Twila Van Leer

Americans Are Shopping Differently

March 19, 2018 By Twila Van Leer

Americans aren’t shopping like they used to do, and that is having a great effect on retailers as they try to cope with the added competition posed by online buying and other technology-related changes in the market.

Nobody feels the changes as much as the shelf-stockers, sales personnel, cashiers and others who used to handle things with no competition. They are hustling to address changes in customer behavior and preferences.

Mundane tasks like tracking inventory and checking out customers have been automated and the retailers are trying to capitalize on the thing they do have – direct contact with the buyer.

Sometimes the retailer is interacting in a whole new way. A Best Buy clerk, for instance, may find himself in the customer’s home helping to compare and analyze the choices in electronics. At Walmart, a worker skims the aisles hand-picking products to fill online orders. They will be delivered to the consumer who waits in a car outside the store.

Some advocates for the retail workers believe this may over time mean fewer, but better-paid, employees. As of now, the better pay part of the equation has not been apparent.

With many customers using their electronics to compare prices before making any buying decisions, the nature of in-store selling are changing, Sometimes, a clerk spends time explaining the merchandise, only to have the customer comment, “I’ll buy it online.” Sales people have to work harder to hold their ground.

In 2017, some 66,500 retail jobs disappeared. Some of that loss was made up by hires in accounting jobs in distribution/call centers. The hardest-hit areas of retailing are in clothing and consumer electronics. Department stores have been hardest hit, but many small businesses also are feeling the pinch.

Retailers who survive are scrambling to meet the challenges. The jobs they offer are likely to involve new duties. How these jobs will change depends on three factors: the pace at which online shopping expands; the changes that occur with robotics and shifts in hourly pay. Entry level jobs in retailing will disappear. There will be more pressure to perform. So far, surveys of these personnel show, the pay has not kept pace with the new demands.

Walmart, hustling to meet the Amazon challenge, now has 18,000 personal shoppers with very specific guidelines to do the picking for customers. They have 30 seconds to find an item or, if it is not available, to find a suitable substitute. They report that they come to know the tastes of certain repeat customers and routinely satisfy their shopping desires.

Target stores, too, are training more specialized sales persons in such areas as clothing, consumer electronics and beauty products. They pay them more for the expertise they bring to the job, which results in greater sales.

Money Can Buy Happiness

March 16, 2018 By Twila Van Leer

Contrary to the common adage that says you can’t buy happiness, a massive research project conducted by Purdue University and the University of Virginia indicates that there is a certain amount of happiness that is related to satisfaction with life that comes from a certain income.

The two universities analyzed World Gallup Poll data that was gathered from 1.7 million people in 164 countries and cross-referenced earnings with life satisfaction. The results of the study were published in the journal Nature Human Behavior.

The study acknowledged that costs and standards of living varied among the countries included in the study and factored that into their conclusions.

The upshot for Americans was that an ideal income for individuals is $95,000 per year to obtain life satisfaction. Emotional well-being, the study showed, is achievable at $60,000 to $75,000 per year. Families with children, of course, will need more.

The researchers defined life satisfaction as an overall assessment of how one is doing financially. Emotional well-being related to day-to-day feelings such as happiness, sadness, excitement, anger, etc.

The extensive survey also indicated that once a threshold was reached, additional increases in income actually were associated with reduced happiness, indicating that the more people have, the more they want. They tend to compare themselves with others more often.

There is a happiness “tipping point,” the researchers concluded., related to how well an individual feels about money. A small decline in earnings causes one to relate with others who make slightly lower incomes, perhaps because of the costs that come with higher incomes, said Andrew Jebb, lead author of the study and a doctoral student at Purdue.

He noted that the findings of the large study raise issues about money and happiness across cultures. “Money is only part of what really makes us happy and we’re learning more about the limits of money.“

Home Prices Jumped In 2017

March 14, 2018 By Twila Van Leer

WASHINGTON – Home prices in 2017 rose at the fastest pace in three years as potential buyers vied for a limited number of available properties, according to Standard & Poor’s.

The 2017 6.3 percent uptick was the sharpest increase since June of 2014, according to the S&P Corelogic Case-Shiller national home price index. That put the increase in housing costs ahead of wage and inflation growth.

The factors feeding into the jump in housing costs are complex. Although a general upswing in the economy is making home ownership possible for more Americans, fewer people are putting their homes on the market, often because of the rise in replacement homes. Higher mortgage rates also discourage many families from making an upgrade. The number of homes for sale in January 2018 was the lowest for that month since records were begun in 1999.

Volatility in the stock market is causing some nervousness in the housing market as well, according to S&P experts.

Since the low point in the housing bust related to the 2007-08 recession, home prices have leaped 62 percent, according to the Case-Shiller Index. In the same period, the inflation increase has been just 12.4 percent.

Mortgage interest rates are climbing. By historic standards, the current 4.4 percent on a 30-year mortgage is low, but it still is up by .4 percent since the beginning of the year. Sharp interest increases tend to slow sales.

The slowdown in sales may put some brakes on the rate of price appreciation, and that could encourage some homeowners to list their properties in anticipation of the problem escalating.

Unseasonably cold weather this winter may have slowed sales across the board. Existing home sales dropped in January by the greatest percentage in three years, and new home sales also fell.

Value Of Money Changes

February 26, 2018 By Twila Van Leer

Do You Know The Time Value Of Money?

Wimpy, of the old cartoon show, Popeye, loves hamburgers, a passion that leads to his signature line, “I’ll gladly pay you Tuesday for a hamburger today.” This line leads us to our topic of discussion today. Will the dollar you have today be worth more tomorrow?

A dollar this year may be worth much more next year. The opposite of what Wimpy was suggesting. This variation in the value of our dollars is one of the fundamental principles of finance and you need to firmly establish it in your mind as you contemplate investing. Your $1 today invested wisely can be worth much more next year. The best advice you can take is to remember this forward -looking growth statement. You need to realize the value of every dollar that comes into your possession.

Using your money wisely can offset such factors as inflation. If you can invest and earn a dividend or capital gains on your dollar, you stay ahead of the decline in value related to inflation. Realizing the full potential of every dollar you have is key to building wealth. Think of dollars as seeds. You can eat them (spend) or sow them (invest.)

Think in terms of the future value of your dollar, not what it is worth at the moment.

Assume you are 30 years old and 35 years from retirement at age 65. That means that an investment you make now has 35 years to compound. If you invest at a good rate of return, you’ll have a good nest egg when you retire. The historic rate of return on the stock market is 12 percent. The return on bonds is slightly lower. A combination of both could predictably give you a return of 10 percent.

Using these variables and estimates, you could assume that failing to invest $20 today could cost you approximately $562 over 35 years. Adjusting for inflation, the cost could be closer to $140. Even so, your purchasing power would have increased some seven-fold.

Multiply $20 by whatever amount you are able to invest, and you can see that failing to invest now has significant impact on what you can expect to have in the future.

Seen in this context, you may reassess how much a seemingly small luxury you indulge in today can add up to a significant loss in the future. Think ahead.

Beginners’ Guide To Saving Money

February 24, 2018 By Twila Van Leer

Saving money is the keystone principle to financial success. It’s what makes it possible for you to take advantage of opportunities, such as going back to school, starting a business or buying shares of stock when the market crashes.

The logical questions are: How much should I be saving? What is the difference between saving and investing? What are the safest methods for saving?

There is a huge difference between saving and investing. Both should have a place in your financial planning, but they have different roles. It can make a difference in whether you experience a bare-knuckle survival through a recession or depression or sleep soundly knowing you have spare liquidity on hand. Knowing the difference is vital to building wealth and finding financial independence.

Many individuals have lost everything in an economic downturn despite having wonderful portfolios because they failed to appreciate the role of cash in their calculations.

Making money for you is not always the first role of cash.

Knowing the basic differences between saving and investing may help. Saving involves putting cold, hard cash away where it is safe and liquid. Some successful money managers suggest keeping a lot of cash hidden on hand to be a source of quick availability. Savings should be in FDIC-insured accounts, including U.S. treasury bills. Money market accounts are good, but money market funds require a careful look at the holdings and structure. Savings should be immediately accessible so you can deploy them with minimal delay according to circumstances.

During the 2008-09 economic meltdown, some hedge fund managers actually had their spouses getting as much cash as they could from ATMs because it appeared that the entire economy was going to collapse. Not widely publicized, such activity nevertheless showed the depth of the concerns.

The objective in saving is to keep ahead of inflation.

Now, about investing. That’s a process of using your money to earn a return. There is more volatility in the process than in saving, but it is the basis for building wealth. Learning the tricks of investing is a process and many helps are available, including the book, “How to Start Investing.” Professional help is available if you are a real novice. The trick is to start. Learn as you go.

Stocks, bonds and real estate are the most popular avenues for investing.

So, given the differences, how much of your income should you dedicate to each of these money-management techniques? Obviously, the answer is individual, but the bottom line should be: “As much as you can,” even to the extent of sacrificing some of your immediate desires to maximize your savings and investment options.

Put savings before investments (unless you receive a sudden windfall such as an inheritance, etc.) A good savings cushion will fund your investments. The two primary purposes for savings are as a hedge against the loss of income, through a layoff, downturn, illness or for special purposes such as a house down payment, car or other big-tab item. Ideally, you should have six months of coverage for essential living costs. That will give you a sense of security that you can’t get from the market, which can be extremely volatile in the short-run.

You shouldn’t consider investing until your savings program will give you the assurance of being able to take care of emergencies and/or saving for the items that will take more than five years to pay for. Having health insurance should take precedence over investing as well. Without it, a single health incidence could wipe you out.

Savings and investing. Make both a matter for long-term personal financial health. But start with the savings.