect when meeting with a financial advisor?

    “The first thing you should expect when you sit down with a retirement advisor is a detailed look at your complete financial picture,” writes Adam Hayes for Investopedia. They will most likely ask you questions like;

    • What are your assets?
    • Do you have investments, real estate, pending inheritances, or other resources of value?
    • What are your debts? Do you have a mortgage, car payments, credit cards, student loans, small business liabilities, or other loans?
    • How do you service your debt while still saving for retirement?
    • What are your retirement plans?
    • Do you want to retire early or keep working for as long as you can?
    • How much will you collect from Social Security each month, and when is the best time to start collecting benefits?
    • Are you adequately covered by insurance?

    “Once your retirement advisor collects all of your information, a report will usually be drafted providing you with detailed financial information about your retirement,” adds Hayes. “This report will include how much money you will be able to withdraw from the account each month and how much you will need to save on a monthly basis to reach that goal.”

    Taxes, Portfolios, and Fees — Oh My!

    “Your retirement advisor should also take you through the various tax considerations of your financial picture,” he says. “If you have a traditional IRA, should you consider making it a Roth? How can you minimize the taxes you will pay on your other assets? How about your estate? If you end up with a lot of assets, how will you minimize your estate taxes?”

    What if the advisor is an experienced portfolio manager? They may be able to “set up a portfolio that fits your goals,” states Hayes. “If your advisor isn’t able to do that, they may recommend someone who can.”

    Also, you will be expected to pay your retirement advisor. Each charge differently. Some charge an hourly rate, while others a flat fee.

    Additionally, you may be charged a quarterly or annual retainer fee or a percentage of assets that they manage on your behalf. And, some may earn a commission from financial or insurance products you purchase.

    How do I find a retirement advisor?

    The easiest way to find a retirement advisor would be through referrals. If that river is dry, you start by searching for special certifications, such as certified financial planner (CFP) or the American College’s retirement income certified professional (RICP) designation. You can also check out RIIA, the Retirement Income Industry Association.

    Furthermore, your bank or investment firms also have retirement advisors on-hand — either in-house or hired independently. Just be aware that they may push products, such as their bank’s mutual funds.

    When you do narrow down your candidates, make sure that you consider;

    • Their background and certification(s).
    • The services that they offer.
    • How you’ll be charged.
    • Whether or not they are fiduciary.
    • The characteristics that they possess, such as integrity, availability, and understanding.
    • Their investment strategy.

    Final words of advice.

    Even after you find a qualified professional to assist you with your retirement plan, make sure that you keep the lines of communication open. Just like visiting your dentist, you should meet with your retirement advisor twice a year to assess your progress and make adjustments as needed. For example, your needs and goals are vastly different when you’re 35 to when you reach 55.

    The post Is Your Retirement Administered by Qualified People? appeared first on Due.

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    Albert Costill

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  • HELOCs are back. Cash-strapped borrowers are tapping into a $33 trillion pile of home equity.

    HELOCs are back. Cash-strapped borrowers are tapping into a $33 trillion pile of home equity.

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    Goodbye pandemic refi cash-outs. Hello HELOCs?

    Home-equity lines of credit (HELOCs) and second-lien mortgages have been staging a notable comeback as U.S. homeowners look for liquidity and ways to monetize the pandemic surge in home prices, according to BofA Global.

    It used to be that borrowers sitting on an estimated $33 trillion pile of equity built up in their homes could simply refinance and pull out cash, until the Federal Reserve’s rapid rate hikes began squelching the option.

    Now, with mortgage rates above 6%, and the Fed penciling in two more rate hikes in 2023, cash-strapped homeowners have been seeking out alternatives to extract cash from their properties.

    While cash-out refinances tumbled 83% in the fourth quarter of 2022 from a year before, HELOCs rose 7% and home-equity loans grew 31%, according to the latest TransUnion data.

    “Borrower demand remains high, particularly given household budgets have been pressured by rising food and energy costs,” a BofA Global credit strategy team led by Pratik Gupta’s, wrote in a weekly client note.

    Risky loans to subprime borrowers and home equity products helped precipitate the 2007-2008 global financial crisis and the era’s wave of devastating home foreclosures.

    At the time, households had more than $1.2 trillion of home equity revolving and available credit (see chart), whereas the figure was closer to $900 billion in the first quarter of this year.

    Home equity products are making a big comeback as households seek liquidity


    BofA Global, New York Fed Consumer Credit Panel/Equifax

    The pandemic saw home prices surge, giving a big boost to home equity levels. The Urban Institute pegged home equity in the U.S. at $33 trillion as of May, up from a post-2008 peak of about $15 trillion.

    BofA analysts argued this time home equity products look different, with roughly $17 trillion of tappable equity across 117 million U.S. homeowners, and most borrowers having high credit scores and low rates.

    “The vast majority of that — $14 trillion — is from the cohort of homeowners who own their homes free & clear,” Gupta’s team wrote.

    Another $1.6 trillion of equity could be available from Freddie Mac and Fannie Mae borrowers, according to his team, which pegged an estimated 94% of all outstanding U.S. first-lien home mortgages now below 4% rates.

    Major banks own the bulk of home equity balances (see chart), led by Bank of America Corp.
    BAC,
    +1.23%    ,
    PNC Bank
    PNC,
    +0.57%    ,
    Wells Fargo,
    WFC,
    -0.05%    ,
    JPMorgan Chase
    JPM,
    +0.24%
    and Citizens
    CFG,
    +0.35%    ,
    according to the team, which notes several other major banks appear to have hit pause on their programs.

    A smaller portion of HELOCs and second-lien mortgages have been securitized, or packaged up and sold as bond deals, while nonbank lenders have been offering the products as well.

    Stocks closed lower Monday, taking a pause from a recent rally, as investors monitored weekend tumult in Russia. The Dow Jones Industrial Average
    DJIA,
    -0.04%
    was less than 0.1% lower, while the S&P 500 index
    SPX,
    -0.45%
    was off 0.5% and the Nasdaq Composite
    COMP,
    -1.16%
    fell 1.2%, according to FactSet.

    Related: The economy was supposed to cave in by now. It hasn’t — and GDP is set to rise again.

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  • ‘The war on remote work is not over.’ But one group in particular is heading back to the office.

    ‘The war on remote work is not over.’ But one group in particular is heading back to the office.

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    As the fight between bosses and workers over returning to the office keeps entering new rounds, new data show how much in-office attendance ramped up last year — especially for white-collar workers with high levels of education.

    But even still, the return to the office has been two different stories for men and women. From 2021 to 2022, men spent more time at the workplace while women spent the same amount of time working from home year-over-year.

    Last year, 34% of workers said they worked from home at least part of the time, according to the annual Bureau of Labor Statistics survey of how Americans spend their time.

    That was down from the 38% of employed people who said the same in 2021 — and a deeper look into Thursday’s data reveals an even more pronounced, but uneven, reduction in the number of people who are working remotely.

    More than one quarter of men in 2022 said they spend at least some of their working time at home, while 41% of women said they had work-from-home in their job schedule. One year earlier, it was a different story for men, but not for women. Over one-third of men, 35%, said working from home was part of their routine while 42% of women said the same.

    It may be a reminder of the juggle that women face between their personal and professional lives. For example, in homes with children under age 6, women spent just over an hour each day caring for their children while men in those households spent half that amount. That breakdown was unchanged between 2022 and 2021, the data showed.

    Meanwhile, the return-to-office trend accelerated for more educated workers from 2021 to 2022. In 2021, 60% of people with at least a bachelor’s degree said they did some of their work from home. In 2022, the share fell to 54% doing some work from home.

    When the pandemic shut down offices and other workplaces, people with higher levels of education often had greater chances of being able to stay home while they worked.

    That dynamic is still at play now, although the differences between groups are becoming less stark. Last year and in 2021, the share of people with no college degree who said they worked from home at least some of the time stayed below 20%.

    It’s unclear what was driving highly-educated workers to spend more time in the office between 2021 and 2022, said Stephan Meier, a Columbia Business School professor who chairs the school’s management division. Some of it could be attributed to return-to-office policies, but it might also be due to growing comfort with vaccination and public-health measures as the pandemic continued, he said.

    “What I would care about is who goes to the office and who doesn’t want to go to the office,” he said.

    The overall change in numbers is not “a major shift,” said Meier, who teaches students and executives about the future of work. “What those numbers show to me is that the war on remote work is not over.”

    The year-over-year decline fits with the trends that Nicholas Bloom, a professor of economics at Stanford University, is seeing in his own research analyzing where people say they are working these days. Even if there’s less remote work happening, Bloom said, his research shows the “rate of decline is itself declining.”

    Bloom thinks the rate of remote work may bottom out next year. “I predict longer-run, from 2025 onwards, this will start to rise again as remote-work technology — hardware, software, [virtual reality, augmented reality], etc. — gets better and continues the long-run rise of [working from home].”

    Between May and December 2020, Bureau of Labor Statistics research showed, 42% of employed people said they spent least some of their time working from home as COVID-19 upended daily life.

    As a whole, the BLS survey on how Americans use their time paints a picture of a slow return to the office — but not necessarily a return to the way things were before COVID-19.

    Before the pandemic, 24% of workers said they spent some of their time working from home, according to the Bureau of Labor Statistics.

    This year, office foot traffic has edged higher, but the rise is incremental and uneven. Earlier in June, average weekly office occupancy surpassed 50% for the first time in three months, according to an ongoing gauge from Kastle Systems, a security-technology provider.

    One week later, the company’s barometer of average occupancy across 10 major cities dropped back below 50%. In the data from early June, Tuesdays tended to be the busiest days for offices, and Fridays were the slowest.

    Meier said he wouldn’t be surprised if next year’s time-use survey reveals even less time spent working from home. But this is a transitional moment in which businesses are figuring out the particular version of hybrid work duties and office setups that work for them, he said.

    “Personally, I do think there is something magical about being in person,” Meier said. “Does it need to be five days a week? Absolutely not.”

    See also: Salesforce is trying a ‘cute gimmick’ to get workers back to the office, but it may fall flat

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  • How Does Raising Interest Rates Lower Inflation? | Entrepreneur

    How Does Raising Interest Rates Lower Inflation? | Entrepreneur

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    Between March 2022 and March 2023, the Fed raised the federal funds target rate by 475 basis points or 4.75%. This news was widely covered in the media because it wasn’t immediately clear whether the persistent rate hikes were slowing inflation.

    If you’re reading this article, there’s a chance inflation is high right now, and you’ve been hearing about the Fed raising interest rates. Many people are confused about the Fed’s monetary policy and how raising interest rates can affect what you pay at the gas pump or supermarket. In this article, we’ll try to clarify the relationship between the two.

    Key Takeaways

    • When consumer demand exceeds supply, the prices of goods and services increase until the Fed can restore a balance.
    • Higher interest rates tend to discourage spending and encourage saving money, which lowers demand to bring supply and demand back in balance.
    • The most considerable risk with raising interest rates to lower inflation is that there usually won’t be a soft landing, which can push the economy into a recession.

    What You’ve Likely Heard

    If you’ve seen a news segment on the Fed raising interest rates or heard a relative complain about the high cost of borrowing, you may have preconceptions about what raising interest rates means.

    For example, you may think that rate hikes always cause an economic recession. You may also have heard the Fed wants to raise unemployment to stop inflation. Neither of these paint an entirely accurate picture of the situation.

    The Fed generally raises interest rates when inflation doesn’t naturally resolve itself. While an economic recession is a risk of rate hikes, it’s not a certainty. Let’s go into further detail to understand the Fed’s thought process and how its actions affect inflation.

    Monetary Policy

    The Federal Reserve is the central banking system of the US and has the dual mandate of maintaining sustainable growth and maximizing employment. The Fed influences these things through monetary policy, the tools available to the Fed with which they control the nation’s money supply.

    The federal funds target rate is one of the Fed’s monetary policy tools.

    The fed funds rate indirectly affects the rate at which banks borrow and lend their excess reserves to each other overnight. Because banks have to meet specific reserve requirements related to the amount of money they keep on hand, a higher fed funds rate disincentivizes borrowing.

    The fed funds rate impacts more than just banks. Borrowing becomes more expensive for consumers when the Fed raises rates, encouraging people to save money and decreasing demand. When demand falls, it allows prices to stabilize and curbs inflation.

    But before we go into more detail, we should also understand what causes high inflation in the first place.

    What Causes High Inflation?

    There are many possible reasons why inflation could be on the rise in an economy. Generally speaking, inflation can increase when the cost of raw materials or production increases, demand for products surges past the supply level, or the government’s fiscal policies cause disruptions. Many other factors could exacerbate inflation, from supply chain issues caused by global conflict to unexpected demand levels, as we saw governments lifting pandemic restrictions.

    For a case study of rising inflation and the Fed’s response, let’s consider the build-up to the 475 bps rate hike from 2022 to 2023.

    Initially, inflation was labeled as “transitory” in the spring of 2021 because the Fed believed the unique spike in global demand from loosening pandemic restrictions was causing the price increase. The supply chains couldn’t keep up because they had grown accustomed to a “new normal,” so when consumer demand shifted, there was a delay as supply chains caught up.

    There were also unique global events impacting inflation in 2022. The Russian attack on Ukraine disrupted global supply chains, and many countries introduced sanctions against Russia. The Russian war with Ukraine heavily affected energy prices, as the former held a high market share of European gas.

    This huge mismatch in supply and demand led to increased prices, with inflation reaching 8.3% year-over-year in August 2022.

    How Does Raising Rates Lower Inflation?

    It may seem counterintuitive to hear the central banks raise interest rates because everything is becoming more expensive. But we can’t stress enough that price stability is the goal of raising rates.

    In the event of high inflation (unsustainable economic growth), the central bank has to decrease the money supply to restore the balance of demand and supply. Said another way, demand has to slow down enough for supply to catch up.

    When borrowing money costs more due to higher rates, consumers are less likely to carry credit card debt or apply for a loan. An auto loan or mortgage is now more expensive. You may not make that home purchase if borrowing costs you more than it would have a year ago. Consumers may think twice before putting a transaction on a high-interest-rate credit card.

    The Fed aims to bring demand down enough to match supply, which should control the increasing prices. The challenge is to get the entire economy down to an acceptable level without leading it into a recession.

    Does Raising Interest Rates Always Work for Fighting Inflation?

    The obvious question many of us have is whether monetary policy always works. It feels frustrating that the move to fight inflation is to cool off the whole economy. A frequent effect of rising interest rates is higher unemployment, as many companies adjust to reduced revenue and a stop to growth.

    The truth is that the Fed only has so many tools that it can use to control inflation. The Fed can raise rates to fight inflation but can’t introduce fiscal policies or pass laws.

    The government introduces fiscal policies and legislation to support the central banks. Using our 2022-23 case study again, we saw fiscal policy used in August 2022 when President Biden signed the Inflation Reduction Act into law. The government can also broker deals with other countries to increase supply, thereby alleviating issues with the supply of raw materials.

    The Fed is also obviously limited when it comes to influencing global supply chains. Using our case study, the Fed couldn’t single-handedly resolve the conflict in Ukraine, which caused massive disruptions in the world’s grain, gas, and oil supply.

    The danger of the Fed not managing inflation is serious. Stagflation, though rare, is a possibility. Stagflation refers to a uniquely dangerous economic situation in which inflation and unemployment are high, and economic demand has stagnated.

    While the Fed will try to bring demand in line with supply, supply chain issues make this restoration difficult. There are no one-size-fits-all solutions for managing supply, as the central bank can’t control global conflict.

    What Are the Consequences of Interest Rates Increasing?

    Many consequences come with raising interest rates; certain people can suffer more than others.

    When borrowing money becomes more expensive, getting a mortgage, applying for an auto loan, or getting a business loan to grow a company becomes costlier. Businesses and consumers will spend less, cooling off the economy. Unfortunately, this can also lead to job loss. Every industry impacted by the rate hikes will likely report lower earnings, leading to layoffs and higher unemployment rates.

    It’s difficult to anticipate the impact of every rate hike on consumer spending. The Fed aims to engineer a soft landing where prices cool down without mass job loss and a full-blown recession.

    How Can You Invest Your Money?

    When the Fed announces interest rate hikes, the stock market tends to suffer. It becomes challenging to find the best investment when interest rates are high because uncertainty can lead to stock market sell-offs.

    Companies that are generally considered recession-proof include utility companies, food and beverage vendors, discount retail stores, and healthcare companies. If high interest rates lead to a recession, discretionary spending usually decreases, but not in the essential sectors of the economy.

    Bond Prices and Interest Rates

    When the Fed adjusts the fed funds rate, it affects the bond market. Bonds and interest rates have an inverse relationship. Because most bonds come with a fixed rate when interest rates fall, bonds with now comparatively high rates become more attractive to bond investors. This pushes the price of bonds higher. Conversely, if the Fed raises rates, bonds with relatively low rates become less attractive investments, causing their prices to decrease.

    You may hear about something called an inverted yield curve. This refers to shorter-term bonds having higher yields than longer-term bonds. This is considered an inversion of what should be true: taking a longer-term bond (a bond with greater risk) should earn you a higher yield.

    An inverted yield curve suggests investors are not confident about the economy’s future, and experts see it as an indicator of an upcoming recession.

    The Bottom Line

    News around high inflation tends to be doom and gloom. Rate hikes can end companies’ growth periods, lead to unemployment, and push the economy into recession. At the same time, out-of-control inflation can lead to even more dangerous economic situations.

    The Fed will fight against inflation by raising interest rates until supply and demand come back into balance. Don’t be surprised to hear about rate hikes in the future, as they’re a common reaction to high inflation. You can prepare yourself financially for the worst-case scenario by saving money and diversifying your income.

    The post How Does Raising Interest Rates Lower Inflation? appeared first on Due.

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  • We’re 54, have $4.5 million in savings but don’t know how to withdraw it in retirement. What should we do?

    We’re 54, have $4.5 million in savings but don’t know how to withdraw it in retirement. What should we do?

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    My wife and I are both 54 years old and have accumulated a taxable account totaling $2.3 million, and retirement assets totaling $2.2 million. We hope to retire at 55, and we are wondering about the best way to take our distributions. Clearly we will not touch the qualified money until we reach 59½.  

    I understand the 4% rule, but when it comes to taking the money, is it better to have a set monthly, quarterly, or annual withdrawal, or is it better to take a lump sum? I can see myself going crazy trying to time market tops in order to take distributions. I was planning to take money off the table after the peak in 2021. I purposely held out until 2022 for tax purposes and that backfired.  

    Is the best course of action to set it and forget on a monthly, quarterly, or annual basis?

    See: I’m 54 and the primary earner but ‘professionally, I am exhausted’ — we have $2.18 million but what about healthcare?

    Dear reader, 

    You touch on a really common issue retirees have: the distribution phase. 

    For decades, Americans are told to save, save, save for retirement, but then they get to the point where they need to start using the money…and that can be a complicated process. Retirees need to have an idea of how much to withdraw, what that distribution’s impact will be on the rest of their nest egg, what to expect come tax time and how not to use that money too quickly. 

    Like so much in personal finance, the answer to your question is highly dependent on individual circumstances. I’ll get to that in a minute. 

    First, a note about the 4% rule. This rule is meant to be a guideline. For some people, 4% is too much, while for others, it isn’t enough. Experts have argued its applicability, too — Morningstar, for example, said retirees could use a rate of 3.3% and would have a 90% probability of not running out of money in retirement. 

    Want more actionable tips for your retirement savings journey? Read MarketWatch’s “Retirement Hacks” column

    Before you commit to the 4% rule (which, of course, you can always adjust as the years go on), do a few quick calculations on how much you expect to spend in retirement — with a buffer included — and see what the percentage of your total retirement savings actually is. You may be able to retain more in your retirement assets than you expected. 

    If you’re still not sure on how much to take out, perhaps start a bit more conservatively in an effort to preserve your investments. The less money you take out, the more in your accounts that can continue to grow.

    Also, be aware of something called the “sequence of returns” risk, which is when your portfolio value drops too quickly at the beginning of your distribution journey. The result could be less than ideal for your account.

    Read: The Decumulation Drawdown: How spending became the big dilemma in retirement

    Pay attention to the tax implications of your decision, and consider consulting a qualified financial planner and/or an accountant to help you run the numbers. There are plenty of factors you have not included in your letter, such as if any of that money is in Roth accounts, and even then, a qualified financial planner can get into the granular details to help you make the most of your retirement spending and savings. You might find making Roth conversions to be beneficial as your taxable income drops — it’s also a way to avoid required minimum distributions down the road. 

    Also, you’re right not to touch your retirement assets until you’re 59 ½ years old (and for readers who are unaware, that’s when most retirement account assets become available without incurring a penalty). There are exceptions, such as the “55 rule,” which is when you are allowed to withdraw from your retirement account after separation from service if you are 55 or older. The account you can withdraw from must be linked to the job from which you’re separating, and there may be other stipulations attached. Check with your employer about what you are and aren’t allowed to do with your retirement plan. 

    Now, how often to distribute. This will depend on your comfort level, but some advisers suggest pulling six to 12 months’ of monthly expenses in a money-market account and then creating a paycheck effect. “Setting up monthly or biweekly distributions will create the feel of still working and help you stay within your budget,” said Brian Schmehil, a certified financial planner and managing director of wealth management for The Mather Group. 

    Also see: At 55 years old, I will have worked for 30 years — what are the pros and cons of retiring at that age? 

    Make sure the accounts you’re drawing from have shorter investment horizons and are in less risky investments, which will help you “continue to spend what you want to spend and accomplish your goals without having to be overly mindful of market volatility,” Schmehil said. This is in line with the bucket approach, which is when your assets are divided into various investment horizons. The least risky is in your shorter-term “bucket,” whereas the investments with the most risk are earmarked for the long term. 

    Having a monthly distribution schedule might help keep you in check. “I like to use monthly for most people,” said David Haas, a certified financial planner and owner of Cereus Financial Advisors. “It keeps them thinking about a monthly budget if they have a propensity to spend too much.” 

    Keep in mind how many variables can change over the course of your retirement. For example, if you switch up where your retirement money comes from — your taxable account, your retirement accounts, Social Security, etc. — your tax liabilities could change. Also, inflation might have an impact on your spending, or how quickly you draw down your distribution. Your risk tolerance may also transform, especially as you get older and you see your nest egg dwindle or you face market volatility. The frequency in which you take your money might change too, and if it does, that’s OK.

    Readers: Do you have suggestions for this reader? Add them in the comments below.

    Have a question about your own retirement savings? Email us at HelpMeRetire@marketwatch.com

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  • We’re 54, have $4.5 million in savings but don’t know how to withdraw it in retirement. What should we do?

    We’re 54, have $4.5 million in savings but don’t know how to withdraw it in retirement. What should we do?

    [ad_1]

    My wife and I are both 54 years old and have accumulated a taxable account totaling $2.3 million, and retirement assets totaling $2.2 million. We hope to retire at 55, and we are wondering about the best way to take our distributions. Clearly we will not touch the qualified money until we reach 59½.  

    I understand the 4% rule, but when it comes to taking the money, is it better to have a set monthly, quarterly, or annual withdrawal, or is it better to take a lump sum? I can see myself going crazy trying to time market tops in order to take distributions. I was planning to take money off the table after the peak in 2021. I purposely held out until 2022 for tax purposes and that backfired.  

    Is the best course of action to set it and forget on a monthly, quarterly, or annual basis?

    See: I’m 54 and the primary earner but ‘professionally, I am exhausted’ — we have $2.18 million but what about healthcare?

    Dear reader, 

    You touch on a really common issue retirees have: the distribution phase. 

    For decades, Americans are told to save, save, save for retirement, but then they get to the point where they need to start using the money…and that can be a complicated process. Retirees need to have an idea of how much to withdraw, what that distribution’s impact will be on the rest of their nest egg, what to expect come tax time and how not to use that money too quickly. 

    Like so much in personal finance, the answer to your question is highly dependent on individual circumstances. I’ll get to that in a minute. 

    First, a note about the 4% rule. This rule is meant to be a guideline. For some people, 4% is too much, while for others, it isn’t enough. Experts have argued its applicability, too — Morningstar, for example, said retirees could use a rate of 3.3% and would have a 90% probability of not running out of money in retirement. 

    Want more actionable tips for your retirement savings journey? Read MarketWatch’s “Retirement Hacks” column

    Before you commit to the 4% rule (which, of course, you can always adjust as the years go on), do a few quick calculations on how much you expect to spend in retirement — with a buffer included — and see what the percentage of your total retirement savings actually is. You may be able to retain more in your retirement assets than you expected. 

    If you’re still not sure on how much to take out, perhaps start a bit more conservatively in an effort to preserve your investments. The less money you take out, the more in your accounts that can continue to grow.

    Also, be aware of something called the “sequence of returns” risk, which is when your portfolio value drops too quickly at the beginning of your distribution journey. The result could be less than ideal for your account.

    Read: The Decumulation Drawdown: How spending became the big dilemma in retirement

    Pay attention to the tax implications of your decision, and consider consulting a qualified financial planner and/or an accountant to help you run the numbers. There are plenty of factors you have not included in your letter, such as if any of that money is in Roth accounts, and even then, a qualified financial planner can get into the granular details to help you make the most of your retirement spending and savings. You might find making Roth conversions to be beneficial as your taxable income drops — it’s also a way to avoid required minimum distributions down the road. 

    Also, you’re right not to touch your retirement assets until you’re 59 ½ years old (and for readers who are unaware, that’s when most retirement account assets become available without incurring a penalty). There are exceptions, such as the “55 rule,” which is when you are allowed to withdraw from your retirement account after separation from service if you are 55 or older. The account you can withdraw from must be linked to the job from which you’re separating, and there may be other stipulations attached. Check with your employer about what you are and aren’t allowed to do with your retirement plan. 

    Now, how often to distribute. This will depend on your comfort level, but some advisers suggest pulling six to 12 months’ of monthly expenses in a money-market account and then creating a paycheck effect. “Setting up monthly or biweekly distributions will create the feel of still working and help you stay within your budget,” said Brian Schmehil, a certified financial planner and managing director of wealth management for The Mather Group. 

    Also see: At 55 years old, I will have worked for 30 years — what are the pros and cons of retiring at that age? 

    Make sure the accounts you’re drawing from have shorter investment horizons and are in less risky investments, which will help you “continue to spend what you want to spend and accomplish your goals without having to be overly mindful of market volatility,” Schmehil said. This is in line with the bucket approach, which is when your assets are divided into various investment horizons. The least risky is in your shorter-term “bucket,” whereas the investments with the most risk are earmarked for the long term. 

    Having a monthly distribution schedule might help keep you in check. “I like to use monthly for most people,” said David Haas, a certified financial planner and owner of Cereus Financial Advisors. “It keeps them thinking about a monthly budget if they have a propensity to spend too much.” 

    Keep in mind how many variables can change over the course of your retirement. For example, if you switch up where your retirement money comes from — your taxable account, your retirement accounts, Social Security, etc. — your tax liabilities could change. Also, inflation might have an impact on your spending, or how quickly you draw down your distribution. Your risk tolerance may also transform, especially as you get older and you see your nest egg dwindle or you face market volatility. The frequency in which you take your money might change too, and if it does, that’s OK.

    Readers: Do you have suggestions for this reader? Add them in the comments below.

    Have a question about your own retirement savings? Email us at HelpMeRetire@marketwatch.com

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  • Why top pick Victor Wembanyama could be worth over $80 million a year to the Spurs

    Why top pick Victor Wembanyama could be worth over $80 million a year to the Spurs

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    That’s how Victor Wembanyama introduced himself the day before the NBA draft, when he conducted his first news conference before NBA media. But to talent evaluators, Wembanyama has already emerged as one of the top NBA prospects of a generation with his dominant play for a French professional team this season, and his tantalizing upside on the basketball court.

    The 19-year-old, 7-foot-5 Frenchmen — who goes by “Wemby” — was selected with the first pick in the NBA Draft on Thursday night by the San Antonio Spurs, and the team could be set for a huge financial windfall from Wembanyama’s arrival.

    The Spurs could see an increase of roughly $8 million-$10 million in season ticket sales, an added $5 million-$10 million in incremental ticket revenue from higher and dynamic pricing, and another $5 million-$10 million in corporate sponsorships, according to Dr. Patrick Rishe, the director of the sports business program at Washington University in St. Louis.

    “All told, the impact on team revenues in 2023-24 will likely be somewhere in the $20-$50 million range,” Rishe said, while adding that the Spurs may also be able to leverage Wembanyama’s arrival when negotiating its next local TV contract.

    See also: Victor Wembanyama: 5 things to know about the generational NBA prospect

    Another economics expert thinks Wembanyama’s financial impact on the Spurs could be even higher.

    “$80 million a year to the Spurs for the next few years, that was roughly equal to the increase in revenues that we saw when LeBron James moved back from Miami to Cleveland,” Victor Matheson, economics professor at the College of the Holy Cross, told MarketWatch.

    NBA first-round draft picks like Wembanyama sign a four-year contract upon entering the league. After that, the team that drafted the player has a significant edge in retaining him on his next contract because they are allowed to give him larger pay raises than any other club. Because of this, young players who turn into superstars rarely leave the teams that drafted them for the first seven years of their career, meaning Wembanyama could pay dividends to the Spurs in the hundreds of millions of dollars if he stays with the team.

    See also: LeBron James vs. Michael Jordan: Who is the GOAT when it comes to net worth?

    While the Spurs are not for sale, some think Wembanyama’s presence alone will increase that value of the team, which was roughly $2 billion as of 2022 (or 20th in the NBA).

    “I suspect that just the cachet of having this player on your team would be the sort of thing that would entice an owner potentially to pay more for the team, because owners in sports aren’t just about dollars and cents, they’re about dollars and cents, and the prestige and the ego that go along with owning an NBA franchise,” said Matheson.

    The NBA has complex revenue sharing agreements among teams to help level the financial playing field between the small-market and big-market teams. Because of this agreement, not every dollar Wembanyama makes for the Spurs goes directly to the team.

    So it’s clear that Wembanyama could provide a major financial boost for the Spurs. But his immediate impact on the NBA overall might seem small, considering the league made over $10 billion last year, according to Statista. But another area where Wembanyama could help the NBA in a huge way is by unlocking a new audience for NBA games: France.

    “A guy like him can certainly open up new markets for you. So obviously, we have had top players from France before like Tony Parker, but this might be maybe a level beyond that,” Matheson said. “And if you could open up a 60 million person country, and all of a sudden make the NBA must-see TV in Paris and not just in the United States, that’s where you can really generate a lot.”

    Matheson compared Wembanyama’s arrival to that of China’s Yao Ming coming into the NBA, and Japan’s baseball star Ichiro Suzuki’s arrival in the MLB, which both opened up massive international markets that those leagues didn’t already have a big presence in.

    ESPN’s Adrian Wojnarowski reported that drafting Wembanyama could add as much as $500 million to the value of an NBA franchise.

    But some sports industry experts see Wembanyama’s impact as more muted, noting the possibility that he maybe doesn’t live up to the incredible hype, as well as the limitations of San Antonio’s smaller market size compared to cities like New York.

    “This could be a significant turning point for the fortunes of the Spurs, both on and off the court, but it is worth remembering that players are different ‘assets’ than, say, arenas,” Michael Leeds, professor of economics and director of graduate studies at Temple University, told MarketWatch. “There is a lot of uncertainty among even top picks.” 

    He recalled how Sam Bowie was chosen ahead of Michael Jordan during the 1984 draft, yet Jordan became a superstar, while Bowie did not have much of a basketball career. “A player’s career can be derailed for a lot of reasons,” Leeds added. “I do not think that Wembanyama will have that much of an immediate impact on the financial fortunes of the Spurs.”

    See also: Here’s how much Victor Wembanyama and other 2023 NBA draft picks will earn on their rookie contracts

    The Spurs are also hurt by their market size in San Antonio, which some say limits their financial upside compared to a bigger market like New York or Los Angeles. San Antonio is the 24th biggest TV market (out of 30) among NBA teams, according to Sports Media Watch.

    “The San Antonio market is small and has demographics that generally don’t support the NBA,” Emory University marketing professor Michael Lewis told MarketWatch. “There are markets that could benefit greatly from a generational talent, but the Spurs seem unlikely.”

    “It helps the franchise but over the long run players move from place to place,” added Sal Galatioto, the president of Galatioto Sports Partners, who has facilitated over 30 sales of professional sports teams — including the sale of the Golden State Warriors in 2010. “Players get hurt. Players aren’t as good as you think they are.”

    Galatioto cited the recent sale of the NBA’s Charlotte Hornets at a $3 billion valuation as evidence that franchise appraisals are getting higher, and not much of that increase is based on what happens on the court.

    “When was the last time Charlotte won anything?” he asked.

    Read on: NBA All-Star Chris Paul on what he looks for in an investment, competing with LeBron James, and his favorite possession

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  • Off-Season, On Budget: How Simplifying Your Travel Can Save You Money | Entrepreneur

    Off-Season, On Budget: How Simplifying Your Travel Can Save You Money | Entrepreneur

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    Traveling is not cheap, and it’s definitely not easy. A vacation can take months to research, plan, and save for, depending on the destination and duration.

    Despite this, travel demand has steadily increased following the COVID-19 pandemic. As of May 18, 2023, the Transportation Security Administration (TSA) had screened 2,627,978 passengers compared to 2,366,865 in 20223. That’s not quite back to pre-pandemic levels. But it’s close.

    Even though travel is still lower than 2019, there is a shortage of airline seats, hotel rooms, and overworked staff. There are plenty of deals to be had if you look hard enough. However, competition is fierce as ever to get consumers back on the road — especially during the summer when 85% of Americans plan to travel.

    Thankfully, there are ways to budget for an unforgettable vacation. But, first, you have to simplify your life.

    Limit your purchases.

    “Generally I try not to buy many things,” says Erin Spens, editor and co-founder of Boat magazine. “I’d much rather have the time and money to travel than work like crazy just to buy stuff.”

    Erin considers the places she has visited and the memories she has, even when she sees something that she’d really want to own. “And that helps me put ‘value’ into perspective,” she adds.

    Small purchases aren’t the only thing to consider. You may also want to second-guess your larger purchases. For example, when my friends bought their first home they chose to buy a smaller house. They could have afforded something bigger. However, they used the savings from owning a smaller home on travel.

    Sell what you don’t need.

    How about the stuff you already own?

    Basically, if you have things you don’t want or need, you should sell your stuff. Your closet may be filled with clothes that you don’t wear, collections of things you don’t value anymore, and valuables that you’d rather trade in for an international trip.

    Selling your unused and unworn clothes and accessories can earn you hundreds or even thousands of dollars. If you have vintage clothing, sell some of it on Etsy. You can also list your clothing on commission-based platforms like Poshmark, ThredUP, Depop, or a local consignment shop.

    Have some old gadgets you want to sell? Check out Declutter or trade-in programs from Apple or Best Buy.

    For your valuables, you can’t beat eBay. But, for less valuable and larger items, list them on Facebook Marketplace, Craigslist, or OfferUp.

    Live minimally.

    If you plan to travel, learning how to live with less is highly recommended. I suggest you start by visiting one of the best minimalist blogs out there, Zen Habits. It has inspiring stories and minimalist living tips that you should check out now.

    You can also save money by living a minimalist lifestyle by following these tips:

    • Don’t shop for quantity, shop for quality. It is likely that reducing frequent purchases will save you money over the long run, even if the price is higher at the time. Plus, it reduces waste.
    • Reduce. Minimalism emphasizes getting rid of unnecessary items. Start by identifying what is useful in your life and what isn’t. You can then start to get rid of things that don’t add any value to your life once you have cut them down.
    • Eliminate one obligation from your life. Ideally, you should avoid things that do not fulfill your passions and pursuits. For example, instead of eating at a trendy restaurant, invite your friends over for dinner.
    • Cut down on monthly bills. Cut the cord or cancel services you don’t need anymore, such as that expensive gym membership. With Truebill, you can budget, cancel subscriptions, and negotiate bills to cut monthly expenses.
    • Make movies and books digital. Consider going digital if you’re a big reader or movie fan. As a result, you’ll save space in your home and find what you’re looking for more easily. It’s also easier to travel with these digital items.

    Minimalism emphasizes experiences over material possessions. Some people value memories made during trips more than having the latest gadget. As a general rule, spend wisely based on where you stand.

    Don’t overpack.

    In addition to avoiding checked baggage fees, packing light has a few other benefits. To begin with, packing light simplifies getting around. You can navigate public transit more easily with a lighter suitcase or backpack, rather than paying for a taxi to lug your stuff around.

    What does it take to pack light?

    Well, here’s a tip from my globe-trotting grandparents. Wear clothes that you can easily wash in the bathroom sink. Also, choose items that dry quickly, as well as clothes that can be mixed and matched.

    You should also pack basics that are versatile enough to pair with any outfit. By doing this, you won’t have to carry four pairs of shoes, for example.

    There’s also one more perk. If you pack light, you won’t be tempted to buy souvenirs — because your suitcase or backpack will have limited space.

    Take advantage of a package deal.

    By booking vacation packages instead of flights and hotels separately, you can save a lot of money. In addition, packages simplify your travel planning overall, saving you time. Booking directly through airlines can often be more cost-effective than using travel sites like Expedia or Kayak. Many airlines now offer travel packages of their own.

    If you’re looking for deals, sites such as American Airlines’ AAVacations.com can be a great place to start.

    Don’t waste your time on unnecessary details.

    It may be tempting to fly low-cost. However, consider if you really need priority boarding, extra legroom, or seat selection, because these can result in significant price increases. In addition, you may have to forego the in-room massage because hotel add-ons can add up.

    At the same time, you can cover some additional travel frills by setting aside ‘fun money’ from alternative sources. Earning cash back on online purchases through sites like Rakuten, for example, can help to build up a vacation fund.

    Consider taking a mini-vacation instead.

    You can make your summer travel into a mini-vacation if a big vacation is out of the question this year.

    Consider spending a four-day weekend near you rather than spending two weeks traveling around Europe. You could also go camping or plan a visit with a friend or family member. For example, my sister leaves near the beach. So, I can crash with her and still get a little beach time in.

    As a result, you’ll be able to escape and make travel memories while remaining within your budget. In addition, you can travel to Europe off-season with the money you saved.

    Travel off-season.

    Traveling off-season is generally cheaper, as prices and demand are lower.

    But, how do we determine peak season from off-season? There are many factors to consider, including where you’re going, when you’re going, and why you’re going.

    As an example, during the summer the Jersey Shore and Outer Banks are at their peak. Since people go skiing in the Poconos in the winter, that would be the peak season.

    In addition, it depends on if you’re traveling during holidays, including holidays back home as well as those abroad. Aside from the hemisphere, you’ll visit, the weather plays a big part in your decision.

    It is therefore likely that travelers to Europe will find cheaper airfare, hotels, and vacation packages during the winter. In contrast, South America’s winter is between June and August, when prices drop for travel there. Similarly, in Australia and South Africa, the winter season starts in June and the summer season begins in December.

    Besides saving money, there are fewer crowds. In other words, booking hotel rooms or visiting museums will be easier and more flexible.

    Think convenience, not cost.

    This might sound counterproductive. But, I’ve learned this from my travels.

    Suppose you’re planning a trip to Chicago. As a first-time visitor, you’re probably looking forward to seeing the sights surrounding the Magnificent Mile. Of course, hotels aren’t cheap in this area. As a result, you choose to stay outside the city in a suburb, such as Perioa.

    Yes, you may save a lot on lodging. However, you should also consider the time and money it will take to run you back and forth. Maybe it’s just more convenient to stay in the city — even if it costs a little more.

    Flights are no different. Denver is only about six hours away from Salt Lake City. In addition to the six-hour drive, which means adding another day or two to your vacation, you’ll have to pay for gas as well. Before you leave or return, you may also need to get a room depending on the time of the fight.

    In some cases, convenience justifies the price.

    Automate your travel savings.

    Whenever you receive a paycheck, set up an automatic transfer of funds to a savings account to save for your vacation.

    It is possible to open a savings account specifically for vacations. Capital One 360 offers the ability to create multiple savings accounts, for example. Accounts can even be named and goals can be set. Keeping yourself motivated might be as simple as naming your vacation-specific account, such as “My Argentina Getaway”.

    It is also possible to save with Ally Bank, an online savings account offering a higher interest rate than most savings accounts. You could also use SmartyPig, a fee-free, FDIC-insured online savings account held by BBVA Compass.

    What’s the key? Make sure a portion of your pay is automatically transferred to your vacation fund every time you get paid. Start saving now for your vacation since going into debt may not be worth it. And, don’t forget to regularly check your accounts to ensure that your bills are being paid.

    FAQs

    Is it necessary to be rich to travel the world?

    Everyone can travel in some form. In fact, a new culture can be experienced without traveling far. The best way to find affordable flights is to be flexible, search on new websites like Skypicker and Fareness, or plan ahead. For domestic flights, book 57 days in advance, for international flights, 117 days in advance. It’s also possible to make traveling the world your 9-to-5 job.

    What are the advantages of traveling instead of buying stuff?

    Vacations with your family can have a lasting impact on your child’s happiness, according to research.

    Travel also allows you to engage in healthy activities, such as yoga or walking, that promote physical health. Traveling more and working less is possible by spending your money on travel rather than things. Compared to buying things, it will improve your lifestyle and rejuvenate you.

    What is the best way to save for your dream vacation?

    The first step is to determine the cost of your trip. To do this, you need to decide where you’d like to travel, and how long you’d like to travel.

    The next step is to get specific once you’ve defined your idea.

    • What it will cost you to fly there and back (plus travel insurance!)
    • Accommodation costs
    • Food and beverage budget
    • The cost of any activities and sight-seeing trips you wish to take while you are there
    • Your travel emergency fund amount

    It isn’t possible to get an exact number, but it will give you a ballpark figure. You should always assume you’ll spend more than expected in all of these categories to give yourself an extra buffer.

    In addition, automate a monthly deposit into a dedicated savings account until you reach your travel goals.

    Is it a good idea to pay for a vacation with a credit card?

    That depends.

    If you pay your bill with credit upfront when you don’t have the money to cover it immediately, you could face several repercussions:

    • The cost could be high. The average APR for all cards in the U.S. News database is 15.56% to 22.87%. It is thus possible to accrue serious interest charges if vacation expenses are rolled over for even a few months.
    • Your credit could be damaged. Credit utilization should be as low as possible. Your credit scores might suffer if you use your card for a big getaway and the costs consume more than 30% of your available credit.
    • Added financial stress. Vacations are all about relaxing. It’s possible to become stressed out and depressed if your trip results in credit card debt you won’t be able to repay.

    You should, however, use a credit card if you already have the funds set aside for the trip – and pay off the balance immediately.

    The main reason is that you can earn points, miles, or cash back if you use a credit card to pay for today’s vacation. Additionally, by booking your trip with your credit card, you might be able to get some valuable travel protections. Using your credit card to book your flight and hotel online is easy, convenient, and easy to carry with you after you arrive at your destination.

    The post Off-Season, On Budget: How Simplifying Your Travel Can Save You Money appeared first on Due.

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    John Rampton

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