Investing

YOUR GUIDE TO NAVIGATING YOUR FINANCIAL FUTURE

More than eight in 10 teenagers have already thought about their retirement, according to a recent report. However, far fewer know the best way to set up a long-term plan.
Ed Slott, a certified public accountant and the founder of Ed Slott and Co., recommends starting with a Roth individual retirement account.
He said contributions can be small at the outset because “time is the key asset.”

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When it comes to teens and money, there is often a disconnect.
Overall, teenagers are taking a greater interest in their long-term financial health — although far fewer understand basic retirement planning.

A majority, or 83%, of 13- to 18-year-olds, said they had already thought about their retirement, according to the results of a survey from Junior Achievement and MissionSquare.
But most teens mistakenly believed saving money in a bank account was the best long-term strategy. Only 45% said investing in stocks and bonds with the help of a financial advisor, which would offer a greater long-term return, was the preferred way to go.

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

“This research shows retirement is more top-of-mind for teens than one might think,” said Jack Kosakowski, Junior Achievement’s president and CEO. “While young people have given retirement planning some thought, it’s apparent they still need information on the best way to go about it.”

‘The greatest money-making asset you can possess’

Although retirement can seem far away, particularly for those just starting out, teens have a unique opportunity that others do not, according to Ed Slott, a certified public accountant and the founder of Ed Slott and Co.
“The greatest money-making asset you can possess is time,” he said. “Someone who starts at 15 has a huge advantage even over someone who starts at 25.”

Slott recommends opening a Roth individual retirement account to get a head start.
Contributions to a Roth IRA are taxed upfront, and earnings grow tax-free. In retirement, withdrawals are completely free of tax and penalties, as long as the account has been open for at least five years.
Since there are no age restrictions, anyone with earned income — say, from a summer job — can contribute.

Even if a teen only puts some money away, parents can add funds on their child’s behalf, as long as the combined amount doesn’t exceed the teenager’s earned income for the year. Once contributed, the money inside a Roth IRA account can be invested appropriately to suit any type of long-term goal.
In Christopher Jackson’s 12th-grade personal finance class, students open Roth IRAs with an initial grant of $100 from the community, which they then learn to maintain on their own. Jackson, who teaches at Da Vinci Communications High School in Southern California, tells his students that “this is going to be the most important class they are going to take in their life.”
“My No. 1 goal is to affect their children’s children,” he recently told CNBC.

How Roth IRAs help you start saving

While there is a maximum IRA contribution limit of $7,000 for 2024, it’s less about how much you save and more about the act of saving, Slott said. “It doesn’t have to be a lot. Time is the key asset.”
Meanwhile, both the investment and all the interest, dividends and growth on these assets will accumulate tax-free over the years.

If there are more immediate needs before hitting retirement age, account holders can withdraw their contributions at any time without taxes or penalties if, for instance, they need the money for college or a down payment on a house down the road, according to Slott.
However, Slott advises young adults to view tapping into these funds as a last resort.
“Roth money is the last money you should touch because that money is growing the fastest and it will never be eroded by current or future taxes,” he said.
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Just an inch of floodwater can generate tens of thousands of dollars in property damage. Homeowners trying to move and start over after such a disaster might find a surprising buyer for their home: the government.
The Federal Emergency Management Agency, or FEMA, has spent around $4 billion assisting in the purchase of about 45,000 to 50,000 damaged homes since 1989, according to A.R. Siders, director of the University of Delaware’s Climate Change Science and Policy Hub, who analyzed FEMA’s data in 2019.

These homes have been marred by floods to the point where the homeowners decide to move away. To encourage homeowners not to sell to new buyers and stop what Siders calls “that terrible game of hot potato,” FEMA’s Hazard Mitigation Grant Program supports local and state governments in purchasing the homes, demolishing them and turning the property into public land, in what are called floodplain buyouts.

‘I have no regrets’

Andrea Jones accepted a floodplain buyout for her home in the Charlotte, North Carolina, area.

Andrea Jones, 59, sold her home in the Charlotte, North Carolina, area in a floodplain buyout. Jones, who works in the wealth and investments department of a bank, purchased her home in 2006 for $135,000. Her home was appraised in 2022 at a value of $325,000.
Jones said her home never flooded but her street did.
“Within three years of me being in the house was the first time I experienced the heavy flooding. It came up to my mailbox,” Jones said. “You could not see the street. You could not see the beginning of my driveway.”
Commuting to her home, which was not in a flood zone when she bought it but was later rezoned into one, made her worry.

“At times when I would be at work and it’d be raining really hard and I’d be like, am I going to be able to get home? Am I going to be able to get to my house? Am I going to have to park my car up the street?” she said. “It just didn’t happen a lot. But when it did happen, it was scary.”

The image on the left shows the former home of Andrea Jones before it was demolished following a floodplain buyout. The image on the right is how the land looks now.
Courtesy: Andrea Jones

Jones put the proceeds from the sale toward the purchase of a new home, which she said is nicer, for $437,000. Since the home is more expensive and interest rates are higher, Jones said, her monthly mortgage is double what it once was.
Her new home is outside the floodplain and about a 10-minute drive from her former neighborhood.
“I miss the neighborhood; I miss my friends,” she said. “I miss seeing people walking their dogs, standing out, talking with them, having conversations … things like that.”
However, she said she feels more comfortable and has peace of mind living in her new home because she doesn’t need to worry about her street flooding.
“I wouldn’t go back. I have no regrets [about] having made the decision that I made,” she said.

How floodplain buyouts work

Floodplain buyouts help a homeowner move out of harm’s way and potentially help the community by creating open space and/or an area that can collect flood waters to protect the other homes in the region.
For FEMA’s floodplain buyouts, executed under the Hazard Mitigation Grant Program, 75% of the buyout funding is provided by the federal government, and the remaining 25% comes from state, local and community funds. In some instances, the 2021 Bipartisan Infrastructure Law can cover 90% of the buyout with federal funds.
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However, buyouts as a strategy can be controversial, experts say.
“It’s a bit of a mixed bag. I think in some cases they’re successful and in some cases they’re not,” said Mathew Sanders, senior officer for U.S. conservation at Pew Charitable Trusts.
Sanders said some communities may be apprehensive about taking on the responsibility of the deeded land. “There’s legal liability associated with owning property generally, and so it ends up, in some cases, being a fairly significant drain on local resources,” he said.
The Congressional Research Service found that, without full participation, floodplain buyouts can also lead to problems such as blight, community fragmentation, difficulty with municipal services and inability to restore the floodplain to be able to properly absorb water.

For homeowners, it can be ‘a long time to wait’

Of course, a buyout can be a huge advantage for a person who does not want to live in a floodplain but may not have the resources to abandon their home.
Even so, the buyouts can take a long time. On average, federal buyouts can take two to five years, though 80% of the FEMA acquisitions are approved in less than two years.
“That’s a long time to wait, if your home has mud in it and you’re trying to figure out whether to rebuild or not,” said Siders, of the Climate Change Science and Policy Hub.
Jones’ buyout was delayed by the pandemic, but once she started the process up again in May 2022, things moved quickly. She purchased her new home in January 2023.
How long the buyout takes often depends on which program is funding the buyout. In addition to FEMA, the U.S. Department of Housing and Urban Development and many state and local communities fund floodplain buyouts.

And all of this is happening as the U.S. is facing a housing shortage of at least 7.2 million homes, according to Realtor.com.
“We’re talking about a crisis of affordability in housing across the country, combined with the crisis of the climate change effects. How do we ensure that we provide for our population while making sure that they’re not in harm’s way?” asked Carlos Martín, director of the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University.
Watch the video to learn more about how floodplain buyouts work and whether the U.S. should continue investing in buying and destroying homes facing flooding. More

President Biden hasn’t not given up on the idea of free community college nationwide.
Unlike student loan forgiveness, free college is a better way to combat the college affordability crisis, some experts say.
Even though Biden has yet to make college tuition-free at the federal level, the number of statewide free-college programs is growing.

When President Joe Biden unveiled the details of his Plan B for student loan forgiveness, he revealed that his hope to make some college free was not dead.  
“I also want to make community college tuition free so you don’t need loans at all,” Biden said after including free community college as part of his $7.3 trillion budget for fiscal 2025.

Unlike loan forgiveness, free college is a better way to combat the college affordability crisis, some experts say — and although a federal effort has yet to get off the ground, it could have a good chance of securing widespread approval going forward.
“Student loan forgiveness is a Band-Aid,” said Ryan Morgan, CEO of the Campaign for Free College Tuition. “It’s not a permanent solution but it’s certainly better than nothing.”
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Critics have panned the president’s efforts on loan forgiveness for overstepping his authority while only impacting those graduates with existing education debt.
“Loan forgiveness is a snapshot in time in terms of a fix,” Morgan said.

Alternatively, free college appeals more broadly to those struggling in the face of rising college costs, rather than after the fact.
“If you remove cost as the barrier than everyone who wants to, and is qualified to go, can attend some sort of higher education program,” Morgan said.
“That makes it “a very popular bi-partisan issue,” he added.

And yet, the Biden administration’s plan to make community college tuition-free for two years was ultimately stripped from the Build Back Better Act in 2021.
However, while the White House turned its focus to student loan forgiveness, states have been moving forward with plans to pass legislation of their own to make some college tuition-free.
As of the latest tally, 35 states already have some type of program in place.
Most are “last-dollar” scholarships, meaning the program pays for whatever tuition and fees are left after financial aid and other grants are applied. In other words, students receive a scholarship for the amount of tuition that is not covered by existing state or federal aid.

The problem with free college

Critics say lower-income students, through a combination of existing grants and scholarships, already pay little in tuition to state schools, if anything at all.
“The reality is that there’s a very good chance you aren’t going to pay tuition,” said Sandy Baum, senior fellow at Urban Institute’s Center on Education Data and Policy. “That’s not really solving an access problem.”
Further, in most cases the money does not cover fees, books, or room and board, which are all costs that lower-income students struggle with, and community college may not be the stepping stone to a four-year school it is often believed to be.
In fact, just 16% of all community college students go on and attain a bachelor’s degree, according to recent reports by the Community College Research Center at Columbia University, the Aspen Institute College Excellence Program and the National Student Clearinghouse Research Center.

“It’s a really risky way to think you are going to save money because very few people go on to get a bachelor’s degree,” Baum said.
In addition, community college is already significantly less expensive. At two-year public schools, tuition and fees averages $3,990 for the 2023-24 school year, according to the College Board. Alternatively, at four-year, in-state public schools, that number is $11,260 per year and, at four-year private universities, it’s $41,540.

New Mexico’s program is ‘our gold star’

Among all state-based plans, the New Mexico Opportunity Scholarship Act has been hailed as the most extensive tuition-free scholarship program in the country — “that’s our gold star in terms of programs,” Morgan said.
New Mexico’s Opportunity Scholarship goes a step further than most by opening up access to returning adult learners, part-time students and immigrants, regardless of their immigration status, in addition to recent high school graduates. (The average scholarship recipient in New Mexico is under 25 years old, female and Hispanic.)
In New Mexico, the state aid is applied first, so federal aid and private scholarships can go toward books, room and board and childcare to help cover the total cost of going to school. 
Since its inception in 2022, overall college enrollment has increased by nearly 7% in the state, reversing more than a decade of declines, according to Higher Education Department Secretary Stephanie Rodriguez.
That’s “telling us that students are ready to go to school, they want to be there and they want to reskill or upskill,” she said.
“It’s gratifying to see that the scholarship is doing exactly what it was intended to do,” Rodriguez added.
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A Goldman Sachs logo is displayed on an android smartphone.
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Macroeconomic woes and geopolitical tensions have been weighing on investor sentiment, shaking up the major averages in the past week.
Investors seeking stability may want to turn to dividend-paying stocks.

They can follow the recommendations of Wall Street analysts, who conduct a thorough analysis of the financials of the dividend-paying companies and assess their ability to grow their dividends over the long term.     
Here are three attractive dividend stocks, according to Wall Street’s top experts on TipRanks, a platform that ranks analysts based on their past performance.
Enterprise Products Partners
This week’s first dividend stock is Enterprise Products Partners (EPD), a midstream energy services provider. The limited partnership has increased its cash distribution for 25 consecutive years at a compound annual growth rate of 7%.
On April 5, Enterprise Products announced a quarterly cash distribution of $0.515 per unit, payable on May 14. This payment reflects an increase of 5.1% year over year. EPD stock offers an attractive dividend yield of 7.1%.
Following the company’s investor update call held earlier this month, RBC Capital analyst Elvira Scotto reiterated a buy rating on EPD stock with a price target of $35. The analyst said that the call supported her view that the company is well-positioned to gain from its organic growth projects, which are expected to come online through 2026.

Scotto added that the company’s organic projects (like the Mentone West 2 natural gas processing plant in the Delaware) are mainly focused on the Permian Basin, where it expects consistent growth for at least another 10 years.
The analyst is confident about EPD’s ability to support its growth investments, thanks to a strong operations base and balance sheet. Further, she expects mid-single-digit growth in the company’s distributions.
“EPD remains comfortable returning 55-60% of its adjusted CFO (cash flow from operation) to investors through distributions and buybacks,” said Scotto.
Scotto ranks No. 84 among more than 8,700 analysts tracked by TipRanks. Her ratings have been profitable 64% of the time, with each delivering an average return of 17.8%. (See EPD Technical Analysis on TipRanks) 
Goldman Sachs
Let’s move to Goldman Sachs (GS), one of the leading investment banks in the U.S. The bank recently reported better-than-anticipated first-quarter results, driven by a rise in trading and investment banking revenue. A rebound in capital market activities helped it deliver solid performance.
In the first quarter, Goldman Sachs returned $2.43 billion of capital to shareholders through share repurchases worth $1.5 billion and dividends of $929 million. The bank declared a dividend of $2.75 per share, payable on June 27. GS stock offers a dividend yield of 2.7%
In reaction to the impressive Q1 print, Argus analyst Stephen Biggar upgraded his rating for Goldman Sachs to buy from hold with a price target of $465, saying that the results “demonstrated the considerable strengths of the Goldman franchise during an investment banking upturn.”
While there were some appearances of false rebounds in the investment banking space in 2023, the analyst thinks that the current recovery appears to have the power to persist. His optimism is supported by the encouraging sequential improvement in the equity and debt underwriting business. He is further encouraged by the high-teens year-over-year growth in industrywide announced M&A deal value in the first quarter.
Biggar expects these factors to drive improved revenues in the second half of 2024. He highlighted data from the Securities Industry and Financial Markets Association, which indicates a triple-digit year-over-year increase in capital formation in Q1 2024. Notably, the value of IPO issuance jumped 239%, while secondary issuance surged 110% in the first quarter.
Biggar ranks No. 603 among more than 8,700 analysts tracked by TipRanks. His ratings have been profitable 60% of the time, with each delivering an average return of 11.8%. (See Goldman Sachs Stock Buybacks on TipRanks)
Cisco Systems
Finally, let’s look at Cisco Systems (CSCO), a networking equipment maker. In the second quarter of fiscal 2024, the company returned a total of $2.8 billion to stockholders through share repurchases and dividends of 39 cents per share.
Cisco announced a roughly 3% increase in its dividend to 40 cents per share, beginning the payment in April 2024. The stock has a dividend yield of 3.3%.
On April 15, Bank of America Securities analyst Tal Liani upgraded Cisco Systems to buy from hold and increased the price target to $60 from $55, citing valuation and three catalysts: AI-related tailwinds, growth in the security business and synergies from the recently completed Splunk acquisition.
“We expect Networking to start normalizing and see renewed growth driven by Cisco’s share gains in Ethernet-based AI buildouts of hyperscalers,” said Liani.
While the analyst agrees that the next two quarters may continue to be under pressure, he contends that this downtrend is fully reflected in Wall Street’s expectations. He thinks that management’s guidance is adequately conservative.
Meanwhile, Liani expects the company’s security business growth to accelerate, driven by stabilization in the firewall space and its recently launched products.
Liani holds the 532nd position among more than 8,700 analysts tracked by TipRanks. His ratings have been successful 55% of the time, with each delivering an average return of 10.9%. (See Cisco Ownership Structure on TipRanks) More

YOUR GUIDE TO NAVIGATING YOUR FINANCIAL FUTURE

In her upcoming book, “Financially Lit!: The Modern Latina’s Guide to Level Up Your Dinero & Become Financially Poderosa,” author Jannese Torres discusses how she became the first woman in her family to graduate from college, build a career and achieve what she believed were marks of success.
“Homeownership is one of those things where more people need to question if they have the personality, lifestyle, or the value system for this, or are you just wanting to do it because that’s what everybody else is telling you to do,” Torres said.

Jannese Torres is the founder of the blog Delish D’Lites and the podcast “Yo Quiero Dinero.”
Photo Jannese Torres

In her upcoming book, “Financially Lit!: The Modern Latina’s Guide to Level Up Your Dinero & Become Financially Poderosa,” author Jannese Torres discusses how she became the first woman in her family to graduate from college, build a career and achieve what she believed were marks of success.
Yet in her pursuit of the American dream, she realized that she didn’t know what to do with her financial success. She also realized certain milestones, such as homeownership, often aren’t so much achievements as a new set of challenges.

“It’s just important for people not to just feel this pressure to buy a home because you’re a certain age or you’ve reached a certain life milestone,” said Torres, a Latina money expert who hosts the podcast “Yo Quiero Dinero” and an entrepreneurship coach who helps clients pursue financial independence.

As part of its National Financial Literacy Month efforts, CNBC will be featuring stories throughout the month dedicated to helping people manage, grow and protect their money so they can truly live ambitiously.

CNBC spoke with Torres in early April about what drove her to write her new book, how she has worked through “financial survivor’s guilt,” and why pursuing the American dream can become a nightmare for some.
(This interview has been edited and condensed for clarity).

‘Nobody talks about the grief that comes with growth’

Arrows pointing outwards

“I wanted to write the book that I needed when I was graduating from high school and that could have saved me from making a lot of financial mistakes because I didn’t learn anything about money,” said Jannese Torres, author of “Financially Lit!: The Modern Latina’s Guide to Level Up Your Dinero & Become Financially Poderosa.”
Courtesy: Jannese Torres

Ana Teresa Solá: What drove you to write this book? 
Jannese Torres: When I was doing the market research for the book, one of the things that I did was look and see what the competitive market looked like out there, or if there is a reason that this book needs to exist. 

I couldn’t find a single book that was specifically marketed to the Latina community or Latinos in general being the majority minority in this country. 

Our families have told us to go and pursue the American dream, but we haven’t been given instructions for how to manage the emotions that come with it.

Jannese Torres

I felt like I wanted to write the book that I needed when I was graduating from high school and that could have saved me from making a lot of financial mistakes because I didn’t learn anything about money. The more that I’ve talked to folks through the podcast and through my social media platforms, that’s been a very common sentiment. We’re told to go to school, get a job and make money, but then that’s the end of the conversation. What do we actually do with it? 
ATS: Like many younger generations of Latinos in the U.S., you overcame many hurdles and achieved major goals. But you describe in the book that these milestones also come with a sense of guilt. Why is guilt tied to success? 
JT: I call it “financial survivor’s guilt” because this is one of those things that we have not been prepared for. Our families have told us to go and pursue the American dream, but we haven’t been given instructions for how to manage the emotions that come with it. Nobody talks about the grief that comes with growth. Nobody talks about what it feels like to be on the other side of the struggle when so many people that you love are still there and you feel powerless to help them all. 

Looking back at it now, it’s like I was making all these decisions because of what other people valued versus asking myself what I actually value.

Jannese Torres

It’s going to require folks to give themselves some compassion, and to be okay to feel those feelings. But don’t let them sabotage you. It’s going to require some boundaries that you learn to exercise and also being okay with feeling like you’re on this island by yourself. When you’re the first to do something, it’s always going to feel uncomfortable. But if we don’t have examples of people who can make it out, I think it’s going to be much harder for folks to believe that they can do it, too. 

‘I was over my head very quickly’

ATS: Walk me through the chapter or that point in time when you bought a house, but it wasn’t all you thought it would be. 
JT: Looking back at it now, I was falling victim to the American dream. As a first-generation kid, my parents didn’t invest. The only thing that we saw as examples of “making it” was when family members would buy homes: The sacrifices were worth it and this is the thing that you have to show for your success.

When you’re the first to do something, it’s always going to feel uncomfortable. But if we don’t have examples of people who can make it out, I think it’s going to be much harder for folks to believe that they can do it, too. 

Jannese Torres
Latina money expert and entrepreneurship coach

I definitely felt the pressure to keep up with the Joneses in that respect. I was turning 30 years old and I saw friends buying homes, getting married, doing all those things that are on the successful adult checklist of life. When I decided to purchase the home, it was coming from a place of, “Well, I need to do this too, because this is just what everybody does.”
I quickly realized that I bought a home in a place that I didn’t even want to live in. 
Looking back at it now, it’s like I was making all these decisions because of what other people valued versus asking myself what I actually value. The freedom to have that flexibility that comes with renting is something that I valued much more.
But I felt like I was falling victim to that narrative that says, “You’re wasting money if you rent, and successful adults purchase homes.” It took a lot of unlearning of those narratives and realizing that just because something works for one person doesn’t mean that it’s universally applicable. 
Homeownership is one of those things where more people need to question if they have the personality, lifestyle, or the value system for this, or are you just wanting to do it because that’s what everybody else is telling you to do. 

Jannese Torres
Courtesy: Jannese Torres

ATS: What would you tell someone who’s financially comfortable or has reached certain benchmarks where they could potentially invest in a property but are still wary about it? 
JT: One of the things that made me realize I was over my head very quickly was the fact that two weeks into moving into the home, I discovered that the basement would flood. The sewer line was blocked, and that was not something that we checked during inspection. I ended up having to spend $4,000 on replacing the pipe in the basement two weeks after moving in. That pretty much depleted the little money that I had left over after closing costs. 
I ended up having to take a 401(k) loan to pay for repairs and putting things on credit cards. It’s important to realize that closing costs, the fees and the down payment are just the beginning.

There’s this narrative where if you get a mortgage, then you’re going to be paying the same amount of money forever and that’s why you should buy a home instead of renting. And I’m like, “Absolutely not.” Your property taxes and insurance will increase. You’re not going to be able to predict when things go wrong in the home and when you need to fix something. 
You have to make sure you can afford the maintenance costs and the things that will inevitably come with homeownership. And from a value perspective, you have to really be honest with yourself: “Does this suit my lifestyle? Do I want to stay in this place for like a decade or more? … Or do I want the flexibility to give my landlord 30 days’ notice and be able to move somewhere else? Are you in a job that feels like it’s something you want to do long term? Or do you want to make a career pivot?”

‘The American dream is more of an illusion’

ATS: Do you think the American dream has changed? 
JT: I definitely do think that the American dream is in the process of being redefined because it has become so inaccessible, especially to the newer generations. I think there was this path to “success” where you could go to school, you could buy a home with a regular job, and previous generations were not saddled with the level of student loan debt and the cost of living was not as high. There’s factors in play that are making the American dream obsolete or at least inaccessible to people. 
We are seeing sort of this questioning of it and this shift. I think that the Great Recession was a big impetus for people starting to wonder. It feels very much like the American dream is more of an illusion for a lot of folks, and I am curious to see where it goes. More

In this photo illustration a Kao Corporation logo seen displayed on a smartphone. 
Igor Golovniov | SOPA Images | Lightrocket | Getty Images

Company: Kao Corp (4452.T)

Business: Japan-based Kao Corp manufactures and sells consumer and chemical products. It operates in five business segments. The hygiene and living care segment provides fabric, kitchen, home, sanitary and pet care products. The health and beauty care segment offers facial, body, hair, oral care, hair styling and color products, as well as salon, in-bathroom health care and warming products. The life care business offers health drinks and hygiene products for commercial use. The cosmetics business provides counseling and self-selection cosmetic products. Finally, the chemical business segment features oleo chemicals, fat and oil derivatives, surfactants, fragrances and other specialty chemical products.
Stock Market Value: 2.92 trillion Japanese yen (6,273 yen per share)

Activist Commentary: Oasis Management is a global hedge fund management firm headquartered in Hong Kong with additional offices in Tokyo, Austin and the Cayman Islands. Oasis was founded in 2002 by Seth Fischer, who leads the firm as its chief investment officer. Oasis is an authentic international activist investor, doing activism primarily in Asia (and occasionally Europe). The firm has an impressive track record of prolific and successful international activism. It has as many arrows in its quiver as any activist and has been successful in getting seats on boards, opposing strategic transactions, advocating for strategic actions, improving corporate governance and holding management accountable.

What’s happening

On April 8, Oasis Management announced that it owns over 3% of Kao Corp. Days earlier, the firm rolled out its “A Better Kao” presentation, proposing an overhaul at the company.

Behind the scenes

Kao Corp is a global fast-moving consumer goods company with a diversified portfolio of products spanning from hair and skin care to cosmetics and chemicals. The company operates across five segments, but hygiene and living care (33%), health and beauty (25%), cosmetics (15%) and chemicals (23%) are their four key segments generating nearly all of Kao’s 1.53 trillion yen in revenue in 2023. The company has a stable of brands (including Curél, freeplus, Jergens, Bioré, Oribe and Molton Brown) that has deeply underperformed its peers. As of the issuance of its campaign presentation, Oasis points out that Kao shares were down 22.9% since 2021 while peers were up between 1.7% to 100.4% during the same period. In addition, while peers have recovered their consumer products sales, Kao has failed to return to pre-pandemic levels and has some of the worst operating profit margins in the industry. Despite the push from the Tokyo Stock Exchange for companies to improve return on equity, Kao’s ROE has been on a steady decline to sub-5% in 2023 from approximately 20% in 2017. Operating margins are on a similar trajectory as well, declining to 4% in 2023 from 14% in 2019.
Oasis details what it thinks are the company’s issues in its “A Better Kao” campaign presentation. Oasis thinks the company: (i) is too reliant on Japan, generating 65% of revenue in its domestic market and 35% in the rest of the world, which is a distribution nearly inverse to their peers, (ii) is not in the optimal distribution channels, (iii) is not focused enough on marketing – while peers spend between 20% and 35% of its revenue on marketing and advertising, Kao has consistently only paid 10% to 11% of its consumer goods revenue. Oasis also said that Kao has a bloated brand portfolio with too many subscale domestic brands; the company has nearly 80 brands, but generates the same revenue as peers with 10 to 30.
Oasis does offer several solutions to the company to jumpstart growth such as: (i) reversing its opposition to international expansion and distribution in order to unleash the potential of its stable of globally beloved brands, which have been artificially constrained to domestic and regional markets; (ii) reviewing its brand portfolio, prioritizing focus and investment in high-growth areas, expand gross margins through product premiumization, streamline its bloated brand and SKU portfolio and focus particularly on rationalization in its cosmetics and health and beauty segments; and (iii) embracing marketing by onboarding a CMO with global experience as well as refreshing the board with similarly experienced directors. These are wholesale changes to Kao’s business, geographical footprint, distribution channels and product mix that would usually require an in-depth analysis of costs, demand, competitive landscape and chance of success. Oasis provides none of that.

Oasis does cite Beiersdorf’s turnaround as the analog for what is possible at Kao. Suffering many of the same problems, Beiersdorf had underperformed peers, poorly allocated marketing spend and lagged on premiumization. Investors had also lost confidence in management. The company refreshed its CEO overhauled its corporate culture and growth strategy and refocused on key brands and gross margin expansion. Since doing so, Beiersdorf’s share price has outperformed the rest of its European consumer goods peers. However, Oasis had absolutely nothing to do with that turnaround and is not recommending any of the executives from Beiersdorf for positions at Kao. It is hard to see what relevance Beiersdorf has here besides just being a peer.
Oasis states that the board has no directors with expertise in international consumer goods marketing or branding, and the firm makes good points regarding gender and demographics of the board. Oasis has proven to be a value-creating activist in many situations and would likely be a valuable board member here, but this is not a typical Oasis activist campaign. First, until 2023, the firm had never engaged a cosmetics company. Since then, this is Oasis’ third engagement of a Japanese company in the cosmetics, health and consumer goods category. The other two have not gone so well. Kusuri No Aoki and Tsuruha are both drugstore operators, engaged in the sale of pharmaceuticals, cosmetics and other consumer goods. At both companies, Oasis ran proxy fights and was defeated by management. Second, if Oasis is even remotely correct about the issues at Kao, fixing them would require a total reconstitution of the board and replacement of management. That is not something that is typically done at Japanese companies nor something Oasis has a lot of experience in. In Japan, Oasis and other activists have been successful in creating shareholder value just by engaging companies without getting their activist agenda implemented. That is something that can happen in Japan, but generally when the recommendations are minor such as capital allocation, selling down cross-shareholdings and corporate governance improvements. In this case, Oasis would have to implement its activist agenda and do some heavy lifting to create value at a company with the issues it claims this company has.
That does not seem to be part of the Oasis plan here. Oasis CIO Seth Fischer did not rule out submitting shareholder proposals to Kao, but even that seems like using a flyswatter on an elephant. Additionally, a settlement here is very unlikely. Oasis had been privately meeting with management since 2021, so if management was inclined to work with them, it would have happened already, and Oasis would not have had to go public with its campaign. On the contrary, the day after Oasis launched its campaign, Kao stated that the firm lacked sufficient understanding of its portfolio management and restructuring plans. 
As of the date of its presentation, Oasis projected between 76% to 97% upside for the stock, or nearly 10,000 yen per share if their proposals are adopted. However, the investor has also been engaging privately with the company since June 2021 during which time growth has slowed, margins had declined, ROE has plummeted and the stock has slid. So, I would take the firm’s predictions and chances of success with a grain of salt.
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

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Dado Ruvic | Reuters

The Bitcoin network on Friday night slashed the incentives rewarded to miners in half for the fourth time in its history.
The celebrated event, which takes place about once every four years as mandated in the Bitcoin code, is designed to slow the issuance of bitcoins, thereby creating a scarcity effect and allowing the cryptocurrency to maintain its digital gold-like quality.

There may be some speculative trading on the event itself. JPMorgan said it expects to see some downside in bitcoin post-halving and Deutsche Bank said it “does not expect prices to increase significantly.” However, the impact may be bigger months from now, even if bitcoin continues its trend of diminishing returns from its halving day to its cycle top. Two key things to watch will be the block reward and the hash rate.

“While the upcoming Bitcoin halving will create a supply shock as the previous ones had, we believe its impact on the cryptocurrency’s price could be magnified by the concurrent demand shock created by the emergence of spot bitcoin ETFs,” said Benchmark’s Mark Palmer.
The bigger immediate impact will be to the miners themselves, he added. They’re the ones that run the machines that do the work of recording new blocks of bitcoin transactions and adding them to the global ledger, also known as the blockchain.
“Miners with access to inexpensive, reliable power sources are well positioned to navigate the post-halving market dynamics,” said Maxim’s Matthew Galinko in a note Friday. “Some miners, many that are not public, could exit the market with a combination of poor access to power, efficient machines, and capital. Miners with capital and relatively expensive power will likely find opportunities in the wake of potential consolidation and disruption driven by the halving.”
The block reward
Miners have two incentives to mine: transaction fees that are paid voluntarily by senders (for faster settlement) and mining rewards — 3.125 newly created bitcoins, or about $200,000 as of Friday evening, when the mining reward shrunk from 6.25 bitcoins. The incentive was initially 50 bitcoins.

Arrows pointing outwards

The reduction in the block rewards leads to a reduction in the supply of bitcoin by slowing the pace at which new coins are created, helping maintain the idea of bitcoin as digital gold — whose finite supply helps determine its value. Eventually, the number of bitcoins in circulation will cap at 21 million, per the Bitcoin code. There are about 19.6 million in circulation today.
“Miners utilize powerful, specialized computer hardware to validate transactions on the Bitcoin network and record them permanently on the blockchain,” Deutsche Bank analyst Marion Laboure said. “This process, known as mining, rewards miners with newly minted bitcoins. But with each halving, the reward to mining is decreased to maintain scarcity and control the cryptocurrency’s inflation rate over time.”

The hash rate

Historically after a halving, the Bitcoin hash rate – or the total computational power used by miners to process transactions on the Bitcoin network – has fallen, pricing some miners out of the market. It generally recovers in the medium term, however, Laboure pointed out.
The network hash rate has been hitting all-time highs for months as miners tried to take market share ahead of the halving. Growth in the Bitcoin hash rate dilutes individual miners’ contribution to the network hash rate.
“In the past three halvings, the network recovered its pre-halving hash rate levels within an average of 57 days,” she said. “It is also likely that the current elevated prices of bitcoin may limit this short-term dip in the hash rate, as bitcoin miners enjoy record high profits in the lead-up to the halving.”
Palmer said the impact of the halving on bitcoin miners’ economics could be “more than offset over time” if bitcoin’s price rallies keep pushing the cryptocurrency to new highs in the months ahead.

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A majority of new retirees claim Social Security retirement benefits before age 65, according to new research from the Alliance for Lifetime Income.
Waiting another five to eight years would result in higher lifetime benefits, experts say.
When deciding the right time to claim Social Security, retirees should consider not only the size of their monthly benefits but also their lifetime benefits.

Sporrer/Rupp | Image Source | Getty Images

The largest and final cohort of the baby boom generation — 30.4 million Americans — will turn 65 by 2030.
And more than half of that group will rely primarily on Social Security for income, according to new research from the Alliance for Lifetime Income.

When to claim Social Security retirement benefits is a high-stakes decision. Generally, the longer you wait, the larger your monthly checks will be.
Eligibility for retirement benefits starts at age 62. But full retirement age – generally age 66 or 67, depending on an individual’s birth year — is when retirees may receive 100% of the benefits they’ve earned.
For each year you wait past full retirement age up to 70, you may receive an 8% benefit boost.
“Everyone should know that you have a penalty if you collect before 70,” said Teresa Ghilarducci, a professor at The New School for Social Research and author of the book “Work, Retire, Repeat: The Uncertainty of Retirement in the New Economy.”
Yet a majority of new retirees claim benefits before age 65, according to the Alliance for Lifetime Income’s new research, even though waiting another five to eight years would result in higher lifetime benefits.

How to know your full retirement age

To gauge when to claim, you first should know your full retirement age — the point when you’re eligible for 100% of the benefits you’ve earned.
Today, a new higher full retirement age of 67 is getting gradually phased in.
“For most of the people retiring today, their full retirement age is somewhere between 66 and 67,” said Joe Elsasser, a certified financial planner and president of Covisum, a Social Security claiming software company.
If you were born between 1943 and 1954, your full retirement age is 66.  The full retirement age increases gradually if you were born from 1955 to 1960 until it reaches 67. If you were born in 1960 or later, your full retirement age is 67.

Social Security full retirement age

Year of birth
Social Security full retirement age

1943-1954
66

1955
66 and two months

1956
66 and four months

1957
66 and six months

1958
66 and eight months

1959
66 and 10 months

1960 and later
67

Source: Social Security Administration

Why it pays to delay retirement benefits

Claiming at age 62 comes with significant penalties, experts say.
For people who are turning 65 this year, early claiming would have resulted in a 30% benefit cut. Instead of $1,000 per month at their full retirement age, 66 and 10 months, they would be receiving around $700 per month had they claimed at age 62.
Most people know that early claiming will result in reduced benefits, a Schroders survey from 2023 found. However, many respondents still planned to start their monthly checks early.
Using the word “early” to describe claiming at 62 may lead people to feel there is an advantage to claiming then, Shai Akabas, executive director of the economic policy program at the Bipartisan Policy Center, said during a presentation by Alliance for Lifetime Income.

Instead, that could be called the “minimum benefit age” to help people understand there are benefit reductions for claiming then, he said.
A bipartisan group of senators has called for making that change, as well as changing “full retirement age” to “standard benefit age.” Age 70, the highest claiming age, would be called the “maximum benefit age.”
When deciding the right time to claim Social Security, retirees should consider not only the size of their monthly benefits, but also their lifetime benefits, longevity protection and immediate needs, according to the Bipartisan Policy Center.
It also helps to consider how a claiming decision will affect a spouse or dependents who may also receive benefits based on a worker’s record.
Research has found only about 8% of beneficiaries delay until age 70, the highest possible age to claim benefits, according to Ghilarducci. Because Social Security benefits are one of the few sources of guaranteed income for many retirees, having smaller monthly checks can make them more financially vulnerable.
Those who can’t delay their Social Security benefits for years can still increase their lifetime benefit income by delaying for just a few months, Ghilarducci said.
“Do whatever you can to bridge to a higher Social Security benefit amount,” Ghilarducci said. More