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529 Plans Make a Money-Saving Comeback

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serious students listening...
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As the costs of college education have risen steadily over the years, families have realized that they need to do what they can to help their kids avoid a mountain of student-loan debt once they graduate. One of the most popular ways that Americans have saved for college is through 529 plans, also known as college savings plans. Back in January, though, the future of 529 plans was in peril, as President Obama's budget included a provision that would have endangered the use of college savings plans as a viable way to save more for college education.

Backlash against the budget proposal was extremely strong, leading to its removal from the administration's budget. Now, lawmakers have taken action to make 529 plans an even more useful tool for savers. Below, we'll take a look at why 529 plans were under threat and what the government is not trying to do to strengthen college savings plans for the future.

Taking Away a Key Tax Break

The most important element of the 529 plan is that it allows you to save money in a special account that is free of tax. Not only do you avoid having to pay income taxes on the interest, dividends, and investment appreciation on your holdings within the 529 plan throughout your children's pre-college years, but you also get to make tax-free withdrawals of those earnings as long as you spend the money on qualified educational expenses.

The administration's budget proposal sought to take away the tax-free feature of 529 plan withdrawals used to pay for a college education. Instead, the earnings that 529 plan accounts collected would be subject to income tax when they were withdrawn, in a manner similar to how traditional IRAs for retirement get taxed. Taxpayers would get credit for the after-tax money they had used to contribute to the 529 plan in the first place, but they'd have to pay taxes on any rise in the account's value resulting from investing those contributions.

The changes would only have applied to new 529 plans, but in response to loud criticism from the public, the administration withdrew its proposal on 529 plans. Now, though, lawmakers have started work on measures that would enhance the value of the college savings plans.

Making 529 Plans Even More Useful

Late last month, the House of Representatives passed H.R. 529, a bill aimed at expanding college savings plans. If it passes, the bill would make some major enhancements to 529 plans going forward.

First and foremost, the bill would expand the definition of qualifying educational expenses to include computer equipment and software as well as Internet access for students to use while in college. Currently, you're only allowed to withdraw money tax-free for tuition and other fees required by the college or university, as well as materials like books that are specifically required for the coursework the student does. Room and board also qualifies as long as the student is enrolled at least half-time, but most furnishings and other optional costs don't qualify.

Second, the bill would remove an onerous and largely outdated provision of 529 plan law that requires parents to add up the money they take out of multiple plan accounts and perform certain calculations to determine whether any of the money is subject to tax. Under current law, those provisions rarely apply, but the bill would ensure that even if the tax-free nature of 529 plans comes into question again in the future, savers wouldn't have to deal with the complication of coordinating multiple accounts for tax purposes.

Finally, the bill would allow parents who get refunds from colleges and universities to put that money back into a 529 plan account. Parents would have 60 days to get the refunded money back into the 529, closely mirroring what retirement savers are allowed to do with rolled-over IRA withdrawals.

Be Smart About College Savings

The passage of H.R. 529 is far from assured, despite the House's 401-20 vote in favor of the measure. Despite a veto-proof majority, the Senate still has to consider the bill, with possible amendments that could change its provisions.

Nevertheless, with 529 plans having survived the threat of having their tax-free nature taken away, college savers can still benefit greatly from using college savings plans under current law. Any added provisions making them even more attractive would just be icing on the cake for parents looking to do their best to support their children's education.

Motley Fool contributor Dan Caplinger isn't looking forward to his 10-year-old's future fight with financial aid offices. You can follow him on Twitter @DanCaplinger or on Google+. To read about our favorite high-yielding dividend stocks for any investor, check out our free report.

 

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When Is Getting a 401(k) Loan a Good Idea?

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How to Invest Your Retirement Savings

By Maryalene LaPonsie

Don't do it! That's the conventional wisdom about taking out a 401(k) loan. And as someone who took out one, left her job and found herself shelling out big bucks in taxes and penalties, I'm not about to argue with conventional wisdom.

However, people stretched financially thin may think otherwise. They may see their 401(k) account as a tempting source of cash. To help those of you thinking about dipping into your account, we want to take a moment to review what you need to know about these loans. I also contacted two certified financial planners so you wouldn't have to take my word for it.

I fully expected both planners to say 401(k) loans are nothing but bad news, and certainly, they both expressed extreme concern about people dipping into their retirement savings. But I was also surprised to hear that a 401(k) loan may make sense in some limited situations. Before we get to those, let's start with the basics of 401(k) loans.

Basics of 401(k) Loans

Named after a section of the tax code, traditional 401(k) plans allow you to put money aside, tax-free, for retirement. After a few years of regular contributions, these plans can carry a nice balance, which may start to look like a handy cash cow.

While there is no requirement that 401(k) plans allow loans, many do. Under Internal Revenue Service rules, those that do allow loans can let participants take out up to 50 percent of their vested account balance, or $50,000, whichever is less. Typically, these loans are paid back over a maximum of five years, although, in some cases, a longer payback period may be arranged. On occasion, the IRS issues special rules, such as after hurricanes Katrina, Rita and Wilma when those affected were allowed to take loans for their entire vested balance.

Loans from 401(k) accounts do charge an interest rate, but that money is paid back into the plan. This is one reason they may appeal to some workers. Rather than paying interest to a bank or other lender, the worker keeps the interest to pad their retirement account. In addition, repayments are made via a payroll deduction, which makes them convenient, another bonus for some workers.

Why They Aren't Such a Hot Idea

Despite being an apparent source of easy cash, some finance experts say you should be keeping your hands off your 401(k). "Your 401(k) is not a savings account," says Mark Vandevelde, a CFP and wealth partner with Hefty Wealth Partners in Auburn, Indiana. "It is money that should be set aside for long-term goals and never to be touched, in my humble opinion." As Vandevelde sees it, there are three problems with 401(k) loans:
  • Lost investment gains that can reduce your fund balance at retirement.
  • The risk of defaulting on the loan, which could result in taxes and a penalty.
  • The chance you may reduce your 401(k) contributions to afford the loan repayment amount, which again could affect your fund balance at retirement.
"It's not free money," Vandevelde says. "You have to pay it back with regular payroll deductions. Many people end up reducing their actual 401(k) contributions to compensate for the amount they are having to pay back and, therefore, they actually aren't saving as much."

On its website, Principal Financial Group has an example of how this may play out. A 35-year-old who takes out a $5,000 loan and pays it back over five years may find himself with $52,000 less at age 65. The calculation assumes a $150 per-paycheck contribution that is decreased by $44 to accommodate the loan repayment.

Keith Klein, a CFP and owner of Turning Pointe Wealth Management in Phoenix, agrees with Vandevelde that a 401(k) loan shouldn't be your first choice for cash. "The key to remember is when you take money out, it has to be paid back in five years," Klein says. "If you default, that money will be considered income, and you'll have to pay taxes plus a 10 percent penalty."

Plus, a lot can happen in five years, and if you find yourself taking a new job opportunity, you'd better be ready to pay up. "A lot of people don't realize what happens when you leave [or] get fired from your job and you have an outstanding 401(k) loan," Vandevelde says. "It becomes immediately due and has to be paid in full. If you cannot pay it back, the remaining balance is considered a distribution and is subject to tax and a 10 percent penalty if [you're] under age 59½."

When a 401(k) Loan Might Make Sense

Despite the financial perils associated with a 401(k) loan, Klein says there may be times when it makes sense to take one out. "Now, I'm not recommending you take loans out," he says, "but there are circumstances when life doesn't go perfectly."

For example, an older worker who is losing a job may find taking out a loan and letting it default could be a better option than paying their bills with the credit card until they find other employment or are old enough to claim Social Security. While the money will become taxable income, the 10 percent penalty no longer applies once an individual turns 59½.

Divorce or disability could be other scenarios in which a 401(k) loan may be a better way to bridge an income gap in an emergency situation. Still, Klein says it's not an ideal option. "Having a [cash] reserve is always the best answer," he notes.

Both Vandevelde and Klein say that, unfortunately, far too many people rush into a 401(k) loan, or they use them for purchases such as vacations, cars or even big screen TVs. For those sorts of purchases, both financial planners agree a 401(k) is not the right source of money.

So going back to the question in the headline: Is getting a 401(k) loan a good idea? Given the drawbacks listed above, it's probably not ever a good idea, but in some unique situations, it may be the best of your not-so-great options.

Of course, rather than waiting to find yourself in an emergency with limited options, a better course of action would be to get out of debt and bulk up your savings account now. If you're not sure how, subscribe to the Money Talks News newsletter to get the best personal finance tips and advice delivered straight to your inbox each day. We'll also email you a PDF of Stacy Johnson's "205 Ways to Save Money" as soon as you've subscribed. It's full of great tips that'll help you save a ton of extra cash. It doesn't cost a dime, so why wait?

 

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How to Get Top Dollar Selling Your Wedding Dress Online

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How To Get Top Dollar Selling Your Wedding Dress Online

Here comes the bride, all dressed in your white taffeta wedding gown, which you sold online.

In years past, brides dry-cleaned and packed away their wedding gowns, keeping them for daughters they hoped would someday wear them down the aisle, too. These days, financially savvy brides are selling their wedding dresses online and using proceeds to, among other things, pay off the wedding that cost almost $30,000, on average, according to TheKnot.com.

Pre-Internet, once- or never-worn wedding gowns were sold via sad newspaper ads and in consignment shops that often charged 50 percent commission. Now, sites that specialize in selling wedding dresses and reach prospective brides around the globe are becoming the go-to places to hawk gowns.

On average, eBay sells between 1,000 and 2,000 new and used wedding gowns each week, with an average price tag of $127.34. On one recent listing, a bride asked $495 for a once-worn Vera Wang she bought at a trunk show for $6,000.

"Listing your dress online maximizes the exposure of your wedding dress to future brides who are in the market," said Tracy DiNunzio, founder and CEO of Tradesy, a site that sells thousands of preowned wedding gowns each week during the buying season, which she says runs from January through May.

Sites for Selling

Although eBay and Craigslist list wedding dresses among their many wares, several sites specialize in selling preowned wedding gowns, including Tradesy, Nearly Newlywed, Once Wed, PreOwned Wedding Dresses and Still White.

Comparison shop among the sites to make sure you select the one that fits your needs and budget -- and you accept its own listing and commission policy. Tradesy, for instance, charges a 9 percent commission, which you can spend on the site or pay a 2.9 percent transfer fee to place into PayPal, a banking account or debit card. Still White charges $19.95 or $29.95, depending on the listing promotion package you select. Nearly Newlywed only takes dresses selling for more than $500 and then grabs a 25 percent commission; if the dress sells for less than $500, the site takes $200.

Wedding Dress Selling Tips
  • Timing: Wedding dress sales peak in February and March, the best time to list your dress online, according to Terapeak, an e-commerce data tracker for eBay. Slowest period for wedding dress sales is between Thanksgiving and New Year's.
  • Dress condition: Time is not on your side if you want the best price, so list dresses as soon as possible while they're still in style. Some brides even pre-sell their gowns before their wedding day. Never-worn will reap the best price, while once-worn with no damage is a close second. Dresses older than three years are a tough sell, while vintage dresses from the 1980 and 1990s are popular.
  • Listing info: Include designer, size, original price and a detailed description of style and extras like beads, pearls, crystals and sequins. Be honest, which informs buyers and reduces return rates.
  • Pictures: Buyers want to see what they're getting, so don't skimp on pictures. Take photos of the dress in its entirety on a hanger; close-up photos of detailing like lace, sequins or unique pattern; back views including labels, zippers and clasps; and shots of damage, if any. Keep the background plain so your dress and details stand out.
  • Best-sellers: Typically, plus-sized, short, lace, white and ivory gowns are top-sellers. When you write a description, use those keywords in the headline or listing body.

 

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Who's at Fault in Apple Pay Fraud, Apple or Banks?

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MasterCard Launches NYC Tech Hub, Showcases Payment Innovations
Charles Sykes/Invision for MasterCard/AP Images
By Cadie Thompson

Criminals are finding ways around Apple Pay's safeguards.

Banks are reportedly getting hit with a growing number of fraud cases involving the mobile payment system. But recent reports involving the service have more to do with identity theft than breaking into Apple's (AAPL) encrypted biometric enabled payment service.

What's happening is that criminals are setting up new iPhones with stolen credit card information, then impersonating the victim using other information easily found online, thus tricking the bank into thinking they are the authorized user in order to verify the new card.

Given that criminals can easily purchase credit card details and other personal data off black market sites, this type of workaround isn't that difficult, security experts said.

Apple or the Banks to Blame?

While these fraud cases stem from identity theft rather than a hack into the Apple Pay system, it shows that there are still kinks in the service's verification process that both Apple and the banks need to address, security experts said.

Both sides play a role because Apple could have done more.

"Both sides play a role because Apple could have done more," said Samuel Bucholtz, co-founder of Casaba Security. "But where the fraud is really coming from is the bank's verification of those cards. It's not a compromise of any Apple security system that Apple has put in place."

According to Apple's support page, when a user adds a card to Apple Pay, Apple encrypts the data then sends it to the bank along with other information, including data about your iTunes account activity and information about the device you are using, such as its current location or the name of the device. It is then up to the bank to decide whether to approve that card for transactions.

The bank may request additional information to prove the card belongs to the user, but often the information that is asked for is easy for criminals to obtain online. Also, bankers may not require any additional information because they want the process to be as painless as possible, experts said.

Banks have made a push to get customers to adopt the service because of the added layer of security provided the tokenization technology it involves. And their efforts seem to be working, given the adoption figures some financial firms have touted. JPMorgan Chase (JPM), for example, recently said that it already had one million customers who had added cards to Apple Pay, and Bank of America (BAC) said that it had 1.1 million cards registered for the service by the end of last year.

"Banks jumped the gun, they wanted to make it easy, but it is a trade-off between usability and security and they trended toward the side of usability rather than security," Bucholtz said.

One thing the banks and Apple could require to make the process safer is a PIN issued by the bank to register a new card, Bucholtz said. This could be a PIN the bank mails to the user or one they have to log into their bank account to access for a one-time registration, he said.

Apple's Trade-Off

While banks are ultimately responsible for authorizing a card, Apple could do more to increase security in the verification process, said Joe Loomis, founder and CEO of the security firm CyberSponse.

"The verification process of Apple is somewhat inferior because you are dealing with a consumer mindset that convenience is most important in their life so if you make something cumbersome, they aren't going to use it," Loomis said.

"So Apple has to balance this perspective of making it secure enough so that it's difficult to compromise or circumvent but also easy enough so that grandma can set up her credit cards on her iPhone. Unfortunately, that doesn't always jibe."

Security researcher Cherian Abraham, who originally wrote about the Apply Pay fraud last month, pointed out in a tweet on Wednesday that Apple could do more to force banks to improve the process.

"If Apple can mandate [that] banks pay 15 basis points to Apple for every transaction, couldn't they mandate a better-provisioning process by banks?" he asked.

Loomis said that Apple has a history of bypassing comprehensive security verification processes in favor of making things easy for consumers. For example, the celebrity iCloud hacks that took place last year may have been prevented if Apple had stronger verification requirements, like two-factor authentication, in place to authenticate users. But then again there is always a trade-off, Loomis said.

Apple didn't respond to a request for comment.

"You have to have some kind of assumption that there will be some type of fraud, and the more security you have in there the less your adoption rate is. So as long as your adoption rate outpaces the fraud rate it's considered a win. That's just how the world works today. It's an accepted risk," Loomis said.

"Apple knows all of this stuff, it's part of their risk modeling. A product that allows you to have secure verification, it's not going to have fast adoption. So in the perspective of trying to raise money for your shareholders and trying to generate revenue, it's definitely not something that any trendsetter is going to do."

 

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Ringling Bros. to Phase Out Elephant Acts by 2018

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Circus Elephants
Elise Amendola/AP
By TAMARA LUSH

POLK CITY, Fla. -- The Ringling Bros. and Barnum & Bailey Circus will phase out the show's iconic elephants from its performances by 2018, telling The Associated Press exclusively that growing public concern about how the animals are treated led to the decision.

Executives from Feld Entertainment, Ringling's parent company, said the decision to end the circus's century-old tradition of showcasing elephants was difficult and debated at length. Elephants have often been featured on Ringling's posters over the decades. The decision is being announced Thursday.

"There's been somewhat of a mood shift among our consumers," said Alana Feld, the company's executive vice president. "A lot of people aren't comfortable with us touring with our elephants."

Within two hours of the announcement, animal rights groups took credit for the decision, saying that the pressure put on the circus ultimately led to Feld's decision.

"For 35 years PETA has protested Ringling Bros.' cruelty to elephants," Ingrid E. Newkirk, president of People for the Ethical Treatment of Animals, wrote in a statement. "We know extreme abuse to these majestic animals occurs every single day, so if Ringling is really telling the truth about ending this horror, it will be a day to pop the champagne corks, and rejoice. ... If the decision is serious, then the circus needs to do it NOW."

Feld owns 43 elephants, and 29 of the giant animals live at the company's 200-acre Center for Elephant Conservation in central Florida. Thirteen animals will continue to tour with the circus before retiring to the center by 2018. One elephant is on a breeding loan to the Fort Worth Zoo.

Another reason for the decision, company President Kenneth Feld said, was that certain cities and counties have passed "anti-circus" and "anti-elephant" ordinances. The company's three shows visit 115 cities throughout the year, and Feld said it's expensive to fight legislation in each jurisdiction. It's also difficult to plan tours amid constantly changing regulations, he said.

'Not Reacting to Critics'

"All of the resources used to fight these things can be put toward the elephants," Feld said during an interview at the Center for Elephant Conservation. "We're not reacting to our critics; we're creating the greatest resource for the preservation of the Asian elephant."

In Asheville, North Carolina, city leaders recently prohibited wild and exotic animals from performing at the U.S. Cellular Center, the city's municipal venue. And in Los Angeles in 2014, the City Council banned the use of bull-hooks by elephant trainers. Animal rights activists say bull-hooks are cruel and abusive, while circus leaders say they're needed for safety and point to federal approval of the devices. Other cities from South Florida to Oakland, California, have imposed restrictions.

The circus will continue to use tigers, dogs and goats, and a Mongolian troupe of camel stunt riders joined its Circus Xtreme show this year. More motorsports, daredevils and feats of human physical capabilities will likely be showcased as well.

Ringling's popular Canada-based competitor, Cirque du Soleil, features human acts and doesn't use wild animals.

"There are endless possibilities," said Juliette Feld, another executive vice president and a producer of Feld's Marvel Universe Live, Disney on Ice and Monster Jam shows, among others.

Feld owns the largest herd of Asian elephants in North America. It costs about $65,000 yearly to care for each elephant, and Kenneth Feld said the company would have to build new structures to house the retiring elephants at the center, located in between Orlando and Tampa on a rural, ranch-like property.

Limited Access

Kenneth Feld said initially the center will be open only to researchers, scientists and others studying the Asian elephant.

Eventually, he "hopes it expands to something the public will be able to see."

"I want everybody's grandkids to be able to see Asian elephants," he said.

The center's youngest elephant is Mike, who will be 2 in August, and the oldest is Mysore, who is 69. One elephant, 6-year-old Barack, was conceived by artificial insemination. Since the center opened in 1995, 26 elephants have been born there.

Ringling's elephants have been at the center of lawsuits and ongoing complaints from animal rights activists.

In 2014, Feld Entertainment won $25.2 million in settlements from a number of animal-rights groups, including the Humane Society of the United States, ending a 14-year legal battle over unproven allegations that Ringling circus employees mistreated elephants.

The initial lawsuit was filed in 2000 by a former Ringling barn helper who was later found to have been paid at least $190,000 by the animal-rights groups that helped bring the lawsuit. The judge called him "essentially a paid plaintiff" who lacked credibility and standing to sue. The judge rejected the abuse claims following a 2009 trial.

'Greatest Show on Earth'

Kenneth Feld testified during that trial about elephants' importance to the show.

"The symbol of the 'Greatest Show on Earth' is the elephant, and that's what we've been known for throughout the world for more than a hundred years."

When asked by a lawyer whether the show would be the same without the elephants, Feld replied, "No, it wouldn't."

This week, Feld said, "Things have changed."

"How does a business be successful? By adapting," he said.

Feld noted that when his father bought the circus in 1967, there was still a human sideshow featuring acts such as the bearded lady and other human oddities. His father did away with that, he said.

"We're always changing and we're always learning," he said.

In 2008, Feld acquired a variety of motor sports properties, including monster truck shows, motocross and the International Hot Rod Association, which promotes drag races and other events. In 2010, it created a theatrical motorcycle stunt show called Nuclear Cowboyz. Roughly 30 million people attend one of Feld's 5,000 live entertainment shows every year.

 

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Soft Economic Data Hint at Near-Term Hiccup in Growth

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Jobseekers Attend An NYU Engineering and Technology Career Fair As Jobless Claims In U.S. Increased
Michael Nagle/Bloomberg via Getty ImagesStudents wait to speak with representatives at the Cisco Systems booth during a career fair at the New York University last month.
By Lucia Mutikani

WASHINGTON -- The number of Americans filing new claims for unemployment aid last week rose to its highest level since May, but economists dismissed the increase as weather-related and said the jobs market remained solid.

They were also little perturbed by other data Thursday that showed factory orders fell in January for a sixth straight month and fourth-quarter productivity declined by more than initially thought.

The reports, however, suggested some near-term weakness in economic growth.

The underlying fundamentals of the economy remain solid...

"The underlying fundamentals of the economy remain solid and there is no reason we won't continue to see the type of economic growth and job growth that we saw in 2014 continuing this year," said Gus Faucher, senior economist at PNC Financial Services Group in Pittsburgh.

Initial claims for state unemployment benefits rose by 7,000 to a seasonally adjusted 320,000 for the week ended Feb. 28, the Labor Department said. It was the second consecutive week of increases.

While the Labor Department cited no special factors influencing the data, economists said cold and snowy weather in February and a strike by petroleum refinery workers were likely to blame.

Data for the week ended Feb. 21 showed a large number of layoffs in Kentucky because of bad weather.

"We suspect the pattern reflects the weather rather than fundamental deterioration. That said, we will, of course, be on watch for the possibility that the rise in the last two weeks marks a change in the trend," said Jim O'Sullivan, chief U.S. economist at High Frequency Economics in Valhalla, New York.

The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, rose 10,250 to 304,750 last week.

The claims data has no bearing on Friday's employment report for February as it falls outside the survey period.

Nonfarm payrolls are expected to have increased 240,000 last month after rising by 257,000 in January, according to a Reuters survey of economists. The unemployment rate is forecast falling 0.1 percentage point to 5.6 percent.

The economy added more than a million jobs between November and January, a feat last seen in 1997.

U.S. stocks were trading higher Thursday after the European Central Bank said it would start its new government bond-buying program of 60 billion euros a month on March 9 and raised its economic growth forecast for 2015.

Prices for U.S. Treasury debt were little changed, while the dollar rose to an 11½-year high against the euro.

Soft Manufacturing

In a separate report, the Commerce Department said new orders for manufactured goods slipped 0.2 percent in January after dropping 3.5 percent in December.

The department also said orders for non-defense capital goods excluding aircraft -- seen as a measure of business confidence and spending plans -- rose 0.5 percent instead of the 0.6 percent advance reported last month.

Manufacturing has been hurt by softening demand in Europe and Asia as well as a strong dollar and lower crude oil prices, which have caused some energy companies to either delay or cut back on capital expenditure projects.

A labor dispute at U.S. West Coast ports, which has since been resolved, also has weighed on factory activity through disruptions to the supply chain.

There is optimism the sector will regain momentum in the second quarter as some of these factors fade.

'Starting to Turn the Corner'

"There are some signs that the core capital goods data might be starting to turn the corner after a weak end to 2014," said Daniel Silver, an economist at JPMorgan (JPM) in New York.

A second report from the Labor Department showed productivity, which measures worker hourly output, fell at a 2.2 percent annual rate in the fourth quarter as the number of hours worked outpaced output. It was previously reported to have declined at a 1.8 percent pace.

Productivity has been weak for much of the recovery from the 2007-09 recession, helping to boost hiring.

"Of late, job growth has been extraordinary, but it now behooves employers to quickly utilize these new hires as effectively as those already on the job," said Doug Handler, chief U.S. economist at IHS Global Insight in Lexington, Massachusetts.

In the fourth quarter, hours worked increased at a revised 4.9 percent rate instead of the previously reported 5.1 percent pace. Compensation an hour rose at a 1.9 percent rate, rather than the 0.9 percent pace reported last month.

That left unit labor costs, a key gauge of inflation and profit pressures that measures the price of labor for any given unit of output, increasing at a 4.1 percent rate in the fourth quarter -- up from the 2.7 percent rate reported last month.

 

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Exports Support Record Number of Jobs for 5th Straight Year

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Since 2009, the United States export industry has added 1.8 million positions, according to a Commerce Department statement released Wednesday. In 2014, the industry supported a record 11.7 million jobs -- marking the fifth straight year the number has set a record.

"Exports are creating jobs and strengthening our economy," U.S. Secretary of Commerce Penny Pritzker said . "We know that export-related jobs are good jobs, paying up to 18 percent more than non-export related positions."

Numbers are up across the board, as goods exports supported 7.1 million jobs last year -- an increase of 1 million jobs since 2009. Service exports increased roughly 700,000 jobs over that same time, increasing its total to 4.6 million jobs in 2014.

Pritzker said American businesses exporting goods and services are critical to the country's growth since 95 percent of the world's consumers are outside the U.S.

News With a Political Pitch

"Enacting President Obama's trade agenda will open new markets to 'Made in America' goods, helping create even more jobs in communities across the country," she said in the report. "Now is the time for Congress to pass bipartisan trade promotion legislation, so we can implement new trade agreements that will help our businesses, workers and innovators compete on a level playing field and succeed around the world."

Through the last four decades, Congress has used trade promotion authority -- or "fast track negotiating authority" -- to pursue foreign trade agreements throughout the world. Measures often include domestic job support, relaxed export agreements and moves to create equal competition for agricultural businesses. The technique recently resurfaced for its potential role in the highly debated Trans-Pacific Partnership.

 

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Market Wrap: Wall Street Inches Up Ahead of Key Jobs Report

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Financial Markets Wall Street
Richard Drew/AP
By Sinead Carew

NEW YORK -- U.S. stocks closed modestly higher in light trading Thursday as investors held back on big bets ahead of Friday's jobs report, which is expected to be a big factor in influencing the timing of a Federal Reserve interest rate hike.

Focus on the report was heightened as many investors see it as one of the most import economic indicators due to be released ahead of the Fed's meeting in mid-March.

People are anticipating some fireworks tomorrow. That's the best way to describe the waiting today.

"People are anticipating some fireworks tomorrow. That's the best way to describe the waiting today," said Paul Schatz, president and chief investment officer at Heritage Capital in Woodbridge, Connecticut.

The S&P and the Dow had hit records and the Nasdaq surpassed 5,000 at the start of the week after a strong February performance for U.S. stocks, giving additional reason for investors to take a breather Thursday.

European news was some help to U.S. markets but higher-than-expected U.S. jobless claims took "a little bit of the wind out of the sails," said Paul Brigandi, managing director of portfolio management at Direxion Funds in New York.

Initial jobless claims rose to 320,000 in the latest week, above the 295,000 estimate. The disappointing numbers came after a weaker-than-expected private payrolls report Wednesday and ahead of Friday's monthly employment report.

A separate report showed new orders for U.S. factory goods unexpectedly fell in January for a sixth month, a sign of weakness in the manufacturing sector.

The Dow Jones industrial average (^DJI) rose 38.82 points, or 0.21 percent, to 18,135.72, the Standard & Poor's 500 index (^GSPC) gained 2.51 points, or 0.12 percent, to 2,101.04 and the Nasdaq composite (^IXIC) added 15.67 points, or 0.32 percent, to 4,982.81.

Earlier in the day, the European Central Bank raised growth and inflation targets and announced it would start its government bond-buying program of 60 billion euros a month on March 9.

Stocks In the News

AbbVie said it would buy Pharmacyclics for about $21 billion, giving it access to what is expected to be one of the world's top-selling cancer drugs. Pharmacyclics (PCYC) shares jumped 10.3 percent to $254.22 while AbbVie (ABBV) fell 5.7 percent to $56.86.

The news also helped lift other healthcare stocks such as Vertex Pharmaceuticals (VRTX), which closed up 5.8 percent at $126.96. Regeneron Pharmaceuticals (REGN) added 3.8 percent to $428.95 and Biogen Idec (BIIB) rose 2.8 percent to $425.60.

About 5.7 billion shares changed hands on U.S. exchanges, below the 6.5 billion average for the last five sessions, according to BATS Global Markets.

Advancing issues outnumbered declining ones on the NYSE by 1,660 to 1,371, for a 1.21-to-1 ratio; on the Nasdaq, 1,560 issues rose and 1,154 fell, for a 1.35-to-1 ratio favoring advancers.

The S&P 500 posted 21 new 52-week highs and 2 new lows; the Nasdaq composite recorded 97 new highs and 42 new lows.

What to watch Friday:
  • Staples (SPLS), Footlocker (FL) and Tribune Media (TRCO) are scheduled to release quarterly financial results before U.S. markets open.
  • At 8:30 a.m., the labor Department releases employment data for February, and the Commerce Department releases international trade data for January.
  • The Federal Reserve releases consumer credit data for January at 3 p.m.

 

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The 6 Best Things to Buy in March

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Welcome to March, the interim between winter's most brutal weather and the glory of spring. While it may be snowing in your neck of the woods, take comfort in the fact that green grass, fragrant buds and short sleeves are headed your way soon.

While you wait for sunshine, now's the perfect time to create your spring and summer game plan. Maybe that means a vacation, some indoor or outdoor home improvement or even a personal makeover. Fortunately, some of the best buys in March will help facilitate all of the above.

 

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This ETF Goes for Less Volatility, Luring Anxious Investors

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Let's be honest: In the face of a dicey global economy, the relentless forward march of the market is causing anxiety not only for those on the sidelines, but also for investors who are already participating and enjoying pretty decent returns.

If you're looking to capture the broader market's success but worry over the possibility of a pullback, consider an exchange traded fund designed to lower your risk.

The iShares MSCI USA Minimum Volatility ETF (USMV) attempts to track the broad performance of U.S. equities with lower volatility than the overall market. Based on the MSCI USA Minimum Volatility Index, the fund began trading on Oct. 18, 2011. Since inception, USMV has averaged 18.1 percent in annual returns.

During this period, the fund's total return of 64.75 percent trails the S&P 500 (^GSPC) index's total return by about 7 percentage points. But it's tracked the S&P 500 with much less volatility. USMV has a current beta of 0.79, meaning that when compared to market, which carries a baseline beta of 1.0, it's only 79 percent as volatile.

USMV has actually outperformed the S&P over a one-year period. For the last trailing 12 months, USMV has returned 17.3 percent, versus the S&P 500 index return of 14.8 percent That's 2.5 percentage points of outperformance for less risk.

Smoothing Out a Bumpy Ride

While the S&P 500 may have just conquered yet another record high in breaching the 2100 level, recent market action has been defined by seesaw volatility. In late fall, the index lost nearly 7 percent between mid-September and mid-November before regaining ground, and experienced another 5 percent hiccup in December before recouping and advancing.

Such dizzying swings within the space of weeks have some investors seeking stability, and USMV appears to be a beneficiary of this desire. The fund held over $3.6 billion in assets as of Dec. 31, 2014. In the first few weeks of this year, the fund's net assets have billowed by more than 27 percent, to $4.6 billion.

Sector and Stock Selection

How does the fund decrease its volatility, and theoretically, investor risk? First, four broad and relatively stable sectors account for nearly two-thirds of the USMV's market value: health care (19.8 percent), financials (15.6 percent), information technology (14.7 percent) and consumer staples (14.2 percent).

This is somewhat similar to the composition of the first two-thirds of the S&P 500 index, except that USMV essentially switches health care and financials in terms of weighting. It also gives more weight to the consumer staples sector, which relies more heavily on food and other "bread and butter" stocks, vs. the S&P's bias toward the consumer discretionary sector, which includes companies that perform well in healthy economies, when consumers have more disposable income -- think Netflix (NFLX) and other media stocks, for example.

The fund also gets a boost from stocks that, in the best-case scenario, outperform the market with a lower beta. A fine example is the ETF's largest holding: AmerisourceBergen (ABC). Not exactly a household name, AmerisourceBergen is nonetheless a $119 billion pharmaceutical distribution company. ABC has returned nearly 47 percent over the past trailing 12 months, while carrying a beta of just 0.60. Other top-10 holdings that are beating the broader indexes with betas below 1.0 include Becton Dickinson (BDX), PepsiCo (PEP) and Paychex (PAYX).

The ETF is fairly investor-friendly as well. Because it's invested in liquid, primarily large-cap U.S. stocks, there's very little difference between the market share price and the fund's net asset value (the daily published value of the fund's holdings). Currently, the fund trades at a 0 percent discount to net asset value. In addition, USMV yields 1.9 percent, and carries an expense ratio of just 0.15 percent.

Should you consider an investment in USMV? In the final analysis, the fund is highly correlated to the broader market, even with lower volatility. USMV may experience less fluctuation than, say the SPDR S&P 500 ETF (SPY) or the Vanguard S&P 500 ETF (VOO), two larger funds that track the performance of the S&P 500, but outsize market swings will still impact this strategic ETF.

On the other hand, USMV may offer just the psychological boost that some investors need to participate in the market. BlackRock Fund Advisors, which manages the fund, remarks that its product "may help reduce losses during declining markets while still experiencing gains during rising markets." With an albeit brief track record approaching 3.5 years, USMV so far is on the path to fulfilling this goal.

Motley Fool contributor Asit Sharma has no position in any stocks mentioned. The Motley Fool recommends Becton Dickinson, Netflix, Paychex and PepsiCo. The Motley Fool owns shares of Netflix and PepsiCo. Try any of our Foolish newsletter services free for 30 days. Check out our free report on our favorite high-yielding dividend stocks.​

 

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Tax Trap: How Phaseouts Can Take Away Valuable Breaks

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Most taxpayers try to take advantage of every tax break they can find, and many make plans to arrange their finances to make maximum use of credits, deductions, and other tax breaks. But the tax laws are riddled with traps that often take away tax breaks. One of the most common involves what are known as tax phaseouts: income levels at which tax credits and deductions begin to disappear.

Phaseouts On the Rich

Many of the tax phaseouts that get the most attention are tailored toward taking away tax benefits for high-income taxpayers. For instance, the tax law changes that took effect at the beginning of 2013 reinstated what's known as the Personal Exemption Phaseout, which starts taking away the income reduction for personal exemptions for single taxpayers making more than $250,000 and married taxpayers with income over $300,000. The reduction is 2 percent for every $2,500 above the respective threshold, meaning that those who make $125,000 more than the threshold amount no longer get any benefit from personal exemptions. With personal exemption amounts of $3,950 per person in 2014, big families can lose thousands of dollars in tax breaks because of these phaseout provisions.

Indeed, many phaseouts target taxpayers with relatively high incomes. The Adoption Credit, for instance, begins to phase out at $197,880 of income, and $40,000 above that threshold, it disappears entirely. Similarly, the amount that you're able to exclude from the Alternative Minimum Tax begins to phase out once your income rises above $117,300 for single filers and $156,500 for joint filers, losing $1 for every $4 above the limit until you run out of exemption.

How Phaseouts Can Hurt Lower-Income Taxpayers

But phaseouts don't just target those best able to handle their disappearance. Some of the most draconian phaseout provisions are on tax breaks targeted at low-income taxpayers.

The best example is the Earned Income Tax Credit. This credit gradually rises with income, and once it hits its maximum amount, it stays there for those with children until income reaches $17,830 for single filers or $23,260 for joint filers. Above that level, though, the credit starts to go away. For those with one child, the phaseout rate is about $16 for every $100 of additional income above that threshold. If you have two or more children, the rate jumps to more than $21 for every extra $100 you earn.

Phaseouts therefore have a huge impact on the marginal tax rate that recipients of the Earned Income Tax Credit pay. In addition to the regular 10 percent or 15 percent tax rates that generally apply to those who have incomes in the range eligible for the credit, the phaseout adds 16 to 21 percentage points to their effective marginal tax rate. When you do the math, marginal rates of as much as 36 percent treat low- and middle-income taxpayers the same way the IRS does much higher-income taxpayers beyond those phaseout limits.

Other tax breaks have similar problems. The Child and Dependent Care Credit doesn't entirely disappear, but the amount of the credit gradually drops from 35 percent of the first $3,000 of childcare expenses for those with incomes of $15,000 or less, down to 20 percent for those with incomes of more than $43,000. The Saver's Credit for retirement contributions gives people up to 50 percent back for as much as $2,000 in deposits to IRAs, 401(k)s, or other retirement accounts for single filers earning $18,000 or less or joint filers with income of $36,000 or lower. But that credit drops to 20 percent the moment you earn a single dollar above those limits, with a 10 percent rate applying further up the scale. Once you earn more than $30,000 for singles or $60,000 for joint filers, you lose that 10 percent amount entirely -- again, even if you only exceed it by a single dollar.

How to Deal With Phaseouts

To avoid the traps that phaseout provisions lay out, you have to know in advance what's at stake. Paradoxically, in a few cases, it might make sense to earn less income than you otherwise would in order to avoid the phaseout provision, especially with the Saver's Credit and its particularly abrupt phaseout.

With most phaseouts, earning more income will still leave you with more money in your pocket after taxes. Still, policymakers point to phaseouts as sometimes thwarting the intent of tax breaks designed to help certain taxpayers. Expressing your discontent to those policymakers and the legislators who create tax laws might not help you right away, but it can be one way to get the ball rolling and hopefully effect change in the long run.

Motley Fool contributor Dan Caplinger concentrates on phasing lower taxes in, not out. You can follow him on Twitter @DanCaplinger or on Google+. To read about our favorite high-yielding dividend stocks for any investor, check out our free report.​

 

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When to Convert Your Traditional IRA to a Roth

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By Maryalene LaPonsie

Roth individual retirement accounts are one way to reduce taxes in retirement. Debuting in 1997, these IRAs allow workers to pay taxes on their contributions now and then let money in the account grow tax-free.

Here's an example: A 30-year-old man investing $5,000 in an IRA now would have $73,927 in his account at age 65. (That assumes he deposits nothing more and receives an 8 percent annual rate of return on the investment.) He would get a $5,000 deduction at the time of his contribution but could end up later paying taxes on the $73,927 account balance. Under this scenario, with a Roth IRA, the man would pay taxes on only the $5,000 contribution and nothing on required minimum distributions he takes in retirement.

It's no wonder Roth IRAs have become such a popular savings option. However, it's an option that may not have been around when you opened your IRA. Fortunately, you can convert your traditional IRA to a Roth, which financial experts say can be a smart money move at any age.

"The main thing you have to be aware of is that you'll pay income tax on the amount you convert," says Keith Klein, a certified financial planner and owner of Turning Pointe Wealth Management in Phoenix.

However, converting at the right time can help minimize those taxes. U.S. News spoke with financial professionals who explained the three times you should make a conversion.

1. When You Expect Your Income and Tax Rate to Go Up

While some may dispute whether taxes are ever truly low, Klein says current rates are relatively modest from a historical standpoint. That alone may be reason enough to convert now rather than risk rates increasing in the coming years.

However, more important than tax rates is whether a worker expects to earn more in the future. That's why Roth IRAs are an obvious choice for younger workers who are early in their career and can reasonably expect their income and tax bracket to go up as the years go by.

2. When You Are in a Low-Income Period

Since converting an IRA can result in taxes, some people may hesitate to do so during a period when they aren't making much money and have limited discretionary funds. However, low-income periods can be a good time to convert to a Roth IRA.

"If you don't have any [other] taxable income, [consider] converting an amount lower than your standard deduction and exemptions," says Steven Elwell, vice president of financial planning firm Schroeder, Braxton & Vogt in Amherst, New York. Following this strategy should eliminate the need to pay taxes on the converted amount.

This can work well because there is no minimum dollar amount for an IRA conversion, and you can choose to convert a small portion of your account every year. Individuals on disability, enrolled in school or going through a period of unemployment may be in a prime position for a conversion.

"Another scenario that's fantastic for slowly converting an IRA is when someone retires early before collecting Social Security," Elwell says, noting his firm is working with one couple hoping to avoid any taxes on their IRA by using this strategy.

3. When You Are Doing Estate Planning

Even if you're well into retirement, a conversion to a Roth IRA may make sense. Lockwood's firm has an 84-year-old client who is in the enviable position of not needing all his IRA money. Rather than passing on a traditional IRA, he is looking into converting it now as a gift to his children. Since his income is less than that of his children, the Roth conversation will be taxed at a lower rate than what his heirs would pay if they decided to convert the account later.

"If you have a large enough estate," Elwell says, "by converting from an IRA to a Roth IRA, you can reduce estate taxes too." Depending on an individual's tax bracket, income tax on the converted amount may be less than the estate tax for that amount. For those with estates just over the federal exemption level, paying income taxes for a conversion could also bring its value low enough to avoid the estate tax completely.

Regardless of whether you're converting an IRA to save money for yourself or heirs, financial planners say you need to watch out for any unintended consequences. "One of the dangers of converting is that taking on that extra [income] can push you into a higher tax bracket," Klein says. Not only could that income result in more taxes, it could affect eligibility for certain benefits, tax deductions or credits. To avoid any unforeseen complications, consult with a financial professional.

For midcareer and older workers, the decision may not be so clear-cut. Doug Lockwood, a certified financial planner and partner at Hefty Wealth Partners in Auburn, Indiana, says individuals should keep an eye on their time horizon when it comes to converting their IRA. He suggests working with a financial adviser to determine whether it makes sense to convert now or wait and pay taxes later.

 

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Time Has Come for Apple to Reveal Details of Its Smartwatch

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Marcio Jose Sanchez/APApple CEO Tim Cook shows off the new Apple Watch last fall. Details are expected next week.
Watches are all about time, and Apple (AAPL) has certainly been taking its time in rolling out its smartwatch. The consumer tech giant showed off the Apple Watch six months ago at its iPhone 6 media event, and next week it will finally do more than just tease the market.

Apple has scheduled a media event for Monday, and the "spring forward" theme leaves little doubt that this will be when the consumer tech giant offers up specs, prices and release dates for the smart watch. Apple is late to the party: Smartphone rival Samsung (SSNLF) hit the market with its Galaxy Gear smart watch two years ago. It hasn't gained a lot of traction and it's now on its second generation as well as second operating system platform.

This has been a hard market to crack. Tech giants Qualcomm (QCOM) and Sony (SNE) have also tried to take the smartwatch market by the wrist, but ho-hum reviews and an unenthused marketplace have resulted in chilly receptions.

Apple can change that, of course. It's the ultimate tastemaker. It made the smartphone cool for consumers with the iPhone. It ushered in the tablet era a few years later with the introduction of the iPad. Apple Watch could be the world's most valuable tech company's next hit. With Apple shares hitting fresh all-time highs, it may very well need to be a hit to keep the good times going.

Watch This Space

The watch that Apple showed off back in September was a fashionably slick device, using several ways to navigate the otherwise small screen. The digital crown, swipes and a button on the side can help wearers go through notifications, personalized updates and apps.

It's not going to be cheap. The chatter has the new smartwatch starting at $350 -- with higher-end models fetching as much as $950. The price will be a factor. Unlike the iPhone, for which stateside carriers subsidize most of the cost in exchange for a two-year commitment, folks will likely have to buy the Apple Watch at the retail price just as they do with iPads and iPods. Spoiler alert: Apple's iPad and iPod sales have been shrinking in recent quarters.

After seeing the first wave of smartwatches crash -- except for perhaps niche pioneer Pebble -- can Apple succeed? It can, and it's important to remember all of the advantages that Apple has these days.

An Apple a Day

Apple is the undisputed champ of premium consumer electronics, and its army of iPhone users is growing. Apple sold a record 74.5 million iPhones during the holiday quarter alone, building the audience of potential buyers of the smartwatch device that uses the phone's connectivity to serve up apps, notifications, and more.

It also only helps that Apple is rolling out the Apple Watch after the larger iPhone 6 and iPhone 6 Plus came out. Bigger smartphones are harder to take out of and put back into pockets as calls and notifications come in, making the high-tech wristwatches a welcome luxury. It will also make it more convenient to help grow Apple Pay usage, since the smartwatches can settle up transactions that way.

The market hasn't taken to smart watches, but Apple has a knack for educating the masses. Apple's success is probably the best thing that could happen to Samsung, Sony, and others. It would validate the medium, paving the way for cheaper options. So, yes, Apple has a lot to prove next week, but a lot of Apple's rivals are hoping that it succeeds so they can once again ride the tech tastemaker's coattails.

Motley Fool contributor Rick Munarriz owns shares of Qualcomm. The Motley Fool recommends Apple and owns shares of Apple and Qualcomm. Try any of our Foolish newsletter services free for 30 days. Check out our free report on the Apple Watch to learn where the real money is to be made for early investors.​

 

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Loans for All Credit Scores: The Meaning of the OneMain Sale

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Citibank (C) this week announced the sale of OneMain Financial to Springleaf Financial (LEAF) for $4.25 billion. The combined business will be a subprime giant, with over 2,000 branches offering loans to people with less-than-perfect credit. Just a few years ago, Citi was trying to sell OneMain for $1 billion, and no one wanted to buy. Yet in 2015, Springleaf buys the business for much more money, and its shares jump 26 percent on the news. What does this acquisition mean? Quite simply: Americans are borrowing again, and lenders are looking forward to the earnings growth that will come from this expansion of lending.

We are seeing increased activity across all credit scores, with both old business models and new. This can be a good thing: too many people are paying far too much for their credit card debt. Finding new opportunities to refinance that debt at a lower interest rate would be prudent. If you are a small business, you may have found growth difficult after the financial crisis due to restricted lending from big banks, and these new providers are enabling you to grow your business.

However, there is also a risk that the availability of credit leads us down a path of excessive borrowing once again. I hope for the former, but fear the latter.

Here is a quick overview of some new (and old) entrants that are trying to grow their loan portfolios. If you are trying to find a smart way to cut your interest rate or grow your business, keep reading. If you are just looking for some instant money to buy that next flat-screen TV, please don't.

Super-Prime Customers

For people with excellent credit (a FICO score of 700 or higher), there are now plenty of options to borrow. And interest rates are racing towards historic lows, with incentives being piled on top. It really is a borrowers market.

SoFi is a new online lender that can help people refinance their student loans, with rates starting as low as 3.50 percent. It has just expended into personal loans, and it is bringing its low-rate swagger with them. Interest rates start at 5.50 percent, and only go up to 8.99 percent. Even better, there is no origination fee and no prepayment penalty.

If you have $10,000 of credit card debt at an 18 percent rate (which, believe it or not, is close to the national average), you could save nearly $2,000 of interest by paying off your debt at SoFi. To qualify, you need a score of 700 or higher. And, if you apply via MagnifyMoney (we do not receive any payments from SoFi) during March, it is paying a $100 bonus to customers after the loan closes. For super-prime customers, it will be hard to find a better deal. SoFi is widely regarded as the next Internet lender to go public.

Not Quite Prime

If your score is below 700, you still have some amazing options. Payoff will lend to people with a score as low as 660, and its rates start at 10 percent. Payoff is focused on helping people get out of debt, and it has built a business around getting people debt-free. It does not want the Payoff loan to increase your total debt, because its primary goal is for you to have less debt in 12 months than you have today.

LendingClub (LC) is one of the original Internet lenders, and it is active all the way down to a 620 credit score. I poured through its investor prospectus and borrower data to get a good understand of its approval criteria, and that's share at MagnifyMoney. In summary, it is looking for people who have credit card debt, but almost always paid on time. It doesn't like collection items on your credit report or many missed payments. So, if you are responsibly paying but just want to get out of debt faster, it may be the right option for you. LendingClub generated a lot of headlines over its wildly successful December IPO.

The good news about SoFi, Payoff and LendingClub is that you can see if you are approved and what interest rate you could get without hurting your credit score. All use "soft pulls" on your credit report. The smartest move is to apply to all 3 lenderthree and go for the lowest interest rate.

Small Businesses

After 2008, it became incredibly difficult for small businesses to get access to affordable credit. Just as Internet lenders have been making it easier for people to borrow, the same innovation has come to the small business market.

FundingCircle is a leading small business marketplace lender, and it is on target to issue more than $1 billion of loans this year. It looks to make loans between $25,000 and $500,000 to profitable small businesses looking to grow or finance inventory. The process feels like the opposite of bank lending. You apply online, answering just a few key eligibility questions, including your time in business, your business revenue, profits and the FICO score of the owners (which must be higher than 620). It can close loans in a week.

I spoke with the owner of a wine shop in New York, who benefited from FundingCircle. Before 2008, the renewal of his credit facility was routine. But, in 2008, everything changed. Even though his business was doing better (people must have been drinking a lot of wine in those days), the big banks just wouldn't lend. When he Googled for an answer, he found FundingCircle and was able to get the loan arranged in a week.

Back to Where We Started, With OneMain

If you visit a OneMain branch, you can get a loan issued in under 30 minutes. It goes deep with FICO scores (as low as 550), but its prices are higher (up to 35 percent). OneMain is a much better alternative to payday and title lending, but it can also be a more expensive form of credit card borrowing.

The business has been booming over the last few years and was making hundreds of millions of dollars for Citi. Combined with Springleaf, we can expect further growth, including more aggressive online loan distribution alongside their branch network.

OneMain was a pioneer of subprime installment lending in 1912 (under its original name, Commercial Credit). And that should give us all a wakeup call. The business models and technology may be new, but the core business is as old as time. They are all money lenders. In the last crisis, we thought we had become so smart that we could use analytics and securitization to give people loans they couldn't afford. Right now, we don't see signs of excess. But as the competition for loans heats up, this new batch of lenders will be under pressure to relax lending criteria. Let's just hope that this time is different.

Nick Clements is the co-founder of MagnifyMoney, a price comparison website that helps you find the cheapest bank accounts, and the lowest interest rates on your savings and your debt. He spent nearly 15 years in consumer banking, and most recently he ran the largest credit card business in the U.K. You can follow him on Twitter @npclements

 

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25 Easy and Creative Ways to Spend Less on Food

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By Maryalene LaPonsie

If you're a family of four with pre-teens and consider yourself "thrifty," you may have spent $654.90 on groceries last month. On the other hand, maybe you live large -- or as the U.S. Department of Agriculture says, "liberal" -- and spent $1,303.20 for the month.

Those numbers come from the USDA estimates for the average cost of food at home in December 2014. The USDA apparently didn't even want to attempt to estimate how much those with teens spent on food, but I'm quite sure the monthly cost isn't going anywhere but up for those families. So here are 25 ways to bring the cost down.

1. Skip Serving-Sized Items

I have kids. I know serving size portions are convenient. Individual yogurts, cheese sticks and chip bags making packing lunches so easy. But it also makes them more expensive. Rather than buying small packages, buy bigger portions and break them down. Invest in reusable containers to dole out yogurt from a big tub. Buy chunk cheese and cut it up. Get the big bag of chips and pretzels and divide them up in baggies. It doesn't take much time, and it will save you dollars.

2. Don't Buy Processed Foods

Actually, if you really want to make a dent in your budget, you should lay off the processed foods entirely. They typically provide poor value. A box of macaroni and cheese may not seem expensive when you can buy it for a buck, but portion sizes are dwindling, and that box may not get your family very far. You may be better off investing that dollar toward the ingredients for homemade mac 'n' cheese. You might pay a little more upfront, but you'll get a meal that will feed the family and maybe even leave you with leftovers.

3. Or If You Do, Use Coupons

If you do want to buy processed foods, you should definitely be couponing. After all, coupons are most easily found for processed items, and if you combine them with sales, you can get some items practically free. Head to your favorite search engine and look up "couponing" to find a whole slew of sites that will teach you the basics.

4. Sign Up for the Store Loyalty Program and E-Coupons

Even if you don't relish the idea of clipping paper coupons, you should definitely sign up for your grocery store's loyalty program and e-coupon program, if they have one.

For example, as a Midwest shopper, Meijer is my go-to grocery store. Its mPerks program lets me clip virtual coupons and, even better, let's me sign up for personalized rewards. For example, if I spend a certain amount within a month's time, I get $20 off my next shopping trip. It's a simple way to save without needing to do anything more than punch in my loyalty number during checkout. Meijer isn't unique. Next time you go shopping, swing by the customer service desk and see if your store offers a loyalty or e-coupon program.

5. Stockpile the Best Deals

One of the secrets couponers use to stretch their dollars is stockpiling. It's the idea that if you buy 50 bottles of ketchup when you can get them for 10 cents each, you'll never have to buy them at regular price. Of course, you don't want to go off the deep end (just how much ketchup do these extreme couponers use?) but you can save cash by using a less radical version of stockpiling. When you see a good sale, pick up a couple extras at the bargain price. A good rule of thumb is to buy enough to get you to the next sale. Traditionally, sales run on 12-week cycles so you could buy three months of an item to avoid having to pay full price next time.

6. Learn How to Cook

You can also spend less on food if you learn how to cook. Not only will that keep you from heading to the drive-thru so often, it can also help you avoid overpriced, processed foods and make the most of the ingredients you do buy. If you don't know where to start, I recommend bypassing the grocery store and heading to the library first. You can find all sorts of cookbooks geared toward beginners. My favorite for new cooks is Mark Bittman's How to Cook Everything the Basics.

7. Plan Menus Based on the Ads or Your Pantry

It's easy to say you should avoid processed foods and cook from scratch, but whole foods aren't always cheap either. Pull a random menu plan out of a cooking magazine, and you may have to pick up your jaw off the ground when you see the total in the checkout lane. It's a mistake I've made. All those strange cuts of meat and fresh herbs really add up. A better way to make your menu plan is to look at the ad and what is in your cupboards already. If chicken is on sale, and you have rice in the pantry then it looks like you're having chicken and rice for dinner one day this week.

8. Buy Fresh Ingredients in Season

Cans and boxes will last a long time on your shelf, but fresh ingredients won't. Fruits and veggies, in particular, can eat up a big chunk of your food budget. Train your taste buds to like what's in season.

9. Salvage Food About to Go Bad

Regardless of how careful you menu plan, you may end up with food that's about to expire. You could resign yourself to pitching it in the trash, or you could come up with creative ways to salvage it. For example, slightly stale bread can make great French toast or be turned into breadcrumbs. You could use overripe bananas for banana bread. If you have veggies you know you won't get to in time, blanch and freeze them.

10. Make the Most of Your Freezer

Speaking of freezing, your freezer is your best friend when it comes to saving on food. You can freeze practically everything, which means you can buy extras of dirt-cheap groceries and not worry about it going bad. I go to our local bread outlet store to buy all sorts of breads, bagels and muffins to freeze. Let them thaw on the counter overnight, and they're as good as new. When berries are practically being given away in the spring, I place them in a single layer on a pan to freeze before transferring to baggies. I've even frozen milk and used it later in baking.

11. Invest in Half a Hog or Quarter Cow

However, one of the best ways to use your freezer is to buy a half hog or a quarter cow and freeze it. Expect to shell out some serious money upfront, but your per pound cost will likely be lower than what you'd pay for comparable cuts in the grocery store. Check with your local butcher shop or area farms to see where you can buy meat in bulk this way.

12. Make Meat a Side Rather Than the Star

Regardless of whether you buy directly from the farmer or shop at the grocery store, meat is likely the most expensive part of your meals. You can spend less by demoting meat from its starring role at the table and using it as a supporting player instead. Casseroles, soups and stews are a few of the ways to give your family the meat they crave without breaking your budget.

13. Make a List -- and Stick to It

When you go into the store, take a list with you. Don't be swayed by impulse purchases. If it's not on the list, it stays on the shelf.

14. Don't Walk Up and Down the Aisles

Now, I know some of you may be thinking you want to wander the aisles to see if there are any great deals. But you should have looked at the ads beforehand when making your list. Sure, there could be unadvertised sales in some aisles, but the chance of that is slim compared to the chance you'll be persuaded to buy something you don't need. Remember, every extra minute you spend in the store is an extra minute when you could give in to impulse-buy temptation. Make it your goal to get in and out as quickly as possible.

15. Grab the Generics

In the event you need to buy something that isn't on sale, you should probably always be reaching for the generic first. They are cheaper and often just as good as the name brands.

16. Look High and Look Low

Another way to find the best deal is to look high and low on the shelf. Grocery stores may put the biggest profit-generating brands at eye level. Stretching or stooping could result in a cheaper brand and more money left in your pocket at the end of the day.

17. Check the Ethnic Aisle

If your store has an ethnic aisle, take some time to get acquainted with it. At my store, I find some spices, beans and canned goods are cheaper there than they are elsewhere in the store. For that matter, if you cook a certain cuisine frequently, see if there is a dedicated ethnic market in your area where you can stock up on essentials at a low price.

18. Go to the Store Alone

You will spend less money at the store if you go without spouses, children or friends who could convince, cajole or coax you into buying extra items.

19. Fill Your Stomach First

You'll also spend less money if you eat something before heading to the store. Shopping on an empty stomach may guarantee everything sounds delicious and lead you to fill your cart with food you don't need.

20. Consider a Warehouse Club Membership

Let's shift our discussion to stores for a moment. Where you shop can be as important as what you buy when it comes to saving money. Personally, I finally jumped on the Costco (COST) bandwagon a few months ago and found it's saving me a bundle. However, not everyone will benefit from a warehouse club membership. In my case, it makes sense because I have a household of seven, including two boys who eat as much as the rest of us combined.

If you're on the fence, you can browse the store for free to check out the prices. You'll also want to read our articles on the secret tactics of warehouse clubs, best buys at these stores and a comparison of the big three in the business.

21. Shop for Food in Unexpected Places

When it comes to groceries, don't limit yourself just to the grocery store. Sometimes, deals are to be found in unlikely places. Drug stores are one place where you can occasionally find nearly free groceries if you combine coupons with sales. You don't want to buy at regular price, but keep an eye on the sales circulars for CVS (CVS), Rite Aid (RAD) and Walgreens (WBA). All have a couple of great buys each week. The dollar store and online retailers such as Amazon (AMZN) are other unexpected places to find deals on grocery goods.

22. Check Out Outlet Stores

If you throw stuff out the day before the expiration date stamped on the label, this option probably isn't for you. However, for everyone else, look and see whether you have a salvage store or other outlet nearby. These stores sell items that are either imperfect -- think dented cans -- or nearing their expiration date. It's hard to find cheaper groceries than what you'll find at these stores. I'm not lucky enough to have a scratch and dent store nearby, but I do have a bakery outlet that practically gives away their goods.

23. Head to a Stripped-Down Store

A final store option may be to head to a stripped-down retailer. Aldi may be the best-known store in the category, but Save-a-Lot is another option in my area. These stores offer a limited selection, may not bag your groceries and may require you to deposit a quarter to use a cart. In exchange, you get low, low prices on brands you may or may not recognize. Aldi has a loyal fan base, but I must admit my experiences have only been so-so. Still, if you have a store nearby, it's worth a trip to see if you can save some money.

24. Plant a Garden

A non-shopping way to save money on food is to grow your own. We won't go too much into this here because we have a whole separate article about how to save green by growing green.

25. Eat Less

Finally, you can spend less on food by, quite simply, eating less. Yes, I know those of you with teens think I've gone mad. I have teens myself, so I'm well aware of how hard it is to reign in the appetites of growing kids. My strategy has been to put enough of a main course or meat on the table so everyone can have a serving. Then, I make sure to have a large amount of rice, potatoes or other inexpensive side dish available for when the chorus of "I'm still hungry" begins. And if they don't like it, well, then I guess it's tough being a teen in my house.

There you have it: 25 tried and true ways to spend less on food. Which ones have worked for you, and which strategies did we miss? Share your money-saving tips in the comments below or on the Money Talks News Facebook page.

Like this article? Sign up for our newsletter and we'll send you a regular digest of our newest stories, full of money saving tips and advice, free! We'll also email you a pdf of Stacy Johnson's "205 Ways to Save Money" as soon as you've subscribed. It's full of great tips that'll help you save a ton of extra cash.

 

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Amazon Adds Hotel Rooms to Its Everything Store

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BYA3DR Waiter with breakfast tray hospitality hotel service
Alamy
By Robert McGarvey

Amazon has quietly dipped its toes into selling hotel accommodations. And the deals can be stellar.

Usually with the Everything Store, a publicity machine is at full volume -- think of the ill-fated Fire Phone -- but not so with hotel rooms where, quietly, the company began slipping them into Amazon Local offerings a few months ago. They are easily overlooked. Look harder.

I had been booked into a three-night stay in late April at the four-diamond Heldrich Hotel in New Brunswick, New Jersey, at $474. Then an Amazon emailed popped into my inbox. "Still Time to Save: New Brunswick Stay." A click told me rooms could be had -- at the same hotel -- for as low as $104. I checked availability for my nights, cancelled the original reservation, booked anew for $347 and saved $127.

Understand, Amazon's foray into rooms has been greeted with some skepticism, mainly because the big online travel agencies -- notably Expedia (EXPE) and Priceline (PCLN) -- are themselves mammoth companies with huge marketing war chests and over a decade of knowhow in selling travel. It is one thing for Amazon to crush independent bookstores and record shops. It is another thing, snorted many skeptics, to take on the 800-pound travel gorillas in their own lairs.

'A Niche That Is Ripe for Disruption'

But at least some industry experts believe Amazon has staked out a niche where it may win. Said Donna Quadri-Felitti, clinical associate professor of hospitality and tourism at New York University, when asked about Amazon's prospects in selling hotel nights: "What took you so long, Jeff?" The question was directed at Amazon (AMZN) founder and CEO Jeff Bezos, and Quadri-Felitta's point is that hotels may be a niche that is ripe for disruption, in ways that benefit hotel operators, Amazon, and you and me.

Gautam Lulla, president of Travel Tripper, which provides marketing tools to hotels, said that Amazon may come into the fight with a powerful advantage. It excels at analytics - knowing a lot about its customers and their purchase habits -- and, said Lulla, if Amazon can tap into that to predict travel desires, it would be ahead of many competitors. He added that, to his mind, Amazon's entry into hotels is a plus both for hotels and consumers.

Pranav Patel, co-founder of HotelUpgrade.com and an experienced hotel manager, makes it three in holding an optimistic view about Amazon's future: "Amazon is going to become a viable contender in the OTA space, simply because they understand e-commerce and user experience and are amazing at user acquisition and loyalty."

Then there's this: Independent hoteliers hate Expedia, Hotels.com and the rest. The reason: they are nicked for booking fees as high as 30 percent. Buy a $200 room at Expedia, and, in many cases, the hotel sees only $140. Big, chain hotels get better deals from Expedia and the others. Their rates may be as low as 15 percent. But independents with little clout take the Expedia deal or they get left behind.

Focus on Independent Hotels

Amazon is solidly focused on independent hotels. A search of its inventory found no national chains. Amazon has not confirmed its fees to MainStreet but several independent hotels told MainStreet they were paying in the vicinity of 15 percent, perhaps half of what Expedia would want.

Amazon offerings are selective. In a recent search on www.local.amazon.com, there was a good deal at the hip Fifteen Beacon in Boston ($339 a night, down from $485). A New Braunfels, Texas Hill Country Cottage night was a jaw-dropping $51 (regular price: $165). The Chaminade Resort in Santa Cruz, California, was $139 (regular price: $319). The Jack London Lodge in Glen Ellen, California, was $85 (regular price: $174).

In a recent search, maybe 50 more hotels were on offer, from around the United States, with a sampling of Mexican resorts. That means you cannot rely on Amazon Local to find a cheap room for your next business trip, but when you are prowling in search of a great buy for a weekend getaway and you are flexible about location, this is a place worth looking.

 

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Apple Could Be Building Something Much Bigger Than a Car

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AppleApple took a tentative step toward the auto business with its CarPlay in-dash system. Reports now suggest that the Silicon Valley giant is preparing to take a far greater leap.
Reports in the Wall Street Journal, the Financial Times, and other sources have suggested that Apple (AAPL) is developing a new product: a car.

Why would Apple develop a car? The easy answer is this: Tesla Motors (TSLA) has proven that a Silicon Valley company can enter the car business, and Apple sees an opportunity.

But the easy answer isn't necessarily the right one. As Tesla is learning, it's hard to make money in the car business. Costs are extremely high, and profit margins are slim.

Apple is accustomed to fat profit margins. What's more, Apple is a company that only enters a market when it thinks it has a game-changing product. Think about the iPhone, the iPod, even the Mac: all products that "disrupted" the existing space.

How could Apple "disrupt" the car business?

How to Disrupt the Auto Industry

Industries can get "disrupted" when there are consumer needs that aren't been addressed by the existing companies doing business in the market. Before Apple's iPod, MP3 music players were hard to use, their appeal limited to techie types.

Likewise, the iPhone wasn't the first smartphone, but it made smartphones more useful -- and far more appealing to a mass-market audience. It's not the only successful smartphone, but nearly all of the successful smartphones introduced after the iPhone's debut followed its lead.

And if it weren't for Apple's Macintosh computers, Microsoft (MSFT) wouldn't have had to invent Windows -- and personal computers might never have become mass-market products.

How could Apple have that kind of effect on the car business?

Tesla has invented what many people believe to be a better kind of car. But it's still a car: It still costs a lot of money to own, it still needs to be parked and recharged and serviced and so forth. And it still needs to be driven: Even if you have a Tesla, you still have to put up with traffic jams.

The truth is, today's cars -- even the ones that aren't Teslas -- offer a pretty good experience. They're safe and comfortable and reliable and fun to drive. It's hard to improve on that experience in a transformative way.

But it might be possible to improve on the experience of car ownership.

What If Apple Is Planning to Sell Rides, Not Cars?

You've probably heard of Uber, the ride-sharing service. It's an alternative to a taxi: You can summon a car with a smartphone app, get a ride for an agreed-upon price, and pay very simply.

It works pretty well -- in some urban areas. But it has its flaws: It depends on "crowdsourced" drivers, which means that coverage is inconsistent. And Uber's policy of "surge pricing" -- raising prices during times of high demand -- can result in a night out that becomes a lot more expensive than you'd planned.

Imagine a service like Uber, but with much wider coverage -- and with automated, self-driving electric cars.

Those flaws seem to offer an opportunity -- and the seed of inspiration. What if Apple isn't planning to build and sell a car? What if it's planning to build a car service?

Imagine a service like Uber, but with much wider coverage -- and with automated, self-driving electric cars. Imagine that you could always get a ride to wherever you needed to go, quickly and easily and safely -- without ever having to drive or park or worry about fuel or repairs.

Now imagine that those cars were designed by Apple. Imagine that they were quiet and comfortable and attractive and loaded with high-tech features -- and they always remembered your preferences for everything from temperature to music to the position of your seat, because their controls were seamlessly integrated with your iPhone.

Imagine, in other words, an automated Uber, designed and implemented by Apple.

If you could have a service like that -- one that was always available, always reliable, always safe, and flexible, with different sizes and types of vehicles available -- for the price of your monthly car payment or less, would you sign up?

Would you give up your car if you could have something like that instead?

If enough people say "yes" to that question, Apple could genuinely "disrupt" the global auto business, by disrupting the whole idea of car ownership.

This Could Be a Very Apple Kind of Business

Nobody outside of Apple's tight circle knows what the company is planning. And Apple's car idea -- whatever it is -- might never see the light of day: Apple often explores new-product ideas without choosing to develop them.

But while many experts agree that the idea of Apple building and selling a car doesn't seem to make a lot of sense, an Apple car service could be the kind of "disruptive" idea that Apple does best.

Motley Fool contributor John Rosevear owns shares of Apple. The Motley Fool recommends and owns shares of Apple and Tesla Motors. Try any of our Foolish newsletter services free for 30 days. Check out our free report on the Apple Watch to learn where the real money is to be made for early investors.

 

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Labor Market Flexes Muscles, Adds 295,000 Jobs in February

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Unemployment Benefits
Lynne Sladky/AP
By Lucia Mutikani

WASHINGTON -- U.S. employers stepped up hiring in February and the jobless rate fell to a more than 6½-year low of 5.5 percent, which could put pressure on the Federal Reserve to raise interest rates in June.

Nonfarm payrolls increased 295,000 last month after rising 239,000 in January, the Labor Department said Friday. The broad job gains came despite disruptive weather conditions that took hold across large parts of the country in mid-February.

The labor market is on a roll. This should ease fears at the Fed that the global downturn and sharp drop in oil prices are materially disrupting the U.S. economic outlook...

The decline in the unemployment rate from 5.7 percent in January took it to its lowest level since May 2008 and into territory that some Fed officials consider consistent with full employment.

"The labor market is on a roll. This should ease fears at the Fed that the global downturn and sharp drop in oil prices are materially disrupting the U.S. economic outlook, and keep the Fed firmly on course for a June lift-off," said Scott Anderson, chief economist at Bank of the West in San Francisco.

The decline in the unemployment rate, however, largely reflected people dropping out of the labor force.

But economists, who had expected payrolls to rise only 240,000 and the unemployment rate to fall to 5.6 percent, noted that other indicators monitored by the U.S. central bank showed a rapidly tightening labor market.

February marked the 12th straight month that employment gains have been above 200,000, the longest such run since 1994.

The dollar rallied to a fresh 11½-year high against a basket of currencies as traders brought forward bets on when the Fed would raise rates. However, futures markets continued to point to a first rate hike in September.

U.S. stocks and government bond prices fell.

Average hourly earnings rose by three cents last month, leaving the year-on-year gain at 2 percent. That compared to a 2.2 percent rise seen in the 12 months through January.

While economists acknowledged that persistently sluggish wage growth and very benign inflation argued against the Fed pulling the trigger in June, they said tightening conditions in the labor market could force the central bank's hand.

"Even if the Fed decides to delay the lift-off in policy, it is hard to see the downward trend in unemployment not continuing," said Jeremy Lawson, chief economist at Standard Life Investments in Edinburgh, Scotland.

"Will the Fed really want short-term interest rates to be negative when the unemployment rate falls below 5 percent late this year or early next year?"

Wage Vigil

Fed officials are monitoring pay closely to help determine when enough pressure has built in the jobs market to merit higher borrowing costs to keep the economy from overheating.

The central bank has kept its key overnight lending rate near zero since December 2008.

Wage growth could get a lift from an announcement last month by Walmart Stores (WMT), the world's largest retailer, that it would spend more than $1 billion this year to increase pay for about 40 percent of its U.S. workforce.

Other companies including TJX Cos. (TJX) and health insurer Aetna (AET) also have announced wage increases.

The closely followed employment report was released a little more than a week before the Fed's March 17-18 policy meeting. Many economists expect the central bank could signal its openness to a June rate hike by dropping a pledge to be "patient" in considering such a move.

"It is most likely they will drop 'patience' in March," said Samuel Coffin, an economist at UBS (UBS) in Stamford, Connecticut.

February's sturdy jobs report reinforces the view that a recent cooling in economic growth reflects temporary factors, such as harsh winter weather and a now-settled labor dispute at West Coast ports.

That dispute weighed on exports and import growth in January, resulting in the trade deficit narrowing by $3.8 billion to $41.8 billion, a separate report from the Commerce Department showed.

While the labor force participation rate, or the share of working-age Americans who are employed or at least looking for a job, fell 0.1 percentage point to 62.8 percent last month, other measures on the Fed's so-called dashboard improved.

A broad measure of joblessness that includes people who want to work but have given up searching and those working part-time because they cannot find full-time employment fell to its lowest level since September 2008.

The number of Americans unemployed for 27 weeks or longer also dropped to its lowest level since January 2009.

Overall, private payrolls increased 288,000 last month, with construction employment rising 29,000. Manufacturing payrolls were up 8,000 and government employment jumped 7,000.

There were hefty gains in retail payrolls, while employment in the leisure and hospitality sector recorded its largest gain since August 2012.

The mining sector saw an acceleration in job losses last month, with payrolls posting their biggest decline since August 2009. It was hurt by a loss of 1,100 jobs tied to oil and gas extraction, which has taken a hit from lower crude-oil prices.

 

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Dow Finally Gets a Taste for Apple

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Apple Stock Split 5 Things To Know
Elise Amendola/AP
By David Gaffen

NEW YORK -- Apple (AAPL), the largest U.S. company by market value, will join the storied Dow Jones industrial average (^DJI), replacing AT&T (T), in a change that reflects the dominant position of the iPhone-maker in the U.S. economy and society.

The decision to nudge aside AT&T, which has been part of the Dow for the better part of a century, is a recognition of the way in which communications and technology have evolved over the last several decades.

This is a sign of the times, and it might get everyone to look at the Dow more than they have been.

"This is a sign of the times, and it might get everyone to look at the Dow more than they have been," said Richard Sichel, who oversees $2 billion as chief investment officer at Philadelphia Trust Co.

"It would be difficult to pick any 30 companies that would cover the entire economy, especially compared with the S&P 500, but it does give the Dow more credibility."

The action, by S&P Dow Jones Indices, had been widely expected since Apple split its shares seven-for-one in June 2014.

After the split, many investors felt it was only a matter of time before the iPad maker would be added to the 30-stock average, since its high stock price had previously made it unsuitable for the price-weighted index.

The Dow industrials is the oldest U.S. stock average, first been published in 1896. Its compact size -- just 30 names -- and its mission to reflect the U.S. economy mean it has a familiarity for retail investors that other indexes that cover a greater portion of the market's value do not.

Even though professional managers generally benchmark against the S&P 500, additions and removals from the Dow are still seen as a big event. It was last altered in September 2013 when Goldman Sachs (GS), Visa (V) and Nike (NKE) were added.

Apple, which has a market capitalization of $736 billion, didn't respond to requests for comment.

AT&T declined to comment on its removal from the average. The company, which has a market value of $176.5 billion, has spent most of the last 100 years in the Dow. Its deletion from the index leaves Verizon (VZ) as the sole telecommunications company in the average.

AT&T was added in 1916, the year after the first-ever transcontinental telephone call. It was removed in 2004. After SBC Communications renamed itself AT&T following a 2005 merger, it was reinstated.

"It was a new way of life: telephones, back then 100 years ago, these talking machines," said Howard Silverblatt, index analyst at S&P Dow Jones Indices.

Twist of Fate

In a twist of fate, Apple owes some of its success to its partnership with AT&T over the iPhone, the device that propelled Apple's dominance. The iPhone first hit the market in 2007 with AT&T as its exclusive carrier, a deal that continued for more than three years.

Since the iPhone's introduction, Apple's annual revenue has risen more than sevenfold, from $24.6 billion in 2007 to $182.8 billion most recently. AT&T hasn't seen the same kind of growth. Its revenue in 2014 was $132.4 billion, up 11 percent from $118.9 billion in 2007.

"There's irony in that they are replacing AT&T, which helped them lift off to begin with," said Neil Azous, founder of Stamford, Connecticut-based advisory firm Rareview Macro.

Despite Apple's size, it would as of Thursday's close only have a 4.66 percent weighting in the Dow because of its price, the index company said in a statement. Apple will join the average after the close of trading on March 18.

Shares of Apple rose 1.3 percent to $128.07 on Friday, while those of AT&T fell 1.6 percent to $33.43.

Visa's Greater Value

Had Apple had replaced any one of the 30 Dow components except Visa (V) after its June 2014 split, a Reuters analysis recently showed, the index would have been higher. Visa is the only Dow component that would have helped the Dow more during that time, in part because of its high stock price.

Most of the assets indexed to the Dow industrials are through the S&P Dow Jones Industrials exchange-traded fund (DIA), commonly known as the "Dow Diamonds." It had about $12.5 billion in assets as of Thursday. By comparison, more than $1.9 trillion in assets track the S&P, including mutual funds and ETFs.

Kevin Landis, chief investment officer of Firsthand Capital Management, a Silicon Valley-based technology-investing specialist with $300 million in assets under management, said he hopes that this is not a sign that Apple is past its prime.

"The Dow Jones is such a backwards-looking list, I cringed when Intel (INTC) and Microsoft (MSFT) were added," Landis said. "I'm cringing today. Let's hope Apple can defy the forces of history."

Intel and Microsoft joined the average in November 1999, and their performance was weak for years following.

-With additional reporting by Jonathan Spicer, Jessica Toonkel and Ryan Vlastelica.

 

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Week's Winners and Losers: Best Buy Is Back

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EARNS Best Buy
Mark Lennihan/AP
There were plenty of winners and losers this week, with a hardwood flooring retailer walking the plank after a report called out the safety of some of its products and the leading consumer electronics retailer serving up encouraging financial results.

Sirius XM Radio (SIRI) -- Winner

Shares of the satellite radio monopoly hit new 52-week highs after raising some debt at a low rate. Sirius XM was supposed to issue $750 million in debt this week, but strong demand resulted in it clearing $1 billion in new financing. The new senior notes will mature in 10 years, paying an annual rate of 5.375 percent.

It's a slick move by Sirius XM. It can turn around and use those proceeds to either pay down earlier debt that matures sooner with higher rates or buy back its stock at an attractive financing rate. Either way, Sirius XM comes out ahead.

Lumber Liquidators (LL) -- Loser

The leading retailer specializing in hardwood flooring walked the plank after a scorching "60 Minutes" segment. Sunday night's show tested laminate flooring from leading merchants, finding all 30 of the Chinese-made laminates sold at Lumber Liquidators to be high in formaldehyde.

You may recall formaldehyde from biology class when you dissected a preserved frog, but it's also used in moderation in flooring. The problem is that it's also a potential carcinogen, and the Chinese samples contain levels that are above accepted limits.

Lumber Liquidators scheduled a conference call for next week to provide a business update, and it is expected to discuss the situation. It also bowed out of presenting at the Raymond James' annual Institutional Investors Conference on Wednesday. Even if it's able to cut ties with the Chinese suppliers, it will take some time for its reputation to recover.

Kroger (KR) -- Winner

At least one supermarket chain is cleaning up these days. Kroger shares hit fresh highs after it posted blowout quarterly results. The chain of more than 2,600 grocery stores came through with a profit of $1.04 a share, well ahead of the 90 cents a share that analysts were forecasting. Revenue also landed ahead of expectations, climbing 9 percent to $25.2 billion on the strength of a 6 percent uptick in comparable-store sales excluding fuel.

The near-term outlook is similarly bright for Kroger. It sees profitability clocking in between $3.80 a share and $3.90 a share. The market was holding out for just $3.72 a share.

The Fresh Market (TFM) -- Loser

The Fresh Market is backing out of a key market. The high-end grocer revealed on Thursday that it will be closing all of its stores in California. The chain of small-box supermarkets specializing in premium products will be taking a charge of $20 million to $26 million to shutter all of its stores in Palo Alto, Laguna Hills and Santa Barbara.

The Fresh Market will focus on growing its chain on the East Coast, where it has had more success. It makes sense to put more effort on the markets where its high-end niche concept is working, but any retreat is still ultimately a retreat.

Best Buy (BBY) -- Winner

There are signs of life at Best Buy. The leading retailer of consumer electronics posted positive store-level sales growth in its latest quarter. It also saw earnings grow even faster, proving that it was able to grow sales without sacrificing margins.

Best Buy isn't painting a very upbeat picture of the next few quarters given the competitive nature of the business, but it's rewarding shareholders through a dividend hike and a commitment to aggressively buy back stock.

Motley Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends Lumber Liquidators and The Fresh Market. The Motley Fool owns shares of Lumber Liquidators. Try any of our Foolish newsletter services free for 30 days. Looking for a winner for your portfolio? Check out The Motley Fool's one great stock to buy for 2015 and beyond.

 

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