With gas prices rising, fuel efficient vehicles are gaining worth

You can’t call them “good investments” because they inevitably depreciate. But the models in our ranking of the top 10 vehicles with highest resale value do amount to sensible purchases for the way they minimize the dollar losses associated with owning and maintaining a vehicle.

The models on our list retain a higher percentage of their original purchase price than any other car you can buy. But high gas prices are having a dramatic effect on prices — so much so that in just a matter of weeks, the list of the top 10 vehicles with the highest resale values will look different.

“Economy cars are improving,” says John Blair, chief executive officer of Automotive Lease Guides (ALG), a market research firm headquartered in Santa Barbara, Calif. “The outlook for small, fuel-efficient vehicles is much brighter today versus a year ago. And the outlook on SUVs has changed dramatically in the other direction.”

So it’s no surprise that the car that tops this ranking, the playful Mini Cooper, is one of the most fuel-efficient models on sale in the United States. It will hold more than 60 percent of its value after three years of ownership.

None of the models on our resale honor roll give up more than 15 percent of their purchase price per year through their first three years, based on data from ALG. And as automobile depreciation goes, that’s as good as gold. Click on the “slide show” link below for the full list of vehicles with the highest resale values.

Even though rising fuel prices have caused fuel economy to have a greater impact on resale values, most of the models in our ranking don’t ask you to sacrifice in the service of fiscal good sense. They are fun and rewarding to drive, each in their own way.

Some express youthful nonconformity, like the Scion xB, Nissan Rogue and Volkswagen New Beetle Convertible, numbers 7, 9 and 10, respectively. The Infiniti G37 Coupe, BMW 1 Series and Audi S5, which rank second, third and tenth, combine sophistication with spirited energy.

Volkswagen’s R32, at number No. 5, exudes athletic exuberance. The four-wheel-drive convertible Jeep Wrangler, No. 4, invites rugged adventure.

Even the two top-10 finishers that appear purely practical, Honda’s CR-V and Civic Hybrid, are far from pedestrian. They’re smartly styled, well engineered and have a refined driving experience. The Civic Hybrid adds technological charm to those attributes.

Smart styling contributes a lot to a vehicle’s resale value, says John Blair, chief executive officer of ALG. That’s due to fundamental market dynamics: supply and demand.

A model that is uniquely attractive will generate more demand from people shopping for used cars. Naturally, that greater demand pumps up its resale price. Thus, ALG puts a heavy weight on appearance when it estimates the residual value of new vehicles.

Residual value is analogous to resale value, but it’s not the same thing. It’s the price that a model in average condition is expected to take in when eventually it is sold at a wholesale used-car auction. The retail value of a vehicle — the price a consumer pays to buy it — varies a little from model to model but generally runs about 15 percent above the ALG residual value, Blair says.

The firm’s estimates are used by automotive lease writers to determine how much a model will be worth when its lease expires. Our top 10 vehicles with the highest resale value — there are actually 11 models on the list, thanks to one tie — are based on ALG residual values expressed as a percent of the original purchase price. All are current, 2008 models. The ranking excludes specialty cars produced in low numbers.

In addition to a vehicle’s styling, its manufacturer’s reputation for quality has a big impact on how much value it retains, Blair says.

“The No. 1 influence is certainly a vehicle brand and the perception of the brand,” he says. “The used-car buyer is looking for a vehicle that’s not going to be a maintenance headache for them. If you have a strong brand, that has a real positive influence on the residual value.”

Of the vehicles on our list, the Honda Civic Hybrid, Honda CR-V, Infiniti G37 Coupe and Scion xB all have better-than-average predicted reliability, according to Consumer Reports. “Honda is at the top of that list,” in terms of having a sterling reputation for vehicle longevity, Blair says.

Forbes

Tags: Chief Executive Officer, Depreciation, Dollar Losses, Dramatic Effect, Economy Cars, Fuel Economy, Fuel Efficient Vehicles, Fuel Prices, Gas Prices, Good Sense, Honor Roll, John Blair, Mini Cooper, Nissan Rogue, Nonconformity, Resale Value, Resale Values, Scion, Scion Xb, Slide Show

The title to this article is a snowclone. And while many of you don’t know (yet) what a snowclone is, I believe the entertainment value of knowing a little about them almost matches the value of knowing which group of stocks has historically smashed the market’s averages. Before I wander off on my tangent, you want to know about the new strong buys.

What’s old is new again, because here in mid-2008, the new strong buys are the ones that have also historically bested the broader market by about 5% per year. That’s always a good start, but today there’s an added bonus — these “strong buys” are coming off consecutive years of significant underperformance. Small-cap value stocks are priced better today than they have been for years.

I love the smell of small-cap value in the morning (it’s the smell of victory)
According to Wikipedia, “A snowclone is a type of cliche and phrasal template originally defined as ‘a multi-use, customizable, instantly recognizable, time-worn, quoted or misquoted phrase or sentence that can be used in an entirely open array of different jokey variants by lazy journalists and writers.’”

(Did somebody just call my name?)

The term “snowclones” originates from one of the lesser-known timeworn cliched templates, “If the Eskimos have N words for snow, the X surely have M words for Y.” For instance: “If the Eskimos have 300 words for snow, Wall Street financiers must have 600 words for subprime mortgage derivatives.”

It turns out that the Eskimos don’t have a particularly large number of words for snow. (Wall Street does have several dozen terms for subprime mortgage products, although because of the number of layoffs of Wall Street’s finest, most of these are unprintable in a decent public forum. But I digress.)

You might have used other snowclones, such as “Got X [milk]?” Or perhaps: “(Dammit, Jim,) I’m a doctor, not an [X].” Or even: “I’m not an [X], but I play one on TV.” So in a move that will surprise nobody more than my editors (hey guys, I finally came up with my own subheads!), I’ve lazily inserted some classic snowclones below as phrasal templates to illuminate a few reasons behind small-cap value stocks’ market dominance, and current strong positioning.

Give me your poor, your tired, your small-cap value stocks
In one of my favorite articles, “70 Times Better than the Next Microsoft,” I recounted why small-cap value stocks crush the other quadrants of the market, large value, large growth, and especially small growth, over time. It’s mostly because small value stocks are unexciting, spat upon, and ignored. They’re the type of companies that seem painfully outdated, quaint, poor (tired, even) compared to the exciting tech stocks, biotechs, and other sectors that end up getting bid up to the moon — and consequently disappoint the majority of investors. And yet, the returns are stunning. Here’s one of my favorite tables proving the point:

The most dramatic example this year is the way coal stocks like Westmoreland Coal (NYSE: WLB), Alpha Natural Resources (NYSE: ANR), and James River Coal have taken off, moving up 50% to 200% or more year to date. James River has done so with a fraction of the attention sexier companies garner. Think of the nonstop headlines for less stodgy alternative energy companies such as First Solar (Nasdaq: FSLR) and Suntech Power (NYSE: STP).

Small-cap value is the new black — and the new strong buys
When something is anointed the “new black,” it is so hot and trendy that it will replace the old guard. The new black will be the color everyone will wear. Well, at least until the next “new black.” Nothing ever really does replace black, but this construction is an attempt to promote something of the moment.

The highest compliment you can give to a stock in some corners is to say it is a “strong buy.” But you know what? Small-cap value stocks are virtually never given Wall Street’s official imprimatur as strong buys. The lack of such ratings keeps small value stocks at far better prices than the highly followed and touted large caps that do get dozens of strong buy ratings from the Street. Never being “the new black” or “strong buys” has provided small-cap value stocks’ actual investors with great entry points for their money.

Though small-cap value stocks are dramatically underfollowed on Wall Street, numerous studies and reports argue that they have the best returns. Combine that fact with the particularly attractive prices at which these stocks are trading today, and you’re looking at something far better than “the new black” or a “strong buy.” You’re looking at the antithesis of trendy: boring companies with boring returns over the past two years. These are precisely the companies that tend to dramatically beat the market over the long term — especially after dry periods like the one we’ve just witnessed.

There’s no crying in small-cap value!
Small-cap value doesn’t beat the market average every year; its performance in the past two and a half years or so has alternated between “desultory” and “painful.” Some of that underperformance results from the performance of financial companies, which comprise a large chunk of the value indices. However badly large caps such as Wachovia (NYSE: WB) and Bank of America (NYSE: BAC) have performed, small-cap regional banks like Cascade Bancorp and Great Southern Bancorp (Nasdaq: GSBC) have followed suit.

But you won’t see us crying about that at Motley Fool Hidden Gems. The prices and opportunities that are available in small-cap value, particularly outside of financials, haven’t been seen for at least four years, and probably closer to six.

For more on snowclones, check out the page on Wikipedia. For more on small-cap value, including what we’re recommending right now at Hidden Gems (where we’re beating the market averages by 20 percentage points over the past five years), take a free 30-day trial.

The Motley Fool

Tags: Added Bonus, Array, Cap Value, Cliche, Derivatives, Editors, Entertainment Value, Eskimos, Financiers, Journalists, Layoffs, Mortgage Products, Phrase, Play One, Public Forum, Small Cap Value Stocks, Tangent, Variants, Victory, Wall Street, Wikipedia

Infomercial king Billy Mays, known for screaming about the wonders of cleaning solutions Kaboom!, OxiClean, and other household products, is now starring in a commercial for what he calls “the most important product I’ve ever endorsed:” health insurance. The bearded salesman started pitching iCan Benefit Group’s “health insurance that you can actually afford” in May 2008, pointing to the need for its health plans given that 47 million Americans are uninsured. In the commercial, Mays says iCan’s plans include guaranteed acceptance, starting as low as $160 per month for individuals and $260 for families, and can allow you to lower your monthly premium, increase coverage, or both. Concludes Mays: “You can’t afford not to make this call.”

His pitch shows how difficult it has become for many hard-pressed Americans to afford basic necessities, such as health care, as the cost of food, gasoline, and many adjustable-rate mortgage payments climb, while wages barely budge and employers cut jobs. To protect your assets, it’s important that your insurance policies give you enough coverage in case something horrible happens to you or a loved one.

Mays is understandably “passionate about health care.” We all need health insurance, yet many Americans can’t afford it, while the cost of the plans and of medical care keeps rising. Mays is pitching iCan’s Mini Medical, a type of limited health insurance for those who can’t afford major medical insurance or have been turned down because of preexisting health conditions.

Low Premiums Mean High Risk

These limited plans are not for everyone, and they could end up costing more if you need expensive care. “The problem is they’re advertising these unbelievably low premium health insurance plans,” says Mark Kenison, a financial adviser who specializes in insurance at Turning Point Benefits Group in Charlotte, N.C. “All you’re doing its transferring risk to yourself so your monthly premiums are lower.”

Consumers might focus on the low monthly price and not examine the cost and coverage of each health service, Kenison says. Beware of policies that don’t set a maximum amount that you’d be responsible for paying for a health service, he advises. For example, iCan’s mini-medical plan will probably not provide enough coverage if you get badly injured or need surgery. Looking at an example of the company’s lowest-cost offering, iCan’s mini-medical plan costs an individual $160 per month in North Carolina — plus an additional, $100 one-time enrollment fee — and covers a maximum of just $1,000 for surgery per year, with anesthesia limited to $250 per surgery. If you’re hospitalized, the plan would cover only $200 for the first day and $100 each additional day, with a maximum of $1,100 for up to 10 days. On average, hospital care is estimated to cost $1,931 a person per year, according to the latest figures [2004] from the U.S. government’s Centers for Medicare & Medicaid Services.

The low maximum benefits — and the prospect of huge additional out-of-pocket expenditures — bothers some financial pros. “It just feels wrong,” says Kenison, adding that most people would be better off getting a major medical plan that limits their risk to a certain dollar amount.

If you end up with a large medical bill, members of iCan’s health plans have a health advocate to negotiate pricing and hospital charges, says Harold Shatz, managing member of iCan Benefit Group in Boca Raton, Fla. A $40,000 to $50,000 medical bill can be reduced to $10,000 to $12,000 through network pricing and use of a health advocate to examine the bills and find errors, he says. iCan’s plans, Shatz says, are based on studies that found that 95% of people with major medical health plans did not have expenses that exceeded their deductible, and are geared for people who can’t afford or get coverage. Shatz calls iCan’s medical plans a “concierge service that gives you access to the medical community before you need it and when you need it, and holds your hand through it and helps you negotiate the pricing to what it should be.”

“It’s a very common-sense program for people who don’t have another choice,” Shatz says. “It beats the heck out of having nothing.”

Pushy Marketing

Advisers recommend ignoring outfits that use such strong marketing-driven tactics as iCan and 123 Health Plan, both of which offer plans through enrollment in a nonprofit organization called Health Care Credit Union Assn. [HCCUA] The HCCUA’s other membership benefits include entertainment, dining, movie and travel discounts, and roadside assistance.

Consumers should understand exactly what services a health plan covers and estimate what their out-of-pocket expenses will be. Steven Weydert, a financial adviser at Bowyer, Weydert Wealth Planning Partners in Park Ridge, Ill., says his No.1 rule is to insure only things you absolutely can’t afford to lose and to take as high a deductible as you can afford. A good place to compare health plans, he says, is eHealthInsurance.

If you lose your job during these tough economic times, you can sign up for your employer’s COBRA health-care plan for the next 18 months. But some similar plans cost less. “COBRA might be more expensive than a policy that suits your needs,” Kenison says. “Don’t assume COBRA is the best way to go.” Start shopping when you lose your job, as it usually takes two to four weeks to get a policy in place, he says.

Get Term Life

Amid the economic squeeze, it’s vital to address other insurance needs, too. Consumers should make sure they have enough life insurance, which replaces income when you or a family member dies. Weydert recommends buying a term life policy covering 10 times your gross salary. If you want to be more conservative — and depending on your age — Kenison advises getting a term life policy that covers 20 times what you earn to keep your lifestyle going. So if you earn $10,000 per month, or $120,000 per year, you should have $2.4 million in term life. “This would be enough to generate $120,000 per year, using a 5% cash flow, and hopefully, you would never touch the principal,” he says. That amount can be reduced, he points out, if a person can expect some other sources of income, from Social Security, say, or a pension.

Kenison also likes term life policies that are portable — that is, you can take the policy with you if you leave or lose your job. Most companies offer a $50,000 policy at no cost, and you should be able to buy an affordable policy with additional coverage on your own. Weydert compares life insurance policies and rates for his clients at Insure.com.

Individual disability insurance [BusinessWeek.com, 8/4/08] is also a good idea, advisers say. Large corporations usually offer an employee disability plan that covers 65% to 70% of your salary if you get hurt and can’t work. But your net benefit after taxes, Weydert figures, will be closer to 45% of your gross income. “Your standard of living will go way down if you take a claim, so you need another policy to bring you back closer to whole,” he says. Look for an individual disability policy that covers 65% to 70% of your gross income. Also, make sure the insurance provider has a liberal definition of disability — which will help you qualify as disabled and get benefits, Weydert says. And look for an insurer with high ratings, such as John Hancock, he says.

The loud pitch from Billy Mays might entice some consumers to buy insurance out of fear, without understanding the policy. After you shop around, find an agent who will take the time to explain the policy to you and don’t buy until you understand it. Remember, says Marc Vorchheimer, an adviser at Integrated Financial Consulting in Spring Valley, N.Y.: “Your goal is to protect against catastrophe.”

Business Week

Tags: Adjustable Rate Mortgage, Basic Necessities, Benefits Group, Billy Mays, Cleaning Solutions, Cost Of Food, Financial Adviser, Health Conditions, Health Insurance, Health Insurance Plans, High Risk, Household Products, Insurance Policies, Kaboom, Kenison, Low Cost Health, Low Cost Health Insurance, Major Medical Insurance, Mortgage Payments, Oxiclean

More than half of homeowners pay too much because their property has been wrongly assessed. Here’s how to research and correct mistakes, and how to navigate the appeals process.

You could be paying more than you owe in property taxes.

In a hot market, owners often find themselves facing double, sometimes triple, increases in property taxes, according to the National Taxpayers Union, a Washington, D.C., advocacy group whose goal is to lower taxes. Now, with home values decreasing in many areas, owners may be stuck with a property assessment that’s too high.

There is a remedy: Appeal the assessment.

How it works

Property-tax increases largely are based on rising home values, not the increase of taxes by local governments. Different formulas are used to figure property taxes, but all depend on a home’s assessed value. Some jurisdictions use a home’s actual market value, while others use a percentage of a property’s worth.Whatever value is used, it’s multiplied by the local tax rate to compute the property’s bill. As home values increase, so do their assessed values. Homeowners end up paying more, even though the tax rate stays the same.

The National Taxpayers Union estimates that as much as 60% of taxable property in the United States is overassessed. But only half of homeowners protest their assessments. This means many may be paying more in property taxes than necessary.

“A property owner really should monitor his assessment every year, with a particular emphasis in a reassessment year, if applicable,” says Franco A. Coladipietro of the law firm of Amari & Locallo in Chicago.

Many taxpayers fail to fight because they don’t understand the process, or because they can’t stomach doing the research and providing evidence to prove the assessment is wrong. Instead, they opt for what Glenn Straus, president of Straus & Co., a Dallas property-tax consulting firm, calls the cuss-and-pay system.

“They cuss the bill, and then they pay it,” Straus says.

Swear aloud, then swing into action

That’s too bad, because the appeal work isn’t as difficult as homeowners fear. In fact, it’s something most can do themselves. Sure, the process is tedious and bureaucratic, says Peter J. Sepp, the National Taxpayers Union’s vice president of communications, but it’s no more difficult than representing yourself in traffic or small-claims court.

If you really don’t have the time, hire a property-tax consultant or attorney to do the work. Many of these consultants charge on a contingency basis, meaning they’ll take a percentage of the tax savings if they succeed in lowering your assessment.

“Fees are charged various ways,” says Les Abrams, a property-tax analyst with Nearhood Law Offices in Scottsdale, Ariz. “Some will work on contingency, others will charge flat fees, and some will do work by the hour.”

Know the appeals process

If you decide on a do-it-yourself appeal, you first need to establish your timeline. When do assessments go out? When is the deadline for appealing? Call your local assessor’s office for this information.

The appeals process varies from locality to locality. So does the amount of time permitted for an appeal. In some cases, a homeowner might have only 30 days to appeal. In other jurisdictions, it could be 120 days.

If your request for an appeal arrives at the assessor’s office even a day after the protest deadline, you’re out of luck. You’ll have to wait until the following year (or sometimes the next assessment, which could be longer) before you can appeal. Straus says you might want to send your request for an appeal by certified mail, so you’ll have proof that it was received before the deadline.

Once you receive your assessment, it’s time to build your case. It’s not enough to bemoan how high your taxes are. Complaining about how those tax dollars are spent won’t work, either. You need cold, hard facts.

Assessments can be appealed on two grounds: a mistake in the assessment of your house, or an assessment at a higher rate than comparable homes.

Correcting the mistakes

Mistakes happen more often than you think. Many assessors don’t even come onto your property to inspect it. They simply compare a written description of your home with that of similar properties in your neighborhood.

Appraisers also may use historical information that’s wrong. A home’s square footage, for example, might have been incorrectly calculated on original construction documents.

Or the assessor may have a slightly different view than you do of your home. “The assessor may be counting a screened in porch as year-round living space, and you only use it in the summer,” says Sepp.

Obvious mistakes aren’t difficult to spot. Is the inhabitable-square-footage figure correct? Does the assessment say your home has four bedrooms when it has only three? But you also should consider comparing the assessment with a recent appraisal of your property. If you don’t have one, hire an appraiser for a new evaluation.

Make sure that any property changes, particularly those that would negatively affect the value of your home, are part of the assessment. For example, maybe a bridge has gone out near your home, making your house less accessible (and less valuable).

Don’t forget any modifications you’ve made. If you’ve torn down a garage to increase garden space, your home’s value likely would decrease.

Look closely at your neighbors

The other way to challenge an assessment is to see how your home stacks up to comparable houses in your neighborhood. “Comparable” means homes of the same size, age and general location.

For example, Straus lives in a 550-home subdivision in Texas. But even within the subdivision, there are differences that affect value. Homes near a busy road in the community are valued less than those abutting a quiet creek.

You can find information on comparable homes and their worth at the assessor’s office, or start with property-value sites like Zillow.com, Domania.com and Trulia.com. If you don’t want to do the legwork yourself, hire a Realtor or an appraiser to collect the data. Straus recommends getting comparisons on five to 10 homes.

Once you have your comparative data, go over the figures and decide whether you have a case. If you think your assessment is too high, contact your assessor’s office and try to arrange a one-on-one, informal meeting. Sometimes simply pointing out the facts can be enough for the assessor to lower an assessment.

Straus says 95% of his commercial cases are settled informally without the need of a hearing. Just be aware that when you meet with your assessor, it’s a negotiation. You may still end up with a higher valuation than you’d like, but one that is lower than the assessor’s original appraisal.

Prepare to protest

If the assessor won’t meet with you (and some counties won’t permit informal meetings), or if you meet but fail to reach an agreement, the next step is to protest the assessment.

Ask the assessor about the procedures and deadlines for filing a protest. Follow the guidelines to the letter to ensure that your appeal isn’t thrown out on a technicality.

Before your hearing, gather all of your evidence and put it in order. For example, you may want to collect photos of comparable properties or put the market data into a spreadsheet that makes it easy for the hearing officials to see the basis of your argument. Your presentation doesn’t have to be as polished as Perry Mason’s, but being organized will help you make the strongest possible case.

Consider sitting in on somebody else’s hearing before your appeals date. You’ll see how the board operates. You can also get a sense of which arguments do and don’t work.

What if the board doesn’t rule in your favor, despite your compelling presentation? You can go to court, but in most cases it will cost you more than the amount of tax money you might save. But you may not need to take such drastic action. Many states have a state appeals board, Straus says, where you can take your case if the local panel rejects your petition.

Just remember to stay composed and professional throughout the process.

“Calling them SOBs is not a good negotiation tactic,” Straus says. “The appeal hearing is an emotional thing because it goes straight to your wallet, but you have to stay calm.”

Bankrate

Tags: Advocacy Group, Amari, Appeals Process, Correct Mistakes, Cuss, Dallas Property Tax, Home Values, Hot Market, Jurisdictions, Local Governments, National Taxpayers Union, Property Assessment, Property Owner, Property Tax Consulting, Property Tax Increases, Property Taxes, Reassessment, Straus, Tax Consulting Firm, Tax Rate

Plummeting stock prices can cast a dark cloud over anyone’s finances. However, at tax time, these capital losses can produce a ray of write-off sunshine.

When you sell any pharmaceutical flops or biotech blunders, you can use them to offset gains from more successful ventures — or even a portion of your everyday income.

A capital loss is the result of selling an investment at less than the purchase price or adjusted basis. Any expenses from the sale are deducted from the proceeds and added to the loss.

The key point is that capital losses are only losses after you sell them. A stock sitting in your portfolio with a deflated price may cause you distress, but it doesn’t do you any tax good until you dump it. (The sale of personal-use property, such as a car, doesn’t get this favored tax treatment. Such losses can’t be deducted as capital losses.)

You can recoup a percentage of a true loss from the taxman. This is one of the best deductions available to investors. A capital loss directly reduces your taxable income, which means you pay less tax. It makes for a nice consolation prize.

And investment losers could actually turn out to be surprise winners for parents who find that they are going to owe more thanks to the earnings of assets held by their children.

How it works
It’s touching that the Internal Revenue Service wants to give you a break when the stock market tanks. However, this doesn’t mean the weighing and applying of capital losses is simple.

You must fill out Schedule D, where you’ll discover that losses are categorized as short-term and long-term, just like gains. The value of the deductible loss depends on how the loss is applied. Sadly, the taxpayer doesn’t get to choose.

Here’s how it works:

Tags: Adjusted Basis, Biotech Blunders, Capital Losses, Consolation Prize, Dark Cloud, Internal Revenue Service, Key Point, Losers, Market Tanks, Personal Use, Proceeds, Short Term Capital Gain, Stock Market, Stock Prices, Stock Tanks, Surprise Winners, Tax News, Tax Time, Taxable Income, Taxman, True Loss