The two things that are most likely wrecking your retirement savings


If you earn a decent income but have trouble saving, the culprits could be the roof over your head and the car in your driveway.

Retirement savers who contribute more to their 401(k)s often spend less on housing and transportation than their peers, according to a study by the Employee Benefit Research Institute and J.P. Morgan Asset Management.

Better savers also spend less on food and drink, but housing and transportation are bigger expenses that tend to be less flexible. Once you commit to a place to live and a car payment, you’re typically stuck with those expenses for a while.

“It may be decisions that you’re making as you are building your life that will ultimately crowd out saving for retirement,” says Katherine Roy, chief retirement strategist for J.P. Morgan Asset Management.

The researchers divided 10,000 households into three groups: the 25% who contributed the least to their retirement plans, the 25% who contributed the most, and the “middle savers” whose contributions landed them in the middle 50%. High savers, not surprisingly, had higher incomes than the other two groups. Middle and low savers had similar incomes, but middle savers contributed about 5% at the start of their careers while the low savers contributed about 2%.

See: What if I’m in my 40s and don’t have a retirement fund?

That 3 percentage-point difference in contributions is largely attributable to the lower savers spending more on housing, transportation, and food and beverage, the researchers found. By retirement age, middle savers had accumulated savings equal to twice their salaries. Low savers had accumulated about half as much.

A ‘beater’ truck and a fat 401(k)

Driving older vehicles and owning a modest home are the top two sacrifices cited in a study of Principal Financial Group customers ages 20 to 54 who contribute big chunks of their income to retirement accounts.

One of those savers is Erryn Ross, 30, of Tigard, Oregon. For several years after college, the accounts receivable coordinator lived at home and drove a “beater” truck, a hand-me-down from his dad. By the time he was ready to replace the truck, he had saved enough to pay cash for a new one while also maxing out his 401(k) contribution.

Ross credits his mother — who drives a 2002 Honda Accord, previously owned by her father — with getting him started.

“She said, ‘OK, you can either pay me $1,000 for rent, or you can put $1,000 in index funds every month,’” Ross says. He put the money into his retirement account.

Ross recently bought a house with his fiancée, and they chose a home that cost about half of what their lender said they could afford. They figured out how much they felt comfortable spending each month and based their purchase on that amount.

“I don’t really need a million-dollar home here,” Ross says. “I just need something that’s going to house the family.”

It’s not all about choice

Both studies have their limitations. Perhaps the biggest one is that the researchers studied only people who had access to workplace retirement plans. Before the pandemic, 55 million working Americans lacked such access, according to Georgetown University Center for Retirement Initiatives. Access makes a huge difference: AARP found that people are 15 times more likely to save for retirement if they have access to a payroll deduction plan at work.

Also see: Has COVID-19 stopped Americans from chasing early retirement? Not exactly

The researchers also didn’t factor in the cost of living, which varies widely across the country. Living expenses are 46% higher in San Francisco and 86% higher in Manhattan than in Portland, Oregon, for example.

People’s personal costs of living matter hugely as well. Someone with health problems and lousy insurance likely will have more of their income eaten up by medical bills than someone in excellent health who has good coverage. The number of people you have to support — children, elderly parents, for example — affects how much you can save. People with student loan debt have less discretionary income than those whose parents paid for college. And so on.

Income matters, of course. Some people save on small incomes, while others don’t on large ones. But the more money you make, the easier it is to save.

Also read: The pros and cons of buying a certified used car

In other words, any number of factors — such as, say, losing a job during a pandemic — can affect someone’s ability to save.

When you do have choice, though, choose wisely. The decisions you make about the big expenses now can have a huge effect on what you can spend in retirement.

“Often in our financial wellness programs, we lead with, ‘You need to have a budget’ or ‘Don’t have that Starbucks
SBUX,
-1.14%

  cup of coffee,’” Roy says. “I think it’s more fundamental than that.”

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The best midsize luxury SUVs of the year, ranked


The midsize luxury SUV segment is extremely competitive. This is an area where almost every luxury brand has a seat at the table and they all have different sets of strengths and weaknesses. Some are better off-road, some are all about on-road performance and some are more family-oriented with roomy 3-row seating. Whatever you’re looking for in a midsize luxury SUV, you’ll find something perfect for your wants, your needs and your budget on this list.

Here are the best midsize luxury SUVs for 2020, ranked.

1. Mercedes-Benz GLE-Class

Score: 4.8 / 5

The 2021 Mercedes-AMG GLE 63 S


Mercedes-Benz

Mercedes-Benz has been working on midsize luxury SUVs for quite some time and the all-new 2020 Mercedes-Benz GLE-Class is the closest that the brand has come to truly perfecting this formula.

In classic Mercedes-Benz fashion, the GLE-Class seamlessly combines high-end luxury with engaging performance and in this case, it’s wrapped in a practical and stylish SUV that’s just the right size. The interior is arguably the nicest in this class and it’s packed with the latest technology in both safety and infotainment. One of its few faults is a cramped optional third row of seats.

This SUV makes more sense with the standard 2-row configuration. We admit, sometimes the technology can get in its own way. If you prefer just the basics when it comes to lowering the interior temperature, you might not like the Benz setup here. Still, this is an excellent midsize luxury SUV. It’s a little pricey for this class with a starting MSRP of $54,250, but it’s so good that the price tag is justified. The GLE was on our list of the best cars of 2019. 

2. Audi Q8

Score: 4.8 / 5

When a luxury brand comes out with an “SUV coupe,” it usually means making big compromises on practicality to get a more stylish body. However, the Audi A8 is a sleek SUV with a sloping roofline that also manages to have generous passenger space and plenty of cargo space. Its interior is breathtaking, with a high-end design and quality materials throughout, and its sharp handling makes it feel like a smaller car. All-wheel drive is standard, which improves all-season traction.

Many of us prefer the equally spectacular Q7 but that’s largely a matter of individual taste. The starting price is high at $68,200, but it comes generously equipped with standard features, delivering a truly luxurious experience.

3. BMW X5

Score: 4.8 / 5

The BMW X5 is one of the original midsize luxury SUVs and in 2020, it’s still one of the best. We know it’s cliché to call it “the BMW of SUVs,” but it’s an accurate way to describe this luxurious crossover with agile handling and a powerful engine lineup. A third row of seats is optional, but they’re a bit cramped and we’d recommend a different SUV on this list if you need extra seats.

Where this BMW
BMWYY,
+1.62%

  excels is in the fun-to-drive factor while also serving up practicality with its roomy cargo hold and its intuitive infotainment system. The starting price of $58,900 puts it on the expensive side, but it’s well worth it for the right driver. 

4. Audi Q7

Score: 4.7 / 5

The Audi Q7 is right up there with its chief competitors from BMW and Mercedes-Benz in terms of interior opulence, stately styling and agile handling. The Q7 features standard 3-row seating, but like most of its competitors, space in the third row is quite tiny. The Q7 received a nice mid-cycle refresh for 2020 which includes updated styling, a dual-screen infotainment system, a new mild-hybrid setup for the V6 engine and the debut of the high-performance SQ7 for drivers looking for some extra punch under the hood. Like the Q8, AWD is standard on the Q7. Pricing is a little steep starting at $54,800, but like its other German competitors, it’s worth it for drivers who appreciate the finer things in life.

5. Acura MDX

Score: 4.6 / 5

The 2020 Acura MDX


Acura

The Acura MDX is arguably the strongest value of any SUV on this list with its attractive starting MSRP of $44,500. It’s also a family-friendly choice, with standard 3-row seating that actually has some decent room in the third row. The interior design is getting a little dated and it’s not quite as premium as many of its rivals, but it’s nice considering the price tag.

Don’t miss:The best small luxury cars of the year

The standard V6 engine delivers an excellent balance of performance and fuel economy, but if you’re looking for something even more efficient, there’s a Sport Hybrid variant available which improves both performance and efficiency and throws in standard AWD. The hybrid starts at $52,800, which is still more affordable than many non-hybrid rivals. Find an Acura MDX for sale

6. Volvo XC90

Score: 4.6 / 5

The Volvo XC90


Volvo

In terms of interior quality, the 2020 Volvo XC90 is just as nice as more expensive German rivals while carrying a competitive starting MSRP of $48,350. That price is even more attractive when you consider the long list of standard technology and safety features in this handsome Volvo
VLVLY,
+2.72%

 .

This is a great 3-row luxury crossover for families with its roomy cabin with standard 3-row seating and a generous cargo area to boot. The XC90 gets some slight tweaks for 2020, including revised styling and, finally, available seating for six with second-row captain’s chairs. The base engine is good on gas but a bit lacking in performance and we prefer the T6 powertrain setup. Find a Volvo XC90 for sale

7. Porsche Cayenne

Score: 4.5 / 5

Porsche Cayenne GTS


Porsche

The 2020 Porsche Cayenne is still fresh off a 2019 redesign and introduces a new “coupe” body style for 2020. The Cayenne checks every box you would expect from a Porsche SUV. It’s fast, it’s luxurious and it carries styling that makes it unmistakable as a Porsche.

Check out: 9 smart dog accessories for your car

You could upgrade to one of the hotter available engines, but most drivers will be more than satisfied with the standard turbocharged engine and standard AWD. Unsurprisingly for a Porsche, the Cayenne is toward the top of the price range in this segment with a starting MSRP of $66,800, making it good for drivers to prioritize performance over value. 

8. Lexus RX

Score: 4.5 / 5

The 2020 Lexus RX is a favorite among drivers looking for a midsize luxury SUV that is safe, comfortable, reliable and efficient. There aren’t a lot of surprises with the RX and for many drivers, that’s a good thing. The interior is very nice and the ride is gentle, making it a good commuter with the versatility of an SUV. A third row of seats is available in the form of the RXL, but the optional extra seats don’t offer much legroom. The RX is a great family SUV as long as you don’t really need a third row. Value is the name of the game with a starting MSRP of $44,150, while the thrifty RX Hybrid starts at just $46,245. 

9. Land Rover Range Rover Sport

Score: 4.3 / 5

The Land Rover Range Rover Sport


Land Rover USA

If you’ve always wanted a Range Rover but you also want available three-row seating and a more affordable price, then the 2020 Land Rover Range Rover Sport is the luxury SUV for you. With standard 4-wheel drive, the Range Rover Sport doesn’t skimp on the off-road performance that its name promises, and its range of powerful engines gives it outstanding on-road performance as well.

The interior is comfortable and nicely designed, but the cargo area is a bit tight. Mild-hybrid and plug-in hybrid options were added for 2020, making this SUV a little greener. Base price for a Range Rover Sport is just under $70,000. 

10. Infiniti QX60

Score: 4.2 / 5

Looking for a luxury midsize SUV with third-row seating you can actually use? The 2020 Infiniti QX60 isn’t as opulent or sporty as some of its rivals, but it’s one of the most family-friendly crossovers in this class with a standard third row that is easy to access thanks to sliding second-row seats.

Don’t miss:Four electric and hybrid SUVs that can tow some serious weight

Adding to its family-friendliness is good cargo space, an available rear-seat entertainment system and a coveted Top Safety Pick+ from the Insurance Institute for Highway Safety. The standard V6 is strong and good for family-hauling while also being pretty good on gas. It’s also a strong value, with a starting MSRP of $44,350. Even upgrading to the Luxe AWD model still keeps the price under $50k.

11. Land Rover Range Rover Velar

Score: 4.2 / 5

Sitting above the Evoque and below the Range Rover Sport in the Range Rover lineup is the 2020 Land Rover Range Rover Velar. This 2-row midsize SUV exudes elegance inside and out with posh styling and a composed ride. A new V8 engine making a whopping 550 horsepower joins the Velar lineup for 2020, making this Range Rover more competitive with high-performance German luxury SUVs. Four-wheel drive is standard and its off-road capabilities are better than you might expect for such a fashionable SUV. Its starting price of $56,300 is a bit steep considering some of its more modern German rivals with nicer interiors and similar prices.

12. Lincoln Aviator

Score: 4.1 / 5

The Lincoln Aviator


Lincoln

The roomy 2020 Lincoln Aviator is another family-friendly choice in midsize luxury SUVs with standard 3-row seating. It’s one of the most stylish SUVs in this segment with a gorgeous exterior and a more opulent interior than you might expect. It’s also quite advanced technologically with one of the best infotainment systems in this class.

The ride is comfy and the standard twin-turbo V6 engine pumping out 400 hp is fantastic, but when it comes to handling, some rivals are more agile. It starts at a reasonable $51,100 and the higher-performance Grand Touring plug-in hybrid variant starts at $68,800. The all-new Aviator is the only vehicle from a luxury brand to earn a spot on our Best New Cars for 2020 list. 

13. Maserati Levante

Score: 4.1 / 5

The 2020 Maserati Levante


Maserati USA

Maserati performance and style come in a versatile midsize SUV in the form of the 2020 Maserati Levante. The Levante offers two incredible Ferrari-built engines under the hood, a 345-hp twin-turbo V6 and a 590-hp twin-turbo V8. Think of it like a high-end sport sedan but with an SUV body. The Levante also has sharp handling and it just might have the most satisfying exhaust note of any SUV on this list. However, its $72,990 base price makes the interior quality feel a bit lacking. The Porsche Cayenne is arguably a better value for a performance-oriented midsize luxury SUV. 

See: 10 SUVs that are really fun to drive

14. BMW X6

Score: 4.0 / 5

The BMW X6


BMW USA

All-new for 2020, the BMW X6 has a sleek coupe-like body that looks cool but results in a compromise of practicality. The seats are super-comfortable, but the steep roofline cuts into the cargo area quite a bit while also hurting rear visibility. That said, the cabin is extremely well-designed and full of high-end materials plus a long standard features list. It has a lineup of very strong engines, but as comfortable and as fast as it is, its 6-figure starting MSRP of $108,600 is hard to justify. The BMW X5 M is slightly cheaper, much more practical and delivers 567 hp that you’re unlikely to get bored with. 

15. Cadillac XT5

Score: 4.0 / 5

The Cadillac XT5 is a competitively priced midsize 2-row luxury SUV that takes the fight directly to the Lexus RX but can’t quite match its Japanese rival. The XT5 is a good SUV with a sharp aesthetic, a comfortable ride and a strong predicted reliability rating from J.D. Power. It got some nice updates for 2020 including a new infotainment system, a new turbocharged base engine that is good on gas and a stylish new Sport trim. Where the XT5 is lacking is interior quality and tight back seat headroom for a midsize SUV. It’s attractively priced starting at $44,095, but similarly-priced Japanese luxury SUVs are better buys. 

16. Lincoln Nautilus

Score: 3.9 / 5

The Lincoln Nautilus is another American 2-row luxury SUV that takes a shot at the Lexus RX and makes a good effort but falls a bit short of greatness. It’s a nice, comfortable, practical crossover, but there’s nothing that makes it really stand out in this class.

More on MarketWatch:

In Black Label form, it does eclipse the RX in terms of interior materials, color choices and textures, but that’s nearly a $60,000 car. You do get a host of concierge-level service but it’s a pricey option. Its most competitive factor with the Nautilus is actually at the other end of the spectrum — its price, which starts at $41,040, making this Lincoln a strong value for anyone looking for a comfy, quiet cruiser with SUV versatility. Both available engines are efficient and upgrading to the twin-turbo V6 adds more power, but the handling of the Nautilus isn’t what we’d call athletic. 

Also see: 8 new luxury SUVs for under $50,000

17. Cadillac XT6

Score: 3.9 / 5

The 2020 Cadillac XT6 is an all-new entry in the competitive 3-row luxury crossover segment and fails to stand out compared with the best midsize luxury SUVs. It has a dignified appearance, and its interior is roomy and family-friendly with plenty of room in its standard third row of seats, but that’s about where its virtues end. The sole engine choice is a naturally aspirated V6, which has enough guts for family-hauling duty, but there isn’t much of a fun-to-drive factor here. The interior quality is good but not great, which kind of sums up this whole SUV. This Cadillac is moderately priced starting at $52,695. 



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Moving? What you should know about doing it in a pandemic


Moving is stressful enough without throwing a pandemic into the mix.

Many Americans may be forced to consider moving as some federal foreclosure and eviction moratoriums have expired. In the first week of July, 32% of Americans did not make a full, on-time housing payment, according to a nationally representative survey by the website Apartment List. Others may relocate to save money, be closer to loved ones or simply leave a densely populated area.

If you’re considering moving, here’s what to know from a financial standpoint, as well as tips to make moving day safer.

Budget for extras

Aside from the usual expenses like buying boxes, renting a van or hiring movers, plan for extra costs because of the pandemic.

You may need to buy heavy-duty supplies to deep-clean your old place, for example, or to sanitize your new accommodations. If you are moving out of a rental unit, some landlords may ask you to pay for professional cleaners or take the cost out of your security deposit.

The Big Move: I work in Silicon Valley, but my job is now remote. I can finally live somewhere cheaper. Where should I go?

Moving across county or state lines? Check what the quarantine requirements are in your new location, says Jean Wilczynski, a certified financial planner and senior wealth adviser at Exencial Wealth Advisors in Old Lyme, Connecticut. You may have to pay for quarantine accommodations like a hotel or Airbnb if your new apartment or home is not move-in ready, she says.

If you are receiving unemployment benefits, check the rules on how your benefits carry forward in your new location and what the taxes are if it is a new state, Wilczynski says. You can typically find this information on your state’s Department of Labor website, she says.

Also see: Relocating? Ask these 6 questions to find the place that’s right for you

If you are unemployed or your income has dropped as a result of the pandemic, you can also check whether you qualify for moving assistance by calling 211.

You might not be able to really get to know your new place until you’re living there, so prepare yourself (and your wallet) for surprises like leaky faucets or broken appliances. Landlords and real-estate agents may offer only virtual tours. And if you can see the new accommodations in person, you may be required to sign a waiver, wear a mask and avoid touching anything while in the house.

Stay safe during the move

How to move safely depends on whether you are doing it yourself or using movers. Current guidance from the Centers for Disease Control and Prevention suggests that the main way the coronavirus spreads is through respiratory droplets, says Lindsay Slowiczek, pharmacist and drug content integrity manager at Healthline.com. That’s why wearing a mask and staying away from people is important to slow the spread of the virus, she says. Sanitizing surfaces is also an extra precaution worth taking.

Moving yourself

If you’re renting a moving truck, companies like U-Haul offer contactless pickup and drop-off options. Slowiczek suggests sanitizing the door handles, steering wheel, radio and the metal tongue on the seat belt in the rental van.

Using movers

Before picking a moving company, check its website or call and ask about its safety practices in response to the pandemic, Slowiczek says. Ask whether the movers wear masks and gloves during the move.

On moving day, she suggests being prepared with a plan to limit interaction with movers and maintain social distancing. This includes packing as many things as you can yourself, or consider using a self-pack moving container as Slowiczek did for her own recent move.

The Big Move: I’m tired of renting in Manhattan, but love living in New York. Is now the time to buy if the city is supposedly dead?

If the movers will pack the truck, create a schedule for the movers. For example, ask them to start with a particular room as you stay in another. This is also particularly useful if you live with family members who are vulnerable or immunocompromised, she says. Try to limit their involvement with the move as much as possible.

“Plan out the way [the movers] are going to move through the house,” says Slowiczek. “If possible, move all of [your boxes] to one area in your home so they don’t have to come throughout your house as much.”

Keep hand sanitizer or soap handy during the move so that you and the movers can use it periodically, she says. (Check on the FDA website that your brand of hand sanitizer is methanol-free, Slowiczek adds). After the move, use disinfectants registered with the Environmental Protection Agency to clean surfaces or furniture.

“Just using the product as-is is not enough — read the instructions on how long it should be wet on the surface,” Slowiczek says.

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How the East Asian mind-set succeeded with the coronavirus when Western individualism failed


HONG KONG ( Project Syndicate) – In 1960, the Nobel laureate economist Ronald H. Coase introduced the “problem of social cost”: human activities often have negative externalities, so individual rights cannot be absolute. Institutions must intervene.

There is no better example of this dynamic than the COVID-19 crisis.

While virtually every country has suffered as a result of the pandemic, some have done much better than others. Whereas some have reduced COVID-19 cases to near zero, others have had steadily climbing infection and death rates for months.


As the late Nobel laureate Ronald H. Coase showed, regardless of ideology or politics, each society must develop institutional arrangements that constrain individual freedom to minimize social costs .

As McKinsey & Company has noted, economic activity associated with discretionary mobility has returned to normal for the former group. Among the latter, such activity remains about 40% below the pre-pandemic level.

Everyone is at risk

Not everyone is suffering equally. Low-paid workers with inferior access to medical care and less opportunity to stay home – say, because their jobs are classified as “essential” – are bearing the clinical and economic brunt of the crisis.

This puts everyone at risk. After all, even if a country contains the first wave of COVID-19 infections, it will remain vulnerable, as the virus continues to be imported from worse-performing countries.

In other words, the social costs of inadequate institutional arrangements in some countries are spilling over to those with well-functioning institutions.

The first step toward addressing this problem is to identify which institutional arrangements are most effective for reducing the social costs of the COVID-19 crisis.

Strong institutions not enough

This is not, as one might assume, just a matter of having strong institutions. The United States and the United Kingdom are institutionally robust, and both had weeks, if not months, to prepare before their outbreaks began, but both have had among the world’s highest infection and mortality rates.


Soviet-style centralized intervention is not feasible: agents of the state cannot observe every move every person makes and enforce every precautionary behavior at all times.

By contrast, East Asian countries were the first to be infected, meaning they had little, if any, time to prepare. And yet many of them are among the countries that have reduced COVID-19 cases to near zero. The difference comes down to attitudes: what role and responsibilities each society attributes to government, and to what extent it expects the community to act as a collective agent of the common good.

In the U.S., there is a long-standing emphasis on personal freedom. “Small government” is a commonly heard refrain, with many arguing that individuals acting as self-interested participants in markets and in social and political processes will naturally produce positive outcomes. Government intervention – even in the event of a pandemic – infringes on individual rights and, indeed, on the very meaning of being an American. Protests over shelter-in-place orders and mask mandates reflect this view.

This is very different from the prevailing mindset in East Asia. For example, many Western observers have attributed China’s success in containing COVID-19 to its authoritarian regime, which supposedly infringed on individual freedoms, privacy, and economic efficiency in a way no democratic government ever could.

Market can’t do it alone

Coase’s theory shows why that logic is flawed. As he explains, the market may be able to minimize social costs if all actors have full information and face near-zero transaction costs. But those conditions are unrealistic even in normal times.

During a pandemic, no individual can possibly receive comprehensive and current information on the virus. In fact, the very existence of asymptomatic carriers precludes the possibility of “full information.” And, because the transaction costs of mask wearing, quarantining, testing, and contact tracing are high, making compliance a matter of individual choice will never be enough to contain the virus.

But Soviet-style centralized intervention is not feasible: agents of the state cannot observe every move every person makes and enforce every precautionary behavior at all times. And, contrary to popular belief, that is not what China has done.

Instead, recognizing that fully voluntary action was inadequate, the state provided comprehensive and mandatory rules to facilitate individual and communal compliance, as well as fiscal and logistical support for implementation.

Personal example

To illustrate, upon arriving in Shenzhen from Hong Kong, one of us headed to a designated hotel – equipped with medical staff conducting tests and monitoring temperatures – for a 14-day mandatory quarantine. On the way to the hotel, both the landlord and a community contact person got in touch, having been informed by the authorities to prepare for a new arrival from abroad.

From the airport to the quarantine hotel to home, every single individual – immigration officers, bus drivers, security screeners, medical personnel, and hotel staff – wore full personal protective equipment. Common areas were regularly disinfected. The state provided all needed resources.

Of course, a traveler would prefer to go home, rather than stay in a quarantine hotel for two weeks. But ostensibly high compliance costs for individuals do not outweigh the overall social costs of partial interventions.

So, with institutional support and clear guidance – delivered via many channels, including social media – people have taken the necessary precautions. Responsibility for implementation has also been clearly delineated across government agencies.

Results

The results – sharply reduced COVID-19 infections and deaths – speak for themselves.

Other East Asian countries – such as Japan, Singapore, South Korea, and Vietnam – have achieved similar success, using very similar institutional approaches. In every case, the government intervened early, devised comprehensive rules and guidance, and provided the resources needed to apply relevant measures.

And in every case, society was receptive to government intervention aimed at advancing the common good.

Crucially, these countries have very different cultures and political systems. Attempts to turn an effective institutional response to the pandemic into a political or ideological battleground are thus misguided, at best.

The Coasian lesson is that, regardless of ideology or politics, each society must develop institutional arrangements that minimize social costs. After all, those suffering the consequences of others’ decisions are unlikely to revel in their “freedom.”

Andrew Sheng, Distinguished Fellow of the Asia Global Institute at the University of Hong Kong and a member of the UNEP Advisory Council on Sustainable Finance, is a former chairman of the Hong Kong Securities and Futures Commission. His latest book is “From Asian to Global Financial Crisis.

Xiao Geng, chairman of the Hong Kong Institution for International Finance, is a professor and director of the Research Institute of Maritime Silk-Road at Peking University HSBC Business School. 

This article was published with permission of Project Syndicate Minimizing the Social Cost of COVID-19.

Suggested further reading

Nouriel Roubini: Reports of the dollar’s demise are greatly exaggerated

Anne Krueger: The American tragedy: A lousy economy and lots of COVID-19 infections

Robert Shiller explains the pandemic stock market and why it is decoupled from the economy 



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Which is better? The Tesla Model S and Model 3 compared


Tesla Model S sedan is the car that put Tesla
TSLA,
+3.97%

on the map, and the Model 3 is the vehicle designed to put the company onto the shopping lists of mainstream car buyers. So, we’re going to look at how these two EVs compare when pitted directly against each other.

Is the larger and pricier Model S still the standard-bearer for the Tesla brand? Or does the smaller and less-expensive Model 3 make a bigger and better first impression for potential electric car owners? Let’s break things down into five simple categories:

Price

This should be an easy win for the Model 3, since the compact sedan has a starting price that’s considerably lower than the larger Model S. Check Tesla’s official website and you’ll see the Model 3 starts at $37,990, while the Model S costs a whopping $74,990 for the least expensive variant. Choose the Model S in Performance trim with the optional $8,000 Autopilot package and you’re looking at a starting price that breaks the $100,000 barrier.

The Tesla Model 3.


iStock

The problem for Tesla was when it came to starting production of the entry-level Model 3. For many months, priority was initially given to building the more expensive versions, fitted with a bigger battery pack and all-wheel drive. Start loading options onto a Model 3 and, surprise, the price gap between it and its bigger brother, the Model S, narrows considerably.

Also read: Companies are weighing stock splits after Tesla and Apple’s announcement, expert says

A range-topping Model 3 with the dual-motor and all-wheel drive setup in Performance trim starts at $54,990. Add AutoPilot and you’re looking at a Model 3 that’s close to $62,990. But credit to Tesla, the standard Model 3 is finally online, according to the Tesla website, if you ordered a Standard version now, delivery would take between 6-8 weeks.

As a bonus, no matter which Tesla you choose, you have seven days or 1,000 miles to return the car for a full refund. Considering the entire Model 3 line is finally available, the (belated but deserved) win here goes to Tesla’s entry-level sedan. Winner: Model 3

Power

If you think electric cars have anything to do with golf-carts, then get behind the wheel of a Tesla. These sedans are fast, no matter if you’re going for a Model 3 or Model S. You’ve probably read about the optional Ludicrous mode that’s available in the Model S, which gives it supercar-like acceleration. Punch the gas pedal and the sprint from 0-60 mph takes only 2.4 seconds, according to Tesla. That’s crazy fast and about equal to the acceleration provided in the multimillion-dollar Bugatti Chiron.

A Model 3 in Performance trim is no slouch, however. The same 0-60 run is accomplished in 3.2 seconds and, ironically, it’s the Model 3 that has a slightly higher top speed (162 mph, versus 155 mph in the Model S). But if you’re a speed freak and want the ultimate in near-silent and scary-fast acceleration, the obvious winner is the Model S. Winner: Model S

You might like: What it’s like to drive a Tesla Model Y

Range

For many people considering an electric car, this is the single most important factor. What good is an EV if it can’t get you where you need to go, and then back again. When it comes to range, Model 3 offers a wider overall spread. The standard model goes 250 miles, while the Performance clocks in at 299 miles’ range. The Long Range model boasts 322 miles between charges.  The Model S Performance boasts a range of 348 miles and the Long Range variant can go 402 miles. Winner: Model S

Space

The bigger car is going to provide more interior room, right? You’ll be surprised to learn the Model 3 offers cabin room that’s almost identical to what you get in the larger Model S. In fact, the Model 3 offers slightly more front and rear headroom than the longer and sleeker Model 3. When it comes to front and rear legroom, the two are as close as you can get. Each delivers 42.7 inches of front legroom, with the Model S holding the slightest advantage in rear legroom at 35.4, versus 35.2 in the Model 3. It’s only in hip room and shoulder room where the Model S begins to, ahem, stretch out from its smaller sibling.

Also see: These 3 EVs are the lowest cost to own over 5 years

In terms of cargo space, the Model S streaks ahead with more than 26 cubic feet of trunk space, opposed to about 15 cubic feet in the Model 3. Credit the larger sedan’s convenient rear hatchback, which opens wide and makes cargo-toting a painless process. There is also the option of two rear-facing jump seats available in the Model S, though these are only suitable for small (and brave) young children. Cabin space is close, but cargo room is a clear win for the bigger car. Winner: Model S

New vs. used:

Let’s stir up a little drama by adding a wild card option, a used Model S compared with a brand-new Model 3. We looked at what an average price would be for a 2012 Model S, the sedan’s first year of production. Basing our search in South California and assuming the car has about 55,000 miles, a Fair Market Range according to KBB.com would place the Model S price between $29,000 to $33,000. That’s at least several thousand dollars less than the least expensive Model 3 though admittedly, you have an 8-year-old EV and not a brand-new edition. Still, it’s food for thought if you love the idea of going electric with plenty of power and luxury along for the ride.

Read: How to test drive a used car

Even though it comes up a bit short on range, Model 3’s similar cabin space to the Model S along with performance that’s still jaw-dropping fast are factors that cannot be overlooked. In the end, with the price being a huge factor for most shoppers, it’s the less expensive Model 3 that’s the better EV.

Overall winner: Model 3

Read next:These are your best bets for used hybrids under $10k



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