Investing

Salesforce signage outside its office building in New York.
Scott Mlyn | CNBC

Retail investors are grappling with the gyrations of the stock market as economic data rolls in and the Federal Reserve’s rate decision looms.
To avoid making knee-jerk decisions based on short-term market activity, investors may want to consider input from Wall Street’s analysts, who have been combing through the financial details on an array of companies and have insight into their long-term prospects.

With that in mind, here are three stocks favored by Wall Street’s top pros, according to TipRanks, a platform that ranks analysts based on their past performance.

Salesforce

The week’s first pick is cloud-based customer relationship management software provider Salesforce (CRM). The company recently reported market-beating fiscal third-quarter earnings and in-line revenue. Despite macro headwinds, Salesforce delivered solid earnings growth due to its productivity and cost reduction measures.
Mizuho analyst Gregg Moskowitz highlighted that the current remaining performance obligation, a leading indicator of revenue, grew 14% in the fiscal third quarter, well above management’s projection of around 11% growth. This outperformance was driven by strong early renewal activity and one large deal.
The analyst also noted several other positives, including robust operating margin expansion, solid growth in cash flow from operations, greater multi-cloud traction and the early success of the company’s artificial intelligence-related offerings.
Moskowitz increased his price target for Salesforce stock to $280 from $255 and reiterated a buy rating. He said, “CRM remains well situated to help its vast customer base manage revenue and process optimization via digital transformation.”

Interestingly, Moskowitz ranks No. 94 among more than 8,600 analysts tracked by TipRanks. His ratings have been profitable 62% of the time, with each delivering an average return of 16.3%, on average. (See Salesforce Technical Analysis on TipRanks)  

Block

We move to fintech company Block (SQ). Last month, the company impressed investors with strong third-quarter performance, fueled by impressive growth in both its Cash App and Square platforms. The company also raised its earnings guidance and announced a $1 billion share buyback plan.
Recently, Deutsche Bank analyst Bryan Keane increased his price target for SQ stock to $90 from $75 and reaffirmed a buy rating. He pointed out that Block shares have started to regain some momentum following the results.
Keane added that the Street’s consensus expectations for operating income and earnings before interest, taxes, depreciation and amortization have increased through 2026 due to better margins, driving substantial free cash flow generation.
For Cash App, the analyst is optimistic that the company will be able to enhance its monetization rate above his core estimate of nearly 1.43% through 2024 via growth in e-commerce, continued adoption of its existing products, and upcoming product launches. For the Square ecosystem, the analyst expects Block to maintain positive yields by increasing Square Banking and other efforts.
“We remain bullish on the company’s long-term outlook with what we see as sustainably high growth with significant profitability improvements,” said Keane.
Keane holds the 868th position among more than 8,600 analysts on TipRanks. His ratings have been successful 57% of the time, with each rating delivering an average return of 6.5%. (See Block Options Activity on TipRanks).

Microsoft

Tech giant Microsoft (MSFT) has gained a lot of attention this year due to its aggressive efforts to capture the growth opportunities in the generative artificial intelligence space.
In a research note to investors, Tigress Financial analyst Ivan Feinseth highlighted that MSFT recently reported its strongest sales gain in six quarters, thanks to the performance of its cloud computing business, which is benefiting from the traction in its new AI products. The analyst thinks that Microsoft is at the forefront of the AI revolution, with the continued integration of AI functionality and ChatGPT across its offerings.
Feinseth expects ongoing cloud migrations, growing enterprise AI projects focused on business optimization, and expanding Microsoft 365 applications to boost the company’s performance. He also expects the Activision Blizzard acquisition will strengthen the company’s gaming business.       
“MSFT’s strong balance sheet and cash flow will continue to fund ongoing growth initiatives and business-expanding strategic acquisitions and enhance shareholder returns through ongoing dividend increases and share repurchases,” said Feinseth.
Feinseth increased the price target for MSFT stock to $475 from $433 and reiterated a buy rating on the stock. He ranks No. 311 among more than 8,600 analysts tracked by TipRanks. His ratings have been profitable 60% of the time, with each delivering a return of 9.8%, on average. (See Microsoft Insider Trading Activity on TipRanks)     More

More retirement savers are borrowing from their 401(k) accounts, data shows.
They also appear to be borrowing greater sums of money than in years past.
Inflation is a likely contributor to more Americans taking 401(k) loans.

D3sign | Moment | Getty Images

Households turn more to 401(k) loans

Workers generally can’t touch their 401(k) savings without penalty before retirement age. Loans are one, but not the only, exception. Investors can borrow against their account balance and the loan, if repaid properly, is tax- and penalty-free.
Most but not all plans allow for them.
About 2.6% of savers, or roughly 138,000 people, took a loan from their workplace plan in the third quarter this year, borrowing an average $10,778, according to Empower, an account administrator, which analyzed its internal data on 5.3 million accounts. That share increased from 2.3% in Q3 2022 and 1.7% in 2020.

Similarly, Fidelity Investments, the nation’s largest 401(k) administrator, saw 2.8% of savers, or 641,000 people, take loans in the third quarter, an increase from 2.4% during the same period last year.
About 17.6% of investors, or more than four million people, have an outstanding loan, said Fidelity, which analyzed 22.9 million accounts. That share has jumped from 17.2% in the second quarter and 16.8% in Q3 2022, according to the firm, which attributes the rising loan prevalence to “inflation and cost of living pressures.”

401(k) loan amounts have grown, too

Inflation, which is a measure of how quickly consumer prices are rising, touched a 40-year high last year, though has since fallen significantly. The average American’s earnings struggled to keep pace, equating to lost buying power for many.

“Heightened inflation over the last couple of years has hurt household finances,” said Cathy Curtis, a certified financial planner and the founder and CEO of Curtis Financial Planning in Oakland, California.
“Regular income may not cover all the expenses if raises have not kept up with the increased cost of living,” added Curtis, who is also a member of CNBC’s Advisor Council.
401(k) loan amounts also seem to have jumped. The average worker took a $15,000 loan in 2022, which is up from roughly $10,000 to $11,000 between 2018 and 2021, according to the Plan Sponsor Council of America, a trade group, which recently polled employers sponsoring a total of 687 workplace plans.

401(k) loans are ‘definitely better’ than credit card debt

Americans have also turned to credit cards to cover their costs. Total credit card debt topped $1 trillion for the first time ever in Q2 2023.
There are 70 million more credit card accounts open now than in 2019, economists at the Federal Reserve Bank of New York wrote recently. Further, 69% of Americans had a credit card account in the second quarter, up from 65% at the end of 2019, the bank said.

I think 401(k) loans — like credit card debt — are kind of leading indicators of economic stress in America.

David Blanchett
head of retirement research at PGIM

While households should try not to touch their retirement savings before old age, a 401(k) loan is a “relatively attractive place” to get fast cash for those in a pinch, Blanchett said.
“It’s definitely better than, say, credit card debt,” he added. “You don’t want to take on loans, to the extent you can [avoid it]. But there are better places to get them than others.”
Unlike credit card and other debt, savers who borrow from their 401(k) pay themselves back with interest. Interest rates are also generally much lower than those of credit cards, which are currently at a record high over 21%.

Many times, households use 401(k) accounts for a down payment on a new home, Curtis said. As mortgage rates have soared, down payments have increased — meaning a bigger 401(k) withdrawal would be required, Curtis said.
Average rates on a 30-year fixed-rate mortgage are more than 7% today, up from around 3% for most of 2020 and 2021, according to Freddie Mac data.
Nationwide, the median down payment was more than $30,000 in Q3 2023, nearly 15% of the average purchase price, a record high, according to Realtor.com. Those figures are up from about $22,000 and 12.5% in 2021.

When a 401(k) loan may be a good idea

 401(k) loans may make sense in a few circumstances, Curtis said.
For example: if a financial lifeline is needed for an essential expense such as a medical emergency, and a 401(k) loan were to help avoid high-interest debt. Additionally, a loan can help cover a down payment if other savings aren’t available, Curtis said.
“The loan can be considered an investment in an asset that can grow,” she said.

The downsides of 401(k) loans

There are also some instances in which a 401(k) loan may be a poor idea.
For one, it may be risky for those with insecure jobs, Curtis said. If a borrower leaves a job due to a layoff, for example, the loan often needs to be paid in full within a shortened time frame. These provisions differ from plan to plan. If a borrower is unable to make that payment, it may become considered a withdrawal, and therefore subject to income tax and tax penalties.
Withdrawing money may also affect long-term retirement savings, Curtis said. Borrowed money isn’t invested in the market, so savers miss out on potential growth, she said.
Most but not all 401(k) plans allow investors to continue saving even if they have an outstanding loan, Blanchett said.
It can be in savers’ best interest to do so, especially if they get an employer match, he said.Don’t miss these stories from CNBC PRO: More

The era of free dating apps may be over: Companies are trying to boost revenue, while single people increasingly feel the apps are the only way to find love.
Some 35% of Americans who have used a dating website or app have paid to do so at some point, according to a recent report by Pew Research Center.
“The days of venture capital-subsidized swiping are over,” said Blaine Anderson, a dating coach in Austin, Texas, who said her clients spend hundreds of dollars a month on dating apps.

D3sign | Moment | Getty Images

Channing Muller moved to Chicago in May from Chattanooga, Tennessee. Her main goal in the new city was to find a partner.
Already a Bumble user, before long, she was subscribed to three more dating apps: The League, Hinge and Match. Muller wanted to get the most out of the platforms, so she signed up for their paid versions.

At times, she was spending more than $100 a month on the apps.
“When you’re serious about looking for a relationship, you’re going to put your money where your mouth is,” said Muller, 38, a marketing consultant. 

Channing Muller
Courtesy: Channing Muller

The era of free dating apps may be over: Companies are trying to boost their revenue, while single people increasingly feel the apps are the only way to find love.
Some 35% of Americans who have used a dating website or app have paid to do so at some point, according to a recent report by Pew Research Center. The average paying dating app user spends around $19 a month, Morgan Stanley found earlier this year.
Some people, however, shell out much more.

The League’s VIP membership costs $999 a week or $2,499 a month. The VIP membership allows users to match with prospects in multiple cities, see new singles first and use a concierge service that it says will help you “win at this dating game.”
In September, Tinder rolled out a $499 monthly subscription to some of its most active users, and Hinge recently introduced a $600-a-month membership.
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“The days of venture capital-subsidized swiping are over,” said Blaine Anderson, a men’s dating coach in Austin, Texas, who said her clients spend hundreds of dollars a month on dating apps. “[Companies] want to monetize the services they provide to eager singles.”
The rise of paid options has rendered free tiers “borderline unusable” for some clients, Anderson said.
Still, dating app companies say they have noticed a demand for paid add-ons and are unlikely to go back.
“There’s a group of users who are eager to use our premium features,” AJ Balance, Grindr chief product officer, told CNBC.
Officials at Match Group, Inc., the parent company of more than 45 dating apps and sites, including Tinder, Hinge and The League, declined to comment.

Dating apps use paid features to entice users

Dating apps have seen a slowdown in user growth of late, “stoking investors’ concerns that the honeymoon may be over for the U.S. online dating industry,” Morgan Stanley wrote in a recent report.
“I think there’s a general sense of app fatigue,” said Kathryn Coduto, an assistant professor at Boston University who studies internet behavior.
In her research, Coduto has found that many people use up to four dating apps at a time. The platforms can start to blend together.
“The apps are pulling from the same dating pool, and so [users] are seeing the same people, matching with the same people and not finding anyone new,” Coduto said. “This leads to a feeling of frustration and the question of like, ‘What’s the point?'”

Dating apps, in response, are trying to entice users with exclusive memberships and unique perks, Anderson said: “Premium features can really accelerate and improve the quality of your matches and dates.”
On the dating app Coffee Meets Bagel, users who pay $34.99 a month can send virtual flower bouquets, while Tinder lets certain subscribers swipe on people in different cities. Grindr users can see an unlimited number of profiles if they pay $39.99 a month, compared with the 99 profiles available to its free users.
Paying to find love is, of course, not new.
“People have paid for things like personal ads, speed-dating experiences, dating and relationship coaches and matchmakers,” Coduto said.
While there’s proven to be a healthy market of dating app subscribers, many single people may feel they have no other choice, said Ali Mogharabi, senior equity analyst at Morningstar Research Services.
“It’s become more of a norm to use apps to find dates and long-term relationships,” Mogharabi said.

Anderson, the dating coach based in Austin, said her clients often feel that they have to pay for an app’s premium services to actually have a chance at meeting someone.
“You want to be able to cast a wider net and you often can’t do that with the free version,” Anderson said.
The unpaid versions are also increasingly loaded with annoying advertisements, Coduto added.
“You’re swiping on a lot of ads in addition to people,” she said.

Dating app costs can cut into other expenses

Carli Blau, founder of Boutique Psychotherapy in New York, said she thinks dating app companies are taking advantage of people. Some of her clients have been on the apps for years and remain single, she said.
She’s noticed that many of the features that used to be free now come at a cost.
“At what point are we monetizing somebody else’s unhappiness? Where does it become unethical?” Blau said.

Nikita Sherbina, who owns a software company in Phoenix, has spent around $250 a month for the last two years on three dating apps: Hinge, Bumble and Tinder. 
“It’s kind of expensive,” Sherbina, 26, said. “I usually compromise [on] other types of expenses, like groceries.”
In its most recent earnings call, Match Group, Inc. executives pointed to the resumption of student loan payments in the fall, credit card delinquencies and other economic factors as threats to its bottom line.
“Given that we have a lot of consumers at Tinder who are on the younger side [and] who tend to have less discretionary income, we could feel a little bit of that impact,” Gary Swidler, Match’s president and chief financial officer, said on the call.

Paying for premium dating apps doesn’t promise love

There is some evidence that paid dating apps get results.
Coffee Meets Bagel says its paid users get 60% more dates than its nonsubscribers. Pew Research has found that people who met their partner on an app are more likely to have paid for the service.
But when you’re dealing with an area as messy and mysterious as romance and love, money can only go so far, Coduto said.

I usually compromise other types of expenses, like groceries.

Nikita Sherbin
dating app subscriber

“Ultimately, I think a lot of people pay to use dating apps because it gives them a sense of control over a process that often feels full of uncertainty,” she said.
Often, improving your profile may go further than just paying to be seen by more people, Anderson added: “You have to have an exceptional profile as a man to even be in the ball game of potentially getting matches.”
Coduto agreed.
“Paying for a dating app isn’t going to write you a better biography or opening line,” she said. “It doesn’t ultimately change who you are behind your profile.”
In September, Muller decided to take a break from dating apps, she said. Although the memberships offered her more and more features and larger access to profiles, the price tags began to feel too high.
“I’m sorry, do you have Bill Gates’ long-lost son on there?” Muller said. More

Seoul, South Korea ranked in the top three of the fastest growing destination for digital nomads.
Prasit Photo | Moment | Getty Images

Company: Samsung C&T (028260.KS)

Business: Samsung C&T Corp is a Korea-based company engaged in the trading of industrial goods. The company operates its business through a group of segments. These include engineering and construction, trading and investment, as well as fashion and resorts. Shares of the company do not trade in the U.S.
Stock Market Value: $15.35 billion ($94.71 per share)

Activist: Palliser Capital

Percentage Ownership:  0.62%
Average Cost: n/a
Activist Commentary: Palliser Capital is a global multi-strategy fund with a bias to Asia and Europe. Founded in 2021 by James Smith, who was previously the head of Elliott Investment Management’s Hong Kong office, Palliser applies a value-oriented investment philosophy to a broad range of opportunities across the capital structure where complexity or distress lead to undervaluation that can be monetized through an effort-intensive process or proprietary catalyst. Nearly the entire senior investment team has had significant activist experience working at Elliott. The firm has experience investing in both Europe and Asia and their activist investment at Keisei has shown the patience, conviction and diplomacy of a top activist.

What’s happening

On Dec. 6, Palliser Capital announced that it took a 0.62% position in Samsung C&T (SCT).

Behind the scenes

Palliser thinks that Samsung C&T (“SCT”) is grossly undervalued by the market due to sub-optimal capital allocation, historic corporate governance issues and a complex corporate structure. The investor suggested short- and long-term measures that could be taken to create $25 billion of shareholder value. On its face, creating $25 billion of shareholder value at a $15 billion company seems ridiculous. However, diving into Palliser’s thesis one could realize that the firm is conservatively underestimating the value that can be created here. SCT is a large industrial South Korean conglomerate controlled by the Lee family through multiple, cross-owned affiliates. SCT has a publicly traded market cap of about $15 billion. Its main assets consist of five publicly traded subsidiaries and an operating business. The post-tax value of SCT’s interest in these five publicly traded subsidiaries are: Samsung Electronics ($13.9 billion), Samsung Biologics ($13.4 billion), Samsung SDS ($1.7 billion), Samsung Life ($1.6 billion) and Samsung Engineering ($300 million). That is a total of $30.9 billion of easily ascertainable and realizable value for a roughly $15 billion company. This does not even count the operating business, which has $30 billion of revenue and $1.55 billion of earnings before interest, taxes, depreciation and amortization. Using a 5.5 times EBITDA multiple, Palliser values this business at $8.4 billion. With net cash of $1.1 billion, that is a company valuation of $40.4 billion.

Why is this company trading at a 63% discount? For three reasons. First, its capital allocation policies and practices have left shareholders and others with little confidence that much of this value will accrue to them. SCT has approximately $1.5 billion of annual cash flow, and only approximately 25% of that is returned to shareholders through a dividend and up to 60% is used for capex. Samsung is an iconic and structurally important Korean company that should be investing and growing. Palliser is not debating that. The firm would like to see a more transparent and disciplined capex plan that uses the backdrop of the return on share buybacks as the benchmark and offers a fair return to shareholders. SCT also has other opportunities to generate cash for capex and shareholder return like taking on some debt (the company has $1.1 billion of net cash) to lower its cost of capital and potentially divesting some of the disparate and non-synergistic businesses that make up the operating company.
Second, SCT’s corporate governance policies do not give shareholders confidence that the board is working for them. In South Korea, boards have a duty to the company, not to shareholders. Absent a charter amendment, there are other things the company can do to give shareholders more confidence. The current board is five independent directors and four management directors. While Korean companies of this size are mandated to have 50% independent directors, “independent” is not defined. That means board independence may not be the way investors would expect it to be in the U.S. Moreover, SCT’s independent directors lack any real C-suite experience, relevant industry experience, proven portfolio management and capital allocation expertise. So, refreshing the board with experienced independent directors would be a great start. The board is also staggered. Three of the four management directors are co-CEOs of the company; these individuals answer to the board and account for one-third of its composition. If SCT named one CEO to whom the other division heads would report, it would simplify decision making. Additionally, more transparent communication with the market and aligning management’s interests with shareholders would also go a long way.
Third, the complex cross-affiliated ownership structure, or “chaebols” as they are called in South Korea, causes a deep discount to value. SCT was formed through a series of M&A transactions that were designed more for the purpose of the family keeping control than efficiency. These chaebols have adversely affected the valuation of these companies. For that reason, South Korean chaebols have been converting to two-layer holding company structures over the past 20 years. Samsung is one of two large companies in South Korea that still has the chaebol structure. This chaebol structure discount permeates the entire organizational structure. Even with the chaebol structure, Palliser estimates a $25 million valuation gap. Converting to a holding company structure would increase the value of all the SCT subsidiaries. Relative to where the stock trades today, it would inflate this valuation gap even more.
The undervaluation is not in doubt here. The key question is what can Palliser, or anyone else, do to close that valuation gap? All Palliser is doing right now is bringing these issues to a public debate to put some pressure on management to make shareholder friendly changes. The firm is not threatening any confrontational actions. Palliser has a history of working with management to effect change. That is good here because winning a proxy fight in South Korea is extremely rare. It has been done before, but not by a non-local activist at an iconic company with a family who owns 30% of the common stock. But the trend is on Palliser’s side as South Korea is getting more shareholder friendly every year. And there is also a good reason why the Lee family might support changes that increase shareholder value. Lee family patriarch and former Samsung chairman, Lee Kun-hee, was South Korea’s richest person at the time of his death on Oct. 25, 2020. Lee’s death triggered the largest inheritance tax bill in South Korean history, exceeding $10 billion. South Korea’s inheritance tax rate of 50% is the world’s second highest after Japan. His heirs have been given five years to pay the inheritance tax, and they could certainly use higher value stock to margin or more capital returned to shareholders.
Palliser is not alone in its thinking. Shareholder City of London Investment Management Company has made two proposals for the 2024 annual meeting: a dividend of roughly $3.42 per ordinary share and a buyback program of $380 million to run until the end of 2024. In South Korea, shareholder proposals are binding if approved by a majority of shareholders, but they rarely are approved. At the very least, enough votes could put pressure on management to do something. A good start would be to retire the 13% of outstanding shares held as treasury shares, which count towards outstanding shares in South Korea and which management has already promised to retire within five years. Doing this would immediately increase earnings per share by 14.4%.
Ken Squire is the founder and president of 13D Monitor, an institutional research service on shareholder activism, and the founder and portfolio manager of the 13D Activist Fund, a mutual fund that invests in a portfolio of activist 13D investments.  More

Adults in their 30s oftentimes have more financial responsibilities on their plate.
“The 30s can be sometimes more stressful because your responsibilities have gone up and you’re still not at your earnings potential of your 40s and 50s,” said certified financial planner Shaun Williams.
Here are three things to do to stay on track with your retirement plans.

Fg Trade | E+ | Getty Images

Unlike younger adults, those in their 30s oftentimes have more financial responsibilities on their plate.
“The 30s can be sometimes more stressful because your responsibilities have gone up and you’re still not at your earnings potential of your 40s and 50s,” said certified financial planner Shaun Williams, partner and private wealth advisor of Paragon Capital Management based in Denver. The firm is ranked No. 57 on the 2023 CNBC FA 100 list.

Individuals in their 30s are more likely than those in their 20s to have a spouse, kids or even aging parents who rely on them. However, not everyone follows this path. Some remain as single earners or become dual-income earners with no kids — DINKs, for short.

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While those life changes and choices can have a significant effect on your ability to save, experts say it’s important to keep your retirement plans in focus during this decade — or start if you haven’t yet.
“Have you done what you needed to do to build basic financial security? Have you paid off any high-interest rate debt? Are you staying out of credit card debt? Have you started saving for retirement?” said CFP Sophia Bera Daigle, founder of Gen Y Planning in Austin, Texas. She is also a member of the CNBC Financial Advisor Council.
Here are three things to consider:

1. Revisit your retirement accounts

You may be earning more than you did in your 20s as you’ve progressed in your career. It might be time to switch up retirement accounts.

Opening a Roth individual retirement account can be a smart call as a young worker. You won’t get a tax break on contributions, but that money grows tax-free. Not everyone qualifies to contribute. In 2023, eligibility begins to phase out for individuals with an adjusted gross income of $138,000.
In your 30s, even if you don’t earn too much to use a Roth, opening a traditional IRA may make more sense. A traditional IRA offers an upfront tax break on contributions, and you may find that’s more beneficial, said Williams.

“The tax benefits of traditional IRAs are better the higher your income,” he said. “You’re going to be better off in the long run in most cases.”
With a better income, you might also boost contributions to your employer-sponsored retirement account like a 401(k) plan. You still have decades to go before retirement, so contributing more of your income alongside the company match can make the most of time in the market and compounding.

2. Figure out how new big goals fit in

Westend61 | Westend61 | Getty Images

Your aspirations may change as you get older. You may want to travel more, become a homeowner, save for a wedding or even have children. Put thought into what your new goals are and how they fit with staying on track for retirement savings. 
“My DINK clients get to talk about things like early retirement because they’re not paying for their kids’ education or child care costs. They get to talk about things like buying a second home,” said Daigle.
Meanwhile, those who become parents might find that early child care costs or saving for a child’s eventual college education come at the cost of contributions for their own retirement. 
“A parent still needs to focus on their own retirement,” said Williams. “A parent should always make sure that their retirement is healthy and sound before considering really setting up their children.”

As first-time parents begin to think about financing their children’s future education, especially college, it may be advantageous to start a 529 plan and “get on track for their kids’ college,” said Daigle.  
Those costs ought to come after you’ve paid yourself first in the form of retirement contributions and maybe cut expenses that are less pressing.

3. Keep an eye on lifestyle creep

Yana Iskayeva | Moment | Getty Images

As you increase your earnings, it is easy to fall victim to lifestyle creep, or the phenomenon by which your nonessential expenses tend to rise with your income. This can be a detriment to your savings as you grow accustomed to a higher-cost lifestyle, for DINKs especially.
“A lot of people allow lifestyle creep to come in and start spending more and more,” Williams said.
If you have the ability to spend more in your 30s, it’s smart to assess your financial goals first. Make sure above all that you are on track for retirement before you splurge on discretionary expenses.
“[In] your 30s, you’re solidifying how you’re going to live your life, and that’s just going to continue in your 40s and 50s,” Williams said. “People don’t change that much once they get there.”Don’t miss these stories from CNBC PRO: More

You may be able to finish paying off your student debt sooner than you thought, experts say.
They shared tips on how to make that happen.

Momo Productions | Digitalvision | Getty Images

‘Even an extra $5 a month can make a big difference’

Paying just a little more than you owe each month on your student debt can reduce the amount you’ll pay overall and shorten your repayment timeline, said Betsy Mayotte, president of The Institute of Student Loan Advisors, a nonprofit.
“Even an extra $5 a month can make a big difference,” Mayotte said. (You’ll want to make sure to tell your servicer to direct the additional money to your principal, so it doesn’t just apply it to future interest and payments.)
To illustrate the impacts of throwing extra cash at your student debt each month, higher education expert Mark Kantrowitz provided an example.
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If someone owed $10,000, and had a 5% interest rate, an additional $50 a month would shave nearly 4 years off of a 10-year repayment timeline. The borrower would also save more than $1,000 in interest.
Kantrowitz’s student loan calculator lets you see how extra payment amounts can shorten your repayment term.
If you’re unsure how to get the extra cash to pay down your debt quicker, consider making a budget, said Douglas Boneparth, a certified financial planner and president and founder of Bone Fide Wealth, a wealth management firm based in New York.
“If paying off student loans is at the top of your list, scrutinize your monthly cash flow to see where you might have room to allocate more money towards them,” said Boneparth, who is a member of the CNBC Financial Advisor Council.

Consider auto-pay, avalanche method

Most student loan servicers offer borrowers a discount on their interest rate when they sign up for automatic payments, Kantrowitz said. An even slightly lower interest rate will help you pay your debt down faster.
Claiming the student loan interest deduction, meanwhile, on your federal income tax return can reduce your taxable income. Your lender reports your interest payments over a certain amount to the IRS on a tax form called a 1098-E, and should provide you with a copy, too. Depending on your tax bracket and how much interest you paid, the deduction could be worth up to $550 a year, Kantrowitz said.
If that results in a bigger refund, you can direct more money toward your education debt each year. You don’t need to itemize your taxes to claim the deduction, which can reflect up to $2,500 in interest payments on all federal and most private student loans.

Yet before you accelerate payments on your student debt, you want to first pay down any higher-interest loans, Kantrowitz said. Undergraduate federal student loans disbursed last summer had an interest rate of 5.5%, while the average interest rate on credit cards is more than 20%.
The tip above is an example of what is called “the avalanche method,” in the world of debt repayment, Mayotte said. It is when you pay the minimum due on all your loans, but send extra payments to the loan with the highest interest rate.
Of course, if your priciest debt is from your education, you can use the strategy on those loans (many student borrowers have multiple loans). You can learn your different interest rates with your servicer or at Studentaid.gov. Private student loans tend to have much higher rates than federal ones.
Unless you truly can’t afford to make payments on your student debt, you’ll also want to avoid deferments and forbearances, particularly if your goal is to get out of the debt sooner than later. These pauses stretch out your repayment timeline, and your balance can swell from interest accrual.
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With property prices in the city down 15-20% since their peak, Peter Churchouse of Portwood Capital said now may be a good time to buy a property in Hong Kong if you’re looking to own a home.
But “Hong Kong is not the place” if investors are looking for good rental yield, he said, adding that Australia and New Zealand markets look attractive.

Hong Kong residential prices could fall by another 10% in 2024, according to DBS Hong Kong.
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Hong Kong’s property market has plunged nearly 20% since its peak, and it may be a good time for homeowners to buy — but investors might want to think twice, according to Peter Churchouse, chairman and managing director of real estate investment firm Portwood Capital. 
With property prices in the city down 15-20% since their peak, Churchouse said now may be a good time to buy a property in Hong Kong if you’re looking to own a home, but investors hunting for yield should look at Australia and New Zealand instead.

Investors and homeowners have different priorities, Churchouse pointed out.
For homeowners looking to buy, “prices down this much is probably not a bad time to look to be buying” if you can afford to pay mortgage and down payment, he said Tuesday on CNBC’s “Squawk Box Asia.”
“There’s still a bit of downside risks … but perhaps the worst is over.”
Home prices in Hong Kong dropped for four months straight. The official housing price index stood at 339.2 in August, down 7.9% from a year earlier and 4.2% lower from April peaks.
“Hong Kong is probably the easiest place in the region to buy, and I would think that Japan is probably a close second,” he said.

Buying elsewhere in the region is “fraught with all sorts of difficulties and legal issues … There are all sorts of banana skins,” Churchouse warned, explaining that home buyers in other countries either have to be a resident, permanent resident or an employee. 
“Often, you can’t own property as an investor,” he added.

Jeff Yau, Hong Kong property analyst at DBS Hong Kong, said prices in Hong Kong are expected to continue plummeting and could fall by another 10% in 2024.
In October, the Hong Kong government cut stamp duties for property buyers to help boost the city’s slumping real estate market. 
Among the relaxed levies, the stamp duty that non-permanent residents have to pay for property and another levy imposed on additional properties purchases by residents will each be halved to 7.5%. 
Despite the positive news for homebuyers, demand may not bounce back in full force as the higher cost of financing will remain a hurdle for potential homeowners, said Henry Chin, Asia-Pacific’s head of research at CBRE.

Best rental yield

For investors looking for high rental yield, “Hong Kong is not the place,” Churchouse said. “The yield today is less than the cost of capital, less than the interest rate you’re paying on your loan.”
Rental yield in Hong Kong is currently below 3%, while the effective mortgage rate exceeds 4.1%, implying a “negative rental carry,” DBS Bank’s Yau said.
“If the investors have their first property, they still need to pay New Residential Stamp Duty of 7.5% if they buy a second property,” Yau said. “It is not a good time to buy property for investment.”
Where can investors find good rental yield?
“The best yield in markets in this region, I tend to think, are Australia and New Zealand,” Churchouse said. Yield for residential property or commercial property there may be as high as between 6-8% — “maybe even higher,” he added.
In Japan as well, it’s common to find rental yields of about 5% or 6%, he added.
In a country where interest rates are “very, very low,” he said, “You can get a rental yield that higher than your interest costs in Japan.”
— CNBC’s Clement Tan contributed to this report. More

It can be easy for adults in their 20s to overlook retirement altogether.
About 66% of Gen Zers say they’re not sure they’ll ever have enough money to be able to retire, according to a recent study.
“Awareness is the first key. Some people have the ‘head in the sand mentality’ for too long for a lot of their 20s,” said Sophia Bera Daigle, a certified financial planner.

A young woman receives help from a financial advisor.
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It can be far too easy for adults in their 20s to overlook retirement altogether.
After all, it’s still decades away, with many other shorter-term goals — such as buying a home or paying off student debt — closer on the horizon.

About 66% of Gen Zers, or those between ages 18 and 25, say they’re not sure they’ll ever have enough money to be able to retire, according to the recent Prosperity Index Study by Intuit.
Yet, for people in their 20s, it’s a powerful time to get started on saving and investing for retirement. With the right moves now, you can harness the power of compound interest and make the most of the decades ahead to set yourself up for success.

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Here’s a look at more stories on how to manage, grow and protect your money for the years ahead.

“Awareness is the key. Some people have the ‘head in the sand mentality’ for too long for a lot of their 20s,” said Sophia Bera Daigle, a certified financial planner and the founder of Gen Y Planning in Austin, Texas. She is also a member of the CNBC Financial Advisor Council.
Here are some moves to get started:

1. Make the most of your 401(k)

If you work for a company that sponsors a retirement plan such as a 401(k) or 403(b), the first thing is to check if you’re eligible and if a company match is available, Daigle said.

If you do have access to an account, start contributing as soon as you can and always at least pay yourself what the company matches, said CFP Shaun Williams, partner and private wealth advisor of Paragon Capital Management based in Denver. The firm is ranked No. 57 on the 2023 CNBC FA 100 list.
The company match is almost like “free money” that can help boost your savings faster, especially at a time where you may not be able to set aside much.

2. Open and invest in a Roth IRA

When you open and contribute to a Roth Individual Retirement Account, you don’t pay taxes on the dollars you put into the account, allowing your savings to grow tax-free for decades.
While they may have income limits and other drawbacks, it’s a powerful tool for people in their 20s.
As you begin your career, you will likely have a lower income, putting you in a lower tax bracket. Use this to your advantage and consider opening a Roth IRA, in which your tax payments will be low.
Funds in a Roth account can also be withdrawn at any time without penalties, making them useful for other goals or even for emergencies.

3. Build up emergency savings

It’s smart to have an emergency savings fund, especially as most emergencies can cost hundreds of dollars.
Before you really start paying down debt, get a handle on that emergency fund, said Williams. Building an emergency savings first can help you keep your retirement savings untouched should unexpected expenses arise.
You may want to have about six months of your spending needs in an emergency fund in case you lose your job, said Williams.
Look into products where you can earn more for your savings, said Daigle.

4. Invest with a long horizon in mind

You have four to five decades in your favor, Williams said. Use the markets for what they’re meant for and be fairly aggressive.
It can be strategic to allocate your assets in different investments, and your 20s is the time for you to take the most risk as an investor, such as focusing your portfolio on stocks.
If it seems daunting for you, you can stick to target date funds, which are the default investment vehicle for most employer-sponsored accounts.

5. Take advantage of your human capital

As someone who’s in their 20s, you have the highest amount of “human capital,” said Williams. Continue educating yourself and refining your skills during your 20s to increase your earnings potential, whether through graduate programs or certifications, Williams said.
“They have all the time. Increasing their earnings potential is one of the best retirement readiness things as well,” he said.
Boosting your income will help you keep up with your short-term goals while bulking your retirement savings.
Make yourself more marketable now in your 20s; that’s really going to pay on in your 40s and 50s, he added.

6. Get and stay out of debt

If most of your income is funneled into debt repayment, you might fall behind on saving for retirement. Therefore, the best thing you can do for yourself in your 20s is to stay out of debt, especially from credit cards, said Daigle.
“It’s so much easier to get started on the other things if you’re not starting in a hole,” she said.
However, if you do have debt, pay extra toward the highest-interest loan when you can, and make the minimum payment on the rest, said Williams.
If you have student loans, make sure you are in a repayment plan that works the best for you and don’t make extra payments until you bulked your emergency savings, experts say.
To keep out of debt, credit cards should be paid off in full, as those are likely to have higher interest rates.
“If you let your credit cards get out of hand from living beyond your means, that’s the No. 1 problem,” said Williams.

7. Live within your means

It’s important to understand where your money is going and get a handle on your budget, experts say, that way you can allocate a sustainable amount of your income for retirement.
Would-be investors in their 20s often put off saving for retirement for later on in their lives or when they become higher earners. This idea tends to fall through as “lifestyle creep” takes over.
Social media comparisons also don’t help adults in their 20s. Nearly 2 in 3, or 73%, of Gen Zers say social media makes them feel they’re tracking behind their life goals while peers seem to be succeeding, the Prosperity Index Study by Intuit found.
Don’t be influenced by what you see on social media apps such as Instagram, said Williams.
If you need to say no to certain things because you cannot afford it, say no.
“Laying the groundwork in your 20s is wonderful so that in your 30s, you can really turbocharge your financial goals,” Daigle said.Don’t miss these stories from CNBC PRO: More