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Friday Financial Five – March 11, 2016

Friday, March 11, 2016


More stimulus from the ECB

The European Central Bank initiated more measures in hopes of stimulating growth, delving deeper into negative interest rates. The ECB will also continue its bond buying program. However, president Mario Draghi definitely stated they wouldn’t drive rates down any lower while lowering growth forecasts. This was a clear indication that the ECB is concerned about the ability of Eurozone banks to thrive in the current interest rate environment. While markets initially cheered the prospect of more stimulus, the ECB president’s cautious statements led to largely flat domestic markets for the day.

Study focuses on driver of increased wealth inequality

Central bank influence may be linked to the increase in wealth inequality across the globe, according to a report  by the Bank for International Settlements. The thesis is that the ultra-low interest environment since the financial crisis created a situation where those who were already wealthy benefitted from a zero interest rate environment and inflated stock prices. Those with lower wealth, mostly tied to their homes, saw a significant decrease in home related equity followed by a recovery. The difference in growth between the wealthy’s stock and the less wealthy homeowner’s real estate equity resulted in an increasing gap in the wealth equation between haves and have-nots.

Reviewing credit card rewards programs

Credit cards make spending easy but to really maximize their use, consumers should capture spending data to track monthly expenses and pre-screen a card that will allow maximum cash back privileges. Nextadvisor provides one such comparative chart of cards that offer rewards, including providers such as American Express, Chase, and Discover. American Express tops the chart with the recently launch Blue Case Preferred®, where users can earn 6% cash back up to a cap at US supermarkets and unlimited 3% at select gas stations and department stores. Chase’s Freedom® and the Citi® Double Cash cards are also highly ranked.

401(k) plans are in favor

The number of people with a favorable opinion of the 401(k) plan increased again in 2015, according to the Investment Company Institute’s latest review. Almost three quarters of the households responding feel positively about the defined contribution plan. While that’s good news for the employers that offer the plans, it may also mean workers still aren’t entirely comfortable with the difference between defined contribution and defined benefit plans. That’s made it easier for companies to transition from one type of plan to the other, while substituting a less expensive match of employee contributions for the lifetime of income owed in the traditional pension structure.

Own a piece of the Yankees

A 1% ownership in the Yankees may be available, complete with limited input in any of the team’s operations. The asking price is based on a roughly $3 billion valuation, meaning a purchase price of roughly $24 million. The team is widely considered to be the most valuable sports team in the country, despite currently having a more closers than openers. Any transaction would have to be approved by the MLB and the Yankees. 


Dan Forbes, a CFP Board Ambassador, is a regular contributor on financial issues. He leads the firm Forbes Financial Planning, Inc in East Greenwich, RI and can be reached at [email protected]


Related Slideshow: Massachusetts Business Rankings

See how Massachusetts stacked up.

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Massachusetts has 2015's 28th highest insurance premium penalties for high risk drivers, according to a WalletHub report. 

Mass is behind Colorado and New Mexico who come in at 26 and 27 spots respectively while Mass is ahead of Tennessee and the District of Columbia who rank 29 and 30 respectively. 

Massachusetts ranks 14th overall in the category of DUI conviction annual premium increase with an amount of $756.

Massachusetts ranks 20th overall in the category of speeding over 20 mph annual premium increase with a total of $261 while ranking 21 overall in the category of  two accidents annual premium increase with a total of $1,364. 

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Massachusetts has been ranked as the 5th most eco-friendly state in the country, according to a recent study by WalletHub. 

Mass ranks tenth in environmental quality and fourth in Eco-Friendly Behaviors landing them in 8th overall. 

Mass is behind Minnesota and New York who are in the fourth and third spots respectively, and in front of Washington and New Hampshire  who come in at the six and seven spots. 

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The Economist

Small Business Friendliness Grade: D+

The Economist grades states on an A+ to F grading scale for its small business climate. Massachusetts ranks near the bottom of the nation, joining New Mexico and New York in receiving D+ grades.  9 states scored worse than a D+ in the Economist rankings. 

Overbearing bureaucracy and excessive licensing is stifling small business in America. 

Read More About The Economist Grade Here

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#25 CNBC

CNBC ranks each state in cost of doing business, economy, technology and innovation.

Massachusetts' unemployment rate as of May 2014 was 5.6 percent. The state added 9,100 jobs in the month of May.

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#13 Forbes

Forbes ranks each state in business costs, economic climate, and growth prospects.

The most damning in the commentary:

Massachusetts’ business costs, including labor, energy and taxes, are the highest of the 48 contiguous states—only Hawaii is higher—at 20% above the national average.

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#47 ChiefExecutive.net

ChiefExecutive.net ranks each state in taxations and regulations, workforce quality, and living environment.

The most damning in the commentary:

Taxation and regulation are always the key barometers. Massachusetts and Oregon are the worst.

Read More About ChiefExecutive.net Ranking Here

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Tax Foundation

#25 Tax Foundation

Tax Foundation ranks each state in corporate tax rank, sales tax rank, and unemployment insurance tax rank.

Massachusetts ranked #49 in unemployment insurance tax.

Read More About Tax Foundation Ranking Here

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Wallet Hub

#10 Wallet Hub

Wallet Hub ranks each state in ROI rank, state tax rank, and overall government services.

Massachusetts ranked #49 in worst roads and bridges, but ranked #7 in overall government services.

Read More About Wallet Hub Ranking Here

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#41 ALEC

ALEC ranks each state in economic performance and outlook.

Although Massachusetts ranked low in economic performance, a forward-looking forecast is based on the state’s standing in 15 important state policy variables. Some of these variables include top marginal personal income tax rate and sales tax burden.

Read More About ALEC Ranking Here

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Kauffman Foundation

#29 Kauffman Foundation

Kauffman Foundation ranks each state in entrepreneurship.

Entrepreneurial activity generally is highest in Western and Southern states
and lowest in Midwestern and Northeastern states.

Read More About Kauffman Foundation Ranking Here

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Free Enterprise

#18 Free Enterprise

Free Enterprise ranks each state in performance, exports, innovation + entrepreneurship, business climate, talent pipeline, infrastructure.

Massachusetts's reputation as a hotspot for science and technology endures in this year's rankings. The commonwealth is a center for STEM jobs and university research and development, ranking 4th and 2nd, respectively, in those two categories. It also ranks 6th as a center for high-tech establishments. Massachusetts is taking aggressive steps to bolster economic activity with high-impact university-industry R&D projects and new tools for tech-based startup companies.

Read More About Free Enterprise Ranking Here

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The Pew Charitable Trusts

#45 The Pew Charitable Trusts

The Pew Charitable Trusts ranks each state in job growth and job creation.

Massachusetts added 38,368 jobs in 2014.

Read More About The Pew Charitable Trusts Ranking Here


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