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Wednesday, September 3, 2014

Pros and cons of student financed education

Financing education
High tuition costs make it difficult for students to finance college

A research study carried out by professors at Brigham Young University indicates parents who make their children pay for at least some college facilitate a greater respect for education in their children. The report, which involved surveying 402 students, is detailed by Laura Padilla-Walker, Larry Nelson and Jason S. Carroll in Volume 19, Number 1 of the Journal of Adult Development. More specifically, the researchers sought to identify statistical relationships between parental funding and beliefs about education in children.

Following further investigation of the study, Allison Linn of MSNBC uncovered details of the research from one of its authors. Moreover, according to Laura Padilla-Walker the students that obtained the best results in their education were not assisted by their parents at all. Also, the students who were completely funded by their parents had the least respect for their education and spent more time not getting educating in college. Overall, the research results indicated that of those students surveyed, at least partial responsibility for paying for college led to positive educational results.

Making kids pay for college forces the hand of financial responsibility. It raises real life questions before rather than after college is signed up for. For example, students  faced with paying their own college are more likely to think about where the money comes from and what it actually pays for. Such reasoning often leads to more appreciation for the what the money buys and even better money management skills. Innovative thinking is one of the possible outcomes having to pay for college encourages. To illustrate, according to Business Insider, two students raised $50,000 by advertising using their faces. 

Requiring children to pay for college is not entirely beneficial however. The research also indicates disadvantages according to a press release issued by Brigham Young University. For example, if students find themselves excessively burdened with the cost of education, they take longer to get educated and may not graduate at all. These kind of results can lead to a kind of adult pragmatism and skepticism that leads to an unfortunate economic outlook. In other words, children may  look at their education as a medium to high-risk investment, which is wise, but also perceptually restrictive to confidence and career development.

Additional research into perceptions about education shows how requiring children to pay for education may exacerbate an already dim view of the benefits of education. For instance, a report from NAS Recruitment Communications shows 51 percent of millennials believe they will not receive job offers upon graduating from college. This is further highlighted by a study from the University of California at Berkley that state enrollment and amount of degrees being awarded are not increasing, and in some states decreasing. It attributes this trend to the rise of foreign competition and the declining benefits of obtaining a higher education in the United States.

Image licenses: 1. Barry Dahl; CC BY 2.0; 2. 

Tuesday, September 2, 2014

Newsletter: Personal finance and nutrition

The life of Marissa Mayer, CEO of Yahoo

Female CEOs
Marissa Mayer: CEO of Yahoo
By A.W. Berry

Marissa Mayer is an information technology executive, centi-millionaire, and celebrity who formally worked at Google for over a decade and served as its Vice President of local and location-based products. In July of 2012, she was hired by Yahoo to be their Chief Executive Officer. Mayer has two computer science degrees in artificial intelligence from Stanford University, and has also served on Walmart's Board of Directors per the Huffington Post.


Born in Wisconsin, Marissa Mayer is an American who originally sought to become a neurosurgeon per Spectrum Magazine. However, when pre-med classes seemed overly expensive in terms of educational value, Mayer got sidetracked into computer science to make the most of her education. Soon after graduating from Stanford, Mayer was hired by Google when it was still a small start-up business in 1999. She was the first female engineer to be hired by the company. Mayer has a younger brother named Mason Mayer per the San Francisco Appeal.


Marissa has a flare for innovation and fastidious detail per Bloomberg. After being hired by Yahoo as its CEO, Marissa Mayer also announced her first pregnancy to Zachary Bogue, her husband of three years, and venture capitalist and private equity partner. Mayer has no previous marriages, and according to the Los Angeles Times, her hobbies include ballet, fashion and art. These interests seem to follow the professional pursuits of both her parents as her father is an engineer, and her mother is an art teacher. 


Working at Google gave Mayer the opportunity to leverage her computer science brilliance and develop the knowledge and leadership skills central to her role at Yahoo. At the time she was hired by Yahoo, the company was experiencing substantial managerial problems, and had already hired and let go of five CEOs in five years per the Huffington Post. Successfully taking on the task that several previous CEOs did not finish was an opportunity Mayer chose to pursue as an implicit challenger per the LA Times.


In 2009 Marissa Mayer became a Glamour Magazine Woman of the Year. She also received an honorary Phd from the Illinois Institute of Technology. At Google, her many years of work identified her as a major influence on the design and programming of Google Maps, Mail and Earth; this is also reflected in her Tecca top 10 ranking for most influential women in technology. In 2012, Mayer was named the 42nd most powerful woman in business by Fortune/CNN Money. Mayer has also served as a Board Trustee for two museums per the World Economic Forum where she was a 2010 Young Global Leader honoree.

Image license: Giorgio Montersino; CC BY-SA 2.0

Monday, September 1, 2014

Bond buying tips

What to look for when purchasing bonds
U.S. bonds are considered low risk, but often yield less than alternate investments

Bond yields vary considerably, and changes in the bond market can affect the performance of bonds making it a good idea to be aware of smart ways to buy bonds. For example, according to CNN Money, no single bond fund can provide big returns on investment like they used to. For this reason a diversification of bond investing is recommended. Before purchasing any bonds, it is a good idea to learn about them, and for that the Securities Industry and Financial Markets Association or SIFMA provides a helpful guide.


An effective bond buying method should ideally account for inflation, diversification, duration, risk and yield. A good bond buying strategy also helps reach individual investing and financial planning goals. For example, a younger investor seeking an investment less volatile than stocks, but with higher yield than federal bonds may choose to purchase a BRIC bond fund that invests in debt instruments issued by Brazil, Russia, India and China. Moreover, these countries have credit ratings ranging from BBB to AA, and have 10-year bond yields as high as 12 percent per Trading Economics


Key variables that affect bond buying are interest, bond rating, price and the maturity date of the bond. Bond rating agency Morningstar highlights the influence of these variables including how changes in bond interest rates can negatively affect the price of previously issued bonds on the secondary bond market. Furthermore, the affect of bond default risk puts upward pressure on bond yields yet a positive economic outlook can downwardly influence credit risk. As bond prices rise and fall with changes in economic and market conditions, smart bond buyers can determine whether or not those new prices are good based on yield and in comparison to competing bond investments. 


The type of bond product purchased can have a significant impact on return on investment. For instance, according to the Financial Regulatory Authority or FINRA, although international bonds can offer higher yields, they are subject to sovereign risk. FINRA describes sovereign risk as the complete risk that includes currency and interest rate risk. To avoid these risks, international bonds that appreciate against the dollar and have stable or rising yields with reasonably low default risk are more ideal. Other ways to buy bonds are through tax free municipal bond index funds because they can optimize retirement income and be useful in financial planning. Corporate bonds and in some cases, bond trading, also offer investors a range of options.


Bonds can be purchased using a number of mechanisms. Treasury Direct can be used to buy bonds directly from the U.S. Government instead of through a broker. If a broker is used, Investopedia warns that even if a broker does not charge commission, they may increase the bond price instead. In light of this, investors can also use self-guided discount brokerage accounts to lower the cost of purchasing bonds. In some cases a brokerage account is necessary to buy bonds. For example, FINRA states international bonds can be purchased, but usually with the help of a broker. In any case, smart ways to buy bonds factor in the effectiveness of the bond buying mechanism relative to cost, ease of use, and availability of product in terms of overall return.

Image license: US-PDGov