The Way We’re Working Isn’t Working

No matter how much we produce today — whether it’s measured in dollars or sales or goods or widgets — it’s never enough. We’re so busy trying to keep up that we stop noticing we’re in a race we can never win. From The Way We’re Working Isn’t Working: The Four Forgotten Needs That Energize Great Performance, by Tony Schwartz, Jean Gomes, and Catherine McCarthy, Ph.D.

The way we’re working isn’t working.

The defining ethic in the modern workplace is more, bigger, faster. More information than ever is available to us, and the speed of every transaction has increased exponentially, prompting a sense of permanent urgency and endless distraction. We have more customers and clients to please, more e-mails to answer, more phone calls to return, more tasks to juggle, more meetings to attend, more places to go, and more hours we feel we must work to avoid falling further behind.

The technologies that make instant communication possible anywhere, at any time, speed up decision making, create efficiencies, and fuel a truly global marketplace. But too much of a good thing eventually becomes a bad thing. Left unmanaged and unregulated, these same technologies have the potential to overwhelm us. The relentless urgency that characterizes most corporate cultures undermines creativity, quality, engagement, thoughtful deliberation, and, ultimately, performance.

No matter how much value we produce today — whether it’s measured in dollars or sales or goods or widgets — it’s never enough. We run faster, stretch out our arms further, and stay at work longer and later. We’re so busy trying to keep up that we stop noticing we’re in a Sisyphean race we can never win.

All this furious activity exacts a series of silent costs: less capacity for focused attention, less time for any given task, and less opportunity to think reflectively and long term. When we finally do get home at night, we have less energy for our families, less time to wind down and relax, and fewer hours to sleep. We return to work each morning feeling less rested, less than fully engaged, and less able to focus. It’s a vicious cycle that feeds on itself. Even for those who still manage to perform at high levels, there is a cost in overall satisfaction and fulfillment. The ethic of more, bigger, faster generates value that is narrow, shallow, and short term. More and more, paradoxically, leads to less and less.

The consulting firm Towers Perrin’s most recent global workforce study bears this out. Conducted in 2007–2008, before the worldwide recession, it looked at some 90,000 employees in eighteen countries. Only 20 percent of them felt fully engaged, meaning that they go above and beyond what’s required of them because they have a sense of purpose and passion about what they’re doing. Forty percent were “enrolled,” meaning capable but not fully committed, and 38 percent were disenchanted or disengaged.

All of that translated directly to the bottom line. The companies with the most engaged employees reported a 19 percent increase in operating income and a 28 percent growth in earnings per share. Those with the lowest levels of engagement had a 32 percent decline in operating income, and their earnings dropped more than 11 percent. In the companies with the most engaged employees, 90 percent of the employees had no plans to leave. In those with the least engaged, 50 percent were considering leaving. More than a hundred studies have demonstrated some correlation between employee engagement and business performance.

Think for a moment about your own experience at work.

How truly engaged are you? What’s the cost to you of the way you’re working? What’s the impact on those you supervise and those you love?

What will the accumulated toll be in ten years if you’re still making the same choices?

The way we’re working isn’t working in our own lives, for the people we lead and manage, and for the organizations in which we work. We’re guided by a fatal assumption that the best way to get more done is to work longer and more continuously. But the more hours we work and the longer we go without real renewal, the more we begin to default, reflexively, into behaviors that reduce our own effectiveness — impatience, frustration, distraction, and disengagement — and take a pernicious toll on others.

The real issue is not the number of hours we sit behind a desk but the energy we bring to the work we do and the value we generate as a result. A growing body of research suggests that we’re most productive when we move between periods of high focus and intermittent rest. Instead, we live in a gray zone, constantly juggling activities but rarely fully engaging in any of them — or fully disengaging from any of them. The consequence is that we settle for a pale version of the possible.

How can such a counterproductive way of working persist?

The answer is grounded in a simple assumption, deeply embedded in organizational life and in our own belief systems. It’s that human beings operate most productively in the same one-dimensional way computers do: continuously, at high speeds, for long periods of time, running multiple programs at the same time. Far too many of us have unwittingly bought into this myth, a kind of Stockholm syndrome, dutifully trying to mimic the machines we’re meant to run, so they end up running us.

The limitation of even the highest-end computer is that it inexorably depreciates in value over time. Unlike computers, human beings have the potential to grow and develop, to increase our depth, complexity and capacity over time. To make that possible, we must manage ourselves far more skillfully than we do now.

Our most basic survival need is to spend and renew our energy. We’re hardwired to make waves — to be alert during the day and to sleep at night, and to work at high intensity for limited periods of time — but we lead increasingly linear lives. By putting in long, continuous hours, we expend too much mental and emotional energy without sufficient intermittent renewal. It’s not just rejuvenation we sacrifice along the way but also the unique benefits we can accrue during periods of rest and renewal, including creative breakthroughs, a broader perspective, the opportunity to think more reflectively and long term, and sufficient time to metabolize experiences. Conversely, by living mostly desk-bound sedentary lives, we expend too little physical energy and grow progressively weaker. Inactivity takes a toll not just on our bodies, but also on how we feel and how we think.


You Have Breast Cancer: How Long Can You Afford to Be Away From Work?

Breast cancer affects not just your health, but your bank account, too. Dede Bonner, Ph.D. and author of The 10 Best Questions for Surviving Breast Cancer: The Script You Need to Take Control of Your Health — poses the questions that will help you determine if and for how long you should take a leave of absence.

Do I want to take leave from work, or would I be happier if I continued working? What leave, medical benefits, and schedule flexibility can I reasonably expect from my employer? How many days can I afford to be out?

You must decide soon about taking time off from work during your breast cancer treatments. Your diagnosis, treatment plan, and doctors’ advice will largely determine how much time away from work you’ll need (if any).

Beyond your doctors’ recommendations, you are likely to have some options about how you want to spend your time. Some women choose to devote all their energies to healing. Going back to work may be a difficult step when you contemplate your normal work-related stresses on top of treatment-related side effects and dealing with nosy coworkers. Others prefer to work as a good distraction. Your job may give you something to think about besides your health, make you feel like you have more control over your life, and reconnect you with people who care about you. How the treatments are affecting you will also impact your decision.

For some, the need to keep their incomes drives all else. You may be compelled to work in order not to lose revenue. Another consideration is your partner’s or loved one’s lost income while he or she is caring for you and taking you to treatment appointments.

If you decide to take time off during the course of your treatment, remember that the U.S. Family and Medical Leave Act allows most workers twelve weeks of leave each year for a serious illness such as breast cancer. You don’t necessarily have to take all your leave at once, and you may prefer to dole it out to coincide with your scheduled treatments and posttreatment recovery times.

You can’t be discriminated against because of your illness.
Most employees are protected by the Americans with Disabilities Act (ADA). Cancer is considered a disability for the purposes of this law. This means that your employer can’t treat you any differently from other employees of your company and must make reasonable accommodations if needed. It’s comforting to know that legally you can’t lose your job because of your absence or illness.

Dede Bonner, Ph.D., author of 10 Best Questions for Surviving Breast Cancer: The Script You Need to Take Control of Your Health (Copyright © 2008 by 10 Best Questions, LLC) and a.k.a. “the Question Doctor,” is on the graduate business faculties of The George Washington University and Curtin University in Perth, Western Australia.

Read the Introduction to 10 Best Questions for Surviving Breast Cancer

More books by Dede Bonner

Browse more books about Healthy Living

Is Busy Better?

Many of us will feel exhilarated when we retire — at least for a while. Bernice Bratter and Helen Dennis, authors of Project Renewment: The First Retirement Model for Career Women, pose five questions to help you figure out how to make yours a time of renewal.

“In the first few months of my retirement I was so busy I didn’t know how I ever had time to work. The first thing I did was to take everything that was broken out of my storage cupboard and have it repaired. That included the vacuum, cracked porcelain plate and the bent silver spoon. I cleaned and organized my house. I took clothes to the tailors, shoes to the shoemaker and I had the house painted and windows washed. I even tackled the garage. I went on a trip to India and had breakfasts, lunches and dinners with old friends. I took yoga classes and long walks in the middle of the day. I read books and took computer lessons, honing my skills since I no longer had an assistant. My biggest luxury was reading the morning newspaper — in the morning.

“After everything got fixed and I grew tired of eating at restaurants every day, life began to feel superficial. I panicked when I realized that I was busy — and bored. I didn’t miss work, but I missed the mental stimulation, camaraderie and challenges that I had while working. I was scared that I could never find these things again in retirement.”

Clearly something was missing.

The early days of retirement are filled with choices: a time to catch up with friends, take the extra yoga and Pilates classes and start (and complete) the never-ending to-do lists. There is even a choice to do nothing. We initially may feel liberated and relieved, knowing we now have the time to do all of those things for which there was no time during our working years. This glorious honeymoon can last a lifetime or disappear and reappear many times.

At one time, retirement was considered the most stable period of life; today it can be one of the most dynamic life stages. And change is an integral part of it. Since retirement is an opportunity that can last as long as thirty years, just being busy for that amount of time may not be sufficient.

One of the unsettling retirement experiences of successful women is the prospect of an empty calendar. We are used to filling every minute, knowing where we are supposed to be, what projects are due and what clients to meet. Now the calendar is empty. If not, it is filled with different kinds of appointments — the doctor, mechanic, hairstylist and trainer. One woman commented, “Sometimes I write my own name on my calendar so I think I’m busy.

“There’s part of me that finds the prospect of not having something to do all day–every day a delicious concept. And then there’s part of me that is panicky about the idea that I’m not going to have something to do every day, that I am going to get bored, lose my sense of self-worth and not have anything to talk about to people.”

Why do we feel so compelled to be busy? Part of the answer is the Puritan work ethic. The Puritans were members of a group of English Protestants in the seventeenth century who were advocates of strict religious discipline. Their teachings were based on their Bible and emphasized hard work and perfection as necessary for salvation. Pleasure was considered sinful. Puritanism was well received by early capitalists because it created a self-disciplined and hardworking labor force. These values continue to define the American work ethic. American employees often do not take the full amount of paid vacation time because of the stress of returning to work to face a slew of e-mails and a huge to-do list. They also fear their absence will affect their job security. One-quarter of Americans don’t have any paid vacation time, and those who do have fourteen days; the French have thirty-nine days and the Brits twenty-four.

This ethic has formed the framework from which we derive implicit positive rewards as a result of the work we do. We gain a sense of self-respect when we demonstrate initiative, industriousness, productivity and self-discipline, all traits valued in the workplace.

If we are chairing the board of a nonprofit organization, raising a quarter of a million dollars for the art museum or getting up three times a week at 5:00 A.M. to oversee the local soup kitchen, we likely are deriving great meaning from these endeavors. They demonstrate our ability and commitment to achieve and complete tasks.

And by being busy, we are protected from the perception that others may have of us as no longer being able to perform. Keeping busy may give definition to our emerging role, which can be clouded at best. It motivates us to continue contributing to society, families, the arts and the nonprofit world. We try to make this world a better place. The key is to find value in our busyness.

A retired executive director in Project Renewment shared her uneasiness when asked, “What are you doing with yourself these days?” “I would mention so many activities that people would gasp at the number of my commitments. But what I was doing had little or no social value. I felt that others perceived me as being shallow and that my life lacked purpose.”

The American author Barbara Ehrenreich writes that “the secret of the truly successful . . . is that they learned very early in life how not to be busy.” This suggests that life is to be savored and not rushed.

When busyness no longer has meaning, it is time to stop, take stock and figure out what is missing in our lives. The board meetings may become tedious, the book clubs may be getting arduous and the gym may become boring.

Maintaining a busy schedule is not the same as being fulfilled. Being busy without meaning implies that quantity is better than quality. Most of us want that quality of life with activities and relationships that replenish our soul and have personal meaning. Being too busy may prevent our continued growth as suggested by the German classical scholar and philosopher Friedrich Nietzsche. “A man [woman] who is very busy seldom changes his [her] opinions.”

Questions to ask yourself:

  1. How do you feel about unscheduled time?
  2. Assuming you will have fifty unscheduled hours of time per week, what will bring you pleasure and satisfaction?
  3. How would you define a quality activity?
  4. If you want to keep a busy schedule, do you know why?
  5. How do you want to balance your time between leisure and activity?

Bernice Bratter, author of Project Renewment: The First Retirement Model for Career Women (Copyright © 2008 by Bernice Bratter and Helen Dennis, Illustrations copyright © 2008 by Lahni Baruck), is a native Angeleno who graduated from UCLA with a major in psychology. She did graduate work at the Phillips Graduate Institute, where she obtained a master’s degree in social science. She is a licensed marriage and family therapist and has served  as president of the Los Angeles Women’s Foundation, a public foundation dedicated to reshaping the lives of girls and women in Southern California, as well as executive director of the Center for Healthy Aging, a nonprofit interdisciplinary health care organization for older adults and their families. An advocate on aging and women’s issues, she has appeared in front of various government agencies and has lectured and served as a consultant to nonprofit organizations. In 1981 she was a gubernatorial appointee as observer for the State of California to the White House Conference on Aging and is the recipient of numerous awards and commendations including the Santa Monica YWCA Woman of the Year Award as well as the Center for Healthy Aging Community Leader Award. Bernice holds an honorary doctor of law degree from Pepperdine University and has served on the board of directors of Tenet Healthcare. She has appeared on 60 Minutes, 20/20, The Phil Donahue Show and in Hour Detroit magazine. In 1999 she cofounded Project Renewment, which explores the different challenges career women face once they leave the workforce. As cofounder of Project Renewment she continues to meet the demand of women who want to join a Project Renewment group.

Helen Dennis, author of Project Renewment: The First Retirement Model for Career Women (Copyright © 2008 by Bernice Bratter and Helen Dennis, Illustrations copyright © 2008 by Lahni Baruck), is a nationally recognized leader on issues of aging, employment and retirement. She has conducted research on these issues for organizations such as The Conference Board, AARP, UC Berkeley and the U.S. Administration on Aging. Nationally, she has lectured extensively to the business community, professional groups, nonprofit organizations and government agencies. In her consulting practice Helen has worked with more than ten thousand employees planning the nonfinancial aspects of their retirement, including men and women who are senior executives, managers, factory workers and university faculty and staff. She is the editor of two books, Retirement Preparation and Fourteen Steps in Managing an Aging Work Force, and a weekly columnist writing on “Successful Aging” for The Daily Breeze, a MediaNews group newspaper. As a leader, Helen has served as president of three nonprofit organizations and currently serves as chairperson for the American Society on Aging’s Business Forum on Aging and the Healthcare and Elder Law Programs in Southern California. She was appointed as a delegate to the 2005 White House Conference on Aging and serves on the national board of the American Society on Aging. A lecturer for more than twenty years at the University of Southern California’s Andrus Gerontology Center, she has been the recipient of several awards for her teaching effectiveness and contributions to the field of aging. These include the Distinguished Teaching Award from the Association for Gerontology in Higher Education, the Excellence in Teaching Award from the Andrus Associates at the University of Southern California and the Francis Townsend Award in Gerontology from California State University, Long Beach. Her views on age, employment and retirement issues have been quoted by the Wall Street Journal, the Los Angeles Times, the Christian Science Monitor, the Sacramento Bee and others. She has also appeared on 20/20 and national network news programs. As cofounder of Project Renewment, she continues to support the formation of Project Renewment groups and has made numerous national presentations on the challenges and opportunities facing career women in retirement.


Meditations on Money for the Inner Soul: Understand Road Blocks, Karmic Blocks, and How You Manifest Wealth

Break through the illusory nature of wealth and let your soul guide your relationship to money. From Lara Owen, author of Growing Your Inner Light: A Guide to Independent Spiritual Practice.

We live in a time in history in which wealth has taken on a new collective meaning. There are more wealthy people than ever before, and in the collective imagination, we have a newly created vision of a standard of living that we consider our birthright. Credit cards, mortgages, and car loans mean we can experience ourselves as being well-off without it necessarily being based in reality. Whole countries live off debt and fake money. It’s all very confusing when there are still large areas of the world dealing with famine and disease on a scale that is unheard of in what is termed the ”developed” world.

The inequality and illusory nature of wealth are not the only reasons to be wary of its seductions. Even if you thought you were well-off, chances are that whatever wealth you thought you possessed has diminished in recent times. The upheaval in the world’s financial markets has made it only too clear that worshipping at the altar of materialism is a risky business.

So how do we navigate this treacherous territory at a time when material greed and expectation have reached heights that Socrates probably never even imagined? At a time in which global finances are in such rapid flux that no one can predict what will happen next?

First of all, stay close to yourself. Listen to your dreams and imaginings, and your inner promptings. Take yourself seriously. The soul will not lead you in the wrong direction if you pay attention. Learn to distinguish between the inner soul voice and the conditioned fantasy voice, and pay close attention to how manifestation functions for you.

The following are some questions that will help you work through your thoughts about money. Write these in your journal, and take some time to meditate on and write about each one.

  • Where does your money tend to come from? Do you get funds from your family, from your spouse, from hard work, from throwing big parties, from creating works of art?
  • How does money come to you? Does it come in sudden wind-falls or in regular paychecks? Does it come happily or unhappily?
  • What are your open gates for receiving money, and where do you think you might be closed? Visualize the gates through which money comes to you and see why some are closed. Find out what it would take to open them.
  • How does stuff come to you? Is it different from how money comes to you? (Sometimes people have a knack for attracting things over money because they have a negative belief about money itself.)
  • Look for where life is easy for you and see if that lesson can be applied to the realms that are more difficult. For example, if you have easy, plentiful friendships with women, think about working in a field in which women will be your clients or customers.
  • Examine your family of origin issues. Every family has its trips about money. What did you learn about money as a child? If money was lacking, what concepts has that imparted to your thinking? If you were born into a family that had money and that you have inherited, accept this as your fate and use the money to further your soul dream, which will often be philanthropic and/or socially responsible.
  • Look at where you disrespect money and waste it, and clean up your act. Look at your ethics and see if you feel entirely comfortable with all your choices.
  • Add up how much money you spend a year in interest and see what you can do to turn that negative into a positive by earning the money before you spend it.

Gratitude practice is useful in clarifying our relationship with money. Think about all the financial help you have received in your life and give thanks for it. Gratitude blocks can often arise around money because it can be such a charged issue, bringing up issues of entitlement in particular.

If you feel you don’t have as much money as you need, look at what useful function the lack of money might serve for you spiritually. For example, if you tend to be scattered in your thoughts and actions, a lack of money might serve to focus you on what is really necessary. Imagine having all the money you think you need and see how you feel. Within that you may find clues to why you might be blocking yourself from being wealthier.

Practice respect for but also detachment from money. The gods and goddesses of money seem to like us to pay close attention but to also be relaxed. (That applies to just about everything, though, doesn’t it?)

Give space in your perceptions for the possibility that everything right now is absolutely perfect – that the restrictions you experience on the material level are actually part of the divine plan of your soul for your ultimate fulfillment. Do this while vowing to free yourself of karmic restrictions brought about by erroneous thoughts and actions regarding money, work, and material anxiety.

Lara Owen, author of Growing You Inner Light: A Guide to Independent Spiritual Practice (Copyright © 2009 by Lara Owen), has trained with spiritual teachers all over the world and has made a lifelong study of spiritual practice in several traditions. She has a background in Chinese medicine and psychotherapy, and has worked in publishing, television, and documentary film. Lara lectures internationally and maintains a consulting practice working with individuals, groups, and organizations. She is the author of several books on personal and spiritual development, including Love Begins at 40 and the acclaimed Her Blood Is Gold.


Raise Your Paycheck One Negotiation at a Time

Make your pitch for more money or a better title, with tips from The Apprentice‘s Carolyn Kepcher, author of Carolyn 101: Business Lessons from The Apprentice’s Straight Shooter.

Let’s just say that I myself have asked for a raise or promotion both the right way and the wrong way a few times. A few years ago, when I was given the Bedminster golf property to manage in addition to Trump National, I saw it as a reasonable opportunity to ask Donald Trump for a raise. As you can imagine, this is not the easiest thing to get up the gumption to do. And I knew that the cardinal rule in these situations has two important parts:

  1. Correctly anticipate the most likely reaction to your request.
  2. Anticipate your next move.

Donald Trump says that, in this situation, “Timing is everything.” In my case, the timing seemed fine, although in retrospect, I can see that was where I committed my first error. As I tend to do with Mr. Trump, I got straight to the point. I told him I thought I deserved a raise. I didn’t delve into the details, and he didn’t ask. I know some people believe it’s best to put these requests in memo form. Personally, I tend to subscribe to the notion that if you are in line for a raise or a promotion you don’t need four pages citing your accomplishments — all it should take is a verbal reminder of how good you are. If he or she doesn’t know that already, you’ve not been doing a good job of selling yourself to your superior.

I took Mr. Trump’s grunt as an assent that he and I agreed I deserved a raise. But that was only half the battle. For the second phase of my operation, I threw him a curveball without meaning to. Without prompting, I tossed out the number I was looking for. In response, he looked me square in the eye. “Let me think about it,” he replied calmly, “and I’ll get back to you.”

I was totally taken aback. I had been all primed to play the negotiation game. I would go in with a high number, he would come back with a low number, and then we would talk and end up somewhere in the middle.

But I had made, I suddenly realized, a false assumption about how Donald Trump would act. By classifying him in my mind as Mr. Decisive and Mr. Negotiator, I had failed to anticipate the fact that, as Warren Buffett says about investing, “You don’t need to swing at every pitch.” My biggest failure had been to assume that Mr. Trump’s response would be predictable. I should never have expected predictability from Donald Trump.

So I was surprised. And as both a manager and an employee, I hate few things more than surprises. Now I had to do a better job of entering into my boss’s mind. What was Donald Trump doing? What was he thinking? What message was he seeking to convey to me by failing to respond?

What he was doing without really saying so, I decided, was letting me know that he was surprised by the number. He hadn’t been surprised by the request itself, but he had been surprised by its size. Okay, I decided, the right number would have been one that he wouldn’t have had to think so hard about. In fact, by failing to hand him a more reasonable number, I had broken one of my own cardinal rules: I had brought him a problem, not a solution. I had given him a headache as opposed to relieving one. What was Donald Trump’s goal in this negotiation? A number that would make both of us happy.

Carolyn 101: Asking for a raise of more than a small percentage of your base salary is a major step, to be contemplated only if you truly believe your new position requires either significantly more work or that much more responsibility than your present position.

I now had a decision to make. If he didn’t get back to me, I could get back to him. One of my personal guidelines was that no way was I going to lose face with Donald Trump. I wasn’t going to backpedal, at least not to his face. It occurred to me that I had also neglected to realize that while I had been given a promotion, to managing the Bedminster, New Jersey, property in addition to the Briarcliff Manor, New York, property, I hadn’t yet proven myself in the new position. Faulty timing had been my original error, and coming on too strong with the number had simply compounded it.

So what were my options? I had already rejected admitting that I was in the wrong — at least by coming right out and saying so. Mr. Trump had sent me a very important signal by not rejecting my request out of hand. But instead, very deliberately I had to assume, he had said he would think about it. What I could infer from that statement was that he regarded my request not as totally off the wall but rather as premature and overblown, and he wanted me to know it.

For the longest time, I did nothing. For six months, I waited for him to respond. But he didn’t. All right, I said to myself, he is teaching me a lesson, like a Zen master, pointing toward something I need to learn. Or, just possibly, he forgot about it.

I eventually got that raise — it just took me longer than originally anticipated. What it took, in fact, was time. I decided that what I needed to do to demonstrate that I had proven myself as the operator of the additional property was to wait for some profit-and-loss numbers to come in, to justify my own number.

I went in with a new number, lower but not a lot lower than my previous one. I didn’t openly address my performance at Bedminster, because he knew the particulars already. What I did do — very deliberately — was to act as if we were starting this discussion from scratch, and that for the purposes of this meeting, the previous meeting had never happened.

Since I was the one who had made the original error, I took it upon myself to come up with a number that I could feel confident we would both be happy with. The actual request was nothing compared to the preparation that went into it. I made my request. He granted it. From his tone I could tell that he appreciated my revised approach.

Asking for a Raise or Promotion Don’ts

  • Come in after you’ve been working for me for a year and say, “I’ve been here for a year and I deserve a raise.”
  • Come to me with a song and dance about how the competition gets paid more than you do. I once had a secretary tell me, “Carolyn, I’ve being doing a little research, and a lot of executive secretaries are making x, and I’m not there.”

I would reply to both such requests, “Why don’t you think about a few real reasons why you’re deserving of a raise?”

Asking for a Raise or Promotion Dos

  • Make a strong case that you are worth it. Explain in detail to me what your contribution has been to the group’s success. A rising tide lifts all boats, and if you’ve done good for the organization, your boss wants to hear it. As I said before, some people say you should put your case for a raise or promotion into writing, so that your boss can use it as a set of talking points with his or her superiors. In some corporate settings that might be useful, but the day I have to start sending my boss memos telling him or her why I am doing a good job is the day I start sending out résumés myself!
  • When building that case, present me with a plan for your promotion. Once again, do the work yourself. As in “I’ve been doing this job for such-and-such period of time, during which time I have accomplished these particular goals. I see the next reasonable step as tackling these responsibilities in the future, so that we can all accomplish the following objectives.” Show me you’ve thought about where you’re going with the organization.

Carolyn Kepcher, author of Carolyn 101: Business Lessons from The Apprentice’s Straight Shooter (Copyright © 2004 by Carolyn Kepcher), is an Executive Vice President with The Trump Organization and the COO of Trump National Golf Clubs in New York and New Jersey. She has worked for The Trump Organization for nearly ten years and costars with her boss, Donald Trump, on the hit reality television series The Apprentice. She lives with her husband and two children in Ridgefield, Connecticut.



How to Invest in Foreign Currency, Without Leaving the Country

In a global economy, the dollar won’t always be on top. Will your savings be protected when it falls? Where to Put Your Money NOW author Peter Passell highlights three ways to shore up your retirement portfolio with overseas securities.

The very idea of investing in foreign currencies seems exotic and dangerous, an adventure best left to the professionals. But the ongoing integration of the global economy, along with the introduction of inexpensive ways to invest abroad, has radically altered the landscape. Much of what you buy is made in countries with other currencies, so the exchange rate between the dollar and those currencies now directly affects your living standard. Yet, oddly, many investors who are careful to hedge their bets in U.S. securities never think to diversify their portfolios into other major currencies.

There’s an important distinction between investing in foreign stocks and investing in foreign currencies. Foreign stocks do change in value as the exchange rate of the dollar changes. But a whole host of other factors also affect foreign stock prices. By contrast, buying safe bonds with short maturities (thus not subject to much market risk) is a pure currency “play” — a bet that the foreign currency will rise in value against the dollar.

Is there a good reason to bet that the dollar will fall in value? I think so. The dollar is overvalued in the sense that, at the current exchange rate, foreigners buy far less from us than we do from them. So, at present, foreigners (or their governments) must inevitably amass vast quantities of dollars (nearly $800 billion last year). And when (not if ) they get tired of trading their TVs and cars and oil for the chance to buy U.S. Treasury securities, the exchange value of the dollar will fall.

But even if you aren’t as sure as I am that the dollar will eventually tank, it still makes sense to put some of your savings into securities denominated in other currencies. Think of it this way: by keeping all your assets in dollars even though so much of what you buy comes from Asia and Europe, you are effectively betting that the dollar will appreciate.

A decade ago, buying safe, fixed-income securities in other currencies was not practical unless you had a lot of money to invest. Now, options abound.

Foreign Bond Funds
Lots of bond mutual funds buy securities in other countries. Most of them, though, are just looking for higher interest rates and don’t want to risk changes in the value of their assets as exchange rates vary. Luckily for them, there are sophisticated (if not always cheap) ways to neutralize exchange risk. But a few funds deliberately expose their shareholders to the risk of changes in exchange rates — precisely what we want as a means to hedge against the decline of the dollar.

Oppenheimer International Bond Fund. This fund does just what you’d like it to, investing in high-quality bonds denominated in diverse foreign currencies. I have to grit my teeth to recommend it, however, because the fees are so large: first a 4.75 percent sales charge, then close to 1 percent in annual management fees. Buy it only if you plan to hold for several years, if you buy it at all. Visit or call 1-888-470-0862.

American Century International Bond Fund. Much like the Oppenheimer fund; invests in a mix of bonds, mostly in Europe and Japan, with average maturities of about five years. Like Oppenheimer, it charges a 4.75 percent initial sales charge. The one exception: anyone who owned American Century mutual fund shares before September 28, 2007. Visit or call 1-888-345-2071.

Foreign-Currency-Linked Bank CDs
An online bank called the EverBank specializes in federally insured CDs with maturities up to twelve months that rise and fall in value with the exchange rate between the dollar and any of a dozen currencies. Don’t worry about how they get the federal insurance — the whole thing is on the up-and-up. The only drawbacks: relatively low interest rates and a $10,000 minimum investment. Visit or call 1-800-926-4922.

Foreign-Currency Exchange-Traded Funds
There seems to be an exchange-traded fund for every financial index these days, so why not some ETFs that track the exchange rate of the dollar with other currencies and pay a little interest, besides? Why not, indeed.

Sharp-eyed investors will note that some ETFs tracking exchange rates and other indexes are actually ETNs — exchange traded notes. The difference is small, but not insignificant. ETNs are uninsured loans to banks, which give you a little interest plus a link between the value of the principal and a specific financial index. So ETNs should generate slightly higher returns than equivalent ETFs, but shareholders must live with the (small) risk that the bank will default on the loan. In the spirit of conservative investing, I’d generally opt for ETFs unless an ETN offers a unique investment opportunity.

The most popular way to invest in currency ETFs is one currency at a time — which leaves the question of which currencies to buy and in what proportion. If you spend a lot of time (and/or money) in another country — for example, if you regularly visit relatives in Canada — it probably makes sense to buy the relevant single-currency ETF. Otherwise, you may be better off with an ETF that buys a whole package of currencies.

PowerShares DB G10 Currency Harvest Fund
Tracks an index of ten major currencies that is maintained by Deutsche Bank, the giant German bank. High management fees for an ETF. Visit or call 1-800-983-0903.

CurrencyShares ETFs
The investment company Rydex manages individual exchange traded funds for euros, Japanese yen, British pounds, Swedish krona, Swiss francs, Canadian dollars, and Mexican pesos. Management fees aren’t bad. The funds track exchange rates with the dollar quite closely and pay whatever interest they can earn in safe, short-term bonds in the currency. For information, visit

WisdomTree Dreyfus Currency Income ETFs
This brand of ETFs tracks a host of individual currencies — notably currencies of three emerging-market powerhouses, China, India, and Brazil. Visit

Barclays GEMS Asia 8 ETN
This new exchange-traded note tracks an index of the Indonesian rupiah, the Indian rupee, the Philippine peso, the South Korean won, the Thai baht, the Malaysian ringgit, the Taiwanese dollar, and the Chinese yuan. Downside: high management fees, some credit risk. Best information source:

Peter Passell, author of Where to Put Your Money NOW: How to Make Super-Safe Investments and Secure Your Future (Copyright © 2009 by Peter Passell), is a senior fellow at the Milken Institute and the editor of the Milken Institute Review, and has been a columnist for the New York Times. He is the author of many guides to personal finance, including Where to Put Your Money, The Money Manual, and How to Read the Financial Pages.


How to Find the Best Credit Card for You

Whether you’re a sensible card user or a bit dysfunctional when it comes to credit cards, there are steps you can take to get the right card and reduce your costs. Here’s what you need to know, from Get a Financial Life by Beth Kobliner.

Many of us have become addicted to credit cards, and banks have been more than willing to feed this habit by dangling cards in front of everyone old enough to sign his or her name. Today, the card companies are tightening their standards and limiting credit lines as well as hiking interest rates and fees.

Whether you’re a sensible card user or a bit dysfunctional when it comes to credit cards, there are steps you can take to get the right card and reduce your costs. It’s especially important that you know what to do these days; making credit mistakes can cost you a lot of money.

How to Find the Best Card for You
Despite what the ads say, whether your card has a Visa seal or a MasterCard logo is not that important. These are just membership organizations. It’s the banks or company that issues the card — such as Citibank or Bank of America — that matters. Issuers control the rates, fees, and other factors that are critical to you.

Look for a credit card that best suits your own personal spending habits. If you usually carry a balance from month to month, get the lowest interest rate — technically the annual percentage rate or APR — you can. But if you always pay off your balance in full, the rate doesn’t matter. In that case, your priority is to find a card that doesn’t’ charge an annual fee and offers a grace period, the stretch of time lenders give you to pay in full before they start charging interest.

If you pay off your entire balance each month, you may also want to consider special “reward” cards that offer frequent-flyer mileage or credits toward a car for every dollar you charge. If you have a troubled credit history, consider a secured card that requires you have enough money on deposit to cover your charges, and if you have a tough time controlling your credit card spending, you may be better off just sticking with a debit card instead. (More on all these options follows.)

In any case, most of us don’t need more than two credit cards total. Extra cards just make it easy to overspend.

How to Search for a Low-Rate Card
If you find you don’t have enough cash to pay off your credit card balance immediately, you’ll want to get the lowest-rate card possible and transfer your debit to it. The way it generally works is that the new low-rate issuer pays off your other creditor(s) or gives you checks to settle your old accounts. The details vary from card to card, though, so you need to read the fine print (online, generally buried in the “terms and fees” page or in the paperwork the company sends you) before signing up. Some low-rate issuers, for example, offer you a twenty-day grace period before interest acuminates on the money you borrow; others tack on transfers fees (for transferring the debt, naturally) and start charging you interest the moment the checks are cashed by your old cardholders.

There are two kinds of low-rate cards: those with low rates that last and those with temporarily low introductory rates, also known as teasers. Teaser rates can be as low as 0% and last for six months to a year. After that period, the rate increases dramatically. While the low teaser rate lasts, however, it can save you a lot of money. Transferring a $2,000 balance from a 16% card to one with a 0% teaser rate, for example, would save you $156 in interest payments over six months – assuming there are no balance transfer fees, of course.

So if you know for sure that you can pay off the whole card before that teaser rate runs out, you’re okay. The card issuer counts on the fact that you can’t – which is the case for most people. If that’s your situation and you’re super-organized, you may be able to keep your rates low by going “credit card surfing” – transferring your balance to a new teaser-rate card whenever your teaser rate runs out. But you have to surf carefully and that’s very hard to do. Credit card companies have gotten wise to credit card surfers, and most now charge transfer fees, so pay attention. Also, don’t let the low rates seduce you into paying off your debt slowly; try to pay at least as much every month as you would with a higher-rate card.

In a perfect world, you’d be able to find a card with a low rate that lasts. The interests rates on such cards tend to be higher than teaser rates, but are far more stable in the long run. Unfortunately, after the wave of credit card delinquencies in recent years, banks have made it significantly more difficult to qualify for these cards. Here are details on some of the requirements.

  • Solid bill-paying habits. If you’ve been 30 days late paying a credit card bill within the last four years or if you have ever been more than 60 days late, you’ll have a hard time getting a low-rate card.
  • Stability. Some issuers want to see that you’ve been at your job for at least a year. It also helps if you’ve lived in the same apartment or house for a year.
  • Moderate usage. To measure credit card use, issuers look at the ratio of your outstanding debt to your potential debt (that’s the sum of the credit limits on all your cards). This is called your usage ratio. For example, if you have two cards with a combined $1,000 credit limit and outstanding debt of $900, your usage ratio is 90% ($900 divided by $1000). This ratio should not exceed 30%. Borrowers who qualify for the best cards have a ratio of about 7%.
  • Long-term dependability. Lenders favor borrowers who have established a lengthy track record of on-time payment – years and years of good behavior.

Beth Kobliner, the author of Get a Financial Life (Copyright © 1996, 2000, 2009 by Beth Kobliner), is a contributor to the New York Times, and a former staff writer for Money magazine and a financial columnist for Glamour. She’s made multiple appearances on Oprah, Today, CNN, MSNBC, PBS, and NPR as a personal finance expert.



Negotiate Everything!

Learn how to make things happen with these 19 key negotiating strategies from Ivanka Trump, author of The Trump Card: Playing to Win in Work and Life.

Yes, everything.

In my life, this means everything from legal bills to real estate deals in Panama. I’ve been negotiating for as long as I can remember. When I was a student at Choate, I negotiated off-campus privileges to allow me to pursue my modeling career in New York — no easy feat in the traditional boarding school lockdown environment. The school officials were lined up against me on this, but I made a compelling argument. They’d granted similar leave to a student who was training to be an Olympic skier, so I used precedent to my advantage and got what I wanted, which included keeping a car on campus and getting permission to drive down to New York for go-sees. One of the great lessons here was that my parents left it to me to work out the terms. If it was something I wanted, they knew I’d find a way to make it happen.

That’s what you’re doing when you’re banging out an agreement — you’re finding a way to make something happen: a transaction, a contract, an arrangement of some kind or other. The best negotiations result in a deal that benefits both parties, so very often that’s what I try to accomplish. Of course, there are times when you simply want to come out ahead in a deal, but as a guiding principle you’ll want to play it straight, because you never know when you’ll next be seated across the table from the very same person, working on a follow-up transaction. The only time I stray from this philosophy is when I’m angling for some kind of break on a personal level or when the residual relationship is irrelevant. I’ll call to renegotiate my cable bill, for example, if I hear that a friend in my building is paying far less for her service. Here I’m not looking to build or nurture a relationship, the way I would be in a professional negotiation. Instead, I’m looking to get the best price for the same service. I’m offering the cable company the continued privilege of doing business with me, a long-term customer. What I’m seeking is simply the courtesy of being given the same terms it has extended to others — and preferably better.

A lot of people think it’s tacky to negotiate with a vendor. They even have a name for it: haggling. But I don’t see anything wrong with the practice. There’s no negative taint to it; as far as I’m concerned, it’s just business. For the longest time, there were certain settings where negotiating on a sales price was considered unacceptable — in department stores, for example. Yet in marketplaces all around the world, haggling over price is the order of the day. It’s the law of supply and demand. Here in the United States, it’s perfectly acceptable, even expected, for us to negotiate in some circumstances — say, when shopping for a new car. And now, as our economy tightens, we’re seeing this type of negotiation more and more, as consumers are less and less inclined to part with their hard-earned dollars, and sellers are becoming increasingly eager to pry those dollars from customers’ fingers.

My father is well known for his negotiating skills, so I’ve been fortunate enough to learn from the very best. A great many so-called experts have written volumes on the subject, but here are a couple of pointers I’ve picked up along the way.

Know what you want. It’s the number one rule going into any negotiation, yet most people don’t give it a thought. They’ll start in on a series of discussions and figure their objectives will become clear to them in time. If you take this approach you’ll allow the other party to define your goals, instead of the other way around.

Be aware of your physical presence. Size matters. Height, stature, how you carry yourself — they all come into play in a negotiation. In some cases the balance of power is already tilted in one direction before discussions even began. I once read about an executive who had his desk built six inches too high (with a desk chair perched at a corresponding height), placed opposite a visitor’s chair that was six inches too low. I don’t advocate this approach, but I appreciate the message behind it: a show of strength can very often be misinterpreted as…well, strength. The effect in this scenario was to put the executive in a clear position of power and authority over his visitor — to make his opposition feel “dominated” from the outset. Talk about homefield advantage!

Make sure you’re negotiating with the right person. A classic rookie mistake is you make all kinds of progress and give all kinds of concessions, and suddenly you look up and realize the person you’re talking to doesn’t have the authority to finalize your deal. The actual “boss” will then come to the table and continue the negotiation, often without acknowledging the concessions you have already made.

Try to read the people across the table from you. Put yourself in their shoes. Think about what makes sense for them in this deal. Think about the points they might be unwilling to concede — and why.

Understand their personality. Collect as much information as you can about the people you’ll be dealing with. Learn what they’re really looking to get out of the deal, not just what they’re telling you. Discover their true goal, and you’ll be well on your way to yours. The best way to do this is to listen more than you speak. You might discover a concession you can make that will cost you only a little and count for a lot on the other side. Know that some people respond better to a carrot; others, to a stick. Know which type of person you’re dealing with, and alter your style to suit. Be the carrot or be the stick, but get it done.

Be honest with yourself. Know that your personality will sometimes clash with the other party and that it’s okay to separate yourself from the negotiation if you think your involvement is counterproductive. Remember, it’s not about you, it’s about the deal. Bring in another member of your team if you find yourself at an impasse. My partners and I are always sizing up our “competition” on the other side of the table to determine which one of us might be best suited to a particular negotiation.

Understand that people ask for more than they expect to get. Feel free to do the same. My brother Don is always reminding me that you don’t get what you don’t ask for.

Share the logic for your requests. If your fellow negotiator understands your reasoning, and your logic is sound, it makes it more difficult to oppose the request.

Trust, but verify. I’m always prepared to give someone the benefit of the doubt, but I’m careful to back it up during the due diligence process. A certain amount of skepticism is healthy in assessing the merits of any deal.

Resist the temptation to cut the pie in half. Make trades, but don’t think that splitting the difference down the middle is any kind of winning solution to a stalemate. Demonstrate a willingness to do so, and it will lead to bad behavior on the other side. The other party will end up asking for too much in order to anchor you at a higher number, making it difficult for you to bridge the gap in a workable way.

Don’t negotiate by e-mail. It might seem like a convenient timesaver, but it’s a cop-out. In my experience, it actually benefits the weaker party, because that person will be able to avoid a direct confrontation and have more time to craft a strong response to their weak position.

Give to get. The best deal is the one that works out favorably for both parties — except in a pure buy-sell transaction with no likelihood of future deals. I try to keep this in mind when I’m working on a new partnership agreement or some type of joint venture. A lot of times, you’ll continue to work with the other party long after your deal is finalized, so it’s in everyone’s best interest to make sure each side believes it got a good deal. I never mind it when the other guy feels as if he “won” a particular negotiation, because if I’m happy with the outcome and it satisfies my company’s goals, I’ll know it means that I won as well.

Perception is more important than reality. If someone perceives something to be true, it is more important than if it is in fact true. Let the other guy think what he wants. This doesn’t mean you should be duplicitous or deceitful, but don’t go out of your way to correct a false assumption if it plays to your advantage.

Put all your big issues on the table. Right away, if you can. The longer you wait to show your hand, the fewer cards you’ll have to play.

Make sure your concessions are acknowledged. Even if they’re relatively small. It’ll help your case later on if the other guys feel as if they’ve won a point or two.

Use your leverage. I’m not afraid to use my celebrity to my advantage in negotiations. Or my connections. Very often, when I’m trying to seal a favorable deal, I’ll invite a potential partner to one of our country clubs for a friendly round of golf. Sometimes the smallest “sweetener” can produce the biggest results; it softens the other guy up and puts him in a position to want to respond favorably to me and my terms.

Be prepared. The Boy Scouts know what they’re doing. Do your homework, and come to the table armed with research, backstory, and whatever other information you can find. The more you know, the stronger your position. It’s tough to argue with someone who can back up her assertions with a rational, knowledgeable argument.

Know when to walk away. Some of the best deals I ever negotiated are the ones that never came to fruition. Lately, I’ve been very fortunate to have walked away from several top-of-the-market deals that just didn’t make sense for us at the time. That they would make even less sense for us now is a victory of a kind. One thing I always try to maintain is what I call my “walk-away power.” Let it be known that you’re perfectly willing to let a deal go if you can’t make it work. If the other guy thinks you’re forced by circumstances to do a deal, he’ll have an advantage.

Don’t allow negotiations to drag on too long. Many a deal dies under its own weight. It still might be a good deal all around, but human nature gets in the way. People lose their passion for a transaction that never quite reaches its conclusion, especially entrepreneurial types, if they start to think you want to beat them up on every nonsubstantive issue.

Ivanka Maria Trump, author of The Trump Card: Playing to Win in Work and Life (Copyright © 2009 by Ivanka Trump), is a businesswoman, former fashion model, and the daughter of Ivana and Donald Trump. She joined The Trump Organization in 2005 and is currently vice president of real estate development and acquisitions. In addition, she joined forces with Dynamic Diamond Corp to design and introduce a line of jewelry, The Ivanka Trump Collection. She is a boardroom judge on the hit show The Apprentice. Ivanka received her BA in real estate from the Wharton School of Finance at the University of Pennsylvania, graduating summa cum laude.



Fixed Income Annuities, a Worry-Free or Risk-Filled Ride?

Straight-shooting personal finance author Peter Passell demystifies guaranteed payout plans — and the insurance agents who sell them — in his latest book, Where to Put Your Money NOW: How to Make Super-Safe Investments and Secure Your Future.

Annuities are contracts that assure you a series of payments at specified dates in the future. The classic annuity contract designed to minimize the investor’s risk is an old-fashioned “defined-benefit” pension plan from an employer, in which you get a monthly check in a fixed amount until you (and usually your spouse) die. The ultimate annuity, one could argue, is Social Security. It pays every month for as long as you live and adjusts the payout to the cost of living. Social Security is, of course, backed by the commitment of Congress to deliver on the deal.

Annuities sold to individuals by insurance companies can, in theory, be the answer to a lot of the worries of conservative investors. In the simplest form, they work like pension plans, guaranteeing a fixed monthly payment for life. Lots of other investments provide reliable periodic payments — think of a U.S. Treasury bond with a thirty-year term, which delivers interest every six months for thirty years, then returns the principal. But few investments other than annuities can guarantee that you won’t outlive your savings, and few allow you to spend the principal along the way.

Using annuities to guarantee a predictable income in retirement has major problems, however. First, the idea of the annuity has strayed far from the simple pension-like contract; with all the bells and whistles that sellers add, the typical annuity contract is hard to understand. Since no two annuity contracts are alike, it is also difficult to comparison shop. Second, annuities are traditionally sold the way life insurance is sold: an agent spends hours or days with the client, working as hard as possible to sell the deal that generates the fattest commissions. Few of us are immune to this sort of salesmanship, thus few of us are likely to opt for the objectively best deal.

Third, changes in the tax laws several decades ago changed the focus of annuities from relatively simple, pension-like contracts to tax-sheltered savings accounts called deferred annuities that allow you to use the proceeds to buy a real annuity later on. The resulting contracts can look good on first glance, but almost always have drawbacks that make them less flexible and less rewarding than alternative, equally conservative investments.

Let’s start by getting off the table those tax-sheltered savings accounts that morph into annuities. With a deferred annuity, you plunk down a wad of money, the money earns income either at a fixed, CD-like rate or at a return keyed to the insurance company’s returns on a specified investment portfolio. Then, years down the road, you have the option of taking out the proceeds and paying the taxes on the earnings (which have been deferred), or trading the accumulated cash for an immediate fixed annuity that pays out like a pension. The sellers of deferred annuities generally stress the tax-sheltered savings rather than the annuity features because few buyers ever trade in their accounts for true annuities.

Still, what’s wrong with the concept of a deferred annuity? The devil is in the details. First, deferred annuities are illiquid. The insurance company sponsor almost always penalizes withdrawals before the five- or six-year mark. The IRS exacts its own (10 percent) penalty if you withdraw any cash before you are 59½. Second, deferred annuities are expensive: the insurance company sponsor typically charges fat fees to “manage” the account.

More important, the gimmick that made deferred annuities so attractive when they were invented — the ability to defer taxes on investment income — has been overshadowed by tax-sheltered individual retirement accounts (IRAs) and employer-sponsored 401(k) retirement accounts. With these, you get a tax break on contributions to the account, still get to defer taxes on income earned within the account, and generally pay far smaller fees. The bottom line: don’t even consider deferred annuities as a means of saving for retirement unless you’ve maxed out your contributions to your IRA and/or 401(k).

That still leaves ‘immediate” annuities, the classic annuity contract, to consider. On the plus side, they offer a certainty about retirement income that other investments can’t match. On the minus side, the contracts are inflexible, and the returns to your investment are apt to be quite low because somebody has to pay the salesman for his considerable efforts.

An annuity is, in effect, a bet about when you’ll die. Most of the people who buy annuities are healthy and expect to live a long time. The insurance companies understand this and set annuity payout terms accordingly. Thus annuities are generally a bad deal for people who don’t expect to live as long as their contemporaries.

If you do value the pension-like properties of annuities enough to invest in one, the trick is (a) to deal only with an insurance company that has the financial cojones to make good on its side of the bargain far into the future, and (b) to get the most for your money by shopping around.

The former task is relatively easy. Don’t be entirely put off by the collapse of AIG, America’s largest insurance company, in the financial meltdown. The companies that actually guarantee the annuity contracts are state-regulated subsidiaries of larger companies, and they are under government orders to behave far more conservatively with their reserves. Even AIG’s annuity subsidiary is generally considered solid.

Note, too, that state insurance commissions maintain reserve funds to meet the obligations of insolvent insurance companies in their jurisdictions. State-by-state information about insurance regulation is available from individual state Web sites. All of these sites are accessible through a site run by the National Association of Insurance Commissioners.

Another independent source on the quality of the insurance companies behind annuities is the credit rating agency A.M. Best, which, incidentally, came out of the mortgage-backed securities ratings scandals unscathed. A.M. Best provides ratings information online at no charge, provided you fill out a “membership” form. Visit for the particulars. When you go shopping for an annuity, consider only companies with the two highest rankings, A++ and A+.

As noted earlier, comparison shopping for immediate fixed annuities is difficult. But a few guidelines will help:

  • Avoid annuities that charge up-front fees or “loads.” In theory, they may be as good a deal as annuities that collect all of their fees annually. But loads are too often a sign that the insurer is relying heavily on its commission- based sales force, rather than the underlying quality of its financial products, to sell annuities.
  • Keep it simple. Like new cars, annuities come with all sorts of optional extras—in particular, guarantees that some or all of the investment will be returned to the heirs if the annuity-holder dies young. But there’s never a free lunch. Such bells and whistles make it (even more) difficult to compare annuities. Besides, it is practically impossible to assess the value of such features.
  • Focus on insurers affiliated with investment firms that are generally inclined to compete for business on the cost of services rather than on the charm of their sales force (see below).
  • After finding the annuity that pays the most, perform at least one reality check. Could you generate almost as much income from interest payments on, say, a newly issued U.S. Treasury bond and still have the principal left over after thirty years? If so, the annuity plainly isn’t worth it.

There is no substitute for comparison shopping, but four companies are a good place to start because they have both strong financial ratings and reputations for treating consumers fairly:

The primary business of this gigantic organization is to manage pensions (annuities) for college teachers. But it will sell annuities to anybody. Visit

The gold standard among full-service investment firms, known for low-fee financial products. The company sells immediate annuities through the Vanguard Lifetime Income Program. Visit or call the annuity line at 1-800-523-0352.

The chief competitor to Vanguard in the low-cost, full service investment business. Visit or call 1-800-345-1388.

This company provides excellent financial services at good prices—but only to military personnel (active or retired) and their families (including grown children). Visit or call 1-800-531-8722.

Peter Passell, author of Where to Put Your Money NOW: How to Make Super-Safe Investments and Secure Your Future (Copyright © 2009 by Peter Passell), is a senior fellow at the Milken Institute and the editor of the Milken Institute Review, and has been a columnist for the New York Times. He is the author of many guides to personal finance, including Where to Put Your Money, The Money Manual, and How to Read the Financial Pages.


When to Buy a Hot Stock

If a stock trend is already obvious can you still make a profit? Yes, says former AOL finance editor Hilary Kramer. Here, she shares key strategies for riding a stock wave and jumping off on top. From her book Ahead of the Curve: Nine Simple Ways to Create Wealth by Spotting Stock Trends

We’re all familiar with the “looks too good to be true” phenomenon — and most of us are wary enough not to get burned by it. The No Money Down mortgage! The You Have Won a Free Trip to the Bahamas! postcard. Clearly, there is a catch, right? We read the fine print, and more times than not, we find we’re correct. Maybe the hitch is that there is an absurd interest rate on the mortgage, or the Bahamas trip is free — once you’ve put yourself on a mailing list and then been chosen from millions out of a huge hat. No question, there is a good reason to be suspicious of things that must have a catch.

It’s not any different in investing. Hype over a stock gets built up, and the careful investor questions if something that obvious could possibly be a good value. When the tech craze was in full force, people were singing the praises of companies like, an online community, or, which proposed an entire new, internet-only currency. If I had been a lemming and followed the herd without doing my homework, I might have jumped in and bought shares of after its extraordinary IPO, which opened at $9 and was over $63 on its first day of trading. It never went much higher, and in less than three years the stock was worth 14 cents. If I’d invested after that stellar first day, I would have lost quite a bit of money. Of course, I never would have had a chance to invest in Flooz, as it went belly-up before making it to an IPO. I still find myself chuckling over some of the crazy ideas from the late 1990s dot-com craze.

Or, back in early 2000, everyone was eating Krispy Kreme doughnuts and the stock was at $50. It seemed like Krispy Kreme was some big secret, and if you were in on it, that made you hip and cool. But what was the real trend here? This was a faddish brand, more than anything (coupled with a good excuse to eat a doughnut and feel hip!). Then Krispy Kreme became overexposed, sold in grocery stores and, even worse, at the highway convenience stores. Quickly the brand lost its luster, the sense that these were special food items, rare and cool as albino elephants. At the same time, the Atkins diet (another fad, as most diets are) said no to carbs, and within eighteen months Krispy Kreme had dropped to $10.

Hype can be infectious. Once you get the bug, it can cloud your judgment. But sometimes a spade is indeed a spade. In the world of trends, we like to think that the first person to identify the trend is the real winner. But I’ve found, more times than not, that when a trend is lasting and strong, getting in on the game a bit later isn’t going to hurt you. Yes, the payout might be greater for the first spotter of a trend, but a trend rider who rides the wave a bit later can still make out just fine. If you had bought during its IPO in August 2004 at $85, you would have done better than had you invested in the company four months later, at $180. But two years later, with Google’s stock soaring at $468, you would have been a winner either way. Bottom line: just because others are already talking about a stock, don’t assume that it isn’t a good investment anymore.

I like to say that if there is a sound explanation for the excitement, don’t shy away from the investment. Once again, using Google as an example, everyone was buzzing about Google when it was about to go public in 2004. It offered a service that couldn’t be beaten. How many people did you know who used Google as their home page? It was the great “discovery” that had already been discovered, and everyone wanted to turn their friends, family, and coworkers on to it. This clearly wasn’t a product that would disappear — and it was growing and getting more sophisticated by the day.

But it also clearly was already known by everyone and their mother, and people worried that it was another example of 1990s tech hype. Many people I know hesitated to invest in the IPO for that reason. They ignored what they saw with their own eyes and heard with their own ears — the obvious fact that Google was providing a superior service. To wit, this company was clearly flexible, adaptable, and eminently creative, but many investors feared another burst bubble, and as a result they didn’t jump on the IPO. If they had bought 10 shares then, for $850, as of early 2007 their investment would be worth more than $4,500.

As always, it’s important to do your research when a company seems hyped, discovered, and obvious, to make sure there is evidence of a solid trend wave to ride. But acting on valid hype is a sound trends strategy. These trends won’t generally yield blockbuster results unless you’re in on them early enough, or unless you play the Six Degrees game and jump on a tangentially related trend. But they will yield results all the same.

When investing in companies getting lots of hype, a key assessment you must make is to evaluate whether the buzz indicates a fad or a longer-term trend. If I had a dime for every fad that I’ve observed build to a frenzied crescendo, only to fizzle out within months, I’d be rich just from that. Look at kids’ products, for instance. Gummy bracelets were a fad in the ’80s, Pokemon in the ’90s. And a fad today, at the time of writing this book, is Bratz dolls. How do you tell the difference? This is tricky, but I can offer some good rules of thumb. One indicator is that fads often involve promises that are too good to be true, or some extreme change in taste or behavior. Trends, by contrast, tend to be related to more plausible fundamental changes in the way we or companies operate. Trends therefore tend to spread out into a broader range of products and services. For example, the organic trend has been powerful enough to cause biotech companies like Monsanto to change their marketing, and it’s spawned an increasing array of foods and stores that cater specifically to this demand. Both the Atkins diet and organics were premised on helping us live better, but one had staying power while the other was unrealistic for us to stick to over time. In assessing a potential trend, focus on determining if it’s likely to stick in our culture for a long or a short time. If you think it’s likely to be popular for only a short time, it’s probably a fad. A diet, a fashion, a way of thinking that isn’t grounded in anything meaningful, lasting, or sustainable — these are usually indicators of fads. I mean, how many of us really believed we could live the rest of our lives without eating pasta and bread on a regular basis?

Another good rule of thumb is the pervasiveness of an apparent trend. If the buzz about it is out of New York or Los Angeles, but no one in the Midwest has even heard about it, it may be too early in the trend for most investors or possibly just a flash in the pan. Lasting trends are widespread. Before Google’s IPO, it wasn’t just techies in Silicon Valley using the search engine for their web queries; there were plenty of people using it in Nebraska as well.

What if, in doing your research, you determine that the buzz is misguided? In other words, if you identify that the hype is over a company or a trend that simply doesn’t have lasting power? There may still be good money to be made by investing in that trend. Both fads and trends can be exploited to make a profit — you just need to be careful about evaluating and closely monitoring which you’re dealing with. The long-term trend you ride for the long haul, the fad you get in and out of quickly. During the Atkins craze, short-term investments in meat suppliers, for example, probably wouldn’t have been a terrible idea, provided the companies had solid fundamentals.

Investing in a fad is a riskier investment that takes that much more careful monitoring, because it involves your buying and holding a stock for the very short term, and jumping off before others figure out that the trend or company is overhyped. If you’re going to invest in fads, make sure you are watching the clock — and get out in time in order to make, not lose, money.

Hilary Kramer, a global investment specialist and author of Ahead of the Curve: Nine Simple Ways to Create Wealth by Spotting Stock Trends (Copyright © 2007 by Hilary Kramer), is the former Finance Editor of AOL and also serves as the AOL Money Coach. Her expertise in investing spans more than twenty years of experience in equity research, asset allocation, and portfolio management. She graduated from the Wharton School with an MBA, and within a decade she was recognized as one of the best equity investors on Wall Street and had amassed a personal fortune of more than $10 million. She has since then devoted her energies to helping individual investors apply the simple secrets that she used to bring her wealth and freedom from financial worries. She appears regularly as a commentator on the Nightly Business Report on PBS and has provided market commentary to The Wall Street Journal, Fox News Channel, ABC, Bloomberg, and CNBC, among others. Hilary also appears daily on the nationally syndicated radio show Doug Stephan’s Good Day. She has held directorships in both NYSE- and NASDAQ-traded companies and, from 1994 to 2002, was the senior managing director of a $5.2 billion global investment fund with both private equity and publicly traded securities.



Are You Financially Compatible? A Quiz on Love and Money

Disagreements about how to earn, spend or save money can be almost impossible to reconcile. In the quiz below, author Alvin Hall gives couples a head start on discussing differences now. From Your Money or Your Life: A Practical Guide to Managing and Improving Your Financial Life

Each partner should answer the following questions individually. Then review and discuss your answers together. There are no right or wrong answers. Instead, the quiz is designed to launch a conversation between the two of you about your attitudes toward money and your financial goals, dreams, and desires. The objective is to learn about yourself and your partner, and to lay the foundation for developing a money plan for life that you can both be happy with.

Your Current Money Situation

1. How satisfied am I with my current income?
2. How satisfied am I with my current degree of financial security?
3. How much debt do I currently have? Is my current debt load comfortable or is it too great?
4. How satisfied am I with my career and income prospects for the near future (one to three years)? How about for the longer term (three to twenty years)?
5. Are there things I would like to do to improve my career and income prospects? If so, what are they? Am I taking steps to pursue those goals?
6. How satisfied am I with my current spending patterns? Why?
7. What would I like to spend less money on?
8. What would I like to spend more money on?
9. What do I wish I could buy that I can’t currently afford?
10. How satisfied am I with my current saving patterns?
11. How much money do I have set aside for an emergency? Is it enough?
12. How much money do I have invested in stocks, bonds, mutual funds, or other financial investments?
13. How satisfied am I with the current results of my investments? Why?

How You Manage Your Money

14. Do I enjoy managing money? Specifically, how do I feel about paying bills? About saving? About investing?
15. Would I like to turn over the management of my money to another person if I could?
16. Where do I turn for advice and information about money and investments?
17. Do I have a professional financial adviser or financial planner? If so, am I satisfied with the help he or she gives me? Why or why not?

Your Future Financial Plans

18. What plans do I have for a family? Do I plan to have children? If so, how many? When?
19. If I plan to have children, do I expect to have enough income to raise them in a style I consider appropriate?
20. What “special things” (beyond basic food and shelter) would I want to provide for my children? Which are most important? Do I expect to be able to afford them?
21. What level of income do I hope to enjoy ten years from now? Twenty years? Thirty years?
22. What lifestyle would I like to enjoy ten years from now? Twenty years? Thirty years?
23. How long do I intend to keep working?
24. What is my idea of a rewarding retirement?
25. Where do I hope to live in retirement?
26. What activities do I hope to pursue in retirement?
27. How much income will I need to enjoy my desired retirement lifestyle?
28. How much savings will I need to make my desired retirement lifestyle possible?

Money and Your Partnership

29. To what extent do my partner and I share income and expenses?
30. Am I satisfied with the current sharing of money rights and responsibilities between me and my partner? Why or why not?
31. What money matters, if any, would I prefer not to share with my partner? Why?
32. Do I have any other emotional or psychological concerns related to money that this quiz has not uncovered? If so, what are they?

Alvin Hall, author of Your Money or Your Life: A Practical Guide to Managing and Improving Your Financial Life (Copyright © 2009 by Alvin Hall), has been training and counseling a wide range of financial service companies and institutions in the United States and around the world for the last twenty years. He lives in New York City.



Secrets to Saving an Emergency Fund, Starting Now

Personal finance expert Alvin Hall covers the whys and hows of financial safety — you don’t want to miss. From Your Money or Your Life: A Practical Guide to Managing and Improving Your Financial Life

Why do I need an emergency fund? The truth is that everyone is subject to financial emergencies.

In fact, statistics show that most people will suffer a significant loss of income at some point in their lives — a loss that can plunge them into near poverty if there’s no financial cushion to fall back on.

The emergency you face could take many forms, including:

  • Being laid off from a job during a time when the industry you are in is contracting and few jobs are available
  • A plant closing or business slowdown that eliminates your job
  • An injury that prevents you from working
  • A devastating or chronic illness
  • An accident that totals your car
  • A mental, emotional, or social problem that afflicts a family member
  • A fire that destroys your home and property
  • An unexpected legal calamity, such as an arrest or a lawsuit
  • An unexpected financial calamity, like being caught in a pyramid or Ponzi scheme

On my television program, we profiled a woman who could be the poster girl for savings. A year before I met her, she and her partner had joint earnings of nearly $100,000. They enjoyed that income to the fullest, taking lavish holidays and buying presents for their small child. They even spent close to $25,000 on a cruise to Jamaica in order to fulfill their dream of being married by a luxury ship’s captain.

Within a few months, everything changed. First, her husband left her. Weeks later, she was laid off from the job she’d held for thirteen years. Because she had no savings, her parents ended up paying her mortgage. Now, as an unemployed single mom, she’s dependent on state benefits to get through each month.

Please don’t say “It could never happen to me.” Deep inside, you know it could. You owe it to yourself and your family to be prepared for such emergencies.

The goal of saving at least six months’ income strikes some people as very ambitious. It’s certainly more than most people have on hand. But I’m convinced it represents a realistic emergency fund, one that will probably allow you to navigate safely through any financial storm you’re likely to encounter. Anything less is all too likely to be quickly depleted in the face of a true emergency.

Accumulating six months’ income won’t happen overnight. For most people who embark on a serious saving program, it will take four to five years to reach this target. That’s all right. Many of life’s worthwhile achievements take that much time: graduating from college or university, getting a career off the ground, raising a child to school age… The key is to set your sights on reaching the goal and be persistent in pursuing it. Once you’ve built up the six month fund, it can remain in savings untouched, ready to spring into action when an emergency arises.

Alvin says…
Begin saving now with the goal of having six to nine months’ after-tax income in a liquid savings account. Liquid means readily accessible at full value. Money invested in property is not liquid, since it may be difficult to sell at a moment’s notice, and if you must sell it quickly, you may not be able to get full value. Your emergency savings should also be in a safe account — one with virtually no risk of loss. Stocks, bonds, and mutual funds carry significant risk of loss and therefore don’t qualify on this score. I recommend using a bank account for your six to nine months’ savings, since such an account is both liquid (you can withdraw it at any time) and very safe (the value of your funds is insured up to the limit set by the FDIC).

Put Saving First
The problem most people have with saving is that they mentally spend their income before they get it. You need to turn off that switch. Here’s how.

Begin by deciding how much you want to save. A good target is 10 percent of your take-home pay. (Ten percent will allow you to build your six-month fund in less than five years.) But if that amount seems like a daunting goal, don’t make that into an excuse to do nothing. Many people can’t start out there. If necessary, start by saving whatever you can afford, even if it’s no more than ten or twenty or fifty dollars a month, and gradually increase the amount as and when you’re able.

Whatever amount you decide to target, take this money out of your paycheck up front, before you spend a penny on anything else. Better still, arrange for automatic withdrawals from your checking account into a savings account. Most banks will be happy to set up such a plan for you.

Deposit this “top 10 percent” into your account and then pretend that this account doesn’t exist; don’t even get an ATM card for it. If the bank sends you one anyway, cut it up. And when making your spending plans, don’t factor this money into your income. You know the old saying: Out of sight, out of mind. Keep your savings account out of sight, and soon it will slip out of your mind… except when you look up your balance, to congratulate yourself on how nicely it’s growing.

Saving secrets. Here are some other tricks that can help make saving easy…or at least easier:

  • Maintain your savings account in a different bank from your checking account, preferably one that’s a few blocks out of your way rather that just a step or two from your office door or your home. This helps to create a psychological barrier that discourages you from withdrawing and spending. Incidentally, searching out a new bank will give you an opportunity to investigate opportunities for earning a better interest rate on your money — a second benefit that’s not to be overlooked.
  • After launching your savings plan, look for opportunities to increase the amount you set aside each week or month. For example, earmark your next salary raise entirely for savings if you can. This is surprisingly easy to do — after all, you’ve been living on the lower amount all along. Just pretend you never got a raise, and enjoy watching how quickly your savings increase. Do the same with end-of-year bonuses, cash gifts or inheritances from relatives, and other windfalls.
  • Finally, change your debt habit into a saving habit. Here’s what I mean: Suppose you’ve been setting aside an amount each month to pay down your credit cards — $450, let’s say. Once you get all your debt paid off, start banking the same $450. You won’t miss the money, since you haven’t been spending it anyway. Use the same technique when you’ve finished paying off a car loan or your mortgage.

Putting fun into saving. Does all of this sound rather self denying and harsh? Perhaps you want to protest, the way small children do, “I never get to have any fun!” Well, consider building some fun into your savings program by tying it to giving yourself something you want. Decide in advance what categories of spending are most gratifying and enjoyable for you — the desserts of your daily financial diet. Then link that kind of spending to saving.

For example, if clothes are your weakness, then every time you spend money on a piece of clothing, deposit the exact same amount into your savings account. Do this with whatever is your weakness — buying books, going to the movies, splurging on fancy tools or cosmetics, whatever. Thus, the pleasure of treating yourself will be associated with (and increased by) the happiness of building up your cash reserve. If, however, you can’t deposit an equal amount of money into your savings account, then you can’t buy the thing you want. That’s the pact you must make and keep with yourself.

Another approach is to treat yourself once you’ve reached certain savings targets. These targets should be quarterly or longer. Only when you have saved that amount or more can you treat yourself to something you can easily afford. It’s important that the treat provide you with enough long-term satisfaction to motivate you to reach your next savings target.

Alvin Hall, author of Your Money or Your Life: A Practical Guide to Managing and Improving Your Financial Life (Copyright © 2009 by Alvin Hall), has been training and counseling a wide range of financial service companies and institutions in the United States and around the world for the last twenty years. He lives in New York City.