Cash flow can be issue in owning rental home
How do you feel about investing in real estate in addition to the stock market? I have a 401(k) account and a taxable account that I invest in stocks. I have a $300,000 low-interest-rate mortgage on my house, but I am able to meet expenses with salary and dividends. I may be getting some additional money, and a friend has encouraged me to invest in a rental house to decrease taxes. I live in the Seattle area, where real estate prices have gained over 10 percent in the past year. My house has appreciated 55 percent in eight years. If I get a rental, I would need someone to manage renters as well as take care of repairs. I fear these costs will offset any potential gain. — E.E., by email
The first thing to remember is that you already have a significant investment in real estate: your house. For most people, it’s the biggest single part of their net worth.
You’re wise to be concerned about management costs and repairs. You should add vacancies to that list. The worst way to invest in real estate is to focus on possible appreciation while forgetting month-to-month cash flow. Investors in single-family-home real estate are more likely to be successful if they are “hands-on” kinds of people, doing most of the necessary repairs and upkeep themselves.
Another pitfall is not having enough in cash reserves to carry the property through an extended vacancy or recovery from the tenant who stiffs you for rent while trashing the property. If the rent can’t cover the financing and operating costs, it’s easy to get into trouble.
I’m looking for a simple way to manage investments. I liked a recent column about putting half of your investments in a total domestic stock market fund and half in a total domestic bond market fund. My thoughts are with Vanguard or Fidelity. Also, does Schwab have them? I’d like the stock symbols for these funds. — B.S., Austin
When I first introduced the most basic Couch Potato portfolio more than 20 years ago, it had to be done with Vanguard mutual funds, and the most efficient way to do it was at Vanguard. Today it is possible to build a basic Couch Potato portfolio at any brokerage firm using exchange-traded funds.
The original Couch Potato portfolio was invested in the Vanguard Total Stock Market Index Fund and the Vanguard Total Bond Market Index Fund. Basically it was a commitment to domestic equities and bonds.
Later, it was possible to substitute an inflation-protected treasury securities fund. As a practical matter, the performance difference is small. Based on returns for the asset class (not the funds), a portfolio that used the total bond market index would have earned at a compound annual rate of 9.27 percent over the past 30 years, while one that used inflation-protected bonds would have earned at a compound rate of 9.24 percent.
■ Build the basic Couch Potato portfolio at Vanguard using its ETFs: VTI and BND.
■ You can do the same thing at Fidelity using ITOT and AGG.
■ You can do it at Schwab using SCHB and SCHZ.
Build with these, and you will pay nothing in commissions — and the annual expenses of your portfolio will be under 0.06 percent. The only action you will need to take is to rebalance once a year. Take from the bond fund in down years, from the stock fund in good years.
Shoppers buying on their phones this holiday season will see new ways stores are making it easier and faster as they try to lock in sales before people swipe to the next site.
“It’s not just a shopper’s tool,” said Tamara Gaffney of Adobe Digital Insights, the research arm of Adobe Systems. “It’s now so embedded in our existence we don’t even think about the fact that we pulled out our phone and bought things.”
Mobile shopping accounted for $4.61 billion in sales from Thanksgiving through last Monday, according to Adobe Digital Insights. Some 54 percent of visits to retailers’ sites and 36 percent of sales for the period came from phones and tablets.
Here are four ways smartphones are changing the way people shop — and how retailers are responding:
More impulse buying
Mobile shopping entices people to buy right when they’re thinking about it, Gaffney said. She noted that retailers that had more mobile traffic enjoyed a 30 percent increase in online revenue.
The slow recovery of the U.S. economy is continuing to keep the cost of Christmas — or at least the gifts listed in “The Twelve Days of Christmas” — from spiraling out of control.
The price of two turtle doves jumped from $290 to $375 this year, but nine of the other 12 gifts listed in the carol stayed the same price or became cheaper, including a partridge in a pear tree, according to the 33rd annual PNC Wealth Management Christmas Price Index.
As a result, the overall cost of the gifts listed in the song increased 0.7 percent to $34,363, up $233 from last year’s total of $34,131.
PNC Financial Services Group releases the price index each year as a whimsical way of tracking inflation.
Besides the turtle doves, only the cost of 11 pipers piping and 12 drummers drumming — both up 2.8 percent — increased.
Thomas Melcher, chief Investment officers for PNC Asset Management Group, said the increasing wages of drummers and pipers could signal a march toward higher wages for a broader range of workers in 2017. He said he wouldn’t be surprised to see increases coming for the eight
This is a tough one. President-elect Donald Trump and the Republicans who now have a majority in both houses of Congress didn’t focus much on higher education during their campaigns, said Jason Delisle, fellow at the American Enterprise Institute, a right-leaning think tank in Washington, D.C. That makes predicting the next four years of student loan policy tricky.
But Trump recently spoke about simplifying a program that lets student loan borrowers repay their loans based on their incomes, which policy experts have recommended for years.
Here’s how it works now: If you’re struggling to afford your monthly student loan bills, federal income-driven repayment plans will cap them at a percentage
Retailers need to make it easier to find items so shoppers don’t quickly move on.
“They want it fast,” said Peter Cobb, co-founder and executive vice president of handbags and luggage site eBags, which says mobile accounted for 43 percent of visits and 20 percent of sales for the five-day period.
Wal-Mart Stores Inc. said 70 percent of Walmart.com traffic and 60 percent of orders Thursday and Friday were driven by mobile devices. maids a-milking, nine ladies dancing and 10 lords a-leaping.
“There are some underlying inflationary pressures that seem to be building,” Melcher said.
The price of five gold rings, as tracked by PNC, hasn’t gone up in three years, even though the price of gold as a commodity has.
“At a certain point, the end product should begin to reflect the price appreciation of the commodity,” Melcher said.
PNC calculates the prices from sources including retailers, bird hatcheries and two Philadelphia dance groups, the Pennsylvania Ballet and Philadanco.
The cost of buying the same gifts online is $44,603 this year, up 2.2 percent from $43,627 last year. But Melcher cautioned that’s largely
More focus on deals
Many shoppers are fixated on deals — and mobile phones make it easier to grab them.
Customers look to have spent nearly 3.5 percent less on average for the five-day weekend starting Thursday than a year ago, according to a survey conducted over the weekend by the National Retail Federation trade group. Much of the drop had to do with the heavy discounting shoppers demand. The NRF’s survey showed more than 36 percent of shoppers said everything they bought this past weekend was on sale, compared with 32.5 percent a year ago.
Market Track, which monitored nearly 1,500 products online from Thanksgiving through Cyber Monday, says stores changed prices more often than last year, and more were lowered than raised. Some 41 percent of prices shifted at least once, compared with 27 percent last year, said Traci Gregorski, senior vice president of marketing.
Speedier service
People buying on the go want a swifter response when they need help.
“When you have shoppers who are engaged, you have to try to because it costs more to transport animals and performers — 10 lords a-leaping cost $5,509 in-person, but $13,373 online because of transportation costs — than the cost of the items themselves.
“In most instances, it’s cheaper to shop online,” Melcher said. “I’ve never personally shipped a swan, but I imagine it’s not the cheapest endeavor in the world.”
A buyer who purchased all the gifts each time they are mentioned in the song would spend $156,507, up $1,100 from last year.
The full set of prices for purchasing the gifts from a brick-andmortar business, not online, is: ■ Partridge, $20; last year, $25 ■ Pear tree, $190; last year, same
■ Two turtle doves, $375; last capture as much revenue as you can,” said Kevon Hills, senior vice president of operations at StellaService, which tracks customer service for retailers and online companies.
Two years ago, 97 percent of retailers offered email as a way to interact with customers, but that fell to 81 percent heading into this holiday season, StellaService said. Some 90 percent use live chat, up from 80 percent two years ago.
In-store research
Even people who bought lots of items on their phones are spending time in stores, said Marshal Cohen of research firm NPD Group Inc. “In the past, consumers did their research online and then purchased in-store, but brick and mortar stores are now critical to consumers’ research needs,” he wrote in a blog post.
Technology beyond shopping apps means people use stores differently.
“They do research online, compare prices, look for deals and even try on an outfit and Snapchat it to a friend, all while in the store,” said Tom McGee, CEO of the mall group International Council of Shopping Centers. year, $290
■ Three French hens, $182; last year, same
■ Four calling birds (canaries), $600; last year, same
■ Five gold rings, $750; last year, same
■ Six geese a-laying, $360; last year, same
■ Seven swans a-swimming, $13,125; last year, same
■ Eight maids a-milking, $58; last year, same
■ Nine ladies dancing (per performance), $7,553; last year, same
■ 10 lords a-leaping (per performance), $5,509; last year, same
■ 11 pipers piping (per performance), $2,708; last year, $2,635
■ 12 drummers drumming (per performance), $2,934; last year, $2,855