Students Learn Personal Finance for the Real World

BY STEVE DINNEN

We all make mistakes when it comes to money and finances. In the mid-1990s, when he first transitioned from the academic world to the corporate world and started making a reasonable income, Toby White said his biggest misstep was “feeling like I needed to spend it right away."

“If I had been more disciplined and had saved a greater percentage of my take-home pay, my retirement situation and current net worth would be much more favorable today than it is,” said White, who is an associate professor of finance and actuarial science at Drake University.

Lesson learned. And now lesson taught, in White’s class on personal finance at Drake. Before students swap campus life for workaday life, he’s giving them a rundown on the ins and outs of compounding interest, saving versus spending, asset allocation — a how-to guide on the proper care and feeding of your money.

"I don't think that many young professionals value the benefits of either financial planning or investing in general," White said. "They are more likely to be focused on that first big expenditure they can make with the newfound income they are realizing, but they may not budget for the long term or even the intermediate term."

"As for investing, many students may buy into a small number of individual stocks, or cryptocurrencies now, but they are not necessarily aware of portfolio management issues like asset allocation, diversification, and the correlation structure among various asset classes and industries," he added.

Maisy Russell is one of White’s students. She has questions about contracts. And leases, and utility payments. And retirement savings. And all the other things that go with transitioning to life on her own in Chicago, where she will move in May after graduating.

Russell is joining nearly 4 million other students nationwide who are finishing two- and four-year college programs and entering the workplace. It could be a good time: The National Association of Colleges and Employers Job Outlook 2022 report projects a 30% increase in college hiring over the next six months. The report also shows that employers plan to hire 26.6% more new grads from the class of May 2022 than they did from the class of May 2021.

But new graduates will find some instability due to the pandemic and its sudden realignment of the way the nation does business. This is especially the case for Russell, who has two majors — business studies and theater arts — as well as a minor in musical theater.

“I originally was planning on going into the theater industry but because of the pandemic my plans have changed,” she said. “It is such an unstable climate that I now am looking into business law or marketing.”

In addition to remote work, the Outlook 2022 report notes big changes: "We're seeing more positions for contract work, project work and one-off commissions, and more people are finding that self-employment is a better option for them than conventional employment.”

There’s also graduate school, which Andrew Kasten chose. He had questions about that big money mistake, as well. That’s why he enrolled in White’s class, and with an advanced business degree from Florida International University under this belt in a few more years, he should come out well prepared to meet the challenges that lie ahead.

As Travel Opens Up, a Reminder of Tipping Protocol

BY STEVE DINNEN

I just had a great meal in Albufeira, Portugal—grilled sea bream caught just this morning in the ocean, tasty white wine, and a salad with tomatoes that tasted like real tomatoes. Total bill, 30 euros. Total tip, 1 euro. The waiter thanked me for my 3% gratuity.

Odd as it may seem to Americans, tipping is not an integral part of the protocol at a restaurant. At least not in Portugal, which has seen a surge in American tourists who are discovering its great weather, great food and great wine. Good prices, too, and at a restaurant you don't have to worry about a tip unless you want to reward a waiter for exceptional service.

Protocols vary a bit across Europe, but in general, travelers will find that tipping is not expected in France, Portugal, Spain, Germany or Switzerland. It’s more common to either skip it or just round up the tab, leaving 1 or 2 euros on the table for good service. And in some places they already take care of it— on your bill, look for "Servicio Incluido” or a version thereof—which means that it's already built it into the bill. That’s especially common for larger parties (same as the States). Waiters in Europe tend to be paid better on an hourly basis than their American counterparts, and tips just aren’t part of their compensation. It’s common for them to see waiting as a career, as opposed to a steppingstone in the U.S.

Asians and Australians more or less frown on tips. And in Japan, it’s considered rude. Back in Europe, I once had a waiter in Barcelona practically throw a tip back at me. But by the same token, a very good waiter in Naples took time to remind me—twice—that a tip would be welcomed. He gave me great service, and I obliged.

Mexico and Canada also have tipping. Maybe 10%.

Bellmen and taxi drivers typically earn a small tip—a euro, maybe 2. You’ll be able to figure out the protocol as you travel around now that the world is reopening.

Invasion May Have Major Consequences for Investors

BY LANANH NGUYEN FOR THE NEW YORK TIMES

Since the fall of the Soviet Union, investors have enjoyed decades of global economic stability in which military conflicts and foreign diplomacy played a diminished role in the movements of markets.

But Russia's invasion of Ukraine is the most overt sign of a recent change in that dynamic as increased jostling among powerful nations will have sweeping consequences for investors.

The largest military conflict in Europe since World War II — combined with simmering tensions between the United States and China — has investors watching shifts in international power dynamics more closely than they have in a long time.

“There has been more global geopolitical tension now for the last several years — frictions between China and the rest of the world, China and the U.S. in particular, are not going away,” said Daniel J. Ivascyn, the chief investment officer at PIMCO, a fund manager that oversees $2.2 trillion in assets. “This Russia situation further complicates some of these broad global relationships, and it absolutely is an increased topic of conversation with our investors.” READ MORE.