17 Burst results for "Alexis Leon"
Bloomberg Radio New York
"alexis leon" Discussed on Bloomberg Radio New York
"Do you cash in on the amount that your home has appreciated by and try and buy something maybe just a little better or not, because if you buy something a little better, you're going to be, as you say, so I mean, by that new mortgage rate. Right. And that's why also I want to point this out is home equity is still at record. Yes, we've seen home prices dip a bit. But there's still up 40%. So because of that, people are sitting on an extreme amount of wealth in their actual homes. So that's part of this idea of well, how can I leverage my home, don't want to over leverage, we don't want to go back to the dangerous leading up to the Great Recession. But what can people do safely to kind of pat the equity in their home and be able to renovate or use the proceeds to pay down debt or do smart things that that money because again, they're sitting on their homes that are worth quite a lot. And that's why, so if you were to do a cash out refi, there's a very helpful example from Lori Goodman over at the urban institute's housing client policy center. Let's say you want to take out a $100,000 in home equity. If you were to do a cash out refi, you would say pay around a 6 and a half percent new interest rate on a loan, you would have a monthly payment of about $1900. But if you keep your existing mortgage rate, let's say, 3%, you take out a second mortgage at a much higher rate, even when you blend that together, your total bumpy payment for both loans is probably going to be less than it would be if you did the cash out refi. Now Alexis not all banks not even many of the traditional banks do second mortgages, do they? Right, some do. I think you'll have a better chance if you are interested in doing a second mortgage looking at some of the non traditional lenders, rocket mortgage offers a product, penny Mac does as well. They've all introduced versions relatively recently. And again, just keep in mind that you will have to have good credit in order to qualify for these things. Probably not quite as high of a credit score as you need to have with the home equity line of credit, but you'll still have to have a good credit score documentation as income to show that you have the ability to repay and so forth. So I do think we're going to see more interest in these products than we have in the last few years. And do we have any data on how many people are Tapping into them yet or whether that number is rising? Yes, according to Equifax from January to August of 2022, second mortgage origination totaled more than 50 billion. It was about 53 billion. Now, remember, it's a very, very tiny sliver of the overall $1 trillion mortgage market plus. But that 53 billion is a 50% jump from the previous year. So there is more interest that's for sure. Bloomberg opinions Alexis Leon does there well, that does it for this week's opinion. Do feel free to get in touch. I'm advan Quinn on Twitter or email me at the Quinn at Bloomberg .NET. We're produced by Eric molo, stay with us. Today's top stories and global business
Bloomberg Radio New York - Recording Feed
"alexis leon" Discussed on Bloomberg Radio New York - Recording Feed
"Rebellion is a 50% jump from the previous year. So there is more interest that's for sure. Bloomberg opinions Alexis Leon does there well that does it for this week's opinion do feel free to get in touch. I'm advani Quinn on Twitter or email me at the Quinn at Bloomberg .NET. We're produced by Eric molo, stay with us. Today's top stories and global business headlines are coming up right now. Broadcasting 24 hours a day at Bloomberg dot com and the Bloomberg business app. This is Bloomberg radio. President Biden's upcoming budget plan will not be used in negotiations over raising the debt ceiling. That's according to treasury secretary Janet Yellen who spoke to Reuters Republican lawmakers have pushed Biden and Democrats to agree to spending cuts to win their votes to raise the cap, the Biden administration has called for the limit to be raised without conditions. Former vice president Mike Pence says he'll make a decision by spring on whether he'll run for The White House, Pence told reporters this week, he would pledge to support the eventual GOP nominee if required to take part in the Republican primaries. As for his former boss, Donald Trump, Pence says he thinks times call for different leadership and he's confident that we'll have better choices come 2024. California has more reported UFO sightings than any other state since 2001, Daniel martindale has more. That's according to research analysis conducted by bonus finder dot com. The website analyzed data from the national UFO reporting center state report index, California has 15,480 officially reported UFO sightings since 2001. Los Angeles is the state's leading UFO hotspot with nearly 600 reported sightings, most reports involve people seeing circles, spheres or triangular shapes in the
Bloomberg Radio New York
"alexis leon" Discussed on Bloomberg Radio New York
"Management buyout Michael Dell's approach, all those years ago was brilliantly executed controversial, but he managed it. And it's exactly what Dell the company needed to take it out of kind of public view and do what you need to do behind the various thoughts that one of the reasons why Marcia's son is using SoftBank's own cash to buy back shares is you can then cancel them. So remaining shareholder has a higher concentration of shares and if it keeps doing that, it's kind of like a creepy buyout because masses own holdings in the company then increase without an app to spend their money as all money. And so there is a feeling that there is a chance that sometime in the next year or two master himself might get together would say private equity or banks or other people and just launch a buyout of the company itself. Well, one place it doesn't look like you can call upon as Elias, Elliott dumped at stake in SoftBank, which may not be a good sign Eliot seems to do pretty well, usually the activist investor obviously. Yeah, I think it would be a wonderful irony if you jumped into bed with Elliot decided to do a management by iodine. That would happen. You'd have to pick the pattern very well. It is a Japanese company so I just have to start off on other doors of Japanese financials first. Maybe Japanese private equity may be local banks. There's no discounting the fact that they could try and get a big overseas private equity coming in and help them out. But I think they would look locally first. Is SoftBank too big to fail, would it have some kind of a contagious effect on the Japanese economy or on the market if it were to if it's stock or to plummet, let's say, which is not happening. We put that out there. It is interesting enough it is huge, but only a small portion of its holdings are in Japanese companies. And even though it's a somewhat large company, it's not largest Japanese company out there. So I don't think the stock will go to zero. There is value. There's actually a net asset value. We actually go to sultan's Iowa website every day and they track it in real time. Big chunk of Alibaba. Which has a valuation, even a pride, you can somewhat value it. They own a big chunk of listed companies because some of their portfolio companies have IPOs. They own a telco. So they definitely have an asset asset value. The company's stock trades are the huge discount in the asset value, but I don't see it going to zero. And so that's something to note as a floor to how low it's not going to go. But beyond that, it's not so huge that it's collapsed with causes systemic problem in Japan and therefore banks come with had to come and fail about on the flip side what they invest in, not a large share that is actually deputy startup or U.S. European agents. So there's no systemic problem that could stop that. And I think that's one of the reasons why there is a floor on how loaded this stuff could go. Bloomberg opinions, Tim Colton. Stay tuned, as child care calls increase, associated relief and the tax code stays stagnant. Alexis Leon does explains on Bloomberg opinion. The best of Bloomberg businessweek every business day. Sales activities soaring. The Bloomberg businessweek podcast. With Carol messer and Tim's den of act. What is an apple developed car look
Bloomberg Radio New York
"alexis leon" Discussed on Bloomberg Radio New York
"During that day. Now what do we do? And that's the next big question for masters. Now what did he do with our remaining cash? Tim Colbert on masayoshi saw that founder of SoftBank group. SoftBank's vision fund losses have talked $5 billion now as the startup investors strategy comes a cropper in markets looking for profitable companies. Is it a preview of what's to come for the greater venture capital universe? And later many lawmakers are focused on this and trying to figure out different ways to help parents with these costs. There are all different ways, but it's clear that there's this patchwork system in a city like Washington D.C. that is the most expensive city in the U.S. for child care. The average annual cost for infant care is $24,243 and that is just for one child. As child care calls increase, associated relief in the tax code stays stagnant. Alexis Leon does explains. First, though, to the capital markets directly. This week we saw a massive repricing in the treasury curve, we also heard fed officials begin to voice considering a 50 basis point interest rate increase again. Here's St. Louis fed president Jim bullard. I think we can lock in this disinflationary trend by continuing to have policy rate increases during 2023. Even though the real economy looks like it's going to continue to grow and the labor market broadly across the country looks like it remains strong. And here's Cleveland fed president Loretta master. But this show I'm sure they incoming data have not changed my view that we will need to bring the fed funds rate above 5%. And hold it there for some time. Indeed, at our meeting two weeks ago, setting aside what financial market participants participants expected us to do, I saw a compelling economic case for a 50 basis point increase, which would have brought the top of the target range to 5%. I spoke with Bloomberg chief rates correspondent Garfield Reynolds to gauge bond market reaction to the daily drip of new data and fed speak. So Garfield, since the last fed meeting, the two year bond yields up about 60 basis points, and Marco kalana pointed out that it's the mon market moving towards the fed, but the prevailing sentiment is of exuberance and greed. Do you think that's fair? Well, I think it's a little bit, I mean, as far as the bond market goes, it's definitely received a big shock both from the data itself. There have been upside surprises. And also from the feds willingness to actually deliver on higher rates and the idea that they would hold them there for longer. Now that's something that was flagged by the fed last year even as it was starting to slow the pace of rate hikes. But the bond market was looking past that and assuming that the impact of last year's extreme rate hikes would be such that the fed would be able to soon stop hiking rates and in fact would have to turn towards considering rate cuts. I mean, on the grade side, if that's talking about what's going on in the equities market, where we're seeing some perhaps surprising resilience, especially the NASDAQ is shrugging off like a 60 basis point jump in the two year yield has not done much damage to the NASDAQ at all despite TikTok's famously supposedly being yield sensitive. Now, perhaps part of the reason for that is that the economic data have been so resilient in the face of last year's rate hikes. So we're kind of in a scenario where perhaps equity market to judging that good news for the economy is good news for equities, even as bonds are deciding more traditional set up good news for the economy is bad news for bonds. Yeah, the whole thing is a little bit odd. It feels like there's something that we're missing out on. Anyway, Marco says the market's not just fighting the fed, but it's taunting the fed with crypto and meme stocks and unpopular companies responding best fed communications. So I guess he sees it slightly differently that this is some kind of fake out or something on the part of those that are putting money into these particular stocks. Well, I think there is ultimately a disconnect in the way the bond market is positioning very deeply inverted yield curve and a persistently inverted yield curve. Signaling a lot of concerns about the potential for your major economic slowdown, you've also got even though the bond market has pushed back, its expectations for when the fed will peak and push up the expectations for where it will call a halt to rate hikes. It still sees next year now rather than this year, but next year it's one and a half percentage points of rate cut. That says the bond market sees the recession. Stocks seemingly don't see one. Yeah, I mean, I guess it's the eisemann call of we don't like to change our market narrative or people get very attached to their market narratives and perhaps the bond market maybe has a little bit better of an ability to not be in denial about certain things, but that seems a little bit too deep. Why should the bond market be so much more nuanced and so much more sophisticated than the stock market in some ways? Well, I think it's more they look at different calculations and especially now one of the things that's feeding this is bonds again have yields. So because they have yields, you can buy a bond and still do okay even if those yields in rice either price of bonds go down. That's a reversal of the situation for much of the past decade when yields went down so low that bonds are almost like stocks you had to buy them on the basis of price appreciation, not on the basis of carry. But now they've got yields again. So the calculation for quite a few bond investors is, hey, 3% 4%, four and a half percent depending on the instrument. I can buy that and hang on to it and I'll do okay. Whereas equity investors mostly don't look so much at dividends. They're looking for capital appreciation. So they're looking for the idea that earnings are going to improve and we're seeing to be having mostly a fairly decent earnings season and although there are plenty of dire warnings that are slowdown is coming and that will cause an earnings recession. For now, to some extent, they're almost drawing confidence from the fate of one of us to keep raising rates at a slower pace because that says to them, well, the fed doesn't think the economy is about to collapse because the fed thought the economy was about to collapse. They'd be saying, we're going to stop hiking rates. Yes, exactly. Move to the hold portion of their agenda, assuming that's still on. Fat expectations up to 5.4% now for the terminal rates and there are even places where you see the market looking at the probability of a hike to 6.1 and the chances of a hike to 6% now is .5%. So that's a one in 200 chance or something? Yeah, exactly. And one in 200 chance. So not huge, but nevertheless, it's starting to be there and when anything kind of appears in a market, you really have to take notice. I mean, how quickly can this change again if we get more communication, which is really just constant at this point? Yes, I mean, obviously can change rapidly less than a month ago, the market was mostly expecting that the fed was going to peak under 5%. And that was despite plenty of commentary from the fed that 5% was about the minimum where they thought they would go to and it would only take a couple of data points if inflation had come in weaker than expected just this week. Then you would have had a fairly rapid cooling down in rate expectations at least until unless you then had fed officials pushing back saying yes, this is not we don't really believe this. So it's all on the table and like I said
Bloomberg Radio New York
"alexis leon" Discussed on Bloomberg Radio New York
"It included this, but it went well beyond it to things like fees you pay when you buy Taylor Swift's concert tickets and all sorts of stuff resort fees. I didn't even know the existence. How big a problem is this? It's a big problem. This is something called also referred to as drip pricing. I've written about it before. Where it's basically there are all these hidden fees when you as the consumer are logging on and you're trying to buy tickets or you're trying to book a resort and you don't actually find out what the true cost is until after the fact and there have been behavioral studies showing that by then it's too late you know, you already committed. You've already entered the information. You're already committed to that price and you don't want to have to start over and that's how a lot of consumers end up biting off more than they can chew and paying a lot more than they initially bargained for or had budgeted for. But is the proper policy response to that to stop the fees or is it to make sure there's full disclosure? So I know before I signed the dotted line, yeah, it's cost that much. That's a good point. I think it depends on the fee. You know, I think for certain things, then perhaps just better disclosure is enough and you should just know at the outset like it's still perfectly acceptable to charge that fee, but I should just know at the outset that this is what's included. And then for others, the fares themselves seem plain on plain unfair. I'm sure you saw the one about basically parents are being charged extra $50 fee to make sure they're sitting with their children on an airplane. That's the third sort of thing that just seems totally unfair and ridiculous. Finally, unfair political question, this strikes me as the sort of thing that happens in Washington, people say, that's a good idea, but it's never going to get done because there's a big lobby that's going to resist this. Yes, when it comes to even the credit card stuff, whether it's with the capping of the interest rates or even capping of the late fees, yes, there's such affordable industry that will fight against this. So who knows if it will even happen, but it certainly is something to keep an eye on. But it's a great column and very time, as I say, thanks so much to Alexis Leon. You can read more on this and other stories from Bloomberg opinion at Bloomberg dot com slash opinion and on the terminal by typing in OPI and go coming up LeBron James becomes the highest score in the history
Bloomberg Radio New York
"alexis leon" Discussed on Bloomberg Radio New York
"Counterproductive on all sorts of levels. Stephen mim, on the current state of U.S. issued export controls in the effectiveness of these actions through history. Also it will be a bumpy road to find a new equilibrium between China's rich, basically big tech billionaires and powerful basically the government. Shuli ran on China's rich and China's powerful, not necessarily one of the same. We'll also speak with Alexis leones as we head towards the final month of the calendar year, what you should consider before December 31st in order to reduce your capital gains taxes, assuming you have any this year. First to the markets, we got the minutes from the FOMC's latest meeting this week and plenty of fed speak as we waited out until December 14th. I asked Bloomberg opinions, Jonathan Levin, if there is something the fed wants to communicate to the market in preparation for that meeting. Yeah, I think it gets really tricky for them. I think obviously there's still trying to keep financial conditions relatively quiet and I think that their messaging efforts to do just that or getting away from them a little bit, certainly in the last few weeks. We saw tip space ten year real yield trading at just about 1.4%. So near the lowest since September, that's a pretty obvious indicator that maybe conditions are ceasing to be as tight as they would prefer. So you may see some of these fed officials certainly Powell himself. Do a little bit of classic jaw boning, maybe try and get those real yields on the ten year up a little bit. But quite frankly, it's going to be difficult because everybody knows that their data dependent here. They're going to take everything he says before the next CPI with a grain of salt. I'm really just see what the data shows us. And this all comes back to this balancing actor trying to do where they're trying to slow down the pace without letting financial conditions loosen too much. And again, they're kind of doing an okay job at that. And they're in a difficult position where I'm not exactly sure what they could be doing better here. But conditions are getting a little bit looser than they have to be comfortable with. Would they go so far as to hint at the possibility that they might change their minds back to 75 basis points? You know, it's possible, but I don't think that they can really go there I think the risk there becomes potentially losing credibility. And I think the fed is just going to have to get comfortable with the fact that this is going to be a game time decision. We're going to get two key pieces of data in the next few weeks. In some ways, I think average hourly earnings coming on December 2nd might actually be the more important one because there are so many cross currents in this inflation data. But if you do get average hourly earnings coming in, again, month on month at something like 0.3% and you get another beat in CPI. It's really hard to see anything preventing them from going 50 here at this next meeting. You say that maybe market pricing is getting away from the fed a little bit. Can you think of anything that the fed might do between now and December 14th in order to reverse that trend? Yeah, I mean, the main thing that they can do is really just focus at this point on how long they intend to stay higher. I really think that there's very little to debate at this point in terms of the pace. Everybody knows that they're stepping down. We've talked about this a lot before on this program. They just have to take the velocity down so that they can find the right setting as they get to their ultimate destination point. And frankly, I don't even think that there's much room left for debate in terms of the destination point. When you hear the fed speakers out on the circuit, really, the range of opinions is pretty firmly between four 7 5 and maybe 5.25. Which is pretty boring something. Yeah, so barring some dramatic change. It really doesn't feel like there's a lot of wiggle room there. I think it really is just all about communicating. If this is indeed their intention, the idea that they are going to stay higher for longer, maybe until the very, very end of December 2023. Maybe even come out and say something along the lines of even if we slip into a recession, provided it's not historically bad one. We're going to stay there. Apart from average hourly earnings, what might put a spanner in the works in terms of CPI data or the jobs are bored. I mean, are you anticipating that we'll continue to see CPI coming down even though I know the last CPI report you thought might be reflecting better conditions that are actually out there because of medical costs. Yes. So we had a couple of head fakes in the past, say, 12 to 18 months, there were two big ones, right? And after each of those, they proved to be just that a head fake, right? And the month of the month inflation bounced right back. We do know that this quirk in the data involving health insurance and the medical care broadly is going to be a repetitive feature here. So I do think there are a lot of reasons to suspect that there may be a bounce back after this extremely, extremely good print last month. But it may still look reasonably good. And it's all going to come down to how good it is reasonably good. Everybody pretty much in agreement at this point, then Jonathan, it sounds like you think that is the case except for maybe the tips market, which might be just a little bit behind or the what's going on in the tips market that there isn't agreement. I mean, I think the tips market is in agreement in so far as it's reflecting a loosening of financial conditions. I think that that's really what's going on across the board. You know, this is where it gets sort of tricky, right? So at the short end of the curve, things remain reasonably tight, but people don't actually borrow anything at the short end of the curve for a mortgage is priced off of the ten year. And Jay Powell himself actually talked about this after the last fed meeting. And so that's where it gets tricky and I'm not exactly sure what the fed can do short of drastic steps like selling bonds off of its portfolio, which would clearly clearly spook the markets in ways the fed is probably not prepared to do. So it's basically it's going to come down to what is the data show and they may have to come up with a new playbook if financial conditions feel like they're getting much looser from here. Bloomberg opinions, Jonathan Levin. Stay tuned, Alexis Leon is next with a reminder that your losses this year can be put to use and later, Julie ran on China's offering to and from big tech. This
Bloomberg Radio New York
"alexis leon" Discussed on Bloomberg Radio New York
"Home buyers evaluate their finances in the new year they may be tempted to rush to buy in order to get the best mortgage interest rate But Bloomberg opinion columnist Alexis leonda says it's a fool's game to try to time the mortgage market Are there predictions about where rates might end up at the end of the year So far economists right now are saying they think the year will end up with rates at about 4% And looking over the past 20 years the more quote unquote normal level for 30 year rates has been really around 5% So even if we were to end the year at 4% or even if economists were to revise their forecast for that 4% and get it closer to 5 it's still a 5% mortgage is still pretty low and there's this great stat that the last time we saw inflation where it was today was a 1982 and at that time mortgage rates were close to 17% So perspective is really important So many people might feel the urge to rush into a purchase immediately right now before rates rise again Is that wise No it's definitely not wise as much as you may just be looking at rates ticking up and up and up and thinking about how that will affect your monthly mortgage payment It's helpful to take a step back First think about how much higher rate will actually move the needle on a monthly basis I include an example in the column Let's say you have a $500,000 loan If you have a rate of 3.5% versus 3% the difference in a payment it comes down to about a $100 more a month Obviously that's a significant amount of money But for people probably who are borrowing at that level a $100 a month is certainly I don't think worth rushing into something a significant as a home purchase especially if you're rushing to do it and you do something like waive a home inspection and then discover your roof needs repairing and your hundreds of thousands of dollars on the hook And instead of $1200 a year it's helpful to think about things in context So you have some strategies for how to deal with this And the first is shop around Don't most consumers shop around for a loan Can you think so And it seems like such common sense and it was such an almost appreciated point I almost included in the column But I saw this report from a couple of years ago from Freddie Mac that found almost half of consumers don't try to find the best rate They just either stick with the bank that they work with or you know that they've either they've gotten a loan from in the past and more people don't even realize that the rates offered by the bank can vary So it's very helpful to keep in mind shop around even just do a little bit of research to get a sense of what the different rates offered by the different banks are because the 30 year fixed rate when I just said that it was 3.56% That's just an average in a typical week you might see lenders offering rates that can vary by more than three tenths of a percentage point Let's talk about the mortgage itself You can make a bigger down payment or you can pay an additional point Exactly There's things that you can do especially if you're kind of cash flush let's say you were an existing home buyer and you made a profit from selling your home into this hot market If you'd rather put more cash up front now or pay an additional point those are things that you can do if you're worried about what will happen month to month So again if you make a bigger down payment you'll help to keep the monthly payment the same as interest rates rise and likewise with paying additional point you're effectively buying the interest rate back down and that's the fee that you pay to the lender and basically a point is equal to 1% of the loan amount and can discount the rate by as much of a quarter of a percent The final piece of advice is to itemize deductions Explain that A lot of taxpayers take the standard deduction especially since the 2017 Trump tax law increased the standard deduction I think it's something like 90% of taxpayers now take the standard deduction But let's say you live in a place with high property taxes and you're one of the people who continue to itemize their deductions You have to remember that if your interest rate rises then that's going to end up being basically a benefit for you and you're willing to get a bigger deduction when you're filing your taxes If a borrower is looking to refinance an existing mortgage do the same rules apply Right So there is one exception to all the advice that I've been talking about with respect to not panicking over rates If you're looking to refinance your existing mortgage to a lower rate and it's just a straight refi that you just want to get a lower rate than by all means hurry up because then it's just a very simple equation You have 6% mortgage you see rates are three and a half percent and you're worried that they might quickly catch up to the rate you're paying So in that case by all means go ahead and refinance Thanks Alexis That's Alexis Leon is columnist for Bloomberg opinion Let's turn now to coffee instant coffee Fed up pasta and sourdough bread Those are some of the COVID era food fads Bloomberg opinion columnist Bobby gosh says he's willing to tolerate Overnight oats he can hardly think about it And what about instant coffee That's another one that not only was Bobby able to tolerate but he actually wanted to try it He tested a few brands to see which ones he liked best So I confess that I am not up on all the recent fads but I thought instant coffee was a thing of the past Yeah instant coffee is as old as well certainly as old as I am I remember it from my childhood But it used to be Joe for the poor right It used to be achieving share for kind of coffee easy to make very cheap and exported all over the world Thanks to companies like Nestlé with their nest company But what's new is these fancy high end instant coffees that come from.
Bloomberg Radio New York
"alexis leon" Discussed on Bloomberg Radio New York
"Jim Forbes You're listening to Bloomberg opinion on Bloomberg radio I'm June grosso As potential home buyers evaluate their finances in the new year they may be tempted to rush to buy in order to get the best mortgage interest rate But Bloomberg opinion columnist Alexis leonda says it's a fool's game to try to time the mortgage market Are there predictions about where rates might end up at the end of the year So far economists right now are saying they think the year will end up with rates at about 4% And looking over the past 20 years the more quote unquote normal level for 30 year rates has been really around 5% So even if we were to end the year at 4% or even if economists were to revise their forecast for that 4% and get it closer to 5 it's still a 5% mortgage is still pretty low and there's this great stat that the last time we saw inflation where it was today was a 1982 and at that time mortgage rates were close to 17% So perspective is really important So many people might feel the urge to rush into a purchase immediately right now before rates rise again Is that wise No it's definitely not wise as much as you may just be looking at rates taking up and up and up and thinking about how that will affect your monthly mortgage payment It's helpful to take a step back First think about how much higher rate will actually move the needle on a monthly basis I include an example in the column Let's say you have a $500,000 loan If you have a rate of 3.5% versus 3% the difference in a payment it comes down to about a $100 more a month Obviously that's a significant amount of money But for people probably who are borrowing at that level a $100 a month is certainly I don't think worth rushing into something a significant as a home purchase especially if you're rushing to do it and you do something like waive a home inspection and then discover your roof needs repairing and your hundreds of thousands of dollars on the hook And instead of $1200 a year it's helpful to think about things in context So you have some strategies for how to deal with this And the first is shop around Don't most consumers shop around for a loan Can you think so And it seems like such common sense and it was such an almost appreciated point I almost included in the column but I saw this report from a couple of years ago from Freddie Mac that found almost half of consumers don't try to find the best rate They just either stick with the bank that they work with or that they have gotten a loan from in the past and more people don't even realize that the rates offered by the bank can vary so it's very helpful to keep in mind shop around even just do a little bit of research to get a sense of what the different rates offered by the different banks are Because the 30 year fixed rate when I just said that it was 3.56% that's just an average in a typical week you might see lenders offering rates that can vary by more than three tenths of a percentage point Let's talk about the mortgage itself You can make a bigger down payment or you can pay an additional point Exactly There are things that you can do especially if you're kind of cash flush let's say you were an existing home buyer and you made a profit from selling your home into this hot market If you'd rather put more cash upfront now or pay an additional point those are things you can do if you're worried about what will happen month to month So again if you make a bigger down payment you'll help to keep the monthly payment the famous interest rates rise And likewise with paying additional point you're effectively buying the interest rate back down and that's the fee that you pay to the lender and basically a point is equal to 1% of the loan amount and can discount the rate by as much of a quarter of a percent The final piece of advice is to itemize deductions Explain that A lot of taxpayers take the standard deduction especially since the 2017 Trump tax law increased the standard deduction I think it's something like 90% of taxpayers now take the standard deduction But let's say you live in a place with high property taxes and you're one of the people who continue to itemize their deductions You have to remember that if your interest rate rises then that's going to end up being basically a benefit for you and you're willing to get a bigger deduction when you're filing your taxes If a borrower is looking to refinance an existing mortgage do the same rules apply Right So there is one exception to all the advice what I've been talking about with respect to not panicking over rates If you're looking to refinance your existing mortgage to a lower rate and it's just a straight refi that you just want to get a lower rate than by all means hurry up because then it's just a very simple equation You have 6% mortgage you see rates are three and a half percent and you're worried that they might quickly catch up to the rate you're paying So in that case by all means go ahead and refinance Thanks Alexis That's Alexis Leon is columnist for Bloomberg opinion Let's turn now to coffee instant coffee Fed up pasta and sourdough bread Those are some of the COVID era food fads Bloomberg opinion columnist Bobby gosh says he's willing to tolerate Overnight oats he can hardly think about it And what about instant coffee That's another one that not only was Bobby able to tolerate but he actually wanted to try it He tested a few brands to see which ones he liked best So I confess that I am not up on all the recent fads but I thought instant coffee was a thing of the past Yeah instant coffee is as old as well certainly as old as I am I remember it from my childhood But it used to be Joe for the poor right It used to be achieving cheerful kind of coffee easy to make very cheap and exported all over the world Thanks to companies like Nestlé with their nescafe But what's new is these fancy high end.
Bloomberg Radio New York
"alexis leon" Discussed on Bloomberg Radio New York
"Decision to stop tractor trailer traffic early this morning saying it was right to do that However Lamont noted there have been some bad crashes on interstate 95 That includes one rollover I'm Chris courage You're listening to Bloomberg opinion on Bloomberg radio I'm June grosso As potential home buyers evaluate their finances in the new year they may be tempted to rush to buy in order to get the best mortgage interest rate But Bloomberg opinion columnist Alexis leonda says it's a fool's game to try to time the mortgage market Are there predictions about where rates might end up at the end of the year So far economists right now are saying they think the year will end up with rates at about 4% And looking over the past 20 years the more quote unquote normal level for 30 year rates has been really around 5% So even if we were to end the year at 4% or even if economists were to revise their forecast for that 4% and get it closer to 5 it's still a 5% mortgage is still pretty low and there's this great stat that the last time we saw inflation where it was today was a 1982 and at that time mortgage rates were close to 17% So perspective is really important So many people might feel the urge to rush into a purchase immediately right now before rates rise again Is that wise No it's definitely not wise as much as you may just be looking at rates ticking up and up and up and thinking about how that will affect your monthly mortgage payment It's helpful to take a step back First think about how much higher rate will actually move the needle on a monthly basis I include an example in the column Let's say you have a $500,000 loan If you have a rate of 3.5% versus 3% the difference in a payment it comes down to about a $100 more a month Obviously that's a significant amount of money But for people probably who are borrowing at that level a $100 a month is certainly I don't think worth rushing into something a significant as a home purchase especially if you're rushing to do it and you do something like wave a home inspection and then discover your roof needs repairing and your hundreds of thousands of dollars on the hook and instead of $1200 a year It's helpful to think about things in context So you have some strategies for how to deal with this And the first is shop around Don't most consumers shop around for a loan June you would think so and it seems like such common sense and it was such a almost cliched point I almost included in the column But I saw this report from a couple of years ago from Freddie Mac that found almost half of consumers don't try to find the best rate They just either stick with the bank that they work with or that they have gotten a loan from in the past and more people don't even realize that the rates offered by the bank can vary So it's very helpful to keep in mind shop around even just do a little bit of research to get a sense of what the different rates offered by the different banks are Because the 30 year fixed rate when I just said that it was 3.56% that's just an average in a typical week you might see lenders offering rates that can vary by more than three tenths of a percentage point Let's talk about the mortgage itself You can make a bigger down payment or you can pay an additional point Exactly There's things that you can do especially if you're kind of cash flush let's say you were an existing home buyer and you made a profit from selling your home into this hot market If you would rather put more cash up front now or pay an additional point those are things you can do if you're worried about what will happen month to month So again if you make a bigger down payment you'll help to keep the monthly payment the same if interest rates rise and likewise with paying additional point you're effectively buying the interest rate back down and that's the fee that you pay to the lender and basically a point is equal to 1% of the loan amount and can discount the rate by as much of a quarter of a percent The final piece of advice is to itemize deductions Explain that A lot of taxpayers take the standard deduction especially since the 2017 Trump tax law increased the standard deduction I think it's something like 90% of taxpayers now take the standard deduction But let's say you live in a place with high property taxes and you're one of the people who continue to itemize their deductions You have to remember that if your interest rate rises then that's going to end up being basically a benefit for you and you're going to get a bigger deduction when you're filing your taxes If a borrower is looking to refinance an existing mortgage do the same rules apply Right So there is one exception to all the advice that I've been talking about with respect to not panicking over rates If you're looking to refinance your existing mortgage to a lower rate and it's just a straight refi that that you just want to get a lower rate than by all means hurry up Because then it's just a very simple equation You have 6% mortgage You see rates are three and a half percent and you're worried that they might quickly catch up to the rate you're paying So in that case by all means go ahead and refinance Thanks Alexis That's Alexis Leon is columnist for Bloomberg opinion Let's turn now to coffee instant coffee Feta pasta and sourdough bread Those are some of the COVID era food fads Bloomberg opinion calm this Bobby gosh says he's willing to tolerate Overnight oats he can hardly think about it And what about instant coffee That's another one that not only was Bobby able to tolerate but he actually wanted to try it He tested a few brands to see which ones he liked best So I confess that I am not up on all the recent fads but I thought instant coffee was a thing of the past Yeah instant coffee is as old as well certainly as old as I am I remember it from my childhood But it used to be Joe for the poor right It used to be achieving cheerful kind of coffee easy to make very cheap and exported all over the world Thanks to companies like Nestlé with their landscaping But what's new is these fancy high end instant coffees that come from.
Bloomberg Radio New York
"alexis leon" Discussed on Bloomberg Radio New York
"Potential home buyers evaluate their finances in the new year they may be tempted to rush to buy in order to get the best mortgage interest rate But Bloomberg opinion columnist Alexis leonda says it's a fool's game to try to time the mortgage market Are there predictions about where rates might end up at the end of the year So far economists right now are saying they think the year will end up with rates at about 4% And looking over the past 20 years the more quote unquote normal level for 30 year rates has been really around 5% So even if we were to end the year at 4% or even if economists were to revise their forecast for that 4% and get it closer to 5 it's still a 5% mortgage is still pretty low and there's this great stat that the last time we saw inflation where it was today was a 1982 and at that time mortgage rates were close to 17% So perspective is really important So many people might feel the urge to rush into a purchase immediately right now before rates rise again Is that wise No it's definitely not wise as much as you may just be looking at rates ticking up and up and up and thinking about how that will affect your monthly mortgage payment It's helpful to take a step back First think about how much higher rate will actually move the needle on a monthly basis I include an example in the column Let's say you have a $500,000 loan If you have a rate of 3.5% versus 3% the difference in a payment it comes down to about a $100 more a month Obviously that's a significant amount of money But for people probably who are borrowing at that level a $100 a month is certainly I don't think worth rushing into something a significant as a home purchase especially if you're rushing to do it and you do something like waive a home inspection and then discover your roof needs repairing and your hundreds of thousands of dollars on the hook And instead of $1200 a year it's helpful to think about things in like in context So you have some strategies for how to deal with this And the first is shop around Don't most consumers shop around for a loan Can you think so And it seems like such common sense and it was such an almost cliched point I almost included in the column But I saw this report from a couple of years ago from Freddie Mac that found almost half of consumers don't try to find the best rate They just either stick with the bank that they work with or that they have gotten a loan from in the past And more people don't even realize that the rates offered by the bank can vary So it's very helpful to keep in mind shop around even just do a little bit of research to get a sense of what the different rates offered by the different banks are Because the 30 year fixed rate when I just said that it was 3.56% that's just an average in a typical week you might see lenders offering rates that can vary by more than three tenths of a percentage point Let's talk about the mortgage itself You can make a bigger down payment or you can pay an additional point Exactly There's things that you can do especially if you're kind of cash flush let's say you were an existing home buyer and you made a profit from selling your home into this hot market If you would rather put more cash up front now or pay an additional point those are things you can do if you're worried about what will happen month to month So again if you make a bigger down payment you'll help to keep the monthly payment the same if interest rates rise And likewise with paying additional point you're effectively buying the interest rate back down and that's the fee that you pay to the lender and basically a point is equal to 1% of the loan amount and can discount the rate by as much of a quarter of a percent The final piece of advice is to itemize deductions Explain that A lot of taxpayers take the standard deduction especially since the 2017 Trump tax law increased the standard deduction I think it's something like 90% of taxpayers now take the standard deduction But let's say you live in a place with high property taxes and you're one of the people who continue to itemize their deductions You have to remember that if your interest rate rises then that's going to end up being basically a benefit for you and you're going to get a bigger deduction when you're filing your taxes If a borrower is looking to refinance an existing mortgage do the same rules apply Right So there is one exception to all the advice that I've been talking about with respect to not panicking over rates If you're looking to refinance your existing mortgage to a lower rate and it's just a straight refi that that you just want to get a lower rate than by all means hurry up Because then it's just a very simple equation You have 6% mortgage You see rates are three and a half percent and you're worried that they might quickly catch up to the rate you're paying So in that case by all means go ahead and refinance Thanks Alexis That's Alexis Leon is columnist for Bloomberg opinion Let's turn now to coffee instant coffee Feta pasta and sourdough bread Those are some of the COVID era food fads Bloomberg opinion columnist Bobby gosh says he's willing to tolerate Overnight oats he can hardly think about it And what about instant coffee That's another one that not only was Bobby able to tolerate but he actually wanted to try it He tested a few brands to see which ones he liked best So I confess that I am not up on all the recent fads but I thought instant coffee was a thing of the past Yeah instant coffee is as old as well certainly as old as I am I remember it from my childhood But it used to be Joe for the poor right It used to be achieving cheerful kind of coffee easy to make very cheap and exported all over the world Thanks to companies like Nestlé with their mascara But what's new is these fancy high end instant coffees that come.
Bloomberg Radio New York
"alexis leon" Discussed on Bloomberg Radio New York
"Tell us what financial advisers have been telling you about retirees actually scrimping Right I wanted to write something because I feel like generally what we hear and what's drilled into our heads is safe stay safe and then once you're in retirement you know withdraw a minimal amount and whether it's this rule of from the traditional 4% are now 3% of people are saying really that's what the focus should be on And I thought it was interesting because I spoke to several financial advisers who said and again this doesn't apply to a lot of retirees but there are a significant section of people or significant segment of retirees who actually script more than they have to and just think of somebody compared this It's the metaphor is like ants and grasshoppers that if you've worked so hard and been an aunt your whole life where you've done everything you're supposed to do and you've diligently saved to then turn into a grasshopper and spend not frivolously but to spend on things that are really important to you or that you hope to enjoy and retirement it really may be difficult for some people to do that and it's just a good reminder that if you've done all the right things don't forget to stop and kind of enjoy some of the things that you had set out to do So for the grasshoppers among us talk about some things that we could do First of all that suggested withdrawal rate 3% or 4% How reliable is that Sure I think it helpful to think of that as a starting point You know to start at a 3% or 4% a year withdrawal rate that's fine but you really have to keep in mind that obviously personal situations preferences will dictate each year whether that amount should be higher or lower because a lot of times the financial models that are used specifying that 3% or 4% rate they're specifying that rate at a static amount it's assuming the same fixed amount of portfolio withdrawals every year but as you know few people actually live like that Most retirees have some guaranteed income That's exactly right And that's why sometimes it's helpful you know obviously when you're thinking about things like inflation or market performance lower bond yields all of those things should be factored into your withdrawal amount or what you think you should be spending in retirement But that has to do with your portfolio So many times people's overall assets when you're in retirement a chunk of that may also be coming from some kind of guaranteed income whether that social security are going to do with you that someone will purchase So when you're thinking about the withdrawal rate you know keep in mind both guaranteed streams of income because that may make you a little less worry about outliving your savings What about long-term care policies Because as I recall they're pretty expensive Right Long-term care also long-term care insurance is something that people are really worried of as well justified often because of the high costs that they offer or they come with But long-term care is such a hard thing I mean all of these depressing studies show that an absorbent and healthy sense down the road could blow up you know all of these carefully laid retirement plans So it's helpful to kind of plan for it and whether that comes down to purchasing some kind of long-term care insurance or simply setting up a separate account where you can kind of put enough money in there to calculate how much you might need for long-term care There are studies that show you know the average time needed for long-term care is about three years So calculate you know how much it would cost on average for that year Then increase that to about three years and maybe you just have a separate portfolio and you can sleep at night knowing that there's money dedicated for that long-term care if and when that utilizes One of the things I found really interesting in your column You said that retirement planning depends on emotional factors And I think that's true because some people are thinking about their kids after they die Some of this is emotional and it's not something that you can just kind of solve by plugging in an algorithm or in actuarial table I mean when you talk to people about something like when you think you'll die which is obviously the most crucial question because that will entail then how much you need in retirement because you're thinking about how many years you'll be around for so many people think that they're kind of die around the time when their parents did So it can be helpful to kind of clear out some of the psychological thoughts to use an online calculator The American academy of actuaries and the society of actuaries have one that's called a longevity illustrator You can use that for couples and that will ask you some questions some prompts and maybe give you a number of course no one can predict that But at least give you a number that you might be surprised about if again you have some of these preexisting thoughts about following kind of when your parents passed as they did And the same goes for this idea about quote unquote taking care of your children or your grandchildren A lot of financial advisers say they have these conversations with their clients and first is kind of this abstract idea of the desire to leave a legacy Then when they really drill down you know they have to find out why that's a priority What kind of amounts of money are we really talking about And then once you have some dollar figures you can try to see if that really makes sense And again how much that could eat into your own retirement enjoyment Thanks Alexis That's Alexis Leon is calmness for Bloomberg opinion Let's turn now to an issue of inequality in America America's hunger pandemic is getting worse according to Bloomberg opinion columnist Adam minter who says that despite the massive amount of.
Bloomberg Radio New York
"alexis leon" Discussed on Bloomberg Radio New York
"Longevity and child inheritances These are some of the biggest things influencing well off retirees to save their hard earned money Bloomberg opinion columnist Alexis Leon is argues that people shouldn't be so paralyzed by the prospect of depleting their savings when they reach retirement age Tell us what financial advisers have been telling you about retirees actually scrimping Right I wanted to write something because I feel like generally what we hear and what's drilled into our heads is safe safe save and then once you're in retirement you know withdraw a minimal amount and whether it's this rule of from the traditional 4% are now 3% of people are saying really that's what the focus should be on And I thought it was interesting because I spoke to several financial advisers who said and again this doesn't apply to a lot of retirees but there are a significant section of people or significant segment of retirees who actually script more than they have to and just think of somebody compared this It's the metaphor is like aunts and grasshoppers that if you've worked so hard and been ant your whole life where you've done everything you're supposed to do and you've diligently saved to then turn into a grasshopper and spend not frivolously but to spend on things that are really important to you or that you hope to enjoy and retirement it really may be difficult for some people to do that and it's just a good reminder that if you've done all the right things don't forget to stop and kind of enjoy some of the things that you would set out to do So for the grasshoppers among us talk about some things that we could do First of all that suggested withdrawal rate 3% or 4% How reliable is that Sure I think it's helpful to think of that as a starting point To start a 3% or 4% a year withdrawal rate that's fine but you really have to keep in mind that obviously personal situations preferences will dictate each year whether that amount should be higher or lower because a lot of times the financial models that are used specifying that 3% or 4% rate they're specifying that rate at a static amount it's assuming the same fixed amount of portfolio withdrawals every year But as you know few people actually live like that Most retirees have some guaranteed income That's exactly right And that's why sometimes it's helpful you know obviously when you're thinking about things like inflation or market performance lower bond yields all of those things should be factored into your withdrawal amount or what you think you should be spending in retirement But that has to do with your portfolio So many times people's overall assets when they're in retirement a chunk of that may also be coming from some kind of guaranteed income whether that social security or annuity that someone will purchase So when you're thinking about the withdrawal rate keep in mind both guaranteed streams and income because that may make you a little less worry about outliving your savings What about long-term care policies Because as I recall they're pretty expensive Right Long-term care also long-term care insurance is something that people are really worried of as well justified often because of the high costs that they offer or they come with But long term care is such a hard thing I mean all of these depressing studies show that an absorbent intelligence down the road could blow up you know all of these carefully laid retirement plans So it's helpful to kind of plan for it and whether that comes down to purchasing some kind of long-term care insurance or simply setting up a separate account where you can kind of put enough money in there to calculate how much you might need for long-term care There are studies that show you know the average time needed for long-term care is about three years So calculate you know how much it would cost on average for that year Then increase that to about three years and maybe you just have a separate portfolio and you can sleep at night knowing that there's money dedicated for that long-term care if and when that utilizes One of the things I found really interesting in your column You said that retirement planning depends on emotional factors And I think that's true because some people are thinking about their kids after they die Some of this is emotional and it's not something that you can just kind of solve by plugging in an algorithm or in actuarial table I mean when you talk to people about something like when you think you'll die which is obviously the most crucial question because that will entail then how much you need in retirement because you're thinking about how many years you'll be around for So many people think that they're kind of die around the time when their parents did So it can be helpful to kind of clear out some of the psychological thoughts to use an online calculator The American academy of actuaries and the society of actuaries have one that's called a longevity illustrator You can use that for couples and that will ask you some questions some prompts and maybe give you a number of course no one can predict that But at least give you a number that you might be surprised about if again you have some of these preexisting thoughts about following kind of when your parents passed as they did And the same goes for this idea about quote unquote taking care of your children or your grandchildren A lot of financial advisers say they have these conversations with their clients and first is kind of this abstract idea of the desire to leave a legacy Then when they really drill down you know they have to find out why that's a priority What kind of amounts of money are we really talking about And then once you have some dollar figures you can try to see if that really makes sense And again how much that could eat into your own retirement enjoyment Thanks Alexis That's Alexis Leon is columnist for Bloomberg opinion Let's turn now to an issue of inequality in America America's hunger pandemic is getting worse according to Bloomberg opinion columnist Adam minter who says that despite the massive amount of.
Bloomberg Radio New York
"alexis leon" Discussed on Bloomberg Radio New York
"Longevity and child inheritances These are some of the biggest things influencing well off retirees to save their hard earned money Bloomberg opinion columnist Alexis Leon is argues that people shouldn't be so paralyzed by the prospect of depleting their savings when they reach retirement age Tell us what financial advisers have been telling you about retirees actually scrimping Right I wanted to write something because I feel like generally what we hear and what's drilled into our heads is safe safe safe and then once you're in retirement you know withdraw a minimal amount and whether it's this rule of from the traditional 4% are now 3% of people are saying really that's what the focus should be on And I thought it was interesting because I spoke to several financial advisers who said and again this doesn't apply to a lot of retirees but there are a significant section of people or significant segment of retirees who actually script more than they have to and just think of somebody compared this It's the metaphor is like ants and grasshoppers that if you've worked so hard and been in your whole life where you've done everything you're supposed to do and you diligently save to then turn into a grasshopper and spend not frivolously but to spend on things that are really important to you or that you hope to enjoy and retirement it really may be difficult for some people to do that and it's just a good reminder that if you've done all the right things don't forget to stop and kind of enjoy some of the things that you had set out to do So for the grasshoppers among us talk about some things that we could do First of all that suggested withdrawal rate 3% or 4% How reliable is that Sure I think it's helpful to think of that as a starting point To start at a 3% or 4% a year withdrawal rate that's fine but you really have to keep in mind that obviously personal situations preferences will dictate each year whether that amount should be higher or lower because a lot of times the financial models that are used specifying that 3% or 4% rate they're specifying that rate at a static amount it's assuming the same fixed amount of portfolio withdrawals every year but as you know few people actually live like that Most retirees have some guaranteed income That's exactly right And that's why sometimes it's helpful you know obviously when you're thinking about things like inflation or market performance lower bond yields all of those things should be factored into your withdrawal amount or what you think you should be spending in retirement But that has to do with your portfolio So many times people's overall assets under a retirement a chunk of that may also be coming from some kind of guaranteed income whether that social security or annuity that someone has purchased So when you're thinking about the withdrawal rate keep in mind both guaranteed streams and income because that may make you a little less worry about outliving your savings What about long-term care policies Because as I recall they're pretty expensive Right Long-term care also long-term care insurance is something that people are really worried of as well justified often because of the high costs that they offer or they come with But long term care is such a hard thing I mean all of these depressing studies show that an exorbitant health down the road could blow up you know all of these carefully lead retirement plans So it's helpful to kind of plan for it and whether that comes down to purchasing some kind of long-term care insurance or simply setting up a separate account where you can kind of put enough money in there to calculate how much you might need for long-term care There are studies that show the average pack needed for long-term care is about three years So calculate how much it would cost on average for that year Then increase that to about three years and maybe you just have a separate portfolio and you can sleep at night knowing that there's money dedicated for that long-term care if and when that utilizes One of the things I found really interesting in your column You said that retirement planning depends on emotional factors And I think that's true because some people are thinking about their kids after they die Some of this is emotional and it's not something that you can just kind of solve by plugging in an algorithm or in actuarial table I mean when you talk to people about something like when you think you'll die which is obviously the most crucial question because that will entail then how much you need in retirement because you're thinking about how many years you'll be around for so many people think that they're all kind of die around the time when your parents did So it can be helpful to kind of clear out some of the psychological thoughts to use an online calculator The American academy of actuaries and the society of actuaries have one that's called a longevity illustrator You can use that for couples and that will ask you some questions some prompts and maybe give you a number of course no one can predict that But at least give you a number that you might be surprised about if again you have some of these preexisting thoughts about following kind of when your parents passed as they did And the same goes for this idea about quote unquote taking care of your children or your grandchildren A lot of financial advisers say they have these conversations with their clients and first is kind of this abstract idea of this desire to leave a legacy Then when they really drill down you know they have to find out why that's a priority What kind of amounts of money are we really talking about And then once we have some dollar figures you can try to see if that really makes sense And again how much that could eat into your own retirement enjoyment Thanks Alexis That's a Lexus Leon is columnist for Bloomberg opinion Let's turn now to an issue of inequality in.
Bloomberg Radio New York
"alexis leon" Discussed on Bloomberg Radio New York
"And child inheritances These are some of the biggest things influencing well off retirees to save their hard earned money Bloomberg opinion columnist Alexis Leon is argues that people shouldn't be so paralyzed by the prospect of depleting their savings when they reach retirement age Tell us what financial advisers have been telling you about retirees actually scrimping Right I wanted to write something because I feel like generally what we hear and what's drilled into our heads is safe safe save and then once you're in retirement you know withdraw a minimal amount and whether it's this rule of from the traditional 4% are now 3% of people are saying really that's what the focus should be on And I thought it was interesting because I spoke to several financial advisers who said and again this doesn't apply to a lot of retirees but there are a significant section of people or significant segment of retirees who actually script more than they have to and just think of somebody compared this It's the metaphor is like ants and grasshoppers that if you've worked so hard and been ant your whole life where you've done everything you're supposed to do and you diligently save to then turn into a grasshopper and spend not frivolously but to spend on things that are really important to you or that you hope to enjoy and retirement it really may be difficult for some people to do that and it's just a good reminder that if you've done all the right things don't forget to stop and kind of enjoy some of the things that you had set out to do So for the grasshoppers among us talk about some things that we could do First of all that suggested withdrawal rate 3% or 4% How reliable is that Sure I think it's helpful to think of that as a starting point You know to start at a 3% or 4% a year withdrawal rate that's fine but you really have to keep in mind that obviously personal situations preferences will dictate each year whether that amount should be higher or lower because a lot of times the financial models that are used specifying that 3% or 4% rate they're specifying that rate at a static amount it's assuming the same fixed amount of portfolio withdrawals every year But as you know few people actually live like that Most retirees have some guaranteed income That's exactly right And that's why sometimes it's helpful you know obviously when you're thinking about things like inflation or market performance lower bond yields all of those things should be factored into your withdrawal amount or what you think you should be spending in retirement But that has to do with your portfolio So many times people's overall assets under a retirement a chunk of that may also be coming from some kind of guaranteed income whether that social security or annuity that someone will purchase So when you're thinking about the withdrawal rate you know keep in mind both guaranteed streams of income because that may make you a little less worry about outliving your savings What about long-term care policies Because as I recall they're pretty expensive Right Long-term care also long-term care insurance is something that people are really worried of as well justified often because of the high costs that they offer or they come with But long term care is such a hard thing I mean all of these depressing studies show that an absorbent intelligence down the road could blow up you know all of these carefully laid retirement plans So it's helpful to kind of plan for it and whether that comes down to purchasing some kind of long-term care insurance or simply setting up a separate account where you can kind of put enough money in there to calculate how much you might need for long-term care There are studies that show the average pack needed for long-term care is about three years So calculate you know how much it would cost on average for that year Then increase that to about three years and maybe you just have a separate portfolio and you can sleep at night knowing that there's money dedicated for that long-term care if and when that utilizes One of the things I found really interesting in your column You said that retirement planning depends on emotional factors And I think that's not true because some people are thinking about their kids after they die Some of this is emotional and it's not something that you can just kind of solve by plugging in an algorithm or in actuarial table I mean when you talk to people about something like when you think you'll die which is obviously the most crucial question because that will entail then how much you need in retirement because you're thinking about how many years you'll be around for so many people think that they're kind of die around the time when their parents did So it can be helpful to kind of clear out some of the psychological thoughts to use an online calculator the American academy of actuaries and the society of actuaries have one that's called a longevity illustrator You can use that for couples and that will ask you some questions some prompts and maybe give you a number of course no one can predict that But at least give you a number that you might be surprised about if again you have some of these preexisting thoughts about following kind of when your parents passed as they did And the same goes for this idea about quote unquote taking care of your children or your grandchildren A lot of financial advisers say they have these conversations with their clients and first is kind of this abstract idea of the desire to leave a legacy Then when they really drill down you know they have to find out why that's a priority What kind of amounts of money are we really talking about And then once you have some dollar figures you can try to see if that really makes sense And again how much that could eat into your own retirement enjoyment Thanks Alexis That's Alexis Leon is columnist for Bloomberg opinion Let's turn now to an issue of inequality in America America's hunger pandemic is getting worse according to Bloomberg opinion columnist Adam minter who says that despite the massive amount of emergency federal funding driven by the COVID-19 pandemic America's issues with food insecurity.
Bloomberg Radio New York
"alexis leon" Discussed on Bloomberg Radio New York
"On what's going on around the world Michael Karen thank you very much Japan and France confirmed their first cases of the new variant of the coronavirus today It comes as China says it's determined to hold a successful Winter Olympics in roughly 65 days even after the WHO warned COVID cases may surge due to severe consequences fueled by omo crime Tiger Woods says his days of being a full-time golfer are over Wood spoke to golf digest in his first major interview since his devastating guard crash in February In the NFL Washington outlasted the Seahawks 1715 in the NBA the wizards lost in baseball There's word Max Scherzer has agreed to a $130 million three year contract with the New York mets Global news 24 hours a day on air and on Bloomberg quick take powered by more than 2700 journalists and analysts more than a 120 countries I'm Michael Barr This is Bloomberg The following commentary is from Bloomberg opinion For smart ways to close out a baffling taxier and Alexis Leon is a Congress for Bloomberg opinion The countdown to the end of the year always comes with gobs of generic tax advice But there's more to think about this year than usual There are a handful of substantial tax changes on the horizon and with congressional Democrats introducing half a dozen different flavors of cuts hikes credits and deductions it's easy to lose track Among the biggest changes that could take effect just weeks from now high earners who have taken advantage of a special Roth retirement account will be blocked from doing so Crypto holders should remember that they can no longer lock in unrealized losses next year and by the same coins back just a few days later And finally business owners take note those who earn more than $400,000 a year will be subject to a 3.8% tax on investment income that they had previously been exempt from I'm Alexis leonis for more opinion please go to Bloomberg dot com slash opinion or OPI and go on the Bloomberg terminal This has been Bloomberg opinion And Bloomberg opinion commentaries can be heard every weekday at this time and terminal customers can read more at op N go It is 6 50 on Wall Street we turn to news and science and technology now with the Bloomberg.
Bloomberg Radio New York
"alexis leon" Discussed on Bloomberg Radio New York
"Radio I'm joon Grasso As millions of Americans change jobs many in certain sectors are feeling locked in by equity based awards they risk losing if they leave But according to opinion columnist Alexis leanders there are a few strategies to help keep them even if you decide it's time to go She joins us to explain People in the finance and tech sectors may feel a kind of pressure to stay in jobs because of the equity based awards Tell us about that Sure we hear this all the time you know that if you work in the finance or tech sector sometimes you feel locked in because of these equity based awards Sometimes it's restricted Stock that you receive Other times they're stock options where you have the option to buy company stock at a set price But either way when it's such a big chunk of overall compensation it could really make people feel like their hamstrung in that they shouldn't leave their jobs because they're going to be leaving so much money on the table But as you point out the job market is hot right now and it's really good for job seekers So do some companies take that into account and try to win job seekers over Yes that's exactly what's happening employers know that it is a candidate's job market right now especially if you work in areas like investment banking or FinTech or alternatives like private equity or hedge funds employers are desperately competing for top talent And because of that they're willing even more so than usual to make candidates whole and to basically give them any words they may be forfeiting by leaving a previous employer So it can be complicated How do you figure out what you're giving up before you decide to take another job Right That's why I did the cone because I wanted people to know that of course you can hire the role of an attorney to help walk you through that But I thought it was helpful for people to know firsthand kind of what they should be looking at and what they should know because there's so many moving parts in different components of compensation and various terms governing if and when it's going to be paid out that I thought was helpful to give people some tips to know So the first thing is the most relevant document First start with your employment contract There could be terms in there that you want to know The termination mean just retiring changing a job death you know there's so many different terms that could be included under the definition of termination And then you want to look at stock option plan and that's going to give you obviously the nitty Gritty details on the number of shares included the awards The vesting schedule you know when you're getting them what you have to do to actually receive them but they'll also have as I said those definitions for things like termination and they'll also let you know what happened if you go to a competitor like what then happens to those awards and a lot of times obviously the terms are more onerous if you are in fact going to work for a competitor Now do you have to consult an account basically in order to figure out the tax consequences Definitely It's always helpful I think to talk to an accountant to make sure you understand what the tax implications are because sometimes maybe you have stock options that have vested so that means that you're eligible to test them but maybe you have an exercise them yet So you haven't actually purchased them at the set price that the company has awarded you Obviously you generally buy when it's out of discount when the price that you've been given is lower than where the stock is trading So you want to take all that into consideration if you are in fact going to exercise you want to make sure you understand what those tax implications are doing so And here was a shocker in your column sometimes private companies can claw back stock options even after they've been exercised Yeah that can be a rude awakening for people who work through the private company you know they receive the stock option they vested they exercise them And they think even if they've gone to work for another employer that they still have those options but that's not the case A lot of times not always but often private companies because they want to keep those options and that stock basically for the people who are still working there who can then be eligible for the biggest payday they often write into contracts that they have the potential or the option to claw back those stock options to take back that stock back and reserve it only for people who are continuing to work there What are some of the other loopholes or things that people should watch out for Sure This is also with private companies but another thing to keep in mind is that with private companies stock options that you often have to come up with outside cash to exercise them with a public company you can use a portion of the awarded shares to basically pay for the rest of the shares but that's not an option with a company that's still private what you have to do is basically come up with outside cash to then exercise those options And to pay for any taxes that you may as a result of exercising those options Thanks Alexis That's Alexis Leon is a personal finance columnist for Bloomberg opinion Let's turn now to Starbucks which celebrates its 50th anniversary this year Opinion columnist Virginia postrel joins us to explain how the coffee giant went from a Gourmet bean cellar to a world renowned cafe So explain how Starbucks took a specialty concept and made it into this phenomenon Yes So Starbucks has celebrating its 50th anniversary which was a surprise to me and I suspect would be a surprise to most people because for the first 20 years basically it was a small coffee retailer in Seattle Catering to a very specialized market But Howard Schultz discovered it and it's a complicated explaining the story but eventually ended up buying it out And his vision was to make coffeehouses as common in the U.S. and later in the world as they were in Italy And so by 1990 they had stores in Chicago that were successful and then in 1991 they rolled them out to LA and that was really the beginning of the phenomenon as we know it which is the idea of having a place that is convenient that is welcoming where people can hang out as well as get coffee that comes from beans rather than a can As it used to be the case So how important is the aesthetic at Starbucks It's very important And Starbucks has really changed our expectations of what mass market restaurants mass marketplaces look like When they started out the very early sort of Howard Schultz Starbucks were mild on Milan They were hard surfaces very modern very sort of Italian But he realized that that wasn't really what was wanted in the U.S. what people wanted was a place where they could feel comfortable and hang out And then that led to a different sort of aesthetic But by the late 1990s where Starbucks had become ubiquitous is sort of conscious aesthetic appeal had gone from being sort of a new idea for a mass marketplace to being the minimum standard and in 2003 I published a book called the substance of style which had this idea called the aesthetic imperative which was sweeping through formerly non aesthetic industries like business hotels and consumer electronics and Starbucks was really the touchstone example there They paid a lot of attention not only to the coffee but to the environment they created And that then set a standard for other respirators in particular but for other people who were thinking about designing environments In that period I ran into it even in churches thinking about their areas where they had fellowship and that sort of thing It really changed the way our public environment looks How would you compare Starbucks to all the other coffeehouses out there Well what's been fascinating is that Starbucks you would have thought would lead to driving out of business competitors with less capital less buying power all that sort of thing But what in fact it did was it demonstrated that there was a real desire for upscale coffee So today there are 37,000 coffeehouses in the U.S. more or less And Starbucks is about 15,000 of those If you go back 30 years to 1991 there were only 1650 coffeehouses in the U.S. and only a 165 were Starbucks So what Starbucks did was it provided this demonstration effect that told consumers and also entrepreneurs that making a coffeehouse was something that people might like And then a lot of people who didn't like Starbucks started sort of anti Starbucks And some of those it was just about being quirky and interesting and not so corporate and other ones were being sort of more left wing political anti corporate as opposed to just non corporate And then now we have people who basically grew up in a world where Starbucks was on every corner And they are creating what are called third wave coffeehouses which are much more connoisseurship.
Bloomberg Radio New York
"alexis leon" Discussed on Bloomberg Radio New York
"Away into an old 41 K plan, and it's In addition, it's a plan that has good investment options because a lot of times was available to you via 41 K plan may not be available to you, just as a, you know, individual retail investor. So if you like the investments and another huge thing to keep in mind and the fees are low You're going to be on top of it As I said, and you're able to kind of think how the office and at 41 K kind of align with the other retirement assets you have. You can check the boxes for all of those things that maybe are good candidates to keep it where it is and just continue to let it grow. Be proactive. Make sure you know that you're checking in to see if the plan providers saying the same if there are any changes. If they're changes to what the investments are, just make sure you're getting regular updates and all that stuff, then it's not the end of the world. But I wanted to tell you, the Scott that I read after Actually, I published the piece that sometimes when people there almost 25 million forgotten accounts in the U. S, and the average balance believe they're not $55,000, representing nearly 1.35 trillion of assets in total, So it is, unfortunately, what people mostly end up doing is they just leave them there now, if they proactively chosen to do that, and because, you know, a great investment options and more fees Kudos to them. But if it's just simply because it's too difficult for them to move, and they've forgotten about it. As you see all these really frightening thirties about Americans being unprepared for retirement, you know, here's a part of over a trillion in assets that unfortunately too many people are forgetting about Thanks, Alexis. That's Alexis Leon is a personal finance columnist for.