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Warren Buffett just became the longest-serving CEO of an S&P company. Take a look inside his incredible life and career.

Sat, 02/22/2020 - 2:05pm

  • Leslie Wexner, the CEO and founder of Victoria's Secret's parent company L Brands, recently announced that he would be stepping down after 57 years on the job. He had the longest tenure amongst any current CEO of an S&P company.
  • With Wexner's departure, Warren Buffett is now the longest-tenured CEO in the S&P 500. He's been the CEO of Berkshire Hathaway for 50 years.
  • The distinction is particularly impressive given that the average tenure of a CEO was reported to be five years between 2015 and 2017. 
  • Buffett's current net worth is estimated at $90 billion, according to Forbes.
  • Take a look inside Buffett's incredible life and how he got to where he is today.
  • Visit Business Insider's homepage for more stories.

SEE ALSO: Warren Buffett just announced he's donating $3.6 billion in Berkshire Hathaway shares to 5 foundations. Here's how the notoriously frugal billionaire spends his $87.3 billion fortune

In February 2020, Warren Buffett became the longest-tenured CEO of an S&P 500 company. With a net worth of $90 billion, he is also one of the richest people in the world, something he had been working towards for much of his almost-90-year life.

Buffett gained the title after Les Wexner, 82, of L Brands, the parent company of Victoria's Secret, stepped down as CEO. Wexner had held the position for 57 years.

Sycamore Partners had recently acquired a majority of Victoria's Secret stocks. Wexner and disgraced financier Jeffrey Epstein reportedly had a close relationship, attracting controversy in the months preceding his resignation.

Buffett has led Berkshire Hathaway for 50 years and amassed a massive fortune starting with business ventures in his teen years. 



Buffett was born in 1930 in Omaha, Nebraska.

The "Oracle of Omaha" was born to Howard and Leila Buffett. His father was a four-term US congressman from Nebraska and a stockbroker.



While most kids were playing stickball out in the street, Buffett was rubbing elbows with Wall Street's most powerful players from an early age.

At age 10, Buffett had his "road to Damascus" moment, on Wall Street.

During a visit to New York City, Buffett and his father joined At Mol, a Dutchman who was a member of the New York Stock Exchange, for lunch.

"After lunch, a guy came along with a tray that had all these different kinds of tobacco leaves on it," Buffett recalled. "He made a cigar for Mr. Mol, who picked out the leaves he wanted. And I thought this is it. It can't get any better than this. A custom-made cigar."

It was at that moment Buffett realized he would dedicate his life to making money.



Buffett caught the investing bug early. When he was 11 years old he purchased his first stock.

He bought three shares of Cities Services Preferred at $38 per share. The young Buffett held on to them despite a quick price drop, to $27 per share, but sold them as soon as they reached $40.

Buffett's small profit could have been tremendous if he had waited it out a little longer, as the price of Cities Services Preferred's stock ultimately soared to nearly $200 per share.

The experience imparted an important financial lesson, which has informed his investment decisions to this day: Buy and hold.



Buffett's hustle game was strong as a youth. While he was a high-school student he and a friend operated a lucrative pinball business. He also took on odd jobs like delivering newspapers and washing cars.

When Buffett was in high school he pitched the following business scheme to his friend Don Danley after he purchased a $25 used pinball machine:

"I bought this old pinball machine for 25 bucks, and we can have a partnership. Your part of the deal is to fix it up. And lookit, we'll tell Frank Erico, the barber, 'We represent Wilson's Coin-Operated Machine Company, and we have a proposition from Mr. Wilson. It's at no risk to you. Let's put this nickel machine in the back, Mr. Erico, and your customers can play while they wait. And we'll split the money."

The duo struck a deal with Erico and the machine was an immediate hit, raking in $4 bucks on the first night.

Rather than spending their earnings, the young partners reinvested it in more machines.

In a couple of months, Buffett was a pinball kingpin with several machines operating at barbershops across his town. Buffett sold the business for over $1,000 after a year.

In addition to the pinball business, Buffett undertook a number of odd business ventures during his childhood such as delivering newspapers, selling gum and soda, and washing cars.



Through his various business endeavors, Buffett amassed a small fortune by the time he was 16. In fact, he was so successful that he was reluctant to go to college.

He accumulated so much money as a teenager that he didn't see the point in accepting his offer of admission from the prestigious Wharton School of Business at the University of Pennsylvania.

But he ultimately gave in to the will of his father and went off to college, only to return to Nebraska two years later, at which point he attended the University of Nebraska.

 



After completing his undergraduate studies, Buffett moved to New York to attend Columbia's School of Business, where he met his mentor and future employer Benjamin Graham.

The catalyst for Buffett's decision to move to the Big Apple was a well-known Wall Street book titled, "The Intelligent Investor." Buffett, an avid reader, said he first picked up the book when he was 19, and its philosophy of "value investing" changed his life

The author of the book, Benjamin Graham, went on to become Buffett's professor at Columbia Business School. After he earned his master's degree in 1951, Buffett moved back to work for Buffett-Falk & Co., his father's brokerage firm in Omaha.

 



Buffett married his wife Susan Thompson in 1952. The two had an open marriage that lasted until her death in 2004.

In 1952, Buffett married Susan "Susie" Thompson. The couple had three children: Susan, Howard, and Peter.

Warren and Susie had a complicated relationship, to say the least. Although they remained married until Susan's death in 2004, they didn't live together for more than half of their marriage.

Susan Buffett left her husband when she was 45. She remained married, to Warren, but lived in San Francisco. The two remained close and spoke frequently on the phone and even went on vacations together. Ultimately it was Susie who set Warren up with Astrid Menks, a waitress who moved in with Buffett and then married him after Susie died.

 



Buffett moved back to New York City in 1954 after accepting a job with Benjamin Graham.

Graham offered Buffett a job in New York City so the family packed their bags and moved there from Omaha, Nebraska in 1954. Buffett worked for his mentor for two years as an analyst at Graham-Newman Corp., where he made $12,000 a year.

 



In 1956, Buffet started his own investment firm Buffett Partnership Limited, which ran for 13 years.

In the years that the firm was active, it generated over a hundred million in assets. The initial investment in the firm was a little over $100,000.

 



In 1969, Buffett closed the partnership and took on a leadership role with Berkshire Hathaway, a position he holds to this day.

Buffett started buying up shares of Berkshire Hathaway, a textile manufacturing firm, during the early 1960s and ultimately took complete control of the business.

The firm now offers investment services and is valued at $516 billion.



Throughout the early '80s, Buffett steadily grew his multimillion-dollar net worth and became a billionaire in 1986.

In 1982, Buffett's net worth stood at $376 million. It increased to $620 million in 1983.

And in 1986, at 56, Buffett became a billionaire, despite his humble $50,000 salary from Berkshire Hathaway.



Buffett bought over $1 billion in Coca-Cola stocks between 1988 and 1994.

Berkshire Hathaway currently owns about 10% of Coca-Cola, which amounts to $22 billion. Buffett is said to drink five cans of Coke a day, after having spent his early years drinking Pepsi.



In 2008, Buffett became the richest person in the world.

Forbes named Buffett as the richest person in the world in March 2008 with an estimated wealth of $65 billion. He dethroned Bill Gates who had held that spot for 13 years. Gates ranked third behind Buffett and Mexican billionaire Carlos Helu.

Gates regained his spot as the richest person the following year. Forbes currently ranks Jeff Bezos at the top of the list.



In 2010, Buffett and Bill Gates created the Giving Pledge, a group of some of the richest people in the world who have made a commitment to donate a majority of their wealth to charity.

Buffett's frugality is a trademark of his "brand." The 89-year uses a flip phone and prefers to travel on public transportation. This does not mean Buffett is a stingy miser.

In 2019, he beat his own personal philanthropic record by donating $3.6 billion worth of Berkshire Hathaway stocks to five charities, including The Bill and Melinda Gates Foundation. 

In addition, Buffett and fellow billionaire Bill Gates agreed to donate at least half of their fortunes to charity when they created and signed the Giving Pledge.

Since 2010, over 150 people have made the pledge, including Facebook's Mark Zuckerberg.



Buffett was presented with the Presidential Medal of Freedom by President Obama in 2011 for his commitment to philanthropy.

The group honored that year also included cellist Yo-Yo Ma and Maya Angelou. President Obama called the recipients "some of the most extraordinary people in America and around the world."



In 2018, Buffett tried to invest in Uber but was unsuccessful. He was also outbid for an energy company in 2017.

Buffett's recent dealmaking efforts have run into a few roadblocks. He was outbid for the energy company Oncor in 2017. The Buffett-backed conglomerate Kraft Heinz called off plans to merge with Unilever, a deal valued at $143 billion. Buffett tried and failed to invest $3 billion in Uber, in 2018.

In his company's annual letter in 2018, Buffett lamented the fact that high stock valuations derailed nearly every investment idea the firm had in 2017.

The requirement of a sensible purchase price "proved a barrier to virtually all deals we reviewed in 2017, as prices for decent, but far from spectacular, businesses hit an all-time high. Indeed, the price seemed almost irrelevant to an army of optimistic purchasers," he said. 



In 2018, Buffet promoted two vice-chairs to Berkshire Hathaway's board. This fueled speculation that the two men might potentially succeed him one day.

In January 2018, Buffett promoted two senior executives — Greg Abel and Ajit Jain — to Berkshire's board of directors.

Abel was appointed as Berkshire's vice chairman for non-insurance business operations, and Jain as vice chairman, insurance operations. Buffett described the appointments as "part of a movement toward succession," providing the clearest hint of the pool of candidates he's considering to replace himself.  

Abel and Jain each made $18 million in 2018 after they were appointed to the board.

 

This post was originally authored by Frank Chaparro.



4 ways to spend $100 today to be richer by this time next year

Sat, 02/22/2020 - 2:02pm

 
  • A growing net worth is a good sign of financial progress, and it might not be as hard to accomplish as you think.  
  • Automatically putting money in a high-yield savings account, increasing your retirement contribution, and opening a brokerage account can all boost your wealth.
  • By making smart choices with even small amounts of money you have today, you'll set yourself up for big changes over the long term.
  • Read more personal finance coverage.

If you're starting 2020 with high hopes for your money, consider this: Building wealth is about making incremental progress, day after day, year after year.

Big wins — like getting a raise — are wonderful, but small wins — like choosing the right investment or savings account — are even better, because you have total control. The seemingly tiny habits you start and decisions you make today determine where you'll be in the future.

With just $100, you can set yourself on a path to a rich life almost instantly. Here are a few ideas to get started increasing your net worth:

1. A high-yield savings account

A good savings account can do much more for your wealth than you may realize. Even though interest rates are down compared to early 2019, a high-yield savings account can still help you earn up to 20 times more on your cash than a traditional savings account. That means you could earn hundreds of dollars in interest for simply storing your money in the right place, completely risk-free.

Now, just opening a new savings account won't make you rich. You need to save regularly to meaningfully boost your wealth. Consider an account like CIT Bank's Savings Builder, which helps create momentum by rewarding you with its top APY if you set up an auto-deposit each month.

2. A meeting with a financial planner

Most fee-only certified financial planners charge between $100 to $300 for a one-time session, but many offer an initial no-cost consultation. Whether you meet once or set up an ongoing engagement, you'll be able to get specific guidance on any aspect of your financial situation, including budgeting, retirement, investing, education planning, and estate planning.

According to a Northwestern Mutual survey, people who work with a financial adviser are more likely to know how to balance spending now and saving for later; set specific goals and feel confident that they will achieve those goals; and have a plan in place to weather economic ups and downs.

SmartAsset's free tool can help find a financial planner near you »

3. An increase to your retirement contribution

Retirement may be decades away for you, but the best time to start building a nest egg is today. Whether you contribute to an employer-sponsored retirement plan like a 401(k) or tax-advantaged Roth IRA at a robo-adviser or brokerage, increasing your monthly or per-paycheck savings by $100 can have a big impact.

Of course, there's no guarantee your investments will gain value in the short term. It's nearly impossible to predict where the market will be a year from now, but waiting on the sidelines until the "right" time is a mistake none of us can afford to make. As long as you're thoughtful about your asset allocation, risk tolerance, and time horizon, you don't have anything to worry about.

4. An investment in a brokerage account

If you have money you want to grow for goals that are closer than your golden years and you've paid off any high-interest debt, it could be a good time to invest in the stock market.

Despite popular belief, you don't need a ton of money to get started. For beginners, an online investing app like Betterment can keep your costs low and guide you toward investments that match your risk tolerance and your goals.

Again, there's no telling whether your investments will gain or lose value over the next year, but if you don't invest at all, increasing your net worth is going to be a far more difficult task.

Join the conversation about this story »

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30 Big Tech Predictions for 2020

Sat, 02/22/2020 - 12:25pm

Digital transformation has just begun.

Not a single industry is safe from the unstoppable wave of digitization that is sweeping through finance, retail, healthcare, and more.

In 2020, we expect to see even more transformative developments that will change our businesses, careers, and lives.

To help you stay ahead of the curve, Business Insider Intelligence has put together a list of 30 Big Tech Predictions for 2020 across Banking, Connectivity & Tech, Digital Media, Payments & Commerce, Fintech, and Digital Health.

This exclusive report can be yours for FREE today.

Join the conversation about this story »

I'm a former banker, and I'd recommend Ally's high-yield savings account to just about anyone

Sat, 02/22/2020 - 12:15pm

When I was a kid, my mom took me to a local bank to open my first savings account. My "Dinosaver" account came with a free dinosaur toy, which was a pretty big selling point for me as a young boy. But these days, I care a lot more about interest rates than toys and gifts from my bank.

Today, I keep a good chunk of my savings at Ally Bank, which I also suggest to my sister, friends, and other people who want to level up their savings. Let's dig into the details of Ally Bank Savings to see why I recommend it to just about anyone.

Ally's account doesn't let fees eat into your savings

As a former banker, I firmly believe you should never have to pay any fees to keep your money in a savings account. Some big banks charge you $10 or $15 per month if you don't keep at least a certain minimum balance. That's a bad deal for customers. You shouldn't have to pay a monthly fee regardless of your balance.

Ally Bank's Online Savings Account doesn't charge any fees for regular activity. You may get charged for overdrafts, depositing bad checks, sending outgoing wires, and other less-common activity. But for just keeping your money in the bank, you won't pay a thing regardless of your balance.

Interest rates are important for big balances, and Ally's are competitive

My sister followed our parents' example and had her bank accounts at the same big, traditional bank during college. But after getting charged a fee for going under the minimum balance one month, she took a closer look at the terms. She called me up and said, "Did you know my savings account pays just 0.01%?" I did know, and helped her decide where to put her money for better rates.

Like every other bank, Ally's interest rate varies — in the past year it's climbed above 2%. But even at 1.60%, that's 160 times more than my sister would get with her old account. After years of earning practically nothing for her savings, she called me after a month at Ally excited by how much she earned. Less than 2% interest probably won't make you rich, but it's a lot better than the average savings account.

Multiple accounts and savings buckets give you more control

Money-smart households are sure to save for emergencies. I keep part of my emergency fund at Ally Bank. After dealing with a few big annual bills, I decided to store more for other purposes at Ally, as well.

I opened a second savings account at Ally where I put away $250 per week for my property taxes and insurance. Ally makes it easy to have multiple accounts, but you can also save for specific goals in one Online Savings Account.

With savings buckets, you can divvy up one savings account for multiple goals. For example, you might want to save for a trip, down payment on a home or new car, taxes, or anything else you choose. Savings buckets act like sub-accounts inside of an existing savings account. You can add up to 10 buckets per savings account.

Power up your account with smart saving features

While I love my Schwab checking account for the ability to use any ATM in the world with no fee, it doesn't give me the best tools for automated savings. It doesn't even offer the ability to save on a weekly schedule, so I set that up through my savings account at Ally. But that's just scratching the surface on what Ally can do.

In addition to setting your own recurring transfer schedule, Ally has a "Surprise Savings" feature that transfers in savings based on your income and spending habits automatically and behind the scenes.

Just like savings product Digit, which charges a monthly fee for a similar service, computers at Ally analyze what's safe-to-save without overdrafting. It makes surprise transfers to grow your savings balance with almost no effort.

Don't leave your savings in a poor-performing account

A bad savings account is still better than keeping your money under the mattress or in a coffee can buried in the backyard, but you should expect more of a bank than just FDIC insurance and a pretty lobby. You should expect low fees and competitive interest rates with no exceptions.

Ally Bank offers consistently great rates and low fees on all of its products, including checking, savings, and investment accounts. I spend a big portion of my day reviewing bank accounts, and I use Ally bank myself. It's one account I'd recommend to just about anyone.

Eric Rosenberg is a former bank manager and corporate finance and accounting professional who left his day job in 2016 to take his online personal finance side hustle full-time.

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Bloomberg's 'tax on the very rich' isn't actually a wealth tax like the ones Warren and Sanders have proposed. Here's how they compare.

Sat, 02/22/2020 - 12:00pm

  • Billionaires have become central to the Democratic primary race — thanks to both their donations and their taxes.
  • A wealth tax, like the ones proposed by presidential candidates Sen. Elizabeth Warren and Sen. Bernie Sanders, would make ultra-wealthy Americans pay the federal government a small percentage of their net worth each year.
  • Former New York City Mayor Mike Bloomberg proposed a 'surtax' on ultra-wealthy Americans' income that would leave their net worth alone and would bring in much less revenue, but is more feasible than Warren and Sanders' plans.
  • Despite popular support, any bill for a wealth tax would have to overcome opposition in both Houses of Congress, the White House, and the Supreme Court before becoming law.
  • Visit Business Insider's homepage for more stories.

A majority of the American public, a group of ultra-wealthy Americans, and a handful of presidential candidates agree that the US needs a wealth tax to help close the growing wealth gap

But few people agree on how just how much that tax should be, or how it should be administered.

Three Democratic presidential candidates, Sen. Elizabeth Warren, Sen. Bernie Sanders, and former New York City Mayor Mike Bloomberg, have released their own proposals on how to raise taxes on the ultra-wealthy, and questioned the other candidates' commitment to ending wealth inequality, because they have yet to do so.

Before Sanders unveiled his plan in September, Warren's plan was the most commonly cited example of a radical wealth tax. Now, though, Sanders' "Tax on Extreme Wealth" makes Warren's "Ultra-Millionaire Tax" "look moderate," NPR's Greg Rosalsky wrote. Last week, Bloomberg released his own "New Tax on the Very Rich" proposal for an income-based tax on ultra-wealthy Americans. The catch is that Bloomberg's proposal isn't a tax on wealth at all; it's a surtax on income.

Sanders and Warren both propose instituting a wealth tax, but their plans have some key differences. 

As shown in the chart above, Sanders' plan proposes taxing Americans who have lower net worths than Warren's plan does. The endpoints of Sanders' tax brackets overlap, so for the purposes of this chart, Business Insider rounded to the nearest decimal based on standard tax policy. A married couple with a collective net worth above $32 million would have to pay a wealth tax under Sanders' plan, while couples worth less than $50 million would be exempt from Warren's tax.

The richest Americans — those with a net worth above $10 billion — would also pay 8% in taxes more Sanders' plan, substantially more than the 3% proposed by Warren.

The difference between the two plans is perhaps best illustrated by how much their respective authors say they would raise. Warren's campaign estimates that her wealth tax would raise $2.75 trillion in 10 years, while Sanders' campaign estimates that his tax would raise $4.35 trillion during the same time period.

Bloomberg says he also wants to raise billionaires' taxes — but has a very different idea of how to do it.

The former New York City mayor's tax plan includes raising the tax rate for the highest-earning Americans from 37% to 39.6%, according to his campaign website. That was the tax rate before Trump's unpopular Tax Cuts and Jobs Act took effect in 2018. Bloomberg also proposed adding an additional 5% "surtax" on incomes of more than $5 million a year, according to his campaign website.

The former mayor's plan would likely be easier turn into law than Warren and Sanders' proposals since it is "essentially just adding a higher tax bracket," CBS News' Stephen Gandel reported. Bloomberg's proposal would also be significantly easier for the IRS to enforce since it would eliminate the need to appraise assets such as yachts and fine art. 

Any true wealth tax proposal would face substantial headwinds before becoming law, Business Insider reported. The constitutionality of such a tax would likely end up debated in front of the Supreme Court, according to former Department of Justice tax attorney James Mann, who is now a tax partner at law firm Greenspoon Marder. The revenue raised by a potential wealth tax would likely be much lower than its advocates expect because of tax evasion, Mann told Business Insider.

Bloomberg's proposal does trade feasibility for earning potential, however. The "surtax" would net the federal government about $4 billion a year, or $40 billion over a decade, CBS News estimates. The billionaire says on his campaign website that he would spend the funds on rebuilding infrastructure, improving public education, and widening access to health care if elected, but he would have far less to work with than Warren's $2.75 trillion and Sanders' $4.35 trillion over the same time period.

"Mike recognizes the urgent need to address economic inequality in the United States, and as your piece notes, a wealth tax faces significant challenges — and may not work," a spokesperson for Bloomberg's campaign said in a statement to Business Insider. "Mike's plans tackle worsening inequality immediately, using both existing and innovative tools." Bloomberg's proposal for a financial transaction tax would also raise more tax revenue from the wealthy, according to the spokesperson.

Bloomberg himself would pay an additional $1.2 billion in taxes every year on his proposal, according to CBS News, but he could hold on to his existing $62 billion fortune tax-free. 

Wealth accumulation in the US would look a lot different under a wealth tax 

A study by The University of California at Berkeley's Emmanuel Saez and Gabriel Zucma, published in the Brookings Papers on Economic Activity, found that if a moderate wealth tax had been introduced in 1982, Jeff Bezos' fortune would be half what it was in 2018. Bill Gates, meanwhile, would be $61 billion less rich.

While no such study has been done on Sanders' proposal, NPR's Greg Rosalsky reported that it "wouldn't just slow the growth of wealth at the top. It would essentially stop it."

SEE ALSO: Here's how much money America's 10 wealthiest people would have if the US had a moderate wealth tax

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Here are the biggest takeaways from Warren Buffett’s annual letter

Sat, 02/22/2020 - 11:05am

  • Warren Buffett, the chairman and CEO of Berkshire Hathaway, released his annual letter to shareholders on Saturday alongside the company's fourth quarter 2019 earnings report. 
  • In the letter, Buffett discussed share buybacks, his death, and Berkshire Hathaway's acquisition strategy going forward. 
  • Here are the biggest takeaways from the letter. 
  • Read more on Business Insider. 

It's an exciting day for Berkshire Hathaway shareholders and the broader investment community: Warren Buffett has released his annual letter to shareholders alongside the company's fourth-quarter earnings report. 

The letter, which Buffett has penned for decades, gives a glimpse into company operations, performance, and strategy, as well as an inside look into what the "Oracle of Omaha '' has been thinking about in the past year. 

This year's letter was 14 pages long and boasted quotes from economists such as Edgar Lawrence Smith and John Maynard Keynes. In it, Buffett lamented about the "fickle stock market," "rare" opportunities for buying companies, and the role of boards of directors. He also discussed some plans for his and vice chair Charlie Munger's death, and gave a hint about succession plans. 

Buffett also exhibited his usual flourish for humor and wisdom in the letter. In discussing the attributes of a board of directors, he wrote, "if I were ever scheduled to appear on Dancing With the Stars, I would immediately seek refuge in the Witness Protection Program."

He continued: "We are all duds at one thing or another. For most of us, the list is long. The important point to recognize is that if you are Bobby Fischer, you must play only chess for money."

In 2019, Berkshire Hathaway stock posted its worst underperformance of the broader market in a decade, and have gained 1.1% this year through Friday's close. Buffett again failed to make a major acquisition for Berkshire Hathaway. In the absence of a large company purchase, Berkshire Hathaway bought back a record $2.2 billion of its stock in the fourth quarter. Over the entire year, the company spent $5 billion on repurchasing its own stock. 

The company posted net earnings of $29.2 billion in the year, up from a loss of $25.4 billion a year earlier when the company had to take a major write-down on its investment in Kraft Heinz Co. Operating earnings fell 23% in 2019 to $4.4 billion. Berkshire Hathaway's record cash pile was $128 billion at the end of 2019, down only slightly from $128.2 billion at the end of the third quarter. 

Here are the main takeaways from Warren Buffett's annual letter to Berkshire Hathaway shareholders.

Accounting rules

The first letter of Buffett's report was dominated by his thoughts on GAAP accounting rules. In 2019, the company earned $81.4 billion, broken down into $24 billion of operating earnings, $3.7 billion of realized capital gains and a $53.7 billion gain from an increase in the amount of net unrealized capital gains that exist in the stocks we hold. Each of those components of earnings is stated on an after-tax basis.

The $53.7 billion gain comes from the GAAP accounting rule that went in place last year. 

"As we stated in last year's letter, neither Charlie Munger, my partner in managing Berkshire, nor I agree with that rule," Buffett wrote. 

He continued: "The adoption of the rule by the accounting profession, in fact, was a monumental shift in its own thinking. Before 2018, GAAP insisted – with an exception for companies whose business was to trade securities – that unrealized gains within a portfolio of stocks were never to be included in earnings and unrealized losses were to be included only if they were deemed "other than temporary." Now, Berkshire must enshrine in each quarter's bottom line – a key item of news for many investors, analysts and commentators – every up and down movement of the stocks it owns, however capricious those fluctuations may be."



Stock buybacks

Berkshire Hathaway's annual report, released the same day as the letter, showed that the company repurchased a record $2.2 billion of its own stock at the end of the year, up from $700 million in the previous quarter. That brings the total the company spent on stock buybacks to $5 billion over the year. 

"Over time, we want Berkshire's share gown to go down," Buffett wrote. "If the price-to-value discount (as we estimate it) widens, we will likely become more aggressive in purchasing shares. We will not, however, prop up the stock at any level."

Berkshire Hathaway loosened its rule around share buybacks in 2018 making it easier for Buffett and Munger to authorize buybacks when the repurchase price is "below Berkshire's intrinsic value," according to the company. Still, in previous quarters, analysts thought that the company could've spent more on share buybacks



Boards of directors

Buffett also discussed the compensation and purpose of corporate boards over the last few years, a "hot topic."

"Over the years, many new rules and guidelines pertaining to board composition and duties have come into being. The bedrock challenge for directors, nevertheless, remains constant: Find and retain a talented CEO – possessing integrity, for sure – who will be devoted to the company for his/her business lifetime. Often, that task is hard. When directors get it right, though, they need to do little else. But when they mess it up,......" he wrote. 

He continued: "At Berkshire, we will continue to look for business-savvy directors who are owner-oriented and arrive with a strong specific interest in our company. Thought and principles, not robot-like "process," will guide their actions. In representing your interests, they will, of course, seek managers whose goals include delighting their customers, cherishing their associates and acting as good citizens of both their communities and our country."



Acquisitions

Buffett did not make a major acquisition in 2019, marking the third year in a row since Berkshire Hathaway has completed a company purchase. In this year's annual letter, he spelled out his three criteria for buying companies for shareholders and investors. 

"First, they must earn good returns on the net tangible capital required in their operation. Second, they must be run by able and honest managers. Finally, they must be available at a sensible price," he wrote. 

He continued: "When we spot such businesses, our preference would be to buy 100% of them. But the opportunities to make major acquisitions possessing our required attributes are rare. Far more often, a fickle stock market serves up opportunities for us to buy large, but non-controlling, positions in publicly-traded companies that meet our standards."

 



Succession plans

In this year's annual letter, Buffett told shareholders that Berkshire Hathaway is "100% prepared" for his death. 

He also wrote that two key executives thought to be in the running to succeed him — Greg Abel and Ajit Jain— will be given more exposure at the company's annual shareholder meeting in Omaha, Nebraska. 

This year, shareholders at the meeting will be able to address questions to Abel and Jain as well as Buffett and Munger, according to the letter. 

"That change makes great sense. They are outstanding individuals, both as managers and as human beings, and you should hear more from them."

Buffett has been the CEO and chairman of Berkshire Hathaway since 1970. This week, Buffett became the longest-tenured CEO in the S&P 500 when Les Wexner at L brands stepped down. 

 



Market performance

Buffett wrote that stocks will likely outperform bonds long-term, especially if interest rates and corporate taxes remain low. 

"What we can say is that if something close to current rates should prevail over the coming decades and if corporate tax rates also remain near the low level businesses now enjoy, it is almost certain that equities will over time perform far better than long-term, fixed-rate debt instruments," he wrote. 

He continued: "That rosy prediction comes with a warning: Anything can happen to stock prices tomorrow. Occasionally, there will be major drops in the market, perhaps of 50% magnitude or even greater," he said.

Buffett added that equities are "the much better long-term choice for the individual who does not use borrowed money and who can control his or her emotions. Others? Beware!"



Politics

Buffett notably did not discuss politics in this year's shareholder letter, a departure from last year's letter where he spoke about how bipartisanship has spurred prosperity in the US.

Buffett campaigned for Hillary Clinton in 2016 and wrote in 2013 that he voted for Barack Obama. While he has not yet endorsed a candidate for the November 2020 election, he told CNBC in early 2019 that he would support Mike Bloomberg for president.

 



3 things to consider when you're deciding which savings account to open

Sat, 02/22/2020 - 10:35am

  • When shopping for a new savings account, look for a high-yield savings account that helps your money grow. It's the same as a traditional savings account, but offers interest on your cash. 
  • Find a bank account that's fee-free, easy to use, and offers a high interest rate — or, even better, all three. 
  • See Business Insider's rankings of the best high-yield savings accounts in 2020 »

In the market for a savings account? Three main considerations can help you decide which one you should open: a convenient experience, fee-free banking, and the ability to earn interest on your money.

The best savings account is usually one that accrues interest. There's really no reason not to opt for a high-yield savings account over a traditional savings account. After all, there's virtually no difference between the two, other than the fact that one helps you grow your money by earning a small amount of interest. About 75% of Americans don't yet have a high yield savings account, and that means they're leaving free money on the table.

To choose the one that's right for you, consider what you really want out of your savings account. Do you need ATM access or a good mobile app experience? Or, can't stand paying maintenance fees? Each bank's account has different strong points. Here are three important factors for choosing a high-yield savings account:

1. A great online app experience and convenient access

What does convenience mean to you, when it comes to a savings account? Is it a friendly app? The ability to use the ATM down the street? An account at the bank you've patronized for years — or one at an entirely different bank, to make your money harder to access (and therefore spend) on a whim?

Most high-yield savings accounts are through online-only banks and apps. That means that a good experience on the web and on mobile are critical. To make the most of your account, you'll want to choose one that's convenient for you.

  • Online-only bank Ally does this well, thanks to its easy-to-navigate online platform.
  • Although its account is technically a cash account, banking service Wealthfront also has a good mobile and online experience, and took the "best overall" spot in Business Insider's high-yield savings account list for 2020.
  • Synchrony Bank is also notable for the convenience factor. It doesn't charge any ATM fees on its end, and gives a $5 reimbursement each month for any fees charged by the ATM companies. Many high-yield savings accounts don't offer ATM access at all.

Get the details »

2. Fee-free saving with no maintenance fees

The point of a high-yield savings account is to be earning money, not spending it on fees. Luckily, there are many options that can help your money grow each month without a fee. None of the accounts included in this article have monthly fees. That said, these three banks are some of the best for fee-free saving. 

  • Wealthfront's high-yield cash account is another trusted choice for fee-free saving, and also offers a consistently competitive rate.  
  • Ally Bank is another safe bet for fee-free saving, with no monthly maintenance fees and no minimum deposit to start your account. It's very transparent about fees on its website, too. 
  • The CIT Bank Savings Builder account has no monthly maintenance fees or any other fees. The only fee it charges is for wire transfers.

Get the details »

3. A high interest rate

You want your money to earn as much as possible, and choosing an account with the high interest rate can help you do that. Because high-yield savings accounts aren't invested, they usually earn between 1.5% and 2% interest — not enough to make you rich, but considerably more than the typical savings account.

It's worth noting that interest rates can change, so it's not worth basing your decision solely on the interest rate. But if you're deciding between accounts that are convenient and fee-free, you'll want to take a look at the interest rates to break a tie.

  • Brio Bank took the top spot on our high-yield savings account list for interest rate. 
  • Investing app Betterment also tends to maintain high interest rates, and is usually neck-in-neck with close competitor Wealthfront. 
  • That said, Wealthfront's high-yield savings account is a close third and offers consistently high rates. 

Get the details »

Join the conversation about this story »

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'I like being in the trenches': Fastly CEO steps down after disappointing market debuts, citing his 'true strengths and passions' as a developer instead of company leader (FSLY)

Sat, 02/22/2020 - 10:25am

Fastly CEO Artur Bergman is stepping down, the internet infrastructure company announced Thursday.

In a blog post announcing the news, Bergman said he would instead assume the role of chief architect and executive chairperson. Current Fastly president Joshua Bixby will replace Bergman as the company's CEO.

"At my core, I am a developer," Bergman wrote in an email to Fastly employees. "While I will always cherish the time I have spent leading Fastly, my true strengths and passions lie in building the architecture and innovation, including our compute platform. I like being in the trenches, solving the most complex problems for our customers, and ultimately providing them with a better experience at the edge."

Bergman founded Fastly in 2011, and the company went public in April. Although it didn't have the starpower of Uber or Slack at the time of its debut, Fastly was among the handful of enterprise software companies that performed better on public markets than its consumer-facing cohort members. However, the company has struggled to meet expectations in the year since, and growth has plateaued in recent months. Like several other newly public tech companies, Fastly has struggled to reach profitability even after its IPO.

The company sells security and content delivery tools to other large companies. In its filing ahead of going public, Fastly said some of its customers include The New York Times, Alaska Airlines, Spotify, and Microsoft's Github. However, it doesn't charge these customers a subscription for its services and instead only charges customers based on how much they use its product. The revenue model has been a sticking point for public and private investors looking for a more reliable revenue stream.

Fastly's stock, traded under the stock ticker "FSLY" on the New York Stock Exchange, was off roughly 10% on market close Friday on the news of the leadership shakeup. 

Bixby joined Fastly in 2013 as a senior executive and president from startup incubator Stanley Park Ventures. According to Bergman's note, Bixby has led multiple parts of the business during his tenure, including sales, marketing, corporate development, and engineering. 

"Several years ago, I entrusted him to run the part of the organization that I have the most expertise in – engineering," Bergman wrote. "I have learned that Joshua is open-minded, a creative problem solver, and an innovator at heart. He intuitively understands what type of people, systems, and organization are needed to grow with integrity and humanity."

Bergman recently returned from paternity leave, where he had the ability to rethink his role within the company, he wrote. 

Prior to going public, Fastly had raised $220 million in venture capital from Battery Ventures, ICONIQ Capital, Deutsche Telekom Capital Partners, and others, according to Pitchbook.

Fastly did not immediately respond to Business Insider's request for comment.

Read the full blog post announcing the leadership changes here.

SEE ALSO: Security startup OneTrust is cashing in on the mad dash for data privacy tech with more than $400 million in venture funding in just the last 7 months

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Warren Buffett tells Berkshire Hathaway shareholders the company is '100% prepared' for his death

Sat, 02/22/2020 - 9:55am

  • Warren Buffett, the chairman and CEO of Berkshire Hathaway, released his annual letter to shareholders on Saturday.
  • In the letter, Buffett discussed the company's plans for the deaths of himself, 89, and vice chair Charlie Munger, 96. 
  • "Your company is 100% prepared for our departure," Buffett wrote. 
  • The "Oracle of Omaha" also said that investors at the annual shareholder meeting can ask Ajit Jain and Greg Abel —two key executives in the running to succeed Buffett— questions alongside him and Munger. 
  • Read more on Business Insider.

On Saturday, Warren Buffett released his annual letter to shareholders of Berkshire Hathaway, the company he's led for 50 years. 

Investors around the world anxiously await the letter's arrival each year as it gives a glimpse into the mind of Buffett, the famed value-investor and "Oracle of Omaha." 

In this year's letter, Buffett, the longest tenured CEO in the S&P 500, took time to discuss the plans for Berkshire Hathaway upon the deaths of himself, 89, and Charlie Munger, the vice chair of the company, 96. 

"Three decades ago, my Midwestern friend, Joe Rosenfield, then in his 80s, received an irritating letter from his local newspaper. In blunt words, the paper asked for biographical data it planned to use in Joe's obituary. Joe didn't respond. So? A month later, he got a second letter from the paper, this one labeled 'URGENT'," Buffett wrote. 

He continued: "Charlie and I long ago entered the urgent zone. That's not exactly great news for us. But Berkshire shareholders need not worry: Your company is 100% prepared for our departure."

Buffett pointed to Berkshire Hathaway's structure, it's skilled and devoted top managers, and nurturing culture as reasons that he and Munger feel optimistic about the company's future.

The letter also pointed to the two key Berkshire Hathaway executives that are thought to be in the running to succeed Buffet, Greg Abel and Ajit Jain. At this year's annual Berkshire Hathaway meeting, which takes place in Omaha, Nebraska, there will be one important change— shareholders will be able to ask Abel and Jain questions in addition to Buffett and Munger. 

"That change makes great sense. They are outstanding individuals, both as managers and as human beings, and you should hear more from them," Buffett said. 

Join the conversation about this story »

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Bosses frequently slept with subordinates at WeWork

Sat, 02/22/2020 - 9:49am

  • Under Adam Neumann, inter-office relationships at WeWork proliferated, according to a Business Insider investigation.
  • In 2018, a woman on the real estate team sent the company a 50-page letter of wide-ranging allegations about the company's culture, including about relationships between colleagues and between subordinates and their managers.
  • That document, which led to a company investigation, eventually resulted in a more than $2 million settlement. Now, WeWork's new CEO said he's leading a company that doesn't tolerate poor behavior.
  • For Business Insider's full investigation, click here.

Couples at WeWork weren't a human resources problem – they could be celebrated. 

One couple that met at WeWork was presented with a "member for life" keycard for their baby at Summer Camp, WeWork's raucous annual party that ended after 2018. And cofounder Miguel McKelvey met his girlfriend when she was a junior employee at WeWork, though she did not report to him. 

To be sure, many companies allow inter-office relationships, although not typically between managers and subordinates.

In the spring of 2018, a woman who once worked in WeWork's real estate business sent the company a 50-page document alleging drug use, sexual harassment, and pay discrimination. The document, which set out the terms of a threatened lawsuit, was obtained by Business Insider.

WeWork then launched an investigation, which discovered instances of managers sleeping with coworkers and subordinates, echoing an allegation from the document that a senior manager admitted to the woman that he slept "with two direct female subordinates."

Her document also claimed she saw a male executive openly smoking marijuana at the company's Summit – a mandatory all-staff event – in 2016. The executive then allegedly told the woman "'he wanted to have a go" with another female subordinate who was visibly drunk, according to the document.

A former top male manager said that WeWork employees slept together, not just in the real estate team but across the company.

WeWork's new CEO, Sandeep Mathrani, has drawn a line between the WeWork of the past and the company he started leading on Tuesday. In a statement, he said WeWork has "zero tolerance" for violating company policy. 

"It is our highest priority to ensure our employees feel safe and respected, and this starts at the top," he said. "In this new chapter at WeWork we are fully invested in upholding a culture of integrity."

A spokesman for Neumann, who was ousted in September, declined to comment.

For Business Insider's full investigation into how the woman's allegations sparked an investigation and eventually led to a settlement of more than $2 million, read here. 

Have a WeWork tip? Contact this reporter via encrypted messaging app Signal at +1 (646) 768-1627 using a non-work phone, email at mmorris@businessinsider.com, or Twitter DM at @MeghanEMorris. (PR pitches by email only, please.) You can also contact Business Insider securely via SecureDrop.

SEE ALSO: WeWork's US president — and Adam Neumann's friend — will leave days after the firm's new CEO joins

READ MORE: Today's the first day on the job for new WeWork CEO Sandeep Mathrani. Insiders told us why he's the guy to pull off one of the most difficult turnarounds Silicon Valley has ever seen.

DON'T MISS: WeWork's board shakeup sees 3 longtime directors depart. Another is leaving in April, and the company is adding its first female board member.

Join the conversation about this story »

L Brands once owned an arsenal of popular stores, and its downfall is a sign of how far the American mall has fallen

Sat, 02/22/2020 - 9:42am

  • L Brands once dominated the American mall. In its heyday in the 1980s and 1990s, the company owned The Limited, Limited Too, Abercrombie & Fitch, Victoria's Secret, and Express, among others.
  • However, after a series of missteps, the beleaguered company has since sold off nearly all of its brands, including Victoria's Secret on Thursday, leaving just Bath & Body Works as a standalone company.
  • We took a closer look at how the rise and fall of L Brands mirrors the death of the American mall. 
  • Visit Business Insider's homepage for more stories.

If there is one company that best exemplifies the demise of the modern mall, it's L Brands

Over the course of several decades, L Brands evolved from a humble women's clothing store in Columbus, Ohio, into a full-fledged retail behemoth. At its peak in the 1980s and 1990s, L Brands operated several of America's most popular mall brands, including The Limited, Express, Abercrombie & Fitch, Victoria's Secret, and Bath & Body Works, among others. 

Under founder Les Wexner, L Brands seized opportunities for growth through a handful of acquisitions and the development of new brands that diversified its brand portfolio. These additions helped L Brands widen its empire into new areas like sporting goods and luxury, at the now-defunct stores Galyan's Trading Company and Henri Bendel, respectively. 

However, Wexner's propensity to buy up brands, squeeze them for sales, and then sell them at any sign of strife eventually caught up with him. Before long, L Brands seemed to be losing companies from its portfolio almost as quickly as it had added them. Thanks in large part to the 2008 recession, which rocked nearly every sector of the retail industry but particularly mall brands, L Brands began to lose steam that it was never quite able to regain. 

We took a closer look at how the unraveling of L Brands mirrors the death of the American mall by examining the downfall of each of its brands. 

SEE ALSO: The rise and fall of Victoria's Secret, America's biggest lingerie retailer

The Limited

In many ways, the story of The Limited exemplifies the rise and fall of retail in America, from its humble beginnings as a small mom-and-pop shop in Columbus, Ohio, to its rise as a staple of the modern mall and its eventual demise in the early aughts. 

The brainchild of Wexner and the foundation for the entire L Brands company, The Limited opened its doors in 1963, selling an assortment of women's apparel. Over the next several years, Wexner focused on expanding the brand and opening more stores, and by 1976, The Limited operated 100 stores nationally. After a couple of savvy acquisitions, Wexner took his company — then known as The Limited Brands — public in 1982, and before long The Limited was in nearly every mall in America. 

However, The Limited ultimately fell prey to the same challenges facing several of its mall brand peers. Foot traffic plummeted and sales dwindled. Seeking support, in 2007 L Brands sold a majority stake of the company to Sun Capital Partners, a private-equity firm that works with distressed companies.

While this kept the store afloat for several more years, in 2017 The Limited announced it would close all 250 stores nationwide. Today it lives on as a shell of its former self, with a small online store on the Belk department store website. 

 



Express

When Express came on the scene, it became a slightly more fashion-forward sister brand to The Limited. The first Express store opened in 1980 in Chicago's popular Water Tower Place, and within just two years it became a separate division of L Brands. However, despite two decades of solid performance, by the early aughts the brand started to fall out of favor with consumers.

In 2007, following several years of underperformance, Wexner sold a majority of Express to Golden Gate Capital Partners and Express became its own privately held company. Today it continues to struggle in the face of the retail apocalypse, and it recently announced it would close 200 stores by the end of 2022

"Our strategic agenda focuses on growth in the intimate apparel, and personal care and beauty segments of our business," Wexner said in a statement at the time. "The new ownership structure for Express will provide it with the resources, leadership focus and capital to maximize its potential."



Express Men

In an attempt to capitalize on the growing menswear market, Express began adding men's clothing in 1987. It called this collection Structure and eventually spun off the line into its own store in 1989. In 2001, L Brands rebranded the store as Express Men, which had a brief two-year stint in malls around the nation before the Structure line was sold to Sears. 

 



Lane Bryant

In 1982, L Brands acquired the plus-size retailer Lane Bryant, including its 207 brick-and-mortar stores and its mail-order business, Brylane. This kicked off a string of acquisitions for L Brands in the 1980s, as Wexner looked to expand into new sectors. 

L Brands retained full ownership of Lane Bryant until 2001, when it was sold to the Charming Shoppes, though L Brands kept its corporate offices in Columbus, Ohio. In 2012, Lane Bryant was fully sold to Ascena Retail Group during a vital growth period for the plus-size market, paired with mounting discontent over Victoria's Secret's lack of size diversity in its campaigns and runway shows. The inability to capitalize on extended sizes proved to be a blind spot not just for L Brands, but for the entire retail industry.



Victoria's Secret

Also in 1982 — just one month after it filed its initial public offering — L Brands acquired intimate apparel company Victoria's Secret. In the early days, Wexner turned the focus of the company from men to women and focused on a mix of comfort, style, and affordability. 

By the 1990s, the brand was thriving and had become the largest lingerie retailer in the country. It continued to explode in popularity over the course of the decade thanks in large part to the start of the annual Victoria's Secret Fashion Show in 1995, which featured supermodels like Tyra Banks and Heidi Klum. 

Victoria's Secret continued to reign supreme in the lingerie market until 2015, when sales started to slip due to increased competition and lack of innovation in both its products and its brand image. As the rest of the industry began including a wider range of sizes and more inclusive models in marketing, Victoria's Secret continued to feature mostly white, thin women in its catalogs and runway shows. 

By 2020, Victoria's Secret had dug itself a hole it was incapable of crawling out of. On February 20, Wexner announced he would be stepping down as chairman and CEO of L Brands and selling a majority share of the company to Sycamore Partners. 



Henri Bendel

The lone luxury department store of the portfolio, Henri Bendel joined the L Brands family in 1985. The century-old store was known for its high-end accessories and handbags, as well as its signature brown-and-white striped pattern. 

However, in 2018, L Brands announced it would permanently shutter the store in order to focus on its other brands, namely the struggling Victoria's Secret. The closures came amid significant strife for the department store industry at large, affecting companies ranging from Sears and JCPenney to Barneys and Lord & Taylor. 

"We have decided to stop operating Bendel to improve company profitability and focus on our larger brands that have greater growth potential," Wexner told The Wall Street Journal at the time. 



New York & Company

Also in 1985, L Brands acquired Lerner New York, a women's workwear company, eventually rebranding it as New York & Company. In 2002, it became its own company after L Brands sold it to Bear Stearns Merchant Banking. At the time of the sale, it operated 522 stores and brought in $940 million in sales. 



Limited Too

In 1987, the company debuted its spinoff brand for young girls, Limited Too, which grew wildly popular with preteens around the country. At its most successful point, Limited Too operated 600 stores in the US, and in 1999 L Brands spun off the company as part of Tween Brands, Inc. 

However, in the early 2000s, sales began to slow and by 2008, Limited Too announced that it would be shuttering completely. The beleaguered chain was later purchased by the Ascena Retail Company and rebranded as Justice.



Abercrombie & Fitch

As it continued to grow its mall brand empire, L Brands acquired Abercrombie & Fitch in 1988. At the time, the teen retailer included just 25 stores and one catalog. However, in the following years, its presence grew as the store shifted its focus exclusively to teenage clientele. L Brands helped get the ball rolling for Abercrombie's notoriously hyper-sexualized brand identity, a move that ultimately helped grow sales until recent years when the company underwent an extensive overhaul.

In 1996, the company went public and began operating autonomously, but its scantily clad imagery was reminiscent of the challenges that would eventually plague Victoria's Secret. 

 

 



Bath & Body Works

Next, Wexner set his sights on the personal care industry with the launch of Bath & Body Works in 1990. Known for its robust collection of scented soaps, body wash, and candles, the company became one of L Brands' best performing brands, eventually keeping the company afloat as sales at Victoria's Secret began to plummet. 

On February 20, Bath & Body Works became the sole remaining company to be part of L Brands, after Wexner sold a majority share of Victoria's Secret and stepped down from the company. 



Galyan's Trading Company

Looking to diversify its brand assortment, L Brands purchased Galyan's Trading Company in 1995, a venture that would prove to be short-lived. By 1999, L Brands had already sold off its majority shares, and a few years later the name was gone for good when the chain was bought out by Dick's Sporting Goods.

The downfall of Galyan's signaled the start of challenges for the sporting goods market, including the bankruptcy and liquidation of Sports Authority in 2016. 



La Senza

L Brands purchased Canadian lingerie company La Senza in 2006, but by 2013 the market was so saturated — in part due to competition from other L Brands companies, like Victoria's Secret — that it closed two-thirds of the stores. In 2019, L Brands sold off the company to the private-equity firm Regent. 



Acorns makes it easy to invest your spare change, but the monthly fee might not make sense for everyone

Sat, 02/22/2020 - 9:25am

 

When I was a kid, my parents always kept a jar in their closet for their spare change. They'd fill up the jar throughout the year and then deposit the money in the bank right before our summer vacation.

They loved the "spare change jar" approach to saving because it felt so painless. It was only a few cents here and there. Yet, over time, it added up in surprising ways. 

But there's one big reason why I don't have my own "spare change jar." I don't use cash. And there's probably a good chance that you don't either. But what if there was a way to save the "spare change" from your card transactions? And what if you could not only save the money, but invest it in the stock market?

It turns out that you can do exactly that and more with Acorns, a micro-investing app and website

What is Acorns Invest?

Acorns Invest is the core service that Acorns offers to its users; it costs $1 per month. Here's what you get with an Acorns Invest account.

Round-Ups let you invest spare change

After you've created your Acorns account, you'll have the opportunity to link your bank account, debit card, or credit card. Once your card or account has been linked, Acorns will monitor all the purchases that you make and round up each transaction to the nearest dollar.

For example, if you bought a cup of coffee for $2.25, Acorns would set aside $0.75. Once you've reached a $5 threshold in your Acorns account, it will be automatically invested in your Invest account portfolio. Acorns says that the typical person invests over $30 per month with Round-Ups alone.

You can set Round-Ups to work with every transaction or you can manually select the transactions that you'd like to round up. Also, you can tell Acorns how much you'd like to invest when your transactions equal exactly one dollar.

Finally, you can supercharge your Round-Ups by adding a multiplier of 2x, 5x, or 10x. That means a Round-Up of $0.25 would actually add $0.50 to your Invest account with a 2x multiplier, for example.

Investing with 'found money'

Acorns has partnered with over 300 companies that will invest a percentage of your sale amounts into your Acorns Invest account. Several popular brands are Found Money partners, including Airbnb, Nike, Walmart, Barnes & Noble, and more. This means that, instead of getting cash back from a purchase, the company will add a small amount to your Acorns Invest account.

Each brand is free to set its own investment amount. When I checked the Found Money page on my account, these are the offers I found: 

  • Tidal: Will invest 5% of your purchase
  • Walgreens: Will invest 2% of your purchase
  • Chevron: Will invest $0.25 when you spend at least $20
  • Walmart: Will invest 1% of your purchase

You can search for Found Money deals on the Found Money section of the Acorns app and website or by using the Google Chrome extension. Found Money rewards are credited to your account 60 to 120 after your purchase.

Set up recurring investments

If you'd like to invest more than just your Round-Ups and Found Money rewards, you can do that with Acorns, too. 

When you set up your Acorns account, you can set up a weekly recurring investment. You can also transfer one-time amounts to Acorns from your linked bank account at any time.

What is Acorns Later?

Acorns Later is a solution for investors who are looking to use Acorns to save for retirement. With Acorns Later, you can open an IRA in just a few taps. Acorns will help you pick the right IRA for your situation and, as with Acorns Invest, you can get started investing with as little as $5.

For most users, Acorns Later will only cost a dollar more than Acorns Invest. You'll pay $2 per month for Acorns Later until your amount invested with Acorns exceeds $1 million.

What is Acorns Spend?

Acorns Spend comes with all of the benefits of Acorns Invest and Acorns Later, plus you get an Acorns debit card and checking account. It's also the most expensive Acorns product, at $3 per month.

One of the main benefits of Acorns Spend is the ability to get Real-Time Round-Ups (instead of having to wait for the transaction to settle). The Acorns Spend checking accounts also come with no minimum balance or overdraft fees. You'll never have to pay ATM withdrawal fees either.

However, it should be pointed out your Acorns Spend account is a checking account, not a high-yield savings account. You won't earn any interest on your uninvested funds. 

How to sign up with Acorns

It's easy to start investing with Acorns. It took me about five minutes to get up and running. First, you'll need to create your account and password.

Next, you'll need to link your bank to your Acorns account. For most banks, you'll be able to connect your account by simply providing your bank login credentials.

Next, Acorns will ask you for some more information about your income, risk appetite, and financial goals. You'll also have the opportunity to choose how much of the cash in your Acorns account you'd like to invest.

Finally, Acorns will tell you how it plans to invest your money, based on the information you provided.

Above, you can see the asset allocation that Acorns suggested for me. More specifically, Acorns said that my funds would be invested in the low-cost ETFs seen below.

These funds represent a mix of companies, markets, real estate, and bonds. Acorns uses these same six funds for every investor. However, your specific risk tolerance will affect the percentage of your funds that are invested in each ETF.

Is Acorns worth the cost?

On the surface, Acorns' fees seem inexpensive. After all, even its priciest tier only costs $3 per month. But, like other micro-investing apps, it's important to think about fees from the perspective of a percentage of your invested funds.

For example, let's say you're an "average" user and invest about $30 per month with Round-Ups. If you were an Acorns Spend user paying $3 per month, that would be 10% of your invested amount. 

Even if you only paid the $1 fee, that would still be over 3% of your invested funds. That seems pretty outrageous when you consider the fact that some of the top robo-advisers charge as little as 0.25% of assets under management.

However, it should be pointed out that Acorns' flat-fee structure benefits users more as their portfolios grow. For example, with a $10,000 portfolio, Acorns pricing becomes a steal. While you'd pay $25 per year with a 0.25% pricing structure, the basic Acorns Invest tier only costs $12 per year.

Finally, it should be pointed out that if Acorns' "invest your spare change" model helps you invest just $12 to $36 more per year than you would with a different provider, the benefits of the technology outweigh the cost.

Want to try investing your spare change? Open an Acorns account today to get started »

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Warren Buffett's Berkshire Hathaway spent a record $2.2 billion on its own stock at the end of 2019

Sat, 02/22/2020 - 9:16am

  • Warren Buffett, the chairman and CEO of Berkshire Hathaway, released his annual letter detailing the company's annual performance to shareholders on Saturday.
  • In the fourth quarter of 2019, Berkshire Hathaway spent $2.2 billion on share buybacks, the most the company has repurchased in a single quarter.
  • Berkshire Hathaway's cash pile was $128 billion at the end of the year. It reached the record amount in the third quarter of 2019. 
  • Read more on Business Insider. 

In the final three months of 2019, Berkshire Hathaway, led by famed value investor Warren Buffett, repurchased $2.2 billion of its own stock, the most the company has spent on repurchases in a single quarter.

The record amount came after the company spent $700 million on share buybacks in the previous quarter. Over the whole year, Berkshire Hathaway spent $5 billion repurchasing about 1% of the company. 

Buffett in his annual letter to shareholders, which is released in tandem with the company's year-end report, discussed both the "sense and nonsense of stock repurchases." Berkshire Hathaway will only buy back its stock if Buffett and vice chair Charlie Munger believe it is selling for less than it is worth, and the company is still left with ample cash after the purchase, he wrote. 

"Over time, we want Berkshire's share gown to go down," Buffett wrote. "If the price-to-value discount (as we estimate it) widens, we will likely become more aggressive in purchasing shares. We will not, however, prop up the stock at any level."

For Berkshire Hathaway, repurchasing 1% of the company was "a good move," Catherine Seifert, an analyst at New York-based CFRA Research told Markets Insider in an interview. 

"I think that buyback in the fourth quarter was very significant, particularly against the backdrop of some of the weakness in the core insurance unit and sort of the mixed results elsewhere," Seifert said, adding that the percentage of Berkshire's repurchased stock is small compared to some of its peers.

Berkshire Hathaway loosened its rule around share buybacks in 2018 making it easier for Buffett and Munger to authorize buybacks when the repurchase price is "below Berkshire's intrinsic value," according to the company. Still, in previous quarters, analysts thought that the company could've spent more on share buybacks

In addition, Berkshire Hathaway's cash pile is still sitting at a record $128 billion and growing. Buffett has struggled to spend down the cash pile in recent years as he's failed to land a major "elephant-sized" acquisition, despite a few attempts in 2019. He did not make an offer for Tiffany & Co., as he's long avoided bidding wars. Buffett also refused to bid higher for Tech Data, which he lost to Apollo Global Management, a private equity firm.

In Berkshire Hathaway's 2018 letter, Buffett wrote that prices were "sky-high" for long-term prospects, but that he and Munger "continue, nevertheless, to hope for an elephant-sized acquisition." 

In this year's letter, Buffett wrote that "the opportunities to make major acquisitions possessing our required attributes are rare." 

The company posted net earnings of $29.2 billion in the year, up from a loss of $25.4 billion a year earlier when the company had to take a major write-down on its investment in Kraft Heinz Co. Operating earnings fell 23% in 2019 to $4.4 billion. Berkshire Hathaway Class A shares have gained 1.1% year-to-date through Friday's close.

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THE HEALTHCARE PAYMENTS REPORT: The strategies payments leaders are using to take advantage of the $3.7 trillion opportunity in US healthcare

Sat, 02/22/2020 - 9:03am

The US healthcare payments market is enormous: Healthcare expenditure hit $3.65 trillion in 2018, per projections from CMS, and this spending is only expected to accelerate.

But the industry is at a tipping point. Better-informed and more critical customers, along with a push to combat the complex and opaque medical billing process, are creating demand for innovation in the healthcare payments space.

Despite a titanic market size and room for innovation, digital transformation is occurring incrementally at best. In fact, 90% of healthcare providers still leverage paper and manual processes for collections, according to data from a report commissioned by InstaMed and compiled by Qualtrics.

And even when healthcare providers offer digital solutions like online portals to customers (which 60% do), they seem to be falling short: While the majority of consumers claim they want to make appointments (68%), fill out registration forms (68%), and pay healthcare bills (61%) online, the share of consumers who actually do so hovers around 30% for those use cases. Discrepancies like these make healthcare payments a greenfield for lucrative digital innovation.

In The Healthcare Payments Report, Business Insider Intelligence looks at the healthcare payments process, including the types of healthcare payments, the stakeholders making them, where those payments are going, and what's driving change in the market. We then examine payments companies' innovations from the past year that address healthcare payments' most pressing challenges, analyze why they're lucrative, and discuss how other payments companies can learn from the innovations to furnish their own solutions.

The companies mentioned in this report are: InstaMed, JPMorgan, Liquid Payments, Patientco, Waystar

Here are some of the key takeaways from the report:

  • The US healthcare payments market is massive: Total US healthcare expenditure hit $3.65 trillion in 2018, per projections from The Office of the Actuary in the Centers for Medicare & Medicaid Services. For reference, consumers spent slightly less on retail purchases — $3.63 trillion — in 2018, per Internet Retailer.
  • But healthcare payments innovation has failed to keep up with consumer demands due to providers' reliance on legacy processes, and this may be hurting providers' bottom lines. 
  • Healthcare payments are complicated by the different stakeholders — providers, payers, and patients — that have a role in each transaction. These stakeholders' needs are shifting as the market changes: Consumers are taking a more active role in paying for their healthcare while states are pivoting toward a model that compensates providers based on the quality of their services rendered rather than the quantity.
  • Some payments firms are successfully adapting to the shifting market by creating digital solutions that balance the evolving needs of the entire healthcare payment value chain. 

In full, the report:

  • Outlines the structure of the current healthcare payments market.
  • Analyzes the forces and stakeholders driving change in the market.
  • Highlights companies that are implementing innovative solutions in the healthcare payments space, and offers key takeaways that other players can apply to their own approaches.

Interested in getting the full report? Here are three ways to access it:

  1. Purchase & download the full report from our research store. >> Purchase & Download Now
  2. Subscribe to a Premium pass to Business Insider Intelligence and gain immediate access to this report and more than 250 other expertly researched reports. As an added bonus, you'll also gain access to all future reports and daily newsletters to ensure you stay ahead of the curve and benefit personally and professionally. >> Learn More Now
  3. Current subscribers can log in and read the report here.

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Who audits the auditor? The White House wants to redraw oversight for the Big Four and other accounting firms, and some critics fear that could lead to more fraud.

Sat, 02/22/2020 - 8:34am

  • The Trump administration wants to eliminate a panel that regulates accounting firms which vet the books of public companies. The White House says its aim is to eliminate duplication of effort. But critics say that would get rid of oversight that the industry needs.
  • The Big Four firms — PricewaterhouseCoopers, KPMG, Deloitte & Touche, and Ernst & Young — audit almost all large U.S. companies, and have recently had a spate of scandals, deficient audits, and other problems, critics of the Trump administration's plan note.
  • Companies from General Electric to Under Armour to Mattel are facing accounting questions. PCAOB inspections have found nearly a third of the Big Four audits they review have some sort of deficiency.
  • And even if the White House's proposal isn't enacted now, the question of whether to keep the PCAOB isn't going away. It may be an indication of where the administration would like to head if President Trump is re-elected and Republicans get full control of Congress.
  • Click here for more BI Prime stories.

If the White House has its way, soon fewer people might be watching the watchmen - and some observers fear that could lead to more corporate fraud.

The Trump administration wants to eliminate a panel that regulates accounting firms which vet the books of public companies. But critics say that would get rid of oversight that the industry needs. The Big Four firms, who audit almost all large U.S. companies, have recently had a spate of scandals, deficient audits, and other problems, the critics note — and they need to be pushed to do better.

The administration wants to fold the accounting-regulatory panel, the Public Company Accounting Oversight Board, into the Securities and Exchange Commission. The White House says its aim is to eliminate duplication of effort, since the two agencies both oversee audit firms.

But that would mean a return to the bad old days, many accounting-industry observers say. After all, they note, the reason the PCAOB was created, nearly two decades ago, was that the industry needed a tough, independent watchdog after slipshod, lightly regulated audits failed to prevent the Enron scandal and other big accounting blowups.

Independent audits help ensure that the information investors get about companies is accurate and reliable. But many fear that if the PCAOB goes away, there won't be enough pressure on auditors to make sure their audits are strong and rigorous. The inspections of audit firms in which the PCAOB currently sniffs out problems won't be as stringent, or might not be done at all, they say, and the quality of audits won't get enough emphasis at the SEC.

And if companies know their audits are less likely to be tough and reviewed by regulators, the critics say, they might feel more leeway to massage their numbers. Potential fraudsters could be emboldened.

"If you know there's not an independent regulator looking over your audit, and it's going to be a lot more lax, then you're going to be a lot more lax," said James D. Cox, a Duke University law professor specializing in corporate and securities law.

The SEC, the PCAOB, and representatives of major accounting firms all declined to comment.

Companies from General Electric to Under Armour to Mattel are facing accounting questions

The White House floated the idea earlier in February in its annual budget proposal, saying it wanted to "consolidate the functions and responsibilities" of the PCAOB into the SEC starting in 2022. It cites a desire to reduce "ambiguity" and duplicative authority - the PCAOB is a non-profit corporation established by Congress that reports to the SEC, and both have jurisdiction over audit firms.

The proposal puzzled many observers. It's unlikely to be enacted anytime soon — it would likely require congressional action outside the budget process, to amend the Sarbanes-Oxley Act that created the PCAOB, and that action probably isn't forthcoming as long as Democrats control the House of Representatives.

The Big Four accounting firms — PricewaterhouseCoopers, KPMG, Deloitte & Touche, and Ernst & Young — have sometimes chafed at the PCAOB's oversight, but they aren't known to have been pushing to scrap it. 

And it seems like an odd time to eliminate an independent regulator of auditing. Companies from General Electric to Under Armour to Mattel are facing accounting questions. PCAOB inspections have found nearly a third of the Big Four audits they review have some sort of deficiency. In September, PwC paid $7.9 million to settle allegations from the SEC that it had gotten too close to some of its clients to perform tough, arm's-length audits.

"It addresses a non-problem. I'm not sure this helps anyone," said Daniel Goelzer, a former PCAOB member and former acting chairman.

But the proposal illustrates the degree to which the Trump administration has been pushing broadly to roll back financial regulation. "There's a mood in Washington right now of trying to make sure everybody in the administration is putting their shoulder to the wheel — less regulation, less accountability, more leeway for market players," Cox said.

A spate of negative news about the PCAOB may also have played a role - notably a high-profile scandal in which PCAOB employees and KPMG partners stole confidential PCAOB information to give KPMG a leg up in preparing for the board's inspections. After that, all five members of the PCAOB were replaced.

The move could scale back inspections of auditors, critics fear

Questions have already arisen about how independent and free from outside influence the PCAOB is. 

Last fall, SEC Chairman Jay Clayton replaced a PCAOB member with a Trump administration staffer, and put an SEC commissioner who's often critical of regulatory efforts in charge of coordinating SEC and PCAOB activities. That led former SEC Chairman Arthur Levitt to publicly criticize Clayton, saying he was weakening the PCAOB's independence and credibility.

It's unclear just what might happen to the PCAOB's activities if it were folded into the SEC — a lot would depend on how it's structured, funded, and staffed. One area the critics are concerned could be curtailed: the PCAOB's inspections, which scrutinize audit firms' audits to gauge their performance and see if they're following auditing rules.

The inspections are the PCAOB's biggest activity, and the SEC doesn't have any equivalent. Observers are worried that if the PCAOB is folded into the SEC, inspections might be fewer, or not as stringent, or might have more of a compliance, check-the-box orientation.

"You won't have the manpower to do real inspections," said John Coffee, a Columbia University law professor. "That was what was new about the PCAOB, you audited the auditor."

More broadly, critics question whether the PCAOB's mission of overseeing audits and auditors might get lost inside the SEC, which is much larger and has much broader concerns. "Even if you were able to maintain the same level of staff, it just wouldn't be the same level of priority," Goelzer said.

And, in turn, that could mean corporate executives might feel freer to manipulate their numbers, knowing that their audits and the auditors who perform them might not be getting the same level of regulatory scrutiny.

If regulation eases up, "they will go right back to what they were doing in the first place," said Barbara Roper, director of investor protection for the Consumer Federation of America.

PCAOB has its own critics, but observers say the oversight it provides is better than what existed before

To be sure, the PCAOB has had something of a checkered history when it comes to tough regulation. In September, the Project on Government Oversight, a nonpartisan independent watchdog, said in a report that the PCAOB has done "a feeble job" in key respects, filing only 18 enforcement cases against the Big Four in its entire history despite hundreds of deficient audits found during its inspections.

Still, observers said, whatever the problems, the oversight the PCAOB has provided is better than before the board was created, when the accounting industry essentially regulated itself.

The PCAOB's work has led to "vastly improved" audits, said Jeanette Franzel, a former PCAOB member. "We cannot let down our guard when it comes to audit quality."

And even if the White House's proposal isn't enacted now, the question of whether to keep the PCAOB isn't going away. It may be an indication of where the administration would like to head if President Trump is re-elected and Republicans get full control of Congress.

"Once you tee something up, it doesn't go away in the conversation," Cox said.

SEE ALSO: Read 58 pages of letters revealing how WeWork convinced securities regulators to let it use an accounting measure that painted a rosy picture

SEE ALSO: The SEC's patience is running thin with an accounting measure that WeWork, Uber, and Peloton are fond of

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Morgan Stanley's big E-Trade bet; PE firms ramp up MBA hiring; inside AMC's turnaround

Sat, 02/22/2020 - 8:16am

 

 

Hi readers, 

I'm Michelle Abrego, a new finance editor at Business Insider, and I'm filling in for Meredith today.

It was a crazy week for dealmaking. Morgan Stanley revealed plans to buy discount broker E-Trade in the biggest bank deal since the financial crisis. Rebecca Ungarino spoke to insiders to learn why the traditionally white-shoe bank is making a $13 billion play for the brokerage firm once known for its talking baby ads.

The deal could be great news for wealth-management fintechs looking for a partner to take them to the next level. Venture and growth-stage investors told Dan DeFrancesco it shows banks' willingness to pay up for client segments and digital capabilities they haven't been able to develop themselves. 

And in a big role reversal, one M&A deal this week saw a fintech acquiring an established player. Shannen Balogh took a look at LendingClub's announcement that it's planning to buy Radius Bank. The transaction would make it the first tech firm to buy a US-regulated bank. One analyst went so far as to call it "amazing."

If you needed further evidence that fintech has hit an inflection point, Dan also delved into data from CB Insights this week which showed exactly that. In 2019, investors put $17.2 billion into mega-rounds of more than $100 million. The focus on larger, later-stage rounds shows fintechs are not the scrappy startups they used to be.  

Meanwhile, Casey Sullivan surveyed 13 top business schools and found that private-equity giants are hiring more and more MBAs for a wider variety of roles. As more money flows into private markets, firms are also putting more resources into hiring and training top talent. Read more here to see which schools have the best recruitment prospects.

We also had a fresh Friday afternoon WeWork scoop from Meghan Morris. Arik Benzino, WeWork's head of US, Canada, and Israel, is leaving. Benzino, who is a friend of former CEO Adam Neumann, was one of the few executives who stayed long after the founder was ousted. His departure also comes during the first week on the job for new WeWork CEO Sandeep Mathrani. 

Read on for a deep dive into how AMC is overhauling its business to prove the doubters on Wall Street wrong, a look at a new startup challenging LinkedIn that just nabbed $8.5 million led by Sequoia Capital, and more.

Thanks for reading, and have a great weekend!

Michelle

If you aren't yet a subscriber to Wall Street Insider, you can sign up here. Are there stories you'd like to see more of, or new areas you'd like to read about? Get in touch with me at mabrego@businessinsider.com

Wall Street is betting AMC is in a downward spiral. Here's the inside story of how the world's biggest movie-theater chain is battling for a comeback.

Lately, AMC Entertainment's movie magic has sputtered in the eyes of investors and analysts. Its stock has plunged 75%, erasing nearly $3 billion in market cap, since the start of 2017. 

Broadly, industry watchers are worried about an uninspiring pipeline of movies out of Hollywood and how the theater industry is positioned with Netflix and Amazon pumping out more movies every year.

Private-equity firm Silver Lake joined the cast of the AMC story in the summer of 2018. 

We spoke to 20 people who have worked at AMC during stints from 2016 through 2019, in locations including New York, New Jersey, California, and Kansas. And we chatted with insiders and analysts to understand how Silver Lake's entrance has changed up the story arc for AMC.  

READ MORE HERE>>

This new startup just nabbed $8.5 million from Sequoia Capital and others to help companies map out their power players

The Org, a startup that wants to map out companies' org charts, just nabbed $8.5 million in funding in a round led by Sequoia Capital, with participation from Balderton and Founders Fund.

As its database grows, The Org's co-founders Christian Wylonis and Andreas Jarbøl are focused on launching a premium offering for professional users like recruiters, salespeople, and journalists.

The startup is also exploring job posting functionality and building out its news feed.

READ MORE HERE>>

New housing laws around the country could give renters alternatives to cash security deposits. Here are 5 startups that could see a windfall.

The high upfront cost of a security deposit can dissuade some renters from moving into a new location. 

Cincinnati recently passed a "Renter's Choice" law, which required landlords of a certain size to provide alternatives to security deposits. State legislatures and the City of New York are considering similar laws. 

Some companies have started to offer insurance products that replace the large, but refundable security deposit with a much smaller, but non-refundable fee. 

Five startups have a lot to gain from these new laws.

READ MORE HERE >>

Robinhood, Fidelity, and Charles Schwab are racing to give customers the chance to buy $1 slices of stocks. We talked to a dozen insiders about who wins, who loses, and what it says about trading today.

The rise of self-directed fractional-share trading is a product of the fiercely competitive, margin-pressured environment that startup and legacy brokerages alike are operating in today.

Players like Robinhood, Fidelity, and Charles Schwab have raced to announce their own offerings — marketed largely at customers still building up wealth — in recent months, or have hinted at launches it in the press. 

We spoke with nearly a dozen insiders and execs about the feature's rise in mainstream retail investing to understand who wins, who loses, and what it says about the industry today.

READ MORE HERE>>

Coatue's new quant fund lost money in the fourth quarter and it shows how hard it is for new entrants to break into the space

Coatue, billionaire Philippe Laffont's firm, opened a quant fund last May to outside investors even as many larger quant funds were struggling in an increasingly competitive space.

In the hyper-competitive space of quant funds, where the biggest managers like Two Sigma, D.E. Shaw, and Renaissance Technologies are investing more every year into new data streams and artificial intelligence, new players face an uphill battle.

The fund, which sources say is closed, runs roughly $350 million now, and returned just under 2% in its first eight months of trading.

READ MORE HERE>>

 

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I spend $41 a month on life insurance, and there are 5 reasons I'm happy to shell out

Fri, 02/21/2020 - 6:09pm

 

Life insurance, similar to putting windshield wiper fluid in your car or an umbrella in your bag, is one of those things you never really think about needing until you need it. 

Since I first started working at the age of 15, up until my late 30s, I would regard the filling out of new-hire paperwork with the same sort of "yeah yeah yeah" attitude. 

Taxes made the most sense, since they come with the scary threat of fines and/or possible imprisonment if you don't take them seriously. But the other things, such as a 401(k) and especially life insurance, that all seemed like something a much older person would need to worry about. Those were things that "future me" needed to pay close attention to. 

If I was lucky enough to be offered a benefits package, which was a given with most office jobs in the early- to mid-2000s — not so much in this current climate of contract work — I would scan through the life insurance paperwork and, when it came to the part where you list a beneficiary, list the name of whatever person I was dating at the time. 

It would almost be like a joke to me, imagining a worst-case scenario where I was taken out by a bus and then some person I had long since broken up with is tracked down and informed that they were now the beneficiary of my life insurance. Joke's on me, though. I learned how seriously this should be taken, and I changed my tune, real quick.

Losing my parents changed my perspective

Over a six-year span of time, I lost both my mother and father. When my father died, I, his only child, was listed as the main beneficiary of his life insurance.

The payout was not enormous, but substantial enough for me to pay for his funeral arrangements and use the remainder as a down payment to buy a house. 

If I hadn't had that money, the financial state I was in at that time would have made it hard to even buy a plane ticket out to the small town where he lived and died, much less arrange for his funeral. 

He knew enough to plan ahead, and now I do too. I bought a life insurance plan for myself shortly after returning home from his funeral, and I view it as one of the best decisions I've made in my life. Here are a few reasons why.

1. Grieving is hard enough as it is

I come from a small family, and have built a small family for myself. My little unit consists of me, my wife, and our dog and two cats. Both my wife and I currently work freelance/contract jobs, and while we're lucky to make a pretty good living doing so, we're not rich people by any means. 

All the money I got from my dad's life insurance went right back into the house we live in. If I died without life insurance, be it tomorrow or 50 years from now, it would be very hard for my wife to arrange for my funeral, while also keeping up to date with bills and our pretty hefty mortgage payment, all while being sad.

I won't be around to cheer her up anymore, however as the sole beneficiary of my life insurance, the payout will alleviate some necessary burdens for her. It brings me a sense of calm to know that I've set up a plan to take some of the weight off her shoulders when I'm gone.

2. Getting life insurance is a lot easier than you might think

When I made the decision to get life insurance, I didn't exactly know where to start in terms of researching plans and picking the best one, so I just picked one. I've always been a "better done than perfect" type of person, and don't like to sit on things, so I figured that in the end, having something is better than having nothing. 

This is going to sound ridiculous, but I chose a plan through MetLife because it uses Snoopy in its marketing campaigns, and seeing Snoopy on my paperwork made me smile. Who doesn't trust Snoopy? 

I filled out my paperwork online, selecting a renewable term life policy with a $70,000 payout that I plan to increase in a few years when a higher premium seems more manageable. I think from start to finish the signup process took me about half an hour. It takes more time to make dinner. 

3. Life insurance is way more affordable than I imagined

As opposed to independently purchased health insurance, which costs hundreds of dollars a month, life insurance is surprisingly affordable. When I first signed up, the monthly premium for my $70,000 policy was $33.75. It is now just a tad bit more, at $41 a month. 

My premium does rise every five years because it's a "renewable" policy, but that means I get to keep the policy until I'm well into my 80s; with many term life insurance policies, the maximum term is 30 years, so you're very likely to outlive your policy and your beneficiary will never see the payout.

4. Why not?

When I think of the wide variety of things I choose to spend money on in any given month, it puts a lot into perspective for me. I am currently signed up for a weekly meal plan that costs $38, and two (TWO!) different subscription boxes for my dog that are averaged out to $30 each per month. I also subscribe to just about every streaming TV service there is, because god forbid something comes out and I don't have immediate access to it in the comfort of my own home. 

Why in the world wouldn't I put that same effort, and money, towards making sure that my wife can pay her bills once I die? Life insurance is a no brainer when  you think of it like that. Zero harm can come from having it, but a whole lot of grief can come to your loved ones if you don't. I would hope that I have as much invested interest in my wife as I do my dog. 

5. You can change beneficiaries whenever you want

This will never, ever, in a million years happen, but for the sake of this article, let's say my wife and I split up one day, and she's removed as the beneficiary of my life insurance. Is there still a valid reason to keep the policy up to date? Absolutely. 

Policies can be updated in any number of ways. I could choose to have my death benefit go to a charity, or have it split up amongst a number of charities. I could split it between a charity, and a cousin or an aunt. With some types of whole life insurance policies, you can even get a much smaller cash payout and, throwing your arms in the air in defiance, put it in your mattress for someone to find once you've died. 

I wouldn't recommend that last option, but it goes to show that when it comes to life insurance policies, they're easy enough to get and fairly flexible. Just get one. It's one less thing to worry about.

Life insurance will never be cheaper than it is today. Lock in your rate with help from Policygenius »

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THE AI IN INSURANCE REPORT: How forward-thinking insurers are using AI to slash costs and boost customer satisfaction as disruption looms

Fri, 02/21/2020 - 5:02pm

The insurance sector has fallen behind the curve of financial services innovation — and that's left hundreds of billions in potential cost savings on the table.

The most valuable area in which insurers can innovate is the use of artificial intelligence (AI): It's estimated that AI can drive cost savings of $390 billion across insurers' front, middle, and back offices by 2030, according to a report by Autonomous NEXT seen by Business Insider Intelligence. The front office is the most lucrative area to target for AI-driven cost savings, with $168 billion up for grabs by 2030.

There are three main aspects of the front office that stand to benefit most from AI. First, Chatbots and automated questionnaires can help insurers make customer service more efficient and improve customer satisfaction. Second, AI can help insurers offer more personalized policies for their customers. Finally, by streamlining the claims management process, insurers can increase their efficiency. 

In the AI in Insurance Report, Business Insider Intelligence will examine AI solutions across key areas of the front office — customer service, personalization, and claims management — to illustrate how the technology can significantly enhance the customer experience and cut costs along the value chain. We will look at companies that have accomplished these goals to illustrate what insurers should focus on when implementing AI, and offer recommendations on how to ensure successful AI adoption.

The companies mentioned in this report are: IBM, Lemonade, Lloyd's of London, Next Insurance, Planck, PolicyPal, Root, Tractable, and Zurich Insurance Group.

Here are some of the key takeaways from the report:

  • The cost savings that insurers can capture from using AI in the front office will allow them to refocus capital and employees on more lucrative objectives, such as underwriting policies.
  • To ensure that AI in the front office is successful, insurers need to have a clear strategy for implementing the tech and use it as a solution for specific problems.
  • Insurers are still at different stages when it comes to implementing AI: a number of them need to find ways to appropriately build their strategies and enable transformation, while the others must identify how to move forward with their existing strategy.
  • Overall, incumbents should focus on a hybrid model between digital and human to ensure they're catering to all consumers.

 In full, the report:

  • Outlines the benefits of using AI in the insurance industry.
  • Explains the three main ways insurers can revamp their front office using the technology.
  • Highlights players that have successfully implemented AI solutions in their front office.
  • Discusses how insurers should move forward with AI and what routes are the most lucrative option for players of different sizes.

Interested in getting the full report? Here are two ways to access it:

  1. Purchase & download the full report from our research store. >> Purchase & Download Now
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The choice is yours. But however you decide to acquire this report, you've given yourself a powerful advantage in your understanding of AI in insurance.

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Tech stocks plummet as coronavirus fears send traders fleeing to safety

Fri, 02/21/2020 - 4:19pm

  • Coronavirus fears returned to US stocks on Friday, sending the Nasdaq 100 to its worst day in almost four weeks.
  • Declines were led by Hasbro, Nvidia, and Advanced Micro Devices, three names with supply chain exposure in China.
  • Safe-haven assets rallied, with the yield on the 30-year Treasury note hitting an all-time low.
  • Visit Business Insider's homepage for more stories.

US stocks tumbled on Friday amid mounting coronavirus fears. The tech-heavy Nasdaq 100 was hit particularly hard, registering its worst single-day drop in almost four weeks.

Among names leading the decline were semiconductor makers: Advanced Micro Devices fell 7%, while Nvidia Corp. slid 4.7%. Parts for semiconductors are heavily sourced out of China.

Meanwhile, toy maker Hasbro tumbled 9%. The firm said in its earnings release last week that China-based parts of its supply chain would see disruption as a result of coronavirus.

Through Wednesdsay, markets shrugged off the risk of coronavirus — the fast-spreading disease that's infected more than 76,000 and killed 2,250. But companies have been increasingly sounding the alarm on forecasts, with Apple, Foxconn, Air-France-KLM, and AP Moller-Maersk all announcing this week that their businesses would be affected by the outbreak. 

Here is how the major indexes closed:

Dow Jones Industrial Average: -0.78%

S&P 500 Index: -1.05%

Nasdaq 100: -1.88%

Investors also rushed into safe haven assets on Friday. The yield on the 30-year US Treasury hit an all-time low, while gold futures posted their biggest weekly gain in eight months.

Read more: A simple trading strategy has historically made investors an average of 21% in just 6 days. Here's how Goldman Sachs says you can replicate it.

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NOW WATCH: A big-money investor in juggernauts like Facebook and Netflix breaks down the '3rd wave' firms that are leading the next round of tech disruption

CULTIVATED: The next trendy cannabinoid, inside the world of cannabis influencers, and more

Fri, 02/21/2020 - 3:40pm

Welcome to Cultivated, our weekly newsletter where we're bringing you an inside look at the deals, trends, and personalities driving the multibillion-dollar global cannabis boom.

Sign up here to get it in your inbox every week.

If you want a discount to BI Prime to read our stories, sign up here!

Happy Friday everybody!

I hope everyone enjoyed the shortened week. 

I'll keep it quick: we've got some great stories on tap for you in this edition. First, I interviewed Richard Acosta, the CEO of the newest cannabis REIT.

My colleague Yeji took a deep dive into CBN, which could be the next trendy cannabinoid after CBD. And we also have a look at the fascinating world of cannabis influencers, who draw in both huge traffic and the ire of the social platforms they use.

-Jeremy 

Here's what we wrote about this week:

A group of cannabis investors just raised $225 million to buy up real estate in a tough market. Here's how they put the deal together.

Subversive Real Estate Acquisition REIT LP is the newest cannabis-focused real estate investment vehicle in town.

SPACs are an increasingly common structure used to invest in cannabis companies because most traditional investors — like pension-backed hedge funds or private equity firms — are reticent to get involved in the industry, since cannabis is federally illegal in the US.

The fund's CEO, Richard Acosta, told Business Insider that they raised $225 million over a two-week period in December through a SPAC, or special purpose acquisition vehicle.

There's a hot new cannabis compound that claims it'll help you sleep better. Meet CBN, which is chasing a $1 billion-plus market.

Get ready for the next trendy cannabis-linked wellness compound.

Cannabis companies are gearing up to launch products containing cannabinol, or CBN, claiming they can help people sleep better. The market for CBN could be significant. Millions of Americans have trouble sleeping, and some already turn to CBD or melatonin for help. 

Inside the world of cannabis influencers on Instagram and YouTube, who can make over $1,000 for a sponsored post but often get their accounts shut down

Instagram and YouTube are still determining how to moderate cannabis content at a time when their users live across state and national borders where marijuana is subject to a wide variety of laws and regulations. 

"It started with pictures and taking bong rips," cannabis influencer Anjela G. said. "I really just found a way to connect with so many people all over the world." 

Anjela's cannabis-centered brand, Koala Puffs, has over 900,000 followers across Instagram, YouTube, Snapchat, and Twitter. Because her content is all about using cannabis, a federally classified Schedule I drug in the US, her accounts are in a tenuous position on social platforms like Instagram and YouTube.

Capital raises, M&A activity, partnerships, and launches
  • Aurora Cannabis spinoff Australis Capital terminated its agreement to merge with Folium Biosciences, a CBD company, after the company said it discovered "new relevant information with regard to Folium." The deal was first announced in December. 
  • A group of Canadian cannabis industry alums has launched Alan Aldous, a PR agency focused on the emerging psychedelic space. The name is a "nod to two highly inquisitive famous authors, Alan Watts and Aldous Huxley," the company said in a release. 
  • Cannabis real estate fund NewLake Capital acquired ten properties in six states for a $15.5 million price tag. Six of the ten properties are part of a sale-leaseback transaction with Grassroots Cannabis.
  • High Times has received a symbol and approval from FINRA to begin trading, culminating the decades-old company's Regulation A+ campaign. Adam Levin, High Times' executive chairman, said the listing will help "assist us in furthering our acquisitional goals." The release did not give a specific trading date. 
Executive moves
  • Embattled Canadian cannabis producer CannTrust has appointed Greg Guyatt as CEO. Guyatt takes over from Robert Marcovitch, the company's interim CEO, who was appointed after Peter Aceto left the company in the wake of an unlicensed growing scandal. Guyatt was previously CannTrust's COO. 
  • TILT Holdings has appointed  Mark Scatterday, the company's interim CEO, as full-time CEO. Tim Conder will become President and COO. 
Chart of the week

In the US, Colorado spent the most on cannabis per capita in 2019, at an average of $268 per person, followed closely by Nevada ($242) and Alaska ($192). Interestingly, some states on this list with only medical programs —  like Montana, Arizona, Oklahoma, and Rhode Island — are outpacing some states with full legalization in terms of spending per capita: 

What we're reading

Wine vs. weed in Napa Valley (Politico)

Cannabis company executives point finger at founders over alleged missing $14 million (Financial Post)

Pay to play: Cannabis brands fork over cash for retail shelf space (Marijuana Business Daily)

'I'm the latest carnage': Terry Booth on his Aurora Cannabis departure (BNN Bloomberg)

Business gets ready to trip: How psychedelic drugs may revolutionize mental health care (Fortune Magazine)

Did we miss anything? Have a tip? Just want to chat? Send us a note at cannabis@businessinsider.com or find Business Insider's cannabis team on twitter: @jfberke & @jesse_yeji. You can also reach Jeremy on encrypted messaging app Signal on at (646) 376 6002. 

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