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Subaru is Kelley Blue Book’s
Most Trusted Brand and
Best Overall Brand. Again.
And now, 2017 Lowest 5-Year Cost to Own.*

Trust the brand Kelley Blue Book awarded Most Trusted


and Best Overall of any brand for two years in a row.
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Subaru is a registered trademark. *2016–2017 Kelley Blue Book Brand Image Awards are based on the Brand Watch™ study from Kelley Blue Book Strategic Insights. Award calculated among
non-luxury shoppers. 2017 model-year vehicle’s projected cost to own for the initial five-year ownership period is based on the average Kelley Blue Book 5-Year Cost to Own data which considers
depreciation and costs such as fuel and insurance. For more information, visit www.kbb.com. Kelley Blue Book is a registered trademark of Kelley Blue Book Co., Inc.
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What it really costs to go
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to Disney—and how to do MONEY’s annual
it for less. P L U S : Extra analysis identifies
savings tips for visiting five new winners.
Universal Studios. BY MEGAN LEONHARDT
BY BRAD TUTTLE AND KAITLIN MULHERE

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inequality: smart, controversial TIVWSREPM^IHTPERVIGSQQIRHEXMSR Tales from the front lines
words from U.S. leaders past of a divided economy.
and present. B Y I A N S A L I S B U R Y BY KRISTEN BAHLER

J U LY 2 0 1 7 M O N E Y. C O M

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 Big Restaurant Markups Many plans are replacing
mutual funds with trusts.

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 /RS[=SYV6MKLXW Many active service members
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Kicked off a flight? Here’s how
to get fully compensated. 3 -6% ;MXLHVE[EPW
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3 ,S[XS8EPO When can you change your
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Give your portfolio a tune-up.
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A physician outlines steps &IVOWLMVI ,EXLE[E]
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costs of routine health care. a step?

'309127
IN THIS ISSUE THE INTELLIGENT INVESTOR MY MONEY STORY
9RHIVWIEEXXVEGXMSRW  Letters & Comments
QEOIXLMW)K]TXMER  The Numbers 3 ,S[XS9WI)8*W 3 % 1YWMG0IWWSR
VIWSVXEHMZIVŞWTEVEHMWI XS4MGO3XLIV)8*W A jazz choir teacher gives
7IITEKI A new group of exchange- amateurs a surprising insight
Cover photograph (Disney
World castle) from Look traded funds has gone meta. into being a professional.
N A R C H U K . C O M / M O M E N T/G E T T Y I M A G E S

Photos GmbH/Alamy BY J O H N WAG G O N E R BY C H R I S KO R N E L I S

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J U LY 2 0 1 7 M O N E Y. C O M

CHIEF EXECUTIVE OFFICER Rich Battista
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LETTERS
& COMMENTS

“GO AHEAD—INVEST ALREADY” [MAY]

8LIEVKYQIRX FACEBOOK
COMMENTS ABOUT

EKEMRWXHSPPEV
RECENT STORIES
ON MONEY.COM

GSWXEZIVEKMRK Definitely some valid points


seems to assume that the market here. However, you can’t
build wealth by skipping
is valued near or below historical $4 Starbucks … Expenses
averages. But stocks are currently aren’t nearly as important
overvalued by most measures. as income.
Considering these facts, I think investors would be wise :-831%6) 87/-
to seriously question a recommendation to invest a large Re: “Millionaire to Millennials:
Stop Buying Avocado Toast
amount of new money into stocks all at once, at least in if You Want to Buy a Home.”
today’s market. GREG AREND, CASTLE ROCK, COLO.

Good to pay back


when you can. They
COUPLES BUDGETING TIP necessities like rent, vacations when I made all should do that.
Thanks for the article food, and utilities are more money early in It would make the
on newlyweds’ finances. shared strictly 50/50, our life together. Later world a better place.
[“The Newlyweds’ so no one partner feels on, he made more and
Guide to Financial inferior or superior to was able to assume that )66304) 8)67
Success,” June]. I want the other. But any role. We both enjoyed Re: “Nicki Minaj Offers to Pay
to share the system my luxuries, such as restau- the arrangement. College Tuition for Fans”
partner and I used rant meals, movies, M I C H A E L S C H M I DT
when we became a or vacations are paid Washington, D.C. There is no age to be
couple. It served us well for by the person who embarrassed about if you
for 32 years until his makes more money. actively contribute to your
TAX SOLACE FOR VICTIMS
parents’ household.
untimely death from Using this system, I The romance scam
pancreatic cancer. All paid for some fabulous victim [“The Terrifying 2-//-136832
True Story of a Re: “Here’s the Age Millennials
$1 Million Scam,” June] Say They’d Be Embarrassed to
may be able to take Still Live With Their Parents”
OUR FAVORITE COMMENT a tax deduction for her
financial loss to the We need to properly
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thief. This might help define success: 90%
offset some capital having professional
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in the top pay tier
LMWMHIEETTIEPMRK-EGXIHSRMXWXE]IHTEXMIRX of her investments. She
ERHRS[IRNS]EZIV]WEXMWJEGXSV]VIXMVIQIRX should check with her is not too shabby.
JYRH W AY N E P L A S T E R , TA M P A tax adviser. 797%2'0)1)27
M A RT I N G L AT T Re: Ever Wondered What
Calabasas, Calif. Became of High School
Valedictorians?

Write to MONEY: letters@moneymail.com


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Brides shell out thousands for someone to say,
“You can chill about this.” BY K R I ST E N BA H L E R

ATTENDANT-FOR-HIRE A Florida native, Glantz got


Jen Glantz has seen it all: her start in 2014 when she
demands that bridesmaids dye posted an ad on Craigslist for
their hair, get spray tans, even brides who “need someone to
lose weight. That’s not the take control” and got over 100
worst of it, either. “There was responses in two days.
one August wedding where It’s not all about drama. With
I found the bride downing a Glantz’s “Day-of Coordinator”
bottle of vodka,” Glantz recalls. packages ($1,200 to $2,000),
“She got blackout drunk and she’s essentially a wedding-
started screaming that it was planner lite—an extra pair of
the worst night of her life.” hands to make sure everything
But that’s why Glantz, who from picking up the dry clean-
maintains the dogged positivity ing to tossing the bouquet runs
of a Dallas Cowboys cheer- smoothly. For Glantz to actually
leader, earns about $2,000 per walk down the aisle alongside
wedding. “Friends don’t know the bride—to replace a missing
how to handle brides in stress- or estranged friend—it will cost
ful wedding situations,” she you $2,000 and up.
adds. “It becomes a bit of a “It happens more than you’d
nightmare. I’m that third-party think,” Glantz says.
person who can say, ‘You can
chill about this, because you %P[E]WEFVMHIWQEMH#4VS.IR
can trust me.’ I bring them +PERX^LEH3GPMIRXWPMRIHYT
back to reality.” JSVXLMWWTVMRKŞW[IHHMRKWIEWSR

 M O N E Y. C O M J U LY 2 0 1 7
J ULY 2 0 1 7

P H O TO G R A P H S C O U R T E S Y O F S U S A N S H E K ( 2 ) ; STA R F I S H S T U D I O S ( 2 ) ; J E N G L A N T Z ( 9 )


M O N E Y. C O M
J U LY 2 0 1 7
*MVWX TRAVEL

%QE^MRK
%HZIRXYVIW8LEX 2. Xi’an, 5. Kraków,

;SRŞX'SWXE*SVXYRI
China Poland
TOTAL COST OF A TOTAL COST OF A
WEEK FOR TWO: WEEK FOR TWO:
$2,828 $3,200
Go bold without going broke. MONEY looked far afield to WHAT TO DO THERE: WHAT TO DO THERE:
identify international vacations that will take you beyond Visit the 8,000
figures in the famed
Wander the Old
Town and see
the ordinary. BY MEGAN LEONHARDT AND KERRI ANNE RENZULLI Terra-Cotta Army. St. Mary’s Basilica.

1 : C E C I L I A C O L U S S I S TO C K — A L A M Y STO C K P H O TO. 2 : W O L F G A N G K A E H L E R — L I G H T R O C K E T V I A G E T T Y I M A G E S . 3 : J O H N S . L A N D E R — L I G H T R O C K E T V I A G E T T Y
I M A G E S . 4 : A S H I T D E S A I — M O M E N T/G E T T Y I M A G E S . 5 : VA N N E ST E R O V— A L A M Y. 6 : N A R C H U K . C O M / M O M E N T/G E T T Y I M A G E S . 7 : R O B E R T H A R D I N G — A L A M Y
3. Hoi An, 6. Sharm el-
Vietnam Sheikh, Egypt
TOTAL COST OF A TOTAL COST OF A
WEEK FOR TWO: WEEK FOR TWO:
$2,684 $3,306

WHAT TO DO THERE: WHAT TO DO THERE:


Take a river tour Scuba dive at
in a traditional Ras Mohammed
wooden long-tail National Park.
boat; walk through
the historic
district.

4. Siem Reap, 7. Sofia,


IF PARIS IS TOO PASSÉ for your next interna- 1. Oaxaca,
tional vacation, it’s time to consider a more Cambodia Bulgaria
Mexico
off-the-beaten-path experience. A number TOTAL COST OF A TOTAL COST OF A
TOTAL COST OF A WEEK FOR TWO: WEEK FOR TWO:
of destinations deliver great value with WEEK FOR TWO: $2,445 $2,725
fewer tourist hordes. MONEY has scoured $1,948
WHAT TO DO THERE: WHAT TO DO THERE:
its Best in Travel database to identify seven WHAT TO DO THERE: Tour Alexander
Set aside
cities that may not be at the top of tourists’ Visit the ruins several hours Nevsky Cathedral
lists—yet—but are packed with incredible at Monte Albán; to visit Angkor and the
snack your way Wat and underground
things to do, delicious flavors to try, through Mercado surrounding museum at
and reasonably priced places to stay. 20 de Noviembre. temples. St. Sofia Church.

Methodology: To make these selections, MONEY weighed more than 14,500 data points for over 200 of the most popular international destinations. Then we ranked the
seven cities that scored best on overall cost factors, giving the most weight to the price of airfare, lodging, and food, as well as the biggest year-over-year price drops. We
also considered the number of restaurants and attractions each city offered, as well as experience factors like low crime rates, pleasant weather, and ease of access to
public transportation. Only one winner was chosen per country.

 M O N E Y. C O M J U LY 2 0 1 7
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Copyright © 2017 Time Inc. Fortune® and the FORTUNE 500 are all trademarks of Time Inc.
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C O M E T— G E T T Y I M A G E S ; P E P P E R S : L O N G H A 2 0 0 6 — G E T T Y I M A G E S ; O N I O N S : S PAT H I S A N D M I L L E R — G E T T Y I M A G E S ; K E TC H U P : K E L E N A R T— I STO C K P H O TO/G E T T Y I M A G E S ; S O U R C R E A M : V I K I F — I STO C K P H O TO/G E T T Y

'LIET 8LMRKW6IWXEYVERXW
I M A G E S ; B U R G E R : E N V I S I O N /G E T T Y I M A G E S ; G U A C A M O L E : G R A N D R I V E R — G E T T Y I M A G E S ; V E G G I E P I Z Z A : PA U L S E H E U LT— E Y E U B I Q U I T O U S /G E T T Y I M A G E S ; F LY I N G C A R : D AV I S E L E N — K I T T Y H AW K

0SZIXS3ZIVGLEVKI=SY*SV
Add-ons like sour cream or pizza toppings really cost you. BY J E N N I F E R CA L FAS

RESTAURANTS mark up
ingredients by 300% on MEAT WHAT THEY PAY: 48¢
(on pizza) WHAT YOU PAY: $3
average, according to
MARKUP: 525%
software company
PlateIQ, which analyzed
invoices from more than
1,000 eateries earlier this
year. Before you get too SOUR WHAT THEY PAY: 19¢
indignant, remember CREAM WHAT YOU PAY: $1
(on burritos)
that you’re paying for a MARKUP: 426%

full dining experience—


not just for sustenance.
Typically 60% of a
restaurant check goes to
GUACAMOLE WHAT THEY PAY: 52¢
labor and rent and 30% (on burritos) WHAT YOU PAY: $2
to 33% to food, with less MARKUP: 285%
than 10% left as profit.

CHEESE WHAT THEY PAY: 29¢ VEGETABLES WHAT THEY PAY: 32¢
(on WHAT YOU PAY: $1.50 (on pizza) WHAT YOU PAY: $2
hamburgers) MARKUP: 417% MARKUP: 525%

The upfront fee entitles you to a $2,000 discount


FOR $100 YOU CAN GET when the Google cofounder’s Kitty Hawk Flyer
becomes available later this year. One big
FIRST DIBS ON LARRY catch: Page hasn’t said what the “all-electric”
PAGE’S FLYING CAR vehicle, designed for cruising above lakes, will
actually cost. —J.C.

J U LY 2 0 1 7 M O N E Y. C O M

Today is better when you’ve
taken care of tomorrow.

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Mutual of America® and Mutual of America Your Retirement Company® are registered service marks of Mutual of America Life Insurance Company,
a registered Broker/Dealer. 320 Park Avenue, New York, NY 10022-6839.
4PER
;LEXXS(SMJ=SY+IX&YQTIH
Kicked off a flight? Here’s how to score full compensation. BY M EG A N L EO N H A R DT

THE DISTURBING more than two hours


video of a passenger later than planned (four
being dragged off a hours for international
United Airlines flight in flights). While many air-
April should raise lines try to compensate
alarm bells for anyone passengers with credit
who flies these days. vouchers, you can—
If you haven’t volun- and should—insist on a
teered to give up your check, says Paul Hud-
seat, and an airline em- son of Flyerrights.org.
ployee insists on re- In fact, you should be
moving you from the able to collect your
plane, experienced compensation immedi-
travelers and fliers’ ately at the airport. If
rights organizations that’s not possible,
suggest this five-step keep your documents
action plan to save and notes on what
your vacation and took place to file a
O R I G I N A L P H O TO G R A P H S , M A N : C R A F T V I S I O N /G E T T Y I M A G E S ; C A N E : G E T T Y I M A G E S / I STO C K P H O TO

avoid bloody noses. claim later, advises


AirHelp.com.
OBEY
The Patriot Act makes it FOCUS ON
a felony for passengers THE POSITIVE
on planes to disobey Angry rants won’t get
airline staffers. That law you much extra from
gives them the right to stressed-out gate
remove any passenger. agents. So try to keep
Object too much and vises passengers to use rights—and no guaran- destination as soon calm by focusing on
you can face a large fine their smartphones to tee of compensation— as possible. the money you’ll be
and even prison time. search for the U.S. De- if airline staffers re- getting, suggests Laura
partment of Transpor- move you for safety DEMAND A Begley Bloom, a travel
KNOW YOUR tation’s rules for being concerns, such as CHECK NOW journalist whose family
RIGHTS “involuntarily denied weight-and-balance is- If your removal is due to made $11,000 by vol-
Federal rules require boarding.” Also, pull up sues on small planes, overbooking and you’ll unteering to get
airlines to provide you the airline’s “contract or if your flight is can- be more than one hour bumped one weekend.
with a written state- of carriage” and search celed for weather late to your destination, Spend some of that
ment explaining your for similar terms. reasons. the government re- loot to lighten your
rights and why you’re Leocha cautions that quires airlines to com- mood. “A lot of airports
being bumped. Since fliers can generally get GET REBOOKED pensate you. Federal have massage kiosks.
airline staffers often compensation only if No matter why you’ve law states you should Buy some Twizzlers.
neglect to do so, Char- they are bumped be- been kicked off, the be paid $1,350 if the al- Have a glass of wine.
lie Leocha, president of cause of overbooking. airline is supposed to ternate routing gets you It’s 5 o’clock some-
Travelers United, ad- Fliers have fewer rebook you to your to your final destination where,” she says.

ILLUSTRATION BY JOSUÉ EVILLA J U LY 2 0 1 7 M O N E Y. C O M



4PER
ER
R TOUGH CONVERSATIO
ON

PREP WORK
The first step is to find out exactly
how much and what there is to
bequeath. So it is crucial to inven-
tory the assets—financial accounts,
jewelry, real estate, family heirlooms,
and the like. Some financial accounts,
such as life insurance policies,
401(k)s, and IRA balances can be
handed over directly without
reference to a will. It’s best to assign
or update beneficiaries to those
accounts immediately.

OPENING LINE
“I saw what happened to Jill’s family
when she died without a will. What can
we do to avoid that?”
Use a friend’s passing (or perhaps
news of a court battle over a will-less
celebrity like Prince) to ease into the
conversation while providing some
emotional distance. Though inevi-
table, our mortality is something
most of us avoid contemplating. So
focus instead on providing for loved
ones. Start by deciding whom to
include as heirs, and whom to name
as executor, the person responsible
for paying claims against the estate
and distributing assets to beneficia-
ries. A trusted friend, relative, or

,S[XS8EPO%FSYX
W O M A N : D A N I E L G R I L L— G E T T Y I M A G E S ; M A N : 4 X 6 — I S T O C K /G E T T Y I M A G E S
financial institution can play this
role. If you’re going with a profes-
sional executor, remember to set

+IXXMRKE;MPP aside funds to pay for his or her fees.

TALKING POINTS
“Kara is old enough to support herself,
An easy guide to an uncomfortable topic. but what about Jason? Who would look
BY K E R R I A N N E R E N ZU L L I after him if something happens?”
The single most important aspect
NO ONE WANTS TO PLAN for his or her own death. Maybe that’s why of a will is also often the hardest:
about half of Americans don’t have a will. But people who die Who will take custody of minor
without written instructions force their families to endure potentially children? Consider the personal
long and expensive probate court cases, and could subject minor children bond between the child and potential
to the care of a hated relative. So do your friends and family a favor, guardian, as well as factors like their
and broach the topic of drafting a will. Here’s how to do that gently: location, dependents, age, and other
financial obligations. Remember:
If you don’t make a selection, a judge
 M O N E Y. C O M J U LY 2 0 1 7 will make the choice.
“It’s tempting to split the money

)WGETI+]Q*IIW
evenly between kids, but what if one
is earning a lot more?”
“Everyone’s default when
planning is to treat heirs equally—
but fair isn’t always equal,” says Canceling a fitness club contract can be a workout.
Raleigh, N.C., financial planner
BY A L I C I A A DA M C Z Y K
Mike Palmer. Typical issues: Did
one child receive a gift—say,
Half of all gym
financial support for an advanced members—
degree—that the others didn’t? more than 20 million
Should a low-earning child Americans—are probably
receive more support than a not going to the gym
high-earning one? Will biological often enough to justify
and stepchildren be treated the monthly fees,
studies show.
differently? If you are having
But many fitness club
difficulty deciding, try asking the contracts lock custom-
I L L U ST R AT I O N B Y J O S U E E V I L L A ; O R I G I N A L P H O T O G R A P H S , W E I G H T: I S TO C K P H O TO/G E T T Y I M A G E S ; W O M A N : P M I M A G E S /G E T T Y I M A G E S

heirs directly about what they ers into payments for


think would be fair. You don’t at least a year. If you’re
have to follow their wishes, but tired of paying for
their input could help you find missed yoga classes,
common ground. lawyers and gym experts
suggest trying these
“Do you feel comfortable giving
money-saving poses.
the children their inheritance all at
once? They are still so young—who CHECK THE
knows what they’d spend it on?” FINE PRINT
If you want to influence either Most gyms allow you BEG ment that your request
the timing of the inheritance or the to cancel for reasons Try asking a member- was received,” advises
such as illness, injury, ship representative for Samuella Becker, a New
way it gets spent, you’ll need a
job loss, or relocation. leniency. “Unhappy York City PR consultant,
trust. Incentive trusts can require, who says her emailed
Look at your sales members can create
for instance, that an heir earn a material too: If the problems on social cancellation was
college degree or pass a drug test salesperson misled you, media,” notes Tom ignored for weeks,
before collecting money. Staggered or failed to notify you of, Holland, a former gym costing her an extra
trusts let your estate be paid out say, revocation rights, owner who is now a fit- month of fees.
over a certain time span. state laws typically ness coach. If the local
allow you to void an staff says no, appeal MOTIVATE
agreement. to the corporate head- If you can’t get out of
NEXT STEPS quarters, suggests paying the bills, keep
Hire a lawyer to execute the plan NEGOTIATE Shaolaine Loving, a Las doing so. Otherwise, a
you’ve outlined. A will drafted by If your club requires Vegas contract attorney. debt collector could turn
an attorney averages about $375, arbitration and pays up at your door. Either
according to LegalZoom. all arbitration fees, “that DOCUMENT use the bills to motivate
Finally, tell the heirs. You don’t gives you some leverage,” Send a printed cancella- yourself to get back on
says Columbus attorney tion notice, along with the treadmill, or frame
need to spell out how much
Troy Doucet. You can paperwork such as con- your contract and hang
they’ll inherit, but you should talk it up where it’ll be a stark
point out how much tracts and membership
about big decisions you’ve made. a dispute will cost them cards, via registered reminder to think
Says Cincinnati financial planner and try to negotiate a mail. Equally vital: “Seek through your next big
David Nienaber: “People are buyout. a written acknowledge- purchase.
more upset when you die and
they’re left to figure out with
their siblings why you did what
you did.” J U LY 2 0 1 7 M O N E Y. C O M

4PER SELF-CARE

;E]WXS'YX
CANCEL UNNECESSARY TESTS
Ask a doctor who suggests a test how the
results might change your course of treat-

=SYV1IHMGEP&MPPW
ment. If the answer is “not much,” then
press for why it is needed. Consider skip-
ping it if you don’t get a good answer.
Unnecessary procedures are surprisingly
common: One study found they make up
A physician outlines steps patients can take to 7% of health care spending.
slash the costs of their routine health care.
BY E L I Z A B E T H O’ B R I E N SEARCH FOR OPTIONS
Inquire where you can get the work done.
Physicians often operate at different loca-
tions on different days of the week. If it is
safe and convenient to have the procedure
done in an office, rather than a hospital,
that often results in big savings. Also use
your insurer’s web cost estimator tool to
see if you can get your tests done at lower
cost nearby, and then bring the results to
your doctor to analyze.

COMPARISON SHOP AHEAD OF TIME


Ask: “How much will that cost?” If the doc-
tor doesn’t know, insist on talking with the
billing specialist at the office or hospital.
You may have to be persistent to get be-
yond “It depends on your insurance,”
Rosenthal warns. At a minimum, she says,
the facility should be able to provide the
cash price. Check your insurer’s online
estimator tool (or call your insurer) to see
if it has information on less expensive op-
tions in your community.

VET THE PROFESSIONALS


You don’t want surprise bills from other
doctors who might participate in your care.
Remember that you might not meet pro-
MEDICAL SERVICEShave long been one of families’ biggest viders who, say, read a scan off-site, or
budget busters. To diagnose an injured knee, for example, treat you when you’re under anesthesia.
So ask whomever you choose to oversee
some hospitals post cash prices (the price paid by the uninsured) of
your care: “What are the names and roles
more than $4,000 for an MRI. But patients are increasingly able to of the other medical professionals who will
safely reduce their nonemergency medical bills, says Elisabeth be involved, and are they in my plan’s net-
Rosenthal, editor-in-chief of Kaiser Health News and author of An work?” It pays to double-check their
American Sickness: How Healthcare Became Big Business and How You names with your insurer. You can ask your
Can Take It Back. physician to swap out-of-network provid-
If you have the time and energy for a little polite questioning of ers for in-network replacements. “I see the
anesthesiologist isn’t in my network—is
your doctor, a few phone calls, and some web research, you can often
there someone else who can treat me who
dramatically slash your medical bills. In the case of MRIs, for is?” But doctors don’t (or can’t) always
F M A J O R /G E T T Y I M A G E S

instance, by as much as 75%. Rosenthal, who is also a former honor such requests. If they don’t, you’ll
practicing physician and former New York Times medical correspon- have to take your business elsewhere, or
dent, suggests trying these four actions: budget for much higher costs.

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6IXMVI
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old-style mutual funds - 0 % 9 8 9 1 ) 6 0
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lowdown for savers. 2 2 9 : 6 - 5 2 ) -
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7IIFIPS[JSVERW[IVW

THERE’S A STEALTH investment


vehicle that’s making its
way into more 401(k) plans: the
collective investment trust (CIT).
You might own one or more,
especially if you work for a large
company, and not even know it.
Also known as collective
investment funds, these holdings funds. That leads to the primary accusing companies of having
are similar to mutual funds in attraction of CITs: lower fees. excessive 401(k) fees have put a
owning baskets of securities. But While the trusts are not spotlight on what savers pay. Also,
PA P E R : K YO S H I N O/G E T T Y I M A G E S

they are open only to retirement new—in fact, like mutual funds the onus on plans to lower fees has
plans and some other institutional they’ve been around for many grown over the past decade owing
investors, and they aren’t subject decades—they’ve been growing in to a requirement that plans
to the same disclosure rules and popularity. Recent lawsuits filed by disclose all fees to participants.
other requirements as mutual retirement-plan participants In 2016, 65% of larger 401(k)


ANSWERS: BONDS, EXPENSE, FUND, INDEXING, MONEY, MUTUAL, PORTFOLIO, RETIRE, SAVE, AND STOCKS.
M O N E Y. C O M
6IXMVI LOOKING FORWARD

plans included at least one trust again by switching to CITs. As POTENTIAL DRAWBACKS
on its menu, vs. 48% in 2012, seen in the graphic below, a typical Trusts can have a disadvantage
according to Lori Lucas, defined mix of CITs in a large 401(k) plan when it comes to transparency
contribution practice leader at might cost 0.35% of assets in and the ease of reviewing all of
Callan Associates, an investment annual fees, less than half the cost your investments in one place.
consulting firm. “The financial of ordinary mutual funds, accord- “These aren’t investments you’d
services industry has seen an ing to Callan. A 0.35% expense generally see in the newspaper,”
increased use of trusts due to fee ratio is equal to just $350 a year says Bob Salerno, a senior vice
sensitivity,” says Kevin Jestice, on a $100,000 balance. president at Fidelity. You can’t
head of institutional investor The very cheapest institutional look them up on websites like
services at Vanguard. funds and CITs are far cheaper Yahoo Finance either.
Here’s what you need to know than the averages—under 0.1% or Instead, you’ll have to log in to
if you own a collective investment even under 0.05%, says Michael your account on the website of the
trust now, or may in the future: Miller, managing director of the financial company that adminis-
PFE Group. Trusts are typically ters your 401(k) plan. Much of the
HOW TO SPOT THEM a hair cheaper than the funds. information you’ll see on the trusts
The tip-off that some of the is likely to be similar to what is
options in your 401(k) are CITs? provided for the mutual funds in
On the list of investments, look for the plan. For instance, you will
“Trust” or the abbreviated “Tr” in often be able to see how a trust
the name—and also the absence of has performed compared with an
a ticker symbol. Don’t assume 401(k) Makeover index benchmark or category
your investments are funds Collective investment trusts carry
average, says David Blanchett,
because you see the names of big lower fees than mutual funds … head of retirement research for
fund companies like Vanguard and Morningstar.
Fidelity; they are also big provid- AVERAGE EXPENSES Another downside to collective
ers of CITs, typically through their investment trusts is that it’s
own trust-company subsidiaries. 0.76% Ordinary mutual funds harder to integrate them into
As investments, trusts “look online portfolio management tools.
and feel a lot like a mutual fund,” 0.48% Institutional For example, Personal Capital
funds
Lucas says. For example, a trust offers free financial software that
could track the S&P 500 stock 0.35% Collective allows users to track investments
trusts
index, just like an index mutual held in multiple accounts and at
fund. There are also target-date NOTE: Weighted based on typical asset mix of large plans.
various firms. The software
trusts: Some plans might offer the automatically grabs data about the
Vanguard Target Retirement 2030 … And are growing as a percentage securities inside mutual funds, but
Fund, and others, the Vanguard of assets in retirement savings plans. for CITs the user would have to
Target Retirement 2030 Trust. manually add a ticker symbol for
You can typically move money into % OF ASSETS AT VANGUARD an equivalent fund to use as a
or out of a trust daily, just as you 20% proxy, a spokeswoman says. Ditto
can with the funds in a 401(k). 15% for investors using Morningstar’s
portfolio tracking tool.
10%
THE COST SAVINGS VS. FUNDS Similarly, portfolio manage-
Some 401(k)s have trimmed ment firm Betterment says it
their expenses by switching 0 can’t advise clients about the
from ordinary mutual funds for 2010 ’13 ’16 CITs inside their 401(k)s as it
individual investors to lower-cost SOURCES: Callan Associates (fees), Vanguard
does about mutual fund holdings
institutional funds—and cut them in those company plans.

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6IXMVI PENSIONS VS. SAVINGS

future will leave the service with


a retirement benefit, the military
says. That compares with less
than 19% under a system that has
been in force since the days of
MacArthur and Patton. The idea
is to attract more men and women
who aren’t inclined to make the
military a longtime career.
The new plan “is a key step in
modernizing the department’s
ability to recruit, retain, and
maintain the talent we require
of our future force,” a Pentagon
spokesman said in 2015, when the
Defense Department submitted its
proposal to Congress. The changes
in military retirement plans will

8LI1MPMXEV]ŞW
also save the government about
$2 billion a year.
The shift kicks in Jan. 1. Those

+SXE2I[7TMR
who enroll after that date get the
new plan, while those with more

SR6IXMVIQIRX
than 12 years of service will
remain under the old system.
Anyone with less than 12 years of
service on that date will have one
year to make an irrevocable choice
A“blended” design is intended to attract between the two programs. (See
younger people, while most of today’s service the next page for tips on choosing.)
members have a choice to make. BY DA N K A D L EC The switch highlights some of
the tradeoffs between pensions
and 401(k)s that workers in
IN A BID TO LURE MILLENNIALS, the U.S. military is 4ISTPI[LSLEZI private industry have long been
making the most sweeping changes to its WIVZIHEXPIEWX grappling with. Pension plans can
]IEVW[MPPVIQEMRMR
retirement program since World War II. No longer will XLIGYVVIRXTIRWMSR provide worry-free income for life,
only 20-year veterans leave the service with a benefit W]WXIQ%FSZI but the benefits go mostly to
for later life. Going forward, those who serve as little 1EVMRIWXVEMRMR long-tenured workers. With
/Y[EMXMR33
as two years will be assured of returning to civilian life savings plans, far more people get
with at least some retirement savings. a retirement nest egg. But workers
The new Blended Retirement System introduces bear much of the responsibility for
J O E RA E D L E— G E T T Y I M AG ES

matching contributions to a 401(k)-type savings plan diligently saving and making


while downsizing the traditional pension benefit— reasonable investment choices.
a trade the corporate world has been making for With the blended program,
35 years. About 88% of current active-duty military, “there are a lot of ifs,” says
or 1.15 million service members, will get to choose Kathleen Brinker, relationship
between the old and new designs. manager with AAFMAA Wealth
Under the new plan, 85% of those serving in the Management, a financial adviser

 M O N E Y. C O M J U LY 2 0 1 7
for military personnel. “The new receive a contribution of 1% of men and women struggle with the
plan works if you contribute base pay to the government’s demands of serving and managing
enough to get the full match, if you 401(k)-like Thrift Savings Plan their financial affairs at the same
invest prudently, if you don’t take (TSP). They fully vest in the TSP time. Too often, they return to
money out early, if you have in two years, so they can take all civilian life with no retirement
enough time for your money to those dollars with them if they benefits for the future but having
grow.” The military is rolling out a leave at that point. They will also taken on debt that weighs on their
stepped-up education effort along receive a matching contribution family finances.
with the changes. of up to another 4% of earnings. Veterans are twice as likely as
In the new blended plan, the Contributing the 5% of pay other Americans to carry debt
pension benefit after 20 years of required to get the full match from month to month, according
service will be 20% less than under could be a challenge for some to a 2014 survey conducted by
the old plan. But participants will military families. Many military Harris Poll for the National
Foundation for Credit Counseling.
More than half said they were
unprepared for a financial
'966)2836Š&0)2()(š40%2# with the old pension emergency. Such statistics explain
8-47c328,)6-+,8',3-')*36=39 plan—and then some.
why the government has been
But the blended pro-
IF YOU’RE WELL ON gram requires savings pushing the military to better
Savings Plan and
YOUR WAY: The old getting matching discipline and hands-on educate its members on money.
retirement system will contributions. attention. Another challenge is that most
generally be better for And keep in service members are risk-averse
people who have several IF YOU’RE JUST START- mind that military investors, says Ross Cutler, an
years of military ser- ING YOUR CAREER: personnel are subject
AAFMAA adviser. Matching funds
vice under their belt The choice is tougher to involuntary layoffs,
and plan to stay for at if you’ve only got a year like everyone else. The under the new system go into a
least the 20 years or two of service but Army announced a low-risk fund that yields about 1%.
required for a pension. plan to retire from the forced troop reduction But financial advisers say service
You probably won’t military. Many additional of 8% just two years members, like other retirement
have enough time to years of matching con- ago. If you choose the savers, should plan to put a
make up for the new tributions and com- old pension plan and
pound growth in the
significant chunk of their money
plan’s smaller pension get downsized before
by saving in the Thrift TSP can close the gap you’ve got 20 years into stocks for the higher returns
in, you lose. they have delivered on average
over long periods.
IF YOU’RE PLANNING
For some, that will require
A Big Savings Challenge TO MOVE ON: If you
think you won’t stay
getting comfortable with holdings
the 20 years required whose values can swoon in some
Under the military’s new plan, an officer serving
for a pension, go with periods while soaring in others.
20 years would need about $300,000 in savings
the new system be- “Most [veterans] retire from
at retirement to offset a smaller pension.
cause it guarantees the service and have second
you will leave with
careers,” which means they can
ESTIMATED VALUE OF PENSION AT RETIREMENT some savings.
hopefully leave their military
Current plan $1.4 million A TOOL THAT CAN retirement savings alone to keep
HELP: The military in growing, says Cutler. If these men
May rolled out its and women aren’t going to tap
New plan $1.1 million Blended Retirement
those dollars until they are in their
System Comparison
Calculator, at sixties, “it’s easier to make the
NOTES: Based on inflation-indexed pensions starting at $53,000 and
$42,000, for 40 years. SOURCE: AAFMAA Wealth Management militarypay.defense case for more aggressive investing
.gov/Calculators/BRS. with equities,” he says.

J U LY 2 0 1 7 M O N E Y. C O M

6IXMVI IRA DO-OVER

=SYV-6%;MXLHVE[EP
IRA custodian to send the dollars
directly to another provider. And

1E]&I6IZIVWMFPI
last year, the IRS granted a little
more flexibility to IRA investors
who accidentally go beyond the
60-day period for reasons such as
a family death or home damage.
There are certain situations where you can change your
mind—and avoid taxes and penalties. BY K A R E N DA M ATO You withdrew to buy your first
home, but there was a problem.
As a first-time homebuyer, you can
SOME FINANCIAL MOVES are easily undone. You can THE DEAL avoid the usual penalty for IRA
sell a stock, for instance, and change your mind WITH withdrawals before age 59½.
D0-OVERS
and buy it back the following week. But when it comes And you get extra time to undo a
,IVIEVIXLI
to individual retirement accounts, which give you tax [MRHS[WMR[LMGL withdrawal as well: If the money
breaks for saving, there are only limited circumstances ]SYGERVIZIVWI isn’t used for the home purchase
ERc-6%[MXLHVE[EP
in which you can pull your money out of that tax- because of delay or cancellation,
advantaged bubble and pump it back in. you have 120 days to put it back in.
Why might you want to do that? Maybe you
assumed there were no other options besides tapping You tapped the account after
your IRA to cover a financial emergency, but then 70½ but wish you had made a
a family member stepped in to help. If you’re dealing direct charitable contribution
with a traditional IRA in which you made tax- from your IRA instead. This one
60 DAYS
deductible contributions, reversing the withdrawal 8LMWMWXLIWXERHEVH is tricky. Once you reach the age for
could save you from a big tax bill and also the 10% VYPIMJ]SYŞVI required minimum distributions
early-withdrawal penalty if you are younger than 59½. ]SYRKIVXLER3€ (RMDs) from traditional IRAs, the
You would delay the tax bill until later in life and, first dollars you pull out each year
perhaps more important, you would leave your nest are counted as that. And RMDs are
egg alone to keep growing for your retirement years. not allowed to be redeposited.
Here’s a look at the rules for four instances in which So if your RMD for this year
you might dip into an IRA and then want a do-over. is $20,000, and you withdrew that
amount, you can’t change your
You’re under 70½ and tapped your IRA, but now mind to do a $20,000 charitable
don’t need the cash. You have a 60-day window to get 120 DAYS transfer. However, if you pull out
-J]SYŞVIFY]MRK
that money back into an IRA. The key to the do-over ]SYVƙVWXLSQIERH $30,000, you could change course
option is a tax rule that people often use to roll IRA ]SYLMXTVSFPIQW on the $10,000 above your RMD.
money from one financial institution to another. If you
take a distribution from your IRA at Company A today You withdrew from an inher-
and deposit those dollars in an IRA at Company B ited IRA in which you’re the
( O L D M A N ) A L B E R TO M I R A N D A – N O U N P R O J E C T

within 60 days, there’s no tax bill due. beneficiary. You’re out of luck.
You can also use this 60-day rule to deposit the “There is no 60-day rule” in this
money you withdrew back into your original IRA, says case, Shier says, so you can’t put
Suzanne Shier, chief wealth planning and tax strategist the money back. There is a wrinkle,
at Northern Trust: “You just have to put it back into an OUT OF LUCK though: If you inherited an IRA
IRA. It doesn’t have to be at another institution.” -J]SY[MXLHVI[ from your spouse, you can roll those
There are a few things you need to know: You can JVSQER-6%]SY dollars into your own account,
MRLIVMXIHJVSQ
use this 60-day rule only once a year. However, there EcRSRWTSYWI which might open up the do-over
are no limits on transactions in which you direct your option for the future.

 M O N E Y. C O M J U LY 2 0 1 7
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-RZIWX

1-(=)%6 AFTER GETTING OFF TO a fast-and-furious start


following the presidential elections—with
-2:)7836Ş7+9-() the Dow Jones industrial average racing
past the 21,000 mark for the first time in
history—the stock market shifted into

8MQIJSVE
neutral in early spring. And then it was
thrown for a loop, as controversies and

4SVXJSPMS4MX7XST
investigations in Washington threatened the
Trump administration’s agenda of infra-
structure spending and tax cuts.
Time for investors to slam on the brakes?
P H O T O G R A P H B Y M A R T I N B A R R A N D/G E T T Y

Hardly. You shouldn’t assume that the


Use the midyear lull in the market to refuel growing hazards on Wall Street are a sign
and repair your investments to keep racing on. that the eight-year-old bull market is
BY CA R L A F R I E D nearing an end.
Instead, consider this moment as the
stock market’s equivalent of a yellow flag,
offering investors a much-needed break to
slow down and make any needed fixes or

J U LY 2 0 1 7 M O N E Y. C O M

-RZIWX MIDYEAR INVESTOR’S GUIDE

adjustments to their investments, for investment risk probably has not GET BACK INTO THE PROPER LANE
not just for the next few laps but for changed all that much. If anything it Chances are your strategy has
the long race ahead. has gotten more conservative as strayed, even if you haven’t touched
To be sure, a midyear portfolio you are now nearly a decade closer your portfolio lately.
review may not seem all that to your financial goals, including How? The bigger-than-average
necessary, given how well benign funding a long and comfortable gains for U.S. equities over the past
neglect has been working in your retirement. “I tell people to enjoy five years—coupled with the modest
favor lately. Over the past five years, this bull market but make sure that performance of bonds and the
for example, U.S. equities have you’re not taking on more risk now,” downright disappointing returns
delivered annualized total returns says New York City investment for foreign investments—have likely
of 15%. That’s five percentage points adviser David Schneider. altered your allocations to stocks,
higher than the long-term historical Here’s how to make sure your bonds, and other assets. This is
average for stocks—with nary a bear investment risks are under control especially true if you haven’t been
market in sight. and give your portfolio a thorough steering your investments back to
What’s more, even with the recent once-over to ensure that it—and your original weightings on an
slowdown in stocks, the S&P 500 you—are ready for the long annual basis.
index is still up 8% so far in 2017 road ahead: For instance, say you started out
while the Nasdaq composite index five years ago with a balanced
has gained more than 15%. Both portfolio that consisted of 40% U.S.
indexes have recently hit their stocks, 20% international equities,
all-time highs. and 40% in core bonds. And let’s
Even if you haven’t been a assume you didn’t rebalance that
dedicated rebalancer—that is, if you Portfolio Drift portfolio anytime since. By simply
haven’t periodically reset your mix letting your winners (and losers)
If you didn’t rebalance your 40% U.S.
of stocks, bonds, and other asset stock/20% foreign stock/40% bond ride, market forces will have
classes back to your desired alloca- portfolio, it will have shifted on its own. morphed that 40-20-40 portfolio into
tions—you really haven’t paid a price one that’s 52% invested in U.S.
for letting your winners run. And U.S. stocks stocks, 19% in international equities,
run. And run. International stocks Bonds and 29% in bonds (see chart at left).
At least so far. “Bull markets can This may not seem like a big deal.
AFTER 3 YEARS
lull you into doing nothing as they But for one thing, you now have a
make all investors look smart,” says portfolio that’s roughly 70% stocks
Hans Scheil, chief executive officer 45% and 30% bonds, instead of the more
of Cardinal Retirement Planning in conservative 60% equities/40%
Cary, N.C. “But the time to review 37% fixed-income mix. And considering
18%
your portfolio is before a market that you’re now five years closer to
correction, not after.” retirement, even keeping 60% of your
What’s more, the odds are good retirement savings in stocks may be
that after an eight-year-old bull AFTER 5 YEARS too risky, depending on your age and
market—which ranks as the second current circumstances.
longest rally in history—your 52% Moreover, this new strategy
perception of risks may be some- leaves you overexposed to the
what diminished. Behavioral experts 29% priciest part of the global markets
refer to this as recency bias, when 19% that have done the best lately—U.S.
investors are predisposed to believe stocks—while being light on those
that their investments will continue investments that are relatively cheap
to perform as they have been doing. SOURCE: Morningstar (foreign equities) and provide ballast
On the other hand, your tolerance for your portfolio when U.S. stocks
falter (fixed income).
“Over time the only way to make
 M O N E Y. C O M J U LY 2 0 1 7 money is to be a contrarian,” says
Scott Clemons, chief investment
strategist at Brown Brothers
)2.3=8,-7&9001%6/)8&98
Harriman. “Rebalancing is forced 1%/)796)8,%8=39Ş6)238
contrarianism in that you sell
some winners and move money 8%/-2+32136)6-7/23;š
into the other parts of your —DAVID SCHNEIDER, INVESTMENT ADVISER

portfolio that have lagged” and


are cheaper as a result.
But rebalancing doesn’t simply
mean selling some stocks and two and a half percentage points most investors. And right now it’s
using that money to replenish your better than value stocks. probably unlikely you can find
bond exposure. Within your equity So consider trimming your sizable losses in your portfolio that
portfolio, there are some moves to growth winners and redeploy that you can also sell to offset those
consider as well: money into value to restore that gains to lower your taxes.
balance. Why? For starters, if a You’re not completely out of
Reset your mix between market correction is lurking luck, though. This bull market has
domestic and foreign shares. around the corner, stocks with likely set you up for the opportu-
Going back to our prior example, loftier valuations tend to suffer nity to score a rebalancing and tax
if you started out with a bigger losses. And value stocks win by donating shares of appreci-
60% stock/40% bond portfolio in tend to trade at far more attractive ated assets to a charity.
which two-thirds of your stocks prices. The typical stock in the When you donate appreciated
were held in domestic shares, that S&P 500 Value stock index sports shares you get a rare twofer. You
strategy has shifted too. If you had a price/earnings ratio of 17, vs. 23 owe no capital gains tax, and
not rebalanced over the past five for growth stocks in the S&P 500 you get to claim the donation as a
years, the equity portion of your index. Because of that valuation charitable contribution on your
portfolio would be more like 75% advantage, value stocks also tend itemized return. For example, if
U.S. and 25% international today. to outperform growth shares over you had a $25,000 capital gain
So now is the time to sell some very long periods of time. when selling a holding from a
of your domestic exposure and use Check out our MONEY 50 list regular account, your federal
those proceeds to shift into cheaper (see page 78) for solid value- capital gains bill could be $3,750.
foreign equities (more on this in a minded funds. Among the best Donate the winning investment
moment). options on our recommended list and you avoid the $3,750 tax bill,
of funds and ETFs are Dodge & Cox and your charitable deduction
Rebalance your U.S. stock Stock Fund (DODGX) and PowerShares would be worth $7,000 if you are in
holdings as well. The domestic FTSE RAFI U.S. 1000 ETF (PRF). the 28% federal income tax bracket.
stock universe is generally divided Not all charities are equipped
into two groups: “value”-oriented AVOID COSTLY TOLLS to deal with donated assets,
shares of beaten-down or over- Rebalancing inside your retire- so you’ll need to ask upfront.
looked companies; and “growth” ment accounts is easy, as there Another option is to set up a
stocks, which are shares of fast- is no tax bill when you sell stock, donor-advised fund (DAF). With
growing companies that are firing fund, or ETF shares within a tax- a DAF you donate your stock into
on all cylinders. sheltered 401(k) or IRA. Selling an account that you agree to
Normally you’d want to split shares in a regular, taxable disburse to charity. You can make
your equity stake down the middle, account is trickier. those gifts pronto or wait years
with about half in growth and half If you’ve owned the investment until you’re ready to make the
in value. But so far this year, for at least a year, you must pay donation. But the minute you
growth stocks in the S&P 500 have the long-term capital gains tax, move an asset into a DAF you
returned about 13% while value which currently stands at 15% for avoid the capital gains tax and are
has gained just 3%. And over the
past decade, growth shares have
returned about 7.5% annually— J U LY 2 0 1 7 M O N E Y. C O M

-RZIWX MIDYEAR INVESTOR’S GUIDE

entitled to a charitable deduction


for the current tax year.
This could be an especially THE CASE FOR INVESTING ABROAD
good time to consider donating ;MXL97GSVTSVEXMSRWKIRIVEXMRKWSQYGLSJXLIMVVIZIRYIWSZIVWIEW
appreciated stock and fund XLIVIŞWFIIREKVS[MRKHIFEXIEFSYX[LIXLIV]SYRIIHHMVIGXJSVIMKR
shares. If the Trump administra- I\TSWYVI8LIERW[IVMW]IWŜERHLIVIŞW[L]
tion and Congress push through
OPPORTUNITIES have soared 36% year dominate their
lower income tax rates for 2018
Jack Bogle, founder of to date. economies. For
and beyond, the value of a 2017 the Vanguard Group, instance, “the U.S.
deduction will generate more tax recently argued that DIVERSIFICATION market acts like a tech
savings. Fidelity, Schwab, and investors get sufficient In periods of turmoil stock ETF,” says Jeffrey
Vanguard offer donor-advised foreign exposure and crisis, stock Kleintop, chief global
fund programs. indirectly through U.S. markets around the investment strategist
multinationals. world tend to fall in for Charles Schwab.
According to FactSet, unison. That was “Japan tracks the
VENTURE FAR AFIELD about a third of certainly the case in the financial sector.
In addition to rebalancing your aggregate revenues for global financial panic of Germany tracks autos.
exposure to foreign stocks, now the S&P 500 index of 2008. So holding And Canada’s stock
may be a good time to think about U.S. companies is foreign stocks doesn’t market tracks energy
increasing your weighting as well. generated abroad. always protect you. But stocks.” Therefore,
There are a couple of reasons That’s true. But what over longer stretches, having broad global
why: First, foreign stocks have you don’t get by simply “owning a globally exposure helps diversify
investing in the S&P 500 diversified portfolio your sector bets too.
lagged U.S. shares for several
is the chance to opens you up for less
years now. Over the past decade, generate higher returns risk of a really bad INFLATION PROTECTION
international stocks have re- from a broader array of outcome,” says Ben “One of the most
turned a mere 1% a year, while companies. This year, Inker, head of the asset underappreciated
domestic equities have delivered for example, U.S. allocation team at GMO. reasons for foreign
annual returns of about 7%, equities are up about While global stocks are exposure comes with
according to Morningstar. 8%. But European somewhat correlated currency. The foreign
stocks are up 15%. India with one another, currency you get from
“If you look back over many,
is up 19%. Mexico is up individual markets tend owning foreign stocks
many decades, what you find is 20%. China is up 23%. to move in sync with provides investors with a
that there’s a long-term mean And the stocks in Poland the stock sectors that hedge against inflation,”
reversion where things that do says Brian Singer, a
well for a period of years end up portfolio manager with
doing poorly over the next few the asset manager
years—and vice versa,” says Chris
Brightman, chief investment
Foreign Sale William Blair. If inflation
were to climb, reducing
the purchasing power of
officer for Research Affiliates. While U.S. stocks are pricey, foreign equities
the dollar, “it would be
Just refer to recent history. are on deep discount relative to history.
nice to have some
“If you looked at the decade that HISTORICAL nondollar exposure in
STOCKS P/E RATIO TODAY
ended in 2000, U.S. stocks were MEDIAN P/E your portfolio,” says
the leading asset class. But if you Inker. With inflation
United States 29 16 growing at 2.2%, this
looked at the decade that ended
in 2010, it was quite the reverse,” Foreign 15 22 may not seem like a
priority now. But if the
Brightman says, noting that Emerging markets 13 17 U.S. economy heats up,
foreign stocks trounced the China 12 17 the case for going
S&P 500 index during what was abroad will be that much
considered a “lost decade” for SOURCE: Research Affiliates stronger. —Paul J. Lim
domestic equities.

 M O N E Y. C O M J U LY 2 0 1 7
before anything else, we’re all human
rethink your bias at lovehasnolabels.com
-RZIWX MIDYEAR INVESTOR’S GUIDE

The other reason to be bullish


on overseas stocks is that they’re
;,%8=39)%623:)68,)2)<8
one of the few attractively priced *-:)=)%67-72380-/)0=83
assets in today’s market. U.S.
shares are currently trading at a 1%8',8,)4%78*-:)=)%67š
price/earnings ratio of 29, based —KATE WARNE, INVESTMENT STRATEGIST FOR EDWARD JONES
on 10 years of averaged profits.
That’s 80% higher than the
historical median P/E of 16. The
market has been this frothy only ACCELERATE YOUR SAVINGS 25—as it is now—the average
twice before: in the late 1990s, It’s human nature to assume that annual real return after inflation
during the dotcom bubble, and the stock market’s stellar perfor- has historically been less than 1%
just prior to the start of the Great mance in recent years will persist over the subsequent decade. By
Depression in 1929. for years to come. But history contrast, when the market’s P/E is
By contrast, foreign stocks in shows that the more expensive below 10, stocks have historically
Europe and Japan are trading at a stocks are, the less likely they are produced double-digit gains.
P/E of 15, which is roughly 30% to deliver decent returns over the “This doesn’t mean U.S.
below their historical levels, subsequent decade. equities will do poorly,” says Kate
according to Research Affiliates. AQR Capital studied the Warne, investment strategist for
And foreign stocks based in the historical performance of stocks the brokerage Edward Jones.
emerging markets are trading at a based on P/E ratios using 10 years “They will likely outperform
P/E of 13, down from the typical 17. of corporate profits. It found that bonds. But just understand that
Today, investors between the when the market’s P/E was above what you earn over the next five
ages of 35 and 50 invest only 14% years is not likely to match the
of their stock portfolios abroad, past five years.”
according to Fidelity. That’s down The surest way to counteract
from an 18% allocation in 2009. this isn’t to take on more invest-
Younger investors have even less ment risk by increasing your
exposure—just 13% on average. Why Savings Matters exposure to the riskiest stocks.
Yet a study by Vanguard found Rather, it’s to boost how much you
that the optimal strategy is to Lower investment returns mean save and invest.
keep at least 30% and up to 40% you’ll have to save more to achieve Say, for instance, that you want
the same results.
of your stocks overseas. to amass $250,000 over the next
“Though there is no expiration 15 years. Over the past 15 years,
date on the U.S. bull market, now SAVINGS NEEDED TO GET a balanced portfolio of 70% stocks
TO $250,000 IN 15 YEARS
is an opportunity to rebalance and 30% bonds produced annual
into non-U.S. stocks, where returns of about 7%. That meant
Annual return of 2% $14,500
valuations are much better,” says you could reach that goal by
BBH’s Clemons. saving about $10,000 a year.
His firm is advising clients 3% $13,500 But if that same balanced
to shift three to four percentage portfolio produces only 4% going
points out of their U.S allocation 4% $12,500 forward, you could still reach your
into international equities. In goal by saving $2,500 more a year.
other words, if you normally keep So rather than roll the dice with
5% $11,500
45% of your portfolio in U.S. your strategy, boost your 401(k)
shares and 30% in foreign, you contribution rate by a percentage
should shift that to about 42% SOURCE: MONEY research
point or two. It’s the market’s
in the U.S. and 33% abroad. surest bet.

 M O N E Y. C O M J U LY 2 0 1 7
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-RZIWX THE INTELLIGENT INVESTOR

you can buy and hold. The latter


ones tend to be the better deals.
That’s partly because they
must compete with low-cost asset-
allocation funds and therefore
must be cheap themselves. Plus,

,S[XS9WI)8*W
ETFs are a cost-effective way to
gain exposure to really broad asset
classes. Take iShares Core Moderate

XS4MGO3XLIV)8*W
Allocation (AOM). This balanced ETF
invests in a mix of iShares-run
ETFs that hold U.S. stocks, foreign
equities, and bonds—and rebal-
As exchange-traded funds grow, a new group of ETFs ances annually. The fund has
beaten 60% of its peers over the
are investing exclusively in other ETFs. BY J O H N WAG G O N E R
past five years, and charges just
0.25% in expenses.
THERE ARE NOW more than which real estate ETFs (Vanguard
2,400 exchange-traded funds REIT) or inflation-protected bond THE HIGHER-COST OPTION
to choose from. Some are terrific ETFs (SPDR Bloomberg Barclays TIPS) ETFs of ETFs that focus on
low-cost investments, while others that it thinks are best. specific stock strategies have had
are the financial equivalent of a more difficult case to prove.
hemlock. So how do you choose? THE LOW-COST OPTION First Trust Dorsey Wright Focus 5 ETF (FV)
You could hire an adviser, Some ETFs of ETFs expose you to invests in the five First Trust–run
but that might cost 1% of assets specific timely strategies, while ETFs that exhibit the greatest
or more a year, neutralizing the others are all-in-one portfolios of momentum and reviews that
low-cost reasons for buying ETFs stock, bond, and other ETFs that portfolio every two weeks, making
in the first place. Or you could look changes as necessary.
to ETFs that invest in other ETFs. Holding this ETF back: Its
“ETFs of ETFs” isn’t a new 0.89% expense ratio, its attempt
concept. Mutual funds investing in at market timing, and its increas-
other funds have been around for ing size. And when you have just
years. Just as with those “funds of Cost of Convenience five holdings in a $2.5 billion fund,
funds,” you have to be mindful of selling one holding can cause a
While some exchange-traded funds
high fees. These ETFs “are hardly help you pick other ETFs, you have big jolt to that underlying ETF,
cheap, but they’re not egregious,” to be mindful of the added costs. says Todd Rosenbluth, senior
says ETF.com’s Dave Nadig. You director of ETF and mutual fund
just have to know how to use them: AVERAGE EXPENSE RATIO research at CFRA.
To be sure, all-in-one ETFs of
THE NO-COST OPTION 0.24% 0.68% ETFs may also invest in only
Unlike mutual funds, most ETFs half-a-dozen or so funds. But those
disclose their holdings daily, 1.30% asset-allocation ETFs don’t make
meaning you can piggyback on adjustments on a weekly basis.
their best ideas—without being Plus, “getting the asset allocation
a client. For instance, by examining ETFs ETFs Actively right can matter a lot more than
of ETFs managed funds
Cambria Global Asset Allocation ETF (GAA), individual securities selection,”
which has beaten 95% of its peers SOURCE: Morningstar Rosenbluth says. “And if funds can
over the past year, you’ll know do it cheaply, all the better.”

 M O N E Y. C O M J U LY 2 0 1 7
-RZIWX STOCK X-RAY

 7XSGO <6E]
 &IVOWLMVI ,EXLE[E]
With growth slowing lately, could Warren Buffett be losing a step or two? BY TAYLOR TEPPER
THE ORACLE OF OMAHA has always carried an aura of clairvoyance. By divining the stock market, Warren Buffett
turned what was once a struggling textile manufacturer into a diverse conglomerate that’s now the fourth-largest
company, based on total revenues, in the Fortune 500. And since he took over, Berkshire shares have gained more
than twice as much as the S&P 500 index. Still, Buffett’s crystal ball may need a bit of a shine. He has recently
admitted to missing out on game-changing companies like Amazon.com while misjudging his own top picks,
including IBM. That’s partly why Berkshire shares have lagged the S&P over the past one and three years.

NO WONDER BUFFETT TALKS UP AS BUFFETT PATIENTLY WAITS FOR BERKSHIRE HATHAWAY MAY BE
INDEX FUNDS—THEY’VE DEALS, CASH IS PILING UP— SLOWING DOWN SIMPLY
BEEN BEATING HIM LATELY. DRAGGING HIS PERFORMANCE. BECAUSE OF ITS SHEER SIZE.

TOTAL ANNUALIZED RETURNS IN PAST 3 YEARS TOTAL CASH AND CASH EQUIVALENTS GROWTH RATE IN BOOK VALUE PER SHARE

19%
$80 million

10.8% 8.9% 11%


$60 million

S&P 500 Berkshire


Hathaway 2013 ’14 ’15 ’16 ’17 Since 1965 Past 5 years

As recently as a year ago, Buffett In addition to its stock holdings and Berkshire’s scale—its revenues rival
was heaping praise on longtime holdings wholly owned private businesses, such as Apple’s and its market cap is on par
such as Wells Fargo and IBM, which he Geico, Berkshire holds another big with Facebook’s—presents investors and
described as “excellent businesses” run asset: more than $90 billion in cash, Buffett with certain challenges. As he
by talented and shareholder-oriented earning practically nothing thanks to low wrote to shareholders: “Our size pre-
managers. Yet several of those big bets interest rates. Conventional wisdom says cludes a brilliant result: Prospective
have blown up recently. Buffett is building up cash because he returns fall as assets increase.”
Wells, which is still engulfed in a scan- sees a big buying opportunity on the There’s something else that could slow
dal surrounding its sales tactics, has horizon. Rumors of his desire to make Berkshire’s roll. For years, investors gave
lagged the S&P over the past one, three, a splashy acquisition were fueled earlier Buffett a pass on dividends, believing it
five, 10, and 15 years. Berkshire recently in the year when Kraft Heinz, which Berk- was better to allow the Oracle to reinvest
P H O T O G R A P H B Y D A N I E L A C K E R /G E T T Y

trimmed its stake to keep from owning shire is among the largest shareholders that cash to grow the business. But as
more than 10% of the bank. And after of, made a failed bid for Unilever. Buffett’s performance cools, and as his
IBM posted its 20th straight quarter of The Oracle is on record as saying cash cash builds, and as his impending retire-
declining revenues, Buffett sold about is “a holding position until you find some- ment looms (he’s 86), expect investors to
one-third of the 81 million shares Berk- thing else.” But cash could be building clamor for income. Buffett acknowledged
shire owned at the end of 2016. Buffett, simply because Buffett sees little value that repurchases and payouts could be
who declined to comment, told CNBC: in today’s frothy market, so he’s sitting coming. Yet that obligation could further
“I’ve revalued it somewhat downward.” on the sidelines rather than overpaying. slow Berkshire’s growth.

 M O N E Y. C O M J U LY 2 0 1 7 SOURCES: Morningstar, Berkshire Hathaway


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All that said, there are ways to decrease how much


you’ll spend. “The biggest mistake people make is
choosing a hotel that’s too expensive,” says Jason
Cochran, author of Frommer’s EasyGuide to Disney World,
Universal and Orlando and editor-in-chief at Frommers.
com. The typical visitor spends 12-plus hours each day
touring the parks, so it can seem like a waste to pay top

Walt Disney World dollar for a hotel. “If you’re spending that kind of time out
of your room, it doesn’t matter if there’s a view, and it
sits right at the red-hot center of the barely matters if it’s on Disney property.”
family vacation universe. The flagship Which brings us back to the big question: How much
Florida-based Magic Kingdom park is does a Disney World vacation actually cost? Because
there are so many visitor options, and travelers go in with
one of the world’s biggest tourism widely varying expectations—for instance, do you
magnets, welcoming over 20 million consider Goofy tchotchkes a must-have?—there is no
visitors a year. Sister Disney parks single answer.
Epcot, Animal Kingdom, and Holly- Before launching into the particulars, it’s worth
mentioning that because Disney can be so overwhelming,
wood Studios each attract over it may be wise to book the trip with a Disney-certified
10 million guests annually as well. travel agent (yes, there is such a person). A knowledge-
able agent will answer all of your questions, make the
most of whatever budget you bring to the table, and
The record crowds will only keep increasing, even with eliminate hassles and confusion in general. Using an
a recent admissions price hike introduced earlier this agent shouldn’t cost you anything extra either—they are

T H I S PA G E , 1 : S T E V E N D I A Z — D I S N E Y; 2 : M AT T ST R O S H A N E — D I S N E Y
year. A Frozen-themed ride and a Star Wars fireworks and paid on commission. Just make sure you’re getting
laser show have been added in recent months, and exactly the trip that you want and that you’re not being
May 27 marked the opening of the long-awaited Avatar- steered into pricey extras simply because “that’s what
themed area. everyone does.” To find a good agent, ask Disney-loving
Before booking your dream Disney adventure, crunch friends for recommendations.
the numbers as realistically as you can and figure out: Now, on to sample pricing. We did the math based on P R E V I O U S S P R E A D : H E L E N S E S S I O N S — A L A M Y;

How much will the big trip actually cost? four different categories of visitors. In each case, the
It’s not cheap. A single day’s adult admission at the numbers are based on a four-night vacation for a family
Magic Kingdom now runs as much as $124, compared with of four, with two adults and two kids who qualify for the
$105 in 2015 and $79 in 2010. Food easily costs more than child admission rate (ages 3 to 9).
$10 per person per order, even at Disney’s to-go type Lodging prices can vary dramatically throughout the
restaurants, and sometimes over $50 per person for special year, and you might find rates that are different depend-
meals hosted by characters like Ariel and Winnie the Pooh. ing on your specific dates and whether certain promo-
Don’t forget about souvenirs: T-shirts go for about $30, tions are available at the time. The rates cited in this
a set of Mickey ears runs around $20 if you get it mono- article are based on dates in early or late summer, when
grammed—and you probably will. We haven’t even prices are fairly high—but not as high as those in July or
mentioned lodging and transportation yet. in the period around Christmas and New Year’s.

 M O N E Y. C O M J U LY 2 0 1 7
 

1. ing that you’ll want four days’


worth of Park Hopper passes to
age” category—based on four
days’ worth of tickets with the
four. On the off day, guests might
hang out by the pool and decom-
AVERAGE take full advantage of all the new Park Hopper option included. press, away from the crowds. Or
DISNEY additions, including Pandora: you can take advantage of other
VACATION The World of Avatar, which just
opened at Disney World’s Animal
+ HOTEL: $672
+ TRANSPORTATION: $1,400
nearby entertainment, such as the
retro vibe of Old Town in Kissim-
Kingdom (photo No. 1). Park + ADMISSION: $1,660 mee (photo No. 3).
According to the Department
Hoppers are pricier than base + FOOD: $953
of Transportation, the average
tickets but allow you to visit mul- + SOUVENIRS & EXTRAS: $200 + HOTEL: $269
national roundtrip flight to
tiple parks on the same day. TOTAL: $4,885 + TRANSPORTATION: $1,600
Orlando in 2016 cost roughly
$350, down from about $400 in + ADMISSION: $1,120

3.
+ HOTEL: $1,746 + FOOD: $425
2014. Obviously, your airline bill
+ TRANSPORTATION: $1,400 + SOUVENIRS & EXTRAS: $150
will fall significantly if you can
find cheaper flights for the en-
+ ADMISSION: $1,660 NO-FRILLS TOTAL: $3,564
tire family.
+ FOOD: $1,154
+ SOUVENIRS & EXTRAS: $400
DISNEY VISIT
4.
Meanwhile, the average
TOTAL: $6,360
Disney on-site hotel costs $388 Staying off-resort will save you
per night, plus 12.5% in taxes, significantly not only on lodging, DELUXE
for a total of $436.50, according
to Hipmunk data. 2.
but on food as well—because
many hotels provide free break-
DISNEY
Disney offers a variety of BUDGET fast. And you can cook, or at least VACATION
meal plans for on-site hotel eat at non-Disney restaurants.
guests, and while some visitors DISNEY According to Hotels.com, the Disney guests seeking to stay in
love the convenience, the plans VACATION average nightly rate for a hotel style, with a decent amount of
space and convenient access to
are generally pretty expensive. “I in Kissimmee—only 14 miles
don’t find the Disney Dining Plan Disney has several basic hotels away—was $114 in 2016, vs. $393 the parks, might go with a one-
to be a great value for guests dubbed “Value Resort” proper- for a Disney property. And rooms bedroom villa at the Grand Florid-
who plan to be on the go a lot,” ties, including Pop Century and in Kissimmee can be found for ian, near the Magic Kingdom
says Cochran of Frommers.com. the Art of Animation, with its well below that average price— (photo No. 4). The hotel is con-
He describes the value as themed wings that pay homage for instance, starting around $40 nected to Disney’s monorail
“borderline” for guests who want to Disney classics such as The a night for a basic motel. (which takes you right into the
to regularly enjoy sit-down Little Mermaid and The Lion King For this category, we assumed Magic Kingdom) and costs $955
meals, and he recommends that (photo No. 2). Rooms at these that travelers would want to stay per night for our group on theo-
budget-conscious visitors look hotels cost around $150 a night. in a decent three-star motel, and retical bookings this summer.
out for special deals in the fall, While cheaper than Disney’s we found plenty that come with a Even though the vacation is
only four nights, we went with
3 : AVA L O N /A L A M Y; 4 : K E N T P H I L L I P S — D I S N E Y

when Disney often includes free high-rise hotels, these resorts still pool, complimentary breakfast,
meal plans with hotel bookings. come with the perks of on-site and a free shuttle to Disney for five days’ worth of admissions
To calculate the “average” lodging, including free shuttles to about $60 a night plus taxes. On because it’s often possible to
Disney food tab, we factored in the parks and free transportation the other hand, we had to up the squeeze in some extra rides on
the resort’s “Standard” dining to and from Orlando’s airport. transportation budget here be- one of your travel days. This cat-
plan, which includes one quick- This is the type of lodging we cause of the need for a rental car egory also incorporates a bigger
serve meal, one table-service factored into this budget cate- and parking fees. budget for food and shopping.
meal, two snacks daily, and a re- gory. We also trimmed the bill by To save some money on admis-
fillable drink mug. The cost for opting for a more basic meal sions, we skipped the Park Hopper + HOTEL: $4,278
our hypothetical group: $754. plan ($553, plus an allotment for option in this category, meaning + TRANSPORTATION: $1,400
The plan wouldn’t cover all snacks beyond the plan) and by that guests will be able to visit + ADMISSION: $1,740
meals, so we budgeted an extra scaling back on souvenirs. only a single park each day. We’ve + FOOD: $1,563
$100 per day for food. As for admissions costs, also reduced the number of days’ + SOUVENIRS & EXTRAS: $800
For admissions, we’re assum- they’re the same as the “aver- admission to three rather than TOTAL: $9,781

TELL US HOW YOU SAVED ON YOUR VISITS TO DISNEY AND UNIVERSAL: letters@moneymail.com. J U LY 2 0 1 7 M O N E Y. C O M

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Dreaming of a Disney adventure? It doesn’t always come cheap. We asked a
handful of theme-park experts for their best tips on how to save—no matter
when you’re visiting. Their best nuggets of advice are below:

tion within the vacation is $31 for “double” strollers,


bound to be the most relax- recommended for two kids.
ing part of your trip. “That’s more expensive than
a car rental in Orlando,” says
Buy food à la carte. Testa. “It would be cheaper
The menus at quick-serve if we all drove Chevy Aveos
restaurants inside the parks down Main Street U.S.A.”
generally list food in combo The solution is to bring a
packages, with a main dish, cheap umbrella stroller from
fountain drink, and a side of home, or even buy one in
fries or chips included for Florida just for the trip and
one price. donate it to Goodwill when
“You don’t have to buy the you’re done.
whole package,” says Jason
Cochran of Frommers.com. Skip the souvenirs—unless
“Tell them you don’t want, they’re truly special.
say, the fries, and you’ll get a Robert Niles, founder of
discount of a few bucks.” ThemeParkInsider.com,
The full meal is often too says it makes no sense
much for a child to stomach whatsoever to buy stuffed
anyway, and the savings will animals or other Disney
add up when you use this toys and T-shirts that are
strategy multiple times readily available from
throughout your vacation. Walmart, Amazon, or your
mall’s Disney Store.
Never buy admissions at want by searching deals Order groceries for your “Never buy souvenirs in
the gate. from sellers such as Offi- room. the park that you can find
Instead, purchase online via cialTicketCenter.com, Park- You’ll be saving money every outside the park or online,”
the resort’s website. You’ll Savers, and MouseSavers. time you can feed the family he says. “You’ll almost al-
save an easy $20 per ticket somewhere outside of a re- ways find a better deal on
on passes good for three or Take a day off. sort restaurant. Rather than merchandise outside the
more days at Disney. It The simplest way to save is gathering groceries during park than in it. Save your
saves time too, because to buy an admissions pass your precious vacation time money for special things
you’ll get to skip the ticket- with one fewer day than in Florida, have an order sold exclusively in the park.”
buying lines. your vacation allows. On delivered to your room by
To save even more, using your day off, you can sleep services like Instacart, Use your military ID.
reputable third-party whole- in, hang out by the hotel Garden Grocer, or Amazon. Active and retired military
salers for multiday tickets pool, and maybe do low-key First, double-check to see can get significantly dis-
can save you “up to $50 per meals by hitting a super- if your room has a refrigera- counted admissions at Disney
ticket vs. buying at the market—or dining at non- tor. If yes, find out how big it parks by purchasing them at
parks,” says Len Testa, co- resort restaurants that are is, and order accordingly. military sales outlets.
author of The Unofficial always less expensive. Also, make sure that your For example, a five-day
H E L E N S ESS I O N S —A L A M Y

Guide to Walt Disney World. Disney lovers often balk hotel accepts food deliver- Park Hopper pass at Disney
Testa is a contributor to at this advice, but few who ies (most do), and ask if World costs as little as $224
the theme park–focused stay away from the parks for there’s a fee for the service. with the military discount,
site TouringPlans.com, a day wind up regretting it. compared with $445
which has a neat tool that Not only will the strategy BYO stroller. normally. The discount is
finds the lowest prices on lower your admissions and Disney charges $15 a day for good for up to six family
the kinds of tickets you food costs, this little vaca- a single-child stroller and members too.

 M O N E Y. C O M J U LY 2 0 1 7
 

1. 2.
QUICK & THE LONG
CONVENIENT WEEKEND
How many days should you By tacking on a third day to
spend at Universal Studios Flori- play at the parks, you can go
da? “You can definitely do the big back and take in your favorite

When Universal Studios stuff in two days, provided the


lines aren’t too long,” says Cochran
attractions more than once.
Moreover, you’ll be able to hang
Florida in Orlando first opened in of Frommers.com. In September
and late January, for example,
out and explore the shops and
restaurants at Diagon Alley with-
1990, it was seen as a daylong when crowds are the smallest, you out feeling rushed. And by opting
distraction from the thrills of Disney could even squeeze in all the main
attractions at both parks, includ-
for a 3-Park pass, you can hit the
slides and other rides at Volcano
World. Not so much anymore. ing the Wizarding World of Harry Bay—Universal’s new water park
1 : E V E E D E L H E I T—TA M PA B AY T I M E S / Z U M A P R E S S I N C . /A L A M Y; 2 : C A B A N A B AY: J A M E S K I L B Y— U N I V E R S A L O R L A N D O

Potter (photo No. 1) in a single that opened in late May (photo


marathon day. No. 2)—too. “It’s the coolest wa-
The theme park has swelled to a massive experience, Or during busier periods ter park in Orlando by far right
with two main parks: the titular original and Islands of (which is anytime that school is now,” says Cochran.
out), it’s “possible to do most of For this package, we assumed a
Adventure, both now attracting close to 10 million visitors
the big-ticket rides at both parks three-night stay in August at Uni-
a year, up from roughly 5.5 million in 2009. That’s despite on a single day if you have an Ex- versal’s Cabana Bay (which is next
ticket price increases that pushed the one-day cost of press pass that gets you into door to Volcano Bay) with a court-
admission to both parks up as high as $179. shorter versions of the ride yard poolside suite, giving you a
What’s their secret? With the Wizarding World of Harry queues,” Cochran adds. But Ex- bit more space to spread out com-
press passes cost extra—over pared with the standard room in-
Potter expansion at Islands of Adventure in 2010, followed
$100 more on top of normal ad- cluded in the previous option. The
by the Diagon Alley area in 2014, Universal tapped into a mission in summer. So for the pur- price for our group: $1,940.
massive J.K. Rowling fan base. And newer attractions such poses of calculating this package, The package came with three
as the Skull Island: Reign of Kong ride and Volcano Bay we’ve skipped that option here. days’ worth of 3-Park admis-
are giving fans fresh reasons to visit beyond Harry Potter. As for how to best plan a quick, sions, allowing guests to come
action-packed Universal Studios and go as they please on the
Just as with Walt Disney World, Universal’s vacation
vacation, you might naturally look same day to any combination of
prices can vary wildly based on when you’re traveling. An into packages. But we sifted Universal Studios, Islands of Ad-
off-peak visit in the fall might cost half of what the same through many options, and it gen- venture, and Volcano Bay.
trip would be in the summer or spring-break weeks. But erally cost the same no matter When we hypothetically
Universal offers a staggering number of complicated whether you are booking hypo- booked these items separately,
thetical packages or purchasing the total was virtually identical,
upsells, including dining packages ($23 to $45 daily for
rooms at Universal’s Cabana Bay with the hotel coming to $620
adults), souvenir cups with unlimited Coca-Cola beverage hotel and tickets à la carte. and tickets costing $1,321.
refills ($14 per person), VIP tours (from $190), and
Universal Express passes that allow guests to skip lines for + HOTEL (2 NIGHTS): $369 + HOTEL (3 NIGHTS): $620
an extra $40 to $150 daily. + TRANSPORTATION (FLIGHT + TRANSPORTATION (FLIGHT
PLUS CAR RENTAL): $1,500 PLUS CAR RENTAL): $1,550
But if you want an idea of how much some standard
+ ADMISSION: $1,065 + ADMISSION: $1,321
Universal Studios Florida vacations might cost, look to the + FOOD: $600 + FOOD: $900
right. In both cases, pricing is based on travel this summer + SOUVENIRS & EXTRAS: $100 + SOUVENIRS & EXTRAS: $150
for a family of four—two adults and two kids ages 3 to 9. TOTAL: $3,634 TOTAL: $4,541

J U LY 2 0 1 7 M O N E Y. C O M

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sion—and to prove its to buy U.S. assets—from New York City apart-
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program put forward by Jefferson credited referred to had borrowed
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the peg for currencies Agricultural laborers preserving at least a nod irresponsible behavior will
around the world. accounted for nine-tenths to Jefferson’s attitude. induce more of the same.

 M O N E Y. C O M J U LY 2 0 1 7
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Š1][ERXWEVIQER]ERH year tenure, he removed ś their feet. Such punish-
MJXSPH;SYPHQYWXIV up to a fifth of government Š%TVEGXMGI[LMGL ment largely disappeared
QER]EWGSVIš workers, who, he argued, JSVGIW Ŧ JIPPS[ GVIE before the Civil War, but a
had acquired “a habit XYVIW Ŧ MRXS XLI HVIEV] debate continues over
Adams had wealth, of … tolerating conduct [EPPWSJETVMWSR Ŧ how much personal
sophisticated tastes, from which an unprac- JSVXLIQMWJSVXYRISJ responsibility individuals
a worldly existence, and ticed man would revolt.” FIMRKTSSVš should bear for their
public acclaim. Son of The problem? Jackson financial misfortunes.
a President, he grew up replaced them with his In the early 19th century, Academic studies—
accompanying his father own, often more corrupt, Americans were routinely including ones written
on diplomatic missions, political supporters. Other jailed for being unable to by now-Sen. Elizabeth
became an envoy to the Presidents imitated repay loans. Van Buren Warren—that blame big
Netherlands before turning Jackson’s “spoils system” and other like-minded medical bills for many
30, and then served as of rewarding party hacks reformers, however, modern bankruptcies
President himself. He was with government jobs, argued that debtors’ have been a frequently
also a noted abolitionist eventually inspiring a new prisons were not only cited argument in favor of
and a published (if reform movement. unfair, but counterproduc- the Affordable Care Act.
somewhat mediocre) poet.
But as Adams reminds us,
it’s hard to satisfy the
human desire for more. In Š%PPXLIQIEWYVIWSJXLIKSZIVRQIRXEVIHMVIGXIHXSXLI
his 1841 poem “The Wants
of Man,” the speaker
TYVTSWISJQEOMRKXLIVMGLVMGLIVERHXLITSSVTSSVIVš
itemizes his desire for
fancy meals, “elegant
attire,” love, power, and
adulation, but also
confesses: “And were each 
wish a mint of gold / I still ;MPPMEQ,IRV],EVVMWSR
should long for more.” ś

Income inequality isn’t a new concern. The campaign of 1840 was fought during
 a depression that had lasted three years and would go on for another four, and
%RHVI[.EGOWSR Harrison ran on a platform of financial reforms—reestablishing a central bank
ś to shore up the economy and eliminating Jackson’s spoils system, which had
Š)ZIV]QER[LSLEWFIIR already come to be associated with corruption. Harrison would die in office after
MRSJƙGIEJI[]IEVW just a month, making his campaign promises moot. But many—like economist
FIPMIZIWLILEWEPMJI Thomas Piketty, whose 2013 tome Capital was a surprise bestseller—still worry
IWXEXIMRMXEZIWXIHVMKLXš that our economic system tends to amplify inequality.

Donald Trump isn’t the


first President to rail

J U LY 2 0 1 7 M O N E Y. C O M

3 The complex U.S. office, and showing a Before Fillmore was
.SLR8]PIV relationship with Mexico prescient appreciation President, he was a U.S.
ś dates back to the 19th for Texas’s economic congressman whom
Š*SVIMKR XVEHI Ŧ century. Tyler worked potential. But the Samuel F.B. Morse
XLIIRPEVKIQIRXSJXLI hard to bring the annexation of Texas also impressed with “a rude
QEVOIXJSVSYVQERYJEG fledgling Texas repub- fueled what has become model” of what would
XYVIWEGSRWXERXP] lic—newly independent an ongoing conflict become the telegraph.
KVS[MRKQEVOIXJSVSYV from Mexico—into the between the U.S. and Fillmore wrangled
EKVMGYPXYVEPTVSHYG union, signing a bill Mexico over trade and $30,000 ($880,000 in
XMSRW Ŧ [SYPH VETMHP] offering annexation management of the today’s dollars) in federal
?JSPPS[AERRI\EXMSRš during his final days in border. funds to help build an
experimental line between
Washington, D.C., and
Baltimore—an innovation
Š2S4VIWMHIRX[LS that would come to
TIVJSVQWLMWHYXMIWJEMXLJYPP] radically remake commu-
ERHGSRWGMIRXMSYWP]GERLEZI nications. From space
ER]PIMWYVIš satellites to the Internet,
the government has
continued to play a key
 role in promoting technol-
>EGLEV]8E]PSV ogy and infrastructure
ś3 that help private busi-
 Š8LIKVIEXQMRIVEP nesses transform the
.EQIW/ 4SPO [IEPXLSJ'EPMJSV economy.
ś RME Ŧ QEOI?WA MX GIVXEMR
XLEXXLIVI[MPPEVMWI
Polk served for just one term but is often MREJI[]IEVW
regarded as one of the most effective Presidents, PEVKIERHTVSWTIVSYW
in part because he was a workaholic. “Pursue a GSQQYRMXMIWSRSYV
vision, but mind the details,” the Harvard [IWXIVRGSEWXš
Business Review recently noted in summation of
his management style. He set a small number
of clear goals—acquiring California from Mexico, 
and Oregon from Great Britain, reorganizing the *VEROPMR4MIVGI
Treasury, and lowering the tariff—and pursued ś
them single-mindedly until they were largely Š8LIVIZIRYISJXLI
achieved. While more recent Presidents have GSYRXV]PIZMIHEPQSWX
faced criticism over vacation plans and leisure MRWIRWMFP]XSXLI
pursuits, it’s worth noting that the strains of  XE\TE]IVKSIWSRJVSQ
office wore Polk out entirely: He died within 1MPPEVH*MPPQSVI ]IEVXS]IEVMRGVIEWMRK
months after retiring. 3ś FI]SRHIMXLIV
Š3333[EWRSXQYGL XLIMRXIVIWXWSVXLI
JSVXLIREXMSRXSTE]SRE TVSWTIGXMZI[ERXWSJ
GSRXMRKIRG]SJXLMWOMRHš XLIKSZIVRQIRXš

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 two institutions Ameri- “If we should wait before Andrew Johnson was the
.EQIW&YGLERER cans love to hate: the collecting a tax to adjust real deal. Like Lincoln
 ś  income tax and a fore- the taxes upon each man before him, Johnson was
Š4VIZIRXXLI%QIVMGER runner of the Internal in exact proportion with born in a log cabin.
TISTPIJVSQGVSWWMRKXLI Revenue Service to every other man, we Apprenticed to a tailor at
6SGO]1SYRXEMRW#=SY collect it. Lincoln’s tax, should never collect any 10, he did not learn to
QMKLXEW[IPPGSQQERH instituted to fund the tax at all.” write or do basic math
2MEKEVERSXXSƚS[š Civil War, was progres- until he was 18. He is
sive—the first $600 in believed to have been
Like many U.S. Presidents, earnings were exempt—  drunk when he delivered
Buchanan believed in and relatively light, with %RHVI[.SLRWSR his rambling, defensive
“manifest destiny”—the rates that topped out at ś vice presidential speech,
idea that white settlers 5% of income. The tax Š-EQEKSMRŞJSVXSXIPP quoted above, which
must extend “the blessings was repealed a decade ]SYLIVIXSHE]]IW-ŞQ dumbfounded his audi-
of Christianity and of civil later, although the 16th EKSMRJSVXSXIPP]SYEPP ence and left him humili-
and religious liberty over Amendment brought it XLEX-ŞQETPIFIMERš ated. While his humble
the whole North American back in 1913. Even Lincoln roots helped him connect
continent.” Getting rich acknowledged the While modern politicians with voters, his clumsy
was, of course, also part of system’s imperfections: play up their folksy roots, heavy-handedness
the bargain. Buchanan undermined his presiden-
was right in one sense: cy, leading to bitter battles
Holding back the econom- with Congress and
ic forces that propelled Š(S]SYVIEPP]XLMROER]SRI undermining federal
settlers along the Oregon
[SYPHFIMRXIVIWXIHMRE efforts to rebuild the

FSSOF]QI#š
and California trails was South and enfranchise
probably futile. But as we former slaves.
now appreciate, America’s
westward drive came at
devastating human cost—
in particular for the Native
Americans who were 
uprooted from their lands 9P]WWIW7+VERX
and forcibly resettled on    ś   
reservations.
It’s now widely considered one of the best pieces of writing by a President—but
Grant’s autobiography emerged out of financial necessity. Several years after
 retiring from the Oval Office, the President and general who had outmaneu-
%FVELEQ0MRGSPR vered wily Confederate leader Robert E. Lee fell prey to a fraudulent investment
   scheme, losing his family’s fortune. Determined to provide for his heirs, Grant
Š)EGLQERWLEPPTE]XE\IW (who may have been speaking with a touch of false modesty) resolved to write
MRI\EGXTVSTSVXMSRXSXLI his memoirs—even as he fought the cancer that would eventually kill him—and
ZEPYISJLMWTVSTIVX]š the resulting volume, published by Mark Twain, became a bestseller.

While Lincoln himself is


widely beloved, he created

J U LY 2 0 1 7 M O N E Y. C O M

8 , )  7 1 % 68 ) 7 8
1378-28)6)78-2+
8,-2+):)6=
Š-TMX]XLEXQER[LS[ERXWEGSEX
9746)7-()28 WSGLIETXLEXXLIQERSV[SQER[LS
):)67%-(
%&398132)=
TVSHYGIWXLIGPSXLSVWLETIWMXMRXS
EKEVQIRX[MPPWXEVZIMRXLITVSGIWWš

3
.EQIW 
+EVJMIPH & I R N E Q M R, E V V M W S R
 ś
Š2I\XMRMQTSVXERGIXS
JVIIHSQERHNYWXMGI American manufacturing workers were strug-
MWcTSTYPEVIHYGEXMSRš gling. Believing that import tariffs would aid
 workers, by protecting them from low-cost
6YXLIVJSVH Garfield worked as a competition abroad, Harrison signed a tariff that
&,E]IW schoolteacher before joining lifted import duties nearly 50% on many goods.
ś the Union Army and later Opponents argued the move would backfire by
Š7XVMOIWERHFS]GSXXMRK Ŧ entering politics. He raising the cost of goods for many of the poor
GERFINYWXMƙIHSRP]SR continued to believe in the workers it was trying to help. Sound familiar?
KVSYRHWEREPSKSYWXS power of education to let The tariff proved unpopular, and Harrison lost
XLSWI[LMGLNYWXMJ][EV Americans climb the his reelection bid to Grover Cleveland, whom
ZM^MRXSPIVEFPIMRNYWXMGI economic ladder—particu- he’d defeated four years before.
ERHSTTVIWWMSRš larly for poor blacks
struggling to escape both
As the economy leapt into the legacy of slavery and the
the industrial age, violent South’s emerging Jim Crow
labor battles became a system. As a congressman,
more frequent occurrence. he helped create a forerun- Š)\TIVMIRGILEWWLS[R of their industry.” Yet after
Hayes used federal troops ner to the Department of XLEXXLIXVEHISJXLI)EWX a number of Western
to maintain order during Education. And in his MWXLIOI]XSREXMSREP towns burned the Presi-
“the Great Railroad inaugural address he [IEPXLERHMRƚYIRGIš dent in effigy, Arthur
Strike”—a disturbance proposed a federally funded relented—signing a second
prompted when the program to promote Late-19th-century bill that shortened the
Baltimore & Ohio Railroad “universal education.” He immigration debates exclusion period to
announced a 10% pay was shot and killed months sound shockingly familiar. 10 years. Large-scale Asian
cut—which grew to into office—and the federal The arrival of thousands immigration would not
involve 100,000 workers government did not commit of Chinese workers— resume until the 1960s.
and led to as many as 100 to African-American drawn largely by the Gold
deaths. While Hayes’s education in the South for Rush and construction of
intervention aided the another 70 years. the transcontinental
railroads, 19th-century railroad—bred resentment
working conditions were among white Americans,
indeed unjust and who blamed them for
oppressive—certainly by crime and lower wages. In
21st-century standards— 1882, Congress passed a
and workers didn’t win bill to bar Chinese   
  
significant improvements immigration for 20 years. +VSZIV'PIZIPERH
in pay and working Arthur vetoed it, defend- ś
conditions until the  ing Chinese-Americans: ś
Progressive Era. 'LIWXIV% %VXLYV “The States of the Pacific Š%TYFPMGSJƙGIMWE
 Slope are full of evidences TYFPMGXVYWXš

 M O N E Y. C O M J U LY 2 0 1 7
 for more inflation.   rather than outcomes—an
;MPPMEQ1G/MRPI] (Inflation was good news ; M P P M E Q  , S [ E V H  8E J X argument many conserva-
 ś3 for millions of debt-ridden 3ś tives make to this day.
Š3YV QSRI] Ŧ WLSYPH farmers who knew Š-RWSJEV EW Ŧ IUYEPMX] SJ
EPPFITYXYTSR devaluing the dollar would STTSVXYRMX]GERFI
ER IRHYVMRKFEWMWš make it easier to pay back TVSQSXIH Ŧ EPP EVI
loans.) McKinley’s victory MRW]QTEXL]š
The election of 1896 was put the U.S. on the gold
literally about money. standard, which would How far should the federal
McKinley favored the gold survive until the Great government go to promote
standard—a dollar peg to Depression. Today fairness? As Americans
a fixed amount of gold— mainstream economists came to accept Washing-
to restrict the supply of favor neither gold nor ton’s new role as economic 
money and therefore silver. But inflation referee—balancing the ;S S H V S [  ; M P W S R
promote stable prices. questions—how much is interests of corporations, ś
Rival William Jennings beneficial, and who workers, and consumers— Š%KVIEXMRHYWXVMEPREXMSR
Bryan wanted a looser actually benefits from Roosevelt’s handpicked MWGSRXVSPPIHF]MXWW]WXIQ
“bimetal” standard, with it—continue to vex successor continued many SJGVIHMXš
gold and silver, to allow policymakers. progressive policies.
Yet Taft had a friendlier The Federal Reserve
attitude toward business Bank wasn’t signed into

Š%PP-EWOMWE
and a more restrained existence until 1913—before
vision of the federal which Americans suffered

WUYEVIHIEPJSV
government than his through a century of
mentor. Taft argued that boom-and-bust cycles.

IZIV]QERš Washington should focus


on laws to promote
(A successor to the bank
created by Hamilton and
“equality of opportunity,” Washington was abolished
by Andrew Jackson.) One
big problem with private
banks: In bad times, they
 tended to hoard money to
8LISHSVI6SSWIZIPX protect their own balance
 3    3  sheets, rather than lend it
out. Wilson proposed a
As America evolved into an industrialized nation, corporations took on new national bank that would
dominance—shaping what Americans bought and ate, how long they worked, do the opposite—helping
and what wages they earned. Many middle- and working-class Americans keep interest rates low in
began to seek a bulwark against this overwhelming power; “progressives” like difficult times, then
Roosevelt delivered. Among his accomplishments: breaking up monopolies, raising those rates when
including one of the nation’s largest railroads; strict new rules for inspecting the economy seemed
meat and medicine; and the creation of dozens of national parks and forests. likely to overheat.

J U LY 2 0 1 7 M O N E Y. C O M

Š-JEQERLEWRSXQEHI
EQMPPMSRHSPPEVWF]
XLIXMQILIMW3LIMWRSX
[SVXLQYGLš

 confidence and optimism.


;E V V I R+ , E V H M R K During his first 100 days
ś in office, he spurred
Š;MXLXLIREXMSR[MHI a flurry of legislation—
MRHYGXMSRSJ[SQERLSSH stabilizing the banking
MRXSSYVTSPMXMGEPPMJI system, supporting crop
[IcQE]GSYRXYTSRLIV  prices, and creating
MRXYMXMSRWLIVVIƙRI , I V F I V X, S S Z I V thousands of jobs building
QIRXWLIVMRXIPPMKIRGI ś roads and bridges. Today
ERHLIVMRƚYIRGIXSI\EPX historians consider the
XLIWSGMEPSVHIVš The 1929 stock market crash was followed by a New Deal a mixed success.
slew of bank closures, and the world economy The government-funded
began to sink. Suddenly what had seemed like tactics Roosevelt used to
sunny competence began to sound glib. Like jump-start growth are
many successful people, Hoover may have failed ones policymakers still
to appreciate how many of his accomplishments use. (President Trump has
were due to tailwinds of favorable circumstance. frequently talked about a
Yet the wealthy President does not entirely $1 trillion infrastructure
deserve his out-of-touch reputation. He ran plan to put Americans
humanitarian operations that fed millions during back to work.) But overall
3 and after World War I. And as President, he the economy remained
'EPZMR'SSPMHKI undertook activist programs that would later be lackluster until the
ś associated with Roosevelt, pressing business for outbreak of World War II,
Š8LIGLMIJFYWMRIWWSJXLI higher wages and promoting job-creating public and the resulting spike in
%QIVMGERTISTPI works like the Hoover Dam. There were also U.S. military spending.
MWFYWMRIWWš mistakes, however—like the Smoot-Hawley Tariff
Act, which most economists say choked off trade
Coolidge saw business as and made a bad situation worse.
America’s animating 
spirit: “Americans,” he , E V V ]7 8V Y Q E R
said, “are profoundly ś
concerned with produc- Š-GSYPHRIZIVPIRHQ]WIPJ
ing, buying, selling, XSER]XVERWEGXMSR
investing, and prospering reduced the national  LS[IZIVVIWTIGXEFPI
in the world.” Indeed, the debt, and sharply cut *V E R O P M R  (   6 S S W I Z I P X XLEX[SYPHGSQQIVGMEPM^I
1920s were a decade of taxes. And the Dow in  SRXLITVIWXMKIERH
remarkable material turn rose more than Š8LISRP]XLMRK[ILEZI HMKRMX]SJcXLISJƙGISJ
aspiration. For the first 250%—more than under XSJIEVMWJIEVMXWIPJš XLIcTVIWMHIRG]š
time, ordinary Americans any other 20th-century
owned telephones, President. Of course, this At the height of the Great The critics who cried foul
washing machines, sunny materialism also Depression, unemploy- at Barack Obama’s recent
radios—and stocks. had a dark side, although ment hit 25%. Yet $400,000 speaking fee
Coolidge’s business– it wouldn’t come to light Roosevelt was a skilled might well have found an
friendly administration until Coolidge was out communicator who ally in President Truman.
balanced the budget, of office. excelled at conveying He commanded no federal

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income after he left office further their mutual  


beyond his $113-a-month growth. Last year the 6MGLEVH12M\SR
Army pension—and, federal government spent    ś   
despite lucrative offers, $584 billion on the Š4EXHSIWRŞXLEZIEQMRO
refused to capitalize on his military and another GSEX&YXWLIHSIWLEZIE
public service beyond $68 billion on veterans’ VIWTIGXEFPI6ITYFPMGER
selling his memoirs. His benefits, compared with GPSXLGSEXERH-EP[E]W
situation did improve in $91 billion on transporta-  XIPPLIVWLI[SYPHPSSO
1958, when Congress tion and $92 billion on 0] R H S R& . S L R W S R KSSHMRER]XLMRKš
passed the Former education. In all, defense ś
Presidents Act, awarding accounts for roughly half Š-[ERXXSFIXLI4VIWM Two decades before
ex-Presidents a lifetime of the “discretionary” HIRX[LSLIPTIHXLITSSV Watergate, Nixon was
pension and Secret Service federal budget, which XSƙRHXLIMVS[R[E]ERH nearly felled by another
protection. Modern cash excludes obligations like [LSTVSXIGXIHXLIVMKLXSJ political scandal. He was
grabs did not begin until Social Security, Medi- IZIV]GMXM^IRXSZSXIMR serving as Dwight
Gerald Ford, who accepted care, and interest on the IZIV]IPIGXMSRš Eisenhower’s running
posts on corporate boards national debt. mate when opponents
and began giving paid charged that he was using
speeches; Ford’s example political contributions
has been followed by every from wealthy donors to
President since. Š1]JEXLIVEP[E]WXSPHQIXLEXEPP live “in style far beyond
FYWMRIWWQIR[IVIWSRWSJFMXGLIW his salary,” as one
FYX-RIZIVFIPMIZIHMXXMPPRS[š headline put it. Nixon
responded with a nation-
ally televised half-hour
address, in which he laid
bare his family finances
 in excruciating detail.
. S L R*/ I R R I H ] It’s easy to smirk now at
ś the aw-shucks style of
  what came to be called
([MKLX( The privileged son of a prominent businessman, the “Checkers” speech
)MWIRLS[IV Kennedy believed he could serve as an honest (after the Nixon family
ś broker between capital and labor. But he became dog). But Nixon’s version
Š;IQYWXKYEVH enraged after U.S. Steel broke a promise by of what we might today
EKEMRWX Ŧ XLI QMPMXEV] raising prices after unions agreed to limit wage call a “celebrity confes-
MRHYWXVMEPGSQTPI\š demands. Kennedy faced a “paradox,” Wall Street sional” saved his career,
Journal columnist Peggy Noonan recently noted: at least in the short
The last general to serve Business leaders whom he admired as “bright term—and heralded
as President cautioned and enlightened” in private life, frustrated him the power of television
against the creeping scope by pursuing selfish, short-term ends at the helm in national politics.
of the military and, in of their corporations.
particular, Big Govern-
ment’s tendency to collude
with powerful industry to

J U LY 2 0 1 7 M O N E Y. C O M

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  one does, but by what one the 55 mph speed limit)
+ I V E P H  6   *S V H . M Q Q ] ' E V X I V owns.” He fretted aloud failed to resolve domestic
     ś   over Americans’ stagnant woes, and his scolding
Š%KSZIVRQIRXFMK Š8SSQER]SJYWRS[ productivity, unwillingness tone put off voters.
IRSYKLXSKMZI]SY XIRHXS[SVWLMT to save for the future,
IZIV]XLMRK]SY[ERXMW WIPJMRHYPKIRGI ERH and declining respect for
EcKSZIVRQIRXFMK GSRWYQTXMSRš institutions like schools and
IRSYKLXSXEOIJVSQ]SY the news media—critiques
IZIV]XLMRK]SYLEZIš Materialism was overtak- that still ring true today.
ing the country, Carter Yet while Carter may have
Since the Progressive warned in his “Malaise” diagnosed the problem,
Era, many Americans speech: “Human identity is his emphasis on self-
have looked to Washing- no longer defined by what sacrifice (such as minding
ton to solve social 
problems—handing + I S V K I  , ;  & Y W L
bureaucrats more money ś
and more power over Š8LIWMQTPIERW[IVMWPIXŞWQEOIXLI[LSPITMI Š6IEHQ]PMTW
daily life. Ford, who FMKKIVERHIZIV]FSH]KIXWEFMKKIVWPMGIš RSRI[XE\IWš
worried that federal
spending was contribut- Reagan’s success helped
ing to runaway inflation, make tax cuts Republican
pressed for more limited 3 gospel. His successor’s
government, telling 6SREPH6IEKER single term revealed some
Congress, “The first thing  of their limits. Bush had
we all have to do is to been a prominent critic of
learn to say no.” Many By the 1980s, Roosevelt’s once-radical New Deal one of Reagan’s sugges-
Americans still want it had softened into conventional wisdom: Ameri- tions that tax cuts would
both ways. President cans now expected Washington to take an active grow the economy enough
Trump won the 2016 role in shaping the economy. Regulations prodded to pay for themselves,
election in part by “good” behavior by powerful businesses, and hefty dubbing it “voodoo”
promising hefty tax income taxes (top rates were 70% when Reagan economics. Yet eight years
cuts—but also by pledg- took office) promoted fairness. But Reagan, later, on the cusp of the
ing to protect Social a former Democrat, became convinced that these presidency himself, Bush
Security and Medicare efforts were shackling America’s entrepreneurial doubled down on Reagan’s
and boost defense spirit. “Government is not the solution to our cuts. In 1990, faced with a
spending. At least one problem; government is the problem,” he liked ballooning deficit, he
nonpartisan analysis to say. If we focused on growing the economy— relented and supported a
found such changes would lower taxes, less red tape—rather than redistrib- tax hike to help balance
increase the federal debt uting wealth, everyone would be better off, he the budget—a pragmatic
by more than $5 trillion argued. Economists still debate the effectiveness approach now lauded
over the next decade. of Reagan-era reforms, but he presided over a by economists. But the
remarkable boom. flip-flop, which became
a mainstay of attack
ads, helped cost him the
presidency in 1992.

 M O N E Y. C O M J U LY 2 0 1 7
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MRGVIEWIW#7IIXLIGLEVXFIPS[XSXVEGOEGIRXYV]SJIGSRSQMGWLMJXW

ANNUALIZED PERCENTAGE CHANGE IN ...


(FROM FIRST YEAR IN OFFICE TO LAST)

PRICE
C OF UNEMPLOYED
U O NATIONAL
N O DOW JO
DO JONES
S
INCOME
CO MILK POPULATION
O ON DEBT INDEX PO
POPULATION
ON

THEODORE
RE
ROOSEVE T
ELT
N/A
N/A
A 2.2%
2.2%
2%
% 12.5%
12
12.5
2 5%
2.5 2.8%
2.8%
8%
8% 4.2%
4.2%
2%
2% 1.8%
1.8%
1.
.8
.8
8%
%

WILLIAM HOWARD
H
TAFT
N/A
N/A
A 11.9%
.9%
9%
9% –2.5%
–2

–2.5
2.5
2.5
5%
5% 2.2%
2.2
2.2%
2%
% –2.8%
–2.8
–2.8
–2
2.8%
.8
8% 1.3%
1.3%
3%
3%

WOODROWW
WILSON
110.3
10.3%
03
0.3
3%% 11.0%
11
111.0
11.0%
1.0
1. 2.6%
2.6%
6%
% 98.7%
98
98.7
9
98.
8 7% –1.1%
–11.1
–1 .1%
.11% 1.2%
1..2%
2%
2%

WARREN G.
HARDING
6.6%
6 6%
6.6
.6%
6% –1.6%
–111.6
– 1.6%
.6
6% –26.5%
–26
–26.
26
26.
26 5%
5% –2.3%
–2.3
–2
–2.3
2 3% 6.1%
6.11%
6 1% 1.0%
1 0%
1.0%

CALVIN
COOLIDGE
E
1.0%
1.0%
0%
0% 1.2%
1.2%
2%
2% –3.2%
–3.2
–3.2
3 % –3.4%
–3

–3.4
3.4
3 4% 29.8%
29
29.8
988%
% 1.1%
1.1%
1.1
1%
1%

HERBERT
HOOVER
–11.2%
–11.2
–11
–11.
11 2%
% –6.4%
–6.

–6.4
6.4
4% 163.3%
6
163
16
163.
63 3%
3% 3.8%
3.8
3.8%
8%
% –18.9%
–18.
–18.
–18
–1
118
8
8.9%
% 0.6%
066%
%

FRANKLIN
N D.
ROOSEVE T
ELT
16.4%
16.4
16
6.4
6.4
6.4%
4% 4.2%
4.2%
2%
% –7.9%

–7.9
–7
7.9
.9
9% 66.0%
66
66.0
6 0%
60% 4.5%
4.5
4.5%
5%
5 % 0.9%
0.9%
9%
9%

HARRY S.
TRUMAN
8.2%
8..2%
2%
% 6.9%
6.9%
.9%
% 7.2%
722%
% NO
NO CHANGE
CHANG
HAN
HA
ANGE
GE 6.4%
6.4%
6.4%
4% 1.6%
11...6%
6%
6%

DWIGHT D.
EISENHOW
WER
3.8
3
3.8%
.8%
8
8%
% 1.4
1.4%
.4%
4%
4% 11.2%
111.22%
111.2
.2
2% 1.0%
1.0%
0%
0% 14.9%
14 9%
14.9
4.9
9 % 1.6%
11...6%
6%
6%

JOHN F.
KENNEDY Y
2.7%
2.7%
7%
7% –0.3% –5.0%
–5

–5.0
5.0
5.0
0% 1.9%
11.9
.9%
9%
9 % 1.5%
1.5%
5%
% 1.0%
1.0%

LYNDON B
B.
JOHNSON
N
9%
5.9%
5.9%
9% 3.0%
3.0
3.0%
0%
% –6.2%
–6.
–6.2
– 6.2
6.2
2%
% 2.3%
2.3%
3
3%
% 1.6%
1..6%
6%
6% 0.9%
0.9%
9%

RICHARD M.
NIXON
6.2%
2%
6.2%
2% 3.7%
3.7%
7%
% 10.0%
10
0 0%
10.0
0.0 5.7%
5.7%
7%
% –3.8%
–3

–3.8
3.8%
3.8
.8
8% 0.9%
9%
0.9%
9%

GERALD R.
FORD
4.1
4.1%
4.1%
1% 2.7%
2.7%
7%
% –4.7%
–4

–4.7
4.7
4.7
7
7%% 8.2%
8 2%
8.2 % 8.9%
%
8.9%
9% 0.5%
0.5%
5%
5%

JIMMY
CARTER
7.7%
7.7%
7%
7% 6.9%
6.9%
6.9%
9% NO CHANGE 7.5%
7 5%
5% 4.0%
4.0
4.0%
0%
0% 0.8%
0..8%
8%
8%

RONALD
REAGAN
6 2%
6.2%
2 0.5% –3.5%
–3

–3.5
3.5
3 5% 20.1%
20
20.11%
20.1 18.5%
8.5
18
18.5
8.
8.55% 0.8%
0.8%
8%
8%

GEORGE H
H. W..
BUSH
11.6%
.6%
6%
6% 2.4%
2.4
2.4%
4%
4% 10.4%
10
10.4
0 4% 10.6%
10
10.6
0 6% 5.0%
5.0%
5.0
0%
% 0.8%
0.8
0.8%
8%
8%

WILLIAM J.
CLINTON
4.7%
4.7% NO
NO CHANGE
CH
HA
HAN
HANG
ANG
ANG
NGE –5.3%
–5.
–5.3
– 5.3
5 3% 3.6%
3.6
3.6%
. % 23.4%
23.4
23
23.
23.4
4% 1.2%
2
1.2%
2%
%

GEORGE W.
BUSH
2.2%
2.2%
2%
% 3.9%
3.9
3.9%
9%% 2.9%
2.9%
9%
9% 9.1%
%
9.1%
1% –1.6%
–11.6
– 1 6% 0.8%
0.8%
8%
8%

BARACK
OBAMA
2.4%
2.4
.4%
4%
4% 0.4% –5.9%
–5.
–5

–5.9
5.9
5.9
.9%
9% 8.0%
8..0%
0%
0% 11.2%
1111.2
11.2 2%
2% 0.7%
0.7%
7%
7%

SOURCES: DOW JONES INDEX: BLOOMBERG; POPULATION: CENSUS BUREAU; NATIONAL DEBT: U.S. DEPARTMENT OF THE TREASURY; UNEMPLOYMENT: BUREAU OF LABOR STATISTICS;
CENSUS BUREAU; INCOME: THOMAS PIKETTY/EMMANUEL SAEZ UP TO TRUMAN (PER TAX UNIT), CENSUS BUREAU THEREAFTER (PER HOUSEHOLD); CENSUS BUREAU; MILK PRICE: USDA;
CENSUS BUREAU; BUREAU OF LABOR STATISTICS

J U LY 2 0 1 7 M O N E Y. C O M

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build that. Somebody else


made that happen.” His
opponents pounced,
arguing he was dismiss-
ing individual achieve-
ment. The question
 continues to divide us.
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Š-J]SY[SVOLEVH In late 2008, George W. Bush tried to ward off a
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EcGLERGIXSKSEWJEVEW spoken assessment came as Congress failed to
]SYV+SHKMZIREFMPMX] pass the $700 billion bailout he had requested.
[MPPXEOI]SYš Lawmakers eventually relented, helping the
nation avoid economic catastrophe. Bush exited 
This message from “the office with historically low approval ratings (SREPH.
man from Hope” reso- owing to both the Iraq War and the financial 8V Y Q T
nated deeply with voters crisis. A few months later, the stock market 3  ś
in 1992; it remains an hit bottom and began to rebound. Š=SYGERŞXGSR
articulation of how most TISTPIEXPIEWXRSX
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should work. In hindsight,
though, it may feel overly Trump came into office
optimistic. During the making big promises—
past generation, market not made up of hero but, as he noted in the
forces have prodded U.S. entrepreneurs, or preceding quote (from his
corporations to lay off Jeffersonian planters, bestseller The Art of the
millions of workers, while reaping the rewards of Deal), at a certain point
hiking CEO pay in the toil and self-reliance. you’ve got to produce
name of “shareholder It was a community in results. After his first
value.” Wall Street firms which everyone plays a attempt at repealing and
paid traders millions for   crucial part. His biggest replacing Obamacare
their supposed financial & E V E G O3 F E Q E legislative achievement, stalled out, it became
acumen, only to demand 333 Obamacare’s promise of clear: This stuff is
government bailouts Š-J]SY[IVI health coverage for every complicated. With a
when investment bets WYGGIWWJYPWSQIFSH] American, underscores health care bill finally
went bad. And Silicon EPSRKXLIPMRIKEZI]SY that ethos. Yet during the having passed the House
Valley executives like WSQILIPTš same speech, which and currently awaiting
Steve Jobs have made echoed an Elizabeth action from the Senate,
billions of dollars while Is the economy basically Warren theme, Obama and tax reform scheduled
bragging that “it’s better a team sport or a solo went on to utter a less next, Americans are
to be a pirate than join competition? As Obama apt phrase: “If you’ve got watching to see if Trump
the Navy.” saw it, the economy was a business, you didn’t can deliver the goods.

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BY M EG A N L EO N H A R DT A N D K A I T L I N M U L H E R E
you feel incomplete without a phone The resurgence of unlimited plans

-J
has brought other shifts, experts say.
in your hand, you’re in good company. The Big Four have sharply cut the
About three-quarters of Americans now number of plans they offer—to 35
own a smartphone, Pew Research Center from the 49 offered a year ago. That’s
not necessarily a bad thing, says
reports. And roughly 45% of people mobile technology expert Logan
say they are constantly connected during the workday, Abbott: It simplifies the choice for
according to the American Psychological Association. heavy data users. “Most people just
want the right amount of data for
The average person uses about no longer the case. Over the past their usage,” he says.
4.5 gigabytes of data a month, up year, the Big Four carriers—AT&T, The major carriers have also cut
more than a third from the 3.3GB Sprint, T-Mobile, and Verizon—have prices for those unlimited plans,
used on average a year ago, accord- rolled out new, fiercely competitive making them more practical for
ing to Brad Akyuz, a director at the unlimited data plans that eliminate more people. “Even if you technically
NPD Group research firm who once-burdensome overage fees. don’t need an unlimited plan, it’s an
specializes in the mobile industry. It all started with T-Mobile, says affordable option,” says NerdWallet’s
That’s partly because of in- Kristin Paulin, a senior telecom cell phone expert, Kelsey Sheehy.
creased video streaming, largely analyst at research and consulting All of these industry changes
driven by social media use. Last firm Ovum. Last September, created a different set of parameters
year, more than 54% of all videos T-Mobile eliminated all of its for this year’s Best Cell Phone Plans
were watched on a mobile device— traditional plans with specific data analysis. Download speeds and the
up from 17% in 2013, according to quantities, subbing in a single, quality of superfast 4G/LTE net-
online video technology company competitively priced unlimited plan: works took on greater weight, as did
Ooyala. “When you stream video, T-Mobile One. Sprint followed closely concerns over various data restric-
the data numbers go up exponen- behind, shaving $20 a month off its tions imposed by carriers. “As
tially,” Akyuz says. unlimited plan; AT&T also reshaped smartphones have become lifelines,
Until recently, powering your its own offerings. Finally, in early users expect these devices to work
data usage could be tricky—and 2017, Verizon caved as well. “Verizon and also to work well,” Paulin says.
expensive. But a radical reshaping essentially had to succumb to the To choose the following winners,
of the mobile landscape means that’s competitive pressure,” Paulin says. MONEY evaluated almost 100 plans
from 15 companies. We compared
cost per gigabyte, hidden fees, and
national network quality, as well as
data limits and speeds. We also ruled
out providers who failed to meet our
thresholds for customer service,
data, and voice network quality.
What follows are MONEY’s
selections for five of the best plans
on the market now.

J U LY 2 0 1 7 M O N E Y. C O M

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4PERW

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Even if you use your phone mainly for texting and talking,
you’ll need a little data for things like checking email or
exchanging photos via text. The challenge is, as a light data
user, you’re in the minority—so there’s less competition )ZIV]HE]4PER
among plans that fit your needs. For this category, we looked
at plans with less than 4GB of data. If you’re using social
media, browsing the
132)=Ş74-'/ can jump up from this $30-a-month
web, and occasionally
6)49&0-'
plan to the next level—paying only the
difference between the two plans—and streaming videos—which
;-6)0)773 you’re probably doing
then drop back again the following month.
Tradeoffs: Whenever you don’t have a more often, thanks to the
Why it wins: You may have never heard of Wi-Fi connection, your phone will switch
to Sprint and T-Mobile networks, which rise of autoplay—you’ll
Republic Wireless, but the five-year-old
company has developed a cult following, MONEY found to be less reliable than need a plan with a
says NerdWallet’s Sheehy. The backbone of those of the other two big carriers. And decent amount of data.
Republic Wireless is hybrid calling, a while Republic Wireless has increased the
number of compatible devices you can Smartphone users now
technology that seamlessly transfers users
between Wi-Fi and cellular networks for bring to its network, you can’t currently generally consume about
voice calls. Republic Wireless also prioritizes use Apple products. 4.5GB of data every month,
Wi-Fi for data use, so you’ll consume less Terms: so MONEY considered only
than you would with traditional carriers. (%8% 2GB
Pricing is transparent, with no fees, and if 2)8;36/797)( T-Mobile, Sprint plans that offered at least
you have a heavy month of data usage, you %229%0'378 $360 4GB for this category.

 M O N E Y. C O M J U LY 2 0 1 7
T H E B E ST C E L L P H O N E P L A N FO R YO U
78-'/-2+
;-8,8,)40%2
Users are generally happy with the

9RPMQMXIH4PER
plans they have—but they’re always
open to a bargain.

If you’re streaming your favorite Netflix shows during your ,S[WEXMWJMIHEVI]SY


[MXL]SYVGIPPTLSRITPER#
daily commute, you’re not alone—but you may need an
:)6=7%8-7*-)(
unlimited plan to handle your video addiction. Despite the 731);,%87%8-7*-)(
name, even unlimited plans may stumble on poor connections
'378
or data usage restrictions. For this category, MONEY prioritized
33%
network quality over price.
34%

132)=Ş74-'/ Gogo Wi-Fi on every flight. And T-Mobile’s 2)8;36/74))(

813&-0)32) 4G/LTE network is widely available, with


users reporting access to the highest data
41%
43%

speeds 87% of the time, according to


Why it wins: T-Mobile has revamped its
wireless research firm OpenSignal.
unlimited plan since last September’s initial 2)8;36/'3:)6%+)
rollout and now offers the best value in this Tradeoff: T-Mobile One isn’t the cheapest 50%
category. For $75 a month you get 4G/LTE unlimited plan on the market. If price is the
most important consideration, Boost Mobile 36%
data speeds—the fastest available—plus
unlimited data at 3G speeds to turn your (which runs on the Sprint network) charges
$50 a month for the first line. “If they have
phone into a wireless hotspot. (Like most ;LEX[SYPHQEOI
coverage in your area, it’s hard to beat that
“unlimited” plans, T-Mobile’s may eventually ]SYW[MXGLTPERW#
tighten data speeds—but not till you’ve hit a deal,” Abbott says.
-
very generous 30GB.) The plan also works Terms:
,
well for travelers, as it includes unlimited (%8% Unlimited
+
texting and data abroad, plus an hour of %229%0'378 $840 with autopay discount

*
) %

(
132)=Ş74-'/ Tradeoffs: As with most prepaid plans,

%8
8
AT&T’s 6GB offering does have some '
&
compromises. This plan caps download

+34,32)+& speeds, which means the network may feel


like a slower 3G connection. And it defaults
% Lower cost 55% & Higher quality of voice
calls 3% ' Better network coverage 8%
to streaming video in standard definition to ( Faster network speed 7%
Why it wins: With more than enough data
save on data. For HD streaming, you’ll need ) More new phones and options 4%
for the average user, this $45 AT&T * Better wireless and hotspot capabilities 4%
to change your account settings. If you go
prepaid plan offers incredible value. It’s + More monthly data 10% , Better selection
over 6GB per month, you won’t face overage
20% cheaper than other plans with 4GB to of phones to purchase 3% - Other 6%
fees, but data speeds will slow to a crawl.
6GB of data a month—and you’re able to
roll over any unused data to the next Terms: NOTE: From survey of almost 1,900 cell phone customers
conducted for MONEY. SOURCE: Morning Consult
month. You also save by going with a (%8% 6GB
prepaid plan, since those charge lower %229%0'378 $480
taxes and fees. “For the same amount of with autopay discount 4-'/%40%2
data, you’re spending $10 to $15 less a If none of these suits
month” than with a traditional plan, says your family’s needs—if
NerdWallet’s Sheehy. Adding you require different
to the plan’s value is AT&T’s network, data levels, or another
whose LTE coverage and reliability number of users—try
put it in second place among the
the tool at money.com/
Big Four carriers, according
cellphones to get a
to network researcher
customized result.
RootMetrics.

J U LY 2 0 1 7 M O N E Y. C O M

;L]-WRŞX1]
'EVVMIV,IVI#
Each year MONEY hears from
readers wondering why their carrier
or plan isn’t among the winners.
One common reason: The market
teems with nearly 100 secondary
players, which lease wireless and
data services from the Big Four—
and it’s nearly impossible to do a
truly comprehensive evaluation of
every plan offered. These smaller
companies, known as mobile virtual
network operators (MVNOs), can
come and go quickly, says Joseph
Paonessa, founder of BestMVNO
.com, but they also can deliver a lot
of innovation and niche offerings.
8-2+, for example, was the first
MVNO with an à la carte menu that
lets customers mix and match levels
of voice minutes, text, and data; you
don’t pay for anything you don’t use.
Ting is also known for strong
customer service. But none of its
offerings include unlimited talk and
text, which we required to make fair
price comparisons, so they didn’t
make the final analysis.
'SYTPIW4PER
86%'*32), another popular
MVNO, was in a similar position. If you and your partner are both average users, you can
It was once the go-to provider for probably save some cash by signing up for one plan with two
prepaid plans, Paonessa says, and lines. For this category we considered only plans with at least
its market share still tops any 4GB each, to ensure you’d have enough data for using social
company outside the Big Four.
Yet TracFone remains competitive
apps, streaming music, and watching some video.
mainly with inexpensive plans
132)=Ş74-'/

I L L U ST R AT I O N S B Y O K S A N A L AT Y S H E VA — N O U N P R O J E C T
Tradeoff: As a secondary carrier, Cricket
designed for very light users—too
'6-'/)8;-6)0)77
is subject to an AT&T cap on download
basic for the categories we selected. speeds at 8Mbps. That’s significantly
Finally, we considered Google’s
463.)'8*-, a unique service run 71%68 slower than the fastest networks, which
offer speeds consistently above 20Mbps.
on a combination of Wi-Fi and To conserve data usage, Cricket
cellular networks that reimburses Why it wins: This plan provides 8GB per automatically streams video in standard
person—almost double what the average definition unless you’re on a Wi-Fi
customers for unused data.
user needs—but at $85 a month with an connection. That’s good if you want to
Ultimately, we found it too niche an
autopay discount, it’s pretty tough to beat avoid maxing out your data limit, but you
offering. But its ultracheap prices may notice the diminished video quality.
its value. You’re paying 15% to 38% less
may make it a good fit for someone
per gigabyte than you would for other plans Terms:
who lives in an urban area, in the same data range. Cricket also has (%8% 8GB per person
frequently travels internationally, an above-average customer service score 2)8;36/97)( AT&T
and is willing to use one of the four from J.D. Power, and it runs on AT&T’s %229%0'378 $1,020 with
Android models it allows. network, which is among the nation’s best. autopay discount

 M O N E Y. C O M J U LY 2 0 1 7 LOVE YOUR PLAN? HATE IT? Tell us why at letters@moneymail.com.


T H E B E ST C E L L P H O N E P L A N FO R YO U
,3;19',(%8%#
The younger the users, the more data
they’re likely to need.
%:)6%+)1328,0=(%8%97)&=%+)

*EQMP]4PER +&
ages 18 to 24
The younger the user, the higher the data consumption. For
the family category, we looked at plans that offered two lines
with at least 10GB—enough for extensive music and video +&
ages 25 to 34
streaming, for instance. The other two lines needed to offer
at least 4GB of data, which should suffice for an average user.
+&
132)=Ş74-'/ ages 35 to 54
fees—a no-surprises approach that’s

813&-0)32) unusual among the Big Four carriers—and


data is unlimited, so you don’t have to +&
worry about having your kids push you into
Why it wins: Deep multiuser price breaks ages 55+
overage charges. Like most unlimited
on T-Mobile’s unlimited plan make it an
plans, T-Mobile does start to restrict data
excellent value for a family. T-Mobile says it NOTES: Based on NPD Connected Intelligence Data
speeds, but not until you hit 30GB, higher Consumption Report, March 2017. Overall average data
has focused on significantly expanding its use is 4.5GB per month. SOURCE: The NPD Group
than nearly every other plan MONEY
4G/LTE network in the past two years, and
evaluated.
the resulting improvements have helped
Tradeoff: If you value high-definition video
1IXLSHSPSK]
make the carrier’s offerings more
attractive. For $140 a month with an streaming, you’ll need to pay an extra $5
autopay discount, you get access to an per person each month. Otherwise the plan
above-average network and a carrier that limits you to DVD-quality playback. MONEY evaluated roughly 100
has the third-highest J.D. Power customer Terms: prepaid and postpaid plans from
service rating of the 15 carriers we (%8% Unlimited 15 carriers. We narrowed the set
evaluated. The price includes taxes and %229%0'378 $1,680 with autopay discount to include only plans with unlimited
calls and texts, and at least 1GB of
data per month. To make an
apples-to-apples comparison, we
looked at the annual cost of each
plan, factoring in any device access
costs, activation fees, and SIM card
pricing, as well as applicable
discounts such as autopay.
For an objective measure of
customer service, MONEY used the
ratings featured in J.D. Power’s 2017
U.S. Wireless Customer Care
Performance Study, plus information
gathered through reporting. We also
evaluated each carrier’s voice and
4G/LTE data network footprints, and
took into account published reports
by RootMetrics and OpenSignal.
Winners were chosen on the basis
of price, data allowances, and plan
features. All of MONEY’s best plans are
from carriers that were at least above
average on network quality, coverage,
and customer service. The data was
collected in April and May 2017.

J U LY 2 0 1 7 M O N E Y. C O M

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 M O N E Y. C O M J U LY 2 0 1 7
1)28 &=/6-78)2&%,0)6

NATHAN BO NDS’ BRE A KING POINT came after 19


months of unemployment, 23 interviews, and 200
applications.
His résumé had been rejected by a string of
minimum wage jobs—including ones at the local
L.L. Bean and J. Crew outlets—and Bonds, who
lives in Cranston, R.I., was scraping by on tempo-
rary construction work. By the time a friend of-
fered him a $10-an-hour delivery gig, he could
barely afford rent—much less the fees needed to
update his license. So he didn’t get that job either.
“That was my lowest point,” the 41-year-old
father of five says. “It was like my life was in a
vise, and I could not move forward.”
Bonds, a former quality manager at a manu-
facturing plant, is a highly skilled worker in an
industry in need of highly skilled workers. His long
bout of unemployment, and his struggle to find
work even at minimum wage, flies in the face of
stellar jobs reports that have made headlines over
the past several years.
It’s also not that uncommon.
As of April 2017, 1.6 million unemployed Amer-
icans have been out of work for six months or
longer, according to data from the Bureau of
Labor Statistics. Nearly a million have been job-
less for more than a year.
“Long-term unemployment,” as it’s called, isn’t
a new phenomenon. In 2010 it peaked at 6.8 mil-
lion and has been trending downward in the wake
of the recession. But those numbers offer little
comfort to the 22.6% of jobless Americans who
fall into that category today—a ratio that remains
stubbornly high compared to pre-crisis levels.
Ever since economists started tracking this
figure in 1948, the share of long-term unemployed
to total unemployed has topped 20% only at the
2EXLER&SRHW[LSPSSOIHJSV[SVOJSVRIEVP]X[S height of a recession or in its direct aftermath. If
]IEVWEXLSQIMR6LSHI-WPERH[MXLLMWHEYKLXIVW the official unemployment rate included the mil-
lions of people working part-time because they

PHOTOGRAPHS BY REBECCA GREENFIELD J U LY 2 0 1 7 M O N E Y. C O M



0 3 2 + 8 ) 6 1  9 2 ) 1 4 0 3 = 1 ) 2 8

can’t find full-time work, or those who want to panies like HP and GE Capital. “If
work but haven’t looked for a job in at least four someone doesn’t show employment
weeks, the ranks of long-term unemployed would for a period of time, their application
be even higher. can get kicked out, never to see the
Now experts worry that a large percentage of light of day.”
long-term job seekers have been pushed out of Another commonly cited culprit is
the market completely—and that the new presi- the so-called skills gap, the idea that
dential administration is ill-equipped to rope millions of jobs go unfilled because of
them back in. the disparity between the skills em-
“It’s uncharted territory to have this level of ployers want and those applicants
long-term unemployment this far out of reces- have. Not everyone agrees that such
sion,” says Ofer Sharone, a sociologist at the a gap exists, and among those who do
University of Massachusetts at Amherst who there’s a range of opinions about how
studies employment trends. “Something new is to fix it. If the gap does exist, though,
going on, making it harder for people who have the long-term jobless are more likely
been out of the market for a long time.” to fall into it, says Princeton econo-
mist Alan Krueger.
IT ’S HARD TO PINPOINT exactly what’s keeping “Skills deteriorate the longer job
people out of work for so long, but economists seekers are out of the workplace,”
have a few theories. Krueger says. “That often leads the
Hiring discrimination is one possibility. Often, long-term unemployed to face particu-
job seekers with long career gaps face inherent lar difficulties.”
bias from employers, who assume their skills Whatever the reason, mounds of
are rusty or that they are otherwise unemploy- research show that the odds of landing
able. On top of that, new technology, like appli- 2 %8 , % 2 a new job are demonstrably harder for
cant tracking systems that sort through the high &32(7 the long-term unemployed than for
1 % 2 9 *% ' 8 9 6 - 2 +
volume of résumés each job posting receives, can 59%0-8=
others. One study from the Federal
negatively affect the long-term unemployed. Cer- 1%2%+)6 Reserve Bank of Boston says a job
tain screens, like those that ask applicants for seeker’s chances of finding work drop
dates of employment, can filter out candidates dramatically after six months of un-
2EXLER&SRHW
who have been looking for work for many months. VMKLX XEPOW[MXL
employment. Another study from the
“Bias happens all the time,” says Linda Shar- 'LVMWXMER'S[ER Brookings Institution—led by Krueger
key, coauthor of The Future-Proof Workplace and XLIcGIRXIVHMVIGXSV and two other researchers—found
an HR expert who has overseen hiring for com- JSV4SPEVMW1)4 that, after 15 months, the long-term
unemployed are more than twice as
likely to have left the market as to have
settled into steady, full-time work.
Older workers are at a particular
disadvantage, says Joseph Carbone,
president and CEO of the Bridgeport,
Conn., jobs development group The
WorkPlace.
“If you’re 50 or older, you face an
almost impenetrable wall of discrimi-
nation,” he says. “Companies have a
very narrow view of what they want.
When you walk into an interview with
a lot of gray hair, it’s usually over very
quickly.”
For 60-year-old Stephen Wayman
of Landing, N.J., who has two degrees
in mechanical engineering and more 78)4,)2 on,” he says. “I suspect younger [hiring managers]
than 20 years of experience, the gap ; %= 1 % 2 don’t give me the benefit of the doubt.”
1)',%2-'%0
on his résumé is like a scarlet letter. Wayman doesn’t have young children to pro-
)2+-2))6
Wayman lost his job as director of fa- vide for, but he’s living off his pension and savings
cilities and real estate in 2015 and has account—something he didn’t plan on doing at
struggled to find another one. To keep 7XITLIR;E]QER age 60. But more than the lack of a salary, Wayman
busy, he teaches a class on project EJXIVEWTIIGLEXE misses having an opportunity to grow.
management at a local university and PIEHIVWLMT “I feel like I have a lot of gas left in the tank,”
HIZIPSTQIRX
takes online courses in computer he says.
QIIXMRKMR2I[
programming. .IVWI]
“I’ve been asked, Why should we NATHAN BONDS’ STORY has a happy ending.
hire you when we have other appli- In March he landed a role as a project manager
cants who haven’t been out of work?” for the manufacturing consultancy Polaris MEP,
he says. “I tell them I’ve been using with help from Platform to Employment (P2E)—a
this opportunity to learn new things. program from Carbone’s The WorkPlace, which
I have new knowledge of computer SHARE uses government and private funding for job
science; I’ve gotten into teaching.” YOUR EXPERIENCES training and wage-subsidy efforts.
These interviews go well, or he COPING WITH Other workforce agencies, like the Rhode
thinks they do, but he has yet to get LONG-TERM Island Department of Labor and Training—
an offer. UNEMPLOYMENT whose Real Jobs RI program gives companies
“Who knows what people really at letters@
think, and why they don’t bring you moneymail.com. J U LY 2 0 1 7 M O N E Y. C O M

0 3 2 + 8 ) 6 1  9 2 ) 1 4 0 3 = 1 ) 2 8

/%6)2 résumé building, and job-search as-


.3,2732 sistance. Some centers also provide
%8 8 3 6 2 ) =    specific outreach and coaching for the
long-term unemployed and space for
/EVIR.SLRWSRTMGOW long-term-unemployment develop-
YTLIVWSR6SFIVX ment groups to meet.
1MXGLIPPJVSQWGLSSP A number of additional grants that
MRRSVXL[IWX fall under the Workforce Innovation
;EWLMRKXSR('
and Opportunity Act (WIOA), which
was signed by President Obama in 2014
and funds state programs for dislo-
cated workers, would also be reduced.
The proposal also decimates fed-
eral funding for the Department of
grants to hire and train job seekers—rely heavily Commerce’s Manufacturing Extension
on a mix of state and federal funds. Bonds’ new Partnership (MEP), a private-public
employer benefits from such funding. partnership that helps small and mid-
If President Trump’s federal budget passes as size manufacturers like Bonds’ new
proposed, states will be forced to do more with employer compete.
less. Workforce agencies, job centers, and ulti- In addition to the cuts, the budget
mately the long-term unemployed could suffer. does expand some programs designed
Under the administration’s most recent 2018 to assist the unemployed, like the Re-
budget proposal, the Department of Labor would employment and Eligibility Assess-
lose $2.4 billion, or 20% of its operating budget. ment program, which helps people
The budget specifically calls for less federal receiving unemployment benefits re-
support for job training and employment ser- enter the workforce.
vices grants, a move that puts the core programs The President’s proposal isn’t set
at more than 2,500 American Job Centers at in stone. But it does shine a light on
risk. Those centers provide a range of free ser- what long-term unemployment could
vices for all job seekers, like career counseling, look like in the Trump era—and it’s
very different from what was prom-
ised on the campaign trail.
; , ) 6 )  0 3 2 + 8 ) 6 1  9 2 ) 1 4 0 3 = 1 ) 2 8  , - 8 7  , % 6 ( ) 7 8 In a July 2016 tweet, candidate
Trump acknowledged that long-term
unemployment is indeed a problem
KEY *: 8%–18% 19%–28% 29%–35% 36%–48% (“We are suffering through the worst
6LSHI-WPERH long-term unemployment in the last
 70 years. I want change—Crooked
Hillary Clinton does not”). But experts
;]SQMRK say his actions prove otherwise.

“The message that comes across is,
9XEL We don’t care,” Carbone says. “A lot of

;EWLMRKXSR(' the folks who need assistance to help

overcome barriers to opportunity are
just not going to get it.”
*PSVMHE
 THE DAY-TO-DAY SCRIPTSthat dictate a
modern job hunt—online applications,
SOURCE:
Bureau of Labor Statistics follow-up emails, résumé updates—

*The rates are the percentage of the total unemployed populations who are unemployed for 27 weeks or more. PHOTOGRAPH BY SUSANA RAAB/INSTITUTE
can be particularly draining for the
long-term unemployed. For many, the
mystery of why they’re rejected is a 73098-32783)2(
confusing constant.
Karen Johnson, 47, is running on
fumes.
=396.3&(639+,8
In 2015, Johnson’s executive legal Searching for a job can 3. UNPLUG
position was cut from the technology be particularly stressful
company where she had worked for if you’ve been out of the Online job boards have made
10 years. At first the Washington, D.C., it easy to find and connect to
workforce for six months an an enormous number of
resident wasn’t worried. or longer. Here’s how to openings. But when it comes
“I thought it was going to be easy,” recalibrate and move forward. to quality connections—
she says. “I hadn’t looked for a job in those that can lead to an of-
20 years. I didn’t get it at all.” fer—nothing beats face-to-
Since then, Johnson has applied to
1. STAY BUSY face networking, says career
coach Nancy Burke of
a range of positions, but nothing has The lack of a normal workday Minneapolis.
materialized. Her family’s resources is disorienting, says Marc “The résumé shouldn’t be
are thinning—her iPhone is duct-taped Cenedella, founder and CEO doing all the work for you,”
of careers site The Ladders. she says. “Commit yourself to
together (“I’m afraid to spend money
He suggests finding a regu- spending 80% of your time
on it,” she says), and her daughter, a lar commitment to fill your building a network and con-
senior in high school, is taking a gap downtime such as fundraising necting with people, and the
year before college until the family gets for a local charity, consulting other 20% online.”
pro bono for a nonprofit, or If you’re new to networking,
back on its feet. social sites like LinkedIn and
mentoring young people in
Johnson is an optimist, but she’s your field. You’ll maintain a Meetup can help you identify
starting to burn out. It’s frustrating to sense of normalcy, and you’ll some industry-specific events
spend two decades climbing the career have something to chat about in your area. Getting involved
when a hiring manager asks on a logistical level, like
ladder—working nights, weekends, passing out pamphlets at a
what you’ve been up to.
and through every vacation—with little meeting, makes for an easy
to show for it. As a black woman, John- icebreaker.
son is worried she faces an extra layer 2. DON’T MIND THE GAP
of discrimination in a job market that’s 4. SEEK SMALL
During interviews, long-term
already stacked against her. job seekers tend to spend
For now, Johnson is updating her too much time talking about Job seekers tend to eye in-
résumé with a skill set worthy of to- the gap on their résumé, and dustry giants for vacancies,
day’s landscape. She’s learning to too little about why they’re neglecting small and medi-
the best person for the job um-size employers in the
code and is practicing soldering, they’re applying for, process, Burke says.
welding, and laser cutting at a local Cenedella says. Your local library or Cham-
do-it-yourself community “maker- You can’t avoid it com- ber of Commerce can be a
pletely, but waxing poetic good resource for small-
space.” She’s the proud owner of a
about why you’re still out of business guides and directo-
new 3D printer. the market won’t help your ries. Scan those—and the
But she feels uncertain about the case. local business journal, if your
future. Johnson watches how our new “Just address it and move city has one—for companies
on,” he says. “Your current that are in growth mode.
President talks about jobs and how unemployment has nothing Chances are some of them
blue-collar workers are driving the to do with how well you can are looking for experienced
conversation. So far there’s been no do your next job.” candidates. —K.B.
message from the top about the highly
skilled, highly educated workers who
are also struggling to make ends meet.
That troubles her.
“Where do I go?” she says. “I’m not
going to be a coal miner.” J U LY 2 0 1 7 M O N E Y. C O M

THE NUMBERS

783'/7

*92(7
 &-++)781989%0*92(7&='%8)+36= TOTAL RETURN EXPENSES
(AS % OF
ONE THREE ASSETS)
CATEGORY YEAR YEARS1

LARGE-CAP STOCKS

8IGL7LEVIW
Fidelity Contrafund (FCNTX) 19.7% 11.6% 0.68
American Funds Growth Fund of America (AGTHX) 21.6 11.0 0.66
Dodge & Cox Stock (DODGX) 27.6 9.4 0.52
American Funds Investment Co. of America (AIVSX) 16.5 8.7 0.59

SRE8IEV
American Funds Wash. Mutual Investors (AWSHX) 15.8 8.6 0.58
MIDCAP
Vanguard Mid-Cap Index (VIMAX) 17.0 8.9 0.06
Fidelity Low-Priced Stock (FLPSX) 15.6 7.0 0.88
Vanguard Extended Market Index (VEXAX) 21.4 7.9 0.08
EVEN AS THE BROAD STOCK MARKET has stalled, technology Fidelity Spartan Extended Market Index (FSEVX) 21.3 8.0 0.07
Vanguard Strategic Equity Fund (VSEQX) 21.2 8.9 0.18
shares soared 4.4% in the four weeks ended May 17.
SMALL-CAP
Thanks to outsize gains for Facebook, Amazon, Netflix, Vanguard Small-Cap Index (VSMAX) 19.9 8.1 0.06
and Google—the so-called FANG stocks—the sector is Vanguard Small-Cap Value Index Fund (VSIAX) 19.5 8.7 0.07
up nearly 36% over the past year. Vanguard Explorer (VEXRX) 23.0 7.7 0.34
T. Rowe Price Small-Cap Value (PRSVX) 26.4 8.4 0.92
Vanguard Small-Cap Growth Index (VSGAX) 20.5 7.4 0.07
7
4336%8-37
BALANCED
American Funds American Balanced (ABALX) 11.4 7.4 0.59
P/E DIVIDEND YIELD Fidelity Balanced (FBALX) 12.9 7.2 0.55
Vanguard Balanced Index Fund (VBIAX) 11.2 7.0 0.08
23.0 2.3% Fidelity Puritan Fund (FPURX) 12.3 7.4 0.56
Vanguard STAR Fund (VGSTX) 13.5 6.0 0.32
INTERNATIONAL
2.2 Vanguard Total International Stock Index (VGTSX) 18.9 1.7 0.18
22.0 Harbor International (HAINX) 14.9 –0.1 0.79
CURRENT Oakmark International Fund (OAKIX) 33.5 3.8 1.05
ONE-
ONE- 2.1 YEAR American Funds EuroPacific Growth (AEPGX) 20.0 3.7 0.83
21.5 YEAR RANGE Vanguard International Growth Fund (VWILX) 26.1 5.1 0.33
RANGE
21.0 2.01
EMERGING MARKETS
2.0
American Funds New World (NEWFX) 21.0 2.2 1.07
CURRENT Vanguard Emerging Markets Stock Index (VEMAX) 25.6 1.3 0.14
T. Rowe Price Emerging Markets Stock (PRMSX) 29.9 4.9 1.26
20.0 1.9 Fidelity Emerging Markets (FEMKX) 23.6 3.5 1.01
Northern Emerging Markets Equity Index Fund (NOEMX) 28.2 1.0 0.31
U.S. GOVERNMENT BONDS
&)2',1%6/7 TOTAL RETURN Fidelity Government Income (FGOVX) –0.1 1.9 0.45
O E
ONE ONE THREE American Funds U.S. Government Securities (AMUSX) 0.1 1.9 0.63
INDEX MONTH
MO H YEAR YEARS1
MFS Government Securities (MFGSX) –0.6 1.4 0.88
S&P 500 0.6%
0 % 17.6% 10.2%
Sit U.S. Government Securities (SNGVX) 0.3 1.4 0.80
Nasdaq2 2.6
6 27.5 13.7
JPMorgan Government Bond (OGGAX) 0.0 2.0 0.75
Russell 2000 – 3
–0.3 25.3 8.6
Morgan Stanley EAFE 6 0
6.0 17.8 1.8 INVESTMENT-GRADE
Dow Jones industrial average 0
0.2 20.7 10.5 Vanguard Total Bond Market Index (VBTLX) 1.0 2.4 0.09
Barclays U.S. aggregate bond index 0
0.5 1.2 2.6 Vanguard Total Bond Market II Index (VTBIX) 1.2 2.5 0.05
SECTOR Dodge & Cox Income (DODIX) 4.5 3.0 0.43
Information technology 4.4 35.7 18.0 Vanguard Short-Term Investment-Grade (VFSUX) 2.1 2.0 0.10
Consumer discretionary 0
0.9 15.5 13.3 T. Rowe Price New Income (PRCIX) 1.5 2.4 0.54
Basic materials 0
0.5 14.1 4.8 HIGH YIELD
Industrials 0.5
0 18.8 9.3 Vanguard High-Yield Corporate (VWEAX) 10.4 4.7 0.13
Health care 0
0.4 9.3 10.4 American Funds American High-Income Trust (AHITX) 13.5 2.8 0.71
Consumer staples –0
–0.4 7.9 10.4 Fidelity Capital & Income (FAGIX) 14.2 5.5 0.75
Utilities – 4
–0.4 10.1 11.0 Fidelity High Income (SPHIX) 14.5 4.2 0.73
Financials –1
–1.0 26.7 11.5 Northern High Yield Fixed Income (NHFIX) 12.2 3.0 0.81
Energy –2.9 2.6 –7.6
Telecom services –7.3 –3.8 3.2 TAX-EXEMPT
Vanguard Intermediate-Term Tax-Exempt (VWIUX) 0.2 2.9 0.09
Vanguard Limited-Term Tax-Exempt (VMLUX) 0.7 1.3 0.09
NOTES AND SOURCES: Stock index data as of May 17 from Lipper, New York; 877-955-4773. Vanguard Tax-Exempt Money Market (VMSXX) 0.5 0.2 0.15
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. Vanguard Short-Term Tax-Exempt Fund (VWSUX) 0.9 0.7 0.09
Biggest funds ranked by total net assets. 1Annualized. 2Price change only. Fidelity Municipal Money Market (FTEXX) 0.3 0.1 0.41

 M O N E Y. C O M J U LY 2 0 1 7
What President Trump
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THE NUMBERS

MONEY 50

*SVIMKR*YRHW FUND (TICKER)


ONE
O E
MONTH
O H
TOTAL RETURN

ONE
YEAR
THREE
YEARS 1
EXPENSES
(AS % OF
ASSETS)
PHONE
NUMBER
(800)

/IIT;MRRMRK
Vanguard Inflation-Protected (VIPSX) –0.4% 1.0% 1.1% 0.20 662-7447
Vanguard Short-Term Infl.-Prot. (VTIP) –0.2 1.3 0.2 0.07 662-7447
Vanguard Total Intl. Bond Index (VTIBX) 0.0 1.3 3.8 0.15 662-7447
CUSTOM FUNDS
Large-Cap
IN A MONTH DOMINATED by political rows in Washington— Dodge & Cox Stock (DODGX) 0.2 27.6 9.4 0.52 621-3979
from President Trump’s firing of FBI director James PowerShares FTSE RAFI U.S. 1000 (PRF) –0.8 16.4 8.0 0.39 843-2639
Comey to the naming of a special counsel to probe Sound Shore (SSHFX) 1.2 19.5 7.1 0.93 551-1980
PowerShares S&P High Qual. Port.(SPHQ) –0.2 13.0 11.1 0.29 983-0903
possible Russian involvement in the U.S. elections— Primecap Odyssey Growth (POGRX) 2.7 29.1 13.3 0.64 729-2307
the biggest market moves actually took place overseas. T. Rowe Price Blue Chip Growth (TRBCX) 3.5 22.7 13.1 0.71 638-5660
Thanks in part to a weakening dollar and the Midcap
Vanguard Mid-Cap Value Index(VOE) –1.0 17.9 8.8 0.07 662-7447
defeat of far-right nationalist presidential candidate WisdomTree MidCap Dividend (DON) –2.2 13.4 9.7 0.38 909-94732
Marine Le Pen in France, international stock portfo- T. Rowe Price Div. Mid Cap Gro. (PRDMX) 2.3 18.8 10.7 0.87 638-5660
lios on our recommended list of mutual and exchange- Small-Cap
PowerShares FTSE RAFI U.S. 1500 S-M (PRFZ) –0.5 23.1 7.9 0.39 843-2639
traded funds soared in the four weeks ended May 17. Vanguard Small-Cap Value (VBR) –1.6 19.5 8.7 0.07 662-7447
Oakmark International, which keeps nearly three- WisdomTree SmallCap Dividend (DES) –1.9 19.3 8.7 0.38 909-94732
quarters of its assets in Europe, gained 7% in the T. Rowe Price QM U.S. Small-Cap Gro. (PRDSX) 1.5 22.5 10.9 0.82 638-5660
Specialty
month and is up more than 33% for the year. Van- PowerShares Intl. Div.Achievers (PID) 0.4 10.1 -4.0 0.58 983-0903
guard International Growth—which also has a big SPDR S&P Dividend (SDY) –1.1 11.6 10.3 0.35 787-22572
stake in Europe, as well as in China—has returned Cohen & Steers Realty Shares (CSRSX) –3.5 3.5 8.0 0.96 437-9912
SPDR Dow Jones Intl. Real Estate (RWX) 1.0 0.8 0.9 0.59 787-22572
more than 25% year to date, thanks to double-digit iShares N.American Nat. Resources (IGE) –3.9 3.5 -8.8 0.48 474-2737
gains for European equities. —TAYLOR TEPPER Foreign
Oakmark International (OAKIX) 7.0 33.5 3.8 1.05 625-6275
Vanguard International Growth (VWIGX) 6.8 25.9 5.0 0.46 662-7447
,3;8397)3966)'311)2()(0-78 T. Rowe Price Emerging Markets (PRMSX) 5.6 29.9 4.9 1.26 638-5660
Bond
Building-block funds: For broad exposure to core asset classes Dodge & Cox Income (DODIX) 0.7 4.5 3.0 0.43 621-3979
Custom funds: Specialized investments that can tilt your strategy Fidelity Total Bond (FTBFX) 0.5 3.9 3.2 0.45 544-8544
One-decision funds: If you want stocks and bonds in one portfolio Vanguard Short-Term Inv. Grade (VFSTX) 0.3 2.0 1.9 0.20 662-7447
iShares iBoxx $ Inv. Grade Corp.(LQD) 1.2 3.7 3.6 0.15 474-2737
Loomis Sayles Bond (LSBRX) 0.6 8.5 1.5 0.89 633-3330
Fidelity High Income (SPHIX) 1.3 14.5 4.2 0.73 544-8544
TOTAL RETURN
Vanguard Intm.-Term Tax-Ex. (VWITX) 0.6 0.1 2.8 0.19 662-7447
EXPENSES PHONE
(AS % OF NUMBER Vanguard Limited-Term Tax-Ex. (VMLTX) 0.4 0.6 1.2 0.19 662-7447
O
ONE
E ONE THREE ASSETS) (800)
FUND (TICKER) MONTH
MO H YEAR YEARS 1 Templeton Global Bond (TPINX)3 –1.2 10.8 1.5 0.93 632-2301
Fidelity New Markets Income (FNMIX) 1.1 13.6 6.1 0.86 544-8544
BUILDING-BLOCK FUNDS
Large-Cap ONE-DECISION FUNDS
Schwab S&P 500 Index (SWPPX) 0.6% % 17.5% 10.1% 0.03 435-4000 Balanced
Schwab Total Stock Market Index (SWTSX) 0 0.4 18.2 9.7 0.03 435-4000 Fidelity Balanced (FBALX) 0.5 12.9 7.2 0.55 544-8544
Midcap/Small-Cap Fidelity Global Balanced (FGBLX) 2.9 6.8 2.1 1.02 544-8544
iShares Core S&P Mid-Cap (IJH) –0.3 3 19.5 9.4 0.07 474-2737 Vanguard Wellington (VWELX) 0.9 12.6 7.0 0.26 662-7447
iShares Core S&P Small Cap (IJR) ––0.3 23.9 10.2 0.07 474-2737 Target Date
Foreign T. Row
Rowee Pric
Pricee Reti
Retirem
rement
ent se
serie
riess (STO
(STOCK/
CK/BON
BOND D ALLOC
ALLOCATI
ATION
ONN)
Fidelity Spartan International (FSIIX) 5.3
53 17.4 1.5 0.19 544-8544 Example: 2005 Fund (45%/55%)(TRRFX) 1.1 8.6 4.1 0.60 638-5660
Vanguard Total Intl. Stock (VGTSX) 4.1
.1 18.9 1.7 0.18 662-7447 Example: 2020 Fund (68%/32%)(TRRBX) 1.7 12.8 5.7 0.66 638-5660
Vanguard FTSEA/W ex-U.S. Small (VFSVX) 3.535 16.0 2.7 0.27 662-7447 Vanguard Target Retirement series
Vanguard Emerging Markets (VEIEX) 1.9 25.4 1.2 0.32 662-7447 Example: 2025 Fund (70%/30%) (VTTVX) 1.3 12.3 5.7 0.14 662-7447
Specialty Example: 2035 Fund (84%/16%) (VTTHX) 1.6 15.0 6.3 0.15 662-7447
Vanguard REIT Index Investor (VGSIX) –4.8 1.4 7.2 0.26 662-7447
Bond
Vanguard Total Bond Market (VBMFX) 0
0.5 1.1 2.4 0.15 662-7447 NOTES: As of May 17, 2017. Load funds are included for those who prefer
to use a broker. 1Annualized. 2Phone numbers are 866. 34.25% sales load.
Vanguard Short-Term Bond (VBISX) 0
0.22 0.9 1.2 0.15 662-7447 SOURCES: Lipper, New York, 877-955-4773; the fund companies

 M O N E Y. C O M J U LY 2 0 1 7
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MY MONEY STORY

Kornelis’s college
jazz teacher,
Dan Bukvich.

;LEX1] 1YWMG8IEGLIV8EYKLX
1I%FSYX1SRI]
BY C H R I S KO R N E L I S

AFTER I DELIVERED MY MOST RECENT BOOK, a former our intellect. I’ll never forget his most famous
colleague asked if I’d be interested in filling in as lesson, the one they’ll likely chisel onto his
a reporter at my local newspaper. Assignments tombstone: “If you can’t get out of it, get into it.”
included writing about puppies being reunited It was more than how to sing the correct
with their mother—literally a fluff piece—and it bass part to the Beach Boys’ “In My Room.”
wasn’t how I wanted to spend my time. He knew that few of his charges would be
It’s not that I felt above it. But it wasn’t part singing for a living, so he taught something
of the plan. I was an author now. But I thought bigger. During those semesters and summers,
about the regular paychecks, my nonexistent over years in school, he was teaching us how
savings account, and the family of four I to be professionals and, for lack of a better
support. And I started thinking about a lesson word, adults.
I had learned decades ago as a young musician: He understood that every job—whether it’s
If you don’t want to do it, you probably should. singing in a band or pushing paper behind a
When I entered my freshman year at the desk—comes with mundanities and frustrations.
University of Idaho, I started taking music But they are inescapable. Since they cannot be

C O U R T E S Y O F U N I V E R S I T Y O F I D A H O ; P H OT O F R A M E : G E T T Y I M A G E S
classes from the university’s director of jazz avoided, he taught us to embrace them.
choir, Dan Bukvich. The classes had fun titles Now, when classic office minutiae like assets,
like DancersDrummersDreamers. But it didn’t deliverables, and conference rooms present
matter what class Bukvich taught—he was themselves to me, I like to think Bukvich is the
always teaching the same thing. angel on my shoulder with the perfect backbeat,
“Don’t let someone else ruin your experi- reminding me not to waste these prescribed
ence!” he’d holler. (In a choir with 200 voices, breaks, but to mine them for inspiration and
there was ample opportunity to point fingers.) some much-needed extra cash.
“If you don’t want to do it, you probably should,” There have been other “interruptions” to
he’d say when the suggestion came up during my “plan,” of course. I often get into them for
music theory that copying rhythms was beneath the money, but I get far more out of them.

Chris Kornelis is a writer living in Seattle. His latest book is Rocking Fatherhood: The Dad-to-Be’s Guide to Staying Cool.

Do you have a story about money you’d like to share?


 M O N E Y. C O M J U LY 2 0 1 7 Write to us at letters@moneymail.com.
Did yoou know there’s a highly contagious disease that could be especially scary for your new grandchild if you or a family
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©2017 GSK group of companies.


All rights reserved. Printed in USA. 817215R0 March 2017