Friday Financial Five – February 21st, 2014
Friday, February 21, 2014
Dan Forbes, GoLocalWorcester MINDSETTER™
Figuring out the new Medicare surtax
Reading tax code could put Dick Vitale to sleep during a Duke-North Carolina game. So it may make taxpayers slightly uneasy that some major new tax regulations were only recently defined in IRS publications, meaning they may not be incorporated in some income tax software. That includes programs used by some accountants. Those subject to the new 3.8% tax on net investment income, or Medicare surtax as it’s called, will want to pay special attention that the complex calculation is done correctly.
The privatization of tax collection
Speaking of tax season, it’s soon to be payday for the federal government. But what about those income tax returns that contain errors or underpayments but get missed due to a lack of government resources to audit? There’s been considerable backlash to government’s involvement in health care, but it seems there’s no major movement to privatize income tax collection. Hiring companies that work on a contingency basis and receive a percentage of monies recovered might make tax collection more efficient. Or the masses may just be okay with a slightly inefficient tax collection system.
Concierge medical services for the average person
Across the country, an alternative is developing when it comes to delivery of primary care health services. “Concierge medical service” typically includes clients paying a monthly or yearly fee for access to a primary care doctor, sometimes coupled with a catastrophic health insurance policy. While initially considered only an option for the wealthy, the elimination of insurance billing has allowed physicians to make this option more widely available. The Wall Street Journal estimates there are over 5,000 practices offering direct primary care across the U.S.
The steady decline of cable television
Cable TV subscriptions have continued to decline over the years. Multiple options have sprung up that allow people to choose what they watch and when, including Apple TV, Hulu, Netflix, and Roku. Marketwatch has even developed a handy chart for consumers considering a switch. For those that don’t necessarily have to watch everything live, there could be considerable savings.
The steady climb of Socially Responsible Investing
According to the US SIF Foundation, the Forum for Sustainable and Responsible Investment, roughly 11 percent of investment dollars are currently invested in socially conscious holdings. Traditionally, “Social Responsible Investing (SRI)” meant avoiding tobacco or gun companies. Over the years, the Foundation has added several categories for institutional investors to be mindful of. Topping the list of areas to avoid are Sudan and Iran, with executive pay, climate change, and political contribution considerations all included in the top 10.
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 firstname.lastname@example.org .
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."People are more productive when they’re alone,” she said at the time. “But they’re more collaborative and innovative when they’re together. Some of the best ideas come from pulling two different ideas together.”Now that Yahoo's future looks far brighter than when Mayer started, it seems she was onto something all along.
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
WINWhoever killed the electric car must not have been looking when the first Tesla Model S cars were sold at the Tesla factory in Fremont, California. The Silicon Valley electric carmaker took the idea of eco-friendly vehicles and turned it into a blueprint for lead-footed success. Tesla's first made-from-scratch car, the electric Model S sedan, received a rare near-perfect score from Consumer Reports. At the time, Bill Ford, the executive chairman of Ford Motor Co., said "My hat's off to them." Tesla has since transformed America's image of electric cars.
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.