(Washington) — The Federal Reserve announced late Wednesday that it will establish an emergency lending facility to help unclog a short-term credit market that has been disrupted by the viral outbreak.
The Fed said it will lend money to banks that purchase financial assets from money market mutual funds, including short-term IOUs known as commercial paper.
By facilitating the purchase of commercial paper, which is issued by large businesses and banks, the Fed hopes to spur more lending to firms that are seeking to raise cash as their revenues plummet amid the spread of the coronavirus.
The program is the third facility the Fed has revived from the financial crisis days of 2008, when the central bank set up an alphabet soup of programs intended to keep financial markets functioning.
This facility, known as the Money Market Mutual Fund Liquidity Facility, is intended to help money market funds unload assets such as commercial paper, but also Treasury securities and bonds guaranteed by mortgage giants Fannie Mae and Freddie Mac.
Experts Weigh in on the Impacts of COVID-19 on the Global Economy
TIME spoke with four experts, across various disciplines, about how the COVID-19 pandemic could uproot the flow of business, money and labor around the world.
Money market mutual funds are owned by individual investors in brokerage accounts but also by institutional investors and businesses. Many of the funds have sought in the past two weeks to sell assets to raise cash as many investors redeem shares in the funds. Yet with demand for cash rising as stocks plunge and the economy slows sharply, money market funds have struggled to find buyers for their assets.
March 31 (Bloomberg) — The Federal Reserve released thousands of pages of secret loan documents under court order, almost three years after Bloomberg LP first requested details of the central bank’s unprecedented support to banks during the financial crisis. Bloomberg’s Margaret Brennan, Erik Schatzker and Peter Cook report. (Source: Bloomberg)
Every entrepreneur wants consistent monthly income to fuel their cash flow and business goals. However, between economic cycles and changing customer interests, that regular revenue may be hard to achieve.
I’ve talked with more and more small business owners lately who use a subscription business model. It involves offering monthly subscriptions for various products and services. Options for these subscriptions cover all kinds of items. Maybe you know someone who receives a subscription box filled with clothing or makeup. Perhaps you’ve tried making meals prepared by Blue Apron or you receive shaving supplies from Dollar Shave Club. Millions of people enjoy Netflix and Spotify for streaming. Other companies offer toys for kids and treat boxes for pets.
The subscription e-commerce industry generates hundreds of millions of dollars in revenue each year. A 2018 McKinsey survey noted that nearly 60 percent of American consumers surveyed had multiple subscriptions. The monthly subscription economy doesn’t show any signs of slowing down. People love the time and money they save, as well as the excitement of personalization and convenience.
Besides attracting and retaining customers who want these benefits, there’s a significant advantage for subscription companies: recurring revenue. Instead of a one-time payment, monthly subscription businesses collect a monthly fee (or sometimes a year of fees in exchange for a lower monthly rate) before sending out the product or service.
This revenue model provides an upfront spike in cash flow along with a longer-term outlook for stable income. Moreover, you’ll get a better sense of product volume for inventory planning and management.
There is no time like the present to start a monthly subscription business to ride the lucrative wave. Here’s how to launch:
Decide on a subscription model type.
There are three main sub-models that can frame your monthly business within the subscription model. The curation model involves creating a personalized box for customers based on interests they share when they sign up. This might include sample-size versions of products related to a hobby or lifestyle.
The replenishment model is the one I use most often. It offers a regular stream of products the customer uses. For example, Amazon offers this under the name, “Subscribe and Save,” for many food items, cleaning supplies, vitamins, and more.
The access model provides a feeling of exclusivity for customers who get products and experiences not available to anyone without a subscription. Again, let’s reference Amazon. Its Prime program gives members special discounts, offers, and products not accessible to non-Prime members.
Consider a service-oriented subscription model.
You may be wondering how to find your niche. Consider a service-oriented skill set you have that could fit this approach. For example, if you specialize in graphic design, web development, or writing, consider this model for your monthly business.
In contrast to a monthly retainer model, a service-based subscription model provides upfront revenue while giving clients the opportunity to select a pricing tier with accompanying services that fit their needs.
Proceed like any business startup.
I’ve met many a startup founder that didn’t do the basics. Make sure you conduct research, determine a market need or interest, think about what the new product looks like, scope out any competition, and establish pricing.
Create a business plan that outlines your monthly business model, marketing plans, launch timeline, budget, and profitability forecast. Explore technology that helps automate the ordering, processing, and payment aspects of your subscription. I know entrepreneurs who use SaaS companies like Zuora or Zoho here. Also, study how other subscription brands have used marketing tools and platforms to launch and grow their business.
When you are ready to share your subscription business with your audience, consider a no-obligation trial. This entices people to try it on their terms and get excited to sign up for a longer period. In addition, make sure your website or social media promotion has a transparent subscription pricing guide that describes what customers receive at each pricing tier.
Taking all these steps prior to launch can set your monthly subscription business up for success. You want to know that you can attract customers and then deliver an exceptional experience so they maintain their subscriptions and spread the word.
Offer a recurring automatic payment method.
As part of establishing a successful subscription business, it’s ideal to offer old and new customers a way to select recurring automatic payments for their monthly subscription service. They can choose where to deduct the money from — a bank account or credit card.
This model works because it saves them from having to remember to make a payment each month. Instead, they can set up a payment method and comfortably receive the service on a regular basis.
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If you are trying to figure out how much money you need to save for retirement, there’s an easy rule of thumb that you can use: simply multiply your expected annual expenses in retirement by twenty-five.
For example, if you expect to spend $100,000 annually once you’re retired, you’ll want to have a $2.5 million portfolio saved up. If you’d like to play around with the numbers to estimate your own retirement needs, you can use this simple retirement calculator.
This retirement savings rule of thumb is based on the 1998 landmark study conducted by Carl Hubbard, Philip Cooley and Daniel Walz, in their seminal study known as the Trinity Study. They built on the 1994 work of William Bengen, who originally coined the ‘4% Rule’.
The Trinity Study evaluated safe retirement withdrawal rates, and found that 4% was sufficient for the majority of retirees. A safe withdrawal rate simply refers to the amount of money that can be taken out of an account and allow you to reasonably expect the portfolio to not fail, or run out of money. In this case, the 4% withdrawal rate refers to the amount of money that will be withdrawn from the balance of the retirement portfolio in the first year of retirement. In subsequent years, the balance withdrawn will simply be an inflation adjusted number based on the total dollar amount withdrawn the year prior.
The Trinity Study has become so well-known, that it has been adopted by hopeful retirees from all walks of life, including those hoping to retire early. The FIRE movement (Financial Independence, Retire Early) is a lifestyle movement with the goal of allowing individuals to retire as early and quickly as possible.
However, one detail that the movement is getting wrong and completely missing, is the fact that the Trinity Study’s 4% rule of thumb was based on a 30 year retirement period. This time horizon was determined to be on the conservative end of retirements by the authors of the study. If you work until you’re 65, having a 30 year retirement seems pretty reasonable. I don’t think many would argue that living until the age of 95 is a short life by any means.
The problem arises due to the FIRE movement seeking a much longer retirement period. If you retire at 45 years old, you may need a portfolio that will survive another 45 to 50 years in order to avoid running out of money. In this case, making a judgement error could end up meaning re-entering the workforce at an advanced age. For this reason, relying on a 4% withdrawal rate is an extremely risky decision if you plan to retire early.
This begs the question of what a more appropriate withdrawal rate is if you plan to retire early. The answer is that it depends. In general, the study found that as the balance between stocks and bonds shifts towards equities, a portfolio is more likely to withstand the test of time. So inherently, your risk tolerance will need to be factored into the equation. If you are comfortable with 75%+ of your portfolio being in stocks (and stomaching the increased risk), you might be safe with a 3% withdrawal rate. If you prefer less volatile investments, a lower rate is more conservative.
This is bad news for a lot of you hoping to retire early.
For one, it would mean having to save an additional $833,000 if you hope to spend $100,000 annually like in the example above. Unless you are an exceptionally high earner, it’ll likely mean having to work for several additional years or having to continue to earn additional income even after retirement.
With the buzz surrounding the gig economy and the seemingly endless ‘side-hustle’ opportunities available, this seems like a surmountable hurdle. The deficit in retirement savings required also highlights the impact of having to save for retirement as efficiently as possible.
This means fully taking advantage of your 401(k), IRA, and other tax-advantaged accounts. It also means evaluating whether it makes sense to refinance your student loans or not. Avoiding credit card interest fees and other forms of high interest debt are a must. In addition, maximizing your earning potential will also help safeguard your nest egg from market turbulence and economic uncertainty.
To build wealth, you have more potential to increase income than cute expenses.
TheFinanceTwins.com
Just as important, you’ll also want to avoid making costly investment mistakes. One that comes to mind is erroneously viewing your vehicle as a sound investment. Another pitfall is picking individual stocks in lieu of index funds or ETFs. To set yourself up for success, minimizing fees and diversifying your investments is the name of the game.
Does all of this mean that the 4% rule is futile and should be completely ignored? Absolutely not. The authors of the Trinity Study ran simulations to find what the safe withdrawal rate would be for varying time horizons. But at the end of the day, they were just that: simulations. Even if you only had an expected 15 year retirement and used a conservative withdrawal rate, there is always the chance that your portfolio could fail. The same is true in the opposite direction: there’s always the chance that a 4% withdrawal could be sufficient for a 50 year retirement.
The question you have to answer is whether you are comfortable taking that risk. I know I’m not.
There are many financial gurus out there that tell you how much to save for retirement, but how did they come up with that number? Honestly they are all just using each others guesses, but as financial advisors we need to do better. While others guess that you should save 10, 12,15% for retirement we can actually figure out how much you should save…to the penny! The first thing we want to know is how much income are you looking for in retirement? Typically we say that you should aim to have 75% of your current income replaced for retirement. The reason is that social security and other savings may make up the difference. Today we will calculate how much a 30 year old couple should save for retirement given that they each have income of $50,ooo per year. We will adjust this to account for inflation and make some assumptions about their retirement age and life expectancy. After calculating this along with expected returns we can see that they need to save 11.9% of their income yearly to have 75% of their income in retirement. We love doing this for our clients and if you are considering a place for your retirement investments then we hope you will consider jazzWealth.com We’re an investing service that also helps you keep your dough straight. We’ll manage your retirement investments and, using NestEgg we can help you with every penny! —Ready to subscribe— https://www.youtube.com/jazzwealth?su… For more information visit: http://www.JazzWealth.com — Instagram @jazzWealth — Facebook https://www.facebook.com/JazzWealth/ — Twitter @jazzWealth Investment related questions 📧 Dustin@JazzWealth.com Business Affairs 📧Carolyn@JazzWealth.com
As soon as news hit of Michael Bloomberg’s latest donation to Johns Hopkins University, the praise—and the critiques—started rolling in. If you missed it, the billionaire and former New York City mayor announced last week that he would be giving $1.8 billion to his alma mater to increase need-based financial aid for low- and middle-income students. Bloomberg’s goal, he wrote in The New York Times, was that “no qualified high school student should ever be barred entrance to a college based on his or her family’s bank account.” That’s a well-meaning goal, but it misses the mark on promoting economic mobility more broadly, his ultimate aim, and the purported aim of much of education philanthropy………….
You catch the aroma on Arthur Avenue as a happy shopper opens the door, left arm holding a huge, bulging bag of bread and cookies. Yes, this is the Madonia Bakery, in its way a symbol of New York as much as the Lower East Side, the High Line, and Rockefeller Center. New York, to New Yorkers, is the neighborhood, and increasingly these areas are being discovered by visitors to the Big Apple. And Madonia Bakery, on one of the iconic streets in the borough of the Bronx, makes the list……..
This year shoppers will go about their business in a retail environment where online commerce has taken a bigger piece of the holiday sales pie. Customers are clearly appreciating the frictionless shopping experience that online platforms and payment providers can offer. It also doesn’t hurt that 59 percent of people, according to a PayPal study, would rather do almost anything than deal with holiday shopping crowds. That includes shoveling snow for a quarter of that group……..
As we look toward the future of work, it’s becoming more important than ever for companies to understand the needs of their teams, and to build solutions and products to help serve them—whether that’s through training, healthcare, or other investments. At Walmart, we’ve been very deliberate about investing in our associates, particularly over the past three years as we’ve thought about new ways to improve their lives and careers. Education is the latest iteration of that commitment. Between historically low unemployment rates in the US and innovative technologies reshaping jobs, all businesses have a lot of work to do—both in terms of recruiting and upskilling ……..
Billionaire technology titans Marc Benioff and Jack Dorsey don’t exactly see eye to eye on how to fix the homeless problem plaguing San Francisco. The pair took to Twitter on Friday to voice their opposing viewpoints on a ballot measure before San Francisco voters this November called Proposition C, which would tax local businesses to raise money in support of homeless programs. Salesforce cofounder and CEO Marc Benioff, who has been outspoken about the need he sees for tech companies to play their part in addressing homelessness in San Francisco, has come out in support of Prop C and tweeted on Frida…..
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Marwan Forzely has come a long way since his days at Western Union. The serial entrepreneur, who sold his previous company to Western Union to help the money-transfer giant directly connect to customer bank accounts, has raised $25 million to cut intermediary banks out of the payment process altogether.Instead of relying on a series of correspondents to move money between different jurisdictions around the world, Marwan’s latest venture, Veem, uses bitcoin to directly connect its clients’ bank accounts with suppliers and customers…….
