DailyFinance.comhttp://www.dailyfinance.comDailyFinance.comhttp://o.aolcdn.com/os/df/2013/img/2-dailyfinance_logo_m.pngDailyFinance.comhttp://www.dailyfinance.comen-usCopyright 2013 Weblogs, Inc. The contents of this feed are available for non-commercial use only.Blogsmith http://www.blogsmith.com/What Are Benchmarks?http://www.dailyfinance.com/2013/04/25/benchmarks-definition/http://www.dailyfinance.com/2013/04/25/benchmarks-definition/http://www.dailyfinance.com/2013/04/25/benchmarks-definition/#commentsFiled under: , , , , ,

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April is Financial Literacy Month, and our goal is to help you raise your money IQ. In this series, we'll tackle key economic concepts -- ones that affect your everyday finances and investments -- to help you make smarter choices with every dollar decision you face.

Today's term: benchmarks.

You probably think of a benchmark as simply a baseline for comparison, something you can measure performance or judge quality against -- and if so, you're right. But if you're like many people, you don't apply benchmarking sufficiently in your financial and nonfinancial life, and you may suffer for that.

In Business and Investing

There are many forms of benchmarking, especially in the business world. If you're developing a new electronic device, you'll likely benchmark it against existing similar products, as you aim to meet or exceed their capabilities. Computer-related companies, for example, measure their products' or systems' effectiveness against industry benchmarks or standout performers. In the auto industry, Volkswagen (VLKAY) has developed a new modular car-building methodology, and both Ford (F) and Toyota (TM) are already using it as a benchmark against which to measure themselves.

In the investing arena, benchmarks are also critical. You may have noticed, for example, when reviewing documents related to mutual funds that you own, that the fund companies will report their performance and will compare it to a benchmark. A stock fund, for instance, might show how it has outperformed (or underperformed) the S&P 500. A bond fund might compare its performance to a bond index.
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Many of us might glance at those comparisons and then move on, or perhaps we'll just ignore them completely. That's a mistake.

Consider, for example, that within the world of mutual funds, it's hard to find lower fees than those for some broad-market index funds, such as S&P 500 index funds. The Vanguard 500 Index Fund (VFINX), for example, charges just 0.17 percent annually. In contrast, many stock mutual funds, especially those actively managed by pros instead of those that track relatively stable indexes, charge more than 1 percent, and sometimes much more.

That's not necessarily bad -- if the managed funds are delivering much stronger results. Unfortunately, that's usually not the case. The historical trend is that most managed funds underperform simple index funds.

Thus, index funds serve a critical role as benchmarks: If your investments are not beating their benchmarks, then it may be time to move your money elsewhere -- perhaps into an investment that tracks that benchmark.

Correct Use of Benchmarks

There are some common mistakes people make when using benchmarks to judge the performance of their investments.

One is taking a short-term view. Over a few months or a year or two, a fund might do unusually well or poorly. So you have to look at the big picture and measure performance with an eye on the long-term.

Be sure to use the right benchmark, too. If you're invested in a small-cap mutual fund, for example, and you're comparing its results with the S&P 500, that's an apples-and-oranges proposition, since the S&P 500 is made up of bigger companies that generally can't grow as rapidly as successful small ones.

Check out the average annual returns for the S&P 500 and the small-cap-focused Russell 2000 index:
3 years 5 years 10 years
S&P 500 11.3% 4.4% 7.8%
Russell 2000 13.5% 8.2% 11.5%
Data: Morningstar.com, Russell.com.

Also, be sure to review the performance of your whole portfolio regularly, and to compare apples to apples. For example, if your portfolio is 50 percent stocks and 50 percent bonds, you shouldn't be comparing its overall performance to the S&P 500, as that's 100 percent stock-based.

In Your Life

Benchmarks can involve other parts of your life, too. If you're buying a home, for example, you'd do well to compare it with the rest of the neighborhood, to make sure it's not the best or worst house on the block, as those won't always offer the best value.

But trying to live up to the benchmarks of celebrity lives or even our seemingly well-off neighbors can lead you and your finances astray. If you're living beyond your means by trying to keep with the Joneses, and you're accumulating a lot of credit card debt, you're in deep danger. And, don't forget, those folks you're trying to compete with may be hiding financial troubles themselves.

Learning about some simple economic concepts can make you a better financial and nonfinancial thinker and decision maker.

Motley Fool contributor Selena Maranjian owns shares of Ford. The Motley Fool recommends Ford. The Motley Fool owns shares of Ford. Try any of our newsletter services free for 30 days.

More money terms:
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]]>Basic Economicsbenchmarkingbenchmarksfinancial literacyfinancial termsInvestingmoney terms to knowSelena MaranjianThu, 25 Apr 2013 10:00:00 ESTWhat Is Risk and Return?http://www.dailyfinance.com/2013/04/24/what-is-risk-and-return/http://www.dailyfinance.com/2013/04/24/what-is-risk-and-return/http://www.dailyfinance.com/2013/04/24/what-is-risk-and-return/#commentsFiled under: , , , , , , , ,

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April is Financial Literacy Month, and our goal is to help you raise your money IQ. In this series, we'll tackle key economic concepts -- ones that affect your everyday finances and investments -- to help you make smarter choices with every dollar decision you face.

Today's concept: risk and return.

When it comes to financial matters, we all know what risk is -- the possibility of losing your hard-earned cash. And most of us understand that a return is what you make on an investment. What many people don't understand, though, is the relationship between the two.

Trade-offs

The relationship between risk and return is often represented by a trade-off. In general, the more risk you take on, the greater your possible return. Think of lottery tickets, for example. They involve a very high risk (of losing your money) and the possibility of an extremely high reward (the giant check with lots of zeroes). Or penny stocks: They're also very risky and yet seem full of amazing potential.

At the other end of the spectrum are options such as a savings account at your bank, or buying government bonds. They're quite low-risk, but you're not going to make a mint on them, either -- at least not these days, with interest rates so low.

Your personal risk tolerance can affect how much risk you take on, but sometimes a lack of information can get in the way and influence you, too.

Getting the Facts

Let's review the examples above.

Ironically, lotteries are presented as low-risk, high-return propositions. But they're really more like very high-risk, very low-return ones. Sure, all you have to do is shell out a few bucks for a ticket that might pay you a multimillion-dollar jackpot. But you're really much, much, much more likely to just lose all of the cost of the ticket. With the Powerball lottery, the odds of winning the jackpot are 1 in 175,223,510. Flip that around and you'll see that your odds of losing are 175,223,509 in 175,223,510 -- or, about 99.9999994 percent. And while you might win a lesser prize, overall, in the long run of buying tickets, you'll likely collect only about 60 cents or so for every dollar you spend.

Penny stocks, those trading for less than $5 or so per share, seem much more sensible than lottery tickets because they're tied to companies that are described as likely to grow in value. There's also excitement due to their low price: Being able to buy, say, 1,000 shares for just a few hundred dollars can make you feel rich. But penny stocks are often (though not always) tied to companies that have not proven themselves. Instead of track records of sales and profits, they tend to mainly offer the chance of riches, as they drill for oil or aim to cure cancer. They're also easily manipulated since there are relatively few shares of each issue. Thus, you stand a decent chance of doing worse investing in penny stocks than even with lottery tickets!

Less Risk, Lower Return

On what seems like the more sensible side of the spectrum are bank accounts and government bonds. Are they low-risk? Absolutely. But their returns are low, too.

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According to Bankrate.com, the average money market account has recently been yielding about 0.5 percent, and you can collect as much as 1.2 percent on a two-year CD. That might sound slightly good, but when you factor in inflation, which tends to average close to 3 percent annually, you'll see that you're actually losing purchasing power over time with such investments. So, while you know at the end of the CD term you'll have made 1.2 percent on your investment, you also must recognize that with the the apparently low-risk investment comes the apparently high risk that you won't keep up with inflation.

In your Life

Risk and return play a part in our nonfinancial lives, as well. Think of that lovely person you'd like to date, for example. Asking him or her out involves the risk of being turned down or embarrassed. But the possible return is significant, too, if you end up in a meaningful relationship.

The principle even applies at restaurants. Take a chance on a menu item you've never tried and can't pronounce instead of your safe and boring usual order. It's riskier, but you might discover a new favorite.

Find Balance

When it comes to your money and the financial decisions you make, the more informed you are, the more rationally you'll be able to assess risk and return.

In many cases, you'll want to aim for the middle of the spectrum, taking on a moderate level of risk in exchange for a moderate return. You can do that by spreading your money around -- for example, including a mix of stocks and bonds in your portfolio. It's via smart asset allocation that you'll make sure not to overexpose yourself to risk while getting the best reward possible.

Learning about some simple economic concepts can make you a better financial thinker and decision maker.

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]]>Basic Economicsfinancial literacyfinancial termsInvestingmoney terms to knowrisk and rewardSelena MaranjianWed, 24 Apr 2013 13:40:00 ESTWhat Is Cost-Benefit Analysis?http://www.dailyfinance.com/2013/04/19/cost-benefit-analysis-definition/http://www.dailyfinance.com/2013/04/19/cost-benefit-analysis-definition/http://www.dailyfinance.com/2013/04/19/cost-benefit-analysis-definition/#commentsFiled under: , , , ,

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April is Financial Literacy Month, and our goal is to help you raise your money IQ. In this series, we'll tackle key economic concepts -- ones that affect your everyday finances and investments -- to help you make smarter choices with every dollar decision you face.

Today's term: cost-benefit analysis.

Most of us are familiar with the term, and have a basic grasp of it. It refers to how a project or decision might be evaluated, comparing its costs with its benefits. In many cases, it's a like a quantified pros-and-cons list.

Applying cost-benefit analyses in the business world and your own personal finances can be very effective, helping decision makers avoid just going with their gut or with very rough calculations.

The Most Bang for the Buck in Business

In the business world, companies' managers might think in terms of costs and benefits if they have several possible actions they can take. For example, a cost-benefit analysis can help them determine whether to build another factory, buy a certain company, issue more stock, or expand their employee retirement benefits.

Economists apply cost-benefit analysis when they want to estimate the effect of various actions, such as government incentive programs to support the housing market, or subsidies for certain industries, or changes in tax rates, or spending on infrastructure.
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The analysis can take various forms, and can involve varying degrees of complexity and precision, everything from considering opportunity costs (i.e., what is given up by making a given choice) to applying probability estimates to outcomes, to calculating the net present value of various options (which involves translating future costs and benefits into current dollars).

Assessing the costs and benefits helps zero in on the action that offers the most bang for the buck. It's good to remember, though, that these analyses are not necessarily precise, as they often include estimates, especially for qualitative factors.

Cost-Benefit Analysis in Our Lives

When pondering big decisions (or even some small ones), using cost-benefit analysis can help you be a bit more rigorous in your decision making process and more confident in the final decision you make. It comes in handy in all sorts of situations, such as when you're:
  • Weighing different career or job options. In this case, you might factor in any costs associated with getting the required training, the amount you'll expect to earn, the degree of enjoyment you'll get, the location, the commute, the wardrobe, the hours, the employee benefits, and so on.
  • Deciding whether to rent or buy a home, and what kind of home, too. You might consider costs such as the down payment, mortgage, insurance, monthly rent, along with the cost of commuting from various spots, the satisfaction provided by each location and home type, the expected cost of repairs and upkeep over time, insurance and tax costs, and resale or equity values.
  • Deciding whether to attend a particular function. Think about how much enjoyment you'll get, or how you might be able to network, versus how comfortable you'll be and what you'll give up to attend, such as an alternative activity, or $40 for gas and parking.
  • Making financial decisions: Thinking in a detailed way about the big picture can help you in such choices as how much to contribute to a retirement account, when to start collecting Social Security, whether to buy an annuity or CDs, or perhaps even which stocks to buy.
It can be applied, too, when thinking about your cellphone contract or your cable bill or whether you should hire someone to fix a leaky faucet versus tackling the job yourself. Even if you can't quantify all the factors involved in a decision, you might still include them on a list to help you come up with a final decision.

Learning about some simple economic concepts can make you a better financial thinker and decision maker.

Gallery: Financial Terms You Need to Know

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]]>Basic Economicscost-benefit analysisfinancial literacyfinancial termsmoney terms to knowSelena MaranjianFri, 19 Apr 2013 05:00:00 ESTWhat Is Inflation?http://www.dailyfinance.com/2013/04/17/inflation-definition/http://www.dailyfinance.com/2013/04/17/inflation-definition/http://www.dailyfinance.com/2013/04/17/inflation-definition/#commentsFiled under: ,

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April is Financial Literacy Month, and our goal is to help you raise your money IQ. In this series, we'll tackle key economic concepts -- ones that affect your everyday finances and investments -- to help you make smarter choices with every dollar decision you face.

Today's term: inflation.

You probably think you've got the term down pat: Inflation means prices rising over time. Well, yes, that's pretty much right. But there's much more to inflation, and it's much more relevant to your life than you might think. Inflation can go in the opposite direction, for example, and it can spiral out of control.

First, a quick review.

Inflation is about purchasing power. It's a way to measure the changing purchasing power of our currency by tracking changes in the prices of things we buy. The national banks of various countries try to keep inflation under control through their actions and policies (such as via the interest rates they set); many aim for an annual inflation rate of about 2 percent to 3 percent.

If inflation is at our long-term national average rate of about 3 percent, you can expect that something that costs you $100 today will cost you $103 next year, and $116 in five years. Plenty of online inflation calculators can give you a peek into the past, too. For example, per the U.S. Department of Labor's calculator, it would cost you $62 in 1993 dollars to buy what costs you $100 today.

It's not as simple as it seems

While the concept of inflation seems simple, as in the examples above, it's actually a bit more complicated. For one thing, prices of various goods and services tend to grow -- and sometimes shrink -- at significantly different rates.

Think of college tuition, room and board, for example. Between the 2000-2001 and 2010-2011 school years, that cost has grown by an annual average of 5.5 percent overall, at both private and public schools combined. Meanwhile, the average selling price of a new vehicle rose just 1.7 percent, on average, annually between 2001 and 2011, and the price of gas averaged 8.9 percent annual growth during that same period.

Changes can be quite different in different time periods, for different items, and even in different regions -- think of the housing market, for example.

Inflation is calculated in different ways, too. Its most basic form, as calculated by the Bureau of Labor Statistics, is the Consumer Price Index or CPI, which reflects the changes in prices of a basket of goods and services, such as food, gasoline, newspapers, postage, lodging, furniture, dental services, socks, cigarettes, pet food and more. There's also the "Core CPI," which excludes energy and food prices, as they can be especially volatile.

Another key thing to understand is that each of us will experience a different level of inflation over time, depending on what we spend our money on. If you live in a city and have no car, for example, you've been far less affected by the surging price of gas. If you're feeding a family of 8, you're much more affected by the price of food.

Going to extremes

Finally, know that there are related phenomena such as deflation, when the prices of items fall over time, and hyperinflation, when inflation is at nosebleed levels.

Deflation may sound good, and it does offer an increase in purchasing power and an incentive to save. But it can also hurt the economy, with people putting off purchases as they wait for even lower prices. (Conversely, high inflation can lead people to purchase more, before prices rise further.)

Then there's hyperinflation, which can result when economies get out of control, such as in Germany between 1922 and 1923, when average prices doubled every 28 hours. In July of 1946 in Hungary, inflation averaged 207 percent per day. More recently, in late 2008, Zimbabwe experienced inflation of about 98 percent daily, and ended up issuing a $100 trillion bill.

Learning about simple economic concepts like inflation can make you a better financial thinker and decision maker.

More money terms:
Net worth
Cash flow
Compound interest
See all Money Terms to Know

Gallery: Test Your Financial Fluency

Pop Quiz:You've saved $25,000 for a down payment on a house. You plan to buy within a year. Which of the following is the safest place toD. Bank savings account is correct.What's the fastest and easiest way to boost your paycheck?C. Adjust your tax withholding is correct.

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]]>consumer price indexfinancial literacyfinancial termsinflationinterest ratesmoney terms to knowSelena MaranjianWed, 17 Apr 2013 05:00:00 ESTWhat is Supply and Demand?http://www.dailyfinance.com/2013/04/16/supply-and-demand-definition/http://www.dailyfinance.com/2013/04/16/supply-and-demand-definition/http://www.dailyfinance.com/2013/04/16/supply-and-demand-definition/#commentsFiled under: ,

Supply and demand
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April is Financial Literacy Month, and our goal is to help you raise your money IQ. In this series, we'll tackle key economic concepts -- ones that affect your everyday finances and investments -- to help you make smarter choices with every dollar decision you face.

Today's concept: supply and demand.

Most folks are familiar with the concept of supply and demand, but most of us also don't give it much thought, which is a mistake. That's because it applies to much more than just business.

First, to review. In basic economics, the law of supply and demand influences prices. If supply of an item is abundant, that will pressure the price downward, and vice versa. In practice, imagine that you're the only one in town selling shoehorns. Because consumers don't have any other places to buy the product, that gives you some pricing power. But if other stores in town start carrying shoehorns, you may have to drop your price to keep customers coming.

In the Stock Market

Similar principles are at work in the stock market. Once stocks are launched into the market via an initial public offering, or IPO, their prices aren't set by the companies behind the stocks, or even the brokerages processing the trading. Instead, they reflect the shares' supply and demand.

As an example, think of retailer J.C. Penney (JCP). Its stock closed at $15.87 per share on April 8. But on April 9, it closed around $13.92, down more than 12 percent in a single day.

What happened? Well, the struggling company's CEO, Ron Johnson, was dismissed, replaced by a former CEO, Mike Ullman. The fact that the stock price sank reflects a lack of confidence in the company -- or a lack of demand for its shares. If investors were more optimistic about the company and Ullman's leadership potential, demand for its shares would have risen, driving the price up.

Meanwhile, shares of Yahoo (YHOO) have surged more than 50 percent since Marissa Mayer took the reins of the company. That increase reflects confidence in her leadership and the company's future -- via an increased demand for shares.

In Our Lives

Shortages and surpluses affect other areas of our lives, too, such as careers. There's a good case to be made for pursuing the career that most excites you, but you would also do well to factor in the supply and demand for that occupation and others.

There are many lists of jobs that are expected to be in great demand in the coming years. The folks at Randstad, for example, a major global staffing company, have listed "13 Hot Jobs for 2013." They include registered nurses, physicians (specializing in urgent care and anti-aging medicine), drug safety specialists, mortgage underwriters, loan documentation specialists, accountants, manufacturing production specialists, industrial engineers, electrical/hardware engineers, customer service representatives, executive assistants, software developers, and IT professionals.
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When certain occupations experience demand significantly greater than supply, salaries and benefits tend to rise as companies try to attract and retain employees.

You see supply and demand in play elsewhere, too. It affects everything from the prices ticket scalpers can command to the price of oil. Let's say the world's oil producers maximized their production. Supply would rise, and the price of oil would likely fall. Since that doesn't sound good to oil producers, they have been known to manage their production. At the supermarket, the prices of many foods are tied to their supply, which is affected by droughts and other factors.

Learning about some simple economic concepts like these can make you a better financial thinker and decision maker.

Motley Fool contributor Selena Maranjian has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

Gallery: Test Your Financial Fluency

Pop Quiz:You've saved $25,000 for a down payment on a house. You plan to buy within a year. Which of the following is the safest place toD. Bank savings account is correct.What's the fastest and easiest way to boost your paycheck?C. Adjust your tax withholding is correct.



More money terms:
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Sunk cost
Net worth

See all money terms to know

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]]>Basic Economicsfinancial literacyfinancial termsmoney terms to knowsupply and demandSelena MaranjianTue, 16 Apr 2013 05:00:00 ESTWhat Is Compound Interest?http://www.dailyfinance.com/2013/04/15/compound-interest-definition/http://www.dailyfinance.com/2013/04/15/compound-interest-definition/http://www.dailyfinance.com/2013/04/15/compound-interest-definition/#commentsFiled under: ,

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April is Financial Literacy Month, and our goal is to help you raise your money IQ. In this series, we'll tackle key economic concepts -- ones that affect your everyday finances and investments -- to help you make smarter choices with every dollar decision you face.

Today's term: compound interest.

The concept of interest is familiar to most of us. We know that with many bank accounts, for example, we earn some interest -- though it's rather paltry these days.

But there are several kinds of interest that are calculated and represented quite differently than simple interest. Compound interest is -- pardon the pun -- one of the more interesting ones.

First, let's start with simple interest. Here's how it works: Let's say that you've parked $1,000 in an account somewhere, earning 10 percent per year in simple interest. In year one, you'll collect $100, bringing your total to $1,100. Great, eh? In year two, you get... $100. That brings your total to $1,200. In year three, you're at $1,300. You're probably catching on to the idea by now. You keep earning that interest rate off your initial principal.

Small numbers become big numbers

Enter compound interest, which is far more exciting.

Start again with $1,000 and factor in an annual 10 percent compound interest rate. In year one, you get $100, for a total of $1,100. In year two, though, you collect that 10 percent not only on your original principal amount, but also on the interest you've already earned - on the whole $1,100. So you earn $110, instead of the $100 that simple interest gave you, bringing your total to $1,210. In year three, you collect $121 instead of $100, for a total of $1,331 instead of $1,300. In year four, you earn $133, bringing your total to $1,464 instead of the $1,400 you'd have earning simple interest.

The key thing to observe in this example is that not only is your overall total investment growing from year to year, but the amount by which it's growing is also increasing.

Now check out how powerful that 10 percent compound interest rate is over time, because when you combine compounding with years, the magic really happens:
$1,000 grows at 10% annually over... And becomes...
10 years $2,594
20 years $6,728
30 years $17,449
40 years $45,259
50 years $117,391

Compound interest in your life

That kind of growth may seem magical, but it's not magic -- it's just math.

You don't need to wait around for an every-so-many-years environment of steep interest rates, either. If you invest in stocks or some other appreciating asset, your investment can compound over time even if it does not deliver the same return every single year. In that case, you'll be looking at an average rate of growth over time.

Over many decades, for example, the U.S. stock market has grown by an annual average of about 10 percent. Some periods it may average as little as 5 percent, and in others as much as 12 percent, but over long periods, it has generally grown.

There are other examples of compounding having a positive long-term effect. Knowledge, for example, builds on itself. The more you learn, the more you can learn. Once you understand some basics of biology, or French, or politics, you will be able to learn and understand more.

Of course there is a darker side of compounding, where ill effects compound. Epidemics are one example: Each infected person can infect more people, who can then infect even more people. Another dark side is the way your credit card debt can spiral out of control with hefty interest charges applied to an ever-growing balance due.

Focus on the positive, though, and put compounding to work for you in the best ways. Let it contribute to a comfortable retirement, for example. For that, you just need a solid expected growth rate and enough time.

Learning about some simple economic concepts can make you a better financial thinker and decision maker.

More money terms:
Cash flow
Asset allocation
Opportunity cost

See all money terms to know.

Gallery: Test Your Financial Fluency

Pop Quiz:You've saved $25,000 for a down payment on a house. You plan to buy within a year. Which of the following is the safest place toD. Bank savings account is correct.What's the fastest and easiest way to boost your paycheck?C. Adjust your tax withholding is correct.

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]]>compound interestfinancial literacyfinancial termsmoney terms to knowSelena MaranjianMon, 15 Apr 2013 07:00:00 ESTWhat Is Asset Allocation?http://www.dailyfinance.com/2013/04/12/asset-allocation-definition/http://www.dailyfinance.com/2013/04/12/asset-allocation-definition/http://www.dailyfinance.com/2013/04/12/asset-allocation-definition/#commentsFiled under: , , ,

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April is Financial Literacy Month, and our goal is to help you raise your money IQ. In this series, we'll tackle key economic concepts -- ones that affect your everyday finances and investments -- to help you make smarter choices with every dollar decision you face.

Today's term: asset allocation.

In the most basic sense, asset allocation is simply how one's assets are divided among different asset classes, such as cash, stocks, bonds, real estate, and so on -- even insurance investments, commodities, collectibles, and other categories count.

But the term also refers to an investment strategy -- one that can reduce risk through diversification.

Clearly, having all your money in any one asset class can be risky. In 2008, the S&P 500 plunged 37 percent. If you'd held all your assets in an S&P 500 index fund, your net worth would have taken a big hit that year. (It's worth noting, though, that long-term investors who held on regained those losses.) That was also a time of falling real estate values, and had you been a big property owner, especially in some particularly hard-hit regions, you'd have suffered a big blow, with our national housing market only recently starting to pick up again.

Given the harrowing ride we've been on in recent years, you might think that holding cash is the best way to protect your assets from outside forces. Think again.

Cash's buying power tends to shrink every year, due to inflation. Given the inflation we've experienced between just 2000 and 2012, something that cost you $100 in 2000 would cost you about $132 today. Dollars stashed in a mattress are shrinking dollars.

Even dollars kept in savings accounts these days are problematic, given our low interest rates. If you're earning even 1 percent in interest, but the inflation rate is around the long-term average rate of roughly 3 percent, then you're losing ground by 2 percent annually. Bonds can offer a guaranteed return, but they too sport low interest rates today, and bond prices can fall over time, too.

Allocation in Action

There is no one-size-fits-all perfect asset allocation model. What's good for you might be less so for someone else, due to the current size of your nest egg, your risk tolerance, your years until retirement, and other considerations.

One thing that everyone should do, though, is rebalance their portfolio, to maintain the desired allocation. That's because over time, an allocation will likely change.

Imagine this simple example: If your assets are split equally between stocks and bonds, and over three years your bonds hold steady, but your stocks double in value, your allocation will no longer be 50-50. It will be 33-67, with stocks making up much more of the overall portfolio.

Some advisers may suggest rebalancing frequently, after minor changes. You needn't be that fastidious about it, as frequent selling and buying can generate unwelcome commission fees. But do keep an eye on your holdings and when any category has become meaningfully larger or smaller than you want, rebalance.

One Way to Allocate Your Assets

Tending to rebalancing is easier said than done, which is why target-date funds have grown more popular. These mutual funds are built and managed around a particular retirement date, and therefore rebalance their holdings over time, investing more conservatively as the "target" date approaches.

Keep in mind, though, that there's a lot of variation among these funds. Even with similar names, funds from different companies can give you dramatically different performance. Remember, too, to keep any target-date fund holdings in perspective by factoring in your assets that are held outside of the fund. You might think that you're all set, with half of your nest egg in a target-date fund. But if the other half of it is all in stocks -- or real estate or cash -- then your overall portfolio allocation is far from what the target-date fund is targeting.

However you do it, be sure to pay attention to your asset allocation. The stocks, funds, bonds, and investment properties you pick do determine your ultimate results, but so does your allocation.

Want to learn more? Take our course on investment strategies in the DailyFinance Learning Center.

Gallery: Test Your Financial Fluency

Pop Quiz:You've saved $25,000 for a down payment on a house. You plan to buy within a year. Which of the following is the safest place toD. Bank savings account is correct.What's the fastest and easiest way to boost your paycheck?C. Adjust your tax withholding is correct.



More money terms:
Net worth
Sunk cost
Opportunity cost

See all money terms to know

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]]>asset allocationbalanced portfoliobondsfinancial literacyfinancial termsInvestinginvestment strategyreal estatestocksSelena MaranjianFri, 12 Apr 2013 05:00:00 ESTWhat Is Net Worth?http://www.dailyfinance.com/2013/04/05/net-worth-definition/http://www.dailyfinance.com/2013/04/05/net-worth-definition/http://www.dailyfinance.com/2013/04/05/net-worth-definition/#commentsFiled under: ,

Net Worth definition
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April is Financial Literacy Month, and our goal is to help you raise your money IQ. In this series, we'll tackle key economic concepts -- ones that affect your everyday finances and investments -- to help you make smarter choices with every dollar decision you face.

Today's term: net worth.

In a nutshell, net worth is what you get when you subtract liabilities from assets -- what you owe from what you own. Like many economic and financial terms, net worth can apply in a variety of situations.

If you're evaluating a company for your portfolio,you might glance at its balance sheet to get a handle on its net worth. Balance sheets break out assets (such as cash, inventory, and receivables) and liabilities (such as debt and accounts payable). Subtracting the latter from the former gives you net worth, which is also referred to in this context as shareholders' equity or book value.

Here's an example: As of the end of 2012, IBM's (IBM) assets totaled $119 billion, and its liabilities totaled $100 billion. Thus, its net worth, or shareholders' equity, was $19 billion.

Net Worth in Our Lives

Each of us has an individual net worth, too, and it's arrived at in similar fashion.

First, grab a sheet of paper and list all your assets. These would include the contents of your bank accounts, your investments, the equity you have in your home, your retirement accounts, the current value of your car(s), the value of your jewelry, the contents of your wallet or purse, and so on. Be thorough -- your sizable board game collection might be worth several thousand dollars, for example.

Next, list all your liabilities, or debts. These would include what you owe on your mortgage or car loan, your credit card debt, any school loans outstanding, and any other debt, such as a home equity loan.

Finally, subtract the liabilities from the assets. What's left is your net worth.

Ideally, your net worth is positive and will grow over time. If your net worth is in negative territory, that's not great, but by saving aggressively, paying down your debts, and being careful in your spending you can reverse the situation over time.

How Does Your Net Worth Compare?

For the record, a typical net worth for an American family these days is between $100,000 and $200,000.

The aggregate net worth of Americans has risen recently and is finally back to pre-recession levels. But much of those gains have gone to wealthy Americans and can be traced to the stock market's recovery.

Middle-class Americans have about two-thirds of their net worth represented by their home equity, and home values have not recovered as much as the stock market at this point. The Dow Jones Industrial Average has more than doubled since its bottom about four years ago, while the national average home price is still some 30 percent below its peak.

Other Reasons You Should Know Your Net Worth

Knowing your net worth has practical value beyond just highlighting what you own and what you owe.

It can also give you an idea of how well you're doing at saving for retirement. (Don't let seemingly large sums fool you -- even a million dollars at retirement may not be enough for some people's needs.)

Net worth also matters when we engage in estate planning, as our estate is essentially our net worth. Deciding how to organize and manage your assets to minimize taxes and make things easy for your loved ones depends to some degree on the size of your estate, or net worth.

So go ahead and calculate your net worth and see where you stand.

Motley Fool contributor Selena Maranjian has no position in any stocks mentioned. The Motley Fool owns shares of International Business Machines. Try any of our newsletter services free for 30 days.

More money terms:
Asset allocation
Compound interest
Opportunity cost

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]]>Financial Literacyfinancial termsnet worthSelena MaranjianFri, 05 Apr 2013 05:00:00 ESTWhat is Cash Flow?http://www.dailyfinance.com/2013/04/04/cash-flow-definition/http://www.dailyfinance.com/2013/04/04/cash-flow-definition/http://www.dailyfinance.com/2013/04/04/cash-flow-definition/#commentsFiled under:

cash flow
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April is Financial Literacy Month and our goal is to help you raise your money IQ. In this series, we'll tackle key economic concepts -- ones that affect your everyday finances and investments -- to help you make smarter choices with every dollar decision you face. Stick with us, and you'll end April financially smarter than you were when the month began.

Here's a vital concept to understand: cash flow.

The meaning of the term varies depending on context. In the accounting world, for example, it refers to the change in a company's cash level over a specific period of time. If a company's cash level rises during that period, it's exhibiting positive cash flow. If it shrinks, negative cash flow.

When investors study companies to see if they might be good fits for their portfolios, they may assess "free cash flow." That reflects a company's cash flow from its operations after it pays all its expenses. Free cash flow can be viewed as the lifeblood of a company.

Negative free cash flow means a company is burning through its cash -- a la J.C. Penney (JCP), Sears Holdings (SHLD), and Radio Shack (RSH), all of which have recently been sporting negative free cash flow.

While negative free cash flow can be viewed as a red flag in the investing world, it's not necessarily a portent of doom. It all depends on what the company is spending its money on. Consider Netflix (NFLX), for example. Its free cash flow recently turned negative, but it has been investing heavily in its business, enlarging its catalog, and creating original programming, such as the well-received "House of Cards."

Cash flow in our lives
The cash flow concept isn't just useful for companies. It can also be applied to personal finances and can give you a better handle on how you're doing money-wise.

To assess your personal cash flow, grab your bank account statement and jot down the cash you had on hand at the end of the past few months or quarters. (If you have multiple bank accounts and/or coffee cans stuffed with money, include those as well.) A glance at those sums will reflect whether you're building cash value or shedding it.

Big or growing cash totals mean you have more opportunities to deploy those sums -- perhaps socking some in an emergency fund, or adding to an IRA, or paying down debt.

Your cash flow doesn't represent your total financial health, though. That's a topic for another day. After all, you might have a modest amount of cash in the bank but no debt, a robust stock portfolio, solid retirement savings, and a big chunk of equity in your house.

Tracking your cash flow, however, can be a big eye opener.

Corral your cash and see which way it flows
To make your assessment of your cash flow most meaningful, dig deeper into the details to see where your money is coming from and where it's going.

For many people, the main (or only) input is salary. There are myriad ways that money flows out of our accounts, though.

If you charge most of your expenses, you'll be able to research your spending habits relatively easily via your credit card statements. If you often pay by cash, consider carrying a notebook for a few months and jotting down each payment you make.

By looking closely, you might spot some ways that cash is trickling away needlessly, such as via a gym membership you never use, or a telephone landline that's redundant given your cellphone's role in your life.

If this is beginning to sound like budgeting, you're not imagining things. Budgeting is a great way to get a firm grip on your spending, and to help ensure that you're taking care of your needs and wants without living beyond your means.

Becoming a better financial thinker and decision maker doesn't have to be hard. Simply learning about some simple economic concepts like cash flow is a great way to start.

More money terms to know:
Sunk cost
Opportunity cost
Compound interest

See all money terms to know

Motley Fool contributor Selena Maranjian owns shares of Netflix. The Motley Fool recommends Netflix. The Motley Fool owns shares of Netflix and RadioShack.

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]]>cash flowfinancial termsfinancialliteracyfree cash flowSelena MaranjianThu, 04 Apr 2013 05:00:00 ESTWhat Is Sunk Cost?http://www.dailyfinance.com/2013/04/03/sunk-cost-definition/http://www.dailyfinance.com/2013/04/03/sunk-cost-definition/http://www.dailyfinance.com/2013/04/03/sunk-cost-definition/#commentsFiled under:

sunk Cost - investing terms
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There are some economic terms most of us know and understand, such as supply and demand. And there are other terms we will probably never even run across, like implicit logrolling and a Kondratieff cycle.

In between, though, are all the terms you need to know to help with everyday financial decision making. To mark Financial Literacy Month, throughout April we'll be unpacking key economic concepts -- the ones that affect your everyday finances and investments -- to help you make the smartest choice with every dollar decision you face.

Today's term: sunk cost.

As the name suggests, sunk cost refers to money that has already been invested in something, money that can't be recovered. Too often, we factor that expense into our financial decision-making when we shouldn't.

Let's say you've spent $40 on a nonrefundable ticket to the theater for tomorrow night. And you're suddenly invited to play board games at a friend's house that same evening. You might think that you should go to the theater -- after all, you spent that $40 -- even though what you'd rather do is hang out with your friends and play games. The $40 is a sunk cost. It's spent, whether you go see the play or not, and the money doesn't know the difference. So you should do whatever you would rather do.

Companies need to keep sunk costs in mind when they plan projects and execute strategies. It's easy to think that once they have spent money buying another company or perhaps building a factory or coal mine, they should stick with it, even if it's not turning out to be as productive as initially expected. If they disregard the sunk costs, though, they can make more sensible decisions about where to spend their next dollars -- ideally on their most promising options.

Sunk costs come into play frequently when we invest in the stock market. Maybe you spent $5,000 on shares of Scruffy's Chicken Shack, and those shares are now worth $3,000. Frustrated that you've lost $2,000 you hang on, even though you're no longer very confident in Scruffy's future, waiting and hoping that the shares will rally and you'll make your money back.

That may seem reasonable, but it's not. View the $2,000 lost as a sunk cost and you'll see that you still have $3,000. You can leave it invested in that same stock, but you can also move it into another investment, ideally one in which you have much more confidence. You are, after all, more likely to earn $2,000 or more in your most promising ideas than in Scrufy's mediocre ones.

Related term: opportunity cost.

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]]>Financial Literacyfinancial termssunk costSelena MaranjianWed, 03 Apr 2013 05:00:00 ESTWhat is Opportunity Cost?http://www.dailyfinance.com/2013/04/01/financial-literacy-money-terms-opportunity-cost/http://www.dailyfinance.com/2013/04/01/financial-literacy-money-terms-opportunity-cost/http://www.dailyfinance.com/2013/04/01/financial-literacy-money-terms-opportunity-cost/#commentsFiled under:

opportunity costs
Alamy
There are some economic terms most of us know and understand, such as supply and demand. And there are other terms we will probably never even run across, like implicit logrolling and a Kondratieff cycle.

In between, though, are all the terms you need to know to help with everyday financial decision making. To mark Financial Literacy Month, throughout April we'll be unpacking key economic concepts -- the ones that affect your everyday finances and investments -- to help you make the smartest choice with every dollar decision you face.

Today's term: opportunity cost.

Simply put, it's what you give up in order to do something. Imagine, for example, that you dream of becoming an engineer or a chef. If you opt to become a chef, you give up the experience of being an engineer and all that goes with it. That's an opportunity cost of becoming a chef.

Opportunity cost is also often defined, more specifically, as the highest-value opportunity forgone. So let's say you could have become a brain surgeon, earning $250,000 per year, instead of a chef earning $50,000. In that scenario, your opportunity cost, salary-wise, is $200,000. (Of course, you should also consider factors such as your enjoyment of your chosen profession.)

Opportunity cost can help you think rationally about your personal finance and investing decisions, too. Imagine that you're thinking of buying a wide-screen TV for $1,000. It costs a grand, true enough. But there are opportunity costs as well. If you invested that $1,000 in the stock market, for example, and over the next 20 years it averaged a 10 percent growth rate, you'd end up with a bit more than $6,700. So that TV that costs $1,000 today will mean that you're giving up an alternative of $6,700 in 20 years.

The concept of opportunity costs applies to making investing choices, too. There are thousands of stocks in the market, and thousands of bonds and mutual funds. It's easy to become captivated by a certain stock or fund, but is it the best investment choice for your needs? Spend some time thinking about its opportunity cost -- the other stocks and funds you're passing up that might actually be more attractive.


More money terms:
Sunk costs
Cash flow
Net worth

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]]>Financial Literacy Monthfinancial termsmoney terms to knowopportunity costSelena MaranjianMon, 01 Apr 2013 05:00:00 ESTThe Top 10 Consumer Complaints of 2012http://www.dailyfinance.com/2013/03/26/top-10-consumer-complaints-2012/http://www.dailyfinance.com/2013/03/26/top-10-consumer-complaints-2012/http://www.dailyfinance.com/2013/03/26/top-10-consumer-complaints-2012/#commentsFiled under: , , , , ,

The top complaints in America
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If you're fed up with hearing people complain, imagine being the Consumer Sentinel Network. This online database for law enforcement compiled and categorized more than 2 million complaints in 2012 -- instances of fraud, scams, schemes, and violations consumers reported to everyone from the FTC to the Better Business Bureau to the U.S. Postal Inspection Service.

So which industries or groups of people cause us the most grief? Here are the CSN's findings for the top 10 complaint categories and the percentage of the total complaints that each represents:

1. Identity theft (18 percent)
2. Debt collection (10 percent)
3. Banks and lenders (6 percent)
4. Shop-at-home and catalog sales (6 percent)
5. Prizes, sweepstakes, and lotteries (5 percent)
6. Impostor scams (4 percent)
7. Internet services (4 percent)
8. Auto-related complaints (4 percent)
9. Telephone and mobile services (4 percent)
10. Credit cards (3 percent)

Stolen identities
It makes sense that identity theft tops the list. Detecting, uncovering and correcting the fallout from identity theft is a long, labyrinthine process. Sure, it's terrible if you lose, say, $500 or $1,000. But with identity theft, some people have not only lost a lot of money but have spent years trying to undo the damage done, encountering many frustrations along the way.

Most of us know to shred documents containing personal information before discarding them, and to be careful to whom we divulge personal information. It can be easy to imagine that identity theft won't happen to us. But according to the CSN, nearly one-fifth of all complaints -- a whopping 369,132 -- were about identity theft.

Military variations
The distribution of complaints was different among military personnel than other Americans. For example, while their top two complaints were the same as the overall results, their No. 6 complaint category was mortgage foreclosure relief and debt management, while it was just 15th for the overall nation.

Foreclosures and debt problems have been major issues for many service members. That's because they often receive orders to pick up and move to a new location and assignment, but with our economy struggling and home prices depressed, they can end up owing more than their homes are worth. Worse still, hundreds have had their homes illegally foreclosed upon by big banks -- JPMorgan Chase (JPM), Wells Fargo (WFC), Bank of America (BAC), and Citigroup (C) -- as has been reported by The New York Times. Military members should know that settlements have been struck with big banks to address these and other wrongs, and that entities such as the Consumer Financial Protection Bureau are looking out for their interests.

Fraud
This wonderful digital age has ushered in new ways for scammers to scam us. The most common method of contact for fraudsters was email, beating the telephone 38 percent versus 34 percent. The median reported loss of victims of fraudsters was $535.

The highest per-capita rate of fraud reports and other complaint types is found in Florida (followed by Georgia and Maryland). This makes sense, since Florida is home to many retirees, and the elderly are common targets of scammers.

The most common type of fraud, by far, involves government documents and benefits (at 46 percent of reported incidents of identity theft). These include the growing problems of tax fraud and wage-related fraud.

Minor complaints
Some complaint categories fall surprisingly low on the list. While many people, for example, may be wary of conducting transactions on online auction sites such as eBay (EBAY), complaints related to this realm accounted for only 1 percent of the total, and ranked 18th out of 30.

Investment-related problems were also less common -- ranking at 26, and making up less than 1 percent of total complaints. It may be that people have been learning to be wary of big, promised returns, get-rich-quick schemes, and other results that seem too good to be true.

While debt collection ranked second overall, credit cards appear in only 10th place -- a bit surprising given the many ways that the credit card industry is finding to shake more dollars out of our pockets.

Complaints have been growing in recent years, so stay alert and don't let yourself get hoodwinked or treated poorly.

Motley Fool contributor Selena Maranjian owns shares of JPMorgan Chase and eBay. The Motley Fool recommends eBay and Wells Fargo. The Motley Fool owns shares of Bank of America, Citigroup Inc , eBay, JPMorgan Chase, and Wells Fargo. Try any of our newsletter services free for 30 days.

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]]>consumer complaintsconsumer sentinel networkidentity thefttop consumer complaintsSelena MaranjianTue, 26 Mar 2013 05:00:00 ESTLooking for Your Tax Refund? So Are Scammershttp://www.dailyfinance.com/2013/03/23/tax-refund-scams-identity-theft/http://www.dailyfinance.com/2013/03/23/tax-refund-scams-identity-theft/http://www.dailyfinance.com/2013/03/23/tax-refund-scams-identity-theft/#commentsFiled under: , , , ,

Tax refund
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There aren't many enjoyable aspects to tax season, but for a lot of folks, at least there's a tax refund check to look forward to. The problem is -- you're not the only one excited about getting a refund.

There are some con artists out there who have been looking forward to your refund check just as much as you have. According to The Wall Street Journal, tax fraud is the third-biggest way that federal funds are stolen, after Medicare/Medicaid fraud and unemployment insurance fraud. There were 1.1 million cases of it in 2011, up more than 2,000 percent over 2008's 51,700.

The Better Business Bureau has outlined some of the top tax scams. Here are their top three, followed by another big danger.

Social Security number theft: When your Social Security number falls into unscrupulous hands, it can be used to file a tax return for you, and to then collect your refund. When this scam is perpetrated, many victims don't even know about it until they receive an unexpected mailing from the IRS.

Phishing for personal information: "Phishing" is a year-round danger, used in non-tax schemes, too. It involves legitimate-seeming emails, calls, texts, or other contacts with you that prey on your trust or fear. You're told you need to give some information, such as your Social Security number or some other personal data, and when you do, it's often used to steal your identity. These phishing communications can be quite tempting, suggesting that the IRS has discovered that you're owed some money, for example. Don't fall for them.

One helpful thing to remember is that the IRS typically only contacts taxpayers through the mail or by telephone, not text. If they do call, ask for the employee's badge number and a contact phone number you can use to call them back. You can also contact the IRS to make sure that the employee and the reason for calling you is legitimate.

Shady tax preparers: There's nothing wrong with seeking help with your taxes -- it actually makes sense, given the complexity of the tax code that's now made up of almost four million words. Just be careful which tax pro you hire. While most are legitimate, there are some that are crooked. (Others are merely less than competent -- here are six warning signs.) As the Better Business Bureau explains, the crooked ones may be "skimming a portion of refunds, charging inflated fees for return prep services and/or promising refunds that are too good to be true." Remember that filing false numbers is against the law and that as the one who signs the return, you are the one responsible for being truthful on it.

Don't be the scammer: Whether or not you employ a tax pro to help with your return, resist the urge to inflate numbers, omit information, file false forms, or otherwise be less than honest on your return. Doing so makes you the scammer, and the IRS is on the lookout.

As a recent MSN Money article noted, "Between October and December of last year, the IRS launched criminal investigations of nearly 1,300 people. About 85 percent of those cases ended with somebody in prison, with sentences averaging four years." Your little tweaking may not be sufficient for a criminal investigation, but it could trigger an audit, fines, and penalties.

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]]>identity theftincome taxincome tax fraudphishingtax preparerstax refundstax scamsSelena MaranjianSat, 23 Mar 2013 06:00:00 ESTTax Filing: Tips for Picking the Right Tax Preparer (Hint: It's Probably Not Uncle Ed)http://www.dailyfinance.com/2013/02/25/tax-filing-tips-picking-tax-preparer/http://www.dailyfinance.com/2013/02/25/tax-filing-tips-picking-tax-preparer/http://www.dailyfinance.com/2013/02/25/tax-filing-tips-picking-tax-preparer/#commentsFiled under: , , ,

Tax preparerSure, your Uncle Ed might be happy to prepare your tax return for you, but think twice before accepting his help. The price might be right, but he might cost you more than you know in the long run if he misses tax credits or deductions that you should have taken advantage of.

The tax code is incredibly dense and complicated and changes frequently, so it's often worth enlisting the help of a skilled pro. Just choose wisely.

Types of Preparers

There are several different kinds of folks who can prepare your return, besides well-meaning friends and relatives. Certified public accountants are an obvious choice, though not all of them deal with individuals' taxes. Enrolled agents are an excellent option, too. They're federally licensed pros who focus solely on taxes and are allowed to represent clients before the IRS. The National Association of Tax Professionals includes CPAs, enrolled agents, and other tax pros, and is another source of candidates.

Sponsored Links
You can gather candidates by asking friends or family for referrals. You'll also find preparers waiting for you through tax-preparation service companies such as H&R Block (HRB), Jackson Hewitt, and Liberty Tax Service. And the folks at AARP offer the AARP Foundation Tax-Aide program, offering free tax-return preparation, targeting those with low to moderate income and those age 60 or older in particular.

Military personnel have an extra option, the Volunteer Income Tax Assistance Program, or VITA, which offers free tax-prep assistance. Low-income non-military taxpayers may also be able to tap this program.

Ask the Right Questions

Once you have some candidates for your business, check them out before signing on with them. Ask for referrals, and for a (no-charge) interview, as well. Here are some questions to ask:
  • What's your experience, education, and familiarity with new tax laws? You need to be confident that the preparer is a savvy one.
  • How much will you be charging me? Get at least an estimate, as you don't want to end up unpleasantly surprised. Find out how the fee is calculated, and avoid any fee based on the size of your refund.
  • How soon will the work be completed?
  • Who exactly will be preparing my return? Are you speaking with the preparer, or will your work be handed off to someone else in the firm? This question can give you a sense of how important your business is to the preparer. If an underling will be preparing your return, what are his or her qualifications and training? You also want to know who you will speak to if you have problems or questions down the road.
  • Do you have continuing professional education requirements, and how much of that do you complete each year? Ideally, a candidate will be regularly keeping up with tax-law changes, and perhaps even exceeding requirements. This is especially important if your tax situation isn't routine.
  • How aggressive or conservative are you? Tax returns are not always simple matters. When an issue falls in a gray area, it's good to know how the preparer will treat it.
  • Will I be able to contact you throughout the year? Remember that tax issues and questions can come up at any time, such as if you change jobs or marital status or are dealing with a loved one's death.
  • What security provisions do you have? You want to see steps taken to protect your privacy and prevent your information from going where it doesn't belong.
  • If I'm audited, will you represent me before the IRS? The ideal response is yes. Some preparers outsource your work, though, and may not represent you. Others may require you to be present, as well, which is not ideal. Be sure you're OK with the answer to this question.
The IRS itself offers some additional questions to get answers to before signing up with any preparer.

Be wary of any candidate making seemingly lavish claims (such as promising you a surprisingly hefty refund) or pitching his services aggressively. Also, do not sign any blank forms, and make sure that the preparer includes his own tax identification number and signature on your return, as required on the form.

If you choose not to hire a pro to prepare your return and would rather do it yourself, consider using tax-prep software, such as Intuit's (INTU) TurboTax. Be smart about your tax preparation, and you can save a lot of money -- and headaches, as well.

Motley Fool contributor Selena Maranjian has no position in any stocks mentioned. The Motley Fool recommends Intuit. The Motley Fool owns shares of Intuit.



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]]>AARP Foundation Tax-Aide programCertified Public Accountantenrolled agentFiling taxesFinancefree online tax filingIntuitIRSIRS auditirs formsirs.govJackson Hewitt Tax Service Inctax deductionstax preparerTax refundTax ReturnsTaxesTurboTaxVITAVolunteer Income Tax Assistance ProgramSelena MaranjianMon, 25 Feb 2013 05:00:00 ESTWhen You've Passed On, Who Inherits Your Credit Card Debt?http://www.dailyfinance.com/2013/02/19/death-inherit-credit-card-debt/http://www.dailyfinance.com/2013/02/19/death-inherit-credit-card-debt/http://www.dailyfinance.com/2013/02/19/death-inherit-credit-card-debt/#commentsFiled under: , , , ,

Death grave cemeteryWhen we die, we leave all kinds of things behind, including our debts. And it's not always clear what exactly happens to those obligations.

Consider your credit card debt. According to Aaron Crowe at the Credit.com blog, your heirs are not likely to be stuck with it, though some parties might want you to believe otherwise.

It's not unheard of, for example, for a debt collection agency to contact the bereaved, seeking loan repayment. Thanks to the Fair Debt Collection Practices Act, there are many rules that those debt collectors must follow.

For example, anyone seeking to collect on the debt of a deceased person needs to address that person's estate, by contacting the executor or whoever is in charge of it. (If you believe a collector who has approached you is violating any rules, contact a lawyer.)

There are more recent regulations governing debt collection and the deceased that can also help. First, the Credit CARD Act of 2009 expects credit card issuers to inform an estate's executor quickly about any sums owed, and to not add fees and penalties while the matter is being settled. Then, in 2011, the Federal Trade Commission issued guidelines in 2011 aimed at reining in aggressive collection activity related to deceased debtors.

Who's Responsible?

Typically, the estate of a deceased person is responsible for his or her debt. If a debt has been held solely in the name of the deceased, it's paid off with assets in the estate, sometimes by selling property (such as a house or car) in order to generate the funds with which to do so. If the debt exceeds the assets, the estate notifies the card issuer that the estate doesn't have some or all of the money owed, and the sum is generally written off by lenders.

It's not always quite so simple, though. If the deceased was married, and a spouse was a joint owner of the account or co-signer on the debt, then the spouse is generally liable for that debt.

In community-property states, things get muddier, because debt taken on during a marriage can be considered community property, even if it was only in the name of the deceased. This is another situation where seeking the counsel of a lawyer is a good idea.

Being an authorized user on a credit card account doesn't mean you're liable for that debt if the cardholder dies, but it can still cause problems. Crowe tells of a New Jersey man whose credit rating was damaged when creditors reported unpaid debts to credit agencies that were related to his late mother's account, on which he'd been an authorized user. Simply using a card, whether you're authorized or not, can lead to collectors calling.

Keep in mind that even if you're sure you're not liable -- or are fairly certain you can make a good case for that -- it can be costly to be absolved, as lawyers and the legal process aren't free.

If You're an Heir

If a loved one dies and you expect to inherit some money, know that you won't be first in line. You'll receive your due only after creditors are paid, and even they come after categories such as taxes, mortgages, and funeral expenses.

Certified financial planner Jeffrey Field recommends that when a relation passes away, you cut up his or her credit cards and send them to their issuers, along with a notice of the death (including the date). Alert the three main credit reporting agencies as well -- Equifax, Experian, and TransUnion -- asking them to close their reports on the deceased. In addition, look into whether the deceased had insurance to cover credit card debt remaining after death. It's not always a smart coverage to buy (as it's best not to let credit card debt accumulate), but if it's there, it can be put to work.

The good news is that there's a good chance that a loved one dying with credit card debt won't hurt you much or at all, financially. Learn the rules, so that you don't have to deal with unnecessary headaches.


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]]>authorized userCredit Card ActCredit CARD Act of 2009credit card debtcredit reportcredit reporting agenciesCredit.comdeath of a spousedebt collectionEquifaxexecutorExperianFair Debt Collection Practices ActFair Debt Collections Practices ActFinancefinancial planningidentity theftJoint accountTransUnionwidowwidowerSelena MaranjianTue, 19 Feb 2013 05:00:00 ESTMatchmaker, Matchmaker, Make Me a Match ... With a Good Tax Preparerhttp://www.dailyfinance.com/2013/02/13/prosado-tax-preparer-matchmaking-service/http://www.dailyfinance.com/2013/02/13/prosado-tax-preparer-matchmaking-service/http://www.dailyfinance.com/2013/02/13/prosado-tax-preparer-matchmaking-service/#commentsFiled under: , , ,

Liberty TaxThere are matchmaking websites galore, offering to help you meet Mr. or Ms. Right. So why not a matchmaking site to help you meet the accountant of your dreams?

For all those lonely taxpayers out there, hoping to meet someone they can trust with that shoebox full of receipts and tax forms, Prosado.com is here. It's a new online service aiming to match taxpayers with tax preparers -- because asking your neighbor for a recommendation, or enlisting the services of Uncle Ralph, may not be the right answer for you.

You click in and, without divulging much personal information, you specify how complex your return is (in terms of the number of tax documents such as 1099 forms that you have). Then you wait for bids.

Tax preparers have paid a few hundred dollars to be able to participate on the site, and interested ones will name a price for you. (They can also see what other bids you've received, and can lower theirs -- a consumer-friendly feature.) You'll be able to see ratings of preparers who bid for your business, and to rate the preparer you end up using. If you accept a bid, you have a few days in which you can cancel.

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Don't dismiss the idea of using a tax preparer, even if you've been filing your own return for years. This year -- with all the last-minute changes to the tax code caused by the fiscal cliff deal -- may be the year you need to hire a professional.

A knowledgeable pro may be able to save you lots of money (and more than make up for his or her bill) by helping you take advantage of credits, deductions, or other strategies that you may have overlooked. The tax code is extremely complex, after all -- nearly 4 million words of regulations. And it changes frequently.

Other Places to Look for Help

Prosado is not your only option for finding a tax preparer. Tax-prep companies offer online directories of their preparers. Here are some handy websites: H&R Block, Jackson Hewitt, and Liberty Tax Service.

Professional organizations are ready to help, as well. Some certified public accountants prepare tax returns for individuals, and the American Institute of CPAs will help you locate one via its website. Enrolled agents are federally licensed pros who focus solely on taxes, and the National Association of Enrolled Agents has a locator service on its website, as well. The National Association of Tax Professionals includes CPAs, enrolled agents, and other tax pros, and is ready to direct you to some.

For those with low to moderate income, especially those age 60 or older, the folks at AARP offer the AARP Foundation Tax-Aide program, making available for free the services of tax-return-preparing volunteers.

Decision Considerations

So once you have a few candidates in mind for your business, how do you choose?

The folks at Prosado rightfully point out that selecting a tax preparer shouldn't be a matter of grabbing the lowest bid. Instead, you should weigh all the factors that matter to you, such as location (if want face-to-face contact), credentials, and years of experience. A low bid might entice, but there are other important factors to consider before you choose:
  • Look into the preparer's training and credentials. CPAs and enrolled agents, as well as tax attorneys, are generally the most up-to-date on current tax rules, as they're required to regularly attend continuing education sessions. Membership in professional organizations is also a promising sign.
  • Do aim for a good personality fit. And if you're looking to keep using the person's services, favor someone who's available year-round, as you may have tax questions or issues to consider during the year (such as if you're changing jobs and have a 401(k) account, or you're getting divorced).
  • Make sure you understand how much it will cost before you sign up, so that you're not unpleasantly surprised later.
  • Find out how quickly your return will be prepared.
  • Find out what happens if you end up audited later. Will the preparer represent you? (Ideally, they will go talk to the IRS in your place, instead of merely accompanying you.)
The Bottom Line

If you're going to get help doing your taxes this year, start looking soon. This isn't a relationship you want to rush into. After all, if the preparer isn't a good fit for you, or just isn't very skilled, you might end up paying far more in taxes than you have to.



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]]>AARP Foundation Tax-Aide programaccountantAmerican Institute of Certified Public AccountantsCPAEnrolled agentFiling taxesFinanceHR BlockJackson HewittJackson Hewitt Tax Service IncLiberty Tax ServiceProsadoProsado.comtax formstax preparationtax preparerSelena MaranjianWed, 13 Feb 2013 05:00:00 ESTGay Marriage Is Just Good Business: The Financial Argument for Equalityhttp://www.dailyfinance.com/2013/01/28/gay-marriage-good-business-LGBT-equality/http://www.dailyfinance.com/2013/01/28/gay-marriage-good-business-LGBT-equality/http://www.dailyfinance.com/2013/01/28/gay-marriage-good-business-LGBT-equality/#commentsFiled under: ,

Same-sex-marriageAdvocates for gay marriage have been achieving a lot of success across the nation lately, with November wins at the ballot box legalizing same-sex marriage in Maine, Maryland and Washington state. Feeding on that building momentum, Rhode Island, Illinois, Hawaii, Minnesota and Delaware are also now looking to recognize marriage equality for the LGBT community.

Arguments in favor of gay marriage are typically centered on justice. But there's a financial case to be made marriage equality for it, too.

Consider, for example, Illinois, where dozens of major business leaders have publicly declared support for gay marriage.

The public letter, signed by business leaders from Google (GOOG), Groupon (GRPN), Morningstar (MORN), Navistar International (NAV), Hyatt Hotels, Leo Burnett, Orbitz Worldwide (OWW), and Exelon (EXC), among others, stated that "to be competitive, a state must create an equitable, fair and respectful environment for all of its citizens. For this reason -- among others -- it is vitally important that Illinois lawmakers enact marriage equality soon."

The letter makes the case that promoting marriage equality helps businesses attract a broader range of employees, which, in turn, helps companies better connect with a diverse customer base. Also cited in the letter are numbers supporting the idea that legalizing gay marriage would promote economic development in a broader sense: "According to the UCLA School of Law's Williams Institute, allowing same-sex couples to marry would generate between $39 million and $72 million in revenues for Illinois businesses, creating $4.5 million to $8 million in new sales and lodging tax revenues over three years."

Taking Action in Other Ways

Some companies aren't waiting for laws to be passed to show their support of gay marriage in other ways.

J.C. Penney (JCP) and Macy's (M), for example, have featured same-sex couples in their ads, while other companies, such as General Mills (GIS), Nike (NKE), Microsoft (MSFT), Amazon.com (AMZN), and Starbucks (SBUX), have issued supportive statements or donated money to marriage equality advocacy groups.

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Some companies and organizations have been proactive, and others reactive, in their support. In Orlando, Fla., for example, the gay community designated a certain weekend each year as "Gay Days," and descended upon Disney parks and other local attractions en masse. The city only recently began recognizing and promoting the event, which is estimated to bring in more than $13 million.

That's peanuts, though, compared to the estimated total buying power of the LGBT community: close to $780 billion.

Companies are clearly catching on. Take a look at the Human Rights Campaign's Corporate Equality Index, which measures the nation's largest businesses on their equal employment opportunity policies, employee benefits, organizational LGBT competency, and their public commitment to equality and responsible corporate citizenship.

Only 13 companies earned top marks in its first survey in 2002. Last year 189 companies did. (Though it must be noted that the Human Rights Campaign's criteria for the index have changed somewhat over the years.)

Support is Growing

Widespread legalization of gay marriage increasingly seems inevitable in America, with support for it nationally and in Illinois growing rapidly.

Public opinion surveys reflect a growth in support. A recent study by the bipartisan Paul Simon Public Policy Institute reported a 10-percentage-point gain in support in Illinois to 44 percent in just the past two years (with an additional 32 percent favoring civil unions instead). A USA Today/Gallup poll taken in November shows national support at 53 percent, up from about 40 percent in 2009.

If America is moving toward universal marriage equality, then it makes sense that the last states to recognize it will be at a competitive disadvantage in many ways. And if ethical grounds aren't enough reason for some to support gay marriage, perhaps the financial grounds will be.


Motley Fool contributor Selena Maranjian, whom you can follow on Twitter, owns shares of Microsoft, Google, Amazon.com, and Starbucks. The Motley Fool recommends Amazon.com, Exelon, Google, Morningstar, Nike, and Starbucks. The Motley Fool owns shares of Amazon.com, Google, Microsoft, Nike, and Starbucks.


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]]>Amazon.comcivil unionsCorporate Equality IndexDelawareExelonFinanceGallupgaygay marriagegay marriage argumentsgay marriage illinoisgay rightsgaymarriageargumentsgaymarriageillinoisgayrightsGoogleGrouponHuman Rights CampaignHyatt Hotels CorpIllinoisJ. C. PenneyLeo BurnettLGBTLGBT communityMacy'smarriage equalityMarylandMicrosoftMorningstar IncNavistar InternationalNike Incnyse:navPublic OpinionRhode IslandStarbuckswhy support gay marriagewhysupportgaymarriageSelena MaranjianMon, 28 Jan 2013 11:05:00 EST"Your Call Is Sort Of Important to Us. Please Tweet or Text For Prompter Service."http://www.dailyfinance.com/2013/01/26/customer-service-on-hold-facebook-twitter-text/http://www.dailyfinance.com/2013/01/26/customer-service-on-hold-facebook-twitter-text/http://www.dailyfinance.com/2013/01/26/customer-service-on-hold-facebook-twitter-text/#commentsFiled under: ,

TwitterIt's no secret that no one likes waiting on hold for a customer service representative -- but it happens all the time. According to a recent survey of 500 consumers by ResearchNow for TalkTo, more than 85 percent of people say they are put on hold every time they call a business.

Half of them spend, on average, 10 to 20 minutes on hold per week, which amounts to 13 hours per year or about 43 days over a typical lifetime. And when they finally get someone on the phone, 48 percent of survey respondents say the people they talk to aren't helpful.

Fortunately, businesses today have more options than simply spending more money to hire more phone representatives to be available for customers. Facebook, Twitter and even texting are the new avenues companies are turning to for handling customer queries.

Tweet Your Troubles Away

Follow the Twitter feeds of many companies and you'll spot interactions with customers there. For example, click into @MaytagCare's Twitter feed, and you'll spot exchanges such as this:
  • @jan_kenny @MaytagCare - note to self -- dishwasher uses water, b smart, include protection for electrical parts to stay dry & not break 3 yr later
  • @MaytagCare @jan_kenny Sorry to hear about the concern. You're welcome to follow & [direct-message us your] name, address, phone # and the model&serial # s for us to review.
Here's an example from Sodastream International (SODA):

  • @momofbnl "@SodaStreamUSA: RT if you've registered your SodaStream at http://www.sodastreamusa.com for your free gift!" I did but have not got anything yet!!!
  • @SodaStreamUSA @momofbnl Don't worry Missy, it will be sent to you in the mail. It takes about 2 months to process and ship. :)
Notice, too, that via Twitter, many companies are able to be proactive -- surprising customers with responses.

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TalkTo addresses the problem of being put on eternal hold via an app that lets people text businesses. It's not such a crazy idea since, according to the ResearchNow survey more than 61 percent of 20-somethings send more than 50 texts each week, and 25 percent of 40-somethings send between 26 and 50.

However companies go about it, it's good business to minimize customer aggravation and maximize good feelings.

Motley Fool contributor Selena Maranjian (@SelenaMaranjian) has no position in any stocks mentioned. The Motley Fool recommends Facebook and SodaStream. The Motley Fool owns shares of Facebook and SodaStream.

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]]>customer servicecustomer service representativeFacebookon holdon hold hellSodastreamTalkToThe Motley FoolTwitterSelena MaranjianSat, 26 Jan 2013 06:00:00 ESTHow to Pick the Best Stocks: CEO Candor Predicts Performancehttp://www.dailyfinance.com/2013/01/16/pick-best-stocks-honest-ceo-candor/http://www.dailyfinance.com/2013/01/16/pick-best-stocks-honest-ceo-candor/http://www.dailyfinance.com/2013/01/16/pick-best-stocks-honest-ceo-candor/#commentsFiled under: , , ,

Alcoa CEO Candor SurveyProfit margins, revenue growth, and a litany of ratios are the traditional tools investors use to evaluate companies. But also inside those annual reports and quarterly findings is more subtle, less quantitative information that can be just as useful in evaluating a company's performance and prospects.

Letters to shareholders aren't just window dressing -- they reveal a lot about the management team's candor.

Candor may not seem like a factor that can make a material difference in a company's performance. But there are some interesting correlations revealed in the results of the annual Rittenhouse Rankings Corporate Culture and Candor Survey.

Candor Builds Credibility ... and ROI

"When leaders clearly communicate the company's principles and profit expectations to customers and investors, they build confidence in the company," writes Rittenhouse's founder, Laura Rittenhouse, in her book "Do Business With People You Can Trust." "When they walk their talk, they are more likely to extract better performance from their employees. These CEOs can draw on 'credibility currency' when times get tough."

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Based on the most recent Rittenhouse survey results, building a culture of up-front communication pays dividends for a company in several ways. The survey evaluates how frank the leaders of 100 leading companies are, and how well their stocks have performed. The results are impressive: The companies in the top quartile of the group saw their stock rise an average of 9.9 percent, while those in the bottom quartile experienced a drop of 5.7 percent.

This is the sixth consecutive year that the most candid companies have outperformed the least candid ones.

Adopting a policy of frank, honest communications can make a big difference in growth. The five companies with the greatest gains in rank (over year-earlier levels) had stock gains averaging 12.4 percent, vs. a 5.7-percent loss for the bottom companies and a gain in the S&P 500 of only 3.1 percent. The five big improvers are Home Depot (HD), Intel (INTC), Foot Locker (FL), Franklin Resources (BEN), and Citigroup (C).

Winners and Losers

Among the 100 large and midsize companies that Rittenhouse studied, here are the best and worst by rank:

The Top 5
1. Church & Dwight (CHD)
2. Alcoa (AA)
3. Southwest Airlines (LUV)
4. Google (GOOG)
5. Ford Motor (F)

The Bottom 5
96. Hewlett-Packard (HPQ)
97. CSX (CSX)
98. Cisco Systems (CSCO)
99. Bank of America (BAC)
100. AIG (AIG)

By way of example, let's look at two of those stocks: Alcoa and Hewlett-Packard.

Alcoa's stock lost ground over the past year, as it has over the past decade (though recently reported Q4 earnings exceeded analysts' expectations). CEO Klaus Kleinfeld, in his 2011 letter to shareholders, didn't try to sugar-coat. He led with bad news right in the first paragraph:

"Whenever someone tells me, 'I have good news and bad news,' I always ask for the bad news first. ... We are acutely aware of the dramatic impact that Alcoa's share price drop had on so many people."


As he wrapped up the long letter, there was more candor:

"As we enter 2012, we remain cautious in the short-term and highly optimistic in the long-term. Volatility persists in Europe; political uncertainty could stall the U.S. recovery; and there is a possibility that the meteoric pace of economic growth in China may slow."


Near the bottom of the list is beleaguered technology company Hewlett-Packard. CEO Meg Whitman hasn't been at the helm for even a year and a half yet. But in 2012, her first full year, the company's stock fell some 45 percent, making it the worst performer in the Dow. Clearly, the company had problems preceding her arrival, but under her watch, there hasn't been any major turnaround yet, either.

In her 2011 letter to shareholders, she led positively: "First, let me say how confident I am in the future of Hewlett-Packard." To her credit, early in the letter she acknowledges some of the company's problems in very broad terms, saying, "My initial focus as CEO has been to get HP out of the headlines and back to being the reliable, trusted company that you can count on."
Near the end, she concedes that, "While I'd like to say that we're through the tough times, many of the fiscal 2011 headwinds are still with us as we enter fiscal 2012, and our near-term focus is on stabilizing the business." She also points to the company's substantial free cash flow, but doesn't mention that it has dropped in recent years.

The Bottom Line

What the Culture and Candor Survey shows is that investors would do well to pay attention not only to a company's profit margins and revenue growth, but also to what its management is saying and how candid it is.

Motley Fool contributor Selena Maranjian owns shares of Google, Intel, Ford, and eBay. The Motley Fool recommends American International Group, Cisco Systems, eBay, Ford, Google, Intel, Southwest Airlines, and The Home Depot. The Motley Fool owns shares of American International Group, Bank of America, Citigroup Inc , Ford, Google, and Intel and has the following options: Long Jan 2014 $25 Calls on American International Group.

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]]>alcoaAmerican International GroupBank of Americabest stockCEO candorCisco SystemsCitigroupFord MotorGoogleHewlett-Packardhonesthonest CEOsIntelMeg WhitmanRittenhouse Rankings Corporate Culture and Candor Surveyshareholder relationsSouthwest Airlines Costock outlookThe Home Depottruthfulnessworst stocksSelena MaranjianWed, 16 Jan 2013 12:10:00 ESTMeet the 'Voice of the Taxpayer': Nina Olson Has Your Back on Tax Reformhttp://www.dailyfinance.com/2013/01/14/taxpayer-advocate-nina-olson-reform/http://www.dailyfinance.com/2013/01/14/taxpayer-advocate-nina-olson-reform/http://www.dailyfinance.com/2013/01/14/taxpayer-advocate-nina-olson-reform/#commentsFiled under: , , , ,

Nina Olson (Bloomberg / Getty Images)Think that you're on your own if you want your tax-reform concerns heard in Washington? Well, you're not. Since 1979 there's been an official advocate who has the ear of Congress, regularly making a stink on taxpayers' behalf, aiming for a fairer, simpler, system.

What started as the Office of the Taxpayer Ombudsman was replaced in 1996 by the Office of the Taxpayer Advocate. Since 2001 it has been headed by Nina Olson -- "the voice of the taxpayer."

Every year Olson presents a report to Congress, outlining areas in the tax code that are in urgent need of reform. It might not come as a surprise that Congress hasn't rushed to implement all suggested tax reform changes immediately. Thus, many items are repeated from year to year.

Here are some of the key concerns raised by the taxpayer advocate in the just-released 2012 report:

Tax-Code Complexity and Cost of Compliance

The tax code has grown over the years to what now encompasses almost four million words. It's so complex that 59 percent of individuals pay tax pros to prepare their returns (and another 30 percent use tax-prep software). This is an extra cost borne by taxpayers. The cost is not just financial -- individuals and businesses spend more than 6 billion hours each year on taxes.

Olson cites this as the biggest tax-reform target we face, explaining: "The existing tax code ... obscures comprehension, leaving many taxpayers unaware how their taxes are computed and what rate of tax they pay; it facilitates tax avoidance by enabling sophisticated taxpayers to reduce their tax liabilities and provides criminals with opportunities to commit tax fraud; and it undermines trust in the system by creating an impression that many taxpayers are not compliant, thereby reducing the incentives that honest taxpayers feel to comply."

Underfunding the IRS

According to Olson, the IRS collected $2.5 trillion in fiscal 2012, on a budget of less than $12 billion -- that's a 214:1 average return-on-investment. Yet this money-generating entity has been facing budget cuts, not increases.

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As a nation with significant financial troubles, taking money away from an entity that brings in desperately needed money seems counterintuitive. Olson writes: "Last year, the IRS Commissioner estimated in a letter to Congress that proposed reductions in the IRS budget would case tax collections to fall seven times as much." The flip side of that coin? Hire more IRS workers, and collect far more in tax revenue than you spent hiring them. As Olson states, "No business would fail to fund a unit that, on average, brought in $7 for every dollar spent."

Prolonged Problems Helping Victims of Identity Theft

Not only is identity theft a big and growing problem for many Americans, but when their finances are hijacked, it can also cause massive headaches with taxes.
Olson says that the IRS isn't responding with sufficient urgency to the problem. She points out that with cases of tax-related identity theft rising some 650 percent since fiscal 2008, the average victim is having to wait more than six months for IRS resolutions to problems (such as receiving refunds due). This is a very serious hardship for lower-income taxpayers in particular, where a delayed refund of several thousand dollars is critically needed. In addition, less money for the IRS means fewer problems solved and questions answered, and longer waits.

The AMT

The Alternative Minimum Tax was enacted in 1969 to prevent high-income taxpayers from avoiding taxation. It's not working well, though, as about 7,000 millionaires in 2011 paid no income tax at all. Meanwhile, the AMT is very complicated, and due to some of its peculiarities, it can ensnare middle-income taxpayers.

As part of the fiscal cliff deal, Congress finally agreed to a permanent "patch" for the AMT, indexing it for inflation so that it won't hit most of those middle class taxpayers, now or ever. But Olson's recommendation is far simpler: Repeal it.

See What Your Advocate Is Fighting For

It's easy to be discouraged about the effectiveness of government, so take some comfort in your Taxpayer Advocate, who's fighting the good fight for individuals. If you'd like to learn more, read the report, or check out a nifty set of infographics summarizing it.

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]]>Alternative Minimum TaxAMTCommissioner of Internal RevenueFinancehelp irs taxIdentity Theftinternal revenue serviceIRSIRS Budget cutsOffice of the Taxpayer Advocatetax codetax fraudtaxestaxpayer advocateU.S.Voice of the TaxpayerSelena MaranjianMon, 14 Jan 2013 12:15:00 EST