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      What to Do With an Inheritance

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      A sudden windfall while grieving can be an emotional minefield, particularly for younger adults. Experts share ways to handle it wisely.Michael Hay knew his mother was financially secure, but he didn’t fully know her situation until she was admitted to a hospital in August and he was granted her power of attorney. Even then, it wasn’t until his mother’s unexpected death, about a month later, that Mr. Hay understood that he and his two sisters were about to inherit a sum that would make a real difference in their lives.Nine months later, Mr. Hay, 47, says he’s still processing the shock of suddenly losing his 78-year-old mother while gaining an inheritance he wasn’t prepared to receive.“I still call it ‘my mom’s money’ even though it’s legally in my name,” said Mr. Hay, who works at a tech start-up and lives in Madison County, N.Y.Mr. Hay’s reaction to his sudden wealth is not unusual. “It is a big shock both emotionally and financially, and I don’t know that anyone is ever prepared,” said Kathryn Kubiak-Rizzone, founder of About Time Financial Planning in Rochester, N.Y. She recommends that beneficiaries not make any financial decisions for the first six months because they’re likely to still be grieving.Research shows that more adult children may find themselves unexpectedly inheriting wealth over the next two decades. The silent generation, or people born roughly between 1928 and 1945, and its successors, the baby boomers, are expected to transfer significant wealth to members of Generation X and millennials over the next 20 years, according to the Wealth Report, a publication from Knight Frank, a London global property consultant.Federal Reserve figures show that half of all inheritances are less than $50,000, but with boomers reaching 80 and beyond, members of their family may begin to inherit more wealth. More than half of millennials who are anticipating an inheritance from their parents or another relative expect to gain at least $350,000, according to a survey by Alliant Credit Union in Chicago. (Whether they actually receive that much is another question.)We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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      Judge Blocks New U.S. Rule Limiting Credit Card Late Fees

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      Set to take effect on Tuesday, the rule would save households $10 billion a year in “junk fees,” the Consumer Financial Protection Bureau said.In March, the Consumer Financial Protection Bureau announced that a new federal rule would cap fees on late credit card payments at $8 a month, estimating that the change would save American households $10 billion a year.On Friday, a federal judge in Fort Worth temporarily blocked the rule, siding with bank and credit card company lobbyists who contend in a lawsuit that it is unconstitutional.The rule was scheduled to take effect on Tuesday. Now, the lobbyists can continue their legal fight in U.S. District Court before Judge Mark T. Pittman, who granted the preliminary injunction.The consumer bureau’s new rule would limit issuers to an $8 fee unless they could show that more money was needed to cover their collection costs. The bureau estimated that the rule would apply to more than 95 percent of all outstanding credit card balances.The Federal Reserve previously aimed to significantly limit credit card late fees in 2010. But a loophole in its rule, which permitted adjustments for inflation, allowed banks and credit card companies to charge an average of $32 a month in late fees, according to the consumer bureau.In announcing the new rule, Rohit Chopra, the bureau’s director, said it would end “the era of big credit card companies hiding behind the excuse of inflation when they hike fees on borrowers and boost their own bottom lines.” President Biden backed the rule, saying, “The American people are tired of being played for suckers.”Two days later, the U.S. Chamber of Commerce joined the American Bankers Association and the Consumer Bankers Association — whose boards of directors include executives from Bank of America, Capital One, Citibank and JPMorgan Chase — in suing Mr. Chopra and his bureau. Three Texas business associations are also plaintiffs. More

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      Car Deals Are Easier to Find but Lenders Are Tightening Their Terms

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      It has become harder for some borrowers to get affordable car loans as banks and dealerships face a rising number of delinquencies.New cars are more available this spring, and manufacturers have even begun offering deals to entice buyers.But at the same time, lenders have been tightening the terms of car loans as they deal with a rising number of delinquencies. That has made it harder for some people to get affordable loans.Access to auto loans for both new and used cars was generally worse in January than in December and down year over year, according to Dealertrack, a Cox Automotive service that tracks credit availability based on factors like loan approvals, terms and down payments. The impact was seen at banks, credit unions and dealerships.“We are seeing credit access tighten in all channels,” said Sean Tucker, a senior editor at Kelley Blue Book, Cox’s car research and sales website.Subprime borrowers in particular — consumers with the lowest credit scores — may face challenges finding financing, Mr. Tucker said. The share of subprime new-car loans has fallen to about 6 percent, roughly half what it was before the pandemic.Borrowers with strong credit are especially attractive to lenders. The average credit score for new-car shoppers taking out a loan or lease rose to 743 at the end of 2023, up from 739 a year earlier, according to fourth-quarter data from Experian Automotive, which tracks car financing. For used cars, the average score was 684, up from 681. (Experian’s report uses VantageScore 3.0 scores, ranging from 300 to 850; scores of 661 and above generally are eligible for favorable terms.)We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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      Report Helps Answer the Question: Is a College Degree Worth the Cost?

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      The analysis found that former students at most colleges had an annual income higher than high school graduates a decade after enrollment.Most people go to college to improve their financial prospects, though there are other benefits to attending a postsecondary institution. But as the average cost of a four-year degree has risen to six figures, even at public universities, it can be hard to know if the money is well spent.A new analysis by HEA Group, a research and consulting firm focused on college access and success, may help answer the question for students and their families. The study compares the median earnings of former college students, 10 years after they enrolled, with basic income benchmarks.The analysis found that a majority of colleges exceed minimum economic measures for their graduates, like having a typical annual income that is more than that of a high school graduate with no higher education ($32,000, per federal Scorecard data).Still, more than 1,000 schools fell short of that threshold, though many of them were for-profit colleges concentrating in short-term credentials rather than traditional four-year degrees.Seeing whether a college’s former students are earning “reasonable” incomes, said Michael Itzkowitz, HEA Group’s founder and president, can help people weigh whether they want to cross some institutions off their list. Someone deciding between similar colleges, for example, can see the institution that has produced students with significantly higher incomes.While income isn’t necessarily the only criteria to consider when comparing schools, Mr. Itzkowitz said, “it’s a very good starting point.”We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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      Looking for a Lower Credit Card Interest Rate? Good Luck.

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      Comparison sites often emphasize the big banks’ offerings even though smaller banks and credit unions typically charge significantly less.Credit card debt is rising, and shopping for a card with a lower interest rate can help you save money. But the challenge is finding one.Smaller banks and credit unions typically charge significantly lower interest rates on credit cards than the largest banks do — even among customers with top-notch credit, the Consumer Financial Protection Bureau reported last week.But online card comparison tools tend to emphasize cards from larger banks that pay fees to the sites when shoppers apply for cards, said Julie Margetta Morgan, the bureau’s associate director for research, monitoring and regulations. “It’s pretty hard to shop for a good deal on a credit card right now.”For cardholders with “good” credit — a credit score of 620 to 719 — the typical interest rate charged by big banks was about 28 percent, compared with about 18 percent at small banks, the report found.For those with poor credit — reflected by a score of 619 or lower — large banks charged a median rate of more than 28 percent, compared with about 21 percent at small banks. (Basic credit scores range from 300 to 850.)The variation in the rates charged by big banks and smaller ones can mean a difference, on average, of $400 to $500 a year in interest for cardholders with an average balance of $5,000, the bureau found.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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      At BlackRock, State Street and Vanguard, Millions of Investors Are Getting a Voice

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      BlackRock, State Street and Vanguard have opened up voting on environmental, social and management issues. It’s not true shareholder democracy, but it’s progress.Index fund investing has swept the world. In December, for the first time, U.S. investors entrusted more money to index funds than actively managed funds, in which a manager picks stocks or bonds for you.There’s a good reason for the index funds’ popularity. For most people, owning a little piece of the entire market, which you can do at low cost with an index fund, has been more profitable than buying and selling securities, either on their own or through a manager.But the relentless growth of index funds has come at a cost. One significant problem is that the most diversified funds own shares in every publicly traded company in the market, and if you don’t like a company, or its specific policies, you’re stuck. You couldn’t even exercise your vote on issues you thought were important because until recently, the fund managers insisted on doing that for you.Well, that’s been changing in a big way.BlackRock announced this month that it was expanding an experimental program to give investors six flavors of policy choices — like a focus on climate change or a preference for religious values — in votes on corporate issues. State Street already has a similar program underway, and Vanguard is tiptoeing into this kind of voting choice, too.All told, the three giant fund companies have given scores of millions of investors, with $4.6 trillion in assets, a way of expressing their views on corporate issues. This is certainly an improvement. And it could eventually lead to profound changes throughout corporate America, even as it eases some ticklish problems for the big index fund companies.The ProblemsIn the view of scholars like John Coates, the author of “The Problem of 12: When a Few Financial Institutions Control Everything,” the growth of index funds has had the unintended consequence of diminishing shareholder democracy.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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      Money in College Savings Accounts Can Now Go Toward Retirement

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      But there are caveats to moving the money into Roth I.R.A.s, and the government still has to issue guidelines about the option.Starting this year, some of the money in 529 college savings accounts can be used for retirement if it’s not needed for education.New rules under the federal law known as Secure 2.0 allow up to $35,000 in a 529 account to be rolled over to a Roth individual retirement account for the beneficiary of the 529 account if certain conditions are met.State-sponsored 529 accounts, named for a section of the tax code, are used to pay for education expenses — mainly college costs. Money deposited in the accounts grows tax free and can be withdrawn tax free to pay for eligible expenses like tuition, housing, food and books.The new Roth option is aimed at parents who may be reluctant to save in a 529 because they worry about having to pay income taxes and a penalty if for some reason the funds aren’t needed for college and they want to withdraw the money.“It is parents’ No. 1 objection to opening a 529,” said Vivian Tsai, chair emeritus of the College Savings Foundation, a group that includes big financial firms that run the state college savings programs. “The barrier is really psychological.” (Ms. Tsai is also senior director and head of relationship management for the education savings unit at TIAA, a large investment firm that manages 529 plans in seven states.)Many families struggle to save for college, and accumulating “too much” money is usually not a problem. “The vast majority of account holders do not save enough,” Ms. Tsai said.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More

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      January Was Awesome for Stock Pickers, but Can They Keep It Going?

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      Most active fund managers beat the market at the start of the year. But history suggests that they’re not likely to keep doing so for long.Over the last 20 years, stock pickers have had a dismal record. Most haven’t come close to beating the overall stock market.But occasionally, there are exceptions. In some periods, stock pickers rule, and the start of this year was one of those times.In fact, it was the best January for actively managed stock mutual funds since Bank of America began compiling data in 1991. It wasn’t just that they turned in handsome returns for investors. The entire stock market did that. The S&P 500 and other stock indexes set records during the month.It was that active stock funds did even better, though not by much, beating various market indexes by less than a percentage point, on average. Still, it was the best single month for these funds — in which managers buy and sell individual stocks whenever they choose to do so — since 2007. That happened to be the best calendar year for stock pickers in decades.There’s no way of knowing how long this streak of outperformance will go on, or why, exactly, it has existed in the first place. But it’s quite possible that it will continue for the balance of the year, and that buying the average actively managed fund will look like a brilliant move. Index funds that mirror the entire market could well lag behind.That said, I think the active fund managers are unlikely to prevail over the long run. The reason is that history shows it’s just too hard to beat the market.We are having trouble retrieving the article content.Please enable JavaScript in your browser settings.Thank you for your patience while we verify access. If you are in Reader mode please exit and log into your Times account, or subscribe for all of The Times.Thank you for your patience while we verify access.Already a subscriber? Log in.Want all of The Times? Subscribe. More