Where to put $50,000 in emergency savings

NEW YORK (CNNMoney)

The philosopher George Santayana famously wrote that those who cannot remember the past are condemned to repeat it. Your question makes me wonder whether people are already starting to forget a key lesson of the financial crisis: Higher yields always come with higher risks.

That's true whether you're investing for the long-term in retirement accounts, like 401(k)s and IRAs, or setting aside savings you may need to tap much sooner for emergencies and such. In fact, the downside of ignoring or underestimating risk may be even higher when you're investing money you may need in the short-term, since you have less flexibility to absorb and recover from any losses.

Back in 2007, when the economy and markets were still going gangbusters, investors seeking "safe" high yields plowed their money into all sorts of investments that claimed to be as secure and liquid as cash while delivering above-average returns: auction-rate securities, bank loan funds and ultrashort-term bond funds, to name a few.

Related: Will your retirement savings last?

These investments lived up to their extra-gain-with-no-pain promise, until they didn't. When the financial crisis hit in 2008, it became clear that supposedly safe alternatives to money-market funds and savings accounts came with an unexpected downside.

The market for auction-rate securities froze up in 2008, leaving thousand of investors unable to access their money for many months and, in some cases, years. Ultrashort-term bond funds, meanwhile, lost 9% of their value during the financial crisis, while bank loan funds fell by more than 30%. It took both types of funds nearly three years to recoup their losses.

Flash forward to today: With savings accounts, money-market accounts and the like paying less than 0.10% a year on average, the impulse to reach for extra yield is still strong. And there's no shortage of people pitching products that cater to that impulse, ranging from the very ones that backfired on investors six years ago (bank-loan funds, ultrashort-term bond funds, short-term bond funds) to a variety of others offering even higher yields (short-term commercial real estate notes and promissory notes). In some cases, they are even touting double-digit returns.

My advice: When it comes to the money that absolutely, positively has to be there whenever you may need it -- emergency funds or savings you expect to tap within a short period, say, a down payment for a house you plan to buy within a few years -- you should stick to an FDIC-insured savings account or money-market account. Granted, their yields are paltry. But for the money you can't afford to put at risk, safety and access are your primary concerns, not return.

Related: The 3 biggest risks every retirement saver should know about

That said, there is a way to boost the yield you earn without sacrificing safety: do a little shopping around. By going to sites like Bankrate.com, Mint.com and NerdWallet, you can find savings accounts, money market accounts and short-term CDs that pay yields well above the average.

We're not talking blow-your-socks-off payouts, but you can get 1% or so in an FDIC-insured account, which is roughly 10 times the national average. On $50,000 of savings, that's the difference between earning $500 a year vs. just $50.

I don't recommend it, but if you want to shoot for a somewhat higher return with a portion of your "safe harbor" stash, you could move some funds into an ultrashort-term bond fund, bank loan fund or even a short-term bond fund. But if you choose to do that, I suggest you complete a risk tolerance questionnaire first. And if you decide to go ahead, make no mistake that, one way or another, you're accepting the possibility of a bigger downside.

In the case of ultrashort- and short-term bond funds, the main danger is rising interest rates. At some point, the Federal Reserve will set a higher target for short-term interest rates. When that happens, rates will rise and ultrashort- and short-term bond funds will be susceptible to setbacks.

Morningstar also noted in a recent report that some funds holding short-term debt have been juicing yields by investing in lower-quality bonds, making them even more vulnerable. Theoretically, any losses should be small, as these funds typically invest in very short-term debt. But as we saw in 2008, theory doesn't always jibe with reality.

As for other "safe" alternatives -- promissory notes, commercial bridge loans and similar products -- I don't think they should play any role in an emergency fund. They require a level of analysis and research that's beyond what most individual investors are willing or capable of doing.

Calculator: How much will I need for retirement?

If you have some money you can afford to take extra risk with in hopes of earning a higher return -- and you're willing and able to do the considerable research needed to truly understand the risks in these complex investments -- fine. But you should know that money in these investments is not as liquid and secure as funds in an FDIC-insured account.

I wish I could recommend more attractive choices, investments that offer loftier yields than money-market and savings accounts, immediate access to your money and the assurance that no matter what happens your principal and any earnings are protected against loss. But in the real world, an investment's return is a reflection of its risk.

That risk may be difficult to discern, or the person selling the investment may gloss over the potential perils. But they are there. If nothing else, the financial crisis proved that in spades.

Walter Updegrave is the editor of RealDealRetirement.com. If you have a question on retirement or investing that you would like Walter to answer online, send it to him at walter@realdealretirement.com.

More from RealDealRetirement.com

Does Uncle Sam want to donate $2,000 toward your retirement?

More sex -- and 3 other tips for a happier retirement

Woulda, coulda, shoulda: What you can learn from pre-retirees top 3 mistakes

First Published: December 2, 2014: 4:16 PM ET

14.44 | 0 komentar | Read More

Switch to Sprint, cut your bill in half

Verizon and AT&T customers can cut their bills in half by switching to Sprint on Dec. 5.

NEW YORK (CNNMoney)

But the deal is only good on Friday, Dec. 5.

Here's how it works. Verizon (VZ, Tech30) and AT&T (T, Tech30) customers must upload their latest bill online and then bring a copy of it into a Sprint store on Dec. 5. The new plan will offer the same data allowance as the customer's current one. And it will include unlimited talk and text.

If the customer is currently paying $160 monthly for four lines, Sprint will charge $80.

Related: You might not need a mobile carrier by 2020

Sprint will also buy the customers out of their current contracts, up to $350 per line.

It's the latest move in the price war going on in the U.S. wireless industry and it is aimed at the two biggest players.

Sprint (S) brought in CEO Marcelo Claure this summer to lead the charge. Claure pledged to make Sprint more "aggressive in the marketplace" and the company has since overhauled its pricing.

But Sprint has a long way to go. Though its speeds are improving, it still has by far the slowest 4G network of its rivals. It was rated the worst cell phone service in the nation by Consumer Reports last year. On top of all that, it continues to hemorrhage money and lose customers.

First Published: December 2, 2014: 6:30 PM ET

14.44 | 0 komentar | Read More

Takata defies U.S. regulators over exploding airbags

HONG KONG (CNNMoney)

The National Highway Traffic Safety Administration had given Takata until midnight to issue a nationwide recall in the U.S., but the company allowed the deadline to pass without taking action.

Until now the recall has been limited to a select number of states. Takata could face a fine of up to $35 million if it does not comply.

"The recall should be called by auto manufactures, not suppliers, so it is not up to us to decide the recall," said Takata spokesman Toyohiro Hishikawa. "But we will fully cooperate once the makers decide to recall."

"It's my personal opinion, but I wonder if NHTSA is serious about putting the fine to suppliers," he said.

Takata's inaction drew the ire of NHTSA, which said in a statement that it found the response "disappointing."

"Takata shares responsibility for keeping drivers safe and we believe anything short of a national recall does not live up to that responsibility," the agency said. "We will review Takata's response in full to determine next steps."

Japan-based Takata insists that the airbags are more likely to malfunction in high humidity areas, but NHTSA contends that the recall should be expanded to all states. Takata has pledged to increase production of replacement parts, and the company has engaged three former U.S. transportation officials to work on the airbag issue.

Related: Takata airbag victims looked like they had been shot

The flawed airbags can explode and hit passengers with shrapnel. At least four U.S. drivers of Honda and Acura cars are believed to have been killed by the airbags, according to the U.S. Center for Auto Safety. Honda is investigating reports of a fifth death, this one in Malaysia.

Related: Exploding airbag maker faces criminal probe

Millions of the airbags have already been recalled. Although the affected cars were manufactured by 10 different automakers, Honda (HMC) has been hardest hit. About five million Honda and Acura models are included in the recalls.

While not everyone injured has died as a result of the accident, the Center for Auto Safety has listed nine serious injuries from the airbags. At least two victims had metal pieces lodge in their eyes, permanently damaging their eyesight.

In most cases, the airbags deployed during a minor accident. But one lawsuit charges that the airbags in a 2001 Honda Civic deployed for no apparent reason while the car was stopped at a red light.

Lawmakers in the U.S. have taken a keen interest in the recall, and a House committee is scheduled to hold a hearing on Wednesday. A Takata representative is expected to testify.

-- CNN's Yoko Wakatsuki contributed reporting from Tokyo.

First Published: December 2, 2014: 11:33 PM ET

14.44 | 0 komentar | Read More

FBI warns of hacking threat after Sony attack

The FBI is warning businesses of a new malicious software that was used to attack Sony Pictures.

NEW YORK (CNNMoney)

The threat comes from the same type of malicious software that infected Sony's computer systems, a law enforcement official told CNN.

As a result of the attack on the Hollywood studio, Brad Pitt's "Fury" and the remake of the musical "Annie," have become available on illicit web sites. Screener copies of at least five unreleased Sony films have also made their way online.

Sony is "exploring the possibility" of a North Korean link to the hacking, according to Re/code and other reports. That's because Sony is about to release "The Interview," a comedy starring James Franco and Seth Rogen. Its plot entails an attempted assassination of the North Korean leader Kim Jong-Un.

Businesses were alerted about the new threat and what the hackers could do once inside the business' computers.

The FBI routinely advises private industry of various cyber threats found during investigations, the FBI said in a statement Monday night.

This data is provided in order to help systems administrators guard against the actions of persistent cyber criminals, it said.

The alert was first reported by Reuters.

CNN's Pamela Brown contributed to this report.

First Published: December 1, 2014: 7:57 PM ET

14.44 | 0 komentar | Read More

Despite scandal, Uber raising $1 billion at a $40 billion valuation

Uber CEO Travis Kalanick has been criticized for his company's tactics, but it's not impacting the fundraising.

NEW YORK (CNNMoney)

The company is looking to raise $1 billion in funding at a $40 billion valuation, a source with knowlege of the deal confirmed to CNNMoney. (Bloomberg first reported the valuation last week.) The company, currently valued at $17 billion, would be worth more than Netflix (NFLX, Tech30).

Additionally, Uber is working with Goldman Sachs on a separate round of funding, according to the source. The bank is offering its high net worth clients the option of convertible debt that could eventually be converted to stock. (This was first reported by Fortune.)

This comes just weeks after an Uber executive came under fire for suggesting the company dig up dirt on journalists who criticized the car service.

One investor called the recent controversies "PR misfires" that have yet to affect the business.

"The [company's] numbers are astronomical," he added.

"In terms of brand awareness, there's no company bigger than Uber right now," Bluerun Ventures Partner John Malloy told CNNMoney. "Late-stage investors have an appetite to be involved in ... what's looked at as the breakthrough company."

First Published: December 1, 2014: 7:36 PM ET

14.44 | 0 komentar | Read More

Japanese voters to give verdict on Abenomics

HONG KONG (CNNMoney)

At best, his record has been mixed. Yet he's gambled his future by calling snap elections and asking voters to buy his cure of government spending, money printing and reforms for a second time.

So why is Abe confident enough of victory to risk being thrown out of office two years early? The simple answer: There's no obvious alternative, politically and economically.

Japan's opposition is in disarray, and opinion polls indicate his party will win again. That's despite waning support for his economic strategy -- known as Abenomics.

There are good reasons for this. Two years ago, the country was just beginning to emerge from a recession. As the election campaign kicks off Tuesday, the economy has slipped back into reverse.

That's not to say nothing has changed. Higher government spending, massive monetary easing by the Bank of Japan, and modest progress on some reforms has fueled a stock market boom and reversed a trend of falling prices.

The benchmark Nikkei has risen nearly 65% from the beginning of 2013, and core inflation is near 1%.

At the same time, wages have lagged and many of Abe's proposed reforms -- the keys to sustained growth -- failed to launch. On Monday, Moody's slashed Japan's credit rating and expressed reservations over the country's rising debt levels.

Related: Moody's downgrades Japan on debt worries

The bottom line for many economists is that it's too early to throw in the towel. Not least because there are no easy answers. Japan needs growth if it's ever to control government borrowing that has left the nation saddled with debt worth nearly 2.5 years of economic output.

"Japan's economic problems are still far from being solved but that is no reason to abandon the fight against deeply-ingrained deflation with all its associated economic costs," Marcel Thieliant and Mark Williams of Capital Economics wrote in a research note.

Abe is betting that voters will make the same calculation, and he will earn the right to spend four more years steering Japan toward revival.

The most important lesson of the past two years is that Abe and his central bank chief can't do it alone -- and lawmakers will need to bite the bullet on painful reforms.

"Hopefully, the recent weakness of the economy will serve as a wake-up call to policymakers that monetary easing alone is not enough to lift economic growth," Thieliant and Williams said.

Related: Even Abenomics can't ignore Japan debt

First Published: December 1, 2014: 9:16 PM ET

14.44 | 0 komentar | Read More

China is finally getting deposit insurance - and that's bad news for the rich

HONG KONG (CNNMoney)

The proposed insurance scheme will guarantee deposits up to 500,000 yuan ($81,395), according to a draft report released by China's State Council. The top-end limit would fully protect more than 99% of all bank accounts.

But what's good for typical Chinese could be bad for the 1%. Accounts with more than 500,000 yuan -- which make up 50% of total deposits -- will be left unprotected, according to Wei Yao, an economist at Societe Generale.

Here's the problem for big savers: China only needs deposit insurance if Beijing is now willing to let banks fail. In the past, the central government has always bailed out troubled institutions and made sure investors got their money back. Even investments offered by the country's massive shadow banking system have been considered safe.

This implicit guarantee from the government encouraged banks to make bad loans, and investors to buy the riskiest products around. Both parties could count on a government rescue.

Related: One Chinese company makes one-third of the world's cigarettes

Analysts have long argued that the way to fix this problem is for China to embrace failure. The government has acknowledged it needs to allow market forces to play a larger role in the economy, and help introduce more risk into the system.

The launch of a deposit insurance program is another clear message that the days of unlimited bailouts are over. Now, only small bank depositors will receive the government's backing.

"In a financial system where shadow banking investment is often protected, such developments represent a great leap of faith," Yao said. "This is the most critical, and yet riskiest reform measure ever undertaken."

Beijing now must carefully monitor how investors respond to the shifting landscape. Depositors could rush to move funds out of small banks and into larger institutions.

"The risk comes down to how the half of deposits -- and the entire bond as well as shadow banking investment -- that are unprotected will move about in response to the implementation," Yao said.

Related: China is not finished with rate cuts

First Published: December 1, 2014: 12:25 AM ET

14.44 | 0 komentar | Read More

Sony films surface on pirate sites after hacking attack

Brad Pitt's "Fury" is one of several Sony movies that have appeared online.

NEW YORK (CNNMoney)

Screener copies of at least five unreleased Sony films have made their way online, according to Variety.

The FBI is reportedly involved in the investigation into the apparent leak.

"The theft of Sony Pictures Entertainment content is a criminal matter, and we are working closely with law enforcement to address it," a Sony Pictures spokesperson said in a statement.

On Sunday, "Fury," which is still in theaters, and "Annie," which is scheduled to premiere December 19, were both on the Top 100 downloaded movies list of the file-sharing site The Pirate Bay.

Three other forthcoming Sony films -- "Still Alice," "Mr. Turner," and "To Write Love on Her Arms" -- have also appeared on file-sharing sites.

An extensive cyber-attack disrupted Sony Pictures' computer systems last week, causing corporate email to be crippled and forcing some employees to rely entirely on telephone calls for communication. The company is still recovering.

While the timing does match up, there has been no independent confirmation that the cyber-attack was the cause of the film leak.

A group calling itself "Guardians of Peace" appeared to take credit for the attack last week.

Re/code reported on Friday that Sony is "exploring the possibility" of a North Korean link to the hacking. That's because Sony is about to release "The Interview," a comedy starring James Franco and Seth Rogen. Its plot entails an attempted assassination of the North Korean leader Kim Jong-Un.

The regime in Pyongyang has been fuming about the movie for months; in June, a spokesman for the North Korean Foreign Ministry called it "undisguised terrorism and a war action" and hinted at consequences to come.

"Those who defamed our supreme leadership and committed the hostile acts against the DPRK can never escape the stern punishment to be meted out," the spokesman said.

The comedy is scheduled to be released on December 25. It does not appear to be circulating online like "Fury" and "Annie" now are.

Jose Pagliery contributed reporting.

First Published: November 30, 2014: 9:09 PM ET

14.44 | 1 komentar | Read More

Behind the scenes of the Janay Rice interviews

NEW YORK (CNNMoney)

All manner of media outlets were vying to be the first to interview Rice, the wife of former Baltimore Ravens running back Ray Rice. Janay's decision to stay with Ray after he violently struck her in an Atlantic City casino elevator -- and after video of the incident instigated weeks of national news coverage -- drew considerable attention earlier this year.

Interest was so great that some media outlets were willing to consider unusual arrangements in order to lock down what's known in the industry as "the get."

ESPN's Jemele Hill got it, securing a three-hour interview earlier this month. Janay did not appear on camera, but the interview formed the basis of an essay, dubbed "Janay Rice, in her own words," that ESPN published on Friday afternoon, the same day Ray's indefinite suspension was overturned.

NBC's Matt Lauer also got it, winning the first on-camera interview with both Janay and Ray, which will be shown on the "Today" show on Monday and Tuesday.

So about those unusual circumstances -- some analysts have criticized the ground rules of the ESPN interview after the outlet disclosed that Janay "was given approval" over the content of her essay and its release date.

Why did ESPN agree to that? Well, for one thing, the Rices had a whole lot of leverage. As Hill told me on CNN's "Reliable Sources" on Sunday, the couple had "an array of choices" of who to talk with.

"I know people see that language and 'final approval' and they envision this process of her shooting down things not to be in there," Hill said.

"But in no way was this ever a dictatorship. It was fully a collaboration," she said. "She came into it with the mindset that she wanted to be as transparent as possible."

Related: Jemele Hill on "Reliable Sources"

"Collaboration" is a controversial word that conjures up something other than traditional journalism. But there is a long history, particularly in the sports world, of first-person pieces.

Earlier this year LeBron James announced his return to the Cleveland Cavaliers via Sports Illustrated in an first-person essay "as told to Lee Jenkins."

In this case, ESPN stressed that "no questions were off limits" when Hill met with Janay.

Reactions to the arrangement were mixed; Mediaite columnist Joe Concha criticized it on Saturday, saying Hill morphed "from journalist to stenographer."

Washington Post media critic Erik Wemple wrote Sunday that the actual content of the essay was "quite compelling," and noted that ESPN had accepted the ground rules not to gain access to, say, NFL commissioner Roger Goodell, but rather to a "victim of domestic violence -- albeit one who's trying to clear the way for her husband's return to the playing field."

Hill told me on "Reliable Sources" that she "interviewed for the interview" by meeting with Janay and her family members several weeks before the Nov. 5 interview.

Hill said Rice was motivated to speak partly because "she had gone months without saying anything."

And what about NBC? Lauer's interview was clearly taped before Ray was reinstated.

A "Today" show spokeswoman said there were "absolutely no restrictions or approval" on the questions and answers in the interview.

Asked whether NBC compensated the Rices for the interview, perhaps by licensing photos or videos from the family, the spokeswoman said there was "absolutely no licensing or arrangement of any kind."

What the Rices gained from both ESPN and NBC was exposure -- NBC, for example, showed a snippet of Lauer's interview on the hugely popular "Sunday Night Football" telecast on Sunday.

First Published: December 1, 2014: 1:21 AM ET

14.44 | 0 komentar | Read More

Madonna's 'Material Girl' look hits the auction block

NEW YORK (CNNMoney)

Several iconic pieces from Madonna's career and personal life are on the auction block, including the Marilyn Monroe-inspired dress, stole and jewelry featured in the 1984 "Material Girl" music video.

The dress is expected to go for $40,000-$60,000 and $4,000-$6,000 for the stole when the items go up for auction starting Friday in Beverly Hills.

Julien's annual Icons & Idols: Rock 'n' Roll auction has 700 items up for bid, including John Lennon's glasses, a T-shirt worn by Kurt Cobain, a guitar from David Bowie and belongings from Elvis Presley, Lady Gaga and more.

Remember 'Easy Rider'? That bike just sold for $1.35 million

But Madge is a top attraction of the auction, with 140 of her items up for sale, including a personal day planner, the inauguration dress she wore when she played Eva Peron in the movie "Evita" and her wedding dress and shoes from her marriage to Sean Penn. You can also get her signed, expired American Express credit card and the baseball uniform she wore in 1992's "A League of Their Own."

The deep pink satin gown had a starting bid of $20,000

"Very little of her stuff comes to auction now," said Martin Nolan, executive director of the auction house.

He said Julien's is looking to set records with the two-day auction that allows people to bid in-person, over the phone and online.

Bids come from all over the world, according to Nolan, but the face of bidders have changed significantly since 2005. "Back then, it was what we call fanatical people, the huge fans that would bid on items. Now, you still see some fans, but they don't have the big dollars that are needed. Museums are big buyers."

Men are buying up these $1,200 sneakers

The starting bid for Madonna's day planner circa 1988 was $1,000

A large portion of the items from The Queen of Pop up came from a private investment firm in the U.K. "They got together and pooled their money in 2007 and chose her as their blue chip icon," said Nolan. "They've now decided to liquidate their Madonna portfolio."

So how strong of a return on investment are celebrity-worn collectibles? In 2005, Julien's held a 200-lot auction of Marilyn Monroe's items that brought in $1 million. Today, Nolan said it would have sold for $10 million. "And that's being conservative." A skirt purchased in that auction for $1,500 sold for $50,000 two years ago.

First Published: November 7, 2014: 5:11 PM ET

14.44 | 0 komentar | Read More