Economy http://www.wisebread.com/taxonomy/term/3292/all en-US Why Does the Stock Market Keep Going Up? http://www.wisebread.com/why-does-the-stock-market-keep-going-up <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/why-does-the-stock-market-keep-going-up" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/surging_business_0.jpg" alt="Surging Business" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Many people were taken by surprise when the stock market reached new highs after the 2016 election, with the Dow Jones industrial average (DJIA) breaking 20,000. But the recent record highs are only the latest in a long trend of stock market growth extending back well over 100 years.</p> <p>The average rate of return for the DJIA since 1896 is about 7 percent when adjusted for inflation. Looking at a broader representation of the overall stock market, the average rate of return for the Standard &amp; Poor's (S&amp;P) 500 index since it's inception in 1928 is about 10 percent per year.</p> <p>Of course, if you pay attention to the stock market, you know that stocks do not move steadily up all the time. Sometimes there are sudden market declines, such as the crash of 1929 that led to the Great Depression, or the 2008 collapse that led to the Great Recession. Sometimes there are long periods of market stagnation when stock prices do not go up much at all, such as during the 1970s. But over time, the long-term trend has been that stock values keep on pushing up, even after setbacks, and routinely go on to break record highs.</p> <p>What makes stock values keep going higher and higher?</p> <h2>Investors <em>think </em>stocks will go up</h2> <p>Investors who decide to put money into the stock market select individual stocks and stock funds based on the financial performance of the businesses in the portfolio. Ultimately, investors weigh the potential for a stock to go up versus the risk that it will go down during their investment window.</p> <p>Sometimes &quot;irrational exuberance&quot; seems to play a big role in driving stock prices. In a hot housing market, investors will pay essentially any price to buy a property if they are confident the price will go up, even if the price is not rational. Investors sometimes buy stock for the same reason &mdash; simply because they think someone else will pay more for it when they want to sell and they don't want to miss an opportunity to make a big gain. In some extreme cases, such as hot initial public offerings (IPOs), stock valuation seems to be driven by speculation without much solid financial basis.</p> <h2>Businesses have figured out how to make products for less</h2> <p>One way that businesses have become more valuable, and therefore garnered higher stock valuation, is by increasing productivity and efficiency. If a business can produce its goods and services at a lower cost, higher profits can be achieved.</p> <p>Businesses boost their efficiency by using automation, optimizing product designs and reuse, and merging or partnering with other companies with complementary resources and capabilities. The continuous effort by businesses to reduce their costs and run their business more efficiently keeps driving stock prices up over time.</p> <h2>Fancy new products (with higher profit margins)</h2> <p>Innovation and technological advances result in new products with higher profit margins than established products. Consumers will pay a premium to get the latest technology and newest capabilities. When a new type of product is launched, there is a window of time when little or no competition is available in the market. This is why the introduction of new products keeps driving stock values up.</p> <h2>Growing consumerism</h2> <p>In the old days, it was common for people to grow their own food, make their own clothes, and craft other household items such as soap and even furniture. When people were more self-sufficient and made most things for themselves, opportunities for businesses to sell products to customers at a profit was limited.</p> <p>Fast forward to today. The population has increased significantly, and most people buy products instead of making things themselves. As the number of consumers grows, and the demand by consumers for more and more products increases, so does profit for businesses that make and sell products.</p> <h2>Why did stocks unexpectedly go up after Trump was elected?</h2> <p>After an initial tumble in stock futures following the 2016 election, the stock market rallied during the following months and hit a record high, with the DJIA reaching 20,000 for the first time ever on January 25, 2017. Why did the stock market go up after the election of an unpredictable new leader?</p> <p>Markets typically react negatively to uncertainty, and that is what happened when the S&amp;P 500 and DJIA market futures fell around 4 percent on the night of the election. But soon, stock prices started rising again. Investors apparently feel that the new president will follow traditional Republican strategies of lowering taxes on businesses and reducing environmental, safety, and consumer protection regulations, resulting in higher potential profits. Also, the possibility of increased military spending and spending on huge infrastructure projects raises expectations for short-term economic growth among investors.</p> <h2>Will the stock market keep going up?</h2> <p>Stepping back and looking at the potential for stock market growth over the coming decades, the elements for continued stock market growth seem to be forthcoming.</p> <p>New levels of automation promise to drive productivity and reduce the cost to produce and deliver products to consumers. Technical innovations such as renewable energy, virtual reality, augmented reality, and medical breakthroughs appear poised to result in highly profitable new products. New consumers are likely to enter the marketplace as developing economies grow, increasing overall demand for manufactured products and driving business profits higher.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dr-penny-pincher">Dr Penny Pincher</a> of <a href="http://www.wisebread.com/why-does-the-stock-market-keep-going-up">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-9"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/are-we-headed-toward-a-bull-or-bear-market">Are We Headed Toward a Bull or Bear Market?</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/heres-how-rate-of-return-can-help-you-invest-smarter">Here&#039;s How Rate of Return Can Help You Invest Smarter</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-foolproof-ways-to-protect-your-money-from-inflation">4 Foolproof Ways to Protect Your Money From Inflation</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-one-mediocre-investor-prospered-after-the-market-crash">How One Mediocre Investor Prospered After the Market Crash</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-creative-ways-to-invest-during-a-weak-market">5 Creative Ways to Invest During a Weak Market</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment businesses consumerism djia dow jones industrial average Economy production rate of return s&p 500 stock market Wed, 07 Jun 2017 09:01:06 +0000 Dr Penny Pincher 1959368 at http://www.wisebread.com Are We Headed Toward a Bull or Bear Market? http://www.wisebread.com/are-we-headed-toward-a-bull-or-bear-market <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/are-we-headed-toward-a-bull-or-bear-market" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock-485863805.jpg" alt="Learning if we&#039;re headed toward a bull or bear market" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>The stock market has been on a roll over the last year. Since the winter of 2016, investors have enjoyed a delightful bull market that has seen the S&amp;P 500 index rise by more than 25 percent.</p> <p>Whenever there is a lengthy run-up like this, investors always want to know how long it can last. Are we due for a big correction or even a record-breaking crash? Or will we see the markets continue to rise?</p> <p>Trying to time the market's movement is a fool's game, but it's always smart to look at the various indicators that may foreshadow future performance. With the current market, there is evidence to back up both bullish and bearish predictions.</p> <h2>Indicators of a bull market</h2> <p>The good times won't end anytime soon.</p> <h3>Most economic indicators are strong</h3> <p>For the most part, the American economy is stable. Unemployment is at its lowest point in a decade. Inflation is not out of hand. Manufacturing output is up, along with consumer confidence. There are some concerns about overall growth and productivity, but nothing that spells immediate doom for American investors at this point. Generally speaking, if the underlying foundations of the economy are sound, a sudden drop in stock prices is unlikely.</p> <h3>Interest rates are still historically low</h3> <p>We've seen interest rates creep up a bit, but they are still very low by historical standards. If you're placing money in a bank account, don't expect to receive much in the way of income. Bond yields are also very low. Thus, there's a good chance we'll see people continue to invest in stocks, as they have recently offered much better returns than most other options. As long as interest rates remain low, demand for stocks will be high.</p> <h3>Technical analysis supports it</h3> <p>Many analysts and financial planners prefer to examine a technical analysis of the stock market's performance, which looks at long-term trends that have historically repeated themselves. Most observers of these trends believe we are halfway through a growth cycle that began around 2010 and will continue another five to 10 years.</p> <h3>Corporate earnings are good</h3> <p>The stock market has been known to take a dive when stock prices are high, based on the underlying earnings of companies. In other words, when stocks are overvalued, the market will eventually find out, and you'll see a big correction. Recent earnings reports suggest that the stock market growth is justified. Earnings reports for the first quarter of 2017 look to be among the best in more than five years, so there's no indication that stocks are generally overvalued as a whole.</p> <h3>Lawmakers are pushing pro-business policies</h3> <p>President Trump was elected in part because of promises to lower corporate taxes and reduce business regulations, and he has the majority support of Congress. These are policies that are generally favored by the business community, and investors have responded positively. As long as businesses remain optimistic about policy changes, the stock market will be propped up.</p> <h2>Indicators of a bear market</h2> <p>On the other hand, maybe the good times are about to end.</p> <h3>Companies are heavily leveraged</h3> <p>U.S. companies have more debt than ever, and a lot of it comes due in the next few years. Moody's Investors Services estimated that a record $2 trillion corporate debt will come due between now and 2021, and warned that the market's ability to absorb all of these maturities is &quot;below average.&quot; Few analysts are predicting a massive wave of corporate bankruptcies, but an inability to refinance debt could curb corporate profits and cause stock prices to fall.</p> <h3>There's a possible epidemic of auto loan defaults</h3> <p>When the stock market last suffered a big crash in 2008, it was largely due to a flurry of defaults on mortgage loans. Many Americans obtained home loans that they ultimately could not afford, and ended up in foreclosure when home values dropped.</p> <p>These days, it appears that there may be a similar concern facing the quantity and quality of auto loans. It may not be as big a crisis as the housing bubble, but Americans ended 2016 with a record $1.2 trillion in auto loan debt, an increase of 9 percent from the previous year. Nearly one-fourth of these outstanding auto loans are considered subprime, and the delinquency rate from these loans is at its highest in seven years. This doesn't pose the same systemic risk as the mortgage crisis, but the auto industry is a key part of the American economy.</p> <h3>Europe is facing uncertainty</h3> <p>The United Kingdom is in the process of leaving the EU. There are rumors that other countries (France?) may follow suit. There are lingering concerns over terror attacks in the region. On one hand, economic trouble in the EU may benefit U.S. companies, but many American firms operate in Europe and are impacted by geopolitical uncertainty anywhere.</p> <h3>Political concerns</h3> <p>President Trump and members of Congress have been pushing pro-business policies, but eventually, they will have to deliver the goods. Their struggles in passing a repeal of the Affordable Care Act has been viewed as a sign that they may not have the wherewithal to accomplish big things, such as tax reform. A failure to follow through on any of these major promises could eventually cause a pullback in the markets.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/tim-lemke">Tim Lemke</a> of <a href="http://www.wisebread.com/are-we-headed-toward-a-bull-or-bear-market">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/why-does-the-stock-market-keep-going-up">Why Does the Stock Market Keep Going Up?</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/this-one-mental-bias-is-harming-your-investments">This One Mental Bias Is Harming Your Investments</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-reasons-to-stay-calm-when-the-market-tanks">8 Reasons to Stay Calm When the Market Tanks</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-cool-things-bonds-tell-you-about-the-economy">7 Cool Things Bonds Tell You About the Economy</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-stocks-to-buy-before-black-friday">6 Stocks to Buy Before Black Friday</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment bankruptcy bear market bull market businesses corporations crash Crisis Economy Europe politics predictions stock market Mon, 15 May 2017 08:00:09 +0000 Tim Lemke 1942751 at http://www.wisebread.com 8 World Currencies That Took a Hit in 2016 http://www.wisebread.com/8-world-currencies-that-took-a-hit-in-2016 <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/8-world-currencies-that-took-a-hit-in-2016" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/piggy_bank_currency_508410954.jpg" alt="World currencies that took a hit in 2016" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>It's been a tough stretch recently for global currencies. Economic uncertainty, political shake-ups, and other world events have sent the value of currencies down sharply over the past year in many countries. Moreover, the decision of some nations to float their currency on the foreign exchange market has had troublesome results. Currencies in South America have been hit especially hard, but others in Europe and Africa haven't been immune to weakening.</p> <p>Here are eight currencies that dove in 2016.</p> <h2>1. British Pound</h2> <p>Thanks, Brexit! The UK's vote to leave the European Union stunned the world and sent the pound plunging over fear of the move's impact on the British and global economy. Right now, the British pound equals about $1.23 U.S., or nearly 20% less since June, 2016. The pound was worth $1.50 right before the Brexit vote. It dropped nearly 15% immediately and kept declining before rebounding slightly at the end of 2016.</p> <h2>2. Mexican Peso</h2> <p>In the spring of 2016, one U.S. dollar was worth about 17 pesos, but the value of the Mexican currency has been tumbling ever since. The anti-immigration and anti-trade message coming from Donald Trump during the presidential campaign led to a weakening of the peso, and Trump's election in November made matters worse. The dollar/peso trade is now above 21, marking a 23% decline in value for the peso.</p> <h2>3. Venezuelan Bolivar</h2> <p>The Venezuelan economy is a mess, with massive inflation, shortages of food and medicine, and general mismanagement. This has led to a collapse of the nation's currency, with the value dropping by more than 36% in late March of last year. But accurate data from Venezuela is so hard to come by that the actual value of currency is anyone's guess.</p> <h2>4. Argentine Peso</h2> <p>Argentina's currency began falling right at the start of 2016, then rebounded in the summer before enduring a long decline since. The U.S. dollar is now worth about 16 pesos. That means the value of the peso is down about 17% since this time in 2016. This drop is largely blamed on the decision to begin floating the currency on the foreign exchange market. The move was supposed to encourage foreign investment, but that has yet to bear out, and the currency has taken a hit as a result.</p> <h2>5. Turkish Lira</h2> <p>National security fears and inflation have hammered Turkey's currency, which hit a new all-time low in early January. The currency began tumbling last spring, and is now off more than 23% since a peak in April. Interest rate hikes in the U.S. have created additional pressure; it now takes about four lira to equal a U.S. dollar.</p> <h2>6. Egyptian Pound</h2> <p>Egypt's currency tumbled in October, after the nation's government announced it would free float its currency. The Egyptian pound's 45% loss in a single day is believed to be a record. The pound had been trading at an 8:1 ratio to the U.S. dollar, but now it takes 18 pounds to make a dollar. Observers say that in the long run, a weaker currency could boost exports and tourism, but there is concern about inflation in the short term.</p> <h2>7. Nigerian Naira</h2> <p>Nigeria also free-floated its currency in 2016 in an effort to lure investment, and results were not quite as bad as in Egypt. After being pegged to the dollar for more than a year, the naira dropped 30% in a day in June. One U.S. dollar is now worth about 315 naira, compared to 199 naira before the slide. To make matters worse, a decline in the value of oil has not helped the currency for this OPEC nation.</p> <h2>8. Euro</h2> <p>General concern about the European economy has depressed the value of the currency used by more than 330 million people on the continent each day. One euro is now worth about $1.05 U.S. It had been trading above $1.15 before enduring a long, slow decline over the second half of 2016.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/tim-lemke">Tim Lemke</a> of <a href="http://www.wisebread.com/8-world-currencies-that-took-a-hit-in-2016">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-powerful-images-of-money-and-what-they-really-mean">6 Powerful Images of Money and What They Really Mean</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-ive-been-trying-to-say">What I&#039;ve been trying to say</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-does-the-fannie-mae-and-freddie-mac-bailout-affect-you">How does the Fannie Mae and Freddie Mac bailout affect you?</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/peak-debt">Peak Debt</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-new-normal-economy">The new normal economy</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Financial News brexit currency dollar Economy euros foreign exchange market money pesos politics Tue, 17 Jan 2017 11:00:10 +0000 Tim Lemke 1873810 at http://www.wisebread.com Going Off the Grid Is a Lot Harder Than You Think http://www.wisebread.com/going-off-the-grid-is-a-lot-harder-than-you-think <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/going-off-the-grid-is-a-lot-harder-than-you-think" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_farm_carrots_519737980.jpg" alt="Woman learning going off the grid is hard" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>The term &quot;off the grid&quot; has taken on an expanded meaning of late. It used to be used in a literal fashion, to refer to disconnection from the grids supplying power, gas, water, and telephone services. Lately it's come to mean something broader: disconnecting from what whatever parts of &quot;the system&quot; seem objectionable to you.</p> <p>Some people want to disconnect from the financial system. Some people want to disconnect from the surveillance state. Some people want to disconnect from the globalized economy or industrial agriculture or consumerism. Any of these choices have both costs and benefits.</p> <p>Take a look at some of your options.</p> <h2>Off the Grid on the Low-Tech Path</h2> <p>To go fully off the grid is to become self-sufficient &mdash; to produce all the things you need for daily living. This is only sort-of possible. That is, the technology to produce everything you need to live is very low-tech indeed &mdash; pretty much everybody lived that way for the past 100,000 years &mdash; but there are two problems, one of which is insurmountable.</p> <h3>The Surmountable Problem: It's a Hard Way to Live</h3> <p>There are two historical routes along the low-tech path. The more recent is subsistence farmer.</p> <p>You can't just decide &quot;I'm going to be a subsistence farmer&quot; and expect to succeed at it. It takes capital (in the form of land and tools). It takes skills (that your grandfather may have had, but that you probably don't). And if you can acquire both of those things, it then takes long hours of year-round backbreaking work to eke out a meager existence.</p> <p>You can live at a much higher standard of living if you work for money (whether at a job or at your own small business) and then use that money to buy the things you need. Even if you don't make much money at all &mdash; part-time work at minimum wage, or whatever you can make as a freelancer at this or that &mdash; you're still going to be able to live as well as a subsistence farmer.</p> <p>Oh, the subsistence farmer will get better food. It doesn't get any fresher, more local, free-range, or organic than the stuff you grow yourself. The subsistence farmer also gets the huge satisfaction that comes from supplying your own needs with your own two hands. But if you really want to produce everything yourself, you're going to have to do without a lot.</p> <p>You have to make a lot of choices about how pure you want to be. Each thing you want to learn how to make yourself &mdash; nails, let's say &mdash; means another big investment in tools (forge, anvil) and skills, and another huge amount of work that you have to do to produce enough nails for a project. And each thing you decide not to make for yourself &mdash; cellphones, let's say &mdash; draws you into the money economy, meaning that you need to produce a surplus, so you have something to sell beyond what you need to live on.</p> <p>Although it would have been a lot easier in your grandfather's time (his parents had and could teach many of the skills that you're going to have to learn from YouTube videos), it's probably easier now than it was in the 1960s, when a lot of hippie types gave subsistence farming a serious try. At least you've got the YouTube videos.</p> <p>There is a lot of stuff out there to help, if you're serious about giving something like this a try. You might start with my review of <a href="http://www.wisebread.com/book-review-the-self-sufficient-life-and-how-to-live-it">The Self-Sufficient Life and How to Live It</a> here on Wise Bread from a few years ago.</p> <p>Just for completeness, I should mention the even older low-tech path: The lifestyle of the hunter-gatherer.</p> <p>As a practical option, this one probably doesn't even exist. Virtually all the land that is suitable to support hunter-gatherers is more valuable for some other use, and so it has been taken for that use. (Hunter-gatherers couldn't win fights with farmers even before firearms were invented.)</p> <p>I suppose a wealthy person could buy a hunting preserve on a tract of land big enough to provide enough fish, game, and plants to support himself. If he did his hunting with primitive weapons and processed the carcasses with primitive tools (and kept to himself), he could probably get away with violating the rules on hunting seasons, fishing licenses, and the like. But it would just be a fantasy of living as a hunter-gatherer. As a landowner, he'd still be on the grid. (As a rich person, he'd no doubt be on the grid in all sorts of ways.)</p> <p>Having said all that, hunting and gathering are both useful as ways to improve whatever lifestyle choice you end up with. Anything you can take from the wild is something that you neither need to grow nor buy. I talk about that in my post <a href="http://www.wisebread.com/foraging-not-insane-useless-or-impossible">Foraging: Not Insane, Useless, or Impossible</a> and Andrea Karim has posts looking at <a href="http://www.wisebread.com/hunt-fish-money-food">hunting and fishing for food</a> and at <a href="http://www.wisebread.com/free-food-in-your-yard-edible-weeds">gathering edible weeds</a>. (Of course those barely scratch the surface of what hunting and gathering can do to supplement your diet in modern times.)</p> <h3>The Insurmountable Problem: You're Still on the Grid</h3> <p>A farmer needs to own land, and all kinds of grid attachments come along with that. You have to pay your property taxes, so you have to earn some money, so you're probably going to have to file an income tax return as well. If you need to earn money you're probably going to have to be able to market your products, so you need a truck, which means even more money, and even more grid attachments (license, plates, safety inspections, dependence on foreign oil).</p> <p>There are other ways you can't get off the grid. The state is going to check and make sure your kids are getting a proper education. You can teach them yourself, but you need to be on-the-grid enough to do the paperwork. You need to have health insurance even if you don't want to avail yourself of modern medical care. Zoning regulations will affect how you can use your land. Federal marketing orders and agreements affect what crops you can grow, and the EPA regulates what you can do with wetlands on your property.</p> <p>Because of these issues (and a hundred more like them), I've become enamored of late by the possibility of a different sort of path to off-the-grid living.</p> <h2>Off the Grid on the High-Tech Path</h2> <p>If you accept the fact that there simply is no way to live completely off the grid &mdash; if you abandon the purity aspect of the notion &mdash; another option opens up: You can go off the grid <em>a la carte</em>, picking and choosing where connecting to the grid is worth the cost, and where disconnecting is the bigger win.</p> <p>The question you need to ask is &quot;<em>Why</em> do you want to live off the grid?&quot; If you understand the answer to that question, you can decide where to put your effort.</p> <h3>The Satisfaction of Providing for Your Own Needs</h3> <p>If this is what moves you, you can start right away. Think about what you need and start producing it.</p> <p>Food? An intensively worked suburban plot can provide a large fraction of all the food a family needs, but you can start with just a garden. If you can have chickens where you live, you can easily be <a href="http://www.wisebread.com/real-eggs">self-sufficient in eggs</a>. You can certainly raise a few rabbits and substantially augment your household meat supply.</p> <p>Clothing? Learn to sew. Learn to knit. Learn to weave. Learn to spin.</p> <p>Shelter? Look into the &quot;tiny house&quot; movement. (There are several <a href="http://www.wisebread.com/can-tiny-house-living-actually-save-you-money">tiny house articles</a> on Wise Bread.)</p> <p>Producing your own stuff is only sometimes cheaper than buying it, but stuff you produce yourself can also be better than what you can buy (once you get good at producing it).</p> <h3>The Safety and Security of Providing for Your Own Needs</h3> <p>One downside of &quot;the grid&quot; is that you're so terribly dependent on it. If the power goes out, you're sitting in the dark. If a backhoe takes out the wrong cable, you've got no landline (or no Internet, or no cable). If the water company starts piping in water that's contaminated with lead, you're drinking from bottles until they clean the system.</p> <p>You can replace most of these things in a grid-free fashion, although it often takes capital.</p> <p>You can put solar panels on your roof and produce your own electricity. If you live out in the country, you can drill your own well and pump up your own water. You can even set up a biodigester and produce your own methane gas (although it might be simpler to harvest the occasional tree and burn wood rather than gas).</p> <p>There's really no way to go grid-free for telephone and Internet, because the connection is the essence of the thing. But if you wanted to do it, the technical chops required to set up your own local network &mdash; one that covered your home or your neighborhood (or your walled compound) &mdash; is not beyond the capability of an ordinary person. Throw in some access points capable of establishing a meshing network and a server with ample disk space and you could offer folks very local networking that was completely independent of the larger grid, providing voice access to everyone within your local network and offering whatever you wanted to spin up on your server. (A local copy of Wikipedia wouldn't take up much room at all.)</p> <h3>The Morality of Providing for Your Own Needs</h3> <p>Things that you produce yourself can be produced in accordance with your own values.</p> <p>You can be confident that no produce from your own garden was harvested by poorly treated migrant labor. You can be confident that no garment that you sew yourself was made by slaves or prisoners. Eggs from your chickens can be cruelty-free, cage-free, free-range, and organic to exactly the extent that you choose &mdash; and will certainly be extremely local.</p> <p>Using power produced by your solar panels funds no overseas terrorist organization, drains no cash to money-center corporations, nor does it enrich the shareholders of the firms endangering our air and water with fracking, offshore drilling, or poorly maintained pipelines.</p> <p>Where morality is not implicated, you can choose to stay on the grid. I don't live in a tiny house: I live in a town house &mdash; but it's a town house owned by a cooperative that I'm a member of. In essence, I rent it from myself. It's on the grid, but it's very much in accordance with my values.</p> <p>Living large on a small budget makes it easy to live light on the planet, and that often goes hand-in-hand with high-tech, off-grid living.</p> <h3>The Flexibility of Providing for Your Own Needs</h3> <p>The technology of the <a href="http://www.wisebread.com/three-paths-to-being-a-digital-nomad">digital nomad</a> makes it possible to go off the grid in a very different way.</p> <p>On the one hand, the digital nomad needs regular (although not necessarily constant) access to the Internet. That's as grid-connected as can be.</p> <p>On the other hand, once you've arranged your life to allow you to be location-independent, you can be pretty indifferent to exactly which bits of the grid you choose to depend on, and you can shift around based on the circumstances of the moment.</p> <p>You can live out of a suitcase and laptop bag, using the power and Internet available wherever you happen to be.</p> <p>You can outfit an RV (or a van) with some solar panels and some batteries, add a few gigabytes of data to your cellular plan, and live and work anywhere you choose.</p> <p>You can connect to the grid, work for as long as seems appropriate, and then disconnect whenever you want.</p> <p>Being able to make these choices &mdash; and then make different choices when the circumstance (or your thinking) changes &mdash; is what I mean by the high-tech path to off-grid living.</p> <h2>High-tech or Low-tech, Capital Makes a Difference</h2> <p>There's a big trade off between <a href="http://www.wisebread.com/self-sufficiency-self-reliance-and-freedom">self-sufficiency and self-reliance</a>, and the more of what you need you can produce for yourself, the more options you have.</p> <p>The grid is part of this. Replacing it requires a lot of capital. Doing without means taking a hit to your standard of living. This means a lot of hard choices, but each additional chunk of capital can turn one more hard choice into an easy choice.</p> <p>I mentioned at the beginning that a subsistence farmer needs capital for land or tools. Many of the other strategies I've mentioned &mdash; such as getting your power from a solar array &mdash; involve substituting capital up front for monthly bills (and a reliance on the grid).</p> <p>There is the option of <a href="http://www.wisebread.com/book-review-farewell-my-subaru">going big on capital</a>. If you've got enough money, you can be as local and off-grid as you want in sourcing your food, power, water, and so on.</p> <p>If you lack capital, you're going to have to pick and choose which aspects of grid you chose to unhook from. Or else, you're going to have to accept a very low standard of living indeed.</p> <p>In the end, it comes down to your values. Why do you want to live off the grid? What lifestyle choices support those reasons?</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/philip-brewer">Philip Brewer</a> of <a href="http://www.wisebread.com/going-off-the-grid-is-a-lot-harder-than-you-think">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-4"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/life-without-tv">Life Without Television</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-keep-social-media-from-ruining-your-vacation">How to Keep Social Media From Ruining Your Vacation</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/3-sneaky-ways-identity-thieves-can-access-your-data">3 Sneaky Ways Identity Thieves Can Access Your Data</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-alternatives-to-cable-tv-that-will-keep-you-entertained">8 Alternatives to Cable TV That Will Keep You Entertained</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/flashback-friday-34-smart-ways-to-improve-your-social-media-presence">Flashback Friday: 34 Smart Ways to Improve Your Social Media Presence</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Lifestyle Technology alternative living disconnecting Economy farming independence Internet off the grid self sufficient sustainability Thu, 15 Dec 2016 11:30:12 +0000 Philip Brewer 1850791 at http://www.wisebread.com 4 Ways Millennials Are Changing Marriage http://www.wisebread.com/4-ways-millennials-are-changing-marriage <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/4-ways-millennials-are-changing-marriage" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock-478191992.jpg" alt="here&#039;s how millennials are changing marriage" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>According to the Gallup, 59% of Millennials have <a href="http://www.gallup.com/poll/191462/gallup-analysis-millennials-marriage-family.aspx">never been married</a>. Raise your hand if you're a 20- or 30-something and your parents are hounding you to settle down and give them grandchildren. Oy, that's a lot of hands. Make sure they understand the four ways Millennials are changing marriage.</p> <h2>Marrying Later</h2> <p>It should be no surprise that the <a href="http://www.gallup.com/poll/163802/marriage-importance-dropped.aspx">youngest generation is marrying later</a>, as this has been a steady trend over the past few generations. However, the number of people born between 1980 and 2000 who are married is even lower than expected. </p> <p>Why wait? Wages are stagnant. More young people are saddled with college debt. More young people are taking longer to earn enough money just to leave their parents' home. More young people are dating longer, and waiting for the right one. <a href="http://www.wisebread.com/avoid-these-5-pitfalls-when-moving-in-together">Couples are living together</a> longer while putting off a wedding. When you don't have a lot of money, support, or time, the idea of spending a ton of time and money planning a wedding doesn't sound so romantic and fun.</p> <h2>Marrying Interracially and LGBT</h2> <p>It's crucial that we see where Millennials are pushing the ball forward, and one of those areas is in continuing the fight against <em>assortative </em>mating, which likely <a href="https://www.brookings.edu/blog/social-mobility-memos/2014/02/10/opposites-dont-attract-assortative-mating-and-social-mobility/">deepens economic inequality</a>. One of the best ways to track this is with interracial dating and marriage.</p> <p>Pew Research Center in 2013 learned that <a href="http://www.pewresearch.org/fact-tank/2015/06/12/interracial-marriage-who-is-marrying-out/">6.3% of all newlyweds</a> married a person who was outside of their race. While America has a long history of structural racism that Millennials also take part in, it is worth pointing out the big gains this generation has made in making marriage about love and not rules based on prejudice. </p> <p>It's also worth pointing out that 71% of American Millennials now <a href="http://www.pewforum.org/2016/05/12/changing-attitudes-on-gay-marriage/">support same sex marriage</a>, in contrast to only 55% of the general population overall. Marriage is getting more open and inclusive of all types of Americans, and you can thank Millennials for helping that happen faster.</p> <h2>Marrying With Prenuptial Agreements</h2> <p>This may not be relevant to your average couple living within the median income bracket, but it's an interesting one. According to some lawyers, more Millennials are cool with locking in a contract before the big day. Apparently, just over half of <a href="http://time.com/money/4549526/prenups-millennials-marriage/">lawyers in a poll</a> cited that they saw an uptick in prenuptial agreements in young couples, and only 2% of lawyers cited a decrease in prenups.</p> <p>Why could that be? One theory is that Millennials are entering marriages older and are more willing to have the tough pre-nup conversations. Another is that they are more protective of whatever wealth they have managed to hold onto, and are worried to repeat the mistakes of their parents. Whatever the reason and however you feel about prenups, it's sign that Millennials are more responsible than the media makes them out to be.</p> <h2>Not Marrying at All</h2> <p>Gasp! Clutch your pearls, but marriage is just not going to happen for a lot of people. According to the Olin College of Engineering, the number of both men and women projected to stay unmarried <a href="https://www.sciencedaily.com/releases/2016/10/161017124248.htm">continues to increase</a>. Professor Downey found that if men were born in the '90s, 30% of them will be unmarried by age 43. For women born in the 1990s, 36% of them are expect to be unmarried by age 43. That's in comparison to 17% of both men and women who were born in the 1970s going unmarried by the same age.</p> <p>Why? Marriage is very personal, and everyone's reasons could very well be different. That said, it's likely that the reasons many Millennials cite for delaying marriage would be the very same reasons some never do it at all. We've learned through myriad surveys, polls, and studies that most Millennials claim to have inherited a less economically stable world than their parents. Since marriage itself is in many ways an economic arrangement, how can we blame them?</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/amanda-meadows">Amanda Meadows</a> of <a href="http://www.wisebread.com/4-ways-millennials-are-changing-marriage">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-5"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/people-are-still-spending-too-much-on-their-weddings">People Are Still Spending Too Much on Their Weddings</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/its-time-to-drop-these-6-rules-of-money-etiquette">It&#039;s Time to Drop These 6 Rules of Money Etiquette</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-terrible-money-moves-to-avoid-on-the-first-date">6 Terrible Money Moves to Avoid on the First Date</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/18-ways-being-too-nice-is-hurting-your-wallet">18 Ways Being Too Nice Is Hurting Your Wallet</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/heres-how-generosity-actually-improves-your-life">Here&#039;s How Generosity Actually Improves Your Life</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Budgeting Lifestyle Dating Economy getting married marriage millennials saving money Spending Money wedding wedding dress wedding fund weddings Wed, 30 Nov 2016 12:30:10 +0000 Amanda Meadows 1844261 at http://www.wisebread.com 7 Financial Reasons 2016 Needs to Be Over ASAP http://www.wisebread.com/7-financial-reasons-2016-needs-to-be-over-asap <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/7-financial-reasons-2016-needs-to-be-over-asap" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/2016_money_78468345.jpg" alt="Why 2016 needs to be over ASAP" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>The year is winding down, and for many of us, it can't end soon enough. From a financial standpoint, 2016 was a mixed bag, at best. Of course, there's no guarantee that next year will be markedly better. But here are a bunch of financial reasons why we're ready to put up a new calendar.</p> <h2>1. Poor Economic Growth</h2> <p>For most of the time after World War II, Americans could count on a growing economy, usually to the tune of at least 3%, and often significantly higher. These days, the gross domestic product (GDP) of the United States is stuck on a slower growth path. While the economy did have a good third quarter, it's likely that growth for the year will be under 3% because of a dismal first half of the year. It's better than being in a recession, but this slower growth could have big implications on incomes, investment returns, and Americans' overall quality of life over time.</p> <h2>2. Mediocre Investment Returns</h2> <p>So far in 2016, the S&amp;P 500 has increased in value by a little over 7%. That's not bad, but many investors were hoping for a bigger jump after an increase of less than 2% in 2015. In the post World War II period, there have been only about a dozen instances when investment returns didn't average at least 5% annually over a two-year period. This will be the eighth consecutive year of positive market returns, and that's a good thing. But the last couple of years have fallen into the &quot;good, not great&quot; category, and that may force a lot of people to adjust their overall retirement projections downward.</p> <h2>3. Fewer People Working</h2> <p>America's unemployment rate is 4.9%, and that's historically quite low. So good news, right? Well, any excitement over that number is tempered by the fact that overall participation in the labor force is at one of its lowest points in the last 50 years. About 63 million people are considered part of the civilian workforce, but that's down from 67 million 15 years ago. The unemployment rate does not consider people who have voluntarily left the workforce or have been out of work for a very long time.</p> <p>There are a variety of reasons why fewer Americans are working, and not all of them are bad. An aging population means more people are retiring. More people are pursuing advanced education. The Affordable Care Act has made it easier for some people to get health insurance without the need to get it through an employer. People who choose to be out of the workforce for too long may lose skills that will make them more employable later. And a declining workforce also has a negative impact on household incomes, consumer spending, and, ultimately, economic growth.</p> <h2>4. Paltry Interest Returns</h2> <p>We've been in an ultralow interest environment for years now. Many of us have benefitted from the low cost of borrowing, but this also means that our savings accounts aren't generating much return. This is bad for anyone starting out saving and for older retirees who rely on interest income. It's also generally a sign from the Federal Reserve that the economy still needs some propping up. Low interest rates can be helpful to us in some respects, but most economists yearn for a time when rates weren't hovering near zero.</p> <h2>5. Flat Wages</h2> <p>Did you get a raise in 2016? If not, you're probably not alone. Real wage growth has been basically flat for years, and this year has been no exception. The U.S. Department of Labor reports that real average weekly earnings rose just 1% in September compared to the same month a year ago. The average worker earns just 11 cents per hour more than this same time last year, when you factor in inflation. This stubborn wage stagnation has a negative impact on the middle class, especially when you consider things like the rising cost of education. Will 2017 be better?</p> <h2>6. Brexit Reax</h2> <p>The world pretty much freaked out over the summer when people in the United Kingdom voted to have their country leave the European Union. It was a result that many believed could not happen, and sent stock markets around the globe tumbling. The British Pound lost a good chunk of its value, and overall uncertainty of what happens next has led to a drag on the economy and England and Europe as a whole.</p> <h2>7. Fumbling Phone Makers</h2> <p>In recent years, companies that make smartphones and other digital devices have been huge drivers of the stock market and the economy. Apple and Samsung certainly come to mind. But in 2016, it was a lot of bad news and disappointment.</p> <p>Samsung was forced to recall and stop production on its Galaxy Note 7, after reports that the phones were catching fire. This news virtually wiped out all of the company's profits for the third quarter of 2016.</p> <p>Meanwhile, Samsung's top competitor, Apple, hasn't exactly taken advantage. The company sold 45 million of its popular iPhone in the most recent quarter, compared to 48 million in the same period last year. And reviews of the newest iPhone 7 have been tepid. Shares of the company are up about 8% this year, which is solid growth but less than what we've come to expect from the tech behemoth. There is hope for 2017, however, as Apple says it will spend a whopping $16 billion on capital expenditures next year.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/tim-lemke">Tim Lemke</a> of <a href="http://www.wisebread.com/7-financial-reasons-2016-needs-to-be-over-asap">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-9"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/heres-how-the-election-could-impact-your-wallet">Here&#039;s How the Election Could Impact Your Wallet</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/13-money-goals-you-can-still-reach-by-2017">13 Money Goals You Can Still Reach by 2017</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/europe-has-the-euro-are-you-ready-for-the-amero">Europe has the Euro. Are you ready for The Amero?</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-jobs-that-robots-cant-do-yet">10 Jobs That Robots Can&#039;t Do, Yet</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/suze-orman-tells-us-to-pay-only-the-minimum-on-credit-cards-wait-what">Suze Orman Tells Us To Pay ONLY The Minimum On Credit Cards. Wait, What?!</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance 2016 2017 Economy employment finances jobs New Year news stock market wages Tue, 08 Nov 2016 09:00:09 +0000 Tim Lemke 1828890 at http://www.wisebread.com 9 Threats to a Secure Retirement http://www.wisebread.com/9-threats-to-a-secure-retirement <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/9-threats-to-a-secure-retirement" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/couple_holding_hands_88407163.jpg" alt="Couple learning threats to a secure retirement" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Saving and investing for retirement isn't easy. There's a lot that can happen to take you off track, potentially leaving you less money than you hoped for.</p> <p>From poor financial planning to unexpected events and even nationwide economic woes, here are some of the things that could pose a threat to your secure retirement.</p> <h2>1. Not Investing Enough</h2> <p>It's never easy to figure out how much to invest. After all, you want to make sure you have enough money to deal with your current needs. It's common for people to invest too little, and this can hurt them in the long run.</p> <p>When saving for retirement, it's smart to contribute as close to the maximum each year into 401K and IRA plans. (That's $18,000 for the 401K and $5,500 for the IRA.) If you can't contribute quite that much, at least put enough in to get the company match on your 401K plan.</p> <p>Even a few extra dollars per month into retirement accounts can make a big difference. For example, let's say you have $50,000 in an account and contribute $500 per month for 25 years. Assuming a 7% return, your portfolio would amount to about $677,000. But what if you contributed $1,000 monthly? Then it would hit nearly $1.1 million.</p> <h2>2. Starting Too Late</h2> <p>When investing, time is your biggest friend. The more time you have to invest, the bigger your nest egg can grow. Thus, one of the biggest threats to a secure retirement is failing to contribute to your fund early in life. If you're past 40 years old, you may have only a couple of decades to invest before you wish to stop working, and that may not be long enough to amass the kind of wealth you'll need for a long and comfortable retirement.</p> <p>Let's say you invest $25,000 today and add $1,000 per month until you are 65. If you're currently 45 and get a 7% annual return, you'll have about $625,000 upon retirement. Not bad, but if you had started when you were 25, you'd have nearly $3 million.</p> <h2>3. Raiding Retirement Funds</h2> <p>Retirement accounts such as a 401K or IRA are designed to have money grow more or less untouched until you reach retirement age. You can withdraw money from them, but there's a cost.</p> <p>When you raid these retirement funds, you'll lose the money in penalties, but you'll also lose the potential earnings of the money you take out. Over time, this can cost an investor thousands of dollars.</p> <h2>4. Economic Growth</h2> <p>For decades following World War II, the annual growth rate of the American economy averaged more than 3%, with some years seeing double that. But in recent years, that annual rate has shrunk to barely 2%. In short, the American economy is not growing as fast as it once was, and that has implications for household income, corporate growth, and employment.</p> <h2>5. Possible Entitlement Cuts</h2> <p>Many lawmakers on Capitol Hill have been warning Americans of a looming crisis in entitlement funding. Observers of the federal budget note that unless there is serious reform, Social Security Trust Funds could be depleted within 20 years. This means that for the younger generation, there may not be as much left from the government upon retirement.</p> <p>It's important to note, however, that workers who want to live comfortably after they are done working should not be counting on Social Security to carry them through the end of their life. Someone who saves aggressively and invests wisely should be able to amass enough in a retirement fund to get by even if Social Security benefits are adjusted downward or even eliminated.</p> <h2>6. Declining Pensions</h2> <p>If you currently work for a company that offers a defined benefit plan, you are a rare breed. In recent years, companies have shifted from offering pensions to instead offering 401K plans, in which workers invest on their own. In most cases, they will also get a contribution from their employer, but that's not guaranteed. This doesn't necessarily mean you'll be destitute at retirement, but it does require employees to be much more engaged in their retirement planning.</p> <h2>7. Placing All Your Eggs in One Basket</h2> <p>Even if you are saving aggressively and investing every penny you can, it's possible to end up with less money than you need in retirement. It can happen when your portfolio is too heavily balanced toward a single investment. It's unwise to invest a high percentage of your savings in one company or even one industry or asset class, because one bad day could wipe out a large chunk of your savings. (Consider the plight of Enron employees who lost nearly everything had most of their savings in company stock.)</p> <p>To protect your retirement money, invest in a diverse mixture of stocks in various sizes and asset classes. Buy mutual funds instead of individual stocks, if at all possible.</p> <h2>8. Funding College Instead of Retirement</h2> <p>It's never a bad idea to save money to contribute to your children's education. There are several vehicles including 529 plans that allow you to invest money tax-free toward college. But many investors become so focused on saving for college that they fail to contribute enough to their own retirement fund.</p> <p>Remember that it's possible to <em>borrow </em>money for college, but you can't borrow money to fund your retirement if you find you're lacking in funds when you're done working. Ideally, you'll be able to amass enough money to fund college and your retirement comfortably. But if you have to make a choice, pay your future self first, then contribute to the college fund.</p> <h2>9. Being Poorly Insured</h2> <p>You may feel like nothing bad will ever happen to you. You are young and healthy. You're a safe driver and you live in a nice neighborhood. So you skimp on things like health, auto, and homeowner's insurance. You may think you're saving money, but you're at serious risk for big financial loss if you get seriously ill or have a serious accident.</p> <p>Being uninsured or underinsured can leave you struggling to make ends meet, placing retirement savings on the back burner. You may even have to raid your retirement accounts to pay the bills. It's wise to perform an insurance assessment to determine if you have the proper level of insurance to protect yourself financially.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/tim-lemke">Tim Lemke</a> of <a href="http://www.wisebread.com/9-threats-to-a-secure-retirement">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-4"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-make-sure-you-dont-run-out-of-money-in-retirement">How to Make Sure You Don&#039;t Run Out of Money in Retirement</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/dont-let-outdated-money-advice-endanger-your-money">Don&#039;t Let Outdated Money Advice Endanger Your Money</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-signs-your-retirement-is-on-track">8 Signs Your Retirement Is on Track</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-tell-if-your-401k-is-a-good-or-a-bad-one">How to Tell if Your 401K Is a Good or a Bad One</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/your-401k-in-2017-heres-whats-new-for-you">Your 401K in 2017: Here&#039;s What&#039;s New for You</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement college Economy education funds income insurance investing late start pensions risk stocks threats Fri, 07 Oct 2016 09:00:06 +0000 Tim Lemke 1807026 at http://www.wisebread.com 4 Foolproof Ways to Protect Your Money From Inflation http://www.wisebread.com/4-foolproof-ways-to-protect-your-money-from-inflation <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/4-foolproof-ways-to-protect-your-money-from-inflation" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_clock_money_94923537.jpg" alt="Woman finding ways to protect her money from inflation" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Back in January 1980, when Jimmy Carter was President and Michael Jackson led the music charts with &quot;Rock with You,&quot; Americans were experiencing one of the periods of highest inflation in modern history. In January 1980, inflation was over 13.9% per year and peaked in April 1980 at 14.76%.</p> <p>With the consumer price index (CPI) at <a href="http://www.bls.gov/news.release/cpi.nr0.htm">0.8% in July 2016</a>, many Americans have never experienced the dramatic increase in prices that other generations have. But even though inflation is low these days, it still eats away at your savings and investments. Let's review four (nearly) foolproof strategies and investments that will reduce the hit.</p> <h2>1. Invest in an S&amp;P 500 Index Fund</h2> <p>The average annual inflation rate since the U.S. government began tracking it in 1913 is <a href="http://inflationdata.com/Inflation/Inflation_Rate/Long_Term_Inflation.asp">about 3%</a>. To combat inflation's effect on your money, you need investments that provide greater average returns than the inflation rate.</p> <p>Since its inception in 1928, the S&amp;P 500 has provided an <a href="http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/histretSP.html">average annual return of 11.25%</a> until 2015, making this stock market index a leading choice to protect yourself from inflation. For the greatest ease and cost-efficiency, invest in a mutual fund or exchange-traded fund that mirrors the S&amp;P 500's performance.</p> <p>Not only are the average returns of passively-managed S&amp;P 500 index funds higher than those of actively managed funds, but also the expense ratios of S&amp;P 500 index funds are lower than those of actively managed funds. For example, the Vanguard 500 Index Investor Shares fund [Nasdaq: <a href="https://finance.yahoo.com/quote/VFINX?p=VFINX">VFINX</a>] has an annual expense ratio of 0.16%, which is 84% lower than the average expense ratio of funds with similar holdings.</p> <p>Of course, this approach isn't actually foolproof, since both the rate of inflation and market returns vary from year to year. But when considering long-term averages, it's a fairly safe bet.</p> <h2>2. Increase Annual Contributions to Saving Accounts</h2> <p>Even when you leverage <a href="http://www.wisebread.com/5-best-online-savings-accounts?ref=internal">high-yield online savings accounts</a>, you'll only make between 0.75% and 1.05% per year, according to data from August 2016. With a July 2016 CPI of 0.8%, you're actually losing 0.05% and gaining only 0.25% per year. (See also: <a href="http://www.wisebread.com/capital-one-360-review?ref=seealso">Capital One 360: A Competitive Banking Option</a>)</p> <p>Setting up automatic transfers from your paycheck or main checking account to your investment and saving accounts is a smart idea, but adjusting those contributions for inflation is an even better one. A good practice is to make an adjustment for inflation once a year. Check with your financial institution to find out if it offers the option of automatic adjustments for inflation to your contributions.</p> <h2>3. Seek Real Estate Income</h2> <p>While gold has a great reputation as an investment hedge against inflation, real estate income has proved to be a better hedge tool. A study from financial company Fidelity back-tested the performance of several assets against inflation on an annual basis during a 40-year period and found that gold and real estate income beat inflation 54% and 71% of the time, respectively. &quot;Real estate is regarded consistently as a <a href="https://www.reit.com/news/videos/wharton-professor-discusses-reits-inflation-hedging-benefits">good inflation hedge</a>, and it is&quot;, asserts Susan Wachter, professor at the University of Pennsylvania Wharton School of Business. (See also: <a href="http://www.wisebread.com/4-reasons-millenials-should-invest-in-a-home?ref=seealso">4 Reasons Millennials Should Invest in a Home</a>)</p> <p>While most individual investors can only afford to buy their own home, all individual investors can gain exposure to real estate income from a wide variety of properties through real estate investment trusts (REITS). Some advantages of REITs are their requirement to maintain a dividend payout ratio of at least 90% and their liquidity because they trade on major stock exchanges.</p> <p>For example, the 10-year annual average return of the Vanguard REIT Index Fund Investor Shares [Nasdaq: <a href="http://finance.yahoo.com/quote/VGSIX?ltr=1">VGSIX</a>] is 7.46%, as of June 30, 2016. In comparison, the 10-year annual average return of the S&amp;P 500 was 7.42% for the same period.</p> <p>Adding REITs provides you access to assets with inflation resistance and helps you protect against the negative of higher inflation. Still, REITs should only be a part of a well-diversified portfolio. Depending on your tolerance to risk, financial advisers suggest allocating from 5% up to 20% of your investment in portfolio in REITs. And of course, past performance is no guarantee of future success.</p> <h2>4. Negotiate Your Salary</h2> <p>If your salary were to consistently go up every year, you would not to worry about inflation to begin with! However, <a href="http://time.com/money/3657524/odds-of-getting-raise/">less than half of working Americans</a> ever even ask for a raise, and about 30% of them are uncomfortable negotiating salary.</p> <p>Start your career on the right foot by successfully negotiating the salary offer of your very first job. Three out of four U.S. employers typically have room to increase their first salary offers by 5% to 10% during negotiations, but only 38% of applicants negotiate those first salary offers. Let's imagine that your first salary offer was $38,000, that would mean that you have the potential of increasing that offer from $39,900 to $41,800. Given the historical inflation average of 3% per year, you have the potential of covering inflation for 40 months just by negotiating your first salary offer.</p> <p>And things only get better after that.</p> <p>By bumping up your salary from the start, you're increasing your chances of future raises. As your salary grows over time, so does your probability of getting a raise. For example, people making $40,000 to $50,000 have about a 40% chance of receiving that raise they requested and people making $60,000 to $70,000 have about a 50% chance.</p> <p>While there are other factors that may influence pay raises, the main one is the decision to request better compensation. From U.S. workers asking for a raise, 75% of them get something: 44% of them get what they asked for and 31% of them receive a smaller amount. Getting at least a small raise is a very smart strategy to protect yourself from inflation because inflation erodes the value of your dollars year after year.</p> <p><em>What are other ways to protect yourself from inflation?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/damian-davila">Damian Davila</a> of <a href="http://www.wisebread.com/4-foolproof-ways-to-protect-your-money-from-inflation">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-12"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/a-simple-guide-to-series-i-savings-bonds-i-bonds">A Simple Guide to Series I Savings Bonds (I-Bonds)</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/this-post-really-suk-kuks-examining-islamic-finance">This Post Really Suk-kuks: Examining Islamic Finance</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/cash-might-make-you-happier-but-investments-will-make-you-richer">Cash Might Make You Happier, But Investments Will Make You Richer</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/why-does-the-stock-market-keep-going-up">Why Does the Stock Market Keep Going Up?</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-3-rules-every-mediocre-investor-must-know">The 3 Rules Every Mediocre Investor Must Know</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Banking Investment consumer price index Economy hedging inflation negotiating real estate REITs returns s&p 500 salary savings stocks Fri, 02 Sep 2016 09:00:14 +0000 Damian Davila 1784422 at http://www.wisebread.com 9 Ways to Tell If a Stock is Worth Buying http://www.wisebread.com/9-ways-to-tell-if-a-stock-is-worth-buying <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/9-ways-to-tell-if-a-stock-is-worth-buying" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/74801987.jpg" alt="" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>One of the most effective ways a person can build wealth over the long term is by <a href="http://www.wisebread.com/how-to-buy-your-first-stocks-or-funds" target="_blank">investing in stocks</a>.</p> <p>When you own a share of stock, you own a portion of a public company. And when those companies do well, investors make money. In fact, stocks are considered essential for those looking to save for retirement or achieve other long-term financial goals.</p> <p>It's possible to invest in groups of stocks through vehicles such as mutual funds or exchange traded funds. But you may also want to consider investing in shares of individual companies. There are more than 4,000 companies that are publicly traded on America's two largest stock exchanges.</p> <p>But how do you know if a stock is worth investing in? What makes a stock good or bad? Here are nine things to consider.</p> <h2>1. Price</h2> <p>The first and most obvious thing to look at with a stock is the price. How much will it cost to buy a share of this company?</p> <p>Now, it's important to note that prices should only be viewed in context. Many companies will &quot;split&quot; shares once they reach a certain level, thus reducing the price but increasing the number of shares available. Other companies never split, so a single share could go for several hundred dollars or more. But the price &mdash; especially when matched against historical prices &mdash; will determine how many shares you can purchase with the money you have. When you evaluate stocks, knowing the price of shares and their history will help you determine if you're getting a good value when buying.</p> <h2>2. Revenue Growth</h2> <p>Share prices generally only go up if a company is growing. And one of the few ways a company can grow is by increasing its revenue. Revenue is often referred to as the &quot;top line,&quot; and it's a major indicator of whether a company has been successful. It's important to not look at revenue in a vacuum. Instead, look at the increase or decrease in revenue from one quarter to the next and one year to the next. A positive trendline bodes well for the stock price, but if revenue is flat or declining, it's important to find out why before investing.</p> <h2>3. Earnings Per Share</h2> <p>How much money does the company have leftover at the end of each quarter? Take that figure, divide it by the number of shares it has sold, and you get the earnings per share number, or EPS. For example, if a company made $40 million in profits last year and has 24 million shares, the EPS is $1.66.</p> <p>EPS can be a driver of stock prices, as investors generally don't want to overpay for a stock. Generally, the higher the EPS, the better shape the company is in. But there is often debate about the best range for EPS, and companies can manipulate it by buying back shares, thus boosting EPS without actually increasing profits.</p> <h2>4. Dividend and Dividend Yield</h2> <p>Many companies will return a portion of their earnings to shareholders. Investors can get a small payment for every share they own, known as a dividend. Many healthy companies will issue good dividends each quarter and the revenue from this may outpace the interest you would get from a normal bank account. Thus, dividend stocks are popular among investors looking for additional income, as well as share growth.</p> <p>It's easy to search for companies with the highest dividends, and you can also search for dividend yield, which is the dividend divided by the share price. If a company has maintained or raised its dividend, that's a sign that it's on strong footing. A cut to dividends is often a bad sign.</p> <p>Some of the most well-regarded public companies have been designated as &quot;Dividend Aristocrats&quot; for distributing and increasing their dividend for at least 25 consecutive years.</p> <p>It's worth noting that many good companies do not distribute dividends because they prefer to invest the cash back into the business. (Amazon is one high-profile example.) And many companies, such as utilities, offer dividends because they can't offer great growth in share value.</p> <h2>5. Market Capitalization</h2> <p>Bigger is not always best, but if you are looking to invest in a stock that will give you steady growth without a lot of volatility, the largest companies are often your best bet. A company's market cap is essentially the value of all its shares. Companies with large market caps are often large and diversified enough to avoid being affected by a single piece of bad news. Think of behemoths like Procter &amp; Gamble, Coca-Cola, or ExxonMobil &mdash; good, solid companies that have offered decades of solid returns.</p> <h2>6. Historical Prices</h2> <p>All companies go through rough patches. But if you are investing for the long term, you need to do more than look at a single company earnings report or current price performance. Looking at five-year, 10-year, and even 15-year returns will give you a sense of whether a company can withstand tough stretches. Historical returns are not a guarantee of future performance, but can at minimum be illustrative.</p> <h2>7. Analyst Reports</h2> <p>Many brokerages and investment banks have a staff of research analysts that issue reports and recommendations about individual stocks. Often, these reports come with &quot;buy&quot; or &quot;sell&quot; ratings, based on the analysts' judgment of a company's share price and finances. It's important to note that analysts often disagree, so it's best not to rely on a single report before choosing whether to invest.</p> <h2>8. The Industry</h2> <p>It's usually important to examine not just a stock, but the industry that the company operates in. By doing this, you may get an understanding of whether a certain type of business or sector is struggling or doing well. For instance, when evaluating a company such as McDonald's, you'll want to look at the entire fast food and restaurant sector to gain an understanding of how Americans are eating out. Looking at a stock in this context will help you understand if there are positive or negative influences that may not be immediately reflected on a company's share price or balance sheet.</p> <h2>9. Major Economic Indicators</h2> <p>No matter how hard it tries, a company can't control every single thing that might impact business. The broader economy of the nation and the world can play an outsized role in the health of a company and its share performance. Things like consumer prices, the unemployment rate, or changes to interest rates can impact how a company is doing independent of its own business. While the stock market and economy are two separate things, they are very much linked. For the most part, when the economy is doing well, companies are doing well and share growth comes with that. Likewise, share prices can lag during slow economic times or times of economic uncertainty.</p> <p><em>Anything we've overlooked? What do you look at when you evaluate a stock?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/tim-lemke">Tim Lemke</a> of <a href="http://www.wisebread.com/9-ways-to-tell-if-a-stock-is-worth-buying">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-4"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/beginners-guide-to-reading-a-stock-table">Beginner&#039;s Guide to Reading a Stock Table</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/stabilize-your-portfolio-with-these-11-dividend-stocks">Stabilize Your Portfolio With These 11 Dividend Stocks</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-save-for-retirement-when-you-are-unemployed">How to Save for Retirement When You Are Unemployed</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-foolproof-ways-to-protect-your-money-from-inflation">4 Foolproof Ways to Protect Your Money From Inflation</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-best-ways-to-invest-50-500-or-5000">The Best Ways to Invest $50, $500, or $5000</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment balance sheet dividends earnings earnings per share Economy evaluating market capitalization shares stocks Fri, 12 Aug 2016 09:00:15 +0000 Tim Lemke 1770719 at http://www.wisebread.com Here's How the Election Could Impact Your Wallet http://www.wisebread.com/heres-how-the-election-could-impact-your-wallet <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/heres-how-the-election-could-impact-your-wallet" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/voter_pins_money_72870711.jpg" alt="Learning how the election will impact your wallet" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>It's Clinton versus Trump, and the topic is money &mdash; because, more than anything else, that's what's on the minds of American voters. All told, 44% of Americans say the economy is their <a href="http://i2.cdn.turner.com/cnn/2015/images/07/26/72715cnnorc.pdf?iid=EL">top campaign issue</a>. Read on for our roundup of how either candidate's presidency would impact your dollars and cents.</p> <h2>Donald Trump</h2> <p>First up, the presumptive Republican nominee and his ideas about taxes, wages, and more.</p> <h3>Taxes</h3> <p>Trump proposes a systemwide overhaul of the U.S. tax code aimed at simplifying it to the point where it would &quot;<a href="http://money.cnn.com/2015/08/11/news/companies/donald-trump-hr-block-tax-code/">put H&amp;R Block right out of business</a>.&quot; In addition to his pledge to make the tax filing process more intuitive for Americans, Trump has also said that he believes the wealthiest Americans should <a href="http://www.ctpost.com/news/article/Trump-close-hedge-fund-tax-loophole-6511995.php">pay higher taxes</a>.</p> <p>&quot;If you make $200 million a year and you pay 10%, you're paying very little relatively to somebody that's making $50,000 a year and has to hire H&amp;R Block because it's so complicated,&quot; Trump said during a Republican presidential debate last year. &quot;I know people that are making a tremendous amount of money and paying virtually no taxes, and I think it's unfair.&quot;</p> <p>Under Trump's plan, federal income taxes would be eliminated for Americans who earn less than $25,000 and married couples that earn less than $50,000.</p> <p>Corporations and the wealthy would pay a decreased corporate tax rate (15% rather than the current 35% rate). The highest income tax rate would drop down to 25% from 39.6%.</p> <p>Despite these cuts, Trump has said that his plan would ultimately raise taxes on the wealthy. That would be achieved, he said, through proposed measures such as the elimination of a hedge fund tax loophole and a one-time 10% tax on money brought back into the U.S. by corporations currently holding funds overseas.</p> <h3>Jobs</h3> <p>Trump has vowed to grow the economy, namely by bringing back jobs he says the U.S. has lost to countries including Japan, China, and Mexico. Tariffs on foreign goods and negotiating better trade deals are the two main ways Trump has said he would accomplish this goal.</p> <p>When it comes to bringing home foreign jobs, Trump has specifically criticized Apple's China-based manufacturing. If elected, he has said he would force the tech company to &quot;start building their damn computers and things in this country instead of in other countries.&quot;</p> <p>As a billionaire real estate developer, Trump has already directly <a href="http://money.cnn.com/2015/09/03/news/economy/donald-trump-jobs-created/">created about 34,000 jobs</a>, according to an analysis by CNNMoney.</p> <h3>Minimum Wage</h3> <p>Reversing a previous position, Trump has said he would <a href="http://money.cnn.com/2016/05/05/news/economy/candidates-minimum-wage/">raise the federal minimum wage</a> from its current rate of $7.25 an hour. He has not, however, revealed by how much.</p> <h3>Social Security</h3> <p>Trump pledges to <a href="http://fortune.com/2016/03/15/primary-elections-ohio-florida/">leave Social Security</a> &quot;the way it is,&quot; a position that has been called impractical by analysts. The reserve fund will be depleted soon after 2030, upon which, if the law is not changed, monthly benefits will have to be slashed by 21%, experts say. There is one change that he would make, however. Trump has said he would raise the age at which Americans are eligible to begin receiving Social Security benefits to 70. Trump has said that he would not support cutting benefits to those who already receive them.</p> <h3>Health Insurance</h3> <p>Trump has said that he would <a href="http://www.cnn.com/2016/03/02/politics/donald-trump-health-care-plan/">ax the Affordable Care Act</a>, also known as Obamacare, and replace it with his own medical care reform system, the details of which are fuzzy. Trump's plan would, however, allow the sale of health insurance across state borders and make health insurance premium payments for individuals fully tax deductible.</p> <h2>Hillary Clinton</h2> <p>Secretary Clinton's plans differ from Mr. Trump's, of course, especially in the areas of taxes and health care.</p> <h3>Taxes</h3> <p>Clinton's economic plan aims to <a href="http://www.nytimes.com/2015/07/14/us/politics/hillary-clinton-offers-her-vision-of-a-fairness-economy-to-close-the-income-gap.html">close the wealth gap</a>, in part by raising taxes for the rich while encouraging the private sector to raise middle-class wages. Specifically, she has said she would close corporate loopholes, including those used by hedge funders to avoid paying millions in income taxes, in an attempt to reign in Wall Street.</p> <p>&quot;We must raise incomes for hardworking Americans so they can afford a middle-class life,&quot; she said at a campaign event last year where she debuted her economic recovery strategy. &quot;That will be my mission from the first day I'm president to the last.&quot;</p> <p>Under Clinton's plan, low and middle-class Americans would pay lower taxes &mdash; just how much lower, she hasn't yet revealed. Meanwhile, wealthy Americans would pay more.</p> <p>Analysts estimate that Clinton's plan would, on average, raise taxes for the top 1% of Americans by <a href="http://money.cnn.com/2016/03/03/pf/taxes/hillary-clinton-taxes/">more than $78,000</a>, reducing their after-tax income by 5%. Individuals with adjusted gross incomes topping $1 million would pay a minimum of 30% of their income in taxes.</p> <p>Experts say that while lower and middle-income Americans would pay less, most won't pay very much less.</p> <p>Overall, Clinton's plan is closer to the status quo than the plans proposed by Trump or any other major candidate.</p> <h3>Jobs</h3> <p>Clinton's plan for job growth includes measures that would incentivize corporations to invest in employees. It would also eliminate tax benefits to companies that outsource jobs to foreign countries. Companies that move their headquarters overseas would be hit with an exit tax.</p> <p>&quot;I'm not interested in condemning whole categories of businesses or the entire private sector,&quot; she has said. &quot;But I do want to send a clear message to every boardroom and every executive suite: If you desert America, you'll pay a price.&quot;</p> <p>Clinton has also pledged to expand overtime benefits and promote equal pay for women while also advancing fair scheduling, paid leave, and earned sick days.</p> <h3>Minimum Wage</h3> <p>Clinton has said she supports a <a href="http://www.slate.com/blogs/moneybox/2016/04/18/hillary_clinton_explains_her_position_on_a_15_minimum_wage.html">federal minimum wage increase</a> to $15 from the current rate of $7.25 an hour. She has also said that she supports a $12 federal minimum wage, with the caveat that states should feel encouraged to go higher, especially in cities and suburbs with high living costs. It's unclear which proposal she prefers.</p> <h3>Social Security</h3> <p>To preserve the quickly depleting Social Security reserve fund, Clinton's plan calls on the rich to contribute more via income tax. She opposes any benefits cuts and has said she would not raise the retirement age. Clinton has also said that she would expand Social Security to groups she says are <a href="https://www.hillaryclinton.com/issues/social-security-and-medicare/">treated unfairly by the system</a>, including widows and caretakers who have taken time off from work for the benefit of children, aging parents, or ailing family members.</p> <h3>Health Insurance</h3> <p>Clinton has embraced the Affordable Care Act, also known as Obamacare, while acknowledging that there are improvements she would like to make to the current system. Namely, she has said that she would like to <a href="http://www.latimes.com/business/hiltzik/la-fi-mh-hillary-clinton-reveals-her-plan-obamacare-20160223-column.html">add a public option</a>, make health coverage accessible to even more people &mdash; including undocumented immigrants &mdash; and cut its cost.</p> <p><em>Will the candidates' positions on bread and butter issues affect your choice this fall?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/brittany-lyte">Brittany Lyte</a> of <a href="http://www.wisebread.com/heres-how-the-election-could-impact-your-wallet">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-3"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/is-social-security-just-a-grand-ponzi-scheme">Is Social Security Just A Grand Ponzi Scheme?</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-biggest-ways-procrastination-hurts-your-finances">7 Biggest Ways Procrastination Hurts Your Finances</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-financial-reasons-2016-needs-to-be-over-asap">7 Financial Reasons 2016 Needs to Be Over ASAP</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/bushs-economic-stimulus-package-what-will-you-get-back">Bush&#039;s economic stimulus package; What will you get back?</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/europe-has-the-euro-are-you-ready-for-the-amero">Europe has the Euro. Are you ready for The Amero?</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance 2016 election donald trump Economy hillary clinton jobs minimum wage presidential election social security taxes united states Mon, 27 Jun 2016 09:30:25 +0000 Brittany Lyte 1738698 at http://www.wisebread.com 7 Cool Things Bonds Tell You About the Economy http://www.wisebread.com/7-cool-things-bonds-tell-you-about-the-economy <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/7-cool-things-bonds-tell-you-about-the-economy" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/kid_investing_happy_000065886749.jpg" alt="Learning cool things bonds teach us about the economy" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Bonds are often cast as the boring stepchild of investments, but they can actually offer some great insights into the machinations of our economy. Their yields and interest rates that are affected by overall economic conditions, so you can learn a lot by owning them. And they may even predict how certain aspects of the economy will evolve. (See also:&nbsp;<a href="http://www.wisebread.com/5-crucial-things-you-should-know-about-bonds?ref=seealso" target="_blank">5 Crucial Things You Should Know About Bonds</a>)</p> <p>Here are seven things that bonds can tell us.</p> <h2>1. They Can Tell You If the Economy Is Healthy (or Not)</h2> <p>Some bonds perform well when the overall economy is in good shape. Others perform better when times are tough. High-yield bonds, emerging market bonds, and corporate bonds with low ratings tend to perform best when the economy is strong. But U.S. Treasuries &mdash; which are seen as less risky &mdash; don't perform as well when the economy is doing well.</p> <p>So, if you want to get a general sense of how the national or world economy is doing, pay attention to the types of bonds people are investing in. Generally speaking, a rush to riskier bonds means things are going well. But when times are tough, Treasuries are often the place investors flock to. Here's a <a href="http://bonds.about.com/od/bonds101/a/The-Economy-And-Bonds.htm">helpful chart</a> that shows how different bonds perform in various economic conditions.</p> <h2>2. They Can Predict a Recession</h2> <p>In the 1980s, economists began to realize that they could predict economic activity by looking at something called the bond &quot;yield curve.&quot; In simple terms, this is the difference in the interest rates between three-month and 10-year Treasury notes. If the interest rates on 10-year notes are higher than the shorter-term rates, then the <a href="https://www.clevelandfed.org/our-research/indicators-and-data/yield-curve-and-gdp-growth.aspx">chances of a recession</a> in the next 18 months are not very high, according to information published by the Federal Reserve. When the yield curve is inverted &mdash; meaning long-term interest rates are lower &mdash; then look out. This was the case in 2006, and America was in a recession within two years.</p> <h2>3. They Can Predict If You'll Pay More for Stuff</h2> <p>One of the downsides to investing in Treasury bonds is that they can lose value due to inflation. That's why the government introduced something called Treasury Inflation Protected Securities (TIPS). These are like bonds, in that they have a fixed-rate yield and regular interest payments, but the principal is adjusted according to the Consumer Price Index.</p> <p>Generally speaking, you can determine the possible rate of future inflation by examining the spread between the yield in a bond and a TIPS with a similar maturity date. So for instance, if a three-year Treasury note has a yield of 4% and a three-year TIPS note has a yield of 2%, then the expected rate of inflation over the next two years is 2%. This is not an exact science, however, as there are a multitude of factors that can drive inflation.</p> <h2>4. They Can Tell You If Stock Investors Are Skittish</h2> <p>When investors flock to bonds, it's often because they are feeling less confident about riskier investments, such as stocks. Bonds are popular investments among those close to retirement, but when all investors are drawn to bonds, it could be a sign that the stock market has taken a dive or is underperforming. Conversely, less interest in bonds could be a sign that the stock market is doing well.</p> <h2>5. They Can Tell You If Companies Are Investing in Themselves</h2> <p>Corporate bonds can give you a glimpse of what companies are doing with their money, especially whether they are looking to expand. Even large companies with a lot of cash will issue bonds in order to make big capital improvements, fund an acquisition, or invest in research and development. (Even Apple, which reported $55 billion in cash in the last quarter, also reported $10 billion in bond debt.)</p> <p>Be careful, however, as many companies go into debt simply to stay afloat. Pay attention to the ratings on corporate bonds to get a better understanding of how companies may be using debt. A company with a strong credit rating is more likely to be raising funds for investment or expansion rather than to simply fund operations.</p> <h2>6. They Can Impact What You Might Pay for Your House</h2> <p>The government does not set mortgage rates. Banks do that. But banks will often keep mortgage rates in line with those of long-term Treasury notes. That's because Treasuries and mortgages are offered for similar terms, usually in the 10- to 30-year time frame. So when Treasury notes rise, mortgage rates usually rise, as well.</p> <h2>7. They Can Let You Know if Your City Is in Trouble</h2> <p>Municipal bonds can offer insight into the economies of cities and states. Municipalities will sell bonds in order to raise money for capital projects. The size and quality of these bonds are clues into whether a city is investing properly or has too much debt. Bonds with high interest rates may come from cities with less-than-stellar credit &mdash; a sign of a city that has been struggling. (For an example, take a look at Atlantic City, which is struggling to make debt payments after years of declining tax revenue.) Moreover, bonds will tell you whether a municipality is selling bonds just to fund normal operations, or for investments in things like infrastructure that will benefit the city's financial health over the long term.</p> <p><em>Still bored by bonds?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/tim-lemke">Tim Lemke</a> of <a href="http://www.wisebread.com/7-cool-things-bonds-tell-you-about-the-economy">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-6"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-investments-that-may-soar-during-trumps-term">8 Investments That May Soar During Trump&#039;s Term</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-make-sure-you-dont-run-out-of-money-in-retirement">How to Make Sure You Don&#039;t Run Out of Money in Retirement</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-foolproof-ways-to-protect-your-money-from-inflation">4 Foolproof Ways to Protect Your Money From Inflation</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/cash-might-make-you-happier-but-investments-will-make-you-richer">Cash Might Make You Happier, But Investments Will Make You Richer</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/are-we-headed-toward-a-bull-or-bear-market">Are We Headed Toward a Bull or Bear Market?</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment bonds Economy inflation interest rates predictions recessions Thu, 12 May 2016 09:00:05 +0000 Tim Lemke 1705414 at http://www.wisebread.com 6 Money Misconceptions About Millennials http://www.wisebread.com/6-money-misconceptions-about-millennials <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/6-money-misconceptions-about-millennials" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/happy_millennial_man_000057999652.jpg" alt="Learning common money misconceptions about millennials" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>As a Millennial myself &mdash; though, admittedly, at the very outskirts of the spectrum (younger Millennials are keen to point that out to me; can't we all just get along?) &mdash; I can tell you that we're unjustly dragged through the mud by the press. We're lazy, entitled, self-absorbed, and demanding &mdash; or so claims the media.</p> <p>Much of the shade that we're thrown, as far as I can tell anyway, is just that &mdash; shade. Because contrary to popular belief, we Millennials are savvier and more responsible, especially where money matters are concerned, than we're portrayed. To tips the scales back in our favor a bit more, here are six money misconceptions about Millennials, and why they're wrong.</p> <h2>1. Millennials Will Be Renters for Life</h2> <p>I'm 34 years old, born in 1981, and I purchased my first home with my husband at 28 years old. Most of my Millennial friends own their homes, too. The idea that Millennials will be renters for life is an outdated belief, perhaps established during the housing crisis of the last decade, but it's held on nonetheless. That's all changing now.</p> <p>Trulia's Chief Economist Ralph McLaughlin is an expert on Millennials and the housing market, and he says that recent research suggests that 18- to 34-year-olds are on the path to homeownership, though the prospect is contingent on affordability.</p> <p>&quot;A recent Trulia survey found that 80% of Millennials said that owning a home is part of their personal American Dream, and of the young people who plan to buy, 35% plan to buy within the next two years,&quot; he says. &quot;However, saving up for a down payment is the biggest obstacle to homeownership. Many say that a new job, promotion, or raise would be the deciding factor on taking the leap from renting to owning.&quot;</p> <p>Trulia's research is supported by a study from the National Association of Realtors, which reports that<a href="http://www.realtor.org/reports/home-buyer-and-seller-generational-trends"> 32% of homebuyers in 2014</a> were Millennials (Gen Y), and the median age group was 29 years old</p> <h2>2. Millennials Aren't Serious About Setting Savings Goals</h2> <p>While Millennials are focused more on obtaining material status symbols than older generations &mdash; 32% of Millennials said <a href="http://www.theatlantic.com/politics/archive/2015/07/american-dream-suffering/397475/">having luxury items</a> was crucial to their attainment of the American Dream &mdash; they're also focused on saving, and setting goals to do so.</p> <p>Chantel Bonneau, a wealth management advisor with Northwestern Mutual, says, &quot;Millennials are a little more financially conservative than maybe their parents, and they act much more like their grandparents. Millennials feel goal oriented, more so than other generations even. Millennials are realistic about taking responsibility and want to see themselves achieve and progress. They want options in retirement and are hopeful that they'll achieve their goals.&quot;</p> <p>The Northwestern Mutual<a href="https://www.northwesternmutual.com/about-us/studies/planning-and-progress-2015-study"> 2015 Planning and Progress Study</a> supports Bonneau's claims. The report details that:</p> <ul> <li>Nearly two-thirds of Millennials classify themselves as more inclined to save than spend, and more than half (53%) of Millennials have set financial goals, compared with 38% of Americans age 35 and older.<br /> &nbsp;</li> <li>Almost half of Millennials have spoken to their partner, friends, family, or an advisor about retirement, taking a step toward successful planning.<br /> &nbsp;</li> <li>Millennials know that safety nets won't be there for them in old age, with 73% of those expecting to need to work past age 65 doing so because Social Security won't take care of their needs.</li> </ul> <h2>3. Millennials Live to Work</h2> <p>Americans live to work, and work to live. That's how Europeans perceive our &quot;no-vacation nation&quot; anyway, but Millennials are poised to change that mindset.</p> <p>According to Bank of America's <a href="http://newsroom.bankofamerica.com/files/doc_library/additional/2015_Millennial_Snapshot_White_Paper.pdf">2015 Year-End Millennial Snapshot</a>, Millennials are just as likely to balance saving for a dream vacation as they are investing &mdash; 32% and 37%, respectively.</p> <p>It's likely this behavior will carry into Millennials' golden years, as nearly half of Millennials (49%) are spending less today so they can ensure a stress-free retirement where they envision time spent traveling and with loved ones. While investing and saving for the future, Millennials are willing to shoulder burdens in the short-term to ensure professional success by delaying compensation in an effort to make ends meet &mdash; so say 64% of Millennial small business owners.</p> <h2>4. Millennials Have No Buying Power</h2> <p>While older generations still think of Millennials as &quot;kids,&quot; the 18- to 34-year-old demographic actually has major influence over the rebounding economy.</p> <p>PayPal reports that 21% of Millennial shoppers opening PayPal Credit accounts in 2015 are in the high-spending power bracket.</p> <p>&quot;This tells us that the 'broke millennial' stereotype may be outdated,&quot; says Rob Skinner, director of marketing strategy at MSLGROUP, a marketing and public relations firm that targets Millennial consumers. &quot;In fact, Millennials spend more money online in a given year than any other age group and represent a quarter of the population.&quot;</p> <p>PayPal also found in a study that Millennials are changing their behavior with regards to using credit. They tend to steer clear of the commitment that comes with credit cards, but will use credit if it is integrated into the technology landscape.</p> <h2>5. Millennials Can't Focus on One Career</h2> <p>Millennials <a href="https://www.recruiter.com/i/its-your-fault-that-millennials-are-job-hoppers-what-are-you-going-to-do-about-it/">hop jobs more frequently</a> than older generations &mdash; but that's because Millennials have no interest in staying in dead-end careers that show little promise of upward mobility&hellip;or the paycheck to match.</p> <p>&quot;Now that they've graduated and are on their own, Millennials are the group that placed the most importance on having a job that paid well, with 46% saying high wages are crucial to their attainment of the American Dream,&quot; says generation expert Tim Elmore, president of Growing Leaders, a nonprofit organization focused on youth leadership development. &quot;Every age group wants to attain financial freedom, of course, but it appears Millennials are more 'direct' than others about their futures and pressuring employers for better wages.&quot;</p> <h2>6. Millennials Don't Save Enough for Retirement</h2> <p>There are plenty of articles that bash Millennials for their retirement plans &mdash; or the perceived lack thereof &mdash; but as Millennials age, they're becoming more concerned with saving for retirement, even if it may not look as traditional as it has in the past. Which is totally fine, by the way. Considering that Millennials will likely have to work until age 75 before they can retire &mdash; thanks to several factors, including high student debt, rising rents, and skittish investors &mdash; the no-rules approach to retirement saving is a perfectly acceptable compromise. And it's working.</p> <p><a href="https://www.fidelity.com/about-fidelity/individual-investing/americas-savings-rate-improves">Fidelity's Retirement Savings Assessment</a> shows that, overall, Millennials are outpacing other generations when it comes to increasing their savings rate. Millennials are now saving 7.5% of their income versus just 5.8% in 2013. Generation X and Boomers are still saving larger percentages of salary but have not stepped up their contributions by nearly as much.</p> <p>&quot;Millennials also have the benefit of time on their side to save and invest, and the most single powerful step they can take for retirement readiness is to increase their savings,&quot; the Assessment states.</p> <p><em>Do any of these misconceptions ring true for you?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/mikey-rox">Mikey Rox</a> of <a href="http://www.wisebread.com/6-money-misconceptions-about-millennials">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-4"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/suze-orman-tells-us-to-pay-only-the-minimum-on-credit-cards-wait-what">Suze Orman Tells Us To Pay ONLY The Minimum On Credit Cards. Wait, What?!</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-6-biggest-financial-decisions-in-your-20s">The 6 Biggest Financial Decisions in Your 20s</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-things-millennials-should-do-today-to-prepare-for-retirement">4 Things Millennials Should Do Today to Prepare for Retirement</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/will-forced-frugality-last">Will &quot;forced frugality&quot; last?</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-financial-differences-between-millennials-and-the-next-generation">7 Financial Differences Between Millennials and the Next Generation</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Frugal Living careers Economy generation y lifestyle millennials misconceptions retirement savings Tue, 16 Feb 2016 11:30:04 +0000 Mikey Rox 1654791 at http://www.wisebread.com 7 Ways Being Debt Free Can Cost You http://www.wisebread.com/7-ways-being-debt-free-can-cost-you <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/7-ways-being-debt-free-can-cost-you" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/cloud_of_debt_000083150391.jpg" alt="Man learning ways being debt free can cost him" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Here at Wise Bread, we generally hate debt. Owing money to banks and credit card companies is usually a guaranteed way of never achieving the financial freedom you want. But there are cases when taking on some debt can be useful, especially as part of a long-term plan.</p> <p>Here are seven times when eschewing debt can be a bad financial move.</p> <h2>1. Market Returns May Be Higher Than Interest Rates</h2> <p>When interest rates are very low and the stock market is booming, you may be missing out on investment gains by choosing to live debt-free. For example, let's say you had $20,000 left on a mortgage with a 3.5% interest rate. If you had the cash, you <em>could</em> pay off your mortgage and avoid paying any additional interest. Or, you could put two-thirds of that money in the stock market and get a good return.</p> <p>There's a chance you'd end up with more cash in the long-run under the second scenario. This is why even super wealthy people are known to mortgage their homes. There is some risk here, especially if you don't have a fixed-rate mortgage.</p> <h2>2. Healthy Economies Rely on Debt</h2> <p>Whether we like it or not, we live in a consumer-driven economy. And one of the key ways for the economy to grow is through people spending. In an ideal world, spending can increase because people are earning more. But it's often credit card debt that fuels much of the growth.</p> <p>While too much personal debt can be a drag on the economy, some nations have found that high savings rates can make the economy sluggish. In fact, there are some nations &mdash; including Germany and China &mdash; that have sought to <em>encourage </em>more spending by their citizens. This is not an invitation to go on a spending spree, but it's worth noting that it helps to have some big spenders in our ranks.</p> <h2>3. You Might Miss Out on Opportunities</h2> <p>It's always best to try and achieve your goals without taking on debt, but sometimes there isn't much choice if you're cash poor and set on pursuing a dream. Taking on a manageable student loan to attend college could be seen as a better decision than not going at all. Borrowing to buy a car so you can make it to a well-paying job might be worth it. Taking out a loan to start a business is a common practice. If you're missing out on opportunities because you're averse to all debt, it may be worth loosening up. Just be careful not to dig yourself a hole you can't get out of.</p> <h2>4. Renting Stinks</h2> <p>There are some people who are so averse to risk that they refuse to even consider taking on a mortgage for a home. That's fine if you have the ability to pay for it all in cash, but very few of us can do that. Buying a home, even if you have to take on a 30-year mortgage, is generally a good long-term financial move, because you're building equity as you make payments. Owning a home is considered a great step on the path to wealth. Just be sure that the payments are easy for you to handle.</p> <h2>5. You Can't Build Credit</h2> <p>There's a weird paradox with credit, which is that you can't be approved for loans or credit cards until you've shown that you can pay back loans and make credit card payments. People who never borrow may have no debt, but they may also have very low credit scores because of a lack of credit history. This means that when they eventually do need a loan, they may end up with a high interest rate &mdash; if they are even approved at all.</p> <p>Credit card debt can be burdensome if you're not careful, but your credit score will rise if you keep at least a <a href="http://www.wisebread.com/this-one-ratio-is-the-key-to-a-good-credit-score">modest balance on a credit card</a> and make payments on time. If you pay your credit card balance in full each month, you can still avoid debt and build a credit history.</p> <h2>6. You've Depleted Your Emergency Fund</h2> <p>Let's say you have $12,000 left on a mortgage and $13,000 in the bank. You <em>could</em> pay off the mortgage and celebrate owning your home free and clear. But then you have just $1,000 left, which isn't really enough to cover an emergency. While it may be tempting to try to pay down debt as quickly as possible using any money you have, it's important to maintain a decent-sized emergency fund to handle any unexpected costs from &quot;life events.&quot;</p> <h2>7. Frugal Isn't Always Fun</h2> <p>When you're in your early 20s, it's tempting to go out with friends, travel, and take on new experiences. But when you're young, you're also probably broke. No one wants to be 22, living at home and unable to even go out for as much as a pizza with friends. There's an argument to be made that being <em>too </em>focused on avoiding debt will cost you some good life experiences. Taking on a small amount of debt could be okay when you're young, as long as you understand how it can impact your long-term goals and have a solid plan to be debt-free once you start earning more.</p> <p><em>When has taking on some debt improved your life &mdash; and your finances?</em></p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" data-pin-save="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F7-ways-being-debt-free-can-cost-you&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F7%2520Ways%2520Being%2520Debt%2520Free%2520Can%2520Cost%2520You.jpg&amp;description=7%20Ways%20Being%20Debt%20Free%20Can%20Cost%20You"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/7%20Ways%20Being%20Debt%20Free%20Can%20Cost%20You.jpg" alt="7 Ways Being Debt Free Can Cost You" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/tim-lemke">Tim Lemke</a> of <a href="http://www.wisebread.com/7-ways-being-debt-free-can-cost-you">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-ways-to-invest-when-youre-in-debt">6 Ways to Invest When You&#039;re In Debt</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/all-the-ways-minimum-payments-are-evil">All the Ways Minimum Payments Are Evil</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-money-moves-to-make-as-soon-as-you-conquer-debt">7 Money Moves to Make as Soon as You Conquer Debt</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-surprising-ways-revolving-debt-helps-you">5 Surprising Ways Revolving Debt Helps You</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-best-0-balance-transfer-credit-cards">The Best 0% Balance Transfer Credit Cards</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Debt Management credit score Economy emergency funds interest rates market returns Fri, 22 Jan 2016 14:00:04 +0000 Tim Lemke 1643167 at http://www.wisebread.com 5 Latin American Markets to Watch http://www.wisebread.com/5-latin-american-markets-to-watch <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-latin-american-markets-to-watch" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/south_america_globe_000006090971_0.jpg" alt="Learning which Latin American markets to watch" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>The <a href="http://www.imf.org/external/pubs/ft/weo/2015/update/02/">International Monetary Fund (IMF)</a> projects that for 2015, the U.S. economy will grow a modest 2.5%. And some analysts predict single digit returns for the S&amp;P 500 for 2016.</p> <p>Emerging economies in Latin America have stronger growth prospects. In general, emerging markets are projected to grow two to three times faster than the U.S. over the next several years. According to the <a href="http://blog-imfdirect.imf.org/2015/11/09/bad-debt-in-emerging-markets-still-early-days/">IMF</a>, from 2009 to 2014 the largest emerging economies grew a total of 48%. As Latin America continues to adapt free-market policies, here are five emerging Latin American <a href="http://www.wisebread.com/10-best-stock-markets-in-the-world-in-2015">markets to watch</a>.</p> <h2>1. Peru</h2> <p>The Peruvian economy is one of the fastest growing economies in Latin America. It is the world's third largest copper producer, and receives a significant portion of its revenue from the mining sector and exportation of metals such as gold, lead, iron, and tin. It also gets about 10% of its revenue from petroleum. While many commodities have taken a hit recently, Peru's current GDP growth of 5.1% is attributed to an expected increase in mining production and infrastructure projects.</p> <p><strong>Projected growth</strong>: 5.0% (2016 est.)</p> <p><strong>GDP Growth (2013 to 2017)</strong>: 27.4%</p> <p><strong>Inflation Rate:</strong> 3.5%</p> <p><strong>Government Debt as % of GDP</strong>: 15.9% (2014 est.)</p> <h2>2. Chile</h2> <p>Chile's moderate growth of 3.3% is attributable to an increase in demand for its exports, thanks to the weakening of the Chilean Peso. But Chile is also an unusually stable economy by Latin American standards, and deserves to be on this list, given the relatively lower risk investors may face. Planned infrastructure deals and changes in business tax policies &mdash; expected to attract outside business investors &mdash; are also good news for the Chilean economy.</p> <p><strong>Projected growth</strong>: 3.3% (2016 est.)</p> <p><strong>GDP Growth (2013 to 2017)</strong>: 24.2%</p> <p><strong>Inflation Rate</strong>: 4.6%</p> <p><strong>Government Debt as % of GDP</strong>: 16.5% (2014 est.)</p> <h2>3. Colombia</h2> <p>Colombia is Latin America's fastest growing economy, thanks in part to a surge in foreign direct investment, and an improving security situation. It's also less dependent on oil than most oil producing countries &mdash; representing only 16% of GDP. Though the Colombian Peso has weakened recently (to approximately 2,900 Pesos per USD), several industries stand to gain from the weaker currency, such as manufacturing, financial services, telecommunications, tourism and transportation.</p> <p><strong>Projected growth</strong>: 3.7% (2016 est.)</p> <p><strong>GDP growth (2013 to 2017)</strong>: 21.9%</p> <p><strong>Inflation rate</strong>: 5.25%</p> <p><strong>Government debt as % of GDP</strong>: 41.9% (2014 est.)</p> <h2>4. Mexico</h2> <p>Mexico has the second largest and strongest economy in Latin America. Its main exports are petroleum, automobiles, and a variety of manufactured parts and electronic equipment. Its expected growth is due to strong U.S. demand for its exports (the U.S. imports 70% of all Mexican exports), and planned spending on infrastructure projects like Mexico City's new international airport.</p> <p><strong>Projected growth</strong>: 3.3% (2016 est.)</p> <p><strong>GDP Growth (2013 to 2017)</strong>: 17.5%</p> <p><strong>Inflation Rate</strong>: 2.88%</p> <p><strong>Government Debt as % of GDP</strong>: 41% (2014 est.)</p> <h2>5. Brazil</h2> <p>Brazil is the largest economy in Latin America, with a population of just over 200 million people. Though corruption scandals have plagued recent governments, foreign direct investment to the South American nation remains strong, and the country's growth prospects reasonable.</p> <p><strong>Projected growth</strong>: 1.0% (2016 est.)</p> <p><strong>GDP Growth (2013 to 2017)</strong>: 22.3%</p> <p><strong>Inflation Rate:</strong> 14.25%</p> <p><strong>Government Debt as % of GDP</strong>: 59.3% (2014 est.)</p> <p><em>Have you added any of these markets to your portfolio?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/qiana-chavaia">Qiana Chavaia</a> of <a href="http://www.wisebread.com/5-latin-american-markets-to-watch">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-foolproof-ways-to-protect-your-money-from-inflation">4 Foolproof Ways to Protect Your Money From Inflation</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-cool-things-bonds-tell-you-about-the-economy">7 Cool Things Bonds Tell You About the Economy</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-investments-that-may-soar-during-trumps-term">8 Investments That May Soar During Trump&#039;s Term</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/cash-might-make-you-happier-but-investments-will-make-you-richer">Cash Might Make You Happier, But Investments Will Make You Richer</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/why-does-the-stock-market-keep-going-up">Why Does the Stock Market Keep Going Up?</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment Economy foreign markets GDP inflation latin america market growth Fri, 04 Dec 2015 14:00:03 +0000 Qiana Chavaia 1618127 at http://www.wisebread.com 3 Reasons the Fed Is Keeping Rates Low (And What It Means for You) http://www.wisebread.com/3-reasons-the-fed-is-keeping-rates-low-and-what-it-means-for-you <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/3-reasons-the-fed-is-keeping-rates-low-and-what-it-means-for-you" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/cash_wad_000075381955.jpg" alt="Learning why the Fed is still keeping rates low " title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>The Federal Reserve has been keeping the benchmark short-term interest rate at record lows since the financial crisis in 2008. The near-zero rates are about to bust, economists say, but not until the economy shows certain signs of recovery that are so far yet-to-be-seen. Read on for our roundup of reasons why the first interest rate hike in nine years is yet to come &mdash; and what it means for you.</p> <h2>1. We Still Need the Stimulus</h2> <p>The Fed was so confident in the nation's job gains and overall economic growth at the start of 2015, that Fed Chair Janet Yellen's <a href="http://www.cnbc.com/2015/07/10/fed-chair-janet-yellen-interest-rate-hike-to-come-later-this-year.html">eagerness to raise interest rates</a> was almost palpable. But the state of the U.S. economy has since gone stagnant. While the Fed still envisions sizable growth in the near future &mdash; the kind that could spawn higher rates &mdash; the results just aren't coming in yet. The economy still needs the amount of stimulus the central bank is providing.</p> <p>For folks on Main Street, that stimulus is important. Cheaper borrowing means consumers can spend more easily, even when times are tough. For businesses, it means conditions are ripe to expand and hire new workers. But when rates finally do begin to rise, borrowing will become more expensive, which in some cases could limit job growth.</p> <p>&quot;Based on my outlook, I expect that it will be appropriate at some point later this year to take the first step to raise the federal funds rate and thus begin normalizing monetary policy,&quot; Yellen said in July. &quot;I want to emphasize that the course of the economy and inflation remains highly uncertain, and unanticipated developments could delay or accelerate this first step.&quot;</p> <h2>2. Full Employment Remains Elusive</h2> <p>We're inching closer to full employment, but we're not quite there yet. What the Fed is waiting for, generally speaking, is for the unemployment rate to drop below 5%. Right now it's hovering about a tenth of a percentage point above that. When it drops, the labor market will strengthen, which will lead to price increases and wage growth. Those factors, and others, will eventually push inflation higher, creating <a href="http://www.wsj.com/video/feds-dudley-discusses-jobless-rate-and-full-employment/58AC9E47-16E1-4BFD-BAEA-D3B0EB02E012.html?utm_source=feedburner&amp;utm_medium=feed&amp;utm_campaign=Feed%3A+wsj%2Fvideo%2Fnews+(WSJ.com+Video+-+News)">prime conditions for a rate increase</a>.</p> <p>Full employment is achieved when all eligible workers who want to find a job are able to do so.</p> <p>&quot;Key measures of hourly labor compensation rose at an annual rate of only around 2% through most of the recovery,&quot; Yellen said. &quot;More recently, however, some tentative hints of a pickup in the pace of wage gains may indicate that the objective of full employment is coming closer into view.&quot;</p> <h2>3. Domestic Spending Is Dropping</h2> <p>Domestic spending is the lifeblood of the U.S. economy, especially now as the nation moves toward recovery. But right now <a href="http://money.cnn.com/2014/01/27/news/economy/spending-obama/">domestic spending is dropping</a>, and that weighs heavily on economic growth. Low domestic spending can be good because it helps cut the deficit. But it also means that everyday Americans can easily feel the pinch. Transportation subsidies, funding for Head Start, and money for national parks are examples of some of the first things to drop. All told, spending on domestic programs has been on the decline since 2010, and is on track to reach the lowest level in more than 50 years by 2023.</p> <p>The deficit hit a high point in 2009 at nearly 10% of the overall size of the economy. It has been in decline every year since. When the deficit does start to rise again, however, it will be due in part to the expected rise in interest rates.</p> <p><em>What are you doing to take advantage of historic low interest rates?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/brittany-lyte">Brittany Lyte</a> of <a href="http://www.wisebread.com/3-reasons-the-fed-is-keeping-rates-low-and-what-it-means-for-you">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-4"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/15-personal-finance-calculators-everyone-should-use">15 Personal Finance Calculators Everyone Should Use</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-surprising-things-lenders-check-besides-your-credit-score">4 Surprising Things Lenders Check Besides Your Credit Score</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-fed-raised-rates-then-something-weird-happened">The Fed Raised Rates — Then Something Weird Happened</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-ways-to-pick-the-bank-thats-right-for-you">7 Ways to Pick the Bank That&#039;s Right for You</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-countries-where-banks-pay-crazy-interest-rates">10 Countries Where Banks Pay Crazy Interest Rates</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Banking Economy employment federal reserve interest rates loans low rates stimulus Tue, 20 Oct 2015 17:17:01 +0000 Brittany Lyte 1591946 at http://www.wisebread.com