Prices for new and used vehicles have skyrocketed so much in the past year that interest rates may seem like an afterthought. But these rates are expected to rise, too.

The average interest rate on new car loans was 4.39 percent in February, relatively flat from a year ago, according to Dealertrack, which provides business software to dealerships. The average for used vehicles was 7.83 percent in February, down from 8.25 percent.

Car loans tend to track the five-year Treasury, which is influenced by the federal fund rate — but that’s hardly the biggest factor in determining the rate you’ll pay.

The rate a borrower qualifies for depends on credit history, the type of vehicle, the loan term, down payment and other factors. Borrowers with poor credit scores may pay 20 percent or more, while those with pristine credit might qualify for rates near zero, said Jonathan Smoke, chief economist at Cox Automotive, an industry consulting firm.

“There is far more variation in auto lending than in, say, the mortgage market because there are more credit types,” he added. “Anyone can get an auto loan.”

Though the typical car payment has reached its highest levels since 2012, the latest increase isn’t expected to make a meaningful difference — at least not yet.

“Car loan rates will move up as the Fed hikes interest rates, but it will be a nonissue for car buyers because it has such a limited impact on monthly payments,” said Mr. McBride, adding that the difference of a quarter percentage point on a $25,000 loan is $3 a month. “Nobody will need to downsize from the S.U.V. to the compact because of rising rates,” he said.

Article source: https://www.nytimes.com/article/federal-reserve-rate-increase.html

Because of the way rates are set on I bonds, people holding older bonds may be earning double-digit rates. An I bond rate has two parts: a fixed rate, set when the bond is issued, which stays the same for its 30-year life, and a variable rate, which is based on the six-month change of the Consumer Price Index and can reset twice a year, in May and November. The Treasury Department applies a formula to combine the two into a composite rate.

The fixed-rate component is currently zero — but it has been 3 percent or higher in the past. I bonds purchased through early 2001 are currently earning more than 13 percent, if holders haven’t already redeemed them, according to the government’s TreasuryDirect website.

The Treasury Department doesn’t disclose its formula for setting the fixed rate, Mr. Tumin said. But as the Federal Reserve raises its benchmark interest rate, it seems “more likely” that the fixed rate on I bonds could nudge up at the next reset in November, Mr. Tumin said.

I bonds are considered quite safe. While it’s possible that the combined rate could fall to zero (it has happened before), it’s guaranteed not to go below that — so you’ll at least get your initial investment back when you redeem the bond, according to the Treasury Department.

You can acquire up to $10,000 in I bonds per person, per year, on TreasuryDirect.gov. Plus you can buy up to $5,000 more using your federal income tax refund. (A couple filing a joint tax return can buy up to $25,000 per year.)

Article source: https://www.nytimes.com/2022/05/03/business/inflation-bonds-rates.html

Mr. Rogers, who ran an investment fund with George Soros and wrote the book “Investment Biker,” said he had briefly been a “skeptical adviser” on the project since he did not expect it to work. He added that he had never bought cryptocurrency, let alone via Mr. Hannum.

“I have never heard of him,” he told me by email. “This is all absurd.”

Mr. Hannum was somewhat connected to the failed venture: He worked at a marketing firm in Santa Monica, Calif., called Hawke Media that helped with it, according to Erik Huberman, Hawke’s chief executive.

I could find no evidence that Mr. Hannum had made any venture investments, let alone $100 million worth. And it’s not clear exactly how he found his way to ZenLedger. Pat Larsen, ZenLedger’s chief executive and a founder, would not get on the phone with me and did not respond to any of my emails. I also wanted to know if he had read the big Forbes profile, where Mr. Hannum described how he had been an early funder of ZenLedger.

Rob Ford, an outside spokesman for ZenLedger, tried to clear some things up. He said that Mr. Hannum did not invest in ZenLedger and that Mr. Larsen had not read the Forbes article. The company does not believe Mr. Hannum ever misrepresented the company itself, he added.

(The I.R.S. connection is real: ZenLedger has four contracts, totaling $509,600, under the corporate name Blockchain Analytics and Tax Software L.L.C. The agency said contracts generally remained in place until they expired. “However,” it added, “government contracts, including this one, are subject to ongoing review in accordance with federal contracting standards.”)

So how did Mr. Hannum end up at ZenLedger?

“Mr. Hannum was referred to ZenLedger through a professional relationship and was cleared by a federal background check with no flags regarding his education or work history,” the company’s statement said. “Once it became evident that he had misrepresented his education and work history, as well as the nature of his role with ZenLedger, his employment with the company was terminated that day.”

A check of federal records is never a bad idea when hiring someone, but it probably wouldn’t raise red flags about a person’s professional or educational background. So if ZenLedger wasn’t asking the right questions, what about its investors?

Article source: https://www.nytimes.com/2022/05/03/your-money/zenledger-dan-hannum.html

Some financial planners may use a similar rough starting point: Spend no more than 28 percent of your gross income on all of your housing expenses — mortgage payments, property taxes, insurance — and an additional 1 to 2 percent allocated for repairs and maintenance.

That won’t work for everyone, though, especially in high-cost metropolitan areas where it’s often hard to find rentals within those strictures.

“Take all of your monthly expenses into account and truly decide how much you want to put toward housing,” said Tom Blower, a senior financial adviser with Fiduciary Financial Advisors. “I would never encourage a client to strictly follow a percentage of income to determine how much to spend each month. Rules of thumb are guidelines and something to consider, but not the end-all, be-all.”

Adjust your expectations.

The rise in interest rates means many people have had to rein in their price ranges — by a lot. A family earning $125,000 that wanted to put down 20 percent and dedicate no more than 28 percent of its gross income to housing — roughly $35,000 — could comfortably afford a $465,000 home when the interest rate was 3 percent. At 5 percent, that figure shrinks to $405,000, according to Eric Roberge, a financial planner and founder of Beyond Your Hammock in Boston. His calculation factored in property taxes, maintenance and insurance.

He generally suggests allocating a conservative share of household income — no more than about 23 percent — to housing, but acknowledged that’s difficult in many places. “Our calculation for affordability doesn’t change,” Mr. Roberge said. “However, the big jump in rates changes what is actually affordable.”

There are other considerations. With many Americans moving from cities to larger spaces in the suburbs, you’ll also need to consider how much more it will cost to run and furnish that home, for example, or how much extra you’ll need to spend on transportation.

Article source: https://www.nytimes.com/2022/05/01/your-money/home-buyers-mortgage-rates-inflation.html

Some financial planners may use a similar rough starting point: Spend no more than 28 percent of your gross income on all of your housing expenses — mortgage payments, property taxes, insurance — and an additional 1 to 2 percent allocated for repairs and maintenance.

That won’t work for everyone, though, especially in high-cost metropolitan areas where it’s often hard to find rentals within those strictures.

“Take all of your monthly expenses into account and truly decide how much you want to put toward housing,” said Tom Blower, a senior financial adviser with Fiduciary Financial Advisors. “I would never encourage a client to strictly follow a percentage of income to determine how much to spend each month. Rules of thumb are guidelines and something to consider, but not the end-all, be-all.”

Adjust your expectations.

The rise in interest rates means many people have had to rein in their price ranges — by a lot. A family earning $125,000 that wanted to put down 20 percent and dedicate no more than 28 percent of its gross income to housing — roughly $35,000 — could comfortably afford a $465,000 home when the interest rate was 3 percent. At 5 percent, that figure shrinks to $405,000, according to Eric Roberge, a financial planner and founder of Beyond Your Hammock in Boston. His calculation factored in property taxes, maintenance and insurance.

He generally suggests allocating a conservative share of household income — no more than about 23 percent — to housing, but acknowledged that’s difficult in many places. “Our calculation for affordability doesn’t change,” Mr. Roberge said. “However, the big jump in rates changes what is actually affordable.”

There are other considerations. With many Americans moving from cities to larger spaces in the suburbs, you’ll also need to consider how much more it will cost to run and furnish that home, for example, or how much extra you’ll need to spend on transportation.

Article source: https://www.nytimes.com/2022/05/01/your-money/home-buying-mortgage-rates-real-estate.html

In one common type of seller-financed agreement, called a “contract for deed” or a land contract, the seller extends credit directly to the buyer, who typically does not receive the deed to the property until the loan is paid. Because buyers lack proof of ownership, their payments may not build equity in the property, and it may not be clear who is responsible for taxes and repairs. The loans typically lack foreclosure protections, so buyers who fall behind in payments may risk eviction and loss of their investment if they miss a payment.

“They come with very high risk,” said Mike Calhoun, president of the Center for Responsible Lending. “They are almost always a horrible idea.”

Nontraditional financing needs further scrutiny by policymakers, Mr. Calhoun said, particularly because buyers may be increasingly forced to consider it as housing becomes less affordable.

Home prices have surged because of a lack of available properties, and now mortgage rates are rising. The average interest rate on a 30-year fixed-rate home loan reached 5 percent in mid-April, the highest in more than a decade. Rising rates and prices combined with tight inventory “are making the pursuit of homeownership the most expensive in a generation,” the mortgage finance giant Freddie Mac said.

Manufactured homes offer a large pool of unsubsidized affordable housing, but risky financing and challenges with land ownership can undermine their potential as a solution to the housing shortage, Ms. Roche said.

The industry needs “more careful oversight and regulation,” Mr. Calhoun said, if it is to be a viable “mainstream” alternative.

Here are some questions and answers about alternative home financing:

Can alternative financing help people own homes?

Pew said more research was needed to quantify how often home buyers succeeded in securing title to their homes when using nontraditional financing. In a separate report, Pew said that “virtually nothing is known about the share of families that actually end up owning their homes when using these agreements.” But it also said available evidence “clearly indicates frequent poor outcomes.” A 2012 study that focused on low-income settlements in Texas, for instance, found that fewer than 20 percent of contract-for-deed buyers made the transition to a deed.

Article source: https://www.nytimes.com/2022/04/22/your-money/house-mortgage-alternative-financing.html

By comparison, putting $500 in a popular portfolio at the roboadviser Betterment costs just $1.25 a year (0.25 percent of the money invested, plus a tad more for the underlying investments). Ellevest, a roboadviser geared toward women, charges $12 annually for its most basic investment plan, and includes extras like online workshops and email courses from certified financial planners.

“There are cheaper options, and yet so many people just don’t invest, period,” said Treasury’s chief executive, Elias Rothblatt, who founded the service with Ivar Vong.

He said Treasury’s goal was to give users the nudge they needed to get started. “If you put $50 or $100 into a low-cost investment and that makes you feel like, ‘Oh, cool, I learned about investing,’ then that is a major win,” he said.

The service, which became available to the public in January, has drawn 2,000 users who have invested nearly $13.5 million. In 2021, it helped people invest $4 million of that during its private beta testing. More seasoned investors also see the appeal: Start-up funders, led by Bloomberg Beta, have put in more than $1.25 million.

Nearly 270 people took part in that February session. Ms. Dunlap started with a pep talk before diving into explanations dotted with metaphor. She likened buying shares of Amazon, for example, to “owning a grain of sand on Bezos’ beach.”

A little blue counter ticked away in the corner of the screen, tracking total dollars invested as participants made purchases, buying shares of investments like the Vanguard Total World Stock E.T.F., State Street’s Global Diversity Index E.T.F. and more. More than half bought something in that hour, spending roughly $120 each — a modest sum, but a meaningful first step.

“This is not TJ Maxx’s candle aisle,” Ms. Dunlap joked as trades piled up in the chat stream. “Please make smart choices.”

Article source: https://www.nytimes.com/2022/04/16/your-money/tori-dunlap-financial-influencers.html

Another company, Tutanota, has made a spate of mini-tender offers since last summer, soliciting shareholders of companies including PayPal, Adobe, Disney, Microsoft, Alibaba and Bank of America.

Its offer for PayPal was $125 per share — as long as the stock was trading above that price on the last day of the offer period. The offer also noted that Tutanota expected to extend the offer several times, “until the market price exceeds the offer price,” and that the offer was dependent on Tutanota’s “obtaining all financing necessary” to fund it.

PayPal, whose stock closed at $102 on Thursday, advised shareholders in a Feb. 25 statement to reject the offer. “PayPal does not endorse Tutanota’s unsolicited mini-tender offer and is not affiliated or associated in any way with Tutanota, its mini-tender offer or its mini-tender offer documents,” it said.

Tutanota, which describes itself as “a private investment company that specializes in investing in publicly traded securities whose value it expects to appreciate over a 12-month period,” couldn’t be reached for comment. No one responded to an email address provided in the offer, or to messages left at a phone number that was answered by a recording.

(A spokeswoman for Tutao, a German company that provides a secure email service called Tutanota, said in an email that it had “no affiliation with Tutanota L.L.C. whatsoever.”)

Companies can be in an awkward position when shareholders receive mini-tender offers. According to the S.E.C., companies must notify their shareholders of tender offers once they become aware of them. But because bidders in mini-tender offers aren’t required to notify the target, the companies may not know about them.

Here are some questions and answers about mini-tender offers:

How do I tell if an offer is a mini-tender?

Bidders generally don’t label their offers as mini-tenders, perhaps because of their dubious reputation. The S.E.C. advises reading the offering document carefully and checking with the bidder or your broker or financial adviser, if you have one. If the bidder is seeking less than 5 percent of the company’s shares, the S.E.C. says, “you’re dealing with a mini-tender offer, and you should proceed with caution.”

Article source: https://www.nytimes.com/2022/04/15/your-money/mini-tender-stock.html

“The barrier to many Gulf Coast L.N.G. projects hasn’t been government permitting but the lack of financial backing,” said Jason Bordoff, a founding director of the Center on Global Energy Policy at Columbia University. “But the Europeans sent a signal that they intend to sign more long-term contracts for L.N.G. supply, so this should help those projects reach final investment decisions.”

It isn’t only the financial backers that have been reluctant to fund new exploration and production. Shareholders have been demanding a bigger piece of the profits after years of lousy investment returns on energy funds. A typical investor who bought an energy stock fund five years ago would only recently have broken even, according to Morningstar Direct. So the energy industry has been focusing on shareholder returns rather than pouring profits back into its businesses, a strategy the markets refer to as capital discipline.

“Capital discipline isn’t just about which fields you’re going to drill,” said David Lebovitz, a global market strategist at J.P. Morgan Asset Management. “The new approach is going to the profitable fields and drilling five to seven wells, rather than 10. If you’re an energy company, you don’t want to overwhelm the world with oversupply.”

In the portfolios Mr. Maloney manages for clients, he includes the Vanguard Energy exchange-traded fund. This $8.3 billion fund had returns of 39 percent in the first quarter after a management fee of 0.1 percent. Exxon and Chevron are the top two holdings, with a combined weighting of 38 percent. Exxon’s shares grew 36.5 percent in the first three months of the year; shares of Chevron rose 40.1 percent.

Chevron has paused sales of certain chemicals and consumer products in Russia and says it does not have exploration or production operations there. It has a 15 percent stake in an oil pipeline that transports crude oil from Kazakhstan to a Russian terminal on the Black Sea, where shipments have continued uninterrupted. There, Kazakh oil can be blended with Russian crude, though Chevron has said its “efforts are carried out in compliance with U.S. law.”

Exxon, which has done much more business in Russia, announced on March 1 that it was leaving the country and would not make further investments there, “given the current situation.” It had been operating a major exploration project in Russia’s Far East known as Sakhalin-1.

Article source: https://www.nytimes.com/2022/04/08/your-money/mutual-funds-and-etfs/energy-funds-russia-oil.html

In an “alert” updated on Feb. 24, the I.R.S. warns FAFSA filers not to use the data tool if they filed their 2020 tax return and didn’t exclude any jobless benefits from their income.

“The concern is: Are colleges looking at inflated income?” said Brendan Williams, senior director of consulting at uAspire, a nonprofit organization that seeks to reduce financial barriers to college.

It’s unclear how many students may be affected. Millions of people received jobless benefits in 2020, but data isn’t readily available to calculate how many of them are also filing a FAFSA, said Kim Cook, chief executive of the National College Attainment Network, a nonprofit group that works on behalf of low-income and minority students.

The Federal Student Aid office has instructed college financial aid administrators to fix the problem if they become aware of it. But administrators may not be able to easily identify affected applications because they don’t typically see a breakdown of a family’s income, said Karen McCarthy, vice president of public policy and federal relations at the National Association of Student Financial Aid Administrators.

Students may be unaware of the issue and won’t know to ask about it, Mr. Chany said. “No one is tapping them on the shoulder,” he added.

What should families do?

If they had unemployment income in 2020 and filed their tax return before March 11 last year, they should contact their college financial aid office to discuss their concerns and have the jobless benefits removed from income on the FAFSA, said Mark Kantrowitz, a financial aid expert. Documents like Form 1099-G, which the government uses to report unemployment income, or unemployment verification letters can help show that students or their family received jobless benefits.

Students should also know that the federal government has encouraged college financial aid offices to use their discretion — “professional judgment” in financial aid lingo — to take into account special circumstances, including the loss of a job in the pandemic, to maximize a student’s financial aid.

Article source: https://www.nytimes.com/2022/04/01/your-money/college-financial-aid-unemployment-benefits.html