Go to Jeff Salisbury LWGate Home Page.From: persfin-digest <owner-persfin-digest@shore.net>
Subject: persfin-digest V4 #61
Date: Mon, 21 Jul 1997 21:02:21 -0400 (EDT)
Articles sorted by: [Date]
[Author]
[Subject]
persfin-digest Monday, July 21 1997 Volume 04 : Number 061
IN THIS ISSUE:
ADVERTISEMENT: MCI FAX REPLY SERVICE [Oppenheimer Software <Connect-Sale]
Re: Finance Books for Children [georgene@secular.org (Georgene Harkness)]
401(k) Plan Providers - Complaints about Met Life ["Timothy A. Budd" <bud]
Re: Credit Card with car rental insurance [bonsai@world.std.com]
RE: Money for College? Retaking SATs will Help [Joy Kyriakopulos <joyk@F]
SAT criterion for college [owner-persfin-mod@shore.net]
Living Trust or Will? [Alan W Feistner <feistlund@juno.com>]
re: Money for College [Jacqueline.D.Richardson@Hitchcock.ORG (Jacqueline]
Debit Cards ["David J. Churchill" <churchilld@worldnet.att.net>]
VUL is SOMETIMES a bad idea [JONESW@CCSUA.CTSTATEU.EDU]
Re: Value of attaining Ph.D. [Fred Decker <deckerf@ucs.orst.edu>]
Calculating year-to-date returns? ["rip west" <rip@montrose.net>]
Re: Investment Clubs ["rip west" <rip@montrose.net>]
Cost Basis formula and tracking DRIPS [David Bryan <dbryan@MAIL.JUS.STATE]
Re: Calculating year-to-date returns? [Rich Carreiro <rlcarr@animato.pn.c]
Re: Best Strategy for IRA Payments? [Rich Carreiro <rlcarr@animato.pn.com]
Year To Date Return Calculation [Nick Lebredo <NLebredo@exchange.ureg.oh]
Re: Timing of IRA Contributions [Nick Lebredo <NLebredo@exchange.ureg.oh]
Re: What's the Family Income Cutoff for Financial Aid? [borisv@ctron.com]
Re: Investment Club Experiences [Scott Barnett <sab@newton.crisp.net>]
paying my daughter's way through college - How Should I Do It? [APRESTON@]
Cap. gain taxes on sale of home? [Arnold Goldberg <ajg@pagesz.net>]
The Truth About Credit Cards [Victor Daniel <vdaniel@olympus.eng.temple.e]
Re: Money for College [Avrum Lapin <avrum113@cyberg8t.com>]
Re: Investment Club Idea [ANDREA WELCH <ACE.AWELCH@MEMO.ACEHARDWARE.COM>]
College Tuition Exemption is Not a Special Interest Loophole [0500101@ACA]
Re: Joint Tenancy [BOB FORD <BOB_FORD@compuserve.com>]
Re: Cell Phones [BOB FORD <BOB_FORD@compuserve.com>]
How to Calculate Year-To-Date Returns [JONESW@CCSUA.CTSTATEU.EDU]
====================================================================
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: Mon, 21 Jul 1997 19:24:41 -0400 (EDT)
From: Oppenheimer Software <Connect-Sales@mcimail.com>
Subject: ADVERTISEMENT: MCI FAX REPLY SERVICE
MCI Fax Reply Service
A Flexible, Low Cost, Fax on Demand Service
Distribute Your Information When They Really Want It -
Not When You Think They Want It
New Rules/Regulations, Advertisers Deadlines, Investor
Relations, Media Information, Technical Support, Late
Changes, Newsletters, Profressional Advice, RFPs, Project
Updates, Application Forms, Schedules, Catalog Revisions,
Political Announcements, Product Updates/Recalls, Legal
Class Action Notifications, Special Events, Brochures,
Inventory Availability, Mortgage Rates, Product Datasheets
Supports Multiple Catalogs
Multiple Retries on Busy Numbers
Toll Free 24X365 Customer Support
Detailed Transaction Reporting Provided
Fax Transmitted Within Seconds of Request
Professional Actor Voice Prompts Available
Update Documents Directly From Your Fax Machine
Rates as low as $.31/minute for select customers
Oppenheimer Software Authorized MCI Messaging Agency
Tel:800-390-9379 E-Mail:Connect-Sales@mcimail.com
Fax:800-492-6862
------------------------------
Date: Mon, 21 Jul 1997 19:27:42 -0400 (EDT)
From: georgene@secular.org (Georgene Harkness)
Subject: Re: Finance Books for Children
>
>Are here any other finance/money-managing/banking/investing/economics
>publications for children?
Zillions is a bi-monthly magazine for kids 10 and up. It costs $16
per year and $28 for two years. Write: Subscription Department, Box
54861, Boulder, Colorado 80322-4861.
This information is straight out of the Consumer Reports magazine.
Hope it helps.
------------------------------
Date: Mon, 21 Jul 1997 19:28:15 -0400 (EDT)
From: "Timothy A. Budd" <budd@owl.csusm.edu>
Subject: 401(k) Plan Providers - Complaints about Met Life
Our firm has been using Met-life as a 401(K) plan provider. To date, it
has been a less-than-stellar effort. We are only given 4 options in which
to allocate our funds (growth, stock index, treasury, and a "diversified"
option). These options have not provided adequate returns. I am
attempting to get some more information to give to our firm administrator
more options. Does anyone have any suggestions for a fairly low cost,
401(k) plan that can provide service for approximately 40 employees?
Thanks! Tim
------------------------------
Date: Mon, 21 Jul 1997 19:28:49 -0400 (EDT)
From: bonsai@world.std.com
Subject: Re: Credit Card with car rental insurance
Someone posted recently looking for a card with collision/loss/damage
insurance coverage on rental cars, since AT&T Universal is discontinuing
this coverage as of late September <boo hiss>.
I just applied for an MBNA Platinum Plus card after being told over the
phone that it does offer this coverage on rental cars (both domestic and
overseas); there is no annual fee but the APR is currently 15.65% so this
may not be a great card for those who carry a balance. They also offer an
optional "Plus Miles" program at a $35 annual cost; this program rewards
one Plus Mile (apparently good on many airlines, one of those
they-buy-the-ticket deals?) for every dollar in purchases charged to the
card.
Check them out at 800.457.3714.
Bonnie
------------------------------
Date: Mon, 21 Jul 1997 19:29:42 -0400 (EDT)
From: Joy Kyriakopulos <joyk@FNAL.GOV>
Subject: RE: Money for College? Retaking SATs will Help
I leave it to others to debate the ethical and legal aspects of
this question. On a practical matter, however, it is well known
that if one studies hard for the SAT tests, and takes them over again,
significant increases in scores can result. When I was in high
school, I took the SAT tests a second time without spending any
time in preparation for the second test. My verbal scores rose almost
a hundred points because I knew better what the test was about and
was able to push myself harder. There's lots of books out on how
to study for the SAT tests. After taking the SAT a second time,
John Doe can reapply to his state school and pay less tuition. I
wish him good luck.
Joy Kyriakopulos
------------------------------
Date: Mon, 21 Jul 1997 19:32:43 -0400 (EDT)
From: owner-persfin-mod@shore.net
Subject: SAT criterion for college
Bob Ford asked some intriguing questions in a post about State College
A, which has a rule that "they only accept students with a SAT score of
XXX or higher and John's SAT was lower." The nature of his questions
indicate that it is irrelevant whether the SAT is a reasonable criterion.
Bob is asking whether it is right and proper for a state college to
establish minimal standards for entrance, not whether SAT performance
itself is a reasonable standard (that is a separate question, and I trust
Bob would not try to confuse the issue by asking two complex questions at
once).
In many states, the justification for paying for state colleges from the common
public purse is to assure that people who satisfy certain moderately high
educational criteria are encouraged to acquire a college education even if they
cannot afford the full cost. The resulting increase in the number of
highly-educated citizens is assumed to redound to the benefit of the public in
various ways.
The public specifies that criteria in addition to a high school
diploma be used because (1) taxpayers want to limit their costs, as each
student in a state college costs taxpayers maybe $5,000 to $10,000; and (2) the
students who satisfy the criteria will be able to learn more when there are no
less-prepared students slowing down the class, thus improving the quality of
the education received, thereby presumably benefitting the public even more.
The public has the ultimate responsibility for setting those criteria, which in
this Republic of ours they delegate to their legislature, which in turn allows
professionals (college administration) to specify the details of the criteria
within certain parameters set by the legislature. The legislature can at any
time change those parameters, e.g., say that a high school diploma with a B
average gives automatic admittance regardless of SAT score.
Bob's questions clearly imply that Bob feels that taxpayer-supported higher
education is an entitlement -- every one who want to go to college is entitled
to have it paid for from the public purse. That is socialism. These
do-gooders with their socialistic ideas should recognize that our free
enterprise system allows anyone to go to college IF he is willing to pay
the full cost to a private college that will agree to take him (and you
can always find such a private college somewhere in these United States of
ours). But cheap higher education (i.e., public college) is not an
entitlement.
Herewith the proposed questions and IMNVHO some reasonable answers:
>1. Is State College A discriminating against John on the basis of mental
>ability? If it is discriminating, is it legal to do so?
Yes, it is discriminating, not on the basis of mental ability but on the basis
of an inability to score decently on the SAT. It is not just legal to do so,
it is part of the job of the state college to be discriminating. It would be
abdicating its fiduciary responsibilities to taxpayers if it did not do so.
>2. Is State College A saying in effect "John, you are not smart enough to
>come to our college and learn to be smart"?
No, it is saying in effect, "John, you have not completed the minimum
requirements necesssary to give you an decent chance to succeed here. Go get
tutored elsewhere until you satisfy the criteria." College doesn't help people
become smart, it helps smart people acquire knowledge and understanding
("smart" being defined in terms of satisfying minimal reasonable criteria).
>3. Since both John and his parents pay state taxes that support the
>college, and the college has plenty of room for John, is it morally and
>ethically right to deny John admission no matter what his SAT scores are?
It would be ethically wrong to accept John; that would be failing to carry out
the responsibilities entrusted to the college by the taxpayers of that state,
which is to not waste the money it would cost to keep John in classes when he is
not sufficiently prepared to keep up with his classmates. If John is entitled
to go, so are all the others like John, which would cost taxpayers piles more
for something that those taxpayers do not feel is worth the cost to them.
>4. Is it morally and ethically right to deny John admission to college
>because of his low SAT test scores when the same college gives full
>scholarships to people with even lower SAT scores than John.
This is vacuous, because the assumptions given include the statement that this
doesn't happen: "they only accept students with a SAT score of XXX or higher".
Bob, if you are going to change assumptions in midstream, none of your
questions can be answered.
Of course, hardly any college uses the SAT alone as a necessary and sufficient
condition for admittance. A public college may have one SAT level as a
necessary condition (XXX in this case) and a higher one (say XXX+150) as a
sufficient condition, with the statistically-less-likely-to-succeed people
between those scores admitted only if there are additional reasons why it would
be to the public's benefit to have them in the college.
The key principle is that, "He who pays the piper calls the tune." At a public
college, the public pays the majority of the costs, so the public has the right
to decide who shall receive the benefit. How hard is that?
Bill Jones
------------------------------
Date: Mon, 21 Jul 1997 19:32:54 -0400 (EDT)
From: Alan W Feistner <feistlund@juno.com>
Subject: Living Trust or Will?
I am trying to determine when it is better to have a living trust than a
'will' to manage assets for transfer upon death? I read trusts are
preferred when a couple has assets above $600k. This is amount that an
individual can pass to heirs without incurring large estate taxes. Other
articles recommend living trusts for families with assets of far less
significance.
My wife and I are in our mid-thirties with two very young children. We
have no debt and some savings, primarily in mutual funds. We move
frequently (I am in the Army) and therefore we do not own a house. I
believe I should prepare our estate for two potential scenarios. First,
should I die and my wife survives me. The second scenario is if my wife
and I die simultaneously and our children survive.
Now our mutual fund accounts are held joint with rights of survivorship.
If a living trust is recommended, how important is the home state of
residency? I currently claim South Dakota and maintain this residency
whenever we move. According to a recent FORBES article, S.D. is a good
state for living trusts. Finally, what is the best way to word a living
trust so we don't have to pay for costly revisions when we have minor
changes in our family and/or financial situation?
If a trust is not recommended, what about registering our mutual fund
accounts as "transfer-on-death (TOD) assets?" Vanguard calls this a
"Directed Beneficiary Plan." This type of registration apparently avoids
probate by sending assets directly to beneficiaries upon both parent's
death.
Thanks.
Alan -- feistlund@juno.com
------------------------------
Date: Mon, 21 Jul 1997 19:33:07 -0400 (EDT)
From: Jacqueline.D.Richardson@Hitchcock.ORG (Jacqueline D. Richardson)
Subject: re: Money for College
- ---- Bob Ford wrote:
A good friend of mine, a high school student wants to go to college when he
graduates from high school.
(snip)
4. Is it morally and ethically right to deny John admission to college because
of his low SAT test scores when the same college gives full scholarships to
people with even lower SAT scores than John.
- ----------
(Hmmmm, sounds like some jocks are getting in - nothing against jocks, but
let's be an equal opportunity STATE school.)
Anyway, my opinion (nothing legal) is that if they aren't applying the criteria
(certain level on SAT scores) equally across the board he has a leg to stand
on. Now I'm sure he doesn't want to start legal proceedings, but you would be
amazed at what he can accomplish if he wants to put a little time and effort
into it.
He needs to gather his facts about his versus other's SAT scores and
admission acceptance. Then he needs to construct a very factual, businesslike
letter (no emotion, threats and that sort of thing) and send it to an
assortment of people such as the President of the school, each member of the
Board of Trustees, etc. If his letter comes across as a well thought out and
presented case of what is actually happening at the school and its
ramifications I would bet he would get some action and reconsideration. I
know, I know, he shouldn't have to go through all of this, BUT if he really
wants to go to college he will find a way and this is as good a way as any to
start with. It is amazing what happens when the President or Trustee of an
organization gets a letter such as this. It usually gets attention, especially
if it is presented in a "professional" manner. They probably won't change
their policy across the board, but I bet he gets in.
Hope this helps and good luck to your friend.
jackie
------------------------------
Date: Mon, 21 Jul 1997 19:36:12 -0400 (EDT)
From: "David J. Churchill" <churchilld@worldnet.att.net>
Subject: Debit Cards
In response to the original post re: why do people dislike debit cards,
one reason I will tell you is that at least for debits from ATM cards,
many business charge EXTRA for using a debit card. I have never been
able to figure this out because it should be CHEAPER to process a debit
transaction than a charge-card transaction or even a check transaction.
Therefore I will NEVER use my ATM card to pay for a debit transaction if
there is an extra charge.
Dave Churchill
------------------------------
Date: Mon, 21 Jul 1997 19:37:45 -0400 (EDT)
From: JONESW@CCSUA.CTSTATEU.EDU
Subject: VUL is SOMETIMES a bad idea
I have always bought term life insurance and invested the difference in
my 403b, which has stronger tax advantages for me than using permanent
life insurance.
But I recognize that a VUL is an excellent choice for most people who
have maxed out their 403b-like options and are in the 28% or higher tax
bracket, and for many other people as well. In particular, I don't think
any whole life policy can match the benefits of a good low-cost VUL.
However, I believe that a substantial number of people would find that
buying term and investing the difference tax-deferred in a variable
annuity is more profitable, let alone in a 403b or IRA. I would like for
Cal to see if I have it right for this MINORITY. (Of course, one buys
life insurance because one needs that death benefit, not just to postpone
taxes on investments).
==1.Assume that a certain person has no need of life insurance after
retirement (many people don't have such a need) (but, as Cal would remind
me, many do). If you need at least some life insurance until you die, even
past age 70, a VUL is an excellent choice.
==2. Assume that that person can obtain a term life insurance policy that is
GUARANTEED RENEWABLE until retirement at good rates without any health re-check
(examples: TIAA and Amica). Without such a term policy, the VUL is far better;
you do not want to have to renew after 20 years and find that your health
status either prevents it or quadruples your premiums.
==3. Assume that that person has sufficient resources that he will not be
withdrawing from the VUL before retirement. Otherwise, the tax advantages of
VUL withdrawals and wash loans are much greater than those for variable
annuities.
Now we can do the following rough calculation: The expenses on the investment
part of the VUL exceed the 0.48% annual expense on Vanguard's variable annuity
by what accumulates to a difference of more than 10% of total assets after 20 to
30 years (you would have to compare your VUL with the 0.48% to see how much over
10% it is). So, even if you manage to avoid ALL taxes on the VUL and pay 28%
tax on the perhaps three-quarters of the variable annuity that is earnings, you
only gain back 21%, for a net gain of about 10% of total assets.
At a 15% tax rate, you almost never come out ahead with a VUL, even a VUL with
such low expenses as Ameritas (which allows you to invest in Vanguard's no-load
mutual funds). And a lot of people who currently are paying at the 28% tax rate
will be paying only 15% in retirement.
Besides, the only way to avoid ALL taxes on the VUL cash value is to die.
Finally, if the primary beneficiary of the variable annuity is a charity, or if
it is your spouse and the secondary beneficiary is a charity, so that taxes are
avoided anyway, that wipes out most of the potential advantage of a VUL even if
you manage to die before you start spending it. (Leaving money to charity is
the simplest, cheapest, and most effective form of estate planning known to
modern man, since it even avoids estate taxes.)
One more point: If you buy term and invest the difference in an Index fund and
hold it for the entire period that you would hold the VUL, NEVER selling or
exchanging into another fund, AND if they lower the capital gains tax to 20%,
you MAY come out much better than either a VUL or a variable annuity, even
allowing for a VUL's tax-free withdrawal and loan possibilities. The reason is
that most of the gains grow tax deferred, and the tax on the annual
distributions is only about the same as the M&E charges on the VUL. But only a
minority of people find this absolutely pure buy-and-hold style appropriate.
NOTE: I do not receive compensation from any insurance company; this is all my
personal opinion, not legal advice.
Bill Jones
------------------------------
Date: Mon, 21 Jul 1997 19:38:39 -0400 (EDT)
From: Fred Decker <deckerf@ucs.orst.edu>
Subject: Re: Value of attaining Ph.D.
Historically people sought the doctorate to have the right to
charge fees for their teaching, so quite literally they had to show
knowledge and mental nimbleness for teaching. Many other potential careers
have opened to those with doctorates in modern times. Major professors
("doctor fathers" in some European universities) have had their own
objectives for the doctoral candidates, as expressed in some of the
discussion here. However, the candidates themselves have personal
objectives which the degree can help them attain. For example, while
public school teachers today with doctorates get better pay and entree to
administration, professional civil service experts also advance in career
status with doctorates. In some cases the aspiring researcher who wins the
degree will also gain the requisite for being able to submit research
proposals seriously considered for fiscal support. Some who complete
careers, say, in military service find the degree provides a challenge
for them personally to demonstrate intellectual prowess for entering
civilian careers. Viewing the Ph.D. from the candidate's standpoint, we
can say it provides a legitimate credential today for people intending to
do other than teaching.
For people outside the immediate post-undergrad years one valuable
aspect of the credential can be the proof of fitness for independent
research. How can a typical mid-career person with family
responsibilities leave a job and residence to live on a campus so as to
provide the professor(s) opportunity to dialog and otherwise get to "know"
the candidate's intellectual qualities? Clearly today one way is the
internet, itself an academic product for speeding up scholarly
communications. Fortunately, those profs who don't like this approach
simply don't have to take on as students any candidates at a distance.
Plenty of faculty, however, will welcome the ability to use the internet
for supervising doctoral candidates. Universities with such faculty will
likely find themselves moving onto a new academic frontier. Hasten the
day!
Fred W. Decker, Ph.D., Emeritus Faculty, Oregon State U.
------------------------------
Date: Mon, 21 Jul 1997 19:39:12 -0400 (EDT)
From: "rip west" <rip@montrose.net>
Subject: Calculating year-to-date returns?
eric said....
<<
I've spent hours trying to come up with a formula. My broker says it's very
complicated and he doesn't know how to figure it out. My monthly statement
includes all events, cash, bonds, buys, sells, etc. I"m only interested in
calculating my track record on stocks (for this year). Obviously I need to
compare my present statement with that of 1-1-97, but how? Any math
wizards out there?
>>
It is complicated, and you can't really solve it by a simple formula. Usual
methods of computing an Internal Rate of Return use trial and error
procedures. The simplest way would be to use a spread sheet. You would put
your investments in as negative figures, your dividends and ending worth as
positive, and let the program figure the IRR.
rip
------------------------------
Date: Mon, 21 Jul 1997 19:39:53 -0400 (EDT)
From: "rip west" <rip@montrose.net>
Subject: Re: Investment Clubs
Randy Barnes said.....
<<
Tim, Andrea et al,
Don't go rushing to an online line broker just to help in portfolio
tracking. An investment club especially needs a person that can assist
your group with ideas and information. I recommend that you get a real
live broker in a national firm to handle your account. They should have
.....
I've met well over 50 people in this group and many have been in
investment
clubs. NONE of them have had a positive experience.
>>
You might want to look at the NAIC site and subscribe to the i-club-list,
where you will find over 6,000 people who have had a positive experience
with investment clubs.
<<
Take the club idea
very slowly and follow the advice of the clubs that have achieved a long
history of success. Read the Beardstown Ladies(?) book and anything
else you can find on the topic. Form a group that has more in common
Do any of you have good or bad NAIC experiences to share???
>>
Well, the Beardstown Ladies had a very postive experience using NAIC
methods, and they have shared them in two books, not to mention their
recipies <G>.
Rip West
------------------------------
Date: Mon, 21 Jul 1997 19:40:12 -0400 (EDT)
From: David Bryan <dbryan@MAIL.JUS.STATE.NC.US>
Subject: Cost Basis formula and tracking DRIPS
What is the correct formula to derive at the cost basis of stock
purchases? I am currently using:
Price per share X Number of shares + any fees = cost basis
Also, I'm using Quatro Pro to track my DRIP funds. Would like Excel better.
Does anyone know of a good cheap software that would be best to track
DRIP funds?
------------------------------
Date: Mon, 21 Jul 1997 19:41:27 -0400 (EDT)
From: Rich Carreiro <rlcarr@animato.pn.com>
Subject: Re: Calculating year-to-date returns?
>I've spent hours trying to come up with a formula. My broker says it's very
>complicated and he doesn't know how to figure it out. My monthly statement
>includes all events, cash, bonds, buys, sells, etc. I"m only interested in
>calculating my track record on stocks (for this year). Obviously I need to
>compare my present statement with that of 1-1-97, but how? Any math
>wizards out there?
Three steps:
(1) Compute the starting and ending values of the stock portion of
your portfolio. Look at the 12/31/96 and 6/30/97 statements and
add up the values of all your stock positions to determine the
beginning and ending values.
(2) Compute the cash flows into and out of the stock portion of your
porfolio. Write down the date and amount of every stock sale and
purchase (consider a purchase a positive number and a sale a negative
number). Also write down the date and amount of every non-reinvested
dividend (consider that a negative number as well). If there is more
than one event on the same day, add them together to get a net cash
flow for that day.
(3 - easy version) Fire up Excel. If you didn't install the Analysis
Toolpak when you installed Excel, fire up the setup program and
install it. Now check the Excel manual on how to activate add-ins
and activate the Analysis Toolpak. Read the descriptions of the
IRR() and XIRR() functions. Now start entering in the data from
(2) in two columns. In the first column put the date of the cash
flow and in the 2nd column put the cash flow itself. The first entry
should be 12/31/96 and the value of the stock portfolio on that date,
expressed as a positive number. The next entries should be the dates
and amounts calculated in (2). The final entry should be 6/30/97 and
the value of the stock portfolio on that date expressed as a *negative*
number (very important). Now in some other cell on the spreadsheet put
in a call to the XIRR() function as described in its description, using
the dates and cash flows you just entered. Voila! It'll tell you what
your return was.
(3 - hard version) Write a program to solve the following equation:
N C[i]
Sum ------------- = 0
i=0 (1 + r)^t[i]
for r, where
C[0] = starting value
C[i] for 0<i<N = cash flows as computed above
C[N] = -(ending value)
t[i] = time between date of starting value and date of i-th cash flow.
r will ultimately be in % per whatever unit of time you choose
for t[i]. If t[i] is measured in years, r will be in %/yr. If
t[i] is measured in days, r will be in %/day and so on. There's
nothing wrong with t[i] being non-integral.
In general there is no closed form solution for r. You have to pick
a value, compute the sum, see how close it is to 0, then try again,
stopping when the sum is as close to 0 as you care about.
Hope that helps!
Rich Carreiro
rlcarr@animato.pn.com
------------------------------
Date: Mon, 21 Jul 1997 19:42:04 -0400 (EDT)
From: Rich Carreiro <rlcarr@animato.pn.com>
Subject: Re: Best Strategy for IRA Payments?
>Which makes more sense for investing in an IRA? Putting all $2000 in it on
>January 1, or to break it up over the year to take advantage of dollar-cost
>averaging? The IRA is in an S&P 500 index fund.
Over the course of 30 years, I doubt it'll matter much if $2000 per
year is invested as a lump sum vs. $166.66 per month, so I'd make a
$2000 deposit on the first business day in January to get the full
year's worth of tax-deferred growth on the deposit.
If you're not comfortable with that, still make the deposit on the 1st
business day in January, but put it in a MMF and then set up automatic
monthly transfers from the MMF to the index fund.
Rich Carreiro
rlcarr@animato.pn.com
------------------------------
Date: Mon, 21 Jul 1997 19:42:30 -0400 (EDT)
From: Nick Lebredo <NLebredo@exchange.ureg.ohio-state.edu>
Subject: Year To Date Return Calculation
Can't claim to be a math wiz, but a fairly simple formula that yields a
very close approximation is:
(Current Portfolio Value minus 50% times your net additions/withdrawals
during the period) divided by (Prior Period Ending Portfolio Value plus
50% times your net additions/withdrawals during the period)
To get this result in percent terms you'll need to subtract one and
multiply by 100.
Example:
Current Portfolio Value = $100,000
Prior Period Ending Portfolio Value = $90,000
Total Net Additions & Withdrawals during Period = $2,000 (assume $3,000
added through periodic investments and $1,000 withdrawn)
Portfolio Total Return would be $99,000/$91,000 or about 8.8% Total
Return during the period.
------------------------------
Date: Mon, 21 Jul 1997 19:43:17 -0400 (EDT)
From: Nick Lebredo <NLebredo@exchange.ureg.ohio-state.edu>
Subject: Re: Timing of IRA Contributions
>Subject: Best Strategy for IRA Payements?
Which makes more sense for investing in an IRA? Putting all $2000 in it
on January 1, or to break it up over the year to take advantage of
dollar-cost averaging? The IRA is in an S&P 500 index fund.
In the short run, the answer depends on what the market does during the
period in question. The dollar cost averaging approach will generally
work best (allow you to acquire more shares at lower prices) in a
declining market environment whereas the beginning of the year lump sum
method is the best approach in an upward trending market. With a long
term perspective, if you believe that the market will continue to have
more up years than down years, I think it makes sense to follow the lump
sum approach at the beginning of the year.
------------------------------
Date: Mon, 21 Jul 1997 19:44:21 -0400 (EDT)
From: borisv@ctron.com
Subject: Re: What's the Family Income Cutoff for Financial Aid?
>Also, I thought the cut-off for financial aid (as in loans -- low cost or
>otherwise) is much higher than $30K.
Does someone know where it is? What family income makes financial aid
application a waste of time (assuming very moderate assets)?
Can you recommend a book(s) about financial preparation for the
college? (my daughter will be a HS junior this year)
Thank you,
- -Boris
Dover,NH
------------------------------
Date: Mon, 21 Jul 1997 19:44:51 -0400 (EDT)
From: Scott Barnett <sab@newton.crisp.net>
Subject: Re: Investment Club Experiences
> Tim, Andrea et al,
>
> Don't go rushing to an online line broker just to help in portfolio
> tracking. An investment club especially needs a person that can assist
> your group with ideas and information. I recommend that you get a real
> live broker in a national firm to handle your account. They should have
> no problem in agreeing to reduce their commission structure
> considerably. Their assistance and resources are extremely important to
> a club. You'll be hard pressed to get a pro to "sing-and-dance" at a
> group meeting if you're trading on'line.
>
> I am involved in a group we call "ASSET Atlanta" (Ass'n of Strategic
> Stock Equity Traders). We do not invest money together as a club, but we
> meet once a month to discuss our strategies and study the markets. I've
> met well over 50 people in this group and many have been in investment
> clubs. NONE of them have had a positive experience. Take the club idea
> very slowly and follow the advice of the clubs that have achieved a long
> history of success. Read the Beardstown Ladies(?) book and anything
> else you can find on the topic. Form a group that has more in common
> than wanting to invest in stocks. You should expect that most folks that
> get involved will loose interest and be of little help to the group.
>
> Do any of you have good or bad NAIC experiences to share???
>
> - -Randy Barnes
I'm President of a one year old NAIC investment club in the Central
New Jersey area. We currently have 8 members, 6 of whom are founders
(we've had one founder drop out due to lack of time).
I think the biggest frustration people have when joining an
investment club is misunderstood expectations. There are many
different investment strategies, and for a club to be successful,
you need to be disciplined about how you invest. If you're
looking to invest in penny stocks or make speculative investments,
you wouldn't like being in our club, where we're looking for
solid companies with steady long-term growth. We try and make
our "mission statement" clear so people know what we're about and
what we want to do. Having said that, I think we've been very
successful in our goals of learning more about the market, and
investing successfully. The NAIC principles have served us very
well so far.
Also, we use e-trade to buy and sell stocks. We saw no reason
to go with a broker, since we all know how to get research information
from S&P Reports, Value Line, and the Internet. We perform
Stock Study Guides (SSG's) which are a strong measure for us of
a company's performance and potential. We will not buy a stock until
an SSG has been completed for the company.
We have a Web page for our club (http://www.crisp.net/home/sab/cjic)
if you'd like more info. We are also open to new members if anyone
in the central NJ area is interested in joining a club.
- --
Scott Barnett
sab@crisp.net
------------------------------
Date: Mon, 21 Jul 1997 19:53:09 -0400 (EDT)
From: APRESTON@server.vcccd.cc.ca.us
Subject: paying my daughter's way through college - How Should I Do It?
i made a committment long ago to pay my daughter's way through the last two
years of college, after she attained the first two years locally. it has
taken a few years (8 to be exact), while she worked full time and went to
school at night. she is 26, and plans to marry in one year, quit her job,
and attend full time. the emotional bond that i have with her and the
commitment i made and stand by will still result in my paying, so my mind
won't be changed about that.
my questions are: would it be better for me to
pay the school directly for all of the costs she incurrs, or should i figure
out what it's going to cost in one year, and give her the money? what are
the tax ramifications? if i give her the money (less than $10K/year is the
threshhold, as i recall), then it is not income to her, but rather a gift,
right? therefore, not taxable? alterantively, if i just paid all the school-
related bills, i.e., paid the university directly for her, would that be
considered income for her? i dont suppose there are any tax advantages to
me, as she's not a dependent even before getting married.
------------------------------
Date: Mon, 21 Jul 1997 19:53:37 -0400 (EDT)
From: Arnold Goldberg <ajg@pagesz.net>
Subject: Cap. gain taxes on sale of home?
Does anyone know the status of these laws, I'm
particularly interested in the one where no cap. gn.
taxes are paid on selling your primary residence.
thanks!!
arnold
------------------------------
Date: Mon, 21 Jul 1997 19:54:15 -0400 (EDT)
From: Victor Daniel <vdaniel@olympus.eng.temple.edu>
Subject: The Truth About Credit Cards
I've followed the discussion on credit cards going through the digest
recently, and have decided to add my two cents. Some have blamed consumer
credit problems on predatory lending practices by banks and credit card
companies. However, one thing that has to be kept in mind is that no one
HAS to use a credit card. It is perfectly possible to get by without one,
as I can attest. A credit card is a convenience. Period. Having and using
one can make your life a little easier, but that's it.
However, having and using a credit card can also make life much, much
harder, if you have the wrong attitude about it. Too many people think of
credit cards as "free money", a license to shop 'til they drop (or
until the credit line is used up). For awhile, they're on easy street,
enjoying the goods and services they can get quickly and easily with their
little wallet-sized piece of plastic. Don't have the cash? No problem.
Then the bills come in. Big problem.
Suddenly Easy Street turns into the Long and Winding Road, as in the
months after their spending spree, people come to realize they may never
be able to pay back all the money they borrowed. Which is exactly what
they either didn't realize or forgot about credit cards. When you pay for
something with a credit card, you are simply borrowing money on the spot
to pay for that something. That money must be PAID BACK at some point.
While that point may be elementary to us on the persfin-digest list, it
seems to elude the millions of credit-card users yearly who find
themselves in debt up to their ears and having to mortgage their futures
to pay their MasterCard or Visa bill. They are seduced by the ease and
convenience of their cards, and forget that there is always a price to be
paid for ease and convenience-literally in the case of credit cards.
So, what to do about the whole situation? I believe educating people about
the hazards of easy credit is at least part of the solution. Of course,
this must all be part of a basic Personal Finance type of education, so
Joe or Jane Average can learn about how and when to use easy credit as
part of an overall healthy financial strategy. Banks can play a part in
this, as teaching people how to be financially responsible will benefit
them in terms of creating people who pay their loans on time and also
have money left over to deposit with them, among other things.
Well, this has turned out to be considerably more than just two cents
worth. I only hope my fellow persfiners consider the above exposition to
be something more than mindless rambling :-) I have learned much over the
two years or so I've been on this list, and I consider this to be part of
my effort to give something back.
Later,
The MacNut
-----------------------------------------------------------------------
| Victor Daniel a.k.a the MacNut Web page in progress at: |
| vdaniel@neptune.eng.temple.edu http://www.netaxs.com/~macnut |
-----------------------------------------------------------------------
------------------------------
Date: Mon, 21 Jul 1997 20:56:30 -0400 (EDT)
From: Avrum Lapin <avrum113@cyberg8t.com>
Subject: Re: Money for College
I feel that State College A can discriminate based on SAT scores as
long as they apply the criteria to everyone (the presumption being that SAT
scores have some bearing on your ability to absorb a college education). I
don't believe that we owe everyone 4 years in college just because they
show up at the door. I don't even believe that we owe 4 years of high
school.
If the people with lower SAT scores than John are being given full
scholarships at State Collega A it is probable that John is being
discriminated against because he is not in a scheduled Minority (my guess).
If so I would suggest that John find a good rabble rousing contingency
lawyer to file a lawsuit on his behalf. (If in CA write to Ward Connerly
the author of Prop 209 for some ideas) - then again John may not be a
revenue producing basketweaving basketball player
If John lives in California he might consider attending a local
Community College selecting a course outline which will essentially
guarentee him a transfer position into State College A. I am not an expert
on this and I don't know what the success rate is for people who take this
route but it is definitely a lower cost approach
Avrum Lapin
Upland., CA
------------------------------
Date: Mon, 21 Jul 1997 20:57:25 -0400 (EDT)
From: ANDREA WELCH <ACE.AWELCH@MEMO.ACEHARDWARE.COM>
Subject: Re: Investment Club Idea
< Take the club idea very slowly and follow the advice of the
<clubs that have achieved a long history of success. Read the
<Beardstown Ladies(?) book and anything else you can find on the
<topic. Form a group that has more in common than wanting to
<invest in stocks. You should expect that most folks that get
<involved will loose interest and be of little help to the group.
<Do any of you have good or bad NAIC experiences to share???-
Hello Randy and all:
Thank you for your comments. I'm surprised at the interest that
my post has raised. Just in the past couple of days there are at
least eight persfiners who've contacted me regarding the
possibility of starting an investment club. It would be quite
easy at this point to get caught up in the enthusiasm that seems
to have been generated.
I for one am going to do as you suggest and "read more about
it". The NAIC web site has much material available, but it does
tend to be slanted in favor of the postive aspects of forming an
Investment Club. I'm off to the bookstore to look for the
Beardstown Ladies book.
Does anybody else have any Investment Club experiences that they
would care to share?
Thanks,
Andrea
------------------------------
Date: Mon, 21 Jul 1997 20:58:22 -0400 (EDT)
From: 0500101@ACAD.NWMISSOURI.EDU
Subject: College Tuition Exemption is Not a Special Interest Loophole
>Please do not support more tax unfairness and special-interest loopholes.
>
Sorry, I disagree. Even though I work for a college/university that offers
a reduced tuition plan (not free, but reduced) my children are not attending
here, so I do not have a personal stake in this.
This is an attempt to tax fringe benefit packages. It is common
practice in many business to offer a discount to employees for goods or
services from the employer. In the case of the education "industry", the
service being offered is a college education. If this becomes taxable, so
will discounts from other employers. Discounts for meals in the company
cafeteria will suddenly become a taxable event!!
TLK
------------------------------
Date: Mon, 21 Jul 1997 20:59:07 -0400 (EDT)
From: BOB FORD <BOB_FORD@compuserve.com>
Subject: Re: Joint Tenancy
RICH
(The usual warning)
I am not an attorney and the following is not legal advice. The only bar
I have passed is the one with a sign "No Cover Charge". What follows is
just my opinion. It is based on
my experience in California. The laws of other states may be different.
>I also believe that one tenant cannot sell, encumber, etc the asset
without
>the permission of the other. Also, I believe a creditor of one tenant can
>attack the interest of the other tenant.
In my real estate investments, I was in a situation that involved the
question of what can a joint tenant do that owns property that they want to
sell and the other joint tenant does not want to sell. As you correctly
state, a joint tenant can not sell his/her share of the property. Two
options were open to the joint tenant that wanted to sell. The simple one
was to have the joint tenant sign and file a deed that transferred his
interest in the real estate to himself as tenants in common with the other
joint tenants. There were only 2 joint tenants in this transaction so
filing that deed made the 2 former joint tenants now tenants in common.
Now each former joint tenant could sell their 1/2 interest in the
property. However buying 1/2 interest in a property is not what most
people would want to do. The buyer would become tenants in common with the
other tenant in common. Selling 1/2 interest in the property is not the
same thing as selling 1/2 of the property.
If a joint tenant wants to sell 1/2 of the property, they must get a
partition order from a court. This is more complicated and costly as
going to court is not a do it your self job. You must get legal help.
The court can and usually will order the property sold and the money
divided between the tenants in common. The 1 exception is if the property
can be physically divided in 1/2 in a way that is fair to both tenants in
common. If it can, a court can order the property be split.
There is a book called "THE DEEDS BOOK" by Mary Randolph published by Nolo
Press that has a lot of good information in it about the different types
of ownership.
BOB FORD
------------------------------
Date: Mon, 21 Jul 1997 20:59:41 -0400 (EDT)
From: BOB FORD <BOB_FORD@compuserve.com>
Subject: Re: Cell Phones
ERIC
I am going through the same process as you are. What cellular phone
should I buy and what service should I use?
You are correct there are hundreds of different plans and options. In my
area (Southern California) there are 2 major cell phone companies
(Airtouch and LA cellular) and 2 PCS providers (Sprint and Pacific Bell).
I have tried both cell phone companies and both PCS companies. This is my
experience. Yours may vary.
PCS is a superior system in sound quality. PCS has a smaller coverage
area but they are growing. Digital systems such as PCS can not be cloned
and your conversations can not be heard by scanning devices.
PCS systems here do not require you to sign a long term contract. You buy
the phone and then pay so much a minute for air time. This appeals to me
as I do not like long term contracts. Things may change during the term of
the contract. Non PCS systems here will give you the phone but you must
sign a long term contract.
One great thing about the arrival of PCS is there is finally some price
competition in the cell phone business. For many years Airtouch and LA
Cellular did not compete on price. They charged the same price. Things
have now changed. Prices change almost daily and they are all going down.
GOOD LUCK
BOB FORD
------------------------------
Date: Mon, 21 Jul 1997 21:00:46 -0400 (EDT)
From: JONESW@CCSUA.CTSTATEU.EDU
Subject: How to Calculate Year-To-Date Returns
Eric asks for a Math Wizard to tell him how he calculates his year-to-date
returns on his stock investments only, when he has many changes to the account
listed on his monthly brokerage statement. Fortunately, I just happen to be
IMNVHO a Math Wizard. Herewith an appropriate algorithm for Eric:
// Initialize two numbers CashProfit, MaxAtRisk as follows:
MaxAtRisk = total value of stock holdings at the beginning of the month;
CashProfit = zero;
//Calculate your maximum cash at risk during the month as follows:
For each transaction on your statement, one at a time in date order:
If a dividend of $X, add X to CashProfit;
If a sale of stock for $X, add X to CashProfit;
If a commission or fee of $X, subtract X from CashProfit;
If a purchase of stock for $X, subtract X from CashProfit;
If CashProfit is negative at this point, then:
add its absolute value to MaxAtRisk;
reset CashProfit to zero;
- -- Doing it in date order is essential.
// Calculate three end-of-month values as follows:
StockValue = sum of values of all stocks evaluated at the end of the month;
MonthsDollarProfit = (StockValue + CashProfit) - MaxAtRisk;
MonthsPercentageProfit = ((StockValue + CashProfit) / MaxAtRisk) minus one;
- -- This number may be negative; it's been known to happen.
/* Note that this MonthsPercentageProfit is exactly what a mutual fund manager
would report as percentage return for the month if (a) he received all cash
additions and redemptions only on the first of the month, (b) he made exactly
the same purchases and sales you made, and (c) he at some point in the month
had 0% cash on hand (fully invested). Actually, he would report slightly less
because he would add a little for daily interest earnings on his cash balance
but subtract a little more than that for his expense ratio. But you can
consider those two factors a wash (i.e, underpay your "salary"). */
//You should calculate year-to-date return at any month-end as follows:
AverageCashAtRisk = average of all MaxAtRisk values for all months so far;
For each month calculate:
MonthsProfitFactor = (StockValue + CashProfit) / AverageCashAtRisk;
YTDPercentageReturn = product of all those MonthsProfitFactors, minus one;
/* But if at any point you want a very rough estimate of your year-to-date
profit, just add up the MonthsPercentageProfit values for all the months to date
(subtracting when it is a negative value). This rough estimate also serves as a
"desk-check" on your calculation of the YTDPercentageReturn, because it should
not be too much different. */
Bill Jones
------------------------------
End of persfin-digest V4 #61
****************************
Articles sorted by: [Date]
[Author]
[Subject]