Ask Rande 10,000+

Top 246. Oct 6, 2001 7:30 AM

» Rande - Re: I have a vague recollection that during the

In response to message posted by Gadfly:

Gad,

They're still around and they're a nifty deal -- for the banks and others who sell them. I posted a more detailed explanation awhile back (somewhere on the site), but the gist of it is that the sellers of these products hedge their positions and make a profit off the spread (THEY are not taking on any risks, believe me). Bottom Line: Those who can't tolerate the risk of the stock market should stick to high-quality fixed income. There's no free lunch.

-- posted by Rande

Top 247. Oct 6, 2001 8:40 AM

» Bernie777 - Teacher's Pension Accounts

Rande, I have friends that are retired teachers and in their tax deferred accounts they claim they are still getting 8 1/2% interest on their money. Do you know if this is true? That's a great deal.

-- posted by Bernie777

Top 248. Oct 6, 2001 8:45 AM

» Rande - Re: Teacher's Pension Accounts

In response to message posted by Bernie777:

Bernie,

Would have to be some sort of locked-in deal from days gone by. For example, when my wife participated in a hospital SEP way back in the early 80s we opted for something called "Golden Gurantee" from Wells Fargo Bank. FDIC-insured CDs promising 10%-plus through 2015. Guess what? She's still got 'em. They're still paying over 10% and will continue to do so through 2015. Periodically, they send an offer to switch to something else. Yeah, right. smile But, an 8.5% yield on a current investment? Doesn't pass the smell test.

-- posted by Rande

Top 249. Oct 6, 2001 9:17 AM

» Kirk - Re: Teacher's Pension Accounts

In response to message posted by Bernie777:

I used to help somoene that made the same claim in 1997 or 1996. I investigated and found it was a "high yield" fund. I told them this was a junk bond fund and that they were returning capital to keep the interest rates high. I said I prefered to own equities for that sort of risk and sell some every year if I need income. They didn't believe me and kept the fund... and now wish they had listened.

Check out "return off capital" in their literature... if above zero, then a red flag should go up. What you will see is the income each month coming at 8.5% (divided by 12 probably) of the amount invested but you will find that what you would get if you redeemed the fund is less than what you put in!!!!

-- posted by Kirk

Top 250. Oct 6, 2001 9:25 AM

» Rande - Re: Re: Teacher's Pension Accounts

In response to message posted by Kirk:

Kirk,

Good point. Was thinking in the low-risk category in my response, but could be a junk bond option. Amazing, isn't it, how bragging among co-workers and friends has changed from how much their stocks have gone up to how much yield they're getting? smile

-- posted by Rande

Top 251. Oct 6, 2001 9:50 PM

» Bernie777 - Total Market Index Fund

Rande, Took your advice and put IRA money into Fidelity Total Market Index Fund. I probably should have stayed with hi tech since I rode those tech funds down but I can't deal with them any more. My 457 has a fund called Citizens Index. It is a socially resposible fund with 40% in large cap tech. I am in that one. I'm not sure if I would be better off switching to the Vanguard 500 index. I plan to leave it there for about 10 years. Any advice on this one? Thanks.

-- posted by Bernie777

Top 252. Oct 7, 2001 1:36 PM

» Rande - Re: Total Market Index Fund

In response to message posted by Bernie777:

Bernie,

The decision to invest in a socially resposible way is important to some. From a pure investment standpoint, I'd prefer the index.

-- posted by Rande

Top 253. Oct 8, 2001 11:44 AM

» Thruhiker - but is it really a "small cap" if it is a "large company"?

but is it really a "small cap" if it is a "large company"?

rande, i am looking for a small cap int'l fund and came across the following paragraph in a new fund to be run by mark yockley of artisian:

"The Fund will define a "small" company as one with a market capitalization of less than $3 billion at the time of the Fund's investment. Some of these companies, although small by U.S. standards, might rank among the largest in their countries by market capitalization."

i felt this was interesting from a philosophical point of view.

steve

-- posted by Thruhiker

Top 254. Oct 8, 2001 11:48 AM

» martin_lowe - SEP-IRA question

Hi Rande,
In April of 2001 I funded my SEP-IRA as the employer (since I have no emplyees) for tax year 2000. My Vanguard statement shows that it was for 2001 and not 2000. When I spoke to Vanguard's retirement specialist he said that they always report it on a calendar basis per IRS rules. Does that sound correct? I Reviewed my prior tax statements from Vanguard (5498's) and they all reflect a mismatch with my tax returns since I always fund my SEP-IRA's after figuring out my tax return in March/April. So, for 2001 I will fund my SEP-IRA in March of 2002, but Vanguard will show it as a 2002 contribution. Is this a problem?
Thanks for any help you're able to provide.
Martin

-- posted by martin_lowe