Making money
Years of low interest rates have forced
investors to get used to paltry returns
on bonds and savings accounts, said Liz
McCormick in Bloomberg Business-
week. The average savings account now
pays 0.10 percent interest, down from
1.73 percent way back in 2000. The 30-
year Treasury bond, a favored safe secu-
rity for long-term savers, “yields about
2.5 percent—compared with an average
6.5 percent since the 1970s.” With this
week’s Federal Reserve interest rate cut
and the prospect of more reductions to
come, returns could dip further. The effect on savers has been
dramatic and sometimes devastating. Institutional investors
have been hard-hit, too. Pension funds “have been ratcheting
down return expectations”; the California Public Employees’
Retirement System recently revised its expected 10-year return
to 6.1 percent from a previous target of 7 percent. Wall Street’s
bond experts warn that slow growth and a worldwide glut of
savings have made low returns on bonds the “new normal”—
and that “yields can absolutely go a lot lower.”“We haven’t seen interest rates this low since before Ham-
murabi,” said Howard Gold in MarketWatch.com. No, really:
Richard Sylla, an expert in bonds at NYU’s Stern School of
Business, confirms that some bonds now offer the lowest returns
in recorded history, back to ancient Babylon. Many European
short-term government and corporate bonds actually havenegative yields, meaning that bond hold-
ers are paying to lend money; investors get
those bonds because they see few other
safe places to park their cash. Amid this
bleak outlook there are still some alterna-
tives to the stock market, said Jeff Reeves,
also in Market Watch.com. “Junk” bond
funds that invest in corporate bonds with
“less-than-stellar credit ratings” can offer
substantial returns. Another option for
investors looking for regular income: Real
Estate Investment Trusts. An REIT “must
deliver 90 percent of taxable income back
to shareholders, giving it a mandate for big dividends.” The per-
formance of REITs can be volatile, so if you invest in them, it’s
safest to choose a fund with a diversified REIT portfolio.Investors looking for better yields than they can get from bonds
should also consider the “bond proxies”—utilities, consumer
staples, real estate, and telecom—said Daren Fonda in Barrons
.com. These stocks may not have the best returns in a roaring
economy, and you should be warned that “these sectors will
likely underperform if the economy reaccelerates.” But they
are well positioned to weather a market decline. Within those
categories, Goldman Sachs analyst Ben Snider likes real estate
and telecom. One other kind of insurance: companies that have
underperformed the market “without a corresponding decline
in earnings estimates,” such as Altria and Verizon. Their stable
cash flows may be well insulated from a downturn.Markets: Low bond yields wreak havoc on savers
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Savers can no longer depend on low-risk bonds.Cities versus homeowners
Fines have “become a big—and rapidly
growing— business” for cash-starved cities,
said Kristine Phillips in USA Today. “States,
cities, and counties collected $15.3 bil lion in
fines and forfeitures in 2016,” a 44 percent
jump from a decade earlier. Some cities have
especially aggressive ticketing practices. In
Dune din, Fla., one woman was fined $103,559
“for overgrown vegetation and a stagnant
swimming pool” at a house she had actually
vacated. Because her name remained in prop-
erty records while her foreclosure was final-
ized, the city kept fining her. Another 33 home-
owners owe the city more than $20,000 in
penalties, mainly for “violating laws that pro-
hibit grasses taller than 10 inches, recreational
vehicles parked on streets at certain hours, or
sidings and bricks that don’t match.”English majors need not apply
“Your college major can affect your ability to
get a student or personal loan,” said Jillian
Berman in MarketWatch.com. Lenders are
using criteria such as what you studied and
where you went to college to make underwrit-
ing decisions. Those experimenting with that
data believe it can be a “better predictor of [a
borrower’s] future income and ability to repaya loan than what’s measured by a traditional
credit score.” While two-thirds of college lend-
ers use only standard financial measures, the
practice of looking at students’ majors and
colleges may soon grow “in an explosive way.”
Lenders say it could mean lower interest rates
for some, but advocacy groups argue it could
result in discrimination against students from
some colleges—and consequently in racial dis-
crimination as well.Amazon’s real estate deal
Amazon is offering customers as much as
$5,000 to use a service that helps prospective
homebuyers find realtors, said Conor Dough-
erty in The New York Times. The retail giant
is partnering with the brokerage firm Realogy,
which owns Century 21 and Coldwell Banker,
to “help its brokers separate the closers from
the lookie-loos.” Prospective buyers find an
agent through Amazon.com/TurnKey. If a
buyer ends up closing on a house, Amazon
offers credit for home products and services—
from $1,000 for a purchase under $400,000
to $5,000 on a $700,000 house. The company
sees it as “a way to encourage people to adopt
products like Alexa speakers and Ring door-
bells and to promote its list of handymen, fur-
niture assemblers, and other home services.”What the experts say
In 1980, dancer and choreographer Mark
Morris founded the Mark Morris Dance
Group (markmorrisdancegroup.org),
bringing ambitious performances with
dancers of sheer talent onto New York’s
and Seattle’s stages. Besides enriching
audiences in theaters worldwide, MMDG
is committed to serving the community
and making dance accessible to people
of all backgrounds, levels, and ages.
Based in Brooklyn, MMDG runs a year-
round dance school for children and
teens and a dance center that offers
classes to people with mental and visual
disabilities. The charity also spearheads
a program called Dance for PD, help-
ing those with Parkinson’s disease gain
coordination, balance, and strength
through dance.Charity of the week
Each charity we feature has earned a
four-star overall rating from Charity
Navigator, which rates not-for-profit
organizations on the strength of their
finances, their governance practices,
and the transparency of their operations.
Four stars is the group’s highest rating.