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Americans Spend 7% Of Income On Gasoline

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Americans are spending $69 more each month to fill up their tank, according to a Triple A report. CBS Chicago reports: “On Wednesday, the Chicago average is $3.26 per gallon of regular gasoline. The average price is $2.999 for the rest of Illinois, compared to the national average of $2.91.”

“Analysts say Americans are now spending 7% of their income on gas, a statistic that is up 1.5% from last year. If you make $45,000 per year, you’re shelling out over $3,000 just to put gas in your vehicle.”

The World Isn’t Prepared for Retirement

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It’s not just America. New data show people all over the globe don’t understand basic concepts of investment and inflation. Suzanne Woolley writes on Bloomberg:

Most online quizzes are relatively mindless, promising to reveal which vegetable, sandwich or rock band best represents your personality. That was not the case for a short online test given to 16,000 people in 15 countries this year. It revealed just how unprepared a good chunk of the world is for retirement. The three-question test, given as part of the Aegon Retirement Readiness Survey 2018, measured how well people understand basic financial concepts. Many of the participants failed the quiz, with big potential consequences for their future security.

Beyond the sobering lack of financial literacy, there were some rather curious data in Aegon’s annual survey, published on Tuesday. For example, some 20 percent of workers surveyed in China envisioned spending retirement with a robot companion. But before we get to that, take a look at this question — which only 45 percent of people around the world got right: The possible answers? True, false, do not know and refuse to answer. Sixteen percent of people got it wrong. “Do not know” was chosen by 38 percent. In the U.S., 46 percent of workers got it right. Good for you, America — though Germany beat you handily. (The answer, in case you were wondering, is false.) It was an inflation question that had the highest percentage of wrong answers, however. More than 20 percent of workers didn’t grasp how higher inflation hurts their buying power. Given that declining health was the most-cited retirement worry, at 49 percent, and health care is an area (in the U.S., especially) with high cost inflation, well, that makes the subject something older folks should have down cold.

How the Quakers Invented the Price Tag

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Belying its simplicity and ubiquity, the price tag is a surprisingly recent economic development, Aeon magazine writes. For centuries, haggling was the norm, ultimately developing into a system that required clerks and shopkeepers to train as negotiators. In the mid-19th century, however, Quakers in the US began to believe that charging people different amounts for the same item was immoral, so they started using price tags at their stores to counter the ills of haggling. And, as this short video from NPR’s Planet Money explains, by taking a moral stand, the Quakers inadvertently revealed an inefficiency in the old economic system and became improbable pricing pioneers, changing commerce and history with one simple innovation.

 

Most of us are used to prices that don’t change. You go into a store to buy some Quaker Oats, and they’re going to cost the same for you as they will for whoever tries to buy them next.

For most of human history, you had to haggle over prices before you could buy something.

The Quakers were among the first people to commit to fixed prices — and they did it because they thought it was more fair. Turned out, it was also good business. This is the strange story of the long journey of that little piece of paper.

Safeguard Your Finances By Opting For Second-Hand Cars

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You probably have heard that a car loses up to approximately 20% of its initial value within the first year. Yes, a car worth $30,000 will depreciate by $6,000 the minute you drive it off according to Trusted Choice. At the end of the year, wear and tear plus mileage covered could bring this figure up to 30% translating to a $9,000 depreciation. As per a statement by the National Automobile Dealers Association, an average person owns about 13 cars in a lifespan. Each of these cars on average costs $30,000. If those cars happened to be second-hand instead of new, you would save up to $130,000. Second-hand cars not only help you in saving money for the future but also help you get your dream car within your budget. Their lower asking prices aside, second-hand cars help you cut on registration, insurance, and customization fees.

Saving Money In A Second-hand Car

An analysis by Consumer Reports shows that a four-year-old car costs between $5000-$9,000 less than a new one. Well, the biggest advantage of buying an old car is that you let another person take the depreciation hit on the car. Interesting enough you can sell the same car at the same amount you initially bought it at, reason been depreciation had already occurred. If you want to save even more, research on second-hand car rebates in your locality. These rebates are basically second-hand car sell-downs from dealers or manufacturers trying to clear their inventory, sell older car models or boost sales. Buying second-hand cars from rebate programs can help you cut 50% of the initial car price.

The benefits of buying a second-hand vehicle are endless. For starters, these cars don’t have exaggerated fees. Secondly, customizing second-hand cars is cheaper compared to brand new cars. In addition, insurance premiums and annual registration fees are often lower especially for cars older than 3 years. Another perk of buying a second-hand car is the fact that you can be assured of quality as an old car already has been inspected and certified by relevant authorities.

Settling On The Ideal Car

Finding a second-hand car can be at times frustrating since there is so much to put into consideration. Taking time in the buying process of a car ensures you get a great deal. Knowing what you can afford and what car meets your needs are key. Make a list of say 3 or 4 cars from different brands that are within your budget and meet your needs. This will help you pick the most convenient option. Before settling on a particular car, use Carfax or Autocheck to check the vehicle’s history.

The Purchasing Process

The next step is getting a good dealer which is easy to do with the help of the internet. You can then research on similar models and see how much each dealer has to offer. Some dealers often post current rebates on each car model making it easier for you to decide. Mentioning rebates from other dealers also helps you get rebates and incentives that were previously not advertised. Even after getting the best rebates you need to negotiate the best price for your car.

Trying to sweet talk the salesperson on lowering the initial price should be your first approch. You can then mention the rebate. Always keep in mind you are trying to save as much money as possible. Offering money up front guarantees you the best incentives and rebates. In case you decide on buying an automobile that is less than 5 years old, it is advisable to buy one which is certified pre-owned as they have long-term warranties. Flexibility and trying to be reasonable on your part is important when seeking a good deal.

A car is probably the next most expensive thing after your house that you will probably own in your lifetime. You should, therefore, take your time before buying one. The fact that you can acquire your desired model, in good condition, but at a much cheaper price makes a strong argument on why you should opt for a second-hand car. Wouldn’t you agree? And just so you know, buying second-hand cars shouldn’t dent your ego as according to Edmunds, there are 40 million second-hand car purchases annually.

The Long, Slow Demise of Credit Card Signatures Starts Today

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Beginning last year, all four major US payment providers — Mastercard, Visa, American Express and Discover — announced plans to remove the requirement that merchants collect signatures for card transactions. Mastercard, American Express and Discover kicked off that new policy Friday, while Visa will do the same Saturday. CNET reports:

Don’t despair if you actually like writing your signature at retail stores, because their ultimate demise will likely take a while. The change is only optional, with merchants, not customers, given the new power to decide whether to get rid of signatures. So, if asked to sign, please don’t insist to your next cashier that you no longer need to — it won’t work. Also, plenty of retailers will likely want to keep signatures, particularly if their workers are paid based on a lot of tips, or they sell pricey items. Still, the change marks a clear awareness from payment providers that the signature doesn’t really work as a strong protector against fraud.

The change is being handled a little differently by each payment provider. For instance, Mastercard, Discover and American Express said they’ll let retailers make every kind of card payment optional for a signature, regardless of whether you’ve got a new chip card or you still swipe. Visa, meanwhile, isn’t changing its requirements for payments using a swipe card, but it did relax its policy for chip card and contactless payments like Apple Pay. Visa noted that over 75 percent of face-to-face transactions using its cards in North America already don’t require a signature, thanks to lower-value transactions.

Big Financial Loss May Shorten Your Life, Study Suggests

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According to a study released on Tuesday, April 3, 2018, middle-aged Americans who experienced a sudden, large economic blow were more likely to die during the following years than those who didn’t. The heightened danger of death after a devastating loss, which researchers called a “wealth shock,” crossed socio-economic lines, affecting people no matter how much money they had to start. Dayton Daily News reported:

Middle-aged Americans who experienced a sudden, large economic blow were more likely to die during the following years than those who didn’t. The heightened danger of death after a devastating loss, which researchers called a “wealth shock,” crossed socio-economic lines, affecting people no matter how much money they had to start.

The analysis of nearly 9,000 people’s experiences underscores well-known connections between money and well-being, with prior studies linking lower incomes and rising income inequality with more chronic disease and shorter life expectancy.

“This is really a story about everybody,” said lead researcher Lindsay Pool of Northwestern University’s medical school. Stress, delays in health care, substance abuse and suicides may contribute, she said. “Policymakers should pay attention.”

Overall, wealth shock was tied with a 50 percent greater risk of dying, although the study couldn’t prove a cause-and-effect connection. The study was published Tuesday in the Journal of the American Medical Association.

John Bogle Net Worth

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Net Worth: $80 Million
Age: 89
Born: May 8, 1929
Source of Wealth: Investor, Business Magnate
Known For: Founding the Vanguard Group
Last Updated: 2018

Introduction

John C. (Jack) Bogle is the founder and retired chief executive of the Vanguard Group. He created the world’s first retail index mutual fund. Bogle also wrote several classic finance books including The Little Book of Common Sense Investing and Enough: True Measures of Money, Business, and Life.

John Bogle has many followers and admires at personal finance and investing website Bogleheads.org. Followers of John Bogle’s investment philosophy admire him not just for his eloquence in tirelessly speaking and writing about the importance of fees and advantages of indexing, but in his conscious decision in the creation of The Vanguard Group not to enrich himself at the expense of consumers.

Early Life

John (Jack) Bogle was born on May 8, 1929 in Verona, New Jersey. During the Great Depression, his family had to sell their home when they lost the inheritance. Bogle attended Manasquan high school on the New Jersey shore and transferred to the prestigious Blair Academy on work scholarships.

In 1947, Bogle graduated from Blair Academy cum laude and got accepted to Princeton University where he decided to study economics and investment. During his university years, Bogle was determined to examine the subject of mutual fund industry that had not been analyzed before. Bogle spent his junior and senior year working on his thesis “The Economic Role of the Investment Company”. Bogle graduated from Princeton University magna cum laude in Economics in 1951. [Read more…]

Over 90% of Active Stock Pickers Can’t Beat Index Funds

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More evidence that it’s very hard to beat the market over time, 95% of finance professionals can’t do it. Mark J. Perry writes on American Enterprise Institute: “The percentage of active managers who do beat the market is usually pretty small – fewer than 8% in most of the cases above over the last 15 years; and they may not sustain that performance in the future. For many investors, the ability to invest in low-cost, passive, unmanaged index funds and outperform 92% of high-fee, highly paid, professional active fund managers seems like a no-brainer, especially considering it requires no research or time trying to find the active managers who beat the market in the past and might do so in the future.”

S&P Dow Jones Indices, the ‘de facto scorekeeper of the active versus passive investing debate,’ recently released its SPIVA U.S. Year-End 2017 report. Here’s an overview of the SPIVA Scorecard:

There is nothing novel about the index versus active debate. It has been a contentious subject for decades, and there are few strong believers on both sides, with the vast majority of market participants falling somewhere in between. Since its first publication 16 years ago, the SPIVA Scorecard has served as the de facto scorekeeper of the active versus passive debate. For more than a decade, we have heard passionate arguments from believers in both camps when headline numbers have deviated from their beliefs.

During the one-year period, the percentage of managers outperforming their respective benchmarks noticeably increased in categories like Mid-Cap Growth and Small-Cap Growth Funds, compared to results from six months prior. Over the one-year period, 63.08% of large-cap managers, 44.41% of mid-cap managers, and 47.70% of small-cap managers underperformed the S&P 500, the S&P MidCap 400, and the S&P SmallCap 600, respectively.

While results over the short term were favorable, the majority of active equity funds underperformed over the longer-term investment horizons. Over the five-year period, 84.23% of large-cap managers, 85.06% of mid-cap managers, and 91.17% of small-cap managers lagged their respective benchmarks.

Similarly, over the 15-year investment horizon, 92.33% of large-cap managers, 94.81% of mid-cap managers, and 95.73% of small-cap managers failed to outperform on a relative basis.

20% of Americans Save Nothing for Retirement

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Despite a low unemployment rate and stronger economy, 20 percent of Americans don’t save any of their income at all and even those who do save aren’t putting away enough for retirement. According to a new survey from Bankrate.com, one-fifth of Americans are adding nothing to their savings. Among respondents, 2 in 5 cite life’s high expenses, while another 1 in 6 blame their crummy job.

“With a steady, significant share of the working population saving nothing or relatively little, it’s virtually guaranteed that they’ll be unable to afford a modest emergency expense or finance retirement,” says Bankrate senior economic analyst Mark Hamrick. “That amounts to a financial fail.”

Bankrate also reports that the average American has less than $5,000 in a financial account, a quarter to a fifth of what you should have, and those aged 55 to 64 who have retirement savings only carry $120,000 – which won’t last long in the absence of paychecks.

Free Credit Freezes Coming for All U.S. Consumers

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Consumers are on track to get one thing from Congress in response to last year’s massive Equifax Inc. hack: free freezes of their data held by the credit-reporting companies. The Wall Street Journal reported:

“The bipartisan agreement, set to be approved in the Senate by next week as part of a broader banking bill, would require credit-reporting companies to let consumers block access to their credit reports to potential lenders without paying a fee. Freezing access to credit data is a crucial measure consumers can take if they want to protect themselves.”

 

 

If You’re So smart, Why Aren’t You Rich?

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The distribution of wealth follows a well-known pattern sometimes called an 80:20 rule: 80 percent of the wealth is owned by 20 percent of the people. Indeed, a report last year concluded that just eight men had a total wealth equivalent to that of the world’s poorest 3.8 billion people. Why should so few people have so much wealth?

Turns out getting rich is just chance. The wealthiest individuals are not the most talented. They are the luckiest. MIT Technology Review reported:

The conventional answer is that we live in a meritocracy in which people are rewarded for their talent, intelligence, effort, and so on. Over time, many people think, this translates into the wealth distribution that we observe, although a healthy dose of luck can play a role.

But there is a problem with this idea: while wealth distribution follows a power law, the distribution of human skills generally follows a normal distribution that is symmetric about an average value. For example, intelligence, as measured by IQ tests, follows this pattern. Average IQ is 100, but nobody has an IQ of 1,000 or 10,000.

Today we get an answer thanks to the work of Alessandro Pluchino at the University of Catania in Italy and a couple of colleagues. These guys have created a computer model of human talent and the way people use it to exploit opportunities in life…

The computer model charts each individual through a working life of 40 years. During this time, the individuals experience lucky events that they can exploit to increase their wealth if they are talented enough. However, they also experience unlucky events that reduce their wealth. These events occur at random…

When the team rank individuals by wealth, the distribution is exactly like that seen in real-world societies. “The ‘80-20’ rule is respected, since 80 percent of the population owns only 20 percent of the total capital, while the remaining 20 percent owns 80 percent of the same capital,” report Pluchino and co.

New and Free Way to Find Jobs on Facebook

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In a move to compete with LinkedIn, Facebook is rolling out facebook.com/jobs to help people find jobs and help local businesses hire the right people with the ability to apply to jobs directly on Facebook.

Facebook already introduced job postings on Facebook in the US and Canada last year. Today, it expands the service to apply to jobs directly on Facebook to more than 40 countries.

Finding a job is quick, easy and free. You can find jobs in the Jobs dashboard at facebook.com/jobs and the “Jobs” option in the “Explore” section on mobile, by clicking the Jobs icon in Marketplace, or visiting the Jobs tab of a business’ Page. When you’re ready to apply for a role, you can create an application, which will populate with job history and other information in your Facebook profile. You can edit your application before you submit it. Once you finish applying, a Messenger conversation will open with the business’ Page so you can have direct contact with the employer and confirm when your information has been received.

Meanwhile, businesses can attract the right applicants and hire quickly, easily and affordably by posting job openings to a Jobs tab on their Page with details like job title, job type (full-time, intern, part-time), salary and more. Job posts will appear in multiple places on Facebook, including on a business’ Page, in the Jobs dashboard, in Marketplace, and in News Feed. Job posts can appear in News Feed similar to other Page posts, and businesses can choose to boost posts to reach the right candidates. Businesses can also manage their applications and communicate with applicants, including scheduling interviews and sending automated reminders, directly through Messenger.

1 in 5 Americans Have More Credit-Card Debt Than Savings

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Some Americans’ finances are on very thin ice. One in five Americans say they have more credit-card debt than they do in emergency savings, according to a report published Thursday from the personal-finance company Bankrate. Another 12% said they had no credit card debt, but they also had no savings. Bankrate surveyed 1,000 people during early February. Maria LaMagna writes on MarketWatch:

But the report isn’t all bad news. More than half (58%) said they had more in emergency savings funds than in credit-card debt, the highest percentage Bankrate has ever had, tied with the amount who said this in 2015.

Financial experts typically recommend that all consumers have three to six months’ worth of expenses saved in an easy-to-access emergency fund, to guard against any unexpected expenses. Bankrate did not ask exactly how much those surveyed had saved…

Consumers trying to build an emergency fund should set up an automatic savings plan, said Greg McBride, chief financial analyst at Bankrate. That will put a certain percentage of their paycheck into a savings account. After determining the amount they can put in that fund for each paycheck, they can then pay debt with whatever funds they can spare in their budget.

“Saving is all about establishing a habit,” he said.

Home Prices Hit Records

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Home prices jumped to all-time highs in almost two-thirds of U.S. cities in the fourth quarter as buyers battled for a record-low supply of listings. Bloomberg reports:

Prices for single-family homes, which climbed 5.3 percent from a year earlier nationally, reached a peak in 64 percent of metropolitan areas measured, the National Association of Realtors said Tuesday. Of the 177 regions in the group’s survey, 15 percent had double-digit price growth, up from 11 percent in the third quarter.

Home values have grown steadily as the improving job market drives demand for a scarcity of properties on the market. While prices jumped 48 percent since 2011, incomes have climbed only 15 percent, putting purchases out of reach for many would-be buyers.

The consistent price gains “have certainly been great news for homeowners, and especially for those who were at one time in a negative equity situation,” Lawrence Yun, the Realtors group’s chief economist, said in a statement. “However, the shortage of new homes being built over the past decade is really burdening local markets and making homebuying less affordable.”

What Are The New Trends In Health Insurance

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Medical insurance is a huge topic. It was talked about continually during the presidential election in the United States. However, we have not seen any significant changes yet. 2018 promises changes. However, experts warn us not to expect all of the changes to be positive.

What the future holds

Citizens and companies are in a holding pattern. During the recession, many people lost their jobs. Others were kept on but their hours were reduced to allow the companies to take advantage of them to the maximum point before they would be eligible for full benefits.

There was a big swing in people going back to school, and gaining training to make them more valuable. Though the recession seems to be over, experts warn another may come very soon. People are being selective about the positions they take. They refuse to be underpaid and seek positions that will be less likely cut if the recession hits again.

Benefits offered to employees is equally as important to them as their salary. The average citizen had no idea how financially difficult it would be when we suddenly faced double and triple insurance premiums, extremely expensive co-pays and deductibles, and in some cases, the loss of company shared insurance expenses altogether.

Companies are staggering and trying to get to their feet to be in the position to attract good people. If a company has less than 50 employees they usually opt for insurance policies with high deductibles. But, by law, they do not have to offer health coverage. Companies with more than 50 employees must offer “acceptable” insurance and they are expected to pay at least ½ of the premium.

Trends for 2018

  • More Increases in health insurance rate. In 2017, insurance premiums went up dramatically in 2017. They will continue to rise. The increases vary from state to state. Some show a rise of 6%-7% and others show increases well into the double digits.
  • Companies will have to balance the premium increase with the need of retaining good employees. This will mean a narrowing of the illness coverages.
  • There will be a major drop in prescription drugs (more than 80) that are covered in 2018. There will be some that have generic replacements. You should check with your insurance company to see how this affects you, Here is a list of drugs that are being dropped from coverage.

  • More use of technology. Expect chronic patients to have more virtual care. Technology will be more available to interact with their doctors without the need of going to the office. Use of devices to monitor their health through virtual means. The goal is to reduce the amount of money it cost to help them maintain.
  • Use of technology to allow doctors to work without having to document everything that is said. You surely have noticed that doctors today show up in your examination room with a laptop computer. They are typing away as you describe your concerns. They have to do this because they simply do not have the time to see their patient load and document everything. Soon, doctors will be able to wear a special pair of goggles which will streamline the visit to a data center which will create the documentation. This is a highly efficient method which will save the doctor money and lower costs of visits.

These are just some of the trends showing up just in time for the new year. If this is all a bit confusing to you, this can help you. There is much work to do. It is clear that the rise in health care costs is a critical issue. There must be a ceiling on the rise in costs. American workers need healthcare they can afford. We are all waiting for Congress to make healthcare affordable and health service better. Maybe this will be our lucky year.