Money jun2016

JUNE 2016

INVESTING

Funds That Can Help You Beat the Market P. 6 2

RETIREMENT

Why Financial Advice Is About to Get Better P. 3 5

GIVE YOURSELF A RAISE The 21 Most Valuable Career Skills Now— and How to Get Them Team MONEY Gives 3 Job Seekers a Makeover P. 5 3

TR AV E L

5 Great Family Vacation Deals P. 6 8

P. 4 2

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JUNE 2016 VOLUME 45, NUMBER 5

F E AT U R E S

62

COVER STORY

42

The 21 Most Valuable Career Skills Our exclusive new study IDs the know-how that can help you land a fat raise or nab a sweet promotion.

by Cybele Weisser, Kerri Anne Renzulli and Megan Leonhardt

Five Ways to Win the Fund Race Professional stock jockeys face long odds. Follow these rules to harness what they do best.

by Penelope Wang

68

The Best Trips for Family Fun From theme parks to beach getaways, here are five valuepacked summer vacations that will please the kids—and your wallet.

by Stirling Kelso

53

Dream Career Makeovers

SET DESIGN BY BRIAN BYRNE

Get inspired by three head-to-toe overhauls.

by Elaine Pofeldt and Kerri Anne Renzulli

Photograph by

jam ie c h un g

JUNE 2016

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America’s emblem stands for great strength and long life.

With that in mind, let’s talk retirement.

Visit us at mutualofamerica.com or call us at 1-866-954-4321.

JUNE 2016 VOLUME 45, NUMBER 5

Plan

68

25 / SCORE A BIG RETAIL DEAL Learn how to game the system and save every time you shop.

Beach lovers can dig up deals in pricey Cape Cod this year.

28 / ASK THE EXPERT Spousal Roth IRA rules, financial aid tips, and more.

29 / ARE “BOOT CAMPS” WORTH THE COST? Specialized college courses promise to shape up students before they’re shipped out.

Invest 37 / THE RX FOR BIOTECH FIRST 17 / THE BIG

NUMBER 18 / FAST TAKES 19 / SOCIAL CURRENCY 20 / THE STATS 22 / TECH IN THIS ISSUE

6 / Money.com 8 / Editor’s Note 11 / Letters & Comments 76 / The Numbers

P H O TO G R A P H B Y A L A M Y

Cover photograph by JAMIE CHUNG Set design by Brian Byrne Wardrobe by Charlotte Sims

In the wake of the burst bubble, how to invest in beaten-down health care.

COLUMNS 30 HOME

How to Beat Back NewHome Bills First-time buyers underestimate all the extras that can blow a housing budget. Before you bid on your new place, factor in these costs too.

by Alexa von Tobel

40

80

THE INTELLIGENT INVESTOR

MONEY WELL SPENT

Seeing the Upside of Bad News

My FreshAir Fund

Investors often overreact to one-time setbacks.

These funds aim to help you profit from such short-term thinking.

by John Waggoner

A devoted daughter learns the value of an over-the-top splurge just when her sensiblespending dad needs it most.

by Susie Poppick

39 / X-RAY: FIDELITY LOW-PRICED STOCK This massive small-company fund defies convention.

Retire 33 / THE RIGHT TIMES TO ACT To retire well, know your best moves at these five key ages.

35 / A WIN ON ADVICE A new rule should improve the quality of investment guidance.

MONEY (ISSN 0149-4653) is published monthly (except one in January/February) by Time Inc. PRINCIPAL OFFICE: 225 Liberty Street, New York, N.Y. 10281-1008. Periodicals postage paid at New York, N.Y. and additional mailing offices.

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Return undeliverable Canadian addresses to: Postal Station A, P.O. Box 4326, Toronto, Ontario M5W 3H4. GST No. 888381621RT0001. © 2016 Time Inc. All rights reserved. Reproduction in whole or in part without written permission is prohibited. MONEY is a registered trademark of Time Inc. U.S. subscriptions: $15 for one year. SUBSCRIBERS: If the Postal Service alerts us that your magazine is undeliverable, we have no further obligation unless we receive a corrected address within two years. Your bank may provide updates to the card information we have on file. You may opt out of this service at any time. CUSTOMER SERVICE AND SUBSCRIPTIONS: For 24/7 service, go to MONEY.COM/CUSTOMERSERVICE. You can also call 800-633-9970; write MONEY, P.O. Box 62120, Tampa, FL, 33662-2120; or email help@money.customersvc.com. MAILING LIST: We make a portion of our mailing list available to reputable firms. If you would prefer that we not include your name, please call or write us. PRINTED IN THE U.S.

JUNE 2016

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JUNE 2016 VOLUME 45, NUMBER 5

Money.com

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THE ULTIMATE GUIDE TO ADULTING The most important financial and career advice new college grads need to know, from how to set a budget and negotiate a starting salary to the best way to save for retirement (yes, retirement). Plus, in an exclusive survey, students respond to the question, How prepared are you for the real world? money.com/newgrads

YOUR WEDDING GIFT QUESTIONS ANSWERED If you’re attending a wedding this summer, don’t stress: Our etiquette experts tell you when, whether, and how much to give.

MONEY IN YOUR IN-BOX! Sign up for our weekly newsletters: Ask the Expert, Retire With Money, and our latest, the MONEY College Planner. money.com/newsletters

COLUMNIST

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“DUMB MONEY” SERIES

For mortgages, budgeting, retirement, college, and more.

MONEY writer Taylor Tepper helps make you smarter about finances by answering the everyday questions you may be too embarrassed to ask.

money.com/calculators

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NEW! MONEY CALCULATORS

6

m o n e y. c o m

JUNE 2016

WALTER UPDEGRAVE offers straight talk and easy-to-understand retirement advice. @realdealretire

P H O TO I L L U ST R AT I O N B Y S A R I N A F I N K E L ST E I N ; G E T T Y I M A G E S ( 1 ) ( A D U LT H O O D ) ; J O S H U A R A I N E Y/A L A M Y ( W E D D I N G ) ; B A R T C O E N D E R S /G E T T Y I M A G E S ( C A L C U L ATO R S )

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The strong case for short-term bonds as interest rates rise.

Short-term bonds have offered: Yield %

Short-term bonds

1mo

3mo

6mo

1yr

2yr

3yr

5yr

7yr

10yr

20yr

45%

2.4x

less sensitivity to interest rate changes than the overall U.S. credit bond market1

more frequent reinvestment than longer maturity bonds2

30yr

Time to Maturity

Consider these short-term bond investments for your portfolio FIDELITY® LIMITED TERM BOND FUND FIDELITY® LIMITED TERM BOND ETF

Potential interest rate increases often present opportunity. At Fidelity, we use our industry-leading bond research and analysis to help you generate additional income and reduce risk.

FJRLX

FLTB

FIDELITY® SHORT DURATION HIGH INCOME FUND

FSAHX

FIDELITY® CONSERVATIVE INCOME MUNICIPAL BOND FUND

FCRDX Fidelity.com/shortbondfunds 800.FIDELITY Or call your Advisor.

Before investing in any mutual fund or exchange-traded fund, you should consider its investment objectives, risks, charges, and expenses.

Contact Fidelity for a prospectus, offering circular or, if available, a summary prospectus containing this information. Read it carefully.

Past performance is no guarantee of future results.

ETFs are subject to market fluctuation and the risks of their underlying investments. ETFs are subject to management fees and other expenses. Unlike mutual funds, ETF shares are bought and sold at market price, which may be higher or lower than their NAV, and are not individually redeemed from the fund.

In general, the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk, liquidity risk, call risk, and credit and default risks for both issuers and counterparties. Lower-quality fixed income securities involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Foreign investments involve greater risks than U.S. investments, and can decline significantly in response to adverse issuer, political, regulatory, market, and economic risks. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

The municipal market can be affected by adverse tax, legislative, or political changes and the financial condition of the issuers of municipal securities. Interest income generated by municipal bonds is generally expected to be exempt from federal income taxes and, if the bonds are held by an investor resident in the state of issuance, state and local income taxes. Such interest income may be subject to federal and/or state alternative minimum taxes. Investing in municipal bonds for the purpose of generating tax-exempt income may not be appropriate for investors in all tax brackets. Generally, tax-exempt municipal securities are not appropriate holdings for tax-advantaged accounts such as IRAs and 401(k)s.

Hypothetical yield curve: A chart that plots the yields of similar bonds across different maturities. The yield, as of 8/14/15, for commonly referenced indices representing bonds with 1–5 year maturities, is as follows: U.S. Treasury securities (1.01%), Barclays 1–5 Year Municipal Bond Index (1.11%), Barclays 1–5 Year U.S. Credit Bond Index (2.05%), and Bank of America Merrill Lynch 1–5 Year BB/B Cash Pay Index (5.99%). Sources: Barclays Live, Bank of America Merrill Lynch.

1 Interest rate sensitivity is based on the annualized standard deviation of monthly total returns for the 10-year period ending February 2014, with the overall bond market represented by the Barclays U.S. Credit Bond Index (all maturities), and short-term bonds represented by the subset of bonds within the index with maturities of 1–5 years (Barclays 1–5 Year U.S. Credit Bond Index). Source: FMR. 2 Frequency of reinvestment based on the percentage of bonds maturing within 3 years as of 8/14/15 — 22.54% for the overall bond market (represented by Barclays U.S. Credit Bond Index), and 55.42% for short-term bonds (represented by Barclays 1–5 Year U.S. Credit Bond Index). Source: FMR. Fidelity Brokerage Services LLC, Member NYSE, SIPC. © 2016 FMR LLC. All rights reserved. 686815.6.0

EDITOR’S NOTE

B

Write the editor: editor@moneymail.com

What It Takes to Get Ahead Now

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JUNE 2016

I L L U ST R AT I O N B Y A L E X A N D R A C O M PA I N -T I S S I E R ; P H O T O G R A P H B Y A C K E R M A N + G R U B E R

EYOND THE BASIC EXPERTISE you need to succeed in your My favorite answer identified a skill not on job, what is the most important skill you could add to our list but that perfectly captures its intent: your repertoire to advance your career—that is, to get a adaptability. “It’s essential to always be learnraise, nab a promotion, or derive greater satisfaction from ing, to think of yourself as never quite done, your work? That is the question we aim to answer in this to consider yourself and your career in permonth’s cover story, “The 21 Most Valuable Career Skills.” manent beta mode,” said senior writer Brad Coming up with the list was a daunting exercise. Partnering with Tuttle. “You have to be able to adapt.” the compensation experts at PayScale.com, a five-person editorial Our career special report aims to help you team led by assistant managing editor Rachel Elson analyzed the do just that. I hope you find it useful and ensalary and job description data of 54 million user profiles covering lightening, and the rest of the issue as well.

15,000 different positions across 350 industries to determine, all else being equal, which of 2,300 professional skills were most closely correlated with higher pay and career achievement. You’ll find the fascinating results starting on page 42, along with advice on how to acquire the know-how most in demand in your profession.

DIANE HARRIS twitter.com/dianeharris All of which prompted me to think about which job skills have been or would be most helpful to me, and to be curious about the same for the people I work with. So I asked.

Not surprisingly, many of our answers underscore READY FOR HIS CLOSE-UP To go from his job as head of a small nonprofit the findings in the cover story. Becoming more tech to a bigger professional stage, Gerald Sorokin needs to look the part. savvy was a consistent theme, from mastering computer Below, a local Iowa City styling and makeup team preps him for our cameras. Find his story, plus two other career makeovers, on page 53. code (software development is No. 6 on our list) to statistical analysis and data mining (Nos. 1 and 2). As writer Kaitlin Mulhere noted, “I read so many studies, sometimes with conflicting claims, that it’d be really helpful to speak the language of researchers more fluently.”

Elson named systems troubleshooting (No. 20), saying that the ability “to look at an operation and see where the bottlenecks and stress points are makes me more valuable to my managers.” (True that, Rachel.)

My most valuable added skill, I think, is my entrepreneurialism, which lets me think up new business ideas (No. 21) that help the bottom line, even though that’s not in my job description. Acting ability and salesmanship were other skills not necessarily equated with journalism that MONEY staffers thought would be useful.

RISE. RACEAHEAD

READ. SHINE. RACEAHEAD

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LETTERS & COMMENTS

Write to MONEY: letters@moneymail.com

RE: SPRING REAL ESTATE GUIDE [MAY]

I found your chart showing a modest 1.6% housing home price increase in Washington, D.C.—due to a (supposedly) “smaller federal governmentâ€?— PURPLE WART HOGS intriguing. While values may have leveled off, I’ve also read there’s no shortage of buyers. And if our recent federal tax bill is any indication of the growth and housing market in Washington, then D.C. isn’t getting any smaller. mimi vangel, Wadsworth, Ohio DON’T LEAVE THE BANK ALONE When you pay off loans early by making extra payments or amounts [“Adulting: A Financial Cheat Sheet,â€? May], it is not enough to specify that it is to go to the principal and not the interest. You sometimes have to send that extra payment to a different address—sometimes to another state!—that is earmarked for that speciďŹ c purpose. Call to ďŹ nd that out, and be persistent! kirby leong, San Lorenzo, Calif.

P H OTO G R A P H BY G R EG O RY R E I D

YOUR 401(k): ALL IN GOOD RHYME “It’s Okay to Stray from Your 401(k)â€? [May] is a catchy title, but isn’t that what got most Americans into the ďŹ nancial mess they are in? The author’s CORRECTION A table in “Take Charge of Your Retirementâ€? (April) misstated the maximum annual contribution for a solo 401(k). It is 25% of compensation—not 25% of proďŹ ts—plus $18,000, up to $53,000.

conclusion that liquidity and exibility are two of the greatest beneďŹ ts money can buy misses the point that you have to have saved that money in the ďŹ rst place. A better title: “If you stray you pay at the end of the day.â€? chris drahos, Wyoming, Mich.

:KDWHYHU KRPH PHDQV WR \RX ZHȇOO KHOS \RX ȴQG LW

GET THEM WHEN THEY’RE YOUNG My 11-year-old son, Matthew, picked up a copy of MONEY in my home office. He was intrigued by the cover story on travel [“Best in Travel 2016,� April].

And since it’s a struggle to get him to complete his required 30-minute daily reading, I was thrilled when he not only read that article but also proceeded to read the rest of the magazine cover to cover. So we are now subscribers! I hope that his interest is the beginning of my future retirement. debra loew, Chappaqua, N.Y.

JUNE 2016

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6HDUFK PLOOLRQV RI KRPHV IRU VDOH DQG IRU UHQW RQ =LOORZ DQG RXU IDPLO\ RI DSSV Š2016 Zillow Group. All rights reserved.

Just because you don’t see it, doesn’t mean it isn’t there.

Introducing the newly redesigned Volkswagen Passat with Blind Spot Monitor, one of seven available Driver Assistance features.* Passat. Where family happens.

vw.com

When equipped with optional Front Assist

Simulated image. *Driver Assistance features are not substitutes for attentive driving. See Owner’s Manual for further details and important limitations. For more information, visit www.iihs.org. ©2016 Volkswagen of America, Inc.

THE BIG NUMBER + FAST TAKES + SOCIAL CURRENCY + THE STATS + TECH

JU N E 2 0 1 6

REDO THE MATH

P R O P ST Y L I N G B Y R E N E E F L U G G E

Popular retirement tools that are faulty Planning for retirement can be daunting, and it doesn’t help that many online calculators produce “extremely misleading” results, according to a recent Texas Tech study. It found that 25 of 36 popular online tools designed to project how much you’d need to save underestimated the size of a couple’s targeted nest egg. Before you bank on any retirement calculator, keep in mind these tips:

Photograph by

b il l di o dato

LOOK BEYOND ASSETS Financial planner Harold Evensky, one of the study’s authors, says his team didn’t name the best calculators in part because what’s “best” depends on which factors most affect your personal situation, such as tolerance for risk. But all good tools will consider marital status and overall health, which can affect your life span (and therefore your savings goal).

WIDEN YOUR NET One way to find the right calculator: Test several of them. That will help you spot the outlier tools that produce inaccurate results. You’ll also get a sense of the ones that ask the most relevant questions for you.

GO FOR A PRO Planning is usually most complex within five to 10 years of retirement, so consider hiring a financial planner then, says David Blanchett, head of retirement research at Morningstar. Expect to spend at least $100 for the initial consultation. —KERRY CLOSE JUNE 2016

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FIRST LOOKING TO SWITCH BANKS? Check out MONEY’s comprehensive guide at money.com/bestbanks.

FAST TAKES BANKING

Get a Decent Return on Your Checking—Finally

IN RECENT YEARS, the interest offered by the typical checking account has dipped to nearly 0%. But a new Bankrate survey found 56 high-yield checking accounts at U.S. banks that offer an average yield of 1.65%.

Before you switch to a higher-earning checking account, consider a few of the ground rules. Many banks require a minimum number of debit card transactions per month, usually 10. Many also require direct deposit of your paycheck and provide only electronic checking statements. High-yield checking accounts tend IT’S MONEY IN THE BANK Annual interest earned to have balance caps beon $25,000 tween $500 and $25,000 (the average maximum is $16,336). Finally, many AVERAGE TYPICAL accounts are offered HIGH-YIELD CHECKING at regional banks and RATE ACCOUNT credit unions and require YIELD 1.65% 0.11% account holders to live in a certain area to be eligible. That said, switching to a high-yield account may be worth your while. A 1.65% return on $25,000 would earn $416 a year. (For a list of banks, search for “2016 high-yield checking survey” on bankrate.com.)

The move to higher-yield accounts isn’t limited to checking. Wall Street powerhouse Goldman Sachs just launched a savings account with a generous 1.05% yield. It’s open to anyone and requires a minimum balance of just $1. —DENVER NICKS

$28

The golden years aren’t as golden as they used to be, according to a new study from the Employee Benefit Research Institute.

Between 1998 and 2012, the number of retirees who said they were

18

“very satisfied” fell to 48.6%, down markedly from 1998, when 60.5% of respondents said

m o n e y. c o m

retirement was “very satisfying.”

The drop in the number of happiest retirees is not limited to any particular economic group either. “This is clearly a more general trend,” says study author Sudipto Banerjee.

“What’s not yet clear is exactly why

Illustration by

this is happening.”

There are ways to brighten the blues. Studies find that being busy— with a hobby, at work, or socializing—correlates with being happier. Yet retirees who lived within 10 miles of their kids were less happy. Aren’t families great? —D.N.

sar i na f i n k e l s t e i n

QUOTED

“Money is best spent on someone who needs it.”

Prince, on his philosophy on giving back, as quoted in “Here’s What Prince Had to Say About Money at the Height of His Fame” on Money.com.

TO P : G E T T Y I M A G E S ( 3 ) ; D O R OT H E A L A N G E / L I B R A R Y O F C O N G R E S S ( 1 ) ; P H O TO G R A P H B Y G E T T Y I M A G E S ( E G G )

WHY SO SAD, RETIREES?

$416

FIRST Join the conversation: twitter.com/money • facebook.com/moneymagazine • pinterest.com/moneymagazine

SOCIAL CURRENCY

READERS TO THE RESCUE

“I declared bankruptcy a few years ago. How long after dating someone new should I tell her?”

HE S E E T ST 21 MO BLE A VALU SKILLS ER CARE GE 42) (PA

FACEBOOK QUESTION OF THE MONTH

WHAT’S THE ONE SKILL YOU NEED TO BOOST YOUR CAREER?

“Building relationships. No matter what career you’re in, it’s ultimately about people.”

—juana reed “Persistence. Everything you do is a trial by fire, and you cannot be afraid to get burned once in a while.” —martin ruiz

Have a discussion as soon as you know you might want a serious relationship but before any commitments between you are made.

Be sure to explain why the bankruptcy happened and what you’ve done to improve.

This isn’t something to lead off with on a first date, but don’t overthink it. A lot of people declared bankruptcy after the Great Recession. You may find out that your date has a little story to tell too.

viola cooper

john dirgo deweese

Tucson

Seattle

From the beginning!

There is nothing worse than starting a relationship with a secret.

Don’t tell her about it at all. Just be more conscientious about how you

are handling your money so she can observe, appreciate, and hopefully take a liking to you.

george carrera San Antonio

If your bankruptcy was seven to 10 years ago and has already fallen off your credit report, you probably don’t need to tell her at all.

alex caffarini Schaumburg, Ill.

eric joubert

“Luck—where experience and knowledge come together.”

—michael schneider

P H O TO G R A P H S B Y G E T T Y ( 1 ) A N D S H U T T E R ST O C K ( 1 )

“Believe in yourself.” —zebaan farooqui “The ability to accept, deal with, and adapt to changes in the workplace.”—marc hardekopf

“Data skills, writing skills, and conceptual thinking.”

Whitman, Mass.

When you are interested in a long-term relationship, you need to have a discussion about money, including not only bad past decisions, but also whether you are a saver or spender, how big your credit card balances are, and your views on saving for retirement.

THE EXPERT SAYS

While this CFP doesn’t think you should wear a “Scarlet B” on the first date, a bankruptcy warrants early disclosure.

Bankruptcy is an FTD (financially transmittable disease) that can affect your partner’s finances, since you may not be able to borrow and would then rely on your beloved’s financial records to transact. Be open and transparent. austin frye CEO and CFP, Frye Financial Center

bill hutchinson Carmel, Ind.

—roxanne brendel “Become good friends with your boss.”

—t. thomas vesper

Want solutions to a financial dilemma in your life? Email your question to social@moneymail.com. To join our reader panel, go to moneymatterspanel.com.

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FIRST Next month’s question: How much do eco-friendly choices cost you each month? To cast your vote, go to money.com.

THE STATS

MONEY READERS WEIGH IN POLL: How much do you think should be spent on a wedding?

The Wedding Cost Planner

MORE THAN$25,000

SSSH. DON’T MENTION THE WORD “WEDDING”

$780: AVERAGE COST TO DRAFT A PRENUP

30% The typical venue markup when the event is a wedding

12% GIFT GUIDE: AVERAGE AMOUNT SPENT ON A…

LESS THAN $5,000

Close family member

25%

HOLY MATRIMONY, BATMAN! THE COSTS FOR OUT-OF-TOWN GUESTS

$120 $80

$225

$65

Airfare

$180

Close friend

Friend

Co-worker

$10,000–$25,000

$170

29%

Hotel

SATURDAY NIGHT IS PRIME TIME

$116 Dining out

JUNE 2

$95 Dressing up

5 6 2 3 12 13 7 8 9 10 4 14 15 11 19 20 16 1 2 SUNDAY 22 23 7 18 26 27 1WEDDINGS 24 25 28 COST 29 310% 0 3 LESS 1

$5,000–$9,999

34%

WHO FOOTS THE BILL?

43%

Bride’s parents

0 16

SUN M ON TU E WED THU F RI SA T 1

43%

Bride and groom

THE GENDER GAP: BRIDE AND GROOM EDITION

.

12%

Groom’s parents

Groom’s tuxedo

Others

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Wedding outfit cost

$236

JUNE 2016

Bachelorette party and shower

$501

Travel and lodging

Wedding gift

$317

$125

TOTAL

$1,179

THESE FREE APPS CAN HELP YOU GET ORGANIZED

AVERAGE COST OF A WEDDING PLANNER: $3,500

The Knot Wedding Planning Complete WeddingHappy

NOTE: Money.com poll survey of 2,827 readers, conducted in March 2016. SOURCES: Splendid Insights Global Wedding Survey; Alan Fields; American

Express Spending and Saving Tracker; Debi Lilly, A Perfect Event Weddings; The Knot; CostofWedding.com; Priceonomics; BrideBox.com

I L L U ST R AT I O N S B Y T H E W O R K S

PITY THE POOR BRIDESMAIDS

20

Wedding dress

2%

FIRST

TECH FATHER’S DAY

Buy This, Not That You know what Dad really appreciates? When you buy him something cool and score a deal. These lesser-known gadgets hold their own against higherprofile, and higher-cost, options. —DOUG AAMOTH

SAVINGS

Headphones

43%

Sony’s MDR-7506 over-the-ear headphones ($80, above) put up a good fight against the second iteration of the entry-level Beats Solo2 ($140, right). The Sony phones produce great, clean sound with a wider dynamic range. They’re also sturdily built and offer insanely comfortable, pillow-like earpieces. Where Beats can’t be beat: style and a removable cord with built-in playback controls.

SAVINGS

Looking to chart your training for less? Misfit’s clip-on Link ($20, above) offers many of the same features as Fitbit’s $60 Zip (below).

It counts your steps, distance, and calories burned, and the battery can last six months without a recharge.

The Link also doubles as a sleep monitor and a remote control for your phone. But if you want a snazzy LCD screen or an online portal to track your weight, hit the Fitbit.

For more Father’s Day tech ideas, go to money.com/tech.

22

Tablet

66%

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Dell’s gorgeous, powerful Venue Android tablet ($199, below) costs half as much as the comparable iPad Mini 4 ($399, right), yet it sports a slightly larger and higher-resolution screen. It also features expandable storage, an impressive-for-a-tablet processor, and a 3D camera. Apple’s advantage?

Better apps and an optional cellular data chip.

SAVINGS

50%

P H O TO G R A P H B Y DYA D P H O T O G R A P H Y; C O U R T E S Y E V E R E T T C O L L E C T I O N ( L E AV E I T T O B E AV E R )

Activity Tracker

Progressive Casualty Ins. Co. & affiliates. Business insurance may be placed through Progressive Specialty Insurance Agency, Inc. with select insurers, which are not affiliated with Progressive, are solely responsible for servicing and claims, and pay the agency commission for policies sold. Prices, coverages, privacy policies and commission rates vary among these insurers.

Score a Big Retail Deal YOU MIGHT BE SURPRISED BY HOW EASY IT IS TO GAME THE SYSTEM—AND SAVE ANYTIME YOU SHOP. by Lisa Lee Freeman

Photo illustration by

dav i d s c h w e n

SEEN ANY GREAT DISCOUNTS LATELY? Of course you have. In our digital world, deals are like dandelions in springtime—they pop up everywhere.

The good news is that there are also some great tools to help you weed out the junk. The best new savings apps and online coupon finders will even locate the deals you want, redeem them for you, and send you a check. But be warned: Retailer incentives are also marketing tools, designed to get you to spend on stuff you don’t really need.

These tips will help you take advantage of the deals without being taken advantage of yourself.

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SMART SHOPPING | ASK THE EXPERT | COLLEGE | HOME

BECOME A DISCOUNT MAGNET Tool: Coupon Sherpa What’s the deal: Using your phone’s GPS and other technologies, some coupon apps can pinpoint where you’re shopping, then shoot you the store’s discounts automatically. You can download an app for individual outlets or cast a wider savings net with an app like Coupon Sherpa. It’s connected to hundreds of retailers, and some shoppers might find the home screen, with its “stores” tab, more convenient than competitor RetailMeNot’s.

Some recent Coupon Sherpa finds: 40% off one item at Lands’ End and $10 off $30 in packing and shipping supplies at Staples.

Keep in mind: Not every deal is as juicy as it seems. Focus on the price, not the markdown. “When you see 80% off, your emotions take over,” says Alok Gupta, a professor of information management at the University of Minnesota. Not sure if the discount is worthwhile? Apps like CamelCamelCamel and Price Zombie will show you an item’s price history, and ShopSavvy will help you compare prices so you can see if today’s sale is really all that.

buy. Once you’ve racked up $50 in savings, Piggy will send you the cash-back bonus (mailed quarterly).

Keep in mind: Retailer apps can save you money, but they also entice you to spend it. “They are optimized to help you buy stuff more easily,” says Lakshman Krishnamurthi, a marketing professor at Northwestern University. One solution: Use the Wunderlist app or the built-in notes app on your phone to build a shopping list. “You’re less likely to browse if you go in knowing exactly what you’re looking for,” says Matt Schulz, senior industry analyst at CreditCards.com.

PROFIT FROM PRICE DROPS Tool: Paribus What’s the deal: Online retailers such as Amazon and BestBuy.com

REQUEST A DISCOUNT

Putting Extra Cash in Your Pocket Frustrated that you can never get a discount on your favorite line of makeup or Apple product?

Use Piggy’s cash-back feature.

SAVE ON AUTOPILOT Tool: Piggy What’s the deal: If you don’t have the time or the patience to bother with a coupon, try a browser add-on such as Piggy (joinpiggy .com). When you’re ready to click the checkout button on a retailer’s website, the app will automatically hunt for available coupons and apply them against your bill. Even better, Piggy features one of the best cash-back programs: 3% on your Macys.com purchases, 7% on Overstock.com, 15% on a Groupon

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will give you a refund if the price drops after you buy an item, but you have to file for the rebate, and you’ve got only a narrow window (usually within a week or so) to do so. Paribus automates the process. It scans all your online receipts, remembers to check for future price drops, then applies for eligible rebates automatically.

Paribus credits the money to your card, minus a 25% commission.

Keep in mind: For Paribus to work, you have to give it access to your email. The company says it encrypts users’ passwords and will only track emails from retailers, but allowing this kind of access could be a privacy concern for many people. One possible solution: Set up a separate email account for your online shopping.

CASH BACK PER RETAILER

3%

Macy’s, Staples, Home Depot

5%

Nordstrom

8%

PetSmart

15%

Groupon

NOTE: Cash back paid quarterly after your Piggy rebate account totals $50 or more. SOURCE: Piggy

Tool: Your favorite retailers’ social media feeds What’s the deal: You know the old saying “It never hurts to ask”? That can work online too.

“It’s amazing how many stores have people who will shoot you a coupon if you ask on Facebook or Twitter,” says Kyle James, founder of Rather-Be-Shopping.com. “Or you can use live chat to ask for a coupon or even negotiate a deal.”

Requesting a discount works best if you find a great bargain elsewhere, then see if the competing retailer will beat the cost. But sometimes all you have to do is inquire about “wiggle room” on the price. James says he did that when he was shopping on Kohls.com for a $150 Keurig 2.0 K250 coffeemaker. His deal: $120, a 20% savings. Bet that morning cup of joe tastes even sweeter.

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RETIRE LIKE A 20 YEAR OLD. INVEST LIKE A 50 YEAR OLD. The Main Advantages of Municipal Bonds Investors are attracted to municipal bonds for three reasons, safety of principal, regular predictable income and the tax-free benefits. Together, these three elements can make a compelling case for including tax-free municipal bonds in your portfolio.

Potential Safety of Principal Many investors, particularly those nearing retirement or in retirement, are concerned about protecting their principal. In March of 2012, Moody’s published research that showed that rated investment grade municipal bonds had an average cumulative default rate of just 0.08% between 1970 and 2011.* That means while there is some risk of principal loss, investing in rated investment-grade municipal bonds can be

a cornerstone for safety of your principal.

Potential Regular Predictable Income Municipal bonds typically pay interest every six months unless they get called or default. That means that you can count on a regular, predictable income stream.

Because most bonds have call options, which means you get your principal back before the maturity date, subsequent municipal bonds you purchase can earn more or less interest than the called bond. According to Moody’s 2012 research,* default rates are historically low for the rated investmentgrade bonds favored by Hennion & Walsh.

Potential Triple Tax-Free Income Income from municipal bonds is not subject to federal income tax and, depending on

where you live, may also be exempt from state and local taxes. Triple tax-free can be a big attraction for many investors in this time of looming tax increases.

About Hennion & Walsh Since 1990 Hennion & Walsh has specialized in investment grade tax-free municipal bonds.The company supervises over $2 billion in assets in over 15,000 accounts, providing individual investors with institutional quality service and personal attention.

Our FREE Gift To You We’re sure you’ll want to know more about the benefits of tax-free Municipal Bonds. So our experts have written a helpful Bond Guide for investors. It’s free and comes with no obligation whatsoever.

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Call (800) 316-1837 © 2016 Hennion and Walsh. Securities offered through Hennion & Walsh Inc. Member of FINRA, SIPC. Investing in bonds involves risk including possible loss of principal. Income may be subject to state, local or federal alternative minimum tax. When interest rates rise, bond prices fall, and when interest rates fall, bond prices rise. *Source: Moody’s Investor Service, March 7, 2012 “U.S. Municipal Bond Defaults and Recoveries. 1970–2011.” Past performance is not guarantee of future results.

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SMART SHOPPING | ASK THE EXPERT | COLLEGE | HOME

Q A

PA YI NG F O R CO LLEG E

We have $350,000 in investments for retirement. Must we disclose them on a FAFSA? —claudia Savings held in nonretirement accounts could sharply reduce financial aid awards, especially at public colleges.

You don’t have to report your retirement savings as assets on the Free Application for Federal Student Aid, as long as the money is in a qualified account. Such accounts include IRAs, 401(k)s, and 403(b)s; you also get a pass on the value of a pension plan.

You must disclose any funds that are in a brokerage account, however, and these could reduce the amount of needbased aid your child gets, says financial aid expert Mark Kantrowitz.

You can’t leave money off the application simply because you intend to use it during retirement.

If you have substantial savings outside a retirement account, there are two basic ways to shelter it from the FAFSA, Kantrowitz says: Use the money to pay down a debt, like a mortgage or an auto loan, or move it into an annuity or other retirement vehicle.

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YOUR LIKELY AID (WITH $350,000 IN SAVINGS) Assets in brokerage account

$0

$6,972

Assets in retirement account

$10,038

University of Virginia (public)

$38,600

University of Southern California (private)

NOTE: Assumes $100,000 annual household income, no other savings.

SOURCES: UVA’s and USC’s net price calculators

Q

N E G O T I AT I N G S A L A R Y

I have two job offers, but my first choice pays less. How do I get that one to match the other offer?

A

You can use the competing bid as leverage, but go about it intelligently.

Candidates should “do the best they can to deal directly with the hiring manager, the person who’s actually managing the budget for their compensation,” suggests Dave Carvajal, CEO of tech industry recruitment firm Dave Partners.

Tell the hiring manager you have another option on the table, and

JUNE 2016

be specific about what the competition has offered. Keep it friendly: “Make it clear that this is the preferred opportunity,” Carvajal says, but at the same time politely stress that compensation is a priority.

If you hit the wall on salary, try negotiating a signing bonus. Companies may be more receptive to a one-time cost than to an ongoing expense that is higher than they had planned.

Q

RETIREMENT

I’m retired, but my wife has income; we file taxes jointly. May I put money in a Roth? —jim

A

You may contribute to what’s called a spousal Roth IRA based on your wife’s income. The strategy lets you invest aftertax dollars now to avoid paying taxes later on gains or withdrawals. “I recommend this to many of my clients,” says Mike Piershale, a financial consultant in Crystal Lake, Ill. As long as your wife has at least $13,000 in earned income in 2016 and you’re both 50 or older, you can contribute up to $6,500 to a Roth in her name and $6,500 in yours, says Piershale.

Your combined contributions can’t exceed her taxable compensation.

One other caveat: As a couple filing jointly, you start losing your ability to contribute once you earn $184,000 in modified adjusted gross income; it disappears at $194,000. So if your wife is a high earner, you could be out of luck.

By Kaitlin Mulhere, Martha C. White, and Sarah Max

Read more answers from Ask the Expert and submit your own question about personal finance at money.com/expert.

SMART SHOPPING | ASK THE EXPERT | COLLEGE | HOME

Are ‘Boot Camps’ Worth the Bucks?

THESE EXTRA-COST COLLEGE PROGRAMS PROMISE TO SHAPE UP STUDENTS’ JOB SKILLS. by Kaitlin Mulhere AS IF COLLEGE ISN’T EXPENSIVE

enough these days, some students are now paying thousands of dollars, over and above their normal tuition, for specialized courses in everything from business fundamentals to computer programming.

Often referred to as “boot camps,” these à la carte programs promise to provide the skills that employers want in their new hires and that may not be part of the regular college curriculum.

“Colleges have always been about preparing students for the fifth job, not the first job,” says Ryan Craig, author of College Disrupted: The Great Unbundling of Higher Education.

Some boot camps are run by colleges themselves, others by independent companies. Some cater to current students, others

Illustration by

jac o b th o ma s

to recent grads. While they vary in length and cost, most courses will set you back at least $1,000 a week for tuition alone.

Coding boot camps are the biggest category, enrolling more than 16,000 students last year. But at least a dozen major colleges also offer monthlong programs in entrepreneurship, finance, and management, tailored to nonbusiness majors. Independent companies, such as Fullbridge and Koru, run boot camps for “soft” skills like teamwork and problem solving.

So, are they worth it? Anthony Carnevale, director of the Georgetown Center on Education and the Workforce, says they can be, but he urges students (and parents) to vet them carefully. Make sure, for example, that any privately run program is licensed by your state,

Plan

which gives you some protection if it fails to deliver on its promises.

Bear in mind that few boot camps, even those sponsored by colleges, currently offer course credit. Nor are they eligible for federal grants and loans, unlike some professional certificate programs that colleges offer. So before you enlist, find out: Is it affordable? Even if the tuition is manageable, don’t forget extra living expenses, suggests Nick Ducoff, vice president for new ventures at Northeastern University in Boston. A full-time, three- to six-month program could mean added housing and food costs of $5,000 to $10,000, as well as cutting into the hours you could earn money by working.

Does it offer the right skills?

Some coding courses, for example, teach the programming language Python, others JavaScript. “You want to make sure you go to a boot camp that’s teaching the languages that are in high demand in your community,” notes Rick O’Donnell, founder of Skills Fund, a lender for boot-camp programs.

So check job listings to see what specific skills local employers are looking for.

How are alumni doing? For independent programs, consult student reviews at CourseReport .com. If it’s a college-sponsored program, request the names of other students or recent grads who have been through it. Ask them if the program helped them land a job and whether the skills they learned turned out to be the ones they really needed.

For more about the different types of boot camps and how to pay for them, visit money.com/colleges.

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SMART SHOPPING | ASK THE EXPERT | COLLEGE | HOME

How to Beat New-Home Bills FIRST-TIME BUYERS DON’T ALWAYS FACTOR IN ALL THE EXTRAS THAT CAN STRAIN A BUDGET. MAKE SURE YOU KEEP AN EYE ON THESE OWNERSHIP COSTS.

by Alexa von Tobel YOUR HOME IS PROBABLY the biggest chunk of your monthly budget—so a miscalculation here can have a larger impact on your overall cash flow than, say, your grocery tab.

The classic mistake: Many firsttime buyers plan for their new mortgage but don’t add in the other homeownership expenses that can blow up a financial game plan. If you’re eyeing a new place, be sure to manage all of these costs:

Utilities: When my husband and I bought our first apartment last year, we knew the extra space would boost our energy bills, but we failed to predict just how much.

Oops. Our cable costs would have risen too if we had added boxes to more rooms. (We ultimately didn’t.)

How to save: Get a better forecast by having your agent ask the sellers for recent utility statements. Then

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cut costs by using a power strip to turn off “vampire” speakers, TVs, and other gadgets and keep them from sucking power while you sleep. On the entertainment front, check selection and prices for streaming services like Netflix or HBO Go. You may be able to save and still watch the shows you want.

Transit: Moving farther from work to get a cheaper place? Remember to add up new transportation costs: a pricier rail trip, perhaps, or a second car. The average worker spends $2,600 annually on commuting, a Citi-commissioned survey found last year.

How to save: Employers may let you set aside up to $255 a month in a pretax account to cover public transit and/or parking. The savings can top $100 a month for someone in the 28% tax bracket.

Maintenance: Longtime renters may fail to plan for paint touch-ups, carpet cleaning, and other repairs.

Illustration by

ga ry n e i l l

But upkeep runs up to $3,500 annually on average, says online real estate site Zillow.

How to save: Small periodic tune-ups (checking HVAC filters, for instance) can preserve the lives of costly major appliances.

Meanwhile, put aside cash for bigger projects so that you don’t need to dip into emergency savings or, worse, rack up credit card debt. Replacing a washer or dryer, for instance, could cost $1,000 or more.

Furniture: Before we even closed on our new place, I began envisioning all of the beautiful new furniture and lighting I was going to put in. Reality check: Just because you’re moving doesn’t mean you need all new things.

How to save: Bring as much from your old home as possible, giving yourself six months to settle in. At that point, you can determine what new items you actually need.

Columnist Alexa von Tobel is the founder of LearnVest. Catch her columns and videos at Money.com.

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The Right Times to Act TO SECURE YOUR RETIREMENT, MAKE THE PROPER MOVES AT A A FEW KEY MOMENTS.

by Penelope Wang

Photo illustration by

dav i d s c h w e n

WHEN YOU’RE SAVING and investing for retirement, you can make a lot of progress by staying on cruise control. Sign up for your 401(k), set a high savings rate, and continue stashing away money throughout your career. Occasionally, though, you’ll reach pivotal ages when your retirement will require hands-on attention—you’ll have to make a decision about your savings or health care, for example, that will affect your financial security or quality of life for years to come.

At these times your window of opportunity may last as little as a few months. So mark these JUNE 2016

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Retire

IMPORTANT AGES | INVESTMENT ADVICE

five ages (or the ones that still apply to you) on your calendar.

25 COMMIT TO SAVING Why this age is critical: When you’re just out of college, saving can be hard. But halfway through your twenties—with a job or two behind you, and maybe grad school too—you’re psychologically and financially ready to set money aside. Along with the monetary payoff of starting at 25 (see the chart below), you’ll develop a habit that will serve you well for life, says Denis Horrigan, a financial planner in Farmington, Conn.

Key move: Aim to put away at least 10% of your pay in your workplace plan, if you have one, or a Roth IRA. Feeling pinched? Use a free app to divert small amounts into savings. Acorns.com rounds up your debit or credit card transactions to the nearest dollar, funneling that change into an investment account.

45 TURN UP THE VOLUME Why this age is critical: You’re near your peak earning year— for men, 48, and for women, 39, PayScale found in 2014—so you can power-save. And you most likely have fewer working years ahead of you than behind you, so retirement has to be a priority, says Brooklyn planner Tom Frederickson.

Key move: Use online tools, such as T. Rowe Price’s Retirement Income Calculator (troweprice.com/ ric), to estimate how much retirement income your portfolio will generate. While forecasts aren’t perfect (see page 17), they can inspire.

A 2014 study out of Stanford and the University of Minnesota found that seeing such estimates helped spur workers to boost their savings.

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60 SUSS OUT SOCIAL SECURITY Why this age is critical: The earliest you can receive Social Security, generally, is at 62, but claiming strategies, especially for married couples, can be complicated. “These are big decisions, and most people need a couple of years to figure out what’s right for them,” says Jim MacKay, a financial planner in Springfield, Mo. Key moves: Although some 40% of retirees claim at 62, look for ways to hold off; monthly benefits grow 7% to 8% a year until you’re 70. While you wait, build up one to two years of cash to cover emergencies and daily expenses. To lower the risk of a bear market crushing your nest egg, slowly shift your investments so you end up with an

The Power of 25 Starting in your mid-twenties to save for retirement means you won’t have to set aside a huge portion of your earnings.

SAVINGS RATES FOR A SECURE RETIREMENT Retire at age 62

Retire at age 67

47%

24% 14% 7% 25

23%

12%

35

45

AGE YOU START SAVING NOTES: Secure retirement income, including Social Security, is 80% of final salary. Salary is $40,000 at age 25, rising 3% per year. Savings rate is personal savings plus employer contribution. Annual investment return is 6%. Life span is 90 years. SOURCES: CalcXML.com, MONEY calculations

appropriately conservative portfolio by your expected retirement date. Most advisers suggest arriving at a 50%/50% stock/bond mix.

65 ENROLL IN MEDICARE Why this age is critical: Unless you or your spouse is still working and you’re on an employer plan— coverage via COBRA doesn’t count—you have three months after the month you turn 65 to sign up for Medicare (at medicare.gov).

Miss the deadline and you’ll pay higher premiums—for example, 10% more for each year you delay Medicare Part B (for doctors).

Key move: Shop around for a Part D plan for drug coverage and a Medigap plan to help pay extra costs, such as co-payments and deductibles. Compare choices at medicare.gov/find-a-plan. And go to shiptacenter.org to connect with local experts and trained volunteers providing free guidance on all your Medicare options.

70½ TACKLE YOUR TAXES Why this age is critical: Starting the year you turn 70½, the clock begins ticking on the required minimum distributions you must take from your 401(k) and IRAs. (You can defer your first RMD until April 1 of the next year, but you’ll have to take a second one before year-end.) Miss an RMD and you’ll pay a hefty 50% penalty on the money you should have withdrawn.

Key move: Get charitable. In 2015 Congress made permanent a rule letting direct donations from your IRA—up to $100,000 a year—count toward your RMD (and perhaps lower your tax bill).

So if you don’t need the money, you can find it a good home.

IMPORTANT AGES | INVESTMENT ADVICE

Retire

IT’S ALL ABOUT YOUR IRA

Raising the Bar on nanc al Adv ce A NEW RULE SHOULD IMPROVE THE QUALITY OF YOUR INVESTMENT GUIDANCE. by Ian Salisbury YOU CAN REST more easily since the Department of Labor issued in April a landmark rule designed to improve the advice you get about retirement investments.

But you could feel befuddled too, given the complexities surrounding the 1,023-page document known as the fiduciary rule. Even though it won’t be in full force until 2018—and may face legislative and legal obstacles before then—the rule is already making an impact.

Here’s what you need to know about the financial advice you get now—and what will change.

THERE ARE DOUBLE STANDARDS The fiduciary rule will obligate a financial professional, when counseling you about retirement investments, to give advice that’s in your best interest. Believe it or not, many advisers don’t have to do that (and under the new rule won’t have to for your nonretirement assets).

Instead, they work under the looser suitability standard, which lets them sell investments that, while appropriate, may be costlier for you—and more profitable for your adviser—than alternatives.

Not sure if your financial professional is a fiduciary now? A regis-

tered investment adviser, or RIA— who typically charges an annual or hourly fee—is a fiduciary. Registered representatives of brokerages follow the suitability standard.

Confusingly, many advisers shift between the standards, explains University of Mississippi securities law professor Mercer Bullard.

So ask your adviser whether and when he or she is a fiduciary.

Why You Need Protection The growing importance of IRAs and similar accounts highlights the need for good advice.

GROWTH OF RETIREMENT SAVINGS Net worth held in retirement accounts 30% 20% 10%

1989

’95

2001

’07

’13

NOTE: Percentages are based on median figures for families in the second-highest income decile (median pretax income of $122,700). SOURCE: Federal Reserve Survey of Consumer Finances 2013

The fiduciary rule could be crucial when you retire or leave a job.

Financial advisers often suggest you roll over money from your 401(k) or other workplace plan to an IRA. That can mean a big payday for them—perhaps tens of thousands of dollars in commissions. The new rule doesn’t outlaw such payments, but supporters believe it will rein in sales pitches by requiring an adviser to justify in writing why a rollover is in your best interest and what services you’re getting in return for his or her compensation. “Make sure it’s worth it to you,” says retirement law attorney Marcia Wagner.

YOUR ADVISER MIGHT CHANGE Some financial trade groups have argued that less wealthy customers will be hurt by the fiduciary rule, since firms that have served them under the suitability standard will drop them because of the lower profits and higher administrative expenses associated with a fiduciary obligation.

Should that happen to you, you’ll have choices. In response to the new rule, the brokerage firm LPL, for example, is cutting prices and lowering the minimum on its fiduciary-compliant Optimum Market Portfolios to $10,000 from $15,000.

You can also get fiduciary advice through services existing well before the new rule. Vanguard’s Personal Advisor Services, if you have at least $50,000, connects you with financial pros who work by phone or email. And companies known as robo-advisers, including Wealthfront and Betterment, can create a customized portfolio for an initial investment of under $1,000.

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de

Rx for Deflating Biotechs THOUGH THIS BURSTING BUBBLE SHARES DNA WITH THE DOTCOM CRASH, THERE ARE KEY DIFFERENCES. by Carla Fried

Photo illustration by

dav i d s c h w e n

FOR MUCH OF THIS bull market, biotechnology stocks were like anabolic steroids for your portfolio. They soared nearly 600% from March 2009 to last summer—almost three times the gains for the broad market. More recently, though, this risky but fast-growing segment of the health care sector has been afflicted with a number of ailments, sinking about 30% since July.

A sharp decline in a sexy part of the market that had skyrocketed to stratospheric levels.

Sound familiar? Biotechs share several genetic markers with dotcom stocks from more than 15 JUNE 2016

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Invest

RX FOR BIOTECH | FUND X-RAY | THE INTELLIGENT INVESTOR

years ago. Many biotech companies, which use biological materials to create drugs (pharmaceutical firms, by contrast, use plant and chemical compounds), have yet to turn a profit. Their shares have risen on the promise of treatments in development that could be blockbusters one day—or busts.

Moreover, this group was bid up to dizzying heights. Shares of small biotech companies were trading at a price/earnings ratio of over 300 last summer before the collapse.

Even now the S&P 600 small biotech stock index sports a P/E of 32, based on projected profits.

Still, there are differences. In the late 1990s there were no “cheap” Internet stocks to be had.

On the other hand “there are a lot of very profitable biotech companies and other health care segments that are trading at reasonable and sometimes low valuations,” says Jeffrey Loo, director of health care equity research at S&P Global Market Intelligence.

The key to investing in the wake of this burst bubble, then, is knowing where those values are.

it’s below the historical average (see chart below).

Health care is attractive for another reason. In the long run, the aging population continues to be a demographic tailwind, says Brian Lazorishak, senior portfolio manager at Stack Financial Management. A bonus given this bull market’s advanced age: When bear markets strike, big, profitable health care stocks have tended to fall half as much as the market.

Lazorishak recommends a diversified approach to health care, ranging from defensive drugmakers such as Johnson & Johnson (JNJ) to pharmaceutical distributors like

A Similar Slide?

The biotech selloff sure looks a lot like the dotcom bust in 2000.

LOSS SIX MONTHS INTO THE SLIDE Biotech stocks now

Internet stocks in 2000

-39%

-43%

BROADEN YOUR HORIZONS In the dotcom era, euphoria for unproven startups seeped into nearly every nook and cranny of the whole tech sector. Valuations got so frothy that some tech giants such as Cisco Systems still aren’t back to their inflated highs.

The biotech craze, by contrast, never infected the broader health care sector that has only modestly outpaced the S&P 500 since March 2009. Blue-chip health stocks trade at 16.1 times projected profits. Not only is that lower than the 17.9 P/E for the S&P 500,

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But all of tech was frothy then—not so with health care stocks today.

VALUATIONS Post-crash P/E ratio Historical average P/E Health care stocks

16 18 Tech stocks

48 18 NOTE: Price/earnings ratios are based on projected profits.

SOURCES: YCharts.com, S&P Global, MONEY research

AmerisourceBergen (ABC) to medical suppliers such as Becton Dickinson (BDX) that are positioned to benefit from growing health spending.

Alternatively, you can go with Health Care Select Sector SPDR (XLV), a low-cost ETF (expense ratio: 0.14%) that owns all three stocks.

SHOP IN THE DISCOUNT BIN Several years after the dotcom crash, tech went from the realm of speculators to bargain hunters.

Biotechs—at least shares of the bigger, established companies that generate real products and profits—have already reached that point. “Large-cap biotechs are at the best valuation we’ve seen” since tracking the group in 1985, says Greg Swenson at Leuthold Weeden Capital Management.

Take Gilead Sciences (GILD). The company, which earned more than $18 billion last year, is suddenly getting a cool reception from gung ho growth investors. They worry that the explosive growth in Gilead’s blockbuster HIV and hepatitis C drugs—which have been on the market for a few years—may be slowing. Gilead is also enmeshed in the recent public ire over sharply rising drug prices that has been the focus of congressional hearings.

Yet even if growth slows to a trickle, the shares trade at a mere eight times Gilead’s expected 2016 earnings. And the stock pays a decent dividend yield of 1.8%.

Gilead and fellow giants Biogen (BIIB) and Amgen (AMGN) are in the Market Vectors Morningstar Wide Moat ETF (MOAT). The fund owns only firms with competitive advantages trading at the widest discounts to their true value, according to Morningstar analysts.

RX FOR BIOTECH | FUND X-RAY | THE INTELLIGENT INVESTOR

Invest

X-Ray: Fidelity Low-Priced Stock THIS HUGE SMALL-STOCK FUND DEFIES CONVENTION—AND THE ODDS. by Ian Salisbury Fidelity Low-Priced Stock gets its name from a peculiar requirement: to buy only stocks trading at $35 a share or less. That’s an old-fashioned way to spot smaller, overlooked equities, yet you can’t argue with the results.

Legendary stock picker Joel Tillinghast has posted gains of 7.3% a year over the past decade, beating the market and his peers. While smaller-stock funds tend to shutter if assets swell—to let the managers focus on just a few of their “best ideas”—Tillinghast holds 867 stocks in a $40 billion portfolio. Quirky for sure, but is it right for you?

No Average Joel

Hard to Pigeonhole

The Clock Is Ticking

Manager Joel Tillinghast has consistently posted outsize gains.

The fund focuses on smaller stocks but actually owns shares of all sizes.

How much longer can investors expect Tillinghast’s run to last?

ANNUAL GAIN SINCE DEC. 1989 INCEPTION

LOW-PRICED STOCK’S PORTFOLIO

12%

Megastocks

13.7%

10.0%

9.2%

Fidelity Low-Priced Stock

Average small-stock fund

Average U.S. stock fund

Tillinghast is a value investor who keeps things simple. He favors firms with business models he can easily understand and strong competitive advantages. This strategy helped him become the literal poster child for stock picking—Fidelity featured him in ads promoting active management.

Yet Tillinghast achieved some of his success by borrowing a page from passive management. With nearly 900 stocks, his fund owns a wider array of shares than many index funds. Low-Priced also charges just 0.79% a year, only a hair above the average 0.72% fees levied by smalland midcap index funds. And he also minimizes trading costs through patience. With a turnover rate of 10%, he hangs on to stocks longer than the Russell 2000 small-company index.

25% Large

MANAGER TENURE

26.5 YEARS

5.8 YEARS

34%

Midsize

29% Small

For its first 15 years, Low-Priced Stock specialized in small-company shares. But as the fund’s assets grew, it became harder for a portfolio this big to just seed tiny businesses.

Today, Low-Priced Stock is classified as a “midcap” fund, but even that belies its unconventional approach.

While there’s still a “tilt” to smaller names, the fund also owns some megasize stocks like Microsoft and Oracle.“It helps diversify the risk,” Tillinghast says. Plus about 45% of his holdings are in international equities, which have dragged performance a bit over the past year. This idiosyncratic approach means Low-Priced Stock can’t neatly replace a small- or large-stock fund in your core portfolio.

“It’s a niche play,” says Mount Sinai, N.Y., planner Peter Creedon.

Fidelity Low-Priced

Average fund manager

While Tillinghast’s distinctive strategy has helped his fund generate stellar returns, the downside is that Low-Priced Stock relies heavily on his skills. “He’s a celebrity manager,” says Woburn, Mass., financial planner Kashif Ahmed. “If something were to happen to him suddenly, his fans may rush out the door, leaving real, long-term investors vulnerable.”

Tillinghast, who turns 58 in June, says he has no plans to go anywhere.

But he’s been at the helm for 26 years, outlasting 99% of his peers.

A few years ago he ceded a sliver— about 6%—of the portfolio to a group of six research analysts who can take charge when he’s away. The question is, If handed the remaining $37.6 billion, can “Team Joel” replicate Tillinghast’s winning record?

SOURCE: Morningstar

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Invest

RX FOR BIOTECH | FUND X-RAY | THE INTELLIGENT INVESTOR

past five years the fund gained 11.3% annually, outpacing peers by nearly two points a year.

EMERGING OPPORTUNITIES

Seeing the Value in a Shattering Event THE MARKET OFTEN OVERREACTS NEGATIVELY TO ONETIME OCCURRENCES. HERE’S HOW TO PROFIT FROM THAT.

by John Waggoner IN THE LONG RUN the stock market may well be a wise predictor of future corporate earnings. In the short term it has all the wisdom of a herd of drunken buffalo.

A simple example: Stocks dropped from the S&P 500 often fall sharply, while those added rise.

Membership in an index has nothing to do with a company’s outlook, but when a stock falls out of the S&P, hundreds of funds automatically sell—and that gives a savvy investor a chance to buy cheaply.

Spin-offs are another example.

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Investors often shun jettisoned businesses, assuming there’s a reason for being kicked to the curb.

Yet studies show that spun-off firms often outperform, as they’re overlooked and underappreciated.

A NEW TWIST ON VALUE This sounds like the essence of bargain hunting, but traditional value funds look for long-standing misjudgments. There are now some funds that take advantage of this type of short-term silliness, and they even have a name: “event driven” funds. Guggenheim Spin-Off ETF (CSD), for instance, owns shares of mostly small and midsize companies that were unloaded. Over the

Illustration by

taylor callery

Some funds don’t just look for bad situations; they seek out corporate moves that have historically led to opportunities, such as mergers.

Investors have long profited by betting on the modest gap between an acquisition target’s current price and the deal price. When investing in announced mergers, the return has typically been about 5% to 7%, says Mark McKenna, manager of BlackRock Event Driven Equity (BALPX).

But he thinks that will rise to 10% as the pace of mergers increases.

Arvind Navaratnam, manager of Fidelity Event Driven Opportunities (FARNX), also looks at mergers, among other incidents. He scooped up shares of Journal Media Group when it announced plans to merge its broadcast assets with E.W. Scripps. (The companies also spun off their print divisions into a new company.) The stock popped more than 40% when Gannett announced that it was buying Journal Media last October.

As with all forms of value investing, there are risks. Navaratnam also held a big stake in Valeant Pharmaceuticals, a serial acquirer whose shares have sunk more than 80% in the past year. Despite that, his fund has beaten 80% of its peers in the past 12 months.

There’s one other benefit beyond performance. Because they look for quirky buy and sell signals, event funds tend to be poorly correlated with the broad market, making them good diversifiers.

Columnist John Waggoner is the author of three books on Wall Street and investing.

HAVE YOU BEEN SETTLING FOR AVERAGE? We have not. 100% of T. Rowe Price Retirement Funds have above-average returns for the 10-year period and below-average costs.

• 100% of our Retirement Funds beat their 10-year Lipper average as of 3/31/16* • 100% of our Retirement Funds have expenses below their Lipper average as of 3/31/16** Results will vary for other periods. Past performance cannot guarantee future results.

Request a prospectus or summary prospectus; each includes investment objectives, risks, fees, expenses, and other information that you should read and consider carefully before investing.

Call our Retirement Specialists to roll over your old 401(k).†

Rollover with ConfidenceSM troweprice.com/rollover | 800-541-5862

The principal value of the Retirement Funds is not guaranteed at any time, including at or after the target date, which is the approximate year an investor plans to retire (assumed to be age 65) and likely stop making new investments in the fund. If an investor plans to retire significantly earlier or later than age 65, the funds may not be an appropriate investment even if the investor is retiring on or near the target date. The funds’ allocations among a broad range of underlying T. Rowe Price stock and bond funds will change over time. The funds emphasize potential capital appreciation during the early phases of retirement asset accumulation, balance the need for appreciation with the need for income as retirement approaches, and focus on supporting an income stream over a long-term postretirement withdrawal horizon. The funds are not designed for a lump-sum redemption at the target date and do not guarantee a particular level of income. The funds maintain a substantial allocation to equities both prior to and after the target date, which can result in greater volatility over shorter time horizons.

*20 of our 36 Retirement Funds had a 10-year track record as of 3/31/16 (includes all share classes). All 20 of these 20 funds (100%) beat their Lipper average for the 10-year period. 36 of 36, 36 of 36, and 36 of 36 of the Retirement Funds outperformed their Lipper average for the 1-, 3-, 5-year periods ended 3/31/16, respectively. Calculations are based on cumulative total return. Not all funds outperformed for all periods. (Source for data: Lipper Inc.) **Keep in mind that an IRA may be subject to an annual fee, and a fee may be assessed if the IRA is closed. † Consider all available options, including remaining with your current retirement plan, rolling over into a new employer’s plan or IRA, or cashing out the account value.

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UNAV082910

COVER STORY

THE

21 Most Valuable Career Skills Whether you’re looking to land a hefty raise or nab a big promotion, our exclusive new study of the know-how that pays off the most at work can help you reach your goal.

By CYBELE WEISSER, KERRI ANNE RENZULLI, and MEGAN LEONHARDT

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You’ve paid your dues. You work hard, in a field you love.

You are, by most measures, successful in your career.

Now you’re ready for the step—or, perhaps, leap—to a bigger job, the next level, substantially higher pay.

In this complex, fast-changing job market, just putting in the hours and being good at what you do may not be enough. You need an edge. And the surest one these days is to possess the skills that are most in demand in your field, that help your employer keep up with the technological, economic, and social forces that are transforming so many industries. The key, of course, is to know exactly what those skills are, how to get them, and what the payoff will be.

To provide that critical insight, MONEY and compensation data site PayScale.com teamed up to develop a unique new analysis of the skills that employers place the highest value on now. Adding this know-how to your arsenal is essential. “You can’t remain stagnant,” says Lydia Frank, PayScale’s editorial director. “You always want to

be learning something new; you always want to be advancing.”

To identify the abilities that bring the greatest rewards, MONEY and PayScale analyzed 54 million employee profiles, across 350 industries, with 15,000 job titles— from entry-level workers to top execs. We compared people with the same title, age, location, and experience, isolating the specific skills (from a universe of about 2,300) correlated with higher pay, advancement, and career opportunity. The result: an authoritative list of the skills with the best payoff in the workforce today.

Of course, knowing which skills are in demand is just the first step.

So in the pages that follow, you’ll also find great advice from career coaches, academics, and recruiters on how to get the know-how you need. The rest is up to you.

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CAREERS 2016

MOST VALUABLE SKILLS

THE FINDINGS

What Employers Pay More For MAKING SENSE OF BIG DATA

TOP SKI LL FOR …

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to organize, analyze, and apply it.

Enter the data maven. “Mainstream American companies have come to realize that in order to become more effective in the marketplace, they need to analyze data,” says Matt Sigelman, the CEO of Burning Glass Technologies, which analyzes job listing information. “And we’re seeing those skills showing up at a premium in a variety of industries, including marketing, logistics jobs, and operations management jobs, just to name a few.”

Top Data Skills / Avg. Pay Boost » SAS (Statistical Analysis System) + 6.1% » Data Mining/Data Warehousing + 5.1% » Data Modeling + 5%

MANAGING THE BOTTOM LINE If you’re not a finance wonk, you might be tempted to leave the numbers stuff to the bean counters upstairs. But no matter where you sit in your firm’s org chart, you’ll get a boost by understanding what keeps the company in the black. “When we ask our alums what they’d do differently in their career, the most common response is that they wish they’d taken more financial accounting classes,” says Thomas Lys, a professor emeritus at Northwestern University’s Kellogg School of Management.

Understanding how dayto-day deals and decisions affect profitability becomes even more important as you advance. A separate analysis of the skills that set apart executives from junior staff (see the chart on page 46) puts

P H O TO G R A P H S B Y T H O M A S B A R W I C K /G E T T Y ( 2 ) ; G E T T Y I M A G E S ( E M P T Y O F F I C E , N O T E B O O K , A N D P O ST- I T N O T E S )

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Across a variety of fields, workers earn more when they can make sense of the exponentially more complex data now available about the markets their employers serve. Although companies have long tracked information about customers, sales, and suppliers, businesses today have access to a far richer vein of information. Every time you click on a website, shop online, watch a video, or do pretty much anything else, you leave behind crumbs of information. “People now create more data in an hour than they used to in a month,” says Traci Fiatte, a group president at Randstad, an international provider of HR services.

Thanks to massive improvements in the software that collects, stores, and integrates data, companies can use this information to do things like target new customers, improve service, and offer more personalized products—as long as they employ folks who understand how

THE 21 MOST VALUABLE CAREER SKILLS These high-demand skills give you the best shot at getting a higher salary than your peers, across multiple types of jobs.

RANK SKILL

WHAT IT INVOLVES

PAY PREMIUM

1

SAS (Statistical Analysis System)

Understanding of this data analysis software commands the highest salary premium on our list.

2

Data Mining/Data Warehousing

These skills involve integrating large data sets and combing through them for patterns with bottom-line impact.

5.1%

3

Search Engine Marketing

Digital marketing is hot. Being able to reach customers via search engine ads gives you an edge.

5.0%

4

Data Modeling

This database design skill is correlated with a juicy pay bump across several job types, from the sciences to finance.

5.0%

5

Contract Negotiation

It’s not just for lawyers: Negotiating chops also command higher pay in business, finance, and management jobs.

5.0%

6

Software Development

From the sciences to engineering, people who can build and customize digital tools wind up earning more.

4.9%

7

Strategic Project Management

The value here stems from a tricky balancing act: high-level thinking plus careful management of details.

4.4%

8

Strategic Planning

This skill hits a trifecta: higher pay, a better shot at an executive slot, and a calling card in a wide range of industries.

4.3%

9

Technical Sales

Sales pros typically fatten their paycheck if they can handle technologically complex products and services.

4.3%

10

Customer Service Metrics

With greater focus on customers’ experience, companies want staff who can track user satisfaction and anticipate future needs.

4.3%

11

Financial Analysis

Managing costs, revenue, and (ultimately) profitability makes you a key team asset.

4.0%

12

Risk Management/Risk Control

The ability to assess and minimize operational threats yields a pay premium in fields ranging from business to health care.

3.9%

13

SAP Material Management

This piece of software is important for managing purchasing, inventory, and other elements of a supply chain.

3.9%

14

Business Analysis

Workers who can identify business needs and solutions tend to earn more across a broad range of occupations.

3.8%

15

IT Security and Infrastructure

A wave of high-profile hacks has driven employers to pay more for people who can protect tech systems from breaches.

3.7%

16

Lean Manufacturing

This skill set, focused on reducing waste, is tied to a management philosophy that grew out of a Toyota manufacturing system.

3.6%

17

Forecasting

Companies value this skill, which pairs management insights with historical data to generate business outlooks.

3.5%

18

Clinical Education

The ability to teach patient procedures correlates with higher pay in health care and social sciences as well as education.

3.4%

19

Computer-Aided Design/Manufacturing

These digital product design skills pay off in fields as varied as health care and engineering.

3.4%

20

Systems Troubleshooting

Earn more in several fields with this problem-solving approach, which methodically diagnoses and repairs operational failures.

3.3%

21

New Business Development

Bringing in partners and brokering revenue-generating deals are good ways to pump up your paycheck.

3.0%

6.1%

NOTES: Analysis identified skills that delivered a 3% or greater pay boost across three or more of the Department of Labor’s 23 major occupation groups, holding other factors (such as title, location, and years of experience) constant. Full methodology on page 47. SOURCES: PayScale.com, MONEY research

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MOST VALUABLE SKILLS

“When I work with executives, I find that what’s really missing is an understanding of big-picture questions.”

management of profit and loss statements in the No. 2 spot. Executives with that skill also earned 5.4% more than their peers.

“When I work with executives, I find that what’s really missing is an understanding of big-picture questions,” says Lys. “They will be trained in how to book a transaction, but they don’t know how to look at financial statements and answer whether this company is doing well or not and why.”

Even workers in creative fields may need to make business decisions that affect the bottom line. “One of my clients was a photographer who wound up working for a photo agency,” says Paul McDon-

—THOMAS LYS, KELLOGG SCHOOL OF MANAGEMENT

ald, senior executive director at staffing firm Robert Half. As this person advanced, he wound up working more with the agency’s clients, McDonald says. “And all of a sudden he was involved in the finances and budgeting of the entire company.”

Top Business Skills / Avg. Pay Boost » Contract Negotiation + 5% » Financial Analysis + 4%

WRANGLING NEW TECH It’s hardly news that hard-core tech folks—coders, IT managers, server administrators—have a major edge when it comes to valued job skills. A LinkedIn

BEST SKILLS TO EARN A PROMOTION Ready to move up? MONEY and PayScale identified the skills that distinguish executives and managers from employees further down the ladder. (The bigger the text size, the more significant the difference.) Some of these talents are also associated with significantly higher salaries—but not all. At senior levels, a quality like leadership is simply table stakes.

AT THE EXECUTIVE LEVEL

strategic planning organizational development

business management strategy development leadership

program management

business development

profit and loss statements business strategy

commercial loans AT THE MANAGER LEVEL

1. Team Leadership » 2. Event Management » 3. Clinical Supervision » 4. People Management » 5. Operations Management 6. Legal Compliance » 7. Sales Management » 8. ADP Payroll System » 9. Accounting » 10. Employee Relations

NOTE: Skills here are disproportionately more likely to appear in executive or manager/supervisor profiles than in lower-level jobs. SOURCES: PayScale.com, MONEY research.

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analysis of the most in-demand skills for 2016, for instance, found that 19 of the top 25 were technology-related, with the top of the list dominated by cutting-edge areas such as cloud computing, software development for mobile devices, and online security.

But IT skills are only a minor part of the story, says LinkedIn spokesman Joseph Roualdes: “Tech is in demand across nearly every industry.”

Most employers favor technical skills specific to the field, notes Katie Bardaro, PayScale’s vice president of data analytics.

Just within human resources, for example, a separate PayScale analysis found that workers who can use the popular Workday software are paid 9.6% more than their peers. Those in health care earn 8.5% more if well versed in Epic software, which helps companies manage electronic health care records. Marketers, meanwhile, must navigate search engine behavior and customer analytics.

Not sure what matters most in your field? Ask your manager what technical skills are missing from your team, says Robert Half’s McDonald.

rather than just the tasks of a job,” says Boston-area recruiter David Hayes.

And the higher you go, the more valuable strategic thinking becomes. Both “strategy development” and “business strategy” are skills that set executives apart, for instance. Moreover, even within that elite stratum, workers with those skills earn 9.1% and 8.2%, respectively, more than those without.

Top Strategy Skills / Avg. Pay Boost » Strategic Planning + 4.3% » Business Analysis + 3.8%

Top Tech Skills / Avg. Pay Boost » Search Engine Marketing + 5% » Customer Service Metrics + 4.3% » SAP Material Management + 3.9%

Learn More Online STRATEGIC THINKING If you right-brain types are starting to feel discouraged, take note: Some of the most sought-after skills have nothing to do with science and technology. Two of the 10 most valued skills involve highlevel thinking and organization: strategic project management and strategic planning. “Strategy is about understanding the business purpose of a job

• The HighestPaying Skills for 100-Plus Jobs • The 25 Talents That Deliver the Biggest Salary Boost • Which Skills to Leave Off Your Résumé

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• 5 Secrets to Advancement From a Top Recruiter • Name Your Most Valuable Skill AND MORE...

Go to money.com/ bestskills

Methodology MONEY and PayScale.com combed through the compensation experts’ database of 54 million employee profiles, ranging across 350 industries and 15,000 job types, looking at worker pay and the skills employees said were critical to their job. Here’s how we used that info:

» For the Most Valuable Career Skills list (page 45), we identified those correlated with at least 3% higher pay for three or more major job types—defined by the U.S. Department of Labor’s Standard Occupational Classifications— holding constant title, location, experience, and industry. » Best Skills to Earn a Promotion (opposite page) highlights talents that are correlated with at least 2% higher pay and are disproportionately more likely to show up at the executive or manager/supervisor level than at lower job levels. We then ranked them by how often they appear, with higher pay used as a tiebreaker. » The Most Flexible Career Skills (page 50) correlate with at least 2% higher pay in seven or more major job types. For all the analyses, MONEY focused on professional job titles.

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MOST VALUABLE SKILLS

THE ADVICE

TOP S

KILL F

OR…

“Give your boss a heads-up that you’re trying to improve yourself.”

—CAREER COACH KATHY ROBINSON

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How to Get the Skills You Need Knowing which skills are in demand is the first step. Next, you’ll need to go out and acquire them—ideally, without spending large amounts of money or taking a lot of time off work.

Fortunately, you have options, and perhaps even employer support—particularly if you understand which abilities matter most to the person who signs your checks. To ensure that your efforts will be valued (and rewarded), discuss training plans with your manager during an annual review or another one-on-one conversation.

“That makes it collaborative,” says Kathy Robinson, a career coach in Boston. “Give your boss a heads-up that you’re trying to improve yourself and not happy with the status quo. It makes it more of a partnership.”

The following five strategies can help you position yourself for success.

FIND FREE, IN-HOUSE TRAINING Nearly 70% of employers offer formal staff training, according to a recent CareerBuilder survey of more than

JUNE 2016

2,300 hiring and HR managers. Classes cover a variety of soft and hard skills, from public speaking to the basics of data analytics. Many large firms give employees free access to online provider Lynda.com’s 3,500 web-based tutorials, which range from design (a five-hour lesson on drawing vector graphics) to business strategy (such as an hourlong training session on managing budget-constrained projects).

In some cases, Lynda provides comprehensive, multi-unit “learning paths.”

For instance, if you want to pick up computer-aided design—No. 19 on the Most Valuable Skills list—Lynda offers four separate paths, from a 20-hour course on the Solidworks program to a 53-hour class that trains you to become an architecture CAD technician.

HIT THE WEB Like Lynda, sites like Coursera, Udemy, and EdX offer hundreds of online classes, most of which are free or low-cost (usually less than $100). These sites are best for people who already know they can learn well on their own, says career coach Cheryl Palmer. “It takes a certain amount of discipline to stay motivated to do this type of training without any external pressure,” she points out.

Want to be able to understand and exploit customer service metrics, No. 10 on the Most Valuable Skills list?

Coursera has a four-week Customer Analytics course, created by the University of Pennsylvania, that will take five to six hours a week and cost $95.

To beef up business skills, Kellogg professor Lys suggests a class in financial statement analysis, which will help you look at a firm’s ledgers and interpret the results. “If I give you the com-

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CAREERS 2016

MOST VALUABLE SKILLS

MOST FLEXIBLE CAREER SKILLS Looking to jump to a new job or industry?

The following talents are valued across a wide range of professions.

1. Project Management (17 out of 23 major job types)

2. Leadership 3. Budget Management 4. Training Program Development 5. Program Management 6. Strategic Planning 7. Financial Analysis 8. Regulatory Compliance

NOTES: These skills show at least 2% higher pay across seven or more of the Labor Department’s major job classifications; pay difference was used as a tiebreaker.

SOURCES: PayScale.com, MONEY research

T O P S K IL

50

L FOR…

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pany’s reported financials, you need to know how to zero in on how well the company is doing,” he says. “For example, labor expenses can be hidden under the cost of goods sold. If you’re in human resources, it can be really helpful to know that.”

GET CERTIFIED For some skills, particularly those tied to software, recruiters and hiring managers seek out formal certifications. So if you’re learning, say, SAS or medical billing tools, take accredited classes, says Randstad’s Fiatte—perhaps through a professional organization or local college.

Project management, the most flexible skill we identified (see the graphic at left), falls into this category.

Already doing the work? With three years of related experience, you can get certified as a Project Management Professional. You’ll need 35 hours of coursework—you can use online study (some of which is free) or classroom training (often around $1,000)—and a passing grade on the 200-question exam ($555 to the Project Management Institute, which issues the credential).

Half of the companies in the CareerBuilder survey said they pay for at least a portion of training and certifications that employees get on their own. Even if your company doesn’t have a formal program, ask whether your manager will cover at least some of the cost (and, if needed, give you time to attend class).

If you pay out of pocket—even if you’ll get reimbursed eventually—you can use federal student loans to cover the bills, as long as you’re taking classes at an accredited institution. And for accredited education costs your employer won’t cover, you can claim 20% (up to $2,000 a year) as a lifetime learning credit on your tax return if you fall below the income limit ($130,000 modified adjusted gross in-

come in 2016 for married couples filling jointly, or $65,000 for singles).

VOLUNTEER FOR A PROJECT In some cases, suggests recruiter McDonald, hands-on practice is the best way to learn. Is your company investigating a new cloud software package, for instance? Ask to be one of the testers and, ideally, to help with the implementation of the selected tool. “It’s a way to get both learning and experience,” McDonald says.

Another spot where real-life experience helps is contract negotiation, No. 5 on the list. Don’t expect to be included on big transactions, says Robinson, the career coach. But your manager may let you take on a smaller deal, handle part of a client relationship, or shadow someone during negotiations. “Asking your boss to put you in that situation is the first step,” Robinson says.

Palmer suggests another tactic: Pick up skills by volunteering at a nonprofit or an industry group. “You can use a site like volunteermatch.org to find local opportunities in the type of work that you want to gain expertise in,” she says.

LINE UP A MENTOR To develop a trait like strategic thinking, suggests Samantha Raniere, an executive coach in San Francisco, find a personal adviser—someone who can both demonstrate the higher-level skill and give you immediate feedback on your own projects. Ideally, this will be someone you work closely with, perhaps even your manager. “You want to work under someone who is really good at it,” Raniere says.

Again, as with most skill building, you’ll probably need a mix of new insights and practical experience. “The ideal setup for success,” she says, “is having an apprenticeship or mentorship, backed up by deep knowledge of the business.”

WHAT ONE SKILL HAS MOST HELPED YOUR CAREER? Let us know at letters@moneymail.com.

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CAREERS 2016

DREAM MAKEOVERS

NOT READY TO RETIRE

HELP! I Want a Career Makeover

Team MONEY to the rescue: Our experts give advice on jobs, finances, and fashion to three professionals ready for a change.

Lose the Chuck Taylors.

By ELAINE POFELDT and KERRI ANNE RENZULLI

C L O C K W I S E F R O M TO P : P H OT O G R A P H S B Y R YA N K E T T E R M E N ; L U I S G A R C I A ; K AT H R Y N G A M B L E

SEEKING A BIGGER STAGE

GETTING ON THE RIGHT TRACK

Introduce yourself to the marketing team.

Take care with your cash flow.

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CAREERS 2016

DREAM MAKEOVERS

A

54

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JUNE 2016

The MONEY Makeover Team

“Be the CEO of your own career.”

Jaime Klein launched Inspire Human Resources, an HR consulting firm, in 2007.

She formerly worked for American Express and has a master’s degree in organizational psychology.

“Transitions aren’t failures, but times of opportunity.”

Linda Rossetti is a career coach in the Boston area who specializes in life transitions.

She’s the author of Women & Transition and managing director of an angelinvestor capital network.

“Changing jobs? Don’t jump off a cliff unless there’s water below.”

Donald Duncan is a certified public accountant and a certified financial planner with 35 years of experience. Based in Chicago, he heads D3 Financial Counselors, which he founded in 1997.

“Dress for the role you want to be in, not the one you have.”

Sylvie di Giusto is an image consultant and corporate trainer based in New York City. She’s the author of The Image of Leadership and a former corporate human resources executive.

P H O TO G R A P H S : C O U R T E S Y O F S U B J E C T. B R I T T N Y G R A D Y: S T Y L I N G B Y T W I L A T R A H A N , H A I R A N D M A K E U P B Y A N A M O N I Q U E . G E R A L D S O R O K I N : ST Y L I N G B Y J E S S I C A M I L L E R , G R O O M I N G B Y L I N D S AY K AV E N , C L OT H I N G P R O V I D E D B Y T H E G O O D FA N C Y, V O N M A U R , A N D G E N T L E M A N C A R E . B Y R O N C A P L A N : S T Y L I N G B Y J U D I M A H E R , G R O O M I N G B Y S Y LV I E H E R R O U , C L OT H I N G P R O V I D E D B Y R O S E N B L U M ’ S

re you yearning to make a big change to your career?

Maybe you’re ready to take a big leap in responsibilities.

Maybe you’d like to stay relevant in a shifting workplace. Or maybe you just want to get on a different track altogether.

Whatever your dream, wouldn’t you be happy to inhabit your own little Cinderella story— one in which a team of experts swoops in with wise counsel to put you in reach of your career goal? Wouldn’t it be great to have a lineup of advisers offering practical strategies on how to get an edge and unlock your full potential?

That’s the fantasy that MONEY has made a reality for the three professionals in this story. They’re at different stages of their MAKEOVERS IN ACTION career, each with a different Watch all goal and each facing differthree subjects transformed ent challenges in reaching it. in before-andafter videos.

Coming to their rescue with money.com/ advice tailored especially bestskills for them are four specialized pros: a human resources consultant, a job coach, a certified financial planner, and an image consultant.

What our three subjects have in common with one another—and perhaps you—is a desire to make a major change, a willingness to listen to good advice, and a readiness to act on what they’ve heard. Read their stories to learn about the challenges they face and the solutions that MONEY’s experts have devised. And prepare to take full advantage of their wisdom in order to land work that’s a great fit for you. In other words, get ready for the next dream career makeover: yours.

WHEN YOU SHIP WITH US, YOUR BUSINESS BECOMES OUR BUSINESS. That’s why we make more eCommerce deliveries to homes than anyone else in the country.

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CAREERS 2016

DREAM MAKEOVERS

Getting on the Right Track Brittny Grady / 26 / Account Manager / Nashville rittny Grady got hooked on marketing in college, in part through internships doing social media and community outreach for a local arts group. But after graduation Grady couldn’t find a job in her chosen field. Needing to repay student loans and meet living expenses, she landed a sales assistant job at a computer company. Promoted to account manager—she sells goods and services to firms that resell them to small businesses— she now earns about $45,000 a year, including commissions.

Grady hopes to pivot from sales to marketing, but she hasn’t seen many entry-level openings at her employer. Earlier this year she started applying for marketing jobs elsewhere. She has gotten encouragement and advice from a mentor who works in the field, but despite Grady’s sales experience and promotion, her five applications thus far have led nowhere. “I still can’t seem to land the job that’s right for me and get my shot,” she says.

B BEFORE

The Financial Plan Lighten up on plastic.

Given Grady’s $13,000 in federal student loans and $1,700 credit card balance, Donald Duncan says a top priority for her is to lower her debt—a move that will make it easier to handle the salary cut she’ll probably have to take to get her first marketing job.

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Grady is paying the minimum on her credit card debt, but Duncan wants her to pay off the full balance at once by tapping her $2,300 emergency fund.

“The interest you would save would be phenomenal,” he says.

Afterward, she can focus on rebuilding that emergency fund to cover three months of living expenses. “Cutting down debt is my No. 1 priority,” she says.

JUNE 2016

The Job Hunt Accentuate the positives.

Grady’s biggest impediment to nabbing an entrylevel marketing gig is her résumé, says Linda Rossetti. “None of her great work experiences or passion for marketing comes across,” she says. In the “Experience” section, she needs to play up her college marketing efforts, highlighting “marquee moments” or accomplishments, especially any that can be quantified. She should also draw attention to her former duties as a sales assistant, which gave her experience tracking and reporting on sales and marketing programs.

Grady also needs to customize her résumé for each job application, says Rossetti. “Look over the job listing carefully and mirror the language they use,” she says. “You want their key phrases to pop up in your résumé so that when they use software to sort through online applications, yours rises to the top.”

“I’m going to pay it off in full, using my savings.”

Come up with a system.

Grady, who says she feels undereducated about personal finance, hasn’t really focused on where her money goes. Compensated via a combination of salary and commissions, she tends to spend her base pay on day-to-day expenses, except for automated savings of

Do some marketing now.

Grady, who majored in communications at school and took courses in both marketing and public relations, has to beef up her real-world experience, says Rossetti. Her suggestion: Grady, who operates a mentoring program for teenage girls locally, should put some marketing goals into place for the program, then work on fulfilling them. “She can point to that success in interviews,” says Rossetti.

Don’t give up at work.

Even if Grady isn’t working in the marketing department, she can get experience by taking on projects with a marketing bent, says Jaime Klein. She needs to introduce herself to people on the marketing team. That will put her on their radar if an opportunity does arise, and it will increase her industry knowledge, better preparing her for future interviews. Soon afterward, Grady says she has made email contact with someone from marketing; they’ll be talking soon.

$25 per check. She uses her commission money on treats for herself like hair appointments.

Duncan says she can make headway toward financial stability by dividing her commission check into thirds, among student loans, fun stuff for herself, and savings— in both her emergency fund and a 401(k). “This is a great idea,” says Grady. “I’ve never taken the time to break it down before.”

Main portraits photographed by

ac k e r m a n + g ru b e r

The Image Show maturity.

It’s important for Grady to present herself as a responsible, experienced professional, says Sylvie di Giusto.

For women, makeup is an important finishing detail in their overall look, she says.

“It shows you’ve put in effort.” But, she adds, “keep it simple and natural. You don’t want to stand out because of your makeup.”

Overprepare.

Wearing a jacket to an interview will reinforce Grady’s professional appearance, says di Giusto. If the office is more casual than anticipated, she can take it off. But if she doesn’t bring one and the office is dressier, she can’t add a layer. “A jacket,” she says, “can be your lifesaver.” Says Grady, “I agree it gives a more polished look. I feel more put-together in it.”

Wear a fitting shoe.

Especially for job interviews, di Giusto tells Grady to find a comfortable midsize heel that makes her feel happy: “When you wear a great heel, your body language changes. You walk straighter.

Your shoulders go back. You appear more confident.”

Grady reports that she likes the heels she wore in the photo shoot: “They had a bit of personality.”

AFTER

“This outfit made me feel like, ‘This job is mine.

You need to hire me.’ ”

CAREERS 2016

DREAM MAKEOVERS

Seeking a Bigger Stage Gerald Sorokin / 52 / Nonprofit Administrator / Iowa City ver the 17 years Jerry Sorokin has been executive director of the Shulman Hillel Foundation at the University of Iowa, the Jewish group has tripled the number of students and community members it regularly serves. Both the organization’s finances and the physical plant have gone from “precarious and leaky” to “secure and updated,” he says.

This year, however, the foundation’s income fell when longtime tenant UI ended its lease. After the Hillel board said it would cut his post’s total compensation, including health benefits, by $45,000—his salary is now $83,000—Sorokin decided it was time to move on. He’d like to work as an executive director at a larger nonprofit organization, not necessarily a religious one. But he fears that the Hillel’s small size—he supervises only three employees— has been a strike against him in past job interviews. “I could just see it in the eyes of the people asking me questions,” he says.

O

BEFORE

The Financial Plan Keep cash coming in.

Upon Sorokin’s planned departure from Hillel at the end of June, he’ll receive $41,000 in severance and vacation pay. Between that and the $80,000 that Sorokin’s wife, Claire Chapnick, earns as a public school teacher, Duncan estimates Sorokin has up to 10 months to

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find a new job before the couple would have to dip into their $15,000 in cash savings (they also have $750,000 in retirement and other accounts). If Sorokin hasn’t found his dream job within five months, however, he should think about a less-than-perfect or part-time job, says Duncan. Sorokin agrees, adding that even working temporarily as a barista wouldn’t be out of the question.

JUNE 2016

The Job Hunt Don’t underplay your oversight.

Just because Sorokin supervises only three employees doesn’t mean he lacks the skills to manage a larger staff, says Rossetti.

On his résumé and in interviews, she says, he can play up his management experience in other ways. For example, Sorokin currently oversees a 20-member student board.

He also provides leadership development, informal religious education, and personal, academic, and career counseling to students. Klein says it could be a plus for him to explain that he has learned to lead teams over which he has no formal authority.

Sorokin agrees: “That’s definitely a direction I’m going in,” he says.

Toot a louder horn.

Sorokin’s résumé doesn’t do his accomplishments justice because it’s phrased weakly, Rossetti says. He needs more action

Scale back on savings.

Sorokin and Chapnick set aside $2,200 a month for retirement, including their employers’ contributions. Duncan, who says the couple are doing “a pretty good job” of saving for retirement, tells Sorokin that if funds run low in 10 months, they should suspend contributions in order to meet living expenses. “I hope we don’t have to make that call,” says

verbs, and should highlight major achievements as specifically as possible, showing off measurable results. For instance, he mentions “Ability to secure key leadership endowment.” She says to restate that as “Secured $1 million leadership endowment.”

Sharpen your delivery.

Unsurprisingly for a man who has spent his life in academia (he has a Ph.D. in political science from the University of Michigan), Sorokin confesses that he tends to speak in paragraphs—a habit that has alienated search committees comprising actionoriented businesspeople.

“They often find me tedious,” he says, based on feedback he’s received.

Rossetti suggests he outline bullet-point answers to questions he might be asked; after providing a brief initial response, he can ask permission to continue with, “Now I’d like to go into depth. Is that okay?”

Sorokin says he fully intends to break out of “50-minute lecture mode.”

Sorokin. Though the couple have $130,000 in college funds for their two daughters, both in high school, Sorokin fears it’s not enough. Duncan suggests the girls shoulder more of the financial burden: “You have to focus on one problem at a time.” Sorokin agrees—sort of: “If they get into a very prestigious school, and there is any way to make it work, I am committed to trying to do that.”

The Image Break out the clippers.

To help present himself as a leader, says di Giusto, Sorokin needs a more polished, businesslike image.

Sorokin, who has worn a beard for most of his adult life, is worried di Giusto is going to tell him to shave it. She says he just needs it trimmed, along with his hair, “so it all looks kept together.” Sorokin dutifully heads to the barber.

Fix the smile.

Also detracting from Sorokin’s image, says di Giusto, is a chipped front tooth. Repairing it will cost $1,000, he tells her. She is unequivocal. “Fix it,” she says.

“If you don’t take care of yourself, people will think you don’t have the ability to take care of others.” He takes her advice seriously. Asked if he plans to follow up, he replies, “Nine-thirty tomorrow morning.”

Dress for the boardroom.

Though attire in the nonprofit sector tends toward business casual, di Giusto says that because Sorokin is applying for posts in which he will be responsible for finances, he should dress more like a banker for the initial interview. That means wearing a dark suit in a color such as navy, a light-colored shirt and tie, and good-quality leather shoes—or perhaps a sport jacket if he makes it past the initial interview and is feeling comfortable. “People want to see someone they can trust,” says di Giusto. Sorokin says he’s game.

AFTER

“I have been frustrated in my inability to move up. This has been useful.”

CAREERS 2016

DREAM MAKEOVERS

Not Ready to Retire

The Job Hunt

Byron Caplan / 61 / Videographer / Jacksonville ith more than 30 years of experience shooting, editing, and producing video, Byron Caplan is a television news pro. He’s covered everything from potholes to the presidency, in places ranging from Maine to New Orleans. He’s also taught journalism and digital media, and has spent the past two years as a professor of digital media at Florida State College in Jacksonville.

But with his $55,000 teaching job ending in June, Caplan, who lives with his girlfriend, is now at a crossroads. He has applied for local media jobs for which he feels “eminently qualified,” but he has gotten no response: “I start to wonder if it’s the age thing.”

As a Plan B, Caplan is considering starting a business to create videos documenting older people’s life stories. “I am very youthful and healthy,” says Caplan, whose 84-year-old mother still plays the harp professionally. “I’d like to remain vital and make an income.”

W

BEFORE

The Financial Plan Speed up the job search.

With his $155,000 home fully paid off and $322,000 in retirement savings, Caplan isn’t panicking. But though his expenses are low— right now he spends about $1,500 a month—he’ll need a new gig to live as well as he’d like, says Duncan. With $2,000 in liquid savings

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and his paychecks on the way out, Caplan has until roughly the end of October to get a job or dip into other funds. Health insurance could cost him up to $1,000 a month until he qualifies for Medicare at age 65.

Basic living expenses could take a bite out of Caplan’s budget for travel and entertainment. Caplan, who is busy job-hunting and developing his business idea, says he isn’t worried he’ll run out of funds

JUNE 2016

Network better online.

For Caplan to start getting responses to online applications, says Klein, he should be looking for people in his LinkedIn network who can put in a good word for him. “If I get a recommendation from someone in my network,” says Klein, “I always give that person a phone interview.” Along with adding contacts on LinkedIn, Klein says, Caplan should post work samples and more information about awards he has earned, since many recruiters use the site to scout for talent.

Prepare for Plan B. Caplan needs to spend some time on the logistics of working in a gig economy, says Rossetti, especially since so much media employment is on a freelance basis. In launching his own venture, he’ll have to learn how to tackle details like financing, marketing, and pricing. He can get started by using the Small

this fall. “I feel like I’ll get a job before then,” he says.

Caplan thinks he’ll need $15,000 to $20,000 to launch the video business, but Duncan suspects it will cost more; when he himself went solo, he had three years of living expenses in the bank.

Plan for the long haul.

Caplan will qualify for about $2,200 a month in Social Security

Business Administration’s “Create a Business Plan” online tool (sba.gov/tools).

Caplan can also get free help from a local volunteer at SCORE (score.org), a nonprofit organization that provides guidance to small businesses. Caplan, in fact, has already met with a SCORE mentor, and says he got good feedback on his idea.

Set yourself apart.

Caplan is already networking in person at meet-ups (meetup.com)—gatherings of people with a particular interest—where he tells people about his work experience. Says Rossetti: “They are fantastic.” But rather than dwell on his job chronology, he needs to introduce himself in terms of what makes his work special, she says. Later on, through a connection he had already made at a meet-up, Caplan secured a gig directing a fashion video that will be submitted to a film festival. “That was great,” he says. “I got to direct and did well—and people saw me doing it.”

if he waits until age 66, but only $1,600 if he starts taking it at age 62. If Caplan can’t get a job, Duncan suggests living off his retirement account first, since that would let his Social Security benefits grow—and he’d lower his IRS bill by being in a low tax bracket while drawing down his retirement savings. Caplan agrees with Duncan, calling taking Social Security early a “Plan F.”

HAVE YOU MADE OVER YOUR OWN CAREER? Tell us about it at letters@moneymail.com.

The Image Demonstrate some flair.

Caplan needs to show that he’s creative and lively, says di Giusto—but in a way that suits his age. He should start by replacing his professorial tweed blazers and T-shirts with a sport jacket in a “power” color like black or navy blue and a contrastingcolor dress shirt left open at the neck.

“You are going into multimedia,” she says. “What people want to see is creativity.” An accessory, such as a pocket square, adds some personality, she says. “I could handle that for a job interview,” agrees Caplan.

Skip the Hollywood hair.

On the subject of creativity, Caplan half-jokingly asks whether he should color his hair all white, like Rutger Hauer’s character in Blade Runner.

Di Giusto objects: “What are you going to do with your eyebrows? Your eyelashes? Whiten them?” she asks.

“It’s a little bit of maintenance. Are you willing to do that?” No, he says.

A better way to make a statement, she says, would be a dramatic new pair of eyeglasses. He disagrees.

“These are timeless and fit the shape of my face well,” he says.

Dress your age.

Caplan asks about wearing skinny hipster pants, but di Giusto rejects that idea. “Although you should go with trends, you have to look ageappropriate,” she says. “I don’t want you to dress like a 30-year-old.”

Caplan deems that wise advice, but later says he may still buy a pair of tapered pants to see how they look.

Put the right foot forward.

Instead of his Chuck Taylor sneakers, Caplan should wear some new leather shoes, though nothing too fancy, to match the look. “If your shoes are dirty or worn,” di Giusto says, “everyone will focus on the shoes.”

Caplan says he can see himself wearing a pair of brown bucks.

AFTER

“I have confidence I’m going to be okay.”

ACTIVELY MANAGED FUNDS

WAYS TO WIN THE FUND RACE

BY PENELOPE WANG

ILLUSTRATIONS BY YAREK WASZUL

Professional stock jockeys face long odds. But if you follow some simple rules, you can harness the winning attributes of successful funds while reining in losing bets.

ave investors given up on trying to beat the market? It may look that way. Between January 2014 and March 2016, they yanked $111 billion out of “actively managed” funds and ETFs—you know, traditional portfolios run by stock pickers. At the same time they plowed more than $434 billion into index funds, which simply buy and hold all the stocks in a given market, according to Cerulli Associates.

Yet actively managed portfolios still hold the bulk of all mutual fund assets. And some of the highest-profile champions of indexing—legendary investors like Jeremy Grantham and Jack Bogle, founder of Vanguard and the father of indexing—believe there’s a place for active strategies in your portfolio.

The key is coming up with the right strategy to improve your odds of success.

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JUNE 2016

ACTIVELY MANAGED FUNDS

RULE NO. 1

How tough is the challenge?

Well, over the past decade only about one out of five actively managed domestic and foreign stock funds has managed to beat the indexes they’re measured against. Those long odds are one reason MONEY recommends you use low-cost index funds and ETFs to anchor the bulk, if not all, of your portfolio.

Still, there’s a benefit to studying the 20% or so of actively run funds that actually succeed over time. After all, there are some areas of the market that aren’t easily tracked by an index. There are some parts of your portfolio where you may simply prefer to go with an active manager. And there are some circumstances— for instance, in your 401(k)—when limited choices may require you to look beyond index funds.

Whichever situation you find yourself in, you can use the following five rules for investing with actively managed funds to help you create a portfolio that addresses your long-term need for growth and income while also satisfying any urge you may have to be better than average.

PICK YOUR SHOTS there are a few areas of the market that aren’t effectively tracked by benchmarks, creating opportunities for smart managers. You just have to know where to find them.

LOOK IN FIXED INCOME. The bond market is quite byzantine.

Among corporate, government, municipal, and foreign bonds, there are millions of individual securities, many of which rarely trade. Actively managed bond funds can avoid these SUCCESS RATE OF STOCK PICKERS illiquid areas, unlike index funds.

They can also sidestep a problem Percent of managers who have beaten their indexes over the past five years. unique to fixed income. In the stock market the more attractive and 21% 16% successful a company is, the bigger Global U.S. large stock stock its value and the greater its weight58% Intermediateing in index funds. In bonds it’s term bond the opposite: The more indebted that companies or governments are, the greater their representa53% 56% Foreign tion in bond funds. This is why U.S. Municipal small stock bond government-related debt makes up around two-thirds of the iShares 30% 10% Core U.S. Aggregate Bond ETF, Emerging U.S. small which tracks the Barclays U.S. Agmarkets stock gregate Bond Index. Yet some fear

RULE NO. 2

CHEAPER IS BETTER “if you’re looking for active funds that are likely to beat their benchmarks, low-cost funds are a good place to start,” says Ben Johnson, Morningstar’s director of global ETF research. In a recent study, Morningstar compared the short-, mid-, and long-term returns of actively managed stock funds against index funds, then ranked the results by cost. In every single category, the lowest-cost portfolios had a better chance of outperforming than the most expensive (see chart).

BE BETTER THAN AVERAGE ON FEES. Fund fees have been falling

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across the board, but the typical active stock fund still charges 1.3%. Yet many actively managed funds charge far less. In our MONEY 50 recommended list, the expense ratio for Vanguard International Growth (VWIGX) is just 0.47%, vs. 1.36% for its average foreign-fund peer. The fund has beaten its benchmark over the past three, five, 10, and 15 years. Dodge & Cox Stock (DODGX) charges 0.52%—less than half what the average large value fund does—and has outpaced the S&P 500 by 1.5 percentage points annually over the past 15 years.

SAVE EVEN MORE. Cheap or not, actively managed funds tend to rack up more capital gains than index funds. So stash your low-cost active portfolios in tax-sheltered accounts such as your 401(k)s and IRAs. “Given how difficult it is to beat the market, you don’t want to give up a big portion of those returns to taxes if you can avoid it,” says adviser Ben Carlson, author of A Wealth of Common Sense.

HOW DO YOU USE ACTIVE FUNDS? Tell us at pwang@moneymail.com.

that government bonds are particularly frothy now.

Active funds such as Fidelity Total Bond (FTBFX) and Dodge & Cox Income (DODIX) can go light on Uncle Sam. Both portfolios, which are in our MONEY 50 list of recommended funds and ETFs, keep nearly half their assets in corporate bonds. And both have beaten the index in the past five and 10 years.

CHERRY-PICK OVERSEAS. Start with emergingmarkets stocks, down around 30% since 2011. “Fiveyear bear markets are rare, and they’re a beautiful opportunity to buy at cheap prices,” says Rob Arnott, chairman of Research Affiliates. Trouble is, 21% of the MSCI Emerging Markets Index is in energy, materials, and industrials—commodity-driven groups that used to drive the developing world but no longer do. T. Rowe Price Emerging Markets Stock (PRMSX) focuses on faster-growing areas, which has led the fund to tech, financial, and consumer stocks. It has less than 7% of its assets in commodity-related sectors.

Small international stocks are another category in which the odds have been in active managers’ favor (see chart). Because these shares are often thinly traded, they are difficult for indexes to include. “Adding foreign small stocks can improve risk-adjusted returns,” says Gregg Fisher of Gerstein Fisher. One standout fund: T. Rowe Price International Discovery (PRIDX) has outpaced around 80% of its peers over the past five, 10, and 15 years.

IMPROVE YOUR ODDS WITH LOW-FEE FUNDS Your chances of beating the market were much better with inexpensive funds than high-cost ones in the past 10 years.

Cheapest 25%

Most expensive 25%

54% 48%

43% 22%

Large value fund

19%

Mid value fund

23%

Small value fund

GRAPHIC NOTES: Tenures are based on single-manager funds and averages for team-run funds. SOURCES: S&P Dow Jones Indices, Morningstar

RULE NO. 3

FORGET ROCK-STAR MANAGERS you know that being a SHORT TRACK RECORDS

successful investor requires patience. “Most investors give up too soon and sell at the bottom,” says Rajat Jain, a senior investment analyst 72% at Litman Gregory.

Less than 10 years But even if you plan to stick around for, say, a decade or longer, there are no guar28% More than antees that your fund manag10 years ers will too. Nearly three out of four stock portfolios are led by managers who have been at the helm for under a decade, according to Morningstar.

CHOOSE BANDS OVER SOLO ARTISTS. Forget searching for the next Peter Lynch or Bill Miller or Joel Tillinghast (see “X-Ray: Fidelity Low-Priced Stock” on page 39). Instead focus on funds led by a strong team of managers that, if necessary, can fill in for departing talent.

How can you find them?

For guidance with the MONEY 50, we look to Morningstar’s “stewardship ratings,” which grade fund groups on qualities such as corporate culture, invest—RAJAT JAIN, LITMAN GREGORY ment process, and manager tenure. This helped identify funds such as Dodge & Cox Stock (DODGX), which is run by an eight-member investment team with an average tenure at Dodge & Cox of 23 years.

To be sure, experience is no guarantee of future performance. But mutual fund companies with an average manager tenure of more than 15 years generally outpace those with shorter tenures, says Bridget Hughes, a research director at Morningstar. Over the past 15 years the Dodge & Cox Stock Fund has beaten more than 90% of its peers.

While you want to buy and hold funds for more than a decade, most managers don’t stick around that long.

Most investors give up too soon and sell at the bottom.”

JUNE 2016

m o n e y. c o m

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RULE NO. 4

though the odds are stacked

LESS IS MORE

against them, some active managers do find a way to beat the market over the long run. The trick is making sure you don’t dilute their results with the performance of their lesser peers.

LIMIT YOUR WAGER. Diversifying is usually a smart move—but not CHANCE OF BEATING INDEX FUNDS when it comes to active The more actively managed funds you own, the less likely funds. In fact, you’re betyou are to beat a basic indexed strategy. ter off sticking with just 9% one or two active funds Three active per asset class (see funds per asset class chart). When you get to 17% 13% a third, your chances of One active fund Two active per asset class funds per lagging an index portasset class folio are really high, according to a study by

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financial analyst Richard Ferri, founder of Portfolio Solutions, and adviser Alex Benke of Betterment.

CONTROL YOUR EMOTIONS. Behavioral finance expert Meir Statman notes that though it’s difficult to win with active management, many people embrace the challenge. The key, the Santa Clara University finance professor wrote in What Investors Really Want, is to set a limit on how much money you’ll dabble with so that you balance your desire to beat the market with the long odds of successfully doing so.

Statman suggests restricting your active bets to the “explore” portion of your portfolio—that 10% to 25% of your stake with which you may choose to take on added risk.

GRAPHIC SOURCES: Richard Ferri and Alex Benke,“A Case for Index Fund Portfolios”; Morningstar

ACTIVELY MANAGED FUNDS

RULE NO. 5

LOOK BEYOND HUMAN STOCK PICKERS stocks these funds own are rising in price. The ing a fund manager. Nowadays there’s another portfolio held by iShares MSCI USA Minimum option: So-called smart-beta index funds and Volatility Factor ETF, for instance, has a price/ ETFs can tilt your portfolio toward investing earnings ratio of 24.3, vs. about 19 for the broad traits or “factors” that acamarket. Some dividenddemic research has deterpaying stocks are also getA SMART ADVANTAGE mined can do well over ting expensive. “There’s time. These factors include performance chasing going Because they are passively run, “smart-beta” funds sport lower avera focus on small-company on right now, and as prices age expense ratios than active funds. stocks or shares trading at rise, the likelihood of earnStock index low valuations. ing a premium to the mar0.55% funds Smart-beta funds work ket diminishes,” says Larry Smart-beta Swedroe, director of remuch as index portfolios 0.61% stock funds search at Buckingham. do—they follow a benchActively manThe better bet: Stick mark with a strict set of 1.30% aged stock with tried-and-true tilts. rules. But while proponents Fortunately, some tradiof smart-beta strategies tional factors have received often refer to them as index less investor attention lately. Value stocks, for funds, these portfolios are more akin to an active example, have underperformed growth-oriented investment approach because they have the same shares for much of the past decade. As a result, goal that fund managers do: to beat the market.

UNDERSTAND THE ADVANTAGES. Smart-beta funds iShares MSCI USA Value Factor ETF (VLUE) carries a have one clear leg up on human-run funds. BeP/E of just 12.6. “The data show that tilting your cause of their index structure, their costs tend to portfolio toward value, especially small value be low. The average expense ratio of a stock smartstocks, improves your odds of beating the market beta fund is just 0.61%, less than if you hang on for a few decades,” says investment half of what actively managed adviser William Bernstein, author of The Four equity funds charge.

Pillars of Investing.

And because they aren’t run by For a small-cap value strategy, you can put a people, smart-beta funds can’t deportion of that “explore” part of your portfolio into viate from their stated strategy— WisdomTree SmallCap Dividend (DES). The ETF, which is in the MONEY 50, tracks an index focusing on nor can the departure of a manager overlooked shares of dividend-paying small comderail these funds. This explains panies. It also sports an expense ratio of 0.38%, vs. why the strategy has caught on in 1.30% for the average small-cap value fund. a big way. Factor funds, as they’re —WILLIAM BERNSTEIN You’ve still got to do your part, though. You sometimes called, are pulling in a have to be willing to hang on to this type of fund lot of the money that has been flowfor a couple of decades or more—perhaps until ing into passively managed portfolios.

AVOID THE CROWDS. Hundreds of new smart-beta retirement. On the plus side, you won’t have to funds have launched recently, including those worry about the manager retiring before then. that tilt toward everything from low-volatility stocks to momentum, and even combinations of J U N E 2 0 1 6 m o n e y. c o m factors. As more investors pile in, many of the

investing actively doesn’t just mean pick-

The data show that tilting your portfolio toward value … improves your odds of beating the market.”

67

FAMILY

S U M M E R

T R A V E L

TIME

BY STIRLING KELSO

Schoolâ&#x20AC;&#x2122;s out, and the heat is on to find the perfect

t vacation for you and the kids. Beach or mountains? Theme park or national park?

These five value-packed trips will get the kids soaked without drowning you in bills.

JUNE 2016

m o n e y. c o m

69

trip; the Kids Adventure Games come to Vail in August (below right).

OUTDOOR ADVENTURE VA I L , C O L O .

This ski resort to the rich and famous can certainly be expensive, but in the summer prices melt like the snow.

Hotels average $190, down from $353 in high season.

And it turns out that, even without its winter blanket, Vail is still a beautiful setting for outdoorsy adventures.

m o n e y. c o m

JUNE 2016

WHERE TO STAY

Before June 22, spacious twobedroom units at

Vail International (vailinternational .com), located between Vail Village and Lionshead, are $176 a night.

Rates jump to $220 in July, though that’s still 50% off ski-

O P E N I N G S P R E A D : P H OTO G R A P H B Y J A M I E G R I L L /G E T T Y

Vail’s newest summer resident is the Epic Discovery adventure park. The big-ticket item is the Canopy Tour WHAT ($189), a guided zip-line and ropes course through the TO DO treetops. But you’ll save $100 if you opt for the Ultimate Adventure Pass, which gets you and the kids all over an exhausting mass of zips, ropes, climbing walls, and tubing.

Vail Mountain itself features dozens of hiking trails. One favorite: the 3.2-mile Berry Picker, which snakes through aspens and columbines and offers views of Vail Village and, from the top of the hike, Mount of the Holy Cross. “You can hike it with the kiddos and take the gondola down,” says local blogger Kim Fuller. Refuel with Blue Moose Pizza’s chicken-and-Gouda cowboy pie (large, $24). “It’s near a playground and mini-golf course, which keeps the kids entertained,” says David O. Williams, editor of RealVail.com.

70

Downtown aglow on a summer night

SAVINGS TIP

Parking in Vail Village typically runs $25 a day in high season, but it’s free everywhere in town during the summer.

season prices. It’s a tighter squeeze, but you’ll save even more when you stay at the Vail Racquet Club (vailracquetclub .com), where onebedroom condos (that sleep four),

That said, you might not need your own wheels at all. You can catch the Bustang Bus in Denver (ridebustang.com; adults, $17; kids, $8.50) and take advantage of the always-free Vail Transportation bus service once you’re in town.

complete with kitchens and dining areas, start at $140 a night, 47% off winter room rates. Guests have complimentary access to yoga, spin, and fitness classes.

T H I S S P R E A D, C LO C K W I S E F R O M TO P L E F T: P H OTO G R A P H S B Y J AC K A F F L EC K ; C O U R T E SY O F VA I L R E S O R TS ( 2 ) ; C H U C K EC K E R T/ F I R ST L I G H T; C O U R T E SY O F VA I L R E S O R TS

Cooling off at Oak Street Beach

CHICAGO

The Windy City is clean, easy to navigate, and a cheap trip. On average, flights to O’Hare International Airport are down 41% compared with last year, according to Cheapflights .com. Chicago is also a great kid-friendly grub hub. After all, the prime local delicacies are pizza and hot dogs.

URBAN ESCAPE

Studded with shops, parks, and museums, WHAT Navy Pier is one of TO DO Chicago’s top tourist attractions. It turns 100 this year with a focus on its maritime roots. On June 10–12, the America’s Cup World Series holds qualifying races on Lake Michigan. In July a tall-ship festival sails into town. Access to the pier is free, but kids can jump on a tall ship for $15 ($25 for adults). A great deal for literate landlubbers: The Chicago Shakespeare Theater also performs at the pier. People under 35 can buy tickets for $20.

There’s another noteworthy Chicago centenarian: The Cubs are celebrating their 100th year at Wrigley Field. Seats in the bleachers are $13, one of the best deals in baseball. More amazing: The long-suffering Cubbies could actually win the World Series.

GOT A FAVORITE FAMILY TRIP? Tell us about it at letters@moneymail.com.

Catching the polar bear swim at Lincoln Park Zoo

THEME PARKS You’ll need extra pixie dust to score a Magic Kingdom deal these days. A new ticketing structure has raised single-day prices during peak times, especially school vacations and holidays. One solution: Plan carefully and explore a bit of Orlando beyond the parks.

ORLANDO

WHERE TO STAY

Summer is peak season in Chicago, but July and August hotel rates average $137, 11% less than

in June, according to data-analytics firm STR, and 24% less than in other kid-friendly cities such as Boston.

Reserve a room at the brand-new Kimpton Gray Hotel

by June 15 and you’ll pay $192 a night, 30% off reg-

SAVINGS TIP

72

The Hippogriff ride at the Wizarding World of Harry Potter

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JUNE 2016

CREDIT GOES HERE

If you go to Shedd Aquarium, the Museum of Science and Industry, the Adler Planetarium, the Field Museum, and Skydeck Chicago, the Chicago CityPass (citypass .com; adults, $98; kids $82) saves 53% on the total admission. Kids under 14 get in free at the Art Institute.

C L O C K W I S E F R O M T O P R I G H T: P H OT O G R A P H S B Y J O R G / M O D R O W/ R E D U X ; C O U R T E S Y O F U N I V E R S A L ST U D I O S ( 2 ) ; A L A M Y; J A S O N L I N D S E Y/A L A M Y

The Crown Fountain in Millennium Park

ular rates. Located right on Michigan Avenue, the Essex Inn (essexinn.com) features a roof garden with park and lake views.

You’ll find rooms from $159 to $229, with 10% to 15% off for multi-night reservations.

The most expensive months at Walt Disney World are June and July, when WHAT a one-day ticket costs $114. Hold off until TO DO July 24 and the price drops to $102; by Aug. 22 you’ll pay $97. For the best deal, buy multiday tickets, says Don Munsil of the website MouseSavers.com. Munsil recommends a five-day pass ($68 a day, adults; $64, kids ages 3 to 9) that covers Disney’s four parks: Magic Kingdom, Epcot, Hollywood Studios, and Animal Kingdom.

But there’s also plenty of fun in the sun in the rest of Orlando. The Leu Botanical Gardens (leugardens.org) on the banks of Lake Rowena feature 50 acres of tropical beauty, says Kristen Manieri, a contributor to Orlando magazine. Tickets: $10 for adults, $3 for kids under 18, and free on Mondays in the summer. And instead of Disney’s water parks, where tickets start at $60 a day, head for Wekiwa Springs (floridastateparks.org; $6 per vehicle), 16 miles from downtown Orlando. You can also go kayaking, canoeing, and snorkeling in the Wekiwa River, which is fed by a natural spring that stays at 72° F all year. At the end of a long, hot day, it’s great natural air-conditioning.

Goofy and pals in the Magic Kingdom

B Resort & Spa, which offers a free shuttle bus to all the Disney parks, WHERE pampers both adults (massages TO STAY and pool bars) and kids (bunk beds and an activity room). Spacious rooms that sleep four start at $149. Use the MOUSESAVERS code and save up to 33% through September (bhotelsandresorts.com).

CREDIT GOES HERE

Universal’s Cabana Bay Beach Resort

Adding Universal Orlando and its Wizarding World of Harry Potter to the trip? Skip the $155 single-day, SAVINGS park-to-park tickets. You’ll save $20 TIP a day or more on multiday tickets.

The smartest option: a three-day pass at $230 for adults and $210 for kids. Pay with your American Express card and get free snacks, drinks, and concierge services and through June 30, 10% off a parkwide dining plan.

JUNE 2016

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73

BEACH GETAWAY CAPE COD, MASS.

Travelers have been making pilgrimages to Cape Cod since, well, the Pilgrims. New this year: lower prices. The average room costs 6% less than in 2015, reports travel website Gogobot. Still, the Cape can be pricey. Look for deals near Yarmouth, with the highest concentration of rooms around.

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JUNE 2016

WHERE TO STAY An ice cream social, Cape Cod–style

Find your perfect beach house on WeNeedaVacation .com, a local home-rental agency. You can find three-bedroom vacation properties a quarter mile from the beach for $1,100 a week in July. If you travel to the Cape in June, you’ll save almost 20%.

SAVINGS TIP

Kids ride free (with a paying adult) on the CapeFlyer, which offers train

service between Boston’s South Station and Hyannis from Memorial Day to Labor Day on weekends (adults, $22 one way).

You’ll also save $4 by booking roundtrip tickets.

MORE ONLINE Check out five must-have apps for your family vacation at money.com/travel.

C L O C K W I S E F R O M TO P L E F T: P H O TO G R A P H S B Y A L A M Y; G R E G VA U G H /A L A M Y; G E T T Y; E L I Z A B E T H C E C I L

An extra reason to love Yarmouth: A handful of its beaches offer free WHAT parking. Gray’s Beach is particularly TO DO lovely, because of its long boardwalk and nature trails, says Christopher Setterlund, author of the In My Footsteps travel books. Mayflower Beach in Dennis is another family favorite, with its tidal flats teeming with aquatic life and, almost as crucial, accessible bathrooms and picnic tables. Parking is expensive ($25 a day), but you save $5 on weekdays.

For a whale of a time, set sail with Dolphin Fleet (whalewatch.com; adults, $47; kids, $31), New England’s first whale-watching company. Visit its website to collect a $2 coupon. This is also a great year to visit the Cape Cod National Seashore. You’ll get in free from Aug. 25–28 at all six beaches, thanks to the National Park Service’s centennial celebration. You can also sign up for free ranger-led walking tours. Go to nps.gov/caco for more information.

74

Coast Guard Beach in Eastham, Mass.

OREGON

Portland sits in an especially sweet road-trip spot.

It’s about halfway between the Pacific Ocean and the Mount Hood foothills, as well as 45 minutes from the Willamette vineyards. Even sweeter: You save money on every route because Oregon is one of five states with no sales tax. (The gas tax is lower than its neighbors’ too.)

ROAD TRIP The route: east on Routes 84 and 26 from Portland, followed by scenic WHAT Route 211 to the Willamette Valley, TO DO then west on Highway 22 to link to coastal Highway 101 up to Seaside before looping back to Portland.

The stops: Start with some culture at the Portland Children’s Museum (tickets, $10.75; portlandcm.org), home to touchable installations and the topiary Zany Maze. It’s about 70 miles to the Hood River, but en route you’ll find U-pick-it farms, such as Cody Orchards (codyorchards.com), and the Columbia River Gorge.

Take a break from driving on the Mount Hood Railroad (mthoodrr.com), which runs a charming two-hour ride through woods and vineyards. Save $15 on the roundtrip if you travel coach (adults, $30; kids, $25).

You’ll find produce of a different variety—wine grapes—in the 150-mile-long Willamette Valley. Brooks Winery (brookswines.com; tastings, $15) is especially family-friendly, notes Jennifer Rouse of Travel Oregon, with badminton and beanbag-toss games for the kids.

For a beach stop, go razor clamming in Seaside. Maybe the kids will even taste what they dig up.

Save a bundle—about 60% in July—by renting a car and picking it up SAVINGS away from the airport TIP grounds. Hop a 13-mile cab to North Portland and you can get a fullsize car from Enterprise for $276 (at press time) for a week. Cost at the airport: $708.

At Kiyokawa Family Orchards

WHERE TO STAY

Mt. Hood Rentals (mthoodrentals .com) lists family condos for $200 a night. In the Willamette Valley, plan an overnight at the Vintages

Trailer Resort (the-vintages.com) near McMinnville, where outfitted Airstreams that sleep four start at $122. In Seaside, stay six blocks from the Pacific at the new River Inn, which has a pool and s’more-ready fire pits ($99, riverinnatseaside.com).

It’s no wonder Meyers Beach is a favorite backdrop for commercials.

THE NUMBERS

STOCKS & FUNDS BIGGEST MUTUAL FUNDS BY CATEGORY CATEGORY

TOTAL RETURN ONE YEAR

THREE YEARS1

EXPENSES (AS % OF ASSETS)

LARGE-CAP STOCKS

Oil Keeps Fueling Rally in Equities THE REBOUND in crude oil that began in February continued in the four weeks ended April 20, allaying fears over the economy. That helped push the S&P 500 up 2.7%, with energy and materials stocks up even more. But the S&P’s price/earnings ratio is now at its highest level in a year.

S&P 500 RATIOS

Fidelity Contrafund (FCNTX) American Funds Growth Fund of America (AGTHX) American Funds Investment Co. of America (AIVSX) Dodge & Cox Stock (DODGX) American Funds Wash. Mutual Investors (AWSHX)

2.4% 0.1 1.3 –3.0 2.3

13.4% 12.8 12.4 11.3 11.5

0.71 0.65 0.58 0.52 0.58

–2.8 –3.7 –7.5 –7.5 –5.0

10.2 11.9 10.1 10.1 13.5

0.79 0.09 0.10 0.07 0.21

–5.7 –9.8 –3.0 –1.0 –8.8

10.6 10.2 11.7 7.8 9.3

0.09 0.35 0.09 0.96 0.09

3.1 –1.1 –1.0 –1.5 1.1

9.2 9.0 9.2 7.4 8.4

0.58 0.56 0.56 0.34 0.09

–8.3 –6.7 –8.1 –6.8 –6.6

2.3 3.0 4.5 5.2 4.6

0.19 0.75 0.83 0.34 0.83

–8.2 –12.0 –15.9 –10.2 –16.1

0.7 –1.5 –3.1 –0.7 –4.1

1.04 1.24 0.15 1.05 1.51

1.4 1.7 1.1 1.6 1.2

1.8 1.7 1.3 0.8 1.3

0.45 0.65 0.88 0.80 0.75

1.6 1.5 0.8 1.6 1.0

2.2 2.1 2.5 1.8 1.8

0.07 0.10 0.44 0.10 0.59

0.3 –5.1 –3.6 –3.9 –3.2

3.3 0.6 4.3 1.6 1.6

0.13 0.67 0.72 0.81 0.72

4.3 0.0 2.0 0.0 0.0

3.3 0.0 1.4 0.0 0.0

0.12 0.40 0.12 0.15 0.62

MIDCAP Fidelity Low-Priced Stock (FLPSX) Vanguard Mid-Cap Index (VIMAX) Vanguard Extended Market Index (VEXAX) Fidelity Spartan Extended Market Index (FSEVX) Vanguard Strategic Equity Fund (VSEQX)

SMALL-CAP Vanguard Small-Cap Index (VSMAX) Vanguard Explorer (VEXRX) Vanguard Small-Cap Value Index Fund (VSIAX) T. Rowe Price Small-Cap Value (PRSVX) Vanguard Small-Cap Growth Index (VSGAX)

BALANCED P/E

American Funds American Balanced (ABALX) Fidelity Balanced (FBALX) Fidelity Puritan Fund (FPURX) Vanguard Star Fund (VGSTX) Vanguard Balanced Index Fund (VBIAX)

DIVIDEND YIELD

2.5%

21.0 CURRENT

20.0

20.5

2.4 ONEYEAR RANGE

19.0

2.3 2.2 CURRENT

18.0

INTERNATIONAL

2.14

ONEYEAR RANGE

2.1

17.0

INDEX

S&P 500 Nasdaq2 Russell 2000 Morgan Stanley EAFE Dow Jones industrial average Barclays U.S. aggregate bond index

U.S. GOVERNMENT BONDS

TOTAL RETURN ONE MONTH

ONE YEAR

THREE YEARS1

2.7% 3.2 3.8 3.8 2.9 0.7

2.3% –0.9 –8.4 –7.2 3.0 1.8

12.9% 15.6 9.3 3.6 10.2 2.2

6.6 4.8 4.0 3.6 2.2 2.0 1.3 0.3 0.0 –1.5

–1.6 –14.7 –3.5 –0.8 6.8 6.5 3.2 14.7 9.5 11.2

16.2 –0.9 10.0 11.3 16.3 18.9 14.4 5.4 11.4 9.6

SECTOR

Health care Energy Basic materials Financials Consumer discretionary Information technology Industrials Telecom services Consumer staples Utilities

NOTES AND SOURCES: Stock index data as of April 20, 2016, from Lipper, New York; 877-955-4773.

Sector returns from Bloomberg. Bond index data from Barclays. Monthly S&P 500 ratios are from Standard & Poor’s. P/E ratios are based on previous four quarters of operating earnings.

Biggest funds ranked by total net assets. 1Annualized. 2Price change only.

76

m o n e y. c o m

JUNE 2016

EMERGING MARKETS American Funds New World (NEWFX) T. Rowe Price Emerging Markets Stock (PRMSX) Vanguard Emerging Markets Stock Index (VEMAX) Fidelity Emerging Markets (FEMKX) Russell Emerging Markets (REMSX)

2.0

BENCHMARKS

Vanguard Total International Stock Index (VGTSX) Harbor International (HAINX) American Funds EuroPacific Growth (AEPGX) Vanguard International Growth Fund (VWILX) T. Rowe Price International Stock Fund (PRITX)

Fidelity Government Income (FGOVX) American Funds U.S. Government Securities (AMUSX) MFS Government Securities (MFGSX) Sit U.S. Government Securities (SNGVX) J.P. Morgan Government Bond (OGGAX)

INVESTMENT-GRADE Vanguard Total Bond Market Index (VBTLX) Vanguard Total Bond Market II Index (VTBIX) Dodge & Cox Income (DODIX) Vanguard Short-Term Investment-Grade (VFSUX) T. Rowe Price New Income (PRCIX)

HIGH YIELD Vanguard High-Yield Corporate (VWEAX) American Funds American High-Income Trust (AHITX) Fidelity Capital & Income (FAGIX) Northern High Yield Fixed Income (NHFIX) Fidelity High Income (SPHIX)

TAX-EXEMPT Vanguard Intermediate-Term Tax-Exempt (VWIUX) Fidelity Municipal Money Market (FTEXX) Vanguard Limited-Term Tax-Exempt (VMLUX) Vanguard Tax-Exempt Money Market (VMSXX) Schwab Municipal Money Fund (SWXXX)

THE NUMBERS

MONEY 50

TOTAL RETURN

Global Funds Bounce Back

FUND (TICKER)

AS THE DOLLAR HAS WEAKENED LATELY, FOREIGN FUNDS IN THE MONEY 50 HAVE REBOUNDED. THE ONE-TWO PUNCH of slowing growth and a strengthening U.S. dollar in recent years has hurt the performance of foreign funds held by American investors. But renewed hope about the global economy—evidenced by rising crude oil and commodity prices—and the slide in the value of the greenback has suddenly turned the tide.

Among stock funds in our recommended list, PowerShares International Dividend Achievers was the big winner, soaring 5.8% in the four weeks ended April 20. Vanguard International Growth rose 4.3%, thanks to its big stakes in European and emerging-market equities. Many companies based in the developing world are reliant on commodity production and have been big beneficiaries of rising prices for natural resources.

HOW TO USE OUR RECOMMENDED LIST Building-block funds: For broad exposure to core asset classes Custom funds: Specialized investments that can tilt your strategy One-decision funds: If you want stocks and bonds in one portfolio

TOTAL RETURN

FUND (TICKER)

ONE MONTH

ONE YEAR

THREE YEARS 1

EXPENSES (AS % OF ASSETS)

PHONE NUMBER (800)

0.09 0.09

435-4000 435-4000

BUILDING-BLOCK FUNDS Large-Cap Schwab S&P 500 Index (SWPPX) Schwab Total Stock Market Index (SWTSX) Midcap/Small-Cap iShares Core S&P Mid-Cap (IJH) iShares Core S&P Small Cap (IJR) Foreign Fidelity Spartan International (FSIIX) Vanguard Total Intl. Stock (VGTSX) Vanguard FTSE A/W ex-U.S. Small (VFSVX) Vanguard Emerging Markets (VEIEX) Specialty Vanguard REIT Index Investor (VGSIX)

2.7% 2.9

2.2% 12.8% 0.3 12.3

ONE MONTH

Bond Vanguard Total Bond Market (VBMFX) Vanguard Short-Term Bond (VBISX) Vanguard Inflation-Protected (VIPSX) Vanguard Short-Term Infl.-Prot. (VTIP) Vanguard Total Intl. Bond Index (VTIBX)

ONE YEAR

THREE YEARS 1

EXPENSES (AS % OF ASSETS)

PHONE NUMBER (800)

0.8% 1.6% 2.1% 0.4 1.3 1.1 0.5 –0.5 –1.2 0.1 0.3 –0.4 0.5 2.3 N.A.

0.16 0.20 0.20 0.08 0.17

662-7447 662-7447 662-7447 662-7447 662-7447

3.5 3.1 3.2 2.7 3.4 3.6

–3.0 0.2 –3.8 8.6 –0.3 0.3

11.3 11.6 11.8 15.0 12.7 16.0

0.52 0.39 0.92 0.29 0.64 0.72

621-3979 843-2639 551-1980 983-0903 729-2307 638-5660

3.2 2.5 3.5

–8.1 4.0 –3.9

10.5 13.5 12.7

1.12 0.38 0.89

292-7435 909-94732 638-5660

3.9 3.2 3.4 4.5

–11.1 –3.0 0.5 –9.9

6.7 11.7 11.4 7.8

1.15 0.09 0.38 1.22

221-4268 662-7447 909-94732 551-1700

5.8 2.5 0.4 2.5 6.4

–14.8 10.0 5.3 –1.8 –17.0

–0.3 12.7 8.7 1.7 –2.6

0.55 0.35 0.97 0.59 0.47

983-0903 787-22572 437-9912 787-22572 474-2737

3.0 4.3 2.5

–10.8 –7.0 –12.0

3.7 5.1 –1.5

0.95 0.47 1.24

625-6275 662-7447 638-5660

1.5 1.2 0.7 1.8 2.4 2.9 1.2 0.5 1.7 2.4

0.8 1.0 1.5 1.1 –2.7 –3.2 4.3 1.9 –4.5 3.6

2.5 2.3 1.7 2.9 1.3 1.6 3.2 1.3 –0.8 1.7

0.44 0.45 0.20 0.15 0.89 0.72 0.20 0.20 0.89 0.86

621-3979 544-8544 662-7447 474-2737 633-3330 544-8544 662-7447 662-7447 632-2301 544-8544

9.0 4.7 8.5

0.56 1.02 0.26

544-8544 544-8544 662-7447

4.7 7.0

0.58 0.66

638-5660 638-5660

7.2 8.1

0.15 0.15

662-7447 662-7447

CUSTOM FUNDS Large-Cap Dodge & Cox Stock (DODGX) PowerShares FTSE RAFI U.S. 1000 (PRF) Sound Shore (SSHFX) PowerShares S&P High Quality Port. (SPHQ) Primecap Odyssey Growth (POGRX) T. Rowe Price Blue Chip Growth (TRBCX) Midcap Ariel Appreciation (CAAPX) WisdomTree MidCap Dividend (DON) T. Rowe Price Div. Mid Cap Gro. (PRDMX) Small-Cap Royce Opportunity (RYPNX) Vanguard Small-Cap Value (VBR) WisdomTree SmallCap Dividend (DES) Wasatch Small Cap Growth (WAAEX) Specialty PowerShares Intl. Div. Achievers (PID) SPDR S&P Dividend (SDY) Cohen & Steers Realty Shares (CSRSX) SPDR Dow Jones Intl. Real Estate (RWX) iShares N. American Nat. Resources (IGE) Foreign Oakmark International (OAKIX) Vanguard International Growth (VWIGX) T. Rowe Price Emerging Markets (PRMSX) Bond Dodge & Cox Income (DODIX) Fidelity Total Bond (FTBFX) Vanguard Short-Term Inv. Grade (VFSTX) iShares iBoxx $ Inv. Grade Corp. Bond (LQD) Loomis Sayles Bond (LSBRX) Fidelity High Income (SPHIX) Vanguard Intm.-Term Tax-Ex. (VWITX) Vanguard Limited-Term Tax-Ex. (VMLTX) Templeton Global Bond (TPINX)3 Fidelity New Markets Income (FNMIX)

ONE-DECISION FUNDS

3.4 3.3

–1.8 –1.6

11.2 12.5

0.12 0.12

474-2737 474-2737

3.9 3.7 3.0 2.9

–7.0 –8.3 –4.2 –16.1

3.5 2.3 4.1 –3.3

0.20 0.19 0.37 0.33

544-8544 662-7447 662-7447 662-7447

0.4

5.1

7.9

0.26

662-7447

NOTES: As of April 20, 2016. N.A.: Not available. Load funds are included for those

Balanced Fidelity Balanced (FBALX) 2.4 –1.1 Fidelity Global Balanced (FGBLX) 2.8 –0.3 Vanguard Wellington (VWELX) 2.6 1.9 Target Date T. Rowe Price Retirement series (STOCK/BOND ALLOCATION) Example: 2005 Fund (45%/55%) (TRRFX) 1.7 0.1 Example: 2020 Fund (68%/32%) (TRRBX) 2.2 –1.1 Vanguard Target Retirement series Example: 2025 Fund (70%/30%) (VTTVX) 2.3 –1.2 Example: 2035 Fund (84%/16%) (VTTHX) 2.8 –2.0

who prefer to use a broker. 1Annualized. 2Phone numbers are 866. 34.25% sales load.

SOURCES: Lipper, New York, 877-955-4773; the fund companies

JUNE 2016

m o n e y. c o m

77

MONEY WELL SPENT

Do you have a purchase you consider Money Well Spent?

Email us about it and what it means to you at wellspent@moneymail.com.

y resh- ir und

by Susie Poppick

80

m o n e y. c o m

JUNE 2016

pery slope of this mind-set. He pointed out that scrambling to protect against every contingency could be harmful in its own right and that studies on air filters’ effectiveness in particular were “inconclusive.” Dad would be fine if he simply wore a mask outdoors, he said.

But this wasn’t the doctor’s father. He was mine. He was the one who had cared for me, educated me, and bailed me out of trouble a thousand times. He may have been careful with spending on himself, but he was quick to lend me money and time whenever I needed either. Now it was my turn to sacrifice for him, even if my efforts were a drop in the parental bucket.

When I arrived home with my Lowe’s haul, Dad was skeptical, to say the least. Didn’t the doctor say those HEPA filters were unnecessary?

So I did what any daughter of a mensch would do: I told him how much I spent. Then I told him I wouldn’t be returning a thing.

He gave me a hug. Thank you, he said, holding me tight.

You can’t buy certainty, no matter how much you spend—or how hard you love. But you have to say yes when you get the chance, however improbable, to rent a little peace of mind. For me, that feeling of hope came cheap at $693.

Former MONEY writer and special projects editor Susie Poppick now covers personal finance for CNBC.com.

Illustration by

javi e r p é r ez es t re lla

G E T T Y I M AG ES

LAST AUGUST I WENT to Lowe’s and spent $693—money I was urged not to spend. The advisory came from my father. He never likes to be fussed over, especially if the fussing involves unnecessary expense. And his attitude hadn’t changed even though he had just been diagnosed with leukemia.

But my father’s health crisis left me feeling shattered—and helpless. So I bolstered myself by trying to control as much of the situation as I could. When I found medical studies showing that airborne mold spores can be fatal to a patient whose immune system has been compromised, I headed to Lowe’s and loaded a cart with a powerful air conditioner (to replace an old, moldy one), two HEPA air filters (to catch ultrafine particles in the air), cleaning supplies, and more. Before the receipt could top $700, my boyfriend stepped in and put the second $220 HEPA filter on his credit card.

I knew that if my dad were there, he’d be grimacing.

Watching the cash register tick up and up, I could feel myself grimacing, too, at the bite the bill was taking out of my modest, 30-year-old journalist’s salary.

But as anyone who has been there can tell you, the prospect of a loved one’s death can drive you crazy.

Maybe you should quit your job—if something terrible happened and you weren’t there, you’d never forgive yourself. All you can see are the holes your loved one’s absence would leave in your life.

My father’s doctor had warned me about the slip-

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