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(Money Magazine) — The stock market keeps taking a hammer to the conventional wisdom about retirement investing. Conventional wisdom, circa autumn 2007 (Dow 14,000): You could be retired for 30 years or more. You need lots of stocks so that your money will grow enough to last that long. Conventional wisdom, circa spring 2009 (Dow 7000): Holding too many stocks is a clear and present danger to your retirement plans. Save what’s left of your portfolio and shift toward bonds. You can’t afford to lose any more. Conventional wisdom, circa autumn 2009 (Dow back up to 9500): Wisdom? Forget it. The market falls, it rises — nobody knows why … Can we talk about something else? Think Favre will make it through the season? Even with the recent pop in stock prices, your 401(k) balance probably isn’t where you want it to be. There are at least two natural responses to the market whipsaw. You can embrace the new momentum, going aggressively back into stocks in the hope of catching up again. Or just check out: With the market so volatile, your chance at a comfortable retirement may seem dicey no matter what you do. According to a recent Vanguard study, 401(k) participants as a group changed their allocations only slightly during the 2008 bear market. Time to get constructive. The retirement you want may be more attainable than you think. Although you might have to save a bigger chunk of your income than you do right now, you also have resources beyond your 401(k), IRA, and Social Security. Your home, your ability to work a few years longer, a pension if you have one (even if it’s small) — all these can have a big impact on your future income. Once you see how much they are worth, you’ll be able to construct a realistic plan that doesn’t force you to take huge gambles. This story will show you what it takes to build up a sufficient nest egg with a conservative portfolio so that you can sleep at night even during volatile markets like this one. Your first task? Putting the long-term risks of stocks and bonds into perspective. 1. Know the risksThe stocks vs. bonds dilemma.When you’re saving for retirement, you have to strike a tricky balance. If you hold a lot in lower-risk bonds, your money won’t grow very fast. You have to let your savings do all the heavy lifting, which can mean accepting a diminished standard of living if you didn’t get a really early start. Even then, you may not have eliminated all the risk. With most kinds of bonds, a spike in inflation can erode the real value of your returns, leaving you with less to live on than you had saved. (That’s what happened to anyone who held Treasury bonds through the 1970s.) You can defend against rising prices with Treasury Inflation-Protected Securities, or TIPS. But their returns are modest — the real yield on a 10-year bond is 1.8%. Against that backdrop, “it’s very tempting to rely on stock returns as the silver bullet for your retirement plans,” says Boston University economics professor Laurence Kotlikoff. It’s also dangerous, he adds. Yes, over the long haul stocks usually do a better job than bonds of growing your nest egg. Since 1926 stocks have returned average gains of 9.6% a year, while corporate bonds have returned only about 6%, according to Ibbotson Associates. But as we’ve learned the hard way recently, those smooth averages hide a lot of wild swings over shorter periods. And if a deep downswing occurs when you are less than 10 or even 15 years from retirement, the consequences can be severe if you have a lot of stocks. “At that point it’s incredibly hard to increase your savings by enough to overcome the damage,” says Alicia Munnell of the Center for Retirement Research. In “You can’t handle the truth about stocks,” economist Zvi Bodie lays out his case for avoiding stocks entirely. But what if you’re willing to live with some risk, yet still want to dial back your exposure? What would you have to change if you decided to hold a portfolio split, say, 50/50 between stock and bonds? If you’re 50 years old, that’s cautious by many standards. A Vanguard target-date mutual fund designed for that age puts only 25% in bonds and the rest in stocks, working its way to 50/50 by age 65. Money’s usual advice is about 40% in bonds at 50. On many online retirement calculators, going to 50/50 in mid-career could point toward a higher savings rate than you may be accustomed to, easily in the 20% to 30% range. That shouldn’t scare you off — most of us have realized by now that the recent era of low savings was unsustainable. And amped-up saving may well beat the easy-seeming alternative of leaning on stocks. 2. Crunch the numbersWhy safety can improve your odds. Since stocks tend to beat bonds over most long periods, any projection of how a hypothetical nest egg will grow has a peculiar effect: It will look — at first glance — as if stocks are the safer bet. Let’s consider a hypothetical 50-year-old earning 100,000 a year, with 300,000 saved in his 401(k). Let’s assume he already ran a few numbers and decided he can live on about 1 million in retirement, which after inflation might work out to 1.65 million by 2024. He definitely has a ways to go. Running those numbers through the Retirement Planner, it turns out that a savings rate of 15% — plus a 3% 401(k) match from his employer — will give him an 8-in-10 chance of hitting his number. That’s if he has a portfolio of 70% stocks and just 30% bonds. Looks like a pretty good option. But now let’s say the volatility of the market has made him nervous and a bit disgusted, and he’s thinking 50/50. In that case, the calculator shows that his odds fall to a little more than 6 in 10. In other words, the conservative portfolio puts him at serious risk of falling short. (Like most calculators, ours makes some simplifying assumptions about the range of future returns and should be used only as a ballpark guide.) In order for our saver to improve his odds, he would have to save at least 22% of his salary, as you can see in the graphic (“Saving more helps aggressive investors,” top right). This is starting to look like a no-brainer: It’s a lot more fun to save 15% of income than 22%, and in both cases the odds of hitting 1.65 million are the same. So more stocks is the way to go, right? Not so fast. The odds we’ve looked at so far express only the chances that the saver will pass that specific 1.65 million finish line. But with the 70/30 portfolio and a 15% savings rate, his potential downside if he doesn’t make that mark is substantial. In one out of 10 cases, he falls short of his goal by 250,000 or more. With the 50/50 split and 22% saved, the comparable shortfall is just 193,000. And in one out of 100 cases, the stock-heavy portfolio falls short by at least 865,000, vs. 657,000 for the balanced portfolio. That could easily be the difference between leaving a small inheritance and dying flat broke. Suddenly, saving more in order to be a bit more conservative looks attractive. It increases your odds of avoiding a big loss. And of course saving more also ups your chances of success even if you stick with an aggressive allocation, as you can see in the chart (“Your goal is closer than it looks,” above, right). 3. Worry lessWhat if you just can’t save that much? If your budget is tight today and you just can’t find another dime to set aside — well, you’re not alone. But you should resist the urge to become really aggressive to make up for what you’ve lost. You probably have some other arrows in your quiver. Just one of the following can go a long way toward getting you to a comfortable retirement: A PENSION, EVEN IF IT LOOKS SMALL. Talk of the demise of traditional pension plans is so widespread that even the people who have them may not appreciate how valuable they still are. Roughly two-thirds of employees at large companies and more than 90% of people who work in local, state, and federal governments still have access to one. If you are over 50, the chances that you’re in a pension plan — or were vested at a previous job — are even higher. Say that our hypothetical 50-year-old was entitled to an annual pension of 12,000 at age 65. That sounds paltry — it’s less than half his Social Security take — but it means that instead of having to save 22% a year to go the 50/50 route, his minimum is closer to 17%. (See graphic “Your goal is closer than it looks,” above, right). YOUR HOUSE, IF YOU OWN IT. As lousy as the real estate market is today, your house should still add up to a very big asset if your retirement is a decade or more off. The simplest means of tapping equity in retirement is to move to a less expensive home and pocket the profit. A 100,000 gain could be converted into an annuity paying about 8,000 a year for life. Again, that would give you some leeway to tamp down your equity exposure today. WORKING A BIT LONGER, EVEN IF IT’S PART-TIME. You could work a couple of extra years beyond 65. That helps even if you make less than you did most of your career. The key is to earn enough to cover living expenses without having to dip into your savings or start collecting Social Security. For each year that you delay Social Security, your eventual payment is boosted 8%. And by the time you do retire for good, your nest egg will have grown larger, and you’ll have fewer years over which you’ll need to spread it. “The combined effect can have an incredibly powerful impact on your retirement lifestyle,” says Steve Vernon, an actuary in Oxnard, Calif. If our 50-year-old worked until age 67 instead of 65, he’d need to save only about 12% of his pay each year. ADJUSTING YOUR GOALS, WITHOUT REGRETS. If our hypothetical investor can’t get to 1.65 million without taking a risk of ending up with half as much, it may make more sense to aim for 1.3 million instead. There’s room to adjust: Many costs diminish as you age. Not only are your kids out of the house, but you may well have it paid off. Also, you are no longer setting aside part of your income for retirement savings. And while the first 10 or so years of retirement may be occupied with travel and expensive hobbies, people tend to slow down later. “The need to accumulate more clothes, more cars, and more technology diminishes,” says John Rekenthaler of Morningstar Associates. Other than the pension, counting on any of these factors could nevertheless be a somewhat risky proposition — your house may not be worth what you hope, you might not end up being healthy enough to work past 65, and you could be hit with big medical costs that increase your income needs. But stocks are risky too. The idea here is that if you think you’ll be able to tap one or two of these resources, you can make a conservative portfolio work even if you can afford only a moderate savings rate today. But by all means, save as much as you can. 4. Choose your toolsWhere to put your money. After you settle on your basic asset-allocation plan, there’s more you can do with your specific investments to ensure a higher return with less risk. EXPENSES AND TAXES: CONTROLLING WHAT YOU CAN. There are some easy ways to bolster your expected return without adding to your portfolio’s volatility at all. First, focus on lower-cost mutual funds. A low-cost index fund charging 0.2% a year has a built-in performance edge over the average stock fund worth almost 1.2 percentage points of performance a year. That adds up quickly. You can also shield your investment income against the very real possibility of higher future tax rates by putting at least some of your savings in a Roth IRA or Roth 401(k). With the Roth, you pay taxes on the money you put in but none when you take it out. BONDS: KEEP YOUR “SAFE” ASSETS SAFE. Compared with stocks, bonds may be low-risk, but they’re not no-risk. Bond prices can fall sharply when interest rates rise. Rates are low now, but there are plenty of concerns that they will rise significantly in coming years. “Stick with bonds that have maturities of no more than three years,” says Chris Cordaro, an adviser in Morristown, N.J. You also need to protect yourself against bond losses caused by defaults, so look at bond funds that concentrate primarily on high-quality issues, such as U.S. Treasuries, high-grade corporate bonds, and high-quality munis. A solid choice: FPA New Income (FPNIX), which is on the Money 70, our list of recommended mutual funds. A stake in TIPS, meanwhile, can protect you against an unexpected inflation spike. Two low-cost options for buying TIPS are Vanguard Inflation-Protected Securities (VIPSX) or going through the government directly at treasurydirect.gov. STOCKS: WHERE TO GET LESS RISK. Stock investing is generally bumpier if you buy equities that are expensive relative to their earnings and assets. “You don’t get rewarded for taking risk; you get rewarded for buying cheap assets,” says Jeremy Grantham, co-founder of the investment firm GMO. So if you are looking beyond low-cost index funds, consider managers with a value bent. Two solid Money 70 funds that hunt for blue-chip values: Jensen (JENSX) and FMI Large Cap (FMIHX). You can also focus on stocks that pay out dividends, which tend to be far less volatile than those that don’t. Consider the iShares Dow Jones Select Dividend Index ETF (DVY) for that. These funds, like all stock investments, will still give you plenty of ups and downs. But with a well-balanced retirement portfolio, you won’t feel so whipsawed. To see if your finances are in peak shape, take our retirement readiness quiz.

(Money Magazine) — You’ve probably spent a lot of time sweating over your 401(k) and IRA. But have you given much thought to the way Social Security will fit into your retirement plans? You should. In fact, Social Security provides 50% of the income for more than half of married retired couples and about 20% for high earners. Moreover, it’s the only source of income you’re likely to have that’s guaranteed to last for life and keep pace with inflation. But given the complexity of the Social Security calculations, it’s tough to figure out how to make the most of it. The amount of your monthly check will depend on when you retire, how much you and your spouse earned, and whether you work in retirement. “That makes it hard to plan,” says former Social Security Administration deputy commissioner Andrew Biggs. The following guide will answer those questions and give you strategies that can help you maximize your benefits. QUESTION 1: Can I count on Social Security to be there? You can. Despite what you may hear about the system going broke, the funds from workers’ payroll taxes will cover all retirees’ payments until 2016 even if no changes are made to the current program. After that the Social Security Administration can cover full benefits until 2037 by cashing in its Treasury bonds from the Social Security trust fund. And when the bonds run out, income from payroll taxes would be enough to cover about 75% of payments for decades. That said, the government is looking at ways to shore up the system. President Obama has talked about imposing Social Security payroll taxes on income over 200,000 (currently, earnings over 106,800 are exempt). Other possible fixes: upping payroll taxes, raising the retirement age, and scaling back payments in some way. The good news for anyone in or near retirement: “People 55 and over are likely to see no change or just a marginal change in benefits,” says actuary Bruce Schobel, who worked on the commission headed by Alan Greenspan nearly 30 years ago that fixed the system (at least until now). But even younger workers can rest assured that drastic cuts are unlikely. QUESTION 2: How much will I get every month? Like all things Social Security, there’s a complex formula involved. But essentially, the amount you’ll get at your full retirement age is based on your average lifetime earnings, adjusted for rising wage levels over the years. Depending on when you were born, your full retirement age varies between 65 and 67. Grab your payments earlier than your full retirement age, and they’ll be reduced: Wait, and you’ll get more. Spouses can also qualify for up to 50% of their husband or wife’s full retirement age payment; if that amount is larger than what you would get based on your own earnings, you’ll get the higher figure. Similarly, if your spouse dies, you would receive a survivor’s benefit of up to 100% of what your deceased spouse was collecting, if that amount is higher than your own payment. Divorced? You may still be eligible for spouse and survivor benefits as well. Your checks are also automatically adjusted for inflation each January. Payments increased by 5.8% for 2009. But given the near-term inflation outlook, the Congressional Budget Office estimates there may not be a cost of living increase for the next few years. QUESTION 3: At what age should I begin collecting? The majority of people take Social Security before full retirement age. But it often pays to wait. Just in terms of benefits accrued, if you have an average life expectancy or better, you’d probably come out ahead waiting for a larger payment that you won’t collect as long. More important, you’ll have a bigger check at an age when your retirement savings are diminished and you aren’t likely to be able to work to supplement your income. The math gets more complicated for married couples, however, since in addition to what they get from their own earnings, one of them may also qualify for spousal benefits and eventually collect payments as a surviving spouse. So married couples should aim to max out their benefits over both their lifetimes. Generally, the best strategy is for the higher-earning spouse to delay taking Social Security for as long as possible. That’s because survivor benefits are based on the larger of the couple’s checks. The lower-earner, meanwhile, should usually claim benefits earlier. That will often, though not always, provide the greatest amount of income as well as security in old age. QUESTION 4: Will I lose benefits if I work? It’s true that if you collect early and work at the same time, your payments may be reduced (once you reach full retirement age, feel free to toil away; your golf game might suffer, but there’s no effect on your Social Security). Your checks will be reduced by 1 for every 2 you earn over an annual limit, currently 14,160 (the hit is considerably less during the calendar year you hit full retirement age). But despite what you often read or hear, you don’t actually “lose” that money. At full retirement age Social Security will begin compensating you with a larger check for the benefits that were withheld. And you’ll receive that higher payment for the rest of your life. If you are reasonably long-lived, you’ll wind up collecting more — and you’ll have extra income from your additional years as a wage slave. Working in retirement can also up your payments in other ways. Your check is based on your 35 highest years of wages. If you work fewer during your career, your benefit will be adjusted to reflect any extra years of work. Even if you clocked all 35 years pre-retirement, you could still get a bump if your annual earnings during your golden years were higher than some years earlier in your career. QUESTION 5: Will my benefits be taxed? You thought Uncle Sam would cut you a break after retirement? Fat chance. Currently, about a third of Social Security recipients pay income tax on a portion of their benefits, and the Social Security Administration projects upwards of 42% of recipients will be doing so by 2018. To see whether you’ll owe taxes and, if so, to estimate what the bill might be, use our simplified worksheet (“Add up the tax bill,” above, right) or fill out the extremely detailed one in IRS Publication 915: Social Security and Equivalent Railroad Retirement Benefits, available at irs.gov. If you want to lessen the tax bite, there are a couple of options. One is to wait at least until full retirement age to claim Social Security, if you think that income from a post-retirement job could result in a big tax bill. Another way to avoid taxes is to pull money from a Roth IRA instead of a traditional IRA or 401(k). That’s because Roth withdrawals don’t count as income in figuring whether your benefits are taxable. So if you don’t already have money in a Roth, you may want to fund one or convert some of your traditional IRA to a Roth. After all, in retirement, you’re likely to need all the cash you can get.

(Fortune Magazine) — My parents were programming me to be a doctor, but I ended up becoming a lawyer. I got married during college and worked at night as a newspaper reporter covering police and courts.In a sense what led me to be a lawyer was my DNA — my father was one — and the work at the paper, which gave me an interest in the law. Be open to following an unlikely path. I [started out as a lawyer] with Akin Gump Strauss Hauer & Feld in their Washington office. In 1981 [D.C. powerhouse] Bob Strauss asked me to go interview for a job in the Reagan administration. I was a seven-year associate and close to being partner. I was wondering, “Will this mean I won’t make partner?” And then I thought, “I’m a Democrat. There’s no way I can work in this administration.” But I ended up becoming, at age 34, the deputy general counsel in charge of all the litigation and enforcement. I had over 100 lawyers working for me. Now I laugh because it turned out to be the best thing that ever happened to me. 0:00
/5:42Betting on energy and techGet to know one industry. I went back to the firm as partner 18 months later and helped start the U.S. Natural Gas Clearing House, which became Dynegy. Then I got picked by Ken Lay to run the gas pipeline business for Houston Natural Gas, later Enron. Four years later I got a call from a headhunter who was looking for a CEO for Public Service Indiana (PSI), the largest electric utility in the state. They’d just written off a 2.7 billion investment in a failed nuclear plant. We strengthened the balance sheet, then we proposed a merger with Cincinnati Gas & Electric. Another company launched a hostile takeover of PSI, which we fought off. We closed the deal, and I became the CEO of the new company, Cinergy. 0:00
/3:29Duke Energy’s nuclear pushIn 2005 we announced the merger of Duke and Cinergy, and I became the CEO of Duke (DUK, Fortune 500). So [the job in government] put me on a trajectory and in a set of relationships that I don’t think would ever have happened if I’d stayed at the firm. I might still be a partner in D.C. Instead I’ve been a CEO for 20 years. Secrets of my success• Keep on learning I’ve told my people that they need to go learn something they haven’t done before. I’ve been a journalist, a lawyer, a CEO. I didn’t learn to ski until I was 36. I’ve learned to scuba dive and fly-fish. It’s forced me to be an amateur and to learn to learn. It keeps you humble. • Listen to your detractors You need to listen to adversaries and understand where they are coming from. Then find a way to find common ground with them. After all these years of working with different groups, I’ve gotten comfortable with Mick Jagger’s idea that you don’t always get what you want, but you get what you need. • Read voraciously I think reading gives you new ways to think about old problems. I’m always sending books to my senior team, so I decided to buy them each a Kindle. When they’re on the road, they can read books and download newspapers and magazines. • Friend or foe Despite being one of the largest emitters of carbon dioxide in the U.S., Duke Energy joined USCAP, an alliance of environmentalists and CEOs lobbying Congress for a cap-and-trade bill to fight global warming. “I had been told that you can’t work with environmentalists,” says Rogers, 61. “That was bad advice.”

Source:CNN

NEW YORK (Fortune) — Dear Annie: Call me an old hippie (I served in the Peace Corps in the late ’60s), but I’ve always wished I could find a job that would let me make a decent living while also doing some real good for someone. I’ve volunteered for local nonprofits all through my finance career, but now that I’m “retiring” as chief financial officer of a medium-sized professional-services firm, I plan to keep working full time somewhere, and I want to do more for the planet. Do you have any suggestions? –Palisades PeacenikDear Peacenik: Your timing is terrific. As it happens, a crop of new venture capital firms (some of them started by people who got rich way back in the dot-com boom) are pumping money into startups that aim to earn a profit while also making the world a better place. One of these, a venture outfit called Good Capital, sponsors an annual conference to bring investors, employers, and job seekers like you together in one place (for information, see www.socialcapitalmarkets.net).”We call it ’social capital,’ a blend of the profit motive and the desire to make a difference, and these companies are expanding fast,” says Good Capital founding partner Kevin Jones. “They need people with financial skills, marketing expertise, manufacturing experience, you name it.”A few examples: Root Capital, headquartered in Cambridge, Mass., makes loans to small farms in the developing world that grow sugar, coffee, and vanilla. Just a couple of years old, Root Capital already has hundreds of millions in loans outstanding and 14 million in annual revenues.Another hybrid of nonprofit and for-profit enterprise, Washington, D.C.-based Kaboom, started with the mission of putting a playground in every urban neighborhood in the U.S. and is now launching a for-profit spinoff that makes a playground-in-a-box.Better World Books, growing at a 30% annual rate this year, has seen its revenues jump from 4 million to 31 million since 2005. The company, based in Mishiwaka, Ind., resells used books that volunteers gather from libraries and universities. Most of the profits — 6.5 million so far — go to literacy programs around the world; Better World Books also claims to have saved over 20 million books from landfills.”Everyone in this field is applying business discipline to create social change,” says Arun Gore, a principal at Gray Ghost Ventures in Atlanta, which backs social-capital startups. In his previous career, Gore was the chief financial officer for joint ventures at T-Mobile. “As investors, we do want to see a profit, but the approach to issues is completely different,” he says. “In a corporation, the only goal is to make money. If an enterprise wasn’t profitable [for T-Mobile], we’d wrap it up and get out. Here, even if we don’t stay on as investors, we try to help the startup survive these tough times and get on its feet.”One investment, a 50% stake in an affordable-housing company, didn’t pan out financially, but Gray Ghost is still working with the founders to turn it into a going concern. “You look at the long-term impact on the community, not just the short-term gain or loss,” says Gore, adding that joining a social-capital startup isn’t for novices: “You need fairly strong financial and operational skills to do this.”You also need to be willing to take a pay cut and do without the infrastructure and amenities that big corporations usually provide. John Ujda joined Better World Books five months ago as vice president of marketing in Atlanta, after a long career at Primedia, Earthlink, and elsewhere. He took a 15% pay cut and notes that “our nonprofit literacy-campaign partners get paid first, so sometimes profitability for us is a challenge. Money doesn’t flow quite so freely as in a purely for-profit company.” Still, he says, he loves what he’s doing and calls promoting literacy “a great get-out-of-bed factor.”Kate Tierney couldn’t agree more. Former head of sales for the 1.2-billion-a-year Western region of giant food wholesaler United Natural Foods Inc., where she had 12 direct reports and 80-odd sales associates under her, Tierney just started her new job as national sales director for San Francisco-based AlterEco. AlterEco imports organic food products from small farmers in developing countries. It has five U.S. employees.”The nimbleness of such a small organization is great,” Tierney says. “You make a decision and it happens. I also love knowing that my job directly affects a small farmer in Bolivia, or an olive grower in Palestine, and his ability to feed his family and educate his children. Waking up with that in mind every day is just a fantastic feeling.”Like Ujda, Tierney took a big pay cut to do this, but she’s adapted: “I eat out a lot less, and I planted a garden. I get a thrill out of eating stuff I grew myself.”Talkback: Have you ever considered leaving the corporate world to work for a nonprofit, or a “social capital” startup whose main purpose is to help others? Do you “do good” at work? Do you wish you could do more? Sign on to Facebook below and tell us.

Source:CNN

(Money Magazine) — 1. The new rules don’t guarantee accuracy After the bust, lenders came under fire for pressuring appraisers to inflate property values. Now banks are largely required to work with independent appraisers, which should help fix the problems that may have led buyers to overpay. If you’re the owner and want to sell or refinance, however, it’s up to you to make sure your home isn’t mistakenly valued below your sale price or loan limit. That’s because appraisal-management companies tend to hire workers who can get the job done quickly and cheaply, rather than those who know the area best. “Appraisers say they’re under pressure to crank out reports,” says Albuquerque mortgage broker Walt Vieira. 2. Detective work may pay off If you’re selling or refinancing, a key factor in your home’s valuation is the recent sales prices for houses that are comparable to yours. But your appraiser may not know if there is some unusual circumstance behind those numbers, such as a divorce or a job relocation. So ask a real estate agent to help you ID recent comparable sales in your area and try to get the scoop on the circumstances from your neighbors. Most appraisers will appreciate extra information, says Michael H. Evans, a fellow of the American Society of Appraisers. 3. Curb appeal can boost your numbers Appraisers don’t give out grades for stellar housekeeping, but the appearance of your home nevertheless has some influence on their final number. “We’re only human,” says Evans. So before the appraiser arrives, prepare your home for the evaluation the same way you would for an open house. At a minimum, mow the yard, shine the windows, tidy the closets, and pick up stray clutter from the floors. “The job of the appraiser is to look at the house through a buyer’s eyes,” says Leslie Sellers, president-elect of the Appraisal Institute. 4. Point out your home’s best features An appraiser who is under time pressure can’t be counted on to notice and research every detail of your house and neighborhood. So before he gives your home a once-over, hand him a typed list of its best attributes. Key things to note: any recent upgrades or improvements in the house itself, such as custom woodwork or new windows, perks of your particular property, such as striking mountain views or mature landscaping, and the benefits of living in your neighborhood, such as access to top schools or public transportation. 5. It’s okay to fight back after the fact Request a copy of the final report when it’s done; lenders are required to give it to you. Check for errors in key stats, such as square footage, and make sure that the comments portray your property accurately. If you find a mistake, call the appraiser directly and ask him to recheck his work. If he’s not willing to make changes, take your complaint to your state’s real estate appraisal board, says Sellers. It’s also worth letting your bank or broker know about your gripe, but remember, under the new rules they can’t meddle with the appraisal directly.

Source:CNN

(CNNMoney.com) — Matthew and Marnie Brannon, co-owners of Midwest Fiat in Columbus, Ohio, have run their vintage Italian car parts and service shop for five years. Late last year, they were offered the chance to buy a competitor and expand their business — but no bank would lend them the money to do it. After a grueling six months of hacking through red tape and warding off scam lenders, the Brannons finally get their financing. Here’s how they did it.December 2008: We had been interested in acquiring a Georgia-based Fiat parts company for months. Between Christmas and the New Year, the owners of that company offered us a purchase price on terms we liked. But the offer, they said, would expire in 90 days.We got to work right away, running the numbers for their company and ours, locating a property in our area that would support a much larger company, and putting together a presentation for lenders. The binder we assembled was 300 pages, opening with our elevator pitch. We also included a PowerPoint presentation on our business, spreadsheets full of our company and personal financial data, and a detailed financial forecast. We knew we’d need to borrow about 110,000 to both make the purchase and operate the business for the first few months after the deal.February 2009: Our first major mistake was assuming that the loan process would be as easy as getting a mortgage. We thought it would be quick, because we were so well-prepared.We approached one bank at a time, waiting weeks in between each for an answer. Every time, the result was the same: A loan officer explaining that although our presentation was the best they’d seen, they weren’t willing to work with us.March: The deadline was looming. After being rejected by three banks, we e-mailed the company in Georgia to explain that we were working very diligently to secure lending, in the hopes that they’d keep the offer on the table. Then we took a shotgun approach and sent the binder to two more banks at once. One rejected us, but the other took interest. We went in for a meeting and the loan officer said he could try to get us a Small Business Administration (SBA) loan.At the very end of the month, CNNMoney.com interviewed us and ran a story describing our situation.April: About 30 individuals contacted us following that story claiming to be able to help us. Some emailed, some called. But none were known, reputable lenders. For starters, they came from far and wide. Why would we want to work with someone from Nevada or L.A.? And also, their means of getting us money — from a reverse mortgage on our house to attaching liens to our merchant services — were too unconventional for our tastes.As far as we could tell, they were all snake oil salesmen — with the exception of one guy from Columbus who facilitates loans and financing at much larger companies. He had connections at a bank that he thought would be interested in our business. He wanted to meet for lunch to discuss — no strings or personal involvement attached. It’s beyond us why he took the time to introduce himself, but we were thrilled that he did. After a lunch meeting, where we of course presented our trusty binder, he pulled out his phone. It took only one phone call for us to get our foot in the door at a commercial financing institution in Columbus. It was a small lender that had been around for five years or so, but we hadn’t heard of it before.They were much more responsive to us, and moved faster, than any other potential lender that we’d talked with. The rest of the month was full of meetings. We filled out paperwork and answered detailed questions from the lender. The loan officer even came by our shop to survey how we operate. We always made sure that when there was a request for a document, we got it to him immediately.May: We got written and verbal approval for the loan on May 5. The company we wanted to buy was still game to move forward with the sale, but because it had been so long since the original offer, we had to go back and renegotiate for the inventory — they’d kept selling while we were hunting for the financing, so what remained for us to buy had changed.The owners pushed back and were reluctant to update their profit and loss statements. That delayed the process. Plus, a number of new searches had to be done to ensure our potential acquisition didn’t have any outstanding debts.The following six weeks was the most gut-wrenching period for us. All the pieces hung in a delicate balance.The bank kept asking us when we were ready to close. The other bank, the one that was working on an SBA-based solution, contacted us mid-May to announce approval as well, and also began asking when we were ready to sign. We had to finalize the sales contract by gently marshalling all of the stakeholders — the sellers, counsel on both sides, accountants, and so on — some of whom seemed to have little sense of urgency. Because of the delays, we had to continue paying non-refundable deposits on the property for the new warehouse, while persuading the landlord that we were close to sealing the deal. We also needed to line up new insurance policies and perform lien searches to satisfy the lenders.We worried that if any of the main components — the sales contract, the loan, or the property — fell through, all our work would have been for naught.Finally, the sale was completed.June: As we prepared the loan documents, the bank’s lending officers were wringing their hands over the collateralization. In the end, everything but our wedding rings was on the line, from our properties to our life insurance. Our friends thought we were crazy, but we decided to take the leap.On June 22, we signed on the dotted line and got a loan that would both cover the purchase and carry us through our nascent months.Oh, and that day we were finally able to withdraw our application from the bank that had expressed an interest in giving us an SBA loan in March. We had kept it open as a backup option in case our current deal went kablooey.July: Our epic journey hasn’t ended — it has just begun.As tired as we are, we’re running on adrenaline to get the shop up on its feet. We just finished transferring inventory from Georgia to Ohio. In a few days, we’ll be hiring two new employees, and we plan to add another three by the end of the year. We also plan on making our Web site more professional to reflect our new company.Our friends who doubted us now rethink our decisions when they see the sheer amount of stuff we have and the new, amazing space. They finally see the vision that we had all along.

Source:CNN

(Money Magazine) — Fear and greed. Those are the emotions that rule the markets, and changes in stock prices simply reflect the swing of the pendulum between the two extremes. Only lately the swings have arrived with more violence than a Transformers movie. First came fear, specifically of a financial system meltdown. That triggered one of the sharpest stock selloffs in history last fall as banks lost confidence in one another, institutional investors started dumping assets and highly leveraged hedge funds unwrapped their positions to raise cash. When it was all over, the Standard & Poor’s 500 had lost 45% in six months. Greed reappeared in the spring, as bargain hunters swept into stocks at the first tentative signs the crisis might be easing. That led shares to surge 39% from March to June, the best three-month gain in the S&P since 1933. In recent weeks prices have retreated again. Who can blame you if you’re feeling whipsawed and now wonder, What’s next and what am I supposed to do about it? And therein lies the real problem: Crazy markets can drive you to do dangerous things. Warren Buffett calls fear and greed “super-contagious diseases.” If you catch either one, you risk serious damage to your financial health. Exhibit A: In the two months following the collapse of Lehman Brothers last September, shareholders unloaded a staggering 120 billion of their stock funds – more money than had flowed into those funds during all of 2007 and 2008. But selling at that point merely turned paper losses into real ones, and kept many people on the sidelines when stock prices took off again. Exhibit B: During the first two months of the spring rally, investors flocked to high-risk stocks, plowing more money into emerging-market funds than they put into U.S., European, and Japanese stock funds combined. Clearly they had short memories or very forgiving natures, since those funds collectively lost about two-thirds of their value – far more than the average stock – during the market’s most recent swoon. This renewed appetite for risk doesn’t seem to be letting up, either among the pros or individual investors. “No respectable fund manager likes being beaten by a rising average,” says York University economics professor Jonathan Nitzan. “So you get ‘panic buying’ – a frenzied attempt to jump on the bandwagon before the really large gains are gone.” Meanwhile, in a recent CNNMoney.com survey, more than half of the 40,000-plus respondents reported that they planned to add to their stockholdings over the next few months, and nearly one in five intended to do so aggressively. Greed trumps fear, at least for now. But just because everyone else is lining up for the roller coaster doesn’t mean you should too. The ride will inevitably be rough, and you could get hurt. Instead, you need a strategy to keep you on a steady course – that is, a way that you can profit from the fear and greed of others without being sucked into it. These actions should help. 1. Don’t try to know the unknowable When TV’s talking heads and all the “smart” people you know start crowing about a particular strategy – whether it’s loading up on growth stocks or running for cover in cash – you naturally assume they know something you don’t. You probably also subconsciously place more weight on recent events, and so figure that whatever the current trend is, it will probably continue – if stock prices are rising, you’re apt to think they’ll continue to rise for at least a while more, and vice versa. Behavioral financial specialists have dubbed this phenomenon recency bias. The rub: Neither assumption is true. The experts don’t own a crystal ball, and past performance is no guide to future returns. Remembering that can help keep you grounded when emotions are running high in the market. Like now. Judging by the massive inflows into stock funds lately and the sharp price gains of the spring, you might conclude that values will keep rising for a while, especially since the threat of a collapse of the financial system seems to have passed. Yet history shows that prices are more likely to pull back following big rallies off bear market lows. Looking at similar advances over the past 50 years, Sam Stovall, chief investment strategist at Standard & Poor’s Equity Research, found that, on average, stocks subsequently lost 7%; if the rally came after a “mega-downturn,” prices dropped 14%. If that happens again, stocks would ultimately give up about half of their recent gains. As for where stocks would go after that, the outlook is murkier. History suggests further gains ahead: Over the past century, the average big rally in a period of generally falling prices saw the market rise 64% in 18 months; if the rally turned out to be ushering in a new era of generally rising prices, stocks shot up more, 110% on average, over nearly three years, according to Ned Davis Research. But history is a spotty guide at best. And the current financial downturn, the deepest since the Great Depression, is hardly typical. The staggering amounts of money that the U.S. and other governments have been pouring into the recovery effort are so unprecedented that you are “reduced to guesswork” when it comes to gauging how effective they’ll be and what impact they’ll have on the markets, says veteran money manager Jeremy Grantham. The moral: Forget trying to divine the unknowable (like the future direction of stock prices or how long a bull or bear market will last). And don’t believe anyone else who appears to know the outcome either. 2. Focus on what can go wrong, not rightWhen greed is gripping the market, the question that typically drives investment decisions is, How much money can I make on a particular stock, or can I make a killing by placing a bigger-than-usual bet on a hot sector of the market? A better question to ask: How much money could I lose? Look at what can happen, for instance, if you make an outsize bet on stocks. T. Rowe Price crunched the numbers for a 50-year-old with 175,000 in his retirement account who decides to shift his entire portfolio into stocks. (The researchers also assumed the investor contributes 15,000 a year to the plan, adjusted annually for inflation.) While the investor typically had more money in his portfolio by age 65 than he would with a more conservative mix, 15% of the time he actually ended up with less. And even when he came out ahead, the additional profit was often quite modest – typically about 50,000 on a portfolio of nearly 1 million. “It’s tempting to focus on what you’d get if you hit a home run, but the additional risk you take with a concentrated stock portfolio just isn’t worth it,” says Christine Fahlund, senior financial planner at T. Rowe. Making matters worse, the big stock bet would be far riskier on a year-to-year basis than other strategies. The most common measure of portfolio risk is standard deviation, which tells you how much an investment’s short-term returns bounce around its long-term average. Since 1926 stocks have returned average gains of 9.6% a year, with a standard deviation of 21.5 percentage points, according to Ibbotson Associates. That means that about two-thirds of the time, the annual return on stocks landed 21.5 percentage points below or above the average – that is, in any given year, your results would range from a 12% loss to a 31% gain. You’d need either an iron stomach or a steady supply of Zantac to stay the course. And if you happened to be at or near retirement when one of those really bad years hit, you might have to rethink your plans. Running for cover when fear overtakes the market turns out to be a losing proposition too. True, you’d avoid the wild ride: Ibbotson found that returns on an all-bond portfolio typically fluctuate less than eight percentage points off the long-term average annual gain of about 6%. But you’re likely to end up with a lot less money – about 15% less than you’d earn over 15 years with a more diversified portfolio, according to T. Rowe, and possibly 30% less. That’s a big hit, especially for anyone close to retirement. Moreover, these results assume a 3% inflation rate; if inflation were to rise – a scenario that could come to pass, given the country’s massive budget deficit – the all-bond portfolio would lag even further behind, since bond prices typically get hammered when the consumer price index shoots up. NEXT: Make fear and greed work for you12

Source:CNN

NEW YORK: Big businesses are battling to take home chunks of the government’s billion-dollar stimulus pie and AT&T is among the leaders on the telecom front.That comes as little surprise, given its size and resources. AT&T (T, Fortune 500) is by far the nation’s largest telecom company, racking up 124 billion in sales last year. That’s nearly double the revenue logged by its closest competitor, Verizon (VZ, Fortune 500).AT&T also has a huge client base, which includes some of the largest federal and local government contracts. The company has been using that base as a springboard to search out more projects, especially as the consumer side of its business slumps in the recession.”Every conversation we have with federal agencies is about stimulus dollars and how we can help,” said Don Herring, senior vice president of AT&T Government Solutions. The process. AT&T has vast resources and is not afraid to use them. “We have full teams, assigned to every agency in the federal government, who try to better understand the nuances of every agency’s mission and what they need,” said Herring. “On a weekly basis, we’ll say, ‘Here’s another idea about how you may want to do something.’”Requests are coming from clients as well.”Customers have been asking us how we can help them meet their technology and infrastructure modernization goals for stimulus,” said Sherry Charles, AT&T’s vice president of Wholesale and GEM Solutions. “It helps that we have longstanding relations with our customers.”0:00
/2:30Stimulus stumbleThe company said the process is identical to how it goes about hunting for other government contracts, which AT&T said is a roughly a 65 billion business for tech firms annually. Sometimes agencies give projects a direct go-ahead, but more often they request formal proposals so projects can be opened up for broader bidding. So far, the stimulus process has been slow going, Herring said, with only some of the basic infrastructure funding trickling out. AT&T’s first stimulus-related contract came about through a prior relationship with a client: 419,000 to upgrade circuits in several Social Security Administration offices across the country. It’s small relative to the 14.3 billion in stimulus funds already awarded to companies. But Herring noted that the vast majority of stimulus projects (more than 250 billion worth) have yet to be funded, and when the money begins to flow faster, AT&T will be well-positioned to be a part of bigger contracts.Charles said the company is a good candidate help hospitals integrate electronic health records, which is being funded with 20 billion of stimulus money. AT&T has already signed a contract with the state of Tennessee to custom build a virtual private network for e-health information exchange, she added.AT&T is also working hard to get involved with broadband services in rural America, smart grid wiring, and other health IT programs.”It’s still way to early to tell how AT&T will do, but they’re going to compete,” said Warren Suss, founder of Suss consulting, a federal IT and networking consultancy firm. “The battle is on, and it is still to be determined who’s going to come out on top.”Size matters. The company said its mammoth size gives it a leg up on some of its competitors, as AT&T is one of a very small handful of companies that offer practically every telecom service, including wireless, broadband, telephone and networking solutions.”Agencies want one place to go, with one network and one carrier,” said Herring.Analysts say big firms like AT&T are more likely to get stimulus funds than smaller competitors, as they have the resources to quickly act on a wide array projects and have the infrastructure to bid on a large number of contracts.”AT&T has positioned itself well as an aggressive competitor for stimulus,” said Suss. “This isn’t an inexpensive game — it takes a lot of resources to go after these big federal deals.”Experience counts. AT&T has been working on government projects for years, and at one time, it was the only game in town. AT&T was a monopoly until the mid 1980s. In fact, it wasn’t until 1989 that the government opened up its first telecom contract to a company other than AT&T, when 40% of the government’s communications contracts were awarded to rival Sprint (S, Fortune 500), giving “just” 60% to AT&T.AT&T struggled through the 1990s. And when those big federal telecom contracts were up for renewal 10 years ago, the company was completely left out for the first time ever. But since then, AT&T has clawed its way back to the lucrative federal sphere, gaining scores of federal networking contracts with 20 different agencies when they were again up for renewal in 2006. “AT&T’s star is rising,” said Suss. “It has won many of the major battles … and has been very aggressive with pricing.”
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Source:CNN

(Fortune Small Business) — As an undergraduate at Cornell University, Lyle Small annoyed his housemates by spending days on end painting their Ping-Pong table in rainbow shades of ink. He brewed chemicals to create inks that changed hue when exposed to light and heat. “I got obsessed,” says Small, now 41. “I thought all printing inks should change color.” Two decades later his passion is paying dividends. Small’s Colorado Springs company, Chromatic Technologies Inc. (CTI), is booming while rivals in the ink industry are cutting back. Music distributors, foodmakers and the beer giant MillerCoors are using Small’s color-changing ink to make their packaging stand out. CTI landed 120 new customers in 2008. Small expects sales to double this year, to 10 million. Thanks to CTI’s ink, the mountains on Coors Light cans turn blue when the beer reaches optimal drinking temperature (roughly 43-50F). Coors (TAP, Fortune 500) already used color-changing ink on paper labels for bottles, but the brewer had struggled to find a contractor that could create the same effect on cans. “CTI is the only one that delivered,” says Ray Toms, a MillerCoors scientist who worked on the project. MillerCoors signed a two-year contract to buy all of its ink for cans from CTI. The beer company will account for 40% of Small’s revenue this year. The deal took persistence. When CTI first approached Coors in 2001, Small couldn’t guarantee that the ink would work in high-volume production. Coors printed 20 million cans of Coors Light every day; any downtime would be costly. So Small arranged painstaking tests in canning factories in eight countries. Three years later he was ready to ink a deal. The brewer’s faith has paid off. Amid flat beer industry sales, Coors Light saw 3% growth this year. The color-changing artwork is prominently featured in the company’s TV ads. “It’s resonating with consumers,” says Benj Steinman, publisher of Beer Marketer’s Insight. In May, CTI announced another high-profile deal, this time in the music industry. Chickenfoot — a rock supergroup fronted by Sammy Hagar — signed with CTI to use its ink on the band’s debut CD. Song titles and images of the band members appear on the cover when it’s exposed to heat or light — or merely touched. “The band is just loving it,” says Todd Gallopo, who designed the cover and owns Los Angeles design firm Meat and Potatoes. “Specialty packaging is where it’s at” — especially in an industry with slipping CD sales. CTI also produces inks that glow in the dark, change color in the sun or transform when tilted in the light. For a recent sweepstakes, Dairy Queen used CTI’s ink on its Blizzard cups; when placed in sunlight the cups revealed whether they were winners. More recently CTI signed deals with Hite beer in Korea, Carlsberg beer in Hong Kong, Skol beer in Brazil and Pizza Hut in New Zealand and Mexico. This year’s mission: Expand international operations to 50% of the company’s business by tackling customers in India, Japan, Malaysia and Russia. Small says his six-person sales staff has been able to close deals with foreign brewers in six months — half the time it takes in the U.S. The MillerCoors deal seems to have opened a lot of doors, and the color-changing sunlight is shining in.
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Source:CNN

(Fortune Magazine) — We had a vacation house in Newport Beach, Calif., so I was always in and around the water and loved to surf. My dad was an importer, and on a trip to Japan he brought me home a movie camera. I started filming surfers at the local beach and then editing and splicing my own little surf movies. When I went to the University of Southern California’s school of business, I helped pay my way by showing surf movies up and down the coast for 1 a ticket. ” Look for a product that’s proven.I thought I’d just bum around for a year or two and then get serious about life. I started traveling to go surfing and ended up in Bali in 1974. I met Jeff Hakman, who’s a very famous surfer. We became good friends, and he invited me to spend time on the North Shore. He knew about these shorts coming out of Australia called Quiksilver (ZQK). He also knew Alan Green, the guy who designed them, and Alan sold us the rights to Quiksilver in America in 1976. ” Do it yourself.Jeff and I started buying the fabric and getting the shorts sewn one at a time. I put the snaps in every pair, Jeff would iron every pair, and then we’d put them in the back of my Volkswagen van and drive up and down the coast to sell them. By doing that we built relationships with surfers who owned local shops that are now larger accounts.0:00
/0:54H&M: Profit is in fashionFind a niche.Most people didn’t sell [surf] clothing back in those days, only boards and wax, so we were really different. The marketing was easy: Give free pairs of shorts to hot kids who surfed. That’s the grass-roots methodology that we continue to use. Don’t listen to the naysayers.Early on when I told my father about Quiksilver, he said, “I spent all this money on education, and you’re going to go and make surf shorts?” Thankfully, I proved him wrong.
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Source:CNN