Month: July 2021

Now that we are well into the summer, many persons (like myself) are looking forward to next week’s Summer Olympics in Tokyo, Japan, torches will be lit on Friday, July 23^rd. 

There are and will be many interesting stories, and new stars will be born.  The USA Olympic trials have already had interesting stories, such as Simone Biles’s quest to be the most medaled athlete of all time.   As per The New York Times, the charismatic track and field sprinter Sha’Carri Richardson (the fastest U.S. woman) has been denied a spot on the 100-meter and 200-meter individual races, (and 100-meter relay team) because she smoked marijuana to cope with the death of her biological mother.  The athletes are tested for marijuana, which Sha’Carri was well aware of, and for which she apologized.  How does smoking pot help you run faster?  I would think it would slow you down!

Since USA professional athletes have been permitted to compete in the Olympics, there has been a misconception that athletes get rich from competing.  In some countries yes, however, in the USA only 50% of our track & field athletes ranked in the top 10 earns over $18,000 per year.  The following are some ways athletes are getting compensated:

1. The USOC (United States Olympic Committee): Although the USOC takes in millions annually, they only compensate the athletes (based on 2018 data) $37,500 for gold, $22,500 for silver and $15,000 for bronze.  For US Olympians, gold medals come with a heavy tax bill on $38,100 of income per gold medal!  This covers both the $37,500 received plus the value of the actual gold estimated at about $600.
2. Corporate Sponsorship: United States corporations spend millions sponsoring “the team” which is why athletes are wearing team logos.  In a typical Olympic Games, there are 15,000 athletes competing in 26 sports for only 1,000 medals, so it is difficult to get sponsorships.  This is different from endorsement deals.  Sponsorships (aside from endorsements) are usually the best way to get paid as training is time-consuming and expensive.
3. Special Funds: USA swimming pulls in over $100 million per year (from fees from 300,000 members) and gives a $3,000 per month stipend only to swimmers who rank in the top 16.  This is called an APA (Athlete Partnership Agreement).  This money is not “Free” as athletes are required to make public appearances, attend charity events and banquets, etc.
4. Government:  In some countries (like Cuba for example) the government takes care of Olympic medalists for life.  A client of mine does business in Cuba and gave me some inside information.  If the athlete earns a medal (can be a bronze or silver in addition to gold) in any sport, the government takes care of them financially for life.  However, he told me about a Cuban boxer he met who finished 4^th and is now flat broke.
5. Foundations and Private Funding:  In wrestling for example, LivingTheDreamMedalFund.com raises money that pays out $250,000, $50,000, and $25,000 for gold, silver, and bronze medals, respectively.
6. Large Corporate Partnerships:  Some large US corporations partner with US athletes allowing them to work part-time while training.

It is clear in the USA that Olympians are doing it for the “love of the sport!”  There is a bill pending that would eliminate taxation on income received by Olympians.  This would greatly benefit the next Michael Phelps, who holds the record for the most medals won by ANY athlete (28) including 23 gold medals and 13 individual golds.   Simone Biles would be happy as well as she holds the gymnastics record with the most World medals (25) and gold medals (19), hopefully with more to come!

Times are changing in amateur sports, as there was just an NCAA (National Collegiate Athletic Association) rule change (after a unanimous Supreme Court Ruling) this month that the NCAA must provide compensation to athletes for “education-related” expenses, like paid internships and study abroad.  The lines between sports and money are clearly blurred!  One thing we can agree on is Let’s Go U.S.A.!

The Google definition of inflation is: “A general increase in prices and fall in the purchasing value of money over time.  Inflation can occur when prices rise due to increases in production costs, such as raw materials and wages.  A surge in demand for products and services can cause inflation as consumers are willing to pay more for the product.”

An example of inflation is the cost to cross the Marine Parkway-Gil Hodges Memorial Bridge.  When the bridge opened on July 3^rd, 1937, the cost to cross the bridge was between 10-15 cents, depending on the type of vehicle.  The current cost is $5.09 by mail and $2.45 by E-Z Pass. 

The Federal Reserve wants to keep inflation under the 2% benchmark.  Right now, inflation is running around 3% which is in the danger zone.  As per Barron’s, the FOMC (Federal Open Market Committee) released minutes from its June monetary policy meeting.  Fed officials signaled that interest rates would rise sooner and faster than Wall Street expected prior to the meeting, as inflation is rising at its fastest pace since 2008.

What does this all mean?  This means that if you are on a fixed income, your money will not go as far during inflationary times.  This also means, if you have investments and/or money in the bank that is “netting after-tax” less than 3%, you are losing money (purchasing power).  These are important barometers that few people are paying attention to right now.

People have been couped up (myself included) during the height of Covid-19 and many persons now have more spendable income.   A combination of inflation, the Suez Canal blockage, and higher demand for travel has skyrocketed travel costs in the past month.  Hotel costs in Miami Beach have risen 50% since the last week in June.  Rental cars are up 110% this year and are 70% higher since the pre-pandemic in 2019.  Oil prices could soon hit $100/barrel, which will also spike gas prices.

There are options where one can position assets to fight inflation or at least break even, as interest rates are likely to rise over the next 12-18 months.  I have seen banks that are paying anywhere from .10% to .50% interest.

Every situation is different, depending on one’s risk tolerance.  Some suggestions below can help you offset inflation’s eating away at your purse or wallet:

1. Shop Your Bank Account rates: Take a look at your most recent bank statement.  The internet makes it much easier to shop interest rates and there are virtual banks (meaning they have no brick-and-mortar locations) that will pay a higher interest rate.
2. Consider Credit Unions for Emergency Funds: Credit Unions will usually pay a higher interest rate than your typical bank.  For example, the Italo-American credit union is currently paying .75%.
3. Fixed Interest Annuities vs CDs: Many conservative investors still have large sums sitting in CDs (Certificates of Deposit).  CDs can also stand for Certificates of Disappointment!  CDs are taxable (even if you do NOT withdraw funds).  If you have a CD earning 3% and you are in the 30% tax bracket, you are netting 2.1% after-tax.  A fixed annuity paying 3% is tax deferred (the same 30% tax bracket person is netting a taxable equivalent of 3.9%).  Many people are unaware that Fixed Annuities are protected by New York State up to $500,000, whereas banks are protected by FDIC (Federal Deposit Insurance Corporation) up to $250,000.  Insurance companies will usually offer higher interest rates.
4. The Stock Market: Obviously, stock market returns can exceed inflation; however, there is the risk of loss that options 1,2,3,5 and 6 do not have. 
5. Cash-Value Whole Life Insurance: Money that is inside your cash-value life insurance usually sits in the insurance company’s general account.  Many insurance carriers are still paying in the 4% range.
6. Consider Buying Series I-Savings Bonds: The I stands for “Inflation” bonds.  These bonds may be purchased (up to $10,000) online by opening a Treasury Direct account.  The Treasury Direct account is linked to your personal checking account, and you can transfer up to $10,000 at a time.  Currently, Series I-Savings Bonds are netting 3.54%.  There is no risk of loss with these bonds.

To summarize, these are important times to huddle with your advisors and make sure your money is working for you instead of being eroded by inflation!

For many sleepaway and day camps, this past Monday was opening day for the summer of 2021!  After 15 months of Covid-19, many kids will be happy to spend extended time out of the house and away from their parents.  For parents, absence makes the heart grow fonder.

After we dropped off my nephew at basketball camp last Sunday, I started thinking about how big of a business camp has become.  Last year, many parents decided to skip sending their children to camp, and this year, demand has increased more than supply, especially for the higher-end camps.

As a kid, you never think about how much your parents are paying for the camp you attend.  For this column, I decided to dig in deep and call my client and friend, Ken Barer.   Ken (KB) is the Athletic Director and part-owner of Camp Mohawk, a high-end day camp in White Plains for children ages 3-13.  Ken played Pro Basketball in France and is the former Men’s Basketball Head Coach at Umass Lowell.

Early in the conversation, I learned that summer camps have come a long way since I went to (KSA) Kutcher’s Sports Academy many moons ago.  Back then, many of my friends went to Camp Anawana.

It is clear to me that Camp Mohawk is different from the regular day camp.  Most of their counselors (known as Group Leaders) are teachers, some have been with the camp for as long as 30 years. 

Each Group Leader gets a tablet, and they post daily pictures and a summary of what their campers accomplished that day.  The parents can download the Camp Mohawk app and can access the pictures as well as message the group leaders.  They can also request play dates for their children and request an introduction to other parents through the app. 

Camp Mohawk is considered a full-service, general day camp and one of the “Big-5” of high-end camps.  Last year, due to Covid restrictions, they hosted 600 campers.  They are proud to say they had zero positive Covid tests last summer!  This year they will host approximately 800 campers, about 100 below normalcy. They have a staff of over 300 persons.   They have an acceptance process that includes an interview and a guided tour of their sprawling 45-acre campus. 

Mohawk runs a full 8-week summer session and offers 6-week and 4-week options.  Camp Mohawk charges $10,000 for the full summer 8-week session for the first child.  They offer sibling discounts for the 2^nd and 3^rd child, and the 4^th child is free!  Mohawk had a waiting list for this summer, and they suggest applying now for the summer of 2022.

The pricing includes transportation, (they have bus pickup spots in Manhattan and Brooklyn) a snack in the morning and in the afternoon, a full lunch, 2 daily swimming sessions (instruction in the morning and free period in the afternoon) towels and daily bathing-suit laundering.  Their day runs from 9a-4p daily.

In addition to traditional sports like basketball, their campus features:

1. 8 Heated Pools
2. A Farm with Animals, such as Alpacas
3. 2 Wiffleball Stadiums, built like Yankee Stadium and Citi Field
4. A Mountain Bike Course
5. Zip Lining
6. 3 Climbing Walls
7. A Waterslide
8. A Hydro Blast Water Balloon Launcher

Covid-19 protocols include $20,000 of hand sanitizer and sink hand-washing stations across the campus and daily health and temperature checks that are logged online.  For more information go to CampMohawk.com.

My takeaways are that I would like to wind the clock back to be a 10-year-old and go to Camp Mohawk for the next 3 summers.  Summer camp can be expensive and should be budgeted for.  To the kids who have suffered due to no fault of their own, have a fantastic summer!