How to be Rich, Happy and Free from Scams

NEW YORK (AP) -- The stock market ended a tumultuous year right where it started. In the final tally, despite big climbs and falls, unexpected blows and surprising triumphs, all the hullabaloo proved for naught. On Friday, the Standard & Poor's 500 index closed at 1,257.60. That's exactly 0.04 point below where it started the year. "If you fell asleep January 1 and woke up today, you'd think nothing had happened," says Jack Ablin, chief investment officer of Harris Private Bank. "But it's been up and down all year. It's been crazy." It was a year when U.S. companies were supposed to run out of ways to make big profits. But they didn't, and in fact generated more than ever. It was a year when the U.S. lost its prized triple-A credit rating, which should have spooked buyers of its bonds. Instead investors bought more of them and made Treasurys one of the best bets of 2011. It was a year when stocks caught fire, then collapsed to near bear-m...

By Linda Stern (Reuters) - Sigh. A lot of people are predicting more of the same for 2012: Another year of stock market volatility, high unemployment, banking industry upheaval, weak housing and more talk about Facebook, mobile commerce, 401(k) plans and taxes. But maybe that's just because it's hard to envision change. Not everything will stay the same. For example, a year from now, we'll not be having weekly Republican presidential debates, and we will most likely know who the President will be in 2013. Conventional wisdom holds that by this time next year, Facebook will be a publicly traded company and not just a huge time suck. It's easier to imagine the European economic situation getting better or worse in 2012 than it is to imagine it lurching along as it has been for a whole other year. And federal financial regulators who have spent a year threatening to increase their oversight of mortgage lenders, financial advisers and 401(k) plans may stop talking and start...

By Emily Brandon There are some new developments that could help you save more for retirement in 2012, including a higher 401(k) contribution limit and better access to 401(k) fee information. Of course, your ability to save and invest will largely determine your retirement success. If you're aiming to improve your finances in the new year, try to incorporate a few of these tips into your retirement plan. Here are 12 ways to get better prepared for retirement in 2012. Save $500 more next year. Consider resetting the automatic contribution to your 401(k) to include an extra $42 per month. The contribution limit for 401(k)s, 403(b)s, and the federal government's Thrift Savings Plan will increase by $500 in 2012, to $17,000. And workers age 50 and older will be able to contribute an extra $5,500 next year. "Always allocate a percentage to your retirement account from your paycheck before you spend, even if it is a tiny amount," says Elaine King, a certified financial pla...

By Philip Moeller Looking back on 2011, the New Year can't come fast enough. Will things be better in 2012? Without wanting to tempt fate, rarely has a coming year had such a low bar to being better than the previous year. With all fervent wishes for a great 2012 for everyone, here are 10 things that happened in 2011 that should stay in 2011: 1. Congress. The petty yet exhausting fights in Congress produced well-deserved ridicule from an ungrateful nation. The Congressional approval rate hit an all-time low of 11 percent earlier this month, according to Gallup's tracking poll. "This month's record-low congressional job approval rating is one of a number of measures of Congress that have reached historical low points this year." Gallup said. "This suggests that 2011 will be remembered as the year in which the American public lost much of any remaining faith in the men and women they elect and send off to Washington to represent them." 2. Europe. Coming in...

By Matthew Lynn LONDON (MarketWatch) — Shortly before the 1929 stock-market crash that ushered in a global recession, the American economist Irving Fisher made a rightly celebrated forecast: “Stock prices have reached what looks like a permanently high plateau.” That should be enough to warn anyone off making predictions, particularly where finance and business are concerned. Still, since we are stuck in the quiet space between Christmas and New Year’s day, here are a few things that might or might not happen in 2012. 1. Mario Draghi resigns Predictions for the euro zone make as much sense as trying to forecast the weather for the summer of 2020. The situation is so volatile, no one really has any idea what is going to happen any more. Here is one thought, however. The simplest way out of this crisis is for the European Central Bank to start printing money, but the main problem is selling that fix to the Germans. When it comes to the crunch, Draghi will step aside, a German will be ins...

By Janice Revell, FORTUNE -- Given the extreme volatility in the market these days, the idea of being able to capitalize on all that whipsaw action is alluring. And the fund industry is offering that very opportunity, in the form of leveraged exchange-traded funds. They're a day trader's dream, and they've been increasing in popularity. But beware: Used improperly, these high-octane investments can wreak destruction on your portfolio -- even if the market moves the way you anticipated. Leveraged ETFs are amped-up versions of traditional exchange-traded funds, which track the performance of various indexes and asset classes including stocks, bonds, commodities, and currencies. These funds -- which go by such names as "Ultra" or "Double Long" -- use derivatives to deliver two or three times the daily returns of the underlying index. Inverse leveraged ETFs (a.k.a. "Double Short" funds) are designed to produce the opposite performance of the benchm...

By Janet Novack Let’s face it. Most of us put off tax chores from time to time---not as chronically or recklessly as Congress, but often enough that it can end up costing us. So as a service to the frazzled, here are 10 money saving moves that must be made before Dec. 31 and five others that can be safely postponed until the beginning of next year. BY DEC. 31: 1. Grab expiring tax breaks. Dozens of tax breaks expire on Dec. 31, and while Congress is likely to reauthorize some of them retroactively, others could permanently disappear. So, for example, if you’re self employed or own a small business and are in the market for a new vehicle, consider buying before Dec. 31. Until then you can write off the full cost of purchasing a new luxury SUV—provided it’s used 100% for business and its gross vehicle weight is more than 6,000 pounds. (More details here.) If you’re considering making energy efficient home improvements, get the work done before Dec. 31 to take advantage of an expiring $...

By Walter Updegrave I have a substantial amount of cash I want to move into stock and bond mutual funds I already own. I'm aware of the concept of dollar-cost averaging, but I'm afraid that as soon as I move the money it will decline in value and take years to recover. My question is not about what to invest in, but how to make those investments timing wise. -- Robert P. Dollar-cost averaging and timing aren't the central issues here. They're sideshows. The real question is: Does the mix of stock and bond mutual funds you already own truly represent the balance of risk versus reward you're comfortable with as an investor? If it is, then you should immediately invest the cash along the same lines your current investments are allocated. So if you decided that a portfolio of 60% stocks and 40% bonds is the right investment mix for your time horizon, then you should put 60% of the new cash into stock funds and 40% into your bond funds. But if you're not okay with yo...

Can money buy happiness? Those who don't have money believe it can. Money means having fancy clothes, designer accessories and desirable cars, bigger homes and exotic vacations. Money allows entry into the gilded and coveted life of the rich and famous. Or maybe having money simply means being able to pay for your child's higher education and having the ability to fix that leaking roof or broken refrigerator. The timeless aphorism "money doesn't buy happiness" solicits the classic response "of course it doesn't" but many individuals still act like it does, according to Jim Roberts, a marketing professor at Baylor University and author of Shiny Objects: Why We Spend Money We Don't Have in Search of Happiness We Can't Buy. Americans are addicted to material possessions, he says, and his research on consumer behavior shows that consumers are seeking happiness in all the wrong places, leading to unaffordable credit card bills, no savings and in t...

By Robert Frank Affluence Is Becoming a Temporary Phenomenon. Here's How to Dodge the 'Beta Trap' and Hold On to What You've Got Who says the rich always get richer? Despite heated rhetoric emanating from politicians and pundits, the top 1% is hardly a fixed group that enjoys consistent income gains. To the contrary, the wealthiest have become the most crash-prone group in our economy. The total income of the top 1%—or those earning more than $343,000 in 2009—fell by more than 30% from 2007, according to the most recent Internal Revenue Service data. By contrast, the average income of the bottom 90% fell less than 3% during the same period. A November Federal Reserve study, meanwhile, found that a third of the people in the top 1% in 2007, as measured by wealth, were no longer in the top 1% in 2009. The good news: Despite the turbulent new economics of wealth, there are safeguards that the rich and future rich can deploy to cushion the shocks and mitigate their risks. [...

If you're frustrated with today's jittery financial markets, you're certainly not alone. Unfortunately there are no quick fixes to resolve the issues fueling the market's ups and downs --namely the European debt crisis, a shaky global economy, and U.S. political gridlock. But before you throw in the towel and unwind your positions into the recent weakness, Alec Young, global equity strategist at Standard & Poor's Capital IQ has some sectors to reconsider into year-end. "We think the best thing (the Consumer Discretionary) (XLY) sector has going for it is extremely low expectations on the domestic economy," says Young. Just like the better than expected Black Friday sales, he sees more positive surprises ahead since the economic pessimism is "more than factored in." For the record, FactSet research shows Q4 Consumer Discretionary sector earnings are seen growing by 4% vs 14% for the full S&P 500, with sales up 8% vs 7% for the index. Young...

By Mark Miller "Set it and forget it," infomercial marketer extraordinaire Ron Popeil used to say. That might have worked for Ron's easy-to-use chicken rotisserie -- but it's not a good approach for your retirement portfolio. Even the best-built retirement plan needs a periodic check-up, so here's a list of seven tips, tweaks and reminders for the year ahead. 1. Adjust your 401(k) contribution. The maximum employee contribution allowable by the IRS rises by $500 in 2012, to $17,000; workers over age 50 can contribute another $5,500 in catch-up contributions. If you're already maxing out, adjust your contribution rate for 2012 accordingly. Deductible contribution maximums for traditional IRAs and Roth IRAs are unchanged for 2012 - you can sock away $5,000 (or $6,000 if you are over age 50). 2. Rebalance. Make sure your equity and fixed income allocations are on target by buying or selling assets as needed to make sure you're not taking more risk than desire...

By Bernice Han Singapore on Monday predicted sharply lower economic growth of 1.0-3.0 percent in 2012 amid an export slowdown and warned the situation could worsen if Europe's debt woes trigger a global crisis. "This does not factor in downside risks to growth, such as a worsening debt situation or a full-blown financial crisis in the advanced economies," the Ministry of Trade and Industry (MTI) said in a statement releasing the data. "Should these risks materialise, growth in the Singapore economy in 2012 could come in lower than expected," it added. The city-state's 2011 gross domestic product (GDP) growth is estimated at 5.0 percent, down from an all-time high of 14.5 percent in 2010 when the economy was coming off a 0.8 contraction during the 2009 recession. Singapore's open and trade-driven economy is regarded as a bellwether for Asia's exporters, which depend heavily on electronics and other manufactured shipments to North America and Europe fo...

Kelvin Chan HONG KONG (AP) -- Economic growth in East Asia will continue to wane in 2012 as sovereign debt problems in Europe and an anemic U.S. economy raise the risk of a deep global downturn, the Asian Development Bank said Tuesday. The ADB cut its 2012 growth forecast for 14 East Asian economies excluding Japan to 7.2 percent from the 7.5 percent predicted in September. In a worst-case scenario -- in which the U.S. and Europe slow as much as they did in the 2008-2009 global crisis -- East Asia would grow only 5.4 percent in 2012, the development lender said. The ADB also lowered its 2011 forecast slightly to 7.5 percent from 7.6 percent. The Manila-based lender said its "cautiously optimistic" outlook for the region faces "much greater downside risks than just a few months ago." Those risks include a deep recession in both the Europe and the U.S., rising protectionism and persistent or resurgent inflation. "The recovery in advanced economies lost steam this...

The gap between rich and poor is widening across most developed economies as skilled workers reap more rewards and top executives and bankers benefit from a global job market, the Organization for Economic Cooperation and Development said. The average income of the richest tenth of the population is now about nine times that of the poorest tenth, the Paris- based OECD said today in a report. The gap has increased about 10 percent since the mid 1980s. Mexico, the U.S., Israel and the U.K. are among the countries with the biggest divide between rich and poor, while Denmark, Norway, Belgium and the Czech Republic are among those with the smallest gap. The earnings multiple is 14-to-1 in the U.S. and Israel, compared with about 10-to-1 in the U.K., Italy and Japan and 6-to-1 in Germany and Denmark. "The social contract is starting to unravel in many countries," OECD Secretary-General Angel Gurria said in a statement. "This study dispels the assumptions that the benefits of e...

This year's mutual-fund scoreboard highlights an interesting conundrum about investing in emerging markets. Economies of big emerging-markets countries such as China, India and Russia have been growing much faster than the plodding U.S. economy. Yet if you own a fund that focuses on emerging-markets stocks, the chances are good that its performance this year has been lagging far behind the returns of the U.S.-stock funds in your portfolio. How could that be? The idea that a nation's economic performance is the main driver of returns in equities is one of several unfounded beliefs many investors have about the relative merits of developed and emerging markets. And this year, it has helped fuel strong demand for emerging-markets stock funds, which were one of the few areas in the equities fund world to see continued inflows during recent stock-market volatility. If you're considering buying or selling an emerging-markets stock fund, it might be worth taking a closer look at s...

Shree Ann Mathavan Bank bonuses seem to be universally shrinking. Asia, often cited as the engine of growth for many firms, isn’t impervious to suddenly skinnier payouts either. Even front-office staff – the revenue-generators who are typically well compensated – will be hard hit by the bonus crackdown. Here’s a forecast of what the pool will be like for front-office employees in Singapore, Hong Kong and Shanghai. Singapore Angela Kuek, head of front-office banking and financial services, Hudson, predicts a “significant decline” in bonus payments. “Last year top performers got 75 to 100 per cent on their base salary and average performers got a bonus of a couple of months. This year average performers will either get zero bonuses or be told to go. Anything from 50 per cent on base salary and above will be considered above average.” Kuek doesn’t expect a rush of post-bonus activity. “I don’t think there will be much supply of roles in the front-office because deal flow isn’t going to be...

If there is ever a poignant piece of advice that university lecturers and textbooks failed to warn me about upon graduating and entering the workforce, it is the fundamentals of office politics. Not long after finding my feet in my new professional environment, I learnt pretty quickly that sometimes it’s the brownnosing and “who you know, not what you know” ticket that guarantees movement up the corporate ladder. I have sat back and watched in amusement as co-workers, managers, directors and the like strategise to get themselves promotions and bigger bonuses. They masterfully do whatever it takes to get their own way and they make the game of office politics look like an art form. My disappearing manager I once had a manager who disappeared from his desk at 12pm sharp every Friday and would stumble back to the office every few hours smelling of cigarettes and alcohol. He used these bar-hopping benders as quality bonding time with his higher-ups. As everyone would agree, there is a defi...

Shree Ann Mathavan Bleak prospects in the banking industry are making some people contemplate a career change. A few employees, especially those in the middle and back office, are now even thinking the previously unthinkable – leaving banking altogether. Derek Kenny, director, Gulf Connexions Group, has seen an increase in such moves among finance tech (project management and business analysis), finance and HR professionals. “Banking is becoming a pretty easy place to headhunt out of for organisations in other industries such as tech firms, telcos and aviation. A top candidate is a top candidate and although there will be a learning curve when you move industries, companies are willing to invest in smart people,” says Kenny. He knows of one corporation which specifically looks to hire candidates from banks. John Mullally, manager, financial services, Robert Walters Hong Kong, has seen job seekers move into professional services firms like management consultancies or accountancy practic...