Investing

Spending more to save more — also known as “spaving” — is a common pitfall.
But it can also lead to excessive spending and high-interest credit card debt if you aren’t careful, experts say.
Here are the best ways to avoid falling for a financial trap.

Spending more to save more is an all-too-common pitfall.
The opportunities for so-called spaving are nearly everywhere, whether it’s the lure of a “limited-time deal” or “buy one, get one free” or tacking on additional items to get a bigger discount or simply to reach the free shipping threshold.

But spending to save can lead to excessive buying habits and high-interest credit card debt if you aren’t careful, according to consumer savings expert Andrea Woroch.
More from Personal Finance:‘Quiet luxury’ is alive and well in 2024Americans are splurging on travel and entertainmentShoppers embrace ‘girl math’ to justify luxury purchases
Similar to “girl math,” which breaks down the price of an item by the cost per wear to justify big-ticket purchases, spaving encompasses all the ways buying decisions are rationalized. 
″’Spaving is us justifying our desire to buy more,” said Brad Klontz, a Boulder, Colorado-based psychologist and certified financial planner.
By nearly every measure, Americans are financially strained. Yet, even as inflation and high interest rates squeeze budgets, consumers continue to fall for these financial traps.

“Teams of scientists have figured out how to extract more money out of you,” said Klontz, who is also managing principal of YMW Advisors and a member of CNBC’s Financial Advisor Council.
But spaving comes at a cost, he added.
“We are just constantly spending more than we can afford and then we experience stress related to our financial health,” Klontz said.

How to combat spaving

Think through your purchases carefully, Woroch said — and consider the trade-offs, especially if it comes at the expense of your economic standing. Here are her six steps to avoid the financial trap of spaving:

Quiet the noise. Identifying triggers that lead to impulse sale purchases is key to dodging them in the future, Woroch said. “Delete shopping apps on your phone that alert you to the latest sale and unsubscribe from store newsletters,” she said. “Instead, look for coupons only when you need them” through deal sites such as CouponCabin.com or with a browser plug in like SideKick, which scans for applicable codes.
Pay with cash. Buying big-ticket purchases in cash can also help avoid impulse spending. “You’re less likely to part with your hard-earned dollars on something you didn’t plan to buy or don’t really need when you’re forking over actual bills,” Woroch said. This strategy doesn’t rule out money-saving opportunities, she added. Take pictures of your receipts using the Fetch app and earn points, which can then be redeemed for gift cards at retailers such as Walmart, Target and Amazon.
Do the math. For some “buy more, save more” deals, the percent discount is often the same but disguised as a greater value, according to Woroch. For instance, getting $20 off $100 is no better than $10 off $50. “Don’t let this fool you into buying more,” she cautioned, “do the math with your calculator if you aren’t sure.”
Steer clear of temptation. If there’s a particular retailer that temps you with limited-time sales, try to avoid going into that store altogether. Instead, “order online and choose curbside pick up to get what you need,” Woroch said.
Create shopping “hurdles.” If you are shopping online, deleting stored payment details can help create a “purchase hurdle” that forces you to think through your buying decisions before your proceed, Woroch said.
Set time rules. When in doubt, sleep on it, she advised. “Give yourself 24 hours to think through a purchase before you hit the buy button.” Chances are, you will have moved on.

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Women and Wealth Events
Your Money

In February, Rebekah Alstede Modery and Sarah Alstede joined Kurt Alstede and Mary Thompson-Alstede as co-owners of Alstede Farms in Chester, New Jersey.
With the younger generation of Alstede women owners, the farm is now majority women-owned.
Women farmers are frequently involved in day-to-day decision-making, record keeping and financial management, land use and crop decisions as well as estate planning, according to the 2022 Census of Agriculture.

Rebekah Alstede Modery, left, and Sarah Alstede, sisters and co-owners of Alstede Farms in Chester, New Jersey.
Courtesy: Alstede Farms

Sisters Rebekah Alstede Modery and Sarah Alstede were raised on a New Jersey farm. This year, they decided to spend their careers there, too.
Rebekah graduated in 2023 with a double major in agricultural business and sustainable agricultural production from Delaware Valley University. When it was time to decide on her next steps, it was easy to commit to staying on at the family farm, she said.

“I grew up here, and I loved doing it, and particularly loved the business and marketing side,” Rebekah, 24, told CNBC in the living room of her childhood home, nestled on Alstede Farms’ 600-acre property in Chester, New Jersey.
Sarah, 22, had a similar bond with the farm: “I knew really my entire life growing up that I would want to be here forever.”
She recently graduated from Centenary University with an associate degree in animal science with a focus in equine studies.

More from Women and Wealth:

Here’s a look at more coverage in CNBC’s Women & Wealth special report, where we explore ways women can increase income, save and make the most of opportunities.

In February, the sisters joined their father, Kurt Alstede, and their stepmother, Mary Thompson-Alstede, as co-owners of Alstede Farms.
With the younger generation of Alstede women owners, the farm is now majority women-owned. While farming is often thought of as a male-dominated field, there’s data indicating women are often key decision-makers for farms.

What decisions women farmers make

There were about 1.22 million female producers, or women farmers, in 2022, according to the National Agricultural Statistics Service, or NASS, at the U.S. Department of Agriculture. It’s still a male-dominated field: Those women represent about 36% of all producers.
Until recently, government data didn’t fully capture the role of women in farming, said Dominique Sims, an agricultural statistician at NASS.
NASS conducts the Census of Agriculture once every five years. It updated its practices in 2017 to collect more detailed demographic data, and ask more questions about who makes key decisions for farms and ranches. For its 2022 survey, it added another decision-making category: marketing.
“Women have always been a part of agriculture and always been a part of the decision-making, but the Census of Agriculture hasn’t always had the questions to ask,” said Shoshana Inwood, an associate professor of community, food and economic development at The Ohio State University.
Of the women who were in farming in 2022, many were key decision-makers, according to the 2022 Census of Agriculture.

The category women are most involved in is making day-to-day decisions, with 78%, the data shows.
Record-keeping and financial management is the only area where women are more likely to be involved than men, at 71% versus 70%.
“If you look at the female producers specifically, those are the categories where they reported the highest rate of involvement,” said Lance Honig, chair of NASS’ agricultural statistics board.
Both genders are equally as likely to be involved in estate and succession planning, at 53%.

High interest rates, climate change challenge farms

As younger women such as Rebekah and Sarah take on roles making key farm decisions, they’ll need to be prepared to navigate a host of growing financial challenges.
While the total number of producers in the U.S. has hardly changed in recent years, farms continue to consolidate.
There were 1.9 million farms in the U.S. in 2022, a 7% decline from 2017, according to USDA figures. Over that same period, the average farm size increased 5%, to 463 acres per farm, according to the agency.
About 23% of farms in the U.S. carried debt in 2022, a decline from 28% in 2018, according to the Agricultural Resource Management Survey by the USDA Economic Research Service.
However, that’s not indicating a healthier farm economy, according to the American Farm Bureau Federation. High interest rates have made it more expensive for farms to carry debt and created liquidity challenges.
“Operating loans and other forms of financing cost farmers a whopping 43% more in 2023 than in 2022 and are forecast to remain elevated for much of 2024,” wrote AFBF economist Bernt Nelson.

Climate change and weather extremes that come with it have also become increasingly challenging for farmers. Two of the biggest stressors are changing temperatures and rainfall or precipitation, said Rachel Schattman, assistant professor of sustainable agriculture at the University of Maine.
“Farmers are very good at thinking on their feet and they’re great problem solvers,” said Schattman. “The variability makes that problem-solving process a lot more intense and it’s a lot more financially demanding.”
Changing weather contributes to issues such as frost and freezes after long, warm periods in the spring, flooding or ponding events, drought, hastened crop developments and changing dynamics with pest and weed pressure, she said.
Some farmers have the cash flow to pay outright for the labor costs and equipment needed to mitigate such problems, while others might have to take lines of credit at the beginning of the season, said Schattman.
“For large-scale investments like wind machines to deal with frost in perennial fruit orchards, those are much more capital intensive and are often financed through things like traditional loans,” she said.

‘A huge undertaking’ as a family

Co-owners of Alstede Farms from left to right: Mary Thompson-Alstede, Rebekah Alstede Modery, Kurt Alstede and Sarah Alstede.
Courtesy: Alstede Farms

In mid-March, Alstede Farms experienced a frost-freeze period, which threatens the life of new blooms, said Rebekah, who now works as the farm’s assistant production manager out in the fields. Warmer temperatures earlier in the spring had spurred the apples, peaches, plums and apricots to further develop, putting them and early crops including strawberries at risk.
“We were out with different tools trying to keep everything warm. We double-covered our strawberries and we had fans blowing, just mixing the air to keep it warmer for the apples,” said Rebekah.
Such efforts are “a huge undertaking,” said Mary Thompson-Alstede. “We have people up all night long making sure everything is working and operational and driving tractors around with heaters to move it to all different places on the farm.”
In addition to labor costs, the double layer of row covers for the 22 acres of strawberries was $25,000, said Kurt Alstede. “We successfully protected them, but now there’s another $25,000 investment because of climate change.”

Rebekah Alstede Modery, left, and Sarah Alstede, sisters and co-owners of Alstede Farms in Chester, New Jersey.
Courtesy: Alstede Farms

Sometimes the risk management tools are not enough. Apple-picking is one of Alstede Farm’s crown jewels, along with pumpkins, and both share a peak season that spans from early September to late October, said Sarah.
Last year, the farm lost eight of its busiest weekends in the fall due to rain. Alstede Farms resorted to selling hundreds of tons of apples to juice at 5% of the price, or 10 cents a pound instead of $1.99.
Sarah believes that she and her sister have the grit to withstand such challenges, after seeing their family deal with hardships.
“It’s definitely equipped us to what the future will bring once we really take over,” she said. More

Coca-Cola beverages are offered for sale April 30, 2024 in Chicago, Illinois. 
Scott Olson | Getty Images

As macro uncertainty hangs over the stock market, investors are searching for sources of income, which can help cushion their portfolios in volatile times.
Those who wish to add stocks that pay dividends consistently can follow the recommendations of Wall Street experts. These analysts can guide investors toward the best stocks from a large universe of dividend-paying companies.  

Here are three attractive dividend stocks, according to Wall Street’s top pros on TipRanks, a platform that ranks analysts based on their past performance.
Chord Energy
First up is Chord Energy (CHRD), an oil and gas operator in the Williston Basin. Earlier this year, Chord declared a base-plus-variable cash dividend of $3.25 per share.
Recently, Siebert Williams Shank analyst Gabriele Sorbara initiated coverage of Chord Energy stock with a buy rating and a price target of $262, citing its attractive valuation and capital returns. The analyst highlighted the company’s peer‐leading capital returns framework, under which it aims to return more than 75% of free cash flow (FCF) to shareholders through dividends and opportunistic buybacks.
The analyst expects capital returns of $778.8 million and $1.15 billion in 2024 and 2025, respectively. These estimates for 2024 and 2025 reflect capital return yields of 6.6% and 9.7%, respectively, which are above the peer average yields of 6.3% and 7.8%.
Citing CHRD’s solid track record in the Williston basin and an impressive inventory runway of oil locations, Sorbara said, “With improving capital efficiencies from wider spacing, longer laterals and acquisition synergies, we view CHRD as the name to own for the greatest exposure and leverage to the basin.” 

The analyst also sees an upside to the Street’s consensus estimates for certain key metrics, including production, EBITDA and free cash flow, driven by the recently announced Enerplus acquisition, enhanced capital efficiencies and higher oil prices.
Sorbara ranks No. 391 among 8,800 analysts tracked by TipRanks. His ratings have been profitable 52% of the time, with each delivering an average return of 12.4%. (See Chord Energy Stock Buybacks on TipRanks)
Energy Transfer
Next on the list is Energy Transfer (ET), a master limited partnership or MLP. ET is a midstream energy company operating over 125,000 miles of pipeline and related infrastructure. On April 24, the company announced an increase in its quarterly cash distribution to $0.3175 per common unit for the first quarter of 2024, payable on May 20.
The new cash distribution marks a 3.3% year-over-year increase and reflects a dividend yield of about 8% on an annualized basis.
Recently, Mizuho analyst Gabriel Moreen slightly raised the price target for ET to $19 from $18 and reiterated a buy rating, calling the stock his firm’s new midstream top pick. The analyst pointed out that the stock has outperformed its midstream peers so far this year, but to a lesser extent compared to some other operators. That’s despite the company’s solid free cash flow outlook and leverage in the Permian basin.
“We believe ET could capitalize on its improved credibility by providing a more detailed capital allocation framework,” said Moreen.
The analyst thinks that a clear message about capital allocation could serve as a major company-specific catalyst to help investors capitalize on the company’s healthy free cash flow yield.
He added that the stock’s discounted valuation and upside potential on equity return are the key drivers that make it his firm’s top midstream pick.
Moreen ranks No. 183 among 8,800 analysts tracked by TipRanks. His ratings have been successful 79% of the time, with each delivering an average return of 10.3%. (See Energy Transfer Technical Analysis on TipRanks)
Coca-Cola
This week’s final pick is dividend king Coca-Cola (KO). Earlier this year, the beverage giant increased its quarterly dividend by about 5.4% to $0.485 per share. This marked the 62nd consecutive year in which the company hiked its dividend. KO stock offers a dividend yield of 3.1%.
On April 30, Coca-Cola reported better-than-expected first-quarter results and raised its organic revenue growth forecast. However, the company expects a higher impact of currency headwinds than previously estimated.
Reacting to the Q1 print, RBC Capital analyst Nik Modi reiterated a buy rating on KO stock with a price target of $65. The analyst noted that KO significantly outperformed organic growth expectations. He thinks that the company’s underlying fundamentals continue to be robust despite the impact of a strong dollar on the bottom line.   
“We believe the company’s latest restructuring and organizational design changes will facilitate better allocation of resources, which will ultimately lead to better share gains and white space expansion,” said Modi.
The analyst expects the momentum in Coca-Cola’s revenue and earnings to continue this year and sees further upside if the U.S. dollar weakens, given the company’s significant exposure to international markets.
Modi ranks No. 620 among 8,800 analysts tracked by TipRanks. His ratings have been profitable 60% of the time, with each delivering an average return of 6.5%. (See Coca-Cola Hedge Fund Activity on TipRanks) More

“When you think about the potential for scamming people … if I was interested in investing in scamming, it’s gonna be the growth industry of all time and it’s enabled, in a way” by AI, Warren Buffett said.
“Obviously, AI has potential for good things too, but … I do think, as someone who doesn’t understand a damn thing about it, it has enormous potential for good and enormous potential for harm,” he added.

Warren Buffett isn’t jumping on the artificial intelligence bandwagon just yet, warning about the technology’s potential for harm.
“When you think about the potential for scamming people … if I was interested in investing in scamming, it’s gonna be the growth industry of all time and it’s enabled, in a way” by AI, Buffett said at Berkshire Hathaway’s annual shareholder meeting on Saturday. Buffett pointed to the technology’s ability to reproduce realistic and misleading content in an effort to send money to bad actors.

Scammers are known to use AI voice-cloning and deep-fake technology to manipulate videos and images that impersonate an individual’s family and friends to ask for money or personal information.
“Obviously, AI has potential for good things too, but … I do think, as someone who doesn’t understand a damn thing about it, it has enormous potential for good and enormous potential for harm — and I just don’t know how that plays out,” Buffett added.

Warren Buffett walks the floor ahead of the Berkshire Hathaway Annual Shareholders Meeting in Omaha, Nebraska on May 3, 2024. 
David A. Grogen | CNBC

AI has been the talk of Wall Street for more than a year, as investors bet on the technology’s potential to drive higher profits going forward. Stocks such as Nvidia and Meta Platforms have skyrocketed during the AI boom, up 507% and 275%, respectively since the end of 2022.
However, the investing legend admitted he’s not familiar with AI and likened its potential that of the atomic bomb’s during the 20th century.

More from Berkshire Hathaway’s Annual Meeting

“I don’t know anything about about AI. That doesn’t mean I deny its existence or importance or anything of the sort,” Buffett said, speaking in a cautious tone. “We let the genie out of the bottle when we developed nuclear weapons and that genie has been doing some terrible things lately, and the power of that genie is what scares the hell out of me.”
“I don’t know any way to get the genie back in the bottle, and AI is somewhat similar. It’s part of the way out of the bottle, and it’s enormously important and it’s going to be done by somebody … whether it’s going to change the future of society, we will find out later,” Buffett added. More

Many companies offer stock compensation but employees miss the opportunity to build wealth.
Nearly three-quarters of companies offer some form of equity compensation to certain employees, according to a 2023 survey.
A few common types include stock options, restricted stock units and employee stock purchase plans.

Prasit photo | Moment | Getty Images

As employers compete to attract and retain talent, equity compensation — or an ownership stake in the company — has become a key workplace benefit.
Some 72% of companies offer some form of equity compensation to certain employees, a 2023 survey from Morgan Stanley found. That’s up from 65% in 2021.

These perks motivate employees and boost their long-term investing goals, according to the Morgan Stanley survey, which polled 1,000 U.S. employees and 600 human resource executives.
However, some “miss the opportunity” because they don’t understand it, said certified financial planner Chelsea Ransom-Cooper, chief financial planning officer for Zenith Wealth Partners in New York.
More from Personal Finance:This job perk is like a ‘cash bonus’ — but you need a long-term strategy, experts sayEmployee stock purchase plans offer ‘free money’ — but also carry complexity and riskTreasury Department announces new Series I bond rate of 4.28% for the next six months
Here’s what to know about three popular types of stock-based compensation, experts say.

There’s potential for ‘life-changing wealth’

Many employees receive so-called stock options as part of their compensation, which are the right to buy or “exercise” company shares at a preset price within a specific timeframe.

“It’s almost iconic to grant stock options in a startup private company,” said Bruce Brumberg, editor-in-chief and co-founder of myStockOptions.com, which covers various types of equity compensation.
Startups want to create the drive and incentive of ownership culture with the potential for “life-changing wealth,” he said.

Stock options become valuable when there’s a discount between your preset price and the market value, which makes it more attractive to exercise. However, the taxes can be complicated, depending on the type of stock options.
Incentive stock options can offer some tax benefits — if you meet certain rules — but could trigger the alternative minimum tax, a parallel system for higher earners.

Photo by LanaStock via Getty Images

By comparison, the more common nonqualified stock options generally have less favorable tax treatment and you’ll owe regular income taxes on the discount upon exercise.
But even with an initial discount, there’s no guarantee a company’s stock price won’t decrease after exercising a stock option.
“It could be worth nothing but a piece of paper,” Ransom-Cooper from Zenith Wealth Partners said.

Restricted stock units are ‘like a cash bonus’

Another benefit, restricted stock units, or RSUs, are company shares granted upon hiring, which vest over time. RSUs can also be tied to performance-based goals.
Some 94% of public companies offer RSUs to at least middle managers, according to a 2021 survey from the National Association of Stock Plan Professionals.
“I like to think of it like a cash bonus,” said Pittsburgh-based CFP Matthew Garasic, founder of Unrivaled Wealth Management. 

I like to think of it like a cash bonus.

Matthew Garasic
Founder of Unrivaled Wealth Management

For example, if the stock price is $10 and 100 shares vest, it’s treated like $1,000 in compensation for that year, and the standard withholding of 22% might not be enough, depending on your tax bracket, he explained.

After vesting, the decision to sell or hold RSUs depends on your short- and long-term investing goals.
“We like to establish a target of what they like to hold in company stock,” said Garasic, who aims to keep allocations of a single stock to 10% or less. “Once we get above that target, we just sell at vest.”

Employee stock purchase plans offer ‘free money’

Many publicly traded companies may also offer discounted company shares via an employee stock purchase plan, or ESPP.
“There’s free money to be had” with an ESPP, Garasic explained.
However, the decision to participate typically depends on your short-term financial goals.
After enrolling, your ESPP collects a portion of after-tax money from each paycheck and uses the funds to buy discounted company stock on a specific date.
The gold standard is a 15% discount with a lookback feature, which bases the stock purchase price on the value at the beginning or end of the offering period, whichever is lower, experts say.

Any time you’re investing in a single company, there’s certainly a big risk.

Kristin McKenna
President of Darrow Wealth Management

You can typically sell after a set period, but there’s no guarantee you’ll make money, even with the built-in discount.
“Any time you’re investing in a single company, there’s certainly a big risk,” CFP Kristin McKenna, president of Darrow Wealth Management in Boston, previously told CNBC.
Yearly goals like investing up to your employer’s 401(k) match should come before your ESPP, especially with limited income, she added. More

Wako Megumi | Istock | Getty Images

Company: Toyo Suisan Kaisha (2875.T)

Business: Toyo Suisan Kaisha and its subsidiaries produce and sell food products in Japan and internationally. The company operates through the following segments: Seafood, Overseas Instant Noodles, Domestic Instant Noodles, Frozen and Refrigerated Foods, Processed Foods and Cold Storage. It purchases, processes, and sells seafood, and manufactures and sells a variety of products including instant cup and bag noodles, soup and processed foods.
Stock Market Value: Roughly 1 trillion Japanese yen (10,070.00 yen per share)

Activist: Nihon Global Growth Partners Management

Percentage Ownership: 3.8%
Average Cost: n/a
Activist Commentary: Nihon Global Growth Partners Management is a long-term investor in Japanese-listed companies that are growing rapidly in markets outside of Japan. Prior to founding Nihon Global in 2018, the firm’s principals were involved in managing a private equity program in Japan starting in 2004. As private equity investors, the principals have done nine buyouts, including three listed companies in Japan. All the principals’ prior private equity investments involved Japanese companies where a substantial portion of the growth was in markets outside of Japan.

What’s happening

In late April, Nihon Global issued a press release and presentation detailing its investment in Toyo Suisan and four shareholder proposals it has put forward to be voted on at the company’s upcoming 2024 general shareholders’ meeting: (i) increase the dividend payout ratio to 40%; (ii) repurchase 20 billion yen of the company’s shares; (iii) implement a director stock compensation program; and (iv) disclose the company’s cost of capital.

Behind the scenes

Toyo Suisan is an international conglomerate with multiple business segments across seafood, processed foods and refrigeration, but its crown jewel is its overseas instant noodle business. The company is a global leader in the space, specifically in North America which contributed 65% of consolidated earnings before interest and taxes in 2023 and is expected to surpass 70% in the coming years. Toyo Suisan’s brand of packaged instant noodles under the brand name Maruchan can be found in more than the dorm rooms of college students, dominating 70% of market share by volume and 45% by sales value in the US, and 75%+ in Mexico. The segment has enjoyed roughly 10.9% revenue and 12.8% EBIT compound annual growth rates from 2012 to 2024, as well as consistently healthy EBIT margins in the mid-teens.

Despite this staggering performance and status as a global leader in instant noodles in the U.S., Mexico, and Japan, the company appears deeply discounted to its intrinsic value. Nihon Global attributes this to the company’s (i) lack of strategic focus on its core assets; (ii) poor capital allocation, dedicating far too much capex on low ROA legacy businesses and being substantially overcapitalized; and (iii) a lack of attention to total shareholder return, which has underperformed peers in terms of total returns, as well as a lack of a formal shareholder return policy.
The ideal plan for Toyo Suisan would be to divest its legacy and non-core businesses and focus its capital and resources on growing its core noodles business. Legacy businesses have generated just 17% of the company’s 10-year cumulative earnings before interest, taxes, depreciation and amortization, yet they have been awarded 51% of the capex despite generating sub-5% return on assets. Assets like its valuable refrigerated warehouse segment, a very attractive business, would be better suited as a Japanese real estate investment trust or sold to a strategic acquirer. The same applies to its processed foods and seafood trading businesses, which would benefit from the scale and synergies provided by a strategic acquirer, yet they continue to languish in Toyo Suisan, hindering valuations and diverting attention from the company’s core growth areas all while delivering poor ROAs.
Nissin Foods (2897.T) is one of the largest and most respected instant noodle companies globally. Toyo Suisan has consistently outperformed Nissin Foods in North America, one of the most profitable and fastest-growing markets in the world. Yet, Nissin trades at a higher price-earnings multiple because it is a pure play focused on the instant noodle market. Nissin also has a clear 40% dividend payout ratio and conducts share buybacks. Toyo Suisan, on the other hand, is the last remaining company among its peers with no shareholder return policy and no stated targets regarding return on equity, dividend on equity, dividend payout ratio and total shareholder return, according to Nihon Global’s presentation. It also hasn’t conducted a share buyback in 17 years.
Becoming a pure-play noodle company with improved capital allocation practices would almost immediately close the roughly 8 times P/E multiple discount that Toyo Suisan trades at versus Nissin Foods. After that, as the dominant player in the North American market, Toyo Suisan would be in a prime position to be a global consolidator in the instant noodle market, a market that is prime for consolidation with two to three players dominating the industry. With this plan, Nihon Global estimates that the intrinsic value of the company is 17,300 yen per share or more, as opposed to the low 10,000 range.
However, while that type of an ambitious activist plan would be commonplace in the United States, activism in Japan is more of a jog than a sprint. It generally starts with shareholder proposals that by regulation can only address specific issues, such as capital allocation and dividends. Accordingly, Nihon Global has put forward four shareholder proposals to be voted on at the company’s annual meeting in June 2024: (i) increase the dividend payout ratio to 40%; (ii) repurchase 20 billion yen of the company’s shares; (iii) implement a director share compensation program which would make 40% of total compensation performance-linked and half of which would be stock; and (iv) disclose the company’s cost of capital. These are incredibly reasonable proposals. The dividend raise is an incremental increase of only 1.9% of December 2023 cash. The repurchase is only 4.6% of shareholders equity as of December 2023. The compensation program is equal to market standard, and the disclosure of cost of capital is consistent with the existing recommendations of the Tokyo Stock Exchange.
A word about shareholder proposals in Japan for those who are not familiar with them: They are like going before Judge Chamberlain Haller in the 1992 movie “My Cousin Vinny.” “That is a lucid, intelligent, well thought out objection. Overruled.” In other words, they rarely pass. Last year, 3% of corporate governance shareholder proposals were passed and 4% of balance sheet-based shareholder proposals were passed. That is part of an upward trend. But there is a lot of good news here. First, if passed they are binding – unlike in the U.S. Second, and more importantly, they do not need to pass to get the attention of management. Japanese business culture takes shareholder concerns seriously: If a proposal gets at least 20% of the votes, management will often act in some way that is consistent with it. Last year, 107 shareholder proposals received more than 20% approval from shareholders, and 49 received more than 30%, according to a study by law firm White & Case.
In this case, Nihon Global could potentially win here or receive upward of 40% of the vote, which is almost like a mandate in Japan. Last year at Toyo Suisan, a less experienced activist shareholder with negligible ownership who did not do any marketing or soliciting to support its more debatable proposal to amend the Articles of Incorporation received 19.8% of the vote. Moreover, the shareholder base here is 41% foreign and more likely to support a shareholder proposal. There is no “white knight” large shareholder and no cross holdings that support management. Nihon Global’s first three proposals are more likely to pass than its fourth proposal, as the first three require a majority of votes cast and the fourth proposal would require two-thirds of the votes cast. One last possibility that often happens in Japan is that Nihon Global could withdraw its proposals after meeting with management, who would agree to institute some of the recommendations. Senior management has thus far refused to meet with Nihon Global, but the firm has only been requesting a meeting since September 2023 and that is somewhat standard in Japan. Now that Nihon Global has escalated it to shareholder proposals, senior management may decide to meet with the firm, particularly as this is a next-generation senior management team, some of whom are American trained.
This activist campaign highlights three important themes in Japanese activist investing. First, it shows the opportunities available to activists in Japan where reasonable shareholder proposals could lead to significant shareholder value creation. Second, it shows the limitations of activism in Japan where ambitious plans, even if compelling and logical, such as divesting non-core businesses and focusing on the core business is a non-starter in the early stages of a campaign in Japan. Third, there is a trend in Asia of private equity investors turning to public company shareholder activism. While shareholder engagement in Japan is relatively new for public investors, private equity investors have been doing it for decades. Accordingly, it is the private equity investors who have the experience dealing with management teams of public Japanese companies. That is inviting a lot of former private equity investors into the space. Brian Doyle of Nihon Global and his team are a good example of this. Hiroyuki Otsuka, a former deputy head of Carlyle Group’s Japan business, recently raised approximately $1 billion dollars to launch Newton Investment Management, a Japanese engagement fund.
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

The popular Public Service Loan Forgiveness program began a partial processing pause on May 1 and it likely runs through July, the U.S. Department of Education recently said.
The temporary suspension comes as the Biden administration overhauls the once-troubled federal student loan program.
Here’s what borrowers should know.

Teacher teaching her students in art class at school.
Fg Trade | E+ | Getty Images

The popular Public Service Loan Forgiveness program began a partial processing pause on May 1, which will likely run through July, the U.S. Department of Education recently said.
The temporary suspension comes as the Biden administration overhauls the once-troubled federal student loan program.

Here’s what borrowers should know.

Why the pause is happening

The PSLF program, signed into law by President George W. Bush in 2007, allows certain not-for-profit and government employees to have their federal student loans canceled after 10 years of on-time payments.
However, the program has been plagued by problems, making people who actually get the relief a rarity.
Borrowers often believe they’re paying their way to loan cancellation only to discover at some point in the process that they don’t qualify, usually for confusing technical reasons. Lenders have been blamed for misleading borrowers and botching their timelines.
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The Biden administration has been trying to reform the program. As part of that overhaul, it is changing how loan servicing works for public servants, and some of the customer service will soon be handled by the government itself.
“After the improvements, PSLF borrowers will have all of their PSLF information centralized on StudentAid.gov so that the Department can provide real-time and more accurate information on payment counts and form processing,” the Education Department wrote in a recent blog post.
Previously, only one company managed the servicing for PSLF borrowers on behalf of the government: first, FedLoan, and more recently, Mohela, or the Missouri Higher Education Loan Authority. Going forward, a number of different companies will service the accounts, along with the Education Department.

What borrowers can expect during the transition

The Education Department will not review PSLF form submissions for roughly a two-month period, it says. (The exact dates will depend on how long the changes take place to complete.)
Meanwhile, from May 1 through July, it says, “borrowers will not be able to see their PSLF payment counts on MOHELA’s website.”
“During the transition, PSLF forgiveness will be suspended,” said higher education expert Mark Kantrowitz.

Borrowers will be able to continue making their loan payments, and these months will count on their timeline to loan forgiveness. Borrowers should also be able to submit a form to certify public service employment and to apply for loan forgiveness if they are at the 10-year mark.
“Forms will be reviewed as soon as the transition is complete,” the Education Department says.
If you qualify for debt cancellation during the transition, you can request a forbearance from your servicer in the meantime, it says, adding that any overpayments should be refunded.

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If you opted into your employer’s Roth 401(k) after-tax matching contribution this year, it could trigger a tax surprise, experts say.
Your employer’s Roth match will be extra income for tax purposes and levies aren’t automatically withheld.

JGI/Jamie Grill

If you’ve opted into your employer’s Roth 401(k) after-tax matching contributions this year, it could trigger a tax surprise without proper planning, experts say. 
Enacted in 2022, Secure 2.0 ushered in sweeping changes for retirement savers, including the option for employers to offer 401(k) matches in Roth accounts. These accounts are after-tax, meaning employees pay upfront taxes but growth and withdrawals in retirement are tax-free. Previously Roth 401(k) matches went into pretax accounts.

Roughly 12% of employers with 401(k) plans said they are “definitely” adding the feature and 37% are “still considering it,” according to a recent survey from the Plan Sponsor Council of America.
However, those new matching Roth contributions could have “unintended consequences” at tax time, according to Tommy Lucas, a certified financial planner and enrolled agent at Moisand Fitzgerald Tamayo in Orlando, Florida.
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“If you go this route, you’ll want to know that you’re basically getting extra income” and taxes aren’t automatically withheld, Lucas said. 
“You’re increasing your adjusted gross income by taking this match as a Roth,” he said.

“If you go this route, you’ll want to know that you’re basically getting extra income.”

Tommy Lucas
Financial advisor at Moisand Fitzgerald Tamayo

For example, let’s say your salary is $100,000 with a 6% employer match in 2024. If you designate your $6,000 employer match as Roth and you’re in the 22% federal income tax bracket, you could have an extra $1,320 in tax liability, according to Lucas.
“There’s probably something on top of that for state income taxes,” depending on where you live, he said.
Plus, you won’t see your employer’s matching Roth contribution reported on Form W-2, according to IRS guidance released late last year. Instead, you’ll receive Form 1099-R, which could be confusing, Lucas said.

How to plan for income from Roth 401(k) matches

If you’ve chosen your company’s Roth matches for 2024, you need to prepare for the extra income, said CFP Jim Guarino, managing director at Baker Newman Noyes in Woburn, Massachusetts. He is also a certified public accountant.
You can increase your federal and state withholdings with your employer or boost your quarterly estimated tax payments, he said.  

For example, if you expect to incur $1,320 more in federal taxes, you could divide that amount by your remaining 2024 paychecks and include that “extra withholding” on Form W-4 for your employer, Lucas said.
Of course, you’ll need to double-check that the change is reflected on future paychecks, he said.
“In either case, working with a trusted tax advisor would help to optimize overall tax planning and eventual tax reporting for the year,” Guarino added.

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