Crowdfunding Takes Effect

Crowdfunding Takes Effect

Everyone can do it.

New Securities and Exchange Commission regulations approved late last year allowing the general public to invest in start-up companies went into effect Monday. Private companies were previously allowed to solicit only accredited investors—those with a net worth of at least $1 million, excluding the value of their homes, or annual income of more than $200,000. In response, the Financial Industry Regulatory Authority issued an Investor Alert, urging investors interested in crowdfunding to consider the risks. “Small, retail investors can expect to be inundated with pitches and promises of their ability to get in the ground floor of the next Google or Facebook,” said Andrew Stoltmann, an attorney with The Stoltmann Law Offices in Chicago, in an email. “Unfortunately, 99 percent of these offerings are likely to be investment duds.” A whole cottage industry has already started to emerge around the new crowdfunding rules. KCSA Strategic Communications, for example, launched CrowdFund Communications on Monday, an investor relations platform for companies that equity crowdfund.

Active Vs. Passive Isn’t Black Or White

In the latest E*TRADE StreetWise study, the online brokerage reported that the debate between active and passive management is irrelevant for most experienced retail investors. While passive management is more popular overall, most preferred portfolio models that mixed in active management to deliver outperformance in narrower and less liquid segments of the market. According to Lena Haas, the senior vice president of Retirement, Investing and Savings at E*TRADE Financial, said an increased knowledge of fees, desire to customize portfolios and get the most out of different asset classes have all contributed to an increase in hybrid approaches. “It’s not simply about choosing between the two philosophies,” Haas said, “but thinking tactically about how best to combine them.”

How Millennials Spend Their Money

Cheaper than Ruby Tuesday. | Copyright Joe Raedle, Getty Images

Millennials might eat out more often than their older counterparts, but they still spend less money, a TD Bank survey states. The survey found that while millennials dine out an average 13 times a month, they’re only spending $26,000 a year on discretionary purchases such as clothing, dining, entertainment and travel. That’s 27 percent less than Gen X and 23 percent less than baby boomers, the study states. The reason why they’re more frugal—other than lower salaries? The Internet. Online shopping, especially on eBay and Amazon, allow them to shop for clothes, electronics, furniture and more on a shoestring budget. They also have more options than previous generations. According to Billy Petion, 33, from Palm Beach Gardens, Fla.: “For two people to go out to the movies, not including food and beverages, it’s about $20. If you have Netflix for $8.99 a month, you can watch as many movies as you want,” he told BankRate.com.

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