Personal Finance Blog

Tips And Stories To Help You With Managing Money

Sharks Experts Share Advice

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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.”

8 Tips For Buying In Bulk From Costco

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shopping in bulk
Shopping at Costco in Marina Del Rey, California. Photo credit: GABRIEL BOUYS/AFP/Getty Images
Loading up the cart with bargain-priced items in amounts calculated to last a lifetime, if not forever, is a popular option for many Americans. And the experts say it can be a very good approach, but they warn that the shopping should be focused and strategic to get the most for your buck.

The big-time bulk marketers, such as Costco, Sam’s Club and BJ’s Wholesale, are experts. They use pricing ploys, store layout, product placement and tempting sales to ensure that you return often. They even choose their shopping carts – larger than normal – to entice you into putting just one more item – or a half dozen – into the day’s shopping load.

Costco opened its first store in San Diego, Calif., in 1976. Today it has 468 stores in the U.S. and Puerto Rico, with 33 more in Mexico. They average $164 million in sales annually, overall net revenue of $112 billion overall in 2014.

Tip #1 Special Pricing Available For Large Quantity Buyers

Costco has even lower pricing for consumers who spend more than $10,000 when ordering. You can request special price quotes for specific items.

Tip #2 Factor Membership Fees In Your Budget

The annual membership that customers purchase is a major source of the income. The stores can offer good prices because of the membership fee. So customers need to figure in the fee when they decide how much they are actually saving.

Tip #3 Double Check Your Prices

The outlets also manipulate prices on various items to make the savings seem more than they really are. Pay a reduced price for milk, for instance, and you may not realize that you are paying more for the chocolate you intend to put into the milk than you might have done at another grocery. In the trade, they call this strategy “high-low.”

Tip #4 Larger Shopping Carts Means More Spending

Factors that lure shoppers into buying more include the size of the baskets. Since the 1970s, they have tripled and the psychological result is enormous. The urge to fill up the space may lead a customer to pile in more purchases than he or she had intended.

Tip #5 Store Layout Influences Your Spending

Stores are laid out to keep shoppers away from the exits. No bright lights, no windows or other distractions are available to keep them from their shopping. Expensive items, such as electronics, are kept at the front of the stores. In comparison, the sales racks seem even cheaper. They change their offerings frequently, so there is always a sense of being on a treasure hunt.

Tip #6 Ask For A Trial Membership

Some sensible strategies for shoppers include: Ask for a trial membership and then track savings to be sure they offset the fee. Don’t assume that large quantities are practical. If your family likes only an occasional bit of cheese, buying it in three-pound blocks isn’t wise. Check prices against those in other regular all-purpose stores. You may find such things as party items, greeting cards, note paper, etc., cheaper at a dollar store. If you don’t expect to buy a huge amount of goods, bypass the shopping cart. Make a list and stick to it. Give yourself a deadline to be in and out. Go directly to the area where your wanted items are stocked and don’t dawdle in the expensive parts of the store.

Tip #7 Returning Items Is Easy

Peterson, of Addicted To Costco recalls once “standing in line behind a man who was trying to return a violin a year and a half after buying it because his daughter didn’t want to play anymore. Costco cheerfully gave him a full refund for the instrument.”

Tip #8 Get A Cheap Lunch

Many families will go to Costco just to get a cheap hot dog or pizza. Costco’s pizzeria’s alone would rank #11 in a list of the biggest Pizzeria’s in the nation. Free samples for shoppers will help put you in a buying mood.

Calculating Your Tax Return For 2016

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tax-refunds

It’s time to prepare your 2015 taxes. More than 70 percent of America’s taxpayers can look forward to a refund on the money they paid into the system last year. If your tax return is fairly simple you can use a tax calculator 2015 to calculate your returns.

109,000,000 Refunds Last Year

Last year, the IRS sent 109 million refunds to happy tax filers, averaging $2,797. This year, the agency anticipates 150 million filings. Most people will have until April 18 to file, three days beyond the usual April 15 deadline because Emancipation Day falls on the 15th.

Consistent with the season, the grumbling has begun. The IRS has cut back on some customer services and getting copies of old filings may take longer. Concerns about identify theft also are rampant. The agency suggests that taxpayers with concerns go to the IRS.gov site before trying to make contact via telephone.

IRS Get Transcript

The IRS Get Transcript will be available for those who need a copy of a filing for a previous year, but they may wait longer, according to John Koskinen, IRS commissioner. Planning well ahead is the best approach, he said.

Serious ID fraud relating to Get Transcript last year has created roadblocks for legitimate taxpayers who need the service. Instead of being able to print out a copy of an earlier return, those who use Get Transcript now should expect to receive a printed copy in five to 10 days of their request.

Koskinen said the IRS expects to have problems with the service fixed during the current filing period, but it won’t be possible to print copies directly until new safeguards have been tested.

The problems relate to serious fraud activity last year from mid-February to mid-May. Some 100,000 Get Transcript accounts were compromised. More precautions are being taken by tax preparers and IRS agents to prevent fraud, he said. Better ways to authenticate a taxpayer’s identity are being put into place. New password protections have been added to private-sector software accounts. Minimum eight-digit passwords combining letters and numbers are being required.

Phone Verification

The agency also is adding safeguards to protect taxpayers against people who make phone calls purporting to be IRS agents. New provisions passed by Congress in December include authorization for the IRS to use private debt collectors to get payment from people who haven’t paid up yet. The program is expected to be working later this year. They may be making robocalls.

But until you receive a letter from the IRS saying that you will be receiving such a call, be wary of contacts purporting to be from the IRS. Rule of thumb: if you are surprised to be receiving a call from the IRS, you likely are not talking with the IRS but with a crook anxious to have your information.

EMV Cardholders Face Challenges

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If you don’t yet know what EMV means, you need to find out. As of Oct. 1, there were big changes in the world of credit and debit card use, and shopping as you knew it is becoming a thing of the past.

EMV is the new acronym incorporating Europay, MasterCard and Visa. It designates a new type of credit or debit card, one that has a small chip embedded that takes the place of a magnetic strip for identifying the cardholder. Credit card data is stored on an integrated circuit through the chip. A purchaser must put his card in a reader, which applies a one-time code to the transaction. The process is expected to help stymie would-be fraudsters.

The chip is a response to the gigantic card breaches that occurred in some of the country’s largest merchants in recent years. Billions of dollars in losses are plenty of impetus for trying to curb unhealthy fraud.

The chip has been in use in many other countries for some time and it is deemed very efficient in preventing counterfeit fraud, which accounts for about two-thirds of fraud that occurs in stores. It isn’t the silver bullet that will bring an end to all fraud that takes place in the commercial world, but it is one powerful weapon in the battle. Experts are hard at work on other measures, such as tokenization, that will be applied as they become practical.

But despite the fact that the Oct. 1 deadline shifts blame for fraud to the banks and merchants who failed to incorporate the EMV technology by that date, the transition is proving more difficult than was expected. Just over half of American cardholders had received the new chip-embedded cards by the deadline. Relatively few of them have been educated about how the new technology works. According to surveys, 68 percent of those who have received new cards have no idea what it’s all about.

On the other side of the counter, thousands of merchants lack the equipment needed to read the new cards. Clerks and others expected to use the equipment are not all trained in the technology.

EMV is a giant step forward toward reducing fraud, but only if consumers, card issuers and merchants all get on board to make the new chipped cards effective.

As a consumer, what can you do? If your financial institution hasn’t issued you new chipped cards, ask why. And pay attention to the information you are receiving that will make you a part of the new shopping mode. Pressure the merchants with whom you deal to step up to the new technology and then be patient as it comes on line. (Keep in mind that getting the new equipment hasn’t always been easy for merchants. Small businessmen, in particular, have faced challenges in preparing to make the changes the chipped cards require. This is new territory for everyone involved. It changes the way clerks and managers interact with customers, according to those on the selling side of things.) But making it work is to everyone’s advantage.

Of course, the proof will be in the pudding. If the expectation that chips will make a big dent in fraud doesn’t pan out, expect other approaches.

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    Is Travel Insurance Worth It?

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    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.