June 18, 2019

How Libra Would Work for You

Facebook said it intended to offer Libra to almost all of the 2.7 billion customers who are now on its Facebook Messenger and WhatsApp services. It will also hopes to allow Libra to be used for payments for things like ads on its social network.

Facebook has set up a subsidiary, Calibra, which will be responsible for making Libra available to its users. Calibra intends to build other services on top of Libra, including, eventually, financial services like lending and investing.

Facebook hopes its partners, such as Uber and Spotify, will also take Libra as payment for car rides and online subscriptions, as they do with PayPal and Venmo today.

Every time someone buys Libra, that money will be deposited into a bank account where it will sit untouched, so that every dollar’s or euro’s worth of Libra will be backed by a dollar or euro in the bank, according to the Libra design documents. This is important because the bank holdings of Libra will generate interest that can be used to pay back the cryptocurrency’s initial investors. This structure will mean that an infinite number of Libra can be generated, in contrast to Bitcoin, which is meant to be capped at 21 million. Creating new Libra will not require anything like Bitcoin’s mining process, which has consumed enormous amounts of electricity and made Bitcoin the target of environmental critics.

Facebook and other companies that have created Libra wallets can encourage new customers by giving them a small number of Libra to get started. You will also be able to buy Libra by transferring money from a bank account or debit card. The cost of an individual Libra will be determined by the value of the basket of global currencies that backs up Libra, which will fluctuate slightly over time based on the value of the underlying currencies.

If Libra works as intended, once customers own Libra, they will be able to send them to any other business or person with a Libra wallet, anywhere in the world.

If you want to turn Libra back into dollars or other traditional currencies, Facebook’s wallet, Calibra, will make the conversion at the going rate — based on the current value of the underlying currencies — and transfer the money to another bank or online financial account like PayPal.

Article source: https://www.nytimes.com/2019/06/18/technology/how-libra-would-work-for-you.html?emc=rss&partner=rss

Retouching the Mona Lisa Is Restoration, but a Mickey Mantle? Collectors Cry Fraud

“It’s all what the public believes,” he said.

He faulted grading companies like Professional Sports Authenticator, which is part of Collectors Universe, a publicly traded company in Santa Ana, Calif., that offers authentication services for sports memorabilia and trading cards.

P.S.A. charges up to $5,000 to grade a card. Mr. Moser said that its graders were not as knowledgeable as they purported to be and that they were overwhelmed by the volume of submissions and rushed the process. The grade you get, he said, depends as much on the grader as on the card.

Fraud in collectibles markets is rife but difficult to prove, said Carter Reich, a lawyer who specializes in art fraud cases. He, too, blamed grading companies for not following a universal standard.

“It’s their own standard,” he said, “and some other grading company has a different one.”

Joe Orlando, chief executive of Collectors Universe, referred a request for an interview to his assistant, who provided a statement from P.S.A. that said that it had been fighting consumer fraud for 30 years and that each year it rejected thousands of cards out of the two million it graded.

“Our job is to be skeptical,” Mr. Orlando said in an interview with me last year.

But that does not mean the company always gets it right. The first card that P.S.A. ever graded was a 1909 T206 Honus Wagner. It awarded a near-perfect grade of 8 in 1991.

Mr. Kendrick paid $2.8 million for the card in a private sale in 2007. Despite being the first and highest graded Wagner card, it was dogged by suspicion that its edges had been trimmed.

In 2013, Bill Mastro, who in the 1980s was the king of card sales, admitted to trimming the corners of the card, pleaded guilty to fraud charges and was sentenced to federal prison.

Article source: https://www.nytimes.com/2019/06/14/your-money/sports-card-alteration-fraud.html?emc=rss&partner=rss

How Secured Credit Cards Can Build, or Rebuild, Your Credit

That may be in part because some features, like the required cash deposit, make the cards hard for some people to use. Often, consumers who are approved for the cards can’t cobble together a deposit, the consumer protection bureau reported.

Also, the low spending limit may make it difficult for people to use the cards in a way that significantly improves their credit score. A major component of credit scores is the proportion of available credit that a person uses. Users of secured cards must keep balances quite low — ideally, 30 percent of the cap — to lift their scores, Mr. Levy said.

Secured cards also usually charge annual fees, and may have higher interest rates than traditional credit cards.

Even so, “the potential market for secured credit cards is huge,” the network found.

Amazon’s card, issued through Synchrony Financial, has no annual fee and offers a wider range of credit limits than most secured cards — as little as $100 or as much as $1,000, according to the company’s website. Credit Builder users may be eligible to move up to an Amazon Store Card after seven months of on-time payments.

The Credit Builder card can be used only at Amazon, making it akin to store cards offered by brick-and-mortar retailers. Its interest rate is a relatively high 28.24 percent. (The average rate on credit cards for people with poor credit was 25.33 percent as of June 5, according to the card site Creditcards.com.)

Amazon Prime members, who pay an annual membership fee, are eligible for 5 percent cash back on purchases with the secured card. But cash-back features tend to encourage spending, which can lead to higher balances and a slower credit score improvement, Mr. Levy said.

Users should be particularly cautious about the card’s special financing promotions, said Odysseas Papadimitriou, chief executive of the personal finance site WalletHub.com.

Article source: https://www.nytimes.com/2019/06/14/your-money/secured-credit-cards-amazon.html?emc=rss&partner=rss

My Husband’s Will Pits Me Against Our Daughter. What Can I Do?

I didn’t have a problem not mentioning it when I was hired at my current job, and that was directly coming off unemployment. Gut instinct says not to, but I’m still unsure. What should I do? Name Withheld

You have a perfectly good explanation for both of these job terminations. In the second instance, you have a court’s decision in your favor. A reasonable manager, given these explanations, shouldn’t remove you from consideration. On the other hand, if it ever comes out that you lied on the form — which, let’s be clear, is what you’re considering — they’d have reason to fire you for doing so. (This is an ethical, not a legal, observation.) Go with the truth and an explanation. It isn’t a serious offense to omit from your résumé a brief episode that would require lengthy context. It is a serious offense to lie about something you’ve been asked about explicitly.

I have an elderly friend who sold real estate until the market crashed in 2008. Although the market rebounded, she did not. She has no pension or savings and is struggling to live on her modest Social Security check, food stamps and handouts from charity organizations. She is not in the best of health, so getting a part-time job would be difficult but not impossible. I am in my 50s and doing O.K. financially; I saved my money, and I still work.

I have helped her out occasionally by buying her necessities and giving her money, but I’m becoming resentful. I don’t think she has done everything to help herself. For instance, she refuses to move to a subsidized apartment or give up her health insurance for Medicaid. She does have a grown son who could help her, but she doesn’t want to ask, because they do not have a good relationship. I have even offered to pay her to do basic bookkeeping for me, but she says she can’t work for a friend.

What is my ethical responsibility here? I have real concerns that she could be evicted and end up homeless. I want to be a good person and a good friend, but I don’t think I should have to support her. Suzanne Kolasinski

It’s often useful to distinguish between the question “What am I obliged to do?” and the question “What would it be good to do?” What you’ve done for her — offering her work, buying her necessities, giving her money — is what a friend would do, not something you had a duty to do. A lot of what’s valuable about friendship flows from our wanting to do things for our friends; doing them out of a sense of duty is at odds with this idea.

The strict answer to your question about your responsibility is that you’ve already done more than you had to. There’s a great deal more that it might be good to do, however. You don’t make it clear whether you’ve actually discussed with her the various ways you think she could be helping herself. You should. Helping her think straight about her situation could be a gift of friendship. She may balk at accepting your advice, as she balked at accepting your offer of work. But it can take a thoughtful analysis by someone who cares for us to get us to accept the realities of our situation. And unless you press these issues with her, your resentment may well poison your friendship.

Article source: https://www.nytimes.com/2019/06/11/magazine/my-husbands-will-pits-me-against-our-daughter-what-can-i-do-ethicist.html?emc=rss&partner=rss

Savings Accounts for Disabled Americans Catch On, but Slowly

“It’s a great tool,” Ms. Gehringer said of the account.

While ABLE programs offer investments like mutual funds and exchange-traded funds, most also offer traditional interest-bearing savings accounts and checking accounts with debit cards that are insured by the Federal Deposit Insurance Corporation. That gives people who are uncomfortable with putting their money at risk in the market a choice of more conservative options, said Rob Percival, a senior vice president with Ascensus, which administers ABLE accounts in 20 states and Washington, D.C.

One drawback of ABLE accounts is that after the account owner’s death, the state may seek reimbursement from the accounts to cover the cost of Medicaid payments.

Here are some questions and answers about ABLE accounts:

How much money can I save in an ABLE account?

The maximum from all contributors is pegged to the annual gift tax exclusion, currently $15,000 a year. Also, as a result of the 2017 tax overhaul law, ABLE account owners who work may contribute extra money from their earnings — up to $12,140 in most states (the amount is tied to the federal poverty level and is higher in Hawaii and Alaska), for a total of about $27,000 a year.

In many states, balances in ABLE accounts can grow up to $300,000 and often much higher — but a temporary suspension of supplemental security benefits will be triggered when an account exceeds $100,000, so that amount acts as an effective cap for many people.

Also under the tax overhaul package, families can now roll over money — up to the annual contribution limit — from a 529 college savings plan into an ABLE account, without paying a tax or penalty. But there are pros and cons to doing so, and families may want to consult a special needs planner, according to the Special Needs Alliance, a nonprofit that provides legal advice to people with disabilities and their families.

Do I have to open an account through the state where I live?

No. Most states open their ABLE programs to nonresidents. Some states offer contributors a state income tax break, however, so using your home state’s program may make sense. (There is no federal income tax deduction for contributions to ABLE accounts.)

The National Disability Institute offers a tool on its ABLE National Resource Center website to help compare state programs.

Article source: https://www.nytimes.com/2019/06/07/your-money/able-accounts-savings-disabled.html?emc=rss&partner=rss

S.E.C. Tells Brokers to Work for You, but Don’t Skip the Fine Print

Fee-only pros are not compensated when they sell you something. Instead, they will receive a flat fee, an hourly charge, or payment calculated as a percentage of the assets they manage for you. It’s clean and transparent.

Another option: certified financial planners, a professional designation with rigorous curriculum and experience requirements. They pledge to act as fiduciaries when providing financial advice and can lose their designation if their self-governing board discovers they have not.

You can find these types of professionals through the following associations: The Garrett Planning Network, the National Association of Personal Financial Advisors and XY Planning Network. Roboadvisers — which provide automated advice, sometimes with human help — are another alternative.

If the brokerage firm that your adviser works for will not permit them to use their certified financial planner credentials, that is a huge red flag.

Then there’s the ultimate test: Ask your advisers to sign a fiduciary pledge, which states that you expect them to put your interests first all of the time, with all of your money, in all of your accounts.

Any disputes you have — with brokers and advisers alike — are likely to be settled in arbitration anyway. But having a signed pledge in your back pocket, experts have said, can only bolster your case.

Article source: https://www.nytimes.com/2019/06/06/your-money/sec-broker-rules.html?emc=rss&partner=rss

S.E.C. Adopts New Broker Rules That Consumer Advocates Say Are Toothless

The sole dissenting commissioner, Robert Jackson, an independent who fills one of the Democratic seats on the commission, said in an interview: “Does this rule require customers’ interest to come first? No, it doesn’t.”

Mr. Clayton, the agency chairman, took issue with that characterization.

The rules will require brokers to “act in the best interest of their retail customers when making a recommendation, including not placing their financial or other interests ahead of the interests of the retail customer,” he said.

It will take some time for experts to fully grasp the changes outlined, and even longer to see how they might alter the brokerage landscape in practice. The section on Regulation Best Interest alone is 771 pages, and lawyers, academics and consumer advocates are still parsing and digesting the language. Even so, industry officials were comfortable heralding the rules, which will take effect 60 days after they are published in the Federal Register.

Kenneth E. Bentsen Jr., the president and chief executive officer of the Securities Industry and Financial Markets Association, the trade group for large financial services firms, said the rule would impose a materially heightened standard of conduct for broker-dealers.

“The costs to implement will no doubt be significant,” he said, but they are “worthwhile to uniformly enhance investor protection to the level investors should and do expect.”

It can be hard for investors to figure out where the loyalties of professionals — particularly brokers — lie. That tripped up Heather Heckel, 33, an art teacher at a middle school in Port Washington, N.Y., who previously worked in Manhattan.

A broker left a notice in Ms. Heckel’s school mailbox about investments the broker was selling inside retirement plans known as 403(b)’s, which are similar to 401(k)’s. She signed on, and the broker transferred her retirement savings from a guaranteed investment that paid 7 percent — an exceedingly rare investment, available to New York City public schoolteachers — and moved it to an annuity with an annual fee of more than 2 percent. That was more than four times the fee that the average investor pays for mutual fund-type investments, according to Morningstar.

Article source: https://www.nytimes.com/2019/06/05/your-money/sec-investment-brokers-fiduciary-duty.html?emc=rss&partner=rss

What a ‘Living Wage’ Actually Means

Even so, her work was used to establish such a standard anyway. According to a 1955 survey by the United States Department of Agriculture, the cost of food accounted for a third of the average American family’s budget after taxes. So, using the Agriculture Department’s economy food plan as a baseline, her formula multiplied the cost of food by three. The resulting number became the federal poverty guideline in 1969. That initial number hasn’t been recalculated since. Instead, it has been adjusted according to the Consumer Price Index to match the rising cost of food.

As Ms. Orshansky said, this formula establishes a number below which American households are in poverty, but it doesn’t guarantee that anyone above it is not. It can’t account for things like the actual cost of housing or transportation, data for which was less readily available in the 1960s.

Fortunately, today there’s much more data available. In 2004, Amy Glasmeier, now a professor of economic geography and regional planning at the Massachusetts Institute of Technology, developed the Living Wage Calculator. This tool uses more specific data to gauge the basic needs of American families. It estimates the cost of food, child care, health care (both insurance premiums and typical health care costs), housing, transportation and other necessities.

Of course, a family in Los Angeles has different needs than a family in rural Iowa, so the calculator breaks down the data by region, all the way to the county level. It also takes into consideration a more realistic view of American families, with combinations of up to two adults and up to three children. Two-adult families are further broken down into households where either one or two adults work.

When you choose your county, you’ll see a breakdown of what each adult in your household will need to make per hour — rather than per year, since many part-time and hourly jobs aren’t salaried — in order to cover basic expenses. Below that, you’ll see a breakdown of what those expenses like food, health care, and transportation, which is helpful if any of these categories are more expensive for you than the national average.

Article source: https://www.nytimes.com/2019/06/05/smarter-living/what-a-living-wage-actually-means.html?emc=rss&partner=rss

Confusing Options May Be Coming to Your 401(k). It Could Cost You.

“The insurance companies won’t sell budget, simple immediate annuities — the kind most of us want,” said Teresa Ghilarducci, a professor of economics at the New School for Social Research and an expert in retirement policy. “They will sell variable annuities that are typically complicated and overwhelmingly expensive to be appropriate for most families.”

There is often little benefit to saving your money inside products like variable annuities over many decades because of the high costs, experts say, which leaves you with less money once you reach retirement.

Some employers, including United Technologies, have already experimented with complex annuities. After it closed its pension plan for new workers, the company created an option that invests a portion of workers’ savings in a variable annuity. And executives from the investment giant BlackRock said they were working on other ways to include guaranteed income streams in retirement plans.

“These next generation products need to be simpler, cheaper and more transparent,” said Dan Basile, head of product management for BlackRock’s defined contribution business. “That is where we are focusing our innovation efforts.”

[Read more about changes included in the retirement legislation.]

The legislation is intended to make employers — who must act as fiduciaries, and choose the best retirement plan options for workers — more comfortable embracing annuities. And as more states and employers struggle under the weight of their pension obligations and look for alternatives, they may increasingly look to annuities.

Employers have long been reluctant to include annuities among their retirement offerings because they feared being sued if an insurer could not make the guaranteed payments — something that could happen decades after affected employees left the company.

The legislation would assuage those concerns by adding a provision that protects employers from liability in such cases. If the insurer went insolvent, retirees would be able to seek redress from state insurance guaranty associations, which provide a backstop to their benefits up to certain limits.

Article source: https://www.nytimes.com/2019/06/04/your-money/retirement-bill-annuities.html?emc=rss&partner=rss

Confusing Options May Be Coming to Your 401(k). It Could Cost You

The proposed changes are part of H.R. 1994, the Setting Every Community Up for Retirement Enhancement Act of 2019, which passed the House with an overwhelming bipartisan majority on May 23. The bill would also allow small businesses to band together to create retirement plans and broaden the uses of college savings accounts. Leaders in the Senate are now pushing to take up similar legislation, which also has wide support and was first introduced in 2016.

[Read Ron Lieber’s simple annuity explainer here.]

Annuities can be part of a well-founded retirement strategy. Typically, workers invest in low-cost stock and bond funds to build a nest egg, then use some of that money to buy a simple annuity, which provides regular checks for the rest of their lives. Experts say some variation of this strategy is usually the most efficient approach to recreating a paycheck in retirement.

More complex annuities, like so-called indexed annuities and variable annuities, are less common in corporate 401(k) plans but could become more mainstream if the bills become law. These products are more lucrative for insurers because they tend to have higher costs in return for the extra features they add.

Equity-indexed annuities, for example, guarantee you won’t lose money — and if a certain index, like the SP 500, rises, the insurer will credit a portion of any return to your account. Variable annuities allow you to choose how to invest your savings and are often sold with so-called guaranteed lifetime withdrawal benefits, meaning you can receive regular checks and still have the option to take back some of your money.

But these features come with extra costs, which are often hard to decipher.

“The insurance companies won’t sell budget, simple immediate annuities — the kind most of us want,” said Teresa Ghilarducci, a professor of economics at the New School for Social Research and an expert in retirement policy. “They will sell variable annuities that are typically complicated and overwhelmingly expensive to be appropriate for most families.”

Article source: https://www.nytimes.com/2019/06/04/your-money/retirement-bill-annuities.html?emc=rss&partner=rss