Finance

Sharks Experts Share Advice

February 24, 2016 By Twila Van Leer

Shark Tank Experts — Kevin O’Leary, Barbara Corcoran, Daymon John, Lori Greiner, Robert Herjavec, Mark Cuban

What would the experts on the popular ABC show “Shark Tank” advise those who are 50-plus to help make them financially secure? In its February/March AARP The Magazine, which is aimed at those in that age group, editors asked the Sharks. And here is some of their advice:

Kevin O’Leary warns that you must be prepared for financial downs.

Keep 10 percent of your total assets in cash. Three basic investing rules include: Never put more than 5 percent of your money in one stock or more than 20 percent in one sector such as energy. Do put 50 percent of your investments in dividend-paying stocks and 50 percent in interest-bearing bonds. Over the past 40 years, 71 percent of the returns on Standard and Poors came from dividends, not capital appreciation.

Mark Cuban warns that you must “follow the green, not the dream.”

Too many entrepreneurs focus so closely on their dream that they forget the practicalities. The advice carries over to planning for retirement. To better align the dream with the green, determine your savings; assume you’ll earn 4 to 6 percent on investments; commit to living on the returns and not spending the principal; calculate what that leaves you with annually, monthly and weekly; adjust accordingly.

Cuban suggests some healthy paranoia. Learn to spot “Slick Willies.”

If you are listening to one, take a time out to think things through and then follow your good sense. Long-term, consider every financial activity with caution and the expectation that things could change. Health considerations, for instance.

No deal is better than a bad deal.

Three ways to hone your skills to avoid bad deals: Understand the investment. Keep emotion out of it. Getting emotionally attached to such things as a house can blind you to the realities. Speak the truth, not what others want to hear. In making financial decisions, you are not trying to make friends. Separate the two.

Learn from the past.

Take risks, but do it based on your knowledge of outcomes in similar circumstances over a period of time. Invest in what you know. What companies and products do you love and trust? Build your portfolio around them. Do your homework using the many resources of the Internet. Focus first on recouping your capital, then on how much profit you can make.

Negotiate everything.

Don’t simply accept the fact that utility bills are going up, for instance. Call the provider and see if there is anything you can do to lower your bills. If your financial adviser wants 1.5 percent, offer 1 percent. Negotiate with medical providers, etc. If you don’t get a reduction, you haven’t lost anything by trying.

Listen and keep learning.

Ask the question: “What did I learn from this experience?” Age doesn’t matter. There is always opportunity for learning from what life hands you. More knowledge and wisdom mean more opportunity, according to Shark Robert Herjavec. “It’s just a matter of opening doors and finding it.”

Is Travel Insurance Worth It?

December 27, 2015 By Twila Van Leer

It’s a constant debate for those who travel often. Is travel insurance worth what you pay for it? Before deciding that it is a frill you can forgo, look at the recent statistics.

When a huge storm hit the Northeast a couple of years ago right at the height of Thanksgiving travel, more than 700 flights were cancelled or delayed. That meant thousands of distraught travelers who were forced into additional costs for hotel rooms, unanticipated meals and other unforeseen arrangements. Those who had invested in insurance were the winners.

Your airline must re-book you in the event of a cancelled flight, but is not obligated to pick up resultant expenses.

Before buying a trip policy, check your credit card. Many cards offer protection against travel snafus. More than half – 63 percent – will reimburse you for lost or delayed baggage. In some cases, the card-issuer offers as much as $5,000 in nonrefundable travel expenses if your trip is cancelled or interrupted.

Many cards will cover a partner and/or children, but only if you make all your arrangements via the card.

If the credit card you are currently using does not offer travel benefits, it may pay to look around. The next alternative is to shop for a travel insurance policy, particularly if you are planning a pricey trip, going overseas or have any reason to think you might have to cancel the trip.

Experts advise that the insurance offered by airlines is not the best alternatives. Their policies often have many exclusions and will not cover pre-existing medical conditions, they say.

Look onsite for companies such as Insuremytrip.com, which offers data on hundreds of policies. The cost is usually in the range of 4 to 8 percent of your nonrefundable travel expenses. Variables include the length of your trip, destination and age.

If you have a pre-existing medical condition, plan to get your travel insurance 10 to 30 days before your travel begins. You may want to consider a policy that allows you to cancel for any reason, rather than a list of pre-determined causes.

If you are facing a tight time-frame on a connecting flight, or if bad weather appears it may be a factor, consider a policy that tracks your flight in real time and automatically helps re-book you on another flight in the event of a missed connection or a cancelled flight.

Such a policy, issued as AirCare by Berkshire Hathaway Travel Protection, also puts a little money in your bank to take care of incidental expenses when there is a problem. A delay of two hours or longer will add $50 to your account. If you miss a connecting flight, the policy offers $100. If your bag doesn’t show up for more than 12 hours, you receive $500. That is a nice cushion for trips that go sour.

Tips For Holiday Car Deals

December 17, 2015 By Twila Van Leer

Many Americans like to make big-item purchases – cars, for instance – part of the excitement of the holidays. There’s something about a big red bow atop a new vehicle that makes the purchase memorable.

And the car dealers have learned that piggy-backing on such events as Black Friday, offering good deals and holiday discounts, helps their trade.

For instance, Lexus, trying to overtake Mercedes and BMW as leaders in the luxury car market, has its “December To Remember” promotion in full swing. Leases on low-mileage cars in the $40,000 range are going for $319 per month with a $3,000 down payment.

GM’s Chevrolet started heavy-duty advertising on Black Friday weekend, offering zero percent financing for six years or 20 percent off the sticker price on many of its 2015 models. And other manufacturers are making similar offerings to attract holiday sales. If you are in the car-buying mode, here are some things to keep in mind.

You should be able to wangle at least 10 percent off the sticker price of an unsold 2015 model, possibly more on higher-priced large trucks and SUVs. Some Ford dealers have made a cost reduction of more than $9,600 on some 2015 F-150 trucks. That’s the country’s most popular vehicle. Lease deals are low because interest rates are low and resale values high for vehicles coming off lease. It’s nice to have the 2015 stock off the lot so the 2016 models can show to best advantage. But dealers advise against buying something less than satisfactory just because it appears to be a good year-end deal. If you don’t like something about the vehicle when you take it off the lot, you’ll like it a whole lot less down the road.

Understandably, dealers make the best deals on the models they have the most of on hand. Slow-selling midsize cars, small vehicles and electric/gas hybrids are in that category. The manufacturers sometimes make incentives available to dealers to help promote sales of the slow-selling models. It pays to shop around rather than make a hasty decision.

Automakers keep tabs on inventories by dividing sales per day into the number of vehicles on the lots. A 60-day supply is considered adequate.

The deals are out there, so if your merry Christmas includes a new vehicle, proceed. But proceed with caution and take a clear-eyed look at all the options so you’ll drive into the New Year with the best possible deal.

Plan Ahead For Holiday Travel

November 11, 2015 By Twila Van Leer

If travel is part of your holiday plans, the time to act is now. The cheapest, most convenient travel plans begin early. Prices already are starting to climb and if past experience holds, the demand for airline seats will become pricey as Thanksgiving gets onto the holiday radar.

If you have expectations to travel between Thanksgiving and New Year, here are things to consider:

Santa can offer a bit of good news. Airline fares this fall/winter are a little lower than last year. This August, the last month for which data is available, the average domestic fare was down 6.8 percent compared with the year before. Experts predict that the trend will continue.

Tickets already are going fast for the peak travel days around Christmas and they also are lower – by 3 percent – than last year. You might find even bigger savings on the discount carrier routes, such as Spirit and Frontier airlines. The larger carriers are keeping an eye on the discount fares and the could be good news for travelers across the board.

Both Christmas and New Years days fall on Friday, so many travelers making the return trip will hope to be aboard flights on either Saturday or Sunday. Fares could be higher for those days, although still a bit lower than last year, according to experts with CheapAir.com.

Keep an eye on fees that will increase your travel costs, particularly the fees charged for checking luggage and for changing tickets. Southwest still does not charge baggage fees on the first two prices of luggage. If you can, cut down on the amount of luggage you have to pay for by shipping gifts ahead of time. Postage is likely less expensive than baggage fees. Or buy gift cards that provide the recipient with his or her choice of gifts without adding bulk to your packing.

Try to minimize your baggage by getting what you need into a carry-on that will fit under your seat. If fees are unavoidable, pay them before the fact. They are higher at the airport.

Expect your flights to be crowded. Home for the holidays is an aspiration of millions of Americans. The most-used airlines are now filling 80 percent of their flights, even the less popular early-morning and late-night options. More people are opting to pay the price for elite travel – larger seats, better leg room – somewhat limiting the availability for families. The larger the group, the sooner you need to get plans gelled.

Whatever particular needs or desires you want to include in your travel plans, the first advice is still the best. Do it now and travel with less hassle and more comfort. And do your part to minimize stress by planning now to exercise holiday cheer despite lines, glitches and general tension that are part of the seasonal travel.

Renting Housing Can Be Costly

October 29, 2015 By Twila Van Leer

More Americans are renting and many of them pay up to half of their income for housing and utilities.

Enterprise Community Partners, a nonprofit agency that promotes affordable housing, looked at census data and ferreted out the data, including the fact that more families are putting half of their earnings into a rental place. Since 20007, the number of people in this category has risen to 11.25 million, an increase of 26 percent.

The problem becomes more acute when the increase in rental costs outpace the rise in hourly wages. Rentals have risen at nearly twice the rate of income, Labor Department figures show. The department reported that hourly wages rose just 2.1 percent in the past 12 months, compared with a 3.7 percent increase in rents. For some families, the difference is forcing hard decisions on how to make the income stretch far enough.

A combination of factors underlying the problem includes the slow recovery from the recession of the early 2010s. Construction of new rental units also has fed into the dilemma, as has the number of families that lost their homes during the recession, opting for renting instead. All told, the various factors create a bad situation for those who rent, including the prospect of homelessness if they can’t meet the demand.

Many have had to downsize, moving from rentals with three or more bedrooms to those with one or two. Throw in the increased costs of transportation, communications and health care and many families find themselves overwhelmed.

Studies show that more than 30 percent of renting families in California, Florida, New Jersey and New York fork over more than half of what they earn to pay for housing and utilities. In other states, excluding Alaska, South Dakota and Wyoming, the figure goes down to 20 percent.

Enterprise Community Partners say their data is consistent with that of other organizations interested in the housing market. The federal Department of Housing and Urban Development has published figures that show 12 million renters and homeowners who see half of their income go into housing costs. In 2013, the Harvard University Joint Center for Housing Studies estimated that 27 percent of renters were paying 50 percent of income for rentals and related costs. The increases reported by these agencies were “unimaginable just a decade ago,” the Harvard report stated.

The high costs of renting are affecting the upkeep of many rental units, according to the Consumer Federation of America. Those who rent cannot afford to make routine repairs, forcing the landlords to look at further increases to meet this need. The alternative is to let buildings fall into disrepair. Both the property owners and the renters are caught in the bind.

Construction can’t keep up with the increasing demand. This spring, the National Low Income Housing Coalition reported a shortage of 7.1 million apartments for low income renters. More than 320,000 units are expected to be ready for occupancy this year, according to the Commerce Department. The shortages are most acute in the Western states.

But until demand and supply reach some semblance of balance, the prospects for higher rentals that absorb greater percentages of income are likely to continue.