Go to Jeff Salisbury LWGate Home Page.From: persfin-digest <owner-persfin-digest@shore.net>
Subject: persfin-digest V4 #42
Date: Sun, 1 Jun 1997 10:10:25 -0400 (EDT)
Articles sorted by: [Date]
[Author]
[Subject]
persfin-digest Sunday, June 1 1997 Volume 04 : Number 042
IN THIS ISSUE:
ADVERTISEMENT: MCI FAX BROADCAST SERVICE [Oppenheimer Software <Connect-]
Kev's Financial Guide [Mark Coulter <coulter@csonline.net>]
International Auto Purchase in USA [colston@viagrafix.com (Lloyd Colston)]
WANTED: Used QUICKEN 5.0 for Windows 3.1, or newer [ktjensen@juno.com]
Re: Investing for a friend? [David Meyers <dmeyers@panix.com>]
News from T. Rowe Price [rfrego@blitz.net]
Re: Investing for a friend? [Rich Carreiro <rlcarr@animato.pn.com>]
Re: Co-Mingling IRA's <--Help!! [Rich Carreiro <rlcarr@animato.pn.com>]
IRA For Minor [Paul Landsberg <paws@vlsi.columbia.edu>]
Ethical obligations of the Pharmacist ["Phillip Jennings" <pjennings@dean]
Re: I Had To Buy Windows 95 Regardless of Whether I wanted It ["Michael W]
Not All Windows 95 Copies Are The Same [Kurt Nosack <KNOSACK@novell.com>]
Re: Cheap prescription drugs in Mexico [P Keehn <pakeehn@ucdavis.edu>]
Financial Planning Assistance Offer ["Steve O'Keefe" <IPS@olympus.net>]
Re: Buying a used car (Kev's "Rules of Thumb" for Financial Security) [Ia]
RE: Investing for friend - NO! [rrk@aps.anl.gov (Robert Kalt)]
Donated computers - Tax Deduction Only for US Entities [eric <73354.3477@]
Non-profit Minnesota corp? [eric <73354.3477@CompuServe.COM>]
financial planning via e-mail? ["John and Stacy Cole" <thecoles@eis1.eis.]
Bank vs us: Who is in charge? [riker@worldweb.net]
When a friend asks you to invest her money [JONESW@CCSUA.CTSTATEU.EDU]
Dow approaches? [eric <73354.3477@CompuServe.COM>]
Natural gas drilling programs? [curious@sirius.com]
RE: Kev's "Rules of Thumb" for Financial Security [PRIMO <primo@fast.net>]
====================================================================
Neither Ira Krakow nor Persfin-Digest is responsible for the content
of any Persfin-Digest Sponsor Ad. Posting a Sponsor Ad does not
indicate endorsement of the product or service by Ira Krakow or
Persfin-Digest. You're on your own.
This issue is sponsored by:
Oppenheimer Software - An Official MCI Messaging Agency. Features:
MCI Fax Broadcasting Service
MCI Fax Reply Service
MCI Connect for cc:Mail
MCI AutoForward
internetMCI
Lan Access to MCI
Telephone: 800-390-9379
FAX: 800-492-6862
E-Mail: Connect-Sales@mcimail.com
Also sponsored by Wholesale Products. Why pay retail?
Specialists in HP320LX palmtops - the hot new HP palmtop that runs
Windows CE. Pocket versions of Internet Explorer, Excel, and Word are
included. Connectivity to PC applications. It's in stock and
orderable. Price: $689 + $19.95 shipping (in USA).
Visit our PAL/NTSC/SECAM electronics site, featuring VCRs, converters,
TVs, appliances, etc., geared to the international marketplace, at:
http://www.wholesaleproducts.com/non-usa.html
Calculators:
HP 48GX: $180.28 + s&h
HP 48G: $ 91.78 + s&h
JVC GR-DV1 Camcorder Now Reduced to $1695.95. PAL Version $1699.95.
Visit our Blank Videotape Kiosk at:
http://www.wholesaleproducts.com/videotapekiosk.html
Visit our newly updated and expanded Web site, at:
http://www.wholesaleproducts.com
Special Orders: wholesal@shore.net
Phone: 1-800-574-7253 (9am - 5:30pm Boston time)
Fax (24 hrs): 617-438-8307
For information on placing a Persfin-Digest Sponsor Advertisement, e-mail
ikrakow@shore.net
====================================================================
Persfin Digest Archive (maintained by Ameristock Mutual Fund):
http://www.ameristock.com and
http://www.ameristock.com/pda/persfin_home.htm
Ira Krakow's Mall: http://www.krakow.com
Personal Finance Web Sites: http://www.tiac.net/users/ikrakow/pagerefs.html
To post a question or an answer, send email to: persfin-digest@shore.net
The messages posted to the Persfin-Digest are opinions and are not
intended to substitute for qualified professional advice. Subscribers
should seek the services of qualifed professionals for such advice. The
publisher, Internet provider, advertisers, and Digest contributors cannot be
held responsible for any loss incurred as a result of the application of any
of the information provided here.
Copyright (c) 1995, 1996 Ira Krakow
REQUESTED SUBSCRIPTION FEE: $20/year. Monies will go directly to defraying
publication costs, compensating for the time and effort of the Publisher,
and enabling the Publisher to create additional useful sources of
information on the Internet. Send cash, check, or money order (U.S.
funds), payable to "Ira Krakow", to:
Ira Krakow
12 Clearview Road
Stoneham, MA 02180-1918
Contribution will be acknowledged by e-mail if you include an e-mail address.
To Subscribe: e-mail majordomo@shore.net, text: subscribe persfin-digest
To Unsubscribe: e-mail majordomo@shore.net, text: unsubscribe persfin-digest
----------------------------------------------------------------------
Date: Sun, 1 Jun 1997 09:39:33 -0400 (EDT)
From: Oppenheimer Software <Connect-Sales@mcimail.com>
Subject: ADVERTISEMENT: MCI FAX BROADCAST SERVICE
MCI Fax Broadcast Service
A High Volume, Very Low Cost, Fax Broadcasting Service
Send 50, 500 or 5000:
Newsletters, Catalog Revisions, Late Changes, Political
Announcements, Product Updates/Recalls, Legal Class Action
Notifications, Special Events, Party Invitations, Bids,
New Rules/Regulations, Advertisers Deadlines, Investor
Relations, Portfolio Advisories, Contract Opportunities
...in minutes, using your Fax Machine or Delrina WinFax Pro
Secure and Private
Free List Management Software
Cost Allocation/Accounting Reports Available
Automatic Retries on Busy Fax Numbers - up to 24 Hours
Toll Free 24X365 Customer Support for those Late Night Jobs
Low Cost List Conversion Services available (dBASE, ACT!, and more)
Rates as Low as $.17/minute (domestic) Off Peak for Select Customers
Oppenheimer Software Authorized MCI Messaging Agency
Tel:800-390-9379 E-Mail:Connect-Sales@mcimail.com
Fax:800-492-6862
------------------------------
Date: Sun, 1 Jun 1997 09:41:39 -0400 (EDT)
From: Mark Coulter <coulter@csonline.net>
Subject: Kev's Financial Guide
Lots of good stuff there, thanks. Please add some of my personal
favorites.
1. Don't use overtime pay or bonuses to make downpayments.
2. Divide each large annual bill such as taxes, car insn., school
clothes, xmas club, etc. by the number of your paydays and set aside the
total in a separate account each pay, (at least on paper).
3. Take a look around your house. Everything you see has a life
expectancy, usually 10 yrs. Think about a payday account for major
appliance replacement.
4. Make the max 401-k contribution even if you have to use other
investment money to do it. Chances are you won't need the money untill
you retire anyway and the penalty isn't that severe if you do. Some
plans even allow you to borrow from them and pay yourself interest.
(Don't be reckless with this feature).
5. Don't think of retirement money as a fund to live it up on after you
quit work. It is to support your existing lifestyle when you are too old
or physically unable to work.
6. Forget expensive, non-productive hobbies like boating or racing unless
your income exceeds 70-80K. Spend your hobby time working at the local
volunteer fire co. or Salvation Army/Big Brother type place. NEVER TRY
TO MAKE MONEY DURING YOUR TIME AWAY FROM WORK. You won't enjoy it.
Your fellow Persfiner,
Mark
------------------------------
Date: Sun, 1 Jun 1997 09:42:38 -0400 (EDT)
From: colston@viagrafix.com (Lloyd Colston)
Subject: International Auto Purchase in USA
I have a page at http://www.viagrafix.com/colston/drivefaq.htm
which explains the process for Internationals coming to USA seeking to
buy a car must complete.
If you are an insurance agent interested in the this market, I
would like to hear from you.
If you have time, please look at the page and email your
comments.
Thanks.
- --
Lloyd Colston
Pryor, OK USA
Internet business group: http://www.isbc.com
KC5FM Home page http://www.viagrafix.com/colston
------------------------------
Date: Sun, 1 Jun 1997 09:43:11 -0400 (EDT)
From: ktjensen@juno.com
Subject: WANTED: Used QUICKEN 5.0 for Windows 3.1, or newer
I am looking for a copy of Quicken version 5.0 for Windows 3.1, or a
newer version for Windows 3.1 If you have this older version available
I would be willing to buy it form you. Let me know by emailing to
ktjensen@juno.com Thanks in advance!!
------------------------------
Date: Sun, 1 Jun 1997 09:44:18 -0400 (EDT)
From: David Meyers <dmeyers@panix.com>
Subject: Re: Investing for a friend?
>I suggested that she open a brokerage account that I could trade from using
>her id and password, but she doesn't want to because the minimums are too
>high for her(e-schwab, which I use, has a minimum of $5000).
If she has not enough to open a brokerage account, then she
almost certainly doesn't have enough to warrant much active
management or more than just a couple of funds anyway.
>I have thought of the investment club type of arrangement but don't know
>too much about it and am leery of having to set up an LLC or something.
Way more complicated than you need.
>Therefore I am wondering if there are any angles I haven't thought of that
>could make this work, or if I should just tell her to forget the idea.
Given that you are not talking about a lot of money, though
it may seem like it to the person who owns it, I'd suggest
just indicating a few good funds and suggesting that your
friend choose from them. Then, perhaps, review those choices
for her, but a few well selected funds shouldn't require
much active management nor intervention on your part.
>(Editor's Comment: Sounds like an excellent way to sour a friendship.
>-IK)
It certainly could be. I'd suggest disclaiming pretty strongly.
You cannot guarantee that you'd get results for your friend
that would be great, nor even that you could repeat your
decent performance from before - and that is probably what
your friend expects you to be able to do.
One easy out would be to suggest looking at one of the
articles in, say, Kiplingers, where they list "model"
portfolios for various goals. Typically they would have
four portfolios, one for young, aggressive investors,
one for retirement income, and a couple between. These
articles usually indicate a relatively small number of
funds in each portfolio, explain _why_ each fund was
chosen, and offer suggestions as to which funds to not
include if you have not got enough to mimic them.
Reviewing such an article _with_ your friend, rather
than controlling the investment _for_ your friend
is probably a _much_ safer course of action.
- --D
------------------------------
Date: Sun, 1 Jun 1997 09:45:45 -0400 (EDT)
From: rfrego@blitz.net
Subject: News from T. Rowe Price
T. Rowe Price Introduces Complete Account Access on the Internet
We are pleased to announce that T. Rowe Price investors now have complete
access to their mutual fund and IRA accounts through the T. Rowe Price Web
site. Shareholders can now safely check account balances and conduct
transactions on-line 24 hours a day, seven days a week.
As a T. Rowe Price Watch List subscriber, you know the convenience the Web
offers in helping you track your investments. Our new Account Access service
is just one more way for you to securely manage your accounts where you want,
when you want.
Visit our Web site today at http://www.troweprice.com/aalink/aasplash.html and
see how easy it is to sign up for this exciting free service.
------------------------------
Date: Sun, 1 Jun 1997 09:46:27 -0400 (EDT)
From: Rich Carreiro <rlcarr@animato.pn.com>
Subject: Re: Investing for a friend?
>I was telling a friend about the moderately good success I've had investing
>in mutual funds and she asked if I could invest some money for her. At
>first I said yes but as I thought more about the legal and tax situation, I
>became more doubtful. If I just throw her money in with mine, then legally
>I become responsible for the capital gains and/or losses, PLUS the money
>she gives me is income to me (right?).
If you did this, you would be correct as to the consequences.
However, there's no reason to do that. Instead, have her give you a
limited power of attorney to trade on *her* account. Many brokerage
houses (including discounters) have a standard form for this. Mutual
fund companies probably have something similar.
When the LPOA is executed, you'll have the power to make any trade in
the account that the account owner could have made. However, you have
NO power to deposit or withdraw funds, and title to the account
remains with the owner at all times. She also retains the right to
place trades herself.
In theory she could also go to a lawyer and have a more "customized"
LPOA drawn up if she wanted to limit you more than the brokerages'
standard forms do, but for the amounts of money your talking about
here, that's probably not cost-effective.
Having said all this, I agree with Ira that this is an excellent way to
screw up a friendship, however.
Rich Carreiro
rlcarr@animato.pn.com
------------------------------
Date: Sun, 1 Jun 1997 09:47:36 -0400 (EDT)
From: Rich Carreiro <rlcarr@animato.pn.com>
Subject: Re: Co-Mingling IRA's <--Help!!
[Disclaimer: this is my opinion, not advice. I am not a professional.]
> 1) Regular IRA; includes deductible contributions and
> employer-sponsored contributions, all money in 1 fund; not
> adding to this IRA.
> 2) SEP-IRA; set up while self-employed; not currently adding to
> this IRA; the money is divided over 4 funds.
> 3) SAR-SEP IRA; managed by my current employer who makes
> employer contributions on my behalf; currently adding to this
> account; in 1 fund.
>
[snip]
>What problems might I create by combining different types of IRA's,
>such as qualified status and creating accounting nightmares when I
>get around to withdrawing funds from these accounts?
As I understand things, the problem is with co-mingling contributory
IRA money and qualified plan IRA money. The former is (not
surprisingly :-) contributions that you make to a "regular" IRA each
year out of earned income. The latter are IRAs funded with qualified
plan money. These could be IRAs funded from a 401(k) or 403(b)
rollover, or IRAs (like SEP-IRAs) that were themselves qualified
plans.
The basic rule is that if you have an IRA that is funded *only* with
qualified plan money (either "directly" or via a rollover from another
qualified plan) it may be rolled over into a future qualified plan.
However, if you add even $1 of contributory monies, you forever lose the
ability to roll that account into a qualified plan.
Account (1) has already been so tainted. It cannot be rolled into a
qualified plan, and if you consolidate it with any other account, that
account will also lose the ability to be rolled into a qualified plan.
As for (2) and (3), I believe there's no problem with combining them
with respect to keeping the ability to roll into a qualified plan.
However, there may well be issues regarding combining SEP-IRAs and
SAR-SEP IRAs (maybe the IRS doesn't allow it -- I have no clue), so I
suggest talking to a tax pro on that one.
- --
Rich Carreiro
rlcarr@animato.pn.com
------------------------------
Date: Sun, 1 Jun 1997 09:48:08 -0400 (EDT)
From: Paul Landsberg <paws@vlsi.columbia.edu>
Subject: IRA For Minor
Hi Ira, I was cleaning out the mailbox and came across the issue
where I posted about putting money into an IRA for a minor.
I'm not sure I was clear in what I was looking for, as I perceived
from the editor's comment.
Many people on this list may be at a point where they have an extra
2,000 they would like to put towards their children. Heck, it may just
be around Xmas time where a child gets some gift money where it can
be put aside. Now if college is funded (I know of quite a few people
who feel that college costs should be funded out of current income
at the time the child is in college), consider the tremendous
compounding that 2K$ (I wasn't talking yearly or regular investments)
that would occur if an IRA is started. However, I do realize that
similar results could be had if someone contributes to a fund like
the 20th Century Giftrust with a "expiration date" 50 years into
the future.
Later!
Paul
------------------------------
Date: Sun, 1 Jun 1997 09:49:25 -0400 (EDT)
From: "Phillip Jennings" <pjennings@deans.pharm.utah.edu>
Subject: Ethical obligations of the Pharmacist
Concerning Ira's question: the pharmacist should have the patient's
welfare foremost in mind. We have the duty to contact prescribers
concerning potential problems a prescription may cause. In the
unusual case that a physician refuses to change a prescription, the
pharmacist does have the right to refuse to fill it. In fact I would
suggest that the pharmacist discuss this issue with the patient to be
sure the patient understands the situation and document the
conversation in the patient's profile.
This scenario supposes that the prescription could cause harm to the
patient. What about when the pharmacist thinks a similar medication
would be better (due to cost, side effects, etc.) than the one the
physician has prescribed, even though the medication would not cause
any harm ? If the physician disagrees with the pharmacist, then
generally the pharmacist will fill the presciption and possibly tell
the patient to discuss this with the physician at the next office
visit. In our health care system, the physician still assumes the
responsibility for the patient's care, but it is the pharmacist's
duty to double check all prescriptions to make sure there is no
immediate danger to the patient.
There was an interesting article in the most recent Money Mag. (? May
or June?) concerning the "kickbacks" some drug companies provide when
a pharmacist is successful in getting a physician to switch to a
different drug (usually from the same "class" of medicines). While
this certainly occurs, I personally feel that unless the switch is
made with the patient's best interest in mind, then this behavior
possibly violates our ethical responsibility. I am not a lawyer and
certainly others may have different opinions. At this point there is
no regulation (ethical or legal) that prevents a pharmacist from
trying to convince a physician to switch medications. It is
ultimately the physician's decision though. Your pharmacist should
always be your personal advocate.
Phillip Jennings, Pharm.D.
Assistant Professor
University of Utah College of Pharmacy
------------------------------
Date: Sun, 1 Jun 1997 09:50:19 -0400 (EDT)
From: "Michael Warner"<michael_warner_at_ane1@mail.hq.faa.gov>
Subject: Re: I Had To Buy Windows 95 Regardless of Whether I wanted It
Richard Alpert wrote:
"I didn't want to buy an MS product, I wanted to buy hardware. I paid
for an MS product that I didn't want and don't use."
This is what most of us will find when we purchase computer systems
"off the shelf." These systems are configured to meet the needs of
the majority of computer users. For those whose needs are not met by
these systems, there are numerous shops that will build a system with
only the components and software desired. This alternative can prove
to save hundreds of dollars since you don't have to pay for "features"
and software that you don't want and won't use. These computer shops
are easily located through the yellow pages.
------------------------------
Date: Sun, 1 Jun 1997 09:51:18 -0400 (EDT)
From: Kurt Nosack <KNOSACK@novell.com>
Subject: Not All Windows 95 Copies Are The Same
>the Win95 CD that is included with each machine is Microsoft standard,
>all of them are the same. Some machines might need special drivers,
>but they aren't on the CD.
>Ken
Actually, not all copies of Win95 are the same. Most are, but large
hardware vendors (like Compaq and Dell) have customized versions of the OS.
Most of the differences are just wallpaper and screensavers, but there could
be other stuff optimized for the hardware.
As for selling the OS, I think you should be able to, but check the
licensing agreement to be sure.
Kurt Nosack knosack@novell.com
------------------------------
Date: Sun, 1 Jun 1997 09:51:53 -0400 (EDT)
From: P Keehn <pakeehn@ucdavis.edu>
Subject: Re: Cheap prescription drugs in Mexico
To Ira's question: are Mexican authorities enforcing laws relating to
legal drugs and not illegal drugs --- at the time I read the piece I
guessed that the arresting officer needed some money; when the bribe
wasn't forthcoming the arrest occurred. I read a lot of Mexican news so
if I learn more I'll pass it along.
Pauline
------------------------------
Date: Sun, 1 Jun 1997 09:52:43 -0400 (EDT)
From: "Steve O'Keefe" <IPS@olympus.net>
Subject: Financial Planning Assistance Offer
I've got some help for all those Baby Boomers out there who pledged to get
serious about financial planning. I have permission to send you the
"Introduction to Investing" from Jonathan Michael's book, "Personal Finance
on the Web: An Interactive Guide," just published by John Wiley & Sons. To
get the sample chapter, just send mailto:IPS@olympus.net with the subject
line, "Send Personal Finance."
The book is an impressive marriage of several technologies. If you're
familiar with book / web site combos, prepare to be blown away by this
guide. Michaels used Adobe Acrobat to overcome some of the problems with
web site companions. Each page of the book is seamlessly integrated with
the abundance of personal finance resources available online. The author's
tone is witty and warm, gently nudging the user into the serious work of
financial planning, while lightening the process with a few whimsical links.
The "Introduction to Investing" is a plain text file covering such topics
as assessing your resources, defining your goals, and balancing risk and
return, with URLs for online assistance. The excerpt doesn't do the book
justice -- you can't appreciate the technical beauty of this project unless
you see the book or visit the web site. You can view this material at the
web site if you have Acrobat Reader, which is available for free
downloading at the site:
http://www.wiley.com/PRT/pfw
------------------------------
Date: Sun, 1 Jun 1997 09:53:54 -0400 (EDT)
From: Ian Haggard <ian@shellus.com>
Subject: Re: Buying a used car (Kev's "Rules of Thumb" for Financial Security)
> >7. Always buy a used car (Used is three or more years old). Cars
> >depreciate at the maximum rate during the first three years. Car leases
> >are to be avoided by most individuals.
>
> There is a reason why cars depreciate quickly during the first
> 3 years. That is the length of most standard warranties. I would
> suggest buying a one or two year old car that still has some time left
> on the warranty. That way, if there are any big mechanical problems,
> you can get them fixed under warranty.
This is actually less of a problem than you might think. If you want to
buy a used car but are afraid to do so because it wouldn't come with a
warranty, there are businesses that do nothing but inspect cars (and
offer warranties on them, too).
When I bought a car early this year (90 Toyota Camry DX V6) I had it
fully inspected by Auto Exam for a little bit less than a hundred
bucks. Auto Exam is one of several national chains that offer this
service. I think Auto Critic is another one.
In addition to inspection, Auto Exam offers 2 and 3 year warranties on
cars that it has inspected and which have under 90k miles. The car does
of course have to either pass inspection or have any problems fixed
before they will issue the warranty.
I didn't end up getting a warranty because the car I purchased had over
90k miles. But I had called called Auto Exam earlier and gotten some
quotes over the phone for warranties on Toyotas of approximately the
same vintage. The prices they quoted were in line with what I
expected. I would certainly expect to be able to negotiate their price
down by a by a half or a third. But their asking prices were still
better than those at used-car dealerships.
- --
Ian Haggard || ian@shellus.com (work) || IanHaggard@juno.com (home)
------------------------------
Date: Sun, 1 Jun 1997 09:54:35 -0400 (EDT)
From: rrk@aps.anl.gov (Robert Kalt)
Subject: RE: Investing for friend - NO!
Ira was absolutely 100% correct: do *not* invest for a friend! No-no-no!
You could help the friend learn *how* but don't touch the money.
I wouldn't even want to be responsible for selecting specific funds/stocks -
just provide some tools. Even my Dad took this approach with us, after
a certain age of course.
- ---Bob
------------------------------
Date: Sun, 1 Jun 1997 09:55:46 -0400 (EDT)
From: eric <73354.3477@CompuServe.COM>
Subject: Donated computers - Tax Deduction Only for US Entities
Tax deductions are only to US entities. The US gov't (and IRS) don't support
foreign charities, including Bulgaria. But be nice and help out anyway!
------------------------------
Date: Sun, 1 Jun 1997 09:56:18 -0400 (EDT)
From: eric <73354.3477@CompuServe.COM>
Subject: Non-profit Minnesota corp?
How can I find out:
1) If a company is truly registered as non-profit?
2) Can I get the company's latest income/expenses? If so, where?
I'd like to see how much is spent on salaries, etc.
------------------------------
Date: Sun, 1 Jun 1997 09:57:01 -0400 (EDT)
From: "John and Stacy Cole" <thecoles@eis1.eis.com.eg>
Subject: financial planning via e-mail?
I wonder if any of you have advice on how to find a qualified
financial planner (fee-only) who will advise someone via e-mail? I am
a U.S. government employee posted abroad and expect (hope) to be
abroad for at least the next ten years or so. I would like to be able
to consult a financial planner initially to review my financial
situation and make any changes necessary and then do update
consultations once or twice a year. Does anyone see any problems with
doing this via e-mail? (I thought perhaps it would be best to send my
personal financial information by mail first and then do the
consultation via e-mail unless the planner had a way to send/receive
e-mail securely.) How would I go about finding such a person? Also,
is there any advantage in making sure that the planner is from my
state of residence (I am a Maryland resident)? (I thought that might
be best so that he/she would know the local tax situation?)
I'd appreciate any help you all could offer. This is a wonderful
digest; I've learned a lot from all of you and very much appreciate
your taking the time to help others.
------------------------------
Date: Sun, 1 Jun 1997 09:57:51 -0400 (EDT)
From: riker@worldweb.net
Subject: Bank vs us: Who is in charge?
My brother and I have been helping my Mom manage two fairly sizable
accounts. Really, since we have relatively limited time and expertise, we
have been managing the investors at the investment houses.
We decided to consolidate accounts for ease of management. We already had
one account at a major bank, which had been working closely with us.
Moreover, the investment houses were driven by the desire to make
commissions, while the bank earned its money as a percentage of the total
account value; they had more incentive to make the money grow.
Based on informal discussions with the bank ("informal" = "big mistake"),
we transferred all my Mom's assets to them.
The bank has suddenly, for lack of a better phrase, copped an attitude. --
They want to sell off certain bonds which have excellent interest rates,
but that they don't generally monitor.
- -- There is one account where we all agree that we want to sell of certain
assets; but Mom, brother, and I want to do it in stages. The bank is
virtually insisting on doing it all at once.
- -- The bank suddenly has come up with this idea that they only support
their own in-house mutual funds, and are essentially limiting us from
buying almost anything else.
- -- I could tell you much more....
Question: Is this common from banks, or other financial institutions? To
manage from the standpoint of their convenience rather than our needs?
We may yet transfer the money away from them (though there is the problem
that one of the accounts is required to stay there for legal reasons).
Question: Can anyone recommend one or more financial institutions,
preferably in the New York metro area, where the institution does not play
power trip games? And does not try to manage your money based on their
convenience? (Please be good enough indicate if you work for said
institution, or have any other affiliation apart from being a customer.)
Question: Has anyone had any success--found a better culture to work
with--by investing through a foreign bank or investment house with U.S.
offices? Any legal or financial pitfalls to this that we should know of?
Thanks in advance for all replies.
Riker@worldweb.net
------------------------------
Date: Sun, 1 Jun 1997 10:00:40 -0400 (EDT)
From: JONESW@CCSUA.CTSTATEU.EDU
Subject: When a friend asks you to invest her money
David Hodges asks:
What do you do when a friend or relative asks for help on making
decisions on how to invest her money? First, let us assume that the
friend is not yet retired and is investing money for her retirement.
The most important thing is to make sure that she knows what she is
getting into with stocks and bonds. Spend at least half-an-hour with her
discussing the alternatives, and take a very pessimistic attitude as to
the risk involved. If she won't spend that much time hearing your
cautions, but just wants you to invest it for her, then have her put it
all in a money market and come back later when she is willing to discuss
the risks.
The first objective is to find out what percentage of total assets the
friend should have in stocks. I tend to recommend 100 minus your age,
because that is a standard conservative criterion. The primary purpose of
that first half-hour of discussion is to find a reasonable percentage that
will let your friend sleep well at night. When in doubt, start with a
lower percentage in stock. Your friend should hold this initial
percentage for at least three months while acquiring some education and
experience; then the allocation can be changed as is appropriate.
Once one has decided the stock-to-bond ratio, the rest is not too hard.
I always recommend Vanguard funds, though other fund families can be good
too: Of the stock portion, put 80% in IndexTrust/Total Stock Market (the
Wilshire 5000) and 20% in International Growth. Of the bond portion, put
it all in Short-Term Corporate or in individual 5-year treasuries,
depending on the amount of money invested (a bond fund is generally
cheaper than a $5,000 5-year treasury but more expensive than a $10,000
5-year treasury).
If the amount of money invested is large enough and the person seems receptive
to a little more complication, then the 80% in Total Stock Market can be
replaced by 40% in IndexTrust/Value (the 340 cheapest S&P500), 20% in
IndexTrust/Growth (the other 160 S&P500), and 20% in IndexTrust/Extended Market
(Wilshire 4500). Why the slant toward value stocks in the S&P500 holding?
Because value stocks historically have earned more than growth stocks in the
very long term, and because they are not likely to drop as much in a correction.
The investment company does not have to be Vanguard (www.vanguard.com) --though
none of T.Rowe Price (www.troweprice.com), Fidelity (www.fidelity.com), or
Scudder (funds.scudder.com) has a domestic small-cap index fund. I would not
recommend any investment company other than these four. If the person does not
have enough money to meet these 4 families' minimums of $2500-3000 per fund
($500-1000 for IRAs), she should keep everything in a savings account or bank CD
or money market fund until she does.
The important thing with index funds and near-equivalents is to avoid sales
loads and compare the expense ratio with Vanguard's. For example, as of Spring
1997, the short-term bond funds' expense ratios were 0.25% for Vanguard but
0.70% to 0.80% for the other three. Now these funds have a true return of only
2 to 3% (after subtracting for the effects of inflation). So the true profit of
your investment is about 20% more each year with Vanguard than with the others
due to expenses alone.
Why only index funds for domestic stock? It is not because I believe that
everyone should buy only index funds; I don't do it much myself. I think they
are good choices, but I also think I know enough to do a little better.
HOWEVER, I FIRMLY BELIEVE THAT EVERYONE WHO HAS TO ASK FOR INVESTMENT ADVICE
FROM OTHERS SHOULD ONLY BUY INDEX FUNDS OR NEAR-EQUIVALENTS FOR THEIR STOCK
HOLDINGS. If and when they have educated themselves enough to make confident
independent decisions, they can start making non-indexed choices. If they
choose a non-indexed stock fund just because someone else told them it was a
good decision, then it is ipso facto a bad decision, even if it happens to make
money (just as drawing to an inside straight is a bad decision, even if you
fill it). And they should have more than half of their stock investments
specifically in an S&P 500 index or its near-equivalent until they have the
education to do otherwise.
What if your friend wants instead advice on investing for a goal less than 10
years in the future? I would not recommend anything but short-term corporates,
5-year treasuries, and money markets (even though I believe that REITs and Junk
Bonds are a good investment), again on the grounds that people who need advice
should make those more conservative investments until they have acquired the
education to decide about more volatile investments.
After getting your friend started as described above, tell your friend that the
only help you will give from now on is in education. You will help find
appropriate references (e.g., www.investorhome.com). And you will be willing to
be a sounding board for her to test her investing conclusions on. But you will
not advise her any more about what to invest in than the above.
Bill Jones
------------------------------
Date: Sun, 1 Jun 1997 10:02:05 -0400 (EDT)
From: eric <73354.3477@CompuServe.COM>
Subject: Dow approaches?
Has anyone been doing the "Dow 10 "approach? Or the "Dow 5", or the "Foolish
four" (as per the Motley fool).
------------------------------
Date: Sun, 1 Jun 1997 10:03:03 -0400 (EDT)
From: curious@sirius.com
Subject: Natural gas drilling programs?
Any opinions on natural gas drilling programs as tax shelters?
------------------------------
Date: Sun, 1 Jun 1997 10:03:45 -0400 (EDT)
From: PRIMO <primo@fast.net>
Subject: RE: Kev's "Rules of Thumb" for Financial Security
> 4. Mortgages should be no more than twice your yearly salary. Again,
> you might be debt poor with anything more. Save money so that you can
> ensure your mortgage will be only this size. Buy a condo or a small
> house if that is all you can afford. Many people do this for the tax
> advantages.
>
>> On this one, I'd add that if possible, it's a good idea to try to
>> put at least 20% down so that one can avoid paying PMI.
========================================================================
I disagree. If you are not careful, your downpayment could evaporate if
you are forced to sell in a declining real estate market.
In some real estate markets, it may not make sense to purchase real
estate. In Northeast Pennsylvania for instance, I have seen people sell
their homes and not able to pay off their mortgages even after owning
the home for 5 years or more. In some cases, homes sold for 70% of
their original value after requiring 2 years or more to find a willing
buyer.
Unless values in your real estate market are appreciating and you are
planning to stay in place for a significant period of time, buying a
home may not be a sound financial decision. Like any other investment,
one must do their homework BEFORE committing their $$$$$$$$$$.
PRIMO
------------------------------
End of persfin-digest V4 #42
****************************
Articles sorted by: [Date]
[Author]
[Subject]