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Americans Save Less to Sustain Spending as Income Gains Cool

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Americans kept on spending in September as income gains cooled, pushing down the savings rate to the lowest this year. Inflation matched the Federal Reserve’s target, reinforcing the central bank’s outlook for gradual interest-rate hikes. Bloomberg reports:

Purchases, which account for about 70 percent of the economy, rose 0.4 percent from the prior month, matching economists’ estimates, following an upwardly revised 0.5 percent increase, Commerce Department figures showed Monday. Incomes advanced a less-than-projected 0.2 percent, the weakest in more than a year, while Americans saved 6.2 percent of their disposable income, matching the lowest level since 2013.

Nearly Half the World Lives on Less Than $5.50 a Day: World Bank

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Despite progress in reducing extreme poverty, nearly half the world’s population lives on less than $5.50 a day, with a rising share of the poor in wealthier economies, the World Bank said Wednesday. Phys.org reports:

In a twice-yearly report, the bank took a broader look at poverty to see where countries were lagging, even though the share of those living in extreme poverty—defined as earning less than $1.90 a day—has continued to come down in recent years.

Under the expanded criteria for poverty, the report found the number of poor worldwide was still “unacceptably high,” while the fruits of economic growth were “shared unevenly across regions and countries.”

Even though global growth of recent years had been sluggish, the total count of people in poverty declined by more than 68 million people between 2013 and 2015—”a number roughly equivalent to the population of Thailand or the United Kingdom.”

Despite the improvement, the report said current trends indicated the World Bank’s goal of reducing extreme poverty to less than three percent of the world’s population by 2030 may be unattainable.

Many Pay High Investment Company Fees for Services They Don’t Use, Survey Shows

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If you are investing in stocks, bonds, or mutual funds, you have a wide range of options to help manage your portfolio—everything from traditional brokerages to mutual fund companies to online financial firms. But as consumers search for an investment company, many pay little attention to the fees they’re being charged, according to a just-released Consumer Reports survey of more than 46,000 CR members. Penelope Wang, writing for Consumer Reports:

Four out of 10 surveyed said they weren’t sure what they paid in fees. And of those who knew the costs, only 60 percent rated their investment company in our survey as Excellent or Very Good on the amount charged.

“Hidden and confusing fees are proliferating across the marketplace, making it hard for consumers to know what they’re getting for their money, and to comparison shop across providers,” says Anna Laitin, director of financial policy at Consumers Union, the advocacy division of Consumer Reports.

“It is concerning that so many investors don’t know how much they are paying in fees and that many of those who do understand the fees don’t appear to think they are getting their money’s worth,” she says.

40% of American Middle Class Face Poverty in Retirement, Study Concludes

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Nearly half of middle-class Americans face a slide into poverty as they enter their retirement, a recent study by the Schwartz Center for Economic Policy Analysis at the New School has concluded. CNBC reports:

Roughly 40 percent of Americans who are considered middle class (based on their income levels) will fall into poverty or near poverty by the time they reach age 65, according to the study.

The study also concluded that if workers age 50 to 60 decide to retire at age 62, 8.5 million of them are projected to fall below twice the Federal Poverty Level, with retirement incomes below $23,340 for singles and $31,260 for couples. Further, 2.6 million of those 8.5 million downwardly mobile workers and their spouses will have incomes below the poverty level — $11,670 for an individual and $15,730 for a two-person household.

Half the World Is Now Middle Class Or Wealthier

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Something of enormous global significance is happening almost without notice. For the first time since agriculture-based civilization began 10,000 years ago, the majority of humankind is no longer poor or vulnerable to falling into poverty. The Brookings Institution reports:

By our calculations, as of this month, just over 50 percent of the world’s population, or some 3.8 billion people, live in households with enough discretionary expenditure to be considered “middle class” or “rich.” About the same number of people are living in households that are poor or vulnerable to poverty. So September 2018 marks a global tipping point. After this, for the first time ever, the poor and vulnerable will no longer be a majority in the world. Barring some unfortunate global economic setback, this marks the start of a new era of a middle-class majority.

In most countries, there is a clear relationship between the fate of the middle class and the happiness of the population. According to the Gallup World Poll, new entrants into the middle class are noticeably happier than those stuck in poverty or in vulnerable households. Conversely, individuals in countries where the middle class is shrinking report greater degrees of personal stress. The middle class also puts pressure on governments to perform better. They look to their governments to provide affordable housing, education, and universal health care. They rely on public safety nets to help them in sickness, unemployment or old age. But they resist efforts of governments to impose taxes to pay the bills. This complicates the politics of middle-class societies, so they range from autocratic to liberal democracies. Many advanced and middle-income countries today are struggling to find a set of politics that can satisfy a broad middle-class majority. The tipping point in the world today offers opportunities for business but complications for policymakers.

Chinese Anger Grows as ‘Get Rich Quick’ Investment Schemes Go Bust

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When Cao downloaded the Qiangqiantong app, he certainly never expected it could ruin his life. So Cao invested the equivalent of $11,600 — his entire savings — with Qiangqiantong. And why not? The app claimed to offer amazing investment opportunities, with high returns and little risk. Instead, this June, the company shut down. Now Cao does not know if he will ever see his money again. The Washing Post reports:

Over the past decade, millions of investors sunk their cash into thousands of companies like Qiangqiantong (which roughly translates to Get Rich Quick) and others with names like Money Pig and Qianbao, or Wallet.

The promises were the same: steady growth, big dividends and a chance for investors to put financial worries behind. Investors lapped it up. It was once among the largest small-investor cash flood in the world, with as much as $200 billion riding on P2P dreams.

Some state-owned banks even helped facilitate payments, and government officials spoke of some of the P2P companies in glowing terms.

But since June, hundreds of upstart investment companies have gone bust — many falling victim to credit runs, risky bets or the same Ponzi-scheme unraveling that brought down fraudsters such as Bernie Madoff.

30% of America’s Student Loan Borrowers Can’t Keep Up After Six Years

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In order to compete in the economy of tomorrow, many young Americans will need to earn an advanced degree — around 65 percent of all jobs in the United States will require some post-secondary education by 2020. But wages have not grown significantly over the past several years, and student debt holders are being pinched.The result: More than 30 percent of student loan borrowers are in default, late or have stopped making payments after just six years.

CNBC cites reports that within six years, more than 15% of student borrowers had officially defaulted, while 10% more had stopped making payments and another 4.8% were at least 90 days late. And for-profit colleges fared even worse, where nearly 25% of graduates defaulted, and a total of 44% faced “some form of loan distress.”

These trends were masked by Department of Education reports which stopped tracking repayment rates after just three years (reporting defaults rates of just 10%), according to Ben Miller, senior director for post-secondary education at the left-leaning Center for American Progress. “Official statistics present a relatively rosy picture of student debt. But looking at outcomes over more time and in greater detail shows that hundreds of thousands more borrowers from each cohort face troubles repaying.”

70% of Millionaires Don’t Consider Themselves Wealthy

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Are all millionaires wealthy? Not if you ask them. A whopping 70% of those with at least $1 million in assets that are invested or available to invest, excluding home values, don’t consider themselves to be wealthy, according to a survey of 4,500 affluent investors by UBS. CNN Money reports:

Rather, it’s only when they hit the $5 million mark that millionaires begin to feel “wealthy.” Why $5 million? Apparently, that’s the level at which most rich people feel they have “no constraints on activities,” according to the survey.

In addition to feeling like money is no object, most wealthy people also find it important to hold a substantial amount of their fortune in cash because it helps them feel more secure.

“Holding a significant amount of cash is is a critical component of investor confidence, as investors believe these are assets they won’t lose,” the survey said. “Investors aren’t quick to forget the significant losses they endured in 2008.”

Almost Half of Americans Can’t Pay for Their Basic Needs

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Four in 10 Americans are struggling to pay for their basic needs such as groceries or housing, a problem even middle-class households confront, according to a new study from the Urban Institute. CBSNews reports:

Despite the U.S. economy being near full employment, 39.4 percent of adults between 18 and 64 years old said they experienced at least one type of material hardship in 2017, according to the study, which surveyed more than 7,500 adults about whether they had trouble paying for housing, utilities, food or health care.

The findings surprised researchers at the Urban Institute, who had expected to find high levels of hardship among poor Americans but hadn’t predicted so many middle-class families would also struggle to meet their basic needs. That may illustrate that a middle-class income “is no guarantee” of protection from hardship, said Michael Karpman, research associate at the Urban Institute’s health Policy Center and a co-author of the report.

1 in 3 Americans Have Less Than $5,000 Saved for Retirement

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The vast majority of Americans, 78 percent, say they’re “extremely” or “somewhat” concerned about not having enough money for retirement, according to Northwestern Mutual’s 2018 Planning & Progress Study. CNBC reports:

A shocking 21 percent of Americans have nothing at all saved for the future, and another 10 percent have less than $5,000 tucked away, the study finds.

That means about a third of Americans have only a few thousand dollars, or less, put away for their golden years.

Of course, some people are more prepared: A quarter report having $200,000 or more stashed away, while 16 percent have between $75,000 and $199,999. But overall, Northwestern Mutual found that Americans with retirement savings have an average of $84,821 saved, which is far from enough. Experts typically recommend trying to accumulate at least $1 million.

Study: Six to Eight Hours of Sleep Best for Heart

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Research shows sleep deprivation or excessive hours in bed increase risk of coronary artery disease or stroke. From a report:

Six to eight hours of sleep a night is most beneficial for the heart, while more or less than that could increase the risk of coronary artery disease or a stroke, researchers have suggested. The study, presented at the European Society of Cardiology Congress in Munich, indicates sleep deprivation and excessive hours in bed should be avoided for optimum heart health. The study’s author, Dr Epameinondas Fountas of the Onassis cardiac surgery centre in Athens, said: “Our findings suggest that too much or too little sleep may be bad for the heart. More research is needed to clarify exactly why, but we do know that sleep influences biological processes like glucose metabolism, blood pressure, and inflammations — all of which have an impact on cardiovascular disease.” Data from more than a million adults from 11 studies was analysed as part of the research. Compared with adults who got six to eight hours of sleep a night, “short sleepers” had an 11% greater risk, while “long sleepers” had 33% increased risk over the next nine years.

Money Really Does Lead to a More Satisfying Life

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New research suggests that more money really does lead to a more satisfying life. Justin Wolfers writes on New York Times:

Surveys of thousands of Swedish lottery winners have provided persuasive evidence of this truth. Lottery winners said they were substantially more satisfied with their lives than lottery losers. And those who won prizes worth hundreds of thousands of dollars reported being more satisfied than winners of mere tens of thousands. These effects are remarkably durable. They were still evident up to two decades after a big win. The findings appear in a research report, “Long-Run Effects of Lottery Wealth on Psychological Well-Being,” that has generated a lot of buzz among economists over the summer. The working paper is by Erik Lindqvist from the Stockholm School of Economics, Robert Ostling from Stockholm University and David Cesarini from New York University.

Facebook Stock Suffers Largest One-Day Drop In History, Shedding $119 Billion

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Facebook is experiencing one its worst days as a publicly traded company. According to CNBC, Facebook lost about $119 billion of its value on Thursday, marking the biggest one-day loss in U.S. market history. CBS MoneyWatch reported:

The company’s shares plunged $41.24, or almost 19 percent, to $176.26 a day after the social media giant reported disappointing results. The slide is the largest decline in market capitalization in history, exceeding Intel’s $91 billion single-day loss in September 2000, according to Bloomberg data.

Founder and CEO Mark Zuckerberg saw his fortune drop by $15.9 billion to roughly $71 billion. His personal loss alone, if only on paper, exceeds the value of companies such as Molson Coors and Macy’s, which have market values of $14 billion and $12 billion, respectively.

Investors were spooked by Facebook’s forecast showing that its number of active users is growing less quickly than expected, while the company also took a hit from Europe’s new privacy laws.

Your Guide to Renters Insurance

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Renting has recently become extremely popular, yet renters insurance is still widely misunderstood; many renters don’t even know how to get it. In fact, renters insurance is extremely cheap, at an average of under $150 per year.

Policies also provide important benefits to both tenants and landlords. Many renters expect their landlord’s insurance to cover much more than it actually does. Renters insurance fills in these gaps, which is why many landlords are now making it mandatory.

In most cases, your landlord will only be responsible for damages that result from their own negligence. If they provide faulty locks, for example, they’ll be liable if someone breaks in. In the majority of cases, such as natural events, burglaries, and other damages, you’ll be responsible for the costs. A low cost renters insurance plan will pay for many of these events and provide peace of mind for both parties.

Coverage Under Renters Insurance

Renters insurance covers a wide range of situations, and it’s important to understand when it’s appropriate to file a claim. One of the key aspects of renters insurance is its coverage of personal property. If you need to replace items that were lost or damaged in a burglary, fire, or similar incident, simply file a claim through your renter’s insurance to be reimbursed.

Property coverage is an important aspect of renters insurance, as the average renter owns between $20,000 and $30,000 worth of personal property. Without insurance, any unexpected incident can be a major problem for both tenant and landlord.

Renters insurance ensures that both sides are covered in case of an emergency for a small monthly fee. Most policies will cover a wide range of situations in addition to personal property claims, so read your plan closely and discuss it with your agent to get a full understanding of your coverage.

Getting Renters Insurance

Since there’s so little awareness of renters insurance, many people don’t even know where to get coverage. There are many providers available when you’re searching for renters insurance. Some may give users the option of registering through an app, while other companies may need customers to meet an agent in person to set up a plan.

You may even be able to bundle your renters insurance policy together with your car or home plan with your existing provider.

If you’re a tenant, there’s simply no good reason to not have renters insurance. For a relatively low cost, it can save you significant amounts of money in the long-run. Furthermore, if you’re a landlord, you probably sleep better knowing that your tenants will have the money to pay for any incidents. It makes renting easier for both parties, which is why you should consider making it mandatory for all your tenants.

Mark Zuckerberg Becomes World’s Third-Richest Person

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Facebook co-founder Mark Zuckerberg has overtaken Warren Buffett as the world’s third-richest person, reports Bloomberg. Zuckerberg only trails Amazon founder Jeff Bezos and Microsoft co-founder Bill Gates. From the report:

“It’s the first time that the three wealthiest people on the ranking made their fortunes from technology. Zuckerberg, 34, is now worth $81.6 billion, about $373 million more than Buffett, the 87-year-old chairman and chief executive officer of Berkshire Hathaway. Zuckerberg’s ascent has been driven by investors’ continued embrace of Facebook, the social-network giant that shook off the fallout from a data-privacy crisis that hammered its shares, sending them to an eight-month low of $152.22 on March 27. The stock closed Friday at a record $203.23.”