By Friederike Sperl, Contributor
Last weekend I went to Paris and I fell in love all over again with all these amazing French designers and their beautiful feminine styles. An item that particularly caught my eye was the embellished blazer and I asked myself if such a statement piece could be styled for work. A few beads or sequins here and there might be the perfect alternative to a plain and boring suit. …read more
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Last month, New York City Mayor Michael Bloomberg proposed a major upgrade to building codes in order to prepare the Big Apple for an era of more floods and storms. It is fascinating reading for anyone who loves the look and feel of New York. …read more
Source: FULL ARTICLE at Forbes Latest
Last week, Utah Sen. Mike Lee (R.) sent a letter to Senate Majority Leader Harry Reid (D., Nev.), “informing Senator Reid that we will not vote for a continuing resolution that funds Obamacare,” risking a government shutdown if Lee’s objectives are not achieved. While eleven other Senate Republicans have signed on to Lee’s letter, other Republicans are denouncing the move in surprisingly direct language. “It’s not an achievable strategy…and it’s dishonest,” said Sen. Tom Coburn (R., Okla.). “It’s the dumbest idea I’ve ever heard of,” added Sen. Richard Burr (R., N.C.). It’s worth understanding why conservatives like Lee are advocating this strategy, and why others are opposing him. …read more
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By Howard Gleckman, Contributor Last week, the OECD proposed a major new initiative aimed at cracking down on tax avoidance by multinational corporations. The 40-page report follows widespread international criticism of aggressive tax planning by high-profile U.S.-based firms such as , , and . …read more
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Last weekend, journalist Helen Thomas passed away, ending a remarkably long and historic career in journalism. When she began working at United Press International (UPI), Edward R. Murrow was reporting for CBS, Walter Cronkite had yet to start his career at the same network, and William Randolph Hearst, founder of the great newspaper empire where Mrs. Thomas would eventually work, was still alive. When Hearst was born, in 1863, Horace Greeley of the New York Tribune ruled the world of newspapers from New York. He battled it out for readership and influence with James Gordon Bennett of the Herald, among others. William Lloyd Garrison was still writing The Liberator, an anti-slavery publication he founded in the 1830s. Frederick Douglass had ceased publishing his paper, The North Star, only a decade earlier. …read more
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Last week, my Forbes colleague and friend, Thomas Basile, published an article wherein he expressed his concern that we are reaching the end of Jeffersonian Democracy in America as a result of voters abdicating their responsibility to participate in the electoral process. …read more
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By Nathaniel Parish Flannery, Contributor
Last year I caught a glimpse of Mexico City’s mostly ignored Occupy movement. I saw a few demonstrators camped out in from of the shimmering mirrored panels of the country’s stock exchange. Only two young protesters sat in the tent in front of hand-written placards that displayed messages such as “THE OUTRAGED OF THE WORLD UNITE!” and “THE STATE CAN ONLY SUSTAIN ITSELF THROUGH CRIME.” One police officer watched from in front of the stock exchange while crowds of well-dressed young professionals walked by talking on Blackberries and iPhones. After surveying the scene, I wrote an article in which I explained “The problem for the Occupy movement is that even though Mexico continues to struggle with ongoing problems of inequality and poverty, in the last fifteen years, an unprecedented number of young Mexicans have joined the country’s middle class.” …read more
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By Loren Thompson, Contributor
Last week, I wrote a commentary for Forbes explaining why the sequestration provisions of the 2011 Budget Control Act could result in many U.S. warfighters dying unnecessarily. This week, I’d like to explore how that deadly dynamic would play out by examining the impact of budget cuts on one program — the Army-Marine Corps effort to develop a next-generation jeep. …read more
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Last week, the City of Detroit filed for bankruptcy, making it the largest municipal bankruptcy in American history. It’s a remarkable story, especially for natives of the state, like me, who have watched Detroit slowly decline for decades. But it’s even more remarkable, when you consider the fact that the Michigan state legislature is on the verge of adding billions in unfunded liabilities to the state’s Medicaid program, precisely at the time when Michigan’s politicians should be most acutely aware of the cost of fiscal irresponsibility. …read more
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Last week, five of our financial planners at Financial Finesse shared their best and worst personal investment decisions in our blog. (Yes, even elite financial planners in the top 2% make investment mistakes.) So what can we learn from their experiences? Here are five key lessons:
1) Invest in yourself.
One of our planners discussed how his best decision was investing in himself. He was the first in his family to go to college and worked his way not just through college but also to an MBA and the CFP® designation. That education enabled him to have the career and the income he does today.
For most people, that ability to earn a living is the most valuable asset they have so it’s important never to forget about investing in your own human capital. A college degree has been estimated to boost lifetime earnings by $250-$300k even after the costs of that education. A graduate degree can boost that even further. A study of recent MBA graduates found that they were able to recoup their investment in only about 4 years on average. Another study found that those with a graduate degree earned an average of 38% more than those in their same field of work who only had a bachelor’s degree.
2) But do your homework first.
Your homework should start well before you even set foot in a classroom. Not all graduate degrees are equal. That same study found that while those in the natural and social sciences benefited quite a bit financially from their graduate degrees, earning 70% and 55% more respectively, those in other fields like communication/journalism and the arts benefited less from their degrees while still spending tens of thousands of dollars on tuition. In those cases, getting more work experience might have been more valuable.
There’s even growing talk of a higher education bubble in areas like law. In fact, another of our planners said that getting a law degree was his worst investment decision. Although he received a full scholarship and didn’t have to pay for his degree, he gave up several years of earnings in a lucrative position for a degree that didn’t really boost his career as a financial planner.
So if you’re thinking about going to school, make sure you do it for the right reasons and that you’ve considered all the costs, including the opportunity cost of possibly being out of the workforce for an extended period of time. (If you do decide to go, here are some ways to get Uncle Sam to share in the cost.) Finally, keep in mind that there are other ways of investing in yourself like living a healthy lifestyle that can make you more productive, expanding your knowledge informally through reading and taking ad hoc classes on your own, or developing your social network.
3) Start investing early.
Most of us won’t be able (or want) to work forever so no matter how much time, money, and effort you invest in building your human capital, at some point you’ll want to begin converting it into financial capital. Given the power of compounding, that point should be as soon as possible. That’s why another of our planner’s best investment decision was starting to save at age 22. If he made $40k a year, saved 10% of that every year, received a 5% employer match, and earned an average annualized return of 5% after inflation, he could retire at age 67 with $1 million in today’s dollars, not including any raises or promotions he’s likely to get throughout his lifetime. But if he started saving twice that much at age 40, he would still have less than $700k at retirement. By waiting until 50, he cuts that amount by more than half.
Even if you can’t afford to save much now, you can start with a small percentage and slowly increase that over time. Many retirement plans allow you to automate this with a contribution rate escalator. Using this method, you’ll be surprised how quickly you’ll be saving more than you ever thought you could.
4) Have a plan.
Once you save something to invest, you need to have a plan as to how to invest it. Otherwise, it’s very easy to get caught up following the herd, which was the most commonly cited investment mistake by our planners. Several of them invested in risky technology stocks at the height of the .com bubble in the late 90′s and lost a good chunk of change when the bubble eventually burst.
Even though they were all financial planners at the time who should have known better, there is one thing we all have in common as human beings, emotions, and that, rather than lack of knowledge, is why most investment mistakes are made. Here’s how it tends to go. When the stock market (and this applies to other investments like real estate, gold, and bonds too) is doing well, people tend to invest more aggressively since everyone else seems to be making money and the aggressive investments have the best performance records. When the market eventually takes a downturn (and it always will at some point), the tendency is to hold on and hope it comes back. If instead it keeps getting worse (think back to 2008), people tend to panic and sell out, moving their money into more conservative investments. When the market eventually turns back around (and it always has at some point), people wait for it to go back up for a long time to make sure the recovery is real before they get back in. This “greed, hope, and fear” cycle then repeats itself.
One way to avoid this is to have an investment plan in place and to put it in writing, which was another of our planner’s best investment decisions. The plan should include a target asset allocation (or how your money is divided between different types of investments like stocks v. bonds) based on the time horizon of your goals and your personal risk tolerance. By sticking to your plan, you can avoid the day-to-day distractions of the market.
5) Buy low and sell high.
Having an asset allocation plan and periodically re-balancing it can also help you buy low and sell high. For example, let’s say your plan is to have 60% in stocks and 40% in bonds. When the market goes up and your stocks are now 70% of your portfolio, it’s tempting to put more in but you’re actually now taking more risk than you should even if it doesn’t feel that way. By shifting enough money out of stocks and into bonds to bring your stock percentage back down to 60%, you’re selling those stocks while they’re relatively high. When the market declines and you only have 50% in stocks, you would then move money out of those bonds to bring the stock percentage back up to 60%, buying those stocks while they’re relatively low.
Having an investment strategy like this can help you manage your risk and even improve your returns by buying low and selling high. As Warren Buffet once said “Be greedy when others are fearful and fearful when others are greedy.” Since this can be emotionally hard to do, you may also want to automate this process with an automatic re-balancing feature if your retirement plan offers it or by investing in a fund that will do it for you like a balanced or target date fund.
Avoiding bubbles and buying low applies to the real estate market as well. One of our planners said his best investment decision was not buying a home near the top of the real estate bubble. Another took advantage of the real estate crash by purchasing an investment property at a considerable discount.
Look back on your own best and worst investment decisions. Do you find similar themes? What did you learn from them? Share your thoughts in the comments section below.
Liz Davidson is CEO of Financial Finesse, the leading provider of unbiased financial education for employers nationwide, delivered by on-staff CERTIFIED FINANCIAL PLANNER™ professionals. For additional financial tips and insights, follow Financial Finesse on Twitter and become a fan on Facebook.
Source: FULL ARTICLE at Forbes Latest
By William Pentland, Contributor
Last week, the Arizona Public Service Company, the largest electric utility in Arizona, asked state utility regulators to raise electric rates for residential customers who install solar photovoltaic systems at their homes. …read more
Source: FULL ARTICLE at Forbes Latest
By Sanjeev Sardana, Contributor
Last month I was interviewed for an article about the downside of entrepreneurial success. The theme of the resulting story focused on how an entrepreneur’s propensity to take on risk often jeopardized their established wealth as they continue to seek new ventures and investments. …read more
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Last week I wrote about a new vacation policy at Lendio, which is where I spend my workday. Since that time, there have been numerous internal discussions about how the new policy should be implemented and whether or not our employees will feel comfortable taking a week or 10 days off. It was reiterated that the intent of the new policy wasn’t to create such a performance-driven atmosphere that nobody felt good about taking time off. Nor was it to imply that while on vacation you were expected to call into the office, take your laptop so you can go through your emails and get a little bit of work done, or otherwise allow work to intrude on vacation time—although I’m sure some of that will likely happen. …read more
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By Paula Rosenblum, Contributor
Last week, the Washington DC city council passed a bill called the Large Retailer Accountability Act (LRAA) of 2013. The bill requires retailers with gross annual sales of more than $1 billion to pay workers an hourly wage of $12.50 an hour, vs. the District’s minimum wage of $8.25 (which is higher than the national minimum wage). Upset with the bill, Walmart first threatened and then confirmed it was canceling the build-out of three new stores in the DC area if the bill becomes law. …read more
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By Peter J Reilly, Contributor
Last week Melanie Sloan of Citizens for Responsibility and Ethics in Washington filed a complaint with the IRS concerning James Bopp Jr., the Bopp Law Firm and James Madison Center for Free Speech. Mr. Bopp is best known for his work on the Citizens United decision, which opened the floodgates of corporate money into political campaigns. This link will bring you to a summary and further links to supporting material on Ms. Sloan’s complaint. I would encourage you to dig into the information, if you find this interesting. Ms. Sloan asserts that Mr. Bopp and the related entities could be liable for over $6,000,000, because of the manner in which JMCFS operated. My own assessment of CREW’s complaint was that it was pretty weak. Ms. Sloan thinks that I got it wrong and has put her criticisms in a letter to Forbes. Here it is, in its entirety: …read more
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By Tony Nitti, Contributor Last week, the IRS released a Chief Counsel Memorandum that addresses what might soon become an all-too-familiar fact pattern. …read more
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By Loren Thompson, Contributor
Last week, Secretary of Defense Chuck Hagel sent a letter to Congress explaining the destructive consequences of military spending cuts required by the 2011 Budget Control Act. The deficit-reduction measure mandated two rounds of cuts, each averaging about $50 billion per year through 2021. The White House has submitted a fiscal 2014 defense request that complies with the first round but not the second, meaning it is roughly $50 billion above spending caps established by the law. …read more
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Last week, I was called to testify by the House Energy and Commerce Committee on efforts to reform the troubled Federal Communications Commission. The invitation came in response to several of my posts here on Forbes about the communications industry, and its increasingly unhealthy relationship with the FCC as well as state and local regulators. (See the sidebar for links to some of the articles that got the Committee’s attention.) …read more
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By Mark Hendrickson, Contributor
Last week, Federal District Judge Denise Cote ruled that Apple Inc. was guilty of collusion and of fixing the price of e-books. …read more
Source: FULL ARTICLE at Forbes Latest
Last year, my fellow HBR blogger Daniel Markovitz suggested that stretch goals can be demotivating, and should be replaced by confidence-building “quick wins.” Frankly, this is like saying that the taste of food is more important than its nutrient value. It’s a false dichotomy. Healthy organizations need both stretch and success to stay alive and vibrant, just like a well-balanced diet includes food that is both tasty and healthy.
The key to integrating the two is to carve quick wins out of long-term goals — so that each small success is a building block towards achieving a broader challenge. It’s important however that these small successes themselves be microcosms of the larger goal, and not simply serve as check-marks for harvesting low hanging fruit. Rather, these small stretches (we call them Rapid Results) need to force people out of their comfort zones to try new approaches, ideas, and ways of working in 100 days or less.
Over the past several decades, my colleagues and I have seen the power of short-term stretch goals in almost every imaginable situation. For example:
In order to achieve seemingly impossible growth targets, an adhesives materials company challenged dozens of divisional teams to each implement one “growth idea” that would generate new revenue in 100 days. One team, for instance, revised a commercial taping product for home use and partnered with Home Depot to sell it. Over the next two years, hundreds of such teams around the world helped the company increase revenues while creating further opportunities for growth. These “small stretches” also energized participants and helped them develop capabilities as growth leaders. As one manager said, “I learned more in 100 days than I had in the previous several years.”
To achieve stretch sales goals, the commercial head of a health care company challenged her global team to boost revenues from older brands without losing focus on their primary products. To make this happen, a cross-functional team from each market selected ten promising brands and focused on getting initial, measurable results on one of them in 100days.Over the next year, these teams built on the initial results so that the collective gain was over half a billion dollars.
Short-term stretch goals also work with community development and not-for-profit initiatives. As part of an effort to increase education in Southern Sudan, a team of villagers with help from an NGO took on the challenge of increasing school attendance by 30% in 100 days.The villagers were so motivated to achieve this goal, that they eventually made their own bricks to construct a new building. A few years later a child from that village was the first from his region to attend a university. Recently, an effort in the U.S. to provide housing for 100,000 homeless veterans is utilizing the same approach by carving out short-term stretch goals in a number of cities around the country.
Regardless of context, there are two keys to the effective use of short-term stretch goals.
The first is to make sure that the immediate goals are part of a larger, more ambitious effort so that whatever is achieved and learned is a building block, not an end-in-itself. In other words, extremely ambitious stretch goals need to be deconstructed into lots of short-term stretch goals, sometimes with multiple cycles.
Second, intentionally design the short-term stretch goals in ways that force innovation, collaboration, and learning — so it’s not just a matter of working harder for a short period of time. In this way, each short-term success builds capability and knowledge for the next and the next.
Let’s not dismiss stretch goals as demotivating or dangerous. If you tackle them by carving out short-term challenges, and learn as you go, they can be a powerful way to accelerate progress.
What’s your experience with short-term stretch goals?
Source: FULL ARTICLE at Forbes Latest
