Category: Money & Finance

Weathering Retail Sales

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Here in Denver, we were recently socked in by a winter storm for about 24 hours. It made for messy conditions for the morning and evening commutes. Meanwhile, the Colorado mountain communities were full of glee, reveling in snow powder that attracts ski and snowboard business.

As with ski resorts, it’s no secret among retailers that weather can have a profound effect on sales. Seasonal changes – as well as daily and weekly fluctuations – must be accounted for when making consumer sales projections. These ebbs and flows not only impact the type of items being sold, but also the manner in which consumers shop. For brick and mortar retailers, the good weather generally fuels business, generating an increase in foot traffic which leads to an uptick in sales. But inclement weather? Well, the results can be mixed.

 ‘Tis The Season To Be Jolly (for Retailers)

The first phase of the holiday season is now behind us, and it appears that shoppers were out in big numbers, according to the latest retail data from the National Retail Federation.

But warmer-than-normal weather patterns wreaked havoc for some stores who were hoping to capitalize on this the busiest shopping season of the year. A report from data analytics firm Planalytics shows that U.S. stores lost $185 million in November sales. This slide is largely attributed to an unusually warm weather pattern in the Midwest and along the East Coast. So far, this trend has continued into December, with outerwear sales plummeting over 30% in cities like Boston, Chicago, New York and Philadelphia.

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A Tough Year For Gold, But Positives Ahead

FuturesIt has been a disappointing year for gold investors in 2015 so far with gold gradually declining since the beginning of the year. Investors may be getting sick of the yellow stuff after the 2014 performance of gold going nowhere, and then the drop in 2013. However, it is during such times that it is important to review the reasons for owning gold and keep its performance in perspective. In this article, we will review the performance of gold, look ahead at the financial landscape, and review whether holding gold still makes sense.

Gold Continues to Outshine, Despite Short-Term Performance

Gold is currently down around 10% year-to-date, bringing its one-year performance down to about the same at -11%. The current price of $1,070 hasn’t been seen since November of 2009. The five-year performance of gold is now down around 21%. This comes after 2014, where gold was essentially flat for the year, and 2013 where gold was down around 28% after correcting from its big run-up to $1,900 an ounce.

Periods of poor performance are certainly painful, and years of poor performance can seem excruciating in the short-term. However, gold as an asset must always be viewed in longer time frames and should always be compared to the other options. From 2001 through 2012, gold had positive gains, with eight of those years showing double-digit gains.

The ten-year performance of gold is up 116% and the fifteen-year performance is a positive 303%, compared to the S&P 500 which is up only 65% and 55% respectively! Gold is clearly holding its own, considering it should be an underperformer because it doesn’t represent a business or return a cash flow.

Should You Buy A Home You Can’t Afford?

mansion-875094_1920Is there ever a situation where buying an unaffordable house makes sense? A new report by real estate service Trulia seems to suggest so. The report notes that in some cities, Millennials should consider buying a house that is a little beyond their budget, given that they are likely to receive promotions and raises that will make it more affordable down the road. About the only worse advice I can think of would be for you to stick your hand in a rattlesnake’s nest.

The report is based on the assumption that in 30 years time, today’s 25 year-olds will be earning the same as today’s 55 year-olds, assuming a certain level of inflation. For example, the typical Millennial in New Haven, CT, can expect to spend 37% of their income on housing in the first year of a mortgage but, three years later, this will drop to 31% or less.

Ralph McLaughlin, a housing economist at Trulia, is quoted as saying, “There’s a sweet spot  of metros where a mortgage looks obtainable but unaffordable, and yet it shouldn’t take long to become affordable.” In other words, it’s obtainable in the sense the person can get the loan, but unaffordable because it currently swamps their budget.

Given that mortgage payments are usually level payments spread out over the term of the loan, the actual mortgage payment doesn’t go down (and neither will maintenance costs or property taxes). Consequently, McLaughlin is assuming some significant promotions and raises for today’s Millennials.

But even if McLaughlin’s assumption is correct, and you can reasonably plan for a climb up the corporate ladder, does this mean you should buy a home today that you can’t really afford? Absolutely not.

Practicing Sound Money: Can the UnBanked Participate?

IMG_4608It’s shocking when you hear of someone functioning day-to-day without a bank account. But according to the Federal Deposit Insurance Corporation, this trend is not all that uncommon.

The FDIC reports that nearly 17 million Americans are unbanked, limiting them in their ability to execute financial transactions and accumulate wealth-building assets. Moreover, 51 million are referred to as underbanked, meaning that they may have to rely on options like check-cashing services and high-interest lending, just to make ends meet.

There are myriad reasons behind this lack of engagement with traditional banking systems. For starters, a growing number of Americans, particularly African-Americans, have grown leery of banks due to predatory lending and excessive fees. Others are simply unable to obtain even a basic checking or savings account, due to a tarnished financial history.

One Pew study found that a third of all households that closed their bank accounts did so because of unexpected or unexplained fees.

Then there is the case of growing numbers of young Americans who have voluntarily chosen to self-select out of financial institutions. FDIC data shows that a surprising 50% of those between the ages of 18 to 24 are unbanked or underbanked.

3 (not so) Crazy Ways to Save Money

woman-shaking-piggy-bank-shutterstock_96849385-400x400A little while ago, Business Insider published an article about a Google employee who was living out of the back of a truck parked in the company’s corporate parking lot. Brandon, the employee in question, stated that his goal was to save 90% of his post-tax income by living in the truck and eschewing electricity, heating, air-conditioning, a kitchen, toilet or a personal shower. While definitely effective, Brandon’s plan is a little ambitious, and his lifestyle is probably not everyone’s cup of tea. But it did get me thinking about some simple ways one could cut out extraneous spending without having to move into the backseat of a car. Here are 3 not-so-crazy money-saving ideas of mine:

Eat Out Less, Cook More

I definitely enjoy eating out. There’s a lot to like about it. It’s a good way to hang out with friends or to get out of the house and relax. Sometimes, I just don’t feel like putting in the time or effort to cook a nice meal for myself. Which reminds me. I’m not a great cook to begin with. Eating out is a way for me to try new foods which

Finally – Legal Investment in Small Businesses

SECYou no longer have to be super wealthy to invest in a new startup company or small business. On October 30th, the Securities and Exchange Commission (SEC) announced new rules that will make equity crowdfunding legal, something investors and small companies looking to raise money have been waiting a long time for. While not perfect, the rules are a step in the right direction to allow capital to flow freely and efficiently to new business ideas and products, which could unleash exciting opportunities.

What is Equity Crowdfunding?

Many people are familiar with the idea of crowdfunding in general — raising money from a large group of people. The two biggest crowdfunding platforms are Indiegogo and Kickstarter. But have you ever noticed that both platforms only allow you to receive products in exchange for your contribution? In other words, you may get a t-shirt or the first product that rolls off the assembly line, but you can’t have an ownership stake in the company: that would have been illegal.

This problem became glaringly obvious to people when Oculus Rift, a virtual reality headset in development, was purchased by Facebook for $2 billion. The project was initially launched on Kickstarter, and those who helped get the company off the ground were given an early prototype of the product in return. But when Facebook made the acquisition, these backers received nothing because they didn’t actually have any shares in the company.

Previously, only accredited investors, or those who were already wealthy, were able to participate in these investments. Now there is the potential for anyone to invest in companies looking to raise capital. This is important for a number of reasons.