As you bemoan the holiday traffic this weekend, you may be wondering if living in your city is worth the hassle. Money Magazine has the answer in its annual "Best Places to Live" feature. If you're in Austin, San Francisco, or Denver, you're in luck. They made this year's Top 10. Find out if your city's a turkey by checking Money's website.
Speaking of turkeys, we've got a few for you. From Tyco to ImClone, the Fool plans to stuff you to the gills with this year's most bumbling birds.
Despite the fact that its home in Alexandria, Va., didn't make the cut, FOOL 50 was feeling thankful today and was up over 3%.
In today's Motley Fool Take:
- Don't Cheat Yourself
- Quote of Note
- Block Party
- Discussion Board of the Day: Tax Strategies
- Hormel Goes Hog Wild
- Shameless Plug: Motley Fool Credit Center
- Quick Takes: US Airways, Eli Lilly, Berkshire Hathaway, more
- And Finally...
We all know we should save for retirement, but study after study shows that most Americans aren't saving enough. But putting money in a checking account rather than a 401(k) not only endangers our retirements. It also costs us money. Here's how.
More taxes today
Before money makes it from your employer's bank account to your paycheck, Uncle Sam takes a bite. However, you can prevent that by contributing money to retirement plan at work or to a deductible traditional IRA (if you're eligible), since your contributions reduce your taxable income dollar for dollar. Put another way, if you're in the 27% tax bracket, every dollar that doesn't go into a retirement account increases your tax bill by 27 cents.
More taxes tomorrow
Capital gains, interest, and dividends on investments in non-retirement accounts get taxed in the year you receive them. Not only does this increase your tax bill year after year, but it leaves less money behind to make more money. However, the money in a 401(k) or IRA grows tax-deferred, which means you don't pay taxes on that money until you make withdrawals in retirement. (If you have a Roth IRA, you won't ever pay taxes on the growth, though you won't get a deduction on the contributions.)
You don't get the employer match
Picture this: Your boss (or the CEO of your intergalactic megalo-conglomerate) is holding out $25 to you -- all you have to do is make sure $100 from your next paycheck goes into the company retirement plan. That's right. If your employer offers a 25% match on retirement contributions, she's essentially offering to pay you to save. For every $100 you don't contribute to the plan, you leave $25 of bonus pay in your boss' pocket (and even more if your company matches 50% on the dollar).
Let's tie all this together in one tidy example to see how utilizing retirement accounts can do more for an investor than improve his post-employment prospects. How much could a hypothetical investor save by contributing to a retirement account?
Retirement Savings Bonus Amount Income tax savings realized by contributing $4,000 a year to a 401(k) (assuming 27% tax bracket) $1,080 Company match (25%) $1,000 Tax-deferred growth (assuming 5% interest on $4,000) $54
For this fictional fellow, contributing $4,000 to a 401(k) increased his net worth by an additional $2,134. This doesn't even consider a myriad of other variables, such as state income tax savings and more money to compound through the years. Even if someone doesn't receive an employer match, the tax savings are compelling.
So start contributing to your retirement accounts now. You can't afford not to.
"As we express our gratitude, we must never forget that the highest appreciation is not to utter words, but to live by them." -- John F. Kennedy
When your name is synonymous with the April 15 tax-filing deadline, you certainly don't expect to be too busy on Oct. 15. But H&R Block
Yes, Block helped originate $3.9 billion in mortgage loans during its fiscal second quarter. Lower rates have meant stacks of new home loan applications and a healthy tug to refinance. H&R Block is along for the ride, joined by lending institutions such as Countrywide Credit
But Block's bread-and-butter business has proven hearty in the off-season, too. It reported a 21% rise in stateside tax operations, and enrollment at the chain's tax preparation schools clocked in 9% higher than last year. With the expanding retirement and college savings options out there, taxes have become taxing. Block welcomes the opportunity to guide, educate, and hold hands.
Sure, folks are always welcome to take the free route and check out our Tax Center or pick up our Tax Guide, but Block's also an option. Things are going so well for the company that it's expecting fiscal year earnings to come in between $2.90 and $3.10 a share. That's at least a 26% improvement from fiscal 2002's bottom line. It also just happens to match tlooks to he lowest and the highest Wall Street projections.
While the stock has been a bear market success story, more than doubling over the past two years, it certainly offers a compelling value at just 13 times this year's profit target. If the low valuation plays out and the fundamentals hold up, Block wouldn't mind another taxing matter for its shareholders to ponder -- unrealized capital gains.
Don't know your 10-4 from your 1040? Think a W-2 is a Scrabble word score? Dumbstruck by all the new college savings alternatives? All this and more -- in the Tax Strategies discussion board. Only on Fool.com.
Nothing says "day before Thanksgiving" like Spam, at least according to Hormel Foods
Sales in the quarter ended Oct. 26 were off slightly to $1.04 billion from $1.06 billion. (That's a lot of Vienna sausages and Dinty Moore stews, people.) Net income remained virtually flat at $68 million, compared to $68.8 million a year earlier. Per share earnings were $0.49, as expected, matching last year's fourth quarter.
Hormel would've had a better quarter and fiscal year were it not for hog prices. There's been a glut of oinkers rooting around, driving prices down in the open market. Exactly which hog parts go into Spam weren't disclosed, but suffice to say, the company uses lots of 'em.
Logically, weakened prices seem helpful, but Hormel had contracts for pre-specified hog prices -- prices above the current market -- so it was hogtied (ahem) into paying more.
According to the company, for fiscal 2002, it paid $81.1 million more than the market price for hogs. Operating profits for its refrigerated food products dropped 7% for the year and 27% for the quarter, thanks to the pricey porkers.
Looking ahead, Hormel hopes to improve its position in the deli and ethnic foods markets, fast-growing segments of the market. And, no, "ethnic foods" doesn't mean Sweet and Sour Spam or Stir-Fried Vienna sausages. The company has several ethnic lines, among them an olive oil (Carapelli), Mediterranean foods(Peloponnese), and a grain called Marrakesh Express. In Hormel's fourth quarter, its ethnic-food lines saw a 7% sales increase.
Greater attention and marketing for its ethnic foods, coupled with a (hopefully) stabilizing hog market, should help Hormel's first quarter. The company has a wide expected-earnings range of $0.35 to $0.43 per share. In last year's first quarter, Hormel earned $0.36 a share.
Credit can be your best friend or your worst enemy. And you know what they say... Don't turn your back on your enemies. Friends may come and go, but enemies accumulate. So it's time to address that big elephant in the closet -- your credit, especially during the holidays. Visit our new Motley Fool Credit Center, and learn how to make credit work for you.
Fallen telecom angel WorldCom has reached an agreement with the government, settling a civil lawsuit with the SEC. The amount of fines the company will pay? Well, it may be another slap on the wrist. The amount will be determined by a judge next year, and the company, currently in bankruptcy protection in the wake of its $9 billion fraud scandal, is hoping for $0. Its settlement also includes ethics training for WorldCom accountants and executives, increased oversight by a court-appointed overseer, and a promise that the company won't break securities laws in the future.
Four Russian oil companies are banding together with the intent of providing an alternative to Middle East oil for Europe and the U.S. Lukoil, Tyumen Oil, Sibneft, and Yukos plan to spend $3.4 billion to $4.5 billion building a pipeline from Western Siberia to Murmansk, an Arctic port. Thanks, Russia!
US Airways, struggling under bankruptcy protection, announced it will lay off an additional 2,500 people in the near future. That will bring its total laid-off force to more than 18,000 since Sept. 11, 2001. The company plans to emerge from Chapter 11 in March, healthier and more competitive.
We reported yesterday that a big bunch of Wall Street firms were fined tens of millions of dollars. We weren't impressed with the severity of the punishment, and it turns out others weren't, either. Today, The Washington Post reports California and Massachusetts are speaking out, urging higher fines and more reform.
Is everyone in Omaha principled and outspoken? Warren Buffett, the well-respected head of Berkshire Hathaway
Today on Fool.com: The market begs to differ, but Bill Mann's not retreating from his tech stocks position.... The Gardners talk with Treasury Secretary Paul O'Neill about the economy and Bono....Rex Moore makes overtures to Overture.... In Fool's School, can you attend the annual meetings of companies your funds invest in?... In Hot Topics, our Fool Community discusses how to separate the deals from the duds on eBay.... And the Post of the Day: Thanksgiving with the in-laws.
Bob Bobala, Robert Brokamp, Tom Jacobs, LouAnn Lofton, Bill Mann, Selena Maranjian, Rex Moore, Rick Munarriz, Matt Richey, Jackie Ross, Reggie Santiago, Dayana Yochim