Questions You Should Ask About Your Investments from the Security and Exchange Commission (SEC). They offer questions relating to: general investments, mutual funds, investment advisers, performance of your investments. Questions such as:
What are the total fees to purchase, maintain, and sell this investment? Are there ways that I can reduce or avoid some of the fees that I’ll pay, such as purchasing the investment directly? After all the fees are paid, how much does this investment have to increase in value before I break even?
How liquid is this investment? How easy would it be to sell if I needed my money right away?
Pretty basic stuff but it provides some questions that you should be able to answer. If you can’t then continue on your path to increase your financial literacy. We hope I site can help with that. In addition we link (on the left) to some good sites including fool.com and Marketplace that are useful in educating yourself.
Credit Cards’ Hidden Costs by Kathleen Day
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The report by the Government Accountability Office found many consumers do not understand that if a borrower is late on one payment, companies will not only impose a late fee, which can reach nearly $40, almost triple that of a decade ago, but also significantly raise the interest rate on past and future charges, possibly to as high as 30 percent.
Credit cards can be a convenient tool but if you do not pay the balance off every month on time that is a very bad sign for your financial health. And leaves you open to onerous fees from credit card issuers. If you do pay off the whole balance every month (as you should under almost all circumstances) you should have a credit card than pays you a rebate (1% of your spending is common) and has no annual fee.
Don’t cash that check! It’s a scam:
The surprise check in the mail “A $10 check is a nice surprise,” the letter from Travelers Advantage says. “Especially since it’s yours for just reviewing the benefits and privileges of this national savings network. And there could be more checks coming your way!”
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Last year, California Attorney General Bill Lockyer filed a lawsuit against Trilegiant and Chase Bank, alleging they worked together to create and carry out a marketing scheme that, he says, “unlawfully deceived tens of thousands of California consumers” into paying for these membership programs.
Don’t cash such checks. The means they are using is so deceitful you can’t trust what else they are going to try to trick you into. Credit Unions are often much less deceitful than banks (though you can’t always trust them either – which is a shame). It is too bad that organizations decide to prey on the financially illiterate. But they do. The easiest thing is not to waste your time trying to find the one good place that actual offers a good value and just chose to use a very bad method to inform people. If they offer something of value let them sell it to you for what it costs (not trick you into cashing a check and then start charging you a monthly fee).
Skip the Coffee? What’s Money for, Anyway?:
My crime: buying morning coffee from Starbucks for my wife and me.
Avoiding the regular cup of overpriced coffee has become an easy cliché for financial advisers, a symbol of money frittered away.
The author is right. There is nothing wrong with spending some of your money on the luxuries you choose. The problem is too many people spend more than all their money on the luxuries they choose (going into debt to support their lifestyle). The author states:
In previous post: saving for retirement, we discuss the options for planning for your future economic security. Cutting back on luxuries is only necessary if you are living beyond your means (looking at your whole financial life). If you have incorporated the luxuries you want into a good overall plan, great, good job, keep up the good work. If not, figure our which luxuries you want to cut (or how you are going to earn more money).
Britain becomes ‘never, never land’ as personal debt runs out of control
Britain seems to be taking after the USA. Debt is not necessarily bad for the economy or individual. Too much debt is. When it becomes “too much” is one of the issues we will discuss, and link to articles discussing, in this blog.
People will benefit from understanding how debt effects their future economic life. To do this they need to gain financial literacy. To help people gain financial literacy is one of the aims of this blog. We believe that gaining financial literacy will lead people to make better economic decisions. Such as not taking on too much debt.
CNNMoney is not exactly intellectual discussion of economic and investing issues but normally it offers fairly good material for the large number of people. Especially those who really don’t want to read Warren Buffett or Brad Setser. Still the following quote in their article, Cashing in on hot real estate is just wrong:
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San Diego-based certified financial planners Christopher Van Slyke and Terry Green recommend an unconventional plan: taking out a new $500,000 ARM.
Handel and Laport can pay off their existing mortgage before the rate rises and retire their other debts. They can put the remaining $200,000 into stock and bond funds.
To be sure, borrowing against a house to put the proceeds into the market rarely makes sense. But in Handel and Laport’s case it does because so much of their net worth is tied up in their home, and the super-hot L.A. real estate market looks primed for a fall…
They can convert equity that might melt away.
They can what? In no way does increasing their leverage convert equity that might melt away. Any amount of “melting away” will still happen after this increase in leverage – no conversion has happened. They still have a full ownership interest in the real estate. If the value of their house fell $300,000 before or after this supposed “conversion” they would “lose” (on paper) the same amount: $300,000. The investment risk for the house has not changed (for the whole portfolio you could argue it has but that gets complicated and subject to debate).
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