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Subject: persfin-digest V4 #58
Date: Mon, 14 Jul 1997 14:57:53 -0400 (EDT)
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persfin-digest Monday, July 14 1997 Volume 04 : Number 058
IN THIS ISSUE:
ADVERTISEMENT: dataTNG [Oppenheimer Software <Connect-Sales@mcimail.com>]
Was New York Times Article on Debit Cards Lifted from Persfin-Digest? [Ke]
Passport application/reply [hic@tiac.net (Howard I. Cohen)]
The Ph.D Dilemma [PRIMO <primo@fast.net>]
How Can One Make Small, Regular Investments? [Susan Mangiero <mangiero@sh]
Subject: Which Credit Card Customers Banks Love The Most [Kent Harker <kh]
Three types of joint accounts: what's the difference? [raj@shiela.sbay.or]
Re: Judging "Return on Investment" for a Paid Off House? ["rip west" <rip]
INVSTORGUIDE [BobWo@aol.com]
Re: Ph.D. economics [Fred Decker <deckerf@ucs.orst.edu>]
Re: Best Way to Buy Stocks? [Randy Barnes <rbarnes@atl.mindspring.com>]
Re: How can I get a passport? ["Narasimhan, Seshadri" <NarasimhanS@bernst]
Re: 401K vs. 457 plan? [Steven Klein <SKLEIN@snm.org>]
budgeting-averages/benchmarks [Gary Shaivitz <ShaivitzG@furash.com>]
Re:There Are Other Benefits To a PhD That Make Up For Lost Money [France]
tax lien certificates as investments? [Leo Beilin <leo.beilin@pobox.com>]
Debit Card Article in New York Times [David Martin <dmartin@seabreeze.hc.]
Re: Best Way to Buy Stocks? ["Ken Meinken" <kmeinken@one.net>]
Re: Lifetime Guarantee [Avrum Lapin <avrum113@cyberg8t.com>]
Re: Debit Card Hype [georgene@secular.org (Georgene Harkness)]
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Date: Mon, 14 Jul 1997 14:16:41 -0400 (EDT)
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------------------------------
Date: Mon, 14 Jul 1997 14:26:31 -0400 (EDT)
From: Ken Stone <kstone@pantheon.yale.edu>
Subject: Was New York Times Article on Debit Cards Lifted from Persfin-Digest?
In this past Sunday's NYTimes (7/13) there was a front page article about
the relative risks and benefits of debit cards. The points mentioned in the
article were almost exactly the same as those that have been made in this
forum over the past few weeks. I could not help but wonder whether a
journalist/lurker in this group may have gotten the idea from here.
Ken
(Editor's Comment: There is a New York Times journalist (David Cay
Johnston) who's email address is:
davidcay@nytimes.com
who has been a Persfin-Digest subscriber for a long time. He's posted a
number of articles to the list and left his email address, so I feel free
posting it here.
What are the rules of journalistic ethics when someone "borrows" ideas
from one medium and uses it in another? Certainly, the Times has the
right to run a story on debit cards. I have no idea whether David had any
relationship to the story, passed on any ideas, etc. If it *did* happen,
shouldn't the source be cited, as in an academic journal? Or does this
apply only if someone cites a Times article only?
>From time to time, a number of journalists for nationally recognized
finance magazines have asked me to post anonymous queries. Some of them
actually turned into articles. So when you visit your favorite newsstand
and browse your favorite magazines, the source of some of these articles
may be right here. -IK)
------------------------------
Date: Mon, 14 Jul 1997 14:27:33 -0400 (EDT)
From: hic@tiac.net (Howard I. Cohen)
Subject: Passport application/reply
Dear Bob:
I'm not an expert, don't work for Uncle Sam, but here are a couple of
suggestions;--
Ask at your local post office. Some city POs have the application forms,
some do not. But should at least be able to answer simple questions of
procedure, costs, etc. Or where the nearest PO is that handles them. Could
call your local office of The State Department. Most big cities have one.
Boston's O'Neil Building is the place we go to locally. Also look up US
Government in the Business Listings of your local phone book. I live in a
suburb of Boston, and I just now called the Boston office listed number,
617-565-6990.
Got a wealth of detail from the recorded 'hello' message, answering just
about all your questions, along with a handful of good suggestions on how to
proceed. For example, for $65. extra you can get 3 day turn around. Not bad.
But pop for a long distance call - and try the Boston number. They mention a
website and even suggests your local library if you're not in the Internet
I think a passport for a 4-5 year is a very wise thing to have, if not
mandatory. I forget exactly what the 'nice lady' said about fees for minors,
maybe $40. It's certainly not cheap for you, your child or me to renew, but
it is a good looking document and certainly useful. Also the process seems
quite efficient, lots of resources and apparently lacking to the classical
bureaucratic nonsense. IMHO that's worth a few dollars more.
It's smart to have a passport, even if you're not traveling. Mine was
invaluable with the local Vehicle Registry people when I misplaced my wallet
with driver's licence in it. It is a great form of picture ID.
Get busy, good luck, and have a great trip.
Howard
Howard I. Cohen, Director
CAD - Special Interest Group
Boston Computer Society
<hic@tiac.net>
------------------------------
Date: Mon, 14 Jul 1997 14:28:14 -0400 (EDT)
From: PRIMO <primo@fast.net>
Subject: The Ph.D Dilemma
> From: "Dalmia, Bipin K." <DALMIABK@phibred.com>
>
> hello all:
>
> i am a little dismayed at all this talk about the financial aspects of
> getting an advanced degree. although the financials should be part of
> the decision, i think that there is a lot more to getting a Ph.D. that
> just that. if one makes the decision to get a Ph.D. just because the
> 'financials' work out, i can almost guarantee that he/she will never
> finish the research and drop-out. getting a doctorate requires a
>genuine commitment to the science behind the fundamentals. i can say a
>lot more, but i do not want to sound condescending so i think i'll stop here.
>
> bipin (Ph.D.)
>
Good response. It appears that some people don't have a clue as to what
obtaining a doctorate is all about. Also, I find it disappointing that
so many people measure their success in life by a paycheck or financial
portfolio.
------------------------------
Date: Mon, 14 Jul 1997 14:28:46 -0400 (EDT)
From: Susan Mangiero <mangiero@shu.sacredheart.edu>
Subject: How Can One Make Small, Regular Investments?
My neighbor who is a city policeman inquired about whether it is possible
to make regular small contributions to any stock or bond mutual funds. I
don't know the answer and thought perhaps someone on this list serv
might know. Also, I'm not sure what my neighbor meant by "small" but let's
say about $50 per week. Thanks in advance.
------------------------------
Date: Mon, 14 Jul 1997 14:30:22 -0400 (EDT)
From: Kent Harker <khark@cyberhighway.net>
Subject: Subject: Which Credit Card Customers Banks Love The Most
>Banks *love* creditors that pay their balance in full each month. Why?
>There's no risk. Payments received pose a 0% risk to the bank, right?
>And they *still* make money.
I think people are missing the point that the 2% to 4% the merchant pays
out of each purchase is $60 to $120 on a $3000 purchase and they get it
up front. The 16% to 20% + is an annual rate so that makes quite a difference.
Even if the balance is paid off each month, with $3000 monthly purchases
the bank would make between $720 and $1440 in a year with very little risk.
Hardly a DEADBEAT!!!
Kent Harker
------------------------------
Date: Mon, 14 Jul 1997 14:31:01 -0400 (EDT)
From: raj@shiela.sbay.org (Rajesh K. Singh)
Subject: Three types of joint accounts: what's the difference?
What's the difference between the following types of accounts for
a married couple.
o Joint account in tenancy
o Joint account with Right of survivorship
o Community property
How does this treatment differ for
o Simple checking and savings account (1099-INT)
o Mutual fund accounts (1099-DIV)
o Brokerage account for stocks (capital gains and dividents)
Again, for a married, is there any advantage to choosing one over the
other? Thanks a lot.
- -raj (raj@shiela.sbay.org)
------------------------------
Date: Mon, 14 Jul 1997 14:31:56 -0400 (EDT)
From: "rip west" <rip@montrose.net>
Subject: Re: Judging "Return on Investment" for a Paid Off House?
>
>
> One way to consider the return on this investment might be to lump together
> a year's worth of payments that would've been paid and to consider that
> amount to be the "yield" on this investment. If the payments were
> $1000/month then this would producing 12%. A second possibility would be
to
> calculate a year's rent in comparable housing (perhaps this would be more
> or less than the mortgage payment) and to consider that amount to be the
> more "proper" return on the investment.
>
Why not take the down payment plus all your mortgage payments as negative
cash flows and use the appraised value of the house less the mortgage
balance at the time of valuation as a positive cash flow and figure the
IRR.
rip
------------------------------
Date: Mon, 14 Jul 1997 14:33:22 -0400 (EDT)
From: BobWo@aol.com
Subject: INVSTORGUIDE
I'm impressed with a web site called Investorguide. It is a very complete
directory to finance web sites and much, much more. Yahoo calls the
directory "fantastic". They also send out a very well written, concise, and
free weekly newsletter. Check out Investorguide at:
http:/www.investorguide.com.
Bob
(Editor's Comment - I updated the links to our list of personal finance
Web sites at:
http://www.tiac.net/users/ikrakow/pagerefs.html
InvestorGuide is there, as well as many others, including many auto
buying, home mortgage, and other investment links. Happy surfing! -IK)
------------------------------
Date: Mon, 14 Jul 1997 14:36:13 -0400 (EDT)
From: Fred Decker <deckerf@ucs.orst.edu>
Subject: Re: Ph.D. economics
Analysis and discussion here showing excessively high economic
cost and delayed break-even point for attaining Ph.D. should prompt
forward-looking academic leaders to get out of the rut of assistantships
and residence requirements for Ph.D. Instead, use of web to foster
advanced studies and development of prowess at research for new knowledge
production or problem solving should make possible the completion of
programs without the large economic sacrifices described.
Fred W. Decker, OSU Emeritus Faculty
(Editor's Question - How about the "rut" of residence requirements for and
tuition payments for an undergraduate degree? With technologies such as
the Web and broadband communications, will distance learning replace
in-residence colleges? Is the $100K+ price tag worth it? -IK)
------------------------------
Date: Mon, 14 Jul 1997 14:36:57 -0400 (EDT)
From: Randy Barnes <rbarnes@atl.mindspring.com>
Subject: Re: Best Way to Buy Stocks?
Mike, Boris, et al,
I use Paine Webber, Schwab, and ETrade. (I'm in the process of moving my
Internet account to PBS-Pacific Brokerage Services.) In the various
accounts the commissions charged varies, obviously PW is higher, but
it's not that significant. The Internet guys usually charge more for a
limit order and often don't have as many order options available. I
trade some stock options, and not everybody will take a stop order.
If you're building an account based on mindless selection, such as the
Dow dogs/Four or something like that, you'll want to use an Internet
broker with ridiculously low fees. My advice is to just do it whatever
it is. If you're new at stocks I think you'll be better off at Charles
Schwab. I really think you'd be better with a full service broker, but
the chances of you finding a good one are so slim that it's not worth
the risk. Schwab has live people to help you 24 hrs a day, and their
telephone quote and trading system is the best in the biz. The
commissions are higher than the deep discounters, but the extra services
are well worth it.
I trade very frequently and spend a good bit of time on-line. Here are
some of my favorite stock related sites.
http://www.tradepbs.com/ - Pacific Brokerage Services. A great
portfolio tracker that has bid/ask option quotes as well. Find historic
pricing here too.
http://www.stocksmart.com/ - Go to the "YourPortfolio" area. You can
track a real or paper portfolio including real dates, commissions etc,
and all the calculations are handled for you. It'll also email your
statement to you daily weekly or monthly. It's the coolest.
http://www.investools.com/cgi-bin/askcharts.pl - very good charts with
lots of technical features/indicators, all free.
http://www1.bigcharts.com/nscp/3.x/ - more charts with technical
features.
http://www.stockinfo.standardpoor.com/ - The S&P website. A must.
http://portia.advanced.org/3088/ - EduStock allows you to trade a live
market with a $100,000 imaginary account. Loose here first before
jumping in with you real money.
If any of you want my full list email me personally. I'll sent it first
chance I get.
- -Randy Barnes
------------------------------
Date: Mon, 14 Jul 1997 14:39:30 -0400 (EDT)
From: "Narasimhan, Seshadri" <NarasimhanS@bernstein.com>
Subject: Re: How can I get a passport?
Go to the following URL:
http://travel.state.gov/passport_services.html
Everything you always wanted to know about passports ... but were afraid
to ask. And yes, you can also get your passport from a post office ...
maybe not your local one ... but many of them have passport services.
HTH
* Sai
------------------------------
Date: Mon, 14 Jul 1997 14:40:02 -0400 (EDT)
From: Steven Klein <SKLEIN@snm.org>
Subject: Re: 401K vs. 457 plan?
My company has a 457 plan available to us employees. Now my
company is introducing a 401K (in both plans the employee is the only
contributor). Does is make any sense to continue to contribute to the 457
Plan instead of the 401K.? Also the 457 is strictly with Putnam, while the
401K will be with Scwab.
Steve Klein
------------------------------
Date: Mon, 14 Jul 1997 14:40:27 -0400 (EDT)
From: Gary Shaivitz <ShaivitzG@furash.com>
Subject: budgeting-averages/benchmarks
I am in the process of preparing household budgets for myself and two
other families. Annual incomes are approximately 70K, 85K, and 100K.
Where can I find averages for household budget categories for families
in these income ranges? All families live in the Baltimore area
(county).
Thanks!
------------------------------
Date: Mon, 14 Jul 1997 14:51:19 -0400 (EDT)
From: Francesca Pardo <fp10@cornell.edu>
Subject: Re:There Are Other Benefits To a PhD That Make Up For Lost Money
>Francesca Pardo <fp10@cornell.edu> wrote:
>> . . . the increase in salary for holding a Ph.D. doesn't typically pay
>>enough
>> to make up for the reduced salary during the years it takes to get a
>> Ph.D...
>GeorgeS <pip@shore.net> responds:
>Just a side note, there are benefits to a PhD that have nothing to do with
>money. [Many fine examples deleted]
My original post actually was intended to point out that Ph.D.'s were
already pursuing their degrees for something other than money (love of
knowledge, desire to avoid real-world concerns, company of people who share
your interests, etc.)
I myself have quite enjoyed my time as a graduate student, and consider it
to have been well worth whatever financial sacrifice was involved. My
concern was with the impending bill which could make those financial
sacrifices much greater.
Given the length of time to complete a Ph.D. and the lack of job prospects
for Ph.D.'s when I started my program, I would not have felt comfortable
taking on a debt load to obtain a Ph.D. whatever the non-monetary rewards.
I believe that if we make graduate education much more expensive by taxing
tuition waivers we will see fewer people deciding that it's worth pursuing.
- -Francesca
(Editor's Comment - I had a similar experience. I was in a PhD program in
history in the late '60s. I enrolled in the program because of my love of
history. However, even back then, job prospects for history PhDs were so
dismal that I had to look reality in the face and find an occupation
(computer programming) that would put bread on my family's table,
I think this moment of truth comes for most PhD candidates. One can avoid
the economic realities of one's decision only so long. Even in the
rarefied world of academia, talk of dollars and cents (grant proposals,
departmental funding for projects, budgets) is probably as common (perhaps
more so) than in business.
In my opinion, the business world is more honest. For-profit companies
are held to the discipline of the bottom line. In the academic world, the
ideal might be the monk-like pursuit of truth, while the reality is also
based on the bottom line. Terms like "schizophrenia" and "hypocrisy" come
to mind. -IK)
------------------------------
Date: Mon, 14 Jul 1997 14:51:54 -0400 (EDT)
From: Leo Beilin <leo.beilin@pobox.com>
Subject: tax lien certificates as investments?
Does anybody have some pointers to information (books,URLs) on tax lien
certificates as investments?
Thanks
------------------------------
Date: Mon, 14 Jul 1997 14:52:52 -0400 (EDT)
From: David Martin <dmartin@seabreeze.hc.ti.com>
Subject: Debit Card Article in New York Times
There has been discussion on the list recently about debit
cards. In Sunday's New York Times, there was a front page article
about the issue as well. It basicly repeated everything that has been
said in persfin-digest, along with some quotes from people in industry
and some real world examples.
-David Martin
------------------------------
Date: Mon, 14 Jul 1997 14:53:56 -0400 (EDT)
From: "Ken Meinken" <kmeinken@one.net>
Subject: Re: Best Way to Buy Stocks?
>
> This will be a real basic question. I have purchased and own a number
> of no-load mutual funds which I buy direct from the fund house like
> Vanguard, Dreyfus, Fidelity, etc. My question is what do your readers
> recommend as the most cost efficient way to purchase individual
> stocks. I may look at purchasing the stocks comprising the "Foolish
> Four".
>
> How actually does one purchase stock through a broker. Who might your
> readers recommend?
>
> I have heard of discount brokers. How are the commissions set. Does one
> pay based on the $ value of stock purchased or the number of shares or by
> the numbers of individual companies purchased?
>
Mike,
Commissions are set by how ever the broker decides to set them. Some
set a certain fixed price no matter what the number of shares.
Others set fixed prices within certain limites (e.g. $25 for up to
500 shares). Others have complex formulas depending on the price of
the shares and the number of shares purchased.
However, there is more to the costs than just the commissions. If
one broker charges you $10, but the execution is a quarter point
higher, then 100 shares will cost you more than a $25 broker who
gets you a better price. Unfortunately, it's hard to who will get
you the better price.
How does one purchase through a broker? Well first you must set up an
account. Most require a certain amount of money deposited before
they will set up an account. Once you have an account set up, you can
either telephone the broker with an order, or enter it
electronically (depending on how the broker is set up.) You can enter
market orders (buy xx shares at the current price), or a limit order
(buy xx shares at yy price). I almost always use limit orders.
Chosen properly, most of the time you will get your stock at the
price you want. But sometimes you won't get it at all. Then you can
change the order to a higher price if you want.
As for "cost efficient", that depends a lot on how you trade, what
size trades, how often, etc.
Obviously if you are only purchasing small amounts ($100 at a time),
then you might be better off with a dividend reinvestment plan (WSJ
had an excellent list of 50 "no load stocks" that can be purchased
directly a week or two ago). There are several organizations which
can get you started with single shares for companies that require
that before you can enroll in their DRIP programs. See:
http://www.better-investing.org/index.html and
http://netstockdirect.com/
For the Dow Dogs, a discount or deep discount broker would be good
assuming you are investing at least $5,000 or preferably $10,000.
If you are not putting that much into the strategy, I think you'd be
better to either stick with no load mutual funds, or some "buy and
long term hold" strategy to minimize transaction costs.
Personally, I use Aufhauser as a discount broker and have been very
satisified for several years. They are much cheaper than Fidelity or
Schwab and offer must better electronic access than either of
Fidelity or Schwab. They provide good phone access and a lot better
service than Merrill-Lynch.
Ken
------------------------------
Date: Mon, 14 Jul 1997 14:54:39 -0400 (EDT)
From: Avrum Lapin <avrum113@cyberg8t.com>
Subject: Re: Lifetime Guarantee
Louis J. Schwarz, CFP, RFC wrote:
>.... I will write a letter to the Crestar to point out that I have a lifetime
free checking account for my life, and to ask to see if they can void
this lifetime guarantee by buying other banks?"
It would not hurt to write but my guess is that the corporation
which offered the lifetime guarantee has ceased to exist and therefore the
guarentee is meaningless. The only way around this would be if you could
construe that the guarantee is a bonefide liability.
I had a no minimum deposit/no check charge account with a newly (at
the time) established bank in CA but guess what - after they moved out of
the storefront into a building that looked like a bank they changed the
policy. At that time I changed banks to another newly established bank
(also in a store front) which also offered "charter members" the same
minimum deposit/no check charge plan.
The second bank still honors the no charge plan after more than 10
years . I wish it were otherwise but both of the banks are still
prospering. While their coverage areas have some overlap they really
complement each other.
Both of the banks specialise in the small business accounts. While
they do car loans etc they gladly tell applicants that car loans are
cheaper at the big banks. In this part of CA we still have a number of sub
regional banks which make a good living out of various niche markets and
these are definitely more user friendly than to the BofA and Wells-Fargo.
Since these smaller banks lend money they need depositors but
preferably depositors who just make deposits and write checks. My bank even
has live friendly tellers, short lines (and an ATM machine outside).
The persons who want a replacement for Fleet bank should be looking
at the local small town bank or an S&L.
Avrum Lapin
Upland., CA
------------------------------
Date: Mon, 14 Jul 1997 14:55:36 -0400 (EDT)
From: georgene@secular.org (Georgene Harkness)
Subject: Re: Debit Card Hype
>read your agreement word for word, nobody else can tell you whether your
>debit card is a good idea or not.
>>debit card is lost or stolen, then someone can charge thousands and
>>thousands without any recourse for me (vs. $50 liability if a credit card
>>were stolen). I am off to the bank today to get a simple ATM card.
>
>How do you know this? My debit card agreement with Elan states very
>plainly that I am liable for only $50 of unauthorized usage on my debit
>card if I notify Elan within 24 hours after *I* discovered the loss of
>my card. Very simple. You would have no more difficulty proving
I don't disagree with your main premise: read your agreement!
However, there are some other considerations that might make you think
twice.
With a credit card, you notice either 1) your card is stolen, or 2)
there are unauthorized charges on your bill, in which case you make a
quick call, write the requisite letter, a new card is issued, and the
problem is solved.
With a debit card, however, you may well not realize your card has
been stolen until several merchants serve YOU with notice that the
past ten, twenty, or however many, checks you wrote bounced, having no
idea your account was compromised. You may only be liable for $50
(who wants to pay someone $50 for exactly nothing?), but what about
all the bounced check charges (issued by the merchants who don't care
WHY the check bounced: they are going to charge you anyway), the
hassle of going to the bank and explaining the problem, and I don't
even want to **think** about the troubles involved trying to get my
name off a bad-check-writer list maintained by one of those anonymous
check-verification companies who aren't interested in hearing your
explanation.
Perhaps if you use the debit card ALL the time, and never write a
paper check, you might be warned soon enough to prevent or solve this
problem quickly. Me, I just cut up my debit card. And I don't think
it's hype or hysteria. It's just good sense.
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End of persfin-digest V4 #58
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