Friday Financial Five – March 7th, 2014
Friday, March 07, 2014
The UK equivalent of myRA
It’s nice to have another country act as the test case for ideas with national implications. The myRA savings account shares similarities with another government sponsored retirement plan. The United Kingdom has the NEST (National Employment Savings Trust), meant to be offered by companies without a better option. It was introduced in 2008 in response to the decline of traditional pensions and should be fully operational by 2018. Workers put away 4 percent of their paycheck, the company matches 3 percent, and the government will add 1 percent. Unlike myRA, which invests in government bonds, the NEST allows for a more diversified investment selection.
ETF.com provides information on exchange-traded funds
The average investor continues to get more comfortable with exchange-traded funds. For those interested in learning more, ETF.com is a resource which can provide a wealth of information for different investment options, including issuers, inception dates and expenses. The site also provides an evaluation system based on efficiency, tradability, and fit. Efficiency details how well the investment fits its core premise, tradability refers to the available market, and fit is meant to relate the ETF to a broad market benchmark.
Keeping an eye on Europe
The situation in the Ukraine presents geopolitical issues, but it also reminds us to note Europe’s financial stability as a whole, a situation that not long ago threatened a global shake-up. Output is increasing but the recovery lags the rest of the world and the threat of a deflationary environment persists. The fear is that the conflict will lead to additional instability, including possible energy disruptions.
Computerization and the American worker
Technological advances continue to change the landscape for the American worker. The Financial Times highlights an Oxford study in which it’s estimated that over 40 percent of Americans have jobs threatened by computerization. The hope is that the ability of computers to perform lower skill tasks will push humans into higher capacity work. If that’s not intellectually feasible, it could lead to large segments of the work population that simply get left behind.
Group calculates state pensions are 75% funded
While the focus on pensions continues across the country, a recent study indicates increased strength in pension funding levels, at least on a national level. According to the study by Wilshire Consulting, last year’s stellar market performance helped increased funding levels to 75 percent, a 3 percent increase over the year before. This also represents an 11 percent gain from the low in 2009.
Dan Forbes is a regular contributor on financial issues. He is a CFP Board Ambassador. He leads the firm Forbes Financial Planning, Inc in Providence, RI and can be reached at [email protected].
Related Slideshow: 10 Historically Bold Moves Made By Big Companies
10. RJ Reynolds
The Smokeless Cigarette
In 1988, long after the American public wised up to the dangers of cigarettes, RJ Reynolds launched the Premier cigarette. They called it a “smokeless nicotine delivery mechanism that looks and feels like a premium cigarette.” It didn't. Smokers said it tasted like charcoal, and drug users quickly figured out how to use it to smoke crack. It has been reported that RJ Reynolds lost $1 billion on the product.
The alleged lobster roll – no one's sure there was ever any real lobster in there – from McDonald's was about as successful in New England as their McCrabcake was in Maryland. It looked bad, tasted worse, and was shunned by even the most die hard Golden Arches fans. (Unlike the McRib, which continues to have a bewildering trance on McDonald's fans.) The sandwich is still available in some Canadian franchises and occasionally in Maine.
Bans Employees From Working at Home
When Yahoo CEO Marissa Mayer became the company’s chief executive, she instated Google-like food options, offered new benefits, and insisted full-time employees work in the office. The tech world was shocked, and Mayer admitted the mandate could diminish productivity. However, she saw an up side.
Sony was right to support Blu-ray over the failed HD DVD, probably because they learned their lesson with the Betamax experience in 1975. That's the year the Betamax video recorder hit stores shelves. A year later, the VHS format hit the market. Sony never licensed its Betamax technology, and the two formats were not compatible. Consumers had to choose between the two. You know how that story ended.
Enters the Auto Market with High End Electric
Fires Steve Jobs
One of the world's most famous college drop outs, Steve Jobs founded Apple, helped it grow into a billion-plus public company, and launched the Macintosh. He was also ousted by Apple's Board of Directors in 1985. The popular take is that the board was stupid to fire Jobs as the leader of the Mac division, because Apple would have more quickly become the company it is today. A new take on the decision posits that the then-30-year old Jobs was disruptive and incompetent in that role. After 12 years away from the company he founded, he learned the skills and discipline required for Apple's rebirth.
Takes on Sony + Nintendo in the Console Gaming Market
Microsoft has one person to thank for its console gaming success, and that person isn't even real. Master Chief is the hero of the insanely popular "Halo" franchise, which was first released was a launch title with the original Xbox. The game revolutionized First Person Shooters on consoles, and sold millions of consoles along the way. At the time, Microsoft was known as primarily a software company. They may have took a bath on those early consoles, but they now join Sony as one of the two major console makers left standing. (Sorry, Nintendo. The Wii U is going to sink you.)
Changes Pricing Plan
Netflix is back on top now, but it almost went under in 2011 when it mishandled its pricing changes and attempted to slice off it DVD business under the name Qwikster. As they did with the New Coke launch, customers responded with immediate anger, leading Netflix CEO Reed Hastings to apologize. The company reverted to its $7.99 streaming plan and has never looked back.
Opts out of Government Loans
After Detroit’s automakers went to Washington in 2008 asking for emergency loans to keep their enterprises afloat, the big bus oval was the only one to opt out of the bailout. Ford decided to mortgage all of its assets to raise operating funds instead. Taxpayers eventually spent $80 billion to rescue General Motors Corp. and Chrysler Corp. Ford focused on efficiency and increasing sales without using government bailout money - thus avoiding the federal tinkering that Chrysler and GM had to accept as a part of their deals. The company has since kept pace with GM, the country's largest automaker.
Perhaps the most famous brand misstep since Ford's Edsel, New Coke is the Titanic of corporate miscalculation. In the 1970s and early 80s, the soft drink giant faced increased competition from Pepsi and other products. To stay on top, Coke executives stopped production of the classic formula and introduced New Coke with tremendous fanfare. The public's responded with immediate outrage. Coca-Cola re-launched its original formula – called Coc-Cola Classic – almost immediately. Today, unopened cans of New Coke go for hundreds on eBay.
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