Six Tips that Make Good ‘Cents’

19151085What do you mean money doesn’t grow on trees? Rats.

Now that we’ve got that nasty truth out of the way, it’s time to get serious. It’s time to start saving.

This Forbes article describes six easy ways people in their thirties can do just that – and how it will pay off in the long run.

Three of the tips include:

  • Embrace stocks: The financial crisis took its toll on many thirtysomethings. Nearly 40% of Gen Y-ers say they’ll never feel okay investing in stocks, MFS Investment Management has reported. Take note: Since 1926, a portfolio mostly in stocks has never lost money in any 20-year period while averaging gains of more than 10.8% a year, versus 4% for bonds. At age 30, you should have most of your portfolio in stocks, with about half in U.S. equities and nearly 30% in foreign equity.
  • Don’t cash out: More than half of workers in their twenties who leave a job do not roll their 401(k) into an IRA or their new employer’s plan, says Aon Hewitt. Bad move: On a $10,000 balance, you could be left with just $7,000 after taxes and penalties. If, instead, you keep that money growing at, say, 6% a year, you’ll have an extra $100,000 or so by the time you retire.
  • Sweat the small stuff: If you carry multiple credit card balances, you’ll save the most money by paying off your highest-rate plastic first, right? Wrong. Two Northwestern University professors have found that people who focus on their smallest debts before tackling bigger, higher-rate loans are more successful at erasing debt. The psychological boost from eliminating a loan entirely gives you the mojo to keep paying down debt.

When Bad PR Causes Falling Stock Prices

Business Insider took an interesting look at 10 PR catastrophes that really damaged companies’ stock prices. It’s a great thing to keep in mind when you’re handling a crisis.

Is PR dead? There’s no better way to tell than looking at the aftermath of a major PR fail.

When really bad news is made public, it not only affects people’s opinions, but it also affects the stock market.

Remember what happened when Steve Jobs denied he was ill, then took a leave of absence to have a liver transplant? Apple’s stock nose-dived 7 points that day.

Here are several other major public events, compared them to the company’s stock prices for that month.

See the 12 instances at BusinessInsider.com.

Economics: How Will We Know When the Recovery is Coming?

Early this decade, when the United States was coming out of its previous economic downturn, a story in our BizVoice magazine featured comments from several state economists. The basic question: What are the leading indicators of an economic recovery?

The answers then varied widely, as they undoubtedly would today. The editors at The Kiplinger Letter say they will be keeping a close watch on four areas:

  • Stocks: According to the editors, stocks, over the past 70 years, have started rising, on average, four months before gross domestic product turned positive.
  • Jobless claims: An encouraging sign will be when the first-time unemployment applications decrease from 550,000 per week to around 400,000.
  • Bond rates: The current 17 percentage point gap between interest rates on low-grade corporate bonds and Treasuries will continue to shut those with less than stellar credit records out of the bond market. The normal gap, they say, is closer to five points.
  • Housing starts: Stable prices are necessary to stop housing’s "negative contribution to GDP growth."

Agree? Disagree? Have your own indicators to watch?