OCR Text |
Show DAILY WML THE WALL STREET JOURNAL LOVe & Money Sunday. May 11 2007 HERALD By Jeff D. Opdyle Editor's Ncto Sunday Journal Additions The (Too High) Price of Being Green quote a famous frog, "It's easy being green." I'm finding just how accurate that is after having shopped recently for a new car, and as my wife, Amy, and I remodel our bathroom. Where possible, we're trying to think environmentally. But I have to say: Kermit was right. Green isn't easy. The reason: Green is expensive. Hybrid cars are pricier than their equivalent counterparts and require years of operation before To ri "a81" y o ohQooo ' I 1 1 QQQN A mm see laying out $25,000 to $40,000 for a system that, even if it saves me roughly $150 a month, and even if I do get some rebates, won't pay for itself for 15 years or more -- and that's breaking even just on the cost, not the income lost because we have all that money in photovoltaic panels instead of an invest- ing you recoup that you own the car long enough. Solar panels are insanely pricey and make no sense economically. Even the tankless water heater I recently bought was much costlier than a traditional unit. As such, this effort to be is pitting my personal values against the value of a dollar. And, honestly, the value of a dollar is winning more often than not. Which leads to the question I've in recent been contemplating weeks: How much green are we consumers willing to spend to go shade of red in your checkbook. My friend Tara, a single mom in Pennsylvania, is itching to go green. She wants to upgrade to an friendly water environmentally heater and windows, solar panels to power her house, an car. She has done her homework, researched all the tax credits available. "I'd like to do all the things I can do to make myself less of a burden to the planet," she says. And yet, there's desire...and then there's reality. "I want to do it," Tara says. "But it will take decades before it makes financial sense. If I knew I was going to stay in my house for 25 years, I'd do the solar thing. But I don't have that much certainty." Laura, a friend in Baltimore, says her husband has long been fixated on solar energy. But no matter where they've lived, the economics of solar have never worked out. The same is true with green? I know I risk angering a lot of people in the green movement who is argue that environmentalism about doing right by the environment, not your wallet. It's about thinking broadly, about the future we're passing on to our children. It's about the planet's survival. Philosophically, I'm with you. But philosophy doesn't pay my bills. It's one thing for California Gov. Arnold Schwarzenegger to ren work his Hummer to run on hydrogen. For him-f- or e celebrities now many themselves green-- it painting isn't a financial inconvenience. In fact, it could help them financially if it boosts their careers. But it makes a huge difference for the average family to dump thousands of extra dollars into a hybrid vehicle. After all, when you're trying to save for retirement and your kids' college tuition, when you're trying to pay off the mortgage, the car note and student loans, when you're swamped by the everyday costs of life, green sometimes just means a deeper SmartMoney fVfSo000 . v ) band aren't impressed enough by any models to justify paving the extra money. Her family bought a new air conditioner and water heater, "but I have toUake it on faith that we're really saving money," she says. "I envisioned seeing big decreases in my bills, but electric and natural-ga- s rates y-efficient have increased, so it's hard to tell. I feel dwarfed by the mass pollution that exists outside my little world, and I wonder if the Earth really benefits from my newspaper recycling." hybrid cars. "It's hard to justify $25,000 for a Prius when you can spend $15,000 for a Civic or Corolla that gets generally similar gas mileage," she says. Laura and her husband tried to the environmental thing when their remodeling house, installing windows and foam insulation. But do energy-efficie- at some point, green comes down to time and budget, she says. "We already had 800 decisions to make, and the house already needed way Before Amy settled on her mini-vaI spent time last year exploring hybrid vehicles. I liked that they could trim emissions as well as our monthly gas bill. But the added cost of the vehicle when compared with a similar model never made a lot of sense financially. We would generally break even just about the time we would need to replace the car. And the truth is we probably won't keep the car that long, and the gas mileage isn't all that better than what we'd create SmartMoney's "10 Stocks for the Next we Years", portfolio, wanted to know what the stocks of the past 10 years had In common. The biggest similarity: They started small, some even under $100 million in market value. And almost all of them had a low pricesales ratio. So we modified our statistical screens to place more emphasis on pricesales. And we reduced our market-valu- e minimum to $300 million. Then we sorted through the in all-o- ne resulting list of stocks-1- 50 by one, looking for common themes that were likely to play out over the next decade. In the end, we identified four themes: clean water, health, wireless technology and global growth. For factor, common to successful stocks in the past and used in One price SALES GROWTH RATIO RATI AttaAJrWorithrMe 0.8. Brlghtpolnt 0.3 13 Harris Interactive 1.7 17 1.0 39 1.1 29 Sirens Dental Systems 2.9 60 Systems PswstwsnsTecB. -- 14 0.8 11 0.5 16 GLOBAL GROWTH Vlasys Healthcare 1.6 12 Globalization Watts Water lech. 1.0 18 and ipment water-treatme- cal equipment and half from scanning and inspection equipment and optical gear used by the defense and aerospace industries. Imaging is the technology that ties it all together. OSI should benefit from two major trends: an aging population with greater demand for medical care as well as continued defense and security spend- years. Then there's Watts Water Technology (WTS, $37), a company valve in that invented a the early 1900s. Watts's greatest opportunity, however, lies with state and nainfrastructure projects, both in the U.S. and abroad. With its emphasis on water efficiency, purity and conservalarge municipal, water tional trends. HEALTH The nation's aging population should help favor medical-equipmemanufacturers, from dental equipment to respiratory care to imaging systems. Slrora Dental System (SIRO, $33) creates computer-assisted machines that allow patients to have a crown made and installed in a single visit. Digital-imagin- g equipment (as opposed to film) and ser drills will also help drive the la- company's revenue. Vtaeyi Healthcare (VAS, $31) Is ) is creating new opportunities in areas as disparate as market research and global air Interactive Harris transport. (HPOL, $6) is one of the top 15 firms It seems ideally positioned to profit from a continuing demand for proprietary data and information in nearly every field. market-researc- world-wid- h Atlas Air Worldwide (AAWW, $59) has ing 747s. It leases Holdings a fleet of 35 Boe- its planes, complete with crew, maintenance and insurance, to shippers, a business that's growing at 17 a year. The U.S. Department of Transportation recently awarded the carrier four more routes into China, bringing the total to 16. James B. Stewart is a columnist for SmartMoney magazine and SmartMoney.com. Unlike Dow Jones reporters, he may have positions In the stocks he writes about Russell Peartman, a senior writer at SmartMoney magazine, and Anofla Shah, a staff reporter, also contributed to this article. alternatives until Jeff Opdyke covers personal finance for The Wall Street Journal. Write him at lovemoneyws.com talked about retirement? A new survey indicates many wives and husbands don't have a clue about their partner's hopes and plans for later life. And that can make an already difficult transition even tougher. In recent ENCORE """ years, educa" " tors and marriage counselors have come to recognize that couples face unique challenges a,nd questions when it comes to retirement. Given the prevalence today of marriages, there's the issue of timing: Will both spouses leave the office at the same time, or will one continue to work? If a husband and wife do retire together, will they end up tripping over each other at home? And do both partners have the same expectations about later life, including budgeting, travel and where to live? Of course, one of the best ways that couples can head off problems in retirement is simply to talk about the future ideally, several years before leaving work. But a study pub your life. Kerry K. Spors today debuts as monthly Sunday Journal columnist with "Small Business.' She'll a be offering smart advice as she looks at issues affecting owners and employees of small companies everywhere whether corporate headquarters is the kitchen table or an office park or a neighborhood shopping center. Index investing is a foolproof strategy that says: "You can't always beat the market but you can keep up with it Many of the newest index portfolios are funds, or ETFs, that are bought and sold on exchanges like stocks. Eleanor Lafee wilt be keeping score in her occasional 'Indexing & ETFs. By the way: Look for more on these funds next week in a Sunday Journal Special Report "ETFs: What You Need to Know." Finally, longtime Sunday Journal contributor Glenn Ruffenach returns with a new occasional Encore feature that witl supplement the existing monthly column by Tom Lauricella. Glenn and Kelly Greene have just finished writing "The Wall Street Journal Complete Retirement Guidebook," which will be published in June and excerpted as the centerpiece of a Sunday Journal retirement-plannin- g special report We hope you enjoy the additions. Look for more in the coming months. David Crook Editor The Wall Street Journal Sunday Exploring Another Career careers, even for those is a tall task. But if you think you've picked the wrong line of work, it's time to start scoping out other areas that interest you. Reading a field's publications and blogs can clue yu in on STARTING big issues OUT and industry " parlance. They also contain may listings for jobs that aren't widely publicized. You might join an association or Changing twenties, professional society. And attending seminars and conferences "is a really good way to build connections and network," says Pamela Mitchell, chief executive of the Reinvention Institute, a firm in Miami. Once you know what you're talking about, give someone who has the job you want a call and ask for some guidance. Ask questions such as: What kinds of people are generally successful in this job? What are things about the job people may not know? How did you get the job? Be sure to ask about the job's negatives, says Brendan Courtney, a senior vice president of Spherion, a recruiting and staffing firm in Fort Lauderdale, Fla. "People get caught up in what they think a job is without knowing the Laurel Touby, the founder of media New a-job warns switchers career site, to "never ask for a job" during such an informational interview. You might also consider an adult internship or volunteering, suggests Ms. Mitchell. "There are a lot of small but growing companies that could always use more manpower," she says, and some unpaid work in a new field could help build your credibility. Shadowing someone on the job may also be an option. VocationVa-cation- s in Portland, Ore., arranges three-da- y "test drives" of dozens of different careers (see vocatlonvicatTafScom). If you need additional academic training for a new field, you may want to look into online options as one- - to well as local programs. By Diana Ransom investment a new funds. plan's Your 401(k) may soon feature option: exchange-trade- d ETFs resemble mu- tual funds but trade on an exchange like a stock. Their low costs, tax effi- and INDEXING other advan- & ETFS tages have "" """" " ready made them popular with many small investorsand they're starting to make a splash in the 401(k) market ETF provider WisdomTree Invest- Ask Dew askjors.surKiay03wsj.eom Kama's MsM mail9berrons.com say. Our address The Wall Street Journal Sunday 4300 Route 1 North South Brunswick, N J. 08852 Ouremst sunday03dwsj.com an Clements feWnj JonatrWdemerits0wsj.com low t Moray-Je- ff Opdyke Jones-To- m Herman questioned individually. Partners in 41 of the couples interviewed gave different answers when asked whether at least one spouse will work in retirement. Wives and husbands in more than one-thir-d of the. couples (35) differed when asked about each other's expected retirement ages. (Wives did a better job of identifying when their husbands expected to retire; husbands tended to underestimate when their wives planned to leave the office.) When asked whether their nest egg would allow them to lead a comfortable, or existence, 37 of the couples surveyed had wives and husbands portfolios, fund firms But the ETFs on 401(k) plan giving different answers. Men were slightly more optimistic than women that their finances would be adequate in later life. Why the different answers? Again, preparing for retirement means talking, and couples don't always have the time or inclination to grapple with some of these issues. "It's hard to overcome inertia," says Steven R Akin, president of Fidelity Personal Investments. "This is hard work. Thinking about retirement is daunting." Not all the news was discouraging. A majority of wives and husbands were able to identify the investments they have earmarked for retirement. That said, fewer than half of the couples surveyed (43) y said they worked jointly on financial matters and only 38 said they worked together on financial planning for retirement. The lesson: Whether the topic is lifestyles or budgets, spouses ap- proaching retirement, says Mr. Akin, should "start talking as early as they possibly can." By Glenn Ruffenach Funds Appear in 401(k)s As broadband-lik- e speeds come to wireless communications, demand for ever more sophisticated handsets and the infrastructure that US lished last month by Fidelity Investments in Boston indicates that such conversations may be few and far between. In all, 502 couples were asked about their plans for retirement. The couples were married 24 years, on average, and were about nine years from retirement. Husbands were 54 years old, on average; wives were 53. Spouses were Exchange-Trade- d WIRELESS TELECOM HOW TO CONTACT lovemoneyewsj.com - y governments mandate all cars run on alternative fuels and all new homes be built with solar panels or fuel cells, or until prices for those options fall to t a mass-marklevel. Until then, we'll only be green around the edges of 'our wallet. ments this year launched a new business unit focused on 401(k)s. Financial-service- s firms are rolling out funds invested in ETFs, designed specifically for retirement plans. And some firms that provide ETFs to 401(k)s, Including Invest n Retire and AST Capital Trust say they're seeing growing demand from employers for ETFbased plans. Since fund expenses take a bite out of Investors' returns, ETFs' low costs could mean a bigger retirement nest egg for 401(k) plan participants. And since ETFs are transparent generally revealing all of their holdings every trading day, they are easy to combine Into ing. On another health-relate- d front: We believe the move toward organic foods is a trend with staying power. United Natural Foods (UNFI, $30) is the largest national distributor of organic and natural foods, offering more than 40,000 products from 17 distribution sites nationwide. It serves the gamut of clients, from Whole Foods Market to small specialty retailers, so it should profit from growth in demand for organic products wherever it may occur. tion, we believe Watts is tapping water-relate- d three important y and diagnostic com- panies that focus on respiratory care and neurodiagnostics-t- he monitoring of the brain and nervous system. Other specialties include artificial hip and knee joints as well as parts used in artificial hearts-- all areas that should benefit from the aging of the baby boom generation. OSI Systems (OSIS, $28) is a hybrid medicaldefense company, with half of its revenue from medi- companies will clean up as emerging and developed economies build and rebuild their systems. Tetra Tech (TTEK, about $20) is a consulting firm specializing in water resource management and environmental cleanups. The company has said that overhauling aging sewer systems in the U.S. alone will require more than $100 billion in work over the next 20 ble with wireless-servic-e providers and to deliver them to retailers. Natural Foods '. a cluster of SERVICES and data. Brightpolnt (CELL, $14) is the middleman for the wireless industry and should be ideally positioned to profit from its continued growth. Nokia, Samsung, Motorola and almost every other maker hire Brightpoint to install the software that makes their phones compati- United Tetra Tec Fresh water is becoming an increasingly important commodity. 4 5 this selection, is a low OSI green-energ- M ave you and your spouse powers them will drive the industry's next leap forward. Power wave Technologies (PWAV, $6) makes the amplifiers, antennas and other equipment that enable wireless phones and handheld devices to transmit and receive voice the Long Haul ratio. . mies of developing nations. And I'm all for that. Plus, the cost was comparable to other flooring, so it was a But the unavoidable flaw in the as it currently exists is that my family, like the bulk of families, has more pressing financial concerns, constraining our ability to save the planet. As Laura says, this is a public-polic- y issue. Middle America won't-can't-- nsh to buy green cars and sprucing up The Wall Journal Sunday. We're launching two new features and beefing up a Sunday Journal stalwart. We're broadenstick-ffi- g ing our subject matter while to our core cornmitment to bring you sensible, useful Information that helps you better manage your money, your career and We're What Couples Don't Talk About: Retiring By James B. Stewart To ment generating additional income for the family's needs. Basically, what I'm saying is this: I'm only willing to go so far to do my part. Including specialized parts and labor, we spent more than $2,000 on a tankless water heater-m- ore than five times the cost of a traditional unit we also looked at. This tankless model runs only when water is on, eliminating the need to keep 50 gallons of water constantly hot, just in case I need a few ounces or a couple of gallons at some point. That makes sense. And we're putting in bamboo floors specifically because it's a renewable grass that reaches maturity quickly and helps the econo- more than we could afford. So taking the time and money to track down certified sustainable lumber for the framing or reclaimed lumber for the Door just got dropped." And then there's my colleague Suzanne, in New Jersey, who would like to replace her aging minivan with a hybrid "that's big enough for our family and actually saves gas." But she and her hus- Top Stock Picks for the Next 10 Years WATER get from a comparable nonhybrid. Similar reasoning kept me from buying the solar panels I want. I like the idea of relying simply on sunlight to power our lives, and I'd love to see my electric meter run backward. But there's no financial benefit I just can't menus are sometimes wrapped in expensive packages. And some ETF selling points, like tax efficiency and the flexibility to trade throughout the day, aren't so important to long-ter401(k) investors. ETFs, with an average expense with ratio of 0.41-comp- ared 1.42 for the average diversified domestic-stoc- k mutual fund may seem a natural fit for long-ter401(k) participants. Indeed, Investors in plans that make the switch to ETFs can see substantial cost savings. Pittsburgh-baseUnion Orthotics & Prosthetics, for example, cut Its 401(k) participants' investment fees roughly in half when it moved to ETFs early last year, says president Jon Leimkuehler. But 'you shouldn't necessarily assume an ETF Is cheaper' than other Investment options, says Sonya Morris, an analyst at Investmentfirm Momlngstar. Some ETFs are no less costly than comparable index mutual funds. And instead of Investing directly -research In ETFs, 401(k) plan participants often must buy In through a fund that charges an additional layer of fees. AST Capital Trust, for example, offers ETFs to 401(k) plans only through "collective" funds, which are similar to mutual funds. Some of these funds invest in a single ETF and charge an extra fee of 0.06 of assets a year. Others, which invest in multiple ETFs, charge an additional 0.35. Steve Ferber, AST's executive vice president says the ETF funds aren't right for all plans. Larger plans, which generally have more ability to negotiate for lower fees on their investments, may be better off with other types of g funds, he says. And expense ratios aren't the only costs to consider. Investors buying an ETF directly typically must pay a brokerage commission. Some plans help manage that cost by grouping individual participants' buy and sell orders Into larger trades. "Participants should ask questions" and understand exactly how such costs may affect them, Ms. Morris says. Another caveat Many of the nearly 500 ETFs on the market are focused on narrow market segmentsthere's even one devoted entirely to dermatology and wound care. Such funds may be difficult to use properly In a 401(k), where a diversified approach is key. 'I don't think the entire gamut of ETF products Is suitable for retirement needs," says Bruce Lavine, president of WisdomTree. By Beanot Lal$ |