DailyFinance.comhttp://www.dailyfinance.comDailyFinance.com%http://www.blogsmithmedia.com/BlogURL%/media/feedlogo.gifDailyFinance.comhttp://www.dailyfinance.comen-usCopyright 2012 Weblogs, Inc. The contents of this feed are available for non-commercial use only.Blogsmith http://www.blogsmith.com/Finding the Best (and Worst) Deals in College Tuitionhttp://www.dailyfinance.com/2011/07/01/finding-the-best-and-worst-deals-in-college-tuition/http://www.dailyfinance.com/2011/07/01/finding-the-best-and-worst-deals-in-college-tuition/http://www.dailyfinance.com/2011/07/01/finding-the-best-and-worst-deals-in-college-tuition/#commentsFiled under:

College CampusPutting their kids through college is something most parents expect will cost them a bundle -- and it does. Just take a look at the Department of Education's College Affordability and Transparency website, which launched Thursday. It gives the lowdown on tuition and fees, the net cost of college, and trends on tuition rates for pubic and private colleges and universities across the nation.

But amid the sticker-shock-inducing figures coming from such institutions as Bates College, which is listed as charging $51,300 annually for tuition and fees, parents and college-bound students may be equally shocked to find options at the other end of the spectrum like Webb Institute, which offers all of its students a tuition-free ride. The deal with Webb, however, is it only offers one major: Naval Architecture and Marine Engineering.

Both of these colleges are not-for-profit, private four-year institutions and rank as the most and least expensive, respectively, in their categories. According to The New York Times, a Bates official took umbrage at the figures, noting its reported costs also included room and board.

Parents taking their first looks at the college will rapidly discover that not-for-profit colleges tend to cost substantially more than private, for-profit institutions, and both of those are far more costly than public institutions. The national average for tuition and fees at not-for-profit institutions costs $21,324 during the 2009-10 school year, versus $15,661 at for-profit private institutions and $6,397 at public four-year colleges.


Tuition

Digging a little bit deeper reveals that Pennsylvania holds six of the top 10 spots on the list of most expensive public institutions. Driving most of those listings are Pennsylvania State University schools. Penn State's main campus ranked No. 1 among the most expensive four-year public colleges for tuition and fees.

On the other extreme, the top two least expensive four-year public colleges are Haskell Indian Nations University and Dine College, which are both among of the nation's 36 Indian tribal colleges. At Haskell, where tuition and fees run $430 a year, the college focuses on preparing its students for leadership in politics to the economy in the context of tribal, regional, national and international matters.

The University of Puerto Rico's schools also held multiple slots on the list of the 10 least expensive public, four-year colleges, with annual fees and tuition ranging from $1,320 to $2,008.

Artistry Is Expensive

The most expensive for-profit colleges also have a common theme: art. Among them: Le Cordon Bleu College of Culinary Arts, with its $38,200 in annual fees and tuition, AI Miami International University of Art and Design, which charges $30,550, and the Art Institute colleges, which range from $30,259 to $32,342.

One of the more painful revelations in the data is the rapid rate at which college cost are rising. Northern New Mexico College, for example, posted a 51% jump in its price tag from the 2007-2008 school year to the 2009-2010 school year. State colleges in California held six of the top 10 spots among four-year public universities and colleges, posting hikes in excess of 40%.

The increases are even steeper at some private colleges and universities. For-profit colleges and universities saw their tuitions jump dramatically, with a 99% increase for Everest University-Largo in Florida and 68% for Brown Mackie College in Fort Wayne, Ind. And among not-for-profit colleges, Wells College in New York, posted a 67% increase.

It's worth noting, however, that the institutions with the greatest increases in percentage terms were generally those with lower tuition to start. Those bargain schools are being forced by economics to start catching up with their higher priced competition.

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]]>college costscollege spendingCollegeCostsCollegeSpendingcost of collegecost of community collegescost of state collegescost of state unversitiescost of universitiesCostOfCollegeCostOfCommunityCollegesCostOfStateCollegesCostOfStateUnversitiesCostOfUniversitiesU.S. Department of EducationU.s.DepartmentOfEducationDawn KawamotoFri, 01 Jul 2011 11:00:00 ESTTips for Firing Up Your Own Fourth of July Fireworkshttp://www.dailyfinance.com/2011/06/30/tips-for-firing-up-your-own-fourth-of-july-fireworks/http://www.dailyfinance.com/2011/06/30/tips-for-firing-up-your-own-fourth-of-july-fireworks/http://www.dailyfinance.com/2011/06/30/tips-for-firing-up-your-own-fourth-of-july-fireworks/#commentsFiled under: ,

FireworksIf you're considering declaring yourself independent of municipal fireworks displays this weekend and sending up a few red, glaring rockets of your own, question number two on your mind should be "How can I get the most bang for my buck?" To aid you in that quest, we've consulted with the fireworks pros for advice.

But yes, cost should be the second question on your mind: First, you need to know precisely what your explosive options are in your corner of the land of the free. Because the law on fireworks is highly variable, depending on your state, county, and even town.

Perhaps it's one of the few up-sides to the downturn: The number of states where people can purchase consumer fireworks is growing, as states see legalizing them as a potential way to raise a bit more in sales taxes. Last year, Rhode Island joined the majority of states that allow consumer fireworks, as did Arizona. And in New York, a bill is on the governor's desk that could lift the ban on consumer fireworks, under certain circumstances. Meanwhile, Massachusetts this year introduced legislation to open its doors to the sale of consumer fireworks.

The fireworks industry generated $952 million in revenues last year, with 67% coming from consumer fireworks sales, according to the American Pyrotechnics Association. And while some states only allow individuals to buy sparklers and novelty items such as smoke balls and "snakes," in a majority, the sale of 1.4G fireworks, more commonly known as consumer fireworks, is legal.

In approximately half of these 1.4G states, a majority of counties allow the private use of fireworks, but only ground-based items like fountains and spinners are legal. In the other states, certain aerial fireworks can also be used.

Fireworks chart

Size Isn't Everything

"The size of the package doesn't relate to the size of the effect," says Ralph Apel, spokesman and former president of the National Council on Fireworks Safety. "You may have a big item that emits only sparks or a small item that can do 20 or 30 effects."

An "effect" is a single task, like shooting out a particular color of sparks, or launching a green strobe that explodes into a star pattern, for example. Wondering what a given firework will do? Just read the effects label, says Apel. It should include such information as how high a firework will shoot into the air, the type of effects it will perform, or colors it will emit.

How to Keep Your Budget From Exploding

"I've seen some packages of fireworks that sell for $800 to $900 and take four men to carry out of the store," says Apel. But for the casual Fourth of July fireworks user, the cost doesn't have to explode through the roof.

"There are a lot of variety packs, so people don't have to buy a lot of single items. Often, these packs are marked, 'buy one, get one free,' " says Julie Heckman, executive director of the American Pyrotechnics Association (APA). "Fireworks are available for every budget. Some families spend several hundred dollars and some spend $30 or $40 for a handful of cones [fireworks] and some sparklers."

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Generally, purchasing those pre-packaged assortments is cheaper than buying the same fireworks individually, Heckman notes. She suggested consumers review APA's states listings to learn about the regulations surrounding fireworks in their particular area and also check out websites of retailers such as Phantom Fireworks and TNT Fireworks to see their product videos before buying.

Consumers looking to stretch out their firework viewing time may want to compare fountains versus aerial fireworks for the best value. Fountains, or cone fireworks, tend to last approximately one to four minutes and are relatively inexpensive, says Jerry Bostocky, vice president of sales for Phantom Fireworks, which, with roughly 13% of the market, is one of the nation's largest consumer fireworks companies. Below is a video of Phantom's New York Harbor ground-based fountain:


Phantom's Apache Firedance, for example, runs three and a half minutes and costs $14.99. That breaks down to about $4.27 per minute. Compare that with Phantom's 500-gram aerial repeater fireworks, or "cakes," often used by consumers as finale displays, which tend to cost anywhere from $60 to $200 and typically run for about a minute.

But cakes are hot sellers and many consumers want some form of finale to their fireworks show, regardless of the time-to-cost ratio. So, in selecting a cake, you may want to compare the effects-to-cost ratio.

For example, Phantom's 500-gram Golden Pyra-Fusion cake costs $59.99 for its two effects - translating into approximately $30 per shot. Meanwhile, Phantom's more expensive Komodo 3000 cake, which has 119 shots and costs approximately $200, comes out to roughly $1.68 per shot. A peek at the Komodo follows in the video below:


"Multi-tube cakes are the most popular. People can light one fuse and it does everything," Heckman says. "Some cakes have 24 shots, 60 shots, 100 shots. It's usually used as a finale and it's very safe."

Phantom's top sellers in the 500-gram category include Untamed Retribution, with 16 shots for $89.99, or nearly $5.63 per shot; Thunder Mountain, with 33 shots for $109.99, or nearly $3.34 per effect; and the Komodo 3000 which comes in at $1.68 per shot.

Combustible Choreography

For consumers seeking to create a scaled-down version of a professional display fireworks show, the key is in the planning.

Apel recommends appointing a single person to be the designated shooter and to develop a sequence of how the fireworks should be ignited, after taking into consideration the various effects that each firework offers.

In some cases, consumers may want to stage their show to increase in height and brilliance with each firework, or instead to alternate between various effects. And if you want to truly imitate the pros, try choreographing the fireworks to music.

Headed Out

Consumers opting to let someone else deliver the big bang effect on Fourth of July nonetheless will have to put a bit of time, effort and possibly some gas into getting to a nearby display, even if the fireworks show itself is free.

Then there's the weather. And if you're facing a cloudy night on July 4, -- or, if like me, you live in an area prone to fog -- pyrotechnic experts offer this advice.

"Cloud cover is usually not a problem because the [firework] shells don't go high enough into the clouds," says Mike Tockstein, an independent pyrotechnic shooter from Southern California and operator of the Pyrotechnic Innovations online training site. "Fireworks usually go up only 300 to 600 feet. Fog, however, is a different thing."

Tockstein noted that Fourth of July fun seekers will usually know about an hour before the show whether its worth it or not to head out. And given that fireworks displays typically last 15 to 20 minutes, Tockstein says onlookers should have little to fear about fog rolling in and ruining a show once they are there.

"A show in San Francisco may get washed out every five years," says Jim Souza, who heads up Pyro Spectaculars in Rialto, Calif. "But there's usually other things going on like music, food and entertainment. It's a fun time for family and friends to get together and for everyone it maybe worth taking a chance."

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]]>cakesconsumer fireworksConsumerFireworksfirework displaysfirework shopping tipsfirework standsFireworkDisplaysfireworksFireworkShoppingTipsFireworkStandsFourth of JulyFourthOfJulyindependence dayIndependenceDayJuly 4thJuly4thshopping tips for fireworksShoppingTipsForFireworksDawn KawamotoThu, 30 Jun 2011 16:00:00 ESTWill Apple Go Downmarket With Cheaper, Prepaid-Compatible iPhone?http://www.dailyfinance.com/2011/06/28/will-apple-go-downmarket-with-cheaper-prepaid-compatible-iphone/http://www.dailyfinance.com/2011/06/28/will-apple-go-downmarket-with-cheaper-prepaid-compatible-iphone/http://www.dailyfinance.com/2011/06/28/will-apple-go-downmarket-with-cheaper-prepaid-compatible-iphone/#commentsFiled under: , , , ,

When Apple (AAPL) rolls out its next-generation, high-end iPhone 5 -- a launch expected to take place in September -- one analyst is predicting the company will also shoot for the low-end market by introducing a second, inexpensive iPhone model that's capable of working with prepaid phone plans, says a CNBC report.

Such a move would make sense, given the setback Apple has suffered over the past 12 months as Android-based phones took the lead from the iPhone. Apple must compete against an army of smartphone makers using Google's (GOOG) Android operating system, offering a variety of phones in a wide range of price points.

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According to the report, which cites a Deutsche Bank (DB) analyst note, Apple is considering pricing a prepaid calling capable iPhone at $349. Currently, for an iPhone 4 with 16 GB that can be used with the carrier of your choice -- and isn't locked into a two-year contract with a wireless company -- consumers must pony up $649. That iPhone 4 also sells for $199 with a two-year carrier service agreement.

If Apple wants to establish a meaningful presence in emerging markets, offering a phone that can handle prepaid calling plans is a good start. Analysts note that customers in emerging markets tend to favor prepaid phones, as well as inexpensive handsets.

While Deutsche Bank's analyst expects to see a new low-end iPhone model from Apple, an analyst with BMO Capital Markets (BMO) believes Apple's solution will be to trot out its older generation 3GS models, according to a Barron's report. Apple currently sells a 3GS with 8 GB for $49 with a two-year AT&T contract.

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]]>androidappleatt+wireless+internetgooglehigh-end smartphonesHigh-endSmartphonesiPhone 4iPhone 5Iphone4Iphone5low-end iPhonelow-end smartphonesLow-endIphoneLow-endSmartphonesprepaid calling plansprepaid iPhonePrepaidCallingPlansPrepaidIphoneSeptember launchSeptemberLaunchsmartphonesVerizonwirelessDawn KawamotoTue, 28 Jun 2011 10:00:00 ESTFed to Set Final Rule on Debit Card Swipe Fees This Weekhttp://www.dailyfinance.com/2011/06/28/fed-to-set-final-rule-on-debit-card-swipe-fees-this-week/http://www.dailyfinance.com/2011/06/28/fed-to-set-final-rule-on-debit-card-swipe-fees-this-week/http://www.dailyfinance.com/2011/06/28/fed-to-set-final-rule-on-debit-card-swipe-fees-this-week/#commentsFiled under: , ,

The Federal Reserve is preparing to issue its final rule on the controversial debit card "swipe fees" Wednesday, a move that could potentially lead to less favorable interest rates on high-yield checking accounts and unattractive terms and yields on other banking products and services.

In its December draft proposal, the Fed suggested capping debit card interchange fees, or "swipe fees," at 12 cents per transaction -- a move that critics say would slash revenues by 75% for financial institutions and other companies that process debit card transactions. Currently, merchants pay financial institutions an average of 44 cents to 45 cents per transaction, says Patricia Hewitt, director of debit advisory service for Mercator Advisory Group.

The Fed's anticipated action is in response to the Durbin Amendment, which is part of the massive Dodd-Frank Wall Street Reform and Consumer Protection Act that became law in July. The Durbin Amendment is slated to take effect on July 21 and will reflect the Fed's final rule on debit card interchange fees.

"When the Federal Reserve meets Wednesday, we doesn't expect a material change from their earlier proposal of 12 cents," says Hewitt, who served as lead author for her firm's report, The Durbin Amendment: Impact Analysis. She added it's unlikely the Fed will consider raising the bar to 24 cents per transaction.

Making It Harder to Get High Yields

With their revenue expected to be squeezed, financial institutions may dramatically alter the interest rates they pay on high-yield checking accounts or bump up the number of debit card transactions an account holder needs to make in a given month in order to maintain such an account, notes a Bankrate.com 2011 report on high-yield checking accounts.

According to its survey of 155 financial institutions, Bankrate found the average interest rate paid on a high-yield checking account was down to 2.56% this year, compared with 3.3% last year.

The declining yield is a byproduct of simple supply and demand. Financial institutions are finding themselves flush with cash, as customers deposit funds into high-yield checking accounts and basic savings accounts. But financial institutions are facing a tough time finding qualified customers who want to borrow the money sitting in their vaults.

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High-yield checking accounts, which have seen their yields decline, still pay more than a traditional checking account yield of 0.1%. Interest rates for high-yield checking accounts are comparable to those from certificate of deposit, but consumers have the added benefit of instant access to their money.

Banks do make consumers jump through a few extra hoops to get those high-yields, however. A majority of these accounts require customers to make 11 debit card transactions a month and use some of the institution's other services like direct deposit or online bill pay -- services that provide other sources of income for the bank.

But should the Fed require a 12-cent cap on debit swipe fees, financial institutions would need to bump up their per-month transaction requirements for high-yield checking accounts to somewhere in the neighborhood of 37 a month to generate a similar amount of revenue, estimated Claes Bell, a Bankrate.com reporter.

Requiring customers to sign up for a greater number of services to obtain a high-yield account may be another action institutions may look at, says Hewitt. "I think the bundling of services and relationships with consumers will change," she says. "Financial institutions will be looking more closely at the profitability [of high-yield checking accounts] in a different way."

She added although financial institutions and card processors could see their profit margins squeezed with the Durbin Amendment, it's unlikely they would exit high-yield checking accounts.

"They want consumers who carry high balances," says Hewitt. "We may see them require a higher minimum balance for an account, or require customers to have a second relationship or account with the bank. They're looking for a second revenue stream."






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]]>debit cardsdebit interchange feesdebit+card+feesdebit+interchangedebitcardfeesDebitCardsdebitinterchangeDebitInterchangeFeesdodd-frank+reform+and+consumer+protection+act,dodd-frankreformandconsumerprotectionact,Durbin AmendmentDurbinAmendmentFederal Reserve final ruleFederalReserveFinalRulehigh-yield checking accountsHigh-yieldCheckingAccountsinterchange+feesinterchangefeesinterest ratesInterestRatesswipe feesSwipeFeesDawn KawamotoTue, 28 Jun 2011 06:30:00 ESTWomen Three Times More Likely to Feel Financially Overwhelmedhttp://www.dailyfinance.com/2011/06/24/women-three-times-more-likely-to-feel-financially-overwhelmed/http://www.dailyfinance.com/2011/06/24/women-three-times-more-likely-to-feel-financially-overwhelmed/http://www.dailyfinance.com/2011/06/24/women-three-times-more-likely-to-feel-financially-overwhelmed/#commentsFiled under: , , ,

Financially stressed womanWomen have a tendency to be labeled as worrywarts, and a recent financial survey seems to support that view. When it comes to financial stress, women are three times more likely to feel overwhelmed by their situations than men, according to Financial Finesse, which conducted the survey.

According to the survey, 9% of women reported feeling "overwhelming financial stress," compared to just 3% of men. And at the opposite end of the spectrum, 17% of men claim to be living a carefree life with no financial stress at all, compared to 10% of women.

The report notes, however, that just because respondents checked off the "no financial stress" box doesn't mean they're not in financial danger. A Financial Wellness Assessment of survey respondents found that, in some cases, these stress-free respondents actually were engaging in risky behavior such as failing to save enough for retirement or not adequately protecting their wealth. In essense, some of the "no financial stress" folks were oblivious to their overall situations, and should be more stressed than they are.

On the family front, people with children average substantially higher financial stress levels, as one would expect, given that they face additional costs that can range from braces to college tuition. In the report, 21% of people surveyed with children said they had a high financial stress level, compared with 12% for those without children.

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Parents, however, can take some comfort in knowing that when it comes to feelings of overwhelming financial stress, people without children aren't too far behind them. The survey found 6% of parents said they were experiencing overwhelming financial stress, while 5% of nonparents said they had those feelings.

More Worrying, Less Fixing

Interestingly, while women tend to worry more than men when it comes to finances, a 2007 study found they're apt to do less than men to resolve their financial concerns, like establishing a financial plan of action.

In addition to gender, age and income play a significant role in the worrywart syndrome.

According to the report, 26% of men and women surveyed between the ages of 30 to 44 years old faced high or overwhelming financial stress, which mirrors Americans' prime child raising years. Meanwhile, the percentage of people in the high or overwhelming worry group shrinks to only 12% once they reach the 55- to 64-year-old range, at or near retirement age.

As for income levels, 34% of women and men who are earning between $35,000 to $59,999 say their financial stress level is high to overwhelming. And, as one would expect, it dramatically drops off as people earn more money. Only 9% of survey participants earning $200,000 or more say they face high to overwhelming financial stress.

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]]>cost of childrenCostOfChildrenfinacial stressFinacialStressfinances and stressFinancesAndStressFinancial Finessefinancial stressFinancialFinesseFinancialStressgender-based financial stressGender-basedFinancialStresshousehold budgetHouseholdBudgetmen and financial stressMenAndFinancialStresspersonal financePersonalFinanceretirement planningRetirementPlanningsavingstuitionwomen and financial stressWomenAndFinancialStresswomens financial healthWomensFinancialHealthDawn KawamotoFri, 24 Jun 2011 15:00:00 ESTAmazon Offers Texas a Big Deal to Delay Internet Sales Tax Lawhttp://www.dailyfinance.com/2011/06/23/amazon-offers-texas-a-big-deal-to-delay-internet-sales-tax-law/http://www.dailyfinance.com/2011/06/23/amazon-offers-texas-a-big-deal-to-delay-internet-sales-tax-law/http://www.dailyfinance.com/2011/06/23/amazon-offers-texas-a-big-deal-to-delay-internet-sales-tax-law/#commentsFiled under: , ,

Amazon taxesAmazon.com has offered a $300 million investment and the promise of 5,000 jobs in the state of Texas in exchange for the state postponing legislation that would force the online retailer to begin collecting sales tax on purchases made by Texans.

According to one source, top officials in the Texas legislature and governor's office are weighing Amazon's (AMZN) offer. The terms of the deal are strikingly similar to one accepted by South Carolina earlier this month -- 2,000 jobs and a $125 million investment in a distribution center, in exchange for which the state will allow it to postpone collecting sales taxes until 2016.

In Texas, where folks say everything is bigger, Amazon's offer to build distribution centers and hire workers is larger too -- if the Lone Star state is willing to delay its Internet tax collection requirement until 2016, said one government official.

This sort of wheeling and dealing in exchange for a tax exemption is not all that uncommon, says Diane Yetter, president of sales tax consulting business Yetter Consulting Services in Chicago. She noted that years ago, Federal Express struck a deal with Tennessee to hire a specific number of people and invest in a new distribution facility, in exchange for a sales tax exemption on purchases of new equipment that went into the building.

"Most states have enterprise zones where companies can locate there and receive tax exemptions," says Yetter. "The states are hoping to capture lucrative property tax or state income tax from those employees." However, she notes, "with Amazon's offer, it's flow-through money. Texas does not require individuals pay income tax, so all these people Amazon plans to hire won't contribute in that way. Texas, in part, may be looking to do this for the [public relations] benefit, or part of political jockeying."

Although Amazon did not return calls seeking comment, the e-commerce giant may be banking on the hope it can strike similar deals with others from the growing number of states that have introduced and passed "Amazon Tax" legislation this year.

An Unfair Advantage for Online Retailers

Convincing those states to delay implementing their legislation by nearly five years may also buy Amazon time to try to win its court battle with New York, where it hopes to avoid setting a legal precedent that would require it to collect sales tax on online purchases made through any of its affiliates.

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New York took a novel approach in its approach to the tax issue in order to get around a 1992 U.S. Supreme Court decision, Quill v. North Dakota, which says states can only collect sales tax if the retailer has a physical presence in the state, like a store or distribution center. But New York argues Internet retailers that rely on other websites or affiliates also have a presence in the state where the affiliate operates. New York takes the view that affiliates are de facto storefronts, allowing a retailer to transact a sale once a user clicks on their advertisement on the affiliate Web site.

Brick-and-mortar competitors complain that their online rivals have an unfair advantage, noting they are able to sell their items at lower prices because their customers aren't paying sales tax -- which, they say, is costing them revenues and forcing them to lay off workers. Although consumers are required to pay sales tax on their Internet purchases, many do not. And the money that goes uncollected is huge -- with some estimates reaching $23 billion in uncollected sales tax by 2012.

Amazon, however, has threatened and has terminated its relationship with its affiliates in states where "Amazon Tax" legislation has passed. Earlier this year, state Rep. Nancy Skinner introduced AB153 in the California state legislature, calling for out-of-state retailers like Amazon to start collecting online sales tax. Affiliates, as well as brick-and-mortar retailers, turned up en masse to voice their concerns at a recent hearing over the bill.


California's House of Representatives has passed AB153, and it's scheduled to be heard on July 6 in the state senate's governance and finance committee. Amazon has yet to make a similar offer in California, said one government source. Currently, Amazon does not have a distribution center in the state, nor does it have one under construction.

In the meantime, California, like other states pushing their own versions of the "Amazon Tax" laws, hope to shift the burden of collecting Internet sales tax onto the online retailers themselves, similar to the way they are collected at a brick-and-mortar checkout counters.

As Yetter previously noted: "If everybody paid the sales tax that's due, the states' budgets wouldn't be as bad as they are."



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]]>AB 153Ab153amazon taxamazon.comAmazonTaxinternet sales taxinternet taxesInternetSalesTaxInternetTaxesnancy skinneNancySkinneonline sales taxOnlineSalesTaxretail taxesRetailTaxessouth carolina amazon taxSouthCarolinaAmazonTaxtexas amazon taxTexas sales taxTexasAmazonTaxTexasSalesTaxDawn KawamotoThu, 23 Jun 2011 14:40:00 ESTAs Banks Exit the Reverse Mortgage Business, Seniors Seek Alternativeshttp://www.dailyfinance.com/2011/06/22/reverse-mortgage-seniors-alternatives-banks-loans/http://www.dailyfinance.com/2011/06/22/reverse-mortgage-seniors-alternatives-banks-loans/http://www.dailyfinance.com/2011/06/22/reverse-mortgage-seniors-alternatives-banks-loans/#commentsFiled under: , , , ,

Wells FargoLast week, Wells Fargo (WFC), the biggest name in the nation's reverse mortgage market, announced that it was getting out of the business, citing concerns that housing prices could continue to erode further. That move followed in the footsteps of No. 2 reverse mortgage player Bank of America (BAC), which exited the business earlier this year. Combined, the two banking behemoths represented 43.6% of the reverse mortgage market, based on a 12-month trailing period ending in April, according to industry researcher Reverse Market Insight.

But certified financial planners say it's not the end of the world for cash-strapped seniors who want to stay in their homes. With financial finesse, in some situations, seniors may find non-bank solutions yield better results.

John Lunde, president of Reverse Market Insight, doesn't except a stampede of other reverse mortgage lenders will quit the business. He also notes that most of the other lenders hold much smaller slices of the market, with the exception of MetLife Bank, an affiliate of insurance behemoth MetLife (MET).

Reverse Mortgage
How a Reverse Mortgage Works

Reverse mortgages are available to homeowners who are at least 62 years old, allowing them to convert a portion of their home equity into cash, receiving either a lump sum or regularly scheduled payments. Borrowers may continue living in their home for as long as they wish, providing they continue paying the property tax and insurance, and maintain the property.

Once the last borrower on the loan moves out of the house or dies, the home is sold, the lender collects its money, and any funds that remain go to the borrowers or their heirs.

Borrowers, however, have to pay an upfront mortgage insurance premium fee if they are seeking a Home Equity Conversion Mortgage that is offered through the Department of Housing and Urban Development and insured by the Federal Housing Administration. And like a traditional loan, borrowers may also end up paying a loan origination fee and closing costs.


Cheaper By Far to Borrow from Family

With the pool of reverse mortgage lenders shrinking, senior citizens who face a cash flow crunch may have other options available. One option to consider is an intrafamily loan structured like a private reverse mortgage, says Joan Gagnon, a certified financial planner and CPA with Gagnon Wealth Management in Mansfield, Mass.

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Gagnon is currently working with two adult children of a 70-year-old Massachusetts divorcee on a private reverse mortgage. Come July, she will no longer receive alimony payments and her sole source of income will be Social Security. Although the mother owns her house outright, she will be cash-flow constrained once the alimony stops.

The children looked at using a reverse mortgage for their mother, until they learned she would have to pay $20,000 for the upfront insurance costs, Gagnon says. Another remedy discussed was for her to sell her home, move into a trailer home and live off the proceeds from the sale, but she didn't want to sell her house, Gagnon recalled.

"I suggested they look into doing a private reverse mortgage. The kids are in their late 40s and 50s and still working, and they have investments. It made sense for them," Gagnon said.

Under the arrangement that is currently being finalized, the children will provide their mother with a monthly sum and also cover any major maintenance work the home needs. And because the loan is a private transaction, the debt-to-loan ratio can be 100% if desired, much higher than would be allowed by a bank, Gagnon says.

In return, the mother will return the principle plus 5% compounded interest, and repay the funds spent on maintaining the home, once the home is sold after her death. Gagnon notes that all parties involved have also agreed to sell the home if its market value dips below the amount the children have already paid their mother, in addition to factoring in interest owed and maintenance costs covered.

If You're the Bank, Don't Forget the Interest

Whenever there is a formal loan between related parties, an interest rate, or applicable federal rate, has to be charged. Currently that rate is around 5%. The two children will need to claim the interest rate, or imputed interest, on their tax returns every year, even though the money they will ultimately receive is deferred until the house is sold.

With the private reverse mortgage, the children will be receiving a higher interest rate than they would if they left their money in a bank account. And they are ensured they will get their money back, given the terms of the loan are tied to the home's market value.

The downside, however, is that the lower home values drop, the shorter the window their mother will have in her home. The house has more than $200,000 in equity so it will likely take years for the mother uses up all of her asset-based loan.

Lease-Back Sales Keep You in Your Home Too

But many seniors don't have children who are in a financial position to help bail them out, says John Deyeso, a certified financial planner with Financial Filosophy in New York.

Other alternatives for those seniors who wish to remain in their house is to rent out a room to increase cash flow, Deyeso says. Parents could consider doing a lease-back sale, in which a relative or other buyer purchases the home from them, along with a life-long rental agreement. The seller can use the proceeds of the sale to make rent payments back to the new owner, he added, as well as cover their other expenses.

Whether its a lease-back or a private reverse mortgage transaction, any senior doing such a deal should hire an attorney to draw up the documents, says Barbara Stucki, vice president of the home equity initiatives at the National Council on Aging.

NCOA, which offers a fact sheet on reverse mortgages, has teamed up with HUD and the National Reverse Mortgage Lenders Association to assist seniors who have reverse mortgages and are having trouble making their property tax payments and homeowners insurance. NCOA also operates a website called Benefits Checkup that allows seniors to input information about their specific situation and learn about resources and programs available to help them cut their costs.

During the past five years, the profile of seniors who are tapping into reverse mortgages has changed.

Says Lunde: "Five years ago, before the financial crisis, the typical age of a reverse mortgage borrower was low 70s. Today, it's closer to 62 to 65 years old. More baby boomers are willing to look at mortgages and debt as a way to live the life they like to live."



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]]>aging parentsAgingParentsequity lines of creditequity loansEquityLinesOfCreditEquityLoansforeclosurerhome equityhome is largest assetHomeEquityHomeIsLargestAssethomesmortgagesnest eggNestEggpersonal financePersonalFinanceretirement fundsRetirementFundsreverse mortgagesReverseMortgagessenior citizensSeniorCitizensDawn KawamotoWed, 22 Jun 2011 11:00:00 ESTOECD: Meat Prices Expected to Jump 30% in Coming Decadehttp://www.dailyfinance.com/2011/06/17/oecd-meat-prices-expected-to-jump-30-in-coming-decade/http://www.dailyfinance.com/2011/06/17/oecd-meat-prices-expected-to-jump-30-in-coming-decade/http://www.dailyfinance.com/2011/06/17/oecd-meat-prices-expected-to-jump-30-in-coming-decade/#commentsFiled under: ,

SteakFood prices are expected to rise by double digits in the coming decade, with the cost of meat on average potentially climbing as much as 30% worldwide, according to a joint-report released Friday by the Organisation for Economic Co-operation and Development and the UN Food and Agriculture Organisation.

That projection comes as consumers are already struggling with record high meat prices, fueled by rising costs for feed and low production of livestock, the report notes. And in the coming years, the OECD says it expects increasingly stringent regulations over food safety, environmental conditions and welfare requirements for livestock will contribute to a bump up prices.

In January 2013, for example, Europe is expected to implement more stringent requirements for housing pigs, which in turn may reduce production of pork because of the added costs, the report notes.

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Meat is not the only food category expected to see double-digit price increases within the coming decade. The price for cereals is expected to rise as much as 20% during this time period.

"While higher prices are generally good news for farmers, the impact on the poor in developing countries who spend a high proportion of their income on food can be devastating," Angel Gurria, OECD Secretary-General, said in a statement.

Both organizations are taking a number of steps to try to reverse the situation, including calling on governments to encourage investments in agriculture that could lead to greater production of food in developing countries.

The anticipated rise in food costs is expected to be driven by an uptick in crude oil prices, which has a rippling effect on such things as the cost for nitrogen fertilizers and other farm chemicals used in the production of food.

Overall, the organizations project that agricultural production will grow more slowly over the next decade, rising only 1.7% compared with a 2.6% increase in the previous decade. The slowdown in production is expected to hit most of the crops, in particular oil seeds and coarse grains, the report notes.

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]]>agriculturecropsfood pricesfood productionFoodPricesFoodProductionlivestockmeat pricesMeatPricesOECD 50Oecd50Organisation for Economic Co-operation and DevelopmentOrganisationForEconomicCo-operationAndDevelopmentUN Food and Agriculture OrganisationUnFoodAndAgricultureOrganisationDawn KawamotoFri, 17 Jun 2011 16:15:00 ESTDonald Trump's Legacy: Kids Who Aim to Think Bighttp://www.dailyfinance.com/2011/06/17/fathers-day-donald-trumps-legacy-kids-who-aim-to-think-big/http://www.dailyfinance.com/2011/06/17/fathers-day-donald-trumps-legacy-kids-who-aim-to-think-big/http://www.dailyfinance.com/2011/06/17/fathers-day-donald-trumps-legacy-kids-who-aim-to-think-big/#commentsFiled under: ,

Trump ChildrenEric Trump started getting a taste of the family business at a young age, tagging along with his real estate and hotel tycoon father Donald Trump as he visited job sites and finessed deals on the golf course. He still recalls sitting in his dad's office, building an empire out of Legos while his dad was constructing a much larger empire over the phone.

That early immersion set the stage for Eric's involvement with the Trump Organization as an adult. It's a situation that is becoming increasingly rare, as family-run businesses today face a tough time enticing the children to take over after their parents exit.

Trump, 27, executive vice president of development and acquisitions of the Trump Organization and the youngest of Donald's three children with his first wife, Ivana, says his father's influence had a significant effect on his career path and personality.

"Both of my parents were incredible role models. Although we were privileged and traveled around the world extensively and had the best education, we were expected to work hard and they they always wanted us occupied," recalls Trump. "Every summer, I was working. I was either mowing lawns at some of our properties, laying tile with some of our stonemasons or some other job."

Gallery: Father and Son: Donald Trump and Eric Trump
Donald Trump


He noted his father has a strong work ethic, a trait that was passed onto him and his siblings Donald Jr. and Ivanka as children. All three currently serve as executive vice presidents at the Trump Organization and are touted as the "next generation."

"We also love our jobs and we're often working seven days a week, looking after our properties, returning emails or phone calls," says Trump.

A Disciplined but Fun Upbringing

Discipline and manners were also drilled into the kids early, with the dad quickly correcting them if they began to goof off, Trump recalled. You weren't likely to see Trump children bouncing from one bed to the other in a hotel room, or sliding down a sweeping staircase banister. That disciplined behavior carried them through the tumultuous teenage years and into young adulthood.

"We knew our family had a reputation to uphold. We're one of that last families you'd ever see going to a club and dancing on tables," says Trump. "The family name is very important to us, and we'd never let it get disgraced."

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That said, Trump noted his father is not humorless. He described his dad as a funny guy, and that sense of humor is something he and his siblings have inherited, which, Trump says, results in a fun working environment.

But it wasn't also so clear to Eric that he would be following in his father's footsteps. Trump said he entertained other occupations as a youngster, such as fighter pilot or firefighter. But when he was in high school, his decision to pursue a path with the family business began to crystallize.

"I've always loved buildings and the tangible nature of it," says Trump.

While at Georgetown University, he wrestled with becoming an engineering major or going into finance and management. He discussed his options with his father and other mentors before going into finance and management because it would offer greater versatility across a number of business areas. As a minor, he picked psychology.

"I found it teaches you more about yourself than other people," says Trump. "It teaches you about your personality traits, what you enjoy and why, why people think a certain way about you, and personality traits you want to exemplify."

Trump children

Teaching How to See the Big Picture and the Tiny Details

The one trait of Donald Trump's that Eric says he hopes to one day exemplify is his vision.

"He doesn't think about building one building," says Eric Trump. "When he thinks about building, he envisions 30 skyscrapers, a whole city. He has big thoughts and that vision sets him apart from other people and me."

In the meantime, though, Eric Trump says he's inherited some other traits from dad, among them loyalty, honor and an eye for detail. Trump says his father can pick out a single burned-out light bulb in a densely packed ceiling of lights, or variations in sheet rock texture.

Eric TrumpThe younger Trump also learned valuable lessons learned from his father when the family business faced financial adversity. Since 1991, Donald Trump's corporation or companies that bear his name have filed for Chapter 11 reorganization bankruptcies in 1991, 1992, 2004 and 2009, according to a Forbes report.

When Eric Trump joined the Trump Organization in 2006, he recalls, the stock market was going gangbusters. The Dow Jones Industrial Average, for example, reached an all-time high of 14,164.53 in October 2007.

Trump and his siblings were champing at the bit to ride the "up cycle," pressing their father to build, build, build. But the elder Trump tempered their enthusiasm.

"My father said this market will always have its ups and downs, and to be more conservative and back off," recalled Eric Trump.

Dad was right, of course. By late 2008, the markets suffered a meltdown and the Great Recession ensued. And in 2009, three highly-leveraged Atlantic City, N.J., casinos that were once run by Donald Trump filed for Chapter 11 reorganization -- for the third time.

A Tangible Legacy

Although the younger Trumps have learned a thing or two from dear old dad, Donald Trump is also learning some things them about the Internet and social media. The elder Trump prefers to communicate by phone, fax or letters, but his children are introducing him to Twitter and Facebook, giving a greater social media presence to their hotel properties and introducing apps for their golf courses that allow customers to book tee times, says the younger Trump.

Donald Trump invested a lot of himself in fatherhood: So what does Eric Trump hope he'll receive as a return on that investment?

"I want to continue the Trump legacy, which values building, love of construction and love of tangible assets," says the younger Trump. "I want to continue to build the biggest and the best. If I can continue that and my grandchildren can continue that, that would be the best ROI."

Click Below for More Fatherly Advice From ...

Warren Buffett | Peter Lynch | Charles Schwab

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]]>bankruptcyChapter 11Chapter11Donald Jr. TrumpDonald TrumpDonaldJr.TrumpEric TrumpEricTrumpfathers dfathers dayFathersDFathersDaygolf coursesGolfCourseshotelsIvanka TrumpIvankaTrumplessons from dadLessonsFromDadreal estate developmentRealEstateDevelopmentTrump CasinosTrump childrenTrump OrganizationTrumpCasinosTrumpChildrenTrumpOrganizationDawn KawamotoFri, 17 Jun 2011 10:01:00 ESTLessons from Super-Rich Dads: What Buffett, Trump, Lynch and Schwab Taught Their Kidshttp://www.dailyfinance.com/2011/06/17/fathers-day-lessons-from-super-rich-dads-what-buffett-trump-lynch-and-sch/http://www.dailyfinance.com/2011/06/17/fathers-day-lessons-from-super-rich-dads-what-buffett-trump-lynch-and-sch/http://www.dailyfinance.com/2011/06/17/fathers-day-lessons-from-super-rich-dads-what-buffett-trump-lynch-and-sch/#commentsFiled under: , , , , , ,

Father's DayParents can only hope that the values and wisdom they've tried to bestow on their children have made it past their offspring's ears -- which can be prone to selective hearing -- and into the gray matter mass between them. In that respect, we have some good news for investment gurus Warren Buffett and Peter Lynch, as well as industry tycoons Donald Trump and Charles Schwab: Their kids were listening -- at least, a good chunk of the time.

In this Father's Day special report, the adult children of these Wall Street icons chatted with DailyFinance about the lessons they learned from their dads.

Among the common themes to emerge from these interviews were that investing philosophies can be applied to how you live your life, as Peter Lynch's middle daughter has learned, and that the values you hold fast to in your personal life can make good business sense too, an idea we heard from Charles Schwab's eldest daughter.


Another common theme -- the idea that listening is a two-way street. Take Warren Buffett, for example, who regularly queried his children at the dinner table about the products and services they used, mining their preferences for insight about potential investments. Then there's Donald Trump, who learned from his social-media-savvy kids about something called the Internet.

Come take a stroll down Memory Lane with these now-grown children, share in their family photo galleries, and learn what some of America's most successful dads have passed down to the next generation:

  • Eric Trump, youngest son of Donald Trump and his first wife Ivana Trump

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]]>Annie LukowskiAnnieLukowskiBerkshire HathawayBerkshireHathawaybillionaireCarrie Schwab PomerantzCarrieSchwabPomerantzCharles SchwabCharles Schwabs childrenCharlesSchwabCharlesSchwabsChildrendiscount brokerDiscountBrokerDonald TrumpDonald Trumps childrenDonaldTrumpEric TrumpEricTrumpFathers DayFathersDayFidelityinheritancelessons+from+super-rich+dads:+what+buffett,+trumplessons+from+superrich+dadslessonsfromsuper-richdads:whatbuffett,trumplessonsfromsuperrichdadsMagellan FundMagellanFundPeter BuffettPeter LynchPeter Lynchs childrenpeter+lynch+taught+his+kidsPeterBuffettPeterLynchPeterLynchsChildrenpeterlynchtaughthiskidsPoor DadPoorDadRich Dadrich kidsRichDadRichKidsTrump OrganizationTrumpOrganizationWarren Buffets childrenWarren BuffettWarrenBuffetsChildrenwealthwealthy kidsWealthyKidsDawn KawamotoFri, 17 Jun 2011 10:00:00 ESTWhat Warren Buffett Gave to His Kids: Values, Not Billionshttp://www.dailyfinance.com/2011/06/17/fathers-day-what-warren-buffett-gave-to-his-kids-values-not-billions/http://www.dailyfinance.com/2011/06/17/fathers-day-what-warren-buffett-gave-to-his-kids-values-not-billions/http://www.dailyfinance.com/2011/06/17/fathers-day-what-warren-buffett-gave-to-his-kids-values-not-billions/#commentsFiled under: , ,

Peter and Warren BuffettPeter Buffett believes he's received the best investing education anyone could ever hope for. After all, his father is the Oracle of Omaha, Warren Buffett, chairman of Berkshire Hathaway (BRK.A).

But though he ranks No. 3 on Forbes' list of the world's richest people, the value of the elder Buffett's advice wasn't wrapped up in ways to make money and a killing on Wall Street. Rather, says his son, a 53-year-old New York musician and author, it was laced with more fundamental ideas about how a person should live their life.

"He would talk to us a little bit about finances, but it was more about his general philosophy on life. He would say, 'You don't have to swing at every pitch. When you're ready to invest [in a stock], it looks like a fat, slow-moving ball.' But that's so true in many things in life. You don't have to swing at every pitch," Peter Buffett says. "The money is the goal for so many people. My dad's goal is about being right."

Gallery: Father and Son: Warren Buffett and Peter Buffett
Warren Buffett

Buffett's father is a conservative value investor, renowned for his ability to delve deep and uncover the intrinsic value of companies. And that strategy of striving to be "right" has paid off handsomely. Over the past decade, Berkshire Hathaway has consistently outperformed the broader markets by impressive margin.

When considering investments in companies, the elder Buffett found his family dinner table fertile ground for informal market research

"He would ask some question about a product, especially from my sister who was older. He would try to determine the demographic interest in something like a newspaper. He'd ask questions like 'how often do you read it.' We knew we were being tested," the younger Buffett laughs.

In 1977, when Peter Buffett was a teen, Berkshire Hathaway purchased the Buffalo Evenings News, a New York local newspaper. And despite the beating the newspaper industry has suffered over the past two decades, as circulation and advertising have declined and a shift toward online advertising has emerged, Buffett continues to hold the investment, citing his love of newspapers.

Following Dad By Walking His Own Path

Buffet's dad is definitely not one to be swayed into dumping things just because they are old or out of favor. Peter still visits his father in the same modest Omaha, Neb., family home in which he was raised, despite his father's immense wealth.

"The thing that I admire most about my dad is his authenticity. Authenticity is No. 1. He is who he says he is and all that goes with having integrity and honesty," says the younger Buffett, adding with a chuckle. "His brothers names are Frank and Ernest. You can't get much better than that."
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Peter Buffett says the greatest gift he could give his father is to follow in his footsteps by being authentic to himself.

"I think he is aware of this in me," says the younger Buffett, citing incidents in his own career as a musician.

After he scored a song used in Dances with Wolves, the Oscar-winning movie directed and starred in by actor Kevin Costner, Buffett was told by a number of Hollywood agents he would have to uproot his family from Milwaukee and move to Los Angeles if he wanted to become a serious film composer.

"I seriously thought about moving for a couple weeks, but then I thought, no, I don't want to move and I want to focus on something that is more real to me," recalled the younger Buffett. "I thought about my dad and how he could have moved to New York to be closer to Wall Street. But in watching my dad operate over the years, I learned you don't do things just because they looked sexier over there. This has served me well because it's taken me to different places than the norm."


Warren Buffett's parenting style also included letting his kids fail and succeed on their own. In other words, he wasn't a helicopter parent, always hovering about.

"His management style is the way he is in life. In a business environment, he finds great management and says 'I believe in you,' and then leaves them alone," Peter Buffett says. "I'm a big believer that experience is everything. And when you fall down and get up by yourself, you feel so much better about yourself."

He added that if he believed his father would financially bail him out every time he got into trouble, it would undermine any success he encountered.

Peter's Only Inheritance: From Granddad's Farm

Peter Buffett's financial standing did not come from his father's wealth, nor any hot stock tips from dad. In fact, the younger Buffett has never purchased a share of stock.

He received $90,000 in Berkshire Hathaway stock in 1979, purchased from proceeds from the sale of his grandfather's farm. The younger Buffett said his dad had been in a conundrum about what to do with the farm. Neither he nor his sister or brother, all young adults, were capable of running a farm.

"My dad didn't believe in misallocated capital and he didn't believe in inherited wealth," says Peter Buffett. "The Berkshire Hathaway stock was my big head start and it was kicked in my head that it would be all I would get. People wrongly assume we [kids] get piles of money from our dad."

Indeed. Warren Buffett in 2006 pledged $37 bilion to the The Gates Foundation, earmarking the vast majority of his wealth with the nonprofit and not his children upon his death.

Says Peter Buffett: "I watched someone who transferred values to me, and not wealth."


Click Below for More Fatherly Advice From ...

Donald Trump | Peter Lynch | Charles Schwab

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]]>berkshire hathawayBerkshireHathawaybillionaireFathers DayFathersDayinheritanceoracle of omahaOracleOfOmahaPeter BuffettPeter Buffett muscianPeterBuffettPeterBuffettMuscianWarren Buffettwarren buffett billionairewarren buffett investorWarren Buffetts Berkshire HathawayWarren Buffetts childrenWarren Buffetts parenting styleWarren Buffetts sonWarrenBuffettBillionaireWarrenBuffettInvestorWarrenBuffettsBerkshireHathawayWarrenBuffettsChildrenWarrenBuffettsParentingStyleWarrenBuffettsSonworlds richestWorldsRichestDawn KawamotoFri, 17 Jun 2011 10:00:00 ESTPeter Lynch's Best Investing Advice to His Daughter Works for the Rest of Life, Toohttp://www.dailyfinance.com/2011/06/17/fathers-day-peter-lynchs-best-investing-advice-to-his-daughter-works-for-th/http://www.dailyfinance.com/2011/06/17/fathers-day-peter-lynchs-best-investing-advice-to-his-daughter-works-for-th/http://www.dailyfinance.com/2011/06/17/fathers-day-peter-lynchs-best-investing-advice-to-his-daughter-works-for-th/#commentsFiled under: , , ,

Annie LukowskiWhen you're the daughter of investment guru Peter Lynch, it's kind of hard not to pick up great financial advice from dear old dad, even when he's not going out of his way to give it to you. That was the case for Annie Lukowski, one of three daughters of the famed Fidelity Investments Magellan fund manager.

Annual reports could frequently be found laying around their Massachusetts home. Simple shopping excursions to even the local drugstore could elicit a lines of subtle, yet inquisitive, questioning from her father, who used his offspring to conduct informal market testing, recalls Lukowski, 33, now a Los Angeles-based Web film director.

And although he didn't resort to Powerpoint stock chart presentations at the dinner table, Lynch covered the basics and beyond with his daughters.

Gallery: Father and Daughter: Peter Lynch and Annie Lukowski
Lynch gallery

"My father is known for having no computer skills, so there were never any Powerpoint presentations going on," Lukowski laughed. "But as a kid, he invited me in and said, 'This is what a P/E ratio is and this is what it does.' He was always saying it was important to remember that the stock market is a market of stocks ... [and he encouraged us] to follow these companies."

That advice should ring true to the value investors who follow Lynch, a man who believes in investing in companies that he intimately knows rather than making picks based on the gyrations of the stock market.



Preschool investor

As a 4-year-old, Lukowski found herself in relatively rare position as an investor. Lynch put his middle daughter into an investment account shortly after the birth of her younger sister, she says.

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"I wasn't doing much investing at age 4. He was mostly doing that," Lukowski says, noting that her father continues to manage that account. "I'm very fortunate to have a very smart financial adviser."

Lynch, however, solicits input from his daughters on stocks they might want in their portfolios -- adding their opinions into the mix.
In high school, Lukowski was a member of her school's stock market club, which entered a stock picking contest: Student teams were each given same amount of imaginary money and competed to make the most lucrative investments in their fake portfolios.

"I took that as a launching point," Lukowski recalls. "I'm was really excited about this one company and I think it's interesting. It was Panera Bread. And I really want to invest in it, so I did all the research for my club. And then we invested like $200,000 fake dollars, or something into it, through my club. And then I mentioned it to my father and he said, you know Annie, let's do it for real too. We got a position in that and went from there."
The investment in Panera Bread (PNRA) did extremely well, Lukowski recalls. Investors who purchased the stock 10 years ago and held onto it have seen its price soar approximately 600%. By comparison, the Nasdaq and the Dow are up roughly 50% over that same period.

"I loved Panera bread and I thought it was a great restaurant. They had WiFi before other restaurants and their menu was really exciting," Lukowski recalled.

Annie LukowskiAdult investor

As an adult, Lynch's middle daughter says she's strapped for time to do the investment research her father suggests is needed.

"My father always says it takes one or two stocks every decade to make a hit. If you have a full-time job and you're following 30 or 40 companies, you're not doing the proper research," says Lukowski, who admires his diligence and "amazing work ethic."

She noted, however, that her father isn't infallible: There have been some fish he's let get away -- Apple (AAPL), for example. When the iPod launched in 2001, Lukowski, then in her early 20s, was among the first to snap one up.

"I was the right age and loved music. My father was 'wow, this is a really interesting product,'" recalled Lukowski. But, apparently, it wasn't interesting enough. "He was late to the game, while I was really big on this iPod. He was like, 'oh, it's a piece of technology,' so he waited on that one."

Overall, Lukowski says, her investment style is like her father's: She's a value investor who believes a company is only worth investing in if she has personal knowledge about the product or interaction with it. It's a philosophy that dovetails with what Lukowski says is the best advice her father has ever given her.

"His best investment advice is also great advice for your life," says Lukowski. "It's do your research, know what you own, interact with it and then make a decision. It's very, very basic and very true."


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Warren Buffett | Donald Trump | Charles Schwab



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]]>Annie LukowskiAnnieLukowskiapplefamed investorFamedInvestorfathers dayFathersDayFidelity InvestmentsFidelityInvestmentsinvest in what you knowInvestInWhatYouKnowinvestment guruInvestmentGuruiphoneipodlessons from dadLessonsFromDadMagellan FundMagellanFundpanera breadPaneraBreadPeter LynchPeter Lynchs daughterPeterLynchPeterLynchsDaughtervalue investingvalue investorValueInvestingValueInvestorDawn KawamotoFri, 17 Jun 2011 06:30:00 ESTCharles Schwab's Fatherly Advice: Have a Passion for What You Do -- and Diversifyhttp://www.dailyfinance.com/2011/06/17/fathers-day-charles-schwabs-fatherly-advice-have-a-passion-for-what-you-do/http://www.dailyfinance.com/2011/06/17/fathers-day-charles-schwabs-fatherly-advice-have-a-passion-for-what-you-do/http://www.dailyfinance.com/2011/06/17/fathers-day-charles-schwabs-fatherly-advice-have-a-passion-for-what-you-do/#commentsFiled under: , ,

Schwab bookDiscount brokerage king Charles Schwab and his eldest daughter Carrie Schwab-Pomerantz got a chance to rewrite a little family history when they co-authored a personal finance book in 2002: It Pays to Talk: How to Have the Essential Conversations with Your Family about Money and Investing.

The title says it all -- but Schwab hadn't actually had those chats with his daughter when she was a youngster.

"My parents never sat me down to discuss the birds and bees of savings," says Pomerantz, now 51 and living near San Francisco.

But that didn't stop her from opening a savings account with the help of her mother at age 9, nor later from soliciting fatherly investment advice about her retirement account as a young adult. Ultimately, she chose to join her father's company as a broker. Today, she's a senior vice president of the Charles Schwab Corporation (SCHW) and president of the Charles Schwab Foundation.

Gallery: Father and Daughter: Charles Schwab and Carrie Schwab-Pomerantz
Thumbnails Charles Schwab

"What I learned from him is that you should have a passion for whatever it is you do, and that you should do what is right for the people," says Pomerantz. "He democratized investing for Americans, and I'm an advocate of teaching women and the under-served about finances. Having savings and assets can make a difference in their lives. In a way, I've mirrored his advocacy for the people."

An Independent-Minded Daughter

Back in 1975, her father launched his discount brokerage after the Securities and Exchange Commission deregulated brokerage commission rates. While most brokerages saw deregulation as an opportunity to raise commission rates, Schwab ran in the other direction and lowered them, a move that made investing more affordable. Pomerantz notes that her father stressed that when you do the right thing for the customer, profits are apt to follow.

Profits and expansion did follow, but initially Pomerantz wasn't interesting in following her father into the business.

"I wanted to be independent of him and wanted to do my own thing," says Pomerantz, who received her bachelor's degree in political science at the University of California at Berkeley and then later a master's degree in business at George Washington University. "I was interested in shipping and did that for a couple years, but I was bored. I decided to go back into investing."

As a teenager, Pomerantz had received exposure to the industry while helping out with odd jobs at her father's company. When she decided to dip back into the investing world after her stint with the shipping industry, she initially considered joining Schwab competitor Merrill Lynch, which offered a training program. But after talking with an acquaintance in Schwab's human resources department, she changed those plans.

"She said 'That's ridiculous. Why go to a competitor?'" recalled Pomerantz. The woman explained that Schwab was offering a new training program aimed at college graduates.

The Return on a Father's Investment

Carrie SchwabAfter joining Schwab full time in 1983 as a broker, she asked her father for advice on how to best allocate her money in an individual retirement account (IRA), which was just then becoming a more widely used investment vehicle.

"He impressed upon me the importance of diversification and taught me about mutual funds achieving that diversification," says Pomerantz.

In addition to diversification via mutual funds, Schwab also shared this investment philosophy tidbit with his daughter -- that a gambler is someone who jumps in and out of a particular stock. Schwab believes more in a buy-and-hold approach, given that companies are inherently designed for growth.

"It's in the DNA of companies to grow," Pomerantz says.

Schwab has taken his buy-and-hold advice to heart, remaining the largest individual investor in Charles Schwab. But Pomerantz notes her father could also do well to follow his other advice about diversification.

Pomerantz, a certified financial planner, considers herself a more conservative investor than her father and primarily holds index funds. Schwab, meanwhile, characterizes himself as a calculated risk-taker, says Pomerantz. Back in the 1970s when Schwab was starting his brokerage business, the economy was tanking and her parents were undergoing a divorce.

The risk, however, paid off. Schwab, still chairman of the company he founded, has an estimated net worth of $4.7 billion and is ranked No. 223 on Forbes' list of the world's billionaires.

Schwab's wealth extends beyond material things to his five children. Pomerantz, the eldest of three kids from his marriage to his first wife, says her father's investment in her has paid off -- she's healthy, happy, and a high-achiever who, like him, believes she has a higher purpose in helping others.


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Warren Buffett | Donald Trump | Peter Lynch

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]]>Carrie Schwab-PomerantzCarrieSchwab-pomerantzCharles SchwabCharles Schwab CorporationCharlesSchwabCharlesSchwabCorporationdiscount brokerdiscount brokerageDiscountBrokerDiscountBrokeragefathers dayFathersDayindividual investorsIndividualInvestorsinvestment adviceInvestmentAdvicelessons from dadLessonsFromDadretail investingRetailInvestingDawn KawamotoFri, 17 Jun 2011 06:30:00 ESTDo You Know How Your Financial Adviser Gets Paid? Probably Nothttp://www.dailyfinance.com/2011/06/10/do-you-know-how-your-financial-adviser-gets-paid-probably-not/http://www.dailyfinance.com/2011/06/10/do-you-know-how-your-financial-adviser-gets-paid-probably-not/http://www.dailyfinance.com/2011/06/10/do-you-know-how-your-financial-adviser-gets-paid-probably-not/#commentsFiled under:

financial advisorIf you keep a detailed household budget, you know how useful it is to be able to break down your expenses. Knowing precisely how and how much you pay for specific things can be a key first step on the road to personal financial health. But surprisingly few people are able to pinpoint how their financial advisers are paid, according to a survey released this week by research firm Cerulli Associates.

Nearly two-thirds of survey respondents -- 64% -- either believed their financial adviser was providing their services free of charge when engaging in transactions on their behalf, or they weren't sure how their financial adviser was compensated.

It's not a trivial issue: How your financial adviser is compensated -- whether via commissions or advisory fees -- affects the rules they must adhere to, and the degree to which fiduciary standards require them to put the client's interest first.



Investment brokers and dealers, who tend to work on commission based on securities or products sold, are required to recommend products to their clients under a suitability standard, which is generally designed to align a person's net worth with the degree of riskiness they can tolerate in a particular investment. They are also required to disclose that the firm's interests may not always be in sync with those of the investors. Meanwhile, investment advisers, who are often paid a fee for their advice, are required to adhere to a fiduciary standard that mandates they put their client's interests ahead of their own or their firms.

The study, however, found that 63% of survey respondents who work with a broker-dealer or wirehouses believe their adviser is bound by those fiduciary requirements all the time. In reality, that requirement applies to those advisers only part of the time, notes the survey.

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"With a commission arrangement, there is always the temptation [for the broker dealer] to move product," says Scott Smith, Cerulli associate director. "I'm not saying this is what is happening with all commissioned advisers, but with a fee-based account, you don't have that worry because they get paid either way."

Broker-dealers and wirehouses say only 13% of their clients have a fiduciary-only, or strictly fee-based investment adviser, relationship with them. In roughly 82% of the cases, the relationship involves a combination of a commission-based brokerage and fee-based advisory service -- which means the fiduciary standard applies only part of the time and only to the work performed under the fee arrangement.

Commissions Vs. Fees: Investors Are Split

That may soon change. The Securities and Exchange Commission is weighing the implementation of new requirements designed to apply a uniform fiduciary standard to both broker-dealers and fee-based financial advisers, under the Dodd-Frank Wall Street Reform and Consumer Protection Act. And, according to a Bloomberg report, the SEC is expected to propose a new rule standard regarding uniform fiduciary duties during the second half of this year. That SEC proposal, the report notes, is expected to continue to allow broker-dealers the freedom to receive commissions.

The survey found that despite the potential conflict of interest that can arise with commission-based compensation, nearly half of investors prefer it over paying asset-based fees to financial advisers. Nearly half of survey respondents, 47%, say they prefer paying commissions, while 43% said they would opt for fee-only financial advice. A small slice of 8% of survey respondents said they would want a mix of commission and fee-based services.

"Paying fees in perpetuity seems less attractive, but investors don't consider the services that go into a fee-based arrangement," says Smith. "A commission account may cost them 5% up front, versus a 1% fee that they may pay every year or two, or three or five years. And if the investor is reallocating their account every couple years, they may actually break even compared with a commission account."

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]]>brokerages fiduciary standardsBrokeragesFiduciaryStandardsCerulli Associatescommission versus fee-based financial adviceDodd-Frank Actfee-based advisersfee-based asset managersFee-basedAdvisersFee-basedAssetManagersfiduciary standardsFiduciaryStandardsfinancial adviserFinancial advisorSECSecurities and Exchange CommissionDawn KawamotoFri, 10 Jun 2011 10:00:00 ESTTop Tips for Empty Nesters to Protect Their Nest Eggshttp://www.dailyfinance.com/2011/06/08/top-tips-for-empty-nesters-to-protect-their-nest-eggs/http://www.dailyfinance.com/2011/06/08/top-tips-for-empty-nesters-to-protect-their-nest-eggs/http://www.dailyfinance.com/2011/06/08/top-tips-for-empty-nesters-to-protect-their-nest-eggs/#commentsFiled under: , ,

Empty nestersEmpty nesters, it's time to recalibrate your grocery bill. The kids have flown the coop: Are you still buying enough food to feed an army?

If so, you're not alone: That's one of the top five hidden costs that can sneak up on parents of newly independent offspring. And with a new batch of members joining that group now that graduation season is upon us, we've asked some personal financial advisers for their best advice on protecting your nest egg after the children are grown and gone.

These tips may come in handy, given that far too few parents are stashing the money they used to spend on their offspring in their retirement accounts. A recent study by Boston College's Center for Retirement Research found per-person spending on non-durable consumables -- vacations, apparel, restaurants and food purchases, etc. -- actually rises sharply after the kids leave home.

"Instead of taking the money that they used to spend on their kids and using it toward their retirement, they're not changing their household spending and, in fact, are increasing their per-capita spending," says Norma Coe, an associate research director at the center and co-author of the study.

In 2001, households with children were spending $5,100 per person for non-durable goods. But by 2007, after the kids moved out, the figure rose to $6,500 per person, up 27.4%, according to the report.

The Kindest Cuts

"We used to spend about $170 a week when the kids were living at home and now its about $100 to $150 a week. Food prices have gone up since the kids left home, but we're also buying more things for ourselves like packaged and prepared meals," says Mary, a 55-year-old from West Des Moines, Iowa.

As a result, Mary is spending approximately $50 to $75 per person for she and her husband, compared with approximately $43 a week per person for her family of four when the children were at home.

Financial planners note in addition to paring down the grocery bill, there are a number of other important steps to take to ferret out hidden costs after the kids leave home and reallocate that disposable income towards retirement.
  • Cancel adult children from your car insurance policy. Many times kids are left on as drivers on their parents' insurance policy, keeping the premiums unnecessarily high, Tom Orecchio, a certified financial planner and principal with Modera Wealth Management in New Jersey, said in an email interview.
  • Remove your child from your cellular family plan, especially if they are no longer under a two-year contract with your carrier. Don't forget to also cancel or reduce services like texting or data plans. "People get these long phone bills and they don't want to deal with it, so they throw it in the drawer and don't review it," says Jon Govin, vice president with Summit Wealth Associates in Minnesota.
  • Cancel cable TV channels that only the kids used to watch. "It's probably time to cut out all of the extra channels -- goodbye, SpongeBob SquarePants," Govin joked.
  • Discontinue automatic pay plans for things like memberships or subscriptions, suggested Orecchio. Do you really expect to pick up where your son left off on the Call of Duty online video game?
  • Remove kids from your health insurance plan. Adult children living out of state could be subject to out-of-network costs, dramatically driving up the cost of the insurance, Meanwhile, Orecchio says: "Many times, kids have a plan through their work but the adjustment is not made on the family plan, keeping premiums high."
  • Close the Bank of Mom and Dad. This is one of the most important moves parents can make: Some continue to support their kids too much by failing to charge them for rent when they boomerang back home, or send envelopes with money as though they still were supporting them like they did in college, says Lisa Kirchenbauer, a certified financial planner with Omega Wealth Management.
A Good Time to Revisit Estate Planning, Too

Patty of Minnesota, a single mother of three grown children who sells software to the finance industry, says she knows about the Bank of Mom all too well.

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"They have their hand out and I've been handing it over. One of my children owes me upwards of $6,000 and I don't expect to see that again," Patty says. "In the past, I would easily spend a couple hundred dollars a month helping them out, plus loans. But since I have Jon [Govin] as my financial adviser, I now spend about $50 a month. My youngest daughter was going to borrow money from me to buy a car, and I was about to do it, but then I told her, 'My adviser doesn't advise me to go in that direction.'"

Although Patty's children left home three years ago, one daughter moved back in for a six-month stint in 2010, and last September, a 13-year-old grandson who had been living with her for a year moved out of her home.

Situations like this may give parents another reason to update their estate planning once the kids have grown up. Parents often forget to update their wills once their children are no longer minors, says Walt Mozdzer, a certified financial planner with Syverson Strege & Co. of West Des Moines, Iowa, in an email interview.

"A typical will might state that if neither parent survives, the money goes outright to the kids at age 25, or in trust until they reach age 25," Mozdzer says. "However, once the kids become young adults, parents watch their money maturity and often wind up extending the age at which full inheritance can occur." A typical change, he says, may feature graduated payouts of a third of the inheritance at age 25, half at 30 and the rest at 35.

The thinking behind a graduated payout system, Mozdzer says, is that if the young adult goes on a wild spending spree with the first distribution, "They have two more chances to get it right."

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]]>boomerang childrenBoomerangChildrenbudgetcollege gradsCollegeGradsempty nestersgrocerieshousehold expensesHouseholdExpensesnest eggNestEggpersonal financeplanning for retirementPlanningForRetirementreducing household billsReducingHouseholdBillsretirementretirement planningRetirementPlanningDawn KawamotoWed, 08 Jun 2011 11:00:00 ESTApple WWDC: Neither iCloud Nor Jobs Will Send Stock Skywardhttp://www.dailyfinance.com/2011/06/06/apple-wwdc-neither-icloud-nor-jobs-will-send-stock-skyw/http://www.dailyfinance.com/2011/06/06/apple-wwdc-neither-icloud-nor-jobs-will-send-stock-skyw/http://www.dailyfinance.com/2011/06/06/apple-wwdc-neither-icloud-nor-jobs-will-send-stock-skyw/#commentsFiled under: ,

Apple WWDC Preview: iCloud Steve Jobs Steve Jobs received a standing ovation at Apple's annual Worldwide Developers Conference Monday as Apple unveiled its iCloud hosted computing service. But despite Jobs' anticipated participation at the Apple (AAPL) event, his second this year since taking a medical leave six months ago, investors should not expect a huge upswing in the company's stock, says Brian Marshall, a Gleacher & Co. analyst.

In part, that's because the iCloud service and Jobs' attendance at the conference is already baked into the share price. The company announced Jobs' expected appearance at WWDC and teased the iCloud announcement last Tuesday, which gave Apple's shares a slight 3% rise to $347.83 immediately afterward.

Apple stock

But Apple wasn't able to hold onto that slight gain as the week progressed, although it did manage to fare better than the broader markets.

Apple stock and broader markets

"It is positive Steve will be in attendance and hopefully his appearance is healthy on a relative basis," said Marshall, in an email interview. "Regarding iCloud, we need to learn more but at the end of the day, it will not move the needle from a financial perspective anytime soon but should enable iOS to gain share."

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Reportedly, iCloud will allow customers to store their data, such as iTunes music and movies, in the cloud, and access it from anywhere using their Apple devices. Apple, meanwhile, is reportedly in talks with four major recording studios to participate in the iCloud service.

Despite the buzz over the potential deals with the recording studios, as well as the possibility of a subscription-based model for iCloud, Apple's stock is not expected to soar as a result of today's event. Ironically, Wall Street and companies tend to favor dependable, on-going sources of revenue that come with subscription-based models that can enhance one-off sales of hardware.

"Regarding today's event, I don't expect much material action in the stock (announcements already expected). However, I do believe expectations are low and the stock is set to rise materially in the [second half of this year]," says Marshall. That's when an iPhone 4 upgrade is due, he notes. But Marshal anticipates better results from the first half of 2012, when the widely anticipated iPhone 5 should be released, designed to run on carriers' next generation Long-Term Evolution (LTE) networks.

That upgrade may help juice Apple's shares. Considering the blowout earnings Apple has been dishing out, its year-to-date stock performance has been lackluster.



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]]>Applecloud computingiCloudiPhone 4iPhone 5Iphone5Long-Term EvolutionLTEMedical leavesmartphoneSteve JobsWordwide Developers ConferenceWordwideDevelopersConferenceWWDCDawn KawamotoMon, 06 Jun 2011 13:00:00 ESTNew College Grads Value Health Insurance More Than Parents May Realizehttp://www.dailyfinance.com/2011/06/01/new-college-grads-value-health-insurance-more-than-parents-may-r/http://www.dailyfinance.com/2011/06/01/new-college-grads-value-health-insurance-more-than-parents-may-r/http://www.dailyfinance.com/2011/06/01/new-college-grads-value-health-insurance-more-than-parents-may-r/#commentsFiled under: , ,

What New College Grads Really Want? Health InsuranceParents, take heed: Those wild and crazy recent college grads of yours may not be as crazy as you think. Turns out, they don't really want to do 200-foot bungee jumps if they don't have health insurance coverage.

Nearly 40% of parents say they aren't willing to keep their adult children on their health insurance plans until age 26, according to a recent eHealthInsurance (EHTH) survey, despite health care reforms that went into effect late last year allowing them to do so. And of the 1,000 parents, full-time college students and recent college graduates surveyed, 43% of parents said they'd only be willing to continue health insurance coverage on their adult children under age 26 if they could do it without additional costs.

Parents may be surprised to find this attitude may increase their chances of having their college grad boomerang back home after the commencement ceremony. For starters, 74% of college grads surveyed say its better to live at home for the first year after college, if it's a choice between having health insurance or living on their own without it.

And nearly half of college grads surveyed, 49%, say its more important to take a job they don't like, if it means receiving health insurance or a retirement account. That's a bit higher than the percentage of parents (46%) who held the same view.

A whopping 93% of college grads surveyed said they would be willing to make such sacrifices as giving up a weekly evening night out to restaurants or movies, or their daily trip to the coffee shop, if it allowed them to afford health insurance.

'One Less Thing to Worry About'

Emily Vancise, 22, of Temple City, Calif., fits the profile. She said she and her friends care about health insurance. The Earlham College graduate, who earned a bachelor's degree in human development in May, says she and her friends discussed the new health care law when it was enacted in the fall.

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"Everyone I know is already on their parents' health insurance, but we talked about how relieved we were that we were on their insurance," says Vancise.

In the fall, Vancise will be joining a nonprofit organization as an intern, working with intercity youth in Los Angeles area schools. She'll receive basic health care during her internship, but after her stint is done, she'll have the option to rejoin her parents' health insurance plan.

"It's just one less thing to worry about," Vancise says.

Under the old law, a number of states only mandated health insurers cover children up to age 19, unless the adult child was a full-time college student, in which case coverage continued up to age 24 or 25. The new law allows parents to carry their adult children on their health insurance plans until age 26, whether or not they attend college. Some states, however, already had longer time horizons in place prior to the new law, such as New Jersey which goes up to age 29, says insurance broker Patrick Burns, who operates Burns Employee Benefits in Oakland, Calif.

"Prior to the new law, some parents would even go as far as putting their kids in different training programs or have them take a few classes here and there so they could continue to still provide coverage," Burns says. "But with the new law last fall, we had a pretty big rush in October of parents adding kids onto their plans."

Currently, 31% of college grads are covered by a health insurance policy paid for by their parents - either their parents' plan, or their own individual plan, according to the survey.

college grad health insurance survey

Alternative Options for Insurance

Burns, as well as an eHeathInsurance spokesman, noted there are times when it makes financial sense to cover an adult child and other times when it doesn't.

"Parents who have kids who have moved back home and have no work should definitely add them to their health plan," says Burns.

Parents whose recent college grads are living in areas that are still within their health care provider network should also consider adding their adult children back onto their plan, especially if it's through an employer's group health insurance family plan that doesn't require an additional cost to add family members, Burns says.

But if parents work for a small employer that requires additional costs for family members, it may make better sense to seek out an individual plan. Burns noted that while the benefits of an employer plan may be more extensive, it often costs more than a scaled-down individual plan.

"Young people don't want to pay much for a health plan. Most are looking for something that pays for three or four office visits a year, since they are relatively young and healthy, but has catastrophic coverage with a high deductible," Burns says.

Individual health insurance premiums for 19- to 26-year-olds ran approximately $113 per month in February of last year, according to a survey of plans purchased through eHealthInsurance.

Showing a Surprising Level of Responsibility

Parents whose adult children are living out of state may find the costs to pay out-of-network prices too expensive, so that would be another reason for the college grad to move to an individual plan, says Nate Purpura, an eHealthInsurance spokesman.

Another option college grads may want to consider is short-term health insurance. This can serve as a bridge between graduation day and a job already set to begin within a year with an employer who offers insurance, says Purpura. If a college grad does not have a job guarantee within a year, they are better off riding on their parents plan or seeking an individual plan. he added.

"With the economy where it is and job prospects hard for grads, the statistics from our survey bear it out they are looking for something that will give them stability," Purpura says, noting he was surprised by some things the survey revealed, such as young peoples' willingness to move back home if left with no job or health insurance.

"I was shocked by some of the results. When I was in college, I wanted to pursue my dreams and would do anything not to have to move back home. I'm impressed with how this group of grads are responsible."

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]]>college grad health insurancecollege gradsCollegeGradHealthInsurancehealth care reformhealth insurancehealth insurance for college gradsHealthInsuranceHealthInsuranceForCollegeGradsparentspersonal financeDawn KawamotoWed, 01 Jun 2011 06:30:00 ESTForeclosure Prices Fall Again: How Your State Stacks Uphttp://www.dailyfinance.com/2011/05/27/foreclosure-prices-fall-again-how-your-state-stacks-up/http://www.dailyfinance.com/2011/05/27/foreclosure-prices-fall-again-how-your-state-stacks-up/http://www.dailyfinance.com/2011/05/27/foreclosure-prices-fall-again-how-your-state-stacks-up/#commentsFiled under: ,

Bargain hunters looking to snap up foreclosed homes found prices dipped again in the first quarter, with Ohio and Illinois offering the steepest discounts, according to figures released earlier this week by RealtyTrac. But if you're getting ready to you whip out your checkbook, you may want to wait even longer.

During the first quarter, homes foreclosed by banks or in various stages of foreclosure accounted for 28% of all residential sales in the U.S. That's slightly up from 27% in the previous quarter, slightly down from 29% a year ago.

"At the first quarter foreclosure sales pace, it would take exactly three years to clear the current inventory of 1.9 million properties already on the banks' books, or in foreclosure," says James Saccacio, RealtyTrac CEO, in a statement.

Foreclosures tend to dampen the value of neighboring homes, which in part explains the 3% decline in value that hit U.S. homes in the first quarter, according to the Zillow Home Value Index. And the folks at Zillow recently revised their forecast of when U.S. homes would likely see their falling values bottom out, moving the bar from later this year to 2012 -- at the earliest.

The price of a home in some stage of foreclosure is getting cheaper, according to RealtyTrac. During the first quarter, the average sales price was $168,321 -- down 1.89% from the previous quarter and a decline of 1.46% compared with a year ago.

And when comparing the sales price of foreclosed homes to homes that were not in foreclosure, the discount widened a tad during the first quarter, compared with a year ago. The discount grew to nearly 27% in the first quarter, compared with a 26% a year ago.

But in Ohio and Illinois, the average discount was a whopping 41% in the first quarter, higher than last year by 1 and 3 percentage points, respectively.

Other states with fire-sale discounts in the low to high 30% range include: California, Delaware, Georgia, New York, Oklahoma, Pennsylvania, Tennessee, Virginia and Wisconsin.

An Improvement from Recession Numbers

"While foreclosure sales continue to account for an unusually high percentage of all residential home sales, sales volume is well off the peak we saw in the first quarter of 2009, when nearly 350,000 foreclosure properties were sold to third parties," Saccacio said.

During the first quarter, 158,434 homes in various stages of foreclosure or bank-owned (REO) homes were sold to third parties, down 16% from the previous quarter and a drop of 36% from a year ago.

Nevada was the hardest hit. As in previous quarters, a majority of the homes sold in the Silver State (53%) were going through the foreclosure process or already been foreclosed on, according to RealtyTrac. But the numbers were slightly better than in previous quarters. Foreclosure sales accounted for 54% of the transactions in the fourth quarter and 59% a year ago.

California and Arizona were not far behind. Of all the residential transactions handled in both states during the first quarter, foreclosure-related sales accounted for 45% of the transactions in both California and Arizona.

Scammers Converge on California

But it's California that's attracting a horde of foreclosure scam artists, according to a report released Thursday by the Homeownership Preservation Foundation, an independent national nonprofit advisory organization.

California homeowners represented 22% of the calls to HPF's hotline, where folks can report cases where they believe they've been approached or were a victim of a foreclosure rescue scam. Florida came in a far distant second, with only 7% of the hotline calls, followed by Texas and New York which each had 5% of the calls.

"Although California was among the states most hard hit by the housing crisis, the reported foreclosure rescue scam activity seems disproportionately higher than we would have expected," says Colleen Hernandez, HPF's CEO, in a statement. "It's also surprising that the scam activity is so widely dispersed [throughout the state] rather than concentrated in areas or regions with the highest foreclosure rates."

Among cities attracting foreclosure rescue scam artists, Miami ranked No. 1, followed by Los Angeles, Las Vegas, Houston and Chicago.

Homeowners who find themselves in a financial bind should take note that the Federal Trade Commission in February began prohibiting companies and individuals from charging upfront fees to negotiate mortgage reduction plans on behalf of the homeowner. Despite that new FTC rule, HPF warns companies and so-called mortgage rescue experts continue to charge upfront fees that average $2,589 a pop - often without delivering any relief or doing any work.

Here's a state-by-state look at RealtyTrac's foreclosure rates:foreclosure sales nationwide

  • The number of foreclosure sales ( # of FC Sales)
  • Percentage change from the fourth quarter (% from Q4 10)
  • Percentage change from a year ago (% from Q1 10)
  • Foreclosures as a percent of all sales ( Pct. of All Sales)
  • Average foreclosure sales price (Avg FC Sales Price)
  • Average foreclosure discount percentage (Avg FC Discount%)
  • Average foreclosure discount percentage for bank-owned homes (Avg REO Discount%)
  • Average percentage discount percentage of pre-foreclosure homes (Avg Pre-FC Discount%)

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]]>average foreclosure pricesAverageForeclosurePricesbank foreclosurersBankForeclosurersdefaultforeclosed homesforeclosure of homesforeclosure rateForeclosureOfHomesForeclosureRateforeclosureshomes in defaultHomesInDefaultRateOfForeclosuresstates with high foreclosure ratesstates with largest foreclosurestroubled real estateTroubledRealEstateDawn KawamotoFri, 27 May 2011 06:30:00 ESTYahoo's Analyst Day Leaves Many Questions Hanginghttp://www.dailyfinance.com/2011/05/25/yahoos-analyst-day-leaves-many-questions-hanging/http://www.dailyfinance.com/2011/05/25/yahoos-analyst-day-leaves-many-questions-hanging/http://www.dailyfinance.com/2011/05/25/yahoos-analyst-day-leaves-many-questions-hanging/#commentsFiled under: , , , ,

Yahoo's analyst day Wednesday addressed the steps the struggling Internet pioneer is taking to reposition the ship and revive its under-performing stock, but on the subject of a controversial transaction involving one of its major Asian investments, its executives left a number of questions unanswered.

Yahoo's (YHOO) webcast, which is scheduled to run from 11 a.m. to 5 p.m., kicked off with its brazenly blunt and embattled CEO Carol Bartz taking the stage with founder and board member Jerry Yang (left) and Chief Financial Officer Tim Morse (right) to address the Alipay-Alibaba Group transaction before diving into the agenda.

Bartz, who was brought in two and a half years ago to turn around the struggling company, is seeking to woo investors who are increasingly loosing patience as the company's revenue growth, without its partners' contributions, have deteriorated and its stock price has sputtered along. The company has held three analyst days in the past 18 months to tout its message of better days ahead, whereas most large corporations typically hold one, or perhaps two, a year.

Wall Street is particularly interested in how Yahoo plans to extract value out of its assets in Asia, which account for more than half of its value. Bartz and crew have been under fire recently for getting blindsided when one of their major Asian investments, Alibaba Group, transferred ownership of its Alipay online payment company to a company operated by Alibaba's CEO Jack Ma, notes Deutsche Bank analyst Jeetil Patel, in a recent research note.

Despite analysts' questions over how Yahoo could have been "surprised" by the transaction -- and concerns that Yahoo should have known from the get-go, given that it has a board seat on Alibaba -- Bartz and Yang continued to say that the issue is in the past, and that the two companies, along with a third Alibaba investor, Softbank, have agreed not to discuss the past nor details of the current negotiations around the Alipay transaction.

What Bartz and Yang did say regarding the matter was that the Chinese government is in the process of licensing online payment systems, and that Yahoo, as well as Alibaba Group and Softbank, wanted to ensure that Alipay would get its license and be among the first round of companies to receive one. In order to increase its chances of being in that early group, they said, the thinking was to put Alipay's ownership under a business that was owned 100% by Chinese nationals. Alipay is still awaiting its license.

Looking for a Coherent -- and Profitable -- Asia Strategy

Alipay, along with online auction site Taobao.com, which relies on Alipay to process its transactions, are part of the Alibaba Group. Yahoo has been waiting for the day when Alibaba Group takes Taobao and Alipay public, which could dramatically enhance the value of its investment in them.
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Yahoo investors, meanwhile, have wondering when it would finally start seeing some profit from its Alibaba investment. As a result, some analysts questioned whether a repeat of the Alipay fiasco would later occur with Taobao, but Yang referred back to the principles that drove the Alipay transaction in the first place, and sidestepped the issue of whether steps have been taken to prevent another surprise down the road.

Yahoo and the other two companies are currently negotiating with Alipay to ensure they get a fair value for the transaction and Bartz noted all parties are "committed to reaching an agreement."

Alipay's contribution to Taobao, similar to that of PayPal to eBay, is a value that will be retained by Taobao, said Morse, noting that all parties involved are in agreement on that. But where it's downright murky is how they'll determine what value to place on Alipay's non-Taobao transactions, or how much should that be worth going forward, he added.

Yahoo, as well as investors, don't want to incorrectly assess Alipay's value, or what Yahoo should receive for it.

10 Questions Investors Need Answered

Yahoo investors will also be keen to hear why its search alliance with Microsoft's (MSFT) hasn't delivered as planned, and about the company's strategy for mobile, social networking and video, says Mark Mahaney, a Citigroup analyst, in a recent research note.

Mahaney offered a handy "top 10" tips sheet for investors listening into the analyst day webcast on the questions they will likely want answered:
  • Can you provide more details around the Alipay restructuring?
  • Why did Display Advertising growth underperform the broader Interactive Advertising Bureau (IAB) data?
  • What are the issues facing the search alliance with Microsoft?
  • how much operating margin expansion can this management team deliver?
  • How does Yahoo manage the rising competitive influence of social media companies?
  • What are Yahoo's social, mobile and video strategies?
  • What's Yahoo's mergers and acquisition strategy?
  • How is Yahoo performing internationally?
  • What are Yahoo's plan for its balance sheet?
  • Is the company done with investing in its core infrastructure?
Mahaney, as well as Patel, have a "hold" on Yahoo's stock. Both are waiting for the company to transform from a "show-me company" into one that is delivering revenue growth and results.

Over the past year, Yahoo's stock has underperformed the Nasdaq and lagged behind rival Google (GOOG).

yahoo stock chart

"Valuation remains intriguing, but we're still waiting for convincing Top-Line Turnaround Story Proof" Mahaney notes in his report. "[Operating expense] discipline is clearly on display [advertising]. Asia assets liquidation catalyst is now unclear given the Alipay restructuring. Also, the [Microsoft] Search transition is not going smoothly. YHOO's Display segment is growing, tho underperforming IAB benchmark, and competition is mounting. We believe YHOO shares have upwards bias, but we don't have real conviction."

Patel says he's sticking with his "hold" recommendation for now because Yahoo's ability to profit from its China assets appears increasingly at risk.

Said Patel prior to the analyst day, "We remain on the sidelines due to lack of growth on the core business and limited visibility into Asia monetization."



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]]>Alibabaalipaycarol bartzchina internet stockscontent companyContentCompanydisplay advertisingDisplayAdvertisinginternet searchInternetSearchinvestor questionsInvestorQuestionsJerry Yangmicrosoft yahooonline searchOnlineSearchpaid advertisingPaidAdvertisingSoftbankTaobaoYahoo analyst dayYahoo investorsYahoo outlookYahoo shareholdersYahooInvestorsYahooShareholdersDawn KawamotoWed, 25 May 2011 15:40:00 ESTCan Russian Search Giant Yandex Find Profits to Justify Its Hot IPO?http://www.dailyfinance.com/2011/05/25/yandex-ipo-search-for-success-may-lead-investors-astray/http://www.dailyfinance.com/2011/05/25/yandex-ipo-search-for-success-may-lead-investors-astray/http://www.dailyfinance.com/2011/05/25/yandex-ipo-search-for-success-may-lead-investors-astray/#commentsFiled under: , , ,

Can Russian Search Giant Yandex Find Profits to Justify Its Hot IPO? Russian search engine Yandex (YNDX) saw its IPO soar more than 55% on its first day of trading Tuesday, putting it among the top four opening-day gainers this year. But while this Russian beauty managed to attract the attention of investors with its ability to maintain market dominance over Google (GOOG) in its native land, analysts are cautioning investors to temper their enthusiasm.

Yandex, which priced its IPO at $25 a share and raised $1.3 billion in capital, commands 65% of the search market share in Russia -- three times more than Google, notes Rick Summer, an analyst with Morningstar. And in the global search arena, Yandex holds its own, ranking sixth worldwide, according to comScore.

But although the Russian search market is expected to expand by 15% to 25% over the next five years as advertising migrates online from print publications, Yandex faces weakness in display advertising -- a segment of the online advertising market that Summer believes will become even more competitive going forward.

"While Yandex has been able to dominate text-based search [advertising] with approximately 80% market share, we believe that display advertising will become increasingly important to advertisers. We are concerned the company will not keep pace with the competition in that segment of the market," says Summer, in a research note. "Ultimately, Yandex will have to be successful in much more than paid search for the IPO to represent an attractive buying opportunity."

And when comparing it with Google, Summer added that Yandex's growth in its local market is expected to be substantially smaller than the U.S.-based search giant experienced after its IPO. Google's revenues grew 45% annually over the five-year stretch going into 2009.

The Pros and Cons of Dominating Russia

Summer further noted that investors should be wary if Yandex looks outside the borders of the former Soviet Union for growth. Analysts have noted that Yandex has been able to maintain its lead over Google in its local markets because its search algorithms are finely tuned to the Russian language, which gives it more accurate, useful results. Expanding its business outside of the Russian-speaking zone would negate that advantage.

Others analysts, noting how the Russian government often treats high-profile companies, are concerned that problems may flare up between Yandex and Moscow. Stephanie Chang, an analyst with IPO research firm Renaissance Capital, noted some investors may be concerned that the Russian government might demand that Yandex disclose some of its customers' information, as it reportedly has done with its PayPal-like online payments site, Yandex Money.

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Despite these concerns, Chang was pleased with the strength of the company's IPO, and says it's trading in the range she expected for it. Yandex priced its IPO at $25 a share, after raising its pricing range to $24 to $25 a share from $20 to $22 a share. It closed its first trading day at $38.84 a share.

"I'm not surprised to see it performed well, since it is the dominant search player in Russia," she said.

Chang resists the urge to compare Yandex's launch with LinkedIn's hot IPO. The business-focused social networking firm saw its share price surge by more than 100% from its target of $45 a share to close at $94.25 after its first trading day. But while they're both online players, LinkedIn (LNKD) operates in different countries, and with a much different business model.

And when comparing Yandex's IPO against those of other search titans like Google, which priced its IPO at $85 a share in a Dutch auction in 2004 and closed up 18% on its first trading day, or Chinese search giant Baidu (BIDU) which priced at $27 a share in 2005 and soared a whopping 354% on its first trading day, Chang says the comparison is difficult to make because the market conditions are much different now than they were back then.

"It's a completely different market now," says Chang.



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]]>Baidudisplay advertisingDisplayAdvertisingGoogleinitial public offeringInternet IPOsInternet stocksInternetIposInternetStocksLinkedInonline advertisingpaid advertisingPaidAdvertisingRussian search engineRussianSearchEnginesearch enginesSearchEnginesYandexYandexIpoDawn KawamotoWed, 25 May 2011 15:12:00 EST