Q. What changes can I expect from my employer's health insurance plan during open enrollment for 2016?
A. Employers are just starting to announce their health insurance options for 2016, and you may need to make your decisions during open enrollment in the next month or two. The National Business Group on Health recently came out with its annual survey of large employers, which offers the first glimpse of the changes employees are likely to see in their health plans for 2016.
1. Higher premiums. Large employers expect their health care costs to increase by about 5 percent for 2016 -- the same size increase they expected in 2014 and 2015. They plan to pass along some of the extra cost to employees but more of it to dependents, with employees contributing 20 percent of their own premiums and 24 percent of the premiums for dependents (higher-income employees may pay more). About one-third of the companies plan to add a surcharge for spouses who could get coverage elsewhere but don't. But very few (only 4 percent) plan to exclude spouses who have similar coverage available through their own employer.
2. More high-deductible health plans. Employers are continuing to try to contain rising costs by forcing employees to take more control of their health care: 83 percent of large employers plan to offer a consumer-directed health insurance plan in 2016 (primarily high-deductible health insurance paired with a health savings account). Half of the employers plan to offer the high-deductible plan as an option, and 33 percent plan to offer it as the only option. More than half contribute to employees' HSAs, giving them tax-free money for medical expenses; some add more if you participate in a wellness program or take a health risk assessment. For more information about HSAs, see FAQs About Health Savings Accounts.
3. Restrictions on expensive drugs. Employers identified the cost of specialty drugs as one of the major causes for health care cost increases, and they're imposing more restrictions on coverage. More than three-quarters of the employers surveyed plan to use prior authorization for some of these specialty medications -- requiring physicians to fill out forms explaining why you need the specific drug. Three-quarters plan to use step therapy, covering the drug only after you've tried a list of less-expensive medications first.
4. New telemedicine options. Nearly three-quarters of the employers will offer telemedicine, which provides virtual visits with a doctor, as an option. "It's still primarily phone-based, but the video component is starting to take off," says Karen Marlo, vice president of benchmarking and analysis for the National Business Group on Health. "You can take a picture of a rash with your phone and e-mail it to someone who can look at it, for example. It's a good way to provide good quality care at a lower cost, and it improves access in parts of the country where you have to travel a long distance to go to a physician." A telemedicine doctor's appointment may cost $40 or $50, while an actual office visit may cost $150.
5. Cash for wellness programs. Employers continue to focus on plans to improve your health, which they hope will ultimately help lower their medical expenses, and they're giving employees more incentives to participate. Thirty-nine percent plan to offer a break on health insurance premiums or cost sharing for employees who participate in a wellness program, health assessment or biometric exam. Thirteen percent plan to offer breaks for participating in a disease management program, which provides special care and resources for people with complex conditions, such as diabetes. You may also get more money in your HSA: Nearly one-third of employers plan to contribute to an HSA for employees who complete a wellness or health education program, and 8 percent plan to make HSA contributions if you achieve a health goal.
If you've been considering a Roth IRA as part of your retirement investment portfolio, now's the time to start one.
With tax-free growth and tax-free withdrawal opportunities, Roth IRAs can offer strategic benefits throughout retirement and provide the investment flexibility to help you achieve other financial goals along the way.
Here's more on why a Roth should be part of your retirement investment mix:
1. Grow tax-free and withdraw tax-free. Unlike a traditional IRA, contributions to a Roth are made using money that's already been taxed. While there's no tax benefit up front, your earnings within the account grow tax-free and withdrawals made during retirement are also tax-free.
Once a five-year aging period has been met (generally speaking, this means the first withdrawal occurs no sooner than five years after the original contribution was made) and the account owner is at least age 59½, the money you take out of your Roth IRA is tax-free.
2. Withdraw contributions at any time. The money you contribute to a Roth IRA can be removed at any time for any reason. Though it's not a great long-term investment strategy, you always have access to the money you've put in without penalty. But the earnings within your Roth are another story: The five-year aging rule and minimum retirement age rules apply to withdrawals that include earnings.
Some investors use the liberal withdrawal rules of a Roth IRA to build emergency savings, knowing that as long as their contributions are invested in a money market or cash-equivalent account, the funds are easily accessible and available penalty-free.
3. Contribute as long as you're working, regardless of age. You can keep adding to your Roth IRA well into retirement. No matter your age, if you earn a paycheck or receive 1099 wages for contract work, you can still contribute to your Roth. By contrast, with a traditional IRA contributions must stop when an earner reaches age 70½.
4. Avoid required minimum distributions. Unlike a 401(k), 403(b) or traditional IRA, Roth IRAs don't mandate minimum distributions during the lifetime of the original owner. That can be a big relief for those who don't need additional income in retirement or for those who'd rather have a Roth to bequeath as part of their estate.
Minimum distributions do apply to heirs. If you're considering making your Roth IRA a significant part of your estate, consult an attorney or investment adviser for details on how a Roth inheritance might affect your survivors' taxes.
5. Balance your future tax liability. The biggest and best benefit of a Roth IRA is hidden in plain sight -- namely, the ability to choose whether you take your income in retirement tax-free or taxed.
It used to be said that a regular IRA or 401(k) was wisest because your income tax rate was likely to be lower after retirement. It made sense to save pretax and then pay taxes on that income when you withdrew it later in life. But shifting political realities have some wondering if we could actually face higher tax rates in retirement.
Many folks are betting that it's smarter to pay the taxes now instead of kicking the can down the road and risking higher rates later. Regardless, having at least a portion of your retirement in a Roth IRA offers the option of managing your tax liability by diversifying your sources of income.
Who qualifies?. It's important to note that not everyone qualifies to invest in a Roth IRA, and for those who do, there are annual contribution limits. For 2015, the upper income limit for single filers to make a full contribution is $116,000. As income increases, the amount that can be contributed diminishes, and goes to zero at an income of $131,000. For couples who file jointly, the income limit is $183,000 for a full contribution, with an upper limit of $193,000 for a partial one.
If you exceed those income limits, you can't contribute new money to a Roth IRA, but you are allowed to convert money from an existing traditional IRA or other qualified plan to a Roth.
For those who can contribute the maximum to a Roth, that amount is $5,500 ($6,500 if you're age 50 or older).
To learn more about Roth IRAs, check out the IRS's complete guide. And remember, the sooner you make a Roth part of your retirement planning, the longer that tax-free balance can grow. Get started today!
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NEW YORK -- A new fiduciary rule proposed by the Department of Labor would tighten rules on brokers who work with millions of Americans' retirement accounts. The change would change the way retirement plan advisers are paid, with the goal of eliminating conflicts of interest, and require them to always act in their clients' best interests.
The White House, which is behind the proposal, says the conflicts of interest it is intended to address are costing investors $17 billion a year. That is based on an estimate that $1.7 trillion of IRA assets are invested in products that generate conflicts of interest resulting in 1 percentage point in extra yearly costs.
Backers of the rule say brokers not held to the fiduciary standard encourage savers to move nest eggs from low-cost employer-sponsored plans to IRA accounts, which typically charge higher fees. They also, according to the White House critique, steer savers into higher-cost IRA products.
Practical effects of the change, described as the first major overhaul of retirement adviser regulation in 40 years, could be significant. "It is a huge deal," said Brian Menickella, head of retirement and financial planning at The Beacon Group in King of Prussia, Pennsylvania. "It's going to be enormously impactful," added Menickella, who supports the rule change.
Brokers commonly receive commissions when they sell IRA investment products such as mutual funds. Commissions are higher on some products than others, critics say brokers too often recommend products that pay high commissions when others would be more in line with the client's interests. Brokers can do this under current rules, as long as the investment is suitable to the client's needs. The new standard would raise the bar to require advisers act in clients' best interests.
Joe Pieffer, an attorney and acting president of the New Orleans-based Public Investors Arbitration Bar Association who is in favor of the change, says that will put more money in savers' pockets. "For some people, it's the difference between having enough money to retire and not having enough money to retire," he says. White House figures show reducing returns by 1 percentage point, the estimated average cost from conflicted recommendations, could reduce a saver's nest egg by more than 25 percent over 35 years.
Advisers currently licensed as registered investment advisers, rather than as broker-dealers, are already held to the fiduciary standard. RIAs such as Menickella anticipate that many brokers will seek to go through the more rigorous RIA licensing process.
Critics say conforming to the rule will place undue cost burdens on broker-dealer firms. The Financial Services Institute, a Washington, D.C.-based group of independent broker firms, says it will cost firms nearly $3.9 billion to implement the rule.
The FSI and others warn that if it goes into effect smaller investors may find it impossible to get advice for investing their retirement savings. Menickella is doubtful. "RIAs have been doing this all along," he says. "It's not like the model doesn't work."
Pieffer says the financial services industry often makes similarly dire predictions about regulatory proposals, but they aren't always fulfilled. "When we deregulated commissions you could make on stock trading, they predicted calamity," he says. "They've survived."
The Department of Labor oversees worker retirement accounts, so it is the federal agency charged with creating the rule. That process is currently at the comment stage and many observers feel a final rule is likely soon. "This is going to happen," says Pieffer. "I think it's going to happen by the end of the year."
When baby makes three, all kinds of seeming "must-haves" can take a toll on your bottom line -- from hand-knit nursery blankets to souped-up strollers.
According to the U.S. Department of Agriculture, the average middle-income family shells out about $13,000 in just the first year of a baby's life.
So how can moms and dads navigate the budget-busting new-baby minefield? By going to the source for nuggets of advice: parents who've been there, done that -- and spent that.
First-time parents like the moms and dads we're profiling have made decisions early on that are paying off now ... and for years to come.
Courtesy: Christie Gettler'We Buy Cloth Diapers'
Christie Gettler, 27, GiftStarter.com co-founder, Rhode Island
"When we learned that we were pregnant, my husband, Matt, and I had student loans, wedding debt, and astronomical monthly rent payments to make.
Financially speaking, it was not an opportune time to be procreating.
I wanted to use cloth diapers for financial and environmental reasons, but Matt wasn't convinced. So our deal was that we'd try it, and if it became too much, we'd move on.
Now he's a bigger advocate than I am!
Our stash of 40 washable diapers, 70 cloth wipes, two pail liners, and three wet bags cost less than $450 -- and will last us until Max, 1, gets potty trained. (And in terms of effort, we do a dedicated load of laundry every three to four days.)
Compare that to the cost of disposables over two and a half years (roughly $2,500), plus wipes, and we'll save about $2,000. When you add in any future children, the cash really piles up.
Whenever we go past the diaper aisle at the grocery store, we have the satisfaction of saying, 'At least we don't have to spend money on that.' "
Courtesy: Ivonne Medina'We Joined an Online Forum for Discounted Baby Gear'
Ivonne Medina, 32, business development manager, Montreal
"Anything catering to new parents tends to sell at a premium. So in looking for ways to save, my husband, Ryan, and I joined a local online forum, the Plateau Play Group, when I was pregnant.
There are similar forums across the U.S. that connect parents looking to sell or give away gently used stuff. You can find them through online searches, pediatricians' offices, and local parenting publications.
We've been lucky enough to source all kinds of items at a hefty discount, including an exersaucer, a stroller bassinet, a car seat adapter, toys and feeding covers.
My favorite find was a barely used, still-in-the-box breast pump for $60, instead of the $400-plus we expected to pay. (I just had to get new tubing for it.) It feels good to buy something that's served someone, and will probably serve someone after us.
The group also helps free up our two-bedroom condo of things we don't need. We sell a lot of what we don't use anymore with Noah, who's now 7 months old. And we usually give away the clothing for free.
Joining this online forum is a gift that keeps on giving."
Courtesy: Alexa von Tobel'We Opened a 529 Plan'
Alexa von Tobel, 31, LearnVest founder and CEO, New York City
"Bee was born during one of the craziest points of my professional career -- our company was acquired just days before her birth -- so we didn't have tons of time to do things like decorate her nursery or purchase adorable outfits.
But one of the first things we did do before Bee's arrival was set up a 529 Savings Plan. We also made sure that all of our family's gift contributions went straight into it.
It's a state-sponsored, tax-advantaged account that can be used in the future to pay for certain college costs, like tuition, fees, room and board, books and technology.
According to the College Board, the average price of a four-year private college in the U.S. now tops $40,000 per year -- and college costs rise at around 5 percent per year.
So setting aside savings in a 529 plan now will go a long way toward helping pay for her education."
Courtesy: Sarah Vogel'I Went Freelance to Save on Child Care'
Sarah Vogel, 32, part-time yoga instructor and freelancer, Washington, D.C.
"I was working as a writer and project manager at a PR firm when my husband, Abe, and I decided to start our family.
We had a lot to consider: our financial and emotional quality of life, our lack of family support in D.C., the availability of part-time and freelance positions in my field, and the value I felt in spending one-on-one time with my child.
My gut told me that staying home would work well for our family, and after six weeks of maternity leave, I resigned.
The high cost of child care in D.C. was a big factor in my decision: Approximately 50 percent of my paycheck would have gone to cover care for our son, Hardy.
To supplement our household income, I started teaching yoga at a studio in our area, and now lead three classes weekly. I'm also doing about 10 hours of freelance communications work per week. The extra earnings have helped us enjoy such luxuries as dinners out and vacations worry-free.
Hardy is now 16 months old, and I'm still forming my long-term career plan, based on the possibility of having other children and my desire for flexibility."
Courtesy: Annie Callahan'We Road-Tested Baby Gear Before Buying'
Annie Callahan, 31, physician assistant, Pleasanton, California
"As first-time parents, my husband, Todd, and I found it hard to predict what gear would end up being worth the investment.
So to avoid committing to the wrong baby carrier -- which can easily top $150 -- we joined our local chapter of the nonprofit Babywearing International.
You can rent carriers from BWI ($10 each per month) to decide which one suits you best before making a purchase. I'd recommend one that works for many ages and stages. My personal top picks turned out to be the ErgoBaby Four Position 360 and the Boba Wrap.
It also took trial and error to find the right sleeping setup. We splurged on a beautiful heirloom bassinet for over $500 -- and our daughter, Josephine, hated it. She wouldn't sleep more than an hour or two.
Word of mouth and online reviews eventually tipped us off to the Fisher-Price Rock 'n Play Portable Bassinet for $70 -- but worth 10 times that, as Todd says.
Our daughter slept for a solid six hours. She's now 12 weeks old, and hasn't slept any less since! It works like a charm because of the incline, rocking motion and built-in white noise.
We even bought a new one and had it shipped to use on an extended trip -- and then donated it to a local kids' group before heading home. It's seriously that great."
Courtesy: Rachel Moring'We Hired a Live-in Au Pair'
Rachel Moring, 34, regional sales director, New Orleans
"My husband, Parker, and I knew our crazy schedules would make child care a challenge.
My job calls for long hours and travel, while his work as a commercial real estate appraiser can be unpredictable.
As we weighed our options, a live-in au pair initially didn't seem realistic. It's not a common choice in our area, plus we didn't think it would work with our budget. But after doing some research, we were sold.
Through Go Au Pair, we learned that an au pair can provide child care up to 45 hours per week at $7.85 per hour. So while we would spend about the same if we opted for a more traditional form of child care, an au pair would save us money on after care.
An added perk of welcoming our au pair, Angelia, from Colombia into our home? She's helping our five-month-old son, Dev, pick up Spanish."
Courtesy: Cary Shiwarski'We Built a Postbaby Budget That Cut Out Discretionary Spending'
Cary Shiwarski, 36, doctor, Pittsburgh
"My husband, Dan, and I had our daughter Piper, now 1, during my fellowship training -- not because it was a good financial time, but because we felt that we were running out of time.
Our biggest baby expense -- day care -- is equivalent to our mortgage payment at $1,400 per month. When the first bill arrived, we knew things had to change.
So we took a hard look at our spending, and calculated that we had to trim $450 each month from our budget.
How did we do it?
We canceled cable, decreased our cell phone data plan, cut back on dining out, put travel plans on hold, and quit impulse buys. I also said goodbye to pedicures and yoga classes, while Dan gave up his hockey league.
Now we watch TV online, use coupons, and make iced coffee at home. About once a month, we'll eat out with friends during happy hour.
We've also become more financially accountable to each other, and discuss purchases ahead of time.
Piper is the sunshine in our life, and we wouldn't change anything!"
Bill Pugliano/Getty ImagesThe Tesla Model X is shown at the 2013 Detroit auto show.
From the country's coolest carmaker introducing its first new model in years to a leading payroll provider giving us a snapshot of the country's employment rate, here are some of the things that will help shape the week that lies ahead on Wall Street.
Monday -- Big Shoes to Fill in Late-Night Programming
After a hiatus that lasted a couple of weeks, "The Daily Show" returns Monday to Viacom's (VIA) Comedy Central with a new host. Jon Stewart retired from the iconic late-night show last month, closing things out with a bang as the show won of a ton of Emmy awards last week.
Trevor Noah takes over as the host of the show that has historically leaned politically to the left, skewering primarily the right. The South African comedian promises to bring his own identity to the show, and we'll have to see how the ratings play out in the coming weeks to see if Stewart's fan base sticks around.
Tuesday -- X Marks the Spot
A new Tesla Motors (TSLA) vehicle will officially launch Tuesday. The first of Tesla's Model X -- a state-of-the-art crossover SUV -- will roll off the assembly line at a media event Tuesday night.
The Model X is cool, complete with rear falcon-wing doors that open up instead of out. It's not cheap. The Model X was initially supposed to cost as much as the current Model S sedan, but Tesla eventually conceded that it would have to be priced at $5,000 more.
The crossover SUV has been delayed and folks have been placing down payments on the vehicle for three years. Now it's time to see if the all-electric vehicle was worth the wait.
Wednesday -- The Check's in the Mail
It's a pretty quiet week on the earnings front, but Paychex (PAYX) is one of the handful of companies reporting quarterly results Wednesday. Paychex is a leading provider of payroll and other human resources-related services. It has roughly 590,000 payroll clients, accounting for 1 of every 15 paychecks in the private sector.
Analysts see year-over-year growth of about 8 percent in revenue and earnings. If it falls short, it may lead some economists to wonder if corporate America is slowing down.
Thursday -- Spicing Things Up
Spice giant McCormick (MKC) chimes in Thursday with its fresh financials. Wall Street pros aren't holding out for much. They see flat sales growth and a decline in profitability. However, McCormick has consistently landed ahead of analyst income targets over the past year.
McCormick announced earlier this month that it would be expanding its organic and non-GMO offerings. It's a sign of the times, even on the spice rack.
Friday -- Mars Attacks
"The Martian" opens Friday at a multiplex near you. 20th Century Fox (FOX) is the studio behind the movie that stars Matt Damon as an astronaut who gets left behind on Mars and is presumed dead. Spoiler alert: He isn't dead. Ridley Scott is directing, and he's no stranger to sci-fi, having worked on "Alien," "Prometheus" and "Blade Runner." His new movie should be the top draw at the box office over the weekend.
Motley Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool owns and recommends Tesla Motors. The Motley Fool recommends McCormick. Try any of our Foolish newsletter services free for 30 days and check out our free report for one great stock to buy for 2015 and beyond.
Like a stress fracture that goes unnoticed until a critical moment, an investment portfolio can suffer from one or more hairline cracks that, if left untreated, can fracture a wealth strategy amid market volatility. Since the best cure for any injury is early intervention, GOBankingRates spoke with financial experts to identify the most effective overall fixes for the weak spots where portfolio breaks most frequently occur. Read on and learn their solutions to common portfolio shortcomings.
1. Create a Plan
Many investors start saving without a clear objective or financial plan. "Some may view investing as a strategy to pick the hot stock that will provide a significant return in the short run," said Jim Heard, president and CEO at TrueWealth in Atlanta. "They may be inexperienced investors in need of education, or they understand the principles of risk and return, yet believe they have the ability to beat the market," he said. "Often, these investors earn their education the hard way." When they believe they can beat the market, investors often become overexposed in concentrated stock positions, which could be risky. Instead, Heard encouraged investors to take a longer view and develop a strategy that accurately reflects their financial goals.
2. Diversify Assets
Asset allocation is by far the most important driver of returns, said Kevin J. Prendergast, chief investment officer at EFG Advisors in Schaumburg, Illinois.
Meanwhile, many portfolios often include a collection of mutual funds and individual stocks, with little consideration given for how each position affects the investor's overall risk and return profile. Before deciding how heavily to invest in stocks and bonds across the foreign, domestic and government-issued markets, said Prendergast, investors must carefully consider their investment objectives as well as how they respond to turbulence in the market. An effective asset allocation strategy can be designed with a portfolio of exchange-traded funds. Prendergast said that ETFs can provide "extreme diversification at the security level, while allowing investors to achieve precise exposure to each asset class without holdings overlap."
3. Analyze Risk Tolerance
The ancient Greek aphorism, "know thyself," is sage advice for all investors regardless of time horizon. "Often times an investor will say they are a conservative investor," said Dennis Breier, president at Fairwater Wealth Management in Downers Grove, Illinois. "However, when we analyze their portfolio, we come to find out their current allocation is anything but conservative." Ultimately, investors who haven't properly defined their risk tolerance run the risk of losing more than they're comfortable with. Conversely, investing too conservatively could cause them to miss out on potentially larger returns. Breier's practice uses a risk analysis tool to help clients identify their risk tolerance while also capturing the level of volatility present in their investment mix. An allocation that properly accounts for investors' comfort with risk can help build a proper asset base -- and allow them to sleep at night.
4. Look Beneath the Surface
Some investors assume they hold a diversified portfolio because they hold an assortment of mutual funds. Without checking the top holdings within each fund, however, many investors could be surprised to discover they're substantially less diversified than they thought. "I've had multiple cases where clients were in four to five mutual funds that were essentially the same," said Robert Palidora, a financial consultant with AXA Advisors in Bala Cynwyd, Pennsylvania. "It's like playing Russian roulette and putting all your money on black." Once a proper asset allocation strategy has been established, a portfolio rebalance is an easy fix for investors. "Within certain accounts, you can also add automatic rebalancing to keep the allocation in line," he added.
5. Ease Up on Company Stock
Many companies offer stock options or other incentives to employees, making it an attractive investment option. Employees should carefully monitor the percentage of employer stock within a portfolio because even seemingly successful companies unexpectedly go bust. Remember Enron? Even corporate executives should take heed. "Executives are often over concentrated in their employer stock," said Timothy Golas, a partner with Spurstone Executive Wealth Solutions in Avon, Connecticut.
6. Think Long Term
There's a mistaken notion that to be successful in the financial markets, one must actively trade stocks, said Robert R. Johnson, president and CEO of The American College of Financial Services in Bryn Mawr, Pennsylvania. Many try to determine which stocks or market sectors are going to rise in the near term and then move assets into those areas. Those who think they can identify hot sectors and anticipate trading opportunities are speculators, not investors, Johnson added. "Market timing is incredibly difficult. Professional investors will admit that they can't time the market," he said. In fact, 86 percent of professional investment managers weren't able to beat the market in 2014, according to published reports. That doesn't leave much hope for the amateur investor. Instead, Johnson suggested a strategy of consistently investing in low-cost diversified index funds over a long time horizon. Those who try to time the market inevitably sell after the market has fallen and buy after a market rise. "It's the opposite of the old adage, 'buy low, sell high,'" he said.
7. Get Systematic
Building wealth can be a much simpler process than many believe, said Johnson. A consistent fixed dollar investment done systematically over a long time period can yield dramatic results. The number one reason investors underperform is because they succumb to emotional triggers like fear or greed, said Johnson. A systematic investment strategy "allows investors to overcome their behavioral biases" so they sidestep the temptation to get greedy after the market has risen or become fearful and prematurely sell investments after the market has fallen, Johnson said. These seven fixes make it easy to identify potential portfolio breaks and overcome weaknesses before any damage is done.
Even if you love where you live, if you own a home that you purchased from someone else, you've probably looked around your house before and wondered: "What was the builder thinking?"
But not everyone goes that route. Plenty of people pay to have their home custom-built. In other words, some homeowners are the builder -- or at least, they're the ones pulling the strings and making the hard decisions on how small or big their residence should be and what features it should have.
And if that's what you're doing, you don't want to look around your house someday and wonder: "What was the builder thinking?"
So if you're spending money on a custom home, keep these eight things in mind.
Have the details in place before you start building. That means not just knowing how the floor plan will look but knowing how the rooms will be designed, says Jonathan Macias, a real estate broker and the president of the Macias Realty Group in El Segundo, California.
Designing a house seems easy, but the amount of choices out there can be overwhelming for many.
"Designing a house seems easy, but the amount of choices out there can be overwhelming for many. What color tile, what size, what pattern, will it match with the walls, what cabinets will go with this, what about the faucet?" Macias says. "All of these questions could be just for one small bathroom."
In other words, you don't want to be agonizing about how a bathroom should look and holding up your contractors. Speaking of which ...
Hire the right people. It should go without saying, but let's let Macias say it: "Do make sure you get all licensed contractors and professionals. Make sure they are properly insured and get references from past work."
Don't build too big. Sure, you may have a lot of stuff, and you might look longingly at mansions and want the same thing, but if that's the route you want to take, then think long and hard about what you're about to do. What may be right for you now may not be right for you in 10 years, or even next year.
"I meet potential clients in my office almost weekly who tell me, "We built a 6,000 square-foot home, but now we're dying to downsize to something smaller. Most families don't even need 5,000 square feet, and a home as small as 2,500 or 3,000 square feet won't feel small if it's designed properly, says Andy Stauffer, owner of Stauffer and Sons Construction, a homebuilder in Colorado Springs.
"A larger house is just more expensive and harder to maintain and clean," Stauffer says. "According to the National Association of Home Builders, a custom home in the USA costs an average of $105 per square foot to build. That means by eliminating even 500 square feet in a home that you don't need, you'll save over $50,000."
Think about the resale value now. Even if you never intend to sell your home, and plan to pass it to descendants, assume that you might sell it someday, Stauffer says.
"It's simply a fact of life. Most of us don't know for sure where we'll be in 10 or 15 years, as much as we'd like to think we do," he says. "I recently spoke to a real estate agent who had some clients that built a five-story custom home. They loved it, but when it was time to sell, they had to drop the price by tens of thousands of dollars and sell at a significant loss because nobody wanted to buy a five-story home and walk up and down the stairs all day long."
So build your dream home, but don't make it a nightmare for someone else, Stauffer advises: "Don't go crazy."
Keep your mortgage within reason. You can always add to your home later, creating the dream house when you can afford it, and build your realistic home now, suggests Joan Fradella, a family mediator in West Palm Beach, Florida.
When she built her home in 1998, she wanted to stick to keeping the mortgage balance low, and so Fradella was careful not to go, as Stauffer says, "crazy." She was going to have a luxury kitchen and bathrooms built into her home, but she didn't, settling for more modest layouts, reasoning that she could later.
"I also didn't get the crown molding and French doors because I knew we could do that ourselves," Fradella says. And, indeed, her mortgage remained reasonable.
But don't sacrifice all of your amenities. Looking back, Fradella feels it might not have been a terrible idea to have included some of those "extras," provided her mortgage hadn't been too much higher. Because as it turned out, she says, "Life happens, your kid starts to play hockey; [goes] to private school, then college."
She still hasn't added any upgrades, and she's been living in her home for 18 years.
Yet, she stands by her advice. "You will be surprised how quickly a $200,000 home becomes $400,000 in upgrades," she says.
Preventing your house from becoming an economical abyss means knowing what upgrades are "must haves," says Brian Brunhofer, president of Meritus Custom Builders, a Chicago-area builder that specializes in custom homes. "For example, carpet can always be switched out to hardwood floors later, but a full basement is something you should decide on now," he says.
Brunhofer also points out that lending now is relatively inexpensive. As long as you don't go crazy, "it can be much more economic to stretch and plan for those features in your budget now," he says.
Of course, it's in every builder's best interest if you do include those upgrades now, since that's more money for the builder, but it doesn't mean Brunhofer isn't right.
Check in on the work. Keep the surprises for holiday gifts and birthday presents. Don't get sucked into the idea that it would be fun to have someone drive you up to your new house, while blindfolded, so you can have a surprise unveiling -- (as you may have seen on home improvement reality TV shows). Because you might wind up stuck with a big mortgage on a house you're not thrilled with.
"Visit the site during construction," advises Nicole Cannon, a residential architect based in Los Angeles. "Make sure things are matching your expectations and ask questions if they don't. The worst option is to remain quiet and end up with something that you are unhappy with or have to pay to fix after the fact."
Don't let your dream home cloud your reality. Let's end this on admittedly a bit of a downer -- to prevent you from having an unhappy ending when building your own home.
Cannon warns that having a house custom built can be an amazing experience, but it can also be a stressful time, and no matter what you might be thinking, "it will not solve all of life's challenges," she says. "I've had more than one client who thought that building a new home would bring their significant other closer, and a new home would solve their marriage problems. It's tragic when a home is completed and goes on the market immediately due to divorce."
Are you swimming in debt and don't know how you're ever going to pay it off? You're not alone. In fact, the average U.S. household has more than $15,000 in credit card debt, according to a 2014 NerdWallet analysis. If you're looking for some easy ways to cut down your debt, follow the advice of these U.S. News My Money bloggers.
1. Create a Budget. "The first step to solving your debt problem is to establish a budget," writes Money Crashers contributor David Bakke. You can use personal finance tools like Mint.com, or make your own Excel spreadsheet that includes your monthly income and expenses. Then scrutinize those budget categories to see where you can cut costs. "If you don't scale back your spending, you'll dig yourself into a deeper hole," Bakke warns.
2. Pay off the most expensive debt first. Sort your credit card interest rates from highest to lowest, then tackle the card with the highest rate first. "By paying off the balance with the highest interest first, you increase your payment on the credit card with the highest annual percentage rate while continuing to make the minimum payment on the rest of your credit cards," writes Mint.com spokeswoman Hitha Prabhakar.
3. Pay more than the minimum balance. To make a dent in your debt, you need to pay more than the minimum balance on your credit card statements each month. "Paying the minimum -- usually 2 to 3 percent of the outstanding balance -- only prolongs a debt payoff strategy," Prabhakar writes. "Strengthen your commitment to pay everything off by making weekly, instead of monthly, payments." Or if your minimum payment is $100, try doubling it and paying off $200 or more.
4. Take advantage of balance transfers. If you have a high-interest card with a balance that you're confident you can pay off in a few months, Trent Hamm, founder of TheSimpleDollar.com, recommends moving the debt to a card that offers a zero-interest balance transfer. "You'll need to pay off the debt before the balance transfer expires, or else you're often hit with a much higher interest rate," he warns. "If you do it carefully, you can save hundreds on interest this way."
5. Halt your credit card spending. Want to stop accumulating debt? Remove all credit cards from your wallet, and leave them at home when you go shopping, advises WiseBread contributor Sabah Karimi. "Even if you earn cash back or other rewards with credit card purchases, stop spending with your credit cards until you have your finances under control," she writes. 6. Put work bonuses toward debt.
If you receive a job bonus around the holidays or during the year, allocate that money toward your debt payoff plan. "Avoid the temptation to spend that bonus on a vacation or other luxury purchase," Karimi writes. It's more important to fix your financial situation than own the latest designer bag.
7. Delete credit card information from online stores. If you do a lot of online shopping at one retailer, you may have stored your credit card information on the site to make the checkout process easier. But that also makes it easier to charge items you don't need. So clear that information. "If you're paying for a recurring service, use a debit card issued from a major credit card service linked to your checking account," Hamm writes.
8. Sell unwanted gifts and household items. Have any birthday gifts or old wedding presents collecting dust in your closet? Search through your home, and look for items you can sell on eBay or Craigslist. "Do some research to make sure you list these items at a fair and reasonable price," Karimi writes. "Take quality photos, and write an attention-grabbing headline and description to sell the item as quickly as possible." Any profits from sales should go toward your debt.
9. Change your habits. "Your daily habits and routines are the reason you got into this mess," Hamm writes. "Spend some time thinking about how you spend money each day, each week and each month." Do you really need your daily latte? Can you bring your lunch to work instead of buying it four times a week? Ask yourself: What can I change without sacrificing my lifestyle too much? 10. Reward yourself when you reach milestones.
You won't pay down your debt any faster if you view it as a form of punishment. So reward yourself when you reach debt payoff goals. "The only way to completely pay off your credit card debt is to keep at it, and to do that, you must keep yourself motivated," Bakke writes. Just make sure to reward yourself within reason. For example, instead of a weeklong vacation, plan a weekend camping trip. "If you aim to reduce your credit card debt from $10,000 to $5,000 in two months," Bakke writes, "give yourself more than a pat on the back when you do it."
Ty Wright/Bloomberg via Getty ImagesThe strong U.S. dollar makes U.S.-made goods more expensive overseas and hampers exports.By Simon Constable
NEW YORK -- The great thing about pain is that the moment it stops, you feel better. And the agony the strong dollar inflicted on stocks -- and consequently, your portfolio -- may soon be over.
The U.S. Dollar Index, which measures the greenback against major world currencies, surged 22 percent from July 2014 through mid-March, according to data from the Federal Reserve Bank of St. Louis. It stalled then, however, and has moved in a mostly sideways range since.
The reason the rally had such a destructive impact on stocks is that it crushed reported earnings. For big companies, the rest of the world is just as important as domestic U.S. sales. In fact, for the members of the Standard & Poor's 500 Index and the SPDR S&P 500 (SPY) exchange-traded fund that tracks the index, non-dollar revenue amounted to 48 percent of total sales in 2014, according to S&P Dow Jones Indices.
Put another way, for large multinationals, approximately one out of every two dollars in revenue came from outside the U.S. So when companies reported their financial results at the end of each quarter, the stronger dollar meant even robust businesses started to look bad when compared to the prior year. First, sales in overseas currencies were worth less when converted to dollars. And second, dollar-denominated sales declined because customers shied away from the higher costs.
So the dollar's stall is good news for stocks. Even if the dollar doesn't weaken, starting in March 2016, the year-over-year comparisons for quarterly earnings reports will be easier. Sure, some companies will be affected more and some less, depending on exactly where their sales come from. But the conversion of euros, pounds and yen back into dollars won't be universally damaging across the board. Better than that, because investors tend to look forward by approximately nine months, the positive effects are probably already starting.
There is a risk that the dollar will start to climb once again, and if it does, then year-over-year comparisons will start to deteriorate once more. Why could that happen? For one, if the European Central Bank expands its money printing program, then the euro will weaken, and the dollar will be stronger.
In a recent report, Brown Brothers Harriman references "growing expectation" that such a thing may occur. It just hasn't happened yet -- and may never -- because, as PNC says, "the Eurozone's consumers in 2015 are still their most upbeat since before the Great Recession in 2007."
To be sure, there are a lot of problems outside the United States, many of which could dampen that outlook: continued weakness in southern Europe, the sluggish Japanese economy and the dramatic slowdown in China and resource-based economies like Australia and Canada.
This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.
NEW YORK -- Anyone thinking 2016 could be their year for that big jump in pay likely should temper any excitement.
New numbers show employers are expected to reward employees with the same 3 percent increase in pay in 2016 that they received this year. For those looking for a silver lining, employers are expecting to give bigger pay raises -- 4.6 percent on average -- to their top performing workers, according to the numbers from consulting firm Towers Watson.
To a large extent, 3 percent pay raises have become the new norm in corporate America.
"To a large extent, 3 percent pay raises have become the new norm in corporate America," said Sandra McLellan, North America practice leader at Towers Watson. "We really haven't seen variation from this level for many years."
"While most organizations are finding the talent they need at current salary levels, we are seeing more employers prioritizing how their salary budgets are being spent, especially in light of their ongoing difficulty in attracting and retaining top performers or employees with critical skills," she added.
The survey of more than 1,100 U.S. companies showed nearly 90 percent of employees at US companies are eligible to receive annual or short-term bonuses this year, up from 86 percent last year -- and 85 percent received a bonus this year, up from 81 percent in 2014.
"Unfortunately, it's very rare to get more than a 3 percent annual increase within a company," said Angela Copeland, career coach at Copeland Coaching. "Companies see a higher employer turnover now than ever with people switching jobs every three to five years. They save their money to recruit new talent."
Copeland and others, however, suggest there is a way to get that bigger salary increase one may be craving. "Hands down, the best way to significantly grow your salary over time is to be one of those people who consistently switches jobs every three to five years," Copeland said.
"When you change companies, you are able to negotiate pay again from the beginning," she said. "But, don't take a low salary just to get your foot in the door -- expect 3 percent increases annually at your new job as well."
Katie Donovan, a negotiation and equal pay consultant at her company Equal Pay Negotiations, agreed that, without a doubt, people get much bigger pay increases when they change jobs. She added with the cost to replace an employee so high, many employees -- even the average employee -- can use this to their benefit.
For those looking to stay at their jobs, the numbers show it is by far the highest performing workers that see the biggest rewards, with an average salary increase 77 percent larger than the 2.6 percent increase given to workers receiving an average rating. Workers with below-average performance ratings bring up the rear, receiving a salary increase of less than 1 percent.
"Many organizations are rethinking whether linking base salary increases primarily to last year's performance makes sense or if this should be the role of short-term-incentive and bonus programs," McLellan said.
Regardless of how a company gives out salary increases, Donovan said now is the time to negotiate next year's pay raise.
"Budgets for next year tend not to be finalized yet, so there is opportunity," said Donovan. "Do the research, and see what the pay is for your job in your area. Then talk to your boss about being underpaid and show the data.""Do not make any statements about leaving," she reminds. "But ask, 'Well, if you had to hire a new person -- based on this data -- it looks as though you would need to pay them more than I'm making. I'm just looking to earn that amount.' "
WASHINGTON -- U.S. consumer spending grew briskly in August and a key measure of inflation firmed a bit, signs of strength in America's domestic economy that could lead the Federal Reserve to tighten interest rates despite weakness abroad.
The Commerce Department said Monday that consumer spending increased 0.4 percent after an upwardly revised 0.4 percent rise in July.
The figures give a bullish sign for economic growth in the third quarter.
"These data underscore the ongoing health of the consumer sector," said John Hoff, an economist at RBS Securities.
The report could help convince investors of Fed Chair Janet Yellen's view, most recently expressed on Thursday, that the economy was strong enough to warrant a rate increase this year. New York Fed President William Dudley also said Monday that a hike was likely this year and could come as soon as October.
Investors have been doubtful, with many betting that the Fed's first rate increase in a decade won't come until March.
But the U.S. dollar firmed following the consumer spending report, as did yields on U.S. government debt, signs that some investors were bringing forward their bets on a rate increase.
Economists polled by Reuters had forecast consumer spending rising 0.3 percent last month. Consumer spending accounts for more than two-thirds of U.S. economic activity.
It was the latest report indicating momentum in the economy as it confronted recent global financial markets turbulence, sparked by concerns over a slowing Chinese economy, which pushed the Fed to hold off hiking rates earlier in September.
Last month, spending on long-lasting goods such as automobiles increased 0.9 percent. Outlays on services like utilities rose 0.5 percent.
Personal income increased 0.3 percent in August.
Overall inflation remained muted, reflecting low oil prices. Inflation, which has persistently run below the Fed's 2 percent target in annual terms, rose just 0.3 percent in August from the same month a year earlier.
However, prices were up 1.3 percent when excluding food and energy, a key metric used by the Fed to gauge the trend rate of inflation. In July, core prices rose 1.2 percent year-over-year.
CHICAGO -- Alcoa (AA) said Monday it will split into two companies to separate its struggling aluminum smelting operations from production of lightweight metals for its faster-growing aerospace and automotive business.
The news sparked a rally in Alcoa's shares, which were up nearly 6 percent at $9.60 in premarket trading.
Falling commodity prices and a glut of aluminum have battered Alcoa stock, which before the news, had fallen more than 42 percent this year.
The split will separate the cyclical commodity business that excels during demand upswings from a high-technology business benefiting from rising demand for new alloys and titanium for planes and automobiles.
The split is expected to be completed in the second half of 2016. The traditional aluminum business will retain the Alcoa name, while the newer company, which Alcoa said would have higher value products, is still unnamed.
"We are interested in creating value for our customers, for our shareholders, for our employees, and at this point this is the option we see that creates the biggest value," Chief Executive Officer Klaus Kleinfeld told Reuters.
The commodity business was a significant drag, not only on valuation but on the resources of the company.
Josh Sullivan, an analyst with Sterne Agee CRT, said Alcoa had already been in the process of a transition, including its recent acquisition of RTI International Metals.
"The commodity business was a significant drag, not only on valuation but on the resources of the company," Sullivan said.
In a conference call with analysts Alcoa said that as of Dec. 31, its pension was underfunded by about $3.3 billion.
Executives said as the company works out the details of the split it will allocate debt and pension liabilities "in a manner that is prudent for the two businesses to have the balance sheet" Alcoa is targeting.
Regarding credit ratings, Alcoa said it is targeting investment grade for its "value-added" business and "strong non-investment grade" for its legacy business.
The company has bet on growth from higher-margin titanium and high-strength aluminum sales to the aerospace industry, as its order book swells for airplane production and amid renewed global spending on automobiles.
Still, efforts by the world's third-largest producer of aluminum to address the diverging trends had given conflicting messages for investors, according to sources close to the company.
The split is expected to be completed in the second half of 2016 and the traditional aluminum firm will retain the name Alcoa, the company said.
Kleinfeld will be chief executive of the new, unnamed entity and will remain chairman of Alcoa throughout the transition period.
"We believe both entities have gotten into a shape that they are competitive and sizeable and they can stand on their own," Kleinfeld said.
The company didn't provide a timeline for choosing a CEO for Alcoa after the split. The division of the company doesn't need shareholder approval, sources familiar with the matter said.
The company's financial advisers are Morgan Stanley (MS) and Greenhill & Co. The legal adviser for the split is Wachtell, Lipton, Rosen & Katz.
Frank Augstein/APFormer Volkswagen CEO Martin WinterkornBy GEIR MOULSON and DAVID RISING
BERLIN -- German prosecutors opened an investigation Monday against former Volkswagen (VLKAY) CEO Martin Winterkorn to establish what his role was in the emissions-rigging scandal that has shaken the world's largest automaker.
The investigation will concentrate on the suspicion of fraud committed through the sale of vehicles with manipulated emissions data, and aims to determine who was responsible, prosecutors in Braunschweig said in a statement.
In the German system, anyone can file a criminal complaint with prosecutors, who are then obliged to examine it and decide whether there is enough evidence to open a formal investigation.
In this case, following the revelations about the rigged tests, prosecutors in Braunschweig, near VW's headquarters in Wolfsburg, received about a dozen complaints, including one from Volkswagen itself, said spokeswoman Julia Meyer.
This is a very broad case and in other such investigations it has taken many months, sometimes years.
She said it was too early to say if and when prosecutors may try and interview Winterkorn himself, and that she didn't know whether he already had an attorney to represent him.
She said at this stage, she couldn't estimate how long the investigation would last.
"This is a very broad case and in other such investigations it has taken many months, sometimes years," she said.
Winterkorn, Volkswagen's CEO since 2007, resigned Wednesday -- days after the world's top-selling carmaker admitted that it had rigged diesel emissions to pass U.S. tests during his tenure. He said that he was going "in the interests of the company even though I am not aware of any wrongdoing on my part."
Under German law, it isn't possible to bring charges against a company, only against individuals. Meyer wouldn't elaborate on specifics of the investigation, and it wasn't clear what Winterkorn's suspected role might be. There was no immediate comment from Volkswagen on the prosecutors' decision.
Fraud can carry a prison sentence of up to 10 years in Germany.
The head of VW's Porsche division, Matthias Mueller, was appointed Friday as Volkswagen's new CEO. He promised to do everything to win back the public's trust.
The company has admitted that it used a piece of engine software to cheat on diesel car emissions tests in the U.S. It will have to fix programming it has said is in some 11 million cars worldwide, far more than the 482,000 originally identified by U.S. authorities.
Details on what cars are involved have emerged gradually. The group, which has 12 marques in all, said Friday that some 5 million cars made by its core Volkswagen brand had the diesel engine in question.
On Monday, Audi said that 2.1 million of its vehicles also had the engine, while Czech-based Skoda said 1.2 million vehicles were affected.
Volkswagen shares, which were pummeled early last week before recovering some ground, headed south again Monday. They were down 7.1 percent in afternoon Frankfurt trading at 107.40 euros ($120.20).
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Plenty of stocks go up and down in any given week. The gainers inspire us to keep investing. The decliners keep greed in check while reminding us about the risks of the equity markets.
Let's go over some of last week's best and worst performers.
Bellerophon Therapeutics (BLPH) -- Up 59 percent last week
The market's biggest gainer last week was once again a biotech company. Bellerophon took top honors after a study showed encouraging results for its pulmonary arterial hypertension treatment. The mid-stage clinical trials were effective for treating patients with high blood pressure.
Coca-Cola Bottling (COKE) -- Up 14 percent last week
Things got fizzy for Coca-Cola's (KO) largest independent bottler after it spearheaded a consolidation plan. Coca-Cola Bottling struck a deal with Coca-Cola to purchase a few manufacturing facilities as well as some franchise distribution territories that it didn't already own.
The new supply system will streamline domestic operations, and the market clearly likes what that means for Coca-Cola Bottling. It was also a good week for shares of Coca-Cola itself, but the world's leading beverage company saw its stock only move 2 percent higher on the week.
Shares of the electronics manufacturer got charged up after it posted encouraging preliminary quarterly results. Jabil posted better-than-expected financials, and it also boosted its guidance for the current quarter.
Jabil's strong report bodes well for Apple's (AAPL) iPhone 6s. Jabil is a contract manufacturer for Apple components and its encouraging outlook suggests that Apple is ramping up its production.
Investing in Sientra proved to be a bust last week after the maker of breast implants and breast tissue expanders was derailed overseas. The U.K.'s Medicines and Healthcare Products Regulatory Agency suspended certification of its Silimed-branded products in Europe.
Sientra sent a letter to its plastic surgeon clients, explaining that the move has no bearing on its stateside operations. Its products remain regulated and approved by the Food and Drug Administration, but investors clearly feel that the negative knock overseas could hurt sales closer to home.
Shares of Pier 1 shed nearly a quarter of their value after the home furnishings retailer posted disappointing quarterly results. Sales rose a mere 3 percent since the prior year, and most of that growth has come from its online retail initiatives. Store activities -- a combination of in-store sales and online orders either placed or picked up at the store -- clocked in flat.
Pier 1 also saw margins contract as it ramped up promotional and clearance activities to eat away at its excessive inventory of outdoor furniture. Pier 1's profit of 4 cents a share was a little more than half as much as analysts were expecting.
Caesars Entertainment (CZR) -- Down 22 percent last week
Betting against the house continues to be the smartest wager when it comes to Caesars Entertainment. The casino operator took a hit after reports surfaced claiming that the casino operator was at an impasse with its creditors.
Caesars is trying to avoid filing for bankruptcy, just as it continued to defend the bankruptcy of one of its subsidiaries. Caesars has big plans of restructuring itself into a company that includes spinning off its real estate holdings into an income-producing real estate investment trust, or REIT, but it won't get there on its own terms if it can't get creditors to play along.
Motley Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool owns and recommends Apple. The Motley Fool is short Caesars Entertainment and has the following options: long January 2016 $37 calls on Coca-Cola, short January 2016 $43 calls on Coca-Cola and short January 2016 $37 puts on Coca-Cola. The Motley Fool recommends Coca-Cola. Try any of our Foolish newsletter services free for 30 days. Check out our free report on one great stock to buy for 2015 and beyond.
NEW YORK -- U.S. stocks finished sharply lower Monday and were on track for their worst quarter in four years as investors worried about the health of China's economy and its potential impact on the timing of a U.S. interest rate increase.
The Nasdaq composite lost 3 percent and S&P 500 dropped more than 2 percent.
Much of the damage came from pharmaceutical and biotech stocks, including Allergan (ACT) and Gilead Sciences (GILD), with the sector still bleeding a week after Democratic presidential candidate Hillary Clinton criticized drug pricing.
The broad health care sector and China are hurting the market.
Following its worst week in seven years, the Nasdaq biotechnology index fell 6 percent, its worst one-day drop since 2011. Among the S&P sectors, the health care index was the deepest decliner, down 3.84 percent.
"The broad health care sector and China are hurting the market. It's time for risk-off and there's no place to hide," said Richard Weeks, managing director at HighTower Advisors in Vienna, Virginia.
Profits at Chinese industrial companies fell 8.8 percent, fresh data showed, pushing down shares of raw material producers and energy companies. Oil prices fell more than 2 percent.
U.S. consumer spending rose more than expected in August, according to another report, appearing to add to the case for an interest rate increase this year.
But contracts to buy previously owned U.S. homes decreased, indicating the robust housing market could be losing some steam.
The Federal Reserve held off from raising rates at its September meeting, citing concerns about the global economy, notably China, among other factors.
New York Federal Reserve President William Dudley on Monday suggested the central bank could pull the trigger as soon as October.
'Confused' Central Bank
"A lot of investors think the Fed is confused," said Mohannad Aama, Managing Director at Beam Capital Management. "They're putting themselves in a corner by saying they expect to raise rates between now and the end of the year when the economy every day is proving otherwise."
Several other Fed officials are scheduled to speak during the week, including Chair Janet Yellen on Wednesday.
Investors will also scrutinize September non-farm payrolls data Friday.
The Dow Jones industrial average (^DJI) fell 1.9 percent to end at 16,001.89 points. The Standard & Poor's 500 index (^GSPC) lost 2.6 percent to 1,881.77 and the Nasdaq composite (^IXIC) dropped 3 percent to finish at 4,543.97.
Billionaire investor Carl Icahn said the Fed's low interest rates are creating bubbles in markets for art, property and "junk" bonds, in a video to be released Tuesday.
The largest drag on the S&P 500, Apple (AAPL) fell 1.97 percent despite reporting that it sold a record number of its new iPhones in their first weekend.
Declining issues outnumbered advancing ones on the NYSE by 2,796 to 316. On the Nasdaq, 2,397 issues fell and 452 advanced. The S&P 500 index showed no new 52-week highs and 80 lows, while the Nasdaq recorded 12 new highs and 358 lows.
About 8.3 billion shares changed hands on U.S. exchanges, above the 7.2 billion daily average for the past 20 trading days, according to Thomson Reuters (TRI) data.
-With additional reporting from Abhiram Nandakumar and Sweta Singh in Bangalore, and Sinead Carew in New York.
What to watch Tuesday:
Standard & Poor's releases S&P/Case-Shiller index of home prices for July at 9 a.m. Eastern time.
The Conference Board releases the Consumer Confidence Index for September at 10 a.m.
Costco Wholesale (COST) releases quarterly financial results after U.S. markets close.
On the surface, it may seem that frugality is the best way to live your life if you're looking to save yourself some green.
But penny-pinching doesn't always play out how you intended, and it can actually end up hurting you financially and otherwise, according to U.S. News & World Report.
Here are five times when you may want to rethink your penny-pinching ways:
Used baby products: Although it may seem appealing to save yourself some cash by purchasing a used baby's crib, car seat or highchair on the cheap, it's probably not a good, nor safe, idea. "The highchair you found at a garage sale or thrift store may look sturdy, but for all you know, it was recalled three years ago because the screws sometimes come loose," U.S. News said. You may want to splurge on a new crib and car seat for your little one and look to save money on other baby items, like gently used baby clothes or bedding.
Lowest premium health insurance: Sure, it's better to have a low premium health insurance than to be uninsured, but there's a potential cost to that cheap coverage. "If you end up paying more for doctor's visits, or even worse, skipping visits because you don't like the in-network health care providers, then that cheap policy will cost you," U.S. News said. Check out "10 Common Mistakes to Avoid When Buying Health Insurance."
Not saving -- or not saving enough -- for the golden years: Everyone knows it's important to save for retirement. Although you may be tempted to skimp on retirement savings in your early working years, you could be cheating yourself out of thousands of dollars each year, especially if your employer is willing to match your retirement contributions. Click here to see if you're saving enough money for retirement.
Buying cheap shoes: If you're a penny-pincher who hates to spend big bucks on shoes, consider this: Cheap shoes have the potential to cause foot problems, like blisters and calluses. They also tend to fall apart faster, U.S. News said. You'd probably be better off spending a little more to get a decent pair of shoes the first time around.
Leasing a car: Although leasing a vehicle initially may seem like a money-saving option compared with purchasing a car, U.S. News noted that when the lease is up, that's it. You don't own the car, so you have nothing to show for all your car payments. Check out "Does It Ever Make Sense to Lease a Car."
Has being frugal ever backfired on you? Share your experiences below or on our Facebook page.
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Getty ImagesDon't let the fear of outliving your savings prevent you from enjoying retirement.By David Ning
One prominent retirement fear is outliving your retirement savings. But this common concern seldom happens, because there are plenty of ways to adjust your spending and tighten your belt when the markets take a dive. Here's why you aren't likely to completely run out of money in retirement.
Spending has been going up and down all your life. No one actually spends a constant amount adjusted for inflation every year. You sometimes get big expense years, such as when you decide to change your car. Other years, you are too busy to take a vacation and you naturally spend less. Spending will fluctuate, which means you can easily tighten and loosen your purse strings as long as you pay attention.
Some types of expenses may decrease during market panics. An economic decline may cause some things to drop in price. For example, many types of home repairs cost less during the financial crisis. There wasn't enough work to go around and prices fell. Traveling was also much cheaper than usual for a few years. A general decline in prices can work wonders for retirees on a fixed income because their expenses will decrease even if they don't do anything to change their lifestyle.
Some of your expenses will decline over time. Some expenses decrease due to new products introduced into the marketplace. For example, technology often becomes cheaper once an innovation is a few years old. If you are willing to put in a little time, you can also find other ways to save money on essential services. Sometimes spending less simply means avoiding new products that you have never tried before. This isn't nearly as bad as having to give up services you are already accustomed to.
Social Security is adjusted for inflation. Social Security provides an income floor for almost every older person in our country. For example, let's say you retired and an event along the lines of the great recession happens again, wiping out half your equity values. If your asset allocation is 60 percent stocks and 40 percent bonds, you might lose 30 percent of your portfolio value. Now, let's assume that 35 percent of your spending is covered by Social Security. Since Social Security doesn't get cut when the markets dive, you just need to cut 30 percent from the portion of income that comes from your investments, which is actually only a 19.5 percent pay cut. A 19.5 percent drop in spending power is still drastic, but it's manageable due to the unwavering income you receive from Social Security. Plus, delaying big purchases and trips for a year or two is likely to help you make significant progress spending less until your investments have time to recover.
You can get an annuity, even at an advanced age. If you are certain you never want to reduce your expenses in retirement, you can purchase an annuity that provides another guaranteed stream of income. For example, let's say you are 80 and your portfolio is only worth a fraction of what it was worth when you retired. You could use your savings to purchase an immediate annuity that will provide monthly payments for the rest of your life. If you only annuitize a small amount of savings, the payments might not be large, but they can be set up to continue for as long as you live and won't decline due to stock market drops.
Safe withdrawal rates are calculated to survive the worst. An annual withdrawal rate of 3 or 4 percent of your savings each year has been calculated to survive the worst stock market period in history. Your retirement could span several decades, and there will probably be declines during that period. No one knows what stock valuations and interest rates will be 10 or 15 years from now. But a conservative withdrawal rate and some cutbacks in spending during years in which the market performs especially poorly is likely to allow your money to last for the rest of your life.
You need to live a long life for your money to run out. While we all like to think we will live until age 100, few of us do. While there's certainly the possibility that you will outlive your portfolio assets, you can always cut your expenses or adjust your spending to account for what turns out to be an exceptionally long life span. Plus, you will still have Social Security payments coming in, so you are looking at a very small chance that your money will ever completely run out.
Getty ImagesThe cast and crew of "Empire" at The Theatre at The Ace Hotel in March.
Traditionally, fall premiere week for broadcast television networks has been a sparkling time of peak sampling as millions upon millions of viewers tune-in to new and returning shows.
Save for 16 million viewers gobbling up Fox (FOXA) hip-hop drama "Empire" last week for its second season premiere, a more than 60 percent leap in total viewership since its series debut of 9.9 million viewers in January, according to Nielsen stats, this year's fall premiere week not only experienced sagging ratings, but fewer male millennial viewers. New primetime shows, from Fox's Tuesday sorority spoof "Scream Queens" with a 1.7 Nielsen rating in the 18-to-49 adult demographic to Comcast-owned (CMCSA) NBC's Thursday drama "The Player" with a 1.2 rating, fell limp.
So what are some major reasons TV viewing is down?
Appointment TV is dead. It's a challenge for the industry.
For one, glut. An estimated 400 scripted shows are expected to be broadcast on TV and online services such as Netflix (NFLX) and Amazon.com (AMZN), up from 211 on the air in 2009, according to The New York Times. Experts say a glut of TV content and viewing platforms as well as a varied range of good and bad shows have thinned out linear TV audiences. "Appointment TV is dead. It's a challenge for the industry," said Jim O'Neill, a principal analyst at online video technology company Ooyala, a U.S.-based subsidiary of Australian telecommunications and IT services company Telstra (TLSYY). "It's not just a situation where [over-the-top content] is the future. OTT is now. The amount of time on live TV is going down, and the amount of DVR TV is going up, and the OTT option is going up. I don't think network TV will ever be the same."
O'Neill, who said he grew up before cable TV, when just nine channels existed, sees 2015 as presenting a grander array of choices, both well-written and not. According to Ad Age and Nielsen stats, not only was TV viewing among adults 18 to 24 down 20 percent compared to the first two nights of the 2014 to 2015 season, but male viewership within that age group plunged by about a quarter.
Disney's (DIS) ABC scored OK with its series premiere Tuesday of the documentary-style reboot "The Muppets," averaging 8.9 million viewers, but critics panned the show. The New York Post called it a betrayal of late original Muppets creator Jim Henson's "tender, optimistic vision -- a pointless prostitution of a children's entertainment franchise." Loosely based on the 2002 film, Fox's new sci-fi drama "Minority Report" scored a measly 1.1 rating among 18-to-49 adult viewers. Yahoo blasted it as "alternately bad and laughably bad."
Returning shows also suffered. The season premiere of CBS's (CBS) "NCIS: LA" earned its lowest ratings yet, a 1.2 among adults, with roughly 7.89 million viewers, compared to last year's premiere of a 1.9 adults rating. ABC's "How to Get Away with Murder," whose star Viola Davis snagged an Emmy this month, premiered its second season with a 2.6 rating among adults, and about 9 million viewers. That's down from a 3.8 rating when the series premiered last fall, drawing an impressive 14 million viewers.
Swift Impact
Secondly, mobile. With streaming options, cable TV options such as Time Warner-owner (TWX) juggernaut Emmys winner HBO and content viewed through cellphones and tablets, the changing media landscape is having a swift impact. According to Ooyala's recently released Q2 2015 Global Video Index report, 44 percent of all online viewing is now on mobile devices, increasingly preferred by younger consumers.
"The golden crescent of TV viewers is millennial men, and they don't want to be told what to watch," said O'Neill, whose own 25- and 27-year-old sons watch everything from HBO and Showtime to Netflix and Amazon on mobile devices. "They're fine with waiting a year to watch "The Walking Dead." TV is still important to them, but it's on their terms, and that's the big difference."
Networks taking advantage of technology and social media buzz can only help boost viewership, added USC Annenberg School for Communication and Journalism assistant professor David Craig, also an Emmy-nominated producer and former programming executive at Disney's A&E and Lifetime.
"Empire," the golden child of fall premiere week, with a massive following on Twitter (TWTR) , is the best example of a network doing something right. "If you look at the most successful show on broadcast TV right now, it's 'Empire,' " said Craig. "Creator Lee Daniels was given full license to make the show he wanted to make. The broadcast networks should adopt a creator-centric model for programming. It's also about building a community in advance, with social media."
Thirdly, social media.
Millennials immersed in social media is changing the way certain shows become popular while others die on the vine. The migration to HBO and Netflix has now extended to interactive online video and visuals sharing venues such as Snapchat, IAC's (IACI) Vimeo and Facebook's (FB) Instagram, said Craig. Ten years after it first launched, Google's (GOOGL) YouTube has more than 1,500 channels.
"Millennials are now participating in a media ecology. It no longer just represents their lives," Craid said. "They're interacting in the space. That's further enticing millennials away from linear television. People are migrating from users to creators. It's a radical change."
One of the most popular reasons to stop at a 7-Eleven is to fuel up when you're on the go -- for cheap. This convenience store chain offers low prices and great deals. But which items at 7-Eleven are guaranteed to be a good buy? What are some of the best ways to save money at 7-Eleven?
Here's a look at the best deals you can expect to find at your local 7-Eleven store as well as some money-saving tips:
1. 7-Eleven coffee. If all you want is a hot cup of coffee that delivers your daily dose of caffeine, 7-Eleven will do it for a lot less than your local coffeehouse. A 24-ounce Stay-Hot Cup at 7-Eleven is priced at just $1.55 for a limited time only. That's less than what you would pay for about the same amount of coffee at Starbucks with a venti freshly brewed coffee priced at $2.35.
And while you probably can't expect to get a handcrafted latte at 7-Eleven, the coffee bars usually include a wide range of flavored creamers, syrups and other add-ins to help jazz up your convenience-store coffee.
2. Breakfast sandwiches. If you need breakfast, consider a cheaper option from 7-Eleven. The convenience store offers a variety of breakfast sandwiches, but perhaps its best deal is the $2 price for a sausage biscuit and any size of coffee. This is well under the cost of a sausage biscuit with egg from McDonald's breakfast menu ($2.79) and half the cost of a sausage biscuit with egg meal.
Of course, the 7-Eleven version doesn't come with egg, but it's still a comparable option at a much lower price -- especially if your aim is to load up on caffeine over calories.
3. Bottled beverages. Beverages are a popular item at 7-Eleven, and the deals are frequent. One such discount spotted at my 7-Eleven location recently was an offer to get two 18.5-ounce bottles of Pure Leaf brand of brewed tea for only $2.22.
A similar deal had 2-liter bottles of Coca-Cola products marked down from their regular price of $2.29 each to two for $3.33 -- just $1.67 each. The same two-liter bottles ring in at $2.19 each at my local grocery store.
4. Big gulps. If you want to how to save money on soda, however, a fountain drink will get you much more bang for your buck. The signature 7-Eleven Big Gulp is known to be as cheap as 99 cents for 32 ounces.
5. Slurpees. One of 7-Eleven's most recognizable offerings, the Slurpee is a big draw for many fans of the convenience store. Buying a Slurpee from 7-Eleven is one of the easy ways to save money on a cool, summer treat. The chain knows this and uses it to its advantage to get you in the door with Slurpee deals, like a recent offer to buy one Slurpee and get a second one free.
6. 7-Eleven's candy aisle. To satisfy a sweet-tooth craving for less, head to 7-Eleven's candy aisle. Its standard-sized candies are typically priced around $1.39, which is less than prices at one local grocery store that sells standard candy bars for $1.49 each.
7. 7-Select brand treats.The deals are even sweeter if you pick candies from the convenience store's signature brand, 7-Select. This brand sells sour neon gummy worms for just 32 cents an ounce, compared with the Trolli brand at 45 cents an ounce at 7-Eleven. A bag of Trolli Sour Brite Crawlers comes up to $1.89, but the 7-Select variety is priced 30 percent lower at just $1.29.
Similarly, the 7-Select sleeve of mini chocolate donuts costs $1.39, well below the Hostess Donettes' price of $1.99 at 7-Eleven.
8. Mix-and-match deals. 7-Eleven usually has mix-and-match deals that offer savings on candies. For instance, snackers can buy two standard-sized candies for $2.49. With these candies regularly priced at $1.39, that's an overall savings of 29 cents. The savings are even better on king-sized candies, which are priced at two for $3.49 -- a savings of 49 cents when buying two for the regular price of $1.99 each.
9. Exclusive offers with the 7-Eleven app. As every savvy shopper knows, one of the best tips on saving money is to stay updated on the latest deals and offers. You can do that at 7-Eleven by signing up for the 7-Eleven app and 7Rewards.
Text "EARN" to 711711, and you'll get a link to download the 7-Eleven app to get access to its 7Rewards loyalty program. The 7-Eleven app can also score you exclusive deals and offers when you scan the app barcode at every checkout. In August, the retailer ran a promotion that offered free Butterfinger candy bars to those who used the app.
10. 7Rewards' 7th cup free. If you're a loyal 7-Eleven patron, you should definitely be taking advantage of its 7Rewards program to get any seventh cup free. Set up a 7Rewards account through the 7-Eleven app, then simply scan the barcode of each beverage you buy with your loyalty account. After you purchase any six beverages, your seventh drink is free. Any 7-Eleven beverage counts, including coffee, fountain drinks, Slurpees and hot chocolate.
11. Big Bite hot dogs. One of the best deals at 7-Eleven are its Big Bite hot dogs, mostly because they come with unlimited toppings for free. Load up on chili, cheese and other tasty toppings, and you can easily double the calories without adding anything to your cost. Plus, you can cheaply upgrade it to a meal with the Big Bite and Big Gulp combo, which is a steal at just $2.
12. Beer. When it comes to beer, 7-Eleven's prices keep pace with what you'd expect to pay at a local grocery store. So if you need extra beer in the middle of a sports match or to pregame before a night out with friends, you can pick up some brews at 7-Eleven guilt-free knowing you're not paying a premium just because it's convenient.
If you're picking up individual servings, like standalone bottles or cans, you'll probably pay less than you might elsewhere. 7-Eleven's $2.29 price for a 25-ounce can of Budweiser, for instance, beat out a local grocery store's price of $2.79 by 50 cents. The savings are even better if your 7-Eleven has a deal, like the mix-and-match offer I spotted at my local store that prices two 25-ounce cans of brands like Coors and Budweiser for just $4.
13. Premium ice creams. If you're craving a pint of ice cream, 7-Eleven locations often have a decent selection of premium ice cream brands in its freezers. The convenience store prices ice cream similarly to what you'd pay at a grocery store, but if you find a deal, you might pay much less.
While my local grocery store has my favorite Haagen-Dazs flavor for $5.89, a local 7-Eleven is offering a two-for-$7.99 deal that puts the price of a pint at just $3.99.
14. Exclusive deals with big brands. Lastly, one of the best deals to watch for at 7-Eleven are the products you can only get at this chain. For example, Doritos has partnered with 7-Eleven to offer the Doritos Loaded nacho cheese snacks. Last summer, 7-Eleven was the only place you could buy the summer tropical flavors of Red Bull, which Red Bull has since expanded to its regular line of flavors after they proved to be a hit with customers.
And right now, 7-Eleven is exclusively selling Monster Energy Pipeline Punch and even offers a two-for-$4 deal on this flavor.
Dividends, which are quarterly payments made by companies to shareholders, can be a very cool thing. Who doesn't love the idea of getting free money just for owning a stock?
Shares of companies with solid dividends can be an important part of any investment portfolio, and some of the nation's most iconic companies have a track record of paying solid dividends to shareholders every quarter. But there are many cases where a dividend stock should be avoided. Here are eight times to stay away from dividend stocks.
1. When You're Seeking Growth
Dividends are nice when you're seeking income, but often, companies pay high dividend yields because they can't offer investors much share growth. If you are young and have a long way to retirement, it should be growth you're seeking. Real estate investment trusts and utilities are examples of companies that pay good dividends and offer stability, but little in the way of share price upside.
2. When a Yield Is High Because the Price Is Low
If you look at a list of stocks with the best dividend yields, it will often include a number of struggling companies. A low stock price isn't necessarily a bad thing if you're getting a bargain, but beware of investing in companies that are dealing with major operational problems with no clear path to improvement. If a company continues to struggle, it may cut its dividend, anyway.
3. When the Company Would Be Better Off Not Offering Dividends
It's nice to get a dividend, but sometimes you'd rather see the company use that money to invest in the business, expand, or make acquisitions. A young technology firm, for instance, would probably be better off not paying a dividend.
4. When You Are Using a Tax-Deferred Account
If you have your retirement savings in a traditional IRA account, your earnings upon withdrawal are taxed at the ordinary income rate. This includes dividends that you may have accumulated over time. If you have dividend stocks in a taxable brokerage account, you pay the the prevailing dividend tax rate instead, which is usually lower. And any gain -- including dividends -- from stocks in a Roth IRA aren't taxed at all upon withdrawal when you retire.
5. When a Company Is Low on Cash
Generally speaking, investors like to see a company pay for its dividends and capital expenditures with cash on hand. Sometimes a company needs to borrow to meet these obligations, and that's a red flag that the company may have to cut its dividend down the road. Read a company's balance sheet to determine its cash flow situation, then figure out if the dividend is sustainable.
6. When the Stock Is Too Pricey for the Dividend
Dividends are nice, but there's very little point to paying $100 a share for a 25 cent-a-share annual dividend. Under this scenario, you're only getting a dividend yield of 0.25 percent -- hardly a king's ransom. But if the stock is trading at $40 and the dividend is $1, you'll have a much nicer yield of 2.5 percent.
7. When Interest Rates Are High
Dividend stocks can be very popular when interest rates are low, because they can offer a better return than cash saved in the bank. Why keep your cash in the bank getting less than 1 percent interest annually when you can get 3.35 percent by investing in Coca-Cola? But the opposite is also true. At various times in history, bank interest has exceeded most dividend yields. High interest rates can also be a killer for Real Estate Investment Trusts, which are impacted by the housing market and have some of the market's highest dividends.
8. When There's No Record of Dividend Growth
It's tempting to be drawn to the current yield of a dividend stock, but it's better to examine whether the company has a history of increasing its dividend on a regular basis. A company's true health will shine through if it can routinely make dividend payments and even boost those payments every year. So-called "dividend aristocrats" are those firms that have increased dividends each year for 25 straight years, and the list includes many of the most prized blue chip stocks including Coca-Cola (KO), AT&T (T), Walmart (WMT) and Exxon Mobil (XOM).
Do you have any dividend stocks in your portfolio?
