Tuesday, May 9, 2017

Early retirement buyouts. How to evaluate an offer.

"It is never too late to be what you might have been." - George Eliot, novelist, poet and journalist, who was Mary Anne Evans but used a male pen name. (1818-1880)

By Julia Anderson
Despite the improving economy, employers in certain industries continue to look for ways to cut costs by laying off workers.

Kroger Co., parent company to Portland-based Fred Meyer stores, announced late last year that it will reduce costs by offering early retirement to 2,000 corporate administrative employees.  Depending on how many employees voluntarily accept the buyout package will determine how many will be laid off -- without the package -- to meet the 2,000-job reduction quota. Kroger administrative employees were given two months to make up their minds.

Boeing Co. said it will implement a voluntary early retirement plan this year. Intel, Oregon’s largest private employer, has been cutting jobs. Boeing said as many as 1,880 machinists and engineers could be affected.

In offering early retirement packages or job buyouts, employers must be careful to avoid age discrimination. But there are proven legal ways to do that. The early retirement package or buyout must be voluntary based on tenure or other neutral criteria. A worked must get at least 21 days to consider the offer.

Employees accepting an early retirement or buyout will be asked to sign a carefully drafted “release agreement” explaining their rights under federal law as they walk out the door. That makes it hard to sue for discrimination.

So how do you evaluate an early retirement package if you find yourself in the cross hairs your employer’s cost reduction/buyout program?

There is much to consider: health insurance coverage after you leave the job, how close you are to age 65 when Medicare kicks in, how close you are to taking Social Security benefits and whether the company might offer “bridge money” to get you to Social Security.

The biggest decision comes first. What are the consequences of turning down the buyout offer, dodging the layoff bullet and keeping the job? Only your gut can answer that one.

While, facing a layoff is no fun there are some positives.

A layoff qualifies you for unemployment benefits if you sign up and look for a new job through your state unemployment agency. Human resource administrators can explain how this works, what the job search requirements are and how many weeks you might be eligible for unemployment benefits.

Secondly, you can buy health insurance coverage through your former employer’s insurance plan for at least 18 months, thanks to COBRA, a federal law passed by Congress in 1985. Some employers let you stay with the company health insurance plan until you reach 65.

In addition, some employers might offer “bridging money” to financially bridge the period between early retirement and when you are eligible for Social Security benefits.

But who wants to take reduced Social Security benefits at 62 when full benefits only kick in at age 66 or 67?

The biggest negative of taking an early retirement offer is that you no longer will have the job and its income to support saving through the company-sponsored 401(k) program. If there’s a pension, it will likely be smaller than if you had kept the job longer. That means less to live on in real retirement.

Whatever you do, give yourself plenty of time to evaluate the offer!!

Reinventing yourself

Some people reinvent themselves after an early buyout by starting their own business, by finding another job or by working part-time. How long you have to figure that out depends on how much you employer offers in severance pay.

Severance usually consists of your current salary plus addition money for the number of years you’ve worked for the company.

Keep in mind that experts say that the amount of money you need to live on in retirement should by about eight times your income. So if your household income is $100,000 a year, you will likely need at least $1 million in retirement savings to enjoy a modest retirement.

Meanwhile, do NOT make early withdrawals from your 401(k) retirement savings plan but instead move it into a self-directed Individual Retirement Account with an online brokerage or a trusted local firm. Money withdrawn from a company-sponsored 401(k) or IRA is subject to a 10 percent “premature distribution” penalty before age 59 ½.

Plus, you will pay federal income tax on the withdrawal. And you won’t be growing that money for your real retirement.

Those who have been through an early retirement buyout will tell you that it is a stressful time with lots of ups and downs. It feels bad to be asked to leave a place where you like the job, like the contribution you make and enjoy the people you work with.

Financial planner Jim Blankenship writing in US News &World Report warns that some companies “make an early retirement package seem more attractive than it really is.” He said that you may want to consult an independent professional adviser who “will work for your best interests” in negotiating a buyout.

Saying yes to a buyout may mean retraining for something new or doing something else that you’ve felt passionate about. But whatever, it will be a roller coaster ride.

Saturday, April 22, 2017

Teaching grandchildren (and their parents) about money

"Too many people spend money they haven't earned, to buy things they don't want, to impress people they don't like." -- Will Smith, actor and producer, songwriter and rapper, (1968 -   )

By Julia Anderson
In our era of instant gratification and in a financial world where a regular bank savings account pays next to no interest, how do you help your grand kids learn about using money carefully, investing and saving for the long-haul?

The good news is that there are a lot of great resources on the Internet offering good step-by-step advice. These tips will help you help your grand kids get a handle on saving and investing, on budgeting, and spending wisely.

Here’s a run-down of six helpful Web sites:

At forbes.com, writer Laura Shin has put together a list of five money lessons to teach kids according to their age. She describes each lesson to be taught, then follows with several exercises to help with the learning.

For example: The lesson for a three to five-year-old is “You may have to wait to buy something you want.” She provides three ways to help a young child learn about having a savings goal and a spending goal for small purchases.

Ages six to 10: You need to make choices about how to spend money.
Ages 11 to 13: The sooner you save, the faster your money can grow from compound interest.
Ages 14 to 18: When comparing colleges, be sure to consider how much each school would cost. 
The lesson for an 18-year-old? “Use a credit card only if you can pay the balance off each month.”

Web site: savingtoinvest.com - The power of compounding

The Web page at savingtoinvest.com, explains in dramatic fashion plus “the power of compounding.”

Here, the unnamed author, offers an exercise to teach the power of compounding. Other money gurus use similar examples.

Ask your grandchild, “Would you rather have $1 million now, or take a penny and double the amount every day for 30 days?”

Most people (certainly most kids) would take the $1 million. But that would be the poorer choice. The visual chart on the Web page makes it clear how doubling your penny every day for 30 days would result in the tidy sum of $5,368,709.12!

Included with this exercise are three tips: The sooner you start saving and investing, the better; It is good to make saving a habit with regular investments, and that patience is a virtue. It takes time to build the nest egg “by investing wisely and leaving the money alone for the long term.”

Web site: feedthepig.org

The American Institute of Certified Public Accountants has taken on the mission of improving the financial literacy of all Americans. Feedthepig.org is geared toward those aged 25 to 34 to help them take control of their finances.

Here are the resources for young adults (your kids or grandkids) to reduce debt, plan ahead, boost a credit score, save to buy a house or a car. Mr. Pig, BenjaminBankes, will send along savings tips, if you sign up for free email.

There is a companion Web site, 360financialliteracy.org, with more money tips including a page for Tweens & Teens and their parents.

Dave Ramsey is a well-known money guru with a lot of books and a radio show. On this page, he also focuses on the miracle of compound interest.

He uses the comparison of two young adults. One starts investing at age 19, the other doesn’t get started until age 27.

The 19-year-old puts $2,000 into an investment account for eight years and leaves it there until he’s 65. It earns an average of 12 percent a year, which is what the S&P 500 has historically done over the past 50 years. He ends up with more than $2.2 million.

His friend who started later at age 27 and puts $2,000 in from age 27 to age 65. He ends up with only $1.5 million. So starting early and leaving the money there to grow is a huge deal.

I don’t know anything about Chicago-based Windgate Wealth, but I do like their six ways to teach your kids about saving money. In a nutshell, here are the tips:

Start with a piggy bank.

Open a bank account.

Use savings jars to save for short- and long-term goals.

Create a timeline to visually help kids see their savings progress.

Lead by example. When shopping, for instance, engage your children in the buying decisions. Explain the choices you make.

Start a conversation about money and the importance of saving.

General advice: Parents and grandparents an make money and saving money fun and accessible. Discuss the difference between needs and wants and help them visualize their financial future.

This article summarizes a study about millennials and money, which mentions that one-third of this age group is uncomfortable talking about money with their parents. (See FidelityInvestments Millennial Money Study)

Included are eight tips for how to have the “money” conversation.

1. Keep your advice brief

2. Share your experiences.

3. Keep your expectations in check.

4. Set rules when lending money.

5 Discuss investing strategies.

6. Set a good example -- and let it show.

7 Don't avoid the inheritance topic.

8 Discuss your finances with your kids at least once a year.

Maybe it is no surprise that nearly half (47 percent) of young adults have received financial assistance from their parents since leaving home to pay for such basic things as cell phone bills, car insurance and even to buy groceries.

Twenty-five percent said that a one point they had moved back home for financial reasons.

Friday, March 31, 2017

Smart Money: My new gig with Joe Smith on TVCTV!

"Anything you need, you can get on YouTube. It's wacky." -- Lorraine Toussaint, actress. (1960 -     ).

Want to know more about how and when to claim Social Security benefits? Are you worried that the Social Security Administration will run out of money?

Are you into estate planning and need to hold a Family Money Summit to explain to your children what you’re going to do with your business and/or your money?

Are you in need of a financial planner but don’t know the questions to ask to hire one?

How about the basics of retirement planning in five steps?

These are some of the topics we are covering in a new series of taped shows hosted at TVCTV public access channel in Beaverton, Ore. The good news is that the shows also are available on YouTube. https://www.youtube.com/watch?v=QiovwBv14Nc

I’ve teamed up with Portland television host, Joe Smith, to talk about all things money-related. We discuss elder financial abuse and how to prevent it.

We delve into one of my most popular topics here at sixtyandsingle.com, How to Get Married after 60. And we go through my Five Basic Steps to Retirement Planning.

My big passion in semi-retirement is to help people, particularly women, plan and save for retirement. Mary Weisensee at TVCTV – the public access community programming network in Washington County, Ore. -- liked my Smart Money column in the Portland Tribune and asked me to talk about money issues in a series of taped shows.

The first shows being aired on TVCTV channels focus on Social Security. Here's an OregonLive advance news story explaining the show, click here.

In three Social Security segments, Joe Smith and I interview Alan Edwards, the region’s Social Security guru.

We cover what everyone should know about Social Security in Social Security 101, How women can best claim Social Security benefits and we tackle Social Security Myths.

The good news is that Social Security is not going to run out of money until about 2035 and then would just reduce benefits to keep going. That’s of course unless Congress tweaks the benefit rules to return the program to solvency.

Click here for a link to the "My Account" Social Security Web site.

The shows, called Smart Money (like my column in the Portland Tribune), will air on public access channel 22 in Washington County, but are also being made available on CVTV in Clark County, Wash. and will be distributed to other public access operations in the region. And we are on YouTube!!! https://www.youtube.com/watch?v=QiovwBv14Nc

Other Smart Money shows will come along soon. Joe and I are taping shows on new topics. The list is really endless.

Bottom line on Social Security: People should set up a personal account at www.socialsecurity.gov. Then check up on their employment and wage information. Then start planning for how and when they might want to claim Social Security benefits.

It is really a big deal and a big part of retirement planning. It’s best to start now.
Here's my post at sixtyandsingle on Social Security. click here.

Hey, I'm on YouTube!!! https://www.youtube.com/watch?v=QiovwBv14Nc

Sunday, February 26, 2017

Women earn less than men. Why it is a big problem and what we can do about it

"If fighting for equal pay and paid family leave is playing the gender card, then deal me in! -- Hillary Clinton.

A recent headline in my hometown newspaper, said it all. “Public Pay is a Man’s World: Men far outnumber women in 100 highest-paid public jobs…”

The page one in-depth report looked at top jobs across a wide spectrum of local public employers…cities, school districts, the community college and county government.

In all cases, the top manager, (all men) earned tens of thousands of dollars more a year than the highest paid female manager in the same organization.

For example: The county medical examiner (coroner in some counties) was earning $221,964 a year. That’s a lot but he’s a physician and deserves the pay for a demanding on-call job. However, the associate medical examiner, a second-in-command position held by a woman who also is a doctor, earned just $165,264.
Is it OK that she earns 25 percent less than her boss for doing pretty much the same job?

It is NOT news that women generally earn less money than men in the work place.

Nationally, women working full-time (at least 35 hours a week) earned $726 a week, according to the latest (2015) Bureau of Labor Statistics report. The median earnings for men working full-time was $895. This 81.1 percent -- women vs men -- gap means women have less opportunity to save for retirement. And they collect less in Social Security benefits in retirement because of their weaker earnings record.

In Oregon, women working full-time (at least 35 hours) earned $734 a week, according to the BLS. That’s 83 percent of the $884 Oregon men earned working full-time and slightly better than the national figures.
In Washington, the earnings gap was wider--- $797 for women, $1,025 for men.

In the nation’s tech industry, the earnings gap between men and women is wider with the greatest disparity early in their careers. Those women 25 and younger, earn 29 percent less than men the same age. According to Fortune magazine, a job survey had the average female software programmer earning 30 percent less than her male counterpart at any age.

The discouraging part is that 30 years ago, women represented 37 percent of computer science college graduates. That compared with just 14 percent in 2013.

Every year when the earnings gap numbers are updated, there is a media thresh about what it means and why not much has changed over the past 17 years.   In 2016, men earned annual median pay of $51,212 while women earned median pay of $40,742.

From my vantage point of 30 years of full-time work experience covering business and economic news, here’s my take.

Jobs and the hours

This is not so much about wage discrimination as the kinds of jobs women tend to fill and accept as compared with where and what men take on for work. (Example: A step-granddaughter wants to be a dog walker after high school. My grandson wants to be an aeronautics engineer and fly a plane. I am guessing that their IQs are about the same.)

Women generally end up more often working in industries that pay less – health care, retailing, marketing, business and finance, human resources and in education. Men, on the other hand, tend to work in higher paying jobs in construction, transportation, manufacturing and yes, management. But why is that?

Many of the jobs in these higher paying industries could be done just as well by women as by men. And while some discrimination certainly still exists today, workplace labor laws make it less likely.

But this doesn’t start with college or that first job. It starts in high school. Studies show that kids typically make career choices before they graduate.

In selecting a career direction, young men make wages a No. 1 priority while young women tend to focus on “flexibility and security” rather than pay.

Young women do not factor in what their career choice will mean in terms of household income, long-term savings and even retirement planning.

Of course other factors undermine the ability of women to earn as much as men in any given job. Dropping out of the job market to have and to raise children may mean re-entering at a lower pay rate. Women often choose jobs at less pay that have a better work-life balance. They may take a lower-paying job that offers more security, less risk.

On the other hand, employers may see them as less reliable because they have kids and pay them less. Argh.
As well, women who work in retailing, business services and hospitality may be more vulnerable to layoffs and downsizing.

Women may choose to not take on higher-paying and more influential positions in an organization. But, according to a Wharton Business School study, they also may be passed over because of “unconscious employer stereotypes.”
For me this is a big long-term economic problem.

Women tend to live longer than men (83 vs 80) and spend more time living financially on their own in retirement. Half of women, age 65 and older, are single and on their own. Twenty-five percent of those women are living at or below the poverty line.

Women tend to earn less during their working lives for all the reasons mentioned above.
That in turn means a financially limited retirement. How many more 90-year-old women with just Social Security income can we cram into our assisted-living centers?

Closing the earnings gap

So what’s to be done? How do we close the earnings gap?

Obviously, high school career coaches could do a better job of encouraging young women to a choose career path for which they are passionate, but also pays well. Sometimes I think talking about money and making a good living, is considered crass and makes us (women) look greedy and too ambitious.

Meanwhile, jobs of the future require more technical skills. Girls must embrace math and science and consider jobs in the higher-paying tech field and in engineering, in medicine.

At least one study, suggested women just need to work more hours. According to The Atlantic magazine, 26 percent of men who work full-time worked more than 41 hours a week, while only 15 percent of women worked those hours. More hours means more income, more opportunity to save and get ahead.

Why not give women free childcare that would allow them to be moms and have a job? I know that's expensive. Should employers be encouraged to do salary audits to make sure people are being paid the same for the same work with the same job title?

And finally, it turns out that women may not that great at negotiating a job or a pay raise.

I am guessing that the women mentioned in the local newspaper report had little idea that they were earning so much less than the men they work with. I am wondering how many of them have asked for a raise?  (Sadly, a recent study said women do ask for raises but more often are turned down.)

Shouldn’t we teach better negotiating skills to young women and make sure they know that they are worth when it comes to landing and keeping a job?

As grandmothers, isn't part of our job to encourage our granddaughters to aim high, take on math and science studies and go for the gold...or at least for a higher paying job.
the Fed's Janet Yellen on workplace discrimination, click here.
"Still missing: Female Business leaders," CNNMoney, click here.
"Gender Equality by Design," click here.
"The simple truth about the pay gap," AAUW, click here.

Wednesday, January 18, 2017

Succession planning: How to hand off your business to your kids (or somebody else)

"The brave may not live forever, but the cautious do not live at all.”Richard Branson, international business entrepreneur who is selling his Virgin America airlines to Alaska Airlines.

In the region where I live near Portland, Oregon, many small businesses are owned and operated by women.
In fact, Portland is known generally as a town where smaller, family-owned businesses have thrived, unlike its coastal neighbors to the north and south -- Seattle and San Francisco -- where the behemoths of industry dominate the landscape.

Women-owned businesses that I know about have successfully operated in the health care industry, are in retailing and marketing, hospitality-travel and real estate. In addition, women I know have worked side-by-side with a spouse to build businesses in such diverse industries as manufacturing, construction, automotive supply and trucking.

Many of these successful enterprises were launched by people born after World War II who have put their heart and soul into their business over the past 25 or 30 years. But what happens when these Baby Boomers, now in their 60s and early 70s, begin to age into retirement? Should they sell out or let the kids carry on?

It is never too soon to start talking about succession planning with your kids or with younger employees who might want to take on operations when it is time for you to step-away.

“Those that work on a plan will have a much better chance of a hand-off,”  Ted Austin, senior vice president with the Private Client Reserve of U.S. Bank in Portland, told me.

According to industry statistics, 25 percent of family business transfers fail because of poor succession planning, he said.

“The biggest obstacle is around communication," he said. "Some people build a business with the idea someone will buy it. For others, the family name is on the door with the expectation the operation will stay in the family. One way or another you have got to talk about it.”

For business succession planning to succeed, Austin recommends these steps:
  •  Start talking sooner than later within the family about how to handle the legacy of your hard work.
  •  Find out if the next generation is interested in continuing the business or if you should begin looking into a buyout by a group of employees or an outside investor.
  • Set up a plan for how the transition will work. What’s the timeline? How will responsibilities be shifted? Will dad and mom still come to work every day even though they may no longer be in charge? How will employees be kept in the loop?
Austin at U.S. Bank suggests that a good exit plan may spin out over a five- or ten-year period after a lot of questions have been answered.  For instance, will it be a buyout by the children over time or will ownership shares be gifted to the next generation?
“The more clarity in the plan related to legal governance of the business going forward means less stress during family gatherings at Christmas or while on a family vacation in Bend. Austin cautions that mistrust or misunderstanding can put a damper on family events.

Building an advisory team

Good succession planning may mean putting together a team of professional advisers – an attorney to write out a legal agreement, a financial planner to help with estate and retirement planning and a bank trust officer who can advise on tax strategies, creditor protection and asset management.

“Depending on the complexity, this professional help will cost money,” Austin said. “Make sure the family understands that cost.”

Succession planning evolves with the business but doing it sooner than later can make the difference between a successful transition and disaster.  Advisers at SCORE, a national small business mentoring network, say that business owners should not shy away from succession planning because it looks too far in to the future.

“Devising a formal plan that outlines who will own and operate the company, once you are not in the day-to-day role, is a critical path decision that has a direct impact on long-term business profitability,” they say.

Before embarking on an exit strategy, business owners should seek legal advice and possibly a “business evaluation expert” who can help make sure every transition option has been, considered, the Small Business Administration recommends.

“Without naming names, if you drive down Portland’s Broadway you will see a lot of families that have built wealth, generation by generation through a growing family business,” Austin said. “Where it has gone extremely well, family members have been involved in the business. They have been able to look under the hood so that when it comes time they will be as ready as they can be. Or they decide this isn’t something they want to do, so everyone can plan for that change.”

Will the business founders be able to pass on the company to his or her next generation or will a new owner step in with a buyout, ready to take the reins? That business succession conversation must launched by the business owner with her family.

Why not make it happen this year!

Friday, January 13, 2017

My rheumatoid arthritis: One year on there are still lots of questions, no clear answers

"Trouble has no necessary connection with discouragement. Discouragement has a germ of its own, as different from trouble as arthritis is different from a stiff joint." -- F. Scott Fitzgerald, American novelist regarded as one of the greatest American writers of the 20th Century.  (1896-1940)

Editor's note: For another first-person experience with polymyalgia rheumatic (PMR) from Washington Post writer Alice Reid (Jan. 14, 2017). Click here.

A year ago, I was diagnosed with rheumatoid arthritis. My symptoms were most typical of polymyalgia rheumatica…a type of RA that causes muscle pain and stiffness, especially in the shoulders.

The condition came on in a matter of two weeks. At the outset, it was so bad that I could not roll over in bed without crying. I could not lift dishes out of the dishwasher. I couldn’t wash my hair without gasping with pain when I lifted my hands to my head. Walking became a shuffle.
Terrified, I saw a physician’s assistant and then a rheumatologist.

First the good news. My condition, a year later, is much improved!

The RA symptoms are still present but I describe them to my doctor as similar to discomfort from strained muscles in my shoulders and thighs. Occasionally, the inside of my wrists hurt. I have little or no swelling in my hands. I am back to doing most of the things I like to do such as traveling and, this winter, downhill skiing.

But I am aware that I have this problem that comes and goes, but never completely goes away.
I take methotrexate, an RA treatment standby, as well as a prescription anti-inflammatory drug (NSAID) called Diclofenac.

The problem is that I am NOT pain-free.

My doctor wants me to be pain-free because the pain indicates that the disease is still “active” and working on my body. Long-term that could mean trouble, debilitating trouble.

After a year of tracking these symptoms, looking at my blood test results and seeing me during regular office exams, my rheumatologist is still not sure what version of RA I have. Some of my symptoms suggest polymyalgia rheumatic but I also might have psoriatic rheumatoid arthritis or something else.

What is it?

According to a Mayo Clinic web site, polymyalgia rheumatica almost exclusively affects older adults with the average age at onset of 73. Women are about two times more likely to develop the disorder. And polymyalgia rheumatica is most common among whites in northern European populations. With the last name Anderson, you can guess my genetic background. I’m 70.

They also say that rheumatoid arthritis is more common in people whose parents may also have had the disease or some form of arthritis. That would be my father.

The broad definition of rheumatoid arthritis is that it is a chronic inflammation disorder that can play havoc with more than just your joints. It occurs when your body mistakenly “attacks your own body’s tissues,” mainly the lining of your joints. This in turn eventually causes swelling that results in bone erosion and joint deformity. There can also be trouble with other systems...your eyes, your ears, cardiac system, gastric system. Really concerning.

Glen Frey, Eagles co-founder and band member, died about a year ago (2016) from complications (pneumonia) related to rheumatoid arthritis and the immune suppressing drugs he was taking for it at the time of his death at age 67.

At the time, Marcy O’Koon, senior director for consumer health at the Arthritis Foundation, told The New York Post in an online report that with immune-suppressant drugs “you are vulnerable to infection, in fact, speaking to RA, you’re more vulnerable to infection anyway. That’s something people have to watch out for and contact their doctor at the first sign of fever, she said.

O’Koon also said that those who suffer from the chronic inflammatory disorder have to weigh the many life-changing benefits of strong drugs that treat the disease against their nasty side effects.
That is what I’m doing, right now.

Looking at Humira

After a year of trying several other drugs (Leflunomide and Sulfasalazin) in combination with methotrexate with no clear satisfactory (totally pain-free) result, my doctor is now talking about Humira.  She called it a “miracle drug” and said that many of her patients found it very helpful.

Humira is a leading anti-inflammatory drug (also known as Adalimumab) used to treat symptoms and prevent the progression of active rheumatoid arthritis and something called ankylosing spondylitis. That’s another inflammatory disease that affects the spine and sometimes, the eyes. (It turns out there are many different kinds of rheumatoid arthritis, which can affect children and young adults, as well as seniors, like me.

There are big trade-offs in using Humira (known as a biologic drug), and it is not just its high cost.

This drug can lower your white blood cell count, which increases the chance of getting an infection. It also lowers the ability of your blood to clot. This is serious stuff: When using Humira you are supposed to even be careful brushing your teeth or using dental floss. You are not supposed to touch the inside of your nose or your eyes without washing your hands.

And you are “to avoid contact sports or other situations where bruising or injury might occur,” says the Mayo Clinic drug report. Then there’s the higher risk of cancer including lymphoma, leukemia, lupus and nervous system problems, according to the Mayo report.

Since neither Medicare nor my cheap Medicare-advantage plan cover the cost of this medication, I was told that my personal cost to buy Humira for a year would be about $10,000. At the peak, it would cost me $4,800 a month. That’s something to think about.

Considering my options

Like a lot of things related to rheumatoid arthritis, there are no clear cut answers for what exactly is going on with my autoimmune disease or how exactly to best deal with it. As I see it, my options are to: continue with the methotrexate/Diclofenac combination and endure some RA discomfort. Or figure out a way to start taking Humira with all of its precautions and side-effects with the hope that I would be pain-free and slow the progress of this disease. (Just read through comments on a Humira user review Web site. Some of the comments were really scary).

My doctor also suggested that I reconsider taking a bit of prednisone in combination with the methrotrexate. But I hate prednisone for the side effects…weight gain, puffy face, sleeplessness…depression. All lovely. For a rundown on all this stuff, click here.

My last thought: I have new sympathy and respect for people living with rheumatoid arthritis (about 1.3 million). It means varying degrees of chronic pain. It means fatigue that comes and goes without much reason.

It means having good days and bad days with little true understanding from those who don’t have it and/or don’t know about it.

So my RA journey continues. I feel lucky in many ways that rheumatoid arthritis has only lately entered my life, that my pain issues are much improved and that there are options and drugs in the arsenal that my doctor has yet to use to continue to give me the life I enjoy.

Why do autoimmune diseases affect women more often than men? click here.
Humira user forum, click here.
Cost of Humira, click here.
Beating the high costs, click here.
Ways to beat the high costs, click here.

Monday, January 2, 2017

Bit by FitBit. An investing lesson relearned

"Behind every stock is a company. Find out what it's doing."Peter Lynch,  Fidelity Magellan Fund manager from 1977 to 1990, during which time the fund's assets from $20 million to $14 billion. (1944 -   )   

There’s a lot to like about FitBit wearable health and fitness tracking devices. Interactive with a smart phone app, a FitBit – worn like a wrist watch -- will track the steps you take every day, calculate how many stairs (or the equivalent elevation gains) you climb daily and give you your heart rate at any given moment. While asleep, a FitBit can detect how many times in the night you become restless, roll over or get up to raid the refrigerator.

Using the app, you can clock in your daily water and food intake and track your overall physical performance in terms of calories in and calories out.

The app uses clever graphics and trends charts to show you your progress. It rewards you with "badges" when you reach certain milestones. All very clever.

After receiving a FitBit as a birthday present last year, I was so impressed with the product that I bought stock in the publicly traded company, FitBit Inc., headquartered in San Francisco. In 2015, the company reported revenue of $1.86 billion on sales of 21.4 million "connected health and fitness devices."

Last week, I sold my FitBit stock investment at a 70 percent loss!

This lesson is something I occasionally must (painfully) relearn: Don’t be a gambler (you idiot), be an investor!
These are the rules (my rules) that I violated:

  - I bought the stock on an emotional whim rather than after taking time to do research on the company, its products and financial performance. If I had done that I would have noticed that FitBit management and the stock were under pressure in late 2015.

  - I failed to evaluate FitBit competition in the wearables market. Competition from the likes of Apple and Samsung, not to mention smaller competitors. 

  - Fitbit does not pay shareholders a quarterly dividend. Instead, investors are in it for a hoped-for big run-up in share price. Only buy a stock like this if you can afford to lose every cent that goes into the gamble.

  - I failed to recognize the techy trendiness of Fitbit products, not unlike GoPro wearable/mountable cameras. GroPro stock had peaked just a year earlier (2015) at $82.35 a share and then plummeted over the next 12 months to $17 a share. That was just about the time that I was falling in love with FitBit.

A month (January 2016) after my investment, FitBit was hit with a class action lawsuit claiming that its heart rate technology was not accurate enough for people with health issues. Turns out that this technology in all wearables is a bit iffy. The negative news churned around for the next six months.

In quarterly reports, the company’s earnings per share had weakened even as revenue (sales) were increasing. The share price went from about $30 to $12 by the end of March 2016.

At that point, I decided to hold the stock until the end of the year for tax purposes. Selling FitBit at a long-term (owned more than 12 months) capital loss can be used to off-set any long-term capital gains incurred during the year from other stocks sold at a profit. This gave me some comfort.

Meanwhile, my own FitBit that I was wearing pretty much all the time began to physically come apart after 10 months of use. The colorful rubbery housing became unglued from the postage-stamp electronic device sitting inside. I tried gluing it but that didn’t work. Durability of some FitBit products turned out to be an issue, which resulted in complaints on online reader boards. Click here.

To my surprise, I received a new FitBit for my birthday again, this past year! This one has a different flaw that aggravates me….in the night, if I move my arm, the FitBit face lights up to tell me the time. That’s like having someone turn a flashlight on in my face. I have enough sleep issues as it is, so I stopped wearing it. Apparently you can go to the iOS app and turn off the QuickView button. Haven't tried that yet, too busy.

Investment analysts at Standard & Poor Capital IQ (click here) , rate  FitBit stock as a HOLD with a 52-week target price of $11. The stock starts 2017 at $7.32 a share. At that price, someone might make some money if and when the company turns around. As an emerging growth stock in a fickle market, analysts see "limited long-term visibility" for FitBit share performance. In other words, they don't know where FitBit's share price might go.

Forecasts call for a 10 to 15 percent FitBit sales revenue increase in 2017. Earnings per share could to climb from 57 cents to 74 cents. As the leading provider of wearable fitness-tracking devices, FitBit still has potential, analysts said.
Negatives include stiff competition, manufacturing supply issues, rising costs and softer demand. FitBit product prices range from around $100 to $200.

A Zacks Equity Research post at Nasdaq.com, asked this week, “Is There Hope for FitBit (FIT) investors in 2017?” Zacks mentioned several of the negatives already described in this report. But then said that in spite of all the gloominess surrounding the stock, the fact that Fitbit is still No. 1 in the wearables market and apparently saw a good fourth quarter (2016) gives investors reason for hope in 2017.

Not for me.

I’m too busy relearning my own basic rule about not buying stock in trendy, techy companies that don’t pay a dividend. If I had 20 years to see how it all turns out, maybe I could justify continuing to own FitBit shares. But it is easier for me to sell, take the loss and move on.

There are gamblers and there are investors. I try to be an investor. An investor does the research, buys for the long-term and reinvests the dividends for 20 years.

Or as investment guru, Peter Lynch, says, "Know what you own, and why you own it."

In the case of FitBit, I didn't know what I owned. I just fell in love.

For more:
Understanding capital gains and losses, click here.
Going All-in: Comparing Investing and Gambling, click here.
What is the difference between investing and gambling? click here.
25 Rules for Investing, The Street,  click here.