Tumbling Interest Rates in Europe Leaves Some Banks Owing Money on Loans to Borrowers

I’m not sure even what to say except that I want one of these mortgages! Also, I don’t imagine this ends well.

Tumbling Interest Rates in Europe Leaves Some Banks Owing Money on Loans to Borrowers

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Where the Money Comes From

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As the tax filing deadline approaches, Money Magazine has offered some interesting statistics on our annual ritual.  In the early months, the IRS says that roughly 83% of all returns have resulted in refunds, with an average refund of $2,893 per return.  In all, roughly eight out of ten filers qualify for a refund, and this year’s refund is in line with previous year averages.

Meanwhile, the IRS website notes that in the past few years, roughly 47% of Americans were below the threshold where they had to pay income taxes—which is where the famous “47 percenters” phrase came from in the Romney presidential campaign.  However virtually all of those Americans paid FICA taxes.  In all, 185.5 million income tax returns were filed last year, but only 34,000 estate tax returns and just 335,000 gift tax returns.  The government collected $1.64 trillion in individual income taxes, compared with $353 billion in business income taxes.  In aggregate, Californians paid the most taxes, at $369 billion, well ahead of Texas ($265 billion) and New York ($251 billion).  At the other end of the spectrum, the citizens of Vermont paid $4.3 billion and people and companies living in Wyoming paid $4.9 billion,

Finally, there’s an interesting comparison.  The King James Bible totals around 700,000 words, whereas the U.S. Federal Tax Code numbers 3.7 million words.

Sources:

http://money.cnn.com/2015/03/26/pf/taxes/average-tax-refund-irs/index.html?iid=SF_PF_River

http://facts.randomhistory.com/tax-facts.html

http://www.sars.gov.za/AllDocs/Documents/Tax%20Stats/Tax%20Stats%202014/TStats%202014%20Highlights%20WEB.pdf

http://www.irs.gov/uac/SOI-Tax-Stats-IRS-Data-Book

About the Author: Bob Veres has been a commentator, author and consultant in the financial services industry for more than 20 years.  Over his 20-year career in the financial services world, Mr. Veres has worked as editor of Financial Planning magazine; as a contributing editor to the Journal of Financial Planning; as a columnist and editor-at-large of Dow Jones Investment Advisor magazine; and as editor of Morningstar’s advisor web site: MorningstarAdvisor.com.

Mr. Veres has been named one of the most influential people in the financial planning profession by Investment Advisor magazine and Financial Planning magazine, was granted the NAPFA Special Achievement Award by the National Association of Personal Financial Advisors, and most recently the Heart of Financial Planning Distinguished Service Award from the Denver-based Financial Planning Association. 

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The Upper Uppers

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What does it take to be a “one percenter?” How much do you have to earn before you fall into this rarified zone?

A new study written by socioeconomists Estelle Sommeiller and Mark Price, looked at state-level tax data from the Internal Revenue Service over the past 35 years. They’ve created a chart which looks at annual income at the threshold of the top 1% in each U.S. state. If you live in Connecticut, you’re a “one percenter” if you earn more than $678,000 a year, higher than New York’s threshold of $506,000, the $539,000 threshold in New Jersey, $555,000 in Washington, D.C. or $532,000 in Massachusetts. California ($438,000) and Texas ($423,000), which are considered wealthy states, actually came in behind North Dakota ($502,000).

States with the lowest threshold include West Virginia ($243,000), Kentucky and Alabama ($263,000) and Maine ($274,000). If somebody earning a good income in Connecticut or New York wanted to break into the one-percent category, he/she could move to a less competitive state.

Nationwide, the total share of income going to the upper 1% rose by about 12 percentage points since 1979. The one-percenters in Connecticut make a little over 33% of all income in that state, and in New York, the percentage is 32.6%. Elsewhere, the range is generally in the 14% to 22% range, up from the 7-11% range back in 1979.

Source: http://blogs.wsj.com/economics/2015/01/27/inequality-is-not-just-about-wall-street-its-in-all-50-states/?utm_content=buffere638d&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer

About the Author: Bob Veres has been a commentator, author and consultant in the financial services industry for more than 20 years. Over his 20-year career in the financial services world, Mr. Veres has worked as editor of Financial Planning magazine; as a contributing editor to the Journal of Financial Planning; as a columnist and editor-at-large of Dow Jones Investment Advisor magazine; and as editor of Morningstar’s advisor web site: MorningstarAdvisor.com.

Mr. Veres has been named one of the most influential people in the financial planning profession by Investment Advisor magazine and Financial Planning magazine, was granted the NAPFA Special Achievement Award by the National Association of Personal Financial Advisors, and most recently the Heart of Financial Planning Distinguished Service Award from the Denver-based Financial Planning Association.

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Return on College

 

OregonLet’s say you’re giving your niece or grandson some advice on which major to select in college.  Do you tell them to get an art degree, or take courses in social sciences?  Or should they focus on business and finance?

The decision should not ignore their natural abilities and interests, of course.  But if they’re looking for the best return on their tuition dollar, then they might consider spending their time in the computer sciences and math buildings.

This information comes from a report published by PayScale.com, which helps people manage their careers and figure out what they’re worth on the job market.  PayScale’s research team tracked the median salary for people who completed its salary survey online.  They then compared the 20-year earnings of people following different careers with what was earned, on average, by competing workers with a high school diploma but no college degree.  Then they subtracted the cost of 4 years of college tuition, to arrive at a return on investment figure—the additional money the degree provided.  Advanced degrees like law and medicine were excluded; the survey focused on bachelors degrees.

The results were striking.  Business and finance majors came away with a respectable $331,345 average ROI over 20 years, but they actually finished a distant third on the list, just ahead of sales, marketing and public relations ($318,212).  The highest ranking majors, by this metric, were computer and math, whose degree-holders saw a net return on their tuition investment of $584,339 over the 20 years after graduation.  These nerdy individuals nosed out the architecture and engineering graduates, whose average ROI came to $561,475.

Life, physical and social sciences majors fared somewhat less well, earning almost exactly $250,000 more than their high school diploma competition.  Graduates with an arts, design, entertainment and related degree came in last in the survey; they are expected to make a little over $125,000 as a result of their college training.

Interestingly, the PayScale website also tracks the average return on tuition investment for different colleges.  Graduates of Harvey Mudd College in Claremont, CA can expect to earn nearly $1 million over the 20 years after graduation, with a typical starting salary north of $75,000—with a 4-year college investment of $237,700.  Numbers 2-10 on the rankings include the California Institute of Technology ($901,400 earnings, $221,600 cost); The Stevens Institute of Technology in Hoboken, NJ ($841,000; $232,000), the Colorado School of Mines in Golden, CO ($831,000; $112,000); Babson College in Wellesley, MA ($812,800; $230,200); Stanford University ($809,000; $233,300); the Massachusetts Institute of Technology ($798,500; $224,500); Georgia Institute of Technology ($796,300; $86,700); Princeton University ($795,700; $217,300); and the Virginia Military Institute ($767,300; $95,700).

You can look up your own alma mater here: http://www.payscale.com/college-roi/

About the Author: Bob Veres has been a commentator, author and consultant in the financial services industry for more than 20 years.  Over his 20-year career in the financial services world, Mr. Veres has worked as editor of Financial Planning magazine; as a contributing editor to the Journal of Financial Planning; as a columnist and editor-at-large of Dow Jones Investment Advisor magazine; and as editor of Morningstar’s advisor web site: MorningstarAdvisor.com.

Mr. Veres has been named one of the most influential people in the financial planning profession by Investment Advisor magazine and Financial Planning magazine, was granted the NAPFA Special Achievement Award by the National Association of Personal Financial Advisors, and most recently the Heart of Financial Planning Distinguished Service Award from the Denver-based Financial Planning Association. 

Source:

http://www.payscale.com/college-roi/

http://www.bloomberg.com/news/articles/2015-03-05/the-career-with-the-biggest-financial-payoff?hootPostID=293b20e2f9470947cb0facdcea7f70ea

 

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Lower Oil, Less Looking For It

gasYou already know that oil prices are lower than they have been in a long time, in part because U.S. oil production is higher than it has ever been, and still climbing steeply.  But you have to wonder how long these conditions will last, since lower oil prices make it less economical for oilfield services companies to drill.

The accompanying chart, courtesy of the oilfield services company Baker Hughes, may be the most dramatic illustration of economic reality you will see this month.  It shows how the U.S. has increased the millions of barrels of oil per day that we’re pumping out of U.S. soil in the past four years.  Looking at the orange line rising ever-more-steeply, you wonder whether oil prices will ever go back up to previous levels.

But then you see the purple line, which tracks the number of active oil rigs that are out there looking for new sources of oil.  The last quarter of 2014 and the first few months of this year have created a dramatic bear market for drilling rigs in action.  In just two fiscal quarters, the number of rigs in the field has dropped almost by half, and there is no sign that the trend is slowing down.

What does that mean?  Nothing in the short term, since the orange line represents existing production.  But longer-term, you have to expect that fewer active rigs will mean fewer wells and, at the very least, a leveling out of that orange line.  Oil prices may be down today, but that doesn’t mean supplies will outrun demand forever.  Enjoy the low gas prices while you can.

CA - 2014-3-10 Oil Rigs Chart

 

 

About the Author: Bob Veres has been a commentator, author and consultant in the financial services industry for more than 20 years.  Over his 20-year career in the financial services world, Mr. Veres has worked as editor of Financial Planning magazine; as a contributing editor to the Journal of Financial Planning; as a columnist and editor-at-large of Dow Jones Investment Advisor magazine; and as editor of Morningstar’s advisor web site: MorningstarAdvisor.com.

Mr. Veres has been named one of the most influential people in the financial planning profession by Investment Advisor magazine and Financial Planning magazine, was granted the NAPFA Special Achievement Award by the National Association of Personal Financial Advisors, and most recently the Heart of Financial Planning Distinguished Service Award from the Denver-based Financial Planning Association. 

Source:

http://www.bloomberg.com/news/articles/2015-03-06/oil-rigs-get-slammed-for-the-13th-week

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