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Jobless father of 4: Awaiting lifeline from Congress

Written By limadu on Senin, 24 Maret 2014 | 23.11

renardo gomez unemployment

Renardo Gomez, with three of his children, has been unemployed since April and is afraid of getting evicted.

WASHINGTON (CNNMoney)

He owes several family members payments of $50 to $100. The borrowed money, along with food stamps, has helped feed his four kids. His unpaid cable bill has mounted to $400, his electricity bill $600. His landlord has let him postpone rent. But next month, he owes double the rent: $700.

Gomez is among 2 million unemployed workers hoping Congress moves forward this week to renew federal jobless benefits for up to five months. Two weeks ago, a bipartisan group of Senators reached a deal, which is expected to pass the Senate this week.

Five Republicans signed on to the $9 billion measure. However, its fate looks grim in the House.

"I'm worried. ... What if I get evicted? What's going to happen?" said Gomez, 51, who worked as a facilities specialist for the Federal Emergency Management Agency in New York City until his contract ended last April. Gomez has been looking for jobs since.

The deal would throw a financial lifeline to people in the same situation like Gomez who have been scrambling to get by since federal jobless benefits lapsed the week of December 28. When the recession-era program expired, it took away a safety net for 1.3 million long-term unemployed Americans who have been unable to find new work.

The long-term unemployed now total about 2.1 million, including those who have run out of state unemployment benefits these past few months with nothing to turn to, according to the National Employment Law Project, an advocacy group.

Related: Life without benefits gets tougher for jobless

The Senate deal would fund federal unemployment benefits through May, and include back payments of missed unemployment checks since early January.

Yet, House Speaker John Boehner has balked at the deal. Last week he called the bill "essentially unworkable," because state administrators complained it would be tough to carry out in such a short period of time.

The Senate deal would cost more than $9 billion. To avoid increasing federal deficits, the deal would be paid for by an accounting move that brings in higher corporate income taxes from companies that contribute less to pensions for a while.

Republicans like the deal because it will also prevent millionaires from qualifying for benefits. It also requires people who have been unemployed for nine months to undergo a review of their job search strategy.

"There are 2.1 million workers who should certainly be pleased, but they need to know they've got a long haul ahead of them," said Judith Conti, federal advocacy coordinator for the National Employment Law Project, an advocacy group for the unemployed in Washington.

If Congress passes the bill and President Obama signs it into law, it could still take weeks to get programs up and running again, Conti warned. The unemployed would still be stuck making ends meet without benefits for a while, she said.

Related: Will Obama's pledge get the unemployed back to work?

Unemployment insurance benefits are generally administered by the states.

However, back in June 2008, when the jobless rate started ticking up from under 5% to 5.6%, President George W. Bush signed the federal benefits program to help those whose state benefits had run out.

The unemployment rate climbed to more than 10% at the height of the Great Recession in 2009, and the government extended or expanded the federal benefits 11 times since then, most recently in January 2013.

Those who want to extend jobless benefits point to recent jobs reports that continue to show frustrated unemployed workers dropping out of the labor force.

Gomez said he continues sending his resumé out each week. After his job ended in New York, he moved his family to Fitchburg, Mass., to be closer to his girlfriend. It's made it tougher get to interviews, because he lost his car when he couldn't afford car payments. He takes the bus.

"I'd work at McDonalds. I really don't care. But nobody is hiring," he said. "I'm really trying." To top of page

First Published: March 24, 2014: 7:14 AM ET


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Tech stocks tank

Nasdaq 11

Click the chart for more markets data.

NEW YORK (CNNMoney)

The Nasdaq, which has been the best performer of the year, fell nearly 2% Monday. So did CNNMoney's Tech 30 index. The Dow and S&P 500 were also down, but not nearly as much.

Video streaming provider Netfli (NFLX)was under the most pressure Monday. The stock was down 8% and was one of the biggest losers in the Tech 30 Monday.

It appears that Netflix investors are worried about the possibility of competition from Apple (AAPL, Fortune 500) after the Wall Street Journal reported that the company is exploring a partnership with Comcast (CMCSA, Fortune 500) for an Apple-branded TV service. Shares of Apple were actually one of the few big tech stocks moving higher.

Related: CNNMoney's Tech 30

But Netflix wasn't the only momentum tech taking a beating. Some other well-known Interner stocks, including Yahoo! (YHOO, Fortune 500), Linkedin (LNKD), Twitter (TWTR), Priceline (PCLN, Fortune 500) and Facebook (FB, Fortune 500), also suffered.

Shares of Nu Ski (NUS)surged after the company said it was fined around $540,000 for its business practices in China. The beauty products marketer had previously disclosed that it was being investigated by Chinese regulators, but the relatively small penalty seems to be a relief to investors who had feared a more major regulatory blow.

Herbalife (HLF), the nutritional supplements distributor that uses a similar multi-level marketing sales model as Nu Skin, also rallied on the news. Herbalife revealed earlier this month that it is being probed by the Federal Trade Commission.

The company has been in the crosshairs of hedge fund manager Bill Ackman, who has publicly called it a pyramid scheme and unveiled a large bet that its stock price would fall. He also recently disclosed what he says are more shady tactics by the company in China.

Related: Fear and Greed index shifts into 'neutral'

Lions Gate (LGF) shares were up flat even though the studio's film "Divergent" had a strong opening at the box office. Many analysts expected a weaker showing for the movie.

Investors were also gearing up for some high profile initial public offerings in the days ahead.

King Digital Entertainment, the company behind the popular Candy Crush Saga online game is one of 14 companies currently scheduled to go public this week.

The IPO mania is part of a global trend, as more and more companies seek to go public in order to take advantage of increased demand for stocks.

Related: Candy Crush mania coming to Wall Street

European stock markets were all lower in midday trading as the Russian takeover of Ukraine's Crimean peninsula continues to dominate sentiment.

Asian markets ended with some significant gains though, despite HSBC data that showed Chinese manufacturing activity fell to an eight-month low in March. The Hang Seng in Hong Kong shot up by 1.9% and the Shanghai Composite rose by 0.9%. To top of page

First Published: March 24, 2014: 9:51 AM ET


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Stocks: Preparing for a rush of IPOs

sp 500 futures 655

Click on chart to track premarkets

NEW YORK (CNNMoney)

The company behind the popular Candy Crush Saga online game is one of 14 companies set to go public this week.

The IPO mania is part of a longer term, global trend that has seen many companies make their public debut.

U.S. stock futures were relatively firm heading into the first day of the trading week. There's little economic or corporate news on the docket Monday that could influence market sentiment.

The latest reading on the CNNMoney Fear & Greed index shows investor sentiment is in 'neutral mode.'

Related: Candy Crush mania coming to Wall Street

U.S. stocks slumped Friday, at the end of a strong week. The Dow Jones industrial average, the S&P 500 and the Nasdaq all closed in the red.

Related: CNNMoney's Tech30

European stock markets were all lower in midday trading as the Russian takeover of Ukraine's Crimean peninsula continues to dominate sentiment.

Asian markets ended with some significant gains. Japan's Nikkei jumped by 1.8% after a long weekend. The Hang Seng in Hong Kong shot up by 1.9% and the Shanghai Composite rose by 0.9%.

The stock surge comes despite HSBC data that showed Chinese manufacturing activity fell to an eight-month low in March. To top of page

First Published: March 24, 2014: 5:53 AM ET


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Arizona may allow Tesla sales

NEW YORK (CNNMoney)

The bill is part of Arizona's effort to be the home state of a massive Tesla factory currently under development.

Arizona is one of four southwestern states Tesla is considering for its so-called gigafactory, a $1.6 billion battery production center that the company says could employ 6,500 workers.

Tesla has showrooms in 23 states and is explicitly allowed to sell its cars directly to consumers in four states. That model is illegal in many others.

One of Tesla's dozens of showrooms is in an upscale mall in Scottsdale, Arizona. Potential buyers can learn about the vehicles, but to buy, must head to a state where it is legal to do so, such as neighboring California.

Related: Where it's legal to buy a Tesla

Sponsor Warren Petersen, a Republican member of the state house, said the bill was written to bring Tesla to town.

"We wanted to send a message that Arizona is open for business," Peterson told CNN affiliate KPNX-TV.

The bill would apply only to electric cars.

The measure would have "a very small impact" on the state's auto market, Peterson said, but would be good for Tesla.

A state senate committee last week passed the measure over strong objections from an auto dealers' group. But its fate in the full legislature is uncertain, said Brahm Resnik, political reporter for KPNX-TV.

"Much like other states, our auto dealer lobby is quite powerful," Resnik said.

If the bill passes, it would become part of the portfolio of incentives each state in the running for the factory is expected to pitch to Tesla. Nevada's dealership law is under dispute. New Mexico and Texas do not allow direct sales.

If Arizona scores the gigafactory, it would be the state's second big-name acquisition. Last year, Apple announced one of its two new U.S. plants would be built in Mesa, Arizona. The other is in Texas.

New Jersey, which is not in the running for the factory, recently banned direct sales. Tesla had been selling its cars at two Garden state showrooms.

--CNNMoney's Chris Isidore contributed to this report To top of page

First Published: March 23, 2014: 4:11 PM ET


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Apple eyes partnerships in bid to reinvent TV

apple tv

Television is thought to be a focus for Apple and CEO Tim Cook.

NEW YORK (CNNMoney)

The computing giant's next foray into TV could come in partnership with Comcast, the largest television and broadband provider in the United States, The Wall Street Journal reported Sunday night.

The Journal said that the two companies are holding talks that could result in Comcast delivering an Apple-branded TV service the same way it delivers phone calls and cable video-on-demand. These are called "managed services," and are set apart from the broadband connections that bring Netflix (NFLX), YouTube and other websites to customers. The arrangement would allow Apple to be confident that its video offerings won't sputter the way some other streams do.

The two companies are not close to an agreement, The Journal said.

Talks may be picking up where talks between Apple and another distributor, Time Warner Cable, left off in February. The companies were known to be in extensive talks about a partnership of some kind, possibly involving a cable TV app for the Apple TV box.

The talks were interrupted by the acquisition of Time Warner Cable by rival Comcast (CMCSA, Fortune 500), a deal that is now awaiting regulatory approval.

Apple's (AAPL, Fortune 500) talks with distributors reflect its long-rumored interest in rethinking how television is packaged and sold to subscribers.

Right now its hockey-puck-shaped Apple TV box is used in millions of homes to connect TV sets to Internet services like Netflix and the iTunes store. But the device is missing a connection to the much wider world of broadcast and cable television, where the vast majority of TV is viewed.

Related: How to fix the Apple TV

A distribution deal with Comcast could help Apple get there, though a number of other hurdles would remain. Chief among them: If Apple wants to sell a cable-like bundle of channels to paying subscribers, it needs to obtain the rights from the channel owners.

Apple has conducted negotiations with major media companies about gaining the rights to their live channels and, in some cases, "in-season stacking rights" for video-on-demand, according to people with direct knowledge of the talks who insisted on anonymity.

"In-season stacking rights" would allow Apple to stream complete current seasons of shows on major networks and cable channels, reducing or eliminating the need for a digital video recorder. In one scenario discussed by the companies, advertisement fast-forwarding would be disabled for a certain period of time after the premiere of a new episode.

Related: Apple's iPhone sales disappoint

Apple is not known to have struck deals with any channel owners to date. One distribution executive at a channel owner said that negotiations are not on the fast track.

"Everybody is afraid to make a bad deal, so the deals are very slow to be made," the executive said.

But many television executives are intrigued by Apple's imaginative plans. A successor to the existing Apple TV box could incorporate voice search through Siri and use the iPhone or iPod as a remote control.

Representatives for Comcast and Apple declined to comment on Sunday night. To top of page

First Published: March 24, 2014: 1:03 AM ET


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China's factories hit 8-month low

HONG KONG (CNNMoney)

HSBC said that its "flash" measure of sentiment among manufacturing purchasing managers fell to 48.1 in March. Analysts had expected the index to rebound from its final reading of 48.5 in February.

Any number under 50 indicates a deceleration in the manufacturing sector.

Some improvement was seen in new export orders. But almost all other index components -- including output, employment and domestic orders -- worsened.

HSBC economist Qu Hongbin said that the poor results are likely to spur Beijing to undertake a series of policy changes to stabilize growth.

He said that targeted spending on new subway systems, anti-pollution measures and public housing are among the most likely stimulus options.

Related story: Risks in focus as China's economy slows

China's economy is off to a sluggish start this year, with trouble extending beyond the manufacturing sector.

The real estate market is showing signs of weakness. Industrial production, retail sales, and investment growth have all disappointed. The economic slowdown has also led to a steep decline in the price of copper and iron ore.

Many economists have now downgraded their growth forecasts, and some think Beijing may not be able to meet its 7.5% GDP target for 2014.

Related story: China's big tech moves onto banks' turf

Beijing will almost certainly respond with some stimulus measures, but the question is how far officials are willing to go.

In the past, policymakers might have responded by pushing cheap credit into the economy and pursuing other quick fixes to boost growth.

But Beijing has started a series of market-oriented reforms that include a crackdown on the shadow banking sector and runaway local government debt. Another sugar high of easy credit could endanger those initiatives. To top of page

First Published: March 23, 2014: 10:30 PM ET


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Meet America's oldest bike maker

NEW YORK (CNNMoney)

New York City's Worksman Industrial Cycles is the oldest large-scale bike maker in the United States. Housed in a 70-year-old, three-story factory in Queens, Worksman has been making bikes in New York since 1898.

Workers at the plant weld metal tubes, paint the frames, build the wheels and assemble all the components. There are sixty employees -- and most live within walking distance.

Many of the company's products are for use in industrial spaces. Trikes with back cargo space are big sellers for maintenance men and security personnel at factories, colleges and warehouses. Boeing (BA, Fortune 500) is one of the company's largest customers, as are Ford (F, Fortune 500), Wal-Mart (WMT, Fortune 500) and General Electric (GE, Fortune 500).

The company also makes smaller bikes for deliveries, four-wheeled bikes that are popular in beach towns, and cruisers and commuter bikes for the retail market. On a recent Tuesday, some 50 bikes stood ready for shipment -- an average day's output.

Manufacturing in the United States is costly, said Wayne Sosin, the company's co-owner. But by making the bikes here, they can let customers choose among dozens of styles and configurations, while still maintaining direct oversight of production.

"We can give our customers a lot more service and choice," said Sosin. "We didn't want to say, 'Here's how it comes: It comes in a box. It's blue. That's it.'"

Related: Coolest commutes on two wheels

Worksman was started on Manhattan's Lower East Side by Morris Worksman, a Russian immigrant who owned a dry goods store. All day, he'd watch street merchants struggle with their goods, and he figured there must be a better way. So he invented a bike to transport loads.

For the next several decades, it was popular mostly in New York, said Sosin. During World War II, Worksman's son was an aircraft engineer who traveled to manufacturing plants around the country. He was amazed by their vast size, and immediately saw opportunity.

"If you've ever walked one of these places, they are a million square feet," said Sosin, who owns the company with the founder's granddaughter and her husband. "It's exhausting."

Related: Furniture making comes back to the South

On the factory floor, Worksman's biggest competitor is the golf cart. Sosin said it can be hard to convince managers to switch from battery power to pedals. But they're often won over by the savings. A Worksman trike costs around $1,000, while a golf cart can cost five times that. The bikes also require much less maintenance.

After taking a hit during the recent recession, sales at the company have been solid -- growing by about 8% a year for the last four and a half years, said Sosin, who declined to disclose actual sales figures.

The company has recently started targeting distribution centers, plant nurseries and zoos (they just launched a model that has fat tires for off-road use). They're also targeting consumers through bike shops and their website, with products in the $500 range.

Retro-looking bikes are all the rage among urban dwellers these days, a fact not lost on Sosin.

"A lot of companies are trying to create the illusion that they've been making bikes for 100 years," he said. "They make up a cool story and put a leather seat on it, but it's all made up. Those people that want the genuine article, they find us." To top of page

First Published: March 24, 2014: 7:12 AM ET


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Top JPMorgan banker to resign amid hiring probe

jpmorgan

JPMorgan's office in the heart of Hong Kong's central business district.

HONG KONG (CNNMoney)

Fang Fang, a 12-year employee, was one of JPMorgan's top China dealmakers and most recently served as vice chairman of the firm's Asia investment banking group.

Therese Esperdy, JPMorgan's co-head of banking for Asia-Pacific, wrote in an internal company memo circulated Monday that Fang had informed the bank of his "desire to retire."

Fang had come under scrutiny for his reported ties to a program at JPMorgan that is now the subject of a U.S. investigation.

The program, called "Sons and Daughters" and run out of JPMorgan's Hong Kong office, is thought to have tracked the children of top Communist Party officials hired by the bank.

Documents obtained by investigators list the hires and their ability to win new business for the bank in China, according to The New York Times.

If there is an explicit link between the hiring decisions, new deals and increased revenue for the bank, investigators could make the case that JPMorgan was in violation of the Foreign Corrupt Practices Act. The FCPA makes it illegal for American companies to pay bribes as a part of doing business.

Investigators have not accused any JPMorgan employees of wrongdoing.

Marie Cheung, a spokeswoman for the bank, said that Fang's decision to retire was a personal one, and she added that JPMorgan is cooperating with regulators.

Related: Snowden documents show NSA hacked Huawei

Investigators have secured emails in which senior employees discuss the program. Fang, a Chinese citizen, sent some of the messages.

"You all know I have always been a big believer of the Sons and Daughters program -- it almost has a linear relationship" with winning assignments to advise Chinese companies, Fang wrote in an email published by The Times.

In another email, Fang suggested that JPMorgan should extend the contract of Tang Xiaoning, a bank employee whose father is the chairman of China Everbright, a state-backed financial services company.

"Given where we are on China Everbright, I think we may need another contract for Xiaoning," Fang said. JPMorgan had been hired to work on a share offering for a subsidiary of China Everbright. To top of page

First Published: March 24, 2014: 8:37 AM ET


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Visa and MasterCard resume service at two Russian banks

visa mastercard

Card services are working again for customers at SMP Bank and InvestCapitalBank in Russia.

LONDON (CNNMoney)

Visa (V, Fortune 500) and MasterCard (MA, Fortune 500) cards at both SMP Bank and InvestCapitalBank are working again, according to the banks.

Meanwhile, card services at two other banks -- Rossiya and a subsidiary, Sobinbank -- continue to be blocked.

"Now everything is working fine," said a representative at InvestCapitalBank, noting that services resumed Sunday.

Card services had been blocked after the U.S. issued sanctions against two major shareholders in the banks, Arkady Rotenberg and Boris Rotenberg.

MasterCard said it worked closely with U.S. regulators before resuming services at SMP Bank.

"This is not an unusual situation when sanctions are issued. Questions are raised, and refinements are made by the regulators from time to time," Mastercard said in a statement. "We will continue our active dialogue with regulators and our efforts to minimize the impact on the Russian payments market."

Visa did not immediately respond to requests for comment.

Related: U.S. sanctions on Russia begin to bite

The U.S. sanctions against Bank Rossiya and individuals within Russian President Vladimir Putin's inner circle were designed to put economic pressure on Russia for taking control of Crimea, a southern area in Ukraine.

That pressure continued to build at Bank Rossiya Monday after the bank asked customers to stop making foreign exchange payments out of their accounts until further notice.

Bank Rossiya is Russia's 17th biggest bank, with $10 billion in assets, according to a senior U.S. administration official. It has substantial interests in oil and gas.

--CNN's Zahra Ullah contributed to this report. To top of page

First Published: March 24, 2014: 9:12 AM ET


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Who pays most income taxes? People 45 and up

NEW YORK (CNNMoney)

Nearly half of all tax filers are over 45. And they are paying the lion's share of federal income tax revenue -- 74% in 2011. That's up from 61% in 1997, according to an analysis of IRS data by the Tax Foundation.

The biggest jump during that time period was among 55- to 65-year-olds. Their share of income taxes paid rose 9 percentage points.

That shouldn't be too surprising.

"It's largely a function of the life cycle that drives those numbers," said Roberton Williams, a fellow at the Tax Policy Center.

For one thing, a large portion of the population has gotten older since 1997. The youngest of the Baby Boomers are now on the cusp of 50.

Related: Unlike 1960s, singles make up majority of tax filers

And one's peak earning years tend to hit in the late 40s and 50s.

Those between the ages of 55 and 65, for instance, had the highest average adjusted gross income ($81,859) of any age group in 2011. Men and women 45 to 55 weren't far behind ($80,195). By contrast, the average for all tax filers that year was $57,606.

More than 80% of tax filers with income over $1 million were over 45, and nearly half of those were older than 55.

Related: 7 surprising 2014 tax facts

"As the Baby Boomer generation moves into its peak earnings years, there will be more high-income taxpayers than younger, low-income ones, giving the appearance of rising inequality," the Tax Foundation noted in its analysis.

Looking ahead, after the Baby Boomers will come the next group of middle-aged filers -- Gen Xers, then Millennials -- who likely will also dominate the ranks of taxpayers when their time comes.

This story is part of a CNNMoney series exploring Americans' real tax burden. We'll look at who pays the most and who pays the least; and why two people with the same income can have very different tax bills. We'd love to hear how you feel about your tax burden at #YourEconomy. To top of page

First Published: March 24, 2014: 12:01 PM ET


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401(k) fees: Still too high

Written By limadu on Senin, 10 Maret 2014 | 23.11

401k fees

401(k) fees are beginning to come down, but maybe not enough.

NEW YORK (Money Magazine)

MONEY looked at six holes you might see in your 401(k) plan, and some fixes you can make to address them. Below, how to shore up one of those leaks: the fees you pay.

Leak No. 2: Fees are falling, but perhaps not enough

Thanks in part to Labor Department regulations, which came on the heels of a string of class-action lawsuits, 401(k) costs are beginning to come down. The average investment fee charged by stock funds in these accounts, for instance, fell from 0.74% of assets annually in 2009 to 0.63% in 2012, the last full year for which data are available, according to the Investment Company Institute, the mutual fund industry's trade group.

Calculator: How much are 401(k) fees costing you?

But those figures mask a two-tiered system. Employees at large companies with billion-dollar plans frequently get access to ultra-cheap investment options that are usually available only to institutions.

Work for small businesses that lack economies of scale and retirement-market expertise, and you're probably paying significantly more. For example, the average fee that investors pay in plans with less than $50 million in assets is 0.94%, according to the financial information company BrightScope. A few plans charge fees as high as 3%.

WHAT TO DO

Take full advantage of your employer match. Even if your plan is expensive, it almost always makes sense to contribute enough to get the full match, which is essentially free money.

Related: Best Places to Retire with a nice nest egg

Then look for alternatives. Albany planner Walt Klisiwecz says if your plan charges total fees above 1.25% of assets per year, you should look for a work-around. He recommends that investors in pricey plans put their next incremental dollars into traditional or Roth IRAs, where you can buy any fund you want.

Those who aren't allowed to deduct traditional IRA contributions because their adjusted gross income is above $70,000 for singles or $116,000 for married couples -- or who expect to be in a higher tax bracket at retirement -- should go with the Roth.

Roth contributions aren't deductible, but withdrawals at retirement are tax-free. You can save $5,500 a year in a Roth ($6,500 for those 50 and older) if you're single and earn $114,000 or less or married and make $181,000 or less.

Stick with the lowest-fee funds in the plan. After you max out on your IRA, go back and redirect any extra money to your 401(k). But go with the lowest-fee funds in your plan (see Leak No. 4 LINK) to make the best of a bad situation. "You've just got to hold your nose," Klisiwecz says.

Is your 401(k) plan letting you down?

Auto-enrollment is a double-edged sword
Advice could come at a cost
Too few index funds to choose from
401(k) waiting periods take a toll
Company stock is still a problem To top of page

First Published: March 10, 2014: 10:30 AM ET


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Once bankrupt, Vallejo still can't afford its pricey pensions

vallejo police

The Vallejo police force, shown at a crime scene last year, remains "woefully understaffed" several years after bankruptcy, according to City Manager Dan Keen.

NEW YORK (CNNMoney)

The main culprit: Ballooning pension costs, which will hit more than $14 million this year, a nearly 40% increase from two years ago.

Amid threats of legal action from the state's pension giant, CalPERS, Vallejo did little during its nearly three-year stint in bankruptcy to stem the growth in its pension bills.

As a result, Vallejo continues to dole out large sums of money for retirees. Except for new hires, Vallejo's police and firefighters can retire at age 50 with as much as 90% of their salary -- for life. Public safety workers who retired in the last five years have average annual pensions of more than $101,000.

And the pension costs are expected to continue to rise, with a projected increase of up to 42% over the next five years.

Related: Detroit retirees sound off on possible pension cut

Moody's recently warned that Vallejo's pension obligations could force it to file for bankruptcy protection a second time. The credit rating agency said the city offers a cautionary tale for two other California cities teetering on the brink: San Bernardino and Stockton.

Vallejo City Manager Dan Keen counters that the city's financial position isn't as bleak as Moody's says. He said the city is in a much "better place" than when it filed for bankruptcy, in part due to a 1% sales tax hike that is funding new city services, like the installation of new surveillance cameras aimed at improving public safety.

In addition, employee concessions, such as a 5% pay cut for police, will allow the city to fill this year's projected $5.2 million budget shortfall, he said.

Still, Keen said pension costs are a major concern.

"If we don't resolve those costs, then we're going to see services continue to suffer," said Keen, who has led the city since 2012. "We're going to have to cut somewhere."

A lot of cuts have already been made.

Vallejo's roads are littered with potholes. Three of its nine fire stations remain closed. And its police force is down by almost 40% -- though Keen says there are plans to hire more officers this year.

Crime has surged, with more than two dozen homicides last year, compared to only seven in 2006. Burglaries are also on the rise. Residents maintain neighborhood watch groups, but the crime is taking a toll.

"Some people in my neighborhood are voting with their feet and leaving Vallejo," resident Russell Zellers wrote in a 2013 letter to City Hall. "If things continue along the present course, I may not be far behind them."

Related: Retired union workers facing 'unprecedented' pension cuts

In the fatter years, Vallejo enjoyed a housing boom like many California cities. Flush with property tax revenues, city leaders approved increases in salaries and benefits for city workers. Police officers and firefighters were earning six-figure salaries, even before overtime.

As costs grew, city officials began dipping into the city's cash reserves to pay the bills. Then, in May 2008, after a wave of foreclosures caused property tax revenue to plummet, the city could no longer afford the generous salaries and other benefits it was paying and was forced to file for bankruptcy.

To help cut its debt, the city slashed retiree health benefits and the interest payments it paid to banks. It also cut pension benefits for new hires and raised the amount current workers must contribute to their pensions. But it did not attempt to cut pension benefits for current workers and retirees, a move that can only be attempted during bankruptcy.

In its report, Moody's blamed the state's pension giant CalPERS for Vallejo's lack of action.

CalPERS, which manages $277 billion in retirement assets for more than 1.6 million workers and retirees, has repeatedly argued that pension benefits are protected by California law. It says it is an "arm of the state" and should therefore be exempt from bankruptcy proceedings -- meaning it should get paid in full while other creditors could get pennies on the dollar.

Workers and retirees say their pensions were promised through employment contracts and they shouldn't be penalized for the city's bad planning.

Related: Pensions ask retirees to pay back tens of thousands

So far, no bankrupt California city has ever challenged CalPERS over pension cuts. CalPERS did not respond to a request for comment.

Vallejo's bankruptcy was likely only a short-term fix to its financial problems, said Michael Sweet, a California-based bankruptcy attorney at Fox Rothschild LLP.

"The problem will continue to fester until people face up to the fact that the money available is less than promises made," he said. To top of page

First Published: March 10, 2014: 10:37 AM ET


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Does your 401(k) offer too few index funds?

401k index funds

Research shows that passive investing -- buying index funds that hold broad swaths of the market -- is your best option.

NEW YORK (Money Magazine)

MONEY looked at six holes you might see in your 401(k) plan, and some fixes you can make to address them. Below, see another way your retirement plan might be letting you down: a limited choice of index funds.

Leak No. 4: You can have index funds, but only a few

There's a vast body of research that shows passive investing -- through index funds that simply buy and hold large parts of the market -- is your best bet. That's because most index funds charge a fraction of the fees actively managed portfolios do. And saving as little as half a point in expenses annually over 35 years could easily generate $100,000 more in lifetime savings, assuming a modest 6% annual return.

"I wouldn't put a penny in anything else," says Miami financial adviser Frank Armstrong.

Calculator: How much are 401(k) fees costing you?

Then why do so few plans let you index your whole portfolio? Only half offer index funds for foreign equities or intermediate-term bonds. And fewer than two in five let you index small-company stocks.

In most cases, your employer doesn't pay for record keeping or other administrative costs directly. Those are covered by fund fees. Since index funds charge very little, plan designers fear that including too many may make plans unaffordable. Many 401(k)s are also run by fund or insurance companies that "want to offer their own products," says Brooks Herman, head of data and research at BrightScope.

WHAT TO DO

Start with what your 401(k) does offer. Ninety-five percent of plans include an index fund that tracks the S&P 500 or a similar index. These blue-chip investments are likely to be the single biggest piece of your strategy, making up as much as half your total portfolio in your forties.

Related: 10 Best Places to Retire

Next, look at your actively managed options. The average expense ratio for indexed foreign funds, small-stock funds, and bond funds are 0.59%, 0.48%, and 0.31%. If you have access to active funds with fees close to those levels, they may be a decent alternative.

Finally, think outside your 401(k) box. While you can contribute only about a third as much annually in an IRA as the 401(k) max, that's not necessarily a problem. In a balanced portfolio of stocks and bonds, your fixed-income weighting may only amount to about a third. You may have also rolled over old 401(k)s into IRAs. Those balances probably aren't huge, but you can use them for exposure to small or foreign stocks, which may account for just 10% to 20% of your total portfolio.

Is your 401(k) plan letting you down?

Auto-enrollment is a double-edged sword
Fees: Still paying too much?
Advice could come at a cost
401(k) waiting periods take a toll
Company stock is still a problem To top of page

First Published: March 10, 2014: 10:24 AM ET


23.11 | 0 komentar | Read More

Stocks slip as investors keep eye on Asia

Dow 10

Click the chart for more markets data.

NEW YORK (CNNMoney)

The Dow, S&P 500, and Nasdaq were all lower in morning trading.

The Dow and S&P 500 are near all-time highs as investors celebrated the five year anniversary of the current bull market. But the Nasdaq is not back to all-time highs yet. In fact, Monday is the 14-year anniversary of the tech-heavy index hitting its peak of above 5,130. Still, the Nasdaq is now only about 15.5% below its dot-com boom record, thanks to a nearly 40% jump last year and strong start to 2014.

Related: Winners and losers of the bull market

European markets were mixed in afternoon trading. But Asian markets ended significantly lower after China trade data and revised Japanese GDP numbers came in weaker than expected.

Boeing (BA, Fortune 500) shares fell after Malaysia Airlines Flight 370, a Boeing 777, disappeared Saturday in mysterious circumstances en route to Beijing. The company also announced late Friday that "hairline cracks" had been found on some of its Dreamliner 787 jets still in production.

Tension in Ukraine created volatility in global markets early last week. But investors have been breathing a sigh of relief the past few days as the crisis seems to be abating.

"As long as there's no feeling that an escalation into a wider conflict is imminent, the markets may remain calm," said Wasif Latif of USAA Investments in a note to clients Monday morning.

Related: Fear & Greed Index is in extreme greed

In other corporate news, Chiquita Brands (CQB) rallied after the company said it was buying Ireland's Fyffes for about $526 million to create the world's leading banana company.

Related: CNNMoney's Tech 30

Shares of eBay (EBAY, Fortune 500), a member of CNNMoney's Tech 30 Index, slumped after Carl Icahn stepped up his campaign against the company's management.

In a letter Monday, the activist investor attacked John Donahue, the company's CEO, for failing to supervise his firm's board for alleged conflicts of interest related to their financial stakes in companies that Icahn believes are eBay competitors. eBay responded by defending Donahue's record. Icahn wants eBay to spin off its PayPal unit. To top of page

First Published: March 10, 2014: 9:50 AM ET


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Fixing the holes in your 401(k)

401k fixing holes

Employer-sponsored retirement plans are getting better, but they've still got plenty of holes. Here's how to plug them.

NEW YORK (Money Magazine)

Still, shortcomings remain. And some of the fixes that have improved the overall system may actually be impeding your progress.

"You've got be careful," says Rick Meigs, who runs 401khelpcenter.com, an industry website that tracks trends in the retirement marketplace. "There are always unintended consequences."

In the stories that follow you'll learn the various ways that your plan is letting you down. More important, you'll find out how to make the best out of a savings tool that -- holes and all -- is still likely to be your best bet at being able to fund a pleasant and prosperous retirement.

Leak No. 1: Auto-enrollment is a double-edged sword

The push to enroll employees in 401(k)s automatically has generally been praised -- for good reason. Participation rose from 67% in 2005, before these programs began, to 78%, as young workers have been swept into the system. But for long-time savers, auto-enrollment cuts a different way.

Related: How does a 401(k) plan work?

Most companies set aside a fixed pot of money for 401(k) matches and other benefits. As the pool of eligible employees grows, firms can either set aside more or cut the size of the benefits. It's too early to tell how companies will respond in the long run, but a study affiliated with the Boston College Center for Retirement Research found that plans without this feature matched 3.5%, vs. 3.2% for auto-enroll plans.

Calculator: How fast will my savings grow?

Another unintended consequence: Many plans default workers in at a meager 3% savings rate, in part to avoid scaring off new participants. You know that's too little. What you may not realize, though, is that a low default rate for newbies can help "frame" what even experienced hands think is an adequate level of saving. In auto-enroll 401(k)s, those making more than $100,000 sock away 9.3% of their pay, vs. 10.7% for highly paid workers who aren't in such plans.

"People look at the 3% and think, 'That's what the company is recommending. So if I'm saving twice as much, that must be a good thing,' " says Rob Austin, director of retirement research at the benefits consultant Aon Hewitt. Yet even three times the default is probably insufficient, as many planners advise socking away 15% of your pay, including the match.

WHAT TO DO

Make automation work for you. Two in five auto-enroll plans offer a different automated function -- one that boosts your contribution rate over time unless you opt out, according to the Plan Sponsor Council of America. If yours doesn't, you may still be able to opt in to such a tool. Even if you think you're disciplined enough to make these adjustments yourself, sign up just in case.

Bank your raises as you go. At the same time some businesses are cutting their match, many are restoring bonuses and raises. Commit to saving at least a portion of those pay hikes before you get them, says Shlomo Benartzi, chief behavioral economist at AllianzGI.

"People tend to feel the pain of losses more than the pleasure of gains," he says. In this context, money "lost" to savings "feels like a loss." But that won't be the case if you sock the raise away before you ever have a chance to enjoy it.

Is your 401(k) plan letting you down?

Fees: Still paying too much?
Advice could come at a cost
Too few index funds to choose from
401(k) waiting periods take a toll
Company stock is still a problem To top of page

First Published: March 10, 2014: 10:34 AM ET


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401(k) waiting periods take a toll

401k new employee

New job? You may find yourself waiting three months to a year to join the company's 401(k) plan.

NEW YORK (Money Magazine)

MONEY looked at six holes you might see in your 401(k) plan, and some fixes you can make to address them. Below, see another way your retirement plan might be letting you down: waiting periods to contribute or get an employer match.

Why waiting periods matter

Being forced to sit out of your 401(k) for a year every time you switch jobs can be costly.

Workers who save continually $904,000
Workers who must sit out every sixth year $778,000

NOTE: Based on a 30-year-old with a salary of $50,000 who receives 2% annual pay raises, saves 12% annually, and earns 6% a year. SOURCE: Morningstar and MONEY

Leak No. 5: Which is it: 'Hurry up and save' or 'Wait'?

Plan providers talk up the importance of contributing now, but they don't always make it easy. Roughly two out of five 401(k)s make new hires wait at least three months before joining, according to the PSCA. More than 10% make them sit out a full year.

The same problem exists with employer matches, as almost a third of plans require nearly a year of service before they start kicking in. One influential provider has taken this delay a step further. IBM recently announced it would stop matching with every paycheck deferral and instead issue a lump sum in December. Leave before that date and you'll forfeit an entire year's worth of matches.

Calculator: How fast will your savings grow?

Why should you worry? Because you know you're not going to be at your company throughout your career -- workers spend less than five years per job. Say you're in your late forties, are near your peak salary, and are contributing the $17,500 annual pretax max. If you had to sit out of your 401(k) for a year because you changed jobs, there's no way you could make up that much pretax saving just through an IRA.

WHAT TO DO

Save based on your life stage. If you're in a waiting period, max out your IRA, then weigh your other savings goals. Let's say you're that late-40s high earner and you have kids. Take the difference between what you would have put into your 401(k) and what you're saving in your IRA, and redirect that sum into your children's 529 college savings accounts.

This may be more than you planned to sock away for college this year. But front-loading your 529 now may make it easier to afford boosting your retirement savings when you turn 50 and are eligible to save more in retirement plans. Starting at that age, Uncle Sam lets you stuff an additional $5,500 a year in "catch-up contributions" to your 401(k) and $1,000 in your IRAs.

Is your 401(k) plan letting you down?

Auto-enrollment is a double-edged sword
Fees: Still paying too much?
Advice could come at a cost
Too few index funds to choose from
Company stock is still a problem To top of page

First Published: March 10, 2014: 10:17 AM ET


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Company stock is too risky for your 401(k)

company stock

Enron's collapse brought to light the heightened risk of having company stock in your retirement portfolio.

NEW YORK (Money Magazine)

MONEY looked at six holes you might see in your 401(k) plan, and some fixes you can make to address them. Below, see the sixth way your retirement plan might be letting you down -- with company stock as a key investing option.

Leak No. 6: Company stock is still a problem

Fewer Americans are larding their 401(k)s with their employer's stock compared with the early 2000s, when the collapse of Enron brought this risk to light. And only 12% of plans make matching contributions using company shares, down from 45% in 2001, according to Hewitt.

Still, many let workers invest in employer shares as an option. And where company stock is available, it represents about 14% of employees' portfolios.

Calculator: Will you have enough to retire?

Even at that level, risks abound. For starters, you may think you know more about your company than you actually do, leading to overconfidence and mistakes. "People see company stock through rose-colored glasses," says Berwyn, Pa., planner Vincent Barbera.

What's more, so much of your financial security is already tied to that one company -- your salary, bonuses, and health care -- why increase your exposure?

Related: What investments are best for IRAs and 401(k)s?

"If your company goes belly up, you've lost a percentage of your retirement plan and your paycheck," says Meigs. "It's a double whammy."

WHAT TO DO

Cap that company stock. Ideally, you should not hold any of your employer's shares in your 401(k), says Barbera. If that's untenable, limit your exposure to 5% to 10%. That's not enough to ruin you if your company falters as Bear Stearns did in 2008, but enough to give you a lift if your firm turns out to be the next Apple.

Is your 401(k) plan letting you down?

Auto-enrollment is a double-edged sword
Fees: Still paying too much?
Advice could come at a cost
Too few index funds to choose from
401(k) waiting periods take a toll To top of page

First Published: March 10, 2014: 10:13 AM ET


23.11 | 0 komentar | Read More

401(k) advice could come at a cost

401k invest advice

Investing for retirement can be confusing, but your employer's 'free' 401(k) advice may come at a price.

NEW YORK (Money Magazine)

MONEY looked at six holes you might see in your 401(k) plan, and some fixes you can make to address them. Below, see another way your retirement plan might be letting you down -- with handholding that isn't free.

Why savings rates matter

A mere two-point drop in your contribution rate can cut your chances of retirement success noticeably.

15% 81%
13% 77%
11% 71%
9% 64%

NOTE: Based on Monte Carlo simulations. Assumes a 30-year-old making $50,000, with $50,000 already saved, who retires at 65 and lives until 95. SOURCE: T. Rowe Price Retirement Income Calculator

Leak No. 3: Plans are offering more advice but...

Companies understand that most Americans are confused about investing for retirement. Roughly half of large plans now offer access to some type of investment management, up from 11% in 2007, according to Hewitt. These services don't simply tee up suggestions on what to do with your account. They pick funds for you and adjust your portfolio automatically.

Vanguard, one of the largest 401(k) providers -- largely by improving participants' stock and bond mix. In reality, though, there are no guarantees. Managed accounts in Vanguard's plans returned just 1.9% a year on average between 2007 and 2012, vs. 2.3% for DIY participants.

Part of the problem: Handholding isn't free. In some company plans these add-ons will cost as much as 1% or more of your assets a year, eliminating most or all of the potential advantage. The most popular providers, Financial Engines and Morningstar's Retirement Manager program, charge about half that or less.

Calculator: How much are 401(k) fees costing you?

Still, those costs are on top of the investment fees you're paying for the underlying funds, which could run you another half or full percentage point -- dragging down your returns.

WHAT TO DO

In your thirties and forties: All the advice you may need is guidance on how much to save (answer: shoot for 15%) and a target-date fund, says Lori Lucas, defined-contribution practice leader at the investment consulting firm Callan.

Target-date funds -- all-in-one portfolios that expose you to stocks and bonds and that automatically grow more conservative over time -- are a form of professional management available in two-thirds of plans.

In your fifties and beyond: At this stage, you've accumulated a sizable sum and the idea of handing over investment decisions to a pro may not sound bad.

"This is especially true for near retirees," says Lucas. "You are making some complex decisions that are both major and irreversible."

Related: Should I delay my retirement?

The one in four workers 56 to 65 who held more than 90% of their 401(k)s in equities heading into the financial crisis certainly could have used such help. Don't expect miracles, though. Hewitt found that on average investors who sought help performed about the same as investors who were on their own in 2008. They did, however, perform better in 2009 when stocks bounced back.

Is your 401(k) plan letting you down?

Auto-enrollment is a double-edged sword
Fees: Still paying too much?
Too few index funds to choose from
401(k) waiting periods take a toll
Company stock is still a problem To top of page

First Published: March 10, 2014: 10:27 AM ET


23.11 | 0 komentar | Read More

Invest $1 million, try for a U.S. green card

NEW YORK (CNNMoney)

Patel is here on an investor immigrant visa -- a controversial program that gives a green card to any foreigner who invests at least $500,000 and creates 10 jobs in the United States.

Next March, he'll have to go before immigration officials and prove he's created the 10 positions or he risks losing the temporary green card he was granted last year.

"The worst-case scenario is I leave," said Patel, 40, who's based in Dallas but originally from the UK. "I guess I could always sell the company."

The investor immigrant visa (officially known as EB-5) has been around since 1990 but has expanded rapidly in the last few years. Over 6,600 visas were issued under it in 2012, according to a recent Brookings Institution report. That's up from just 800 in 2007.

Related: Canada kills investor visa popular with Chinese

Its popularity seems to be driven by an increasing number of wealthy foreigners looking to move to the United States, as well as more people promoting the program abroad, according to Brookings.

But despite its popularity, the program has plenty of critics, especially those who see it as a way for the global elite to buy U.S. citizenship.

Even those who support it think there's too much red tape and believe parts of it are mismanaged to the point of fraud.

Much of the criticism is leveled at a separate part of the program that allows investment in regional economic development funds. There, private entities control and invest the money, with the visa applicant often having little idea of where the money goes -- though they still have to prove they've created jobs.

These private entities have been accused of ripping off investors, and both Brookings and an inspector general's report from the Department of Homeland Security, which oversees the program, recommend substantial management changes.

Most program participants choose this passive investment method, but not Patel.

"I'd have to trust my money to strangers and hope for a return," he said. Instead, he decided to start his own company.

Related: 3,000 Americans ditch their passports

The snack business wasn't new to Patel. After graduating from Babson's MBA program in 2002, he got a job at Stacy's -- then an upstart Boston snack maker. Four years later, Stacy's was bought by Frito Lay for an undisclosed amount. As CFO, Patel paid over a million dollars in taxes that year.

But without a job, Patel couldn't stay in the country.

"There's no visa to just stay in the United States and spend money," he said. So he went back to his native England, where he stayed for four years.

But he quickly realized he wanted to return to the United States.

In 2008, he attended a trade fair in Chicago where food makers were looking for marketers to sell their product. He considered fragrances and powdered drinks before settling on peanuts.

"I thought the category was kind of sleepy," he said. "There wasn't really a strong, fun, branded presence."

In 2011 he launched his brand -- Lord Nut Levington, which has six kinds of flavored peanuts that are sold in major U.S. supermarkets. This April, he'll be featured on ABC's show "Shark Tank."

He has two full-time employees -- an accountant and a marketing chief. Together, they handle product development, marketing and the finances. Everything else -- manufacturing, sales, etc. -- is handled by outside firms.

But Patel is frustrated with the investor visa program. There doesn't appear to be any leeway with his March 2015 deadline to create eight more jobs. And while the government does take indirect jobs into account, there's no way to measure that in advance. And it does not distinguish between minimum wage jobs and his two professional-level positions.

He may hire more people just to meet the requirement, but that would be a burden on his company -- which has yet to turn a profit.

"Maybe I should have opened a cleaning business," he said. To top of page

First Published: March 10, 2014: 10:39 AM ET


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Pizza chain Sbarro files for bankruptcy

sbarro bankruptcy

Sbarro's Pizza has filed for bankruptcy for the second time in less than three years.

NEW YORK (CNNMoney)

In a statement Monday the chain said the bankruptcy filing is a pre-packaged plan, which means that it has already agreed on a reorganization plan with creditors that hold 98% of the company's debt. That should allow it to quickly shed an estimated $140 million in debt, and emerge from bankruptcy as a healthier company.

It is the second bankruptcy filing in less than three years by the chain, which previously filed for bankruptcy in April 2011.

In February, the company announced it was closing 155 company-owned restaurants in the United States, effective immediately. That left it with 220 U.S. locations and more than 600 other locations owned by franchise operators in 40 different countries.

The closings left the company with about 2,700 employees. Spokesman Jonathan Dedmon said that no further restaurant closings are envisioned under the bankruptcy plan. He said Sbarro has already closed its weaker locations and expects to shed 80% of its debt during the bankruptcy. It has also secured $20 million in new financing.

"The previous closures and bankruptcy filing are part of an overall plan to invest in and grow the company for the future," he said.

Related: Everything must go -- there's a flood of store closings

Sbarro is best known for locations in airports, malls, train stations and highway rest stops -- high traffic locations with limited direct competition from other pizza chains. It also has only a fraction of the advertising budget of competitors such as Domino's Pizza (DPZ), Papa John's (PZZA), or Yum Brands' (YUM, Fortune 500) Pizza Hut.

The closing announcement was one of many mass store closing announcements so far this year. Earlier this month, electronics retailer Radio Shack (RSH) announced plans to shut up to 1,100 stores, and office supply retailer Staples (SPLS, Fortune 500) said it would shut 225 stores. Department store chain J.C. Penney (JCP, Fortune 500) announced plans in January to close 33 stores, while Macy's (M, Fortune 500) announced it would shut 5 stores and lay off 2,500 in a cost-cutting effort.

The closely held company is based in Melville, N.Y. To top of page

First Published: March 10, 2014: 9:40 AM ET


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Asset allocation for dummies

Written By limadu on Senin, 03 Maret 2014 | 23.10

too much stock

Use online tools to figure out your personal mix of stocks and bonds.

NEW YORK (Money Magazine)

Generally speaking, stocks provide more long-term growth, but they can be volatile. Bonds, on the other hand, tend to be more stable but offer relatively little growth. As a result, most people should put their money in a mix of both -- but how much of each depends on your age and how soon you plan to retire and begin withdrawing your savings.

Cash or cash equivalents like money-market funds pose very little risk but offer very little return. Beyond a modest supply of emergency funds, you might not need cash in your portfolio at all until you're about to stop working.

In general, the younger you are, and the further you are from retirement, the more your portfolio ought to be weighted toward stocks. The reason has to do with one's ability to withstand and recover from big stock market declines.

Younger folks, with a lot of working years ahead, can generally count on a steady stream of future earnings long into the future. As a result, money they invest in the near term represents a relatively small percentage of their lifetime earnings. And their future income stream -- which some economists actually encourage us to think of as playing a bond-like role in our overall financial portfolio -- will likely dwarf the size of any stock market losses incurred early on.

Calculator: When will you be a millionaire?

This isn't true for everyone, of course -- only those who can reasonably expect to maintain steady income well into the future. Entrepreneurs, by contrast, tend to have highly unpredictable incomes, in which case they ought to tilt their portfolios toward bonds.

The upshot? Until retirement is imminent -- at which point a more customized financial plan is in order -- most people can follow a simple rule of thumb: Subtract your age from 100. The result is the percentage of your savings that should be invested in stocks. The rest should be in bonds. For instance, if you're 40 years old, you should have 60 percent of your funds in stocks and 40 percent in bonds.

Then you can make some adjustments depending on your circumstances and attitudes. For example, increase your stock allocation by one percentage point for every year you expect to work past age 65. Another: If you are fairly comfortable with risk, you might subtract your age from 110 instead of 100.

Once a year, you'll want to repeat the calculation and "rebalance" your portfolio -- especially because market forces might have thrown your stock-bond mix out of whack in the interim. If stocks had a great year and bonds a lousy one, for example, your percentage of stocks will have grown too large.

Related: Want income? Look beyond the old reliable dividend stocks

Those who want to get more sophisticated about dividing their portfolio among types of investment -- not just stocks and bonds, but small and foreign company stocks as well -- should give this three-question asset allocation tool a try. Among other things, it gauges how much risk you can tolerate and your typical response to stock market volatility.

On the other hand, if all this sounds like more than you're likely to tackle on an annual basis, consider placing your money in a target-date fund, which will automatically adjust your stock-bond mix as you get closer to retirement. All you have to do is determine when you plan to retire. Target-date funds tend to be too heavy on stocks for those approaching retirement, however; but that, again, is when you should be developing a more tailored financial plan anyway.

Another solid one-stop option is a low-priced balanced mutual fund. These funds generally mix stocks and bonds in about a 60/40 ratio -- a bit conservative if you're in your 20s or 30s, but in the right ballpark if you're in your 40s or 50s. To top of page

First Published: March 3, 2014: 9:25 AM ET


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Stocks hit by Ukraine and Russia fears

u.s. stocks, dow

Click the chart for more stock market data.

NEW YORK (CNNMoney)

The Dow fell more than 150 points, or nearly 1%. The S&P 500 and Nasdaq were also down almost 1%.

Investors were cautious following news that Russia has moved forward with military intervention in Ukraine. Ukraine's new leaders have accused Russia of declaring war.

Stocks in Russia took the biggest hit. The Micex index tanked almost 11%, while the Market Vectors Russia ETF (RSX) was down 7%. Investors seemed to be very concerned by threats of serious sanctions against Russia from the United States and Europe.

Russia's central bank reacted by hiking interest rates, saying it wanted to maintain financial stability and inflation levels as market volatility increases.

All the major European stock markets fell sharply in afternoon trading, with Germany's Dax dropping more than 3%. France's CAC 40 was off more than 2% and London's FTSE 100 down about 1.5%.

The Ukraine fears hit most Asian stock markets as well. Hong Kong's Hang Seng index closed 1.5% lower and Tokyo's Nikkei dropped 1.3%. Stocks in Shanghai and Shenzhen bucked the trend and moved higher.

Related: 5 reasons Ukraine matters to the world economy

Though global markets were getting knocked down, Nigel Green, founder and CEO of deVere Group, said he doesn't expect the sell-off to last long.

"There has been some volatility in the capital markets as a result of the political and military uncertainty in Ukraine, which have naturally exacerbated concerns about the country's fundamental economic weaknesses," he said. "However, I fully expect this to be a short-term phenomenon. "

Green said that while Ukraine's problems may raise more concerns about emerging markets, he doesn't expect the crisis will trigger another global recession. Rather, Green said the situation will be limited to Russia and Ukraine.

Meanwhile, as investors seek safe-haven assets, gold prices rose by 2% to around $1,350 per ounce.

Investors were buying U.S. Treasuries too, pushing the 10-year yield down to 2.61% from 2.65 late Friday. Bond prices and yields move in opposite directions.

The price of oil is also up, with crude prices rising by 1.5% to nearly $104 per barrel.

"Russia's involvement clearly magnifies the scope for contagion and increases the possibility that global energy prices will be affected both directly and indirectly," wrote Stephanie Flanders, chief European market strategist for JPMorgan asset management in London.

Related: Fear & Greed Index still in Greed despite Ukraine worries

In company news, Men's Wearhouse (MW) said Monday that it has entered into merger talks with its rival retailer Jos. A. Bank (JOSB). To top of page

First Published: March 3, 2014: 9:44 AM ET


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Six steps for building a better budget

wealth budget

Just writing down what you make and what you spend can change your financial life for the better.

NEW YORK (Money Magazine)

The mere act of writing down -- on paper, in a spreadsheet, or on a website or app -- how much money you have coming in and how much is going out can make a huge difference when it comes to getting a handle on your finances.

It can help you avoid outright waste on things like late fees and overdraft penalties. It will help you identify where you could save money without painful cuts. And eventually it will enable you to spend less than you bring in so you can save for the future.

The short-term goal should be to reduce your spending to 90% or less of your income.

Here are six steps you need to take:

1. Add up your income. Tally up your family's monthly after-tax income. If what you earn varies depending on how many hours you work, add up your monthly total for a few months so you can calculate an average. But don't include dollars you can't be sure you'll receive, such as year-end bonuses or tax refunds.

2. Track your monthly spending. Make a list of all of your regularly occurring expenses: Mortgage or rent, utilities, insurance, child care, groceries, gas, car payments and access to phone, Internet and TV service are some common ones. Maybe you're also making payments on outstanding credit card debt, a student loan or a home equity loan. Add them all up to make sure the money coming in is more than what's going out each month.

Related: How healthy are your finances?

3. Don't forget the little things. You may still do a sizable amount of spending that's hard to group into large monthly buckets -- money, perhaps, that you withdraw at the ATM and spend on day-to-day needs. Start tracking where that cash is going by keeping a journal of expenses for the next four weeks. You can use those results to extrapolate how much cash you're going through in a typical month.

4. Expect the unexpected. Often, "unexpected" expenses that can derail a budget aren't really so unexpected. Holiday gifts for your kids' teachers? Happens every year. Getting hit up with requests to buy stuff for fundraisers? You know they're coming. Since you can count on a parade of these recurring one-off expenses, project a conservative estimate for the year and include it in your budget.

5. Look for items to cut. If you're spending more than you make, creating a budget can help you find places to cut the fat. Maybe you could cancel a monthly subscription to an expensive gym or some premium cable channels. Wait until things go on sale to buy them, turn your thermostat down in winter and up in summer, and when you pay off your car, don't immediately trade it in for a new one.

6. Get high-tech help. A personal-finance program like Quicken, or website or app like Mint, has built-in tools that can help you create a budget. With many of these services, every time you make a deposit, write a check, pay a credit card bill or dispatch an electronic payment you are asked to assign it to a particular category. And if you bank online, you can download your payments and deposits directly from the bank rather than entering them by hand. To top of page

First Published: March 3, 2014: 9:21 AM ET


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Quick guide to how much you'll need to retire

retirement goal

Calculating how much you need for retirement and setting a goal, helps you reach a comfortable retirement.

NEW YORK (Money Magazine)

The answer depends not only on what you hope to do during retirement -- work part time? travel the world? -- but on unpredictable factors that are largely out of your control, like your health and the performance of the stock market.

But don't use that as an excuse not to try. The reason: People who have a retirement savings goal -- even if that goal is a product of back-of-the-envelope calculations -- are vastly more likely to retire comfortably than those without one. So get out your envelope. Here's a quick-and-dirty way to estimate your retirement needs.

Find your multiplier

The most commonly used rule of thumb projects that the average retiree will need to save 11 times (some experts say 12) his or her salary at retirement age in order to be reasonably confident of having enough funds.

Watch: How to save for retirement in 2014

The problem with that ultra-easy method, of course, is that unless you're very close to retiring, you have no idea how much you'll be making when you decide to hang it up. So author Charles Farrell, in his respected book Your Money Ratios, crunched some more numbers and came up with multipliers based on your current age and income. In order to have a good shot at replacing 80% of your pre-retirement earnings, he recommends that you aim to have accumulated:

• 1.4 times your annual income at age 35;
• 3.7 times your annual income at age 45;
• 7.1 times your income at age 55;
• and 12 times your income at age 65.

Don't panic!

If you're already behind by that measure, don't despair. Ratcheting up your savings rate may be enough to make up for lost ground. But even if you can't catch up, the truth is that there isn't a single path to a satisfying retirement. By living on 70% of your salary or working a few more years, you can cut the savings levels you need to reach by 10% to 25%.

And you can probably live on less. Planners typically suggest you aim to replace 70% to 80% of your pre-retirement income, which doesn't amount to a dramatic lifestyle change once you eliminate the money you were saving, Social Security taxes, and commuting costs. But many retirees find they can get by on 50%.

Related: Have enough money for the retirement life you want

We'll offer a more detailed guide to projecting your retirement needs further down the Road to Wealth. But another option is use an online calculator like this one from AARP. To top of page

First Published: March 3, 2014: 9:21 AM ET


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Plug the financial leaks, now!

financial leaks

There's no reason to let your money go down the drain.

NEW YORK (Money Magazine)

Unfortunately, many of us are too consumed by day-to-day life to focus on the countless instances of small-scale back-sliding: completely unnecessary waste, extra money we could have if we just reached for it, fees we could avoid if we just made a little effort. The stupid easy stuff, in other words.

What follows is a list of 10 common financial leaks -- by no means an exhaustive list, but a good starting point -- and strategies for plugging them.

1. Your savings barely earns interest. The average money market fund pays next to nothing -- 0.12% as of March 2013 -- yet savers still leave loads of money in them. With a little shopping around, you'll see that many institutions pay close to 1%, which can earn $100 a year on every $10,000 in savings. Search for the best rates here.

2. You don't admit your money mistakes. This one has broad application, but let's focus on a really common one: You haven't been to the gym in months, but you don't cancel your membership because doing so would mean acknowledging that you made a mistake -- and that you won't get back the money you already wasted. Continuing that unused membership can cost $500 to $1,000 a year.

3. You waste your flexible spending dollars. A third of FSA account holders let their hard-earned dollars go unspent each year -- at a cost of $120 a year on average. To use up funds by the Dec. 31 or March 15 deadline (check with your firm), buy a spare pair of glasses or stock up on staples like bandages. You'll need a prescription to get reimbursed for most OTC meds, which your doctor can fax to the pharmacy.

Calculator: Net worth -- How do you stack up?

4. You leave your heat and AC running for no reason. Using a programmable thermostat to adjust your home's temperature -- it can lower the heat at night and when you're at work, for example -- could shave 5% to 15% off your heating and cooling bills. What's more, about half of households with a programmable thermostat fail to use that feature.

5. You pay your bank to hold your money. Americans spend $7 billion on bank fees each year. But many banks will waive their monthly checking account fee if you set up direct deposit from your employer.

6. You pay your fund manager for making too many trades. Mutual funds that replace their holdings the most frequently have only a 31% chance of outperforming the market, says Russel Kinnel, director of mutual fund research at Morningstar: "You're better off steering clear."

Watch: How to save for retirement in 2014

The brokerage and other costs that managers ring up by moving in and out of stocks on a regular basis don't show up in the expense ratio. So check your fund's turnover rate at Morningstar.com or in the prospectus. If the entire fund turns over 1 1/2 times (150%) or more a year, it's too much.

7. You pay your fund company too much for doing almost nothing. Running a passively managed broad index fund requires relatively little human input, so the "expense ratio" you pay on such funds should be tiny. Yet, the difference in cost between the lowest- and highest-priced index funds can be nearly one percentage point -- or close to $1,000 a year for every $100,000 you invest.

8. You spend more on your car than it's worth. Once your car is 10 years old, the cost of repairing it after an accident is very likely more than the car is worth, says Philip Reed of Edmunds.com. Dropping collision coverage for your wheels and covering just injury and property damage could save up to 40%.

9. You pay too much for auto insurance. Drivers who have stayed with the same insurer for more than eight years could save 19% by switching, according to a recent study. Yet, 75% of policyholders automatically renew without getting a new quote.

10. You don't bundle your insurance policies. Insuring your home and auto with a single company can save up to 25% per year, says Alec Gutierrez of Kelly Blue Book. That's $300 a year for a typical home and auto policy. To top of page

First Published: March 3, 2014: 9:21 AM ET


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The college savings cheat sheet

college savings

Savings for your kid's college education? The simplest choice is an age-based 529 plan.

NEW YORK (Money Magazine)

We're talking about 529 college saving plans, which are named for the IRS tax code that created them. With a 529, you can save for college tax-free, as long as the money is used for higher-education expenses. Despite this huge tax advantage, 529 plans are still overlooked -- only one in four parents saving for college are putting money in a 529, according to a recent survey by lender Sallie Mae.

Why are families missing out on 529s? Well, chalk it up to confusion. Nearly every state has its own plan, and some operate more than one, so shopping around can be daunting. (You can invest in nearly any state's 529, not just your own.) And much like a 401(k), each 529 presents you with a wide array of investment choices to sort through. Still, you can quickly drill down to the right choice for you -- just follow these five steps:

1. Check out your state's tax breaks. First determine what tax benefits your state offers -- most states let you claim a deduction for contributions to a 529. (Go to savingforcollege.com, where you can look up each state's tax breaks and 529 plans.) If you live in a state with no income tax, or one that doesn't offer a tax deduction, you're free to look elsewhere. You can also shop around if you live in one of the six states (including Missouri and Pennsylvania) that allow you to deduct contributions to any state's 529 plan.

2. Assess your state's plans. If your state does give you tax breaks, you're typically better off investing at home, especially if the deductions are generous. But there are exceptions. When the local 529 offers poorly performing funds or charges high costs -- say, more than 0.5% -- you may do better by going elsewhere. (More on costs below.) And for those investing for young kids, you may be able to start out with your in-state plan and later roll over your money to a better plan elsewhere. Some 14 states allow you to move your funds to an out-of-state 529 without penalty as long as you stay invested for a few years.

3. Keep your costs down. For many years 529s levied higher fees than retail brokerages did for comparable offerings, which took a big bite out of returns. But competition is finally pushing down costs.

Calculator: How much will college really cost?

To find a low-cost 529, stick with those that are direct-sold -- meaning you invest directly with the plan -- and avoid plans sold through brokers and advisers, who typically layer on fees. If you sort through the choices, you'll typically find funds charging less than 0.5% -- often index offerings that cost 0.2% or less. (You can find links to the different state plans at collegesavings.org).

4. Opt for an age-based fund. The simplest and best choice for many families is an age-based portfolio, which is similar to a retirement target-date fund: You get instant diversification and the asset mix shifts to become more conservative as your child nears college. (That automatic feature is especially helpful for 529s, since you can generally make only one investment change a year.) But make sure you're comfortable with the asset mix, since some age-based portfolios are more risky than others -- an aggressive fund for a 10-year-old might have 70% in stocks, while a conservative choice might hold less than 30%.

5. Protect your portfolio. When you're one or two years away from paying that first tuition bill, you may want to shift out of the age-based fund to even safer assets. Just make sure they really are safe.

Watch: Is the cost of college crippling?

Many families were hit hard in 2008 by losses in their 529 bond funds, which turned out to hold subprime mortgage securities. Today fixed-income investors face the prospect of rising interest rates, which would push down bond prices. The longer the maturity of the bond funds, the bigger the potential losses.

Still, 529s offer many low-risk options, such as a high-quality short-term bond fund, which is likely to hold up relatively well if rates rise. (You can look up the fund's average maturity and credit quality at Morningstar.com.) Many 529s also offer stable value funds, which are backed by an insurance company and hold a steady net asset value -- they pay a yield equivalent to a short-term bond fund. And some plans, like Ohio's CollegeAdvantage 529, let you invest in bank CDs. You can't get safer than that. To top of page

First Published: March 3, 2014: 9:22 AM ET


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Diversify your portfolio in four easy steps

fix mix

Broad diversification, beyond plain vanilla stocks and bonds, can help you reach higher returns.

NEW YORK (Money Magazine)

Now it's time to really refine your portfolio, both to make sure you are broadly diversified and perhaps to reach for a higher return. Here's how.

1. Go beyond blue chips. Many investors will choose to purchase stocks through a mutual fund that holds mostly large company stocks, or one that tracks an index like the S&P 500, a list of the 500 most valuable public corporations.

That generally makes sense: Such blue chip stocks represent about 75% of the value of the U.S. market. But it leaves out another 25% that you don't want to miss, because in many years shares of small- and mid-size companies outperform the big ones.

The Money 50 list of recommended funds includes the dedicated small- and mid-size picks iShares Core S&P Mid-Cap ETF (IJH) and iShares Core S&P Small Cap ETF (IJR). Or you can simplify your portfolio my choosing a core holding that includes the full spectrum of U.S. stocks, such as a "total stock market" index fund.

2. Consider a tilt. A large body of research has shown that it's very difficult for stock pickers to outperform the market. (In other words, you are usually just better off buying and holding an index fund.) But some of the same researchers have identified a few patterns in historical stock returns that might help you carve out extra gains over the long run. Both small-company and "value" stocks -- that is, those that trade at low prices relative to their earnings or business value -- seem to offer investors an edge.

Small-cap stocks have bested blue chips by an annualized two percentage points since 1927, according to Morningstar data. About the same is true of large-company value shares over pricier large "growth" stocks. The big winners? Stocks that are both small and cheap.

Calculator: Asset allocation -- Fix your mix

It's important to understand that this extra return isn't without a downside: Smaller companies provide a high average return because they are riskier investments. Likewise, value stocks may be priced low because the market sees trouble ahead for the company. And portfolios tilted toward small and value sometimes underperform the market for years -- so this is a strategy that requires patience.

You can tilt your portfolio by beefing up your stake in a small-cap fund or adding a value-focused fund to your core holdings.

3. Don't forget your passport. The U.S. market represents only about a third of the world's equities, by market value. That doesn't mean you should own mostly foreign companies -- the rest of the world's markets include some very risky places to invest -- but many advisers recommend keeping about 30% of your stock portfolio in an international mutual fund or ETF.

One big reason is diversification: Foreign markets don't move in step with U.S. markets. By further spreading out your risks, you may be able to lower your volatility without sacrificing return.

Watch: What to expect in the stock market in 2014

Emerging markets funds, which invest in places like China and Latin America, frequently sport impressively high returns in good years, but often at the cost of extreme volatility. If you want to reach for those extra gains, go with a fund that diversifies broadly across many different emerging markets. Or simply hold a foreign fund that includes emerging markets as a part of its strategy.

4. Diversify your bonds, too. Keep money you expect to be tapping relatively soon in bonds with short maturities, or in a bond fund with a short duration. (Duration is a measure of how a bond will react to a change in interest rates -- roughly, a fund with a duration of two years will lose 2% for each 1% rise in interest rates.)

For longer-term holdings, look for a fund with an intermediate portfolio duration, which will allow you to take advantage of higher yields. You can also spread your bets among different kinds of bond issuers -- many general bond funds hold both corporate bonds and U.S. Treasuries. Foreign bonds offer diversification benefits similar to foreign stocks.

You can also diversify the risk of inflation. A Treasury Inflation Protected Security, or TIPS, bond delivers a lower yield, but one that is guaranteed not to be eroded by inflation. You can buy individual TIPS from Treasurydirect.gov, or hold them through a mutual fund that specializes in inflation-protected bonds. To top of page

First Published: March 3, 2014: 9:23 AM ET


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Improve your financial life - automatically

mint set budget

An app like Mint can link your checking account and credit card accounts to track your income and expenses.

NEW YORK (Money Magazine)

Ever been there? There's a way to avoid this problem: Automate at least some of the bill-paying process -- and other pieces of your financial life while you're at it. Banks have been improving their digital offerings and nudging customers toward them because they're cheaper than paper, but there's a benefit for you, too: Once you set up online or mobile banking, paying bills can be fast and almost painless.

Here's your financial automation checklist:

Direct deposit. Start by signing up for direct deposit at work so your paychecks land in your bank account automatically. It makes the money available sooner and saves you all those trips to the ATM. Plus, many financial institutions will waive their monthly checking fees for customers who use direct deposit. (Some banks have minimum thresholds, so check to make sure you qualify.)

Bill payments. This is the next logical step. To set up electronic bill payments via your bank's website, you'll need your account number at each company you want to pay and likely its address too. With bills that fluctuate each month, or if you prefer to initiate each payment yourself, all you'll need to do is go online, enter the amount of the payment, and the rest happens electronically.

Watch: Biggest tax changes you'll see in 2014

With bills that are identical each month, like a mortgage, set up automatic payments. Just be certain that you'll always have enough in your account to cover it. If you're short, the bill may still get paid on time, but you'll be hit with a $30 or $35 overdraft fee. If you tend to live paycheck to paycheck, add email or text alerts if your bank account balance drops below the amount scheduled to be withdrawn.

After the first bill for any new vendor is scheduled to be paid, verify that the transaction went as planned.

Most checking accounts don't charge for online bill-paying; some prepaid debit accounts do. If you don't want to go through your bank, you can go to websites of the vendors you pay every month and set up automatic payments through your credit card. This lets you consolidate numerous monthly bills into a single credit card statement.

Budgeting. If you use budgeting software like Quicken, or a budgeting website or app like Mint, link your checking account and credit card accounts so all your bills and expenses will be categorized and easy to track in one place.

Savings. Most companies that offer a retirement savings program like a 401(k) make it easy to divert a portion of each paycheck into these accounts automatically. (Increasingly, in fact, this is the default option for new employees.)

Calculator: How fast will your savings grow?

Don't pass up this easy and valuable savings tool. If you commit, say, 10% of your pre-tax salary to retirement savings, you won't pay income taxes on it. Your company may match your contributions. And when you don't see the money in your account, you tend not to miss it -- and you'll probably get used to living on less.

Even if you don't work for a company with a 401(k) plan, you can set up automatic transfers from your checking or savings account into a tax-advantaged account like an IRA or Roth IRA, a 529 college savings plan, a brokerage account, a vacation account, house fund or any other savings goal or vehicle you have.

Auto-escalate your savings. Within many company 401(k) programs, you can instruct the plan provider to automatically increase your savings rate by an amount you choose (usually between 1% and 3%) on the same day every year. Gradually increasing the amount you save this way can add substantially to your savings without taking a big hit all at once.

Portfolio rebalancing. Smart asset allocation -- that is, dividing your investment portfolio among different types of assets -- is an important stage on the road to wealth. And once you determine the right mix for you, it's important to maintain those proportions over the long-term, even as market fluctuations throw them out of whack.

Periodically "rebalancing" your portfolio is the answer -- and many investment companies now offer the option of automatic, periodic adjustments back to your desired allocation. To top of page

First Published: March 3, 2014: 9:24 AM ET


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